Form 8-K - Current report

FalsePROGRESSIVE CORP/OH/000008066100000806612024-07-162024-07-16

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 16, 2024

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio

001-09518

34-0963169

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

6300 Wilson Mills Road,

Mayfield Village,

Ohio

44143

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code [phone]

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $1.00 Par Value			PGR			New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Condition.

On July 16, 2024, The Progressive Corporation (the “Company”) issued a news release containing financial results for the Company and its consolidated subsidiaries for the month and year-to-date periods ended June 30, 2024, and selected quarterly financial results. A copy of the news release is attached hereto as Exhibit 99.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

See exhibit index on page 3.

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:

July 16, 2024

THE PROGRESSIVE CORPORATION

By:

/s/ Mariann Wojtkun Marshall

Name:

Mariann Wojtkun Marshall

Title:

Vice President and Chief Accounting Officer

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EXHIBIT INDEX

Exhibit No. Under Reg. S-K Item 601						Form 8-K Exhibit No.						Description
99						99						News release dated July 16, 2024, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month and year-to-date periods ended June 30, 2024, and selected quarterly financial results.
104						104						Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document).

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									NEWS RELEASE

The Progressive Corporation									Company Contact:
6300 Wilson Mills Road									Douglas S. Constantine
Mayfield Village, Ohio 44143									[phone]
http://www.progressive.com									[e-mail]

PROGRESSIVE REPORTS JUNE RESULTS

MAYFIELD VILLAGE, OHIO -- July 16, 2024 -- The Progressive Corporation (NYSE:PGR) today reported the following results for the month ended June 30, 2024 and the second quarter of 2024:

			June									Quarter
(millions, except per share amounts and ratios; unaudited)			2024			2024						2023						Change
Net premiums written			$	5,748.5		$	17,901.6					$	14,716.9					22		%
Net premiums earned			$	5,777.0		$	17,209.5					$	14,464.4					19		%
Net income			$	802.7		$	1,458.7					$	345.4					322		%
Per share available to common shareholders			$	1.37		$	2.48					$	0.57					334		%
Total pretax net realized gains (losses) on securities			$	22.2		$	(126.3)					$	126.9					(200)		%
Combined ratio			86.2			91.9						100.4						(8.5) pts.
Combined ratio – prior year month			104.9
Average diluted equivalent common shares			587.4			587.4						587.0						0		%

In October 2023, we converted our monthly accounting closing calendar to align with the Gregorian calendar. We do not expect that this change will have a material impact on our reported quarterly and annual underwriting results but it may impact our year-over-year comparisons on monthly results from October 2023 through September 2024. Therefore, during this time period, we have modified and limited the content of the earnings release, compared to our historical reporting. See the Monthly Commentary at the end of the October 2023 release, issued November 17, 2023, for further discussion on the closing calendar conversion.

			June 30,
(thousands; unaudited)			2024						2023						% Change
Policies in Force
Personal Lines
Agency – auto			8,964.8						8,437.8						6
Direct – auto			12,576.8						11,220.5						12
Total personal auto			21,541.6						19,658.3						10
Total special lines			6,311.8						5,843.1						8
Total Personal Lines			27,853.4						25,501.4						9
Total Commercial Lines			1,117.6						1,101.1						1
Total Property business			3,339.1						2,974.3						12
Companywide Total			32,310.1						29,576.8						9

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, business-related general liability and property insurance predominantly for small businesses, and workers’ compensation insurance primarily for the transportation industry. 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

For the month ended June 30, 2024

(millions)

(unaudited)

			June 2024												Comments on Monthly Results1
Net premiums written			$	5,748.5
Revenues:
Net premiums earned			$	5,777.0
Investment income			235.3
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales			(72.3)
Net holding period gains (losses) on securities			94.5
Total net realized gains (losses) on securities			22.2
Fees and other revenues			88.3
Service revenues			37.4
Total revenues			6,160.2
Expenses:
Losses and loss adjustment expenses			3,867.8
Policy acquisition costs			439.0
Other underwriting expenses			760.5
Investment expenses			2.4
Service expenses			40.3
Interest expense			23.3
Total expenses			5,133.3
Income before income taxes			1,026.9
Provision for income taxes			224.2
Net income			802.7
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities			311.4
Net unrealized losses on forecasted transactions			0.1
Foreign currency translation adjustment			0
Other comprehensive income (loss)			311.5
Total comprehensive income (loss)			$	1,114.2

1 See the Monthly Commentary at the end of this release for additional discussion. For a description of our financial reporting and accounting policies as it applies to information contained throughout this release, see Note 1 to our 2023 audited consolidated financial statements included in our 2023 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

For the year-to-date periods ended June 30,

(millions)

(unaudited)

			Year-to-Date
			2024						2023
Net premiums written			$	36,863.8					$	30,826.6
Revenues:
Net premiums earned			$	33,358.1					$	27,997.5
Investment income			1,302.6						874.1
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales			(372.9)						104.8
Net holding period gains (losses) on securities			402.2						98.4
Net impairment losses recognized in earnings			0						(4.5)
Total net realized gains (losses) on securities			29.3						198.7
Fees and other revenues			496.3						432.9
Service revenues			190.5						153.5
Total revenues			35,376.8						29,656.7
Expenses:
Losses and loss adjustment expenses			23,566.9						22,794.1
Policy acquisition costs			2,539.8						2,269.4
Other underwriting expenses			4,111.2						3,289.6
Investment expenses			13.0						11.6
Service expenses			206.4						172.9
Interest expense			139.2						129.0
Total expenses			30,576.5						28,666.6
Income before income taxes			4,800.3						990.1
Provision for income taxes			1,010.2						196.8
Net income			3,790.1						793.3
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities			(100.1)						147.6
Net unrealized losses on forecasted transactions			0.2						0.2
Foreign currency translation adjustment			(0.2)						0.2
Other comprehensive income (loss)			(100.1)						148.0
Total comprehensive income (loss)			$	3,690.0					$	941.3

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

&

INVESTMENT RESULTS

For the month and year-to-date periods ended June 30,

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of per share results:
			June						Year-to-Date
			2024						2024						2023
Net income			$	802.7					$	3,790.1					$	793.3
Less: Preferred share dividends and other1			0						17.0						16.8
Net income available to common shareholders			$	802.7					$	3,773.1					$	776.5
Per common share:
Basic			$	1.37					$	6.45					$	1.33
Diluted			$	1.37					$	6.42					$	1.32
Comprehensive income (loss)			$	1,114.2					$	3,690.0					$	941.3
Less: Preferred share dividends and other1			0						17.0						16.8
Comprehensive income (loss) attributable to common shareholders			$	1,114.2					$	3,673.0					$	924.5
Per common share:
Diluted			$	1.90					$	6.25					$	1.57
Average common shares outstanding - Basic			585.4						585.4						584.9
Net effect of dilutive stock-based compensation			2.0						2.0						2.1
Total average equivalent common shares - Diluted			587.4						587.4						587.0

1 Includes the underwriting discounts and commissions on issuance, initial issuance costs, and excise tax related to the preferred share redemption in February 2024.

The following table sets forth the investment results for the period:
			June						Year-to-Date
			2024						2024						2023
Fully taxable equivalent (FTE) total return:
Fixed-income securities			0.8%						1.2%						1.7%
Common stocks			3.3%						13.8%						16.9%
Total portfolio			0.9%						1.7%						2.3%
Pretax annualized investment income book yield			3.9%						3.8%						3.0%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

For the month ended June 30, 2024

($ in millions)

(unaudited)

June 2024
												Commercial
			Personal Lines Business									Lines			Property			Companywide
			Agency			Direct			Total			Business			Business			Total
Net Premiums Written			$	2,179.8		$	2,543.8		$	4,723.6		$	753.8		$	271.1		$	5,748.5
Net Premiums Earned			$	2,088.0		$	2,561.0		$	4,649.0		$	883.5		$	244.5		$	5,777.0
GAAP Ratios
Loss/LAE ratio			65.5			67.7			66.7			66.4			68.3			66.8
Expense ratio			18.4			19.3			18.9			19.6			29.3			19.4
Combined ratio			83.9			87.0			85.6			86.0			97.6			86.2
Net catastrophe loss ratio1									6.1			1.5			17.1			5.9
Actuarial Adjustments2
Reserve Decrease/(Increase)
Prior accident years																		$	(7.7)
Current accident year																		25.3
Calendar year actuarial adjustment			$	24.7		$	34.7		$	59.4		$	(52.1)		$	10.3		$	17.6
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																		$	(7.7)
All other development																		81.5
Total development																		$	73.8
Calendar year loss/LAE ratio																		66.8
Accident year loss/LAE ratio																		68.1

1 Represents catastrophe losses incurred during the period, including development on prior events and the impact of reinsurance, as a percent of net premiums earned. During the month, we incurred catastrophe losses related to severe weather throughout the United States. See the Monthly Commentary at the end of this release for additional discussion.

2 Represents 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

For the year-to-date period ended June 30, 2024

($ in millions)

(unaudited)

Year-to-Date
												Commercial
			Personal Lines Business									Lines			Property			Companywide
			Agency			Direct			Total			Business			Business			Total
Net Premiums Written			$	13,132.7		$	15,910.2		$	29,042.9		$	6,256.2		$	1,564.3		$	36,863.8
% Growth in NPW			20%			25%			22%			9%			13%			20%
Net Premiums Earned			$	12,071.1		$	14,616.0		$	26,687.1		$	5,221.9		$	1,448.7		$	33,358.1
% Growth in NPE			20%			23%			21%			9%			19%			19%
GAAP Ratios
Loss/LAE ratio			67.6			69.5			68.6			71.0			101.6			70.4
Expense ratio			18.0			18.0			18.0			19.2			28.8			18.7
Combined ratio			85.6			87.5			86.6			90.2			130.4			89.1
Net catastrophe loss ratio1									3.3			0.7			47.9			4.8
Actuarial Adjustments2
Reserve Decrease/(Increase)
Prior accident years																		$	(118.5)
Current accident year																		15.9
Calendar year actuarial adjustment			$	15.1		$	4.4		$	19.5		$	(117.1)		$	(5.0)		$	(102.6)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																		$	(118.5)
All other development																		181.0
Total development																		$	62.5
Calendar year loss/LAE ratio																		70.4
Accident year loss/LAE ratio																		70.6

1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.

2 Represents 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 and common shares repurchased)

(unaudited)

			June 30, 2024
CONDENSED GAAP BALANCE SHEET:
Investments, at fair value:
Available-for-sale securities:
Fixed maturities1 (amortized cost: $69,668.2)			$	67,488.3
Short-term investments (amortized cost: $733.4)			733.4
Total available-for-sale securities			68,221.7
Equity securities:
Nonredeemable preferred stocks (cost: $886.9)			838.2
Common equities (cost: $707.8)			3,295.6
Total equity securities			4,133.8
Total investments2,3			72,355.5
Net premiums receivable			14,544.5
Reinsurance recoverables (including $4,515.0 on unpaid loss and LAE reserves)			4,881.4
Deferred acquisition costs			1,938.3
Other assets			4,173.3
Total assets			$	97,893.0
Unearned premiums			$	23,680.4
Loss and loss adjustment expense reserves			36,605.2
Other liabilities2			7,376.3
Debt			6,890.7
Total liabilities			74,552.6
Shareholders’ equity			23,340.4
Total liabilities and shareholders’ equity			$	97,893.0
Common shares outstanding			585.7
Common shares repurchased - actual			19,514
Average cost per common share			$	209.32
Book value per common share			$	39.85
Trailing 12-month return on average common shareholders’ equity
Net income			35.4		%
Comprehensive income			40.2		%
Net unrealized pretax gains (losses) on fixed-maturity securities			$	(2,161.3)
Increase (decrease) from May 2024			$	394.2
Increase (decrease) from December 2023			$	(126.7)
Debt-to-total capital ratio			22.8		%
Fixed-income portfolio duration			3.2
Weighted average credit quality			AA- .

1 As of June 30, 2024, we held certain hybrid securities and recognized a change in fair value of $18.6 million as a realized loss during the period we held these securities.

2 At June 30, 2024, we had $74.1 million of net unsettled security transactions classified in “other liabilities.”

3 Includes $4.1 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.

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Monthly Commentary

•During June, we increased our Personal Lines loss estimates about $115 million, or 2.5 points for the month, and decreased our Property loss estimates a net $12 million, or about 4.7 points, relative to the May storms. We also reversed the reinsurance recoverable of $95 million, which included losses and allocated loss adjustment expenses, under our per occurrence reinsurance contracts. Since these storms occurred close to the end of the month, estimating the losses was challenging as virtually no claims had been reported at the time we estimated May results. On a year-to-date basis as of June 30, 2024, we remain close to reaching the annual retention thresholds under our 2024 catastrophe aggregate excess of loss contracts.

Events

Our second quarter Investor Relations conference call is currently scheduled to be held on Tuesday, August 6, 2024, at 9:30 a.m. eastern time. This event, which will consist of both a conference call and webcast, is scheduled to last 90 minutes and will begin with an approximate 45-minute presentation on acquiring policies in our Direct channel, followed by a question and answer session with Tricia Griffith, our CEO, and John Sauerland, our CFO. We plan to file our Quarterly Report on Form 10-Q with the SEC on Monday, August 5, 2024. If the dates of our events, which are always subject to change, are rescheduled, we will announce the change in a press release as soon as practical and publish it on our investor website. Details regarding access to the teleconference, or any event changes, will be available at: https://investors.progressive.com/events.

We plan to release July results on Wednesday, August 14, 2024, before the market opens.

About Progressive

Progressive Insurance® makes it easy to understand, buy and use car insurance, home insurance, and other protection needs. Progressive offers choices so consumers can reach us however it’s most convenient for them — online at progressive.com, by phone at 1-800-PROGRESSIVE, via the Progressive mobile app, 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 second largest personal auto insurer in the country, a leading seller of commercial auto, motorcycle, and boat 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.

Regulation FD Disclosure Outlets

The Company disseminates information to the public about the Company, its products, services and other matters through various outlets in order to achieve broad, non-exclusionary distribution of information to the public. These outlets include the Company’s website (progressive.com) and its investor relations website (investors.progressive.com). We encourage investors and others to review the information the Company makes public through these outlets, as such information distributed through these outlets may be considered to be material information.

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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,” “goal,” “target,” “anticipate,” “will,” “could,” “likely,” “may,” “should,” 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 not guarantees of future performance, 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 and the continued availability of reinsurance and performance by reinsurers;

•the secure and uninterrupted operation of the systems, facilities, and business functions and the operation of various third-party systems that are critical to our business;

•the impacts of a security breach or other attack involving our technology systems or the systems of one or more of our vendors;

•our ability to maintain a recognized and trusted brand and reputation;

•whether we innovate effectively and respond to our competitors’ initiatives;

•whether we effectively manage complexity as we develop and deliver products and customer experiences;

•our ability to attract, develop, and retain talent and maintain appropriate staffing levels;

•the impact of misconduct or fraudulent acts by employees, agents, and third parties to our business and/or exposure to regulatory assessments;

•the highly competitive nature of property-casualty insurance markets;

•whether we adjust claims accurately;

•compliance with complex and changing laws and regulations;

•litigation challenging our business practices, and those of our competitors and other companies;

•the success of our business strategy and efforts to acquire or develop new products or enter into new areas of business and our ability to navigate the related risks;

•how intellectual property rights affect our competitiveness and our business operations;

•the success of our development and use of new technology and our ability to navigate the related risks;

•the performance of our fixed-income and equity investment portfolios;

•the impact on our investment returns and strategies from regulations and societal pressures relating to environmental, social, governance and other public policy matters;

•our continued ability to access our cash accounts and/or convert investments 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;

•our ability to obtain capital when necessary to support our business and potential growth;

•evaluations and ratings 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;

•the impacts of epidemics, pandemics, or other widespread health risks; 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, 2023.

Any forward-looking statements are made only as of the date presented. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

In addition, investors should be aware that accounting principles generally accepted in the United States 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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Cover Page	Jul. 16, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 16, 2024
Entity Registrant Name	PROGRESSIVE CORP/OH/
Entity Incorporation, State or Country Code	OH
Entity File Number	001-09518
Entity Tax Identification Number	34-0963169
Entity Address, Address Line One	6300 Wilson Mills Road,
Entity Address, City or Town	Mayfield Village,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44143
City Area Code	440
Local Phone Number	461-5000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1.00 Par Value
Trading Symbol	PGR
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000080661

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