Progressive 10-Q 2025-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2025

or

For the transition period from to

Commission File Number: 001-09518

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

(440) 461-5000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, $1.00 par value: 586,223,643 outstanding at April 30, 2025

PART I—FINANCIAL INFORMATION

The Progressive Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)

1 All of our outstanding Serial Preferred Shares, Series B, were redeemed in February 2024.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Balance Sheets

(unaudited)

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I. OVERVIEW

The Progressive Corporation’s insurance subsidiaries recognized substantial year-over-year growth in both premiums and policies in force during the first quarter 2025, compared to the same period last year, while maintaining an underwriting profit better than our 4% companywide calendar-year underwriting profit goal.

We wrote $22.2 billion of net premiums written during the first quarter 2025, which was $3.2 billion more than we generated during the same period last year, and reported an underwriting profit margin of 14.0%. During the first three months of 2025, companywide net premiums written and earned increased 17% and 20%, respectively, compared to the same period last year, and policies in force increased 18%. Companywide policies in force grew by 1.3 million policies since December 31, 2024, and by 5.5 million since March 31, 2024, to end the first quarter 2025 with 36.3 million policies in force.

Our Personal Lines segment experienced strong year-over-year growth for the first quarter 2025, with net premiums written increasing 20% and policies in force up 18%, compared to the same period in the prior year. This growth was primarily in our personal auto products and reflects new application growth mainly attributable to increased advertising spend and our continued efforts to work closely with our independent agents and to leverage our agent compensation program to reward writing profitable business.

In Commercial Lines, we experienced solid growth with net premiums written up 5% and policies in force up 6%, during the first quarter 2025, compared to the same period last year. The growth in Commercial Lines premiums written primarily reflected the renewal of certain transportation network company (TNC) business policies that have higher rates and projected mileage, which is the basis for computing premiums, than the policies that renewed in the first quarter 2024.

During the first quarter 2025, on a countrywide basis, we increased personal auto rates less than 1% and increased our personal property rates about 2%, in the aggregate. In our core commercial auto businesses (which excludes our TNC business, our Progressive Fleet & Specialty Programs (Fleet & Specialty) products, and our business owners’ policy (BOP) product), we increased rates in the aggregate about 1% during the first quarter 2025. We currently believe we are adequately priced in our personal auto products in most states and will continue to monitor the impact from tariffs and potential changes in the regulatory environment. We expect both the personal property and core commercial auto products to have near double-digit rate increases through the remainder of 2025.

Starting in the first quarter 2025, the U.S. government announced additional tariffs on goods imported into the U.S. from numerous countries, which have, in response, resulted in additional tariffs against the U.S. We regularly model the potential impact tariffs could have on vehicle loss costs, the supply chain, the availability of parts, and general inflation, among other factors, although the dynamic international trade environment currently prevents us from accurately predicting how tariffs will ultimately impact our business. While our focus has been on trying to maintain stable rates for customers, tariffs and other retaliatory actions will likely result in higher loss costs, which could result in a reduction in profitability and higher than currently anticipated rate increases throughout 2025 and 2026.

For the first quarter 2025, the year-over-year increase in net income primarily reflected an increase in underwriting income. The increase in recurring investment income, was offset by net realized losses during the first quarter 2025, compared to net realized gains in the same period last year.

Comprehensive income increased $1.3 billion over the first quarter last year, which was primarily driven by a $0.9 billion decrease in net unrealized losses on our fixed-maturity securities, compared to a $0.2 billion net unrealized loss increase in the same period last year. The change in the unrealized losses we recognized during both periods were primarily driven by the then-current economic environment.

At March 31, 2025, total capital (debt plus shareholders’ equity) was $35.8 billion, which was an increase of $3.4 billion from year-end 2024, primarily due to the $3.5 billion of comprehensive income earned in the first quarter 2025.

A. Insurance Operations

Our underwriting profit margin was 14.0% during the first quarter 2025, compared to 13.9% during the first quarter 2024. Our Personal Lines and Commercial Lines operating segments both generated strong profitability for the first three months of 2025. While underwriting profitability was relatively flat on a year-over-year basis, for the first quarter 2025, our companywide loss and loss adjustment expense (LAE) ratio decreased 2.0 points, which was mostly offset by a 1.9 point increase in the expense ratio. The decrease in the loss and LAE ratio was primarily driven by favorable prior accident years reserve development and decreased incurred personal and commercial auto accident frequency. The increase in our companywide expense ratio during the first quarter 2025 primarily reflected increased advertising expense. During the first quarter 2025, our advertising spend was $1.3 billion, which was 86%, or 2.3 points, greater than the first quarter last year.

We closely manage our expenses, monitoring both acquisition expenses and non-acquisition expenses, which we view as an important measure of operational efficiency as we seek to deliver our most competitive rates to consumers. We will continue to advertise to maximize growth as long as the advertising spend is efficient and we remain on track to achieve our calendar-year profitability goal.

Our Personal Lines segment is comprised of our personal vehicle and property products. Personal Lines vehicles include both personal auto and special lines products. Our Personal Lines profitability for the first quarter 2025 was 14.3%, with personal vehicle and property products reporting 14.3% and 12.8%, respectively. In total, our special lines products, which are generally used less in cold weather months, had about a 1 point favorable impact on our total personal vehicle combined ratio for the first quarter 2025.

Our Commercial Lines segment includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP product. Our total Commercial Lines underwriting profitability for the first quarter 2025 was 12.5%.

During the first quarter 2025, our personal auto and core commercial auto businesses’ profitability benefited from higher average earned premium per policy, lower incurred loss frequency trends, and, in personal auto, favorable prior accident years reserve development.

For the first quarter 2025, both segments generated strong net premiums written growth. Personal Lines net premiums written grew 20%, with the agency and direct personal vehicle businesses growing 17% and 25%, respectively, while personal property premium growth was flat. Commercial Lines net premiums written grew 5%.

Changes in net premiums written are a function of new business applications (i.e., policies sold), business mix, premium per policy, and retention.

During the first quarter 2025, we experienced a significant increase in total Personal Lines new business applications, primarily driven by increases in our personal vehicle products, due to increased advertising spend, our efforts to get back into the independent agents’ quote flows, and our competitiveness in the marketplace. New personal auto applications increased 32% during the first quarter 2025, compared to the same period in the prior year.

In our personal property business, significant growth in new applications in our renters policies was offset by declines in our homeowners, condo, and dwelling products. The new applicati

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The duration of the financial instruments held in our portfolio that are subject to interest rate risk was 3.4 years at March 31, 2025, 3.2 years at March 31, 2024, and 3.3 years at December 31, 2024. The weighted average beta of the equity portfolio was 1.0 at March 31, 2025 and 1.1 at both March 31, 2024 and December 31, 2024. We have not experienced a material impact when compared to the tabular presentations of our interest rate and market risk sensitive instruments in our Annual Report on Form 10-K for the year ended December 31, 2024.

We, under the direction of our Chief Executive Officer and our Chief Financial Officer, have established disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our Chief Executive Officer and our Chief Financial Officer reviewed and evaluated our disclosure controls and procedures as of the end of the period covered by this report. Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effectively serving the stated purposes as of the end of the period covered by this report.

There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For discussion of legal proceedings, see Note 11 – Litigation to the consolidated financial statements, which is incorporated herein by reference.

There have been no material changes in the risk factors from those discussed in Item 1A, Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Share Repurchases

Progressive’s financial policies state that we will repurchase shares to neutralize dilution from equity-based compensation in the year of issuance and as an option to effectively use under-leveraged capital.

In May 2024, the Board of Directors approved an authorization for the company to repurchase up to 25 million of its common shares. This authorization does not have an expiration date. Share repurchases under this authorization may be accomplished through open market purchases, including trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, through privately negotiated transactions, pursuant to our equity incentive awards, or otherwise. During the first quarter 2025, all repurchases were accomplished in conjunction with our equity incentive awards at the then-current market prices; there were no open market purchases during the quarter.

(c) Insider Trading Arrangements

During the first quarter 2025, certain executive officers entered into Rule 10b5-1 trading arrangements that are intended to satisfy the affirmative defense of Rule 10b5-1(c). The executive officers’ plans provide for: (i) the sale of all of the shares issued upon vesting for certain outstanding equity awards previously granted to the applicable executive officer, excluding any shares withheld by the company to satisfy tax withholding obligations (see our 2025 Proxy Statement for a description of the company’s equity compensation plans) and, (ii) for three executives, the sale and/or gift of a certain amount of additional shares (see “Additional or Specified Shares” below) held by the applicable executive, that are not sold in connection with the vesting of an outstanding equity award (as described in (i) above), some of which may have been the result of a prior vesting event for the executive.

Below are the details of each applicable Rule 10b5-1 trading arrangement:

1 Subject to the plan’s earlier expiration or completion in accordance with its terms.

Additional Information

President and CEO Susan Patricia Griffith’s quarterly letter to shareholders is included as Exhibit 99 to this Quarterly Report on Form 10-Q and in our online shareholders’ report located on our investor relations website at: investors.progressive.com/financials.

See exhibit index contained herein beginning on page 51, which is incorporated by reference from information with respect to this item.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.