Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

I. OVERVIEW

During the first quarter 2024, The Progressive Corporation’s insurance subsidiaries recognized strong growth in both premiums and policies in force, compared to the same period last year, and generated an underwriting profit significantly better than our 4% companywide calendar-year underwriting profit goal.

Net premiums written and earned increased 18% and 19%, respectively, compared to the same period last year, with all operating segments contributing to the growth. For the quarter, we generated $19.0 billion of net premiums written, which was an increase of $2.9 billion, compared to the first quarter 2023.

On a companywide basis, we ended the quarter with 30.8 million policies in force, which was 7% greater than the same period last year. Policies in force increased 1.1 million since year-end 2023 and 2.0 million from the end of March 2023. Although personal auto new business applications were down from the prior year, reflecting the rate and non-rate actions we took throughout 2023 to manage profitability, policy in force growth benefited from improved retention in both our Personal Lines and Property businesses.

Profitability for the quarter was strong with our companywide combined ratio for the first quarter 2024 of 86.1, which was 12.9 points better than the first quarter last year and 9.9 points better than our calendar-year underwriting profitability goal. Several factors contributed to the significant year-over-year improvement in our underwriting profit. The average earned premiums per policy were higher than the prior year first quarter in all of our operating segments, primarily due to the rate increases we took during 2023 to meet our companywide profitability target. Also, on a year-over-year basis for the first quarter, our incurred personal auto accident frequency decreased 9% and, while severity was up 3%, we are starting to see indications that severity trends are stabilizing. In addition, in the first quarter 2024, we had favorable prior accident years reserve development of 0.1 points, compared to unfavorable development in the first quarter last year of 4.6 points. Lastly, our companywide expense ratio was 2.3 points lower in the first quarter 2024, compared to the same period last year, in large part due to a 7% decrease in advertising spend. We are increasing our media spend to maximize growth and will continue to do so as long as we remain on track to achieve our target profitability and generate sales at a cost below the maximum amount we are willing to spend to acquire a new customer.

On a year-over-year basis, for the first quarter 2024, net income increased $1.9 billion and comprehensive income increased $1.1 billion, compared to the same period last

year. The increase in net income primarily reflected the increase in underwriting profitability. During the quarter, net income also benefited from a 47% increase in recurring investment income, primarily due to investing new cash from operations and proceeds from maturing bonds in higher coupon rate securities.

The quarter-over-prior-year quarter increase in comprehensive income reflected the increase in net income partially offset by the change in net unrealized losses on our fixed-maturity securities during the periods. During the first quarter 2024, net unrealized losses increased, compared to a decrease in net unrealized losses in the first quarter last year, with both periods primarily driven by the then-current interest rate environment, with a moderate decline in interest rates during the first quarter last year.

Total capital (debt plus shareholders’ equity) at March 31, 2024, was $28.7 billion, which was up $1.5 billion from year-end 2023. During the first quarter 2024, we earned $2.1 billion of comprehensive income, which was offset by the $0.5 billion redemption of all of our outstanding Serial Preferred Shares, Series B, during the quarter, as discussed in further detail in Financial Condition below.

A. Insurance Operations

During the first quarter 2024, all of our operating segments were profitable with Personal Lines, Commercial Lines, and Property reporting combined ratios of 84.5, 91.8, and 93.4, respectively. Personal Lines is comprised of both our personal auto and special lines products, with the latter typically having lower losses during the first quarter due to the seasonal nature of these products (e.g., motorcycles, boats, and RVs). The special lines profitability during the first quarter contributed just over a 1 point favorable impact to our total Personal Lines combined ratio. During the quarter, all of our operating segments benefited from higher average earned premiums per policy, lower incurred loss frequency and severity trends, and lower expense ratios, with Personal Lines also benefiting from favorable prior accident year reserve development.

As a result of the rate actions we took during 2023 to help achieve our target profit margin, we currently believe that, in most states, we are adequately priced in our personal auto and core commercial auto (which exclude our transportation network company (TNC) business, business owners’ policy (BOP), and Progressive Fleet & Specialty (previously referred to as Protective Insurance)) products. We will continue to monitor the factors that could impact our loss costs for both our vehicle and Property businesses, which may include new and used car prices, miles driven, driving patterns, loss severity, weather events, building materials, construction costs, inflation, and other components, on a state-by-state basis, and adjust rates as

we deem appropriate. We currently anticipate that aggregate rate changes throughout 2024 will be of lesser magnitude than those taken in each of the prior two years, but we will continue to evaluate our rate need and adjust rates as we deem necessary.

Throughout the first quarter 2024, we continued to lift the non-rate actions implemented last year, on a state-by-state basis, as our focus shifted from achieving our target profit margin to maximizing profitable growth.

For the first quarter 2024, net premiums written grew 18% compared to the first quarter last year, with all segments showing strong growth. Personal Lines net premiums written grew 20%, with the Agency and Direct distribution channels growing 18% and 21%, respectively. Commercial Lines net premiums written grew 11% and Property grew 17%. Changes in net premiums written are a function of new business applications (i.e., policies sold), business mix, premium per policy, and retention.

In the first quarter 2024, we experienced a decrease in Personal Lines new business applications, primarily reflecting the significant volume of new applications written in the prior year first quarter. On a quarter-over-prior-year quarter basis, new personal auto applications decreased 9% for the first quarter 2024, compared to an increase of 83% in the same period in 2023. As certain new business restrictions began to be lifted during the quarter, we saw personal auto new business application growth stabilize towards the end of the quarter.

New applications in our core commercial auto business increased 2% during the first quarter 2024, compared to the same period last year. Excluding the impact of the for-hire transportation business market target (BMT), which had a year-over-year decrease in new applications, our core commercial auto new application growth would have been 9% during the first quarter 2024. The for-hire transportation BMT continues to be adversely impacted by challenging freight market conditions that have caused a decline in the active number of motor carriers in this BMT.

New applications in the Property business were up 31% over the first quarter last year as we continued to focus on growing new business in less volatile weather states and home and auto bundles, as well as lower risk properties, such as new construction or homes with newer roofs, in regions where our appetite to write new business is limited.

During the first quarter 2024, on a year-over-year basis, average written premium per policy grew 14% in personal auto, 10% in core commercial auto, and 2% in Property. The growth in personal auto, commercial auto, and Property primarily reflected rate increases taken throughout 2023, in response to rising loss costs, that continued to be earned through the first quarter 2024. The rate increases taken in commercial auto were, in part, offset by a shift in the mix of business, primarily driven by decreased demand in our for-hire transportation product.

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

We believe a key element in improving the accuracy of our rating is Snapshot®, our usage-based insurance offering. During the first quarter 2024, the adoption rates for consumers enrolling in the program decreased about 20% in Agency auto and was flat in Direct auto, compared to the first quarter 2023. The decrease in the Agency auto adoption rate primarily reflects a shift in the mix of agencies through which we wrote new business during the first quarter 2024, as a result of the rate and non-rate actions implemented after the first quarter of 2023. As we continue to lift certain non-rate restrictions during 2024, we would expect the mix of agencies where we write new business will begin to shift in the direction of the agency mix that was in place prior to the implementation of those restrictions. Snapshot is available in all states, other than California, and our latest segmentation model was available in states that represented about 70% of our countrywide personal auto premium at March 31, 2024. We continue to invest in our mobile application, with mobile devices being chosen for Snapshot monitoring for the majority of new enrollments.

We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention continues to be one of our most important priorities. Our efforts to increase our share of multi-product households remains a key initiative and we will continue to make investments to improve the customer experience in order to support that goal. Policy life expectancy, which is our actuarial estimate of the average length of time that a policy will remain in force before cancellation or lapse in coverage, is our primary measure of customer retention in our Personal Lines, Commercial Lines, and Property businesses.

We evaluate total personal auto retention using a trailing 12-month and a trailing 3-month policy life expectancy. Although the latter can reflect more volatility and is more sensitive to seasonality, this measure is more responsive to current experience and may be an indicator for the future trend of our 12-month measure. As of the end of the first quarter 2024, our trailing 12-month total personal auto policy life expectancy increased 20%, compared to last year. The Agency and Direct channels trailing 12-month measure was up 28% and 13%, respectively. As of the end of the first quarter 2024, we have seen improvement in our trailing 12-month policy life expectancy on a year-over-year basis for each of the last ten months. Rate increases could have an adverse impact on our retention, as potentially indicated by our total personal auto trailing 3-month policy life expectancy no longer showing improvement, compared to the same period last year.

At the end of the first quarter 2024, our trailing 12-month policy life expectancy increased 6% in special lines, 11% in Property, and decreased 15% in Commercial Lines,

compared to the same period last year. The decrease in Commercial Lines policy life expectancy in all BMTs, reflected rate and non-rate actions taken in 2023 to achieve our target profitability, as well as the continued decrease in demand in the for-hire transportation BMT.

B. Investments

The fair value of our investment portfolio was $69.0 billion at March 31, 2024, compared to $66.0 billion at December 31, 2023. The increase from year-end 2023 primarily reflected cash flows from operations, in part offset by the redemption of all of our outstanding Serial Preferred Shares, Series B, and the payment of our annual variable common share dividends.

Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities (the securities allocated to Group I and II are defined below under Results of Operations – Investments). At both March 31, 2024 and December 31, 2023, 7% of our portfolio was allocated to Group I securities and 93% to Group II securities.

Our recurring investment income generated a pretax book yield of 3.7% for the first quarter 2024, compared to 3.0% for the same period in 2023. The increase from prior year primarily reflected investing new cash from operations, and proceeds from maturing bonds, in higher coupon rate securities. Our investment portfolio produced a fully taxable equivalent (FTE) total return of 0.8% and 2.3% for the first quarter 2024 and 2023, respectively. Our fixed-income and common stock portfolios had FTE total returns

of 0.3% and 9.9%, respectively, for the first quarter 2024, compared to 2.0% and 7.3%, respectively, last year. The decrease in the fixed-income portfolio FTE total return, compared to last year, primarily reflected movements in Treasury yields year-over-year. The increase in the common stock portfolio total return reflected general market conditions in first quarter 2024.

At March 31, 2024, the fixed-income portfolio had a weighted average credit quality of AA- and a duration of 3.2 years, compared to AA and 3.0 years at March 31, 2023 and AA- and 3.0 years at December 31, 2023. Our decrease in weighted average credit quality compared to March 31, 2023, was mainly due to a second major credit rating agency downgrading U.S. Treasury debt to AA+ from AAA during the third quarter 2023, which led us to lower our U.S. Treasury positions to AA+. During first quarter 2024, we took advantage of higher interest rates to increase the portfolio duration.

At March 31, 2024, we continued to maintain a relatively conservative investment portfolio with a greater allocation to cash and treasuries and relatively shorter interest rate risk. We believe that this portfolio allocation, coupled with a lack of maturities of our outstanding debt until 2027, positions us well to benefit from a higher interest rate environment. We also believe that we are in a very strong position to face the current dynamic operating and investment marketplaces as we move into the second quarter of 2024.

II. FINANCIAL CONDITION

A. Liquidity and Capital Resources

Progressive’s insurance operations create liquidity by collecting and investing premiums from new and renewal business in advance of paying claims. As primarily an auto insurer, our claims liabilities generally have a short-term duration.

Operations generated positive cash flows of $4.2 billion and $2.4 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in operating cash flow for the first three months of 2024 compared to 2023 is primarily attributable to collecting more premiums in 2024 relative to paying losses. The increase in premiums collected were mostly driven by rate increases and policies in force growth. While loss payments also increased during the first three months of 2024, primarily due to higher loss severity trends, the increase in loss payments was not as substantial as the increase in premiums. We believe cash flows will remain positive in the reasonably foreseeable future and do not expect we will have a need to raise capital to support our operations in that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.

As of March 31, 2024, we held $39.9 billion in short-term investments and U.S. Treasury securities, which represented about 58% of our total portfolio. Based on our portfolio allocation and investment strategies, we believe that we have sufficient readily available marketable securities to cover our claims payments and short-term obligations in the event our cash flows from operations were to be negative. See Item 1A, Risk Factors in our Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2023, for a discussion of certain matters that may affect our portfolio and capital position.

Our total capital (debt plus shareholders’ equity) was $28.7 billion, based on book value, at March 31, 2024, compared to $23.3 billion at March 31, 2023, and $27.2 billion at December 31, 2023. The increase from December primarily reflected the comprehensive income recognized during the first three months of 2024, mainly driven by our underwriting profitability, partially offset by the redemption of all of the outstanding Serial Preferred Shares, Series B. 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 to, but excluding February 22, 2024, which was the redemption date. Our debt-to-total capital ratio was 24.0% at March 31, 2024, 27.5% at March 31, 2023, and 25.4% at December 31, 2023.

While our financial policies include a goal of maintaining debt below 30% of total capital at book value, we recognize that various factors, including rising interest rates, widening credit spreads, declines in the equity markets, or erosion in operating results, may result in that ratio exceeding 30% at times. In such a situation, we may choose to remain above 30% for some time, dependent upon market conditions and the capital needs of our operating businesses. We will continue to monitor this ratio, market conditions, and our capital needs going forward.

None of the covenants on our outstanding debt securities include rating or credit triggers that would require an adjustment of interest rates or an acceleration of principal payments in the event that our debt securities are downgraded by a rating agency. In April 2024, we renewed the unsecured discretionary line of credit (the Line of Credit) with PNC Bank, National Association, in the maximum principal amount of $300 million. We did not engage in short-term borrowings, including any borrowings under our Line of Credit, to fund our operations or for liquidity purposes during the reported periods.

During the first three months of 2024, we returned capital to shareholders primarily through common share dividends and common share repurchases. In March 2024, our Board of Directors declared a $0.10 per common share dividend, or $58.6 million in the aggregate, that was paid in April 2024. In January 2024, we also paid common share dividends declared in the fourth quarter 2023, in the aggregate amount of $497.9 million, or $0.85 per share (see Note 9 – Dividends for further discussion).

Consistent with our financial policies, we repurchase common shares to neutralize dilution from equity-based compensation granted during the year and opportunistically when we believe our shares are trading below our determination of long-term fair value. During the first three months of 2024, we repurchased 0.2 million common shares, at a total cost of $37.1 million, to satisfy tax withholding obligations in connection with the vesting of

equity awards under our equity compensation plans. We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and potential capital needs to expand our business operations.

At March 31, 2024, we had $3.2 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to the insurance subsidiaries to fund potential future growth. As of March 31, 2024, our estimated consolidated statutory surplus was $24.6 billion.

During the first three months of 2024, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2023 Annual Report to Shareholders. There have not been any material changes in off-balance-sheet leverage, which includes purchase obligations and catastrophe excess of loss reinsurance contracts, from those disclosed in our 2023 Annual Report to Shareholders.

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

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

Nevertheless, we may decide to raise additional capital to take advantage of attractive terms in the market and provide additional financial flexibility. We currently have an effective shelf registration with the U.S. Securities and Exchange Commission so that we may periodically offer and sell an indeterminate aggregate amount of senior or subordinated debt securities, preferred stock, depository shares, common stock, purchase contracts, warrants, and units. The shelf registration enables us to raise funds from the offering of any securities covered by the shelf registration as well as any combination thereof, subject to market conditions.

III. RESULTS OF OPERATIONS – UNDERWRITING

A. Segment Overview

We report our underwriting operations in three segments: Personal Lines, Commercial Lines, and Property. As a component of our Personal Lines segment, we report our Agency and Direct business results to provide further understanding of our products by distribution channel.

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


	Three Months Ended March 31,
		2024		2023
Personal Lines
Agency		34	%	34	%
Direct		42		41
Total Personal Lines1		76		75
Commercial Lines		20		21
Property		4		4
Total underwriting operations		100	%	100	%

1 Personal auto products accounted for 96% and 95% of the total Personal Lines segment net premiums written during the three months ended March 31, 2024 and 2023, respectively; our special lines products accounted for the balance.

Our Personal Lines business writes insurance for personal autos and special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles). Within Personal Lines, we often refer to our four consumer segments:

Sam - inconsistently insured;
Diane - consistently insured and maybe a renter;
Wrights - homeowners who do not bundle auto and home; and
Robinsons - homeowners who bundle auto and home.

While our personal auto policies primarily have 6-month terms, we write 12-month auto policies in our Platinum agencies to promote bundled auto and home growth. At March 31, 2024 and 2023, 14% of our Agency auto policies in force were 12-month policies. To the extent our Agency application mix of annual policies grows, the shift in policy term could increase our written premium mix by channel as 12-month policies have about twice the amount

of net premiums written compared to 6-month policies. Our special lines products are written for 12-month terms.

Our Commercial Lines business 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 Commercial Lines business operates in the following five traditional business market targets (BMT):

business auto;
for-hire transportation;
contractor;
for-hire specialty; and
tow.

Within Commercial Lines, we refer to these BMTs as our core commercial auto business. In addition to the core commercial auto business, Commercial Lines writes TNC, Progressive Fleet & Specialty (formerly referred to as Protective Insurance) and BOP products.

At March 31, 2024, about 90% of Commercial Lines policies in force had 12-month terms. The majority of our Commercial Lines business is written through the independent agency channel although we continue to focus on growing our direct business. To serve our direct channel customers, we continue to expand our product offerings, including adding states where we offer our BOP product, as well as adding these product offerings to our digital platform that serves direct small business consumers (BusinessQuote Explorer®). Our core commercial auto business written through the direct channel represented about 11% of our total core commercial auto premiums written for the three months ended March 31, 2024 and 2023.

Our Property business writes residential property insurance for homeowners, other property owners, renters, and umbrella insurance. About three-fourths of our Property business is generated through the independent agency channel with the balance in the direct channel. All of our Property policies have 12-months terms.

B. Profitability

Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses. We also use underwriting margin, which is underwriting profit or loss expressed as a percentage of net premiums earned, to analyze our results. For the respective periods, our underwriting profitability results were as follows:


	Three Months Ended March 31,
		2024	2023
		Underwriting Profit (Loss)	Underwriting Profit (Loss)
($ in millions)			$		Margin		$		Margin
Personal Lines
Agency			$	950.7	16.2	%	$	162.6	3.3	%
Direct			1,043.6		14.9		(22.1)		(0.4)
Total Personal Lines			1,994.3		15.5		140.5		1.3
Commercial Lines			209.0		8.2		37.2		1.6
Property			46.9		6.6		(32.7)		(5.5)
Other indemnity1			(0.3)		NM		(3.4)		NM
Total underwriting operations			$	2,249.9	13.9	%	$	141.6	1.0	%

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

Several factors contributed to the significant increase in underwriting profit for the first quarter 2024, compared to the first quarter 2023. As a result of the rate increases we took throughout 2023, our personal and core commercial auto average written premium per policy were up 14% and 10%, respectively, and Property was up 2% year over year. Also, on a year-over-year basis for the first quarter, our incurred personal auto accident frequency decreased 9% and, while severity was up 3%, we are starting to see indications that severity trends are stabilizing. During the first quarter 2024, we recognized favorable prior accident years development, compared to significant unfavorable development in the first quarter last year, which accounted for 4.7 points on a quarter-over-prior-year quarter basis.

Lastly, our companywide expense ratio was 2.3 points lower in the first quarter 2024, compared to the same period last year, in large part due to a 7% decrease in advertising spend. We are increasing our media spend to maximize growth and will continue to do so as long as we remain on track to achieve our target profitability.

See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our frequency and severity trends, reserve development, and catastrophe losses incurred during the periods.

Further underwriting results for our Personal Lines business, including results by distribution channel, the Commercial Lines business, the Property business, and our underwriting operations in total, were as follows:


	Three Months Ended March 31,
Underwriting Performance1		2024	2023	Change
Personal Lines – Agency
Loss & loss adjustment expense ratio		65.9	78.0	(12.1)
Underwriting expense ratio		17.9	18.7	(0.8)
Combined ratio		83.8	96.7	(12.9)
Personal Lines – Direct
Loss & loss adjustment expense ratio		67.9	79.7	(11.8)
Underwriting expense ratio		17.2	20.7	(3.5)
Combined ratio		85.1	100.4	(15.3)
Total Personal Lines
Loss & loss adjustment expense ratio		67.0	79.0	(12.0)
Underwriting expense ratio		17.5	19.7	(2.2)
Combined ratio		84.5	98.7	(14.2)
Commercial Lines
Loss & loss adjustment expense ratio		72.4	76.3	(3.9)
Underwriting expense ratio		19.4	22.1	(2.7)
Combined ratio		91.8	98.4	(6.6)
Property
Loss & loss adjustment expense ratio		64.8	75.4	(10.6)
Underwriting expense ratio		28.6	30.1	(1.5)
Combined ratio		93.4	105.5	(12.1)
Total Underwriting Operations
Loss & loss adjustment expense ratio		67.8	78.4	(10.6)
Underwriting expense ratio		18.3	20.6	(2.3)
Combined ratio		86.1	99.0	(12.9)
Accident year – Loss & loss adjustment expense ratio2		67.9	73.8	(5.9)

1 Ratios are expressed as a percentage of net premiums earned. Fees and other revenues are netted against either loss adjustment expenses or underwriting expenses in the ratio calculations, based on the underlying activity that generated the revenue.

2 The accident year ratios include only the losses that occurred during the period noted. As a result, accident period results will change over time, either favorably or unfavorably, as we revise our estimates of loss costs when payments are made or reserves for that accident period are reviewed.

Losses and Loss Adjustment Expenses (LAE)


	Three Months Ended March 31,
(millions)		2024		2023
Change in net loss and LAE reserves		$	578.9	$	925.2
Paid losses and LAE		10,392.7		9,698.8
Total incurred losses and LAE		$	10,971.6	$	10,624.0

Claims costs, our most significant expense, represent payments made and estimated future payments to be made, to or on behalf of our policyholders, including expenses needed to adjust or settle claims. Claims costs are a function of loss severity and frequency and, for our vehicle businesses, are influenced by inflation and driving patterns, among other factors, some of which are discussed below. In our Property business, severity is primarily a function of construction costs and the age of the structure.

Accordingly, anticipated changes in these factors are taken into account when we establish premium rates and loss reserves. Loss reserves are estimates of future costs and our reserves are adjusted as underlying assumptions change and information develops.

Our total loss and LAE ratio decreased 10.6 points for the first quarter 2024, compared to the same period last year, primarily due to a decrease in loss frequency, higher premium per policy, and favorable prior accident years reserve development in the first quarter 2024, compared to unfavorable development in the first quarter last year, partially offset by higher loss severity as discussed below. On an accident year basis, our first quarter 2024 loss and LAE ratio was 5.9 points lower than the first quarter 2023.

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


	Three Months Ended March 31,
		2024	2023
($ in millions)			$		Point1	$		Point1
Personal Lines			$	200.2	1.6	$	92.1	0.9
Commercial Lines			8.9		0.3	3.5		0.1
Property			137.4		19.3	145.3		24.3
Total net catastrophe losses incurred			$	346.5	2.1	$	240.9	1.8

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

In the three months ended March 31, 2024, our catastrophe losses reflected severe weather events throughout the United States, with five states (Texas, Missouri, Florida, Oregon, and California) contributing just over half of the losses. We have responded, and plan to continue to respond, promptly to catastrophic events when they occur in order to provide high-quality claims service to our customers.

Changes in our estimate of our ultimate losses on catastrophes currently reserved, along with potential future catastrophes, could have a material impact on our financial condition, cash flows, or results of operations. We reinsure various risks including, but not limited to, catastrophic losses. We do not have catastrophe-specific reinsurance for our Personal Lines or commercial auto businesses, but we reinsure portions of our Property business. The Property business reinsurance programs include catastrophe occurrence excess of loss contracts and aggregate excess of loss contracts. We also purchase excess of loss reinsurance on our workers’ compensation insurance and our higher-limit commercial auto liability product offered by our Progressive Fleet & Specialty business.

We evaluate our reinsurance programs during the renewal process, if not more frequently, to ensure our programs continue to effectively address the company’s risk tolerance. For 2024, we entered into a new catastrophe aggregate excess of loss reinsurance contract that has multiple layers of coverage, with the first retention layer

threshold ranging from $450 million to $475 million, excluding named tropical storms and hurricanes, and the second retention layer threshold of $525 million, including named tropical storms and hurricanes. The first and second layers provide coverage up to $85 million and $100 million, respectively.

While the total coverage limit and per-event retention will evolve to fit the growth of our business, we expect to remain a consistent purchaser of reinsurance coverage. While the cost of our reinsurance, in the markets in which we participate, increased for the coverages placed in the beginning of 2024, compared to the prior years, and the availability of reinsurance is subject to many forces outside of our control, we did not, and do not expect to in the near term, experience a significant lack of availability of any of the types of reinsurance that we typically purchase. See Item 1A, Risk Factors in our 2023 Form 10-K filed with the U.S. Securities and Exchange Commission, for the year ended December 31, 2023, for a discussion of certain risks related to catastrophe events and the potential impact of climate change. See Item 1, Business – Reinsurance on Form 10-K for a discussion of our various reinsurance programs.

The following discussion of our severity and frequency trends in our personal auto business excludes comprehensive coverage because of its inherent volatility, as it is typically linked to catastrophic losses generally resulting from adverse weather. For our core commercial

auto products, the reported frequency and severity trends include comprehensive coverage. Comprehensive coverage insures against damage to a customer’s vehicle due to various causes other than collision, such as windstorm, hail, theft, falling objects, and glass breakage.

Total personal auto incurred severity (i.e., average cost per claim, including both paid losses and the change in case reserves) on a calendar-year basis, over the prior-year period, was as follows:


	Growth Over Prior Year
	Quarter
Coverage Type	2024
Bodily injury	6	%
Collision	(1)
Personal injury protection	6
Property damage	2
Total	3

To address inherent seasonality trends and lessen the effects of month-to-month variability in the commercial auto products, we use a trailing 12-month period in assessing severity. In the first quarter 2024, our core commercial auto products’ incurred severity increased 4%, compared to the same period last year. Since the loss patterns in the non-core commercial auto businesses are not indicative of our other commercial auto products, disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial products.

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

Our personal auto incurred frequency, on a calendar-year basis, over the prior-year period, was as follows:


	Growth Over Prior Year
	Quarter
Coverage Type	2024
Bodily injury	(8)	%
Collision	(11)
Personal injury protection	(9)
Property damage	(8)
Total	(9)

The year-over-year decrease in frequency, in part, reflects underwriting actions taken to reduce new business and a shift in the mix of business to a more preferred tier of customers.

On a trailing 12-month basis, our core commercial auto products’ incurred frequency was flat during the first quarter 2024, compared to the same period last year.

We closely monitor the changes in frequency, but the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We will continue to analyze trends to distinguish changes in our experience from other external factors, such as changes in the number of vehicles per household, miles driven, vehicle usage, gasoline prices, advances in vehicle safety, and unemployment rates, versus those resulting from shifts in the mix of our business or changes in driving patterns, to allow us to react quickly to price for these trends and to reserve more accurately for our loss exposures.

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


	Three Months Ended March 31,
($ in millions)		2024			2023
Actuarial Adjustments
Reserve decrease (increase)
Prior accident years		$	(63.3)		$	0.3
Current accident year		32.7			(140.8)
Calendar-year actuarial adjustments		$	(30.6)		$	(140.5)
Prior Accident Years Development
Favorable (unfavorable)
Actuarial adjustments		$	(63.3)		$	0.3
All other development		74.7			(621.5)
Total development		$	11.4		$	(621.2)
(Increase) decrease to calendar-year combined ratio		0.1		pts.	(4.6)		pts.

Total development consists of both actuarial adjustments and “all other development” on prior accident years. We use “accident year” generically to represent the year in which a loss occurred. The actuarial adjustments represent the net changes made by our actuarial staff to both current and prior accident year reserves based on regularly scheduled reviews. Through these reviews, our actuaries identify and measure variances in the projected frequency and severity trends, which allow them to adjust the reserves to reflect current cost trends.

For our Property business, 100% of catastrophe losses are reviewed monthly, and any development on catastrophe reserves are included as part of the actuarial adjustments. For the Personal Lines and Commercial Lines businesses, development for catastrophe losses in the vehicle businesses would be reflected in “all other development,” discussed below, to the extent they relate to prior year reserves. We report these actuarial adjustments separately for the current and prior accident years to reflect these adjustments as part of the total prior accident years development.

“All other development” represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves, and changes in reserve estimates on specific claims. Although we believe the development from both the actuarial adjustments and “all other development” generally results from the same factors, we are unable to quantify the portion of the reserve development that might be applicable to any one or more of those underlying factors.

Our objective is to establish case and IBNR reserves that are adequate to cover all loss costs, while incurring minimal variation from the date the reserves are initially established until losses are fully developed. Our ability to meet this objective is impacted by many factors. Changes in case law, particularly related to personal injury protection, can make it difficult to estimate reserves timely and with minimal variation. As reflected in the table above, we experienced slightly favorable prior accident years development during the first quarter 2024, compared to unfavorable prior accident years development for the same period last year. The favorable development during the first quarter 2024 was, in part, due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023. This was partially offset by higher than anticipated severity in core commercial auto for

California and New York. The 2023 unfavorable first quarter development in Personal Lines was primarily driven by higher than anticipated severity and increases in incurred losses on previously closed claims and the impact of the legislation enacted in March 2023 in Florida that resulted in a significant number of lawsuits being filed prior to its effective date. In Commercial Lines, the unfavorable development for first quarter 2023 was mainly due to late reported claims from prior accident periods and changes in reserve estimates (e.g., aging of the reserves, changes to estimates by adjusters, and inflation factors) in our core commercial auto products.

See Note 6 – Loss and Loss Adjustment Expense Reserves, for a more detailed discussion of our prior accident years reserve development and Critical Accounting Policies in our 2023 Annual Report to Shareholders for discussion of the application of estimates and assumptions in the establishment of our loss reserves.

Underwriting Expenses

Underwriting expenses include policy acquisition costs and other underwriting expenses. The underwriting expense ratio is our underwriting expenses, net of certain fees and other revenues, expressed as a percentage of net premiums earned. For the first quarter 2024, our underwriting expense ratio was down 2.3 points, compared to the same period last year, due to growth in net premiums earned and decreases in our advertising spend. In total, our companywide advertising spend decreased 7%, or 1.2 points, compared to the first quarter 2023. As previously discussed, we are increasing our media spend to maximize growth and will continue to do so as long as we remain on track to achieve our target profitability and generate sales at a cost below the maximum amount we are willing to spend to acquire a new customer.

To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition, including advertising and agency commissions, from our underwriting expense ratio. By excluding acquisition costs from our underwriting expense ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business. During the first quarter 2024, our NAER decreased 0.6 points, 1.4 points, and 0.2 points in our Personal Lines, Commercial Lines, and Property businesses, respectively, compared to the same period last year, as a result of general operational expense discipline.

C. Growth

For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent the premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which are a function of the premiums written in the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.


	Three Months Ended March 31,
($ in millions)		2024		2023		% Growth
Net Premiums Written
Personal Lines
Agency		$	6,398.8	$	5,414.4	18	%
Direct		8,082.1		6,698.8		21
Total Personal Lines		14,480.9		12,113.2		20
Commercial Lines		3,747.7		3,366.9		11
Property		733.4		629.4		17
Other indemnity1		0.2		0.2		0
Total underwriting operations		$	18,962.2	$	16,109.7	18	%
Net Premiums Earned
Personal Lines
Agency		$	5,857.7	$	4,860.2	21	%
Direct		7,020.5		5,717.4		23
Total Personal Lines		12,878.2		10,577.6		22
Commercial Lines		2,557.4		2,356.1		9
Property		712.8		598.7		19
Other indemnity1		0.2		0.7		(71)
Total underwriting operations		$	16,148.6	$	13,533.1	19	%
1 Includes other underwriting business and run-off operations.
		March 31,
(thousands)		2024		2023		% Growth
Policies in Force
Personal Lines
Agency auto		8,592.9		8,172.9		5	%
Direct auto		11,855.4		10,995.5		8
Total auto		20,448.3		19,168.4		7
Special lines1		6,075.7		5,637.3		8
Personal Lines — total		26,524.0		24,805.7		7
Commercial Lines		1,100.8		1,071.2		3
Property		3,208.9		2,912.6		10
Companywide total		30,833.7		28,789.5		7	%
1 Includes insurance for motorcycles, RVs, watercraft, snowmobiles, and similar items.

To analyze growth, we review new policies, rate levels, and the retention characteristics of our segments. Although new policies are necessary to maintain a growing book of business, we recognize the importance of retaining our current customers as a critical component of our continued growth.

D. Personal Lines

The following table shows our year-over-year changes for our Personal Lines business:


	Growth Over Prior Year Quarter

	2024		2023
Applications
New	(7)	%	70	%
Renewal	10		1
Written premium per policy - Auto	14		8
Policy life expectancy - Auto
Trailing 3 months	0		10
Trailing 12 months	20		(16)

In our Personal Lines business, in the first quarter 2024 new business applications decreased, compared to the same period last year, as a result of targeted rate and non-rate actions taken throughout 2023 to achieve our calendar-year underwriting profitability goal. Throughout the first quarter 2024, we continued to lift certain non-rate measures that were put in place to slow new business growth in 2023. In the first quarter 2023, we believe that the significant growth in new applications in part reflected competitor rate increases and our increased media spend during the period.

The decrease in new applications during the first quarter 2024, was driven by our personal auto products, with decreases in our Sam and Diane consumer segments, partially offset with the Wrights up slightly and the Robinsons experiencing a near double digit increase, reflecting a continued shift in the mix of business to a more preferred consumer tier. Our special lines products experienced solid new business application growth during the quarter, compared to the same period last year.

Personal auto policies in force in the first quarter 2024 grew between 4% and 13%, compared to the same period last year, across all consumer segments, primarily reflecting strong policy renewals, except Sams, who saw a low single digit decrease.

During the first quarter 2024, on a countrywide basis, we implemented personal auto rate increases in 13 states, which, in the aggregate, increased rates about 2%, following rate increases of 19% taken during 2023. We continue to see the 2023 rate increases earn into the policies written contributing to our year-over-year increase in premiums. We currently anticipate that any rate changes throughout 2024 will be of lesser magnitude than those taken in each of the prior two years, but we will continue to evaluate our rate need and adjust rates as we deem necessary.

Our written premium per policy increased during the first quarter 2024, primarily due to the rate increases taken in 2023, as previously discussed. We will continue to manage growth and profitability in accordance with our long-standing goal of growing as fast as we can, as long as we can provide high-quality customer service, at or below a

companywide 96 combined ratio on a calendar-year basis. While we continued to focus on profitability, during the first quarter 2024, we began taking measures that we believe will position ourselves to accelerate profitable growth during the year, including continuing to lift the non-rate actions we put in place during 2023 to slow new business growth and increasing our media spend.

We report our Agency and Direct business results separately as components of our Personal Lines segment to provide further understanding of our products by distribution channel. The channel discussions below are focused on personal auto insurance since this product accounted for 96% of the Personal Lines segment net premiums written during the first quarter 2024.

The Agency Business


	Growth Over Prior Year Quarter

	2024		2023
Applications - Auto
New	(13)	%	68	%
Renewal	8		(3)
Written premium per policy - Auto	15		10
Policy life expectancy - Auto
Trailing 3 months	7		10
Trailing 12 months	28		(19)

The Agency business includes business written by more than 40,000 independent insurance agencies that represent Progressive, as well as brokerages in New York and California. During the first quarter 2024, while 16 states generated new Agency auto application growth, only one of our top 10 largest Agency states generated new application growth. Total Agency auto applications increased 3%, driven by the growth in renewal applications for the first quarter 2024. During the first quarter 2024, year-over-year new application growth was strong for Robinsons and moderate for Wrights, while both Sams and Dianes saw a significant decrease. Policies in force grew in the teens for the Robinsons and Wrights and were relatively flat for Dianes, while Sams experienced a single digit decrease, compared to the same period last year.

During the first quarter 2024, on a year-over-year basis, Agency auto quote volume and the rate of conversion (i.e., converting a quote to a sale) decreased 4% and 10%, respectively, compared to the first quarter last year when quote volume and rate of conversion were up 14% and 49%, reflecting our competitiveness in the marketplace during the period. For the first quarter 2024, each consumer segment, except Wrights, saw a decrease in quotes, while all consumer segments, except Robinsons, saw a decrease in conversion.

Written premium per policy for new and renewal Agency auto business increased 5% and 17%, respectively, compared to the first quarter 2023, primarily attributable to the rate increases previously discussed.

Our trailing 12-month policy life expectancy in the Agency auto business lengthened significantly during the first quarter 2024, following substantial declines during the same period last year, on a year-over-year basis. This increase was driven by our efforts to slow growth during 2023 as well as competitor rate increases. The tailwinds of these efforts also contributed to the increase in the trailing 3-month measure.

The Direct Business


	Growth Over Prior Year Quarter

	2024		2023
Applications - Auto
New	(6)	%	92	%
Renewal	11		4
Written premium per policy - Auto	13		7
Policy life expectancy - Auto
Trailing 3 months	(6)		10
Trailing 12 months	13		(14)

The Direct business includes business written directly by Progressive online, through our Progressive mobile app, or by phone. During the first quarter 2024, 21 states, including only two of our top 10 largest Direct states, generated new auto application growth. Total Direct auto applications increased 6%, driven by the growth in renewal applications for the first quarter 2024. During the quarter, each of our consumer segments experienced a decrease in new applications year over year, except the Robinson segment, which experienced a percentage increase in the single digits. Policies in force grew between 2% and 12% in each consumer segment, compared to the same period last year.

During the first quarter 2024, Direct auto quote volume was flat, while conversion decreased 6%, compared to the same period last year, primarily reflecting the strong quote and conversion activity in the first quarter 2023, along with the other actions we took to slow growth through the remainder of 2023, as previously discussed. In comparison to the first quarter 2024, in the first quarter 2023, quotes and conversion increased 73% and 13%, respectively, reflecting competitor rate increases and our increased advertising spend during the period, compared to the prior year first quarter.

All consumer segments saw an increase in quotes and a decrease in the rate of conversion during the first quarter 2024, except Wrights, who saw a low double digit decline in quotes and a single digit increase in conversion. As we slowly increased advertising and continued to lift certain non-rate restrictions in 2024, we saw Direct auto new application growth begin to stabilize by the end of the quarter.

Written premium per policy for new and renewal Direct auto business increased 9% and 14%, respectively, in the first quarter 2024, compared to the same period last year,

primarily attributable to the rate increases previously discussed.

Our trailing 12-month policy life expectancy in the Direct auto business experienced a lengthening of retention during the first quarter 2024, following substantial declines during the same period last year, on a year-over-year basis. The drivers of the change were similar to those in the Agency business, where we focused on growing more bundled, preferred market tier, consumers. The decrease in the trailing 3-month policy life expectancy during the first quarter 2024 was primarily driven by the previously discussed rate increases taken during 2023.

E. Commercial Lines

The following table and discussion focuses on our core commercial auto products. Year-over-year changes in our core commercial auto products were as follows:


	Growth Over Prior Year Quarter

	2024		2023
Applications
New	2	%	2	%
Renewal	0		7
Written premium per policy	10		1
Policy life expectancy Trailing 12 months	(15)		(14)

The increases in net premiums written in our Commercial Lines business reflected growth in all of our BMTs, except our for-hire transportation BMT, which continued to be adversely impacted by challenging freight market conditions that have continued to cause a decline in the active number of motor carriers in this BMT. The most significant growth was in our contractor and business auto BMTs, primarily driven by the aggregate core commercial auto rate increases of 17% taken during 2023.

During the first quarter 2024, core commercial auto new application growth was positive in each of our BMTs, except for the for-hire transportation and for-hire specialty BMTs. During the first quarter 2024, quote volume increased about 5%, while conversion decreased about 5%, compared to the same period last year.

During the first quarter 2024, we increased rates, in aggregate, about 1% in our core commercial auto products. While we currently do not anticipate significant rate changes throughout 2024, we still have about 10 points of rate to earn in during the rest of 2024 from rate revisions taken during 2023 and the first quarter 2024. We will continue to evaluate our rate need and adjust rates as we deem necessary. Written premium per policy for new and renewal core commercial auto business increased 4% and 14%, respectively, for the first quarter 2024, compared to the same period last year, primarily reflecting the previously discussed rate increases.

Our policy life expectancy decreased in all BMTs. We believe rate and non-rate actions, as well as unfavorable trucking market conditions, drove increased shopping and

caused motor carriers to exit the industry, resulting in negative effects on policy life expectancy.

F. Property

The following table shows our year-over-year changes for our Property business:


	Growth Over Prior Year Quarter

	2024		2023
Applications
New	31	%	12	%
Renewal	7		6
Written premium per policy	2		10
Policy life expectancy Trailing 12 months	11		0

Our Property business writes residential property insurance for homeowners, other property owners, and renters, and umbrella insurance in the agency and direct channels.

Improving profitability and reducing concentration exposure continued to be the top priority for our Property business during the first quarter 2024. We continued to concentrate our growth in markets that are less susceptible to catastrophes and lower our exposure to coastal and hail-prone states for our homeowners products, which we define as our total Property business excluding renters and umbrella products. Homeowners policies in force in the growth-oriented states increased about 20% in the first quarter 2024, compared to the same period last year.

In regions where our appetite to write new business is limited, we are continuing to prioritize Progressive auto bundles, as well as lower risk properties, such as new construction or homes with newer roofs. Homeowners policies in force were down about 5% in the first quarter 2024 in the volatile weather states, compared to the same period last year. In addition, to continue to rebalance our business, late in 2023 we began a non-renewal effort of up to 115,000 Property policies in Florida. Following the required filings and notices, the first of these non-renewals will go into effect in the second quarter of 2024 and will continue over the following 12 months. To try to ease this disruption to our customers and agents, we reached an agreement with an unaffiliated Florida insurer to offer replacement policies to these policyholders, subject to the insurer’s underwriting and financial guidelines and agent appointments where applicable.

The increase in our written premium per policy, during the first quarter 2024, compared to the same period last year, was primarily attributable to rate increases taken over the last 12 months and higher premium coverages reflecting increased property values. During the first quarter 2024, we increased rates, in aggregate, about 6% in our Property segment. These impacts on written premium per policy were partially offset by less homeowners growth in volatile states, which have higher average premiums. We intend to continue to make targeted rate increases in states where we believe it is necessary to achieve our profitability targets.

The policy life expectancy in our Property business lengthened during the first quarter 2024, compared to the prior year, primarily driven by less frequent shopping due to a slowdown in the housing market and a shift in the mix of business.

IV. RESULTS OF OPERATIONS – INVESTMENTS

A. Investment Results

Our management philosophy governing the portfolio is to evaluate investment results on a total return basis. The fully taxable equivalent (FTE) total return includes recurring investment income, adjusted to a fully taxable amount for certain securities that receive preferential tax treatment (e.g., municipal securities), and total net realized, and changes in total net unrealized, gains (losses) on securities.

The following table summarizes investment results for the periods ended March 31:


	Three Months
	2024		2023
Pretax recurring investment book yield (annualized)	3.7	%	3.0	%

FTE total return:
Fixed-income securities	0.3		2.0
Common stocks	9.9		7.3
Total portfolio	0.8		2.3

The increase in the book yield, compared to last year, primarily reflected investing new cash from operations, and proceeds from maturing bonds, in higher coupon rate securities. The decrease in the fixed-income portfolio FTE total return, compared to last year, primarily reflected movement in Treasury yields year-over-year. The increase in the common stock portfolio total return reflected general market conditions in first quarter 2024.

A further break-down of our FTE total returns for our fixed-income portfolio for the periods ended March 31, follows:


	Three Months
	2024		2023
Fixed-income securities:
U.S. Treasury Notes	(0.4)	%	2.4	%
Municipal bonds	0.4		2.7
Corporate bonds	0.6		2.6
Residential mortgage-backed securities	2.0		2.0
Commercial mortgage-backed securities	3.2		1.0
Other asset-backed securities	1.4		1.9
Preferred stocks	4.3		(4.1)
Short-term investments	1.4		1.1

B. Portfolio Allocation

The composition of the investment portfolio was:


($ in millions)	Fair Value		% of Total Portfolio		Duration (years)	Average Rating1
March 31, 2024
U.S. government obligations	$	38,562.7	55.8	%	3.9	AA+
State and local government obligations	2,059.8		3.0		3.0	AA+
Foreign government obligations	15.9		0.1		2.3	AAA
Corporate debt securities	12,521.3		18.1		2.7	BBB+
Residential mortgage-backed securities	383.1		0.6		0.5	A+
Commercial mortgage-backed securities	3,851.8		5.6		2.2	A+
Other asset-backed securities	6,061.2		8.8		1.1	AA+
Preferred stocks	1,060.6		1.5		2.3	BBB-
Short-term investments	1,326.7		1.9		<0.1	AA-
Total fixed-income securities	65,843.1		95.4		3.2	AA-
Common equities	3,194.9		4.6		na	na
Total portfolio2	$	69,038.0	100.0	%	3.2	AA-
March 31, 2023
U.S. government obligations	$	27,350.1	48.3	%	3.7	AAA
State and local government obligations	2,061.6		3.6		3.4	AA+
Foreign government obligations	15.8		0.1		3.3	AAA
Corporate debt securities	10,681.3		18.8		3.0	BBB
Residential mortgage-backed securities	630.0		1.1		0.4	A
Commercial mortgage-backed securities	4,503.0		7.9		2.5	A
Other asset-backed securities	4,865.8		8.6		1.1	AA
Preferred stocks	1,260.4		2.2		2.5	BBB-
Short-term investments	2,524.1		4.5		<0.1	AA+
Total fixed-income securities	53,892.1		95.1		3.0	AA
Common equities	2,794.3		4.9		na	na
Total portfolio2	$	56,686.4	100.0	%	3.0	AA
December 31, 2023
U.S. government obligations	$	36,869.4	55.9	%	3.6	AA+
State and local government obligations	2,202.8		3.3		3.0	AA+
Foreign government obligations	16.3		0.1		2.6	AAA
Corporate debt securities	11,183.7		16.9		2.7	BBB+
Residential mortgage-backed securities	417.2		0.6		0.5	A+
Commercial mortgage-backed securities	3,939.7		6.0		2.3	A
Other asset-backed securities	5,575.4		8.4		1.2	AA+
Preferred stocks	1,075.8		1.7		2.4	BBB-
Short-term investments	1,789.9		2.7		<0.1	AA-
Total fixed-income securities	63,070.2		95.6		3.0	AA-
Common equities	2,928.4		4.4		na	na
Total portfolio2	$	65,998.6	100.0	%	3.0	AA-
na = not applicable

1 Represents ratings at period end. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.

2 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.

Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities.

We define Group I securities to include:

common equities,
nonredeemable preferred stocks,
redeemable preferred stocks, except for 50% of investment-grade redeemable preferred stocks with cumulative dividends, which are included in Group II, and
all other non-investment-grade fixed-maturity securities.

Group II securities include:

short-term securities, and
all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.

We believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital purposes and is in line with the treatment by our regulators.

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


	March 31, 2024				March 31, 2023				December 31, 2023
($ in millions)	Fair Value		% of Total Portfolio		Fair Value		% of Total Portfolio		Fair Value		% of Total Portfolio
Group I securities:
Non-investment-grade fixed maturities	$	466.8	0.7	%	$	1,019.5	1.8	%	$	532.6	0.8	%
Redeemable preferred stocks1	87.0		0.1		90.8		0.2		86.9		0.1
Nonredeemable preferred stocks	886.7		1.3		1,078.8		1.9		902.1		1.4
Common equities	3,194.9		4.6		2,794.3		4.9		2,928.4		4.4
Total Group I securities	4,635.4		6.7		4,983.4		8.8		4,450.0		6.7
Group II securities:
Other fixed maturities	63,075.9		91.4		49,178.9		86.7		59,758.7		90.6
Short-term investments	1,326.7		1.9		2,524.1		4.5		1,789.9		2.7
Total Group II securities	64,402.6		93.3		51,703.0		91.2		61,548.6		93.3
Total portfolio	$	69,038.0	100.0	%	$	56,686.4	100.0	%	$	65,998.6	100.0	%

1 We held no non-investment-grade redeemable preferred stocks at March 31, 2024 and 2023, or December 31, 2023.

To determine the allocation between Group I and Group II, we use the credit ratings from models provided by the National Association of Insurance Commissioners (NAIC) to classify our residential and commercial mortgage-backed securities, excluding interest-only (IO) securities, and the credit ratings from nationally recognized statistical rating organizations (NRSROs) to classify all other debt securities. NAIC ratings are based on a model that considers the book price of our securities when assessing the probability of future losses in assigning a credit rating. As a result, NAIC ratings can vary from credit ratings issued by NRSROs. Management believes NAIC ratings more accurately reflect our risk profile when determining the asset allocation between Group I and Group II securities.

Unrealized Gains (Losses)

As of March 31, 2024, our fixed-maturity portfolio had total after-tax net unrealized losses, which are recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheets, of $1.8 billion, compared to $2.2 billion and $1.6 billion at March 31, 2023 and December 31, 2023, respectively. The decrease in net unrealized losses from March 31, 2023, was primarily due to higher valuations across all non-U.S. Treasury portfolios, as tighter credit spreads in 2023 drove strong portfolio performance. The increase in net unrealized losses since December 31, 2023, was primarily due to a lower valuation on our U.S. Treasury portfolio caused by higher interest rates in 2024.

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

Holding Period Gains (Losses)

The following table provides the balance and activity for both the gross and net holding period gains (losses) for the three months ended March 31, 2024:


(millions)	Gross Holding Period Gains		Gross Holding Period Losses		Net Holding Period Gains (Losses)
Balance at December 31, 2023
Hybrid fixed-maturity securities	$	5.3	$	(34.4)	$	(29.1)
Equity securities1	2,233.9		(86.5)		2,147.4
Total holding period securities	2,239.2		(120.9)		2,118.3
Current year change in holding period securities
Hybrid fixed-maturity securities	0		7.2		7.2
Equity securities1	268.8		26.1		294.9
Total changes in holding period securities	268.8		33.3		302.1
Balance at March 31, 2024
Hybrid fixed-maturity securities	5.3		(27.2)		(21.9)
Equity securities1	2,502.7		(60.4)		2,442.3
Total holding period securities	$	2,508.0	$	(87.6)	$	2,420.4

1Equity securities include common equities and nonredeemable preferred stocks.

Changes in holding period gains (losses), similar to unrealized gains (losses) in our fixed-maturity portfolio, are the result of changes in market conditions as well as sales of securities based on various portfolio management decisions.

Fixed-Income Securities

The fixed-income portfolio is managed internally and includes fixed-maturity securities, short-term investments, and nonredeemable preferred stocks. Following are the primary exposures for our fixed-income portfolio.

Interest Rate Risk Our duration of 3.2 years at March 31, 2024 and 3.0 years at both March 31, 2023 and December 31, 2023 fell within our acceptable range of 1.5 to 5 years. The duration distribution of our fixed-income portfolio, excluding short-term investments, represented by the interest rate sensitivity of the comparable benchmark U.S. Treasury Notes, was:


Duration Distribution (excluding short-term securities)	March 31, 2024		March 31, 2023		December 31, 2023
1 year	11.0	%	19.2	%	18.1	%
2 years	11.2		14.0		12.0
3 years	32.4		22.5		25.7
5 years	31.8		26.9		27.4
7 years	12.1		12.8		14.6
10 years	1.5		4.6		2.2


Total fixed-income portfolio	100.0	%	100.0	%	100.0	%

Credit Risk This exposure is managed by maintaining an A+ minimum average portfolio credit quality rating, as defined by NRSROs. At both March 31, 2024 and December 31, 2023, our credit quality rating was AA- and at March 31, 2023, it was AA . The credit quality distribution of the fixed-income portfolio was:


Average Rating1	March 31, 2024		March 31, 2023		December 31, 2023
AAA	11.0	%	65.2	%	10.7	%
AA	64.3		6.1		65.1
A	7.0		7.5		7.0
BBB	16.3		18.7		15.7
Non-investment grade/non-rated
BB	1.1		2.0		1.2
B	0.2		0.3		0.2
CCC and lower	0		0.1		0
Non-rated	0.1		0.1		0.1
Total fixed-income portfolio	100.0	%	100.0	%	100.0	%

1 The ratings in the table above are assigned by NRSROs.

The year-over-year rating shift between the AAA and AA categories was primarily due to a second major credit rating agency downgrading U.S. Treasury debt during the third quarter 2023 to AA+ from AAA, which led us to lower our U.S. Treasury positions to AA+.

Concentration Risk We did not have any investments in a single issuer, either overall or in the context of individual asset classes and sectors, that exceeded our thresholds during the first quarter 2024.

Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the first quarter 2024.

Liquidity Risk Our overall portfolio remains very liquid and we believe that it is sufficient to meet expected near-term liquidity requirements. The short-to-intermediate duration of our portfolio provides a source of liquidity. During the remainder of 2024, we expect approximately $4.8 billion, or 18%, of principal repayment from our fixed-income portfolio, excluding U.S. Treasury Notes and short-term investments. Cash from interest and dividend payments and our short-term portfolio provide additional sources of recurring liquidity.

The duration of our U.S. government obligations, which are included in the fixed-income portfolio, was comprised of the following at March 31, 2024:


($ in millions)	Fair Value		Duration (years)
U.S. Treasury Notes
Less than one year	$	561.1	0.8
One to two years	2,306.4		1.6
Two to three years	7,435.3		2.6
Three to five years	20,923.5		4.0
Five to seven years	6,250.9		5.6
Seven to ten years	1,085.5		7.2
Total U.S. Treasury Notes	$	38,562.7	3.9

ASSET-BACKED SECURITIES

Included in our fixed-income portfolio are asset-backed securities, which were comprised of the following at the balance sheet dates listed:


($ in millions)	Fair Value		Net Unrealized Gains (Losses)		% of Asset- Backed Securities		Duration (years)	Average Rating (at period end)1
March 31, 2024
Residential mortgage-backed securities	$	383.1	$	(9.0)	3.7	%	0.5	A+
Commercial mortgage-backed securities	3,851.8		(516.8)		37.4		2.2	A+
Other asset-backed securities	6,061.2		(84.7)		58.9		1.1	AA+
Total asset-backed securities	$	10,296.1	$	(610.5)	100.0	%	1.5	AA
March 31, 2023
Residential mortgage-backed securities	$	630.0	$	(16.1)	6.3	%	0.4	A
Commercial mortgage-backed securities	4,503.0		(749.6)		45.0		2.5	A
Other asset-backed securities	4,865.8		(220.7)		48.7		1.1	AA
Total asset-backed securities	$	9,998.8	$	(986.4)	100.0	%	1.7	AA-
December 31, 2023
Residential mortgage-backed securities	$	417.2	$	(9.8)	4.2	%	0.5	A+
Commercial mortgage-backed securities	3,939.7		(595.5)		39.7		2.3	A
Other asset-backed securities	5,575.4		(91.4)		56.1		1.2	AA+
Total asset-backed securities	$	9,932.3	$	(696.7)	100.0	%	1.6	AA-

1 The credit quality ratings in the table above are assigned by NRSROs.

Residential Mortgage-Backed Securities (RMBS) The following table details the credit quality rating and fair value of our RMBS, along with the loan classification and a comparison of the fair value at March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):


Residential Mortgage-Backed Securities (at March 31, 2024)
($ in millions) Average Rating1	Non-Agency			Government/GSE2			Total			% of Total
AAA	$	55.8		$	0.2		$	56.0		14.6	%
AA	31.0			1.1			32.1			8.4
A	246.2			0			246.2			64.2
BBB	44.0			0			44.0			11.5
Non-investment grade/non-rated:
BB	0.3			0			0.3			0.1

CCC and lower	1.1			0			1.1			0.3
Non-rated	3.4			0			3.4			0.9
Total fair value	$	381.8		$	1.3		$	383.1		100.0	%
Increase (decrease) in value	(1.8)		%	(5.3)		%	(1.8)		%

1 The credit quality ratings are assigned by NRSROs; when we assigned the NAIC ratings for our RMBS, 100% of our non-investment-grade securities were rated investment grade and reported as Group II securities.

2 The securities in this category are insured by a Government Sponsored Entity (GSE) and/or collateralized by mortgage loans insured by the Federal Housing Administration (FHA) or the U.S. Department of Veteran Affairs (VA). .

In the residential mortgage-backed sector, our portfolio consists of deals that are backed by high-credit quality borrowers and/or those that have strong structural protections through underlying loan collateralization. During the first quarter of 2024, the RMBS portfolio decreased as a result of principal paydowns and maturities.

Commercial Mortgage-Backed Securities (CMBS) The following table details the credit quality rating and fair value of our CMBS, along with a comparison of the fair value at March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):


Commercial Mortgage-Backed Securities (at March 31, 2024)
($ in millions) Average Rating1	Multi-Borrower			Single-Borrower			Total			% of Total
AAA	$	169.7		$	1,090.8		$	1,260.5		32.7	%
AA	0			825.0			825.0			21.4
A	0			592.2			592.2			15.4
BBB	0			755.1			755.1			19.6
Non-investment grade/non-rated:
BB	0			408.7			408.7			10.6
B	0			10.3			10.3			0.3


Total fair value	$	169.7		$	3,682.1		$	3,851.8		100.0	%
Increase (decrease) in value	(4.2)		%	(12.2)		%	(11.8)		%

1 The credit quality ratings are assigned by NRSROs; when we assigned the NAIC ratings for our CMBS, 62% of our non-investment-grade securities were rated investment grade and reported as Group II securities, with the remainder classified as Group I.

The CMBS portfolio experienced lower volatility in first quarter 2024. During the quarter, the pace of new issuances accelerated, which led to paydowns in the portfolio via early refinancing. As of March 31, 2024, we had no delinquencies in our CMBS portfolio.

The following table shows the composition of our CMBS portfolio by maturity year and sector:


Commercial Mortgage-Backed Securities Sector Details (at March 31, 2024)
($ in millions) Maturity1	Office		Lab Office		Multi-family		Multi-family IO		Retail		Industrial		Self- Storage		Casino		Total		Average Original LTV		Average Current DSCR
2024	$	134.1	$	0	$	22.4	$	31.2	$	36.5	$	0	$	0	$	0	$	224.2	59.4	%	1.9
2025	0		42.0		0		37.0		65.0		44.3		0		0		188.3		65.7		2.0
2026	428.1		83.2		284.4		33.4		0		92.7		61.2		112.1		1,095.1		60.9		1.9
2027	382.0		0		39.4		30.3		0		95.1		250.0		0		796.8		60.6		2.0
2028	255.5		0		0		23.0		0		0		0		0		278.5		51.9		3.3
2029	397.4		90.1		0		11.0		0		79.8		74.0		67.5		719.8		59.6		2.9
2030	77.0		59.9		0		3.8		0		0		0		92.4		233.1		55.5		3.1
2031	224.8		91.2		0		0		0		0		0		0		316.0		66.5		2.1
Total fair value	$	1,898.9	$	366.4	$	346.2	$	169.7	$	101.5	$	311.9	$	385.2	$	272.0	$	3,851.8
LTV= loan to value
DSCR= debt service coverage ratio

1 The floating-rate securities were extended to their full maturity and fixed-rate securities are shown to their anticipated repayment date (if applicable) or otherwise, their maturity date.

We show the average loan to value (LTV) of each maturity year when the loans were originated. The LTV ratio that management uses, which is commonly expressed as a percentage, compares the size of the entire mortgage loan to the appraised value of the underlying property collateralizing the loan at issuance. A LTV ratio less than 100% indicates excess collateral value over the loan amount. LTV ratios greater than 100% indicate that the loan amount exceeds the collateral value. We believe this ratio provides a conservative view of our actual risk of loss, as this number displays the entire mortgage LTV, while our ownership is only a portion of the structure of the mortgage loan-backed security. For many of the mortgage loans, in our portfolio, our exposure is in a more senior part of the structure, which means that the LTV on our actual exposure is even lower than the ratios presented.

In addition to the LTV ratio, we also examine the credit of our CMBS portfolio by reviewing the debt service coverage ratio (DSCR) of the securities. The DSCR compares the underlying property’s annual net operating income to its annual debt service payments. A DSCR less than 1.0 times indicates that property operations do not generate enough income over the debt service payments, while a DSCR greater than 1.0 times indicates that there is an excess of operating income over the debt service payments. A number above 1.0 generally indicates that there would not be an incentive for the borrower to default in light of the borrower’s excess income. The DSCR reported in the table is calculated based on the most currently available net operating income and mortgage payments for the borrower, which, for most securities, is data as of September 30, 2023.

Other Asset-Backed Securities (OABS) The following table details the credit quality rating and fair value of our OABS, along with a comparison of the fair value at March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):


Other Asset-Backed Securities (at March 31, 2024)
($ in millions) Average Rating	Automobile			Collateralized Loan Obligations			Student Loan			Whole Business Securitizations			Equipment			Other			Total			% of Total
AAA	$	2,450.5		$	903.2		$	31.4		$	0		$	917.2		$	220.6		$	4,522.9		74.6	%
AA	21.8			374.4			10.8			0			41.8			0			448.8			7.4
A	5.6			0			0			0			151.2			126.5			283.3			4.7
BBB	4.4			0			0			732.4			0			36.7			773.5			12.8
Non-investment grade/non-rated:
BB	0			0			0			0			0			32.7			32.7			0.5



Total fair value	$	2,482.3		$	1,277.6		$	42.2		$	732.4		$	1,110.2		$	416.5		$	6,061.2		100.0	%
Increase (decrease) in value	0.1		%	(0.3)		%	(9.1)		%	(6.8)		%	(0.2)		%	(5.5)		%	(1.4)		%

During the first quarter 2024, we selectively added to the OABS portfolio as we viewed spreads and potential returns to be attractive in certain areas. Investments were predominately made in the automobile and equipment categories in highly rated, senior, and short-tenor debt tranches in the new issue markets.

STATE AND LOCAL GOVERNMENT OBLIGATIONS

The following table details the credit quality rating of our state and local government obligations (municipal securities) at March 31, 2024, without the benefit of credit or bond insurance:


Municipal Securities (at March 31, 2024)
(millions) Average Rating	General Obligations		Revenue Bonds		Total
AAA	$	539.2	$	361.7	$	900.9
AA	422.5		699.8		1,122.3
A	0		36.4		36.4
BBB	0		0		0
Non-rated	0		0.2		0.2
Total	$	961.7	$	1,098.1	$	2,059.8

Included in revenue bonds were $528.8 million of single-family housing revenue bonds issued by state housing finance agencies, of which $279.9 million were supported by individual mortgages held by the state housing finance agencies and $248.9 million were supported by mortgage-backed securities.

Of the revenue bonds supported by individual mortgages held by the state housing finance agencies, the overall credit quality rating was AA+. Most of these mortgages were supported by the Federal Housing Administration, the U.S. Department of Veterans Affairs, or private mortgage insurance providers. Of the revenue bonds supported by mortgage-backed securities, 84% were collateralized by Ginnie Mae mortgages, which are fully guaranteed by the U.S. government; the remaining 16% were collateralized by Fannie Mae and Freddie Mac mortgages.

Credit spreads of taxable municipal bonds tightened during the first quarter 2024, while credit spreads of tax-exempt bonds were close to unchanged. We did not add significantly to this portfolio during the first quarter 2024, and as a result, municipal securities as a percentage of the total fixed-income portfolio declined.

CORPORATE DEBT SECURITIES

The following table details the credit quality rating of our corporate debt securities at March 31, 2024:


Corporate Securities (at March 31, 2024)
(millions) Average Rating	Consumer		Industrial		Communication		Financial Services		Technology		Basic Materials		Energy		Total
AAA	$	0	$	0	$	0	$	129.1	$	0	$	0	$	41.4	$	170.5
AA	96.6		55.9		0		364.4		0		0		38.6		555.5
A	621.4		258.1		189.8		1,771.0		16.4		122.1		438.8		3,417.6
BBB	2,677.2		1,439.7		414.9		1,580.9		741.0		43.3		1,205.5		8,102.5
Non-investment grade/non-rated:
BB	44.7		45.8		24.8		0		11.0		0		6.0		132.3
B	119.3		0		0		0		0		20.6		0		139.9

Non-rated	0		0		0		0		3.0		0		0		3.0
Total fair value	$	3,559.2	$	1,799.5	$	629.5	$	3,845.4	$	771.4	$	186.0	$	1,730.3	$	12,521.3

The size of our corporate debt portfolio increased to $12.5 billion at March 31, 2024 from $11.2 billion at December 31, 2023. We selectively increased exposure to investment-grade securities but continued to predominately focus on shorter maturities, which we viewed as having a more favorable risk/reward profile. At March 31, 2024, corporate debt securities made up approximately 19% of our fixed-income portfolio, compared to approximately 18% at December 31, 2023. The duration of the corporate debt portfolio was 2.7 years at both March 31, 2024 and December 31, 2023.

PREFERRED STOCKS – REDEEMABLE AND NONREDEEMABLE

The table below shows the exposure break-down by sector and rating at March 31, 2024:


Preferred Stocks (at March 31, 2024)
	Financial Services
(millions) Average Rating	U.S. Banks		Foreign Banks		Insurance		Other Financial		Industrials		Utilities		Total

BBB	$	547.7	$	31.8	$	84.7	$	29.5	$	141.1	$	47.0	$	881.8
Non-investment grade/non-rated:
BB	91.8		23.0		0		0		0		0		114.8

Non-rated	0		0		39.9		9.3		14.8		0		64.0
Total fair value	$	639.5	$	54.8	$	124.6	$	38.8	$	155.9	$	47.0	$	1,060.6

The majority of our preferred stocks have fixed-rate dividends until a call date and then, if not called, generally convert to floating-rate dividends. The interest rate duration of our preferred stocks is calculated to reflect the call, floor, and floating-rate features. Although a preferred stock will remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend. As of March 31, 2024, our non-investment-grade preferred stocks were all with issuers that maintain investment-grade senior debt ratings.

We also face the risk that dividend payments on our preferred stock holdings could be deferred for one or more periods or skipped entirely. As of March 31, 2024, we expect all of these securities to pay their dividends in full and on time. Approximately 78% of our preferred stocks pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.

At March 31, 2024, the preferred stock portfolio fair value was $1.1 billion, which was consistent with the value at December 31, 2023. During the first quarter 2024, we sold securities with less attractive risk/reward profiles and low credit spreads that we believed were less probable to be called on their call dates. This decrease was mostly offset by an increase in valuation of the preferred portfolio during the first quarter of 2024, as credit spreads tightened.

Common Equities

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


($ in millions)	March 31, 2024				March 31, 2023				December 31, 2023
Common stocks	$	3,170.6	99.2	%	$	2,774.0	99.3	%	$	2,907.8	99.3	%
Other risk investments1	24.3		0.8		20.3		0.7		20.6		0.7
Total common equities	$	3,194.9	100.0	%	$	2,794.3	100.0	%	$	2,928.4	100.0	%

1 The other risk investments consist of limited partnership interests.

The majority of our common stock portfolio consists of individual holdings selected based on their contribution to the correlation with the Russell 1000 Index. We held 787 out of 1,005, or 78%, of the common stocks comprising the index at March 31, 2024, which made up 95% of the total market capitalization of the index. At March 31, 2024 and 2023, and December 31, 2023, the year-to-date total return, based on GAAP income, was within our targeted tracking error, which is +/- 50 basis points.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that certain statements in this report not based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as “estimate,” “expect,” “intend,” “plan,” “believe,” “goal,” “target,” “anticipate,” “will,” “could,” “likely,” “may,” “should,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are not guarantees of future performance, are based on current expectations and projections about future events, and are subject to certain risks, assumptions and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to:

*•*our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;

*•*our ability to establish accurate loss reserves;

*•*the impact of severe weather, other catastrophe events, and climate change;

*•*the effectiveness of our reinsurance programs and the continued availability of reinsurance and performance by reinsurers;

*•*the secure and uninterrupted operation of the systems, facilities, and business functions and the operation of various third-party systems that are critical to our business;

*•*the impacts of a security breach or other attack involving our technology systems or the systems of one or more of our vendors;

*•*our ability to maintain a recognized and trusted brand and reputation;

*•*whether we innovate effectively and respond to our competitors’ initiatives;

*•*whether we effectively manage complexity as we develop and deliver products and customer experiences;

*•*our ability to attract, develop, and retain talent and maintain appropriate staffing levels;

*•*the impact of misconduct or fraudulent acts by employees, agents, and third parties to our business and/or exposure to regulatory assessments;

*•*the highly competitive nature of property-casualty insurance markets;

*•*whether we adjust claims accurately;

*•*compliance with complex and changing laws and regulations;

*•*litigation challenging our business practices, and those of our competitors and other companies;

*•*the success of our business strategy and efforts to acquire or develop new products or enter into new areas of business and our ability to navigate the related risks;

*•*how intellectual property rights affect our competitiveness and our business operations;

*•*the success of our development and use of new technology and our ability to navigate the related risks;

*•*the performance of our fixed-income and equity investment portfolios;

*•*the impact on our investment returns and strategies from regulations and societal pressures relating to environmental, social, governance and other public policy matters;

*•*our continued ability to access our cash accounts and/or convert investments into cash on favorable terms;

*•*the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;

*•*legal restrictions on our insurance subsidiaries’ ability to pay dividends to The Progressive Corporation;

*•*our ability to obtain capital when necessary to support our business and potential growth;

*•*evaluations and ratings by credit rating and other rating agencies;

*•*the variable nature of our common share dividend policy;

*•*whether our investments in certain tax-advantaged projects generate the anticipated returns;

*•*the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;

*•*the impacts of epidemics, pandemics, or other widespread health risks; and

*•*other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, 2023.

Any forward-looking statements are made only as of the date presented. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

In addition, investors should be aware that accounting principles generally accepted in the United States prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

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