Progressive Affirmed by A.M. Best

June 15, 2004

Insurance standardbearer ratings agency A.M. Best Co. has affirmed the financial strength ratings of “A+” (superior) for Progressive Agency Pool, Progressive Direct Pool and United Financial Casualty Co., all based in Mayfield Village, Ohio.

These entities previously comprised the Progressive Casualty Pool. The financial strength rating of “A” (excellent) for National Continental Insurance Co. has also been affirmed. Best also affirmed the “a” senior debt rating for Progressive Corp.’s existing debt securities and the indicative rating of “a” for senior debt under the company’s $650 million shelf registration, of which $250 million remains. The rating outlooks are stable.

Best said the ratings reflect Progressive’s solid capitalization, strong operating performance and sustainable competitive advantages, which have enabled it to become a market leader in the private passenger automobile insurance sector. The strong operating performance is derived from steady net investment income growth and underwriting earnings, which have resulted in significant annual surplus growth.

Progressive continues to benefit from an innovative management team with creative operating strategies, brand name recognition, a dynamic multiple channel distribution platform and extensive utilization of cutting edge underwriting and claims handling technology.

Furthermore, Best said, Progressive benefits from its extensive data mining capabilities and technology advantages that enable detailed pricing of various risk classes and distribution sources. The strong underwriting earnings also reflect management’s innovative approach to claims handling which emphasizes prompt contact and settlement with each insured, and its efficient expense operating platform.

These positive rating factors are partially offset by Progressive’s high underwriting leverage and inherent risk associated with aggressive growth in net premiums written and associated liabilities, Best said. Rate adequacy, improved customer retention and new business growth have driven the increase in premium volume.

Although surplus increases have generally mirrored premium growth, Progressive has historically maintained underwriting leverage that is higher than industry composite norms.

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