Progressive Earnings: Underwriting Results Improve

Narrow-moat Progressive's fourth-quarter results show the company continuing to make good progress in improving its underwriting results. With its peers still struggling, Progressive is in a strong position currently, and we think the company's recent performance supports our favorable view of management. We maintain our $114 per share fair value estimate and see Progressive's shares as being materially overvalued. In our view, the current market price suggests the company's long-term returns will be substantially higher than its historical results, and we don't see a solid basis for that view. We appreciate that the insurer is currently operating from a position of relative strength but see that as a temporary situation.