Basis of Presentation

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF REPORTING AND ACCOUNTING

The accompanying consolidated financial statements include the accounts of The Progressive Corporation and our wholly owned insurance subsidiaries 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, 2024, 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, 2023 (2023 Annual Report to Shareholders).

Premiums Receivable

We perform analyses to evaluate our premiums receivable for expected credit losses. See our 2023 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 Ended June 30,				Six Months Ended June 30,
(millions)	2024		2023		2024		2023
Allowance for credit losses, beginning of period	$	327.7	$	340.9	$	369.1	$	343.3
Increase in allowance1	128.0		125.3		234.8		242.2
Write-offs2	(127.8)		(122.3)		(276.0)		(241.6)
Allowance for credit losses, end of period	$	327.9	$	343.9	$	327.9	$	343.9

1 Represents the incremental increase in other underwriting expenses.

2 Represents the portion of allowance that is reversed when the premiums receivable is written off. Premiums receivable balances are written off once we have exhausted our collection efforts.

Property – Held for Sale

Included in other assets in our consolidated balance sheets are properties that are classified as held for sale (HFS). At June 30, 2024 and 2023, and December 31, 2023, we had HFS properties of $152.4 million, $59.5 million, and $77.2 million, respectively. When properties are determined to be HFS, the property is written down to its fair value less estimated costs to sell, as applicable. The increase in HFS properties since December 31, 2023, primarily reflects a decision in the first quarter 2024 to sell certain regional properties to optimize our real estate portfolio by consolidating employees into existing alternative properties.

Earnings Per Share

We redeemed all of our outstanding Serial Preferred Shares, Series B, in February 2024. See Note 9 – Dividends for further discussion. To determine net income available to common shareholders, which is used in the calculation of the per common share amounts, we reduced net income by preferred share dividends, and, for 2024,

•underwriting discounts and commissions on the preferred share issuance,

•initial issuance costs related to the preferred shares, and

•excise taxes related to the preferred share redemption.

New Accounting Standards

Adopted – On January 1, 2024, we began amortizing the remaining original cost of tax equity investments to the provision for income taxes, since certain conditions were met, on the modified retrospective basis, pursuant to an Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board. Previously, these investments were accounted for under the equity method of accounting and the amortization was recognized as a net impairment loss on the consolidated statements of income. The adoption of the ASU had no cumulative effect on retained earnings and did not have a material impact on our financial condition or results of operations. The amount of income tax credits and investment amortization recognized for the three and six months ended June 30, 2024, and the carrying amount of the tax credit investments at June 30, 2024, were not material to our financial condition or results of operations and, therefore, no additional disclosure is provided.

Reclassification

Goodwill and intangible assets are included in other assets in our consolidated balance sheets and the amortization of intangible assets in other, net, in cash provided by operating activities in our consolidated statements of cash flows. The June 30, 2023 amounts, which were presented separately on the balance sheet and statement of cash flows in the prior year, were reclassified to conform to the current year presentation.