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A.M. Best Affirms Ratings of The Progressive Corporation and Its Subsidiaries
[February 11, 2016]

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


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 Progressive Commercial Auto Group (collectively known as Progressive). A.M. Best also has affirmed the FSR of A (Excellent) and the ICR of "a+" of National Continental Insurance Company. In addition, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of "a+" of American Strategic Insurance Corp (ASI) (St. Petersburg, FL) and its affiliates. Additionally, A.M. Best has affirmed the ICR of "a" and all issue ratings of the parent holding company, The Progressive Corporation [NYSE: PGR]. The outlook for all ratings is stable. All companies are headquartered in Mayfield Village, OH except where noted. (See below for a detailed listing of the companies and ratings.)

The ratings for the Progressive auto writers (Progressive and National Continental) reflect their 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 more recent years, though tempered somewhat over the past year. 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.

The ratings for the ASI companies reflect their consistent solid operating performance and strong risk-adjusted capitalization. Premium growth has been steady as the companies continue to expand into new states. Since Progressive acquired the controlling interest in the companies in April 2015, ASI has continued to operate as a separate company under its current management team and has benefited from its association with one of the leading personal automobile writers in the United States. For example, ASI's current distribution network has been broadened through Progressive's extensive market penetration and cross-selling and "bundling" opportunities with ASI's predominantly homeowners' line of business.

These positive rating factors are partially offset by ASI's concentrations in severe weather catastrophe prone states. However, ASI maintains a comprehensive reinsurance program designed to mitigate the effects of such large losses.

Progressive's debt-to-adjusted capitalization remains within expectations consistent with the holding company's current rating level. As of Dec. 31, 2015, the most recently available quarterly data, The Progressive Corporation, along with its subsidiaries, had $29.8 billion in total assets and approximately $7.3 billion in total shareholder equity.



While these ratings are well-positioned at the current rating level, negative rating actions could occur if 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 operating performance consistently exceeds its peer group by a significant margin over the next several years, and 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 FSR of A (Excellent) and the ICR of "a+" have been affirmed for National Continental Insurance Company.

The FSR of A (Excellent) and the ICR of "a+" have been affirmed for American Strategic Insurance Corp and its following affiliates:

  • American Capital Assurance Corp
  • ASI Assurance Corp
  • ASI Home Insurance Corp
  • ASI Lloyds
  • ASI Preferred Insurance Corp
  • ASI Select Insurance Corp

The ICR of "a" and the following issue ratings of The Progressive Corporation have been affirmed:

The Progressive 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 $614.4 million remains outstanding)

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

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 see A.M. Best's Recent Rating Activity web page.

A.M. Best is the world's oldest and most authoritative insurance rating and information source.

For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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