Progressive Corporation: Variable Dividends

Case Solution

Timothy A. Luehrman, Brenda Chia
Harvard Business School ()

In 2006, Progressive Corporation introduced a alternate in its dividend coverage. Henceforth, dividends might be paid yearly as opposed to quarterly and, greater important, might be set in line with a components that could bring about significantly extra yr-to-yr variability than changed into the case historically. Under the brand new coverage, dividends might be tied to the company’s underwriting results, its overall performance relative to pre-decided goals, and a goal payout ratio. Progressive’s new coverage changed into meant to assist with average capital control withinside the cyclical assets and casualty coverage business.

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