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NEW YORK--(BUSINESS WIRE)--July 18, 2003--Standard & Poor's
Ratings Services said today that it affirmed its 'A+' counterparty
credit and senior unsecured debt ratings on Progressive Corp.
(NYSE:PGR) based on Progressive's excellent business position, very
strong operating performance, extremely strong capitalization, strong
liquidity, and strong financial flexibility. Partially offsetting
these factors is the group's recent aggressive premium growth as well
as its relatively narrow line-of-business focus.
Standard & Poor's also said that the outlook on Progressive is
stable.
"Progressive's business position is expected to remain very
strong, with growth rates of 20%-25% in 2003," said Standard & Poor's
credit analyst Polina Chernyak. "Management is also expected to remain
focused on its core businesses in the near term."
Progressive is the third-largest automobile writer in the U.S.
with about a 5% market share at year-end 2002. Further enhancing
Progressive's position are its strong franchise, claims-service
reputation, and state-of-the-art pricing and IT systems. Management is
capable, with a clear vision and strong track record of implementing
its goals. Results are monitored aggressively, with compensation tied
to profitability targets.
After operating results deteriorated somewhat in 1999 and 2000
(though they were still better than industry auto lines), Progressive
has turned around its operating performance. In Standard & Poor's
opinion, Progressive's recent results are a testament of management's
ability to implement rate increases and to restructure its
underwriting and claims operations. For year-end 2003 and 2004,
Standard & Poor's expects Progressive to continue to show strong
underwriting performance.
As primarily an automobile writer, Progressive's business remains
subject to the competitive conditions of this sector. However,
Progressive's ability to implement price increases and produce
better-than-industry operating results despite difficult market
conditions in the recent past does demonstrate that the group has some
distinct competitive advantages, which have so far enabled management
to execute its strategic plans successfully.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can
be found on Standard & Poor's Web site at www.standardandpoors.com;
under Credit Ratings in the left navigation bar, select Credit Ratings
Actions.