Form 8-K PROGRESSIVE CORP/OH/ For: Nov 16
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 16, 2016
THE PROGRESSIVE CORPORATION
(Exact name of registrant as specified in its charter)
Ohio | 1-9518 | 34-0963169 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
6300 Wilson Mills Road, Mayfield Village, Ohio | 44143 | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (440) 461-5000
Not Applicable |
(Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 7.01 Regulation FD Disclosure.
On November 16, 2016, The Progressive Corporation issued a news release containing financial results for the Company and its consolidated subsidiaries for the month of, and year-to-date period ended, October 2016. A copy of the news release is attached hereto as Exhibit 99.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
See exhibit index on page 4.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 16, 2016
THE PROGRESSIVE CORPORATION
By: /s/ Jeffrey W. Basch
Name: Jeffrey W. Basch
Title: Vice President and
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit No. Under Reg. S-K Item 601 | Form 8-K Exhibit No. | Description | ||
99 | 99 | News release dated November 16, 2016, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year-to-date period ended, October 2016. |
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NEWS RELEASE |
The Progressive Corporation | Company Contact: | ||
6300 Wilson Mills Road | Julia Hornack | ||
Mayfield Village, Ohio 44143 | (440) 395-2164 | ||
PROGRESSIVE REPORTS OCTOBER RESULTS
MAYFIELD VILLAGE, OHIO -- November 16, 2016 -- The Progressive Corporation (NYSE: PGR) today reported the following results for October 2016:
October | October | |||||||||
(millions, except per share amounts and ratios; unaudited) | 2016 | 2015 | Change | |||||||
Net premiums written | $ | 2,259.2 | $ | 1,946.0 | 16 | % | ||||
Net premiums earned | $ | 2,232.2 | $ | 1,965.8 | 14 | % | ||||
Net income attributable to Progressive | $ | 70.7 | $ | 92.2 | (23) | % | ||||
Per share | $ | 0.12 | $ | 0.16 | (23) | % | ||||
Total pretax net realized gains (losses) on securities | ||||||||||
(including net impairment losses) | $ | 5.2 | $ | 4.0 | 30 | % | ||||
Combined ratio | 97.1 | 94.0 | 3.1 pts. | |||||||
Average diluted equivalent shares | 583.4 | 587.6 | (1) | % |
(thousands; unaudited) | October | October | ||||
2016 | 2015 | Change | ||||
Policies in Force | ||||||
Vehicle businesses: | ||||||
Agency – auto | 5,022.7 | 4,750.6 | 6 % | |||
Direct – auto | 5,352.5 | 4,878.8 | 10 % | |||
Total personal auto | 10,375.2 | 9,629.4 | 8 % | |||
Total special lines | 4,282.3 | 4,135.2 | 4 % | |||
Total Personal Lines | 14,657.5 | 13,764.6 | 6 % | |||
Total Commercial Lines | 613.1 | 554.0 | 11 % | |||
Property business | 1,188.2 | 1,075.6 | 10 % | |||
Progressive offers insurance to personal and commercial auto drivers throughout the United States. Our Personal Lines business writes insurance for personal autos and recreational vehicles. Our Commercial Lines business writes primary liability, physical damage, and other auto-related insurance for autos and trucks owned and/or operated predominantly by small businesses. Our Property business writes residential property insurance for homeowners, other property owners, and renters.
See the “Comprehensive Income Statements” and “Supplemental Information” for further month and year-to-date information and
the "Monthly Commentary" at the end of this release for additional discussion.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENT
October 2016
(millions)
(unaudited)
Current Month | Comments on Monthly Results1 | ||||
Net premiums written | $ | 2,259.2 | |||
Revenues: | |||||
Net premiums earned | $ | 2,232.2 | |||
Investment income | 38.1 | ||||
Net realized gains (losses) on securities: | |||||
Net impairment losses recognized in earnings | 0 | ||||
Net realized gains (losses) on securities | 5.2 | ||||
Total net realized gains (losses) on securities | 5.2 | ||||
Fees and other revenues | 32.8 | ||||
Service revenues | 9.4 | ||||
Total revenues | 2,317.7 | ||||
Expenses: | |||||
Losses and loss adjustment expenses | 1,756.7 | ||||
Policy acquisition costs | 183.9 | ||||
Other underwriting expenses | 260.7 | ||||
Investment expenses | 2.1 | ||||
Service expenses | 8.5 | ||||
Interest expense | 12.4 | ||||
Total expenses | 2,224.3 | ||||
Income before income taxes | 93.4 | ||||
Provision for income taxes | 27.5 | ||||
Net income | 65.9 | ||||
Net (income) loss attributable to noncontrolling interest (NCI), net of tax | 4.8 | ||||
Net income attributable to Progressive | 70.7 | ||||
Other comprehensive income (loss), net of tax | |||||
Changes in: | |||||
Total net unrealized gains (losses) on securities | (73.5 | ) | |||
Net unrealized losses on forecasted transactions | (0.1 | ) | |||
Foreign currency translation adjustment | 0 | ||||
Other comprehensive income (loss) | (73.6 | ) | |||
Other comprehensive (income) loss attributable to NCI | 1.5 | ||||
Total comprehensive income (loss) attributable to Progressive | $ | (1.4 | ) | ||
1 For a description of our financial reporting and accounting policies, see Note 1 to our 2015 audited consolidated financial statements included in our 2015 Shareholders’ Report, which can be found at www.progressive.com/annualreport.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
October 2016
(millions)
(unaudited)
Year-to-Date | |||||||||
2016 | 20151 | % Change | |||||||
Net premiums written | $ | 20,061.2 | $ | 17,671.5 | 14 | ||||
Revenues: | |||||||||
Net premiums earned | $ | 18,834.8 | $ | 16,698.5 | 13 | ||||
Investment income | 390.8 | 372.0 | 5 | ||||||
Net realized gains (losses) on securities: | |||||||||
Net impairment losses recognized in earnings | (61.8 | ) | (23.2 | ) | 166 | ||||
Net realized gains (losses) on securities | 96.0 | 120.4 | (20) | ||||||
Total net realized gains (losses) on securities | 34.2 | 97.2 | (65) | ||||||
Fees and other revenues | 281.0 | 257.7 | 9 | ||||||
Service revenues | 87.1 | 72.0 | 21 | ||||||
Gains (losses) on extinguishment of debt | 1.6 | (0.9 | ) | (278) | |||||
Total revenues | 19,629.5 | 17,496.5 | 12 | ||||||
Expenses: | |||||||||
Losses and loss adjustment expenses | 14,311.3 | 12,079.5 | 18 | ||||||
Policy acquisition costs | 1,558.5 | 1,382.8 | 13 | ||||||
Other underwriting expenses | 2,522.9 | 2,295.2 | 10 | ||||||
Investment expenses | 17.0 | 18.7 | (9) | ||||||
Service expenses | 77.0 | 64.4 | 20 | ||||||
Interest expense | 116.2 | 113.3 | 3 | ||||||
Total expenses | 18,602.9 | 15,953.9 | 17 | ||||||
Income before income taxes | 1,026.6 | 1,542.6 | (33) | ||||||
Provision for income taxes | 301.6 | 495.9 | (39) | ||||||
Net income | 725.0 | 1,046.7 | (31) | ||||||
Net (income) loss attributable to noncontrolling interest (NCI), net of tax | (6.5 | ) | (17.3 | ) | (62) | ||||
Net income attributable to Progressive | 718.5 | 1,029.4 | (30) | ||||||
Other comprehensive income (loss), net of tax | |||||||||
Changes in: | |||||||||
Total net unrealized gains (losses) on securities | 174.7 | (112.3 | ) | (256) | |||||
Net unrealized losses on forecasted transactions | (1.0 | ) | (9.5 | ) | (89) | ||||
Foreign currency translation adjustment | 0.7 | (1.2 | ) | (158) | |||||
Other comprehensive income (loss) | 174.4 | (123.0 | ) | (242) | |||||
Other comprehensive (income) loss attributable to NCI | (0.8 | ) | 1.2 | (167) | |||||
Total comprehensive income attributable to Progressive | $ | 892.1 | $ | 907.6 | (2) | ||||
1 Includes results of ARX Holding Corp. and subsidiaries (ARX) since April 1, 2015, the date The Progressive Corporation acquired a controlling interest in ARX.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
October 2016
(millions – except per share amounts)
(unaudited)
The following table sets forth the computation of per share results: | ||||||||||||
Current | Year-to-Date | |||||||||||
Month | 2016 | 2015 | ||||||||||
Net income attributable to Progressive | $ | 70.7 | $ | 718.5 | $ | 1,029.4 | ||||||
Per share: | ||||||||||||
Basic | $ | 0.12 | $ | 1.23 | $ | 1.76 | ||||||
Diluted | $ | 0.12 | $ | 1.23 | $ | 1.75 | ||||||
Comprehensive income (loss) attributable to Progressive | $ | (1.4 | ) | $ | 892.1 | $ | 907.6 | |||||
Per share: | ||||||||||||
Diluted | $ | 0 | $ | 1.52 | $ | 1.54 | ||||||
Average shares outstanding - Basic | 580.2 | 582.1 | 585.9 | |||||||||
Net effect of dilutive stock-based compensation | 3.2 | 3.3 | 3.7 | |||||||||
Total equivalent shares - Diluted | 583.4 | 585.4 | 589.6 | |||||||||
The following table sets forth the investment results for the period: | |||||||
Current | Year-to-Date | ||||||
Month | 2016 | 2015 | |||||
Fully taxable equivalent (FTE) total return: | |||||||
Fixed-income securities | 0% | 3.3% | 1.8 % | ||||
Common stocks | (2.1)% | 6.2 % | 2.2 % | ||||
Total portfolio | (0.3)% | 3.7 % | 1.8 % | ||||
Pretax annualized investment income book yield | 2.1 % | 2.3 % | 2.4 % | ||||
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
October 2016
($ in millions)
(unaudited)
Current Month | ||||||||||||||||||
Vehicles | ||||||||||||||||||
Commercial | ||||||||||||||||||
Personal Lines Business | Lines | Property | Companywide | |||||||||||||||
Agency | Direct | Total | Business | Business | Total1 | |||||||||||||
Net Premiums Written | $ | 1,004.6 | $ | 931.5 | $ | 1,936.1 | $ | 248.7 | $ | 74.4 | $ | 2,259.2 | ||||||
% Growth in NPW | 16 | % | 18 | % | 17 | % | 13 | % | 11 | % | 16 | % | ||||||
Net Premiums Earned | $ | 970.7 | $ | 936.3 | $ | 1,907.0 | $ | 248.9 | $ | 76.3 | $ | 2,232.2 | ||||||
% Growth in NPE | 10 | % | 15 | % | 13 | % | 23 | % | 11 | % | 14 | % | ||||||
GAAP Ratios | ||||||||||||||||||
Loss/LAE ratio | 77.5 | 79.1 | 78.3 | 73.2 | 107.0 | 78.6 | ||||||||||||
Expense ratio | 19.3 | 15.8 | 17.6 | 20.2 | 33.42 | 18.5 | ||||||||||||
Combined ratio | 96.8 | 94.9 | 95.9 | 93.4 | 140.42 | 97.1 | ||||||||||||
Actuarial Adjustments3 | ||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||
Prior accident years | $ | 32.7 | ||||||||||||||||
Current accident year | (3.9 | ) | ||||||||||||||||
Calendar year actuarial adjustment | $ | 12.7 | $ | 16.7 | $ | 29.4 | $ | 0 | $ | (0.6 | ) | $ | 28.8 | |||||
Prior Accident Years Development | ||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||
Actuarial adjustment | $ | 32.7 | ||||||||||||||||
All other development | (17.5 | ) | ||||||||||||||||
Total development | $ | 15.2 | ||||||||||||||||
Calendar year loss/LAE ratio | 78.6 | |||||||||||||||||
Accident year loss/LAE ratio | 79.3 | |||||||||||||||||
1 Includes results for all of our run-off businesses, including our professional liability group. For the month, our run-off businesses generated no underwriting profit or loss.
2 Included in both the expense ratio and combined ratio is 6.7 points of amortization expense primarily associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.7 and a combined ratio of 133.7 for October 2016. See the Monthly Commentary for a discussion of the catastrophe losses incurred during the month.
3 Represents adjustments solely based on our actuarial reviews.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
October 2016
($ in millions)
(unaudited)
Year-to-Date | ||||||||||||||||||
Vehicles | ||||||||||||||||||
Commercial | ||||||||||||||||||
Personal Lines Business | Lines | Property | Companywide | |||||||||||||||
Agency | Direct | Total | Business | Business | Total1 | |||||||||||||
Net Premiums Written | $ | 8,633.0 | $ | 8,333.1 | $ | 16,966.1 | $ | 2,304.2 | $ | 790.9 | $ | 20,061.2 | ||||||
% Growth in NPW | 9 | % | 15 | % | 11 | % | 22 | % | NM | 14 | % | |||||||
Net Premiums Earned | $ | 8,216.2 | $ | 7,883.0 | $ | 16,099.2 | $ | 2,021.3 | $ | 714.3 | $ | 18,834.8 | ||||||
% Growth in NPE | 7 | % | 15 | % | 11 | % | 21 | % | NM | 13 | % | |||||||
GAAP Ratios | ||||||||||||||||||
Loss/LAE ratio | 75.7 | 77.3 | 76.5 | 72.5 | 74.6 | 76.0 | ||||||||||||
Expense ratio | 19.6 | 19.1 | 19.3 | 21.9 | 33.62 | 20.2 | ||||||||||||
Combined ratio | 95.3 | 96.4 | 95.8 | 94.4 | 108.22 | 96.2 | ||||||||||||
Actuarial Adjustments3 | ||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||
Prior accident years | $ | 107.7 | ||||||||||||||||
Current accident year | (26.5 | ) | ||||||||||||||||
Calendar year actuarial adjustment | $ | 28.9 | $ | 36.1 | $ | 65.0 | $ | (2.0 | ) | $ | 18.2 | $ | 81.2 | |||||
Prior Accident Years Development | ||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||
Actuarial adjustment | $ | 107.7 | ||||||||||||||||
All other development | (69.6 | ) | ||||||||||||||||
Total development | $ | 38.1 | ||||||||||||||||
Calendar year loss/LAE ratio | 76.0 | |||||||||||||||||
Accident year loss/LAE ratio | 76.2 | |||||||||||||||||
NM=Not meaningful; Property business written by Progressive prior to April 2015 was negligible.
1 Includes results for all of our run-off businesses, including our professional liability group. On a year-to-date basis, our run-off businesses generated a $1.6 million underwriting loss.
2 Included in both the expense ratio and combined ratio is 7.2 points of amortization expense primarily associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported a year-to-date expense ratio of 26.4 and a combined ratio of 101.0.
3 Represents adjustments solely based on our actuarial reviews.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions - except per share amounts)
(unaudited)
October | |||
2016 | |||
CONDENSED GAAP BALANCE SHEET: | |||
Investments – Available-for-sale, at fair value: | |||
Fixed maturities1 (amortized cost: $14,753.9) | $ | 14,914.4 | |
Equity securities: | |||
Nonredeemable preferred stocks (cost: $723.7) | 856.0 | ||
Common equities (cost: $1,576.2) | 2,803.4 | ||
Short-term investments (amortized cost: $5,351.5) | 5,351.5 | ||
Total investments2 | 23,925.3 | ||
Net premiums receivable | 4,734.6 | ||
Deferred acquisition costs | 679.6 | ||
Goodwill and intangible assets | 892.6 | ||
Other assets3 | 3,923.4 | ||
Total assets | $ | 34,155.5 | |
Unearned premiums | $ | 7,827.2 | |
Loss and loss adjustment expense reserves3 | 11,508.6 | ||
Other liabilities2 | 3,118.6 | ||
Debt | 3,152.0 | ||
Total liabilities | 25,606.4 | ||
Redeemable noncontrolling interest (NCI) | 466.4 | ||
Shareholders' equity | 8,082.7 | ||
Total liabilities, NCI, and shareholders' equity | $ | 34,155.5 | |
Common shares outstanding | 580.3 | ||
Shares repurchased - October | 0.5 | ||
Average cost per share | $ | 31.91 | |
Book value per share | $ | 13.93 | |
Trailing 12-month return on average shareholders' equity | |||
Net income available to Progressive | 12.4 | % | |
Comprehensive income available to Progressive | 13.3 | % | |
Net unrealized pretax gains (losses) on investments | $ | 1,517.1 | |
Increase (decrease) from September 2016 | $ | (113.2 | ) |
Increase (decrease) from December 2015 | $ | 269.3 | |
Debt-to-total capital ratio4 | 28.1 | % | |
Fixed-income portfolio duration | 1.9 | ||
Weighted average credit quality | A+ | ||
Year-to-date Gainshare factor5 | 1.56 |
1 As of October 31, 2016, we held certain hybrid securities and recognized a change in fair value of $2.9 million as a realized gain during the period we held these securities.
2 At October 31, 2016, we had $415.7 million of net unsettled security transactions, including collateral on open derivative positions.
3 Loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $1,970.4 million, which are included in "other assets."
4 Ratio reflects debt as a percent of debt plus shareholders' equity; redeemable noncontrolling interest is not part of this calculation.
5 The Gainshare factor excludes the results of our Property business.
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Monthly Commentary
• | During October, we incurred about $92 million, or 4.1 loss ratio points, of catastrophe losses, including $87 million related to Hurricane Matthew, compared to about $28 million, or 1.4 loss ratio points, last year. Approximately $45 million of the catastrophe losses were from our vehicle businesses and $47 million, net of reinsurance, were from our Property business (about 61 points on our Property business combined ratio). Year-to-date total catastrophe losses were approximately $570 million, or 3.0 points, compared to $230 million, or 1.4 points, last year. Catastrophe losses for the Property business are included in our results beginning April 2015. |
• | Disclosure of monthly results often shows more variability in written premium growth rates than disclosure on a quarterly basis. The Personal Lines written premium growth rates in fiscal October 2016 were higher than September 2016, partially due to the fact that the first two days of October, which are historically higher volume days, were reported in fiscal September 2015 (thereby lowering the October 2015 denominator). Adjusting for these days, October's Personal Lines written premium growth rates would be more in line with the year-to-date premium growth rates. |
Events
We plan to release November results on Wednesday, December 14, 2016, 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. Home insurance is underwritten by select carriers, including American Strategic Insurance Corp. and subsidiaries (ASI), our majority owned subsidiaries.
Progressive is the fourth largest auto insurer in the country; a leading seller of motorcycle and commercial auto insurance; and through ASI, one of the top 20 homeowners carriers. Progressive also offers car insurance online in Australia at
http://www.progressiveonline.com.au.
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 Service Centers.
The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly at NYSE:PGR.
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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 estimates, assumptions, and projections generally; inflation and changes in general economic conditions (including changes in interest rates and financial markets); the possible failure of one or more governmental, corporate, or other entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading by one or more rating agencies of our securities or governmental, corporate, or other securities we hold; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including reinsurers and other counterparties to certain financial transactions; the accuracy and adequacy of our pricing, loss reserving, and claims methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to attract and retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for the introduction of products to new jurisdictions, for requested rate changes and the timing thereof and for any proposed acquisitions; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments at the state and federal levels, including, but not limited to, matters relating to vehicle and homeowners insurance, health care reform and tax law changes; the outcome of disputes relating to intellectual property rights; the outcome of litigation or governmental investigations that may be pending or filed against us; severe weather conditions and other catastrophe events; the effectiveness of our reinsurance programs; changes in vehicle usage and driving patterns, which may be influenced by oil and gas prices; changes in residential occupancy patterns and the effects of the emerging "sharing economy"; advancements in vehicle or home technology or safety features, such as accident and loss prevention technologies or the development of autonomous or partially autonomous vehicles; our ability to accurately recognize and appropriately respond in a timely manner to changes in loss frequency and severity trends; technological advances; acts of war and terrorist activities; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions, and safeguard personal and sensitive information in our possession; our continued access to and functionality of third-party systems that are critical to our business; restrictions on our subsidiaries' ability to pay dividends to The Progressive Corporation; possible impairment of our goodwill or intangible assets if future results do not adequately support either, or both, of these items; court decisions, new theories of insurer liability or interpretations of insurance policy provisions and other trends in litigation; changes in health care and auto and property repair costs; 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. 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 a reserve is established 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.
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