Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand our financial condition and results of operations. MD&A should be read in conjunction with the consolidated financial statements and the related notes, and supplemental information.
I. OVERVIEW
The Progressive insurance organization has been offering insurance to consumers since 1937. The Progressive Corporation is a holding company that does not have any revenue producing operations, physical property, or employees of its own. The Progressive Corporation, together with its insurance and non-insurance subsidiaries and affiliates, comprise what we refer to as Progressive.
We report two operating segments. Our Personal Lines segment, which represents 87% of companywide net premiums written, writes insurance for personal vehicles, which include personal auto and special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), personal residential property insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program. Our personal auto product represents about 90% of our Personal Lines net premiums written and just under 80% of our companywide premiums, and contributes the largest impact to our underwriting results. Our special lines and personal property insurance products each represent about 5% of our total Personal Lines premiums.
Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and commercial property insurance predominantly for small businesses, and workers’ compensation insurance primarily for the transportation industry. Commercial Lines includes our core commercial auto products, transportation network company (TNC) business, Progressive Fleet & Specialty Programs (Fleet & Specialty) products, and business owners’ policy (BOP) product and represents 13% of our companywide net premiums written. Our core commercial auto products represented about 80% of our total Commercial Lines net premiums written and about 10% of companywide premiums.
We operate both segments throughout the United States, through both the independent agency and direct distribution channels. Based on 2024 premiums written, in the United States, we are the second largest private passenger auto insurer, the largest writer of motorcycle insurance, the twelfth largest homeowners insurance carrier, and the largest writer of commercial auto insurance.
Our underwriting operations, combined with our service and investment operations, make up the consolidated group.
A. Operating Results
During 2025, Progressive maintained an underwriting profit better than our 4% companywide calendar-year underwriting profit goal and reported excellent results year over year in both premiums and policies in force. Our underwriting profit margin was 12.6%, which was 1.4 points better than the 11.2% margin earned in 2024. We wrote $83.2 billion of net premiums written during 2025, which was $8.8 billion, or 12%, more than we generated during 2024, with a 15% increase in net premiums earned. We ended 2025 with 3.7 million, or 10%, more policies in force than at December 31, 2024.
Both our Personal Lines and Commercial Lines operating segments generated strong profitability during the year, reporting underwriting profit margins of 12.5% and 13.0%, respectively, compared to 11.4% and 10.6% for 2024. Several factors contributed to the increase in our underwriting profit, including lower personal and commercial auto accident frequency, lower weather-related catastrophe losses, and favorable prior accident years development. Partially offsetting the positive impact on profitability in Personal Lines was 1.7 points of policyholder credit expense related to personal auto excess profits earned in Florida.
Since Florida insurance reform was enacted in early 2023, we have seen lower loss costs on certain types of personal auto accident claims and favorable reserve development, and we have experienced strong profitability in our Florida personal auto business. Despite actions to lower rates, beginning in the fourth quarter 2024 and through 2025, our personal auto profit in Florida for the 2023 to 2025 period exceeded the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any three-accident-year period. As a result, in 2025, we recorded a $1.2 billion policyholder credit expense (Florida policyholder credits), which represents our current estimate of the profit we earned on the three-accident-year period ending December 31, 2025, in excess of the permitted profit limit. See II. Financial Condition for further information.
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Our Personal Lines segment experienced year-over-year growth for 2025, with net premiums written increasing 14% and policies in force up 11%, over the significant growth of 23% in net premiums written and 18% in policies in force we experienced during 2024. This growth was primarily driven by our personal auto products’ strong renewal application growth, driven by new applications gained over 2024 renewing during 2025.
In Commercial Lines, we experienced a decrease in net premiums written of 3% for 2025, compared to 2024, despite experiencing policies in force growth of 4%. The decline in net premiums written was primarily due to certain TNC policies that were not renewed in 2025. To a lesser extent, the net premiums written decline was due to a shift to a greater mix of policies with 6-month terms in our contractor and business auto business market targets (BMT), which have about half the amount of net premiums written as 12-month policies, and to a mix shift to lower average written premium BMTs in our core commercial auto business. Excluding TNC, Commercial Lines net premiums written would have decreased 1% for 2025, compared to 2024.
During 2025, in the aggregate, we decreased personal auto rates less than 1% and increased our personal property rates about 10%. In our core commercial auto business, we increased rates about 9% in the aggregate during 2025.
While we currently continue to believe we are adequately priced in our personal auto products in most states, 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 adds uncertainty in predicting how tariffs will ultimately impact our business over time. While our focus has been on trying to maintain stable rates for customers, effective tariffs and other retaliatory actions may result in higher loss costs, which could result in a reduction in profitability and the possible need for rate increases throughout 2026.
While we expect to continue increasing rates modestly in our personal property and core commercial auto products during 2026, we will continue to monitor the impact from tariffs and other potential changes in the regulatory environment as we evaluate the possible need for additional rate increases.
For 2025, the year-over-year increase in companywide underwriting profitability was the primary contributor to the $2.8 billion increase in net income. The remainder of the net income increase reflected an increase in recurring investment income during 2025, primarily reflecting investing new cash from insurance operations and proceeds from maturing bonds in higher coupon rate securities. Total
comprehensive income increased $4.2 billion, primarily reflecting the increase in net income and the increase in net unrealized gains on our fixed-maturity securities in 2025.
We ended 2025 with total capital (debt plus shareholders’ equity) of $37.2 billion, which was an increase of $4.7 billion from year-end 2024, primarily driven by the $12.8 billion of comprehensive income earned in 2025, partially offset by $8.1 billion of quarterly and annual-variable common share dividends declared during 2025.
B. Insurance Operations
Our companywide underwriting profit margin was 12.6% during 2025, compared to 11.2% during 2024. For 2025, our loss and loss adjustment expense (LAE) ratio decreased 3.2 points, and our underwriting expense ratio increased 1.8 points, compared to 2024. The decrease in the loss and LAE ratio was primarily driven by lower personal and commercial auto accident frequency, lower weather-related catastrophe losses, and favorable prior accident years development, compared to the prior year. The increase in the underwriting expense ratio was primarily driven by the Florida policyholder credits, previously discussed, which contributed 1.5 points to the companywide ratio. Our Personal Lines and Commercial Lines operating segments both generated strong profitability for 2025, with margins of 12.5% and 13.0%, respectively. Excluding the Florida policyholder credits, the Personal Lines underwriting margin would have been 14.2%.
We closely manage our expenses, monitoring both acquisition expenses and non-acquisition expenses, which we view as important measures of operational efficiency as we seek to deliver our most competitive rates to consumers. During 2025, our advertising spend was $5.1 billion, an increase of $1.1 billion, or 0.6 points, greater than 2024. We plan to continue to advertise to maximize growth as long as the advertising spend is efficient and we remain on track to achieve our target profitability.
Our Personal Lines segment is comprised of our personal vehicle and property products. Personal Lines vehicles include both personal auto and special lines products. For 2025, our personal vehicle and personal property underwriting margins were 11.9% and 24.9%, respectively, with Florida policyholder credits reducing the personal vehicles margin by 1.8 points. Profitability in our special lines products had a favorable 0.4 point impact on our personal vehicle combined ratio during 2025. The substantially higher underwriting profit margin in our personal property products during 2025 was primarily driven by the low level of catastrophe losses incurred, lower loss frequency, favorable development on prior year losses, and increased rates.
Our Personal Lines segment experienced year-over-year growth for 2025, with our agency and direct personal vehicle businesses and personal property business net premiums written growing 11%, 19%, and 1%,
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respectively, compared to 2024, and policies in force growing 9%, 13%, and 4%.
Changes in net premiums written are a function of new business applications (i.e., policies sold), business mix, premium per policy, and retention.
Relative to the significant growth we experienced in our Personal Lines new business applications during 2024, we experienced a moderate increase in total new business applications during 2025. Total Personal Lines renewal business applications increased substantially, primarily driven by the significant new business application growth experienced in our personal vehicle products in prior periods. New and renewal personal auto applications increased 9% and 20%, respectively, in 2025, compared to the prior year.
In our personal property business, strong growth in new applications in our renters policies was more than offset by a decrease in our homeowners product, which we define as our total personal property business excluding renters and umbrella products. For 2025, the new business applications in our homeowners product decreased about 45%, compared to 2024, with a significant decrease in both the less volatile and more volatile (e.g., coastal and hail-prone states) weather-related markets throughout the year.
During 2025, in our personal property business, we continued to focus on improving profitability and reducing exposure in more volatile weather-related markets, and, where permitted, on slowing growth and non-renewing policies. We prioritized insuring lower-risk properties (e.g., new construction, existing homes with newer roofs), accepting new business for our homeowners product only when bundled with a Progressive personal auto policy, where permitted, and continued to exit the non-owner-occupied home market. In addition, we maintained our cost sharing through mandatory wind and hail deductibles and roof depreciation schedules in most markets. We believe these actions adversely impacted new business application growth. During late 2025, we began to take actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing execution, and regulatory and market conditions. Some of these actions include expanding agency relationships, lifting certain agency restrictions put in place in 2024, and reopening new business in our direct channel. We plan to continue these actions in 2026.
The total Commercial Lines net premiums written decreased 3% for 2025, compared to 2024, primarily reflecting certain TNC policies not renewing in 2025, and, to a lesser extent, a shift to a greater mix of policies with 6-month terms, and a mix shift to lower average written premium BMTs, all compared to 2024. Excluding the TNC business, total Commercial Lines net premiums written was down 1% for 2025, on a year-over-year basis.
New and renewal business applications in our core commercial auto products increased 1% and 6%, respectively, for 2025, compared to the prior year. The low new business application growth was predominantly influenced by the for-hire transportation BMT, reflecting the impact of rate and non-rate actions taken to address profitability challenges and, to a lesser extent, the continued decline in the number of active motor carriers in this BMT. Excluding the impact of this BMT, our core commercial auto new application growth would have been 5% for 2025.
During 2025, on a year-over-year basis, average written premium per policy decreased 1%, 7%, and 6% in the personal auto, personal property, and core commercial auto products, respectively. In aggregate, we took minimal personal auto rate actions during 2025. The decrease in personal property average written premium per policy primarily was due to a shift in the mix of business to more renters policies, which have lower average written premiums, and our continued focus on slowing growth in more volatile weather-related markets, which generally have higher risk and, therefore, higher average premiums per policy. These mix shifts in our personal property business were partially offset by aggregate rate increases of 10% taken during 2025 and higher premium coverages reflecting increased property values.
The decrease in average written premium per policy in our core commercial auto products was due to a shift in the mix of business, as previously discussed. This decrease was partially offset by rate increases of 9%, in the aggregate, for 2025. Given that our personal property and commercial auto policies are predominately written for 12-month terms, rate actions take longer to earn into premium for these products.
We will continue to monitor the factors that could impact our loss costs for both segments, which may include tariffs, as previously discussed, new and used car prices, miles driven, driving patterns, loss severity, weather events, building materials, construction costs, inflation, and other factors, on a state-by-state basis.
We believe a key element in improving the accuracy of our personal auto rating is Snapshot ® , our usage-based insurance offering. For 2025, the personal auto adoption rates for consumers enrolling in the program decreased 2% in agency and increased 6% in direct, compared to the same period last year. Snapshot is available in all states, other than California, and our latest segmentation model was available in states that represented 81% of our countrywide personal auto net premiums written (excluding California) at year-end 2025. We continue to invest in our mobile application, with the majority of new enrollments choosing mobile devices for Snapshot monitoring.
We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently,
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increasing retention continues to be one of our most important priorities. Our efforts to increase our share of Progressive personal auto and personal property bundled households (i.e., Robinsons) remains a key initiative, and we plan to 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 newly written policy will remain in force before cancellation or lapse in coverage, is our primary measure of customer retention in our Personal Lines and Commercial Lines businesses.
In personal auto, we evaluate 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, we believe this measure is more responsive to current experience and may be an indicator for the future trend of our 12-month measure. Our trailing 12-month total personal auto policy life expectancy was down 7% year over year for 2025, with agency personal auto down 6% and direct auto down 8%. On a trailing 3-month basis, our personal auto policy life expectancy was down 10% for 2025, compared to 2024. We believe these decreases are primarily due to increased shopping and competition in the marketplace, and a shift in our mix of business, including changes in billing plans offered to customers. Due, in part, to the efforts of our customer preservation team, during 2025 we saw an increase in existing customers who went through our new customer quote process to either modify existing coverage or to find a lower rate. As a result, some of these customers replaced their existing policies with new Progressive policies, which resulted in retention of the customer but negatively impacted the policy life expectancy measure.
Our trailing 12-month policy life expectancy was down 12% for our personal property products year over year for 2025. We believe this decrease primarily reflected a mix shift to more renters policies, which generally have a lower policy life expectancy.
For our core commercial auto products, our trailing 12-month policy life expectancy increased 10% in 2025, compared to 2024, which we believe is due to a shift in the mix of business to BMTs with historically higher policy life expectancies, the moderation of our rate increases, and various initiatives, such as payment and renewal reminders. The increase in the core commercial auto policy life expectancy was across all BMTs, except in for-hire specialty.
C. Investments
The fair value of our investment portfolio was $97.4 billion at December 31, 2025, compared to $80.3 billion at December 31, 2024. The increase from year-end 2024 primarily reflected positive cash flows from insurance operations and investment returns, partially offset by the payment of our quarterly and 2024 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 December 31, 2025 and 2024, 6% of our portfolio was allocated to Group I securities with the remainder to Group II securities.
Our recurring investment income generated a pretax book yield of 4.1% for 2025, compared to 3.9% for 2024. The increase from the prior year primarily reflected investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities. Our investment portfolio produced a fully taxable equivalent (FTE) total return of 7.3% for 2025 and of 4.6% for 2024. Our fixed-income and common stock portfolios had FTE total returns of 7.0% and 16.8%, respectively, for 2025, compared to 3.8% and 22.9%, respectively, for 2024. The increase in the fixed-income portfolio FTE total return primarily reflected movement in U.S. Treasury yields year over year. The decrease in the common stock portfolio FTE total return reflected general market conditions.
At both December 31, 2025 and 2024, the fixed-income portfolio had a weighted average credit quality of AA-. At December 31, 2025, the fixed-income portfolio duration was 3.4 years, compared to 3.3 years at December 31, 2024. During 2025, we increased our duration to take advantage of higher yields in the market.
At December 31, 2025, we continued to maintain a relatively conservative investment portfolio with a greater allocation to cash and treasuries. We believe that this portfolio allocation positions us well to benefit from the continuing dynamic market environment. We believe the investment portfolio is in a very strong position as we move into 2026.
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II. FINANCIAL CONDITION
A. Liquidity and Capital Resources
The Progressive Corporation receives cash through subsidiary dividends, capital raising, and other transactions, and uses these funds to contribute to its subsidiaries (e.g., to support growth), to make payments to shareholders and debt holders (e.g., dividends and interest, respectively), to repurchase its common shares, and to redeem or pay off debt, as well as for acquisitions and other business purposes that may arise.
During 2025, The Progressive Corporation received $10.0 billion, in the form of dividends, from its insurance and non-insurance subsidiaries.
The Progressive Corporation deployed capital through the following actions in 2025:
• Common Share Dividends - declared aggregate dividends of $13.90 per common share, or $8.1 billion.
• Common Share Repurchases - acquired 0.7 million of our common shares at a total cost of $166 million either in the open market or to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plan.
◦ Pursuant to our financial policies, we repurchase common shares to neutralize dilution from equity-based compensation granted during the year or opportunistically when we believe our shares are trading below our determination of long-term fair value.
• Capital Contributions - contributed a net $94 million to its insurance and non-insurance subsidiaries.
Over the last three years, The Progressive Corporation received dividends from its subsidiaries, net of capital contributions, of $13.2 billion.
Aggregate payments, not including accruals, made for the last three years, were as follows:
• $3.8 billion for common share dividends and $0.4 billion to repurchase our common shares;
• $0.8 billion for interest on our outstanding debt; and
• $0.6 billion for preferred share redemptions and dividends.
The covenants on The Progressive Corporation’s existing debt securities do not include any rating or credit triggers that would require an adjustment of the interest rate or an acceleration of principal payments in the event that our debt securities are downgraded by a rating agency. While we had an unsecured discretionary line of credit available to us during each of the last three years in the amount of $300 million, we did not borrow under this arrangement, or engage in other short-term borrowings, to fund our operations or for liquidity purposes.
Progressive’s insurance operations create liquidity by collecting and investing premiums from new and renewal business in advance of paying claims, as well as from our
insurance subsidiaries producing aggregate calendar-year underwriting profits and positive cash flows. As primarily an auto insurer, our claims liabilities generally have a short-term duration. At December 31, 2025, our loss and LAE reserves were $43.3 billion. Typically, at any point in time, approximately 50% of our outstanding loss and LAE reserves are paid within the following twelve months and less than 20% are still outstanding after three years. See Note 6 – Loss and Loss Adjustment Expense Reserves for further information on the timing of claims payments.
For the three years ended December 31, 2025, operations generated positive cash flows of $43.3 billion. In 2025, operating cash flows increased $2.4 billion, compared to 2024, primarily driven by the increase in underwriting profit. We believe cash flows will remain positive in the foreseeable future and do not anticipate the 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 December 31, 2025, we held $53.3 billion in short-term investments and U.S. Treasury securities, which represented nearly 55% of our total portfolio’s fair value at year end. 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 2025 Form 10-K filed with the U.S. Securities and Exchange Commission for a discussion of certain matters that may affect our portfolio and capital position.
Insurance companies are required to satisfy regulatory surplus and premiums-to-surplus ratio requirements. As of December 31, 2025, our consolidated statutory surplus was $28.4 billion, compared to $27.2 billion at December 31, 2024. Our net premiums written-to-surplus ratio was 2.9 to 1 at year-end 2025, 2.7 to 1 at year-end 2024, and 2.8 to 1 at year-end 2023. At December 31, 2025, we also had access to $13.0 billion of securities held in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations, provide additional capital to the insurance subsidiaries to fund potential future growth, and to fund other opportunities. In January 2026, a portion of these securities were used to pay the $8.0 billion common share dividends declared in December 2025.
Insurance companies are also required to satisfy risk-based capital ratios. These ratios are determined by a series of dynamic surplus-related calculations required by the laws of various states that contain a variety of factors that are applied to financial balances based on the degree of certain risks (e.g., asset, credit, and underwriting). One prominent ratio monitored by regulators is the amount of net
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premiums written as a ratio of surplus. Although the ratio of written premiums to surplus that the regulators will allow is a function of a number of factors (including applicable laws, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write historically have been perceived to be limited to a specified multiple of the insurer’s total surplus. This limit is generally 3 to 1 for property and casualty insurance and is generally the maximum target for our vehicle businesses. However, two states have permitted us to target a premiums-to-surplus ratio for our vehicle businesses to a maximum ratio of 3.5 to 1 based on our strong financial condition. This approval reduces the amount of capital we may need to hold at our applicable insurance subsidiaries relative to premium, subject to the other factors previously mentioned. For 2025, these subsidiaries represented 91% of our companywide total net premiums written. The pace and extent to which we move to this ratio is yet to be determined. Our insurance subsidiaries’ risk-based capital ratios were in excess of applicable minimum regulatory requirements at year-end 2025. The payment of dividends by our insurance subsidiaries are subject to certain limitations. See Note 8 – Statutory Financial Information for additional information on insurance subsidiary dividends.
We seek to deploy our 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. Management views our capital position as consisting of three layers, each with a specific size and purpose:
• The first layer of capital is the amount of capital we need to satisfy state insurance regulatory requirements and support our objective of writing all the business we can write and service, consistent with our underwriting discipline of achieving a combined ratio of 96 or better. This first layer of capital, which we refer to as “regulatory capital,” is held by our various insurance entities.
• While our regulatory capital layer is, by definition, a cushion for absorbing financial consequences of adverse events, such as loss reserve development, litigation, weather catastrophes, and investment market changes, we view that as a base and hold a second layer of capital for even more extreme conditions. The modeling used to quantify capital needs for these conditions is extensive, including tens of thousands of simulations, representing our best estimates of such contingencies based on historical experience. This capital is held either at a consolidated non-insurance subsidiary of the holding company or in our insurance entities, where it is potentially eligible for a dividend to the holding company.
• The third layer is capital in excess of the sum of the first two layers and provides maximum flexibility to fund other business opportunities, repurchase stock or other securities, and pay dividends to shareholders, among other purposes. This capital is largely held at a consolidated non-insurance subsidiary of the holding company.
We monitor our total capital position regularly throughout the year to ensure we have adequate capital to support our insurance operations. At December 31, 2025, we held total capital (debt plus shareholders’ equity) of $37.2 billion, compared to $32.5 billion at December 31, 2024. Our debt-to-total capital ratios at December 31, 2025, 2024, and 2023, were 18.5%, 21.2%, and 25.4%, respectively. Our debt-to-total capital ratios were consistent with our financial policy of maintaining a ratio of less than 30%.
At December 31, 2025, we had various noncancelable contractual obligations that were outstanding. We had outstanding $7.0 billion principal amount of Senior Notes with maturity dates ranging from 2027 through 2052, with $3.6 billion of future interest payment obligations related to our outstanding debt. The next debt repayments of $1.0 billion, in the aggregate, are due in 2027 upon the maturity of our 2.45% Senior Notes and our 2.50% Senior Notes. See Note 4 – Debt for additional information on our long-term debt.
At year-end 2025, we also had $3.0 billion of purchase obligations that are noncancelable commitments for goods and services (e.g., software licenses, maintenance on information technology equipment, and media placements). Just over 45% of our purchase obligations are payable within one year and just over 25% will be outstanding for longer than three years. In addition, we have $317 million of minimum commitments for reinsurance agreements, primarily related to multiple-layer property catastrophe reinsurance contracts with various reinsurers for terms ranging from one to three years. See Note 1 – Reporting and Accounting Policies, Commitments and Contingencies for a discussion of these obligations. We do not have, and do not expect to enter into, any material commitments for capital expenditures in the reasonably foreseeable future.
On July 4, 2025, H.R. 1, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” (the Act) was signed into law by the President of the United States. The Act contains numerous tax provisions applicable to corporations. These provisions did not have a material adverse effect on our financial condition or results of operations.
As previously discussed, during 2025, we recorded $1.2 billion of Florida policyholder credit expense, which represents the profit we expect we earned on the three-accident-year period ending December 31, 2025, in excess of the permitted profit limit. In early 2026, we began to provide credits to Florida personal auto policyholders active at December 31, 2025. See Item 1A, Risk Factors in
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our 2025 Form 10-K, for a description of other factors that may impact our ability to establish accurate loss reserves.
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, Florida policyholder credits, 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, depositary shares, common stock, purchase contracts, warrants, and units. The shelf registration enables us to raise funds, subject to market conditions, from the offering of any securities covered by the shelf registration as well as any combination thereof.
III. RESULTS OF OPERATIONS – UNDERWRITING
A. Segment Overview
We report our underwriting operations in two segments: Personal Lines and Commercial Lines. Our Personal Lines segment includes our personal vehicles (auto and special lines) and personal property products. Since our personal auto products represented about 90% of our Personal Lines segment net premiums written for 2025, much of the following discussion will focus on our personal auto products, both in total and by distribution channel. We will also discuss our personal property products as we continue to focus on improving profitability and reducing our concentration and exposure in more volatile weather-related markets.
Our Commercial Lines segment includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP business. Of our total Commercial Lines segment, our core commercial auto products represented 82% of net premiums written and our TNC business represented 14% as of year-end 2025. Therefore, much of the following discussion will focus only on our core commercial auto products.
The following table shows the composition of our companywide net premiums written, by segment, for the years ended December 31:
Personal Lines
Vehicles
Agency
Direct
Property
Total Personal Lines
Commercial Lines
Total underwriting operations
Within our Personal Lines segment, we often categorize our personal auto product policyholders into 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, to promote bundled personal auto and property growth, we write 12-month term personal auto policies in our Platinum agencies. At year-end 2025 and 2024, 10% and 12%, respectively, of our agency personal auto policies in force were 12-month policies. To the extent our agency application mix of annual personal auto policies changes, the shift in policy term could impact our average written premiums in the agency channel, as 12-month policies have about twice the amount of net premiums written, compared to 6-month policies.
Our special lines and personal property products are written for 12-month terms. In our special lines products and personal property business 57% and 72%, respectively, of net premiums written was generated through the independent agency channel, with the balance through the direct channel.
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Within our Commercial Lines segment, our core commercial auto business operates in the following five traditional business market targets (BMT):
• for-hire specialty;
• for-hire transportation;
• tow;
• contractor; and
• business auto.
At year-end 2025, about 85% of our 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, with about 10% of our core commercial auto premiums written through the direct channel for each of the last three years.
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, other underwriting expenses, and policyholder credit expense. 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 three years ended December 31, our underwriting profitability results were as follows:
Underwriting
Profit (Loss)
Underwriting
Profit (Loss)
Underwriting
Profit (Loss)
($ in millions)
Margin
Margin
Margin
Personal Lines
Vehicles
Agency 1
Direct 1
Property
Total Personal Lines
Commercial Lines
Other indemnity 2
Total underwriting operations
1 Included in the underwriting profit of the personal vehicles agency and direct businesses is $560 million and $664 million, respectively, of expense related to Florida policyholder credit expense for 2025.
2 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.
The increase in our underwriting profit margin on a year-over-year basis for 2025 was primarily due to a 3.2 point decrease in our companywide loss and LAE ratio, mostly driven by lower personal and commercial auto accident frequency, lower weather-related catastrophe losses, and favorable prior accident years development. The impact of the more favorable loss and LAE experience in 2025 was partially offset by a 1.8 point increase in our companywide underwriting expense ratio, driven in part by the 1.5 point increase related to the Florida policyholder credits expense in 2025.
See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our catastrophe losses, auto frequency and severity trends, and reserve development recognized during the periods and the Underwriting Expenses section for further discussion of our advertising and non-acquisition expenses.
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Further underwriting results for our Personal Lines business, Commercial Lines business, and our underwriting operations in total, were as follows:
Underwriting Performance 1
Personal Lines
Vehicles
Agency
Loss & loss adjustment expense ratio
Underwriting expense ratio 2
Combined ratio 2
Direct
Loss & loss adjustment expense ratio
Underwriting expense ratio 2
Combined ratio 2
Property
Loss & loss adjustment expense ratio
Underwriting expense ratio
Combined ratio
Total Personal Lines
Loss & loss adjustment expense ratio
Underwriting expense ratio 2
Combined ratio 2
Commercial Lines
Loss & loss adjustment expense ratio
Underwriting expense ratio
Combined ratio
Total Underwriting Operations
Loss & loss adjustment expense ratio
Underwriting expense ratio
Combined ratio
Accident year – Loss & loss adjustment expense ratio 3
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 Included in both the underwriting expense and the combined ratios for the personal vehicles agency and direct businesses are 1.9 points and 1.7 points, respectively, of expense related to the Florida policyholder credit for 2025. Excluding the policyholder credit, the total Personal Lines underwriting expense and combined ratios would have been 1.7 points lower for 2025.
3 The accident year ratios include only the losses that occurred during each respective year. 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 year are reviewed.
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Losses and Loss Adjustment Expenses (LAE)
(millions)
Change in net loss and LAE reserves
Paid losses and LAE
Total incurred losses and LAE
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 personal auto and core commercial auto businesses, are influenced by inflation and driving patterns, among other factors, some of which are discussed below. In our personal property business, severity is primarily a function
of construction costs and the age and complexity of the structure, among other factors. 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. See V. Critical Accounting Estimates for a discussion of the effect of changing estimates.
Our total loss and LAE ratio decreased 3.2 points in 2025 and 8.5 points in 2024, each compared to the prior year. During 2025, the decrease in the ratio was primarily driven by lower auto accident frequency, a decrease in catastrophe losses, and favorable prior accident years reserve development. On an accident year basis, our loss and LAE ratio decreased 2.1 points and 6.0 points in 2025 and 2024, respectively, compared to the prior years.
We experienced severe weather conditions in several areas of the country during each of the last three years. Hurricanes, hail storms, tornadoes, and wind activity generally contribute to catastrophe losses. The following table shows our consolidated catastrophe losses and related combined ratio point impact, excluding loss adjustment expenses, for the years ended December 31:
($ in millions)
Points 1
Points 1
Points 1
Personal Lines
Vehicles
pts.
pts.
2.4 pts.
Property
Total Personal Lines
Commercial Lines
Total catastrophe losses incurred
pts.
pts.
pts.
1 Represents catastrophe losses incurred during the year, including the impact of reinsurance, as a percent of net premiums earned for each segment.
During 2025, our catastrophe losses reflected severe weather throughout the United States. 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 auto, special lines, or core commercial auto businesses. For our personal property business and certain BOP product coverages, reinsurance programs include catastrophe per 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 Fleet & Specialty business and on certain BOP product coverages.
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. As a result, during 2025, we entered into new reinsurance contracts under our per occurrence excess of loss program for our property business that covers losses from June 1, 2025 through May 31, 2026. This program is comprised of privately placed reinsurance, reinsurance placed through catastrophe bond transactions, and coverage obtained through the Florida Hurricane Catastrophe Fund (FHCF). The reinsurance program has a retention threshold for losses and allocated loss adjustment expenses (ALAE) from a single catastrophic event of $200 million for a storm outside of Florida and $75 million for a storm in Florida. For losses that exceed $200 million, we also retain a percent of the first reinsurance layer, up to $48 million, after applying FHCF coverage. In general, as of December 31, 2025, this program includes coverage for $2.0 billion in losses and ALAE with additional substantial coverage for a second or third hurricane. When including coverage specific to Florida, including the FHCF, this program’s coverage reaches an estimated $2.2 billion.
From June 1, 2025 through December 31, 2025, which covers the hurricane season, we had shared limit coverage in our reinsurance program that provided $175 million of coverage for named storms. We renewed this coverage from May 31, 2026 through December 31, 2026. This reinsurance arrangement can, depending on the
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circumstances, provide coverage for a significant covered event, or provide coverage for aggregate losses under our occurrence excess of loss retention. During 2025, we ceded no losses under this coverage.
During 2025, our personal property business also had an aggregate excess of loss program structure with multiple layers providing for catastrophe losses and ALAE. No losses were ceded under this aggregate excess of loss agreement during 2025. In January 2026, a new aggregate excess of loss program was entered for claims occurring in 2026. The 2026 program provides a higher coverage limit than the 2025 program and includes coverage for named storms and other types of perils (e.g., wildfires, winter storms, severe thunderstorms). This program has retention thresholds of $550 million and $750 million and provides coverage up to $300 million.
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 availability of reinsurance is subject to many forces outside of our control, the types of reinsurance that we elected to purchase during 2025 and in early 2026, were readily available and competitively priced. On a year-over-year basis, we did not incur a material change in the aggregate costs of our reinsurance programs. See Item 1A, Risk Factors in our 2025 Form 10-K, for a discussion of certain risks related to catastrophe events. For further details and additional discussion on our reinsurance programs, see Item 1, Business – Reinsurance in our 2025 Form 10-K and Note 7 – Reinsurance 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 business, 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.
On a calendar-year basis, the change in total personal auto incurred severity (i.e., average cost per claim, including both paid losses and the change in case reserves) over the prior-year periods was as follows:
Coverage Type
Bodily injury
Collision
Personal injury protection
Property damage
Total
The year-over-year increase in total severity was predominantly driven by more large losses, higher medical costs, and increased bodily injury coverage reserves due to a higher rate of plaintiff-attorney represented claims.
On a calendar-year basis, the incurred severity in our core commercial auto products increased 4% in 2025, compared to 9% and 6% in 2024 and 2023, respectively. The increase in 2025 was due, in part, to an increase in large losses and more litigated claims in bodily injury, partially offset by a shift in the mix of business to lower severity BMTs. Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto products (i.e., TNC and Fleet & Specialty businesses), disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial auto products.
It is a challenge to estimate future severity, but we continue to monitor changes in the underlying costs, such as tariffs, 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.
The change in total personal auto products incurred frequency, on a calendar-year basis, over the prior-year periods, was as follows:
Coverage Type
Bodily injury
Collision
Personal injury protection
Property damage
Total
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The year-over-year decrease in frequency for 2025, in part, reflects a shift in the mix of business to a more preferred tier of customers (i.e., Wrights and Robinsons).
On a calendar-year basis, our core commercial auto products’ incurred frequency decreased 10% in 2025 and 7% in 2024, compared to an increase of 2% in 2023. The decrease in frequency for 2025 was, in part, due to a shift in the mix of business and lower vehicle miles traveled, compared to 2024.
We closely monitor 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, changes in driving patterns, and the ridesharing economy, 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 years ended December 31:
($ in millions)
Actuarial Adjustments
Reserve decrease (increase)
Prior accident years
Current accident year
Calendar-year actuarial adjustments
Prior Accident Years Development
Favorable (unfavorable)
Actuarial adjustments
All other development
Total development
(Increase) decrease to calendar-year combined ratio
pts.
pts.
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 the Personal Lines vehicle products and the Commercial Lines business, development for catastrophe losses would be reflected in “all other development,” to the extent they relate to prior year reserves. For our Personal Lines property business, 100% of catastrophe losses are reviewed monthly, and any development on catastrophe reserves are included as part of the actuarial adjustments. 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. 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, such as the factors impacting estimates described above.
As reflected in the table above, we experienced favorable prior accident years development during 2025 and 2024, compared to unfavorable development in 2023. The favorable development during 2025 was, in part, due to lower than anticipated severity and frequency in Florida, and to a lesser extent, lower than anticipated litigation defense costs in the majority of states and lower than anticipated personal auto payments related to reopened property damage claims that were previously closed. See Note 6 – Loss and Loss Adjustment Expense Reserve s and V. Critical Accounting Estimates for a more detailed discussion of our prior accident years development.
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Underwriting Expenses
Underwriting expenses include policy acquisition costs, other underwriting expenses, and policyholder credit expense. The underwriting expense ratio is our underwriting expenses, net of certain fees and other revenues, expressed as a percentage of net premiums earned. For 2025, our underwriting expense ratio increased 1.8 points, compared to 2024, primarily attributable to the $1.2 billion of Florida policyholder credit expense recorded during 2025, which contributed a 1.5 point unfavorable impact.
We invested heavily in advertising during 2025 to capture consumer shopping, and will continue to advertise to maximize growth, as long as we remain on track to achieve our profitability goal and can acquire customers at or below our target acquisition cost. For 2025, our total companywide advertising costs were $5.1 billion,
compared to $4.0 billion in 2024, or 0.6 points greater, and exceeded the amount of advertising spend for any previous annual period.
To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition (e.g., advertising and agency commissions) from our underwriting expense ratio. By excluding acquisition costs from our underwriting expense ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business. In 2025, our NAER decreased 0.2 points in our personal vehicle business (excluding policyholder credit expense), compared to 2024, and increased 1.0 points and 0.7 points in our personal property and core commercial auto businesses, respectively. We remain committed to efficiently managing operational non-acquisition expenses.
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C. Growth
For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent the premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which are a function of the premiums written in the current and prior periods, are generally earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.
For the years ended December 31,
($ in millions)
% Change
% Change
% Change
Net Premiums Written
Personal Lines
Vehicles
Agency
Direct
Property
Total Personal Lines
Commercial Lines
Other indemnity 1
Total underwriting operations
Net Premiums Earned
Personal Lines
Vehicles
Agency
Direct
Property
Total Personal Lines
Commercial Lines
Other indemnity 1
Total underwriting operations
NM = Not meaningful
1 Includes other underwriting business and run-off operations.
December 31,
(# in thousands)
% Change
% Change
% Change
Policies in Force
Personal Lines
Agency – auto
Direct – auto
Special lines
Property
Total Personal Lines
Commercial Lines
Total
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.
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D. Personal Lines
Our Personal Lines segment offers personal vehicle (personal auto and special lines) and residential property insurance products to consumers, with the operating goal of optimizing the number of insured products within our policyholders’ households. In our discussion below, we report our personal auto and personal property business results separately as components of our Personal Lines segment to provide a further understanding of our products. Our personal auto business discussions are further separated between the agency and direct distribution channels. For 2025, 42% of our personal auto business net premiums was written through the agency channel and 58% was written through the direct channel. For 2025, consumer segment results varied by channel, as discussed below, and our total personal auto business experienced overall growth in policies in force, new business applications, quotes, and conversion, compared to 2024.
Personal Auto - Agency
The year-over-year changes in our personal auto agency business were as follows:
Applications
New
Renewal
Total
Written premium per policy
New
Renewal
Total
Policy life expectancy
Trailing 3 months
Trailing 12 months
The personal auto 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 2025, we generated new agency personal auto application growth in 31 states and the District of Columbia, including 7 of our top 10 largest agency states.
Compared to the prior year, new application and policies in force growth varied by consumer segment:
• Sams experienced a single digit increase in policies in force, with substantial growth in new applications during 2025;
• Dianes experienced moderate policies in force and new application growth during 2025;
• Wrights experienced strong policies in force growth, with flat new application growth; and
• Robinsons experienced flat policies in force growth, with negative new application growth due to restrictions on new homeowners applications.
During 2025, on a year-over-year basis, we experienced an increase in agency personal auto quote volume of 6%, with a rate of conversion (i.e., converting a quote to a sale) decrease of 1%. All consumer segments saw an increase in quote volume, except Robinsons, who saw a moderate decrease, compared to 2024. Conversion decreased for Robinsons and Wrights, while Sams and Dianes saw a low single digit increase.
The decline in new applications, quotes, and conversion for Robinsons, compared to 2024, was due to several initiatives implemented in our personal property business that were focused on improving profitability, as discussed in the Personal Property section below. These initiatives, which began during the second half of 2024, focused primarily on home and condo coverages and impacted growth in bundled personal auto and homeowners policies.
Our personal agency auto rates experienced a slight decrease during 2025. The decrease in written premium per policy for new and renewal personal auto agency business during 2025, compared to 2024, was, in part, attributable to rate decreases in certain markets, including Florida, and a shift in the mix of business, including a shift to a higher percentage of 6-month policies, which have about half the amount of net premiums written as policies with 12-month terms.
The trailing 3- and 12-month policy life expectancy in the personal auto agency business experienced decreases during 2025 on year-over-year basis. We believe the decreases were primarily driven by a shift in the mix of business, including changes in billing plans offered to customers, as well as policy replacements due to increased consumer shopping and price sensitivity. As previously discussed, due in part to the efforts of our customer preservation team, during the year we saw an increase in existing customers who went through our new customer quote process to either modify existing coverage or to find a lower rate. As a result, some of these customers replaced their existing policies with new Progressive policies, which negatively impacted policy life expectancy, but retained the customer.
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Personal Auto - Direct
The year-over-year changes in our personal auto direct business were as follows:
Applications
New
Renewal
Total
Written premium per policy
New
Renewal
Total
Policy life expectancy
Trailing 3 months
Trailing 12 months
The personal auto direct business includes business written directly by Progressive online or by phone. For 2025, we generated new direct personal auto application growth in 42 states and the District of Columbia, including 8 of our top 10 largest direct states, with Sams and Dianes experiencing strong new application growth, while Wrights and Robinsons experienced moderate growth during the period. At the end of 2025, policies in force grew around 15% in each consumer segment, compared to the end of 2024.
During 2025, we experienced an increase in direct personal auto quote volume of 5% with a rate of conversion increase of 6%, compared to 2024, primarily driven by the increased advertising spend and our competitiveness in the marketplace. All consumer segments saw an increase in quote volume in 2025, with all consumer segments experiencing an increase in the rate of conversion, except Robinsons, who saw a slight decline.
The personal property profitability initiatives that negatively affected Robinsons new application, quote, and conversion growth in the agency channel were not as impactful to the direct channel as the majority of the property business bundled with personal auto in the direct channel is written through unaffiliated third-party carriers, which remained available even when we restricted writing our personal property products.
Our personal direct auto rates were relatively stable during 2025, resulting in relatively steady written premium per policy for 2025, compared to 2024.
Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced decreases in retention during 2025, compared to 2024. We believe the driver of these changes was due to a shift in the mix of business, including changes in billing plans offered to customers, and increased shopping and price sensitivity where we saw an increase in the number of existing customers who went through our new customer quote process to either modify
existing coverage or to find a lower rate. As a result, some of these customers replaced their existing policies with new Progressive policies, which negatively impacted policy life expectancy, but retained the customer.
Personal Property
The year-over-year changes in our personal property business were as follows:
Applications
New
Renewal
Total
Written premium per policy
New
Renewal
Total
Policy life expectancy
Trailing 12 months
Our personal property business writes residential property insurance for homeowners and renters, umbrella, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program. Our personal property business insurance is written in the agency and direct channels.
In addition to reducing our geographic footprint in more volatile weather-related markets (e.g., coastal and hail-prone states), we continued to focus on achieving profitability goals in markets that are less susceptible to catastrophes for our homeowners product, which we define as our total personal property business excluding renters and umbrella products. In the growth-oriented markets, homeowners product policies in force decreased 1% on a year-over-year basis as of December 31, 2025. Policies in force decreased 16% in the volatile weather-related markets as of the end of 2025, compared to 2024.
We believe our actions taken to address profitability, which began in the second half of 2024 and continued through 2025, adversely impacted new business application growth. During 2025, we continued several initiatives, including: (i) prioritizing insuring lower-risk properties (e.g., new construction, existing homes with newer roofs); (ii) having underwriting restrictions in place in the majority of states, to only accept new homeowners product business when the property policy is bundled with a Progressive personal auto policy, where permitted; (iii) restricting new business and non-renewing policies that provide coverage for non-owner-occupied properties (e.g., short-term vacation rental, secondary residence, etc.) in the majority of states; and, (iv) expanding our cost sharing with policyholders through mandatory wind and hail deductibles and roof depreciation schedules in markets where permitted. During the third quarter 2025, we began to take actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate
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adequacy, cost sharing execution, and regulatory and market conditions. Some of these actions include expanding agency relationships and reopening new business in certain agency and direct channel markets.
Our written premium per policy decreased on a year-over-year basis for 2025, primarily attributable to a shift in the mix of business to more renters policies, which have lower average written premiums, and a decline in homeowners policies in force in both volatile weather-related markets and non-owner-occupied properties, which both have higher average premiums. The effect of these declines were partially offset by rate increases taken during the last 12 months and higher premium coverages reflecting increased property values. During 2025, we increased rates, in aggregate, about 10% in our personal property business. We intend to continue to make targeted rate increases in states where we are not achieving our profitability goals.
The policy life expectancy in our personal property business shortened as of the end of 2025, compared to 2024, which we believe is primarily driven by a shift in the mix of business to more renters policies, our previously discussed rate increases, increased competition in the marketplace, and the non-renewals for certain policies in volatile weather markets.
E. Commercial Lines
The following table and discussion focuses on our core commercial auto products, which accounted for about 80% of our Commercial Lines segment 2025 net premiums written. Year-over-year changes in our core commercial auto products were as follows:
Applications
New
Renewal
Total
Written premium per policy
New
Renewal
Total
Policy life expectancy
Trailing 12 months
For 2025, on a year-over-year basis, core commercial auto new application growth was positive in all BMTs, except for-hire transportation, which was impacted by rate and non-rate actions taken to address profitability challenges and, to a lesser extent, the continued decline in the number of active motor carriers in this BMT. Policies in force grew in all of our BMTs, except in the for-hire transportation and for-hire specialty BMTs, compared to 2024. For 2025, quote volume and the rate of conversion increased about 3% and decreased about 2%, respectively, in our core commercial auto products, compared to 2024.
The effect the previously discussed rate increases had on written premium per policy for our core commercial auto business was offset by a shift in the mix of business, primarily driven by decreased demand for products in our for-hire transportation BMT. Written premium per policy was also impacted by a shift to a greater mix of policies with 6-month terms in our contractor and business auto BMTs, which have about half the amount of net premiums written as 12-month policies. During 2025, we increased rates, in aggregate, about 9% in our core commercial auto products. We will continue to evaluate our rate need and adjust rates as we deem necessary.
Our policy life expectancy increased in all BMTs, except in for-hire specialty, as of the end of 2025, compared to 2024. We believe this improvement was due to a shift in the mix of business to BMTs with historically higher policy life expectancies, moderation of our rate increases, and various initiatives, such as payment and renewal reminders.
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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 summarizes investment results for the years ended December 31:
Pretax recurring investment book yield
FTE total return:
Fixed-income securities
Common stocks
Total portfolio
The increase in the book yield during 2025 and 2024, primarily reflected investing new cash from insurance operations, and proceeds from maturing bonds, in higher coupon rate securities. For each year, the change in the fixed-income portfolio FTE total return, compared to prior year, primarily reflected movement in U.S. Treasury yields year-over-year. The common stock FTE total return reflected general market conditions.
A further break-down of our FTE total returns for our fixed-income portfolio for the years ended December 31, follows:
Fixed-income securities:
U.S. government
State and local government
Foreign government
Corporate and other debt
Residential mortgage-backed
Commercial mortgage-backed
Other asset-backed
Nonredeemable preferred stocks
Short-term investments
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B. Portfolio Allocation
The composition of the investment portfolio at December 31, was:
($ in millions)
Fair Value
% of Total Portfolio
Duration (years)
Average Rating 1
U.S. government
State and local government
Foreign government
AAA
Corporate and other debt
BBB+
Residential mortgage-backed
Commercial mortgage-backed
Other asset-backed
Nonredeemable preferred stocks
Short-term investments
Total fixed-income securities
Common equities
Total portfolio 2
U.S. government
State and local government
Foreign government
AAA
Corporate and other debt
BBB+
Residential mortgage-backed
Commercial mortgage-backed
Other asset-backed
Nonredeemable preferred stocks
BBB-
Short-term investments
Total fixed-income securities
Common equities
Total portfolio 2
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 December 31, 2025 and 2024, we had $200 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 December 31, 2025 and 2024, included $13.0 billion and $6.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions. A portion of these investments were sold and proceeds used to pay our common share dividends in January 2026 and 2025; see Note 14 – Dividends for additional information.
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.
Group I securities, 6% of the total portfolio at December 31, 2025 , 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, 94% of the total portfolio at December 31, 2025 , include:
• short-term investments, and
• all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.
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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. Non-investment-grade fixed-maturity securities are determined by National Association of Insurance Commissioners (NAIC) and nationally recognized statistical rating organizations (NRSROs) as applicable.
Our common equities portfolio is primarily indexed to the Russell 1000, with a goal of a +/- 50bps GAAP income targeted total return tracking error.
See Note 2 – Investments for a further break-out of our portfolio.
Unrealized Gains and Losses
As of December 31, 2025, our fixed-maturity portfolio had a total after-tax net unrealized gain, which is recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheet, of $0.1 billion, compared to a total after-tax net unrealized loss of $1.4 billion at December 31, 2024. The improvement of the total net unrealized balance over the prior year, and shift from a loss to a gain, was due to valuation increases across all fixed-maturity sectors. Our U.S. government, corporate and other debt, and commercial mortgage-backed portfolios had the most significant valuation increases. Lower interest rates and, in some cases, tighter credit spreads drove strong portfolio performance.
See Note 2 – Investments for a further break-out of our gross unrealized gains (losses).
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 the fixed-income portfolio.
Interest Rate Risk This risk includes the change in value resulting from movements in the underlying market rates of debt securities held. We manage this risk by maintaining the portfolio’s duration (a measure of the portfolio’s exposure to changes in interest rates) between 1.5 and 5.0 years. The duration of the fixed-income portfolio was 3.4 years at December 31, 2025, compared to 3.3 years at December 31, 2024. The distribution of duration and convexity (i.e., a measure of the speed at which the duration of a security is expected to change based on a rise or fall in interest rates) is monitored on a regular basis.
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, at December 31, was:
Duration Distribution
1 year
2 years
3 years
5 years
7 years
10 years
Total fixed-income portfolio
Credit Risk This exposure is managed by maintaining a minimum weighted average portfolio credit quality rating, as defined by NRSROs. Effective January 1, 2025, we moved our internal rating guideline to A, down from an A+, in light of the downgrade of the U.S. government securities.
At both December 31, 2025 and 2024, our weighted average credit quality rating was AA-. The credit quality distribution of our fixed-income portfolio at December 31, was:
Average Rating 1
AAA
BBB
Non-investment-grade/non-rated:
Non-rated
Total fixed-income portfolio
1 The ratings in the table above are assigned by NRSROs.
Concentration Risk Our investment constraints limit investment in a single issuer, other than U.S. Treasury Notes or a state’s general obligation bonds, to 2.5% of shareholders’ equity, while the single issuer guideline on preferred stocks and/or non-investment-grade debt is 1.25% of shareholders’ equity. Additionally, the guideline applicable to any state’s general obligation bonds is 6% of shareholders’ equity. We consider concentration risk both overall and in the context of individual asset classes and sectors in our portfolio. At December 31, 2025 and 2024, we were within all of the constraints described above.
App.-A-67
Prepayment and Extension Risk We are exposed to this risk especially in our asset-backed (i.e., structured product) and preferred stock portfolios. Prepayment risk includes the risk of early redemption of security principal that may need to be reinvested at less attractive rates. Extension risk includes the risk that a security will not be redeemed when anticipated, and that the security that is extended will have a lower yield than a security we might be able to obtain by reinvesting the expected redemption principal. Our holdings of different types of structured debt and preferred securities help manage this risk. During 2025 and 2024, we did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio.
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 2026, we expect approximately $9.6 billion, or 24%, of principal repayment from our fixed-income
portfolio, excluding U.S. government securities and short-term investments. Cash from interest and dividend payments provides an additional source of recurring liquidity.
The duration of our U.S. government securities, which are included in the fixed-income portfolio, was comprised of the following at December 31, 2025:
($ in millions)
Fair
Value
Duration
(years)
Less than one year 1
One to two years
Two to three years
Three to five years
Five to seven years
Seven to ten years
Total U.S. government
1 Excludes $7,919 million of U.S. treasury bills included in short-term investments.
ASSET-BACKED SECURITIES
The following table details the credit quality rating of our asset-backed securities at December 31, 2025:
(millions)
Average Rating 1
Residential
Mortgage-Backed
Commercial
Mortgage-Backed
Other
Asset-Backed
Total
AAA
BBB
Non-investment-grade/non-rated:
CCC and lower
Non-rated
Total fair value
1 The credit quality ratings are assigned by NRSROs.
Our residential mortgage-backed portfolio consists of deals that are backed by high-credit quality borrowers and/or those that have strong structural protections through underlying loan collateralization. The fair value of this portfolio grew by $1.6 billion in 2025 and new purchases were concentrated in high-quality investment-grade securities and contained both fixed-rate and adjustable residential mortgages. We viewed this sector as having attractive risk-adjusted spreads and potential returns.
The commercial mortgage-backed portfolio fair value grew by $1.6 billion in 2025 as we viewed the absolute and relative value of commercial mortgage-backed spreads as attractive. The growth in the portfolio was primarily a result of purchases of new issue investment - grade securities backed by single-borrower transactions across various sectors including apartments, logistics, grocery-anchored retail, life sciences, and self-storage. We maintained a preference for geographically diversified portfolios or high-quality single assets leased to creditworthy tenants.
App.-A-68
A further break-down of our other asset-backed securities (OABS) at December 31, 2025:
(millions)
Average Rating
Automobile
Collateralized Loan Obligations
Student Loan
Whole Business Securitizations
Equipment
Other
Total
AAA
BBB
Non-investment-grade/non-rated:
Total fair value
The OABS portfolio fair value grew by $0.5 billion in 2025. The growth in the portfolio was primarily the result of security purchases that were partially offset by principal paydowns on securities during the year. We selectively added securities in highly-rated senior and short-tenor debt tranches that we viewed as having attractive spreads and potential returns. Additions were made in both the new issue and secondary markets.
STATE AND LOCAL GOVERNMENT SECURITIES
The following table details the credit quality rating of our state and local government (municipal) securities at December 31, 2025:
(millions)
Average Rating
General Obligations
Housing Revenue
Other Revenue
Total
AAA
Total fair value
The municipal portfolio fair value grew by $0.5 billion in 2025. There was an increase in new issuances in the market and we selectively added high-quality securities with shorter maturities, which we viewed as having more favorable risk/reward profiles.
CORPORATE AND OTHER DEBT SECURITIES
The following table details the credit quality rating of our corporate and other debt securities at December 31, 2025:
(millions)
Average Rating
Consumer
Industrial
Communication
Financial Services
Technology
Basic Materials
Energy
Total
AAA
BBB
Non-investment-grade/non-rated:
Non-rated
Total fair value
The corporate and other debt portfolio fair value grew by $6.0 billion in 2025. At December 31, 2025, corporate and other debt securities made up approximately 21% of our fixed-income portfolio compared to 18% at December 31, 2024. We continued to predominately focus on shorter-maturity investment-grade securities, which we viewed as having more favorable risk/reward profiles.
App.-A-69
NONREDEEMABLE PREFERRED STOCKS
The following table details the credit quality rating of our nonredeemable preferred stocks at December 31, 2025:
Financial Services
(millions)
Average Rating
U.S. Banks
Foreign
Banks
Insurance
Other
Financial
Industrials
Utilities
Total
BBB
Non-investment-grade/non-rated:
Non-rated
Total fair value
The majority of our nonredeemable preferred securities have fixed-rate dividends until a call date and then, if not called, generally convert to floating-rate dividends. The interest rate duration is calculated to reflect the call, floor, and floating-rate features. Although a nonredeemable preferred stock will remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend. At year-end 2025, our non-investment-grade nonredeemable preferred stocks were with issuers that maintain investment-grade senior debt ratings.
We also face the risk that dividend payments could be deferred for one or more periods or skipped entirely. As of December 31, 2025, we expect all of these securities to pay their dividends in full and on time. Approximately 97% of our nonredeemable preferred stocks pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.
The nonredeemable preferred stock portfolio fair value decreased by $0.3 billion in 2025. This decline was primarily due to nonredeemable preferred stocks that were called during the year.
V. CRITICAL ACCOUNTING ESTIMATES
Progressive is required to make certain estimates and assumptions when preparing its financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates in a variety of areas. The area we view as most critical with respect to the application of estimates and assumptions is the establishment of our loss and LAE reserves.
A. Loss and LAE Reserves
Loss and LAE reserves represent our best estimate of our ultimate liability for losses and LAE relating to events that occurred prior to the end of any given accounting period but have not yet been paid. At December 31, 2025, we had $39.5 billion of net loss and LAE reserves (net of reinsurance recoverables on unpaid losses), which included $30.7 billion of case reserves and $8.8 billion of IBNR reserves. The following discussion focuses on our personal auto liability and commercial auto liability, including TNC, reserves since these businesses represent approximately 93% of our total carried net reserves.
We do not review our loss reserves on a macro level and, therefore, do not derive a companywide range of reserves to compare to a standard deviation. Instead, we review a large majority of our reserves by product/state subset combinations on a quarterly time frame, with the remaining reserves generally reviewed on a semiannual basis. A change in our scheduled reviews of a particular subset of the business depends on the size of the subset or emerging issues relating to the product or state. By reviewing the
reserves at such a detailed level, we have the ability to identify and measure variances in the trends by state, product, and line coverage that otherwise would not be seen on a consolidated basis. We believe our comprehensive process of reviewing at a subset level provides us more meaningful estimates of our aggregate loss reserves.
In analyzing the ultimate accident-year loss and LAE experience, our actuarial staff reviews in detail, at the subset level, frequency (number of losses per exposure) and severity (dollars of loss per each claim), as well as the frequency and severity of our LAE costs. The loss ratio, a primary measure of loss experience, is equal to the product of frequency times severity divided by the average premium (dollars of premium per exposure). The average premium for personal and commercial auto businesses is not estimated. The actual frequency experienced will vary depending on the change in the mix in class of drivers we insure, but the IBNR frequency projections for these lines of business are generally stable in the short term, because a large majority of the parties involved in an accident report their claims within a short time period after the occurrence. The experienced by Progressive is much more to estimate, especially for , since is affected by changes in underlying costs, such as medical costs, jury , judicial interpretations, and regulatory changes. In addition, will vary relative to the change in our mix of business by limit.
App.-A-70
Assumptions regarding needed reserve levels made by the actuarial staff take into consideration influences on available historical data that reduce the predictive nature of our projected future loss costs. Internal considerations that are process related, which generally result from changes in our claims organization’s activities, include claim closure rates, the number of claims that are closed without payment, and the level of the claims representatives’ estimates of the needed case reserve for each claim. These changes and their effect on the historical data are studied at the state level versus on a larger, less indicative, countrywide basis.
External items considered include the litigation atmosphere, changes in medical costs, and the availability of services to resolve claims. These also are better understood at the state level versus at a more macro,
countrywide level. These items, as well as additional considerations such as the type of accident and change in reporting patterns, are closely monitored.
At December 31, 2025, we had $43.3 billion of carried gross reserves and $39.5 billion of net reserves. Our net reserve balance assumes that the loss and LAE severity for accident year 2025 over accident year 2024 would be 7.2% higher for personal auto liability and 6.5% higher for commercial auto liability. As discussed above, the severity estimates are influenced by many variables that are difficult to precisely quantify and which influence the final amount of claims settlements. That, coupled with changes in internal claims practices, the legal environment, and state regulatory requirements, requires significant judgment in the estimate of the needed reserves to be carried.
The following table highlights what the effect would be to our carried loss and LAE reserves, on a net basis, as of December 31, 2025, if during 2026 we were to experience the indicated change in our estimate of severity for the 2025 accident year (i.e., claims that occurred in 2025):
Estimated Changes in Severity for Accident Year 2025
(millions)
As Reported
Personal auto liability
Commercial auto liability
Other 1
Total
1 Includes reserves for personal and commercial auto physical damage claims and our non-auto lines of business; no change in estimates is presented due to the immaterial level of these reserves.
Note: Every percentage point change in our estimate of severity for the 2025 accident year would affect our personal auto liability reserves by $287 million and our commercial auto liability reserves by $59 million.
App.-A-71
Our 2025 year-end loss and LAE reserve balance also includes claims from prior years. Claims that occurred in 2025, 2024, and 2023, in the aggregate, accounted for approximately 93% of our reserve balance. If during 2026 we were to experience the indicated change in our estimate of severity for the total of the prior three accident years (i.e., 2025, 2024, and 2023), the effect to our year-end 2025 reserve balances would be as follows:
Estimated Changes in Severity for Accident Years 2025, 2024, and 2023
(millions)
As Reported
Personal auto liability
Commercial auto liability
Other 1
Total
1 Includes reserves for personal and commercial auto physical damage claims and our non-auto lines of business; no change in estimates is presented due to the immaterial level of these reserves.
Note: Every percentage point change in our estimate of severity for the 2025, 2024, and 2023 accident years would affect our personal auto liability reserves by $709 million and our commercial auto liability reserves by $174 million.
Our best estimate of the appropriate amount for our reserves as of year-end 2025 is included in our financial statements for the year. Our goal is to ensure that total reserves are adequate to cover all loss costs, while sustaining minimal variation from the time reserves are initially established until losses are fully developed. At the point in time when reserves are set, we have no way of knowing whether our reserve estimates will prove to be high or low, or whether one of the alternative scenarios discussed above is reasonably likely to occur. The above tables show the potential favorable or unfavorable development we will realize if our estimates miss by 2% or 4%.
App.-A-72
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;
• the highly competitive nature of property-casualty insurance markets;
• whether we adjust claims accurately;
• compliance with complex and changing laws and regulations;
• the impact of misconduct or fraudulent acts by employees, agents, and third parties to our business and/or exposure to regulatory assessments;
• our ability to attract, develop, and retain talent and maintain appropriate staffing levels;
• 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, our financial condition, 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, 2025.
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.
App.-A-73
Supplemental Information
The Progressive Corporation and Subsidiaries
Ten Year Summary – Selected Financial Information
(unaudited)
(millions – except ratios, policies in force, per share
amounts, and number of people employed)
Net premiums written
Growth
Net premiums earned
Growth
Policies in force (thousands):
Personal Lines
Growth
Commercial Lines
Growth
Total revenues
Underwriting margins: 1
Personal Lines
Commercial Lines
Total underwriting operations
Net income attributable to Progressive
Per common share - diluted
Average equivalent common shares - diluted
Comprehensive income (loss) attributable to Progressive
Total assets
Debt outstanding
Total shareholders’ equity
Statutory surplus
Common shares outstanding
Common share close price (at December 31)
Rate of return 2
Market capitalization
Book value per common share
Ratios:
Return on average common shareholders’ equity:
Net income attributable to Progressive
Comprehensive income (loss) attributable to Progressive
Debt to total capital 3
Price to earnings
Price to book
Net premiums written to statutory surplus
Statutory combined ratio
Dividends declared per common share 4
Number of people employed
1 Underwriting margins are calculated as pretax underwriting profit (loss), as defined in Note 10 – Segment Information , as a percentage of net premiums earned. Policyholder credit expense is included in pretax underwriting profit (loss), as applicable.
2 Represents annual rate of return, assuming dividend reinvestment.
3 Ratio reflects debt as a percent of debt plus shareholders’ equity; redeemable noncontrolling interest is not part of this calculation.
4 Represents dividends pursuant to the dividend policy in place for the applicable year (see Note 14 – Dividends for further discussion).
App.-A-74
(millions – except ratios, policies in force, per share
amounts, and number of people employed)
Net premiums written
Growth
Net premiums earned
Growth
Policies in force (thousands):
Personal Lines
Growth
Commercial Lines
Growth
Total revenues
Underwriting margins: 1
Personal Lines
Commercial Lines
Total underwriting operations
Net income attributable to Progressive
Per common share - diluted
Average equivalent common shares - diluted
Comprehensive income (loss) attributable to Progressive
Total assets
Debt outstanding
Total shareholders’ equity
Statutory surplus
Common shares outstanding
Common share close price (at December 31)
Rate of return 2
Market capitalization
Book value per common share
Ratios:
Return on average common shareholders’ equity:
Net income attributable to Progressive
Comprehensive income (loss) attributable to Progressive
Debt to total capital 3
Price to earnings
Price to book
Net premiums written to statutory surplus
Statutory combined ratio
Dividends declared per common share 4
Number of people employed
App.-A-75
The Progressive Corporation and Subsidiaries
Performance Graph
(unaudited)
The following performance graph compares the performance of Progressive’s Common Shares (PGR) to the Standard & Poor’s 500 Stock Index (S&P 500 Index) and the Standard & Poor’s 500 Property & Casualty Insurance Index (S&P 500 P/C Group) for the last five years.
Cumulative Five-Year Total Return*
PGR, S&P 500 Index, S&P 500 P/C Group (Performance Results through 12/31/25)
(Assumes $100 was invested at the close of trading on December 31, 2020)
For the years ended December 31,
PGR
S&P 500 Index
S&P 500 P/C Group
*Assumes reinvestment of dividends
App.-A-76
The Progressive Corporation and Subsidiaries
Quantitative Market Risk Disclosures
(unaudited)
Quantitative market risk disclosures are only presented for market risk categories when risk is considered material. Materiality is determined based on the fair value of the financial instruments at December 31, 2025, and the potential for near-term losses from reasonably possible near-term changes in market rates or prices. The discussion
below relates to instruments entered into for purposes other than trading; we had no trading financial instruments at December 31, 2025 and 2024. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Investments for our discussion of the qualitative information about market risk.
Financial instruments subject to interest rate risk were:
Fair Value
-200 bps
-100 bps
+100 bps
+200 bps
(millions)
Change
Change
Actual
Change
Change
U.S. government
State and local government
Foreign government
Corporate and other debt
Residential mortgage-backed
Commercial mortgage-backed
Other asset-backed
Nonredeemable preferred stocks
Short-term investments
Total at December 31, 2025
Total at December 31, 2024
Exposure to risk is represented in terms of changes in fair value due to selected hypothetical movements in market rates. Bonds and preferred stocks are individually priced to yield to the worst case scenario, which includes any issuer-specific features, such as a call option. Asset-backed
securities and state and local government housing securities are priced assuming deal specific prepayment scenarios, considering the deal structure, prepayment penalties, yield maintenance agreements, and the underlying collateral.
Financial instruments subject to equity market risk were:
Fair Value
(millions)
Actual
Common equities at December 31, 2025
Common equities at December 31, 2024
The model represents the estimated value of our common equity portfolio given a +/-10% change in the market, based on the common equity portfolio’s weighted average beta of 1.1 for 2025 and 2024. The beta is derived from recent historical experience, using the S&P 500 as the market surrogate. The historical relationship of
the common equity portfolio’s beta to the S&P 500 is not necessarily indicative of future correlation, as individual company or industry factors may affect price movements. Betas are not available for all securities. In such cases, the change in fair value reflects a direct +/-10% change; the portion of our securities without betas is 1.0%.
App.-A-77
The Progressive Corporation and Subsidiaries
Net Premiums Written by State
(unaudited)
($ in millions)
Texas
Florida
California
Georgia
New York
New Jersey
Michigan
Ohio
Pennsylvania
Arizona
All other
Total
App.-A-78
Insurance Quotes, Claims Reporting, and Customer Service
Personal autos, motorcycles, recreational vehicles, homeowners, and renters
Commercial autos/trucks, business property, and general liability
To receive a quote
1-800-PROGRESSIVE (1-800-776-4737) progressive.com
1-888-806-9598 progressivecommercial.com
To report a claim
1-800-PROGRESSIVE (1-800-776-4737)
progressive.com
1-800-PROGRESSIVE (1-800-776-4737) progressivecommercial.com
For customer service:
If you bought your policy directly through Progressive online or by phone
1-800-PROGRESSIVE (1-800-776-4737) progressive.com
1-800-444-4487 progressivecommercial.com
If you bought your policy through an independent agent or broker
1-800-300-3693 in California
progressiveagent.com
1-800-444-4487 progressivecommercial.com
If you bought your policy through an independent agent or broker for the state of California
Driveinsurance.com
1-800-444-4487 progressivecommercial.com
In addition, iPhone ® and Android ® users can download the Progressive mobile app to start a quote, report a claim, or service a policy.
Principal Office
The Progressive Corporation
300 North Commons Blvd.
Mayfield Village, Ohio 44143
progressive.com
Annual Meeting The Annual Meeting of Shareholders will take place on Friday, May 8, 2026, at 10:00 a.m., eastern time. This meeting will be held by online webcast only. You will be able to attend and participate in the Annual Meeting via live webcast by visiting virtualshareholdermeeting.com/PGR2026. To participate in the meeting, you must have your 16-digit control number that is shown on your Notice of Internet Availability of Proxy Materials or proxy card. You will not be able to attend the Annual Meeting in person.
Online Annual Report and Proxy Statement Our 2025 Annual Report to Shareholders can be found at: progressive.com/annualreport.
Our 2026 Proxy Statement and 2025 Annual Report to Shareholders, in a PDF format, can be found at: progressiveproxy.com.
Shareholder/Investor Relations Progressive does not maintain a mailing list for distribution of shareholders’ reports. To view Progressive’s publicly filed documents, shareholders can access our website: progressive.com/sec. To view our earnings and other releases, access our website: progressive.com/financial-releases.
For financial-related information or to request copies of Progressive’s publicly filed documents free of charge, write to: The Progressive Corporation, Investor Relations, 300 North Commons Blvd., Box W94, Mayfield Village, Ohio 44143, email: investor_relations@progressive.com, or call: 440-395-2222.
For all other company information, call: 440-461-5000 or access our website at: progressive.com/contactus.
Transfer Agent and Registrar Registered Shareholders: If you have questions or changes to your account and your Progressive common shares are registered in your name, write to: Equiniti Trust Company, LLC, 48 Wall Street, Floor 23, New York, New York 10005; phone: 1-866-709-7695; email: HelpAST@equiniti.com; or visit their website
at: equiniti.com/us.
App.-A-79
Beneficial Shareholders: If your Progressive common shares are held in a brokerage or other financial institution account, contact your broker or financial institution directly regarding questions or changes to your account.
Common Shares, Holders, and Dividends The Progressive Corporation’s common shares are traded on the New York Stock Exchange (symbol PGR). There were 1,557 shareholders of record on January 31, 2026. Progressive currently has a dividend policy under which the Board expects to declare regular, quarterly common share dividends and, on at least an annual basis, to consider declaring an additional variable common share dividend.
Counsel Baker & Hostetler LLP, Cleveland, Ohio
Corporate Governance Progressive’s Corporate Governance Guidelines and Board Committee Charters are available at: progressive.com/governance.
Accounting Complaint Procedure Any employee or other interested party with a complaint or concern regarding accounting, internal accounting controls, or auditing matters relating to Progressive may report such complaint or concern directly to the Chairperson of the Audit Committee, as follows:
Stuart B. Burgdoerfer, Chair of the Audit Committee, auditchair@progressive.com.
Any such complaint or concern also may be reported anonymously over the following toll-free Alertline: 1-800-683-3604 or online at: progressivealertline.com.
Progressive will not retaliate against any individual by reason of his or her having made such a complaint or reported such a concern in good faith. View the complete procedures at: progressive.com/governance.
Contact Non-Management Directors Interested parties have the ability to contact the non-management directors as a group by sending a written communication clearly addressed to the non-management directors to either of the following:
Lawton W. Fitt, Chairperson of the Board, The Progressive Corporation, email: chair@progressive.com; or
David M. Stringer, Secretary, The Progressive Corporation, 300 North Commons Blvd., Box W94, Mayfield Village, Ohio 44143 or email: secretary@progressive.com.
The recipient will forward communications so received to the non-management directors.
Whistleblower Protections Progressive will not retaliate against any officer or employee of Progressive because of any lawful act done by the officer or employee to provide information or otherwise assist in investigations regarding conduct that the officer or employee reasonably believes to be a violation of federal securities laws or of any rule or regulation of the Securities and Exchange Commission. View the complete Whistleblower Protections at: progressive.com/governance.
Charitable Contributions We contribute to: (i) The Insurance Institute for Highway Safety to further its work in reducing the human trauma and economic costs of auto accidents; (ii) Humble Design, a nonprofit organization we partnered with to furnish homes for families and veterans transitioning from homelessness; (iii) Family Promise, a nonprofit organization that helps families experiencing homelessness and low-income families achieve sustainable independence through a community-based response; and (iv) The Progressive Insurance Foundation.
To more broadly represent our employees and their communities, The Progressive Insurance Foundation provides funds to national charitable organizations identified by our Employee Resource Groups and, through the Name Your Cause ® program, to qualifying charities chosen by each participating employee’s recommendation, without requiring the employee to contribute. Over the last five years, The Progressive Insurance Foundation provided on average approximately $6 million per year to these charitable organizations.
Social Responsibility and Sustainability Progressive uses an online format to communicate our social responsibility efforts, and we see sustainability as part of the value we bring to our shareholders, customers, employees, agents, and communities. Information on our social responsibility and sustainability efforts can be found at: progressive.com/sustainability.
App.-A-80
Directors
Philip Bleser 1,5,7
Roger N. Farah 2,3,5,7
Jeffrey D. Kelly 1,7
Retired Chairman of Global Corporate
Former Executive Chair of the Board,
Retired Chief Operating Officer and
Banking,
CVS Health Corporation
Chief Financial Officer,
JPMorgan Chase & Co.
(healthcare)
RenaissanceRe Holdings Ltd.
(financial services)
(reinsurance services)
Stuart B. Burgdoerfer 1,6,7
Lawton W. Fitt 2,4,5,7
Barbara R. Snyder 3,7
Retired Executive Vice President and
Chairperson of the Board,
President,
Chief Financial Officer,
The Progressive Corporation and
The Association of American Universities
L Brands, Inc.
Retired Partner,
(higher education)
(retailing)
Goldman Sachs Group
(financial services)
Pamela J. Craig 3,6,7
Susan Patricia Griffith 2
Kahina Van Dyke 4,6,7
Retired Chief Financial Officer,
President and
Operating Partner,
Accenture PLC
Chief Executive Officer,
Advent International
(global management consulting)
The Progressive Corporation
(global private equity)
Charles A. Davis 4,7
Devin C. Johnson 1,6,7
Chief Executive Officer,
Former President,
Stone Point Capital LLC
The SpringHill Company
(private equity investing)
(global consumer and entertainment)
1 Audit Committee Member
2 Executive Committee Member
3 Compensation and Talent Committee
Member
4 Investment and Capital Committee
Member
5 Nominating and Governance
Committee Member
6 Technology Committee Member
7 Independent Director
App.-A-81
Corporate Officers
Other Executive Officers
Lawton W. Fitt
Karen B. Bailo
Chairperson of the Board
Commercial Lines President
(non-executive)
Jonathan S. Bauer
Susan Patricia Griffith
Chief Investment Officer
President
and Chief Executive Officer
Steven A. Broz
Chief Information Officer
John P. Sauerland
Vice President
Patrick K. Callahan
and Chief Financial Officer
Personal Lines President
David M. Stringer
William L. Clawson II
Vice President, Secretary,
Chief Human Resources Officer
and Chief Legal Officer
John Murphy
Allyson L. Bach
Claims President
Assistant Secretary
Lori Niederst
Carl G. Joyce
Customer Relationship Management
Vice President
President
and Chief Accounting Officer
Maribel Pumarejo
Maureen McCoy Spooner
Chief Marketing Officer
Treasurer
Andrew J. Quigg
Chief Strategy and Finance Management
Officer
© 2026 The Progressive Corporation
App.-A-82
