10-KPeriod: FY2009

PROGRESSIVE CORP/OH/ Annual Report, Year Ended Dec 31, 2009

Filed March 1, 2010For Securities:PGR

Summary

In 2009, The Progressive Corporation demonstrated resilience, achieving net income of $1.057 billion, a significant turnaround from a net loss of $70 million in 2008. This financial recovery was driven by a combination of increased net premiums written, which grew to $14.0 billion, and an improved combined ratio of 91.6%, down from 94.6% in the prior year. The company's core personal auto insurance segment, accounting for approximately 89% of net premiums written, showed strength, with Progressive maintaining its position as a leading player in the market. Key to the company's performance was its disciplined approach to underwriting and claims handling, supported by a robust investment portfolio that, despite market volatility, contributed positively to comprehensive income. The company also actively managed its capital through share repurchases and a variable dividend policy, returning value to shareholders while maintaining financial stability. Progressive's strategic focus on innovation, customer service, and operational efficiency appears to be paying off, positioning it favorably in a competitive insurance landscape as it expands internationally into Australia.

Financial Highlights

34 data points
Beta

Revenue

$14.56B

Net Income

$1.06B

7.3% Net Margin

EPS (Diluted)

$1.57

Total Assets

$20.05B

Cash & Equivalents

$160.70M

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$14.56B
Interest Expense$139.00M
Net Income$1.06B
EPS (Basic)$1.59
EPS (Diluted)$1.57
Shares Outstanding (Basic)666.80M
Shares Outstanding (Diluted)672.20M

Key Highlights

  • 1Achieved a net income of $1.057 billion in 2009, a substantial improvement from a net loss of $70 million in 2008.
  • 2Net premiums written increased to $14.0 billion in 2009, up from $13.6 billion in 2008, indicating growth in core business.
  • 3Combined ratio improved to 91.6% in 2009, demonstrating enhanced underwriting profitability compared to 94.6% in 2008.
  • 4The company's investment portfolio had a fair value of $14.7 billion at December 31, 2009, contributing $534.1 million in total investment income before expenses and taxes.
  • 5Progressive's market share in the U.S. private passenger auto insurance market increased to approximately 7.6% in 2009 from 7.3% in 2008.
  • 6Began selling personal auto insurance in Australia in December 2009, marking international expansion.
  • 7Returned capital to shareholders through share repurchases and a variable dividend program, declaring a dividend of $0.1613 per common share in February 2010.

Frequently Asked Questions

In 2009, Progressive reported a net income of $1.057 billion, a significant improvement from a net loss of $70 million in 2008. This turnaround was supported by an increase in net premiums written to $14.0 billion and an improved combined ratio of 91.6%.

Progressive maintained its position as a leading insurer in the U.S. private passenger auto market, increasing its market share to approximately 7.6% in 2009 from 7.3% in 2008. The company also expanded its reach by launching personal auto insurance in Australia in December 2009.

Progressive follows a policy of paying an annual variable dividend based on after-tax underwriting income and a companywide performance factor. In February 2010, the company paid a dividend of $0.1613 per common share. Additionally, Progressive repurchases shares to neutralize dilution from equity compensation and return excess capital to investors.

Progressive identifies several key risk categories: Insurance Risks (underwriting accuracy, reserve adequacy, catastrophic events), Operating Risks (competition, innovation, brand management, employee retention, regulatory compliance, claims adjustment), Market Risks (investment portfolio performance, interest rate, credit, liquidity), and Credit Risks (counterparty defaults, access to capital, dividend restrictions). A significant risk factor mentioned is the competitive nature of the auto insurance market and the potential impact of economic downturns.