Fitch Ratings Affirms Progressive Corporation's Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 22, 2002 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 af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'AA+' insurer financial strength ratings of the 24 pooled and reinsured members of the Progressive Casualty Insurance Group. The group represents substantially all of the personal automobile insurance operations 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) ). Fitch also affirmed PGR's 'A+' long-term issuer and senior debt ratings. The Rating Outlook is Stable. The ratings and Rating Outlook reflect PGR's strong operating performance, 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 and personal auto insurance franchise. PGR's overall GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). combined ratio for 2001 and for the six months ended June 30, 2002, were 95.2% and 92.0%, respectively, which compare favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the 104.4% and 96.9% GAAP combined ratios reported for 2000 and the six months ended June 30, 2001, respectively. PGR is currently operating well within its 96% combined ratio target, reflecting the success of the pricing, advertising and claims handling initiatives that followed a period of poor operating results in the late 1999 to early 2000 timeframe. The ratings also consider PGR's 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. , limited product diversification and the dividend requirements imposed upon the operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. to support holding company debt. PGR discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its homeowners insurance business in May 2002. Thus, the company now concentrates almost entirely on automobile insurance. Fitch believes PGR's primary goal is the achievement of a 96% GAAP combined ratio. Fitch expects that PGR grow as fast as possible while maintaining its profitability goal. Fitch also believes PGR's financial leverage will fluctuate in a range between 20% and 30% debt-to-total capital, with a target of 25%. The ratings affected are listed in the table below. Entity/Issue/Type Action Rating/Outlook Halcyon Insurance Company Mountain Laurel Assurance Company Progressive American Insurance Company Progressive Bayside 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 Hawaii Insurance Company 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 of IL Progressive West Insurance Company --Insurer financial strength Affirm 'AA+'; --Rating Outlook Stable. The Progressive Corporation --Senior debt Affirm 'A+'; --Long-term issuer Affirm 'A+'; --Rating Outlook Stable. The Progressive Corporation is an insurance holding company based in Mayfield Village, OH. The company focuses on selling personal lines (predominately automobile insurance) and a small amount of commercial insurance. Products are sold through 30,000 independent agents and directly through the company's www.progressive.com Web site and 1-800-AUTO-PRO number. |
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