Case | HBS Case Collection | August 2008

Progressive Corporation: Variable Dividends

by Timothy A. Luehrman and Brenda W. Chia


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; Policy; Goals and Objectives; Performance; Business and Shareholder Relations; Insurance Industry;


Luehrman, Timothy A., and Brenda W. Chia. "Progressive Corporation: Variable Dividends." Harvard Business School Case 209-004, August 2008.