10-QPeriod: Q1 FY2009

PROGRESSIVE CORP/OH/ Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 11, 2009For Securities:PGR

Summary

Progressive Corporation (PGR) filed its quarterly report on Form 10-Q for the period ending March 30, 2009. The report indicates no material changes in risk factors from the previous annual report. The company's investment portfolio, while subject to interest rate and equity market risks, is managed with a focus on diversification. Value-at-Risk (VaR) calculations show potential losses, with the total portfolio VaR at $477.5 million at 99% confidence over a 66-day period, representing 3.7% of the portfolio and 11.1% of shareholders' equity. Significant shareholder activity included the approval of amendments to the Code of Regulations and the ratification of the independent auditor. The company also details its executive compensation through restricted stock awards, both time-based and performance-based, aligning executive incentives with business growth and profitability goals.

Financial Highlights

31 data points
Beta

Revenue

$3.47B

Net Income

$232.50M

6.7% Net Margin

EPS (Diluted)

$0.35

Total Assets

$18.22B

Cash & Equivalents

$134.50M

Free Cash Flow

$520.20M

Financial Statements
Beta
Revenue$3.47B
Interest Expense$33.70M
Net Income$232.50M
EPS (Basic)$0.35
EPS (Diluted)$0.35
Shares Outstanding (Basic)668.60M
Shares Outstanding (Diluted)672.00M

Key Highlights

  • 1No material changes in disclosed risk factors compared to the 2008 annual report.
  • 2Investment portfolio's 66-day VaR at 99% confidence was $477.5 million (3.7% of portfolio, 11.1% of shareholder's equity) as of March 31, 2009.
  • 3Shareholders approved amendments to the Code of Regulations regarding shareholder proposals and director nominations.
  • 4The company's stock repurchase program authorized in June 2007 for up to 100 million shares was nearing expiration (June 30, 2009), with minimal repurchases in the first quarter of 2009 (346,702 shares).
  • 5Progressive granted significant restricted stock awards to management in March 2009, including performance-based awards tied to premium growth and combined ratio targets.
  • 6The independent registered public accounting firm, PricewaterhouseCoopers LLP, was ratified for 2009.
  • 7Executive compensation includes performance-based restricted stock awards designed to incentivize outperformance in personal and commercial auto businesses and achieve profitability goals.

Frequently Asked Questions

Progressive's investment portfolio is subject to interest rate risk and equity market risk. The company uses Value-at-Risk (VaR) to estimate its exposure to short-term volatility. As of March 31, 2009, the total portfolio VaR was an estimated $477.5 million, representing a potential loss at 99% confidence within a 66-day trading period. The duration of the fixed-income portfolio was 3.0 years, and the equity portfolio beta was 1.0, indicating it moved in tandem with the stock market.

Shareholders elected four directors, approved amendments to the Code of Regulations concerning shareholder proposals and director nominations, and ratified the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2009. Executive compensation practices were detailed through restricted stock awards.

Progressive has a board authorization for up to 100 million common shares to be repurchased, which was set to expire on June 30, 2009. In the first quarter of 2009, minimal shares were repurchased, primarily to neutralize dilution from equity-based compensation and return underleveraged capital. Executive compensation includes time-based and performance-based restricted stock awards, with the latter tied to key performance indicators like premium growth and combined ratios, aligning executive interests with long-term shareholder value.