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Form 8-K PROGRESSIVE CORP/OH/ For: Dec 15

December 15, 2021 9:05 AM EST

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NEWS RELEASE
The Progressive CorporationCompany Contact:
6300 Wilson Mills RoadDouglas S. Constantine
Mayfield Village, Ohio 44143(440) 910-3563

PROGRESSIVE REPORTS NOVEMBER RESULTS

MAYFIELD VILLAGE, OHIO -- December 15, 2021 -- The Progressive Corporation (NYSE:PGR) today reported the following results for November 2021:
November
(millions, except per share amounts and ratios; unaudited)20212020Change
Net premiums written$3,289.4 $2,957.9 11  %
Net premiums earned$3,590.4 $3,150.8 14  %
Net income$195.2 $739.8 (74) %
  Per share available to common shareholders$0.33 $1.26 (74) %
Total pretax net realized gains (losses) on securities$(99.1)$459.6 (122) %
Combined ratio91.986.65.3 pts.
Average diluted equivalent common shares586.3587.6 %

November
(thousands; unaudited)20212020Change
Policies in Force
Personal Lines
Agency – auto7,921.97,616.14 %
Direct – auto9,600.88,881.18 %
Total personal auto17,522.716,497.26 %
Total special lines5,286.94,913.48 %
Total Personal Lines22,809.621,410.67 %
Total Commercial Lines968.8819.418 %
Total Property business2,762.52,459.612 %
Companywide Total26,540.924,689.67 %
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 liability and physical damage insurance, workers’ compensation coverage primarily for the transportation industry, and business-related general liability and property insurance, predominantly for small businesses. Our Property business writes residential property insurance for homeowners, other property owners, and renters.


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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENT
November 2021
(millions)
(unaudited)
Current Month
Comments on Monthly Results1
Net premiums written
$3,289.4 
Revenues:
Net premiums earned
$3,590.4 
Investment income
72.1 
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales
4.5 
Net holding period gains (losses) on securities
(103.2)
Net impairment losses recognized in earnings
(0.4)
Total net realized gains (losses) on securities
(99.1)
Fees and other revenues
55.4 
Service revenues
22.5 
Total revenues
3,641.3 
Expenses:
Losses and loss adjustment expenses
2,641.5 
Policy acquisition costs
297.7 
Other underwriting expenses
414.4 
Investment expenses
2.0 
Service expenses
20.7 
Interest expense
17.1 
Total expenses
3,393.4 
Income before income taxes
247.9 
Provision for income taxes
52.7 
Net income
195.2 
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities
(44.5)
Net unrealized losses on forecasted transactions
Foreign currency translation adjustment
(0.4)
Other comprehensive income (loss)
(44.9)
Total comprehensive income
$150.3 
1 For a description of our financial reporting and accounting policies, see Note 1 to our 2020 audited consolidated financial statements included in our 2020 Shareholders’ Report, which can be found at www.progressive.com/annualreport.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
November 2021
(millions)
(unaudited)

Year-to-Date
20212020% Change
Net premiums written$43,291.9 $37,779.6 15
Revenues:
Net premiums earned$40,755.5 $36,097.4 13
Investment income778.0 863.9 (10)
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales612.7 851.8 (28)
Net holding period gains (losses) on securities678.8 437.3 55
Net impairment losses recognized in earnings(4.6)NM
Total net realized gains (losses) on securities1,286.9 1,289.1 0
Fees and other revenues638.6 554.6 15
Service revenues251.2 208.4 21
Total revenues43,710.2 39,013.4 12
Expenses:
Losses and loss adjustment expenses30,880.0 23,099.6 34
Policy acquisition costs3,415.0 3,008.1 14
Other underwriting expenses5,227.5 5,123.8 2
Policyholder credit expense1,067.0 (100)
Investment expenses23.3 18.4 27
Service expenses234.4 188.9 24
Interest expense201.4 198.3 2
Total expenses39,981.6 32,704.1 22
Income before income taxes3,728.6 6,309.3 (41)
Provision for income taxes771.0 1,310.7 (41)
Net income2,957.6 4,998.6 (41)
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities(821.3)558.0 (247)
Net unrealized losses on forecasted transactions0.7 0.7 0
Foreign currency translation adjustment(0.7)NM
Other comprehensive income (loss)(821.3)558.7 (247)
Total comprehensive income$2,136.3 $5,557.3 (62)
NM = Not Meaningful

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
November 2021
(millions – except per share amounts)
(unaudited)



The following table sets forth the computation of per share results:
CurrentYear-to-Date
Month20212020
Net income
$195.2 $2,957.6 $4,998.6 
Less: Preferred share dividends
2.2 24.6 24.6 
Net income available to common shareholders
$193.0 $2,933.0 $4,974.0 
Per common share:
Basic
$0.33 $5.02 $8.50 
Diluted
$0.33 $5.00 $8.46 
Comprehensive income
$150.3 $2,136.3 $5,557.3 
Less: Preferred share dividends
2.2 24.6 24.6 
Comprehensive income attributable to common shareholders
$148.1 $2,111.7 $5,532.7 
Per common share:
Diluted
$0.25 $3.60 $9.41 
Average common shares outstanding - Basic
583.8584.6584.9
Net effect of dilutive stock-based compensation
2.52.52.8
Total average equivalent common shares - Diluted
586.3587.1587.7


The following table sets forth the investment results for the period:
Current
Year-to-Date
Month
20212020
Fully taxable equivalent (FTE) total return:
Fixed-income securities
(0.1)%(0.1)%6.3%
Common stocks
(1.2)%27.7%16.0%
     Total portfolio
(0.2)%2.2%6.9%
Pretax annualized investment income book yield
1.8%1.9%2.4%



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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
November 2021
($ in millions)
(unaudited)


Current Month
Commercial
Personal Lines BusinessLinesPropertyCompanywide
AgencyDirectTotalBusinessBusinessTotal
Net Premiums Written$1,217.9 $1,337.3 $2,555.2 $554.5 $179.8 $3,289.4 
% Growth in NPW5%8%6%35%23%11%
Net Premiums Earned$1,322.0 $1,458.1 $2,780.1 $630.6 $179.6 $3,590.4 
% Growth in NPE6%9%8%52%19%14%
GAAP Ratios
Loss/LAE ratio75.6 77.1 76.4 70.1 
42.0 .
73.6 
Expense ratio18.8 16.1 17.4 19.3 
29.01
18.3 
Combined ratio94.4 93.2 93.8 89.4 
71.01
91.9 
Net catastrophe loss ratio2
(1.8)0.5 (1.6)(1.4)
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years$0.3 
Current accident year23.8 
Calendar year actuarial adjustment$12.8 $13.5 $26.3 $(0.9)$(1.3)$24.1 
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment$0.3 
All other development47.3 
Total development$47.6 
Calendar year loss/LAE ratio73.6 
Accident year loss/LAE ratio74.9 
1Included in both the expense ratio and combined ratio is 2.6 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.4 and a combined ratio of 68.4.
2Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned. Negative ratio reflects favorable development on prior period catastrophes, primarily related to Hurricane Ida.
3Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
November 2021
($ in millions)
(unaudited)


Year-to-Date
Commercial
Personal Lines BusinessLinesPropertyCompanywide
AgencyDirectTotalBusiness BusinessTotal
Net Premiums Written$16,107.5 $17,652.6 $33,760.1 $7,497.6 $2,029.9 $43,291.9 
% Growth in NPW7%10%9%52%16%15%
Net Premiums Earned$15,557.2 $17,031.0 $32,588.2 $6,302.8 $1,857.1 $40,755.5 
% Growth in NPE7%10%9%41%16%13%
GAAP Ratios
Loss/LAE ratio75.7 77.0 76.3 69.6 
86.4 .
75.8 
Expense ratio18.5 19.6 19.1 19.7 
29.11
19.6 
Combined ratio94.2 96.6 95.4 89.3 
115.51
95.4 
Net catastrophe loss ratio2
2.0 0.4 
30.3.
3.0 
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years$(99.1)
Current accident year106.5 
Calendar year actuarial adjustment$39.8 $42.0 $81.8 $(29.9)$(44.5)$7.4 
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment$(99.1)
All other development46.7 
Total development$(52.4)
Calendar year loss/LAE ratio75.8 
Accident year loss/LAE ratio75.7 
1Included in both the expense ratio and combined ratio is 2.8 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 26.3 and a combined ratio of 112.7.
2Represents catastrophe losses incurred during the period, including the impact of reinsurance, 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.


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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions - except per share amounts)
(unaudited)
November 2021
CONDENSED GAAP BALANCE SHEET:
Investments, at fair value:
Available-for-sale securities:
Fixed maturities1 (amortized cost: $45,843.6)
$46,016.8 
Short-term investments (amortized cost: $672.1)672.1 
Total available-for-sale securities46,688.9 
Equity securities:
Nonredeemable preferred stocks (cost: $1,536.9)
1,591.3 
Common equities (cost: $1,247.7)4,835.9 
Total equity securities6,427.2 
Total investments2
53,116.1 
Net premiums receivable9,777.6 
Reinsurance recoverables (including $4,796.5 on unpaid loss and LAE reserves)5,033.9 
Deferred acquisition costs1,391.8 
Goodwill and intangible assets574.9 
Other assets2,861.0 
Total assets$72,755.3 
Unearned premiums$16,180.3 
Loss and loss adjustment expense reserves26,018.7 
Other liabilities2
6,810.8 
Debt4,898.6 
Total liabilities53,908.4 
Shareholders’ equity
18,846.9 
Total liabilities and shareholders’ equity
$72,755.3 
Common shares outstanding584.4 
Common shares repurchased - November
Average cost per common share$
Book value per common share$31.40 
Trailing 12-month return on average common shareholders’ equity
Net income 20.4  %
Comprehensive income16.0  %
Net unrealized pretax gains (losses) on fixed-maturity securities$166.9 
Increase (decrease) from October 2021$(56.4)
Increase (decrease) from December 2020$(1,039.7)
Debt-to-total capital ratio20.6 %
Fixed-income portfolio duration3.0 
Weighted average credit qualityAA-
1 As of November 30, 2021, we held certain hybrid securities and recognized a change in fair value of $6.3 million as a realized gain during the period we held these securities.
2 At November 30, 2021, we had $605.1 million of net unsettled security transactions classified in other liabilities.

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Monthly Commentary
The Company has no additional commentary regarding November’s results.

Events
We plan to release December results on Wednesday, January 26, 2022, before the market opens.

About Progressive
Progressive InsuranceSM makes it easy to understand, buy and use car insurance, home insurance, and other protection needs. 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 car 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.

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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:

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, 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.


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