PGR 10-K & 10-Q changes, risk factors and insider trading

This information should be considered carefully together with the other information contained in this report and in the other reports and materials filed by us with the SEC,Securities and Exchange Commission (SEC), as well as news releases and other information we publicly disseminate from time to time.

•changing vehicle usage and driving patterns, which may be influenced by epidemics, pandemics, other widespread health risks, or changes in oil and gas prices, among other factors, changes in residential occupancy patterns, and the sharingridesharing economy

•advancements in vehicle or home technology or safety features, such as accident and loss prevention technologies or the development of autonomous or partially autonomoussemi-autonomous vehicles

We are seeing variousVarious insurance regulations, legislative and regulatory challenges, political initiatives, and other societal pressures that seek to limit or prohibit the use of specific rating factors in insurance policy pricing, such as credit, education, and occupation. In our view, these efforts have the potential to significantly undermine the effectiveness of risk-based pricing. If we are unable to use rating factors that have been shown empirically to be highly predictive of risk, we may not be able to as accurately match insurance rates to the applicable risks, which may significantly adversely impact our insurance operating results.

Our insurance operating results have periodically been, and in the future likely will continue to be, materially adversely affected by natural events, such as hurricanes, tornadoes, windstorms, floods, earthquakes, hailstorms, severe winter weather, and fires, or by other events, such as explosions, terrorist attacks, cyberattacks, epidemics, pandemicspandemics, or other widespread health risks, riots, and hazardous material releases. The frequency, severity, duration, geographic location, and scope of such events are inherently unpredictable. Moreover, climate change may be contributing to the increase in frequency of severe weather events and other natural disasters, how long they last, and how much insured damage they cause, and may change where the events occur. Catastrophe losses have in the past, and may in the future, adversely affect the profitability of our property business more than they affect the profitability of our other businesses. In addition, our property business has a concentration of policies in force in states with significant exposure to hurricanes and hailstorms and its results have in the past been impacted by catastrophe events in these states to a greater relative degree than some other insurers.

Our property business relies on reinsurance contracts, state reinsurance funding, and catastrophe bonds (collectively, “reinsurance arrangements”) to reduce its exposure to certain catastrophe events. We also use reinsurance contracts to reinsure portions of our Commercial Lines business, including our workers’ compensation and business owners’ policies and the transportation network company business. See Item 1, Business – Reinsurance for further discussion. Reinsurance arrangements are often subject to a threshold below which reinsurance does not apply (often called the retention), so that we are responsible for all losses below the threshold from a covered event. Also, reinsurance policies typically have an aggregate dollar coverage limit, and, therefore, we are further exposed to the extent that our claims liabilities arising from a covered event exceed our reinsurance coverage. In addition, although the reinsurer is liable to us to the extent of the contractual reinsurance coverage, we remain liable under our policies to the insured as the direct insurer on all risks reinsured. As a result, we are subject to the risk that reinsurers will be unable to pay, or will dispute, our reinsurance claims, and this risk may be heightened to the extent climate change or other factors cause higher than anticipated losses for a reinsurer across its businesses. Further, the availability and cost of reinsurance are subject to prevailing reinsurance market conditions, which have been, and in the future could be, adversely impacted by the underwriting capacity of the reinsurance industry. That underwriting capacity can be influenced by several factors, including industry losses, changes in legal and regulatory guidelines, and the occurrence of significant reinsured events, such as weather-related catastrophes, among other things. Depending on the impact of any of these factors, we may not be able to obtain reinsurance coverage in the future at all or with commercially reasonable rates, terms, and conditions. The unavailability and/or increased cost of reinsurance could adversely affect our business volume, profitability, or financial condition.

Our business requires that we develop and maintain large and complex technology systems, and that we rely on third-party systems and applications, to run our operations and to store the significant volume of data that we acquire, including the personal information of our customers and employees and our intellectual property, trade secrets, and other sensitive business and financial information. All of these systems are subject to “cyberattacks” by third parties with substantial computing resources and capabilities, which arehave becomingbecome more frequent and more sophisticated, and to unauthorized or illegitimate actions by employees, consultants, agents, and other persons with legitimate access to our systems. Such attacks or actions may include attempts to:

•improperly access, use, steal, sell, corrupt, or destroy data or information, including our intellectual property, financial data, or the personal information of our customers, employees, or other individuals

Our brand and reputation also could be adversely affected by situations that reflect negatively on us, whether due to our business practices, adverse financial developments, perceptions of our corporate governance, perceptions of our purpose-driven brand, how we address employee matters and concerns, our approach to environmental,environmental social,and sustainabilitysocial (Sustainability) and corporate responsibility matters, investments in our portfolio, the conduct of our officers, directors, or employees, or other causes. It may also be harmed by the actions of third parties that are generally outside of our control, including agents, significant customers, or other businesses with which we do business or in which we invest, such as third-party providers that interface with our customers, unaffiliated insurers and other companies whose products we offer or make available to our customers, or other causes.

The negative impacts of these or other events may be aggravated as consumers, regulators, and other stakeholders increase or change their expectations, or adopt conflicting expectations, regarding the conduct of large public companies, environmental, social, and governance (ESG) standards, and sustainability and corporate responsibility efforts, programs, and initiatives.initiatives, and corporate governance and Sustainability standards. These expectations and standards are continually evolving and not always clear. Our practices may not change in the manner or at the rate that our various stakeholders expect. These impacts may be further complicated such that perceptions are formed through rapid and broad interactions using social media and other communication tools over which we have no control. Additionally, we may fail to meet our related commitments, targets, or aspirations in these areas, and also could determine that it is in the best interest of the company and our shareholders to prioritize other business priorities ahead of our efforts in these areas. Any such negative impact or event could decrease demand for our products or services, create difficulties in our ability to recruit and retain employees, negatively impact our stock price, and lead to greater regulatory scrutiny of our businesses, among other things.

Our ability to develop and implement innovative products and services, which may include technological advances, that are accepted and valued by our customers and independent agents is critical to maintaining and enhancing our competitive position. Innovations must be implemented in compliance with applicable insurance and other regulations and may require extensive modifications to our systems and processes and extensive coordination with and reliance on the systems of third parties. Technological and societal changes may lead to changes in customers’ preferences as to how they want to interact with us. As a result, if we do not handle these transitions effectively and bring such innovations to market with the requisite speed and agility, the quality of our products and services, our relationships with our customers and agents, and our business prospects, may be materially adversely affected. In addition, innovations by competitors or other market participants may increase the level of competition in the industry. If we fail to respond appropriately in a timely manner to those innovations and also to the evolving customer preferences, our competitive position and results may be materially adversely affected.

Complexity and legacy systems may, among other potential difficulties, create barriers to innovation or the provision of high-quality products and customer and agent experiences with the speed and agility that may be required; require us to modify our business practices, adopt new software, systems or technology, or replace outdated software, systems or technology, or upgrade systems or technology to enhance the scale, performance or functionality, each at significant expense; and lead to increased difficulty in executing our business strategies.

The markets in which we sell insurance are highly competitive. We face vigorous competition from large, well-capitalized national and international companies, as well as smaller regional insurers. Other companies, potentially including existing insurance companies, vehicle manufacturing companies, “insurtech” companies, and other well-financed companies seeking new opportunities, or new competitors with technological or other innovations, also have entered these markets and may continue to do so in the future. Many of our competitors have substantial resources, experienced management, and strong marketing, underwriting, pricing, and technological capabilities. The property and casualty insurance industry is a relatively mature industry, in which brand recognition, marketing skills, innovation, operational effectiveness, pricing, scale, and cost control are major competitive factors. If our competitors offer similar insurance products at lower prices, offer such insurance products bundled with other products or services that we do not offer, are permitted to offer their products under different legal and regulatory constraints than those that apply to us, or engage in other successful competitive initiatives, our ability to generate new business, or to retain a sufficient number of our existing customers, could be compromised. In addition, because auto insurance constitutes a significant portion of our overall business, we may be more sensitive than other insurers to, and more adversely affected by, trends that could decrease auto insurance rates or reduce demand for auto insurance over time, such as advances in vehicle technology, autonomous or semi-autonomous vehicles, or vehicle-sharing arrangements. Consolidations and strategic relationships in the independent agent channel in our Personal Lines business have increased competition and could continue to do so. We may also be adversely affected in our Commercial Lines business, which represents a significant portion of our growth potential, by trends or events that decrease the demand for services offered by, or decrease the profitability of, the commercial auto market, including trucking businesses and ridesharing services. Additionally, our Commercial Lines business may be adversely affected by a loss of or reduction in geographic coverage from one or more customers, including transportation network company customers.

Historically, the auto and property insurance markets have been described as cyclical, with periods of relatively strong profitability being followed by increased pricing competition among insurers. This price competition, which is sometimes referred to as a “soft market,” can adversely affect revenue and profitability levels. As insurers recognize this situation (which can occur at different times, for different products and for different companies), the historical reaction has been for insurers to raise their rates (sometimes referred to as a “hard market”) in an attempt to restore profitability to acceptable levels. As more insurers react in this way, profit levels in the industry may increase to a point where some insurers begin to lower their rates, starting the cycle over again. The ability to discern at any point in time whether we are in a “hard” or “soft” market is often difficult, as such a conclusion represents an assessment of innumerable data points including, among others, the operating results of, and the dynamic competitive actions taken by, us and many competitors in multiple markets involving a variety of products. Often, detailed information on our competitors becomes available on a delayed basis, and the nature of the market becomes apparent only in retrospect. Our ability to predict future competitive conditions is also constrained as a result.

Insurance laws and regulations may, among other things, limit an insurer’s ability to underwrite and price risks accurately, prevent the insurer from obtaining timely rate changes to respond to increased or decreased costs, delay or restrict the ability to discontinue or exit unprofitable businesses or jurisdictions, limit the profit an insurer may earn, impose marketing restrictions or requirements related to the use of artificial intelligence and third-party data, prevent insurers from terminating policies under certain circumstances, dictate or limit the types of investments that an insurance company may hold, and impose specific requirements relating to information technology systems and related cybersecurity risks. As a result, we have been, and may in the future be, limited in our ability to respond to evolving business conditions. For additional discussion of statutory profit limits, see Management’s Discussion and Analysis of Financial Condition and Results of Operations – II. Financial Condition in the Annual Report.

Moreover, inconsistencies in requirements among the various states, or between state and federal requirements, or changes in regulatory priorities,priorities or funding, may further complicate our compliance efforts, potentially damage our reputation in the marketplace or our brand, potentially resulting in additional costs for us.us or impacting our ability to participate in certain government funded programs, such as the National Flood Insurance Program.

Data privacy and security laws and regulations impose complex compliance and reporting requirements and challenges. Various jurisdictions have enacted or are considering privacy and security legislation or regulations. Each jurisdiction’s unique requirements, and the variations across the jurisdictions, present further ongoing compliance challenges. Compliance with these laws and regulations will result in increased costs, which may be substantial and may adversely affect our profitability or our ability or desire to grow or operate our business in certain jurisdictions.

•Unauthorized acts or representations, unauthorized use or disclosure of personal or proprietary data or information, deception, and misappropriation of funds,funds or other benefits

Our success depends on our ability to attract, develop, compensate, motivate, and retain talented employees, including executives, other key managers, and employees with strong technological,technical, analytical, and other skills and know-how necessary for us to run our insurance businesses, investment operations, and corporate functions, assess potential expansion into new productsproducts, services, and business areas, and adapt to technological trends in our industry. Our loss of certain executives and key employees, or the failure to attract or retain talented executives, managers, and employees with varied and appropriate backgrounds, skills,experiences, knowledge, perspectives, and experiences,skills, could have a material adverse effect on our business. These risks may be heightened when United States labor markets, or key segments of those markets, are especially competitive.

Our workplace policies or perceptions of those policies by current and potential employees, including policies with respect to virtual, hybrid, and in-person work protocols, could impact our ability to attract, onboard, and retain talent with neededdesired skills,experiences, knowledge, perspectives, and experiences.skills.

Our success also depends, in large part, on our ability to maintain and improve the staffing effectiveness and culture that we have developed over the years. Our ability to do so may be impaired as a result of litigation against us, other judicial decisions, legislation or regulations, or other factors in the employment marketplace, as well as our failure to recognize and respond to changing trends and other circumstances that affect our employees or our culture, including any impact arising from a decrease in virtual and hybrid workers relative to recent market trends. In such events, the productivity of our workers and the efficiency of our operations could be adversely affected, which could lead to an erosion of our operating performance and margins.

The Progressive Corporation and/or its subsidiaries are named as defendants in class actions, collective actions, representative actions, and individual and other lawsuits challenging various aspects of the subsidiaries’ business operations. Certain pending lawsuits are described in Note 12 – Litigation in the Annual Report. Additional litigation may be filed against us in the future challenging similar or other of our business practices or operations. In addition, lawsuits have been filed against our competitors and other businesses or entities, and other such lawsuits may be filed in the future, and even though we are not a party to such litigation, the results of those lawsuits nevertheless may create additional risks for, and/or impose additional costs and/or limitations on, our subsidiaries’ business practices or operations.

There hascontinues beento be a proliferation of patents, both inside and outside the insurance industry, that significantly impacts our businesses. The existence of such patents, and other claimed intellectual property rights, from time to time has resulted in legal challenges to certain of our business practices by other insurance companies and non-insurance entities alleging that we are violating their rights. Such legal challenges could result in costly legal proceedings, substantial monetary damages, or expensive changes in our business processes and practices. Similarly, we may seek or obtain patent protection for innovations developed by us. However, we may not be able to obtain patents on these processes and practices, and defending our patents and other intellectual property rights against challenges, and enforcing and defending our rights, including, if necessary, through litigation, can be time consuming and expensive, and the results are inherently uncertain, which can further complicate business plans.

Our development and use of new technology, such as generative and agentic artificial intelligence, may present additional risks, may not be successful, and could have a material adverse effect on our business.

We have developed, and used for many years, new technologies, including machine learning and other forms of artificial intelligence (AI), predictive models, algorithms and automated processes, and will in the future develop and use AI and other new technologies in our business. As with many technological innovations, the growing development and use of generative and agentic AI (GenAIAdvanced AI) presents additional risks that may adversely affect our business. GenAIAdvanced AI might produce or reveal datasets that are flawed or insufficient or contain biased information, which could result in unintentionally and unfairly discriminatory outcomes in our business processes. These deficiencies could also undermine the associated predictions, analysis, or decisions GenAIAdvanced AI applications produce or the business decisions we make based on this information. We could face challenges on whether we use AI in our business processes in a responsible, compliant, and effective manner. Since GenAIAdvanced AI is subject to public debate, and depending on how observers view our development and use of AI, we could be subject to criticism or experience an adverse impact on our brand or reputation, which could decrease demand for our products or services, create difficulties in our ability to recruit and retain employees and lead to greater regulatory scrutiny of our businesses. Additionally, one or more of our key vendors may begin to use AI in their business in a manner that does not meet existing or rapidly evolving regulatory standards. Furthermore, our competitors or other third parties may be able to replace legacy systems, incorporate GenAIAdvanced AI into their products and operations, or optimize or redesign their processes more quickly, or more successfully, than us.

Intellectual property ownership rights, including those associated with related copyrights, patent rights, GenAIAdvanced AI inputs for model training, and other GenAIAdvanced AI outputs, have not been fully interpreted by courts or regulations. Additionally, we are subject to new AI-focused regulations and regulatory expectations that could impose varied compliance and reporting requirements and challenges that could impact our operations or ability to write business profitably in one or more jurisdictions. For example, the National Association of Insurance Commissioners (NAIC) has adopted guiding principles on AI, as well as a model bulletin, to inform and articulate general expectations for businesses, professionals, and stakeholders across the insurance industry as they implement AI tools to facilitate operations. Nearly half of all departments of insurance have adopted the NAIC AI model bulletin. Other states have adopted or are considering alternatives, including comprehensive AI legislation or reminders that existing state laws pertain to AI activities, including laws regarding unfair claims and trade practices. We cannot predict what other regulatory actions may be taken with regard to AI but any limitations, or any failure or perceived failure by us to comply with any such requirements, could have an adverse impact on our business.

•Interest rate risk –- the risk of adverse changes in the value of fixed-income securities as a result of increases in market interest rates.

•Investment credit risk –- the risk that the value of certain investments may decrease due to a deterioration in the financial condition, operating performance, or business prospects of, the regulatory environment applicable to, or the liquidity available to, one or more issuers of those securities or, in the case of asset-backed securities, due to the deterioration of the loans or other assets that underlie the securities.

•Concentration risk –- the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors, or industries, which could result in a significant decrease in the value of the portfolio in the event of a deterioration of the financial condition or performance of, the regulatory environment applicable to, or outlook for, those issuers, sectors, or industries.

•Prepayment or extension risk –- applicable to certain securities in the portfolio, such as asset-backed securities and other bonds with call provisions, prepayment risk is the risk that, as interest rates change, the principal of such securities may be repaid earlier than anticipated, requiring that we reinvest the proceeds at less attractive rates. Extension risk is the risk that a security may not be redeemed when anticipated, adversely affecting the value of the security and preventing the reinvestment of the principal at higher market rates.

•Liquidity risk –- discussed separately below.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations – IV. Results of Operations – Investments in the Annual Report for additional discussion of the composition of our investment portfolio as of December 31, 2024,2025, and of the market risks associated with our investment portfolio.

New regulations and societal pressures relating to ESGSustainability and other public policy matters could negatively impact our returns or cause us to change our investing strategies in ways that could negatively impact our results.

The value of securities held in our portfolio could be materially adversely impacted as issuers or the businesses or assets underlying such securities are faced with new, potentially conflicting, laws or regulations or initiatives by regulators, investors, activists, or others, including those addressing ESG,Sustainability, sustainability,corporate governance, corporate responsibility or other public policy concerns. For example, the universe of securities that we are permitted to hold could be significantly narrowed by insurance regulators if we are prohibited from investing in certain industries or types of companies or we could be required to make additional disclosures when we acquire any such securities. Similarly, we could also face pressures from other stakeholders that seek to influence our investment decisions. These factors could cause a decline in the value of investments held in our portfolio, or cause us to change our investment strategy, which could increase our costs or reduce our returns relative to returns from other available investment opportunities.

We may need to acquire additional capital, from time to time, as a result of many factors, including increased regulatory requirements, unprofitable insurance or investment operations, or significant growth in the insurance premiums that we write, among other factors. If we are unable to obtain capital at favorable rates when needed, whether due to our results, volatility, or disruptions, in debt and equity markets due to factors beyond our control, or other reasons, our financial condition could be materially adversely affected. In such an event, unless and until additional sources of capital are secured, we may be limited in our ability, or unable, to service our debt obligations, pay dividends, grow our business, pay our other obligations when due, or engage in other corporate transactions. Such a deterioration of our financial condition could adversely affect the perception of our company by insurance regulators, potentially resulting in regulatory actions, and the price of our equity or debt securities could fall significantly.

We believe that shareholder value will be increased in the long run if we meet or exceed the financial goals and policies that we establish each year. We do not manage our business to maximize short-term stock performance or the amount of any dividend that may be paid. Due to our focus on the long-term value of the enterprise, we may undertake business decisions and strategies and establish related financial goals that are designed to enhance our longer-term performance and value, while understanding that such decisions and strategies may not always similarly benefit short-term results, such as growth goals, our annual underwriting profit, dividend payouts, or earnings per share. We do not provide earnings estimates to the market and do not comment on earnings estimates by analysts. As a result, our reported results for a particular period may vary, perhaps significantly, from investors’ expectations, which could result in significant volatility in the price of our equity or debt securities. Our personal property business has caused, and is likely to continue to cause, additional volatility in our consolidated results.

Due to our focus on the long-term value of the enterprise, similar tradeoffs may be involved in our consideration of the interests of other stakeholders, including our employees, customers, agents, suppliers, and communities, as well as whether and how we respond to or address ESG,Sustainability, sustainability,corporate governance, and corporate responsibility initiatives, programs and efforts and other public policy matters that impact us. These types of initiatives and considerations are fast-evolving areas and determining appropriate responses and actions can be uncertain. Different stakeholders often have conflicting perspectives on these initiatives, programs and efforts, and considerations. Depending on how observers view our responses or our commitment to addressing such matters, we could be subject to criticism, adverse publicity, or campaigns, among other actions, by investors, activists, or others. Consequently, such factors and the related tradeoffs may adversely affect our financial performance or the market prices of our equity or debt securities.

Beginning with its emergence in 2020, COVID-19 increased many of the risks described above and impacted our business, operations, and financial results in several ways. We have discussed the associated risks and impacts of COVID-19 in our SEC filings beginning with its onset in 2020. We believe that the existing risks and impacts of COVID-19 are not currently material to our business. Any futureAn epidemic, pandemic, or other widespread health risk, including a new variation of the COVID-19 virus,risk could exacerbate the impacts of many of the other risk factors described above and adversely affect our business. Depending on the duration and severity of any such epidemic, pandemic, or other widespread health risk, and the nature and extent of governmental responses to it, our business, our operations, and our financial results could be negatively impacted.

OurPersonal Lines reported an underwriting profit margin of 12.4% for the second quarter, compared to 14.0% for the same period last year. Personal Lines segmentalso experienced year-over-year growth for the firstsecond quarter 2026, with net premiums written increasing 7%5% and policies in force upincreasing 9%,8%, overcompared to the significantsame period last year. This growth offollows 20%significant increases in the second quarter last year, which had net premiums written growth of 15% and 18% in policies in force wegrowth experiencedof in the first quarter last year.16%. The current period net premiums written growth was primarily driven by policies in force growth in our personal auto products, which were up 11%9%, compared to MarchJune 30, 2025.

In Commercial Lines,Lines we experiencedreported an increaseunderwriting inprofit both net premiums written and policies in forcemargin of 3%14.7% for the firstsecond quarter 2026, compared to 13.2% in 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 wouldincreased have4% decreasedand 1%policies forin force increased 3% during the firstsecond quarter 2026, compared to the same period last year. In our core commercial auto business (which excludes our transportation network company (TNC) business, our Progressive Fleet & Specialty Programs (Fleet & SpecialtyFSP) products, and our business owners’ policy (BOP) product) we continued to experience a shift to a greater mix of business market targets (BMT) with lower average written premiums and a shift to a greater mix of policies with 6-month terms in our contractor and business auto business market targets (BMT),BMTs, which negatively affected average premiums since those policies have about half the amount of net premiums written as 12-month policies,term and a shift to a greater mix of BMTs with lower average written premium.policies.

For the firstsecond quarter 2026, thewe $251experienced a $136 million year-over-year increase in net income, compared to the firstsecond quarter 2025, reflectedprimarily reflecting an increase in both underwriting profit and total net investment income. Total comprehensive income decreased $1.2$669 billionmillion for the firstsecond quarter 2026, compared to the same period last year, driven by net unrealized losses on our fixed-maturity securities,securities in the current period, compared to net unrealized gains during the samesecond periodquarter last year.

At MarchJune 31,30, 2026, total capital (debt plus shareholders’ equity) was $40.4$42.7 billion, which was an increase of $3.2$5.5 billion from year-end 2025. ThisThe increase was primarily driven by the $2.2$5.2 billion of comprehensive income earned induring the first threesix months of 2026 and the March 2026 issuancesissuance of $500 million of 4.60% Senior Notes due 2031, and $1.0$1.5 billion of 5.15%senior Seniornotes Notesduring duethe 2036,first quarter 2026. These increases were partially offset by the repurchase of 2.35.4 million of our common shares,shares at a total cost of $478$1.1 million.billion.

Our companywide underwriting profit margin was 13.6% duringfor the firstsecond quarter 2026,2026 comparedwas to1.1 14.0%points duringlower than the firstsame quarterperiod 2025.last Foryear. theThe firstdecrease quarterreflected 2026,a 0.6 point increase in our loss and loss adjustment expense (LAE) ratioratio, primarily due to increased severity, and a 0.5 point increase in our underwriting expense ratioratio, wereprimarily relativelydriven stable,by comparedincreased toadvertising theexpense, sameas perioddiscussed last year.below.

We continue to closely managemonitor our expenses, monitoring bothincluding acquisition expenses and non-acquisition expenses, which we view as an important measuremeasures of operational efficiency as we seek to deliver our most competitive rates to consumers. During the firstsecond quarter 2026, our advertising spendexpense was $1.5$1.4 billion, or 20%16% greaterhigher than the firstsecond quarter last year. The current period impacteffect of the increase inhigher advertising spend on our expense ratio was partially offset by the increase in net premiums earned, contributingresulting 0.7in morean additional 0.5 points of contribution to the underwriting expense ratio in the firstsecond 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%88% of our companywide net premiums written atduring periodthe endsecond quarter 2026 and is comprised of our personal vehicle and property products. Personal Lines vehiclesvehicle products include both personal auto and special lines products, with thespecial latterlines typically havingexperiencing 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). OurIn Personal Lines underwriting margin for the first quarter 2026 was 14.0%, with personal vehicle andour personal property products, homeowners products reportingare 13.7%defined as our total personal property business excluding renters and 21.7%,umbrella respectively. Profitability in our special lines products had about a one point favorable impact to our personal vehicleproducts.

Personal Lines generated an underwriting profit margin of 12.4% for the second quarter 2026, with personal vehicle and personal property products reporting underwriting profit margins of 12.0% and 22.0%, respectively. Profitability in our special lines products had a minimal impact on the personal vehicle combined ratio during the firstsecond quarter 2026. The strong underwriting profit margin in our personal property products was primarily driven by thea low level of incurred catastrophe losseslosses, andlower loss frequency of loss during the periodperiod, and increased rates.

For the firstsecond quarter 2026, Personal Lines generated net premiums written growthincreased 5%, with personal vehicle business increases of 7%,2% with ourin agency and direct8% in direct, and a 1% increase in personal vehicle businesses growing 5% and 10%, respectively, while our personal property business decreased 5%,property, 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.

RelativePersonal to the significant growth wevehicles experienced in our personal vehicle products during the first quarter 2025, we experienced a 2%an increase in total personal vehicle new business applications duringof the1% firstand quarteran 2026.increase Total personal vehiclein renewal business applications increasedof 14%11% during the firstsecond quarter,quarter primarily2026, drivencompared byto the renewalsame ofperiod new business applications gained overin the pastprior twelve months.year. Our personal vehicle business continued to demonstrategenerate sustained net premiums written and application growth despite continued increased competition in the marketplace and in comparison to the double-digit application growth experienced during the firstsame quarterperiod 2026.last year.

During the first quarter 2026, onOn a countrywide basis, induring the aggregate,second quarter 2026, we decreased personal auto rates by less than 1% and increased our personal property rates about 1%.1%, in the aggregate.

We believe a key element in improving the accuracy of our personal auto rating is Snapshot®, our usage-based insurance offering. ForDuring the firstsecond quarter 2026, theSnapshot adoption rates among eligible new business personal auto adoption rates for consumers enrollingdecreased 3% in thedirect programand decreased 5%8% in agency and 1% in direct,agency, compared to the same period last year. Approximately half of direct new business consumers elected Snapshot in both the second quarter 2025 and 2026. The decrease in the agency adoption rate iswas primarily due to liftingthe certainexpansion agentof restrictionsSnapshot duringeligibility in the second half of 2025, expandingwhich increased the number of agents able to write Snapshot policies and broadened access to a broader agent baseagents with historically lower adoption rates. Snapshot is available in all states, other than California, and our latest segmentation model was available in states thatrepresenting represented 80%81% 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.

We willbelieve continuewe toare currently adequately priced in our personal auto, personal property, and core commercial auto products in most states through the remainder of the year. However, we regularly monitor the factors that could impact our loss costs for both segments,costs, which may include tariffs, as previously discussed,inflation, new and used car prices, miles driven, driving patterns, loss severity,severity and frequency, weather events, building material andmaterials, 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 increaseIncreasing our share of Progressive auto and personal property bundled households (i.e., Robinsons) remains a key initiative, and we plan to continue toinvesting make investments to improvein 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 remainremains in force before cancellation or lapse in coverage, is our primary measure of customer retention in ourboth Personal Lines and Commercial Lines businesses.Lines.

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. OurFor the second quarter 2026, trailing 12-month total personal auto policy life expectancy was downdecreased 8% year over yearyear, forwhile trailing 3-month policy life expectancy decreased 9%, compared to the firstsame period last year. We believe these decreases were primarily due to increased shopping and competition in the marketplace and, to a lesser extent, changes in billing plans offered to customers and a shift in our mix of business.

Our trailing 12-month policy life expectancy was down 8% for our personal property products year over year for the firstsecond quarter 2026. We believe our personal propertythe retention decreaseddecrease was primarily asdriven by a resultcontinued shift in the mix of a mix shiftbusiness to more renters policies,policies whichand, generally haveto a lowerlesser policyextent, liferate expectancy.increases in previous years and increased competition in the marketplace.

For our core commercial auto products, our trailing 12-month policy life expectancy increased 5%,2%, compared to the same period in the prior year,year. which weWe believe isthe dueincrease toreflected a shift into the mix of business toauto BMTsand withcontractor BMTs, which historically have higher policy life expectancies, the moderation ofin our rate increases, and various initiatives, such asincluding 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.

The fair value of our investment portfolio was $94.1$97.2 billion at MarchJune 31,30, 2026, compared to $97.4 billion at December 31, 2025. The modest decrease from year-end 2025 primarily reflected valuation declines across fixed-maturity sectors, the $7.9 billion payment of our annual variable common share dividend, partiallyand the $1.1 billion of repurchases of our common shares, mostly offset by significant 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,securities withand the balance (75%-100%) of our portfolio in Group II securities (the securities allocated to Group I and II areas defined below under Results of Operations – Investments).Investments. At MarchJune 31,30, 20262026, and December 31, 2025, 6%7% of our portfolio was allocated to Group I securitiessecurities, compared to 6% at December 31, 2025, with the remainder allocated to Group II securities.

Our recurring investment income generated a pretax book yield of 4.2% forin theboth firstsecond quarter 2026,2026 compared to 4.1% for the same period inand 2025. OurThe investment portfolio produced a fully taxable equivalent (FTE) total return of 0.1%1.2% and 2.2% forin the firstsecond quarter 20262026, andcompared 2025,to respectively.2.1% Ourin the same period last year. For the second quarter 2026, the fixed-income and common stock portfolios hadgenerated FTE total returns of 0.3%0.6% and (4.1)%,15.3%, respectively, for the first quarter 2026, compared to 2.5%1.7% and (5.0)%,10.9%, in the same period last year. The decrease in the fixed-income portfolioportfolio’s FTE total return primarily reflected year-over-year movements in U.S. Treasury yields year-over-year.yields.

AtThe Marchfixed-income 31,portfolio maintained a weighted average credit quality of AA- at June 30, 2026 and 2025, and December 31, 2025,2025. the fixed-income portfolio had a weighted average credit quality of AA-. At March 31, 2026, theThe fixed-income portfolio duration was 3.5 years,years at June 30, 2026, compared to 3.4 years at Marchboth 31,June 30, 2025 and December 31, 2025. During 2026, we modestly increased our duration to take advantage of higher yields available in the market.

Progressive’s insurance operations creategenerate 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$8.0 billion and $5.1$9.2 billion for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The decrease in operating cash flows forduring the first threesix months of 2026, compared to the same period last year, was primarily drivendue byto the $1.2 billion Florida policyholder credits that were paid out duringin the first quarter 2026. These policyholder credits represented the estimated profit we earned onfor the three-accident-year period endingended 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 periodperiod. (seeSee theour 2025 Annual Report to Shareholders for further discussion of the Florida policyholder credit expense).expense. We believe cash flows will remain positive infor the foreseeable future and do not anticipate the need to raise capital to support our operations induring that timeframe, although changes in market or regulatory conditions affecting the insurance industry, or other unforeseen events, may necessitate otherwise.

AsAt ofJune March 31,30, 2026, we held $46.5$45.8 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 bebecome 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$42.7 billion at MarchJune 31,30, 2026, compared to $35.8$39.5 billion at MarchJune 31,30, 2025, and $37.2 billion at December 31, 2025. The increase from year-end 2025,2025 primarily reflectsreflected the $5.2 billion of comprehensive income recognized during the first threesix months of 2026 and the March 2026 debt issuancesissuance of $1.5 billion of senior notes,notes for whichin the fundsfirst arequarter intended2026. These increases were partially offset by the repurchase of our common shares, as discussed below. Our debt-to-total capital ratio was 19.6% at June 30, 2026, compared to 17.5% at June 30, 2025, and 18.5% at December 31, 2025. These ratios were consistent with our financial policy of maintaining a debt-to-total capital ratio of less than 30%.

None of the covenants on our existing debt securities include rating or credit triggers that would require an adjustment of interest rate or an acceleration of principal payments in the event 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 a 1-month term Secured Overnight Financing Rate (SOFR) plus 1.00%.1.0%. We did not engage in short-term borrowings, including any borrowings under the line of credit, to fund our operations or for liquidity purposes during the reported periods.

We seek to deploy capital in a prudent manner and use multiple data sources and modeling tools to estimate the frequency, severity, and correlation of identified exposures, including, but not limited to, investment losses, catastrophic and other insured losses, natural disasters, and other significant business interruptions,interruptions. toThis analysis helps us estimate our potential capital needs.needs under a range of scenarios.

During the first threesix months of 2026, we returned capital to shareholders primarily through common share dividends and common share repurchases. In March 2026, ourOur Board of Directors declared a $0.10 per common share dividend,dividend orin both the first and second quarters of 2026. These dividends, which were both $58 millionmillion, in the aggregate, that waswere paid in April 2026 and July 2026. In January 2026, we also paid common share dividends declared in the fourth quarter 2025, in the aggregate amount of $8.0 billion, or $13.60 per share (see Note 10 – Dividends for further discussion).

Pursuant to our financial policies, we repurchase common shares 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.value and to neutralize dilution from equity-based compensation granted during the year. During the first threesix months of 2026, we repurchased 2.35.4 million common shares, at a total cost of $478$1.1 million,billion, both in the open market and to satisfy tax withholding obligations in connection with the vesting of equity awards under our employee equity compensation plans. We will continue to make decisions on returning capital to shareholders based on the strength of our overall capital position, the capital strength of our subsidiaries, and the potential capital needs of our business.

At MarchJune 31,30, 2026, we had $6.2$6.7 billion in a consolidated, non-insurance subsidiary of the holding company that can be used to fund corporate obligations and provide additional capital to theour insurance subsidiaries to fundsupport potential future growth and other opportunities. As of MarchJune 31,30, 2026, our estimated consolidated statutory surplus was $31.1$32.9 billion.

During the first threesix 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 havealso notwere been anyno material changes in off-balance-sheet leverage, which includesincluding purchase obligations, from those discussed in our 2025 Annual Report to Shareholders.

Based on our capital planning and forecasting efforts, we believe we have sufficient capital resources and cash flows from operations to support our current business, scheduled principal and interest payments on our debt, anticipated quarterly dividends on our common shares, 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 market terms in the market andor 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, fromthrough the offering of any securitiessecurity, or a combination thereof, covered by the shelf registration as well as any combination thereof.registration.