On Thursday, A.M. Best Co. affirmed a stable outlook for Hilltop Holdings Inc. ( HTH ) by assigning it an issuer credit rating (ICR) of “bbb+". The rating agency also upgraded the financial strength rating (FSR) of American Summit Insurance Company, an insurance subsidiary of Hilltop, to “A" from “A-" and ICR to “a" from “a-". The ratings for American Summit reflect a stable outlook that is also favorable for Hilltop. The company’s strong balance sheet that remains fairly liquid while mitigating financial risk along with its extensive geographic exposure and better-than-expected underwriting performance provides an organized and structured growth strategy for the company. However, this is partially offset by high underwriting expense ratio and low investment yields. We believe that Hilltop will be able to resolve these limitations once the global economy recovers to a stable position. Additionally, A.M. Best reiterated the FSR of “A" and ICR of “a+" on National Lloyds Insurance Company, an affiliate of American Summit and another subsidiary of Hilltop. These ratings again reflect a healthy operating performance, a risk-adjusted balance sheet and strong capital leverage. Besides, the company’s firm grip on the local personal property insurance market adds value to Hilltop’s overall business in its operating areas. However, these bull factors are partially offset by National Lloyds’ exposure to the weather-risk prone areas such as Texas, which increases the company’s claim ratios and underwriting expense ratios as well. Earnings Recap For full year 2009, Hilltop trimmed its loss per share to 22 cents from 58 cents in 2008. Total revenues increased 25.7% year-over-year to $128.8 million, while total operating expenses decreased 8.6% year-over-year to $132.3 million. Expense ratio remained almost stable at 35.7% versus 35.6% in 2008. As of December 31, 2009, the company reported $1.0 billion in assets and $784 million in stockholders’ equity. Over the last couple of years, Hilltop has been attempting to reduce the size of its balance sheet in order to gain capital leverage for facilitating some sound acquisitions, especially of some distressed banks at a good bargain value, thereby utilizing the advantage of the current sluggish market. On Thursday, the shares of Hilltop closed at $11.63, down 0.4%, on the New York Stock Exchange. Read the full analyst report on "HTH" Zacks Investment Research