AM Best Affirms Credit Ratings of The Progressive Corporation and Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of the members of The Progressive Corporation (Progressive) (Mayfield Village, OH) [NYSE: PGR]. Additionally, AM Best has affirmed the Long-Term ICR of “a” (Excellent) of Progressive, the parent holding company, and all of the Long-Term Issue Credit Ratings (Long-Term IR) of Progressive’s senior and preferred stock issuances. Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of Protective Insurance Company (Carmel, IN) and its wholly owned subsidiaries, collectively known as Protective Insurance Corporation Group (Protective). AM Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of National Continental Insurance Company (National Continental) (Bohemia, NY). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

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

Progressive’s risk-adjusted capitalization, considered strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), traditionally benefits from consistently favorable underwriting results and reliable levels of investment income. These results consistently leverage an efficient multi-channel distribution platform and innovative underwriting and claims-handling technology; the latter exemplified by the continued development and incorporation of usage-based technologies. In addition, Progressive continues to experience strong premium growth, reflective of its widespread brand recognition and sophisticated pricing algorithms. Based on its five-year combined ratio average, Progressive continues to outperform AM Best’s private passenger standard auto composite despite the impact of inflation and supply chain issues throughout the automobile insurance industry.

Despite profitability in core operations, the group reported a $2.1 billion comprehensive loss as indicated in its December earnings release, primarily driven by unrealized losses related to fixed maturities. This loss drove an estimated 12.8% decline in GAAP equity year over year. While the losses have been influenced by rising interest rates, which lower the market value of held bonds, AM Best does not expect Progressive to sell a material amount of bonds at a loss given its solid liquidity and operating cash positions. While loss reserve development patterns over the medium term have been mixed, trends have improved leading to favorable overall development in 2022. One-year loss reserve development has not had a significant impact on the combined ratio. Furthermore, Progressive maintains high underwriting leverage relative to industry averages; however, it has done so traditionally while consistently producing favorable underwriting results with low levels of volatility.

The ratings of Protective reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. Additionally, the ratings reflect strategic advantages gained through the affiliation with Progressive.

The ratings of National Continental reflect the company’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, infrastructure and technological capabilities afforded as a subsidiary of Progressive.

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

• 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
• Progressive County Mutual Insurance Company
• 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
• Progressive Select Insurance Company
• Progressive Garden State Insurance Company
• Progressive Express Insurance Company
• Progressive Property Insurance Company
• Progressive Choice Insurance Company
• Progressive Freedom Insurance Company
• Artisan and Truckers Casualty Company
• American Strategic Insurance Corp.
• ASI Assurance Corp.
• ASI Home Insurance Corp.
• ASI Lloyds
• ASI Preferred Insurance Corp.
• ASI Select Insurance Corp
• Blue Hill Specialty Insurance Company
• Drive New Jersey Insurance Company
• Mountain Laurel Assurance Company
• United Financial Casualty Company

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed with stable outlooks for Protective Insurance Company and its wholly owned subsidiaries:

• Sagamore Insurance Company
• Protective Specialty Insurance Company

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

The Long-Term ICRs of “a” (Excellent) and the following Long-Term IRs of The Progressive Corporation have been affirmed with stable outlooks:

The Progressive Corporation—

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

-- “a” (Excellent) on $500 million 2.50% senior unsecured notes, due 2027

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

-- “a” (Excellent) on $550 million 4.00% senior unsecured notes, due 2029

-- “a” (Excellent) on $500 million 3.20% senior unsecured notes, due 2030

-- “a” (Excellent) on $400 million 6.25% senior unsecured notes, due 2032

-- “a” (Excellent) on $500 million 3.00% senior unsecured notes, due 2032

-- “a” (Excellent) on $350 million 4.35% senior unsecured notes, due 2044

-- “a” (Excellent) on $400 million 3.70% senior unsecured notes, due 2045

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

-- “a” (Excellent) on $600 million 4.20% senior unsecured notes, due 2048

-- “a” (Excellent) on $500 million 3.95% senior unsecured notes, due 2050

-- “a” (Excellent) on $500 million 3.70% senior unsecured notes, due 2052

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

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Christopher Draghi
Associate Director

+1 908 439 2200, ext. 5043

christopher.draghi@ambest.com

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Senior Director

+1 908 439 2200, ext. 5432

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Source: AM Best