Press Release - JUNE 20, 2018

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


CONTACTS:
 Raymond Thomson, CPCU, ARe, ARM
Associate Director
+1 908 439 2200, ext. 5621
raymond.thomson@ambest.com

Greg Williams
Senior Director
+1 908 439 2200, ext. 5815
greg.williams@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JUNE 20, 2018
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 Concurrently, A.M. Best has withdrawn the Long-Term IR of “bbb+” of the $1 billion 6.7% junior subordinated debentures due to redemption.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.

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