$207 right now, for a market cap of $121b.

The company made $5.02 in Q4, according to preliminary financial results presented along with their monthly basic statistics like net premiums written and combined ratio. Combining this with the first 3 quarters, that means they will report full year earnings of $19.29, so their current share price represents 10.7x earnings.

Combined ratios fluctuate a fair bit from year to year, and last quarter's (88%) and the previous 3 quarters' (87.3%) are better than their average, so one might reasonably fear that there will be some mean reversion towards their target of 96%. Looking at the last few years, their net margin has been all over the place, from 2% in their worst year in a long time, 2022, to 8% in 2023, 11% in 2024, and 13% in 2025, for an average of 13%. If they had an average year with this net margin in 2026, with 15% growth in NPWW (down from 16% last year, 21% in 2024, and 25% in 2023), then the current price would represent 15x normalized net earnings. That seems like a very reasonable price for a firm with consistently growing NPW, great underwriting results, and conservative management.

I think the market is a bit jittert about how much AI is going to eat into insurance companies' earnings, and maybe, eventually, drive down premiums written if self-driving cars take market share (Tesla users using FSD have <50% the accident rates, and can get 50% off their premiums with Tesla or Lemonade; maybe this will happen to other carmakers as well.) I think this is a legitimate fear, but it's going to take a long time for the percentages using FSD to be high enough to matter to Progressive, even is it does eventually happen.

Regards, DTB