Progressive’s combined ratio for the first quarter came in just a point under breakeven, with 4.6 points of the 99 combined ratio across all lines attributable to unfavorable loss reserve development.

The combined ratio is three points above the company’s target of 96—a goal that Progressive achieved for full-year 2022. It is also 4.5 points over last year’s first-quarter of 94.5 figure, which included only 1.6 point of unfavorable reserve development.

In dollars, the first-quarter 2023 reserve hit across all lines related to prior accident years totaled $621.2 million. More than half of that hit the books in the month of January, according to monthly earnings reports issued by the carrier. In both the January and February reports, Progressive noted that the bulk of prior accident year reserve development (75 percent in January and 70 percent in February) came from personal auto products “primarily related to our property damage, collision, and comprehensive coverages, in part due to accidents settling for more than reserved and changes in reserve estimates.”

The commentary was different for the month of March.

Explaining $146.5 million of prior accident-year development in the third month of this year, Progressive said that roughly 55 percent of that came from personal auto—and that “the majority of the unfavorable development in personal auto reflects activity that came as a result of recently passed legislation in Florida.”

(Editor’s Note: While Progressive representatives did not respond to an inquiry to clarify the legislation being referenced, our sister publication Insurance Journal reported that plaintiffs lawyers moved to file tens of thousands of lawsuits before a tort reform bill favorable to insurers, HB 837, became law in late March.)

The Florida situation, however, wasn’t the only driver of reserve boosts for personal auto. Progressive said a portion of the unfavorable development in the month of March reflected “higher than anticipated severity, which resulted in increases in incurred losses on previously closed claims.”

Commercial auto, Progressive said, contributed to 30 percent of the unfavorable development for the month—up from 20 and 25 percent in January and February—with property explaining the rest.

Individually, combined ratios for the personal lines (auto and special lines) and commercial lines (commercial auto and small business insurance) were similar to each other, coming in at 98.7 and 98.4 for the first-quarter of 2023. The commercial lines result is almost 8 points higher than last year’s first-quarter commercial lines combined ratio of 90.5. The personal lines combined ratio is up 3.5 points from 95.2 in first-quarter 2022.

The residential property combined ratio for this year’s first quarter, 105.5, includes 24.3 points from catastrophe losses.

In spite of the underwriting losses, Progressive’s bottom-line net income rose 43 percent to $447.9 million in the first quarter, with investment income jumping 73 percent to $419.6 million, and net realized gains coming in at $71.8 million, compared to net realized losses of $445.3 million in last year’s first quarter.

Net written premium grew 22 percent across all lines in the quarter to $16.1 billion. For just personal lines, premiums rose 25 percent to $12.1 billion.