N🟁N

Fitch Affirms Progressive's 'A+' IDR Following Debt Tender Offer

  //business-finance.news-articles.net/content/201 .. ressive-s-a-idr-following-debt-tender-offer.html
  Published in Business and Finance on Thursday, June 10th 2010 at 6:50 GMT by Market Wire
          ^{🞛 This publication is a summary or evaluation of another publication}

CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has affirmed The Progressive Corporation's (NYSE: PGR) ratings as follows:

--Issuer Default Rating (IDR) at 'A+';

--Senior debt ratings at 'A';

--Junior subordinated debt 'BBB+'.

The Rating Outlook is Stable for all ratings.

Fitch took no rating action on the 'AA' Insurer Financial Strength (IFS) ratings with a Stable Outlook of Progressive's operating subsidiaries.

Fitch's rating action follows the company's announcement today to commence a solicitation of consents from holders of record on June 9, 2010 of its 6.25% senior notes due 2032 to terminate the Replacement Capital Covenant (RCC) relating to those notes. The RCC was granted by Progressive in June 2007 to the holders of the notes in connection with the company's $1 billion issuance of its 6.7% fixed-to-floating rate junior subordinated debentures due 2067. The proposed termination of the RCC requires the consent of the holders of a majority in principal amount of the notes.

The termination of the RCC is a condition to the completion of Progressive's tender offer of up to $350 million to holders of the $1 billion junior subordinated debt. The tender offer will expire on July 8, 2010.

From Fitch's perspective the tender offer changes the effective maturity date of the $1 billion junior subordinated debt to less than five years. Thus, consistent with Fitch's Equity Credit for Hybrids rating methodology this security will receive class A or zero equity credit for this security. Prior to the tender offer the company was receiving 75% equity credit (class D) for this security. Fitch will no longer use any equity credit adjusted financial leverage when calculating PGR's financial leverage.

As of April 30, 2010 PGR non-equity credit adjusted financial leverage was 25.4%. On a pro forma basis, assuming a retirement of $350 million PGR's April 30, 2010, financial leverage will decline to 22.3%.

Fitch has affirmed the following ratings with a Stable Outlook:

The Progressive Corporation

--IDR at 'A+';

--Senior debt at 'A';

--$350 million 6.375% due Jan. 15, 2012 at 'A';

--$150 million 7% due Oct. 1, 2013 at 'A';

--$300 million 6.625% due March 31, 2029 at 'A';

--$400 million 6.25% due Dec. 1, 2032 at 'A';

--Junior subordinated debentures at 'BBB+'.

--$1 billion 6.7% due June 18, 2067 at 'BBB+'.

These rating actions reflect the application of Fitch's current criteria which are available at '[ www.fitchratings.com ]' and specifically include the following reports:

--'Insurance Rating Methodology' (Dec. 29, 2009);

--'Non-Life Insurance Rating Criteria' (March 24, 2010);

--'Fitch's Approach to Rating Insurance Groups' (March 24, 2010);

--'Insurance Industry: Global Notching Methodology and Recovery Analysis' (Dec. 29, 2009);

--'Equity Credit for Hybrids & Other Capital Securities - Amended'(Dec. 29, 2009);

--'Rating Hybrid Securities'(Dec. 29, 2009).

Additional information is available at '[ www.fitchratings.com ]'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: [ HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS ]. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '[ WWW.FITCHRATINGS.COM ]'. 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.