Tickers in this Article: PGR, ALL, CB, CINF, CNA, BRK.A
Love it or hate it, Progressive's (NYSE:PGR) long-running ad campaign using the fictional character Flo stands out in an industry rife with boring commercials about protecting one's family. Flo has appeared in 53 commercials since her introduction in 2008. And as the company has been steadily gaining popularity since then, there's more reason than ever to consider becoming a shareholder. Tutorial: Stock Picking

Solid Profits
Progressive releases results monthly, giving investors a real snapshot into its business at any given time. For the first two months of the year, net premiums written increased 4% to $2.7 billion and net income increased by 34% to $226.7 million. For those new to insurance, investors use the combined ratio to gauge a company's underwriting profitability. Anything under 100 indicates an underwriting profit. Year-to-date, Progressive's is 91%, 120 basis points higher year-over-year. The key to a successful insurance business is combining an underwriting profit with an investment profit. Between 2000 and 2010, it did both every year except in 2008, when its investment portfolio lost $1.4 billion. Considering most insurance companies followed suit that year, it has an exceptional record of profitability.(For more information on insurance stocks, read A Choice Insurance Stock.)

Progressive and Peers
Company
15-Year Annual Total Return
Progressive (NYSE:PGR)
14.4%
Allstate (NYSE:ALL)
5.9%
Chubb (NYSE:CB)
8.6%
Cincinnati Financial (Nasdaq:CINF)
6.6%
CNA Financial (NYSE:CNA)
-0.5%
Book Value
In its annual report, Berkshire Hathaway (NYSE:BRK.A) compares its annual growth in book value per share with the S&P 500. Berkshire believes that's the best way to show whether the company is doing a good job for shareholders - so, we'll apply the same logic to Progressive. In 2001, its book value per share was $3.69. In 2010, it was $9.13. That's 10.6% compounded annual growth. That's a decent return, but it's not the entire story. After adding-back the share repurchases for the last nine years. we get a revised book value per share of $17.96, which is 19.2% compounded annually. That's virtually identical to Buffett's long-term record - one that most investors would relish. (To learn more about stock values, check out The 4 Basic Elements Of Stock Value.)

Stock Performance
Over the past 15 years, in almost any period you choose, Progressive outperformed both its peers in the property and casualty industry, as well as the S&P 500. And not just by a little bit. With the exception of the latest five-year period, when it was beaten by a couple of percentage points by both its peers and the index, it's been full-speed ahead. Its annual total return in the past decade-and-a-half is 14.4%, 700 basis points better than its benchmarks. Sure it's seen year's like 2006, when it underperformed by 30%. But those are the exception, not the rule. If you're looking for a stable financial, this is it. (For more information, see The Characteristics Of A Successful Company.)

The Bottom Line
Progressive doesn't have the biggest dividend in the world, so if you're investing for income only, you'll probably want to stay away. However, those looking for both should seriously consider the Ohio insurer.

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