DBRS Assigns Provisional Ratings to Flagship Credit Auto Trust 2019-1

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes of notes to be issued by Flagship Credit Auto Trust 2019-1 (the Issuer):

-- $166,780,000 Class A Notes at AAA (sf)
-- $22,290,000 Class B Notes at AA (sf)
-- $29,500,000 Class C Notes at A (sf)
-- $23,860,000 Class D Notes at BBB (sf)
-- $17,570,000 Class E Notes at BB (sf)

The provisional ratings are based on a review by DBRS of the following analytical considerations:

(1) Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization (OC), subordination, amounts held in the reserve fund and excess spread. Credit enhancement levels are sufficient to support the DBRS-projected cumulative net loss assumption under various stress scenarios.

(2) The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the ratings address the timely payment of interest on a monthly basis and the payment of principal by the legal final maturity date.

(3) The consistent operational history of Flagship Credit Acceptance LLC (Flagship or the Company) and the strength of the overall Company and its management team.
-- The Flagship senior management team has considerable experience and a successful track record within the auto finance industry.

(4) The capabilities of Flagship with regard to originations, underwriting and servicing.
-- DBRS has performed an operational review of Flagship and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.

(5) DBRS exclusively used the static pool approach because the Company has enough data to generate sufficient amount of static pool projected losses.
-- DBRS was conservative in the loss forecast analysis that was performed on the static pool data and no seasoning was given to this collateral.

(6) The legal structure and presence of legal opinions that will address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with Flagship, that the trust has a valid first-priority security interest in the assets and the consistency with the DBRS “Legal Criteria for U.S. Structured Finance.”

Flagship is an independent full-service automotive financing and servicing company that provides (1) financing to borrowers who do not typically have access to prime credit-lending terms for the purchase of late-model vehicles and (2) refinancing of existing automotive financing.

The rating on the Class A Notes reflects the 37.40% of initial hard credit enhancement provided by the subordinated notes in the pool (35.55%), the Reserve Account (1.00%) and OC (0.85%). The ratings on the Class B, Class C, Class D and Class E Notes reflect 28.90%, 17.65%, 8.55% and 1.85% of initial hard credit enhancement, respectively. Additional credit support may be provided from excess spread available in the structure.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Retail Auto Loan Securitizations, which can be found on dbrs.com under Methodologies & Criteria.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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