TEXT-S&P says Progressive Corp ratings unchanged by dividend

Mon Oct 15, 2012 10:54am EDT

Oct 15 - --Standard & Poor's Ratings Services said today that its ratings on Progressive Corp. (NYSE:PGR; A+/Stable/--) and its insurance operating subsidiaries are unaffected by the company's announcement that it declared an extraordinary cash dividend of approximately $600 million to shareholders, payable Nov. 29, 2012. In our analysis, we take into account a certain level of return of capital including share repurchases or special dividend payouts.

The ratings on Progressive companies reflect our expectation that the group will maintain a singular risk focus on auto insurance and will sustain its very strong competitive position through its well-recognized franchise and dominant market share. We believe that although the group's profitability in 2012 will be relatively lower than in prior years, the underwriting performance nevertheless will be better than the personal lines industry average. We expect Progressive to maintain strong capitalization and its consolidated debt leverage to remain less than 30%. In addition, we expect the company to maintain a cushion of highly liquid assets of at least $1 billion through its investment in Progressive Investment Co. Inc., which had $1.6 billion of assets as of third-quarter 2012

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