AM Best Removes From Under Review With Positive Implications and Upgrades Issuer Credit Ratings of Protective Insurance Corporation and Its Subsidiaries

Rhea-AI Summary

AM Best has upgraded the Long-Term Issuer Credit Ratings for Protective Insurance Corporation Group and its subsidiaries to “a+” and affirmed the Financial Strength Rating of A. This upgrade follows Progressive Corporation's acquisition of Protective, valued at approximately $338 million. The ratings reflect Protective's strong balance sheet and improved operating performance since 2018, supported by recent corrective measures including strengthening loss reserves. The outlook for these ratings is stable, indicating confidence in Protective's integration and future prospects under Progressive's management.

Positive

• Upgraded Long-Term Issuer Credit Ratings to “a+” for Protective Insurance Corporation Group.
• Financial Strength Rating of A affirmed, indicating excellent financial health.
• Improved operating performance noted since 2018 due to corrective actions.
• Acquisition by Progressive Corporation offers synergistic opportunities and access to capital.

Negative

• None.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has removed from under review with positive implications and upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” (Excellent) from “a” (Excellent) and affirmed the Financial Strength Rating of A (Excellent) of Protective Insurance Company and its wholly owned subsidiaries, Sagamore Insurance Company and Protective Specialty Insurance Company, collectively referred to as Protective Insurance Corporation Group (Protective). AM Best also has removed from under review with positive implications and upgraded the Long-Term ICR to “bbb+” (Good) from “bbb” (Good) of Protective Insurance Corporation, the group’s immediate holding company. The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn the rating of Protective Insurance Corporation as company management has requested that this entity no longer participate in AM Best’s interactive ratings process. All companies are domiciled in Carmel, IN.

The ratings reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

In July, The Progressive Corporation (NYSE: PGR) (Progressive) completed the acquisition of Protective Insurance Corporation. Under the terms of the merger agreement, holders of Class A and Class B common shares of Protective received $23.30 per share in cash, without interest, for a total transaction value of approximately $338 million. The rating upgrades reflect Protective’s integration into the Progressive organization, which offers synergistic opportunities where Progressive benefits from a complimentary book of business, and Protective benefits from the backing of a much larger organization with robust sophistication and access to capital. Progressive’s management has indicated it will support Protective regarding efforts to modernize infrastructure and will manage the group in a similar capacity as its other insurance entities.

Prior to the acquisition, Protective had been implementing corrective actions regarding its current book of business, most notably strengthening loss reserves, implementing rate increases and discontinuing non-core lines of business. The impact of these results has gained traction as evidenced by operating performance that has gradually improved since 2018 and more favorably, loss reserve development trends. Additionally, Protective re-focused efforts on its core lines of business providing coverage for fleet transportation. The ERM program remains appropriate for the group’s risk profile.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Chris Draghi

Associate Director

+1 908 439 2200, ext. 5043

chris.draghi@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Michelle Baurkot

Director

+1 908 439 2200, ext. 5314

michelle.baurkot@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What recent rating changes were made for PGR?

AM Best upgraded the Long-Term Issuer Credit Ratings for Protective Insurance Corporation Group to “a+” and affirmed a Financial Strength Rating of A.

What was the acquisition value of Protective Insurance Corporation by Progressive?

The acquisition was valued at approximately $338 million.

What factors contributed to the rating upgrades for Protective Insurance Corporation?

The upgrades were due to Protective's strong balance sheet, improved operating performance, and the successful integration into Progressive Corporation.

When did Progressive Corporation complete the acquisition of Protective Insurance Corporation?

The acquisition was completed in July.

What is the current outlook for Protective Insurance Corporation's ratings?

The outlook assigned to these Credit Ratings is stable.