EXHIBIT 99
![]() | NEWS | |
RELEASE | ||
The Progressive Corporation | Company Contact: | |
6300 Wilson Mills Road | Thomas A. King | |
Mayfield Village, Ohio 44143 | (440)395-2260 | |
http://www.progressive.com | ||
FOR IMMEDIATE RELEASE
MAYFIELD VILLAGE, OHIO — April 14, 2005 — The Progressive Corporation today reported the following results for March 2005:
Month | Quarter | |||||||||||||||||||||||||||||||
(millions, except per share amounts) | 2005 | 2004 | Change | 2005 | 2004 | Change | ||||||||||||||||||||||||||
Net premiums written | $ | 1,127.6 | $ | 1,077.7 | 5 | % | $ | 3,604.8 | $ | 3,277.3 | 10 | % | ||||||||||||||||||||
Net premiums earned | 1,049.9 | 974.4 | 8 | % | 3,350.0 | 3,093.5 | 8 | % | ||||||||||||||||||||||||
Net income | 135.2 | 152.6 | (11 | )% | 412.7 | 460.0 | (10 | )% | ||||||||||||||||||||||||
Per share | .67 | .69 | (3 | )% | 2.04 | 2.09 | (2 | )% | ||||||||||||||||||||||||
Combined ratio | 84.8 | 82.8 | (2.0 | ) pts. | 85.0 | 83.2 | (1.8 | ) pts. | ||||||||||||||||||||||||
Pre-tax net realized gains (losses) | (.2 | ) | 23.6 | NM | 10.2 | 59.5 | (83 | )% | ||||||||||||||||||||||||
Diluted equivalent shares | 201.4 | 220.1 | (8 | )% | 201.9 | 220.0 | (8 | )% | ||||||||||||||||||||||||
NM = Not Meaningful | ||||||||||||||||||||||||||||||||
See the “Income Statement” for further month and year-to-date information.
The Company offers insurance to personal and commercial auto drivers throughout the United States. The Company’s Personal Lines business units write insurance for private passenger automobiles and recreation vehicles. The Company’s Commercial Auto business unit writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned by small businesses. See “Supplemental Information” for month and year-to-date results.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
Current | ||||||||
Month | Comments on Monthly Results1 | |||||||
Direct premiums written | $ | 1,155.5 | ||||||
Net premiums written | $ | 1,127.6 | ||||||
Revenues: | ||||||||
Net premiums earned | $ | 1,049.9 | ||||||
Investment income | 45.3 | Includes dividends earned on preferred stocks typically in the third month of a quarter. | ||||||
Net realized gains (losses) on securities | (.2 | ) | ||||||
Service revenues | 3.3 | |||||||
Total revenues | 1,098.3 | |||||||
Expenses: | ||||||||
Losses and loss adjustment expenses | 674.0 | |||||||
Policy acquisition costs | 111.4 | |||||||
Other underwriting expenses | 105.2 | |||||||
Investment expenses | .7 | |||||||
Service expenses | .8 | |||||||
Interest expense | 6.9 | |||||||
Total expenses | 899.0 | |||||||
Income before income taxes | 199.3 | |||||||
Provision for income taxes | 64.1 | |||||||
Net income | $ | 135.2 | ||||||
COMPUTATION OF EARNINGS PER SHARE | ||||||||
Basic: | ||||||||
Average shares outstanding | 198.5 | |||||||
Per share | $ | .68 | ||||||
Diluted: | ||||||||
Average shares outstanding | 198.5 | |||||||
Net effect of dilutive stock-based compensation | 2.9 | |||||||
Total equivalent shares | 201.4 | |||||||
Per share | $ | .67 | ||||||
1 See the Monthly Commentary at the end of this release for additional discussion. Also see Note 1 to the Company’s 2004 audited consolidated financial statements included in the Company’s 2004 Annual Report, which can be found at progressive.com/annualreport, for a description of the Company’s reporting and accounting policies.
The following table sets forth the total return on investments for the month: |
Fully taxable equivalent total return: | ||||
Fixed-income securities | (.3 | )% | ||
Common stocks | (1.4 | )% | ||
Total portfolio | (.4 | )% |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
INCOME STATEMENTS
March 2005 Year-to-Date
(millions – except per share amounts)
(unaudited)
Year-to-Date | ||||||||||||
2005 | 2004 | % Change | ||||||||||
Direct premiums written | $ | 3,684.3 | $ | 3,358.3 | 10 | |||||||
Net premiums written | $ | 3,604.8 | $ | 3,277.3 | 10 | |||||||
Revenues: | ||||||||||||
Net premiums earned | $ | 3,350.0 | $ | 3,093.5 | 8 | |||||||
Investment income | 120.4 | 114.9 | 5 | |||||||||
Net realized gains (losses) on securities | 10.2 | 59.5 | (83 | ) | ||||||||
Service revenues | 11.2 | 12.6 | (11 | ) | ||||||||
Other income | — | (.2 | ) | NM | ||||||||
Total revenues | 3,491.8 | 3,280.3 | 6 | |||||||||
Expenses: | ||||||||||||
Losses and loss adjustment expenses | 2,168.6 | 1,962.1 | 11 | |||||||||
Policy acquisition costs | 356.1 | 334.0 | 7 | |||||||||
Other underwriting expenses | 323.4 | 276.2 | 17 | |||||||||
Investment expenses | 2.8 | 3.3 | (15 | ) | ||||||||
Service expenses | 5.4 | 5.5 | (2 | ) | ||||||||
Interest expense | 20.8 | 20.5 | 1 | |||||||||
Total expenses | 2,877.1 | 2,601.6 | 11 | |||||||||
Income before income taxes | 614.7 | 678.7 | (9 | ) | ||||||||
Provision for income taxes | 202.0 | 218.7 | (8 | ) | ||||||||
Net income | $ | 412.7 | $ | 460.0 | (10 | ) | ||||||
COMPUTATION OF EARNINGS PER SHARE | ||||||||||||
Basic: | ||||||||||||
Average shares outstanding | 199.0 | 216.4 | (8 | ) | ||||||||
Per share | $ | 2.07 | $ | 2.13 | (2 | ) | ||||||
Diluted: | ||||||||||||
Average shares outstanding | 199.0 | 216.4 | (8 | ) | ||||||||
Net effect of dilutive stock-based compensation | 2.9 | 3.6 | (19 | ) | ||||||||
Total equivalent shares | 201.9 | 220.0 | (8 | ) | ||||||||
Per share | $ | 2.04 | $ | 2.09 | (2 | ) | ||||||
The following table sets forth the total return on investments for the year-to-date period:
2005 | 2004 | |||||||
Fully taxable equivalent total return: | ||||||||
Fixed-income securities | (.2 | )% | 2.2 | % | ||||
Common stocks | (1.7 | )% | 1.9 | % | ||||
Total portfolio | (.4 | )% | 2.2 | % |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
March 2005
($ in millions)
(unaudited)
Current Month | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Personal Lines | Auto | Other | Companywide | |||||||||||||||||||||
Agency | Direct | Total | Business | Businesses1 | Total | |||||||||||||||||||
Net Premiums Written | $ | 648.2 | $ | 332.9 | $ | 981.1 | $ | 144.8 | $ | 1.7 | $ | 1,127.6 | ||||||||||||
% Growth in NPW | 1 | % | 8 | % | 3 | % | 14 | % | NM | 5 | % | |||||||||||||
Net Premiums Earned | $ | 618.0 | $ | 306.1 | $ | 924.1 | $ | 123.6 | $ | 2.2 | $ | 1,049.9 | ||||||||||||
% Growth in NPE | 5 | % | 12 | % | 7 | % | 13 | % | NM | 8 | % | |||||||||||||
GAAP Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 63.4 | 67.9 | 64.9 | 59.0 | NM | 64.2 | ||||||||||||||||||
Expense ratio | 21.0 | 20.1 | 20.7 | 20.0 | NM | 20.6 | ||||||||||||||||||
Combined ratio | 84.4 | 88.0 | 85.6 | 79.0 | NM | 84.8 | ||||||||||||||||||
Actuarial Adjustments2 | ||||||||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||||||||
Prior accident years | $ | 15.2 | ||||||||||||||||||||||
Current accident year | (1.3 | ) | ||||||||||||||||||||||
Calendar year actuarial adjustment | $ | 6.5 | $ | 1.4 | $ | 7.9 | $ | 6.0 | $ | — | $ | 13.9 | ||||||||||||
Prior Accident Years Development | ||||||||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||||||||
Actuarial adjustment | $ | 15.2 | ||||||||||||||||||||||
All other development | 31.8 | |||||||||||||||||||||||
Total development | $ | 47.0 | ||||||||||||||||||||||
Calendar year loss/LAE ratio | 64.2 | |||||||||||||||||||||||
Accident year loss/LAE ratio | 68.7 | |||||||||||||||||||||||
Statutory Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 64.1 | |||||||||||||||||||||||
Expense ratio | 19.4 | |||||||||||||||||||||||
Combined ratio | 83.5 | |||||||||||||||||||||||
1 Amounts primarily include professional liability insurance for community banks and the Company’s run-off businesses. The other businesses generated an underwriting profit of less than $50 thousand for the month.
2 Represents adjustments solely based on the Company’s corporate actuarial review.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
March 2005 Year-to-Date
($ in millions)
(unaudited)
Year-to-Date | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Personal Lines | Auto | Other | Companywide | |||||||||||||||||||||
Agency | Direct | Total | Business | Businesses1 | Total | |||||||||||||||||||
Net Premiums Written | $ | 2,081.8 | $ | 1,081.0 | $ | 3,162.8 | $ | 436.3 | $ | 5.7 | $ | 3,604.8 | ||||||||||||
% Growth in NPW | 6 | % | 15 | % | 9 | % | 16 | % | NM | 10 | % | |||||||||||||
Net Premiums Earned | $ | 1,975.4 | $ | 972.6 | $ | 2,948.0 | $ | 395.2 | $ | 6.8 | $ | 3,350.0 | ||||||||||||
% Growth in NPE | 6 | % | 12 | % | 8 | % | 14 | % | NM | 8 | % | |||||||||||||
GAAP Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 65.0 | 66.8 | 65.6 | 58.7 | NM | 64.7 | ||||||||||||||||||
Expense ratio | 20.8 | 19.6 | 20.4 | 19.9 | NM | 20.3 | ||||||||||||||||||
Combined ratio | 85.8 | 86.4 | 86.0 | 78.6 | NM | 85.0 | ||||||||||||||||||
Actuarial Adjustments2 | ||||||||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||||||||
Prior accident years | $ | 36.4 | ||||||||||||||||||||||
Current accident year | (2.9 | ) | ||||||||||||||||||||||
Calendar year actuarial adjustment | $ | 19.3 | $ | 6.1 | $ | 25.4 | $ | 6.3 | $ | 1.8 | $ | 33.5 | ||||||||||||
Prior Accident Years Development | ||||||||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||||||||
Actuarial adjustment | $ | 36.4 | ||||||||||||||||||||||
All other development | 78.5 | |||||||||||||||||||||||
Total development | $ | 114.9 | ||||||||||||||||||||||
Calendar year loss/LAE ratio | 64.7 | |||||||||||||||||||||||
Accident year loss/LAE ratio | 68.1 | |||||||||||||||||||||||
Statutory Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 64.8 | |||||||||||||||||||||||
Expense ratio | 19.0 | |||||||||||||||||||||||
Combined ratio | 83.8 | |||||||||||||||||||||||
Statutory surplus | $ | 5,041.0 | ||||||||||||||||||||||
March | March | |||||||||||
Policies in Force | 2005 | 2004 | Change | |||||||||
(in thousands) | ||||||||||||
Agency – Auto | 4,443 | 4,118 | 8 | % | ||||||||
Direct – Auto | 2,209 | 1,941 | 14 | % | ||||||||
Other Personal Lines3 | 2,429 | 2,057 | 18 | % | ||||||||
Total Personal Lines | 9,081 | 8,116 | 12 | % | ||||||||
Commercial Auto Business | 433 | 380 | 14 | % | ||||||||
NM = Not Meaningful | ||||
1 | The other businesses generated an underwriting profit of $5.4 million. | |||
2 | Represents adjustments solely based on the Company’s corporate actuarial review. | |||
3 | Includes insurance for motorcycles, recreation vehicles, mobile homes, watercraft, snowmobiles and similar items. |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions– except per share amounts)
(unaudited)
March | ||||||
2005 | ||||||
CONDENSED GAAP BALANCE SHEET:1 | ||||||
Investments - Available-for-sale: | ||||||
Fixed maturities, at market (amortized cost: $9,548.0) | $ | 9,505.5 | ||||
Equity securities, at market: | ||||||
Preferred stocks (cost: $952.0) | 957.7 | |||||
Common equities (cost: $1,400.2) | 1,898.9 | |||||
Short-term investments, at market (amortized cost: $1,042.3) | 1,042.8 | |||||
Total investments2 | 13,404.9 | |||||
Net premiums receivable | 2,469.2 | |||||
Deferred acquisition costs | 450.6 | |||||
Other assets | 1,398.5 | |||||
Total assets | $ | 17,723.2 | ||||
Unearned premiums | $ | 4,364.3 | ||||
Loss and loss adjustment expense reserves | 5,348.3 | |||||
Other liabilities2 | 1,431.3 | |||||
Debt | 1,284.5 | |||||
Shareholders’ equity | 5,294.8 | |||||
Total liabilities and shareholders’ equity | $ | 17,723.2 | ||||
Common Shares outstanding | 199.6 | |||||
Shares repurchased – March | 1.0 | |||||
Average cost per share | $ | 89.56 | ||||
Book value per share | $ | 26.53 | ||||
Return on average shareholders’ equity | 28.4 | % | ||||
Net unrealized pre-tax gains on investments | $ | 462.4 | ||||
Debt to total capital ratio | 19.5 | % | ||||
1 | Pursuant to SFAS 113, “Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,” loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $338.0 million. |
2 | Amounts include net unsettled security acquisitions of $105.2 million. |
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Monthly Commentary
• | As discussed in February’s release, March’s lower premium growth reflects the Company’s use of a fiscal calendar and the timing of when renewal premiums were incorporated in results. | |||
• | Policies in force growth remains strong. On a month over prior month basis, the Company has seen increases in retention, currently defined as policy life expectancy, in both the Agency and Direct channels. | |||
• | The Company is experiencing a decrease in its premium per application on both new and renewal business consistent with market pricing refinement in several states. | |||
• | Net premiums written in the Company’s other Personal Lines businesses, which represent about 6.5% of total Personal Lines and include motorcycles, recreation vehicles and other specialty products, grew 27% in the first quarter. | |||
• | The Commercial Auto business is increasing its offering of twelve-month term policies, primarily in the specialty commercial auto market, which will have a favorable effect on the premiums per application. Six-month term restrictions will remain in selected markets. As a result, it may be difficult to make year over prior year comparisons using written premiums during this time of transition and a focus on earned premiums is recommended. | |||
• | The pretax recurring book yield of the investment portfolio was 4.3% for March 2005 and 3.8% for the first quarters of both 2005 and 2004. | |||
• | At March month-end, the net unrealized gains in the investment portfolio were $462.4 million, a decrease of $112.0 million from February 2005 and $207.0 million from year-end 2004. The fixed-income portfolio duration was 2.9 years and the weighted average credit quality was AA+. |
The Progressive group of insurance companies ranks third in the nation for auto insurance based on premiums written. The companies that offer insurance directly (by phone at 1-800-PROGRESSIVE and online at progressive.com) market their products and services through the Progressive DirectSM brand, while the companies that offer insurance through more than 30,000 independent agencies in the U.S. market their products and services through the Drive Insurance from ProgressiveSM brand. The Common Shares of The Progressive Corporation, the holding company, are publicly traded at NYSE:PGR. More information can be found at progressive.com.
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 accuracy and adequacy of the Company’s pricing and loss reserving methodologies; pricing competition and other initiatives by competitors; the Company’s ability to obtain regulatory approval for requested rate changes and the timing thereof; the effectiveness of the Company’s advertising campaigns; legislative and regulatory developments; disputes relating to intellectual property rights; the outcome of litigation pending or that may be filed against the Company; weather conditions (including the severity and frequency of storms, hurricanes, snowfalls, hail and winter conditions);
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changes in driving patterns and loss trends; acts of war and terrorist activities; the Company’s ability to maintain the uninterrupted operation of its 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 by the Company in releases and publications, and in 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. Reported results, therefore, may appear to be volatile in certain accounting periods.
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