Fitch Rates Progressive's $1B Junior Subordinated Debentures 'A'

Fitch Ratings has assigned an ‘A’ rating to The Progressive Corporation (Progressive)(NYSE:PGR) $1 billion 6.70% junior subordinated debentures. Fitch has taken no rating action on the ‘AA-‘ Issuer Default Rating (IDR) and ‘A+’ senior debt ratings of Progressive and the ‘AA+’ Insurer Financial Strength (IFS) rating of Progressive’s operating subsidiaries. Refer to the rating list below for all ratings. The Rating Outlook is Stable.

Progressive’s junior subordinated debt offering receives 75% equity credit based on Fitch’s hybrid methodology. The primary factors used to determine equity credit included: loss absorption provided by the junior subordinated standing of the securities, the ability to defer dividends for up to ten years and the fact that the step up provision from fixed to floating after ten years was not considered onerous.

Proforma debt to equity and coverage for 2007 are 19.7% and 17.4 times (x) respectively. Both measures are comfortably in Fitch’s expectations for the current rating category.

The Progressive Corporation is an insurance holding company based in Mayfield Village, OH. The company sells personal and commercial automobile insurance through independent agent and direct distribution channels.

Fitch has taken no rating action on the ‘AA+’ IFS Rating with a Stable Outlook for the following companies:

The following are members of Progressive Direct Holdings:

Drive New Jersey Insurance Co

Progressive American Insurance Co

Progressive Bayside Insurance Co

Progressive Casualty Insurance Co

Progressive Classic Insurance Co

Progressive Gulf Insurance Co

Progressive Hawaii Insurance Corp

Progressive Mountain Insurance Co

Progressive Northern Insurance Co

Progressive Northwestern Insurance Co

Progressive Preferred Insurance Co

Progressive Southeastern Insurance Co

Progressive Specialty Insurance Co

Progressive Michigan Insurance Co

Progressive Northeastern Insurance Co

Progressive Security Insurance Co

Progressive West Insurance Co

Progressive County Mutual Insurance Co

The following are members of Drive Insurance Holdings:

Mountain Laurel Assurance Co

Progressive Direct Insurance Co

Progressive Paloverde Insurance Co

Progressive Premier Insurance Co of IL

Progressive Universal Insurance Co

Progressive Home Insurance Co

Progressive MAX Insurance CO

Progressive Marathon Insurance Co

Progressive Auto Pro Insurance Co

Progressive Choice Insurance Co

Progressive Freedom Insurance Co

Progressive Garden State Insurance Co

The following are members of Progressive Commercial Holdings:

Artisan & Truckers Cas Co

Progressive Express Insurance Co

United Financial Casualty Co

Fitch has taken no action on the ‘AA-‘ Issuer Default Rating and ‘A+’ senior debt rating both with a Stable Outlook to:

The Progressive Corporation

–$347.7 million 6.375% due Jan. 15, 2012 affirmed at ‘A+’;

–$148.9 million 7% due Oct. 1, 2013 affirmed at ‘A+’;

–$294.1 million 6.625% due March 31, 2029 affirmed at ‘A+’;

–$393.7 million 6.25% due Dec. 1, 2032 affirmed at ‘A+’.

Fitch has assigned an ‘A’ rating to Progressive Corporations Junior Subordinate Debentures:

The Progressive Corporation

— $1 billion 6.70% due June 2067

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.