Summary
Progressive Corp (PGR) filed its quarterly report on November 8, 2010, for the period ending September 29, 2010. The filing provides insights into the company's market risk exposure and internal controls. A key takeaway is the stable, yet slightly increasing, duration of financial instruments subject to interest rate risk, and a weighted average beta for the equity portfolio that remained largely consistent. The company utilizes Value-at-Risk (VaR) to assess potential investment portfolio volatility, with a recent adjustment in its reporting methodology to a 99.5 percentile confidence level and an annual return period for better alignment with industry standards and capital planning. From a capital management perspective, Progressive continued its share repurchase program, buying back 5 million shares during the third quarter of 2010 at an average price of $19.65. These repurchases are aimed at neutralizing dilution from equity-based compensation and potentially returning capital to shareholders. The company also affirmed the effectiveness of its disclosure controls and procedures, with no material changes to internal controls over financial reporting noted during the quarter. Investors should note that no material changes in risk factors from the prior annual report were disclosed.
Financial Highlights
34 data points| Revenue | $3.77B |
| Interest Expense | $31.90M |
| Net Income | $261.60M |
| EPS (Basic) | $0.40 |
| EPS (Diluted) | $0.40 |
| Shares Outstanding (Basic) | 655.80M |
| Shares Outstanding (Diluted) | 661.20M |
Key Highlights
- 1The duration of financial instruments subject to interest rate risk was 2.0 years at September 30, 2010, a slight decrease from 2.3 years at December 31, 2009.
- 2The weighted average beta of the equity portfolio was 1.07 at September 30, 2010, indicating a slight increase in equity sensitivity to market movements.
- 3Progressive is using Value-at-Risk (VaR) with adjusted reporting parameters (99.5 percentile confidence, annual period) to manage investment portfolio volatility.
- 4Total portfolio VaR was estimated at $(578.6) million at September 30, 2010, representing 3.5% of the portfolio and 8.6% of shareholders' equity.
- 5The company repurchased 5 million shares during July, August, and September 2010 for an aggregate of approximately $98.25 million.
- 6Disclosure controls and procedures were deemed effective by management, with no material changes to internal control over financial reporting.
- 7No material changes in risk factors were reported compared to the annual report for the year ended December 31, 2009.