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FOR IMMEDIATE RELEASE
OLDWICK - JANUARY 23, 2015 09:30 AM (EST)
A.M. Best has assigned a debt rating of "a" to the 30-year $400 million 3.70% fixed rate senior unsecured notes recently issued by The Progressive Corporation (Progressive) (Mayfield Village, OH) [NYSE: PGR]. The assigned outlook is stable. All existing ratings of Progressive and its subsidiaries are unchanged.
The assigned rating recognizes the favorable risk-adjusted capitalization and strong operating results of Progressive's property/casualty subsidiaries (Progressive P&C). The rating also recognizes Progressive P&C subsidiaries proactive and comprehensive risk management, significant U.S. market presence in automobile lines and leading position in the market for usage-based insurance devices and brand identification.
On a pro-forma basis, as of Nov. 30, 2014 (the latest publicly available financials), simply by including the new issue, Progressive's debt-to-capital ratio is 26.3%, (or 29.5% excluding estimated accumulated other comprehensive income (AOCI). Thus, the additional borrowing of $400 million results in a slight increase of the debt-to-capital ratio from 23.2% (or 26.1% excluding AOCI) as of Nov. 30, 2014, which still remains well within the financial leverage guidelines for the assigned rating.
Progressive's fixed charge coverage also remains solidly supportive of its ratings and remains significantly above A.M. Best's guidelines.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
o Equity Credit for Hybrid Securities
o Insurance Holding Company and Debt Ratings
This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.