When building wealth in the stock market, one smart move you can make is to invest in quality companies with competitive advantages and robust cash flows that can grow no matter what the economy does.One place you can unearth hidden gems like this is the insurance industry. Insurance companies can be an excellent source of cash flow because their products are always in high demand. While these businesses aren't exciting, well-run insurers can deliver phenomenal market-beating returns with less volatility ov ...

Progressive Corporation (NYSE:PGR) Q3 2023 Earnings Conference Call November 1, 2023 9:30 AM ET Company Participants Douglas Constantine - Director, IR Susan Griffith - President, CEO & Director Patrick Callahan - President, Personal Lines Conference Call Participants Jian Huang - Morgan Stanley Michael Zaremski - BMO Capital Markets Jimmy Bhullar - JPMorgan Chase & Co. Joshua Shanker - Bank of America Merrill Lynch Elyse Greenspan - Wells Fargo Securities David Motemaden - Evercore ISI Tracy Benguigui - Ba ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-09518 THE PROGRESSIVE CORPORATION (Exact name of registrant as specified in its charter) Ohio 34-0963169 (State or other ju ...

Investor 2023 Q2 Relations Reserving and cohort pricing Information Relevant to this Presentation Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Investors are cautioned that certain statements in this presentation and related comments by management during the earnings callnot based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as “estimate,” “expect,” “intend,” “p ...

Progressive Corporation (NYSE:PGR) Q2 2023 Earnings Conference Call August 2, 2023 9:30 AM ET Company Participants Douglas Constantine - Director, IR Susan Griffith - President, CEO & Director Gary Traicoff - Corporate Actuary Jim Curtis - Personal Lines Controller Conference Call Participants Elyse Greenspan - Wells Fargo Securities Michael Zaremski - BMO Capital Markets Jimmy Bhullar - JPMorgan Chase & Co. Tracy Benguigui - Barclays Bank Joshua Shanker - Bank of America Merrill Lynch Yaron Kinar - Jefferi ...

Premium Growth and Policy Performance - Net premiums written grew 18% year-over-year to $14.7 billion in Q2 2023, driven by policy growth and rate increases[112] - Policies in force increased by 12% year-over-year to 29.6 million, with personal auto products showing strong growth[112] - Personal auto policies in force grew between 10% and 17% across all consumer segments in Q2 2023 compared to the same period last year[187] - Companywide total policies in force increased by 12% to 29,576.8 thousand in Q2 2023 from 26,509.1 thousand in Q2 2022[183] - Net premiums written for Personal Lines increased by 22% to $11,600.1 million in Q2 2023 compared to $9,472.5 million in Q2 2022[183] - Total underwriting operations net premiums written grew by 18% to $14,716.9 million in Q2 2023 from $12,422.1 million in Q2 2022[183] - Total Personal Lines net premiums earned grew 23% to $11,387.9 million in Q2 2023 from $9,272.4 million in Q2 2022[183] - Commercial Lines net premiums written increased by 2% to $2,366.4 million in Q2 2023 compared to $2,308.8 million in Q2 2022[183] Underwriting Performance and Losses - Combined ratio increased by 4.8 points to 100.4 in Q2 2023, primarily due to unfavorable prior accident years reserve development and higher catastrophe losses[109] - Catastrophe losses contributed 7.1 points to the underwriting loss in Q2 2023, with nearly 60% of losses in vehicle businesses[111] - Property business experienced a 33.2% underwriting loss margin in Q2 2023, with 66.7 points attributed to catastrophic weather events[117] - Underwriting profit for Personal Lines - Agency decreased to $(71.2) million with a margin of (1.4)% in Q2 2023, compared to $260.3 million and 6.0% margin in Q2 2022[154] - Total underwriting operations reported a loss of $(64.3) million with a margin of (0.4)% in Q2 2023, down from $538.5 million and 4.4% margin in Q2 2022[154] - Catastrophe losses reduced underwriting profitability by 7.1 points in Q2 2023 and 4.5 points in the first six months of 2023, compared to 4.3 points and 2.8 points respectively in the same periods last year[154] - Total incurred losses and LAE increased to $12,170.1 million in Q2 2023 from $9,421.1 million in Q2 2022[159] - The total loss and LAE ratio increased by 6.5 points in Q2 2023 compared to the same period last year, primarily due to increased severity and higher catastrophe losses[160] - Net catastrophe losses incurred totaled $1,024.6 million in Q2 2023, up from $528.3 million in Q2 2022[161] - The company experienced 19 catastrophic weather events in Q2 2023, compared to 23 events in Q2 2022[161] Investment Performance - Net income increased by 164% year-over-year in Q2 2023, driven by net realized gains on securities and a 55% increase in recurring investment income[114] - The fair value of the investment portfolio rose to $59.3 billion at June 30, 2023, up from $53.5 billion at December 31, 2022[134] - Recurring investment income generated a pretax book yield of 3.1% in Q2 2023, up from 2.3% in Q2 2022[136] - Pretax recurring investment book yield (annualized) increased to 3.1% in Q2 2023 from 2.3% in Q2 2022, and to 3.0% in the first six months of 2023 from 2.1% in the same period last year[205] - The total portfolio value as of June 30, 2023, was $59.27 billion, with fixed-income securities accounting for 95.4% ($56.56 billion) and common equities making up 4.6% ($2.71 billion)[209] - U.S. government obligations represented 53.3% ($31.60 billion) of the portfolio as of June 30, 2023, up from 36.0% ($18.72 billion) in June 2022[209] - Corporate debt securities accounted for 17.4% ($10.30 billion) of the portfolio as of June 30, 2023, slightly down from 19.6% ($10.17 billion) in June 2022[209] - The fixed-income portfolio had a duration of 2.9 years as of June 30, 2023, within the acceptable range of 1.5 to 5 years[217] - The portfolio's credit quality rating was AA as of June 30, 2023, with 26.9% of the fixed-income portfolio allocated to 5-year duration securities[218] - Group I securities (higher risk) made up 7.6% ($4.52 billion) of the portfolio as of June 30, 2023, down from 11.4% ($5.90 billion) in June 2022[212] - Group II securities (lower risk) accounted for 92.4% ($54.74 billion) of the portfolio as of June 30, 2023, up from 88.6% ($46.03 billion) in June 2022[212] - The fixed-maturity portfolio had total after-tax net unrealized losses of $2.6 billion as of June 30, 2023, compared to $2.2 billion in June 2022[213] - Equity securities had net holding period gains of $1.92 billion as of June 30, 2023, up from $1.84 billion in December 2022[215] - The portfolio's short-term investments decreased to 2.5% ($1.49 billion) as of June 30, 2023, from 8.9% ($4.61 billion) in June 2022[212] - AAA-rated fixed-income portfolio increased to 68.4% in June 2023, up from 57.7% in June 2022[219] - The company expects approximately $3.1 billion (13%) of principal repayment from its fixed-income portfolio during the remainder of 2023[220] - Total asset-backed securities decreased to $9,845.8 million in June 2023, down from $11,929.9 million in June 2022[221] - Residential mortgage-backed securities decreased by 3.1% in value during the second quarter of 2023[222] - The CMBS portfolio experienced a 14.4% decrease in value during the second quarter of 2023 due to commercial real estate market volatility[225] - The CMBS portfolio has no delinquencies as of the end of the second quarter of 2023[225] - The average original loan-to-value (LTV) ratio for the CMBS portfolio ranges from 51.9% to 66.5% across different maturity years[227] - The average current debt service coverage ratio (DSCR) for the CMBS portfolio ranges from 1.8 to 3.7 across different maturity years[227] - Automobile and equipment categories saw additions in Q2 2023, with a total fair value of $1,481.3 million and $820.8 million respectively, representing 63.7% of the total portfolio[229] - Municipal securities portfolio increased modestly in Q2 2023, with total fair value reaching $2,154.7 million, including $472.2 million in single-family housing revenue bonds[230][231] - Corporate debt securities portfolio decreased to $10.3 billion in Q2 2023 from $10.7 billion in Q1 2023, with a reduction in high-yield securities exposure[233] - Preferred stocks portfolio declined to $1.1 billion in Q2 2023 from $1.3 billion in Q1 2023, primarily due to called or sold securities with less attractive risk/reward profiles[235][236] - Common equities portfolio held 762 out of 1,008 stocks in the Russell 1000 Index, representing 95% of the index's total market capitalization[239] - Total fair value of the fixed-income portfolio decreased by 4.4% in Q2 2023, with the largest declines in asset-backed securities (-11.2%) and equipment (-10.8%)[229] - Revenue bonds supported by individual mortgages held by state housing finance agencies had an overall credit quality rating of AA+[231] - Corporate debt securities made up approximately 18% of the fixed-income portfolio in Q2 2023, down from 20% in Q1 2023[233] - Approximately 82% of preferred stocks pay dividends with tax preferential characteristics[236] - The majority of common stock portfolio holdings are selected based on their correlation with the Russell 1000 Index, with a year-to-date total return within the targeted tracking error of +/- 50 basis points[239] - The duration of financial instruments subject to interest rate risk was 2.9 years at both June 30, 2023, and December 31, 2022, and 2.8 years at June 30, 2022[243] - The weighted average beta of the equity portfolio was 1.04 at June 30, 2023, and 1.00 at both June 30, 2022, and December 31, 2022[243] - The company has not experienced a material impact compared to the tabular presentations of interest rate and market risk-sensitive instruments in the Annual Report on Form 10-K for the year ended December 31, 2022[243] Personal Auto and Commercial Auto Performance - Personal auto incurred severity increased by 12% year-over-year in Q2 2023, while accident frequency rose by 1%[119] - Personal auto rates increased by an aggregate countrywide net of 7% in Q2 2023, following a 4% increase in Q1 2023[121] - Snapshot adoption rates increased by 40% in Agency auto and nearly 10% in Direct auto year-over-year in Q2 2023[129] - Trailing 12-month total personal auto policy life expectancy increased by 1% compared to last year, marking the first positive trend since early 2022[132] - Direct channel trailing 12-month policy life expectancy increased by 2%, while the Agency channel remained flat[132] - Trailing 3-month policy life expectancy for total personal auto surged by 40% compared to the same period last year[132] - Trailing 12-month policy life expectancy increased by 4% in special lines and 7% in Property, but decreased by 11% in Commercial Lines[133] - Personal auto business severity increased by 12% quarter-over-quarter and 11% year-to-date, driven by inflation impacting vehicle and repair costs[167] - Commercial auto products' incurred severity increased by 7% in Q2 2023 compared to the same period last year, excluding TNC, BOP, and Protective Insurance products[168] - Commercial auto products' incurred frequency increased by 2% in Q2 2023 on a trailing 12-month basis, excluding Protective Insurance and TNC business[169] - 80% of the total unfavorable development in H1 2023 was in personal auto products, with half due to higher severity in auto property and physical damage coverages[174] - Florida contributed approximately 40% to prior accident year reserve development year-to-date across all personal auto product lines[175] - Property damage coverage severity trends increased significantly, with over 80% of prior year development from the 2022 accident year[176] - Written premium per policy for new and renewal Agency auto business increased 11% and 8% respectively in Q2 2023 compared to Q2 2022[192] - Direct auto applications increased 14% in Q2 2023 and 16% year-to-date, driven by growth in both new and renewal applications[193] - Agency auto quote volume increased 16% in Q2 2023 and 15% year-to-date, with conversion rates up 29% and 39% respectively[191] - Personal auto rate increases implemented in 27 states during Q2 2023 resulted in an aggregate rate increase of about 7%[187] - Direct auto quote volume decreased 7% in Q2 2023 but increased 32% in the first six months of 2023, with conversion rates rising by 35% and 21% respectively[194] - Written premium per policy for new and renewal Direct auto business increased by 5% and 7% in Q2 2023, and 6% and 8% in the first six months of 2023[194] - Commercial auto new application growth was positive in all business markets except for-hire transportation, with quote volume increasing 8% in Q2 2023 and 5% in the first six months of 2023[196] - Written premium per policy for new commercial auto business decreased 4% in Q2 2023 and 5% in the first six months of 2023, while renewal business increased 3% and 4% respectively[197] Property Business Performance - Property business new applications increased 12% in Q2 2023 and 12% year-to-date, driven by underwriting changes in less volatile weather states[198] - New applications in growth-oriented states for Property business were up about 50% in Q2 2023 and the first six months of 2023[199] - The Property business reinsurance program includes coverage for $2.0 billion in damages, with additional substantial coverage for a second or third hurricane[163] - The new aggregate excess of loss reinsurance contract has a first retention layer threshold ranging from $500 million to $575 million, excluding named tropical storms and hurricanes[164] - Reinsurance coverage limits are $100 million for non-named storm property catastrophe losses and $85 million for other events[165] Expense Management and Ratios - Advertising spend decreased by 34% in Q2 2023, reducing the contribution to the combined ratio by 2.0 points[112] - Underwriting expense ratio decreased by 1.7 points in Q2 2023 compared to the same period last year, driven by a 34% reduction in advertising spend[180] - Non-acquisition expense ratio (NAER) increased by 0.4 points in Commercial Lines and 0.7 points in Property businesses in Q2 2023 compared to the same period last year[181] Capital and Shareholder Equity - Total capital (debt plus shareholders' equity) increased to $23.6 billion at June 30, 2023, compared to $22.0 billion at June 30, 2022[140] - The company repurchased 0.3 million common shares in the first six months of 2023 at a total cost of $40.1 million[144] Tax and Financial Metrics - The company reported recoverable income taxes of $44.0 million at June 30, 2023, compared to net current income taxes payable of $114.0 million at June 30, 2022[201] - Net federal deferred tax assets were $1.2 billion at June 30, 2023, compared to $1.0 billion at June 30, 2022[201] - The effective tax rate for the three and six months ended June 30, 2023, was 20.7% and 19.9%, respectively, compared to 14.6% and 6.8% for the same periods last year[203] Reinsurance and Reserve Development - Calendar-year actuarial adjustments totaled $490.4 million for Q2 2023, with prior accident years contributing $206.9 million and current accident year contributing $283.5 million[172]

Progressive Corp (NYSE:PGR) Q1 2023 Earnings Conference Call May 3, 2023 9:30 AM ET Company Participants Douglas Constantine - Director, IR Susan Griffith - President, CEO & Director John Sauerland - VP & CFO Patrick Callahan - President, Personal Lines Jonathan Bauer - CIO Conference Call Participants Michael Zaremski - BMO Capital Elyse Greenspan - Wells Fargo Securities Brian Meredith - UBS Andrew Kligerman - Crédit Suisse Jamminder Bhullar - JPMorgan Chase & Co. David Motemaden - Evercore ISI Tracy Beng ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-09518 THE PROGRESSIVE CORPORATION (Exact name of registrant as specified in its charter) Ohio 34-0963169 (State or other jurisd ...

Financial Data and Key Metrics Changes - The company reported a calendar year combined ratio of 96, successfully meeting its goal despite challenges such as high inflation and significant natural disasters [5][6] - Personal auto policies in force (PIFs) grew by 3% in 2022, with the fourth quarter marking the best new application volume in the company's history [9][10] - The company maintained a lower acquisition expense ratio compared to 2021, indicating improved efficiency in customer acquisition [9] Business Line Data and Key Metrics Changes - The personal auto segment saw continued rate increases, albeit at a slower pace than previous years, with competitors also raising rates to address profitability concerns [8][9] - The company emphasized the importance of usage-based insurance (UBI) products, which have become a key competitive advantage, with UBI adoption at near historical highs [12][24] - In commercial lines, the Smart Haul program targets truckers and has been successful in leveraging electronic logging devices for better pricing accuracy [39][40] Market Data and Key Metrics Changes - The company noted an improvement in its relative competitiveness as competitors raised rates, leading to stronger retention and quote growth [8][9] - The company is actively monitoring market trends and adjusting its strategies to maintain competitiveness in a challenging environment [9][66] Company Strategy and Development Direction - The company has updated its core values and purpose to better unify and guide its organization, focusing on competitive pricing and segmentation as key pillars of its strategy [6][7] - The company plans to expand its continuous monitoring UBI model to more states, enhancing pricing accuracy and customer service [23][66] - The company is investing in telematics to improve underwriting and claims processes, leveraging data from both personal and commercial lines [45][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unpredictability of the future but expressed confidence in the company's ability to navigate challenges and grow while maintaining a combined ratio of 96 [9][66] - The CEO indicated a more bullish outlook for personal auto PIF growth compared to previous months, citing a favorable competitive position and increased shopping activity in the market [65][66] - Management emphasized the importance of segmentation and underwriting restrictions in maintaining profitability and managing risk [58][66] Other Important Information - The company is set to launch an accident response service for all auto customers, enhancing customer value and claims efficiency [29][30] - The company is exploring partnerships with automakers to leverage driving data for improved pricing accuracy, viewing competition as beneficial for consumers [60][61] Q&A Session Summary Question: Progressive's personal auto accident frequency levels appear to be trending better than the industry. What are the reasons for this? - Management agreed with the observation, attributing it to effective segmentation and a favorable mix of business, while noting that they report incurred frequency compared to competitors who report paid frequency [56][57] Question: Can you provide an update on auto PIF growth expectations? - Management expressed a more optimistic outlook than in previous months, highlighting the company's proactive rate adjustments and competitive positioning in the market [64][66] Question: What impact has continuous monitoring had on underwriting profitability? - Management acknowledged that while continuous monitoring is more expensive, it enhances service offerings and pricing accuracy, which could lead to improved profitability over time [67]

Risk Management - The company faces various risks categorized into insurance, operating, market, liquidity, and credit risks, which could adversely affect financial condition and cash flows[1]. - Accurate underwriting and pricing of risks are crucial for the company’s financial health, with reliance on historical data and future trend projections[46]. - The establishment of loss reserves is inherently uncertain, influenced by factors such as medical costs and labor shortages, which could lead to significant deviations from estimates[48]. - Severe weather and catastrophe events have historically impacted the company's insurance operating results, with climate change potentially exacerbating these risks[50]. - The company relies on reinsurance arrangements to mitigate exposure to catastrophe events, but market conditions could affect the availability and cost of such coverage[53]. - The company’s operations depend on the uninterrupted functioning of its systems and third-party services, with potential disruptions posing significant risks[54]. - Cybersecurity threats are a major concern, with increasing sophistication of attacks that could compromise sensitive data and disrupt operations[56]. - The company undertakes substantial efforts to protect its systems, but past incidents indicate vulnerabilities that may not be fully mitigated[58]. - Legislative and regulatory challenges may limit the use of specific rating factors in insurance pricing, potentially undermining risk-based pricing effectiveness[47]. - The company faces significant risks from security breaches, data loss, or cyber-attacks, which could materially adversely affect business results, prospects, and liquidity[59]. Financial Performance - Total revenues for 2022 were $958.2 million, a significant decrease from $3,526.4 million in 2021[153]. - Net income for 2022 was $721.5 million, down from $3,350.9 million in 2021, reflecting a decline of approximately 78.5%[153]. - Total assets as of December 31, 2022, were $22,696.6 million, a decrease from $23,558.9 million in 2021[156]. - Total liabilities increased to $6,805.6 million in 2022 from $5,327.3 million in 2021, representing a rise of approximately 27.8%[156]. - The company reported a comprehensive loss of $2,121.2 million in 2022, compared to a comprehensive income of $2,459.9 million in 2021[153]. - Cash flows from operating activities for 2022 were $388.2 million, a significant drop from $2,711.5 million in 2021[159]. - Dividends paid to common shareholders in 2022 totaled $234.0 million, down from $3,746.5 million in 2021[159]. - The Progressive Corporation's income taxes for 2022 were $705.0 million, down from $815.0 million in 2021, representing a decrease of approximately 13.5%[164]. Market Position and Competition - The company has made substantial investments in brand recognition and marketing, which are critical for maintaining consumer trust and competitive positioning in the insurance market[60]. - The competitive landscape includes large national and international companies, as well as insurtech firms, which may offer similar products at lower prices, impacting the company's ability to retain customers[72]. - The insurance market is cyclical, with periods of strong profitability followed by increased pricing competition, which can adversely affect revenue and profitability levels[74]. - The company must innovate effectively to respond to competitors' initiatives; failure to do so may adversely affect its competitive position[63]. Regulatory and Compliance - Regulatory compliance is complex and varies by jurisdiction, potentially increasing operational costs and affecting profitability[77]. - Increased regulatory scrutiny on the use of "big data," machine learning, and artificial intelligence may adversely affect the company's operations and profitability in various jurisdictions[83]. - The company faces potential lawsuits and investigations related to compliance with complex laws and regulations, which could lead to significant monetary penalties and reputational damage[84]. - The company is involved in various lawsuits challenging its business practices, which may result in costly legal proceedings and impact its financial condition[86]. Investment and Capital Management - The performance of the company's investment portfolio is subject to various risks, including interest rate risk and credit risk, which could adversely affect financial results[92]. - The transition from LIBOR to alternative reference rates may impact the interest rates and values of certain floating rate securities held by the company[98]. - The ability to access capital markets and obtain financing is contingent on favorable evaluations and ratings by credit agencies, with potential downgrades adversely affecting borrowing costs and market perceptions[106][107]. - The company may need to acquire additional capital due to increased regulatory requirements or unprofitable operations, which could adversely affect its financial condition and ability to meet obligations[105]. Strategic Initiatives - The company is focused on maintaining a combined ratio of 96 or below while pursuing growth, indicating a balance between profitability and expansion[89]. - New insurance products and services are being developed, which may introduce new risks and may not perform as well as existing offerings[89]. - The company is evaluating new business models and considering investments in different areas, which may require significant expenditures and could impact short-term results[90]. - The Progressive Corporation is investing $500 million in technology development to enhance customer experience and operational efficiency[183]. - The company plans to expand its market presence in the Southeast region, targeting a 20% increase in market share over the next three years[182]. - A new product line aimed at younger consumers is set to launch in Q2 2024, with projected sales of $200 million in the first year[183]. - The Progressive Corporation has completed two strategic acquisitions in the last quarter, expected to contribute an additional $300 million in annual revenue[182]. Sustainability and Corporate Responsibility - The company is focusing on sustainability initiatives, with a goal to reduce operational carbon emissions by 25% by 2025[183]. - The Progressive Corporation is committed to sustainability initiatives, with plans to reduce carbon emissions by HH% by 2025[186]. Shareholder Returns - The company announced a quarterly dividend on common shares, with the Board retaining discretion to alter the dividend policy, which may result in variable payments or no payments in certain periods[109]. - In 2022, the Board decided not to declare an annual-variable common share dividend, reflecting changes in performance and capital needs[109]. - The company repurchased a total of 161,567 shares in the fourth quarter of 2022 at an average price of $126.74 per share, as part of a broader authorization to repurchase up to 25 million common shares[124]. Internal Controls and Governance - The company has established disclosure controls and procedures to ensure timely and accurate reporting of financial information as required by the Securities Exchange Act of 1934[129]. - As of the end of the reporting period, Progressive's disclosure controls and procedures were deemed effective by the Chief Executive Officer and Chief Financial Officer[130]. - The company has not reported any disagreements with accountants on accounting and financial disclosure[128]. - Progressive's consolidated financial statements are included in the Annual Report, providing a comprehensive overview of its financial condition and results of operations[144].