LETTER TO SHAREHOLDERS

致股东信

Progressive's strategy is to become the number one choice of U.S. consumers for auto insurance. Progressive has consciously decided to narrow its business focus within the framework of that objective.

If past is prologue, Progressive will experience a resurgence. We increased prices ahead of competitors which will likely slow our volume, allowing us to focus on developing our current claim representatives rather than focus on building the staff as we have for the past few years.

如果过去是序章，那么Progressive将迎来复兴。我们领先于竞争对手提价，这可能会减缓业务量，从而使我们能够专注于培养现有的理赔代表，而不是像过去几年那样着重扩充员工规模。

We expect that this in turn should produce lower loss costs.

我们预期这反过来应当会降低赔付成本。

A key part of the improved customer experience is building customer trust and loyalty, which we do in part by continually identifying new and better ways to serve customers.

改善客户体验的关键部分在于建立客户信任和忠诚度，而这部分工作我们通过不断寻找为客户服务的新方法和更好方法来实现。

The theme for this annual report is "not what you'd expect." Progressive has routinely redefined what you should expect from an auto insurance company by consistently dreaming, thinking outside the lines and having the will to do things never before tried. Progressive's future depends on continuing to do that. Progressive must lead. Leaders always go where others never have been.

本年度报告的主题是“并非你所预期的”。Progressive一贯通过不断创新、打破常规思维以及勇于尝试前所未有之举，重新定义了人们对汽车保险公司的期望。Progressive的未来取决于继续这样做，Progressive必须引领潮流。领导者总会走别人未曾涉足之路。

1999 was a mixed year for Progressive. Many positive accomplishments, including a 16% increase in annual premium volume and becoming the 4th largest U.S. auto insurer, were overshadowed by a 6.7 point decrease in the Company's year-to-year underwriting profit (from 8.4% in 1998 to 1.7% in 1999) with a concomitant decline in earnings per share from $6.11 in 1998 to $3.96 in 1999. Progressive shareholders had a wild ride as Progressive's stock traded at an all-time high price of 174+ on January 12 and then plummeted to close 1999 at $73.125. Disappointing 1999 performance caused us to reappraise all of our assumptions, abilities, approaches, advantages and attitudes. This letter shares our view of what happened and why, what we are doing about each issue, how we view both competition and the social/political environment vis-a-vis auto insurance, what our strategy is and how we will execute it.

1999年对Progressive来说是喜忧参半的一年。许多正面成就——包括年保费量增长16%以及成为美国第四大汽车保险公司——都被公司的年度承保利润下降6.7个百分点（从1998年的8.4%降至1999年的1.7%）以及每股收益从1998年的6.11美元降至1999年的3.96美元所掩盖。Progressive股东经历了一段惊心动魄的时期，因Progressive的股价在1月12日曾创下174+的历史最高价，随后在1999年收盘时暴跌至73.125美元。令人失望的1999年业绩促使我们重新评估所有假设、能力、方法、优势和态度。本文信件分享了我们对所发生情况及其原因的看法，我们为每个问题所采取的措施，我们如何看待竞争以及汽车保险相关的社会/政治环境，以及我们的战略及执行方式。

What Happened and What We Are Doing

发生了什么以及我们正在做什么

RATE CHANGES In 1999, we were surprised by the sudden reversal in the long-term trend of reducing accident frequency and severity, resulting in loss cost increases not contemplated in the rates we charged. We attribute the change to forces both inside and outside Progressive. Progressive decreased rates an average of 1.3% during the first six months of 1999, only to increase rates 4.4% in the second half of the year, primarily in the fourth quarter. It is likely that these rate increases will slow volume growth in 2000, and, since the majority of our policies are annual, we will not see the full impact of these rate changes on earnings until the fourth quarter of 2000. We will take advantage of this slow down to increase the tenure of our claim force and to improve our service to customers, agents and claimants.

费率变化：1999年，我们对长期事故频率和严重性下降趋势的突然逆转感到惊讶，这导致赔付成本上升，远超我们所收取费率中预期的水平。我们将这种变化归因于内部和外部的多种力量。1999年前六个月，Progressive平均降费率1.3%，而在下半年，主要在第四季度，又提高了费率4.4%。这些费率提升很可能会在2000年减缓业务量增长，并且由于我们大多数保单为年度保单，我们要到2000年第四季度才能看到这些费率变化对收益的全部影响。我们将利用这一放缓期延长理赔团队的任期，并改善对客户、代理和理赔人的服务。

OPERATING GOALS We recognized that the way we structured our goals and incentive compensation program for 1999 helped drive our disappointing calendar underwriting results. We created internal incentives that credited a portion of anticipated future policy renewal profits to current results to encourage growing the business acquired directly. Although expanding the direct business is key to Progressive's long-term viability, we learned that we are unable to measure accurately either who will renew and/or the likely future profit margins on the renewals. The insoluble issues include that we often change prices and/or risk categories, and that distribution is changing fast so that history may no longer be a good predictor. We decided that anticipating profit to be earned on policies to be renewed in the future can lead to flawed conclusions, inadequate pricing and GAAP underwriting losses. In response, we based our goals and manager incentives for 2000 on calendar year results.

运营目标：我们认识到，1999年我们设定目标和激励补偿计划的方式助长了令人失望的日历年承保业绩。我们创建了内部激励机制，将预期未来保单续保利润的一部分计入当前业绩，以鼓励直接增长业务。虽然扩大直销业务对Progressive的长期生存至关重要，但我们发现无法准确衡量谁会续保以及续保的未来利润率。难以解决的问题包括我们经常调整价格和/或风险类别，以及分销变化迅速，历史可能不再是良好的预测指标。我们认为，预期未来续保保单的利润可能会导致错误的结论、不足的定价以及符合GAAP的承保亏损。为此，我们将2000年的目标和管理激励基于日历年业绩设定。

CLAIM FOCUS Progressive's premium volume has expanded from $2,457.2 million in 1994 to $6,124.7 million in 1999, a compound annual growth rate of 20%. Our number of claims handled has grown at a similar rate, from 348,000 in 1994 to 988,000 in 1999. Automobile insurance is a personal service business. Claim handling, a highly technical job, is the most significant of Progressive's services. It takes about two years to train and develop a new claim representative to be a consistently excellent claim handler. The claim staff expanded from 3,093 in 1994 to 7,561 in 1999, with average claim representative tenure of 3.7 years, bringing with it predictable but unmeasurably lower claim handling quality and increased loss costs. As premium growth slows, we expect to see a reduction in new claim representative hiring and an increase in average claim representative tenure. Our claim effort is focused on building our industry recognized Immediate Response(R) claims service with the goal of improved total resolution (pay and conclude with happy customers and claimants). Continuously delighting customers drives us to create new customer/claimant services.

理赔重点：Progressive的保费收入从1994年的24.572亿美元增长到1999年的61.247亿美元，年复合增长率为20%。理赔处理数量也以相似的速度增长，从1994年的348,000件增至1999年的988,000件。汽车保险是一项以个人服务为主的业务，理赔处理是一项高度专业化的工作，是Progressive最重要的服务。培养一名始终表现卓越的新理赔代表大约需要两年时间。理赔人员从1994年的3,093人增至1999年的7,561人，平均理赔代表任期为3.7年，这带来了可预见但无法量化的较低理赔质量和增加的赔付成本。随着保费增长放缓，我们预计新理赔代表的招聘将减少，而平均任期将延长。我们的理赔工作集中在建立业界公认的Immediate Response®理赔服务，目标是实现更优的整体解决（支付并圆满结案，使客户和理赔人满意）。不断取悦客户促使我们创造新的客户/理赔人服务。

RESERVE ADEQUACY In 1999, we reduced loss reserves relating to prior accident years, amounting to .5 combined ratio points, compared to 3.7 points in 1998, 2.5 points in 1997 and 3.3 points in 1996. We believe that our loss reserves are fairly stated; we continually monitor their adequacy to ensure that we remain properly reserved.

准备金充足性：1999年，我们减少了与以前年份事故相关的损失准备金，下降幅度为综合比率0.5个百分点，而1998年为3.7个百分点，1997年为2.5个百分点，1996年为3.3个百分点。我们认为我们的损失准备金陈述是公允的；我们不断监控其充足性，以确保我们储备充足。

ADVERTISING During 1999, we continued to increase our understanding of advertising, brand building and direct sales management. Our inexperience, and probably a bit of hubris, beginning with our advertising and sponsorship associated with Super Bowl XXXIII, led us to incur significant costs without achieving proportionate benefits. Although we didn't get the hoped-for consumer response, we did achieve a boost in overall awareness of Progressive as an auto insurer. We also learned about advertising agency and media selection management, more about what messages sell best and more about call center management--all developing skills for Progressive. We changed advertising agencies and, in 2000, are running a new series of advertising spots leading with our strongest attribute--Progressive's own people explaining the many advantages we have to offer with a greater focus on generating calls and sales while building the brand.

广告：在1999年，我们继续深化对广告、品牌建设和直销管理的理解。由于缺乏经验，可能还有些自负，从与超级碗XXXIII相关的广告和赞助开始，我们付出了巨额成本，却未能获得相应的收益。尽管未能获得预期的消费者反应，我们仍提高了消费者对Progressive作为汽车保险公司的整体认知。我们还学到了更多关于广告代理和媒体选择管理、哪些信息最能打动消费者以及呼叫中心管理的知识——这些都在不断提升Progressive的技能。我们更换了广告代理，并且在2000年推出了一系列以我们最强优势为主导的新广告，突出展示Progressive员工亲自讲解我们所能提供的众多优势，同时更加注重引发电话咨询和销售，并建立品牌。

STOCK PRICE The question I am most often asked is, "Why did PGR drop from the $170s to the $60s?" Because my personal net worth has always been based on the value of Progressive stock, I have 30 years experience with, and interest in, the stock's price. I respond to the question first with an honest, "I don't know." Then I reminisce. In December 1974, Progressive dropped from the $27 per share it sold at in early 1973 to nearly $2 per share, a decline which rendered me insolvent. Since 1974, I have known that inexplicably high prices are possible and can be followed by precipitous price drops. My personal explanation for last year's Progressive stock price gyrations is that after 35 years of being an exciting growth company, Progressive was finally recognized as such. In the euphoria of last year's stock market and despite our comments to the contrary, some assumed we would achieve both the wide profit margins and high growth of the late '90s well into the future. When it became clear that we would sustain neither the margin nor the growth rate during a cyclical auto insurance downturn, the stock price plummeted. Through the efforts discussed above, I believe that we have both the strategy and determination in place to return to more profitable times.

股价：我最常被问到的问题是，“为什么PGR的股价从170多美元跌到60多美元？”因为我的个人净资产一直基于Progressive股票的价值，我有30年的股价经验和兴趣。我首先诚实地回答“我不知道”，然后回忆起1974年12月，Progressive的股价从1973年初的每股27美元跌至接近2美元，这一下跌使我破产。自1974年以来，我就知道，不可思议的高价是可能的，随后可能会出现暴跌。我对去年Progressive股价波动的个人解释是，经过35年的激动人心的成长，公司最终被市场认可了。在去年股市的狂热氛围中，尽管我们曾发表相反评论，有人认为我们将持续实现90年代后期的高利润率和高增长，但当明显看出在周期性汽车保险低迷期我们无法维持这种利润率和增长率时，股价便暴跌。通过上述措施，我相信我们具备了回归更高盈利时期的战略和决心。

It is possible that the many changes implemented in 1999 (e.g., program design, credit vendors, etc.) interacted to cause unanticipated risk selection problems. In 2000, we will focus more on improving what we've developed rather than creating new processes and systems. [Art - pages 20 and 21]

1999年实施的许多变革（例如，方案设计、信用供应商等）可能相互作用导致了未预见的风险选择问题。2000年，我们将更多地专注于改进已开发的内容，而非创建新的流程和系统。 [艺术 - 第20和21页]

The Current Environment

当前环境

Auto insurance is a cyclical business. From 1974 through 1991, the auto insurance industry lost an annual average of 6% in underwriting. During that same period, Progressive made an average 1% underwriting profit. From 1992 through 1998, the auto insurance industry lost only 1% in underwriting, similar to results in the seven years prior to 1974. During that same period, 1992 through 1998, Progressive made an average underwriting profit of 7.9%. It appears that the cycle began to turn again in 1999, meaning that Progressive will have to continue to outperform the industry in order to achieve our targeted 4% underwriting profit. Progressive now competes directly with the largest auto insurance companies in the U.S., most of which are well-capitalized and very experienced. In addition, industry consolidation is underway, which will probably result in fewer, but much stronger, competitors. Multiple-line companies doing business with insurance agents confront increasing competitive disadvantages from the insurers specializing in automobile insurance. Some sold their personal lines business in 1999-more will. This trend could benefit Progressive, which sells more auto insurance through Independent Agents than any other auto insurer. On the other hand, we anticipate greater competition for agent business.

汽车保险是一个周期性行业。从1974年到1991年，整个汽车保险行业的承保平均亏损率为6%，而在同一时期，Progressive实现了平均1%的承保利润。从1992年到1998年，汽车保险行业的承保亏损仅为1%，这与1974年前的七年情况相似；而在1992至1998年期间，Progressive的平均承保利润为7.9%。看起来，1999年周期再次开始转变，这意味着Progressive必须继续跑赢行业，才能实现我们目标中的4%承保利润。Progressive如今直接与美国最大的汽车保险公司竞争，这些公司大多资金雄厚、经验丰富。此外，行业整合正在进行中，可能会导致竞争者数量减少但实力更强。多险种公司与保险代理合作时，面临着来自专注于汽车保险的保险公司的日益增加的竞争劣势。一些公司在1999年出售了其个人险业务——未来还会有更多。这一趋势可能有利于Progressive，因为其通过独立代理销售的汽车保险比其他任何汽车保险公司都多。另一方面，我们预计代理业务的竞争将更加激烈。

Progressive's product and service innovations have changed the competitive landscape. Customers are beginning to expect 24-hour service and the ability to buy when and where it is convenient for them. Customers also want special pricing and coverages to meet their unique needs. Technology presents continuous opportunity and challenge. Much money and energy is being invested to develop new ways to distribute auto insurance over the Internet, as well as new ways to make it easy and inexpensive for consumers to compare prices and other aspects of individual insurer offerings. Technology becomes increasingly critical to everything we do.

Progressive的产品和服务创新改变了竞争格局。客户开始期待24小时服务以及随时随地便捷购买的能力。客户还希望获得专门的定价和保障以满足其独特需求。技术既带来持续的机遇，也带来挑战。大量资金和精力正投入到开发通过互联网分销汽车保险的新方式，以及让消费者便捷且低成本地比较各个保险公司报价和其他方面的新方法。技术在我们的一切工作中变得日益关键。

Personal Lines Business In 1999, we continued to focus on growing our Personal Lines business. Insurance written for private passenger automobiles, motorcycles and recreation vehicles accounted for 93% of Progressive's total net premiums written in 1999. In 1999, Personal Lines net premiums written were $5,702.4 million, an increase of 16% as compared to 1998. The underwriting profit margin was 1.2% in 1999, compared to 7.9% last year. Although we had several significant missteps in 1999, our fundamental strategy remains sound.

个人险业务：1999年，我们继续专注于拓展个人险业务。私人乘用车、摩托车和休闲车保险构成了Progressive1999年总净保费的93%。1999年，个人险净保费为57.024亿美元，比1998年增长了16%。1999年的承保利润率为1.2%，而去年为7.9%。尽管1999年我们出现了一些重大失误，但我们的基本战略依然稳健。

OFFER A CHOICE IN HOW TO BUY Progressive recognizes the importance of providing consumers choices in how to buy based on where, when and how they want it. Accordingly, we continue to pursue a multiple-distribution approach. We view no distribution method through which we sell as superior to any other. No matter whether our customers choose to buy through an Independent Insurance Agent or direct through 1-800-AUTO-PRO(R) or progressive.com, we believe that to get the business we seek, we have to provide the lowest price. Therefore, we identify and market to those groups with the greatest likelihood of buying. We also know that we have to be as efficient as possible. To continue to be successful, we need to be the leader in market innovation. During 1999, one of our more significant achievements was the success we experienced in selling auto insurance over the Internet. By continuing to offer our products for sale in every way in which customers wish to shop, we believe we can achieve our goal of being consumers' number one choice for auto insurance.

提供多种购买选择：Progressive认识到，根据客户希望购买的时间、地点和方式，为消费者提供多种选择的重要性。因此，我们继续采取多渠道分销策略。我们认为，无论通过哪种分销方式销售，都没有哪种方式比其他方式更优。无论客户是通过独立保险代理、拨打1-800-AUTO-PRO®电话还是访问progressive.com直接购买，我们都相信，为了获得我们期望的业务，我们必须提供最低的价格。因此，我们会识别并针对最有可能购买的群体进行营销。我们也知道必须尽可能高效。要继续成功，我们需要成为市场创新的领导者。1999年，我们在通过互联网销售汽车保险方面取得了显著成就。通过以各种客户喜爱的方式持续销售我们的产品，我们相信能够实现成为消费者首选汽车保险公司的目标。

BECOME A RECOGNIZED, TRUSTED BRAND Progressive's brand promotion can be seen in a variety of media in every market where we do business, completing in 1999, our multi-year rollout of our direct distribution option. Despite the fact that we have been the largest seller of auto insurance through Independent Insurance Agents for several years, it is only recently that we have become more of a household name. During 1999, our brand profile with consumers continued to rise. Our awareness measures, particularly our awareness levels with age segments up to 35, an attractive part of our new acquisition range, have all improved. Our advertising, which was initially centered around our promise to give the rates of several of our largest competitors, seems to have resonated well with consumers and earned their trust. During 1999, we attempted several creative directions to build awareness and communicate our size and innovative service features. As our brand strengthened and awareness grew, consumer confidence was expressed in increased conversion rates. We ended 1999 much stronger than we entered, with many lessons learned.

成为公认、值得信赖的品牌：Progressive的品牌推广在我们开展业务的每个市场都通过多种媒体得到了体现，1999年我们完成了多年的直销选项推广。尽管多年来我们一直是通过独立保险代理销售汽车保险的最大卖家，但直到最近，我们才真正成为家喻户晓的名字。1999年，我们在消费者中的品牌形象持续提升。我们的认知度指标——尤其是35岁以下年龄段的认知度，这部分是我们新客户群中颇具吸引力的一环——都有所改善。我们的广告最初围绕承诺提供几家最大竞争对手的费率展开，似乎很好地引起了消费者共鸣，并赢得了他们的信任。1999年期间，我们尝试了几种创意方向来提升认知度并传达我们的规模和创新服务特点。随着品牌加强和认知度提升，消费者信心体现在更高的转化率上。我们以诸多经验教训结束了1999年，状态远胜于年初。

PROVIDE A COMPETITIVE PRICE FOR ALL DRIVERS In 1996, we migrated to a goal to produce a 4% underwriting profit over the entire retention period of a policyholder. In mid-1999, we realized this approach was not consistent with our financial goals. Accordingly, we returned to our historic target of a calendar year 96 combined ratio in Personal Lines, with the intent to achieve that goal within the next few years. One important lesson of migrating to and then from profit targets based on the entire retention period of a policyholder was a better appreciation of the importance of customer retention. Beginning in 1999, we focused on better understanding what actions, in addition to price, we can take to retain our customers longer. While customer retention is an important tenet in our pricing strategy, the end goal is still to capture sufficient information so that we provide the lowest rates possible for all drivers while still earning a reasonable rate of return. We continue to believe that we do this as well as or better than anyone in the industry.

为所有驾驶者提供具竞争力的价格：1996年，我们转向了一个目标，即在保单持有者整个续保期内实现4%的承保利润。到1999年中期，我们意识到这种方法与我们的财务目标不符。因此，我们回归到历史目标——个人险日历年96综合比率，意图在未来几年内实现这一目标。基于整个续保期的利润目标的转变过程中，一个重要的教训是更好地认识到客户留存的重要性。从1999年起，我们开始更深入地了解，除了价格之外，我们还能采取哪些措施以延长客户留存。虽然客户留存是我们定价策略中的重要原则，但最终目标仍是获取足够信息，以便在仍能获得合理回报的前提下，为所有驾驶者提供最低的费率。我们继续相信，我们在这方面的表现与业内任何人相比都是最好或同样优秀的。

BE EASY TO DO BUSINESS WITH We realized early on that, regardless of distribution method, people migrate to the company with the lowest rates. On the other hand, more and more people put a premium on their own time. Accordingly, in addition to providing a low-cost product, we have to be easy to do business with. What does that mean for Progressive? For a multi-distribution company, that means several things. From the Agency side, we must offer simple and reliable software on the desktop of each Agency's customer service representative. In the event that these representatives have a question, they need to be able to contact someone 24 hours a day, 7 days a week for an answer. Waiting until tomorrow is not acceptable. In addition, we are focusing on those Independent Agents who, like Progressive, deliver a superior customer experience at the point of sale. The same principles hold true for our direct operations. When customers call Progressive, either to purchase a policy or ask a question, they want a process that is efficient and customer friendly. Perhaps the most demanding customers are found on the Internet. Used to the control they exercise over the buying process, Internet customers demand a site that is both fast and efficient. To discover the ease of doing business with Progressive, we invite you to call a local agent, call us at 1-800-AUTO-PRO(R) or visit us at progressive.com. Sometimes we have the lowest price. Sometimes we don't. But one thing that is certain, Progressive is always working to ensure that we are easy to do business with.

易于合作：我们早已意识到，无论采用哪种分销方式，人们总会选择费率最低的公司。另一方面，越来越多的人看重自己的时间。因此，除了提供低成本产品外，我们还必须使交易过程变得简单便捷。这对Progressive意味着什么？对于一家多渠道分销公司来说，这意味着多方面要求。从代理方面，我们必须为每位代理客服代表提供简单可靠的桌面软件，以便当他们有疑问时能全天候（24小时、7天）联系到解答人员，不能拖到第二天。此外，我们正在关注那些与Progressive一样，在销售环节提供卓越客户体验的独立代理。对于我们的直销业务，同样原则适用。当客户致电Progressive购买保单或咨询问题时，他们希望获得一个高效且对客户友好的流程。也许最苛刻的客户出现在互联网上，习惯于对购买过程拥有充分控制的互联网客户要求网站既快速又高效。为了让您体验与Progressive合作的便捷，我们邀请您致电当地代理、拨打1-800-AUTO-PRO®，或访问progressive.com。有时我们的价格最低，有时则不然，但有一点是确定的，Progressive始终致力于确保与我们合作变得容易。

FOCUS ON SATISFACTORY CLAIM RESOLUTION FOR CUSTOMERS While most consumers make their purchasing decisions based on the cost of the product, some actually think about the service they will receive in the event they have an accident. A customer that had a claim under a Progressive policy in 1999, would have received an in-person contact within nine hours about 42% of the time. Following this initial contact, the claim representative would have verified coverage, assessed the damage and provided a timely settlement. With five claim call centers open 24 x 7, and over 7,500 claim professionals in 350 field offices, we believe the overall process is as good as any in the industry.

专注于为客户提供令人满意的理赔解决方案：大多数消费者在购买决策时以产品成本为依据，而有些则会考虑在发生事故时能获得何种服务。1999年，一位在Progressive保单下提出理赔的客户中，约42%的情况会在9小时内得到面对面联系。在首次接触后，理赔代表会核实保险范围、评估损失并提供及时赔付。凭借全天候运行的5个理赔呼叫中心以及350个现场办事处中超过7,500名理赔专业人员，我们相信整个理赔流程堪比业内任何一家公司。

As we look forward to 2000, we expect that executing against these five tenets will allow us to move steadily toward our goal of becoming consumers' number one choice for auto insurance.

展望2000年，我们期望通过贯彻这五项原则，使我们稳步迈向成为消费者首选汽车保险公司的目标。

Other Businesses

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 $437.0 million in 1999, compared to $405.5 million the prior year. Pretax operating profit was $41.8 million, compared to $61.9 million in 1998, and return on revenue was 9.6%, compared to 15.3% in 1998.

公司的其他业务线包括为小型商业车队承保保险、为汽车贷款机构和金融机构提供抵押保护和贷款跟踪、为美国银行家协会成员社区银行及独立信用合作社提供董事和高级职员责任及忠诚度保险，以及提供相关的理赔、承保和系统服务。1999年这些业务的收入为4.37亿美元，而前一年为4.055亿美元。税前营业利润为4180万美元，而1998年为6190万美元，收入回报率为9.6%，而1998年为15.3%。

Investments and Capital Management

投资与资本管理

Progressive's investment and capital management goals are first to ensure that there is sufficient capital to support all the insurance premium we can profitably write, and second to maximize our total investment return. Our objectives are to finance growth internally, to sustain an A or better debt rating, to have a lower debt cost than peer companies and to repurchase stock cost effectively. Progressive's senior debt was rated A+ and A2 by Standard & Poor's and Moody's, respectively, at year-end 1999, and our debt to debt plus equity ratio was 27.6%.

Progressive的投资与资本管理目标首先是确保有足够的资本支持我们可获利承保的所有保险保费，其次是最大化总体投资回报。我们的目标是内部融资推动增长，保持A级或更高的债务评级，确保债务成本低于同行，并以成本效益高的方式回购股票。1999年年末，Progressive的高级债务分别被标准普尔和穆迪评为A+和A2，我们的债务占债务加股本比率为27.6%。

During 1999, we did not repurchase shares other than to fulfill obligations under certain employee benefit programs. Over the last ten years, we repurchased 20.8 million split-adjusted shares at an average cost of $20.89. The shares we bought back in the 1990s were purchased for $433 million and were worth $1.5 billion at the end of the decade, an annualized return of 38%, exceeding the S&P 500 index return of 18%. We do not follow a formulaic approach, but consider short- and long-term factors, both technical and fundamental, in deciding whether to repurchase shares. In 1999, some of the important considerations that caused us to hold off buying shares were the excessive capital in the industry and falling auto rate levels. Over the long term, we expect Progressive to be a much larger company and will need the capital we have now, if not more, but we will buy back shares when, in our judgement, we believe it is appropriate.

在1999年，除履行某些员工福利计划的义务外，我们没有回购股票。过去十年中，我们以平均每股20.89美元的价格回购了2080万股调整后股份。我们在1990年代回购的股票总额为4.33亿美元，到十年末市值达到15亿美元，年化回报率为38%，超过标准普尔500指数的18%。我们不采用公式化方法，而是在决定是否回购股票时考虑短期和长期、技术和基本面因素。1999年，促使我们暂停回购股票的重要因素包括行业内过剩的资本和不断下降的汽车费率。从长远来看，我们预计Progressive将成为一家更大的公司，并将需要现有甚至更多的资本，但我们会在认为适当时回购股票。

In March 1999, we successfully issued $300 million of 30-year senior debt at 6.625% in a public offering. We intend to use these funds to pay the $300 million of debt ($150 million at 10% and $150 million at 10.125%) due at the end of 2000.

1999年3月，我们成功发行了3亿美元的30年期高级债券，利率为6.625%，通过公开发售筹集资金。我们计划利用这些资金偿还2000年末到期的3亿美元债务（其中1.5亿美元利率为10%，另一1.5亿美元利率为10.125%）。

At year-end 1999, $4,513.7 million, 70.2% of our total invested assets, were investment-grade, fixed-maturity securities, compared to $4,532.9 million and 79.9% in 1998. Non-investment-grade fixed-maturity securities were $248.0 million, 3.9% of total invested assets, compared to $128.0 million and 2.3% in 1998. The portfolio's duration was 3.0 years at year-end 1999, near the middle of our target range. We earned 3.0% on our fixed-income assets which was a good result relative to other fixed-income managers who had flat or declining total returns caused by the rise in interest rates (five-year government bonds rose 174 basis points from 4.5% to 6.3% in 1999).

截至1999年末，我们总投资资产中有45.137亿美元，占70.2%，为投资级固定到期证券；而1998年为45.329亿美元，占79.9%。非投资级固定到期证券为2.48亿美元，占总投资资产的3.9%，而1998年为1.28亿美元，占2.3%。1999年末投资组合的久期为3.0年，接近我们的目标范围中部。我们的固定收益资产收益率为3.0%，这一结果优于其他固定收益管理者，他们由于利率上升而总回报停滞或下降（1999年五年期国债从4.5%上升174个基点至6.3%）。

We increased our common stock investments during the year to $1,243.6 million, 19.3% of total invested assets, compared to $636.9 million and 11.2% in 1998. A truer representation of our common equity exposure at year end is $1,013.4 million, or 15.8%, which excludes $230.2 million of term trust certificates holding fixed-income investments. Our 11.6% equity return was in line with value oriented active equity managers, but underperformed relative to the Russell 3000's 20.9% because of our underweighting technology stocks throughout the year. Borrowing a terrific quote from Byron Wien at Morgan Stanley, as stated in Barron's, "In my lifetime, we've gone from valuing stocks based on dividends to earnings, to cash flow, and then momentum. Now stocks are priced on possibilities." At Progressive, we never adopted the "momentum" approach and focus on the intrinsic value of a company to invest in more than its "possibilities."

我们在当年将普通股投资增加至12.436亿美元，占总投资资产的19.3%，而1998年为6.369亿美元，占11.2%。更准确地表示我们年末普通股敞口的是10.134亿美元，或15.8%，该数额不包括2.302亿美元的持有固定收益投资的定期信托凭证。我们的11.6%股票回报率与价值导向的主动股票管理者一致，但由于全年低配科技股，相对于Russell 3000的20.9%回报率表现欠佳。引用摩根士丹利Byron Wien在《巴伦周刊》中所说的一句精彩话：“在我有生之年，我们已经从以股息为依据评价股票，到以收益，再到现金流，随后是动量。现在股票的定价基于其可能性。”在Progressive，我们从未采用“动量”方法，而是关注公司的内在价值，以投资于其“可能性”之外的更多价值。

Included in our fixed-maturity and common equity portfolios are $195.8 million, or 3.0%, of other risk assets. These include high yield and distressed debt, private equities and warrants, and mezzanine investments. No individual security in this category comprised more than 1% of Progressive's total investment portfolio. Our total return in this asset class was 7.1%.

我们的固定到期和普通股投资组合中还包括1.958亿美元，即3.0%的其他风险资产。这些包括高收益及困境债券、私募股权及认股权证，以及夹层投资。该类别中没有任何单一证券占Progressive总投资组合的比例超过1%。我们在该资产类别中的总回报率为7.1%。

1999年，Progressive税前投资收入为3.879亿美元，而1998年为3.062亿美元，其中1999年实现收益为4720万美元，而1998年为1140万美元。投资组合的加权平均全税等效账面收益率在1999年和1998年均为6.3%。

Management Transition

管理层转型

We closed the year with another step in management transition. Glenn Renwick was named CEO-Insurance Operations. With Glenn assuming that new role officially on January 1, 2000, and Chuck Chokel already in a comparable position for Investments and Capital Management, the new generation of Progressive leadership is in place and leading the way. I am thrilled to continue to be deeply involved working with Glenn and Chuck as well as our senior staff officers.

我们以管理层转型的又一步结束了这一年。Glenn Renwick被任命为保险运营首席执行官。随着Glenn于2000年1月1日正式担任这一新角色，而Chuck Chokel已在投资与资本管理领域担任类似职务，新一代Progressive领导层已到位并引领未来。我非常激动能继续与Glenn、Chuck以及我们的高级管理人员密切合作。

2000 Focus

2000年重点

Helping customers and claimants resolve the inconvenience, pain and costs associated with automobile accidents is what Progressive is all about. In 2000, we will pursue, with all the energy, creativity and focus that we can bring to it, ways that we can change what we do to improve the claim experience that our customers and claimants have when they have the misfortune to be involved in a loss. We want to produce an even better experience from beginning to end for our customers in every one of their interactions with Progressive.

帮助客户和理赔人解决与汽车事故相关的不便、痛苦和成本是Progressive的核心。2000年，我们将全力以赴，利用所有能量、创造力和专注，探索改变现有做法以改善客户和理赔人在遭遇损失时的理赔体验的方法。我们希望在客户与Progressive的每一次互动中，从始至终都能带来更好的体验。

Like customers for all services and products, auto insurance customers want more information about their opportunities and many more options as to how they can seize those opportunities. Our objective is to make the buying experience with Progressive the easiest, most interesting and gratifying of any auto insurer.

正如所有服务和产品的客户一样，汽车保险客户也希望获得更多关于他们机会的信息，以及更多如何抓住这些机会的选择。我们的目标是使与Progressive的购买体验成为所有汽车保险公司中最轻松、最有趣和最令人满意的。

The Internet has become the market of choice for people ages 18-35. As this age group has the highest propensity to shop for auto insurance, it is a market in which we are most interested. In 1999, Progressive extended its dominance in Internet auto insurance. We are unique in offering consumers the option to buy insurance directly online in 47 states, plus the District of Columbia. During the year, we sold more than $70 million of auto insurance on the Internet (for the year, Internet sales, which either closed directly online or through a customer service representative, represented about 7% of our direct sales), gave over 1 million insurance quotes to consumers, and serviced over 65,000 customers online. For those consumers who prefer buying through an Independent Agent, we provided a quick online way to find a local Independent Agent, which was accessed by consumers over 5,000 times a month during 1999. Through "Personal Progressive" (located at progressive.com) we are able to provide our policyholders a personalized online insurance service center for billing, online payments, policy changes, individualized claim information and vehicle replacement quotes.

互联网已成为18至35岁人群的首选市场。由于这一年龄段的人群具有最高的汽车保险购买倾向，这正是我们最为关注的市场。1999年，Progressive扩大了其在互联网汽车保险领域的主导地位。我们独特地为消费者提供了在47个州及哥伦比亚特区直接在线购买保险的选项。全年，通过互联网销售的汽车保险超过7000万美元（全年互联网销售，无论是直接在线成交还是通过客户服务代表成交，占我们直销业务约7%），向消费者提供了超过100万份保险报价，并为超过65,000名客户提供了在线服务。对于那些偏好通过独立代理购买的消费者，我们提供了一种快速在线查找当地独立代理的方法，1999年该功能每月被访问超过5000次。通过“Personal Progressive”（位于progressive.com）我们为保单持有人提供了一个个性化的在线保险服务中心，涵盖账单、在线支付、保单变更、个性化理赔信息以及车辆更换报价。

We will launch a homeowners product in Arizona in March 2000 and plan to expand to a few additional states during the year. Progressive recognizes that many consumers and agents prefer the convenience of placing their home and auto insurance with the same company. The new product line will also include condominium owners' and renters' insurance policies. We will limit our rollout of these new products to states where the competitive and regulatory environments allow us to charge adequate premiums for the risk and provide reasonable opportunity to achieve an underwriting profit.

我们将在2000年3月在亚利桑那州推出房屋保险产品，并计划在年内扩展到其他几个州。Progressive认识到，许多消费者和代理更青睐于将房屋和汽车保险放在同一家公司办理的便利性。新产品线还将包括公寓业主和租客保险政策。我们将把这些新产品的推广限制在那些竞争和监管环境允许我们为风险收取足够保费并提供合理机会实现承保利润的州。

The Future

未来

We begin 2000 excited about the opportunities that lie ahead yet respectful of the challenges that are implicit in our objectives and strategy. Much will be required to realize our vision. At Progressive, it is always as if we are just beginning our business. We believe the future is brighter than ever.

我们带着对前方机遇的激动，同时也尊重目标和战略中隐含的挑战，迈入2000年。实现我们的愿景需要付出巨大努力。在Progressive，我们总感觉自己才刚刚起步。我们相信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 1999. We are grateful for our shareholders' continued confidence. To the 18,753 men and women who make Progressive a great company, thanks for all your contributions in 1999 and for the promise you bring to our future. Joy, Love and Peace

我们衷心感谢有幸服务的客户。感谢您的支持。感谢1999年与Progressive合作的30,000多名独立保险代理。我们也感谢股东们持续的信任。致使Progressive成为优秀公司的18,753位男士和女士，感谢你们在1999年的所有贡献以及你们为我们的未来带来的希望。

欢乐、爱与和平。