10-KPeriod: FY2014

PROGRESSIVE CORP/OH/ Annual Report, Year Ended Dec 31, 2014

Filed March 2, 2015For Securities:PGR

Summary

The Progressive Corporation's 2014 10-K report highlights a year of consistent growth in net premiums written, reaching $18.7 billion, an increase from $17.3 billion in 2013 and $16.4 billion in 2012. The company maintained a strong combined ratio, demonstrating effective expense management and underwriting discipline. Key strategic initiatives include the pending acquisition of a controlling interest in ARX Holding Corp. (ASI), aimed at expanding its homeowners insurance offerings. Progressive continues to focus on its core personal and commercial auto insurance segments, with Personal Lines accounting for approximately 90% of total net premiums written. The company's commitment to innovation is evident in its usage-based insurance program, Snapshot®, which generated over $2.6 billion in premiums in 2014. The report also emphasizes the competitive landscape, Progressive's robust market share in private passenger auto insurance, and its strategic use of technology and data analytics to maintain a competitive edge.

Financial Highlights

39 data points
Beta

Revenue

$19.39B

Net Income

$1.28B

6.6% Net Margin

EPS (Diluted)

$2.15

Total Assets

$25.79B

Cash & Equivalents

$108.40M

Free Cash Flow

$1.62B

Financial Statements
Beta
Revenue$19.39B
Interest Expense$116.90M
Net Income$1.28B
EPS (Basic)$2.17
EPS (Diluted)$2.15
Shares Outstanding (Basic)590.60M
Shares Outstanding (Diluted)594.80M

Key Highlights

  • 1Net premiums written increased to $18.7 billion in 2014, up from $17.3 billion in 2013 and $16.4 billion in 2012.
  • 2The combined ratio improved to 92.3 in 2014, indicating enhanced underwriting profitability.
  • 3A significant strategic move is the pending acquisition of a controlling interest in ARX Holding Corp. (ASI) for an estimated $875 million, expanding into homeowners insurance.
  • 4Personal Lines remain the dominant segment, contributing approximately 90% of total net premiums written.
  • 5Progressive's Snapshot® usage-based insurance program generated over $2.6 billion in premiums in 2014.
  • 6The company holds a strong market position, ranking fourth in the U.S. private passenger auto market.
  • 7Progressive is actively pursuing innovation, including patents related to usage-based insurance and its Service Center vehicle repair model.

Frequently Asked Questions

Progressive's primary business is providing personal and commercial auto insurance. The company is structured into two main segments: Personal Lines, which includes personal auto and special lines products (motorcycles, RVs, etc.), and Commercial Lines, focusing on auto insurance for small businesses. Personal Lines accounts for approximately 90% of net premiums written.

Key performance indicators include net premiums written, which show consistent growth. The combined ratio, a measure of underwriting profitability, improved to 92.3 in 2014. The company also reports net income and earnings per share. Investment income is also a factor, though it decreased slightly in 2014.

The most significant strategic initiative is the pending acquisition of a controlling interest in ARX Holding Corp. (ASI), a major homeowners insurance provider. This acquisition, expected to close in April 2015, aims to expand Progressive's presence in the property insurance market and serve as the exclusive provider of homeowners products for new business in its Agency channel.

Progressive emphasizes innovation through technology and data analytics, highlighted by its Snapshot® usage-based insurance program and patents in this area. The company actively monitors and responds to a highly competitive market by focusing on price competitiveness, brand recognition, service quality, and operational efficiencies. They also leverage technology for claims handling and customer service, such as their Service Center model.