Item 1. Financial Statements
Item 1. Financial Statements.
The Progressive Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Nine Months
Periods Ended September 30,
2025 2024 2025 2024
(millions — except per share amounts)
Revenues
Net premiums earned $ 20,849 $ 18,297 $ 60,568 $ 51,655
Investment income 924 739 2,609 2,042
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales 12 68 32 ( 305 )
Net holding period gains (losses) on securities 283 220 438 622
Total net realized gains (losses) on securities 295 288 470 317
Fees and other revenues 306 278 896 774
Service revenues 138 117 382 308
Total revenues 22,512 19,719 64,925 55,096
Expenses
Losses and loss adjustment expenses 13,445 12,510 39,854 36,077
Policy acquisition costs 1,555 1,390 4,522 3,930
Other underwriting expenses 3,015 2,670 8,423 6,781
Policyholder credit expense 1
950 0 950 0
Investment expenses 10 7 26 20
Service expenses 144 126 400 333
Interest expense 70 70 209 209
Total expenses 19,189 16,773 54,384 47,350
Net Income
Income before income taxes 3,323 2,946 10,541 7,746
Provision for income taxes 708 612 2,184 1,622
Net income 2,615 2,334 8,357 6,124
Other Comprehensive Income (Loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities 284 1,561 1,611 1,461
Net unrealized losses on forecasted transactions 0 0 1 0
Other comprehensive income (loss) 284 1,561 1,612 1,461
Comprehensive income (loss) $ 2,899 $ 3,895 $ 9,969 $ 7,585
Computation of Earnings Per Common Share
Net income $ 2,615 $ 2,334 $ 8,357 $ 6,124
Less: Preferred share dividends and other 2
0 0 0 17
Net income available to common shareholders $ 2,615 $ 2,334 $ 8,357 $ 6,107
Average common shares outstanding - Basic 586.5 585.6 586.3 585.5
Net effect of dilutive stock-based compensation 1.7 2.0 1.8 2.2
Total average equivalent common shares - Diluted 588.2 587.6 588.1 587.7
Basic: Earnings per common share $ 4.46 $ 3.98 $ 14.25 $ 10.43
Diluted: Earnings per common share $ 4.45 $ 3.97 $ 14.21 $ 10.39
1 See Note 8 – Segment Information for further discussion.
2 All of our outstanding Serial Preferred Shares, Series B, were redeemed in February 2024.
See notes to consolidated financial statements.
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The Progressive Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
September 30, December 31,
(millions) 2025 2024 2024
Assets
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $ 88,247 , $ 74,595 , and $ 77,126 )
$ 88,509 $ 74,411 $ 75,332
Short-term investments (amortized cost: $ 1,515 , $ 757 , and $ 615 )
1,515 757 615
Total available-for-sale securities 90,024 75,168 75,947
Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $ 454 , $ 760 , and $ 756 )
438 735 728
Common equities (cost: $ 808 , $ 733 , and $ 745 )
4,047 3,497 3,575
Total equity securities 4,485 4,232 4,303
Total investments 94,509 79,400 80,250
Cash and cash equivalents 173 136 143
Restricted cash and cash equivalents 12 11 11
Total cash, cash equivalents, restricted cash, and restricted cash equivalents 185 147 154
Accrued investment income 691 560 594
Premiums receivable, net of allowance for credit losses of $ 516 , $ 388 , and $ 460
16,519 15,135 14,369
Reinsurance recoverables 4,107 4,881 4,765
Prepaid reinsurance premiums 215 224 349
Deferred acquisition costs 2,164 2,032 1,961
Property and equipment, net of accumulated depreciation of $ 1,398 , $ 1,590 , and $ 1,461
790 689 790
Net federal deferred income taxes 662 598 954
Other assets 1,693 1,537 1,559
Total assets $ 121,535 $ 105,203 $ 105,745
Liabilities and Shareholders’ Equity
Unearned premiums $ 26,822 $ 24,772 $ 23,858
Loss and loss adjustment expense reserves 42,105 38,062 39,057
Accounts payable, accrued expenses, and other liabilities 10,267 8,318 10,346
Debt 1
6,896 6,892 6,893
Total liabilities 86,090 78,044 80,154
Common shares, $ 1.00 par value (authorized 900 ; issued 798 , including treasury shares of 212 )
586 586 586
Paid-in capital 2,233 2,096 2,145
Retained earnings 32,437 24,632 24,283
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities 203 ( 140 ) ( 1,408 )
Net unrealized losses on forecasted transactions ( 13 ) ( 14 ) ( 14 )
Foreign currency translation adjustment ( 1 ) ( 1 ) ( 1 )
Total accumulated other comprehensive income (loss) 189 ( 155 ) ( 1,423 )
Total shareholders’ equity 35,445 27,159 25,591
Total liabilities and shareholders’ equity $ 121,535 $ 105,203 $ 105,745
1 Consists solely of long-term debt. See Note 4 – Debt for further discussion.
See notes to consolidated financial statements.
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The Progressive Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
Three Months Nine Months
Periods Ended September 30, 2025 2024 2025 2024
(millions — except per share amounts)
Serial Preferred Shares, No Par Value
Balance, beginning of period $ 0 $ 0 $ 0 $ 494
Redemption of Serial Preferred Shares, Series B 1
0 0 0 ( 494 )
Balance, end of period 0 0 0 0
Common Shares, $ 1.00 Par Value
Balance, beginning of period 586 586 586 585
Treasury shares purchased ( 1 ) ( 1 ) ( 1 ) ( 1 )
Net restricted equity awards issued/vested 1 1 1 2
Balance, end of period 586 586 586 586
Paid-In Capital
Balance, beginning of period 2,192 2,060 2,145 2,013
Amortization of equity-based compensation 42 38 90 86
Treasury shares purchased 0 ( 1 ) ( 1 ) ( 2 )
Net restricted equity awards issued/vested ( 1 ) ( 1 ) ( 1 ) ( 2 )
Reinvested dividends on restricted stock units 0 0 0 1
Balance, end of period 2,233 2,096 2,233 2,096
Retained Earnings
Balance, beginning of period 29,921 22,410 24,283 18,801
Net income 2,615 2,334 8,357 6,124
Treasury shares purchased ( 39 ) ( 84 ) ( 105 ) ( 131 )
Cash dividends declared on common shares ($ 0.10 , $ 0.10 , $ 0.30 , and $ 0.30 per share) 1
( 59 ) ( 59 ) ( 176 ) ( 176 )
Cash dividends declared on Serial Preferred Shares, Series B ($ 0 , $ 0 , $ 0 , and $ 15.688377 per share) 1
0 0 0 ( 8 )
Reinvested dividends on restricted stock units 0 0 0 ( 1 )
Other, net ( 1 ) 31 78 23
Balance, end of period 32,437 24,632 32,437 24,632
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period ( 95 ) ( 1,716 ) ( 1,423 ) ( 1,616 )
Other comprehensive income (loss) 284 1,561 1,612 1,461
Balance, end of period 189 ( 155 ) 189 ( 155 )
Total shareholders’ equity $ 35,445 $ 27,159 $ 35,445 $ 27,159
1 See Note 9 – Dividends for further discussion.
There are 20 million Serial Preferred Shares authorized. There are 5 million Voting Preference Shares authorized; no such shares have been issued.
See notes to consolidated financial statements.
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The Progressive Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended September 30, 2025 2024
(millions)
Cash Flows From Operating Activities
Net income $ 8,357 $ 6,124
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 230 208
Net amortization (accretion) of fixed-income securities ( 81 ) ( 24 )
Amortization of equity-based compensation 90 86
Net realized (gains) losses on securities ( 470 ) ( 317 )
Net (gains) losses on disposition of property and equipment 2 ( 2 )
Changes in:
Premiums receivable ( 2,150 ) ( 3,177 )
Reinsurance recoverables 658 213
Prepaid reinsurance premiums 134 26
Deferred acquisition costs ( 203 ) ( 345 )
Income taxes ( 138 ) ( 367 )
Unearned premiums 2,964 4,638
Loss and loss adjustment expense reserves 3,048 3,673
Accounts payable, accrued expenses, and other liabilities 2,079 1,601
Other, net ( 142 ) ( 226 )
Net cash provided by operating activities 14,378 12,111
Cash Flows From Investing Activities
Purchases:
Fixed maturities ( 34,912 ) ( 35,836 )
Equity securities ( 143 ) ( 110 )
Sales:
Fixed maturities 17,520 18,583
Equity securities 182 222
Maturities, paydowns, calls, and other:
Fixed maturities 6,269 4,750
Equity securities 240 110
Net (purchases) sales of short-term investments ( 825 ) 1,070
Net change in unsettled security transactions 398 514
Purchases of property and equipment ( 227 ) ( 175 )
Sales of property and equipment 70 65
Net cash used in investing activities ( 11,428 ) ( 10,807 )
Cash Flows From Financing Activities
Dividends paid to common shareholders ( 2,812 ) ( 615 )
Acquisition of treasury shares for equity award tax liabilities ( 92 ) ( 121 )
Acquisition of treasury shares acquired in open market ( 15 ) ( 13 )
Redemption of preferred shares 0 ( 500 )
Dividends paid to preferred shareholders 0 ( 8 )
Net cash used in financing activities ( 2,919 ) ( 1,257 )
Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 31 47
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 154 100
Cash, cash equivalents, restricted cash, and restricted cash equivalents – September 30
$ 185 $ 147
See notes to consolidated financial statements.
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The Progressive Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. BASIS OF REPORTING AND ACCOUNTING
The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries and non-insurance subsidiaries and affiliates in which we have a controlling financial interest (Progressive).
The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended September 30, 2025, are not necessarily indicative of the results expected for the full year. These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report to Shareholders).
Premiums Receivable
We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2024 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:
Three Months Ended September 30, Nine Months Ended September 30,
(millions) 2025 2024 2025 2024
Allowance for credit losses, beginning of period $ 501 $ 328 $ 460 $ 369
Increase in allowance 1
211 167 540 402
Write-offs 2
( 196 ) ( 107 ) ( 484 ) ( 383 )
Allowance for credit losses, end of period $ 516 $ 388 $ 516 $ 388
1 Represents the incremental increase in other underwriting expenses.
2 Represents the portion of allowance that is reversed when the premiums receivable balances are written off. Premiums receivable balances are written off once we have exhausted our collection efforts.
Property – Held for Sale
At September 30, 2025 and 2024, and December 31, 2024, we had held for sale properties of $ 112 million, $ 150 million, and $ 129 million, respectively, which are included in other assets on our consolidated balance sheets.
New Accounting Standards
We did not adopt any new accounting standards during the three and nine months ended September 30, 2025.
In September 2025, the Financial Accounting Standards Board issued an Accounting Standards Update (ASU), which amends the existing accounting guidance for capitalization of internal-use software costs and provides more detailed guidelines around the criteria for capitalization. This ASU will be effective for fiscal years (including interim periods within those fiscal years) beginning after December 15, 2027 (2028 for calendar-year companies). This standard may be applied using a prospective, modified, or retrospective transition approach. We do not believe this ASU will have a material impact on our financial condition or results of operations.
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2. INVESTMENTS
The following tables present the composition of our investment portfolio by major security type:
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
September 30, 2025
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 51,021 $ 731 $ ( 413 ) $ 0 $ 51,339 54.3 %
State and local government obligations 3,320 20 ( 65 ) 0 3,275 3.5
Foreign government obligations 16 0 0 0 16 0
Corporate and other debt securities 18,621 270 ( 86 ) 12 18,817 19.9
Residential mortgage-backed securities 2,979 26 ( 6 ) 1 3,000 3.2
Commercial mortgage-backed securities 5,916 17 ( 247 ) 0 5,686 6.0
Other asset-backed securities 6,374 35 ( 33 ) 0 6,376 6.7
Total fixed maturities 88,247 1,099 ( 850 ) 13 88,509 93.6
Short-term investments 1,515 0 0 0 1,515 1.6
Total available-for-sale securities 89,762 1,099 ( 850 ) 13 90,024 95.2
Equity securities:
Nonredeemable preferred stocks 454 0 0 ( 16 ) 438 0.5
Common equities 808 0 0 3,239 4,047 4.3
Total equity securities 1,262 0 0 3,223 4,485 4.8
Total portfolio 1
$ 91,024 $ 1,099 $ ( 850 ) $ 3,236 $ 94,509 100.0 %
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
September 30, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 44,231 $ 772 $ ( 574 ) $ 0 $ 44,429 56.0 %
State and local government obligations 2,681 10 ( 90 ) 0 2,601 3.3
Foreign government obligations 17 0 ( 1 ) 0 16 0
Corporate and other debt securities 14,970 222 ( 156 ) 0 15,036 18.9
Residential mortgage-backed securities 1,404 24 ( 6 ) 2 1,424 1.8
Commercial mortgage-backed securities 4,664 4 ( 377 ) 0 4,291 5.4
Other asset-backed securities 6,628 40 ( 54 ) 0 6,614 8.3
Total fixed maturities 74,595 1,072 ( 1,258 ) 2 74,411 93.7
Short-term investments 757 0 0 0 757 1.0
Total available-for-sale securities 75,352 1,072 ( 1,258 ) 2 75,168 94.7
Equity securities:
Nonredeemable preferred stocks 760 0 0 ( 25 ) 735 0.9
Common equities 733 0 0 2,764 3,497 4.4
Total equity securities 1,493 0 0 2,739 4,232 5.3
Total portfolio 1
$ 76,845 $ 1,072 $ ( 1,258 ) $ 2,741 $ 79,400 100.0 %
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($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
December 31, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 47,103 $ 36 $ ( 1,151 ) $ 0 $ 45,988 57.3 %
State and local government obligations 2,893 2 ( 117 ) 0 2,778 3.5
Foreign government obligations 16 0 0 0 16 0
Corporate and other debt securities 14,111 65 ( 215 ) ( 7 ) 13,954 17.4
Residential mortgage-backed securities 1,600 9 ( 11 ) 3 1,601 2.0
Commercial mortgage-backed securities 4,721 7 ( 376 ) 0 4,352 5.4
Other asset-backed securities 6,682 26 ( 65 ) 0 6,643 8.3
Total fixed maturities 77,126 145 ( 1,935 ) ( 4 ) 75,332 93.9
Short-term investments 615 0 0 0 615 0.7
Total available-for-sale securities 77,741 145 ( 1,935 ) ( 4 ) 75,947 94.6
Equity securities:
Nonredeemable preferred stocks 756 0 0 ( 28 ) 728 0.9
Common equities 745 0 0 2,830 3,575 4.5
Total equity securities 1,501 0 0 2,802 4,303 5.4
Total portfolio 1
$ 79,242 $ 145 $ ( 1,935 ) $ 2,798 $ 80,250 100.0 %
1 At 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; see Note 9 – Dividends for additional information.
At September 30, 2025, bonds and certificates of deposit in the principal amount of $ 788 million were on deposit to meet state insurance regulatory requirements. We did no t hold any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at September 30, 2025 or 2024, or December 31, 2024. At September 30, 2025, we did no t hold any debt securities that were non-income producing during the preceding 12 months.
Hybrid Securities Certain securities in our fixed-maturity portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. These securities are reported at fair value:
September 30,
(millions) 2025 2024 December 31, 2024
Fixed Maturities:
Corporate and other debt securities $ 696 $ 637 $ 608
Residential mortgage-backed securities 642 369 479
Other asset-backed securities 0 3 1
Total hybrid securities $ 1,338 $ 1,009 $ 1,088
Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we use the fair value option to record the changes in fair value of these securities through income as a component of net realized gains (losses).
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Fixed Maturities The composition of fixed maturities by maturity at September 30, 2025, was:
(millions) Cost Fair Value
Less than one year $ 8,676 $ 8,668
One to five years 53,046 53,116
Five to ten years 26,249 26,446
Ten years or greater 276 279
Total $ 88,247 $ 88,509
Asset-backed securities are classified in the maturity distribution table above based upon their projected cash flows. All other securities that do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.
Gross Unrealized Losses The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
September 30, 2025
U.S. government obligations 71 $ 11,145 $ ( 413 ) 7 $ 1,777 $ ( 3 ) 64 $ 9,368 $ ( 410 )
State and local government obligations 251 1,557 ( 65 ) 40 188 ( 1 ) 211 1,369 ( 64 )
Corporate and other debt securities 138 3,503 ( 86 ) 24 718 ( 4 ) 114 2,785 ( 82 )
Residential mortgage-backed securities 28 283 ( 6 ) 9 186 ( 1 ) 19 97 ( 5 )
Commercial mortgage-backed securities 138 2,879 ( 247 ) 16 375 ( 1 ) 122 2,504 ( 246 )
Other asset-backed securities 50 1,128 ( 33 ) 13 228 ( 1 ) 37 900 ( 32 )
Total fixed maturities 676 $ 20,495 $ ( 850 ) 109 $ 3,472 $ ( 11 ) 567 $ 17,023 $ ( 839 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
September 30, 2024
U.S. government obligations 86 $ 12,919 $ ( 574 ) 3 $ 2,069 $ ( 3 ) 83 $ 10,850 $ ( 571 )
State and local government obligations 302 1,779 ( 90 ) 44 208 0 258 1,571 ( 90 )
Foreign government obligations 1 16 ( 1 ) 0 0 0 1 16 ( 1 )
Corporate and other debt securities 224 5,251 ( 156 ) 14 426 ( 3 ) 210 4,825 ( 153 )
Residential mortgage-backed securities 33 244 ( 6 ) 4 185 0 29 59 ( 6 )
Commercial mortgage-backed securities 177 3,750 ( 377 ) 5 170 0 172 3,580 ( 377 )
Other asset-backed securities 80 1,531 ( 54 ) 16 353 0 64 1,178 ( 54 )
Total fixed maturities 903 $ 25,490 $ ( 1,258 ) 86 $ 3,411 $ ( 6 ) 817 $ 22,079 $ ( 1,252 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
December 31, 2024
U.S. government obligations 113 $ 38,782 $ ( 1,151 ) 39 $ 30,257 $ ( 418 ) 74 $ 8,525 $ ( 733 )
State and local government obligations 379 2,339 ( 117 ) 127 783 ( 6 ) 252 1,556 ( 111 )
Corporate and other debt securities 304 7,034 ( 215 ) 122 2,935 ( 33 ) 182 4,099 ( 182 )
Residential mortgage-backed securities 40 428 ( 11 ) 12 377 ( 4 ) 28 51 ( 7 )
Commercial mortgage-backed securities 153 3,294 ( 376 ) 8 264 ( 16 ) 145 3,030 ( 360 )
Other asset-backed securities 84 1,907 ( 65 ) 34 912 ( 8 ) 50 995 ( 57 )
Total fixed maturities 1,073 $ 53,784 $ ( 1,935 ) 342 $ 35,528 $ ( 485 ) 731 $ 18,256 $ ( 1,450 )
A review of the securities in an unrealized loss position indicated, at the end of each period presented, that the issuers were current with respect to their interest obligations and that there was no evidence of deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.
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Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did no t record any allowances for credit losses or any write-offs for credit losses deemed to be uncollectible during the first nine months of 2025 or 2024, and did no t have a material credit loss allowance balance as of September 30, 2025 and 2024, or December 31, 2024. We considered several factors and inputs related to the individual securities as part of our analysis. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included:
• current performance indicators on the business model or underlying assets (e.g., delinquency rates, foreclosure rates, and default rates);
• credit support (via current levels of subordination);
• historical credit ratings; and
• updated cash flow expectations based upon these performance indicators.
We initially reviewed securities in a loss position to determine whether we intended, or if it was more likely than not that we would be required, to sell any of the securities prior to the recovery of their respective cost bases (which could be maturity). If we were more likely than not, or intended, to sell prior to a potential recovery, we would write off the unrealized loss. No unrealized loss write offs were recorded during the nine months ended September 30, 2025 or 2024.
For those securities that we determined we were not likely to, or did not intend to, sell prior to a potential recovery, we performed additional analysis to determine if the loss was credit related. For securities with a potential credit-related loss, we calculated the net present value (NPV) of the cash flows expected (i.e., expected recovery value) using the current book yield for each security. The NPV was then compared to the applicable security’s current amortized cost basis to determine if a credit loss existed. If the NPV was below the amortized cost basis, and deemed material for any specific security, or in the aggregate, a credit loss would be recognized and either a new allowance for credit losses would be recorded, or adjustments would be made to a previous allowance. All changes to new or existing allowances for credit losses are recorded to net realized gains (losses) on securities.
As of September 30, 2025 and 2024, and December 31, 2024, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate. We continue to expect all the securities in our fixed-maturity portfolio will pay their principal and interest obligations.
In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at September 30, 2025 and 2024, and December 31, 2024, to determine if the accrued interest amounts were uncollectible. Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest, and future principal obligations and, therefore, did no t write off any accrued income as uncollectible at September 30, 2025 and 2024, or December 31, 2024.
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Realized Gains (Losses) The components of net realized gains (losses) for the three and nine months ended September 30, were:
Three Months Nine Months
(millions) 2025 2024 2025 2024
Gross realized gains on security sales
Available-for-sale securities:
U.S. government obligations $ 1 $ 43 $ 78 $ 44
Corporate and other debt securities 6 2 9 6
Residential mortgage-backed securities 0 0 1 1
Total available-for-sale securities 7 45 88 51
Equity securities:
Nonredeemable preferred stocks 1 0 3 0
Common equities 11 14 50 26
Total equity securities 12 14 53 26
Subtotal gross realized gains on security sales 19 59 141 77
Gross realized losses on security sales
Available-for-sale securities:
U.S. government obligations 0 ( 2 ) ( 78 ) ( 329 )
State and local government obligations 0 ( 1 ) ( 2 ) ( 1 )
Corporate and other debt securities ( 4 ) ( 5 ) ( 7 ) ( 43 )
Commercial mortgage-backed securities 0 0 ( 10 ) ( 15 )
Total available-for-sale securities ( 4 ) ( 8 ) ( 97 ) ( 388 )
Equity securities:
Nonredeemable preferred stocks ( 1 ) ( 7 ) ( 6 ) ( 18 )
Common equities ( 2 ) ( 12 ) ( 6 ) ( 12 )
Total equity securities ( 3 ) ( 19 ) ( 12 ) ( 30 )
Subtotal gross realized losses on security sales ( 7 ) ( 27 ) ( 109 ) ( 418 )
Net realized gains (losses) on security sales
Available-for-sale securities:
U.S. government obligations 1 41 0 ( 285 )
State and local government obligations 0 ( 1 ) ( 2 ) ( 1 )
Corporate and other debt securities 2 ( 3 ) 2 ( 37 )
Residential mortgage-backed securities 0 0 1 1
Commercial mortgage-backed securities 0 0 ( 10 ) ( 15 )
Total available-for-sale securities 3 37 ( 9 ) ( 337 )
Equity securities:
Nonredeemable preferred stocks 0 ( 7 ) ( 3 ) ( 18 )
Common equities 9 2 44 14
Total equity securities 9 ( 5 ) 41 ( 4 )
Subtotal net realized gains (losses) on security sales 12 32 32 ( 341 )
Other assets
Gain 0 36 0 36
Net holding period gains (losses)
Hybrid securities 3 20 17 31
Equity securities 280 200 421 591
Subtotal net holding period gains (losses) 283 220 438 622
Total net realized gains (losses) on securities $ 295 $ 288 $ 470 $ 317
Realized gains (losses) on securities sold are computed using the first-in, first-out method. We had minimal sales activity during the third quarter of 2025. During the first nine months of 2025 and the third quarter and first nine months of 2024, the majority of our security sales were U.S. Treasury Notes that were sold for duration management. We also selectively sold securities that we viewed as having less attractive risk/reward profiles during the first nine months of 2025 and 2024.
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The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective quarter ends:
Three Months Nine Months
(millions) 2025 2024 2025 2024
Total net gains (losses) recognized during the period on equity securities $ 289 $ 195 $ 462 $ 587
Less: Net gains (losses) recognized on equity securities sold during the period 9 ( 5 ) 41 ( 4 )
Net holding period gains (losses) recognized during the period on equity securities held at period end $ 280 $ 200 $ 421 $ 591
Net Investment Income The components of net investment income for the three and nine months ended September 30, were:
Three Months Nine Months
(millions) 2025 2024 2025 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations $ 470 $ 396 $ 1,314 $ 1,064
State and local government obligations 24 16 64 42
Corporate and other debt securities 214 155 593 417
Residential mortgage-backed securities 38 14 95 27
Commercial mortgage-backed securities 63 49 175 142
Other asset-backed securities 78 83 246 243
Total fixed maturities 887 713 2,487 1,935
Short-term investments 20 9 66 45
Total available-for-sale securities 907 722 2,553 1,980
Equity securities:
Nonredeemable preferred stocks 6 9 19 30
Common equities 11 8 37 32
Total equity securities 17 17 56 62
Investment income 924 739 2,609 2,042
Investment expenses ( 10 ) ( 7 ) ( 26 ) ( 20 )
Net investment income $ 914 $ 732 $ 2,583 $ 2,022
On a year-over-year basis, investment income (interest and dividends) increased 25 % and 28 % for the three and nine months ended September 30, 2025, respectively, compared to the same periods last year . The increases primarily reflect growth in invested assets and an increase in recurring investment book yield. The book yield increase primarily reflects investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities.
3. FAIR VALUE
We have categorized our financial instruments, based on the degree of subjectivity inherent in the method by which they are valued, into a fair value hierarchy of three levels, as follows:
• Level 1 : Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. government obligations, which are continually priced on a daily basis, active exchange-traded equity securities, and certain short-term investments).
• Level 2 : Inputs that are observable for the instrument either directly (other than quoted prices included within Level 1) or indirectly. This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are
observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
• Level 3 : Inputs that are unobservable. Unobservable inputs reflect our subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain privately held investments).
Determining the fair value of the investment portfolio is the responsibility of management. As part of that responsibility, we evaluate whether a market is distressed or inactive in determining the fair value for our portfolio. We review certain market level inputs to evaluate whether sufficient activity, volume, and new issuances exist to create an active market.
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Based on this evaluation, we concluded there was sufficient activity related to the sectors and securities for which we obtained valuations.
The composition of the investment portfolio by major security type and our outstanding debt was:
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
September 30, 2025
Fixed maturities:
U.S. government obligations $ 51,339 $ 0 $ 0 $ 51,339 $ 51,021
State and local government obligations 0 3,275 0 3,275 3,320
Foreign government obligations 0 16 0 16 16
Corporate and other debt securities 0 18,812 5 18,817 18,621
Residential mortgage-backed securities 0 3,000 0 3,000 2,979
Commercial mortgage-backed securities 0 5,686 0 5,686 5,916
Other asset-backed securities 0 6,376 0 6,376 6,374
Total fixed maturities 51,339 37,165 5 88,509 88,247
Short-term investments 1,414 101 0 1,515 1,515
Total available-for-sale securities 52,753 37,266 5 90,024 89,762
Equity securities:
Nonredeemable preferred stocks 0 378 60 438 454
Common equities:
Common stocks 4,004 0 9 4,013 774
Other risk investments 0 0 34 34 34
Subtotal common equities 4,004 0 43 4,047 808
Total equity securities 4,004 378 103 4,485 1,262
Total portfolio $ 56,757 $ 37,644 $ 108 $ 94,509 $ 91,024
Debt $ 0 $ 6,398 $ 0 $ 6,398 $ 6,896
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
September 30, 2024
Fixed maturities:
U.S. government obligations $ 44,429 $ 0 $ 0 $ 44,429 $ 44,231
State and local government obligations 0 2,601 0 2,601 2,681
Foreign government obligations 0 16 0 16 17
Corporate and other debt securities 0 15,033 3 15,036 14,970
Residential mortgage-backed securities 0 1,424 0 1,424 1,404
Commercial mortgage-backed securities 0 4,291 0 4,291 4,664
Other asset-backed securities 0 6,614 0 6,614 6,628
Total fixed maturities 44,429 29,979 3 74,411 74,595
Short-term investments 755 2 0 757 757
Total available-for-sale securities 45,184 29,981 3 75,168 75,352
Equity securities:
Nonredeemable preferred stocks 0 683 52 735 760
Common equities:
Common stocks 3,452 0 22 3,474 710
Other risk investments 0 0 23 23 23
Subtotal common equities 3,452 0 45 3,497 733
Total equity securities 3,452 683 97 4,232 1,493
Total portfolio $ 48,636 $ 30,664 $ 100 $ 79,400 $ 76,845
Debt $ 0 $ 6,498 $ 0 $ 6,498 $ 6,892
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Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
December 31, 2024
Fixed maturities:
U.S. government obligations $ 45,988 $ 0 $ 0 $ 45,988 $ 47,103
State and local government obligations 0 2,778 0 2,778 2,893
Foreign government obligations 0 16 0 16 16
Corporate and other debt securities 0 13,949 5 13,954 14,111
Residential mortgage-backed securities 0 1,601 0 1,601 1,600
Commercial mortgage-backed securities 0 4,352 0 4,352 4,721
Other asset-backed securities 0 6,643 0 6,643 6,682
Total fixed maturities 45,988 29,339 5 75,332 77,126
Short-term investments 613 2 0 615 615
Total available-for-sale securities 46,601 29,341 5 75,947 77,741
Equity securities:
Nonredeemable preferred stocks 0 676 52 728 756
Common equities:
Common stocks 3,527 0 23 3,550 720
Other risk investments 0 0 25 25 25
Subtotal common equities 3,527 0 48 3,575 745
Total equity securities 3,527 676 100 4,303 1,501
Total portfolio $ 50,128 $ 30,017 $ 105 $ 80,250 $ 79,242
Debt $ 0 $ 6,173 $ 0 $ 6,173 $ 6,893
Our portfolio valuations, excluding short-term investments valued at original cost, classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices.
Our short-term investments classified as Level 1 include commercial paper, treasury bills, and money market funds, which are highly liquid, actively marketed, and have short durations. These securities are valued at their original cost, adjusted for any accretion of discount, which approximates fair value because of the relatively short period of time until maturity. The remainder of our short-term investments with a trade date to maturity of less than a year are classified as Level 2. These securities are classified as Level 2 since they are valued using external pricing vendor prices or are securities that continually trade at par value because they contain either liquidity facilities or mandatory put features within one year and as a result are valued at their original cost.
At September 30, 2025 and 2024 and December 31, 2024, vendor-quoted prices represented 93 % of our Level 1 classifications (excluding short-term investments valued at original cost). The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.
At September 30, 2025 and 2024, vendor-quoted prices comprised 99 % of our Level 2 classifications (excluding short-term investments valued at original cost), with the
balance from dealer quotes, compared to 100 % at December 31, 2024. In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.
As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute
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one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance.
To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. When necessary, we challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.
For structured debt securities, including commercial, residential, and other asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates. We further stratify each class of structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, and subordinated) and use duration and credit quality to determine if the fair value is appropriate.
For corporate and other debt, nonredeemable preferred stock, and the notes issued by The Progressive Corporation (see Note 4 – Debt ), we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification. The review also includes recent trades, including: volume traded at various levels that establish a market; issuer specific fundamentals; and industry-specific economic news as it comes to light.
For municipal securities (e.g., general obligations, revenue, and housing), we stratify the portfolio to evaluate securities by type, duration, credit quality, and coupon, to review price changes relative to credit spread and interest rate changes. Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.
For short-term investments valued at original cost, we look at acquisition price relative to the coupon or yield. Since most of these securities are 60 days or less to maturity, we believe that original cost is the best estimate of fair value. For short-term investments valued with external vendor prices, we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification, and recent trade information.
We also review data assumptions as supplied by our sources to determine if that data is relevant to current
market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.
During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review our external sales transactions and compare the actual final market sales prices to previous market valuation prices on a monthly basis. This review provides us further validation that our pricing sources are providing market level prices, and gives us additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients. We believe this effort helps ensure that we are reporting the most representative fair values for our securities.
After all the valuations are received and our review of Level 2 securities is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected securities to Level 3.
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Except as described below, our Level 3 securities are priced externally; however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature.
To the extent we receive prices from external sources (e.g., broker and valuation firm) for the Level 3 securities, we review those prices for reasonableness using internally developed assumptions and then compare our derived prices to the prices received from the external sources. Based on our review during the first nine months of 2025 and for the full year of 2024, all prices received from external sources remained unadjusted.
If we do not receive prices from an external source, we perform an internal fair value comparison, which includes a review and analysis of market-comparable securities, to determine if fair value changes are needed. Based on this analysis, certain private equity investments included in the
Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value. At
least annually, these private equity investments are priced by an external source.
Our Level 3 other risk investments include securities accounted for under the equity method of accounting and, therefore, are not subject to fair value reporting. Since these securities represent less than 0.1% of our total portfolio, we include them in our Level 3 disclosures and report the activity from these investments as “other” changes in the summary of changes in fair value table and categorize these securities as “pricing exemption securities” in the quantitative information table.
During the first nine months of 2025 and for the full year of 2024, there were no material assets or liabilities measured at fair value on a nonrecurring basis.
Due to the relative size of the Level 3 securities’ fair values, compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net or comprehensive income.
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The following tables provide a summary of changes in fair value associated with Level 3 assets for the three and nine months ended September 30, 2025 and 2024:
(millions) Fair Value at June 30, 2025 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at September 30, 2025
Fixed maturities:
Corporate and other debt securities $ 5 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 5
Equity securities:
Nonredeemable preferred stocks 60 0 0 0 0 0 0 60
Common equities:
Common stocks 9 0 0 0 0 0 0 9
Other risk investments 32 2 0 0 0 0 0 34
Total Level 3 securities
$ 106 $ 2 $ 0 $ 0 $ 0 $ 0 $ 0 $ 108
(millions) Fair Value at June 30, 2024 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at September 30, 2024
Fixed maturities:
Corporate and other debt securities $ 3 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3
Equity securities:
Nonredeemable preferred stocks 52 0 0 0 0 0 0 52
Common equities:
Common stocks 22 0 0 0 0 0 0 22
Other risk investments 24 ( 1 ) 0 0 0 0 0 23
Total Level 3 securities
$ 101 $ ( 1 ) $ 0 $ 0 $ 0 $ 0 $ 0 $ 100
(millions) Fair Value at December 31, 2024 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at September 30, 2025
Fixed maturities:
Corporate and other debt securities $ 5 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 5
Equity securities:
Nonredeemable preferred stocks 52 0 8 0 0 0 0 60
Common equities:
Common stocks 23 0 0 0 0 ( 14 ) 0 9
Other risk investments 25 9 0 0 0 0 0 34
Total Level 3 securities $ 105 $ 9 $ 8 $ 0 $ 0 $ ( 14 ) $ 0 $ 108
(millions) Fair Value at December 31, 2023 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at September 30, 2024
Fixed maturities:
Corporate and other debt securities $ 3 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 3
Equity securities:
Nonredeemable preferred stocks 64 0 0 0 0 ( 12 ) 0 52
Common equities:
Common stocks 22 0 0 0 0 0 0 22
Other risk investments 21 2 0 0 0 0 0 23
Total Level 3 securities
$ 110 $ 2 $ 0 $ 0 $ 0 $ ( 12 ) $ 0 $ 100
1 For fixed maturities, these amounts are included in accumulated other comprehensive income (loss) on our consolidated balance sheets. For equity securities, these amounts are included in our consolidated statements of comprehensive income.
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The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at September 30, 2025 and 2024, and December 31, 2024:
($ in millions) Fair Value at September 30, 2025 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt securities $ 5 Market comparables Weighted average market capitalization price change % ( 1.0 )% to ( 0.9 )%
( 1.0 ) %
Equity securities:
Nonredeemable preferred stocks 60 Market comparables Weighted average market capitalization price change % ( 6.6 )% to 11.3 %
3.8 %
Common stocks 9 Market comparables Weighted average market capitalization price change % ( 21.5 )% to 74.6 %
11.3 %
Subtotal Level 3 securities 74
Pricing exemption securities 34
Total Level 3 securities $ 108
($ in millions) Fair Value at September 30, 2024 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt securities $ 3 Market comparables Weighted average market capitalization price change % ( 3.1 )% to 10.9 %
2.6 %
Equity securities:
Nonredeemable preferred stocks 52 Market comparables Weighted average market capitalization price change % 4.0 % to 25.0 %
18.1 %
Common stocks 22 Market comparables Weighted average market capitalization price change % ( 19.1 )% to 69.6 %
19.0 %
Subtotal Level 3 securities 77
Pricing exemption securities 23
Total Level 3 securities $ 100
($ in millions) Fair Value at December 31, 2024 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt securities $ 5 Market comparables Weighted average market capitalization price change % ( 1.4 )% to ( 1.3 )%
( 1.4 ) %
Equity securities:
Nonredeemable preferred stocks 52 Market comparables Weighted average market capitalization price change % ( 14.1 )% to 6.0 %
( 2.7 ) %
Common stocks 23 Market comparables Weighted average market capitalization price change % ( 41.3 )% to 95.9 %
6.0 %
Subtotal Level 3 securities 80
Pricing exemption securities 25
Total Level 3 securities $ 105
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4. DEBT
Debt at each of the balance sheet periods consisted of the following Senior Notes:
($ in millions) September 30, 2025 September 30, 2024 December 31, 2024
Principal Amount Interest Rate Issuance Date Maturity Date Carrying
Value Fair
Value Carrying
Value Fair
Value Carrying
Value Fair
Value
$ 500 2.45 % August 2016 2027 $ 499 $ 491 $ 499 $ 483 $ 499 $ 479
500 2.50 March 2022 2027 499 490 498 482 499 479
300 6 5/8 March 1999 2029 298 323 298 330 298 320
550 4.00 October 2018 2029 548 550 547 549 547 534
500 3.20 March 2020 2030 498 481 498 476 498 462
500 3.00 March 2022 2032 497 461 497 458 497 439
400 6.25 November 2002 2032 397 445 397 450 397 430
500 4.95 May 2023 2033 497 514 497 519 497 495
350 4.35 April 2014 2044 347 308 347 319 347 298
400 3.70 January 2015 2045 396 320 396 331 396 308
850 4.125 April 2017 2047 843 716 842 750 842 684
600 4.20 March 2018 2048 591 510 591 532 591 490
500 3.95 March 2020 2050 492 404 491 420 491 386
500 3.70 March 2022 2052 494 385 494 399 494 369
Total $ 6,896 $ 6,398 $ 6,892 $ 6,498 $ 6,893 $ 6,173
There was no short-term debt outstanding as of the end of all periods presented.
During the second quarter 2025, The Progressive Corporation renewed its line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $ 300 million, which expires April 2026 and has the same terms as the previous line of credit with PNC. See the 2024 Annual Report to Shareholders for a discussion of the terms of this line of credit. We had no borrowings under the line of credit that was available during the periods presented.
5. INCOME TAXES
The effective tax rate for the three and nine months ended September 30, 2025, was 21.3 % and 20.7 %, respectively , compared to 20.8 % and 20.9 % for the same periods last year.
Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at September 30, 2025 and 2024, and December 31, 2024.
We had net current income taxes payable of $ 24 million and $ 26 million at September 30, 2025 and December 31, 2024 , respectively, which were reported in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets, compared to net cu rrent income taxes recoverable of $ 5 million at September 30, 2024 , which was reported in other assets. The balance may fluctuate from period to period due to normal timing differences.
At September 30, 2025 and 2024, and December 31, 2024, we have not recorded any unrecognized tax benefits or related interest and penalties.
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6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Activity in the loss and loss adjustment expense reserves is summarized as follows:
September 30,
(millions) 2025 2024
Balance at January 1 $ 39,057 $ 34,389
Less reinsurance recoverables on unpaid losses 4,487 4,789
Net balance at January 1 34,570 29,600
Incurred related to:
Current year 40,922 36,276
Prior years ( 1,068 ) ( 199 )
Total incurred 39,854 36,077
Paid related to:
Current year 21,904 19,669
Prior years 14,228 12,492
Total paid 36,132 32,161
Net balance at September 30
38,292 33,516
Plus reinsurance recoverables on unpaid losses 3,813 4,546
Balance at September 30
$ 42,105 $ 38,062
We experienced favorable reserve development of $ 1,068 million and $ 199 million during the first nine months of 2025 and 2024, respectively, which is reflected as “incurred related to prior years ” in the table above.
Year-to-date September 30, 2025
• The favorable prior year reserve development included approximately $ 660 million attributable to accident year 2024, $ 190 million to accident year 2023, and the remainder to accident years 2022 and prior.
• Our perso nal auto products incurred about $ 910 million of favorable loss and loss adjustment expense (LAE) reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated loss severity and frequency in Florida and, to a lesser extent, lower than anticipated litigation defense costs across most states and lower than anticipated payments on reopened property damage claims that were previously closed.
• Our personal property products experienced about $ 75 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events.
• Our Commercial Lines business experienced about $ 80 million of favorable development, primarily attributable to lower than anticipated severity in our transportation network company business, partially offset by higher than anticipated severity and litigation defense costs in our core commercial auto bodily injury coverages.
Year-to-date September 30, 2024
• The favorable prior year reserve development included approximately $ 160 million attributable to accident year 2023, $ 5 million to accident year 2022, and the remainder to accident years 2021 and prior.
• Our personal auto products incurred about $ 375 million of favorable loss and LAE reserve development, with about 60 % attributable to the agency auto business and the balance in the direct auto business. The favorable development was, in part, due to lower than anticipated severity and frequency in Florida and lower than anticipated property damage severity across the majority of states.
• Our personal property business experienced about $ 75 million of unfavorable development primarily due to higher LAE costs than anticipated.
• Our Commercial Lines business experienced about $ 100 million of unfavorable development primarily driven by higher than anticipated severity in our commercial auto business for California, New York, and Texas.
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7. SUPPLEMENTAL CASH FLOW INFORMATION
Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries. The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at September 30, 2025 and 2024, and December 31, 2024, were $ 58 million, $ 89 million, and $ 127 million, respectively. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.
Non-cash activity included the following in the respective periods:
Nine Months Ended September 30,
(millions) 2025 2024
Common share dividends 1
$ 59 $ 59
Operating lease liabilities 2
83 74
1 Declared but unpaid. See Note 9 – Dividends for further discussion.
2 From obtaining right-of-use assets.
In the respective periods, we paid the following:
Nine Months Ended September 30,
(millions) 2025 2024
Income taxes $ 2,313 $ 1,985
Interest 226 226
Operating lease liabilities 68 63
8. SEGMENT INFORMATION
Our Personal Lines segment writes insurance for personal autos, special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), personal residential property insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program. Property information for the three and nine months ended September 30, 2024, was recast to conform to the current year presentation; see Note 10 – Segment Information in our 2024 Annual Report to Shareholders for further discussion.
Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related
general liability and commercial property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.
Our service businesses provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses.
All segment revenues are generated from external customers and all intercompany transactions are eliminated in consolidation.
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Following are the operating results for the respective periods:
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended September 30, 2025
Net premiums earned $ 18,089 $ 2,760 $ 0 $ 20,849
Fees and other revenues 272 34 0 306
Total underwriting revenue 18,361 2,794 0 21,155
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 9,801 1,575 1 11,377
Catastrophe losses 207 12 0 219
Loss adjustment expenses 1,554 296 ( 1 ) 1,849
Total losses and loss adjustment expenses 11,562 1,883 0 13,445
Underwriting expenses:
Distribution expenses 2
2,507 313 1 2,821
Other underwriting expenses 3
2,394 300 5 2,699
Total underwriting expenses 4,901 613 6 5,520
Pretax underwriting profit (loss) $ 1,898 $ 298 $ ( 6 ) 2,190
Investment profit (loss) 4
1,209
Service businesses profit (loss) ( 6 )
Interest expense ( 70 )
Total pretax profit (loss) $ 3,323
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended September 30, 2024
Net premiums earned $ 15,570 $ 2,727 $ 0 $ 18,297
Fees and other revenues 235 43 0 278
Total underwriting revenue 15,805 2,770 0 18,575
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 8,514 1,607 ( 1 ) 10,120
Catastrophe losses 698 34 0 732
Loss adjustment expenses 1,382 276 0 1,658
Total losses and loss adjustment expenses 10,594 1,917 ( 1 ) 12,510
Underwriting expenses:
Distribution expenses 2
2,267 297 0 2,564
Other underwriting expenses 3
1,245 248 3 1,496
Total underwriting expenses 3,512 545 3 4,060
Pretax underwriting profit (loss) $ 1,699 $ 308 $ ( 2 ) 2,005
Investment profit (loss) 4
1,020
Service businesses profit (loss) ( 9 )
Interest expense ( 70 )
Total pretax profit (loss) $ 2,946
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(millions) Personal Lines Commercial Lines Other 1
Companywide
Nine Months Ended September 30, 2025
Net premiums earned $ 52,343 $ 8,224 $ 1 $ 60,568
Fees and other revenues 784 112 0 896
Total underwriting revenue 53,127 8,336 1 61,464
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 28,484 4,695 0 33,179
Catastrophe losses 1,349 36 0 1,385
Loss adjustment expenses 4,415 875 0 5,290
Total losses and loss adjustment expenses 34,248 5,606 0 39,854
Underwriting expenses:
Distribution expenses 2
7,183 907 2 8,092
Other underwriting expenses 3
4,967 823 13 5,803
Total underwriting expenses 12,150 1,730 15 13,895
Pretax underwriting profit (loss) $ 6,729 $ 1,000 $ ( 14 ) 7,715
Investment profit (loss) 4
3,053
Service businesses profit (loss) ( 18 )
Interest expense ( 209 )
Total pretax profit (loss) $ 10,541
(millions) Personal Lines Commercial Lines Other 1
Companywide
Nine Months Ended September 30, 2024
Net premiums earned $ 43,706 $ 7,949 $ 0 $ 51,655
Fees and other revenues 647 127 0 774
Total underwriting revenue 44,353 8,076 0 52,429
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 24,225 4,781 ( 4 ) 29,002
Catastrophe losses 2,279 69 0 2,348
Loss adjustment expenses 3,903 824 0 4,727
Total losses and loss adjustment expenses 30,407 5,674 ( 4 ) 36,077
Underwriting expenses:
Distribution expenses 2
5,655 855 0 6,510
Other underwriting expenses 3
3,468 726 7 4,201
Total underwriting expenses 9,123 1,581 7 10,711
Pretax underwriting profit (loss) $ 4,823 $ 821 $ ( 3 ) 5,641
Investment profit (loss) 4
2,339
Service businesses profit (loss) ( 25 )
Interest expense ( 209 )
Total pretax profit (loss) $ 7,746
1 Includes other underwriting business and run-off operations.
2 Includes policy acquisition costs, agents’ contingent commissions, and advertising costs attributable to our operating segments. A portion of our companywide advertising costs are also attributed to our service businesses.
3 Primarily consists of employee compensation and benefit costs, policyholder credits, and the increase in the allowance for credit loss exposure on our premiums receivable.
4 Calculated as recurring investment income plus total net realized gains (losses) on securities, less investment expenses.
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In the tables above, the results for the Personal Lines segment for both the three and nine months ended September 30, 2025, included $ 950 million of policyholder credit expense, included within other underwriting expenses. During the third quarter 2025, we determined it was 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. Further, the accrual 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. The expense is reported in policyholder credit expense on the consolidated statements of comprehensive income and the accrual is included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.
Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; (iii) other underwriting expenses; and (iv) policyholder credit expense. Combined ratio is the complement of the underwriting margin. Fees and other revenues are netted against either loss adjustment expenses or underwriting expenses in the ratio calculations, based on the underlying activity that generated the revenue. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 2025 2024
Under-
writing
Margin Combined
Ratio Under-
writing
Margin Combined
Ratio Under-
writing
Margin Combined
Ratio Under-
writing
Margin Combined
Ratio
Personal Lines 10.5 % 89.5 10.9 % 89.1 12.9 % 87.1 11.0 % 89.0
Commercial Lines 10.8 89.2 11.3 88.7 12.2 87.8 10.3 89.7
Total underwriting operations 10.5 89.5 11.0 89.0 12.7 87.3 10.9 89.1
9. DIVIDENDS
Following is a summary of our common and preferred share dividends that were declared and/or paid during the nine months ended September 30, 2025 and 2024:
(millions — except per share amounts) Amount
Declared Payable Per Share Accrued/Paid 1
Common – Annual-Variable Dividends:
December 2024 January 2025 $ 4.50 $ 2,637
December 2023 January 2024 0.75 439
Common – Quarterly Dividends:
August 2025 October 2025 0.10 59
May 2025 July 2025 0.10 58
March 2025 April 2025 0.10 59
December 2024 January 2025 0.10 58
August 2024 October 2024 0.10 59
May 2024 July 2024 0.10 58
March 2024 April 2024 0.10 59
December 2023 January 2024 0.10 59
Preferred Dividends:
January 2024 2
February 2024 15.688377 8
1 The accrual is based on an estimate of shares outstanding as of the record date and recorded as a component of accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets until paid.
2 In February 2024, we redeemed all of our outstanding Serial Preferred Shares, Series B.
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10. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss), including reclassification adjustments by income statement line item, were as follows:
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at June 30, 2025 $ ( 128 ) $ 33 $ ( 95 ) $ ( 81 ) $ ( 13 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities 362 ( 76 ) 286 286 0 0
Total other comprehensive income (loss) before reclassifications 362 ( 76 ) 286 286 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities 3 ( 1 ) 2 2 0 0
Total reclassification adjustment for amounts realized in net income 3 ( 1 ) 2 2 0 0
Total other comprehensive income (loss) 359 ( 75 ) 284 284 0 0
Balance at September 30, 2025 $ 231 $ ( 42 ) $ 189 $ 203 $ ( 13 ) $ ( 1 )
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at June 30, 2024 $ ( 2,180 ) $ 464 $ ( 1,716 ) $ ( 1,701 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities 2,013 ( 423 ) 1,590 1,590 0 0
Total other comprehensive income (loss) before reclassifications 2,013 ( 423 ) 1,590 1,590 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities 36 ( 7 ) 29 29 0 0
Total reclassification adjustment for amounts realized in net income 36 ( 7 ) 29 29 0 0
Total other comprehensive income (loss) 1,977 ( 416 ) 1,561 1,561 0 0
Balance at September 30, 2024 $ ( 203 ) $ 48 $ ( 155 ) $ ( 140 ) $ ( 14 ) $ ( 1 )
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Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at December 31, 2024 $ ( 1,809 ) $ 386 $ ( 1,423 ) $ ( 1,408 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities 2,028 ( 426 ) 1,602 1,602 0 0
Total other comprehensive income (loss) before reclassifications 2,028 ( 426 ) 1,602 1,602 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities ( 11 ) 2 ( 9 ) ( 9 ) 0 0
Interest expense ( 1 ) 0 ( 1 ) 0 ( 1 ) 0
Total reclassification adjustment for amounts realized in net income ( 12 ) 2 ( 10 ) ( 9 ) ( 1 ) 0
Total other comprehensive income (loss) 2,040 ( 428 ) 1,612 1,611 1 0
Balance at September 30, 2025 $ 231 $ ( 42 ) $ 189 $ 203 $ ( 13 ) $ ( 1 )
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at December 31, 2023 $ ( 2,053 ) $ 437 $ ( 1,616 ) $ ( 1,601 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications:
Investment securities 1,514 ( 318 ) 1,196 1,196 0 0
Total other comprehensive income (loss) before reclassifications 1,514 ( 318 ) 1,196 1,196 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities ( 336 ) 71 ( 265 ) ( 265 ) 0 0
Total reclassification adjustment for amounts realized in net income ( 336 ) 71 ( 265 ) ( 265 ) 0 0
Total other comprehensive income (loss) 1,850 ( 389 ) 1,461 1,461 0 0
Balance at September 30, 2024 $ ( 203 ) $ 48 $ ( 155 ) $ ( 140 ) $ ( 14 ) $ ( 1 )
In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances. During the next 12 months, we expect to reclassify $ 1 million (pretax) into interest expense, related to net unrealized losses on forecasted transactions (see Note 4 – Debt in our 2024 Annual Report to Shareholders for further discussion).
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11. LITIGATION
The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.
In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our 2024 Annual Report to Shareholders.
As of September 30, 2025, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging that: we improperly value total loss claims by applying a negotiation adjustment in Alabama, Arkansas, Colorado, North Carolina, Ohio, and South Carolina; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; and we improperly reduce or deny personal injury protection benefits when medical expenses are paid initially by health insurance in Arkansas. Other insurance companies face many of these same issues. We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate.
Lawsuits arising from insurance policies and operations, including, but not limited to, allegations involving claims adjustment and vehicle valuation, may be filed
contemporaneously in multiple states. As of September 30,
2025, we are named as defendants in class action lawsuits
pending in multiple states alleging that we improperly
value total loss vehicle physical damage claims through the
application of a negotiation adjustment in calculating such valuations, which includes six states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states. These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws. While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations. Based on information available to us, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for suits for which accruals have been established and are not material, as of September 30, 2025.
With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established were not material at September 30, 2025 and 2024, or December 31, 2024, and there were no material settlements during 2024 or the first nine months of 2025. For most of these lawsuits, we do not consider any losses to be both probable and estimable, and we are unable to estimate a meaningful range of loss, if any, at this time, due to the factors discussed in Note 12 – Litigation in our 2024 Annual Report to Shareholders. In the event that any one or more of these lawsuits results in a substantial judgment against us, or settlement by us, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material adverse effect on our consolidated financial condition, cash flows, and/or results of operations. For a further discussion on our pending litigation and related reserving policies, see Note 1 – Reporting and Accounting Policies and Note 12 – Litigation in our 2024 Annual Report to Shareholders.
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