UPDATE: Credit Suisse Initiates Coverage on Progressive Corp. with Neutral Rating, $29 PT on ASI Deal

In a report published Wednesday, Credit Suisse analyst Ryan Tunis initiated coverage on

with a Neutral rating and $29.00 price target. In the report, Credit Suisse noted, "The ASI relationship demonstrates PGR's commitment to increasing policyholder life expectancy across the firm, which we view as the most important driver of policy growth, particularly in agency, in which we see PGR facing increasing pressure from other large players such as TRV. The drawback, in our view, is the future capital outlay likely required to grow the business, which we think will limit PGR's ability to pay a special dividend. Although homeowners has been viewed as a lower-multiple business than auto, we think that the fact that (1) ASI's book is heavily reinsured, and (2) auto growth benefits long-term from bundling, should offset multiple compression from shift to home." Progressive Corp. closed on Tuesday at $27.20.