S&P Assigns Progressive Casualty Insurance 'AApi' Rtg
28 October 1998
S&P Assigns Progressive Casualty Insurance 'AApi' Rtg
NEW YORK--Standard & Poor's CreditWire 10/28/98--Standard & Poor's today assigned its double-'Api' insurer financial strength rating to Progressive Casualty Insurance Co.
Progressive Casualty Insurance is licensed in all states, the District of Columbia, Canada, and two U.S. territories. The company's major line of business is personal auto insurance, and it is a subsidiary of Progressive Corp. (single-'A'-plus counterparty credit rating/Stable), the fifth-largest writer of automobile insurance in the United States. The company commenced operations in 1956.
The following factors were incorporated in the rating of double-'Api':
-- Progressive Casualty is the lead company of the Progressive
Casualty Intercompany Pool and in 1998, retained 53% of the
pool's business.
-- Capitalization for the intercompany pool was very strong for
year-end 1997, 173% (unadjusted) under Standard & Poor's capital
adequacy model.
-- The Progressive group has been remarkably successful in
increasing the efficiency of its operations. The overall
statutory expense ratio was a strong 23.4% in 1997 versus 37.1%
in 1991.
-- Operating performance for the intercompany pool is very strong,
with return on revenue averaging 12.4% from 1993-1997. Although
the pool is consistently profitable on an underwriting basis, its
earnings are more volatile than that of most higher rated
insurers.
-- While the pool's business is focused on personal auto insurance,
this concentration is offset by the geographic diversity of the
pool's premiums.
`Pi' ratings, denoted with a pi subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a pi subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a pi subscript are not subject to potential CreditWatch listings.
Ratings with a pi subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.--CreditWire
