Progressive Corporation
11/02/2026 | Press release | Distributed by Public on 11/02/2026 09:20
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
I. OVERVIEW
The Progressive Corporation's insurance subsidiaries continued to generate underwriting profitability above our 4% companywide calendar-year underwriting profit goal during the third quarter 2026, producing a companywide underwriting profit margin of 11.3%. Both our Personal Lines and Commercial Lines operating segments generated strong underwriting profitability during the third quarter 2026.
We also maintained growth in both premiums and policies in force, albeit at a more moderate pace than in the third quarter last year, despite the continued increase in competition in the marketplace. Companywide net premiums written were $22.3 billion, an increase of $0.9 billion, or 4%, compared to the third quarter last year, while net premiums earned increased 5%. Policies in force increased 6%, or by 2.4 million policies, compared to September 30, 2025; with policies in force increasing by 0.4 million in the third quarter 2026.
For the third quarter 2026, we experienced a $73 million year-over-year decrease in net income, compared to the third quarter 2025, with total comprehensive income decreasing $2,254 million. The decrease in total comprehensive income was primarily driven by net unrealized losses on our fixed-maturity securities in the current period, compared to net unrealized gains during the third quarter last year.
At September 30, 2026, total capital (debt plus shareholders' equity) was $42.9 billion, an increase of $5.7 billion from year-end 2025. The increase was primarily driven by $5.8 billion of comprehensive income earned during the first nine months of 2026 and the issuance of $1.5 billion of senior notes during the first quarter 2026. These increases were partially offset by the repurchase of 7.7 million of our common shares at a total cost of $1.6 billion.
A. Insurance Operations
Our companywide underwriting profit margin for the third quarter 2026 was 0.8 points higher than in the same period last year, reflecting a 4.5 point decrease in the underwriting expense ratio, partially offset by a 3.7 point increase in the loss and loss adjustment expense (LAE) ratio. The decrease in the underwriting expense ratio primarily reflected Florida personal auto policyholder credit expense (Florida policyholder credits) recognized in the third quarter 2025 (see our 2025 Annual Report to Shareholders for further discussion of the Florida policyholder credits). This expense added 4.6 points to the third quarter 2025 underwriting expense ratio. The increase in the loss and LAE ratio was primarily due to higher severity.
Personal Lines represented 89% of companywide net premiums written during the third quarter 2026 and is comprised of our personal vehicle and property products. Personal vehicle products include personal auto and special lines products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft), and personal property products include homeowners, renters, and umbrella products.
During the third quarter 2026, we continued to focus on selectively increasing the availability of our personal property products. Beginning late in 2025, we took actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing, geographical diversification, and the regulatory and market conditions. Some of these actions include expanding independent agency relationships, reopening new business in certain agency and direct channel markets, and lifting targeted underwriting restrictions on older roofs, medium- to high-value homes, and non-bundled homeowners products, where we intend to bundle in the future, in certain markets. Certain restrictions remain in place in markets where we continue to focus on improving profitability and reducing exposure in more volatile weather-related markets.
Personal Lines generated an underwriting profit margin of 12.0% for the third quarter 2026, compared to 10.5% for the same period last year, with personal vehicle and personal property products reporting strong underwriting profit margins of 11.3% and 27.2%, respectively. Profitability in our special lines products, which typically experience higher losses during warmer weather months due to the seasonal nature of these products, had a 0.6 point unfavorable impact on the personal vehicle combined ratio during the third quarter 2026. The strong underwriting profit margin in personal property was primarily driven by a low level of incurred catastrophe losses, prior period rate increases, and lower loss frequency, and we believe was influenced by our sustained efforts to reduce exposure and improve profitability.
For the third quarter 2026, Personal Lines net premiums written increased 4%, with personal vehicle business increases of 2% in agency and 5% in direct, and a 5% increase in personal property, each compared to the same period last year. The current period net premiums written growth was primarily driven by policies in force growth in our personal auto products, which were up 7%, compared to September 30, 2025. The effect of the growth in policies in force was, in part, offset by a decrease in average written premiums per policy, due to aggregate rate decreases taken over the last 12 months in response to increased
competition in the marketplace. Changes in net premiums written are a function of new business applications (i.e., policies sold), retention, business mix, and premium per policy.
Personal vehicles experienced a decrease in new business applications of 1% and an increase in renewal business applications of 9% during the third quarter 2026, compared to the same period in the prior year. Despite continued increased competition in the marketplace, our personal vehicle business continued to generate total application growth, in relation to the double-digit growth during the same period last year.
Personal property experienced a 3% increase in both new and renewal business applications during the third quarter 2026, compared to the same period last year. New business applications in our homeowners product (which excludes our renters and umbrella products) increased 22%, compared to the prior-year period, and was flat in our renters product.
On a countrywide basis, during the third quarter 2026, personal auto rates were flat and personal property rates decreased less than 1%, in the aggregate.
We believe a key element in improving the accuracy of our personal auto rating is Snapshot®, our usage-based insurance offering. During the third quarter 2026, Snapshot adoption rates relative to total new business personal auto customers increased 8% in agency and decreased 4% in direct, compared to the same period last year. Approximately half of direct new business customers elected Snapshot in both the third quarter 2025 and 2026. The increase in the agency adoption rate was primarily due to the expansion of Snapshot eligibility in the second half of 2025, which increased the number of agents able to write Snapshot policies. Snapshot is available in all states, other than California, and our latest segmentation model was available in states representing 85% of countrywide personal auto net premiums written (excluding California) on a trailing 12-month basis at quarter end. We continue to invest in our mobile application, with the majority of new enrollments choosing mobile devices for Snapshot monitoring.
The Commercial Lines segment includes our core commercial auto products, transportation network company (TNC) business, Progressive Fleet & Specialty Programs (FSP) products, and business owners' policy (BOP) product. Total Commercial Lines generated an underwriting profit margin of 7.4%, compared to 10.8% in the same period last year, with a net premiums written increase of 9% and a policies in force increase of 5% for the third quarter 2026, compared to the third quarter 2025. This growth was driven by an increase in our core commercial auto products, due to an increase in both new and renewal applications, primarily resulting from targeted rate decreases in certain states and business market targets (BMT), and increased advertising and agent incentive
spend. Core commercial auto products experienced an increase in new business applications of 11% and an increase in renewal business applications of 8% during the third quarter 2026, compared to the same period last year. New business applications increased in all BMTs and renewal business applications increased in all BMTs, except for-hire transportation.
In aggregate, we increased core commercial auto rates 1% on a countrywide basis during the third quarter 2026.
We believe we are currently adequately priced in our personal auto, personal property, and core commercial auto products in most states through the remainder of the year. However, we regularly monitor the factors that could impact our loss costs, which may include loss severity and frequency, inflation, new and used car prices, miles driven, driving patterns, weather events, building materials, construction costs, tariffs, and other factors, on a state-by-state basis. We continue to closely monitor our expenses, including acquisition expenses and non-acquisition expenses, which we view as important measures of operational efficiency as we seek to offer consumers our most competitive rates. During the third quarter 2026, advertising expense was $1.6 billion, or 18% higher than the third quarter last year. The effect of the higher advertising spend on the current period expense ratio was partially offset by growth in net premiums earned, contributing an additional 0.8 points to the underwriting expense ratio in the third quarter 2026, compared to the same period last year. We will continue to invest in advertising to maximize growth as long as the spend remains efficient and we remain on track to achieve our calendar-year profitability goal.
For the third quarter 2026, on a year-over-year basis, average written premium per policy decreased 2% in personal auto, 1% in personal property products, and 3% in core commercial auto products. In aggregate, personal auto rate decreases on a countrywide basis over the previous 12 months contributed to the decrease in average written premium per policy. The decrease in core commercial auto average written premium per policy was primarily due to a shift in the mix of business, including a shift to a higher percentage of 6-month policies, which have about half of the amount of net premiums written as 12-month term policies. Given that our personal property and commercial auto policies are predominantly written for 12-month terms, rate and non-rate actions take longer to earn into premium for these products.
We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention continues to be one of our most important priorities. Increasing our share of Progressive auto and personal property bundled households (i.e., Robinsons) remains a key initiative, and we plan to continue investing in the customer experience in order to support that goal. Policy life expectancy, our actuarial estimate of the average length of time a newly written
policy remains in force before cancellation or lapse in coverage, is our primary measure of customer retention in both Personal Lines and Commercial Lines.
In personal auto, we evaluate retention using a trailing 12-month and a trailing 3-month policy life expectancy. Although the latter can reflect more volatility and is more sensitive to seasonality, we believe this measure is more responsive to current experience and may be an indicator for the future trend of our 12-month measure. For the third quarter 2026, both the trailing 3-month and 12-month total personal auto policy life expectancy decreased 9% year over year. We believe these decreases were primarily due to an increase in shopping and competition in the marketplace and, to a lesser extent, a shift in our mix of business.
Our trailing 12-month policy life expectancy was down 7% for our personal property products year over year for the third quarter 2026. We believe the retention decrease was primarily driven by rate increases in previous years, increased competition in the marketplace, and, to a lesser extent, a continued shift in the mix of business to more renters policies.
For core commercial auto products, trailing 12-month policy life expectancy increased 3%, compared to the same period in the prior year. We believe the increase reflected a shift to the business auto and contractor BMTs, which historically have higher policy life expectancies, moderation in our rate increases, and various initiatives, including payment and renewal reminders.
B. Investments
The fair value of our investment portfolio was $99.2 billion at September 30, 2026, compared to $97.4 billion at December 31, 2025. The increase from year-end 2025 primarily reflected significant positive cash flows from insurance operations and proceeds from the senior note issuances in March 2026, partially offset by the payment of our annual variable common share dividend, valuation declines across fixed-maturity sectors, repurchases of our common shares, and the Florida policyholder credits paid in the first quarter 2026.
Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities and 75%-100% in Group II securities as defined below under Results of Operations - Investments. At September 30, 2026, 7% of our portfolio was allocated to Group I securities, compared to 6% at December 31, 2025, with the remainder allocated to Group II securities.
Our recurring investment income generated a pretax book yield of 4.3% in the third quarter 2026, compared to 4.2% in the same period last year. The investment portfolio produced a fully taxable equivalent (FTE) total return of -1.5% in the third quarter 2026, compared to 1.7% in the same period last year. For the third quarter 2026, the fixed-income and common stock portfolios generated FTE total returns of -1.7% and 2.2%, respectively, compared to 1.5% and 8.1%, in the same period last year. The decrease in the fixed-income portfolio's FTE total return primarily reflected year-over-year movements in U.S. Treasury yields.
The fixed-income portfolio maintained a weighted average credit quality of AA- at September 30, 2026 and 2025, and December 31, 2025. The fixed-income portfolio duration was 3.6 years at September 30, 2026, compared to 3.4 years at both September 30, 2025, and December 31, 2025. During 2026, we modestly increased our duration to take advantage of higher yields available in the market.
II. FINANCIAL CONDITION
A. Liquidity and Capital Resources
Progressive's insurance operations generate liquidity by collecting and investing premiums from new and renewal business in advance of paying claims, as well as our insurance subsidiaries producing aggregate calendar-year underwriting profits and positive cash flows. As primarily an auto insurer, our claims liabilities generally have a short-term duration.
Operations generated positive cash flows of $12.5 billion and $14.4 billion for the nine months ended September 30, 2026 and 2025, respectively. The decrease in operating cash flows during the first nine months of 2026, compared to the same period last year, was primarily due to the $1.2 billion Florida policyholder credits paid in the first quarter 2026. We believe cash flows will remain positive for the foreseeable future and do not anticipate the need to raise capital to support our operations during that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.
At September 30, 2026, we held $43.7 billion in short-term investments and U.S. Treasury securities, which represented just under 45% of our total portfolio's fair value at quarter end. Based on our portfolio allocation and investment strategies, we believe we have sufficient readily available marketable securities to cover claims payments and short-term obligations in the event our cash flows from operations were to become negative. See Item 1A, Risk Factors in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission for the year ended December 31, 2025 (our 2025 Form 10-K), for a discussion of certain matters that may affect our portfolio and capital position.
Our total capital (debt plus shareholders' equity) was $42.9 billion at September 30, 2026, compared to $42.3 billion at September 30, 2025, and $37.2 billion at December 31, 2025. The increase from year-end 2025 primarily reflected the $5.8 billion of comprehensive income recognized during the first nine months of 2026 and the issuance of $1.5 billion of senior notes in the first quarter 2026. These increases were partially offset by the repurchase of our common shares, as discussed below. Our debt-to-total capital ratio was 19.6% at September 30, 2026, compared to 16.3% at September 30, 2025, and 18.5% at December 31, 2025. These ratios were consistent with our financial policy of maintaining a debt-to-total capital ratio of less than 30%.
None of the covenants on our existing debt securities include rating or credit triggers that would require an adjustment of interest rate or an acceleration of principal payments in the event our debt securities are downgraded by a rating agency. In April 2026, we renewed the unsecured discretionary line of credit with PNC Bank, National Association, in the maximum principal amount of $300 million and amended the interest rate to the 1-month term Secured Overnight Financing Rate (SOFR) plus 1.0%. We did not engage in short-term borrowings, including any borrowings under the line of credit, to fund our operations or for liquidity purposes during the reported periods.
We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, investment losses, catastrophic and other insured losses, natural disasters, and other significant business interruptions. This analysis helps us estimate potential capital needs under a range of scenarios.
During the first nine months of 2026, we returned capital to shareholders primarily through common share dividends and common share repurchases. Our Board of Directors declared a $0.10 per common share dividend in each of the first three quarters of 2026. These dividends, which were each $58 million, in the aggregate, were paid in April 2026, July 2026, and October 2026. In January 2026, we also paid common share dividends declared in the fourth quarter 2025, in the aggregate amount of $8.0 billion, or $13.60 per share (see Note 10 - Dividends for further discussion).
Pursuant to our financial policies, we repurchase common shares opportunistically when we believe our shares are trading below our determination of long-term fair value and to neutralize dilution from equity-based compensation granted during the year. During the first nine months of 2026, we repurchased 7.7 million common shares, at a total cost of $1.6 billion, both in the open market and to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plans. We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and the potential capital needs of our business.
At September 30, 2026, we had $5.8 billion of investments in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to our insurance subsidiaries to support potential future growth and other opportunities. As of September 30, 2026, our estimated consolidated statutory surplus was $35.6 billion.
During the first nine months of 2026, our contractual obligations and critical accounting policies have not changed materially from those discussed in our 2025 Annual Report to Shareholders. There also were no material changes in off-balance-sheet leverage, including purchase obligations, from those discussed in our 2025 Annual Report to Shareholders.
Based on our capital planning and forecasting efforts, we believe we have sufficient capital resources and cash flows from operations to support our current business, scheduled principal and interest payments on our debt, anticipated
quarterly dividends on our common shares, contractual obligations, and other expected capital requirements for the foreseeable future, including the principal payments for the $500 million 2.45% Senior Notes and the $500 million 2.50% Senior Notes maturing in January 2027 and March 2027, respectively.
Nevertheless, we may decide to raise additional capital to take advantage of attractive market terms or provide additional financial flexibility. We currently have an effective shelf registration with the U.S. Securities and Exchange Commission so that we may periodically offer and sell an indeterminate aggregate amount of senior or subordinated debt securities, preferred stock, depository shares, common stock, purchase contracts, warrants, and units. The shelf registration enables us to raise funds, subject to market conditions, through the offering of any security, or a combination thereof, covered by the registration.
III. RESULTS OF OPERATIONS - UNDERWRITING
A. Segment Overview
We report our underwriting operations in two segments: Personal Lines and Commercial Lines. Our Personal Lines segment includes personal vehicles (auto and special lines products) and personal property products (insurance for homeowners and renters, umbrella insurance, and flood insurance through the "Write Your Own" program for the National Flood Insurance Program). Since personal auto products represented about 90% of the Personal Lines net premiums written as of the end of the quarter, the following personal vehicles discussion focuses primarily on our personal auto products, both in total and by distribution channel.
Our Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and commercial property insurance predominantly for small businesses, and workers' compensation insurance primarily for the transportation industry. Commercial Lines includes our core commercial auto products, TNC business, FSP products, and BOP product. Since core commercial auto products represented about 80% of the Commercial Lines net premiums written on a trailing 12-month basis as of the end of the quarter, the following Commercial Lines discussion focuses primarily on our core commercial auto products.
The following table shows the composition of our companywide net premiums written, by segment, for the respective periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||
| Agency | 35 | % | 36 | % | 35 | % | 36 | % | |||||||||||||||
| Direct | 50 | 50 | 48 | 47 | |||||||||||||||||||
| Property | 4 | 4 | 4 | 4 | |||||||||||||||||||
| Total Personal Lines | 89 | 90 | 87 | 87 | |||||||||||||||||||
| Commercial Lines | 11 | 10 | 13 | 13 | |||||||||||||||||||
| Total underwriting operations | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||
Within Personal Lines, we categorize our personal auto policyholders into four consumer segments:
•Sam - inconsistently insured;
•Diane - consistently insured and maybe a renter;
•Wrights - homeowners who do not bundle auto and home; and
•Robinsons - homeowners who bundle auto and home.
While our personal auto policies primarily have 6-month terms, we write 12-month term personal auto policies in our Platinum agencies to promote bundled personal auto and property growth. At September 30, 2026 and 2025, 9% and 11%, respectively, of our agency personal auto policies in force were 12-month term policies. To the extent our agency application mix of annual personal auto policies changes, the shift in policy term could impact our average written premiums in the agency channel, as 12-month term policies generate about twice the amount of net premiums written, compared to 6-month term policies.
Our special lines and personal property products are written for 12-month terms. During the third quarter 2026, 55% of special lines net premiums written and 69% of personal property net premiums written were generated through the independent agency channel, with the balance generated through the direct channel.
Within Commercial Lines, our core commercial auto business operates in five traditional business market targets (BMT):
•for-hire specialty;
•for-hire transportation;
•tow;
•contractor; and
•business auto.
At September 30, 2026, 82% of Commercial Lines policies in force had 12-month terms. The majority of our Commercial Lines business is written through the independent agency channel, although we continue to focus on growing our direct business, with about 11% of core commercial auto premiums written through the direct channel.
B. Profitability
Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, other underwriting expenses, and policyholder credit expense. 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, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 |
20251
|
2026 |
20251
|
||||||||||||||||||||||||||||||||||||||||||||
|
Underwriting Profit (Loss) |
Underwriting Profit (Loss) |
Underwriting Profit (Loss) |
Underwriting Profit (Loss) |
||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | Margin | $ | Margin | $ | Margin | $ | Margin | |||||||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | 1,079 | 14.0 | % | $ | 873 | 11.7 | % | $ | 3,404 | 14.9 | % | $ | 3,279 | 15.0 | % | |||||||||||||||||||||||||||||||
| Direct | 986 | 9.3 | 737 | 7.5 | 3,244 | 10.4 | 2,935 | 10.4 | |||||||||||||||||||||||||||||||||||||||
| Property | 216 | 27.2 | 288 | 36.5 | 554 | 23.7 | 515 | 22.0 | |||||||||||||||||||||||||||||||||||||||
| Total Personal Lines | 2,281 | 12.0 | 1,898 | 10.5 | 7,202 | 12.8 | 6,729 | 12.9 | |||||||||||||||||||||||||||||||||||||||
| Commercial Lines | 207 | 7.4 | 298 | 10.8 | 888 | 11.0 | 1,000 | 12.2 | |||||||||||||||||||||||||||||||||||||||
|
Other indemnity2
|
(15) | NM | (6) | NM | (35) | NM | (14) | NM | |||||||||||||||||||||||||||||||||||||||
| Total underwriting operations | $ | 2,473 | 11.3 | % | $ | 2,190 | 10.5 | % | $ | 8,055 | 12.5 | % | $ | 7,715 | 12.7 | % | |||||||||||||||||||||||||||||||
1 Included in the underwriting profit of the personal vehicles agency business and the personal vehicles direct business is $436 million and $514 million, respectively, of expense related to Florida policyholder credits for both the three and nine months ended September 30, 2025.
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 expenses in, such businesses.
The increase in our underwriting profit margin for the third quarter 2026, compared to the third quarter 2025, was in part driven by the Florida policyholder credits, which contributed 4.6 points to the third quarter 2025 underwriting expense ratio. The decrease in the underwriting expense ratio was partially offset by a 3.7 point increase in our loss and LAE ratio, primarily due to increased severity.
See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our personal and commercial auto severity and frequency trends, catastrophe losses, and reserve development recognized during the periods, and the Underwriting Expenses section for further discussion of our advertising and non-acquisition expenses.
Further underwriting results for our Personal Lines business, Commercial Lines business, and our underwriting operations in total, were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
|
Underwriting Performance1
|
2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 67.4 | 63.7 | 3.7 | 66.7 | 64.7 | 2.0 | |||||||||||||||||||||||||||||
|
Underwriting expense ratio2
|
18.6 | 24.6 | (6.0) | 18.4 | 20.3 | (1.9) | |||||||||||||||||||||||||||||
|
Combined ratio2
|
86.0 | 88.3 | (2.3) | 85.1 | 85.0 | 0.1 | |||||||||||||||||||||||||||||
| Direct | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 69.3 | 66.4 | 2.9 | 68.8 | 67.3 | 1.5 | |||||||||||||||||||||||||||||
|
Underwriting expense ratio2
|
21.4 | 26.1 | (4.7) | 20.8 | 22.3 | (1.5) | |||||||||||||||||||||||||||||
|
Combined ratio2
|
90.7 | 92.5 | (1.8) | 89.6 | 89.6 | 0 | |||||||||||||||||||||||||||||
| Property | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 44.0 | 33.8 | 10.2 | 46.9 | 48.8 | (1.9) | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 28.8 | 29.7 | (0.9) | 29.4 | 29.2 | 0.2 | |||||||||||||||||||||||||||||
| Combined ratio | 72.8 | 63.5 | 9.3 | 76.3 | 78.0 | (1.7) | |||||||||||||||||||||||||||||
| Total Personal Lines | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 67.4 | 63.9 | 3.5 | 67.1 | 65.3 | 1.8 | |||||||||||||||||||||||||||||
|
Underwriting expense ratio2
|
20.6 | 25.6 | (5.0) | 20.1 | 21.8 | (1.7) | |||||||||||||||||||||||||||||
|
Combined ratio2
|
88.0 | 89.5 | (1.5) | 87.2 | 87.1 | 0.1 | |||||||||||||||||||||||||||||
| Commercial Lines | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 72.1 | 67.6 | 4.5 | 67.6 | 67.3 | 0.3 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 20.5 | 21.6 | (1.1) | 21.4 | 20.5 | 0.9 | |||||||||||||||||||||||||||||
| Combined ratio | 92.6 | 89.2 | 3.4 | 89.0 | 87.8 | 1.2 | |||||||||||||||||||||||||||||
| Total Underwriting Operations | |||||||||||||||||||||||||||||||||||
| Loss & loss adjustment expense ratio | 68.1 | 64.4 | 3.7 | 67.2 | 65.7 | 1.5 | |||||||||||||||||||||||||||||
| Underwriting expense ratio | 20.6 | 25.1 | (4.5) | 20.3 | 21.6 | (1.3) | |||||||||||||||||||||||||||||
| Combined ratio | 88.7 | 89.5 | (0.8) | 87.5 | 87.3 | 0.2 | |||||||||||||||||||||||||||||
|
Accident year - Loss & loss adjustment expense ratio3
|
70.5 | 66.6 | 3.9 | 69.6 | 67.5 | 2.1 | |||||||||||||||||||||||||||||
1 Ratios are expressed as a percentage of net premiums earned. Fees and other revenues are netted against either loss adjustment expenses or underwriting expenses in the ratio calculations, based on the underlying activity that generated the revenue.
2 Included in both the underwriting expense and the combined ratios for the personal vehicles agency business are 5.8 points for the third quarter 2025, and 2.0
points for the nine months ended September 30, 2025, of expense related to the Florida policyholder credits. Included in both the underwriting
expense and the combined ratios for the personal vehicles direct business are 5.2 points for the third quarter 2025, and 1.8 points for the nine months ended
September 30, 2025, of policyholder credit expense. Excluding the policyholder credit, the total Personal Lines underwriting expense and combined ratios
would have been 5.3 points lower for the third quarter 2025, and 1.8 points lower for the nine months ended September 30, 2025.
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.
Losses and Loss Adjustment Expenses (LAE)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Change in net loss and LAE reserves | $ | 1,293 | $ | 1,038 | $ | 3,691 | $ | 3,722 | |||||||||||||||
| Paid losses and LAE | 13,611 | 12,407 | 39,612 | 36,132 | |||||||||||||||||||
| Total incurred losses and LAE | $ | 14,904 | $ | 13,445 | $ | 43,303 | $ | 39,854 | |||||||||||||||
Loss and LAE, our most significant expense, represent the costs needed to settle claims. These costs include payments made and estimated future payments to be made, to or on behalf of our policyholders, and expenses related to adjusting claims. Claims costs are driven by loss severity and frequency. In personal auto and core commercial auto, these trends are influenced by inflation and driving patterns, among other factors. In our personal property business, severity is primarily affected by construction costs and the age and complexity of the structure, among other factors. We consider anticipated changes in these factors when establishing premium rates and loss reserves. Loss reserves are estimates of future costs and we adjust
our reserves as underlying assumptions change and additional information develops.
Our total loss and LAE ratio increased 3.7 points and 1.5 points, for the three and nine months ended September 30, 2026, respectively, compared to the same periods last year, primarily due to higher severity and, for the quarter, higher catastrophe losses, partially offset by greater favorable prior accident years reserve development. On an accident year basis, our loss and LAE ratio was 3.9 points and 2.1 points higher for the third quarter and first nine months of 2026, respectively, compared to the same periods last year.
The following table shows our consolidated catastrophe losses and related combined ratio point impact, excluding loss adjustment expenses, incurred during the periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ |
Point1
|
$ |
Point1
|
$ |
Point1
|
$ |
Point1
|
|||||||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||||||||||||||
| Vehicles | $ | 310 | 1.7 | $ | 198 | 1.1 | $ | 1,131 | 2.1 | $ | 1,029 | 2.1 | |||||||||||||||||||||||||||||||||||
| Property | 63 | 7.9 | 9 | 1.1 | 264 | 11.3 | 320 | 13.7 | |||||||||||||||||||||||||||||||||||||||
| Total Personal Lines | 373 | 2.0 | 207 | 1.1 | 1,395 | 2.5 | 1,349 | 2.6 | |||||||||||||||||||||||||||||||||||||||
| Commercial Lines | 15 | 0.5 | 12 | 0.4 | 34 | 0.4 | 36 | 0.4 | |||||||||||||||||||||||||||||||||||||||
| Total net catastrophe losses incurred | $ | 388 | 1.8 | $ | 219 | 1.1 | $ | 1,429 | 2.2 | $ | 1,385 | 2.3 | |||||||||||||||||||||||||||||||||||
1 Represents catastrophe losses incurred during the period, including the impact of reinsurance, as a percent of net premiums earned.
Changes in our estimate of ultimate losses on catastrophes currently reserved, along with the impact of potential future catastrophes, could materially affect our financial condition, cash flows, or results of operations. We reinsure various risks, including, but not limited to, catastrophic losses. We do not have catastrophe-specific reinsurance for our personal auto or core commercial auto businesses. Our reinsurance programs include:
•catastrophe per occurrence excess of loss contracts for our personal property business, our boat product, and certain BOP product coverages;
•aggregate excess of loss contracts for our personal property business and certain BOP product coverages; and
•per occurrence excess of loss reinsurance for our workers' compensation insurance.
We evaluate our reinsurance programs during the renewal process, if not more frequently, to ensure they continue to align with our risk tolerance. During the second quarter 2026, we entered into new reinsurance contracts under our per occurrence excess of loss program for our personal property business. This reinsurance program has a retention threshold for losses and allocated loss adjustment
expenses (ALAE) from a single catastrophic event of $300 million for a storm outside of Florida and $75 million for a storm in Florida. In general, our program includes coverage for $1.9 billion in losses and ALAE with additional substantial coverage for a second or third hurricane. When considering coverage specific to Florida, including the Florida Hurricane Catastrophe Fund, this coverage reaches an estimated $2.2 billion.
For 2026, we also entered into a new catastrophe aggregate excess of loss reinsurance contract for claims occurring in 2026. This contract has multiple layers of coverage, provides a higher coverage limit than the 2025 program, and covers named storms and other perils (e.g., wildfires, winter storms, severe thunderstorms). See Item 1, Business - Reinsurance in our 2025 Form 10-K for a discussion of our various reinsurance programs.
While the total coverage limit and per-event retention will evolve as our business grows, we expect to remain a consistent purchaser of reinsurance coverage. While the availability of reinsurance is subject to many factors outside of our control, the types of reinsurance we elected to purchase during the first half of 2026 were readily
available and competitively priced. On a year-over-year basis, we did not incur a material change in the aggregate costs of our reinsurance programs. See Item 1A, Risk Factors in our 2025 Form 10-K for a discussion of certain risks related to catastrophe events.
The following discussion of severity and frequency trends in our personal auto business excludes comprehensive coverage because of its inherent volatility, as it is typically linked to catastrophic losses generally resulting from adverse weather. For our core commercial auto business, the reported frequency and severity trends include comprehensive coverage. Comprehensive coverage insures against damage to a customer's vehicle from various causes other than collision, such as windstorm, hail, theft, falling objects, and glass breakage.
On a calendar-year basis, the change in total personal auto incurred severity (i.e., average cost per claim, including both paid losses and the change in case reserves) over the prior-year period, was as follows:
| Quarter | Year-to-date | ||||||||||
| Coverage Type | 2026 | 2026 | |||||||||
| Bodily injury | 2% | 6% | |||||||||
| Collision | 4 | 1 | |||||||||
| Personal injury protection | 16 | 6 | |||||||||
| Property damage | 2 | 2 | |||||||||
| Total | 4 | 4 | |||||||||
The year-over-year increase in total severity in both periods was predominantly driven by higher medical costs and plaintiff-attorney represented claims in our bodily injury and personal injury protection coverages, and more large losses in our bodily injury coverage, compared to the same periods in the prior year. The increase in personal injury protection for the quarter was largely driven by severity increases in New York. The change in severity has been relatively consistent during the first nine months of 2026.
To address inherent seasonality trends and lessen the effect of month-to-month variability in the commercial auto products, we assess severity using a trailing 12-month period. Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto
products (i.e., TNC and FSP businesses), we believe disclosing severity and frequency trends excluding those businesses is more representative of our overall experience for the majority of our commercial products. As of the end of the third quarter 2026, trailing 12-month incurred severity in our core commercial auto products increased 3%, compared to the same period last year.
Estimating future severity remains challenging, and we continue to monitor changes in underlying cost drivers, including general inflation, used car prices, vehicle repair costs, medical costs, health care reform, court decisions, jury verdicts, regulatory changes, and other factors that may affect severity.
The change in total personal auto incurred frequency, on a calendar-year basis, over the prior-year period, was as follows:
| Quarter | Year-to-date | ||||||||||
| Coverage Type | 2026 | 2026 | |||||||||
| Bodily injury | (2)% | (2)% | |||||||||
| Collision | (3) | (2) | |||||||||
| Personal injury protection | (2) | 0 | |||||||||
| Property damage | (4) | (3) | |||||||||
| Total | (3) | (2) | |||||||||
On a trailing 12-month basis, incurred frequency in our core commercial auto products decreased 6% as of the end of the third quarter 2026, compared to the same period last year. We believe this decrease was due, in part, to a shift in the mix of business and lower vehicle miles traveled.
Although we closely monitor changes in frequency, the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We continue to analyze trends to distinguish changes in our loss experience from external factors, so that we can respond through pricing actions and more accurately reserve for our loss exposures. These changes include the number of vehicles per household, miles driven, vehicle usage, gasoline prices, advances in vehicle safety, unemployment rates, shifts in business mix, changes in customer driving patterns, and the ridesharing economy, among other factors.
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, | ||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Actuarial Adjustments | |||||||||||||||||||||||
| Reserve decrease (increase) | |||||||||||||||||||||||
| Prior accident years | $ | 198 | $ | 156 | $ | 481 | $ | 254 | |||||||||||||||
| Current accident year | 164 | 137 | 309 | 191 | |||||||||||||||||||
| Calendar-year actuarial adjustments | $ | 362 | $ | 293 | $ | 790 | $ | 445 | |||||||||||||||
| Prior Accident Years Development | |||||||||||||||||||||||
| Favorable (unfavorable) | |||||||||||||||||||||||
| Actuarial adjustments | $ | 198 | $ | 156 | $ | 481 | $ | 254 | |||||||||||||||
| All other development | 336 | 305 | 1,055 | 814 | |||||||||||||||||||
| Total development | $ | 534 | $ | 461 | $ | 1,536 | $ | 1,068 | |||||||||||||||
| (Increase) decrease to calendar-year combined ratio | 2.4 | pts. | 2.2 | pts. | 2.4 | pts. | 1.8 | pts. | |||||||||||||||
Total development consists of both actuarial adjustments and "all other development" on prior accident years. We use "accident year" generically to refer to the year in which a loss occurred. Actuarial adjustments represent the net changes made by our actuarial staff to current and prior accident year reserves based on regularly scheduled reviews. Through these reviews, our actuaries identify and measure variances in projected frequency and severity trends and adjust reserves to reflect current cost trends.
For the Personal Lines vehicle products and Commercial Lines business, development for catastrophe losses is reflected in "all other development" to the extent it relates to prior-year reserves. For our Personal Lines property business, all catastrophe losses are reviewed monthly, and any development on catastrophe reserves is included as part of the actuarial adjustments. We report these actuarial adjustments separately for current and prior accident years to show these adjustments as part of total prior accident years development.
"All other development" represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves, and changes in reserve estimates on specific claims. Our objective is to establish case and IBNR reserves that are adequate to cover all loss costs, while incurring minimal variation from the date reserves are initially established until losses are fully developed. Our ability to achieve this objective is affected by many factors, including the factors impacting estimates described above.
As shown in the table above, we experienced favorable prior accident years reserve development during the first nine months of both 2026 and 2025. During the first nine months of 2026, we experienced $1.3 billion of favorable development in our personal auto products, primarily due to lower than anticipated bodily injury severity and, to a lesser extent, lower than anticipated payments on reopened property damage claims that were previously closed and lower than anticipated loss adjustment expenses. In
commercial auto, we experienced about $210 million of favorable development, primarily due to lower than anticipated injury severity in our TNC business, partially offset by higher than anticipated injury severity and litigation defense costs in our core commercial auto products.
See Note 6 - Loss and Loss Adjustment Expense Reserves to the consolidated financial statements for a more detailed discussion of our prior accident years reserve development and V. Critical Accounting Estimates in our 2025 Annual Report to Shareholders for a discussion of the application of estimates and assumptions in establishing our loss reserves.
Underwriting Expenses
Underwriting expenses include policy acquisition costs, other underwriting expenses, and policyholder credit expense. The underwriting expense ratio represents underwriting expenses, net of certain fees and other revenues, as a percentage of net premiums earned. For the third quarter and first nine months of 2026, our underwriting expense ratio decreased 4.5 points and 1.3 points, respectively, compared to the same periods last year. The decrease for both periods was primarily driven by the $950 million Florida policyholder credits recorded in the third quarter 2025, which contributed 4.6 points and 1.6 points to the underwriting expense ratio for the three and nine months ended September 30, 2025, respectively.
During the third quarter 2026, we continued to invest heavily in advertising to capture consumer shopping and will continue to advertise to maximize growth, as long as we remain on track to achieve our profitability goal and can acquire customers at or below our target acquisition cost. For the three and nine months ended September 30, 2026, total companywide advertising costs were $1.6 billion and $4.5 billion, respectively. Advertising spend increased 18% for both periods and contributed a 0.8 point and 0.7 point increase in the third quarter and first nine months of 2026, compared to the same periods last year.
To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to acquiring a policy (e.g., advertising and agency commissions) from our underwriting expense ratio. By excluding these costs from our underwriting expense ratio, we are able to understand costs other than those incurred to acquire new policies and grow the business. For the third quarter 2026, our NAER decreased 0.6 points in our personal vehicle business (excluding policyholder credit
expense), compared to the same period last year, while increasing 1.0 points in personal property and 0.7 points in core commercial auto. On a year-to-date basis, our NAER decreased 0.4 points in our personal vehicle business (excluding policyholder credit expense), compared to the same period last year, and increased 1.0 points in personal property and 0.7 points in core commercial auto. We remain committed to efficiently managing operational non-acquisition expenses.
C. Growth
For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which reflects premiums written in both the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes variability from rate changes and mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | % Change | 2026 | 2025 | % Change | |||||||||||||||||||||||||||||
| Net Premiums Written | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | $ | 7,905 | $ | 7,724 | 2 | % | $ | 23,387 | $ | 22,678 | 3 | % | |||||||||||||||||||||||
| Direct | 11,093 | 10,600 | 5 | 32,276 | 30,054 | 7 | |||||||||||||||||||||||||||||
| Property | 867 | 824 | 5 | 2,416 | 2,402 | 1 | |||||||||||||||||||||||||||||
| Total Personal Lines | 19,865 | 19,148 | 4 | 58,079 | 55,134 | 5 | |||||||||||||||||||||||||||||
| Commercial Lines | 2,433 | 2,234 | 9 | 8,931 | 8,530 | 5 | |||||||||||||||||||||||||||||
|
Other indemnity1
|
3 | 2 | NM | 9 | 2 | NM | |||||||||||||||||||||||||||||
| Total underwriting operations | $ | 22,301 | $ | 21,384 | 4 | % | $ | 67,019 | $ | 63,666 | 5 | % | |||||||||||||||||||||||
| Net Premiums Earned | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||||||||||||||
| Agency | $ | 7,709 | $ | 7,480 | 3 | % | $ | 22,821 | $ | 21,808 | 5 | % | |||||||||||||||||||||||
| Direct | 10,556 | 9,819 | 8 | 31,161 | 28,193 | 11 | |||||||||||||||||||||||||||||
| Property | 795 | 790 | 1 | 2,342 | 2,342 | 0 | |||||||||||||||||||||||||||||
| Total Personal Lines | 19,060 | 18,089 | 5 | 56,324 | 52,343 | 8 | |||||||||||||||||||||||||||||
| Commercial Lines | 2,807 | 2,760 | 2 | 8,081 | 8,224 | (2) | |||||||||||||||||||||||||||||
|
Other indemnity1
|
2 | 0 | NM | 5 | 1 | NM | |||||||||||||||||||||||||||||
| Total underwriting operations | $ | 21,869 | $ | 20,849 | 5 | % | $ | 64,410 | $ | 60,568 | 6 | % | |||||||||||||||||||||||
| NM = Not meaningful | |||||||||||||||||||||||||||||||||||
|
1 Includes other underwriting business and run-off operations.
|
|||||||||||||||||||||||||||||||||||
| September 30, | |||||||||||||||||||||||||||||||||||
| (# in thousands) | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||||
| Policies in Force | |||||||||||||||||||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||||||||||||||
| Agency - auto | 11,347 | 10,630 | 7 | % | |||||||||||||||||||||||||||||||
| Direct - auto | 16,848 | 15,619 | 8 | ||||||||||||||||||||||||||||||||
| Special lines | 7,390 | 6,980 | 6 | ||||||||||||||||||||||||||||||||
| Property | 3,652 | 3,651 | 0 | ||||||||||||||||||||||||||||||||
| Total Personal Lines | 39,237 | 36,880 | 6 | ||||||||||||||||||||||||||||||||
| Commercial Lines | 1,252 | 1,198 | 5 | ||||||||||||||||||||||||||||||||
| Companywide total | 40,489 | 38,078 | 6 | % | |||||||||||||||||||||||||||||||
To analyze growth, we review new policies, rate levels, and the retention characteristics of our segments. Although new policies are necessary to maintain a growing book of business, we recognize the importance of retaining current customers as a critical component of our continued growth.
D. Personal Lines
Our Personal Lines business offers personal vehicle (personal auto and special lines) and residential property insurance products to consumers, with the operating goal of growing the number of insured products within our policyholders' households. In the discussion below, we report our personal auto and personal property business results separately to provide a further understanding of our products. Our personal auto business discussions are further separated between the agency and direct distribution channels. For the three months ended September 30, 2026, 41% of our personal auto business was written through the agency channel and 59% was written through the direct channel. For both the third quarter and first nine months of 2026, consumer segment results varied by channel, as discussed below. Our total personal auto business experienced overall growth in policies in force and an increase in the rate of conversion, while quotes declined and new business applications were relatively flat, compared to the third quarter and first nine months of last year.
Personal Auto - Agency
The year-over-year changes in our personal auto agency business were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 2 | % | (5) | % | 1 | % | 9 | % | |||||||||
| Renewal | 9 | 19 | 10 | 18 | |||||||||||||
| Total | 8 | 13 | 8 | 16 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | (3) | (5) | (3) | (5) | |||||||||||||
| Renewal | (5) | (4) | (5) | (2) | |||||||||||||
| Total | (5) | (4) | (4) | (3) | |||||||||||||
| Policy life expectancy | |||||||||||||||||
| Trailing 3 months | (7) | (7) | |||||||||||||||
| Trailing 12 months | (6) | (5) | |||||||||||||||
The personal auto agency business includes business written by more than 40,000 independent insurance agencies that represent Progressive, as well as brokerages in New York and California. During the third quarter 2026, we generated new agency personal auto application growth in 20 states, including six of our top 10 largest agency states.
Compared to the prior-year periods, new application and policies in force growth varied by consumer segment:
•Sams and Dianes experienced single-digit new application growth during the third quarter and first nine months of 2026, and positive policies in force growth at the end of the third quarter;
•Wrights experienced a single-digit decrease in new application growth during the third quarter and first nine months of 2026, with positive policies in force growth at the end of the third quarter; and
•Robinsons experienced a single-digit increase in new application growth during the third quarter and first nine months of 2026, with a single-digit decrease in policies in force growth at the end of the third quarter.
For the third quarter 2026, on a year-over-year basis, we experienced an increase in agency auto quote volume of 2%, with a flat rate of conversion (i.e., converting a quote to a sale). For the first nine months of 2026, quote volume was flat and the rate of conversion increased 1%, compared to the same period in the prior year. Compared to the prior-year periods, quote volume and conversion varied by consumer segment, as follows:
•Sams experienced a low single-digit decrease in quote volume and a single-digit increase in the rate of conversion, during both the third quarter and first nine months of 2026;
•Dianes experienced a low single-digit increase in quote volume during the third quarter, while growth was flat for the first nine months of 2026, and experienced a low single-digit increase in the rate of conversion for both periods;
•Wrights experienced a low single-digit decrease in quote volume and experienced a flat rate of conversion during the third quarter and first nine months of 2026; and
•Robinsons experienced a low double-digit increase in quote volume and a single-digit decline in conversion for the third quarter and first nine months of 2026.
Our agency auto rates were relatively stable during the quarter and on a year-to-date basis. The decrease in written premium per policy for new and renewal personal auto agency business for the third quarter and first nine months of 2026, compared to the same periods last year, was in part attributable to rate decreases in certain markets and a shift in the mix of business, including a shift to a higher percentage of 6-month term policies, which have about half of the amount of net premiums written as policies with 12-month terms.
Our trailing 3- and 12-month policy life expectancy in the agency auto business experienced a decrease at the end of the third quarter 2026, on a year-over-year basis, which we believe is primarily due to increased shopping and competition in the marketplace and, to a lesser extent, a shift in our mix of business.
Personal Auto - Direct
The year-over-year changes in our personal auto direct business were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | (2) | % | 0 | % | 1 | % | 13 | % | |||||||||
| Renewal | 10 | 21 | 12 | 22 | |||||||||||||
| Total | 7 | 15 | 10 | 20 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | 2 | 3 | 3 | 3 | |||||||||||||
| Renewal | (2) | 0 | (2) | 1 | |||||||||||||
| Total | (1) | 1 | 0 | 1 | |||||||||||||
| Policy life expectancy | |||||||||||||||||
| Trailing 3 months | (11) | (7) | |||||||||||||||
| Trailing 12 months | (10) | (6) | |||||||||||||||
The personal auto direct business includes business written directly by Progressive online or by phone. During the third quarter 2026, we generated new direct personal auto application growth in 12 states, including four of our top 10 largest direct states. Compared to the same periods in the prior year, Sams experienced a single-digit increase in new applications, while Wrights and Robinsons experienced a slight decline for the third quarter and first nine months of 2026. Dianes experienced a low single-digit decline in new applications for the third quarter and a low single-digit increase for the first nine months of 2026, year over year. Policies in force grew in the single digits in each consumer segment, compared to the same period last year.
During the third quarter and first nine months of 2026, direct personal auto quote volume decreased 6%, with a rate of conversion increase of 4% and 7%, respectively, compared to the same periods last year, primarily driven by our competitiveness in the marketplace. For the third quarter and first nine months of 2026, all consumer segments experienced a decline in quote volume and an increase in the rate of conversion, except Sams, who had a slight increase in quote volume for the third quarter 2026, compared to the same periods in the prior year.
Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced a decrease at the end of the third quarter 2026, on a year-over-year basis, which we believe is primarily due to increased shopping and competition in the marketplace and, to a lesser extent, a shift in our mix of business.
Personal Property
The year-over-year changes in our personal property business were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 3 | % | (4) | % | 0 | % | (5) | % | |||||||||
| Renewal | 3 | 13 | 2 | 13 | |||||||||||||
| Total | 3 | 7 | 1 | 6 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | 27 | (16) | 24 | (31) | |||||||||||||
| Renewal | (7) | (6) | (8) | (4) | |||||||||||||
| Total | (1) | (5) | (3) | (7) | |||||||||||||
|
Policy life expectancy
Trailing 12 months
|
(7) | (15) | |||||||||||||||
Our personal property business writes residential property insurance for homeowners and renters, umbrella, and flood insurance through the "Write Your Own" program for the National Flood Insurance Program. Our personal property business insurance is written in the agency and direct channels.
In addition to reducing our overall exposure in more volatile weather-related markets (e.g., coastal, wildfire, and hail-prone areas), we continued to focus on achieving profitability goals and, in the second half of 2025, we began to increase product availability in markets where we believe we can achieve our profitability targets for our homeowners product, which we define as our total personal property business excluding renters and umbrella products. In the growth-oriented markets, homeowners product policies in force decreased 2% and decreased 16% in the volatile weather markets as of the end of the third quarter 2026, compared to the same period in the prior year.
Our total written premium per policy decreased on a year-over-year basis for the third quarter and first nine months of 2026, primarily attributable to a shift in the mix of business to more renters policies, which have lower average written premiums, and a decline in homeowners policies in force in both volatile weather-related markets and non-owner-occupied properties, which both have higher average premiums. The effect of these declines was partially offset by rate increases taken during the last 12 months and higher premium coverages reflecting increased property values. Written premium per policy in our new business increased for the third quarter and first nine months of 2026, due to the actions taken to generate new business in our homeowners products, as previously discussed. During the third quarter 2026, we took minimal rate decreases, in aggregate, in our personal property
business, bringing the year-to-date aggregate rate increase to 2%. We intend to continue to make targeted rate changes in states where we are not achieving our optimal profitability goals.
The policy life expectancy in our personal property business shortened as of the end of the third quarter 2026, compared to the same period last year, which we believe is primarily driven by rate increases in previous years, increased competition in the marketplace, and, to a lesser extent, a shift in the mix of business to more renters policies.
E. Commercial Lines
The following table and discussion focus on our core commercial auto products, which accounted for about 80% of our Commercial Lines segment net premiums written on a trailing 12-month basis, as of the end of the third quarter 2026. Year-over-year changes in our core commercial auto products were as follows:
| Quarter | Year-to-date | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Applications | |||||||||||||||||
| New | 11 | % | (1) | % | 2 | % | 4 | % | |||||||||
| Renewal | 8 | 6 | 8 | 5 | |||||||||||||
| Total | 9 | 4 | 6 | 5 | |||||||||||||
| Written premium per policy | |||||||||||||||||
| New | 0 | (6) | (3) | (7) | |||||||||||||
| Renewal | (5) | (7) | (4) | (6) | |||||||||||||
| Total | (3) | (7) | (3) | (6) | |||||||||||||
|
Policy life expectancy
Trailing 12 months
|
3 | 11 | |||||||||||||||
For the third quarter and first nine months of 2026, on a year-over-year basis, core commercial auto new and renewal application growth was positive in all BMTs, except for-hire transportation, which had a decrease in new applications for the quarter and a decrease in renewal applications for both periods, and for-hire specialty, who experienced flat renewal application growth for the first nine months of 2026. These increases were primarily driven by rate decreases in targeted state and BMT combinations, and increased advertising and agent incentive spend. Policies in force grew in all of our BMTs, except for-hire transportation, compared to the same period in the prior year. During the third quarter and first nine months of 2026, commercial auto quote volume increased 6% and 2%, respectively, with a 5% increase in the rate of conversion for the quarter and a decrease of 1% for the first nine months of 2026, compared to the same periods in the prior year. We believe the increase in conversion for the quarter was primarily attributable to our competitiveness in the marketplace.
The effect of rate increases over the previous 12-month period on written premium per policy for our core commercial auto business was offset by a shift to a greater mix of policies with 6-month terms in our contractor and business auto BMTs, which have about half the amount of net premiums written as 12-month term policies. During the third quarter 2026, rates remained relatively stable in our core commercial auto products, bringing the year-to-date aggregate rate increase to 2%. We will continue to evaluate our rate need and adjust rates as we deem necessary.
Our policy life expectancy increased in our for-hire specialty and for-hire transportation BMTs, as of the end of the third quarter 2026, compared to the same period last year. The improvement in total policy life expectancy was due to a shift in the mix of business to BMTs with historically higher policy life expectancies, moderation of our rate increases, and various initiatives, such as payment and renewal reminders.
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:
| Three Months | Nine Months | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Pretax recurring investment book yield (annualized) | 4.3 | % | 4.2 | % | 4.2 | % | 4.2 | % | |||||||||||||||
| FTE total return: | |||||||||||||||||||||||
| Fixed-income securities | (1.7) | 1.5 | (0.9) | 5.8 | |||||||||||||||||||
| Common stocks | 2.2 | 8.1 | 13.0 | 13.8 | |||||||||||||||||||
| Total portfolio | (1.5) | 1.7 | (0.3) | 6.1 | |||||||||||||||||||
The change in the fixed-income portfolio FTE total return, compared to the prior-year period, primarily reflected movement in U.S. Treasury yields year-over-year.
The following table summarizes the FTE total returns for our fixed-income portfolio for the periods ended September 30:
| Three Months | Nine Months | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Fixed-income securities: | ||||||||||||||
| U.S. government | (3.2) | % | 1.3 | % | (3.1) | % | 6.1 | % | ||||||
| State and local government | (1.8) | 1.6 | (0.6) | 5.1 | ||||||||||
| Foreign government | 0.5 | (0.9) | (2.0) | 5.8 | ||||||||||
| Corporate and other debt | (1.1) | 1.6 | 0 | 5.7 | ||||||||||
| Residential mortgage-backed | (0.6) | 1.6 | 1.1 | 5.2 | ||||||||||
| Commercial mortgage-backed | 0.6 | 2.0 | 2.9 | 6.3 | ||||||||||
| Other asset-backed | 0.5 | 1.5 | 2.4 | 4.3 | ||||||||||
| Nonredeemable preferred stocks | 0.4 | 1.5 | 3.2 | 5.4 | ||||||||||
| Short-term investments | 1.0 | 1.1 | 3.0 | 3.3 | ||||||||||
B. Portfolio Allocation
The composition of the investment portfolio was:
| ($ in millions) |
Fair Value |
% of Total Portfolio |
Duration (years) |
Average Rating1
|
|||||||||||||||||||
| September 30, 2026 | |||||||||||||||||||||||
| U.S. government | $ | 41,594 | 41.9 | % | 4.2 | AA+ | |||||||||||||||||
| State and local government | 3,835 | 3.9 | 2.7 | AA+ | |||||||||||||||||||
| Corporate and other debt | 23,275 | 23.5 | 2.8 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 4,559 | 4.6 | 2.3 | AAA- | |||||||||||||||||||
| Commercial mortgage-backed | 7,909 | 8.0 | 1.1 | AA | |||||||||||||||||||
| Other asset-backed | 11,075 | 11.1 | 1.0 | AA+ | |||||||||||||||||||
|
Nonredeemable preferred stocks
|
193 | 0.2 | 1.0 | BB+ | |||||||||||||||||||
| Short-term investments | 2,125 | 2.1 | <0.1 | A+ | |||||||||||||||||||
| Total fixed-income securities | 94,565 | 95.3 | 3.6 | AA- | |||||||||||||||||||
| Common equities | 4,632 | 4.7 | na | na | |||||||||||||||||||
|
Total portfolio2
|
$ | 99,197 | 100.0 | % | 3.6 | AA- | |||||||||||||||||
| September 30, 2025 | |||||||||||||||||||||||
| U.S. government | $ | 51,339 | 54.3 | % | 4.4 | AA+ | |||||||||||||||||
| State and local government | 3,275 | 3.5 | 2.5 | AA+ | |||||||||||||||||||
| Foreign government | 16 | 0 | 0.9 | AAA | |||||||||||||||||||
| Corporate and other debt | 18,817 | 19.9 | 2.7 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 3,000 | 3.2 | 2.6 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 5,686 | 6.0 | 1.5 | AA- | |||||||||||||||||||
| Other asset-backed | 6,376 | 6.7 | 1.3 | AA | |||||||||||||||||||
| Nonredeemable preferred stocks | 438 | 0.5 | 1.1 | BB+ | |||||||||||||||||||
| Short-term investments | 1,515 | 1.6 | 0.1 | AA- | |||||||||||||||||||
| Total fixed-income securities | 90,462 | 95.7 | 3.4 | AA- | |||||||||||||||||||
| Common equities | 4,047 | 4.3 | na | na | |||||||||||||||||||
|
Total portfolio2
|
$ | 94,509 | 100.0 | % | 3.4 | AA- | |||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| U.S. government | $ | 43,298 | 44.5 | % | 5.4 | AA+ | |||||||||||||||||
| State and local government | 3,303 | 3.4 | 2.6 | AA+ | |||||||||||||||||||
| Foreign government | 17 | 0 | 0.7 | AAA | |||||||||||||||||||
| Corporate and other debt | 19,991 | 20.5 | 2.6 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 3,175 | 3.3 | 2.3 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 5,973 | 6.1 | 1.4 | AA- | |||||||||||||||||||
| Other asset-backed | 7,109 | 7.3 | 1.2 | AA | |||||||||||||||||||
| Nonredeemable preferred stocks | 404 | 0.4 | 1.0 | BB+ | |||||||||||||||||||
| Short-term investments | 10,005 | 10.3 | <0.1 | AA- | |||||||||||||||||||
| Total fixed-income securities | 93,275 | 95.8 | 3.4 | AA- | |||||||||||||||||||
| Common equities | 4,098 | 4.2 | na | na | |||||||||||||||||||
|
Total portfolio2
|
$ | 97,373 | 100.0 | % | 3.4 | AA- | |||||||||||||||||
| na = not applicable | |||||||||||||||||||||||
1 Represents ratings at period end. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.
2 At September 30, 2026 and 2025, and December 31, 2025, we had $1,160 million, $523 million, and $200 million, respectively, of net unsettled security transactions included in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets.
The total fair value of the portfolio at September 30, 2026 and 2025, and December 31, 2025, included $5.8 billion, $4.9 billion, and $13.0 billion, respectively, of securities held in a consolidated, non-insurance, subsidiary of the holding company, net of unsettled security transactions. A portion of the investments held at December 31, 2025, were sold and proceeds were used to pay our common share dividends in January 2026; see Note 10 - Dividends for additional information.
Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities.
Group I securities, 7% of the total portfolio at September 30, 2026, include:
•common equities,
•nonredeemable preferred stocks,
•redeemable preferred stocks, except for 50% of investment-grade redeemable preferred stocks with cumulative dividends, which are included in Group II, and
•all other non-investment-grade fixed-maturity securities.
Group II securities, 93% of the total portfolio at September 30, 2026, include:
•short-term securities, and
•all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.
We believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital purposes and is in line with the treatment by our regulators. Non-investment-grade fixed-maturity securities are determined by National Association of Insurance Commissioners (NAIC) and nationally recognized statistical rating organizations (NRSROs) as applicable. Our common equities portfolio is primarily indexed to the Russell 1000.
See Note 2 - Investments for a further breakdown of our portfolio.
Unrealized Gains (Losses)
As of September 30, 2026, our fixed-maturity portfolio had a total after-tax net unrealized loss, which is recorded as part of accumulated other comprehensive income (loss) on our consolidated balance sheets, of $2,730 million, compared to a total after-tax net unrealized gain of $203 million and $117 million at September 30, 2025 and December 31, 2025, respectively. The decline from September 30, 2025 and December 31, 2025 was due to valuation decreases across fixed-maturity sectors as interest rates rose during 2026. Our U.S. government and corporate and other debt securities had the most significant valuation decrease from prior year and prior year end.
See Note 2 - Investments for a further breakdown of our gross unrealized gains (losses).
Fixed-Income Securities
The fixed-income portfolio is managed internally and includes fixed-maturity securities, short-term investments, and nonredeemable preferred stocks. Following are the primary exposures for our fixed-income portfolio.
Interest Rate Risk Our duration of 3.6 years at September 30, 2026 and 3.4 years at both September 30, 2025 and December 31, 2025, fell within our acceptable range of 1.5 to 5.0 years. The duration distribution of our fixed-income portfolio, excluding short-term investments, represented by the interest rate sensitivity of the comparable benchmark U.S. Treasury Notes, was:
| Duration Distribution | September 30, 2026 | September 30, 2025 | December 31, 2025 | ||||||||||||||
| 1 year | 10.6 | % | 10.8 | % | 11.8 | % | |||||||||||
| 2 years | 18.6 | 8.1 | 9.2 | ||||||||||||||
| 3 years | 21.5 | 30.5 | 19.5 | ||||||||||||||
| 5 years | 28.9 | 30.2 | 28.2 | ||||||||||||||
| 7 years | 13.2 | 19.9 | 19.4 | ||||||||||||||
| 10 years | 7.2 | 0.5 | 11.9 | ||||||||||||||
| Total fixed-income portfolio | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Credit Risk This exposure is managed by maintaining an A minimum weighted average portfolio credit quality rating, as defined by NRSROs. At September 30, 2026 and 2025, and December 31, 2025, our weighted average credit quality rating was AA-. The credit quality distribution of the fixed-income portfolio was:
|
Average Rating1
|
September 30, 2026 | September 30, 2025 | December 31, 2025 | ||||||||||||||
| AAA | 20.1 | % | 12.5 | % | 13.2 | % | |||||||||||
| AA | 50.4 | 62.1 | 59.6 | ||||||||||||||
| A | 8.9 | 8.1 | 8.8 | ||||||||||||||
| BBB | 18.1 | 16.1 | 17.1 | ||||||||||||||
| Non-investment grade/non-rated | |||||||||||||||||
| BB | 1.9 | 1.0 | 1.1 | ||||||||||||||
| B | 0.4 | 0.1 | 0.1 | ||||||||||||||
| Non-rated | 0.2 | 0.1 | 0.1 | ||||||||||||||
| Total fixed-income portfolio | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
1 The credit quality ratings are assigned by NRSROs.
Concentration Risk We did not have any investments in a single issuer, either overall or in the context of individual asset classes and sectors, that exceeded our investment constraints during the third quarter 2026.
Prepayment and Extension Risk We did not experience significant adverse prepayment or extension of principal relative to our cash flow expectations in the portfolio during the third quarter 2026.
Liquidity Risk Our overall portfolio remains very liquid and we believe that it is sufficient to meet expected near-term liquidity requirements. The short-to-intermediate duration of our portfolio provides a source of liquidity. During the next 12 months, we expect approximately $12.0 billion, or 24%, of principal repayment from our fixed-income portfolio, excluding U.S. government securities and short-term investments. Cash from interest and
dividend payments provides an additional source of recurring liquidity.
The duration of our U.S. government securities, which are included in the fixed-income portfolio, was comprised of the following at September 30, 2026:
| ($ in millions) |
Fair Value |
Duration (years) |
|||||||||
|
Less than one year1
|
$ | 412 | 0.4 | ||||||||
| One to two years | 2,494 | 1.8 | |||||||||
| Two to three years | 7,575 | 2.4 | |||||||||
| Three to five years | 13,772 | 4.2 | |||||||||
| Five to seven years | 9,860 | 5.4 | |||||||||
| Seven to ten years | 7,481 | 7.4 | |||||||||
| Total U.S. government | $ | 41,594 | 4.2 | ||||||||
1 Excludes $1,056 million of U.S. Treasury Bills included in short-term investments.
ASSET-BACKED SECURITIES
The following table details the credit quality rating of our asset-backed securities at September 30, 2026:
|
(millions)
Average Rating1
|
Residential Mortgage-Backed |
Commercial Mortgage-Backed |
Other Asset-Backed |
Total | ||||||||||
| AAA | $ | 3,846 | $ | 4,883 | $ | 8,159 | $ | 16,888 | ||||||
| AA | 60 | 1,277 | 261 | 1,598 | ||||||||||
| A | 524 | 608 | 1,041 | 2,173 | ||||||||||
| BBB | 128 | 802 | 1,565 | 2,495 | ||||||||||
| Non-investment-grade/non-rated: | ||||||||||||||
| BB | 0 | 326 | 49 | 375 | ||||||||||
| B | 0 | 13 | 0 | 13 | ||||||||||
| CCC and lower | 1 | 0 | 0 | 1 | ||||||||||
| Non-rated | 0 | 0 | 0 | 0 | ||||||||||
| Total fair value | $ | 4,559 | $ | 7,909 | $ | 11,075 | $ | 23,543 | ||||||
1 The credit quality ratings are assigned by NRSROs.
Our residential mortgage-backed portfolio consists of securities that are backed by high-credit quality borrowers and/or those that have strong structural protections through underlying loan collateralization. The fair value of this portfolio increased $277 million during the third quarter 2026 and new purchases were concentrated in high-quality, investment-grade, securities and contained both fixed- and adjustable-rate residential mortgages. We continued to view this sector as having attractive risk-adjusted spreads, which widened this quarter due to interest rate volatility, and potential returns.
The commercial mortgage-backed portfolio fair value increased $456 million during the third quarter 2026 as we continued to view the risk/reward profile of commercial mortgage-backed securities as attractive. The growth in the portfolio was primarily the result of purchases of investment-grade securities backed by single-borrower transactions across various sectors including apartments, logistics, self-storage, office, and retail. We maintained a preference for geographically diversified portfolios or high-quality single assets in major markets.
A further breakdown of our other asset-backed securities (OABS) at September 30, 2026:
|
(millions) Average Rating |
Automobile | Collateralized Loan Obligations | Student Loan | Whole Business Securitizations | Equipment | Other | Total | ||||||||||||||||
| AAA | $ | 2,642 | $ | 4,201 | $ | 27 | $ | 0 | $ | 863 | $ | 426 | $ | 8,159 | |||||||||
| AA | 0 | 102 | 1 | 0 | 56 | 102 | 261 | ||||||||||||||||
| A | 0 | 0 | 0 | 149 | 187 | 705 | 1,041 | ||||||||||||||||
| BBB | 0 | 0 | 0 | 1,462 | 0 | 103 | 1,565 | ||||||||||||||||
| Non-investment grade/non-rated: | |||||||||||||||||||||||
| BB | 0 | 0 | 0 | 0 | 0 | 49 | 49 | ||||||||||||||||
| Total fair value | $ | 2,642 | $ | 4,303 | $ | 28 | $ | 1,611 | $ | 1,106 | $ | 1,385 | $ | 11,075 | |||||||||
The OABS portfolio fair value increased $1.6 billion during the third quarter 2026. The growth in the portfolio was primarily the result of adding highly-rated, shorter duration collateralized loan obligations primarily in the new issue market. We viewed these additions as offering an attractive risk/reward profile.
STATE AND LOCAL GOVERNMENT SECURITIES
The following table details the credit quality rating of our state and local government (municipal) securities at September 30, 2026:
|
(millions) Average Rating |
General Obligations | Housing Revenue | Other Revenue | Total | ||||||||||
| AAA | $ | 867 | $ | 580 | $ | 350 | $ | 1,797 | ||||||
| AA | 508 | 760 | 457 | 1,725 | ||||||||||
| A | 0 | 0 | 219 | 219 | ||||||||||
| Non-rated | 81 | 0 | 13 | 94 | ||||||||||
| Total fair value | $ | 1,456 | $ | 1,340 | $ | 1,039 | $ | 3,835 | ||||||
The municipal portfolio fair value decreased $17 million during the third quarter 2026, primarily reflecting valuation declines, partially offset by purchases of taxable and tax-exempt bonds, including housing finance agency and bullet bonds. These purchases further diversified the portfolio while targeting attractive risk-adjusted returns.
CORPORATE AND OTHER DEBT SECURITIES
The following table details the credit quality rating of our corporate and other debt securities at September 30, 2026:
|
(millions) Average Rating |
Consumer | Industrial | Communication | Financial Services | Technology | Basic Materials | Energy | Total | ||||||||||||||||||
| AAA | $ | 34 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 80 | $ | 114 | ||||||||||
| AA | 61 | 0 | 550 | 931 | 107 | 0 | 0 | 1,649 | ||||||||||||||||||
| A | 593 | 800 | 95 | 3,598 | 422 | 88 | 365 | 5,961 | ||||||||||||||||||
| BBB | 3,950 | 2,179 | 814 | 2,595 | 1,816 | 214 | 2,177 | 13,745 | ||||||||||||||||||
| Non-investment grade/non-rated: | ||||||||||||||||||||||||||
| BB | 419 | 157 | 88 | 65 | 255 | 44 | 404 | 1,432 | ||||||||||||||||||
| B | 121 | 90 | 84 | 0 | 51 | 0 | 19 | 365 | ||||||||||||||||||
| Non-rated | 0 | 0 | 0 | 5 | 4 | 0 | 0 | 9 | ||||||||||||||||||
| Total fair value | $ | 5,178 | $ | 3,226 | $ | 1,631 | $ | 7,194 | $ | 2,655 | $ | 346 | $ | 3,045 | $ | 23,275 | ||||||||||
The corporate and other debt portfolio fair value increased $1.7 billion during the third quarter 2026. At September 30, 2026, corporate and other debt securities made up approximately 25% of our fixed-income portfolio, compared to 23% at June 30, 2026. During the quarter, we purchased select corporate debt securities that we viewed as offering more attractive risk/reward profiles.
NONREDEEMABLE PREFERRED STOCKS
The following table details the credit quality rating of our nonredeemable preferred stocks at September 30, 2026:
| Financial Services | ||||||||||||||||||||
|
(millions) Average Rating |
U.S. Banks |
Insurance | Other Financial | Industrials | Utilities | Total | ||||||||||||||
| BBB | $ | 69 | $ | 0 | $ | 32 | $ | 0 | $ | 39 | $ | 140 | ||||||||
| Non-investment grade/non-rated: | ||||||||||||||||||||
| Non-rated | 0 | 21 | 23 | 9 | 0 | 53 | ||||||||||||||
| Total fair value | $ | 69 | $ | 21 | $ | 55 | $ | 9 | $ | 39 | $ | 193 | ||||||||
The nonredeemable preferred stock portfolio fair value decreased $83 million during the third quarter 2026. The decrease was primarily due to nonredeemable preferred stocks that were called during the quarter.
While dividends on nonredeemable preferred stocks can be deferred or skipped entirely, we expect these securities to pay dividends in full and on time as of September 30, 2026. All of our nonredeemable preferred stocks pay dividends that have tax preferential characteristics and the majority have fixed-rate dividends until a call date. If not called, they generally convert to floating-rate dividends or reset at a fixed spread to a benchmark U.S. Treasury yield.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Investors are cautioned that certain statements in this report not based upon historical fact are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements often use words such as "estimate," "expect," "intend," "plan," "believe," "goal," "target," "anticipate," "will," "could," "likely," "may," "should," and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. Forward-looking statements are not guarantees of future performance, are based on current expectations and projections about future events, and are subject to certain risks, assumptions and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to:
•our ability to underwrite and price risks accurately and to charge adequate rates to policyholders;
•our ability to establish accurate loss reserves;
•the impact of severe weather, other catastrophe events, and climate change;
•the effectiveness of our reinsurance programs and the continued availability of reinsurance and performance by reinsurers;
•the secure and uninterrupted operation of the systems, facilities, and business functions and the operation of various third-party systems that are critical to our business;
•the impacts of a security breach or other attack involving our technology systems or the systems of one or more of our vendors;
•our ability to maintain a recognized and trusted brand and reputation;
•whether we innovate effectively and respond to our competitors' initiatives;
•whether we effectively manage complexity as we develop and deliver products and customer experiences;
•the highly competitive nature of property-casualty insurance markets;
•whether we adjust claims accurately;
•compliance with complex and changing laws and regulations;
•the impact of misconduct or fraudulent acts by employees, agents, and third parties to our business and/or exposure to regulatory assessments;
•our ability to attract, develop, and retain talent and maintain appropriate staffing levels;
•litigation challenging our business practices, and those of our competitors and other companies;
•the success of our business strategy and efforts to acquire or develop new products or enter into new areas of business and our ability to navigate the related risks;
•how intellectual property rights affect our competitiveness and our business operations;
•the success of our development and use of new technology and our ability to navigate the related risks;
•the performance of our fixed-income and equity investment portfolios;
•the impact on our investment returns and strategies from regulations and societal pressures relating to sustainability and other public policy matters;
•our continued ability to access our cash accounts and/or convert investments into cash on favorable terms;
•the impact if one or more parties with which we enter into significant contracts or transact business fail to perform;
•legal restrictions on our insurance subsidiaries' ability to pay dividends to The Progressive Corporation;
•our ability to obtain capital when necessary to support our business, our financial condition, and potential growth;
•evaluations and ratings by credit rating and other rating agencies;
•the variable nature of our common share dividend policy;
•whether our investments in certain tax-advantaged projects generate the anticipated returns;
•the impact from not managing to short-term earnings expectations in light of our goal to maximize the long-term value of the enterprise;
•the impacts of epidemics, pandemics, or other widespread health risks; and
•other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission, including, without limitation, the Risk Factors section of our Annual Report on Form 10-K for the year ending December 31, 2025.
Any forward-looking statements are made only as of the date presented. Except as required by applicable law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or developments or otherwise.
In addition, investors should be aware that accounting principles generally accepted in the United States prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.
Progressive Corporation published this content on November 02, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 02, 2026 at 15:20 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]