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Item 2. Management’s Discussion and Analysis

2025-11-03 compared with 2025-08-04 · 291 added, 256 removed, 679 unchanged (45% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The Progressive Corporation’s insurance subsidiaries recognized substantial year-over-year growth in both premiums and policies in force during the second quarter 2025, compared to the same period last year, while maintaining an underwriting profit better than our 4% companywide calendar-year underwriting profit goal.

During the second quarter 2025, we wrote $20.1 billion of net premiums written, which was $2.2 billion more than we generated during the same period last year.

Companywide net premiums written and earned increased 12% and 18%, respectively, during the second quarter 2025, compared to the same period last year.

Policies in force increased 15%, or by 5.0 million policies, compared to June 30, 2024;

with policies in force increasing by 1.0 million in the second quarter 2025.

We experienced profitable growth during the second quarter 2025, with a strong underwriting profit margin of 13.8%.

Our Personal Lines segment experienced strong year-over-year growth for the second quarter 2025, with net premiums written increasing 15% and policies in force up 16%, over the significant growth we experienced in the second quarter 2024.

This growth was primarily driven by our personal auto products and reflects new and renewal application growth, which we believe is mainly attributable to increased advertising spend, competitively priced products, and our agency incentive compensation programs.

In Commercial Lines, we experienced a decrease in net premiums written of 6% during the second quarter 2025, compared to the same period last year, despite experiencing policies in force growth of 6%.

The decline in net premiums written during the quarter was primarily driven by changes in the length of policy terms and related renewal timing for certain transportation network company (TNC) business policies.

These policies were renewed for a 6-month term in the second quarter 2024 and subsequently renewed for a 12-month term in the fourth quarter 2024.

In addition, our contractor and business auto business market targets (BMT) experienced a shift to a greater mix of policies with 6-month terms, compared to the second quarter 2024.

As 12-month policies have about twice the amount of net premiums written compared to 6-month policies, the shift negatively impacted average premiums.

During the second quarter 2025, on a countrywide basis, we decreased personal auto rates less than 1% and increased our personal property rates about 4%, in the aggregate.

In our core commercial auto businesses (which excludes our TNC business, our Progressive Fleet & Specialty Programs (Fleet & Specialty) products, and our business owners’ policy (BOP) product), we increased

rates in the aggregate about 3% during the second quarter 2025.

While we currently believe we are adequately priced in our personal auto products in most states, starting in the first quarter 2025, the U.S.

The Progressive Corporation’s insurance subsidiaries recognized strong year-over-year growth in both premiums and policies in force during the third quarter 2025, compared to the same period last year, while maintaining an underwriting profit better than our 4% companywide calendar-year underwriting profit goal.

During the third quarter 2025, we wrote $21.4 billion of companywide net premiums written, which was $1.9 billion, or 10%, more than we generated during the same period last year, with a 14% increase in net premiums earned.

Policies in force increased 12%, or by 4.2 million policies, compared to September 30, 2024;

with policies in force increasing by 0.8 million in the third quarter 2025.

While experiencing this strong growth during the third quarter 2025, we also maintained strong profitability, with an underwriting profit margin of 10.5%.

Our Personal Lines segment experienced year-over-year growth for the third quarter 2025, with net premiums written increasing 12% and policies in force up 13%, over the significant growth of 28% in net premiums written and 15% in policies in force we experienced in the third quarter last year.

This growth was primarily driven by our personal auto products and reflects renewal application growth, driven by new applications gained over the last year renewing during the quarter.

In Commercial Lines, we experienced a decrease in net premiums written of 6% for the third quarter 2025, compared to the same period last year, despite experiencing policies in force growth of 6%.

The decline in net premiums written was primarily driven by a decrease in transportation network company (TNC) premiums, due to decreases in projected mileage, which is the basis for computing premiums, during the third quarter 2025, compared to increases in projected mileage during the third quarter 2024.

To a lesser extent, the net premiums written decline was due to a shift to a greater mix of policies with 6-month terms in our contractor and business auto business market targets (BMT), which have about half the amount of net premiums written as 12-month policies, and to a mix shift to lower average written premium BMTs in our core commercial auto business (which excludes our TNC business, our Progressive Fleet & Specialty Programs (Fleet & Specialty) products, and our business owners’ policy (BOP) product).

On a year-to-date basis for the period ended September 30, 2025, net premiums written in our TNC business were flat compared to the same period last year.

Excluding TNC, Commercial Lines net premiums written would have decreased 2% for the third quarter 2025, compared to the same period last year.

During the third quarter 2025, on a countrywide basis, we increased personal auto rates less than 1% and increased our personal property rates about 2%, in the aggregate.

In our core commercial auto business, we increased rates about 2% in the aggregate during the third quarter 2025.

While we currently continue to believe we are adequately priced in our personal auto products in most states, starting in the first quarter 2025, the U.S.

government announced additional tariffs on goods imported into the U.S.

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While we expect to continue increasing rates in our personal property and core commercial auto products through the remainder of 2025, we will continue to monitor the impact from tariffs and other potential changes in the regulatory environment as we evaluate the possible need for additional rate increases.

For the second quarter 2025, the $1.7 billion year-over-year increase in net income reflected an increase in both underwriting income and total net investment income, with the change in net unrealized losses on our fixed-maturity securities also contributing positively to our growth in comprehensive income.

At June 30, 2025, total capital (debt plus shareholders’ equity) was $39.5 billion, which was an increase of $7.0 billion from year-end 2024, primarily driven by the $7.1 billion of comprehensive income earned in the first half of 2025.

For the third quarter 2025, the $281 million year-over-year increase in net income primarily reflected an almost even increase in both underwriting income and total net investment income, while total comprehensive income decreased $996 million, primarily related to lower net unrealized gains on our fixed-maturity securities in the third quarter 2025.

Included in underwriting income for the third quarter 2025 was a $950 million policyholder credit expense related to excess profits earned in Florida.

Since Florida insurance reform was enacted in early 2023, we have seen lower loss costs on certain types of personal auto accident claims and favorable reserve development, and we have experienced strong profitability in our Florida personal auto business.

Despite actions to lower rates in the last year, it is probable that our personal auto profit in Florida for the 2023 to 2025 period will exceed the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any three-calendar-year period.

In such event, we would need to credit any profit above the limit to all Florida personal auto policyholders active at December 31, 2025.

As a result, in September 2025, we recorded a $950 million policyholder credit expense, which represents our current estimate of the profit we will earn on the three-calendar-year period ending December 31, 2025, in excess

of the permitted profit limit.

This liability will continue to be refined through the fourth quarter 2025.

See Financial Condition for further information.

At September 30, 2025, total capital (debt plus shareholders’ equity) was $42.3 billion, which was an increase of $9.9 billion from year-end 2024, primarily driven by the $10.0 billion of comprehensive income earned in the first nine months of 2025.

Insurance Operations

Our underwriting profit margin was 13.8% during the second quarter 2025, compared to 8.1% during the second quarter 2024.

Our Personal Lines and Commercial Lines operating segments both generated strong profitability for the second quarter 2025, with margins of 14.0% and 13.2%, respectively.

Underwriting profit was up significantly on a year-over-year basis, for the second quarter 2025, with our companywide loss and loss adjustment expense (LAE) ratio decreasing 6.1 points.

The decrease in the loss and LAE ratio was primarily driven by a decrease in catastrophe losses in Personal Lines and by favorable prior accident years reserve development in both Personal Lines and Commercial Lines.

Our companywide underwriting profit margin was 10.5% during the third quarter 2025, compared to 11.0% during the third quarter 2024.

For the third quarter 2025, our loss and loss adjustment expense (LAE) ratio decreased 3.7 points, and our underwriting expense ratio increased 4.2 points, compared to the same period last year.

The decrease in the loss and LAE ratio was primarily driven by a decrease in catastrophe losses and by favorable prior accident years reserve development in both Personal Lines and Commercial Lines.

The increase in the underwriting expense ratio was primarily driven by the Florida personal auto excess profit policyholder credit, previously discussed, adding 4.6 points to the companywide ratio.

Our Personal Lines and Commercial Lines operating segments both generated strong profitability for the third quarter 2025, with margins of 10.5% and 10.8%, respectively.

Excluding the Florida personal auto excess profit policyholder credit, the Personal Lines underwriting margin would have been 15.8%.

We closely manage our expenses, monitoring both acquisition expenses and non-acquisition expenses, which we view as an important measure of operational efficiency as we seek to deliver our most competitive rates to consumers.

We will continue to advertise to maximize growth as long as the advertising spend is efficient and we remain on track to achieve our calendar-year profitability goal.

During the second quarter 2025, our advertising spend was $1.2 billion, which was 35%, or 0.7 points, greater than the second quarter last year.

The expense ratio impact from increased advertising spend was partially offset by a decrease in certain general expenses.

During the third quarter 2025, our advertising spend was $1.3 billion, which was 10% greater than the third quarter last year, although, due to the growth in net premiums earned, advertising spend contributed 0.2 less points to the underwriting expense ratio in the third quarter 2025, compared to the same period last year.

Our Personal Lines segment is comprised of our personal vehicle and property products.

Personal Lines vehicles include both personal auto and special lines products, with the latter typically having higher losses during the warmer weather months, due to the seasonal nature of these products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft).

Our Personal Lines underwriting margin for the second quarter 2025 was 14.0%, with personal vehicle and property products reporting 13.8% and 16.4%, respectively.

The special lines profitability had minimal impact to our personal vehicle combined ratio during the second quarter 2025.

Our Personal Lines underwriting margin for the third quarter 2025 was 10.5%, with personal vehicle and property products reporting 9.3% and 36.5%, respectively, with Florida excess profit credits reducing the personal vehicles margin by 5.5%.

Profitability in our special lines products had minimal impact to our personal vehicle combined ratio during the third quarter 2025.

The substantially high underwriting profit margin in our personal property products was primarily driven by

favorable development on prior accident year losses and the low level of incurred catastrophe losses during the period.

Our Commercial Lines segment includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP product.

Our total Commercial Lines underwriting profitability for the second quarter 2025 was 13.2%.

For the second quarter 2025, Personal Lines generated strong net premiums written growth of 15%, with the agency and direct personal vehicle businesses and property business growing 11%, 20%, and 2%, respectively, compared to the same period last year.

Commercial Lines net premiums written decreased 6%.

Our total Commercial Lines underwriting profitability for the third quarter 2025 was 10.8%.

For the third quarter 2025, Personal Lines generated strong net premiums written growth of 12%, with the agency and direct personal vehicle businesses and property business growing 9%, 15%, and 5%, respectively, compared to the same period last year.

Commercial Lines net premiums written decreased 6% year over year.

Changes in net premiums written are a function of new business applications (i.e., policies sold), business mix, premium per policy, and retention.

During the second quarter 2025, we experienced an increase in both total Personal Lines new and renewal business applications, primarily driven by significant increases in our personal vehicle products, due to continued increased advertising spend, our continued efforts to get back into independent agents’ quote flows, and our competitiveness in the marketplace.

New and renewal personal auto applications increased 8% and 22%, respectively, during the second quarter 2025, on top of the significant growth we experienced in the same period last year.

In our personal property business, significant growth in new applications in our renters policies was offset by declines in our homeowners product, which we define as our total personal property business excluding renters and umbrella products.

For the second quarter 2025, the new

business applications in our homeowners product decreased just over 50%, compared to the same period last year, with decreases in both less volatile weather-related states and in the more volatile weather-related markets (e.g., coastal and hail-prone states).

During the second quarter 2025, in our personal property business, we continued to focus on improving profitability and reducing exposure in more volatile weather-related markets, and, where permitted, on slowing growth and non-renewing policies.

Relative to the significant growth we experienced in our personal vehicle products during the third quarter 2024, we experienced a small decrease in total Personal Lines new business applications during the third quarter 2025.

Total Personal Lines renewal business applications increased substantially, primarily driven by the significant new business application growth experienced in our personal vehicle products in prior periods.

New and renewal personal auto applications decreased 2% and increased 20%, respectively, for the third quarter 2025, compared to the same period in the prior year.

In our personal property business, the strong growth in new applications in our renters policies was offset by declines in our homeowners product, which we define as our total personal property business excluding renters and umbrella products.

For the third quarter 2025, the new business applications in our homeowners product decreased just over 35%, compared to the same period last year, with a significant decrease in both the less volatile and more volatile (e.g., coastal and hail-prone states) weather-related states.

During the third quarter 2025, in our personal property business, we continued to focus on improving profitability and reducing exposure in more volatile weather-related markets, and, where permitted, on slowing growth and non-renewing policies.

We prioritized insuring lower-risk properties (e.g., new construction, existing homes with newer roofs), accepting new business for our homeowners product only when bundled with a Progressive personal auto policy, where permitted, and continued to exit the non-owner-occupied home market.

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We believe these actions adversely impacted new business application growth.

We plan to continue these actions during the remainder of 2025 in the more volatile weather-related markets and will determine readiness for new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, and cost sharing execution.

The total Commercial Lines net premiums written decrease during the second quarter 2025 primarily reflected changes in the renewal timing for certain TNC policies and a shift in the length of policy terms in the core commercial auto contractor and business auto BMTs, compared to the second quarter 2024, as previously discussed.

Excluding the TNC business, total Commercial Lines net premiums written was down 2% on a year-over-year basis.

New and renewal business applications in our core commercial auto products increased 3% and 5%, respectively, during the second quarter 2025, compared to the same period last year.

The new business application growth was primarily due to an increase in quote volume in all BMTs and improved conversion in all BMTs, other than for-hire transportation and for-hire specialty.

Excluding the impact of the for-hire transportation BMT, which had a year-over-year decrease in new applications, our core commercial auto new application growth would have been 8% during the second quarter 2025.

The for-hire transportation BMT continued to be adversely impacted by challenging freight market conditions that have caused a decline in the active number of motor carriers in this BMT.

During the second quarter 2025, on a year-over-year basis, average written premium per policy decreased 1% in personal auto and 6% in both our personal property and core commercial auto products.

In aggregate, we took minimal personal auto rate decreases during the second quarter 2025.

The decrease in personal property average written premium per policy was due to a shift in the mix of business to more renters policies, which have lower average written premiums, and our continued focus on slowing growth in more volatile weather-related markets,

which generally have higher risk and, therefore, higher average premiums per policy.

We plan to continue certain actions during the remainder of 2025.

During the third quarter 2025, we began to take actions in several markets

to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing execution, and regulatory and market conditions.

Some of these actions include expanding agency relationships, lifting certain agency restrictions put in place in 2024, and reopening new business in our direct channel.

The total Commercial Lines net premiums written decreased 6% for the third quarter 2025, compared to the same period in the prior year, primarily driven by our TNC business, reflecting decreases in projected mileage, which is the basis for computing premiums, during the third quarter 2025, compared to increases in projected mileage during the third quarter 2024.

In addition, our contractor and business auto BMTs experienced a shift to a greater mix of policies with 6-month terms, compared to the third quarter 2024.

As 12-month policies have about twice the amount of net premiums written compared to 6-month policies, the shift negatively impacted average premiums.

A mix shift to lower average written premium BMTs also contributed to the decline.

Excluding the TNC business, total Commercial Lines net premiums written was down 2% for the third quarter 2025, on a year-over-year basis.

New and renewal business applications in our core commercial auto products decreased 1% and increased 6%, respectively, for the third quarter 2025, compared to the same period last year.

The new business application decline was predominately driven by the for-hire transportation BMT, primarily attributable to rate and non-rate actions taken to address profitability challenges and, to a lesser extent, the continued decline in the number of active motor carriers in this BMT.

Excluding the impact of this BMT, our core commercial auto new application growth would have been 3% for the third quarter 2025.

For the third quarter 2025, on a year-over-year basis, average written premium per policy decreased 1%, 5%, and 7% in the personal auto, personal property, and core commercial auto products, respectively.

In aggregate, we took minimal personal auto rate increases during the third quarter 2025.

These mix shifts in our personal property business were partially offset by aggregate rate increases of 11% taken over the last 12 months and higher premium coverages reflecting increased property values.

The decrease in average written premium per policy in our core commercial auto products was due to a shift in the mix of business, primarily driven by decreased demand in our for-hire transportation BMT and, to a lesser extent, the for-hire specialty BMT, as well as a shift in policy term towards more 6-month policies in our contractor and business auto BMTs.

This decrease was partially offset by rate increases of about 7%, in the aggregate, over the trailing 12 months.

The decrease in average written premium per policy in our core commercial auto products was due to a shift in the mix of business, primarily driven by decreased demand in our for-hire transportation BMT, as well as a shift in policy term towards more 6-month policies in our contractor and business auto BMTs.

This decrease was partially offset by

rate increases of about 6%, in the aggregate, over the trailing 12 months.

Given that our personal property and commercial auto policies are predominately written for 12-month terms, rate actions take longer to earn into premium for these products.

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We believe a key element in improving the accuracy of our personal auto rating is Snapshot ® , our usage-based insurance offering.

During the second quarter 2025, the personal auto adoption rates for consumers enrolling in the program decreased 2% in agency and increased 6% in direct, compared to the same period last year.

For the third quarter 2025, the personal auto adoption rates for consumers enrolling in the program decreased 1% in agency and increased 6% in direct, compared to the same period last year.

Snapshot is available in all states, other than California, and our latest segmentation model was available in states that represented 78% of our countrywide personal auto net premiums written (excluding California) on a trailing 12-month basis at quarter end.

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In personal auto, we evaluate personal auto retention using a trailing 12-month and a trailing 3-month policy life expectancy.

Although the latter can reflect more volatility and is more sensitive to seasonality, we believe this measure is more responsive to current experience and may

be an indicator for the future trend of our 12-month measure.

Our trailing 12-month total personal auto policy life expectancy was down 5% year over year for the second quarter 2025.

On a trailing 3-month basis, our personal auto policy life expectancy was down 7% for the second quarter 2025, compared to the same period last year, which we believe is due to a shift in the mix of business, increased shopping, and increased competition in the marketplace.

Our trailing 12-month policy life expectancy was down 17% for our personal property products year over year for the second quarter 2025.

We believe our personal property retention decreased primarily as a result of a mix shift to more renters policies, rate increases, and the non-renewal of certain policies.

For our core commercial auto products, our trailing 12-month policy life expectancy increased 5%, compared to the prior year, which we believe is due to the moderation of our rate increases, compared to competitor rate increases, and our improving competitiveness in the marketplace.

The increase in the core commercial auto policy life expectancy was across all BMTs, except in for-hire specialty and for-hire transportation, which we believe is due to various initiatives to help with improving policy life expectancy such as payment and renewal reminders.

The fair value of our investment portfolio was $88.6 billion at June 30, 2025, compared to $80.3 billion at December 31, 2024.

Although the latter can reflect more volatility and is more sensitive to seasonality, we believe this measure is more responsive to current experience and may be an indicator for the future trend of our 12-month measure.

Our trailing 12-month total personal auto policy life expectancy was down 6% year over year for the third quarter 2025.

On a trailing 3-month basis, our personal auto policy life expectancy was down 7% for the third quarter 2025, compared to the same period last year, which we believe is primarily due to increased shopping and competition in the marketplace, and due to a shift in our mix of business.

Due, in part, to the efforts of our customer preservation team, during the period we saw an increase in existing customers who went through our new customer quote process to either modify existing coverage or to find a lower rate.

As a result, some of these customers replaced their existing policies with new Progressive policies, which

negatively impacted policy life expectancy but retained the customer.

Our trailing 12-month policy life expectancy was down 15% for our personal property products year over year for the third quarter 2025.

We believe our personal property retention decreased primarily as a result of a mix shift to more renters policies.

For our core commercial auto products, our trailing 12-month policy life expectancy increased 11%, compared to the prior year, which we believe is due to the moderation of our rate increases, compared to competitor rate increases, our improving competitiveness in the marketplace, and various initiatives to help with improving policy life expectancy such as payment and renewal reminders.

The increase in the core commercial auto policy life expectancy was across all BMTs, except in for-hire specialty.

The fair value of our investment portfolio was $94.5 billion at September 30, 2025, compared to $80.3 billion at December 31, 2024.

The increase from year-end 2024 reflected positive cash flows from insurance operations and investment returns, partially offset by the payment of our annual variable common share dividend.

Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities (the securities allocated to Group I and II are defined below under Results of Operations – Investments ).

At June 30, 2025 and December 31, 2024, 5% and 6%, respectively, of our portfolio was allocated to Group I securities with the remainder to Group II securities.

Our recurring investment income generated a pretax book yield of 4.2% for the second quarter 2025, compared to 3.9% for the same period in 2024.

At September 30, 2025 and December 31, 2024, 5% and 6%, respectively, of our portfolio was allocated to Group I securities with the remainder to Group II securities.

Our recurring investment income generated a pretax book yield of 4.2% for the third quarter 2025, compared to 4.0% for the same period in 2024.

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

Our investment portfolio produced a fully taxable equivalent (FTE) total return of 2.1% and 0.9% for the second quarter 2025 and 2024, respectively.

Our fixed-income and common stock portfolios had FTE total returns of 1.7% and 10.9%, respectively, for the second quarter 2025, compared to 0.8% and 3.6%, respectively, last year.

The increase in the fixed-income portfolio FTE total return primarily reflected movements in U.S.

Our investment portfolio produced a fully taxable equivalent (FTE) total return of 1.7% and 4.0% for the third quarter 2025 and 2024, respectively.

Our fixed-income and common stock portfolios had FTE total returns of 1.5% and 8.1%, respectively, for the third quarter 2025, compared to 3.9% and 5.8%, respectively, last year.

The decrease in the fixed-income portfolio FTE total return primarily reflected movements in U.S.

Treasury yields year-over-year.

increase in the common stock portfolio FTE total return reflected general market conditions.

At June 30, 2025 and 2024, and December 31, 2024, the fixed-income portfolio had a weighted average credit quality of AA-.

At June 30, 2025, the fixed-income portfolio duration was 3.4 years, compared to 3.2 years at June 30, 2024, and 3.3 years at December 31, 2024.

The increase in the common stock portfolio FTE total return reflected general market conditions.

At September 30, 2025 and 2024, and December 31, 2024, the fixed-income portfolio had a weighted average credit quality of AA-.

At September 30, 2025, the fixed-income portfolio duration was 3.4 years, compared to 3.3 years at September 30, 2024 and December 31, 2024.

During 2025, we increased our duration to take advantage of higher yields in the market.

At June 30, 2025, we continued to maintain a relatively conservative investment portfolio with a greater allocation to cash and treasuries.

At September 30, 2025, we continued to maintain a relatively conservative investment portfolio with a greater allocation to cash and treasuries.

We believe that this portfolio allocation positions us well to benefit from the continuing dynamic market environment.

We believe the investment portfolio is in a very strong position as we move into the third quarter of 2025.

We believe the investment portfolio is in a very strong position as we move into the fourth quarter of 2025.

FINANCIAL CONDITION

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As primarily an auto insurer, our claims liabilities generally have a short-term duration.

Operations generated positive cash flows of $9.2 billion and $7.5 billion for the six months ended June 30, 2025 and 2024, respectively.

The increase in operating cash flow for the first six months of 2025, compared to the same period last year, was in part driven by the growth in profit from our underwriting operations.

We believe cash flows will remain positive in the foreseeable future and do not expect we will need to raise capital to support our operations in that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.

As of June 30, 2025, we held $48.9 billion in short-term investments and U.S.

Operations generated positive cash flows of $14.4 billion and $12.1 billion for the nine months ended September 30, 2025 and 2024, respectively.

The increase in operating cash flow for the first nine months of 2025, compared to the same period last year, was primarily driven by the growth in profit from our underwriting operations.

industry, or other unforeseen events, may necessitate otherwise.

As of September 30, 2025, we held $52.9 billion in short-term investments and U.S.

Treasury securities, which represented about 56% of our total portfolio at quarter end.

Based on our portfolio allocation and investment strategies, we believe that we have sufficient readily available marketable securities to cover our claim payments and short-term obligations in the event our cash flows from operations were to be negative.

See Item 1A, Risk Factors in our Annual Report on Form 10-K filed with the U.S.

See Item 1A, Risk Factor s in our Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission for the year ended December 31, 2024 (our 2024 Form 10-K), for a discussion of certain matters that may affect our portfolio and capital position.

Our total capital (debt plus shareholders’ equity) was $39.5 billion, based on book value, at June 30, 2025, compared to $30.2 billion at June 30, 2024, and $32.5 billion at December 31, 2024.

The increase from year-end 2024, primarily reflected the comprehensive income recognized during the first six months of 2025.

Our debt-to-total capital ratio was 17.5% at June 30, 2025, 22.8% at June 30, 2024, and 21.2% at December 31, 2024.

Our total capital (debt plus shareholders’ equity) was $42.3 billion, based on book value, at September 30, 2025, compared to $34.1 billion at September 30, 2024, and $32.5 billion at December 31, 2024.

The increase from

year-end 2024, primarily reflects the comprehensive income recognized during the first nine months of 2025.

Our debt-to-total capital ratio was 16.3% at September 30, 2025, 20.2% at September 30, 2024, and 21.2% at December 31, 2024.

Our debt-to-total capital ratios were consistent with our financial policy of maintaining a ratio of less than 30%.

None of the covenants on our existing debt securities include rating or credit triggers that would require an adjustment of interest rate or an acceleration of principal payments in the event that our debt securities are downgraded by a rating agency.

In April 2025, we renewed the unsecured discretionary line of credit with PNC Bank, National Association, in the maximum principal amount of $300 million.

During the second quarter 2025, we renewed the unsecured discretionary line of credit with PNC Bank, National Association, in the maximum principal amount of $300 million.

We did not engage in short-term borrowings, including any borrowings under the line of credit, to fund our operations or for liquidity purposes during the reported periods.

We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, catastrophic and other insured losses, natural disasters, and other significant business interruptions, to estimate our potential capital needs.

During the first six months of 2025, we returned capital to shareholders primarily through common share dividends and common share repurchases.

Our Board of Directors declared a $0.10 per common share dividend in both the first and second quarters of 2025.

These dividends, which were $59 million and $58 million, respectively, in the aggregate, were paid in April 2025 and July 2025.

In January 2025, we also paid common share dividends declared in the fourth quarter 2024, in the aggregate amount of $2.7 billion, or $4.60 per share (see Note 9 – Dividends for further discussion).

We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, investment losses, catastrophic and other insured losses, natural disasters, and other significant business interruptions, to estimate our potential capital needs.

During the first nine months of 2025, we returned capital to shareholders primarily through common share dividends and common share repurchases.

Our Board of Directors declared a $0.10 per common share dividend in each of the first three quarters of 2025.

These quarterly common share dividends, which were $59 million, $58 million, and $59 million, in the aggregate, were paid in April 2025, July 2025, and October 2025, respectively.

In January 2025, we also paid a common share dividend declared in the fourth quarter 2024, in the aggregate amount of $2.7 billion, or $4.60 per share (see Note 9 – Dividends for further discussion).

Pursuant to our financial policies, we repurchase common shares to neutralize dilution from equity-based compensation granted during the year and opportunistically when we believe our shares are trading below our determination of long-term fair value.

During the first six months of 2025, we repurchased 0.3 million common shares, at a total cost of $67 million, including 0.1 million shares in the second quarter 2025, both in the open market and to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plans.

During the first nine months of 2025, we repurchased 0.4 million common shares, at a total cost of $107 million, including 0.1 million shares in the third quarter 2025, both in the open market and to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plans.

We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and the potential capital needs of our business.

At June 30, 2025, we had $5.0 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to the insurance subsidiaries to fund potential future growth and other opportunities.

As of June 30, 2025, our estimated consolidated statutory surplus was $31.1 billion.

During the first six months of 2025, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2024 Annual Report to Shareholders.

At September 30, 2025, we had $4.9 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and

provide additional capital to the insurance subsidiaries to fund potential future growth and other opportunities.

As of September 30, 2025, our estimated consolidated statutory surplus was $33.7 billion.

Insurance departments establish and monitor compliance with capital and surplus requirements.

One prominent ratio monitored by regulators is the amount of net premiums written as a ratio of surplus.

Although the ratio of written premiums to surplus that the regulators will allow is a function of a number of factors (including applicable laws, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write historically have been perceived to be limited to a specified multiple of the insurer’s total surplus, generally 3 to 1 for property and casualty insurance, which is generally the maximum target for our vehicle businesses;

however, two states have permitted us to target a premiums-to-surplus ratio for our vehicle businesses to a maximum ratio of 3.5 to 1 based on our strong financial condition.

This approval reduces the amount of capital we may need to hold at our applicable insurance subsidiaries relative to premium, subject to the other factors previously mentioned.

For 2024, these subsidiaries represented 90% of our companywide total net premiums written.

The pace and extent to which we move to this ratio is yet to be determined.

We have previously announced our intention to pay a dividend on our common shares on a quarterly basis and to consider paying a variable dividend on at least an annual basis.

The Board of Directors declares any applicable dividend and may consider, among other factors, changes in our performance or available capital, or other potential uses for our capital as part of this action.

During the first nine months of 2025, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2024 Annual Report to Shareholders.

There have not been any material changes in off-balance-sheet leverage, which includes purchase obligations, from those discussed in our 2024 Annual Report to Shareholders.

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1, “An Act to provide for reconciliation pursuant to title II of H.

14” (the Act) was signed into law by the President of the United

14” (the Act) was signed into law by the President of the United States.

The Act contains numerous tax provisions applicable to corporations.

We are in the process of evaluating the provisions applicable to Progressive and, while this assessment is not yet complete, we do not currently expect the Act will have a material effect on our financial condition or results of operations.

These provisions will not have a material adverse effect on our financial condition or results of operations.

In response to these trends, we have lowered Florida personal auto rates twice in the last year.

Despite these actions, it is possible that our profit for personal auto in Florida for the 2023 to 2025 period will exceed the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any three-calendar-year period and that we will need to pay any profit above

the limit to all Florida personal auto policyholders active at December 31, 2025.

We are not currently able to determine whether we will exceed the permitted profit limit because several factors can impact the determination.

The Atlantic hurricane season continues through late November 2025, and the risk of hurricanes impacting Florida through that time is relatively high.

In addition, any reserve development through the first quarter 2026 on losses for accident years 2023 through 2025 will impact the statutory calculations.

Finally, other factors described in Item 1A, Risk Factors in our 2024 Form 10-K that may impact our ability to establish accurate loss reserves could impact these determinations.

We expect to be able to reasonably estimate any potential exposure by the end of the fourth quarter 2025, and to pay amounts owed, if any, during late 2025 or 2026.

Despite these actions, it is probable that our personal auto profit in Florida for the 2023 to 2025 period will exceed the statutory profit limit that a Florida statute

imposes on the profit that any insurance group can earn on personal auto insurance over any three-calendar-year period.

In such event, we would need to credit any profit above the limit to all Florida personal auto policyholders active at December 31, 2025.

The estimated liability will continue to be refined through the end of the fourth quarter 2025, given the continuing exposure to potential significant storm activity through the Atlantic hurricane season, which continues into late November 2025, and the other factors that impact reserve development through the first quarter 2026 on losses for applicable accident years.

See Item 1A, Risk Factors in our 2024 Form 10-K, for a description of other factors that may impact our ability to establish accurate loss reserves.

In early 2026, we expect to provide credits to policyholders active at December 31, 2025.

As of September 30, 2025, we had approximately 2.7 million personal auto policyholders active in Florida.

Based upon our capital planning and forecasting efforts, we believe we have sufficient capital resources and cash flows from operations to support our current business, scheduled principal and interest payments on our debt, anticipated quarterly dividends on our common shares, our contractual obligations, and other expected capital requirements for the foreseeable future.

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Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and commercial property insurance predominantly for small businesses, and workers’ compensation insurance primarily for the transportation industry and includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP product.

Of our total Commercial Lines segment, our core commercial auto products represented about 80% of net premiums written and our TNC business represented about 15%, both on a trailing 12-month basis, as of the end of the second quarter 2025.

Therefore, much of the following discussion focuses only on our core commercial auto products.

The following table shows the composition of our companywide net premiums written, by segment, for the respective periods:

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

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

2025 2024 2025 2024

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While our personal auto policies primarily have 6-month terms, to promote bundled personal auto and property growth, we write 12-month personal auto policies in our Platinum agencies.

At June 30, 2025 and 2024, 11% and

13%, respectively, of our agency personal auto policies in force were 12-month policies.

To the extent our agency application mix of annual personal auto policies changes, the shift in policy term could impact our average premiums in the agency channel, as 12-month policies have about twice the amount of net premiums written compared to 6-month policies.

At September 30, 2025 and 2024, 11% and 13%, respectively, of our agency personal auto policies in force were 12-month policies.

To the extent our agency

application mix of annual personal auto policies changes, the shift in policy term could impact our average premiums written in the agency channel, as 12-month policies have about twice the amount of net premiums written compared to 6-month policies.

Our special lines and personal property products are written for 12-month terms.

About 55% and 70%, respectively, of our special lines products and personal property business net premiums written during the second quarter 2025 was generated through the independent agency channel, with the balance through the direct channel.

About 55% and 70%, respectively, of our special lines products and personal property business net premiums written during the third quarter 2025 was generated through the independent agency channel, with the balance through the direct channel.

Within our Commercial Lines segment, our core commercial auto business operates in the following five traditional business market targets (BMT):

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• business auto.

At June 30, 2025, about 85% of Commercial Lines policies in force had 12-month terms.

At September 30, 2025, about 85% of Commercial Lines policies in force had 12-month terms.

The majority of our Commercial Lines business is written through the independent agency channel, although we continue to focus on growing our direct business, with about 10% of our core commercial auto premiums written through the direct channel.

Profitability

Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses.

Profitability, for our underwriting operations, is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, other underwriting expenses, and policyholder credit expense.

We also use underwriting margin, which is underwriting profit or loss expressed as a percentage of net premiums earned, to analyze our results.

For the respective periods, our underwriting profitability results were as follows:

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

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

2025 2024 2025 2024

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Personal Lines

Agency $ 1,135 15.6 % $ 788 12.7 % $ 2,406 16.8 % $ 1,739 14.4 %

Direct 1,185 12.5 783 10.3 2,198 12.0 1,826 12.5

$ 873 11.7 % $ 870 13.1 % $ 3,279 15.0 % $ 2,609 14.0 %

737 7.5 665 8.1 2,935 10.4 2,491 10.9

Property 288 36.5 164 21.5 515 22.0 (277) (12.5)

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Total underwriting operations $ 2,190 10.5 % $ 2,005 11.0 % $ 7,715 12.7 % $ 5,641 10.9 %

1 Included in the underwriting profit of the personal vehicles agency business and the personal vehicles direct business is $436 million and $514 million, respectively, of expense related to Florida personal auto policyholder credits for both the three and nine months ended September 30, 2025.

2 Underwriting margins for our other indemnity businesses are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

The increase in our underwriting profit margin on a year-over-year basis for the second quarter 2025 was due to a decrease in our companywide loss and LAE ratio of 6.1 points.

On a year-to-date basis, the loss and LAE ratio decreased 4.1 points.

The decrease in the loss and LAE ratio during the second quarter 2025 was primarily driven by a decrease in catastrophe losses in Personal Lines and by favorable prior accident years reserve development in both Personal Lines and Commercial Lines.

During the second quarter 2025, our advertising spend was $1.2 billion, which was 35%, or 0.7 points, greater than the

second quarter last year, and $2.5 billion during the first half of 2025, which was 57%, or 1.5 points, greater than the same period last year.

The expense ratio impact from increased advertising spend was partially offset by a decrease in non-acquisition expenses.

The decrease in our underwriting profit margin on a year-over-year basis for the third quarter 2025 was due, in part, to the $950 million Florida excess profit policyholder credit expense recorded during the quarter.

Excluding the effect of the policyholder credit, third quarter 2025 underwriting profit would have been 4.1 points higher than the same period last year, driven by a decrease in the loss and LAE ratio, which is attributable to lower incurred catastrophe losses and favorable development on prior accident year losses.

The increase in our underwriting profit margin, on a year-over-year basis, for the nine months ended September 30, 2025, was also driven by the same factors.

See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our catastrophe losses, auto frequency and severity trends, and reserve development recognized during the periods and the Underwriting Expenses section for further discussion of our advertising and non-acquisition expenses.

Further underwriting results for our Personal Lines business, Commercial Lines business, and our underwriting operations in total, were as follows:

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

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

Underwriting Performance 1

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Underwriting expense ratio 2

24.6 19.0 5.6 20.3 18.4 1.9

Combined ratio 2

88.3 86.9 1.4 85.0 86.0 (1.0)

Loss & loss adjustment expense ratio 66.4 69.9 (3.5) 67.3 69.7 (2.4)

Underwriting expense ratio 2

26.1 22.0 4.1 22.3 19.4 2.9

Combined ratio 2

92.5 91.9 0.6 89.6 89.1 0.5

Loss & loss adjustment expense ratio 33.8 48.6 (14.8) 48.8 83.3 (34.5)

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Underwriting expense ratio 2

25.6 21.1 4.5 21.8 19.5 2.3

Combined ratio 2

89.5 89.1 0.4 87.1 89.0 (1.9)

Commercial Lines

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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.

2 Included in both the underwriting expense and the combined ratios for the personal vehicles agency business are 5.8 points for the third quarter 2025, and 2.0 points for the nine months ended September 30, 2025, of expense related to the Florida personal auto policyholder credit.

Included in both the underwriting expense and the combined ratios for the personal vehicles direct business are 5.2 points for the third quarter 2025, and 1.8 points for the nine months ended September 30, 2025, of policyholder credit expense.

Excluding the policyholder credit, the total Personal Lines underwriting expense and combined ratios would have been 5.3 points lower for the third quarter 2025, and 1.8 points lower for the nine months ended September 30, 2025.

3 The accident year ratios include only the losses that occurred during the period noted.

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Losses and Loss Adjustment Expenses (LAE)

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

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

(millions) 2025 2024 2025 2024

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are estimates of future costs and our reserves are adjusted as underlying assumptions change and information develops.

Our total loss and LAE ratio decreased 6.1 points and 4.1 points, for the three and six month periods ended June 30, 2025, respectively, compared to the prior year periods, primarily due to a decrease in catastrophe losses and to favorable prior accident years reserve development.

On an accident year basis, our loss and LAE ratio was 4.8 points and 2.8 points lower for the second quarter and first half of 2025, respectively, compared to the same periods last year.

Our total loss and LAE ratio decreased 3.7 points and 4.0 points, for the three and nine months ended September 30, 2025, respectively, compared to the prior year periods, primarily due to a decrease in catastrophe losses and to favorable prior accident years reserve development.

On an accident year basis, our loss and LAE ratio was 2.2 points and 2.6 points lower for the third quarter and first nine months of 2025, respectively, compared to the same periods last year.

The following table shows our consolidated catastrophe losses and related combined ratio point impact, excluding loss adjustment expenses, incurred during the periods:

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

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

2025 2024 2025 2024

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1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned for each segment.

In the second quarter 2025, our catastrophe losses reflected severe weather events throughout the United States, with Texas accounting for about one third of the losses.

We have responded, and plan to continue to respond, promptly to catastrophic events when they occur in order to provide high-quality claims service to our customers.

Changes in our estimate of our ultimate losses on catastrophes currently reserved, along with potential future catastrophes, could have a material impact on our financial condition, cash flows, or results of operations.

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During the second quarter 2025, we entered into new reinsurance contracts under our per occurrence excess of loss program for our personal property business.

This reinsurance program has a retention threshold for losses and allocated loss adjustment expenses (ALAE) from a single catastrophic event of $200 million for a storm outside of Florida and $75 million for a storm in Florida.

This reinsurance program has a retention threshold for losses

and allocated loss adjustment expenses (ALAE) from a single catastrophic event of $200 million for a storm outside of Florida and $75 million for a storm in Florida.

In general, our program includes coverage for $2.0 billion in losses and ALAE with additional substantial coverage for a second or third hurricane.

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For 2025, we also entered into a new catastrophe aggregate excess of loss reinsurance contract for claims occurring in 2025 that has multiple layers of coverage.

The first retention layer threshold ranges from $450 million to $475 million, excluding named tropical storms and hurricanes,

and the second retention layer threshold is $525 million, including named tropical storms and hurricanes.

The first retention layer threshold ranges from $450 million to $475 million, excluding named tropical storms and hurricanes, and the second retention layer threshold is $525 million, including named tropical storms and hurricanes.

The first and second layers provide coverage up to $75 million and $100 million, respectively.

As part of the 2025 aggregate excess of loss program, we also entered into a severe convective storm parametric loss aggregate coverage, which covers a type of thunderstorm characterized by strong winds, heavy rain, large hail, thunder, lightning, and sometimes tornadoes.

sometimes tornadoes.

This parametric loss coverage provides $15 million of coverage, net of a retention of $665 million.

While the total coverage limit and per-event retention will evolve to fit the growth of our business, we expect to remain a consistent purchaser of reinsurance coverage.

While the availability of reinsurance is subject to many forces outside of our control, the types of reinsurance that we elected to purchase during the first half of 2025 were readily available and competitively priced.

While the availability of reinsurance is subject to many forces outside of our control, the types of reinsurance that we elected to purchase during the first nine months of 2025 were readily available and competitively priced.

On a year-over-year basis, we did not incur a material change in the aggregate costs of our reinsurance programs.

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Property damage 7 4

The year-over-year increase in total severity was predominantly driven by increased bodily injury coverage reserves, compared to the same periods last year, due to higher medical costs and a higher rate of litigated injury claims.

The year-over-year increases in total severity was predominantly driven by increased bodily injury coverage reserves, compared to the same periods last year, due to higher medical costs and a higher rate of plaintiff-attorney represented injury claims.

To address inherent seasonality trends and lessen the effects of month-to-month variability in the commercial auto products, we use a trailing 12-month period in assessing severity.

Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto products (i.e., TNC and Fleet & Specialty businesses), disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial products.

As of the end of the second quarter 2025, our core commercial auto products’ trailing 12-month incurred severity increased 7%, compared to the same period last year, in part, due to increased medical costs.

Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto products (i.e., TNC and Fleet & Specialty

businesses), disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial products.

As of the end of the third quarter 2025, our core commercial auto products’ trailing 12-month incurred severity increased 7%, compared to the same period last year, in part, due to increased medical costs.

It is a challenge to estimate future severity, but we continue to monitor changes in the underlying costs, such as tariffs, general inflation, used car prices, vehicle repair costs, medical costs, health care reform, court decisions, and jury verdicts, along with regulatory changes and other factors that may affect severity.

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Total (2) (3)

The year-over-year decrease in frequency, in part, reflects a shift in the mix of business to a more preferred tier of customers (i.e., Wrights and Robinsons) and lower vehicle miles traveled during the first half of 2025, compared to the same periods last year.

On a trailing 12-month basis, our core commercial auto products’ incurred frequency decreased 8% through the second quarter 2025, we believe, in part, due to a shift in the mix of business and lower vehicle miles traveled compared to the same period last year.

The year-over-year decrease in frequency during the three and nine months ended September 30, 2025, in part, reflects a shift in the mix of business to a more preferred tier of customers (i.e., Wrights and Robinsons).

On a trailing 12-month basis, our core commercial auto products’ incurred frequency decreased 9% as of the end of the third quarter 2025, we believe, in part, due to a shift in the mix of business and lower vehicle miles traveled, compared to the same period last year.

We closely monitor changes in frequency, but the degree or direction of near-term frequency change is not something that we are able to predict with any certainty.

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The table below presents the actuarial adjustments implemented and the loss reserve development experienced on a companywide basis in the following periods:

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

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

($ in millions) 2025 2024 2025 2024

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Our ability to meet this objective is impacted by many factors, such as the factors impacting severity estimates described above and storms occurring close to quarter end.

As reflected in the table above, we experienced favorable prior accident years development during the first six months of 2025 and 2024.

The favorable development during the first six months of 2025 was, in part, due to lower than anticipated severity and frequency in Florida and lower litigation defense costs across most states in the personal auto business.

As reflected in the table above, we experienced favorable prior accident years development during the first nine months of 2025 and 2024.

The favorable development during the first nine months of 2025 was, in part, due to lower than anticipated severity and frequency in Florida, lower than anticipated litigation defense costs across most states, and lower than anticipated personal auto payments related to reopened property damage claims that were previously closed.

See Note 6 – Loss and Loss Adjustment Expense Reserve s to the consolidated financial statements for a more detailed discussion of our prior accident years reserve development and Critical Accounting Policies in our 2024 Annual Report to Shareholders for discussion of the application of estimates and assumptions in the establishment of our loss reserves.

Underwriting Expenses

Underwriting expenses include policy acquisition costs and other underwriting expenses.

Underwriting expenses include policy acquisition costs, other underwriting expenses, and policyholder credit expense.

The underwriting expense ratio is our underwriting expenses, net of certain fees and other revenues, expressed as a percentage of net premiums earned.

For the second quarter and first half of 2025, our underwriting expense ratio was up 0.4 points and 1.1 points, respectively, compared to the same periods last year.

Both increases were primarily attributable to the increase in our advertising spend.

In total, our companywide advertising spend increased 35%, or 0.7 points, in the second quarter, and 57% or 1.5 points, for the first six months of 2025, compared to the same periods last year.

Our total advertising spend for the first half of 2025, was $2.5 billion, compared to $1.6 billion in the first half of 2024.

We invested heavily during the first half of the year to capture consumer shopping, and will continue to advertise to maximize growth, as long as we remain on track to achieve our profitability goal and can acquire customers at or below our target acquisition cost.

To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition (e.g., advertising and agency

commissions) from our underwriting expense ratio.

By excluding acquisition costs from our underwriting expense ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business.

During the second quarter 2025, our NAER decreased 0.4 points in our personal vehicle business and increased 0.9 points and 0.5 points in our personal property and core

commercial auto businesses, respectively, compared to the same period last year.

On a year-to-date basis, our NAER decreased 0.3 points in our personal vehicle business, and increased 1.1 points and 0.4 points in our personal property and core commercial auto businesses, respectively.

For the third quarter and first nine months of 2025, our underwriting expense ratio was up 4.2 points and 2.2 points, respectively, compared to the same periods last year.

The increase for both periods was primarily attributable to the $950 million of Florida policyholder credit expense recorded in the third quarter 2025, and accounted for 4.6 and 1.6 points for the three and nine months ended September 30, 2025, respectively.

During the third quarter and nine months ended September 30, 2025, our advertising spend was $1.3 billion and $3.8 billion, respectively, which was 10% and 36% greater than the same periods last year.

As a result of the increase in net premiums earned during the periods, advertising spend contributed 0.2 less points to the underwriting expense ratio in the third quarter 2025, and 0.9 more points to the underwriting expense ratio for the nine months

ended September 30, 2025, compared to the same periods last year.

We invested heavily in advertising during the first nine months of the year to capture consumer shopping, and will continue to advertise to maximize growth, as long as we remain on track to achieve our profitability goal and can acquire customers at or below our target acquisition cost.

To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition (e.g., advertising and agency commissions) from our underwriting expense ratio.

By excluding acquisition costs from our underwriting expense

ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business.

For the third quarter 2025, our NAER increased 0.1 points, 0.6 points, and 1.7 points in our personal vehicle (excluding policyholder credit expense), personal property, and core commercial auto businesses, respectively, compared to the same period last year.

On a year-to-date basis, our NAER decreased 0.1 points in our personal vehicle business (excluding policyholder expense), and increased 0.8 points in both our personal property and core commercial auto businesses.

We remain committed to efficiently managing operational non-acquisition expenses.

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Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.

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

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

($ in millions) 2025 2024 % Growth 2025 2024 % Growth

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1 Includes other underwriting business and run-off operations.

September 30,

(# in thousands) 2025 2024 % Growth

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Personal Lines

Our Personal Lines business offers vehicle (personal auto and special lines) and residential property insurance products to personal consumers, with the operating goal of optimizing the number of insured products within our policyholders’ households.

Our Personal Lines business offers personal vehicle (personal auto and special lines) and residential property insurance products to consumers, with the operating goal of optimizing the number of insured products within our policyholders’ households.

In our discussion below, we report our personal auto and personal property business results separately as components of our Personal Lines segment to provide a further understanding of our products.

Our personal auto business discussions are further separated between the agency and direct distribution channels.

For the three months ended June 30, 2025, 44% of our personal auto business was written through the agency channel and 56% was written through the direct channel.

While consumer segment results varied by channel, as discussed below, our total personal auto business experienced overall growth in policies in force, new business applications, quotes, and conversion during the second quarter and first half of 2025, compared to the same periods last year.

For the three months ended September 30, 2025, 41% of our personal auto business was written through the agency channel and 59% was written through the direct channel.

For the third quarter 2025, consumer segment results varied by channel, as discussed below, and our total personal auto business experienced overall growth in policies in force, while new business applications, quotes, and conversion were down, compared to the same period last year.

Personal auto new business applications, quotes, and conversion increased on a year-over-year basis, for the nine months ended September 30, 2025.

Personal Auto - Agency

The year-over-year changes in our personal auto agency business were as follows:

Change Over Prior Year

Quarter Year-to-date

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The personal auto agency business includes business written by more than 40,000 independent insurance agencies that represent Progressive, as well as brokerages in New York and California.

During the second quarter 2025, we generated new agency personal auto application growth in 32 states and the District of Columbia, including seven of our top 10 largest agency states.

Compared to the same periods in the prior year, new applications increased 6% during the second quarter 2025, primarily driven by significant growth for Sams and Dianes, which more than offset a decrease in new

applications for Robinsons, while Wrights experienced flat growth.

For the first six months of 2025, all consumer segments experienced an increase in new application growth, except for Robinsons who experienced a decline.

All consumer segments saw an increase in policies in force at the end of the second quarter 2025, compared to the same period last year.

During the second quarter and first six months of 2025, on a year-over-year basis, we experienced an increase in agency auto quote volume of 7% and 12%, respectively, with a rate of conversion (i.e., converting a quote to a sale) decrease of 2% for the quarter and an increase of 4% on a year-to-date basis, compared to the same periods last year.

For both the second quarter and first six months of 2025, all consumer segments experienced an increase in quote volume, compared to the same periods in the prior year, except Robinsons, who decreased substantially.

Both Sams and Dianes experienced an increase in conversion during the second quarter and first half of 2025, with Wrights and Robinsons experiencing a decrease, compared to the same periods last year.

The increase in new applications, quotes, and conversion for Sams were, in part, driven by lifting certain underwriting restrictions that were in place at the beginning of 2024.

During the third quarter 2025, we generated new agency personal auto application growth in 20 states and the District of Columbia, including four of our top 10 largest agency states.

Compared to the same period in the prior year, the decrease in new applications during the third quarter 2025 was primarily driven by substantial declines for both Wrights and Robinsons, with a slight decline for Dianes, which was partially offset by a single-digit increase in Sams.

For the first nine months of 2025, compared to the same period in the prior year, all consumer segments experienced an increase in new application growth, except for Robinsons who experienced a significant decline.

Year-over-year policies in force growth at the end of the third quarter

2025, was strong in all consumer segments except Robinsons, which saw a small increase due to restrictions on new homeowner applications.

For the third quarter and the nine months ended September 30, 2025, on a year-over-year basis, we experienced an increase in agency auto quote volume of 2% and 8%, respectively, with a rate of conversion (i.e., converting a quote to a sale) decrease of 6% for the quarter, with flat conversion on a year-to-date basis.

For the third quarter 2025, Sams and Dianes experienced an increase in quote volume, compared to the same period in the prior year, while Wrights and Robinsons saw a single-digit decline.

On a year-over-year basis for the first nine months of 2025, all consumer segments experienced an increase in quote volume except Robinsons, who saw a moderate decline.

All consumer segments experienced a decrease in conversion for the third quarter 2025, with conversion declines in Wrights and Robinsons for the first nine months of 2025, compared to the same periods last year.

The decline in new applications, quotes, and conversion for Robinsons, compared to the prior year periods, was due to several initiatives implemented in our personal property business that were focused on improving profitability, as discussed in the Personal Property section below.

These initiatives, which began during the last half of 2024, focused primarily on home and condo coverages and impacted growth in bundled auto and homeowner policies.

These initiatives, which began during the last half of 2024, focused primarily on home and condo coverages and impacted growth in bundled personal auto and homeowners policies.

Our personal auto rates were relatively stable during the quarter.

The decrease in written premium per policy for new and renewal personal auto agency business during the second quarter and first six months of 2025, compared to the same periods last year, was, in part, attributable to rate decreases in certain markets, including Florida, and a shift in the mix of business, including a shift to a higher percentage of 6-month policies, which have about half of the amount of net premiums written as policies with 12-month terms.

Our trailing 3- and 12-month policy life expectancy in the agency auto business experienced a decrease at the end of the second quarter 2025, on a year-over-year basis, which we believe is primarily driven by a shift in the mix of business to more Sams and increased consumer shopping.

The decrease in written premium per policy for new and renewal personal auto agency business for the third quarter and first nine months of 2025, compared to the same periods last year, was, in part, attributable to rate decreases in certain markets, including Florida, and a shift in the mix of business, including a shift to a higher percentage of 6-month policies, which have about half of the amount of net premiums written as policies with 12-month terms.

Our trailing 3- and 12-month policy life expectancy in the agency auto business experienced a decrease at the end of the third quarter 2025, on a year-over-year basis, which we believe is primarily driven by policy replacements due to increased consumer shopping and price sensitivity.

As previously discussed, due, in part, to the efforts of our customer preservation team, during the period we saw an increase in existing customers who went through our new customer quote process to either modify existing coverage or to find a lower rate.

As a result, some of these customers replaced their existing policies with new Progressive policies, which negatively impacted policy life expectancy, but retained the customer.

Personal Auto - Direct

The year-over-year changes in our personal auto direct business were as follows:

Change Over Prior Year

Quarter Year-to-date

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Written premium per policy

New 3 13 3 11

Renewal 0 5 1 10

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The personal auto direct business includes business written directly by Progressive online or by phone.

During the second quarter 2025, we generated new direct personal auto application growth in 39 states and the District of Columbia, including seven of our top 10 largest direct states.

Compared to the same periods in the prior year, all four consumer segments experienced moderate growth in new applications, except Sams, who experienced significant growth for the second quarter 2025, with all four consumer segments experiencing significant growth for the first half of 2025.

During the third quarter 2025, we generated new direct personal auto application growth in 27 states and the District of Columbia, including six of our top 10 largest direct states.

Compared to the same periods in the prior year, all consumer segments experienced a decline in new applications, except Sams, who experienced moderate growth for the third quarter 2025, with all four consumer segments experiencing growth for the first nine months of 2025.

Policies in force grew between 15% and 19% in each consumer segment, compared to the same period last year.

During the second quarter and first six months of 2025, direct personal auto quote volume increased 2% and 12%, respectively, with a rate of conversion increase of 6% and 7%, compared to the same periods last year, primarily driven by increased advertising spend and our competitiveness in the marketplace.

For the second quarter 2025, Sams and Robinsons experienced quote volume growth higher than the total, Dianes experienced flat growth, and the Wrights experienced a decline, compared to the same period last year.

All consumer segments experienced quote volume growth for the first half of 2025.

For the second quarter and first half of 2025, all consumer segments experienced an increase in conversion, except for Robinsons, who experienced a slight decline.

For the third quarter and first nine months of 2025, direct personal auto quote volume decreased 4% and increased 6%, respectively, with a rate of conversion increase of 4% and 6%, compared to the same periods last year, primarily driven by increased advertising spend and our competitiveness in the marketplace.

For the third quarter 2025, all consumer segments experienced a decline in quote volume, except Robinsons, who experienced a slight increase, with all consumer segments experiencing quote volume growth for the first nine months of 2025, compared to the same periods last year.

For the third quarter and first nine months of 2025, all consumer segments experienced an increase in conversion, except for Robinsons, who experienced a slight decline in both periods, compared to the same periods in the prior year.

The personal property profitability initiatives that negatively affected Robinsons new application, quote, and conversion growth in the agency channel were not as impactful to the direct channel as the majority of the property business bundles with personal auto in the direct channel is written through unaffiliated third-party carriers, which remain available even when we restrict writing our personal property products.

Our personal auto rates were relatively stable during the quarter, resulting in relatively steady written premium per

policy during the second quarter and first six months of 2025, compared to the same periods last year.

Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced a decrease at the end of the second quarter 2025, on a year-over-year basis, which we believe is primarily driven by a shift in the mix of business and increased consumer shopping.

Our personal auto rates were relatively stable during the quarter, resulting in relatively steady written premium per policy for the third quarter and first nine months of 2025, compared to the same periods last year.

Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced a decrease at the end of the third quarter 2025, on a year-over-year basis, which we believe is primarily due to increased shopping and price sensitivity where we saw an increase in the number of existing customers who went through our new customer quote process to either modify existing coverage or to find a lower rate.

As a result, some of these customers replaced their existing policies with new Progressive policies, which negatively impacted policy life expectancy, but retained the customer.

Personal Property

The year-over-year changes in our personal property business were as follows:

Change Over Prior Year

Quarter Year-to-date

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In addition to reducing our geographic footprint in more volatile weather-related markets (e.g., coastal and hail-prone states), we continued to focus on achieving profitability goals in markets that are less susceptible to catastrophes for our homeowners product, which we define as our total personal property business excluding renters and umbrella products.

In the growth-oriented states, homeowners product policies in force increased 7% on a year-over-year basis as of June 30, 2025.

Policies in force decreased 15% in the volatile weather states as of the end of the second quarter 2025, compared to the same period in the prior year.

In the growth-oriented states, homeowners product policies in force increased 2% on a year-over-year basis as of September 30, 2025.

Policies in force decreased 15% in the volatile weather states as of the end of the third quarter 2025, compared to the same period in the prior year.

We believe actions taken to address profitability adversely impacted new business application growth.

During the first half of 2025, we continued several initiatives, including:

During the first nine months of 2025, we continued several initiatives, including:

(i) prioritizing insuring lower-risk properties (e.g., new construction, existing homes with newer roofs);

(ii) having underwriting restrictions in place in most states, to only accept new homeowners product business when the property policy is bundled with a Progressive personal auto policy, where permitted;

(iii) restricting new business and non-renewing policies that provide coverage for non-owner-occupied properties (e.g., short-term vacation rental, secondary residence, etc.) in the majority of states;

and, (iv) expanding our cost sharing with policyholders through

mandatory wind and hail deductibles and roof depreciation schedules in markets where permitted.

In addition, beginning in the second quarter 2024, following the required filings and notices, we began our efforts to non-renew about 115,000 property policies in Florida.

This effort slowed while the moratoriums were in place in response to Hurricanes Helene and Milton, which temporarily limited an insurer’s ability to non-renew policies, but resumed once the moratoriums expired in December 2024.

This effort was substantially completed by the end of the second quarter 2025.

Our written premium per policy decreased on a year-over-year basis for the second quarter and first six months of 2025, primarily attributable to a shift in the mix of business to more renters policies, which have lower average written premiums, and a decline in homeowners policies in force in both volatile weather-related markets and non-owner-occupied properties, which both have higher average premiums.

(iii) restricting new business and non-renewing policies that provide coverage for non-owner-occupied properties (e.g., short-term vacation rental,

secondary residence, etc.) in the majority of states;

and, (iv) expanding our cost sharing with policyholders through mandatory wind and hail deductibles and roof depreciation schedules in markets where permitted.

During the third quarter 2025, we began to take actions in certain states to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing execution, and regulatory and market conditions.

Some of these actions include expanding agency relationships and reopening new business in certain agency and direct channel markets.

Our written premium per policy decreased on a year-over-year basis for the third quarter and first nine months of 2025, primarily attributable to a shift in the mix of business to more renters policies, which have lower average written premiums, and a decline in homeowners policies in force in both volatile weather-related markets and non-owner-occupied properties, which both have higher average premiums.

The effect of these declines were partially offset by rate increases taken during the last 12 months and higher premium coverages reflecting increased property values.

During the second quarter 2025, we increased rates, in aggregate, about 4% in our personal property business, bringing the year-to-date aggregate rate increase to 6%.

During the third quarter 2025, we increased rates, in aggregate, about 2% in our personal property business, bringing the year-to-date aggregate rate increase to 8%.

We intend to continue to make targeted rate increases in states where we are not achieving our profitability goals.

The policy life expectancy in our personal property business shortened during the second quarter 2025, compared to the same period last year, which we believe is primarily driven by a shift in the mix of business to more renters policies, the non-renewals for certain policies in volatile weather states, and rate increases made during the last 12 months.

The policy life expectancy in our personal property business shortened as of the end of the third quarter 2025, compared to the same period last year, which we believe is primarily driven by a shift in the mix of business to more renters policies.

Commercial Lines

The following table and discussion focuses on our core commercial auto products, which accounted for about 80% of our Commercial Lines segment net premiums written on a trailing 12-month basis, as of the end of the second quarter 2025.

Year-over-year changes in our core commercial auto products were as follows:

Change Over Prior Year

Quarter Year-to-date

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Trailing 12 months

During the second quarter and first six months of 2025 on a year-over-year basis, core commercial auto new application growth was positive in our tow, contractor, and business auto BMTs.

The for-hire transportation BMT continued to be adversely impacted by challenging freight market conditions that have continued to cause a decline in the active number of motor carriers in this BMT.

Policies in force grew in all of our BMTs, except in the for-hire transportation and for-hire specialty BMTs.

During the second quarter and first six months of 2025, quote volume increased about 4% and 3%, respectively, while conversion decreased 1% and increased 2%, in our core commercial auto products, compared to the same periods last year.

The effect the previously discussed rate increases had on written premium per policy for our core commercial auto business was offset by a shift in the mix of business, primarily driven by a decreased demand for products in our for-hire transportation BMT and, to a lesser extent, our for-hire specialty BMT.

For the third quarter and first nine months of 2025, on a year-over-year basis, core commercial auto new application growth was positive in all BMTs, except for-hire transportation, which was impacted by rate and non-rate actions taken to address profitability challenges and, to a lesser extent, the continued decline in the number of active motor carriers in this BMT.

Policies in force grew in all of our BMTs, except in the for-hire transportation and for-hire specialty BMTs, compared to the same period in the prior year.

For the third quarter 2025, quote volume and the rate of conversion increased about 4% and decreased about 5%, respectively, in our core commercial auto products, compared to the same period in the prior year.

On a year-over-year basis for the first nine months of 2025, quote volume increased 4%, while conversion was flat.

The effect the previously discussed rate increases had on written premium per policy for our core commercial auto business was offset by a shift in the mix of business, primarily driven by decreased demand for products in our for-hire transportation BMT.

Written premium per policy was also impacted by a shift to a greater mix of policies with 6-month terms in our contractor and business auto BMTs, which have about half the amount of net premiums written as 12-month policies.

During the second quarter 2025, we increased rates, in aggregate, about 3% in our core commercial auto products, bringing the year-to-date aggregate rate increase to 4%.

During the third quarter 2025, we increased rates, in aggregate, about 2% in our core commercial auto products, bringing the year-to-date aggregate rate increase to 6%.

We will continue to evaluate our rate need and adjust rates as we deem necessary.

Our policy life expectancy increased in all BMTs, except in for-hire specialty and for-hire transportation for the second quarter 2025, compared to the same period last year.

As of the end of the second quarter 2025, policy life expectancy has experienced sequential month-over-month improvement since the end of the third quarter 2024.

Our policy life expectancy increased in all BMTs, except in for-hire specialty, as of the end of the third quarter 2025, compared to the same period last year.

As of the end of the third quarter 2025, policy life expectancy has experienced sequential month-over-month improvement since the end of the third quarter 2024.

We believe this improvement is due to the moderation of our rate increases, compared to competitor rate increases, and various initiatives, such as payment and renewal reminders.

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The fully taxable equivalent (FTE) total return includes recurring investment income, adjusted to a fully taxable amount for certain securities that receive preferential tax treatment (e.g., municipal securities), and total net realized, and changes in total net unrealized, gains (losses) on securities.

The following table summarizes investment results for the periods ended June 30:

Three Months Six Months

The following table summarizes investment results for the periods ended September 30:

Three Months Nine Months

2025 2024 2025 2024

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

The increase in the fixed-income portfolio FTE total return, compared to last year, primarily

The change in the fixed-income portfolio FTE total return, compared to last year, primarily

reflected movement in U.S.

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The common stock FTE total return reflected general market conditions.

A further break-down of our FTE total returns for our fixed-income portfolio for the periods ended June 30, follows:

Three Months Six Months

A further break-down of our FTE total returns for our fixed-income portfolio for the periods ended September 30, follows:

Three Months Nine Months

2025 2024 2025 2024

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(years) Average Rating 1

June 30, 2025

September 30, 2025

government obligations $ 51,339 54.3 % 4.4 AA+

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Other asset-backed securities 6,376 6.7 1.3 AA

Nonredeemable preferred stocks 500 0.6 1.2 BBB-

Short-term investments 2,103 2.4 <0.1 A+

Nonredeemable preferred stocks 438 0.5 1.1 BB+

Short-term investments 1,515 1.6 0.1 AA-

Total fixed-income securities 90,462 95.7 3.4 AA-

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$ 94,509 100.0 % 3.4 AA-

June 30, 2024

September 30, 2024

government obligations $ 44,429 56.0 % 4.0 AA+

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To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.

2 At June 30, 2025 and 2024 and December 31, 2024, we had $303 million, $74 million, and $125 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.

The total fair value of the portfolio at June 30, 2025 and 2024 and December 31, 2024, included $5.0 billion, $4.1 billion, and $6.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions.

2 At September 30, 2025 and 2024 and December 31, 2024, we had $523 million, $469 million, and $125 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.

The total fair value of the portfolio at September 30, 2025 and 2024 and December 31, 2024, included $4.9 billion, $4.1 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 were used to pay our common share dividends in January 2025;

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The following table shows the composition of our Group I and Group II securities:

June 30, 2025 June 30, 2024 December 31, 2024

September 30, 2025 September 30, 2024 December 31, 2024

($ in millions) Fair

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Unrealized Gains (Losses)

As of June 30, 2025, our fixed-maturity portfolio had total after-tax net unrealized losses, which are recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheets, of $0.1 billion, compared to $1.7 billion and $1.4 billion at June 30, 2024 and December 31, 2024, respectively.

The decrease in total unrealized losses from June 30, 2024 and December 31, 2024, was due to valuation increases across all fixed-maturity sectors, most prominently in our U.S.

Treasury, corporate and other debt, and commercial mortgage-backed portfolios as lower interest rates and, in some cases, tighter credit spreads drove strong portfolio performance.

As of September 30, 2025, our fixed-maturity portfolio had a total after-tax net unrealized gain, which is recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheet, of $0.2 billion, compared to total after-tax net unrealized losses of $0.1 billion and $1.4 billion at September 30, 2024, and December 31, 2024, respectively.

The improvement from total net unrealized losses at both prior periods to the September 30, 2025 total net unrealized gain balance, was due to valuation increases across all fixed-maturity sectors.

Treasury, corporate and other debt, and commercial mortgage-backed portfolios had the most significant valuation increase.

Lower interest rates and, in some cases, tighter credit spreads drove strong portfolio performance.

See Note 2 – Investments for a further break-out of our gross unrealized gains (losses).

Holding Period Gains (Losses)

The following table provides the balance and activity for both the gross and net holding period gains (losses) for the six months ended June 30, 2025:

The following table provides the balance and activity for both the gross and net holding period gains (losses) for the nine months ended September 30, 2025:

(millions) Gross Holding

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Total changes in holding period securities 431 7 438

Balance at June 30, 2025

Balance at September 30, 2025

Hybrid fixed-maturity securities 17 (4) 13

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Following are the primary exposures for our fixed-income portfolio.

Interest Rate Risk Our duration of 3.4 years at June 30, 2025, 3.2 years at June 30, 2024, and 3.3 years at December 31, 2024, fell within our acceptable range of 1.5 to 5.0 years.

Interest Rate Risk Our duration of 3.4 years at September 30, 2025 and 3.3 years at both September 30, 2024, and December 31, 2024, fell within our acceptable range of 1.5 to 5.0 years.

The duration distribution of our fixed-income portfolio, excluding short-term investments, represented by the interest rate sensitivity of the comparable benchmark U.S.

Treasury Notes, was:

Duration Distribution June 30, 2025 June 30, 2024 December 31, 2024

Duration Distribution September 30, 2025 September 30, 2024 December 31, 2024

1 year 10.8 % 10.9 % 9.6 %

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Credit Risk This exposure is managed by maintaining an A minimum weighted average portfolio credit quality rating, as defined by NRSROs.

At June 30, 2025 and 2024, and December 31, 2024, our weighted average credit quality rating was AA-.

At September 30, 2025 and 2024, and December 31, 2024, our weighted average credit quality rating was AA-.

The credit quality distribution of the fixed-income portfolio was:

Average Rating 1

June 30, 2025 June 30, 2024 December 31, 2024

September 30, 2025 September 30, 2024 December 31, 2024

AAA 12.5 % 12.4 % 12.6 %

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1 The credit quality ratings are assigned by NRSROs.

Concentration Risk We did not have any investments in a single issuer, either overall or in the context of individual asset classes and sectors, that exceeded our thresholds during the second quarter 2025.

Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the second quarter 2025.

Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the third quarter 2025.

Liquidity Risk Our overall portfolio remains very liquid and we believe that it is sufficient to meet expected near-term liquidity requirements.

The short-to-intermediate duration of our portfolio provides a source of liquidity.

During the remainder of 2025, we expect approximately $3.8 billion, or 10%, of principal repayment from our fixed-income portfolio, excluding U.S.

During the next 12 months, we expect approximately $9.6 billion, or 25%, of principal repayment from our fixed-income portfolio, excluding U.S.

Treasury Notes and short-term investments.

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The duration of our U.S.

government obligations, which are included in the fixed-income portfolio, was comprised of the following at June 30, 2025:

government obligations, which are included in the fixed-income portfolio, was comprised of the following at September 30, 2025:

($ in millions) Fair

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Five to seven years 20,661 5.7

Seven to ten years 1 8.4

Treasury Notes $ 51,339 4.4

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(at period end) 1

June 30, 2025

September 30, 2025

Residential mortgage-backed securities $ 3,000 $ 20 19.9 % 2.6 AA+

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Total asset-backed securities $ 15,062 $ (208) 100.0 % 1.6 AA

June 30, 2024

September 30, 2024

Residential mortgage-backed securities $ 1,424 $ 18 11.6 % 2.9 AA+

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1 The credit quality ratings are assigned by NRSROs.

Residential Mortgage-Backed Securities (RMBS) The following table details the credit quality rating and fair value of our RMBS, along with the loan classification and a comparison of the fair value at June 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

Residential Mortgage-Backed Securities (RMBS) The following table details the credit quality rating and fair value of our RMBS, along with the loan classification and a comparison of the fair value at September 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

($ in millions)

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Our RMBS portfolio consists of deals that are backed by high-credit quality borrowers and/or those that have strong structural protections through underlying loan collateralization.

During the second quarter of 2025, we continued to increase our exposure in this portfolio through purchases in both the primary and secondary markets.

Our additions were concentrated in high-quality investment-grade securities.

Commercial Mortgage-Backed Securities (CMBS) The following table details the credit quality rating and fair value of our CMBS, along with a comparison of the fair value at June 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

During the third quarter of 2025, we continued to increase our exposure through purchases in both primary and secondary markets.

Our additions were concentrated in high-quality investment-grade securities and contained both fixed-rate and adjustable-rate residential mortgages.

Commercial Mortgage-Backed Securities (CMBS) The following table details the credit quality rating and fair value of our CMBS, along with a comparison of the fair value at September 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

($ in millions)

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when we assigned the NAIC ratings for our CMBS, 91% of our non-investment-grade securities were rated investment grade and reported as Group II securities, with the remainder classified as Group I.

During the second quarter 2025, our allocation to CMBS remained relatively stable.

While CMBS credit spreads widened in the beginning of the quarter, they tightened back in and ended the quarter close to unchanged.

We purchased securities in both the primary and secondary markets during the quarter.

We focused on buying high-quality securities in sectors including apartments, grocery-anchored shopping centers, logistics, and self-storage.

As of June 30, 2025, we had no delinquencies in our CMBS portfolio.

The following table shows the composition of our CMBS portfolio by maturity year and sector at June 30, 2025:

At September 30, 2025, the CMBS portfolio fair value was $5.7 billion, which increased from $5.0 billion at June 30, 2025.

The majority of this increase was due to purchases of investment-grade single-borrower securities in new issue markets across the apartment, logistics, life sciences, and grocery-anchored retail sectors.

Overall, CMBS credit spreads remained unchanged during the quarter and there was an increase in new issuances in the market.

As of September 30, 2025, we had no delinquencies in our CMBS portfolio.

The following table shows the composition of our CMBS portfolio by maturity year and sector at September 30, 2025:

($ in millions)

Office Lab Office Multi-family Multi-family IO Industrial Self- Storage Casino Data Center Retail Total Average Original LTV Average Current DSCR

Office Lab Office Multi-family Multi-family IO Industrial Self- Storage Casino Data Center Retail Hotel Total Average Original LTV Average Current DSCR

2025 $ 0 $ 0 $ 0 $ 10 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 10

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The DSCR reported in the table is calculated based on the most currently available net operating income and mortgage payments for the borrower.

Other Asset-Backed Securities (OABS) The following table details the credit quality rating and fair value of our OABS, along with a comparison of the fair value at June 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

Other Asset-Backed Securities (OABS) The following table details the credit quality rating and fair value of our OABS, along with a comparison of the fair value at September 30, 2025, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

($ in millions)

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Increase (decrease) in value 0.5 % 0 % (4.4) % (1.2) % 0.5 % 0 % 0 %

During the second quarter 2025, we selectively added securities to the OABS portfolio that we viewed as having attractive spreads and potential returns.

The securities we acquired were predominantly in the automobile and equipment categories in highly rated, senior, and short-tenor debt tranches.

At September 30, 2025, the OABS portfolio fair value was $6.4 billion, which decreased from $6.7 billion at June 30, 2025.

The net decline was primarily due to principal paydowns on securities, which were partially offset by security purchases during the third quarter 2025.

We selectively added securities to the OABS portfolio that we viewed as having attractive spreads and potential returns.

The securities we acquired were predominantly in the automobile, equipment, and collateralized loan obligations categories in highly-rated senior and short-tenor debt tranches.

Additions were primarily made in new issue markets with some selective secondary purchases.

STATE AND LOCAL GOVERNMENT OBLIGATIONS

The following table details the credit quality rating of our state and local government obligations (municipal securities) at June 30, 2025, without the benefit of credit or bond insurance:

The following table details the credit quality rating of our state and local government obligations (municipal securities) at September 30, 2025, without the benefit of credit or bond insurance:

Average Rating General

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Total fair value $ 1,326 $ 1,949 $ 3,275

Included in revenue bonds were $734 million of single-family housing revenue bonds issued by state housing finance agencies, of which $358 million were supported by

individual mortgages held by the state housing finance

agencies and $376 million were supported by mortgage-backed securities.

Included in the fair value of revenue bonds were $842 million of single-family housing revenue bonds issued by state housing finance agencies, of which $396 million were supported by individual mortgages held by the state housing finance agencies and $446 million were supported by mortgage-backed securities.

Of the revenue bonds supported by individual mortgages held by the state housing finance agencies, the overall credit quality rating was AA+.

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the remaining 22% were collateralized by Fannie Mae and Freddie Mac mortgages.

While credit spreads of municipal bonds widened in the beginning of the second quarter 2025, they tightened back in and ended the quarter close to unchanged.

We selectively added short-duration bonds to the portfolio during the second quarter, and as a result, municipal securities as a percentage of the total fixed-income portfolio increased modestly.

The broader risk rally in the third quarter 2025 contributed to tighter credit spreads in municipal securities.

During the third quarter 2025, we continued to selectively add short duration bonds to the portfolio in higher quality issuers.

CORPORATE AND OTHER DEBT SECURITIES

The following table details the credit quality rating of our corporate and other debt securities at June 30, 2025:

The following table details the credit quality rating of our corporate and other debt securities at September 30, 2025:

Average Rating Consumer Industrial Communication Financial Services Technology Basic Materials Energy Total

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Total fair value $ 5,183 $ 2,475 $ 571 $ 6,351 $ 1,785 $ 271 $ 2,181 $ 18,817

The size of our corporate and other debt portfolio increased to $18.1 billion at June 30, 2025, from $16.0 billion at

March 31, 2025.

We selectively added securities as volatility provided periods with attractive credit spreads during the quarter.

At June 30, 2025 and March 31, 2025, corporate and other debt securities made up approximately 21% and 20%, respectively, of our fixed-income portfolio.

The duration of the corporate and other debt portfolio increased slightly to 2.8 years at June 30, 2025, from 2.7 years at March 31, 2025.

The fair value of our corporate and other debt portfolio increased to $18.8 billion at September 30, 2025, from $18.1 billion at

June 30, 2025.

At both September 30, 2025 and June 30, 2025, corporate and other debt securities made up approximately 21%, of our fixed-income portfolio.

We generally view shorter maturity securities as having more favorable risk/reward profiles, and the average duration of our corporate and other debt portfolio decreased slightly to 2.7 years at September 30, 2025, from 2.8 years at June 30, 2025.

NONREDEEMABLE PREFERRED STOCKS

The table below shows the exposure break-down of our nonredeemable preferred stocks by sector and rating at June 30, 2025:

The table below shows the exposure break-down of our nonredeemable preferred stocks by sector and rating at September 30, 2025:

Financial Services

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Although a nonredeemable preferred stock will remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend.

At June 30, 2025, our non-investment-grade nonredeemable preferred stocks were with issuers that maintain investment-grade senior debt ratings.

At September 30, 2025, our non-investment-grade nonredeemable preferred stocks were with issuers that maintain investment-grade senior debt ratings.

We also face the risk that dividend payments could be deferred for one or more periods or skipped entirely.

As of June 30, 2025, we expect all of these securities to pay their dividends in full and on time.

As of September 30, 2025, we expect all of these securities to pay their dividends in full and on time.

Approximately 97% of our nonredeemable preferred stocks pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.

At June 30, 2025, the nonredeemable preferred stock portfolio fair value was $0.5 billion, which is a slight decrease from $0.6 billion at March 31, 2025.

At September 30, 2025, the nonredeemable preferred stock portfolio fair value was $0.4 billion, which is a slight decrease from $0.5 billion at June 30, 2025.

This decline was primarily due to nonredeemable preferred stocks that were called during the quarter.

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Common equities, as reported on our consolidated balance sheets, were comprised of the following:

($ in millions) June 30, 2025 June 30, 2024 December 31, 2024

($ in millions) September 30, 2025 September 30, 2024 December 31, 2024

Common stocks $ 4,013 99.2 % $ 3,474 99.4 % $ 3,550 99.3 %

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The majority of our common stock portfolio consists of individual holdings selected based on their contribution to the correlation with the Russell 1000 Index.

We held 685 out of 1,015, or 67%, of the common stocks comprising the index at June 30, 2025, which made up 93% of the total market capitalization of the index.

At both June 30, 2025 and 2024, the year-to-date GAAP income total return was within our targeted tracking error of +/- 50 basis points.

At December 31, 2024, the full year GAAP income total return did not meet our targeted tracking error.

We held 651 out of 1,011, or 64%, of the common stocks comprising the index at September 30, 2025, which made up 89% of the total market capitalization of the index.

At September 30, 2025, the year-to-date GAAP income total return was within our targeted tracking error of +/- 50 basis points.

The year-to-date and full-year, as applicable, GAAP income total return did not meet our targeted tracking error as of September 30, 2024 and December 31, 2024, respectively.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

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Item 2. Management’s Discussion and Analysis