Company Website:
http://www.ambest.com
OLDWICK, N.J. -- (Business Wire)
A.M. Best has affirmed the financial strength rating (FSR) of A+
(Superior) and the issuer credit ratings (ICR) of “aa” of the members of Progressive
Agency Pool, Progressive Direct Pool and ProgressiveCommercial
Auto Group (collectively known as Progressive). A.M. Best also has
affirmed the FSR of A (Excellent) and ICR of “a+” of National
Continental Insurance Company. Additionally, A.M. Best has affirmed
the ICR of “a” and all debt ratings of the parent holding company, TheProgressive Corporation [NYSE: PGR]. The outlook for all ratings
is stable. All companies are headquartered in Mayfield Village, OH. (See
below for a detailed listing of the companies and ratings.)
The ratings reflect Progressive’s strong operating performance, adequate
capitalization and sustainable competitive advantages. Progressive’s
capitalization has benefited from 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 recent years. Progressive continues to
benefit from a 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 improved brand
recognition.
These positive rating factors are partially offset by Progressive’s high
underwriting leverage relative to industry averages. However,
Progressive has historically operated with elevated underwriting
leverage while consistently generating favorable underwriting results.
Progressive’s debt-to-adjusted capitalization remains within
expectations consistent with the holding company’s current rating level.
As of Sept. 30, 2014, the most recently available quarterly data, The
Progressive Corporation along with its subsidiaries had nearly $26.0
billion in total assets and approximately $6.9 billion in total
shareholder equity. Additionally, Progressive recently announced that it
has agreed to acquire a controlling position in ARX Holding Corp.,
the parent company of American Strategic Insurance Corp (ASI) and
its affiliates, in an all-cash transaction valued at approximately $875
million. The transaction, which is anticipated to close by April 1,
2015, is not expected to impact Progressive’s existing ratings and
outlook. While ASI’s book of business in terms of net premiums written
is relatively small compared to that of Progressive (approximately $670
million compared to $17 billion for the 2013 full year results), ASI’s
primarily property book of business does provide Progressive’s
predominantly automobile business with greater product diversification
and greater long term strategic advantages in improving its ability to
offer product bundling and significant geographic expansion.
While Progressive is well-positioned at its current rating level,
negative rating actions could occur if its operating performance and
consequently risk-adjusted capitalization fall below expectations for
its current ratings. In addition, negative rating actions could occur if
capital erosion occurs due to investment volatility or increased risk
appetite. Alternatively, positive rating actions could occur if
Progressive’s operating performance consistently exceeds its peer group
by a significant margin over the next several years, and its
risk-adjusted capitalization improves significantly.
The FSR of A+ (Superior) and 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 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 Freedom Insurance Company
- Progressive Garden State Insurance Company
The FSR of A+ (Superior) and 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 ICR of “a” and the following debt ratings of TheProgressive
Corporation have been affirmed:
TheProgressive Corporation—
-- “a” on $300 million 6.625% senior unsecured notes, due 2029
-- “a” on $400 million 6.250% senior unsecured notes, due 2032
-- “a” on $500 million 3.75% senior unsecured notes, due 2021
-- “a” on $350 million 4.35% senior unsecured debentures, due 2044
-- “bbb+” on $1 billion 6.7% junior subordinated debentures, due 2067
(of which $630 million remains outstanding)
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
-
Catastrophe Analysis in A.M. Best’s Ratings
-
Rating Members of Insurance Groups
-
Risk Management and the Rating Process for Insurance Companies
-
Understanding BCAR for Property/Casualty Insurers
-
Analyzing Insurance Holding Company Liquidity
-
Equity Credit for Hybrid Securities
-
Insurance Holding Company and Debt Ratings
This press release relates to rating(s) 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 visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
Contacts:
A.M. Best
Neil Das Gupta, 908-439-2200, ext. 5206
Senior
Financial Analyst
neil.dasgupta@ambest.com
or
Joseph
Burtone, 908-439-2200, ext. 5125
Assistant Vice President
joseph.burtone@ambest.com
or
Christopher
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim
Peavy, 908-439-2200, ext. 5644
Assistant Vice President,
Public Relations
james.peavy@ambest.com
Source: A.M. Best
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