(The following statement was released by the rating agency)
CHICAGO, June 06 (Fitch) Fitch Ratings has affirmed The
Corporation's (NYSE: PGR) Issuer Default Rating (IDR) at 'A+',
ratings at 'A', and junior subordinated debt rating at 'BBB+'.
affirms Progressive's operating subsidiaries' Insurer Financial
rating at 'AA'. A complete list of ratings follows the end of
the release. The
Rating Outlook is Stable.
KEY RATING DRIVERS
Fitch's ratings are based on Progressive's very strong operating
risk-based capital position, market leading risk-management and
expertise, and its significant personal and commercial auto
Progressive is the fourth-largest U.S. private passenger auto
writer and largest
commercial auto writer based on 2016 premiums written.
Progressive reported a GAAP combined ratio of 90.9% through the
months of 2017, down from 95.1% for full-year 2016. Embedded in
PGR's culture is
obtaining a GAAP calendar year combined ratio of 96% or better.
to view Progressive as one of the strongest underwriters among
property/casualty companies, and recognizes the company's
history of favorable
underwriting margins and stability.
Capitalization at the operating company level scored 'Very
Strong' based on
year-end 2015 data on Prism, Fitch's proprietary capital model.
for 2016 will be available in late summer 2017. Total
increased by 10.3% through the first four months of 2017, to
nearly $8.8 billion
at April 30, 2017. Equity growth was driven by net earnings of
$621 million and
$190 million of unrealized investment gains through the first
four months of
Progressive issued $850 million of 30-year senior notes in April
proceeds from the issuance are expected to be used to redeem
$564 million of its
junior subordinated debentures due in 2067 on June 15, 2017. The
proceeds are expected to be used for general corporate purposes.
Progressive's financial leverage as of April 30, 2017 was 31.2%.
leverage as of the same date, including the expected redemption
of the company's
junior subordinated debentures, will decrease to 28%.
Progressive's profitability promotes very strong interest
fixed-charge coverage, excluding realized gains, in 2016 was
11.1x, down from
the five-year average between 2012 - 2016 of 12.5x. Fitch
believes that GAAP
fixed-charge coverage will range from high single-digits to low
over the near term, including the new senior note issuance.
Factors that could lead to a ratings downgrade include the
--Obtaining a GAAP calendar year combined ratio of 99% or
--Failure to maintain a Prism score of 'Very Strong' or better;
--Financial leverage above 30%;
--Homeowners' growth that substantially increases probable
maximum loss (PML)
--Failure to maintain statutory maximum dividend coverage ratio
of 7x or higher
on a sustained basis;
--A meaningful change to the auto insurance market that
unfavorably alters the
Fitch believes that a ratings upgrade for Progressive would
require a broadened
product focus with a material reduction of net leverage.
FULL LIST OF RATING ACTIONS
Fitch has affirmed the following ratings with a Stable Outlook:
The Progressive Corporation
--IDR at 'A+';
--$500 million 3.75% due 2021 at 'A';
--$500 million 2.45% due 2027 at 'A';
--$300 million 6.625% due 2029 at 'A';
--$400 million 6.25% due 2032 at 'A';
--$350 million 4.35% due 2044 at 'A';
--$400 million 3.70% due 2045 at 'A';
--$850 million 4.125% due 2047 at 'A';
--Junior subordinated debentures 6.7% due 2067 at 'BBB+'.
Fitch has affirmed the following companies' 'AA' IFS ratings
with a Stable
The following are members of Progressive Direct Holdings:
Mountain Laurel Assurance. Co.
Progressive Advanced Insurance Company
Progressive Choice Ins Co.
Progressive Direct Insurance Co.
Progressive Freedom Ins Co.
Progressive Garden State Ins Co.
Progressive Marathon Ins Co.
Progressive MAX Ins Co.
Progressive Paloverde Ins. Co.
Progressive Premier Ins. Co. of IL
Progressive Select Insurance Co.
Progressive Universal Ins. Co.
The following are members of Drive Insurance Holdings:
Drive New Jersey Ins Co.
Progressive American Ins. Co.
Progressive Bayside Ins. Co.
Progressive Casualty Ins. Co.
Progressive Classic Insurance Co.
Progressive Commercial Casualty Company
Progressive County Mutual Insurance Co.
Progressive Gulf Ins. Co.
Progressive Hawaii Ins. Co.
Progressive Michigan Ins. Co.
Progressive Mountain Insurance Co.
Progressive Northern Ins. Co.
Progressive Northwestern Ins.
Progressive Preferred Ins. Co.
Progressive Security Ins. Co.
Progressive Southeastern Ins. Co.
Progressive Specialty Ins. Co.
Progressive West Ins. Co.
The following are members of Progressive Commercial Holdings:
Artisan & Truckers Casualty Co.
Progressive Express Ins. Co.
United Financial Casualty Co.
Christopher A. Grimes, CFA
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Gerry Glombicki, CPA
Donald Thorpe, CFA, CPA
Media Relations: Hannah James, New York, Tel: + 1 646 582 4947,
Additional information is available on www.fitchratings.com
Insurance Rating Methodology (pub. 26 Apr 2017)
Dodd-Frank Rating Information Disclosure Form
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
ON THE AGENCY'S
PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE CODE OF
CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS
RELEVANT INTERESTS ARE
AVAILABLE here. FITCH
PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS
PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD
ANALYST IS BASED
IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY
PAGE FOR THIS
ISSUER ON THE FITCH WEBSITE.
Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and
subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone:
(212) 908-0500. Fax: (212) 480-4435. Reproduction or
retransmission in whole or
in part is prohibited except by permission. All rights reserved.
In issuing and
maintaining its ratings and in making other reports (including
information), Fitch relies on factual information it receives
from issuers and
underwriters and from other sources Fitch believes to be
conducts a reasonable investigation of the factual information
relied upon by it
in accordance with its ratings methodology, and obtains
of that information from independent sources, to the extent such
available for a given security or in a given jurisdiction. The
manner of Fitch’s
factual investigation and the scope of the third-party
verification it obtains
will vary depending on the nature of the rated security and its
requirements and practices in the jurisdiction in which the
rated security is
offered and sold and/or the issuer is located, the availability
and nature of
relevant public information, access to the management of the
issuer and its
advisers, the availability of pre-existing third-party
verifications such as
audit reports, agreed-upon procedures letters, appraisals,
engineering reports, legal opinions and other reports provided
by third parties,
the availability of independent and competent third- party
with respect to the particular security or in the particular
jurisdiction of the
issuer, and a variety of other factors. Users of Fitch’s ratings
should understand that neither an enhanced factual investigation
third-party verification can ensure that all of the information
Fitch relies on
in connection with a rating or a report will be accurate and
Ultimately, the issuer and its advisers are responsible for the
accuracy of the
information they provide to Fitch and to the market in offering
other reports. In issuing its ratings and its reports, Fitch
must rely on the
work of experts, including independent auditors with respect to
statements and attorneys with respect to legal and tax matters.
and forecasts of financial and other information are inherently
and embody assumptions and predictions about future events that
by their nature
cannot be verified as facts. As a result, despite any
verification of current
facts, ratings and forecasts can be affected by future events or
were not anticipated at the time a rating or forecast was issued
The information in this report is provided “as is” without any
warranty of any kind, and Fitch does not represent or warrant
that the report or
any of its contents will meet any of the requirements of a
recipient of the
report. A Fitch rating is an opinion as to the creditworthiness
of a security.
This opinion and reports made by Fitch are based on established
methodologies that Fitch is continuously evaluating and
ratings and reports are the collective work product of Fitch and
or group of individuals, is solely responsible for a rating or
a report. The
rating does not address the risk of loss due to risks other than
unless such risk is specifically mentioned. Fitch is not engaged
in the offer or
sale of any security. All Fitch reports have shared authorship.
identified in a Fitch report were involved in, but are not
for, the opinions stated therein. The individuals are named for
only. A report providing a Fitch rating is neither a prospectus
nor a substitute
for the information assembled, verified and presented to
investors by the issuer
and its agents in connection with the sale of the securities.
Ratings may be
changed or withdrawn at any time for any reason in the sole
discretion of Fitch.
Fitch does not provide investment advice of any sort. Ratings
are not a
recommendation to buy, sell, or hold any security. Ratings do
not comment on the
adequacy of market price, the suitability of any security for a
investor, or the tax-exempt nature or taxability of payments
made in respect to
any security. Fitch receives fees from issuers, insurers,
obligors, and underwriters for rating securities. Such fees
generally vary from
US$1,000 to US$750,000 (or the applicable currency equivalent)
per issue. In
certain cases, Fitch will rate all or a number of issues issued
by a particular
issuer, or insured or guaranteed by a particular insurer or
guarantor, for a
single annual fee. Such fees are expected to vary from US$10,000
(or the applicable currency equivalent). The assignment,
dissemination of a rating by Fitch shall not constitute a
consent by Fitch to
use its name as an expert in connection with any registration
under the United States securities laws, the Financial Services
and Markets Act
of 2000 of the United Kingdom, or the securities laws of any
jurisdiction. Due to the relative efficiency of electronic
distribution, Fitch research may be available to electronic
subscribers up to
three days earlier than to print subscribers.
For Australia, New Zealand, Taiwan and South Korea only: Fitch
Australia Pty Ltd
holds an Australian financial services license (AFS license no.
authorizes it to provide credit ratings to wholesale clients
ratings information published by Fitch is not intended to be
used by persons who
are retail clients within the meaning of the Corporations Act