Ford motor captive gets Excellent rating

Ratings agency AM Best has affirmed the financial strength rating of A (Excellent) of The American Road Insurance Company (TARIC), the Michigan-based single-parent captive insurer owned by Ford Credit, a subsidiary of Ford Motor Company.

TARIC provides primarily automobile floor plan collateral protection, inland marine, extended service business and commercial auto liability coverages to Ford and its subsidiaries in the US and Canada.

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

AM Best views the efficiencies gained by ready and immediate access to business as a strength. However, it sees TARIC’s reliance on its parent for premium revenues making the company susceptible to changes in macroeconomic conditions and market forces that impact the automobile industry.

Significant deterioration in operating performance or risk-adjusted capitalisation may result in downward movement in the ratings and/or outlooks. In addition, negative rating action may also occur if the credit profile of Ford deteriorates.