Progressive (NYSE: PGR) earns $6,129M H1 2026 and sustains strong margins
The Progressive Corporation reported strong profitability for the quarter and six months ended June 30, 2026. Second-quarter net income was $3,311M on total revenues of $23,609M, with six‑month net income of $6,129M on revenues of $45,797M. Companywide underwriting margins were 12.7% in Q2 and 13.1% year‑to‑date, corresponding to combined ratios of 87.3 and 86.9.
Personal Lines generated a Q2 underwriting margin of 12.4%, while Commercial Lines delivered 14.7%. Companywide net premiums written grew about $1.0B, or 5%, versus Q2 2025, and net premiums earned rose 6%. Progressive surpassed 40 million policies in force, adding 0.5 million during the quarter and 2.8 million year over year, despite heightened competition and higher advertising spend that added 0.5 points to the expense ratio.
The investment portfolio had a fair value of $97,221M, producing Q2 net investment income of $969M and total net realized gains on securities of $604M, though other comprehensive income reflected $375M of unrealized losses on fixed‑maturity securities in the quarter. Operating cash flow was $7,974M for the first half, supporting common dividends paid of $8,030M and repurchases of 5.4M shares for about $1,066M. Progressive issued $1,487M of new senior notes, bringing total debt to $8,387M and total capital to $42.7B, with a debt‑to‑total‑capital ratio of 19.6%. The company also discloses multiple class‑action and related lawsuits over claims practices where losses are deemed reasonably possible but not currently probable or reasonably estimable; adverse outcomes in aggregate could be materially adverse.
Positive
- Underwriting profitability remains strong, with Q2 2026 underwriting margin at 12.7% and six‑month margin at 13.1%, both well above the company’s 4% calendar‑year underwriting profit goal.
- Capital and liquidity are robust, with total capital of $42.7B, a conservative debt‑to‑total‑capital ratio of 19.6%, operating cash flow of $7,974M in six months, and a high‑quality fixed‑income portfolio rated on average AA-.
Negative
- None.
Filing Explained
The filing leaves litigation exposure unquantified while preserving future financing capacity; no new shelf securities sale is disclosed.
Progressive’s Form 10-Q is an unaudited quarterly report updating its financial condition, risks, and liquidity for the quarter ended
The cases involve allegations about vehicle total-loss valuations and personal-injury-protection or wage-loss calculations in specified states. The company says an unfavorable result or settlement across a significant number of cases could have a material adverse effect, but the disclosed state leaves the possible amount unresolved.
The company also reports an effective shelf registration covering possible future debt, preferred stock, common stock, and other securities. A shelf registration provides capacity to offer registered securities later; it does not itself sell or issue shares.
Separately, the company renewed a
Key Figures
Net income Q2 2026: $3,311M
Net income H1 2026: $6,129M
Net premiums earned Q2 2026: $21,573M
+5 more
8 metrics
Net income Q2 2026
$3,311M
Three months ended June 30, 2026
Net income H1 2026
$6,129M
Six months ended June 30, 2026
Net premiums earned Q2 2026
$21,573M
Three months ended June 30, 2026
Underwriting margin Q2 2026
12.7%
Companywide underwriting operations
Cash from operations H1 2026
$7,974M
Net cash provided by operating activities
Investment portfolio fair value
$97,221M
Total investments at June 30, 2026
Total debt carrying value
$8,387M
Senior notes outstanding at June 30, 2026
Dividends paid H1 2026
$8,030M
Dividends paid to common shareholders, six months ended June 30, 2026
Key Terms
underwriting margin, combined ratio, catastrophe losses, policy life expectancy, +1 more
5 terms
underwriting margin financial
"Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability."
Underwriting margin is the percentage of premiums an insurer keeps after paying claims and covering the direct costs of underwriting and administering policies. It measures the profitability of the insurer’s core insurance operations, excluding investment returns, similar to a store’s gross margin that shows how much money remains from sales to cover other costs. Investors use it to judge pricing, risk selection and the sustainability of the insurance business.
combined ratio financial
"Combined ratio is the complement of the underwriting margin."
The combined ratio is a way insurance companies measure how well they are doing by adding up all their costs and claims and comparing them to the money they earn from premiums. If the ratio is below 100%, it means the company is making a profit; if it's above 100%, they are losing money. It helps see if an insurance company is financially healthy or not.
catastrophe losses financial
"Catastrophe losses | 1,022 | 19 | 0 | 1,041"
Catastrophe losses are large, unexpected insurance payouts that follow major disasters such as hurricanes, earthquakes, wildfires or pandemics. They matter to investors because they can sharply reduce an insurer’s profits, drain reserves and force special financing or rate increases — much like a sudden flood overwhelming a city’s budget — and can also ripple through markets by affecting reinsurers, bondholders and stock prices.
policy life expectancy financial
"Policy life expectancy, our actuarial estimate of the average length of time a newly written policy remains in force"
usage-based insurance financial
"We believe a key element in improving the accuracy of our personal auto rating is Snapshot®, our usage-based insurance offering."
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did Progressive (PGR) perform financially in Q2 2026?
Progressive reported Q2 2026 net income of $3,311M on $23,609M of total revenues. For the first half of 2026, net income reached $6,129M on revenues of $45,797M, reflecting solid underwriting and investment results across its Personal and Commercial Lines.
What were Progressive (PGR)’s underwriting margins and combined ratios?
Companywide underwriting margins were 12.7% in Q2 2026 and 13.1% for the first six months. This corresponds to combined ratios of 87.3 and 86.9, with Personal Lines at 12.4% margin and Commercial Lines at 14.7% in the quarter.
How fast are premiums and policies growing at Progressive (PGR)?
In Q2 2026, net premiums written rose by about $1.0B, or 5%, versus Q2 2025, and net premiums earned grew 6%. Progressive surpassed 40 million policies in force, adding 0.5 million during the quarter and 2.8 million compared to June 30, 2025.
What is the status of Progressive (PGR)’s dividends and share repurchases?
During the first half of 2026, Progressive paid $8,030M in common share dividends and repurchased 5.4M common shares for about $1,066M. The company uses dividends and buybacks to return excess capital while keeping leverage within its stated policy.
How strong are Progressive (PGR)’s investment portfolio and cash flows?
At June 30, 2026, the investment portfolio’s fair value was $97,221M, generating Q2 net investment income of $969M and total net realized gains of $604M. Operating activities provided $7,974M of cash in the first half of 2026, supporting dividends and buybacks.
Are there significant legal risks disclosed by Progressive (PGR)?
Progressive is defending several class‑action and related lawsuits involving total loss valuation and certain benefit calculations. Management deems losses from these suits reasonably possible but not currently probable or reasonably estimable; in aggregate, adverse outcomes could be materially adverse.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended June 30, 2026
or
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the transition period from to
Commission File Number: 001-09518
THE PROGRESSIVE CORPORATION
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(440 ) 461-5000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Shares, $1.00 par value: 581,371,770 outstanding at July 2, 2026
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
The Progressive Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited)
| Three Months | Six Months | ||||||||||||||||||||||
Periods Ended June 30, | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| (millions — except per share amounts) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | |||||||||||||||||||
| Investment income | |||||||||||||||||||||||
| Net realized gains (losses) on securities: | |||||||||||||||||||||||
| Net realized gains (losses) on security sales | |||||||||||||||||||||||
| Net holding period gains (losses) on securities | |||||||||||||||||||||||
| Total net realized gains (losses) on securities | |||||||||||||||||||||||
| Fees and other revenues | |||||||||||||||||||||||
| Service revenues | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Losses and loss adjustment expenses | |||||||||||||||||||||||
| Policy acquisition costs | |||||||||||||||||||||||
| Other underwriting expenses | |||||||||||||||||||||||
| Investment expenses | |||||||||||||||||||||||
| Service expenses | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Net Income | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Other Comprehensive Income (Loss) | |||||||||||||||||||||||
| Changes in: | |||||||||||||||||||||||
| Total net unrealized gains (losses) on fixed-maturity securities | ( | ( | |||||||||||||||||||||
| Net unrealized losses on forecasted transactions | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | $ | $ | |||||||||||||||||||
| Computation of Earnings Per Common Share | |||||||||||||||||||||||
| Average common shares outstanding - Basic | |||||||||||||||||||||||
| Net effect of dilutive stock-based compensation | |||||||||||||||||||||||
| Total average equivalent common shares - Diluted | |||||||||||||||||||||||
| Basic: Earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted: Earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
See notes to consolidated financial statements.
1
The Progressive Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
| June 30, | December 31, | ||||||||||||||||
| (millions) | 2026 | 2025 | 2025 | ||||||||||||||
| Assets | |||||||||||||||||
| Available-for-sale securities, at fair value: | |||||||||||||||||
Fixed maturities (amortized cost: $ | $ | $ | $ | ||||||||||||||
Short-term investments (amortized cost: $ | |||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||
| Equity securities, at fair value: | |||||||||||||||||
Nonredeemable preferred stocks (cost: $ | |||||||||||||||||
Common equities (cost: $ | |||||||||||||||||
| Total equity securities | |||||||||||||||||
| Total investments | |||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||
| Restricted cash and cash equivalents | |||||||||||||||||
| Total cash, cash equivalents, restricted cash, and restricted cash equivalents | |||||||||||||||||
| Accrued investment income | |||||||||||||||||
Premiums receivable, net of allowance for credit losses of $ | |||||||||||||||||
| Reinsurance recoverables | |||||||||||||||||
| Prepaid reinsurance premiums | |||||||||||||||||
| Deferred acquisition costs | |||||||||||||||||
Property and equipment, net of accumulated depreciation of $ | |||||||||||||||||
| Net federal deferred income taxes | |||||||||||||||||
| Other assets | |||||||||||||||||
| Total assets | $ | $ | $ | ||||||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||
| Unearned premiums | $ | $ | $ | ||||||||||||||
| Loss and loss adjustment expense reserves | |||||||||||||||||
| Dividends payable on common shares | |||||||||||||||||
| Accounts payable, accrued expenses, and other liabilities | |||||||||||||||||
Debt1 | |||||||||||||||||
| Total liabilities | |||||||||||||||||
Common shares, $ | |||||||||||||||||
| Paid-in capital | |||||||||||||||||
| Retained earnings | |||||||||||||||||
| Accumulated other comprehensive income (loss): | |||||||||||||||||
| Net unrealized gains (losses) on fixed-maturity securities | ( | ( | |||||||||||||||
| Net unrealized losses on forecasted transactions | ( | ( | ( | ||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||
| Total accumulated other comprehensive income (loss) | ( | ( | |||||||||||||||
| Total shareholders’ equity | |||||||||||||||||
| Total liabilities and shareholders’ equity | $ | $ | $ | ||||||||||||||
1 Consists of both short-term and long-term debt. See Note 4 – Debt for further discussion.
See notes to consolidated financial statements.
2
The Progressive Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
(unaudited)
| Three Months | Six Months | ||||||||||||||||||||||
| Periods Ended June 30, | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| (millions — except per share amounts) | |||||||||||||||||||||||
Common Shares, $ | |||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | |||||||||||||||||||
| Treasury shares purchased | ( | ( | |||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Paid-In Capital | |||||||||||||||||||||||
| Balance, beginning of period | |||||||||||||||||||||||
| Amortization of equity-based compensation | |||||||||||||||||||||||
| Treasury shares purchased | ( | ( | ( | ||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Retained Earnings | |||||||||||||||||||||||
| Balance, beginning of period | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Treasury shares purchased | ( | ( | ( | ( | |||||||||||||||||||
Cash dividends declared on common shares ($ | ( | ( | ( | ( | |||||||||||||||||||
| Other, net | ( | ( | |||||||||||||||||||||
| Balance, end of period | |||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||
| Balance, beginning of period | ( | ( | ( | ||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Balance, end of period | ( | ( | ( | ( | |||||||||||||||||||
| Total shareholders’ equity | $ | $ | $ | $ | |||||||||||||||||||
There are 20 5 no
See notes to consolidated financial statements.
3
The Progressive Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
| Six Months Ended June 30, | 2026 | 2025 | |||||||||
| (millions) | |||||||||||
| Cash Flows From Operating Activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation | |||||||||||
| Net amortization (accretion) of fixed-income securities | ( | ( | |||||||||
| Amortization of equity-based compensation | |||||||||||
| Net realized (gains) losses on securities | ( | ( | |||||||||
| Net (gains) losses on disposition of property and equipment | |||||||||||
| Changes in: | |||||||||||
| Premiums receivable | ( | ( | |||||||||
| Reinsurance recoverables | |||||||||||
| Prepaid reinsurance premiums | ( | ||||||||||
| Deferred acquisition costs | ( | ( | |||||||||
| Income taxes | ( | ||||||||||
| Unearned premiums | |||||||||||
| Loss and loss adjustment expense reserves | |||||||||||
| Accounts payable, accrued expenses, and other liabilities | ( | ||||||||||
| Other, net | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash Flows From Investing Activities | |||||||||||
| Purchases: | |||||||||||
| Fixed maturities | ( | ( | |||||||||
| Equity securities | ( | ( | |||||||||
| Sales: | |||||||||||
| Fixed maturities | |||||||||||
| Equity securities | |||||||||||
| Maturities, paydowns, calls, and other: | |||||||||||
| Fixed maturities | |||||||||||
| Equity securities | |||||||||||
| Net (purchases) sales of short-term investments | ( | ||||||||||
| Net change in unsettled security transactions | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Sales of property and equipment | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash Flows From Financing Activities | |||||||||||
| Dividends paid to common shareholders | ( | ( | |||||||||
| Acquisition of treasury shares for equity award tax liabilities | ( | ( | |||||||||
| Acquisition of treasury shares acquired in open market | ( | ( | |||||||||
| Net proceeds from debt issuances | |||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | ( | ||||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1 | |||||||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents – June 30 | $ | $ | |||||||||
See notes to consolidated financial statements.
4
The Progressive Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. BASIS OF REPORTING AND ACCOUNTING
The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries and non-insurance subsidiaries and affiliates in which we have a controlling financial interest; collectively referred to as Progressive, we, us, or our.
The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended June 30, 2026, are not necessarily indicative of the results expected for the full year. These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report to Shareholders).
Premiums Receivable
We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2025 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Allowance for credit losses, beginning of period | $ | $ | $ | $ | |||||||||||||
Increase in allowance1 | |||||||||||||||||
Write-offs2 | ( | ( | ( | ( | |||||||||||||
| Allowance for credit losses, end of period | $ | $ | $ | $ | |||||||||||||
1 Represents the incremental increase in other underwriting expenses.
2 Represents the portion of allowance that is reversed when the premiums receivable balances are written off. Premiums receivable balances are written off once we have exhausted our collection efforts.
Supplemental Cash Flow Information
Cash and cash equivalents include bank demand deposits. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.
Non-cash activity included the following in the respective periods:
| Six Months Ended June 30, | |||||||||||
| (millions) | 2026 | 2025 | |||||||||
Common share dividends1 | $ | $ | |||||||||
Operating lease liabilities2 | |||||||||||
1 Declared but unpaid. See Note 10 – Dividends for further discussion.
2 From obtaining right-of-use assets.
In the respective periods, we paid the following:
| Six Months Ended June 30, | |||||||||||
| (millions) | 2026 | 2025 | |||||||||
| Income taxes, net of refunds | $ | $ | |||||||||
| Interest | |||||||||||
| Operating lease liabilities | |||||||||||
New Accounting Standards
We did not adopt any new accounting standards during the three and six months ended June 30, 2026.
In May 2026, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that establishes accounting guidance for the recognition of environmental credits and environmental credit obligations. This ASU will be effective for fiscal years (including interim periods within those fiscal years) beginning after December 15, 2027 (fiscal 2028 for calendar-year companies). We do not believe this ASU will have a material impact on our financial condition or results of operations.
In September 2025, the FASB issued an ASU that amends the existing accounting guidance for capitalization of internal-use software costs and provides more detailed guidelines around the criteria for capitalization. This ASU will be effective for fiscal years (including interim periods within those fiscal years) beginning after December 15, 2027 (fiscal 2028 for calendar-year companies). We do not believe this ASU will have a material impact on our financial condition or results of operations.
5
2. INVESTMENTS
The following tables present the composition of our investment portfolio by major security type:
| ($ in millions) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Holding Period Gains (Losses) | Fair Value | % of Total Fair Value | |||||||||||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
| State and local government | ( | ||||||||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||||||||
| Corporate and other debt | ( | ||||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Other asset-backed | ( | ||||||||||||||||||||||||||||||||||
| Total fixed maturities | ( | ||||||||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||||||||
| Total available-for-sale securities | ( | ||||||||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ||||||||||||||||||||||||||||||||||
| Common equities | |||||||||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||||||||
Total portfolio1 | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
| ($ in millions) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Holding Period Gains (Losses) | Fair Value | % of Total Fair Value | |||||||||||||||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
| State and local government | ( | ||||||||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||||||||
| Corporate and other debt | ( | ||||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Other asset-backed | ( | ||||||||||||||||||||||||||||||||||
| Total fixed maturities | ( | ||||||||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||||||||
| Total available-for-sale securities | ( | ||||||||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ||||||||||||||||||||||||||||||||||
| Common equities | |||||||||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||||||||
Total portfolio1 | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
6
| ($ in millions) | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Net Holding Period Gains (Losses) | Fair Value | % of Total Fair Value | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
| State and local government | ( | ||||||||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||||||||
| Corporate and other debt | ( | ||||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ||||||||||||||||||||||||||||||||||
| Other asset-backed | ( | ||||||||||||||||||||||||||||||||||
| Total fixed maturities | ( | ||||||||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||||||||
| Total available-for-sale securities | ( | ||||||||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ||||||||||||||||||||||||||||||||||
| Common equities | |||||||||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||||||||
Total portfolio1 | $ | $ | $ | ( | $ | $ | % | ||||||||||||||||||||||||||||
1 At June 30, 2026 and 2025, and December 31, 2025, we had $568 million, $303 million, and $200 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.
At June 30, 2026, securities in the principal amount of $881 million were on deposit to meet state insurance and other regulatory requirements. We did no no t hold any debt securities that were non-income producing during the preceding 12 months.
Hybrid Securities Certain securities in our fixed-maturity portfolio are accounted for as hybrid securities because they contain embedded derivatives that are not deemed to be clearly and closely related to the host investments. These securities are reported at fair value:
| June 30, | |||||||||||||||||
| (millions) | 2026 | 2025 | December 31, 2025 | ||||||||||||||
| Fixed Maturities: | |||||||||||||||||
| Corporate and other debt | $ | $ | $ | ||||||||||||||
| Residential mortgage-backed | |||||||||||||||||
| Total hybrid securities | $ | $ | $ | ||||||||||||||
Since the embedded derivatives (e.g., change-in-control put option, debt-to-equity conversion, or any other feature unrelated to the credit quality or risk of default of the issuer that could impact the amount or timing of our expected future cash flows) do not have observable intrinsic values, we use the fair value option to record the changes in fair value of these securities through income as a component of net realized gains (losses).
7
Fixed Maturities The following table details the composition of fixed maturities by maturity at June 30, 2026:
| (millions) | Cost | Fair Value | |||||||||
| Less than one year | $ | $ | |||||||||
| One to five years | |||||||||||
| Five to ten years | |||||||||||
| Ten years or greater | |||||||||||
| Total | $ | $ | |||||||||
Securities are classified in the maturity distribution table based upon their projected cash flows. Contractual maturities may differ from expected cash flows because the issuers of the securities may have the right to call or prepay obligations.
Gross Unrealized Losses The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:
| Total No. of Sec. | Total Fair Value | Gross Unrealized Losses | Less than 12 Months | 12 Months or Greater | |||||||||||||||||||||||||||||||
| ($ in millions) | No. of Sec. | Fair Value | Gross Unrealized Losses | No. of Sec. | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| State and local government | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate and other debt | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other asset-backed | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total fixed maturities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| Total No. of Sec. | Total Fair Value | Gross Unrealized Losses | Less than 12 Months | 12 Months or Greater | ||||||||||||||||||||||||||||
| ($ in millions) | No. of Sec. | Fair Value | Gross Unrealized Losses | No. of Sec. | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| State and local government | ( | ( | ( | |||||||||||||||||||||||||||||
| Corporate and other debt | ( | ( | ( | |||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Other asset-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Total fixed maturities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Total No. of Sec. | Total Fair Value | Gross Unrealized Losses | Less than 12 Months | 12 Months or Greater | ||||||||||||||||||||||||||||
| ($ in millions) | No. of Sec. | Fair Value | Gross Unrealized Losses | No. of Sec. | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| U.S. government | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| State and local government | ( | ( | ( | |||||||||||||||||||||||||||||
| Corporate and other debt | ( | ( | ( | |||||||||||||||||||||||||||||
| Residential mortgage-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Commercial mortgage-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Other asset-backed | ( | ( | ( | |||||||||||||||||||||||||||||
| Total fixed maturities | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
A review of the securities in an unrealized loss position indicated that, at the end of each period presented, the issuers were current with respect to their interest obligations and that there was no evidence of deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity.
8
Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did no no
As of June 30, 2026 and 2025, and December 31, 2025, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any specific securities, or in the aggregate. We continue to expect all the securities in our fixed-maturity portfolio will pay their principal and interest obligations.
In addition, we reviewed the accrued investment income on securities in an unrealized loss position at June 30, 2026 and 2025, and December 31, 2025, to determine if the accrued interest amounts were uncollectible. Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest and future principal obligations and, therefore, did no
9
Realized Gains (Losses) The following table details the components of net realized gains (losses) for the three and six months ended June 30:
| Three Months | Six Months | ||||||||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Gross realized gains on security sales | |||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||
| U.S. government | $ | $ | $ | $ | |||||||||||||||||||
| State and local government | |||||||||||||||||||||||
| Corporate and other debt | |||||||||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Nonredeemable preferred stocks | |||||||||||||||||||||||
| Common equities | |||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||
| Subtotal gross realized gains on security sales | |||||||||||||||||||||||
| Gross realized losses on security sales | |||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||
| U.S. government | ( | ( | ( | ( | |||||||||||||||||||
| State and local government | ( | ( | ( | ||||||||||||||||||||
| Corporate and other debt | ( | ( | ( | ( | |||||||||||||||||||
| Commercial mortgage-backed | ( | ( | |||||||||||||||||||||
| Total available-for-sale securities | ( | ( | ( | ( | |||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ( | ( | ( | |||||||||||||||||||
| Common equities | ( | ( | ( | ||||||||||||||||||||
| Total equity securities | ( | ( | ( | ( | |||||||||||||||||||
| Subtotal gross realized losses on security sales | ( | ( | ( | ( | |||||||||||||||||||
| Net realized gains (losses) on security sales | |||||||||||||||||||||||
| Available-for-sale securities: | |||||||||||||||||||||||
| U.S. government | ( | ||||||||||||||||||||||
| State and local government | ( | ( | ( | ||||||||||||||||||||
| Corporate and other debt | |||||||||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||||||||
| Commercial mortgage-backed | ( | ( | |||||||||||||||||||||
| Total available-for-sale securities | ( | ||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ( | ( | ||||||||||||||||||||
| Common equities | |||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||
| Subtotal net realized gains (losses) on security sales | |||||||||||||||||||||||
| Net holding period gains (losses) | |||||||||||||||||||||||
| Hybrid securities | ( | ||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Subtotal net holding period gains (losses) | |||||||||||||||||||||||
| Total net realized gains (losses) on securities | $ | $ | $ | $ | |||||||||||||||||||
During the second quarter and first six months of 2026 and 2025, the majority of our security sales were U.S. government securities that were sold for duration management. We also selectively sold securities that we viewed as having less attractive risk/reward profiles during the second quarter and first six months of 2026 and 2025.
10
The following table reflects our holding period realized gains (losses) recognized on equity securities held at the three and six months ended June 30:
| Three Months | Six Months | ||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total net gains (losses) recognized during the period on equity securities | $ | $ | $ | $ | |||||||||||||
| Less: Net gains (losses) recognized on equity securities sold during the period | |||||||||||||||||
| Net holding period gains (losses) recognized during the period on equity securities held at period end | $ | $ | $ | $ | |||||||||||||
Net Investment Income The following table details the components of net investment income for the three and six months ended June 30:
| Three Months | Six Months | ||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Available-for-sale securities: | |||||||||||||||||
| Fixed maturities: | |||||||||||||||||
| U.S. government | $ | $ | $ | $ | |||||||||||||
| State and local government | |||||||||||||||||
| Corporate and other debt | |||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||
| Commercial mortgage-backed | |||||||||||||||||
| Other asset-backed | |||||||||||||||||
| Total fixed maturities | |||||||||||||||||
| Short-term investments | |||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||
| Equity securities: | |||||||||||||||||
| Nonredeemable preferred stocks | |||||||||||||||||
| Common equities | |||||||||||||||||
| Total equity securities | |||||||||||||||||
| Investment income | |||||||||||||||||
| Investment expenses | ( | ( | ( | ( | |||||||||||||
| Net investment income | $ | $ | $ | $ | |||||||||||||
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3. FAIR VALUE
The composition of the investment portfolio by major security type and our outstanding debt was:
| Fair Value | |||||||||||||||||||||||||||||
| (millions) | Level 1 | Level 2 | Level 3 | Total | Cost | ||||||||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| State and local government | |||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||
| Corporate and other debt | |||||||||||||||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||||||||||||||
| Commercial mortgage-backed | |||||||||||||||||||||||||||||
| Other asset-backed | |||||||||||||||||||||||||||||
| Total fixed maturities | |||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | |||||||||||||||||||||||||||||
| Common equities: | |||||||||||||||||||||||||||||
| Common stocks | |||||||||||||||||||||||||||||
| Other risk investments | |||||||||||||||||||||||||||||
| Subtotal common equities | |||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||
| Total portfolio | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Debt | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||||||||
| (millions) | Level 1 | Level 2 | Level 3 | Total | Cost | ||||||||||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| State and local government | |||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||
| Corporate and other debt | |||||||||||||||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||||||||||||||
| Commercial mortgage-backed | |||||||||||||||||||||||||||||
| Other asset-backed | |||||||||||||||||||||||||||||
| Total fixed maturities | |||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | |||||||||||||||||||||||||||||
| Common equities: | |||||||||||||||||||||||||||||
| Common stocks | |||||||||||||||||||||||||||||
| Other risk investments | |||||||||||||||||||||||||||||
| Subtotal common equities | |||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||
| Total portfolio | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Debt | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
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| Fair Value | |||||||||||||||||||||||||||||
| (millions) | Level 1 | Level 2 | Level 3 | Total | Cost | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Fixed maturities: | |||||||||||||||||||||||||||||
| U.S. government | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| State and local government | |||||||||||||||||||||||||||||
| Foreign government | |||||||||||||||||||||||||||||
| Corporate and other debt | |||||||||||||||||||||||||||||
| Residential mortgage-backed | |||||||||||||||||||||||||||||
| Commercial mortgage-backed | |||||||||||||||||||||||||||||
| Other asset-backed | |||||||||||||||||||||||||||||
| Total fixed maturities | |||||||||||||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||||||||
| Total available-for-sale securities | |||||||||||||||||||||||||||||
| Equity securities: | |||||||||||||||||||||||||||||
| Nonredeemable preferred stocks | |||||||||||||||||||||||||||||
| Common equities: | |||||||||||||||||||||||||||||
| Common stocks | |||||||||||||||||||||||||||||
| Other risk investments | |||||||||||||||||||||||||||||
| Subtotal common equities | |||||||||||||||||||||||||||||
| Total equity securities | |||||||||||||||||||||||||||||
| Total portfolio | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Debt | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Our portfolio valuations, excluding short-term investments valued at adjusted original cost and classified as either Level 1 or Level 2 in the above tables, are priced exclusively by external sources, including pricing vendors, dealers/market makers, and exchange-quoted prices. At each reporting period, we concluded there was sufficient market activity in the relevant sectors and securities, further supporting our Level 1 and Level 2 classifications.
Our short-term investments classified as Level 1 include commercial paper, U.S. Treasury Bills, and money market funds, which are highly liquid, actively marketed, and have short durations. These securities are valued at their original cost, adjusted for any accretion of discount, which approximates fair value because of the relatively short period of time until maturity. The remainder of our short-term investments with a trade date to maturity of less than a year are classified as Level 2. These securities are classified as Level 2 since they are valued using external pricing vendor prices or are securities that continually trade at par value because they contain either liquidity facilities or mandatory put features within one year and, as a result, are valued at their original cost.
At June 30, 2026 and December 31, 2025, vendor-quoted prices represented 91 93 %, at June 30, 2025. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. government securities, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges.
At June 30, 2026 and 2025, vendor-quoted prices comprised 99 100 % at December 31, 2025. In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.
As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the
13
general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance.
To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. When necessary, we challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.
For asset-backed securities, including residential, commercial, and other asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates. We further stratify each class of asset-backed securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, and subordinated) and use duration and credit quality to determine if the fair value is appropriate.
For corporate and other debt, nonredeemable preferred stock, and the notes issued by The Progressive Corporation (see Note 4 – Debt), we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification. The review also includes recent trades, including: volume traded at various levels that establish a market; issuer specific fundamentals; and industry-specific economic news as it comes to light.
For state and local government (municipal) securities, we stratify the portfolio to evaluate securities by type, duration, credit quality, and coupon, to review price changes relative to credit spread and interest rate changes.
Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.
For short-term investments valued at adjusted original cost, we look at acquisition price relative to the coupon or yield. Since most of these securities are 60 days or less to maturity, we believe that adjusted original cost is the best estimate of fair value. For short-term investments valued with external vendor prices, we review securities by duration, credit quality, and coupon, as well as changes in interest rate and credit spread movements within that stratification, and recent trade information.
We also review data assumptions as supplied by our sources to determine if that data is relevant to current market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.
During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review our external sales transactions and compare the actual final market sales prices to previous market valuation prices on a monthly basis. This review provides us further validation that our pricing sources are providing market level prices, and gives us additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients. We believe this effort helps ensure that we are reporting the most representative fair values for our securities.
After all the valuations are received and our review of Level 2 securities is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected securities to Level 3.
14
Except as described below, our Level 3 securities are priced externally; however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature.
To the extent we receive prices from external sources (e.g., broker and valuation firm) for the Level 3 securities, we review those prices for reasonableness using internally developed assumptions and then compare our derived prices to the prices received from the external sources. Based on our review during the first six months of 2026 and for the full year of 2025, all prices received from external sources remained unadjusted.
If we do not receive prices from an external source, we perform an internal fair value comparison, which includes a review and analysis of market-comparable securities, to determine if fair value changes are needed. Based on this analysis, certain private equity investments included in the Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value. At
least annually, these private equity investments are priced by an external source.
Our Level 3 other risk investments include securities accounted for under the equity method of accounting and, therefore, are not subject to fair value reporting. Since these securities represent less than 0.1% of our total portfolio, we include them in our Level 3 disclosures and report the activity from these investments as “other” changes in the summary of changes in fair value table and categorize these securities as “pricing exemption securities” in the quantitative information table.
During the first six months of 2026 and for the full year of 2025, there were no material assets or liabilities measured at fair value on a nonrecurring basis.
Due to the relative size of the Level 3 securities’ fair values, compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net or comprehensive income.
15
The following tables provide a summary of changes in fair value associated with Level 3 assets for the three and six months ended June 30, 2026 and 2025:
| (millions) | Fair Value at March 31, 2026 | Calls/ Maturities/ Paydowns/ Other | Purchases | Sales | Net Realized (Gain)/Loss on Sales | Change in Valuation1 | Net Transfers In (Out) | Fair Value at June 30, 2026 | ||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
| Corporate and other debt | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ||||||||||||||||||||||||||
| Common equities: | ||||||||||||||||||||||||||
| Common stocks | ||||||||||||||||||||||||||
| Other risk investments | ||||||||||||||||||||||||||
Total Level 3 securities | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| (millions) | Fair Value at March 31, 2025 | Calls/ Maturities/ Paydowns/ Other | Purchases | Sales | Net Realized (Gain)/Loss on Sales | Change in Valuation1 | Net Transfers In (Out) | Fair Value at June 30, 2025 | ||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
| Corporate and other debt | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ||||||||||||||||||||||||||
| Common equities: | ||||||||||||||||||||||||||
| Common stocks | ||||||||||||||||||||||||||
| Other risk investments | ||||||||||||||||||||||||||
| Total Level 3 securities | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| (millions) | Fair Value at December 31, 2025 | Calls/ Maturities/ Paydowns/ Other | Purchases | Sales | Net Realized (Gain)/Loss on Sales | Change in Valuation1 | Net Transfers In (Out) | Fair Value at June 30, 2026 | ||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
| Corporate and other debt | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Other asset-backed | ||||||||||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ( | ( | ||||||||||||||||||||||||
| Common equities: | ||||||||||||||||||||||||||
| Common stocks | ||||||||||||||||||||||||||
| Other risk investments | ||||||||||||||||||||||||||
| Total Level 3 securities | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||
| (millions) | Fair Value at December 31, 2024 | Calls/ Maturities/ Paydowns/ Other | Purchases | Sales | Net Realized (Gain)/Loss on Sales | Change in Valuation1 | Net Transfers In (Out) | Fair Value at June 30, 2025 | ||||||||||||||||||
| Fixed maturities: | ||||||||||||||||||||||||||
| Corporate and other debt | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Equity securities: | ||||||||||||||||||||||||||
| Nonredeemable preferred stocks | ||||||||||||||||||||||||||
| Common equities: | ||||||||||||||||||||||||||
| Common stocks | ( | |||||||||||||||||||||||||
| Other risk investments | ||||||||||||||||||||||||||
Total Level 3 securities | $ | $ | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||
16
The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at June 30, 2026 and 2025, and December 31, 2025:
| ($ in millions) | Fair Value at June 30, 2026 | Valuation Technique | Unobservable Input | Range of Input Values Increase (Decrease) | Weighted Average Increase (Decrease) | ||||||||||||
| Fixed maturities: | |||||||||||||||||
| Corporate and other debt | $ | Market comparables | Weighted average market capitalization price change % | ( | ( | % | |||||||||||
| Equity securities: | |||||||||||||||||
| Nonredeemable preferred stocks | Market comparables | Weighted average market capitalization price change % | ( | % | |||||||||||||
| Common stocks | Market comparables | Weighted average market capitalization price change % | ( | % | |||||||||||||
| Subtotal Level 3 securities | |||||||||||||||||
| External price securities | |||||||||||||||||
| Pricing exemption securities | |||||||||||||||||
| Total Level 3 securities | $ | ||||||||||||||||
| ($ in millions) | Fair Value at June 30, 2025 | Valuation Technique | Unobservable Input | Range of Input Values Increase (Decrease) | Weighted Average Increase (Decrease) | ||||||||||||
| Fixed maturities: | |||||||||||||||||
| Corporate and other debt | $ | Market comparables | Weighted average market capitalization price change % | % | |||||||||||||
| Equity securities: | |||||||||||||||||
| Nonredeemable preferred stocks | Market comparables | Weighted average market capitalization price change % | ( | % | |||||||||||||
| Common stocks | Market comparables | Weighted average market capitalization price change % | ( | % | |||||||||||||
| Subtotal Level 3 securities | |||||||||||||||||
| Pricing exemption securities | |||||||||||||||||
| Total Level 3 securities | $ | ||||||||||||||||
| ($ in millions) | Fair Value at December 31, 2025 | Valuation Technique | Unobservable Input | Range of Input Values Increase (Decrease) | Weighted Average Increase (Decrease) | ||||||||||||
| Fixed maturities: | |||||||||||||||||
| Corporate and other debt | $ | Market comparables | Weighted average market capitalization price change % | ( | % | ||||||||||||
| Equity securities: | |||||||||||||||||
| Nonredeemable preferred stocks | Market comparables | Weighted average market capitalization price change % | ( | ( | % | ||||||||||||
| Common stocks | Market comparables | Weighted average market capitalization price change % | ( | % | |||||||||||||
| Subtotal Level 3 securities | |||||||||||||||||
| Pricing exemption securities | |||||||||||||||||
| Total Level 3 securities | $ | ||||||||||||||||
17
4. DEBT
Debt at each of the balance sheet periods consisted of the following Senior Notes:
| ($ in millions) | June 30, 2026 | June 30, 2025 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Principal Amount | Interest Rate | Issuance Date | Maturity Date | Carrying Value | Fair Value | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||||||||||||||||
| $ | % | August 2016 | January 2027 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| March 2022 | March 2027 | ||||||||||||||||||||||||||||||||||||||||||||||
| 6 5/8 | March 1999 | March 2029 | |||||||||||||||||||||||||||||||||||||||||||||
| October 2018 | March 2029 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2020 | March 2030 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2026 | March 2031 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2022 | March 2032 | ||||||||||||||||||||||||||||||||||||||||||||||
| November 2002 | December 2032 | ||||||||||||||||||||||||||||||||||||||||||||||
| May 2023 | June 2033 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2026 | March 2036 | ||||||||||||||||||||||||||||||||||||||||||||||
| April 2014 | April 2044 | ||||||||||||||||||||||||||||||||||||||||||||||
| January 2015 | January 2045 | ||||||||||||||||||||||||||||||||||||||||||||||
| April 2017 | April 2047 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2018 | March 2048 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2020 | March 2050 | ||||||||||||||||||||||||||||||||||||||||||||||
| March 2022 | March 2052 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
At June 30, 2026, short-term debt consisted of the $500 million 2.45 % senior notes that mature in January 2027 and the $500 million 2.50 % senior notes that mature in March 2027. There was no
In March 2026, The Progressive Corporation issued $500 million of 4.60 % Senior Notes due 2031 and $1 billion of 5.15 % Senior Notes due 2036 in an underwritten public offering. The net proceeds from the issuances, after deducting underwriters’ discounts, commissions, and other issuance costs, were approximately $1,487 million in aggregate. Consistent with the other senior notes issued by The Progressive Corporation, interest on these notes is payable semiannually, principal is
due at maturity, and the notes are redeemable, in whole or in part, at any time, subject to a treasury “make whole” provision.
During the second quarter 2026, The Progressive Corporation renewed its line of credit with PNC Bank, National Association (PNC), in the maximum principal amount of $300 million, which expires April 30, 2027. The renewal amended the interest rate to 1-month term Secured Overnight Financing Rate (SOFR) plus 1.0 %. The remaining terms are unchanged from the previous line of credit. See the 2025 Annual Report to Shareholders for a discussion of the terms of this line of credit. We had no
18
5. INCOME TAXES
The effective tax rate for the three and six months ended June 30, 2026, was 21.3 % and 21.2 %, respectively, compared to 20.3 % and 20.4 % for the same periods last year. The lower effective tax rate for the prior-year periods was primarily due to the tax benefits associated with distributions of deferred compensation during the second quarter 2025.
Deferred income taxes reflect the tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes
and, therefore, no
We had net current income taxes recoverable of $50 million and $115 million at June 30, 2026 and 2025, respectively, which were reported in other assets on our consolidated balance sheets, compared to net current income taxes payable of $28 million at December 31, 2025, which was reported in accounts payable, accrued expenses, and other liabilities. The balance may fluctuate from period to period due to normal timing differences.
At June 30, 2026 and 2025, and December 31, 2025, we have not
6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Activity in the loss and loss adjustment expense reserves is summarized as follows:
| June 30, | |||||||||||
| (millions) | 2026 | 2025 | |||||||||
| Balance at January 1 | $ | $ | |||||||||
| Less reinsurance recoverables on unpaid losses | |||||||||||
| Net balance at January 1 | |||||||||||
| Incurred related to: | |||||||||||
| Current year | |||||||||||
| Prior years | ( | ( | |||||||||
| Total incurred | |||||||||||
| Paid related to: | |||||||||||
| Current year | |||||||||||
| Prior years | |||||||||||
| Total paid | |||||||||||
Net balance at June 30 | |||||||||||
| Plus reinsurance recoverables on unpaid losses | |||||||||||
Balance at June 30 | $ | $ | |||||||||
We experienced favorable reserve development of $1,002 million and $607 million during the first six months of 2026 and 2025, respectively, which is reflected as “incurred related to prior years” in the table above.
Year-to-date June 30, 2026
•The favorable prior-year reserve development included approximately $670 million attributable to accident year 2025, $220 million to accident year 2024, and the remainder to accident years 2023 and prior.
•Our personal auto products incurred about $845 million of favorable loss and loss adjustment expense (LAE) reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated bodily injury severity and, to a lesser extent, lower than anticipated payments on reopened property damage claims that were previously closed and lower than anticipated personal injury protection loss adjustment expenses.
•Our Commercial Lines business incurred about $140 million of favorable loss and LAE reserve development. The favorable development was primarily due to lower than anticipated injury severity in our transportation network company (TNC) business, partially offset by higher than anticipated injury severity and litigation defense costs in our core commercial auto products.
19
Year-to-date June 30, 2025
•The favorable prior-year reserve development included approximately $400 million attributable to accident year 2024, $115 million to accident year 2023, and the remainder to accident years 2022 and prior.
•Our personal auto products incurred about $520 million of favorable loss and LAE reserve development, with the agency and direct auto businesses each contributing about half. The favorable development was primarily due to lower than anticipated loss severity and frequency in Florida and, to a lesser extent, lower than anticipated litigation defense costs across most states.
•Our personal property products experienced about $50 million of favorable development, primarily attributable to favorable development on 2024 catastrophe events.
•Our Commercial Lines business experienced about $45 million of favorable development, primarily attributable to lower than anticipated severity in our TNC business.
7. SEGMENT INFORMATION
Our Personal Lines segment writes insurance for personal autos, special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), personal residential property insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program.
Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related
general liability and commercial property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.
Our service businesses primarily provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among other products, through programs in our direct Personal Lines and Commercial Lines businesses.
All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.
Following are the operating results for the respective periods:
| (millions) | Personal Lines | Commercial Lines | Other1 | Companywide | ||||||||||||||||||||||
Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | ||||||||||||||||||||||
| Fees and other revenues | ( | |||||||||||||||||||||||||
| Total underwriting revenue | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses: | ||||||||||||||||||||||||||
| Losses (excluding catastrophe losses) | ||||||||||||||||||||||||||
| Catastrophe losses | ||||||||||||||||||||||||||
| Loss adjustment expenses | ||||||||||||||||||||||||||
| Total losses and loss adjustment expenses | ||||||||||||||||||||||||||
Underwriting expenses: | ||||||||||||||||||||||||||
Distribution expenses2 | ||||||||||||||||||||||||||
Other underwriting expenses3 | ||||||||||||||||||||||||||
| Total underwriting expenses | ||||||||||||||||||||||||||
| Pretax underwriting profit (loss) | $ | $ | $ | ( | ||||||||||||||||||||||
Investment profit (loss)4 | ||||||||||||||||||||||||||
| Service businesses profit (loss) | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Total pretax profit (loss) | $ | |||||||||||||||||||||||||
20
| (millions) | Personal Lines | Commercial Lines | Other1 | Companywide | ||||||||||||||||||||||
Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | ||||||||||||||||||||||
| Fees and other revenues | ||||||||||||||||||||||||||
| Total underwriting revenue | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses: | ||||||||||||||||||||||||||
| Losses (excluding catastrophe losses) | ( | |||||||||||||||||||||||||
| Catastrophe losses | ||||||||||||||||||||||||||
| Loss adjustment expenses | ||||||||||||||||||||||||||
| Total losses and loss adjustment expenses | ||||||||||||||||||||||||||
Underwriting expenses: | ||||||||||||||||||||||||||
Distribution expenses2 | ||||||||||||||||||||||||||
Other underwriting expenses3 | ||||||||||||||||||||||||||
| Total underwriting expenses | ||||||||||||||||||||||||||
| Pretax underwriting profit (loss) | $ | $ | $ | ( | ||||||||||||||||||||||
Investment profit (loss)4 | ||||||||||||||||||||||||||
| Service businesses profit (loss) | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Total pretax profit (loss) | $ | |||||||||||||||||||||||||
| (millions) | Personal Lines | Commercial Lines | Other1 | Companywide | ||||||||||||||||||||||
Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | ||||||||||||||||||||||
| Fees and other revenues | ||||||||||||||||||||||||||
| Total underwriting revenue | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses: | ||||||||||||||||||||||||||
| Losses (excluding catastrophe losses) | ||||||||||||||||||||||||||
| Catastrophe losses | ||||||||||||||||||||||||||
| Loss adjustment expenses | ||||||||||||||||||||||||||
| Total losses and loss adjustment expenses | ||||||||||||||||||||||||||
Underwriting expenses: | ||||||||||||||||||||||||||
Distribution expenses2 | ||||||||||||||||||||||||||
Other underwriting expenses3 | ||||||||||||||||||||||||||
| Total underwriting expenses | ||||||||||||||||||||||||||
| Pretax underwriting profit (loss) | $ | $ | $ | ( | ||||||||||||||||||||||
Investment profit (loss)4 | ||||||||||||||||||||||||||
| Service businesses profit (loss) | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Total pretax profit (loss) | $ | |||||||||||||||||||||||||
21
| (millions) | Personal Lines | Commercial Lines | Other1 | Companywide | ||||||||||||||||||||||
Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | ||||||||||||||||||||||
| Fees and other revenues | ||||||||||||||||||||||||||
| Total underwriting revenue | ||||||||||||||||||||||||||
| Losses and loss adjustment expenses: | ||||||||||||||||||||||||||
| Losses (excluding catastrophe losses) | ( | |||||||||||||||||||||||||
| Catastrophe losses | ||||||||||||||||||||||||||
| Loss adjustment expenses | ||||||||||||||||||||||||||
| Total losses and loss adjustment expenses | ||||||||||||||||||||||||||
Underwriting expenses: | ||||||||||||||||||||||||||
Distribution expenses2 | ||||||||||||||||||||||||||
Other underwriting expenses3 | ||||||||||||||||||||||||||
| Total underwriting expenses | ||||||||||||||||||||||||||
| Pretax underwriting profit (loss) | $ | $ | $ | ( | ||||||||||||||||||||||
Investment profit (loss)4 | ||||||||||||||||||||||||||
| Service businesses profit (loss) | ( | |||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Total pretax profit (loss) | $ | |||||||||||||||||||||||||
1 Includes other underwriting business and run-off operations.
2 Includes policy acquisition costs, agents’ contingent commissions, and advertising costs attributable to our operating segments. A portion of our companywide advertising costs are also attributed to our service businesses.
3 Primarily consists of employee compensation and benefit costs, and the increase in the allowance for credit loss exposure on our premiums receivable.
4 Calculated as recurring investment income plus total net realized gains (losses) on securities, less investment expenses.
Our management uses underwriting margin and combined ratio as primary measures of underwriting profitability. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. 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. Combined ratio is the complement of the underwriting margin. Following are the underwriting margins and combined ratios for our underwriting operations for the respective periods:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Under- writing Margin | Combined Ratio | Under- writing Margin | Combined Ratio | Under- writing Margin | Combined Ratio | Under- writing Margin | Combined Ratio | ||||||||||||||||||||||||||||
| Personal Lines | % | % | % | % | |||||||||||||||||||||||||||||||
| Commercial Lines | |||||||||||||||||||||||||||||||||||
| Total underwriting operations | |||||||||||||||||||||||||||||||||||
22
8. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss), including reclassification adjustments by income statement line item, were as follows:
| Components of Changes in Accumulated Other Comprehensive Income (after tax) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (millions) | Pretax total accumulated other comprehensive income (loss) | Total tax (provision) benefit | After tax total accumulated other comprehensive income (loss) | Total net unrealized gains (losses) on securities | Net unrealized losses on forecasted transactions | Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Reclassification adjustment for amounts realized in net income by income statement line item: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net realized gains (losses) on securities | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total reclassification adjustment for amounts realized in net income | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Changes in Accumulated Other Comprehensive Income (after tax) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (millions) | Pretax total accumulated other comprehensive income (loss) | Total tax (provision) benefit | After tax total accumulated other comprehensive income (loss) | Total net unrealized gains (losses) on securities | Net unrealized losses on forecasted transactions | Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications for investment securities | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Reclassification adjustment for amounts realized in net income by income statement line item: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net realized gains (losses) on securities | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total reclassification adjustment for amounts realized in net income | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23
| Components of Changes in Accumulated Other Comprehensive Income (after tax) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (millions) | Pretax total accumulated other comprehensive income (loss) | Total tax (provision) benefit | After tax total accumulated other comprehensive income (loss) | Total net unrealized gains (losses) on securities | Net unrealized losses on forecasted transactions | Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) before reclassifications | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Reclassification adjustment for amounts realized in net income by income statement line item: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net realized gains (losses) on securities | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total reclassification adjustment for amounts realized in net income | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Changes in Accumulated Other Comprehensive Income (after tax) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (millions) | Pretax total accumulated other comprehensive income (loss) | Total tax (provision) benefit | After tax total accumulated other comprehensive income (loss) | Total net unrealized gains (losses) on securities | Net unrealized losses on forecasted transactions | Foreign currency translation adjustment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications for investment securities | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Reclassification adjustment for amounts realized in net income by income statement line item: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net realized gains (losses) on securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total reclassification adjustment for amounts realized in net income | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | ( | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In an effort to manage interest rate risk, we entered into forecasted transactions on certain issuances of The Progressive Corporation’s debt. During the next 12 months, we expect to reclassify approximately $1 million (pretax) into interest expense, related to net unrealized losses on forecasted transactions (see Note 4 – Debt in our 2025 Annual Report to Shareholders for further discussion).
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9. LITIGATION
The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.
In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our 2025 Annual Report to Shareholders.
As of June 30, 2026, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging that: we improperly value total loss claims by applying a negotiation adjustment in Colorado, North Carolina, and Ohio; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; and we improperly reduce or deny personal injury protection benefits when medical expenses are paid initially by health insurance in Arkansas. Other insurance companies face many of these same issues. We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate.
Lawsuits arising from insurance policies and operations, including, but not limited to, allegations involving claims adjustment and vehicle valuation, may be filed
contemporaneously in multiple states. As of June 30, 2026, we are named as defendants in class action lawsuits
pending in multiple states alleging that we improperly
value total loss vehicle physical damage claims through the
application of a negotiation adjustment in calculating such valuations, which includes three states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states. These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws. While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations. Based on information available to us, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for suits for which accruals have been established and are not material, as of June 30, 2026.
With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established were not material at June 30, 2026 and 2025, or December 31, 2025, and there were no material settlements during 2025 or the first six months of 2026. For most of these lawsuits, we do not consider any losses to be both probable and estimable, and we are unable to estimate a meaningful range of loss, if any, at this time, due to the factors discussed in Note 12 – Litigation in our 2025 Annual Report to Shareholders. In the event that any one or more of these lawsuits results in a substantial judgment against us, or settlement by us, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material adverse effect on our consolidated financial condition, cash flows, and/or results of operations. For a further discussion on our pending litigation and related reserving policies, see Note 1 – Reporting and Accounting Policies and Note 12 – Litigation in our 2025 Annual Report to Shareholders.
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10. DIVIDENDS
Following is a summary of our common share dividends that were declared and/or paid during the six months ended June 30, 2026 and 2025:
| (millions — except per share amounts) | Amount | ||||||||||||||||
| Declared | Payable | Per Share | Accrued/Paid1 | ||||||||||||||
| Annual-Variable Dividends: | |||||||||||||||||
| December 2025 | January 2026 | $ | $ | ||||||||||||||
| December 2024 | January 2025 | ||||||||||||||||
| Quarterly Dividends: | |||||||||||||||||
| May 2026 | July 2026 | ||||||||||||||||
| March 2026 | April 2026 | ||||||||||||||||
| December 2025 | January 2026 | ||||||||||||||||
| May 2025 | July 2025 | ||||||||||||||||
| March 2025 | April 2025 | ||||||||||||||||
| December 2024 | January 2025 | ||||||||||||||||
1 The accrual is based on an estimate of shares outstanding as of the record date and recorded as dividends payable on common shares on our consolidated balance sheets until paid; the prior period accrual was reclassified into this line item from accounts payable, accrued expenses, and other liabilities to conform to the current period’s presentation.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
I. OVERVIEW
The Progressive Corporation’s insurance subsidiaries continued to generate underwriting profitability above our 4% companywide calendar-year underwriting profit goal during the second quarter 2026, producing a companywide underwriting profit margin of 12.7%. Both our Personal Lines and Commercial Lines operating segments generated strong underwriting profitability during the second quarter 2026.
We also reported steady year-over-year growth in both premiums and policies in force despite increased competition in the marketplace. Companywide net premiums written were $21.1 billion, an increase of $1.0 billion, or 5%, compared to the second quarter last year, while net premiums earned increased 6%. We also surpassed the 40 million policies in force milestone by adding 0.5 million more policies during the quarter and ending the second quarter with 2.8 million more policies in force than at June 30, 2025.
Personal Lines reported an underwriting profit margin of 12.4% for the second quarter, compared to 14.0% for the same period last year. Personal Lines also experienced year-over-year growth for the second quarter 2026, with net premiums written increasing 5% and policies in force increasing 8%, compared to the same period last year. This growth follows significant increases in the second quarter last year, which had net premiums written growth of 15% and policies in force growth of 16%. The current period net premiums written growth was primarily driven by policies in force growth in our personal auto products, which were up 9%, compared to June 30, 2025.
Commercial Lines reported an underwriting profit margin of 14.7% for the second quarter 2026, compared to 13.2% in the same period last year. Commercial Lines net premiums written increased 4% and policies in force increased 3% during the second quarter 2026, compared to the same period last year. In our core commercial auto business (which excludes our transportation network company (TNC) business, our Progressive Fleet & Specialty Programs (FSP) products, and our business owners’ policy (BOP) product) we continued to experience a shift to a greater mix of business market targets (BMT) with lower average written premiums and a shift to a greater mix of policies with 6-month terms in our contractor and business auto BMTs, which negatively affected average premiums since those policies have about half the amount of net premiums written as 12-month term policies.
For the second quarter 2026, we experienced a $136 million year-over-year increase in net income, compared to the second quarter 2025, primarily reflecting an increase in total net investment income. Total comprehensive income decreased $669 million for the second quarter 2026, compared to the same period last year, driven by net unrealized losses on our fixed-maturity securities in the current period, compared to net unrealized gains during the second quarter last year.
At June 30, 2026, total capital (debt plus shareholders’ equity) was $42.7 billion, an increase of $5.5 billion from year-end 2025. The increase was primarily driven by $5.2 billion of comprehensive income earned during the first six months of 2026 and the issuance of $1.5 billion of senior notes during the first quarter 2026. These increases were partially offset by the repurchase of 5.4 million of our common shares at a total cost of $1.1 billion.
A. Insurance Operations
Our companywide underwriting profit margin for the second quarter 2026 was 1.1 points lower than the same period last year. The decrease reflected a 0.6 point increase in our loss and loss adjustment expense (LAE) ratio, primarily due to increased severity, and a 0.5 point increase in our underwriting expense ratio, primarily driven by increased advertising expense, as discussed below.
We continue to closely monitor our expenses, including 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 the second quarter 2026, advertising expense was $1.4 billion, or 16% higher than the second quarter last year. The current period effect of the higher advertising spend on our expense ratio was partially offset by the increase in net premiums earned, resulting in an additional 0.5 points of contribution to the underwriting expense ratio in the second quarter 2026, compared to the same period last year. We will continue to advertise to maximize growth as long as the advertising spend is efficient and we remain on track to achieve our calendar-year profitability goal.
Personal Lines represented 88% of companywide net premiums written during the second quarter 2026 and is comprised of our personal vehicle and property products. Personal Lines vehicle products include both personal auto and special lines products, with special lines typically experiencing higher losses during warmer weather months, due to the seasonal nature of these products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft). In our personal property products, homeowners products are defined as our total personal property business excluding renters and umbrella products.
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Personal Lines generated an underwriting profit margin of 12.4% for the second quarter 2026, with personal vehicle and personal property products reporting underwriting profit margins of 12.0% and 22.0%, respectively. Profitability in our special lines products had a minimal impact on the personal vehicle combined ratio during the second quarter 2026. The strong underwriting profit margin in our personal property products was primarily driven by a low level of incurred catastrophe losses, lower loss frequency during the period, and increased rates.
For the second quarter 2026, Personal Lines net premiums written increased 5%, with personal vehicle business increases of 2% in agency and 8% in direct, and a 1% increase in personal property, each compared to the same period last year. Changes in net premiums written are a function of new business applications (i.e., policies sold), retention, business mix, and premium per policy.
Personal vehicles experienced an increase in new business applications of 1% and an increase in renewal business applications of 11% during the second quarter 2026, compared to the same period in the prior year. Our personal vehicle business continued to generate sustained net premiums written and application growth despite continued increased competition in the marketplace and in comparison to the double-digit application growth experienced during the same period last year.
Personal property experienced flat new business applications and an increase in renewal business applications of 1% during the second quarter 2026, compared to the same period last year. New business applications in our homeowners product increased 11%, compared to the prior-year period, while declining 2% in our renters product.
On a countrywide basis, during the second quarter 2026, we decreased personal auto rates by less than 1% and increased personal property rates about 1%, in the aggregate.
We believe a key element in improving the accuracy of our personal auto rating is Snapshot®, our usage-based insurance offering. During the second quarter 2026, Snapshot adoption rates among eligible new business personal auto consumers decreased 3% in direct and 8% in agency, compared to the same period last year. Approximately half of direct new business consumers elected Snapshot in both the second quarter 2025 and 2026. The decrease in the agency adoption rate was primarily due to the expansion of Snapshot eligibility in the second half of 2025, which increased the number of agents able to write Snapshot policies and broadened access to agents with historically lower adoption rates. Snapshot is available in all states, other than California, and our latest segmentation model was available in states representing 81% of countrywide personal auto net premiums written (excluding California) on a trailing 12-month basis at quarter end. We continue to invest in our mobile
application, with the majority of new enrollments choosing mobile devices for Snapshot monitoring.
During the second quarter 2026, we continued to focus on selectively increasing the availability of our personal property products. Beginning late 2025, we took actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing, geographical diversification, and the regulatory and market conditions. Some of these actions include expanding independent agency relationships, reopening new business in certain agency and direct channel markets, and lifting targeted underwriting restrictions on older roofs, medium- to high-value homes, and non-bundled homeowners products in certain markets. Certain of these restrictions remain in place in markets where we continue to focus on improving profitability and reducing exposure in more volatile weather-related markets. We believe these actions taken in 2025 continued to adversely impact new business application growth in 2026.
The Commercial Lines segment includes our core commercial auto products, TNC business, FSP products, and BOP product. Total Commercial Lines generated an underwriting profit margin of 14.7% with a net premiums written increase of 4% and a policies in force increase of 3% for the second quarter 2026, compared to the same period last year. Increases in both net premiums written and policies in force were primarily driven by volume growth due to rate decreases in targeted state and BMT combinations, and increased advertising and agent incentive spend. Core commercial auto products experienced an increase in new business applications of 1% and an increase in renewal business applications of 8% during the second quarter 2026, compared to the same period last year. New and renewal business applications increased in all BMTs except for-hire transportation.
In aggregate, core commercial auto rates were relatively flat on a countrywide basis during the second quarter 2026.
We believe we are currently adequately priced in our personal auto, personal property, and core commercial auto products in most states through the remainder of the year. However, we regularly monitor the factors that could impact our loss costs, which may include tariffs, inflation, new and used car prices, miles driven, driving patterns, loss severity and frequency, weather events, building materials, construction costs, and other factors, on a state-by-state basis.
For the second quarter 2026, on a year-over-year basis, average written premium per policy decreased 2% in both personal auto and personal property products, and decreased 3% in core commercial auto products. In aggregate, we took minimal personal auto rate decreases on a countrywide basis over the previous 12 months. The decrease in personal property average written premium per policy was primarily due to a shift in the mix of business to
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more renters policies, which have lower average written premiums, partially offset by aggregate rate increases of 9% taken over the last 12 months and higher premium coverages reflecting increased property values. The decrease in core commercial auto average written premium per policy was primarily due to a shift in the mix of business, including a shift to a higher percentage of 6-month policies, which have about half of the amount of net premiums written as 12-month term policies. Given that our personal property and commercial auto policies are predominately written for 12-month terms, rate and non-rate actions take longer to earn into premium for these products.
We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention continues to be one of our most important priorities. Increasing our share of Progressive auto and personal property bundled households (i.e., Robinsons) remains a key initiative, and we plan to continue investing in the customer experience in order to support that goal. Policy life expectancy, our actuarial estimate of the average length of time a newly written policy remains in force before cancellation or lapse in coverage, is our primary measure of customer retention in both Personal Lines and Commercial Lines.
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. For the second quarter 2026, trailing 12-month total personal auto policy life expectancy decreased 8% year over year, while trailing 3-month policy life expectancy decreased 9%, compared to the same period last year. We believe these decreases were primarily due to increased shopping and competition in the marketplace and, to a lesser extent, changes in billing plans offered to customers and a shift in our mix of business.
Our trailing 12-month policy life expectancy was down 8% for our personal property products year over year for the second quarter 2026. We believe the retention decrease was primarily driven by a continued shift in the mix of business to more renters policies and, to a lesser extent, rate increases in previous years and increased competition in the marketplace.
For core commercial auto products, trailing 12-month policy life expectancy increased 2%, compared to the same period in the prior year. We believe the increase reflected a shift to the business auto and contractor BMTs, which historically have higher policy life expectancies, moderation in our rate increases, and various initiatives, including payment and renewal reminders.
B. Investments
The fair value of our investment portfolio was $97.2 billion at June 30, 2026, compared to $97.4 billion at December 31, 2025. The modest decrease from year-end 2025 primarily reflected valuation declines across fixed-maturity sectors, the $7.9 billion payment of our annual variable common share dividend, and the $1.1 billion of repurchases of our common shares, mostly offset by significant positive cash flows from insurance operations and proceeds from the $1.5 billion senior note issuances in March 2026.
Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities and 75%-100% in Group II securities as defined below under Results of Operations – Investments. At June 30, 2026, 7% of our portfolio was allocated to Group I securities, compared to 6% at December 31, 2025, with the remainder allocated to Group II securities.
Our recurring investment income generated a pretax book yield of 4.2% in both second quarter 2026 and 2025. The investment portfolio produced a fully taxable equivalent (FTE) total return of 1.2% in the second quarter 2026, compared to 2.1% in the same period last year. For the second quarter 2026, the fixed-income and common stock portfolios generated FTE total returns of 0.6% and 15.3%, respectively, compared to 1.7% and 10.9%, in the same period last year. The decrease in the fixed-income portfolio’s FTE total return primarily reflected year-over-year movements in U.S. Treasury yields.
The fixed-income portfolio maintained a weighted average credit quality of AA- at June 30, 2026 and 2025, and December 31, 2025. The fixed-income portfolio duration was 3.5 years at June 30, 2026, compared to 3.4 years at both June 30, 2025 and December 31, 2025. During 2026, we modestly increased our duration to take advantage of higher yields available in the market.
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II. FINANCIAL CONDITION
A. Liquidity and Capital Resources
Progressive’s insurance operations generate liquidity by collecting and investing premiums from new and renewal business in advance of paying claims, as well as 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.
Operations generated positive cash flows of $8.0 billion and $9.2 billion for the six months ended June 30, 2026 and 2025, respectively. The decrease in operating cash flows during the first six months of 2026, compared to the same period last year, was primarily due to the $1.2 billion Florida policyholder credits paid in the first quarter 2026. These policyholder credits represented the estimated profit we earned for the three-accident-year period ended December 31, 2025, in excess of the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any contiguous three-accident-year period. See our 2025 Annual Report to Shareholders for further discussion of the Florida policyholder credit expense. We believe cash flows will remain positive for the foreseeable future and do not anticipate the need to raise capital to support our operations during that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.
At June 30, 2026, we held $45.8 billion in short-term investments and U.S. Treasury securities, which represented about half of our total portfolio’s fair value at quarter end. Based on our portfolio allocation and investment strategies, we believe we have sufficient readily available marketable securities to cover claims payments and short-term obligations in the event our cash flows from operations were to become negative. See Item 1A, Risk Factors in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2025 (our 2025 Form 10-K), for a discussion of certain matters that may affect our portfolio and capital position.
Our total capital (debt plus shareholders’ equity) was $42.7 billion at June 30, 2026, compared to $39.5 billion at June 30, 2025, and $37.2 billion at December 31, 2025. The increase from year-end 2025 primarily reflected the $5.2 billion of comprehensive income recognized during the first six months of 2026 and the issuance of $1.5 billion of senior notes in the first quarter 2026. These increases were partially offset by the repurchase of our common shares, as discussed below. Our debt-to-total capital ratio was 19.6% at June 30, 2026, compared to 17.5% at June 30, 2025, and 18.5% at December 31, 2025. These ratios were consistent with our financial policy of maintaining a debt-to-total capital ratio of less than 30%.
None of the covenants on our existing debt securities include rating or credit triggers that would require an adjustment of interest rate or an acceleration of principal payments in the event our debt securities are downgraded by a rating agency. In April 2026, we renewed the unsecured discretionary line of credit with PNC Bank, National Association, in the maximum principal amount of $300 million and amended the interest rate to a 1-month term Secured Overnight Financing Rate (SOFR) plus 1.0%. We did not engage in short-term borrowings, including any borrowings under the line of credit, to fund our operations or for liquidity purposes during the reported periods.
We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, investment losses, catastrophic and other insured losses, natural disasters, and other significant business interruptions. This analysis helps us estimate potential capital needs under a range of scenarios.
During the first six months of 2026, we returned capital to shareholders primarily through common share dividends and common share repurchases. Our Board of Directors declared a $0.10 per common share dividend in both the first and second quarters of 2026. These dividends, which were both $58 million, in the aggregate, were paid in April 2026 and July 2026. In January 2026, we also paid common share dividends declared in the fourth quarter 2025, in the aggregate amount of $8.0 billion, or $13.60 per share (see Note 10 – Dividends for further discussion).
Pursuant to our financial policies, we repurchase common shares opportunistically when we believe our shares are trading below our determination of long-term fair value and to neutralize dilution from equity-based compensation granted during the year. During the first six months of 2026, we repurchased 5.4 million common shares, at a total cost of $1.1 billion, both in the open market and to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plans. We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and the potential capital needs of our business.
At June 30, 2026, we had $6.7 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to our insurance subsidiaries to support potential future growth and other opportunities. As of June 30, 2026, our estimated consolidated statutory surplus was $32.9 billion.
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During the first six months of 2026, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2025 Annual Report to Shareholders. There also were no material changes in off-balance-sheet leverage, including purchase obligations, from those discussed in our 2025 Annual Report to Shareholders.
Based on 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, contractual obligations, and other expected capital requirements for the foreseeable future.
Nevertheless, we may decide to raise additional capital to take advantage of attractive market terms or provide additional financial flexibility. We currently have an effective shelf registration with the U.S. Securities and Exchange Commission so that we may periodically offer and sell an indeterminate aggregate amount of senior or subordinated debt securities, preferred stock, depository shares, common stock, purchase contracts, warrants, and units. The shelf registration enables us to raise funds, subject to market conditions, through the offering of any security, or a combination thereof, covered by the registration.
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 personal vehicles (auto and special lines products) and personal property products (insurance for homeowners and renters, umbrella insurance, and flood insurance through the “Write Your Own” program for the National Flood Insurance Program). Since personal auto products represented about 90% of the Personal Lines net premiums written as of the end of the quarter, much of the following Personal Lines discussion will focus on our personal auto products, both in total and by distribution channel.
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, TNC business, FSP products, and BOP product. Since core commercial auto products represented about 80% of the Commercial Lines net premiums written on a trailing 12-month basis as of the end of the quarter, much of the following Commercial Lines discussion focuses only on our core commercial auto products.
The following table shows the composition of our companywide net premiums written, by segment, for the respective periods:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||
| Agency | 36 | % | 37 | % | 35 | % | 35 | % | |||||||||||||||
| Direct | 48 | 47 | 47 | 46 | |||||||||||||||||||
| Property | 4 | 4 | 3 | 4 | |||||||||||||||||||
| Total Personal Lines | 88 | 88 | 85 | 85 | |||||||||||||||||||
| Commercial Lines | 12 | 12 | 15 | 15 | |||||||||||||||||||
| Total underwriting operations | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Within Personal Lines, we categorize our personal auto 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.
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While our personal auto policies primarily have 6-month terms, we write 12-month term personal auto policies in our Platinum agencies to promote bundled personal auto and property growth. At June 30, 2026 and 2025, 9% and 11%, respectively, of our agency personal auto policies in force were 12-month term 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 term policies generate about twice the amount of net premiums written, compared to 6-month term policies.
Our special lines and personal property products are written for 12-month terms. During the second quarter 2026, 55% of special lines net premiums written and 70% of personal property net premiums written were generated through the independent agency channel, with the balance generated through the direct channel.
Within Commercial Lines, our core commercial auto business operates in five traditional business market targets (BMT):
•for-hire specialty;
•for-hire transportation;
•tow;
•contractor; and
•business auto.
At June 30, 2026, 83% of Commercial Lines policies in force had 12-month terms. The majority of our Commercial Lines business is written through the independent agency channel, although we continue to focus on growing our direct business, with about 11% of core commercial auto premiums written through the direct channel.
B. Profitability
Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses. We also use underwriting margin, which is underwriting profit or loss expressed as a percentage of net premiums earned, to analyze our results. For the respective periods, our underwriting profitability results were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Underwriting Profit (Loss) | Underwriting Profit (Loss) | Underwriting Profit (Loss) | Underwriting Profit (Loss) | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | Margin | $ | Margin | $ | Margin | $ | Margin | |||||||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | 1,041 | 13.6 | % | $ | 1,135 | 15.6 | % | $ | 2,325 | 15.4 | % | $ | 2,406 | 16.8 | % | |||||||||||||||||||||||||||||||
| Direct | 1,134 | 10.8 | 1,185 | 12.5 | 2,258 | 11.0 | 2,198 | 12.0 | |||||||||||||||||||||||||||||||||||||||
| Property | 171 | 22.0 | 128 | 16.4 | 338 | 21.9 | 227 | 14.6 | |||||||||||||||||||||||||||||||||||||||
| Total Personal Lines | 2,346 | 12.4 | 2,448 | 14.0 | 4,921 | 13.2 | 4,831 | 14.1 | |||||||||||||||||||||||||||||||||||||||
| Commercial Lines | 397 | 14.7 | 364 | 13.2 | 681 | 12.9 | 702 | 12.9 | |||||||||||||||||||||||||||||||||||||||
Other indemnity1 | (13) | NM | (4) | NM | (20) | NM | (8) | NM | |||||||||||||||||||||||||||||||||||||||
| Total underwriting operations | $ | 2,730 | 12.7 | % | $ | 2,808 | 13.8 | % | $ | 5,582 | 13.1 | % | $ | 5,525 | 13.9 | % | |||||||||||||||||||||||||||||||
1 Underwriting margins for our other indemnity businesses are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.
The decrease in our underwriting profit margin compared to the prior year, for both the second quarter and first six months of 2026, was driven by increased severity and advertising spend. During the second quarter, our advertising expense was $1.4 billion, which was 16%, or 0.5 points, greater than the second quarter last year. For the first half of 2026, our advertising expense was $2.9 billion, which was 18%, or 0.6 points, greater than the same period last year.
See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our personal and commercial auto severity and frequency trends, catastrophe losses, 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:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
Underwriting Performance1 | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 68.1 | 66.2 | 1.9 | 66.4 | 65.1 | 1.3 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 18.3 | 18.2 | 0.1 | 18.2 | 18.1 | 0.1 | |||||||||||||||||||||||||||||
| Combined ratio | 86.4 | 84.4 | 2.0 | 84.6 | 83.2 | 1.4 | |||||||||||||||||||||||||||||
| Direct | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 69.6 | 68.3 | 1.3 | 68.6 | 67.7 | 0.9 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 19.6 | 19.2 | 0.4 | 20.4 | 20.3 | 0.1 | |||||||||||||||||||||||||||||
| Combined ratio | 89.2 | 87.5 | 1.7 | 89.0 | 88.0 | 1.0 | |||||||||||||||||||||||||||||
| Property | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 47.9 | 54.4 | (6.5) | 48.4 | 56.4 | (8.0) | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 30.1 | 29.2 | 0.9 | 29.7 | 29.0 | 0.7 | |||||||||||||||||||||||||||||
| Combined ratio | 78.0 | 83.6 | (5.6) | 78.1 | 85.4 | (7.3) | |||||||||||||||||||||||||||||
| Total Personal Lines | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 68.1 | 66.8 | 1.3 | 66.9 | 66.2 | 0.7 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 19.5 | 19.2 | 0.3 | 19.9 | 19.7 | 0.2 | |||||||||||||||||||||||||||||
| Combined ratio | 87.6 | 86.0 | 1.6 | 86.8 | 85.9 | 0.9 | |||||||||||||||||||||||||||||
| Commercial Lines | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 63.2 | 66.8 | (3.6) | 65.3 | 67.2 | (1.9) | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 22.1 | 20.0 | 2.1 | 21.8 | 19.9 | 1.9 | |||||||||||||||||||||||||||||
| Combined ratio | 85.3 | 86.8 | (1.5) | 87.1 | 87.1 | 0 | |||||||||||||||||||||||||||||
| Total Underwriting Operations | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 67.4 | 66.8 | 0.6 | 66.7 | 66.3 | 0.4 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 19.9 | 19.4 | 0.5 | 20.2 | 19.8 | 0.4 | |||||||||||||||||||||||||||||
| Combined ratio | 87.3 | 86.2 | 1.1 | 86.9 | 86.1 | 0.8 | |||||||||||||||||||||||||||||
Accident year – Loss & loss adjustment expense ratio2 | 70.0 | 68.4 | 1.6 | 69.1 | 67.8 | 1.3 | |||||||||||||||||||||||||||||
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 The accident year ratios include only the losses that occurred during the period noted. As a result, accident period results will change over time, either favorably or unfavorably, as we revise our estimates of loss costs when payments are made or reserves for that accident period are reviewed.
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Losses and Loss Adjustment Expenses (LAE)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Change in net loss and LAE reserves | $ | 1,272 | $ | 1,565 | $ | 2,398 | $ | 2,684 | |||||||||||||||
| Paid losses and LAE | 13,300 | 12,040 | 26,001 | 23,725 | |||||||||||||||||||
| Total incurred losses and LAE | $ | 14,572 | $ | 13,605 | $ | 28,399 | $ | 26,409 | |||||||||||||||
Loss and LAE, our most significant expense, represent the costs needed to settle claims. These costs include payments made and estimated future payments to be made, to or on behalf of our policyholders, and expenses related to adjusting claims. Claims costs are driven by loss severity and frequency. In personal auto and core commercial auto, these trends are influenced by inflation and driving patterns, among other factors. In our personal property business, severity is primarily affected by construction costs and the age and complexity of the structure, among other factors. We consider anticipated changes in these factors when establishing premium rates and loss reserves. Loss reserves are estimates of future costs and we adjust
our reserves as underlying assumptions change and additional information develops.
Our total loss and LAE ratio increased 0.6 points and 0.4 points, for the three and six months ended June 30, 2026, respectively, compared to the same periods last year, primarily due to higher severity, partially offset by greater favorable prior accident years reserve development. On an accident year basis, our loss and LAE ratio was 1.6 points and 1.3 points higher for the second quarter and first half of 2026, respectively, compared to the same periods last year.
The following table shows our consolidated catastrophe losses and related combined ratio point impact, excluding loss adjustment expenses, incurred during the periods:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | Point1 | $ | Point1 | $ | Point1 | $ | Point1 | |||||||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||||||||||||||
| Vehicles | $ | 654 | 3.6 | $ | 531 | 3.2 | $ | 821 | 2.3 | $ | 831 | 2.5 | |||||||||||||||||||||||||||||||||||
| Property | 105 | 13.5 | 157 | 20.2 | 201 | 13.0 | 311 | 20.0 | |||||||||||||||||||||||||||||||||||||||
| Total Personal Lines | 759 | 4.0 | 688 | 3.9 | 1,022 | 2.7 | 1,142 | 3.3 | |||||||||||||||||||||||||||||||||||||||
| Commercial Lines | 14 | 0.5 | 19 | 0.7 | 19 | 0.4 | 24 | 0.4 | |||||||||||||||||||||||||||||||||||||||
| Total net catastrophe losses incurred | $ | 773 | 3.6 | $ | 707 | 3.5 | $ | 1,041 | 2.4 | $ | 1,166 | 2.9 | |||||||||||||||||||||||||||||||||||
1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.
Changes in our estimate of ultimate losses on catastrophes currently reserved, along with the impact of potential future catastrophes, could materially affect 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 or core commercial auto businesses. Our reinsurance programs include:
•catastrophe per occurrence excess of loss contracts for our personal property business, our boat product, and certain BOP product coverages;
•aggregate excess of loss contracts for our personal property business and certain BOP product coverages; and
•excess of loss reinsurance for our workers’ compensation insurance.
We evaluate our reinsurance programs during the renewal process, if not more frequently, to ensure they continue to align with our risk tolerance. During the second quarter 2026, we entered into new reinsurance contracts under our per occurrence excess of loss program for our personal property business. This reinsurance program has a retention threshold for losses and allocated loss adjustment
expenses (ALAE) from a single catastrophic event of $300 million for a storm outside of Florida and $75 million for a storm in Florida. In general, our program includes coverage for $1.9 billion in losses and ALAE with additional substantial coverage for a second or third hurricane. When considering coverage specific to Florida, including the Florida Hurricane Catastrophe Fund, this coverage reaches an estimated $2.2 billion.
For 2026, we also entered into a new catastrophe aggregate excess of loss reinsurance contract for claims occurring in 2026. This contract has multiple layers of coverage, provides a higher coverage limit than the 2025 program, and covers named storms and other perils (e.g., wildfires, winter storms, severe thunderstorms). See Item 1, Business – Reinsurance in our 2025 Form 10-K for a discussion of our various reinsurance programs.
While the total coverage limit and per-event retention will evolve as our business grows, we expect to remain a consistent purchaser of reinsurance coverage. While the availability of reinsurance is subject to many factors outside of our control, the types of reinsurance we elected to purchase during the first half of 2026 were readily
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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.
The following discussion of 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 from 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 period, was as follows:
| Quarter | Year-to-date | ||||||||||
| Coverage Type | 2026 | 2026 | |||||||||
| Bodily injury | 7% | 7% | |||||||||
| Collision | 1 | 0 | |||||||||
| Personal injury protection | 5 | 1 | |||||||||
| Property damage | 3 | 2 | |||||||||
| Total | 4 | 4 | |||||||||
The year-over-year increase in total severity was predominantly driven by bodily injury coverage, due to higher medical costs, more large losses, and a higher rate of plaintiff-attorney represented claims, compared to the same period in the prior year. The change in severity has been relatively stable during the first six months of 2026.
To address inherent seasonality trends and lessen the effect of month-to-month variability in the commercial auto products, we assess severity using a trailing 12-month period. Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto products (i.e., TNC and FSP businesses), we believe disclosing severity and frequency trends excluding those
businesses is more representative of our overall experience for the majority of our commercial products. As of the end of the second quarter 2026, trailing 12-month incurred severity in our core commercial auto products increased 5%, compared to the same period last year.
Estimating future severity remains challenging, and we continue to monitor changes in underlying costs drivers, including general inflation, used car prices, vehicle repair costs, medical costs, health care reform, court decisions, jury verdicts, regulatory changes, and other factors that may affect severity.
The change in total personal auto incurred frequency, on a calendar-year basis, over the prior-year period, was as follows:
| Quarter | Year-to-date | ||||||||||
| Coverage Type | 2026 | 2026 | |||||||||
| Bodily injury | (2)% | (2)% | |||||||||
| Collision | (3) | (1) | |||||||||
| Personal injury protection | 0 | 1 | |||||||||
| Property damage | (3) | (2) | |||||||||
| Total | (2) | (1) | |||||||||
On a trailing 12-month basis, incurred frequency in our core commercial auto products decreased 8% as of the end of the second quarter 2026, compared to the same period last year. We believe this decrease was due, in part, to a shift in the mix of business and lower vehicle miles traveled.
Although we closely monitor changes in frequency, the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We continue to analyze trends to distinguish changes in our loss experience from external factors, so that we can respond through pricing actions and more accurately reserve for our loss exposures. These changes include the number of vehicles per household, miles driven, vehicle usage, gasoline prices, advances in vehicle safety, unemployment rates, shifts in business mix, changes in customer driving patterns, and the ridesharing economy, among other factors.
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The table below presents the actuarial adjustments implemented and the loss reserve development experienced on a companywide basis in the following periods:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Actuarial Adjustments | |||||||||||||||||||||||
| Reserve decrease (increase) | |||||||||||||||||||||||
| Prior accident years | $ | 161 | $ | 73 | $ | 283 | $ | 98 | |||||||||||||||
| Current accident year | 116 | 40 | 145 | 54 | |||||||||||||||||||
| Calendar-year actuarial adjustments | $ | 277 | $ | 113 | $ | 428 | $ | 152 | |||||||||||||||
| Prior Accident Years Development | |||||||||||||||||||||||
| Favorable (unfavorable) | |||||||||||||||||||||||
| Actuarial adjustments | $ | 161 | $ | 73 | $ | 283 | $ | 98 | |||||||||||||||
| All other development | 390 | 256 | 719 | 509 | |||||||||||||||||||
| Total development | $ | 551 | $ | 329 | $ | 1,002 | $ | 607 | |||||||||||||||
| (Increase) decrease to calendar-year combined ratio | 2.6 | pts. | 1.6 | pts. | 2.4 | pts. | 1.5 | pts. | |||||||||||||||
Total development consists of both actuarial adjustments and “all other development” on prior accident years. We use “accident year” generically to refer to the year in which a loss occurred. Actuarial adjustments represent the net changes made by our actuarial staff to current and prior accident year reserves based on regularly scheduled reviews. Through these reviews, our actuaries identify and measure variances in projected frequency and severity trends and adjust reserves to reflect current cost trends.
For the Personal Lines vehicle products and Commercial Lines business, development for catastrophe losses is reflected in “all other development” to the extent it relates to prior-year reserves. For our Personal Lines property business, all catastrophe losses are reviewed monthly, and any development on catastrophe reserves is included as part of the actuarial adjustments. We report these actuarial adjustments separately for current and prior accident years to show these adjustments as part of 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 reserves are initially established until losses are fully developed. Our ability to achieve this objective is affected by many factors, including the factors impacting estimates described above.
As shown in the table above, we experienced favorable prior accident years reserve development during the first six months of both 2026 and 2025. The favorable development during the first six months of 2026 was due, in part, to lower than anticipated bodily injury severity and, to a lesser extent, lower than anticipated payments on
reopened property damage claims that were previously closed and lower than anticipated personal injury protection loss adjustment expenses. In commercial auto, the favorable development was primarily due to lower than anticipated injury severity in our TNC business, partially offset by higher than anticipated injury severity and litigation defense costs in our core commercial auto products.
See Note 6 – Loss and Loss Adjustment Expense Reserves to the consolidated financial statements for a more detailed discussion of our prior accident years reserve development and V. Critical Accounting Estimates in our 2025 Annual Report to Shareholders for a discussion of the application of estimates and assumptions in establishing our loss reserves.
Underwriting Expenses
Underwriting expenses include policy acquisition costs and other underwriting expenses. The underwriting expense ratio represents underwriting expenses, net of certain fees and other revenues, as a percentage of net premiums earned. For the second quarter and first half of 2026, our underwriting expense ratio increased 0.5 points and 0.4 points, respectively, compared to the same periods last year. The increase was primarily attributable to higher advertising spend. During the second quarter 2026, we continued to invest heavily in advertising 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 the three and six months ended June 30, 2026, total companywide advertising costs were $1.4 billion and $2.9 billion, respectively. Advertising spend increased 16%, or 0.5 points, in the second quarter and 18%, or 0.6 points, for the first six months of 2026, compared to the same periods last year.
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To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to acquiring a policy (e.g., advertising and agency commissions) from our underwriting expense ratio. By excluding these costs from our underwriting expense ratio, we are able to understand costs other than those incurred to acquire new policies and grow the business. For the second quarter 2026, our NAER was flat in our personal vehicle
business compared to the same period last year, while increasing 1.5 points in personal property and 1.1 points in core commercial auto. On a year-to-date basis, our NAER decreased 0.2 points in our personal vehicle business, compared to the same period last year, and increased 1.0 points in personal property and 0.7 points in core commercial auto. We remain committed to efficiently managing operational non-acquisition expenses.
C. Growth
For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which reflects premiums written in both the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes variability from rate changes and mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| Net Premiums Written | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | $ | 7,655 | $ | 7,481 | 2 | % | $ | 15,482 | $ | 14,954 | 4 | % | |||||||||||||||||||||||
| Direct | 10,098 | 9,387 | 8 | 21,183 | 19,454 | 9 | |||||||||||||||||||||||||||||
| Property | 856 | 845 | 1 | 1,549 | 1,578 | (2) | |||||||||||||||||||||||||||||
| Total Personal Lines | 18,609 | 17,713 | 5 | 38,214 | 35,986 | 6 | |||||||||||||||||||||||||||||
| Commercial Lines | 2,465 | 2,363 | 4 | 6,498 | 6,296 | 3 | |||||||||||||||||||||||||||||
Other indemnity1 | 3 | 0 | NM | 6 | 0 | NM | |||||||||||||||||||||||||||||
| Total underwriting operations | $ | 21,077 | $ | 20,076 | 5 | % | $ | 44,718 | $ | 42,282 | 6 | % | |||||||||||||||||||||||
| Net Premiums Earned | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | $ | 7,632 | $ | 7,302 | 5 | % | $ | 15,112 | $ | 14,328 | 5 | % | |||||||||||||||||||||||
| Direct | 10,471 | 9,466 | 11 | 20,605 | 18,374 | 12 | |||||||||||||||||||||||||||||
| Property | 777 | 776 | 0 | 1,547 | 1,552 | 0 | |||||||||||||||||||||||||||||
| Total Personal Lines | 18,880 | 17,544 | 8 | 37,264 | 34,254 | 9 | |||||||||||||||||||||||||||||
| Commercial Lines | 2,691 | 2,765 | (3) | 5,274 | 5,464 | (3) | |||||||||||||||||||||||||||||
Other indemnity1 | 2 | 1 | NM | 3 | 1 | NM | |||||||||||||||||||||||||||||
| Total underwriting operations | $ | 21,573 | $ | 20,310 | 6 | % | $ | 42,541 | $ | 39,719 | 7 | % | |||||||||||||||||||||||
| NM = Not meaningful | |||||||||||||||||||||||||||||||||||
1 Includes other underwriting business and run-off operations. | |||||||||||||||||||||||||||||||||||
| June 30, | |||||||||||||||||||||||||||||||||||
| (# in thousands) | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||||
| Policies in Force | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Agency - auto | 11,211 | 10,423 | 8 | % | |||||||||||||||||||||||||||||||
| Direct - auto | 16,721 | 15,245 | 10 | ||||||||||||||||||||||||||||||||
| Special lines | 7,297 | 6,850 | 7 | ||||||||||||||||||||||||||||||||
| Property | 3,631 | 3,608 | 1 | ||||||||||||||||||||||||||||||||
| Total Personal Lines | 38,860 | 36,126 | 8 | ||||||||||||||||||||||||||||||||
| Commercial Lines | 1,226 | 1,189 | 3 | ||||||||||||||||||||||||||||||||
| Companywide total | 40,086 | 37,315 | 7 | % | |||||||||||||||||||||||||||||||
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 current customers as a critical component of our continued growth.
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D. Personal Lines
Our Personal Lines business offers personal vehicle (personal auto and special lines) and residential property insurance products to consumers, with the operating goal of growing the number of insured products within our policyholders’ households. In the discussion below, we report our personal auto and personal property business results separately to provide a further understanding of our products. Our personal auto business discussions are further separated between the agency and direct distribution channels. For the three months ended June 30, 2026, 42% of our personal auto business was written through the agency channel and 58% was written through the direct channel. For both the second quarter and first half of 2026, consumer segment results varied by channel, as discussed below. Our total personal auto business experienced overall growth in policies in force, new business applications, and conversion, while quotes declined, compared to the same periods last year.
Personal Auto - Agency
The year-over-year changes in our personal auto agency business were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 2 | % | 6 | % | 1 | % | 17 | % | |||||||||
| Renewal | 9 | 19 | 11 | 18 | |||||||||||||
| Total | 8 | 16 | 9 | 18 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | (3) | (6) | (3) | (5) | |||||||||||||
| Renewal | (5) | (3) | (5) | (2) | |||||||||||||
| Total | (4) | (3) | (4) | (2) | |||||||||||||
| Policy life expectancy | |||||||||||||||||
| Trailing 3 months | (7) | (6) | |||||||||||||||
| Trailing 12 months | (6) | (4) | |||||||||||||||
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 the second quarter 2026, we generated new agency personal auto application growth in 17 states, including five of our top 10 largest agency states.
Compared to the prior-year periods, new application and policies in force growth varied by consumer segment:
•Sams and Wrights experienced flat new application growth and a low decline in new applications during the second quarter and first six months of 2026, respectively, and positive policies in force growth at the end of the second quarter;
•Dianes experienced a low increase in new application growth during the second quarter and first six months of 2026, with positive policies in force growth at the end of the second quarter; and
•Robinsons experienced a moderate increase in new application growth during the second quarter and first six months of 2026, with a single-digit decrease in policies in force growth at the end of the second quarter.
For the second quarter 2026, on a year-over-year basis, we experienced a decrease in agency auto quote volume of 1% with a rate of conversion (i.e., converting a quote to a sale) increase of 2%. For the first six months of 2026, quote volume was flat and the rate of conversion increased 1%, compared to the same period in the prior year. Compared to the prior-year periods, quote volume and conversion varied by consumer segment:
•Sams and Dianes experienced a low single-digit decrease in quote volume and a single-digit increase in conversion, during the second quarter and first six months of 2026;
•Wrights experienced a low single-digit decrease in quote volume during the second quarter and first six months of 2026 and experienced conversion growth in the low single-digits for the quarter, with flat growth for the first six months of 2026; and
•Robinsons experienced a low double-digit increase in quote volume for the quarter and a single-digit increase for the first six months of 2026, with a single-digit decline in conversion in both periods.
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Our personal auto rates were relatively stable during the quarter and on a year-to-date basis. The decrease in written premium per policy for new and renewal personal auto agency business for the second quarter and first six months 2026, compared to the same periods last year, was in part attributable to rate decreases in certain markets and a shift in the mix of business, including a shift to a higher percentage of 6-month term policies, which have about half of the amount of net premiums written as policies with 12-month terms.
Our trailing 3- and 12-month policy life expectancy in the agency auto business experienced a decrease at the end of the second quarter 2026, on a year-over-year basis, which we believe is primarily due to increased shopping and competition in the marketplace and, to a lesser extent, changes in billing plans offered to customers and a shift in our mix of business.
Personal Auto - Direct
The year-over-year changes in our personal auto direct business were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 1 | % | 9 | % | 2 | % | 21 | % | |||||||||
| Renewal | 13 | 25 | 14 | 23 | |||||||||||||
| Total | 10 | 21 | 11 | 22 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | 3 | 3 | 4 | 3 | |||||||||||||
| Renewal | (2) | 1 | (1) | 1 | |||||||||||||
| Total | 0 | 1 | 0 | 1 | |||||||||||||
| Policy life expectancy | |||||||||||||||||
| Trailing 3 months | (10) | (8) | |||||||||||||||
| Trailing 12 months | (9) | (6) | |||||||||||||||
The personal auto direct business includes business written directly by Progressive online or by phone. During the second quarter 2026, we generated new direct personal auto application growth in 19 states, including five of our top 10 largest direct states. Compared to the same periods in the prior year, Sams and Dianes experienced a single-digit increase in new applications, while Wrights and Robinsons experienced a single-digit decline for the second quarter and first six months of 2026. Policies in force grew between 6% and 11% in each consumer segment, compared to the same period last year.
During the second quarter and first six months of 2026, direct personal auto quote volume decreased 7% and 6%, respectively, with a rate of conversion increase of 9% in both periods, compared to the same periods last year, primarily driven by our competitiveness in the marketplace. For the second quarter and first six months of 2026, all consumer segments experienced a decline in quote volume and an increase in conversion, compared to the same periods in the prior year.
Our personal auto rates were relatively stable during the quarter and on a year-to-date basis, resulting in a minimal written premium per policy change for the second quarter and first six months of 2026, compared to the same periods last year.
Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced a decrease at the end of the second quarter 2026, on a year-over-year basis, which we believe is primarily due to increased shopping and competition in the marketplace and, to a lesser extent, changes in billing plans offered to customers and a shift in our mix of business.
Personal Property
The year-over-year changes in our personal property business were as follows:
| Quarter | Year-to-date | |||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||
| Applications | ||||||||||||||||||||
| New | 0 | % | (11) | % | (1) | % | (6) | % | ||||||||||||
| Renewal | 1 | 14 | 1 | 13 | ||||||||||||||||
| Total | 1 | 4 | 0 | 6 | ||||||||||||||||
| Written premium per policy | ||||||||||||||||||||
| New | 26 | (33) | 21 | (37) | ||||||||||||||||
| Renewal | (6) | (3) | (8) | (3) | ||||||||||||||||
| Total | (2) | (6) | (4) | (7) | ||||||||||||||||
Policy life expectancy Trailing 12 months | (8) | (17) | ||||||||||||||||||
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 overall exposure in more volatile weather-related markets (e.g., coastal, wildfire, and hail-prone areas), we continued to focus on achieving profitability goals and, in the second half of 2025, we began to increase product availability in markets where we believe we can achieve our profitability targets 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 2% on a year-over-year basis as of June 30, 2026. Policies in force decreased 17% in the volatile weather markets as of the end of the second quarter 2026, compared to the same period in the prior year.
Beginning late 2025, we took actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing, geographical diversification, and the regulatory and market conditions. Some of these actions include expanding independent agency relationships, reopening new business in certain agency and direct channel markets, and lifting targeted
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underwriting restrictions on older roofs, medium- to high-value homes, and non-bundled homeowners products in certain markets. Certain of these restrictions remain in place in markets where we continue to focus on improving profitability and reducing exposure in more volatile weather-related markets. We believe these actions taken in 2025 continued to adversely impact new business application growth in 2026.
Our written premium per policy decreased on a year-over-year basis for the second quarter and first half of 2026, primarily attributable to a continued 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 the second quarter 2026, we increased rates, in aggregate, about 1% in our personal property business, bringing the year-to-date aggregate rate increase to 3%. 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 the second quarter 2026, compared to the same period last year, which we believe is primarily driven by a continued shift in the mix of business to more renters policies and, to a lesser extent, rate increases in previous years and increased competition in the marketplace.
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 net premiums written on a trailing 12-month basis, as of the end of the second quarter 2026. Year-over-year changes in our core commercial auto products were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 1 | % | 3 | % | (3) | % | 6 | % | |||||||||
| Renewal | 8 | 5 | 9 | 5 | |||||||||||||
| Total | 5 | 5 | 5 | 5 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | (4) | (7) | (4) | (7) | |||||||||||||
| Renewal | (3) | (6) | (4) | (5) | |||||||||||||
| Total | (3) | (6) | (4) | (6) | |||||||||||||
Policy life expectancy Trailing 12 months | 2 | 5 | |||||||||||||||
For the second quarter, on a year-over-year basis, core commercial auto new and renewal application growth was positive in all BMTs, except for-hire transportation, primarily driven by rate decreases in targeted state and BMT combinations, and increased advertising and agent incentive spend. For the first six months of 2026, all BMTs experienced an increase in new application growth, except for hire-transportation and contractors, compared to the same period in the prior year. Policies in force grew in all of our BMTs, except in for-hire transportation and for-hire specialty, compared to the same period in the prior year. During the second quarter and first six months of 2026, commercial auto quote volume increased 1% in both periods, with a flat rate of conversion for the quarter and a decrease of 4% for the first six months of 2026, compared to the same periods in the prior year. We believe the decrease in conversion for the first six months of 2026 was primarily attributable to rate increases taken over the last year and increased consumer shopping.
The effect of the previously discussed rate increases on written premium per policy for our core commercial auto business was offset by the continued shift in the mix of business and 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 term policies. During the second quarter 2026, rates remained relatively stable in our core commercial auto products, bringing the year-to-date aggregate rate increase to 1%. We will continue to evaluate our rate need and adjust rates as we deem necessary.
Our policy life expectancy increased in our for-hire specialty and for-hire transportation BMTs, as of the end of the second quarter 2026, compared to the same period last year. The improvement in total policy life expectancy 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 table summarizes investment results for the periods ended June 30:
| Three Months | Six Months | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Pretax recurring investment book yield (annualized) | 4.2 | % | 4.2 | % | 4.2 | % | 4.2 | % | |||||||||||||||
| FTE total return: | |||||||||||||||||||||||
| Fixed-income securities | 0.6 | 1.7 | 0.9 | 4.3 | |||||||||||||||||||
| Common stocks | 15.3 | 10.9 | 10.6 | 5.3 | |||||||||||||||||||
| Total portfolio | 1.2 | 2.1 | 1.3 | 4.3 | |||||||||||||||||||
The change in the fixed-income portfolio FTE total return, compared to the prior-year period, primarily reflected movement in U.S. Treasury yields year-over-year.
The following table summarizes the FTE total returns for our fixed-income portfolio for the periods ended June 30:
| Three Months | Six Months | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Fixed-income securities: | |||||||||||||||||||||||
| U.S. government | 0.1 | % | 1.7 | % | 0.1 | % | 4.7 | % | |||||||||||||||
| State and local government | 0.6 | 1.4 | 1.3 | 3.5 | |||||||||||||||||||
| Foreign government | (1.4) | 5.1 | (2.5) | 6.8 | |||||||||||||||||||
| Corporate and other debt | 1.0 | 2.0 | 1.2 | 4.0 | |||||||||||||||||||
| Residential mortgage-backed | 0.9 | 1.6 | 1.7 | 3.6 | |||||||||||||||||||
| Commercial mortgage-backed | 1.4 | 2.0 | 2.3 | 4.2 | |||||||||||||||||||
| Other asset-backed | 1.1 | 1.3 | 1.9 | 2.8 | |||||||||||||||||||
| Nonredeemable preferred stocks | 1.8 | 2.0 | 2.8 | 3.8 | |||||||||||||||||||
| Short-term investments | 1.1 | 1.1 | 2.0 | 2.2 | |||||||||||||||||||
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B. Portfolio Allocation
The composition of the investment portfolio was:
| ($ in millions) | Fair Value | % of Total Portfolio | Duration (years) | Average Rating1 | |||||||||||||||||||
| June 30, 2026 | |||||||||||||||||||||||
| U.S. government | $ | 43,781 | 45.0 | % | 4.5 | AA+ | |||||||||||||||||
| State and local government | 3,852 | 4.0 | 2.7 | AA+ | |||||||||||||||||||
| Foreign government | 16 | 0 | 0.2 | AAA | |||||||||||||||||||
| Corporate and other debt | 21,591 | 22.2 | 2.8 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 4,282 | 4.4 | 2.2 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 7,453 | 7.7 | 1.0 | AA | |||||||||||||||||||
| Other asset-backed | 9,460 | 9.7 | 1.1 | AA | |||||||||||||||||||
Nonredeemable preferred stocks | 276 | 0.3 | 2.0 | BB+ | |||||||||||||||||||
| Short-term investments | 1,978 | 2.0 | <0.1 | A+ | |||||||||||||||||||
| Total fixed-income securities | 92,689 | 95.3 | 3.5 | AA- | |||||||||||||||||||
| Common equities | 4,532 | 4.7 | na | na | |||||||||||||||||||
Total portfolio2 | $ | 97,221 | 100.0 | % | 3.5 | AA- | |||||||||||||||||
| June 30, 2025 | |||||||||||||||||||||||
| U.S. government | $ | 46,810 | 52.8 | % | 4.4 | AA+ | |||||||||||||||||
| State and local government | 2,964 | 3.3 | 2.6 | AA+ | |||||||||||||||||||
| Foreign government | 17 | 0 | 1.1 | AAA | |||||||||||||||||||
| Corporate and other debt | 18,122 | 20.5 | 2.8 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 2,660 | 3.0 | 2.5 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 5,049 | 5.7 | 1.6 | AA- | |||||||||||||||||||
| Other asset-backed | 6,650 | 7.5 | 1.1 | AA | |||||||||||||||||||
| Nonredeemable preferred stocks | 500 | 0.6 | 1.2 | BBB- | |||||||||||||||||||
| Short-term investments | 2,103 | 2.4 | <0.1 | A+ | |||||||||||||||||||
| Total fixed-income securities | 84,875 | 95.8 | 3.4 | AA- | |||||||||||||||||||
| Common equities | 3,735 | 4.2 | na | na | |||||||||||||||||||
Total portfolio2 | $ | 88,610 | 100.0 | % | 3.4 | AA- | |||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| U.S. government | $ | 43,298 | 44.5 | % | 5.4 | AA+ | |||||||||||||||||
| State and local government | 3,303 | 3.4 | 2.6 | AA+ | |||||||||||||||||||
| Foreign government | 17 | 0 | 0.7 | AAA | |||||||||||||||||||
| Corporate and other debt | 19,991 | 20.5 | 2.6 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 3,175 | 3.3 | 2.3 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 5,973 | 6.1 | 1.4 | AA- | |||||||||||||||||||
| Other asset-backed | 7,109 | 7.3 | 1.2 | AA | |||||||||||||||||||
| Nonredeemable preferred stocks | 404 | 0.4 | 1.0 | BB+ | |||||||||||||||||||
| Short-term investments | 10,005 | 10.3 | <0.1 | AA- | |||||||||||||||||||
| Total fixed-income securities | 93,275 | 95.8 | 3.4 | AA- | |||||||||||||||||||
| Common equities | 4,098 | 4.2 | na | na | |||||||||||||||||||
Total portfolio2 | $ | 97,373 | 100.0 | % | 3.4 | AA- | |||||||||||||||||
| na = not applicable | |||||||||||||||||||||||
1 Represents ratings at period end. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.
2 At June 30, 2026 and 2025, and December 31, 2025, we had $568 million, $303 million, and $200 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.
The total fair value of the portfolio at June 30, 2026 and 2025, and December 31, 2025, included $6.7 billion, $5.0 billion, and $13.0 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions. A portion of the investments held at December 31, 2025 were sold and proceeds were used to pay our common share dividends in January 2026; see Note 10 – Dividends for additional information.
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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, 7% of the total portfolio at June 30, 2026, 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, 93% of the total portfolio at June 30, 2026, include:
•short-term securities, and
•all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.
We believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital purposes and is in line with the treatment by our regulators. 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 (Losses)
As of June 30, 2026 and 2025, our fixed-maturity portfolio had a total after-tax net unrealized loss, which is recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheets, of $832 million and $81 million, respectively, compared to a total after-tax net unrealized gain of $117 million at December 31, 2025. The decline from June 30, 2025 and December 31, 2025 was due to valuation decreases across fixed-maturity sectors as interest rates rose during 2026. Our U.S. government and corporate and other debt securities had the most significant valuation decrease from prior year and prior year end.
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 our fixed-income portfolio.
Interest Rate Risk Our duration of 3.5 years at June 30, 2026 and 3.4 years at both June 30, 2025 and December 31, 2025, fell within our acceptable range of 1.5 to 5.0 years. The duration distribution of our fixed-income portfolio, excluding short-term investments, represented by the interest rate sensitivity of the comparable benchmark U.S. Treasury Notes, was:
| Duration Distribution | June 30, 2026 | June 30, 2025 | December 31, 2025 | ||||||||||||||
| 1 year | 12.6 | % | 11.2 | % | 11.8 | % | |||||||||||
| 2 years | 15.1 | 8.0 | 9.2 | ||||||||||||||
| 3 years | 22.3 | 28.0 | 19.5 | ||||||||||||||
| 5 years | 28.1 | 32.6 | 28.2 | ||||||||||||||
| 7 years | 14.1 | 19.5 | 19.4 | ||||||||||||||
| 10 years | 7.8 | 0.7 | 11.9 | ||||||||||||||
| Total fixed-income portfolio | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Credit Risk This exposure is managed by maintaining an A minimum weighted average portfolio credit quality rating, as defined by NRSROs. At June 30, 2026 and 2025, and December 31, 2025, our weighted average credit quality rating was AA-. The credit quality distribution of the fixed-income portfolio was:
Average Rating1 | June 30, 2026 | June 30, 2025 | December 31, 2025 | ||||||||||||||
| AAA | 18.0 | % | 12.8 | % | 13.2 | % | |||||||||||
| AA | 53.1 | 61.0 | 59.6 | ||||||||||||||
| A | 9.0 | 8.2 | 8.8 | ||||||||||||||
| BBB | 17.9 | 16.8 | 17.1 | ||||||||||||||
| Non-investment grade/non-rated | |||||||||||||||||
| BB | 1.6 | 1.0 | 1.1 | ||||||||||||||
| B | 0.3 | 0.1 | 0.1 | ||||||||||||||
| Non-rated | 0.1 | 0.1 | 0.1 | ||||||||||||||
| Total fixed-income portfolio | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
1 The credit quality ratings are assigned by NRSROs.
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Concentration Risk We did not have any investments in a single issuer, either overall or in the context of individual asset classes and sectors, that exceeded our investment constraints during the second quarter 2026.
Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the second quarter 2026.
Liquidity Risk Our overall portfolio remains very liquid and we believe that it is sufficient to meet expected near-term liquidity requirements. The short-to-intermediate duration of our portfolio provides a source of liquidity. During the next 12 months, we expect approximately $11.2 billion, or 24%, of principal repayment from our fixed-income portfolio, excluding U.S. government securities and short-term investments. Cash from interest and
dividend payments provides an additional source of recurring liquidity.
The duration of our U.S. government securities, which are included in the fixed-income portfolio, was comprised of the following at June 30, 2026:
| ($ in millions) | Fair Value | Duration (years) | |||||||||
Less than one year1 | $ | 347 | 0.6 | ||||||||
| One to two years | 2,333 | 1.8 | |||||||||
| Two to three years | 7,457 | 2.5 | |||||||||
| Three to five years | 13,289 | 4.3 | |||||||||
| Five to seven years | 12,872 | 5.4 | |||||||||
| Seven to ten years | 7,483 | 7.7 | |||||||||
| Total U.S. government | $ | 43,781 | 4.5 | ||||||||
1 Excludes $757 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 June 30, 2026:
(millions) Average Rating1 | Residential Mortgage-Backed | Commercial Mortgage-Backed | Other Asset-Backed | Total | ||||||||||
| AAA | $ | 3,434 | $ | 4,313 | $ | 6,685 | $ | 14,432 | ||||||
| AA | 99 | 1,311 | 170 | 1,580 | ||||||||||
| A | 597 | 639 | 1,041 | 2,277 | ||||||||||
| BBB | 150 | 820 | 1,515 | 2,485 | ||||||||||
| Non-investment-grade/non-rated: | ||||||||||||||
| BB | 0 | 357 | 49 | 406 | ||||||||||
| B | 0 | 13 | 0 | 13 | ||||||||||
| CCC and lower | 1 | 0 | 0 | 1 | ||||||||||
| Non-rated | 1 | 0 | 0 | 1 | ||||||||||
| Total fair value | $ | 4,282 | $ | 7,453 | $ | 9,460 | $ | 21,195 | ||||||
1 The credit quality ratings are assigned by NRSROs.
Our residential mortgage-backed portfolio consists of securities 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 increased by $146 million during the second quarter 2026 and new purchases were concentrated in high-quality investment-grade securities and contained both fixed-rate and adjustable residential mortgages. We continued to view this sector as having attractive risk-adjusted spreads and potential returns.
The commercial mortgage-backed portfolio fair value increased by $462 million during the second quarter 2026 as we continued to view commercial mortgage-backed spreads as attractive. The growth in the portfolio was primarily the result of purchases of investment-grade securities backed by single-borrower transactions across various sectors including apartments, logistics, office, and data centers. We maintained a preference for geographically diversified portfolios or high-quality single assets in major markets.
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A further break-down of our other asset-backed securities (OABS) at June 30, 2026:
| (millions) Average Rating | Automobile | Collateralized Loan Obligations | Student Loan | Whole Business Securitizations | Equipment | Other | Total | ||||||||||||||||
| AAA | $ | 2,601 | $ | 2,960 | $ | 35 | $ | 0 | $ | 815 | $ | 274 | $ | 6,685 | |||||||||
| AA | 0 | 82 | 1 | 0 | 45 | 42 | 170 | ||||||||||||||||
| A | 0 | 0 | 0 | 150 | 163 | 728 | 1,041 | ||||||||||||||||
| BBB | 0 | 0 | 0 | 1,410 | 0 | 105 | 1,515 | ||||||||||||||||
| Non-investment grade/non-rated: | |||||||||||||||||||||||
| BB | 0 | 0 | 0 | 0 | 0 | 49 | 49 | ||||||||||||||||
| Total fair value | $ | 2,601 | $ | 3,042 | $ | 36 | $ | 1,560 | $ | 1,023 | $ | 1,198 | $ | 9,460 | |||||||||
The OABS portfolio fair value increased by $1.3 billion during the second quarter 2026. The growth in the portfolio was primarily the result of adding highly-rated, shorter duration collateralized loan obligations. We viewed these additions as offering an attractive risk/reward profile, and they 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 June 30, 2026:
| (millions) Average Rating | General Obligations | Housing Revenue | Other Revenue | Total | ||||||||||
| AAA | $ | 948 | $ | 524 | $ | 442 | $ | 1,914 | ||||||
| AA | 502 | 705 | 438 | 1,645 | ||||||||||
| A | 0 | 0 | 224 | 224 | ||||||||||
| Non-rated | 56 | 0 | 13 | 69 | ||||||||||
| Total fair value | $ | 1,506 | $ | 1,229 | $ | 1,117 | $ | 3,852 | ||||||
The municipal portfolio fair value increased by $765 million during the second quarter 2026, driven primarily by purchases of taxable and tax-exempt bonds, including housing finance agency bonds, across several states. We continued to broaden the portfolio’s diversification through these investments.
CORPORATE AND OTHER DEBT SECURITIES
The following table details the credit quality rating of our corporate and other debt securities at June 30, 2026:
| (millions) Average Rating | Consumer | Industrial | Communication | Financial Services | Technology | Basic Materials | Energy | Total | |||||||||||||||||||||
| AAA | $ | 34 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 85 | $ | 119 | |||||||||||||
| AA | 69 | 0 | 423 | 851 | 0 | 0 | 44 | 1,387 | |||||||||||||||||||||
| A | 602 | 673 | 119 | 3,316 | 311 | 89 | 539 | 5,649 | |||||||||||||||||||||
| BBB | 3,907 | 2,196 | 722 | 2,218 | 1,731 | 219 | 2,158 | 13,151 | |||||||||||||||||||||
| Non-investment grade/non-rated: | 0 | ||||||||||||||||||||||||||||
| BB | 364 | 163 | 59 | 64 | 122 | 47 | 212 | 1,031 | |||||||||||||||||||||
| B | 102 | 102 | 0 | 0 | 46 | 0 | 0 | 250 | |||||||||||||||||||||
| Non-rated | 0 | 0 | 0 | 0 | 4 | 0 | 0 | 4 | |||||||||||||||||||||
| Total fair value | $ | 5,078 | $ | 3,134 | $ | 1,323 | $ | 6,449 | $ | 2,214 | $ | 355 | $ | 3,038 | $ | 21,591 | |||||||||||||
The corporate and other debt portfolio fair value increased by $605 million during the second quarter 2026. At both June 30, 2026 and March 31, 2026, corporate and other debt securities made up approximately 23% of our fixed-income portfolio. During the quarter, we purchased select corporate debt securities that we viewed as offering more attractive risk/reward profiles.
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NONREDEEMABLE PREFERRED STOCKS
The following table details the credit quality rating of our nonredeemable preferred stocks at June 30, 2026:
| Financial Services | |||||||||||||||||||||||
| (millions) Average Rating | U.S. Banks | Foreign Banks | Insurance | Other Financial | Industrials | Utilities | Total | ||||||||||||||||
| BBB | $ | 96 | $ | 59 | $ | 0 | $ | 33 | $ | 0 | $ | 39 | $ | 227 | |||||||||
| Non-investment grade/non-rated: | |||||||||||||||||||||||
| Non-rated | 0 | 0 | 20 | 20 | 9 | 0 | 49 | ||||||||||||||||
| Total fair value | $ | 96 | $ | 59 | $ | 20 | $ | 53 | $ | 9 | $ | 39 | $ | 276 | |||||||||
The nonredeemable preferred stock portfolio fair value increased $36 million during the second quarter 2026. The increase was primarily due to nonredeemable preferred stocks purchased during the quarter, partially offset by nonredeemable preferred stocks that were called during the quarter.
While dividends on nonredeemable preferred stocks can be deferred or skipped entirely, we expect these securities to pay dividends in full and on time as of June 30, 2026. The majority of our nonredeemable preferred stocks pay dividends that have tax preferential characteristics and have fixed-rate dividends until a call date. If not called, they generally convert to floating-rate dividends or reset at a fixed spread to a benchmark U.S. Treasury yield.
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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 sustainability 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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The duration of the financial instruments held in our portfolio that are subject to interest rate risk was 3.5 years at June 30, 2026, compared to 3.4 years at June 30, 2025 and December 31, 2025. The weighted average beta of the equity portfolio was 1.1 at June 30, 2026 and 2025, and December 31, 2025. We have not experienced a material impact when compared to the tabular presentations of our interest rate and market risk sensitive instruments in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 4. Controls and Procedures.
We, under the direction of our Chief Executive Officer and our Chief Financial Officer, have established disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Our Chief Executive Officer and our Chief Financial Officer reviewed and evaluated our disclosure controls and procedures as of the end of the period covered by this report. Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effectively serving the stated purposes as of the end of the period covered by this report.
There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
For discussion of legal proceedings, see Note 9 – Litigation to the consolidated financial statements, which is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes in the risk factors from those discussed in Item 1A, Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) Share Repurchases
| ISSUER PURCHASES OF EQUITY SECURITIES | ||||||||||||||||||||||||||
| 2026 Calendar Month | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| April | 956,615 | $ | 200.60 | 3,754,894 | 21,245,106 | |||||||||||||||||||||
| May – prior authorization | 326,307 | 198.75 | 4,081,201 | — | ||||||||||||||||||||||
| May – current authorization | 942,877 | 198.31 | 942,877 | 24,057,123 | ||||||||||||||||||||||
| June | 845,952 | 201.16 | 1,788,829 | 23,211,171 | ||||||||||||||||||||||
| Total | 3,071,751 | $ | 199.85 | |||||||||||||||||||||||
Progressive’s financial policies state that we will repurchase shares to neutralize dilution from equity-based compensation in the year of issuance and as an option to effectively use under-leveraged capital.
In May 2026, the Board of Directors approved an authorization for the company to repurchase up to 25 million of its common shares. This authorization, which does not have an expiration date, terminated the 20,918,799 shares that remained under the Board’s May 2025 authorization to repurchase 25 million shares.
Share repurchases under this authorization may be accomplished through open market purchases, including trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, through privately negotiated transactions, pursuant to our equity incentive awards, or otherwise. During the second quarter 2026, all repurchases were accomplished in conjunction with our equity incentive awards or through the open market at the then-current market prices.
Item 5. Other Information.
(c) Insider Trading Arrangements
During the second quarter 2026, Lori Niederst , our Chief Personal Lines Officer , entered into a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c). The plan provides for the sale of all of the shares issued upon vesting for certain outstanding equity awards previously granted to Ms. Niederst, excluding any shares withheld by the company to satisfy tax withholding obligations (see our 2026 Proxy Statement for a description of the company’s equity compensation plans). The plan was entered into on April 16, 2026 , and will expire on February 12, 2027 , subject to the plan’s earlier expiration or completion in accordance with its terms.
Additional Information
President and CEO Susan Patricia Griffith’s quarterly letter to shareholders is included as Exhibit 99 to this Quarterly Report on Form 10-Q and in our online shareholders’ report located on our investor relations website at: investors.progressive.com/financials.
Item 6. Exhibits.
See exhibit index contained herein beginning on page 51, which is incorporated by reference from information with respect to this item.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE PROGRESSIVE CORPORATION | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | August 3, 2026 | By: /s/ Andrew J. Quigg | ||||||||||||
Andrew J. Quigg | ||||||||||||||
Vice President and Chief Financial Officer | ||||||||||||||
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| EXHIBIT INDEX | ||||||||||||||||||||
| Exhibit No. Under Reg. S-K, Item 601 | Form 10-Q Exhibit Number | Description of Exhibit | If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC | |||||||||||||||||
| 10(iii) | 10 | Form of Restricted Stock Award Agreement under The Progressive Corporation Amended and Restated 2017 Directors Equity Incentive Plan (for 2026) | Filed herewith | |||||||||||||||||
| 31 | 31.1 | Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Susan Patricia Griffith | Filed herewith | |||||||||||||||||
| 31 | 31.2 | Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, Andrew J. Quigg | Filed herewith | |||||||||||||||||
| 32 | 32.1 | Section 1350 Certification of the Principal Executive Officer, Susan Patricia Griffith | Furnished herewith | |||||||||||||||||
| 32 | 32.2 | Section 1350 Certification of the Principal Financial Officer, Andrew J. Quigg | Furnished herewith | |||||||||||||||||
| 99 | 99 | Letter to Shareholders from Susan Patricia Griffith, President and Chief Executive Officer (Regulation FD Disclosure) | Furnished herewith | |||||||||||||||||
| 101 | 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith | |||||||||||||||||
| 101 | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | |||||||||||||||||
| 101 | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | |||||||||||||||||
| 101 | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | |||||||||||||||||
| 101 | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | |||||||||||||||||
| 101 | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | |||||||||||||||||
| 104 | 104 | Cover Page Interactive Data File (the cover page tags are embedded within the Inline XBRL document) | Filed herewith | |||||||||||||||||
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