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) August 14, 2013

 

 

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   1-9518   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 440-461-5000

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 (see General Instruction A.2. below):

 

¨ 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))

 

 

 


Item 7.01 Regulation FD Disclosure.

On August 14, 2013, The Progressive Corporation issued a news release containing financial results for the Company and its consolidated subsidiaries for the month of, and year-to-date period ended, July 2013. 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 4.

 

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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: August 14, 2013

 

THE PROGRESSIVE CORPORATION
By:   /s/ Jeffrey W. Basch
Name: Jeffrey W. Basch
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 August 14, 2013, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year-to-date period ended, July 2013

 

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EX-99

Exhibit 99

 

LOGO

  

NEWS

RELEASE

The Progressive Corporation

   Company Contact:

6300 Wilson Mills Road

   Matt Downing

Mayfield Village, Ohio 44143

   (440) 395-4222

http://www.progressive.com

  

PROGRESSIVE REPORTS JULY RESULTS

MAYFIELD VILLAGE, OHIO — August 14, 2013 — The Progressive Corporation (NYSE:PGR) today reported the following results for July 2013:

 

     July      July      Change  
(millions, except per share amounts and ratios; unaudited)    2013      2012     

Net premiums written

   $ 1,732.2       $ 1,648.0         5

Net premiums earned

   $ 1,654.1       $ 1,554.4         6

Net income

   $ 101.5       $ 59.0         72

Per share

   $ .17       $ .10         73

Total pretax net realized gains (losses) on securities
(including net impairment losses)

   $ 11.5       $ 16.9         (32 )% 

Combined ratio

     92.7         96.9         (4.2 ) pts. 

Average diluted equivalent shares

     604.0         608.2         (1 )% 

 

     July      July         
(thousands; unaudited)    2013      2012      Change  

Policies in Force:

        

Agency – auto

     4,840.0         4,872.4         (1 )% 

Direct – auto

     4,141.4         4,029.8         3
  

 

 

    

 

 

    

Total personal auto

     8,981.4         8,902.2         1

Total special lines

     4,043.4         3,996.6         1
  

 

 

    

 

 

    

Total Personal Lines

     13,024.8         12,898.8         1
  

 

 

    

 

 

    

Total Commercial Auto

     526.0         526.4        
  

 

 

    

 

 

    

Progressive offers insurance to personal and commercial auto drivers throughout the United States. Our Personal Lines business writes insurance for personal autos and recreational vehicles. Our Commercial Auto business writes primary liability, physical damage, and other auto-related insurance for autos and trucks owned by small businesses.

See the “Comprehensive Income Statements” and “Supplemental Information” for further month and year-to-date information.


THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

July 2013

(millions)

(unaudited)

 

     Current
Month
    Comments on Monthly  Results1

Net premiums written

   $ 1,732.2     
  

 

 

   

Revenues:

    

Net premiums earned

   $ 1,654.1     

Investment income

     32.8     

Net realized gains (losses) on securities:

    

Other-than-temporary impairment (OTTI) losses:

    

Total OTTI losses

     0    

Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses

     0    
  

 

 

   

Net impairment losses recognized in earnings

     0    

Net realized gains (losses) on securities

     11.5     
  

 

 

   

Total net realized gains (losses) on securities

     11.5     

Fees and other revenues

     26.4     

Service revenues

     4.2     
  

 

 

   

Total revenues

     1,729.0     
  

 

 

   

Expenses:

    

Losses and loss adjustment expenses

     1,197.7     

Policy acquisition costs

     139.5     

Other underwriting expenses

     223.3     

Investment expenses

     2.3     

Service expenses

     4.1     

Interest expense

     10.2     
  

 

 

   

Total expenses

     1,577.1     
  

 

 

   

Income before income taxes

     151.9     

Provision for income taxes

     50.4     
  

 

 

   

Net income

     101.5     
  

 

 

   

Other comprehensive income, net of tax:

    

Net unrealized gains (losses) on securities:

    

Net non-credit related OTTI losses, adjusted for valuation changes

     0    

Other net unrealized gains (losses) on securities

     80.0     
  

 

 

   

Total net unrealized gains (losses) on securities

     80.0     

Net unrealized gains on forecasted transactions

     (.1  

Foreign currency translation adjustment

     (.4  
  

 

 

   

Other comprehensive income

     79.5     
  

 

 

   

Total comprehensive income

   $ 181.0     
  

 

 

   

 

1 

For a description of our reporting and accounting policies, see Note 1 to our 2012 audited consolidated financial statements included in our 2012 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

July 2013

(millions)

(unaudited)

 

     Year-to-Date        
     2013     2012     % Change  

Net premiums written

   $ 10,568.7      $ 9,939.6        6   
  

 

 

   

 

 

   

Revenues:

      

Net premiums earned

   $ 10,110.4      $ 9,412.0        7   

Investment income

     235.5        261.3        (10

Net realized gains (losses) on securities:

      

Other-than-temporary impairment (OTTI) losses:

      

Total OTTI losses

     (1.7     (5.6     (70

Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses1

     (.1     (.7     (86
  

 

 

   

 

 

   

Net impairment losses recognized in earnings

     (1.8     (6.3     (71

Net realized gains (losses) on securities

     226.8        96.0        136   
  

 

 

   

 

 

   

Total net realized gains (losses) on securities

     225.0        89.7        151   

Fees and other revenues

     165.7        162.4        2   

Service revenues

     23.2        22.2        5   

Gains (losses) on extinguishment of debt

     0       (1.7     NM   
  

 

 

   

 

 

   

Total revenues

     10,759.8        9,945.9        8   
  

 

 

   

 

 

   

Expenses:

      

Losses and loss adjustment expenses

     7,300.2        7,002.5        4   

Policy acquisition costs

     862.4        862.0        0  

Other underwriting expenses

     1,390.0        1,338.6        4   

Investment expenses

     11.6        9.1        27   

Service expenses

     23.1        21.5        7   

Interest expense

     71.2        72.8        (2
  

 

 

   

 

 

   

Total expenses

     9,658.5        9,306.5        4   
  

 

 

   

 

 

   

Income before income taxes

     1,101.3        639.4        72   

Provision for income taxes

     366.6        204.2        80   
  

 

 

   

 

 

   

Net income

     734.7        435.2        69   
  

 

 

   

 

 

   

Other comprehensive income, net of tax:

      

Net unrealized gains (losses) on securities:

      

Net non-credit related OTTI losses, adjusted for valuation changes

     .3        3.8        (92

Other net unrealized gains (losses) on securities

     24.6        208.6        (88
  

 

 

   

 

 

   

Total net unrealized gains (losses) on securities

     24.9        212.4        (88

Net unrealized gains on forecasted transactions

     (.8     (1.3     (38

Foreign currency translation adjustment

     (1.4     .2        NM   
  

 

 

   

 

 

   

Other comprehensive income

     22.7        211.3        (89
  

 

 

   

 

 

   

Total comprehensive income

   $ 757.4      $ 646.5        17   
  

 

 

   

 

 

   

 

NM = Not Meaningful

      
1 

A negative amount for the period reflects credit losses reclassified from other comprehensive income, which exceeded the amount of non-credit OTTI losses recognized in other comprehensive income during the period.

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

&

INVESTMENT RESULTS

July 2013

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of net income per share and comprehensive income per share:

 

     Current      Year-to-Date  
     Month      2013      2012  

Net income

   $ 101.5       $ 734.7       $ 435.2   
  

 

 

    

 

 

    

 

 

 

Per share:

        

Basic

   $ .17       $ 1.22       $ .72   

Diluted

   $ .17       $ 1.22       $ .71   

Comprehensive income

   $ 181.0       $ 757.4       $ 646.5   
  

 

 

    

 

 

    

 

 

 

Per share:

        

Diluted

   $ .30       $ 1.25       $ 1.06   

Average shares outstanding—Basic

     599.2         600.0         605.2   

Net effect of dilutive stock-based compensation

     4.8         4.1         4.2   
  

 

 

    

 

 

    

 

 

 

Total equivalent shares—Diluted

     604.0         604.1         609.4   
  

 

 

    

 

 

    

 

 

 

The following table sets forth the investment results for the period:

 

     Current     Year-to-Date  
     Month     2013     2012  

Fully taxable equivalent (FTE) total return:

      

Fixed-income securities

     .3     .8     3.6

Common stocks

     5.2     19.8     10.6

Total portfolio

     1.0     3.1     4.5

Pretax annualized investment income book yield

     2.4     2.6     3.0

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

July 2013

($ in millions)

(unaudited)

 

Current Month

 
                       Commercial               
     Personal Lines Business     Auto     Other      Companywide  
     Agency     Direct     Total     Business     Businesses1      Total  

Net Premiums Written

   $ 864.1      $ 694.7      $ 1,558.8      $ 173.4      $ 0      $ 1,732.2   

% Growth in NPW

     5     7     6     (1 )%      NM         5

Net Premiums Earned

   $ 831.3      $ 650.9      $ 1,482.2      $ 171.8      $ .1       $ 1,654.1   

% Growth in NPE

     6     7     6     6     NM         6

GAAP Ratios

             

Loss/LAE ratio

     72.8        70.5        71.8        77.4        NM         72.4   

Expense ratio

     20.0        20.8        20.3        20.4        NM         20.3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Combined ratio

     92.8        91.3        92.1        97.8        NM         92.7   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Actuarial Adjustments2

             

Reserve Decrease/(Increase)

             

Prior accident years

              $ (5.6

Current accident year

                6.2   
             

 

 

 

Calendar year actuarial adjustment

   $ 1.3      $ .6      $ 1.9      $ (1.3   $ 0      $ .6   
             

 

 

 

Prior Accident Years Development

             

Favorable/(Unfavorable)

             

Actuarial adjustment

              $ (5.6

All other development

                1.9   
             

 

 

 

Total development

              $ (3.7
             

 

 

 

Calendar year loss/LAE ratio

                72.4   
             

 

 

 

Accident year loss/LAE ratio

                72.2   
             

 

 

 

Statutory Ratios

             

Loss/LAE ratio

                72.4   

Expense ratio

                19.8   
             

 

 

 

Combined ratio

                92.2   
             

 

 

 

 

1 

The other businesses generated an underwriting loss of $0.5 million for the month. Combined ratios and % growth are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

2 

Represents adjustments solely based on our corporate actuarial reviews.

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

July 2013

($ in millions)

(unaudited)

 

Year-to-Date

 
                       Commercial               
     Personal Lines Business     Auto     Other      Companywide  
     Agency     Direct     Total     Business     Businesses1      Total  

Net Premiums Written

   $ 5,290.0      $ 4,162.1      $ 9,452.1      $ 1,116.6      $ 0      $ 10,568.7   

% Growth in NPW

     6     8     7     4     NM         6

Net Premiums Earned

   $ 5,090.0      $ 3,977.9      $ 9,067.9      $ 1,042.3      $ .2       $ 10,110.4   

% Growth in NPE

     7     8     7     9     NM         7

GAAP Ratios

             

Loss/LAE ratio

     72.6        71.4        72.0        73.2        NM         72.2   

Expense ratio

     20.2        20.8        20.5        21.9        NM         20.6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Combined ratio

     92.8        92.2        92.5        95.1        NM         92.8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Actuarial Adjustments2

             

Reserve Decrease/(Increase)

             

Prior accident years

              $ 23.4   

Current accident year

                2.0   
             

 

 

 

Calendar year actuarial adjustment

   $ 12.4      $ 14.5      $ 26.9      $ (1.5   $ 0      $ 25.4   
             

 

 

 

Prior Accident Years Development

             

Favorable/(Unfavorable)

             

Actuarial adjustment

              $ 23.4   

All other development

                (109.1
             

 

 

 

Total development

              $ (85.7
             

 

 

 

Calendar year loss/LAE ratio

                72.2   
             

 

 

 

Accident year loss/LAE ratio

                71.4   
             

 

 

 

Statutory Ratios

             

Loss/LAE ratio

                72.2   

Expense ratio

                20.3   
             

 

 

 

Combined ratio

                92.5   
             

 

 

 

Statutory Surplus

              $ 6,498.9   
             

 

 

 

NM = Not Meaningful

1 

The other businesses generated an underwriting loss of $4.0 million.

2 

Represents adjustments solely based on our corporate actuarial reviews.

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

BALANCE SHEET AND OTHER INFORMATION

(millions – except per share amounts)

(unaudited)

 

     July  
     2013  

CONDENSED GAAP BALANCE SHEET:

  

Investments – Available-for-sale, at fair value:

  

Fixed maturities1(amortized cost: $12,985.0)

   $ 13,130.3   

Equity securities:

  

Nonredeemable preferred stocks1(cost: $426.3)

     756.1   

Common equities (cost: $1,429.4)

     2,327.3   

Short-term investments (amortized cost: $1,636.2)

     1,636.2   
  

 

 

 

Total investments2

     17,849.9   

Net premiums receivable

     3,439.8   

Deferred acquisition costs

     473.6   

Other assets3

     2,493.7   
  

 

 

 

Total assets

   $ 24,257.0   
  

 

 

 

Unearned premiums

   $ 5,403.5   

Loss and loss adjustment expense reserves3

     8,176.4   

Other liabilities2

     1,907.0   

Debt

     2,064.1   

Shareholders’ equity

     6,706.0   
  

 

 

 

Total liabilities and shareholders’ equity

   $ 24,257.0   
  

 

 

 

Common shares outstanding

     601.2   

Shares repurchased – July

     .3   

Average cost per share

   $ 25.65   

Book value per share

   $ 11.15   

Trailing 12-month return on average shareholders’ equity

  

Net income

     18.9

Comprehensive income

     18.8

Net unrealized pretax gains (losses) on investments

   $ 1,365.5   

Increase (decrease) from June 2013

   $ 123.1   

Increase (decrease) from December 2012

   $ 38.2   

Debt-to-total capital ratio

     23.5

Fixed-income portfolio duration

     1.9 years   

Weighted average credit quality

     AA-   

Year-to-date Gainshare factor

     1.21   

 

1 

As of July 31, 2013, we held certain hybrid securities and recognized a change in fair value of $7.5 million as a realized gain during the period we held these securities.

2

At July 31, 2013, we had $85.4 million of net unsettled security transactions, including collateral on open derivative positions.

3

Loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $956.9 million, which are included in “other assets.”

 

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Monthly Commentary

 

   

The company has no additional commentary regarding July results.

Events

We are currently scheduled to release August results on Thursday, September 12, 2013, 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 it whenever, wherever, and however it’s most convenient—online at http://www.progressive.com, by phone at 1-800-PROGRESSIVE, on a mobile device or in-person with a local agent.

Progressive offers insurance for personal and commercial autos and trucks, motorcycles, boats and recreational vehicles, as well as home insurance from select carriers. It’s the fourth largest auto insurer in the country, the largest seller of motorcycle insurance, and a leader in commercial auto insurance. Progressive also offers car insurance online in Australia at http://www.progressiveonline.com.au.

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 Service Centers.

The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, trade publicly 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 possible failure of one or more governmental entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading by one or more rating agencies of our securities or governmental, corporate, or other securities we hold; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including counterparties to certain financial transactions; the accuracy and adequacy of our pricing and loss reserving methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for requested rate changes and the timing thereof; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments, including, but not limited to, health care reform and tax law changes; the outcome of disputes relating to intellectual property rights; the outcome of litigation or governmental investigations that may be pending or filed against us; 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; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions, and safeguard personal and sensitive information in our possession; court decisions and trends in litigation and health care and auto repair costs; 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. 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. 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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