S&P Assigns Prelim 'A+' Rtg to Progressive's Shelf

    NEW YORK--Standard & Poor's--Oct. 31, 2002--Standard & Poor's Ratings Services said today that it assigned its preliminary single-'A'-plus senior unsecured debt rating to The Progressive Corp.'s (Progressive) $650 million shelf, which was filed on Oct. 22, 2002.
    Standard & Poor's also said that it affirmed its single-'A'-plus counterparty credit rating on Progressive based on Progressive's excellent business position within the personal auto business, very strong operating performance, extremely strong capitalization, strong liquidity, and strong financial flexibility, partially offset by the group's recent aggressive premium growth as well as its relatively narrow line-of-business focus. The outlook is stable.
    The current shelf replaces a previous one filed by Progressive in November 2001. "Although any use of the shelf could lead to a temporary rise in Progressive's leverage position, Progressive and its operating companies' total debt to total capitalization is expected to return to 25% by year-end 2003," said Standard & Poor's credit analyst Laline Carvalho.
    Standard & Poor's expects Progressive to continue to show strong underwriting performance in 2002 and 2003. Capital adequacy at the operating companies is expected to remain supportive of the rating at more than 175%. Debt leverage is expected to hover in the 25% range by the end of 2003, while interest coverage is expected to remain very strong.
    Progressive is the fourth largest automobile writer in the U.S., with about 5% market share at year-end 2001. Further enhancing its position is Progressive's strong franchise, claims-service reputation, and state-of-the-art pricing and technology systems. Management has a clear vision and strong track record of implementing its goals. Results are monitored aggressively, with compensation tied to profitability targets.
    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 public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.