__________to__________ of Title of each class Name of each exchange on which registered 2013: $14,008,711,206 2014: 595,282,483 2011. We currently write personal auto insurance in all 50 of the United States, We write the majority of our special lines products in all 50 states. Our special lines management group is organized by product and led by a general manager. sales operations. development and management of our product offerings and customer service processes that are tailored to the unique characteristics and purchasing preferences of customers who shop for and select our insurance products. Volume potential is driven by our price competitiveness, brand recognition, service quality, and the actions of our competitors, among other factors. See “Competitive Factors” herein for further discussion. 2011. Lines 2013. reinsured with various reinsurance entities. NAIC in 2010. prior approval. (millions) 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 December 31 Plus reinsurance recoverables on unpaid losses Balance at December 31 using external law firms. LIABILITY FOR UNPAID LOSSES AND LAE - GROSS LESS: REINSURANCE RECOVERABLE ON UNPAID LOSSES LIABILITY FOR UNPAID LOSSES AND LAE - NET1 PAID (CUMULATIVE) AS OF: One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Nine years later Ten years later LIABILITY RE-ESTIMATED AS OF: One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Nine years later Ten years later NET CUMULATIVE DEVELOPMENT FAVORABLE/(UNFAVORABLE) PERCENTAGE2 RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - GROSS LESS: RE-ESTIMATED REINSURANCE RECOVERABLE ON UNPAID LOSSES RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - NET1 GROSS CUMULATIVE DEVELOPMENT: FAVORABLE/(UNFAVORABLE) Represents loss and LAE reserves net of reinsurance recoverables on net unpaid losses at the balance sheet date. commercial auto businesses during that period. For 2011 and 2012, we experienced very minimal unfavorable development, or less than 1% of our original estimate. In addition, during 2013, we experienced unfavorable development in our run-off professional liability group business based on internal actuarial reviews of our claims history; the substantial majority of this business is reinsured. immaterial. Information Our success depends on our ability to underwrite risks accurately and to charge adequate rates to . the availability of sufficient, reliable data our ability to conduct a complete and accurate analysis of available data uncertainties inherent in estimates and assumptions, generally our ability to predict changes in the development, selection, and application of appropriate rating formulae or other pricing methodologies our ability to innovate with new pricing strategies, and the success of those our ability to implement rate changes and obtain any required regulatory approvals on a timely basis our ability to predict policyholder retention accurately unanticipated court decisions, legislation, or regulatory action the frequency and severity of catastrophic events, such as hurricanes, hail storms, floods, other severe weather, and terrorist events changing driving patterns advancements in vehicle technology and safety features, such as accident prevention technologies or the development of autonomous or partially autonomous vehicles unforeseen disruptive technologies, events, legislation, or regulation, and the availability of sufficient, reliable data the difficulty in predicting the rate and direction of changes in frequency and severity trends, including the effects of future inflation rates, in multiple markets unexpected changes in medical and auto repair costs unanticipated changes in governing statutes and regulations new or changing interpretations of insurance policy provisions and coverage-related issues by courts the effects of our ability to recognize fraudulent or inflated claims the accuracy of our estimates regarding claims that have been incurred but not recorded as of the date of the financial statements the accuracy and adequacy of actuarial techniques and databases used in estimating loss reserves, and the accuracy and timeliness of estimates of total loss and loss adjustment expenses as determined by our employees for different categories of claims. July 12, 2013. results of operations. our ability to generate revenue growth could be significantly impaired. complexity, while delivering high quality products and services. claims, Moreover, the negative impacts of these or other events may be aggravated as the perceptions of consumers and others are formed based on modern communication and social media tools over which we have no control. goodwill and to our brand. Likewise, the actively managed equity portfolio will be subject to risks arising from the investment decisions of the investment advisors, including sector or industry concentrations, lack of geographic diversification, and the performance of individual issuers. local, national, or international events, such as regulatory changes, power outages, system failures, wars, or terrorist attacks a recession, depression, political or social upheaval, or other financial weakness or failure of one or more financial institutions that play a prominent role in securities markets or act as a counterparty for various financial instruments, such as derivative transactions, which could further disrupt the markets or cause us to incur losses if counterparties to one or more of our transactions should default inactive markets for specific kinds of securities, or for the securities of certain issuers or in certain sectors, which could result in decreased valuations and impact our ability to sell a specific security or a group of securities at a reasonable price when desired the failure, or perceived failure, of governmental attempts to stabilize their budgets or economies through austerity programs, tax increases or other measures, to stabilize specific companies or groups of companies through capital injections, to shore up markets, or otherwise to spur economic recovery or growth, or the failure or refusal of a government to engage in such efforts investor fear, whether a significant change in inflation expectations or the onset of deflation a significant devaluation of governmental or private sector credit, currencies or financial markets, or other factors or affiliates, pay dividends to shareholders, or repurchase its securities. Progressive may be unable to changed in the discretion of the Board of Directors. In addition to our corporate headquarters and another office complex and call center in Mayfield Village, Ohio, we own significant locations in Colorado Springs, Colorado; Tampa, Florida; and Tempe, Arizona. Year 2010 2009 $23.24. 2013. policy. share each. EQUITY COMPENSATION PLAN INFORMATION Plan Category Equity compensation plans approved by security holders: Employee Plans: 2010 Equity Incentive Plan 2003 Incentive Plan 1995 Incentive Plan2 Subtotal Employee Plans Director Plans: 2003 Directors Equity Incentive Plan 1998 Directors’ Stock Option Plan2 Subtotal Director Plans Equity compensation plans not not approved by security holders: None Total plans. ISSUER PURCHASES OF EQUITY SECURITIES 2010 Calendar Month October November December Total Total revenues Net income (loss) Per share: Net income (loss)1 Dividends Comprehensive income (loss) Total assets Debt outstanding Name Age Offices Held and Last Five Years’ Business Experience We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, and waivers from, the provisions of the foregoing Code of Ethics by posting such information on our Internet Report of Independent Registered Public Accounting Firm Consolidated Statements of Changes in Shareholders’ Equity - For the Years Ended December 31, Notes to Consolidated Financial Statements Supplemental Information (Unaudited) Schedule I - Summary of Investments - Other than Investments in Related Parties Schedule II - Condensed Financial Information of Registrant Schedule III - Supplementary Insurance Information Schedule IV - Reinsurance Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations Report of Independent Registered Public Accounting Firm on Financial Statement Schedules Consent of Independent Registered Public Accounting Firm No other schedules are required to be filed herewith pursuant to Article 7 of Regulation S-X. 10.82. Type of Investment Available-for-sale Fixed maturities: Bonds: United States Government and government agencies and authorities States, municipalities, and political subdivisions Public utilities Corporate and other debt securities Asset-backed securities Redeemable preferred stock Total fixed maturities Equity securities: Common stocks: Public utilities Banks, trusts, and insurance companies Industrial, miscellaneous, and all other Nonredeemable preferred stocks Total equity securities Short-term investments Total investments Includes $6.3 million in treasury bills issued by the Australian government. 2013. Revenues Dividends from subsidiaries* Undistributed income from subsidiaries Equity in net income of subsidiaries Intercompany investment income* Net gain on extinguishment of debt Total revenues Expenses Interest expense Deferred compensation1 Other operating costs and expenses Total expenses Income (loss) before income taxes Provision (benefit) for income taxes Net income (loss) Represents gain on net death benefit received on life insurance policies. Assets Investment in affiliate Investment in subsidiaries* Receivable from investment subsidiary* Intercompany receivable* Income taxes Other assets Total Assets Liabilities and Shareholders’ Equity Accounts payable, accrued expenses, and other liabilities Dividend payable Debt Total liabilities Common Shares, $1.00 par value (authorized 900.0; issued 797.7 and 797.8, including treasury shares of 135.3 and 125.2) Paid-in capital Retained earnings Total accumulated other comprehensive income Total shareholders’ equity Total Liabilities and Shareholders’ Equity Cash Flows From Operating Activities: Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Undistributed income from subsidiaries Amortization of stock-based compensation Net gain on extinguishment of debt Changes in: Intercompany receivable Accounts payable, accrued expenses, and other liabilities Income taxes Other, net Net cash provided by operating activities Cash Flows From Investing Activities: Additional investments in equity securities of consolidated subsidiaries Received from (paid to) investment subsidiary Net cash provided by (used in) investing activities Cash Flows From Financing Activities: Proceeds from exercise of stock options Tax benefit from exercise/vesting of stock-based compensation Reacquisition of debt Dividends paid to shareholders Acquisition of treasury shares Net cash used in financing activities Change in cash Cash, beginning of year Cash, end of year (millions) Income taxes, net of refunds Interest Segment Year ended December 31, 2010: Personal Lines Commercial Auto Other indemnity3 Total Year ended December 31, 2009: Personal Lines Commercial Auto Other indemnity Total Year ended December 31, 2008: Personal Lines Commercial Auto Other indemnity Total Year Ended: December 31, 2010 Premiums earned: Property and liability insurance December 31, 2009 Premiums earned: Property and liability insurance December 31, 2008 Premiums earned: Property and liability insurance Year Ended December 31, 2010 December 31, 2009 December 31, 2008 Corporation Filing Date S-8 S-8 S-8 S-8 S-8 S-8 /s/ Glenn M. Renwick Director, Chairman of the Board, Glenn M. Renwick Brian C. Domeck EXHIBIT INDEX Exhibit No. Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC 3(i) Amended Articles of Incorporation of The Progressive Corporation (as amended April 18, 2008) 3(ii) 4 4 4 4 4 4 4 4 4 EXHIBIT INDEX Exhibit No. Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC 4 4 4 4 4 4 4 4 4 10(ii) 10(ii) 2011 Gainsharing Plan 10(iii) The Progressive Corporation 2013 Gainsharing Plan 10(iii) The Progressive Corporation 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) EXHIBIT INDEX Exhibit No. Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 10(iii) 11 13 21 23 24 31 31 EXHIBIT INDEX Exhibit No. Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC 32 32 99 101 101 101 101 101 101xý Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 20102013¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 toOhio 34-0963169 6300 Wilson Mills Road, Mayfield Village, Ohio 44143 (Address of principal executive offices) (Zip Code) Common Shares, $1.00 Par Value New York Stock Exchange xý Yes ¨ Noxý Noxý Yes ¨ Noxý Yes ¨ No¨ýLarge accelerated filer xý Accelerated filer ¨ Non-accelerated filer Smaller reporting company ¨ xý No2010: $11,441,203,2452011: 660,034,992April 29, 2011,May 16, 2014, and the Annual Report to Shareholders for the year ended December 31, 2010,2013, included as Exhibit 13 to this Form 10-K, are incorporated by reference in Parts I, II, III, and IV hereof.April 29, 2011May 16, 2014 (the “Proxy Statement”) have been incorporated by reference herein and are identified under the appropriate items in this Form 10-K. The 20102013 Annual Report to Shareholders (the “Annual Report”) of The Progressive Corporation and subsidiaries, which will be attached as an Appendix to the 20112014 Proxy Statement, is included as Exhibit 13 to this Form 10-K. Cross references to relevant sections of the Annual Report are included under the appropriate items of this Form 10-K.ITEM 1.BUSINESSand 1one mutual insurance company affiliate, and one limited partnership investment affiliate. TheseOur insurance subsidiaries and mutual insurance company affiliate provide personal and commercial automobile insurance and other specialty property-casualty insurance and related services. Our property-casualty insurance products protect our customers against losses due to collision and physical damage to their motor vehicles, and uninsured and underinsured bodily injury, and liability to others for personal injury or property damage arising out of the use of those vehicles. Our non-insurance subsidiaries and limited partnership investment affiliate generally support our insurance and investment operations. We operate our businesses throughout the United States and sell personal auto insurance on an Internet-only basis in Australia.$14.5$17.3 billion in 2010,2013, compared to $14.0$16.4 billion in 20092012 and $13.6$15.1 billion in 2008.2011. Our combined ratio, calculated on a basis consistent with accounting principles generally acceptedwhich we calculate by dividing the sum of our loss and loss adjustment expenses, policy acquisition costs, and other underwriting expenses, net of "fees and other revenues," by our net premiums earned, was 93.5 in the United States of America (GAAP), was 92.42013, 95.6 in 2010, 91.62012, and 93.0 in 2009, and 94.6 in 2008.Ourproducts are comprised ofbusiness, which includes insurance for personal autos and special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items):and in the District of Columbia. In December 2009, we began writing personal auto insuranceColumbia, and on an Internet-only basis in Australia. Our personal auto management group is organized by state into four geographic regions in the United States, plus a region for Australia. Each region is led by a general manager.Our AutoLines – A Group President manages our Commercial Lines business, which offers products are offered in 49 states; we do not currently write Commercial AutoLines in Hawaii or the District of Columbia. The Commercial AutoLines business is organized by state, with product managers responsible for local implementation. These state-level managers are led by two regional directors who report to a general manager.ledbased on geographic region, and one is a countrywide group that provides various claims-related services, including catastrophe response and special investigations. Each group is headed by a general manager.Our Claims business area, which supportsmanager, and each handles both the Personal Lines and Commercial Auto businesses, is organized into three geographic regions, with a general manager responsible for each region.Our Personal Lines Commercial Auto, and Claims businesses are each managed by a Group President, while our California agency organization is managed separately.Tempe,Phoenix, Arizona; and Colorado Springs, Colorado, support our policy servicing, agency distribution, claims, operations, and direct sales.policypolicies and makes key strategic decisions anddecisions. This team includes the Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Chief Investment Officer, Chief Information Officer, Chief Human Resource Officer, and Chief Marketing Officer, as well as our three Group Presidents (discussed above). The Group Presidents are responsible for the2forduring each of the last three years. Our strategy is to be a competitively priced provider of a full line of auto insurance products with distinctive service, distributed through whichever channel the customer prefers.• 20092012 based on net premiums written and believe that we held that position for 2010.2013. There are approximately 360320 competitors in this market. Progressive and the other leading 14 private passenger auto insurers, each of which writes over $1.8$2.0 billion of premiums, comprise about 75% of this market. For 2009,2012, the industry net premiums written for private passenger auto insurance in the United States was $156.5$167.9 billion, and our share of this market was approximately 7.8%8.5%, compared to $158.0$163.3 billion and 7.3%8.1% in 2008,2011, respectively; comparable industry data is not available for 20102013 at this time. All industry data, including ranking and market share, was obtained directly from data reported by either SNL Financial or A.M. Best Company, Inc. (“A.M. Best”), or was estimated using A.M. Best data as the primary source.Personal auto insurance represented approximately 90% of our total Personal Lines net premiums written for each of the last three years. Volume potential is driven by our price competitiveness, brand recognition, service quality, and the actions of our competitors, among other factors. See “Competitive Factors” on page 4 of this report for further discussion.Our specialty Personal LinesThe Personal Lines business is either generated by We also offer a personal umbrella insurance product in 37 states and the District of Columbia through certain independent agents and brokers or written directly online or by phone. to Direct customers via telephone.30,00035,000 independent insurance agencies located throughout the United States, including brokerages in New York and California. TheseThese independent insurance agents and brokers have the ability to place business with Progressive for specified insurance coverages within prescribed underwriting guidelines, subject to compliance with company-mandated procedures. Our guidelines prescribe the kinds and amounts of coverage that may be written and the premium rates that may be charged for specified categories of risk. The agents and brokers do not have authority on behalf of Progressive to establish underwriting guidelines, develop rates, settle or adjust claims, or enter into other transactions or commitments. The Agency business also writes insurance through strategic alliance business relationships with other insurance companies, financial institutions, and national agencies. The total net premiums written through the Agency business represented 58%56% of our Personal Lines volume in 2010,both 2013 and 2012, compared to 59%57% in 2009 and 62% in 2008.42%44% of our Personal Lines volume in 2010,both 2013 and 2012, compared to 41%43% in 2009 and 38% in 2008.Snapshot2011.SM, our usage-based insurance product, is now available to Direct auto consumers in 27 states, including 8 states added during 2010, and Agency auto customers in 9 of those 27 states. We plan to continue expansion of Snapshot into about 15 additional states in 2011, depending on regulatory approval and business results. We currently have three patents, and additional patent applications pending, with respect to usage-based insurance.Progressive Home Advantage®, our offering which is designed to combine a Progressive policy with a homeowner’s or renter’s policy underwritten by one of three unaffiliated insurance carriers, is available to Agency customers in 43 states and to Direct customers in 48 states and the District of Columbia; this program is not available to customers in Florida and Alaska.We also offer a personal umbrella insurance product in 32 states through certain independent agents and to Direct customers via telephone. We began offering this product in select markets in 2006 and have been expanding into additional markets as we have evaluated and met certain performance criteria. We plan to continue the roll-out in both channels during 2011.AutoAutoLines business writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses and represented approximately 10% of our total net premiums written forduring each of the last three years. The majority of our Commercial AutoLines customers insure threetwo or fewer vehicles. The Commercial AutoLines business, which is primarily distributed through the independent agency channel, operates in the following business auto and truck markets. The business auto market which accounts for slightly more than half of our total Commercial Auto premiums and approximately 60% of the vehicles we3insure in this business, includestargets:contractors, landscapers,retailing, farming, services, and plumbers. The remainder is in the truck commercial auto market, which includesprivate truckingtrucks,and coal-type businesses, andlocal cartage, and other short-haul commercial vehicles. We also offer cargo, general liability,wreckers used in towing services and workers’ compensation insurance products to these same customers; certaingas/service station businesses.these products are underwritten by unaffiliated insurance companies through our Progressivetotal Commercial Advantage program.Lines premiums, while the for-hire transportation and contractor business market targets each account for about another 25%. Business auto and contractor together account for approximately 75% of the vehicles we insure in this business, while for-hire transportation accounts for about 15%. Although the Commercial Auto businessLines differs from Personal Lines auto in its customer basesbase and products written, both businesses require the same fundamental skills, including disciplined underwriting and pricing, as well as excellent claims service.380340 competitors in the total commercial auto market. We primarily compete with about 3532 other large companies/groups, each with over $130$140 million of commercial auto premiums written annually. These leading commercial auto insurers comprise about 75% of this market. Our Commercial AutoLines business ranked fourthsecond in the commercial auto insurance market for 2009, and we2012, up one place from 2011, based on net premiums written. We believe that we will be inretained the top fournumber two position for 2010. Businesses which represented less than 1% of our net premiums written in each of the last three years, consist of managing our run-off businesses, which includesincluding the run-off of our professional liability businesses, principally directors and officers liability insurance for community banks.In 2010, webusiness, which was sold our professional liability insurance businesses.in 2010. Pursuant to our agreement with the purchaser of this business, from the date of sale through April 30, 2012, we will continuecontinued to write these policies, principally directors and officers liability insurance for an agreed upon period after the closing of the sale.community banks. All professional liability insurance policies written in July 2010 and later were 100% reinsured. From August 1, 2009 through June 30, 2010, the substantial majority of the risks on this business written for these policieswere 100% reinsured and prior to August 2009, a majority of the risk on this business was 100% reinsured. Beginning in July 2010, all such new and renewal business is 100% reinsured. The sale of these businesses did not have a material effect on our financial condition, results of operations, or cash flows.provide insurance-related services and representedwhich represent less than 1% of our total revenues for each of the last three years and do not have a material effect on our overall operations.Ouroperations, primarily include:business providesprovider, we provide policy issuance and claims adjusting services for the Commercial Auto Insurance Procedures/Plans (CAIP), which are state-supervised plans serving the involuntary market in 43 states. We are the sole nationwide servicing carrier for CAIP. As a service provider, weand collect fee revenue that is earned on a pro rata basis over the terms of the related policies. In 2010, we reachedWe have an agreement with AIPSO (the national organization responsible for administering the involuntary insurance market) under which we will receive a supplemental fee, when necessary, to satisfy a minimum servicing fee requirement.requirement; this agreement is scheduled to expire on August 31, 2014. We cede 100% of the premiums and losses to the plans. Reimbursements to us from the CAIP plans are required by state laws and regulations. Material violations of contractual service standards can result in ceding restrictions for the affected business. We have maintained, and plan to continue to maintain, compliance with these standards. Any changes in our participation as a CAIP service provider would not materially affect our financial condition, results of operations, or cash flows.OurCommission-Based Businesses – We have two commission-based service businesses also include our alliance with three unaffiliated homeowner insurance companies, of which one company services our Agency customers, one services our Direct customers, and the third is available to both businesses.new and existing Progressive Agency and Direct customers home, condo,condominium, and renters insurance underwrittenwritten by theseeleven unaffiliated homeowner’s insurance companies. Progressive Home Advantage is not currently available to customers in Alaska and is available to only Agency customers in Florida. For the policies written under this program in our Direct business, we receive commissions, all of which are used to mitigateoffset the expenses associated with maintaining this program.320275 claims offices located throughout the United States. In addition, we have in operation 54 service centers, in 4148 metropolitan areas across the country, that providewe have in operation 63 Service Centers, of which 30 have combined our concierge level claims service. These facilities are designedoffices and Service Centers to improve our efficiency and manage costs. Insureds and other claimants can elect to have their vehicles repaired by their own repair shops, have their vehicles repaired by one of our network shops, or have the entire repair process coordinated by one of our Service Centers. If a customer elects to repair their vehicle through a Service Center, we provide end-to-end resolution for auto physical damage losses. Customers can choose to bring their vehicles to one of these sites, where they can pick up a rental vehicle. Our representatives will then write the estimate, select a qualified repair shop, arrange the repair, including pick-up and delivery of the vehicle, and inspect the vehicle once the repairs are complete. We holdUnder the Service Center option, we guarantee the repairs for as long as the customer owns or leases their car. If a U.S. patent for thiscustomer decides not to repair their vehicle, our representatives will write an estimate and the customer can receive payment on the spot. This innovative, patented approach to the vehicle repair process which increases consumer satisfaction and our productivity and improves the cycle time in comparison to our other claims settlement processes.issuers.insurers. In the Agency channel, some of our competitors have broad distribution networks of employed or captive agents. Over the last few years,With widely available comparative rating services, have gained prominence, adding transparency to industry pricing, and many of ourconsumers can easily compare prices among competitors. Many competitors have4significantly increased theirinvest heavily in advertising and marketing efforts and/or expandedexpanding their online or mobile service offerings. TheseOver the past decade, these changes have further intensified the competitive nature of the automobile and other property-casualty insurance markets in which we operate.theour subsidiaries’ businesses are in good standing.administrativeregulatory powers relating to licensingthose operations. Regulated areas include, among others: regulating premium changespolicy forms, establishing reservesurplus requirements regulating compliance with statutorymethods,principles specific to insurance companies and the content of statutoryrequired financial reports, and regulating the type and amount of investments permitted. Rate regulation varies from “use and file,” to “file and use,” to prior approval.Insurance departments are charged with the responsibility of ensuring that insurance companies maintain adequate capital and surplus and comply with a variety of operational standards. Insurance companies are generally required to file detailed annual and other reports with thedepartmentreserveseach jurisdiction in which they conduct business. insurers and transactions between insurers and affiliatesgrant toauthorize insurance authorities the powerdepartments to regulate acquisitions of insurers and certain other transactions and to require periodic disclosure of certainspecified information. These laws impose prior approval requirements for certain transactions between regulated insurers and their affiliates and generally regulate dividend and other distributions, including loans and cash advances, between regulated insurers and their affiliates. See the “Dividends” discussion in Item 5(c) herein for further information on these dividend limitations. In December 2010,The scope of insurance holding company regulation has expanded as states have adopted the National Association of Insurance Commissioners (NAIC) promulgated a revised model holding company act which, topromulgated by the extent ultimately adopted by individual state legislatures, will expand the scope of existing insurance holding company regulation. regulated insurers can be assessed or required to contribute to state guaranty funds to cover policyholder losses resulting from the insolvency of other insurers. Insurers are also required by many states, as a condition of doing business in the state, to provide coverage to certain risks which are not insurablethat cannot find coverage in the voluntary market. These “assigned risk” plans generally specify the types of insurance and the level of coverage that must be offered to such involuntary risks, as well as the allowable premium. Many states also have involuntary market plans, which hire a limited number of servicing carriers to provide insurance to involuntary risks. These plans, through assessments, pass underwriting and administrative expenses on to insurers that write voluntary coverages in those states.Insurance companies are generally required by insurance regulators to maintain sufficient surplus to support their writings. Although the ratio of writings to surplus that the regulators will allow is a function of a number of factors (including applicable law, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write have historically been perceived to be limited to a specified multiple of the insurer’s total policyholders’ surplus, generally 3 to 1. Thus, the amount of an insurer’s surplus, in certain cases, may limit its ability to grow its business. At year-end 2010, we had net premiums written of $14,476.8 million and statutory surplus of $5,073.0 million. The combined premiums to surplus ratio for all Progressive insurance companies was 2.9 to 1. In addition, we have access to $2.2 billion in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth as needed. The NAIC also has developed a risk-based capital (RBC) program to enable regulators to take appropriate and timely regulatory actions relating to insurers that show signs of weak or deteriorating financial condition. RBC is a series of5dynamic surplus-related formulas that contain a variety of factors that are applied to financial balances based on the degree of certain risks, such as asset, credit, and underwriting risks. Progressive’s RBC ratios are well in excess of minimum requirements.Regulationconstantlyoperations, including coverages, forms, rating criteria, and rate levels. The ability to implement changes as real or perceived issuesto these items on a timely basis is critical to our ability to compete effectively in the marketplace. Rate regulation varies from “use and developments arise. Some changes may be duefile,” to economic developments, such as changes in investment laws made“file and use,” to recognize new investment products, while others result from consumer resistance to price increases and concerns relating to insurer rating and underwriting practices and solvency. In recent years, legislation, regulatory measures, and voter initiatives have been introduced, and in some cases adopted, which deal with use of non-public consumer information, use of credit information in underwriting and rating, insurance rate development, rate of return limitations, and the ability of insurers to cancel or non-renew insurance policies, reflecting concerns about consumer privacy, insurance availability, prices, and alleged discriminatory pricing. In addition, from time to time, the United States Congress and certain federal agencies investigate the current condition of the insurance industry to determine whether federal regulation is necessary; in 2010, a new Federal Insurance Office was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, whose purpose is to collect information about the insurance industry and monitor the industry for systemic risk.We6GAAP,accounting principles generally accepted in the United States of America (GAAP), which differ in certain respects from amounts reported under statutory accounting principles (SAP) prescribed by insurance regulatory authorities. Certain significant differences are described below:Category GAAP AccountingSAP AccountingAcquisition ExpensesCategoryGAAP Accounting SAP Accounting Commissions, premium taxes, and other variable costs incurred in connection with writingthe successful acquisition of new and renewal business are capitalized and amortized pro rata over the policy term as premiums are earned.Commissions, premium taxes, and all other acquisition expenses are expensed as incurred. Non-admitted AssetsPremium receivablesPremiums receivable are reported net of an allowance for doubtful accounts.Premium receivablesPremiums receivable over 90 days past due are “non-admitted,” which means they are excluded from surplus. For premium receivablesreceivable less than 90 days past due, we also estimate a bad debt reserve. Furniture, equipment, application software, leasehold improvements, and prepaid expenses are capitalized and amortized over their useful lives or periods benefited. Excluding computer equipment and operating software, the value of all other furniture, equipment, application software, leasehold improvements, and prepaid expenses, net of accumulated depreciation or amortization, is non-admitted against surplus. Computer equipment and operating software are capitalized, subject to statutory limitations based on surplus, and depreciated over three years. Deferred tax assets are recorded based on estimated future tax effects attributable to temporary differences. A valuation allowance would be recorded for any tax benefits that are not expected to be realized. The accounting for deferred tax assets is consistent with GAAP, except for certain deferred tax assets that do not meet statutory requirements for recognition, which are non-admitted against surplus.Reinsurance Ceded reinsurance balances are shown as an asset on the balance sheet as “prepaid reinsurance premiums” and “reinsurance recoverables.” Ceded unearned premiums are netted against the “unearned premiums” liability. Ceded unpaid loss and loss adjustment expense (LAE) amounts are netted against “loss and LAE reserves.” Only ceded paid loss and LAE are shown as a “reinsurance recoverables” asset. Fixed-maturity securities, which are classified as available-for-sale, are reported at current fair values.Fixed-maturity securitessecurities are reported at amortized cost or the lower of amortized cost or fair value, depending on the NAIC designation of the security. Preferred stocks, both redeemable and nonredeemable, are reported at quoted fair values.Redeemable preferred stocks are reported at amortized cost or the lower of amortized cost or fair value, depending on the NAIC designation of the security. Nonredeemable preferred stocks are reported at quoted fair value, consistent with GAAP.Federal tax expense and tax liability or recoverable balances includeincludes current and deferred income taxes.For income statement reporting, federal tax expense only includes the current tax provision. Deferred taxes are posted to surplus. SAP deferred tax assets are subject to certain limitations on admissibility. approachinvestment goals are to investment and capital management seeks to ensure that we have sufficient capitalmanage our portfolio on a total return basis to support all of the insurance premiums that we can profitably write.write and contribute to our comprehensive income. Our portfolio is invested primarily in short-term and intermediate-term, investment-grade fixed-income securities. Our investment portfolio had a fair value of $15.5$18.1 billion at December 31, 2010,2013, compared to $14.7$16.5 billion at December 31, 2009.2012. Investment income is affected by the variability of cash flows to or from the portfolio, shifts in the type and quality of investments in the portfolio, changes in yield, and other factors. Total investment income, (loss), including net realized gains (losses) on securities, before expenses and taxes, was $616.2$740.4 million in 2010,2013, compared to $534.1$749.8 million in 20092012 and $(807.4)$582.6 million in 2008.2011. On a pretax total return basis (i.e., total investment income plus changes in unrealized gains/losses) investment income was $870.0 million, $1,026.6 million, and $452.6 million for the years ended December 31, 2013, 2012, and 2011, respectively. For more detailed discussion, seeManagement’s Discussion and Analysis of Financial Condition and Results of Operationsin our Annual Report, which is included as Exhibit 13 to this Form 10-K.720102013 was 24,638,26,145, all of whom were employed by subsidiaries of The Progressive Corporation.June 30, 2010,July 12, 2013, as well as in section “V. Critical Accounting Policies” of ourManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report, which is included as Exhibit 13 to this Form 10-K. The accompanying tables present information concerning our property-casualty losses and LAE. 2010 2009 2008 $ 6,653.0 $ 6,177.4 $ 5,942.7 529.4 244.5 287.5 6,123.6 5,932.9 5,655.2 10,451.7 10,040.9 9,981.8 (320.4 ) (136.0 ) 33.2 10,131.3 9,904.9 10,015.0 6,841.0 6,542.2 6,700.4 3,047.0 3,172.0 3,036.9 9,888.0 9,714.2 9,737.3 6,366.9 6,123.6 5,932.9 704.1 529.4 244.5 $ 7,071.0 $ 6,653.0 $ 6,177.4 (millions) 2013 2012 2011 Balance at January 1 $ 7,838.4 $ 7,245.8 $ 7,071.0 Less reinsurance recoverables on unpaid losses 862.1 785.7 704.1 Net balance at January 1 6,976.3 6,460.1 6,366.9 Incurred related to: Current year 12,427.3 11,926.0 10,876.8 Prior years 45.1 22.0 (242.0 ) Total incurred 12,472.4 11,948.0 10,634.8 Paid related to: Current year 8,095.0 7,895.3 7,289.3 Prior years 3,919.9 3,536.5 3,252.3 Total paid 12,014.9 11,431.8 10,541.6 Net balance at December 31 7,433.8 6,976.3 6,460.1 Plus reinsurance recoverables on unpaid losses 1,045.9 862.1 785.7 Balance at December 31 $ 8,479.7 $ 7,838.4 $ 7,245.8 favorablyunfavorably by $45.1 million in both 20102013 and 2009,$22.0 million in 2012, compared to slight unfavorablefavorable development of $242.0 million in 2008.2011, which is reflected as “Incurred related to prior years” in the table above. Total development consists of net changes made by our actuarial department on prior accident year reserves, based on regularly scheduled reviews, claims settling for more or less than reserved, changes in reserve estimates by claim representatives, and emergence of unrecorded claims at rates different than reserved, and changes inanticipated. estimates by claim representatives. The favorable development in 2010our Commercial Lines business was primarily attributable to higher frequency and severity on late emerging claims primarily in our bodily injury coverage for our truck business. In addition, unfavorable development in our Personal Lines business reflects unfavorable reserve development in our Agency auto business IBNR reserves due to higher frequency and severity on late emerging claims, offset in large part by favorable development in our Direct auto business due to lower than expected defenseanticipated severity costs on case reserves. We also experienced unfavorable reserve development in our other businesses, primarily due to reserve increases in our run-off professional liability group business, based on recent internal actuarial reviews of our claims history.cost containment expensesan increase in our estimate of bodily injury severity for accident year 2011. In addition, unfavorable development in our Commercial Lines business reflects higher than anticipated frequency and severity costs on late emerging claims and higher settlements on large losses. This unfavorable development was partially offset by favorable reserve adjustments, primarily in our loss adjustment expense reserves and our personal auto bodily injury reserves for accident years 2009 and 2008.onof larger losses for amounts less than we originally reserved in bothour Personal Lines (primarily in our personal auto product) and Commercial Auto. Similarly, in 2009, personal autoLines businesses. We also experienced lower than expected defense and cost containment costs, while Commercial Auto recognized favorable settlements on larger losses duringreflecting a combination of fewer claims being litigated, as well as the year. In 2008, an increase in the number of late reported Commercial Auto claims, and an increase in the estimated severityfact that a greater percentage of these claims, wascases are now being handled by our in-house counsel, which is a primary contributorcost-effective alternative to the unfavorable development.8ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSES DEVELOPMENTANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSES DEVELOPMENT ($ in millions) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LIABILITY FOR UNPAID LOSSES AND LAE - GROSS $ 4,576.3 $ 5,285.6 $ 5,660.3 $ 5,725.0 $ 5,942.7 $ 6,177.4 $ 6,653.0 $ 7,071.0 $ 7,245.8 $ 7,838.4 $ 8,479.7 LESS: REINSURANCE RECOVERABLES ON UNPAID LOSSES 229.9 337.1 347.2 361.4 287.5 244.5 529.4 704.1 785.7 862.1 1,045.9 4,346.4 4,948.5 5,313.1 5,363.6 5,655.2 5,932.9 6,123.6 6,366.9 6,460.1 6,976.3 7,433.8 PAID (CUMULATIVE) AS OF: One year later 2,233.8 2,355.5 2,662.1 2,897.4 3,036.9 3,172.0 3,047.0 3,252.3 3,536.5 3,919.9 Two years later 3,148.1 3,430.6 3,931.0 4,240.4 4,361.4 4,427.8 4,348.4 4,724.0 5,111.6 — Three years later 3,642.5 3,999.9 4,584.7 4,856.2 4,966.1 5,031.7 5,007.9 5,459.4 — — Four years later 3,873.0 4,269.6 4,839.1 5,121.9 5,227.5 5,314.7 5,323.9 — — — Five years later 3,977.1 4,368.6 4,948.7 5,229.0 5,340.1 5,452.0 — — — — Six years later 4,012.5 4,419.2 4,995.6 5,282.1 5,402.3 — — — — — Seven years later 4,034.4 4,445.7 5,023.7 5,317.8 — — — — — — Eight years later 4,047.3 4,459.8 5,042.3 — — — — — — — Nine years later 4,054.9 4,467.4 — — — — — — — — Ten years later 4,060.3 — — — — — — — — — LIABILITY RE-ESTIMATED AS OF: One year later 4,237.3 4,592.6 5,066.2 5,443.9 5,688.4 5,796.9 5,803.2 6,124.9 6,482.1 7,021.4 Two years later 4,103.3 4,485.2 5,130.5 5,469.8 5,593.8 5,702.1 5,647.7 6,074.4 6,519.6 — Three years later 4,048.0 4,501.6 5,093.6 5,381.9 5,508.0 5,573.8 5,575.0 6,075.9 — — Four years later 4,070.0 4,471.0 5,046.7 5,336.5 5,442.1 5,538.5 5,564.6 — — — Five years later 4,073.7 4,475.5 5,054.6 5,342.8 5,452.8 5,580.0 — — — — Six years later 4,072.4 4,486.4 5,060.8 5,352.8 5,475.6 — — — — — Seven years later 4,080.5 4,486.3 5,070.2 5,369.7 — — — — — — Eight years later 4,077.8 4,493.3 5,081.7 — — — — — — — Nine years later 4,082.7 4,497.5 — — — — — — — — Ten years later 4,086.1 — — — — — — — — — $ 260.3 $ 451.0 $ 231.4 $ (6.1 ) $ 179.6 $ 352.9 $ 559.0 $ 291.0 $ (59.5 ) $ (45.1 ) 6.0 9.1 4.4 (.1 ) 3.2 5.9 9.1 4.6 (.9 ) (.6 ) RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - GROSS $ 4,463.2 $ 5,005.0 $ 5,688.2 $ 6,033.7 $ 6,175.5 $ 6,319.6 $ 6,360.3 $ 6,963.8 $ 7,446.5 $ 8,020.4 LESS: RE-ESTIMATED REINSURANCE RECOVERABLES ON UNPAID LOSSES 377.1 507.5 606.5 664.0 699.9 739.6 795.7 887.9 926.9 999.0 $ 4,086.1 $ 4,497.5 $ 5,081.7 $ 5,369.7 $ 5,475.6 $ 5,580.0 $ 5,564.6 $ 6,075.9 $ 6,519.6 $ 7,021.4 $ 113.1 $ 280.6 $ (27.9 ) $ (308.7 ) $ (232.8 ) $ (142.2 ) $ 292.7 $ 107.2 $ (200.7 ) $ (182.0 ) (millions)1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $ 2,986.4 $ 3,238.0 $ 3,813.0 $ 4,576.3 $ 5,285.6 $ 5,660.3 $ 5,725.0 $ 5,942.7 $ 6,177.4 $ 6,653.0 $ 7,071.0 201.1 168.3 180.9 229.9 337.1 347.2 361.4 287.5 244.5 529.4 704.1 2,785.3 3,069.7 3,632.1 4,346.4 4,948.5 5,313.1 5,363.6 5,655.2 5,932.9 6,123.6 6,366.9 1,409.3 1,601.7 1,860.7 2,233.8 2,355.5 2,662.1 2,897.4 3,036.9 3,172.0 3,047.0 2,047.2 2,290.7 2,688.9 3,148.1 3,430.6 3,931.0 4,240.4 4,361.4 4,427.8 0 2,355.0 2,655.8 3,084.6 3,642.5 3,999.9 4,584.7 4,856.2 4,966.1 0 0 2,514.6 2,821.0 3,291.6 3,873.0 4,269.6 4,839.1 5,121.9 0 0 0 2,586.3 2,910.2 3,381.7 3,977.1 4,368.6 4,948.7 0 0 0 0 2,631.2 2,945.7 3,416.7 4,012.5 4,419.2 0 0 0 0 0 2,647.3 2,959.6 3,428.7 4,034.4 0 0 0 0 0 0 2,653.9 2,962.9 3,440.7 0 0 0 0 0 0 0 2,654.6 2,970.6 0 0 0 0 0 0 0 0 2,659.9 0 0 0 0 0 0 0 0 0 2,686.3 3,073.2 3,576.0 4,237.3 4,592.6 5,066.2 5,443.9 5,688.4 5,796.9 5,803.2 2,708.3 3,024.2 3,520.7 4,103.3 4,485.2 5,130.5 5,469.8 5,593.8 5,702.1 0 2,671.2 2,988.7 3,459.2 4,048.0 4,501.6 5,093.6 5,381.9 5,508.0 0 0 2,666.9 2,982.7 3,457.8 4,070.0 4,471.0 5,046.7 5,336.5 0 0 0 2,678.5 2,993.7 3,475.4 4,073.7 4,475.5 5,054.6 0 0 0 0 2,683.7 3,002.5 3,472.5 4,072.4 4,486.4 0 0 0 0 0 2,688.4 3,000.6 3,470.1 4,080.5 0 0 0 0 0 0 2,688.6 2,995.8 3,477.3 0 0 0 0 0 0 0 2,683.5 3,000.9 0 0 0 0 0 0 0 0 2,687.2 0 0 0 0 0 0 0 0 0 $ 98.1 $ 68.8 $ 154.8 $ 265.9 $ 462.1 $ 258.5 $ 27.1 $ 147.2 $ 230.8 $ 320.4 3.5 2.2 4.3 6.1 9.3 4.9 0.5 2.6 3.9 5.2 $ 2,903.6 $ 3,208.4 $ 3,751.6 $ 4,450.6 $ 4,985.9 $ 5,651.5 $ 5,977.1 $ 6,154.7 $ 6,329.1 $ 6,457.0 216.4 207.5 274.3 370.1 499.5 596.9 640.6 646.7 627.0 653.8 $ 2,687.2 $ 3,000.9 $ 3,477.3 $ 4,080.5 $ 4,486.4 $ 5,054.6 $ 5,336.5 $ 5,508.0 $ 5,702.1 $ 5,803.2 $ 82.8 $ 29.6 $ 61.4 $ 125.7 $ 299.7 $ 8.8 $ (252.1 ) $ (212.0 ) $ (151.7 ) $ 196.0 1Represents loss and LAE reserves net of reinsurance recoverables on net unpaid losses at the balance sheet date.2Cumulative development ÷ liability for unpaid losses and LAE - Net.920002003 through 2009.2012. The top line of the table shows the estimated liability for unpaid losses and LAE recorded at the balance sheet dateDecember 31 for each of the indicated years for the property-casualty insurance subsidiaries only. This liability represents the estimated amount of losses and LAE for claims that were unpaid at the balance sheet date, including IBNR. The table also presents the re-estimated liability for unpaid losses and LAE on a gross and net basis, with separate disclosure of the re-estimated reinsurance recoverablerecoverables on unpaid losses.of:”of”) shows the cumulative amount paid with respect to the previously recorded liability as of the end of each succeeding year. The lowermiddle portion of the table (labeled “Liability Re-estimated as of:”of”) shows the re-estimated amount of the previously recorded liability based on experience as of the end of each succeeding year. The re-estimated amount is the sum of the paid amounts above and the outstanding reserve for occurrences prior to the reservebalance sheet date. The estimate is increased or decreased as more information about the claims becomes known for individual years. For example, as of December 31, 2010,2013, our insurance subsidiaries had paid $2,970.6$4,467.4 million of the currently estimated $3,000.9$4,497.5 million of losses and LAE that had been unpaid at the end of 2001;2004; thus, an estimated $30.3$30.1 million of losses incurred through 20012004 remain unpaid as of the current financial statement date.net cumulative development“Net Cumulative Development” represents the aggregate change in the ultimate loss estimate over all prior years. For example, the 20002003 liability has developed favorably by $98.1$260.3 million over ten years. That amount has been reflected in income over the ten years and had the largest impact on the income in calendar year 2001.2005. The effects on income during the past three years due to changes in estimates of the liabilities for losses and LAE are shown in the reconciliation table on page 810 as the “prior years” contribution to incurred losses and LAE.2010,2013, but incurred in 2007,2010, will be included in the cumulative development amount for years 2007, 2008,2010, 2011, and 2009.2012. Conditions and trends that have affected development of the liability in the past may not necessarily occur in the future. Accordingly, it generally is not appropriate to extrapolate future development based on this table.For 2000 and 2001, while we experienced an increase in bodily injury severity, our developed reserves were within 2% to 4% of our original estimates. The20022003 and 2005; thus, the reserve run-off for these years was very favorable following the end of each year, or about 4% to 9% of our original carried amounts. The favorable reserve development for each of 20062007 through 20082010 was less than 4%about 3% to 9% of our original carried reserves, while 2009 reserves developed favorably by about 5% due to lower than expected defensewhich primarily reflects the decreases in severity between our original estimate and cost containment expenses and favorable settlements on larger losseswhat we experienced in both our personal auto and Commercial Auto businesses.9,12, we also re-estimate the reinsurance recoverablerecoverables on unpaid losses each year. The top of the table shows the amount of reinsurance recoverablerecoverables on unpaid losses that we had at the end of the calendar year, while the bottom shows the reserves re-estimated based on development in subsequent years. For example, at December 31, 2009,2012, we estimated our reinsurance recoverablerecoverables on unpaid losses to be $529.4$862.1 million. During 2010,2013, these reserves developed unfavorably by $124.4$136.9 million, bringing the re-estimated reinsurance recoverablerecoverables on unpaid losses to $653.8$999.0 million, as shown at the bottom of the table. Over the last ten years, we have experienced unfavorable development in our reinsurance recoverables on unpaid losses. ThisThe majority of this development primarily reflects our claims organization’scontinuing process of re-evaluating Michigan personal injury protectionPIP claims that require lifetime reserve estimates, which began in 2009 and continued in early 2010.estimates. As a result, we have increased both our direct reserves and corresponding reinsurance recoverables, since these claims are reinsured through the Michigan Catastrophic Claims Association (MCCA) state-mandated plan. The MCCA is funded through an assessment that insurance companies collect from policyholders in the state; therefore, our exposure to losses from the failure of this reinsurer is minimal.912 is constructed from Schedule P, Part-1, from the Consolidated Annual Statements of Progressive’s insurance subsidiaries, as filed with the state insurance departments.Areas.Progressive operatesAreasStatesStates; we also sell personal auto physical damage insurance via the Internet in Australia. For the years ended December 31, 2013, 2012, and began operating in Australia in December 2009.2011, net premiums earned on our Australian business were $13.0 million, $7.1 million, and $3.5 million, respectively. The amount of Australian revenues and assets is insignificant.Information.Web sitewebsite is located at progressive.com. As soon as reasonably practicable, we make all documents that we file with, or furnish to, the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-K, Form 10-Q, andcurrent reports on Form 8-K, and any amendments to these reports, available free of charge via our Web sitewebsite at progressive.com/investors. These reports are also available on the SEC’s Web site:website: http://www.sec.gov.10ITEM 1A.RISK FACTORS–- risks associated with assuming, or indemnifying for, the losses of, or liabilities incurred by, policyholders–-therisks stemming from external or internal events or circumstances that directly or indirectly may affect our insurance operations–- changes in the value of invested assets held in our investment portfolios, which might result from a variety of factors including interest rate movements, market price fluctuations, credit spread widening, risk premium pricing, liquidity difficulties, foreign exchange rate changes,impacting the investment marketplace generally, or the sectors, industries, or individual securities in which we have invested, and the performance of an individual issuer or a market sector, and – - the risks that a counter-partythe other party to a transaction will fail to perform according to the terms and conditions of a contract, as well as our abilityor that we will be unable to obtain capital when necessary, pay or otherwise satisfy our obligations when due.due or obtain capital when necessary. it should be noted that many of the risks may have ramifications in more than one category. For example, although presented as an Operating Risk below, governmental regulation of insurance companies also affects our underwriting, investing and financing activities, which are addressed separately under Insurance Risks, Market Risks, and Credit Risks below. TheThese categories, therefore, should be viewed as a starting point for understanding the significant risks facing us and not as a limitation on the potential impact of the matters discussed.This information should be considered carefully together with the other information contained in this report and in the other reports and materials filed by us with the Securities and Exchange Commission (“SEC”), as well as news releases and other information publicly disseminated by us from time to time. market valuations, interest rates, consumer confidence, and construction spending, among a host of other factors, will have a bearing on the amount of insurance that is purchased by consumers and small businesses. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any such risks or uncertainties, or any of the following risks or uncertainties, develop into actual events, we could experience a materially adverse effect on our business, financial condition, cash flows, or results of operations. In that case, the market price of our common shares or debt securities could decline materially.I.Insurance Riskspolicyholders.policyholdersTheA primary role of the pricing function is to ensure that rates are adequate to generate sufficient premiums to pay losses, loss adjustment expenses, and underwriting expenses, and to earn a profit.As a result, ourOur ability to price accurately is subject to a number of risks and uncertainties, including, without limitation:uncertainties inherent in estimates and assumptions, generallytrendtrends and to predict both the severity and frequency of future losses with reasonable accuracycertain operating expenses with reasonable accuracyinnovationsunderstandingour ability to understand the impact of ongoing changes in our claimclaims settlement practices11suchthese risks may result in our pricing being based on inadequate or inaccurate data or inappropriate analyses, assumptions, or methodologies, and may cause us to estimate incorrectly future changes in the frequency or severity of claims. As a result, we could underprice risks, which would negatively affect our underwriting profit margins, or we could overprice risks, which could reduce our competitiveness and growth prospects. In either event, our operating results, financial condition, and cash flows could be materially adversely affected. In addition, underpricing insurance policies over time could erode the capital position of one or more of our insurance subsidiaries, thereby constraining our ability to write new business.ongoing changes in our claimclaims settlement practices810 of this report, as well as our “Report on Loss Reserving Practices,” which was filed with the SEC on Form 8-K on June 30, 2010.If they occur with enough severity, our financial performance, cash flows, and results of operations could be materially adversely affected.The incidence and severity of catastrophes are inherently unpredictable. In addition, changing climate conditions may increase the frequency and severity of natural disasters such as hurricanes, tornadoes, other storms and fires. We use catastrophe modeling tools and third-party experts to help estimate our exposures to such events, but thoseevents. Those tools and expert opinions are based on historical data and other assumptions that limit their reliability, and they may provide projections that are materially different from the actual events.become even less reliable as climatic conditions change. As a result, increased levelsour forecasting efforts may generate projections that prove to be materially inaccurate. An increase in the frequency or severity of hurricanescatastrophes during a given period could materially adversely affect our financial performance, cash flows, and other storms could have a material adverse effect on our insurance operating results.II.Operating Risksbusinesses. Competitors maybusinesses, all of which are highly competitive markets. If our competitors offer consumers combinations of auto policies and othersimilar insurance products at lower prices, offer such insurance products bundled with other products or financial services that we do not offer. We could be adversely affected by the failureoffer, or engage in other successful competitive initiatives, our ability to generate new business or to retain a sufficient percentagenumber of our currentexisting customers could be seriously compromised. In addition, due to our focus on the auto insurance market, we may be more sensitive than other insurers to trends that could affect auto insurance coverages and rates over time. For example, if governmental mandates or restrictions, economic conditions, demographic trends, changing driving patterns, rising gasoline prices, advancements in vehicle technology or safety features, or other factors, were to result in decreased demand for auto insurance or decreased auto insurance rates for an extended period, the automobile insurance market as a result of competitors offering similar insurance products at lower prices or12offering bundled products or serviceswhole could shrink and by other competitor initiatives. The automobile insurance industry is a relatively mature industry, in which brand recognition, operational effectiveness (including, for example, rate and claim-paying accuracy, customer experience, and application of information technology), pricing, scale, and cost control are major competitive factors.which has been defined bywith periods of relatively strong profitability being followed by increased pricing competition among insurers. This price competition, which is sometimes referred to as a “soft market,” can adversely affect revenue and profitability levels. Unexpected increases in the insurers’ underlying costs (such as vehicle repair costs, medical costs, and the expenses to resolve claims) can further reduce profits or result in underwriting losses. As the insurers recognize this situation (which can occur at different times for different companies)companies, as a result of varying loss cost experiences, trend recognition capabilities, and profitability goals), the historical reaction has been for insurers to raise their rates (sometimes referred to as a “hard market”) in an attempt to restore profit to acceptable levels. As more insurers react in this way, profit levels in the industry may increase to a point where some insurers begin to lower their rates, starting the cycle over again. In the past, this cycle has generally played out over a number of years. We cannot determinebe certain whether and to what extent such cyclicality is currently impacting the auto insurance market, nor can we predict whether it will do so in the future.complexity. also require extensive modifications to our systems and processes, and thus may add to our costs and entail a high degree of complexity and risk, thatwhich makes their implementation a challenge. In addition, our efforts may not ultimately achieve anticipated business goals. These initiatives may also disrupt our relationships with certain of our customers and producers (i.e., agents and brokers). Many of these initiatives are also implemented in cooperation with, or in reliance on, third-party vendors and their systems, which may further limit our control of implementation, quality, customer experiences, and successful outcomes. Our efforts ultimately may not achieve the business goals that we have set. Our ability to develop and implement such strategic initiatives that are accepted and valued by our customers and create a sustainable advantage is critical, however, to maintaining or enhancing our competitive position; if we fail to do so, or if we are unable to maintain the advantage over our competition, our business could be materially adversely affected.industry. Thisindustry and adversely affect our competitive position. These developments can include product, pricing, or marketing innovations, new or improved services, technologytechnological advances, or new modesways of doing business, that enhanceamong other initiatives. Recent examples of significant developments in the customer’s abilitymarketplace include: new ways for customers to shop and compare prices from multiple companies, among other initiatives.the growth in mobile communications and consumers’ desire to transact business on mobile devices, the prominence of social media as a source of information for consumers, and the availability of very large volumes of data and the challenges related to analyzing those data sets (sometimes referred to as “big data”). Our ability to react to such advances, develop and maintain winning strategies, and then navigate the new competitive environment is also important to our success.The fast pace of change and innovation in our businesses, combined with ongoingresultsresult in significant levels of complexity in our products and in the systems and processes we use to run our business. TheThis complexity may create a barrierbarriers to implementing or defending certain new ideas or providing high-quality products and customer experiences, may require us to modify our business practices, to adopt new systems, or to upgrade or replace outdated systems, each at significant expense, and may lead to the increased possibility of error in executing our business strategies, as well asstrategies. In addition, we must make difficult management decisions regarding the optimal allocation of available resources (such as ITinformation technology resources) for multiple potentialcompeting initiatives or projects. Our inabilityresult inexperience decreased ability to compete effectively for insurance business, poor experiences for customers, substantially increased costs, liability to third parties, regulatory investigations and sanctions, poor customer experiences, and damage to our brand.theseour campaigns or efforts are unsuccessful or are less effective than those of competitors, or if our reliance on a particular spokesperson or character is compromised, our business could be materially adversely affected. also be adversely affected by incidents that reflect negatively on our company. These situations might include, among others, failing to protect sensitive customer information, systems failures, effects of cyber attacks (such as computer hacking, data theft, system disruption, and viruses and malware), errors in handling a customer’s policy, inappropriate handling of13of policyholdersmisconduct by our officers, directors or other parties,employees or others acting on our behalf, inability to service outstanding policies or write new business due to our systems failures or the failure of third-party systems that we use, facility shut-downs or other causes, litigation or regulatory actions challenging our business practices, and actions by our other business partners, including unaffiliated businesses through which we offer bundled products (such as homeowners insurance) and other business partners,, and many of the other matters that are discussed in these Risk Factors.key managers.skills necessary for us to run our business. Our loss of certain key officers and employees, or the failure to attract andor develop talented new executives and managers with diverse backgrounds and experiences, could have a materially adverse effect on our business.We further believe that ourmarketplace.marketplace, as well as our failure to recognize and respond to changing trends and other circumstances that affect our employees. In such events, the productivity of certain of our workers and the efficiency of our operations could be adversely affected, which could lead to an erosion of our operating performance and margins.a highly regulated environment.environments. Our insurance subsidiaries are subject to regulation and supervision by state insurance departments in all 50 states, the District of Columbia, and Australia, each of which has a unique and complex set of laws and regulations. In addition, certain federal laws impose additional requirements on businesses, including insurers.insurers, in a wide range of areas, such as the use of credit information, privacy, and the reimbursement of certain medical costs incurred by the government. Our insurance subsidiaries’ ability to complyimplement business plans and remain competitive while complying with these laws and regulations, at reasonable costs, and to obtain necessary regulatory action in a timely manner, is and will continue to be critical to our success.legislative and regulatory initiativesmatters concerning the use of nonpublic consumer information and related privacy issues, the use of credit scoring in underwriting, procedures for settling claims with our insureds and claimants, and efforts to freeze, set, or roll back insurance premium rates or limit the rate of return that an insurance company may earn. Insurance laws and regulations may limit, among other things, our insurance subsidiaries’ ability to underwrite and price risks accurately, prevent our subsidiaries from obtaining timely rate changes to recognize increased or decreased costs, restrict our subsidiaries’ ability to discontinue unprofitable businesses or exit unprofitable markets, prevent insurers from terminating policies under certain circumstances, prescribe the form and content of certain disclosures and notices to policyholders, and dictate the types of investments that an insurance company may hold. Moreover, inconsistencies between requirements at the state and federal level may further complicate our compliance efforts, potentially resulting in additional costs being imposed on us. In addition, laws in certain jurisdictions mandate that insurance companies pay assessments arising in a number of circumstances, including assessments to pay claims upon the insolvency of other insurance companies or to cover losses in government-provided insurance programs for high risk auto and homeowners coverages. Compliance with laws and regulations often results in increased costs, which can be substantial, to our insurance subsidiaries. These costs, in turn, may adversely affect our profitability or our ability or desire to grow or operate our business in the applicable jurisdictions. or an alleged failure to so comply, by us or other companies in the insurance, financial services, or related industries, also could result in actions or investigations by regulators, state attorneys general, federal officials, or other law enforcement officials. Such actions and investigations, and any determination that we have not complied with an applicable law or regulation, could potentially lead to significant monetary payments, fines and penalties, adverse publicity and damage to our reputation in the marketplace, and in extreme cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions. In addition, The Progressive Corporation and its subsidiaries could face individual and class action lawsuits by insureds and other parties for alleged violations of certain of these laws or regulations.In addition, fromFrom time to time, the United States Congress and certain federal agencies investigate the current condition of the insurance industry to determine whether federal regulation is necessary. For example, in 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which, in addition to imposing a number of new compliance obligations on publicly traded companies, created within the United States Department of the Treasury a new Federal Insurance Office (FIO), whose purpose is (in part) to collect collects information about the insurance industry and monitormonitors the industry for systemic risk. IfIn December 2013, the FIO weresubmitted a report to recommendCongress recommending reforms intended to modernize and improve the new Financial Stability14Oversight Council (also created by the Dodd-Frank Act)U.S. system of insurance regulation. The report proposes significant changes to existing state regulations and includes a number of recommendations that we are “systemically significant” and therefore require additionalwould result in direct federal regulation or thatof the insurance industry as a whole should be regulated at the federal level, our businesses could be affected significantly. Weindustry. At this time, we are unable to predict whether any additional state or federal laws or regulations will be enacted as a result of the FIO report, or as a result of other legislative, regulatory or reform efforts, and how and to what extent such laws and regulations would affect our businesses.56 of this report.successeffectiveness of our concierge level claims services program.service center program and other methods of resolving claims. Our failure to pay claims fairly, accurately, and in a timely manner, or to deploy claims resources appropriately, could result in unanticipated costs to us, lead to material litigation, undermine customer goodwill and our reputation in the marketplace, and impair our brand image and, as a result, materially adversely affect our competitiveness, financial results, prospects, and liquidity.includehave recently included cases alleging damages as a result of our subsidiaries’ use of credit in underwriting and related requirements under the U.S. federal Fair Credit Reporting Act; methods used for evaluating and paying certain bodily injury, personal injury protection, and medical payment claims; other claims handling procedures; challenges to our direct repair program and service center program; interpretations of the provisions of our insurance policies; and policy implementation and renewal procedures,procedures; and employment-related litigation, including federal wage and hour claims, among other matters. From time to time, we also may be involved in litigation or other disputes alleging that certain of our subsidiaries’ business practices or systems violate the patent, trademark, or other intellectual property rights of third parties. Additional litigation may be filed against us concerning our employment-related practices, allegations of medical or attorney malpractice, and other general liability causes of action arising from our operations. In addition, lawsuits have been filed, and other lawsuits may be filed in the future, against our competitors and other businesses, and although we are not a party to such litigation, the results of those cases may create additional risks for, and/or impose additional costs and/or limitations on, our subsidiaries’ business operations.damages.damages and injunctive relief. The potential for injunctive relief can threaten our use of important business practices, including how vehicles are repaired and other claims are settled. Moreover, the resolution of individual or class action litigation in insurance or related fields may lead to a new layer of court-imposed regulation, resulting in material increases in our costs of doing business.–- Litigation in our Annual Report, which is included as Exhibit 13 to this Form 10-K.(such as computer hacking, data theft, system disruption, and viruses and malware)(as discussed above), riots, hazardous material releases, medical epidemics, utility outages, or interruptions of our data processing and storage systems andor the systems of third-party vendors, or unavailability of communications facilities. Likewise, we could experience a failure or corruption of one or more of our information technology, telecommunications, or other systems for various reasons, including failures that might occur as existing systems are replaced or upgraded.becausemany of our information technology and telecommunicationscritical business systems interface with and depend on third-party systems,systems; we could experience service denials if demand for such servicea third party’s services exceeds capacity or if a third-party system fails or experiences an interruption. If sustained or repeated, and if an alternate system, process, or vendor is not immediately available to us, such a business interruption, system failure, or service denialevents could result in a deterioration of our ability to write and process new and renewal business, provide customer service, resolve and pay claims in a timely manner, or perform other necessary business functions. ThisAny such event could result in a materially adverse effect on our business results, prospects, and liquidity, as well as damage to customer goodwill.15A security breach of our computer systems or other operations could also interrupt or damage our operations; infect, corrupt, or destroy data or systems; subject us to liability if confidential customer information is misappropriated; and significantly damage our reputation. Despite the implementation of security measures, including hiring an independent firm to perform intrusion vulnerability testing of our computer systems, these systems may be vulnerable to physical or electronic break-ins, computer viruses, programming errors, insider threats, attacks by third parties, or similar disruptive problems. Any compromise of security could deter people from entering into transactions that involve transmitting confidential information to our systems, which could have a material adverse effect on our business.We rely heavily on credit card acceptance for premium payment and settlement of claims deductibles. Data security standards for merchants and service providers that accept credit card payments are prescribed by the Payment Card Industry Security Standards Council (PCI), an independent body formed by an association of the major credit card vendors. These standards are intended to promote a common set of data security measures to help ensure the safe handling of sensitive information by companies accepting credit card payments. Satisfaction of the PCI standards does not ensure that sensitive information will be maintained on a secure basis, but it is required to do business with the credit card companies. In September 2010, an independent organization recognized by PCI for such purposes certified Progressive as being in compliance with the current PCI standards. The PCI data security standards, however, will likely evolve over time to address emerging payment security risks and other issues, requiring additional compliance efforts by us and recertification of our processes. Our intention is to maintain compliance with PCI’s data security standards. The failure to do so could result in contractual fines or disruption of our ability to receive credit card payments.III.Market Risks•Interest rate risk – the risk of adverse changes in the value of fixed-income securities as a result of increases in market interest rates.•Investment credit risk – the risk that the value of certain investments may decrease in value due to the deterioration in financial condition of, or the liquidity available to, one or more issuers of those securities or, in the case of asset-backed securities, due to the deterioration of the loans or other assets that underlie the securities, which, in each case, also includes the risk of permanent loss.•Concentration risk – the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors, or industries, which could result in a significant decrease in the value of the portfolio in the event of a deterioration of the financial condition or performance of, or outlook for, those issuers, sectors, or industries.•Prepayment or extension risk (applicable to certain securities in the portfolio, such as residential mortgage-backed securities) – the risk that, as interest rates change, the principal of such securities may be repaid earlier than anticipated, or that a security may not be redeemed when anticipated, adversely affecting the value of, or income from, such securities and the portfolio by investing at less attractive rates.•Liquidity risk – the risk that we will not be able to convert investment securities into cash on favorable terms and on a timely basis, or that we will not be able to sell them at all, when we desire to do so. Disruptions in the financial markets, or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us.lack of transparency regardingdeterioration in the underlying businesses of the issuers of the securities that we purchase; credit ratings assigned to such securities by nationally recognized creditsecurities rating agenciesorganizations are based on incomplete or inaccurate information or otherwise prove unwarranted; or our risk mitigation strategies are ineffective for the applicable market conditions.which is primarily managed by a third party to track the Russell 1000 Index, iswith a small portion actively managed by external investment advisory firms. Our equity investments are subject to general movements in the values of equity markets and to the changes in the prices of the securities we hold. An investment portfolio that is designed to track an index, such as the Russell 1000, or that follows a specific investment discipline, such as value investing, does not reduce the risks inherent in equity investing and is not necessarily less risky than other equity investment strategies. Equity markets, sectors, industries, and individual securities may be subject to high volatility and to long periods of depressed or declining valuations, and also may be subject to some of the same risks that affect our fixed-income portfolio, as discussed above. For example, a rapid rise in interest rates may cause equity prices to fall, particularly those of16interest-sensitive companies. In addition, even though the Russell 1000 Index is broadly diversified, significant portions of the index may be concentrated in one or more sectors, such as theenergy, technology, or financial services, industry, which may adversely affect the performance of our common equity portfolio if such a sector underperforms. A decline in the aggregate value of the equities that make up the index would be expected to result in a commensurate decline both in the value of our common equity portfolio and in our capital.adverse developmentsdevelopment in either the U.S. or other economies that adversely affects the value of securities held in our portfoliossubstantivesubstantiated or not causing the market to react irrationallystagflation,the perception that such a default is likely, andeventscompany’ssubsidiary’s investment portfolio could also put the subsidiary at risk of failing to satisfy regulatory minimum capital requirements and could limit the subsidiary’s ability to write new business. If we, at that time, are unable to supplement the subsidiary’s capital from The Progressive Corporation’s other assets or by issuing debt or equity securities on acceptable terms, our business could be materially adversely affected.20102013, and onof the market risk associated with our investment portfolio.IV.Credit Riskshardship,difficulties, or default in the performance of contractual obligations.acquisitionsacquisition of goods and services (such as telecommunications and information technology facilities, equipment and support, and other systems and services that are integral to our operations), agreements with other insurance carriers to bundle products that we do not offer, and arrangements for transferring certain of our risks (including reinsurance used by us in connection with certain of our insurance products and our corporate insurance policies). In addition, from time to time, we enter into significant financial transactions, such as derivative instruments, with major banks or other financial institutions. If one or more of these parties were to default in the performance of their obligations under their respective contracts or determine to abandon or terminate support for a system, product, or service that is significant to our business, we could suffer significant financial losses and operational interruptions or other problems, which could in turn could adversely affect our financial performance, cash flows, or results of operations and cause damage to our brand and reputation.pay dividends to shareholders, repay indebtedness, or make capital contributions to its other subsidiaries or affiliate.17pay dividends to shareholders, make payments on its indebtedness, meet its other obligations, repurchase its common shares, or make capital contributions to or otherwise fund its subsidiaries or affiliate.affiliates, pay dividends to shareholders, repurchase its common shares or other securities, or meet its other obligations. Each insurance subsidiary’s ability to pay dividends to the holding company may be limited by one or more of the following factors:Insuranceinsurance regulatory authorities require insurance companies to maintain specified minimum levels of statutory capital and surplusInsuranceinsurance regulations restrict the amounts available for distribution based on either net income or surplus of the insurance companyCompetitivecompetitive pressures require our insurance subsidiaries to maintain high financial strength ratings,Inin certain jurisdictions, prior approval must be obtained from regulatory authorities for the insurance subsidiaries to pay dividends or make other distributions to affiliated entities, including the parent holding companywhichthat may limit the ability of our insurance subsidiaries to pay dividends can be found in Item 5(c), “Dividends,” of this report.The appropriate level ofManagement determines our capital needs at any given time is estimated by management based in part, on a number of factors, including:business resultsperformance of our insurance operations and investment portfolios are continually enhanced, our ability to predict accurately the nature, size, and scope of unexpected events is inherently uncertain.Theany given time is determined by the performance of our insurance operations and investment results (including investment income, valuation changes in our portfolio, and the realization of any deferred tax benefits), as well as by our capital management activities, such as the payment of cash dividends, repurchases of our common shares and debt securities, the establishment of credit lines, and the issuance by us of debt, equity, or other securities. Ifsubsidiaries. Also, if we experience losses in our insurance operations or from our investment portfolio, our capital levels may be reduced, perhaps significantly. If our capital level turns out to befalls lower than the amount needed at a given time, our ability to grow and successfully operate the insurance business could be constrained, and our flexibility to pay dividends, repurchase our securities, or engage in other corporate transactions could be limited, until additional sources of capital are secured. Such a deterioration of our financial condition could adversely affect the perception of our company by insurance regulators and other third parties (such as rating agencies, underwriters, institutional and other investors, and consumers), potentially resulting in regulatory actions or our customers), and as a result, our abilityinability to gain access to debt or equity markets at favorable rates, could be adversely impacted, and the price of our common shares or debt securities could fall significantly.isare evaluated and rated by various rating agencies, such as Standard & Poor’s, Moody’s Investors Service, Fitch Ratings, and A.M. Best. Progressive and its insurance subsidiaries currently enjoy favorable, stable ratings. Downgrades in our credit ratings could adversely affect our ability to access the capital markets and/or lead to increased borrowing costs in the future (although the interest rates we pay on our current indebtedness would not be affected), as would adverse recommendations by equity analysts at the various brokerage houses and investment firms. Perceptions of our company by investors, producers, other businesses, and consumers could also be significantly impaired. In addition, a downgrade could trigger contractual obligations in certain derivative transactions requiring us to post substantial amounts of collateral, in cash or high-grade assets, for the benefit of the other party to the transaction, or allow the other party to liquidate the derivatives transaction. Downgrades in the ratings of our insurance subsidiaries could likewise negatively impact our operations, potentially resulting in lower or negative premium growth. In any such event, our financial performance could be materially adversely affected.changed.(25%(33-1/3% for 20102013 and 33-1/3% for182011)2014) and then by the Gainshare factor (determined under our employee Gainsharing (cash bonus) plans based on the operating performance of our principal insurance businesses). ToIf our Gainshare factor for the extent ouryear is zero or after-tax comprehensive income (which includes net investment income, realized investment gains and losses, and the change in unrealized investment gains and losses) is less than after-tax underwriting income, no dividend will be paid under our annual variable dividend policy.20112014 (to be paid early in 2012)2015), the dividend, if any, would not be declared by the Board until late 20112014 or early 2012,2015, and the Board could decideretains the discretion, at any time, to alter our policy or not to pay the annual dividend for 20112014 or future years. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in U.S. federal income tax laws, or disruptions of national or international capital markets, or other events affecting our liquidity, or financial position or prospects, as described above under “Investing“Market Risks.” Any such change could adversely affect investors’ perceptions of the company and the value of, or the total return of an investment in, our common shares or debt securities.position,performance, while understanding that such strategies may not always similarly benefit short-term performance,results, such as our annual underwriting profit or earnings per share. Such strategies, for example, may involve a reduction in premiums for certain products or customers, or increases in advertising spend, to support growth or enhance retention of current customers. Consequently, these strategies may adversely affect short-term performance or the amount of our variable dividend for a given year, and may result in additional volatility in the price of our common shares or debt securities.ITEM 1B.UNRESOLVED STAFF COMMENTS19ITEM 2.PROPERTIESservice centersService Centers that provide our concierge level of claims service.7182 buildings located throughout the United States.States, including 51 Service Centers. These facilities, which contain approximately 4.14.4 million square feet of space, are not segregated by industry segment.3.62.4 million square feet of space throughout the United States and one location in Australia. These leases are generally short-term to medium-term leases of commercial space.In addition to our corporate headquarters and another office complex and call center in Mayfield Village, Ohio, we have significant locations in Colorado Springs, Colorado; Tampa, Florida; and Tempe, Arizona.ITEM 3.LEGAL PROCEEDINGS For a discussion of litigation we currently face, seeNote 12 - Litigationin our Annual Report, which is included as Exhibit 13 to this Form 10-K.ITEM 4.REMOVED AND RESERVED20ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Quarter High Low Close Dividends
Declared
Per Share 1 $ 19.69 $ 16.18 $ 19.09 $ 0 2 20.94 18.67 18.72 0 3 21.59 18.41 20.87 0 4 22.13 19.54 19.87 1.3987 $ 22.13 $ 16.18 $ 19.87 $ 1.3987 1 $ 15.24 $ 9.76 $ 13.44 $ 0 2 17.00 13.00 15.11 0 3 17.50 14.12 16.58 0 4 18.10 15.90 17.99 .1613 $ 18.10 $ 9.76 $ 17.99 $ .1613 Year Quarter High Low Close 2013 1 $ 25.38 $ 21.36 $ 25.27 $ 0 2 26.39 23.99 25.42 0 3 27.55 24.86 27.23 0 4 28.54 25.81 27.27 1.4929 $ 28.54 $ 21.36 $ 27.27 $ 1.4929 2012 1 $ 23.37 $ 19.01 $ 23.18 $ 0 2 23.41 20.22 20.83 0 3 21.28 19.17 20.74 0 4 23.19 20.68 21.10 1.2845 $ 23.41 $ 19.01 $ 21.10 $ 1.2845 Common Sharescommon shares on February 15, 2011,January 31, 2014, was $20.16.There were 3,7032010.See the table above for the frequency and amount of cash dividends declared on our Common Shares, $1.00 par value, for the last two years.Progressive maintainsdeclaringpaying an annual variable dividend that, if declared, would be payable shortly after the close of the year. TheThis annual variable dividend is based on a formula that multiplies our annual after-tax underwriting income by a target percentage factor and then by a companywide performance factor (known as our Gainshare factor). The Board determined the target percentage of after-tax underwriting income multiplied by a companywide performance factor (“Gainshare factor”), subject to the limitations discussed below. The target percentage is determined by our Board of Directors on an annual basis and announced to shareholders and the public. For 2013, the Board determined the target percentage to be 20% for 200833-1/3% of annual after-tax underwriting income, which is unchanged from the target percentage in both 2012 and 2009 and 25% for 2010.2011. The Board increasedalso determined that this target towill remain at 33-1/3% for 2011. 2014.in our insurance businesses. The Gainshare factor is also used in connection with our cash bonus program for employees and is approved by the Compensation Committee of the Board annually.Board. This Gainshare factor is also used in the annual cash incentive program currently in place for our employees (our “Gainsharing program”). Although recalibrated every year, the structure of the Gainsharing program generally remains the same. Our annual variable dividend program iswill result in a variable payment to shareholders each year, subject to certain limitations. To the extentIf the Gainshare factor is zero or if after-taxour comprehensive income (net income plus the after-tax change in unrealized gains (losses) during the period, among other items) is less than after-tax underwriting income, no dividend would be payable under our annual variable dividend will be paid.20112014 or future years, at any time prior to the declaration of the dividend for the year. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in federal income tax laws, disruptions of national or international capital markets, or other events affecting our business, liquidity, or financial position. In December 2010,2013, the Board of Directors declared an annual variable dividend, which was paid in February 20112014 to shareholders of record at the close of business on January 27, 2011.29, 2014. The amount of the dividend was $.3987$.4929 per common share, or $263.8$293.9 million. The 20092012 annual variable dividend was declared by the Board in December 2012 and paid to shareholders in February 2013; the total amount of dividends was $172.0 million, or $.2845 per common share. The 2011 annual dividend was declared by the Board in December 20092011 and paid to shareholders in February 2010;2012; the total amount of dividends was $108.4$249.4 million, or $.1613$.4072 per common share. No dividend was paid for 2008 because we reported an after-tax comprehensive loss. 2010,February 2014 (declared in December 2013) and November 2012 (declared in October 2012), we returned $663.2$596.3 million and $604.7 million, respectively, to shareholders via an extraordinaryspecial cash dividenddividends of $1.00 per share.21To the extent we elect to defer the payment of interest on our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067, we may be restricted from declaring any dividends. SeeNote 4 – Debtin our Annual Report, which is included as Exhibit 13 to this Form 10-K for further discussion. Our intent is to pay interest on the Debentures as and when due.policyholders’ surplus was $5.1$6.0 billion on December 31, 2010,2013, and $5.0$5.6 billion on December 31, 2009.2012. At December 31, 2010, $454.92013, $524.8 million of consolidated statutory policyholders’ surplus represented net admitted assets of Progressive’s insurance subsidiaries and affiliate that are required to meet minimum statutory surplus requirements in such entities’ states of domicile. Generally, the net admitted assets of insurance companies that, subject to other applicable insurance laws and regulations, are available for transfer to the parent company cannot include the net admitted assets required to meet the minimum statutory surplus requirements of the states where the companies are licensed. The companies may be licensed in states other than their states of domicile, however, which may have higher minimum statutory surplus requirements. Based on the dividend laws currently in effect, the insurance subsidiaries could pay aggregate dividends of $949.8$1,169.7 million in 20112014 without prior approval from regulatory authorities, provided the dividend payments are not made within 12 months of previous dividends paid by the applicable subsidiary.The followingis set forth with respect toabout securities authorized for issuance under our equity compensation plans at December 31, 2010. Number of
Securities to be
Issued upon Exercise
of Outstanding
Options, Warrants
and Rights Weighted-Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights Cumulative Number
of Securities Awarded
as Restricted
Stock or issued upon
vesting of Restricted
Stock Units Number of Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans 0 $ 0 0 18,000,000 2,793,865 1 NA 15,990,908 2,328,180 1,916,416 3 11.31 1,402,320 0 4,710,281 11.31 17,393,228 20,328,180 0 0 653,282 757,201 120,125 10.34 0 0 120,125 10.34 653,282 757,201 4,830,406 $ 11.25 4 18,046,510 21,085,381 NA = Not Applicable1Represents restricted stock unit awards, under which, upon vesting, the holder has the right to receive common shares on a one-to-one basis; there is no exercise price associated with restricted stock unit awards. The total is comprised of 2,276,695 time-based units and performance-based awards, at target value, in the amount of 517,170 units, in each case including reinvested dividend equivalent units. The performance-based awards outstanding can vest from 0-200% of the target award value based on the achievement of predetermined performance goals.2These plans have expired and no further awards may be made thereunder.3Represents stock options outstanding, all of which expire, if not exercised prior to December 31, 2011.4The weighted average price does not include restricted stock unit awards.22 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 501,837 $ 21.13 20,945,441 29,054,559 475,000 20.85 21,420,441 28,579,559 1,609,070 20.21 23,029,511 26,970,489 2,585,907 $ 20.51 Progressive’s financial policies state that we will repurchase shares to neutralize dilution from equity-based compensation in the year of issuance and to return underleveraged capital to investors. SeeNote 9 - Employee Benefit Plans, “Incentive Compensation Plans” in our Annual Report, which is included as Exhibit 13 to this Form 10-K, for a summary of our restricted equity grants.ISSUER PURCHASES OF EQUITY SECURITIES 2013 Calendar Month October 102,773 $ 26.12 39,799,053 35,200,947 November 150,168 25.96 39,949,221 35,050,779 December 4,000,000 25.50 43,949,221 31,050,779 Total 4,252,941 $ 25.53 2009,2011, the Board approved an authorization to repurchase up to 5075 million of our common shares. Thisshares; this Board authorization does not have an expiration date. Shares repurchasedShare repurchases under this authorization may be accomplished through open market purchases, privately negotiated transactions, or otherwise, and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. In the fourth quarter 2010, allThe October and November repurchases were accomplished through the open market or in conjunction with our incentive compensation plans at the then currentthen-current market price.prices. December's repurchase was a privately negotiated transaction.ITEM 6.SELECTED FINANCIAL DATA For the years ended December 31, 2010 2009 2008 2007 2006 $ 14,963.3 $ 14,563.6 $ 12,840.1 $ 14,686.8 $ 14,786.4 1,068.3 1,057.5 (70.0 ) 1,182.5 1,647.5 1.61 1.57 (.10 ) 1.65 2.10 1.3987 .1613 0 2.1450 .0325 1,398.8 1,752.2 (614.7 ) 1,071.0 1,853.1 21,150.3 20,049.3 18,250.5 18,843.1 19,482.1 1,958.2 2,177.2 2,175.5 2,173.9 1,185.5 1For 2008, amount represents basic earnings per share, since diluted earnings per share was antidilutive due to the net loss for the year.23 For the years ended December 31, 2013 2012 2011 2010 2009 Total revenues $ 18,170.9 $ 17,083.9 $ 15,774.6 $ 15,215.5 $ 14,791.1 Net income 1,165.4 902.3 1,015.5 1,068.3 1,057.5 Per share: Net income 1.93 1.48 1.59 1.61 1.57 Dividends 1.4929 1.2845 .4072 1.3987 .1613 Comprehensive income 1,246.1 1,080.8 924.3 1,398.8 1,752.2 Total assets 24,408.2 22,694.7 21,844.8 21,150.3 20,049.3 Debt outstanding 1,860.9 2,063.1 2,442.1 1,958.2 2,177.2 ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A.CONTROLS AND PROCEDURESITEM 9B.OTHER INFORMATION24ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE20112014 Annual Meeting of Shareholders of the Registrant, is incorporated herein by reference from the section entitled “Item 1: Election of Directors” in the Proxy Statement. Glenn M. Renwick 5558 Chairman of the Board since November 2013; President, and Chief Executive Officer Brian C. Domeck 5154 Vice President and Chief Financial Officer beginning in March 2007; Demand Manager of the Direct Business prior to January 2007Charles E. Jarrett 5356 Vice President, Secretary, and Chief Legal Officer Thomas A. King 5154 Vice President and Treasurer Jeffrey W. Basch 5255 Vice President and Chief Accounting Officer John A. Barbagallo 5154 Commercial Lines Group President, including Agency Operations since September 2007; Agency Group President from May 2006 to September 2007; Agency Business General Manager of the Atlantic Region prior to May 2006M. Jeffrey Charney 5154 Chief Marketing Officer since November 2010; Senior Vice President and Chief Marketing Officer of Aflac Incorporated from November 2008 to October 2010; Senior Vice President and Chief Marketing Officer of QVC, Inc. prior to November 20082010 William M. Cody 4851 Chief Investment Officer Susan Patricia Griffith 4649 Claims Group President since March 2008; Chief Human Resource Officer prior to March 2008Valerie Krasowski 4548 Chief Human Resource Officer since August 2008; Special Lines General Manager from March 2006 to August 2008; Director of Regional Marketing prior to March 2006John P. Sauerland 4649 Personal Lines Group President since September 2007; Direct Group President from June 2006 to September 2007; Claims General Manager of the Midwest Region prior to June 2006Raymond M. Voelker 4750 Chief Information Officer 25Incorporated by reference from the “Section 16(a) Beneficial Ownership Reporting Compliance” section of the Proxy Statement.None.Web sitewebsite at: progressive.com/governance.2010.2013. The description of those procedures is incorporated by reference from the “Shareholder-Proposed Candidate Procedures” section of the Proxy Statement (which can be found in “Other Board of Directors Information”).Expert”Experts” section of the Proxy Statement (which can be found in “Audit Committee”).ITEM 11.EXECUTIVE COMPENSATIONITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSEQUITY COMPENSATION PLAN INFORMATION Plan Category Equity compensation plans approved by security holders: 2010 Equity Incentive Plan 6,731,324 NM 11,139,779 1,342,067 NM 0 Subtotal Employee Plans 8,073,391 NM 11,139,779 2003 Directors Equity Incentive Plan 0 $ 0 476,884 Subtotal Director Plans 0 $ 0 476,884 Equity compensation plans not approved by security holders: None Total 8,073,391 NM 11,616,663 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation”Information,” subsections “Board of Directors Independence Determinations” and “Certain Relationships and Related Transactions.”ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES26ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a)(1)Listing of Financial Statements20102013 Annual Report, which is included as Exhibit 13 to this Form 10-K, are incorporated by reference in Item 8:2010, 2009,2013, 2012, and 2008201120102013 and 200920122010, 2009,2013, 2012, and 20082010, 2009,2013, 2012, and 20082011(a)(2)Listing of Financial Statement Schedules(a)(3)Listing of Exhibits40.46. Management contracts and compensatory plans and arrangements are identified in the Exhibit Index as Exhibit Nos. 10.310.4 through 10.67.(b)Exhibits(c)Financial Statement Schedules27 December 31, 2013 Type of Investment Cost Fair Value Available-for-sale Fixed maturities: Bonds: United States Government and government agencies and authorities $ 3,630.4 $ 3,662.2 $ 3,662.2 States, municipalities, and political subdivisions 2,247.3 2,256.0 2,256.0 Foreign government obligations 15.6 15.6 15.6 Public utilities 96.3 100.0 100.0 Corporate and other debt securities 2,788.7 2,826.6 2,826.6 Asset-backed securities 4,337.5 4,366.1 4,366.1 Redeemable preferred stocks 299.5 313.9 313.9 Total fixed maturities 13,415.3 13,540.4 13,540.4 Equity securities: Common stocks: Public utilities 106.7 156.4 156.4 Banks, trusts, and insurance companies 208.1 332.4 332.4 Industrial, miscellaneous, and all other 1,136.3 2,041.7 2,041.7 Nonredeemable preferred stocks 445.7 711.2 711.2 Total equity securities 1,896.8 3,241.7 3,241.7 1,272.6 1,272.6 1,272.6 Total investments $ 16,584.7 $ 18,054.7 $ 18,054.7 (millions) December 31, 2010 Cost Fair Value Amount At
Which
Shown In
The
Balance
Sheet $ 3,203.2 $ 3,242.6 $ 3,242.6 1,955.5 1,989.1 1,989.1 145.0 144.5 144.5 2,434.0 2,501.6 2,501.6 3,403.1 3,469.7 3,469.7 490.0 502.5 502.5 11,630.8 11,850.0 11,850.0 81.8 107.3 107.3 153.5 199.5 199.5 786.4 1,118.2 1,118.2 601.3 1,157.6 1,157.6 1,623.0 2,582.6 2,582.6 1,090.8 1,090.8 1,090.8 $ 14,344.6 $ 15,523.4 $ 15,523.4 2010.28 Years Ended December 31, 2013 2012 2011 Revenues Dividends from subsidiaries $ 1,119.7 $ 782.3 $ 875.3 Undistributed income (loss) from subsidiaries 117.5 193.1 225.7 Equity in net income of subsidiaries* 1,237.2 975.4 1,101.0 Intercompany investment income* 2.8 6.1 5.6 Gains (losses) on extinguishment of debt (4.3 ) (1.8 ) (.1 ) 2.6 0 0 Total revenues 1,238.3 979.7 1,106.5 Expenses Interest expense 121.2 126.3 138.0 9.5 5.5 .4 Other operating costs and expenses 4.0 3.7 4.7 Total expenses 134.7 135.5 143.1 Income before income taxes 1,103.6 844.2 963.4 Provision (benefit) for income taxes (61.8 ) (58.1 ) (52.1 ) Net income $ 1,165.4 $ 902.3 $ 1,015.5 Other comprehensive income (loss) 80.7 178.5 (91.2 ) Comprehensive income $ 1,246.1 $ 1,080.8 $ 924.3 (millions) Years Ended December 31, 2010 2009 2008 $ 1,216.2 $ 1,230.6 $ 300.5 (73.5 ) (78.7 ) (304.2 ) 1,142.7 1,151.9 (3.7 ) 6.6 8.5 41.3 6.4 0 0 1,155.7 1,160.4 37.6 139.5 146.4 146.3 4.3 4.8 (5.7 ) 3.9 3.3 3.4 147.7 154.5 144.0 1,008.0 1,005.9 (106.4 ) (60.3 ) (51.6 ) (36.4 ) $ 1,068.3 $ 1,057.5 $ (70.0 ) *Eliminated in consolidation.1SeeNote 4 – Employee Benefit Plans in these condensed financial statements.29 December 31, 2010 2009 $ 1.0 $ 1.0 5,984.8 5,680.8 2,120.2 2,242.2 179.1 125.0 48.7 36.5 70.2 65.5 $ 8,404.0 $ 8,151.0 $ 132.8 $ 116.7 264.1 108.5 1,958.2 2,177.2 2,355.1 2,402.4 662.4 672.6 1,007.1 939.7 3,595.7 3,683.1 783.7 453.2 6,048.9 5,748.6 $ 8,404.0 $ 8,151.0 *Eliminated in consolidation. December 31, 2013 2012 Assets Investment in affiliate $ 5.0 $ 1.0 Investment in subsidiaries* 6,923.5 6,648.6 Receivable from investment subsidiary* 1,648.4 1,322.9 Intercompany receivable* 307.6 296.2 Net deferred income taxes 69.1 48.3 Other assets 141.8 82.0 Total Assets $ 9,095.4 $ 8,399.0 Liabilities and Shareholders’ Equity Accounts payable, accrued expenses, and other liabilities $ 154.8 $ 156.9 Dividend payable 890.2 172.0 Debt 1,860.9 2,063.1 Total liabilities 2,905.9 2,392.0 Common shares, $1.00 par value (authorized 900.0; issued 797.6 and 797.7, including treasury shares of 201.8 and 193.1) 595.8 604.6 Paid-in capital 1,142.0 1,077.0 Retained earnings 3,500.0 3,454.4 Total accumulated other comprehensive income 951.7 871.0 Total shareholders’ equity 6,189.5 6,007.0 Total Liabilities and Shareholders’ Equity $ 9,095.4 $ 8,399.0 30 Years Ended December 31, 2010 2009 2008 $ 1,068.3 $ 1,057.5 $ (70.0 ) 73.5 78.7 304.2 2.4 1.8 1.8 (6.4 ) 0 0 (54.1 ) (22.0 ) (18.6 ) 7.3 12.5 (31.2 ) (12.2 ) 31.1 (21.6 ) (1.9 ) (5.6 ) 27.4 1,076.9 1,154.0 192.0 (3.5 ) (152.4 ) (270.1 ) 122.0 (849.5 ) 317.7 118.5 (1,001.9 ) 47.6 27.2 18.8 27.0 14.0 9.7 11.1 (214.3 ) 0 0 (763.7 ) 0 (98.3 ) (258.6 ) (180.6 ) (179.4 ) (1,195.4 ) (152.1 ) (239.6 ) 0 0 0 0 0 0 $ 0 $ 0 $ 0 Years Ended December 31, 2013 2012 2011 Cash Flows From Operating Activities: Net income $ 1,165.4 $ 902.3 $ 1,015.5 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed (income) loss from subsidiaries (117.5 ) (193.1 ) (225.7 ) Amortization of equity-based compensation 2.1 2.0 2.1 (Gains) losses on extinguishment of debt 4.3 1.8 .1 Changes in: Intercompany receivable (11.4 ) (58.6 ) (58.5 ) Accounts payable, accrued expenses, and other liabilities 19.4 .3 4.5 Income taxes (55.8 ) 21.7 (3.4 ) Other, net (16.3 ) (9.9 ) 4.2 Net cash provided by operating activities 990.2 666.5 738.8 Cash Flows From Investing Activities: Additional investments in equity securities of consolidated subsidiaries (13.9 ) (36.1 ) (11.8 ) Investment in affiliate (4.0 ) 0 0 (Paid to) received from investment subsidiary (325.5 ) 773.7 23.6 Net cash provided by (used in) investing activities (343.4 ) 737.6 11.8 Cash Flows From Financing Activities: Proceeds from exercise of stock options 0 .5 22.4 Tax benefit from exercise/vesting of equity-based compensation 10.3 5.8 6.4 Net proceeds from debt issuance 0 0 497.0 Payment of debt (150.0 ) (350.0 ) 0 Reacquisition of debt (58.1 ) (32.5 ) (15.0 ) Dividends paid to shareholders (175.6 ) (853.7 ) (263.6 ) Acquisition of treasury shares (273.4 ) (174.2 ) (997.8 ) Net cash used in financing activities (646.8 ) (1,404.1 ) (750.6 ) Change in cash 0 0 0 Cash, beginning of year 0 0 0 Cash, end of year $ 0 $ 0 $ 0 31Thethe Progressive Corporation and its subsidiaries’ Annual Report to Shareholders,, which is included as Exhibit 13 to this Form 10-K.both year-end 20102013 and 2009, $2.22012, $1.8 billion and $1.4 billion, respectively, of marketable securities were available in this company. Non-cash activity includes declared but unpaid dividends, and the contribution from The Progressive Corporation of its common shares to certain subsidiaries, subject to restricted stock awards granted to employees.dividends. For the years ended December 31, we paid the following: 2010 2009 2008 $ 434.0 $ 461.7 $ 258.0 138.4 144.7 144.7 (millions) 2013 2012 2011 Income taxes $ 497.0 $ 389.1 $ 435.0 Interest 122.3 135.0 129.5 IncomeThe consolidated group’s net income taxes currently payable/recoverable are included in other liabilities/assets, respectively, in the accompanying Condensed Balance Sheets are comprisedbased on the balance at the end of the parent company’s net deferred tax assets and the consolidated group’s net income taxes payable/recoverable.year. The Progressive Corporation and its subsidiaries have adopted, pursuant to a written agreement, a method of allocating consolidated federal income taxes. Amounts allocated to the subsidiaries under the written agreement are included in “Intercompany Receivable” in the accompanying Condensed Balance Sheets.-– Employee Benefit Plans in our Annual Report, which is included as Exhibit 13 to this Form 10-K.ReclassificationsOther Comprehensive Income — In 2010,On the condensed Statements of Comprehensive Income, other comprehensive income (loss) represents activity of the subsidiaries of The Progressive Corporation has correctly presented undistributed incomeand includes net unrealized gains (losses) on securities, net unrealized gains on forecasted transactions, and foreign currency translation adjustments.subsidiariesNote 14 – Dividends in our Annual Report, which is included as part of total revenues in the Condensed Statements of Income and has revised the prior years’ statementsExhibit 13 to conform with this presentation. There was no effect on total net income (loss).Form 10-K.32Segment
policy
acquisition costs1
policy
benefits,
losses,
claims,
and
loss expenses1
policy
claims
and
benefits payable1 Premium revenue
investment income1,2 Benefits,
claims,
losses, and
settlement expenses Amortization
of deferred
policy
acquisition costs Other
operating expenses
premiumsYear ended December 31, 2013: Personal Lines $ 15,341.6 $ 11,194.6 $ 1,257.5 $ 2,149.2 $ 15,569.2 Commercial Lines 1,761.6 1,267.3 194.3 201.2 1,770.5 Other indemnity .2 10.5 0 .5 0 Total $ 447.6 $ 8,479.7 $ 5,174.5 $ 0 $ 17,103.4 $ 403.2 $ 12,472.4 $ 1,451.8 $ 2,350.9 $ 17,339.7 Year ended December 31, 2012: Personal Lines $ 14,368.1 $ 10,745.3 $ 1,250.4 $ 2,010.5 $ 14,636.8 Commercial Lines 1,649.0 1,196.6 186.2 195.2 1,735.9 Other indemnity .9 6.1 0 .6 0 Total $ 434.5 $ 7,838.4 $ 4,930.7 $ 0 $ 16,018.0 $ 427.6 $ 11,948.0 $ 1,436.6 $ 2,206.3 $ 16,372.7 Year ended December 31, 2011: Personal Lines $ 13,431.1 $ 9,615.2 $ 1,231.9 $ 1,915.6 $ 13,612.2 Commercial Lines 1,467.1 1,010.7 166.6 171.9 1,534.3 Other indemnity 4.6 8.9 .7 .5 .1 Total $ 433.6 $ 7,245.8 $ 4,579.4 $ 0 $ 14,902.8 $ 466.5 $ 10,634.8 $ 1,399.2 $ 2,088.0 $ 15,146.6 (millions)Progressive does not allocate assets, liabilities, or investment income to operating segments. Deferred
policy
acquisition
costs1 Future
policy
benefits,
losses,
claims,
and loss
expenses1 Unearned
premiums1 Other
policy
claims
and
benefits
payable1 Premium
revenue Net
investment
income1,2 Benefits,
claims,
losses, and
settlement
expenses Amortization
of deferred
policy
acquisition
costs Other
operating
expenses Net
premiums
written $ 12,826.9 $ 9,159.6 $ 1,188.1 $ 1,587.1 $ 13,024.4 1,474.2 958.6 167.9 162.7 1,449.5 13.7 13.1 3.9 (9.7 ) 2.9 $ 417.2 $ 7,071.0 $ 4,353.8 $ 0 $ 14,314.8 $ 508.2 $ 10,131.3 $ 1,359.9 $ 1,740.1 $ 14,476.8 $ 12,365.9 $ 8,847.0 $ 1,171.6 $ 1,410.2 $ 12,453.1 1,623.3 1,050.7 187.0 155.8 1,533.9 23.6 7.2 6.0 1.7 15.9 $ 402.2 $ 6,653.0 $ 4,172.9 $ 0 $ 14,012.8 $ 495.9 $ 9,904.9 $ 1,364.6 $ 1,567.7 $ 14,002.9 $ 11,847.8 $ 8,716.2 $ 1,147.9 $ 1,348.2 $ 11,878.8 1,762.2 1,290.2 203.3 174.6 1,704.8 21.4 8.6 6.9 .6 20.7 $ 414.0 $ 6,177.4 $ 4,175.9 $ 0 $ 13,631.4 $ 628.9 $ 10,015.0 $ 1,358.1 $ 1,523.4 $ 13,604.3 1Progressive does not allocate assets, liabilities, or investment income to operating segments.2Excludes total net realized gains (losses) on securities.3We sold our professional liability insurance businesses in the first quarter 2010. The gain on the sale is reflected in other operating expenses.33 Gross
Amount Ceded to
Other
Companies Assumed
From
Other
Companies Net
Amount Percentage
of Amount
Assumed
to Net $ 14,519.2 $ 204.4 $ 0 $ 14,314.8 0 $ 14,199.4 $ 186.6 $ 0 $ 14,012.8 0 $ 13,810.1 $ 178.7 $ 0 $ 13,631.4 0 34Year Ended: Gross Amount Ceded to
Other Companies Assumed
From
Other Companies Net Amount Percentage
of Amount
Assumed to NetDecember 31, 2013 Premiums earned: Property and liability insurance $ 17,317.9 $ 214.5 $ 0 $ 17,103.4 0 December 31, 2012 Premiums earned: Property and liability insurance $ 16,207.6 $ 189.6 $ 0 $ 16,018.0 0 December 31, 2011 Premiums earned: Property and liability insurance $ 15,107.5 $ 204.7 $ 0 $ 14,902.8 0 Losses and Loss
Adjustment Expenses
Incurred Related to Paid Losses
and Loss
Adjustment
Expenses Current
Year Prior
Years $ 10,451.7 $ (320.4 ) $ 9,888.0 $ 10,040.9 $ (136.0 ) $ 9,714.2 $ 9,981.8 $ 33.2 $ 9,737.3 Year Ended Current Year Prior Years December 31, 2013 $ 12,427.3 $ 45.1 $ 12,014.9 December 31, 2012 $ 11,926.0 $ 22.0 $ 11,431.8 December 31, 2011 $ 10,876.8 $ (242.0 ) $ 10,541.6 35Corporation:March 1, 2011February 26, 2014 appearing in the 20102013 Annual Report to Shareholders of The Progressive Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements./s/ PricewaterhouseCoopers LLPCleveland, OhioMarch 1, 201136To the Board of Directors and Shareholders of The Progressive Corporation:on:on Forms:Form Filing No. 333-185704 December 27, 2012 S-8 333-185703 December 27, 2012 S-8 333-172663 March 8, 2011 S-8 333-104646 April 21, 2003 333-104653 April 21, 2003 333-41238 July 12, 2000 333-51613May 1, 1998S-8333-25197April 15, 1997S-8 33-57121 December 29, 1994 33-64210June 10, 1993S-8 33-51034 August 20, 1992 33-38793February 4, 1991S-833-37707November 9, 1990S-833-33240January 31, 1990S-8 33-16509 August 14, 1987 March 1, 2011February 26, 2014 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the 2013Annual Report to Shareholders, which is incorporated by reference in thisThe Progressive Corporation's Annual Report on Form 10-K.10-K for the year ended December 31, 2013. We also consent to the incorporation by reference of our report dated March 1, 2011February 26, 2014 relating to the financial statement schedules, which appears in thissuch Annual Report on Form 10-K./s/ PricewaterhouseCoopers LLPCleveland, OhioMarch 1, 201137 THE PROGRESSIVE CORPORATION March 1, 2011February 26, 2014 By: Glenn M. Renwick Director,Chairman of the Board, President, and Chief Executive Officer*Peter B. Lewis March 1, 2011/s/ Glenn M. RenwickGlenn M. RenwickDirector, President, and Chief Executive Officer March 1, 2011February 26, 2014/s/ Brian C. Domeck Brian C. Domeck Vice President and Chief Financial Officer March 1, 2011February 26, 2014/s/ Jeffrey W. Basch Jeffrey W. Basch Vice President and Chief Accounting Officer March 1, 2011February 26, 2014Jeffrey W. Basch * Lead Independent Director February 26, 2014 Stephen R. Hardis * Director February 26, 2014 Stuart B. Burgdoerfer * Director February 26, 2014 Charles A. Davis * Director February 26, 2014 Roger N. Farah * Director February 26, 2014 Lawton W. Fitt * Director February 26, 2014 Jeffrey D. Kelly * Director February 26, 2014 Heidi G. Miller, Ph.D. * Director February 26, 2014 Patrick H. Nettles, Ph.D. * Director February 26, 2014 Bradley T. Sheares, Ph.D. By: /s/ Charles E. Jarrett February 26, 2014 *Stuart B. BurgdoerferDirectorMarch 1, 2011*Charles A. DavisDirectorMarch 1, 2011*Roger N. FarahDirectorMarch 1, 2011*Lawton W. FittDirectorMarch 1, 2011*Stephen R. HardisDirectorMarch 1, 2011Bernadine P. Healy, M.D.DirectorMarch 1, 2011*Abby F. KohnstammDirectorMarch 1, 2011*Norman S. MatthewsDirectorMarch 1, 2011*Patrick H. Nettles, Ph.D.DirectorMarch 1, 2011*Bradley T. Sheares, Ph.D.DirectorMarch 1, 201138*Charles E. Jarrett by signing his name hereto, does sign this document on behalf of the persons indicated above pursuant to powers of attorney duly executed by such persons.Attorney-in-fact EXHIBIT INDEX Description of Exhibit 3(i) 3.1 Filed herewith 3(ii) 3.2 Code of Regulations of The Progressive Corporation (as amended January 31, 2014) Filed herewith 4 4.1 Form of 3.75% Senior Notes due 2021, issued in the aggregate principal amount of $500,000,000 under the 1993 Senior Indenture (see exhibit 4.5 below), as amended and supplemented Current Report on Form 8-K (filed on August 22, 2011; Exhibit 4.2 therein) 4 4.2 Form of 6 5/8% Senior Notes due 2029, issued in the aggregate principal amount of $300,000,000 under the 1993 Senior Indenture, as amended and supplemented Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 4.5 therein) 4 4.3 Form of 6.25% Senior Notes due 2032, issued in the aggregate principal amount of $400,000,000 under the 1993 Senior Indenture, as amended and supplemented Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.4 therein) 4 4.4 Form of 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067, issued in the original aggregate principal amount of $1,000,000,000 under the Junior Subordinated Indenture (see exhibit 4.11 below), as amended and supplemented Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.5 therein) 4 4.5 Indenture dated as of September 15, 1993 between The Progressive Corporation and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee (“1993 Senior Indenture”) (including table of contents and cross-reference sheet) Registration Statement No. 333-48935 (filed on March 31, 1998; Exhibit 4.1 therein) 4 4.6 First Supplemental Indenture dated March 15, 1996 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company Registration Statement No. 333-01745 (filed on March 15, 1996; Exhibit 4.2 therein) 4 4.7 Second Supplemental Indenture dated February 26, 1999 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee Registration Statement No. 333-100674 (filed on October 22, 2002; Exhibit 4.3 therein) 4 4.8 Fourth Supplemental Indenture dated November 21, 2002 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.5 therein) EXHIBIT INDEX Description of Exhibit 4 4.9 Fifth Supplemental Indenture dated June 13, 2007 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, evidencing the designation of U.S. Bank National Association as successor Trustee under the 1993 Senior Indenture Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.6 therein) 4 4.10 Sixth Supplemental Indenture dated August 22, 2011 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, as Trustee Quarterly Report on Form 10-Q (filed on November 7, 2011; Exhibit 4.1 therein) 4 4.11 Junior Subordinated Indenture dated as of June 21, 2007 between The Progressive Corporation and The Bank of New York Trust Company, N.A., Trustee (“Junior Subordinated Indenture”) (including table of contents and cross-reference sheet) Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.12 therein) 4 4.12 First Supplemental Indenture dated June 21, 2007 to the Junior Subordinated Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.13 therein) 4 4.13 Second Supplemental Indenture dated September 2, 2011, to the Junior Subordinated Indenture dated June 21, 2007, between The Progressive Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee Current Report on Form 8-K (filed on September 7, 2011; Exhibit 4 therein) 4 4.14 Replacement Capital Covenant dated June 21, 2007, of The Progressive Corporation Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.15 therein) 4 4.15 Termination of Replacement Capital Covenant, dated June 23, 2010 Current Report on Form 8-K (filed on June 24, 2010; Exhibit 4 therein) 4 4.16 Confirmation Letter-Discretionary Line of Credit dated March 25, 2013 from PNC Bank, National Association to The Progressive Corporation Current Report on Form 8-K (filed on March 27, 2013; Exhibit 4.1 therein) 4 4.17 Discretionary Line of Credit Note dated March 25, 2013 from The Progressive Corporation to PNC Bank, National Association Current Report on Form 8-K (filed on March 27, 2013; Exhibit 4.2 therein) 10(ii) 10.1 Sublease Agreement for Aircraft Hangar dated as of August 21, 2006 between Progressive Casualty Insurance Company and Acme Operating Corporation Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.1 therein) 10(ii) 10.2 First Amendment to Sublease Agreement for Aircraft Hangar dated June 6, 2011 between Progressive Casualty Insurance Company and Acme Operating Corporation Quarterly Report on Form 10-Q (filed on August 9, 2011; Exhibit 10.1 therein) By: /s/ Charles E. Jarrett Description of Exhibit March 1, 2011Charles E. JarrettAttorney-in-fact39
Under
Reg. S-K,
Item 601 3.1 Quarterly Report on Form 10-Q (filed on May 6, 2008; Exhibit 3.1 therein) 3.2 Code of Regulations of The Progressive Corporation (as amended April 24, 2009) Quarterly Report on Form 10-Q (filed on May 11, 2009; Exhibit 3.1 therein) 4.1 364-Day Secured Liquidity Credit Facility Agreement dated as of December 31, 2008 between The Progressive Corporation and PNC Bank, National Association (successor in interest to National City Bank) (“PNC Credit Agreement”) Current Report on Form 8-K (filed on January 7, 2009; Exhibit 4.1 therein) 4.2 Amendment No. 1, dated as of December 31, 2009, to PNC Credit Agreement Current Report on Form 8-K (filed on January 6, 2010; Exhibit 4.1 therein) 4.3 Amendment No. 2, dated as of December 31, 2010, to PNC Credit Agreement Current Report on Form 8-K (filed on January 4, 2011; Exhibit 4 therein) 4.4 Form of 6.375% Senior Notes due 2012, issued in the aggregate principal amount of $350,000,000 under the 1993 Senior Indenture (see exhibit 4.9 below), as amended and supplemented Filed herewith 4.5 Form of 7% Notes due 2013 issued in the aggregate principal amount of $150,000,000 under the 1993 Senior Indenture, as amended and supplemented Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 4.4 therein) 4.6 Form of 6 5/8% Senior Notes due 2029, issued in the aggregate principal amount of $300,000,000 under the 1993 Senior Indenture, as amended and supplemented Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 4.5 therein) 4.7 Form of 6.25% Senior Notes due 2032, issued in the aggregate principal amount of $400,000,000 under the 1993 Senior Indenture, as amended and supplemented Annual Report on Form 10-K (filed on February 27, 2008; Exhibit 4.5 therein) 4.8 Form of 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 issued in the original aggregate principal amount of $1,000,000,000 under the Junior Subordinated Indenture (see exhibit 4.15 below), as amended and supplemented Current Report on Form 8-K (filed on June 22, 2007; Exhibit 4.3 therein) 4.9 Indenture dated as of September 15, 1993 between The Progressive Corporation and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee (“1993 Senior Indenture”) (including table of contents and cross-reference sheet) Registration Statement No. 333-48935 (filed on March 31, 1998; Exhibit 4.1 therein) 40
Under
Reg. S-K,
Item 601 4.10 First Supplemental Indenture dated March 15, 1996 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company Registration Statement No. 333-01745 (filed on March 15, 1996; Exhibit 4.2 therein) 4.11 Second Supplemental Indenture dated February 26, 1999 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee Registration Statement No. 333-100674 (filed on October 22, 2002; Exhibit 4.3 therein) 4.12 Third Supplemental Indenture dated December 7, 2001 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee Registration Statement No. 333-100674 (filed with SEC on October 22, 2002; Exhibit 4.4 therein) 4.13 Fourth Supplemental Indenture dated November 21, 2002 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.5 therein) 4.14 Fifth Supplemental Indenture dated June 13, 2007 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, evidencing the designation of U.S. Bank National Association as successor Trustee under the Senior Indenture Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.6 therein) 4.15 Junior Subordinated Indenture dated as of June 21, 2007 between The Progressive Corporation and The Bank of New York Trust Company, N.A., Trustee (“Junior Subordinated Indenture”) (including table of contents and cross-reference sheet) Current Report on Form 8-K (filed on June 22, 2007; Exhibit 4.1 therein) 4.16 First Supplemental Indenture dated June 21, 2007 to the Junior Subordinated Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee Current Report on Form 8-K (filed on June 22, 2007; Exhibit 4.2 therein) 4.17 Replacement Capital Covenant dated June 21, 2007, of The Progressive Corporation Current Report on Form 8-K (filed on June 22, 2007; Exhibit 4.4 therein) 4.18 Termination of Replacement Capital Covenant, dated June 23, 2010 Current Report on Form 8-K (filed on June 24, 2010; Exhibit 4 therein) 10.1 Sublease Agreement for Aircraft Hangar dated as of August 21, 2006 between Progressive Casualty Insurance Company and Acme Operating Corporation Filed herewith 10.2 Assignment of Assumption of Lease Agreement dated July 7, 2010, between Acme Operating Company and Acme Acquisition Company Filed herewith 41EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601Form 10-KExhibitNo.Description of Exhibit 10(iii)10(ii) 10.3 Assignment and Assumption of Lease Agreement dated July 7, 2010, between Acme Operating Company and Acme Acquisition Company Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.2 therein) 10(iii) 10.4 The Progressive Corporation 2007Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.8 therein) 10(iii) 10.5 The Progressive Corporation 2012 Gainsharing Plan Annual Report on Form 10-K (filed on February 28, 2007;2012; Exhibit 10.810.7 therein) 10.4 10.6 2008 Annual Report on Form 10-K (filed on February 27, 2008;26, 2013; Exhibit 10.6 therein) 10.5 10.7 2009Gainsharing PlanFiled herewith 10(iii)10.6 The Progressive Corporation 2010Gainsharing PlanFiled herewith 10(iii)10.7 First Amendment to The Progressive Corporation 20102014 Gainsharing Plan Filed herewith 10.8 The Progressive Corporation 2011Gainsharing PlanFiled herewith 10(iii)10.9 The Progressive Corporation 2007 Executive Bonus Plan Current Report on Form 8-K (filed on February 8, 2007; Exhibit 10(A) therein) 10(iii)10.10 The Progressive Corporation 1995 Incentive PlanFiled herewith 10(iii)10.11 Form of Non-Qualified Stock Option Agreement under The Progressive Corporation 1995 Incentive PlanAnnual Report on Form 10-K (filed on February 27, 2008;28, 2012; Exhibit 10.1810.8 therein) 10.12 Form of Objective-Based (now known as Performance-Based) Non-Qualified Stock Option Agreement under The Progressive Corporation 1995 Incentive PlanFiled herewith 10(iii)10.13 Form of The Progressive Corporation 1995 Incentive Plan Restricted Stock Award Agreement (Time-Based Award)Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.9 therein) 10(iii)10.14 The Progressive Corporation 2003 Incentive Plan Registration Statement No. 333-104646 (filed on April 21, 2003; Exhibit 4(a) therein) 10.15 10.10 First Amendment to The Progressive Corporation 2003 Incentive Plan CurrentAnnual Report on Form 8-K10-K (filed on February 8, 2007;28, 2012; Exhibit 10(B)10.10 therein) 10.16 10.11 Second Amendment to The Progressive Corporation 2003 Incentive Plan Current Report on Form 8-K (filed on February 4, 2010; Exhibit 10.1 therein) 10.17 10.12 Third Amendment to The Progressive Corporation 2003 Incentive Plan Current Report on Form 8-K (filed on February 2, 2011; Exhibit 10.2 therein) 10.18 10.13 Form ofFourth Amendment to The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Time-Based Award) (for 2004 through February 2007) AnnualQuarterly Report on Form 10-K10-Q (filed on March 1, 2010;May 7, 2012; Exhibit 10.1410.4 therein)42EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601 Form 10-KExhibitNo.Description of ExhibitIf Incorporated by Reference, Documents withWhich Exhibit was Previously Filed with SEC 10(iii)10.19 10.14 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Time-Based Award) (for March 2007 and thereafter)though 2010) CurrentAnnual Report on Form 8-K10-K (filed on MarchFebruary 26, 2007;2013; Exhibit 10.110.13 therein) 10.20 10.15 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for 2004 through February 2007) Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.16 therein) 10.21 10.16 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for March 2007 through February 2009) CurrentAnnual Report on Form 8-K10-K (filed on MarchFebruary 26, 2007;2013; Exhibit 10.210.15 therein) 10.22 10.17 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for March 2009 through February 2010) Quarterly Report on Form 10-Q (filed on May 11, 2009; Exhibit 10.2 therein) 10(iii) 10.23 Description of Exhibit 10(iii) 10.18 Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2003 Equity Incentive Plan Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.1 therein) 10.24 10.19 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards under The Progressive Corporation 2003 Equity Incentive Plan Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.2 therein) 10.25 10.20 The Progressive Corporation 2010 Equity Incentive Plan Current Report on Form 8-KRegistration Statement No. 333-172663 (filed on February 4, 2010;March 8, 2011; Exhibit 10.24.1 therein) 10.26 10.21 First Amendment to The Progressive Corporation 2010 Equity Incentive Plan Current Report on Form 8-KRegistration Statement No. 333-172663 (filed on March 8, 2010;2011; Exhibit 10.14.2 therein) 10.27 10.22 Second Amendment to The Progressive Corporation 2010 Equity Incentive Plan Current Report on Form 8-KRegistration Statement No. 333-172663 (filed on March 11, 2010;8, 2011; Exhibit 10.14.3 therein) 10.28 10.23 Third Amendment to The Progressive Corporation 2010 Equity Incentive Plan Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.4 therein) 10(iii) 10.24 Fourth Amendment to The Progressive Corporation 2010 Equity Incentive Plan Current Report on Form 8-K (filed on February 2, 2012; Exhibit 10.1 therein) 10(iii) 10.25 Fifth Amendment to The Progressive Corporation 2010 Equity Incentive Plan Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.5 therein) 10(iii) 10.26 Sixth Amendment to The Progressive Corporation 2010 Equity Incentive Plan Current Report on Form 8-K (filed on December 11, 2012; Exhibit 10.1 therein) 10(iii) 10.27 Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012) Current Report on Form 8-K (filed on March 25, 2011; Exhibit 10.1 therein) 10(iii) 10.28 Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2013) Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.1 therein) 10(iii) 10.29 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Performance) under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012) Current Report on Form 8-K (filed on March 25, 2011; Exhibit 10.2 therein) 10(iii) 10.30 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Performance) under The Progressive Corporation 2010 Equity Incentive Plan (for 2012) Current Report on Form 8-K (filed on March 22, 2012; Exhibit 10.1 therein) 10(iii) 10.31 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2013) Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.2 therein) 10(iii) 10.29 Description of Exhibit 10(iii) 10.32 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2013) Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.3 therein) 10(iii) 10.33 The Progressive Corporation 2003 Directors Equity Incentive Plan Registration Statement No. 333-104653 (filed on April 21, 2003; Exhibit 4(a) therein) 10.30 10.34 Amendment No. 1 to The Progressive Corporation 2003 Directors Equity Incentive Plan Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.21 therein) 10.31 10.35 Amendment No. 2 to The Progressive Corporation 2003 Directors Equity Incentive Plan Current Report on Form 8-K (filed on February 2, 2012; Exhibit 10.2 therein) 10(iii) 10.36 Amendment No. 3 to The Progressive Corporation 2003 Directors Equity Incentive Plan Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.3 therein) 10(iii) 10.37 Form of The Progressive Corporation 2003 Directors Equity Incentive Plan Restricted Stock Award Agreement (for 2004 and thereafter) Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.22 therein) 43EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601 Form 10-KExhibitNo.Description of ExhibitIf Incorporated by Reference, Documents withWhich Exhibit was Previously Filed with SEC 10(iii)10.32 10.38 The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on February 25, 2009;December 27, 2012; Exhibit 10.244.3 therein) 10.33 10.39 First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.244.4 therein) 10.34 10.40 Second Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.254.5 therein) 10.35 10.41 Third Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Filed herewithRegistration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.6 therein) 10.36 10.42 Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Filed herewithRegistration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.7 therein) 10.37 10.43 The Progressive Corporation Executive Deferred Compensation Plan (2008 Amendment and Restatement) Current Report on Form 8-KRegistration Statement No. 333-185704 (filed on December 20, 2007;27, 2012; Exhibit 10.14.8 therein) 10.38 10.44 First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2008 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.9 therein) 10(iii) 10.45 The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.294.10 therein) 10(iii) 10.39 Description of Exhibit 10(iii) 10.46 First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.11 therein) 10(iii) 10.47 Form of The Progressive Corporation Executive Deferred Compensation Plan Deferral Agreement (for 2005 through 2009) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.304.12 therein) 10.40 10.48 Form of The Progressive Corporation Executive Deferred Compensation Plan Gainsharing/Bonus Deferral Agreement (for 2010 and thereafter) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.314.13 therein) 10.41 10.49 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2004) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.324.14 therein) 10.42 10.50 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2005) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.334.15 therein) 10.43 10.51 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2006 through 2009) Filed herewithRegistration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.16 therein) 10.44 10.52 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Unit Deferral Agreement (for 2010 and thereafter) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.354.17 therein)44EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601 Form 10-KExhibitNo.Description of ExhibitIf Incorporated by Reference, Documents withWhich Exhibit was Previously Filed with SEC 10(iii)10.45 10.53 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2003) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on February 25, 2009;December 27, 2012; Exhibit 10.344.18 therein) 10.46 10.54 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2004) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.374.19 therein) 10.47 10.55 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2005) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.384.20 therein) 10.48 10.56 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2006 through 2009) Filed herewithRegistration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.21 therein) 10.49 10.57 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Unit Deferral Agreement (for 2010 and thereafter) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.404.22 therein) 10(iii) 10.50 Description of Exhibit 10(iii) 10.58 The Progressive Corporation Executive Deferred Compensation Trust (November 8, 2002 Amendment and Restatement) Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.414.23 therein) 10.51 10.59 First Amendment to Trust Agreement between Fidelity Management Trust Company and Progressive Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.424.24 therein) 10.52 10.60 Second Amendment to The Progressive Corporation Executive Deferred Compensation Trust Quarterly Report on Form 10-QRegistration Statement No. 333-185704 (filed on August 2, 2007;December 27, 2012; Exhibit 10.14.25 therein) 10.53 10.61 Third Amendment to The Progressive Corporation Executive Deferred Compensation Trust Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on FebruaryDecember 27, 2008;2012; Exhibit 10.544.26 therein) 10.54 10.62 Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on February 25, 2009;December 27, 2012; Exhibit 10.424.27 therein) 10.55 10.63 Fifth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Quarterly Report on Form 10-QRegistration Statement No. 333-185704 (filed on May 11, 2009;December 27, 2012; Exhibit 10.14.28 therein) 10.56 10.64 Sixth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Annual Report on Form 10-KRegistration Statement No. 333-185704 (filed on March 1, 2010;December 27, 2012; Exhibit 10.474.29 therein) 10.57 10.65 Seventh Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.30 therein) 10(iii) 10.66 Eighth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Filed herewith 10(iii) 10.67 The Progressive Corporation Directors Deferral Plan (2008 Amendment and Restatement) CurrentAnnual Report on Form 8-K10-K (filed on December 20, 2007;February 26, 2013; Exhibit 10.210.62 therein)10(iii) 10.68 The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement) Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.63 therein) 10(iii) 10.69 First Amendment to The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement) Filed herewith 10(iii) 10.70 Form of The Progressive Corporation Directors Restricted Stock Deferral Plan Deferral Agreement Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.53 therein) 10(iii) 10.71 Director Compensation Schedule for 2011 and 2012 Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.64 therein) 10(iii) 10.72 Director Compensation Schedule for 2013 Filed herewith 45
Under
Reg. S-K,
Item 601 10.58 The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement) Current Report on Form 8-K (filed on December 20, 2007; Exhibit 10.3 therein) 10.59 First Amendment to The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement) Annual Report on Form 10-K (filed on February 25, 2009; Exhibit 10.47 therein) 10.60 Form of The Progressive Corporation Directors Restricted Stock Deferral Plan Deferral Agreement Annual Report on Form 10-K (filed on March 1, 2010; Exhibit 10.53 therein) 10.61 The Progressive Corporation 1998 Directors’ Stock Option Plan Annual Report on Form 10-K (filed on February 27, 2008; Exhibit 10.65 therein) 10.62 Director Compensation Schedule for 2006 and 2007 Filed herewith 10.63 Director Compensation Schedule for 2008 and 2009 Annual Report on Form 10-K (filed on February 25, 2009; Exhibit 10.53 therein) 10.64 Director Compensation Schedule for 2010 Filed herewith 10.65 The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Filed herewith 10.66 First Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Quarterly Report on Form 10-Q (filed on November 1, 2007; Exhibit 10.1 therein) 10.67 Non-plan Cash Bonus Paid to William M. Cody, Chief Investment Officer Current Report on Form 8-K (filed on February 2, 2011; description under “Changes to Cash Bonus Plans” therein) 11 Computation of Earnings Per Share Filed herewith 13 The Progressive Corporation 2010 Annual Report to Shareholders Filed herewith 21 Subsidiaries of The Progressive Corporation Filed herewith 23 Consent of Independent Registered Public Accounting Firm Incorporated herein by reference to page 37 of this Annual Report on Form 10-K 24 Powers of Attorney Filed herewith 31.1 Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Glenn M. Renwick Filed herewith 31.2 Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, Brian C. Domeck Filed herewith 46EXHIBIT INDEX Description of Exhibit 10(iii) 10.73 The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.65 therein) 10(iii) 10.74 First Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.68 therein) 10(iii) 10.75 Second Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Quarterly Report on Form 10-Q (filed on May 9, 2011; Exhibit 10.1 therein) 10(iii) 10.76 Third Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Quarterly Report on Form 10-Q (filed on May 9, 2011; Exhibit 10.2 therein) 10(iii) 10.77 Fourth Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Quarterly Report on Form 10-Q (filed on August 6, 2013; Exhibit 10.2 therein) 10(iii) 10.78 Fifth Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Quarterly Report on Form 10-Q (filed on August 6, 2013; Exhibit 10.3 therein) 10(iii) 10.79 2011 Non-plan Cash Bonus Paid to William M. Cody, Chief Investment Officer Current Report on Form 8-K (filed on March 6, 2012; description under “Item 5.02” therein) 10(iii) 10.80 2012 Progressive Capital Management Bonus Plan Current Report on Form 8-K (filed on March 6, 2012; Exhibit 10.1 therein) 10(iii) 10.81 2013 Progressive Capital Management Bonus Plan Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.73 therein) 10(iii) 10.82 2014 Progressive Capital Management Bonus Plan Filed herewith 11 11 Computation of Earnings Per Share Filed herewith 13 13 The Progressive Corporation 2013 Annual Report to Shareholders Filed herewith 21 21 Subsidiaries of The Progressive Corporation Filed herewith 23 23 Consent of Independent Registered Public Accounting Firm Incorporated herein by reference to page 43 of this Annual Report on Form 10-K 24 24 Powers of Attorney Filed herewith 31 31.1 Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Glenn M. Renwick Filed herewith 31 31.2 Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, Brian C. Domeck Filed herewith
Under
Reg. S-K,
Item 601 32.1 Section 1350 Certification of the Principal Executive Officer, Glenn M. Renwick Furnished herewith 32.2 Section 1350 Certification of the Principal Financial Officer, Brian C. Domeck Furnished herewith 99 Letter to Shareholders from Glenn M. Renwick, President and Chief Executive Officer Furnished herewith 101.INS XBRL Instance Document Furnished herewith 101.SCH XBRL Taxonomy Extension Schema Document Furnished herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Furnished herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Furnished herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Document Furnished herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Furnished herewith No other exhibits are required to be filed herewith pursuant to Item 601 of Regulation S-K.47EXHIBIT INDEX Description of Exhibit 32 32.1 Section 1350 Certification of the Principal Executive Officer, Glenn M. Renwick Furnished herewith 32 32.2 Section 1350 Certification of the Principal Financial Officer, Brian C. Domeck Furnished herewith 99 99 Letter to Shareholders from Glenn M. Renwick, President and Chief Executive Officer Furnished herewith 101 101.INS XBRL Instance Document Filed herewith 101 101.SCH XBRL Taxonomy Extension Schema Document Filed herewith 101 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101 101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith