exv99

Exhibit 99

First Acceptance Corporation Reports Operating Results for the Second Quarter and Six Months Ended December 31, 2010

NASHVILLE, TN, February 7, 2011 — First Acceptance Corporation (NYSE: FAC) today reported its financial results for the second quarter and six months ended December 31, 2010 of its fiscal year ending June 30, 2011.

Operating Results

Revenues for the three months ended December 31, 2010 were $51.7 million, compared with $53.8 million for the same period in fiscal year 2010. Loss before income taxes for the three months ended December 31, 2010 was $2.0 million, compared with income before income taxes of $1.6 million in the same period in fiscal year 2010. Net loss for the three months ended December 31, 2010 was $2.1 million, or $0.04 per share on a diluted basis, compared with net income of $1.5 million, or $0.03 per share on a diluted basis, for the same period in fiscal year 2010.

Revenues for the six months ended December 31, 2010 were $104.8 million, compared with $111.1 million for the same period in fiscal year 2010. Loss before income taxes for the six months ended December 31, 2010 was $1.5 million, compared with income before income taxes of $4.4 million in the same period in fiscal year 2010. Net loss for the six months ended December 31, 2010 was $1.7 million, or $0.04 per share on a diluted basis, compared with net income of $4.2 million, or $0.09 per share on a diluted basis, for the same period in fiscal year 2010.

Premiums earned for the three months ended December 31, 2010 were $42.5 million, compared with $45.2 million for the same period in fiscal year 2010. Premiums earned for the six months ended December 31, 2010 were $86.5 million, compared with $93.7 million for the same period in fiscal year 2010. The declines in premiums earned were primarily due to a decline in the number of policies in force (“PIF”) from 147,090 at December 31, 2009 to 144,582 at December 31, 2010, which was impacted by the closure of underperforming stores. At December 31, 2010, we operated 393 stores, compared with 409 stores at December 31, 2009. Premiums earned were also negatively impacted by an increase in the percentage of PIF with liability-only coverage, as well as a decline in newly-issued PIF at December 31, 2010 compared with the same date in the prior year. The number of PIF sold through our open stores increased from 139,453 at December 31, 2009 to 140,547 at December 31, 2010.

Loss and Loss Adjustment Expense Ratio. The loss and loss adjustment expense ratio was 78.4 percent for the three months ended December 31, 2010, compared with 66.1 percent for the three months ended December 31, 2009. The loss and loss adjustment expense ratio was 75.6 percent for the six months ended December 31, 2010 compared with 67.3 percent for the six months ended December 31, 2009. We experienced unfavorable development related to prior periods of $3.1 million for the three months ended December 31, 2010, compared with favorable development of $2.4 million for the three months ended December 31, 2009. For the six months ended December 31, 2010, we experienced unfavorable development related to prior periods of $1.0 million, compared with favorable development of $6.1 million for the six months ended December 31, 2009. The unfavorable development for the three and six months ended December

31, 2010 was primarily due to higher than anticipated paid severity on accidents occurring during the first six months of calendar year 2010. The higher than anticipated paid severity was primarily related to no-fault (or Personal Injury Protection) losses in Florida and Bodily Injury losses in Florida and Georgia.

Excluding the development related to prior periods, the loss and loss adjustment expense ratios for the three months ended December 31, 2010 and 2009 were 71.1 percent and 71.4 percent, respectively. Excluding the development related to prior periods, the loss and loss adjustment expense ratios for the six months ended December 31, 2010 and 2009 were 74.5 percent and 73.8 percent, respectively. The increase for the six months ended December 31, 2010 compared with the same period in the prior year was due to higher loss adjustment expense resulting from (i) the increase in the percentage of claims related to liability-only coverage policies and (ii) increased investigative efforts with regards to no-fault claims in Florida.

We are in the process of implementing a new multivariate pricing program in all states in which we conduct business. We believe that this new pricing program will provide us with greater pricing segmentation and improve our pricing relative to the risk we are insuring. In connection with this new pricing program and specific to the states mentioned above, we filed new rates in Florida, which became effective in November 2010, and in Georgia, which are currently awaiting regulatory approval.

Expense Ratio. The expense ratio decreased from 28.2 percent for the three months ended December 31, 2009 to 26.6 percent for the same period in the current fiscal year. The expense ratio decreased from 27.1 percent for the six months ended December 31, 2009 to 26.1 percent for the same period in the current fiscal year. The year-over-year decreases in the expense ratio were primarily due to the reduction in fixed costs and savings realized from the closure of underperforming stores.

Combined Ratio. The combined ratio was 105.0 percent for the three months ended December 31, 2010, compared with 94.3 percent for the same period in fiscal year 2010. The combined ratio was 101.7 percent for the six months ended December 31, 2010, compared with 94.4 percent for the same period in fiscal year 2010.

About First Acceptance Corporation

Our primary focus is the selling, servicing and underwriting of non-standard personal 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 December 31, 2010, we leased and operated 393 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, 2010 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						Six Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Revenues:
Premiums earned	$	42,520		$	45,199		$	86,454		$	93,666
Commission and fee income		7,065			6,966			14,341			13,920
Investment income		2,124			2,033			4,261			3,946
Net realized losses on investments, available-for-sale		(32	)		(423	)		(256	)		(445	)

		51,677			53,775			104,800			111,087


Costs and expenses:
Losses and loss adjustment expenses		33,338			29,871			65,395			63,024
Insurance operating expenses		18,393			19,711			36,901			39,281
Other operating expenses		291			750			678			1,023
Litigation settlement		(5	)		102			(5	)		(279	)
Stock-based compensation		173			272			365			655
Depreciation and amortization		465			500			941			964
Interest expense		991			992			1,982			1,981

		53,646			52,198			106,257			106,649


Income (loss) before income taxes		(1,969	)		1,577			(1,457	)		4,438

Provision for income taxes		121			102			241			203

Net income (loss)	$	(2,090	)	$	1,475		$	(1,698	)	$	4,235


Net income (loss) per share:
Basic and diluted	$	(0.04	)	$	0.03		$	(0.04	)	$	0.09


Number of shares used to calculate net income (loss) per share:
Basic		48,138			47,960			48,087			47,919

Diluted		48,138			48,387			48,087			48,348

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


	December 31,			June 30,
	2010			2010
	(Unaudited)
ASSETS
Investments, available-for-sale at fair value (amortized cost of $181,097 and $187,907, respectively)	$	190,022		$	196,550
Cash and cash equivalents		29,078			26,184
Premiums and fees receivable, net of allowance of $369 and $418		39,469			41,276
Other assets		8,938			8,733
Property and equipment, net		2,860			3,524
Deferred acquisition costs		3,641			3,623
Goodwill		70,092			70,092
Identifiable intangible assets		6,360			6,360

TOTAL ASSETS	$	350,460		$	356,342


LIABILITIES AND STOCKHOLDERS’ EQUITY
Loss and loss adjustment expense reserves	$	70,295		$	73,198
Unearned premiums and fees		49,566			52,563
Debentures payable		41,240			41,240
Other liabilities		13,189			12,151

Total liabilities		174,290			179,152

Stockholders’ equity:
Preferred stock, $.01 par value, 10,000 shares authorized		—			—
Common stock, $.01 par value, 75,000 shares authorized; 48,532 and 48,509 shares issued and outstanding, respectively		485			485
Additional paid-in capital		466,227			465,831
Accumulated other comprehensive income		8,925			8,643
Accumulated deficit		(299,467	)		(297,769	)

Total stockholders’ equity		176,170			177,190

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	350,460		$	356,342

FIRST ACCEPTANCE CORPORATION AND SUBSIDIARIES
Supplemental Data
(Unaudited)

PREMIUMS EARNED BY STATE


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2010		2009		2010		2009
Premiums earned:
Georgia	$	9,343	$	9,960	$	18,934	$	20,861
Illinois		5,774		6,075		11,580		12,406
Texas		5,708		5,714		11,617		11,626
Florida		4,628		4,933		9,446		10,194
Alabama		4,126		4,709		8,513		9,918
Ohio		3,265		2,909		6,490		5,862
Tennessee		2,582		2,855		5,295		5,958
South Carolina		2,351		2,727		4,851		5,866
Pennsylvania		2,302		2,610		4,719		5,429
Indiana		1,121		1,211		2,265		2,433
Missouri		684		782		1,422		1,609
Mississippi		636		714		1,322		1,504

Total premiums earned	$	42,520	$	45,199	$	86,454	$	93,666

COMBINED RATIOS (INSURANCE OPERATIONS)


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Loss and loss adjustment expense		78.4	%		66.1	%		75.6	%		67.3	%
Expense		26.6	%		28.2	%		26.1	%		27.1	%

Combined		105.0	%		94.3	%		101.7	%		94.4	%

POLICIES IN FORCE


	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Policies in force — beginning of period		150,175			152,866			154,655			158,222
Net decrease during period		(5,593	)		(5,776	)		(10,073	)		(11,132	)

Policies in force — end of period		144,582			147,090			144,582			147,090

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

POLICIES IN FORCE (continued)

The following tables present total policies in force (“PIF”) for the insurance operations segregated by policies that were sold through our open and closed retail locations as well as our independent agents. For our retail locations, PIF are further segregated by (i) newly-issued policies and renewal policies and (ii) liability-only or full coverage. Renewal policies are defined as those policies which renewed after completing their full uninterrupted policy term. Newly-issued policies are defined as those policies issued to first-time customers and customers who have reinstated a lapsed or cancelled policy. Liability-only policies are defined as those policies including only bodily injury (or no-fault) and property damage coverages, which are the required coverages in most states. For comparative purposes, the PIF data with respect to closed retail locations for each of the periods presented below includes all retail locations closed as of December 31, 2010.


	December 31,
	2010		2009
Retail locations:
Open retail locations:
New		63,020		63,775
Renewal		77,527		75,678

		140,547		139,453

Closed retail locations:
New		197		2,201
Renewal		1,985		3,143

		2,182		5,344

Independent agents		1,853		2,293

Total policies in force		144,582		147,090


	December 31,
	2010		2009
Retail locations:
Open retail locations:
Liability-only		85,577		82,730
Full coverage		54,970		56,723

		140,547		139,453

Closed retail locations:
Liability-only		1,255		3,263
Full coverage		927		2,081

		2,182		5,344

Independent agents		1,853		2,293

Total policies in force		144,582		147,090

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						Six Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Retail locations — beginning of period		393			415			394			418
Opened		1			—			1			—
Closed		(1	)		(6	)		(2	)		(9	)
Retail locations — end of period		393			409			393			409

RETAIL LOCATIONS BY STATE


	December 31,				September 30,				June 30,
	2010		2009		2010		2009		2010		2009
Alabama		25		25		25		25		25		25
Florida		31		34		31		36		31		39
Georgia		60		61		60		61		60		61
Illinois		73		76		74		78		74		78
Indiana		17		18		17		18		17		18
Mississippi		8		8		8		8		8		8
Missouri		12		12		12		12		12		12
Ohio		27		27		27		27		27		27
Pennsylvania		16		17		16		17		16		17
South Carolina		26		27		26		27		26		27
Tennessee		20		19		19		20		19		20
Texas		78		85		78		86		79		86

Total		393		409		393		415		394		418

SOURCE: First Acceptance Corporation

INVESTOR RELATIONS CONTACT:
Michael J. Bodayle
615.844.2885