Progressive 2007 Annual Report Download - page 18

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the second half of the year. However, relying
on bond ratings and largely avoiding direct
exposure to sectors that performed poorly
was not enough in 2007.
While our direct exposure to sub-prime
related instruments was small (less than
2% of the portfolio at any point during
the year), we do have exposure to many of
the largest banks and financial institutions
that have taken significant losses from their
positions in similar holdings. We invest in
the bonds and preferred stocks of these
institutions. The market value of these
investments has declined as the underlying
credit quality of these institutions dete-
riorated and many needed to raise capital.
We ended the year with net unrealized
gains on the overall portfolio of $715.4 mil-
lion, and a total return of 4.7% for the year.
Reflecting the generally heightened
interest of investors, we have increased
our disclosure on individual
asset classes
in our annual reporting.
We are continuously motivated by our aspiration of becoming Consumers’ #1 Choice for
Auto Insurance throughout their insurable lives.
Our opportunities are clear and exciting and include:
XBuilding a stronger brand and communicating it well;
XBuilding on our retention gains and providing continuity of coverage throughout a
customer’s lifetime;
XMaintaining a focus on operating at a lower cost than competitors, while providing
remarkable service;
XCreating more responsive product and service offerings for the consumers we cur-
rently do not reach; and, as always,
XContinuing to be innovative in all we do.
In March of 2007, we celebrated 70 years in business. Many things have changed dur-
ing that time, and our challenges and opportunities have evolved. The important constants
are the contributions of Progressive people and the independent insurance agents who
choose to represent us. Our achievements are a result of their efforts and we sincerely
thank them.
Equally important are the customers we are privileged to serve and the shareholders
who support what we are doing. Thank you.
Glenn M.Renwick
President and Chief Executive Officer
LOOKING FORWARD
OIn the spirit of transparency, we realized that we had more information available
monthly than just underwriting activity. That is why in 2003 we decided to expand
our monthly disclosures to report consolidated financial statements and in 2004
added monthly commentary to our releases. We remain the only public company
providing this level of information monthly.