8-K
PROGRESSIVE CORP/OH/ (PGR)
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) January 25, 2023
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. ☐
Item 2.02 Results of Operations and Financial Condition.
On January 25, 2023, 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 ended, December 2022 and selected quarterly financial results. A copy of the news release is attached hereto as Exhibit 99.
Item 8.01 Other Events.
The Company’s Disclosure Outlets To Disseminate Information
We disclose information to the public concerning the Company, its products and services, and other items through a variety of disclosure outlets in order to achieve broad, non-exclusionary distribution of information to the public. Some of the information distributed through these disclosure outlets may be considered to be material information. Investors and others are encouraged to review the information we make public in the locations below. This list may be updated from time to time.
•For information concerning the Company and its products and services, please visit: progressive.com
•For information provided to the investment community, including news releases, events and presentations, and SEC filings, please visit: investors.progressive.com
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
See exhibit index on page 3.
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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: | January 25, 2023 | ||
|---|---|---|---|
| THE PROGRESSIVE CORPORATION | |||
| By: | /s/ Mariann Wojtkun Marshall | ||
| Name: | Mariann Wojtkun Marshall | ||
| 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 January 25, 2023, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year ended, December 2022 and selected quarterly financial results. |
| 104 | 104 | Cover Page Interactive Data File (the cover page tags are<br>embedded within the Inline XBRL document). |
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Document
| NEWS RELEASE | | --- || The Progressive Corporation | Company Contact: | | --- | --- | | 6300 Wilson Mills Road | Douglas S. Constantine | | Mayfield Village, Ohio 44143 | (440) 395-3707 | | http://www.progressive.com | investor_relations@progressive.com |
PROGRESSIVE REPORTS DECEMBER RESULTS
MAYFIELD VILLAGE, OHIO -- January 25, 2023 -- The Progressive Corporation (NYSE:PGR) today reported the following results for December 2022 and the fourth quarter of 2022:
| December | Quarter | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions, except per share amounts and ratios; unaudited) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||
| Net premiums written | $ | 3,574.0 | $ | 3,113.3 | 15 | % | $ | 12,460.2 | $ | 10,749.3 | 16 | % |
| Net premiums earned | $ | 4,030.0 | $ | 3,613.2 | 12 | % | $ | 12,891.5 | $ | 11,601.4 | 11 | % |
| Net income | $ | 5.8 | $ | 393.3 | (99) | % | $ | 826.4 | $ | 962.3 | (14) | % |
| Per share available to common shareholders | $ | 0.01 | $ | 0.67 | (99) | % | $ | 1.40 | $ | 1.63 | (14) | % |
| Total pretax net realized gains (losses) on securities | $ | (411.1) | $ | 222.3 | (285) | % | $ | (72.8) | $ | 425.3 | (117) | % |
| Combined ratio | 93.3 | 94.6 | (1.3) pts. | 93.9 | 94.7 | (0.8) pts. | ||||||
| Average diluted equivalent common shares | 587.1 | 586.4 | 0 | % | 587.1 | 586.3 | 0 | % | ||||
| December | ||||||||||||
| --- | --- | --- | --- | |||||||||
| (thousands; unaudited) | 2022 | 2021 | Change | |||||||||
| Policies in Force | ||||||||||||
| Personal Lines | ||||||||||||
| Agency – auto | 7,766.3 | 7,879.0 | (1) % | |||||||||
| Direct – auto | 10,131.0 | 9,568.2 | 6 % | |||||||||
| Total personal auto | 17,897.3 | 17,447.2 | 3 % | |||||||||
| Total special lines | 5,558.1 | 5,288.5 | 5 % | |||||||||
| Total Personal Lines | 23,455.4 | 22,735.7 | 3 % | |||||||||
| Total Commercial Lines | 1,046.4 | 971.2 | 8 % | |||||||||
| Total Property business | 2,851.3 | 2,776.2 | 3 % | |||||||||
| Companywide Total | 27,353.1 | 26,483.1 | 3 % |
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 insurance 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.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENT
December 2022
(millions)
(unaudited)
| Current Month | Comments on Monthly Results1 | ||
|---|---|---|---|
| Net premiums written | $ | 3,574.0 | |
| Revenues: | |||
| Net premiums earned | $ | 4,030.0 | |
| Investment income | 152.5 | ||
| Net realized gains (losses) on securities: | |||
| Net realized gains (losses) on security sales | (205.2) | ||
| Net holding period gains (losses) on securities | (205.2) | ||
| Net impairment losses recognized in earnings | (0.7) | ||
| Total net realized gains (losses) on securities | (411.1) | ||
| Fees and other revenues | 56.8 | ||
| Service revenues | 20.1 | ||
| Total revenues | 3,848.3 | ||
| Expenses: | |||
| Losses and loss adjustment expenses | 3,070.4 | ||
| Policy acquisition costs | 328.6 | ||
| Other underwriting expenses | 419.1 | ||
| Investment expenses | 1.6 | ||
| Service expenses | 22.7 | ||
| Interest expense | 21.1 | ||
| Total expenses | 3,863.5 | ||
| Income (loss) before income taxes | (15.2) | ||
| Provision (benefit) for income taxes | (21.0) | Includes $15.7 million of tax benefits primarily related to an increase in state deferred tax assets, in part driven by a decline in the valuation of certain equity investments. | |
| Net income | 5.8 | ||
| Other comprehensive income (loss) | |||
| Changes in: | |||
| Total net unrealized gains (losses) on fixed-maturity securities | 22.1 | Includes $8.6 million of tax benefits related to an increase in state deferred tax assets due to a decline in valuation of certain fixed-maturity securities during the year. | |
| Net unrealized losses on forecasted transactions | 0 | ||
| Foreign currency translation adjustment | 0 | ||
| Other comprehensive income (loss) | 22.1 | ||
| Total comprehensive income (loss) | $ | 27.9 |
1 For a description of our financial reporting and accounting policies, see Note 1 to our 2021 audited consolidated financial statements included in our 2021 Shareholders’ Report, which can be found at www.progressive.com/annualreport.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPREHENSIVE INCOME STATEMENTS
December 2022
(millions)
(unaudited)
| Full Year | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | % Change | |||
| Net premiums written | $ | 51,081.1 | $ | 46,405.2 | 10 |
| Revenues: | |||||
| Net premiums earned | $ | 49,241.2 | $ | 44,368.7 | 11 |
| Investment income | 1,260.3 | 860.9 | 46 | ||
| Net realized gains (losses) on securities: | |||||
| Net realized gains (losses) on security sales | 196.5 | 614.3 | (68) | ||
| Net holding period gains (losses) on securities | (2,100.1) | 899.9 | (333) | ||
| Net impairment losses recognized in earnings | (8.6) | (5.0) | 72 | ||
| Total net realized gains (losses) on securities | (1,912.2) | 1,509.2 | (227) | ||
| Fees and other revenues | 722.1 | 691.8 | 4 | ||
| Service revenues | 299.3 | 271.4 | 10 | ||
| Total revenues | 49,610.7 | 47,702.0 | 4 | ||
| Expenses: | |||||
| Losses and loss adjustment expenses | 38,122.7 | 33,627.6 | 13 | ||
| Policy acquisition costs | 3,917.0 | 3,712.8 | 5 | ||
| Other underwriting expenses | 5,859.6 | 5,654.7 | 4 | ||
| Investment expenses | 24.3 | 25.5 | (5) | ||
| Service expenses | 296.7 | 252.8 | 17 | ||
| Interest expense | 243.5 | 218.6 | 11 | ||
| Goodwill impairment | 224.8 | 0 | NM | ||
| Total expenses | 48,688.6 | 43,492.0 | 12 | ||
| Income before income taxes | 922.1 | 4,210.0 | (78) | ||
| Provision for income taxes | 200.6 | 859.1 | (77) | ||
| Net income | 721.5 | 3,350.9 | (78) | ||
| Other comprehensive income (loss) | |||||
| Changes in: | |||||
| Total net unrealized gains (losses) on fixed-maturity securities | (2,842.5) | (891.1) | 219 | ||
| Net unrealized losses on forecasted transactions | 0.4 | 0.7 | (43) | ||
| Foreign currency translation adjustment | (0.6) | (0.6) | 0 | ||
| Other comprehensive income (loss) | (2,842.7) | (891.0) | 219 | ||
| Total comprehensive income (loss) | $ | (2,121.2) | $ | 2,459.9 | (186) |
| NM = Not Meaningful |
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE
&
INVESTMENT RESULTS
December 2022
(millions – except per share amounts)
(unaudited)
| The following table sets forth the computation of per share results: | ||||||
|---|---|---|---|---|---|---|
| Current | Full Year | |||||
| Month | 2022 | 2021 | ||||
| Net income | $ | 5.8 | $ | 721.5 | $ | 3,350.9 |
| Less: Preferred share dividends | 2.3 | 26.9 | 26.9 | |||
| Net income available to common shareholders | $ | 3.5 | $ | 694.6 | $ | 3,324.0 |
| Per common share: | ||||||
| Basic | $ | 0.01 | $ | 1.19 | $ | 5.69 |
| Diluted | $ | 0.01 | $ | 1.18 | $ | 5.66 |
| Comprehensive income (loss) | $ | 27.9 | $ | (2,121.2) | $ | 2,459.9 |
| Less: Preferred share dividends | 2.3 | 26.9 | 26.9 | |||
| Comprehensive income (loss) attributable to common shareholders | $ | 25.6 | $ | (2,148.1) | $ | 2,433.0 |
| Per common share: | ||||||
| Diluted1 | $ | 0.04 | $ | (3.68) | $ | 4.14 |
| Average common shares outstanding - Basic | 584.5 | 584.4 | 584.5 | |||
| Net effect of dilutive stock-based compensation | 2.6 | 2.7 | 2.6 | |||
| Total average equivalent common shares - Diluted | 587.1 | 587.1 | 587.1 |
1 Basic earnings per share is disclosed where a comprehensive loss attributable to common shareholders is reported since diluted earnings per share are antidilutive.
| The following table sets forth the investment results for the period: | ||||
|---|---|---|---|---|
| Current | Full Year | |||
| Month | 2022 | 2021 | ||
| Fully taxable equivalent (FTE) total return: | ||||
| Fixed-income securities | (0.1)% | (6.6)% | (0.1)% | |
| Common stocks | (6.8)% | (19.4)% | 33.4% | |
| Total portfolio | (0.4)% | (7.8)% | 2.6% | |
| Pretax annualized investment income book yield | 3.3%1 | 2.4% | 1.9% |
1 During December we recorded approximately $21 million (or a 0.5% contribution) of additional investment income on our asset-backed securities under the retrospective method of accounting. See Note 1 to our 2021 audited consolidated financial statements for a description of our financial reporting and accounting policies.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
December 2022
($ in millions)
(unaudited)
| Current Month | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial | ||||||||||||
| Personal Lines Business | Lines | Property | Companywide | |||||||||
| Agency | Direct | Total | Business | Business | Total | |||||||
| Net Premiums Written | $ | 1,348.3 | $ | 1,521.6 | $ | 2,869.9 | $ | 497.8 | $ | 206.2 | $ | 3,574.0 |
| % Growth in NPW | 17% | 21% | 19% | (4)% | 11% | 15% | ||||||
| Net Premiums Earned | $ | 1,440.8 | $ | 1,676.0 | $ | 3,116.8 | $ | 715.3 | $ | 197.6 | $ | 4,030.0 |
| % Growth in NPE | 9% | 15% | 12% | 11% | 7% | 12% | ||||||
| GAAP Ratios | ||||||||||||
| Loss/LAE ratio | 74.4 | 77.5. | 76.1 | 75.1 | 78.3 | 76.0 | ||||||
| Expense ratio | 18.1 | 13.61 | 15.7 | 21.7 | 26.5 | 17.3 | ||||||
| Combined ratio | 92.5 | 91.1. | 91.8 | 96.8 | 104.8 | 93.3 | ||||||
| Net catastrophe loss ratio2 | 0.8 | 0.3 | 18.0 | 1.6 | ||||||||
| Actuarial Adjustments3 | ||||||||||||
| Reserve Decrease/(Increase) | ||||||||||||
| Prior accident years | $ | 5.6 | ||||||||||
| Current accident year | (19.7) | |||||||||||
| Calendar year actuarial adjustment | $ | (2.5) | $ | (1.3) | $ | (3.8) | $ | (25.5) | $ | 15.2 | $ | (14.1) |
| Prior Accident Years Development | ||||||||||||
| Favorable/(Unfavorable) | ||||||||||||
| Actuarial adjustment | $ | 5.6 | ||||||||||
| All other development | 33.0 | |||||||||||
| Total development | $ | 38.6 | ||||||||||
| Calendar year loss/LAE ratio | 76.0 | |||||||||||
| Accident year loss/LAE ratio | 77.0 |
1 December Direct expense ratio is lower than the full year primarily due to lower advertising expense.
2 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned. During the month, we incurred catastrophe losses primarily related to winter storms, wind, and thunderstorms throughout the United States.
As previously announced, during December 2022, we updated our incurred loss estimates related to Hurricane Ian, which made multiple landfalls beginning in late September 2022. During the month, our estimate for our vehicle losses, which includes boats and recreational vehicles, was essentially unchanged. For our Property business, prior to giving effect to reinsurance, our estimate of loss and allocated loss adjustment expenses (ALAE) was reduced $400 million during the month, bringing the current estimate of ultimate losses and ALAE to $1 billion at year end 2022. Given that we exceeded our $200 million retention threshold under our reinsurance contracts in September 2022, this change in estimate for our Property losses and ALAE did not impact our results of operations for December.
3 Represents adjustments solely based on our normally scheduled actuarial reviews. For our Property business, the actuarial reserving methodology includes changes to catastrophe losses, while the reviews in our vehicle businesses do not include catastrophes.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
December 2022
($ in millions)
(unaudited)
| Full Year | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Commercial | ||||||||||||
| Personal Lines Business | Lines | Property | Companywide | |||||||||
| Agency | Direct | Total | Business | Business | Total | |||||||
| Net Premiums Written | $ | 18,334.2 | $ | 20,944.3 | $ | 39,278.5 | $ | 9,398.8 | $ | 2,401.7 | $ | 51,081.1 |
| % Growth in NPW | 6% | 11% | 9% | 17% | 8% | 10% | ||||||
| Net Premiums Earned | $ | 17,744.7 | $ | 20,135.5 | $ | 37,880.2 | $ | 9,088.3 | $ | 2,270.0 | $ | 49,241.2 |
| % Growth in NPE | 5% | 9% | 7% | 31% | 11% | 11% | ||||||
| GAAP Ratios | ||||||||||||
| Loss/LAE ratio | 78.1 | 78.6 | 78.3 | 71.5 | 83.3 | 77.3 | ||||||
| Expense ratio | 17.8 | 17.6 | 17.7 | 19.6 | 27.2 | 18.5 | ||||||
| Combined ratio | 95.9 | 96.2 | 96.0 | 91.1 | 110.5 | 95.8 | ||||||
| Net catastrophe loss ratio1 | 2.8 | 0.4 | 25.6 | 3.4 | ||||||||
| Actuarial Adjustments2 | ||||||||||||
| Reserve Decrease/(Increase) | ||||||||||||
| Prior accident years | $ | (105.5) | ||||||||||
| Current accident year | (83.8) | |||||||||||
| Calendar year actuarial adjustment | $ | (33.1) | $ | (0.7) | $ | (33.8) | $ | (112.4) | $ | (43.1) | $ | (189.3) |
| Prior Accident Years Development | ||||||||||||
| Favorable/(Unfavorable) | ||||||||||||
| Actuarial adjustment | $ | (105.5) | ||||||||||
| All other development | 191.8 | |||||||||||
| Total development | $ | 86.3 | ||||||||||
| Calendar year loss/LAE ratio | 77.3 | |||||||||||
| Accident year loss/LAE ratio | 77.5 |
1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.
2 Represents 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.
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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions - except per share amounts)
(unaudited)
| December 2022 | |||
|---|---|---|---|
| CONDENSED GAAP BALANCE SHEET: | |||
| Investments, at fair value: | |||
| Available-for-sale securities: | |||
| Fixed maturities1 (amortized cost: $50,264.0) | $ | 46,651.9 | |
| Short-term investments (amortized cost: $2,861.7) | 2,861.7 | ||
| Total available-for-sale securities | 49,513.6 | ||
| Equity securities: | |||
| Nonredeemable preferred stocks (cost: $1,364.2) | 1,213.2 | ||
| Common equities (cost: $826.1) | 2,821.5 | ||
| Total equity securities | 4,034.7 | ||
| Total investments2,3 | 53,548.3 | ||
| Net premiums receivable | 10,416.9 | ||
| Reinsurance recoverables (including $5,559.2 on unpaid loss and LAE reserves) | 5,832.1 | ||
| Deferred acquisition costs | 1,544.4 | ||
| Goodwill and intangible assets | 314.2 | ||
| Other assets2 | 3,809.1 | ||
| Total assets | $ | 75,465.0 | |
| Unearned premiums | $ | 17,293.6 | |
| Loss and loss adjustment expense reserves | 30,359.3 | ||
| Other liabilities | 5,532.8 | ||
| Debt | 6,388.3 | ||
| Total liabilities | 59,574.0 | ||
| Shareholders’ equity | 15,891.0 | ||
| Total liabilities and shareholders’ equity | $ | 75,465.0 | |
| Common shares outstanding | 584.9 | ||
| Common shares repurchased - December | 0.07 | ||
| Average cost per common share | $ | 128.60 | |
| Book value per common share | $ | 26.32 | |
| Trailing 12-month return on average common shareholders’ equity | |||
| Net income | 4.4 | % | |
| Comprehensive income | (13.5) | % | |
| Net unrealized pretax gains (losses) on fixed-maturity securities | $ | (3,537.6) | |
| Increase (decrease) from November 2022 | $ | 17.1 | |
| Increase (decrease) from December 2021 | $ | (3,609.0) | |
| Debt-to-total capital ratio | 28.7 | % | |
| Fixed-income portfolio duration | 2.9 | ||
| Weighted average credit quality | AA . |
1 As of December 31, 2022, we held certain hybrid securities and recognized a change in fair value of $74.5 million as a realized loss during the period we held these securities.
2 At December 31, 2022, we had $34.4 million of net unsettled security transactions classified in “other assets.”
3 Includes $4.4 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.
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Monthly Commentary
•The Company has no additional commentary regarding December’s results.
Events
Our fourth quarter Investor Relations conference call is currently scheduled to be held on Tuesday, February 28, 2023, at 9:30 a.m. eastern time. The call and webcast is scheduled to last 90 minutes and will begin with an approximate 45-minute presentation on usage-based insurance, followed by a question and answer session with Tricia Griffith, our CEO, and John Sauerland, our CFO. We plan to post our 2022 Shareholders’ Report online and file our Annual Report on Form 10-K with the SEC on Monday, February 27, 2023. If the dates of our events, which are always subject to change, are rescheduled, we will announce the change in a press release as soon as practical and publish it on our investor website. Details regarding access to the teleconference, or any event changes, will be available at: https://investors.progressive.com/events.
We plan to release January results on Wednesday, February 15, 2023, before the market opens.
About Progressive
Progressive Insurance® makes it easy to understand, buy and use car insurance, home insurance, and other protection needs. Progressive offers choices so consumers can reach us however it’s most convenient for them — online at progressive.com, by phone at 1-800-PROGRESSIVE, via the Progressive mobile app, 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 auto 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.
Regulation FD Disclosure Outlets
The Company disseminates information to the public about the Company, its products, services and other matters through various outlets in order to achieve broad, non-exclusionary distribution of information to the public. These outlets include the Company’s website (progressive.com) and its investor relations website (investors.progressive.com). We encourage investors and others to review the information the Company makes public through these outlets, as such information distributed through these outlets may be considered to be material information.
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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 and the continued availability of reinsurance and performance by reinsurers;
•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 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 and changing 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 acquire or 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 impact on our investment returns and strategies from regulations and societal pressures relating to environmental, social, and other public policy matters;
•the elimination of 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;
•the impacts of the COVID-19 pandemic and measures taken in response; 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, 2021.
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.
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