The rating action reflects the weakened financial condition of the ultimate parent company, General Motors Corporation (GM), driven by long-standing competitive pressures that are increasingly impinging on its financial performance. The rating downgrade reflects the potential burden on the insurance operating subsidiaries to support GM. Further, a portion of GMAC's business, extended warranty and non-standard automobile insurance remains exposed to downturns in economic conditions.
A.M. Best will continue to monitor GM's results and financial condition. Additional deterioration at the parent level could result in further rating action at the insurance group.
Despite these negative factors, the A- (Excellent) rating of GMAC reflects its excellent stand-alone capitalization, improved operating leverage and consistently solid operating results. GMAC has a well-established market presence as one of the top 35 P&C insurers in the United States and a leading position as a provider of extended service contracts. These positive rating attributes are derived from GMAC management's focused operating strategy, extensive product knowledge, diversified product offerings and multiple distribution channels. The group has consistently generated capital through operating earnings, which is reflective of disciplined underwriting, an efficient expense structure and a steady stream of investment income.
Through the affiliation with GM, the group benefits from the extensive penetration of GM dealerships, as well as GMAC's brand name recognition, widespread marketing network and direct sales support. In addition, the ratings reflect the group's diversification outside traditional GM-related businesses, particularly its well-established presence in the non-standard automobile market through the GMAC personal lines business.
The financial strength rating has been downgraded to A- (Excellent) from A (Excellent), and issuer credit ratings of "a-" have been assigned to the following property/casualty affiliates of the GMAC Insurance Group:
-- Motors Insurance Corporation
-- CIM Insurance Corporation
-- GMAC Direct Insurance Company
-- GMAC Insurance Company Online, Inc.
-- Integon Casualty Insurance Company
-- Integon General Insurance Corporation
-- Integon Indemnity Corporation
-- Integon National Insurance Company
-- Integon Preferred Insurance Company
-- Integon Specialty Insurance Company
-- MIC General Insurance Corporation
-- MIC Property and Casualty Insurance Corporation
-- National General Assurance Company
-- National General Insurance Company
-- New South Insurance Company
For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.