In this study, a magnetic casing encapsulating a generator is used to improve the electromagnetic and power characteristics of the generator. Two types of two-pole AC generators are proposed: one is a bare-bonded (NC) type and the other is an iron-based amorphous alloy material covering the generator casing. In this study, Fe-Si-B amorphous thin strips were annealed between 300 and 380 °C and soaked for 60 min to observe and analyze the structural changes and the evolution of properties under different temperature conditions. After the thin strip is annealed at 400 °C, α-Fe dendrites begin to appear, and at 450 °C, a large number of α-Fe dendrites are formed. The demagnetization rate of the permanent magnet area near the bottom of the pole piece is the highest for the generator with an amorphous alloy shell because the magnetic flux leakage from the side frame of the pole piece changes the magnetic flux path, thereby affecting the demagnetization performance. In this study, three amorphous alloys, HB1-M, HB1, and SA1, were used as the cladding permanent magnet generator shell, and annealing and non-annealing procedures were conducted to observe the influence on the magnetic power of the generator. The magnetic flux on the surface of the amorphous shell was measured by a magnetic fluxmeter. For experiments with an amorphous shell, the results show that the annealed center point magnetic flux densities were approximately HB1-M (15 mT), HB1 (12 mT), and SA1 (10 mT), and the marginal non-annealed amorphous thin strip could reach ∼7–5 mT. The measured generator harmonic component of SA1 is higher than the voltage and current harmonics, reflecting that the magnetization direction of the magnetic shell in the demagnetization region is covered by the magnetic flux density. Because of central flame annealing, the magnetic shell is paramagnetic, and it helps to reduce the noise by at least 5 dB. The generator current harmonic characteristic of the HB1-M material is smaller than that of the HB1 and SA1 materials. In this study, a composite amorphous material was used to cover the generator casing; it was verified that HB1-M + HB1 + SA1 has the lowest noise characteristics for the generator. The generator noise of the composited material (HB1-M + HB1 + SA1) can be reduced to below 69 dB, which is ∼7–9 dB lower than that of a single amorphous material.