Press Release - MAY 29, 2009

A.M. Best Revises Outlook to Positive for GeoVera Insurance Group


CONTACTS:
 
Analyst(s)
Kenneth Tappen
(908) 439-2200, ext. 5248
kenneth.tappen@ambest.com

Jeffrey Mango, CPA
(908) 439-2200 ext. 5204
jeffrey.mango@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. - MAY 29, 2009
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of GeoVera Insurance Group (GeoVera) (Fairfield, CA) and its property/casualty members. (See below for a detailed list of companies and ratings.)

The ratings and outlook reflect GeoVera's excellent capitalization, moderate underwriting leverage and management's experience in its market segment. Profitable underwriting performance, combined with solid investment income and underwriting fee income, has improved the group's capital position. In addition, GeoVera maintains a moderate underwriting leverage position due to prudent risk management efforts, which have further strengthened risk-adjusted capital. The revised outlook also reflects A.M. Best's expectation that the group will continue to produce profitable underwriting results, while maintaining excellent risk-adjusted capitalization.

Partially offsetting these positive characteristics is GeoVera's geographic concentration of business in catastrophe-prone areas, high gross catastrophe leverage and significant reinsurance dependence. Although GeoVera concentrates all underwriting on providing coverage in catastrophe-prone areas, it combines an established catastrophe-modeled and web-based quoting and binding system to ensure proper pricing with an extensive catastrophe reinsurance program to mitigate its exposure. However, GeoVera maintains high gross catastrophe leverage and is significantly dependent on reinsurance to reduce this exposure to a manageable level on a net basis. Furthermore, GeoVera has paid stockholder dividends to its parent in recent years, which resulted in a decline in surplus in 2008 and tempered surplus growth in 2007.

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for GeoVera Insurance Group and its following property/casualty members:

- GeoVera Insurance Company

- GeoVera Specialty Insurance Company

- Pacific Select Property Insurance Company

- GeoVera Re Ltd.


For Best's 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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