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 17, 2017

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	1-9518	34-0963169
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. 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 (see General Instruction A.2. below):

¨ 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))

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 (§204.12b-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 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 17, 2017, The Progressive Corporation 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 2017 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 17, 2017
		THE PROGRESSIVE CORPORATION
		By: /s/ Jeffrey W. Basch
		Name: Jeffrey W. Basch
		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 17, 2017, containing financial results of The Progressive Corporation and its consolidated subsidiaries for the month of, and year-to-date period ended, September 2017 and selected quarterly financial results.

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EX-99

NEWS RELEASE

The Progressive Corporation	Company Contact:
6300 Wilson Mills Road	Julia Hornack
Mayfield Village, Ohio 44143	(440) 395-2164
http://www.progressive.com

PROGRESSIVE REPORTS SEPTEMBER RESULTS

MAYFIELD VILLAGE, OHIO -- October 17, 2017 -- The Progressive Corporation (NYSE:PGR) today reported the following results for September 2017 and the third quarter of 2017:

	September								Quarter
(millions, except per share amounts and ratios; unaudited)	2017			2016			Change		2017			2016			Change
Net premiums written	$	2,221.9		$	1,861.9		19	%	$	7,142.4		$	6,049.0		18	%
Net premiums earned	$	2,048.6		$	1,783.0		15	%	$	6,544.0		$	5,723.4		14	%
Net income attributable to Progressive	$	41.5		$	75.6		(45)	%	$	224.0		$	198.7		13	%
Per share	$	0.07		$	0.13		(45)	%	$	0.38		$	0.34		13	%
Total pretax net realized gains (losses) on securities
(including net impairment losses)	$	(13.9	)	$	(14.7	)	(5)	%	$	(24.7	)	$	(20.7	)	19	%
Combined ratio	99.9			94.3			5.6 pts.		97.4			96.6			0.8 pts.
Average equivalent shares	585.5			584.2			0	%	585.6			584.6			0	%

(thousands; unaudited)	September	September
	2017	2016	Change
Policies in Force
Vehicle businesses:
Agency – auto	5,515.3	4,980.1	11 %
Direct – auto	5,889.6	5,324.0	11 %
Total personal auto	11,404.9	10,304.1	11 %
Total special lines	4,396.1	4,291.1	2 %
Total Personal Lines	15,801.0	14,595.2	8 %
Total Commercial Lines	638.6	612.7	4 %
Property business	1,375.6	1,184.7	16 %

Progressive offers insurance to personal and commercial auto drivers throughout the United States. Our Personal Lines business writes insurance for personal autos and special lines products. Our Commercial Lines business writes primary liability, physical damage, and other auto-related insurance for autos and trucks owned and/or operated predominantly by small businesses. Our Property business writes residential property insurance for homeowners, other property owners, and renters.

See the “Comprehensive Income Statements” and “Supplemental Information” for further month and year-to-date information and the “Monthly Commentary” at the end of this release for additional discussion.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENT

September 2017

(millions)

(unaudited)

	Current Month			Comments on Monthly Results1
Net premiums written	$	2,221.9
Revenues:
Net premiums earned	$	2,048.6
Investment income	47.1
Net realized gains (losses) on securities:
Net impairment losses recognized in earnings	(16.0		)	Primarily includes write downs on an additional investment in a federal renewable energy tax credit fund ($11.2 million).
Net realized gains (losses) on securities	2.1
Total net realized gains (losses) on securities	(13.9		)
Fees and other revenues	33.8
Service revenues	10.0
Total revenues	2,125.6
Expenses:
Losses and loss adjustment expenses	1,629.4
Policy acquisition costs	170.5
Other underwriting expenses	279.7
Investment expenses	1.7
Service expenses	8.9
Interest expense	13.0
Total expenses	2,103.2
Income (loss) before income taxes	22.4
Provision (benefit) for income taxes	(10.8		)	Includes $16.2 million of tax benefits primarily consisting of the ratable portion of the tax benefits related to the federal renewable energy tax credit fund investments ($11.0 million).
Net income (loss)	33.2
Net (income) loss attributable to noncontrolling interest (NCI)	8.3
Net income (loss) attributable to Progressive	41.5
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on securities	(10.3		)
Net unrealized losses on forecasted transactions	0
Foreign currency translation adjustment	0.1
Other comprehensive income (loss)	(10.2		)
Other comprehensive (income) loss attributable to NCI	1.2
Total comprehensive income (loss) attributable to Progressive	$	32.5

¹ See 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 2016 audited consolidated financial statements included in our 2016 Shareholders’ Report, which can be found at www.progressive.com/annualreport.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPREHENSIVE INCOME STATEMENTS

September 2017

(millions)

(unaudited)

	Year-to-Date
	2017			2016			% Change
Net premiums written	$	20,379.5		$	17,802.0		14
Revenues:
Net premiums earned	$	18,884.0		$	16,602.6		14
Investment income	410.9			352.7			17
Net realized gains (losses) on securities:
Net impairment losses recognized in earnings	(57.8		)	(61.8		)	(6)
Net realized gains (losses) on securities	117.1			90.8			29
Total net realized gains (losses) on securities	59.3			29.0			104
Fees and other revenues	270.3			248.2			9
Service revenues	94.5			77.7			22
Gains on extinguishment of debt	0.2			1.6			(88)
Total revenues	19,719.2			17,311.8			14
Expenses:
Losses and loss adjustment expenses	13,928.8			12,554.6			11
Policy acquisition costs	1,557.2			1,374.6			13
Other underwriting expenses	2,568.3			2,262.2			14
Investment expenses	18.0			14.9			21
Service expenses	81.8			68.5			19
Interest expense	117.6			103.8			13
Total expenses	18,271.7			16,378.6			12
Income before income taxes	1,447.5			933.2			55
Provision for income taxes	429.7			274.1			57
Net income	1,017.8			659.1			54
Net (income) loss attributable to noncontrolling interest (NCI)	(1.9		)	(11.3		)	(83)
Net income attributable to Progressive	1,015.9			647.8			57
Other comprehensive income (loss)
Changes in:
Total net unrealized gains (losses) on securities	300.5			248.2			21
Net unrealized losses on forecasted transactions	(5.6		)	(0.9		)	NM
Foreign currency translation adjustment	0.8			0.7			14
Other comprehensive income (loss)	295.7			248.0			19
Other comprehensive (income) loss attributable to NCI	(2.9		)	(2.3		)	26
Total comprehensive income attributable to Progressive	$	1,308.7		$	893.5		46
NM = Not Meaningful

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

COMPUTATION OF NET INCOME AND COMPREHENSIVE INCOME PER SHARE

&

INVESTMENT RESULTS

September 2017

(millions – except per share amounts)

(unaudited)

The following table sets forth the computation of per share results:
	Current		Year-to-Date
	Month		2017		2016
Net income attributable to Progressive	$	41.5	$	1,015.9	$	647.8
Per share:
Basic	$	0.07	$	1.75	$	1.11
Diluted	$	0.07	$	1.73	$	1.11
Comprehensive income (loss) attributable to Progressive	$	32.5	$	1,308.7	$	893.5
Per share:
Diluted	$	0.06	$	2.23	$	1.53
Average shares outstanding - Basic	581.3		580.7		582.4
Net effect of dilutive stock-based compensation	4.2		5.0		3.2
Total average equivalent shares - Diluted	585.5		585.7		585.6

The following table sets forth the investment results for the period:
		Current	Year-to-Date
		Month	2017	2016
	Fully taxable equivalent (FTE) total return:
	Fixed-income securities	(0.1)%	2.8%	3.3%
	Common stocks	2.2%	14.6%	8.4%
	Total portfolio	0.1%	4.2%	4.0%
	Pretax annualized investment income book yield	2.3%	2.3%	2.3%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

September 2017

($ in millions)

(unaudited)

Current Month
	Vehicles
										Commercial
	Personal Lines Business									Lines			Property			Companywide
	Agency			Direct			Total			Business			Business			Total1
Net Premiums Written	$	938.9		$	923.8		$	1,862.7		$	260.5		$	98.7		$	2,221.9
% Growth in NPW	17		%	19		%	18		%	27		%	26		%	19%
Net Premiums Earned	$	885.6		$	853.6		$	1,739.2		$	224.2		$	85.2		$	2,048.6
% Growth in NPE	15		%	15		%	15		%	13		%	14%			15%
GAAP Ratios
Loss/LAE ratio	80.1			77.1			78.6			67.7			129.02			79.6
Expense ratio	19.0			20.3			19.7			22.6			27.92			20.3
Combined ratio	99.1			97.4			98.3			90.3			156.92			99.9
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years																$	7.0
Current accident year																(8.8		)
Calendar year actuarial adjustment	$	(8.9	)	$	(5.4	)	$	(14.3	)	$	1.4		$	11.1		$	(1.8	)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	7.0
All other development																(6.4		)
Total development																$	0.6
Calendar year loss/LAE ratio																79.6
Accident year loss/LAE ratio																79.6

¹ Includes results for all of our run-off businesses. For the month, our run-off businesses generated a $0.2 million underwriting loss.

² The loss/LAE ratio includes 10.3 points due to the reversal of a portion of the reinsurance recoverable on our aggregate stop-loss agreement, which covers all ARX losses except those from named storms and liability claims. The expense ratio includes 7.0 points of amortization expense predominately associated with the acquisition of a controlling interest in ARX. Excluding these items, the Property business would have reported a loss/LAE ratio of 118.7 (which includes 64.4 points of catastrophe losses), an expense ratio of 20.9, and a combined ratio of 139.6 for September 2017.

³ Represents adjustments solely based on our 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 2017

($ in millions)

(unaudited)

Year-to-Date
	Vehicles
										Commercial
	Personal Lines Business									Lines			Property			Companywide
	Agency			Direct			Total			Business			Business			Total1
Net Premiums Written	$	8,765.9		$	8,461.5		$	17,227.4		$	2,343.7		$	808.4		$	20,379.5
% Growth in NPW	15		%	14		%	15		%	14		%	13		%	14%
Net Premiums Earned	$	8,224.0		$	7,908.5		$	16,132.5		$	2,031.2		$	720.3		$	18,884.0
% Growth in NPE	14		%	14		%	14		%	15		%	13%			14%
GAAP Ratios
Loss/LAE ratio	74.1			74.4			74.3			69.8			73.4			73.8
Expense ratio	19.5			19.7			19.6			22.0			34.62			20.4
Combined ratio	93.6			94.1			93.9			91.8			108.02			94.2
Actuarial Adjustments3
Reserve Decrease/(Increase)
Prior accident years																$	92.8
Current accident year																(13.4		)
Calendar year actuarial adjustment	$	19.0		$	40.4		$	59.4		$	(2.6	)	$	22.6		$	79.4
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	92.8
All other development																(135.3		)
Total development																$	(42.5	)
Calendar year loss/LAE ratio																73.8
Accident year loss/LAE ratio																73.6

¹ Includes results for all of our run-off businesses. On a year-to-date basis, our run-off businesses generated a $0.3 million underwriting loss.

² Included in both the expense ratio and combined ratio is 6.7 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 a year-to-date expense ratio of 27.9 and a combined ratio of 101.3.

³ Represents adjustments solely based on our 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
	2017
CONDENSED GAAP BALANCE SHEET:
Investments – Available-for-sale, at fair value:
Fixed maturities1 (amortized cost: $18,583.1)	$	18,660.0
Equity securities:
Nonredeemable preferred stocks1 (cost: $700.6)	813.7
Common equities (cost: $1,485.5)	3,209.5
Short-term investments (amortized cost: $4,311.5)	4,311.5
Total investments2, 3	26,994.7
Net premiums receivable	5,519.9
Deferred acquisition costs	782.6
Goodwill and intangible assets	837.3
Other assets4	4,798.1
Total assets	$	38,932.6
Unearned premiums	$	9,005.3
Loss and loss adjustment expense reserves4	13,353.3
Other liabilities2	3,474.2
Debt	3,312.2
Total liabilities	29,145.0
Redeemable noncontrolling interest (NCI)	498.2
Shareholders' equity	9,289.4
Total liabilities, NCI, and shareholders' equity	$	38,932.6
Common shares outstanding	581.6
Shares repurchased - September	0.2
Average cost per share	$	46.25
Book value per share	$	15.97
Trailing 12-month return on average shareholders' equity
Net income attributable to Progressive	16.3		%
Comprehensive income attributable to Progressive	18.4		%
Net unrealized pretax gains (losses) on investments	$	1,911.9
Increase (decrease) from August 2017	$	(16.1	)
Increase (decrease) from December 2016	$	462.8
Debt-to-total capital ratio5	26.3		%
Fixed-income portfolio duration	2.2
Weighted average credit quality	A+
Year-to-date Gainshare factor	1.67

¹ As of September 30, 2017, we held certain hybrid securities and recognized a change in fair value of $2.1 million as a realized gain during the period we held these securities.

² At September 30, 2017, we had $238.3 million of net unsettled security transactions.

³ Includes $1.1 billion, net of unsettled security transactions, of investments in a consolidated, non-insurance subsidiary of the holding company.

⁴ Loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $2,624.7 million, which are included in "other assets."

⁵ Ratio reflects debt as a percent of debt plus shareholders' equity; redeemable noncontrolling interest is not part of this calculation.

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Monthly Commentary

• During September, we incurred about $155 million, or 7.6 loss ratio points, of catastrophe losses, compared to about $35 million, or 1.9 loss ratio points, last year. Approximately $100 million of the catastrophe losses were from our vehicle businesses and $55 million were from our Property business (64.4 points on our Property business combined ratio). All of the vehicle catastrophe losses were attributable to Hurricane Irma. In our Property business, gross losses from Hurricane Irma were nearly $300 million; however, our exposure was capped at $50 million, which is our retention level under our catastrophe reinsurance program. The remaining catastrophe losses in our Property business reflect the reversal of a portion of our reinsurance recoverable on our aggregate stop-loss agreement partially offset by favorable development on Hurricane Harvey. Our year-to-date total catastrophe losses were approximately $778 million, or 4.1 points, compared to $478 million, or 2.9 points, last year.

Events

We are currently scheduled to hold our quarterly Investor Relations event on Friday, November 3, 2017, at 10:00 a.m. eastern time. The call and live webcast is scheduled to last 90 minutes and will begin with an approximate 45 minute presentation on progress towards penetrating the home/auto bundle segment, followed by a question and answer session with Tricia Griffith, our CEO, and John Sauerland, our CFO. We plan to post our Shareholders' Report online and file our Quarterly Report on Form 10-Q with the SEC on Thursday, November 2, 2017. Registration for the teleconference and webcast will be available at http://investors.progressive.com/phoenix.zhtml?c=81824&p=irol-calendar.

We plan to release October results on Wednesday, November 15, 2017, before the market opens.

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. Home insurance is underwritten by select carriers, including American Strategic Insurance Corp. and subsidiaries (ASI), our majority owned subsidiaries.

Progressive is the fourth largest auto insurer in the country; a leading seller of motorcycle and commercial auto insurance; and through ASI, one of the top 20 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 Service Centers.

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 estimates, assumptions, and projections generally; inflation and changes in general economic conditions (including changes in interest rates and financial markets); the possible failure of one or more governmental, corporate, or other entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading by one or more rating agencies of our securities or governmental, corporate, or other securities we hold; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including reinsurers and other counterparties to certain financial transactions; the accuracy and adequacy of our pricing, loss reserving, and claims methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to attract and retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for the introduction of products to new jurisdictions, for requested rate changes and the timing thereof and for any proposed acquisitions; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments at the state and federal levels, including, but not limited to, matters relating to vehicle and homeowners insurance, health care reform and tax law changes; the outcome of disputes relating to intellectual property rights; the outcome of litigation or governmental investigations that may be pending or filed against us; severe weather conditions and other catastrophe events; the effectiveness of our reinsurance programs; changes in vehicle usage and driving patterns, which may be influenced by oil and gas prices; changes in residential occupancy patterns and the effects of the emerging "sharing economy"; advancements in vehicle or home technology or safety features, such as accident and loss prevention technologies or the development of autonomous or partially autonomous vehicles; our ability to accurately recognize and appropriately respond in a timely manner to changes in loss frequency and severity trends; technological advances; acts of war and terrorist activities; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions, and safeguard personal and sensitive information in our possession; our continued access to and functionality of third-party systems that are critical to our business; restrictions on our subsidiaries' ability to pay dividends to The Progressive Corporation; possible impairment of our goodwill or intangible assets if future results do not adequately support either, or both, of these items; court decisions, new theories of insurer liability or interpretations of insurance policy provisions and other trends in litigation; changes in health care and auto and property repair costs; 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. 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 a reserve is established 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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