1999-03-26 Peter B. Lewis’s Letters to PGR Shareholders
Refer To：《PGR-Form 10-K - Annual report-1998》。
For 34 years, writing annually to shareholders has been my way to describe Progressive's achievements and aspirations, and to explain our current performance and prospects. I try to do it in a way that lets anyone interested in Progressive understand the value of and reasons for what Progressive does.
在过去的34年里，我每年都会写一封致股东的信，借此描述我们在Progressive的成就与志向，并解释我们当前的业绩与前景。我努力以一种让任何对Progressive感兴趣的人都能理解其价值和行动理由的方式来完成这一工作。
Since 1965, Progressive has grown faster and more profitably than other auto insurers. By 1988, we were the largest, fastest-growing, mostprofitable insurer specializing in high-risk auto insurance sold by Independent Insurance Agents. This was achieved by Progressive's smart and creative people working hard to serve auto insurance consumers better than competitors. In 1988, California consumer activists turned their constituents' rage against escalating auto insurance costs into laws and regulations that threatened auto insurance as a free-enterprise activity. Progressive's strategic response has been to create a new value proposition with redefined service, distribution and product that enhances consumers' auto insurance experience.
自1965年以来，Progressive的成长速度和盈利能力都超过了其他汽车保险公司。到1988年，我们已经成为通过独立保险代理人销售高风险汽车保险的规模最大、成长最快、盈利最强的保险商。这得益于Progressive那些聪明且富有创造力的员工，他们努力让我们的汽车保险服务优于竞争对手。1988年，加利福尼亚州的消费者权益活动者把人们对于不断攀升的汽车保险费用的愤怒转化为立法和监管，威胁到了将汽车保险作为自由企业活动的合法性。Progressive对此的战略应对，是通过重新定义服务、分销与产品，创造出新的价值主张，从而提升消费者的汽车保险体验。
Today, we offer auto insurance to every licensed driver, selling many ways while innovating in claims, technology, pricing and consumer brand building. We first changed claim service so we could respond to most claims within a few hours of their being reported, any time, any day. Next, we made all services available 24 hours a day, 7 days a week and developed rates for all licensed owners and drivers. Then we distributed in the many different ways consumers wanted to buy-in person from Independent Agents, by telephone through 1 800 AUTO PRO (R) or online at progressive.com. Another innovation was offering competitor premium comparisons. We use a combination of television, direct mail and other media to urge consumers to consider Progressive's unique combination of price and service. As important as Independent Agents continue to be to Progressive, we no longer depend solely on them choosing us for their nonstandard risks.
如今，我们面向所有持照驾驶员提供汽车保险，采用多种销售方式，并在理赔、技术、定价以及消费者品牌建设方面不断创新。我们首先改变了理赔服务模式，确保能在接到报案后数小时内随时响应，然后把所有服务都升级为全天候（7天24小时），并为所有持照车主和驾驶员制定保险费率。接下来，我们通过消费者希望的各种渠道进行销售——可亲临独立保险代理人处，也可拨打1 800 AUTO PRO (R)，或登录progressive.com在线购买。另一个创新是提供与竞争对手的保费对比服务。我们通过电视、直邮及其他媒体的组合，鼓励消费者考虑Progressive在价格与服务上独具特色的结合。虽然独立保险代理人对Progressive依然相当重要，但我们已不再仅仅依赖他们为我们选择非标准风险投保人。
Progressive seeks to be consumers' #1 choice for auto insurance. Progressive's Personal Lines net premiums written of $4.9 billion (93% of Progressive's total net premiums written) were 4.0% of the industry's U.S. personal lines insurance premiums, making Progressive the 5th largest U.S. auto insurer. We had another year of excellent financial performance in 1998, notwithstanding the aggressive competition in auto insurance history. Progressive's underwriting profit margin was 8.4% (industry was .3%), compared to 6.6% in 1997.
Progressive的目标是成为消费者在汽车保险方面的首选。1998年，Progressive个人保险业务的净承保保费为49亿美元（占Progressive总净承保保费的93%），约占美国个人保险业务保费总额的4.0%，使Progressive成为美国第五大汽车保险公司。尽管汽车保险业竞争异常激烈，我们在1998年依然取得了优异的财务表现。当年的承保利润率达到8.4%（行业平均水平仅0.3%），而1997年的承保利润率则是6.6%。
Although proud of our achievements, all Progressive people understand that our customers, agents, partners and shareholders care only about what we WILL do for them-no matter what we have already done for them. Competitors are imitating Progressive's consumer-focused innovations. Industry-wide auto insurance service is generally better. Auto insurance premiums are stable or declining due to continuing trends with respect to safer cars and roads, the impaired driving crackdown, better law enforcement and insurers operating more efficiently.
尽管我们对取得的成绩颇感自豪，但所有Progressive人都很清楚，客户、代理人、合作伙伴和股东只关心我们今后能为他们做到什么，而不是我们曾经为他们做了什么。各家竞争对手都在模仿Progressive以消费者为中心的各种创新。整个行业的汽车保险服务水平总体上都有提升。随着汽车和道路安全性持续改善、对酒驾等行为的打击力度加大、执法水平提高，以及保险公司自身运营效率的提升，汽车保险费率也趋于稳定或下降。
Because auto insurance rates are based on history, and because experience steadily improves, we are in the midst of the most profitable period in 20 years. There is an explosion in consumer advertising for auto insurance. Many insurers are increasing producer incentives and many more are reducing rates. Soon operating margins may shrink and be negative for the industry as a whole. These circumstances historically have energized Progressive's great people to focus their knowledge, creativity and effort to serve our customers even better and more efficiently, to achieve our profit and growth aspirations.
由于汽车保险费率基于以往经验，而实际经验又在不断改善，我们正在经历近20年来最具盈利能力的一段时期。汽车保险领域的消费者广告正在爆发式增长，许多保险公司纷纷加大对代理人的激励措施，也有更多公司在降低保费率。很快，整个行业的运营利润空间可能会进一步收窄，甚至出现负数。从以往经验来看，正是这种局面会激发Progressive优秀员工的热情，让他们更加专注于将知识、创造力和努力投入到为客户提供更优质、更高效的服务中，从而实现我们的盈利与发展目标。
To become consumers' #1 choice for auto insurance, Progressive seeks to provide a competitive price for all drivers AND to produce at least a 4% underwriting profit over the total time a person is insured by Progressive. We seek customers for life and are more focused on retaining customers longer. To do this, and to attract new customers, we will promote our brand based on Progressive's unique customer proposition. We "kicked off" 1999 brand building by sponsoring the Super Bowl(TM) XXXIII Halftime Show and by introducing new commercials featuring E.T. as spokesterrestrial for Progressive's commitment to reduce the trauma and costs of accidents by reducing their frequency and severity.
为了成为消费者在汽车保险方面的第一选择，Progressive努力为所有驾驶员提供具有竞争力的价格，并在客户整个投保期间实现至少4%的承保利润。我们追求与客户之间的长期合作关系，并且更加注重延长客户保持率。为此，也为了吸引新客户，我们将基于Progressive独特的客户主张来推广品牌。我们在1999年借着赞助第三十三届超级碗(TM)中场表演正式开启品牌建设，并推出了以E.T.为主角的新广告，向外界传达Progressive致力于通过降低事故发生频率和严重程度来减少创伤和成本的承诺。
Customer focus has driven Progressive's innovation over the past decade. We will work hard in 1999 to expand and improve the ways in which consumers become Progressive customers and will foreclose no distribution option. We know that costs must continue to come down for us to accomplish our vision and achieve our financial objectives. We continue to improve claim operations, trying to reduce claim costs faster than competitors. We continue to work hard to eliminate work and simplify processes, obtain economies of scale, and reduce cycle times and costs, thereby improving customer satisfaction and lowering customer cost. We regularly measure more activities more precisely to understand them better and to improve performance.
在过去十年里，以客户为中心推动了Progressive在创新领域的不断前行。1999年，我们将继续努力扩大和优化消费者成为Progressive客户的途径，不会放弃任何分销渠道。我们深知，要实现我们的愿景并达成财务目标，必须继续降低成本。我们不断改进理赔操作，努力比对手更快地压缩理赔成本。我们还持续努力消除不必要的环节、简化流程、实现规模经济并减少周期时间与支出，从而提高客户满意度并降低客户费用。我们也会更加精准地定期衡量各项活动，以便更好地理解和改进绩效。
We refine the definition and delivery of Immediate Response(R) claims service as we gain greater understanding of customer/claimant needs. Progressive's Immediate Response Vehicles (painted white with PROGRESSIVE emblazoned in blue on the side) travel America's streets providing the help and counseling people need when they are unfortunate enough to have an auto mishap and reinforcing the defining service standard only available from us.
随着我们对客户和索赔方需求的深入了解，我们不断完善“即时响应”(Immediate Response(R))理赔服务的定义和实施。Progressive的即时响应车辆（以白色为主，车身侧面标有蓝色的“PROGRESSIVE”字样）穿梭于美国大街小巷，为那些不幸遭遇车祸的人们提供所需的帮助和建议，并强化只有我们才能提供的独特服务标准。
OUR ORGANIZATION
我们的组织结构
More customers and changing business processes require the talent and energy of people who are better trained, harder working and better paid. How we train, motivate, evaluate and compensate our people and how we organize are critical to Progressive's success. Auto insurance differs greatly by community because regulations differ by state and because traffic, law enforcement, cultural attitudes, insurance agents, medical services and auto repair facilities differ by community. Our matrix organization enables Progressive to meet varied local conditions under a cohesive set of policies that ensure consistency and control, while sustaining experimentation and excitement.
更多客户以及不断变化的业务流程需要那些接受了更好培训、更为勤奋且薪酬更高的人才与活力。我们如何培训、激励、评估和回报员工，以及我们如何组织架构，都是Progressive成功的关键。由于各州法规不同，加之交通状况、执法力度、文化观念、保险代理人、医疗服务以及汽车维修设施各不相同，汽车保险在各个社区之间有着巨大差异。我们的矩阵式组织结构让Progressive在一套统一、可控的政策框架下应对各种地方差异，同时仍保持创新与活力。
Progressive's 44 State and Community Managers actually run the business in their state(s). State Managers are measured and paid based on profit and growth in their state(s) or region. They manage claims, distribution, advertising budgets, price levels, agent development, regulation and community relations for their state. State Managers decide their state(s) organization, including appointing Community Managers with responsibilities similar to their own for a large part of the state.
Progressive在全美设有44位州及社区经理，他们实际上负责运营各自所辖州的业务。州经理的绩效与报酬以其所在州或区域的利润与增长情况为依据。他们负责该州的理赔、分销、广告预算、费率水平、代理人培养、法规事务以及社区关系。州经理还决定其州的组织架构，包括为该州较大区域任命与其职责相似的社区经理。
State Managers report to members of the "Policy Team" which in 1999 includes two CEOs (Insurance Operations, Investments and Capital Management), four Distribution Leaders (Independent Agent, 1 800 AUTO PRO(R), progressive.com, Strategic Alliances), Chief
Pricing/Product Officer, Chief Claim Officer, Chief Financial Officer, Chief Information Officer, Chief Human Resources Officer and Chief Communications Officer. The Distribution Leaders are challenged to develop and manage product offerings and customer service processes tailored to the unique requirements of customers who discover and select Progressive through different distribution modes.
州经理向“政策团队”（Policy Team）的成员汇报工作。该团队在1999年包括两位首席执行官（分别负责保险运营以及投资与资本管理）、四位分销渠道主管（独立代理人、1 800 AUTO PRO(R)、progressive.com、战略联盟）、首席定价/产品官、首席理赔官、首席财务官、首席信息官、首席人力资源官以及首席沟通官。分销渠道主管的任务是根据不同分销渠道下，客户发现并选择Progressive的独特需求来开发并管理产品和客户服务流程。
参考GEICO的做法。
Progressive's organization is like a growing cell inhabited by nearly 16,000 people, many soaring from team to team and task to task. The sphere's skin is kept taut by straight lines between people which define the relationship of the people connected by them (e.g. boss, former boss, direct report, former direct report, relative, etc.). These relationships change constantly, responding to business and personal needs. We eliminate organization confusion by being clear and current about performance objectives, standards, measurements and rewards for each team and each person. We help our people understand how their good work enhances our customers' well-being, our shareholders' value, our agents' prosperity, our partners' profits and their personal opportunities.
Progressive的组织结构就像一个不断生长的细胞，目前有近16,000名员工在其中工作，许多人在不同团队和任务之间灵活切换。这个球状结构的“外皮”通过人员之间的直线关系拉紧，每条直线代表他们之间的关系（如上级、前上级、直接下属、前下属或亲属等）。这些关系会随着业务和个人需求而不断变化。我们通过对每个团队和个人的绩效目标、标准、考核及回报进行及时且明确的阐述，从而消除组织混乱。我们帮助员工明白：他们的优异工作如何促进客户福祉、提升股东价值、推动代理人繁荣、增加合作伙伴利润，并为他们个人带来更多机遇。
Objectives are regularly reviewed and renegotiated. Performance against objectives is regularly and completely reported on and monitored. The whole process is validated and reinforced by Progressive's performance-based employee incentive compensation program, which paid $85.8 million for 1997 and $107.5 million for 1998. Progressive stays flexible by having people expect the organization, their objectives and the Gainsharing formula to change regularly.
我们会定期审视并重新协商目标，并对目标完成情况进行定期且完整的汇报与监督。整个流程通过Progressive的绩效激励薪酬计划得以验证与强化。该计划在1997年支付了8,580万美元，而在1998年支付了1亿750万美元。Progressive通过让员工预期组织架构、个人目标以及利润分享公式会定期调整，来保持组织的灵活性。
PERSONAL LINES BUSINESS
个人保险业务
Ninety-three percent of Progressive's net premiums written is insurance for private passenger automobiles, motorcycles and recreational vehicles. Net premiums written for the Personal Lines business was $4,922.3 million, 15% more than the $4,288.8 million in 1997. The underwriting profit margin was 7.9%, compared to 6.3% in 1997. In 1998, we celebrated a milestone in our motorcycle product expansion by taking over market share leadership from State Farm.
有93%的Progressive净承保保费来自私家车、摩托车以及休闲车保险。个人保险业务的净承保保费达到49.223亿美元，比1997年的42.888亿美元增长了15%。承保利润率为7.9%，而1997年为6.3%。在1998年，我们在摩托车产品扩张方面取得了重要里程碑，从State Farm手中夺下了市场份额的领先地位。
PRODUCT STRATEGY-COMPETITIVE RATES FOR ALL RISK PROFILES
产品策略——为所有风险类型提供具竞争力的费率
In 1997, we reported that introducing financial responsibility as an auto insurance rating factor would result in more competitive rates for many consumers. In 1998, we used financial responsibility in 43 states and began to refine and improve our product design. We expect product design and pricing methods to evolve constantly, based on our developing understanding of loss data, work flows, market conditions and technology, as well as consumer acceptance of our brand as an insurer for all drivers. We introduced the next generation of product design in mid-1998 and expect to have it in markets representing 80% of premium by April 1999. Early results suggest we are attracting more drivers from all risk profiles and retaining them longer.
在1997年，我们曾指出，将财务责任作为汽车保险的费率评估因素，会让许多消费者获得更具竞争力的费率。1998年，我们在43个州采用了财务责任因素，并开始完善和改进产品设计。我们预计，随着我们对损失数据、工作流程、市场状况和技术的不断理解，以及消费者对我们作为“面向所有驾驶员的保险商”这一品牌定位的接受度的不断提高，产品设计与定价方法也会持续演变。我们在1998年中期推出了新一代产品设计，并计划在1999年4月前覆盖占总保费80%的市场。初步结果显示，我们正在吸引更多不同风险类型的驾驶员，并使他们保持更长的续保时间。
BRAND STRATEGY - BE PROGRESSIVE
品牌策略——做Progressive（“进取”）
In 1998, we expanded Progressive's brand promotion and the service and price proposition it stands for by introducing our television advertising in 43 additional markets, bringing the total number of markets in which we regularly advertise to 83. We expanded our national fleet of distinctively marked Immediate Response Vehicles, increased our visibility in the Independent Agency channel with prominent Progressive Authorized Independent Agent signs and significantly increased advertising related to our Internet site, all aimed at substantially increasing awareness of Progressive, what we offer, and what it means to BE PROGRESSIVE.
1998年，我们在额外43个市场投放电视广告，从而将我们常规投放广告的市场总数扩大至83个，借此推广Progressive品牌及其所代表的服务与价格主张。我们扩大了带有鲜明标识的即时响应车辆在全国范围内的规模，并通过显著的“Progressive授权独立代理人”标识提升我们在独立代理人渠道的可见度，还大幅增加了与我们网站相关的广告投放，所有这些举措都旨在大幅提升公众对Progressive的认识、了解我们所提供的产品和服务，以及体会“进取”（Progressive）这一理念的含义。
Customers evaluate our brand by the experiences we provide them. We measure customer satisfaction and our performance with a combination of surveys, customer response requests, phone monitoring and mystery shopping. Delivering superior service depends on hiring superb people and training them all very well. During 1998, we successfully hired and trained over 3,800 people companywide, including claim representatives, policy service representatives, sales representatives, and technology and management staff, and provided ongoing training to several thousand employees across each service experience. We employ a variety of techniques including aptitude simulations before hiring, coaching/mentoring programs, team quality and productivity objectives, and performance-based promotion to develop and empower exceptional people and deliver consistently good customer experiences.
客户通过我们所提供的体验来评价我们的品牌。我们综合利用问卷调查、客户反馈请求、电话监控以及神秘访客来衡量客户满意度和我们的表现。要提供卓越的服务，必须招聘到出色的人才并对他们进行良好的培训。1998年，我们在公司范围内成功招聘并培训了3,800多名员工，其中包括理赔代表、保单服务代表、销售代表，以及技术和管理人员，并且为数千名员工在各个服务环节提供了持续培训。我们运用多种方法，包括在招聘前进行能力模拟测试、实施辅导/导师计划、设定团队质量与生产率目标，以及实施基于绩效的晋升机制，以培养和授权杰出人才并持续为客户提供良好的体验。
MARKETING STRATEGY-MANY WAYS TO BUY
营销策略——多种购买方式
To accommodate consumer preferences, we offer our products through more than 30,000 Independent Insurance Agents, by calling 1 800 AUTO PRO(R) or by visiting our Web site, progressive.com. We are the market leader in selling auto insurance through Independent Agents and seek ever stronger ties between us and Independent Agents and their customers. In 1998, there was considerable development in agent systems to greatly improve Agents' ability to quote accurately, to retrieve policyholder information, to receive rate and software updates electronically, to eliminate paper and to use the Internet to communicate with us.
为了满足消费者的不同偏好，我们通过3万多家独立保险代理人，拨打1 800 AUTO PRO(R)热线或访问我们的网站progressive.com来提供保险产品。我们是通过独立代理人销售汽车保险的市场领导者，并致力于与独立代理人及其客户建立更为紧密的关系。1998年，代理人系统取得了重大进展，大大提升了代理人精准报价、检索保单信息、通过电子方式接收费率和软件更新、减少纸张使用以及通过互联网与我们进行沟通的能力。
Our fastest growing distribution channel is 1 800 AUTO PRO(R), making Progressive a leading direct writer of auto insurance. To support growth, we expanded to five call center locations in 1998 and focused on sales effectiveness training, measurement and call center management. Progressive is the market leader in selling auto insurance on the Internet. Consumers can comparison shop online for auto insurance in 47 states and can actually buy online in 23 states plus the District of Columbia. In 1998, we introduced "Personal Progressive," an online Internet-based system providing consumers access to their own policy information and allowing them to process certain changes and premium payments.
我们增长最快的分销渠道是1 800 AUTO PRO(R)，这使Progressive成为领先的汽车保险直接销售商。为支持这一增长，我们于1998年在五个地点设立了呼叫中心，并重点关注销售效率培训、绩效评估与呼叫中心管理。Progressive在网络销售汽车保险方面也是市场领跑者。消费者可在47个州通过网络对比汽车保险报价，并在23个州及哥伦比亚特区进行在线购买。1998年，我们推出了“Personal Progressive”在线系统，让消费者能够访问其个人保单信息，并办理某些保单变更和保费支付。
In 1998, our Strategic Alliances channel surpassed 200 active alliances with companies that influence their constituents to buy Progressive's products. Our expanded and improved product and offering rates for all drivers greatly expand the opportunities for direct and affinity marketing programs aimed at all risks to be sold through these long-term, exclusive alliances.
在1998年，我们的战略联盟渠道已与超过200家企业建立了活跃的合作，这些企业能够影响其群体来购买Progressive的产品。我们面向所有驾驶员的产品和费率选择得到拓展与改进，从而大幅增加了通过这些长期、排他性联盟所开展的直销与共同营销计划所面向的各类风险客户。
Midland Financial Group, acquired in 1997, underwrites and markets nonstandard private passenger auto insurance, under the Midland name, through Independent Agents in 11 southeastern and western states.
我们于1997年收购的Midland Financial Group以Midland的名义，通过独立代理人在美国东南部和西部的11个州开展非标准私家车保险的承保和营销。
In 1999, because different distribution channels and the customer sets they attract present different business opportunities and challenges, each channel will be led by a Policy Team member. We seek to maximize the opportunities within each distribution channel, while maintaining both the integrity of brand experience for all customers and the ability to leverage our service and technology infrastructures. However our customers decide to buy, we want them to understand and benefit from the following Progressive service offerings.
1999年起，由于不同分销渠道及其吸引的客户群所带来的商机和挑战各不相同，每个渠道将由一名“政策团队”成员领导。我们力求在各个分销渠道内最大化发展机遇，同时保证所有客户的品牌体验一致，并充分利用我们的服务与技术基础设施。无论顾客选择哪种方式购买，我们都希望他们了解并受益于Progressive以下所提供的服务。
SERVICE STRATEGY-WHEN AND WHERE YOU WANT IT
服务策略——随时随地满足您的需求
Assistance after an accident or other loss is Progressive's most important service. We implore our customers to call 1-800-274-4499 immediately after any incident. Twenty-four hours a day, 7 days a week, Progressive people take claim report telephone calls, obtain the relevant information, authorize emergency measures and dispatch Progressive claim representatives to meet customers as quickly as possible, usually within hours.
事故或其他损失发生后所获得的帮助，是Progressive最重要的服务。我们恳请客户在发生任何事故后，立即拨打1-800-274-4499。Progressive的员工每周7天、每天24小时接听理赔电话，获取相关信息，授权紧急措施，并派遣Progressive理赔代表尽快与客户会面，通常可在数小时内完成。
AROUND-THE-CLOCK SERVICE. Consumers want to do business when it's convenient for them, so we operate 24 hours a day, 7 days a week, providing insurance sales and policy change assistance, as well as the critically important Immediate Response(R) claims service. Our customers come to depend on this level of service, which we support by continuous real-time monitoring of internal systems performance, threatening weather and other natural disasters. This approach allows us immediately to reconfigure voice and data networks and to activate disaster response teams when required.
全天候服务。消费者希望在对他们方便的时间完成交易，因此我们实行每周7天、每天24小时运营，为客户提供保险销售和保单变更服务，以及至关重要的即时响应(Immediate Response(R))理赔服务。我们的客户逐渐依赖这种服务水准，而我们通过对内部系统性能、恶劣天气及其他自然灾害的实时监控来加以支持。这样一来，我们就能在必要时立即重新配置语音和数据网络，并启动灾害应对团队。
OTHER BUSINESSES
公司的其他业务
The Company's other lines of business include writing insurance for small fleets of commercial vehicles, collateral protection and loan tracking for auto lenders and financial institutions, directors' and officers' liability and fidelity coverage for American Bankers Association member community banks and independent credit unions, and providing related claims, underwriting and system services. Revenues in these businesses were $405 million in 1998, compared to $402 million last year. Pretax operating profit was $62 million, compared to $37 million last year, up 68%, and return on revenue was 15.3%, compared to 9.2% in 1997. Most of these businesses are in markets that are declining in size.
公司的其他业务领域包括：为小型商用车车队提供保险，为汽车贷款机构和金融机构提供抵押品保护与贷款跟踪服务，为美国银行家协会成员社区银行和独立信用社提供董事及高管责任险和忠诚保险，并提供相关的理赔、承保及系统服务。这些业务在1998年的营收为4.05亿美元，而去年为4.02亿美元。税前营业利润为6,200万美元，而去年为3,700万美元，增长幅度达68%，收入回报率为15.3%，而1997年为9.2%。这些业务大多所处的市场规模正在缩小。
非常窄的领域。
INVESTMENTS AND CAPITAL MANAGEMENT
投资与资本管理
Progressive employs a conservative approach to investments and capital management, intended to ensure that there is sufficient capital to support all the insurance premium that we can profitably write. Our objectives are to finance growth internally, to sustain an A or better senior debt rating, to have lower debt cost than peer companies and to repurchase stock cost-effectively. Progressive's senior debt was rated A+ and A2 by S&P and Moody's, respectively, at year-end 1998 and our debt to debt plus capital ratio was 23.3%. During 1998, we repurchased 393,000 shares at an average cost per share of $104. We filed a shelf registration to issue $300 million of senior debt intended to replace $300 million of debt expiring at year-end 2000.
Progressive在投资与资本管理上采取稳健策略，旨在确保拥有充足资本来支持所有能获得盈利的保险业务。我们的目标包括通过内部融资实现增长，保持A级或更高的高级债评级，令债务成本低于同行，并以具成本效益的方式回购股票。1998年底，Progressive的高级债分别获得标普A+和穆迪A2的评级，我们的“债务占（债务＋资本）”比率为23.3%。在1998年，我们回购了39.3万股股票，平均成本为每股104美元。我们还提交了“货架式发行”注册申请，计划发行3亿美元高级债券，用以替换将于2000年底到期的3亿美元债务。
Asset allocation considers the capital we have in excess of that required to support premiums planned over the next three years, anticipated liquidity needs and our analysis of the expected risks and returns on various assets. At year-end 1998, $4,532.9 million, 79.9% of our total invested assets, was investment-grade, fixed-maturity securities, compared to $4,168.3 million in 1997, 79.1%. Non-investment-grade fixedmaturity securities were $128.0 million, 2.3% of total invested assets, compared to $132.5 million in 1997, 2.5%. The portfolio's duration was 2.8 years at year-end 1998, in the middle of our target range.
在进行资产配置时，我们会考虑在未来三年内承保计划所需资本之外的多余资本、预期的流动性需求，以及对各类资产潜在风险和收益的评估。1998年底，投资级定期到期证券占我们总投资资产的45.329亿美元，约为79.9%，而1997年的数字为41.683亿美元，占79.1%。非投资级定期到期证券为1.28亿美元，占总投资资产的2.3%，而1997年为1.325亿美元，占2.5%。至1998年底，我们的投资组合存续期为2.8年，位于目标区间的中间值。
Common stocks were $636.9 million, 11.2% of total invested assets, compared to $620.8 million and 11.8% at year-end 1997. Our 3.7% total return underperformed the S&P 500's 28.5% because we overweighted smaller capitalization "value style" companies and foreign equities.
普通股规模为6.369亿美元，占总投资资产的11.2%，而1997年底为6.208亿美元，占11.8%。我们的总回报率为3.7%，远低于标普500指数的28.5%，这是因为我们对市值较小的“价值风格”公司和外国股票的配置比例较高。
噪音的产生和目标有关，目标不清晰噪音越多，目标清晰了噪音自然消失。
Included in our non-investment-grade fixed-maturity securities and our common stock portfolio are $299.6 million, 5.3%, of other risk assets. Other risk assets include such items as high yield and distressed debt, private equities and warrants, and mezzanine investments. No individual security in the other risk asset portfolio comprised more than one percent of Progressive's total investment portfolio. Our total return on the average amount invested in this asset class in 1998 was (4.4)%.
在我们的非投资级定期到期证券和普通股投资组合中，包含2.996亿美元（占比5.3%）的其他风险资产。此类风险资产包括高收益及不良债务、私人股权与认股权证，以及夹层投资等。其中没有任何单项证券占Progressive整体投资组合的比例超过1%。我们在1998年对该资产类别的平均投入获得的总回报率为-4.4%。
In 1998, Progressive earned $221.3 million of investment income after tax, compared to $205.3 million in 1997. Realized gains were $11.4 million in 1998, compared to $98.5 million in 1997. As of year-end 1998, there were $174.3 million in unrealized gains, compared to $188.4
million at year-end 1997. The weighted average fully taxable equivalent book yield of the portfolio was 6.3% in 1998, compared to 6.6% in 1997.
在1998年，Progressive的税后投资收入为2.213亿美元，而1997年为2.053亿美元。1998年的已实现收益为1,140万美元，而1997年为9,850万美元。截至1998年底，未实现收益为1.743亿美元，而1997年底为1.884亿美元。我们的投资组合在加权平均的全面应税等价账面收益率方面，1998年为6.3%，而1997年为6.6%。
RISKS
风险
LEGISLATIVE AND REGULATORY Highly complex regulation becomes more ambiguous in a technology-driven economy and compliance with the variety of state regulatory systems becomes more difficult. As Progressive innovates and grows, our "cutting-edge" programs increase the risk of regulatory scrutiny. The constant attention of the plaintiff bar to the insurance industry increases the risk of added liabilities not contemplated when premiums were set.
立法与监管 在技术驱动型经济中，高度复杂的监管环境更趋于模糊，遵守各州不同的监管体系也愈加困难。随着Progressive不断创新和发展，我们的“前沿”项目会提升遭遇监管审查的风险。原告律师群体对保险业的持续关注，也增加了在设定保费时未预料到的潜在赔偿责任的风险。
ADVERTISED BRAND Heightened consumer awareness of the Progressive brand requires ever higher performance standards. We regularly monitor consumer reaction to our advertising and assess their service delivery expectations. We continually seek ways to exceed consumer expectations in innovative and low-cost ways.
品牌宣传 由于消费者对Progressive品牌认知度的提升，我们必须执行更高的绩效标准。我们定期监测消费者对广告的反应，并评估他们对服务水平的预期。我们不断探索创新且低成本的方式来超越消费者预期。
UNPREDICTABLE UNDERWRITING MARGIN AND GROWTH RATE Our goal is to achieve a 4% underwriting profit over the entire retention period of a policyholder and we monitor closely to ensure rates are adjusted promptly and adequately. However, we cannot predict with precision the timing and pace of changes in underwriting margins, retention or the rate of growth.
不可预测的承保利润率与增长率 我们的目标是在保单持有人的整个留存期内实现4%的承保利润，为此我们会密切监控，确保及时且充分地调整费率。然而，我们无法精确预测承保利润率、客户留存率或增长速度在何时及如何发生变化。
HOMEOWNERS INSURANCE Because many consumers buy auto and homeowners insurance together, we plan to test offer a homeowners product in 1999, expanding thereafter based on what we learn from the tests. Inexperience exposes us to underwriting losses. Broad implementation could create underserved market issues and aggregate exposures requiring precise measurement and conservative management.
房主保险 由于许多消费者会同时购买汽车险与房主险，我们计划于1999年试点推出房主保险产品，并根据试点结果考虑后续的拓展。缺乏经验会使我们面临承保亏损的风险。大规模推广可能引发服务不足的市场问题，以及需要精准测算与谨慎管理的风险集中度。
相对不容易量化的保险业务，和Progressive的基因不相匹配。
COMPETITOR RESPONSE Competitors notice Progressive's profitability and growth and then attempt to copy our approach to improving auto insurance consumers' experience. We cannot predict whether or when competitive tactics will influence our profitability and growth, and/or if their attempts to attract our excellent people will succeed. We constantly monitor competitors and improve our products and services to keep them among the industry's best.
竞争对手的反应 当竞争对手注意到Progressive的盈利能力和增长后，他们会试图模仿我们提升汽车保险消费者体验的做法。我们无法预测这些竞争手段是否或何时会影响我们的盈利及增长，也无法预测他们吸引我们优秀员工的努力是否会成功。我们始终密切关注竞争对手，不断改进产品与服务，以保持行业领先。
Y2K Between 1995 and 1998, nearly 100% of our system applications were remediated. Critical applications are being tested in our Year 2000 Time Warp Lab, an autonomous production environment simulating year 2000 operating time frames. We are well under way in ensuring that mainframe computers, servers, personal computers, operating systems, desktop applications and telecommunications hardware and software are compliant. We have completed contingency plans for all of our business processes and are assessing and testing key business partners' readiness. During 1999, we will continue to test, refine and challenge all our preparations. Nonetheless, Progressive, like other well-prepared institutions, is subject to Y2K risks we cannot anticipate, eliminate or quantify.
千年虫问题（Y2K） 在1995年至1998年间，我们几乎对所有系统应用完成了修复。关键应用程序目前正在我们的“Year 2000 Time Warp Lab”进行测试，该实验室是一个独立的生产环境，用以模拟2000年的运行时间范围。我们正有条不紊地确保大型主机、服务器、个人电脑、操作系统、桌面应用以及通信软硬件均符合Y2K要求。我们已经为各项业务流程制定了应急预案，并对主要业务伙伴的准备情况进行评估和测试。在1999年，我们将继续对所有准备工作进行测试、完善与挑战。然而，与其他充分准备的机构一样，Progressive仍会面临我们无法预估、消除或量化的Y2K风险。
THE FUTURE
未来
In 1998, I turned 65 and recovered from an illness. It became clear that managing a smooth CEO succession that left people confident about Progressive's future would be the best thing I could do for the organization I am so proud of and care so much about. On January 1, 1999, Progressive's CEO responsibility was divided so that we now have a CEO-Insurance Operations and a CEO-Investments and Capital Management. Chuck Chokel, formerly CFO, became CEO-Investments and Capital Management and I remain CEO-Insurance Operations. In 1998, we also codified the Board structure, composition and protocols that resulted in clarifying the role of Chairman of the Board, as distinct from the CEO. I remain Chairman of the Board. There are no plans now to appoint a new CEO-Insurance Operations. However, I am delighted to have a structure in place that allows it and will permit me to contribute.
1998年，我年满65岁并从一场疾病中康复。我逐渐意识到，最能让这家令我倍感自豪与珍视的企业确信拥有光明未来的方式，便是顺利完成CEO交接。1999年1月1日，Progressive的CEO职责被分拆，如今我们设有一位负责保险运营的CEO和一位负责投资与资本管理的CEO。原首席财务官Chuck Chokel出任负责投资与资本管理的CEO，而我仍担任负责保险运营的CEO。1998年，我们还对董事会的结构、组成和议事规则进行了规范，明确了董事长与CEO的不同角色。我继续担任董事长。目前并无计划任命新的保险运营CEO，然而我很高兴我们已经建立了这样一种组织架构，使这一安排成为可能，并允许我继续发挥作用。
Progressive leads a wave of change in the United States' system for dealing with auto accident injuries and property damage. We reduce auto accident victims' trauma and cost. We are being rewarded for leadership and commitment. Our success so far encourages us to expand at a pace that tests our ability to provide the service we aspire to deliver.
Progressive正引领着美国在处理汽车事故伤害和财产损失方面的一场变革浪潮。我们致力于为车祸受害者降低创伤与费用，并因此获得了回报。迄今为止取得的成功鼓舞我们继续加快扩张步伐，从而进一步检验我们提供理想服务的能力。
We begin 1999 as we have begun all other years-excited, respectful of the challenges implicit in our objectives and strategy, humbled by our failures, proud of having responded to them and comfortable that our excellent people will continue to achieve superior results. Much will be required to realize our vision. At Progressive, it is always as if we are just beginning our business. We see a future that is brighter than ever.
我们以与往年相同的心态开始1999年——充满激情，敬畏目标和战略中蕴含的挑战，也因过去的失败而保持谦逊，但同时为能够应对这些挑战感到自豪，并相信我们出色的员工会继续取得卓越成绩。要实现我们的愿景，我们尚需做出更多努力。对Progressive来说，就好像我们永远都处在创业初期。我们看到的未来比以往任何时候都更光明。
We deeply appreciate the customers we are privileged to serve. Thank you for your business. Thanks to the more than 30,000 Independent Insurance Agents who did business with Progressive in 1998. We are grateful for our shareholders' continued confidence. To the 15,735 men and women who make Progressive a great company, thanks for all your contributions in 1998 and for the promise you bring to our future. Joy, Love and Peace
我们对能为广大客户服务深表感激。感谢你们的惠顾。也感谢在1998年与Progressive合作的3万多名独立保险代理人。我们同样感谢股东们始终如一的信任。对于令Progressive成为卓越企业的15,735名员工，感谢你们在1998年的所有付出以及你们为我们未来带来的希望。祝愿大家收获喜悦、爱与和平
/s/ Peter Lewis
Peter B. Lewis
Chairman, President and Chief Executive Officer- Insurance Operations
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