AM Best

A.M. Best Assigns Ratings to The General Automobile Insurance Company; Affirms Ratings of Permanent General Insurance Group


Charles M. Huber

Senior Financial Analyst

(908) 439-2200, ext. 5122

Joseph A. Burtone

Assistant Vice President

(908) 439-2200, ext. 5125
Rachelle Morrow

Senior Manager, Public Relations

(908) 439-2200, ext. 5378

Jim Peavy

Assistant Vice President, Public Relations

(908) 439-2200, ext. 5644


OLDWICK, N.J. - NOVEMBER 10, 2010 12:00 AM (EST)
A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of "a-" to The General Automobile Insurance Company (GAIC), a wholly owned subsidiary of Permanent General Assurance Corporation of Ohio (PGACOH). The outlook assigned to these ratings is stable.

In addition, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of the Permanent General Insurance Group (the Group). The ratings apply to Permanent General Assurance Corporation (PGAC) and its affiliate, PGACOH, which operate through an inter-company pooling arrangement. All companies are domiciled in Valley View, OH. The outlook on these ratings remains stable.

The ratings for GAIC are reflective of its supportive capitalization and the benefits that it derives from participating in an intercompany pooling agreement with PGAC and PGACOH. GAIC will function as the Group's vehicle for growth through direct distribution by internet and telephone sales. Aggressive premium growth is projected, and future earnings potential may be adversely impacted if growth is achieved through inadequate pricing during the current soft market. These concerns are partially mitigated by the Group's expertise in the non-standard auto lines and management's efforts to improve earnings.

The ratings for the Group are based on its strong capitalization and sound balance sheet liquidity, better than average earnings, diverse distribution network and strong internal management team. These positive ratings factors are partially offset by the Group's limited business profile in the non-standard automobile market, above average underwriting leverage and aggressive growth during soft market conditions. In addition, the Group is a source of dividend income to the upstream holding company to service its debt and pay dividends to its shareholders. Capitalization may be adversely impacted if premium and loss reserve growth are not supported by a proportional increase in surplus.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; and "A.M. Best's Ratings & the Treatment of Debt." Methodologies can be found at

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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