What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-05 · 141 added, 173 removed, 896 unchanged (26% of the section changed)

2 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Six Months

Periods Ended June 30,

Three Months Nine Months

Periods Ended September 30,

2024 2023 2024 2023

41 unchanged sentences

Consolidated Balance Sheets

June 30, December 31,

September 30, December 31,

(millions — except per share amounts) 2024 2023 2023

56 unchanged sentences

Consolidated Statements of Changes in Shareholders’ Equity

Three Months Six Months

Periods Ended June 30, 2024 2023 2024 2023

Three Months Nine Months

Periods Ended September 30, 2024 2023 2024 2023

(millions — except per share amounts)

38 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended June 30, 2024 2023

Nine Months Ended September 30, 2024 2023

Cash Flows From Operating Activities

39 unchanged sentences

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

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

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

$ 147.0 $ 138.4

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

The results of operations for the period ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(millions) 2024 2023 2024 2023

9 unchanged sentences

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.

At September 30, 2024 and 2023, and December 31, 2023, we had HFS properties of $ 150.4 million, $ 81.6 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.

7 unchanged sentences

• excise taxes related to the preferred share redemption.

Other Assets - 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 September 30, 2023 amounts, which were presented separately in the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.

New Accounting Standards

2 unchanged sentences

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 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

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

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

6 unchanged sentences

(Losses) Fair

June 30, 2024

September 30, 2024

Available-for-sale securities:

3 unchanged sentences

Foreign government obligations 16.9 0 ( 0.5 ) 0 16.4 0

Corporate debt securities 13,260.0 33.6 ( 303.8 ) ( 15.2 ) 12,974.6 17.9

Corporate and other debt securities 14,969.8 221.9 ( 155.3 ) ( 0.9 ) 15,035.5 18.9

Residential mortgage-backed securities 1,403.5 24.8 ( 6.4 ) 2.0 1,423.9 1.8

1 unchanged sentence

Other asset-backed securities 6,628.3 39.4 ( 53.8 ) 0 6,613.9 8.3

Redeemable preferred stocks 178.8 0 ( 1.9 ) ( 5.4 ) 171.5 0.2

Total fixed maturities 74,595.2 1,072.3 ( 1,257.4 ) 1.1 74,411.2 93.7

9 unchanged sentences

(Losses) Fair

June 30, 2023

September 30, 2023

Available-for-sale securities:

3 unchanged sentences

Foreign government obligations 16.9 0 ( 1.5 ) 0 15.4 0.1

Corporate debt securities 10,866.4 14.4 ( 540.3 ) ( 35.9 ) 10,304.6 17.4

Corporate and other debt securities 11,069.8 1.3 ( 596.1 ) ( 53.7 ) 10,421.3 16.9

Residential mortgage-backed securities 530.4 0.2 ( 13.0 ) ( 1.8 ) 515.8 0.8

1 unchanged sentence

Other asset-backed securities 5,524.2 0.1 ( 210.1 ) ( 0.6 ) 5,313.6 8.6

Redeemable preferred stocks 174.0 0 ( 3.6 ) ( 13.7 ) 156.7 0.3

Total fixed maturities 60,490.6 3.7 ( 3,846.3 ) ( 56.1 ) 56,591.9 91.5

15 unchanged sentences

Foreign government obligations 17.3 0 ( 1.0 ) 0 16.3 0.1

Corporate debt securities 11,446.0 87.2 ( 332.3 ) ( 17.2 ) 11,183.7 16.9

Corporate and other debt securities 11,633.7 87.2 ( 334.7 ) ( 28.8 ) 11,357.4 17.2

Residential mortgage-backed securities 426.9 0.2 ( 10.0 ) 0.1 417.2 0.6

1 unchanged sentence

Other asset-backed securities 5,667.2 15.7 ( 107.1 ) ( 0.4 ) 5,575.4 8.4

Redeemable preferred stocks 187.7 0 ( 2.4 ) ( 11.6 ) 173.7 0.3

Total fixed maturities 62,441.9 312.2 ( 2,346.8 ) ( 29.1 ) 60,378.2 91.5

7 unchanged sentences

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

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.

1 At September 30, 2024 and 2023, we had $ 468.5 million and $ 167.3 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 both September 30, 2024 and 2023 included $ 4.1 billion of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions, compared to $ 4.2 billion at December 31, 2023.

Certain fixed-maturity securities previously categorized as redeemable preferred stocks in our footnote disclosures are currently classified as corporate and other debt securities to reflect the accurate categorization based on the underlying features of these securities.

The September 30, 2023 and December 31, 2023 amounts, which were presented separately as redeemable preferred stocks in our Note 2 - Investments and Note 3 - Fair Valu e tables, were reclassified to conform to the current year presentation.

The reclassification did not have an impact on our total fixed-maturity securities or our results of operations, financial condition, or cash flows.

At September 30, 2024, bonds and certificates of deposit in the principal amount of $ 712.0 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 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.

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

At September 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.

1 unchanged sentence

These securities are reported at fair value:

(millions) 2024 2023 Dec.

September 30,

(millions) 2024 2023 December 31, 2023

Fixed Maturities:

Corporate debt securities $ 475.5 $ 520.1 $ 531.3

Corporate and other debt securities $ 637.3 $ 647.5 $ 672.5

Residential mortgage-backed securities 369.0 410.8 323.9

Other asset-backed securities 2.6 19.4 13.9

Redeemable preferred stocks 135.0 125.4 141.2

Total hybrid securities $ 1,008.9 $ 1,077.7 $ 1,010.3

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 June 30, 2024, was:

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

(millions) Cost Fair Value

12 unchanged sentences

Value Unrealized

June 30, 2024

September 30, 2024

government obligations 86 $ 12,919.6 $ ( 574.2 ) 3 $ 2,069.3 $ ( 2.9 ) 83 $ 10,850.3 $ ( 571.3 )

1 unchanged sentence

Foreign government obligations 1 16.4 ( 0.5 ) 0 0 0 1 16.4 ( 0.5 )

Corporate debt securities 402 8,995.0 ( 303.8 ) 150 3,307.1 ( 18.4 ) 252 5,687.9 ( 285.4 )

Corporate and other debt securities 224 5,250.6 ( 155.3 ) 14 426.1 ( 1.9 ) 210 4,824.5 ( 153.4 )

Residential mortgage-backed securities 33 244.2 ( 6.4 ) 4 185.0 ( 0.2 ) 29 59.2 ( 6.2 )

1 unchanged sentence

Other asset-backed securities 80 1,530.5 ( 53.8 ) 16 352.5 ( 0.1 ) 64 1,178.0 ( 53.7 )

Redeemable preferred stocks 3 36.6 ( 1.9 ) 0 0 0 3 36.6 ( 1.9 )

Total fixed maturities 903 $ 25,490.0 $ ( 1,257.4 ) 86 $ 3,410.5 $ ( 5.6 ) 817 $ 22,079.5 $ ( 1,251.8 )

3 unchanged sentences

Value Unrealized

June 30, 2023

September 30, 2023

government obligations 173 $ 34,293.8 $ ( 2,098.4 ) 37 $ 16,686.2 $ ( 557.6 ) 136 $ 17,607.6 $ ( 1,540.8 )

1 unchanged sentence

Foreign government obligations 1 15.4 ( 1.5 ) 0 0 0 1 15.4 ( 1.5 )

Corporate debt securities 414 8,565.9 ( 540.3 ) 109 2,397.4 ( 56.0 ) 305 6,168.5 ( 484.3 )

Corporate and other debt securities 470 9,520.6 ( 596.1 ) 164 3,380.4 ( 94.1 ) 306 6,140.2 ( 502.0 )

Residential mortgage-backed securities 40 99.9 ( 13.0 ) 2 0.4 0 38 99.5 ( 13.0 )

1 unchanged sentence

Other asset-backed securities 295 5,001.8 ( 210.1 ) 104 2,056.9 ( 8.8 ) 191 2,944.9 ( 201.3 )

Redeemable preferred stocks 3 31.3 ( 3.6 ) 0 0 0 3 31.3 ( 3.6 )

Total fixed maturities 1,531 $ 54,926.2 $ ( 3,846.3 ) 353 $ 22,483.5 $ ( 668.1 ) 1,178 $ 32,442.7 $ ( 3,178.2 )

7 unchanged sentences

Foreign government obligations 1 16.3 ( 1.0 ) 0 0 0 1 16.3 ( 1.0 )

Corporate debt securities 313 6,642.4 ( 332.3 ) 26 617.2 ( 14.7 ) 287 6,025.2 ( 317.6 )

Corporate and other debt securities 316 6,674.9 ( 334.7 ) 26 617.2 ( 14.7 ) 290 6,057.7 ( 320.0 )

Residential mortgage-backed securities 39 88.4 ( 10.0 ) 2 0.4 0 37 88.0 ( 10.0 )

1 unchanged sentence

Other asset-backed securities 207 3,299.1 ( 107.1 ) 41 639.4 ( 1.2 ) 166 2,659.7 ( 105.9 )

Redeemable preferred stocks 3 32.5 ( 2.4 ) 0 0 0 3 32.5 ( 2.4 )

Total fixed maturities 1,223 $ 44,062.1 $ ( 2,346.8 ) 126 $ 13,347.6 $ ( 119.3 ) 1,097 $ 30,714.5 $ ( 2,227.5 )

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 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.

We had one security that had its credit ratings downgraded during the third quarter 2024, with a fair value of $ 39.3 million and an unrealized loss of $ 2.9 million as of September 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 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 did no t record any allowances for credit losses or any write-offs for amounts deemed to be uncollectible during the first nine months of 2024 or 2023, and did no t have a material credit loss allowance balance as of September 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 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.

As of September 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 June 30, 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 June 30, 2024 and 2023, or December 31, 2023.

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

Three Months Six Months

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at September 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 nine months ended September 30, were:

Three Months Nine Months

(millions) 2024 2023 2024 2023

3 unchanged sentences

State and local government obligations 0 0 0.3 0

Corporate debt securities 0.7 0 3.6 0.1

Corporate and other debt securities 2.0 0.7 5.6 0.8

Residential mortgage-backed securities 0 0 1.1 0

10 unchanged sentences

State and local government obligations ( 1.3 ) 0 ( 1.4 ) 0

Corporate debt securities ( 21.6 ) ( 29.8 ) ( 36.4 ) ( 50.2 )

Corporate and other debt securities ( 5.3 ) ( 19.1 ) ( 42.8 ) ( 69.3 )

Commercial mortgage-backed securities 0 ( 20.6 ) ( 15.0 ) ( 100.6 )

Other asset-backed securities 0 ( 5.2 ) ( 0.1 ) ( 5.6 )

Redeemable preferred stocks ( 0.8 ) 0 ( 1.1 ) 0

Short-term investments 0 0 0 ( 0.4 )

9 unchanged sentences

State and local government obligations ( 1.3 ) 0 ( 1.1 ) 0

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

Corporate and other debt securities ( 3.3 ) ( 18.4 ) ( 37.2 ) ( 68.5 )

Residential mortgage-backed securities 0 0 1.1 0

1 unchanged sentence

Other asset-backed securities 0 ( 5.2 ) 0 ( 5.6 )

Redeemable preferred stocks ( 0.8 ) 0 ( 1.1 ) 0

Short-term investments 0 0 0 ( 0.4 )

14 unchanged sentences

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

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

During the third quarter and first nine months of 2024, the majority of our security sales were U.S.

Treasury Notes that were sold for duration management.

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.

During the third quarter and first nine months of both 2024 and 2023, we selectively sold securities that 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.

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

bank preferred stocks.

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 other asset gain for all periods presented 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

Three Months Nine 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 $ 199.7 $ ( 80.2 ) $ 591.4 $ ( 0.5 )

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

Three Months Six Months

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

Three Months Nine Months

(millions) 2024 2023 2024 2023

4 unchanged sentences

Foreign government obligations 0.1 0.1 0.2 0.2

Corporate debt securities 134.8 83.5 256.3 167.1

Corporate and other debt securities 155.0 97.4 416.9 270.1

Residential mortgage-backed securities 13.8 7.6 27.2 22.6

1 unchanged sentence

Other asset-backed securities 83.1 62.9 242.6 173.0

Redeemable preferred stocks 2.7 2.7 5.6 5.6

Total fixed maturities 712.9 466.0 1,934.3 1,240.0

8 unchanged sentences

Net investment income $ 732.3 $ 503.0 $ 2,021.9 $ 1,365.5

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.

On a year-over-year basis, investment income (interest and dividends) increased 45 % and 48 % for the three and nine months ended September 30, 2024, respectively.

Growth in invested assets and an increase in recurring investment book yield contributed to the increase in investment income.

The book yield increase primarily reflected investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities.

We have categorized our financial instruments, based on the degree of subjectivity inherent in the method by which they are valued, into a fair value hierarchy of three levels, as follows:

1 unchanged sentence

government obligations, which are continually priced on a daily basis, active exchange-traded equity securities, and certain short-term securities).

Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g., certain corporate and municipal bonds and certain preferred stocks).

Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly.

This includes:

(i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are

observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

(i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are observable for the instruments, and (iv) inputs that

are derived principally from or corroborated by observable market data by correlation or other means.

Inputs that are unobservable.

Unobservable inputs reflect our subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain structured securities and privately held investments).

Unobservable inputs reflect our subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain privately held investments).

Determining the fair value of the investment portfolio is the responsibility of management.

4 unchanged sentences

(millions) Level 1 Level 2 Level 3 Total Cost

June 30, 2024

September 30, 2024

Fixed maturities:

2 unchanged sentences

Foreign government obligations 0 16.4 0 16.4 16.9

Corporate debt securities 0 12,971.6 3.0 12,974.6 13,260.0

Corporate and other debt securities 0 15,032.5 3.0 15,035.5 14,969.8

Subtotal 44,428.5 17,650.3 3.0 62,081.8 61,899.0

4 unchanged sentences

Subtotal asset-backed securities 0 12,329.4 0 12,329.4 12,696.2

Redeemable preferred stocks:

Financials 0 23.1 0 23.1 24.5

Utilities 0 13.4 0 13.4 13.9

Industrials 0 135.0 0 135.0 140.4

Subtotal redeemable preferred stocks 0 171.5 0 171.5 178.8

Total fixed maturities 44,428.5 29,979.7 3.0 74,411.2 74,595.2

3 unchanged sentences

Nonredeemable preferred stocks 0 683.1 51.9 735.0 759.7

Financials 0 748.8 36.7 785.5 831.9

Utilities 0 37.5 0 37.5 40.0

Industrials 0 0 15.2 15.2 15.0

Subtotal nonredeemable preferred stocks 0 786.3 51.9 838.2 886.9

Common equities:

6 unchanged sentences

(millions) Level 1 Level 2 Level 3 Total Cost

June 30, 2023

September 30, 2023

Fixed maturities:

2 unchanged sentences

Foreign government obligations 0 15.4 0 15.4 16.9

Corporate debt securities 0 10,304.6 0 10,304.6 10,866.4

Corporate and other debt securities 0 10,421.3 0 10,421.3 11,069.8

Subtotal 34,293.8 12,491.0 0 46,784.8 49,736.5

4 unchanged sentences

Subtotal asset-backed securities 0 9,807.1 0 9,807.1 10,754.1

Redeemable preferred stocks:

Financials 0 22.0 0 22.0 24.5

Utilities 0 9.3 0 9.3 10.4

Industrials 0 125.4 0 125.4 139.1

Subtotal redeemable preferred stocks 0 156.7 0 156.7 174.0

Total fixed maturities 34,293.8 22,298.1 0 56,591.9 60,490.6

3 unchanged sentences

Nonredeemable preferred stocks 0 805.2 63.7 868.9 976.9

Financials 15.8 824.8 56.0 896.6 1,012.1

Utilities 0 72.7 0 72.7 80.0

Industrials 0 0 15.8 15.8 15.0

Subtotal nonredeemable preferred stocks 15.8 897.5 71.8 985.1 1,107.1

Common equities:

11 unchanged sentences

Foreign government obligations 0 16.3 0 16.3 17.3

Corporate debt securities 0 11,180.7 3.0 11,183.7 11,446.0

Corporate and other debt securities 0 11,354.4 3.0 11,357.4 11,633.7

Subtotal 36,869.4 13,573.5 3.0 50,445.9 51,812.6

4 unchanged sentences

Subtotal asset-backed securities 0 9,932.3 0 9,932.3 10,629.3

Redeemable preferred stocks:

Financials 0 23.1 0 23.1 24.5

Utilities 0 9.4 0 9.4 10.4

Industrials 0 141.2 0 141.2 152.8

Subtotal redeemable preferred stocks 0 173.7 0 173.7 187.7

Total fixed maturities 36,869.4 23,505.8 3.0 60,378.2 62,441.9

3 unchanged sentences

Nonredeemable preferred stocks 0 838.1 64.0 902.1 977.1

Financials 0 802.7 49.2 851.9 922.1

Utilities 0 35.4 0 35.4 40.0

Industrials 0 0 14.8 14.8 15.0

Subtotal nonredeemable preferred stocks 0 838.1 64.0 902.1 977.1

Common equities:

10 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 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.

At September 30, 2024 and 2023, and December 31, 2023, vendor-quoted prices represented 93 % of our Level 1 classifications (excluding short-term investments).

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

1 unchanged sentence

The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.

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

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

techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted.

At both September 30, 2024 and 2023, vendor-quoted prices comprised 99 % of our Level 2 classifications (excluding short-term investments), compared to 100 % at December 31, 2023.

The remaining 1 % at both September 30, 2024 and 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 techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted.

Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews.

2 unchanged sentences

However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process.

Quotes obtained from the sources are not considered binding offers to transact.

Quotes obtained from the sources are not considered binding offers

Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price.

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For structured debt securities, including commercial, residential, and other asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates.

We further stratify each class of our structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, subordinated, etc.) and use duration, credit quality, and coupon to determine if the fair value is appropriate.

For corporate debt and preferred stock (redeemable and nonredeemable) portfolios, as well as the notes issued by The Progressive Corporation (see Note 4 – Debt ), we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification.

We further stratify each class of our structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, and subordinated) and use duration, credit quality, and coupon to determine if the fair value is appropriate.

For corporate and other debt, nonredeemable preferred stock, and the notes issued by The Progressive Corporation (see Note 4 – Debt ), we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification.

The review also includes recent trades, including:

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however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature.

To the extent we receive prices from external sources (e.g., broker, valuation firm) for the Level 3 securities, we review those prices for reasonableness using internally developed assumptions and then compare our derived prices to the prices received from the external sources.

To the extent we receive prices from external sources (e.g., broker and valuation firm) for the Level 3 securities, we review those prices for reasonableness using internally developed assumptions and then compare our derived prices to the prices received from the external sources.

Based on our review, all prices received from external sources remained unadjusted.

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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 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.

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

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

During the first nine 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 and six months ended June 30, 2024 and 2023:

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

Level 3 Fair Value

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

(millions) Fair Value at June 30, 2024 Calls/

Paydowns/Other Purchases Sales Net Realized

on Sales Change in

In (Out) Fair Value at June 30, 2024

In (Out) Fair Value at September 30, 2024

Fixed maturities:

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

Corporate and other debt securities $ 3.0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3.0

Equity securities:

Nonredeemable preferred stocks 51.9 0 0 0 0 0 0 51.9

49.2 0 0 0 0 ( 12.5 ) 0 36.7

14.8 0 0 0 0 0.4 0 15.2

Common equities:

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Level 3 Fair Value

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

(millions) Fair Value at June 30, 2023 Calls/

Paydowns/Other Purchases Sales Net Realized

on Sales Change in

In (Out) Fair Value at June 30, 2023

In (Out) Fair Value at September 30, 2023

Equity securities:

Nonredeemable preferred stocks $ 71.8 $ ( 8.1 ) $ 0 $ 0 $ 0 $ 0 $ 0 $ 63.7

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

16.4 0 0 0 0 ( 0.6 ) 0 15.8

Common equities:

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on Sales Change in

In (Out) Fair Value at June 30, 2024

In (Out) Fair Value at September 30, 2024

Fixed maturities:

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

Corporate and other debt securities $ 3.0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3.0

Equity securities:

Nonredeemable preferred stocks 64.0 0 0 0 0 ( 12.1 ) 0 51.9

49.2 0 0 0 0 ( 12.5 ) 0 36.7

14.8 0 0 0 0 0.4 0 15.2

Common equities:

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on Sales Change in

In (Out) Fair Value at June 30, 2023

In (Out) Fair Value at September 30, 2023

Equity securities:

Nonredeemable preferred stocks $ 83.8 $ ( 8.1 ) $ 0 $ 0 $ 0 $ ( 12.0 ) $ 0 $ 63.7

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

16.4 0 0 0 0 ( 0.6 ) 0 15.8

Common equities:

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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:

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

Quantitative Information about Level 3 Fair Value Measurements

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

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

Fixed maturities:

Corporate debt securities $ 3.0 Market comparables Weighted average market capitalization price change % ( 1.2 )% to 1.2 %

Corporate and other debt securities $ 3.0 Market comparables Weighted average market capitalization price change % ( 3.1 )% to 10.9 %

Equity securities:

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Quantitative Information about Level 3 Fair Value Measurements

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

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

Equity securities:

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Fixed maturities:

Corporate debt securities $ 3.0 Market comparables Weighted average market capitalization price change % 0.3 % to 7.7 %

Corporate and other debt securities $ 3.0 Market comparables Weighted average market capitalization price change % 0.3 % to 7.7 %

Equity securities:

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Debt at each of the balance sheet periods consisted of:

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

September 30, 2024 September 30, 2023 December 31, 2023

(millions) Carrying

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

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.

The effective tax rate for the three and nine months ended September 30, 2024, was 20.8 % and 20.9 %, respectively , compared to 20.5 % and 20.2 % for the same periods last 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 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.

At September 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 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.

At September 30, 2024 and 2023, and December 31, 2023, the net deferred tax asset includes a gross deferred tax asset of $ 38.9 million , $ 807.0 million,

and $ 427.3 million, respectively, related to unrealized losses on fixed-maturity securities.

The decrease in the net deferred tax asset from year end 2023 and September 30, 2023, primarily reflected changes in these net unrealized losses.

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.

We had net current income taxes recoverable of $ 4.6 million at September 30, 2024, which were reported in other assets, compared to net current income taxes payable of $ 246.1 million and $ 311.8 million at September 30, 2023 and December 31, 2023, respectively, which were reported in accounts payable, accrued expenses, and other liabilities 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.

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

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:

September 30,

(millions) 2024 2023

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Total paid 32,161.9 30,346.0

Net balance at June 30

Net balance at September 30

33,515.5 28,636.1

Plus reinsurance recoverables on unpaid losses 4,546.0 4,941.2

Balance at June 30

Balance at September 30

$ 38,061.5 $ 33,577.3

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.

We experienced favorable reserve development of $ 199.4 million during the first nine months of 2024, compared to unfavorable development of $ 1,147.0 million for the same period last year, which is reflected as “incurred related to prior years ” in the table above.

Year-to-date September 30, 2024

• The favorable prior year reserve development included approximately $ 160 million attributable to accident year 2023, $ 5 million to accident year 2022, and the remainder to accident years 2021 and prior.

• Our perso nal auto products incurred about $ 375 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 favorable development was, in part, due to lower than anticipated severity and frequency in Florida and lower than anticipated property damage severity across the majority of states.

• Our Commercial Lines business experienced about $ 100 million of unfavorable development primarily driven by higher than anticipated severity in our commercial auto business for California, New York, and Texas.

• Our Property business experienced about $ 75 million of unfavorable development primarily due to higher LAE costs than anticipated.

Year-to-date September 30, 2023

• The unfavorable prior year reserve development included approximately $ 929 million attributable to accident year 2022, $ 108 million to accident year 2021, and the remainder to accident years 2020 and prior.

• Our personal auto products incurred about $ 866 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half.

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.

Over 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;

partially offset by lower than expected LAE.

• Our Commercial Lines business experienced about $ 277 million of unfavorable development, primarily driven by higher than anticipated severity and frequency of late reported injury claims, with about half of the unfavorable development attributable to our transportation network company business.

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 June 30, 2024 and 2023, and December 31, 2023, were $ 81.3 million, $ 68.0 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 September 30, 2024 and 2023, and December 31, 2023, were $ 89.4 million, $ 79.7 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(millions) 2024 2023

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In the respective periods, we paid the following:

Six Months Ended June 30,

Nine Months Ended September 30,

(millions) 2024 2023

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Operating lease liabilities 63.4 57.2

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.

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

SEGMENT INFORMATION

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Following are the operating results for the respective periods:

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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NA = Not applicable

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;

1 Personal auto insurance accounted for 95 % of the total Personal Lines segment net premiums earned during the three and nine months ended September 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.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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Total underwriting operations 11.0 89.0 7.6 92.4 10.9 89.1 2.8 97.2

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:

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

(millions — except per share amounts) Amount

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Common – Quarterly Dividends:

August 2024 October 2024 0.10 58.6

May 2024 July 2024 0.10 58.6

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December 2023 January 2024 0.10 58.6

August 2023 October 2023 0.10 58.5

May 2023 July 2023 0.10 58.5

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February 2024 15.688377 7.8

August 2023 September 2023 20.67700 10.3

May 2023 June 2023 18.92463 9.5

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

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 )

Other comprehensive income (loss) before reclassifications:

Investment securities 2,012.9 ( 422.7 ) 1,590.2 1,590.2 0 0

Foreign currency translation adjustment 0.1 0 0.1 0 0 0.1

Total other comprehensive income (loss) before reclassifications 2,013.0 ( 422.7 ) 1,590.3 1,590.2 0 0.1

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Total other comprehensive income (loss) 1,976.4 ( 415.0 ) 1,561.4 1,561.2 0.1 0.1

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

Balance at September 30, 2024 $ ( 203.2 ) $ 48.8 $ ( 154.4 ) $ ( 139.7 ) $ ( 13.7 ) $ ( 1.0 )

Components of Changes in

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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 )

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

Other comprehensive income (loss) before reclassifications:

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Total other comprehensive income (loss) ( 491.6 ) 103.2 ( 388.4 ) ( 388.6 ) 0.2 0

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

Balance at September 30, 2023 $ ( 3,861.2 ) $ 818.8 $ ( 3,042.4 ) $ ( 3,027.3 ) $ ( 14.1 ) $ ( 1.0 )

Components of Changes in

Accumulated Other

Comprehensive Income (after tax)

(millions) Pretax total

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Total other comprehensive income (loss) 1,849.7 ( 388.4 ) 1,461.3 1,461.1 0.3 ( 0.1 )

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

Balance at September 30, 2024 $ ( 203.2 ) $ 48.8 $ ( 154.4 ) $ ( 139.7 ) $ ( 13.7 ) $ ( 1.0 )

Components of Changes in

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Total other comprehensive income (loss) ( 304.3 ) 63.9 ( 240.4 ) ( 241.0 ) 0.4 0.2

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

Balance at September 30, 2023 $ ( 3,861.2 ) $ 818.8 $ ( 3,042.4 ) $ ( 3,027.3 ) $ ( 14.1 ) $ ( 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 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;

As of September 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, Ohio, Pennsylvania, and South Carolina;

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

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;

we failed, based on a vendor data security incident, to properly secure and safeguard personally identifiable information;

and that certain of our compensation practices are improper.

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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 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.

As of September 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 eight 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 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.

Based on information known at September 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 September 30, 2024 and 2023, or December 31, 2023, and there were no material settlements during 2023 or the first nine 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