Ratings Roundup: Progressive, Springfield, Aveta, Accident Fund, Financial Guaranty

A.M. Best Co. has affirmed the financial strength ratings (FSR) of ‘A+’ (Superior) and the issuer credit ratings (ICR) of “aa” of the Progressive Agency Pool, Progressive Direct Pool and Progressive Commercial Auto Group (collectively known as Progressive) and their respective members. Best also affirmed the FSR of ‘A’ (Excellent) and the ICR of “a+” of National Continental Insurance Company. The outlook for all of these ratings is stable. In addition Best affirmed the ICR and senior debt of “a” of Progressive’s ultimate parent, The Progressive Corporation, as well as its “bbb+” rating on its junior subordinated debt. The outlook for these ratings is positive. “The ratings reflect Progressive’ s solid capitalization, strong operating performance and sustainable competitive advantages,” said Best. “The strong operating performance is the result of continued favorable underwriting results and investment income growth, which have resulted in solid operating income. Although some deterioration in results has been noted recently due to competitive market conditions as well as increasing loss cost trends, overall results remain favorable.”

A.M. Best Co. has upgraded the financial strength rating to ‘B’ (Fair) from ‘B-‘ (Fair) and the issuer credit rating to “bb” from “bb-” of Covina, Calif.-based Springfield Insurance Company with a stable outlook. Best said the “ratings reflect Springfield’s sound capitalization, recently improved operating performance and adequate liquidity. Springfield’s underwriting results and capitalization have benefited significantly in recent years by the operating environment in California, the company’s largest market.”

Standard & Poor’s Ratings Services has placed its ‘CCC’ counterparty credit rating on Aveta Inc. on CreditWatch with positive implications. S&P credit analyst Joseph Marinucci explained that the rating was moved to “positive in connection with improved financial performance that is likely to result in better earnings quality and enhanced financial flexibility. S&P noted that for most of 2007, Aveta focused strongly on key remediation initiatives that included new senior executives, network recontracting, and buildup of medical management infrastructure. The ‘CCC’ rating on Aveta still best reflects the ongoing uncertainty about the company’s credit profile.”

A.M. Best Company has assigned an “A” (Excellent) rating for Accident Fund and its subsidiaries. Best said it “attributes the rating to Accident Fund’s solid earnings performance and excellent capital position. Other factors contributing to the rating include strategic diversification of premium, national expansion and its strong leadership position within the Michigan workers compensation marketplace.”

Standard & Poor’s Ratings Services said its ratings on Financial Guaranty Insurance Co. (FGIC) and holding company FGIC Corp. remain on CreditWatch with developing implications. S&P issued the statement following FGIC’s application to the New York State Insurance Department for a new license. “We have been told that the newly licensed entity could facilitate the insurance of new public finance business and may also be the recipient of previously insured public finance business from FGIC,” said S&P. “In our view it is possible that this process may result in the allocation of capital or other corporate resources in such a manner that other classes of policyholders may be disadvantaged.” The rating agency also indicated it continues to “monitor developments as this process unfolds and update its ratings accordingly.