Progressive Corporation 2019 Annual Report

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think

Introduction

For this year’s annual report, we chose “think broadly” as the theme and selected the work of 30 multicultural artists from Progressive’s expanding collection of contemporary art. This diverse set of artists reflects our versatility as an organization as well as our willingness to step back and assess the many potential ways with which to grow. The painting A CHANGE IS GONNA COME was created by artist Jeffrey Gibson, who combines indigenous history and textiles with words he believes resonate not only for Native American people but people of all backgrounds. Gibson states, “Ultimately, everyone is at an intersection of multiple cultures, times, histories. The world is shifting and changing and if you’re engaged in the world, you are also shifting and changing.” At Progressive, we relish change and know that it’s not only inevitable, but exciting and it fuels us to come to work every day with a mindset to win, and win in the right way. The multiple vantage points shown throughout this report offer a glimpse into our unique company culture and enduring business.

Jeffrey Gibson, A Change is Gonna Come — **Jeffrey Gibson,** *A CHANGE IS GONNA COME*

About Progressive

broadly

The Progressive Group of Insurance Companies, in business since 1937, is one of the country’s largest auto insurance groups, the largest seller of motorcycle policies, the market leader in commercial auto insurance, and one of the top 15 homeowners carriers, based on premiums written. Progressive is committed to becoming consumers’ number one choice and destination for auto and other insurance by providing competitive rates and innovative products and services that meet customers’ needs throughout their lifetimes, including superior mobile, online, and in-person customer service, and best-in-class, 24-hour claims service.

Progressive companies offer consumers choices in how to shop for, buy, and manage their insurance policies. Progressive offers personal and commercial auto, motorcycle, boat, recreational vehicle, and home insurance. We operate our Personal and Commercial Lines businesses through more than 35,000 independent insurance agencies throughout the U.S. and directly from the Company online, by phone, or on mobile devices. Our homeowners business is underwritten by Progressive Home, and other select carriers, throughout the United States.

Bovey Lee, Rescue Mission — **Bovey Lee,** *Rescue Mission*

Five-Year Financial Highlights

	2019	2018	2017	2016	2015
For the Year (billions – except per share amounts)
Net premiums written	$37.6	$32.6	$27.1	$23.4	$20.6
Growth over prior year	15%	20%	16%	14%	10%
Net premiums earned	$36.2	$30.9	$25.7	$22.5	$19.9
Growth over prior year	17%	20%	14%	13%	8%
Total revenues	$39.0	$32.0	$26.8	$23.4	$20.9
Net income attributable to Progressive	$3.97	$2.62	$1.59	$1.03	$1.27
Per common share	$6.72	$4.42	$2.72	$1.76	$2.15
Underwriting margin	9.1%	9.4%	6.6%	4.9%	7.5%

	2019	2018	2017	2016	2015
At Year-End (billions – except shares outstanding, per share amounts, and policies in force)
Common shares outstanding (millions)	584.6	583.2	581.7	579.9	583.6
Book value per common share	$22.54	$17.71	$15.96	$13.72	$12.49
Consolidated shareholders’ equity	$13.7	$10.8	$9.3	$8.0	$7.3
Common share close price	$72.39	$60.33	$56.32	$35.50	$31.80
Market capitalization	$42.3	$35.2	$32.8	$20.6	$18.6
Return on average common shareholders’ equity
Net income attributable to Progressive	31.3%	24.7%	17.8%	13.2%	17.2%
Comprehensive income attributable to Progressive	35.0%	23.8%	21.7%	14.9%	14.2%

Policies in force (thousands)
Personal Lines
Agency – auto	6,994.3	6,358.3	5,670.7	5,045.4	4,737.1
Direct – auto	7,866.5	7,018.5	6,039.1	5,348.3	4,916.2
Special lines	4,547.8	4,382.2	4,365.7	4,263.1	4,111.4
Total Personal Lines	19,408.6	17,759.0	16,075.5	14,656.8	13,764.7
Growth over prior year	9%	10%	10%	6%	4%
Commercial Lines	751.4	696.9	646.8	607.9	555.8
Growth over prior year	8%	8%	6%	9%	8%
Property	2,202.1	1,936.5	1,461.7	1,201.9	1,076.5
Growth over prior year	14%	32%	22%	12%	NM
Companywide total	22,362.1	20,392.4	18,184.0	16,466.6	15,397.0
Growth over prior year	10%	12%	10%	7%	NM

Private passenger auto insurance market¹	NA	$240.7	$222.3	$206.6	$192.8
Market share²	NA	11.1%	10.1%	9.4%	9.0%

	1-Year	3-Year	5-Year
Stock Price Appreciation³
Progressive	25.1%	30.2%	25.1%
S&P 500	31.5%	15.2%	11.7%

NA = Final comparable industry data will not be available until our third quarter report.

NM = Not meaningful; Property business written by Progressive prior to April 2015 was negligible.

¹Represents net premiums written as reported by A.M. Best Company, Inc.

²Represents Progressive’s private passenger auto business, including motorcycle insurance, as a percent of the private passenger auto insurance market.

³Represents average annual compounded rate of increase and assumes dividend reinvestment.

Our four cornerstones—who we are, why we are here, where we are headed, and how we will get there—are the construct Progressive uses to think about having a competitive advantage. These cornerstones permit all people associated with us to understand what we expect of ourselves and each other and how we conduct our business.

imagine

Barbara Probst, Exposure #91: N.Y.C., Prince & Mercer Streets, 06.22.11, 10:41 a.m. — **Barbara Probst,** *Exposure #91: N.Y.C., Prince & Mercer Streets, 06.22.11, 10:41 a.m.*

Our Four Cornerstones

Core Values > Who We Are

Progressive’s Core Values serve as the foundation for our corporate culture. They govern our decisions and define the manner in which we conduct our business and how we interact with all interested parties. We want them understood and embraced by all Progressive people.

Integrity We revere honesty. We adhere to high ethical standards, provide timely, accurate, and complete financial reporting, encourage disclosing bad news, and welcome disagreement.

Golden Rule We respect all people, value the differences among them, and deal with them in the way they want to be dealt with. This requires us to know ourselves and to try to understand others.

Objectives We strive to communicate clearly Progressive’s ambitious objectives and our people’s personal and team objectives. We evaluate performance against all these objectives.

Excellence We strive constantly to improve in order to meet and exceed the highest expectations of our customers, agents, shareholders, and people. We teach and encourage our people to improve performance and to reduce the costs of what they do for customers. We base their rewards on results and promotion on ability.

Profit We seek to earn a profit by offering consumers products and services they want. Profit is how the free-enterprise system motivates investment and rewards companies that consistently create value.

Purpose > Why We’re Here

True to our name. Progressive.

Vision > Where We’re Headed

Become consumers’ and agents’ #1 choice and destination for auto, home, and other insurance.

Strategy > How We’ll Get There

We will achieve our Vision through four Strategic Pillars:

Ensuring that our people and culture collectively remain our most powerful source of competitive advantage;
Meeting the broader needs of our customers throughout their lifetimes;
Maintaining a leading brand recognized for innovative offerings and supported by experiences that instill confidence; and
Offering competitive prices driven by industry-leading segmentation, claims accuracy, and operational efficiency.

Think Broadly The theme for this year’s annual report, and the associated artwork, is “Think Broadly.” This two-word theme was chosen because it truly aligns with the concept of concurrently investing in our Three Horizons, or otherwise stated, the short-, mid-, and long-term success of Progressive. Success doesn’t happen unless we collectively modify and adjust how we view our ability to expand and win in new areas where we can leverage our skills and abilities. For us, this has been an exhilarating paradigm shift and has allowed us to be more open in our ever-changing environment, which will enable us to grow and flourish. Because of this shift, we are considerably more open to opportunities and thinking more deeply about the needs of all our stakeholders (shareholders, employees, customers, communities, and suppliers).

We are proud of where we stand and the progress we are making in our impact on the environment and society, our people, and in the governance of Progressive. We drive social good through transparency, efficiency, innovation, and empowerment. Working with our business partners, communities, and customers, we strive to move forward to create a better future and improve social and environmental outcomes. We positively affect the communities in which we operate by creating careers that are well-paying and fulfilling and added more than 4,000 employees in 2019 alone. Progressive’s people and our charitable foundation continue to provide our time and our financial resources in communities across the country. Our carbon emissions per policy in force continues to decline, down 7% in 2019 versus 2018 and down 57% over the past ten years. Accountability, integrity, and transparency form the cornerstone of Corporate Governance at Progressive. We are committed to increasing the Company’s value and retaining the trust of investors. Progressive’s Board of Directors is now comprised of 50% females and 50% males and our most recent additions to the Board bring exceptional perspectives in the technology arena, which is critical for our success. These actions should come as no surprise since, to us, corporate responsibility is akin to living our Core Values, which guide our actions and behavior to operate in responsible ways, support others in our communities, and protect the environment. It is this mindset that will keep us focused on what is critical to achieving future success.

Thinking broadly was added, several years ago, to my ever-growing set of leadership principles and was one of the reasons we formed the Strategy team. I believe this principle allows our leaders to step back and look at the world and business through a new lens and vantage point. In fact, I recently articulated a formula, albeit not mathematical, for our senior managers to use as we think about our future. The formula arose from our desire to take the time to step back and assess both successes and failures and challenge how we think about the business, while always keeping in mind our profitability objective. Change can, and should, be invigorating.

The formula may be simple. That said, the execution of it is not. Question Everything + Always Grow Mindset = Enduring Business. This equation fits nicely whether we are thinking about our current business or future opportunities. The wonderful part of having a highly tenured senior leadership team is that we have a depth of historic knowledge that helps to guide us about possible next steps and choices to make for a successful outcome. Where that becomes difficult is when we don’t challenge ourselves to think differently as the world around us evolves. It’s imperative that we feel comfortable questioning ourselves and the way we approach the business. Even if the conclusion is the same, the exercise of questioning nearly always adds value.

Think of the always grow mindset as a double entendre where personal growth draws a parallel to company growth. I’ve asked our senior leadership team to take time to expand their thinking, as individuals, whether it be through books, podcasts, Ted Talks, or the like, believing that taking the time to grow will spawn ideas that will proactively influence Progressive’s growth. Personally, I’ve joined a few outside groups in order to listen to alternative perspectives, get to know other leaders who face similar struggles, and rethink how to solve problems in this ever-changing environment.

If we ask questions and grow personally and professionally, our business will be enduring, which is the legacy we all want to leave for those who follow us.

grow

Ayana V. Jackson, How Sweet the Song — **Ayana V. Jackson,** *How Sweet the Song* (left), *Labouring Under the Sign of the Future* (center), *Seeking the Source of Perfection* (right)

Ayana V. Jackson, Labouring Under the Sign of the Future — **Ayana V. Jackson,** *How Sweet the Song* (left), *Labouring Under the Sign of the Future* (center), *Seeking the Source of Perfection* (right)

From Broad to Narrow

We concluded 2019 with a combined ratio (CR) of 90.9, compared to a 90.6 CR at year-end 2018. Our net premiums written (NPW) growth was up 15%, compared to 20% in 2018. These results are extraordinary by themselves, but remarkable when you add in our prior years of success. We added nearly $5 billion in NPW in 2019, bringing our total NPW to $37.6 billion. It feels like yesterday we celebrated achieving $30 billion. Our ability to post these ongoing results is a tribute to our over 40,000 Progressive people who, every day, strive to create an enduring business.

Our Personal Lines CR was 90.5, with NPW growth of 15% and auto policies in force (PIF) growth of 11%. Both the Agency and Direct channels contributed to these stellar results. Special Lines PIF growth was stronger in 2019 at 4% than it was in 2018 when policy growth was relatively flat.

Commercial Lines, as in years past, continues to be a significant part of our tremendous growth and profit story. NPW grew 20% adding nearly $800 million in NPW from an already solid base of $4 billion. We ended 2019 with an astounding CR of 89.6. The products and programs we have put in place for future growth are beginning to gain momentum and in some cases are substantial, as with our transportation network company (TNC) customer relationships, and in others just beginning, as with our business owners policy/general liability (BOP/GL) programs. Our ability to segment and price rate to risk, as well as invest in people, processes, and technology, we believe, will pay dividends as we look to the future.

I recently had the pleasure of sitting side-by-side with a multi-product specialist (thank you, Brian) in Commercial Lines and more specifically in our BusinessQuote Explorer® team. The training, expertise, and service provided to our small business customers that I was able to observe was exceptional. Witnessing these detailed conversations, where we educate and put the customer at ease, is another reason I’m so bullish on the runway we have in Commercial Lines.

The story on Property isn’t much different than last year. Growth remained strong, with NPW up 16% to $1.7 billion and PIFs up 14% to more than 2.2 million. Our Property CR improved from 106.9 to 101.7, but this is still higher than our target for the Property business. Higher-than-expected wind and hail losses were once again the primary issue. The $214.5 million of retained catastrophic wind and hail losses accounted for 13.8 points on our 2019 Property loss ratio. The good news is that our actions to improve profitability are starting to pay off. We increased rates in the "hail alley" states in the middle of the country and implemented minimum deductible requirements for new customers. These changes have slowed our growth in areas with significant hail exposure, while we continue to grow faster in other areas of the country. We expect that trend to continue in 2020 as we adjust prices to reflect expected future loss costs.

Consistent with thinking broadly, in January 2020, our Property product and team started reporting into the Personal Lines organization, and in February 2020, we reached agreement to buy out the minority ARX stockholders and bring our ownership of ARX to 100%, a year earlier than originally planned. The synergies, shared data on segmentation variables, and ongoing R&D expertise, we believe, will be instrumental as we continue to grow our bundled customers, the Robinsons.

During a recent Investor Webcast, we were asked if we would consider reporting on how catastrophes effect our monthly CR results, particularly in Property. You will be pleased to know that effective with our January 2020 monthly results, we added the percentage of earned premium affected by catastrophes within the supplemental information section of the release.

In 2019, our investment portfolio achieved a fully taxable equivalent total return of 7.9%. As opposed to the significant volatility witnessed in 2018, the easing of monetary policy drove strong gains throughout 2019. Our fixed-income portfolio earned a 6.0% total return due to both lower interest rates and tighter credit spreads. Following last year’s negative return, our equity portfolio gained 30.5% as earnings multiples saw significant expansion.

The combination of strong operating growth and our positive investment performance drove the size of our portfolio to just over $39 billion by the end of 2019. While our invested assets are greater than at any time in our history, the opportunity set is narrow. Valuations across the financial markets remain full and, therefore, we begin 2020 with a conservative allocation to risk assets. We continue to focus on the long term and believe that we will see better opportunities in the future. The one thing that is constant is our focus on protecting Progressive’s balance sheet to support our growing operating business.

As we outlined extensively in last year’s annual letter to shareholders, a substantive change was made to our dividend policy. In December 2018, the Board of Directors terminated the formulaic Gainshare-based annual variable dividend policy and replaced it with a policy under which the Board expects to declare regular quarterly dividends and, on least an annual basis, to consider declaring an additional common share dividend. The new plan, which was effective for 2019, gives us more flexibility in managing capital than we had in the past.

During each quarter of 2019, the regular quarterly dividend was 10 cents per share. In December 2019, the Board of Directors declared an additional dividend of $2.25 per share, or $1.3 billion. Both the fourth quarter and annual 2019 dividends were paid on January 15, 2020.

We compared our return on equity (ROE) results to the S&P 500 Property and Casualty Index and the S&P 500 on a 5-, 10-, and 20-year basis during a recent Investor Webcast, with the punch line being that we have outpaced both indices by very wide margins. While we don’t have the industry data to compare full year 2019, our ROE for last year was a whopping 31.3%.

All-encompassing Strategic Pillars

We’ve frequently shared our four cornerstones: who we are (Core Values); why we are here (Purpose); where we are headed (Vision); and how we will get there (Strategy). These concepts help guide us and also feed off of each other to equate to success.

As an example, you can’t fully meet the broad needs of our customers if you don’t have the right people and culture. You have to invest in the future while caring about keeping prices competitive for consumers. I think you get it. The four strategic pillars are part of our intertwined construct that has served us well for some time. It may appear simple in theory, but in reality, it’s a delicate balance that we vigorously attempt to attain every day.

Patty Chang, Shangri-La (Monks) — **Patty Chang,** *Shangri-La (Monks)*

Shirin Neshat, Women of Allah (Version #2) — **Shirin Neshat,** *Women of Allah (Version #2)*

respect

People and Culture: We continue to believe that our people and culture are Progressive’s greatest competitive advantage and that idiom remains true now more than ever. While our trophy case is full of accolades that acknowledge that we have a great thing going, what is truly meaningful is what happens daily when no one is watching.

To that end, I have a short, but very sweet story that I want to share.

During the planning for this year’s Keys to Progress® campaign that gives cars to deserving veterans, our Claims team learned that one of our 100+ recipients has a twin sister, Christy, who works in Progressive’s Customer Relationship Management (CRM) organization in Phoenix. We learned that Christy hadn’t seen her brother in quite some time, so we put the wheels in motion to fly her across the country for the November 7th vehicle giveaway ceremony in Altamonte Springs, Florida. Our goal was to surprise her brother with more than just a new car. During the event, when it was time for her brother to receive the keys to his car, he was delighted to see his sister run from the back of the crowd and jump into his arms, with the keys dangling in her hand.

Christy said she’s forever grateful for the efforts and huge hearts of her coworkers who made this special day possible for her family. “My brother told me that he never thought things like this actually happened, especially to regular people like us—this event was proof that it DOES!”

This is just one example of the way we treat each other at Progressive and that’s what makes us who we are.

Hung Liu, Unofficial Portraits: The Maiden — **Hung Liu,** *Unofficial Portraits: The Maiden*

Meeting the broader needs of our customers: It’s critical that our customers know we care about them and recognize that we want to build a trusting, long-term relationship. Like any relationship, you must “be there” for someone to build trust. For us, that means being there as their insurance needs change or grow. Building this trusting relationship also means addressing broader customer needs for their unique situations. It might mean recognizing that a parent at a child’s after-school event may need us to communicate with them differently versus when they are at home and have more time to talk. Either way, we are there for them and will flex based on our customers’ wishes.

One way we meet the broader needs of our customers is through our service experiences. We strive to be available where, when, and how people want to interact with us. In 2019, we continued to make purposeful and significant investments in our phone, agency, and digital channel experiences.

‘Where’ references that people may look to address their insurance needs in a variety of settings in their life. And the context of where they are, what’s on their mind, the time they have…all play into how we must be prepared to meet their needs in different ways.

‘When’ references not only time of day, but important aspects of our service like being flexible with payments based on when our insureds get paid. We offer 24/7 service, and also ensure that service throughout that spectrum is all held to our same service standards.

‘How’ references the contact methods by which our customers indicate to us are preferred.

We’re making use of new technologies, developing new customer experiences, and addressing core insurance needs across all of these dimensions. We’re rebalancing our investments as we look at where our customers are going. As an example, since my first annual letter for 2016, mobile app customer engagement has increased about 4x, which is why we’ve heavily invested in using artificial intelligence, offering more personalization, and utilizing device-specific capabilities (such as a mobile phone’s camera) to improve customer experiences in the mobile app.

An important part of our strategy is making good decisions on where we invest our time, talent, and resources. While we follow test-and-learn methodologies, we make decisions quickly and drive to conclusions. With clear and transparent strategies that broadly encompass the organization and cut across silos, we are able to ensure we are broadly utilizing our customer feedback and data in decisions and prioritization.

Another important facet of meeting the needs of our customers is recognizing our responsibility to be smart and disciplined with our resources to keep rates competitive. We utilize our data and customer-first discipline in our experience design and have established “Lean” processes that allow us to continue to deliver and innovate in meaningful ways for our customers, while managing costs. We reward our people for trying things, being open and honest about results, both good and bad, and making decisions that propel us forward.

For many, our phone consultants are the most direct connection they have with us. They are Progressive. While we may not see this with every phone interaction, I find this story a compelling one illustrating how our people care for our customers, gain trust, and, in return, develop long-lasting relationships.

A great example of this was in 2017, when Andrew (a member of our Progressive Advantage Agency) received a call from Shirley. She was unnerved because another insurance carrier was canceling her policy because of a homeowners claim she had made. She didn’t know what to do because her late husband used to handle all of the insurance details. Andrew walked her through both auto and home quotes and explained the process to her making it clear and easy for her to understand. She was grateful and the price was good, so she became a Robinson (auto and home bundled).

Andrew didn’t stop there. He checked on her periodically to make sure everything went smoothly on her end because he had built a strong rapport with her and empathized with her situation (Golden Rule is one of our Core Values). He said, “I just wanted to make sure that I set it all up for her so she wouldn’t have to worry.” Later that year, Shirley sent Andrew a Christmas card wishing him well and thanking him for helping her. Shirley has continued to send her yearly Christmas card to Andrew. This past year, Andrew wrote her back and thanked her for the cards and for trusting Progressive. He keeps those cards close by as a reminder of how he can make a difference in someone’s life during just one phone call.

Ian Wright, Marley Weave — **Ian Wright,** *Marley Weave*

create

Leading Brand: You can’t watch an hour of television without seeing an advertisement from an insurance company. Because of that, ads must be breakthrough while protecting the brand.

What we call our brand “network” continues to grow and evolve, and 2019 was no exception. We produced countless quantities of creative from mass media, to digital, to sponsorships, and everything in between.

In addition, we unveiled several new campaigns to better reach specific demographics. We introduced what we called “Motaur” (half-man and half-motorcycle) with the insights that people who ride feel so connected to their bikes as if they are one.

We started a new small business campaign showing that small businesses can start like a fairy-tale dream, but things can go wrong, and we’ll help you get through it.

Lastly, we introduced “At Home with Baker and Emily Mayfield,” where the message was less about football and more about common occurrences that happen in both a home and within a relationship. In the ads they happen to live in a football stadium, which allowed us to create a massive amount of relatable life events.

We hit the ground running in 2020 with a relationship we have established with a mobile entertainment company called Quibi (stands for quick bites) and a new character in our network we named Sign Spinner. More to come on both of these as the year transpires.

Our Brand Promise: Campaigns are important to capture the attention of consumers and confirm for our current customers that they made the right choice when choosing Progressive. As we head into 2020, we will continue producing media that we believe stands out. In addition, we will focus on a newly articulated brand promise to guide us into the future. Having a public promise becomes an organizing principle that guides every piece of marketing we create.

A brand promise forces us to think about who we are creating for, not just what we need to message. This Promise puts the people we serve at the center of our marketing strategy, and it reminds us that we have a variety of audiences, that aren’t all served, or reached, in the same way. For some of us, big milestones will mark our paths…getting married, buying a house, having a baby…but not necessarily in that order. For others, major life events may be totally different…graduating from trade school, adopting a rescue pet from a shelter, or leaving corporate life to start fresh at age 50. But for all of us, it’s the little things, the small moments, the everyday pursuits, and passions that make up a life.

Whatever it is you’re passionate about, whatever it is you’re striving for, it is the people and things and pastimes that make waking up every day an adventure and a joy. We believe that’s valuable and worth protecting. Our Marketing Brand Promise is:

WHEN IT MATTERS TO YOU. IT MATTERS TO US. AND WE’LL HELP YOU PROTECT IT.

We love this Marketing Brand Promise for a few reasons. The most important part is “you.” This is not about us. This is about people, the customers and consumers that we endeavor to reach and connect with and ultimately form a long-term relationship.

The next part is “matters.” We care about what matters to you and that will be distinct for every customer and throughout their lives as their insurable needs evolve. Our end goal is to have our customers (current and future) really know that Progressive cares about them and we are really there to help and make things better.

And the last piece is “help”—we are in the solutions business always trying to make things better and easier. Help is how we prove it and put our promise into action.

When you combine these pieces, we believe that this is a powerful promise that takes us well beyond product and price, and that builds the emotional value. It is just one more reason for people to choose Progressive. Because the bottom line is—our product is a promise and a promise is only as good as who makes it. We believe our promise is different, and it’s now up to us to prove it.

Hugo Crosthwaite, untitled (from the “Tijuanerias” series) — **Hugo Crosthwaite,** *Tijuanerias #21* (left), *Tijuanerias #25* (center), *Tijuanerias #36* (right)

Competitive Prices: I often talk to new hires about how the only thing worse than having to buy insurance is to use it. We are honest with ourselves that this is a category where people are rightly price sensitive. Because of that, it is a necessity that our prices are competitive as we continue to advance our “Always Grow Mindset” (and we do!).

A key piece of keeping prices competitive, besides having industry leading segmentation through our proprietary product models, is running an efficient organization and, in the claims area, balancing that efficiency with quality on the indemnity side.

Clearly, from the imbedded charts, we take being efficient seriously and that has allowed us this prolonged period of growth and giving customers a reason to join Progressive.

Over the last ten years, we have trimmed 3 points off our CR in what we call NAER (Non-Acquisition Expense Ratio), which are the operating expenses less the cost of acquiring new customers.

In claims, our LAE (loss adjustment expenses) dropped over one point in the last 10 years and nearly 3 points since 2006. In more recent years, we have hired ahead of need in order to make sure that we have enough time to thoroughly train our claims associates, so they are able to serve our customers in the way they have become accustomed. That is a more expensive model, but we believe it is just the right thing to do. In addition, we’ve had some tailwinds due to premium increases.

The truly amazing part about this graph is that the claim handling quality has stayed relatively flat (per our internal audit quality score), which is incredible with so many new people and a tribute to how much each person cares about settling each claim fairly. It should be noted that the claims organization (the largest part of Progressive as far as employees) also had the highest Culture and Engagement scores in 2019. It’s all about balance.

Michelle Marie Murphy, Trans Manicure — **Michelle Marie Murphy,** *Trans Manicure* (left), *Suspension* (center), *Amorphous* (right)

Michelle Marie Murphy, Suspension — **Michelle Marie Murphy,** *Trans Manicure* (left), *Suspension* (center), *Amorphous* (right)

Back to the “Broad” Future

As we reflect on the investments that we have made in all Three Horizons this year, I am incredibly thankful that we have the foresight, courage, and determination to think broadly. It would have been easy to focus on just doing what we have done so well in the past, which of course we did, and is part and parcel of our enterprise growth strategy. We did more than that. We surgically focused on seizing additional market share with our core products, while honing in on new products and services that leverage our strengths. In parallel, our strategy team has been diligently researching possibilities for our future. All-in-all, a formula that we are confident will create an enduring business.

I’d like to give special thanks to our partners, independent agents, and the customers who trust us to protect them. You matter to us.

As always, a very special thank you to the 40,000+ Progressive people who work tirelessly to make this machine we call Progressive hum. You are why we are in the enviable position that we are in. I can’t thank you enough for all that you do.

Tricia Griffith
President and Chief Executive Officer

Clare Rojas, Untitled — **Clare Rojas,** *Untitled*

We write personal and commercial auto insurance, personal residential and commercial property insurance, general liability insurance, and other specialty property-casualty insurance and provide related services throughout the United States. Our Personal Lines segment writes insurance for personal autos and recreational vehicles. Our Commercial Lines segment writes auto-related primary liability and physical damage insurance, and general liability and property insurance, predominantly for small businesses. Our Property segment writes residential property insurance for homeowners, other property owners, and renters. We distribute our products through both the agency and direct channels.

Personal Lines

strive

In Personal Lines, our philosophy remains unchanged and aligns with Progressive’s overarching profitability and growth objectives. During 2019, we hit these objectives by growing net premiums written by 15% over 2018 and generating an underwriting profit of 9.5%. While always striving for profitable growth, we realize there are many variables outside of our control that can impact our ability to achieve these objectives year in and year out.

In 2018, the U.S. auto insurance market made an underwriting profit for the first time in a decade. As a result, market conditions were significantly different in 2019 than we had enjoyed in 2017 and 2018, primarily driven by the overall industry not increasing rates as they had during 2017 and through much of 2018. As a reminder, industry loss costs were rising in 2016 and 2017 and the industry responded with rapid rate increases that peaked around +7% annually in mid-2017 and remained in the 4–6% annual range during much of 2018. These elevated rate increases prompted highly motivated shopping, and switching, by auto customers and, as a result, we enjoyed several years of growth in both prospects and sales during that period. However, 2019 was a different story. Rate increases throughout the private passenger auto industry slowed towards the end of 2018, and our two largest competitors reduced rates beginning late in 2018 and continuing through much of 2019. These rate decreases resulted in a more challenging growth environment, which we saw across some of our growth oriented key performance indicators.

Given these market conditions, we entered 2019 with every expectation that consumer shopping would be down, but still confident that our competitive rates positioned us well for growth. During the year, we focused our acquisition efforts on prospect growth where we were best positioned to leverage our competitive prices to drive new sales growth. We increased advertising spend in Direct and focused our Agency channel resources on quoting system enhancements that would drive sales growth through increasing yield or prospect conversion.

We continue to refine, and rapidly deploy, new risk selection and segmentation models across all of our Personal Lines products. Midway through 2019, we launched our latest auto product model, 8.6, and by the end of the year we elevated this model in 12 states representing 28% of our eligible auto written premium. We expect that this new product model further improves the accuracy of our matching rate to risk and introduces new risk verification models and processes that enhance our competitiveness, especially in more preferred segments. After we began to deploy this new product model, we observed higher new policy conversion rates across both channels, with larger increases in converting customers who maintain continuous insurance coverage, own multiple cars, have fewer violations and accidents, and are homeowners, which dovetails nicely with our vision to become consumers’ and agents’ #1 choice and destination for auto, home, and other insurance.

Marcelo Pombo, El Aguacero — **Marcelo Pombo,** *El Aguacero*

thrive

Another key component of our 8.6 product release, was to enhance our Snapshot® usage-based insurance (UBI) program to increase overall program eligibility for policies with older vehicles and with mismatched number of drivers and vehicles. In 2018, we deployed a new Snapshot mobile algorithm to improve the accuracy of how we use driving data in our pricing. With the 8.6 product enhancement, we dramatically expanded eligibility so that today, Snapshot is available to virtually all auto shoppers with a smartphone. During 2019, more than a million new customers enrolled in our Snapshot program. This new offering elevated to 12 states during 2019 and will continue to roll out throughout 2020, which will further expand our UBI footprint and help more drivers save money by switching to Progressive.

In 2019, we also continued to control operating expenses while growing premiums, successfully reducing our Personal Lines non-acquisition expense ratio by about 4%. This focus on leveraging our scale and capitalizing on technology to reduce operating expenses is an essential element of our long-term strategy. We recognize that eventually vehicle safety technology may evolve to where the reduction in frequency outstrips increases in severity, driving pure premiums (i.e., premiums used to cover loss costs) and average written premiums negative. As technology and consumer preferences evolve, we recognize the need to constantly invest to ensure we’re providing consumers the ability to shop for, purchase, and service Progressive policies where, when, and how they choose to interact with us.

More accurately matching rate to risk, our ongoing focus on efficiency and non-acquisition expense management, and lower weather-related losses all contributed to profitability running more than 5 points better than our 96 combined ratio goal and the addition of more than 1.6 million Personal Lines policies in force during the year. We estimate that for 2019, our share of the private passenger auto market has increased by more than a point, double the growth rate of any of the other top 20 auto competitors. Achieving profitable growth given the challenging market conditions we faced in 2019 validates how our strategy to leverage our leading brand, highly segmented and competitive rates, and expanding product breadth continues to play out in the market as more and more consumers switch carriers to become Progressive customers.

Myoung Ho Lee, Tree #5 — **Myoung Ho Lee,** *Tree #5*

Commercial Lines

Our Commercial Lines business, which has been growing rapidly over the last few years, once again produced excellent operating results. Net premiums written for the year were $4.8 billion, an increase of 20% over 2018. The combined ratio was an excellent 89.6, up 2.9 points from the prior year but still better than our targeted combined ratio. These results were particularly gratifying given the current challenging environment for commercial auto insurance, particularly in some of the higher exposure segments where we participate.

Proactive rate management in 2018 and continued investment in our underwriting capabilities allowed us to raise rates a relatively modest 1.4% on average in 2019, while still producing solid underwriting profit. Conversely, competitor rate increases, which had begun to slow in the first half of 2019, again picked up late in the year as competitors responded to accelerating loss severity trends and prior year loss development. We ended the year comfortable with our overall rate adequacy and competitive position while closely monitoring and planning for potential increases in empirical loss costs and changes in business mix due to a disrupted market. We remain confident in our ability to react adroitly to changing market conditions by state, coverage, and business segment and believe we continue to derive significant competitive advantage from this capability.

We also saw good progress during 2019 on our ongoing efforts to expand our Commercial Lines addressable market through product extensions and new lines of business. We significantly increased our participation in the transportation network company (TNC) business by providing coverage to Uber Technology subsidiaries in an additional 10 states, including California beginning in late December, bringing the total to 14 states at year end. In October, we also began to provide coverage to Lyft Inc. for trips originating on its platform in three states. TNC results continue to meet our internal expectations and we look forward to expanding this business where we can.

Refined commercial auto price segmentation and more competitive rates for the best risks rolled out with our 7.9 product model. The new model was available in 24 states at the end of the year, with policies on the model representing 62% of all non-TNC commercial auto written premium. Better segmentation, combined with growing utilization of our predictive usage-based insurance Smart Haul® program for trucks, contributed to a 21% year-over-year gain in preferred truck policies in force. This hard-earned market segment win lends important stability to our truck business in an otherwise volatile market.

We seek to continually advance our pricing accuracy, underwriting dexterity, and the quality of our product. To that end, we elevated our 8.0 commercial auto product on a new policy servicing platform in October 2019. The early market response has been favorable and additional enhancements are planned for future states. The combination of new product features and greater system and service capabilities for our agents and policyholders offers the potential to further enhance our already strong market position as the nation’s market share leader in commercial auto insurance. The combined rollout of the 8.0 product and the new platform will continue through 2020 and beyond.

In mid-2019, we launched Progressive’s own Business Owners Policy (BOP) in Ohio with a select group of independent insurance agents. This multi-line business insurance policy is geared toward small businesses typically with fewer than 20 employees. Our objective to provide agents with an easy to use product with straightforward pricing and a light underwriting touch is largely being met as we continue to refine our approach. The BOP product was made available to agents in Michigan, Minnesota, and Wisconsin during the fourth quarter, enabling them to round out accounts and allowing us to compete more effectively for more established small businesses. The BOP rollout will pick up in 2020 with more states and agents. We also expect to add Progressive BOP to our digital BusinessQuote Explorer® platform late in 2020 to serve the direct small business consumer.

As we enter 2020, the Commercial Lines business is poised to continue to address the ever-changing market conditions, build on the investments we made in our business during the last decade, and look ahead to other opportunities to help Progressive achieve its Destination Era goals.

Ben Long, The Great Travelling Art Exhibition – Bird Truck Drawing I — **Ben Long,** *The Great Travelling Art Exhibition – Bird Truck Drawing I*

Property

Our Property strategy is meant to complement our multi-channel auto offerings with leading property products in order to increase our share of the bundled home and auto market. In the agency channel, we offer “Progressive Home” residential property insurance for homeowners, other property owners, and renters through our subsidiary, American Strategic Insurance and its affiliates (ASI). In the direct channel, we distribute residential property insurance policies written by ASI and other non-affiliated carriers directly to consumers both on and offline.

During 2019, our Property business had net premiums written of $1.7 billion, an increase of 16% over last year. Policies in force grew by 14%, ending the year at 2.2 million.

The Property business combined ratio for 2019 was 101.7, which includes 4.3 points of amortization expense related to Progressive’s acquisition of a controlling interest in ARX in 2015. Underwriting expenses and non-weather losses were close to our expectations, but wind and hail losses from severe convective storms were higher than expected in 2019. We purchase substantial levels of reinsurance to protect our capital against unlikely severe catastrophe events, reduce volatility, and increase the likelihood of achieving target profit margins. In 2019, we ceded $57 million in incurred losses and loss adjustment expenses to reinsurers in our aggregate stop-loss reinsurance program. Our estimated ultimate losses from named storms Barry, Dorian, Imelda, Nestor, and Olga were just over $10 million, so none of these storms reached the $60 million retention point for our catastrophe excess of loss reinsurance coverage but were included in our aggregate stop-loss recovery for 2019.

Our work to rebrand ASI as Progressive Home neared completion during 2019. Policy documents and other customer communications are now branded Progressive Home in all but two of the 44 states where ASI is currently active.

The combination of Progressive Home and Progressive auto insurance in states beyond ASI’s original coastal states is producing a continued shift in the state mix of our Property business. For 2019, Florida accounted for 15% of new homeowners policies and Texas accounted for 9%, with the remaining states accounting for the balance. As of year-end 2019, the mix of homeowners policies in force was 25% in Florida, 13% in Texas, and 62% in other states, compared to Florida and Texas accounting for 29% and 24%, respectively, of policies in force when Progressive acquired ASI in 2015.

We focused on three priorities for our Property business in 2019: 1) improving profitability; 2) improving agent ease of use for quoting and selling Progressive Home policies; and 3) expanding our direct property offering through investing resources to increase consumer awareness and maximize sales yield. We made progress against these goals during 2019.

Ann Toebbe, Decorating for the Wedding — **Ann Toebbe,** *Decorating for the Wedding*

We increased rates by about 5% in our Progressive Home product portfolio in 2019, with larger increases for the homeowners product in states exposed to substantial modeled hail risk. In many of the hail-prone states, we also introduced minimum wind/hail deductible requirements and began requiring actual cash value coverage for roofs nearing the end of their useful life. Our comparison of actual historical losses vs. modeled wind/hail losses has given us increasing confidence in our forecasts of future wind and hail losses. We will continue to adjust pricing and coverage requirements to ensure that our pricing is adequate to cover expected future losses from severe convective storms.

We now have more than 3,700 Platinum agents, up 12% from the end of 2018. Auto and home bundles from Platinum agents were up about 20% in 2019. The Portfolio agent quoting platform makes it much easier for agents to quote and sell auto and home policy bundles. This system is now live for agents in 33 states.

In the direct channel, we rolled out online buying for homeowner shoppers in ten more states, bringing the year-end total to 14 active states. We will continue to add states during 2020. This allows users of our HomeQuote Explorer® shopping service to purchase their policy online, often without needing to talk with a sales representative. Direct channel sales of home and renters policies now account for 35% of new policies sold (excluding book rolls from competitors, which don’t reflect natural consumer shopping activity).

While we are proud of the strides we took in 2019, we look forward to continuing to work on these goals in 2020. The Property business is also excited to be reporting into the Personal Lines organization and to have the opportunity to work more closely with their teams to continue to grow our bundled home and auto customers.

Operating Results

	2019	2018	Change
Personal Lines
Net premiums written (in billions)	$31.1	$27.2	15%
Net premiums earned (in billions)	$30.2	$26.0	16%
Loss and loss adjustment expense ratio	70.6	70.6	0.0 pts.
Underwriting expense ratio	19.9	19.7	0.2 pts.
Combined ratio	90.5	90.3	0.2 pts.
Policies in force (in thousands)	19,408.6	17,759.0	9%

	2019	2018	Change
Commercial Lines
Net premiums written (in billions)	$4.8	$4.0	20%
Net premiums earned (in billions)	$4.4	$3.6	23%
Loss and loss adjustment expense ratio	68.5	66.3	2.2 pts.
Underwriting expense ratio	21.1	20.4	0.7 pts.
Combined ratio	89.6	86.7	2.9 pts.
Policies in force (in thousands)	751.4	696.9	8%

	2019	2018	Change
Property
Net premiums written (in billions)	$1.7	$1.5	16%
Net premiums earned (in billions)	$1.6	$1.3	21%
Loss and loss adjustment expense ratio	71.2	72.8	(1.6) pts.
Underwriting expense ratio¹	30.5	34.1	(3.6) pts.
Combined ratio¹	101.7	106.9	(5.2) pts.
Policies in force (in thousands)	2,202.1	1,936.5	14%

¹Underwriting expense and combined ratios for 2019 and 2018, include 4.3 points and 5.6 points, respectively, of amortization expense predominately associated with the acquisition of a controlling interest in ARX.

David Rathman, Stand a Little Closer to the Lessons You Learned — **David Rathman,** *Stand a Little Closer to the Lessons You Learned*

Consistent achievement of superior results requires that our people understand Progressive’s objectives and their specific roles, and that their personal objectives dovetail with Progressive’s. Our objectives are ambitious, yet realistic. Progressive monitors its financial policies continuously and strives to meet these targets annually. Experience always clarifies objectives and illuminates better policies. We constantly evolve as we monitor the execution of our policies and progress toward achieving our objectives.

Objectives

Profitability Progressive’s most important goal is for our insurance subsidiaries to produce an aggregate calendar year underwriting profit of at least 4%. Our business is a composite of many product offerings defined in part by product type, distribution channel, geography, customer tenure, and underwriting grouping. Each of these products has targeted operating parameters based on level of maturity, underlying cost structures, customer mix, and policy life expectancy. Our aggregate goal is the balanced blend of these individual performance targets in any calendar year.

Growth Our goal is to grow as fast as possible, constrained only by our profitability objective and our ability to provide high-quality customer service. Progressive is a growth-oriented company and management incentives are tied to profitable growth.

Aggregate expense ratios and growth rates disguise the true nature and performance of each business. As such, we report Personal Lines, Commercial Lines, and Property business results separately. We further break down our Personal Lines’ results by channel (Agency and Direct) to give shareholders a clearer picture of the business dynamics of each distribution method.

Maurice Mbikayi, Untitled — **Maurice Mbikayi,** *Untitled*

Our Business Model

endure

For us, a 96 combined ratio is not a “solve for” variable in our business model equation, but rather a constant that provides direction to each product and marketing decision and a cultural tipping point that ensures zero ambiguity as to how to act in certain situations. Set at a level we believe creates a fair balance between attractive profitability and consumer competitiveness, it’s deeply ingrained and central to our culture.

With clarity as to our business constant, we seek to maximize all other important variables and support with appropriate axioms:

Grow as fast as we can subject to our ability to provide high-quality service. Our preferred measure of growth is in customers, best measured by policies in force.

Extend policy life expectancy. Our preference is for the flexibility of shorter policy periods, highlighting, however, the importance of retaining customers at policy renewal. As part of our Destination Era strategy, our focus is inclusive of all points throughout a customer’s tenure and is a never-ending focus, tailored for every consumer segment.

Clarity as to our objectives means other elements of the business model must be appropriately designed to strongly support, but not necessarily amplify, the risk of maximizing all things at the same time. Our articulation of our most critical investment objective is a good example:

Invest in a manner that does not constrain our ability to underwrite all the profitable insurance available to us at an efficient premiums-to-surplus leverage. We often refer to underwriting capacity as the protected asset and for us it is a clear determination of where the risk of leverage is best allocated.

The importance of net income, earnings per share, and return on equity is never lost on us, and we view achieving strong, long-term performance of these measures as stemming from our consistent focus on the primary elements of our business model.

Sandeep Mukherjee, Untitled — **Sandeep Mukherjee,** *Untitled (Waft 1)*

Financial Policies

Progressive balances operating risk with risk of investing and financing activities in order to have sufficient capital to support all the insurance we can profitably underwrite and service. Risks arise in all operational and functional areas, and, therefore, must be assessed holistically, accounting for the offsetting and compounding effects of the separate sources of risk within Progressive.

We use risk management tools to quantify the amount of capital needed, in addition to surplus, to absorb consequences of events such as unfavorable loss reserve development, litigation, weather-related catastrophes, and investment-market corrections. Our financial policies define our allocation of risk and we measure our performance against them. We will invest capital in expanding business operations when, in our view, future opportunities meet our financial objectives and policies. Underleveraged capital will be returned to investors. We expect to earn a return on equity greater than its cost. Presented is an overview of Progressive’s Operating, Investing, and Financing policies.

Operating

Maintain pricing and reserving discipline

Manage profitability targets and operational performance at our lowest level of product definition
Sustain premiums-to-surplus ratios at efficient levels, and at or below applicable state regulations, for each insurance subsidiary
Ensure loss reserves are adequate and develop with minimal variance

Investing

Maintain a liquid, diversified, high-quality investment portfolio

Manage on a total return basis
Manage interest rate, credit, prepayment, extension, and concentration risk
Allocate portfolio between two groups:
- Group I: Target 0% to 25% (common equities; nonredeemable preferred stocks; redeemable preferred stocks, except for 50% of investment-grade redeemable preferred stocks with cumulative dividends; and all other non-investment-grade fixed-maturity securities)
- Group II: Target 75% to 100% (short-term securities and all other fixed-maturity securities)

Financing

Maintain sufficient capital to support our business

Maintain debt below 30% of total capital at book value
Neutralize dilution from equity-based compensation in the year of issuance through share repurchases
Use underleveraged capital to repurchase shares and pay dividends

Objectives & Policy Scorecard

	Target	2019	2018	2017	5 Years¹	10 Years¹
Financial Results
Underwriting margin
-Progressive²	4%	9.1%	9.4%	6.6%	7.7%	7.3%
-Industry³	na	\|\|\|\|\|\|\|	2.7%	(2.2)%	(2.1)%	(1.6)%
Net premiums written growth
-Progressive	(a)	15%	20%	16%	15%	10%
-Industry³	na	\|\|\|\|\|\|\|	8%	8%	7%	4%
Policies in force growth
-Personal auto	(a)	11%	14%	13%	10%	7%
-Special lines	(a)	4%	0%	2%	2%	3%
-Commercial Lines	(a)	8%	8%	6%	8%	4%
-Property	(a)	14%	32%	22%	nm	nm
Companywide premiums-to-surplus ratio	(b)	2.7	2.8	2.8	na	na
Investment allocation
-Group I	≤25%	12%	14%	17%	na	na
-Group II	≥75%	88%	86%	83%	na	na
Debt-to-total capital ratio	<30%	24.4%	28.9%	26.3%	na	na
Return on average shareholders’ equity
-Net income attributable to Progressive	(c)	31.3%	24.7%	17.8%	22.1%	20.0%
-Comprehensive income attributable to Progressive	(c)	35.0%	23.8%	21.7%	23.4%	21.6%

(a) Grow as fast as possible, constrained only by our profitability objective and our ability to provide high-quality customer service.

(b) Determined separately for each insurance subsidiary.

(c) Progressive does not have a predetermined target for return on average shareholders’ equity.

na = not applicable.

nm = not meaningful; Property business written by Progressive prior to April 2015 was negligible.

¹Represents results over the respective time period; growth represents average annual compounded rate of increase (decrease).

²Expressed as a percentage of net premiums earned. Underwriting profit is calculated by subtracting losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses from the total of net premiums earned and fees and other revenues.

³Industry results represent private passenger auto insurance market data as reported by A.M. Best Company, Inc. The industry underwriting margin excludes the effect of policyholder dividends. Final comparable industry data for 2019 will not be available until our third quarter report. The 5- and 10-year growth rates are presented on a one-year lag basis for the industry.

Achievements

We are convinced that the best way to maximize shareholder value is to achieve these financial objectives and policies consistently. A shareholder who purchased 100 shares of Progressive for $1,800 in our first public stock offering on April 15,1971, would have owned 186,602 shares, including dividend reinvestment, on December 31, 2019, with a market value of $13,508,119, for a 20.1% compounded annual return, compared to the 10.6% return achieved by investors in the S&P 500 during the same period.

In the ten years since December 31, 2009, Progressive shareholders have realized compounded annual returns, including dividend reinvestment, of 19.1%, compared to 13.5% for the S&P 500. In the five years since December 31, 2014, Progressive shareholders’ returns were 25.1%, compared to 11.7% for the S&P 500. In 2019, the returns were 25.1% on Progressive shares and 31.5% for the S&P 500.

We have consistently paid dividends since we went public in 1971. Assuming dividends were not reinvested, a shareholder who bought 100 shares at the initial public offering would now hold 92,264 shares and would have received cumulative dividends of $1,244,454 including $259,631 in 2019. In addition to paying dividends, over the years when we have had adequate capital and believed it to be appropriate, we have repurchased our shares. As our Financial Policies state, we will repurchase shares to neutralize the dilution from equity-based compensation programs and return any underleveraged capital to investors. During 2019, we repurchased 1,242,348 common shares. The total cost to repurchase these shares was $91 million, with an average cost of $73.51 per share. Since 1971, we have spent $9.1 billion repurchasing our shares, at an average cost of $7.55 per share.

Friedrich Kunath, Cloudy with a Chance of Tears — **Friedrich Kunath,** *Cloudy with a Chance of Tears*

In this section

Directors & Officers

lead

Directors

Philip Bleser
Retired Chairman of Global Corporate Banking, J.P. Morgan Chase & Co. (financial services)
Compensation Committee Member, Nominating and Governance Committee Member, Independent Director

Stuart B. Burgdoerfer
Executive Vice President and Chief Financial Officer, L Brands, Inc. (retailing)
Audit Committee Member, Independent Director

Pamela J. Craig
Retired Chief Financial Officer, Accenture PLC (global management consulting)
Compensation Committee Member, Independent Director

Charles A. Davis
Chief Executive Officer, Stone Point Capital LLC (private equity investing)
Investment and Capital Committee Member, Independent Director

Roger N. Farah
Former Executive Director, Tory Burch LLC (retailing)
Executive Committee Member, Compensation Committee Member, Nominating and Governance Committee Member, Independent Director

Lawton W. Fitt
Chairperson of the Board, Retired Partner, Goldman Sachs Group (financial services)
Executive Committee Member, Investment and Capital Committee Member, Nominating and Governance Committee Member, Independent Director

Susan Patricia Griffith
President and Chief Executive Officer, The Progressive Corporation
Executive Committee Member

Jeffrey D. Kelly
Retired Chief Operating Officer and Chief Financial Officer, RenaissanceRe Holdings Ltd. (reinsurance services)
Audit Committee Member, Independent Director

Patrick H. Nettles, Ph.D.
Executive Chairman, Ciena Corporation (telecommunications)
Audit Committee Member, Independent Director

Barbara R. Snyder
President, Case Western Reserve University (higher education)
Compensation Committee Member, Independent Director

Jan E. Tighe
United States Navy, Vice Admiral, Retired (military)
Independent Director

Kahina Van Dyke
Global Head, Digital Channels and Client Data Analytics, Standard Chartered PLC (international banking)
Investment and Capital Committee Member, Independent Director

Didier Massard, Imaginary Journey, Carousel — **Didier Massard,** *Imaginary Journeys: Carousel* (left), *Imaginary Journeys: Cathedral* (center), *Imaginary Journeys: Pagoda* (right)

Didier Massard, Imaginary Journey, Cathedral — **Didier Massard,** *Imaginary Journeys: Carousel* (left), *Imaginary Journeys: Cathedral* (center), *Imaginary Journeys: Pagoda* (right)

24-Hour Insurance Quotes, Claims Reporting, and Customer Service

	Personal Autos, Motorcycles, Recreational Vehicles, Homeowners, Other Property, and Renters	Commercial Autos/Trucks, Business Property, and General Liability
To Receive a Quote	1-800-PROGRESSIVE (1-800-776-4737) progressive.com	1-888-806-9598 progressivecommercial.com
To Report a Claim	1-800-PROGRESSIVE (1-800-776-4737) progressive.com	1-800-PROGRESSIVE (1-800-776-4737)
For Customer Service If you bought your policy through an independent agent or broker	1-800-925-2886 (1-800-300-3693 in California) progressiveagent.com	1-800-444-4487 progressivecommercial.com
If you bought your policy directly through Progressive online or by phone	1-800-PROGRESSIVE (1-800-776-4737) progressive.com	1-800-895-2886 progressivecommercial.com
In addition, iPhone® and Android® users can download the Progressive App to start a quote, report a claim, or service a policy.

Corporate Information

Fiona Rae, Cute Motion!! — **Fiona Rae,** *Cute Motion!!*

PDF Downloads

For this year’s annual report, we chose “think broadly” as the theme and selected the work of 30 multicultural artists from Progressive’s expanding collection of contemporary art. This diverse set of artists reflects our versatility as an organization as well as our willingness to step back and assess the many potential ways with which to grow. The painting A CHANGE IS GONNA COME was created by artist Jeffrey Gibson, who combines indigenous history and textiles with words he believes resonate not only for Native American people but people of all backgrounds. Gibson states, “Ultimately, everyone is at an intersection of multiple cultures, times, histories. The world is shifting and changing and if you’re engaged in the world, you are also shifting and changing.” At Progressive, we relish change and know that it’s not only inevitable, but exciting and it fuels us to come to work every day with a mindset to win, and win in the right way. The multiple vantage points shown throughout this report offer a glimpse into our unique company culture and enduring business.