10-QPeriod: Q2 FY2011

PROGRESSIVE CORP/OH/ Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 9, 2011For Securities:PGR

Summary

The Progressive Corporation (PGR) reported solid financial results for the quarter ending June 30, 2011. Total revenues increased by 5% to $3,872.7 million compared to the same period in the prior year, driven by a 4% increase in net premiums earned. Net income saw a significant increase of 16% to $245.2 million, translating to earnings per share of $0.38, up from $0.32 in the prior year. The company's underwriting operations demonstrated strength with a 6.6% profit margin, exceeding its target, despite facing higher catastrophe losses. Investment operations contributed positively, with total net realized gains on securities reaching $26.0 million, a substantial improvement from a net loss in the prior year. The company's investment portfolio remained robust, valued at $16.0 billion, with a balanced allocation strategy. Progressive also continued its commitment to returning capital to shareholders, repurchasing shares during the quarter and maintaining a solid capital position. Management expressed confidence in the company's liquidity and capital resources to support ongoing operations and future growth initiatives.

Financial Highlights

34 data points
Beta

Revenue

$3.87B

Net Income

$245.20M

6.3% Net Margin

EPS (Diluted)

$0.38

Total Assets

$21.81B

Cash & Equivalents

$149.70M

Free Cash Flow

$339.50M

Financial Statements
Beta
Revenue$3.87B
Interest Expense$31.50M
Net Income$245.20M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)643.60M
Shares Outstanding (Diluted)647.90M

Key Highlights

  • 1Total revenues grew 5% year-over-year to $3,872.7 million.
  • 2Net income increased 16% to $245.2 million, with EPS rising to $0.38 from $0.32.
  • 3Underwriting profit margin was 6.6%, exceeding the company's 4% target.
  • 4Net realized gains on securities were $26.0 million, a significant turnaround from a loss in the prior year.
  • 5Policies in force grew by 5% companywide, with Personal Lines up 5% and Commercial Auto down 2%.
  • 6The company repurchased 13.3 million common shares for $282.9 million during the quarter.
  • 7The investment portfolio value stood at $16.0 billion, with a 23% allocation to Group I securities and 77% to Group II.

Frequently Asked Questions

Progressive's revenue growth was primarily driven by a 4% increase in net premiums earned, contributing to a 5% overall increase in total revenues to $3,872.7 million for the quarter.

The company demonstrated strong underwriting profitability with a 6.6% profit margin, which exceeded its target of 4%. This was achieved despite higher catastrophe losses compared to the prior year, indicating effective management of underlying insurance operations.

The investment portfolio was valued at $16.0 billion and generated $26.0 million in net realized gains on securities, a significant improvement from the prior year. The company's asset allocation strategy aims for a balance between risk and return, and management remains confident in its investment strategy's ability to support overall earnings.

Progressive is actively managing its capital, with total capital (debt plus equity) at $8.3 billion. During the quarter, the company repurchased 13.3 million common shares for $282.9 million, demonstrating a commitment to returning value to shareholders. Additionally, a new share repurchase authorization of up to 75 million common shares was approved.