PROGRESSIVE CORP/OH/

The Progressive Corporation is an insurance holding company whose insurance subsidiaries write personal and commercial auto insurance, personal residential property insurance, and insurance for motorcycles, watercraft, and other recreational vehicles, as well as business-related general liability and commercial property insurance predominantly for small businesses, workers' compensation insurance primarily for the transportation industry, and other specialty property-casualty insurance. The company operates throughout the United States and its vision is to become consumers', agents', and business owners' number one destination for insurance and other financial needs, supported by four strategic pillars of people and culture, broad needs of our customers, leading brand, and competitive prices.

Progressive ranked second in market share in the U.S. private passenger auto insurance market, based on 2024 premiums written, and believes it continued to hold that position for 2025, with approximately 230 competitors in this market. The company and the other leading 15 private passenger auto insurers, each of which writes over $3 billion of premiums annually, comprise about 85% of this market. In commercial auto, Progressive has ranked number one in the U.S. commercial auto market since 2015, and believes it continued to hold that position for 2025, with approximately 340 competitors in the total U.S. commercial auto market, where Progressive and about 64 other large companies/groups, each having over $200 million of commercial auto premiums written annually, comprise 88% of this market. In personal property, Progressive was the twelfth largest homeowners carrier in the U.S., based on 2024 premiums written, with approximately 360 competitors nationwide, and Progressive and the other leading 28 large companies/groups, each with over $1 billion of premiums written annually, comprise about 80% of the market.

Progressive generates revenue primarily through the collection of premiums from its insurance policies, with net premiums written of $83.174 billion ¹ in 2025, and also earns investment income and service revenues. The company's insurance operations are organized into three segments: Personal Lines, Commercial Lines, and Other Indemnity, with Personal Lines accounting for 87% ² of total net premiums written in 2025. Progressive sells its products through both the agency distribution channel, which includes a network of more than 40,000 ³ independent insurance agencies, and the direct distribution channel, which includes business written directly online or by phone.

The Personal Lines segment writes insurance for personal autos and special lines products (recreational vehicles such as motorcycles, RVs, and watercraft), collectively referred to as the personal vehicle business, and personal residential property insurance for homeowners and renters. For 2025, personal vehicle products represented 96% ⁴ of total Personal Lines net premiums written, with personal auto insurance representing 95% ⁵ of total personal vehicle net premiums written. The personal property business represented 4% ⁶ of total Personal Lines net premiums written in 2025, with about 95% ⁷ of the total personal property net premiums written attributable to the homeowners and renters products. The Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and commercial property insurance predominately for small businesses, and workers' compensation insurance primarily for the transportation industry, accounting for 13% ⁸ of total net premiums written in 2025. The Commercial Lines business includes transportation network company (TNC) business, which represented 14% ⁹ of Commercial Lines net premiums written in 2025.

Progressive's service businesses, which represented less than 1% ¹⁰ of total revenues at December 31, 2025, 2024, and 2023, primarily include commission- or fee-based businesses where the company acts as an agent for other insurance companies, offering home, condominium, and renters insurance, among other products, written by affiliated and unaffiliated insurance companies. The company also offers customers the ability to package commercial auto coverage with other commercial coverages written by unaffiliated insurance carriers, receiving commissions for policies written under this program.

In the third quarter 2025, Progressive started rolling out its latest personal auto product offering, model 9.0, which contains new and expanded coverage features, including embedded renters insurance as an optional endorsement to an auto policy. As of December 31, 2025, 10 states, that represented about 25% ¹¹ of companywide personal auto net premiums written, are on model 9.0. The company's 9.1 model is currently in execution planning, with the first state elevation expected in early 2027. Progressive continued to roll out its newest special lines product model (R17), first launched in late 2024, consisting of 27 ¹² product enhancements that expand segmentation. In personal property, 39 ¹³ states were elevated to next-generation-product models (5.0 and higher) by year-end 2025, representing close to 90% ¹⁴ of personal property net premiums written. In Commercial Lines, the 8.3 core commercial auto product model launched in 11 ¹⁵ states that represent 43% ¹⁶ of core commercial auto countrywide net premiums written at the end of 2025, and the newest BOP model was in market in 34 ¹⁷ states that represent 92% ¹⁸ of countrywide BOP net premiums written. In May 2025, the Board of Directors approved an authorization for the company to repurchase up to 25 million ¹⁹ of its common shares. During 2025, no losses were ceded under the occurrence XOL program that is currently in place or the occurrence XOL that was in place from June 1, 2024 through May 31, 2025.

For the fiscal year ended December 31, 2025, Progressive reported total revenues of $81.661 billion ²⁰ in premium revenue, compared to $70.799 billion ²¹ in 2024 and $58.665 billion ²² in 2023. Net premiums written were $83.174 billion ²³ in 2025, up from $74.424 billion ²⁴ in 2024 and $61.550 billion ²⁵ in 2023. Net income was $11.308 billion ²⁶ in 2025, compared to $8.480 billion ²⁷ in 2024 and $3.903 billion ²⁸ in 2023. Total investment income, before expenses and taxes, was $4.3 billion ²⁹ in 2025, $3.1 billion ³⁰ in 2024, and $2.3 billion ³¹ in 2023. On a pretax total return basis, the investment portfolio generated investment income of $6.2 billion ³² in 2025, $3.3 billion ³³ in 2024, and $3.8 billion ³⁴ in 2023.

Progressive's Personal Lines strategy is to be a competitively priced provider of a broad range of personal auto, special lines, and personal property insurance products with distinctive service, distributed through whichever channel the customer prefers, and bundled with other products when appropriate. The company's Destination Era strategy seeks to leverage its personal auto business with its personal property business, as well as insurance products and non-insurance services offered by unaffiliated third parties, to provide customers access to a range of products addressing their diverse needs, with the option to bundle certain products together. As of December 31, 2025, Progressive had nearly 6,000 ³⁵ Platinum agents in its agency distribution channel, and the Portfolio quoting system is available for all agents appointed to write new business where the company offers personal property products. In the direct channel, Progressive bundles its personal auto with personal property products in almost all states, as well as with homeowners and renters products provided by unaffiliated insurance carriers nationwide.

In Commercial Lines, Progressive is rolling out next-generation-product models across its core commercial auto, medium fleet, and BOP products, expanding segmentation and pricing variables. The 8.3 core commercial auto product model launched in 11 ³⁶ states that represent 43% ³⁷ of core commercial auto countrywide net premiums written at the end of 2025. The newest medium-fleet product model was fully deployed in nearly all states, and the newest BOP model was in market in 34 ³⁸ states that represent 92% ³⁹ of countrywide BOP net premiums written as of the end of 2025. In core commercial auto, the company also launched and rolled out its new Cargo Plus endorsement, which was available in 49 ⁴⁰ states as of the end of 2025. Progressive also offers usage-based insurance options in Commercial Lines, including Smart Haul and Snapshot ProView, both available in nearly all states.Progressive's property reinsurance program includes an occurrence excess of loss (XOL) program in place from June 1, 2025 through May 31, 2026, with a retention threshold of $200 million ⁴¹ of losses and allocated loss adjustment expenses for the first event outside of Florida and $75 million ⁴² for an event in Florida. The coverage limits, net of retention, in place at December 31, 2025, were $2.2 billion ⁴³ for a first event in Florida and $2.0 billion ⁴⁴ for a first event outside of Florida, reduced by $70 million ⁴⁵ effective January 8, 2026, with the maturation of a catastrophe bond. The company also had shared limit coverage in its reinsurance program from June 1, 2025 through December 31, 2025 that provided $175 million ⁴⁶ of coverage for named storms, and has renewed this coverage from May 31, 2026 through December 31, 2026 for $175 million ⁴⁷ of coverage. In January 2026, Progressive entered into a new aggregate XOL for claims occurring in 2026. Beginning in 2026, the company has an occurrence XOL program covering its special lines boat product, providing $150 million ⁴⁸ of coverage for named windstorms in excess of a $225 million ⁴⁹ per event retention.

In May 2025, the Board of Directors approved an authorization for the company to repurchase up to 25 million ⁵⁰ of its common shares, which does not have an expiration date. The filing does not specify R&D spending levels, capital expenditure plans, or dividend policy figures beyond the repurchase authorization.

Progressive faces structural headwinds from various insurance regulations that seek to limit or prohibit the use of specific rating factors in insurance policy pricing, such as credit, education, and occupation, which the company believes have the potential to significantly undermine the effectiveness of risk-based pricing. The company also faces risks from severe weather and other catastrophe events, which may become more severe and less predictable as a result of climate change, and its property business has a concentration of policies in force in states with significant exposure to hurricanes and hailstorms. Additionally, the company's ability to obtain reinsurance coverage at reasonable cost is subject to prevailing reinsurance market conditions, which could be adversely impacted by industry losses or significant reinsured events.

Progressive's business could be materially adversely affected by a security breach or other attack involving its technology systems or the systems of one or more of its vendors, as the company relies on large and complex technology systems and third-party systems to run its operations and store significant volumes of data. The company's systems are being threatened on a regular basis, and it has experienced attacks and incidents in the past. The company also faces risks from the development and use of new technology, such as generative and agentic artificial intelligence, which may produce flawed datasets, result in discriminatory outcomes, or lead to reputational harm or regulatory scrutiny.

Progressive's success depends on its ability to underwrite and price risks accurately, and various insurance regulations limiting the use of specific rating factors such as credit, education, and occupation could significantly undermine the effectiveness of risk-based pricing, potentially materially adversely impacting insurance operating results. The company's property business has a concentration of policies in states with significant exposure to hurricanes and hailstorms, and catastrophe losses have in the past and may in the future adversely affect profitability, with the occurrence XOL program having a retention threshold of $200 million ⁵¹ for a first event outside Florida and $75 million ⁵² for an event in Florida. The company faces the risk that reinsurers will be unable to pay or will dispute claims, and the availability and cost of reinsurance are subject to prevailing market conditions that could be adversely impacted by industry losses or significant reinsured events. A security breach or cyberattack could cause significant disruption to operations, substantial liability if confidential customer or employee information is stolen, and severe damage to reputation and brand, and the company's systems are being threatened on a regular basis. The highly competitive nature of property-casualty insurance markets, with approximately 230 ⁵³ competitors in private passenger auto and approximately 340 ⁵⁴ in commercial auto, means that if competitors offer similar products at lower prices or engage in successful competitive initiatives, Progressive's ability to generate new business or retain existing customers could be compromised.

Management's message emphasizes Progressive's vision to become consumers', agents', and business owners' number one destination for insurance and other financial needs, supported by four strategic pillars of people and culture, broad needs of our customers, leading brand, and competitive prices. The company's long-standing goal is to grow as fast as it can, at or below a companywide 96 combined ratio on a calendar-year basis, as long as it can provide high-quality customer service, with the focus on achieving underwriting profitability taking precedence over growth. The key strategic priorities emphasized for the period ahead include the continued rollout of the personal auto product model 9.0, the advancement of the Destination Era strategy to deepen customer relationships through bundling, and the deployment of next-generation-product models across Commercial Lines to improve pricing accuracy and competitiveness.