Illinois Department of Financial and Professional Regulation

Illinois Department of Insurance

JB Pritzker

Governor

Dana Popish Severinghaus

Director

June 22, 2022

Mr. Larry E. Willeford, President

First Acceptance Insurance Company, Inc.

3813 Green Hills Village Dr

Nashville, TN 37202

Re: First Acceptance Insurance Company, Inc., NAIC 10336

Market Conduct Examination Verified Report

Dear Mr. Willeford,

A Market Conduct Examination of your company was conducted by an authorized examiner designated by the

Director of the Illinois Department of Insurance (“Department”) pursuant to Illinois Insurance Code (“Code”)

Sections 132, 132.5(f), 404(1)(a) and 404(1)(c). This examination covered the period of January 1, 2019, through

March 31, 2022. Enclosed with

this letter is a copy of the verified examination report.

The examination report is a public document under the Freedom of Information Act (“FOIA”) [5 ILCS 140/1 et

seq.] and will be posted on the Department’s website. To the extent that the examination report contains information

that your Company deems private, personal, or trade secret pursuant to Sections 7(1)(b), (c), or (g) of FOIA [5 ILCS

140/7(b), (c), and (g)], your Company may request that the Department redact such information from the report

prior to making it public. In making a request for confidentiality, your Company must provide a factual basis for

its assertion of confidentiality. The Department will consider the request and determine whether such information

is exempt from disclosure under Section 7 of FOIA.

No company, corporation, or individual shall use this report or any statement, excerpt, portion, or section thereof

for any advertising, marketing or solicitation purpose. Any company, corporation or individual action contrary to

the above shall be deemed a violation of Section 149 of the Illinois Insurance Code (215 ILCS 5/149).

Please contact me if you have any questions.

Sincerely,

Erica Weyhenmeyer

Chief Market Conduct Examiner

Illinois Department of Insurance

320 West Washington St., 5th Floor

Springfield, IL 62767

Phone: 217-782-1790

Erica.Weyhenmey[email protected]

320 W. Washington Street

Springfield, Illinois 62767

(217) 782-4515

http://insurance.illinois.gov

Company Name: First Acceptance Insurance Company CoCode: 10336 Group Code:

3362

Private Passenger Auto Liability

Statewide data (Illinois only) as of 3/31/2022 Q1 - 2019 Q2 -2019 Q3 - 2019 Q4 - 2019 Q1 - 2020 Q2 - 2020 Q3 - 2020 Q4 - 2020 Q1 - 2021 Q2 - 2021 Q3 - 2021 Q4 - 2021

(2) All expenses other than loss adjustment expenses, excluding amounts from item 5 below 425,988 401,416 382,571 362,869 378,015 358,303 352,056 372,590 450,372 525,917 556,235 584,949

(3) Net Earned Premium Before Application of any COVID-19 Related Premium Credit/Refund/Dividend 888,585 829,754 777,807 726,297 685,440 640,992 610,375 642,792 723,696 838,261 883,412 929,982

(4) The Amount of any COVID-19 Related Premium Credit/Refund/Dividend accounted for as premium

(5) The Amount of any COVID-19 Related Credit/Refund/Dividend accounted for as expense

(6) Net Ultimate Incurred Losses and Defense and Cost Containment Expenses 513,021 264,661 339,673 531,858 287,626 361,132 485,716 398,883 521,261 591,201 932,344 660,947

(7) Net Ultimate Adjusting & Other 80,292 44,621 57,266 92,627 54,057 73,433 89,773 71,748 89,877 91,841 142,197 111,227

(8) Ultimate Reported Claim Counts (excluding Claims Closed without Payment) 67 70 58 61 52 45 60 52 77 98 111 102

(9) Open Claim Counts 0 1 1 3 1 3 4 4 7 17 55 41

Post-refund combined ratio (6+7+2+5)/(3-4) 114.7% 85.7% 100.2% 135.9% 105.0% 123.7% 152.0% 131.2% 146.7% 144.2% 184.6% 145.9%

Pre-refund combined ratio (6+7+2)/(3) 114.7% 85.7% 100.2% 135.9% 105.0% 123.7% 152.0% 131.2% 146.7% 144.2% 184.6% 145.9%

Claims severity (6)/(8) 7,657 3,781 5,856 8,719 5,531 8,025 8,095 7,671 6,770 6,033 8,399 6,480

Notes:

All data provided in rows (2)-(9) will be considered public.

"Net" refers to net of reinsurance and salvage & subrogation.

Claim counts should be reported net of quota share reinsurance.

Accident Quarter

Data from row (1) will be made available on an all company weighted average frequency basis. Data will not be publicly released on an individual company basis.

Company Name: First Acceptance Insurance Company CoCode: 10336 Group Code:

3362

Private Passenger Auto Physical Damage

Statewide data (Illinois only) as of 3/31/2022 Q1 - 2019 Q2 -2019 Q3 - 2019 Q4 - 2019 Q1 - 2020 Q2 - 2020 Q3 - 2020 Q4 - 2020 Q1 - 2021 Q2 - 2021 Q3 - 2021 Q4 - 2021

(2) All expenses other than loss adjustment expenses, excluding amounts from item 5 below 425,988 401,416 382,571 362,869 378,015 358,303 352,056 372,590 450,372 525,917 556,235 584,949

(3) Net Earned Premium Before Application of any COVID-19 Related Premium Credit/Refund/Dividend 390,658 375,700 371,055 363,398 350,218 340,660 354,161 378,003 410,743 486,467 517,684 543,442

(4) The Amount of any COVID-19 Related Premium Credit/Refund/Dividend accounted for as premium

(5) The Amount of any COVID-19 Related Credit/Refund/Dividend accounted for as expense

(6) Net Ultimate Incurred Losses and Defense and Cost Containment Expenses 513,021 264,661 339,673 531,858 287,626 361,132 485,716 398,883 521,261 591,201 932,344 660,947

(7) Net Ultimate Adjusting & Other 80,292 44,621 57,266 92,627 54,057 73,433 89,773 71,748 89,877 91,841 142,197 111,227

(8) Ultimate Reported Claim Counts (excluding Claims Closed without Payment) 98 76 69 82 78 48 82 70 81 103 149 127

(9) Open Claim Counts 0 0 0 0 0 0 0 0 0 1 1 3

Post-refund combined ratio (6+7+2+5)/(3-4) 260.9% 189.2% 210.1% 271.7% 205.5% 232.7% 261.9% 223.1% 258.4% 248.5% 315.0% 249.7%