Property and auto-focused insurance group, The Progressive Corporation, has seen a significant dent in its H1 2022 results due to investment losses and the writedown of ARX Holdings impacting the property segment.
Progressive’s total net unrealized losses on fixed-maturity securities year-to-date was $2,249.7 million, compared to the $448.5 million reported in the same period last year.
These H1 results were impacted by a 7.2% loss in its investment portfolio, a significant loss compared to the 1.9% earnings that were reported in 2021.
The investment results saw a fixed-income securities loss of 5.9% compared to 0.2% in H1 2021; and common stocks loss of 20.4% compared to 20.7% last year.
In June, the total investments portfolio saw a loss of 1.6%. For fixed-income securities the loss was 1.1%, and for common stocks the loss was 1.6%.
As a result of the investment hit, Progressive has reported a net loss of $229 million for H1, compared with a gain of $2,270.1 million in H1 2021.
Progressive’s net premiums written and net premiums earned for H1 2022 increased, 10% to $25,603.1 million and 12% to $23,950.8 million, respectively.
Even though the insurer reported a company wide positive combined ratio of 95% and a nat cat loss ratio of 2.8%, its property line did not do as well, reporting a weaker combined ratio of 113.2%, and net cat loss ratio 29.5%.
In the month of June alone, property business reported a combined ratio of 112.0%, with a net cat loss ratio of 24.5%.
In contrast, the H1 2022 personal and commercial lines of business saw better results with a combined ratio of 89.9%, net cat loss ratio of 0.3%, and a combined ratio of 89.9%, net cat loss ratio 0.3%, respectively.
Progressive noted that for this year’s H1 and June, the net cat loss ratio represents cat losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.
The company also highlighted that their cat losses for the month of June were primarily related to thunderstorms, hail, and wind throughout the United States.
The month’s combined ratio was 94.7% with a nat cat loss ratio of 2.8%; the company’s net premiums written grew 8% to $2,924.9 million, as well as the net premiums earned, 5% to $2,870.7 million.
Personal lines business combined ratio in June was 95.3%, with a net cat loss ratio of 2%; commercial lines of business combined ratio was 87.8%, net cat loss ratio 0.5%.
A total of $224.8 million of goodwill were assigned to the property segment, which was primarily related to the 2015 acquisition of ARX Holding Corp, the company noted.
Progressive said: “Based on our analysis, we concluded that the fair value of our Property segment is less than the current carrying value, primarily driven by reduced forecasted profitability given the magnitude of recent weather events, as well as other factors impacting our plans to restore our Property business to target profitability in a timely fashion.
“There is no indication of impairment on the remaining $227.9 million of goodwill, which is primarily attributable to our Personal Lines Agency business and related to the ARX acquisition.”
Lastly, even though the insurer’s combined ratio for Q2 2022 showed improvement, from 96.5% in Q2 2021 to 95.6%, it also reported a significant net loss of $542.9 million compared to the $790.1 million in earnings reported in the same quarter last month.
On the other hand, Progressive’s Q2 2022 net premiums written increased 8%, from $11,480.3 million in 2021 to $12,422.1million; as well as net premiums earned, increasing 11%, from $10,982.3 million to $12,147.9 million.
Progressive’s results could be a sign of investment losses and mark-downs to come from other re/insurers through the Q2 results season.