exv99

Exhibit 99


Press Release		Source: First Acceptance Corporation
		Contact: Michael Bodayle (615) 844-2885

First Acceptance Corporation Reports Operating Results for the Third Quarter and Nine Months Ended March 31, 2010

NASHVILLE, TN, May 10, 2010/Businesswire-FirstCall/ — First Acceptance Corporation (NYSE: FAC) today reported its financial results for the third quarter and nine months ended March 31, 2010 of its fiscal year ending June 30, 2010.

Operating Results

Revenues for the three months ended March 31, 2010 were $56.1 million, compared with $67.1 million for the same period in fiscal year 2009. Income before income taxes for the three months ended March 31, 2010 was $2.2 million, compared with $4.0 million in the same period in fiscal year 2009. Net income for the three months ended March 31, 2010 was $2.1 million, or $0.04 per share on a diluted basis, compared with $2.4 million, or $0.05 per share on a diluted basis, for the same period in fiscal year 2009.

Revenues for the nine months ended March 31, 2010 were $167.2 million, compared with $203.8 million for the same period in fiscal year 2009. Income before income taxes for the nine months ended March 31, 2010 was $6.6 million, compared with $6.4 million in the same period in fiscal year 2009. Net income for the nine months ended March 31, 2010 was $6.3 million, or $0.13 per share on a diluted basis, compared with $3.2 million, or $0.07 per share on a diluted basis, for the same period in fiscal year 2009.

Premiums earned for the three months ended March 31, 2010 were $46.7 million, compared with $54.8 million for the same period in fiscal year 2009. Premiums earned for the nine months ended March 31, 2010 were $140.3 million, compared with $171.5 million for the same period in fiscal year 2009. These declines were primarily due to the weak economic conditions, which have caused both a decline in the number of policies written, as well as an increase in the percentage of our customers purchasing liability-only coverage. The closure of underperforming stores also contributed to the decrease in policies written and premiums earned. At March 31, 2010, the number of policies in force was 169,603, compared with 173,674 at March 31, 2009. At March 31, 2010, we operated 405 stores, compared with 419 stores at March 31, 2009.

Loss and Loss Adjustment Expense Ratio. The loss and loss adjustment expense ratio was 68.4 percent for the three months ended March 31, 2010, compared with 71.0 percent for the three months ended March 31, 2009. The loss and loss adjustment expense ratio was 67.6 percent for the nine months ended March 31, 2010, compared with 70.1 percent for the nine months ended March 31, 2009. For the three months ended March 31, 2010, we experienced favorable development related to prior periods of $4.1 million, compared with $2.7 million for the three months ended March 31, 2009. For the nine months ended March 31, 2010, we experienced favorable development related to prior periods of $10.2 million, compared with $6.9 million for the nine months ended March 31, 2009.

Excluding favorable development related to prior periods, the loss and loss adjustment expense ratios for the three months ended March 31, 2010 and 2009 were 77.2 percent and 75.9 percent, respectively, and the loss and loss adjustment expense ratios for the nine months ended March 31, 2010 and 2009 were 74.9 percent and 74.1 percent, respectively. The favorable development for the nine months ended March 31, 2010 and 2009 was due to lower than anticipated severity and frequency of accidents in addition to improvement in our claim handling practices.

Expense Ratio. Our expense ratio for the three months ended March 31, 2010 was 27.1 percent, compared with 25.3 percent for the same period in fiscal year 2009. Our expense ratio increased from 23.9 percent for the nine months ended March 31, 2009 to 27.1 percent for the same period in the current fiscal year. The year-over-year increase in the expense ratio was due to the decrease in premiums earned, which resulted in a higher percentage of fixed expenses in our retail operations (such as rent and base salary).

Combined Ratio. The combined ratio was 95.5 percent for the three months ended March 31, 2010, compared with 96.3 percent for the same period in fiscal year 2009. The combined ratio was 94.7 percent for the nine months ended March 31, 2010, compared with 94.0 percent for the same period in fiscal year 2009.

Provision for Income Taxes. The provision for income taxes for the three months ended March 31, 2010 was $0.1 million, compared with $1.6 million for the same period in fiscal year 2009. For the nine months ended March 31, 2010, the provision for income taxes was $0.3 million, compared with $3.1 million for the same period in fiscal year 2009. The provision for income taxes for the three and nine months ended March 31, 2010 related to current state income taxes for certain subsidiaries with taxable income. At March 31, 2010 and June 30, 2009, we established a full valuation allowance against all net deferred tax assets. In assessing our ability to support the realizability of our deferred tax assets, we considered both positive and negative evidence. We placed greater weight on historical results than on our outlook for future profitability. The deferred tax valuation allowance may be adjusted in future periods if we consider that it is more likely than not that some portion or all of the deferred tax assets will be realized. In the event the deferred tax valuation allowance is adjusted, we would record an income tax benefit for the adjustment.

About First Acceptance Corporation

We primarily sell non-standard private passenger automobile insurance products underwritten by us as well as certain commissionable ancillary products, primarily through employee-agents. In certain states, our employee-agents also sell other complementary insurance products underwritten by us. At March 31, 2010, we leased and operated 405 retail offices in 12 states. Our insurance company subsidiaries are licensed to do business in 25 states. Additional information about First Acceptance Corporation can be found online at www.firstacceptancecorp.com.

This press release contains forward-looking statements. These statements, which have been included in reliance on the “safe harbor” provisions of the federal securities laws, involve risks and uncertainties. Investors are hereby cautioned that these statements may be affected by important factors, including, among others, the factors set forth under the caption “Risk Factors” in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended June 30, 2009 and in our other filings with the Securities and Exchange Commission. Actual operations and results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2010			2009			2010			2009
Revenues:
Premiums earned	$	46,651		$	54,845		$	140,317		$	171,506
Commission and fee income		7,471			8,115			21,391			24,033
Investment income		2,008			2,410			5,954			7,741
Net realized gains (losses) on fixed maturities, available-for-sale		(14	)		1,727			(459	)		486

		56,116			67,097			167,203			203,766


Costs and expenses:
Losses and loss adjustment expenses		31,902			38,929			94,926			120,214
Insurance operating expenses		20,125			22,021			59,406			64,977
Other operating expenses		280			276			1,303			982
Litigation settlement		(35	)		(67	)		(314	)		5,167
Stock-based compensation		198			523			853			1,532
Depreciation and amortization		483			455			1,447			1,379
Interest expense		970			969			2,951			3,159

		53,923			63,106			160,572			197,410


Income before income taxes		2,193			3,991			6,631			6,356
Provision for income taxes		124			1,597			327			3,124

Net income	$	2,069		$	2,394		$	6,304		$	3,232


Net income per share:
Basic and diluted	$	0.04		$	0.05		$	0.13		$	0.07


Number of shares used to calculate net income per share:
Basic		47,994			47,673			47,943			47,662

Diluted		48,637			48,865			48,699			49,030

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except per share data)


	March 31,			June 30,
	2010			2009
	(Unaudited)
ASSETS
Fixed maturities, available-for-sale at fair value (amortized cost of $183,013 and $140,849, respectively)	$	188,145		$	140,311
Cash and cash equivalents		32,531			77,201
Premiums and fees receivable, net of allowance of $376 and $419		49,777			45,309
Other assets		8,905			11,866
Property and equipment, net		3,662			3,921
Deferred acquisition costs		4,255			3,896
Goodwill		70,092			70,092
Identifiable intangible assets		6,360			6,360

TOTAL ASSETS	$	363,727		$	358,956


LIABILITIES AND STOCKHOLDERS’ EQUITY
Loss and loss adjustment expense reserves	$	76,183		$	83,973
Unearned premiums and fees		62,499			57,350
Debentures payable		41,240			41,240
Other liabilities		11,092			16,537

Total liabilities		191,014			199,100


Stockholders’ equity:
Preferred stock, $.01 par value, 10,000 shares authorized		—			—
Common stock, $.01 par value, 75,000 shares authorized; 48,489 and 48,312 shares issued and outstanding, respectively		485			483
Additional paid-in capital		465,601			464,720
Accumulated other comprehensive income (loss)		5,132			(538	)
Accumulated deficit		(298,505	)		(304,809	)

Total stockholders’ equity		172,713			159,856

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	363,727		$	358,956

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data
(Unaudited)

GROSS PREMIUMS EARNED BY STATE


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2010		2009		2010		2009
Premiums earned:
Georgia	$	9,918	$	12,273	$	30,780	$	38,045
Texas		6,233		6,459		17,858		19,593
Illinois		6,076		6,736		18,482		20,923
Florida		5,307		6,382		15,502		20,194
Alabama		4,727		5,845		14,645		18,305
Ohio		3,223		3,182		9,085		9,815
Tennessee		2,925		3,650		8,883		11,865
South Carolina		2,847		4,219		8,712		14,160
Pennsylvania		2,569		2,883		7,998		8,455
Indiana		1,266		1,359		3,699		4,221
Missouri		834		939		2,443		3,023
Mississippi		726		918		2,230		2,907

Total premiums earned	$	46,651	$	54,845	$	140,317	$	171,506

COMBINED RATIOS (INSURANCE OPERATIONS)


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2010			2009			2010			2009
Loss and loss adjustment expense		68.4	%		71.0	%		67.6	%		70.1	%
Expense		27.1	%		25.3	%		27.1	%		23.9	%

Combined		95.5	%		96.3	%		94.7	%		94.0	%

POLICIES IN FORCE


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2010		2009		2010		2009
Policies in force — beginning of period		147,090		159,557		158,222		194,079
Net increase (decrease) during period		22,513		14,117		11,381		(20,405	)

Policies in force — end of period		169,603		173,674		169,603		173,674

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data (continued)
(Unaudited)

NUMBER OF RETAIL LOCATIONS

Retail location counts are based upon the date that a location commenced or ceased writing business.


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2010			2009			2010			2009

Retail locations — beginning of period		409			424			418			431
Opened		—			—			—			1
Closed		(4	)		(5	)		(13	)		(13	)

Retail locations — end of period		405			419			405			419

RETAIL LOCATIONS BY STATE


	March 31,				December 31,				June 30,
	2010		2009		2009		2008		2009		2008

Alabama		25		25		25		25		25		25
Florida		34		39		34		39		39		40
Georgia		61		61		61		61		61		61
Illinois		75		80		76		81		78		80
Indiana		18		18		18		18		18		19
Mississippi		8		8		8		8		8		8
Missouri		12		12		12		12		12		14
Ohio		27		27		27		28		27		29
Pennsylvania		17		17		17		18		17		19
South Carolina		26		27		27		27		27		28
Tennessee		19		20		19		20		20		20
Texas		83		85		85		87		86		88

Total		405		419		409		424		418		431