Fitch Affirms Progressive Ratings
NU Online News Service, Dec. 15, 11:45 a.m. EST?Fitch Ratings has affirmed its "double-A-plus" insurer financial strength ratings for 24 pooled and reinsured members of Progressive Casualty Insurance Group, citing the company's ongoing strong operating performance.[@@]
In addition to affirming financial strength ratings for Progressive's pooled and reinsured members–which include all of the company's personal auto insurance operations–Fitch also affirmed its "A-plus" long-term issuer and senior debt ratings. The outlook is now "Stable" for all Progressive ratings.
In explaining its ratings action, the New York-based Fitch said its decision reflects Progressive's strong "underwriting expertise and personal auto insurance franchise."
The insurer, Fitch noted, had 87.8 percent combined ratio for its 2003 first nine months, improving from the 92.4 percent ratio for 2002 and 95.2 percent for 2001. The ratings firm observed that Progressive has been taking advantage of favorable industry conditions and is currently operating well within its 96 percent combined ratio target.
Progressive also maintains other positive attributes, including a "conservative investment philosophy" and modest catastrophe risk. Fitch said the insurers' loss reserves are considered adequate and that any reserve additions will generally be modest.
On the other hand, however, the insurer still needs to improve in some areas, such as its limited product diversification and higher-than-average operating leverage, Fitch pointed out.
The ratings firm said that since Progressive's primary goal is 96 percent GAAP combined ratio, the company's premium growth rate will depend on its ability to achieve its profitability goal, and that the insurer's growth will slow down if competition in the auto insurance marketplace intensifies.
Based in Mayfield Village, Ohio, Progressive provides nonstandard, high-risk personal auto insurance. The company also offers standard-risk and preferred auto insurance as well as other types of personal-use vehicle coverage such as recreational vehicles and snowmobiles.
Progressive offers collateral insurance for auto lenders, directors and officers insurance, and employee misconduct insurance. The company sells its products through its Web site, toll-free telephone numbers and 30,000 independent agents.
For its 2003 third quarter, the insurer reported net income of $319.8 million, a 79 percent increase from the $178.5 million profit posted one year ago?which it said was due to increased premium rates from last year. Net premiums written were improved in the latest quarter to reach $3.10 billion, up 25 percent from the year-ago period.
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