Core Viewpoint - Investors in the Insurance - Property and Casualty sector should consider Progressive (PGR) and Kinsale Capital Group, Inc. (KNSL) for potential undervalued stock opportunities [1] Group 1: Company Rankings and Performance - Progressive has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Kinsale Capital Group, which has a Zacks Rank of 3 (Hold) [3] - PGR has experienced a more significant improvement in its earnings outlook than KNSL recently [3] Group 2: Valuation Metrics - PGR has a forward P/E ratio of 13.79, while KNSL has a forward P/E of 24.49, suggesting PGR is more attractively valued [5] - The PEG ratio for PGR is 1.44, compared to KNSL's PEG ratio of 1.65, indicating PGR's expected earnings growth is more favorable [5] - PGR's P/B ratio is 4.33, while KNSL's P/B ratio is 6.01, further supporting PGR's valuation advantage [6] Group 3: Value Grades - PGR has a Value grade of B, while KNSL has a Value grade of D, reflecting PGR's stronger valuation metrics [6] - Overall, PGR's stronger estimate revision activity and more attractive valuation metrics suggest it is the superior option for value investors at this time [7]

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) This section presents unaudited consolidated financial statements and detailed notes on reporting, investments, debt, taxes, and segment performance [Consolidated Statements of Comprehensive Income](index=3&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The company reported significant year-over-year growth in revenues, net income, and comprehensive income for both the three and six months ended June 30, 2025, driven by increased net premiums earned and investment income Consolidated Statements of Comprehensive Income (Unaudited) | Metric (millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $22,004 | $18,134 | $42,413 | $35,377 | | Total expenses | $18,022 | $16,274 | $35,195 | $30,577 | | Income before income taxes | $3,982 | $1,860 | $7,218 | $4,800 | | Provision for income taxes | $807 | $401 | $1,476 | $1,010 | | Net income | $3,175 | $1,459 | $5,742 | $3,790 | | Other comprehensive income (loss) | $429 | $108 | $1,328 | $(100) | | Comprehensive income (loss) | $3,604 | $1,567 | $7,070 | $3,690 | | Basic: Earnings per common share | $5.42 | $2.49 | $9.80 | $6.45 | | Diluted: Earnings per common share | $5.40 | $2.48 | $9.77 | $6.42 | [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The company's total assets and shareholders' equity increased significantly from December 31, 2024, to June 30, 2025, primarily driven by growth in available-for-sale securities and retained earnings Consolidated Balance Sheets (Unaudited) | Metric (millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------------------- | :-------------- | :---------------- | :-------------- | | Total assets | $115,480 | $105,745 | $97,893 | | Total liabilities | $82,876 | $80,154 | $74,553 | | Total shareholders' equity | $32,604 | $25,591 | $23,340 | | Available-for-sale securities | $84,375 | $75,947 | $68,222 | | Equity securities | $4,235 | $4,303 | $4,134 | | Unearned premiums | $26,335 | $23,858 | $23,681 | | Loss and loss adjustment expense reserves | $41,154 | $39,057 | $36,605 | [Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity increased substantially for the three and six months ended June 30, 2025, primarily due to net income and other comprehensive income, partially offset by common share dividends and treasury share purchases Consolidated Statements of Changes in Shareholders' Equity (Unaudited) | Metric (millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of period (Retained Earnings) | $26,732 | $21,020 | $24,283 | $18,801 | | Net income | $3,175 | $1,459 | $5,742 | $3,790 | | Cash dividends declared on common shares | $(58) | $(58) | $(117) | $(117) | | Other comprehensive income (loss) | $429 | $108 | $1,328 | $(100) | | Total shareholders' equity (end of period) | $32,604 | $23,340 | $32,604 | $23,340 | - All outstanding Serial Preferred Shares, Series B, were redeemed in February 2024[6](index=6&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased significantly for the six months ended June 30, 2025, compared to the prior year, while net cash used in investing and financing activities also increased Consolidated Statements of Cash Flows (Unaudited) | Metric (millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $9,183 | $7,502 | | Net cash used in investing activities | $(6,381) | $(6,387) | | Net cash used in financing activities | $(2,821) | $(1,113) | | Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | $(19) | $2 | | Cash, cash equivalents, restricted cash, and restricted cash equivalents – June 30 | $135 | $102 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies, investment portfolio, fair value, debt, income taxes, loss reserves, and segment performance [1. BASIS OF REPORTING AND ACCOUNTING](index=7&type=section&id=1.%20BASIS%20OF%20REPORTING%20AND%20ACCOUNTING) This note outlines the consolidation principles, the nature of interim period adjustments, and details the changes in the allowance for credit losses on premiums receivable. No new material accounting standards were adopted during the period Allowance for Credit Losses on Premiums Receivable (millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Allowance for credit losses, beginning of period | $473 | $328 | $460 | $369 | | Increase in allowance | $176 | $128 | $329 | $235 | | Write-offs | $(148) | $(128) | $(288) | $(276) | | Allowance for credit losses, end of period | $501 | $328 | $501 | $328 | - No new accounting standards were adopted during the three and six months ended June 30, 2025, and none are expected to materially impact financial condition or results of operations[17](index=17&type=chunk) [2. INVESTMENTS](index=8&type=section&id=2.%20INVESTMENTS) The investment portfolio's fair value increased significantly, with detailed breakdowns of fixed maturities and equity securities. The company reported net realized gains on securities for Q2 and YTD 2025, a notable improvement from losses in the prior year, and no material credit losses on fixed-maturity securities Total Investment Portfolio Fair Value (millions) | Date | Total Portfolio Fair Value | | :--- | :------------------------- | | June 30, 2025 | $88,610 | | June 30, 2024 | $72,356 | | December 31, 2024 | $80,250 | Net Realized Gains (Losses) on Securities (millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net realized gains (losses) on security sales | $19 | $(227) | $20 | $(373) | | Net holding period gains (losses) | $368 | $100 | $155 | $402 | | Total net realized gains (losses) on securities | $387 | $(127) | $175 | $29 | - No allowances for credit losses or write-offs for uncollectible credit losses were recorded during the first six months of 2025 or 2024, and no material credit loss allowance balance existed as of June 30, 2025[25](index=25&type=chunk)[28](index=28&type=chunk) Net Investment Income (millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Investment income | $871 | $685 | $1,685 | $1,303 | | Investment expenses | $(9) | $(7) | $(16) | $(13) | | Net investment income | $862 | $678 | $1,669 | $1,290 | - Investment income increased **27%** and **29%** for the three and six months ended June 30, 2025, respectively, primarily due to growth in invested assets and an increase in recurring investment book yield from investing in higher coupon rate securities[33](index=33&type=chunk) [3. FAIR VALUE](index=14&type=section&id=3.%20FAIR%20VALUE) This note details the fair value hierarchy (Level 1, 2, and 3) used for financial instruments, with the majority of the investment portfolio classified as Level 1 or Level 2. It also provides a summary of changes in fair value for Level 3 assets and quantitative information about Level 3 measurements Total Portfolio Fair Value by Level (millions) | Date | Level 1 | Level 2 | Level 3 | Total | | :--- | :------ | :------ | :------ | :---- | | June 30, 2025 | $52,426 | $36,078 | $106 | $88,610 | | June 30, 2024 | $44,877 | $27,378 | $101 | $72,356 | | December 31, 2024 | $50,128 | $30,017 | $105 | $80,250 | - Vendor-quoted prices represented **93%** of Level 1 classifications (excluding short-term investments valued at original cost) and **99%** of Level 2 classifications at June 30, 2025[39](index=39&type=chunk)[40](index=40&type=chunk) - Level 3 securities, which are more subjective in nature, represent a small portion of the total portfolio, and changes in their valuation would not materially impact net or comprehensive income[52](index=52&type=chunk)[56](index=56&type=chunk) [4. DEBT](index=22&type=section&id=4.%20DEBT) The company's debt consists solely of long-term Senior Notes with various interest rates and maturity dates. The line of credit with PNC Bank was renewed, with no borrowings outstanding during the reported periods Senior Notes (millions) | Principal Amount | Interest Rate | Maturity Date | Carrying Value (June 30, 2025) | Fair Value (June 30, 2025) | | :--------------- | :------------ | :------------ | :----------------------------- | :------------------------- | | $500 | 2.45% | 2027 | $499 | $488 | | $500 | 2.50% | 2027 | $499 | $487 | | $300 | 6 5/8% | 2029 | $298 | $324 | | $550 | 4.00% | 2029 | $548 | $547 | | $500 | 3.20% | 2030 | $498 | $477 | | $500 | 3.00% | 2032 | $497 | $456 | | $400 | 6.25% | 2032 | $397 | $438 | | $500 | 4.95% | 2033 | $497 | $511 | | $350 | 4.35% | 2044 | $347 | $299 | | $400 | 3.70% | 2045 | $396 | $310 | | $850 | 4.125% | 2047 | $843 | $699 | | $600 | 4.20% | 2048 | $591 | $493 | | $500 | 3.95% | 2050 | $491 | $392 | | $500 | 3.70% | 2052 | $494 | $373 | | **Total** | | | **$6,895** | **$6,294** | - The Progressive Corporation renewed its **$300 million** line of credit with PNC Bank, National Association, expiring April 2026, with no borrowings outstanding during the reported periods[61](index=61&type=chunk) [5. INCOME TAXES](index=22&type=section&id=5.%20INCOME%20TAXES) The effective tax rate decreased for the three and six months ended June 30, 2025, primarily due to tax benefits from deferred compensation distributions. Management believes deferred tax assets will be realized, and no valuation allowance was needed Effective Tax Rate (%) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Three Months Ended June 30, | 20.3% | 21.6% | | Six Months Ended June 30, | 20.4% | 21.0% | - The decrease in effective tax rate is primarily due to tax benefits associated with distributions of deferred compensation during Q2 2025[62](index=62&type=chunk) - Net current income taxes recoverable were **$115 million** at June 30, 2025, compared to net current income taxes payable in prior periods[64](index=64&type=chunk) [6. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES](index=23&type=section&id=6.%20LOSS%20AND%20LOSS%20ADJUSTMENT%20EXPENSE%20RESERVES) The company experienced significant favorable reserve development of $607 million during the first six months of 2025, primarily driven by personal auto and personal property, a substantial increase from $63 million in the prior year Loss and Loss Adjustment Expense Reserves Activity (millions) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Balance at January 1 | $39,057 | $34,389 | | Net balance at January 1 | $34,570 | $29,600 | | Total incurred | $26,409 | $23,567 | | Total paid | $23,725 | $21,077 | | Net balance at June 30 | $37,254 | $32,090 | | Balance at June 30 | $41,154 | $36,605 | - Favorable reserve development of **$607 million** during the first six months of 2025, compared to **$63 million** in 2024[66](index=66&type=chunk) - **Drivers of Favorable Reserve Development (YTD June 30, 2025):** * Approximately **$400 million** attributable to accident year 2024, **$115 million** to accident year 2023, and the remainder to 2022 and prior * Personal auto products: **$520 million**, primarily due to lower than anticipated loss severity and frequency in Florida and lower litigation defense costs * Personal property products: **$50 million**, from favorable development on 2024 catastrophe events * Commercial Lines: **$45 million**, mainly from lower than anticipated severity in transportation network company business[67](index=67&type=chunk) [7. SUPPLEMENTAL CASH FLOW INFORMATION](index=24&type=section&id=7.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides details on the composition of cash and cash equivalents, restricted cash, and non-cash and paid activities for the period Non-Cash and Paid Activities (millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | **Non-cash activity:** | | | | Common share dividends (declared but unpaid) | $58 | $58 | | Operating lease liabilities (from obtaining right-of-use assets) | $63 | $47 | | **Paid amounts:** | | | | Income taxes | $1,644 | $1,351 | | Interest | $138 | $138 | | Operating lease liabilities | $45 | $43 | - Cash and cash equivalents include bank demand deposits and daily overnight reverse repurchase commitments. Restricted cash includes collateral for unpaid deductibles and funds for flood claims[68](index=68&type=chunk) [8. SEGMENT INFORMATION](index=24&type=section&id=8.%20SEGMENT%20INFORMATION) The company operates through Personal Lines, Commercial Lines, and Service businesses. Both Personal Lines and Commercial Lines segments demonstrated strong underwriting profitability for Q2 and YTD 2025, with significant improvements in underwriting margins and combined ratios compared to the prior year Pretax Underwriting Profit (Loss) by Segment (millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Personal Lines | $2,448 | $1,083 | $4,831 | $3,124 | | Commercial Lines | $364 | $304 | $702 | $513 | | Other | $(4) | $(1) | $(8) | $(1) | | Total pretax underwriting profit (loss) | $2,808 | $1,386 | $5,525 | $3,636 | Underwriting Margins and Combined Ratios by Segment (%) | Segment | Q2 2025 Underwriting Margin | Q2 2025 Combined Ratio | Q2 2024 Underwriting Margin | Q2 2024 Combined Ratio | YTD 2025 Underwriting Margin | YTD 2025 Combined Ratio | YTD 2024 Underwriting Margin | YTD 2024 Combined Ratio | | :-------------------------------- | :-------------------------- | :--------------------- | :-------------------------- | :--------------------- | :--------------------------- | :---------------------- | :--------------------------- | :---------------------- | | Personal Lines | 14.0% | 86.0 | 7.4% | 92.6 | 14.1% | 85.9 | 11.1% | 88.9 | | Commercial Lines | 13.2% | 86.8 | 11.4% | 88.6 | 12.9% | 87.1 | 9.8% | 90.2 | | Total underwriting operations | 13.8% | 86.2 | 8.1% | 91.9 | 13.9% | 86.1 | 10.9% | 89.1 | [9. DIVIDENDS](index=27&type=section&id=9.%20DIVIDENDS) This note summarizes common and preferred share dividends declared and/or paid during the six months ended June 30, 2025 and 2024 Common and Preferred Share Dividends (millions — except per share amounts) | Dividend Type | Declared Date | Payable Date | Per Share | Amount Accrued/Paid | | :-------------------------------- | :------------ | :----------- | :-------- | :------------------ | | Common – Annual-Variable | December 2024 | January 2025 | $4.50 | $2,637 | | Common – Annual-Variable | December 2023 | January 2024 | $0.75 | $439 | | Common – Quarterly | May 2025 | July 2025 | $0.10 | $58 | | Common – Quarterly | March 2025 | April 2025 | $0.10 | $59 | | Common – Quarterly | December 2024 | January 2025 | $0.10 | $58 | | Common – Quarterly | May 2024 | July 2024 | $0.10 | $58 | | Common – Quarterly | March 2024 | April 2024 | $0.10 | $59 | | Common – Quarterly | December 2023 | January 2024 | $0.10 | $59 | - All outstanding Serial Preferred Shares, Series B, were redeemed in February 2024[76](index=76&type=chunk) [10. OTHER COMPREHENSIVE INCOME (LOSS)](index=28&type=section&id=10.%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) The company reported a significant increase in total other comprehensive income (loss) for the three and six months ended June 30, 2025, primarily driven by net unrealized gains on fixed-maturity investment securities Components of Other Comprehensive Income (Loss) (millions) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Total other comprehensive income (loss) | $429 | $1,328 | | Total net unrealized gains (losses) on securities | $428 | $1,327 | | Net unrealized losses on forecasted transactions | $1 | $1 | | Foreign currency translation adjustment | $0 | $0 | | Balance at June 30, 2025 (after tax) | $(95) | $(95) | - The balance of accumulated other comprehensive income (loss) improved from **$(1,423) million** at December 31, 2024, to **$(95) million** at June 30, 2025[78](index=78&type=chunk) [11. LITIGATION](index=30&type=section&id=11.%20LITIGATION) The company faces various lawsuits, including class actions on total loss claims valuation, with potential material financial impact, though losses are currently deemed reasonably possible but not estimable - **Key Litigation Areas:** * Class/collective actions alleging improper valuation of total loss claims by applying a negotiation adjustment in Alabama, Arkansas, Colorado, Georgia, Indiana, North Carolina, Ohio, Pennsylvania, and South Carolina * Lawsuits alleging improper calculation of basic economic loss related to wage loss coverage in New York * Lawsuits alleging improper reduction or denial of personal injury protection benefits when medical expenses are paid by health insurance in Arkansas[82](index=82&type=chunk)[83](index=83&type=chunk) - Losses from these lawsuits are reasonably possible but neither probable nor reasonably estimable, other than for immaterial accruals already established[83](index=83&type=chunk) [OVERVIEW](index=31&type=section&id=OVERVIEW) The company achieved substantial year-over-year growth in premiums and policies in force during Q2 2025, driven by strong Personal Lines performance and improved underwriting profitability Key Performance Indicators (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------- | :------ | :------ | :--------- | | Net Premiums Written | $20.1 billion | $17.9 billion | +12% | | Net Premiums Earned | $20.3 billion | $17.2 billion | +18% | | Policies in Force (June 30) | 37.3 million | 32.3 million | +15% | | Underwriting Profit Margin | 13.8% | 8.1% | +5.7 pts | | Net Income | $3,175 million | $1,459 million | +$1,716 million | | Total Capital (June 30) | $39.5 billion | $30.2 billion | +$9.3 billion | - Personal Lines segment experienced strong year-over-year growth in Q2 2025, with net premiums written increasing **15%** and policies in force up **16%**, primarily driven by personal auto products due to increased advertising, competitive pricing, and agency incentive programs[87](index=87&type=chunk) - Commercial Lines experienced a **6%** decrease in net premiums written in Q2 2025, despite a **6%** increase in policies in force, mainly due to changes in policy terms and renewal timing for transportation network company (TNC) business policies[88](index=88&type=chunk) - In Q2 2025, personal auto rates decreased less than **1%**, personal property rates increased about **4%**, and core commercial auto rates increased about **3%** in aggregate[89](index=89&type=chunk) - The company anticipates potential higher loss costs and the need for additional rate increases throughout 2025 and 2026 due to the dynamic international trade environment and tariffs[90](index=90&type=chunk) II. FINANCIAL CONDITION [A. Liquidity and Capital Resources](index=34&type=section&id=A.%20Liquidity%20and%20Capital%20Resources) Progressive's insurance operations generated strong positive cash flows, with total capital increasing significantly. The company maintains a conservative and liquid investment portfolio, adhering to its debt-to-total capital ratio policy. Capital is returned to shareholders via dividends and share repurchases, and the company has access to additional capital if needed Operating Cash Flows (millions) | Period | Net Cash Provided by Operating Activities | | :----- | :-------------------------------------- | | Six Months Ended June 30, 2025 | $9,183 | | Six Months Ended June 30, 2024 | $7,502 | Total Capital (millions) and Debt-to-Total Capital Ratio (%) | Date | Total Capital (millions) | Debt-to-Total Capital Ratio (%) | | :--- | :----------------------- | :------------------------------ | | June 30, 2025 | $39,500 | 17.5% | | December 31, 2024 | $32,500 | 21.2% | | June 30, 2024 | $30,200 | 22.8% | - The company held **$48.9 billion** in short-term investments and U.S. Treasury securities at June 30, 2025, representing about **55%** of its total portfolio, ensuring sufficient liquidity[117](index=117&type=chunk) - The Board of Directors approved a new authorization in May 2025 to repurchase up to **25 million** common shares, replacing the previous authorization[236](index=236&type=chunk) - The company may need to pay back profits to Florida personal auto policyholders if its profit for 2023-2025 exceeds the statutory limit, with an estimated exposure to be reasonably estimable by Q4 2025[127](index=127&type=chunk)[129](index=129&type=chunk) III. RESULTS OF OPERATIONS – UNDERWRITING [A. Segment Overview](index=35&type=section&id=A.%20Segment%20Overview) Progressive's underwriting operations are segmented into Personal Lines (primarily personal auto and residential property) and Commercial Lines (primarily core commercial auto and TNC business). Personal auto accounts for about 90% of Personal Lines net premiums written, while core commercial auto accounts for about 80% of Commercial Lines net premiums written - Personal Lines segment primarily focuses on personal auto (about **90%** of net premiums written) and personal residential property insurance[128](index=128&type=chunk) - Commercial Lines segment primarily focuses on core commercial auto products (about **80%** of net premiums written) and TNC business (about **15%**)[132](index=132&type=chunk) Companywide Net Premiums Written by Segment (Q2 2025 vs Q2 2024) | Segment | Q2 2025 | Q2 2024 | | :------ | :------ | :------ | | Personal Lines | 88% | 86% | | Commercial Lines | 12% | 14% | | Total | 100% | 100% | [B. Profitability](index=36&type=section&id=B.%20Profitability) Underwriting profit margin significantly increased year-over-year for Q2 2025, driven by a decrease in the loss and LAE ratio due to lower catastrophe losses and favorable prior accident years reserve development. Advertising spend increased, partially offset by lower non-acquisition expenses Underwriting Profit (Loss) (millions) and Margin (%) | Segment | Q2 2025 Profit (millions) | Q2 2025 Margin (%) | Q2 2024 Profit (millions) | Q2 2024 Margin (%) | YTD 2025 Profit (millions) | YTD 2025 Margin (%) | YTD 2024 Profit (millions) | YTD 2024 Margin (%) | | :-------------------- | :------------------------ | :----------------- | :------------------------ | :----------------- | :------------------------- | :------------------ | :------------------------- | :------------------ | | Personal Lines | $2,448 | 14.0% | $1,083 | 7.4% | $4,831 | 14.1% | $3,124 | 11.1% | | Commercial Lines | $364 | 13.2% | $304 | 11.4% | $702 | 12.9% | $513 | 9.8% | | Total underwriting operations | $2,808 | 13.8% | $1,386 | 8.1% | $5,525 | 13.9% | $3,636 | 10.9% | Combined Ratios by Segment (%) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Personal Lines | 86.0% | 92.6% | 85.9% | 88.9% | | Commercial Lines | 86.8% | 88.6% | 87.1% | 90.2% | | Total Underwriting Operations | 86.2% | 91.9% | 86.1% | 89.1% | - The companywide loss and LAE ratio decreased **6.1 points** in Q2 2025 YoY and **4.1 points** YTD 2025 YoY, primarily due to lower catastrophe losses and favorable prior accident years reserve development[93](index=93&type=chunk)[138](index=138&type=chunk)[143](index=143&type=chunk) - Advertising spend increased **35%** (**0.7 points** impact on expense ratio) in Q2 2025 YoY and **57%** (**1.5 points** impact) YTD 2025 YoY[94](index=94&type=chunk)[139](index=139&type=chunk)[162](index=162&type=chunk) [Losses and Loss Adjustment Expenses (LAE)](index=38&type=section&id=Losses%20and%20Loss%20Adjustment%20Expenses%20(LAE)) Total incurred losses and LAE increased, but the LAE ratio decreased due to lower catastrophe losses and favorable prior accident year reserve development. Personal auto severity increased due to medical costs and litigation, while frequency decreased due to business mix shift and lower miles traveled. Core commercial auto severity increased, and frequency decreased Total Incurred Losses and LAE (millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total incurred losses and LAE | $13,605 | $12,595 | $26,409 | $23,567 | Catastrophe Losses Incurred (millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Personal Lines | $688 | $1,243 | $1,142 | $1,581 | | Commercial Lines | $19 | $26 | $24 | $35 | | Total net catastrophe losses incurred | $707 | $1,269 | $1,166 | $1,616 | - Favorable prior accident years development of **$607 million** during the first six months of 2025, primarily from personal auto (lower severity/frequency in Florida, lower litigation costs) and personal property (2024 catastrophe events)[66](index=66&type=chunk)[67](index=67&type=chunk)[160](index=160&type=chunk) Personal Auto Incurred Severity YoY Change (%) | Coverage Type | Q2 2025 | YTD 2025 | | :------------ | :------ | :------- | | Bodily injury | 12% | 10% | | Collision | 1% | 3% | | Personal injury protection | (3)% | (6)% | | Property damage | 4% | 3% | | Total | 6% | 5% | Personal Auto Incurred Frequency YoY Change (%) | Coverage Type | Q2 2025 | YTD 2025 | | :------------ | :------ | :------- | | Bodily injury | (1)% | 0% | | Collision | (6)% | (6)% | | Personal injury protection | (3)% | (2)% | | Property damage | (3)% | (2)% | | Total | (4)% | (3)% | - Core commercial auto products' trailing 12-month incurred severity increased **7%** and frequency decreased **8%** through Q2 2025[152](index=152&type=chunk)[154](index=154&type=chunk) [Underwriting Expenses](index=40&type=section&id=Underwriting%20Expenses) The underwriting expense ratio increased due to higher advertising spend, partially offset by a decrease in non-acquisition expenses in the personal vehicle business - Underwriting expense ratio increased **0.4 points** in Q2 2025 YoY and **1.1 points** YTD 2025 YoY, primarily due to increased advertising spend[162](index=162&type=chunk) - Non-acquisition expense ratio (NAER) decreased **0.4 points** in the personal vehicle business in Q2 2025 YoY, while increasing in personal property and core commercial auto businesses[165](index=165&type=chunk) [C. Growth](index=41&type=section&id=C.%20Growth) The company achieved strong growth in net premiums written and earned, and policies in force, companywide. Personal Lines showed significant growth, while Commercial Lines experienced a decrease in net premiums written Net Premiums Written (millions) | Segment | Q2 2025 | Q2 2024 | % Growth Q2 | YTD 2025 | YTD 2024 | % Growth YTD | | :-------------------- | :------ | :------ | :---------- | :------- | :------- | :----------- | | Personal Lines | $17,713 | $15,393 | 15% | $35,986 | $30,607 | 18% | | Commercial Lines | $2,363 | $2,508 | (6)% | $6,296 | $6,256 | 1% | | Total underwriting operations | $20,076 | $17,902 | 12% | $42,282 | $36,864 | 15% | Net Premiums Earned (millions) | Segment | Q2 2025 | Q2 2024 | % Growth Q2 | YTD 2025 | YTD 2024 | % Growth YTD | | :-------------------- | :------ | :------ | :---------- | :------- | :------- | :----------- | | Personal Lines | $17,544 | $14,545 | 21% | $34,254 | $28,136 | 22% | | Commercial Lines | $2,765 | $2,664 | 4% | $5,464 | $5,222 | 5% | | Total underwriting operations | $20,310 | $17,209 | 18% | $39,719 | $33,358 | 19% | Policies in Force (thousands) | Segment | June 30, 2025 | June 30, 2024 | % Growth | | :-------------------- | :------------ | :------------ | :------- | | Personal Lines | 36,126 | 31,192 | 16% | | Commercial Lines | 1,189 | 1,118 | 6% | | Companywide total | 37,315 | 32,310 | 15% | [D. Personal Lines](index=42&type=section&id=D.%20Personal%20Lines) Personal Lines saw overall growth in policies and new business applications, primarily in personal auto, though personal property applications declined due to profitability initiatives, and retention measures decreased - Personal auto new and renewal applications increased **8%** and **22%** respectively in Q2 2025 YoY, driven by increased advertising and market competitiveness[98](index=98&type=chunk) - Personal property new business applications decreased over **50%** in Q2 2025 YoY, due to a focus on improving profitability, reducing exposure in volatile weather-related markets, and prioritizing bundled policies[99](index=99&type=chunk)[100](index=100&type=chunk) - Average written premium per policy decreased **1%** in personal auto and **6%** in personal property in Q2 2025 YoY, influenced by rate changes and business mix shifts[103](index=103&type=chunk) - Trailing 12-month total personal auto policy life expectancy was down **5%** YoY, and personal property was down **17%** YoY in Q2 2025, attributed to mix shifts, increased shopping, and non-renewals[108](index=108&type=chunk)[109](index=109&type=chunk) [E. Commercial Lines](index=44&type=section&id=E.%20Commercial%20Lines) Core commercial auto new application growth was positive in most BMTs, except for-hire transportation. Written premium per policy decreased due to business mix shifts and policy term changes. Policy life expectancy increased in most BMTs, reflecting moderation of rate increases and improved competitiveness - Core commercial auto new application growth was **3%** in Q2 2025 YoY, with positive growth in tow, contractor, and business auto BMTs, but a decline in for-hire transportation due to challenging freight market conditions[102](index=102&type=chunk)[187](index=187&type=chunk) - Core commercial auto written premium per policy decreased **6%** in Q2 2025 YoY, primarily due to decreased demand in for-hire transportation/specialty BMTs and a shift to 6-month policies in contractor and business auto BMTs[105](index=105&type=chunk)[188](index=188&type=chunk) - Core commercial auto trailing 12-month policy life expectancy increased **5%** YoY, attributed to the moderation of rate increases compared to competitors and various initiatives like payment and renewal reminders[110](index=110&type=chunk)[189](index=189&type=chunk) IV. RESULTS OF OPERATIONS – INVESTMENTS [A. Investment Results](index=45&type=section&id=A.%20Investment%20Results) The investment portfolio's fair value increased significantly. Recurring investment income book yield increased due to investing in higher coupon rate securities. FTE total return for the total portfolio, fixed-income, and common stock portfolios all increased year-over-year for Q2 2025 Investment Portfolio Fair Value (millions) | Date | Fair Value | | :--- | :--------- | | June 30, 2025 | $88,610 | | December 31, 2024 | $80,250 | Pretax Recurring Investment Book Yield (Annualized) (%) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Three Months | 4.2% | 3.9% | | Six Months | 4.2% | 3.8% | FTE Total Return (%) | Portfolio | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------- | :------- | | Fixed-income securities | 1.7% | 0.8% | 4.3% | 1.2% | | Common stocks | 10.9% | 3.6% | 5.3% | 13.8% | | Total portfolio | 2.1% | 0.9% | 4.3% | 1.7% | [B. Portfolio Allocation](index=46&type=section&id=B.%20Portfolio%20Allocation) The investment portfolio maintains a conservative allocation with a high percentage in fixed-income securities and a weighted average credit quality of AA-. Duration increased slightly. Unrealized losses on fixed-maturity securities decreased significantly due to valuation increases across various sectors Portfolio Composition (June 30, 2025) | Security Type | Fair Value (millions) | % of Total Portfolio | Duration (years) | Average Rating | | :-------------------- | :-------------------- | :------------------- | :--------------- | :------------- | | Fixed-income securities | $84,875 | 95.8% | 3.4 | AA | | Common equities | $3,735 | 4.2% | na | na | | Total portfolio | $88,610 | 100.0% | 3.4 | AA | - The fixed-income portfolio had a weighted average credit quality of **AA-** at June 30, 2025, and a duration of **3.4 years**, within the acceptable range of **1.5 to 5.0 years**[114](index=114&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Total after-tax net unrealized losses on the fixed-maturity portfolio decreased to **$0.1 billion** at June 30, 2025, from **$1.7 billion** at June 30, 2024, due to valuation increases across all fixed-maturity sectors[196](index=196&type=chunk) [Fixed-Income Securities](index=48&type=section&id=Fixed-Income%20Securities) The fixed-income portfolio is managed internally with a focus on interest rate risk (duration), credit risk (maintaining an A minimum weighted average rating), concentration risk, prepayment and extension risk, and liquidity risk. The portfolio remains highly liquid - The fixed-income portfolio's duration was **3.4 years** at June 30, 2025, within the acceptable range of **1.5 to 5.0 years**[202](index=202&type=chunk) - The weighted average credit quality rating for the fixed-income portfolio was **AA-** at June 30, 2025[203](index=203&type=chunk) - The overall portfolio remains very liquid, with approximately **$3.8 billion** (**10%**) of principal repayment expected from the fixed-income portfolio during the remainder of 2025[205](index=205&type=chunk) [Asset-Backed Securities](index=49&type=section&id=Asset-Backed%20Securities) The asset-backed securities portfolio, comprising residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), and other asset-backed securities (OABS), showed an increase in RMBS exposure in high-quality investment-grade securities, stable CMBS allocation with no delinquencies, and selective additions to OABS in highly rated debt tranches Asset-Backed Securities Composition (June 30, 2025) | Type | Fair Value (millions) | Net Unrealized Gains (Losses) (millions) | % of Asset Backed Securities | Duration (years) | Average Rating | | :-------------------------------- | :-------------------- | :--------------------------------------- | :--------------------------- | :--------------- | :------------- | | Residential mortgage-backed securities | $2,660 | $14 | 18.5% | 2.5 | AA+ | | Commercial mortgage-backed securities | $5,049 | $(276) | 35.2% | 1.6 | AA | | Other asset-backed securities | $6,650 | $(18) | 46.3% | 1.1 | AA | | Total asset-backed securities | $14,359 | $(280) | 100.0% | 1.6 | AA | - The RMBS portfolio increased exposure through purchases of high-quality investment-grade securities in Q2 2025[209](index=209&type=chunk) - CMBS allocation remained relatively stable, with a focus on high-quality securities in sectors like apartments, grocery-anchored shopping centers, logistics, and self-storage; no delinquencies were reported at June 30, 2025[210](index=210&type=chunk) - The OABS portfolio selectively added securities in the automobile and equipment categories, predominantly in highly rated, senior, and short-tenor debt tranches[213](index=213&type=chunk) [State and Local Government Obligations](index=52&type=section&id=State%20and%20Local%20Government%20Obligations) The municipal securities portfolio, composed of general obligations and revenue bonds, saw credit spreads widen and then tighten in Q2 2025, with selective additions of short-duration bonds State and Local Government Obligations (June 30, 2025, millions) | Average Rating | General Obligations | Revenue Bonds | Total | | :------------- | :------------------ | :------------ | :---- | | AAA | $728 | $514 | $1,242 | | AA | $538 | $1,028 | $1,566 | | A | $0 | $156 | $156 | | Total fair value | $1,266 | $1,698 | $2,964 | - Municipal bond credit spreads widened at the beginning of Q2 2025 but tightened by quarter-end; short-duration bonds were selectively added to the portfolio[216](index=216&type=chunk) [Corporate and Other Debt Securities](index=52&type=section&id=Corporate%20and%20Other%20Debt%20Securities) The corporate and other debt portfolio increased in size and saw a slight increase in duration, with selective additions of securities during periods of attractive credit spreads Corporate and Other Debt Securities (June 30, 2025, millions) | Average Rating | Consumer | Industrial | Communication | Financial Services | Technology | Basic Materials | Energy | Total | | :------------- | :------- | :--------- | :------------ | :----------------- | :--------- | :-------------- | :----- | :---- | | AAA | $38 | $0 | $0 | $0 | $0 | $0 | $32 | $70 | | AA | $93 | $0 | $0 | $1,041 | $0 | $0 | $44 | $1,178 | | A | $810 | $512 | $165 | $2,945 | $60 | $148 | $566 | $5,206 | | BBB | $3,824 | $1,695 | $393 | $2,176 | $1,590 | $85 | $1,447 | $11,210 | | Non-investment grade/non-rated | $298 | $74 | $60 | $2 | $11 | $7 | $6 | $458 | | Total fair value | $5,063 | $2,281 | $618 | $6,164 | $1,661 | $240 | $2,095 | $18,122 | - The corporate and other debt portfolio increased to **$18.1 billion** at June 30, 2025, from **$16.0 billion** at March 31, 2025, with its duration increasing slightly to **2.8 years**[217](index=217&type=chunk) [Nonredeemable Preferred Stocks](index=52&type=section&id=Nonredeemable%20Preferred%20Stocks) The nonredeemable preferred stock portfolio experienced a slight decrease in fair value due to calls during the quarter. The majority of these securities have fixed-rate dividends until a call date, then convert to floating-rate, and all are expected to pay dividends in full and on time Nonredeemable Preferred Stocks by Sector and Rating (June 30, 2025, millions) | Average Rating | U.S. Banks | Foreign Banks | Insurance | Other Financial | Industrials | Utilities | Total | | :------------- | :--------- | :------------ | :-------- | :-------------- | :---------- | :-------- | :---- | | BBB | $226 | $14 | $64 | $32 | $0 | $39 | $375 | | Non-investment grade/non-rated | $65 | $0 | $20 | $23 | $17 | $0 | $125 | | Total fair value | $291 | $14 | $84 | $55 | $17 | $39 | $500 | - The nonredeemable preferred stock portfolio fair value slightly decreased to **$0.5 billion** at June 30, 2025, from **$0.6 billion** at March 31, 2025, primarily due to calls during the quarter[221](index=221&type=chunk) - Approximately **97%** of nonredeemable preferred stocks pay dividends with tax preferential characteristics, and all are expected to pay their dividends in full and on time[220](index=220&type=chunk) [Common Equities](index=53&type=section&id=Common%20Equities) The common equities portfolio primarily consists of individual holdings selected based on their correlation with the Russell 1000 Index, with GAAP income total return within the targeted tracking error for the year-to-date period Common Equities Composition (millions) | Type | June 30, 2025 | % of Total Common Equities | | :-------------------- | :-------------- | :------------------------- | | Common stocks | $3,703 | 99.1% | | Other risk investments | $32 | 0.9% | | Total common equities | $3,735 | 100.0% | - The company held **685** out of **1,015** (**67%**) of the common stocks comprising the Russell 1000 Index at June 30, 2025, making up **93%** of the index's total market capitalization[222](index=222&type=chunk) [Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995](index=54&type=section&id=Safe%20Harbor%20Statement%20Under%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) This cautionary statement outlines various risks and uncertainties that could cause actual results to differ materially from forward-looking statements, which are not guarantees of future performance - **Key Risks and Uncertainties:** * Ability to underwrite and price risks accurately and charge adequate rates * Ability to establish accurate loss reserves * Impact of severe weather, catastrophe events, and climate change * Effectiveness and availability of reinsurance programs * Secure and uninterrupted operation of critical systems * Impacts of security breaches or cyberattacks * Ability to maintain a recognized brand and reputation * Effectiveness of innovation and response to competitors * Management of complexity in product development and customer experience * Highly competitive nature of property-casualty insurance markets * Accuracy of claims adjustment * Compliance with complex and changing laws and regulations * Impact of misconduct or fraudulent acts * Ability to attract, develop, and retain talent * Litigation challenging business practices * Success of business strategy and new product/market entry * Impact of intellectual property rights * Success of new technology development and use * Performance of investment portfolios * Impact of ESG and public policy matters on investment returns * Ability to access cash and convert investments to cash * Risk of non-performance by significant contract parties * Legal restrictions on insurance subsidiaries' dividend payments * Ability to obtain capital when necessary * Evaluations and ratings by credit rating agencies * Variable nature of common share dividend policy * Returns from tax-advantaged projects * Impact of not managing to short-term earnings expectations * Impacts of epidemics, pandemics, or other widespread health risks[226](index=226&type=chunk) - The company undertakes no obligation to update any forward-looking statements, except as required by applicable law[224](index=224&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section provides quantitative and qualitative disclosures about market risk, specifically interest rate risk and equity market risk, noting no material impact compared to the prior annual report - The duration of financial instruments subject to interest rate risk was **3.4 years** at June 30, 2025[227](index=227&type=chunk) - The weighted average beta of the equity portfolio was **1.1** at June 30, 2025[227](index=227&type=chunk) - No material impact has been experienced when compared to the tabular presentations of interest rate and market risk sensitive instruments in the 2024 Annual Report on Form 10-K[227](index=227&type=chunk) [Item 4. Controls and Procedures.](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the company's disclosure controls and procedures, concluding they were effective as of the end of the reporting period. There have been no material changes in internal control over financial reporting - Disclosure controls and procedures were effectively serving their stated purposes as of June 30, 2025[229](index=229&type=chunk) - There have been no material changes in internal control over financial reporting during the most recent fiscal quarter[230](index=230&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings.](index=56&type=section&id=Item%201.%20Legal%20Proceedings.) This section incorporates by reference the discussion of legal proceedings from Note 11 to the consolidated financial statements - Discussion of legal proceedings is incorporated by reference from Note 11 – Litigation to the consolidated financial statements[233](index=233&type=chunk) [Item 1A. Risk Factors.](index=56&type=section&id=Item%201A.%20Risk%20Factors.) This section states that there have been no material changes in the risk factors from those discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors from those discussed in the 2024 Annual Report on Form 10-K[234](index=234&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section details the company's common share repurchases during the second quarter of 2025 and the Board of Directors' approval of a new authorization to repurchase up to 25 million common shares Issuer Purchases of Equity Securities (Q2 2025) | 2025 Calendar Month | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------ | :------------------------------- | :--------------------------- | | April | 9,183 | $267.93 | | May – prior authorization | 6,000 | $282.61 | | May – current authorization | 15,795 | $280.87 | | June | 14,367 | $272.33 | | Total | 45,345 | $275.78 | - In May 2025, the Board of Directors approved an authorization for the company to repurchase up to **25 million** common shares, terminating the previous authorization[236](index=236&type=chunk) [Item 5. Other Information.](index=56&type=section&id=Item%205.%20Other%20Information.) This section states that no director or executive officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the second quarter of 2025, and references the CEO's quarterly letter to shareholders - No director or executive officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025[238](index=238&type=chunk) [Item 6. Exhibits.](index=56&type=section&id=Item%206.%20Exhibits.) This section provides an index of all exhibits filed with the Quarterly Report on Form 10-Q, including certifications, the CEO's letter to shareholders, and XBRL documents - The exhibit index lists various documents filed, including certifications (Rule 13a-14(a)/15d-14(a) and Section 1350), the CEO's letter to shareholders, and XBRL interactive data files[240](index=240&type=chunk)[245](index=245&type=chunk)

Core Viewpoint - Progressive (NYSE: PGR) was labeled a 'buy' at the end of September last year, and the company has shown strong operational performance since then, although valuations were noted to be somewhat stretched at that time [1]. Company Performance - Progressive has delivered operationally well since the 'buy' recommendation was made [1]. Valuation Concerns - The valuations of Progressive were considered somewhat stretched at the time of the initial recommendation [1].

Report Summary 1. Report Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The industry and market are increasingly focusing on multi - asset ETFs as an innovative product offering one - stop asset allocation solutions. The report explores the development of US multi - asset ETFs to provide insights for domestic market innovation [2][11]. - US multi - asset ETFs have shown significant growth in recent years, with distinct characteristics such as strong head - effects in scale, rapid development of actively managed products, and extensive application of FOF - type products [2][20][31]. - The development of US multi - asset ETFs offers important lessons for the domestic market, including deepening multi - asset index development, diversifying allocation strategies, and broadening underlying asset investment tools [5]. 3. Summary by Directory 3.1 Two Action Plans Mentioned, Multi - asset ETFs Are Approaching - The "Public Offering Plan" emphasizes increasing the creation of asset - allocation products to meet the needs of investors with different risk preferences and promote the coordinated development of equity and fixed - income investments [8]. - The "Index Plan" proposes researching and launching innovative index products such as multi - asset ETFs and expanding the underlying asset categories of ETFs. Recent releases of multi - asset indices indicate growing market attention [10][11]. 3.2 Analysis of the Development History and Current Situation of US Multi - asset ETFs - In 2005, BlackRock issued the world's first multi - asset ETF in Canada. In 2006, Invesco launched the first US multi - asset ETF. After the 2008 financial crisis, multi - asset ETFs evolved rapidly [13][14]. - As of March 31, 2025, there are 181 multi - asset ETFs in the US market, with a total scale of $36 billion, ranking first globally. However, their scale accounts for only 0.35% of all US ETFs, indicating significant growth potential [18]. - The top three fund managers in terms of management scale are BlackRock, Pacer Advisors, and First Trust Portfolios, with a combined scale ratio of 45.35%. The top ten multi - asset ETFs in terms of fund scale account for 51.26% of the total scale [22][25]. - Actively managed multi - asset ETFs have developed rapidly. As of March 31, 2025, 146 out of 181 multi - asset ETFs are actively managed, accounting for 80.66%. Their issuance has increased explosively since 2021 [31]. - FOF - type products are widely used in US multi - asset ETFs. As of March 31, 2025, 73 out of 181 multi - asset ETFs are marked as FOF - type, accounting for nearly 40%, with a fund scale of $13.041 billion, about 36% of the total [34]. - The expense ratios of US multi - asset ETFs vary significantly. The average expense ratio of all 181 multi - asset ETFs is 0.80%, with actively managed and passively managed products having average expense ratios of 0.83% and 0.69% respectively. The expense ratio has generally remained low since 2016 [5][40]. 3.3 Exploration of the Strategy Classification of US Multi - asset ETFs - **Core Allocation Type**: This is the most common strategy type, further divided into target - risk, macro - strategy, and subjective - allocation subtypes. Target - risk type aims to meet pre - designed risk metrics, with 28 products and a scale of $8.176 billion. Macro - strategy type adjusts asset allocation based on macro - economic analysis, with 12 products and a scale of $0.937 billion. Subjective - allocation type gives investment managers high freedom, with 57 products and a scale of $10.402 billion [44][47][51]. - **Trend - Following Type**: These ETFs use momentum factors or trend - following models for asset allocation. As of March 31, 2025, there are 26 products with a scale of $7.193 billion, accounting for about 20% of the total [54][55]. - **Target - Dividend Type**: These ETFs focus on interest (dividend) income, with 22 products and a scale of $6.384 billion. The average historical dividend rate of 17 products issued before 2024 is 7.20%, much higher than other types [58][63]. - **Option - Strategy Type**: These ETFs add option - based derivatives to underlying assets to change the risk - return characteristics. As of March 31, 2025, there are 36 products with a scale of $2.907 billion, accounting for 8.08% of the total [63][64]. 3.4 Suggestions and Insights - **Investor Suggestions**: Different types of investors can choose corresponding multi - asset ETFs. For example, risk - sensitive investors can choose target - risk type; policy - sensitive investors can choose macro - strategy type; investors seeking stable cash flow can choose target - dividend type; those preferring quantitative strategies can choose trend - following type; and investors interested in alternative strategies can choose option - strategy type [68][69][70]. - **Insights for the Domestic Market**: The domestic market should prioritize using existing multi - asset indices as tracking targets, deepen the development of multi - asset indices, focus on stable strategies and diversify allocation strategies, and broaden underlying asset investment tools to promote the development of multi - asset ETFs [72][73][75].

Industry Overview - The Zacks Property and Casualty Insurance (P&C) industry is expected to benefit from improved pricing, prudent underwriting, and exposure growth despite an increase in catastrophic events [1] - The industry includes companies providing commercial and personal property insurance, casualty insurance products, and services, with premiums being the primary revenue source [3] - The industry is currently facing a decline in pricing after several years of increases, with three interest rate cuts last year and potential further cuts this year [2] Trends and Projections - Global commercial insurance rates fell by 4% in Q2, but personal auto insurance is projected to remain strong, supported by better investment returns and reduced claims [4] - Deloitte estimates gross premiums to grow sixfold to $722 billion by 2030, with China and North America accounting for over two-thirds of the total [4] - Swiss Re predicts premium growth of 5% in 2025 and 4% in 2026 [4] Catastrophe Impact - The industry is vulnerable to catastrophe events, which can negatively impact underwriting profits; the 2025 hurricane season is expected to be above normal with 23 named storms [5] - Global insured losses from natural disasters in the first half of 2025 are estimated to be at least $100 billion [5] - The combined ratio is expected to improve from 2023 to 98.5% in 2025 but may deteriorate to 99% in 2026 [5] Mergers and Acquisitions - Consolidation in the P&C industry is anticipated to continue as companies seek to diversify operations and gain market share [6] Technology Adoption - The industry is increasingly adopting technologies such as blockchain, artificial intelligence, and advanced analytics to enhance operations and reduce costs [8] - Insurtechs are emerging, focusing on the P&C insurance sector, with significant investments in technology expected to improve efficiency [8] Industry Performance - The Zacks Property and Casualty Insurance industry ranks 92, placing it in the top 38% of over 250 Zacks industries, indicating positive near-term prospects [9] - The industry has underperformed compared to its sector and the S&P 500, with a year-to-date increase of 4.7% compared to 9.8% for the sector and 6.9% for the S&P 500 [11] Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-book (P/B) ratio of 1.53X, compared to the S&P 500's 8.5X and the sector's 4.27X [13] Company Highlights - Progressive Corporation is a major auto insurer with a Zacks Rank 2, expected to see 23.4% year-over-year earnings growth in 2025 [17][18] - Berkshire Hathaway, with a Zacks Rank 3, continues to benefit from its diverse operations and is expected to see a 5% increase in earnings for 2026 [21][23] - Chubb Limited, also a Zacks Rank 3, is focusing on middle-market businesses and cyber insurance, with an expected 18.9% growth in earnings for 2026 [25][26] - Travelers Companies, carrying a Zacks Rank 3, is well-positioned for growth with a projected 20.5% increase in earnings for 2026 [29][30] - Allstate, the third-largest P&C insurer, is expected to see earnings growth of 0.1% in 2025 and 22% in 2026, supported by rate increases and strategic acquisitions [32][33]

Core Insights - The second-quarter 2025 earnings season has shown better-than-expected results from several U.S. corporations, indicating a positive outlook for the remainder of the year [2][3] Company Summaries JPMorgan Chase & Co. (JPM) - JPMorgan reported adjusted earnings of $4.96 per share, exceeding the Zacks Consensus Estimate of $4.51, with revenues of $44.91 billion, surpassing the estimate of $43.81 billion [5] - The company anticipates net interest income (NII) to reach approximately $95.5 billion, up from a previous estimate of $94.5 billion, driven by loan demand and high interest rates [7] - Current-year expected revenue and earnings growth rates are -0.2% and -3.4%, respectively, while next year's growth rates are projected at 2.6% and 5.1% [8] Netflix Inc. (NFLX) - Netflix reported adjusted earnings of $7.19 per share, beating estimates by 1.7%, with revenues of $11.07 billion, a 16% year-over-year increase [10] - The company raised its full-year 2025 revenue forecast to $44.8-$45.2 billion, driven by membership growth and advertising revenue [12] - Expected revenue and earnings growth rates for the current year are 15.3% and 31.4%, respectively, with next year's rates at 12.8% and 23.4% [14] The Progressive Corp. (PGR) - Progressive's second-quarter earnings per share were $4.88, beating estimates by 10.1%, with a year-over-year increase of 84.1% [16] - Net premiums written increased by 12% to $20 billion, and operating revenues rose 19.5% year over year to $42.2 billion [17] - Expected revenue and earnings growth rates for the current year are 16.6% and 23.4%, respectively, while next year's rates are projected at 9.9% and -4.9% [18] GE Aerospace - GE Aerospace reported adjusted earnings of $1.66 per share, exceeding estimates, with total revenues of $11 billion, a 21% year-over-year increase [20] - Total orders grew by 27% year over year to $14.2 billion, supported by rising defense budgets and demand for commercial air travel [21] - Expected revenue and earnings growth rates for the current year are -4.1% and 22.6%, respectively, with next year's rates at 9.4% and 19.1% [23] Interactive Brokers Group Inc. (IBKR) - IBKR reported adjusted earnings of $0.51 per share, beating estimates, with revenues of $1.48 billion, surpassing the consensus by 8.76% [24] - The company is focusing on developing proprietary software and expanding its product suite to support revenue growth [25] - Expected revenue and earnings growth rates for the current year are 7.4% and 9.7%, respectively, with next year's rates at 6.6% and 6.7% [26]

Core Insights - The Progressive Corporation (PGR) reported a second-quarter 2025 earnings per share (EPS) of $4.88, exceeding the Zacks Consensus Estimate by 10.1% and reflecting an 84.1% year-over-year increase [1][8] - Operating revenues rose 19.5% year over year to $42.2 billion, driven by higher net premiums earned and significant increases in net investment income and service revenues [2] - The company achieved a net realized gain on securities of $387 million, a significant improvement from a loss of $127 million in the same quarter last year [3][8] Premiums and Policies - Net premiums written reached $20 billion, marking a 12% increase from $17.9 billion a year ago, while net premiums earned grew 18% to $20.3 billion, surpassing the Zacks Consensus Estimate of $20.1 billion [1][8] - Policies in force in the Personal Lines segment increased 16% year over year to 36.1 million, with notable growth in the Personal Auto segment [4] Financial Metrics - Progressive's book value per share was $55.62 as of June 30, 2025, up 39.5% from $39.85 a year earlier, and the return on equity improved to 43.6% from 40.2% [5] - The total debt-to-total capital ratio improved by 530 basis points to 17.5 [5] Expense Overview - Total expenses increased by 15.1% to $35.2 billion, driven by higher losses, policy acquisition costs, and other underwriting expenses [2]

Company Performance - Progressive reported quarterly earnings of $4.88 per share, exceeding the Zacks Consensus Estimate of $4.43 per share, and up from $2.65 per share a year ago, representing an earnings surprise of +10.16% [1] - The company posted revenues of $21.62 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.51%, and an increase from $18.26 billion year-over-year [2] - Over the last four quarters, Progressive has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and the earnings outlook for the coming quarters [3][4] - The current consensus EPS estimate for the upcoming quarter is $3.67 on revenues of $22.46 billion, and for the current fiscal year, it is $16.84 on revenues of $87.46 billion [7] - The estimate revisions trend for Progressive was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Insurance - Property and Casualty industry, to which Progressive belongs, is currently in the top 31% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Financial Highlights](index=1&type=section&id=PROGRESSIVE%20REPORTS%20JUNE%20RESULTS) Progressive reported robust financial performance in June and Q2 2025, marked by significant net income growth and increased policies in force across all business lines [June and Q2 2025 Performance Summary](index=1&type=section&id=June%20and%20Q2%202025%20Performance%20Summary) Progressive reported significant growth for June and the second quarter of 2025, with net income surging 40% in June and 118% for the quarter year-over-year, driven by strong premium growth and a 15% increase in companywide policies in force Key Financial Metrics (June & Q2 2025 vs 2024) | (millions, except per share amounts and ratios) | June 2025 | June 2024 | Change | Quarter 2025 | Quarter 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net premiums written** | $6,605 | $5,749 | 15% | $20,076 | $17,902 | 12% | | **Net premiums earned** | $6,954 | $5,777 | 20% | $20,310 | $17,209 | 18% | | **Net income** | $1,124 | $803 | 40% | $3,175 | $1,459 | 118% | | **Per share available to common shareholders** | $1.91 | $1.37 | 40% | $5.40 | $2.48 | 118% | | **Combined ratio** | 86.6 | 86.2 | 0.4 pts | 86.2 | 91.9 | (5.7) pts | Policies in Force (as of June 30) | (thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | **Personal Lines** | | | | | Agency – auto | 10,423 | 8,965 | 16% | | Direct – auto | 15,245 | 12,576 | 21% | | Total Personal Lines | 36,126 | 31,192 | 16% | | **Commercial Lines** | 1,189 | 1,118 | 6% | | **Companywide** | 37,315 | 32,310 | 15% | [Financial Statements](index=2&type=section&id=Financial%20Statements) This section details Progressive's comprehensive income statements for June and year-to-date periods, along with earnings per share and investment portfolio performance [Monthly Comprehensive Income Statement (June 2025)](index=2&type=section&id=COMPREHENSIVE%20INCOME%20STATEMENT%20For%20the%20month%20ended%20June%2030%2C%202025) For the month of June 2025, Progressive generated total revenues of $7.58 billion, resulting in a net income of $1.12 billion, supported by $6.95 billion in net premiums earned and $179 million in net realized gains on securities, leading to a total comprehensive income of $1.58 billion Income Statement - June 2025 (in millions) | | Amount | | :--- | :--- | | **Revenues:** | | | Net premiums earned | $6,954 | | Investment income | $295 | | Total net realized gains on securities | $179 | | Total revenues | $7,575 | | **Expenses:** | | | Losses and loss adjustment expenses | $4,689 | | Total expenses | $6,199 | | **Income before income taxes** | $1,376 | | **Net income** | $1,124 | | **Total comprehensive income** | $1,578 | - The provision for income taxes included a tax benefit of **$45 million**, primarily related to the distribution of deferred compensation[4](index=4&type=chunk) [Year-to-Date Comprehensive Income Statement (as of June 30, 2025)](index=3&type=section&id=COMPREHENSIVE%20INCOME%20STATEMENTS%20For%20the%20year-to-date%20periods%20ended%20June%2030) For the six months ended June 30, 2025, Progressive's net income increased significantly to $5.74 billion from $3.79 billion in the prior year period, driven by a 19% rise in net premiums earned to $39.72 billion, with total comprehensive income reaching $7.07 billion Year-to-Date Income Statement (in millions) | | 2025 | 2024 | | :--- | :--- | :--- | | **Net premiums written** | $42,282 | $36,864 | | **Revenues:** | | | | Net premiums earned | $39,719 | $33,358 | | Investment income | $1,685 | $1,303 | | Total revenues | $42,413 | $35,377 | | **Expenses:** | | | | Losses and loss adjustment expenses | $26,409 | $23,567 | | Total expenses | $35,195 | $30,577 | | **Income before income taxes** | $7,218 | $4,800 | | **Net income** | $5,742 | $3,790 | | **Total comprehensive income** | $7,070 | $3,690 | [Earnings Per Share & Investment Results](index=4&type=section&id=COMPUTATION%20OF%20NET%20INCOME%20AND%20COMPREHENSIVE%20INCOME%20PER%20SHARE%20%26%20INVESTMENT%20RESULTS) For June 2025, diluted earnings per share (EPS) was $1.91, with year-to-date diluted EPS reaching $9.77, while the investment portfolio generated a total return of 1.2% for the month and 4.3% year-to-date Per Share Results | | June 2025 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | | **Net income available to common shareholders** | $1,124M | $5,742M | $3,773M | | **Diluted EPS** | $1.91 | $9.77 | $6.42 | | **Comprehensive income attributable to common shareholders** | $1,578M | $7,070M | $3,673M | | **Diluted Comprehensive EPS** | $2.68 | $12.03 | $6.25 | Investment Results (FTE Total Return) | | June 2025 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | | Fixed-income securities | 1.0% | 4.3% | 1.2% | | Common stocks | 4.9% | 5.3% | 13.8% | | **Total portfolio** | **1.2%** | **4.3%** | **1.7%** | [Supplemental Information (Segment Performance)](index=5&type=section&id=SUPPLEMENTAL%20INFORMATION) This section provides detailed segment-level performance, highlighting net premiums written growth and combined ratios for Personal Lines, Commercial Lines, and companywide operations [Monthly Segment Performance (June 2025)](index=5&type=section&id=SUPPLEMENTAL%20INFORMATION%20For%20the%20month%20ended%20June%2030%2C%202025) In June 2025, the Personal Lines business saw strong net premium written growth of 17%, driven by a 22% increase in the Direct channel, with the Property business reporting the lowest combined ratio at 75.1, contributing to a companywide combined ratio of 86.6 Segment Performance - June 2025 | Segment | Net Premiums Written Growth | Combined Ratio | | :--- | :--- | :--- | | **Personal Lines** | | | | Agency Vehicles | 13% | 86.4 | | Direct Vehicles | 22% | 88.7 | | Property | 6% | 75.1 | | Total Personal Lines | 17% | 87.2 | | **Commercial Lines** | 2% | 83.0 | | **Companywide Total** | **15%** | **86.6** | - Net catastrophe losses for the month were **3.2%** of net premiums earned, with nearly half related to severe weather in Texas[10](index=10&type=chunk) [Year-to-Date Segment Performance (as of June 30, 2025)](index=6&type=section&id=SUPPLEMENTAL%20INFORMATION%20For%20the%20year-to-date%20period%20ended%20June%2030%2C%202025) Year-to-date, companywide net premiums written grew 15%, led by the Personal Lines Direct channel with 22% growth, while the Agency vehicle business was the most profitable segment with a combined ratio of 83.2, despite the Property segment being significantly impacted by catastrophes Segment Performance - Year-to-Date 2025 | Segment | Net Premiums Written Growth | Combined Ratio | | :--- | :--- | :--- | | **Personal Lines** | | | | Agency Vehicles | 14% | 83.2 | | Direct Vehicles | 22% | 88.0 | | Property | 1% | 85.4 | | Total Personal Lines | 18% | 85.9 | | **Commercial Lines** | 1% | 87.1 | | **Companywide Total** | **15%** | **86.1** | - Total favorable development on prior accident years' loss reserves was **$607 million** for the first six months of 2025[12](index=12&type=chunk) [Balance Sheet and Key Metrics](index=7&type=section&id=BALANCE%20SHEET%20AND%20OTHER%20INFORMATION) This section presents Progressive's condensed balance sheet as of June 30, 2025, along with key financial metrics such as book value per share and return on equity [Condensed Balance Sheet and Key Metrics (as of June 30, 2025)](index=7&type=section&id=Condensed%20GAAP%20Balance%20Sheet) As of June 30, 2025, Progressive held total assets of $115.5 billion and total shareholders' equity of $32.6 billion, maintaining a strong financial position with a debt-to-total capital ratio of 17.5%, a book value per common share of $55.62, and a trailing 12-month return on average common shareholders' equity of 37.7% Condensed Balance Sheet (in millions) | | June 30, 2025 | | :--- | :--- | | **Assets** | | | Total investments | $88,610 | | Total assets | $115,480 | | **Liabilities & Equity** | | | Loss and loss adjustment expense reserves | $41,154 | | Total liabilities | $82,876 | | Shareholders' equity | $32,604 | | Total liabilities and shareholders' equity | $115,480 | Key Financial Metrics | Metric | Value | | :--- | :--- | | Book value per common share | $55.62 | | Trailing 12-month ROE (Net Income) | 37.7% | | Debt-to-total capital ratio | 17.5% | | Fixed-income portfolio duration | 3.4 years | | Weighted average credit quality | AA- | - The company repurchased **14,367 common shares** in June 2025 at an average cost of **$272.33 per share**[14](index=14&type=chunk) [Company Commentary and Events](index=8&type=section&id=Monthly%20Commentary) This section provides management commentary on specific financial reporting nuances and outlines key upcoming investor relations events [Commentary and Events](index=8&type=section&id=Commentary%20and%20Events) The company noted that the June net premiums written growth rate was inflated by 2-3% due to a monthly closing process nuance, which did not affect the quarterly growth rate, and has scheduled its Q2 2025 investor conference call for August 5, 2025, with July results planned for release on August 20, 2025 - The companywide net premiums written growth rate for June is higher by about **2-3%** due to a nuance with the monthly closing process where May 31 was reported in June 2025, though the second quarter 2025 growth rate was unaffected[15](index=15&type=chunk) - Upcoming Events: - **Q2 2025 Investor Relations Conference Call:** Tuesday, August 5, 2025, at 9:30 a.m. ET - **Form 10-Q Filing:** Monday, August 4, 2025 - **July 2025 Results Release:** Wednesday, August 20, 2025[16](index=16&type=chunk)[17](index=17&type=chunk) [Forward-Looking Statements and Risk Factors](index=9&type=section&id=Safe%20Harbor%20Statement%20Under%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) This section includes a Safe Harbor statement, emphasizing that forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially [Risk Factors](index=9&type=section&id=Risk%20Factors) The report includes a Safe Harbor statement cautioning investors that forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, including the ability to price risks and set loss reserves accurately, the impact of catastrophes and climate change, competition, regulatory changes, and the performance of investment portfolios - The report contains forward-looking statements that are subject to risks and uncertainties which could cause actual results to differ materially from projections[21](index=21&type=chunk) - Key risk factors include, but are not limited to: - Ability to underwrite and price risks accurately - Impact of severe weather, catastrophe events, and climate change - Effectiveness of reinsurance programs - Highly competitive nature of property-casualty insurance markets - Performance of fixed-income and equity investment portfolios - Compliance with complex and changing laws and regulations[24](index=24&type=chunk)

Core Insights - Progressive Corporation reported significant growth in net premiums written and earned for the quarter and year-to-date, indicating strong business performance and market demand [4]. Group 1: Financial Performance - For the quarter ended June 30, 2025, net premiums written reached $6,605 million, a 15% increase from $5,749 million in 2024 [4]. - Net premiums earned for the same quarter were $6,954 million, up 20% from $5,777 million in 2024 [4]. - The company reported a net income of $1,124 million for the quarter, representing a 40% increase compared to $803 million in 2024 [4]. - Earnings per share available to common shareholders increased to $1.91, a 40% rise from $1.37 in 2024 [4]. - The total pretax net realized gains on securities were $179 million, compared to $22 million in 2024, indicating a significant improvement [4]. - The combined ratio for the quarter was 86.6, slightly up from 86.2 in 2024, but improved from 91.9 year-over-year [4]. Group 2: Policies in Force - As of June 30, 2025, the total number of personal lines policies in force was 36,126 thousand, a 16% increase from 31,192 thousand in 2024 [1]. - The agency auto policies increased to 10,423 thousand, up 16% from 8,965 thousand in 2024 [1]. - Direct auto policies rose to 15,245 thousand, reflecting a 21% increase from 12,576 thousand in 2024 [1]. - Special lines policies grew by 9% to 6,850 thousand from 6,312 thousand in 2024 [1]. - Property policies increased by 8% to 3,608 thousand from 3,339 thousand in 2024 [1]. - Commercial lines policies in force reached 1,189 thousand, a 6% increase from 1,118 thousand in 2024 [1].