The Progressive Corporation, a provider of personal and commercial insurance throughout the U.S., recorded a $40 million reinsurance recoverable in February owing to damages caused by the severe winter weather across southern parts of the country.
During the month, Progressive recorded catastrophe losses of $87 million, resulting in a net catastrophe loss ratio of 2.7% of net earned premiums, including the impact of reinsurance.
The company incurred catastrophe losses during the period as a result of winter storms in Texas and Oregon and across the south eastern U.S.
While uncertainty remains given the complexity and size of the extreme weather event, insurance and reinsurance industry losses are expected to exceed $10 billion and the event has been compared with 2017’s Hurricane Harvey.
For Progressive, the significant impact of the event led to a $40 million recovery under its occurrence excess of loss reinsurance program in its Property segment, as incurred losses and certain allocated loss adjustment expenses (ALAE) from a single storm exceeded the $80 million retention.
Catastrophe losses incurred in the month pushed the company’s combined ratio up by 1.1 percentage points, year-on-year, to 91.4%.
Commenting on Progressive’s February performance, analysts at Morgan Stanley note that while earnings in the month missed expectations as a result of the cat losses, year-on-year, the core combined ratio did improve to 88.9% on the back of a lower core loss ratio of 68.3%.
According to analysts, the firm’s loss ratio in February benefited from “continued lower accident claims frequency associated with lower driving levels.”
At $67.1 million, Progressive’s net income fell by 428% in February 2021 when compared with the previous year.
It’s worth noting that Progressive also called on its reinsurance protection in August of last year, as losses and ALAE, again in its Property business, exceeded the annual $375 million retention.