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PGR Progressive

Filed: 18 Aug 21, 8:52am

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NEWS RELEASE
The Progressive CorporationCompany Contact:
6300 Wilson Mills RoadDouglas S. Constantine
Mayfield Village, Ohio 44143(440) 910-3563

PROGRESSIVE REPORTS JULY RESULTS

MAYFIELD VILLAGE, OHIO -- August 18, 2021 -- The Progressive Corporation (NYSE:PGR) today reported the following results for July 2021:
July
(millions, except per share amounts and ratios; unaudited)20212020Change
Net premiums written$4,551.6 $4,109.3 11  %
Net premiums earned$4,313.5 $3,781.4 14  %
Net income$255.4 $812.0 (69) %
  Per share available to common shareholders$0.43 $1.38 (69) %
Total pretax net realized gains (losses) on securities$122.7 $333.4 (63) %
Combined ratio96.783.513.2 pts.
Average diluted equivalent common shares587.2587.8 %

July
(thousands; unaudited)20212020Change
Policies in Force
Personal Lines
Agency – auto8,014.27,435.48 %
Direct – auto9,614.98,634.411 %
Total personal auto17,629.116,069.810 %
Total special lines5,249.94,854.88 %
Total Personal Lines22,879.020,924.69 %
Total Commercial Lines930.1785.718 %
Total Property business2,683.12,368.313 %
Companywide Total26,492.224,078.610 %
Progressive offers personal and commercial insurance throughout the United States. Our Personal Lines business writes insurance for personal autos and special lines products. Our Commercial Lines business writes auto-related liability and physical damage insurance, workers’ compensation coverage primarily for the transportation industry, and business-related general liability and property insurance, predominantly for small businesses. Our Property business writes residential property insurance for homeowners, other property owners, and renters.


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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENT
July 2021
(millions)
(unaudited)
Current Month
Comments on Monthly Results1
Net premiums written$4,551.6 
Revenues:
Net premiums earned$4,313.5 
Investment income67.9 
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales31.0 
Net holding period gains (losses) on securities92.1 
Net impairment losses recognized in earnings(0.4)
Total net realized gains (losses) on securities122.7 
Fees and other revenues66.3 
Service revenues27.7 
Total revenues4,598.1 
Expenses:
Losses and loss adjustment expenses3,346.9 
Policy acquisition costs363.5 
Other underwriting expenses526.7 
Investment expenses2.6 
Service expenses25.5 
Interest expense18.8 
Total expenses4,284.0 
Income before income taxes314.1 
Provision for income taxes58.7 Includes excess tax benefit of $7.8 million related to the vesting of employee equity awards and distributions of deferred compensation.
Net income255.4 
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities134.8 
Net unrealized losses on forecasted transactions
Foreign currency translation adjustment0.1 
Other comprehensive income (loss)134.9 
Total comprehensive income$390.3 
1 For a description of our financial reporting and accounting policies, see Note 1 to our 2020 audited consolidated financial statements included in our 2020 Shareholders’ Report, which can be found at www.progressive.com/annualreport.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
July 2021
(millions)
(unaudited)

Year-to-Date
20212020% Change
Net premiums written$27,761.0 $24,120.6 15
Revenues:
Net premiums earned$25,716.0 $22,860.7 12
Investment income498.8 560.0 (11)
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales584.9 682.2 (14)
Net holding period gains (losses) on securities587.8 (11.6)NM
Net impairment losses recognized in earnings(2.9)NM
Total net realized gains (losses) on securities1,169.8 670.6 74
Fees and other revenues408.2 339.1 20
Service revenues156.0 133.3 17
Total revenues27,948.8 24,563.7 14
Expenses:
Losses and loss adjustment expenses18,863.8 13,909.2 36
Policy acquisition costs2,166.7 1,893.9 14
Other underwriting expenses3,448.3 3,299.6 5
Policyholder credit expense1,047.8 (100)
Investment expenses14.5 11.5 26
Service expenses142.7 120.8 18
Interest expense131.6 123.2 7
Total expenses24,767.6 20,406.0 21
Income before income taxes3,181.2 4,157.7 (23)
Provision for income taxes655.7 856.2 (23)
Net income2,525.5 3,301.5 (24)
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities(313.7)747.4 (142)
Net unrealized losses on forecasted transactions0.5 0.5 0
Foreign currency translation adjustment(0.4)NM
Other comprehensive income (loss)(313.6)747.9 (142)
Total comprehensive income2,211.9 4,049.4 (45)
NM = Not Meaningful

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
July 2021
(millions – except per share amounts)
(unaudited)



The following table sets forth the computation of per share results:
CurrentYear-to-Date
Month20212020
Net income$255.4 $2,525.5 $3,301.5 
Less: Preferred share dividends2.3 15.7 15.7 
Net income available to common shareholders$253.1 $2,509.8 $3,285.8 
Per common share:
Basic$0.43 $4.29 $5.62 
Diluted$0.43 $4.27 $5.59 
Comprehensive income$390.3 $2,211.9 $4,049.4 
Less: Preferred share dividends2.3 15.7 15.7 
Comprehensive income attributable to common shareholders$388.0 $2,196.2 $4,033.7 
Per common share:
Diluted$0.66 $3.74 $6.86 
Average common shares outstanding - Basic584.6584.7584.8
Net effect of dilutive stock-based compensation2.62.72.8
Total average equivalent common shares - Diluted587.2587.4587.6


The following table sets forth the investment results for the period:
CurrentYear-to-Date
Month20212020
Fully taxable equivalent (FTE) total return:
Fixed-income securities0.6%0.8%5.6%
Common stocks2.0%23.1%2.2%
     Total portfolio0.7%2.7%5.2%
Pretax annualized investment income book yield1.8%1.9%2.5%



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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
July 2021
($ in millions)
(unaudited)


Current Month
Commercial
Personal Lines BusinessLinesPropertyCompanywide
AgencyDirectTotalBusinessBusiness
Total1
Net Premiums Written$1,704.2 $1,917.0 $3,621.2 $730.7 $198.7 $4,551.6 
% Growth in NPW5%7%6%40%13%11%
Net Premiums Earned$1,639.4 $1,802.7 $3,442.1 $695.1 $174.8 $4,313.5 
% Growth in NPE7%10%8%53%16%14%
GAAP Ratios
Loss/LAE ratio79.0 79.3 79.1 68.4 84.5 77.6 
Expense ratio18.2 19.0 18.7 18.9 
28.32
19.1 
Combined ratio97.2 98.3 97.8 87.3 
112.82
96.7 
Net catastrophe loss ratio3
1.5 0.3 24.8 2.3 
Actuarial Adjustments4
Reserve Decrease/(Increase)
Prior accident years$(27.8)
Current accident year10.5 
Calendar year actuarial adjustment$(8.5)$(1.8)$(10.3)$(0.9)$(6.1)$(17.3)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment$(27.8)
All other development16.7 
Total development$(11.1)
Calendar year loss/LAE ratio77.6 
Accident year loss/LAE ratio77.3 
1Includes our other indemnity business results, which primarily consists of Protective Insurance Corporation and subsidiaries' run-off business operations.
2Included in both the expense ratio and combined ratio is 2.7 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 25.6 and a combined ratio of 110.1.
3Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned. During the month, we incurred catastrophe losses primarily related to thunderstorms, hail, and tornadoes throughout the United States.
4Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
July 2021
($ in millions)
(unaudited)


Year-to-Date
Commercial
Personal Lines BusinessLinesPropertyCompanywide
AgencyDirectTotalBusinessBusiness
Total1
Net Premiums Written$10,489.0 $11,493.8 $21,982.8 $4,511.1 $1,263.2 $27,761.0 
% Growth in NPW7%10%9%58%16%15%
Net Premiums Earned$9,957.9 $10,868.3 $20,826.2 $3,734.7 $1,149.6 $25,716.0 
% Growth in NPE7%11%9%35%15%12%
GAAP Ratios
Loss/LAE ratio73.4 73.9 73.6 68.0 85.973.4 
Expense ratio18.6 20.8 19.8 20.0 
29.42
20.2 
Combined ratio92.0 94.7 93.4 88.0 
115.32
93.6 
Net catastrophe loss ratio3
1.6 0.3 27.5 2.5 
Actuarial Adjustments4
Reserve Decrease/(Increase)
Prior accident years$(72.0)
Current accident year28.9 
Calendar year actuarial adjustment$(0.4)$(5.9)$(6.3)$(19.1)$(17.7)$(43.1)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment$(72.0)
All other development(136.1)
Total development$(208.1)
Calendar year loss/LAE ratio73.4 
Accident year loss/LAE ratio72.6 
1Includes our other indemnity business results, which primarily consists of Protective Insurance Corporation and subsidiaries' run-off business operations.
2Included in both the expense ratio and combined ratio is 2.9 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.5 and a combined ratio of 112.4.
3Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.
4Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.


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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions - except per share amounts)
(unaudited)
July 2021
CONDENSED GAAP BALANCE SHEET:
Investments, at fair value:
Available-for-sale securities:
Fixed maturities1 (amortized cost: $42,371.7)
$43,198.2 
Short-term investments (amortized cost: $2,236.3)2,236.3 
Total available-for-sale securities45,434.5 
Equity securities:
Nonredeemable preferred stocks (cost: $1,534.5)
1,667.4 
Common equities (cost: $1,212.0)4,620.0 
Total equity securities6,287.4 
Total investments2
51,721.9 
Net premiums receivable9,474.6 
Reinsurance recoverables (including $4,486.9 on unpaid loss and LAE reserves)4,736.5 
Deferred acquisition costs1,381.0 
Goodwill and intangible assets594.3 
Other assets2,842.5 
Total assets$70,750.8 
Unearned premiums$15,689.6 
Loss and loss adjustment expense reserves24,490.7 
Other liabilities2
6,122.8 
Debt5,397.7 
Total liabilities51,700.8 
Shareholders' equity19,050.0 
Total liabilities and shareholders' equity$70,750.8 
Common shares outstanding585.3 
Common shares repurchased - July0.38 
Average cost per common share$94.58 
Book value per common share$31.70 
Trailing 12-month return on average common shareholders' equity
Net income27.9  %
Comprehensive income25.2  %
Net unrealized pretax gains (losses) on fixed-maturity securities$809.5 
Increase (decrease) from June 2021$170.7 
Increase (decrease) from December 2020$(397.1)
Debt-to-total capital ratio22.1 %
Fixed-income portfolio duration3.0 
Weighted average credit qualityAA-
1 As of July 31, 2021, we held certain hybrid securities and recognized a change in fair value of $17.0 million as a realized gain during the period we held these securities.
2 At July 31, 2021, we had $106.1 million of net unsettled security transactions and $289.7 million of open repurchase transactions classified in other liabilities.

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Monthly Commentary
The Company has no additional commentary regarding July's results.

Events
We plan to release August results on Friday, September 17, 2021, 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 - online at progressive.com, by phone at 1-800-PROGRESSIVE, on a mobile device or in-person with a local agent.

Progressive provides insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes; it is the third largest auto insurer in the country, a leading seller of motorcycle and commercial auto insurance, and one of the top 15 homeowners insurance carriers.

Founded in 1937, Progressive continues its long history of offering shopping tools and services that save customers time and money, like Name Your Price®, Snapshot®, and HomeQuote Explorer®.

The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly at NYSE:PGR.
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that certain statements in this report not based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as “estimate,” “expect,” “intend,” “plan,” “believe,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are based on current expectations and projections about future events, and are subject to certain risks, assumptions 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:

our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;
our ability to establish accurate loss reserves;
the impact of severe weather, other catastrophe events and climate change;
the effectiveness of our reinsurance programs;
the highly competitive nature of property-casualty insurance markets;
whether we innovate effectively and respond to our competitors’ initiatives;
whether we effectively manage complexity as we develop and deliver products and customer experiences;
how intellectual property rights could affect our competitiveness and our business operations;
whether we adjust claims accurately;
our ability to maintain a recognized and trusted brand;
our ability to attract, develop and retain talent and maintain appropriate staffing levels;
compliance with complex laws and regulations;
litigation challenging our business practices, and those of our competitors and other companies;
the impacts of a security breach or other attack involving our computer systems or the systems of one or more of our vendors;
the secure and uninterrupted operation of the facilities, systems, and business functions that are critical to our business;
the success of our efforts to develop new products or enter into new areas of business and navigate related risks;
our continued ability to send and accept electronic payments;
the possible impairment of our goodwill or intangible assets;
the performance of our fixed-income and equity investment portfolios;
the potential elimination of, or change in, the London Interbank Offered Rate;
our continued ability to access our cash accounts and/or convert securities into cash on favorable terms;
the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;
legal restrictions on our insurance subsidiaries’ ability to pay dividends to The Progressive Corporation;
limitations on our ability to pay dividends on our common shares under the terms of our outstanding preferred shares;
our ability to obtain capital when necessary to support our business and potential growth;
evaluations by credit rating and other rating agencies;
the variable nature of our common share dividend policy;
whether our investments in certain tax-advantaged projects generate the anticipated returns;
the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;
impacts from the outbreak of the novel coronavirus, or COVID-19, and the restrictions put in place to help slow and/or stop the spread of the virus; 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, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, 2020.

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 we establish reserves 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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