A.M. Best Removes From Under Review and Affirms Ratings of Palisades Group

A.M. Best Co. has removed from under review with negativeimplications and affirmed the financial strength rating (FSR) of B++(Good) and the issuer credit ratings (ICR) of “bbb” of the PalisadesGroup (Palisades) (Berkeley Heights, NJ) and its members. Theratings have been assigned a stable outlook.

Concurrently, A.M. Best has removed from under review with negativeimplications and affirmed the financial strength rating FSR of B++(Good) and ICRs of “bbb” of the High Point companies (RedBank, NJ). The outlook assigned to these ratings is stable.

Additionally, A.M. Best has removed from under review with negativeimplications and affirmed the ICR of “bb” on National AtlanticHoldings Corporation. Subsequently, A.M. Best has withdrawn therating and assigned an “nr” as the company has filed for dissolution.

The ratings reflect Palisades Group’s adequate risk-adjustedcapitalization, favorable operating earnings and well-established marketposition as a leading writer of personal lines business in New Jersey.Partially offsetting these positive rating factors are the group’selevated underwriting leverage position and business concentration inNew Jersey. This concentration exposes the group to potentialcatastrophic weather-related losses, unfavorable judicial decisions,regulatory actions and increasing competitive pressures.

The group’s positive operating income over the latest five-year periodwas generated as a direct result of its steady investment income,focused operating strategy and knowledge of local market conditions. Theoutlook reflects the group’s level of risk-adjusted capitalization,operating income and position within the New Jersey insurance market.

The ratings also consider the August 1, 2008 acquisition of ProformanceInsurance Company, a New Jersey-domiciled, personal lines carrier(renamed Palisades Property Casualty Insurance Company). Upon closing,Palisades streamlined claim handling processes and strengthened loss andLAE reserves. As a result of this transaction, Palisades will gainincreased market share, become the largest independent agent carrier inNew Jersey, create expense synergies and strengthen its competitiveposition in the state.

The Palisades Group is comprised of Palisades Safety and InsuranceAssociation, the lead company, and its following wholly-ownedsubsidiaries:

Palisades Insurance Company

Palisades Property and Casualty Insurance Company

High Point Preferred Insurance Company

High Point Property and Casualty Insurance Company

High Point Safety and Insurance Company

Twin Lights Insurance Company

Teachers Auto Insurance Company of New Jersey.

For Best’s Ratings, an overview of the rating process and ratingmethodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service creditrating organization dedicated to serving the financial and health careservice industries, including insurance companies, banks, hospitals andhealth care system providers. For more information, visit www.ambest.com.