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Company Profile of Progressive Corporation
Company Profile of Progressive Corporation - May 13th, 2011
The Progressive Corporation (NYSE: PGR), known as the Progressive Casualty Insurance Company through its subsidiaries, provides personal automobile insurance, and other specialty property-casualty insurance and related services in the United States. The company was co-founded in 1937 by Jack Green and Joe Lewis and is headquartered in Mayfield Village, Ohio.
By practically any measure, The Progressive Corporation ranks among the United States' most successful property and casualty insurers. The holding company's primary subsidiary, Progressive Casualty Insurance Co., got its start by insuring "non-standard" or high-risk drivers. The firm's profits have consistently outperformed the industry: from 1970 to 1992, Progressive averaged a three percent annual profit margin on underwriting insurance, whereas its competitors averaged a seven percent annual loss. In the more profitable 1990s its underwriting profit margin increased to 8.4 percent in 1998. Total revenues increased fourfold from $1.39 billion in 1989 to $5.29 billion in 1998. In 1992, Progressive became the nation's largest provider of automobile insurance through independent agents. In 1993, Progressive became the largest automobile insurer in its home state of Ohio. By 1999 it was the fifth largest auto insurer in the United States and was set on becoming the largest. Although a publicly traded company, Progressive remained a family-run enterprise in the late 1990s; Peter B. Lewis, son of one of the co-founders, was chief executive officer, president, and chairman of the board. His younger brother, Daniel R. Lewis, was process leader of Progressive's largest business, the Agency Business Unit.
The Progressive Corporation is an insurance holding company. As of December 31, 2009, the Company had 53 subsidiaries and one mutual insurance company affiliate. These insurance subsidiaries and affiliate provide personal and commercial automobile insurance and other specialty property-casualty insurance and related services. Its property-casualty insurance products protect its customers against losses due to collision and physical damage to their motor vehicles and uninsured and underinsured bodily injury, and liability to others for personal injury or property damage arising out of the use of those vehicles. Its non-insurance subsidiaries support its insurance and investment operations. The Company operates its businesses throughout the United States. In December 2009, it began selling personal auto insurance in Australia.
The Company offers a range of personal and commercial property-casualty insurance products primarily related to motor vehicles. Its Personal Lines products consists of insurance for personal autos and special lines products, which includes motorcycles, all terrain vehicles (ATVs), recreational vehicles (RVs), mobile homes, watercraft, snowmobiles and similar items. It writes personal auto insurance in all 50 of the United States and in the District of Columbia. The Company’s Commercial Auto products are offered in 49 states. It does not write Commercial Auto in Hawaii or the District of Columbia. Its Claims business area supports both the Personal Lines and Commercial Auto businesses.
The Personal Lines segment offers more than one program in a single state, with each program targeted to a specific distribution channel, market or customer group. The Personal Lines segment accounted for approximately 89% of total net premiums written during the year ended December 31, 2009. The Personal Lines business is either generated by independent agents and brokers or written directly online or by phone. The Agency business includes business written by its network of more than 30,000 independent insurance agencies located throughout the United States, as well as brokerages in New York and California.
The Agency business also writes through alliance business relationships with other insurance companies, financial institutions and national agencies. In 2009, the total net premiums written through the Agency business represented 59% of its Personal Lines volume. The Direct business includes business written directly by the Company online and over the phone. Net premiums written in the Direct business were 41% of its Personal Lines. The Company’s Progressive Home Advantage combines a Progressive auto policy with a homeowner’s or renter’s policy, underwritten by one of three unaffiliated insurance carriers, is available to Agency customers in 41 states and to Direct customers in 48 states and the District of Columbia; this program is not available to Direct customers in Florida and Alaska. It also offers a personal umbrella insurance product in 30 states through certain independent agents and to Direct business customers via telephone.
The Commercial Auto business writes primary liability and physical damage insurance for automobiles and trucks owned by small businesses and represented approximately 11% of its total net premiums written for 2009. The majority of its Commercial Auto customers insure three or fewer vehicles. The Commercial Auto business, which is primarily distributed through the independent agency channel, operates in the business auto and specialty truck markets.
Other Indemnity Businesses
The Company’s other indemnity businesses include writing professional liability insurance for community banks, principally directors and officers liability insurance. In addition, its other indemnity businesses include managing its run-off businesses.
The Company’s service businesses provide insurance-related services. It also provides policy issuance and claims adjusting services for the Commercial Auto Insurance Procedures/Plans (CAIP). Through Progressive Home Advantage, it acts as an agent to offer new and existing Progressive customers home, condo and renters insurance underwritten by these homeowner’s insurance companies.
Progressive continued its tradition of innovative services in 1994, when it introduced its 1-800-AUTO-PRO service. Consumers could call the number any time of the day or night to receive a quote on their auto insurance from Progressive. During the same call, they could also receive comparison rates for up to three other leading auto insurers, a move designed to help consumers more easily comparison shop and make more informed buying decisions.
In 1996 the company announced its interest in taking into account personal credit histories, which reflected a customer's financial responsibility and how he chose to pay his bills, when setting their auto insurance rates in California, something which Progressive was able to do in other states. Progressive had found that people with better credit ratings tended to cost the company less money, and therefore should be charged lower rates. The proposal would have to be approved by the state's insurance commissioner. Critics charged that it would discriminate against certain groups of people, including low-income individuals such as minorities and college students. According to Progressive, using a consumer's financial responsibility as a factor in setting their insurance rates was not reflective of that person's income, race, or gender.
In 1998 the company's underwriting profit margin increased from 6.6 percent in 1997 to 8.4 percent, while the industry average was .3 percent. With Personal Lines net premiums written of $4.9 billion, Progressive was the fifth largest U.S. auto insurer. Auto premiums accounted for 93 percent of Progressive's total net premiums written, which reached $5.3 billion in 1998. Brand-building efforts included sponsoring the 1999 Super Bowl XXXIII half-time show and introducing new commercials featuring E.T. as Progressive's spokesperson.
At the beginning of 1999 Progressive created a second CEO position, perhaps to ensure an orderly management succession when 65-year-old Peter B. Lewis decided to retire. Charles Chokel, who had managed the company's $5.6 billion investment portfolio for the past six years as chief financial officer, assumed the new position of CEO in charge of investments and capital management. Lewis remained chairman and CEO in charge of insurance operations as well as president.
Throughout the 1990s Progressive's stated goal was to be the number three auto insurer in the United States. To reach that goal the company would have to increase its premiums to an annual rate of about $10 billion. The company's recent brand-building efforts were aimed at making Progressive the number one consumer choice for auto insurance. The company had offered quotes over the Internet through its own Web site (www.progressive.com) since 1997 and was the first auto insurer to sell policies online. To achieve its goal of being the most widely available auto insurance, Progressive also began offering its quotes over other Web services, such as InsWeb (www.insweb.com) and Quotesmith (www.quotesmith.com). By 1997 it was selling auto insurance to every driver in as many ways as possible: through independent agents, over the telephone, and on the Internet.
Progressive's unique Immediate Response claims service, competitive prices, cost-cutting measures, and other efforts had resulted in a decade of solid growth. For the next decade the company was poised to grow as aggressively as its plans called for and prosper in a very competitive business environment.
Principal Subsidiaries: Airy Insurance Center, Inc.; Allied Insurance Agency, Inc.; Auto Insurance Solutions, Inc.; Classic Insurance Co.; Express Quote Services, Inc.; Gold Key Insurance Agency; Greenberg Financial Insurance Services, Inc.; Insurance Confirmation Services, Inc.; Lakeside Insurance Agency, Inc.; Midland Financial Group, Inc.; Mountain Laurel Assurance Co.; Mountainside Insurance Agency, Inc.; National Continental Insurance Co.; Pacific Motor Club; Paloverde Insurance Company of Arizona; PCIC Canada Holdings, Ltd.; Progressive Adjusting Company, Inc.; Progressive American Insurance Co.; Progressive Casualty Insurance Co.; Progressive Insurance Agency, Inc.; Progressive Investment Company, Inc.; Progressive Max Insurance Co.; Progressive Mountain Insurance Co.; Progressive Northern Insurance Co.; Progressive Northwestern Insurance Co.; Progressive Partners, Inc.; Progressive Preferred Insurance Co.; Progressive Premium Budget, Inc.; Progressive Risk Management Services, Inc.; Progressive Southeastern Insurance Co.; Richmond Transport Corp.; Tampa Insurance Services, Inc.; Progressive Agency, Inc.; Transportation Recoveries, Inc.; United Financial Casualty Co.; Village Transport Corp.; Wilson Mills Land Co.; Bayside Underwriters Insurance Agency Inc.; Garden Sun Insurance Services Inc.; Halcyon Insurance Co.; Marathon Insurance Co.; Ohana Insurance Company of Hawaii Inc.; Paragon Insurance Company of NY; Progressive Casualty Investment Company; Progressive NY Agency Inc.; Progressive American Life; Progressive Bayside Insurance Company; Progressive Casualty Insurance Company of Canada; Progressive County Mutual Insurance Company; Progressive Gulf Insurance Company; Progressive Life Insurance Ltd.; Progressive Premier Insurance Company of Illinois; Progressive Specialty Insurance Company; Progressive Universal Insurance Company of Illinois; Pro-West Insurance Company; The Paradyme Corporation; United Financial Adjusting Company.
Market Cap (Mil.): $14,091.86
Shares Outstanding (Mil.): 655.74
Annual Dividend: 0.40
Yield (%): 1.86
PGR.N Industry Sector
P/E (TTM): 12.49 3.33 25.52
EPS (TTM): 2.97 -- --
ROI: -- 0.07 4.82
ROE: 18.12 1.60 9.55
Incorporated: 1956 as Progressive Casualty Insurance Company
Sales: $5.29 billion (1998)
Stock Exchanges: New York
Ticker Symbol: PGR
NAIC: 524126 Direct Property & Casualty Insurance Carriers; 524128 Other Direct Insurance (Except Life, Health & Medical) Carriers; 551112 Offices of Other Holding Companies
Name Age Since Current Position
Peter Lewis 77 2003 Non-Executive Chairman of the Board
Glenn Renwick 55 2001 President, Chief Executive Officer, Director
Brian Domeck 51 2007 Chief Financial Officer, Vice President
Susan Griffith 46 2008 President - Claims Group
John Barbagallo 51 2007 President - Commercial Lines Group & Agency Operations
John Sauerland 46 2007 President - Personal Lines Group
Jeffrey Basch 52 1999 Vice President, Chief Accounting Officer
Thomas King 51 2003 Vice President, Treasurer
Charles Jarrett 53 2001 Vice President, Secretary, Chief Legal Officer
William Cody 48 2003 Chief Investment Officer
Raymond Voelker 47 2000 Chief Information Officer
M. Jeffrey Charney 51 2010 Chief Marketing Officer
Valerie Krasowski 45 2008 Chief Human Resource Officer
Charles Davis 62 1996 Independent Director
Stephen Hardis 75 1988 Independent Director
Norman Matthews 78 1981 Independent Director
Bradley Sheares 54 2003 Independent Director
Patrick Nettles 67 2004 Independent Director
Roger Farah 58 2008 Independent Director
Lawton Fitt 57 2009 Independent Director
Stuart Burgdoerfer 47 2009 Independent Director
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
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