What changed in this filing

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Item 1. Financial Statements

2024-08-05 compared with 2024-05-06 · 203 added, 108 removed, 866 unchanged (26% of the section changed)

2 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended March 31, 2024 2023

Three Months Six Months

Periods Ended June 30,

2024 2023 2024 2023

(millions — except per share amounts)

28 unchanged sentences

Preferred share dividends and other 1

0 9.5 17.0 16.8

Net income available to common shareholders $ 1,458.7 $ 335.9 $ 3,773.1 $ 776.5

9 unchanged sentences

Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(millions — except per share amounts) 2024 2023 2023

56 unchanged sentences

Consolidated Statements of Changes in Shareholders’ Equity

Three Months Ended March 31, 2024 2023

Three Months Six Months

Periods Ended June 30, 2024 2023 2024 2023

(millions — except per share amounts)

2 unchanged sentences

Redemption of Serial Preferred Shares, Series B 1

0 0 ( 493.9 ) 0

Balance, end of period 0 493.9 0 493.9

18 unchanged sentences

Cash dividends declared on Serial Preferred Shares, Series B ($ 0 , $ 18.92463 , $ 15.688377 , and $ 18.92463 per share) 1

0 ( 9.5 ) ( 7.8 ) ( 9.5 )

Reinvested dividends on restricted stock units ( 0.4 ) ( 0.3 ) ( 0.6 ) ( 0.6 )

12 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2024 2023

Six Months Ended June 30, 2024 2023

Cash Flows From Operating Activities

33 unchanged sentences

Dividends paid to preferred shareholders ( 7.8 ) ( 22.9 )

Acquisition of treasury shares for restricted stock tax liabilities ( 37.1 ) ( 32.7 )

Net cash used in financing activities ( 1,042.8 ) ( 104.6 )

Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 68.3 67.7

Acquisition of treasury shares for equity award tax liabilities ( 37.9 ) ( 33.0 )

Acquisition of treasury shares acquired in open market ( 10.1 ) ( 7.1 )

Net proceeds from debt issuances 0 496.3

Net cash provided by (used in) financing activities ( 1,112.3 ) 316.3

Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 2.1 ( 41.4 )

Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 99.6 220.9

Cash, cash equivalents, restricted cash, and restricted cash equivalents – March 31

Cash, cash equivalents, restricted cash, and restricted cash equivalents – June 30

$ 101.7 $ 179.5

5 unchanged sentences

The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented.

The results of operations for the period ended March 31, 2024, are not necessarily indicative of the results expected for the full year.

The results of operations for the period ended June 30, 2024, are not necessarily indicative of the results expected for the full year.

These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report to Shareholders).

3 unchanged sentences

The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(millions) 2024 2023 2024 2023

2 unchanged sentences

128.0 125.3 234.8 242.2

( 127.8 ) ( 122.3 ) ( 276.0 ) ( 241.6 )

Allowance for credit losses, end of period $ 327.9 $ 343.9 $ 327.9 $ 343.9

2 unchanged sentences

Premiums receivable balances are written off once we have exhausted our collection efforts.

Property and Equipment

Included in other assets in our consolidated balance sheets are “held for sale” properties of $ 169.8 million, $ 67.8 million, and $ 77.2 million at March 31, 2024 and 2023, and December 31, 2023, respectively.

When properties are determined to be “held for sale,” the property is written down to its fair value less estimated costs to sell, as applicable.

The increase in the March 31, 2024, balance from December 31, 2023, was primarily driven by a decision in the first quarter to sell certain regional properties to optimize our real estate portfolio by consolidating employees into already existing alternative properties.

Property – Held for Sale

Included in other assets in our consolidated balance sheets are properties that are classified as held for sale (HFS).

At June 30, 2024 and 2023, and December 31, 2023, we had HFS properties of $ 152.4 million, $ 59.5 million, and $ 77.2 million, respectively.

When properties are determined to be HFS, the property is written down to its fair value less estimated costs to sell, as applicable.

The increase in HFS properties since December 31, 2023, primarily reflects a decision in the first quarter 2024 to sell certain regional properties to optimize our real estate portfolio by consolidating employees into existing alternative properties.

Earnings Per Share

6 unchanged sentences

New Accounting Standards

On January 1, 2024, we started to amortize the remaining original cost of tax equity investments to the provision for income taxes, since certain conditions were met, on the modified retrospective basis, pursuant to an Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board.

Previously, these investments were accounted for under the equity method of accounting.

Adopted – On January 1, 2024, we began amortizing the remaining original cost of tax equity investments to the provision for income taxes, since certain conditions were met, on the modified retrospective basis, pursuant to an Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board.

Previously, these investments were accounted for under the equity method of accounting and the amortization was recognized as a net impairment loss on the consolidated statements of income.

The adoption of the ASU had no cumulative effect on retained earnings and did not have a material impact on our financial condition or results of operations.

The amount of income tax credits and investment amortization recognized for the first quarter 2024, and the carrying amount of the tax credit investments at March 31, 2024, were not material to our financial condition or results of operations and, therefore, no additional disclosure is provided.

The amount of income tax credits and investment amortization recognized for the three and six months ended June 30, 2024, and the carrying amount of the tax credit investments at June 30, 2024, were not material to our financial condition or results of operations and, therefore, no additional disclosure is provided.

Reclassification

Goodwill and intangible assets are included in other assets in our consolidated balance sheets and the amortization of intangible assets in other, net, in cash provided by operating activities in our consolidated statements of cash flows.

The March 31, 2023, amounts, which were presented separately on the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.

The June 30, 2023 amounts, which were presented separately on the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.

The following tables present the composition of our investment portfolio by major security type.

6 unchanged sentences

(Losses) Fair

March 31, 2024

June 30, 2024

Available-for-sale securities:

19 unchanged sentences

(Losses) Fair

March 31, 2023

June 30, 2023

Available-for-sale securities:

39 unchanged sentences

$ 65,914.9 $ 312.2 $ ( 2,346.8 ) $ 2,118.3 $ 65,998.6 100.0 %

1 At March 31, 2024 and 2023, we had $ 16.2 million and $ 22.8 million, respectively, of net unsettled security purchase transactions included in other liabilities, compared to $ 45.6 million included in other assets at December 31, 2023.

The total fair value of the portfolio at March 31, 2024 and 2023, and December 31, 2023, included $ 3.2 billion, $ 4.1 billion, and $ 4.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions.

At March 31, 2024, bonds and certificates of deposit in the principal amount of $ 672.4 million were on deposit to meet state insurance regulatory requirements.

1 At June 30, 2024 and 2023, we had $ 74.1 million and $ 248.0 million, respectively, of net unsettled security purchase transactions included in other liabilities, compared to $ 45.6 million included in other assets at December 31, 2023.

The total fair value of the portfolio at June 30, 2024 and 2023, and December 31, 2023, included $ 4.1 billion, $ 4.3 billion, and $ 4.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions.

At June 30, 2024, bonds and certificates of deposit in the principal amount of $ 713.2 million were on deposit to meet state insurance regulatory requirements.

We did no t hold any securities of any one issuer, excluding U.S.

government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at March 31, 2024 or 2023, or December 31, 2023.

At March 31, 2024, we did no t hold any debt securities that were non-income producing during the preceding 12 months.

government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at June 30, 2024 or 2023, or December 31, 2023.

At June 30, 2024, we did no t hold any debt securities that were non-income producing during the preceding 12 months.

Short-Term Investments Our short-term investments may include commercial paper and other investments that are expected to mature, or are redeemable, within one year.

9 unchanged sentences

Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we use the fair value option to record the changes in fair value of these securities through income as a component of net realized gains (losses).

Fixed Maturities The composition of fixed maturities by maturity at March 31, 2024, was:

Fixed Maturities The composition of fixed maturities by maturity at June 30, 2024, was:

(millions) Cost Fair Value

12 unchanged sentences

Value Unrealized

March 31, 2024

June 30, 2024

government obligations 117 $ 29,776.3 $ ( 1,228.7 ) 17 $ 12,936.0 $ ( 109.4 ) 100 $ 16,840.3 $ ( 1,119.3 )

11 unchanged sentences

Value Unrealized

March 31, 2023

June 30, 2023

government obligations 171 $ 31,496.1 $ ( 1,676.7 ) 51 $ 17,704.6 $ ( 427.9 ) 120 $ 13,791.5 $ ( 1,248.8 )

22 unchanged sentences

A review of the securities in an unrealized loss position indicated that the issuers were current with respect to their interest obligations and that there was no evidence of deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.

We had seven securities that had their credit ratings downgraded during the first quarter 2024, with a combined fair value of $ 58.2 million and an unrealized loss of $ 8.2 million as of March 31, 2024.

We had ten securities, across five issuers, that had their credit ratings downgraded during the second quarter 2024, with a combined fair value of $ 203.0 million and an unrealized loss of $ 66.7 million as of June 30, 2024.

Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position.

We did no t record any allowances for credit losses or any write-offs for amounts deemed to be uncollectible during the first three months of 2024 or 2023, and did no t have a material credit loss allowance balance as of March 31, 2024 and 2023, or December 31, 2023.

We did no t record any allowances for credit losses or any write-offs for amounts deemed to be uncollectible during the first six months of 2024 or 2023, and did no t have a material credit loss allowance balance as of June 30, 2024 and 2023, or December 31, 2023.

We considered several factors and inputs related to the individual securities as part of our analysis.

11 unchanged sentences

In the event that the NPV was below the amortized value, and the amount was determined to be material on any specific security, or in the aggregate, a credit loss would be deemed to exist, and either an allowance for credit losses would be created, or if an allowance currently existed, either a recovery of the previous allowance, or an incremental loss, would be recorded to net realized gains (losses) on securities.

As of March 31, 2024 and 2023, and December 31, 2023, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate.

As of June 30, 2024 and 2023, and December 31, 2023, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate.

We continue to expect all the securities in our fixed-maturity portfolio to pay their principal and interest obligations.

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at March 31, 2024 and 2023, and December 31, 2023, to determine if the accrued interest amounts were uncollectible.

Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest, and future principal, obligations and, therefore, did no t write off any accrued income as uncollectible at March 31, 2024 and 2023, or December 31, 2023.

Realized Gains (Losses) The components of net realized gains (losses) for the three months ended March 31, were:

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at June 30, 2024 and 2023, and December 31, 2023, to determine if the accrued interest amounts were uncollectible.

Realized Gains (Losses) The components of net realized gains (losses) for the three and six months ended June 30, were:

Three Months Six Months

(millions) 2024 2023 2024 2023

4 unchanged sentences

Corporate debt securities 0.7 0 3.6 0.1

Residential mortgage-backed securities 1.1 0 1.1 0

Other asset-backed securities 0.1 0 0.1 0

Total available-for-sale securities 3.2 0.2 6.4 4.1

24 unchanged sentences

Corporate debt securities ( 20.9 ) ( 29.8 ) ( 32.8 ) ( 50.1 )

Residential mortgage-backed securities 1.1 0 1.1 0

Commercial mortgage-backed securities ( 10.7 ) ( 45.5 ) ( 15.0 ) ( 80.0 )

8 unchanged sentences

Subtotal net realized gains (losses) on security sales ( 226.4 ) 135.1 ( 372.9 ) 91.6

Gain 0 0 0 13.2

Impairment 0 ( 2.2 ) 0 ( 4.5 )

6 unchanged sentences

Realized gains (losses) on securities sold are computed using the first-in-first-out method.

During the first three months of 2024, the majority of our gross realized losses on security sales were U.S.

During the second quarter and first six months of 2024, the majority of our gross realized losses on security sales were U.S.

Treasury Notes that were sold for duration management.

We also sold corporate debt securities with less attractive risk/reward profiles and select commercial mortgage-backed securities.

During the first quarter 2023, the gross gains in common equities reflected sales of securities, as part of our plan to incrementally reduce risk in the portfolio in response to our view of the potential of a more difficult economic environment.

The gross loss incurred in our nonredeemable preferred stocks,

during the first quarter 2023, was primarily related to the sale of certain holdings in U.S.

During the second quarter and first six months of both 2024 and 2023, we sold corporate debt securities and select commercial mortgage-backed securities, which we viewed as having less attractive risk/reward profiles.

During 2023, the gross gains in common equities reflected sales of securities, as part of our plan to incrementally reduce risk in the

portfolio in response to our view of the potential of a more difficult economic environment.

The gross loss incurred in our nonredeemable preferred stocks was primarily related to the sale of certain holdings in U.S.

bank preferred stocks.

In addition, during the first quarter last year, we selectively sold securities, which were primarily corporate debt securities and commercial mortgage-backed securities.

The other asset gain for the first three months of 2023, related to proceeds received as the result of litigation in conjunction with three renewable energy investments we made from 2016 through 2018 (the original investments were previously written down in full).

The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective periods ended March 31:

The other asset gain in 2023 is related to proceeds received as a result of litigation in conjunction with three renewable energy investments we made from 2016 through 2018 (the original investments were previously written down in full).

The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective quarter ends:

Three Months Six Months

(millions) 2024 2023 2024 2023

2 unchanged sentences

Net holding period gains (losses) recognized during the period on equity securities held at period end $ 96.8 $ ( 10.8 ) $ 391.7 $ 79.7

Net Investment Income The components of net investment income for the three months ended March 31, were:

Net Investment Income The components of net investment income for the three and six months ended June 30, were:

Three Months Six Months

(millions) 2024 2023 2024 2023

19 unchanged sentences

Net investment income $ 677.7 $ 448.4 $ 1,289.6 $ 862.5

On a year-over-year basis, investment income (interest and dividends) increased 47 % and recurring investment book yield increased 23 % for the three months ended March 31, 2024, compared to the same period last year.

On a year-over-year basis, investment income (interest and dividends) increased 51 % and 49 % for the first three and six months of 2024, respectively, and recurring investment book yield increased 26 % for each of the three and six months ended June 30, 2024, compared to the same periods last year.

The increases primarily reflected investing new cash from operations and proceeds from maturing bonds in higher coupon rate securities.

14 unchanged sentences

(millions) Level 1 Level 2 Level 3 Total Cost

March 31, 2024

June 30, 2024

Fixed maturities:

31 unchanged sentences

(millions) Level 1 Level 2 Level 3 Total Cost

March 31, 2023

June 30, 2023

Fixed maturities:

69 unchanged sentences

These securities are classified as Level 2 since they are primarily longer-dated securities issued by municipalities that contain either liquidity facilities or mandatory put features within one year.

At March 31, 2024, vendor-quoted prices represented 92 % of our Level 1 classifications (excluding short-term investments), compared to 91 % at March 31, 2023 and 93 % at December 31, 2023.

At both June 30, 2024 and December 31, 2023, vendor-quoted prices represented 93 % of our Level 1 classifications (excluding short-term investments), compared to 92 % at June 30, 2023.

The securities quoted by vendors in Level 1 primarily represent our holdings in U.S.

2 unchanged sentences

All Level 1 preferred stocks with active exchange quotes were sold during 2023.

At both March 31, 2024 and December 31, 2023, vendor-quoted prices comprised 100 % of our Level 2 classifications (excluding short-term investments), compared to 98 % at March 31, 2023;

the remaining 2 % at March 31, 2023 were dealer-quoted prices.

At both June 30, 2024 and December 31, 2023, vendor-quoted prices comprised 100 % of our Level 2 classifications (excluding short-term investments), compared to 98 % at June 30, 2023;

the remaining 2 % at June 30, 2023 were dealer-quoted prices.

In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing

33 unchanged sentences

This analysis provides us with additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients.

We believe this effort helps ensure that we are

reporting the most representative fair values for our securities.

We believe this effort helps ensure that we are reporting the most representative fair values for our securities.

After all the valuations are received and our review of Level 2 securities is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected securities to Level 3.

4 unchanged sentences

If we do not receive prices from an external source, we perform an internal fair value comparison, which includes a review and analysis of market-comparable securities, to determine if fair value changes are needed.

Based on this analysis, certain private equity investments included in the Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value.

Based on this analysis, certain private equity investments included in the

Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value.

At least annually, these private equity investments are priced by an external source.

1 unchanged sentence

Since these securities represent less than 0.1% of our total portfolio, we will continue to include them in our Level 3 disclosures and report the activity from these investments as “other” changes in the summary of changes in fair value table and categorize these securities as “pricing exemption securities” in the quantitative information table.

At both March 31, 2024 and December 31, 2023, we held one privately held fixed-maturity security that is classified as a Level 3 investment.

At March 31, 2023, we did no t have any securities in our fixed-maturity portfolio listed as Level 3.

During the first three months of 2024 and for the full year of 2023, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

At both June 30, 2024 and December 31, 2023, we held one privately held fixed-maturity security that is classified as a Level 3 investment.

At June 30, 2023, we did no t have any securities in our fixed-maturity portfolio listed as Level 3.

During the first six months of 2024 and for the full year of 2023, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Due to the relative size of the Level 3 securities’ fair values, compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net or comprehensive income.

The following tables provide a summary of changes in fair value associated with Level 3 assets for the three months ended March 31, 2024 and 2023:

The following tables provide a summary of changes in fair value associated with Level 3 assets for the three and six months ended June 30, 2024 and 2023:

Level 3 Fair Value

(millions) Fair Value at March 31, 2024 Calls/

Paydowns/Other Purchases Sales Net Realized

on Sales Change in

In (Out) Fair Value at June 30, 2024

Fixed maturities:

Corporate debt securities $ 3.0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3.0

Equity securities:

Nonredeemable preferred stocks:

49.2 0 0 0 0 ( 12.5 ) 0 36.7

14.8 0 0 0 0 0.4 0 15.2

Common equities:

Common stocks 22.5 0 0 0 0 0 0 22.5

Other risk investments 24.3 ( 0.4 ) 0 0 0 0 0 23.9

Total Level 3 securities

$ 113.8 $ ( 0.4 ) $ 0 $ 0 $ 0 $ ( 12.1 ) $ 0 $ 101.3

Level 3 Fair Value

(millions) Fair Value at March 31, 2023 Calls/

Paydowns/Other Purchases Sales Net Realized

on Sales Change in

In (Out) Fair Value at June 30, 2023

Equity securities:

Nonredeemable preferred stocks:

$ 67.4 $ 0 $ 0 $ 0 $ 0 $ ( 11.4 ) $ 0 $ 56.0

16.4 0 0 0 0 ( 0.6 ) 0 15.8

Common equities:

Common stocks 18.3 0 0 0 0 0 0 18.3

Other risk investments 20.3 1.6 0 0 0 0 0 21.9

Total Level 3 securities

$ 122.4 $ 1.6 $ 0 $ 0 $ 0 $ ( 12.0 ) $ 0 $ 112.0

Level 3 Fair Value

(millions) Fair Value at December 31, 2023 Calls/

1 unchanged sentence

on Sales Change in

Valuation Net

In (Out) Fair Value at March 31, 2024

In (Out) Fair Value at June 30, 2024

Fixed maturities:

12 unchanged sentences

on Sales Change in

Valuation Net

In (Out) Fair Value at March 31, 2023

In (Out) Fair Value at June 30, 2023

Equity securities:

7 unchanged sentences

$ 121.9 $ 2.1 $ 0 $ 0 $ 0 $ ( 12.0 ) $ 0 $ 112.0

The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at March 31, 2024 and 2023, and December 31, 2023:

1 For fixed maturities, amounts included are unrealized gains (losses) included in accumulated other comprehensive income (loss) on our consolidated balance sheets.

For equity securities, amounts included are net holding period gains (losses) on securities on our consolidated statements of comprehensive income.

The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at June 30, 2024 and 2023, and December 31, 2023:

Quantitative Information about Level 3 Fair Value Measurements

($ in millions) Fair Value at March 31, 2024 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)

($ in millions) Fair Value at June 30, 2024 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)

Fixed maturities:

7 unchanged sentences

Quantitative Information about Level 3 Fair Value Measurements

($ in millions) Fair Value at March 31, 2023 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)

($ in millions) Fair Value at June 30, 2023 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)

Equity securities:

15 unchanged sentences

Debt at each of the balance sheet periods consisted of:

March 31, 2024 March 31, 2023 December 31, 2023

June 30, 2024 June 30, 2023 December 31, 2023

(millions) Carrying

44 unchanged sentences

Total $ 6,890.7 $ 6,165.5 $ 6,886.5 $ 6,224.0 $ 6,888.6 $ 6,431.3

There was no short-term debt outstanding as of the end of all the periods presented.

The Progressive Corporation has a line of credit with PNC Bank, National Association, in the maximum principal amount of $ 300 million.

There was no short-term debt outstanding as of the end of all periods presented.

During the second quarter 2024, The Progressive Corporation renewed its line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $ 300 million, which expires April 2025 and has the same terms as the previous line of credit with PNC.

See the 2023 Annual Report to Shareholders for a discussion of the terms of this line of credit.

We had no borrowings under the line of credit that was available during the periods presented.

The effective tax rate for the three months ended March 31, 2024, was 20.7 % , compared to 19.2 % for the same period last year, with the change primarily due to our permanent tax differences having a lower impact on our effective rate due to increased profitability in the current year.

The effective tax rate for the three and six months ended June 30, 2024, was 21.6 % and 21.0 %, respectively , compared to 20.7 % and 19.9 % for the same periods last year, with the change primarily due to our permanent tax differences having a lower impact on our effective rate due to increased profitability in the current year.

Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates.

We review our deferred tax assets regularly for recoverability.

At March 31, 2024 and 2023, and December 31, 2023, we determined that we did no t need a valuation allowance on our gross deferred tax assets.

At June 30, 2024 and 2023, and December 31, 2023, we determined that we did no t need a valuation allowance on our gross deferred tax assets.

Although realization of the deferred tax assets is not assured, management believes that it is more likely than not the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes.

At March 31, 2024 and 2023, and December 31, 2023, the net deferred tax asset includes a

gross deferred tax asset of $ 482.5 million , $ 582.6 million, and $ 427.3 million, respectively, related to unrealized losses on fixed-maturity securities.

We believe this deferred tax asset will be realized based on the existence of current temporary differences related to unrealized gains in our equity portfolio, prior year capital gains, and other tax planning strategies.

We had net current income taxes payable of $ 961.8 million , $ 203.3 million, and $ 311.8 million at March 31, 2024 and 2023, and December 31, 2023, respectively, included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.

The increase in income taxes payable was primarily driven by the increase in profitability during the first quarter 2024.

At March 31, 2024 and 2023, and December 31, 2023, we had no reserves for uncertain tax positions.

At June 30, 2024 and 2023, and December 31, 2023, the

net deferred tax asset includes a gross deferred tax asset of $ 453.9 million , $ 703.7 million, and $ 427.3 million, respectively, related to unrealized losses on fixed-maturity securities.

We believe this deferred tax asset will be realized based on the existence of current temporary differences related to unrealized gains in our equity portfolio, and prior year capital gains.

We had net current income taxes payable of $ 9.0 million and $ 311.8 million at June 30, 2024 and December 31, 2023, respectively, which were reported in accounts payable, accrued expenses, and other liabilities, compared to recoverable income taxes of $ 44.0 million at June 30, 2023, which were reported in other assets on our consolidated balance sheets.

The balance may fluctuate between an asset and a liability from period to period due to normal timing differences.

At June 30, 2024 and 2023, and December 31, 2023, we had no reserves for uncertain tax positions.

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

12 unchanged sentences

Total paid 21,076.9 19,905.3

Net balance at March 31

Net balance at June 30

32,090.2 27,688.9

Plus reinsurance recoverables on unpaid losses 4,515.0 5,064.4

Balance at March 31

Balance at June 30

$ 36,605.2 $ 32,753.3

We experienced favorable reserve development of $ 11.4 million during the first three months of 2024, compared to unfavorable development of $ 621.2 million for the same period last year, which is reflected as “incurred related to prior years ” in the table above.

First Quarter 2024

We experienced favorable reserve development of $ 62.5 million during the first six months of 2024, compared to unfavorable development of $ 1,110.5 million for the same period last year, which is reflected as “incurred related to prior years ” in the table above.

Year-to-date June 30, 2024

• The favorable prior year reserve development included approximately $ 60 million of favorable development attributable to accident year 2023 and $ 20 million to accident year 2022;

partially offset by unfavorable development attributable to accident years 2021 and prior.

• Our perso nal auto products incurred about $ 100 million of favorable loss and loss adjustment expense (LAE) reserve development, in part due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023, with about 60 % attributable to the Agency auto business and the balance in the Direct auto business.

• Our Commercial Lines business experienced about $ 70 million of unfavorable development, primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

First Quarter 2023

• Our perso nal auto products incurred about $ 235 million of favorable loss and loss adjustment expense (LAE) reserve development, with about 60 % attributable to the Agency auto business and the balance in the Direct auto business.

The favorable development was, in part, due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023 and lower than anticipated property damage severity across the majority of states.

• Our Commercial Lines and Property businesses experienced about $ 140 million and $ 30 million, respectively, of unfavorable development, with the Commercial Lines development primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

Year-to-date June 30, 2023

• The unfavorable prior year reserve development included approximately $ 910 million attributable to accident year 2022, $ 81 million to accident year 2021, and the remainder to accident years 2020 and prior.

• Our personal auto products incurred about $ 870 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half.

The unfavorable development was primarily attributable to higher than anticipated severity in auto property and physical damage coverages, higher than anticipated late reported injury claims, and, to a lessor extent, increased loss costs in Florida injury and medical coverages in small part due to the impact of the legislation enacted in March 2023 in Florida.

• Our Commercial Lines business experienced about $ 144 million of unfavorable development, primarily due to higher than anticipated severity of injury case reserves and higher than anticipated severity and frequency of late reported injury claims.

• Our Property business experienced $ 42 million of unfavorable development, primarily from higher than anticipated claims expenses and higher than anticipated severity in our homeowner liability peril and umbrella products.

About half of the unfavorable development was attributable to higher than anticipated severity in auto property and physical damage coverages, while the remaining unfavorable development was primarily due to increased loss costs in Florida injury and medical coverages and, to a lesser extent, higher than anticipated late reported injury claims.

• Our Commercial Lines business experienced about $ 224 million of unfavorable development, primarily due to higher than anticipated severity and frequency of late reported injury claims.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries.

The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at March 31, 2024 and 2023, and December 31, 2023, were $ 107.7 million, $ 177.5 million, and $ 68.2 million, respectively.

The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at June 30, 2024 and 2023, and December 31, 2023, were $ 81.3 million, $ 68.0 million, and $ 68.2 million, respectively.

Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.

Non-cash activity included the following in the respective periods:

Three Months Ended March 31,

Six Months Ended June 30,

(millions) 2024 2023

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In the respective periods, we paid the following:

Three Months Ended March 31,

Six Months Ended June 30,

(millions) 2024 2023

Income taxes 1

$ 1,350.5 $ 358.8

Interest 138.0 125.6

Operating lease liabilities 42.7 42.5

1 The increase in income taxes paid was primarily driven by higher profitability during the first six months of 2024, compared to the same period last year.

SEGMENT INFORMATION

Our Personal Lines segment writes insurance for personal autos and recreational vehicles (our special lines products).

Our Personal Lines segment writes insurance for personal auto and special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles).

Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.

Our Property segment writes residential property insurance for homeowners, other property owners, and renters, and

umbrella insurance.

Our Property segment writes residential property insurance for homeowners, other

property owners, and renters, and umbrella insurance.

Our service businesses provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses.

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Following are the operating results for the respective periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(millions) Revenues Pretax

Profit (Loss) Revenues Pretax

Profit (Loss)

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Fees and other revenues 3

236.5 NA 206.2 NA

259.8 NA 226.7 NA 496.3 NA 432.9 NA

Service businesses 106.3 ( 8.0 ) 81.0 ( 9.6 ) 190.5 ( 15.9 ) 153.5 ( 19.4 )

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558.7 551.4 581.4 575.3 1,331.9 1,318.9 1,072.8 1,061.2

Interest expense NA ( 69.6 ) NA ( 63.3 )

Interest expense NA ( 69.6 ) NA ( 65.7 ) NA ( 139.2 ) NA ( 129.0 )

Consolidated total $ 18,134.3 $ 1,860.4 $ 15,353.5 $ 435.7 $ 35,376.8 $ 4,800.3 $ 29,656.7 $ 990.1

NA = Not applicable

1 Personal auto insurance accounted for 95 % and 94 % of the total Personal Lines segment net premiums earned during the three months ended March 31, 2024 and 2023, respectively;

insurance for our special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

1 Personal auto insurance accounted for 95 % of the total Personal Lines segment net premiums earned during the three and six months ended June 30, 2024, and 94 % for the same periods in 2023;

insurance for our special lines products accounted for the balance of the Personal Lines net premiums earned.

2 Includes other underwriting business and run-off operations.

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Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Under-writing

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Margin Combined

Ratio Under-writing

Margin Combined

Ratio Under-writing

Margin Combined

Personal Lines

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Total underwriting operations 8.1 91.9 ( 0.4 ) 100.4 10.9 89.1 0.3 99.7

Following is a summary of our common and preferred share dividends that were declared and/or paid during the three months ended March 31, 2024 and 2023:

Following is a summary of our common and preferred share dividends that were declared and/or paid during the six months ended June 30, 2024 and 2023:

(millions, except per share amounts) Amount

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Common – Quarterly Dividends:

May 2024 July 2024 0.10 58.6

March 2024 April 2024 0.10 58.6

December 2023 January 2024 0.10 58.6

May 2023 July 2023 0.10 58.5

March 2023 April 2023 0.10 58.5

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February 2024 15.688377 7.8

May 2023 June 2023 18.92463 9.5

December 2022 March 2023 26.875 13.4

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income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign

Balance at December 31, 2023 $ ( 2,052.9 ) $ 437.2 $ ( 1,615.7 ) $ ( 1,600.8 ) $ ( 14.0 ) $ ( 0.9 )

Balance at March 31, 2024 $ ( 2,316.2 ) $ 492.6 $ ( 1,823.6 ) $ ( 1,808.6 ) $ ( 13.9 ) $ ( 1.1 )

Other comprehensive income (loss) before reclassifications:

Investment securities ( 85.1 ) 18.0 ( 67.1 ) ( 67.1 ) 0 0

Foreign currency translation adjustment ( 0.3 ) 0.1 ( 0.2 ) 0 0 ( 0.2 )

Total other comprehensive income (loss) before reclassifications ( 85.1 ) 18.0 ( 67.1 ) ( 67.1 ) 0 0

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Total other comprehensive income (loss) 136.6 ( 28.8 ) 107.8 107.7 0.1 0

Balance at March 31, 2024 $ ( 2,316.2 ) $ 492.6 $ ( 1,823.6 ) $ ( 1,808.6 ) $ ( 13.9 ) $ ( 1.1 )

Balance at June 30, 2024 $ ( 2,179.6 ) $ 463.8 $ ( 1,715.8 ) $ ( 1,700.9 ) $ ( 13.8 ) $ ( 1.1 )

Components of Changes in

6 unchanged sentences

comprehensive

income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign

Balance at March 31, 2023 $ ( 2,793.3 ) $ 594.6 $ ( 2,198.7 ) $ ( 2,183.1 ) $ ( 14.4 ) $ ( 1.2 )

Other comprehensive income (loss) before reclassifications:

Investment securities ( 651.5 ) 136.8 ( 514.7 ) ( 514.7 ) 0 0

Foreign currency translation adjustment 0.3 ( 0.1 ) 0.2 0 0 0.2

Total other comprehensive income (loss) before reclassifications ( 651.2 ) 136.7 ( 514.5 ) ( 514.7 ) 0 0.2

Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities ( 74.8 ) 15.7 ( 59.1 ) ( 59.1 ) 0 0

Interest expense ( 0.1 ) 0 ( 0.1 ) 0 ( 0.1 ) 0

Total reclassification adjustment for amounts realized in net income ( 74.9 ) 15.7 ( 59.2 ) ( 59.1 ) ( 0.1 ) 0

Total other comprehensive income (loss) ( 576.3 ) 121.0 ( 455.3 ) ( 455.6 ) 0.1 0.2

Balance at June 30, 2023 $ ( 3,369.6 ) $ 715.6 $ ( 2,654.0 ) $ ( 2,638.7 ) $ ( 14.3 ) $ ( 1.0 )

(millions) Pretax total

comprehensive

income (loss) Total tax

benefit After tax total

comprehensive

income (loss) Total net

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Investment securities ( 498.7 ) 104.9 ( 393.8 ) ( 393.8 ) 0 0

Foreign currency translation adjustment ( 0.3 ) 0.1 ( 0.2 ) 0 0 ( 0.2 )

Total other comprehensive income (loss) before reclassifications ( 499.0 ) 105.0 ( 394.0 ) ( 393.8 ) 0 ( 0.2 )

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Total other comprehensive income (loss) ( 126.7 ) 26.6 ( 100.1 ) ( 100.1 ) 0.2 ( 0.2 )

Balance at March 31, 2023 $ ( 2,793.3 ) $ 594.6 $ ( 2,198.7 ) $ ( 2,183.1 ) $ ( 14.4 ) $ ( 1.2 )

Balance at June 30, 2024 $ ( 2,179.6 ) $ 463.8 $ ( 1,715.8 ) $ ( 1,700.9 ) $ ( 13.8 ) $ ( 1.1 )

Components of Changes in

Accumulated Other

Comprehensive Income (after tax)

(millions) Pretax total

comprehensive

income (loss) Total tax

benefit After tax total

comprehensive

income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign

Balance at December 31, 2022 $ ( 3,556.9 ) $ 754.9 $ ( 2,802.0 ) $ ( 2,786.3 ) $ ( 14.5 ) $ ( 1.2 )

Other comprehensive income (loss) before reclassifications:

Investment securities 54.1 ( 11.4 ) 42.7 42.7 0 0

Foreign currency translation adjustment 0.3 ( 0.1 ) 0.2 0 0 0.2

Total other comprehensive income (loss) before reclassifications 54.4 ( 11.5 ) 42.9 42.7 0 0.2

Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities ( 132.7 ) 27.8 ( 104.9 ) ( 104.9 ) 0 0

Interest expense ( 0.2 ) 0 ( 0.2 ) 0 ( 0.2 ) 0

Total reclassification adjustment for amounts realized in net income ( 132.9 ) 27.8 ( 105.1 ) ( 104.9 ) ( 0.2 ) 0

Total other comprehensive income (loss) 187.3 ( 39.3 ) 148.0 147.6 0.2 0.2

Balance at June 30, 2023 $ ( 3,369.6 ) $ 715.6 $ ( 2,654.0 ) $ ( 2,638.7 ) $ ( 14.3 ) $ ( 1.0 )

In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances.

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The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our 2023 Annual Report to Shareholders.

As of March 31, 2024, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging:

we improperly value total loss claims in Colorado, Georgia, Indiana, New York, and Pennsylvania;

As of June 30, 2024, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging:

we improperly value total loss claims in Alabama, Colorado, Georgia, Indiana, New York, Pennsylvania, and South Carolina;

we improperly fail to pay fees and taxes associated with total losses in Michigan and New York;

we improperly adjust medical bills in Washington;

we improperly calculate basic economic loss as it relates to wage loss coverage in New York;

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we improperly reduce or deny first-party medical benefits in Arkansas;

and that certain of our compensation practices and overtime payment practices are improper, including our classification of certain employees as exempt from overtime pay requirements.

and that certain of our compensation practices are improper.

Other insurance companies face many of these same issues.

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Lawsuits arising from insurance policies and operations, including but not limited to allegations involving claims adjustment and vehicle valuation, may be filed contemporaneously in multiple states.

As of March 31, 2024, we are named as defendants in class action lawsuits pending in multiple states alleging that we improperly value total loss vehicle physical damage claims through the application of a negotiation adjustment in calculating such valuations, which includes five states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states.

As of June 30, 2024, we are named as defendants in class action lawsuits pending in multiple states alleging that we improperly value total loss vehicle physical damage claims through the application of a negotiation adjustment in calculating such valuations, which includes seven states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states.

These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws.

While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations.

Based on information known at March 31, 2024, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable.

With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established, if any, were not material at March 31, 2024 and 2023, or December 31, 2023, and there were no material settlements during 2023 or the first three months of 2024.

Based on information known at June 30, 2024, and except as to any settlements and accruals as described below, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable.

With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established were not material at June 30, 2024 and 2023, or December 31, 2023, and there were no material settlements during 2023 or the first six months of 2024.

For most of these lawsuits, we do not consider any losses to be both probable and estimable, and we are unable to estimate a meaningful range of loss, if any, at this time, due to the factors discussed in Note 12 – Litigation in our 2023 Annual Report to Shareholders.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements