8-K - PGR - Equibles

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) December 15, 2021

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio			001-09518	34-0963169
(State or other jurisdiction of<br>incorporation)			(Commission File Number)	(IRS Employer<br>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:

☐ 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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 Par Value	PGR	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

- 1 -

Item 7.01 Regulation FD Disclosure.

On December 15, 2021, The Progressive Corporation (“the Company”) issued a news release containing financial results for the Company and its consolidated subsidiaries for the month of, and year-to-date period ended, November 2021. 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.

- 2 -

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:	December 15, 2021
		THE PROGRESSIVE CORPORATION
		By:	/s/ Mariann Wojtkun Marshall
		Name:	Mariann Wojtkun Marshall
		Title:	Vice President and Chief Accounting Officer

- 3 -

EXHIBIT INDEX

Exhibit No. Under Reg. S-K Item 601	Form 8-K Exhibit No.	Description
99	99	News release dated December 15, 2021, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year-to-date period ended, November 2021.
104	104	Cover Page Interactive Data File (the cover page tags are<br>embedded within the Inline XBRL document).

- 4 -

Document

| NEWS RELEASE | | --- || The Progressive Corporation | Company Contact: | | --- | --- | | 6300 Wilson Mills Road | Douglas S. Constantine | | Mayfield Village, Ohio 44143 | (440) 910-3563 | | http://www.progressive.com | investor_relations@progressive.com |

PROGRESSIVE REPORTS NOVEMBER RESULTS

MAYFIELD VILLAGE, OHIO -- December 15, 2021 -- The Progressive Corporation (NYSE:PGR) today reported the following results for November 2021:

	November
(millions, except per share amounts and ratios; unaudited)	2021		2020		Change
Net premiums written	$	3,289.4	$	2,957.9	11	%
Net premiums earned	$	3,590.4	$	3,150.8	14	%
Net income	$	195.2	$	739.8	(74)	%
Per share available to common shareholders	$	0.33	$	1.26	(74)	%
Total pretax net realized gains (losses) on securities	$	(99.1)	$	459.6	(122)	%
Combined ratio	91.9		86.6		5.3 pts.
Average diluted equivalent common shares	586.3		587.6		0	%
	November
---	---	---	---
(thousands; unaudited)	2021	2020	Change
Policies in Force
Personal Lines
Agency – auto	7,921.9	7,616.1	4 %
Direct – auto	9,600.8	8,881.1	8 %
Total personal auto	17,522.7	16,497.2	6 %
Total special lines	5,286.9	4,913.4	8 %
Total Personal Lines	22,809.6	21,410.6	7 %
Total Commercial Lines	968.8	819.4	18 %
Total Property business	2,762.5	2,459.6	12 %
Companywide Total	26,540.9	24,689.6	7 %

Progressive offers personal and commercial insurance throughout the United States. Our Personal Lines business writes insurance for personal autos and special lines products. Our Commercial Lines business writes auto-related liability and physical damage insurance, workers’ compensation coverage primarily for the transportation industry, and business-related general liability and property insurance, predominantly for small businesses. Our Property business writes residential property insurance for homeowners, other property owners, and renters.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

November 2021

(millions)

(unaudited)

	Current Month
Net premiums written	$	3,289.4
Revenues:
Net premiums earned	$	3,590.4
Investment income	72.1
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	4.5
Net holding period gains (losses) on securities	(103.2)
Net impairment losses recognized in earnings	(0.4)
Total net realized gains (losses) on securities	(99.1)
Fees and other revenues	55.4
Service revenues	22.5
Total revenues	3,641.3
Expenses:
Losses and loss adjustment expenses	2,641.5
Policy acquisition costs	297.7
Other underwriting expenses	414.4
Investment expenses	2.0
Service expenses	20.7
Interest expense	17.1
Total expenses	3,393.4
Income before income taxes	247.9
Provision for income taxes	52.7
Net income	195.2
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	(44.5)
Net unrealized losses on forecasted transactions	0
Foreign currency translation adjustment	(0.4)
Other comprehensive income (loss)	(44.9)
Total comprehensive income	$	150.3

1 For a description of our financial reporting and accounting policies, see Note 1 to our 2020 audited consolidated financial statements included in our 2020 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

November 2021

(millions)

(unaudited)

	Year-to-Date
	2021		2020		% Change
Net premiums written	$	43,291.9	$	37,779.6	15
Revenues:
Net premiums earned	$	40,755.5	$	36,097.4	13
Investment income	778.0		863.9		(10)
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	612.7		851.8		(28)
Net holding period gains (losses) on securities	678.8		437.3		55
Net impairment losses recognized in earnings	(4.6)		0		NM
Total net realized gains (losses) on securities	1,286.9		1,289.1		0
Fees and other revenues	638.6		554.6		15
Service revenues	251.2		208.4		21
Total revenues	43,710.2		39,013.4		12
Expenses:
Losses and loss adjustment expenses	30,880.0		23,099.6		34
Policy acquisition costs	3,415.0		3,008.1		14
Other underwriting expenses	5,227.5		5,123.8		2
Policyholder credit expense	0		1,067.0		(100)
Investment expenses	23.3		18.4		27
Service expenses	234.4		188.9		24
Interest expense	201.4		198.3		2
Total expenses	39,981.6		32,704.1		22
Income before income taxes	3,728.6		6,309.3		(41)
Provision for income taxes	771.0		1,310.7		(41)
Net income	2,957.6		4,998.6		(41)
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	(821.3)		558.0		(247)
Net unrealized losses on forecasted transactions	0.7		0.7		0
Foreign currency translation adjustment	(0.7)		0		NM
Other comprehensive income (loss)	(821.3)		558.7		(247)
Total comprehensive income	$	2,136.3	$	5,557.3	(62)
NM = Not Meaningful

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

INVESTMENT RESULTS

November 2021

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of per share results:
	Current		Year-to-Date
	Month		2021		2020
Net income	$	195.2	$	2,957.6	$	4,998.6
Less: Preferred share dividends	2.2		24.6		24.6
Net income available to common shareholders	$	193.0	$	2,933.0	$	4,974.0
Per common share:
Basic	$	0.33	$	5.02	$	8.50
Diluted	$	0.33	$	5.00	$	8.46
Comprehensive income	$	150.3	$	2,136.3	$	5,557.3
Less: Preferred share dividends	2.2		24.6		24.6
Comprehensive income attributable to common shareholders	$	148.1	$	2,111.7	$	5,532.7
Per common share:
Diluted	$	0.25	$	3.60	$	9.41
Average common shares outstanding - Basic	583.8		584.6		584.9
Net effect of dilutive stock-based compensation	2.5		2.5		2.8
Total average equivalent common shares - Diluted	586.3		587.1		587.7
The following table sets forth the investment results for the period:
---	---	---	---	---
		Current	Year-to-Date
		Month	2021	2020
	Fully taxable equivalent (FTE) total return:
	Fixed-income securities	(0.1)%	(0.1)%	6.3%
	Common stocks	(1.2)%	27.7%	16.0%
	Total portfolio	(0.2)%	2.2%	6.9%
	Pretax annualized investment income book yield	1.8%	1.9%	2.4%

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

November 2021

($ in millions)

(unaudited)

Current Month
							Commercial
	Personal Lines Business						Lines		Property		Companywide
	Agency		Direct		Total		Business		Business		Total
Net Premiums Written	$	1,217.9	$	1,337.3	$	2,555.2	$	554.5	$	179.8	$	3,289.4
% Growth in NPW	5%		8%		6%		35%		23%		11%
Net Premiums Earned	$	1,322.0	$	1,458.1	$	2,780.1	$	630.6	$	179.6	$	3,590.4
% Growth in NPE	6%		9%		8%		52%		19%		14%
GAAP Ratios
Loss/LAE ratio	75.6		77.1		76.4		70.1		42.0 .		73.6
Expense ratio	18.8		16.1		17.4		19.3		29.01		18.3
Combined ratio	94.4		93.2		93.8		89.4		71.01		91.9
Net catastrophe loss ratio2					(1.8)		0.5		(1.6)		(1.4)
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years											$	0.3
Current accident year											23.8
Calendar year actuarial adjustment	$	12.8	$	13.5	$	26.3	$	(0.9)	$	(1.3)	$	24.1
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment											$	0.3
All other development											47.3
Total development											$	47.6
Calendar year loss/LAE ratio											73.6
Accident year loss/LAE ratio											74.9

1Included in both the expense ratio and combined ratio is 2.6 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.4 and a combined ratio of 68.4.

2Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned. Negative ratio reflects favorable development on prior period catastrophes, primarily related to Hurricane Ida.

3Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

November 2021

($ in millions)

(unaudited)

Year-to-Date
							Commercial
	Personal Lines Business						Lines		Property		Companywide
	Agency		Direct		Total		Business		Business		Total
Net Premiums Written	$	16,107.5	$	17,652.6	$	33,760.1	$	7,497.6	$	2,029.9	$	43,291.9
% Growth in NPW	7%		10%		9%		52%		16%		15%
Net Premiums Earned	$	15,557.2	$	17,031.0	$	32,588.2	$	6,302.8	$	1,857.1	$	40,755.5
% Growth in NPE	7%		10%		9%		41%		16%		13%
GAAP Ratios
Loss/LAE ratio	75.7		77.0		76.3		69.6		86.4 .		75.8
Expense ratio	18.5		19.6		19.1		19.7		29.11		19.6
Combined ratio	94.2		96.6		95.4		89.3		115.51		95.4
Net catastrophe loss ratio2					2.0		0.4		30.3.		3.0
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years											$	(99.1)
Current accident year											106.5
Calendar year actuarial adjustment	$	39.8	$	42.0	$	81.8	$	(29.9)	$	(44.5)	$	7.4
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment											$	(99.1)
All other development											46.7
Total development											$	(52.4)
Calendar year loss/LAE ratio											75.8
Accident year loss/LAE ratio											75.7

1Included in both the expense ratio and combined ratio is 2.8 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these additional expenses, the Property business would have reported an expense ratio of 26.3 and a combined ratio of 112.7.

2Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

BALANCE SHEET AND OTHER INFORMATION

(millions - except per share amounts)

(unaudited)

	November 2021
CONDENSED GAAP BALANCE SHEET:
Investments, at fair value:
Available-for-sale securities:
Fixed maturities1 (amortized cost: $45,843.6)	$	46,016.8
Short-term investments (amortized cost: $672.1)	672.1
Total available-for-sale securities	46,688.9
Equity securities:
Nonredeemable preferred stocks (cost: $1,536.9)	1,591.3
Common equities (cost: $1,247.7)	4,835.9
Total equity securities	6,427.2
Total investments2	53,116.1
Net premiums receivable	9,777.6
Reinsurance recoverables (including $4,796.5 on unpaid loss and LAE reserves)	5,033.9
Deferred acquisition costs	1,391.8
Goodwill and intangible assets	574.9
Other assets	2,861.0
Total assets	$	72,755.3
Unearned premiums	$	16,180.3
Loss and loss adjustment expense reserves	26,018.7
Other liabilities2	6,810.8
Debt	4,898.6
Total liabilities	53,908.4
Shareholders’ equity	18,846.9
Total liabilities and shareholders’ equity	$	72,755.3
Common shares outstanding	584.4
Common shares repurchased - November	0
Average cost per common share	$	0
Book value per common share	$	31.40
Trailing 12-month return on average common shareholders’ equity
Net income	20.4		%
Comprehensive income	16.0		%
Net unrealized pretax gains (losses) on fixed-maturity securities	$	166.9
Increase (decrease) from October 2021	$	(56.4)
Increase (decrease) from December 2020	$	(1,039.7)
Debt-to-total capital ratio	20.6		%
Fixed-income portfolio duration	3.0
Weighted average credit quality	AA-

1 As of November 30, 2021, we held certain hybrid securities and recognized a change in fair value of $6.3 million as a realized gain during the period we held these securities.

2 At November 30, 2021, we had $605.1 million of net unsettled security transactions classified in “other liabilities.”

Monthly Commentary

•The Company has no additional commentary regarding November’s results.

Events

We plan to release December results on Wednesday, January 26, 2022, before the market opens.

About Progressive

Progressive InsuranceSM makes it easy to understand, buy and use car insurance, home insurance, and other protection needs. Progressive offers choices so consumers can reach us whenever, wherever and however it’s most convenient - online at progressive.com, by phone at 1-800-PROGRESSIVE, on a mobile device or in-person with a local agent.

Progressive provides insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes; it is the third largest car insurer in the country, a leading seller of motorcycle and commercial auto insurance, and one of the top 15 homeowners insurance carriers.

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 HomeQuote Explorer®.

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: Investors are cautioned that certain statements in this report not 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,” “plan,” “believe,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are based on current expectations and projections about future events, and are subject to certain risks, assumptions 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:

•our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;

•our ability to establish accurate loss reserves;

•the impact of severe weather, other catastrophe events and climate change;

•the effectiveness of our reinsurance programs;

•the highly competitive nature of property-casualty insurance markets;

•whether we innovate effectively and respond to our competitors’ initiatives;

•whether we effectively manage complexity as we develop and deliver products and customer experiences;

•how intellectual property rights could affect our competitiveness and our business operations;

•whether we adjust claims accurately;

•our ability to maintain a recognized and trusted brand;

•our ability to attract, develop and retain talent and maintain appropriate staffing levels;

•compliance with complex laws and regulations;

•litigation challenging our business practices, and those of our competitors and other companies;

•the impacts of a security breach or other attack involving our computer systems or the systems of one or more of our vendors;

•the secure and uninterrupted operation of the facilities, systems, and business functions that are critical to our business;

•the success of our efforts to develop new products or enter into new areas of business and navigate related risks;

•our continued ability to send and accept electronic payments;

•the possible impairment of our goodwill or intangible assets;

•the performance of our fixed-income and equity investment portfolios;

•the potential elimination of, or change in, the London Interbank Offered Rate;

•our continued ability to access our cash accounts and/or convert securities into cash on favorable terms;

•the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;

•legal restrictions on our insurance subsidiaries’ ability to pay dividends to The Progressive Corporation;

•limitations on our ability to pay dividends on our common shares under the terms of our outstanding preferred shares;

•our ability to obtain capital when necessary to support our business and potential growth;

•evaluations by credit rating and other rating agencies;

•the variable nature of our common share dividend policy;

•whether our investments in certain tax-advantaged projects generate the anticipated returns;

•the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;

•impacts from the outbreak of the novel coronavirus, or COVID-19, and the restrictions put in place to help slow and/or stop the spread of the virus; 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, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, 2020.

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 we establish reserves 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.