Progressive Corporation
05/04/2026 | Press release | Distributed by Public on 05/04/2026 08:00
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
I. OVERVIEW
The Progressive Corporation's insurance subsidiaries maintained an underwriting profit better than our 4% companywide calendar-year underwriting profit goal during the first quarter 2026 and reported strong growth year over year in both premiums and policies in force. During the first quarter 2026, we maintained strong profitability, with a companywide underwriting profit margin of 13.6%. We wrote $23.6 billion of companywide net premiums written in the first quarter 2026, which was $1.4 billion, or 6%, more than we generated during the same period last year, with an 8% increase in net premiums earned. We ended the first quarter 2026 with 3.3 million, or 9%, more policies in force than at March 31, 2025; adding nearly one million policies in force in the first quarter 2026 alone.
Both our Personal Lines and Commercial Lines operating segments generated strong profitability during the first quarter 2026, reporting underwriting profit margins of 14.0% and 11.0%, respectively, fairly consistent with the underwriting margins of 14.3% and 12.5% reported for the first quarter last year.
Our Personal Lines segment experienced year-over-year growth for the first quarter 2026, with net premiums written increasing 7% and policies in force up 9%, over the significant growth of 20% in net premiums written and 18% in policies in force we experienced in the first quarter last year. The current period growth was primarily driven by policies in force growth in our personal auto products, which were up 11% compared to March 2025.
In Commercial Lines, we experienced an increase in both net premiums written and policies in force of 3% for the first quarter 2026, compared to the same period last year. The increase in net premiums written was primarily driven by an increase in transportation network company (TNC) premiums, due to the renewal of certain TNC policies that have higher projected mileage, which is the basis for computing premiums, and an increase in the percentage of premiums retained, compared to the TNC policies renewed in the first quarter 2025. Excluding TNC, Commercial Lines net premiums written would have decreased 1% for the first quarter 2026, compared to the same period last year. In our core commercial auto business (which excludes our TNC business, our Progressive Fleet & Specialty Programs (Fleet & Specialty) products, and our business owners' policy (BOP) product) we continued to experience a shift to a greater mix of policies with 6-month terms in our contractor and business auto business market targets (BMT), which have about half the amount of net premiums written as 12-month policies, and a shift to a greater mix of BMTs with lower average written premium.
For the first quarter 2026, the $251 million year-over-year increase in net income, compared to the first quarter 2025, reflected an increase in both underwriting profit and total net investment income. Total comprehensive income decreased $1.2 billion for the first quarter 2026, compared to the same period last year, driven by net unrealized losses on our fixed-maturity securities, compared to net unrealized gains during the same period last year.
At March 31, 2026, total capital (debt plus shareholders' equity) was $40.4 billion, which was an increase of $3.2 billion from year-end 2025. This increase was primarily driven by the $2.2 billion of comprehensive income earned in the first three months of 2026 and the March 2026 issuances of $500 million of 4.60% Senior Notes due 2031, and $1.0 billion of 5.15% Senior Notes due 2036, partially offset by the repurchase of 2.3 million of our common shares, at a total cost of $478 million.
A. Insurance Operations
Our companywide underwriting profit margin was 13.6% during the first quarter 2026, compared to 14.0% during the first quarter 2025. For the first quarter 2026, our loss and loss adjustment expense (LAE) ratio and our underwriting expense ratio were relatively stable, compared to the same period last year.
We closely manage our expenses, monitoring both acquisition expenses and non-acquisition expenses, which we view as an important measure of operational efficiency as we seek to deliver our most competitive rates to consumers. During the first quarter 2026, our advertising spend was $1.5 billion, or 20% greater than the first quarter last year. The current period impact of the increase in advertising spend on our expense ratio was partially offset by the increase in net premiums earned, contributing 0.7 more points to the underwriting expense ratio in the first quarter 2026, compared to the same period last year. We will continue to advertise to maximize growth as long as the advertising spend is efficient and we remain on track to achieve our calendar-year profitability goal.
Our Personal Lines segment represented 83% of our companywide net premiums written at period end and is comprised of our personal vehicle and property products. Personal Lines vehicles include both personal auto and special lines products, with the latter typically having higher losses during the warmer weather months, due to the seasonal nature of these products (e.g., recreational vehicles, such as motorcycles, RVs, and watercraft). Our Personal Lines underwriting margin for the first quarter 2026 was 14.0%, with personal vehicle and personal property products reporting 13.7% and 21.7%, respectively. Profitability in our special lines products had about a one point favorable impact to our personal vehicle
combined ratio during the first quarter 2026. The strong underwriting profit margin in our personal property products was primarily driven by the low level of incurred catastrophe losses and frequency of loss during the period and increased rates.
For the first quarter 2026, Personal Lines generated net premiums written growth of 7%, with our agency and direct personal vehicle businesses growing 5% and 10%, respectively, while our personal property business decreased 5%, each compared to the same period last year. Changes in net premiums written are a function of new business applications (i.e., policies sold), retention, business mix, and premium per policy.
Relative to the significant growth we experienced in our personal vehicle products during the first quarter 2025, we experienced a 2% increase in total personal vehicle new business applications during the first quarter 2026. Total personal vehicle renewal business applications increased 14% during the first quarter, primarily driven by the renewal of new business applications gained over the past twelve months. Our personal vehicle business continued to demonstrate sustained net premiums written and application growth despite increased competition in the marketplace during the first quarter 2026.
Homeowners products are defined as our total personal property business excluding renters and umbrella products. For the first quarter 2026, the new business applications in our homeowners product were flat, compared to the same period last year, with the decrease in the less volatile weather-related markets, offset by an increase in the more volatile (e.g., coastal, wildfire, and hail-prone states) weather-related markets. In our renters product, new business applications experienced a 2% decline.
During the first quarter 2026, in our personal property business, we continued to focus on improving profitability and reducing exposure in more volatile weather-related markets, and, where permitted, on slowing growth and non-renewing policies. We continued to prioritize insuring lower-risk properties (e.g., new construction, existing homes with newer roofs), accepting new business for our homeowners product only when bundled with a Progressive personal auto policy, where permitted, and continued to restrict new business in the non-owner-occupied home market. In addition, we maintained our cost sharing through mandatory wind and hail deductibles and roof depreciation schedules in most markets. We believe these actions adversely impacted new business application growth. During late 2025, we began to take actions in certain markets to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing execution, and 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 underwriting restrictions on older roofs, medium- to high-value homes, and non-
bundled homeowners products in certain markets. We are now selectively increasing the availability of our personal property products throughout the remainder of 2026.
During the first quarter 2026, on a countrywide basis, in the aggregate, we decreased personal auto rates less than 1% and increased our personal property rates about 1%.
We believe a key element in improving the accuracy of our personal auto rating is Snapshot®, our usage-based insurance offering. For the first quarter 2026, the personal auto adoption rates for consumers enrolling in the program decreased 5% in agency and 1% in direct, compared to the same period last year. The decrease in the agency adoption rate is due to lifting certain agent restrictions during the second half of 2025, expanding Snapshot access to a broader agent base with lower adoption rates. Snapshot is available in all states, other than California, and our latest segmentation model was available in states that represented 80% of our 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.
Our Commercial Lines segment includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP product. Our total Commercial Lines underwriting profitability for the first quarter 2026 was 11.0%. The total Commercial Lines net premiums written increased 3% for the first quarter 2026, compared to the same period in the prior year, primarily attributable to the renewal of certain TNC policies, as previously discussed.
Total applications in our core commercial auto products increased 4% for the first quarter 2026, compared to the same period last year. New business applications decreased 6%, with a decline in the business auto, contractor, and for-hire transportation BMTs, and were impacted by rate and non-rate actions taken to address profitability challenges. Despite a 3% increase in Commercial Lines policies in force, excluding the TNC business, total Commercial Lines net premiums written were down 1% for the first quarter 2026, on a year-over-year basis. In our core commercial auto business, in aggregate, rates remained flat during the first quarter 2026.
We continue to believe we are currently adequately priced in our personal auto and core commercial auto products in most states and expect to continue increasing rates modestly in our personal property products through the remainder of the year. However, we regularly model the potential impact tariffs could have on vehicle loss costs, the supply chain, the availability of parts, and general inflation, among other factors, although the dynamic international trade environment adds uncertainty in predicting how tariffs will ultimately impact our business over time. While our focus has been on trying to maintain stable rates for customers, increases in tariffs and other
retaliatory actions may result in higher loss costs, which could result in a reduction in profitability and the possible need for higher than currently anticipated rate increases throughout 2026.
For the first quarter 2026, on a year-over-year basis, average written premium per policy decreased 2%, 7%, and 4% in the personal auto, personal property, and core commercial auto products, respectively. The decrease in personal property average written premium per policy was due to a shift in the mix of business to more renters policies, which have lower average written premiums, and our continued focus on slowing growth in more volatile weather-related markets, which generally have higher risk and, therefore, higher average premiums per policy. These mix shifts in our personal property business were partially offset by aggregate rate increases of 10% taken over the last 12 months and higher premium coverages reflecting increased property values.
The decrease in average written premium per policy in our core commercial auto products was due to a shift in the mix of business to BMTs with lower average premiums, as well as a shift in policy term towards more 6-month policies in our contractor and business auto BMTs. This decrease was partially offset by rate increases of about 9%, in the aggregate, over the trailing 12 months. Given that our personal property and commercial auto policies are predominately written for 12-month terms, rate actions take longer to earn into premium for these products.
We will continue to monitor the factors that could impact our loss costs for both segments, which may include tariffs, as previously discussed, new and used car prices, miles driven, driving patterns, loss severity, weather events, building material and construction costs, inflation, and other factors, on a state-by-state basis.
We realize that to grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention continues to be one of our most important priorities. Our efforts to increase our share of Progressive auto and personal property bundled households (i.e., Robinsons) remains a key initiative, and we plan to continue to make investments to improve the customer experience in order to support that goal. Policy life expectancy, which is our actuarial estimate of the average length of time that a newly written policy will remain in force before cancellation or lapse in coverage, is our primary measure of customer retention in our Personal Lines and Commercial Lines businesses.
In personal auto, we evaluate personal auto 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. Our trailing 12-month total personal auto policy life expectancy was down 8% year over year for the first
quarter 2026. On a trailing 3-month basis, our personal auto policy life expectancy was down 7% for the first quarter 2026, compared to the same period last year, which we believe is primarily due to a shift in our mix of business and increased shopping and competition in the marketplace.
Our trailing 12-month policy life expectancy was down 8% for our personal property products year over year for the first quarter 2026. We believe our personal property retention decreased primarily as a result of a mix shift to more renters policies, which generally have a lower policy life expectancy.
For our core commercial auto products, our trailing 12-month policy life expectancy increased 5%, compared to the prior year, which we believe is due to a shift in the mix of business to BMTs with historically higher policy life expectancies, the moderation of our rate increases, and various initiatives, such as payment and renewal reminders. The increase in the core commercial auto policy life expectancy was across all BMTs, except in for-hire specialty, which was flat.
B. Investments
The fair value of our investment portfolio was $94.1 billion at March 31, 2026, compared to $97.4 billion at December 31, 2025. The decrease from year-end 2025 reflected the $7.9 billion payment of our annual variable common share dividend, partially offset by positive cash flows from insurance operations and proceeds from the $1.5 billion senior note issuances in March 2026.
Our asset allocation strategy is to maintain 0%-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities (the securities allocated to Group I and II are defined below under Results of Operations - Investments). At March 31, 2026 and December 31, 2025, 6% of our portfolio was allocated to Group I securities with the remainder to Group II securities.
Our recurring investment income generated a pretax book yield of 4.2% for the first quarter 2026, compared to 4.1% for the same period in 2025. Our investment portfolio produced a fully taxable equivalent (FTE) total return of 0.1% and 2.2% for the first quarter 2026 and 2025, respectively. Our fixed-income and common stock portfolios had FTE total returns of 0.3% and (4.1)%, respectively, for the first quarter 2026, compared to 2.5% and (5.0)%, last year. The decrease in the fixed-income portfolio FTE total return primarily reflected movements in U.S. Treasury yields year-over-year.
At March 31, 2026 and 2025, and December 31, 2025, the fixed-income portfolio had a weighted average credit quality of AA-. At March 31, 2026, the fixed-income portfolio duration was 3.5 years, compared to 3.4 years at March 31, 2025 and December 31, 2025. During 2026, we
increased our duration to take advantage of higher yields in the market.
At March 31, 2026, we continued to maintain a relatively conservative investment portfolio with a significant allocation to cash and treasuries. We believe that this
portfolio allocation positions us well to benefit from the continuing dynamic market environment. We believe the investment portfolio is in a very strong position as we move into the second quarter of 2026.
II. FINANCIAL CONDITION
A. Liquidity and Capital Resources
Progressive's insurance operations create liquidity by collecting and investing premiums from new and renewal business in advance of paying claims, as 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 $4.4 billion and $5.1 billion for the three months ended March 31, 2026 and 2025, respectively. The decrease in operating cash flows for the first three months of 2026, compared to the same period last year, was primarily driven by the $1.2 billion Florida policyholder credits that were paid out during the first quarter 2026. These policyholder credits represented the estimated profit we earned on the three-accident-year period ending December 31, 2025, in excess of the statutory profit limit that a Florida statute imposes on the profit that any insurance group can earn on personal auto insurance over any contiguous three-accident-year period (see the 2025 Annual Report to Shareholders for further discussion of the Florida policyholder credit expense). We believe cash flows will remain positive in the foreseeable future and do not anticipate the need to raise capital to support our operations in that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.
As of March 31, 2026, we held $46.5 billion in short-term investments and U.S. Treasury securities, which represented about half of our total portfolio's fair value at quarter end. Based on our portfolio allocation and investment strategies, we believe that we have sufficient readily available marketable securities to cover our claims payments and short-term obligations in the event our cash flows from operations were to be negative. See Item 1A, Risk Factors in our 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 $40.4 billion at March 31, 2026, compared to $35.8 billion at March 31, 2025, and $37.2 billion at December 31, 2025. The increase from year-end 2025, primarily reflects the comprehensive income recognized during the first three months of 2026 and the March 2026 debt issuances of $1.5 billion of senior notes, for which the funds are intended to
be used for general corporate purposes. Our debt-to-total capital ratio was 20.7% at March 31, 2026, 19.2% at March 31, 2025, and 18.5% at December 31, 2025. Our debt-to-total capital ratios were consistent with our financial policy of maintaining a 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 that 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 1-month term Secured Overnight Financing Rate (SOFR) plus 1.00%. 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, to estimate our potential capital needs.
During the first three months of 2026, we returned capital to shareholders primarily through common share dividends and common share repurchases. In March 2026, our Board of Directors declared a $0.10 per common share dividend, or $58 million in the aggregate, that was paid in April 2026. In January 2026, we 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 to neutralize dilution from equity-based compensation granted during the year and opportunistically when we believe our shares are trading below our determination of long-term fair value. During the first three months of 2026, we repurchased 2.3 million common shares, at a total cost of $478 million, 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 March 31, 2026, we had $6.2 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to the insurance subsidiaries to fund potential future growth and other opportunities. As of March 31, 2026, our estimated consolidated statutory surplus was $31.1 billion.
During the first three 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 have not been any material changes in off-balance-sheet leverage, which includes purchase obligations, from those discussed in our 2025 Annual Report to Shareholders.
Based upon our capital planning and forecasting efforts, we believe we have sufficient capital resources and cash flows
from operations to support our current business, scheduled principal and interest payments on our debt, anticipated quarterly dividends on our common shares, our contractual obligations, and other expected capital requirements for the foreseeable future.
Nevertheless, we may decide to raise additional capital to take advantage of attractive terms in the market and 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, from the offering of any securities covered by the shelf registration as well as any combination thereof.
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 our 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 our personal auto products represented about 90% of our Personal Lines segment net premiums written at quarter end, much of the following discussion will focus 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 and includes our core commercial auto products, TNC business, Fleet & Specialty products, and BOP product. Of our total Commercial Lines segment, our core commercial auto products represented about 80% of net premiums written on a trailing 12-month basis, as of the end of the first quarter 2026. Therefore, much of the following discussion focuses only 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 March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Personal Lines | |||||||||||
| Vehicles | |||||||||||
| Agency | 33 | % | 34 | % | |||||||
| Direct | 47 | 45 | |||||||||
| Property | 3 | 3 | |||||||||
| Total Personal Lines | 83 | 82 | |||||||||
| Commercial Lines | 17 | 18 | |||||||||
| Total underwriting operations | 100 | % | 100 | % | |||||||
Within our Personal Lines segment, we often categorize our personal auto product 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, to promote bundled personal auto and property growth, we write 12-month personal auto policies in our
Platinum agencies. At March 31, 2026 and 2025, 10% and 12%, respectively, of our agency personal auto policies in force were 12-month 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 policies have about twice the amount of net premiums written, compared to 6-month policies.
Our special lines and personal property products are written for 12-month terms. In our special lines products and personal property business 57% and 69%, respectively, of net premiums written during the first quarter 2026 were generated through the independent agency channel, with the balance through the direct channel.
Within our Commercial Lines segment, our core commercial auto business operates in the following five traditional business market targets (BMT):
•for-hire specialty;
•for-hire transportation;
•tow;
•contractor; and
•business auto.
At March 31, 2026, about 84% 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 12% of our 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, and other underwriting expenses. We also use underwriting margin, which is underwriting profit or loss expressed as a percentage of net premiums earned, to analyze our results. For the respective periods, our underwriting profitability results were as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
|
Underwriting Profit (Loss) |
Underwriting Profit (Loss) |
||||||||||||||||||||||
| ($ in millions) | $ | Margin | $ | Margin | |||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||
| Vehicles | |||||||||||||||||||||||
| Agency | $ | 1,284 | 17.2 | % | $ | 1,271 | 18.1 | % | |||||||||||||||
| Direct | 1,124 | 11.1 | 1,013 | 11.4 | |||||||||||||||||||
| Property | 167 | 21.7 | 99 | 12.8 | |||||||||||||||||||
| Total Personal Lines | 2,575 | 14.0 | 2,383 | 14.3 | |||||||||||||||||||
| Commercial Lines | 284 | 11.0 | 338 | 12.5 | |||||||||||||||||||
|
Other indemnity1
|
(7) | NM | (4) | NM | |||||||||||||||||||
| Total underwriting operations | $ | 2,852 | 13.6 | % | $ | 2,717 | 14.0 | % | |||||||||||||||
1 Underwriting margins for our other indemnity businesses are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.
Our underwriting profit margin for the first quarter 2026 was relatively consistent with the prior year despite a 20%, or $248 million, increase in advertising expense, due to the growth in net premiums earned.
See the Losses and Loss Adjustment Expenses (LAE) section below for further discussion of our catastrophe losses, auto frequency and severity trends, 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 March 31, | |||||||||||||||||
|
Underwriting Performance1
|
2026 | 2025 | Change | ||||||||||||||
| Personal Lines | |||||||||||||||||
| Vehicles | |||||||||||||||||
| Agency | |||||||||||||||||
| Loss & loss adjustment expense ratio | 64.6 | 63.9 | 0.7 | ||||||||||||||
| Underwriting expense ratio | 18.2 | 18.0 | 0.2 | ||||||||||||||
| Combined ratio | 82.8 | 81.9 | 0.9 | ||||||||||||||
| Direct | |||||||||||||||||
| Loss & loss adjustment expense ratio | 67.6 | 67.3 | 0.3 | ||||||||||||||
| Underwriting expense ratio | 21.3 | 21.3 | 0 | ||||||||||||||
| Combined ratio | 88.9 | 88.6 | 0.3 | ||||||||||||||
| Property | |||||||||||||||||
| Loss & loss adjustment expense ratio | 49.0 | 58.4 | (9.4) | ||||||||||||||
| Underwriting expense ratio | 29.3 | 28.8 | 0.5 | ||||||||||||||
| Combined ratio | 78.3 | 87.2 | (8.9) | ||||||||||||||
| Total Personal Lines | |||||||||||||||||
| Loss & loss adjustment expense ratio | 65.6 | 65.4 | 0.2 | ||||||||||||||
| Underwriting expense ratio | 20.4 | 20.3 | 0.1 | ||||||||||||||
| Combined ratio | 86.0 | 85.7 | 0.3 | ||||||||||||||
| Commercial Lines | |||||||||||||||||
| Loss & loss adjustment expense ratio | 67.4 | 67.8 | (0.4) | ||||||||||||||
| Underwriting expense ratio | 21.6 | 19.7 | 1.9 | ||||||||||||||
| Combined ratio | 89.0 | 87.5 | 1.5 | ||||||||||||||
| Total Underwriting Operations | |||||||||||||||||
| Loss & loss adjustment expense ratio | 65.9 | 65.8 | 0.1 | ||||||||||||||
| Underwriting expense ratio | 20.5 | 20.2 | 0.3 | ||||||||||||||
| Combined ratio | 86.4 | 86.0 | 0.4 | ||||||||||||||
|
Accident year - Loss & loss adjustment expense ratio2
|
68.1 | 67.2 | 0.9 | ||||||||||||||
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 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 March 31, | |||||||||||
| (millions) | 2026 | 2025 | |||||||||
| Change in net loss and LAE reserves | $ | 1,126 | $ | 1,119 | |||||||
| Paid losses and LAE | 12,701 | 11,685 | |||||||||
| Total incurred losses and LAE | $ | 13,827 | $ | 12,804 | |||||||
Claims costs, our most significant expense, represent payments made, and estimated future payments to be made, to or on behalf of our policyholders, including expenses needed to adjust or settle claims. Claims costs are a function of loss severity and frequency and, for our personal auto and core commercial auto businesses, are influenced by inflation and driving patterns, among other factors, some of which are discussed below. In our
personal property business, severity is primarily a function of construction costs and the age and complexity of the structure, among other factors. Accordingly, anticipated changes in these factors are taken into account when we establish premium rates and loss reserves. Loss reserves are estimates of future costs and our reserves are adjusted as underlying assumptions change and information develops.
Our total loss and LAE ratio increased 0.1 points, for the first quarter 2026, compared to the same period last year, primarily due to increased severity, partially offset by a decrease in catastrophe losses and higher favorable prior accident years reserve development. On an accident year basis, our loss and LAE ratio was 0.9 points higher than the first quarter 2025.
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 March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| ($ in millions) | $ |
Point1
|
$ |
Point1
|
|||||||||||||||||||
| Personal Lines | |||||||||||||||||||||||
| Vehicles | $ | 167 | 0.9 | $ | 300 | 1.9 | |||||||||||||||||
| Property | 96 | 12.5 | 154 | 19.8 | |||||||||||||||||||
| Total Personal Lines | 263 | 1.4 | 454 | 2.7 | |||||||||||||||||||
| Commercial Lines | 5 | 0.2 | 5 | 0.2 | |||||||||||||||||||
| Total net catastrophe losses incurred | $ | 268 | 1.3 | $ | 459 | 2.4 | |||||||||||||||||
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 our ultimate losses on catastrophes currently reserved, along with potential future catastrophes, could have a material impact on our financial condition, cash flows, or results of operations. We reinsure various risks including, but not limited to, catastrophic losses. We do not have catastrophe-specific reinsurance for our personal auto or core commercial auto businesses. Our reinsurance programs include catastrophe per occurrence excess of loss contracts and aggregate excess of loss contracts for our personal property business and certain BOP product coverages, and catastrophe per occurrence excess of loss contracts for our boat product. We also purchase excess of loss reinsurance on our workers' compensation insurance and our higher-limit commercial auto liability product offered by our Fleet & Specialty business and on certain BOP product coverages.
We evaluate our reinsurance programs during the renewal process, if not more frequently, to ensure our programs continue to effectively address the company's risk tolerance. With respect to our personal property business, in the first quarter 2026, we entered into a new catastrophe aggregate excess of loss reinsurance contract for claims occurring in 2026 that has multiple layers of coverage. The 2026 program provides a higher coverage limit than the 2025 program and includes coverage for named storms and other types of 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 to fit the growth of our business, we expect to remain a consistent purchaser of reinsurance coverage. While the availability of reinsurance is subject to many forces outside of our control, the types of reinsurance that we elected to purchase during the first quarter 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 our severity and frequency trends in our personal auto business excludes comprehensive coverage because of its inherent volatility, as it is typically linked to catastrophic losses generally resulting from adverse weather. For our core commercial auto business, the reported frequency and severity trends include comprehensive coverage. Comprehensive coverage insures against damage to a customer's vehicle due to various causes other than collision, such as windstorm, hail, theft, falling objects, and glass breakage.
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 | |||||
| Coverage Type | 2026 | ||||
| Bodily injury | 8% | ||||
| Collision | (1) | ||||
| Personal injury protection | (2) | ||||
| Property damage | 1 | ||||
| Total | 3 | ||||
The year-over-year increase in total severity was predominantly driven by bodily injury coverage, due to higher medical costs, more large losses, and a higher rate of plaintiff-attorney represented claims, compared to the prior year.
To address inherent seasonality trends and lessen the effects of month-to-month variability in the commercial auto products, we use a trailing 12-month period in assessing severity. Since the loss patterns in the core commercial auto products are not indicative of our other commercial auto products (i.e., TNC and Fleet & Specialty
businesses), 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 first quarter 2026, our core commercial auto products' trailing 12-month incurred severity increased 4%, compared to the same period last year.
It is a challenge to estimate future severity, but we continue to monitor changes in the underlying costs, such as tariffs,
general inflation, used car prices, vehicle repair costs, medical costs, health care reform, court decisions, and jury verdicts, along with regulatory changes and other factors that may affect severity.
The change in total personal auto incurred frequency, on a calendar-year basis, over the prior-year period, was as follows:
| Quarter | |||||
| Coverage Type | 2026 | ||||
| Bodily injury | (2)% | ||||
| Collision | 0 | ||||
| Personal injury protection | 1 | ||||
| Property damage | (1) | ||||
| Total | 0 | ||||
On a trailing 12-month basis, our core commercial auto products' incurred frequency decreased 8% as of the end of the first quarter 2026, we believe, in part, due to a shift in the mix of business and lower vehicle miles traveled, compared to the same period last year.
We closely monitor changes in frequency, but the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We will continue to analyze trends to distinguish changes in our experience from other external factors, such as changes in the number of vehicles per household, miles driven, vehicle usage, gasoline prices, advances in vehicle safety, and unemployment rates, versus those resulting from shifts in the mix of our business, changes in customer driving patterns, and the ridesharing economy, to allow us to react quickly to price for these trends and to reserve more accurately for our loss exposures.
The table below presents the actuarial adjustments implemented and the loss reserve development experienced on a companywide basis in the following periods:
| Three Months Ended March 31, | |||||||||||
| ($ in millions) | 2026 | 2025 | |||||||||
| Actuarial Adjustments | |||||||||||
| Reserve decrease (increase) | |||||||||||
| Prior accident years | $ | 122 | $ | 25 | |||||||
| Current accident year | 29 | 14 | |||||||||
| Calendar-year actuarial adjustments | $ | 151 | $ | 39 | |||||||
| Prior Accident Years Development | |||||||||||
| Favorable (unfavorable) | |||||||||||
| Actuarial adjustments | $ | 122 | $ | 25 | |||||||
| All other development | 329 | 253 | |||||||||
| Total development | $ | 451 | $ | 278 | |||||||
| (Increase) decrease to calendar-year combined ratio | 2.2 | pts. | 1.4 | pts. | |||||||
Total development consists of both actuarial adjustments and "all other development" on prior accident years. We use "accident year" generically to represent the year in which a loss occurred. The actuarial adjustments represent the net changes made by our actuarial staff to both current and prior accident year reserves based on regularly
scheduled reviews. Through these reviews, our actuaries identify and measure variances in the projected frequency and severity trends, which allow them to adjust the reserves to reflect current cost trends.
For the Personal Lines vehicle products and the Commercial Lines business, development for catastrophe losses would be reflected in "all other development," to the extent they relate to prior year reserves. For our Personal Lines property business, 100% of catastrophe losses are reviewed monthly, and any development on catastrophe reserves are included as part of the actuarial adjustments. We report these actuarial adjustments separately for the current and prior accident years to reflect these adjustments as part of the total prior accident years development.
"All other development" represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves, and changes in reserve estimates on specific claims. Our objective is to establish case and IBNR reserves that are adequate to cover all loss costs, while incurring minimal variation from the date the reserves are initially established until losses are fully developed. Our ability to meet this objective is impacted by many factors, such as the factors impacting estimates described above.
As reflected in the table above, we experienced favorable prior accident years reserve development during the first three months of 2026 and 2025. The favorable development during the first three months of 2026 was, in part, due to lower than anticipated bodily injury severity, more subrogation and salvage recoveries than anticipated, and lower than anticipated payments on previously closed but reopened property damage claims.
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 the establishment of our loss reserves.
Underwriting Expenses
Underwriting expenses include policy acquisition costs and other underwriting expenses. The underwriting expense ratio is our underwriting expenses, net of certain fees and other revenues, expressed as a percentage of net premiums earned. For the first quarter 2026, our underwriting expense ratio was up 0.3 points, compared to the same period last year. The increase was primarily attributable to the increase in our advertising spend. During the first 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 months ended March 31, 2026, our total companywide advertising costs were $1.5 billion, which was 20%, or 0.7 points, greater than the same period last year.
To analyze underwriting expenses, we also review our non-acquisition expense ratio (NAER), which excludes costs related to policy acquisition (e.g., advertising and agency commissions) from our underwriting expense ratio. By excluding acquisition costs from our underwriting expense ratio, we are able to understand costs other than those necessary to acquire new policies and grow the business. For the first quarter 2026, our NAER decreased 0.4 points and 0.1 points in our personal vehicle and core commercial auto businesses, respectively, compared to the same period last year, while increasing 0.5 points in our personal property business. We remain committed to efficiently managing operational non-acquisition expenses.
C. Growth
For our underwriting operations, we analyze growth in terms of both premiums and policies. Net premiums written represent the premiums from policies written during the period, less any premiums ceded to reinsurers. Net premiums earned, which are a function of the premiums written in the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention. Policies in force, our preferred measure of growth since it removes the variability due to rate changes or mix shifts, represents all policies for which coverage was in effect as of the end of the period specified.
| Three Months Ended March 31, | |||||||||||||||||
| ($ in millions) | 2026 | 2025 | % Change | ||||||||||||||
| Net Premiums Written | |||||||||||||||||
| Personal Lines | |||||||||||||||||
| Vehicles | |||||||||||||||||
| Agency | $ | 7,827 | $ | 7,473 | 5 | % | |||||||||||
| Direct | 11,085 | 10,067 | 10 | ||||||||||||||
| Property | 693 | 733 | (5) | ||||||||||||||
| Total Personal Lines | 19,605 | 18,273 | 7 | ||||||||||||||
| Commercial Lines | 4,033 | 3,933 | 3 | ||||||||||||||
|
Other indemnity1
|
3 | 0 | NM | ||||||||||||||
| Total underwriting operations | $ | 23,641 | $ | 22,206 | 6 | % | |||||||||||
| Net Premiums Earned | |||||||||||||||||
| Personal Lines | |||||||||||||||||
| Vehicles | |||||||||||||||||
| Agency | $ | 7,480 | $ | 7,026 | 6 | % | |||||||||||
| Direct | 10,134 | 8,908 | 14 | ||||||||||||||
| Property | 770 | 776 | (1) | ||||||||||||||
| Total Personal Lines | 18,384 | 16,710 | 10 | ||||||||||||||
| Commercial Lines | 2,583 | 2,699 | (4) | ||||||||||||||
|
Other indemnity1
|
1 | 0 | NM | ||||||||||||||
| Total underwriting operations | $ | 20,968 | $ | 19,409 | 8 | % | |||||||||||
| NM = Not meaningful | |||||||||||||||||
|
1 Includes other underwriting business and run-off operations.
|
|||||||||||||||||
| March 31, | |||||||||||||||||
| (# in thousands) | 2026 | 2025 | % Change | ||||||||||||||
| Policies in Force | |||||||||||||||||
| Personal Lines | |||||||||||||||||
| Agency - auto | 11,056 | 10,146 | 9 | % | |||||||||||||
| Direct - auto | 16,572 | 14,771 | 12 | ||||||||||||||
| Special lines | 7,101 | 6,637 | 7 | ||||||||||||||
| Property | 3,640 | 3,576 | 2 | ||||||||||||||
| Total Personal Lines | 38,369 | 35,130 | 9 | ||||||||||||||
| Commercial Lines | 1,196 | 1,162 | 3 | ||||||||||||||
| Companywide total | 39,565 | 36,292 | 9 | % | |||||||||||||
To analyze growth, we review new policies, rate levels, and the retention characteristics of our segments. Although new policies are necessary to maintain a growing book of business, we recognize the importance of retaining our current customers as a critical component of our continued growth.
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 our discussion below, we report our personal auto and personal property business results separately as components of our Personal Lines segment 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 March 31, 2026, 41% of our personal auto business was written through the agency channel and 59% was written through the direct channel. For the first quarter 2026, consumer segment results varied by channel, as discussed below, and our total personal auto business experienced overall growth in policies in force, new business applications, and conversion, while quotes were down, compared to the same period last year.
Personal Auto - Agency
The year-over-year changes in our personal auto agency business were as follows:
| Change Over Prior Year Quarter | ||||||||
| 2026 | 2025 | |||||||
| Applications | ||||||||
| New | 0 | % | 30 | % | ||||
| Renewal | 13 | 17 | ||||||
| Total | 10 | 19 | ||||||
| Written premium per policy | ||||||||
| New | (3) | (4) | ||||||
| Renewal | (5) | (1) | ||||||
| Total | (4) | (2) | ||||||
| Policy life expectancy | ||||||||
| Trailing 3 months | (3) | (5) | ||||||
| Trailing 12 months | (6) | (1) | ||||||
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 first 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 same period in the prior year, all consumer segments experienced a low single digit decline in new application growth, except Dianes, who experienced a low single-digit increase. Sams and Dianes experienced a single-digit increase in policies in force growth, Wrights experienced a low double-digit increase, and Robinsons experienced a single-digit decline.
For the first quarter 2026, on a year-over-year basis, we experienced flat growth in personal agency auto quote volume and rate of conversion (i.e., converting a quote to a sale), compared to the same period last year. For the first quarter 2026, Sams experienced a low single-digit increase
in quote volume, compared to the same period in the prior year, while Dianes and Robinsons saw a low single-digit decline and Wrights were flat. Dianes experienced a low single-digit increase in conversion for the first quarter 2026, compared to the same period last year, Sams and Wrights saw a low single-digit decline, and Robinsons conversion was flat.
The decline in new applications and quotes for Robinsons, compared to the prior year period, was due to several initiatives implemented in our personal property business that were focused on improving profitability, as discussed in the Personal Property section below. These initiatives, which began during the last half of 2024, focused primarily on home and condo coverages and impacted growth in bundled personal auto and homeowners policies.
Our personal auto rates were relatively stable during the quarter. The decrease in written premium per policy for new and renewal personal auto agency business for the first quarter 2026, compared to the same period 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 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 first quarter 2026, on a year-over-year basis, which we believe is primarily due to a shift in our mix of business and increased shopping and competition in the marketplace.
Personal Auto - Direct
The year-over-year changes in our personal auto direct business were as follows:
| Change Over Prior Year Quarter | ||||||||
| 2026 | 2025 | |||||||
| Applications | ||||||||
| New | 4 | % | 33 | % | ||||
| Renewal | 15 | 21 | ||||||
| Total | 12 | 24 | ||||||
| Written premium per policy | ||||||||
| New | 5 | 3 | ||||||
| Renewal | (1) | 1 | ||||||
| Total | 0 | 2 | ||||||
| Policy life expectancy | ||||||||
| Trailing 3 months | (9) | (5) | ||||||
| Trailing 12 months | (8) | (7) | ||||||
The personal auto direct business includes business written directly by Progressive online or by phone. During the first quarter 2026, we generated new direct personal auto application growth in 27 states, including seven of our top 10 largest direct states. Compared to the same period in the prior year, Sams and Dianes experienced a single-digit increase in new applications, while Wrights and Robinsons experienced a single-digit decline for the first quarter 2026. Policies in force grew between 10% and 13% in each consumer segment, compared to the same period last year.
For the first quarter 2026, direct personal auto quote volume decreased 5%, with a rate of conversion increase of 9%, compared to the same period last year, primarily driven by our competitiveness in the marketplace. For the first quarter 2026, all consumer segments experienced a decline in quote volume, except Sams, who were flat, compared to the same period last year. For the first three months of 2026, all consumer segments experienced an increase in conversion, compared to the same period in the prior year.
The personal property profitability initiatives that negatively affected Robinsons new application and quote growth in the agency channel were not as impactful to the direct channel as the majority of the property business bundles with personal auto in the direct channel is written through unaffiliated third-party carriers, which remain available even when we restrict writing our personal property products.
Our personal auto rates were relatively stable during the quarter, resulting in relatively steady written premium per policy for the first quarter 2026, compared to the same period last year.
Our trailing 3- and 12-month policy life expectancy in the direct auto business experienced a decrease at the end of the first quarter 2026, on a year-over-year basis, which we believe is primarily due to a shift in our mix of business and increased shopping and competition in the marketplace.
Personal Property
The year-over-year changes in our personal property business were as follows:
| Change Over Prior Year Quarter | ||||||||
| 2026 | 2025 | |||||||
| Applications | ||||||||
| New | (3) | % | 0 | % | ||||
| Renewal | 1 | 13 | ||||||
| Total | 0 | 8 | ||||||
| Written premium per policy | ||||||||
| New | 16 | (42) | ||||||
| Renewal | (11) | (3) | ||||||
| Total | (7) | (10) | ||||||
|
Policy life expectancy
Trailing 12 months
|
(8) | (17) | ||||||
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% on a year-over-year basis as of March 31, 2026. Policies in force decreased 17% in the volatile weather markets as of the end of the first quarter 2026, compared to the same period in the prior year.
We believe actions taken to address profitability adversely impacted new business application growth. During the first three months of 2026, we continued several initiatives, including: (i) prioritizing insuring lower-risk properties (e.g., new construction, existing homes with newer roofs); (ii) having underwriting restrictions in place in certain states, to only accept new homeowners product business when the property policy is bundled with a Progressive personal auto policy, where permitted; (iii) restricting new
business that provides coverage for non-owner-occupied properties (e.g., short-term vacation rental, secondary residence, etc.) in the majority of states; and, (iv) maintaining our cost sharing with policyholders through mandatory wind and hail deductibles and roof depreciation schedules in markets where permitted. During the third quarter 2025, we began to take actions in certain states to generate new business growth at the state level based on our concentration risks, product segmentation, rate adequacy, cost sharing execution, and 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 underwriting restrictions on older roofs, medium- to high-value homes, and non-bundled homeowners products in certain markets.
Our written premium per policy decreased on a year-over-year basis for the first quarter 2026, primarily attributable to a continued 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 were partially offset by rate increases taken during the last 12 months and higher premium coverages reflecting increased property values. During the first quarter 2026, we increased rates, in aggregate, about 1% in our personal property business. We intend to continue to make targeted rate increases in states where we are not achieving our profitability goals.
The policy life expectancy in our personal property business shortened as of the end of the first quarter 2026, compared to the same period last year, which we believe is primarily driven by a continued shift in the mix of business to more renters policies.
E. Commercial Lines
The following table and discussion focuses 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 first quarter 2026. Year-over-year changes in our core commercial auto products were as follows:
| Change Over Prior Year Quarter | ||||||||
| 2026 | 2025 | |||||||
| Applications | ||||||||
| New | (6) | % | 8 | % | ||||
| Renewal | 9 | 4 | ||||||
| Total | 4 | 5 | ||||||
| Written premium per policy | ||||||||
| New | (4) | (8) | ||||||
| Renewal | (5) | (5) | ||||||
| Total | (4) | (6) | ||||||
|
Policy life expectancy
Trailing 12 months
|
5 | (6) | ||||||
For the first quarter 2026, on a year-over-year basis, core commercial auto new application growth was negative in all BMTs, except for-hire specialty and tow. The decrease in new application growth was affected by rate and non-rate actions taken to address profitability challenges. Policies in force grew in all of our BMTs, except in for-hire transportation and for-hire specialty, compared to the same period in the prior year. For the first quarter 2026, quote volume and the rate of conversion increased about 1% and decreased about 8%, respectively, in our core commercial auto products, compared to the same period in the prior year. We believe the decrease in conversion was primarily attributable to rate increases taken over the last year and increased consumer shopping.
The effect the previously discussed rate increases had on written premium per policy for our core commercial auto business was offset by a continued shift in the mix of business and 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 policies. During the first quarter 2026, rates remained stable in our core commercial auto products. We will continue to evaluate our rate need and adjust rates as we deem necessary.
Our policy life expectancy increased in all BMTs, except in for-hire specialty, as of the end of the first quarter 2026, compared to the same period last year. Additionally, 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 March 31:
| Three Months | |||||||||||
| 2026 | 2025 | ||||||||||
| Pretax recurring investment book yield (annualized) | 4.2 | % | 4.1 | % | |||||||
| FTE total return: | |||||||||||
| Fixed-income securities | 0.3 | 2.5 | |||||||||
| Common stocks | (4.1) | (5.0) | |||||||||
| Total portfolio | 0.1 | 2.2 | |||||||||
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.
A further break-down of our FTE total returns for our fixed-income portfolio for the periods ended March 31, follows:
| Three Months | |||||||||||
| 2026 | 2025 | ||||||||||
| Fixed-income securities: | |||||||||||
| U.S. government | 0 | % | 2.9 | % | |||||||
| State and local government | 0.6 | 2.0 | |||||||||
| Foreign government | (1.1) | 1.6 | |||||||||
| Corporate and other debt | 0.2 | 2.0 | |||||||||
| Residential mortgage-backed | 0.8 | 2.0 | |||||||||
| Commercial mortgage-backed | 0.9 | 2.2 | |||||||||
| Other asset-backed | 0.8 | 1.4 | |||||||||
| Nonredeemable preferred stocks | 1.0 | 1.8 | |||||||||
| Short-term investments | 0.9 | 1.1 | |||||||||
B. Portfolio Allocation
The composition of the investment portfolio was:
| ($ in millions) |
Fair Value |
% of Total Portfolio |
Duration (years) |
Average Rating1
|
|||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||
| U.S. government | $ | 44,417 | 47.2 | % | 4.8 | AA+ | |||||||||||||||||
| State and local government | 3,087 | 3.3 | 2.8 | AA+ | |||||||||||||||||||
| Foreign government | 16 | 0 | 0.4 | AAA | |||||||||||||||||||
| Corporate and other debt | 20,986 | 22.3 | 2.8 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 4,136 | 4.4 | 2.2 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 6,991 | 7.4 | 1.1 | AA | |||||||||||||||||||
| Other asset-backed | 8,199 | 8.7 | 1.1 | AA | |||||||||||||||||||
|
Nonredeemable preferred stocks
|
240 | 0.2 | 1.3 | BB+ | |||||||||||||||||||
| Short-term investments | 2,126 | 2.3 | <0.1 | A | |||||||||||||||||||
| Total fixed-income securities | 90,198 | 95.8 | 3.5 | AA- | |||||||||||||||||||
| Common equities | 3,933 | 4.2 | na | na | |||||||||||||||||||
|
Total portfolio2
|
$ | 94,131 | 100.0 | % | 3.5 | AA- | |||||||||||||||||
| March 31, 2025 | |||||||||||||||||||||||
| U.S. government | $ | 44,318 | 53.0 | % | 4.5 | AA+ | |||||||||||||||||
| State and local government | 2,604 | 3.1 | 2.8 | AA+ | |||||||||||||||||||
| Foreign government | 16 | 0 | 1.4 | AAA | |||||||||||||||||||
| Corporate and other debt | 16,016 | 19.2 | 2.7 | BBB+ | |||||||||||||||||||
| Residential mortgage-backed | 2,183 | 2.6 | 2.5 | AA+ | |||||||||||||||||||
| Commercial mortgage-backed | 4,825 | 5.8 | 1.6 | A+ | |||||||||||||||||||
| Other asset-backed | 7,139 | 8.5 | 1.2 | AA+ | |||||||||||||||||||
| Nonredeemable preferred stocks | 584 | 0.7 | 1.2 | BBB- | |||||||||||||||||||
| Short-term investments | 2,595 | 3.1 | <0.1 | A+ | |||||||||||||||||||
| Total fixed-income securities | 80,280 | 96.0 | 3.4 | AA- | |||||||||||||||||||
| Common equities | 3,384 | 4.0 | na | na | |||||||||||||||||||
|
Total portfolio2
|
$ | 83,664 | 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 March 31, 2026 and 2025, and December 31, 2025, we had $443 million, $297 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 March 31, 2026 and 2025, and December 31, 2025, included $6.2 billion, $3.5 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, 6% of the total portfolio at March 31, 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, 94% of the total portfolio at March 31, 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, with a goal of a +/- 50bps GAAP income targeted total return tracking error.
See Note 2 - Investments for a further break-out of our portfolio.
Unrealized Gains (Losses)
As of March 31, 2026 and 2025, 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 $0.5 billion, compared to a total after-tax net unrealized gain of $0.1 billion at December 31, 2025. The decline from December 31, 2025 was due to valuation decreases across all 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 year end.
See Note 2 - Investments for a further break-out 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 3.5 years at March 31, 2026 and 3.4 years at both March 31, 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 | March 31, 2026 | March 31, 2025 | December 31, 2025 | ||||||||||||||
| 1 year | 12.3 | % | 11.1 | % | 11.8 | % | |||||||||||
| 2 years | 13.7 | 8.2 | 9.2 | ||||||||||||||
| 3 years | 22.2 | 25.2 | 19.5 | ||||||||||||||
| 5 years | 26.4 | 35.3 | 28.2 | ||||||||||||||
| 7 years | 17.0 | 19.4 | 19.4 | ||||||||||||||
| 10 years | 8.4 | 0.8 | 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 March 31, 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
|
March 31, 2026 | March 31, 2025 | December 31, 2025 | ||||||||||||||
| AAA | 16.1 | % | 13.6 | % | 13.2 | % | |||||||||||
| AA | 54.9 | 60.8 | 59.6 | ||||||||||||||
| A | 9.3 | 7.4 | 8.8 | ||||||||||||||
| BBB | 18.2 | 17.1 | 17.1 | ||||||||||||||
| Non-investment grade/non-rated | |||||||||||||||||
| BB | 1.3 | 0.9 | 1.1 | ||||||||||||||
| B | 0.1 | 0.1 | 0.1 | ||||||||||||||
| Non-rated | 0.1 | 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 first 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 first 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 $10.6 billion, or 24%, of principal repayment from our fixed-income portfolio, excluding U.S. government securities and short-term investments. Cash from interest and dividend payments provides an additional source of recurring liquidity.
The duration of our U.S. government securities, which are included in the fixed-income portfolio, was comprised of the following at March 31, 2026:
| ($ in millions) |
Fair Value |
Duration (years) |
|||||||||
|
Less than one year1
|
$ | 345 | 0.8 | ||||||||
| One to two years | 2,391 | 1.8 | |||||||||
| Two to three years | 5,862 | 2.6 | |||||||||
| Three to five years | 11,294 | 4.1 | |||||||||
| Five to seven years | 17,371 | 5.5 | |||||||||
| Seven to ten years | 7,154 | 7.9 | |||||||||
| Total U.S. government | $ | 44,417 | 4.8 | ||||||||
1 Excludes $627 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 March 31, 2026:
|
(millions)
Average Rating1
|
Residential Mortgage-Backed |
Commercial Mortgage-Backed |
Other Asset-Backed |
Total | ||||||||||
| AAA | $ | 3,116 | $ | 3,935 | $ | 5,623 | $ | 12,674 | ||||||
| AA | 132 | 1,271 | 140 | 1,543 | ||||||||||
| A | 690 | 595 | 912 | 2,197 | ||||||||||
| BBB | 196 | 822 | 1,476 | 2,494 | ||||||||||
| Non-investment-grade/non-rated: | ||||||||||||||
| BB | 0 | 355 | 48 | 403 | ||||||||||
| B | 0 | 13 | 0 | 13 | ||||||||||
| CCC and lower | 1 | 0 | 0 | 1 | ||||||||||
| Non-rated | 1 | 0 | 0 | 1 | ||||||||||
| Total fair value | $ | 4,136 | $ | 6,991 | $ | 8,199 | $ | 19,326 | ||||||
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 grew by $1.0 billion during the first quarter 2026 and new purchases were concentrated in high-quality investment-grade securities and contained both fixed-rate and adjustable residential mortgages. We continued to view this sector as having attractive risk-adjusted spreads and potential returns.
The commercial mortgage-backed portfolio fair value grew by $1.0 billion during the first quarter 2026 as we continued to view commercial mortgage-backed spreads 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, grocery-anchored retail, lodging, office, and self-storage. We maintained a preference for geographically diversified portfolios or high-quality single assets in major markets.
A further break-down of our other asset-backed securities (OABS) at March 31, 2026:
|
(millions) Average Rating |
Automobile | Collateralized Loan Obligations | Student Loan | Whole Business Securitizations | Equipment | Other | Total | ||||||||||||||||
| AAA | $ | 2,324 | $ | 2,182 | $ | 38 | $ | 0 | $ | 814 | $ | 265 | $ | 5,623 | |||||||||
| AA | 3 | 59 | 1 | 0 | 42 | 35 | 140 | ||||||||||||||||
| A | 0 | 0 | 0 | 0 | 183 | 729 | 912 | ||||||||||||||||
| BBB | 0 | 0 | 0 | 1,371 | 0 | 105 | 1,476 | ||||||||||||||||
| Non-investment grade/non-rated: | |||||||||||||||||||||||
| BB | 0 | 0 | 0 | 0 | 0 | 48 | 48 | ||||||||||||||||
| Total fair value | $ | 2,327 | $ | 2,241 | $ | 39 | $ | 1,371 | $ | 1,039 | $ | 1,182 | $ | 8,199 | |||||||||
The OABS portfolio fair value grew by $1.1 billion during the first quarter 2026. The growth in the portfolio was primarily the result of adding securities in highly-rated senior and short-tenor debt tranches that we viewed as having attractive spreads and potential returns. Additions were made in both the new issue and secondary markets.
STATE AND LOCAL GOVERNMENT SECURITIES
The following table details the credit quality rating of our state and local government (municipal) securities at March 31, 2026:
|
(millions) Average Rating |
General Obligations | Housing Revenue | Other Revenue | Total | ||||||||||
| AAA | $ | 634 | $ | 362 | $ | 470 | $ | 1,466 | ||||||
| AA | 488 | 600 | 341 | 1,429 | ||||||||||
| A | 0 | 0 | 192 | 192 | ||||||||||
| Total fair value | $ | 1,122 | $ | 962 | $ | 1,003 | $ | 3,087 | ||||||
The municipal portfolio fair value decreased by $0.2 billion during the first quarter 2026, driven primarily by sales of tax-exempt bonds maturing in 2026, which were partially offset by security purchases. We increased exposure to Housing Finance Agency bonds across both taxable and tax-exempt structures to broaden the portfolio's diversification.
CORPORATE AND OTHER DEBT SECURITIES
The following table details the credit quality rating of our corporate and other debt securities at March 31, 2026:
|
(millions) Average Rating |
Consumer | Industrial | Communication | Financial Services | Technology | Basic Materials | Energy | Total | ||||||||||||||||||
| AAA | $ | 40 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 95 | $ | 135 | ||||||||||
| AA | 70 | 0 | 383 | 894 | 0 | 0 | 44 | 1,391 | ||||||||||||||||||
| A | 677 | 618 | 123 | 3,436 | 283 | 100 | 532 | 5,769 | ||||||||||||||||||
| BBB | 4,046 | 2,116 | 512 | 2,157 | 1,926 | 211 | 1,815 | 12,783 | ||||||||||||||||||
| Non-investment grade/non-rated: | ||||||||||||||||||||||||||
| BB | 270 | 150 | 59 | 55 | 72 | 46 | 133 | 785 | ||||||||||||||||||
| B | 104 | 0 | 0 | 0 | 15 | 0 | 0 | 119 | ||||||||||||||||||
| Non-rated | 0 | 0 | 0 | 0 | 4 | 0 | 0 | 4 | ||||||||||||||||||
| Total fair value | $ | 5,207 | $ | 2,884 | $ | 1,077 | $ | 6,542 | $ | 2,300 | $ | 357 | $ | 2,619 | $ | 20,986 | ||||||||||
The corporate and other debt portfolio fair value grew by $1.0 billion during the first quarter 2026. At March 31, 2026, corporate and other debt securities made up approximately 23% of our fixed-income portfolio compared to 21% at December 31, 2025. During the quarter, we purchased select corporate debt securities that, in our view, offered more attractive risk/reward profiles.
NONREDEEMABLE PREFERRED STOCKS
The following table details the credit quality rating of our nonredeemable preferred stocks at March 31, 2026:
| Financial Services | |||||||||||||||||||||||
|
(millions) Average Rating |
U.S. Banks |
Foreign Banks |
Insurance | Other Financial | Industrials | Utilities | Total | ||||||||||||||||
| BBB | $ | 95 | $ | 9 | $ | 0 | $ | 32 | $ | 0 | $ | 39 | $ | 175 | |||||||||
| Non-investment grade/non-rated: | |||||||||||||||||||||||
| BB | 16 | 0 | 0 | 0 | 0 | 0 | 16 | ||||||||||||||||
| Non-rated | 0 | 0 | 20 | 20 | 9 | 0 | 49 | ||||||||||||||||
| Total fair value | $ | 111 | $ | 9 | $ | 20 | $ | 52 | $ | 9 | $ | 39 | $ | 240 | |||||||||
The majority of our nonredeemable preferred stocks have fixed-rate dividends until a call date and then, if not called, generally convert to floating-rate dividends or reset at a fixed spread to a benchmark U.S. Treasury yield. The interest rate duration is calculated to reflect the call, floor, and floating-rate features. Although a nonredeemable preferred stock will remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend. At March 31, 2026, our non-investment-grade nonredeemable preferred stocks were with issuers that maintain investment-grade senior debt ratings.
We also face the risk that dividend payments could be deferred for one or more periods or skipped entirely. As of March 31, 2026, we expect all of these securities to pay their dividends in full and on time. Approximately 96% of our nonredeemable preferred stocks pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.
The nonredeemable preferred stock portfolio fair value decreased by $0.2 billion during the first quarter 2026. This decline was primarily due to nonredeemable preferred stocks that were called during the quarter.
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 May 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 04, 2026 at 14:00 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]