UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-09518

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio

34-0963169

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

6300 Wilson Mills Road,

Mayfield Village,

Ohio

44143

(Address of principal executive offices)

(Zip Code)

(440) 461-5000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, $1.00 Par Value	PGR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, $1.00 par value: ~~585,040,907~~585,698,387 outstanding at ~~September 30, 2023~~March 31, 2024

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)


		Three Months				Nine Months
Periods Ended September 30,		2023		2022		2023		2022
Three Months Ended March 31,

Three Months Ended March 31,

Three Months Ended March 31,											2024	2023
(millions — except per share amounts)	(millions — except per share amounts)									(millions — except per share amounts)
Revenues	Revenues
Net premiums earned	Net premiums earned	$	14,894.3	$	12,398.9	$	42,891.8	$	36,349.7
Net premiums earned
Net premiums earned
Investment income	Investment income	510.2		333.6		1,384.3		868.2
Net realized gains (losses) on securities:	Net realized gains (losses) on securities:
Net realized gains (losses) on security sales
Net realized gains (losses) on security sales
Net realized gains (losses) on security sales	Net realized gains (losses) on security sales	(66.2)		(62.1)		38.6		430.0
Net holding period gains (losses) on securities	Net holding period gains (losses) on securities	(80.5)		(152.1)		17.9		(2,262.9)
Net impairment losses recognized in earnings	Net impairment losses recognized in earnings	(2.3)		(2.2)		(6.8)		(6.5)
Total net realized gains (losses) on securities	Total net realized gains (losses) on securities	(149.0)		(216.4)		49.7		(1,839.4)
Fees and other revenues	Fees and other revenues	223.7		181.4		656.6		531.9
Service revenues	Service revenues	81.4		82.7		234.9		230.5
Total revenues	Total revenues	15,560.6		12,780.2		45,217.3		36,140.9
Expenses	Expenses
Losses and loss adjustment expenses	Losses and loss adjustment expenses	11,387.9		10,018.7		34,182.0		28,298.2
Losses and loss adjustment expenses
Losses and loss adjustment expenses
Policy acquisition costs	Policy acquisition costs	1,173.2		970.9		3,442.6		2,867.9
Other underwriting expenses	Other underwriting expenses	1,420.7		1,496.4		4,710.3		4,433.9
Investment expenses	Investment expenses	7.2		5.8		18.8		17.4
Service expenses	Service expenses	91.7		82.8		264.6		221.5
Interest expense	Interest expense	69.7		63.1		198.7		180.4
Goodwill impairment		0		0		0		224.8
Total expenses	Total expenses	14,150.4		12,637.7		42,817.0		36,244.1
Net Income (Loss)
Income (loss) before income taxes		1,410.2		142.5		2,400.3		(103.2)
Net Income
Income before income taxes
Income before income taxes
Income before income taxes
Provision for income taxes	Provision for income taxes	288.9		18.4		485.7		1.7
Net income (loss)		1,121.3		124.1		1,914.6		(104.9)
Net income
Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)
Changes in:	Changes in:
Changes in:
Changes in:
Total net unrealized gains (losses) on fixed-maturity securities
Total net unrealized gains (losses) on fixed-maturity securities
Total net unrealized gains (losses) on fixed-maturity securities	Total net unrealized gains (losses) on fixed-maturity securities	(388.6)		(920.3)		(241.0)		(3,170.0)
Net unrealized losses on forecasted transactions	Net unrealized losses on forecasted transactions	0.2		0.1		0.4		0.3
Foreign currency translation adjustment	Foreign currency translation adjustment	0		(0.7)		0.2		(0.9)
Other comprehensive income (loss)	Other comprehensive income (loss)	(388.4)		(920.9)		(240.4)		(3,170.6)
Comprehensive income (loss)	Comprehensive income (loss)	$	732.9	$	(796.8)	$	1,674.2	$	(3,275.5)
Computation of Earnings Per Common Share	Computation of Earnings Per Common Share
Net income (loss)		$	1,121.3	$	124.1	$	1,914.6	$	(104.9)
Less: Preferred share dividends1		10.4		6.7		27.2		20.1
Net income (loss) available to common shareholders		$	1,110.9	$	117.4	$	1,887.4	$	(125.0)
Net income
Net income
Net income
Less: Preferred share dividends and other1
Net income available to common shareholders
Average common shares outstanding - Basic	Average common shares outstanding - Basic	584.8		584.5		584.9		584.4
Net effect of dilutive stock-based compensation	Net effect of dilutive stock-based compensation	2.7		2.6		2.6		2.7
Total average equivalent common shares - Diluted	Total average equivalent common shares - Diluted	587.5		587.1		587.5		587.1
Basic: Earnings per common share	Basic: Earnings per common share	$	1.90	$	0.20	$	3.23	$	(0.21)
Diluted: Earnings per common share	Diluted: Earnings per common share	$	1.89	$	0.20	$	3.21	$	(0.21)

1 ~~Changed to a floating dividend rate~~All of our outstanding Serial Preferred Shares, Series B, were redeemed in ~~March 2023.~~February 2024. See Note 19 – ~~Basis of Reporting and Accounting~~Dividends for further discussion.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Balance Sheets

(unaudited)


		September 30,				December 31,			March 31,		December 31,
(millions — except per share amounts)	(millions — except per share amounts)	2023		2022		2022		(millions — except per share amounts)	2024	2023		2023
Assets	Assets
Available-for-sale securities, at fair value:	Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $60,490.6, $48,205.7, and $50,264.0)		$	56,591.9	$	44,173.1	$	46,651.9
Short-term investments (amortized cost: $1,795.2, $4,237.6, and $2,861.7)		1,795.2		4,237.6		2,861.7
Available-for-sale securities, at fair value:
Available-for-sale securities, at fair value:
Fixed maturities (amortized cost: $65,949.3, $53,123.9, and $62,441.9)
Fixed maturities (amortized cost: $65,949.3, $53,123.9, and $62,441.9)
Fixed maturities (amortized cost: $65,949.3, $53,123.9, and $62,441.9)
Short-term investments (amortized cost: $1,326.7, $2,524.1, and $1,789.9)
Total available-for-sale securities	Total available-for-sale securities	58,387.1		48,410.7		49,513.6
Equity securities, at fair value:	Equity securities, at fair value:
Nonredeemable preferred stocks (cost: $976.9, $1,417.6, and $1,364.2)		868.9		1,254.4		1,213.2
Common equities (cost: $662.6, $803.7, and $826.1)		2,614.5		2,665.3		2,821.5
Nonredeemable preferred stocks (cost: $931.1, $1,197.7, and $977.1)
Nonredeemable preferred stocks (cost: $931.1, $1,197.7, and $977.1)
Nonredeemable preferred stocks (cost: $931.1, $1,197.7, and $977.1)
Common equities (cost: $708.2, $740.5, and $706.0)
Total equity securities	Total equity securities	3,483.4		3,919.7		4,034.7
Total investments	Total investments	61,870.5		52,330.4		53,548.3
Cash and cash equivalents	Cash and cash equivalents	123.5		350.9		203.5
Restricted cash and cash equivalents	Restricted cash and cash equivalents	14.9		14.4		17.4
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	138.4		365.3		220.9
Accrued investment income	Accrued investment income	378.1		217.4		282.5
Premiums receivable, net of allowance for credit losses of $361.2, $295.0, and $343.3		12,408.0		10,867.7		10,416.9
Premiums receivable, net of allowance for credit losses of $327.7, $340.9, and $369.1
Reinsurance recoverables	Reinsurance recoverables	5,331.2		6,306.8		5,832.1
Prepaid reinsurance premiums	Prepaid reinsurance premiums	235.0		367.5		295.5
Deferred acquisition costs	Deferred acquisition costs	1,732.1		1,585.2		1,544.4
Property and equipment, net of accumulated depreciation of $1,596.9, $1,499.0, and $1,551.1		919.8		1,067.1		1,034.0
Goodwill		227.9		227.9		227.9
Intangible assets, net of accumulated amortization of $170.0, $153.1, and $158.6		74.9		91.8		86.3
Property and equipment, net of accumulated depreciation of $1,580.2, $1,576.2, and $1,655.1
Net federal deferred income taxes	Net federal deferred income taxes	1,357.1		1,269.5		1,131.5
Other assets	Other assets	979.6		827.6		844.7
Total assets	Total assets	$	85,652.6	$	75,524.2	$	75,465.0
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity
Unearned premiums
Unearned premiums
Unearned premiums	Unearned premiums	$	20,761.7	$	17,796.9	$	17,293.6
Loss and loss adjustment expense reserves	Loss and loss adjustment expense reserves	33,577.3		30,631.8		30,359.3
Accounts payable, accrued expenses, and other liabilities	Accounts payable, accrued expenses, and other liabilities	7,030.7		5,931.9		5,532.8
Debt1	Debt1	6,887.6		6,387.4		6,388.3
Total liabilities	Total liabilities	68,257.3		60,748.0		59,574.0
Serial Preferred Shares (authorized 20.0)	Serial Preferred Shares (authorized 20.0)
Serial Preferred Shares, Series B, no par value (cumulative, liquidation preference $1,000 per share) (authorized, issued, and outstanding 0.5)		493.9		493.9		493.9
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 212.6, 212.5, and 212.7)		585.0		585.1		584.9
Serial Preferred Shares, Series B, no par value (cumulative, liquidation preference $1,000 per share) (authorized, issued, and outstanding of 0, 0.5, and 0.5)
Serial Preferred Shares, Series B, no par value (cumulative, liquidation preference $1,000 per share) (authorized, issued, and outstanding of 0, 0.5, and 0.5)
Serial Preferred Shares, Series B, no par value (cumulative, liquidation preference $1,000 per share) (authorized, issued, and outstanding of 0, 0.5, and 0.5)
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 211.9, 212.2, and 212.3)
Paid-in capital	Paid-in capital	1,977.9		1,839.6		1,893.0
Retained earnings	Retained earnings	17,380.9		14,987.5		15,721.2
Accumulated other comprehensive income (loss):	Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on fixed-maturity securities
Net unrealized gains (losses) on fixed-maturity securities
Net unrealized gains (losses) on fixed-maturity securities	Net unrealized gains (losses) on fixed-maturity securities	(3,027.3)		(3,113.8)		(2,786.3)
Net unrealized losses on forecasted transactions	Net unrealized losses on forecasted transactions	(14.1)		(14.6)		(14.5)
Foreign currency translation adjustment	Foreign currency translation adjustment	(1.0)		(1.5)		(1.2)
Total accumulated other comprehensive income (loss)	Total accumulated other comprehensive income (loss)	(3,042.4)		(3,129.9)		(2,802.0)
Total shareholders’ equity	Total shareholders’ equity	17,395.3		14,776.2		15,891.0
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	85,652.6	$	75,524.2	$	75,465.0

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

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)


		Three Months				Nine Months
Periods Ended September 30,		2023		2022		2023		2022
Three Months Ended March 31,

Three Months Ended March 31,

Three Months Ended March 31,										2024	2023
(millions — except per share amounts)	(millions — except per share amounts)
Serial Preferred Shares, No Par Value	Serial Preferred Shares, No Par Value
Serial Preferred Shares, No Par Value
Serial Preferred Shares, No Par Value
Balance, beginning of period	Balance, beginning of period	$	493.9	$	493.9	$	493.9	$	493.9
Balance, beginning of period
Balance, beginning of period
Redemption of Serial Preferred Shares, Series B1
Balance, end of period	Balance, end of period	493.9		493.9		493.9		493.9
Common Shares, $1.00 Par Value	Common Shares, $1.00 Par Value
Balance, beginning of period
Balance, beginning of period
Balance, beginning of period	Balance, beginning of period	585.3		584.9		584.9		584.4
Treasury shares purchased	Treasury shares purchased	(0.3)		(0.4)		(0.6)		(0.7)
Net restricted equity awards issued/vested	Net restricted equity awards issued/vested	0		0.6		0.7		1.4
Balance, end of period	Balance, end of period	585.0		585.1		585.0		585.1
Paid-In Capital	Paid-In Capital
Balance, beginning of period
Balance, beginning of period
Balance, beginning of period	Balance, beginning of period	1,935.7		1,815.2		1,893.0		1,772.9
Amortization of equity-based compensation	Amortization of equity-based compensation	42.9		26.0		86.7		69.7
Treasury shares purchased	Treasury shares purchased	(1.1)		(1.3)		(2.1)		(2.2)
Net restricted equity awards issued/vested	Net restricted equity awards issued/vested	0		(0.6)		(0.7)		(1.4)
Reinvested dividends on restricted stock units	Reinvested dividends on restricted stock units	0.4		0.3		1.0		0.6
Balance, end of period	Balance, end of period	1,977.9		1,839.6		1,977.9		1,839.6
Retained Earnings	Retained Earnings
Balance, beginning of period	Balance, beginning of period	16,350.4		14,967.7		15,721.2		15,339.7
Net income (loss)		1,121.3		124.1		1,914.6		(104.9)
Balance, beginning of period
Balance, beginning of period
Net income
Treasury shares purchased	Treasury shares purchased	(38.3)		(47.4)		(77.1)		(75.7)
Cash dividends declared on common shares ($0.10, $0.10, $0.30, and $0.30 per share)		(58.5)		(58.4)		(175.4)		(175.2)
Cash dividends declared on Serial Preferred Shares, Series B ($20.67700, $26.875, $39.60163, and $26.875 per share)		(10.3)		(13.4)		(19.8)		(13.4)
Cash dividends declared on common shares ($0.10 and $0.10 per share)1
Cash dividends declared on Serial Preferred Shares, Series B ($15.688377 and $0 per share)1
Reinvested dividends on restricted stock units	Reinvested dividends on restricted stock units	(0.4)		(0.3)		(1.0)		(0.6)
Other, net	Other, net	16.7		15.2		18.4		17.6
Balance, end of period	Balance, end of period	17,380.9		14,987.5		17,380.9		14,987.5
Accumulated Other Comprehensive Income (Loss)	Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period	Balance, beginning of period	(2,654.0)		(2,209.0)		(2,802.0)		40.7
Balance, beginning of period
Balance, beginning of period
Other comprehensive income (loss)	Other comprehensive income (loss)	(388.4)		(920.9)		(240.4)		(3,170.6)
Balance, end of period	Balance, end of period	(3,042.4)		(3,129.9)		(3,042.4)		(3,129.9)
Total shareholders’ equity	Total shareholders’ equity	$	17,395.3	$	14,776.2	$	17,395.3	$	14,776.2

1 See Note 9 – Dividends for further discussion.

There are 5.0 million Voting Preference Shares authorized; no such shares have been issued.

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


Nine Months Ended September 30,		2023		2022
Three Months Ended March 31,						Three Months Ended March 31,	2024	2023
(millions)	(millions)
Cash Flows From Operating Activities	Cash Flows From Operating Activities
Net income (loss)		$	1,914.6	$	(104.9)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Cash Flows From Operating Activities
Cash Flows From Operating Activities
Net income
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	212.0		227.5
Amortization of intangible assets		11.4		25.5
Depreciation
Depreciation
Net amortization (accretion) of fixed-income securities	Net amortization (accretion) of fixed-income securities	(7.6)		1.6
Amortization of equity-based compensation	Amortization of equity-based compensation	86.7		69.7
Net realized (gains) losses on securities	Net realized (gains) losses on securities	(49.7)		1,839.4
Net (gains) losses on disposition of property and equipment	Net (gains) losses on disposition of property and equipment	23.0		5.3
Goodwill impairment		0		224.8
Changes in:	Changes in:
Premiums receivable
Premiums receivable
Premiums receivable	Premiums receivable	(1,991.1)		(1,468.2)
Reinsurance recoverables	Reinsurance recoverables	500.9		(1,326.3)
Prepaid reinsurance premiums	Prepaid reinsurance premiums	60.5		90.1
Deferred acquisition costs	Deferred acquisition costs	(187.7)		(229.6)
Income taxes	Income taxes	73.6		(591.6)
Unearned premiums	Unearned premiums	3,468.1		2,181.1
Loss and loss adjustment expense reserves	Loss and loss adjustment expense reserves	3,218.0		4,467.7
Accounts payable, accrued expenses, and other liabilities	Accounts payable, accrued expenses, and other liabilities	1,089.1		546.5
Other, net	Other, net	(215.8)		(39.4)
Net cash provided by operating activities	Net cash provided by operating activities	8,206.0		5,919.2
Cash Flows From Investing Activities	Cash Flows From Investing Activities
Purchases:	Purchases:
Purchases:
Purchases:
Fixed maturities
Fixed maturities
Fixed maturities	Fixed maturities	(18,956.2)		(18,672.7)
Equity securities	Equity securities	(23.2)		(126.5)
Sales:	Sales:
Fixed maturities	Fixed maturities	4,780.3		9,737.6
Fixed maturities
Fixed maturities
Equity securities	Equity securities	745.5		1,467.0
Maturities, paydowns, calls, and other:	Maturities, paydowns, calls, and other:
Fixed maturities
Fixed maturities
Fixed maturities	Fixed maturities	3,693.2		4,158.5
Equity securities	Equity securities	65.3		39.3
Net (purchases) sales of short-term investments	Net (purchases) sales of short-term investments	1,132.0		(3,266.6)
Net change in unsettled security transactions	Net change in unsettled security transactions	201.7		(68.7)
Purchases of property and equipment	Purchases of property and equipment	(169.9)		(245.0)
Sales of property and equipment	Sales of property and equipment	35.0		16.0
Net cash used in investing activities	Net cash used in investing activities	(8,496.3)		(6,961.1)
Cash Flows From Financing Activities	Cash Flows From Financing Activities
Redemption of Serial Preferred Shares, Series B
Redemption of Serial Preferred Shares, Series B
Redemption of Serial Preferred Shares, Series B
Dividends paid to common shareholders	Dividends paid to common shareholders	(175.5)		(175.5)
Dividends paid to preferred shareholders	Dividends paid to preferred shareholders	(33.2)		(26.8)
Acquisition of treasury shares for restricted stock tax liabilities	Acquisition of treasury shares for restricted stock tax liabilities	(52.3)		(76.2)
Acquisition of treasury shares acquired in open market		(27.5)		(2.4)
Net proceeds from debt issuances		496.3		1,486.0
Net cash provided by financing activities		207.8		1,205.1
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents		(82.5)		163.2

Net cash used in financing activities
Net cash used in financing activities
Net cash used in financing activities
Increase in cash, cash equivalents, restricted cash, and restricted cash equivalents
Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1	Cash, cash equivalents, restricted cash, and restricted cash equivalents – January 1	220.9		202.1
Cash, cash equivalents, restricted cash, and restricted cash equivalents – September 30		$	138.4	$	365.3
Cash, cash equivalents, restricted cash, and restricted cash equivalents – March 31

See notes to consolidated financial statements.

The Progressive Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

1. BASIS OF REPORTING AND ACCOUNTING

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

The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended ~~September 30, 2023,~~March 31, 2024, are not necessarily indicative of the results expected for the full year. These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, ~~2022 (2022~~2023 (2023 Annual Report to Shareholders).

~~Insurance~~ Premiums ~~and Receivables~~Receivable

We perform analyses to evaluate our premiums receivable for expected credit losses. See our ~~2022~~2023 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:


		Three Months Ended September 30,					Nine Months Ended September 30,
						Three Months Ended March 31,
						Three Months Ended March 31,
						Three Months Ended March 31,
(millions)	(millions)	2023		2022			2023		2022		(millions)	2024	2023
Allowance for credit losses, beginning of period	Allowance for credit losses, beginning of period	$	343.9	$	265.8		$	343.3	$	280.4
Increase in allowance1	Increase in allowance1	157.5		130.9			399.7		320.6
Write-offs2	Write-offs2	(140.2)		(101.7)			(381.8)		(306.0)
Allowance for credit losses, end of period	Allowance for credit losses, end of period	$	361.2	$	295.0		$	361.2	$	295.0

1 Represents the incremental increase in other underwriting expenses.

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

Property and Equipment

Included in other assets in our consolidated balance sheets are “held for sale” ~~property.~~properties of $169.8 million, $67.8 million, and $77.2 million at March 31, 2024 and 2023, and December 31, 2023, respectively. When ~~property is transferred~~properties are determined to ~~held~~be “held for sale,” the property is written down to its fair value less estimated costs to sell, as applicable. The increase in the ~~property. At September 30, 2023 and 2022, and~~March 31, 2024, balance from December 31, ~~2022, we had held for sale property of $81.6 million, $47.4 million, and $48.7 million, respectively.~~2023, was primarily driven by a decision in the first quarter to sell certain regional properties to optimize our real estate portfolio by consolidating employees into already existing alternative properties.

Earnings Per Share

~~Net income is reduced by preferred share dividends to determine net income available to common shareholders and is used in~~We redeemed all of our ~~calculation of the per common share amounts. Beginning March 15, 2023, the annual dividend rate for our~~outstanding Serial Preferred Shares, Series B, ~~Preferred Shares switched to a floating rate. The floating nature of the dividend rate will impact the amount of the adjustment required to calculate net income available to common shareholders.~~in February 2024. See Note 9 – Dividends for further discussion.

~~For periods when a~~ To determine net ~~loss~~income available to common shareholders, which is ~~reported, earnings~~used in the calculation of the per common share ~~are calculated using basic average equivalent~~amounts, we reduced net income by preferred share dividends, and, for 2024,

•underwriting discounts and commissions on the preferred share issuance,

•initial issuance costs related to the preferred shares, ~~since diluted earnings per~~and

•excise taxes related to the preferred share ~~would be antidilutive.~~redemption.

New Accounting Standards

~~During the first quarter 2023, the Financial Accounting Standards Board issued an Accounting Standards Update (ASU), which permits an election~~On January 1, 2024, we started to amortize the remaining original cost of tax equity investments to the provision for income taxes, ifsince certain conditions ~~are met. Currently,~~were met, on the modified retrospective basis, pursuant to an Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board. Previously, these investments ~~are~~were accounted for under the equity method of accounting. ~~This~~The adoption of the ASU ~~will be effective for fiscal years (including interim periods within those fiscal years) beginning after December 15, 2023 (2024 for calendar-year companies). If elected, this standard must be applied~~had no cumulative effect on ~~either a modified retrospective or a retrospective basis. We intend to adopt the new standard under the modified retrospective basis, however, we do~~retained earnings and did not ~~expect this standard to~~ have a material impact on our financial condition or results of operations. The amount of income tax credits and investment amortization recognized for the first quarter 2024, and the carrying amount of the tax credit investments at March 31, 2024, were not material to our financial condition or results of operations and, therefore, no additional disclosure is provided.

Reclassification

Goodwill and intangible assets are included in other assets in our consolidated balance sheets and the amortization of intangible assets in other, net, in cash provided by operating activities in our consolidated statements of cash flows. The March 31, 2023, amounts, which were presented separately on the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.

2. INVESTMENTS

The following tables present the composition of our investment portfolio by major security type. Our securities are reported in our consolidated balance sheets at fair value. The changes in fair value for our fixed-maturity securities (other than hybrid securities) are reported as a component of accumulated other comprehensive income (loss), net of deferred income taxes, in our consolidated

balance sheets. The net holding period gains (losses) reported below represent the inception-to-date changes in fair value for the hybrid and equity securities. The changes in the net holding period gains (losses) between periods are recorded as a component of net realized gains (losses) on securities in our consolidated statements of comprehensive income.


($ in millions)	($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value		($ in millions)		Cost						Gross Unrealized Gains						Gross Unrealized Losses						Net Holding Period Gains (Losses)						Fair Value					% of Total Fair Value
September 30, 2023
March 31, 2024
Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:	Available-for-sale securities:
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	36,392.2	$	0	$	(2,098.4)	$	0	$	34,293.8	55.4	%	$	39,823.8			$		$	66.2			$		$	(1,327.3)			$		$	0			$		$	38,562.7			55.8		55.8		%
State and local government obligations	State and local government obligations	2,257.6		0		(203.3)		0		2,054.3		3.3
Foreign government obligations	Foreign government obligations	16.9		0		(1.5)		0		15.4		0.1
Corporate debt securities	Corporate debt securities	10,880.8		1.3		(591.8)		(36.1)		10,254.2		16.6
Residential mortgage-backed securities	Residential mortgage-backed securities	530.4		0.2		(13.0)		(1.8)		515.8		0.8
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,699.5		2.1		(723.9)		0		3,977.7		6.4
Other asset-backed securities	Other asset-backed securities	5,524.2		0.1		(210.1)		(0.6)		5,313.6		8.6
Redeemable preferred stocks	Redeemable preferred stocks	189.0		0		(4.3)		(17.6)		167.1		0.3
Total fixed maturities	Total fixed maturities	60,490.6		3.7		(3,846.3)		(56.1)		56,591.9		91.5
Short-term investments	Short-term investments	1,795.2		0		0		0		1,795.2		2.9
Total available-for-sale securities	Total available-for-sale securities	62,285.8		3.7		(3,846.3)		(56.1)		58,387.1		94.4
Equity securities:	Equity securities:
Nonredeemable preferred stocks	Nonredeemable preferred stocks	976.9		0		0		(108.0)		868.9		1.4
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Common equities	Common equities	662.6		0		0		1,951.9		2,614.5		4.2
Total equity securities	Total equity securities	1,639.5		0		0		1,843.9		3,483.4		5.6
Total portfolio1	Total portfolio1	$	63,925.3	$	3.7	$	(3,846.3)	$	1,787.8	$	61,870.5	100.0	%	Total portfolio1		$	68,915.3		$			$	125.5		$			$	(2,423.2)		$			$	2,420.4		$			$	69,038.0		100.0			100.0	%


($ in millions)	($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value		($ in millions)		Cost						Gross Unrealized Gains						Gross Unrealized Losses						Net Holding Period Gains (Losses)						Fair Value					% of Total Fair Value
September 30, 2022
March 31, 2023
Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:	Available-for-sale securities:
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	24,260.9	$	0	$	(1,855.4)	$	0	$	22,405.5	42.8	%	$	28,490.9			$		$	68.8			$		$	(1,209.6)			$		$	0			$		$	27,350.1			48.3		48.3		%
State and local government obligations	State and local government obligations	2,140.9		0		(215.4)		0		1,925.5		3.7
Foreign government obligations	Foreign government obligations	16.7		0		(1.4)		0		15.3		0.1
Corporate debt securities	Corporate debt securities	10,119.8		0		(832.5)		(58.9)		9,228.4		17.6
Residential mortgage-backed securities	Residential mortgage-backed securities	754.2		0.4		(16.5)		(15.1)		723.0		1.4
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,833.9		1.4		(747.4)		0		5,087.9		9.7
Other asset-backed securities	Other asset-backed securities	4,876.7		0		(268.9)		(1.9)		4,605.9		8.8
Redeemable preferred stocks	Redeemable preferred stocks	202.6		0		(5.6)		(15.4)		181.6		0.3
Total fixed maturities	Total fixed maturities	48,205.7		1.8		(3,943.1)		(91.3)		44,173.1		84.4
Short-term investments	Short-term investments	4,237.6		0		0		0		4,237.6		8.1
Total available-for-sale securities	Total available-for-sale securities	52,443.3		1.8		(3,943.1)		(91.3)		48,410.7		92.5
Equity securities:	Equity securities:
Nonredeemable preferred stocks	Nonredeemable preferred stocks	1,417.6		0		0		(163.2)		1,254.4		2.4
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Common equities	Common equities	803.7		0		0		1,861.6		2,665.3		5.1
Total equity securities	Total equity securities	2,221.3		0		0		1,698.4		3,919.7		7.5
Total portfolio1	Total portfolio1	$	54,664.6	$	1.8	$	(3,943.1)	$	1,607.1	$	52,330.4	100.0	%	Total portfolio1		$	57,586.2		$			$	118.9		$			$	(2,893.0)		$			$	1,874.3		$			$	56,686.4		100.0			100.0	%


($ in millions)	($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Holding Period Gains (Losses)		Fair Value		% of Total Fair Value		($ in millions)		Cost						Gross Unrealized Gains						Gross Unrealized Losses						Net Holding Period Gains (Losses)						Fair Value					% of Total Fair Value
December 31, 2022
December 31, 2023
Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:	Available-for-sale securities:
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	26,770.7	$	1.4	$	(1,604.7)	$	0	$	25,167.4	47.0	%	$	37,823.2			$		$	204.1			$		$	(1,157.9)			$		$	0			$		$	36,869.4			55.9		55.9		%
State and local government obligations	State and local government obligations	2,180.0		0		(202.9)		0		1,977.1		3.7
Foreign government obligations	Foreign government obligations	16.8		0		(1.3)		0		15.5		0.1
Corporate debt securities	Corporate debt securities	10,125.8		9.8		(676.1)		(46.8)		9,412.7		17.6
Residential mortgage-backed securities	Residential mortgage-backed securities	696.1		0.3		(17.5)		(12.1)		666.8		1.2
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,446.0		1.5		(784.0)		0		4,663.5		8.7
Other asset-backed securities	Other asset-backed securities	4,826.0		0.9		(260.5)		(1.8)		4,564.6		8.5
Redeemable preferred stocks	Redeemable preferred stocks	202.6		0		(4.5)		(13.8)		184.3		0.3
Total fixed maturities	Total fixed maturities	50,264.0		13.9		(3,551.5)		(74.5)		46,651.9		87.1
Short-term investments	Short-term investments	2,861.7		0		0		0		2,861.7		5.4
Total available-for-sale securities	Total available-for-sale securities	53,125.7		13.9		(3,551.5)		(74.5)		49,513.6		92.5
Equity securities:	Equity securities:
Nonredeemable preferred stocks	Nonredeemable preferred stocks	1,364.2		0		0		(151.0)		1,213.2		2.3
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Common equities	Common equities	826.1		0		0		1,995.4		2,821.5		5.2
Total equity securities	Total equity securities	2,190.3		0		0		1,844.4		4,034.7		7.5
Total portfolio1	Total portfolio1	$	55,316.0	$	13.9	$	(3,551.5)	$	1,769.9	$	53,548.3	100.0	%	Total portfolio1		$	65,914.9		$			$	312.2		$			$	(2,346.8)		$			$	2,118.3		$			$	65,998.6		100.0			100.0	%

1 At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we had ~~$167.3~~$16.2 million and ~~$74.7~~$22.8 million, respectively, of net unsettled security purchase transactions included in other liabilities, compared to ~~$34.4~~$45.6 million included in other assets at December 31, ~~2022.~~2023.

The total fair value of the portfolio at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, included $3.2 billion, $4.1 billion, ~~$4.2 billion,~~ and ~~$4.4~~$4.2 billion, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of unsettled security transactions.

At ~~September 30, 2023,~~March 31, 2024, bonds and certificates of deposit in the principal amount of ~~$612.4~~$672.4 million were on deposit to meet state insurance regulatory requirements. We did not hold any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at ~~September 30,~~March 31, 2024 or 2023, ~~or 2022,~~ or December 31, ~~2022.~~2023. At ~~September 30, 2023,~~March 31, 2024, we did not hold any debt securities that were non-income producing during the preceding 12 months.

Short-Term Investments Our short-term investments may include commercial paper and other investments that are expected to mature, or are redeemable, within one year.

We did not have any open repurchase or reverse repurchase transactions positions at September 30, 2023 and 2022, or December 31, 2022, and did not enter into any such transactions during the first nine months of 2023. During 2022, however, we did invest in repurchase transactions that had an immaterial impact on our results of operations and cash flows. To the extent we enter into repurchase or reverse repurchase transactions, consistent with past practice, we would elect not to offset these transactions and would report them on a gross basis in our consolidated balance sheets, despite the option to elect to offset these transactions as long as they were with the same counterparty and subject to an enforceable master netting arrangement.

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


		September 30,
(millions)	(millions)	2023		2022		Dec. 31, 2022
(millions)
(millions)								2024	2023	Dec. 31, 2023
Fixed Maturities:	Fixed Maturities:
Corporate debt securities
Corporate debt securities
Corporate debt securities	Corporate debt securities	$	511.1	$	500.4	$	535.4
Residential mortgage-backed securities	Residential mortgage-backed securities	410.8		550.8		509.6
Other asset-backed securities	Other asset-backed securities	19.4		51.4		42.0
Redeemable preferred stocks	Redeemable preferred stocks	136.4		133.0		134.7
Total hybrid securities	Total hybrid securities	$	1,077.7	$	1,235.6	$	1,221.7

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

Fixed Maturities The composition of fixed maturities by maturity at ~~September 30, 2023,~~March 31, 2024, was:


(millions)	(millions)	Cost		Fair Value		(millions)	Cost	Fair Value
Less than one year	Less than one year	$	9,639.9	$	9,387.8
One to five years	One to five years	37,572.4		35,419.0
Five to ten years	Five to ten years	13,197.7		11,710.3
Ten years or greater	Ten years or greater	80.6		74.8
Total	Total	$	60,490.6	$	56,591.9

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

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




		Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months					12 Months or Greater					Total No. of Sec.	Total Fair Value	Gross Unrealized Losses	Less than 12 Months				12 Months or Greater
($ in millions)	($ in millions)						No. of Sec.	Fair Value		Unrealized Losses		No. of Sec.	Fair Value		Unrealized Losses					($ in millions)	No. of Sec.	Fair Value	Unrealized Losses		No. of Sec.	Fair Value	Unrealized Losses
September 30, 2023
March 31, 2024
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	173	$	34,293.8	$	(2,098.4)	37	$	16,686.2	$	(557.6)	136	$	17,607.6	$	(1,540.8)
State and local government obligations	State and local government obligations	356	2,033.9		(203.3)		46	359.6		(7.6)		310	1,674.3		(195.7)
Foreign government obligations	Foreign government obligations	1	15.4		(1.5)		0	0		0		1	15.4		(1.5)
Corporate debt securities	Corporate debt securities	467	9,490.0		(591.8)		164	3,380.4		(94.1)		303	6,109.6		(497.7)
Residential mortgage-backed securities	Residential mortgage-backed securities	40	99.9		(13.0)		2	0.4		0		38	99.5		(13.0)
Commercial mortgage-backed securities	Commercial mortgage-backed securities	196	3,960.8		(723.9)		0	0		0		196	3,960.8		(723.9)
Other asset-backed securities	Other asset-backed securities	295	5,001.8		(210.1)		104	2,056.9		(8.8)		191	2,944.9		(201.3)
Redeemable preferred stocks	Redeemable preferred stocks	3	30.6		(4.3)		0	0		0		3	30.6		(4.3)
Total fixed maturities	Total fixed maturities	1,531	$	54,926.2	$	(3,846.3)	353	$	22,483.5	$	(668.1)	1,178	$	32,442.7	$	(3,178.2)

Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Unrealized
Losses No. of Sec. Fair
Value Unrealized
Losses
September 30, 2022
U.S. government obligations 157 $ 22,385.4 $ (1,855.4) 103 $ 16,085.8 $ (1,095.6) 54 $ 6,299.6 $ (759.8)
State and local government obligations 353 1,911.0 (215.4) 292 1,363.1 (129.8) 61 547.9 (85.6)
Foreign government obligations 1 15.3 (1.4) 1 15.3 (1.4) 0 0 0
Corporate debt securities 452 8,885.6 (832.5) 391 7,875.5 (699.0) 61 1,010.1 (133.5)
Residential mortgage-backed securities 44 165.1 (16.5) 34 126.0 (11.8) 10 39.1 (4.7)
Commercial mortgage-backed securities 234 5,074.3 (747.4) 182 3,856.0 (425.4) 52 1,218.3 (322.0)
Other asset-backed securities 277 4,544.8 (268.9) 217 3,597.1 (183.4) 60 947.7 (85.5)
Redeemable preferred stocks 4 48.6 (5.6) 3 37.7 (4.0) 1 10.9 (1.6)
Total fixed maturities 1,522 $ 43,030.1 $ (3,943.1) 1,223 $ 32,956.5 $ (2,550.4) 299 $ 10,073.6 $ (1,392.7)


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months					12 Months or Greater
($ in millions)						No. of Sec.	Fair Value		Unrealized Losses		No. of Sec.	Fair Value		Unrealized Losses
March 31, 2023
U.S. government obligations	148	$	19,446.8	$	(1,209.6)	40	$	5,938.5	$	(127.5)	108	$	13,508.3	$	(1,082.1)
State and local government obligations	343	1,943.6		(161.7)		72	350.7		(7.4)		271	1,592.9		(154.3)
Foreign government obligations	1	15.8		(1.1)		0	0		0		1	15.8		(1.1)
Corporate debt securities	390	8,129.9		(525.4)		93	2,239.3		(75.5)		297	5,890.6		(449.9)
Residential mortgage-backed securities	43	141.7		(16.3)		13	10.0		(0.4)		30	131.7		(15.9)
Commercial mortgage-backed securities	220	4,484.5		(751.2)		11	53.4		(1.5)		209	4,431.1		(749.7)
Other asset-backed securities	267	4,391.9		(222.5)		61	884.8		(6.2)		206	3,507.1		(216.3)
Redeemable preferred stocks	4	48.8		(5.2)		1	10.6		(1.4)		3	38.2		(3.8)
Total fixed maturities	1,416	$	38,603.0	$	(2,893.0)	291	$	9,487.3	$	(219.9)	1,125	$	29,115.7	$	(2,673.1)

Total No. of Sec. Total
Fair
Value Gross
Unrealized
Losses Less than 12 Months 12 Months or Greater
($ in millions) No. of Sec. Fair
Value Unrealized
Losses No. of Sec. Fair
Value Unrealized
Losses
December 31, 2022
U.S. government obligations 160 $ 24,802.5 $ (1,604.7) 90 $ 17,327.2 $ (699.2) 70 $ 7,475.3 $ (905.5)
State and local government obligations 348 1,948.8 (202.9) 239 1,124.2 (76.8) 109 824.6 (126.1)
Foreign government obligations 1 15.5 (1.3) 0 0 0 1 15.5 (1.3)
Corporate debt securities 422 8,449.6 (676.1) 285 5,717.6 (426.1) 137 2,732.0 (250.0)
Residential mortgage-backed securities 45 151.0 (17.5) 27 65.1 (6.8) 18 85.9 (10.7)
Commercial mortgage-backed securities 226 4,651.1 (784.0) 99 1,702.0 (192.1) 127 2,949.1 (591.9)
Other asset-backed securities 262 4,247.8 (260.5) 130 2,144.8 (100.9) 132 2,103.0 (159.6)
Redeemable preferred stocks 4 49.6 (4.5) 3 38.5 (3.1) 1 11.1 (1.4)
Total fixed maturities 1,468 $ 44,315.9 $ (3,551.5) 873 $ 28,119.4 $ (1,505.0) 595 $ 16,196.5 $ (2,046.5)

During the third quarter 2023, the credit ratings of our U.S. government obligations went down due to two major credit rating agencies rating U.S. government debt at AA+ instead of AAA. Additionally, we had 14 securities in other fixed-maturity sectors that had their credit ratings downgraded, with a combined fair value of $144.2 million and an unrealized loss of $7.1 million as of September 30, 2023.


	Total No. of Sec.	Total Fair Value		Gross Unrealized Losses		Less than 12 Months					12 Months or Greater
($ in millions)						No. of Sec.	Fair Value		Unrealized Losses		No. of Sec.	Fair Value		Unrealized Losses
December 31, 2023
U.S. government obligations	147	$	28,225.0	$	(1,157.9)	25	$	11,890.0	$	(100.0)	122	$	16,335.0	$	(1,057.9)
State and local government obligations	324	1,846.2		(138.4)		31	169.9		(0.9)		293	1,676.3		(137.5)
Foreign government obligations	1	16.3		(1.0)		0	0		0		1	16.3		(1.0)
Corporate debt securities	313	6,642.4		(332.3)		26	617.2		(14.7)		287	6,025.2		(317.6)
Residential mortgage-backed securities	39	88.4		(10.0)		2	0.4		0		37	88.0		(10.0)
Commercial mortgage-backed securities	189	3,912.2		(597.7)		1	30.7		(2.5)		188	3,881.5		(595.2)
Other asset-backed securities	207	3,299.1		(107.1)		41	639.4		(1.2)		166	2,659.7		(105.9)
Redeemable preferred stocks	3	32.5		(2.4)		0	0		0		3	32.5		(2.4)
Total fixed maturities	1,223	$	44,062.1	$	(2,346.8)	126	$	13,347.6	$	(119.3)	1,097	$	30,714.5	$	(2,227.5)

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

We had seven securities that had their credit ratings downgraded during the first quarter 2024, with a combined fair value of $58.2 million and an unrealized loss of $8.2 million as of March 31, 2024.

Allowance For Credit and Uncollectible Losses We are required to measure the amount of potential credit losses for all fixed-maturity securities in an unrealized loss position. We did not record any allowances for credit losses or any write-offs for amounts deemed to be uncollectible during the first ~~nine~~three months of ~~2023~~2024 or ~~2022,~~2023, and did not have a material credit loss allowance balance as of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ or December 31, ~~2022.~~2023. We considered several factors and inputs related to the individual securities as part of our analysis. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included:

•current performance indicators on the business model or underlying assets (e.g., delinquency rates, foreclosure rates, and default rates);

•credit support (via current levels of subordination);

•historical credit ratings; and

•updated cash flow expectations based upon these performance indicators.

In order to determine the amount of credit loss, if any, we initially reviewed securities in a loss position to determine whether it was likely that we would be required, or intended, to sell any of the securities prior to the recovery of their respective cost bases (which could be maturity). If we were likely to, or intended to, sell prior to a potential recovery, we would write off the unrealized loss. For those securities that we determined we were not likely to, or did not intend to, sell prior to a potential recovery, we

performed additional analysis to determine if the loss was

credit related. For securities subject to credit related loss, we calculated the net present value (NPV) of the cash flows expected (i.e., expected recovery value) using the current book yield for each security. The NPV was then compared to the security’s current amortized value to determine if a credit loss existed. In the event that the NPV was below the amortized value, and the amount was determined to be material ~~individually,~~on any specific security, or in the aggregate, a credit loss would be deemed to exist, and either an allowance for credit losses would be created, or if an allowance currently existed, either a recovery of the previous allowance, or an incremental loss, would be recorded to net realized gains (losses) on securities.

As of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, we believe that none of the unrealized losses on our fixed-maturity securities were related to material credit losses on any ~~individual security,~~specific securities, or in the aggregate. We continue to expect all the securities in our fixed-maturity portfolio to pay their principal and interest obligations.

In addition, we reviewed our accrued investment income outstanding on those securities in an unrealized loss position at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, to determine if the accrued interest amounts were ~~determined to be~~ uncollectible. Based on our analysis, we believe the issuers have sufficient liquidity and capital reserves to meet their current interest, and future principal, obligations and, therefore, did not write off any accrued income as uncollectible at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ or December 31, ~~2022.~~2023.

Realized Gains (Losses) The components of net realized gains (losses) for the three ~~and nine~~ months ended ~~September 30,~~March 31, were:




		Three Months				Nine Months					Three Months
(millions)	(millions)	2023		2022		2023		2022		(millions)		2024	2023
Gross realized gains on security sales	Gross realized gains on security sales
Available-for-sale securities:	Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:
U.S. government obligations	U.S. government obligations	$	0.2	$	0	$	4.2	$	4.6
U.S. government obligations
U.S. government obligations
State and local government obligations
Corporate debt securities

Corporate debt securities		0.7		0.3		0.8		6.8
Residential mortgage-backed securities		0		0		0		0.7

Other asset-backed securities		0		0		0		0.1

Total available-for-sale securities

Total available-for-sale securities

Total available-for-sale securities	Total available-for-sale securities	0.9		0.3		5.0		12.2
Equity securities:	Equity securities:
Nonredeemable preferred stocks	Nonredeemable preferred stocks	0		0.1		0.3		17.6
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Common equities	Common equities	0.3		1.4		354.2		832.5
Total equity securities	Total equity securities	0.3		1.5		354.5		850.1

Subtotal gross realized gains on security sales	Subtotal gross realized gains on security sales	1.2		1.8		359.5		862.3
Subtotal gross realized gains on security sales
Subtotal gross realized gains on security sales
Gross realized losses on security sales	Gross realized losses on security sales
Available-for-sale securities:	Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	(14.6)		0		(27.2)		(233.5)
State and local government obligations	State and local government obligations	0		0		0		(1.0)
Corporate debt securities	Corporate debt securities	(19.1)		(14.0)		(69.3)		(51.8)

Commercial mortgage-backed securities	Commercial mortgage-backed securities	(20.6)		(44.8)		(100.6)		(58.6)
Commercial mortgage-backed securities
Commercial mortgage-backed securities
Other asset-backed securities	Other asset-backed securities	(5.2)		0		(5.6)		(2.1)

Redeemable preferred stocks
Short-term investments	Short-term investments	0		0		(0.4)		(0.3)
Total available-for-sale securities	Total available-for-sale securities	(59.5)		(58.8)		(203.1)		(347.3)
Equity securities:	Equity securities:
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Nonredeemable preferred stocks	Nonredeemable preferred stocks	(7.4)		(5.1)		(117.6)		(7.0)
Common equities	Common equities	(8.9)		0		(21.8)		(78.0)
Total equity securities	Total equity securities	(16.3)		(5.1)		(139.4)		(85.0)
Subtotal gross realized losses on security sales	Subtotal gross realized losses on security sales	(75.8)		(63.9)		(342.5)		(432.3)
Net realized gains (losses) on security sales	Net realized gains (losses) on security sales
Available-for-sale securities:	Available-for-sale securities:
Available-for-sale securities:
Available-for-sale securities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	(14.4)		0		(23.0)		(228.9)
State and local government obligations	State and local government obligations	0		0		0		(1.0)
Corporate debt securities	Corporate debt securities	(18.4)		(13.7)		(68.5)		(45.0)
Residential mortgage-backed securities		0		0		0		0.7

Commercial mortgage-backed securities
Commercial mortgage-backed securities
Commercial mortgage-backed securities	Commercial mortgage-backed securities	(20.6)		(44.8)		(100.6)		(58.6)
Other asset-backed securities	Other asset-backed securities	(5.2)		0		(5.6)		(2.0)

Redeemable preferred stocks
Short-term investments	Short-term investments	0		0		(0.4)		(0.3)
Total available-for-sale securities	Total available-for-sale securities	(58.6)		(58.5)		(198.1)		(335.1)
Equity securities:	Equity securities:
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Nonredeemable preferred stocks	Nonredeemable preferred stocks	(7.4)		(5.0)		(117.3)		10.6
Common equities	Common equities	(8.6)		1.4		332.4		754.5
Total equity securities	Total equity securities	(16.0)		(3.6)		215.1		765.1

Subtotal net realized gains (losses) on security sales	Subtotal net realized gains (losses) on security sales	(74.6)		(62.1)		17.0		430.0
Subtotal net realized gains (losses) on security sales
Subtotal net realized gains (losses) on security sales
Other assets	Other assets
Gain
Gain
Gain	Gain	8.4		0		21.6		0
Impairment	Impairment	(2.3)		(2.2)		(6.8)		(6.5)
Subtotal net realized gains (losses) on other assets	Subtotal net realized gains (losses) on other assets	6.1		(2.2)		14.8		(6.5)
Net holding period gains (losses)	Net holding period gains (losses)
Hybrid securities	Hybrid securities	(0.3)		(11.4)		18.4		(98.8)
Hybrid securities
Hybrid securities
Equity securities	Equity securities	(80.2)		(140.7)		(0.5)		(2,164.1)

Subtotal net holding period gains (losses)
Subtotal net holding period gains (losses)
Subtotal net holding period gains (losses)	Subtotal net holding period gains (losses)	(80.5)		(152.1)		17.9		(2,262.9)

Total net realized gains (losses) on securities	Total net realized gains (losses) on securities	$	(149.0)	$	(216.4)	$	49.7	$	(1,839.4)

Total net realized gains (losses) on securities

Total net realized gains (losses) on securities

Realized gains (losses) on securities sold are computed using the first-in-first-out method. ~~For~~During the first ~~nine~~three months of ~~both~~2024, the majority of our gross realized losses on security sales were U.S. Treasury Notes that were sold for duration management. We also sold corporate debt securities with less attractive risk/reward profiles and select commercial mortgage-backed securities. During the first quarter 2023, ~~and 2022,~~ the gross gains in common equities reflected sales of securities, as part of our plan to incrementally reduce risk in the portfolio in response to our view of the potential of a more difficult economic environment in both years. The gross loss from the fixed-maturity sales reflected the continued rise in interest rates throughout 2022, which resulted in valuation declines for most of our available-for-sale securities. In addition, during 2023, we selectively sold securities, which were primarily corporate debt securities and commercial mortgage-backed

~~securities.~~environment. The gross loss incurred in our nonredeemable preferred stocks,

during the first quarter 2023, was primarily related to the sale of certain holdings in U.S. bank preferred stocks. In addition, during the first quarter last year, we selectively sold securities, which were primarily corporate debt securities and commercial mortgage-backed securities.

The other asset gain for the first three months of 2023, related to proceeds received as the result of litigation in conjunction with three renewable energy investments we made from 2016 through 2018 (the original investments were previously written down in full). The other asset impairment loss was recorded as a result of our investment in a federal new markets tax credit fund, which was entered into during the second quarter 2021, and is reported in other assets in our consolidated balance sheets.

The following table reflects our holding period realized gains (losses) recognized on equity securities held at the respective periods ended ~~September 30:~~March 31:


		Three Months					Nine Months
						Three Months
						Three Months
						Three Months
(millions)	(millions)	2023		2022			2023		2022		(millions)	2024	2023
Total net gains (losses) recognized during the period on equity securities	Total net gains (losses) recognized during the period on equity securities	$	(96.2)	$	(144.3)		$	214.6	$	(1,399.0)
Less: Net gains (losses) recognized on equity securities sold during the period	Less: Net gains (losses) recognized on equity securities sold during the period	(16.0)		(3.6)			215.1		765.1
Net holding period gains (losses) recognized during the period on equity securities held at period end	Net holding period gains (losses) recognized during the period on equity securities held at period end	$	(80.2)	$	(140.7)		$	(0.5)	$	(2,164.1)

Net Investment Income The components of net investment income for the three ~~and nine~~ months ended ~~September 30,~~March 31, were:


		Three Months					Nine Months
						Three Months
						Three Months
						Three Months
(millions)	(millions)	2023		2022			2023		2022		(millions)	2024	2023
Available-for-sale securities:	Available-for-sale securities:
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	237.0	$	86.1		$	591.7	$	205.4
State and local government obligations	State and local government obligations	12.3		9.8			34.5		29.3
Foreign government obligations	Foreign government obligations	0.1		0.1			0.2		0.2
Corporate debt securities	Corporate debt securities	94.8		71.8			261.9		215.4
Residential mortgage-backed securities	Residential mortgage-backed securities	7.6		8.8			22.6		23.2
Commercial mortgage-backed securities	Commercial mortgage-backed securities	48.7		48.3			147.9		138.1
Other asset-backed securities	Other asset-backed securities	62.9		52.1			173.0		116.5
Redeemable preferred stocks	Redeemable preferred stocks	2.6		3.0			8.2		8.5
Total fixed maturities	Total fixed maturities	466.0		280.0			1,240.0		736.6
Short-term investments	Short-term investments	21.6		24.8			71.1		29.6
Total available-for-sale securities	Total available-for-sale securities	487.6		304.8			1,311.1		766.2
Equity securities:	Equity securities:
Nonredeemable preferred stocks	Nonredeemable preferred stocks	11.9		17.3			40.3		53.6
Nonredeemable preferred stocks
Nonredeemable preferred stocks
Common equities	Common equities	10.7		11.5			32.9		48.4
Total equity securities	Total equity securities	22.6		28.8			73.2		102.0
Investment income	Investment income	510.2		333.6			1,384.3		868.2
Investment expenses	Investment expenses	(7.2)		(5.8)			(18.8)		(17.4)
Net investment income	Net investment income	$	503.0	$	327.8		$	1,365.5	$	850.8

On a year-over-year basis, investment income (interest and dividends) increased ~~53%~~47% and ~~59% for the three and nine months ended September 30, 2023, respectively, and the~~ recurring investment book yield increased ~~32% and 39%~~23% for the three ~~and nine~~ months ended ~~September 30, 2023, respectively,~~March 31, 2024, compared to the same ~~periods~~period last year. The increases ~~are~~ primarily ~~due to an increase in interest rates on floating-rate securities in our portfolio, an increase in average assets resulting from premium growth, and~~reflected investing new cash from operations and ~~cash~~proceeds from ~~maturities~~maturing bonds in higher ~~interest~~coupon rate ~~securities given the rising interest rate environment.~~securities.

3. FAIR VALUE

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

•Level 1: Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. government obligations, which are continually priced on a daily basis, active exchange-traded equity securities, and certain short-term securities).

•Level 2: Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g., certain corporate and municipal bonds and certain preferred stocks). This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are

observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

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

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

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


		Fair Value											Fair Value
(millions)	(millions)	Level 1		Level 2		Level 3		Total		Cost		(millions)	Level 1	Level 2	Level 3	Total	Cost
September 30, 2023
March 31, 2024
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	34,293.8	$	0	$	0	$	34,293.8	$	36,392.2
State and local government obligations	State and local government obligations	0		2,054.3		0		2,054.3		2,257.6
Foreign government obligations	Foreign government obligations	0		15.4		0		15.4		16.9
Corporate debt securities	Corporate debt securities	0		10,254.2		0		10,254.2		10,880.8
Subtotal	Subtotal	34,293.8		12,323.9		0		46,617.7		49,547.5
Asset-backed securities:	Asset-backed securities:
Residential mortgage-backed	Residential mortgage-backed	0		515.8		0		515.8		530.4
Residential mortgage-backed
Residential mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed	0		3,977.7		0		3,977.7		4,699.5
Other asset-backed	Other asset-backed	0		5,313.6		0		5,313.6		5,524.2
Subtotal asset-backed securities	Subtotal asset-backed securities	0		9,807.1		0		9,807.1		10,754.1
Redeemable preferred stocks:	Redeemable preferred stocks:
Financials
Financials
Financials	Financials	0		21.3		0		21.3		24.5
Utilities	Utilities	0		9.3		0		9.3		10.4
Industrials	Industrials	0		136.5		0		136.5		154.1
Subtotal redeemable preferred stocks	Subtotal redeemable preferred stocks	0		167.1		0		167.1		189.0
Total fixed maturities	Total fixed maturities	34,293.8		22,298.1		0		56,591.9		60,490.6
Short-term investments	Short-term investments	1,763.2		32.0		0		1,795.2		1,795.2
Total available-for-sale securities	Total available-for-sale securities	36,057.0		22,330.1		0		58,387.1		62,285.8
Equity securities:	Equity securities:
Nonredeemable preferred stocks:	Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Financials
Financials
Financials	Financials	0		770.7		47.9		818.6		921.9
Utilities	Utilities	0		34.5		0		34.5		40.0
Industrials	Industrials	0		0		15.8		15.8		15.0
Subtotal nonredeemable preferred stocks	Subtotal nonredeemable preferred stocks	0		805.2		63.7		868.9		976.9
Common equities:	Common equities:
Common stocks	Common stocks	2,573.6		0		18.3		2,591.9		640.0
Common stocks
Common stocks
Other risk investments	Other risk investments	0		0		22.6		22.6		22.6
Subtotal common equities	Subtotal common equities	2,573.6		0		40.9		2,614.5		662.6
Total equity securities	Total equity securities	2,573.6		805.2		104.6		3,483.4		1,639.5
Total portfolio	Total portfolio	$	38,630.6	$	23,135.3	$	104.6	$	61,870.5	$	63,925.3
Debt	Debt	$	0	$	5,932.1	$	0	$	5,932.1	$	6,887.6


		Fair Value											Fair Value
(millions)	(millions)	Level 1		Level 2		Level 3		Total		Cost		(millions)	Level 1	Level 2	Level 3	Total	Cost
September 30, 2022
March 31, 2023
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	22,405.5	$	0	$	0	$	22,405.5	$	24,260.9
State and local government obligations	State and local government obligations	0		1,925.5		0		1,925.5		2,140.9
Foreign government obligations	Foreign government obligations	0		15.3		0		15.3		16.7
Corporate debt securities	Corporate debt securities	0		9,228.4		0		9,228.4		10,119.8
Subtotal	Subtotal	22,405.5		11,169.2		0		33,574.7		36,538.3
Asset-backed securities:	Asset-backed securities:
Residential mortgage-backed	Residential mortgage-backed	0		723.0		0		723.0		754.2
Residential mortgage-backed
Residential mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed	0		5,087.9		0		5,087.9		5,833.9
Other asset-backed	Other asset-backed	0		4,605.9		0		4,605.9		4,876.7
Subtotal asset-backed securities	Subtotal asset-backed securities	0		10,416.8		0		10,416.8		11,464.8
Redeemable preferred stocks:	Redeemable preferred stocks:
Financials
Financials
Financials	Financials	0		39.8		0		39.8		43.6
Utilities	Utilities	0		8.8		0		8.8		10.5
Industrials	Industrials	8.9		124.1		0		133.0		148.5
Subtotal redeemable preferred stocks	Subtotal redeemable preferred stocks	8.9		172.7		0		181.6		202.6
Total fixed maturities	Total fixed maturities	22,414.4		21,758.7		0		44,173.1		48,205.7
Short-term investments	Short-term investments	4,219.6		18.0		0		4,237.6		4,237.6
Total available-for-sale securities	Total available-for-sale securities	26,634.0		21,776.7		0		48,410.7		52,443.3
Equity securities:	Equity securities:
Nonredeemable preferred stocks:	Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Financials
Financials
Financials	Financials	60.9		1,015.6		64.9		1,141.4		1,297.6
Utilities	Utilities	0		71.3		0		71.3		79.9
Industrials	Industrials	0		24.7		17.0		41.7		40.1
Subtotal nonredeemable preferred stocks	Subtotal nonredeemable preferred stocks	60.9		1,111.6		81.9		1,254.4		1,417.6
Common equities:	Common equities:
Common stocks	Common stocks	2,597.3		49.3		0		2,646.6		785.0
Common stocks
Common stocks
Other risk investments	Other risk investments	0		0		18.7		18.7		18.7
Subtotal common equities	Subtotal common equities	2,597.3		49.3		18.7		2,665.3		803.7
Total equity securities	Total equity securities	2,658.2		1,160.9		100.6		3,919.7		2,221.3
Total portfolio	Total portfolio	$	29,292.2	$	22,937.6	$	100.6	$	52,330.4	$	54,664.6
Debt	Debt	$	0	$	5,634.7	$	0	$	5,634.7	$	6,387.4


		Fair Value											Fair Value
(millions)	(millions)	Level 1		Level 2		Level 3		Total		Cost		(millions)	Level 1	Level 2	Level 3	Total	Cost
December 31, 2022
December 31, 2023
Fixed maturities:	Fixed maturities:
Fixed maturities:
Fixed maturities:
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	25,167.4	$	0	$	0	$	25,167.4	$	26,770.7
State and local government obligations	State and local government obligations	0		1,977.1		0		1,977.1		2,180.0
Foreign government obligations	Foreign government obligations	0		15.5		0		15.5		16.8
Corporate debt securities	Corporate debt securities	0		9,412.7		0		9,412.7		10,125.8
Subtotal	Subtotal	25,167.4		11,405.3		0		36,572.7		39,093.3
Asset-backed securities:	Asset-backed securities:
Residential mortgage-backed	Residential mortgage-backed	0		666.8		0		666.8		696.1
Residential mortgage-backed
Residential mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed	0		4,663.5		0		4,663.5		5,446.0
Other asset-backed	Other asset-backed	0		4,564.6		0		4,564.6		4,826.0
Subtotal asset-backed securities	Subtotal asset-backed securities	0		9,894.9		0		9,894.9		10,968.1
Redeemable preferred stocks:	Redeemable preferred stocks:
Financials
Financials
Financials	Financials	0		40.5		0		40.5		43.6
Utilities	Utilities	0		9.1		0		9.1		10.5
Industrials	Industrials	9.2		125.5		0		134.7		148.5
Subtotal redeemable preferred stocks	Subtotal redeemable preferred stocks	9.2		175.1		0		184.3		202.6
Total fixed maturities	Total fixed maturities	25,176.6		21,475.3		0		46,651.9		50,264.0
Short-term investments	Short-term investments	2,800.7		61.0		0		2,861.7		2,861.7
Total available-for-sale securities	Total available-for-sale securities	27,977.3		21,536.3		0		49,513.6		53,125.7
Equity securities:	Equity securities:
Nonredeemable preferred stocks:	Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Financials
Financials
Financials	Financials	39.0		994.4		67.4		1,100.8		1,244.2
Utilities	Utilities	0		71.2		0		71.2		79.9
Industrials	Industrials	0		24.8		16.4		41.2		40.1
Subtotal nonredeemable preferred stocks	Subtotal nonredeemable preferred stocks	39.0		1,090.4		83.8		1,213.2		1,364.2
Common equities:	Common equities:
Common stocks	Common stocks	2,783.4		0		18.3		2,801.7		806.3
Common stocks
Common stocks
Other risk investments	Other risk investments	0		0		19.8		19.8		19.8
Subtotal common equities	Subtotal common equities	2,783.4		0		38.1		2,821.5		826.1
Total equity securities	Total equity securities	2,822.4		1,090.4		121.9		4,034.7		2,190.3
Total portfolio	Total portfolio	$	30,799.7	$	22,626.7	$	121.9	$	53,548.3	$	55,316.0
Debt	Debt	$	0	$	5,717.9	$	0	$	5,717.9	$	6,388.3

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

Our short-term investments classified as Level 1 are highly liquid, actively marketed, and have a very short duration, primarily 90 days or less to redemption. These securities are held at their original cost, adjusted for any accretion of discount, since that value very closely approximates what an active market participant would be willing to pay for such securities. The remainder of our short-term investments are classified as Level 2 and are not priced externally since these securities continually trade at par value. These securities are classified as Level 2 since they are primarily longer-dated securities issued by municipalities that contain either liquidity facilities or mandatory put features within one year.

At ~~September 30, 2023,~~March 31, 2024, vendor-quoted prices represented ~~93%~~92% of our Level 1 classifications (excluding short-term investments), compared to ~~90%~~91% at ~~both September 30, 2022~~March 31, 2023 and 93% at December 31, ~~2022.~~2023. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded, and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges. All Level 1 preferred stocks with active exchange quotes were sold ~~as of September 30,~~during 2023.

At ~~September 30,~~both March 31, 2024 and December 31, 2023, vendor-quoted prices comprised ~~99%~~100% of our Level 2 classifications (excluding short-term ~~investments and common stock), while dealer-quoted prices represented the remaining 1%~~investments), compared to 98% ~~and~~at March 31, 2023; the remaining 2%~~, respectively,~~ at ~~both September 30, 2022 and December~~March 31, ~~2022.~~2023 were dealer-quoted prices. In our process for selecting a source (e.g., dealer or pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing

~~from the sources that detailed the pricing~~ techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.

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

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

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

duration, credit quality, and coupon to determine if the fair value is appropriate.

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

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

For short-term securities, we look at acquisition price relative to the coupon or yield. Since our short-term securities are typically 90 days or less to maturity, with the majority listed in Level 2 being 30 days or less to redemption, we believe that acquisition price is the best estimate of fair value.

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

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

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

reporting the most representative fair values for our securities.

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

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

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

If we do not receive prices from an external source, we perform an internal fair value comparison, which includes a review and analysis of market-comparable securities, to determine if fair value changes are needed. Based on this analysis, certain private equity investments included in the Level 3 category remain valued at cost or were priced using a recent transaction as the basis for fair value. At least annually, these private equity investments are priced by an external source.

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

One of our Level 3 financial nonredeemable preferred stocks was exchanged into common equity during third quarter 2023 and the security was sold prior to September 30, 2023. The Level 2 common stock held at September 30, 2022, was transferred to Level 3 at DecemberAt both March 31, ~~2022. At September 30, 2023 and 2022,~~2024 and December 31, ~~2022,~~2023, we held one privately held fixed-maturity security that is classified as a Level 3 investment. At March 31, 2023, we did not have any securities in our fixed-maturity portfolio listed as Level 3.

During the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~for the full year of 2023, there were no material assets or liabilities measured at fair value on a nonrecurring ~~basis, other than goodwill. See~~ ~~Note 12 – Goodwill and Intangible Assets~~ ~~for further discussion.~~basis.

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

The following tables provide a summary of changes in fair value associated with Level 3 assets for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:


		Level 3 Fair Value
(millions)		Fair Value at June 30, 2023		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at September 30, 2023

		Level 3 Fair Value

		Level 3 Fair Value

		Level 3 Fair Value
(millions)																		(millions)	Fair Value at December 31, 2023	Calls/ Maturities/ Paydowns/Other	Purchases	Sales	Net Realized (Gain)/Loss on Sales	Change in Valuation	Net Transfers In (Out)	Fair Value at March 31, 2024
Fixed maturities:
Corporate debt securities
Corporate debt securities
Corporate debt securities
Equity securities:	Equity securities:
Nonredeemable preferred stocks:	Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Financials
Financials
Financials	Financials	$	56.0	$	(8.1)	$	0	$	0	$	0	$	0	$	0	$	47.9
Industrials	Industrials	15.8		0		0		0		0		0		0		15.8
Common equities:	Common equities:
Common stocks
Common stocks
Common stocks	Common stocks	18.3		8.1		0		(10.0)		8.9		(7.0)		0		18.3
Other risk investments	Other risk investments	21.9		0.7		0		0		0		0		0		22.6
Total Level 3 securities	Total Level 3 securities	$	112.0	$	0.7	$	0	$	(10.0)	$	8.9	$	(7.0)	$	0	$	104.6

		Level 3 Fair Value

		Level 3 Fair Value
		Level 3 Fair Value

		Level 3 Fair Value
(millions)	(millions)	Fair Value at June 30, 2022		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at September 30, 2022		(millions)	Fair Value at December 31, 2022	Calls/ Maturities/ Paydowns/Other	Purchases	Sales	Net Realized (Gain)/Loss on Sales	Change in Valuation	Net Transfers In (Out)	Fair Value at March 31, 2023
Equity securities:	Equity securities:
Nonredeemable preferred stocks:	Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Nonredeemable preferred stocks:
Financials
Financials
Financials	Financials	$	64.9	$	0	$	0	$	0	$	0	$	0	$	0	$	64.9
Industrials	Industrials	17.0		0		0		0		0		0		0		17.0
Common equities:	Common equities:
Common stocks	Common stocks	0		0		0		0		0		0		0		0
Other risk investments		18.5		0.2		0		0		0		0		0		18.7
Total Level 3 securities		$	100.4	$	0.2	$	0	$	0	$	0	$	0	$	0	$	100.6

		Level 3 Fair Value
(millions)		Fair Value at December 31, 2022		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at September 30, 2023
Equity securities:
Nonredeemable preferred stocks:
Financials		$	67.4	$	(8.1)	$	0	$	0	$	0	$	(11.4)	$	0	$	47.9
Industrials		16.4		0		0		0		0		(0.6)		0		15.8
Common equities:
Common stocks
Common stocks	Common stocks	18.3		8.1		0		(10.0)		8.9		(7.0)		0		18.3
Other risk investments	Other risk investments	19.8		2.8		0		0		0		0		0		22.6
Total Level 3 securities	Total Level 3 securities	$	121.9	$	2.8	$	0	$	(10.0)	$	8.9	$	(19.0)	$	0	$	104.6

Level 3 Fair Value
(millions) Fair Value at December 31, 2021 Calls/
Maturities/
Paydowns/Other Purchases Sales Net Realized
(Gain)/Loss
on Sales Change in
Valuation Net
Transfers
In (Out) Fair Value at September 30, 2022
Equity securities:
Nonredeemable preferred stocks:
Financials $ 76.4 $ 0 $ 0 $ (15.0) $ (17.2) $ 20.7 $ 0 $ 64.9
Industrials 34.4 (0.5) 0 0 0 (16.9) 0 17.0
Common equities:
Other risk investments 16.9 1.8 0 0 0 0 0 18.7
Total Level 3 securities $ 127.7 $ 1.3 $ 0 $ (15.0) $ (17.2) $ 3.8 $ 0 $ 100.6

The following tables provide a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022:~~2023:

Quantitative Information about Level 3 Fair Value Measurements

($ in millions)

Fair Value at September 30, 2023

Valuation Technique

Unobservable Input

Range of Input Values Increase (Decrease)

Weighted Average Increase (Decrease)

($ in millions)

Fair Value at March 31, 2024

Valuation Technique

Unobservable Input

Range of Input Values Increase (Decrease)

Weighted Average Increase (Decrease)

Fixed maturities:

Corporate debt securities

3.0

Market comparables

Weighted average market capitalization price change %

(2.3)% to 1.2%

(0.1)

Equity securities:

Nonredeemable preferred stocks

63.7

Market comparables

Weighted average market capitalization price change %

(10.8)% to 4.5%

1.7

64.0

Market comparables

Weighted average market capitalization price change %

3.4% to 28.4%

22.6

Common stocks

18.3

Market comparables

Weighted average market capitalization price change %

(37.4)% to 130.2%

(7.9)

Common stocks

22.5

Market comparables

Weighted average market capitalization price change %

(37.9)% to 39.6%

3.4

Subtotal Level 3 securities

82.0

Pricing exemption securities

22.6

Pricing exemption securities

Total Level 3 securities

104.6

Total Level 3 securities

Quantitative Information about Level 3 Fair Value Measurements

($ in millions)

Fair Value at September 30, 2022

Valuation Technique

Unobservable Input

Range of Input Values Increase (Decrease)

Weighted Average Increase (Decrease)

($ in millions)

Fair Value at March 31, 2023

Valuation Technique

Unobservable Input

Range of Input Values Increase (Decrease)

Weighted Average Increase (Decrease)

Equity securities:

Nonredeemable preferred stocks

81.9

Market comparables

Weighted average market capitalization price change %

(20.7)% to (1.1)%

(6.6)

83.8

Market comparables

Weighted average market capitalization price change %

2.7% to 23.3%

9.2

Common stocks

18.3

Market comparables

Weighted average market capitalization price change %

(51.3)% to 48.3%

15.6

Subtotal Level 3 securities

81.9

Pricing exemption securities

18.7

Pricing exemption securities

Total Level 3 securities

100.6

Total Level 3 securities

Quantitative Information about Level 3 Fair Value Measurements

($ in millions)

Fair Value at December 31, 2023

Valuation Technique

Unobservable Input

Range of Input Values Increase (Decrease)

Weighted Average Increase (Decrease)

Fixed maturities:

Corporate debt securities

3.0

Market comparables

Weighted average market capitalization price change %

0.3% to 7.7%

2.6

Equity securities:

Nonredeemable preferred stocks

64.0

Market comparables

Weighted average market capitalization price change %

17.2% to 39.7%

21.7%

Common stocks

22.5

Market comparables

Weighted average market capitalization price change %

(45.8)% to 95.6%

39.7%

Subtotal Level 3 securities

89.5

Pricing exemption securities

20.6

Total Level 3 securities

110.1

Quantitative Information about Level 3 Fair Value Measurements
($ in millions) Fair Value at December 31, 2022 Valuation Technique Unobservable Input Range of Input Values Increase (Decrease) Weighted Average Increase (Decrease)
Equity securities:
Nonredeemable preferred stocks $ 83.8 Market comparables Weighted average market capitalization price change % (0.6)% to 19.9% 10.5%
Common stocks 18.3 Market comparables Weighted average market capitalization price change % (42.5)% to 59.1% 0.3%
Subtotal Level 3 securities 102.1
Pricing exemption securities 19.8
Total Level 3 securities $ 121.9

4. DEBT

Debt at each of the balance sheet periods consisted of:

September 30, 2023 September 30, 2022 December 31, 2022
(millions) Carrying
Value Fair
Value Carrying
Value Fair
Value Carrying
Value Fair
Value
2.45% Senior Notes due 2027 (issued: $500.0, August 2016) $ 498.5 $ 455.8 $ 498.1 $ 459.7 $ 498.2 $ 457.7
2.50% Senior Notes due 2027 (issued: $500.0, March 2022) 497.9 454.0 497.4 451.6 497.5 460.3
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999) 297.7 320.8 297.4 322.1 297.5 326.8
4.00% Senior Notes due 2029 (issued: $550.0, October 2018) 546.8 518.9 546.3 519.5 546.4 527.8
3.20% Senior Notes due 2030 (issued: $500.0, March 2020) 497.2 435.1 496.8 439.3 496.9 448.6
3.00% Senior Notes due 2032 (issued: $500.0, March 2022) 496.2 420.5 495.8 418.8 495.9 438.1
6.25% Senior Notes due 2032 (issued: $400.0, November 2002) 396.6 414.3 396.4 426.0 396.4 435.4
4.95% Senior Notes due 2033 (issued: $500.0, May 2023) 496.4 474.7 0 0 0 0
4.35% Senior Notes due 2044 (issued: $350.0, April 2014) 347.0 280.9 346.9 298.5 346.9 298.4
3.70% Senior Notes due 2045 (issued: $400.0, January 2015) 395.8 288.2 395.7 305.7 395.7 310.2
4.125% Senior Notes due 2047 (issued: $850.0, April 2017) 842.2 666.3 842.0 710.3 842.1 716.2
4.20% Senior Notes due 2048 (issued: $600.0, March 2018) 590.6 473.3 590.3 505.9 590.4 507.0
3.95% Senior Notes due 2050 (issued: $500.0, March 2020) 491.1 373.5 490.9 396.6 490.9 404.9
3.70% Senior Notes due 2052 (issued: $500.0, March 2022) 493.6 355.8 493.4 380.7 493.5 386.5
Total $ 6,887.6 $ 5,932.1 $ 6,387.4 $ 5,634.7 $ 6,388.3 $ 5,717.9

The Progressive Corporation issued $500.0 million of 4.95% Senior Notes due 2033 in May 2023 in an underwritten public offering. The net proceeds from the issuance, after deducting underwriters’ discounts, commissions, and other issuance costs, was approximately $496.3 million. Consistent with the other senior notes issued by Progressive, interest on this note is payable semiannually, principal is due at maturity, and the note is redeemable, in whole or in part, at any time, subject to a treasury “make whole” provision.


	March 31, 2024				March 31, 2023			December 31, 2023
(millions)	Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
2.45% Senior Notes due 2027 (issued: $500.0, August 2016)	$	498.7	$	468.6		$	498.3	$	464.2	$	498.6	$	468.9
2.50% Senior Notes due 2027 (issued: $500.0, March 2022)	498.2		468.5			497.7		463.8		498.1		469.1
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)	297.9		323.5			297.6		329.6		297.8		328.7
4.00% Senior Notes due 2029 (issued: $550.0, October 2018)	547.1		532.5			546.5		538.5		546.9		542.6
3.20% Senior Notes due 2030 (issued: $500.0, March 2020)	497.4		456.1			497.0		460.0		497.3		462.2
3.00% Senior Notes due 2032 (issued: $500.0, March 2022)	496.4		435.7			496.0		446.9		496.3		446.0
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)	396.8		434.2			396.5		448.1		396.7		445.6
4.95% Senior Notes due 2033 (issued: $500.0, May 2023)	496.5		499.2			0		0		496.4		513.0
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)	347.0		312.8			346.9		312.3		347.0		314.2
3.70% Senior Notes due 2045 (issued: $400.0, January 2015)	395.9		327.9			395.8		324.0		395.9		325.1
4.125% Senior Notes due 2047 (issued: $850.0, April 2017)	842.3		719.2			842.1		743.8		842.3		756.2
4.20% Senior Notes due 2048 (issued: $600.0, March 2018)	590.7		519.8			590.4		530.0		590.6		534.1
3.95% Senior Notes due 2050 (issued: $500.0, March 2020)	491.2		409.8			491.0		420.3		491.1		422.3
3.70% Senior Notes due 2052 (issued: $500.0, March 2022)	493.6		390.0			493.5		399.5		493.6		403.3
Total	$	6,889.7	$	6,297.8		$	6,389.3	$	5,881.0	$	6,888.6	$	6,431.3

There was no short-term debt outstanding ~~at September 30, 2023 and 2022, and December 31, 2022.~~as of the end of all the periods presented.

~~During the second quarter 2023,~~ The Progressive Corporation ~~amended its~~has a line of credit with PNC Bank, National Association, ~~(PNC), to increase~~in the maximum principal amount of $300 million. See the 2023 Annual Report to ~~$300 million from the previous amount~~Shareholders for a discussion of ~~$250 million and extend the expiration date to April 30, 2024. Subject to~~ the terms ~~and conditions~~ of ~~the~~this line of credit documents, advances under the line of credit (if any) will bear interest at a variable rate equal to the 1-month term Secured Overnight Financing Rate (SOFR) plus 1.10%. Each advance must be repaid on the 30th day after the date of the advance or, if earlier, April 30, 2024, the expiration date of the line of credit. ~~Prepayments are permitted without penalty. The line of credit is uncommitted and, as such, all advances are subject to PNC’s discretion.~~ We had no borrowings under the line of credit that was available during the periods presented.

5. INCOME TAXES

The effective tax rate for the three months ended March 31, 2024, was 20.7%, compared to 19.2% for the same period last year, with the change primarily due to our permanent tax differences having a lower impact on our effective rate due to increased profitability in the current year.

Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. We review our deferred tax assets regularly for recoverability. At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, we determined that we did not need a valuation allowance on our gross deferred tax assets. Although realization of the deferred tax assets is not assured, management believes that it is more likely than not the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes. At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, the net deferred tax asset includes a

gross deferred tax asset of ~~$807.0~~$482.5 million ~~$827.7~~, $582.6 million, and ~~$742.9~~$427.3 million, respectively, related to unrealized losses on fixed-maturity securities. We believe this deferred tax asset will be realized based on the existence of

~~prior year capital gains,~~ current temporary differences related to unrealized gains in our equity portfolio, prior year capital gains, and other tax planning strategies.

~~At September 30,~~We had net current income taxes payable of $961.8 million, $203.3 million, and $311.8 million at March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, respectively, included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets. The increase in income taxes payable was primarily driven by the increase in profitability during the first quarter 2024.

At March 31, 2024 and 2023, and December 31, 2023, we had no reserves for uncertain tax positions.

The effective tax rate for the three and nine months ended September 30, 2023, was 20.5% and 20.2%, respectively, compared to 12.9% and (1.6)% for the same periods last year. The lower effective tax rates for the three and nine months ended September 30, 2022, were due in part to the low amount of income (loss) before taxes during those periods, resulting in permanent tax differences having a greater impact on the effective rate. The low effective tax rate for the nine months ended September 30, 2022, was also due to a goodwill impairment charge (see ~~Note 12 – Goodwill and Intangible Assets~~ ~~for further discussion).~~

6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

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


		September 30,
	March 31,								March 31,
(millions)	(millions)	2023		2022		(millions)	2024	2023
Balance at January 1	Balance at January 1	$	30,359.3	$	26,164.1
Less reinsurance recoverables on unpaid losses	Less reinsurance recoverables on unpaid losses	5,559.2		4,733.6
Net balance at January 1	Net balance at January 1	24,800.1		21,430.5
Incurred related to:	Incurred related to:
Current year	Current year	33,035.0		28,245.4
Current year
Current year
Prior years	Prior years	1,147.0		52.8
Total incurred	Total incurred	34,182.0		28,298.2
Paid related to:	Paid related to:
Current year	Current year	18,581.3		15,712.4
Current year
Current year
Prior years	Prior years	11,764.7		9,418.5
Total paid	Total paid	30,346.0		25,130.9
Net balance at September 30		28,636.1		24,597.8
Net balance at March 31
Plus reinsurance recoverables on unpaid losses	Plus reinsurance recoverables on unpaid losses	4,941.2		6,034.0
Balance at September 30		$	33,577.3	$	30,631.8
Balance at March 31

We experienced ~~unfavorable~~favorable reserve development of ~~$1,147.0 million and $52.8~~$11.4 million during the first ~~nine~~three months of ~~2023 and 2022, respectively,~~2024, compared to unfavorable development of $621.2 million for the same period last year, which is reflected as “incurred related to prior years” in the table above.

~~Year-to-date September 30,~~First Quarter 2024

•The favorable prior year reserve development included approximately $50 million of favorable development attributable to accident year 2023 and $15 million to accident year 2022; partially offset by unfavorable development attributable to accident years 2021 and prior.

•Our personal auto products incurred about $100 million of favorable loss and loss adjustment expense (LAE) reserve development, in part due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023, with about 60% attributable to the Agency auto business and the balance in the Direct auto business.

•Our Commercial Lines business experienced about $70 million of unfavorable development, primarily driven by higher than anticipated severity in our commercial auto business for California and New York.

First Quarter 2023

•The unfavorable prior year reserve development included approximately ~~$929~~$498 million attributable to accident year 2022, ~~$108~~$30 million to accident year 2021, and the remainder to accident years 2020 and prior.

•Our ~~personal~~personal auto products incurred about ~~$866~~$428 million of unfavorable loss and ~~loss adjustment expense (LAE)~~LAE reserve development, with the Agency and Direct auto businesses each contributing about half. ~~Over half of the~~The unfavorable development was primarily attributable to higher than anticipated severity in auto property and physical damage coverages, ~~while the remaining unfavorable development was primarily due~~higher than anticipated late reported injury claims, and, to a lessor extent, increased loss costs in Florida injury and medical coverages ~~and,~~in small part due to ~~a lesser extent, higher than anticipated late reported injury claims; partially offset by lower than expected loss adjustment expenses.~~the impact of the legislation enacted in March 2023 in Florida.

•Our Commercial Lines business experienced about $277 million of unfavorable development, primarily driven by higher than anticipated severity and frequency of late reported injury claims, with about half of the unfavorable development attributable to our transportation network company (TNC) business.

~~Year-to-date September 30, 2022~~

•Approximately $45 million of the unfavorable prior year reserve development was attributable to accident year 2021 and $29 million to 2019 and prior accident years, partially offset by $21 million of favorable development attributable to accident year 2020.

•Our personal auto products incurred about $28 million of favorable loss and LAE reserve development, with about $25 million attributable to the Direct business. The favorable development was primarily attributable to more subrogation and salvage recoveries and lower LAE than originally anticipated, partially offset by higher than anticipated severity and frequency of auto property damage payments on previously closed claims and late reported injury claims.

•~~Our Commercial Lines business experienced about $77~~$144 million of unfavorable development, primarily due to higher than anticipated severity of injury case reserves and higher than anticipated severity and frequency of late reported injury claims.

•Our Property business experienced $42 million of unfavorable development, primarily from higher than anticipated claims expenses and higher than anticipated severity in our ~~TNC business.~~homeowner liability peril and umbrella products.

7. SUPPLEMENTAL CASH FLOW INFORMATION

Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments of funds held in bank demand deposit accounts by certain subsidiaries. The amount of overnight reverse repurchase commitments, which are not considered part of the investment portfolio, held by these subsidiaries at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, were ~~$79.7~~$107.7 million, ~~$123.0~~$177.5 million, and ~~$125.9~~$68.2 million, respectively. Restricted cash and restricted cash equivalents include collateral held against unpaid deductibles and cash that is restricted to pay flood claims under the National Flood Insurance Program’s “Write Your Own” program, for which certain subsidiaries are participants.

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


		Nine Months Ended September 30,
	Three Months Ended March 31,								Three Months Ended March 31,
(millions)	(millions)	2023		2022		(millions)	2024	2023
Common share dividends1	Common share dividends1	$	58.5	$	58.5
Operating lease liabilities2	Operating lease liabilities2	45.6		29.7

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

2 From obtaining right-of-use assets.

In the respective periods, we paid the following:


		Nine Months Ended September 30,					Three Months Ended March 31,
(millions)	(millions)	2023		2022		(millions)	2024	2023
Income taxes	Income taxes	$	413.0	$	595.9
Interest	Interest	213.5		191.3
Operating lease liabilities	Operating lease liabilities	57.2		62.5

8. SEGMENT INFORMATION

Our Personal Lines segment writes insurance for personal autos and recreational vehicles (our special lines products). Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry. Our Property segment writes residential property insurance for homeowners, other property owners, and ~~renters.~~renters, and

umbrella insurance. Our service businesses provide insurance-related services, including serving as an agent for homeowners, general liability, and workers’ compensation insurance, among

other products, through programs in our direct Personal Lines and Commercial Lines businesses. As previously disclosed in our 2022 Annual Report to Shareholders, during 2022, our contract to act as a servicing agent for processing Commercial Automobile Insurance Procedures/Plans (CAIP) business expired during the third quarter 2022 and we did not renew the contract. This non-renewal did not materially affect our financial condition, results of operations, or cash flows. All segment revenues are generated from external customers; all intercompany transactions are eliminated in consolidation.

Following are the operating results for the respective periods:




		Three Months Ended September 30,								Nine Months Ended September 30,										Three Months Ended March 31,
		2023				2022				2023				2022							2024	2023
(millions)	(millions)	Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)		Revenues		Pretax Profit (Loss)			Revenues		Pretax Profit (Loss)		(millions)				Revenues	Pretax Profit (Loss)	Revenues	Pretax Profit (Loss)
Personal Lines	Personal Lines
Agency	Agency	$	5,414.0	$	335.7	$	4,441.9	$	(41.3)	$	15,481.4	$	427.1		$	13,131.7	$	507.6
Agency
Agency
Direct	Direct	6,361.8		706.2		5,077.4		40.6		18,259.9		810.6			14,776.9		389.4
Total Personal Lines1	Total Personal Lines1	11,775.8		1,041.9		9,519.3		(0.7)		33,741.3		1,237.7			27,908.6		897.0
Commercial Lines	Commercial Lines	2,486.6		23.0		2,317.9		238.1		7,296.8		147.4			6,749.5		683.5
Property2		631.8		74.6		561.0		(141.0)		1,852.8		(164.9)			1,689.6		(289.6)
Other indemnity3		0.1		(3.3)		0.7		(2.1)		0.9		(6.7)			2.0		(9.3)
Property
Other indemnity2
Total underwriting operations	Total underwriting operations	14,894.3		1,136.2		12,398.9		94.3		42,891.8		1,213.5			36,349.7		1,281.6
Fees and other revenues4		223.7		NA		181.4		NA		656.6		NA			531.9		NA
Fees and other revenues3																			Fees and other revenues3				236.5	NA	206.2	NA
Service businesses	Service businesses	81.4		(10.3)		82.7		(0.1)		234.9		(29.7)			230.5		9.0
Investments5		361.2		354.0		117.2		111.4		1,434.0		1,415.2			(971.2)		(988.6)
Investments4
Interest expense	Interest expense	NA		(69.7)		NA		(63.1)		NA		(198.7)			NA		(180.4)
Property - Goodwill impairment2		NA		0		NA		0		NA		0			NA		(224.8)
Consolidated total	Consolidated total	$	15,560.6	$	1,410.2	$	12,780.2	$	142.5	$	45,217.3	$	2,400.3		$	36,140.9	$	(103.2)

NA = Not applicable

1 Personal auto insurance accounted for 95% and 94% of the total Personal Lines segment net premiums earned during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022;~~respectively; insurance for our special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

2 For the three and nine months ended September 30, 2023, pretax profit (loss) included $2.9 million and $10.7 million, respectively, of amortization expense associated with intangible assets attributable to our Property segment, and $5.0 million and $24.1 million for the same periods in 2022. For the nine months ended September 30, 2022, the total pretax loss, including goodwill impairment, for the Property segment was $514.4 million. See ~~Note 12 – Goodwill and Intangible Assets~~ ~~for further discussion.~~

3 Includes other underwriting business and run-off operations.

43 Pretax profit (loss) for fees and other revenues is allocated to operating segments based on revenue.

54 Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit (loss) is net of investment expenses.

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




		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2023			2022			2023			2022					2024	2023
		Under-writing Margin		Combined Ratio	Under-writing Margin		Combined Ratio	Under-writing Margin		Combined Ratio		Under-writing Margin		Combined Ratio				Under-writing Margin	Combined Ratio	Under-writing Margin	Combined Ratio
Personal Lines	Personal Lines
Agency	Agency	6.2	%	93.8	(0.9)	%	100.9	2.8	%	97.2		3.9	%	96.1
Agency
Agency
Direct	Direct	11.1		88.9	0.8		99.2	4.4		95.6		2.6		97.4
Total Personal Lines	Total Personal Lines	8.8		91.2	0		100.0	3.7		96.3		3.2		96.8
Commercial Lines	Commercial Lines	0.9		99.1	10.3		89.7	2.0		98.0		10.1		89.9
Property1		11.8		88.2	(25.1)		125.1	(8.9)		108.9		(17.1)		117.1
Property
Total underwriting operations	Total underwriting operations	7.6		92.4	0.8		99.2	2.8		97.2		3.5		96.5

1 Included in the three and nine months ended September 30, 2023, is 0.5 points and 0.6 points, respectively, of amortization expense associated with intangible assets and 0.9 points and 1.4 points, respectively, for the three and nine months ended September 30, 2022.

9. DIVIDENDS

Following is a summary of our common and preferred share dividends that were declared and/or paid during the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

(millions, except per share amounts) Amount
Declared Payable Per Share
Accrued/Paid1
Common – Quarterly Dividends:
August 2023 October 2023 $ 0.10 $ 58.5
May 2023 July 2023 0.10 58.5
March 2023 April 2023 0.10 58.5
December 2022 January 2023 0.10 58.5
August 2022 October 2022 0.10 58.5
May 2022 July 2022 0.10 58.5
March 2022 April 2022 0.10 58.5
December 2021 January 2022 0.10 58.5
Preferred Dividends:
August 2023 September 2023 20.67700 10.3
May 2023 June 2023 18.92463 9.5
December 2022 March 2023 26.875 13.4
August 2022 September 2022 26.875 13.4
December 2021 March 2022 26.875 13.4


(millions, except per share amounts)		Amount
Declared	Payable	Per Share		Accrued/Paid1
Common – Annual-Variable Dividends:
December 2023	January 2024	$	0.75	$	439.3

Common – Quarterly Dividends:
March 2024	April 2024	0.10		58.6
December 2023	January 2024	0.10		58.6
March 2023	April 2023	0.10		58.5
December 2022	January 2023	0.10		58.5

Preferred Dividends:
January 20242	February 2024	15.688377		7.8
December 2022	March 2023	26.875		13.4

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

~~Beginning March 15, 2023,~~2 During the ~~annual dividend rate for our~~first quarter 2024, we redeemed all of the outstanding Serial Preferred Shares, Series B, ~~Preferred Shares switched to a floating rate equal to the three-month London Interbank Offered Rate (LIBOR) plus a spread of 2.539% applied to~~at the stated amount of $1,000 per ~~share.~~

~~We, as calculation agent under our Series B Preferred Shares, determined that~~share, for an aggregate payout of $507.8 million, including accrued and unpaid dividends of $7.8 million to, but excluding, February 22, 2024, which was the reference rate for the Series B Preferred Shares, for any determination date after June 30, 2023, shall be the sum of (i) 3-Month CME Term SOFR plus (ii) a tenor spread adjustment of 0.26161%, and (iii) a spread of 2.539%. The new reference rate became effective for the dividend period determination date commencing September 15, 2023. The reference rate was determined in

accordance with the successor base rate provisions of the Series B Preferred Shares and the Adjustable Interest Rate (LIBOR) Act and the regulation issued by the Board of Governors of the Federal Reserve System on December 16, 2022, implementing the LIBOR Act.

~~During the floating rate period, dividends on the Series B Preferred Shares will be payable quarterly, if and when declared by the Board of Directors.~~redemption date.

See Note 14 – Dividends in our ~~2022~~2023 Annual Report to Shareholders for a discussion of the dividend policies related to our ~~quarterly and annual~~ common ~~share dividends~~shares and our preferred ~~share dividend policies.~~shares, prior to redemption.

10. OTHER COMPREHENSIVE INCOME (LOSS)

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

Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at June 30, 2023 $ (3,369.6) $ 715.6 $ (2,654.0) $ (2,638.7) $ (14.3) $ (1.0)
Other comprehensive income (loss) before reclassifications:
Investment securities (547.4) 114.9 (432.5) (432.5) 0 0
Foreign currency translation adjustment 0 0 0 0 0 0
Total other comprehensive income (loss) before reclassifications (547.4) 114.9 (432.5) (432.5) 0 0
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities (55.6) 11.7 (43.9) (43.9) 0 0
Interest expense (0.2) 0 (0.2) 0 (0.2) 0
Total reclassification adjustment for amounts realized in net income (55.8) 11.7 (44.1) (43.9) (0.2) 0
Total other comprehensive income (loss) (491.6) 103.2 (388.4) (388.6) 0.2 0
Balance at September 30, 2023 $ (3,861.2) $ 818.8 $ (3,042.4) $ (3,027.3) $ (14.1) $ (1.0)
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
(millions) Pretax total
accumulated
other
comprehensive
income (loss) Total tax
(provision)
benefit After tax total
accumulated
other
comprehensive
income (loss) Total net unrealized gains (losses) on securities Net unrealized losses on forecasted transactions Foreign
currency
translation
adjustment
Balance at June 30, 2022 $ (2,795.5) $ 586.5 $ (2,209.0) $ (2,193.5) $ (14.7) $ (0.8)
Other comprehensive income (loss) before reclassifications:
Investment securities (1,223.3) 256.9 (966.4) (966.4) 0 0
Foreign currency translation adjustment (0.9) 0.2 (0.7) 0 0 (0.7)
Total other comprehensive income (loss) before reclassifications (1,224.2) 257.1 (967.1) (966.4) 0 (0.7)
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net realized gains (losses) on securities (58.4) 12.3 (46.1) (46.1) 0 0
Interest expense (0.2) 0.1 (0.1) 0 (0.1) 0
Total reclassification adjustment for amounts realized in net income (58.6) 12.4 (46.2) (46.1) (0.1) 0
Total other comprehensive income (loss) (1,165.6) 244.7 (920.9) (920.3) 0.1 (0.7)
Balance at September 30, 2022 $ (3,961.1) $ 831.2 $ (3,129.9) $ (3,113.8) $ (14.6) $ (1.5)




								Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)	(millions)	Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at December 31, 2022		$	(3,556.9)	$	754.9	$	(2,802.0)	$	(2,786.3)	$	(14.5)	$	(1.2)
(millions)
(millions)
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Other comprehensive income (loss) before reclassifications:	Other comprehensive income (loss) before reclassifications:
Other comprehensive income (loss) before reclassifications:
Other comprehensive income (loss) before reclassifications:
Investment securities
Investment securities
Investment securities	Investment securities	(493.3)		103.5		(389.8)		(389.8)		0		0

Foreign currency translation adjustment	Foreign currency translation adjustment	0.3		(0.1)		0.2		0		0		0.2

Total other comprehensive income (loss) before reclassifications		(493.0)		103.4		(389.6)		(389.8)		0		0.2
Less: Reclassification adjustment for amounts realized in net income by income statement line item:

Net realized gains (losses) on securities		(188.3)		39.5		(148.8)		(148.8)		0		0
Interest expense		(0.4)		0		(0.4)		0		(0.4)		0
Total reclassification adjustment for amounts realized in net income		(188.7)		39.5		(149.2)		(148.8)		(0.4)		0
Total other comprehensive income (loss)		(304.3)		63.9		(240.4)		(241.0)		0.4		0.2
Balance at September 30, 2023		$	(3,861.2)	$	818.8	$	(3,042.4)	$	(3,027.3)	$	(14.1)	$	(1.0)

								Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)		Pretax total accumulated other comprehensive income (loss)		Total tax (provision) benefit		After tax total accumulated other comprehensive income (loss)		Total net unrealized gains (losses) on securities		Net unrealized losses on forecasted transactions		Foreign currency translation adjustment
Balance at December 31, 2021		$	52.3	$	(11.6)	$	40.7	$	56.2	$	(14.9)	$	(0.6)

Other comprehensive income (loss) before reclassifications:
Investment securities		(4,321.7)		907.6		(3,414.1)		(3,414.1)		0		0
Foreign currency translation adjustment

Foreign currency translation adjustment	Foreign currency translation adjustment	(1.1)		0.2		(0.9)		0		0		(0.9)

Total other comprehensive income (loss) before reclassifications	Total other comprehensive income (loss) before reclassifications	(4,322.8)		907.8		(3,415.0)		(3,414.1)		0		(0.9)

Total other comprehensive income (loss) before reclassifications

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

Net realized gains (losses) on securities	Net realized gains (losses) on securities	(309.0)		64.9		(244.1)		(244.1)		0		0

Net realized gains (losses) on securities

Net realized gains (losses) on securities
Interest expense
Interest expense
Interest expense	Interest expense	(0.4)		0.1		(0.3)		0		(0.3)		0
Total reclassification adjustment for amounts realized in net income	Total reclassification adjustment for amounts realized in net income	(309.4)		65.0		(244.4)		(244.1)		(0.3)		0
Total reclassification adjustment for amounts realized in net income
Total reclassification adjustment for amounts realized in net income
Total other comprehensive income (loss)	Total other comprehensive income (loss)	(4,013.4)		842.8		(3,170.6)		(3,170.0)		0.3		(0.9)
Balance at September 30, 2022		$	(3,961.1)	$	831.2	$	(3,129.9)	$	(3,113.8)	$	(14.6)	$	(1.5)
Total other comprehensive income (loss)
Total other comprehensive income (loss)
Balance at March 31, 2024
Balance at March 31, 2024
Balance at March 31, 2024

								Components of Changes in Accumulated Other Comprehensive Income (after tax)

								Components of Changes in Accumulated Other Comprehensive Income (after tax)

								Components of Changes in Accumulated Other Comprehensive Income (after tax)
(millions)
(millions)
(millions)
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022
Other comprehensive income (loss) before reclassifications:
Other comprehensive income (loss) before reclassifications:
Other comprehensive income (loss) before reclassifications:
Investment securities
Investment securities
Investment securities

Total other comprehensive income (loss) before reclassifications

Total other comprehensive income (loss) before reclassifications

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

Net realized gains (losses) on securities

Net realized gains (losses) on securities

Net realized gains (losses) on securities
Interest expense
Interest expense
Interest expense
Total reclassification adjustment for amounts realized in net income
Total reclassification adjustment for amounts realized in net income
Total reclassification adjustment for amounts realized in net income
Total other comprehensive income (loss)
Total other comprehensive income (loss)
Total other comprehensive income (loss)
Balance at March 31, 2023
Balance at March 31, 2023
Balance at March 31, 2023

In an effort to manage interest rate risk, we entered into forecasted transactions on certain of Progressive’s debt issuances. We expect to reclassify $0.6 million (pretax) into interest expense during the next 12 months, related to net unrealized losses on these forecasted transactions (see Note 4 – Debt in our ~~2022~~2023 Annual Report to Shareholders for further discussion).

2726

11. LITIGATION

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

In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits that challenge certain of the operations of the subsidiaries. ~~These cases include~~The nature and volume of litigation pending against The Progressive Corporation and/or ~~typically have included those alleging damages as a result of, among other things:~~its insurance subsidiaries is similar to that which was disclosed in Note 12 – Litigation in our ~~subsidiaries’ methods used for evaluating and paying medical or injury claims or benefits, including, but not limited~~2023 Annual Report to certain bodily injury, personal injury protection (PIP), uninsured motorist/underinsured motorist (UM/UIM), and medical payment claims and for reimbursing medical costs incurred by Medicare/Medicaid beneficiaries; other claims handling procedures, including, but not limited to, challenges relating to our network of repair facilities, our methods used for estimating physical damage to vehicles for repair purposes and for evaluating the actual cash value of total loss vehicles, the application of a negotiation adjustment in calculating total loss valuations, our payment of fees and taxes, our subrogation practices, our salvage practices, and our handling of diminution of value claims; homeowner claims handling practices and procedures; interpretations of the provisions of our insurance policies; our insurance product design; certain of our premium actions, including those in response to the COVID-19 pandemic; rating practices; certain marketing, sales, services, implementation and renewal practices and procedures, including with respect to accessibility and privacy; our usage-based insurance program; certain relationships with independent insurance agents; patent matters; alleged violation of the Telephone Consumer Protection Act; vendor data security; commercial disputes, including breach of contract; a small business grant program; and certain employment practices, including claims relating to pay practices and fair employment practices, among other matters. Shareholders.

As of ~~September 30, 2023,~~March 31, 2024, lawsuits have been certified or conditionally certified as class/collective actions in cases alleging: we improperly ~~reduce or deny UIM benefits in New Mexico; we improperly~~ value total loss claims in ~~Florida,~~Colorado, Georgia, Indiana, New York, ~~Pennsylvania,~~ and ~~Washington;~~Pennsylvania; we improperly fail to pay fees and taxes associated with total losses in ~~Florida,~~

Michigan and New York; we improperly adjust medical bills in Washington; we improperly calculate basic economic loss as it relates to wage loss coverage in New York; we improperly fail to timely process and pay ~~PIP~~personal injury protection claims in Texas; we improperly reduce or deny first-party medical benefits in Arkansas; and that certain of our compensation practices and overtime payment practices are improper, including our classification of certain employees as exempt from overtime pay requirements. Other insurance companies face many of these same issues.

~~The nature and volume of litigation pending against The Progressive Corporation and/or its insurance subsidiaries is similar to that which was disclosed in~~ ~~Note 12~~ – ~~Litigation~~ ~~in our 2022 Annual Report to Shareholders.~~

We plan to contest the pending lawsuits vigorously, but may pursue settlement negotiations in some cases, as we deem appropriate. Although outcomes of pending cases are uncertain until final disposition, we establish accruals for these lawsuits when it is probable that a loss has been or will be incurred and we can reasonably estimate potential loss exposure, which may include a range of loss. As to lawsuits for which the loss is considered neither probable nor estimable, or is considered probable but not estimable, we do not establish an accrual. Nevertheless, we continue to evaluate pending litigation to determine if any losses not deemed probable and estimable become so, at which point we would establish an accrual at either our best estimate of the loss or the lower end of the range of loss.

Lawsuits arising from insurance policies and operations, including but not limited to allegations involving claims adjustment and vehicle valuation, may be filed contemporaneously in multiple states. As of March 31, 2024, we are named as defendants in class action lawsuits pending in multiple states alleging that we improperly value total loss vehicle physical damage claims through the application of a negotiation adjustment in calculating such valuations, which includes five states in which classes have been certified, as noted above, and lawsuits styled as putative class actions pending in additional states. These lawsuits, which were filed at different times by different plaintiffs, feature certain similar claims and also include different allegations and are subject to various state laws. While we believe we have meritorious defenses and we are vigorously contesting these lawsuits, an unfavorable result in, or a settlement of, a significant number of these lawsuits could, in aggregation, have a material adverse effect on our financial condition, cash flows, and/or results of operations. Based on information known at March 31, 2024, we determined that losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable.

With respect to our pending lawsuits that are not related to claims under insurance policies, the accruals that we have established, if any, were not material at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ or December 31, ~~2022,~~2023, and there were no material settlements during ~~2022~~2023 or the first ~~nine~~three months of ~~2023.~~2024. For most of these lawsuits, we do not consider any losses to be both probable and estimable, and we are unable to estimate a meaningful range of loss, if any, at this time, due to the factors discussed in Note 12 – Litigation in our ~~2022~~2023 Annual Report to Shareholders.In the event that any one or more of these lawsuits results in a substantial judgment against us, or settlement by us, or if our accruals (if any) prove to be inadequate, ~~by a significant amount,~~ the resulting liability could have a material adverse effect on our consolidated financial condition, cash flows, and/or results of operations. For a further discussion on our pending litigation and related reserving policies, see Note 12 – Litigationin our ~~2022~~2023 Annual Report to Shareholders.

~~12. GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill~~

The majority of the goodwill recorded as of September 30, 2023 and 2022, and December 31, 2022, related to the April 1, 2015, acquisition of a controlling interest in ARX Holding Corp. (ARX). During the nine months ended September 30, 2023, there were no changes to the carrying amount of goodwill.

~~In the second quarter 2022, we performed an interim impairment test of our goodwill allocated to the ARX~~

~~reporting unit and recorded an impairment loss of $224.8 million~~. ~~The impairment loss was fully allocated to our Property operating segment. There were no previously recorded goodwill impairment losses on any of the outstanding goodwill. See~~ ~~Note 15~~ – ~~Goodwill and Intangible Assets~~ ~~in our 2022 Annual Report to Shareholders for a discussion of our goodwill impairment evaluation.~~

~~Intangible Assets~~

~~The following table is a summary of the net carrying amount of other intangible assets:~~

(millions) September 30, 2023 September 30, 2022 December 31, 2022
Intangible assets subject to amortization $ 62.5 $ 79.4 $ 73.9
Indefinite-lived intangible assets1
12.4 12.4 12.4
Total $ 74.9 $ 91.8 $ 86.3

1 Indefinite-lived intangible assets are comprised of state insurance and agent licenses. State insurance licenses were previously subject to amortization under superseded accounting guidance and have $0.6 million of accumulated amortization for all periods presented.

~~Intangible assets subject to amortization consisted of the following:~~

(millions) September 30, 2023 September 30, 2022 December 31, 2022
Category Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Agency relationships $ 159.2 $ 96.7 $ 62.5 $ 159.2 $ 85.3 $ 73.9 $ 159.2 $ 88.1 $ 71.1
Software rights 69.1 69.1 0 69.1 64.8 4.3 69.1 67.0 2.1
Trade name 3.6 3.6 0 3.6 2.4 1.2 3.6 2.9 0.7
Total $ 231.9 $ 169.4 $ 62.5 $ 231.9 $ 152.5 $ 79.4 $ 231.9 $ 158.0 $ 73.9

~~Amortization expense was $2.9 million and~~ ~~$11.4 million~~ ~~for the three and nine months ended September 30, 2023, respectively,~~ ~~compared to $5.4 million and~~ ~~$25.5 million during the same periods last year.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

I. OVERVIEW

During the ~~third~~first quarter ~~2023,~~2024, The Progressive Corporation’s insurance subsidiaries recognized strong growth in both premiums ~~written~~ and policies in force, compared to the same period last ~~year. During the third quarter 2023, we~~year, and generated an underwriting profit ~~of 7.6%, which was~~significantly better than our ~~4.0%~~4% companywide calendar-year underwriting profit ~~goal~~goal.

Net premiums written and ~~6.8~~earned increased 18% and 19%, respectively, compared to the same period last year, with all operating segments contributing to the growth. For the quarter, we generated $19.0 billion of net premiums written, which was an increase of $2.9 billion, compared to the first quarter 2023.

On a companywide basis, we ended the quarter with 30.8 million policies in force, which was 7% greater than the same period last year. Policies in force increased 1.1 million since year-end 2023 and 2.0 million from the end of March 2023. Although personal auto new business applications were down from the prior year, reflecting the rate and non-rate actions we took throughout 2023 to manage profitability, policy in force growth benefited from improved retention in both our Personal Lines and Property businesses.

Profitability for the quarter was strong with our companywide combined ratio for the first quarter 2024 of 86.1, which was 12.9 points better than the ~~third~~first quarter last ~~year.~~year and 9.9 points better than our calendar-year underwriting profitability goal. Several factors contributed to the significant year-over-year improvement in our underwriting profit. The ~~underwriting profit variance from~~average earned premiums per policy were higher than the prior year first quarter in all of our operating segments, primarily due to the rate increases we took during 2023 to meet our companywide profitability target. Also, on a year-over-year basis for the first quarter, our incurred personal auto accident frequency decreased 9% and, while severity was ~~primarily attributable~~up 3%, we are starting to ~~lower catastrophe losses~~see indications that severity trends are stabilizing. In addition, in the ~~current~~first quarter 2024, we had favorable prior accident years reserve development of 0.1 points, compared to unfavorable development in the ~~third~~first quarter last year ~~along with our pricing decisions and non-pricing actions that we put in place to help us achieve our stated calendar-year goal~~ of ~~a 96 or better combined ratio.~~

During the third quarter 2023, we experienced catastrophic weather events that contributed 3.2 loss ratio points, compared to 7.1 points for the third quarter 2022, which primarily resulted from Hurricane Ian. During the quarter, our personal auto products profitability benefited by about five points from prior rate revisions that have earned in. In addition,4.6 points. Lastly, our companywide expense ratio was ~~2.5~~2.3 points lower in the ~~third~~first quarter ~~2023,~~2024, compared to the same period last year, in large part due to a ~~52%~~7% decrease in advertising spend. We are increasing our media spend into maximize growth and will continue to do so as long as we remain on track to achieve our target profitability and generate sales at a cost below the ~~third quarter 2023, which brought our year-to-date advertising costs~~maximum amount we are willing to ~~$1.3 billion, compared~~spend to ~~$1.6 billion~~acquire a new customer.

On a year-over-year basis, for the first ~~nine months of 2022. We currently plan to continue to manage our rate levels~~quarter 2024, net income increased $1.9 billion and ~~discretionary spending to further our goal of achieving our companywide calendar-year target profitability.~~

~~During the third quarter 2023, companywide net premiums written grew 20% over the same period last year, with all operating segments contributing to the growth. We generated $15.6~~comprehensive income increased $1.1 billion, of net premiums written, which was an increase of $2.6 billion, compared to the third quarter 2022. We ended the quarter with 29.6 million policies in force, which was an increase of 2.8 million policies, or 10%, over September 30, 2022, and nearly 33,000 more policies than were in force at the end of the second quarter 2023, and 2.3 million more than year-end 2022. While companywide policies in force increased during the third quarter 2023, total personal auto policies in force were down compared to June 30, 2023, reflecting the decrease in new business applications discussed below, which were, in part, offset by the increase in renewal applications as our retention lengthened. The increase from the year-end 2022 policies in force reflected both strong new application growth in the first half of the year and improved retention in our Personal Lines and Property products.

~~As a result of the rate and non-rate actions we have taken to manage profitability, new applications decreased during the third quarter 2023,~~ compared to the same period last

year. While new business is down year over year, policy life expectancy, which is our measure of retention, has lengthened in our Personal Lines products demonstrating the competitiveness of our products in the marketplace. As discussed below, we plan to continue to remain diligent in our efforts to achieve our target profitability and will take the necessary rate and non-rate actions, which could result in less premium and policy growth.

~~On a year-over-year basis, for the third quarter 2023, net income increased $1.0 billion and comprehensive income increased $1.5 billion, from a comprehensive loss in the same period last year.~~ The ~~year-over-year~~ increase in net income primarily reflected anthe increase in underwriting ~~profitability as discussed previously.~~profitability. During the quarter, net income also benefited from a ~~53%~~47% increase in recurring investment income, primarily due to ~~an increase in interest rates on floating-rate securities in our portfolio, an increase in average assets resulting from premium growth, and~~ investing new cash from operations and ~~cash~~proceeds from ~~maturities~~maturing bonds in higher ~~interest~~coupon rate ~~securities given the rising interest rate environment.~~securities.

The quarter-over-prior-year quarter increase in comprehensive income reflected ~~both~~ the increase in net income ~~and a lower amount of~~partially offset by the change in net unrealized losses on our fixed-maturity securities ~~which experienced a loss of $388.6 million in~~during the ~~third~~periods. During the first quarter ~~2023,~~2024, net unrealized losses increased, compared to a ~~loss of $920.3 million~~decrease in net unrealized losses in the ~~same prior~~first quarter last year, ~~period,~~ with both periods ~~being~~ primarily driven by the then-current interest rate environment, with a ~~significant rise~~moderate decline in interest rates during the first quarter last year.

Total capital (debt plus shareholders’ equity) at ~~September 30, 2023,~~March 31, 2024, was ~~$24.3~~$28.7 billion, which was up ~~$2.0~~$1.5 billion from year-end ~~2022, primarily due to our~~2023. During the first quarter 2024, we earned $2.1 billion of comprehensive income, ~~earned~~which was offset by the $0.5 billion redemption of all of our outstanding Serial Preferred Shares, Series B, during the quarter, as discussed in ~~the first nine months of 2023 and the May 2023 issuance of $500 million of 4.95% senior notes.~~further detail in Financial Condition below.

A. Insurance Operations

During the ~~third~~first quarter ~~2023, we experienced a companywide underwriting profit margin~~2024, all of ~~7.6%, compared to an underwriting margin of 0.8% for the same period last year. Our~~our operating segments were profitable with Personal Lines, Commercial Lines, and Property ~~businesses generated an underwriting profit margin~~reporting combined ratios of ~~8.8%, 0.9%,~~84.5, 91.8, and ~~11.8%, respectively, during the third quarter 2023. Our~~93.4, respectively. Personal Lines is comprised of both our personal auto and special lines products, ~~experienced an underwriting loss~~with the latter typically having lower losses during the ~~third~~first quarter due to ~~seasonality. In total,~~ the seasonal nature of these products (e.g., motorcycles, boats, and RVs). The special lines ~~products~~profitability during the first quarter contributed just over a ~~0.8 unfavorable~~1 point favorable impact to our total Personal Lines combined ratio. ~~The strong underwriting results in~~During the ~~third~~ quarter, ~~moved~~all of our ~~year-to-date combined ratio~~operating segments benefited from higher average earned premiums per policy, lower incurred loss frequency and severity trends, and lower expense ratios, with Personal Lines also benefiting from favorable prior accident year reserve development.

As a result of the rate actions we took during 2023 to ~~a 97.2, which is just 1.2 points from our companywide calendar-year goal of a combined ratio of a 96 or better.~~

~~We strongly believe that achieving~~help achieve our target profit margin, ~~takes precedence over growing premiums. With a focus on achieving our calendar-year underwriting profitability goal of at least 4%,~~we currently believe that, in ~~the face of continued volatility in our severity trends that influence higher vehicle and repair costs,~~most states, we ~~will continue to reevaluate our rate plans and intend to continue to raise rates through the fourth quarter 2023, with planned increases of about 3%~~are adequately priced in our personal auto ~~products~~ and ~~about 5% in our~~core commercial auto ~~products. Some of these rate increases will be subject~~(which exclude our transportation network company (TNC) business, business owners’ policy (BOP), and Progressive Fleet & Specialty (previously referred to ~~regulatory approval.~~as Protective Insurance)) products. We will continue to monitor the factors that could impact our loss costs for both our vehicle and Property businesses, which may include new and used car prices, miles driven, driving patterns, loss severity, weather events, building materials, construction costs, inflation, and other components, on a state-by-state basis, and ~~could change~~adjust rates as

we deem appropriate. We currently anticipate that aggregate rate changes throughout 2024 will be of lesser magnitude than those taken in each of the prior two years, but we will continue to evaluate our ~~current plans for~~ rate ~~increases.~~need and adjust rates as we deem necessary.

~~In addition~~Throughout the first quarter 2024, we continued to ~~rate action, we routinely monitor~~lift the non-rate actions ~~including~~implemented last year, on a state-by-state basis, as our advertising spend. During the third quarter 2023, we reduced advertising costs 52%, compared to the same period last year. On a year-to-date basis, we have spent $1.3 billion in advertising, compared to $1.6 billion for the first nine months of 2022. During the quarter, we also continued implementing measures to support the goal offocus shifted from achieving our target profit margin ~~that included slowing new business growth through verification activities, bill plan offerings, and through ongoing general operational expense discipline. We expect~~ to ~~continue to reevaluate our actions through the remainder of the year and may take additional measures as necessary.~~maximizing profitable growth.

For the ~~third~~first quarter ~~2023,~~2024, net premiums written grew ~~20%~~18% compared to the ~~third~~first quarter last year, with all segments showing strong growth. Personal Lines net premiums written grew ~~23%~~20%, with the Agency and Direct distribution channels growing ~~19%~~18% and ~~25%~~21%, respectively. Commercial Lines net premiums written grew 7%11% and Property grew ~~16%~~17%. Changes in net premiums written are a function of new business applications (i.e., policies sold), business mix, premium per policy, and retention.

~~While~~In the first quarter 2024, we experienced ~~significant new application growth during the first half of 2023, due to the actions taken to address profitability there was~~ a decrease in Personal Lines new business applications, primarily reflecting the significant volume of new applications written in the prior year first quarter. On a quarter-over-prior-year quarter basis, new personal auto applications decreased 9% for the first quarter 2024, compared to an increase of 83% in the same period in 2023. As certain new business restrictions began to be lifted during the quarter, we saw personal auto new business application growth stabilize towards the end of the quarter.

New applications in our core commercial auto business increased 2% during the first quarter 2024, compared to the ~~third quarter 2022. During~~same period last year. Excluding the ~~third quarter 2023, we also saw~~impact of the for-hire transportation business market target (BMT), which had a ~~slowing of~~year-over-year decrease in new applications, our core commercial auto new application growth ~~in both our Commercial Lines and Property businesses, compared~~would have been 9% during the first quarter 2024. The for-hire transportation BMT continues to ~~the growth rates experienced earlier~~be adversely impacted by challenging freight market conditions that have caused a decline in the ~~year. The Personal Lines decline reflected a decrease~~active number of motor carriers in ~~both our Agency and Direct auto businesses, combining for a total decrease of 20% for new personal auto business applications. While personal auto premium growth and retention were strong during~~this BMT.

New applications in the ~~third quarter 2023, some of the profitability actions mentioned above could have a negative impact on future premium growth, retention, and could continue to negatively impact new applications.~~

~~Returning to calendar-year profitability in our~~ Property business ~~continues to remain a priority for us. We plan to continue~~were up 31% over the first quarter last year as we continued to focus on our efforts to grow in states that traditionally have less catastrophe exposure and limit growth in coastal and hail-prone states to reduce concentration mix among states. In regions where our appetite to writegrowing new business ~~is limited, we are prioritizing Progressive~~in less volatile weather states and home and auto bundles, as well as lower risk properties, such as new construction or homes with newer ~~roofs. In addition,~~roofs, in regions where our appetite to ~~continue to rebalance our~~write new business we began a non-renewal effort of up to 115,000 Property policies in Florida. Following the required filings and notices, the first of these non-renewals will go into effect in the second quarter of 2024 and will continue on a rolling 12-month basis. To try to ease this disruption to our customers and agents, we reached an agreement with another Florida insurer to offer replacement policies to these policyholders, subject to their underwriting and financial guidelines and agent appointments where applicable. Despite this non-renewal effort, we plan to continue to provide for the insurance needs of over 3 million Florida policyholders across all of our lines of business, including over 200,000 Florida homeowners.

In the third quarter 2023, in our Property products, we increased rates by about 2% in aggregate, following a rate increase of about 7% during the first half of 2023 and an increase of about 19% during 2022. Similar to our personal and commercial auto products, we intend to continue to raise rates in our Property products in an effort to achieve our calendar-year underwriting profitability goal, with a planned aggregate countrywide increase of about 7% over the remainder of the year. Some of these rate increases will be subject to regulatory approval. New applications in the states where we are focused on growth were up about 30% over the third quarter last year. New applications were down about 10% in the more volatile weather states. In addition, the Property business benefited from growth in Robinsons, our bundled auto and home policies. In total, Property new applications were up 9% over the third quarter 2022.is limited.

During the ~~third~~first quarter ~~2023,~~2024, on a year-over-year basis, average written premium per policy grew ~~12%~~14% in ~~both~~ personal auto, 10% in core commercial auto, and ~~Property, and 4%~~2% in ~~commercial auto.~~Property. The growth in personal auto, commercial auto, and Property primarily reflected rate increases taken throughout ~~2022 that continued through the third quarter~~ 2023, in response to rising loss ~~costs.~~costs, that continued to be earned through the first quarter 2024. The rate increases taken in commercial auto were, in part, offset by a shift in the mix of business, primarily driven by decreased demand in our for-hire transportation product.

Given that our commercial auto and Property policies are predominately written for 12-month terms, rate actions take longer to earn in for these products.

We believe a key element in improving the accuracy of our rating is Snapshot®, our usage-based insurance offering. During the ~~third~~first quarter ~~2023,~~2024, the adoption rates for consumers enrolling in the program ~~increased~~decreased about ~~15%~~20% in Agency auto and was flat in Direct auto, compared to

the ~~third~~first quarter ~~2022.~~2023. The decrease in the Agency auto adoption rate primarily reflects a shift in the mix of agencies through which we wrote new business during the first quarter 2024, as a result of the rate and non-rate actions implemented after the first quarter of 2023. As we continue to lift certain non-rate restrictions during 2024, we would expect the mix of agencies where we write new business will begin to shift in the direction of the agency mix that was in place prior to the implementation of those restrictions. Snapshot is available in all states, other than California, and our latest segmentation model was available in states that represented about ~~50%~~70% of our countrywide personal auto premium at ~~September 30, 2023.~~March 31, 2024. We continue to invest in our mobile application, with mobile devices being chosen for Snapshot monitoring for the majority of new enrollments.

We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention continues to be one of our most important priorities. Our efforts to increase our share of multi-product households remains a key initiative and we will continue to make investments to improve the customer experience in order to support that goal. Policy life expectancy, which is our actuarial estimate of the average length of time that a policy will remain in force before cancellation or lapse in coverage, is our primary measure of customer retention in our Personal Lines, Commercial Lines, and Property businesses.

We evaluate total personal auto retention using a trailing 12-month and a trailing 3-month policy life expectancy. ~~The~~Although the latter can reflect more volatility and is more sensitive to ~~seasonality.~~seasonality, this measure is more responsive to current experience and may be an indicator for the future trend of our 12-month measure. As of the end of the ~~third~~first quarter ~~2023,~~2024, our trailing 12-month total personal auto policy life expectancy increased ~~19%~~20%, compared to last ~~year, which marks the second consecutive quarter the trailing 12-month measure has been positive since the beginning of 2022.~~year. The Agency and Direct channels trailing 12-month measure was up ~~20%~~28% and ~~17%~~13%, respectively. WeAs of the end of the first quarter 2024, we have seen improvement in our trailing 12-month policy life expectancy on a ~~month-over-prior month~~year-over-year basis for each of the last ~~several months although recent and future rate~~ten months. Rate increases could ~~potentially~~ have an adverse impact on our ~~retention. Our~~retention, as potentially indicated by our total personal auto trailing 3-month policy life expectancy ~~for total personal auto was up 35%,~~no longer showing improvement, compared to the same period last year. ~~We believe that the improved retention on a trailing 3-month basis reflects our continued competitiveness in the marketplace.~~

At the end of the ~~third~~first quarter ~~2023,~~2024, our trailing 12-month policy life expectancy increased 5%6% in special lines, ~~14%~~11% in Property, and decreased 9%15% in Commercial Lines,

compared to the same period last year. The decrease in Commercial Lines ~~was across~~policy life expectancy in all ~~business market targets (BMT), with~~BMTs, reflected rate and non-rate actions taken in 2023 to achieve our target profitability, as well as the continued decrease in demand in the for-hire transportation BMT demand providing the largest contribution to the overall decrease. Commercial auto retention is being negatively impacted by our rate and underwriting actions, a slowdown in the rate of economic activity, and challenging freight market conditions, which we believe are driving increased shopping and causing motor carriers to exit the industry.BMT.

B. Investments

The fair value of our investment portfolio was ~~$61.9~~$69.0 billion at ~~September 30, 2023,~~March 31, 2024, compared to ~~$53.5~~$66.0 billion at December 31, ~~2022.~~2023. The increase from year-end ~~2022~~2023 primarily reflected ~~solid~~ cash flows from operations, in part offset by the redemption of all of our outstanding Serial Preferred Shares, Series B, and the ~~$0.5 billion~~payment of ~~proceeds from debt issued in May 2023, as discussed further below, partially offset by valuation decreases in U.S. government securities.~~our annual variable common share dividends.

Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities (the securities allocated to Group I and II are defined below under Results of Operations – Investments). At ~~September 30,~~both March 31, 2024 and December 31, 2023, 7% of our portfolio was allocated to Group I securities and 93% to Group II ~~securities, compared to 10% and 90%, respectively, at December 31, 2022.~~

securities.

Our recurring investment income generated a pretax book yield of ~~3.3%~~3.7% for the ~~third~~first quarter ~~2023,~~2024, compared to ~~2.5%~~3.0% for the same period in ~~2022, due to the~~2023. The increase from prior year primarily reflected investing new cash from operations, and proceeds from maturing bonds, in ~~interest rates on our floating-rate securities and the investment of cash and maturities at relatively~~ higher ~~interest rates.~~coupon rate securities. Our investment portfolio produced a fully taxable equivalent (FTE) total return of ~~(0.2)%~~0.8% and ~~(1.9)%~~2.3% for the ~~third~~first quarter ~~2023~~2024 and ~~2022,~~2023, respectively. Our fixed-income and common stock portfolios had FTE total returns

of ~~(0.1)%~~0.3% and ~~(3.1)%~~9.9%, respectively, for the ~~third~~first quarter ~~2023,~~2024, compared to ~~(1.8)%~~2.0% and ~~(4.5)%~~7.3%, respectively, last year. The ~~favorable change~~decrease in the fixed-income ~~return reflected lower~~ portfolio ~~valuation decreases in third quarter 2023,~~FTE total return, compared to ~~third quarter 2022, as the market experienced smaller increases~~last year, primarily reflected movements in ~~interest rates and a more stable environment for credit spreads versus third quarter 2022.~~Treasury yields year-over-year. The ~~year-over-year change~~increase in the common stock portfolio total return reflected general market ~~conditions.~~conditions in first quarter 2024.

At ~~September 30, 2023,~~March 31, 2024, the fixed-income portfolio had a weighted average credit quality of AA- and a duration of ~~2.9~~3.2 years, compared to AA and ~~2.7~~3.0 years at ~~September 30, 2022~~March 31, 2023 and AAAA- and ~~2.9~~3.0 years at December 31, ~~2022.~~2023. Our decrease in weighted average credit quality ~~since December~~compared to March 31, ~~2022,~~2023, was mainly due to ~~two~~a second major credit rating ~~agencies rating~~agency downgrading U.S. Treasury debt atto AA+ ~~instead of~~from AAA during the third quarter 2023, which led us to lower our U.S. Treasury positions to AA+. During first quarter 2024, we took advantage of higher interest rates to increase the portfolio duration.

At March 31, 2024, we continued to maintain a relatively conservative investment portfolio with a greater allocation to cash and treasuries and relatively shorter interest rate risk. We believe that this portfolio allocation, coupled with a lack of maturities of our outstanding debt until 2027, positions us well to benefit from a higher interest rate environment. We also believe that we are in a very strong position to face the current dynamic operating and investment marketplaces as we move into the second quarter of 2024.

II. FINANCIAL CONDITION

A. Liquidity and Capital Resources

Progressive’s insurance operations create liquidity by collecting and investing premiums from new and renewal business in advance of paying claims. As primarily an auto insurer, our claims liabilities generally have a short-term duration.

Operations generated positive cash flows of ~~$8.2~~$4.2 billion and ~~$5.9~~$2.4 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. The increase in operating cash flow for the first ~~nine~~three months of ~~2023~~2024 compared to ~~2022~~2023 is primarily attributable to collecting more premiums in ~~2023~~2024 relative to paying ~~losses,~~losses. The increase in premiums collected were mostly driven by rate increases and ~~volume growth, partially offset by~~policies in force growth. While loss payments also increased during the first three months of 2024, primarily due to higher loss severity ~~trends.~~trends, the increase in loss payments was not as substantial as the increase in premiums. We believe cash flows will remain positive in the reasonably foreseeable future and do not expect we will have a need to raise capital to support our operations in that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.

As of ~~September 30, 2023,~~March 31, 2024, we held ~~$36.1~~$39.9 billion in short-term investments and U.S. Treasury securities, which represented about 58% of our total portfolio. Based on our portfolio allocation and investment strategies, we believe that we have sufficient readily available marketable securities to cover our claims payments and short-term obligations in the event our cash flows from operations were to be negative. See Item 1A, Risk Factors in our Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, ~~2022,~~2023, for a discussion of certain matters that may affect our portfolio and capital position.

Our total capital (debt plus shareholders’ equity) was ~~$24.3~~$28.7 billion, based on book value, at ~~September 30, 2023,~~March 31, 2024, compared to ~~$21.2~~$23.3 billion at ~~September 30, 2022,~~March 31, 2023, and ~~$22.3~~$27.2 billion at December 31, ~~2022.~~2023. The increase from December primarily reflected the comprehensive income recognized during the first ~~nine~~three months of ~~2023, primarily~~2024, mainly driven by ~~recurring investment income reflecting continued increased interest rates,~~ our underwriting profitability, partially offset by the redemption of all of the outstanding Serial Preferred Shares, Series B. During the first quarter 2024, we redeemed all of the outstanding Serial Preferred Shares,

Series B, at the stated amount of $1,000 per share, for an aggregate payout of $507.8 million, including accrued and unpaid dividends to, but excluding February 22, 2024, which was the ~~issuance in May 2023 of $500.0 million of 4.95% Senior Notes due 2033.~~redemption date. Our debt-to-total capital ratio was ~~28.4%~~24.0% at ~~September 30,~~March 31, 2024, 27.5% at March 31, 2023, ~~30.2% at September 30, 2022,~~ and ~~28.7%~~25.4% at December 31, ~~2022.~~2023.

While our financial policies include a goal of maintaining debt below 30% of total capital at book value, we recognize that various factors, including rising interest rates, widening credit spreads, declines in the equity markets, or erosion in operating results, may result in that ratio exceeding 30% at times. In such a situation, ~~as we did during 2022,~~ we may choose to remain above 30% for some time, dependent upon market conditions and the capital needs of our operating businesses. We will continue to monitor this ratio, market conditions, and our capital needs going forward.

None of the covenants on our outstanding debt securities include rating or credit triggers that would require an adjustment of interest rates or an acceleration of principal payments in the event that our debt securities are downgraded by a rating agency. ~~During the second quarter 2023,~~In April 2024, we ~~amended~~renewed the unsecured discretionary line of credit (the Line of Credit) with PNC Bank, National Association, ~~and raised~~in the maximum principal amount toof $300 ~~million from the previous amount of $250~~ million. We did not engage in short-term borrowings, including any borrowings under our Line of Credit, to fund our operations or for liquidity purposes during the reported periods.

During the first ~~nine~~three months of ~~2023,~~2024, we returned capital to shareholders primarily through common share dividends and common share repurchases. ~~Our~~In March 2024, our Board of Directors declared a $0.10 per common share dividend, ~~in each of the first three quarters of 2023. These dividends, which were each $58.5~~or $58.6 million in the aggregate, ~~were~~that was paid in April ~~2023, July 2023, and October 2023.~~2024. In January ~~2023,~~2024, we also paid common share dividends declared in the fourth quarter ~~2022,~~2023, in the aggregate amount of ~~$58.5~~$497.9 million, or ~~$0.10~~$0.85 per share (see Note 9 – Dividends for further discussion).

In addition to the common share dividends, in March 2023, June 2023, and September 2023, we paid Series B Preferred Share dividends in the aggregate amount of $13.4 million, $9.5 million, and $10.3 million, respectively. Beginning March 15, 2023, the annual dividend rate for the Series B Preferred Shares switched to a floating rate equal to the three-month London Interbank Offered Rate (LIBOR) plus a spread of 2.539% applied to the stated amount per share. During the floating rate period, dividends on the Series B Preferred Shares are payable quarterly, if and when declared by the Board of Directors.

We, as calculation agent under our Series B Preferred Shares, determined that the reference rate for the Series B Preferred Shares, for any determination date after June 30, 2023, shall be the sum of (i) 3-Month CME Term Secured Overnight Financing Rate (SOFR) plus (ii) a tenor spread adjustment of 0.26161%, and (iii) a spread of 2.539%. The new reference rate became effective for the dividend period determination date commencing September 15, 2023. The reference rate was determined in accordance with the successor base rate provisions of the Series B Preferred Shares and the Adjustable Interest Rate (LIBOR) Act and the regulation issued by the Board of Governors of the Federal Reserve System on December 16, 2022, implementing the LIBOR Act.

Consistent with our financial policies, we repurchase common shares to neutralize dilution from equity-based compensation granted during the year and opportunistically when we believe our shares are trading below our determination of long-term fair value. During the first ~~nine~~three months of ~~2023,~~2024, we repurchased ~~0.6~~0.2 million common shares, at a total cost of ~~$79.8~~$37.1 million, ~~including 0.3 million shares in the third quarter 2023, both in the open market and~~ to satisfy tax withholding obligations in connection with the vesting of

equity awards under our equity compensation plans. We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and potential capital needs to expand our business operations.

At March 31, 2024, we had $3.2 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to the insurance subsidiaries to fund potential future growth. As of March 31, 2024, our estimated consolidated statutory surplus was $24.6 billion.

During the first three months of 2024, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2023 Annual Report to Shareholders. There have not been any material changes in off-balance-sheet leverage, which includes purchase obligations and catastrophe excess of loss reinsurance contracts, from those disclosed in our 2023 Annual Report to Shareholders.

We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, catastrophic and other insured losses, natural disasters, and other significant business interruptions, to estimate our potential capital needs.

Based upon our capital planning and forecasting efforts, we believe we have sufficient capital resources and cash flows from operations to support our current business, scheduled principal and interest payments on our debt, anticipated quarterly dividends on our common shares, ~~and dividends on the Series B Preferred Shares,~~ our contractual obligations, and other expected capital requirements for the foreseeable future. ~~At September 30, 2023,~~

Nevertheless, we ~~had $4.1 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to the insurance~~

~~subsidiaries to fund potential future growth. As of September 30, 2023, our estimated consolidated statutory surplus was $20.2 billion.~~

During the first nine months of 2023, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2022 Annual Report to Shareholders. During the second quarter 2023, we renewed our catastrophe excess of loss per occurrence reinsurance contract, which increased our noncancellable purchase obligation commitments about $139.5 million, bringing our total commitments related to the excess of loss contracts to $252.6 million at September 30, 2023. There have not been any other material changes in off-balance-sheet leverage, which includes purchase obligations and catastrophe excess of loss reinsurance contracts, from those disclosed in our 2022 Annual Report to Shareholders.

~~In May 2023, we decided~~may decide to raise additional capital to take advantage of attractive terms in the market and to provide additional financial ~~flexibility, and we may decide to do so in the future.~~flexibility. We currently have an effective shelf registration with the U.S. Securities and Exchange Commission so that we may periodically offer and sell an indeterminate aggregate amount of senior or subordinated debt securities, preferred stock, depository shares, common stock, purchase contracts, warrants, and units. The shelf registration enables us to raise funds from the offering of any securities covered by the shelf registration as well as any combination thereof, subject to market conditions.

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III. RESULTS OF OPERATIONS – UNDERWRITING

A. Segment Overview

We report our underwriting operations in three segments: Personal Lines, Commercial Lines, and Property. As a component of our Personal Lines segment, we report our Agency and Direct business results to provide further understanding of our products by distribution channel.

The following table shows the composition of our companywide net premiums written, by segment, for the respective periods:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024												2024	2023
Personal Lines	Personal Lines
Agency
Agency
Agency	Agency	36	%	36	%		36	%	35	%		34	%		34	%
Direct	Direct	45		43			42		41
Total Personal Lines1	Total Personal Lines1	81		79			78		76
Commercial Lines	Commercial Lines	14		16			17		19
Property	Property	5		5			5		5
Total underwriting operations	Total underwriting operations	100	%	100	%		100	%	100	%	Total underwriting operations		100	%		100	%

1 Personal auto products accounted for ~~94%~~96% and 95% of the total Personal Lines segment net premiums written during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 93% for the three and nine months ended September 30, 2022;~~respectively; our special lines products accounted for the balance.

Our Personal Lines business writes insurance for personal autos and special lines products (e.g., motorcycles, RVs, watercraft, and snowmobiles). Within Personal Lines, we often refer to our four consumer segments:

•Sam - inconsistently insured;

•Diane - consistently insured and maybe a renter;

•Wrights - homeowners who do not bundle auto and home; and

•Robinsons - homeowners who bundle auto and home.

While our personal auto policies ~~are~~ primarily ~~written for~~have 6-month terms, we write 12-month auto policies in our Platinum agencies to promote bundled auto and home

growth. At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ 14% of our Agency auto policies in force were 12-month policies. To the extent our Agency application mix of annual policies grows, the shift in policy term could increase our written premium mix by channel as 12-month policies have about twice the amount

of net premiums written compared to 6-month policies. Our special lines products are written for 12-month terms.

Our Commercial Lines business writes auto-related liability and physical damage insurance, business-related general liability and property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry. Our Commercial Lines business operates in the following five traditional business market targets (BMT):

•business auto;

•for-hire transportation;

•contractor;

•for-hire specialty; and

•tow.

Within Commercial Lines, we refer to these BMTs as our core commercial auto business. In addition to the core commercial auto business, Commercial Lines writes TNC, Progressive Fleet & Specialty (formerly referred to as Protective Insurance) and BOP products.

At March 31, 2024, about 90% of Commercial Lines policies in force had 12-month terms. The majority of our Commercial Lines business is written through the independent agency channel although we continue to focus on growing our direct business. To serve our direct channel customers, we continue to expand our product offerings, including adding states where we offer our ~~business owners policy (BOP)~~BOP product, as well as adding these product offerings to our digital platform that serves direct small business consumers (BusinessQuote Explorer®). ~~The direct~~Our core commercial auto business ~~excluding~~written through the direct channel represented about 11% of our ~~transportation network company (TNC) business, BOP, and Protective Insurance Corporation and subsidiaries (Protective Insurance) products, represented 10% of our~~total core commercial auto premiums written for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022. We write about 90% of Commercial Lines policies for 12-month terms.~~2023.

Our Property business writes residential property insurance for homeowners, other property owners, renters, and umbrella insurance. ~~We write the majority~~About three-fourths of our Property business is generated through the independent agency ~~channel. We continue to expand~~channel with the ~~direct distribution of our Property product offerings, and, for both the nine months ended September 30, 2023 and 2022, nearly a quarter of our Property business premiums were written~~balance in the direct channel. All of our Property policies ~~are written for 12-month~~have 12-months terms.

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B. Profitability

Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses. We also use underwriting margin, which is underwriting profit or loss expressed as a percentage of net premiums earned, to analyze our results. For the respective periods, our underwriting profitability results were as follows:




		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended March 31,
		2023				2022				2023				2022						2024	2023
		Underwriting Profit (Loss)				Underwriting Profit (Loss)				Underwriting Profit (Loss)				Underwriting Profit (Loss)						Underwriting Profit (Loss)	Underwriting Profit (Loss)
($ in millions)	($ in millions)	$		Margin		$		Margin		$		Margin		$		Margin		($ in millions)				$			Margin				$				Margin
Personal Lines	Personal Lines
Agency	Agency	$	335.7	6.2	%	$	(41.3)	(0.9)	%	$	427.1	2.8	%	$	507.6	3.9	%
Agency
Agency																						$	950.7		16.2		%		$	162.6			3.3	%
Direct	Direct	706.2		11.1		40.6		0.8		810.6		4.4		389.4		2.6
Total Personal Lines	Total Personal Lines	1,041.9		8.8		(0.7)		0		1,237.7		3.7		897.0		3.2
Commercial Lines	Commercial Lines	23.0		0.9		238.1		10.3		147.4		2.0		683.5		10.1
Property1		74.6		11.8		(141.0)		(25.1)		(164.9)		(8.9)		(289.6)		(17.1)
Other indemnity2		(3.3)		NM		(2.1)		NM		(6.7)		NM		(9.3)		NM
Property
Other indemnity1																		Other indemnity1				(0.3)			NM				(3.4)				NM
Total underwriting operations	Total underwriting operations	$	1,136.2	7.6	%	$	94.3	0.8	%	$	1,213.5	2.8	%	$	1,281.6	3.5	%	Total underwriting operations				$	2,249.9	13.9		13.9		%		$	141.6	1.0		1.0	%

1For the three and nine months ended September 30, 2023, pretax profit (loss) includes $2.9 million and $10.7 million, respectively, of amortization expense associated with acquisition-related intangible assets attributable to our Property segment, compared to $5.0 million and $24.1 million for the respective periods last year. The year-over-year decrease in amortization expense reflects intangible assets that were fully amortized during the first and second quarter 2023, and the first quarter 2022.

2 Underwriting margins for our other indemnity businesses are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

~~For~~Several factors contributed to the ~~third quarter 2023, the higher pretax~~significant increase in underwriting profit ~~primarily reflected 3.9 fewer points of catastrophe losses and a 2.5 point reduction in our companywide underwriting expenses predominately due to a reduction in advertising expenses,~~for the first quarter 2024, compared to the ~~third~~first quarter ~~2022. For~~2023. As a result of the ~~year-to-date period ended September 30,~~rate increases we took throughout 2023, our ~~profitability~~personal and core commercial auto average written premium per policy were up 14% and 10%, respectively, and Property was up 2% year over year. Also, on a year-over-year basis for the first quarter, our incurred personal auto accident frequency decreased ~~from~~9% and, while severity was up 3%, we are starting to see indications that severity trends are stabilizing. During the first quarter 2024, we recognized favorable prior accident years development, compared to significant unfavorable development in the first quarter last year, which accounted for 4.7 points on a quarter-over-prior-year quarter basis.

Lastly, our companywide expense ratio was 2.3 points lower in the first quarter 2024, compared to the same period last year,

~~primarily~~ in large part due to ~~the impact from unfavorable prior accident years reserve development,~~a 7% decrease in ~~part, offset by lower underwriting expenses.~~advertising spend. We are increasing our media spend to maximize growth and will continue to do so as long as we remain on track to achieve our target profitability.

See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our frequency and severity trends, reserve development, and catastrophe losses incurred during the periods.

3633

Further underwriting results for our Personal Lines business, including results by distribution channel, the Commercial Lines business, the Property business, and our underwriting operations in total, were as follows:




		Three Months Ended September 30,			Nine Months Ended September 30,				Three Months Ended March 31,
Underwriting Performance1	Underwriting Performance1	2023	2022	Change	2023	2022	Change	Underwriting Performance1		2024	2023	Change
Personal Lines – Agency	Personal Lines – Agency
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	75.8	82.9	(7.1)	79.0	78.5	0.5
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Underwriting expense ratio	Underwriting expense ratio	18.0	18.0	0	18.2	17.6	0.6
Combined ratio	Combined ratio	93.8	100.9	(7.1)	97.2	96.1	1.1
Personal Lines – Direct	Personal Lines – Direct
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	77.0	81.4	(4.4)	80.5	78.9	1.6
Underwriting expense ratio	Underwriting expense ratio	11.9	17.8	(5.9)	15.1	18.5	(3.4)
Combined ratio	Combined ratio	88.9	99.2	(10.3)	95.6	97.4	(1.8)
Total Personal Lines	Total Personal Lines
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	76.5	82.1	(5.6)	79.8	78.7	1.1
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Underwriting expense ratio	Underwriting expense ratio	14.7	17.9	(3.2)	16.5	18.1	(1.6)
Combined ratio	Combined ratio	91.2	100.0	(8.8)	96.3	96.8	(0.5)
Commercial Lines	Commercial Lines
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	79.7	70.5	9.2	77.8	70.6	7.2
Underwriting expense ratio	Underwriting expense ratio	19.4	19.2	0.2	20.2	19.3	0.9
Combined ratio	Combined ratio	99.1	89.7	9.4	98.0	89.9	8.1
Property	Property
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	58.8	97.2	(38.4)	79.9	89.9	(10.0)
Underwriting expense ratio2		29.4	27.9	1.5	29.0	27.2	1.8
Combined ratio2		88.2	125.1	(36.9)	108.9	117.1	(8.2)
Total Underwriting Operations
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio	Loss & loss adjustment expense ratio	76.3	80.6	(4.3)	79.5	77.7	1.8
Underwriting expense ratio	Underwriting expense ratio	16.1	18.6	(2.5)	17.7	18.8	(1.1)
Combined ratio	Combined ratio	92.4	99.2	(6.8)	97.2	96.5	0.7
Accident year – Loss & loss adjustment expense ratio3		76.1	81.3	(5.2)	76.8	77.6	(0.8)
Total Underwriting Operations
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Loss & loss adjustment expense ratio
Underwriting expense ratio
Combined ratio
Accident year – Loss & loss adjustment expense ratio2

1 Ratios are expressed as a percentage of net premiums earned. ~~The portion of fees~~Fees and other revenues ~~related to our loss adjustment activities~~ are netted against either loss adjustment expenses ~~and the portion of fees and other revenues related to our underwriting operations are netted against~~or underwriting expenses in the ratio ~~calculations.~~calculations, based on the underlying activity that generated the revenue.

2Included in the three and nine months ended September 30, 2023, are 0.5 points and 0.6 points, respectively, of amortization expense on acquisition-related intangible assets attributable to our Property segment, and 0.9 points and 1.4 points for the respective periods last year.

3 The accident year ratios include only the losses that occurred during the period noted. As a result, accident period results will change over time, either favorably or unfavorably, as we revise our estimates of loss costs when payments are made or reserves for that accident period are reviewed.

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Losses and Loss Adjustment Expenses (LAE)

Three Months Ended September 30, Nine Months Ended September 30,
(millions) 2023 2022 2023 2022
Change in net loss and LAE reserves $ 947.2 $ 1,470.4 $ 3,836.0 $ 3,167.3
Paid losses and LAE 10,440.7 8,548.3 30,346.0 25,130.9
Total incurred losses and LAE $ 11,387.9 $ 10,018.7 $ 34,182.0 $ 28,298.2


	Three Months Ended March 31,
(millions)		2024		2023
Change in net loss and LAE reserves		$	578.9	$	925.2
Paid losses and LAE		10,392.7		9,698.8
Total incurred losses and LAE		$	10,971.6	$	10,624.0

Claims costs, our most significant expense, represent payments made and estimated future payments to be made, to or on behalf of our policyholders, including expenses needed to adjust or settle claims. Claims costs are a function of loss severity and frequency and, for our vehicle businesses, are influenced by inflation and driving patterns, among other factors, some of which are discussed below. In our Property business, severity is primarily a function of construction costs and the age of the structure.

Accordingly, anticipated changes in these factors are taken into account when we establish premium rates and loss reserves. Loss reserves are estimates of future costs and our reserves are adjusted as underlying assumptions change and information develops.

Our total loss and LAE ratio decreased ~~4.3~~10.6 points for the ~~third~~first quarter ~~2023 and increased 1.8 points for the nine months ended September 30, 2023,~~2024, compared to the same ~~periods~~period last ~~year. The~~year, primarily due to a decrease in ~~the third quarter 2023, primarily reflects lower catastrophe losses and~~loss frequency, higher premium per policy, ~~partially offset by higher severity~~ and ~~unfavorable current accident years reserve development. The year-to-date increase through the third quarter 2023, was primarily driven by increased severity and unfavorable~~favorable prior accident years reserve development in the first quarter 2024, compared to unfavorable development in the first quarter last year, partially offset by ~~the~~ higher ~~premium per policy due to rate increases.~~loss severity as discussed below. On an accident year basis, our ~~third~~first quarter ~~2023~~2024 loss and LAE ratio was ~~5.2~~5.9 points lower than the ~~third~~first quarter ~~2022, and 0.8 points lower on a year-to-date basis.~~2023.

The following table shows our consolidated catastrophe losses and related combined ratio point impact, excluding loss adjustment expenses, incurred during the periods:




		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2023			2022			2023			2022					2024	2023
($ in millions)	($ in millions)	$		Point1	$		Point1	$		Point1	$		Point1	($ in millions)				$	Point1	$	Point1
Personal Lines	Personal Lines	$	347.5	3.0	$	671.5	7.1	$	1,030.3	3.1	$	1,001.2	3.6
Commercial Lines	Commercial Lines	12.5		0.5	16.7		0.7	34.9		0.5	29.1		0.4
Property	Property	110.8		17.5	195.0		34.8	671.1		36.2	527.8		31.2
Total net catastrophe losses incurred	Total net catastrophe losses incurred	$	470.8	3.2	$	883.2	7.1	$	1,736.3	4.0	$	1,558.1	4.3

1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned for each segment.

In the three ~~and nine~~ months ended September 30, 2023, we were affected by 25 and 68 catastrophic weather events, respectively, compared to 16 and 50 events in the same periods last year. Although there were more storms during 2023, the severity of the 2022 storms were greater, primarily due to the impact of Hurricane Ian during the third quarter of 2022. During the third quarter 2023,March 31, 2024, our catastrophe losses reflected severe weather events throughout the United States, with ~~Texas, Minnesota, Colorado, Michigan,~~five states (Texas, Missouri, Florida, Oregon, and ~~Florida~~California) contributing ~~about 55%~~just over half of the ~~losses, although 39 states and the District of Columbia were affected for the quarter and 46 states and the District of Columbia for the first nine months of 2023.~~losses. We have responded, and plan to continue to respond, promptly to catastrophic events when they occur in order to provide ~~exemplary~~high-quality claims service to our customers.

Changes in our estimate of our ultimate losses on ~~current~~ catastrophes currently reserved, along with potential future catastrophes, could have a material impact on our financial condition, cash flows, or results of operations. We reinsure various risks including, but not limited to, catastrophic losses. We do not

have catastrophe-specific reinsurance for our Personal Lines or commercial auto businesses, but we reinsure portions of our Property business. The Property business reinsurance programs include catastrophe occurrence excess of loss contracts and aggregate excess of loss contracts. We also purchase ~~non-weather-related catastrophe~~excess of loss reinsurance on our ~~Protective Insurance~~ workers’ compensation ~~insurance.~~insurance and our higher-limit commercial auto liability product offered by our Progressive Fleet & Specialty business.

We evaluate our reinsurance programs during the renewal process, if not more frequently, to ensure our programs continue to effectively address the company’s risk tolerance. ~~During the second quarter 2023,~~For 2024, we entered into a new reinsurance contracts under our per occurrence excess of loss program for our Property business. The reinsurance program has retention thresholds for losses and allocated loss adjustment expense (ALAE) from a single catastrophic event of $200 million, which is unchanged from the retention threshold on prior contracts. In general, our program includes coverage for $2.0 billion in damages with additional substantial coverage for a second or third hurricane. When including the Florida Hurricane

Catastrophe Fund and the Reinsurance Assistance to Policyholder programs that are specific to Florida, this coverage reaches $2.4 billion. While the cost of our reinsurance program increased considerably over the prior year due to market conditions, we were able to successfully place 100% of the requested coverage with our reinsurers.

~~During 2023, we also entered into new~~catastrophe aggregate excess of loss reinsurance ~~contracts~~contract that ~~have~~has multiple layers of coverage, with the first retention layer

threshold ranging from ~~$500~~$450 million to ~~$575~~$475 million, excluding named tropical storms and hurricanes, and the second retention layer threshold of ~~$600~~$525 million, including named tropical storms and hurricanes. The first and second layers provide coverage up to $85 million and $100 million, ~~and $85 million,~~ respectively.

During the third quarter 2023, we exceeded the first layer annual retention thresholds and recorded a reinsurance recoverable of $23.0 million, under our 2023 catastrophe aggregate excess of loss program.

While the total coverage limit and per-event retention will evolve to fit the growth of our business, we expect to remain a consistent purchaser of reinsurance coverage. While the cost of our reinsurance, in the markets in which we participate, increased for the coverages placed in the beginning of 2024, compared to the prior years, and the availability of reinsurance is subject to many forces outside of our control, we did not, and do not expect to in the near term, experience a significant lack of availability of any of the types of reinsurance that we typically purchase. See Item ~~1 – Description of Business-Reinsurance~~1A, Risk Factors in our ~~Annual Report on~~2023 Form 10-K filed with the U.S. Securities and Exchange Commission, for the year ended December 31, ~~2022,~~2023, for a discussion of certain risks related to catastrophe events and the potential impact of climate change. See Item 1, Business – Reinsurance on Form 10-K for a discussion of our various reinsurance programs.

The following discussion of our severity and frequency trends in our personal auto business excludes comprehensive coverage because of its inherent volatility, as it is typically linked to catastrophic losses generally resulting from adverse weather. For our core commercial

auto products, the reported frequency and severity trends include comprehensive coverage. Comprehensive coverage insures against damage to a customer’s vehicle due to various causes other than collision, such as windstorm, hail, theft, falling objects, and glass breakage.

Total personal auto incurred severity (i.e., average cost per claim, including both paid losses and the change in case reserves) on a calendar-year basis, over the prior-year ~~periods~~period, was as follows:

Growth Over Prior Year
Quarter Year-to-date
Coverage Type 2023 2023
Bodily injury 8 % 10 %
Collision 5 6
Personal injury protection 0 3
Property damage 5 10
Total 5 9

~~The year-over-year increase in severity, in part, reflects the impact of inflation, which continues to increase the valuation of used vehicles and total loss, repair, and medical costs.~~


	Growth Over Prior Year
	Quarter
Coverage Type	2024
Bodily injury	6	%
Collision	(1)
Personal injury protection	6
Property damage	2
Total	3

To address inherent seasonality trends and lessen the effects of month-to-month variability in the commercial auto products, we use a trailing 12-month period in assessing severity. In the ~~third~~first quarter ~~2023,~~2024, our core commercial auto products’ incurred severity ~~excluding our TNC, BOP, and Protective Insurance products,~~ increased 5%4%, compared to the same period last year. Since the loss patterns in the ~~TNC, BOP, and Protective Insurance~~non-core commercial auto businesses are not indicative of our other commercial auto products, disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial ~~auto~~ products.

It is a challenge to estimate future severity, but we continue to monitor changes in the underlying costs, such as general inflation, used car prices, vehicle repair costs, medical costs, health care reform, court decisions, and jury verdicts, along with regulatory changes and other factors that may affect severity.

Our personal auto incurred frequency, on a calendar-year basis, over the prior-year ~~periods,~~period, was as follows:

Growth Over Prior Year
Quarter Year-to-date
Coverage Type 2023 2023
Bodily injury 0 % 4 %
Collision (5) (5)
Personal injury protection 2 5
Property damage 1 2
Total (1) 0


	Growth Over Prior Year
	Quarter
Coverage Type	2024
Bodily injury	(8)	%
Collision	(11)
Personal injury protection	(9)
Property damage	(8)
Total	(9)

The year-over-year decrease in frequency, in part, reflects underwriting actions taken to reduce new business and a shift in the mix of business to a more preferred tier of customers.

On a trailing 12-month basis, our core commercial auto products’ incurred frequency ~~excluding our TNC, BOP, and Protective Insurance products, increased 4%~~was flat during the ~~third~~first quarter ~~2023,~~2024, compared to the same period last year.

We closely monitor the changes in frequency, but the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We will continue to analyze trends to distinguish changes in our experience from other external factors, such as changes in the number of vehicles per household, miles driven, vehicle usage, gasoline prices, advances in vehicle safety, and unemployment rates, versus those resulting from shifts in the mix of our business or changes in driving patterns, to allow us to react quickly to price for these trends and to reserve more accurately for our loss exposures.

The table below presents the actuarial adjustments implemented and the loss reserve development experienced on a companywide basis in the following periods:




		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
($ in millions)	($ in millions)	2023			2022			2023			2022			($ in millions)		2024		2023
ACTUARIAL ADJUSTMENTS
Actuarial Adjustments
Reserve decrease (increase)	Reserve decrease (increase)
Reserve decrease (increase)
Reserve decrease (increase)
Prior accident years
Prior accident years
Prior accident years	Prior accident years	$	(133.0)		$	(52.6)		$	(339.6)		$	(103.0)
Current accident year	Current accident year	3.6			25.1			(420.7)			(28.1)
Calendar-year actuarial adjustments	Calendar-year actuarial adjustments	$	(129.4)		$	(27.5)		$	(760.3)		$	(131.1)
PRIOR ACCIDENT YEARS DEVELOPMENT
Prior Accident Years Development
Favorable (unfavorable)	Favorable (unfavorable)
Favorable (unfavorable)
Favorable (unfavorable)
Actuarial adjustments
Actuarial adjustments
Actuarial adjustments	Actuarial adjustments	$	(133.0)		$	(52.6)		$	(339.6)		$	(103.0)
All other development	All other development	96.5			144.7			(807.4)			50.2
Total development	Total development	$	(36.5)		$	92.1		$	(1,147.0)		$	(52.8)
(Increase) decrease to calendar-year combined ratio	(Increase) decrease to calendar-year combined ratio	(0.2)		pts.	0.7		pts.	(2.7)		pts.	(0.1)		pts.	(Increase) decrease to calendar-year combined ratio		0.1	pts.	(4.6)	pts.

Total development consists of both actuarial adjustments and “all other development” on prior accident years. We use “accident year” generically to represent the year in which a loss occurred. The actuarial adjustments represent the net changes made by our actuarial staff to both current and prior accident year reserves based on regularly scheduled reviews. Through these reviews, our actuaries identify and measure variances in the projected frequency and severity trends, which allow them to adjust the reserves to reflect current cost trends.

For our Property business, 100% of catastrophe losses are reviewed monthly, and any development on catastrophe reserves are included as part of the actuarial adjustments. For the Personal Lines and Commercial Lines businesses, development for catastrophe losses in the vehicle businesses would be reflected in “all other development,” discussed below, to the extent they relate to prior year reserves. We report these actuarial adjustments separately for the current and prior accident years to reflect these adjustments as part of the total prior accident years development.

“All other development” represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves, and changes in reserve estimates on specific claims. Although we believe the development from both the actuarial adjustments and “all other development” generally results from the same factors, we are unable to quantify the portion of the reserve development that might be applicable to any one or more of those underlying factors.

About 75% of the total unfavorable development for the first nine months of 2023 was in our personal auto products. About 60% of the personal auto unfavorable development was attributable to higher than anticipated severity in auto property and physical damage coverages, while the remaining unfavorable development was primarily due to increased loss costs in Florida injury and medical coverages and, to a lesser extent, higher than anticipated late reported injury claims. This was partially offset by lower loss adjustment expenses than anticipated.

While it is difficult to quantify the direct impact of recent insurance legislation in Florida, Florida contributed approximately half of the total prior accident year reserve development across all personal auto product lines for the nine months ended September 30, 2023. We continue to believe that the Florida tort reform will likely have a positive impact on the insurance industry in Florida over the long term. We will continue to monitor the ever-changing legislative and regulatory environment and will respond as necessary.

Coverages related to fixing vehicles have seen unprecedented increases in severity trends on previously closed claims, relative to comparable periods last year, and continued to be the major driver of prior year unfavorable development countrywide. The contributors to the increased trends came from a variety of sources, including longer vehicle repair times, longer rental times, and higher parts prices and labor rates. Fixing vehicle coverages are short-tailed, which explains why about 80% of the total year-to-date prior year development is from the 2022 accident year. Excluding Florida, accident years prior to 2022 have developed favorably.

Our current year actuarial adjustments are also primarily due to fixing vehicles. Since fixing vehicle coverages are short-tailed, most of the claims that are affected by emerging trends occurred in the later part of 2022. Accordingly, the steeper trends in fixing vehicle coverages increasingly affected claims that occurred in the current accident year. Florida litigation has been a relatively small part of current year actuarial adjustments since the increase in litigation largely affected claims that occurred before March 2023. During the third quarter 2023, we saw current year actuarial adjustment severity moderate, resulting in slightly favorable calendar-year development during the quarter. We continue to monitor loss trends across all states and coverages and will remain vigilant to adjust reserves to reflect those trends.

Our Commercial Lines business represented about 25% of the unfavorable development for the first nine months of 2023, mainly due to higher than anticipated severity and frequency of late reported injury claims, with about half of the unfavorable development attributable to our TNC business. The trend in loss costs has been steep, as costs for medical care, vehicle repair labor, and parts continue to climb. Although we have recently seen the inflationary environmental trends moderate, we believe the impact of these trends will continue to affect loss costs for the foreseeable future.

Our objective is to establish case and IBNR reserves that are adequate to cover all loss costs, while incurring minimal variation from the date the reserves are initially established until losses are fully developed. Our ability to meet this objective is impacted by many factors. Changes in case law, particularly ~~in case law~~ related to personal injury protection, can make it difficult to estimate reserves timely and with minimal variation. As reflected in the table above, we experienced slightly favorable prior accident years development during the first quarter 2024, compared to unfavorable prior accident years development for the same period last year. The favorable development during the first quarter 2024 was, in part, due to lower than anticipated frequency in Florida following tort reform that passed in the first quarter 2023. This was partially offset by higher than anticipated severity in core commercial auto for

California and New York. The 2023 unfavorable first quarter development in Personal Lines was primarily driven by higher than anticipated severity and increases in incurred losses on previously closed claims and the impact of the legislation enacted in March 2023 in Florida that resulted in a significant number of lawsuits being filed prior to its effective date. In Commercial Lines, the unfavorable development for first quarter 2023 was mainly due to late reported claims from prior accident periods and changes in reserve estimates (e.g., aging of the reserves, changes to estimates by adjusters, and inflation factors) in our core commercial auto products.

See Note 6 – Loss and Loss Adjustment Expense ~~Reserves~~Reserve,s, for a more detailed discussion of our prior accident years reserve development and Critical Accounting Policies in our ~~2022~~2023 Annual Report to Shareholders for discussion of the application of estimates and assumptions in the establishment of our loss reserves.

Underwriting Expenses

Underwriting expenses include policy acquisition costs and other underwriting expenses. The underwriting expense ratio is our underwriting expenses, net of certain fees and other revenues, expressed as a percentage of net premiums earned. For the ~~third~~first quarter ~~2023,~~2024, our underwriting expense ratio was down ~~2.5~~2.3 points, compared to the same period last year, ~~and 1.1 points on a year-to-date basis, primarily reflecting~~due to growth in net premiums earned and decreases in our advertising spend. In total, our companywide advertising spend decreased ~~52%~~7%, or 1.2 points, compared to the ~~third~~first quarter ~~2022,~~2023. As previously discussed, we are increasing our media spend to maximize growth and 19% on a year-to-date basis. The reduction in advertising spend in concert with premium growth reduced the contribution of advertising to our combined ratio by 2.5 points and 1.4 points for the three and nine months ended September 30, 2023, respectively, compared to the same periods last year. As wewill continue to ~~focus~~do so as long as we remain on track to achieve our target profitability and generate sales at a cost below the maximum amount we ~~plan~~are willing to ~~continue to manage our expenses and discretionary~~ spend to ~~further our goal of achieving our target profitability.~~acquire a new customer.

To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition, including advertising and agency commissions, from our underwriting expense ratio. By excluding acquisition costs from our underwriting expense ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business. During the ~~third~~first quarter ~~2023,~~2024, our NAER ~~was flat in our Personal Lines business, and increased 0.1~~decreased 0.6 points, 1.4 points, and ~~0.6 points in our Commercial Lines and Property businesses, respectively, compared to the same period last year. On a year-to-date basis, our NAER increased~~ 0.2 ~~points, 0.8 points, and 0.9~~ points in our Personal Lines, Commercial Lines, and Property businesses, respectively, compared to the same period last ~~year.~~

year, as a result of general operational expense discipline.

C. Growth

For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent the premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which are a function of the premiums written in the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.


		Three Months Ended September 30,						Nine Months Ended September 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
($ in millions)	($ in millions)	2023		2022		% Growth		2023		2022		% Growth		($ in millions)			2024						2023							% Growth
NET PREMIUMS WRITTEN
Net Premiums Written
Personal Lines	Personal Lines
Personal Lines
Personal Lines
Agency
Agency
Agency	Agency	$	5,656.3	$	4,744.9	19	%	$	16,604.4	$	13,754.9	21	%		$	6,398.8			$		$	5,414.4			18				18		%
Direct	Direct	6,997.3		5,584.1		25		19,762.5		15,765.5		25
Total Personal Lines	Total Personal Lines	12,653.6		10,329.0		23		36,366.9		29,520.4		23
Commercial Lines	Commercial Lines	2,214.9		2,063.9		7		7,948.2		7,298.4		9
Property	Property	725.2		624.5		16		2,104.9		1,800.2		17
Other indemnity1	Other indemnity1	0.1		0.4		(75)		0.4		1.9		(79)
Total underwriting operations	Total underwriting operations	$	15,593.8	$	13,017.8	20	%	$	46,420.4	$	38,620.9	20	%	Total underwriting operations			$	18,962.2		$			$	16,109.7			18				18		%
NET PREMIUMS EARNED
Net Premiums Earned
Personal Lines	Personal Lines
Personal Lines
Personal Lines
Agency
Agency
Agency	Agency	$	5,414.0	$	4,441.9	22	%	$	15,481.4	$	13,131.7	18	%		$	5,857.7			$		$	4,860.2			21				21		%
Direct	Direct	6,361.8		5,077.4		25		18,259.9		14,776.9		24
Total Personal Lines	Total Personal Lines	11,775.8		9,519.3		24		33,741.3		27,908.6		21
Commercial Lines	Commercial Lines	2,486.6		2,317.9		7		7,296.8		6,749.5		8
Property	Property	631.8		561.0		13		1,852.8		1,689.6		10
Other indemnity1	Other indemnity1	0.1		0.7		(86)		0.9		2.0		(55)
Total underwriting operations	Total underwriting operations	$	14,894.3	$	12,398.9	20	%	$	42,891.8	$	36,349.7	18	%	Total underwriting operations			$	16,148.6		$			$	13,533.1			19				19		%
1 Includes other underwriting business and run-off operations.	1 Includes other underwriting business and run-off operations.
								September 30,
								March 31,
								March 31,
								March 31,
(thousands)	(thousands)							2023		2022		% Growth		(thousands)			2024						2023							% Growth
POLICIES IN FORCE
Policies in Force
Personal Lines	Personal Lines
Personal Lines
Personal Lines
Agency auto
Agency auto
Agency auto	Agency auto							8,363.3		7,600.3		10	%		8,592.9				8,172.9			8,172.9				5				5		%
Direct auto	Direct auto							11,154.3		9,823.8		14
Total auto	Total auto							19,517.6		17,424.1		12
Special lines1	Special lines1							5,956.2		5,558.0		7
Personal Lines — total	Personal Lines — total							25,473.8		22,982.1		11
Commercial Lines	Commercial Lines							1,110.3		1,039.8		7
Property	Property							3,025.2		2,835.5		7
Companywide total	Companywide total							29,609.3		26,857.4		10	%	Companywide total			30,833.7			28,789.5				28,789.5				7				7		%
1 Includes insurance for motorcycles, RVs, watercraft, and similar items.
1 Includes insurance for motorcycles, RVs, watercraft, snowmobiles, and similar items.

To analyze growth, we review new policies, rate levels, and the retention characteristics of our segments. Although new policies are necessary to maintain a growing book of business, we recognize the importance of retaining our current customers as a critical component of our continued growth.

As shown in the following tables, we measure retention by policy life expectancy. We review our customer retention for our personal auto products using both a trailing 3-month and a trailing 12-month period. We believe changes in policy life expectancy using a trailing 12-month period measure is indicative of recent experience, mitigates the effects of month-to-month variability, and addresses seasonality. Although using a trailing 3-month measure is sensitive to seasonality and can reflect more volatility, this measure is more responsive to current experience and generally can be an indicator of how our retention rates are moving.

D. Personal Lines

The following table shows our year-over-year changes for our Personal Lines business:


						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
		Growth Over Prior Year
		Quarter				Year-to-date
		2023		2022		2023		2022
						2024
						2024
						2024				2023
Applications	Applications
New
New
New	New	(15)	%	16	%	25	%	(8)	%		(7)	%	70	%
Renewal	Renewal	15		(2)		8		2
Written premium per policy - Auto	Written premium per policy - Auto	12		10		9		9
Policy life expectancy - Auto	Policy life expectancy - Auto
Trailing 3 months	Trailing 3 months	35		(30)
Trailing 3 months
Trailing 3 months
Trailing 12 months	Trailing 12 months	19		(21)

In our Personal Lines business, ~~while we experienced significant new application growth~~ in the first ~~half of 2023, in~~quarter 2024 new business applications decreased, compared to the ~~third quarter new applications decreased~~same period last year, as a result of targeted rate and non-rate actions ~~with the focus of achieving~~taken throughout 2023 to achieve our calendar-year underwriting profitability goal. Throughout the first quarter 2024, we continued to lift certain non-rate measures that were put in place to slow new business growth in 2023. In the first quarter 2023, we believe that the significant growth in new applications in part reflected competitor rate increases and our increased media spend during the period.

The decrease in new applications during the ~~third~~first quarter 2024, was driven by our personal auto products, with decreases ~~across all of~~in our Sam and Diane consumer segments, ~~except~~partially offset with the Wrights up slightly and the Robinsons ~~who experienced~~experiencing a ~~low~~near double digit ~~increase. On~~increase, reflecting a ~~year-to-date basis, all four~~continued shift in the mix of business to a more preferred consumer ~~segments experienced positive new application growth.~~tier. Our special lines products experienced ~~strong~~solid new business application growth ~~in both periods.~~

~~Personal auto policies in force grew between 5% and 15% across all consumer segments as of~~during the ~~third~~ quarter, ~~2023,~~ compared to the same period last year.

Personal auto policies in force in the first quarter 2024 grew between 4% and 13%, compared to the same period last year, across all consumer segments, primarily reflecting strong policy renewals, except Sams, who saw a low single digit decrease.

During the ~~third~~first quarter ~~2023,~~2024, on a countrywide basis, we implemented personal auto rate increases in ~~25 states. On a year-to-date basis, we~~13 states, which, in the aggregate, increased rates about ~~16%~~2%, ~~in the aggregate,~~ following rate increases of ~~11%~~19% taken during 2023. We continue to see the ~~first half of~~ 2023 ~~and 13% during 2022. We believe that our prior-year~~ rate increases ~~had a negative impact on~~earn into the policies written contributing to our ~~2022 renewal business applications~~year-over-year increase in premiums. We currently anticipate that any rate changes throughout 2024 will be of lesser magnitude than those taken in each of the prior two years, but we will continue to evaluate our rate need and ~~policy life expectancy,~~

~~and~~adjust rates as ~~competitors also raised rates, our retention started to lengthen as evidenced by the growth in our trailing 3- and 12-month policy life expectancy.~~we deem necessary.

Our written premium per policy increased during the ~~third~~first quarter ~~and first nine months of 2023,~~2024, primarily due to the rate increases taken in ~~2022 and~~ 2023, as previously discussed. ~~Our focus on achieving our target underwriting profitability takes precedence over growth.~~ We will continue to manage growth and profitability in accordance with our long-standing goal of growing as fast as we can, as long as we can provide high-quality customer service, at or below a

companywide 96 combined ratio on a calendar-year basis. ~~During the third quarter 2023,~~While we continued to ~~take additional~~focus on profitability, during the first quarter 2024, we began taking measures that we believe will position ourselves to ~~achieve our target profit margin that included slowing~~accelerate profitable growth during the year, including continuing to lift the non-rate actions we put in place during 2023 to slow new business growth ~~through verification activities, bill plan offerings,~~ and ~~through continued general operational expense discipline. In addition to potentially slowing growth, some of these actions could reduce~~increasing our ~~retention.~~media spend.

We report our Agency and Direct business results separately as components of our Personal Lines segment to provide further understanding of our products by distribution channel. The channel discussions below are focused on personal auto insurance since this product accounted for ~~94%~~96% of the Personal Lines segment net premiums written during ~~both~~ the ~~third~~first quarter ~~and first nine months of 2023.~~2024.

The Agency Business


						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
		Growth Over Prior Year
		Quarter				Year-to-date
		2023		2022		2023		2022
						2024
						2024
						2024				2023
Applications - Auto	Applications - Auto
New
New
New	New	(18)	%	9	%	31	%	(14)	%		(13)	%	68	%
Renewal	Renewal	10		(6)		3		(3)
Written premium per policy - Auto	Written premium per policy - Auto	13		12		10		11
Policy life expectancy - Auto	Policy life expectancy - Auto
Trailing 3 months	Trailing 3 months	41		(33)
Trailing 3 months
Trailing 3 months
Trailing 12 months	Trailing 12 months	20		(23)

The Agency business includes business written by more than 40,000 independent insurance agencies that represent Progressive, as well as brokerages in New York and California. ~~Consistent with our plan to slow new business growth, during~~During the ~~third~~first quarter ~~2023, 14~~2024, while 16 states ~~and the District of Columbia~~ generated new Agency auto application growth, ~~including~~ only one of our top 10 largest Agency ~~states. During the third quarter and first nine months of 2023, total~~states generated new application growth. Total Agency auto applications increased ~~5% and 8%~~3%, ~~respectively, primarily due to~~driven by the growth in renewal applications for the first quarter ~~and new applications for~~2024. During the first ~~nine months of 2023. During the third~~ quarter ~~2023,~~2024, year-over-year new application growth was strong for ~~the~~ Robinsons and moderate for ~~the~~ Wrights, while both Sams and Dianes saw a significant decrease. ~~During the first nine months of 2023, each of our~~

~~consumer segments experienced a significant increase in new applications year over year, except Sams who saw a low double digit increase.~~ Policies in force grew ~~by low double digit percentages~~ in ~~each consumer segment, except~~the teens for the Robinsons and Wrights and were relatively flat for Dianes, ~~and~~while Sams ~~who saw~~experienced a single digit ~~increases,~~decrease, compared to the same period last year.

During the ~~third~~first quarter ~~2023,~~2024, on a year-over-year basis, ~~we experienced decreases in~~ Agency auto quote volume ~~of 11%~~ and the rate of conversion (i.e., converting a quote to a sale) ~~of 9%. For the first nine months of 2023, quotes~~decreased 4% and ~~the rate of conversion increased 6% and 23%~~10%, respectively, compared to the ~~same period~~first quarter last ~~year.~~year when quote volume and rate of conversion were up 14% and 49%, reflecting our competitiveness in the marketplace during the period. For the ~~third~~first quarter 2024, each consumer segment, except Wrights, saw a decrease in quotes, while all consumer segments, except Robinsons, saw a decrease in conversion. ~~For the year-to-date period, only Dianes and Wrights saw increases in quote volume, while all consumer segments saw an increase in conversion.~~

Written premium per policy for new and renewal Agency auto business increased 2%5% and ~~14%~~17%, respectively, compared to the ~~third~~first quarter ~~2022, and 9% and 11%, respectively, for~~2023, primarily attributable to the rate increases previously discussed.

Our trailing 12-month policy life expectancy in the Agency auto business lengthened significantly during the first ~~nine months of 2023~~quarter 2024, following substantial declines during the same period last year, on a year-over-year basis. This increase was driven by our efforts to slow growth during 2023 as well as competitor rate increases. The tailwinds of these efforts also contributed to the increase in the trailing 3-month measure.

The Direct Business


						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
		Growth Over Prior Year
		Quarter				Year-to-date
		2023		2022		2023		2022
						2024
						2024
						2024				2023
Applications - Auto	Applications - Auto
New
New
New	New	(22)	%	26	%	27	%	(5)	%		(6)	%	92	%
Renewal	Renewal	20		(1)		11		3
Written premium per policy - Auto	Written premium per policy - Auto	12		9		8		8
Policy life expectancy - Auto	Policy life expectancy - Auto
Trailing 3 months	Trailing 3 months	29		(27)
Trailing 3 months
Trailing 3 months
Trailing 12 months	Trailing 12 months	17		(18)

The Direct business includes business written directly by Progressive online, through our Progressive mobile app, ~~and over the~~or by phone. During the ~~third~~first quarter ~~2023, 10~~2024, 21 states, ~~and the District of Columbia generated new auto application growth,~~ including only ~~one~~two of our top 10 largest Direct states, ~~which is consistent with our plans to slow~~generated new ~~business~~auto application growth. ~~During the third quarter and first nine months of 2023, total~~Total Direct auto applications increased ~~11% and 15%~~6%, ~~respectively, primarily due to~~driven by the growth in renewal applications for the first quarter ~~and both new and renewal applications for the first nine months of 2023.~~2024. During the quarter, each of our consumer segments experienced a ~~significant~~ decrease in new applications year over year, except ~~Robinsons who~~the Robinson segment, which experienced a ~~low single digit increase. On a year-to-date basis, each consumer segment experienced a significant~~percentage increase in ~~new applications from~~ the ~~prior year.~~single digits. Policies in force grew between 7%2% and ~~17%~~12% in each consumer segment, compared to the same period last year.

During the ~~third~~first quarter ~~and first nine months of 2023,~~2024, Direct auto quote volume ~~decreased 31% and increased 8%, respectively,~~was flat, while conversion ~~increased 12% and 17%~~decreased 6%, compared to the same ~~periods~~period last ~~year. All consumer segments saw a decrease~~year, primarily reflecting the strong quote and conversion activity in the first quarter 2023, along with the other actions we took to slow growth through the remainder of 2023, as previously discussed. In comparison to the first quarter 2024, in the first quarter 2023, quotes and conversion increased 73% and 13%, respectively, reflecting competitor rate increases and our increased advertising spend during the ~~quarter, with all consumer segments, except Sams, experiencing increased quote volume during~~period, compared to the prior year first ~~nine months of 2023.~~ quarter.

All consumer segments saw an increase in ~~conversion for both~~quotes and a decrease in the ~~third quarter and first nine months~~rate of ~~2023. The decrease we experienced in our quote volume~~conversion during the ~~third~~first quarter ~~2023 primarily reflected decreased~~2024, except Wrights, who saw a low double digit decline in quotes and a single digit increase in conversion. As we slowly increased advertising ~~spend, compared~~and continued to lift certain non-rate restrictions in 2024, we saw Direct auto new application growth begin to stabilize by the ~~third quarter 2022, along with~~end of the ~~other actions taken to slow growth to focus on profitability.~~quarter.

Written premium per policy for new and renewal Direct auto business increased 2%9% and ~~13%~~14%, respectively, in the first quarter 2024, compared to the ~~third quarter 2022, and 5% and 10%, respectively, for~~same period last year,

primarily attributable to the rate increases previously discussed.

Our trailing 12-month policy life expectancy in the Direct auto business experienced a lengthening of retention during the first ~~nine months of 2023~~quarter 2024, following substantial declines during the same period last year, on a year-over-year ~~basis,~~basis. The drivers of the change were similar to those in the Agency business, where we focused on growing more bundled, preferred market tier, consumers. The decrease in the trailing 3-month policy life expectancy during the first quarter 2024 was primarily driven by the previously discussed rate ~~increases.~~increases taken during 2023.

E. Commercial Lines

Our Commercial Lines business operates in five traditional business markets, which include business auto, for-hire transportation, contractor, for-hire specialty, and tow markets, primarily written through the agency channel. We also write TNC business, BOP insurance, and, through Protective Insurance, larger fleet and workers’ compensation insurance primarily for the transportation industry, along with trucking industry independent contractors, and affinity programs.

The following table and discussion focuses on our core commercial auto ~~product, excluding our TNC, BOP, and Protective Insurance~~ products. Year-over-year changes in our core commercial auto ~~product~~products were as follows:


						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
						Growth Over Prior Year Quarter
		Growth Over Prior Year
		Quarter				Year-to-date
		2023		2022		2023		2022
						2024
						2024
						2024				2023
Applications	Applications
New
New
New	New	3	%	(6)	%	4	%	(1)	%		2	%	2	%
Renewal	Renewal	2		10		5		13
Written premium per policy	Written premium per policy	4		8		2		14
Policy life expectancy Trailing 12 months	Policy life expectancy Trailing 12 months	(9)		(9)

The increases in net premiums written in our Commercial Lines business reflected growth in all of our ~~business market targets (BMTs),~~BMTs, except our for-hire transportation BMT, which continued to be adversely impacted by ~~a slowdown in the rate of economic activity and~~ challenging freight market ~~conditions.~~conditions that have continued to cause a decline in the active number of motor carriers in this BMT. The most significant growth was in our contractor and business auto ~~and contractor BMTs. We believe~~BMTs, primarily driven by the ~~increase in our contractor BMT was influenced by construction, employment, and spending trends.~~aggregate core commercial auto rate increases of 17% taken during 2023.

During the ~~third~~first quarter ~~and first nine months of 2023,~~2024, core commercial auto new application growth was positive in each of our ~~business market targets,~~BMTs, except for the for-hire transportation ~~market, as previously discussed.~~and for-hire specialty BMTs. During the ~~third~~first quarter ~~and first nine months of 2023,~~2024, quote volume increased ~~10% and 7%~~about 5%, ~~respectively,~~ while conversion decreased ~~6% and 3%~~about 5%, compared to the same ~~periods~~period last year.

During the ~~third~~first quarter ~~2023,~~2024, we increased rates, in aggregate, about 4%1% in our core commercial auto ~~products~~products. While we currently do not anticipate significant rate changes throughout 2024, we still have about 10 points of rate to earn in during the rest of 2024 from rate revisions taken during 2023 and ~~12% on a year-to-date basis.~~the first quarter 2024. We will continue to evaluate our rate need and adjust rates as we deem necessary. Written premium per policy for new and renewal core commercial auto business ~~decreased 1%~~increased 4% and 4%14%, respectively, for the ~~third~~first quarter ~~and first nine months of 2023, respectively,~~2024, compared to the same ~~periods~~period last ~~year. Shifts in~~year, primarily reflecting the mix of business to lower premium products more than offset the rate increases we took in commercial auto on our new business. Written premium per policy on renewal business increased 7% for the third quarter and 5% for the first nine months of 2023, compared to the prior year periods, reflectingpreviously discussed rate increases.

Our policy life expectancy decreased in all ~~business market targets.~~BMTs. We believe rate and non-rate actions, as well as unfavorable trucking market conditions, ~~and the general weakening of the economy are driving~~drove increased shopping and ~~causing~~

caused motor carriers to exit the industry, ~~having a~~resulting in negative ~~effect~~effects on policy life expectancy.

F. Property

The following table shows our year-over-year changes for our Property business:


		Growth Over Prior Year
		Quarter				Year-to-date
		2023		2022		2023		2022			Growth Over Prior Year Quarter

						2024
						2024
						2024				2023
Applications	Applications
New
New
New	New	9	%	(9)	%	11	%	(7)	%		31	%	12	%
Renewal	Renewal	4		7		5		8
Written premium per policy	Written premium per policy	12		5		12		4
Policy life expectancy Trailing 12 months	Policy life expectancy Trailing 12 months	14		(9)

Our Property business writes residential property insurance for homeowners, other property owners, and renters, and umbrella insurance in the agency and direct channels. During the third quarter and first nine months of 2023, the increase in new applications experienced in our Property business was primarily due to underwriting changes made in an effort to promote growth in less volatile weather states.

Improving profitability and reducing concentration exposure continued to be the top priority for our Property business during the first ~~nine months of 2023.~~quarter 2024. We ~~have concentrated~~continued to concentrate our growth ~~in the Property business~~ in markets that are less susceptible to catastrophes and ~~have~~ lower our exposure to coastal and hail-prone states for ~~all~~our homeowners products, which we define as our total Property business excluding renters and ~~umbrella. New applications~~umbrella products. Homeowners policies in ~~these~~force in the growth-oriented states ~~were up~~increased about ~~30% in the third quarter and about 45%~~20% in the first ~~nine months of~~

~~2023,~~quarter 2024, compared to the same ~~periods~~period last year.

In regions where our appetite to write new business is limited, we are continuing to prioritize Progressive auto bundles, as well as lower risk properties, such as new construction or homes with newer roofs.

~~New applications~~ Homeowners policies in force were down about ~~10% for the third quarter and 25%~~5% in the first ~~nine months of 2023~~quarter 2024 in ~~these more~~the volatile weather states, compared to the ~~prior periods.~~same period last year. In addition, to continue to rebalance our business, late in 2023 we began a non-renewal effort of up to 115,000 Property policies in Florida. Following the required filings and notices, the first of these non-renewals will go into effect in the second quarter of 2024 and will continue ~~on a rolling 12-month basis.~~over the following 12 months. To try to ease this disruption to our customers and agents, we reached an agreement with ~~another~~an unaffiliated Florida insurer to offer replacement policies to these policyholders, subject to ~~their~~the insurer’s underwriting and financial guidelines and agent appointments where applicable.

The increase in our written premium per policy, during the first quarter 2024, compared to the ~~third quarter and first nine months of 2022,~~same period last year, was primarily ~~due~~attributable to rate increases taken over the last 12 months and ~~providing~~ higher premium coverages ~~to account for inflation.~~reflecting increased property values. During the ~~third~~first quarter ~~2023,~~2024, we increased rates, in aggregate, about 2%6% in our Property ~~segment and 9%~~segment. These impacts on ~~a year-to-date basis. The~~ written premium per policy ~~increase was~~were partially offset by ~~a shift in the mix of business to a larger share of renters policies, which have lower written premium per policy, and~~ less homeowners growth in volatile states, ~~that~~which have higher average premiums. We intend to continue to make targeted rate increases in states where we believe it is necessary to achieve our profitability targets.

~~G. Income Taxes~~

~~At September 30, 2023, and December 31, 2022, we had net current income taxes payable of $246.1 million and $10.9 million, respectively, which were reported~~The policy life expectancy in ~~accounts payable, accrued expenses, and other liabilities,~~our Property business lengthened during the first quarter 2024, compared to ~~recoverable income taxes of $31.0 million at September 30, 2022, which were reported~~the prior year, primarily driven by less frequent shopping due to a slowdown in ~~other assets in our consolidated balance sheets. This balance may fluctuate between an asset~~the housing market and a ~~liability from period to period due to normal timing differences.~~

~~A deferred tax asset or liability is a tax benefit or expense, respectively, that is expected to be realized~~shift in ~~a future tax return. At September 30, 2023 and 2022, and December 31, 2022, we reported net federal deferred tax assets~~the mix of ~~$1.4 billion, $1.3 billion, and $1.1 billion, respectively.~~

We are required to assess our deferred tax assets for recoverability and, based on our analysis, determined that we did not need a valuation allowance on our gross deferred tax assets in each period. Although realization of the gross deferred tax assets is not assured, management believes it is more likely than not that the gross deferred tax assets will be realized based on our expectation we will be able to fully utilize the deductions that are ultimately recognized for tax purposes. We believe our deferred taxbusiness.

assets related to net unrealized losses on fixed-maturity securities will be realized based on the existence of prior-year capital gains, current temporary differences related to unrealized gains in our equity portfolio, and other tax planning strategies.

Our effective tax rate for the three and nine months ended September 30, 2023, was 20.5% and 20.2%, respectively, compared to 12.9% and (1.6)% for the same periods last year. The lower effective tax rates for the three and nine months ended September 30, 2022, were due in part to the

low amount of income (loss) before taxes during those periods, resulting in permanent tax differences having a greater impact on the effective rate. The low effective tax rate for the nine months ended September 30, 2022, was also due to the goodwill impairment charge (see ~~Note 12 – Goodwill and Intangible Assets~~ ~~for further discussion).~~

~~Consistent with prior years, we had no uncertain tax positions. See~~ ~~Note 5 – Income Taxes~~ ~~for further information.~~

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IV. RESULTS OF OPERATIONS – INVESTMENTS

A. Investment Results

Our management philosophy governing the portfolio is to evaluate investment results on a total return basis. The fully taxable equivalent (FTE) total return includes recurring investment income, adjusted to a fully taxable amount for certain securities that receive preferential tax treatment (e.g., municipal securities), and total net realized, and changes in total net unrealized, gains (losses) on securities.

The following table summarizes investment results for the periods ended ~~September 30:~~March 31:






		Three Months				Nine Months
		2023		2022		2023		2022
Pretax recurring investment book yield (annualized)	Pretax recurring investment book yield (annualized)	3.3	%	2.5	%	3.1	%	2.2	%
Pretax recurring investment book yield (annualized)
Pretax recurring investment book yield (annualized)

FTE total return:

FTE total return:

FTE total return:	FTE total return:
Fixed-income securities	Fixed-income securities	(0.1)		(1.8)		1.6		(7.6)
Fixed-income securities
Fixed-income securities
Common stocks
Common stocks
Common stocks	Common stocks	(3.1)		(4.5)		13.3		(24.0)
Total portfolio	Total portfolio	(0.2)		(1.9)		2.1		(9.0)
Total portfolio
Total portfolio

The increase in the book yield, ~~for both periods,~~ compared to last year, primarily reflected investing new cash from operations, and proceeds from maturing bonds, atin higher ~~interest rates, and an increase in interest rates on our floating-rate~~coupon rate securities. The ~~change~~decrease in the fixed-income portfolio FTE total return, ~~for both periods,~~ compared to last year, primarily reflected ~~interest rate movement.~~movement in Treasury yields year-over-year. The increase in the common ~~stocks~~stock portfolio total return reflected general market ~~conditions.~~conditions in first quarter 2024.

A further break-down of our FTE total returns for our fixed-income portfolio for the periods ended ~~September 30,~~March 31, follows:






		Three Months				Nine Months
		2023		2022		2023		2022
Fixed-income securities:	Fixed-income securities:
Fixed-income securities:
Fixed-income securities:
U.S. Treasury Notes
U.S. Treasury Notes
U.S. Treasury Notes	U.S. Treasury Notes	(0.6)	%	(2.9)	%	0.7	%	(8.5)	%
Municipal bonds	Municipal bonds	(0.4)		(2.9)		1.9		(9.4)
Municipal bonds
Municipal bonds
Corporate bonds
Corporate bonds
Corporate bonds	Corporate bonds	0.1		(1.5)		2.7		(8.0)
Residential mortgage-backed securities	Residential mortgage-backed securities	2.0		0.6		6.3		(0.9)
Residential mortgage-backed securities
Residential mortgage-backed securities
Commercial mortgage-backed securities
Commercial mortgage-backed securities
Commercial mortgage-backed securities	Commercial mortgage-backed securities	0.6		(2.0)		2.4		(9.5)
Other asset-backed securities	Other asset-backed securities	1.6		(0.4)		4.6		(3.0)
Other asset-backed securities
Other asset-backed securities
Preferred stocks
Preferred stocks
Preferred stocks	Preferred stocks	0.8		0.6		(2.7)		(10.4)
Short-term investments	Short-term investments	1.3		0.5		3.6		0.7
Short-term investments
Short-term investments

4742

B. Portfolio Allocation

The composition of the investment portfolio was:


($ in millions)	($ in millions)	Fair Value		% of Total Portfolio		Duration (years)	Average Rating1	($ in millions)		Fair Value					% of Total Portfolio					Duration (years)				Average Rating1
September 30, 2023
March 31, 2024
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	34,293.8	55.4	%	3.4	AA+	$	38,562.7			55.8		55.8		%			3.9				AA+
State and local government obligations	State and local government obligations	2,054.3		3.3		3.1	AA+	State and local government obligations		2,059.8			3.0			3.0		3.0				3.0				AA+
Foreign government obligations	Foreign government obligations	15.4		0.1		2.8	AAA	Foreign government obligations		15.9			0.1			0.1		2.3				2.3				AAA
Corporate debt securities	Corporate debt securities	10,254.2		16.6		2.8	BBB	Corporate debt securities		12,521.3			18.1			18.1		2.7				2.7				BBB+
Residential mortgage-backed securities	Residential mortgage-backed securities	515.8		0.8		0.4	A	Residential mortgage-backed securities		383.1			0.6			0.6		0.5				0.5				A+
Commercial mortgage-backed securities	Commercial mortgage-backed securities	3,977.7		6.4		2.3	A+	Commercial mortgage-backed securities		3,851.8			5.6			5.6		2.2				2.2				A+
Other asset-backed securities	Other asset-backed securities	5,313.6		8.6		1.1	AA+	Other asset-backed securities		6,061.2			8.8			8.8		1.1				1.1				AA+
Preferred stocks	Preferred stocks	1,036.0		1.7		2.5	BBB-	Preferred stocks		1,060.6			1.5			1.5		2.3				2.3				BBB-
Short-term investments	Short-term investments	1,795.2		2.9		<0.1	A+	Short-term investments		1,326.7			1.9			1.9		<0.1				<0.1				AA-
Total fixed-income securities	Total fixed-income securities	59,256.0		95.8		2.9	AA-	Total fixed-income securities		65,843.1			95.4			95.4		3.2				3.2				AA-
Common equities	Common equities	2,614.5		4.2		na	na	Common equities		3,194.9			4.6			4.6		na						na
Total portfolio2	Total portfolio2	$	61,870.5	100.0	%	2.9	AA-	Total portfolio2		$	69,038.0		100.0			100.0	%				3.2				AA-
September 30, 2022
March 31, 2023
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	22,405.5	42.8	%	3.5	AAA	$	27,350.1			48.3		48.3		%			3.7				AAA
State and local government obligations	State and local government obligations	1,925.5		3.7		3.7	AA+	State and local government obligations		2,061.6			3.6			3.6		3.4				3.4				AA+
Foreign government obligations	Foreign government obligations	15.3		0.1		3.8	AAA	Foreign government obligations		15.8			0.1			0.1		3.3				3.3				AAA
Corporate debt securities	Corporate debt securities	9,228.4		17.6		2.9	BBB	Corporate debt securities		10,681.3			18.8			18.8		3.0				3.0				BBB
Residential mortgage-backed securities	Residential mortgage-backed securities	723.0		1.4		0.4	A	Residential mortgage-backed securities		630.0			1.1			1.1		0.4				0.4				A
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,087.9		9.7		2.7	A+	Commercial mortgage-backed securities		4,503.0			7.9			7.9		2.5				2.5				A
Other asset-backed securities	Other asset-backed securities	4,605.9		8.8		1.1	AA+	Other asset-backed securities		4,865.8			8.6			8.6		1.1				1.1				AA
Preferred stocks	Preferred stocks	1,436.0		2.7		2.9	BBB-	Preferred stocks		1,260.4			2.2			2.2		2.5				2.5				BBB-
Short-term investments	Short-term investments	4,237.6		8.1		<0.1	AA+	Short-term investments		2,524.1			4.5			4.5		<0.1				<0.1				AA+
Total fixed-income securities	Total fixed-income securities	49,665.1		94.9		2.7	AA	Total fixed-income securities		53,892.1			95.1			95.1		3.0				3.0				AA
Common equities	Common equities	2,665.3		5.1		na	na	Common equities		2,794.3			4.9			4.9		na						na
Total portfolio2	Total portfolio2	$	52,330.4	100.0	%	2.7	AA	Total portfolio2		$	56,686.4		100.0			100.0	%				3.0				AA
December 31, 2022
December 31, 2023
U.S. government obligations
U.S. government obligations
U.S. government obligations	U.S. government obligations	$	25,167.4	47.0	%	3.7	AAA	$	36,869.4			55.9		55.9		%			3.6				AA+
State and local government obligations	State and local government obligations	1,977.1		3.7		3.5	AA+	State and local government obligations		2,202.8			3.3			3.3		3.0				3.0				AA+
Foreign government obligations	Foreign government obligations	15.5		0.1		3.5	AAA	Foreign government obligations		16.3			0.1			0.1		2.6				2.6				AAA
Corporate debt securities	Corporate debt securities	9,412.7		17.6		2.8	BBB	Corporate debt securities		11,183.7			16.9			16.9		2.7				2.7				BBB+
Residential mortgage-backed securities	Residential mortgage-backed securities	666.8		1.2		0.4	A	Residential mortgage-backed securities		417.2			0.6			0.6		0.5				0.5				A+
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,663.5		8.7		2.7	A+	Commercial mortgage-backed securities		3,939.7			6.0			6.0		2.3				2.3				A
Other asset-backed securities	Other asset-backed securities	4,564.6		8.5		1.1	AA+	Other asset-backed securities		5,575.4			8.4			8.4		1.2				1.2				AA+
Preferred stocks	Preferred stocks	1,397.5		2.6		2.8	BBB-	Preferred stocks		1,075.8			1.7			1.7		2.4				2.4				BBB-
Short-term investments	Short-term investments	2,861.7		5.4		0.1	AAA-	Short-term investments		1,789.9			2.7			2.7		<0.1				<0.1				AA-
Total fixed-income securities	Total fixed-income securities	50,726.8		94.8		2.9	AA	Total fixed-income securities		63,070.2			95.6			95.6		3.0				3.0				AA-
Common equities	Common equities	2,821.5		5.2		na	na	Common equities		2,928.4			4.4			4.4		na						na
Total portfolio2	Total portfolio2	$	53,548.3	100.0	%	2.9	AA	Total portfolio2		$	65,998.6		100.0			100.0	%				3.0				AA-
na = not applicable	na = not applicable

1 Represents ratings at period end. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.

2 At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we had ~~$167.3~~$16.2 million and ~~$74.7~~$22.8 million, respectively, of net unsettled security purchase transactions included in other liabilities, compared to ~~$34.4~~$45.6 million included in other assets at December 31, ~~2022.~~2023.

4843

Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities.

We define Group I securities to include:

•common equities,

•nonredeemable preferred stocks,

•redeemable preferred stocks, except for 50% of investment-grade redeemable preferred stocks with cumulative dividends, which are included in Group II, and

•all other non-investment-grade fixed-maturity securities.

Group II securities include:

•short-term securities, and

•all other fixed-maturity securities, including 50% of ~~the~~ investment-grade redeemable preferred stocks with cumulative dividends.

We believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital purposes and is in line with the treatment by our regulators.

The following table shows the composition of our Group I and Group II securities:


		September 30, 2023				September 30, 2022				December 31, 2022
	March 31, 2024																					March 31, 2024									March 31, 2023									December 31, 2023
($ in millions)	($ in millions)	Fair Value		% of Total Portfolio		Fair Value		% of Total Portfolio		Fair Value		% of Total Portfolio		($ in millions)		Fair Value			% of Total Portfolio						Fair Value			% of Total Portfolio						Fair Value			% of Total Portfolio
Group I securities:	Group I securities:
Non-investment-grade fixed maturities
Non-investment-grade fixed maturities
Non-investment-grade fixed maturities	Non-investment-grade fixed maturities	$	651.8	1.1	%	$	1,419.9	2.7	%	$	1,249.2	2.3	%	$	466.8		0.7	0.7	%				$	1,019.5		1.8	1.8	%				$	532.6		0.8	0.8	%
Redeemable preferred stocks1	Redeemable preferred stocks1	83.5		0.1		90.8		0.2		92.1		0.2
Nonredeemable preferred stocks	Nonredeemable preferred stocks	868.9		1.4		1,254.4		2.4		1,213.2		2.3
Common equities	Common equities	2,614.5		4.2		2,665.3		5.1		2,821.5		5.2
Total Group I securities	Total Group I securities	4,218.7		6.8		5,430.4		10.4		5,376.0		10.0
Group II securities:	Group II securities:
Other fixed maturities	Other fixed maturities	55,856.6		90.3		42,662.4		81.5		45,310.6		84.6
Other fixed maturities
Other fixed maturities
Short-term investments	Short-term investments	1,795.2		2.9		4,237.6		8.1		2,861.7		5.4
Total Group II securities	Total Group II securities	57,651.8		93.2		46,900.0		89.6		48,172.3		90.0
Total portfolio	Total portfolio	$	61,870.5	100.0	%	$	52,330.4	100.0	%	$	53,548.3	100.0	%	Total portfolio		$	69,038.0		100.0	100.0	%				$	56,686.4		100.0	100.0	%				$	65,998.6		100.0	100.0	%

1 We ~~did not hold any~~held no non-investment-grade redeemable preferred stocks at ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ or December 31, ~~2022.~~2023.

To determine the allocation between Group I and Group II, we use the credit ratings from models provided by the National Association of Insurance Commissioners (NAIC) to classify our residential and commercial mortgage-backed securities, excluding interest-only (IO) securities, and the credit ratings from nationally recognized statistical rating organizations ~~(NRSRO)~~(NRSROs) to classify all other debt securities. NAIC ratings are based on a model that considers the book price of our securities when assessing the probability of future losses in assigning a credit rating. As a result, NAIC ratings can vary from credit ratings issued by NRSROs. Management believes NAIC ratings more accurately reflect our risk profile when determining the asset allocation between Group I and Group II securities.

Unrealized Gains ~~and Losses~~(Losses)

As of ~~September 30, 2023,~~March 31, 2024, our fixed-maturity portfolio had total after-tax net unrealized losses, which are recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheets, of ~~$3.0~~$1.8 billion, compared to ~~$3.1~~$2.2 billion and ~~$2.8~~$1.6 billion at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2022,~~2023, respectively. The decrease in net unrealized losses from ~~September 30, 2022,~~March 31, 2023, was primarily due to higher valuations ~~on our corporate debt and other asset-backed~~across all non-U.S. Treasury portfolios, as ~~the market experienced smaller increases~~tighter credit spreads in ~~interest rates and a more stable environment for credit spreads.~~2023 drove strong portfolio performance. The increase in ~~our fixed-maturity~~ net unrealized ~~loss from~~losses since December 31, ~~2022 through September 30,~~ 2023, was primarily due to a lower valuation on our U.S. Treasury ~~portfolio.~~portfolio caused by higher interest rates in 2024.

See Note 2 – Investments for a further break-out of our gross unrealized gains (losses).

4944

Holding Period Gains ~~and Losses~~(Losses)

The following table provides the balance and activity for both the gross and net holding period gains (losses) for the ~~nine~~three months ended ~~September 30, 2023:~~March 31, 2024:


(millions)	(millions)	Gross Holding Period Gains		Gross Holding Period Losses		Net Holding Period Gains (Losses)		(millions)	Gross Holding Period Gains	Gross Holding Period Losses	Net Holding Period Gains (Losses)
Balance at December 31, 2022
Balance at December 31, 2023
Hybrid fixed-maturity securities
Hybrid fixed-maturity securities
Hybrid fixed-maturity securities	Hybrid fixed-maturity securities	$	1.3	$	(75.8)	$	(74.5)
Equity securities1	Equity securities1	2,026.6		(182.2)		1,844.4
Total holding period securities	Total holding period securities	2,027.9		(258.0)		1,769.9
Current year change in holding period securities	Current year change in holding period securities
Hybrid fixed-maturity securities	Hybrid fixed-maturity securities	(0.3)		18.7		18.4
Hybrid fixed-maturity securities
Hybrid fixed-maturity securities
Equity securities1	Equity securities1	(62.0)		61.5		(0.5)
Total changes in holding period securities	Total changes in holding period securities	(62.3)		80.2		17.9
Balance at September 30, 2023
Balance at March 31, 2024
Hybrid fixed-maturity securities
Hybrid fixed-maturity securities
Hybrid fixed-maturity securities	Hybrid fixed-maturity securities	1.0		(57.1)		(56.1)
Equity securities1	Equity securities1	1,964.6		(120.7)		1,843.9
Total holding period securities	Total holding period securities	$	1,965.6	$	(177.8)	$	1,787.8

1Equity securities include common equities and nonredeemable preferred stocks.

Changes in holding period gains (losses), similar to unrealized gains (losses) in our fixed-maturity portfolio, are the result of changes in market ~~performance~~conditions as well as sales of securities based on various portfolio management decisions.

Fixed-Income Securities

The fixed-income portfolio is managed internally and includes fixed-maturity securities, short-term investments, and nonredeemable preferred stocks. Following are the primary exposures for our fixed-income portfolio.

Interest Rate Risk Our duration of ~~2.9~~3.2 years at March 31, 2024 and 3.0 years at both ~~September 30,~~March 31, 2023 and December 31, ~~2022, and 2.7 years at September 30, 2022~~2023 fell within our acceptable range of 1.5 to 5 years. The duration distribution of our fixed-income portfolio, excluding short-term investments, represented by the interest rate sensitivity of the comparable benchmark U.S. Treasury Notes, was:


Duration Distribution (excluding short-term securities)	Duration Distribution (excluding short-term securities)	September 30, 2023		September 30, 2022		December 31, 2022		Duration Distribution (excluding short-term securities)	March 31, 2024		March 31, 2023		December 31, 2023
1 year	1 year	20.7	%	19.3	%	17.5	%	1 year	11.0	%	19.2	%	18.1	%
2 years	2 years	13.0		19.1		16.9
3 years	3 years	23.5		23.1		21.3
5 years	5 years	27.6		20.4		25.1
7 years	7 years	12.4		13.5		14.0
10 years	10 years	2.8		4.6		5.2

Total fixed-income portfolio	Total fixed-income portfolio	100.0	%	100.0	%	100.0	%

Total fixed-income portfolio

Total fixed-income portfolio									100.0	%	100.0	%	100.0	%

Credit Risk This exposure is managed by maintaining an A+ minimum average portfolio credit quality rating, as defined by NRSROs. At ~~September 30,~~both March 31, 2024 and December 31, 2023, our credit quality rating was AA- and at ~~both September 30, 2022 and December~~March 31, ~~2022~~2023, it was ~~AA.~~AA . The credit quality distribution of the fixed-income portfolio was:


Average Rating1	Average Rating1	September 30, 2023		September 30, 2022		December 31, 2022		Average Rating1	March 31, 2024		March 31, 2023		December 31, 2023
AAA	AAA	10.8	%	63.2	%	65.5	%	AAA	11.0	%	65.2	%	10.7	%
AA	AA	64.5		6.7		6.4
A	A	7.4		7.1		7.6
BBB	BBB	15.8		19.1		17.2
Non-investment grade/non-rated	Non-investment grade/non-rated
BB	BB	1.2		3.1		2.5
BB
BB
B	B	0.2		0.5		0.5
CCC and lower	CCC and lower	0		0.1		0.1
Non-rated	Non-rated	0.1		0.2		0.2
Total fixed-income portfolio	Total fixed-income portfolio	100.0	%	100.0	%	100.0	%	Total fixed-income portfolio	100.0	%	100.0	%	100.0	%

1 The ratings in the table above are assigned by NRSROs.

The year-over-year rating shift between the AAA and AA categories was primarily due to a second major credit rating agency downgrading U.S. Treasury debt during the third quarter 2023 to AA+ from AAA, which led us to lower our U.S. Treasury positions to AA+.

Concentration Risk We did not have any investments in a single issuer, either overall or in the context of individual asset classes and sectors, that exceeded our thresholds during the ~~third~~first quarter ~~2023.~~2024.

Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the ~~third~~first quarter ~~2023.~~2024.

Liquidity Risk Our overall portfolio remains very liquid and we believe that it is sufficient to meet expected near-term liquidity requirements. The short-to-intermediate duration of our portfolio provides a source of liquidity. During the remainder of ~~2023 and all of~~ 2024, we expect approximately ~~$7.2~~$4.8 billion, or ~~31%~~18%, of principal repayment from our fixed-income portfolio, excluding U.S. Treasury Notes and short-term investments. Cash from interest and dividend payments and our short-term portfolio provide additional sources of recurring liquidity.

The duration of our U.S. government obligations, which are included in the fixed-income portfolio, was comprised of the following at ~~September 30, 2023:~~March 31, 2024:

($ in millions)

Fair
Value

Duration
(years)

($ in millions)

Fair
Value

Duration
(years)

U.S. Treasury Notes

Less than one year

3,758.4

0.6

One to two years

5,445.7

1.5

Two to three years

3,573.7

2.4

Three to five years

14,909.6

4.0

Five to seven years

5,123.4

5.6

Seven to ten years

1,483.0

7.5

Total U.S. Treasury Notes

34,293.8

3.4

ASSET-BACKED SECURITIES

Included in our fixed-income portfolio are asset-backed securities, which were comprised of the following at the balance sheet dates listed:


($ in millions)	($ in millions)	Fair Value		Net Unrealized Gains (Losses)		% of Asset- Backed Securities		Duration (years)	Average Rating (at period end)1	($ in millions)		Fair Value						Net Unrealized Gains (Losses)						% of Asset- Backed Securities						Duration (years)					Average Rating (at period end)1
September 30, 2023
March 31, 2024
Residential mortgage-backed securities
Residential mortgage-backed securities
Residential mortgage-backed securities	Residential mortgage-backed securities	$	515.8	$	(12.8)	5.2	%	0.4	A	$	383.1			$		$	(9.0)			3.7			3.7		%				0.5			A+				A+
Commercial mortgage-backed securities	Commercial mortgage-backed securities	3,977.7		(721.8)		40.6		2.3	A+	Commercial mortgage-backed securities		3,851.8			(516.8)				(516.8)			37.4				37.4		2.2				2.2		A+				A+
Other asset-backed securities	Other asset-backed securities	5,313.6		(210.0)		54.2		1.1	AA+	Other asset-backed securities		6,061.2			(84.7)				(84.7)			58.9				58.9		1.1				1.1		AA+				AA+
Total asset-backed securities	Total asset-backed securities	$	9,807.1	$	(944.6)	100.0	%	1.6	AA-	Total asset-backed securities		$	10,296.1		$			$	(610.5)		100.0				100.0		%				1.5		AA				AA
September 30, 2022
March 31, 2023
Residential mortgage-backed securities
Residential mortgage-backed securities
Residential mortgage-backed securities	Residential mortgage-backed securities	$	723.0	$	(16.1)	6.9	%	0.4	A	$	630.0			$		$	(16.1)			6.3			6.3		%				0.4			A				A
Commercial mortgage-backed securities	Commercial mortgage-backed securities	5,087.9		(746.0)		48.9		2.7	A+	Commercial mortgage-backed securities		4,503.0			(749.6)				(749.6)			45.0				45.0		2.5				2.5		A				A
Other asset-backed securities	Other asset-backed securities	4,605.9		(268.9)		44.2		1.1	AA+	Other asset-backed securities		4,865.8			(220.7)				(220.7)			48.7				48.7		1.1				1.1		AA				AA
Total asset-backed securities	Total asset-backed securities	$	10,416.8	$	(1,031.0)	100.0	%	1.8	AA-	Total asset-backed securities		$	9,998.8		$			$	(986.4)		100.0				100.0		%				1.7		AA-				AA-
December 31, 2022
December 31, 2023
Residential mortgage-backed securities
Residential mortgage-backed securities
Residential mortgage-backed securities	Residential mortgage-backed securities	$	666.8	$	(17.2)	6.7	%	0.4	A	$	417.2			$		$	(9.8)			4.2			4.2		%				0.5			A+				A+
Commercial mortgage-backed securities	Commercial mortgage-backed securities	4,663.5		(782.5)		47.1		2.7	A+	Commercial mortgage-backed securities		3,939.7			(595.5)				(595.5)			39.7				39.7		2.3				2.3		A				A
Other asset-backed securities	Other asset-backed securities	4,564.6		(259.6)		46.2		1.1	AA+	Other asset-backed securities		5,575.4			(91.4)				(91.4)			56.1				56.1		1.2				1.2		AA+				AA+
Total asset-backed securities	Total asset-backed securities	$	9,894.9	$	(1,059.3)	100.0	%	1.8	AA-	Total asset-backed securities		$	9,932.3		$			$	(696.7)		100.0				100.0		%				1.6		AA-				AA-

1 The credit quality ratings in the table above are assigned by NRSROs.

5146

Residential Mortgage-Backed Securities (RMBS) The following table details the credit quality rating and fair value of our RMBS, along with the loan classification and a comparison of the fair value at ~~September 30, 2023,~~March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

													Residential Mortgage-Backed Securities (at September 30, 2023)
Residential Mortgage-Backed Securities (at March 31, 2024)
Residential Mortgage-Backed Securities (at March 31, 2024)
Residential Mortgage-Backed Securities (at March 31, 2024)
($ in millions) Average Rating1	($ in millions) Average Rating1	Non-Agency			Government/GSE2			Total			% of Total		($ in millions) Average Rating1	Non-Agency			Government/GSE2				Total				% of Total
AAA	AAA	$	76.5		$	0.3		$	76.8		14.9	%	AAA	$	55.8	$		$	0.2	$		$	56.0	14.6		14.6	%
AA	AA	31.1			1.2			32.3			6.3
A	A	323.7			0			323.7			62.8
BBB	BBB	77.0			0			77.0			14.9
Non-investment grade/non-rated:	Non-investment grade/non-rated:
BB	BB	0.3			0			0.3			0.1
BB
BB

CCC and lower
CCC and lower
CCC and lower	CCC and lower	1.3			0			1.3			0.2
Non-rated	Non-rated	4.4			0			4.4			0.8
Total fair value	Total fair value	$	514.3		$	1.5		$	515.8		100.0	%	Total fair value	$	381.8	$		$	1.3	$		$	383.1	100.0		100.0	%
Increase (decrease) in value	Increase (decrease) in value	(2.8)		%	(6.1)		%	(2.8)		%

1 The credit quality ratings are assigned by NRSROs; when we assigned the NAIC ratings for our RMBS, 100% of our non-investment-grade securities were rated investment grade and reported as Group II securities.

2 The securities in this category are insured by a Government Sponsored Entity (GSE) and/or collateralized by mortgage loans insured by the Federal Housing Administration (FHA) or the U.S. Department of Veteran Affairs (VA). .

In the residential mortgage-backed sector, our portfolio consists of deals that are backed by high-credit quality borrowers and/or those that have strong structural protections through underlying loan ~~collateralization~~.collateralization. During the ~~third~~first quarter ~~2023,~~of 2024, the RMBS portfolio decreased as a result of ~~maturities on securities~~principal paydowns and ~~we did not have any purchase or sales activity.~~maturities.

Commercial Mortgage-Backed Securities (CMBS) The following table details the credit quality rating and fair value of our CMBS, along with a comparison of the fair value at ~~September 30, 2023,~~March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

													Commercial Mortgage-Backed Securities (at September 30, 2023)
Commercial Mortgage-Backed Securities (at March 31, 2024)													Commercial Mortgage-Backed Securities (at March 31, 2024)
($ in millions) Average Rating1	($ in millions) Average Rating1	Multi-Borrower			Single-Borrower			Total			% of Total		($ in millions) Average Rating1	Multi-Borrower			Single-Borrower			Total			% of Total
AAA	AAA	$	186.5		$	1,008.1		$	1,194.6		30.0	%	AAA	$	169.7	$	$	1,090.8	$	$	1,260.5	32.7		32.7		%
AA	AA	0			941.8			941.8			23.7
A	A	0			806.1			806.1			20.3
BBB	BBB	0			744.5			744.5			18.7
Non-investment grade/non-rated:	Non-investment grade/non-rated:
BB	BB	0			290.7			290.7			7.3

BB
BB
B

Total fair value	Total fair value	$	186.5		$	3,791.2		$	3,977.7		100.0	%

Total fair value

Total fair value														$	169.7		$	3,682.1		$	3,851.8		100.0		%
Increase (decrease) in value	Increase (decrease) in value	(6.2)		%	(15.8)		%	(15.4)		%

1The credit quality ratings are assigned by NRSROs; when we assigned the NAIC ratings for our CMBS, ~~30%~~62% of our non-investment-grade securities were rated investment grade and reported as Group II securities, with the remainder classified as Group I.

The CMBS portfolio ~~continued to experience heightened~~experienced lower volatility in first quarter 2024. During the ~~third~~ quarter, ~~2023 due~~the pace of new issuances accelerated, which led to ~~ongoing challenges around the commercial real estate market and higher financing costs for commercial properties. In general, delinquencies have increased~~paydowns in the ~~CMBS market as some loans that reached their maturity date continued to have difficulty~~portfolio via early refinancing. New issuance has remained slow in the single-asset single-borrower (SASB) market and liquidity has continued to be challenged. We continued to selectively reduce certain positions during the quarter that we believed would be sensitive to potential future economic weakness. As of ~~the end of the third quarter 2023,~~March 31, 2024, we had no delinquencies in our CMBS portfolio.

5247

~~With renewed focus on the commercial real estate sector, the~~The following table shows the composition of our CMBS portfolio by maturity year and sector:


Commercial Mortgage-Backed Securities Sector Details (at September 30, 2023)
Commercial Mortgage-Backed Securities Sector Details (at March 31, 2024)
Commercial Mortgage-Backed Securities Sector Details (at March 31, 2024)
Commercial Mortgage-Backed Securities Sector Details (at March 31, 2024)
($ in millions) Maturity1	($ in millions) Maturity1	Office		Lab Office		Multi-family		Multi-family IO		Retail		Industrial		Self- Storage		Casino		Defeased		Total		Average Original LTV		Average Current DSCR
2023		$	95.1	$	0	$	0	$	10.5	$	0	$	0	$	0	$	0	$	158.5	$	264.1	53.7	%	3.7
($ in millions) Maturity1
($ in millions) Maturity1																										Office		Lab Office		Multi-family		Multi-family IO		Retail		Industrial		Self- Storage		Casino			Total		Average Original LTV			Average Current DSCR
2024	2024	123.0		24.4		22.2		40.5		36.0		179.4		0		0		0		425.5		60.6		2.0	2024	$	134.1	$	0	$	22.4	$	31.2	$	36.5	$	0	$	0	$	0	$	$	224.2	59.4	59.4	%	1.9
2025	2025	0		41.9		0		36.4		62.6		43.7		0		0		0		184.6		65.7		2.1	2025	0		42.0	42.0	0	0	37.0	37.0	65.0	65.0	44.3	44.3	0	0	0	0	188.3		188.3		65.7	65.7		2.0	2.0
2026	2026	417.7		81.9		288.5		32.8		0		90.2		60.2		109.5		0		1,080.8		62.9		1.8	2026	428.1		83.2	83.2	284.4	284.4	33.4	33.4	0	0	92.7	92.7	61.2	61.2	112.1	112.1	1,095.1		1,095.1		60.9	60.9		1.9	1.9
2027	2027	389.5		0		39.1		29.7		0		93.6		253.7		0		0		805.6		60.1		1.9	2027	382.0		0	0	39.4	39.4	30.3	30.3	0	0	95.1	95.1	250.0	250.0	0	0	796.8		796.8		60.6	60.6		2.0	2.0
2028	2028	236.4		0		0		22.4		0		0		0		0		0		258.8		51.9		3.3	2028	255.5		0	0	0	0	23.0	23.0	0	0	0	0	0	0	0	0	278.5		278.5		51.9	51.9		3.3	3.3
2029	2029	381.5		0		0		10.6		0		0		0		63.1		0		455.2		57.6		3.1	2029	397.4		90.1	90.1	0	0	11.0	11.0	0	0	79.8	79.8	74.0	74.0	67.5	67.5	719.8		719.8		59.6	59.6		2.9	2.9
2030	2030	67.0		55.4		0		3.6		0		0		0		86.0		0		212.0		55.5		3.1	2030	77.0		59.9	59.9	0	0	3.8	3.8	0	0	0	0	0	0	92.4	92.4	233.1		233.1		55.5	55.5		3.1	3.1
2031	2031	206.3		84.8		0		0		0		0		0		0		0		291.1		66.5		1.9	2031	224.8		91.2	91.2	0	0	0	0	0	0	0	0	0	0	0	0	316.0		316.0		66.5	66.5		2.1	2.1
Total fair value	Total fair value	$	1,916.5	$	288.4	$	349.8	$	186.5	$	98.6	$	406.9	$	313.9	$	258.6	$	158.5	$	3,977.7
LTV= loan to value	LTV= loan to value
LTV= loan to value
LTV= loan to value
DSCR= debt service coverage ratio	DSCR= debt service coverage ratio
DSCR= debt service coverage ratio
DSCR= debt service coverage ratio

1The floating-rate securities were extended to their full maturity and fixed-rate securities are shown to their anticipated repayment date (if applicable) or otherwise, their maturity date.

We show the average loan to value (LTV) of each maturity year when the loans were originated. The LTV ratio that management uses, which is commonly expressed as a percentage, compares the size of the entire mortgage loan to the appraised value of the underlying property collateralizing the loan at issuance. A LTV ratio less than 100% indicates excess collateral value over the loan amount. LTV ratios greater than 100% indicate that the loan amount exceeds the collateral value. We believe this ratio provides a conservative view of our actual risk of loss, as this number displays the entire mortgage LTV, while our ownership is only a portion of the structure of the mortgage loan-backed security. For many of the mortgage loans, in our portfolio, our exposure is in a more senior part of the structure, which means that the LTV on our actual exposure is even lower than the ratios ~~presented in the table above.~~presented.

In addition to the LTV ratio, we also examine the credit of our CMBS portfolio by reviewing the debt service coverage ratio (DSCR) of the securities. The DSCR ~~ratio~~ compares the underlying property’s annual net operating income to its annual debt service payments. A DSCR ~~ratios~~ less than 1.0 times ~~indicate~~indicates that property operations do not generate enough income over the debt service payments, while a DSCR ~~ratio~~ greater than 1.0 times indicates that there is an excess of operating income over the debt service payments. A number above 1.0 generally indicates that there would not be an incentive for the borrower to default in light of the borrower’s excess income. The DSCR ~~calculation~~ reported in the table is calculated based on the most currently available net operating income and mortgage payments for the borrower, which, for most securities, is ~~full year 2022 data.~~data as of September 30, 2023.

Other Asset-Backed Securities (OABS) The following table details the credit quality rating and fair value of our OABS, along with a comparison of the fair value at ~~September 30, 2023,~~March 31, 2024, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

																									Other Asset-Backed Securities (at September 30, 2023)
Other Asset-Backed Securities (at March 31, 2024)																									Other Asset-Backed Securities (at March 31, 2024)
($ in millions) Average Rating	($ in millions) Average Rating	Automobile			Collateralized Loan Obligations			Student Loan			Whole Business Securitizations			Equipment			Other			Total			% of Total		($ in millions) Average Rating	Automobile		Collateralized Loan Obligations		Student Loan		Whole Business Securitizations		Equipment		Other		Total		% of Total
AAA	AAA	$	1,677.1		$	1,061.5		$	36.5		$	0		$	797.2		$	164.3		$	3,736.6		70.3	%	AAA	$	2,450.5	$	903.2	$	31.4	$	0	$	917.2	$	220.6	$	4,522.9	74.6	74.6	%
AA	AA	25.7			420.3			9.1			0			64.1			0			519.2			9.8
A	A	8.9			0			0			0			149.0			138.0			295.9			5.6
BBB	BBB	6.8			0			0			688.7			0			35.0			730.5			13.7
Non-investment grade/non-rated:	Non-investment grade/non-rated:
BB	BB	0			0			0			0			0			31.4			31.4			0.6
BB
BB

Total fair value	Total fair value	$	1,718.5		$	1,481.8		$	45.6		$	688.7		$	1,010.3		$	368.7		$	5,313.6		100.0	%

Total fair value

Total fair value																										$	2,482.3	$	1,277.6	$	42.2	$	732.4	$	1,110.2	$	416.5	$	6,061.2	100.0		%
Increase (decrease) in value	Increase (decrease) in value	(0.5)		%	(4.4)		%	(11.3)		%	(10.7)		%	(0.9)		%	(8.9)		%	(3.8)		%

During the ~~third~~first quarter ~~2023,~~2024, we selectively added to ~~our~~the OABS portfolio as we viewed spreads and potential returns to be attractive in certain areas. Investments were predominately made in the automobile and equipment categories ~~as we continued to view spreads,~~in highly rated, senior, and ~~potential returns, across this sector to be attractive. Our automobile and equipment additions were mainly through~~short-tenor debt tranches in the new issue ~~purchases, primarily focusing on higher credit tranche securities in the capital structure.~~markets.

5348

~~MUNICIPAL SECURITIES~~STATE AND LOCAL GOVERNMENT OBLIGATIONS

The following table details the credit quality rating of our ~~municipal securities~~state and local government obligations (municipal securities) at ~~September 30, 2023,~~March 31, 2024, without the benefit of credit or bond insurance:

								Municipal Securities (at September 30, 2023)
Municipal Securities (at March 31, 2024)								Municipal Securities (at March 31, 2024)
(millions) Average Rating	(millions) Average Rating	General Obligations		Revenue Bonds		Total		(millions) Average Rating	General Obligations	Revenue Bonds	Total
AAA	AAA	$	609.0	$	324.3	$	933.3
AA	AA	437.1		638.4		1,075.5
A	A	0		45.0		45.0
BBB	BBB	0		0.3		0.3
Non-rated	Non-rated	0		0.2		0.2
Total	Total	$	1,046.1	$	1,008.2	$	2,054.3

Included in revenue bonds were ~~$476.8~~$528.8 million of single-family housing revenue bonds issued by state housing finance agencies, of which ~~$283.7~~$279.9 million were supported by individual mortgages held by the state housing finance agencies and ~~$193.1~~$248.9 million were supported by mortgage-backed securities.

Of the revenue bonds supported by individual mortgages held by the state housing finance agencies, the overall credit quality rating was AA+. Most of these mortgages were supported by the Federal Housing Administration, the U.S. Department of Veterans Affairs, or private mortgage insurance providers. Of the revenue bonds supported by mortgage-backed securities, 84% were collateralized by Ginnie Mae mortgages, which are fully guaranteed by the U.S. government; the remaining 16% were collateralized by Fannie Mae and Freddie Mac mortgages.

Credit spreads of ~~tax-exempt~~taxable municipal bonds ~~widened~~tightened during the ~~third~~first quarter ~~2023,~~2024, while credit spreads of ~~taxable municipal~~tax-exempt bonds ~~tightened.~~were close to unchanged. We ~~added short, high-quality state general obligation, higher education, and housing bonds~~did not add significantly to this portfolio during the ~~quarter. The size~~first quarter 2024, and as a result, municipal securities as a percentage of ~~our municipal~~the total fixed-income portfolio ~~decreased modestly during the quarter as purchases were less than the maturities in the portfolio.~~declined.

CORPORATE DEBT SECURITIES

The following table details the credit quality rating of our corporate debt securities at ~~September 30, 2023:~~March 31, 2024:

																		Corporate Securities (at September 30, 2023)
Corporate Securities (at March 31, 2024)
Corporate Securities (at March 31, 2024)
Corporate Securities (at March 31, 2024)
(millions) Average Rating	(millions) Average Rating	Consumer		Industrial		Communication		Financial Services		Technology		Basic Materials		Energy		Total		(millions) Average Rating	Consumer	Industrial	Communication	Financial Services	Technology	Basic Materials	Energy	Total
AAA	AAA	$	0	$	0	$	0	$	78.0	$	0	$	0	$	0	$	78.0
AA	AA	63.0		0		0		255.1		0		0		44.7		362.8
A	A	515.8		328.7		161.9		1,299.1		40.6		115.3		421.2		2,882.6
BBB	BBB	2,279.3		1,221.3		297.3		1,106.6		521.3		35.8		1,051.9		6,513.5
Non-investment grade/non-rated:	Non-investment grade/non-rated:
BB	BB	158.6		33.6		59.1		0		10.6		0		7.9		269.8
BB
BB
B	B	124.2		0		0		0		0		23.3		0		147.5

Non-rated
Non-rated
Non-rated
Total fair value	Total fair value	$	3,140.9	$	1,583.6	$	518.3	$	2,738.8	$	572.5	$	174.4	$	1,525.7	$	10,254.2

The size of our corporate debt portfolio ~~declined slightly in the third quarter 2023 as we~~increased to $12.5 billion at March 31, 2024 from $11.2 billion at December 31, 2023. We selectively increased exposure to investment-grade securities but continued to ~~take~~predominately focus on shorter maturities, which we viewed as having a more ~~conservative investment posture. We also continued to reduce our exposure to high-yield securities given a less certain macro environment and less attractive~~favorable risk/reward ~~profile of these securities.~~profile. At ~~September 30, 2023, our~~March 31, 2024, corporate debt securities made up approximately ~~17%~~19% of ~~the~~our fixed-income portfolio, compared to approximately 18% at ~~June 30, 2023.~~

~~We also reduced the maturity profile of the corporate debt portfolio during the third quarter~~December 31, 2023. The duration of the corporate debt portfolio was ~~2.8~~2.7 years at ~~September 30, 2023, compared to 2.9 years at June 30, 2023, as we sold some of the longer duration securities with less attractive risk/reward profiles.~~both March 31, 2024 and December 31, 2023.

5449

PREFERRED STOCKS – REDEEMABLE AND NONREDEEMABLE

The table below shows the exposure break-down by sector and rating at ~~September 30, 2023:~~March 31, 2024:

																Preferred Stocks (at September 30, 2023)
		Financial Services
Preferred Stocks (at March 31, 2024)																Preferred Stocks (at March 31, 2024)
	Financial Services
(millions) Average Rating
(millions) Average Rating
(millions) Average Rating	(millions) Average Rating	U.S. Banks		Foreign Banks		Insurance		Other Financial		Industrials		Utilities		Total		U.S. Banks	Foreign Banks	Insurance	Other Financial	Industrials	Utilities	Total

BBB	BBB	$	563.8	$	31.5	$	71.2	$	24.7	$	136.5	$	43.8	$	871.5
BBB
BBB
Non-investment grade/non-rated:	Non-investment grade/non-rated:
BB
BB
BB	BB	79.5		21.2		0		0		0		0		100.7

Non-rated	Non-rated	0		0		39.9		8.1		15.8		0		63.8
Non-rated
Non-rated
Total fair value	Total fair value	$	643.3	$	52.7	$	111.1	$	32.8	$	152.3	$	43.8	$	1,036.0

The majority of our preferred stocks have fixed-rate dividends until a call date and then, if not called, generally convert to floating-rate dividends. The interest rate duration of our preferred stocks is calculated to reflect the call, floor, and ~~floating rate~~floating-rate features. Although a preferred stock will remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend. ~~Our~~As of March 31, 2024, our non-investment-grade preferred stocks were all with issuers that maintain investment-grade senior debt ratings.

We also face the risk that dividend payments on ~~any of these securities~~our preferred stock holdings could be deferred for one or more periods or skipped entirely.As of ~~September 30, 2023,~~March 31, 2024, we expect all of these securities to pay their dividends in full and on time. During the third quarter, our preferred portfolio declined to $1.0 billion at September 30, 2023 from $1.1 billion at June 30, 2023. This decline was primarily due to preferred stocks that were called or sold because they had less attractive risk/reward profiles. Approximately ~~79%~~78% of our preferred stocks pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.

At March 31, 2024, the preferred stock portfolio fair value was $1.1 billion, which was consistent with the value at December 31, 2023. During the first quarter 2024, we sold securities with less attractive risk/reward profiles and low credit spreads that we believed were less probable to be called on their call dates. This decrease was mostly offset by an increase in valuation of the preferred portfolio during the first quarter of 2024, as credit spreads tightened.

Common Equities

Common equities, as reported on the balance sheets, were comprised of the following:


($ in millions)	($ in millions)	September 30, 2023				September 30, 2022				December 31, 2022				($ in millions)	March 31, 2024					March 31, 2023					December 31, 2023
Common stocks	Common stocks	$	2,591.9	99.1	%	$	2,646.6	99.3	%	$	2,801.7	99.3	%	Common stocks	$	3,170.6	99.2	99.2	%		$	2,774.0	99.3	99.3		%	$	2,907.8	99.3	99.3	%
Other risk investments1	Other risk investments1	22.6		0.9		18.7		0.7		19.8		0.7
Total common equities	Total common equities	$	2,614.5	100.0	%	$	2,665.3	100.0	%	$	2,821.5	100.0	%	Total common equities	$	3,194.9	100.0	100.0	%		$	2,794.3	100.0	100.0		%	$	2,928.4	100.0	100.0	%

1The other risk investments consist of limited partnership interests.

The majority of our common stock portfolio consists of individual holdings selected based on their contribution to the correlation with the Russell 1000 Index. We held ~~765~~787 out of ~~1,012,~~1,005, or ~~76%~~78%, of the common stocks comprising the index at ~~September 30, 2023,~~March 31, 2024, which made up 95% of the total market capitalization of the index. At ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ and December 31, ~~2022,~~2023, the year-to-date total return, based on GAAP income, was within our targeted tracking error, which is +/- 50 basis points.

5550

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that certain statements in this report not based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as “estimate,” “expect,” “intend,” “plan,” “believe,” “goal,” “target,” “anticipate,” “will,” “could,” “likely,” “may,” “should,” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are not guarantees of future performance, are based on current expectations and projections about future events, and are subject to certain risks, assumptions and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to:

•our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;

•our ability to establish accurate loss reserves;

•the impact of severe weather, other catastrophe events, and climate change;

•the effectiveness of our reinsurance programs and the continued availability of reinsurance and performance by reinsurers;

•the secure and uninterrupted operation of the systems, facilities, and business functions and the operation of various third-party systems that are critical to our business;

•the impacts of a security breach or other attack involving our technology systems or the systems of one or more of our vendors;

•our ability to maintain a recognized and trusted brand and reputation;

•whether we innovate effectively and respond to our competitors’ initiatives;

•whether we effectively manage complexity as we develop and deliver products and customer experiences;

•our ability to attract, develop, and retain talent and maintain appropriate staffing levels;

•the impact of misconduct or fraudulent acts by employees, agents, and third parties to our business and/or exposure to regulatory assessments;

•the highly competitive nature of property-casualty insurance markets;

•whether we adjust claims accurately;

•compliance with complex and changing laws and regulations;

•litigation challenging our business practices, and those of our competitors and other companies;

•the success of our business strategy and efforts to acquire or develop new products or enter into new areas of business and our ability to navigate the related risks;

•how intellectual property rights affect our competitiveness and our business operations;

•the success of our development and use of new technology and our ability to navigate the related risks;

•the performance of our fixed-income and equity investment portfolios;

•the impact on our investment returns and strategies from regulations and societal pressures relating to environmental, social, governance and other public policy matters;

•~~the elimination of the London Interbank Offered Rate;~~

•our continued ability to access our cash accounts and/or convert investments into cash on favorable terms;

•the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;

•legal restrictions on our insurance subsidiaries’ ability to pay dividends to The Progressive Corporation;

•~~limitations on our ability to pay dividends on our common shares under the terms of our outstanding preferred shares;~~

•our ability to obtain capital when necessary to support our business and potential growth;

•evaluations and ratings by credit rating and other rating agencies;

•the variable nature of our common share dividend policy;

•whether our investments in certain tax-advantaged projects generate the anticipated returns;

•the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;

•the impacts of epidemics, pandemics, or other widespread health risks; and

•other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, ~~2022.~~2023.

Any forward-looking statements are made only as of the date presented. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.

In addition, investors should be aware that accounting principles generally accepted in the United States prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

5651

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The duration of the financial instruments held in our portfolio that are subject to interest rate risk was ~~2.9~~3.2 years at March 31, 2024 and 3.0 years at both ~~September 30,~~March 31, 2023 and December 31, ~~2022, and 2.7 years at September 30, 2022.~~2023. The weighted average beta of the equity portfolio was ~~1.03~~1.05 at ~~September 30, 2023,~~March 31, 2024, ~~1.01~~1.02 at ~~September 30, 2022,~~March 31, 2023, and 1.00 at December 31, ~~2022.~~2023. We have not experienced a material impact when compared to the tabular presentations of our interest rate and market risk sensitive instruments in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Item 4. Controls and Procedures.

We, under the direction of our Chief Executive Officer and our Chief Financial Officer, have established disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our Chief Executive Officer and our Chief Financial Officer reviewed and evaluated our disclosure controls and procedures as of the end of the period covered by this report. Based on that review and evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effectively serving the stated purposes as of the end of the period covered by this report.

There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

5752

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For a discussion of legal proceedings, see Note 11 – Litigation to the consolidated financial statements, which is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes in the risk factors from those discussed in Item 1A, Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES
2023 Calendar Month Total
Number of
Shares
Purchased Average
Price
Paid
Per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Maximum Number of
Shares That May Yet be
Purchased Under the
Plans or Programs
July 208,955 $ 123.14 244,122 24,755,878
August 46,822 130.01 290,944 24,709,056
September 56,408 139.96 347,352 24,652,648
Total 312,185 $ 127.21


ISSUER PURCHASES OF EQUITY SECURITIES
2024 Calendar Month	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
January	208,942	$	163.91	935,880	24,064,120
February	3,347	177.70		939,227	24,060,773
March	11,354	197.03		950,581	24,049,419
Total	223,643	$	165.80

In May 2023, the Board of Directors approved an authorization for the ~~Company~~company to repurchase up to 25 million of its common shares. This authorization does not have an expiration date. Share repurchases under this authorization may be accomplished through open market purchases, including trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, through privately negotiated transactions, pursuant to our equity incentive awards, or otherwise. During the ~~third~~first quarter ~~2023,~~2024, all repurchases were accomplished in conjunction with our equity incentive awards ~~or through the open market~~ at the then-current market ~~prices.~~prices; there were no open market purchases during the quarter.

Progressive’s financial policies state that we will repurchase shares to neutralize dilution from equity-based compensation in the year of issuance and as an option to effectively use under-leveraged capital.

Item 5. Other Information.

•(c) Insider Trading Arrangements

During the ~~three months ended September 30, 2023, no director or officer~~first quarter 2024, certain executive officers, as listed below, entered into Rule 10b5-1 trading arrangements that are intended to satisfy the affirmative defense of Rule 10b5-1(c). The plans provide for: i) the sale of a portion of the ~~Company adopted~~ shares upon vesting pursuant to certain outstanding equity awards previously granted to the applicable executive officer, excluding any shares withheld by the company to satisfy tax withholding obligations (see the 2024 Proxy Statement for a description of the company’s equity compensation plans) and, ii) for certain executives, the sale and/or ~~terminated~~gift of additional shares held by the applicable executive, some of which may have been the result of a ~~“Rule~~prior vesting event. Below are the details of each executive's Rule 10b5-1 trading ~~arrangement”~~arrangement:

Executive Officer

Title

Date Entered

Date Expires*

Additional Shares

Jonathan S. Bauer

Chief Investment Officer

3/18/2024

9/3/2024

2,047

Steven A. Broz

Chief Information Officer

1/26/2024

11/1/2024

16,511

Susan Patricia Griffith

President and Chief Executive Officer

2/28/2024

2/28/2025

13,359

Lori Niederst

Customer Relationship Management President

2/28/2024

12/31/2024

Andrew J. Quigg

Chief Strategy Officer

1/25/2024

2/3/2025

John P. Sauerland

Vice President and Chief Financial Officer

2/28/2024

2/28/2025

20,000

* subject to the plan’s earlier expiration or ~~“non-Rule 10b5-1 trading arrangement,” as each term is defined~~completion in ~~Item 408(a) of Regulation S-K.~~accordance with its terms.

•

Additional Information

President and CEO Susan Patricia Griffith’s quarterly letter to shareholders is included as Exhibit 99 to this Quarterly Report on Form 10-Q and in our online shareholders’ report located on our investor relations website at: investors.progressive.com/financials.

Item 6. Exhibits.

See exhibit index contained herein beginning on page ~~60,~~56, which is incorporated by reference from information with respect to this item.

5854

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE PROGRESSIVE CORPORATION

(Registrant)

Date:

~~October 31, 2023~~May 6, 2024

By: /s/ John P. Sauerland

John P. Sauerland

Vice President and Chief Financial Officer

5955


EXHIBIT INDEX	EXHIBIT INDEX				EXHIBIT INDEX
Exhibit No. Under Reg. S-K, Item 601	Exhibit No. Under Reg. S-K, Item 601	Form 10-Q Exhibit Number	Description of Exhibit	If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC	Exhibit No. Under Reg. S-K, Item 601	Form 10-Q Exhibit Number	Description of Exhibit	If Incorporated by Reference, Documents with Which Exhibit was Previously Filed with SEC
10					10	10.1	Form of Restricted Stock Unit Award Agreement for Time-Based Awards (for 2024)	Filed herewith
10					10	10.2	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Performance Versus Market) (for 2024)	Filed herewith
10					10	10.3	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) (for 2024)	Filed herewith
10					10	10.4	Form of Restricted Stock Unit Award Agreement for Special Time/Performance-Based Award (for 2024)	Filed herewith
10					10	10.5	2024 Progressive Capital Management Annual Incentive Plan	Filed herewith
31	31	31.1	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Susan Patricia Griffith	Filed herewith	31	31.1	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Susan Patricia Griffith	Filed herewith
31	31	31.2	Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, John P. Sauerland	Filed herewith	31	31.2	Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, John P. Sauerland	Filed herewith
32	32	32.1	Section 1350 Certification of the Principal Executive Officer, Susan Patricia Griffith	Furnished herewith	32	32.1	Section 1350 Certification of the Principal Executive Officer, Susan Patricia Griffith	Furnished herewith
32	32	32.2	Section 1350 Certification of the Principal Financial Officer, John P. Sauerland	Furnished herewith	32	32.2	Section 1350 Certification of the Principal Financial Officer, John P. Sauerland	Furnished herewith
99	99	99	Letter to Shareholders from Susan Patricia Griffith, President and Chief Executive Officer (Regulation FD Disclosure)	Furnished herewith	99	99	Letter to Shareholders from Susan Patricia Griffith, President and Chief Executive Officer (Regulation FD Disclosure)	Furnished herewith
101	101	101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith	101	101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	Filed herewith
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101	101	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith	101	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101	101	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith	101	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101	101	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith	101	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
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6056


	Level 3 Fair Value
(millions)	Fair Value at December 31, 2021		Calls/ Maturities/ Paydowns/Other		Purchases		Sales		Net Realized (Gain)/Loss on Sales		Change in Valuation		Net Transfers In (Out)		Fair Value at September 30, 2022
Equity securities:
Nonredeemable preferred stocks:
Financials	$	76.4	$	0	$	0	$	(15.0)	$	(17.2)	$	20.7	$	0	$	64.9
Industrials	34.4		(0.5)		0		0		0		(16.9)		0		17.0
Common equities:

Other risk investments	16.9		1.8		0		0		0		0		0		18.7
Total Level 3 securities	$	127.7	$	1.3	$	0	$	(15.0)	$	(17.2)	$	3.8	$	0	$	100.6


ISSUER PURCHASES OF EQUITY SECURITIES
2023 Calendar Month	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
July	208,955	$	123.14	244,122	24,755,878
August	46,822	130.01		290,944	24,709,056
September	56,408	139.96		347,352	24,652,648
Total	312,185	$	127.21