Progressive 2012 Annual Report Download - page 34

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Following are the operating results for the years ended December 31:
2012 2011 2010
(millions) Revenues
Pretax
Profit
(Loss) Revenues
Pretax
Profit
(Loss) Revenues
Pretax
Profit
(Loss)
Personal Lines
Agency $ 8,103.9 $ 338.9 $ 7,627.4 $ 564.9 $ 7,419.7 $ 601.0
Direct 6,264.2 289.5 5,803.7 354.4 5,407.2 291.1
Total Personal Lines114,368.1 628.4 13,431.1 919.3 12,826.9 892.1
Commercial Auto 1,649.0 86.3 1,467.1 133.5 1,474.2 185.0
Other indemnity .9 (5.8) 4.6 (5.5) 13.7 6.4
Total underwriting operations 16,018.0 708.9 14,902.8 1,047.3 14,314.8 1,083.5
Fees and other revenues2281.8 NA 266.5 NA 252.2 NA
Service businesses 36.1 0 22.8 3.4 25.9 4.5
Investments3749.8 734.4 582.6 569.1 616.2 604.3
Gains (losses) on extinguishment of debt (1.8) (1.8) (.1) (.1) 6.4 6.4
Interest expense NA (123.8) NA (132.7) NA (133.5)
Consolidated total $17,083.9 $1,317.7 $15,774.6 $1,487.0 $15,215.5 $1,565.2
1Personal auto insurance accounted for 91% of the total Personal Lines segment net premiums earned in both 2012 and 2011, and 90% in 2010;
insurance for our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) accounted for the balance of
the Personal Lines net premiums earned.
2Pretax profit (loss) for fees and other revenues are allocated to operating segments.
3Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expenses.
NA = Not Applicable
Progressive’s management uses underwriting margin and combined ratio as primary measures of underwriting profitability.
Underwriting profitability 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. The underwriting margin
is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned (i.e., revenues from underwriting
operations). Combined ratio is the complement of the underwriting margin. Following are the underwriting margins/
combined ratios for our underwriting operations for the years ended December 31:
2012 2011 2010
Underwriting
Margin
Combined
Ratio
Underwriting
Margin
Combined
Ratio
Underwriting
Margin
Combined
Ratio
Personal Lines
Agency 4.2% 95.8 7.4% 92.6 8.1% 91.9
Direct 4.6 95.4 6.1 93.9 5.4 94.6
Total Personal Lines 4.4 95.6 6.8 93.2 7.0 93.0
Commercial Auto 5.2 94.8 9.1 90.9 12.5 87.5
Other indemnity1NM NM NM NM NM NM
Total underwriting operations 4.4 95.6 7.0 93.0 7.6 92.4
1Underwriting margins/combined ratios are not meaningful (NM) for our other indemnity businesses due to the low level of premiums earned by,
and the variability of loss costs in, such businesses.
App.-A-34