image0a04a01a67.jpg
 
 
NEWS RELEASE
 
 
 
 
The Progressive Corporation
 
 
Company Contact:
6300 Wilson Mills Road
 
 
Douglas S. Constantine
Mayfield Village, Ohio 44143
 
 
(440) 910-3563
 
 
 
 
 
 

PROGRESSIVE REPORTS JUNE RESULTS

MAYFIELD VILLAGE, OHIO -- July 15, 2020 -- The Progressive Corporation (NYSE:PGR) today reported the following results for June 2020 and the second quarter of 2020:
 
June
Quarter
(millions, except per share amounts and ratios; unaudited)
2020
 
2019
 
Change
2020
 
2019
 
Change
Net premiums written
$
3,201.6

 
$
2,794.0

 
15
 %
$
10,140.0

 
$
9,126.5

 
11
%
Net premiums earned
$
3,023.1

 
$
2,745.0

 
10
 %
$
9,648.6

 
$
8,824.7

 
9
%
Net income attributable to Progressive
$
470.9

 
$
413.1

 
14
 %
$
1,790.4

 
$
979.4

 
83
%
  Per share available to common shareholders
$
0.80

 
$
0.70

 
14
 %
$
3.04

 
$
1.66

 
83
%
Total pretax net realized gains (losses) on securities
$
142.9

 
$
252.6

 
(43)
 %
$
890.8

 
$
179.9

 
395
%
Combined ratio
86.9

 
92.7

 
(5.8) pts.

87.7

 
90.4

 
(2.7) pts.

Average diluted equivalent common shares
587.3

 
587.0

 
0
 %
587.2

 
586.9

 
0
%

 
June
(thousands; unaudited)
2020
 
2019
 
Change
Policies in Force
 
 
 
 
 
Personal Lines
 
 
 
 
 
Agency – auto
7,362.5
 
6,783.7
 
9 %
Direct – auto
8,507.6
 
7,528.4
 
13 %
Total personal auto
15,870.1
 
14,312.1
 
11 %
Total special lines
4,790.5
 
4,510.2
 
6 %
Total Personal Lines
20,660.6
 
18,822.3
 
10 %
Total Commercial Lines
775.8
 
734.2
 
6 %
Property business
2,336.1
 
2,071.6
 
13 %
Companywide Total
23,772.5
 
21,628.1
 
10 %
 
 
 
 
 
 

Progressive offers personal and commercial insurance throughout the United States. Our Personal Lines business writes insurance for personal autos and special lines products. Our Commercial Lines business writes auto-related primary liability and physical
damage insurance, and general liability and property insurance, predominantly for small businesses. Our Property business writes
residential property insurance for homeowners, other property owners, and renters.



- 1 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENT
June 2020
(millions)
(unaudited)

 
Current Month
 
Comments on Monthly Results1
Net premiums written
$
3,201.6

 
 
 
 
 
 
Revenues:
 
 
 
Net premiums earned
$
3,023.1

 
 
Investment income
77.0

 
 
Net realized gains (losses) on securities:
 
 
 
Net realized gains (losses) on security sales
69.8

 
 
Net holding period gains (losses) on securities
73.1

 
 
Total net realized gains (losses) on securities
142.9

 
 
Fees and other revenues
43.8

 
 
Service revenues
19.6

 
 
Total revenues
3,306.4

 
 
 
 
 
 
Expenses:
 
 
 
Losses and loss adjustment expenses
1,929.6

 
 
Policy acquisition costs
250.9

 
 
Other underwriting expenses
472.7

 
 
Policyholder credit expense
16.9

 
Represents additional policyholder credits issued to personal auto customers in California.
Investment expenses
1.5

 
 
Service expenses
18.3

 
 
Interest expense
18.8

 
 
Total expenses
2,708.7

 
 
 
 
 
 
Income before income taxes
597.7

 
 
Provision for income taxes
126.8

 
 
Net income
470.9

 
 
 
 
 
 
Other comprehensive income (loss)
 
 
 
Changes in:
 
 
 
Total net unrealized gains (losses) on fixed-maturity securities
126.8

 
 
Net unrealized losses on forecasted transactions
0.1

 
 
Other comprehensive income (loss)
126.9

 
 
Total comprehensive income
$
597.8

 
 
 
 
 
 
1See the Monthly Commentary at the end of this release for additional discussion. For a description of our financial reporting and accounting policies, see Note 1 to our 2019 audited consolidated financial statements included in our 2019 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

- 2 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
June 2020
(millions)
(unaudited)


 
Year-to-Date
 
 
 
2020
 
2019
 
% Change
Net premiums written
$
20,011.3

 
$
18,366.4

 
9
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Net premiums earned
$
19,079.3

 
$
17,284.5

 
10
Investment income
485.0

 
514.2

 
(6)
Net realized gains (losses) on securities:
 
 
 
 
 
Net realized gains (losses) on security sales
575.2

 
113.6

 
406
Net holding period gains (losses) on securities
(238.0
)
 
505.1

 
(147)
Net impairment losses recognized in earnings
0

 
(24.3
)
 
(100)
Total net realized gains (losses) on securities
337.2

 
594.4

 
(43)
Fees and other revenues
283.0

 
265.0

 
7
Service revenues
110.6

 
92.6

 
19
Total revenues
20,295.1

 
18,750.7

 
8
 
 
 
 
 
 
Expenses:
 
 
 
 
 
Losses and loss adjustment expenses
11,476.6

 
11,897.1

 
(4)
Policy acquisition costs
1,578.3

 
1,449.2

 
9
Other underwriting expenses
2,848.8

 
2,402.7

 
19
Policyholder credit expense
1,033.4

 
0

 
NM
Investment expenses
9.8

 
12.4

 
(21)
Service expenses
100.3

 
83.4

 
20
Interest expense
104.4

 
94.8

 
10
Total expenses
17,151.6

 
15,939.6

 
8
 
 
 
 
 
 
Income before income taxes
3,143.5

 
2,811.1

 
12
Provision for income taxes
654.0

 
749.3

 
(13)
Net income
2,489.5

 
2,061.8

 
21
Net (income) loss attributable to noncontrolling interest (NCI)
0

 
(4.0
)
 
(100)
Net income attributable to Progressive
2,489.5

 
2,057.8

 
21
 
 
 
 
 
 
Other comprehensive income (loss)
 
 
 
 
 
Changes in:
 
 
 
 
 
Total net unrealized gains (losses) on fixed-maturity securities
630.2

 
578.5

 
9
Net unrealized losses on forecasted transactions
0.4

 
0.4

 
0
Other comprehensive income (loss)
630.6

 
578.9

 
9
Other comprehensive (income) loss attributable to NCI
0

 
(4.9
)
 
(100)
Total comprehensive income attributable to Progressive
$
3,120.1

 
$
2,631.8

 
19
 
 
 
 
 
 
NM = Not Meaningful
 
 
 
 
 


- 3 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
June 2020
(millions – except per share amounts)
(unaudited)




The following table sets forth the computation of per share results:
 
 
 
 
 
 
 
 
 
Current
 
Year-to-Date
 
 
Month
 
2020
 
2019
 
 
 
 
 
 
 
 
Net income attributable to Progressive
$
470.9

 
$
2,489.5

 
$
2,057.8

 
Less: Preferred share dividends
2.2

 
13.4

 
13.4

 
Net income available to common shareholders
$
468.7

 
$
2,476.1

 
$
2,044.4

 
Per common share:
 
 
 
 
 
 
Basic
$
0.80

 
$
4.23

 
$
3.50

 
Diluted
$
0.80

 
$
4.22

 
$
3.48

 
 
 
 
 
 
 
 
Comprehensive income attributable to Progressive
$
597.8

 
$
3,120.1

 
$
2,631.8

 
Less: Preferred share dividends
2.2

 
13.4

 
13.4

 
Comprehensive income attributable to common shareholders
$
595.6

 
$
3,106.7

 
$
2,618.4

 
Per common share:
 
 
 
 
 
 
Diluted
$
1.01

 
$
5.29

 
$
4.46

 
 
 
 
 
 
 
 
Average common shares outstanding - Basic
584.9

 
584.8

 
583.5

 
Net effect of dilutive stock-based compensation
2.4

 
2.3

 
3.2

 
Total average equivalent common shares - Diluted
587.3

 
587.1

 
586.7

 
 
 
 
 
 
 
 


The following table sets forth the investment results for the period:
 
 
 
 
 
 
 
Current
 
Year-to-Date
 
 
 
Month
 
2020
 
2019
 
 
Fully taxable equivalent (FTE) total return:
 
 
 
 
 
 
 
Fixed-income securities
0.8%
 
4.6%
 
4.4%
 
 
Common stocks
2.2%
 
(3.4)%
 
17.9%
 
 
     Total portfolio
0.9%
 
3.9%
 
5.5%
 
 
 
 
 
 
 
 
 
 
Pretax annualized investment income book yield
2.3%
 
2.6%
 
3.1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




- 4 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
June 2020
($ in millions)
(unaudited)



Current Month
 
 
 
 
Commercial
 
 
 
Personal Lines Business
Lines
Property
Companywide
 
Agency
Direct
Total
Business
Business
Total
Net Premiums Written
$
1,261.8

$
1,348.9

$
2,610.7

$
407.0

$
183.9

$
3,201.6

% Growth in NPW
10
%
19
%
15
%
14
%
14
%
15
%
Net Premiums Earned
$
1,220.4

$
1,307.1

$
2,527.5

$
354.2

$
141.4

$
3,023.1

% Growth in NPE
8
%
13
%
11
%
6
%
12%
10
%
 
 
 
 
 
 
 
GAAP Ratios
 
 
 
 
 
 
Loss/LAE ratio
63.6

60.6

62.1

69.9

79.6.

63.9

Expense ratio
21.5

22.4

21.9

28.1

30.51

23.0

Combined ratio
85.1

83.0

84.0

98.0

110.11

86.9

Net catastrophe loss ratio2
 
 
1.4 ..

0.4 ..

16.0

2.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actuarial Adjustments3
 
 
 
 
 
 
Reserve Decrease/(Increase)
 
 
 
 
 
 
Prior accident years
 
 
 
 
 
$
(4.4
)
Current accident year
 
 
 
 
 
11.4

Calendar year actuarial adjustment
$
2.6

$
6.6

$
9.2

$
(1.2
)
$
(1.0
)
$
7.0

 
 
 
 
 
 
 
Prior Accident Years Development
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
Actuarial adjustment
 
 
 
 
 
$
(4.4
)
All other development
 
 
 
 
 
(12.6
)
Total development
 
 
 
 
 
$
(17.0
)
 
 
 
 
 
 
 
Calendar year loss/LAE ratio
 
 
 
 
 
63.9

Accident year loss/LAE ratio
 
 
 
 
 
63.3

 
 
 
 
 
 
 

1Included in both the expense ratio and combined ratio is 3.3 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 27.2 and a combined ratio of 106.8.

2Represents catastrophe losses incurred during the period, including the impact of reinsurance, if any, as a percent of net premiums earned. The majority of the catastrophe losses during the month were primarily due to wind, tornadoes, and thunderstorms throughout the United States. The 2020 catastrophe losses and associated allocated loss adjustment expenses (ALAE) in the Property business have not exceeded the $375 million annual retention threshold under our catastrophe aggregate excess of loss reinsurance program and, therefore, we have not recorded a reinsurance recoverable related to these losses and ALAE.

3Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.



- 5 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
June 2020
($ in millions)
(unaudited)



Year-to-Date
 
 
 
 
Commercial
 
 
 
Personal Lines Business
Lines
Property
Companywide
 
Agency
Direct
Total
Business
Business
Total
Net Premiums Written
$
8,131.2

$
8,624.2

$
16,755.4

$
2,339.2

$
916.7

$
20,011.3

% Growth in NPW
8
%
13
%
10
%
0
%
13
%
9
%
Net Premiums Earned
$
7,747.7

$
8,160.3

$
15,908.0

$
2,318.0

$
853.3

$
19,079.3

% Growth in NPE
8
%
12
%
10
%
11
%
15%
10
%
 
 
 
 
 
 
 
GAAP Ratios
 
 
 
 
 
 
Loss/LAE ratio
58.8

57.9

58.3

62.9

86.5.

60.2

Expense ratio
26.3

28.4

27.4

24.5

29.81

27.1

Combined ratio
85.1

86.3

85.7

87.4

116.31

87.3

Net catastrophe loss ratio2
 
 
1.3

0.3

32.4

2.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Actuarial Adjustments3
 
 
 
 
 
 
Reserve Decrease/(Increase)
 
 
 
 
 
 
Prior accident years
 
 
 
 
 
$
(12.2
)
Current accident year
 
 
 
 
 
30.2

Calendar year actuarial adjustment
$
10.4

$
17.1

$
27.5

$
(7.7
)
$
(1.8
)
$
18.0

 
 
 
 
 
 
 
Prior Accident Years Development
 
 
 
 
 
 
Favorable/(Unfavorable)
 
 
 
 
 
 
Actuarial adjustment
 
 
 
 
 
$
(12.2
)
All other development
 
 
 
 
 
(103.9
)
Total development
 
 
 
 
 
$
(116.1
)
 
 
 
 
 
 
 
Calendar year loss/LAE ratio
 
 
 
 
 
60.2

Accident year loss/LAE ratio
 
 
 
 
 
59.6

 
 
 
 
 
 
 

1Included in both the expense ratio and combined ratio is 3.4 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.4 and a combined ratio of 112.9.

2Represents catastrophe losses incurred during the period, including the impact of reinsurance, if any, as a percent of net premiums earned.

3Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.






- 6 -

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions - except per share amounts)
(unaudited)

 
June 2020
CONDENSED GAAP BALANCE SHEET:
 
Investments, at fair value:
 
Available-for-sale securities:
 
Fixed maturities1 (amortized cost: $33,467.9)
$
34,726.4

Short-term investments (amortized cost: $4,700.5)
4,700.5

Total available-for-sale securities
39,426.9

Equity securities:
 
Nonredeemable preferred stocks (cost: $1,205.4)
1,180.6

Common equities (cost: $1,128.8)
3,170.4

Total equity securities
4,351.0

Total investments2,3
43,777.9

Net premiums receivable
7,557.4

Reinsurance recoverables (including $3,502.7 on unpaid loss and LAE reserves)
3,654.3

Deferred acquisition costs
1,154.8

Goodwill and intangible assets
652.4

Other assets
2,609.3

Total assets
$
59,406.1

 
 
Unearned premiums
$
13,055.6

Loss and loss adjustment expense reserves
18,512.0

Other liabilities2
5,773.2

Debt
5,394.7

Total liabilities
42,735.5

Shareholders' equity
16,670.6

Total liabilities and shareholders' equity
$
59,406.1

 
 
 
 
Common shares outstanding
585.4

Common shares repurchased - June
0

Average cost per common share
$
0

Book value per common share
$
27.63

Trailing 12-month return on average common shareholders' equity
 
Net income attributable to Progressive
31.2
%
Comprehensive income attributable to Progressive
34.9
%
Net unrealized pretax gains (losses) on fixed-maturity securities
$
1,257.1

Increase (decrease) from May 2020
$
160.4

Increase (decrease) from December 2019
$
797.7

Debt-to-total capital ratio
24.4
%
Fixed-income portfolio duration
3.0

Weighted average credit quality
AA-

1 As of June 30, 2020, we held certain hybrid securities and recognized a change in fair value of $1.4 million as a realized gain during the period we held these securities.
2 At June 30, 2020, we had $277.9 million of net unsettled security transactions classified in “other liabilities.”
3 Includes $2.3 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.
 

- 7 -



Monthly Commentary
•
During June, we continued to see a significant decrease in auto accident frequency due to restrictions put in place to help slow and/or stop the spread of the novel coronavirus, or COVID-19, which contributed to our companywide loss/LAE ratio for the month being 8.2 points lower than the ratio reported in June last year. In addition, our net written premiums growth rate reflects higher than anticipated new and renewal auto applications, lower policy cancellations than expected, and minimal negative impact from the fiscal calendar timing.


Events
We are currently scheduled to hold our second quarter Investor Relations conference call on Wednesday, August 5, 2020, at 10:00 a.m. eastern time. Consistent with the first quarter 2020 Investor Relations call, this quarterly call is scheduled to last 60 minutes and will consist of a question and answer session with Tricia Griffith, our CEO, and John Sauerland, our CFO. We are currently planning to file our Quarterly Report on Form 10-Q with the SEC on Tuesday, August 4, 2020. If the dates of our events, which are always subject to change, are rescheduled, we will announce the change in a press release as soon as practical and publish it on our investor website. Details regarding access to the teleconference, or any event changes, will be available at: https://investors.progressive.com/events/default.aspx.

We plan to release July results on Wednesday, August 19, 2020, before the market opens.

About Progressive
The Progressive Group of Insurance Companies makes it easy to understand, buy and use auto insurance. Progressive offers choices so consumers can reach us whenever, wherever and however it's most convenient - online at progressive.com, by phone at 1-800-PROGRESSIVE, on a mobile device or in-person with a local agent.

Progressive provides insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes; it is the third largest auto insurer in the country, a leading seller of motorcycle and commercial auto insurance, and one of the top 15 homeowners insurance carriers.

Founded in 1937, Progressive continues its long history of offering shopping tools and services that save customers time and money, like Name Your Price®, Snapshot®, and HomeQuote Explorer®.

The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly at NYSE:PGR.

- 8 -




Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that certain statements in this report not based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as “estimate,” “expect,” “intend,” “plan,” “believe,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are based on current expectations and projections about future events, and are subject to certain risks, assumptions and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to:

•
our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;
•
our ability to establish accurate loss reserves;
•
the impact of severe weather, other catastrophe events and climate change;
•
the effectiveness of our reinsurance programs;
•
the highly competitive nature of property-casualty insurance markets;
•
whether we innovate effectively and respond to our competitors’ initiatives;
•
whether we effectively manage complexity as we develop and deliver products and customer experiences;
•
how intellectual property rights could affect our competitiveness and our business operations;
•
whether we adjust claims accurately;
•
our ability to maintain a recognized and trusted brand;
•
our ability to attract, develop and retain talent and maintain appropriate staffing levels;
•
compliance with complex laws and regulations;
•
litigation challenging our business practices, and those of our competitors and other companies;
•
the impacts of a security breach or other attack involving our computer systems or the systems of one or more of our vendors;
•
the secure and uninterrupted operation of the facilities, systems, and business functions that are critical to our business;
•
the success of our efforts to develop new products or enter into new areas of business and navigate related risks;
•
our continued ability to send and accept electronic payments;
•
the possible impairment of our goodwill or intangible assets;
•
the performance of our fixed-income and equity investment portfolios;
•
the potential elimination of, or change in, the London Interbank Offered Rate;
•
our continued ability to access our cash accounts and/or convert securities into cash on favorable terms;
•
the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;
•
legal restrictions on our insurance subsidiaries’ ability to pay dividends to The Progressive Corporation;
•
limitations on our ability to pay dividends on our common shares under the terms of our outstanding preferred shares;
•
our ability to obtain capital when necessary to support our business and potential growth;
•
evaluations by credit rating and other rating agencies;
•
the variable nature of our common share dividend policy;
•
whether our investments in certain tax-advantaged projects generate the anticipated returns;
•
the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;
•
impacts from the outbreak of the novel coronavirus, or COVID-19, and the restrictions put in place to help slow and/or stop the spread of the virus; and
•
other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, 2019, and our Quarterly Report on Form 10-Q for the period ending March 31, 2020.

In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.



- 9 -