What a difference a year makes--after reporting unacceptable results last year, we are pleased to report record operating income of $485.5 million in 2001. More importantly, we've made substantial progress on every front toward making Progressive consumers' #1 choice for auto insurance. In last year's letter, Chairman and long-time CEO Peter Lewis reflected on his experience with past insurance cycles:  

多么不同的一年啊——在去年报告了令人无法接受的业绩之后，我们很高兴地宣布 2001 年创纪录的营业收入达到 4.855 亿美元。更重要的是，我们在各个方面都取得了重大进展，朝着使 Progressive 成为消费者首选汽车保险公司的目标迈进。正如去年信中，董事长兼长期首席执行官彼得·刘易斯回顾过去保险周期的经历时所说：

"Increasing rates before competitors do slows growth and causes our competitors to grow faster. While not growing, we fix the processing problems that always arise during previous periods of fast growth and change. Some competitors grow faster while both their underwriting results and customer service deteriorate. Then competitors finally raise rates and restrict acceptances to stem their losses. When this has happened, because Progressive's rates had been adequate and our operations were running smoothly, we grew, usually quite profitably. We will soon learn whether this long-time dynamic still operates."  

“在竞争对手之前提高费率会放缓增长，并导致竞争对手增长更快。在不增长的同时，我们解决了以往快速增长和变革期间总是出现的流程问题。有些竞争对手增长更快，但他们的核保结果和客户服务却在恶化。随后，竞争对手最终提高费率并限制承保以遏制亏损。当这种情况发生时，由于 Progressive 的费率一直足够且运营平稳，我们反而实现了增长，通常非常盈利。我们很快就会了解到这种长久以来的动态是否仍在起作用。”  

The first phase of this market dynamic appears to be playing out as expected. During 2001, we closely monitored our rates and continued to demand rate adequacy in every market and product. Our focus was on restoring operating margin. While the growth in policies in force was less than we would have liked, we ended 2001 with an underwriting margin of 4.8%, in line with our most important goal of a 4% underwriting profit. By year end, we were reporting stronger growth rates and if this trend continues, we look forward to, and feel prepared for, the second phase of the cycle--profitable growth.  

这种市场动态的第一阶段似乎正如预期般展开。2001 年，我们密切监控费率，并持续要求每个市场和产品的费率充足。我们的重点在于恢复营业利润率。尽管有效保单的增长未达预期，但我们在 2001 年以 4.8% 的核保利润率结束，符合我们 4% 核保盈利这一最重要目标。年终时，我们报告了更强劲的增长率；如果这一趋势得以延续，我们期待并已做好迎接周期第二阶段——盈利性增长的准备。

FAST, FAIR, BETTER  That's what you can expect from Progressive. Everything we do recognizes the needs of busy consumers who are cost-conscious, increasingly savvy about insurance and ready for easy, new ways to quote, buy and manage their policies, including claims service that respects their time and reduces the trauma and inconvenience of loss.  

快捷、公平、更优——这就是你对 Progressive 的期待。我们所做的一切都关注那些忙碌、精打细算、对保险日益精明的消费者，他们渴望简单、创新的方式来获取报价、购买和管理保单，包括尊重其时间、减少损失带来创伤和不便的理赔服务。

I expect this proposition will give added meaning to our brand line of "Not what you'd expect from an insurance company--well, maybe you should."  

我期望这一主张将为我们的品牌标语——“这不是你对保险公司的传统印象——嗯，也许你应该重新认识”——增添更深的内涵。

The inclusion of the direct acquisition channel, with its substantial up-front costs, is the most dramatic change, but each change has significant and important implications for achieving our goals. The diversity of channel and product gives Progressive an unlimited ability to meet the needs of consumers shopping for auto insurance. However, each business area must meet very specific and different profitability targets, so that the balanced blend meets our 4% underwriting profit goal. Attempts to change the goals to reflect the new business opportunities in 1998 led us to suboptimal decisions. In 2000, we decided the business model must fit our goals, and during 2001, we have become even clearer in the determination of individual product targets.  

直接获客渠道的加入，尽管伴随着巨额前期投入，是最显著的变化，但每项变革对于实现我们的目标都具有重大而重要的意义。渠道和产品的多样性使 Progressive 拥有无限可能去满足消费者在购买汽车保险时的需求。然而，每个业务领域都必须达到非常具体且不同的盈利目标，从而使整体组合平衡并满足我们 4% 的核保利润目标。1998 年试图调整目标以反映新业务机遇的尝试让我们做出了次优决策。2000 年，我们决定商业模式必须符合我们的目标，而在 2001 年，我们对各产品单独目标的确定则更加明确。

Insurance Operations  

保险运营  

Progressive's Personal Lines earned premium increased 11% to $6.5 billion for 2001, with a 4% increase in auto policies in force and a GAAP combined ratio of 95.5. In 2000, we made organizational changes that allow us to understand and advance each of our two distribution systems--independent agents and direct to the consumer; 2001 marks the first full year of operating with these changes. I am very pleased to report that this structure has produced the desired focus within channel, and enhanced opportunities for leveraging technology and increased brand opportunities for our agents and business partners. We strive to provide the best product possible in each channel, allowing consumers to choose how they do business with us.  

2001 年，Progressive 个人保险业务的已赚保费增长 11% 至 65 亿美元，有效保单增加 4%，并实现 GAAP 综合赔付率 95.5。2000 年，我们进行的组织变革使我们能够更好地理解并推动独立代理和直销两大分销体系；2001 年是这项变革下的第一个完整运营年度。我非常高兴地报告，这一结构已在各渠道内实现所期望的专注度，并为我们的代理及业务合作伙伴提供了利用技术和扩展品牌机会的良好平台。我们努力在每个渠道提供最佳产品，让消费者自主选择与我们合作的方式。

AGENT OPERATIONS  

代理业务  

The Agent business produced earned premium of $4.7 billion, up 1% over 2000, with a 1% decrease in auto policies in force. The discipline to improve operating margin and get to rate adequacy came at the expected cost of low unit growth. The 94.7 combined ratio for the business was remarkable and the largest part of our profit turnaround. The decline in policies in force was more pronounced in the early part of the year, with substantial recovery as competitors began taking rates up, started becoming more restrictive or even withdrawing. We achieved a profitable year in nine of our top ten states, while experiencing significant challenges in New York, Florida, California, Georgia and Louisiana.  

代理业务的已赚保费达到 47 亿美元，比 2000 年增长 1%，而有效保单则减少了 1%。为改善运营利润率并实现费率充足所采取的严格措施，以预期中的低单元增长为代价。该业务 94.7 的综合赔付率非常出色，是我们利润转机中最大的贡献因素。有效保单数量在年初下降更为明显，但随着竞争对手陆续提高费率、变得更为严格甚至退出市场，情况有了显著恢复。在我们排名前十的州中，有九个州实现了盈利，而在纽约、佛罗里达、加利福尼亚、佐治亚和路易斯安那则面临重大挑战。

Our strategy of technology leadership in the Agent business, much of it leveraging the Internet, advanced nicely during the year. Notable achievements include close to full implementation of our paper-free relationship strategy with agents in several states, an increasing number of policy endorsements performed online by the agent versus Progressive's Policy Services group, a substantial number of policies completely underwritten at the point of sale with all underwriting data validation checks performed and a growing number of policyholders electing an installment plan choosing electronic funds transfer. We work closely with agent advisors in defining our agent technology strategy, and share with them a goal to have technology be a significant driver of lower overall cost and increased flexibility for product changes. Our attention will remain focused in this area.  

我们的代理业务技术领导战略（其中大量依赖互联网）在今年取得了良好进展。值得一提的成就包括在多个州与代理全面实施无纸化合作战略、代理通过在线方式完成保单批注数量不断增加（相对于 Progressive 政策服务组）、大量保单在销售现场完全通过核保数据验证完成核保，以及越来越多保单持有人选择通过电子转账的分期付款计划。我们与代理顾问密切合作，共同制定代理技术战略，并与他们分享目标，即通过技术大幅降低整体成本并提升产品变更的灵活性。我们的关注点将继续集中在这一领域。

DIRECT OPERATIONS  

直销业务

The important objective in 2001 was for the Direct business to record a combined ratio under 100. With a substantial book of renewal customers, sufficient scale in call center operations and media buying, and a substantial and growing brand awareness, the business has matured such that calendar year profitability is now expected. The Direct business produced earned premium of $1.8 billion, up 46% over 2000, and increased auto policies in force by 18%. The 97.7 combined ratio, which was 12.8 points better than last year, and the continued improvement in expense ratio to 25.9 for 2001 are extremely encouraging.  

  

2001 年直销业务的一个重要目标是实现综合赔付率低于 100。拥有大量续保客户、充足的呼叫中心运营和媒体采购规模，以及日益增长的品牌认知度，直销业务已经成熟到预计实现整年度盈利。直销业务的已赚保费达到 18 亿美元，比 2000 年增长 46%，有效保单增加 18%。97.7 的综合赔付率，比去年好 12.8 个百分点，加上 2001 年费用率持续改善至 25.9，都极为令人鼓舞。

During the year, we introduced a new advertising campaign we call "High Expectations," providing examples in noninsurance encounters of the high expectations that Progressive customers have come to expect as a result of doing business with us. The advertising successfully generated an increasing number of calls and online quotes. We expense all advertising costs as incurred and do not defer either the development costs of new creatives or the media placements. Our net investment in establishing this business over the last eight years has been fully accounted for in operating results. We look forward to significant contributions to profitable growth.  

在今年期间，我们推出了一项名为“高期待”的新广告活动，在非保险场景中展示了 Progressive 客户因与我们合作而对我们产生的高期待。该广告活动成功带来了越来越多的咨询电话和在线报价。所有广告费用均按发生时费用化，并未将新创意开发成本或媒体投放费用递延。过去八年中，我们在业务建立上的净投资已全面反映在经营业绩中。我们期待这一业务对盈利性增长作出重大贡献。

Our Internet quoting, buying and servicing capabilities continue to lead the industry and gain favor with consumers. We believe our success with the Internet business model was a function of great technology, supported by established call centers for those consumers who start their experience on the Web and wish to finish with an in-person consultation. Predictably, more consumers are becoming more comfortable with the Internet for a variety of products and we see increasing usage for all insurance transactions. We are designing our newer innovations with the next generation of buyer in mind and it is clear the next generation is markedly different in their use and expectations of Web-delivered products. We are very pleased and see tremendous potential in this arena.  

我们的互联网报价、购买和服务能力继续引领行业，深受消费者青睐。我们相信，互联网商业模式的成功源于卓越的技术，再加上成熟的呼叫中心支持，使那些在网上开启体验后又希望得到面对面咨询的消费者得到充分满足。不出所料，越来越多的消费者对各种产品使用互联网越来越得心应手，我们看到所有保险交易的使用率都在上升。我们在设计新型创新产品时已考虑到下一代消费者，显然下一代消费者在使用和对网络产品的期望上有着显著不同。我们对此领域非常满意，并看到巨大的发展潜力。

ELECTRONIC TRANSACTIONS FOR EVERYTHING  

“一切电子化交易”  

Imagine you were in Houston after Tropical Storm Allison hit in June 2001, and you got an e-mail from Progressive saying, "We hope things are OK, but based on your location and flood patterns, we expect you may have had a loss." The e-mail included claim reporting information and some helpful tips for avoiding damage to your car in flood conditions. Progressive sent almost 4,100 e-mails and paid over 6,000 weather-related claims last June in Texas, in our single greatest catastrophe loss ever. Almost 50% of our claims were settled in three weeks and 90% were settled in 50 days. Many people who were safe from harm e-mailed back to say, "Thanks for asking about us!" Not what you'd expect from an insurance company--well, we think you should.  

试想，2001 年 6 月热带风暴艾莉森袭击后，你在休斯顿收到了 Progressive 发来的一封电子邮件，内容写道：“我们希望您一切安好，但根据您的所在地及洪水模式，我们预计您可能遭受了损失。”邮件内包含了理赔报告信息及一些在洪涝条件下避免车辆损伤的有用提示。去年六月，在德州，我们曾发出近 4,100 封电子邮件，并支付了超过 6,000 笔与天气相关的理赔，这是我们至今经历的最严重灾害损失。在三周内，我们的理赔中近 50%已结案，90%在 50 天内解决。许多未受损害的人也回邮说：“谢谢你们关心我们！”这可不是你对传统保险公司的印象——好吧，我们认为你应该如此期待。

END-TO-END DESIGN  

端到端设计  

Suppose you report an accident at nine o'clock on Sunday night. Your car is damaged, but drivable and nobody is hurt. Now what happens? You are offered Immediate Response® claims service, the opportunity to choose your own repair shop or, in several locations, a new alternative we are testing. Imagine this...You're asked, "When would it be convenient for you to drop your car off-- perhaps 7 a.m. tomorrow on your way to work?" We will transfer your personal items, including that often forgotten garage door opener, to your courtesy car, which is there waiting for you. You carry on, business as usual, while we arrange and oversee the repairs of your vehicle until the beeper we provide you alerts you your car is ready for pick up. When you return, we will go over the repairs made by the selected body shop with you and, when satisfied, you pay your deductible and leave with a guarantee on the work for as long as you own the vehicle. Total elapsed time--as fast as possible, because we select a qualified shop that's ready to start work immediately. Total commitment of your time -- less than 20 minutes, plus drive time, because we follow your car until it's repaired to our satisfaction--and yours. Not only do we think it's a great new way to handle vehicle damage claims, but so do over 10,000 consumers who have been involved in our testing. We plan expansion when we have achieved specific prototype acceptance criteria. Not what you'd expect from an insurance company -- well, maybe you should.  

假设你在周日夜里九点报了事故，你的车受损但还能行驶，且无人受伤。那么接下来会发生什么？我们将为你提供“即时响应®”理赔服务，给你机会选择你自己的修理店，或在部分地区试行一种全新选择。想象一下……你会被问到：“您明天上班途中什么时候送车较方便——也许是早上 7 点？”我们会将你的私人物品（包括常常被遗忘的车库遥控器）转移到为你准备的代用车上。你照常出行，而我们负责安排和监督你车辆的修理，直至我们提供的提醒器告知车辆可以提取。你返回后，我们会与你一起核对所选车身修理厂完成的修理工作，待你满意后，再收取你的免赔额，并附带车辆全生命周期的修理保障。总耗时尽可能短，因为我们会选择一家资质合格且能立即开始工作的修理厂；你总共只需投入不到 20 分钟的时间，加上车程时间，因为我们会全程跟进，确保你的车修好达到我们的标准——也达到你的要求。不仅我们认为这是处理车辆损坏理赔的全新绝佳方式，参与测试的超过 10,000 名消费者也持此看法。当达到特定原型验收标准时，我们计划进一步扩展。不是你对保险公司的常规印象——嗯，也许你应该。

CUSTOMER RETENTION  

客户保留  

I've challenged Progressive people to take the loss of a Progressive customer personally. We've created a level of self criticism that demands change to existing procedures and reorientation to customer-centric training and measurement. Many things have changed and will continue to change as a result. We can now measure the retention impact of alternative claims handling solutions. If a customer requests policy cancellation, we are now probing much more deeply into the reasons for their decision with the hope of providing alternative solutions. We predict events that may result in policy cancellations in order to anticipate customer needs. The list of opportunities is long and detailed, reflecting a growing culture of customer preservation and detailed analysis of reasons for customer loss.  

我曾向 Progressive 的员工发出挑战——对待每位 Progressive 客户的流失都应有切身之痛。我们已培养出一种自我批评的文化，要求改变现有流程，并重新聚焦于以客户为中心的培训及衡量。由此带来了许多改变，并将持续推动更多变革。我们现在可以衡量不同理赔处理方案对客户保留率的影响。如果客户申请取消保单，我们将更深入地探究其决定背后的原因，期望提供替代方案。我们还会预测可能导致保单取消的事件，以便提前响应客户需求。机会清单既长且详细，反映出一种日益增强的客户维护文化和对客户流失原因的深入分析。

Progressive's Financial Policies  

Progressive 的财务政策  

*UNDERWRITING  

*核保  

Risk—Failure to grow earned premium and earn a 96 combined ratio  

Policies—  

A. Pursue short-tailed, high-frequency, low-severity opportunities  

A. 寻求短尾、高频、低损失率的机会  

B. Use multiple insurance companies to maintain flexibility  

B. 利用多家保险公司以保持灵活性  

C. Establish growth and profitability targets by term and channel  

C. 按期限和渠道设定增长及盈利目标  

D. Set rates that reflect claim costs, acquisition costs and retention  

D. 设定费率以反映赔付成本、获取成本及客户保留  

E. Ensure loss reserves are adequate and develop with minimal variance  

*INVESTING  

*投资  

Risk—Failure to maintain portfolio liquidity and build wealth  

Policies—  

A. Diversify portfolio with liquid asset classes  

A. 以高流动性资产类别分散投资组合 

B. Use fixed income to cover operating liabilities and contingencies  

B. 使用固定收益资产覆盖经营负债及突发状况  

D. Manage interest rate, default, prepayment and concentration risk  

D. 管控利率、违约、提前还款及集中度风险  

E. Recognize capital gains and losses to promote tax efficiency  

*FINANCING

*融资   

Risk—Failure to pay obligations and earn our cost of equity capital  

Policies—  

A. Keep premium-to-surplus below 3:1 for each insurance company  

A. 保持每家保险公司的保费与盈余比例低于 3:1  

B. Maintain debt between 20% and 30% of total capital at book value  

B. 按账面价值保持债务占总资本的比例在 20%-30%之间  

C. Pay modest, increasing cash dividends to shareholders  

C. 向股东支付适度且逐步增加的现金股息  

D. Split stock to maintain target $50 share price if price exceeds $100  

D. 当股价超过 100 美元时进行股票拆分以维持目标 50 美元股价  

E. Neutralize dilution from stock options with periodic share repurchases  

E. 通过定期回购股票来中和因股票期权带来的稀释效应

We ended 2001 with an $8.2 billion investment portfolio, up from $7.0 billion last December. Our portfolio size grew due to strong cash flows from operations and proceeds from a $350 million debt issuance in December 2001. We constrain our use of capital by requiring ourselves to produce an excellent return on it. Our return on average shareholders' equity was 13.5% for the year and 12.6% over the past five years. Similar to our review of the underwriting business, our review of investing practices has led us to eliminate certain investment practices and change others. Our asset allocation at year end was 84% fixed income, managed largely by Progressive Capital Management, and 16% common stock, largely managed to track the Russell 1000 index. We achieved a 5.9% fully-taxable equivalent total return for the year.  

我们在 2001 年末以 82 亿美元的投资组合结束，与去年 12 月的 70 亿美元相比有所增长。我们的投资组合规模增长源于强劲的经营现金流以及 2001 年 12 月 3.5 亿美元债券发行所得。我们要求自己在利用资本时必须获得卓越回报，以此来约束资本的使用。全年的平均股东权益回报率为 13.5%，过去五年为 12.6%。类似于我们对核保业务的审查，我们对投资实践的审查使我们淘汰了某些投资做法，并改变了其他做法。截至年末，我们的资产配置为 84% 固定收益（主要由 Progressive Capital Management 管理）和 16% 普通股（主要以跟踪 Russell 1000 指数为目标管理）。我们实现了 5.9% 的税前等值总回报。

We stated last year that we would repurchase shares when our capital position, view of the future and the stock's price make it attractive to do so. During the year, we repurchased 932,234 shares and ended the year with 73.4 million shares outstanding versus 73.5 million last year.  

我们去年曾表示，当我们的资本状况、对未来的展望以及股票价格达到吸引力条件时，会进行股票回购。全年中，我们回购了 932,234 股，并以 7340 万股流通在外结束本年度，相较去年 7350 万股略有减少。

PROGRESSIVE IS SPECIAL because our objectives are demanding and hard to achieve, particularly all of them every year, and we aspire to ever increasing levels of performance.  

Progressive 很特别，因为我们的目标既苛刻又难以实现，尤其是每年都要全面达成，我们渴望不断提高业绩水平。

To become consumers' #1 choice in auto insurance requires people who enjoy working hard, growing constantly, performing well and being rewarded competitively in an environment of ever-improving business skills and science with superior technology implementation and a genuine desire to create a better consumer proposition. As we start 2002, I am proud to report this is my assessment of the 20,442 Progressive people who make our future brighter than ever.  

要成为消费者首选的汽车保险公司，需要的是乐于努力工作、不断成长、高效表现并在业务技能和科技不断进步的环境中获得具有竞争力回报的人才，这些人拥有出色的技术执行力和创造更优消费者价值主张的真诚愿望。随着 2002 年的开启，我自豪地报告，我对 Progressive 的 20,442 名员工做出了这样的评价——正是你们使我们的未来比以往更加光明。

We deeply appreciate the customers we are privileged to serve. Thank you for your business. Thanks to the agents and service representatives in the more than 30,000 Independent Insurance Agencies who did business with Progressive in 2001. We are grateful for our shareholders' continued confidence. To the men and women who make Progressive a great company, thanks for all you do each day and for all we have accomplished together in 2001.  

我们衷心感谢那些我们有幸服务的客户。感谢您对我们的信任与支持。也感谢 2001 年与 Progressive 合作的 30,000 多家独立保险代理机构中的代理人和服务代表。我们感激股东们一直以来的信任。致所有使 Progressive 成为一流公司的男女同仁，感谢你们每天所付出的努力以及我们在 2001 年共同取得的成就。

/s/Glenn M. Renwick

Glenn M. Renwick

President and Chief Executive Officer