Item 1. Financial Statements
Item 1. Financial Statements.
The Progressive Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended March 31,
2026 2025
(millions — except per share amounts)
Revenues
Net premiums earned $ 20,968 $ 19,409
Investment income 917 814
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales 96 1
Net holding period gains (losses) on securities ( 216 ) ( 213 )
Total net realized gains (losses) on securities ( 120 ) ( 212 )
Fees and other revenues 297 287
Service revenues 126 111
Total revenues 22,188 20,409
Expenses
Losses and loss adjustment expenses 13,827 12,804
Policy acquisition costs 1,538 1,456
Other underwriting expenses 3,048 2,719
Investment expenses 8 7
Service expenses 131 117
Interest expense 70 70
Total expenses 18,622 17,173
Net Income
Income before income taxes 3,566 3,236
Provision for income taxes 748 669
Net income 2,818 2,567
Other Comprehensive Income (Loss)
Change in total net unrealized gains (losses) on fixed-maturity securities ( 574 ) 899
Comprehensive income (loss) $ 2,244 $ 3,466
Computation of Earnings Per Common Share
Average common shares outstanding - Basic 585.6 586.0
Net effect of dilutive stock-based compensation 1.3 1.7
Total average equivalent common shares - Diluted 586.9 587.7
Basic: Earnings per common share $ 4.81 $ 4.38
Diluted: Earnings per common share $ 4.80 $ 4.37
See notes to consolidated financial statements.
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The Progressive Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
March 31, December 31,
(millions) 2026 2025 2025
Assets
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $ 88,408 , $ 77,754 , and $ 82,704 )
$ 87,832 $ 77,101 $ 82,866
Short-term investments (amortized cost: $ 2,126 , $ 2,595 , and $ 10,005 )
2,126 2,595 10,005
Total available-for-sale securities 89,958 79,696 92,871
Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $ 259 , $ 608 , and $ 419 )
240 584 404
Common equities (cost: $ 839 , $ 774 , and $ 819 )
3,933 3,384 4,098
Total equity securities 4,173 3,968 4,502
Total investments 94,131 83,664 97,373
Cash and cash equivalents 162 195 125
Restricted cash and cash equivalents 17 12 13
Total cash, cash equivalents, restricted cash, and restricted cash equivalents 179 207 138
Accrued investment income 685 584 670
Premiums receivable, net of allowance for credit losses of $ 528 , $ 473 , and $ 552
17,614 16,811 15,362
Reinsurance recoverables 4,003 4,449 4,083
Prepaid reinsurance premiums 198 306 197
Deferred acquisition costs 2,131 2,068 2,044
Property and equipment, net of accumulated depreciation of $ 1,416 , $ 1,490 , and $ 1,460
792 854 783
Net federal deferred income taxes 742 860 748
Other assets 1,734 1,606 1,641
Total assets $ 122,209 $ 111,409 $ 123,039
Liabilities and Shareholders’ Equity
Unearned premiums $ 27,893 $ 26,612 $ 25,219
Loss and loss adjustment expense reserves 44,377 39,822 43,310
Dividends payable on common shares 58 59 7,972
Accounts payable, accrued expenses, and other liabilities 9,456 9,068 9,318
Debt 1
8,386 6,894 6,897
Total liabilities 90,170 82,455 92,716
Common shares, $ 1.00 par value (authorized 900 ; issued 798 , including treasury shares of 214 , 212 , and 212 )
584 586 586
Paid-in capital 2,314 2,160 2,307
Retained earnings 29,612 26,732 27,327
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities ( 457 ) ( 509 ) 117
Net unrealized losses on forecasted transactions ( 13 ) ( 14 ) ( 13 )
Foreign currency translation adjustment ( 1 ) ( 1 ) ( 1 )
Total accumulated other comprehensive income (loss) ( 471 ) ( 524 ) 103
Total shareholders’ equity 32,039 28,954 30,323
Total liabilities and shareholders’ equity $ 122,209 $ 111,409 $ 123,039
1 Consists of both short-term and long-term debt. See Note 4 – Debt for further discussion.
See notes to consolidated financial statements.
2
The Progressive Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
Three Months Ended March 31, 2026 2025
(millions — except per share amounts)
Common Shares, $ 1.00 Par Value
Balance, beginning of period $ 586 $ 586
Treasury shares purchased ( 2 ) 0
Balance, end of period 584 586
Paid-In Capital
Balance, beginning of period 2,307 2,145
Amortization of equity-based compensation 16 16
Treasury shares purchased ( 9 ) ( 1 )
Balance, end of period 2,314 2,160
Retained Earnings
Balance, beginning of period 27,327 24,283
Net income 2,818 2,567
Treasury shares purchased ( 467 ) ( 53 )
Cash dividends declared on common shares ($ 0.10 and $ 0.10 per share)
( 58 ) ( 59 )
Other, net ( 8 ) ( 6 )
Balance, end of period 29,612 26,732
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period 103 ( 1,423 )
Other comprehensive income (loss) ( 574 ) 899
Balance, end of period ( 471 ) ( 524 )
Total shareholders’ equity $ 32,039 $ 28,954
There are 20 million Serial Preferred Shares authorized. There are 5 million Voting Preference Shares authorized; no such shares have been issued.
See notes to consolidated financial statements.
3
The Progressive Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended March 31, 2026 2025
(millions)
Cash Flows From Operating Activities
Net income $ 2,818 $ 2,567
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 75 70
Net amortization (accretion) of fixed-income securities ( 47 ) ( 21 )
Amortization of equity-based compensation 16 16
Net realized (gains) losses on securities 120 212
Net (gains) losses on disposition of property and equipment 3 3
Changes in:
Premiums receivable ( 2,252 ) ( 2,442 )
Reinsurance recoverables 80 316
Prepaid reinsurance premiums ( 1 ) 43
Deferred acquisition costs ( 87 ) ( 107 )
Income taxes 830 667
Unearned premiums 2,674 2,754
Loss and loss adjustment expense reserves 1,067 765
Accounts payable, accrued expenses, and other liabilities ( 788 ) 334
Other, net ( 141 ) ( 34 )
Net cash provided by operating activities 4,367 5,143
Cash Flows From Investing Activities
Purchases:
Fixed maturities ( 19,291 ) ( 17,324 )
Equity securities ( 57 ) ( 86 )
Sales:
Fixed maturities 11,115 14,721
Equity securities 56 149
Maturities, paydowns, calls, and other:
Fixed maturities 2,549 1,950
Equity securities 152 87
Net (purchases) sales of short-term investments 7,919 ( 1,964 )
Net change in unsettled security transactions 243 172
Purchases of property and equipment ( 63 ) ( 59 )
Sales of property and equipment 14 13
Net cash provided by (used in) investing activities 2,637 ( 2,341 )
Cash Flows From Financing Activities
Dividends paid to common shareholders ( 7,972 ) ( 2,695 )
Acquisition of treasury shares for equity award tax liabilities ( 43 ) ( 54 )
Acquisition of treasury shares acquired in open market ( 435 ) 0
Net proceeds from debt issuances 1,487 0
Net cash used in financing activities ( 6,963 ) ( 2,749 )
Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 41 53
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 138 154
Cash, cash equivalents, restricted cash, and restricted cash equivalents – March 31
$ 179 $ 207
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 March 31, 2026, 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, 2025 (2025 Annual Report to Shareholders).
Premiums Receivable
We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2025 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy.
The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:
Three Months Ended March 31,
(millions) 2026 2025
Allowance for credit losses, beginning of period $ 552 $ 460
Increase in allowance 1
183 153
Write-offs 2
( 207 ) ( 140 )
Allowance for credit losses, end of period $ 528 $ 473
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.
Supplemental Cash Flow Information
Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries. The amount of overnight reverse repurchase commitments, which are not considered part of the
investment portfolio, held by these subsidiaries at March 31, 2026 and 2025, and December 31, 2025, were $ 29 million, $ 78 million, and $ 44 million, respectively. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.
Non-cash activity included the following in the respective periods:
Three Months Ended March 31,
(millions) 2026 2025
Common share dividends 1
$ 58 $ 59
Operating lease liabilities 2
23 40
1 Declared but unpaid. See Note 10 – Dividends for further discussion.
2 From obtaining right-of-use assets.
In the respective periods, we paid the following:
Three Months Ended March 31,
(millions) 2026 2025
Income taxes, net of refunds $ ( 85 ) $ 0
Interest 88 88
Operating lease liabilities 26 22
New Accounting Standards
We did not adopt any new accounting standards during the three months ended March 31, 2026. In September 2025, the Financial Accounting Standards Board (FASB) 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 (fiscal 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
March 31, 2026
Available-for-sale securities:
Fixed maturities:
U.S. government $ 44,676 $ 229 $ ( 488 ) $ 0 $ 44,417 47.2 %
State and local government 3,135 13 ( 61 ) 0 3,087 3.3
Foreign government 16 0 0 0 16 0
Corporate and other debt 20,994 121 ( 132 ) 3 20,986 22.3
Residential mortgage-backed 4,127 23 ( 13 ) ( 1 ) 4,136 4.4
Commercial mortgage-backed 7,228 6 ( 243 ) 0 6,991 7.4
Other asset-backed 8,232 13 ( 46 ) 0 8,199 8.7
Total fixed maturities 88,408 405 ( 983 ) 2 87,832 93.3
Short-term investments 2,126 0 0 0 2,126 2.3
Total available-for-sale securities 90,534 405 ( 983 ) 2 89,958 95.6
Equity securities:
Nonredeemable preferred stocks 259 0 0 ( 19 ) 240 0.2
Common equities 839 0 0 3,094 3,933 4.2
Total equity securities 1,098 0 0 3,075 4,173 4.4
Total portfolio 1
$ 91,632 $ 405 $ ( 983 ) $ 3,077 $ 94,131 100.0 %
($ in millions) Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Net
Holding
Period
Gains
(Losses) Fair
Value % of
Total
Fair
Value
March 31, 2025
Available-for-sale securities:
Fixed maturities:
U.S. government $ 44,523 $ 391 $ ( 596 ) $ 0 $ 44,318 53.0 %
State and local government 2,688 6 ( 90 ) 0 2,604 3.1
Foreign government 16 0 0 0 16 0
Corporate and other debt 16,047 127 ( 156 ) ( 2 ) 16,016 19.2
Residential mortgage-backed 2,172 18 ( 8 ) 1 2,183 2.6
Commercial mortgage-backed 5,144 5 ( 324 ) 0 4,825 5.8
Other asset-backed 7,164 25 ( 50 ) 0 7,139 8.5
Total fixed maturities 77,754 572 ( 1,224 ) ( 1 ) 77,101 92.2
Short-term investments 2,595 0 0 0 2,595 3.1
Total available-for-sale securities 80,349 572 ( 1,224 ) ( 1 ) 79,696 95.3
Equity securities:
Nonredeemable preferred stocks 608 0 0 ( 24 ) 584 0.7
Common equities 774 0 0 2,610 3,384 4.0
Total equity securities 1,382 0 0 2,586 3,968 4.7
Total portfolio 1
$ 81,731 $ 572 $ ( 1,224 ) $ 2,585 $ 83,664 100.0 %
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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, 2025
Available-for-sale securities:
Fixed maturities:
U.S. government $ 43,114 $ 541 $ ( 357 ) $ 0 $ 43,298 44.5 %
State and local government 3,342 19 ( 58 ) 0 3,303 3.4
Foreign government 17 0 0 0 17 0
Corporate and other debt 19,773 273 ( 68 ) 13 19,991 20.5
Residential mortgage-backed 3,152 28 ( 6 ) 1 3,175 3.3
Commercial mortgage-backed 6,194 12 ( 233 ) 0 5,973 6.1
Other asset-backed 7,112 28 ( 31 ) 0 7,109 7.3
Total fixed maturities 82,704 901 ( 753 ) 14 82,866 85.1
Short-term investments 10,005 0 0 0 10,005 10.3
Total available-for-sale securities 92,709 901 ( 753 ) 14 92,871 95.4
Equity securities:
Nonredeemable preferred stocks 419 0 0 ( 15 ) 404 0.4
Common equities 819 0 0 3,279 4,098 4.2
Total equity securities 1,238 0 0 3,264 4,502 4.6
Total portfolio 1
$ 93,947 $ 901 $ ( 753 ) $ 3,278 $ 97,373 100.0 %
1 At March 31, 2026 and 2025, and December 31, 2025, we had $ 443 million, $ 297 million, and $ 200 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 March 31, 2026 and 2025, and December 31, 2025, included $ 6.2 billion, $ 3.5 billion, and $ 13.0 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, 2025, were sold and proceeds were used to pay our common share dividends in January 2026; see Note 10 – Dividends for additional information.
At March 31, 2026, bonds and certificates of deposit in the principal amount of $ 789 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 securities, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at March 31, 2026 or 2025, or December 31, 2025. At March 31, 2026, we did no t hold any debt securities that were non-income producing during the preceding 12 months.
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Hybrid Securities Certain securities in our fixed-maturity portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. These securities are reported at fair value:
March 31,
(millions) 2026 2025 December 31, 2025
Fixed Maturities:
Corporate and other debt $ 702 $ 632 $ 733
Residential mortgage-backed 998 579 792
Total hybrid securities $ 1,700 $ 1,211 $ 1,525
Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we use the fair value option to record the changes in fair value of these securities through income as a component of net realized gains (losses).
Fixed Maturities The composition of fixed maturities by maturity at March 31, 2026, was:
(millions) Cost Fair Value
Less than one year $ 10,830 $ 10,805
One to five years 45,137 44,725
Five to ten years 32,117 31,977
Ten years or greater 324 325
Total $ 88,408 $ 87,832
Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities that do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.
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Gross Unrealized Losses The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
March 31, 2026
U.S. government 73 $ 23,054 $ ( 488 ) 32 $ 17,806 $ ( 171 ) 41 $ 5,248 $ ( 317 )
State and local government 293 1,872 ( 61 ) 116 689 ( 5 ) 177 1,183 ( 56 )
Corporate and other debt 320 9,052 ( 132 ) 236 6,990 ( 64 ) 84 2,062 ( 68 )
Residential mortgage-backed 53 1,450 ( 13 ) 35 1,397 ( 8 ) 18 53 ( 5 )
Commercial mortgage-backed 191 5,591 ( 243 ) 79 3,187 ( 10 ) 112 2,404 ( 233 )
Other asset-backed 144 4,911 ( 46 ) 112 4,080 ( 16 ) 32 831 ( 30 )
Total fixed maturities 1,074 $ 45,930 $ ( 983 ) 610 $ 34,149 $ ( 274 ) 464 $ 11,781 $ ( 709 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
March 31, 2025
U.S. government 85 $ 16,851 $ ( 596 ) 18 $ 9,284 $ ( 69 ) 67 $ 7,567 $ ( 527 )
State and local government 307 1,871 ( 90 ) 70 445 ( 2 ) 237 1,426 ( 88 )
Corporate and other debt 210 4,967 ( 156 ) 56 1,352 ( 12 ) 154 3,615 ( 144 )
Residential mortgage-backed 47 674 ( 8 ) 25 628 ( 2 ) 22 46 ( 6 )
Commercial mortgage-backed 165 3,653 ( 324 ) 22 597 ( 4 ) 143 3,056 ( 320 )
Other asset-backed 89 2,046 ( 50 ) 46 1,128 ( 3 ) 43 918 ( 47 )
Total fixed maturities 903 $ 30,062 $ ( 1,224 ) 237 $ 13,434 $ ( 92 ) 666 $ 16,628 $ ( 1,132 )
Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Gross Unrealized
Losses No. of Sec. Fair
Value Gross Unrealized
Losses
December 31, 2025
U.S. government 62 $ 17,402 $ ( 357 ) 8 $ 11,327 $ ( 54 ) 54 $ 6,075 $ ( 303 )
State and local government 252 1,589 ( 58 ) 60 318 ( 1 ) 192 1,271 ( 57 )
Corporate and other debt 141 3,821 ( 68 ) 36 1,177 ( 5 ) 105 2,644 ( 63 )
Residential mortgage-backed 30 293 ( 6 ) 12 233 ( 1 ) 18 60 ( 5 )
Commercial mortgage-backed 147 3,551 ( 233 ) 34 1,210 ( 3 ) 113 2,341 ( 230 )
Other asset-backed 64 1,924 ( 31 ) 32 1,148 ( 3 ) 32 776 ( 28 )
Total fixed maturities 696 $ 28,580 $ ( 753 ) 182 $ 15,413 $ ( 67 ) 514 $ 13,167 $ ( 686 )
A review of the securities in an unrealized loss position indicated that, at the end of each period presented, 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.
Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did no t record any allowances for credit losses or any write-offs for credit losses deemed to be uncollectible during the first three months of 2026 or 2025, and did no t have a material credit loss allowance balance as of March 31, 2026 and 2025, or December 31, 2025. No unrealized loss write offs were recorded during the three months ended March 31, 2026 or 2025.
As of March 31, 2026 and 2025, and December 31, 2025, 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 March 31, 2026 and 2025, and December 31, 2025, to determine if the accrued interest amounts were uncollectible. Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest and future principal obligations and, therefore, did no t write off any accrued income as uncollectible at March 31, 2026 and 2025, or December 31, 2025.
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Realized Gains (Losses) The components of net realized gains (losses) for the three months ended March 31, were:
Three Months
(millions) 2026 2025
Gross realized gains on security sales
Available-for-sale securities:
U.S. government $ 99 $ 53
State and local government 1 0
Corporate and other debt 26 1
Residential mortgage-backed 1 0
Total available-for-sale securities 127 54
Equity securities:
Nonredeemable preferred stocks 8 2
Common equities 13 35
Total equity securities 21 37
Subtotal gross realized gains on security sales 148 91
Gross realized losses on security sales
Available-for-sale securities:
U.S. government ( 36 ) ( 77 )
State and local government 0 ( 2 )
Corporate and other debt ( 5 ) ( 1 )
Commercial mortgage-backed 0 ( 4 )
Total available-for-sale securities ( 41 ) ( 84 )
Equity securities:
Nonredeemable preferred stocks ( 5 ) ( 2 )
Common equities ( 6 ) ( 4 )
Total equity securities ( 11 ) ( 6 )
Subtotal gross realized losses on security sales ( 52 ) ( 90 )
Net realized gains (losses) on security sales
Available-for-sale securities:
U.S. government 63 ( 24 )
State and local government 1 ( 2 )
Corporate and other debt 21 0
Residential mortgage-backed 1 0
Commercial mortgage-backed 0 ( 4 )
Total available-for-sale securities 86 ( 30 )
Equity securities:
Nonredeemable preferred stocks 3 0
Common equities 7 31
Total equity securities 10 31
Subtotal net realized gains (losses) on security sales 96 1
Net holding period gains (losses)
Hybrid securities ( 27 ) 3
Equity securities ( 189 ) ( 216 )
Subtotal net holding period gains (losses) ( 216 ) ( 213 )
Total net realized gains (losses) on securities $ ( 120 ) $ ( 212 )
During the first three months of 2026 and 2025, the majority of our security sales were U.S. government securities that were sold for duration management. We also selectively sold securities that we viewed as having less attractive risk/reward profiles during the first three months of 2026 and 2025.
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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
(millions) 2026 2025
Total net gains (losses) recognized during the period on equity securities $ ( 179 ) $ ( 185 )
Less: Net gains (losses) recognized on equity securities sold during the period 10 31
Net holding period gains (losses) recognized during the period on equity securities held at period end $ ( 189 ) $ ( 216 )
Net Investment Income The components of net investment income for the three months ended March 31, were:
Three Months
(millions) 2026 2025
Available-for-sale securities:
Fixed maturities:
U.S. government $ 400 $ 422
State and local government 24 19
Corporate and other debt 235 171
Residential mortgage-backed 39 25
Commercial mortgage-backed 71 53
Other asset-backed 87 84
Total fixed maturities 856 774
Short-term investments 44 18
Total available-for-sale securities 900 792
Equity securities:
Nonredeemable preferred stocks 4 8
Common equities 13 14
Total equity securities 17 22
Investment income 917 814
Investment expenses ( 8 ) ( 7 )
Net investment income $ 909 $ 807
On a year-over-year basis, investment income (interest and dividends) increased 13% for the three months ended March 31, 2026, compared to the same period last year . The increase primarily reflects growth in invested assets and an increase in recurring investment book yield. The book yield increase primarily reflects investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities.
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3. FAIR VALUE
The composition of the investment portfolio by major security type and our outstanding debt was:
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
March 31, 2026
Fixed maturities:
U.S. government $ 44,417 $ 0 $ 0 $ 44,417 $ 44,676
State and local government 0 3,087 0 3,087 3,135
Foreign government 0 16 0 16 16
Corporate and other debt 0 20,982 4 20,986 20,994
Residential mortgage-backed 0 4,136 0 4,136 4,127
Commercial mortgage-backed 0 6,991 0 6,991 7,228
Other asset-backed 0 8,199 0 8,199 8,232
Total fixed maturities 44,417 43,411 4 87,832 88,408
Short-term investments 2,072 54 0 2,126 2,126
Total available-for-sale securities 46,489 43,465 4 89,958 90,534
Equity securities:
Nonredeemable preferred stocks 0 191 49 240 259
Common equities:
Common stocks 3,891 0 5 3,896 802
Other risk investments 0 0 37 37 37
Subtotal common equities 3,891 0 42 3,933 839
Total equity securities 3,891 191 91 4,173 1,098
Total portfolio $ 50,380 $ 43,656 $ 95 $ 94,131 $ 91,632
Debt $ 0 $ 7,728 $ 0 $ 7,728 $ 8,386
Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
March 31, 2025
Fixed maturities:
U.S. government $ 44,318 $ 0 $ 0 $ 44,318 $ 44,523
State and local government 0 2,604 0 2,604 2,688
Foreign government 0 16 0 16 16
Corporate and other debt 0 16,011 5 16,016 16,047
Residential mortgage-backed 0 2,183 0 2,183 2,172
Commercial mortgage-backed 0 4,825 0 4,825 5,144
Other asset-backed 0 7,139 0 7,139 7,164
Total fixed maturities 44,318 32,778 5 77,101 77,754
Short-term investments 2,595 0 0 2,595 2,595
Total available-for-sale securities 46,913 32,778 5 79,696 80,349
Equity securities:
Nonredeemable preferred stocks 0 524 60 584 608
Common equities:
Common stocks 3,344 0 9 3,353 743
Other risk investments 0 0 31 31 31
Subtotal common equities 3,344 0 40 3,384 774
Total equity securities 3,344 524 100 3,968 1,382
Total portfolio $ 50,257 $ 33,302 $ 105 $ 83,664 $ 81,731
Debt $ 0 $ 6,247 $ 0 $ 6,247 $ 6,894
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Fair Value
(millions) Level 1 Level 2 Level 3 Total Cost
December 31, 2025
Fixed maturities:
U.S. government $ 43,298 $ 0 $ 0 $ 43,298 $ 43,114
State and local government 0 3,303 0 3,303 3,342
Foreign government 0 17 0 17 17
Corporate and other debt 0 19,987 4 19,991 19,773
Residential mortgage-backed 0 3,175 0 3,175 3,152
Commercial mortgage-backed 0 5,973 0 5,973 6,194
Other asset-backed 0 7,109 0 7,109 7,112
Total fixed maturities 43,298 39,564 4 82,866 82,704
Short-term investments 9,810 195 0 10,005 10,005
Total available-for-sale securities 53,108 39,759 4 92,871 92,709
Equity securities:
Nonredeemable preferred stocks 0 344 60 404 419
Common equities:
Common stocks 4,057 0 5 4,062 783
Other risk investments 0 0 36 36 36
Subtotal common equities 4,057 0 41 4,098 819
Total equity securities 4,057 344 101 4,502 1,238
Total portfolio $ 57,165 $ 40,103 $ 105 $ 97,373 $ 93,947
Debt $ 0 $ 6,345 $ 0 $ 6,345 $ 6,897
Our portfolio valuations, excluding short-term investments valued at adjusted 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. We concluded there was sufficient market activity in the relevant sectors and securities, further supporting our Level 1 and Level 2 classifications.
Our short-term investments classified as Level 1 include commercial paper, U.S. 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 March 31, 2026 and 2025, and December 31, 2025, vendor-quoted prices represented 92 %, 93 %, and 91 %, respectively, of our Level 1 classifications (excluding short-term investments valued at adjusted original cost). The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. government securities, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.
At March 31, 2026, vendor-quoted prices comprised 99 % of our Level 2 classifications (excluding short-term investments valued at adjusted original cost), with the balance from dealer quotes, compared to 100 % at March 31, 2025 and December 31, 2025. 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
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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 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 state and local government (municipal) securities, 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 adjusted 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 adjusted 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 three months of 2026 and for the full year of 2025, 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 three months of 2026 and for the full year of 2025, there were no material assets or liabilities measured at fair value on a nonrecurring basis.
Due to the relative size of the Level 3 securities’ fair values, compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net or comprehensive income.
The following tables provide a summary of changes in fair value associated with Level 3 assets for the three months ended March 31, 2026 and 2025:
(millions) Fair Value at December 31, 2025 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at March 31, 2026
Fixed maturities:
Corporate and other debt $ 4 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 4
Equity securities:
Nonredeemable preferred stocks 60 0 0 ( 5 ) ( 7 ) 1 0 49
Common equities:
Common stocks 5 0 0 0 0 0 0 5
Other risk investments 36 1 0 0 0 0 0 37
Total Level 3 securities $ 105 $ 1 $ 0 $ ( 5 ) $ ( 7 ) $ 1 $ 0 $ 95
(millions) Fair Value at December 31, 2024 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation 1
Net
Transfers
In (Out) Fair Value at March 31, 2025
Fixed maturities:
Corporate and other debt $ 5 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 5
Equity securities:
Nonredeemable preferred stocks 52 0 8 0 0 0 0 60
Common equities:
Common stocks 23 0 0 0 0 ( 14 ) 0 9
Other risk investments 25 6 0 0 0 0 0 31
Total Level 3 securities
$ 105 $ 6 $ 8 $ 0 $ 0 $ ( 14 ) $ 0 $ 105
1 For fixed maturities, amounts included are unrealized gains (losses) reflected in accumulated other comprehensive income (loss) on our consolidated balance sheets. For equity securities, amounts included are net holding period gains (losses) on securities on our consolidated statements of comprehensive income.
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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 March 31, 2026 and 2025, and December 31, 2025:
($ in millions) Fair Value at March 31, 2026 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt $ 4 Market comparables Weighted average market capitalization price change % ( 1.0 )%
( 1.0 ) %
Equity securities:
Nonredeemable preferred stocks 49 Market comparables Weighted average market capitalization price change % ( 23.6 )% to 0 %
( 12.4 ) %
Common stocks 5 Market comparables Weighted average market capitalization price change % ( 41.3 )% to ( 12.9 )%
( 23.6 ) %
Subtotal Level 3 securities 58
Pricing exemption securities 37
Total Level 3 securities $ 95
($ in millions) Fair Value at March 31, 2025 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt $ 5 Market comparables Weighted average market capitalization price change % 0.7 % to 0.8 %
0.8 %
Equity securities:
Nonredeemable preferred stocks 60 Market comparables Weighted average market capitalization price change % ( 11.8 )% to 16.1 %
6.4 %
Common stocks 9 Market comparables Weighted average market capitalization price change % ( 36.8 )% to 41.5 %
6.7 %
Subtotal Level 3 securities 74
Pricing exemption securities 31
Total Level 3 securities $ 105
($ in millions) Fair Value at December 31, 2025 Valuation
Technique Unobservable Input Range of
Input Values
Increase
(Decrease) Weighted
Average
Increase
(Decrease)
Fixed maturities:
Corporate and other debt $ 4 Market comparables Weighted average market capitalization price change % ( 0.1 )% to 0.1 %
0 %
Equity securities:
Nonredeemable preferred stocks 60 Market comparables Weighted average market capitalization price change % ( 14.5 )% to 7.6 %
( 4.5 ) %
Common stocks 5 Market comparables Weighted average market capitalization price change % ( 40.9 )% to 36.3 %
7.6 %
Subtotal Level 3 securities 69
Pricing exemption securities 36
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) March 31, 2026 March 31, 2025 December 31, 2025
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 January 2027 $ 500 $ 493 $ 499 $ 484 $ 499 $ 493
500 2.50 March 2022 March 2027 500 492 499 483 499 492
300 6 5/8 March 1999 March 2029 299 320 298 322 299 323
550 4.00 October 2018 March 2029 548 547 548 542 548 551
500 3.20 March 2020 March 2030 498 478 498 470 498 484
500 4.60 March 2026 March 2031 497 501 0 0 0 0
500 3.00 March 2022 March 2032 497 457 497 447 497 462
400 6.25 November 2002 December 2032 397 435 397 434 397 442
500 4.95 May 2023 June 2033 497 507 497 503 497 513
1,000 5.15 March 2026 March 2036 990 1,001 0 0 0 0
350 4.35 April 2014 April 2044 347 295 347 300 347 304
400 3.70 January 2015 January 2045 396 305 396 310 396 314
850 4.125 April 2017 April 2047 843 678 842 695 843 702
600 4.20 March 2018 March 2048 591 478 591 493 591 498
500 3.95 March 2020 March 2050 492 380 491 393 492 392
500 3.70 March 2022 March 2052 494 361 494 371 494 375
Total $ 8,386 $ 7,728 $ 6,894 $ 6,247 $ 6,897 $ 6,345
At March 31, 2026, short-term debt consisted of the $ 500 million 2.45 % senior notes that mature in January 2027 and the $ 500 million 2.50 % senior notes that mature in March 2027. There was no short-term debt outstanding at March 31, 2025, or December 31, 2025.
In March 2026, the Progressive Corporation issued $ 500 million of 4.60 % Senior Notes due 2031 and $ 1 billion of 5.15 % Senior Notes due 2036, in an underwritten public offering. The net proceeds from the issuances, after deducting underwriters’ discounts, commissions, and other issuance costs, were approximately
$ 1,487 million in aggregate. Consistent with the other senior notes issued by Progressive, interest on these notes is payable semiannually, principal is due at maturity, and the notes are redeemable, in whole or in part, at any time, subject to a treasury “make whole” provision.
The Progressive Corporation has a line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $ 300 million. See the 2025 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 months ended March 31, 2026 and 2025, was 21.0 % and 20.7 %, respectively.
Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at March 31, 2026 and 2025, and December 31, 2025.
We had net current income taxes payable of $ 700 million, $ 838 million, and $ 28 million at March 31, 2026 and 2025, and December 31, 2025 , respectively, which were reported in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets. The balance may fluctuate from period to period due to normal timing differences.
At March 31, 2026 and 2025, and December 31, 2025, 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:
March 31,
(millions) 2026 2025
Balance at January 1 $ 43,310 $ 39,057
Less reinsurance recoverables on unpaid losses 3,807 4,487
Net balance at January 1 39,503 34,570
Incurred related to:
Current year 14,278 13,082
Prior years ( 451 ) ( 278 )
Total incurred 13,827 12,804
Paid related to:
Current year 5,356 4,881
Prior years 7,345 6,804
Total paid 12,701 11,685
Net balance at March 31
40,629 35,689
Plus reinsurance recoverables on unpaid losses 3,748 4,133
Balance at March 31
$ 44,377 $ 39,822
We experienced favorable reserve development of $ 451 million and $ 278 million during the first three months of 2026 and 2025, respectively, which is reflected as “incurred related to prior years ” in the table above.
First Quarter 2026
• The favorable prior year reserve development included approximately $ 320 million attributable to accident year 2025, $ 115 million to accident year 2024, and the remainder to accident years 2023 and prior.
• Our perso nal auto products incurred about $ 445 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 bodily injury severity, more subrogation and salvage recoveries than anticipated, and lower than anticipated payments on previously closed but reopened property damage claims.
First Quarter 2025
• The favorable prior year reserve development included approximately $ 180 million attributable to accident year 2024, $ 90 million to accident year 2023, and the remainder to accident years 2022 and prior.
• Our personal auto products incurred about $ 260 million of favorable loss and LAE reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated loss severity and frequency in Florida.
• Our personal property products experienced about $ 30 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events.
7. 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.
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 primarily provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses.
All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.
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Following are the operating results for the respective periods:
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended March 31, 2026
Net premiums earned $ 18,384 $ 2,583 $ 1 $ 20,968
Fees and other revenues 276 20 1 297
Total underwriting revenue 18,660 2,603 2 21,265
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 10,219 1,457 1 11,677
Catastrophe losses 263 5 0 268
Loss adjustment expenses 1,593 289 0 1,882
Total losses and loss adjustment expenses 12,075 1,751 1 13,827
Underwriting expenses:
Distribution expenses 2
2,664 300 2 2,966
Other underwriting expenses 3
1,346 268 6 1,620
Total underwriting expenses 4,010 568 8 4,586
Pretax underwriting profit (loss) $ 2,575 $ 284 $ ( 7 ) 2,852
Investment profit (loss) 4
789
Service businesses profit (loss) ( 5 )
Interest expense ( 70 )
Total pretax profit (loss) $ 3,566
(millions) Personal Lines Commercial Lines Other 1
Companywide
Three Months Ended March 31, 2025
Net premiums earned $ 16,710 $ 2,699 $ 0 $ 19,409
Fees and other revenues 249 38 0 287
Total underwriting revenue 16,959 2,737 0 19,696
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses) 9,109 1,559 0 10,668
Catastrophe losses 454 5 0 459
Loss adjustment expenses 1,390 287 0 1,677
Total losses and loss adjustment expenses 10,953 1,851 0 12,804
Underwriting expenses:
Distribution expenses 2
2,348 286 0 2,634
Other underwriting expenses 3
1,275 262 4 1,541
Total underwriting expenses 3,623 548 4 4,175
Pretax underwriting profit (loss) $ 2,383 $ 338 $ ( 4 ) 2,717
Investment profit (loss) 4
595
Service businesses profit (loss) ( 6 )
Interest expense ( 70 )
Total pretax profit (loss) $ 3,236
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, 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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Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. 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. Combined ratio is the complement of the underwriting margin. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:
Three Months Ended March 31,
2026 2025
Underwriting
Margin Combined
Ratio Underwriting
Margin Combined
Ratio
Personal Lines 14.0 % 86.0 14.3 % 85.7
Commercial Lines 11.0 89.0 12.5 87.5
Total underwriting operations 13.6 86.4 14.0 86.0
8. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss), including reclassification adjustments by income statement line item, were as follows:
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at December 31, 2025 $ 130 $ ( 27 ) $ 103 $ 117 $ ( 13 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications for investment securities ( 628 ) 132 ( 496 ) ( 496 ) 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities 98 ( 20 ) 78 78 0 0
Total reclassification adjustment for amounts realized in net income 98 ( 20 ) 78 78 0 0
Total other comprehensive income (loss) ( 726 ) 152 ( 574 ) ( 574 ) 0 0
Balance at March 31, 2026 $ ( 596 ) $ 125 $ ( 471 ) $ ( 457 ) $ ( 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, 2024 $ ( 1,809 ) $ 386 $ ( 1,423 ) $ ( 1,408 ) $ ( 14 ) $ ( 1 )
Other comprehensive income (loss) before reclassifications for investment securities 1,108 ( 233 ) 875 875 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities ( 30 ) 6 ( 24 ) ( 24 ) 0 0
Total reclassification adjustment for amounts realized in net income ( 30 ) 6 ( 24 ) ( 24 ) 0 0
Total other comprehensive income (loss) 1,138 ( 239 ) 899 899 0 0
Balance at March 31, 2025 $ ( 671 ) $ 147 $ ( 524 ) $ ( 509 ) $ ( 14 ) $ ( 1 )
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 approximately $ 1 million (pretax) into interest expense, related to net unrealized losses on forecasted transactions (see Note 4 – Debt in our 2025 Annual Report to Shareholders for further discussion).
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9. 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 2025 Annual Report to Shareholders.
As of March 31, 2026, 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 Colorado, North Carolina, and Ohio; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; we improperly reduce or deny personal injury protection benefits when medical expenses are paid initially by health insurance in Arkansas; and we sell illusory underinsured motorist coverage in New Mexico. Other insurance companies face many of these same issues. We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate.
Lawsuits arising from insurance policies and operations, including, but not limited to, allegations involving claims adjustment and vehicle valuation, may be filed
contemporaneously in multiple states. As of March 31, 2026, 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 three states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states. These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws. While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations. Based on information available to us, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for suits for which accruals have been established and are not material, as of March 31, 2026.
With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established were not material at March 31, 2026 and 2025, or December 31, 2025, and there were no material settlements during 2025 or the first three months of 2026. 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 2025 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 2025 Annual Report to Shareholders.
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10. DIVIDENDS
Following is a summary of our common share dividends that were declared and/or paid during the three months ended March 31, 2026 and 2025:
(millions — except per share amounts) Amount
Declared Payable Per Share Accrued/Paid 1
Annual-Variable Dividends:
December 2025 January 2026 $ 13.50 $ 7,913
December 2024 January 2025 4.50 2,637
Quarterly Dividends:
March 2026 April 2026 0.10 58
December 2025 January 2026 0.10 59
March 2025 April 2025 0.10 59
December 2024 January 2025 0.10 58
1 The accrual is based on an estimate of shares outstanding as of the record date and recorded as dividends payable on common shares on our consolidated balance sheets until paid; the prior period accrual was reclassified into this line item from accounts payable, accrued expenses, and other liabilities to conform to the current period’s presentation.
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