Progressive Continues to Battle Headwinds in Fourth Quarter

Progressive continued to battle headwinds in the fourth quarter, as the personal auto space appears to be exiting the pandemic in much worse condition than it entered. Still, the narrow-moat company produced a 19% ROE for the year, with this year’s ROE coming in back in line with Progressive’s historical average, after a few years of outsized returns. But this was largely driven by $1.5 billion in realized investment gains, as underwriting profitability saw a significant decline through the year. We will maintain our $79 fair value estimate.