| HBS Case Collection
Progressive Corporation: Variable Dividends
In 2006, Progressive Corporation announced a change in its dividend policy. Henceforth, dividends would be paid annually rather than quarterly and, more importantly, would be set according to a formula that would result in considerably greater year-to-year variability than was the case historically. Under the new policy, dividends would be tied to the company's underwriting results, its performance relative to predetermined goals, and a target payout ratio. Progressive's new policy was intended to help with overall capital management in the cyclical property and casualty insurance business.
Keywords: Capital Structure;
Goals and Objectives;
Business and Shareholder Relations;