NEW YORK — Fitch Ratings recently reported that seasonal weakness pushed up U.S. prime auto loan asset-backed securities' losses slightly higher in January, compared to prior months.

However, the company did share some good news. Despite high unemployment and pressure on loss frequency, January losses were more than 20 percent lower on an annual basis for the third consecutive month.

"Tax refunds and credits will support performance for the remainder of this quarter," explained director Benjamin Tano.

Apparently, one of the factors bolstering performance is the mitigating effects of stronger used-vehicle values. These values result in higher recovery rates on repossessed vehicles and lower loss severity.

"Tighter underwriting, including improved credit quality of the 2009 securitization vintage, is also resulting in loss levels that are lower than both 2007 and 2008 vintages," officials highlighted.

More specifically, Fitch's prime 60-day delinquency index inched up to 0.77 percent in January, up 8.5 percent from December. Also, on an annual basis, January marked the third consecutive double-digit drop at 11.5 percent lower than the same period in 2009.

Annualized net losses came in at 1.61 percent in January, a 5.9-percent monthly climb. However, officials said these were almost 28 percent below the level in 2009. In January of 2009, the index hit a record high of 2.23 percent.

Fitch officials indicated that they remain focused on the loss frequency level due to its strong correlation to unemployment.

Despite a January drop in unemployment, "the poor state of the job market will continue to pressure frequency and overall loss rates this year,' noted John Bella, of Fitch.

Fitch noted that its auto loan ABS indices track the performance of about $55.3 billion in transactions issued from more than 100 transactions. Of this total, prime represents about $45.7 billion, or 83 percent, from 77 transactions.