Company Reports

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns; however, it has experienced fairly dramatic volatility as the auto insurance industry has been on a rollercoaster ride since the start of the pandemic.

Progressive has benefited from strong positioning and favorable industry conditions over the past couple of years. While second-quarter results remained strong, we see signs that tailwinds are starting to ebb.

Progressive continued to generate strong profitability in the first quarter, but growth is slowing as industry conditions start to normalize.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns; however, it has experienced fairly dramatic volatility as the auto insurance industry has been on a rollercoaster ride since the start of the pandemic.

Progressive's fourth-quarter 2025 results show the company continued to generate strong profitability, but its relative advantage may be weakening as industry conditions stabilize.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns; however, it has experienced fairly dramatic volatility as the auto insurance industry has been on a rollercoaster ride since the start of the pandemic.

Progressive's third quarter results remain quite strong, but there are signs that results might start to weaken a bit going forward.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns; however, it has experienced fairly dramatic volatility as the auto insurance industry has been on a rollercoaster ride since the start of the pandemic.

Progressive continued to generate relatively strong growth and underwriting profitability in the second quarter.

Progressive continues to play with a hot hand, as it enjoyed strong market considerations in the first quarter and built its market share.

We are increasing our fair value estimate for narrow-moat Progressive to $183 per share from $163 after reassessing some of our assumptions in light of recent results. Our fair value estimate is equivalent to 4.2 times Progressive's 2024 year-end book value, or 4.0 times book value when excluding goodwill and accumulated other comprehensive income.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns, but it has seen fairly dramatic volatility as the auto insurance industry has been on a roller-coaster ride since the start of the pandemic.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns, but the company has seen fairly dramatic volatility as the auto insurance industry has been on a roller-coaster ride over the past several years.

Progressive continued to show its strength in the fourth quarter. While personal auto insurers have seen underwriting results recover this year due to pricing increases, Progressive continues to be a relatively strong performer in terms of underwriting profitability and growth, which we think reflects well on management. Narrow-moat Progressive generated an outsize return on equity of 36% this year as it exploited industry tailwinds. The company is tracking a bit ahead of our expectations, and we expect to increase our fair value estimate to $163 from $151 per share. However, we still see shares as materially overvalued, and we believe the market is overly focused on the near-term outlook. Our valuation assumes return on equity trends back in line with the company’s historical average over the next few years.

Narrow-moat Progressive continued its strong momentum in the third quarter, with the company benefiting from multiple industry-level tailwinds as well as its own strategic decisions. Return on equity for the last 12 months was 38%, a level that is well above the company’s historical average. We will maintain our $151 per share fair value estimate and see the shares as being materially overvalued. We think the market is overly focused on near-term results. We don’t doubt the magnitude of the current tailwinds or the strength of the company’s competitive position. However, insurance is an inherently mean-reverting industry, and we don’t believe current returns can be maintained over time.

Autonomous vehicles could have profound positive and negative impacts on the auto insurance industry. Self-driving cars could massively reduce accidents by eliminating human errors and, in the long run, could shift the liability from drivers to manufacturers, making personal auto insurance obsolete. We believe that fully autonomous vehicles are closer than most people think from a technology perspective, but the period from technological development to mass adoption is significantly higher than the market anticipates. In our most aggressive adoption scenario, we think most cars on the road could be automated to a level where insurance is largely unnecessary within 20 years. We don't think investors should discount auto insurance stocks based on this risk today. But with the group trading at a hefty premium to historical book multiples, from a long-term perspective, we question whether current valuations are justified for businesses that might become obsolete.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns, but the company has seen fairly dramatic volatility as the auto insurance industry has been on a roller-coaster ride over the past several years.

Narrow-moat Progressive produced another strong quarter, with results roughly in line with the previous quarter. We think the company is benefiting from two main tailwinds currently, as stronger pricing is boosting underwriting results and higher interest rates are producing stronger investment income. The trailing 12-month return on equity of 35% highlights the benefits Progressive is seeing. While we appreciate the strong near-term outlook, we see insurance as a highly competitive industry that is inherently mean-reverting, and we don’t think the current environment will persist. We will maintain our $144 per share fair value estimate and see shares as materially overvalued. We think the market is overly focused on Progressive’s near-term prospects.

Progressive is one of the strongest franchises in the insurance industry and has consistently generated industry-leading returns, but the company has seen fairly dramatic volatility as the auto insurance industry has been on a roller-coaster ride over the past several years.

Higher interest rates have boosted investment income and have had a material positive impact on overall returns for our domestic property-casualty insurance coverage. While insurers with low fixed-income duration have seen the largest impact, the effect has flowed through our coverage. Interest rates and investment income are only part of the story for insurers, but the outlook for underwriting is strong as well, in our view. Following a few years of solid price increases, commercial insurers have seen underwriting margins stabilize at an attractive level. Personal auto insurers have endured some difficulties recently, but strong pricing increases have improved combined ratios. With both sides of the profit picture already strong or improving, we expect our P&C insurers to generate unusually attractive results in the near term. However, we believe the market has overreacted to these tailwinds, and we see our coverage as generally overvalued. Investigating historical underwriting results for a P&C insurance peer group strongly suggests that underwriting results adjust over time to changes in interest rates, and underwriting margins have improved over the past few decades as interest rates fell. If interest rates stay high, we expect underwriting margins will compress, and returns will normalize. Our fair value estimates hinge on the idea that returns for our coverage will ultimately return to a level roughly in line with historical averages. If the industry does mean-revert over the next few years, investors will pay an overly rich price today for most of our coverage.