Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PROGRESSIVE CORP/OH/ | d377962d8k.htm |
Exhibit 99
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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 JUNE RESULTS
MAYFIELD VILLAGE, OHIO — July 12, 2012 — The Progressive Corporation today reported the following results for June and the second quarter 2012:
| Month | Quarter | |||||||||||||||||||||||
| (millions, except per share amounts and ratios; unaudited) |
2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||||||
| Net premiums written |
$ | 1,239.7 | $ | 1,162.0 | 7 | % | $ | 4,129.1 | $ | 3,837.0 | 8 | % | ||||||||||||
| Net premiums earned |
$ | 1,237.9 | $ | 1,144.5 | 8 | % | $ | 3,996.1 | $ | 3,719.9 | 7 | % | ||||||||||||
| Net income |
$ | 13.5 | $ | 53.1 | (75 | )% | $ | 118.6 | $ | 245.2 | (52 | )% | ||||||||||||
| Per share |
$ | .02 | $ | .08 | (73 | )% | $ | .19 | $ | .38 | (49 | )% | ||||||||||||
| Pretax net realized gains (losses) on securities (including net impairment losses) |
$ | .5 | $ | 1.8 | (72 | )% | $ | (4.7 | ) | $ | 26.0 | NM | ||||||||||||
| Combined ratio |
100.9 | 96.3 | 4.6 pts. | 97.6 | 93.4 | 4.2 pts. | ||||||||||||||||||
| Average equivalent shares |
608.5 | 643.2 | (5 | )% | 608.9 | 647.9 | (6 | )% | ||||||||||||||||
| NM = Not Meaningful |
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| (thousands; unaudited) | June 2012 |
June 2011 |
Change | |||||||||
| Policies in Force: |
||||||||||||
| Agency – auto |
4,884.2 | 4,608.2 | 6 | % | ||||||||
| Direct – auto |
4,036.5 | 3,771.3 | 7 | % | ||||||||
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| Total personal auto |
8,920.7 | 8,379.5 | 6 | % | ||||||||
| Total special lines |
3,972.0 | 3,796.8 | 5 | % | ||||||||
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| Total Personal Lines |
12,892.7 | 12,176.3 | 6 | % | ||||||||
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| Total Commercial Auto |
525.0 | 512.0 | 3 | % | ||||||||
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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
June 2012
(millions)
(unaudited)
| Current Month |
Comments on Monthly Results1 | |||||
| Net premiums written |
$ | 1,239.7 | ||||
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| Revenues: |
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| Net premiums earned |
$ | 1,237.9 | ||||
| Investment income |
38.3 | |||||
| Net realized gains (losses) on securities: |
||||||
| Other-than-temporary impairment (OTTI) losses: |
||||||
| Total OTTI losses |
(5.1 | ) | ||||
| Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses2 |
(.3 | ) | ||||
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| Net impairment losses recognized in earnings |
(5.4 | ) | ||||
| Net realized gains (losses) on securities |
5.9 | |||||
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| Total net realized gains (losses) on securities |
.5 | |||||
| Service revenues |
3.3 | |||||
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| Total revenues |
1,280.0 | |||||
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| Expenses: |
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| Losses and loss adjustment expenses |
988.3 | |||||
| Policy acquisition costs |
111.7 | |||||
| Other underwriting expenses |
149.0 | |||||
| Investment expenses |
1.1 | |||||
| Service expenses |
3.5 | |||||
| Interest expense |
10.2 | |||||
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| Total expenses |
1,263.8 | |||||
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| Income before income taxes |
16.2 | |||||
| Provision for income taxes |
2.7 | |||||
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| Net income |
13.5 | |||||
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| Other comprehensive income, net of tax: |
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| Net unrealized gains (losses) on securities: |
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| Net non-credit related OTTI losses, adjusted for valuation changes |
.4 | |||||
| Other net unrealized gains (losses) on securities |
48.8 | |||||
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| Total net unrealized gains (losses) on securities |
49.2 | |||||
| Net unrealized gains on forecasted transactions |
(.2 | ) | ||||
| Foreign currency translation adjustment |
0 | |||||
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| Other comprehensive income |
49.0 | |||||
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| Total comprehensive income |
$ | 62.5 | ||||
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| 1 | 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. |
- 2 -
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
June 2012 Year-to-Date
(millions)
(unaudited)
| Year-to-Date | ||||||||||||
| 2012 | 2011 | % Change | ||||||||||
| Net premiums written |
$ | 8,291.6 | $ | 7,737.0 | 7 | |||||||
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| Revenues: |
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| Net premiums earned |
$ | 7,857.6 | $ | 7,385.2 | 6 | |||||||
| Investment income |
227.2 | 244.1 | (7 | ) | ||||||||
| Net realized gains (losses) on securities: |
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| Other-than-temporary impairment (OTTI) losses: |
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| Total OTTI losses |
(5.6 | ) | (4.5 | ) | 24 | |||||||
| Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses1 |
(.7 | ) | .9 | NM | ||||||||
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| Net impairment losses recognized in earnings |
(6.3 | ) | (3.6 | ) | 75 | |||||||
| Net realized gains (losses) on securities |
79.1 | 129.3 | (39 | ) | ||||||||
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| Total net realized gains (losses) on securities |
72.8 | 125.7 | (42 | ) | ||||||||
| Service revenues |
18.4 | 11.2 | 64 | |||||||||
| Gains (losses) on extinguishment of debt |
(1.7 | ) | 0 | NM | ||||||||
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| Total revenues |
8,174.3 | 7,766.2 | 5 | |||||||||
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| Expenses: |
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| Losses and loss adjustment expenses |
5,806.1 | 5,169.0 | 12 | |||||||||
| Policy acquisition costs |
724.1 | 695.0 | 4 | |||||||||
| Other underwriting expenses |
1,003.6 | 920.7 | 9 | |||||||||
| Investment expenses |
8.0 | 6.6 | 21 | |||||||||
| Service expenses |
18.1 | 8.8 | 106 | |||||||||
| Interest expense |
62.6 | 63.0 | (1 | ) | ||||||||
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| Total expenses |
7,622.5 | 6,863.1 | 11 | |||||||||
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| Income before income taxes |
551.8 | 903.1 | (39 | ) | ||||||||
| Provision for income taxes |
175.6 | 295.0 | (40 | ) | ||||||||
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| Net income |
376.2 | 608.1 | (38 | ) | ||||||||
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| Other comprehensive income, net of tax: |
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| Net unrealized gains (losses) on securities: |
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| Net non-credit related OTTI losses, adjusted for valuation changes |
3.1 | (3.1 | ) | NM | ||||||||
| Other net unrealized gains (losses) on securities |
148.4 | 84.0 | 77 | |||||||||
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| Total net unrealized gains (losses) on securities |
151.5 | 80.9 | 87 | |||||||||
| Net unrealized gains on forecasted transactions |
(1.2 | ) | (1.6 | ) | (25 | ) | ||||||
| Foreign currency translation adjustment |
(.1 | ) | .5 | NM | ||||||||
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| Other comprehensive income |
150.2 | 79.8 | 88 | |||||||||
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| Total comprehensive income |
$ | 526.4 | $ | 687.9 | (23 | ) | ||||||
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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. |
- 3 -
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
June 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 |
$ | 13.5 | $ | 376.2 | $ | 608.1 | ||||||
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| Per share: |
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| Basic |
$ | .02 | $ | .62 | $ | .94 | ||||||
| Diluted |
$ | .02 | $ | .62 | $ | .93 | ||||||
| Comprehensive income |
$ | 62.5 | $ | 526.4 | $ | 687.9 | ||||||
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| Per share: |
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| Diluted |
$ | .10 | $ | .86 | $ | 1.06 | ||||||
| Average shares outstanding—Basic |
604.3 | 605.5 | 647.6 | |||||||||
| Net effect of dilutive stock-based compensation |
4.2 | 4.0 | 4.1 | |||||||||
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| Total equivalent shares—Diluted |
608.5 | 609.5 | 651.7 | |||||||||
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The following table sets forth the investment results for the period:
| Current | Year-to-Date | |||||||||||
| Month | 2012 | 2011 | ||||||||||
| Fully taxable equivalent total return: |
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| Fixed-income securities |
.3 | % | 2.8 | % | 3.0 | % | ||||||
| Common stocks |
3.9 | % | 9.1 | % | 6.8 | % | ||||||
| Total portfolio |
.7 | % | 3.6 | % | 3.3 | % | ||||||
| Pretax annualized investment income book yield |
3.0 | % | 3.1 | % | 3.4 | % | ||||||
- 4 -
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
June 2012
($ in millions)
(unaudited)
| Current Month |
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| Commercial | ||||||||||||||||||||||||
| Personal Lines Business | Auto | Other | Companywide | |||||||||||||||||||||
| Agency | Direct | Total | Business | Businesses1 | Total | |||||||||||||||||||
| Net Premiums Written |
$ | 631.2 | $ | 467.3 | $ | 1,098.5 | $ | 141.2 | $ | 0 | $ | 1,239.7 | ||||||||||||
| % Growth in NPW |
5 | % | 6 | % | 6 | % | 14 | % | NM | 7 | % | |||||||||||||
| Net Premiums Earned |
$ | 626.0 | $ | 484.0 | $ | 1,110.0 | $ | 127.9 | $ | 0 | $ | 1,237.9 | ||||||||||||
| % Growth in NPE |
7 | % | 8 | % | 8 | % | 14 | % | NM | 8 | % | |||||||||||||
| GAAP Ratios |
||||||||||||||||||||||||
| Loss/LAE ratio |
80.8 | 79.3 | 80.1 | 76.9 | NM | 79.8 | ||||||||||||||||||
| Expense ratio |
20.5 | 21.4 | 20.9 | 22.5 | NM | 21.1 | ||||||||||||||||||
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| Combined ratio |
101.3 | 100.7 | 101.0 | 99.4 | NM | 100.9 | ||||||||||||||||||
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| Actuarial Adjustments2 |
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| Reserve Decrease/(Increase) |
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| Prior accident years |
$ | (.3 | ) | |||||||||||||||||||||
| Current accident year |
(11.1 | ) | ||||||||||||||||||||||
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| Calendar year actuarial adjustment |
$ | (6.7 | ) | $ | (3.5 | ) | $ | (10.2 | ) | $ | (1.2 | ) | $ | 0 | $ | (11.4 | ) | |||||||
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| Prior Accident Years Development |
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| Favorable/(Unfavorable) |
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| Actuarial adjustment |
$ | (.3 | ) | |||||||||||||||||||||
| All other development |
(.9 | ) | ||||||||||||||||||||||
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| Total development |
$ | (1.2 | ) | |||||||||||||||||||||
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| Calendar year loss/LAE ratio |
79.8 | |||||||||||||||||||||||
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| Accident year loss/LAE ratio |
79.7 | |||||||||||||||||||||||
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| Statutory Ratios |
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| Loss/LAE ratio |
79.9 | |||||||||||||||||||||||
| Expense ratio |
21.4 | |||||||||||||||||||||||
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| Combined ratio |
101.3 | |||||||||||||||||||||||
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| 1 | The other businesses generated an underwriting loss of $0.4 million for the month. Combined ratios and % growth are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses. |
| 2 | Represents adjustments solely based on our corporate actuarial reviews. |
- 5 -
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
June 2012 Year-to-Date
($ in millions)
(unaudited)
| Year-to-Date |
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| Commercial | ||||||||||||||||||||||||
| Personal Lines Business | Auto | Other | Companywide | |||||||||||||||||||||
| Agency | Direct | Total | Business | Businesses1 | Total | |||||||||||||||||||
| Net Premiums Written |
$ | 4,173.9 | $ | 3,217.7 | $ | 7,391.6 | $ | 900.0 | $ | 0 | $ | 8,291.6 | ||||||||||||
| % Growth in NPW |
6 | % | 7 | % | 6 | % | 14 | % | NM | 7 | % | |||||||||||||
| Net Premiums Earned |
$ | 3,984.6 | $ | 3,077.4 | $ | 7,062.0 | $ | 794.9 | $ | 0.7 | $ | 7,857.6 | ||||||||||||
| % Growth in NPE |
5 | % | 7 | % | 6 | % | 11 | % | NM | 6 | % | |||||||||||||
| GAAP Ratios |
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| Loss/LAE ratio |
74.5 | 73.9 | 74.2 | 70.5 | NM | 73.9 | ||||||||||||||||||
| Expense ratio |
20.8 | 23.3 | 21.9 | 22.8 | NM | 22.0 | ||||||||||||||||||
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| Combined ratio |
95.3 | 97.2 | 96.1 | 93.3 | NM | 95.9 | ||||||||||||||||||
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| Actuarial Adjustments2 |
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| Reserve Decrease/(Increase) |
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| Prior accident years |
$ | 34.8 | ||||||||||||||||||||||
| Current accident year |
(3.2 | ) | ||||||||||||||||||||||
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| Calendar year actuarial adjustment |
$ | 9.7 | $ | 13.0 | $ | 22.7 | $ | 9.1 | $ | (.2 | ) | $ | 31.6 | |||||||||||
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| Prior Accident Years Development |
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| Favorable/(Unfavorable) |
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| Actuarial adjustment |
$ | 34.8 | ||||||||||||||||||||||
| All other development |
(101.9 | ) | ||||||||||||||||||||||
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| Total development |
$ | (67.1 | ) | |||||||||||||||||||||
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| Calendar year loss/LAE ratio |
73.9 | |||||||||||||||||||||||
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| Accident year loss/LAE ratio |
73.0 | |||||||||||||||||||||||
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| Statutory Ratios |
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| Loss/LAE ratio |
73.9 | |||||||||||||||||||||||
| Expense ratio |
21.3 | |||||||||||||||||||||||
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| Combined ratio |
95.2 | |||||||||||||||||||||||
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| Statutory Surplus |
$ | 5,801.0 | ||||||||||||||||||||||
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NM = Not Meaningful
| 1 | Year to date, the other businesses generated an underwriting loss of $2.6 million. |
| 2 | Represents adjustments solely based on our corporate actuarial reviews. |
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions – except per share amounts)
(unaudited)
| June | ||||
| 2012 | ||||
| CONDENSED GAAP BALANCE SHEET: |
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| Investments – Available-for-sale, at fair value: |
||||
| Fixed maturities1 (amortized cost: $11,723.6) |
$ | 12,075.9 | ||
| Equity securities: |
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| Nonredeemable preferred stocks1 (cost: $425.4) |
799.3 | |||
| Common equities (cost: $1,494.9) |
2,055.1 | |||
| Short-term investments (amortized cost: $1,679.2) |
1,679.2 | |||
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| Total investments2, 3, 4 |
16,609.5 | |||
| Net premiums receivable |
3,222.1 | |||
| Deferred acquisition costs |
452.4 | |||
| Other assets5 |
2,435.0 | |||
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| Total assets |
$ | 22,719.0 | ||
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| Unearned premiums |
$ | 5,014.6 | ||
| Loss and loss adjustment expense reserves5 |
7,573.2 | |||
| Other liabilities3 |
1,781.8 | |||
| Debt |
2,062.8 | |||
| Shareholders’ equity |
6,286.6 | |||
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| Total liabilities and shareholders’ equity |
$ | 22,719.0 | ||
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| Common shares outstanding |
609.2 | |||
| Shares repurchased – June |
.6 | |||
| Average cost per share |
$ | 20.90 | ||
| Book value per share |
$ | 10.32 | ||
| Trailing 12-month return on average shareholders’ equity |
||||
| Net income |
12.9 | % | ||
| Comprehensive income |
12.5 | % | ||
| Net unrealized pretax gains (losses) on investments |
$ | 1,283.5 | ||
| Increase (decrease) from May 2012 |
$ | 75.6 | ||
| Increase (decrease) from December 2011 |
$ | 233.0 | ||
| Debt-to-total capital ratio |
24.7 | % | ||
| Fixed-income portfolio duration |
1.9 years | |||
| Weighted average credit quality |
AA- | |||
| Year-to-date Gainshare factor |
1.29 | |||
| 1 | As of June 30, 2012, we held certain hybrid securities and recognized a change in fair value of $2.9 million as a realized gain during the period we held these securities. |
| 2 | Includes $4.6 billion of short-term investments and U.S. Treasury securities prior to settling $15.5 million of net security transactions outstanding as of month-end. |
| 3 | Includes $15.5 million of net unsettled security transactions (as discussed in note 2 above). |
| 4 | Includes $1.4 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 $814.3 million, which are included in “other assets.” |
- 7 -
Monthly Commentary
| • | During June, the company incurred approximately $37 million, or 3.0 loss ratio points, of catastrophe losses, bringing the total catastrophe losses to about $107 million, or 2.7 points, for the second quarter 2012 and $123 million, or 1.6 points, year-to-date. For 2011, catastrophe losses were $23 million (2.0 points), $125 million (3.4 points), and $135 million (1.8 points) for the month, quarter, and year-to-date, respectively. For June, Texas, Colorado, and Florida accounted for about 75% of the total incurred catastrophe losses. |
Events
Progressive is scheduled to hold a one-hour conference call to address questions on Friday, August 3, 2012 at 9:00 a.m., eastern time, subsequent to the posting of our Shareholders’ Report online and the filing of our Quarterly Report on Form 10-Q with the SEC. Registration for the teleconference and webcast is available at
http://investors.progressive.com/phoenix.zhtml?c=81824&p=irol-calendar.
We are currently scheduled to release July results on Wednesday, August 15, 2012, before the market opens.
About Progressive
Celebrating its 75th anniversary in 2012, The Progressive Group of Insurance Companies makes it easy to understand, buy, and use auto insurance. Progressive offers choices so consumers can reach it whenever, wherever, and however it’s most convenient—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. It’s 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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