Credit General Insurance Company and Credit General Indemnity Company are no longer writing new business, effective immediately. Henry C. Sibley, vice president of underwriting, sent a letter to agents on Sept. 15 stating that: “No new business will be bound, outstanding quotes must be withdrawn. We will be issuing non-renewal notices on all business in accordance with state statutes. We will continue to service the existing book of business until expiration.” Sibley gave the reason for the change as “surplus constraints.”
“Basically, we’ve written more premium than we could comparably cover by our surplus,” Sibley told Insurance Journal. “This is not a California thing—this is a nationwide thing.” Any signs of hope? “We’re looking hard—we hope this is a temporary thing.”
Credit General Indemnity Company is an Ohio-domiciled company that currently markets commercial auto business in California, and workers’ compensation and surety programs in Texas (under the name of Credit General Insurance Company of Texas). CG Indemnity was previously a wholly owned subsidiary of PRS Insurance Group Inc., a Delaware holding company. In 1997, PRS transferred all the outstanding shares of the company to its subsidiary, Credit General Insurance Company.
PRS, which was formerly known as the Phoenix Insurance Group Inc., was incorporated in November 1990. PRS’ product lines include workers’ compensation, specialty truck, contractors’ general liability, surety, multi-peril and agency rent-a-captive programs. In April 1997, PRS sold substantially all the tangible net assets of its two wholly owned personal lines automobile agencies, A-1 General and General Automobile Insurance Services, to Permanent General Assurance Corporation, an unaffiliated carrier.
Both the insurance and the indemnity companies, which previously wrote personal auto business, entered into a reinsurance contract with Permanent General in which Permanent General assumed all remaining interest, obligations, liabilities and benefits associated with all personal auto policies in force as of April 4, 1997.
In June 2000, A.M. Best Company lowered the rating of PRS Insurance Group from “A-” to “B++”. In response to the rating action, PRS issued a statement that: “The Group’s current-year projected growth of approximately 25 percent is in line with past years in which both positive operating income and above average returns were generated. Moreover, this growth is largely due to the migration of an existing book of profitable workers’ compensation business away from a partnering carrier, to reduce front fees and to thereby further increase income.
“The Group continues to move toward issuing smaller policies in its largest line (workers’ compensation) as it intensifies its marketing to smaller customers via the Internet.” In the first half of 2000, PRS initiated litigation against primary reinsurer John Hancock for breach of contract related to its workers’ compensation line.
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