__________to__________ Title of each class Name of each exchange on which registered 2013: $14,008,711,206 2014: 595,282,483 2011. 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. product in 37 states and the District of Columbia through certain independent agents and to Direct customers via telephone. Lines majority of our Commercial 2013. this business was reinsured with various reinsurance entities. Two of these four patents have been challenged in actions filed with the PTAB. The challenger has prevailed in these initial proceedings. We intend to appeal all of the adverse rulings from the PTAB. The patents that are the subject of these rulings remain valid and in effect until all appeals are exhausted. Licensing of insurers and agents Capital and surplus requirements Statutory accounting principles specific to insurance companies and the content of required financial and other reports Requirements for establishing insurance reserves Investments Acquisitions of insurers and transactions between insurers and affiliates Limitations on rates of return or profitability Rating criteria, rate levels, and rate changes Insolvencies of insurance companies Authority to exit a business, and Numerous requirements relating to other areas of insurance operations, including: required coverages, policy forms, underwriting standards, and claims handling. the insurer’s financial statements under statutory accounting principles details concerning claims reserves held by the insurer specific investments held by the insurer, and numerous other disclosures about the insurer’s financial condition and operations. 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. (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 LIABILITY FOR UNPAID LOSSES AND LAE - GROSS LESS: REINSURANCE RECOVERABLES 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 RECOVERABLES ON UNPAID LOSSES RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - NET1 GROSS CUMULATIVE DEVELOPMENT: FAVORABLE/(UNFAVORABLE) 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. 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 timely recognize changes in our ability to predict changes in operating expenses with reasonable accuracy 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 strategies 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 our ability to understand the impact of ongoing changes in our claims settlement practices changing driving patterns advancements in vehicle technology and safety features, such as accident prevention technologies or the development of autonomous or partially autonomous vehicles unexpected changes in the medical sector of the economy, including medical costs and systemic changes resulting from national or state health care laws or regulations unanticipated changes in auto repair costs, auto parts prices, and used car prices. 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 changes in our claims settlement practices 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. pricing capabilities. The automobile insurance industry is a relatively mature industry, in which brand recognition, marketing skills, operational effectiveness (including, for example, rate and claim-paying accuracy, customer experience, and application of information complexity, while delivering high quality products and services. 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 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. business, operations, profitability, or financial condition. For further information on pending litigation, seeNote 12 steal, corrupt, or destroy data misappropriate funds disrupt or shut down our systems deny customers, agents, brokers, or others access to our systems, or infect our systems with viruses or malware. goodwill and to our brand. subject to some of the same risks that affect our fixed-income portfolio, as discussed above. 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 development in either the U.S. or other economies that adversely affects the value of securities held in our portfolios 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 substantiated or not a significant change in inflation expectations or the onset of deflation a default on sovereign debt, or the perception that such a default is likely, and a significant devaluation of governmental or private sector credit, currencies or financial markets, or other factors or events. affiliates, pay dividends to shareholders, or repurchase its securities. 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. Year 2012 2011 $23.24. 2013. payable under our annual variable dividend policy. EQUITY COMPENSATION PLAN INFORMATION Plan Category Equity compensation plans approved by security holders: Employee Plans: 2010 Equity Incentive Plan 2003 Incentive Plan2 Subtotal Employee Plans Director Plans: 2003 Directors Equity Incentive Plan Subtotal Director Plans Equity compensation plans not approved by security holders: None Total plans. ISSUER PURCHASES OF EQUITY SECURITIES 2012 Calendar Month October November December Total December's repurchase was a privately negotiated transaction. Total revenues1 Net income (loss) Per share: Net income (loss)2 Dividends Comprehensive income (loss) Total assets Debt outstanding Name Offices Held and Last Five Years’ Business Experience Glenn M. Renwick Brian C. Domeck Charles E. Jarrett Thomas A. King Jeffrey W. Basch John A. Barbagallo M. Jeffrey Charney William M. Cody Susan Patricia Griffith Valerie Krasowski John P. Sauerland Raymond M. Voelker Report of Independent Registered Public Accounting Firm Consolidated Statements of Changes in Shareholders’ Equity - For the Years Ended December 31, 2013, 2012, 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 stocks 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 investments1 Total investments Includes $6.3 million in treasury bills issued by the Australian government. 2013. Revenues Dividends from subsidiaries Undistributed income (loss) from subsidiaries Equity in net income of subsidiaries* Intercompany investment income* Gains (losses) on extinguishment of debt Total revenues Expenses Interest expense Deferred compensation1 Other operating costs and expenses Total expenses Income before income taxes Provision (benefit) for income taxes Net income Other comprehensive income (loss) Comprehensive income Represents gain on net death benefit received on life insurance policies. Assets Investment in affiliate Investment in subsidiaries* Receivable from investment subsidiary* Intercompany receivable* Net deferred 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, including treasury shares of 193.1 and 184.7) 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 Adjustments to reconcile net income to net cash provided by operating activities: Undistributed (income) loss from subsidiaries Amortization of equity-based compensation (Gains) losses 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 investment subsidiary Net cash provided by investing activities Cash Flows From Financing Activities: Proceeds from exercise of stock options Tax benefit from exercise/vesting of equity-based compensation Net proceeds from debt issuance Payment of debt 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, 2012: Personal Lines Commercial Auto Other indemnity Total Year ended December 31, 2011: Personal Lines Commercial Auto Other indemnity Total Year ended December 31, 2010: Personal Lines Commercial Auto Other indemnity Total Progressive does not allocate assets, liabilities, or investment income to operating segments. Year Ended: December 31, 2012 Premiums earned: Property and liability insurance December 31, 2011 Premiums earned: Property and liability insurance December 31, 2010 Premiums earned: Property and liability insurance Year Ended December 31, 2012 December 31, 2011 December 31, 2010 Corporation 2014 Form S-8 S-8 S-8 S-8 S-8 S-8 S-8 S-8 2014 THE PROGRESSIVE CORPORATION /s/ Glenn M. Renwick Director, Chairman of the Board, By: Exhibit No. Under Reg. S-K, Item 601 Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC Amended Articles of Incorporation of The Progressive Corporation (as amended April 18, 2008) Exhibit No. Under Reg. S-K, Item 601 Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC Description of Exhibit The Progressive Corporation 2011 Gainsharing Plan Description of Exhibit Description of Exhibit Exhibit No. Under Reg. S-K, Item 601 Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC Exhibit No. Under Reg. S-K, Item 601 Form 10-K Exhibit No. Description of Exhibit If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SECxý Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 20122013¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 to Ohio 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 No2012: $11,552,341,4052013: 603,919,7062013,2014, and the Annual Report to Shareholders for the year ended December 31, 2012,2013, included as Exhibit 13 to this Form 10-K, are incorporated by reference in Parts I, II, III, and IV hereof.20132014 (the “Proxy Statement”) have been incorporated by reference herein and are identified under the appropriate items in this Form 10-K. The 20122013 Annual Report to Shareholders (the “Annual Report”) of The Progressive Corporation and subsidiaries, which will be attached as an Appendix to the 20132014 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.BUSINESS1one mutual insurance company affiliate, and 1one limited partnership investment affiliate. Our 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, 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.compared toand $15.1 billion in 2011 and $14.5 billion in 2010.2011. Our combined ratio, which we calculate by dividing the sum of our loss and loss adjustment expenses, policy acquisition costs, and other underwriting expenses, net of fees"fees and other revenues," by our net premiums earned, was 93.5 in 2013, 95.6 in 2012, and 93.0 in 2011, and 92.4 in 2010.•Personal Lines – A Group President manages our Personal Lines business, which includes insurance for personal autos and special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items):•Commercial Auto– A Group President manages our Commercial Auto business, which offers products in 49 states; we do not currently write Commercial Auto in Hawaii or the District of Columbia. The Commercial Auto 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.•Claims – A Group President manages our Claims business function, which is organized into four groups. Three of the groups are based 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, and each handles both Personal Lines and Commercial Auto claims.Tempe,Phoenix, Arizona; and Colorado Springs, Colorado, support our policy servicing, agency distribution, claims, and direct sales operations.2on page 5 of this reportherein for further discussion.• 20112012 based on net premiums written and believe that we held that position for 2012.2013. There are approximately 340320 competitors in this market. Progressive and the other leading 1314 private passenger auto insurers, each of which writes over $2.0 billion of premiums, comprise about 75% of this market. For 2011,2012, the industry net premiums written for private passenger auto insurance in the United States was $163.0$167.9 billion, and our share of this market was approximately 8.2%8.5%, compared to $160.1$163.3 billion and 7.9%8.1% in 2010,2011, respectively; comparable industry data is not available for 20122013 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.Thesegment consistsbusiness. Due to the nature of these products, we typically experience higher losses during the warmer weather months. Our competitors are specialty companies and large multi-line insurance carriers. Although industry figures are not available, based on our analysis of this market, we believe that we are one of the largest participants in the specialty personal autolines market, and that we have been the market share leader for the motorcycle product since 1998. We also offer a personal umbrella insurance products, as well as our special lines products.•Personal auto insurance represented approximately 90% of our total Personal Lines net premiums written for each of the last three years. This business includes Snapshot®, our usage-based insurance product, which is available to consumers through both the Agency and Direct channels in 38 states and the District of Columbia and to consumers in 5 more states in our Direct channel only; continued expansion is planned for 2013, depending on regulatory approval and business results.•Special lines productsinclude insurance for motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items, and represent about 10% of our Personal Lines business. Due to the nature of these products, we typically experience higher losses during the warmer weather months. Our competitors are specialty companies and large multi-line insurance carriers. Although industry figures are not available, based on our analysis of this market, we believe that we are one of the largest participants in the specialty personal lines market, and that we have been the market share leader for the motorcycle product since 1998. We also offer a personal umbrella insurance product in 32 states through certain independent agents and to Direct customers via telephone.agencyAgency and directDirect channels:•The Agency businessincludes business written by our network of more than 35,000 independent insurance agencies located throughout the United States, including brokerages in New York and California. These 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 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 56% of our Personal Lines volume in 2012, compared to 57% in 2011 and 58% in 2010.•The Direct businessincludes business written directly by us online, via mobile devices, and over the phone. The Direct business represented 44% of our Personal Lines volume in 2012, compared to 43% in 2011 and 42% in 2010.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 during each of the last three years. The3AutoLines customers insure two or fewer vehicles. The Commercial AutoLines business, which is primarily distributed through the independent agency channel, operates in the following business market targets:•Business auto – autos, vans, and pick-up trucks used by small businesses, such as retailing, farming, services, and private trucking•For-hire transportation – tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses and non-fleet long-haul operators•Contractor – vans, pick-up trucks, and dump trucks used by small businesses, such as artisans, heavy construction, and landscapers/snowplowers•For-hire specialty – dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses, and•Tow – tow trucks and wreckers used in towing services and gas/service station businesses.theour largest business market target, measured by premium volume, and accounts for approximately one third of our total Commercial AutoLines premiums, while the for-hire transportation and contractor business market targets each account for about another 25%. Business auto and contractor eachtogether account for approximately one third75% 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.3132 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 thirdsecond in the commercial auto insurance market for 2012, up one place from 2011, and webased on net premiums written. We believe that we will rank secondretained the number two position for 2012.banks, whichbanks. All professional liability insurance policies written in July 2010 and later were 100% reinsured. The saleFrom August 2009 through June 2010, the substantial majority of the risks on this business did not havewere 100% reinsured and prior to August 2009, a material effectmajority of the risk on our financial condition, results of operations, or cash flows.•Commercial Auto Insurance Procedures/Plans (CAIP) – We are the only servicing carrier on a nationwide basis for CAIP, which are state-supervised plans servicing the involuntary market in 42 states and the District of Columbia. As a service provider, we provide policy issuance and claims adjusting services and collect fee revenue that is earned on a pro rata basis over the terms of the related policies. In 2010, we reached 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; 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.•Commission-Based Businesses –We have two commission-based service businesses.new and existing Agency and Direct customers home, condominium, and renters insurance written by eleven unaffiliated homeowner’s insurance companies. Progressive Home Advantage is not currently available to customers in FloridaAlaska and Alaska.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 offset the expenses associated with maintaining this program.underwrittenwritten by fourseven unaffiliated insurance companies or placed with otheradditional companies through an unaffiliated agency.insurance agencies. This program offers general liability and business owners policies inthroughout the 49 states where we write commercial auto insurancecontinental United States and workers’ compensation coverage in 1444 states as of December 31, 2012.2013. We receive commissions for the policies written under this program, all of which are used to offset the expenses associated with maintaining this program.4280275 claims offices located throughout the United States. In addition, we have in operation 54 service centers, in 4148 metropolitan areas across the country, that provide our concierge level claims service,we have in operation 63 Service Centers, of which 1430 have combined our claims offices and service centersService Centers to improve our efficiency.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 this option, these service centersa 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 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 alsoUnder the Service Center option, we guarantee the repairs for as long as the customer owns or leases their car. If a customer 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 increases consumer satisfaction and our productivity and improves the cycle time in comparison to our other claims settlement processes.technologytechnologies can affect its competitive position. In addition, there has been a proliferation of patents related to new ways in which vehicle insurance is being offered, sold, and serviced.technologies can affect its competitive position. We have sixseven U.S. patents, and additional U.S. patent applicationspatents pending, with respect to certain methods, systems, and devices related to usage-based insurance. Certain of these patent rightspatents expire on or about January 29, 2016, while others extend well beyond that date. Three of these seven patents have been challenged in actions filed with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office. The challenger has prevailed in the initial proceeding with respect to two of those patents, and we are awaiting a ruling from the PTAB with respect to the third patent. We also have a significant amount of “know-how” developed from years of experience with usage-based insurance, and from analyzing the data from over 9 billion driving miles derived from over 5 billion miles related to usage-based insurance.devices. We believe this intellectual property provides us with a competitive advantage in the usage-based insurance market. During 2012, we began to pursue ways in which to leverage this intellectual property. Currently, we do not expect these activities to have a material effect on our operations, results of operations, or financial condition in the current fiscal year. We also hold a U.S. patent (expiring June 2021), and a U.S. patent application pending, on our innovative approach to the vehicle repair service described above, and twoa U.S. patent (expiring in June 2028) on the Name Your Price® functionality on our website. In addition, we hold four patents (expiring July 2019), and additional patents pending, related to our online policy self-service technology.theour subsidiaries’ businesses are in good standing.52012,2013, we had net premiums written of $16.4$17.3 billion and statutory surplus of $5.6$6.0 billion. The combined premiums-to-surplus ratio for all Progressive insurance companies was 2.9 to 1. In addition, as of December 31, 2012,2013, we had access to $1.4$1.8 billion of securities held in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth and for other purposes as needed. The National Association of Insurance Commissioners (NAIC) also has developed a risk-based capital (RBC) program to enable regulators to identify and take appropriate and timely regulatory actions relating to insurers that show signs of weak or deteriorating financial condition. RBC is a series of dynamic 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. At December 31, 2013, Progressive’s RBC ratios arewere well in excess of minimum requirements.67GAAP,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 AccountingAcquisitionExpensesGAAP Accounting SAP Accounting Commissions, premium taxes, and other variable costs incurred in connection with the 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-admittedAssetsPremium 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 securities 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 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 includes 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 $18.1 billion at December 31, 2013, compared to $16.5 billion at December 31, 2012, compared to $16.0 billion at December 31, 2011.2012. 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, including net realized gains (losses) on securities, before expenses and taxes, was $740.4 million in 2013, compared to $749.8 million in 2012 compared toand $582.6 million in 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, and $616.2 million in 2010.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.820122013 was 25,889,26,145, all of whom were employed by subsidiaries of The Progressive Corporation.August 7, 2012,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. 2012 2011 2010 $ 7,245.8 $ 7,071.0 $ 6,653.0 785.7 704.1 529.4 6,460.1 6,366.9 6,123.6 11,926.0 10,876.8 10,451.7 22.0 (242.0 ) (320.4 ) 11,948.0 10,634.8 10,131.3 7,895.3 7,289.3 6,841.0 3,536.5 3,252.3 3,047.0 11,431.8 10,541.6 9,888.0 6,976.3 6,460.1 6,366.9 862.1 785.7 704.1 $ 7,838.4 $ 7,245.8 $ 7,071.0 (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 and favorably bycompared to favorable development of $242.0 million and $320.4 million in 2011, and 2010, respectively, 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 anticipated. (PIP) and an increase in our estimate of bodily injury severity for accident year 2011. In addition, unfavorable development in our Commercial AutoLines 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.both 2011, and 2010, the favorable reserve development reflected the settlement of larger losses for amounts less than we originally reserved in our Personal Lines (primarily in our personal auto product) and Commercial AutoLines businesses. We also experienced lower than expected defense and cost containment costs, reflecting a combination of fewer claims being litigated, as well as the fact that a greater percentage of these cases are now being handled by our in-house counsel, which is a cost-effective alternative to using external law firms. In addition, for 2010, our IBNR reserves developed favorably due to lower severity and frequency of late emerging claims. However, in 2011, the number of late emerging claims increased over 2010 and was greater than anticipated by our carried IBNR, thus we recognized unfavorable development on our total IBNR reserves.910ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSES DEVELOPMENT (millions) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $ 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 $ 7,245.8 $ 7,838.4 180.9 229.9 337.1 347.2 361.4 287.5 244.5 529.4 704.1 785.7 862.1 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 6,460.1 6,976.3 1,860.7 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 2,688.9 3,148.1 3,430.6 3,931.0 4,240.4 4,361.4 4,427.8 4,348.4 4,724.0 0 3,084.6 3,642.5 3,999.9 4,584.7 4,856.2 4,966.1 5,031.7 5,007.9 0 0 3,291.6 3,873.0 4,269.6 4,839.1 5,121.9 5,227.5 5,314.7 0 0 0 3,381.7 3,977.1 4,368.6 4,948.7 5,229.0 5,340.1 0 0 0 0 3,416.7 4,012.5 4,419.2 4,995.6 5,282.1 0 0 0 0 0 3,428.7 4,034.4 4,445.7 5,023.7 0 0 0 0 0 0 3,440.7 4,047.3 4,459.8 0 0 0 0 0 0 0 3,449.7 4,054.9 0 0 0 0 0 0 0 0 3,455.2 0 0 0 0 0 0 0 0 0 3,576.0 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 3,520.7 4,103.3 4,485.2 5,130.5 5,469.8 5,593.8 5,702.1 5,647.7 6,074.4 0 3,459.2 4,048.0 4,501.6 5,093.6 5,381.9 5,508.0 5,573.8 5,575.0 0 0 3,457.8 4,070.0 4,471.0 5,046.7 5,336.5 5,442.1 5,538.5 0 0 0 3,475.4 4,073.7 4,475.5 5,054.6 5,342.8 5,452.8 0 0 0 0 3,472.5 4,072.4 4,486.4 5,060.8 5,352.8 0 0 0 0 0 3,470.1 4,080.5 4,486.3 5,070.2 0 0 0 0 0 0 3,477.3 4,077.8 4,493.3 0 0 0 0 0 0 0 3,475.9 4,082.7 0 0 0 0 0 0 0 0 3,479.8 0 0 0 0 0 0 0 0 0 $ 152.3 $ 263.7 $ 455.2 $ 242.9 $ 10.8 $ 202.4 $ 394.4 $ 548.6 $ 292.5 $ (22.0 ) 4.2 6.1 9.2 4.6 0.2 3.6 6.6 9.0 4.6 (0.3 ) $ 3,756.0 $ 4,459.6 $ 4,999.5 $ 5,675.4 $ 6,001.3 $ 6,117.9 $ 6,203.5 $ 6,286.4 $ 6,855.8 $ 7,296.6 276.2 376.9 506.2 605.2 648.5 665.1 665.0 711.4 781.4 814.5 $ 3,479.8 $ 4,082.7 $ 4,493.3 $ 5,070.2 $ 5,352.8 $ 5,452.8 $ 5,538.5 $ 5,575.0 $ 6,074.4 $ 6,482.1 $ 57.0 $ 116.7 $ 286.1 $ (15.1 ) $ (276.3 ) $ (175.2 ) $ (26.1 ) $ 366.6 $ 215.2 $ (50.8 ) 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.ANALYSIS 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 ) 20022003 through 2011.2012. 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 recoverables on unpaid losses.11of:”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, 2012,2013, our insurance subsidiaries had paid $4,054.9$4,467.4 million of the currently estimated $4,082.7$4,497.5 million of losses and LAE that had been unpaid at the end of 2003;2004; thus, an estimated $27.8$30.1 million of losses incurred through 20032004 remain unpaid as of the current financial statement date.20022003 liability has developed favorably by $152.3$260.3 million over ten years. That amount has been reflected in income over the ten years and had the largest impact on income in calendar year 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 910 as the “prior years” contribution to incurred losses and LAE.2012,2013, but incurred in 2009,2010, will be included in the cumulative development amount for years 2009, 2010, 2011, and 2011.2012. 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.20022003 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 2006 and 2007 through 2010 was less than 4%about 3% to 9% of our original carried reserves. For both 2008 and 2009, we experienced favorable reserve development of more than 6% of our original estimates,reserves, which primarily reflects the decreases in severity between our original estimate and what we experienced in both our personal auto (about 4%) and Commercial Auto (about 6%)commercial auto businesses through 2012. The favorable development of approximately 5% for 2010 also reflects lower severity estimates for both personal autoduring that period. For 2011 and Commercial Auto, but to a lesser extent than the previous two years. In 2011,2012, we experienced very minimal unfavorable development, or less than 0.5%1% of our original estimate.11,12, we also re-estimate the reinsurance recoverables on unpaid losses each year. The top of the table shows the amount of reinsurance recoverables 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, 2011,2012, we estimated our reinsurance recoverables on unpaid losses to be $785.7$862.1 million. During 2012,2013, these reserves developed unfavorably by $28.8$136.9 million, bringing the re-estimated reinsurance recoverables on unpaid losses to $814.5$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’s continuing process of re-evaluating Michigan PIP claims that require lifetime reserve 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.1112 is constructed from Schedule P, Part-1, from the Consolidated Annual Statements of Progressive’s insurance subsidiaries, as filed with the state insurance departments.revenues and assets is insignificant.12ITEM 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 assets held in our investment portfolios, which might result from a variety of factors impacting the investment marketplace generally, or the sectors, industries, or individual securities in which we have invested, and – - the risks that a counterpartythe other party to a transaction will fail to perform according to the terms of a contract, or that we will be unable to obtain capital when necessary or to pay or otherwise satisfy our obligations when due.due or obtain capital when necessary.trendtrends and to predict both the severity and frequency of future losses with reasonable accuracy13suchthese 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.910 of this report, as well as our “Report on Loss Reserving Practices,” which was filed with the SEC on Form 8-K on August 7, 2012.events, but thoseevents. Those tools and expert opinions are based on historical data and other assumptions that limit their reliability, and they may become even less reliable as climatic conditions change. As a result, our forecasting efforts may generate projections that prove to be materially inaccurate. An increase in the frequency or severity of catastrophes during a given period could materially adversely affect our financial performance, cash flows, and results of operations.14technology)and other technologies), pricing, scale, and cost control are major competitive factors.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.industry.industry and adversely affect our competitive position. These developments can include product, pricing, or marketing innovations, new or improved services, technological 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. Thethe 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, are recent examplesand the availability of significant developments invery large volumes of data and the marketplace where we are committing substantial resources.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 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. This complexity may create barriers 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. In addition, we must make difficult decisions regarding the optimal allocation of available resources (such as information technology resources) for competing initiatives or projects.(e.g., mobile applications), which may result in legal challenges to certain of our business practices by third parties, including other insurance companies and non-insurance entities alleging that we are violating their patent rights. Similarly, we may seek or obtain patent protection for innovations developed by us; enforcement of suchus. However, defending our business practices against patent challenges, and enforcing and defending our patent rights, including if necessary through litigation, however, can be time consuming and isexpensive, and the results are inherently uncertain, potentiallyfurther complicating business plans related to these efforts. The complexity may create barriers to implementing or defending certain new ideas or providing high-quality products15and customer experiences, may require us to modify our business practices, and may lead to the increased possibility of error in executing our business strategies, as well as difficult management decisions regarding the allocation of available resources (such as IT resources) for competing initiatives or projects. 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 of claims, of policyholders or other parties, misconduct by our officers, directors or 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 many of the other matters that are discussed in these Risk Factors. 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.key managers.skills necessary for us to run our business. Our loss of certain key officers and employees, or the failure to attract or develop talented executives and managers with diverse backgrounds and experiences, could have a materially adverse effect on our business.marketplace.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.16IfIn December 2013, the FIO weresubmitted a report to recommendCongress recommending reforms intended to modernize and improve the Financial Stability Oversight CouncilU.S. system of insurance regulation. The report proposes significant changes to existing state regulations and includes a number of recommendations that Progressive orwould result in direct federal regulation of the insurance industry as a whole is “systemically significant,” we could be subject to additional regulation, and our businesses could be affected significantly.industry. 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. 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.17–- Litigation in our Annual Report, which is included as Exhibit 13 to this Form 10-K.third party intrusion vulnerabilitythird-party testing. In addition, we seek to assure the security and confidentiality of information provided to our vendors under “cloud computing” or other arrangements through appropriate risk evaluation, security and financial due diligence, contracts designed to set and maintain high security and confidentiality standards, and ongoing testing, auditing, and evaluation of third-party compliance with the required standards. While we expend significant resources on these defensive measures, there can be no assurance that we will be successful in preventing attacks or detecting and stopping them once they have begun.August 2012,September 2013, an independent organization recognized by PCI for such purposes, recertified 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 annual recertification of our processes. Our intention is to maintain compliance with PCI’sPCI's data security standards. The failure to do so could result in contractual fines or disruption of our ability to receive credit card payments.18becausemany 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 events 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.•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 due to a deterioration in the financial condition, operating performance or business prospects 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. In the case of governmental issuers, the risk includes the potential for unbalanced budgets, required austerity measures, debt defaults, or other social or political turmoil.•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. Investments in securities that are not publicly traded are illiquid by their nature.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 securities rating organizations are based on incomplete or inaccurate information or otherwise prove unwarranted; or our risk mitigation strategies are ineffective for the applicable market conditions.19 For example, a rapid rise in interest rates may cause equity prices to fall, particularly those of interest-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. 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. causing the market to react irrationally or stagflation2012,2013, and of the market risk associated with our investment portfolio.could in turn could adversely affect our financial performance, cash flows, or results of operations and cause damage to our brand and reputation.20pay dividends to shareholders, repurchase its securities, repay indebtedness, or make capital contributions to its other subsidiaries or affiliates.pay dividends to shareholders, make payments on its indebtedness, meet its other obligations, repurchase its common shares or other securities, or make capital contributions to or otherwise fund its subsidiaries or affiliates.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, orInin 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 company.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 portfoliosTheany given time is determined by regulatory requirements and 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 falls 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 inability to gain access to debt or equity markets at favorable rates, and the price of our common shares or debt securities could fall significantly.2120122013 and 2013)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). If our Gainshare factor for the year 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.20132014 (to be paid early in 2014)2015), the dividend, if any, would not be declared by the Board until late 20132014 or early 2014,2015, and the Board retains the discretion, at any time, to alter our policy or not to pay the annual dividend for 20132014 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, 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.ITEM 1B.UNRESOLVED STAFF COMMENTS22ITEM 2.PROPERTIESservice centersService Centers that provide our concierge level of claims service.7382 buildings located throughout the United States.States, including 51 Service Centers. These facilities, which contain approximately 4.24.4 million square feet of space, are not segregated by industry segment. 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.2.72.4 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.ITEM 3.LEGAL PROCEEDINGSITEM 4.MINE SAFETY DISCLOSURES23ITEM 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 $ 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 1 $ 21.24 $ 19.12 $ 21.13 $ 0 2 22.08 19.79 21.38 0 3 21.66 16.88 17.76 0 4 19.74 16.97 19.51 .4072 $ 22.08 $ 16.88 $ 19.51 $ .4072 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 2013,2014, was $22.49.3,1142,896 shareholders of record on December 31, 2012.Progressive maintainsTheFor 2013, the Board determined the target percentage to be 33-1/3% forof annual after-tax underwriting income, which is unchanged from the target percentage in both 2012 and 2011 and 25% for 2010. This2011. The Board also determined that this target will remain at 33-1/3% for 2013. 2014.variableannual cash incentive program currently in place for our employees (referred to as our(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. If the Gainshare factor is zero or if our comprehensive income is less than after-tax underwriting income, no dividend willwould be paid.20132014 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 2012,2013, the Board of Directors declared an annual variable dividend, which was paid in February 20132014 to shareholders of record at the close of business on January 25, 2013.29, 2014. The amount of the dividend was $.2845$.4929 per common share, or $293.9 million. The 2012 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.million, or $.2845 per common share. The 2011 annual dividend was declared by the Board in December 2011 and paid to shareholders in February 2012; the total amount of dividends was $249.4 million, or $.4072 per common share. The 2010 annual dividend was declared by the Board in December 2010 and paid to shareholders in February 2011; the total amount of dividends was $263.8 million, or $.3987 per common share.and(declared in October 2010,2012), we returned $604.7$596.3 million and $663.2$604.7 million, respectively, to shareholders via special cash dividends of $1.00 per share each.242012, and $5.3 billion on December 31, 2011.2012. At December 31, 2012, $501.92013, $524.8 million of consolidated statutory 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 $975.5$1,169.7 million in 20132014 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, 2012. Number of
Securities to be
Issued upon Exercise
of Outstanding
Options, Warrants
and Rights Weighted-Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights Number of Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans 4,805,164 1 NM 13,186,558 2,856,110 1 NM 2,438,119 7,661,274 NM 15,624,677 0 $ 0 570,138 0 $ 0 570,138 7,661,274 NM 16,194,815 NM = Not meaningful since restricted stock unit awards do not have an exercise price.1Represents restricted stock unit awards, including reinvested dividend equivalents, 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. Performance-based restricted stock units, including dividend equivalents, of 1,945,808, are included under the 2010 Equity Incentive Plan at their target value. The actual number that will vest can range from 0 to 200% of target, or from 0 to 3,891,616 units. For further discussion of these awards, seeNote 9—Employee Benefit Plans in our Annual Report, which is included as Exhibit 13 to this Form 10-K.2This plan expired on January 31, 2013 and no further awards can be made thereunder; however, dividend equivalents will still be issued on awards made prior to expiration. This plan does not have any performance-based awards currently outstanding that can vest at greater than their target values.25 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 0 $ 0 32,731,173 42,268,827 0 0 32,731,173 42,268,827 194,846 20.94 32,926,019 42,073,981 194,846 $ 20.94 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 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. During the fourth quarter, allThe October and November repurchases were accomplished through the open market or in conjunction with our incentive compensation plans at the then-current market prices.returneffectively use underleveraged capital to investors.capital. 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.ITEM 6.SELECTED FINANCIAL DATA For the years ended December 31, 2012 2011 2010 2009 2008 $ 17,083.9 $ 15,774.6 $ 15,215.5 $ 14,791.1 $ 13,049.0 902.3 1,015.5 1,068.3 1,057.5 (70.0 ) 1.48 1.59 1.61 1.57 (.10 ) 1.2845 .4072 1.3987 .1613 0 1,080.8 924.3 1,398.8 1,752.2 (614.7 ) 22,694.7 21,844.8 21,150.3 20,049.3 18,250.5 2,063.1 2,442.1 1,958.2 2,177.2 2,175.5 1Revenues for 2008 through 2011 have been revised to conform to the 2012 presentation. See the “Revision” section ofNote 1 – Reporting and Accounting Policies in our Annual Report, which is included as Exhibit 13 to this Form 10-K for further information.2For 2008, amount represents basic earnings per share, since diluted earnings per share was antidilutive due to the net loss for the year. 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 RISK26ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A.CONTROLS AND PROCEDURESITEM 9B.OTHER INFORMATION27ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE20132014 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. Age 5758 Chairman of the Board since November 2013; President, and Chief Executive Officer 5354 Vice President and Chief Financial Officer 5556 Vice President, Secretary, and Chief Legal Officer 5354 Vice President and Treasurer 5455 Vice President and Chief Accounting Officer 5354 Commercial Lines Group President, including Agency Operations 5354 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 5051 Chief Investment Officer 4849 Claims Group President since March 2008; Chief Human Resource Officer prior to March 2008 4748 Chief Human Resource Officer since August 2008; Special Lines General Manager prior to August 2008 4849 Personal Lines Group President 4950 Chief Information Officer 28Incorporated by reference from the “Section 16(a) Beneficial Ownership Reporting Compliance” section of the Proxy Statement.None.2012.2013. 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”).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 INDEPENDENCEITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES29ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES20122013 Annual Report, which is included as Exhibit 13 to this Form 10-K, are incorporated by reference in Item 8:2011, and 2010201120122013 and 201120122011, and 20102011, and 2010201143.46. Management contracts and compensatory plans and arrangements are identified in the Exhibit Index as Exhibit Nos. 10.4 through 10.73.30 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, 2012 Cost Fair Value Amount At
Which Shown
In The
Balance Sheet $ 2,806.4 $ 2,896.5 $ 2,896.5 1,914.4 1,964.4 1,964.4 48.0 48.4 48.4 2,934.9 3,064.6 3,064.6 3,313.3 3,425.5 3,425.5 356.9 374.7 374.7 11,373.9 11,774.1 11,774.1 102.0 134.1 134.1 199.2 260.1 260.1 1,069.1 1,504.8 1,504.8 404.0 812.4 812.4 1,774.3 2,711.4 2,711.4 1,990.0 1,990.0 1,990.0 $ 15,138.2 $ 16,475.5 $ 16,475.5 1Includes $21.9 million in treasury bills issued by the Australian government.2012.31 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, 2012 2011 2010 $ 782.3 $ 875.3 $ 1,216.2 193.1 225.7 (73.5 ) 975.4 1,101.0 1,142.7 6.1 5.6 6.6 (1.8 ) (.1 ) 6.4 979.7 1,106.5 1,155.7 126.3 138.0 139.5 5.5 .4 4.3 3.7 4.7 3.9 135.5 143.1 147.7 844.2 963.4 1,008.0 (58.1 ) (52.1 ) (60.3 ) $ 902.3 $ 1,015.5 $ 1,068.3 178.5 (91.2 ) 330.5 $ 1,080.8 $ 924.3 $ 1,398.8 *Eliminated in consolidation.1SeeNote 4 – Employee Benefit Plans in these condensed financial statements.32 December 31, 2012 2011 $ 1.0 $ 1.0 6,648.6 6,179.5 1,322.9 2,096.6 296.2 237.6 48.3 40.1 82.0 81.0 $ 8,399.0 $ 8,635.8 $ 156.9 $ 137.4 172.0 249.6 2,063.1 2,442.1 2,392.0 2,829.1 604.6 613.0 1,077.0 1,006.2 3,454.4 3,495.0 871.0 692.5 6,007.0 5,806.7 $ 8,399.0 $ 8,635.8 *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 33 Years Ended December 31, 2012 2011 2010 $ 902.3 $ 1,015.5 $ 1,068.3 (193.1 ) (225.7 ) 73.5 2.0 2.1 2.4 1.8 .1 (6.4 ) (58.6 ) (58.5 ) (54.1 ) .3 4.5 7.3 21.7 (3.4 ) (12.2 ) (9.9 ) 4.2 (1.9 ) 666.5 738.8 1,076.9 (36.1 ) (11.8 ) (3.5 ) 773.7 23.6 122.0 737.6 11.8 118.5 .5 22.4 27.2 5.8 6.4 14.0 0 497.0 0 (350.0 ) 0 0 (32.5 ) (15.0 ) (214.3 ) (853.7 ) (263.6 ) (763.7 ) (174.2 ) (997.8 ) (258.6 ) (1,404.1 ) (750.6 ) (1,195.4 ) 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 34Thethe Progressive Corporation and its subsidiaries’ Annual Report to Shareholders,, which is included as Exhibit 13 to this Form 10-K.and 2011, $1.4$1.8 billion and $2.0$1.4 billion, respectively, of marketable securities were available in this company. Non-cash activity includes declared but unpaid dividends. For the years ended December 31, we paid the following: 2012 2011 2010 $ 389.1 $ 435.0 $ 434.0 135.0 129.5 138.4 (millions) 2013 2012 2011 Income taxes $ 497.0 $ 389.1 $ 435.0 Interest 122.3 135.0 129.5 35Segment
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) Future policy benefits, Other losses, policy Benefits, Amortization Deferred claims, claims claims, of deferred policy and and Net losses, and policy Other Net acquisition loss Unearned benefits Premium investment settlement acquisition operating premiums costs1 expenses1 premiums1 payable1 revenue income1,2 expenses costs expenses written $ 14,368.1 $ 10,745.3 $ 1,250.4 $ 2,010.5 $ 14,636.8 1,649.0 1,196.6 186.2 195.2 1,735.9 .9 6.1 0 .6 0 $ 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 $ 13,431.1 $ 9,615.2 $ 1,231.9 $ 1,915.6 $ 13,612.2 1,467.1 1,010.7 166.6 171.9 1,534.3 4.6 8.9 .7 .5 .1 $ 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 $ 12,826.9 $ 9,159.6 $ 1,188.1 $ 1,814.7 $ 13,024.4 1,474.2 958.6 167.9 177.9 1,449.5 13.7 13.1 3.9 (.3 ) 2.9 $ 417.2 $ 7,071.0 $ 4,353.8 $ 0 $ 14,314.8 $ 508.2 $ 10,131.3 $ 1,359.9 $ 1,992.3 $ 14,476.8 1Progressive does not allocate assets, liabilities, or investment income to operating segments.2Excludes total net realized gains (losses) on securities.36 Assumed Percentage Ceded to From of Amount Gross Other Other Assumed Amount Companies Companies Net Amount to Net $ 16,207.6 $ 189.6 $ 0 $ 16,018.0 0 $ 15,107.5 $ 204.7 $ 0 $ 14,902.8 0 $ 14,519.2 $ 204.4 $ 0 $ 14,314.8 0 37Year 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 $ 11,926.0 $ 22.0 $ 11,431.8 $ 10,876.8 $ (242.0 ) $ 10,541.6 $ 10,451.7 $ (320.4 ) $ 9,888.0 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 38Corporation:20132014 appearing in the 20122013 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.201339Form Filing No. Filing DateFiling No. Filing Date S-8 333-185704 December 27, 2012 333-185703 December 27, 2012 333-172663 March 8, 2011 333-104646 April 21, 2003 333-104653 April 21, 2003 333-41238 July 12, 2000 33-57121 December 29, 1994 33-51034 August 20, 1992 33-16509 August 14, 1987 20132014 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the 2012 2013Annual Report to Shareholders, which is incorporated by reference in The Progressive Corporation’sCorporation's Annual Report on Form 10-K for the year ended December 31, 2012.2013. We also consent to the incorporation by reference of our report dated February 26, 20132014 relating to the financial statement schedules, which appears in such Annual Report on
Form 10-K.201340 February 26, 20132014 By: Glenn M. Renwick Glenn M. RenwickDirector,Chairman of the Board, President, and Chief Executive Officer*Peter B. Lewis February 26, 20132014/s/ Glenn M. Renwick Director,/s/ Brian C. Domeck Vice President and Chief ExecutiveFinancial Officer February 26, 20132014Glenn M. Renwick Brian C. Domeck /s/ Jeffrey W. Basch Vice President and Chief Accounting Officer February 26, 2014 Jeffrey 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. /s/ Brian C. DomeckVice President and Chief Financial OfficerFebruary 26, 2013Brian C. Domeck/s/ Jeffrey W. BaschVice President and Chief Accounting OfficerFebruary 26, 2013Jeffrey W. Basch*Stuart B. BurgdoerferDirectorFebruary 26, 2013*Charles A. DavisDirectorFebruary 26, 2013*Roger N. FarahDirectorFebruary 26, 2013*Lawton W. FittDirectorFebruary 26, 2013*Stephen R. HardisDirectorFebruary 26, 2013*Jeffrey D. KellyDirectorFebruary 26, 2013*Heidi G. Miller, Ph.D.DirectorFebruary 26, 2013*Patrick H. Nettles, Ph.D.DirectorFebruary 26, 2013*Bradley T. Sheares, Ph.D.DirectorFebruary 26, 201341*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./s/ Charles E. Jarrett February 26, 20132014 Charles E. Jarrett 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) 42EXHIBIT INDEX 3(i) 3.1 Quarterly Report on Form 10-Q (filed on May 6, 2008; Exhibit 3.1 therein) 3(ii) 3.2 Code of Regulations of The Progressive Corporation (as amended April 20, 2012) Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 3.1 therein) 4 4.1 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 4.2 Form of 3.75% Senior Notes due 2021, issued in the aggregate principal amount of $500,000,000 under the 1993 Senior Indenture, as amended and supplemented Current Report on Form 8-K (filed on August 22, 2011; Exhibit 4.2 therein) 4 4.3 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 4.4 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 Filed herewith 4 4.5 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 4.12 below), as amended and supplemented Filed herewith 4 4.6 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 4.7 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 4.8 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) 43EXHIBIT INDEX 4 4.9 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 4.10 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 4.11 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 4.12 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) Filed herewith 4 4.13 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 Filed herewith 4 4.14 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 4.15 Replacement Capital Covenant dated June 21, 2007, of The Progressive Corporation Filed herewith 4 4.16 Termination of Replacement Capital Covenant, dated June 23, 2010 Current Report on Form 8-K (filed on June 24, 2010; Exhibit 4 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) 44EXHIBIT INDEX 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 Annual 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, 2012; Exhibit 10.7 therein) 10(iii) 10.6 The Progressive Corporation 2013 Gainsharing Plan Filed herewithAnnual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.6 therein) 10(iii) 10.7 The Progressive Corporation 2014 Gainsharing Plan Filed herewith 10(iii) 10.8 The Progressive Corporation 2007 Executive Bonus Plan Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.8 therein) 10(iii) 10.810.9 The Progressive Corporation 2003 Incentive Plan Registration Statement No. 333-104646 (filed on April 21, 2003; Exhibit 4(a) therein) 10(iii) 10.910.10 First Amendment to The Progressive Corporation 2003 Incentive Plan Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.10 therein) 10(iii) 10.1010.11 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(iii) 10.1110.12 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(iii) 10.1210.13 Fourth Amendment to The Progressive Corporation 2003 Incentive Plan Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.4 therein) 10(iii) 10.1310.14 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Time-Based Award) (for March 2007 and thereafter)though 2010) Filed herewithAnnual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.13 therein) 10(iii) 10.1410.15 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(iii) 10.1510.16 Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for March 2007 through February 2009) Filed herewithAnnual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.15 therein) 10(iii) 10.1610.17 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) 45EXHIBIT INDEX 10(iii) 10.1710.18 Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2003 Incentive Plan Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.1 therein) 10(iii) 10.1810.19 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards under The Progressive Corporation 2003 Incentive Plan Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.2 therein) 10(iii) 10.1910.20 The Progressive Corporation 2010 Equity Incentive Plan Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.1 therein) 10(iii) 10.2010.21 First Amendment to The Progressive Corporation 2010 Equity Incentive Plan Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.2 therein) 10(iii) 10.2110.22 Second Amendment to The Progressive Corporation 2010 Equity Incentive Plan Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.3 therein) 10(iii) 10.2210.23 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) 10.2310.24 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) 10.2410.25 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) 10.2510.26 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) 10.2610.27 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) 10.2710.29 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) 10.2810.30 Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Performance) under The Progressive Corporation 2010 Equity Incentive Plan as amended(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) EXHIBIT INDEX Description of Exhibit 10(iii) 10.2910.32Form 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(iii) 10.3010.34 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) 46EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601Form 10-KExhibitNo.Description of ExhibitIf Incorporated by Reference, Documents withWhich Exhibit was Previously Filed with SEC10(iii) 10.3110.35 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) 10.3210.36 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) 10.3310.37 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) 10(iii) 10.3410.38 The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.3 therein) 10(iii) 10.3510.39 First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.4 therein) 10(iii) 10.3610.40 Second Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.5 therein) 10(iii) 10.3710.41 Third Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.6 therein) 10(iii) 10.3810.42 Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.7 therein) 10(iii) 10.3910.43 The Progressive Corporation Executive Deferred Compensation Plan (2008 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.8 therein) 10(iii) 10.4010.44 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) 10.4110.45 The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.10 therein) EXHIBIT INDEX Description of Exhibit 10(iii) 10.4210.46 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) 47EXHIBIT INDEXExhibit No.UnderReg. S-K,Item 601Form 10-KExhibitNo.Description of ExhibitIf Incorporated by Reference, Documents withWhich Exhibit was Previously Filed with SEC10(iii) 10.4310.47 Form of The Progressive Corporation Executive Deferred Compensation Plan Deferral Agreement (for 2005 through 2009) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.12 therein) 10(iii) 10.4410.48 Form of The Progressive Corporation Executive Deferred Compensation Plan Gainsharing/Bonus Deferral Agreement (for 2010 and thereafter) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.13 therein) 10(iii) 10.4510.49 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2004) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.14 therein) 10(iii) 10.4610.50 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2005) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.15 therein) 10(iii) 10.4710.51 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2006 through 2009) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.16 therein) 10(iii) 10.4810.52 Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Unit Deferral Agreement (for 2010 and thereafter) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.17 therein) 10(iii) 10.4910.53 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2003) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.18 therein) 10(iii) 10.5010.54 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2004) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.19 therein) 10(iii) 10.5110.55 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2005) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.20 therein) 10(iii) 10.5210.56 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2006 through 2009) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.21 therein) 10(iii) 10.5310.57 Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Unit Deferral Agreement (for 2010 and thereafter) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.22 therein) 48EXHIBIT INDEX 10(iii) 10.5410.58 The Progressive Corporation Executive Deferred Compensation Trust (November 8, 2002 Amendment and Restatement) Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.23 therein) 10(iii) 10.5510.59 First Amendment to Trust Agreement between Fidelity Management Trust Company and Progressive Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.24 therein) 10(iii) 10.5610.60 Second Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.25 therein) 10(iii) 10.5710.61 Third Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.26 therein) 10(iii) 10.5810.62 Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.27 therein) 10(iii) 10.5910.63 Fifth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.28 therein) 10(iii) 10.6010.64 Sixth Amendment to The Progressive Corporation Executive Deferred Compensation Trust Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.29 therein) 10(iii) 10.6110.65 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) 10.6210.67 The Progressive Corporation Directors Deferral Plan (2008 Amendment and Restatement) Filed herewithAnnual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.62 therein) 10(iii) 10.6310.68 The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement)Filed herewith10(iii)10.64First 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;26, 2013; Exhibit 10.4710.63 therein)10(iii) 10.6510.69First 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) 10.6610.71 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 49EXHIBIT INDEX 10(iii) 10.67 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) 10.68 First Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement) Filed herewith 10(iii) 10.69 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) 10.70 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) 10.71 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) 10.72 2012 Progressive Capital Management Bonus Plan Current Report on Form 8-K (filed on March 6, 2012; Exhibit 10.1 therein) 10(iii) 10.73 2013 Progressive Capital Management Bonus Plan Filed herewith 11 11 Computation of Earnings Per Share Filed herewith 13 13 The Progressive Corporation 2012 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 40 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 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 50EXHIBIT 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 EXHIBIT INDEX 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 51EXHIBIT 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