8-K

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) October 14, 2020

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio			001-09518	34-0963169
(State or other jurisdiction of incorporation)			(Commission File Number)	(IRS Employer Identification No.)
6300 Wilson Mills Road,	Mayfield Village,	Ohio		44143
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code (440) 461-5000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ 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. ☐

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Item 2.02 Results of Operations and Financial Condition.

On October 14, 2020, 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, September 2020 and selected quarterly financial results. A copy of the news release is attached hereto as Exhibit 99.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

See exhibit index on page 4.

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	October 14, 2020
		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 October 14, 2020, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year-to-date period ended, September 2020 and selected quarterly financial results.
104	104	Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document).

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EX-99

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 SEPTEMBER RESULTS

MAYFIELD VILLAGE, OHIO -- October 14, 2020 -- The Progressive Corporation (NYSE:PGR) today reported the following results for September 2020 and the third quarter of 2020:

	September						Quarter
(millions, except per share amounts and ratios; unaudited)	2020		2019		Change		2020		2019		Change
Net premiums written	$	3,468.1	$	3,024.3	15	%	$	11,015.1	$	9,621.2	14	%
Net premiums earned	$	3,103.2	$	2,800.9	11	%	$	9,973.5	$	9,012.2	11	%
Net income attributable to Progressive	$	231.4	$	280.9	(18)	%	$	1,530.8	$	841.7	82	%
Per share available to common shareholders	$	0.39	$	0.47	(18)	%	$	2.59	$	1.42	82	%
Total pretax net realized gains (losses) on securities	$	(131.7)	$	50.1	(363)	%	$	532.6	$	65.4	NM
Combined ratio	88.3		92.3		(4.0) pts.		87.8		91.9		(4.1) pts.
Average diluted equivalent common shares	587.8		587.0		0	%	587.8		587.1		0	%

NM = Not meaningful

	September
(thousands; unaudited)	2020	2019	Change
Policies in Force
Personal Lines
Agency – auto	7,527.1	6,903.8	9 %
Direct – auto	8,774.3	7,716.0	14 %
Total personal auto	16,301.4	14,619.8	12 %
Total special lines	4,905.8	4,567.6	7 %
Total Personal Lines	21,207.2	19,187.4	11 %
Total Commercial Lines	803.9	748.7	7 %
Property business	2,421.0	2,144.3	13 %
Companywide Total	24,432.1	22,080.4	11 %

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 primary liability and physical

damage insurance, and 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

September 2020

(millions)

(unaudited)

	Current Month		Comments on Monthly Results1
Net premiums written	$	3,468.1
Revenues:
Net premiums earned	$	3,103.2
Investment income	75.4
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	34.0
Net holding period gains (losses) on securities	(165.7)
Total net realized gains (losses) on securities	(131.7)
Fees and other revenues	48.5
Service revenues	17.0
Total revenues	3,112.4
Expenses:
Losses and loss adjustment expenses	2,073.2
Policy acquisition costs	260.5
Other underwriting expenses	450.5
Policyholder credit expense	3.1		Represents additional policyholder credits issued to personal auto customers.
Investment expenses	1.5
Service expenses	15.7
Interest expense	18.8
Total expenses	2,823.3
Income before income taxes	289.1
Provision for income taxes	57.7
Net income	231.4
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	(62.7)
Net unrealized losses on forecasted transactions	0.1
Other comprehensive income (loss)	(62.6)
Total comprehensive income	$	168.8

¹See the Monthly Commentary at the end of this release for additional discussion. For a description of our financial reporting and accounting policies, see Note 1 to our 2019 audited consolidated financial statements included in our 2019 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

September 2020

(millions)

(unaudited)

	Year-to-Date
	2020		2019		% Change
Net premiums written	$	31,026.4	$	27,987.6	11
Revenues:
Net premiums earned	$	29,052.8	$	26,296.7	10
Investment income	715.5		777.2		(8)
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	771.1		185.3		316
Net holding period gains (losses) on securities	98.7		536.9		(82)
Net impairment losses recognized in earnings	0		(62.4)		(100)
Total net realized gains (losses) on securities	869.8		659.8		32
Fees and other revenues	434.8		403.4		8
Service revenues	169.4		144.1		18
Total revenues	31,242.3		28,281.2		10
Expenses:
Losses and loss adjustment expenses	18,189.7		18,323.4		(1)
Policy acquisition costs	2,413.5		2,200.7		10
Other underwriting expenses	4,179.7		3,643.0		15
Policyholder credit expense	1,062.4		0		NM
Investment expenses	14.5		18.3		(21)
Service expenses	154.7		132.1		17
Interest expense	160.8		142.3		13
Total expenses	26,175.3		24,459.8		7
Income before income taxes	5,067.0		3,821.4		33
Provision for income taxes	1,046.7		916.0		14
Net income	4,020.3		2,905.4		38
Net (income) loss attributable to noncontrolling interest (NCI)	0		(5.9)		(100)
Net income attributable to Progressive	4,020.3		2,899.5		39
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	605.6		636.6		(5)
Net unrealized losses on forecasted transactions	0.6		0.6		0
Other comprehensive income (loss)	606.2		637.2		(5)
Other comprehensive (income) loss attributable to NCI	0		(5.8)		(100)
Total comprehensive income attributable to Progressive	$	4,626.5	$	3,530.9	31
NM = Not Meaningful

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

&

INVESTMENT RESULTS

September 2020

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of per share results:
	Current		Year-to-Date
	Month		2020		2019
Net income attributable to Progressive	$	231.4	$	4,020.3	$	2,899.5
Less: Preferred share dividends	2.2		20.1		20.1
Net income available to common shareholders	$	229.2	$	4,000.2	$	2,879.4
Per common share:
Basic	$	0.39	$	6.84	$	4.93
Diluted	$	0.39	$	6.81	$	4.90
Comprehensive income attributable to Progressive	$	168.8	$	4,626.5	$	3,530.9
Less: Preferred share dividends	2.2		20.1		20.1
Comprehensive income attributable to common shareholders	$	166.6	$	4,606.4	$	3,510.8
Per common share:
Diluted	$	0.28	$	7.84	$	5.98
Average common shares outstanding - Basic	585.2		584.9		583.7
Net effect of dilutive stock-based compensation	2.6		2.8		3.6
Total average equivalent common shares - Diluted	587.8		587.7		587.3

The following table sets forth the investment results for the period:
		Current	Year-to-Date
		Month	2020	2019
	Fully taxable equivalent (FTE) total return:
	Fixed-income securities	0.0%	5.8%	5.6%
	Common stocks	(3.8)%	5.8%	19.5%
	Total portfolio	(0.3)%	5.7%	6.7%
	Pretax annualized investment income book yield	2.2%	2.5%	3.1%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

September 2020

($ in millions)

(unaudited)

Current Month
										Commercial
	Personal Lines Business									Lines			Property			Companywide
	Agency			Direct			Total			Business1			Business			Total
Net Premiums Written	$	1,311.1		$	1,402.2		$	2,713.3		$	591.2		$	163.6		$	3,468.1
% Growth in NPW	10		%	12		%	11		%	36		%	14		%	15		%
Net Premiums Earned	$	1,236.0		$	1,334.7		$	2,570.7		$	386.4		$	146.1		$	3,103.2
% Growth in NPE	8		%	13		%	11		%	12		%	12		%	11		%
GAAP Ratios
Loss/LAE ratio	66.8			66.5			66.6			63.9			77.9.			66.8
Expense ratio	18.8			22.9			21.0			21.6			29.82			21.5
Combined ratio	85.6			89.4			87.6			85.5			107.72			88.3
Net catastrophe loss ratio3							1.6			0.4			25.1			2.6
Actuarial Adjustments4
Reserve Decrease/(Increase)
Prior accident years																$	3.9
Current accident year																(1.0)
Calendar year actuarial adjustment	$	2.5		$	4.4		$	6.9		$	(6.6)		$	2.6		$	2.9
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	3.9
All other development																2.8
Total development																$	6.7
Calendar year loss/LAE ratio																66.8
Accident year loss/LAE ratio																67.0

¹During fiscal September, we generated new and renewal transportation network company (TNC) policies that increased net premiums written $114 million, compared to $88 million in the same period last year. In addition, we continued to recognize substantial growth in the for-hire trucking business reflecting greater demand for shipping services in light of the pandemic.

²Included in both the expense ratio and combined ratio is 3.2 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 26.6 and a combined ratio of 104.5.

³Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned. The majority of the gross catastrophe losses during the month were due to Hurricane Sally and the west coast wildfires. During September, we recorded a reinsurance recoverable of approximately $65 million, bringing the year-to-date recoverable to $135 million, under our catastrophe aggregate excess of loss reinsurance program; the 2020 catastrophe losses and associated allocated loss adjustment expenses (ALAE) in the Property business from these events exceeded the $375 million annual retention threshold under this agreement during August.

⁴Represents 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

September 2020

($ in millions)

(unaudited)

Year-to-Date
										Commercial
	Personal Lines Business									Lines			Property			Companywide
	Agency			Direct			Total			Business			Business			Total
Net Premiums Written	$	12,382.9		$	13,257.2		$	25,640.1		$	3,949.1		$	1,437.2		$	31,026.4
% Growth in NPW	8		%	13		%	11		%	11		%	13		%	11		%
Net Premiums Earned	$	11,749.3		$	12,470.1		$	24,219.4		$	3,532.8		$	1,300.6		$	29,052.8
% Growth in NPE	8		%	12		%	10		%	11		%	14		%	10		%
GAAP Ratios
Loss/LAE ratio	61.6			60.8			61.2			64.1			84.7.			62.6
Expense ratio	23.5			26.1			24.8			23.2			30.11			24.9
Combined ratio	85.1			86.9			86.0			87.3			114.81			87.5
Net catastrophe loss ratio2							1.5			0.3			30.1			2.6
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years																$	(2.2)
Current accident year																50.2
Calendar year actuarial adjustment	$	14.5		$	20.2		$	34.7		$	(19.9)		$	33.2		$	48.0
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	(2.2)
All other development																(113.9)
Total development																$	(116.1)
Calendar year loss/LAE ratio																62.6
Accident year loss/LAE ratio																62.2

¹Included in both the expense ratio and combined ratio is 3.3 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 26.8 and a combined ratio of 111.5.

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

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.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

BALANCE SHEET AND OTHER INFORMATION

(millions - except per share amounts)

(unaudited)

	September 2020
CONDENSED GAAP BALANCE SHEET:
Investments, at fair value:
Available-for-sale securities:
Fixed maturities1 (amortized cost: $35,082.8)	$	36,313.5
Short-term investments (amortized cost: $4,667.8)	4,667.8
Total available-for-sale securities	40,981.3
Equity securities:
Nonredeemable preferred stocks (cost: $1,302.7)	1,323.2
Common equities (cost: $1,130.0)	3,459.8
Total equity securities	4,783.0
Total investments2,3	45,764.3
Net premiums receivable	8,574.3
Reinsurance recoverables (including $3,804.3 on unpaid loss and LAE reserves)	3,987.3
Deferred acquisition costs	1,265.0
Goodwill and intangible assets	638.2
Other assets	2,661.7
Total assets	$	62,890.8
Unearned premiums	$	14,199.3
Loss and loss adjustment expense reserves	19,589.2
Other liabilities2	5,619.7
Debt	5,395.4
Total liabilities	44,803.6
Shareholders' equity	18,087.2
Total liabilities and shareholders' equity	$	62,890.8
Common shares outstanding	585.6
Common shares repurchased - September	0.08
Average cost per common share	$	93.99
Book value per common share	$	30.04
Trailing 12-month return on average common shareholders' equity
Net income attributable to Progressive	33.8		%
Comprehensive income attributable to Progressive	36.7		%
Net unrealized pretax gains (losses) on fixed-maturity securities	$	1,226.1
Increase (decrease) from August 2020	$	(79.3)
Increase (decrease) from December 2019	$	766.7
Debt-to-total capital ratio	23.0		%
Fixed-income portfolio duration	3.0
Weighted average credit quality	AA-

¹ As of September 30, 2020, we held certain hybrid securities and recognized a change in fair value of $4.6 million as a realized gain during the period we held these securities.

² At September 30, 2020, we had $469.2 million of net unsettled security transactions classified in “other liabilities.”

³Includes $2.8 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.

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Monthly Commentary

•Disclosure of monthly results often shows more variability in written premium growth rates than disclosure on a quarterly basis. The first two days of October, which historically are higher volume days, fell in fiscal September 2020, compared to fiscal October last year. Therefore, it may be more meaningful to review policy in force growth, which is not as impacted by the fiscal calendar, or to analyze written premium growth on a quarterly basis.

•Excluding the impact of catastrophe losses in both September 2020 and 2019, our companywide loss/LAE ratio was 5.4 points lower than September last year, in part reflecting continued lower auto accident frequency on a year-over-year basis.

Events

Our third quarter Investor Relations conference call is currently scheduled to be held on Wednesday, November 4, 2020, at 9:30 a.m. eastern time. Consistent with the prior 2020 Investor Relations calls, the third quarter call is scheduled to last 60 minutes and will consist of a question and answer session with Tricia Griffith, our CEO, and John Sauerland, our CFO. We are currently planning to file our Quarterly Report on Form 10-Q with the SEC on Tuesday, November 3, 2020. 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/default.aspx.

October results are currently planned to be released on Tuesday, November 24, 2020, before the market opens, which reflects additional time required to facilitate an orderly transition to a new general ledger software package.

About Progressive

The Progressive Group of Insurance Companies makes it easy to understand, buy and use auto insurance. Progressive offers choices so consumers can reach 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 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.

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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;

•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, 2019, and our Quarterly Report on Form 10-Q for the period ending March 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.

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XML

Cover Page	Oct. 14, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Oct. 14, 2020
Entity Registrant Name	PROGRESSIVE CORP/OH/
Entity Incorporation, State or Country Code	OH
Entity File Number	001-09518
Entity Tax Identification Number	34-0963169
Entity Address, Address Line One	6300 Wilson Mills Road,
Entity Address, City or Town	Mayfield Village,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44143
City Area Code	440
Local Phone Number	461-5000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1.00 Par Value
Trading Symbol	PGR
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0000080661