Progressive 2009 Annual Report Download - page 17

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Consistent achievement of superior results
requires that our people understand Progres-
sive’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 prod-
ucts 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.
We report Personal Lines and Commercial Auto results
separately. We further break down our Personal Lines’
results by channel (Agency and Direct) to give sharehold-
ers a clearer picture of the business dynamics of each dis-
tribution method and their respective rates of growth.
Aggregate expense ratios and aggregate growth rates dis-
guise the true nature and performance of each business.
Objectives, Policies, and Operations Summary