Item 1. Financial Statements
Item 1. Financial Statements.
The Progressive Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended March 31,
2025 2024
(millions — except per share amounts)
Revenues
Net premiums earned $ 19,409 $ 16,149
Investment income 814 618
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales 1 ( 146 )
Net holding period gains (losses) on securities ( 213 ) 302
Total net realized gains (losses) on securities ( 212 ) 156
Fees and other revenues 287 236
Service revenues 111 84
Total revenues 20,409 17,243
Expenses
Losses and loss adjustment expenses 12,804 10,972
Policy acquisition costs 1,456 1,232
Other underwriting expenses 2,719 1,931
Investment expenses 7 6
Service expenses 117 92
Interest expense 70 70
Total expenses 17,173 14,303
Net Income
Income before income taxes 3,236 2,940
Provision for income taxes 669 609
Net income 2,567 2,331
Other Comprehensive Income (Loss)
Decrease (increase) in total net unrealized losses on fixed-maturity securities 899 ( 208 )
Comprehensive income (loss) $ 3,466 $ 2,123
Computation of Earnings Per Common Share
Net income $ 2,567 $ 2,331
Less: Preferred share dividends and other 1
0 17
Net income available to common shareholders $ 2,567 $ 2,314
Average common shares outstanding - Basic 586.0 585.4
Net effect of dilutive stock-based compensation 1.7 1.9
Total average equivalent common shares - Diluted 587.7 587.3
Basic: Earnings per common share $ 4.38 $ 3.95
Diluted: Earnings per common share $ 4.37 $ 3.94
1 All of our outstanding Serial Preferred Shares, Series B, were redeemed in February 2024.
See notes to consolidated financial statements.
1
The Progressive Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
March 31, December 31,
(millions) 2025 2024 2024
Assets
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $ 77,754 , $ 65,949 , and $ 77,126 )
$ 77,101 $ 63,630 $ 75,332
Short-term investments (amortized cost: $ 2,595 , $ 1,327 , and $ 615 )
2,595 1,327 615
Total available-for-sale securities 79,696 64,957 75,947
Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $ 608 , $ 931 , and $ 756 )
584 886 728
Common equities (cost: $ 774 , $ 708 , and $ 745 )
3,384 3,195 3,575
Total equity securities 3,968 4,081 4,303
Total investments 83,664 69,038 80,250
Cash and cash equivalents 195 155 143
Restricted cash and cash equivalents 12 13 11
Total cash, cash equivalents, restricted cash, and restricted cash equivalents 207 168 154
Accrued investment income 584 464 594
Premiums receivable, net of allowance for credit losses of $ 473 , $ 328 , and $ 460
16,811 14,193 14,369
Reinsurance recoverables 4,449 5,003 4,765
Prepaid reinsurance premiums 306 210 349
Deferred acquisition costs 2,068 1,818 1,961
Property and equipment, net of accumulated depreciation of $ 1,490 , $ 1,580 , and $ 1,461
854 756 790
Net federal deferred income taxes 860 1,032 954
Other assets 1,606 1,446 1,559
Total assets $ 111,409 $ 94,128 $ 105,745
Liabilities and Shareholders’ Equity
Unearned premiums $ 26,612 $ 22,907 $ 23,858
Loss and loss adjustment expense reserves 39,822 34,831 39,057
Accounts payable, accrued expenses, and other liabilities 9,127 7,689 10,346
Debt 1
6,894 6,890 6,893
Total liabilities 82,455 72,317 80,154
Common shares, $ 1.00 par value (authorized 900 ; issued 798 , including treasury shares of 212 )
586 586 586
Paid-in capital 2,160 2,029 2,145
Retained earnings 26,732 21,020 24,283
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities ( 509 ) ( 1,809 ) ( 1,408 )
Net unrealized losses on forecasted transactions ( 14 ) ( 14 ) ( 14 )
Foreign currency translation adjustment ( 1 ) ( 1 ) ( 1 )
Total accumulated other comprehensive income (loss) ( 524 ) ( 1,824 ) ( 1,423 )
Total shareholders’ equity 28,954 21,811 25,591
Total liabilities and shareholders’ equity $ 111,409 $ 94,128 $ 105,745
1 Consists solely of long-term debt. See Note 4 – Debt for further discussion.
See notes to consolidated financial statements.
2
The Progressive Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
Three Months Ended March 31, 2025 2024
(millions — except per share amounts)
Serial Preferred Shares, No Par Value
Balance, beginning of period $ 0 $ 494
Redemption of Serial Preferred Shares, Series B 1
0 ( 494 )
Balance, end of period 0 0
Common Shares, $ 1.00 Par Value
Balance, beginning of period 586 585
Treasury shares purchased 0 0
Net restricted equity awards issued/vested 0 1
Balance, end of period 586 586
Paid-In Capital
Balance, beginning of period 2,145 2,013
Amortization of equity-based compensation 16 17
Treasury shares purchased ( 1 ) ( 1 )
Net restricted equity awards issued/vested 0 ( 1 )
Reinvested dividends on restricted stock units 0 1
Balance, end of period 2,160 2,029
Retained Earnings
Balance, beginning of period 24,283 18,801
Net income 2,567 2,331
Treasury shares purchased ( 53 ) ( 36 )
Cash dividends declared on common shares ($ 0.10 and $ 0.10 per share) 1
( 59 ) ( 59 )
Cash dividends declared on Serial Preferred Shares, Series B ($ 0 and $ 15.688377 per share) 1
0 ( 8 )
Reinvested dividends on restricted stock units 0 ( 1 )
Other, net ( 6 ) ( 8 )
Balance, end of period 26,732 21,020
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period ( 1,423 ) ( 1,616 )
Other comprehensive income (loss) 899 ( 208 )
Balance, end of period ( 524 ) ( 1,824 )
Total shareholders’ equity $ 28,954 $ 21,811
1 See Note 9 – Dividends for further discussion.
There are 20 million Serial Preferred Shares authorized. There are 5 million Voting Preference Shares authorized; no such shares have been issued.
See notes to consolidated financial statements.
3
The Progressive Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended March 31, 2025 2024
(millions)
Cash Flows From Operating Activities
Net income $ 2,567 $ 2,331
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 70 70
Net amortization (accretion) of fixed-income securities ( 21 ) ( 7 )
Amortization of equity-based compensation 16 17
Net realized (gains) losses on securities 212 ( 156 )
Net (gains) losses on disposition of property and equipment 3 ( 2 )
Changes in:
Premiums receivable ( 2,442 ) ( 2,235 )
Reinsurance recoverables 316 91
Prepaid reinsurance premiums 43 40
Deferred acquisition costs ( 107 ) ( 131 )
Income taxes 667 609
Unearned premiums 2,754 2,773
Loss and loss adjustment expense reserves 765 442
Accounts payable, accrued expenses, and other liabilities 334 458
Other, net ( 34 ) ( 65 )
Net cash provided by operating activities 5,143 4,235
Cash Flows From Investing Activities
Purchases:
Fixed maturities ( 17,324 ) ( 13,288 )
Equity securities ( 86 ) ( 32 )
Sales:
Fixed maturities 14,721 7,765
Equity securities 149 58
Maturities, paydowns, calls, and other:
Fixed maturities 1,950 1,855
Equity securities 87 24
Net (purchases) sales of short-term investments ( 1,964 ) 479
Net change in unsettled security transactions 172 62
Purchases of property and equipment ( 59 ) ( 50 )
Sales of property and equipment 13 3
Net cash used in investing activities ( 2,341 ) ( 3,124 )
Cash Flows From Financing Activities
Dividends paid to common shareholders ( 2,695 ) ( 498 )
Acquisition of treasury shares for equity award tax liabilities ( 54 ) ( 37 )
Redemption of preferred shares 0 ( 500 )
Dividends paid to preferred shareholders 0 ( 8 )
Net cash used in financing activities ( 2,749 ) ( 1,043 )
Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 53 68
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 154 100
Cash, cash equivalents, restricted cash, and restricted cash equivalents – March 31
$ 207 $ 168
See notes to consolidated financial statements.
4
The Progressive Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. BASIS OF REPORTING AND ACCOUNTING
The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries and non-insurance subsidiaries and affiliates in which we have a controlling financial interest (Progressive).
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, 2025, 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, 2024 (2024 Annual Report to Shareholders).
Premiums Receivable
We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2024 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:
Three Months Ended March 31,
(millions) 2025 2024
Allowance for credit losses, beginning of period $ 460 $ 369
Increase in allowance 1
153 107
Write-offs 2
( 140 ) ( 148 )
Allowance for credit losses, end of period $ 473 $ 328
1 Represents the incremental increase in other underwriting expenses.
2 Represents the portion of allowance that is reversed when the premiums receivable balances are written off. Premiums receivable balances are written off once we have exhausted our collection efforts.
Property – Held for Sale
At March 31, 2025 and 2024, and December 31, 2024, we had held for sale properties of $ 117 million, $ 170 million, and $ 129 million, respectively, which are included in other assets on our consolidated balance sheets.
New Accounting Standards
We did not adopt any new accounting standards during the three months ended March 31, 2025, and there were no recently issued accounting standards that are expected to materially impact our financial condition or results of operations.
5
2. INVESTMENTS
The following tables present the composition of our investment portfolio by major security type:
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
March 31, 2025
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 44,523 $ 391 $ ( 596 ) $ 0 $ 44,318 53.0 %
State and local government obligations 2,688 6 ( 90 ) 0 2,604 3.1
Foreign government obligations 16 0 0 0 16 0
Corporate and other debt securities 16,047 127 ( 156 ) ( 2 ) 16,016 19.2
Residential mortgage-backed securities 2,172 18 ( 8 ) 1 2,183 2.6
Commercial mortgage-backed securities 5,144 5 ( 324 ) 0 4,825 5.8
Other asset-backed securities 7,164 25 ( 50 ) 0 7,139 8.5
Total fixed maturities 77,754 572 ( 1,224 ) ( 1 ) 77,101 92.2
Short-term investments 2,595 0 0 0 2,595 3.1
Total available-for-sale securities 80,349 572 ( 1,224 ) ( 1 ) 79,696 95.3
Equity securities:
Nonredeemable preferred stocks 608 0 0 ( 24 ) 584 0.7
Common equities 774 0 0 2,610 3,384 4.0
Total equity securities 1,382 0 0 2,586 3,968 4.7
Total portfolio 1
$ 81,731 $ 572 $ ( 1,224 ) $ 2,585 $ 83,664 100.0 %
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
March 31, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 39,824 $ 66 $ ( 1,327 ) $ 0 $ 38,563 55.8 %
State and local government obligations 2,201 2 ( 143 ) 0 2,060 3.0
Foreign government obligations 17 0 ( 1 ) 0 16 0.1
Corporate and other debt securities 13,003 45 ( 330 ) ( 23 ) 12,695 18.3
Residential mortgage-backed securities 390 0 ( 9 ) 2 383 0.6
Commercial mortgage-backed securities 4,368 3 ( 519 ) 0 3,852 5.6
Other asset-backed securities 6,146 9 ( 94 ) 0 6,061 8.8
Total fixed maturities 65,949 125 ( 2,423 ) ( 21 ) 63,630 92.2
Short-term investments 1,327 0 0 0 1,327 1.9
Total available-for-sale securities 67,276 125 ( 2,423 ) ( 21 ) 64,957 94.1
Equity securities:
Nonredeemable preferred stocks 931 0 0 ( 45 ) 886 1.3
Common equities 708 0 0 2,487 3,195 4.6
Total equity securities 1,639 0 0 2,442 4,081 5.9
Total portfolio 1
$ 68,915 $ 125 $ ( 2,423 ) $ 2,421 $ 69,038 100.0 %
6
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
December 31, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 47,103 $ 36 $ ( 1,151 ) $ 0 $ 45,988 57.3 %
State and local government obligations 2,893 2 ( 117 ) 0 2,778 3.5
Foreign government obligations 16 0 0 0 16 0
Corporate and other debt securities 14,111 65 ( 215 ) ( 7 ) 13,954 17.4
Residential mortgage-backed securities 1,600 9 ( 11 ) 3 1,601 2.0
Commercial mortgage-backed securities 4,721 7 ( 376 ) 0 4,352 5.4
Other asset-backed securities 6,682 26 ( 65 ) 0 6,643 8.3
Total fixed maturities 77,126 145 ( 1,935 ) ( 4 ) 75,332 93.9
Short-term investments 615 0 0 0 615 0.7
Total available-for-sale securities 77,741 145 ( 1,935 ) ( 4 ) 75,947 94.6
Equity securities:
Nonredeemable preferred stocks 756 0 0 ( 28 ) 728 0.9
Common equities 745 0 0 2,830 3,575 4.5
Total equity securities 1,501 0 0 2,802 4,303 5.4
Total portfolio 1
$ 79,242 $ 145 $ ( 1,935 ) $ 2,798 $ 80,250 100.0 %
1 At March 31, 2025 and 2024 and December 31, 2024, we had $ 297 million, $ 16 million, and $ 125 million, respectively, of net unsettled security transactions included in other liabilities.
The total fair value of the portfolio at March 31, 2025 and 2024 and December 31, 2024, included $ 3.5 billion, $ 3.2 billion, and $ 6.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions. A portion of the investments held at December 31, 2024 were sold and proceeds used to pay our common share dividends in January 2025; see Note 9 – Dividends for additional information.
The March 31, 2024, corporate and other debt securities in our Note 2 – Investments and Note 3 – Fair Value tables include amounts that were previously reported as redeemable preferred stocks. The reclassification was to reflect the accurate categorization based on the underlying features of these securities; see Note 2 – Investments in our 2024 Annual Report to Shareholders for further discussion.
At March 31, 2025, bonds and certificates of deposit in the principal amount of $ 785 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, 2025 or 2024, or December 31, 2024. At March 31, 2025, we did no t hold any debt securities that were non-income producing during the preceding 12 months.
Hybrid Securities Certain securities in our fixed-maturity portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. These securities are reported at fair value:
March 31,
(millions) 2025 2024 December 31, 2024
Fixed Maturities:
Corporate and other debt securities $ 632 $ 648 $ 608
Residential mortgage-backed securities 579 300 479
Other asset-backed securities 0 10 1
Total hybrid securities $ 1,211 $ 958 $ 1,088
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).
7
Fixed Maturities The composition of fixed maturities by maturity at March 31, 2025, was:
(millions) Cost Fair Value
Less than one year $ 8,532 $ 8,486
One to five years 48,451 47,974
Five to ten years 20,460 20,326
Ten years or greater 311 315
Total $ 77,754 $ 77,101
Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities that do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.
Gross Unrealized Losses The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
March 31, 2025
U.S. government obligations 85 $ 16,851 $ ( 596 ) 18 $ 9,284 $ ( 69 ) 67 $ 7,567 $ ( 527 )
State and local government obligations 307 1,871 ( 90 ) 70 445 ( 2 ) 237 1,426 ( 88 )
Corporate and other debt securities 210 4,967 ( 156 ) 56 1,352 ( 12 ) 154 3,615 ( 144 )
Residential mortgage-backed securities 47 674 ( 8 ) 25 628 ( 2 ) 22 46 ( 6 )
Commercial mortgage-backed securities 165 3,653 ( 324 ) 22 597 ( 4 ) 143 3,056 ( 320 )
Other asset-backed securities 89 2,046 ( 50 ) 46 1,128 ( 3 ) 43 918 ( 47 )
Total fixed maturities 903 $ 30,062 $ ( 1,224 ) 237 $ 13,434 $ ( 92 ) 666 $ 16,628 $ ( 1,132 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
March 31, 2024
U.S. government obligations 139 $ 32,968 $ ( 1,327 ) 37 $ 21,635 $ ( 295 ) 102 $ 11,333 $ ( 1,032 )
State and local government obligations 330 1,923 ( 143 ) 41 251 ( 2 ) 289 1,672 ( 141 )
Foreign government obligations 1 16 ( 1 ) 0 0 0 1 16 ( 1 )
Corporate and other debt securities 366 8,127 ( 330 ) 106 2,369 ( 20 ) 260 5,758 ( 310 )
Residential mortgage-backed securities 35 78 ( 9 ) 1 0 0 34 78 ( 9 )
Commercial mortgage-backed securities 181 3,742 ( 519 ) 4 191 ( 2 ) 177 3,551 ( 517 )
Other asset-backed securities 193 3,259 ( 94 ) 59 1,303 ( 2 ) 134 1,956 ( 92 )
Total fixed maturities 1,245 $ 50,113 $ ( 2,423 ) 248 $ 25,749 $ ( 321 ) 997 $ 24,364 $ ( 2,102 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
December 31, 2024
U.S. government obligations 113 $ 38,782 $ ( 1,151 ) 39 $ 30,257 $ ( 418 ) 74 $ 8,525 $ ( 733 )
State and local government obligations 379 2,339 ( 117 ) 127 783 ( 6 ) 252 1,556 ( 111 )
Corporate and other debt securities 304 7,034 ( 215 ) 122 2,935 ( 33 ) 182 4,099 ( 182 )
Residential mortgage-backed securities 40 428 ( 11 ) 12 377 ( 4 ) 28 51 ( 7 )
Commercial mortgage-backed securities 153 3,294 ( 376 ) 8 264 ( 16 ) 145 3,030 ( 360 )
Other asset-backed securities 84 1,907 ( 65 ) 34 912 ( 8 ) 50 995 ( 57 )
Total fixed maturities 1,073 $ 53,784 $ ( 1,935 ) 342 $ 35,528 $ ( 485 ) 731 $ 18,256 $ ( 1,450 )
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 three securities that had their credit ratings downgraded, with a combined fair value of $ 90 million and an unrealized loss of $ 5 million as of March 31, 2025. Based on our analysis of these securities, no credit loss allowance was required.
8
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 credit losses deemed to be uncollectible during the first three months of 2025 or 2024, and did no t have a material credit loss allowance balance as of March 31, 2025 and 2024, or December 31, 2024. We considered several factors and inputs related to the individual securities as part of our analysis. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included:
• current performance indicators on the business model or underlying assets (e.g., delinquency rates, foreclosure rates, and default rates);
• credit support (via current levels of subordination);
• historical credit ratings; and
• updated cash flow expectations based upon these performance indicators.
In order to determine the amount of credit loss, if any, we initially reviewed securities in a loss position to determine whether it was likely that we would be required, or intended, to sell any of the securities prior to the recovery of their respective cost bases (which could be maturity). If we were likely to, or intended to, sell prior to a potential recovery, we would write off the unrealized loss. We did not have an intention to sell any securities in a gross unrealized loss position at March 31, 2025 or March 31, 2024.
For those securities that we determined we were not likely to, or did not intend to, sell prior to a potential recovery,
we performed additional analysis to determine if the loss was credit related. For securities subject to credit-related loss, we calculated the net present value (NPV) of the cash flows expected (i.e., expected recovery value) using the current book yield for each security. The NPV was then compared to the security’s current amortized value to determine if a credit loss existed. 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, 2025 and 2024, and December 31, 2024, 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, 2025 and 2024, and December 31, 2024, 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, 2025 and 2024, or December 31, 2024.
9
Realized Gains (Losses) The components of net realized gains (losses) for the three months ended March 31, were:
Three Months
(millions) 2025 2024
Gross realized gains on security sales
Available-for-sale securities:
U.S. government obligations $ 53 $ 0
Corporate and other debt securities 1 3
Total available-for-sale securities 54 3
Equity securities:
Nonredeemable preferred stocks 2 0
Common equities 35 12
Total equity securities 37 12
Subtotal gross realized gains on security sales 91 15
Gross realized losses on security sales
Available-for-sale securities:
U.S. government obligations ( 77 ) ( 135 )
State and local government obligations ( 2 ) 0
Corporate and other debt securities ( 1 ) ( 15 )
Commercial mortgage-backed securities ( 4 ) ( 5 )
Total available-for-sale securities ( 84 ) ( 155 )
Equity securities:
Nonredeemable preferred stocks ( 2 ) ( 6 )
Common equities ( 4 ) 0
Total equity securities ( 6 ) ( 6 )
Subtotal gross realized losses on security sales ( 90 ) ( 161 )
Net realized gains (losses) on security sales
Available-for-sale securities:
U.S. government obligations ( 24 ) ( 135 )
State and local government obligations ( 2 ) 0
Corporate and other debt securities 0 ( 12 )
Commercial mortgage-backed securities ( 4 ) ( 5 )
Total available-for-sale securities ( 30 ) ( 152 )
Equity securities:
Nonredeemable preferred stocks 0 ( 6 )
Common equities 31 12
Total equity securities 31 6
Subtotal net realized gains (losses) on security sales 1 ( 146 )
Net holding period gains (losses)
Hybrid securities 3 8
Equity securities ( 216 ) 294
Subtotal net holding period gains (losses) ( 213 ) 302
Total net realized gains (losses) on securities $ ( 212 ) $ 156
Realized gains (losses) on securities sold are computed using the first-in-first-out method. During the first three months of 2025 and 2024, the majority of our security sales were U.S. Treasury Notes that were sold for duration management. We also selectively sold securities that we viewed as having less attractive risk/reward profiles during the first three months of 2025 and 2024.
The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective quarter ends:
Three Months
(millions) 2025 2024
Total net gains (losses) recognized during the period on equity securities $ ( 185 ) $ 300
Less: Net gains (losses) recognized on equity securities sold during the period 31 6
Net holding period gains (losses) recognized during the period on equity securities held at period end $ ( 216 ) $ 294
10
Net Investment Income The components of net investment income for the three months ended March 31, were:
Three Months
(millions) 2025 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 422 $ 307
State and local government obligations 19 13
Corporate and other debt securities 171 125
Residential mortgage-backed securities 25 5
Commercial mortgage-backed securities 53 46
Other asset-backed securities 84 78
Total fixed maturities 774 574
Short-term investments 18 19
Total available-for-sale securities 792 593
Equity securities:
Nonredeemable preferred stocks 8 11
Common equities 14 14
Total equity securities 22 25
Investment income 814 618
Investment expenses ( 7 ) ( 6 )
Net investment income $ 807 $ 612
On a year-over-year basis, investment income (interest and dividends) increased 32 % for the three months ended March 31, 2025, compared to the same period last year . The increase primarily reflects growth in invested assets and an increase in recurring investment book yield. The book yield increase primarily reflected investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities.
3. FAIR VALUE
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:
• Level 1 : Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. government obligations, which are continually priced on a daily basis, active exchange-traded equity securities, and certain short-term securities).
• Level 2 : 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.
• Level 3 : 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 privately held investments).
Determining the fair value of the investment portfolio is the responsibility of management. As part of that responsibility, we evaluate whether a market is distressed or inactive in determining the fair value for our portfolio. We review certain market level inputs to evaluate whether sufficient activity, volume, and new issuances exist to create an active market. Based on this evaluation, we concluded that there was sufficient activity related to the sectors and securities for which we obtained valuations.
11
The composition of the investment portfolio by major security type and our outstanding debt was:
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
March 31, 2025
Fixed maturities:
U.S. government obligations $ 44,318 $ 0 $ 0 $ 44,318 $ 44,523
State and local government obligations 0 2,604 0 2,604 2,688
Foreign government obligations 0 16 0 16 16
Corporate and other debt securities 0 16,011 5 16,016 16,047
Residential mortgage-backed securities 0 2,183 0 2,183 2,172
Commercial mortgage-backed securities 0 4,825 0 4,825 5,144
Other asset-backed securities 0 7,139 0 7,139 7,164
Total fixed maturities 44,318 32,778 5 77,101 77,754
Short-term investments 2,595 0 0 2,595 2,595
Total available-for-sale securities 46,913 32,778 5 79,696 80,349
Equity securities:
Nonredeemable preferred stocks 0 524 60 584 608
Common equities:
Common stocks 3,344 0 9 3,353 743
Other risk investments 0 0 31 31 31
Subtotal common equities 3,344 0 40 3,384 774
Total equity securities 3,344 524 100 3,968 1,382
Total portfolio $ 50,257 $ 33,302 $ 105 $ 83,664 $ 81,731
Debt $ 0 $ 6,247 $ 0 $ 6,247 $ 6,894
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
March 31, 2024
Fixed maturities:
U.S. government obligations $ 38,563 $ 0 $ 0 $ 38,563 $ 39,824
State and local government obligations 0 2,060 0 2,060 2,201
Foreign government obligations 0 16 0 16 17
Corporate and other debt securities 0 12,692 3 12,695 13,003
Residential mortgage-backed securities 0 383 0 383 390
Commercial mortgage-backed securities 0 3,852 0 3,852 4,368
Other asset-backed securities 0 6,061 0 6,061 6,146
Total fixed maturities 38,563 25,064 3 63,630 65,949
Short-term investments 1,327 0 0 1,327 1,327
Total available-for-sale securities 39,890 25,064 3 64,957 67,276
Equity securities:
Nonredeemable preferred stocks 0 822 64 886 931
Common equities:
Common stocks 3,148 0 22 3,170 683
Other risk investments 0 0 25 25 25
Subtotal common equities 3,148 0 47 3,195 708
Total equity securities 3,148 822 111 4,081 1,639
Total portfolio $ 43,038 $ 25,886 $ 114 $ 69,038 $ 68,915
Debt $ 0 $ 6,298 $ 0 $ 6,298 $ 6,890
12
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
December 31, 2024
Fixed maturities:
U.S. government obligations $ 45,988 $ 0 $ 0 $ 45,988 $ 47,103
State and local government obligations 0 2,778 0 2,778 2,893
Foreign government obligations 0 16 0 16 16
Corporate and other debt securities 0 13,949 5 13,954 14,111
Residential mortgage-backed securities 0 1,601 0 1,601 1,600
Commercial mortgage-backed securities 0 4,352 0 4,352 4,721
Other asset-backed securities 0 6,643 0 6,643 6,682
Total fixed maturities 45,988 29,339 5 75,332 77,126
Short-term investments 613 2 0 615 615
Total available-for-sale securities 46,601 29,341 5 75,947 77,741
Equity securities:
Nonredeemable preferred stocks 0 676 52 728 756
Common equities:
Common stocks 3,527 0 23 3,550 720
Other risk investments 0 0 25 25 25
Subtotal common equities 3,527 0 48 3,575 745
Total equity securities 3,527 676 100 4,303 1,501
Total portfolio $ 50,128 $ 30,017 $ 105 $ 80,250 $ 79,242
Debt $ 0 $ 6,173 $ 0 $ 6,173 $ 6,893
Our portfolio valuations, excluding short-term investments, classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices.
Our short-term investments classified as Level 1 are highly liquid, actively marketed, and have a very short duration, primarily 90 days or less to redemption. These securities are held at their original cost, adjusted for any accretion of discount, since that value very closely approximates what
an active market participant would be willing to pay for such securities. The remainder of our short-term investments are classified as Level 2 and are not priced externally since these securities continually trade at par value. 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 March 31, 2025 and December 31, 2024, vendor-quoted prices represented 93 % of our Level 1 classifications (excluding short-term investments), compared to 92 % at March 31, 2024. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.
At March 31, 2025 and 2024 and December 31, 2024, vendor-quoted prices comprised 100 % of our Level 2
classifications (excluding short-term investments). 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. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.
As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. 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. 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. To
13
the extent we determine that it may be prudent to substitute one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance.
To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. When necessary, we challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.
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 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: volume traded at various levels that establish a market; issuer specific fundamentals; and industry-specific economic news as it comes to light.
For municipal securities (e.g., general obligations, revenue, and housing), we stratify the portfolio to evaluate securities by type, duration, credit quality, and coupon to review price changes relative to credit spread and interest rate changes. Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.
For short-term securities, we look at acquisition price relative to the coupon or yield. Since our short-term securities are typically 90 days or less to maturity, with the majority listed in Level 2 being 30 days or less to redemption, we believe that acquisition price is the best estimate of fair value.
We also review data assumptions as supplied by our sources to determine if that data is relevant to current
market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.
During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our internally generated portfolio results with those generated based on quotes we receive externally and research material valuation differences. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review on a monthly basis our external sales transactions and compare the actual final market sales prices to previous market valuation prices. This review provides us further validation that our pricing sources are providing market level prices, since we are able to explain significant price changes (i.e., greater than 2%) as known events occur in the marketplace and affect a particular security’s price at sale.
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.
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.
Except as described below, our Level 3 securities are priced externally; 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 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.
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
14
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.
Our Level 3 other risk investments include securities accounted for under the equity method of accounting and, therefore, are not subject to fair value reporting. Since these securities represent less than 0.1% of our total portfolio, we 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.
During the first three months of 2025 and for the full year of 2024, 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, 2025 and 2024:
Level 3 Fair Value
(millions) Fair Value at December 31, 2024 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at March 31, 2025
Fixed maturities:
Corporate and other debt securities $ 5 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 5
Equity securities:
Nonredeemable preferred stocks 52 0 8 0 0 0 0 60
Common equities:
Common stocks 23 0 0 0 0 ( 14 ) 0 9
Other risk investments 25 6 0 0 0 0 0 31
Total Level 3 securities $ 105 $ 6 $ 8 $ 0 $ 0 $ ( 14 ) $ 0 $ 105
Level 3 Fair Value
(millions) Fair Value at December 31, 2023 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at March 31, 2024
Fixed maturities:
Corporate and other debt securities $ 3 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3
Equity securities:
Nonredeemable preferred stocks 64 0 0 0 0 0 0 64
Common equities:
Common stocks 22 0 0 0 0 0 0 22
Other risk investments 21 4 0 0 0 0 0 25
Total Level 3 securities
$ 110 $ 4 $ 0 $ 0 $ 0 $ 0 $ 0 $ 114
1 For fixed maturities, these amounts are included in accumulated other comprehensive income (loss) on our consolidated balance sheets. For equity securities, these amounts are included in our consolidated statements of comprehensive income.
15
The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at March 31, 2025 and 2024, and December 31, 2024:
Quantitative Information about Level 3 Fair Value Measurements
($ in millions) Fair Value at March 31, 2025 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)
Fixed maturities:
Corporate and other debt securities $ 5 Market comparables Weighted average market capitalization price change % 0.7 % to 0.8 %
0.8 %
Equity securities:
Nonredeemable preferred stocks 60 Market comparables Weighted average market capitalization price change % ( 11.8 )% to 16.1 %
6.4 %
Common stocks 9 Market comparables Weighted average market capitalization price change % ( 36.8 )% to 41.5 %
6.7 %
Subtotal Level 3 securities 74
Pricing exemption securities 31
Total Level 3 securities $ 105
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)
Fixed maturities:
Corporate and other debt securities $ 3 Market comparables Weighted average market capitalization price change % ( 2.3 )% to 1.2 %
( 0.1 ) %
Equity securities:
Nonredeemable preferred stocks 64 Market comparables Weighted average market capitalization price change % 3.4 % to 28.4 %
22.6 %
Common stocks 22 Market comparables Weighted average market capitalization price change % ( 37.9 )% to 39.6 %
3.4 %
Subtotal Level 3 securities 89
Pricing exemption securities 25
Total Level 3 securities $ 114
16
Quantitative Information about Level 3 Fair Value Measurements
($ in millions) Fair Value at December 31, 2024 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)
Fixed maturities:
Corporate and other debt securities $ 5 Market comparables Weighted average market capitalization price change % ( 1.4 )% to ( 1.3 )%
( 1.4 ) %
Equity securities:
Nonredeemable preferred stocks 52 Market comparables Weighted average market capitalization price change % ( 14.1 )% to 6.0 %
( 2.7 ) %
Common stocks 23 Market comparables Weighted average market capitalization price change % ( 41.3 )% to 95.9 %
6.0 %
Subtotal Level 3 securities 80
Pricing exemption securities 25
Total Level 3 securities $ 105
4. DEBT
Debt at each of the balance sheet periods consisted of the following Senior Notes:
($ in millions) March 31, 2025 March 31, 2024 December 31, 2024
Principal Amount Interest Rate Issuance Date Maturity Date Carrying
Value Fair
Value Carrying
Value Fair
Value Carrying
Value Fair
Value
$ 500 2.45 % August 2016 2027 $ 499 $ 484 $ 499 $ 469 $ 499 $ 479
500 2.50 March 2022 2027 499 483 498 468 499 479
300 6 5/8 March 1999 2029 298 322 298 324 298 320
550 4.00 October 2018 2029 548 542 547 532 547 534
500 3.20 March 2020 2030 498 470 497 456 498 462
500 3.00 March 2022 2032 497 447 496 436 497 439
400 6.25 November 2002 2032 397 434 397 434 397 430
500 4.95 May 2023 2033 497 503 497 499 497 495
350 4.35 April 2014 2044 347 300 347 313 347 298
400 3.70 January 2015 2045 396 310 396 328 396 308
850 4.125 April 2017 2047 842 695 842 719 842 684
600 4.20 March 2018 2048 591 493 591 520 591 490
500 3.95 March 2020 2050 491 393 491 410 491 386
500 3.70 March 2022 2052 494 371 494 390 494 369
Total $ 6,894 $ 6,247 $ 6,890 $ 6,298 $ 6,893 $ 6,173
There was no short-term debt outstanding as of the end of all periods presented.
The Progressive Corporation has a line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $ 300 million. See the 2024 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.
17
5. INCOME TAXES
The effective tax rate for the three months ended March 31, 2025 and 2024, was 20.7 % .
Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that 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 and, therefore, no valuation allowance was needed at March 31, 2025 and 2024, and December 31, 2024.
We had net current income taxes payable of $ 838 million , $ 962 million, and $ 26 million at March 31, 2025 and 2024, and December 31, 2024, respectively, which were reported in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets. The balance may fluctuate from period to period due to normal timing differences.
At March 31, 2025 and 2024, and December 31, 2024, we have not recorded any unrecognized tax benefits or related interest and penalties.
6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Activity in the loss and loss adjustment expense reserves is summarized as follows:
March 31,
(millions) 2025 2024
Balance at January 1 $ 39,057 $ 34,389
Less reinsurance recoverables on unpaid losses 4,487 4,789
Net balance at January 1 34,570 29,600
Incurred related to:
Current year 13,082 10,983
Prior years ( 278 ) ( 11 )
Total incurred 12,804 10,972
Paid related to:
Current year 4,881 4,422
Prior years 6,804 5,971
Total paid 11,685 10,393
Net balance at March 31
35,689 30,179
Plus reinsurance recoverables on unpaid losses 4,133 4,652
Balance at March 31
$ 39,822 $ 34,831
We experienced favorable reserve development of $ 278 million and $ 11 million during the first three months of 2025 and 2024, respectively, which is reflected as “incurred related to prior years ” in the table above.
First Quarter 2025
• The favorable prior year reserve development included approximately $ 180 million attributable to accident year 2024, $ 90 million to accident year 2023, and the remainder to accident years 2022 and prior.
• Our perso nal auto products incurred about $ 260 million of favorable loss and loss adjustment expense (LAE) reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated loss severity and frequency in Florida.
• Our personal property products experienced about $ 30 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events.
First Quarter 2024
• The favorable prior year reserve development included approximately $ 50 million of favorable development attributable to accident year 2023 and $ 15 million to accident year 2022; partially offset by unfavorable development attributable to accident years 2021 and prior.
• Our personal auto products incurred about $ 100 million of favorable loss and 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.
18
7. 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, 2025 and 2024, and December 31, 2024, were $ 78 million, $ 108 million, and $ 127 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,
(millions) 2025 2024
Common share dividends 1
$ 59 $ 59
Operating lease liabilities 2
40 28
1 Declared but unpaid. See Note 9 – Dividends for further discussion.
2 From obtaining right-of-use assets.
In the respective periods, we paid the following:
Three Months Ended March 31,
(millions) 2025 2024
Interest $ 88 $ 88
Operating lease liabilities 22 22
8. SEGMENT INFORMATION
Our Personal Lines segment writes insurance for personal autos, special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), personal residential property insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program. Property information for the three months ended March 31, 2024, was recast to conform to the current year presentation; see Note 10 – Segment Information in our 2024 Annual Report to Shareholders for further discussion.
Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related
general liability and commercial property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.
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. All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.
19
Following are the operating results for the respective periods:
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended March 31, 2025
Net premiums earned $ 16,710 $ 2,699 $ 0 $ 19,409
Fees and other revenues 249 38 0 287
Total underwriting revenue 16,959 2,737 0 19,696
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 9,109 1,559 0 10,668
Catastrophe losses 454 5 0 459
Loss adjustment expenses 1,390 287 0 1,677
Total losses and loss adjustment expenses 10,953 1,851 0 12,804
Underwriting expenses:
Distribution expenses 2
2,348 286 0 2,634
Other underwriting expenses 3
1,275 262 4 1,541
Total underwriting expenses 3,623 548 4 4,175
Pretax underwriting profit (loss) $ 2,383 $ 338 $ ( 4 ) 2,717
Investment profit (loss) 4
595
Service businesses profit (loss) ( 6 )
Interest expense ( 70 )
Total pretax profit (loss) $ 3,236
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended March 31, 2024
Net premiums earned $ 13,591 $ 2,558 $ 0 $ 16,149
Fees and other revenues 196 40 0 236
Total underwriting revenue 13,787 2,598 0 16,385
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 7,563 1,593 ( 2 ) 9,154
Catastrophe losses 338 9 0 347
Loss adjustment expenses 1,197 274 0 1,471
Total losses and loss adjustment expenses 9,098 1,876 ( 2 ) 10,972
Underwriting expenses:
Distribution expenses 2
1,560 274 0 1,834
Other underwriting expenses 3
1,088 239 2 1,329
Total underwriting expenses 2,648 513 2 3,163
Pretax underwriting profit (loss) $ 2,041 $ 209 $ 0 2,250
Investment profit (loss) 4
768
Service businesses profit (loss) ( 8 )
Interest expense ( 70 )
Total pretax profit (loss) $ 2,940
1 Includes other underwriting businesses and run-off operations.
2 Includes policy acquisition costs, agents’ contingent commissions, and advertising costs attributable to our operating segments. A portion of our companywide advertising costs are also related to our service businesses.
3 Primarily consists of employee compensation and benefit costs, and the increase in the allowance for credit loss exposure on our premiums receivable.
4 Calculated as recurring investment income plus total net realized gains (losses) on securities, less investment expenses.
20
Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Combined ratio is the complement of the underwriting margin. Fees and other revenues are netted against either loss adjustment expenses or underwriting expenses in the ratio calculations, based on the underlying activity that generated the revenue. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:
Three Months Ended March 31,
2025 2024
Underwriting
Margin Combined
Ratio Underwriting
Margin Combined
Ratio
Personal Lines 14.3 % 85.7 15.0 % 85.0
Commercial Lines 12.5 87.5 8.2 91.8
Total underwriting operations 14.0 86.0 13.9 86.1
9. DIVIDENDS
Following is a summary of our common and preferred share dividends that were declared and/or paid during the three months ended March 31, 2025 and 2024:
(millions — except per share amounts) Amount
Declared Payable Per Share Accrued/Paid 1
Common – Annual-Variable Dividends:
December 2024 January 2025 $ 4.50 $ 2,637
December 2023 January 2024 0.75 439
Common – Quarterly Dividends:
March 2025 April 2025 0.10 59
December 2024 January 2025 0.10 58
March 2024 April 2024 0.10 59
December 2023 January 2024 0.10 59
Preferred Dividends:
January 2024 2
February 2024 15.688377 8
1 The accrual is based on an estimate of shares outstanding as of the record date and recorded as a component of accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets until paid.
2 In February 2024, we redeemed all of our outstanding Serial Preferred Shares, Series B.
21
10. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss), including reclassification adjustments by income statement line item, were as follows:
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net
unrealized
gains
(losses)
on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at December 31, 2024 $ ( 1,809 ) $ 386 $ ( 1,423 ) $ ( 1,408 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities 1,108 ( 233 ) 875 875 0 0
Total other comprehensive income (loss) before reclassifications 1,108 ( 233 ) 875 875 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities ( 30 ) 6 ( 24 ) ( 24 ) 0 0
Total reclassification adjustment for amounts realized in net income ( 30 ) 6 ( 24 ) ( 24 ) 0 0
Total other comprehensive income (loss) 1,138 ( 239 ) 899 899 0 0
Balance at March 31, 2025 $ ( 671 ) $ 147 $ ( 524 ) $ ( 509 ) $ ( 14 ) $ ( 1 )
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at December 31, 2023 $ ( 2,053 ) $ 437 $ ( 1,616 ) $ ( 1,601 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities ( 414 ) 87 ( 327 ) ( 327 ) 0 0
Total other comprehensive income (loss) before reclassifications ( 414 ) 87 ( 327 ) ( 327 ) 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities ( 151 ) 32 ( 119 ) ( 119 ) 0 0
Total reclassification adjustment for amounts realized in net income ( 151 ) 32 ( 119 ) ( 119 ) 0 0
Total other comprehensive income (loss) ( 263 ) 55 ( 208 ) ( 208 ) 0 0
Balance at March 31, 2024 $ ( 2,316 ) $ 492 $ ( 1,824 ) $ ( 1,809 ) $ ( 14 ) $ ( 1 )
In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances. During the next 12 months, we expect to reclassify $ 1 million (pretax) into interest expense, related to net unrealized losses on forecasted transactions (see Note 4 – Debt in our 2024 Annual Report to Shareholders for further discussion).
22
11. LITIGATION
The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.
In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. 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 2024 Annual Report to Shareholders.
As of March 31, 2025, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging that: we improperly value total loss claims by applying a negotiation adjustment in Alabama, Arkansas, 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; we improperly reduce or deny personal injury protection benefits when medical expenses are paid initially by health insurance in Arkansas; and we sell illusory underinsured motorist coverage in New Mexico. Other insurance companies face many of these same issues. We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate.
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,
2025, 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 nine 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 available to us, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for suits for which accruals have been established and are not material, as of March 31, 2025.
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 March 31, 2025 and 2024, or December 31, 2024, and there were no material settlements during 2024 or the first three months of 2025. 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 2024 Annual Report to Shareholders. In the event that any one or more of these lawsuits results in a substantial judgment against us, or settlement by us, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material adverse effect on our consolidated financial condition, cash flows, and/or results of operations. For a further discussion on our pending litigation and related reserving policies, see Note 1 – Reporting and Accounting Policies and Note 12 – Litigation in our 2024 Annual Report to Shareholders.
23