AM Best Affirms Credit Ratings of The American Road Insurance Company

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) for American Road Insurance Company (TARIC) based in Dearborn, MI. The stable outlook reflects TARIC's robust balance sheet strength and adequate operating performance. Despite challenges like semiconductor shortages impacting production, TARIC's risk-adjusted capitalization remains strong due to conservative capital management. This company is a subsidiary of Ford Motor Credit Company, supporting the sale and financing of Ford vehicles in the U.S. and Canada.

Positive

• Affirmed Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Rating of 'a' (Excellent) by AM Best.
• TARIC's balance sheet strength assessed as strongest.
• Stable outlook reflecting expected maintenance of rating fundamentals.
• Strong risk-adjusted capitalization due to conservative capital management.
• Operational synergies and efficiencies due to affiliation with Ford.

Negative

• Challenges from semiconductor supply shortages affecting production.
• Continued interruption of unit production expected into early 2023.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of The American Road Insurance Company (TARIC) (Dearborn, MI). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TARIC’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

TARIC is part of an insurance holding company system wholly owned by Ford Motor Credit Company LLC (Ford Credit), which in turn is an indirect, wholly owned subsidiary of Ford Motor Company (Ford) [NYSE: F].

TARIC provides products and services that support the sale and financing of Ford and Ford vehicles in dealerships throughout the United States and Canada with a variety of coverages. Principal lines include collateral protection automobile floorplan, followed by inland marine, contractual liability insurance policies for extended service contracts, direct commercial auto liability, direct general liability and surety bonds. Despite concentration in Ford products and services in the auto industry, TARIC benefits from enterprise-wide operational synergies and efficiencies gained by immediate access to business and low acquisition costs, as well as geographic diversification.

The stable outlooks reflect AM Best’s expectation that TARIC’s rating fundamentals will remain unchanged over the intermediate term. Risk-adjusted capitalization is expected to remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), due to the company’s conservative capital management. While the outlooks also consider some of the more pronounced pandemic-related challenges, such as semiconductor supply shortages and a continued interruption of unit production throughout the remainder of the year and into early 2023, operating performance is projected to remain profitable. Additionally, innovation in all operational phases and the company's risk management are aligned with the business objectives of its ultimate parent, Ford, which will continue to benefit TARIC.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005738/en/

Vicky Riggs

Associate Director

+1 908 439 2200, ext. 5039

vicky.riggs@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Daniel Ryan

Senior Director

+1 908 439 2200, ext. 5325

daniel.ryan@ambest.com

Al Slavin

Communications Specialist

+1 908 439 2200, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What is the Financial Strength Rating of American Road Insurance Company?

AM Best has affirmed the Financial Strength Rating of A (Excellent) for American Road Insurance Company.

What ratings did AM Best assign to TARIC?

AM Best assigned a Long-Term Issuer Credit Rating of 'a' (Excellent) to TARIC.

What challenges is TARIC facing in production?

TARIC is facing challenges from semiconductor supply shortages and production interruptions.

What is the outlook for TARIC's credit ratings?

The outlook for TARIC's credit ratings is stable, indicating no expected changes in the near term.

What is the relationship between TARIC and Ford?

TARIC is a wholly-owned subsidiary of Ford Motor Credit Company, which is itself a subsidiary of Ford Motor Company.