The Progressive Corporation is a holding company and does not have any revenue producing operations of its own. Its insurance subsidiaries and affiliates (together with The Progressive Corporation, the “Company”) provide personal automobile insurance and other specialty property-casualty insurance and related services throughout the United States. The Company’s Personal Lines segment writes insurance for private passenger automobiles and recreation vehicles through both the independent agency channel and the direct channel. The Company ranks third in the U.S. private passenger auto insurance market, based on net premiums written, with an estimated 7% market share.
Progressive Corporation 是一家控股公司，本身不从事任何创收业务。其保险子公司和附属机构（连同 Progressive Corporation 统称为“公司”）在全美范围内提供个人汽车保险以及其他专业财产与意外保险及相关服务。公司的个人保险业务部门通过独立代理渠道和直接渠道销售私家车及休闲车保险。按净保费计算，公司在美国私家车保险市场中排名第三，预计市场份额约为 7%。
Although there are over 300 insurance companies/groups with annual premiums greater than $5 million competing in this $150 billion market, the top 10 insurance groups account for approximately 60% of the premiums written. The Company expects that the market will continue to consolidate with the top 15 or 20 companies growing at the expense of the smaller ones, which may not have sufficient resources to invest in the technologies and systems necessary to remain cost competitive. The Company is the number one writer of private passenger auto insurance through independent agencies and the number three writer in the direct channel, based on net premiums written in the United States. The Company also competes in the U.S. commercial auto insurance market where it is the third largest carrier with about 5% market share. The Company’s Commercial Auto segment writes insurance for automobiles and trucks owned by small businesses primarily through the independent agency channel.
尽管在这个 1500 亿美元的市场中，有超过 300 家年保费超过 500 万美元的保险公司或集团参与竞争，但排名前 10 的保险集团约占总保费的 60%。公司预计，市场将持续整合，排名前 15 或 20 的公司将以小型公司的牺牲为代价实现增长，而后者可能缺乏足够资源来投资保持成本竞争所必需的技术和系统。按美国净保费计算，公司在独立代理渠道中是私家车保险的头部承保人，而在直接渠道中则位列第三。公司还参与美国商业车险市场，按直接保费计算为第三大承保人，市场份额约为 5%。公司的商业车险业务主要通过独立代理渠道为小型企业拥有的汽车和卡车提供保险。
The holding company receives cash through borrowings, equity sales, subsidiary dividends and other transactions, and may use the proceeds to contribute to the capital of its insurance subsidiaries in order to support premium growth, to repurchase its Common Shares, to pay interest on or to retire its outstanding indebtedness, to pay dividends and for other business purposes. In addition, the Company has $1.4 billion of readily marketable securities in a non-insurance subsidiary that can be used to satisfy the holding company’s obligations. The Company did not issue any debt or equity securities during 2003, but repaid $200 million of notes in January 2004.
控股公司通过借款、股权销售、子公司分红及其他交易获得现金，并可能利用这些资金向其保险子公司注资，以支持保费增长、回购普通股、支付利息或偿还未偿债务、支付股息以及用于其他商业目的。此外，公司在一家非保险子公司持有 14 亿美元的易变现证券，可用于满足控股公司的义务。2003 年期间，公司未发行任何债务或股权证券，但于 2004 年 1 月偿还了 2 亿美元的票据。
On a consolidated basis, the Company generated positive cash flows of $2.4 billion in 2003, portions of which were used during the year to repurchase 5.0 million Common Shares (average cost of $64.00 per share) and to construct two call centers and an office building, as well as lease additional space to support our growing operations. The Company leased 12 additional Claims Service Center sites during the year. These sites, which are designed to provide end-to-end resolution for auto physical damage losses, are expected to improve efficiency, increase accuracy, reduce rework, improve repair cycle time and provide greater brand distinction. The Company continues to evaluate the operating performance and cost parameters of these sites to validate their effectiveness.
合并来看，公司 2003 年实现了 24 亿美元的正向现金流，其中部分资金用于当年回购 500 万股普通股（平均每股 64.00 美元）、建设两个呼叫中心和一座办公楼，以及租赁额外场所以支持不断扩大的业务。公司当年还租用了 12 个额外的理赔服务中心地点。这些中心旨在为汽车物损理赔提供端到端解决方案，预计将提升效率、提高准确性、减少返工、缩短维修周期，并增强品牌辨识度。公司将继续评估这些中心的运营表现和成本指标，以验证其有效性。
The Company’s goal is to grow as fast as possible, constrained only by its objective to produce an aggregate calendar year 4% underwriting profit and its ability to provide high quality customer service. The Company had a successful 2003 with a 26% increase in net premiums written, an underwriting profit of 12.7% and net income of $1.26 billion. The Company continued to reap the benefits of the profitable growth phase of this insurance cycle and further benefited from the lowest level of automobile accident frequency experienced by the industry in recent history. Rate adequacy, improved customer retention and new business growth contributed to 2003’s growth. Policies in force grew 19%. The Company performed over 200 rate and program revisions, which were designed to maintain rate adequacy and reflect the most accurate estimate of prospective loss costs based on available information. The Company’s commitment to constrain growth if it is unable to maintain service quality was demonstrated during 2003, when the Company imposed constraints on growth in Texas. During the constraint period, the Company increased the number of employees in the Texas claims organization by approximately 16%, relocated claims managers to Texas, reduced turnover and responded to a sizeable weather-related catastrophe, allowing the Company to relax the constraints by mid-year. Although the Company expects the year-over-year percentage growth to decline in 2004, it believes it is still in a position to grow at a rate which is well in excess of the industry growth rate. Future growth will be constrained by the Company’s most current assessment of claims handling quality. The Company does not expect claims to hinder growth in 2004 since the Company is comfortable with its claims handling quality, as indicated by the Company’s internal audit of claims files, and increased staff during 2003 to enhance capacity.
公司的目标是在确保全年核保利润率达到 4% 以及持续提供高质量客户服务的前提下，实现尽可能快的增长。2003 年，公司取得了成功，净保费增长 26%，核保利润率达到 12.7%，净收入为 12.6 亿美元。公司继续受益于本保险周期盈利增长阶段，同时也得益于行业近年来经历的最低汽车事故频率。费率合理性、客户保留率提高及新业务增长共同推动了 2003 年的业绩，有效保单数增长了 19%。公司进行了 200 多次费率和方案调整，旨在维持费率合理性，并基于现有信息反映未来赔付成本的最准确估计。2003 年期间，公司在无法维持服务质量时对增长进行约束的承诺得到了体现，公司对德克萨斯州业务实施了增长限制。在限制期间，公司将德州理赔组织的员工人数增加了约 16%，将理赔经理调往德州、降低员工流失率，并成功应对了一场重大天气灾害，使公司在年中得以放宽限制。虽然公司预计 2004 年同比增长率将有所下降，但仍认为其增长速度远超行业平均水平。未来的增长将取决于公司对理赔处理质量的最新评估。根据内部理赔档案审计结果以及 2003 年增加的人员配置，公司预计理赔问题不会在 2004 年阻碍增长。
In 2003, the Company achieved underwriting profitability in all of the Personal Lines markets where it writes business, with only five states not meeting or exceeding its 4% underwriting profit objective (these states represented 8% of the Personal Lines premiums written). In Commercial Auto, five states, out of the 42 markets in which we conduct business, were unprofitable (these states represented less than 6% of the Commercial Auto premiums written). The Company will remain focused on maintaining rate stability and allow anticipated increases in trend to bring the Company’s underwriting margins closer to its 4% underwriting profit objective over time.
2003 年，公司在开展业务的所有个人保险市场中均实现了核保盈利，仅有 5 个州未达到或超过 4% 的核保利润目标（这些州占个人险保费的 8%）。在商业车险方面，在我们经营的 42 个市场中，有 5 个州未能盈利（这些州占商业车险保费的比例不足 6%）。公司将继续致力于保持费率稳定，并利用预期趋势的上升，使公司的核保利润率逐步接近 4% 的目标。
The Company realized a modest increase in customer retention year-over-year. The Company continues to focus on retention, but expects external factors, such as the softening of the market, to play a role. Given its strong underwriting margins, the Company is in a position to focus on retaining customers and to introduce new product improvements faster.
公司实现了客户保留率的适度同比增长。公司持续关注客户保留，但预期外部因素（如市场疲软）也会发挥一定作用。鉴于其强劲的核保利润率，公司有能力专注于留住客户，并更快推出新产品改进。
Loss reserves developed favorably during 2003, with 1.5% favorable prior period development. This level of reserving accuracy allows the Company to have solid pricing data, which helps ensure rate adequacy. The majority of the favorable reserve runoff was driven by the assigned risk development (discussed further in the “Loss and Loss Adjustment Expense Reserves” subsection). The Company’s loss ratio also benefited from continued favorable accident frequency. Frequency rates have declined over the past four quarters for all coverages, compared to the same quarter of the prior year, with the exception of personal injury protection, although the magnitude and sequential direction have varied by coverage. These trends are similar to industry trends. The Company cannot predict if these recent trends will continue and, therefore, will consider past trend in its rate evaluation to ensure rates remain adequate.
2003 年，公司实现了 1.5% 的以往期间赔付准备金利好发展。这种准备金评估的准确性为公司提供了坚实的定价数据，有助于确保费率合理性。大部分有利的准备金释放主要源于分配风险发展（详见“赔付及理赔费用准备金”小节）。公司的损失率也得益于持续较低的事故频率。与上一年同一季度相比，过去四个季度内除个人伤害保护外，所有险种的事故发生率均有所下降，尽管不同险种的降幅和递减趋势有所差异。这些趋势与行业整体趋势相似。公司无法预测这些近期趋势是否会持续，因此，在费率评估中将考虑过去的趋势以确保费率持续合理。
The investment environment in 2003 was more favorable than in 2002. The economy improved, resulting in stronger valuations for stocks, modestly higher U. S. Treasury yields and generally lower risk premiums for non-U. S. Treasury bonds. The Company maintained its asset allocation discipline of investing approximately 15% of the total portfolio in common equities and 85% in fixed-income securities. Both asset classes produced positive total returns, with stocks rebounding sharply. In the fixed-income portfolio, the Company kept its exposure to interest rate risk low and credit quality high. During the year, the fixed-income portfolio duration ranged from just under 3 years to 3.3 years at the end of 2003, and the weighted average credit rating ranged from AA to AA+. Substantial cash flows from operations and positive investment returns contributed to strong portfolio growth. With the interest rates low in all fixed-income sectors, the Company plans to maintain its strategy to hold short-duration, high-quality securities. The Company continues to believe that the underwriting business remains the most attractive place to invest its capital.
2003 年的投资环境较 2002 年更为有利。经济改善使得股票估值上升，美国国债收益率略有提高，且非美国国债的风险溢价普遍较低。公司坚持资产配置纪律，总投资组合中大约 15% 投资于普通股，85% 投资于固定收益证券。两类资产均实现了正向总回报，其中股票市场强劲反弹。在固定收益组合中，公司将利率风险敞口保持在较低水平，同时确保信用质量较高。全年固定收益组合的久期从略低于 3 年到 2003 年底的 3.3 年不等，且加权平均信用评级维持在 AA 至 AA+ 之间。充足的经营现金流和积极的投资回报促成了投资组合的强劲增长。鉴于所有固定收益领域的利率均较低，公司计划继续采取持有短久期、高质量证券的策略。公司依然认为，核保业务仍是投资资本最具吸引力的领域。
The Company continues to believe that the underwriting business remains the most attractive place to invest its capital.
公司继续坚信，核保业务依然是投资资本最具吸引力的领域。