Progressive Affirmed

A.M. Best Co. 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. was also affirmed. The “a” senior debt rating for Progressive Corp.’s existing debt securities was affirmed along with the indicative rating of “a” for senior debt under the company’s $650 million shelf registration, of which $250 million remains. The 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.

Also, Best said, Progressive benefits from its extensive data mining capabilities and technology advantages that enable detailed pricing of various risk classes and distribution sources. 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.