Press Release - DECEMBER 15, 2009

A.M. Best Affirms Ratings of Direct General Corporation's Operating Subsidiaries


CONTACTS:
 
Analyst(s)
Maurice Thomas
(908) 439-2200, ext. 5794
maurice.thomas@ambest.com

Joseph Burtone
(908) 439-2200, ext. 5125
joseph.burtone@ambest.com

Public Relations
Jim Peavy
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Rachelle Morrow
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK, N.J. - DECEMBER 15, 2009
A.M. Best Co. has affirmed the financial strength rating (FSR) of B (Fair) and issuer credit ratings (ICR) of "bb+" of Direct General Corporation's (Direct General) lead operating company, Direct General Insurance Company (DGIC) (Indianapolis, IN) and its wholly-owned subsidiary, Direct General Insurance Company of Mississippi (Jackson, MS), as well as its affiliate, Direct Insurance Company (Nashville, TN). Concurrently, A.M. Best has affirmed the FSRs of B (Fair) and upgraded the ICRs to "bb+" from "bb" of Direct General's remaining property/casualty affiliates, Direct General Insurance Company of Louisiana (Baton Rouge, LA) and Direct National Insurance Company (Little Rock, AR). The outlook for all ratings is stable.

The rating affirmations are reflective of Direct General's elevated underwriting leverage and limited business profile. These negative rating factors are partially offset by its adequate risk-adjusted capitalization, low cost operations and established position in the non-standard automobile marketplace.

The ICR upgrades of Direct General Insurance Company of Louisiana and Direct National Insurance Company reflect rating enhancement due to their strategic importance to Direct General's overall business strategy and profile. A.M. Best acknowledges that these companies are fully integrated into the organization's strategic plan and operate under the same management, business profile, technology and investment platform.

Additionally, A.M. Best has affirmed the FSR of B (Fair) and ICR of "bb+" of Direct General Life Insurance Company (DGLIC) (Aiken, SC). The outlook for both ratings is stable.

The ratings of DGLIC recognize its mono-line term life insurance product offering, dependence on the property/casualty agent force to sell life insurance and dividend service requirements from Direct General. Offsetting these factors is the adequate level of capitalization and positive trends in premium growth and operating earnings within DGLIC.

In addition, A.M. Best has withdrawn the FSR of B (Fair) and ICR of "bb+" of Direct Life Insurance Company (Direct Life) (Griffin, GA) and assigned an NR-3 (Rating Procedure Inapplicable) to the FSR and an "nr" to the ICR. These withdrawals are based on Direct Life having no active business issued, and its remaining policies in force will run off by year-end 2009.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.

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