Item 1. Financial Statements.

158K characters. Original on sec.gov · Markdown

Item 1. Financial Statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months				Six Months
Periods Ended June 30,	2025		2024		2025		2024
(millions — except per share amounts)
Revenues
Net premiums earned	$	20,310	$	17,209	$	39,719	$	33,358
Investment income	871		685		1,685		1,303
Net realized gains (losses) on securities:
Net realized gains (losses) on security sales	19		(227)		20		(373)
Net holding period gains (losses) on securities	368		100		155		402
Total net realized gains (losses) on securities	387		(127)		175		29
Fees and other revenues	303		260		590		496
Service revenues	133		107		244		191
Total revenues	22,004		18,134		42,413		35,377
Expenses
Losses and loss adjustment expenses	13,605		12,595		26,409		23,567
Policy acquisition costs	1,511		1,308		2,967		2,540
Other underwriting expenses	2,689		2,180		5,408		4,111
Investment expenses	9		7		16		13
Service expenses	139		115		256		207
Interest expense	69		69		139		139
Total expenses	18,022		16,274		35,195		30,577
Net Income
Income before income taxes	3,982		1,860		7,218		4,800
Provision for income taxes	807		401		1,476		1,010
Net income	3,175		1,459		5,742		3,790
Other Comprehensive Income (Loss)
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities	428		108		1,327		(100)
Net unrealized losses on forecasted transactions	1		0		1		0
Other comprehensive income (loss)	429		108		1,328		(100)
Comprehensive income (loss)	$	3,604	$	1,567	$	7,070	$	3,690
Computation of Earnings Per Common Share
Net income	$	3,175	$	1,459	$	5,742	$	3,790
Less: Preferred share dividends and other1	0		0		0		17
Net income available to common shareholders	$	3,175	$	1,459	$	5,742	$	3,773
Average common shares outstanding - Basic	586.2		585.4		586.1		585.4
Net effect of dilutive stock-based compensation	1.6		2.0		1.6		2.0
Total average equivalent common shares - Diluted	587.8		587.4		587.7		587.4
Basic: Earnings per common share	$	5.42	$	2.49	$	9.80	$	6.45
Diluted: Earnings per common share	$	5.40	$	2.48	$	9.77	$	6.42

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)


	June 30,				December 31,
(millions)	2025		2024		2024
Assets
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $82,372, $69,668, and $77,126)	$	82,272	$	67,489	$	75,332
Short-term investments (amortized cost: $2,103, $733, and $615)	2,103		733		615
Total available-for-sale securities	84,375		68,222		75,947
Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $517, $887, and $756)	500		838		728
Common equities (cost: $775, $708, and $745)	3,735		3,296		3,575
Total equity securities	4,235		4,134		4,303
Total investments	88,610		72,356		80,250
Cash and cash equivalents	125		90		143
Restricted cash and cash equivalents	10		12		11
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	135		102		154
Accrued investment income	636		564		594
Premiums receivable, net of allowance for credit losses of $501, $328, and $460	16,406		14,545		14,369
Reinsurance recoverables	4,197		4,881		4,765
Prepaid reinsurance premiums	263		291		349
Deferred acquisition costs	2,110		1,938		1,961
Property and equipment, net of accumulated depreciation of $1,369, $1,558, and $1,461	820		713		790
Net federal deferred income taxes	633		1,001		954
Other assets	1,670		1,502		1,559
Total assets	$	115,480	$	97,893	$	105,745
Liabilities and Shareholders’ Equity
Unearned premiums	$	26,335	$	23,681	$	23,858
Loss and loss adjustment expense reserves	41,154		36,605		39,057
Accounts payable, accrued expenses, and other liabilities	8,492		7,376		10,346
Debt1	6,895		6,891		6,893
Total liabilities	82,876		74,553		80,154
Common shares, $1.00 par value (authorized 900; issued 798, including treasury shares of 212)	586		586		586
Paid-in capital	2,192		2,060		2,145
Retained earnings	29,921		22,410		24,283
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities	(81)		(1,701)		(1,408)
Net unrealized losses on forecasted transactions	(13)		(14)		(14)
Foreign currency translation adjustment	(1)		(1)		(1)
Total accumulated other comprehensive income (loss)	(95)		(1,716)		(1,423)
Total shareholders’ equity	32,604		23,340		25,591
Total liabilities and shareholders’ equity	$	115,480	$	97,893	$	105,745

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

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)


	Three Months				Six Months
Periods Ended June 30,	2025		2024		2025		2024
(millions — except per share amounts)
Serial Preferred Shares, No Par Value
Balance, beginning of period	$	0	$	0	$	0	$	494
Redemption of Serial Preferred Shares, Series B1	0		0		0		(494)
Balance, end of period	0		0		0		0
Common Shares, $1.00 Par Value
Balance, beginning of period	586		586		586		585
Treasury shares purchased	0		0		0		0
Net restricted equity awards issued/vested	0		0		0		1
Balance, end of period	586		586		586		586
Paid-In Capital
Balance, beginning of period	2,160		2,029		2,145		2,013
Amortization of equity-based compensation	32		31		48		48
Treasury shares purchased	0		0		(1)		(1)
Net restricted equity awards issued/vested	0		0		0		(1)
Reinvested dividends on restricted stock units	0		0		0		1
Balance, end of period	2,192		2,060		2,192		2,060
Retained Earnings
Balance, beginning of period	26,732		21,020		24,283		18,801
Net income	3,175		1,459		5,742		3,790
Treasury shares purchased	(13)		(11)		(66)		(47)
Cash dividends declared on common shares ($0.10, $0.10, $0.20, and $0.20 per share)1	(58)		(58)		(117)		(117)
Cash dividends declared on Serial Preferred Shares, Series B ($0, $0, $0, and $15.688377 per share)1	0		0		0		(8)
Reinvested dividends on restricted stock units	0		0		0		(1)
Other, net	85		0		79		(8)
Balance, end of period	29,921		22,410		29,921		22,410
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period	(524)		(1,824)		(1,423)		(1,616)
Other comprehensive income (loss)	429		108		1,328		(100)
Balance, end of period	(95)		(1,716)		(95)		(1,716)
Total shareholders’ equity	$	32,604	$	23,340	$	32,604	$	23,340

1 See Note 9 – Dividends for further discussion.

There are 20 million Serial Preferred Shares authorized. There are 5 million Voting Preference Shares authorized; no such shares have been issued.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


Six Months Ended June 30,	2025		2024
(millions)
Cash Flows From Operating Activities
Net income	$	5,742	$	3,790
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	149		138
Net amortization (accretion) of fixed-income securities	(55)		(20)
Amortization of equity-based compensation	48		48
Net realized (gains) losses on securities	(175)		(29)
Net (gains) losses on disposition of property and equipment	1		(1)
Changes in:
Premiums receivable	(2,037)		(2,587)
Reinsurance recoverables	568		213
Prepaid reinsurance premiums	86		(41)
Deferred acquisition costs	(149)		(251)
Income taxes	(173)		(342)
Unearned premiums	2,477		3,547
Loss and loss adjustment expense reserves	2,097		2,216
Accounts payable, accrued expenses, and other liabilities	550		1,058
Other, net	54		(237)
Net cash provided by operating activities	9,183		7,502
Cash Flows From Investing Activities
Purchases:
Fixed maturities	(26,354)		(24,532)
Equity securities	(87)		(32)
Sales:
Fixed maturities	17,086		13,687
Equity securities	151		98
Maturities, paydowns, calls, and other:
Fixed maturities	4,006		3,235
Equity securities	177		23
Net (purchases) sales of short-term investments	(1,429)		1,087
Net change in unsettled security transactions	178		120
Purchases of property and equipment	(161)		(118)
Sales of property and equipment	52		45
Net cash used in investing activities	(6,381)		(6,387)
Cash Flows From Financing Activities
Dividends paid to common shareholders	(2,754)		(557)
Acquisition of treasury shares for equity award tax liabilities	(55)		(38)
Acquisition of treasury shares acquired in open market	(12)		(10)
Redemption of preferred shares	0		(500)
Dividends paid to preferred shareholders	0		(8)
Net cash used in financing activities	(2,821)		(1,113)
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(19)		2
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1	154		100
Cash, cash equivalents, restricted cash, and restricted cash equivalents – June 30	$	135	$	102

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1. BASIS OF REPORTING AND ACCOUNTING

The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries and non-insurance subsidiaries and affiliates in which we have a controlling financial interest (Progressive).

The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended June 30, 2025, are not necessarily indicative of the results expected for the full year. These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report to Shareholders).

Premiums Receivable

We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2024 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:


	Three Months Ended June 30,				Six Months Ended June 30,
(millions)	2025		2024		2025		2024
Allowance for credit losses, beginning of period	$	473	$	328	$	460	$	369
Increase in allowance1	176		128		329		235
Write-offs2	(148)		(128)		(288)		(276)
Allowance for credit losses, end of period	$	501	$	328	$	501	$	328

1 Represents the incremental increase in other underwriting expenses.

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

Property – Held for Sale

At June 30, 2025 and 2024, and December 31, 2024, we had held for sale properties of $117 million, $152 million, and $129 million, respectively, which are included in other assets on our consolidated balance sheets.

New Accounting Standards

We did not adopt any new accounting standards during the three and six months ended June 30, 2025, and there were no recently issued accounting standards that are expected to materially impact our financial condition or results of operations.

2. INVESTMENTS

The following tables present the composition of our investment portfolio by major security type:


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
June 30, 2025
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	46,684	$	598	$	(472)	$	0	$	46,810	52.8	%
State and local government obligations	3,030		12		(78)		0		2,964		3.3
Foreign government obligations	17		0		0		0		17		0
Corporate and other debt securities	18,004		222		(112)		8		18,122		20.5
Residential mortgage-backed securities	2,644		21		(7)		2		2,660		3.0
Commercial mortgage-backed securities	5,325		10		(286)		0		5,049		5.7
Other asset-backed securities	6,668		26		(44)		0		6,650		7.5

Total fixed maturities	82,372		889		(999)		10		82,272		92.8
Short-term investments	2,103		0		0		0		2,103		2.4
Total available-for-sale securities	84,475		889		(999)		10		84,375		95.2
Equity securities:
Nonredeemable preferred stocks	517		0		0		(17)		500		0.6
Common equities	775		0		0		2,960		3,735		4.2
Total equity securities	1,292		0		0		2,943		4,235		4.8
Total portfolio1	$	85,767	$	889	$	(999)	$	2,953	$	88,610	100.0	%


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
June 30, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	42,063	$	60	$	(1,229)	$	0	$	40,894	56.5	%
State and local government obligations	2,345		1		(144)		0		2,202		3.0
Foreign government obligations	17		0		(1)		0		16		0.1
Corporate and other debt securities	13,439		33		(306)		(20)		13,146		18.1
Residential mortgage-backed securities	981		2		(9)		2		976		1.3
Commercial mortgage-backed securities	4,457		2		(489)		0		3,970		5.5
Other asset-backed securities	6,366		8		(89)		0		6,285		8.7

Total fixed maturities	69,668		106		(2,267)		(18)		67,489		93.2
Short-term investments	733		0		0		0		733		1.0
Total available-for-sale securities	70,401		106		(2,267)		(18)		68,222		94.2
Equity securities:
Nonredeemable preferred stocks	887		0		0		(49)		838		1.2
Common equities	708		0		0		2,588		3,296		4.6
Total equity securities	1,595		0		0		2,539		4,134		5.8
Total portfolio1	$	71,996	$	106	$	(2,267)	$	2,521	$	72,356	100.0	%


($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value
December 31, 2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	47,103	$	36	$	(1,151)	$	0	$	45,988	57.3	%
State and local government obligations	2,893		2		(117)		0		2,778		3.5
Foreign government obligations	16		0		0		0		16		0
Corporate and other debt securities	14,111		65		(215)		(7)		13,954		17.4
Residential mortgage-backed securities	1,600		9		(11)		3		1,601		2.0
Commercial mortgage-backed securities	4,721		7		(376)		0		4,352		5.4
Other asset-backed securities	6,682		26		(65)		0		6,643		8.3

Total fixed maturities	77,126		145		(1,935)		(4)		75,332		93.9
Short-term investments	615		0		0		0		615		0.7
Total available-for-sale securities	77,741		145		(1,935)		(4)		75,947		94.6
Equity securities:
Nonredeemable preferred stocks	756		0		0		(28)		728		0.9
Common equities	745		0		0		2,830		3,575		4.5
Total equity securities	1,501		0		0		2,802		4,303		5.4
Total portfolio1	$	79,242	$	145	$	(1,935)	$	2,798	$	80,250	100.0	%

1 At June 30, 2025 and 2024 and December 31, 2024, we had $303 million, $74 million, and $125 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.

The total fair value of the portfolio at June 30, 2025 and 2024 and December 31, 2024, included $5.0 billion, $4.1 billion, and $6.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions. A portion of the investments held at December 31, 2024 were sold and proceeds were used to pay our common share dividends in January 2025; see Note 9 – Dividends for additional information.

The June 30, 2024, corporate and other debt securities in our Note 2 – Investments and Note 3 – Fair Value tables include amounts that were previously reported as redeemable preferred stocks. The reclassification was to reflect the accurate categorization based on the underlying features of these securities; see Note 2 – Investments in our 2024 Annual Report to Shareholders for further discussion.

At June 30, 2025, bonds and certificates of deposit in the principal amount of $786 million were on deposit to meet state insurance regulatory requirements. We did not hold any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at June 30, 2025 or 2024, or December 31, 2024. At June 30, 2025, we did not hold any debt securities that were non-income producing during the preceding 12 months.

Hybrid Securities Certain securities in our fixed-maturity portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. These securities are reported at fair value:


	June 30,
(millions)	2025		2024		December 31, 2024
Fixed Maturities:
Corporate and other debt securities	$	731	$	610	$	608
Residential mortgage-backed securities	615		273		479
Other asset-backed securities	0		5		1

Total hybrid securities	$	1,346	$	888	$	1,088

Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we use the fair value option to record the changes in fair value of these securities through income as a component of net realized gains (losses).

Fixed Maturities The composition of fixed maturities by maturity at June 30, 2025, was:


(millions)	Cost		Fair Value
Less than one year	$	8,582	$	8,547
One to five years	49,855		49,697
Five to ten years	23,657		23,747
Ten years or greater	278		281
Total	$	82,372	$	82,272

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

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


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months							12 Months or Greater
($ in millions)	No. of Sec.	Fair Value		Gross Unrealized Losses					No. of Sec.		Fair Value	Gross Unrealized Losses
June 30, 2025
U.S. government obligations	73	$	10,463	$	(472)	9	$	2,878	$	(20)			64	$	7,585	$	(452)
State and local government obligations	275	1,677		(78)		53	289		(1)				222	1,388		(77)

Corporate and other debt securities	159	3,737		(112)		28	610		(6)				131	3,127		(106)
Residential mortgage-backed securities	29	385		(7)		11	342		(2)				18	43		(5)
Commercial mortgage-backed securities	153	3,331		(286)		16	448		(2)				137	2,883		(284)
Other asset-backed securities	79	1,797		(44)		40	880		(2)				39	917		(42)

Total fixed maturities	768	$	21,390	$	(999)	157	$	5,447	$	(33)			611	$	15,943	$	(966)


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months						12 Months or Greater
($ in millions)	No. of Sec.	Fair Value		Gross Unrealized Losses			No. of Sec.		Fair Value		Gross Unrealized Losses
June 30, 2024
U.S. government obligations	117	$	29,776	$	(1,229)	17	$	12,936	$	(110)		100	$	16,840	$	(1,119)
State and local government obligations	336	2,079		(144)		58	411		(2)			278	1,668		(142)
Foreign government obligations	1	16		(1)		0	0		0			1	16		(1)
Corporate and other debt securities	405	9,032		(306)		150	3,307		(19)			255	5,725		(287)
Residential mortgage-backed securities	39	308		(9)		7	244		0			32	64		(9)
Commercial mortgage-backed securities	183	3,883		(489)		7	315		(1)			176	3,568		(488)
Other asset-backed securities	176	3,133		(89)		62	1,447		(3)			114	1,686		(86)

Total fixed maturities	1,257	$	48,227	$	(2,267)	301	$	18,660	$	(135)		956	$	29,567	$	(2,132)


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months						12 Months or Greater
($ in millions)	No. of Sec.	Fair Value		Gross Unrealized Losses			No. of Sec.		Fair Value		Gross Unrealized Losses
December 31, 2024
U.S. government obligations	113	$	38,782	$	(1,151)	39	$	30,257	$	(418)		74	$	8,525	$	(733)
State and local government obligations	379	2,339		(117)		127	783		(6)			252	1,556		(111)

Corporate and other debt securities	304	7,034		(215)		122	2,935		(33)			182	4,099		(182)
Residential mortgage-backed securities	40	428		(11)		12	377		(4)			28	51		(7)
Commercial mortgage-backed securities	153	3,294		(376)		8	264		(16)			145	3,030		(360)
Other asset-backed securities	84	1,907		(65)		34	912		(8)			50	995		(57)

Total fixed maturities	1,073	$	53,784	$	(1,935)	342	$	35,528	$	(485)		731	$	18,256	$	(1,450)

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

Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did not record any allowances for credit losses or any write-offs for credit losses deemed to be uncollectible during the first six months of 2025 or 2024, and did not have a material credit loss allowance balance as of June 30, 2025 and 2024, or December 31, 2024. We considered several factors and inputs related to the individual securities as part of our analysis. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included:

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

We initially reviewed securities in a loss position to determine whether we intended, or if it was more likely than not that we would be required, to sell any of the securities prior to the recovery of their respective cost bases (which could be maturity). If we were more likely than not, or intended, to sell prior to a potential recovery, we would write off the unrealized loss. No unrealized loss write offs were recorded during the six months ended June 30, 2025 or 2024.

For those securities that we determined we were not likely to, or did not intend to, sell prior to a potential recovery, we performed additional analysis to determine if the loss was credit related. For securities with a potential credit-related loss, we calculated the net present value (NPV) of the cash flows expected (i.e., expected recovery value) using the current book yield for each security. The NPV was then compared to the security’s current amortized cost basis to determine if a credit loss existed. If the NPV was below the amortized cost basis, and deemed material for any specific security, or in the aggregate, a credit loss would be recognized and either a new allowance for credit losses would be recorded, or adjustments would be made to a previous allowance. All changes to new or existing allowances for credit losses are recorded to net realized gains (losses) on securities.

As of June 30, 2025 and 2024, and December 31, 2024, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate. We continue to expect all the securities in our fixed-maturity portfolio to pay their principal and interest obligations.

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at June 30, 2025 and 2024, and December 31, 2024, to determine if the accrued interest amounts were uncollectible. Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest, and future principal obligations and, therefore, did not write off any accrued income as uncollectible at June 30, 2025 and 2024, or December 31, 2024.

Realized Gains (Losses) The components of net realized gains (losses) for the three and six months ended June 30, were:


	Three Months				Six Months
(millions)	2025		2024		2025		2024
Gross realized gains on security sales
Available-for-sale securities:
U.S. government obligations	$	24	$	1	$	77	$	1

Corporate and other debt securities	2		1		3		4
Residential mortgage-backed securities	1		1		1		1




Total available-for-sale securities	27		3		81		6
Equity securities:
Nonredeemable preferred stocks	0		0		2		0
Common equities	4		0		39		12
Total equity securities	4		0		41		12

Subtotal gross realized gains on security sales	31		3		122		18
Gross realized losses on security sales
Available-for-sale securities:
U.S. government obligations	(1)		(192)		(78)		(327)
State and local government obligations	0		0		(2)		0
Corporate and other debt securities	(2)		(23)		(3)		(38)

Commercial mortgage-backed securities	(6)		(10)		(10)		(15)



Total available-for-sale securities	(9)		(225)		(93)		(380)
Equity securities:
Nonredeemable preferred stocks	(3)		(5)		(5)		(11)
Common equities	0		0		(4)		0
Total equity securities	(3)		(5)		(9)		(11)
Subtotal gross realized losses on security sales	(12)		(230)		(102)		(391)
Net realized gains (losses) on security sales
Available-for-sale securities:
U.S. government obligations	23		(191)		(1)		(326)
State and local government obligations	0		0		(2)		0
Corporate and other debt securities	0		(22)		0		(34)
Residential mortgage-backed securities	1		1		1		1
Commercial mortgage-backed securities	(6)		(10)		(10)		(15)



Total available-for-sale securities	18		(222)		(12)		(374)
Equity securities:
Nonredeemable preferred stocks	(3)		(5)		(3)		(11)
Common equities	4		0		35		12
Total equity securities	1		(5)		32		1

Subtotal net realized gains (losses) on security sales	19		(227)		20		(373)




Net holding period gains (losses)
Hybrid securities	11		3		14		11
Equity securities	357		97		141		391

Subtotal net holding period gains (losses)	368		100		155		402





Total net realized gains (losses) on securities	$	387	$	(127)	$	175	$	29

Realized gains (losses) on securities sold are computed using the first-in-first-out method. During the second quarter and first six months of 2025 and 2024, the majority of our security sales were U.S. Treasury Notes that were sold for duration management. We also selectively sold securities that we viewed as having less attractive risk/reward profiles during the second quarter and first six months of 2025 and 2024.

The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective quarter ends:


	Three Months				Six Months
(millions)	2025		2024		2025		2024
Total net gains (losses) recognized during the period on equity securities	$	358	$	92	$	173	$	392
Less: Net gains (losses) recognized on equity securities sold during the period	1		(5)		32		1
Net holding period gains (losses) recognized during the period on equity securities held at period end	$	357	$	97	$	141	$	391

Net Investment Income The components of net investment income for the three and six months ended June 30, were:


	Three Months				Six Months
(millions)	2025		2024		2025		2024
Available-for-sale securities:
Fixed maturities:
U.S. government obligations	$	422	$	361	$	844	$	668
State and local government obligations	21		13		40		26

Corporate and other debt securities	208		137		379		262
Residential mortgage-backed securities	32		8		57		13
Commercial mortgage-backed securities	59		47		112		93
Other asset-backed securities	84		82		168		160

Total fixed maturities	826		648		1,600		1,222
Short-term investments	28		17		46		36
Total available-for-sale securities	854		665		1,646		1,258
Equity securities:
Nonredeemable preferred stocks	5		10		13		21
Common equities	12		10		26		24
Total equity securities	17		20		39		45
Investment income	871		685		1,685		1,303
Investment expenses	(9)		(7)		(16)		(13)
Net investment income	$	862	$	678	$	1,669	$	1,290

On a year-over-year basis, investment income (interest and dividends) increased 27% and 29% for the three and six months ended June 30, 2025, respectively, compared to the same periods last year. The increases primarily reflect growth in invested assets and an increase in recurring investment book yield. The book yield increase primarily reflected investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities.

3. FAIR VALUE

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

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

are derived principally from or corroborated by observable market data by correlation or other means.

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

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

The composition of the investment portfolio by major security type and our outstanding debt was:


	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
June 30, 2025
Fixed maturities:
U.S. government obligations	$	46,810	$	0	$	0	$	46,810	$	46,684
State and local government obligations	0		2,964		0		2,964		3,030
Foreign government obligations	0		17		0		17		17
Corporate and other debt securities	0		18,117		5		18,122		18,004
Residential mortgage-backed securities	0		2,660		0		2,660		2,644
Commercial mortgage-backed securities	0		5,049		0		5,049		5,325
Other asset-backed securities	0		6,650		0		6,650		6,668





Total fixed maturities	46,810		35,457		5		82,272		82,372
Short-term investments	1,922		181		0		2,103		2,103
Total available-for-sale securities	48,732		35,638		5		84,375		84,475
Equity securities:

Nonredeemable preferred stocks	0		440		60		500		517



Common equities:
Common stocks	3,694		0		9		3,703		743
Other risk investments	0		0		32		32		32
Subtotal common equities	3,694		0		41		3,735		775
Total equity securities	3,694		440		101		4,235		1,292
Total portfolio	$	52,426	$	36,078	$	106	$	88,610	$	85,767
Debt	$	0	$	6,294	$	0	$	6,294	$	6,895


	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
June 30, 2024
Fixed maturities:
U.S. government obligations	$	40,894	$	0	$	0	$	40,894	$	42,063
State and local government obligations	0		2,202		0		2,202		2,345
Foreign government obligations	0		16		0		16		17
Corporate and other debt securities	0		13,143		3		13,146		13,439
Residential mortgage-backed securities	0		976		0		976		981
Commercial mortgage-backed securities	0		3,970		0		3,970		4,457
Other asset-backed securities	0		6,285		0		6,285		6,366





Total fixed maturities	40,894		26,592		3		67,489		69,668
Short-term investments	733		0		0		733		733
Total available-for-sale securities	41,627		26,592		3		68,222		70,401
Equity securities:

Nonredeemable preferred stocks	0		786		52		838		887



Common equities:
Common stocks	3,250		0		22		3,272		684
Other risk investments	0		0		24		24		24
Subtotal common equities	3,250		0		46		3,296		708
Total equity securities	3,250		786		98		4,134		1,595
Total portfolio	$	44,877	$	27,378	$	101	$	72,356	$	71,996
Debt	$	0	$	6,166	$	0	$	6,166	$	6,891


	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2024
Fixed maturities:
U.S. government obligations	$	45,988	$	0	$	0	$	45,988	$	47,103
State and local government obligations	0		2,778		0		2,778		2,893
Foreign government obligations	0		16		0		16		16
Corporate and other debt securities	0		13,949		5		13,954		14,111
Residential mortgage-backed securities	0		1,601		0		1,601		1,600
Commercial mortgage-backed securities	0		4,352		0		4,352		4,721
Other asset-backed securities	0		6,643		0		6,643		6,682





Total fixed maturities	45,988		29,339		5		75,332		77,126
Short-term investments	613		2		0		615		615
Total available-for-sale securities	46,601		29,341		5		75,947		77,741
Equity securities:

Nonredeemable preferred stocks	0		676		52		728		756



Common equities:
Common stocks	3,527		0		23		3,550		720
Other risk investments	0		0		25		25		25
Subtotal common equities	3,527		0		48		3,575		745
Total equity securities	3,527		676		100		4,303		1,501
Total portfolio	$	50,128	$	30,017	$	105	$	80,250	$	79,242
Debt	$	0	$	6,173	$	0	$	6,173	$	6,893

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

Our short-term investments classified as Level 1 include commercial paper, treasury bills, and money market funds which are highly liquid, actively marketed, and have very short durations. These securities are valued at their original cost, adjusted for any accretion of discount, which approximates fair value because of the relatively short period of time until maturity. The remainder of our short-term investments with a trade date to maturity of less than a year are classified as Level 2. These securities are classified as Level 2 since they are valued using external pricing vendor prices or are securities that continually trade at par value because they contain either liquidity facilities or mandatory put features within one year and as a result are valued at their original cost.

At June 30, 2025 and 2024 and December 31, 2024, vendor-quoted prices represented 93% of our Level 1 classifications (excluding short-term investments valued at original cost). The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.

At June 30, 2025, vendor-quoted prices comprised 99% of our Level 2 classifications (excluding short-term investments valued at original cost), with the balance from

dealer quotes, compared to 100% at June 30, 2024 and December 31, 2024. In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.

As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute

one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance.

To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. When necessary, we challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.

For structured debt securities, including commercial, residential, and other asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates. We further stratify each class of structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, and subordinated) and use duration, credit quality, and coupon to determine if the fair value is appropriate.

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

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

For short-term investments valued at original cost, we look at acquisition price relative to the coupon or yield. Since most of these securities are 60 days or less to maturity, we believe that original cost is the best estimate of fair value. For short-term investments valued with external vendor prices, we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification, and recent trade information.

We also review data assumptions as supplied by our sources to determine if that data is relevant to current

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

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

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

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

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

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

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

Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value. At least annually, these private equity investments are priced by an external source.

Our Level 3 other risk investments include securities accounted for under the equity method of accounting and, therefore, are not subject to fair value reporting. Since these securities represent less than 0.1% of our total portfolio, we include them in our Level 3 disclosures and report the activity from these investments as “other” changes in the summary of changes in fair value table and categorize these securities as “pricing exemption securities” in the quantitative information table.

During the first six months of 2025 and for the full year of 2024, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

Due to the relative size of the Level 3 securities’ fair values, compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net or comprehensive income.

The following tables provide a summary of changes in fair value associated with Level 3 assets for the three and six months ended June 30, 2025 and 2024:



(millions)	Fair Value at March 31, 2025		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation1		Net Transfers In (Out)		Fair Value at June 30, 2025
Fixed maturities:
Corporate and other debt securities	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	5
Equity securities:

Nonredeemable preferred stocks	60		0		0		0		0		0		0		60

Common equities:
Common stocks	9		0		0		0		0		0		0		9
Other risk investments	31		1		0		0		0		0		0		32
Total Level 3 securities	$	105	$	1	$	0	$	0	$	0	$	0	$	0	$	106






(millions)	Fair Value at March 31, 2024		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation1		Net Transfers In (Out)		Fair Value at June 30, 2024
Fixed maturities:
Corporate and other debt securities	$	3	$	0	$	0	$	0	$	0	$	0	$	0	$	3
Equity securities:

Nonredeemable preferred stocks	64		0		0		0		0		(12)		0		52

Common equities:
Common stocks	22		0		0		0		0		0		0		22
Other risk investments	25		(1)		0		0		0		0		0		24
Total Level 3 securities	$	114	$	(1)	$	0	$	0	$	0	$	(12)	$	0	$	101



(millions)	Fair Value at December 31, 2024		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation1		Net Transfers In (Out)		Fair Value at June 30, 2025
Fixed maturities:
Corporate and other debt securities	$	5	$	0	$	0	$	0	$	0	$	0	$	0	$	5
Equity securities:

Nonredeemable preferred stocks	52		0		8		0		0		0		0		60

Common equities:
Common stocks	23		0		0		0		0		(14)		0		9
Other risk investments	25		7		0		0		0		0		0		32
Total Level 3 securities	$	105	$	7	$	8	$	0	$	0	$	(14)	$	0	$	106









(millions)	Fair Value at December 31, 2023		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation1		Net Transfers In (Out)		Fair Value at June 30, 2024
Fixed maturities:
Corporate and other debt securities	$	3	$	0	$	0	$	0	$	0	$	0	$	0	$	3
Equity securities:
Nonredeemable preferred stocks	64		0		0		0		0		(12)		0		52

Common equities:
Common stocks	22		0		0		0		0		0		0		22
Other risk investments	21		3		0		0		0		0		0		24
Total Level 3 securities	$	110	$	3	$	0	$	0	$	0	$	(12)	$	0	$	101

1 For fixed maturities, these amounts are included in accumulated other comprehensive income (loss) on our consolidated balance sheets. For equity securities, these amounts are included in our consolidated statements of comprehensive income.

The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at June 30, 2025 and 2024, and December 31, 2024:



($ in millions)	Fair Value at June 30, 2025		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Fixed maturities:
Corporate and other debt securities	$	5	Market comparables	Weighted average market capitalization price change %	0.6% to 0.8%	0.7	%
Equity securities:
Nonredeemable preferred stocks	60		Market comparables	Weighted average market capitalization price change %	(13.1)% to 22.7%	3.7	%








Common stocks	9		Market comparables	Weighted average market capitalization price change %	(26.3)% to 56.6%	21.3	%
Subtotal Level 3 securities	74
Pricing exemption securities	32
Total Level 3 securities	$	106



($ in millions)	Fair Value at June 30, 2024		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Fixed maturities:
Corporate and other debt securities	$	3	Market comparables	Weighted average market capitalization price change %	(1.2)% to 1.2%	0.2	%
Equity securities:
Nonredeemable preferred stocks	52		Market comparables	Weighted average market capitalization price change %	(7.6)% to (1.5)%	(2.9)	%




Common stocks	22		Market comparables	Weighted average market capitalization price change %	(26.5)% to 19.3%	(4.4)	%
Subtotal Level 3 securities	77
Pricing exemption securities	24
Total Level 3 securities	$	101



($ in millions)	Fair Value at December 31, 2024		Valuation Technique	Unobservable Input	Range of Input Values Increase (Decrease)	Weighted Average Increase (Decrease)
Fixed maturities:
Corporate and other debt securities	$	5	Market comparables	Weighted average market capitalization price change %	(1.4)% to (1.3)%	(1.4)	%
Equity securities:
Nonredeemable preferred stocks	52		Market comparables	Weighted average market capitalization price change %	(14.1)% to 6.0%	(2.7)	%


Common stocks	23		Market comparables	Weighted average market capitalization price change %	(41.3)% to 95.9%	6.0	%
Subtotal Level 3 securities	80
Pricing exemption securities	25
Total Level 3 securities	$	105

4. DEBT

Debt at each of the balance sheet periods consisted of the following Senior Notes:


($ in millions)						June 30, 2025				June 30, 2024			December 31, 2024
Principal Amount		Interest Rate		Issuance Date	Maturity Date	Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
$	500	2.45	%	August 2016	2027	$	499	$	488		$	499	$	469	$	499	$	479
500		2.50		March 2022	2027	499		487			498		468		499		479
300		6 5/8		March 1999	2029	298		324			298		321		298		320
550		4.00		October 2018	2029	548		547			547		527		547		534
500		3.20		March 2020	2030	498		477			497		455		498		462
500		3.00		March 2022	2032	497		456			497		434		497		439
400		6.25		November 2002	2032	397		438			397		428		397		430
500		4.95		May 2023	2033	497		511			497		495		497		495
350		4.35		April 2014	2044	347		299			347		301		347		298
400		3.70		January 2015	2045	396		310			396		310		396		308
850		4.125		April 2017	2047	843		699			842		699		842		684
600		4.20		March 2018	2048	591		493			591		494		591		490
500		3.95		March 2020	2050	491		392			491		392		491		386
500		3.70		March 2022	2052	494		373			494		373		494		369
Total						$	6,895	$	6,294		$	6,891	$	6,166	$	6,893	$	6,173

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

During the second quarter 2025, The Progressive Corporation renewed its line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $300 million, which expires April 2026 and has the same terms as the previous line of credit with PNC. See the 2024 Annual Report to Shareholders for a discussion of the terms of this line of credit. We had no borrowings under the line of credit that was available during the periods presented.

5. INCOME TAXES

The effective tax rate for the three and six months ended June 30, 2025, was 20.3% and 20.4%, respectively, compared to 21.6% and 21.0% for the same periods last year. The decrease in effective tax rate is primarily due to the tax benefits associated with distributions of deferred compensation during the second quarter 2025.

Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at June 30, 2025 and 2024, and December 31, 2024.

We had net current income taxes recoverable of $115 million at June 30, 2025, which were reported in other assets on our consolidated balance sheets, compared to net current income taxes payable of $9 million and $26 million at June 30, 2024 and December 31, 2024, respectively, which were reported in accounts payable, accrued expenses, and other liabilities. The balance may fluctuate from period to period due to normal timing differences.

At June 30, 2025 and 2024, and December 31, 2024, we have not recorded any unrecognized tax benefits or related interest and penalties.

6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

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


	June 30,
(millions)	2025		2024
Balance at January 1	$	39,057	$	34,389
Less reinsurance recoverables on unpaid losses	4,487		4,789
Net balance at January 1	34,570		29,600
Incurred related to:
Current year	27,016		23,630
Prior years	(607)		(63)
Total incurred	26,409		23,567
Paid related to:
Current year	12,842		11,470
Prior years	10,883		9,607
Total paid	23,725		21,077
Net balance at June 30	37,254		32,090
Plus reinsurance recoverables on unpaid losses	3,900		4,515
Balance at June 30	$	41,154	$	36,605

We experienced favorable reserve development of $607 million and $63 million during the first six months of 2025 and 2024, respectively, which is reflected as “incurred related to prior years” in the table above.

Year-to-date June 30, 2025

The favorable prior year reserve development included approximately $400 million attributable to accident year 2024, $115 million to accident year 2023, and the remainder to accident years 2022 and prior.
Our personal auto products incurred about $520 million of favorable loss and loss adjustment expense (LAE) reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated loss severity and frequency in Florida and, to a lesser extent, lower than anticipated litigation defense costs across most states.
Our personal property products experienced about $50 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events.
Our Commercial Lines business experienced about $45 million of favorable development, primarily attributable to lower than anticipated severity in our transportation network company business.

Year-to-date June 30, 2024

The favorable prior year reserve development included approximately $60 million of favorable development attributable to accident year 2023 and $20 million to accident year 2022; partially offset by unfavorable development attributable to accident years 2021 and prior.
Our personal auto products incurred about $235 million of favorable loss and LAE reserve development, with about 60% attributable to the agency auto business and the balance in the direct auto business. The favorable development was, in part, due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023 and lower than anticipated property damage severity across the majority of states.
Our Commercial Lines and personal property businesses experienced about $140 million and $30 million, respectively, of unfavorable development, with the Commercial Lines development primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

7. SUPPLEMENTAL CASH FLOW INFORMATION

Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries. The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at June 30, 2025 and 2024, and December 31, 2024, were $80 million, $81 million, and $127 million, respectively. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.

Non-cash activity included the following in the respective periods:


	Six Months Ended June 30,
(millions)	2025		2024
Common share dividends1	$	58	$	58
Operating lease liabilities2	63		47

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

2 From obtaining right-of-use assets.

In the respective periods, we paid the following:


	Six Months Ended June 30,
(millions)	2025		2024
Income taxes	$	1,644	$	1,351
Interest	138		138
Operating lease liabilities	45		43

8. SEGMENT INFORMATION

Our Personal Lines segment writes insurance for personal autos, special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), personal residential property insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program. Property information for the three and six months ended June 30, 2024, was recast to conform to the current year presentation; see Note 10 – Segment Information in our 2024 Annual Report to Shareholders for further discussion.

Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related

general liability and commercial property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.

Our service businesses provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses.

All segment revenues are generated from external customers and all intercompany transactions are eliminated in consolidation.

Following are the operating results for the respective periods:


(millions)	Personal Lines		Commercial Lines		Other1		Companywide
Three Months Ended June 30, 2025
Net premiums earned	$	17,544	$	2,765	$	1	$	20,310
Fees and other revenues	263		40		0		303
Total underwriting revenue	17,807		2,805		1		20,613
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses)	9,574		1,561		(1)		11,134
Catastrophe losses	688		19		0		707
Loss adjustment expenses	1,471		292		1		1,764
Total losses and loss adjustment expenses	11,733		1,872		0		13,605
Underwriting expenses:
Distribution expenses2	2,328		308		1		2,637
Other underwriting expenses3	1,298		261		4		1,563
Total underwriting expenses	3,626		569		5		4,200
Pretax underwriting profit (loss)	$	2,448	$	364	$	(4)	2,808
Investment profit (loss)4							1,249
Service businesses profit (loss)							(6)
Interest expense							(69)
Total pretax profit (loss)							$	3,982


(millions)	Personal Lines		Commercial Lines		Other1		Companywide
Three Months Ended June 30, 2024
Net premiums earned	$	14,545	$	2,664	$	0	$	17,209
Fees and other revenues	216		44		0		260
Total underwriting revenue	14,761		2,708		0		17,469
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses)	8,148		1,581		(1)		9,728
Catastrophe losses	1,243		26		0		1,269
Loss adjustment expenses	1,324		274		0		1,598
Total losses and loss adjustment expenses	10,715		1,881		(1)		12,595
Underwriting expenses:
Distribution expenses2	1,828		284		0		2,112
Other underwriting expenses3	1,135		239		2		1,376
Total underwriting expenses	2,963		523		2		3,488
Pretax underwriting profit (loss)	$	1,083	$	304	$	(1)	1,386
Investment profit (loss)4							551
Service businesses profit (loss)							(8)
Interest expense							(69)
Total pretax profit (loss)							$	1,860


(millions)	Personal Lines		Commercial Lines		Other1		Companywide
Six Months Ended June 30, 2025
Net premiums earned	$	34,254	$	5,464	$	1	$	39,719
Fees and other revenues	512		78		0		590
Total underwriting revenue	34,766		5,542		1		40,309
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses)	18,683		3,120		(1)		21,802
Catastrophe losses	1,142		24		0		1,166
Loss adjustment expenses	2,861		579		1		3,441
Total losses and loss adjustment expenses	22,686		3,723		0		26,409
Underwriting expenses:
Distribution expenses2	4,676		594		1		5,271
Other underwriting expenses3	2,573		523		8		3,104
Total underwriting expenses	7,249		1,117		9		8,375
Pretax underwriting profit (loss)	$	4,831	$	702	$	(8)	5,525
Investment profit (loss)4							1,844
Service businesses profit (loss)							(12)
Interest expense							(139)
Total pretax profit (loss)							$	7,218


(millions)	Personal Lines		Commercial Lines		Other1		Companywide
Six Months Ended June 30, 2024
Net premiums earned	$	28,136	$	5,222	$	0	$	33,358
Fees and other revenues	412		84		0		496
Total underwriting revenue	28,548		5,306		0		33,854
Losses and loss adjustment expenses:
Losses (excluding catastrophe losses)	15,711		3,174		(3)		18,882
Catastrophe losses	1,581		35		0		1,616
Loss adjustment expenses	2,521		548		0		3,069
Total losses and loss adjustment expenses	19,813		3,757		(3)		23,567
Underwriting expenses:
Distribution expenses2	3,388		558		0		3,946
Other underwriting expenses3	2,223		478		4		2,705
Total underwriting expenses	5,611		1,036		4		6,651
Pretax underwriting profit (loss)	$	3,124	$	513	$	(1)	3,636
Investment profit (loss)4							1,319
Service businesses profit (loss)							(16)
Interest expense							(139)
Total pretax profit (loss)							$	4,800

1 Includes other underwriting businesses and run-off operations.

2 Includes policy acquisition costs, agents’ contingent commissions, and advertising costs attributable to our operating segments. A portion of our companywide advertising costs are also attributed to our service businesses.

3 Primarily consists of employee compensation and benefit costs, and the increase in the allowance for credit loss exposure on our premiums receivable.

4 Calculated as recurring investment income plus total net realized gains (losses) on securities, less investment expenses.

Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Combined ratio is the complement of the underwriting margin. 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. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
	Under- writing Margin		Combined Ratio	Under- writing Margin		Combined Ratio	Under- writing Margin		Combined Ratio	Under- writing Margin		Combined Ratio
Personal Lines	14.0	%	86.0	7.4	%	92.6	14.1	%	85.9	11.1	%	88.9
Commercial Lines	13.2		86.8	11.4		88.6	12.9		87.1	9.8		90.2
Total underwriting operations	13.8		86.2	8.1		91.9	13.9		86.1	10.9		89.1

9. DIVIDENDS

Following is a summary of our common and preferred share dividends that were declared and/or paid during the six months ended June 30, 2025 and 2024:


(millions — except per share amounts)		Amount
Declared	Payable	Per Share		Accrued/Paid1
Common – Annual-Variable Dividends:
December 2024	January 2025	$	4.50	$	2,637
December 2023	January 2024	0.75		439

Common – Quarterly Dividends:
May 2025	July 2025	0.10		58
March 2025	April 2025	0.10		59
December 2024	January 2025	0.10		58
May 2024	July 2024	0.10		58
March 2024	April 2024	0.10		59
December 2023	January 2024	0.10		59

Preferred Dividends:
January 20242	February 2024	15.688377		8

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

2 In February 2024, we redeemed all of our outstanding Serial Preferred Shares, Series B.

10. OTHER COMPREHENSIVE INCOME (LOSS)

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


							Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at March 31, 2025	$	(671)	$	147	$	(524)	$	(509)	$	(14)	$	(1)
Other comprehensive income (loss) before reclassifications:
Investment securities	558		(117)		441		441		0		0




Total other comprehensive income (loss) before reclassifications	558		(117)		441		441		0		0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	16		(3)		13		13		0		0
Interest expense	(1)		0		(1)		0		(1)		0
Total reclassification adjustment for amounts realized in net income	15		(3)		12		13		(1)		0
Total other comprehensive income (loss)	543		(114)		429		428		1		0
Balance at June 30, 2025	$	(128)	$	33	$	(95)	$	(81)	$	(13)	$	(1)


							Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at March 31, 2024	$	(2,316)	$	492	$	(1,824)	$	(1,809)	$	(14)	$	(1)


Other comprehensive income (loss) before reclassifications:
Investment securities	(85)		18		(67)		(67)		0		0




Total other comprehensive income (loss) before reclassifications	(85)		18		(67)		(67)		0		0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	(221)		46		(175)		(175)		0		0

Total reclassification adjustment for amounts realized in net income	(221)		46		(175)		(175)		0		0
Total other comprehensive income (loss)	136		(28)		108		108		0		0
Balance at June 30, 2024	$	(2,180)	$	464	$	(1,716)	$	(1,701)	$	(14)	$	(1)


							Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at December 31, 2024	$	(1,809)	$	386	$	(1,423)	$	(1,408)	$	(14)	$	(1)
Other comprehensive income (loss) before reclassifications:
Investment securities	1,666		(350)		1,316		1,316		0		0




Total other comprehensive income (loss) before reclassifications	1,666		(350)		1,316		1,316		0		0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	(14)		3		(11)		(11)		0		0
Interest expense	(1)		0		(1)		0		(1)		0
Total reclassification adjustment for amounts realized in net income	(15)		3		(12)		(11)		(1)		0
Total other comprehensive income (loss)	1,681		(353)		1,328		1,327		1		0
Balance at June 30, 2025	$	(128)	$	33	$	(95)	$	(81)	$	(13)	$	(1)

							Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at December 31, 2023	$	(2,053)	$	437	$	(1,616)	$	(1,601)	$	(14)	$	(1)


Other comprehensive income (loss) before reclassifications:
Investment securities	(499)		105		(394)		(394)		0		0




Total other comprehensive income (loss) before reclassifications	(499)		105		(394)		(394)		0		0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities	(372)		78		(294)		(294)		0		0

Total reclassification adjustment for amounts realized in net income	(372)		78		(294)		(294)		0		0
Total other comprehensive income (loss)	(127)		27		(100)		(100)		0		0
Balance at June 30, 2024	$	(2,180)	$	464	$	(1,716)	$	(1,701)	$	(14)	$	(1)

In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances. During the next 12 months, we expect to reclassify $1 million (pretax) into interest expense, related to net unrealized losses on forecasted transactions (see Note 4 – Debt in our 2024 Annual Report to Shareholders for further discussion).

11. LITIGATION

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

In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our 2024 Annual Report to Shareholders.

As of June 30, 2025, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging that: we improperly value total loss claims by applying a negotiation adjustment in Alabama, Arkansas, Colorado, Georgia, Indiana, North Carolina, Ohio, Pennsylvania, and South Carolina; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; and we improperly reduce or deny personal injury protection benefits when medical expenses are paid initially by health insurance in Arkansas. Other insurance companies face many of these same issues. We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate.

Lawsuits arising from insurance policies and operations, including but not limited to allegations involving claims adjustment and vehicle valuation, may be filed

contemporaneously in multiple states. As of June 30,

2025, we are named as defendants in class action lawsuits

pending in multiple states alleging that we improperly

value total loss vehicle physical damage claims through the

application of a negotiation adjustment in calculating such valuations, which includes nine states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states. These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws. While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations. Based on information available to us, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for suits for which accruals have been established and are not material, as of June 30, 2025.

With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established were not material at June 30, 2025 and 2024, or December 31, 2024, and there were no material settlements during 2024 or the first six months of 2025. For most of these lawsuits, we do not consider any losses to be both probable and estimable, and we are unable to estimate a meaningful range of loss, if any, at this time, due to the factors discussed in Note 12 – Litigation in our 2024 Annual Report to Shareholders. In the event that any one or more of these lawsuits results in a substantial judgment against us, or settlement by us, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material adverse effect on our consolidated financial condition, cash flows, and/or results of operations. For a further discussion on our pending litigation and related reserving policies, see Note 1 – Reporting and Accounting Policies and Note 12 – Litigation in our 2024 Annual Report to Shareholders.

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.