OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a debt rating of “a” to the 30-year $350 million 4.35% fixed rate senior unsecured debentures 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 Progressive’s property/casualty subsidiaries’ (Progressive P&C) favorable risk-adjusted capitalization and significantly positive operating results. The rating also recognizes Progressive P&C subsidiaries’ proactive and comprehensive risk management, its significant U.S. market presence in automobile lines and leading position in the market for usage based insurance devices and brand identification.
Including the new issue, Progressive’s debt-to-capital ratio is 25.5%, (or 28.7% excluding accumulated other comprehensive income (AOCI). Thus, the additional borrowing of $350 million results in a slight increase of the debt-to-capital ratio from 23.1% (or 26.2% excluding AOCI) as of December 31, 2013, which remains well within the financial leverage guidelines for the assigned rating.
Progressive’s fixed charge coverage also has been solidly supportive of its ratings and remains significantly above A.M. Best’s guidelines as of March 31, 2014.
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.
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