Analyst Note| Brett Horn, CFA |
Catastrophe losses and a dissipating pandemic tailwind led to a difficult quarter for Progressive. We estimate the annualized ROE for the quarter was only 3%, although the trailing 12-month level of 23% is still quite good for the narrow-moat franchise. Overall, we believe that recent results support our view that the company’s results would normalize as the pandemic wound down, and that pricing pressure could push industry results into a relatively weak spot. We will maintain our $79 per share fair value estimate.