How Progressive broke the rules in the insurance industry

The investment appeal of insurance companies:

- Warren Buffett values stable cash flows and steady demand for insurance products.

- Insurance companies provide protection from unwanted events for consumers and businesses, ensuring a steady income.

Hypercompetitive industry:

- Traditionally, insurance companies have focused on investment gains rather than the policies themselves.

-$PGR has differentiated itself by focusing on profitable underwriting.

Progressive's strategy:

- Peter B. Lewis took over in 1965 and focused on growth through profitable underwriting.

-$PGR went public in 1971 with a goal of making a profit of $4 for every $100 of premium.

- This approach led to long-term success and high stock appreciation.

Success in a challenging environment:

- In 2023 ,$PGR adapted to a challenging environment with high inflation.

- It maintained a combined ratio (premiums collected vs. claims and operating expenses) of 94.5%, while the industry average was 103.9%.

Technology Advantage:

- Progressive invests in technology, which allows it to effectively adjust premiums and optimize its portfolio of insureds.

Growth and inflation benefits:

- The company benefits from a growing economy and rising inflation through strong pricing policies and investments in government bonds with attractive yields.

Long-term prospects:

-$PGR is a high-quality stock with long-term growth potential due to its ability to adapt to market changes and maintain profitability.

Progressive has differentiated itself from competitors with its focus on profitable underwriting and technological innovation. It has achieved long-term success and steady growth despite challenging market conditions, making it an attractive investment for the future.