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 — December 15, 2005 — The Progressive Corporation today reported the following results for November 2005:
November | November | |||||||||||
(millions, except per share amounts and ratios) | 2005 | 2004 | Change | |||||||||
Net premiums written | $ | 986.3 | $ | 937.0 | 5 | % | ||||||
Net premiums earned | 1,073.1 | 1,019.3 | 5 | % | ||||||||
Net income | 83.3 | 93.8 | (11 | )% | ||||||||
Per share | .42 | .46 | (10 | )% | ||||||||
Combined ratio | 89.9 | 89.6 | (.3 | ) pts. |
See the “Income Statements” for further month and year-to-date information and the monthly commentary at the end of this release for additional discussion.
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
INCOME STATEMENT
November 2005
(millions — except per share amounts)
(unaudited)
INCOME STATEMENT
November 2005
(millions — except per share amounts)
(unaudited)
Current Month | Comments on Monthly Results1 | |||||
Direct premiums written | $ | 1,003.8 | ||||
Net premiums written | $ | 986.3 | ||||
Revenues: | ||||||
Net premiums earned | $ | 1,073.1 | ||||
Investment income | 48.2 | |||||
Net realized gains (losses) on securities | (28.9 | ) | Includes $3.6 million of write-downs on securities determined to have an other-than-temporary decline in market value. | |||
Service revenues | 2.6 | |||||
Total revenues | 1,095.0 | |||||
Expenses: | ||||||
Losses and loss adjustment expenses | 748.7 | |||||
Policy acquisition costs | 111.5 | |||||
Other underwriting expenses | 104.7 | |||||
Investment expenses | 1.1 | |||||
Service expenses | 1.8 | |||||
Interest expense | 6.8 | |||||
Total expenses | 974.6 | |||||
Income before income taxes | 120.4 | |||||
Provision for income taxes | 37.1 | |||||
Net income | $ | 83.3 | ||||
COMPUTATION OF EARNINGS PER SHARE | ||||||
Basic: | ||||||
Average shares outstanding | 195.8 | |||||
Per share | $ | .43 | ||||
Diluted: | ||||||
Average shares outstanding | 195.8 | |||||
Net effect of dilutive stock-based compensation | 3.0 | |||||
Total equivalent shares | 198.8 | |||||
Per share | $ | .42 | ||||
1 | See the Monthly Commentary at the end of this release for additional discussion. For a description of the Company’s reporting and accounting policies, see Note 1 to the Company’s 2004 audited consolidated financial statements included in the Company’s 2004 Shareholders’ Report, which can be found atwww.progressive.com/annualreport. |
The following table sets forth the investment results for the month:
Fully taxable equivalent total return: | ||||
Fixed-income securities | .4 | % | ||
Common stocks | 3.8 | % | ||
Total portfolio | .9 | % | ||
Pretax recurring investment book yield | 4.2 | % |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
INCOME STATEMENTS
November 2005 Year-to-Date
(millions — except per share amounts)
(unaudited)
INCOME STATEMENTS
November 2005 Year-to-Date
(millions — except per share amounts)
(unaudited)
Year-to-Date | ||||||||||||
2005 | 2004 | % Change | ||||||||||
Direct premiums written | $ | 13,337.8 | $ | 12,533.0 | 6 | |||||||
Net premiums written | $ | 13,070.2 | $ | 12,242.6 | 7 | |||||||
Revenues: | ||||||||||||
Net premiums earned | $ | 12,695.8 | $ | 11,899.7 | 7 | |||||||
Investment income | 481.8 | 444.9 | 8 | |||||||||
Net realized gains (losses) on securities | (33.2 | ) | 89.9 | NM | ||||||||
Service revenues | 37.3 | 44.1 | (15 | ) | ||||||||
Total revenues | 13,181.7 | 12,478.6 | 6 | |||||||||
Expenses: | ||||||||||||
Losses and loss adjustment expenses | 8,627.7 | 7,778.5 | 11 | |||||||||
Policy acquisition costs | 1,337.4 | 1,282.5 | 4 | |||||||||
Other underwriting expenses | 1,227.8 | 1,126.5 | 9 | |||||||||
Investment expenses | 11.3 | 12.8 | (12 | ) | ||||||||
Service expenses | 22.5 | 22.6 | — | |||||||||
Interest expense | 75.8 | 73.8 | 3 | |||||||||
Total expenses | 11,302.5 | 10,296.7 | 10 | |||||||||
Income before income taxes | 1,879.2 | 2,181.9 | (14 | ) | ||||||||
Provision for income taxes | 608.2 | 712.7 | (15 | ) | ||||||||
Net income | $ | 1,271.0 | $ | 1,469.2 | (13 | ) | ||||||
COMPUTATION OF EARNINGS PER SHARE | ||||||||||||
Basic: | ||||||||||||
Average shares outstanding | 197.0 | 214.1 | (8 | ) | ||||||||
Per share | $ | 6.45 | $ | 6.86 | (6 | ) | ||||||
Diluted: | ||||||||||||
Average shares outstanding | 197.0 | 214.1 | (8 | ) | ||||||||
Net effect of dilutive stock-based compensation | 2.9 | 3.4 | (15 | ) | ||||||||
Total equivalent shares | 199.9 | 217.5 | (8 | ) | ||||||||
Per share | $ | 6.36 | $ | 6.76 | (6 | ) | ||||||
NM = Not Meaningful |
The following table sets forth the investment results for the year-to-date period:
2005 | 2004 | |||||||
Fully taxable equivalent total return: | ||||||||
Fixed-income securities | 2.7 | % | 3.4 | % | ||||
Common stocks | 6.9 | % | 7.7 | % | ||||
Total portfolio | 3.3 | % | 4.0 | % | ||||
Pretax recurring investment book yield | 4.0 | % | 3.8 | % |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
November 2005
($ in millions)
(unaudited)
SUPPLEMENTAL INFORMATION
November 2005
($ in millions)
(unaudited)
Current Month
Commercial | ||||||||||||||||||||||||
Personal Lines | Auto | Other | Companywide | |||||||||||||||||||||
Agency | Direct | Total | Business1 | Businesses2 | Total | |||||||||||||||||||
Net Premiums Written | $ | 555.1 | $ | 300.0 | $ | 855.1 | $ | 128.8 | $ | 2.4 | $ | 986.3 | ||||||||||||
% Growth in NPW | 1 | % | 14 | % | 5 | % | 6 | % | NM | 5 | % | |||||||||||||
Net Premiums Earned | $ | 613.3 | $ | 322.6 | $ | 935.9 | $ | 134.7 | $ | 2.5 | $ | 1,073.1 | ||||||||||||
% Growth in NPE | 1 | % | 11 | % | 4 | % | 12 | % | NM | 5 | % | |||||||||||||
GAAP Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 71.5 | 70.1 | 71.0 | 62.2 | NM | 69.8 | ||||||||||||||||||
Expense ratio | 20.2 | 20.8 | 20.4 | 17.2 | NM | 20.1 | ||||||||||||||||||
Combined ratio | 91.7 | 90.9 | 91.4 | 79.4 | NM | 89.9 | ||||||||||||||||||
Actuarial Adjustments3 | ||||||||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||||||||
Prior accident years | $ | 7.3 | ||||||||||||||||||||||
Current accident year | 5.8 | |||||||||||||||||||||||
Calendar year actuarial adjustment | $ | 2.2 | $ | 2.6 | $ | 4.8 | $ | 7.9 | $ | .4 | $ | 13.1 | ||||||||||||
Prior Accident Years Development | ||||||||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||||||||
Actuarial adjustment | $ | 7.3 | ||||||||||||||||||||||
All other development | 6.6 | |||||||||||||||||||||||
Total development | $ | 13.9 | ||||||||||||||||||||||
Calendar year loss/LAE ratio | 69.8 | |||||||||||||||||||||||
Accident year loss/LAE ratio | 71.1 | |||||||||||||||||||||||
Statutory Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 69.7 | |||||||||||||||||||||||
Expense ratio | 19.8 | |||||||||||||||||||||||
Combined ratio | 89.5 | |||||||||||||||||||||||
NM = Not Meaningful | ||
1 | Commercial Auto’s expense ratio includes a reduction of 2.0 points due to changes in involuntary market assessment reserves. | |
2 | Amounts primarily include professional liability insurance for community banks and the Company’s run-off businesses. The other businesses generated an underwriting profit of $.2 million for the month. | |
3 | Represents adjustments solely based on the Company’s corporate actuarial review. |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
November 2005 Year-to-Date
($ in millions)
(unaudited)
SUPPLEMENTAL INFORMATION
November 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 | $ | 7,473.8 | $ | 3,891.1 | $ | 11,364.9 | $ | 1,683.1 | $ | 22.2 | $ | 13,070.2 | ||||||||||||
% Growth in NPW | 3 | % | 12 | % | 6 | % | 14 | % | NM | 7 | % | |||||||||||||
Net Premiums Earned | $ | 7,383.7 | $ | 3,752.8 | $ | 11,136.5 | $ | 1,533.9 | $ | 25.4 | $ | 12,695.8 | ||||||||||||
% Growth in NPE | 3 | % | 12 | % | 6 | % | 12 | % | NM | 7 | % | |||||||||||||
GAAP Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 68.9 | 68.2 | 68.6 | 63.3 | NM | 68.0 | ||||||||||||||||||
Expense ratio | 20.3 | 20.1 | 20.3 | 19.7 | NM | 20.2 | ||||||||||||||||||
Combined ratio | 89.2 | 88.3 | 88.9 | 83.0 | NM | 88.2 | ||||||||||||||||||
Actuarial Adjustments2 | ||||||||||||||||||||||||
Reserve Decrease/(Increase) | ||||||||||||||||||||||||
Prior accident years | $ | 119.0 | ||||||||||||||||||||||
Current accident year | 65.0 | |||||||||||||||||||||||
Calendar year actuarial adjustment | $ | 105.7 | $ | 47.6 | $ | 153.3 | $ | 32.7 | $ | (2.0 | ) | $ | 184.0 | |||||||||||
Prior Accident Years Development | ||||||||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||||||||
Actuarial adjustment | $ | 119.0 | ||||||||||||||||||||||
All other development | 209.2 | |||||||||||||||||||||||
Total development | $ | 328.2 | ||||||||||||||||||||||
Calendar year loss/LAE ratio | 68.0 | |||||||||||||||||||||||
Accident year loss/LAE ratio | 70.6 | |||||||||||||||||||||||
Statutory Ratios | ||||||||||||||||||||||||
Loss/LAE ratio | 68.0 | |||||||||||||||||||||||
Expense ratio | 19.3 | |||||||||||||||||||||||
Combined ratio | 87.3 | |||||||||||||||||||||||
Statutory surplus | $ | 5,113.3 | ||||||||||||||||||||||
November | November | |||||||||||
Policies in Force | 2005 | 2004 | Change | |||||||||
(in thousands) | ||||||||||||
Agency — Auto | 4,506 | 4,262 | 6 | % | ||||||||
Direct — Auto | 2,321 | 2,077 | 12 | % | ||||||||
Other Personal Lines3 | 2,679 | 2,352 | 14 | % | ||||||||
Total Personal Lines | 9,506 | 8,691 | 9 | % | ||||||||
Commercial Auto Business | 468 | 420 | 12 | % | ||||||||
NM = Not Meaningful | ||
1 | The other businesses generated an underwriting profit of $6.4 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)
BALANCE SHEET AND OTHER INFORMATION
(millions— except per share amounts)
(unaudited)
November | ||||
2005 | ||||
CONDENSED GAAP BALANCE SHEET:1 | ||||
Investments — Available-for-sale, at market: | ||||
Fixed maturities (amortized cost: $10,657.8) | $ | 10,589.5 | ||
Equity securities: | ||||
Preferred stocks (cost: $1,268.2) | 1,271.4 | |||
Common equities (cost: $1,411.6) | 2,048.4 | |||
Short-term investments (amortized cost: $2,179.6) | 2,180.0 | |||
Total investments2 | 16,089.3 | |||
Net premiums receivable | 2,549.2 | |||
Deferred acquisition costs | 460.6 | |||
Other assets | 1,503.0 | |||
Total assets | $ | 20,602.1 | ||
Unearned premiums | $ | 4,469.1 | ||
Loss and loss adjustment expense reserves | 5,698.1 | |||
Other liabilities2 | 3,171.6 | |||
Debt | 1,284.9 | |||
Shareholders’ equity | 5,978.4 | |||
Total liabilities and shareholders’ equity | $ | 20,602.1 | ||
Common Shares outstanding | 197.4 | |||
Shares repurchased — November | — | |||
Average cost per share | $ | — | ||
Book value per share | $ | 30.29 | ||
Trailing 12-month return on average shareholders’ equity | 26.4 | % | ||
Net unrealized pre-tax gains on investments | $ | 572.1 | ||
Increase (decrease) from October 2005 | $ | 103.1 | ||
Increase (decrease) from December 2004 | $ | (97.3 | ) | |
Debt to total capital ratio | 17.7 | % | ||
Fixed-income portfolio duration | 3.2 Years | |||
Weighted average credit quality | AA+ |
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 $341.3 million. | |
2 | Amounts include net unsettled security acquisitions, including repurchase commitments, of $1,639.9 million. |
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Monthly Commentary
• | During November, the Company incurred losses of $4.2 million related to Hurricane Wilma and $3.0 million related to Hurricane Katrina, bringing the Company’s total exposure for these two storms to $76.6 million and $188.6 million, respectively. Ninety-eight percent of the Company’s 24,750 Hurricane Katrina claims have been settled to date. For Hurricane Wilma, the Company has settled 96% of the nearly 21,900 claims incurred through December 13. | ||
• | The relatively modest growth rate of Commercial Auto’s net premiums written for November is attributable, in part, to an increase in net premiums written in November 2004 that resulted from the significant reduction in the inventory of unprocessed applications achieved during that month. |
The Progressive Group of Insurance Companies, in business since 1937, ranks third in the nation for auto insurance based on premiums written and provides drivers with competitive rates and 24/7, in-person and online service. The companies that offer insurance directly (by phone at 1-800-PROGRESSIVE and online atwww.progressivedirect.com) market their products and services under the Progressive DirectSM brand, while the companies that offer insurance through more than 30,000 independent insurance agencies market their products and services under the Drive® Insurance from Progressive brand. The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, are publicly traded at NYSE:PGR. More information can be found atwww.progressive.com, including a guide to interpreting the monthly reporting package.
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); 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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