OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best confirmed the American Road Insurance Company (TARIC) (Dearborn, MI) long-term issuer credit rating of “A” (excellent). The outlook for these credit ratings (ratings) is stable.
The ratings reflect the strength of TARIC’s balance sheet, which AM Best considers to be the strongest, as well as its adequate operational performance, neutral business profile and appropriate management of corporate risks.
TARIC is part of an insurance holding company system 100% 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].
Although TARIC holds a general business license, it functions much like a captive, offering a variety of coverages directly to Ford or Ford Credit, mainly collateral protection automobile floor plan, inland navigation, contractual liability insurance for extended service contracts, direct commercial automobile liability, general liability and bonding. In addition to these operational synergies, TARIC also benefits from efficiency gains thanks to its immediate access to business and its low acquisition costs.
The stable outlook reflects AM Best’s expectations that the fundamentals of TARIC’s rating will remain unchanged over the medium term despite some expected business contraction from COVID-19. The risk-adjusted capitalization is expected to remain at the highest level, as measured by Best’s capital adequacy ratio (BCAR), due to the prudent management of the company’s capital. While the outlook also takes into account some of the most pronounced challenges associated with the pandemic, such as semiconductor supply shortages and continued disruption of unit production throughout the remainder of the year and through to the start. from 2022, operational performance should remain profitable. In addition, innovation in all operational phases and business risk management are aligned with Ford’s business objectives, which will continue to benefit TARIC.
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