Progressive Earnings: Underwriting Profitability Dinged by Adverse Reserve Development

Over the past year, personal auto insurers have struggled with a number of negative claims trends. This has pushed most of Progressive’s peers into recognizing significant underwriting losses. While not completely immune to these trends, narrow-moat Progressive has materially outperformed peers during this period. The first quarter, however, marked a bit of a stumble on this front, as adverse reserve development dinged the company’s underwriting profitability. Still, we remain comfortable with our $107 fair value estimate, which we will maintain.