Fitch Affirms Progressive's Ratings.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the 'A+' long-term issuer and senior debt ratings of the Progressive Corporation (NYSE NYSE See: New York Stock Exchange :PGR PGR Project Gotham Racing (game) PGR Procuraduría General de la República (Mexico) PGR Patriot Guard Riders (national motorcycle group based in Centennial, CO) ). The ratings on approximately $1.3 billion of senior debt are affected. Fitch has also affirmed the 'AA+' insurer financial strength ratings of the 24 pooled and reinsured members of the Progressive Group of Insurance Companies. The group represents substantially all of the personal automobile insurance operations of Progressive. The Rating Outlook is Stable. The ratings and Rating Outlook reflect Progressive's excellent operating performance, pricing and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. expertise, personal auto insurance franchise, modest catastrophe risk, conservative investment allocation, and good reserve adequacy. Progressive's overall GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratios for 2004 and for the four months ended April 30, 2005 were 85.1% and 85.1%, respectively, which represent continued strong results when compared to the 87.3% and 83.4% GAAP combined ratios reported for 2003 and the four months ended April 30, 2004, respectively. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , the ratings also reflect Progressive's high (though declining) growth rate, higher-than-average operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. , and limited product diversification. Progressive also employs a moderate amount of financial leverage. However, financial leverage declined in 2004 even though Progressive repurchased approximately 18.6 million common shares for approximately $1.6 billion. Fitch believes Progressive's primary goal is the achievement of a 96% GAAP combined ratio. Thus, Fitch expects that Progressive's premium growth rate will depend on its ability to achieve its profitability goal and that growth will moderate if competition in the auto insurance industry increases. Fitch also considers Progressive's loss reserves to be adequate and expects that loss reserve development, if any, will generally be modest. Fitch expects that Progressive's financial leverage, as measured by its debt-to-total-capital ratio, will range around 20%. The following affected ratings are affirmed at 'AA+' by Fitch: Mountain Laurel mountain laurel, evergreen shrub (Kalmia latifolia) of the family Ericaceae (heath family), closely related to the rhododendron and native to E North America. Assurance Company Progressive American Insurance Company Progressive Bayside bay·side adj. Situated very close to or on the shore of a bay: bayside cottages. Insurance Company Progressive Casualty Insurance Company Progressive Classic Insurance Company Progressive Consumers Insurance Company Progressive County Mutual Insurance Company Progressive Express Insurance Company Progressive Gulf Insurance Company Progressive Halcyon hal·cy·on n. 1. A kingfisher, especially one of the genus Halcyon. 2. A fabled bird, identified with the kingfisher, that was supposed to have had the power to calm the wind and the waves while it nested on the sea Insurance Company (formerly Halcyon Insurance Company) Progressive Hawaii Insurance Corporation Progressive Michigan Insurance Company Progressive Mountain Insurance Company Progressive Northeastern Insurance Company Progressive Northern Insurance Company Progressive Northwestern Insurance Company Progressive Paloverde Insurance Company Progressive Preferred Insurance Company Progressive Premier Insurance Company of IL Progressive Security Insurance Company Progressive Southeastern Insurance Company Progressive Specialty Insurance Company Progressive Universal Insurance Company (formerly Progressive Universal Insurance Company of IL) Progressive West Insurance Company -- Insurer Financial Strength at 'AA+'; -- Rating Outlook Stable. The following are affirmed at 'A+' by Fitch: The Progressive Corporation -- Long-term issuer; -- $99.9 million 7.3% due June 1, 2006; -- $347.7 million 6.375% due Jan. 15, 2012; -- $148.9 million 7.0% due Oct. 1, 2013; -- $294.1 million 6.625% due March 31, 2029; -- $393.7 million 6.25% due Dec. 1, 2032; -- Rating Outlook Stable. The Progressive Corporation is an insurance holding company based in Mayfield Village, OH. The company sells personal and commercial automobile insurance through independent agent and direct distribution channels. Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from this site, at all times. This document will remain on the public site for seven days. |
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