PROGRESSIVE CORP/OH/ 10-Q

Item 1. Financial Statements. The Progressive Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (unaudited) Three Months Six Months Periods Ended June 30, 2026 2025 2026 2025 (millions — except per share amounts) Revenues Net premiums earned $ 21,573 $ 20,310 $ 42,541 $ 39,719 Investment income 979 871 1,896 1,685 Net realized gains (losses) on securities: Net realized gains (losses) on security sales 16 19 112 20 Net holding period gains (losses) on securities 588 368 372 155 Total net realized gains (losses) on securities 604 387 484 175 Fees and other revenues 305 303 602 590 Service revenues 148 133 274 244 Total revenues 23,609 22,004 45,797 42,413 Expenses Losses and loss adjustment expenses 14,572 13,605 28,399 26,409 Policy acquisition costs 1,567 1,511 3,105 2,967 Other underwriting expenses 3,009 2,689 6,057 5,408 Investment expenses 10 9 18 16 Service expenses 154 139 285 256 Interest expense 88 69 158 139 Total expenses 19,400 18,022 38,022 35,195 Net Income Income before income taxes 4,209 3,982 7,775 7,218 Provision for income taxes 898 807 1,646 1,476 Net income 3,311 3,175 6,129 5,742 Other Comprehensive Income (Loss) Changes in: Total net unrealized gains (losses) on fixed-maturity securities ( 375 ) 428 ( 949 ) 1,327 Net unrealized losses on forecasted transactions 0 1 0 1 Foreign currency translation adjustment ( 1 ) 0 ( 1 ) 0 Other comprehensive income (loss) ( 376 ) 429 ( 950 ) 1,328 Comprehensive income (loss) $ 2,935 $ 3,604 $ 5,179 $ 7,070 Computation of Earnings Per Common Share Average common shares outstanding - Basic 583.0 586.2 584.3 586.1 Net effect of dilutive stock-based compensation 1.2 1.6 1.3 1.6 Total average equivalent common shares - Diluted 584.2 587.8 585.6 587.7 Basic: Earnings per common share $ 5.68 $ 5.42 $ 10.49 $ 9.80 Diluted: Earnings per common share $ 5.67 $ 5.40 $ 10.47 $ 9.77 See notes to consolidated financial statements. 1 The Progressive Corporation and Subsidiaries Consolidated Balance Sheets (unaudited) June 30, December 31, (millions) 2026 2025 2025 Assets Available-for-sale securities, at fair value: Fixed maturities (amortized cost: $ 91,485 , $ 82,372 , and $ 82,704 ) $ 90,435 $ 82,272 $ 82,866 Short-term investments (amortized cost: $ 1,978 , $ 2,103 , and $ 10,005 ) 1,978 2,103 10,005 Total available-for-sale securities 92,413 84,375 92,871 Equity securities, at fair value: Nonredeemable preferred stocks (cost: $ 292 , $ 517 , and $ 419 ) 276 500 404 Common equities (cost: $ 870 , $ 775 , and $ 819 ) 4,532 3,735 4,098 Total equity securities 4,808 4,235 4,502 Total investments 97,221 88,610 97,373 Cash and cash equivalents 178 125 125 Restricted cash and cash equivalents 15 10 13 Total cash, cash equivalents, restricted cash, and restricted cash equivalents 193 135 138 Accrued investment income 728 636 670 Premiums receivable, net of allowance for credit losses of $ 544 , $ 501 , and $ 552 17,106 16,406 15,362 Reinsurance recoverables 3,919 4,197 4,083 Prepaid reinsurance premiums 202 263 197 Deferred acquisition costs 2,211 2,110 2,044 Property and equipment, net of accumulated depreciation of $ 1,381 , $ 1,369 , and $ 1,460 922 820 783 Net federal deferred income taxes 681 633 748 Other assets 1,742 1,670 1,641 Total assets $ 124,925 $ 115,480 $ 123,039 Liabilities and Shareholders’ Equity Unearned premiums $ 27,401 $ 26,335 $ 25,219 Loss and loss adjustment expense reserves 45,567 41,154 43,310 Dividends payable on common shares 58 58 7,972 Accounts payable, accrued expenses, and other liabilities 9,179 8,434 9,318 Debt 1 8,387 6,895 6,897 Total liabilities 90,592 82,876 92,716 Common shares, $ 1.00 par value (authorized 900 ; issued 798 , including treasury shares of 217 , 212 , and 212 ) 581 586 586 Paid-in capital 2,338 2,192 2,307 Retained earnings 32,261 29,921 27,327 Accumulated other comprehensive income (loss): Net unrealized gains (losses) on fixed-maturity securities ( 832 ) ( 81 ) 117 Net unrealized losses on forecasted transactions ( 13 ) ( 13 ) ( 13 ) Foreign currency translation adjustment ( 2 ) ( 1 ) ( 1 ) Total accumulated other comprehensive income (loss) ( 847 ) ( 95 ) 103 Total shareholders’ equity 34,333 32,604 30,323 Total liabilities and shareholders’ equity $ 124,925 $ 115,480 $ 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 Six Months Periods Ended June 30, 2026 2025 2026 2025 (millions — except per share amounts) Common Shares, $ 1.00 Par Value Balance, beginning of period $ 584 $ 586 $ 586 $ 586 Treasury shares purchased ( 3 ) 0 ( 5 ) 0 Balance, end of period 581 586 581 586 Paid-In Capital Balance, beginning of period 2,314 2,160 2,307 2,145 Amortization of equity-based compensation 36 32 52 48 Treasury shares purchased ( 12 ) 0 ( 21 ) ( 1 ) Balance, end of period 2,338 2,192 2,338 2,192 Retained Earnings Balance, beginning of period 29,612 26,732 27,327 24,283 Net income 3,311 3,175 6,129 5,742 Treasury shares purchased ( 599 ) ( 13 ) ( 1,066 ) ( 66 ) Cash dividends declared on common shares ($ 0.10 , $ 0.10 , $ 0.20 , and $ 0.20 per share) ( 58 ) ( 58 ) ( 116 ) ( 117 ) Other, net ( 5 ) 85 ( 13 ) 79 Balance, end of period 32,261 29,921 32,261 29,921 Accumulated Other Comprehensive Income (Loss) Balance, beginning of period ( 471 ) ( 524 ) 103 ( 1,423 ) Other comprehensive income (loss) ( 376 ) 429 ( 950 ) 1,328 Balance, end of period ( 847 ) ( 95 ) ( 847 ) ( 95 ) Total shareholders’ equity $ 34,333 $ 32,604 $ 34,333 $ 32,604 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) Six Months Ended June 30, 2026 2025 (millions) Cash Flows From Operating Activities Net income $ 6,129 $ 5,742 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 157 149 Net amortization (accretion) of fixed-income securities ( 79 ) ( 55 ) Amortization of equity-based compensation 52 48 Net realized (gains) losses on securities ( 484 ) ( 175 ) Net (gains) losses on disposition of property and equipment 2 1 Changes in: Premiums receivable ( 1,744 ) ( 2,037 ) Reinsurance recoverables 164 568 Prepaid reinsurance premiums ( 5 ) 86 Deferred acquisition costs ( 167 ) ( 149 ) Income taxes 241 ( 173 ) Unearned premiums 2,182 2,477 Loss and loss adjustment expense reserves 2,257 2,097 Accounts payable, accrued expenses, and other liabilities ( 572 ) 550 Other, net ( 159 ) 54 Net cash provided by operating activities 7,974 9,183 Cash Flows From Investing Activities Purchases: Fixed maturities ( 32,153 ) ( 26,354 ) Equity securities ( 178 ) ( 87 ) Sales: Fixed maturities 18,454 17,086 Equity securities 115 151 Maturities, paydowns, calls, and other: Fixed maturities 5,032 4,006 Equity securities 164 177 Net (purchases) sales of short-term investments 8,080 ( 1,429 ) Net change in unsettled security transactions 368 178 Purchases of property and equipment ( 201 ) ( 161 ) Sales of property and equipment 35 52 Net cash used in investing activities ( 284 ) ( 6,381 ) Cash Flows From Financing Activities Dividends paid to common shareholders ( 8,030 ) ( 2,754 ) Acquisition of treasury shares for equity award tax liabilities ( 44 ) ( 55 ) Acquisition of treasury shares acquired in open market ( 1,048 ) ( 12 ) Net proceeds from debt issuances 1,487 0 Net cash used in financing activities ( 7,635 ) ( 2,821 ) Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 55 ( 19 ) Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 138 154 Cash, cash equivalents, restricted cash, and restricted cash equivalents – June 30 $ 193 $ 135 See notes to consolidated financial statements. 4 The Progressive Corporation and Subsidiaries Notes to Consolidated Financial Statements (unaudited) 1. BASIS OF REPORTING AND ACCOUNTING The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries and non-insurance subsidiaries and affiliates in which we have a controlling financial interest; collectively referred to as Progressive, we, us, or our. The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended June 30, 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 June 30, Six Months Ended June 30, (millions) 2026 2025 2026 2025 Allowance for credit losses, beginning of period $ 528 $ 473 $ 552 $ 460 Increase in allowance 1 230 176 413 329 Write-offs 2 ( 214 ) ( 148 ) ( 421 ) ( 288 ) Allowance for credit losses, end of period $ 544 $ 501 $ 544 $ 501 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. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants. Non-cash activity included the following in the respective periods: Six Months Ended June 30, (millions) 2026 2025 Common share dividends 1 $ 58 $ 58 Operating lease liabilities 2 43 63 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: Six Months Ended June 30, (millions) 2026 2025 Income taxes, net of refunds $ 1,403 $ 1,644 Interest 138 138 Operating lease liabilities 49 45 New Accounting Standards We did not adopt any new accounting standards during the three and six months ended June 30, 2026. In May 2026, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that establishes accounting guidance for the recognition of environmental credits and environmental credit obligations. 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). We do not believe this ASU will have a material impact on our financial condition or results of operations. In September 2025, the FASB issued an ASU that 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). We do not believe this ASU will have a material impact on our financial condition or results of operations. 5 2. INVESTMENTS The following tables present the composition of our investment portfolio by major security type: ($ in millions) Cost Gross Unrealized Gains Gross Unrealized Losses Net Holding Period Gains (Losses) Fair Value % of Total Fair Value June 30, 2026 Available-for-sale securities: Fixed maturities: U.S. government $ 44,463 $ 52 $ ( 734 ) $ 0 $ 43,781 45.0 % State and local government 3,904 10 ( 62 ) 0 3,852 4.0 Foreign government 16 0 0 0 16 0 Corporate and other debt 21,641 86 ( 139 ) 3 21,591 22.2 Residential mortgage-backed 4,291 14 ( 23 ) 0 4,282 4.4 Commercial mortgage-backed 7,674 8 ( 229 ) 0 7,453 7.7 Other asset-backed 9,496 7 ( 43 ) 0 9,460 9.7 Total fixed maturities 91,485 177 ( 1,230 ) 3 90,435 93.0 Short-term investments 1,978 0 0 0 1,978 2.0 Total available-for-sale securities 93,463 177 ( 1,230 ) 3 92,413 95.0 Equity securities: Nonredeemable preferred stocks 292 0 0 ( 16 ) 276 0.3 Common equities 870 0 0 3,662 4,532 4.7 Total equity securities 1,162 0 0 3,646 4,808 5.0 Total portfolio 1 $ 94,625 $ 177 $ ( 1,230 ) $ 3,649 $ 97,221 100.0 % ($ in millions) Cost Gross Unrealized Gains Gross Unrealized Losses Net Holding Period Gains (Losses) Fair Value % of Total Fair Value June 30, 2025 Available-for-sale securities: Fixed maturities: U.S. government $ 46,684 $ 598 $ ( 472 ) $ 0 $ 46,810 52.8 % State and local government 3,030 12 ( 78 ) 0 2,964 3.3 Foreign government 17 0 0 0 17 0 Corporate and other debt 18,004 222 ( 112 ) 8 18,122 20.5 Residential mortgage-backed 2,644 21 ( 7 ) 2 2,660 3.0 Commercial mortgage-backed 5,325 10 ( 286 ) 0 5,049 5.7 Other asset-backed 6,668 26 ( 44 ) 0 6,650 7.5 Total fixed maturities 82,372 889 ( 999 ) 10 82,272 92.8 Short-term investments 2,103 0 0 0 2,103 2.4 Total available-for-sale securities 84,475 889 ( 999 ) 10 84,375 95.2 Equity securities: Nonredeemable preferred stocks 517 0 0 ( 17 ) 500 0.6 Common equities 775 0 0 2,960 3,735 4.2 Total equity securities 1,292 0 0 2,943 4,235 4.8 Total portfolio 1 $ 85,767 $ 889 $ ( 999 ) $ 2,953 $ 88,610 100.0 % 6 ($ in millions) Cost Gross Unrealized Gains Gross Unrealized Losses Net Holding Period Gains (Losses) Fair Value % of Total Fair Value December 31, 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 June 30, 2026 and 2025, and December 31, 2025, we had $ 568 million, $ 303 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 June 30, 2026 and 2025, and December 31, 2025, included $ 6.7 billion, $ 5.0 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 June 30, 2026, securities in the principal amount of $ 881 million were on deposit to meet state insurance and other 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 June 30, 2026 or 2025, or December 31, 2025. At June 30, 2026, 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: June 30, (millions) 2026 2025 December 31, 2025 Fixed Maturities: Corporate and other debt $ 693 $ 731 $ 733 Residential mortgage-backed 827 615 792 Total hybrid securities $ 1,520 $ 1,346 $ 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). 7 Fixed Maturities The following table details the composition of fixed maturities by maturity at June 30, 2026: (millions) Cost Fair Value Less than one year $ 11,419 $ 11,396 One to five years 47,762 47,152 Five to ten years 31,885 31,468 Ten years or greater 419 419 Total $ 91,485 $ 90,435 Securities are classified in the maturity distribution table based upon their projected cash flows. Contractual maturities may differ from expected cash flows 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 June 30, 2026 U.S. government 91 $ 37,839 $ ( 734 ) 51 $ 32,644 $ ( 400 ) 40 $ 5,195 $ ( 334 ) State and local government 351 2,239 ( 62 ) 188 1,174 ( 9 ) 163 1,065 ( 53 ) Corporate and other debt 379 10,640 ( 139 ) 305 8,825 ( 83 ) 74 1,815 ( 56 ) Residential mortgage-backed 79 1,997 ( 23 ) 61 1,946 ( 17 ) 18 51 ( 6 ) Commercial mortgage-backed 160 4,222 ( 229 ) 51 1,831 ( 7 ) 109 2,391 ( 222 ) Other asset-backed 164 5,222 ( 43 ) 132 4,471 ( 18 ) 32 751 ( 25 ) Total fixed maturities 1,224 $ 62,159 $ ( 1,230 ) 788 $ 50,891 $ ( 534 ) 436 $ 11,268 $ ( 696 ) 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 June 30, 2025 U.S. government 73 $ 10,463 $ ( 472 ) 9 $ 2,878 $ ( 20 ) 64 $ 7,585 $ ( 452 ) State and local government 275 1,677 ( 78 ) 53 289 ( 1 ) 222 1,388 ( 77 ) Corporate and other debt 159 3,737 ( 112 ) 28 610 ( 6 ) 131 3,127 ( 106 ) Residential mortgage-backed 29 385 ( 7 ) 11 342 ( 2 ) 18 43 ( 5 ) Commercial mortgage-backed 153 3,331 ( 286 ) 16 448 ( 2 ) 137 2,883 ( 284 ) Other asset-backed 79 1,797 ( 44 ) 40 880 ( 2 ) 39 917 ( 42 ) Total fixed maturities 768 $ 21,390 $ ( 999 ) 157 $ 5,447 $ ( 33 ) 611 $ 15,943 $ ( 966 ) 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. 8 Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did no t record any allowances for credit losses or any write-offs for credit losses deemed to be uncollectible during the first six months of 2026 or 2025, and did no t have a material credit loss allowance balance as of June 30, 2026 and 2025, or December 31, 2025. No unrealized loss write offs were recorded during the six months ended June 30, 2026 or 2025. As of June 30, 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 the accrued investment income on securities in an unrealized loss position at June 30, 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 June 30, 2026 and 2025, or December 31, 2025. 9 Realized Gains (Losses) The following table details the components of net realized gains (losses) for the three and six months ended June 30: Three Months Six Months (millions) 2026 2025 2026 2025 Gross realized gains on security sales Available-for-sale securities: U.S. government $ 51 $ 24 $ 150 $ 77 State and local government 0 0 1 0 Corporate and other debt 9 2 35 3 Residential mortgage-backed 0 1 1 1 Total available-for-sale securities 60 27 187 81 Equity securities: Nonredeemable preferred stocks 2 0 10 2 Common equities 23 4 36 39 Total equity securities 25 4 46 41 Subtotal gross realized gains on security sales 85 31 233 122 Gross realized losses on security sales Available-for-sale securities: U.S. government ( 49 ) ( 1 ) ( 85 ) ( 78 ) State and local government ( 4 ) 0 ( 4 ) ( 2 ) Corporate and other debt ( 6 ) ( 2 ) ( 11 ) ( 3 ) Commercial mortgage-backed 0 ( 6 ) 0 ( 10 ) Total available-for-sale securities ( 59 ) ( 9 ) ( 100 ) ( 93 ) Equity securities: Nonredeemable preferred stocks ( 3 ) ( 3 ) ( 8 ) ( 5 ) Common equities ( 7 ) 0 ( 13 ) ( 4 ) Total equity securities ( 10 ) ( 3 ) ( 21 ) ( 9 ) Subtotal gross realized losses on security sales ( 69 ) ( 12 ) ( 121 ) ( 102 ) Net realized gains (losses) on security sales Available-for-sale securities: U.S. government 2 23 65 ( 1 ) State and local government ( 4 ) 0 ( 3 ) ( 2 ) Corporate and other debt 3 0 24 0 Residential mortgage-backed 0 1 1 1 Commercial mortgage-backed 0 ( 6 ) 0 ( 10 ) Total available-for-sale securities 1 18 87 ( 12 ) Equity securities: Nonredeemable preferred stocks ( 1 ) ( 3 ) 2 ( 3 ) Common equities 16 4 23 35 Total equity securities 15 1 25 32 Subtotal net realized gains (losses) on security sales 16 19 112 20 Net holding period gains (losses) Hybrid securities 17 11 ( 10 ) 14 Equity securities 571 357 382 141 Subtotal net holding period gains (losses) 588 368 372 155 Total net realized gains (losses) on securities $ 604 $ 387 $ 484 $ 175 During the second quarter and first six 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 second quarter and first six months of 2026 and 2025. 10 The following table reflects our holding period realized gains (losses) recognized on equity securities held at the three and six months ended June 30: Three Months Six Months (millions) 2026 2025 2026 2025 Total net gains (losses) recognized during the period on equity securities $ 586 $ 358 $ 407 $ 173 Less: Net gains (losses) recognized on equity securities sold during the period 15 1 25 32 Net holding period gains (losses) recognized during the period on equity securities held at period end $ 571 $ 357 $ 382 $ 141 Net Investment Income The following table details the components of net investment income for the three and six months ended June 30: Three Months Six Months (millions) 2026 2025 2026 2025 Available-for-sale securities: Fixed maturities: U.S. government $ 433 $ 422 $ 833 $ 844 State and local government 27 21 51 40 Corporate and other debt 253 208 488 379 Residential mortgage-backed 54 32 93 57 Commercial mortgage-backed 83 59 154 112 Other asset-backed 100 84 187 168 Total fixed maturities 950 826 1,806 1,600 Short-term investments 16 28 60 46 Total available-for-sale securities 966 854 1,866 1,646 Equity securities: Nonredeemable preferred stocks 2 5 6 13 Common equities 11 12 24 26 Total equity securities 13 17 30 39 Investment income 979 871 1,896 1,685 Investment expenses ( 10 ) ( 9 ) ( 18 ) ( 16 ) Net investment income $ 969 $ 862 $ 1,878 $ 1,669 On a year-over-year basis, investment income (interest and dividends) increased 12 % and 13 % for the three and six months ended June 30, 2026, respectively, compared to the same periods last year . The increases primarily reflect growth in invested assets. 11 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 June 30, 2026 Fixed maturities: U.S. government $ 43,781 $ 0 $ 0 $ 43,781 $ 44,463 State and local government 0 3,852 0 3,852 3,904 Foreign government 0 16 0 16 16 Corporate and other debt 0 21,587 4 21,591 21,641 Residential mortgage-backed 0 4,282 0 4,282 4,291 Commercial mortgage-backed 0 7,453 0 7,453 7,674 Other asset-backed 0 9,310 150 9,460 9,496 Total fixed maturities 43,781 46,500 154 90,435 91,485 Short-term investments 1,930 48 0 1,978 1,978 Total available-for-sale securities 45,711 46,548 154 92,413 93,463 Equity securities: Nonredeemable preferred stocks 0 227 49 276 292 Common equities: Common stocks 4,485 0 8 4,493 831 Other risk investments 0 0 39 39 39 Subtotal common equities 4,485 0 47 4,532 870 Total equity securities 4,485 227 96 4,808 1,162 Total portfolio $ 50,196 $ 46,775 $ 250 $ 97,221 $ 94,625 Debt $ 0 $ 7,758 $ 0 $ 7,758 $ 8,387 Fair Value (millions) Level 1 Level 2 Level 3 Total Cost June 30, 2025 Fixed maturities: U.S. government $ 46,810 $ 0 $ 0 $ 46,810 $ 46,684 State and local government 0 2,964 0 2,964 3,030 Foreign government 0 17 0 17 17 Corporate and other debt 0 18,117 5 18,122 18,004 Residential mortgage-backed 0 2,660 0 2,660 2,644 Commercial mortgage-backed 0 5,049 0 5,049 5,325 Other asset-backed 0 6,650 0 6,650 6,668 Total fixed maturities 46,810 35,457 5 82,272 82,372 Short-term investments 1,922 181 0 2,103 2,103 Total available-for-sale securities 48,732 35,638 5 84,375 84,475 Equity securities: Nonredeemable preferred stocks 0 440 60 500 517 Common equities: Common stocks 3,694 0 9 3,703 743 Other risk investments 0 0 32 32 32 Subtotal common equities 3,694 0 41 3,735 775 Total equity securities 3,694 440 101 4,235 1,292 Total portfolio $ 52,426 $ 36,078 $ 106 $ 88,610 $ 85,767 Debt $ 0 $ 6,294 $ 0 $ 6,294 $ 6,895 12 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 and 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. At each reporting period, 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 June 30, 2026 and December 31, 2025, vendor-quoted prices represented 91 % of our Level 1 classifications (excluding short-term investments valued at adjusted original cost), compared to 93 %, at June 30, 2025. 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 June 30, 2026 and 2025, 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 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 13 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 asset-backed securities, including residential, commercial, 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 asset-backed 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. 14 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 six 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 six 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. 15 The following tables provide a summary of changes in fair value associated with Level 3 assets for the three and six months ended June 30, 2026 and 2025: (millions) Fair Value at March 31, 2026 Calls/ Maturities/ Paydowns/ Other Purchases Sales Net Realized (Gain)/Loss on Sales Change in Valuation 1 Net Transfers In (Out) Fair Value at June 30, 2026 Fixed maturities: Corporate and other debt $ 4 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 4 Other asset-backed 0 0 150 0 0 0 0 150 Equity securities: Nonredeemable preferred stocks 49 0 0 0 0 0 0 49 Common equities: Common stocks 5 0 0 0 0 3 0 8 Other risk investments 37 2 0 0 0 0 0 39 Total Level 3 securities $ 95 $ 2 $ 150 $ 0 $ 0 $ 3 $ 0 $ 250 (millions) Fair Value at March 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 June 30, 2025 Fixed maturities: Corporate and other debt $ 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 31 1 0 0 0 0 0 32 Total Level 3 securities $ 105 $ 1 $ 0 $ 0 $ 0 $ 0 $ 0 $ 106 (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 June 30, 2026 Fixed maturities: Corporate and other debt $ 4 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 4 Other asset-backed 0 0 150 0 0 0 0 150 Equity securities: Nonredeemable preferred stocks 60 0 0 ( 5 ) ( 7 ) 1 0 49 Common equities: Common stocks 5 0 0 0 0 3 0 8 Other risk investments 36 3 0 0 0 0 0 39 Total Level 3 securities $ 105 $ 3 $ 150 $ ( 5 ) $ ( 7 ) $ 4 $ 0 $ 250 (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 June 30, 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 7 0 0 0 0 0 32 Total Level 3 securities $ 105 $ 7 $ 8 $ 0 $ 0 $ ( 14 ) $ 0 $ 106 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. 16 The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at June 30, 2026 and 2025, and December 31, 2025: ($ in millions) Fair Value at June 30, 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 % ( 0.8 )% to 1.4 % ( 0.1 ) % Equity securities: Nonredeemable preferred stocks 49 Market comparables Weighted average market capitalization price change % ( 9.3 )% to 46.6 % 14.4 % Common stocks 8 Market comparables Weighted average market capitalization price change % ( 36.7 )% to 77.2 % 32.0 % Subtotal Level 3 securities 61 External price securities 150 Pricing exemption securities 39 Total Level 3 securities $ 250 ($ in millions) Fair Value at June 30, 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 % 0.6 % to 0.8 % 0.7 % Equity securities: Nonredeemable preferred stocks 60 Market comparables Weighted average market capitalization price change % ( 13.1 )% to 22.7 % 3.7 % Common stocks 9 Market comparables Weighted average market capitalization price change % ( 26.3 )% to 56.6 % 21.3 % Subtotal Level 3 securities 74 Pricing exemption securities 32 Total Level 3 securities $ 106 ($ 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 17 4. DEBT Debt at each of the balance sheet periods consisted of the following Senior Notes: ($ in millions) June 30, 2026 June 30, 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 $ 495 $ 499 $ 488 $ 499 $ 493 500 2.50 March 2022 March 2027 500 493 499 487 499 492 300 6 5/8 March 1999 March 2029 299 316 298 324 299 323 550 4.00 October 2018 March 2029 548 544 548 547 548 551 500 3.20 March 2020 March 2030 498 477 498 477 498 484 500 4.60 March 2026 March 2031 497 498 0 0 0 0 500 3.00 March 2022 March 2032 497 456 497 456 497 462 400 6.25 November 2002 December 2032 398 432 397 438 397 442 500 4.95 May 2023 June 2033 497 504 497 511 497 513 1,000 5.15 March 2026 March 2036 990 1,000 0 0 0 0 350 4.35 April 2014 April 2044 347 297 347 299 347 304 400 3.70 January 2015 January 2045 396 311 396 310 396 314 850 4.125 April 2017 April 2047 843 688 843 699 843 702 600 4.20 March 2018 March 2048 591 491 591 493 591 498 500 3.95 March 2020 March 2050 492 389 491 392 492 392 500 3.70 March 2022 March 2052 494 367 494 373 494 375 Total $ 8,387 $ 7,758 $ 6,895 $ 6,294 $ 6,897 $ 6,345 At June 30, 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 June 30, 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 The Progressive Corporation, 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. During the second quarter 2026, 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 30, 2027. The renewal amended the interest rate to 1-month term Secured Overnight Financing Rate (SOFR) plus 1.0 %. The remaining terms are unchanged from the previous line of credit. 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. 18 5. INCOME TAXES The effective tax rate for the three and six months ended June 30, 2026, was 21.3 % and 21.2 %, r espectively, compared to 20.3 % and 20.4 % for the same periods last year. The lower effective tax rate for the prior-year periods was primarily due to the tax benefits associated with distributions of deferred compensation during the second quarter 2025. 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 June 30, 2026 and 2025, and December 31, 2025. We had net current income taxes recoverable of $ 50 million and $ 115 million at June 30, 2026 and 2025, respectively, which were reported in other assets on our consolidated balance sheets, compared to net current income taxes payable of $ 28 million at December 31, 2025, which was reported in accounts payable, accrued expenses, and other liabilities. The balance may fluctuate from period to period due to normal timing differences. At June 30, 2026 and 2025, and December 31, 2025, we have not recorded any unrecognized tax benefits or related interest and penalties. 6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES Activity in the loss and loss adjustment expense reserves is summarized as follows: June 30, (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 29,401 27,016 Prior years ( 1,002 ) ( 607 ) Total incurred 28,399 26,409 Paid related to: Current year 13,928 12,842 Prior years 12,073 10,883 Total paid 26,001 23,725 Net balance at June 30 41,901 37,254 Plus reinsurance recoverables on unpaid losses 3,666 3,900 Balance at June 30 $ 45,567 $ 41,154 We experienced favorable reserve development of $ 1,002 million and $ 607 million during the first six months of 2026 and 2025, respectively, which is reflected as “incurred related to prior years ” in the table above. Year-to-date June 30, 2026 • The favorable prior-year reserve development included approximately $ 670 million attributable to accident year 2025, $ 220 million to accident year 2024, and the remainder to accident years 2023 and prior. • Our perso nal auto products incurred about $ 845 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 and, to a lesser extent, lower than anticipated payments on reopened property damage claims that were previously closed and lower than anticipated personal injury protection loss adjustment expenses. • Our Commercial Lines business incurred about $ 140 million of favorable loss and LAE reserve development. The favorable development was primarily due to lower than anticipated injury severity in our transportation network company (TNC) business, partially offset by higher than anticipated injury severity and litigation defense costs in our core commercial auto products. 19 Year-to-date June 30, 2025 • The favorable prior-year reserve development included approximately $ 400 million attributable to accident year 2024, $ 115 million to accident year 2023, and the remainder to accident years 2022 and prior. • Our personal auto products incurred about $ 520 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 and, to a lesser extent, lower than anticipated litigation defense costs across most states. • Our personal property products experienced about $ 50 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events. • Our Commercial Lines business experienced about $ 45 million of favorable development, primarily attributable to lower than anticipated severity in our TNC business. 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. Following are the operating results for the respective periods: (millions) Personal Lines Commercial Lines Other 1 Companywide Three Months Ended June 30, 2026 Net premiums earned $ 18,880 $ 2,691 $ 2 $ 21,573 Fees and other revenues 288 18 ( 1 ) 305 Total underwriting revenue 19,168 2,709 1 21,878 Losses and loss adjustment expenses: Losses (excluding catastrophe losses) 10,501 1,390 6 11,897 Catastrophe losses 759 14 0 773 Loss adjustment expenses 1,600 302 0 1,902 Total losses and loss adjustment expenses 12,860 1,706 6 14,572 Underwriting expenses: Distribution expenses 2 2,536 316 3 2,855 Other underwriting expenses 3 1,426 290 5 1,721 Total underwriting expenses 3,962 606 8 4,576 Pretax underwriting profit (loss) $ 2,346 $ 397 $ ( 13 ) 2,730 Investment profit (loss) 4 1,573 Service businesses profit (loss) ( 6 ) Interest expense ( 88 ) Total pretax profit (loss) $ 4,209 20 (millions) Personal Lines Commercial Lines Other 1 Companywide Three Months Ended June 30, 2025 Net premiums earned $ 17,544 $ 2,765 $ 1 $ 20,310 Fees and other revenues 263 40 0 303 Total underwriting revenue 17,807 2,805 1 20,613 Losses and loss adjustment expenses: Losses (excluding catastrophe losses) 9,574 1,561 ( 1 ) 11,134 Catastrophe losses 688 19 0 707 Loss adjustment expenses 1,471 292 1 1,764 Total losses and loss adjustment expenses 11,733 1,872 0 13,605 Underwriting expenses: Distribution expenses 2 2,328 308 1 2,637 Other underwriting expenses 3 1,298 261 4 1,563 Total underwriting expenses 3,626 569 5 4,200 Pretax underwriting profit (loss) $ 2,448 $ 364 $ ( 4 ) 2,808 Investment profit (loss) 4 1,249 Service businesses profit (loss) ( 6 ) Interest expense ( 69 ) Total pretax profit (loss) $ 3,982 (millions) Personal Lines Commercial Lines Other 1 Companywide Six Months Ended June 30, 2026 Net premiums earned $ 37,264 $ 5,274 $ 3 $ 42,541 Fees and other revenues 564 38 0 602 Total underwriting revenue 37,828 5,312 3 43,143 Losses and loss adjustment expenses: Losses (excluding catastrophe losses) 20,720 2,847 7 23,574 Catastrophe losses 1,022 19 0 1,041 Loss adjustment expenses 3,193 591 0 3,784 Total losses and loss adjustment expenses 24,935 3,457 7 28,399 Underwriting expenses: Distribution expenses 2 5,200 616 5 5,821 Other underwriting expenses 3 2,772 558 11 3,341 Total underwriting expenses 7,972 1,174 16 9,162 Pretax underwriting profit (loss) $ 4,921 $ 681 $ ( 20 ) 5,582 Investment profit (loss) 4 2,362 Service businesses profit (loss) ( 11 ) Interest expense ( 158 ) Total pretax profit (loss) $ 7,775 21 (millions) Personal Lines Commercial Lines Other 1 Companywide Six Months Ended June 30, 2025 Net premiums earned $ 34,254 $ 5,464 $ 1 $ 39,719 Fees and other revenues 512 78 0 590 Total underwriting revenue 34,766 5,542 1 40,309 Losses and loss adjustment expenses: Losses (excluding catastrophe losses) 18,683 3,120 ( 1 ) 21,802 Catastrophe losses 1,142 24 0 1,166 Loss adjustment expenses 2,861 579 1 3,441 Total losses and loss adjustment expenses 22,686 3,723 0 26,409 Underwriting expenses: Distribution expenses 2 4,676 594 1 5,271 Other underwriting expenses 3 2,573 523 8 3,104 Total underwriting expenses 7,249 1,117 9 8,375 Pretax underwriting profit (loss) $ 4,831 $ 702 $ ( 8 ) 5,525 Investment profit (loss) 4 1,844 Service businesses profit (loss) ( 12 ) Interest expense ( 139 ) Total pretax profit (loss) $ 7,218 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. 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Under- writing Margin Combined Ratio Under- writing Margin Combined Ratio Under- writing Margin Combined Ratio Under- writing Margin Combined Ratio Personal Lines 12.4 % 87.6 14.0 % 86.0 13.2 % 86.8 14.1 % 85.9 Commercial Lines 14.7 85.3 13.2 86.8 12.9 87.1 12.9 87.1 Total underwriting operations 12.7 87.3 13.8 86.2 13.1 86.9 13.9 86.1 22 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 March 31, 2026 $ ( 596 ) $ 125 $ ( 471 ) $ ( 457 ) $ ( 13 ) $ ( 1 ) Other comprehensive income (loss) before reclassifications: Investment securities ( 438 ) 92 ( 346 ) ( 346 ) 0 0 Foreign currency translation adjustment ( 1 ) 0 ( 1 ) 0 0 ( 1 ) Total other comprehensive income (loss) before reclassifications ( 439 ) 92 ( 347 ) ( 346 ) 0 ( 1 ) Less: Reclassification adjustment for amounts realized in net income by income statement line item: Net realized gains (losses) on securities 37 ( 8 ) 29 29 0 0 Total reclassification adjustment for amounts realized in net income 37 ( 8 ) 29 29 0 0 Total other comprehensive income (loss) ( 476 ) 100 ( 376 ) ( 375 ) 0 ( 1 ) Balance at June 30, 2026 $ ( 1,072 ) $ 225 $ ( 847 ) $ ( 832 ) $ ( 13 ) $ ( 2 ) 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 March 31, 2025 $ ( 671 ) $ 147 $ ( 524 ) $ ( 509 ) $ ( 14 ) $ ( 1 ) Other comprehensive income (loss) before reclassifications for investment securities 558 ( 117 ) 441 441 0 0 Less: Reclassification adjustment for amounts realized in net income by income statement line item: Net realized gains (losses) on securities 16 ( 3 ) 13 13 0 0 Interest expense ( 1 ) 0 ( 1 ) 0 ( 1 ) 0 Total reclassification adjustment for amounts realized in net income 15 ( 3 ) 12 13 ( 1 ) 0 Total other comprehensive income (loss) 543 ( 114 ) 429 428 1 0 Balance at June 30, 2025 $ ( 128 ) $ 33 $ ( 95 ) $ ( 81 ) $ ( 13 ) $ ( 1 ) 23 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: Investment securities ( 1,066 ) 224 ( 842 ) ( 842 ) 0 0 Foreign currency translation adjustment ( 1 ) 0 ( 1 ) 0 0 ( 1 ) Total other comprehensive income (loss) before reclassifications ( 1,067 ) 224 ( 843 ) ( 842 ) 0 ( 1 ) Less: Reclassification adjustment for amounts realized in net income by income statement line item: Net realized gains (losses) on securities 135 ( 28 ) 107 107 0 0 Total reclassification adjustment for amounts realized in net income 135 ( 28 ) 107 107 0 0 Total other comprehensive income (loss) ( 1,202 ) 252 ( 950 ) ( 949 ) 0 ( 1 ) Balance at June 30, 2026 $ ( 1,072 ) $ 225 $ ( 847 ) $ ( 832 ) $ ( 13 ) $ ( 2 ) 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 1,666 ( 350 ) 1,316 1,316 0 0 Less: Reclassification adjustment for amounts realized in net income by income statement line item: Net realized gains (losses) on securities ( 14 ) 3 ( 11 ) ( 11 ) 0 0 Interest expense ( 1 ) 0 ( 1 ) 0 ( 1 ) 0 Total reclassification adjustment for amounts realized in net income ( 15 ) 3 ( 12 ) ( 11 ) ( 1 ) 0 Total other comprehensive income (loss) 1,681 ( 353 ) 1,328 1,327 1 0 Balance at June 30, 2025 $ ( 128 ) $ 33 $ ( 95 ) $ ( 81 ) $ ( 13 ) $ ( 1 ) In an effort to manage interest rate risk, we entered into forecasted transactions on certain issuances of The Progressive Corporation’s debt. 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). 24 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 June 30, 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; 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 June 30, 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 June 30, 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 June 30, 2026 and 2025, or December 31, 2025, and there were no material settlements during 2025 or the first six 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. 25 10. DIVIDENDS Following is a summary of our common share dividends that were declared and/or paid during the six months ended June 30, 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: May 2026 July 2026 0.10 58 March 2026 April 2026 0.10 58 December 2025 January 2026 0.10 59 May 2025 July 2025 0.10 58 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. 26