8-K

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 22, 2003

THE PROGRESSIVE CORPORATION
(Exact name of registrant as specified in its charter)

Ohio	1-9518	34-0963169
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6300 Wilson Mills Road, Mayfield Village, Ohio     44143

(Address of principal executive offices)                     (Zip Code)

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

Not Applicable
(Former name or former address, if changed since last report)

Item 12. Results of Operations and Financial Condition.

On October 22, 2003, The Progressive Corporation (the “Company”) issued a News Release containing financial results of the Company for the three months and nine months ended September 30, 2003 (the “News Release”). A copy of the News Release is attached hereto as Exhibit 99.

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 thereunto duly authorized.

Dated: October 22, 2003
	THE PROGRESSIVE CORPORATION
	By: /s/ W. Thomas Forrester Name: W. Thomas Forrester Title: Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No. Under Reg.	Form 8-K Exhibit
S-K Item 601	No.		Description
99		99	News Release dated October 22, 2003, containing financial results of The Progressive Corporation for the three months and nine months ended September 30, 2003

EX-99 3 l03668aexv99.htm EXHIBIT 99 NEWS RELEASE

Exhibit 99

News Release dated October 22, 2003,
containing financial results
of The Progressive Corporation
for the three months
and nine months ended
September 30, 2003

PROGRESSIVE
[LOGO]

NEWS
RELEASE

The Progressive Corporation	Company Contact:
6300 Wilson Mills Road Mayfield Village, Ohio 44143 http://www.progressive.com	Thomas A. King    (440) 395-2260

The Company will hold a one-hour conference call on Thursday, October 23, 2003, beginning at 8:00 a.m. eastern time. At that time, the Company will discuss results and address questions. Visit the Company’s Web site at http://www.progressive.com/investors/events.asp to register and receive the details for the teleconference or webcast. An instant replay of the conference call will be available until November 7, 2003 by calling 1-800-688-2794 or until October 24, 2004 on our Web site at http://www.progressive.com/investors/archive.asp.

FOR IMMEDIATE RELEASE

MAYFIELD VILLAGE, OHIO –October 22, 2003— The Progressive Corporation today reported third quarter 2003 net income of $319.8 million, or $1.45 per share, compared to $178.5 million, or $.80 per share, in the third quarter last year. Included in net income are net realized losses on securities of $4.3 million, or $.01 per share, for the third quarter 2003, and $23.7 million, or $.07 per share, for the same period last year. In addition, 2003 net income includes $30.8 million, or $.09 per share, of estimated interest income related to an income tax refund the Company will receive, as previously disclosed.

     Net premiums written and earned increased 25% and 26% to $3,104.9 million and $2,927.8 million, respectively, as compared to the third quarter last year. During the third quarter 2003, the Company produced a GAAP combined ratio of 87.9, compared to 91.9 in the same period last year. The Company had catastrophe losses of $13.3 million, $.04 per share or .5 points, including $5.7 million attributable to hurricane Isabel, for the third quarter 2003, compared to $5.6 million, $.02 per share or .2 points, in the same period last year. Recurring investment income was $115.5 million before taxes and $86.3 million after taxes, compared to $116.6 million before taxes and $83.0 million after taxes for the third quarter 2002. See the “Operations Summary” for further information.

     Progressive’s Personal Lines business units write insurance for private passenger automobiles and recreation vehicles. Progressive’s Commercial Auto business unit writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned by small businesses. The Company’s other businesses principally include writing lenders’ collateral protection and directors’ and officers’ liability insurance and providing insurance-related services, primarily processing business for Commercial Auto Insurance Procedures (CAIP), which are state supervised plans serving the involuntary market. See “Supplemental Information” for third quarter 2003 underwriting results.

     During the third quarter 2003, the Company repurchased 1,526,507 of its Common Shares at an average cost of $69.06 per share.

     The Progressive group of insurance companies ranks third in the nation for auto insurance based on premiums written, offering its products by phone at 1-800-PROGRESSIVE, online at progressive.com and through more than 30,000 independent insurance agencies. The Progressive Corporation, the holding company, is publicly traded at NYSE:PGR.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this release and during the Company’s conference call that are not historical fact are forward-looking statements that are subject to certain risks 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 economic conditions (including changes in interest rates and financial markets); the effectiveness of the Company’s advertising campaigns; the accuracy and adequacy of the Company’s pricing methodologies; pricing competition and other initiatives by competitors; ability to obtain regulatory approval for requested rate changes and the timing thereof; legislative and regulatory developments; the outcome of litigation pending against the Company; weather conditions (including the severity and frequency of storms, hurricanes, snowfalls, hail and winter conditions); changes in driving patterns and loss trends; acts of war and terrorist activities; court decisions and trends in litigation and health care and auto repair costs; and other matters described from time to time by the Company in releases and publications, and in 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 a major contingency. Reported results may therefore appear to be volatile in certain accounting periods.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
OPERATIONS SUMMARY
September 30, 2003
(millions – except per share amounts)
(unaudited)

			THREE MONTHS ENDED									NINE MONTHS ENDED
			SEPTEMBER 30,									SEPTEMBER 30,
			2003			2002			% Change			2003		2002			% Change
Direct premiums written			$	3,170.4		$	2,535.4			25		$	9,211.3	$	7,206.8			28
Net premiums written			$	3,104.9		$	2,485.3			25		$	9,007.0	$	7,047.5			28
Revenues:
Net premiums earned			$	2,927.8		$	2,316.5			26		$	8,301.0	$	6,420.0			29
Recurring investment income1				115.5			116.6			(1	)		344.0		341.7			1
Net realized gains (losses) on securities				(4.3	)		(23.7	)		(82	)		15.7		(41.5	)	NM
Service revenues				10.8			9.2			17			30.1		25.8			17
Other income2				30.8			—		NM				30.8		—		NM
	Total revenues			3,080.6			2,418.6			27			8,721.6		6,746.0			29
Expenses:
Losses and loss adjustment expenses				1,983.1			1,653.6			20			5,636.9		4,530.3			24
Policy acquisition costs				321.3			267.0			20			915.6		753.1			22
Other underwriting expenses				267.7			208.0			29			736.4		622.4			18
Investment expenses				2.7			2.8			(4	)		8.3		8.1			2
Service expenses				6.7			5.9			14			19.4		16.4			18
Interest expense				24.0			17.6			36			71.8		53.8			33
	Total expenses			2,605.5			2,154.9			21			7,388.4		5,984.1			23
Income before income taxes				475.1			263.7			80			1,333.2		761.9			75
Provision for income taxes				155.3			85.2			82			435.6		246.8			76
Net income			$	319.8		$	178.5			79		$	897.6	$	515.1			74
COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding				216.9			217.9			—			217.5		219.4			(1	)
		Per share	$	1.47		$	.82			80		$	4.13	$	2.35			76
Diluted:
Average shares outstanding				216.9			217.9			—			217.5		219.4			(1	)
Net effect of dilutive stock options				3.6			3.9			(8	)		3.7		4.2			(12	)
		Total equivalent shares		220.5			221.8			(1	)		221.2		223.6			(1	)
		Per share3	$	1.45		$	.80			80		$	4.06	$	2.30			76

NM = Not Meaningful

¹ The following table sets forth the investment yields for the periods ended September 30:

		Three Months						Nine Months
		2003			2002			2003			2002
Pretax recurring investment book yield			4.1	%		5.1	%		4.3	%		5.3	%
Weighted average fully taxable equivalent (FTE) book yield			4.7	%		5.6	%		4.9	%		5.7	%
FTE total return:
	Fixed income securities		.5	%		4.4	%		4.7	%		8.8	%
	Common stocks		2.9	%		(16.9	)%		14.8	%		(27.5	)%
	Total portfolio		.9	%		1.5	%		6.2	%		3.5	%

Note: The Company is reporting total return yields to more accurately reflect the management of the portfolio and evaluation of the investment results. The FTE total return includes recurring investment income, net realized gains (losses) on securities and changes in unrealized appreciation/depreciation on investment securities.

² Amount represents the estimated interest earned through September on the income tax refund the Company will receive.

³ If the Company recorded compensation cost based on the fair-value based accounting method under Statement of Financial Accounting Standards (SFAS)123, “Accounting for Stock-Based Compensation,” diluted earnings per share would have been reduced $.03 for the nine months ended September 30, 2003, compared to $.04 per share last year.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
September 30, 2003
(millions)
(unaudited)

				THREE MONTHS ENDED							NINE MONTHS ENDED
				SEPTEMBER 30,							SEPTEMBER 30,
				2003		2002		Change			2003		2002		Change
NET PREMIUMS WRITTEN
		Personal Lines – Agency		$	1,893.8	$	1,538.3		23	%	$	5,480.0	$	4,351.8		26	%
		Personal Lines – Direct			862.5		681.2		27	%		2,457.2		1,880.8		31	%
	Total Personal Lines				2,756.3		2,219.5		24	%		7,937.2		6,232.6		27	%
	Commercial Auto Business				339.1		253.1		34	%		1,023.1		745.8		37	%
	Other businesses				9.5		12.7		(25	)%		46.7		69.1		(32	)%
			Companywide	$	3,104.9	$	2,485.3		25	%	$	9,007.0	$	7,047.5		28	%
NET PREMIUMS EARNED
		Personal Lines – Agency		$	1,790.6	$	1,441.6		24	%	$	5,096.2	$	4,019.3		27	%
		Personal Lines – Direct			800.6		618.4		29	%		2,263.4		1,700.6		33	%
	Total Personal Lines				2,591.2		2,060.0		26	%		7,359.6		5,719.9		29	%
	Commercial Auto Business				319.9		237.1		35	%		888.2		624.0		42	%
	Other businesses				16.7		19.4		(14	)%		53.2		76.1		(30	)%
			Companywide	$	2,927.8	$	2,316.5		26	%	$	8,301.0	$	6,420.0		29	%
PERSONAL LINES – AGENCY CR
	Loss and loss adjustment expense ratio				69.0		73.0	4.0 pts.				68.9		72.0	3.1 pts.
	Underwriting expense ratio				19.6		20.1	.5 pts.				19.5		20.8	1.3 pts.
					88.6		93.1	4.5 pts.				88.4		92.8	4.4 pts.
PERSONAL LINES – DIRECT CR
	Loss and loss adjustment expense ratio				66.8		69.2	2.4 pts.				67.6		68.2	.6 pts.
	Underwriting expense ratio				20.8		21.5	.7 pts.				20.4		22.7	2.3 pts.
					87.6		90.7	3.1 pts.				88.0		90.9	2.9 pts.
PERSONAL LINES – TOTAL CR
	Loss and loss adjustment expense ratio				68.3		71.9	3.6 pts.				68.5		70.9	2.4 pts.
	Underwriting expense ratio				20.0		20.5	.5 pts.				19.8		21.3	1.5 pts.
					88.3		92.4	4.1 pts.				88.3		92.2	3.9 pts.
COMMERCIAL AUTO BUSINESS — CR
	Loss and loss adjustment expense ratio				63.9		69.5	5.6 pts.				63.6		69.6	6.0 pts.
	Underwriting expense ratio				20.6		19.5	(1.1)pts.				20.1		20.3	.2 pts.
					84.5		89.0	4.5 pts.				83.7		89.9	6.2 pts.
OTHER BUSINESSES — CR
	Loss and loss adjustment expense ratio				50.9		43.0	(7.9)pts.				54.4		54.8	.4 pts.
	Underwriting expense ratio				34.0		34.4	.4 pts.				39.6		35.6	(4.0) pts.
					84.9		77.4	(7.5)pts.				94.0		90.4	(3.6) pts.
COMPANYWIDE GAAP CR
	Loss and loss adjustment expense ratio				67.8		71.4	3.6 pts.				67.9		70.6	2.7 pts.
	Underwriting expense ratio				20.1		20.5	.4 pts.				19.9		21.4	1.5 pts.
					87.9		91.9	4.0 pts.				87.8		92.0	4.2 pts.
COMPANYWIDE STATUTORY CR 1
	Loss and loss adjustment expense ratio				67.9		71.4	3.5 pts.				68.0		70.5	2.5 pts.
	Underwriting expense ratio				18.0		19.3	1.3 pts.				18.5		20.2	1.7 pts.
					85.9		90.7	4.8 pts.				86.5		90.7	4.2 pts.

     ¹ The interest earned on the Company’s income tax refund is included in the statutory expense ratio to comply with statutory reporting requirements and favorably impacted the third quarter and year-to-date 2003 ratios by 1.0 points and .3 points, respectively.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
ADDITIONAL SUPPLEMENTAL INFORMATION
(millions)
(unaudited)

			THREE MONTHS ENDED								NINE MONTHS ENDED
			SEPTEMBER 30,								SEPTEMBER 30,
			2003		2002			Change			2003			2002			Change
COMPANYWIDE CALENDAR YEAR
		Loss and loss adjustment expense ratio		67.8		71.4		3.6 pts.				67.9			70.6		2.7 pts.
COMPANYWIDE ACCIDENT YEAR
		Loss and loss adjustment expense ratio		69.2		71.9		2.7 pts.				68.1			70.7		2.6 pts.
ACTUARIAL ADJUSTMENTS -
	Reserve Decrease/(Increase)
	Prior accident years		$	2.3	$	(3.8	)				$	(1.5	)	$	7.5
	Current accident year			1.6		6.4						(9.9	)		26.4
	Calendar year actuarial adjustment		$	3.9	$	2.6			50	%	$	(11.4	)	$	33.9		NM
PRIOR ACCIDENT YEARS DEVELOPMENT -
	Favorable/(Unfavorable)
	Actuarial adjustment		$	2.3	$	(3.8	)				$	(1.5	)	$	7.5
	All other development			39.5		15.8						16.7			(1.1	)
	Total development		$	41.8	$	12.0			248	%	$	15.2		$	6.4			138	%

		September 30,
POLICIES IN FORCE (in thousands)		2003		2002		Change
	Agency — Auto		3,920		3,270		20	%
	Direct — Auto		1,800		1,473		22	%
	Other Personal Lines 1		1,985		1,639		21	%
Total Personal Lines			7,705		6,382		21	%
Commercial Auto Business			356		278		28	%

NM = Not Meaningful

¹ Includes insurance for motorcycles, recreation vehicles, mobile homes, watercraft, snowmobiles, homeowners and similar items.

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions– except per share amounts)
(unaudited)

					SEPTEMBER 30,
					2003			2002
CONDENSED GAAP BALANCE SHEETS:1
		Investments -
			Available-for-sale:
				Fixed maturities, at market (amortized cost: $8,920.1 and $6,679.7)	$	9,210.0		$	7,038.7
				Equity securities, at market
				Preferred stocks (cost: $763.5 and $616.6)		793.1			657.7
				Common equities (cost: $1,590.4 and $1,566.7)		1,767.3			1,303.5
			Short-term investments, at amortized cost (market: $633.5 and $565.1)			633.5			565.1
				Total investments2		12,403.9			9,565.0
		Net premiums receivable				2,152.2			1,795.1
		Deferred acquisition costs				432.0			375.2
		Other assets				1,172.5			1,149.7
				Total assets	$	16,160.6		$	12,885.0
		Unearned premiums			$	4,028.7		$	3,362.0
		Loss and loss adjustment expense reserves				4,384.2			3,632.3
		Other liabilities2				1,667.6			1,256.9
		Debt				1,489.6			1,096.2
		Shareholders’ equity				4,590.5			3,537.6
				Total liabilities and shareholders’ equity	$	16,160.6		$	12,885.0
	Common Shares outstanding					216.1			217.7
	Book value per share				$	21.24		$	16.25
	Return on average shareholders’ equity					27.6	%		20.1	%
	Statutory surplus				$	4,413.8		$	2,857.1

¹ Pursuant to SFAS 113, “Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,” loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $212.5 million at September 30, 2003 and $172.7 million at September 30, 2002.

² Amounts include net unsettled security acquisitions of $315.0 million and $181.5 million at September 30, 2003 and 2002, respectively.

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EX-99

EXHIBIT 99   NEWS RELEASE