A.M. Best Affirms Credit Ratings of The Progressive Corporation and Its Subsidiaries

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” of the members of Progressive Agency Pool, Progressive Direct Pool and Progressive Commercial Auto Group (collectively known as Progressive). A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of National Continental Insurance Company (National Continental). Additionally, A.M. Best has affirmed the Long-Term ICR of “a” and all Long-Term Issue Credit Ratings (Long-Term IR) of all senior issuances and the preferred stock issuance of the parent holding company, The Progressive Corporation [NYSE: PGR]. Concurrently, A.M. Best has withdrawn the Long-Term IR of “bbb+” of the $1 billion 6.7% junior subordinated debentures due to redemption. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Mayfield Village, OH. (See below for a detailed listing of the companies and ratings.)

The ratings of Progressive Agency Pool reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).

The ratings of Progressive Direct Pool reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, very favorable business profile and appropriate ERM.

The ratings of Progressive Commercial Auto Group reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, infrastructure and technological capabilities afforded as a subsidiary of The Progressive Corporation.

The ratings of National Continental reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, infrastructure and technological capabilities afforded as a subsidiary of The Progressive Corporation.

Progressive’s risk-adjusted capitalization has benefited from long-term, consistently favorable underwriting results, consistent investment income and significant realized and unrealized capital gains in its investment portfolio given the favorable performance of equity markets in more recent years. Progressive continues to benefit from a seasoned and stable management team, brand name recognition, a multiple channel distribution platform, and innovative underwriting and claims handling technology. In addition, Progressive’s direct operations have continued to witness favorable growth, reflective of its widespread and growing brand recognition. Progressive’s auto results have outperformed competitors in recent years despite the impacts of frequency and severity throughout the automobile insurance industry, due mainly to its sophisticated data mining and pricing techniques.

These positive rating factors are offset partially by Progressive’s high underwriting leverage relative to industry averages. However, Progressive has operated historically with elevated underwriting leverage while consistently generating favorable underwriting results.

Progressive’s debt-to-adjusted capitalization remains within A.M. Best’s expectation consistent with the holding company’s current rating level. As of Dec. 31, 2017, the most recently available year-end data, The Progressive Corporation, along with its subsidiaries, had $38.7 billion in total assets and approximately $9.3 billion in total shareholder equity.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” have been affirmed for the following members of Progressive Agency Pool:

Progressive Casualty Insurance Company
Progressive Northern Insurance Company
Progressive Northwestern Insurance Company
Progressive Specialty Insurance Company
Progressive Preferred Insurance Company
Progressive Classic Insurance Company
Progressive American Insurance Company
Progressive Gulf Insurance Company
Progressive Bayside Insurance Company
Progressive Mountain Insurance Company
Progressive Southeastern Insurance Company
Progressive Hawaii Insurance Corp.
Progressive Michigan Insurance Company
Progressive Security Insurance Company
Progressive West Insurance Company
Drive New Jersey Insurance Company
Progressive County Mutual Insurance Company

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” have been affirmed for the following members of Progressive Direct Pool:

Progressive Direct Insurance Company
Progressive Marathon Insurance Company
Progressive Max Insurance Company
Progressive Advanced Insurance Company
Progressive Universal Insurance Company
Progressive Premier Insurance Company of Illinois
Progressive Paloverde Insurance Company
Mountain Laurel Assurance Company
Progressive Select Insurance Company
Progressive Garden State Insurance Company

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” have been affirmed for the following members of Progressive Commercial Auto Group:

Artisan & Truckers Casualty Company
Progressive Express Insurance Company
United Financial Casualty Company

The FSR of A (Excellent) and the Long-Term ICR of “a+” have been affirmed for National Continental Insurance Company.

The Long-Term ICR of “a” and the following Long-Term IRs of The Progressive Corporation have been affirmed:

The Progressive Corporation—

-- “a” on $500 million 3.75% senior unsecured notes, due 2021

-- “a” on $500 million 2.45% senior unsecured notes, due 2027

-- “a” on $300 million 6.625% senior unsecured notes, due 2029

-- “a” on $400 million 6.250% senior unsecured notes, due 2032

-- “a” on $350 million 4.35% senior unsecured debentures, due 2044

-- “a” on $400 million 3.7% senior unsecured notes, due 2045

-- “a” on $850 million 4.125% senior unsecured notes, due 2047

-- “a” on $600 million 4.2% senior unsecured notes, due 2048

-- “bbb+” on $500 million 5.375% cumulative preferred stock

The Long-Term IR of “bbb+” has been withdrawn for the following due to redemption:

-- “bbb+” on $1 billion 6.7% junior subordinated debentures, due 2067

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

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Greg Williams, +1 908-439-2200, ext. 5815

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Christopher Sharkey, +1 908-439-2200, ext. 5159

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Jim Peavy, +1 908-439-2200, ext. 5644

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