Progressive Fights the Caveman: Recapitalization, Dividend, Buyback (PGR)

The Progressive Corporation (PGR-NYSE) has figured out a way to rekindle a flame under its stock: the classic recapitalization and shareholder-friendly initiatives.  Holders of record on August 31 will receive a special $2.00 dividend payable on September 14.  The company has also announced a new 100 million share buyback plan over the next 24 months that is meant to be on top of the 8.3 million shares remaining under a current buyback plan.  It is also leveraging its books by an anticipation of selling $1 Billion in hybrid debt securities. 

These moves used to be considered robbing Peter to pay Paul, but in today’s investment climate companies are being rewarded for such actions.  Shares of Progressive had gone a bit stagnant now that many other auto insurance companies had copied their comparison shopping, and the GEICO Caveman probably didn’t help them out too much.

Progressive shares are up over 6% to $24.75, now above the mid-point of its $20.91 to $27.07 range over the last 52-weeks.

Jon C. Ogg
June 14, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.