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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 MAY RESULTS

MAYFIELD VILLAGE, OHIO — June 13, 2012 — The Progressive Corporation today reported the following results for May 2012:

 

(millions, except per share amounts and ratios; unaudited)    May      May     Change  
     2012      2011        

Net premiums written

   $ 1,217.4      $ 1,134.6      

Net premiums earned

   $ 1,230.0      $ 1,142.1      

Net income

   $ 43.9      $ 74.1       (41 )% 

Per share

   $ .07      $ .11       (37 )% 

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

   $ 2.7      $ (.4     NM   

Combined ratio

     97.5        93.1       4.4 pts. 

Average diluted equivalent shares

     608.6        648.3       (6 )% 
       

NM = Not Meaningful

 

(thousands; unaudited)    May      May      Change  
     2012      2011         

Policies in Force:

        

Agency – auto

     4,863.2        4,596.9       

Direct – auto

     4,018.5        3,759.4       
  

 

 

    

 

 

    

Total personal auto

     8,881.7        8,356.3       

Total special lines

     3,939.2        3,750.4       
  

 

 

    

 

 

    

Total Personal Lines

     12,820.9        12,106.7       
  

 

 

    

 

 

    

Total Commercial Auto

     521.7        510.3       
  

 

 

    

 

 

    

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 and the “Monthly Commentary” at the end of this release for additional discussion.


THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

May 2012

(millions)

(unaudited)

 

      Current
Month
    Comments on Monthly  Results1

Net premiums written

   $ 1,217.4    
  

 

 

   

Revenues:

    

Net premiums earned

   $ 1,230.0    

Investment income

     38.3    

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

     2.7    
  

 

 

   

Total net realized gains (losses) on securities

     2.7    

Service revenues

     3.1    
  

 

 

   

Total revenues

     1,274.1    
  

 

 

   

Expenses:

    

Losses and loss adjustment expenses

     930.2    

Policy acquisition costs

     112.1    

Other underwriting expenses

     157.1    

Investment expenses

     1.2    

Service expenses

     2.9    

Interest expense

     10.2    
  

 

 

   

Total expenses

     1,213.7    
  

 

 

   

Income before income taxes

     60.4    

Provision for income taxes

     16.5    
  

 

 

   

Net income

     43.9    
  

 

 

   

Other comprehensive income (loss), net of tax:

    

Net unrealized gains (losses) on securities:

    

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

     .3    

Other net unrealized gains (losses) on securities

     (117.7  
  

 

 

   

Total net unrealized gains (losses) on securities

     (117.4  

Net unrealized gains on forecasted transactions

     (.1  

Foreign currency translation adjustment

     (.4  
  

 

 

   

Other comprehensive income (loss)

     (117.9  
  

 

 

   

Total comprehensive income (loss)

   $ (74.0  
  

 

 

   

 

1 

See the Monthly Commentary at the end of this release for additional discussion. For a description of our reporting and accounting policies, see Note 1 to our 2011 audited consolidated financial statements included in our 2011 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

May 2012 Year-to-Date

(millions)

(unaudited)

 

      Year-to-Date      
     2012     2011      % Change

Net premiums written

   $ 7,051.9     $ 6,575.0       7
  

 

 

   

 

 

   

Revenues:

      

Net premiums earned

   $ 6,619.7     $ 6,240.7       6

Investment income

     188.9       203.8       (7)

Net realized gains (losses) on securities:

      

Other-than-temporary impairment (OTTI) losses:

      

Total OTTI losses

     (.5     (1.4 )     (64)

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

     (.4          NM
  

 

 

   

 

 

   

Net impairment losses recognized in earnings

     (.9     (1.4 )     (36)

Net realized gains (losses) on securities

     73.2       125.3       (42)
  

 

 

   

 

 

   

Total net realized gains (losses) on securities

     72.3       123.9       (42)

Service revenues

     15.1       9.2       64

Gains (losses) on extinguishment of debt

     (1.7          NM
  

 

 

   

 

 

   

Total revenues

     6,894.3       6,577.6       5
  

 

 

   

 

 

   

Expenses:

      

Losses and loss adjustment expenses

     4,817.8       4,321.6       11

Policy acquisition costs

     612.4       587.8       4

Other underwriting expenses

     854.6       773.3       11

Investment expenses

     6.9       5.6       23

Service expenses

     14.6       7.1       106

Interest expense

     52.4       52.5       0
  

 

 

   

 

 

   

Total expenses

     6,358.7       5,747.9       11
  

 

 

   

 

 

   

Income before income taxes

     535.6       829.7       (35)

Provision for income taxes

     172.9       274.7       (37)
  

 

 

   

 

 

   

Net income

     362.7       555.0       (35)
  

 

 

   

 

 

   

Other comprehensive income, net of tax:

      

Net unrealized gains (losses) on securities:

      

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

     2.7       (1.9 )     NM

Other net unrealized gains (losses) on securities

     99.6       139.6       (29)
  

 

 

   

 

 

   

Total net unrealized gains (losses) on securities

     102.3       137.7       (26)

Net unrealized gains on forecasted transactions

     (1.0     (1.3 )     (23)

Foreign currency translation adjustment

     (.1     .6       NM
  

 

 

   

 

 

   

Other comprehensive income

     101.2       137.0       (26)
  

 

 

   

 

 

   

Total comprehensive income

   $ 463.9     $ 692.0       (33)
  

 

 

   

 

 

   
      

NM = Not Meaningful

 

1 

A negative amount for the period reflects credit losses reclassified from other comprehensive income that 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

May 2012

(millions – except per share amounts)

(unaudited)

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

 

     Current
Month
    Year-to-Date  
       2012      2011  

Net income

   $ 43.9     $ 362.7      $ 555.0  
  

 

 

   

 

 

    

 

 

 

Per share:

       

Basic

   $ .07     $ .60      $ .85  

Diluted

   $ .07     $ .59      $ .85  

Comprehensive income (loss)

   $ (74.0   $ 463.9      $ 692.0  
  

 

 

   

 

 

    

 

 

 

Per share:

       

Diluted

   $ (.12   $ .76      $ 1.06  

Average shares outstanding - Basic

     604.5       605.7        649.3  

Net effect of dilutive stock-based compensation

     4.1       3.9        4.2  
  

 

 

   

 

 

    

 

 

 

Total equivalent shares - Diluted

     608.6       609.6        653.5  
  

 

 

   

 

 

    

 

 

 

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

 

     Current
Month
    Year-to-Date  
       2012     2011  

Fully taxable equivalent total return:

      

Fixed-income securities

         2.5      3.1 

Common stocks

     (6.2 )%      5.0      8.5 

Total portfolio

     (.8 )%      2.8      3.6 

Pretax annualized investment income book yield

     3.0      3.1      3.4 

 

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

May 2012

($ in millions)

(unaudited)

 

Current Month

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

Net Premiums Written

   $ 622.9     $ 462.6     $ 1,085.5     $ 131.9     $      $ 1,217.4  

% Growth in NPW

                 10      NM       

Net Premiums Earned

   $ 623.0     $ 481.4     $ 1,104.4     $ 125.5     $ 0.1       $ 1,230.0  

% Growth in NPE

                 13      NM       

GAAP Ratios

            

Loss/LAE ratio

     76.8       74.8       76.0       72.1       NM        75.6  

Expense ratio

     21.3       22.3       21.7       23.3       NM        21.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     98.1       97.1       97.7       95.4       NM        97.5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Actuarial Adjustments

            

Reserve Decrease/(Increase)

            

Prior accident years

             $ .6  

Current accident year

               (4.2
            

 

 

 

Calendar year actuarial adjustment

   $ (.6   $ .1     $ (.5   $ (2.9   $ (.2   $ (3.6
            

 

 

 

Prior Accident Years Development

            

Favorable/(Unfavorable)

            

Actuarial adjustment

             $ .6  

All other development

               (2.8
            

 

 

 

Total development

             $ (2.2
            

 

 

 

Calendar year loss/LAE ratio

               75.6  
            

 

 

 

Accident year loss/LAE ratio

               75.4  
            

 

 

 

Statutory Ratios

            

Loss/LAE ratio

               75.7  

Expense ratio

               22.2  
            

 

 

 

Combined ratio

               97.9  
            

 

 

 

 

1

The other businesses generated an underwriting loss of $0.8 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

May 2012 Year-to-Date

($ in millions)

(unaudited)

 

     Year-to-Date        
                       Commercial              
     Personal Lines Business     Auto     Other     Companywide  
     Agency     Direct     Total     Business     Businesses     Total  

Net Premiums Written

   $ 3,542.7     $ 2,750.4     $ 6,293.1     $ 758.8     $      $ 7,051.9  

% Growth in NPW

     6     7     6     14     NM        7

Net Premiums Earned

   $ 3,358.6     $ 2,593.4     $ 5,952.0     $ 667.0     $ 0.7       $ 6,619.7  

% Growth in NPE

     5     7     6     10     NM        6

GAAP Ratios

            

Loss/LAE ratio

     73.3       72.9       73.1       69.3       NM        72.8  

Expense ratio

     20.9       23.6       22.1       22.8       NM        22.1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Combined ratio

     94.2       96.5       95.2       92.1       NM        94.9  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Actuarial Adjustments

            

Reserve Decrease/(Increase)

            

Prior accident years

             $ 35.1  

Current accident year

               7.9  
            

 

 

 

Calendar year actuarial adjustment

   $ 16.4     $ 16.5     $ 32.9     $ 10.3     $ (.2   $ 43.0  
            

 

 

 

Prior Accident Years Development

            

Favorable/(Unfavorable)

            

Actuarial adjustment

             $ 35.1  

All other development

               (101.0
            

 

 

 

Total development

             $ (65.9
            

 

 

 

Calendar year loss/LAE ratio

               72.8  
            

 

 

 

Accident year loss/LAE ratio

               71.8  
            

 

 

 

Statutory Ratios

            

Loss/LAE ratio

               72.8  

Expense ratio

               21.3  
            

 

 

 

Combined ratio

               94.1  
            

 

 

 

Statutory Surplus

             $ 5,732.6  
            

 

 

 

NM = Not Meaningful

 

1

Year to date, the other businesses generated an underwriting loss of $2.2 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)

 

     May  
     2012  

CONDENSED GAAP BALANCE SHEET:

  

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

  

Fixed maturities(amortized cost: $11,712.7)

   $ 12,073.6  

Equity securities:

  

Nonredeemable preferred stocks(cost: $431.0)

     799.0  

Common equities (cost: $1,486.8)

     1,968.1  

Short-term investments (amortized cost: $1,649.2)

     1,649.2  
  

 

 

 

Total investments2, 3

     16,489.9  

Net premiums receivable

     3,241.6  

Deferred acquisition costs

     452.2  

Other assets

     2,378.5  
  

 

 

 

        Total assets

   $ 22,562.2  
  

 

 

 

Unearned premiums

   $ 5,014.0  

Loss and loss adjustment expense reserves

     7,502.6  

Other liabilities

     1,751.6  

Debt

     2,062.6  

Shareholders’ equity

     6,231.4  
  

 

 

 

        Total liabilities and shareholders’ equity

   $ 22,562.2  
  

 

 

 

Common shares outstanding

     609.7  

Shares repurchased – May

     0  

Average cost per share

   $ 0  

Book value per share

   $ 10.22  

Trailing 12-month return on average shareholders’ equity

  

Net income

     13.5 

Comprehensive income

     11.4 

Net unrealized pretax gains (losses) on investments

   $ 1,207.9  

Increase (decrease) from April 2012

   $ (180.6

Increase (decrease) from December 2011

   $ 157.4  

Debt-to-total capital ratio

     24.9 

Fixed-income portfolio duration

     1.9 years   

Weighted average credit quality

     AA-   

Year-to-date Gainshare factor

     1.42  

 

1 

As of May 31, 2012, we held certain hybrid securities and recognized a change in fair value of $2.3 million as a realized gain during the period we held these securities.

2

Includes $4.7 billion of short-term investments and U.S. Treasury securities prior to settling $13.0 million of net security transactions outstanding as of month-end.

3

Includes $13.0 million of net unsettled security transactions (as discussed in note 2 above).

4

Loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $803.0 million, which are included in “other assets.”

 

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Monthly Commentary

 

   

During May, the Company incurred catastrophe losses of about $24 million, or 1.9 combined ratio points, compared to $48 million, or 4.2 points, last year. Oklahoma, Kansas, Texas, South Dakota, Minnesota, and Kentucky accounted for 75% of the total catastrophe losses incurred during the month.

Events

As previously announced, Progressive will host a simultaneous webcast of its 2012 Investor Relations Meeting on Thursday, June 14, 2012 at 9:00 a.m. eastern time. This meeting will last approximately three hours and will include a question and answer session following the presentations. The meeting will also be available simultaneously, in a listen-only format, by phone. Participants via the phone will not be able to submit questions during the question and answer session. To attend the webcast or to receive the call-in instructions, visit our website at http://investors.progressive.com/phoenix.zhtml?c=81824&p=irol-calendar. Information that is distributed at the meeting will be made available on the website on the morning of the meeting.

We are currently scheduled to release June results on Thursday, July 12, 2012, before the market opens.

About Progressive

Celebrating its 75th anniversary in 2012, 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, or in-person with a local agent.

Progressive offers insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes. 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®, the Snapshot Discount®, and a concierge level of claims service.

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 of governmental, corporate, or other securities by a rating agency; 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; disputes relating to intellectual property rights; the outcome of litigation pending or that may be 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; 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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