PROGRESSIVE CORP/OH/ - FORM 8-K - EX-99

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8-K - 8-K - PROGRESSIVE CORP/OH/	d332010d8k.htm

Exhibit 99


				NEWS RELEASE

The Progressive Corporation 6300 Wilson Mills Road Mayfield Village, Ohio 44143 http://www.progressive.com				Company Contact: Matt Downing (440) 395-4222

PROGRESSIVE REPORTS MARCH RESULTS

MAYFIELD VILLAGE, OHIO — April 11, 2012 — The Progressive Corporation today reported the following results for March and the first quarter 2012:


	Month						Quarter
(millions, except per share amounts and ratios; unaudited)	2012		2011		Change		2012		2011		Change
Net premiums written	$	1,325.0	$	1,222.1		8 %	$	4,162.5	$	3,900.0		7 %
Net premiums earned	$	1,209.0	$	1,140.7		6 %	$	3,861.5	$	3,665.3		5 %
Net income	$	76.3	$	136.2		(44)%	$	257.6	$	362.9		(29)%
Per share	$	.13	$	.21		(40)%	$	.42	$	.55		(24)%
Pretax net realized gains (losses) on securities (including net impairment losses)	$	36.2	$	43.8		(17)%	$	77.5	$	99.7		(22)%
Combined ratio		96.0		88.8		7.2 pts.		94.1		90.3		3.8 pts.
Average equivalent shares		609.8		654.1		(7)%		610.0		655.8		(7)%


(thousands; unaudited)	March 2012		March 2011		Change
Policies in Force:
Agency – auto		4,816.6		4,581.3		5	%
Direct – auto		3,987.5		3,722.2		7	%

Total personal auto		8,804.1		8,303.5		6	%
Total special lines		3,852.3		3,645.5		6	%

Total Personal Lines		12,656.4		11,949.0		6	%

Total Commercial Auto		513.8		506.5		1	%

Progressive offers insurance to personal and commercial auto drivers throughout the United States. Our Personal Lines business writes insurance for personal autos and recreational vehicles. Our Commercial Auto business writes primary liability, physical damage, and other auto-related insurance for autos and trucks owned by small businesses.

See the “Comprehensive Income Statements” and “Supplemental Information” for further month and year-to-date information and the “Monthly Commentary” at the end of this release for additional discussion.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

March 2012

(millions)

(unaudited)


	Current Month			Comments on Monthly Results¹
Net premiums written	$	1,325.0

Revenues:
Net premiums earned	$	1,209.0
Investment income		40.2
Net realized gains (losses) on securities:
Other-than-temporary impairment (OTTI) losses:
Total OTTI losses		(.5	)
Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses²		(.4	)

Net impairment losses recognized in earnings		(.9	)
Net realized gains (losses) on securities		37.1

Total net realized gains (losses) on securities		36.2
Service revenues		2.7

Net gains (losses) on extinguishment of debt		(.7	)	Reflects the repurchase of $12.6 million of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067.

Total revenues		1,287.4

Expenses:
Losses and loss adjustment expenses		883.4
Policy acquisition costs		112.0
Other underwriting expenses		164.7
Investment expenses		1.6
Service expenses		3.0
Interest expense		10.4

Total expenses		1,175.1

Income before income taxes		112.3
Provision for income taxes		36.0

Net income		76.3

Other comprehensive income, net of tax:
Net unrealized gains (losses) on securities:
Net non-credit related OTTI losses, adjusted for valuation changes		.7
Other net unrealized gains (losses) on securities		16.0

Total net unrealized gains (losses) on securities		16.7
Net unrealized gains on forecasted transactions		(.3	)
Foreign currency translation adjustment		(.1	)

Other comprehensive income		16.3

Total comprehensive income	$	92.6

See the Monthly Commentary at the end of this release for additional discussion. For a description of our reporting and accounting policies, see Note 1 to our 2011 audited consolidated financial statements included in our 2011 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

²	A negative amount for the period reflects credit losses reclassified from other comprehensive income that exceeded the amount of non-credit OTTI losses recognized in other comprehensive income during the period.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

March 2012 Year-to-Date

(millions)

(unaudited)


	Year-to-Date
	2012			2011			% Change
Net premiums written	$	4,162.5		$	3,900.0			7

Revenues:
Net premiums earned	$	3,861.5		$	3,665.3			5
Investment income		114.7			123.3			(7)
Net realized gains (losses) on securities:
Other-than-temporary impairment (OTTI) losses:
Total OTTI losses		(.5	)		(1.4	)		(64	)
Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses¹		(.4	)		0			NM

Net impairment losses recognized in earnings		(.9	)		(1.4	)		(36	)
Net realized gains (losses) on securities		78.4			101.1			(22	)

Total net realized gains (losses) on securities		77.5			99.7			(22)
Service revenues		8.2			5.2			58
Net gains (losses) on extinguisment of debt		(.7)			0			NM

Total revenues		4,061.2			3,893.5			4

Expenses:
Losses and loss adjustment expenses		2,762.4			2,508.1			10
Policy acquisition costs		359.6			346.7			4
Other underwriting expenses		510.8			454.7			12
Investment expenses		4.2			3.1			35
Service expenses		8.2			4.0			105
Interest expense		31.9			31.5			1

Total expenses		3,677.1			3,348.1			10

Income before income taxes		384.1			545.4			(30)
Provision for income taxes		126.5			182.5			(31)

Net income		257.6			362.9			(29)

Other comprehensive income, net of tax:
Net unrealized gains (losses) on securities:
Net non-credit related OTTI losses, adjusted for valuation changes		3.0			(.9	)		NM
Other net unrealized gains (losses) on securities		199.4			30.5			554

Total net unrealized gains (losses) on securities		202.4			29.6			584
Net unrealized gains on forecasted transactions		(.6	)		(.8	)		(25	)
Foreign currency translation adjustment		.5			.2			150

Other comprehensive income		202.3			29.0			598

Total comprehensive income	$	459.9		$	391.9			17

NM = Not Meaningful

¹	A negative amount for the period reflects credit losses reclassified from other comprehensive income that exceeded the amount of non-credit OTTI losses recognized in other comprehensive income during the period.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

INVESTMENT RESULTS

March 2012

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of net income per share and comprehensive income per share:


	Current		Year-to-Date
	Month		2012		2011
Net income	$	76.3	$	257.6	$	362.9

Per share:
Basic	$	.13	$	.42	$	.56
Diluted	$	.13	$	.42	$	.55

Comprehensive income	$	92.6	$	459.9	$	391.9

Per share:
Diluted	$	.15	$	.75	$	.60

Average shares outstanding - Basic		605.9		606.2		651.8
Net effect of dilutive stock-based compensation		3.9		3.8		4.0

Total equivalent shares - Diluted		609.8		610.0		655.8

The following table sets forth the investment results for the period:


	Current			Year-to-Date
	Month			2012			2011
Fully taxable equivalent total return:
Fixed-income securities		.3	%		2.0	%		1.3	%
Common stocks		2.9	%		12.3	%		6.5	%
Total portfolio		.7	%		3.3	%		1.8	%

Pretax annualized investment income book yield		3.3	%		3.1	%		3.4	%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

March 2012

($ in millions)

(unaudited)

Current Month


										Commercial
	Personal Lines Business									Auto			Other		Companywide
	Agency			Direct			Total			Business			Businesses¹		Total
Net Premiums Written	$	665.3		$	518.5		$	1,183.8		$	141.2		$	0	$	1,325.0
% Growth in NPW		8	%		9	%		8	%		10	%		NM		8	%
Net Premiums Earned	$	613.5		$	474.3		$	1,087.8		$	121.1		$	0.1	$	1,209.0
% Growth in NPE		5	%		7	%		6	%		11	%		NM		6	%

GAAP Ratios
Loss/LAE ratio		72.4			72.3			72.4			78.6			NM		73.1
Expense ratio		21.4			24.4			22.7			24.7			NM		22.9

Combined ratio		93.8			96.7			95.1			103.3			NM		96.0

Actuarial Adjustments²
Reserve Decrease/(Increase)
Prior accident years															$	6.3
Current accident year																3.7

Calendar year actuarial adjustment	$	4.3		$	4.7		$	9.0		$	1.0		$	0	$	10.0

Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment															$	6.3
All other development																(38.8	)

Total development															$	(32.5	)

Calendar year loss/LAE ratio																73.1

Accident year loss/LAE ratio																70.4

Statutory Ratios
Loss/LAE ratio																73.1
Expense ratio																21.6

Combined ratio																94.7

¹	The other businesses generated an underwriting loss of $0.3 million for the month. Combined ratios and % growth are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

²	Represents adjustments solely based on our corporate actuarial reviews.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

March 2012 Year-to-Date

($ in millions)

(unaudited)

Year-to-Date


										Commercial
	Personal Lines Business									Auto			Other		Companywide
	Agency			Direct			Total			Business			Businesses¹		Total
Net Premiums Written	$	2,076.5		$	1,656.5		$	3,733.0		$	429.5		$	0	$	4,162.5
% Growth in NPW		5	%		7	%		6	%		13	%		NM		7	%
Net Premiums Earned	$	1,960.6		$	1,513.2		$	3,473.8		$	387.3		$	0.4	$	3,861.5
% Growth in NPE		4	%		7	%		5	%		9	%		NM		5	%

GAAP Ratios
Loss/LAE ratio		71.9			71.6			71.8			69.1			NM		71.5
Expense ratio		21.0			24.3			22.4			23.3			NM		22.6

Combined ratio		92.9			95.9			94.2			92.4			NM		94.1

Actuarial Adjustments²
Reserve Decrease/(Increase)
Prior accident years															$	27.0
Current accident year																7.1

Calendar year actuarial adjustment	$	13.8		$	11.9		$	25.7		$	8.4		$	0	$	34.1

Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment															$	27.0
All other development																(71.3	)

Total development															$	(44.3	)

Calendar year loss/LAE ratio																71.5

Accident year loss/LAE ratio																70.4

Statutory Ratios
Loss/LAE ratio																71.6
Expense ratio																21.2

Combined ratio																92.8

Statutory Surplus															$	5,704.4

NM = Not Meaningful

¹	Year to date, the other businesses generated an underwriting loss of $1.2 million.

²	Represents adjustments solely based on our corporate actuarial reviews.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

BALANCE SHEET AND OTHER INFORMATION

(millions – except per share amounts)

(unaudited)


	March 2012
CONDENSED GAAP BALANCE SHEET:
Investments – Available-for-sale, at fair value:
Fixed maturities¹(amortized cost: $11,623.7)	$	11,952.7
Equity securities:
Nonredeemable preferred stocks¹(cost: $434.0)		832.4
Common equities (cost: $1,457.3)		2,096.5
Short-term investments (amortized cost: $1,520.1)		1,520.1

Total investments^{2, 3, 4}		16,401.7
Net premiums receivable		3,167.5
Deferred acquisition costs		441.7
Other assets⁵		2,258.4

Total assets	$	22,269.3

Unearned premiums	$	4,880.6
Loss and loss adjustment expense reserves⁵		7,337.4
Other liabilities³		1,720.9
Debt		2,080.0
Shareholders’ equity		6,250.4

Total liabilities and shareholders’ equity	$	22,269.3

Common shares outstanding		611.2
Shares repurchased – March		0
Average cost per share	$	0
Book value per share	$	10.23
Trailing 12-month return on average shareholders’ equity
Net income		14.8	%
Comprehensive income		16.2	%
Net unrealized pretax gains (losses) on investments	$	1,361.9
Increase (decrease) from February 2012	$	25.7
Increase (decrease) from December 2011	$	311.4
Debt-to-total capital ratio		25.0	%
Fixed-income portfolio duration		1.9 years
Weighted average credit quality		AA-
Year-to-date Gainshare factor		1.26

¹	As of March 31, 2012, we held certain hybrid securities and recognized a change in fair value of $4.7 million as a realized gain during the period we held these securities.

²	Includes $4.7 billion of short-term investments and U.S. Treasury securities prior to settling $27.4 million of net security transactions outstanding at month-end.

³	Includes $27.4 million of net unsettled security transactions (as discussed in note 2 above).

⁴	Includes $1.5 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.

⁵	Loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $776.9 million, which are included in “other assets.”

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Monthly Commentary

•

In March, Progressive experienced unfavorable prior accident year reserve development of $32.5 million, or 2.7 combined ratio points, impacting both Personal Lines ($23 million) and Commercial Auto ($9 million). The Personal Lines development reflected unfavorable development in personal auto, primarily in the bodily injury and property damage coverages. We also had unfavorable development in Florida in the personal injury protection (PIP) coverage. In Commercial Auto, the unfavorable development reflected the emergence of higher than expected large losses.

•

During the month we incurred about $10 million, or 0.8 loss ratio points, of catastrophe losses, bringing the total catastrophe losses to approximately $16 million for the quarter, compared to about $10 million in the first quarter last year. Texas and Tennessee were the states with the largest incurred losses for the month with about 40% and 20% of the total, respectively.

Events

We are currently scheduled to release April results on Wednesday, May 16, 2012, before the market opens.

About Progressive

The Progressive Group of Insurance Companies makes it easy to understand, buy, and use auto insurance. Progressive offers choices so consumers can reach us whenever, wherever, and however it’s most convenient for them—online at http://www.progressive.com, by phone at 1-800-PROGRESSIVE, or in-person with a local agent.

Progressive offers insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes. We’re the fourth largest auto insurer in the country, the largest seller of motorcycle insurance, and a leader in commercial auto insurance. Progressive also offers car insurance online in Australia at http://www.progressiveonline.com.au.

Founded in 1937, Progressive continues its long history of offering shopping tools and services that save customers time and money, like Name Your Price^®, the Snapshot Discount^®, and a concierge level of claims service.

The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly at NYSE:PGR.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Statements in this release that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions, and projections generally; inflation and changes in economic conditions (including changes in interest rates and financial markets); the possible failure of one or more governmental entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading of governmental, corporate, or other securities by a rating agency; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including counterparties to certain financial transactions; the accuracy and adequacy of our pricing and loss reserving methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for requested rate changes and the timing thereof; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments, including, but not limited to, health care reform and tax law changes; disputes relating to intellectual property rights; the outcome of litigation pending or that may be filed against us; weather conditions (including the severity and frequency of storms, hurricanes, snowfalls, hail, and winter conditions); changes in driving patterns and loss trends; acts of war and terrorist activities; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions; court decisions and trends in litigation and health care and auto repair costs; and other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

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PROGRESSIVE CORP/OH/ - FORM 8-K - EX-99 - April 11, 2012

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