Item 1. Financial Statements.

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Item 1. Financial Statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)



Three Months Ended March 31,	2024		2023
(millions — except per share amounts)
Revenues
Net premiums earned	$	16,148.6	$	13,533.1
Investment income	617.6		419.6
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	(146.5)		(30.3)
Net holding period gains (losses) on securities	302.1		104.4
Net impairment losses recognized in earnings	0		(2.3)
Total net realized gains (losses) on securities	155.6		71.8
Fees and other revenues	236.5		206.2
Service revenues	84.2		72.5
Total revenues	17,242.5		14,303.2
Expenses
Losses and loss adjustment expenses	10,971.6		10,624.0
Policy acquisition costs	1,232.2		1,115.8
Other underwriting expenses	1,931.4		1,857.9
Investment expenses	5.7		5.5
Service expenses	92.1		82.3
Interest expense	69.6		63.3
Total expenses	14,302.6		13,748.8
Net Income
Income before income taxes	2,939.9		554.4
Provision for income taxes	608.5		106.5
Net income	2,331.4		447.9
Other Comprehensive Income (Loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	(207.8)		603.2
Net unrealized losses on forecasted transactions	0.1		0.1
Foreign currency translation adjustment	(0.2)		0
Other comprehensive income (loss)	(207.9)		603.3
Comprehensive income (loss)	$	2,123.5	$	1,051.2
Computation of Earnings Per Common Share
Net income	$	2,331.4	$	447.9
Less: Preferred share dividends and other1	17.0		7.3
Net income available to common shareholders	$	2,314.4	$	440.6
Average common shares outstanding - Basic	585.4		584.9
Net effect of dilutive stock-based compensation	1.9		2.1
Total average equivalent common shares - Diluted	587.3		587.0
Basic: Earnings per common share	$	3.95	$	0.75
Diluted: Earnings per common share	$	3.94	$	0.75

1 All of our outstanding Serial Preferred Shares, Series B, were redeemed in February 2024. See Note 9 – Dividends for further discussion.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Balance Sheets

(unaudited)


	March 31,				December 31,
(millions — except per share amounts)	2024		2023		2023
Assets
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $65,949.3, $53,123.9, and $62,441.9)	$	63,629.7	$	50,289.2	$	60,378.2
Short-term investments (amortized cost: $1,326.7, $2,524.1, and $1,789.9)	1,326.7		2,524.1		1,789.9
Total available-for-sale securities	64,956.4		52,813.3		62,168.1
Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $931.1, $1,197.7, and $977.1)	886.7		1,078.8		902.1
Common equities (cost: $708.2, $740.5, and $706.0)	3,194.9		2,794.3		2,928.4
Total equity securities	4,081.6		3,873.1		3,830.5
Total investments	69,038.0		56,686.4		65,998.6
Cash and cash equivalents	154.5		273.7		84.9
Restricted cash and cash equivalents	13.4		14.9		14.7
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	167.9		288.6		99.6
Accrued investment income	464.2		299.5		438.0
Premiums receivable, net of allowance for credit losses of $327.7, $340.9, and $369.1	14,192.5		12,411.4		11,958.2
Reinsurance recoverables	5,003.4		5,616.2		5,093.9
Prepaid reinsurance premiums	209.8		269.6		249.8
Deferred acquisition costs	1,818.2		1,626.8		1,687.4
Property and equipment, net of accumulated depreciation of $1,580.2, $1,576.2, and $1,655.1	756.3		949.0		880.8
Net federal deferred income taxes	1,031.8		1,057.0		936.0
Other assets	1,445.8		1,202.6		1,348.5
Total assets	$	94,127.9	$	80,407.1	$	88,690.8
Liabilities and Shareholders’ Equity
Unearned premiums	$	22,907.3	$	19,844.3	$	20,133.7
Loss and loss adjustment expense reserves	34,831.0		31,026.4		34,389.2
Accounts payable, accrued expenses, and other liabilities	7,688.6		6,278.7		7,002.2
Debt1	6,889.7		6,389.3		6,888.6
Total liabilities	72,316.6		63,538.7		68,413.7
Serial Preferred Shares (authorized 20.0)
Serial Preferred Shares, Series B, no par value (cumulative, liquidation preference $1,000 per share) (authorized, issued, and outstanding of 0, 0.5, and 0.5)	0		493.9		493.9
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 211.9, 212.2, and 212.3)	585.7		585.4		585.3
Paid-in capital	2,028.7		1,907.7		2,013.1
Retained earnings	21,020.5		16,080.1		18,800.5
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities	(1,808.6)		(2,183.1)		(1,600.8)
Net unrealized losses on forecasted transactions	(13.9)		(14.4)		(14.0)
Foreign currency translation adjustment	(1.1)		(1.2)		(0.9)
Total accumulated other comprehensive income (loss)	(1,823.6)		(2,198.7)		(1,615.7)
Total shareholders’ equity	21,811.3		16,868.4		20,277.1
Total liabilities and shareholders’ equity	$	94,127.9	$	80,407.1	$	88,690.8

1 Consists of long-term debt. See Note 4 – Debt for further discussion.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)



Three Months Ended March 31,	2024		2023
(millions — except per share amounts)
Serial Preferred Shares, No Par Value
Balance, beginning of period	$	493.9	$	493.9
Redemption of Serial Preferred Shares, Series B1	(493.9)		0
Balance, end of period	0		493.9
Common Shares, $1.00 Par Value
Balance, beginning of period	585.3		584.9
Treasury shares purchased	(0.2)		(0.2)
Net restricted equity awards issued/vested	0.6		0.7
Balance, end of period	585.7		585.4
Paid-In Capital
Balance, beginning of period	2,013.1		1,893.0
Amortization of equity-based compensation	16.8		15.9
Treasury shares purchased	(0.8)		(0.8)
Net restricted equity awards issued/vested	(0.6)		(0.7)
Reinvested dividends on restricted stock units	0.2		0.3
Balance, end of period	2,028.7		1,907.7
Retained Earnings
Balance, beginning of period	18,800.5		15,721.2
Net income	2,331.4		447.9
Treasury shares purchased	(36.1)		(31.7)
Cash dividends declared on common shares ($0.10 and $0.10 per share)1	(58.5)		(58.5)
Cash dividends declared on Serial Preferred Shares, Series B ($15.688377 and $0 per share)1	(7.8)		0
Reinvested dividends on restricted stock units	(0.2)		(0.3)
Other, net	(8.8)		1.5
Balance, end of period	21,020.5		16,080.1
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period	(1,615.7)		(2,802.0)
Other comprehensive income (loss)	(207.9)		603.3
Balance, end of period	(1,823.6)		(2,198.7)
Total shareholders’ equity	$	21,811.3	$	16,868.4

1 See Note 9 – Dividends for further discussion.

There are 5.0 million Voting Preference Shares authorized; no such shares have been issued.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


Three Months Ended March 31,	2024		2023
(millions)
Cash Flows From Operating Activities
Net income	$	2,331.4	$	447.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	69.7		68.0
Net amortization (accretion) of fixed-income securities	(7.5)		(5.0)
Amortization of equity-based compensation	16.8		15.9
Net realized (gains) losses on securities	(155.6)		(71.8)
Net (gains) losses on disposition of property and equipment	(1.7)		16.5
Changes in:
Premiums receivable	(2,234.3)		(1,994.5)
Reinsurance recoverables	90.5		215.9
Prepaid reinsurance premiums	40.0		25.9
Deferred acquisition costs	(130.8)		(82.4)
Income taxes	609.5		106.6
Unearned premiums	2,773.6		2,550.7
Loss and loss adjustment expense reserves	441.8		667.1
Accounts payable, accrued expenses, and other liabilities	457.8		565.5
Other, net	(65.8)		(76.8)
Net cash provided by operating activities	4,235.4		2,449.5
Cash Flows From Investing Activities
Purchases:
Fixed maturities	(13,288.2)		(6,119.5)
Equity securities	(32.4)		(17.8)
Sales:
Fixed maturities	7,765.3		2,202.6
Equity securities	58.2		277.3
Maturities, paydowns, calls, and other:
Fixed maturities	1,855.2		976.0
Equity securities	23.3		25.1
Net (purchases) sales of short-term investments	479.2		360.8
Net change in unsettled security transactions	61.8		57.2
Purchases of property and equipment	(50.2)		(43.2)
Sales of property and equipment	3.5		4.3
Net cash used in investing activities	(3,124.3)		(2,277.2)
Cash Flows From Financing Activities
Redemption of Serial Preferred Shares, Series B	(500.0)		0
Dividends paid to common shareholders	(497.9)		(58.5)
Dividends paid to preferred shareholders	(7.8)		(13.4)
Acquisition of treasury shares for restricted stock tax liabilities	(37.1)		(32.7)

Net cash used in financing activities	(1,042.8)		(104.6)
Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	68.3		67.7
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1	99.6		220.9
Cash, cash equivalents, restricted cash, and restricted cash equivalents – March 31	$	167.9	$	288.6

See notes to consolidated financial statements.

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, 2024, 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, 2023 (2023 Annual Report to Shareholders).

Premiums Receivable

We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2023 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)		2024		2023
Allowance for credit losses, beginning of period		$	369.1	$	343.3
Increase in allowance1		106.8		116.9
Write-offs2		(148.2)		(119.3)
Allowance for credit losses, end of period		$	327.7	$	340.9

1 Represents the incremental increase in other underwriting expenses.

2 Represents the portion of allowance that is reversed when the premiums receivable is written off. Premiums receivable balances are written off once we have exhausted our collection efforts.

Property and Equipment

Included in other assets in our consolidated balance sheets are “held for sale” properties of $169.8 million, $67.8 million, and $77.2 million at March 31, 2024 and 2023, and December 31, 2023, respectively. When properties are determined to be “held for sale,” the property is written down to its fair value less estimated costs to sell, as applicable. The increase in the March 31, 2024, balance from December 31, 2023, was primarily driven by a decision in the first quarter to sell certain regional properties to optimize our real estate portfolio by consolidating employees into already existing alternative properties.

Earnings Per Share

We redeemed all of our outstanding Serial Preferred Shares, Series B, in February 2024. See Note 9 – Dividends for further discussion. To determine net income available to common shareholders, which is used in the calculation of the per common share amounts, we reduced net income by preferred share dividends, and, for 2024,

underwriting discounts and commissions on the preferred share issuance,
initial issuance costs related to the preferred shares, and
excise taxes related to the preferred share redemption.

New Accounting Standards

On January 1, 2024, we started to amortize the remaining original cost of tax equity investments to the provision for income taxes, since certain conditions were met, on the modified retrospective basis, pursuant to an Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board. Previously, these investments were accounted for under the equity method of accounting. The adoption of the ASU had no cumulative effect on retained earnings and did not have a material impact on our financial condition or results of operations. The amount of income tax credits and investment amortization recognized for the first quarter 2024, and the carrying amount of the tax credit investments at March 31, 2024, were not material to our financial condition or results of operations and, therefore, no additional disclosure is provided.

Reclassification

Goodwill and intangible assets are included in other assets in our consolidated balance sheets and the amortization of intangible assets in other, net, in cash provided by operating activities in our consolidated statements of cash flows. The March 31, 2023, amounts, which were presented separately on the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.

2. INVESTMENTS

The following tables present the composition of our investment portfolio by major security type. Our securities are reported in our consolidated balance sheets at fair value. The changes in fair value for our fixed-maturity securities (other than hybrid securities) are reported as a component of accumulated other comprehensive income (loss), net of deferred income taxes, in our consolidated

balance sheets. The net holding period gains (losses) reported below represent the inception-to-date changes in fair value for the hybrid and equity securities. The changes in the net holding period gains (losses) between periods are recorded as a component of net realized gains (losses) on securities in our consolidated statements of comprehensive income.


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
March 31, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	39,823.8	$	66.2	$	(1,327.3)	$	0	$	38,562.7	55.8	%
State and local government obligations	2,200.7		1.5		(142.4)		0		2,059.8		3.0
Foreign government obligations	16.9		0		(1.0)		0		15.9		0.1
Corporate debt securities	12,821.9		45.9		(328.1)		(18.4)		12,521.3		18.1
Residential mortgage-backed securities	390.1		0.2		(9.2)		2.0		383.1		0.6
Commercial mortgage-backed securities	4,368.6		2.5		(519.3)		0		3,851.8		5.6
Other asset-backed securities	6,146.1		9.2		(93.9)		(0.2)		6,061.2		8.8
Redeemable preferred stocks	181.2		0		(2.0)		(5.3)		173.9		0.2
Total fixed maturities	65,949.3		125.5		(2,423.2)		(21.9)		63,629.7		92.2
Short-term investments	1,326.7		0		0		0		1,326.7		1.9
Total available-for-sale securities	67,276.0		125.5		(2,423.2)		(21.9)		64,956.4		94.1
Equity securities:
Nonredeemable preferred stocks	931.1		0		0		(44.4)		886.7		1.3
Common equities	708.2		0		0		2,486.7		3,194.9		4.6
Total equity securities	1,639.3		0		0		2,442.3		4,081.6		5.9
Total portfolio1	$	68,915.3	$	125.5	$	(2,423.2)	$	2,420.4	$	69,038.0	100.0	%


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
March 31, 2023
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	28,490.9	$	68.8	$	(1,209.6)	$	0	$	27,350.1	48.3	%
State and local government obligations	2,222.4		0.9		(161.7)		0		2,061.6		3.6
Foreign government obligations	16.9		0		(1.1)		0		15.8		0.1
Corporate debt securities	11,195.8		45.6		(525.4)		(34.7)		10,681.3		18.8
Residential mortgage-backed securities	655.0		0.2		(16.3)		(8.9)		630.0		1.1
Commercial mortgage-backed securities	5,252.6		1.6		(751.2)		0		4,503.0		7.9
Other asset-backed securities	5,087.8		1.8		(222.5)		(1.3)		4,865.8		8.6
Redeemable preferred stocks	202.5		0		(5.2)		(15.7)		181.6		0.3
Total fixed maturities	53,123.9		118.9		(2,893.0)		(60.6)		50,289.2		88.7
Short-term investments	2,524.1		0		0		0		2,524.1		4.5
Total available-for-sale securities	55,648.0		118.9		(2,893.0)		(60.6)		52,813.3		93.2
Equity securities:
Nonredeemable preferred stocks	1,197.7		0		0		(118.9)		1,078.8		1.9
Common equities	740.5		0		0		2,053.8		2,794.3		4.9
Total equity securities	1,938.2		0		0		1,934.9		3,873.1		6.8
Total portfolio1	$	57,586.2	$	118.9	$	(2,893.0)	$	1,874.3	$	56,686.4	100.0	%


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
December 31, 2023
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	37,823.2	$	204.1	$	(1,157.9)	$	0	$	36,869.4	55.9	%
State and local government obligations	2,338.4		2.8		(138.4)		0		2,202.8		3.3
Foreign government obligations	17.3		0		(1.0)		0		16.3		0.1
Corporate debt securities	11,446.0		87.2		(332.3)		(17.2)		11,183.7		16.9
Residential mortgage-backed securities	426.9		0.2		(10.0)		0.1		417.2		0.6
Commercial mortgage-backed securities	4,535.2		2.2		(597.7)		0		3,939.7		6.0
Other asset-backed securities	5,667.2		15.7		(107.1)		(0.4)		5,575.4		8.4
Redeemable preferred stocks	187.7		0		(2.4)		(11.6)		173.7		0.3
Total fixed maturities	62,441.9		312.2		(2,346.8)		(29.1)		60,378.2		91.5
Short-term investments	1,789.9		0		0		0		1,789.9		2.7
Total available-for-sale securities	64,231.8		312.2		(2,346.8)		(29.1)		62,168.1		94.2
Equity securities:
Nonredeemable preferred stocks	977.1		0		0		(75.0)		902.1		1.4
Common equities	706.0		0		0		2,222.4		2,928.4		4.4
Total equity securities	1,683.1		0		0		2,147.4		3,830.5		5.8
Total portfolio1	$	65,914.9	$	312.2	$	(2,346.8)	$	2,118.3	$	65,998.6	100.0	%

1 At March 31, 2024 and 2023, we had $16.2 million and $22.8 million, respectively, of net unsettled security purchase transactions included in other liabilities, compared to $45.6 million included in other assets at December 31, 2023.

The total fair value of the portfolio at March 31, 2024 and 2023, and December 31, 2023, included $3.2 billion, $4.1 billion, and $4.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions.

At March 31, 2024, bonds and certificates of deposit in the principal amount of $672.4 million were on deposit to meet state insurance regulatory requirements. We did not hold any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at March 31, 2024 or 2023, or December 31, 2023. At March 31, 2024, we did not hold any debt securities that were non-income producing during the preceding 12 months.

Short-Term Investments Our short-term investments may include commercial paper and other investments that are expected to mature, or are redeemable, within one year.

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)	2024		2023		Dec. 31, 2023
Fixed Maturities:
Corporate debt securities	$	507.1	$	548.6	$	531.3
Residential mortgage-backed securities	300.0		482.1		323.9
Other asset-backed securities	9.5		33.8		13.9
Redeemable preferred stocks	141.0		132.8		141.2
Total hybrid securities	$	957.6	$	1,197.3	$	1,010.3

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, 2024, was:


(millions)	Cost		Fair Value
Less than one year	$	7,227.5	$	7,084.8
One to five years	45,277.4		43,850.9
Five to ten years	13,394.2		12,645.2
Ten years or greater	50.2		48.8
Total	$	65,949.3	$	63,629.7

Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities that do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.

Gross Unrealized Losses The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months							12 Months or Greater
($ in millions)	No. of Sec.	Fair Value		Unrealized Losses					No. of Sec.		Fair Value	Unrealized Losses
March 31, 2024
U.S. government obligations	139	$	32,968.1	$	(1,327.3)	37	$	21,634.6	$	(295.1)			102	$	11,333.5	$	(1,032.2)
State and local government obligations	330	1,922.7		(142.4)		41	250.7		(1.8)				289	1,672.0		(140.6)
Foreign government obligations	1	15.9		(1.0)		0	0		0				1	15.9		(1.0)
Corporate debt securities	363	8,094.3		(328.1)		106	2,369.6		(20.6)				257	5,724.7		(307.5)
Residential mortgage-backed securities	35	78.0		(9.2)		1	0		0				34	78.0		(9.2)
Commercial mortgage-backed securities	181	3,741.7		(519.3)		4	190.5		(1.8)				177	3,551.2		(517.5)
Other asset-backed securities	193	3,259.5		(93.9)		59	1,303.5		(2.3)				134	1,956.0		(91.6)
Redeemable preferred stocks	3	32.9		(2.0)		0	0		0				3	32.9		(2.0)
Total fixed maturities	1,245	$	50,113.1	$	(2,423.2)	248	$	25,748.9	$	(321.6)			997	$	24,364.2	$	(2,101.6)


	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		Unrealized Losses			No. of Sec.		Fair Value		Unrealized Losses
March 31, 2023
U.S. government obligations	148	$	19,446.8	$	(1,209.6)	40	$	5,938.5	$	(127.5)		108	$	13,508.3	$	(1,082.1)
State and local government obligations	343	1,943.6		(161.7)		72	350.7		(7.4)			271	1,592.9		(154.3)
Foreign government obligations	1	15.8		(1.1)		0	0		0			1	15.8		(1.1)
Corporate debt securities	390	8,129.9		(525.4)		93	2,239.3		(75.5)			297	5,890.6		(449.9)
Residential mortgage-backed securities	43	141.7		(16.3)		13	10.0		(0.4)			30	131.7		(15.9)
Commercial mortgage-backed securities	220	4,484.5		(751.2)		11	53.4		(1.5)			209	4,431.1		(749.7)
Other asset-backed securities	267	4,391.9		(222.5)		61	884.8		(6.2)			206	3,507.1		(216.3)
Redeemable preferred stocks	4	48.8		(5.2)		1	10.6		(1.4)			3	38.2		(3.8)
Total fixed maturities	1,416	$	38,603.0	$	(2,893.0)	291	$	9,487.3	$	(219.9)		1,125	$	29,115.7	$	(2,673.1)


	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		Unrealized Losses			No. of Sec.		Fair Value		Unrealized Losses
December 31, 2023
U.S. government obligations	147	$	28,225.0	$	(1,157.9)	25	$	11,890.0	$	(100.0)		122	$	16,335.0	$	(1,057.9)
State and local government obligations	324	1,846.2		(138.4)		31	169.9		(0.9)			293	1,676.3		(137.5)
Foreign government obligations	1	16.3		(1.0)		0	0		0			1	16.3		(1.0)
Corporate debt securities	313	6,642.4		(332.3)		26	617.2		(14.7)			287	6,025.2		(317.6)
Residential mortgage-backed securities	39	88.4		(10.0)		2	0.4		0			37	88.0		(10.0)
Commercial mortgage-backed securities	189	3,912.2		(597.7)		1	30.7		(2.5)			188	3,881.5		(595.2)
Other asset-backed securities	207	3,299.1		(107.1)		41	639.4		(1.2)			166	2,659.7		(105.9)
Redeemable preferred stocks	3	32.5		(2.4)		0	0		0			3	32.5		(2.4)
Total fixed maturities	1,223	$	44,062.1	$	(2,346.8)	126	$	13,347.6	$	(119.3)		1,097	$	30,714.5	$	(2,227.5)

A review of the securities in an unrealized loss position indicated that the issuers were current with respect to their interest obligations and that there was no evidence of deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.

We had seven securities that had their credit ratings downgraded during the first quarter 2024, with a combined fair value of $58.2 million and an unrealized loss of $8.2 million as of March 31, 2024.

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 not record any allowances for credit losses or any write-offs for amounts deemed to be uncollectible during the first three months of 2024 or 2023, and did not have a material credit loss allowance balance as of March 31, 2024 and 2023, or December 31, 2023. We considered several factors and inputs related to the individual securities as part of our analysis. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included:

current performance indicators on the business model or underlying assets (e.g., delinquency rates, foreclosure rates, and default rates);
credit support (via current levels of subordination);
historical credit ratings; and
updated cash flow expectations based upon these performance indicators.

In order to determine the amount of credit loss, if any, we initially reviewed securities in a loss position to determine whether it was likely that we would be required, or intended, to sell any of the securities prior to the recovery of their respective cost bases (which could be maturity). If we were likely to, or intended to, sell prior to a potential recovery, we would write off the unrealized loss. For those securities that we determined we were not likely to, or did not intend to, sell prior to a potential recovery, we performed additional analysis to determine if the loss was

credit related. For securities subject to credit related loss, we calculated the net present value (NPV) of the cash flows expected (i.e., expected recovery value) using the current book yield for each security. The NPV was then compared to the security’s current amortized value to determine if a credit loss existed. In the event that the NPV was below the amortized value, and the amount was determined to be material on any specific security, or in the aggregate, a credit loss would be deemed to exist, and either an allowance for credit losses would be created, or if an allowance currently existed, either a recovery of the previous allowance, or an incremental loss, would be recorded to net realized gains (losses) on securities.

As of March 31, 2024 and 2023, and December 31, 2023, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate. We continue to expect all the securities in our fixed-maturity portfolio to pay their principal and interest obligations.

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at March 31, 2024 and 2023, and December 31, 2023, 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 not write off any accrued income as uncollectible at March 31, 2024 and 2023, or December 31, 2023.

Realized Gains (Losses) The components of net realized gains (losses) for the three months ended March 31, were:


	Three Months
(millions)		2024		2023
Gross realized gains on security sales
Available-for-sale securities:
U.S. government obligations		$	0	$	3.8
State and local government obligations		0.3		0
Corporate debt securities		2.9		0.1





Total available-for-sale securities		3.2		3.9
Equity securities:
Nonredeemable preferred stocks		0		0.1
Common equities		11.2		132.0
Total equity securities		11.2		132.1

Subtotal gross realized gains on security sales		14.4		136.0
Gross realized losses on security sales
Available-for-sale securities:
U.S. government obligations		(135.3)		(11.5)
State and local government obligations		(0.1)		0
Corporate debt securities		(14.8)		(20.4)

Commercial mortgage-backed securities		(4.3)		(34.5)
Other asset-backed securities		(0.1)		(0.2)
Redeemable preferred stocks		(0.3)		0
Short-term investments		0		(0.1)
Total available-for-sale securities		(154.9)		(66.7)
Equity securities:
Nonredeemable preferred stocks		(5.9)		(101.0)
Common equities		(0.1)		(11.8)
Total equity securities		(6.0)		(112.8)
Subtotal gross realized losses on security sales		(160.9)		(179.5)
Net realized gains (losses) on security sales
Available-for-sale securities:
U.S. government obligations		(135.3)		(7.7)
State and local government obligations		0.2		0
Corporate debt securities		(11.9)		(20.3)

Commercial mortgage-backed securities		(4.3)		(34.5)
Other asset-backed securities		(0.1)		(0.2)
Redeemable preferred stocks		(0.3)		0
Short-term investments		0		(0.1)
Total available-for-sale securities		(151.7)		(62.8)
Equity securities:
Nonredeemable preferred stocks		(5.9)		(100.9)
Common equities		11.1		120.2
Total equity securities		5.2		19.3

Subtotal net realized gains (losses) on security sales		(146.5)		(43.5)
Other assets
Gain		0		13.2
Impairment		0		(2.3)
Subtotal net realized gains (losses) on other assets		0		10.9
Net holding period gains (losses)
Hybrid securities		7.2		13.9
Equity securities		294.9		90.5

Subtotal net holding period gains (losses)		302.1		104.4






Total net realized gains (losses) on securities		$	155.6	$	71.8

Realized gains (losses) on securities sold are computed using the first-in-first-out method. During the first three months of 2024, the majority of our gross realized losses on security sales were U.S. Treasury Notes that were sold for duration management. We also sold corporate debt securities with less attractive risk/reward profiles and select commercial mortgage-backed securities. During the first quarter 2023, the gross gains in common equities reflected sales of securities, as part of our plan to incrementally reduce risk in the portfolio in response to our view of the potential of a more difficult economic environment. The gross loss incurred in our nonredeemable preferred stocks,

during the first quarter 2023, was primarily related to the sale of certain holdings in U.S. bank preferred stocks. In addition, during the first quarter last year, we selectively sold securities, which were primarily corporate debt securities and commercial mortgage-backed securities.

The other asset gain for the first three months of 2023, related to proceeds received as the result of litigation in conjunction with three renewable energy investments we made from 2016 through 2018 (the original investments were previously written down in full).

The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective periods ended March 31:


	Three Months
(millions)		2024		2023
Total net gains (losses) recognized during the period on equity securities		$	300.1	$	109.8
Less: Net gains (losses) recognized on equity securities sold during the period		5.2		19.3
Net holding period gains (losses) recognized during the period on equity securities held at period end		$	294.9	$	90.5

Net Investment Income The components of net investment income for the three months ended March 31, were:


	Three Months
(millions)		2024		2023
Available-for-sale securities:
Fixed maturities:
U.S. government obligations		$	306.9	$	163.2
State and local government obligations		12.4		10.6
Foreign government obligations		0.1		0.1
Corporate debt securities		121.5		83.6
Residential mortgage-backed securities		5.4		9.2
Commercial mortgage-backed securities		46.4		50.0
Other asset-backed securities		78.2		48.5
Redeemable preferred stocks		2.9		2.9
Total fixed maturities		573.8		368.1
Short-term investments		18.9		24.7
Total available-for-sale securities		592.7		392.8
Equity securities:
Nonredeemable preferred stocks		11.0		15.1
Common equities		13.9		11.7
Total equity securities		24.9		26.8
Investment income		617.6		419.6
Investment expenses		(5.7)		(5.5)
Net investment income		$	611.9	$	414.1

On a year-over-year basis, investment income (interest and dividends) increased 47% and recurring investment book yield increased 23% for the three months ended March 31, 2024, compared to the same period last year. The increases primarily reflected investing new cash from operations and proceeds from maturing bonds in higher coupon rate securities.

3. FAIR VALUE

We have categorized our financial instruments, based on the degree of subjectivity inherent in the method by which they are valued, into a fair value hierarchy of three levels, as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. government obligations, which are continually priced on a daily basis, active exchange-traded equity securities, and certain short-term securities).
Level 2: Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g., certain corporate and municipal bonds and certain preferred stocks). This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are

observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Inputs that are unobservable. Unobservable inputs reflect our subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain structured securities and privately held investments).

Determining the fair value of the investment portfolio is the responsibility of management. As part of that responsibility, we evaluate whether a market is distressed or inactive in determining the fair value for our portfolio. We review certain market level inputs to evaluate whether sufficient activity, volume, and new issuances exist to create an active market. Based on this evaluation, we concluded that there was sufficient activity related to the sectors and securities for which we obtained valuations.

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, 2024
Fixed maturities:
U.S. government obligations	$	38,562.7	$	0	$	0	$	38,562.7	$	39,823.8
State and local government obligations	0		2,059.8		0		2,059.8		2,200.7
Foreign government obligations	0		15.9		0		15.9		16.9
Corporate debt securities	0		12,518.3		3.0		12,521.3		12,821.9
Subtotal	38,562.7		14,594.0		3.0		53,159.7		54,863.3
Asset-backed securities:
Residential mortgage-backed	0		383.1		0		383.1		390.1
Commercial mortgage-backed	0		3,851.8		0		3,851.8		4,368.6
Other asset-backed	0		6,061.2		0		6,061.2		6,146.1
Subtotal asset-backed securities	0		10,296.1		0		10,296.1		10,904.8
Redeemable preferred stocks:
Financials	0		23.2		0		23.2		24.5
Utilities	0		9.6		0		9.6		10.4
Industrials	0		141.1		0		141.1		146.3
Subtotal redeemable preferred stocks	0		173.9		0		173.9		181.2
Total fixed maturities	38,562.7		25,064.0		3.0		63,629.7		65,949.3
Short-term investments	1,326.7		0		0		1,326.7		1,326.7
Total available-for-sale securities	39,889.4		25,064.0		3.0		64,956.4		67,276.0
Equity securities:
Nonredeemable preferred stocks:
Financials	0		785.3		49.2		834.5		876.1
Utilities	0		37.4		0		37.4		40.0
Industrials	0		0		14.8		14.8		15.0
Subtotal nonredeemable preferred stocks	0		822.7		64.0		886.7		931.1
Common equities:
Common stocks	3,148.1		0		22.5		3,170.6		683.9
Other risk investments	0		0		24.3		24.3		24.3
Subtotal common equities	3,148.1		0		46.8		3,194.9		708.2
Total equity securities	3,148.1		822.7		110.8		4,081.6		1,639.3
Total portfolio	$	43,037.5	$	25,886.7	$	113.8	$	69,038.0	$	68,915.3
Debt	$	0	$	6,297.8	$	0	$	6,297.8	$	6,889.7


	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
March 31, 2023
Fixed maturities:
U.S. government obligations	$	27,350.1	$	0	$	0	$	27,350.1	$	28,490.9
State and local government obligations	0		2,061.6		0		2,061.6		2,222.4
Foreign government obligations	0		15.8		0		15.8		16.9
Corporate debt securities	0		10,681.3		0		10,681.3		11,195.8
Subtotal	27,350.1		12,758.7		0		40,108.8		41,926.0
Asset-backed securities:
Residential mortgage-backed	0		630.0		0		630.0		655.0
Commercial mortgage-backed	0		4,503.0		0		4,503.0		5,252.6
Other asset-backed	0		4,865.8		0		4,865.8		5,087.8
Subtotal asset-backed securities	0		9,998.8		0		9,998.8		10,995.4
Redeemable preferred stocks:
Financials	0		40.0		0		40.0		43.5
Utilities	0		8.8		0		8.8		10.5
Industrials	9.6		123.2		0		132.8		148.5
Subtotal redeemable preferred stocks	9.6		172.0		0		181.6		202.5
Total fixed maturities	27,359.7		22,929.5		0		50,289.2		53,123.9
Short-term investments	2,524.1		0		0		2,524.1		2,524.1
Total available-for-sale securities	29,883.8		22,929.5		0		52,813.3		55,648.0
Equity securities:
Nonredeemable preferred stocks:
Financials	40.0		884.5		67.4		991.9		1,102.7
Utilities	0		70.5		0		70.5		80.0
Industrials	0		0		16.4		16.4		15.0
Subtotal nonredeemable preferred stocks	40.0		955.0		83.8		1,078.8		1,197.7
Common equities:
Common stocks	2,755.7		0		18.3		2,774.0		720.2
Other risk investments	0		0		20.3		20.3		20.3
Subtotal common equities	2,755.7		0		38.6		2,794.3		740.5
Total equity securities	2,795.7		955.0		122.4		3,873.1		1,938.2
Total portfolio	$	32,679.5	$	23,884.5	$	122.4	$	56,686.4	$	57,586.2
Debt	$	0	$	5,881.0	$	0	$	5,881.0	$	6,389.3


	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2023
Fixed maturities:
U.S. government obligations	$	36,869.4	$	0	$	0	$	36,869.4	$	37,823.2
State and local government obligations	0		2,202.8		0		2,202.8		2,338.4
Foreign government obligations	0		16.3		0		16.3		17.3
Corporate debt securities	0		11,180.7		3.0		11,183.7		11,446.0
Subtotal	36,869.4		13,399.8		3.0		50,272.2		51,624.9
Asset-backed securities:
Residential mortgage-backed	0		417.2		0		417.2		426.9
Commercial mortgage-backed	0		3,939.7		0		3,939.7		4,535.2
Other asset-backed	0		5,575.4		0		5,575.4		5,667.2
Subtotal asset-backed securities	0		9,932.3		0		9,932.3		10,629.3
Redeemable preferred stocks:
Financials	0		23.1		0		23.1		24.5
Utilities	0		9.4		0		9.4		10.4
Industrials	0		141.2		0		141.2		152.8
Subtotal redeemable preferred stocks	0		173.7		0		173.7		187.7
Total fixed maturities	36,869.4		23,505.8		3.0		60,378.2		62,441.9
Short-term investments	1,757.0		32.9		0		1,789.9		1,789.9
Total available-for-sale securities	38,626.4		23,538.7		3.0		62,168.1		64,231.8
Equity securities:
Nonredeemable preferred stocks:
Financials	0		802.7		49.2		851.9		922.1
Utilities	0		35.4		0		35.4		40.0
Industrials	0		0		14.8		14.8		15.0
Subtotal nonredeemable preferred stocks	0		838.1		64.0		902.1		977.1
Common equities:
Common stocks	2,885.3		0		22.5		2,907.8		685.4
Other risk investments	0		0		20.6		20.6		20.6
Subtotal common equities	2,885.3		0		43.1		2,928.4		706.0
Total equity securities	2,885.3		838.1		107.1		3,830.5		1,683.1
Total portfolio	$	41,511.7	$	24,376.8	$	110.1	$	65,998.6	$	65,914.9
Debt	$	0	$	6,431.3	$	0	$	6,431.3	$	6,888.6

Our portfolio valuations, excluding short-term investments, classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices.

Our short-term investments classified as Level 1 are highly liquid, actively marketed, and have a very short duration, primarily 90 days or less to redemption. These securities are held at their original cost, adjusted for any accretion of discount, since that value very closely approximates what an active market participant would be willing to pay for such securities. The remainder of our short-term investments are classified as Level 2 and are not priced externally since these securities continually trade at par value. These securities are classified as Level 2 since they are primarily longer-dated securities issued by municipalities that contain either liquidity facilities or mandatory put features within one year.

At March 31, 2024, vendor-quoted prices represented 92% of our Level 1 classifications (excluding short-term investments), compared to 91% at March 31, 2023 and 93% at December 31, 2023. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges. All Level 1 preferred stocks with active exchange quotes were sold during 2023.

At both March 31, 2024 and December 31, 2023, vendor-quoted prices comprised 100% of our Level 2 classifications (excluding short-term investments), compared to 98% at March 31, 2023; the remaining 2% at March 31, 2023 were dealer-quoted prices. In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing

techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.

As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute 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 our structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, subordinated, etc.) and use duration, credit quality, and coupon to determine if the fair value is appropriate.

For corporate debt and preferred stock (redeemable and nonredeemable) portfolios, as well as the notes issued by The Progressive Corporation (see Note 4 – Debt), we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification. The review also includes recent trades, including: volume traded at various levels that establish a market; issuer specific fundamentals; and industry-specific economic news as it comes to light.

For municipal securities (e.g., general obligations, revenue, and housing), we stratify the portfolio to evaluate securities by type, duration, credit quality, and coupon to review price changes relative to credit spread and interest rate changes. Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.

For short-term securities, we look at acquisition price relative to the coupon or yield. Since our short-term securities are typically 90 days or less to maturity, with the majority listed in Level 2 being 30 days or less to redemption, we believe that acquisition price is the best estimate of fair value.

We also review data assumptions as supplied by our sources to determine if that data is relevant to current market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.

During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our internally generated portfolio results with those generated based on quotes we receive externally and research material valuation differences. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review on a monthly basis our external sales transactions and compare the actual final market sales prices to previous market valuation prices. This review provides us further validation that our pricing sources are providing market level prices, since we are able to explain significant price changes (i.e., greater than 2%) as known events occur in the marketplace and affect a particular security’s price at sale.

This analysis provides us with additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients. We believe this effort helps ensure that we are

reporting the most representative fair values for our securities.

After all the valuations are received and our review of Level 2 securities is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected securities to Level 3.

Except as described below, our Level 3 securities are priced externally; however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature.

To the extent we receive prices from external sources (e.g., broker, valuation firm) for the Level 3 securities, we review those prices for reasonableness using internally developed assumptions and then compare our derived prices to the prices received from the external sources. Based on our review, all prices received from external sources remained unadjusted.

If we do not receive prices from an external source, we perform an internal fair value comparison, which includes a review and analysis of market-comparable securities, to determine if fair value changes are needed. Based on this analysis, certain private equity investments included in the 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 will continue to 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.

At both March 31, 2024 and December 31, 2023, we held one privately held fixed-maturity security that is classified as a Level 3 investment. At March 31, 2023, we did not have any securities in our fixed-maturity portfolio listed as Level 3.

During the first three months of 2024 and for the full year of 2023, 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, 2024 and 2023:

































	Level 3 Fair Value
(millions)	Fair Value at December 31, 2023		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at March 31, 2024
Fixed maturities:
Corporate debt securities	$	3.0	$	0	$	0	$	0	$	0	$	0	$	0	$	3.0
Equity securities:
Nonredeemable preferred stocks:
Financials	49.2		0		0		0		0		0		0		49.2
Industrials	14.8		0		0		0		0		0		0		14.8
Common equities:
Common stocks	22.5		0		0		0		0		0		0		22.5
Other risk investments	20.6		3.7		0		0		0		0		0		24.3
Total Level 3 securities	$	110.1	$	3.7	$	0	$	0	$	0	$	0	$	0	$	113.8



	Level 3 Fair Value
(millions)	Fair Value at December 31, 2022		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at March 31, 2023
Equity securities:
Nonredeemable preferred stocks:
Financials	$	67.4	$	0	$	0	$	0	$	0	$	0	$	0	$	67.4
Industrials	16.4		0		0		0		0		0		0		16.4
Common equities:
Common stocks	18.3		0		0		0		0		0		0		18.3
Other risk investments	19.8		0.5		0		0		0		0		0		20.3
Total Level 3 securities	$	121.9	$	0.5	$	0	$	0	$	0	$	0	$	0	$	122.4

The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at March 31, 2024 and 2023, and December 31, 2023:


	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at March 31, 2024		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Fixed maturities:
Corporate debt securities	$	3.0	Market comparables	Weighted average market capitalization price change %	(2.3)% to 1.2%	(0.1)	%
Equity securities:
Nonredeemable preferred stocks	64.0		Market comparables	Weighted average market capitalization price change %	3.4% to 28.4%	22.6	%








Common stocks	22.5		Market comparables	Weighted average market capitalization price change %	(37.9)% to 39.6%	3.4	%
Subtotal Level 3 securities	89.5
Pricing exemption securities	24.3
Total Level 3 securities	$	113.8


	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at March 31, 2023		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Equity securities:
Nonredeemable preferred stocks	$	83.8	Market comparables	Weighted average market capitalization price change %	2.7% to 23.3%	9.2	%




Common stocks	18.3		Market comparables	Weighted average market capitalization price change %	(51.3)% to 48.3%	15.6	%
Subtotal Level 3 securities	102.1
Pricing exemption securities	20.3
Total Level 3 securities	$	122.4


	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at December 31, 2023		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Fixed maturities:
Corporate debt securities	$	3.0	Market comparables	Weighted average market capitalization price change %	0.3% to 7.7%	2.6	%
Equity securities:
Nonredeemable preferred stocks	64.0		Market comparables	Weighted average market capitalization price change %	17.2% to 39.7%	21.7%


Common stocks	22.5		Market comparables	Weighted average market capitalization price change %	(45.8)% to 95.6%	39.7%
Subtotal Level 3 securities	89.5
Pricing exemption securities	20.6
Total Level 3 securities	$	110.1

4. DEBT

Debt at each of the balance sheet periods consisted of:


	March 31, 2024				March 31, 2023			December 31, 2023
(millions)	Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
2.45% Senior Notes due 2027 (issued: $500.0, August 2016)	$	498.7	$	468.6		$	498.3	$	464.2	$	498.6	$	468.9
2.50% Senior Notes due 2027 (issued: $500.0, March 2022)	498.2		468.5			497.7		463.8		498.1		469.1
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)	297.9		323.5			297.6		329.6		297.8		328.7
4.00% Senior Notes due 2029 (issued: $550.0, October 2018)	547.1		532.5			546.5		538.5		546.9		542.6
3.20% Senior Notes due 2030 (issued: $500.0, March 2020)	497.4		456.1			497.0		460.0		497.3		462.2
3.00% Senior Notes due 2032 (issued: $500.0, March 2022)	496.4		435.7			496.0		446.9		496.3		446.0
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)	396.8		434.2			396.5		448.1		396.7		445.6
4.95% Senior Notes due 2033 (issued: $500.0, May 2023)	496.5		499.2			0		0		496.4		513.0
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)	347.0		312.8			346.9		312.3		347.0		314.2
3.70% Senior Notes due 2045 (issued: $400.0, January 2015)	395.9		327.9			395.8		324.0		395.9		325.1
4.125% Senior Notes due 2047 (issued: $850.0, April 2017)	842.3		719.2			842.1		743.8		842.3		756.2
4.20% Senior Notes due 2048 (issued: $600.0, March 2018)	590.7		519.8			590.4		530.0		590.6		534.1
3.95% Senior Notes due 2050 (issued: $500.0, March 2020)	491.2		409.8			491.0		420.3		491.1		422.3
3.70% Senior Notes due 2052 (issued: $500.0, March 2022)	493.6		390.0			493.5		399.5		493.6		403.3
Total	$	6,889.7	$	6,297.8		$	6,389.3	$	5,881.0	$	6,888.6	$	6,431.3

There was no short-term debt outstanding as of the end of all the periods presented.

The Progressive Corporation has a line of credit with PNC Bank, National Association, in the maximum principal amount of $300 million. See the 2023 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, 2024, was 20.7%, compared to 19.2% for the same period last year, with the change primarily due to our permanent tax differences having a lower impact on our effective rate due to increased profitability in the current year.

Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. We review our deferred tax assets regularly for recoverability. At March 31, 2024 and 2023, and December 31, 2023, we determined that we did not need a valuation allowance on our gross deferred tax assets. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not 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. At March 31, 2024 and 2023, and December 31, 2023, the net deferred tax asset includes a

gross deferred tax asset of $482.5 million, $582.6 million, and $427.3 million, respectively, related to unrealized losses on fixed-maturity securities. We believe this deferred tax asset will be realized based on the existence of current temporary differences related to unrealized gains in our equity portfolio, prior year capital gains, and other tax planning strategies.

We had net current income taxes payable of $961.8 million, $203.3 million, and $311.8 million at March 31, 2024 and 2023, and December 31, 2023, respectively, included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets. The increase in income taxes payable was primarily driven by the increase in profitability during the first quarter 2024.

At March 31, 2024 and 2023, and December 31, 2023, we had no reserves for uncertain tax positions.

6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:


	March 31,
(millions)	2024		2023
Balance at January 1	$	34,389.2	$	30,359.3
Less reinsurance recoverables on unpaid losses	4,789.0		5,559.2
Net balance at January 1	29,600.2		24,800.1
Incurred related to:
Current year	10,983.0		10,002.8
Prior years	(11.4)		621.2
Total incurred	10,971.6		10,624.0
Paid related to:
Current year	4,421.7		3,962.6
Prior years	5,971.0		5,736.2
Total paid	10,392.7		9,698.8
Net balance at March 31	30,179.1		25,725.3
Plus reinsurance recoverables on unpaid losses	4,651.9		5,301.1
Balance at March 31	$	34,831.0	$	31,026.4

We experienced favorable reserve development of $11.4 million during the first three months of 2024, compared to unfavorable development of $621.2 million for the same period last year, which is reflected as “incurred related to prior years” in the table above.

First Quarter 2024

The favorable prior year reserve development included approximately $50 million of favorable development attributable to accident year 2023 and $15 million to accident year 2022; partially offset by unfavorable development attributable to accident years 2021 and prior.
Our personal auto products incurred about $100 million of favorable loss and loss adjustment expense (LAE) reserve development, in part due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023, with about 60% attributable to the Agency auto business and the balance in the Direct auto business.
Our Commercial Lines business experienced about $70 million of unfavorable development, primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

First Quarter 2023

The unfavorable prior year reserve development included approximately $498 million attributable to accident year 2022, $30 million to accident year 2021, and the remainder to accident years 2020 and prior.
Our personal auto products incurred about $428 million of unfavorable loss and LAE reserve development, with the Agency and Direct auto businesses each contributing about half. The unfavorable development was primarily attributable to higher than anticipated severity in auto property and physical damage coverages, higher than anticipated late reported injury claims, and, to a lessor extent, increased loss costs in Florida injury and medical coverages in small part due to the impact of the legislation enacted in March 2023 in Florida.
Our Commercial Lines business experienced about $144 million of unfavorable development, primarily due to higher than anticipated severity of injury case reserves and higher than anticipated severity and frequency of late reported injury claims.
Our Property business experienced $42 million of unfavorable development, primarily from higher than anticipated claims expenses and higher than anticipated severity in our homeowner liability peril and umbrella products.

7. SUPPLEMENTAL CASH FLOW INFORMATION

Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries. The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at March 31, 2024 and 2023, and December 31, 2023, were $107.7 million, $177.5 million, and $68.2 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)	2024		2023
Common share dividends1	$	58.6	$	58.5
Operating lease liabilities2	28.0		9.3

1 Declared but unpaid. See Note 9 – Dividends for further discussion.

2 From obtaining right-of-use assets.

In the respective periods, we paid the following:


	Three Months Ended March 31,
(millions)	2024		2023
Income taxes	$	0	$	0.1
Interest	87.9		87.9
Operating lease liabilities	21.6		21.5

8. SEGMENT INFORMATION

Our Personal Lines segment writes insurance for personal autos and recreational vehicles (our special lines products). Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry. Our Property segment writes residential property insurance for homeowners, other property owners, and renters, and

umbrella insurance. Our service businesses provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses. All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.

Following are the operating results for the respective periods:


	Three Months Ended March 31,
		2024			2023
(millions)			Revenues			Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)
Personal Lines
Agency			$	5,857.7		$	950.7	$	4,860.2	$	162.6
Direct			7,020.5			1,043.6		5,717.4		(22.1)
Total Personal Lines1			12,878.2			1,994.3		10,577.6		140.5
Commercial Lines			2,557.4			209.0		2,356.1		37.2
Property			712.8			46.9		598.7		(32.7)
Other indemnity2			0.2			(0.3)		0.7		(3.4)
Total underwriting operations			16,148.6			2,249.9		13,533.1		141.6
Fees and other revenues3			236.5			NA		206.2		NA
Service businesses			84.2			(7.9)		72.5		(9.8)
Investments4			773.2			767.5		491.4		485.9
Interest expense			NA			(69.6)		NA		(63.3)
Consolidated total			$	17,242.5		$	2,939.9	$	14,303.2	$	554.4

NA = Not applicable

1 Personal auto insurance accounted for 95% and 94% of the total Personal Lines segment net premiums earned during the three months ended March 31, 2024 and 2023, respectively; insurance for our special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

2 Includes other underwriting business and run-off operations.

3 Pretax profit (loss) for fees and other revenues is allocated to operating segments based on revenue.

4 Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit (loss) is net of 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 (i.e., revenues from underwriting operations). Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Combined ratio is the complement of the underwriting margin. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:


	Three Months Ended March 31,
		2024			2023
			Under-writing Margin			Combined Ratio	Under-writing Margin		Combined Ratio
Personal Lines
Agency			16.2	%		83.8	3.3	%	96.7
Direct			14.9			85.1	(0.4)		100.4
Total Personal Lines			15.5			84.5	1.3		98.7
Commercial Lines			8.2			91.8	1.6		98.4
Property			6.6			93.4	(5.5)		105.5
Total underwriting operations			13.9			86.1	1.0		99.0

9. DIVIDENDS

Following is a summary of our common and preferred share dividends that were declared and/or paid during the three months ended March 31, 2024 and 2023:


(millions, except per share amounts)		Amount
Declared	Payable	Per Share		Accrued/Paid1
Common – Annual-Variable Dividends:
December 2023	January 2024	$	0.75	$	439.3

Common – Quarterly Dividends:
March 2024	April 2024	0.10		58.6
December 2023	January 2024	0.10		58.6
March 2023	April 2023	0.10		58.5
December 2022	January 2023	0.10		58.5

Preferred Dividends:
January 20242	February 2024	15.688377		7.8
December 2022	March 2023	26.875		13.4

1 The accrual is based on an estimate of shares outstanding as of the record date and recorded as a component of accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets until paid.

2 During the first quarter 2024, we redeemed all of the outstanding Serial Preferred Shares, Series B, at the stated amount of $1,000 per share, for an aggregate payout of $507.8 million, including accrued and unpaid dividends of $7.8 million to, but excluding, February 22, 2024, which was the redemption date.

See Note 14 – Dividends in our 2023 Annual Report to Shareholders for a discussion of the dividend policies related to our common shares and our preferred shares, prior to redemption.

10. OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss), including reclassification adjustments by income statement line item, were as follows:


							Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at December 31, 2023	$	(2,052.9)	$	437.2	$	(1,615.7)	$	(1,600.8)	$	(14.0)	$	(0.9)
Other comprehensive income (loss) before reclassifications:
Investment securities	(413.6)		86.9		(326.7)		(326.7)		0		0


Foreign currency translation adjustment	(0.3)		0.1		(0.2)		0		0		(0.2)

Total other comprehensive income (loss) before reclassifications	(413.9)		87.0		(326.9)		(326.7)		0		(0.2)
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	(150.5)		31.6		(118.9)		(118.9)		0		0
Interest expense	(0.1)		0		(0.1)		0		(0.1)		0
Total reclassification adjustment for amounts realized in net income	(150.6)		31.6		(119.0)		(118.9)		(0.1)		0
Total other comprehensive income (loss)	(263.3)		55.4		(207.9)		(207.8)		0.1		(0.2)
Balance at March 31, 2024	$	(2,316.2)	$	492.6	$	(1,823.6)	$	(1,808.6)	$	(13.9)	$	(1.1)




























							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, 2022	$	(3,556.9)	$	754.9	$	(2,802.0)	$	(2,786.3)	$	(14.5)	$	(1.2)
Other comprehensive income (loss) before reclassifications:
Investment securities	705.6		(148.2)		557.4		557.4		0		0




Total other comprehensive income (loss) before reclassifications	705.6		(148.2)		557.4		557.4		0		0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	(57.9)		12.1		(45.8)		(45.8)		0		0
Interest expense	(0.1)		0		(0.1)		0		(0.1)		0
Total reclassification adjustment for amounts realized in net income	(58.0)		12.1		(45.9)		(45.8)		(0.1)		0
Total other comprehensive income (loss)	763.6		(160.3)		603.3		603.2		0.1		0
Balance at March 31, 2023	$	(2,793.3)	$	594.6	$	(2,198.7)	$	(2,183.1)	$	(14.4)	$	(1.2)

In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances. We expect to reclassify $0.6 million (pretax) into interest expense during the next 12 months, related to net unrealized losses on these forecasted transactions (see Note 4 – Debt in our 2023 Annual Report to Shareholders for further discussion).

11. LITIGATION

The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.

In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our 2023 Annual Report to Shareholders.

As of March 31, 2024, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging: we improperly value total loss claims in Colorado, Georgia, Indiana, New York, and Pennsylvania; we improperly fail to pay fees and taxes associated with total losses in Michigan and New York; we improperly adjust medical bills in Washington; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; we improperly fail to timely process and pay personal injury protection claims in Texas; we improperly reduce or deny first-party medical benefits in Arkansas; and that certain of our compensation practices and overtime payment practices are improper, including our classification of certain employees as exempt from overtime pay requirements. 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. Although outcomes of pending cases are uncertain until final disposition, we establish accruals for these lawsuits when it is probable that a loss has been or will be incurred and we can reasonably estimate potential loss exposure, which may include a range of loss. As to lawsuits for which the loss is considered neither probable nor estimable, or is considered probable but not estimable, we do not establish an accrual. Nevertheless, we continue to evaluate pending litigation to determine if any losses not deemed probable and estimable become so, at which point we would establish an accrual at either our best estimate of the loss or the lower end of the range of loss.

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, 2024, 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 five 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 known at March 31, 2024, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable.

With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established, if any, were not material at March 31, 2024 and 2023, or December 31, 2023, and there were no material settlements during 2023 or the first three months of 2024. 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 2023 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 12 – Litigation in our 2023 Annual Report to Shareholders.

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