Exhibit 99
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News Release dated April 16, 2003,
containing financial results of
The Progressive Corporation
for the three months
ended March 31, 2003
PROGRESSIVE NEWS
RELEASE
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The Progressive Corporation COMPANY CONTACT:
6300 Wilson Mills Road Thomas A. King
Mayfield Village, Ohio 44143 (440) 395-2260
http://www.progressive.com
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The Company will hold a one-hour conference call on Thursday, April 17, 2003,
beginning at 9:00 a.m. eastern time. At that time, the Company will discuss
results and address questions. Visit the Company's Web site at
http://www.progressive.com/investors/events.asp to register and receive the
call-in details. An instant replay of the conference call will be available
until May 2, 2003 by calling 1-800-947-6599.
FOR IMMEDIATE RELEASE
MAYFIELD VILLAGE, OHIO - April 16, 2003-- The Progressive Corporation today
reported first quarter 2003 net income of $291.5 million, or $1.32 per share,
compared to $176.2 million, or $.78 per share in the first quarter last year.
Net premiums written and earned both increased 32% to $2,879.3 million and
$2,598.3 million, respectively, as compared to the first quarter last year. The
Company produced a GAAP combined ratio of 86.7, compared to 90.5 in the first
quarter last year. Recurring investment income was $116.0 million before taxes
and $85.4 million after taxes, compared to $108.1 million before taxes and $76.8
million after taxes for the first quarter 2002. See the "Operations Summary" for
complete results.
For the first quarter 2003, operating income, which is a non-GAAP
disclosure and defined by the Company as net income excluding net realized gains
and losses on securities and nonrecurring items, was $293.5 million, or $1.33
per share, compared to $185.8 million, or $.83 per share, last year. There were
no nonrecurring items. See the "Operations Summary" for a reconciliation of the
Company's net income to operating income.
Progressive's Personal Lines business units write insurance for private
passenger automobiles and recreation vehicles. Progressive's Commercial Auto
business unit writes primary liability, physical damage and other auto-related
insurance for automobiles and trucks owned by small businesses. The Company's
other businesses primarily include writing lenders' collateral protection and
directors' and officers' liability insurance and providing insurance-related
services, primarily processing business for Commercial Auto Insurance Procedures
(CAIP), which are state supervised plans serving the involuntary market. See
"Supplemental Information" for first quarter 2003 underwriting results.
During the first quarter 2003, the Company repurchased 1,831,855 of its
Common Shares at an average cost of $54.29 per share.
The Progressive group of insurance companies ranks third in the nation for
auto insurance based on premiums written, offering its products by phone at
1-800-PROGRESSIVE, online at progressive.com and through more than 30,000
independent insurance agencies. The Progressive Corporation, the holding
company, is publicly traded 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 EFFECTIVENESS OF THE COMPANY'S ADVERTISING
CAMPAIGNS; THE ACCURACY AND ADEQUACY OF THE COMPANY'S PRICING METHODOLOGIES;
PRICING COMPETITION AND OTHER INITIATIVES BY COMPETITORS; ABILITY TO OBTAIN
REGULATORY APPROVAL FOR REQUESTED RATE CHANGES AND THE TIMING THEREOF;
LEGISLATIVE AND REGULATORY DEVELOPMENTS; THE OUTCOME OF LITIGATION PENDING
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; 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 A MAJOR CONTINGENCY. REPORTED RESULTS MAY THEREFORE APPEAR TO BE
VOLATILE IN CERTAIN ACCOUNTING PERIODS.
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
OPERATIONS SUMMARY
March 31, 2003
(millions - except per share amounts)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
-------------------------------------
2003 2002 % Change
-------- -------- --------
Direct premiums written $2,939.6 $2,237.8 31
======== ========
Net premiums written $2,879.3 $2,186.8 32
======== ========
Revenues:
Premiums earned $2,598.3 $1,967.5 32
Recurring investment income(1) 116.0 108.1 7
Net realized losses on securities (3.1) (14.8) (79)
Service revenues 8.8 7.8 13
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Total revenues 2,720.0 2,068.6 31
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Expenses:
Losses and loss adjustment expenses 1,733.5 1,357.4 28
Policy acquisition costs 287.7 234.0 23
Other underwriting expenses 232.2 189.7 22
Investment expenses 3.3 3.0 10
Service expenses 5.9 5.1 16
Interest expense 24.1 18.1 33
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Total expenses 2,286.7 1,807.3 27
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Income before income taxes 433.3 261.3 66
Provision for income taxes 141.8 85.1 67
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Net income $ 291.5 $ 176.2 65
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COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding 217.9 220.5 (1)
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Per share $ 1.34 $ .80 68
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Diluted:
Average shares outstanding 217.9 220.5 (1)
Net effect of dilutive stock options 3.4 4.3 (21)
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Total equivalent shares 221.3 224.8 (2)
======== ========
Per share(2) $ 1.32 $ .78 69
======== ========
RECONCILIATION TO OPERATING INCOME(3)
Net income $ 291.5 $ 176.2 65
Reconciling item (after-tax):
Net realized losses on securities 2.0 9.6 (79)
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Operating income $ 293.5 $ 185.8 58
======== ========
Per share $ 1.33 $ .83 60
======== ========
(1) The following table sets forth the investment yields for the periods ended
March 31:
Three Months
---------------
2003 2002
---- ----
Pretax recurring investment book yield 4.6% 5.2%
Weighted average fully taxable equivalent book yield 5.2% 5.7%
(2) If the Company recorded compensation cost based on the fair-value based
accounting method under Statement of Financial Accounting Standards (SFAS)123,
"Accounting for Stock-Based Compensation," diluted earnings per share would have
been reduced $.01 for the three months ended March 31, 2003, compared to $.01
per share last year.
(3) Since operating income is a not a term defined by GAAP, the Company's
operating income may not be comparable to similarly titled measures reported by
other companies.
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
March 31, 2003
(millions)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
-------------------------------------
2003 2002 Change
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NET PREMIUMS WRITTEN
Personal Lines - Agent $ 1,751.4 $ 1,340.2 31%
Personal Lines - Direct 795.3 585.1 36%
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Total Personal Lines 2,546.7 1,925.3 32%
Commercial Auto Business 314.2 231.2 36%
Other businesses 18.4 30.3 (39)%
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Companywide $ 2,879.3 $ 2,186.8 32%
========== ==========
NET PREMIUMS EARNED
Personal Lines - Agent $ 1,600.5 $ 1,241.5 29%
Personal Lines - Direct 707.1 517.0 37%
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Total Personal Lines 2,307.6 1,758.5 31%
Commercial Auto Business 272.7 178.6 53%
Other businesses 18.0 30.4 (41)%
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Companywide $ 2,598.3 $ 1,967.5 32%
========== ==========
PERSONAL LINES - AGENT CR
Loss and loss adjustment expense ratio 67.2 70.4 3.2 pts.
Underwriting expense ratio 19.7 20.4 .7 pts.
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86.9 90.8 3.9 pts.
========== ==========
PERSONAL LINES - DIRECT CR
Loss and loss adjustment expense ratio 66.5 67.2 .7 pts.
Underwriting expense ratio 20.2 23.5 3.3 pts.
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86.7 90.7 4.0 pts.
========== ==========
PERSONAL LINES - TOTAL CR
Loss and loss adjustment expense ratio 66.9 69.5 2.6 pts.
Underwriting expense ratio 19.9 21.3 1.4 pts.
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86.8 90.8 4.0 pts.
========== ==========
COMMERCIAL AUTO BUSINESS - CR
Loss and loss adjustment expense ratio 64.7 66.5 1.8 pts.
Underwriting expense ratio 19.3 21.0 1.7 pts.
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84.0 87.5 3.5 pts.
========== ==========
OTHER BUSINESSES - CR
Loss and loss adjustment expense ratio 67.4 56.0 (11.4) pts.
Underwriting expense ratio 45.5 36.9 (8.6) pts.
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112.9 92.9 (20.0) pts
========== ==========
COMPANYWIDE GAAP CR
Loss and loss adjustment expense ratio 66.7 69.0 2.3 pts.
Underwriting expense ratio 20.0 21.5 1.5 pts.
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86.7 90.5 3.8 pts.
========== ==========
COMPANYWIDE STATUTORY CR
Loss and loss adjustment expense ratio 66.8 69.0 2.2 pts.
Underwriting expense ratio 18.7 20.3 1.6 pts.
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85.5 89.3 3.8 pts.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
ADDITIONAL SUPPLEMENTAL INFORMATION
(millions)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
-----------------------------------
2003 2002 Change
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COMPANYWIDE CALENDAR YEAR
Loss and loss adjustment expense ratio 66.7 69.0 2.3 pts.
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COMPANYWIDE ACCIDENT YEAR
Loss and loss adjustment expense ratio 65.2 69.2 4.0 pts.
====== ======
ACTUARIAL ADJUSTMENTS -
Favorable/(Unfavorable)
Prior accident years $ 5.2 $ 13.9
Current accident year (.8) .2
------ ------
Calendar year actuarial adjustment $ 4.4 $ 14.1 (69)%
====== ======
PRIOR ACCIDENT YEARS DEVELOPMENT -
Favorable/(Unfavorable)
Actuarial adjustment $ 5.2 $ 13.9
All other development (44.2) (10.8)
------ ------
Total development $(39.0) $ 3.1 NM
====== ======
March 31,
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POLICIES IN FORCE (in thousands) 2003 2002 Change
----- ----- ------
Agent - Auto 3,627 2,932 24%
Direct - Auto 1,650 1,302 27%
Other Personal Lines(1) 1,708 1,428 20%
----- -----
Total Personal Lines 6,985 5,662 23%
===== =====
Commercial Auto Business 304 230 32%
===== =====
NM = Not Meaningful
(1) Includes insurance for motorcycles, recreation vehicles, mobile homes,
watercraft, snowmobiles, homeowners and similar items.
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions- except per share amounts)
(unaudited)
MARCH 31,
--------------------------
2003 2002
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CONDENSED GAAP BALANCE SHEETS:(1)
Investments -
Available-for-sale:
Fixed maturities, at market (amortized cost: $7,290.0 and $6,274.6) $ 7,556.7 $ 6,293.8
Equity securities, at market
Preferred stocks (cost: $747.0 and $687.2) 775.4 717.2
Common equities (cost: $1,588.3 and $1,275.7) 1,499.5 1,347.7
Short-term investments, at amortized cost (market: $828.3 and $429.9) 828.3 429.9
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Total investments(2) 10,659.9 8,788.6
Net premiums receivable 1,938.6 1,619.3
Deferred acquisition costs 390.5 341.2
Other assets 1,165.0 1,095.1
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Total assets $ 14,154.0 $ 11,844.2
========== ==========
Unearned premiums $ 3,590.2 $ 2,942.7
Loss and loss adjustment expense reserves 3,908.9 3,295.3
Other liabilities(2) 1,212.1 1,140.6
Debt 1,489.2 1,095.9
Shareholders' equity 3,953.6 3,369.7
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Total liabilities and shareholders' equity $ 14,154.0 $ 11,844.2
========== ==========
Common Shares outstanding 217.0 220.3
Book value per share $18.22 $15.30
Return on average shareholders' equity 27.5% 20.6%
Statutory surplus $3,634.1 $2,808.2
(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 $190.4
million in 2003 and $168.8 million in 2002.
(2) Other liabilities include net unsettled security acquisitions of $105.0
million and $238.3 million at March 31, 2003 and 2002, respectively.