S&P affirms Progressive

Standard & Poor's said it affirmed its A+ counterparty credit rating on Progressive Corp. and its AA+ counterparty credit and financial strength ratings on the company's core operating insurance subsidiaries.

The outlook remains negative.

The affirmations follow Progressive's announcement that it had a pretax loss of $684 million for the third quarter of 2008, compared with pretax income of $299.2 million for the same quarter of 2007. The agency said that while profitability weakened through the first nine months of 2008, it views the company's long track record of positive cash flow borne from favorable and consistent profitability as a positive rating factor, and the company maintains a very strong liquidity position, capitalization that is supportive of the risk profile and a favorable debt-maturity schedule.

The ratings reflect the company's strong competitive position, well-recognized franchise and dominant market position as the third-largest auto writer in the United States, S&P said.

A narrow business focus mitigates these strengths, the agency said.

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