Basis of Presentation

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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

The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended March 31, 2021, are not necessarily indicative of the results expected for the full year. These consolidated financial statements and the notes thereto should be read in conjunction with Progressive’s audited financial statements and accompanying notes included in Exhibit 13 to our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report to Shareholders”).

We perform analyses to evaluate our premiums receivables for expected credit losses, based on historical and current collections experience using actuarial analysis, to determine estimated rates of default. These rates are applied to the stratified subsets of our consumer receivable balances, based on the age of the receivable, to establish an allowance for credit loss. Progressive’s premiums receivables are short-term in nature and, generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. Premiums receivables balances are written off once we have exhausted our collection efforts.

The following table summarizes changes in our allowance for credit loss exposure on our premiums receivables for the year-to-date periods ending:


(millions)	March 31, 2021		March 31, 2020		December 31, 2020
Allowance for credit loss, beginning of period	$	356.2	$	283.2	$	283.2
Increase in allowance1	60.9		170.3		472.0
Write-offs2	(151.8)		(108.8)		(399.0)
Allowance for credit loss, end of period	$	265.3	$	344.7	$	356.2

1Represents the incremental increase in other underwriting expenses.

2Represents portion of allowance that is reversed when premiums receivables are written off.

During the first quarter 2021, the increase in our allowance for credit losses was lower than prior periods reflecting greater collections received on outstanding premiums receivable balances, due in part to the government stimulus and tax refund checks distributed during the quarter. In contrast, during the first quarter 2020, the increase in the allowance in part reflects the greater potential for credit losses due to the financial hardships of policyholders as a result of the economic impacts related to the spread of the novel coronavirus, COVID-19.

Other assets on the consolidated balance sheets include certain long-lived assets that are considered “held for sale.” The fair value of these held for sale assets, less the estimated costs to sell, was $55.1 million at March 31, 2021, $31.8 million at March 31, 2020, and $56.6 million at December 31, 2020.