Basis of Presentation

6 Months Ended

Jun. 30, 2022

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 (Progressive).

The consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, were necessary for a fair statement of the results for the interim periods presented. The results of operations for the period ended June 30, 2022, 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, 2021 (2021 Annual Report to Shareholders).

Insurance Premiums and Receivables

We perform analyses to evaluate our premiums receivable for expected credit losses. See the 2021 Annual Report to Shareholders for a discussion on our premiums receivable allowance for credit loss policy. The following table summarizes changes in our allowance for credit loss exposure on our premiums receivable:


	Three Months				Six Months
Periods Ended June 30,	2022		2021		2022		2021
(millions)
Allowance for credit losses, beginning of period	$	276.2	$	265.3	$	280.4	$	356.2
Allowance acquired during period1	0		3.5		0		3.5
Increase in allowance2	95.8		87.4		189.7		148.3
Write-offs3	(106.2)		(111.0)		(204.3)		(262.8)
Allowance for credit losses, end of period	$	265.8	$	245.2	$	265.8	$	245.2

1 Represents the amount of the allowance acquired in the Protective Insurance Corporation and subsidiaries (Protective Insurance) acquisition.

2 Represents the incremental increase in other underwriting expenses.

3 Represents portion of allowance that is reversed when premiums receivable are written off.

The year-over-year increase in the balance of the allowance for credit losses at June 30, 2022, compared to June 30, 2021, primarily reflects a higher amount of premiums receivable determined to be at risk of being uncollectible, driven by the growth in our premiums receivable balance. During the first six months of 2021, we experienced greater collections than anticipated, in part due to changes in consumer spending habits and government stimulus spending during the period, which resulted in a lower “increase in allowance” when compared to the six months ended June 30, 2022.

Premiums receivable balances are written off once we have exhausted our collection efforts. We recognized higher write-offs during the six months ended June 30, 2021, reflecting the premiums receivable that were reserved during 2020, when moratoriums and billing leniency efforts were put into place during the novel coronavirus, COVID-19, pandemic, which delayed the write-off of these uncollectible balances into 2021.

Property and Equipment

Other assets on the consolidated balance sheets include certain long-lived assets that are considered “held for sale.” The carrying value of these held-for-sale assets was $24.9 million at June 30, 2022, $57.5 million at June 30, 2021, and $10.8 million at December 31, 2021.

Goodwill and Intangible Assets

In preparation of the second quarter 2022 financial statements, we evaluated goodwill for impairment using a quantitative approach given changes in circumstances that indicated that the carrying value of certain portions of goodwill may not be recoverable. See Note 12 – Goodwill and Intangible Assets for further discussion.

Earnings per Common Share

For the three and six months ended June 30, 2022, earnings per common share were calculated using basic average equivalent shares since diluted earnings per share would be antidilutive given the net loss reported for both periods. Amounts are reported on a diluted basis for the second quarter and first six months of 2021.