10-KPeriod: FY2011

PROGRESSIVE CORP/OH/ Annual Report, Year Ended Dec 31, 2011

Filed February 28, 2012For Securities:PGR

Summary

The Progressive Corporation's 2011 10-K filing reveals a stable year for the insurer, marked by continued growth in net premiums written, which reached $15.1 billion, a slight increase from the previous year. The company maintained a solid combined ratio of 93.0, indicating effective management of claims and expenses relative to premiums earned. Progressive's core business remains personal auto insurance, representing approximately 90% of its Personal Lines segment, with ongoing expansion of its usage-based insurance product, Snapshot. Key operational strengths include a diversified distribution strategy through both agencies and direct channels, and a robust claims service model, including patented concierge services. The company also highlighted its strong capital position, with statutory surplus of $5.3 billion and a premiums-to-surplus ratio of 2.9:1, suggesting ample capacity for future growth and to weather potential market fluctuations. Management emphasized a long-term value creation strategy, potentially leading to short-term performance variations, as well as a variable dividend policy tied to underwriting income and overall company performance.

Financial Highlights

35 data points
Beta

Revenue

$15.77B

Net Income

$1.02B

6.4% Net Margin

EPS (Diluted)

$1.59

Total Assets

$21.84B

Cash & Equivalents

$155.70M

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$15.77B
Interest Expense$132.70M
Net Income$1.02B
EPS (Basic)$1.61
EPS (Diluted)$1.59
Shares Outstanding (Basic)632.30M
Shares Outstanding (Diluted)636.90M

Key Highlights

  • 1Net premiums written grew to $15.1 billion in 2011, up from $14.5 billion in 2010.
  • 2The combined ratio remained favorable at 93.0 for 2011, consistent with prior years.
  • 3Personal auto insurance continues to be the dominant segment, accounting for approximately 90% of Personal Lines premiums.
  • 4Progressive is expanding its usage-based insurance product, Snapshot, available in more states.
  • 5The company reported strong statutory surplus of $5.3 billion, with a premiums-to-surplus ratio of 2.9:1.
  • 6Loss reserves developed favorably for the year, contributing positively to the financial results, although some IBNR reserves showed unfavorable development.
  • 7The company's investment portfolio had a fair value of $16.0 billion at year-end 2011, primarily in fixed-income securities.

Frequently Asked Questions

Progressive's primary business is personal and commercial automobile insurance. In 2011, the company reported net premiums written of $15.1 billion, showing growth from the previous year. The combined ratio was 93.0, indicating solid operational efficiency.

Progressive utilizes a multi-channel distribution strategy. Its Personal Lines products are sold through a network of over 35,000 independent insurance agencies (Agency business), which accounted for 57% of Personal Lines volume in 2011, and directly to consumers via online and phone channels (Direct business), which accounted for 43%.

The company demonstrates a strong financial position. As of December 31, 2011, its statutory surplus was $5.3 billion, with a premiums-to-surplus ratio of 2.9:1. This indicates ample capital to support its operations and growth.

Progressive determines its liability for unpaid losses and loss adjustment expenses using actuarial and statistical procedures. The company reported favorable reserve development in 2011 for its Personal Lines and Commercial Auto businesses, though some unfavorable development was noted in IBNR reserves due to an increase in late-emerging claims.