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ý
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Ohio
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34-0963169
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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6300 Wilson Mills Road, Mayfield Village, Ohio
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44143
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Shares, $1.00 Par Value
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New York Stock Exchange
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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•
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Personal auto insurance
represented approximately 92% of our total Personal Lines net premiums written in 2016, 2015, and 2014. We ranked fourth in market share in the U.S. private passenger auto market for
2015
based on net premiums written and believe that we continued to hold that position for
2016
. There are approximately 300 competitors in this market. Progressive and the other leading 15 private passenger auto insurers, each of which writes over $2.0 billion of premiums annually, comprise about 80% of this market. All industry data, including ranking and market share, was obtained directly from data reported by either SNL Financial or A.M. Best Company, Inc. (“A.M. Best”), or was estimated using A.M. Best data as the primary source.
|
•
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Special lines products include insurance for motorcycles, ATVs, RVs, manufactured homes, watercraft, snowmobiles, and similar items, and represented about 8% of our Personal Lines net premiums written for 2016, 2015, and 2014. Due to the nature of these products, we typically experience higher losses during the warmer weather months. Our competitors are specialty companies and large multi-line insurance carriers. Although industry figures are not available, based on our analysis of this market, we believe that we are one of the largest providers of most of these products, and that we have been the market share leader for the motorcycle product since 1998.
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•
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The Agency business includes business written by our network of more than 35,000 independent insurance agencies located throughout the United States, including brokerages in New York and California. T
hese independent insurance agents and brokers have the ability to place business with Progressive for specified insurance coverages within prescribed underwriting guidelines, subject to compliance with company-mandated procedures. The agents and brokers do not have authority on behalf of Progressive to establish underwriting guidelines, develop rates, settle or adjust claims, or enter into other transactions or commitments. The Agency business also writes insurance through strategic alliance business relationships with other insurance companies, financial institutions, and national agencies. The total net premiums written through the Agency channel represented 51% of our Personal Lines volume in
2016
, compared to 52% in
2015
and 54% in
2014
.
|
•
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The Direct business includes business written directly by us on the Internet, through mobile devices, and over the phone. The total net premiums written by the Direct business represented 49% of our Personal Lines volume in
2016
, compared to 48% in
2015
and 46% in
2014
.
|
•
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In the Direct channel, Progressive Home Advantage
®
(PHA) is the program in which we bundle our auto product with homeowners and renters insurance provided by unaffiliated insurance carriers or ASI.
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•
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Together with ASI as our exclusive provider, we also offer a PHA program in our Agency business. Our two organizations now have dedicated, coordinated sales teams focusing on auto/home (and auto/renters) bundled growth in this channel.
|
•
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In addition, we offer the Platinum product to those select agents who have the appropriate customers and believe our bundled offering is a "must have" for their agency. This product is a single offering that combines home insurance from ASI and auto insurance from Progressive with compensation, coordinated policy periods, single event deductible, and other features that meet the needs and desires that our agents have expressed. During 2016, we expanded Platinum in both the number of agents that have access to the product as well as the number of states where it is available.
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•
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Our special lines products and umbrella insurance can be combined with any of the auto, home, or renters coverages that we offer, in either the Direct or Agency businesses.
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•
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As our mix of Direct customers shifts towards more complex, multi-product customers, we are further expanding the roster of products that we make available to consumers through other companies. As a result, visitors to our website can now be connected to unaffiliated insurance carriers that provide life, health, or travel insurance, among others insurance products, as well as to third parties providing vehicle extended warranties, or finance or refinance products.
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•
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Business auto
– autos, vans, and pick-up trucks used by small businesses, such as retailing, farming, services, and private trucking,
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•
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For-hire transportation
– tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses and non-fleet long-haul operators,
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•
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Contractor
– vans, pick-up trucks, and dump trucks used by small businesses, such as artisans, heavy construction, and landscapers/snowplowers,
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•
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For-hire specialty
– dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses,
|
•
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Tow
– tow trucks and wreckers used in towing services and gas/service station businesses, and
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•
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For-hire livery
– non-fleet (i.e., five or fewer vehicles) taxis, black-car services, and airport taxis
.
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•
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Commercial Automobile Insurance Procedures/Plans (CAIP)
– We are the only servicing carrier on a nationwide basis for CAIP plans, which are state-supervised plans servicing the involuntary market in 42 states and the District of Columbia. As a service provider, we provide policy issuance and claims adjusting services and collect fee revenue that is earned on a pro rata basis over the terms of the related policies. Reimbursements to us from the CAIP plans are required by state laws and regulations, subject to contractual service standards. Any changes in our participation as a CAIP service provider would not materially affect our financial condition, results of operations, or cash flows.
|
•
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Commission-based businesses
– We earn commissions as an agent for other insurance companies, as follows:
|
•
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Licensing of insurers and agents,
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•
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Capital and surplus requirements,
|
•
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Statutory accounting principles specific to insurance companies and the content of required financial and other reports,
|
•
|
Requirements for establishing insurance reserves,
|
•
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Investments,
|
•
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Acquisitions of insurers and transactions between insurers and their affiliates,
|
•
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Limitations on rates of return or profitability,
|
•
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Rating criteria, rate levels, and rate changes,
|
•
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Insolvencies of insurance companies,
|
•
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Assigned risk programs,
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•
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Authority to exit a business, and
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•
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Numerous requirements relating to other areas of insurance operations, including: required coverages, policy forms, underwriting standards, and claims handling.
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•
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the insurer’s financial statements under statutory accounting principles,
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•
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details concerning claims reserves held by the insurer,
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•
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specific investments held by the insurer, and
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•
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numerous other disclosures about the insurer’s financial condition and operations.
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•
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Insurance Risks -
risks associated with assuming, or indemnifying for, the losses or liabilities incurred by policyholders
|
•
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Operating Risks -
risks stemming from external or internal events or circumstances that directly or indirectly may affect our insurance operations
|
•
|
Market Risks -
risks that may cause
changes in the value of assets held in our investment portfolios, and
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•
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Credit and Other Financial Risks
- risks that the other party to a transaction will fail to perform according to the terms of a contract, or that we will be unable to satisfy our obligations when due or obtain capital when necessary.
|
•
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the availability of sufficient, reliable data
|
•
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our ability to conduct a complete and accurate analysis of available data
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•
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uncertainties inherent in estimates and assumptions, generally
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•
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our ability to timely recognize changes in trends and to predict both the severity and frequency of future losses with reasonable accuracy
|
•
|
our ability to predict changes in operating expenses with reasonable accuracy
|
•
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the development, selection, and application of appropriate rating formulae or other pricing methodologies
|
•
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our ability to innovate with new pricing strategies and the success of those strategies
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•
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our ability to implement rate changes and obtain any required regulatory approvals on a timely basis
|
•
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our ability to predict policyholder retention accurately
|
•
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unanticipated court decisions, legislation, or regulatory actions
|
•
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the frequency and severity of catastrophe events
|
•
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our ability to understand the impact of ongoing changes in our claims settlement practices
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•
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changing vehicle usage and driving patterns, which may be influenced by oil and gas prices among other factors, changes in residential occupancy patterns, and the emerging sharing economy
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•
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advancements in vehicle or home technology or safety features, such as accident and loss prevention technologies or the development of autonomous or partially autonomous vehicles
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•
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unexpected changes in the medical sector of the economy, including medical costs and systemic changes resulting from national or state health care laws or regulations
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•
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unforeseen disruptive technologies and events, and
|
•
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unanticipated changes in auto repair costs, auto parts prices, used car prices, or construction requirements or labor and materials costs.
|
•
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the availability of sufficient, reliable data
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•
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the difficulty in predicting the rate and direction of changes in frequency and severity trends, including the effects of future inflation rates, for multiple products in multiple markets
|
•
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unexpected changes in medical costs, auto repair costs, or the costs of construction labor and materials
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•
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unanticipated changes in governing statutes and regulations
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•
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new or changing interpretations of insurance policy provisions and coverage-related issues by courts
|
•
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the effects of changes in our claims settlement practices
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•
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our ability to recognize fraudulent or inflated claims
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•
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the accuracy of our estimates regarding claims that have been incurred but not recorded as of the date of the financial statements
|
•
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the accuracy and adequacy of actuarial techniques and databases used in estimating loss reserves
|
•
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the accuracy and timeliness of our estimates of loss and loss adjustment expenses as determined for different categories of claims, and
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•
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The ultimate paid losses and loss adjustment expenses may deviate, perhaps substantially, from point-in-time estimates of such losses and expenses, as reflected in the loss reserves included in our financial statements. Consequently, ultimate losses paid could materially exceed reported loss reserves and have a material adverse effect on our financial condition, cash flows, or results of operations. Further information on our loss reserves can be found in
Note 6 - Loss and Loss Adjustment Expense Reserves
in our Annual Report.
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•
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steal, corrupt, or destroy data, including our intellectual property, financial data or the personal information of our customers or employees
|
•
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misappropriate funds
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•
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disrupt or shut down our systems
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•
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deny customers, agents, brokers, or others access to our systems, or
|
•
|
infect our systems with viruses or malware.
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•
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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, 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, or outlook for, those issuers, sectors, or industries.
|
•
|
Prepayment or extension risk
- applicable to certain securities in the portfolio, such as residential mortgage-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
- the risk that we will not be able to convert investment securities into cash on favorable terms and on a timely basis, or that we will not be able to sell them at all, when we desire to do so.
|
•
|
insurance regulatory authorities require insurance companies to maintain specified minimum levels of statutory capital and surplus
|
•
|
insurance regulations restrict the amounts available for distribution based on either net income or surplus of the insurance company
|
•
|
competitive pressures require our insurance subsidiaries to maintain high financial strength ratings, and
|
•
|
in certain jurisdictions, prior approval must be obtained from regulatory authorities for the insurance subsidiaries to pay dividends or make other distributions to affiliated entities, including the parent holding company.
|
Year
|
|
Quarter
|
|
High
|
|
Low
|
|
Close
|
|
Dividends
Declared
Per Share
|
|||||||||
2016
|
|
1
|
|
|
$
|
35.27
|
|
|
$
|
29.32
|
|
|
$
|
35.14
|
|
|
$
|
0
|
|
|
|
2
|
|
|
35.54
|
|
|
31.14
|
|
|
33.50
|
|
|
0
|
|
||||
|
|
3
|
|
|
34.29
|
|
|
30.54
|
|
|
31.50
|
|
|
0
|
|
||||
|
|
4
|
|
|
35.95
|
|
|
30.66
|
|
|
35.50
|
|
|
0.6808
|
|
||||
|
|
|
|
$
|
35.95
|
|
|
$
|
29.32
|
|
|
$
|
35.50
|
|
|
$
|
0.6808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
2015
|
|
1
|
|
|
$
|
27.90
|
|
|
$
|
25.23
|
|
|
$
|
27.20
|
|
|
$
|
0
|
|
|
|
2
|
|
|
28.50
|
|
|
26.44
|
|
|
27.83
|
|
|
0
|
|
||||
|
|
3
|
|
|
31.70
|
|
|
27.23
|
|
|
30.64
|
|
|
0
|
|
||||
|
|
4
|
|
|
33.95
|
|
|
30.09
|
|
|
31.80
|
|
|
0.8882
|
|
||||
|
|
|
|
$
|
33.95
|
|
|
$
|
25.23
|
|
|
$
|
31.80
|
|
|
$
|
0.8882
|
|
(millions, except per share amounts)
|
|
|
Amount
|
|||||
Dividend Type
|
Declared
|
Paid
|
Per
Share |
|
Total
1
|
|
||
Annual – Variable
|
December 2016
|
February 2017
|
$
|
0.6808
|
|
$
|
395.4
|
|
Annual – Variable
|
December 2015
|
February 2016
|
0.8882
|
|
519.2
|
|
||
Annual – Variable
|
December 2014
|
February 2015
|
0.6862
|
|
404.1
|
|
|
For the years ended December 31,
|
||||||||||||||||||
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||
Total revenues
|
$
|
23,441.4
|
|
|
$
|
20,853.8
|
|
|
$
|
19,391.4
|
|
|
$
|
18,170.9
|
|
|
$
|
17,083.9
|
|
Net income attributable to Progressive
|
1,031.0
|
|
|
1,267.6
|
|
|
1,281.0
|
|
|
1,165.4
|
|
|
902.3
|
|
|||||
Per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to Progressive
|
1.76
|
|
|
2.15
|
|
|
2.15
|
|
|
1.93
|
|
|
1.48
|
|
|||||
Dividends declared
|
0.6808
|
|
|
0.8882
|
|
|
0.6862
|
|
|
1.4929
|
|
|
1.2845
|
|
|||||
Comprehensive income attributable to Progressive
|
1,164.0
|
|
|
1,044.9
|
|
|
1,352.4
|
|
|
1,246.1
|
|
|
1,080.8
|
|
|||||
Total assets
|
33,427.5
|
|
|
29,819.3
|
|
|
25,787.6
|
|
|
24,408.2
|
|
|
22,694.7
|
|
|||||
Debt outstanding
|
3,148.2
|
|
|
2,707.9
|
|
|
2,164.7
|
|
|
1,860.9
|
|
|
2,063.1
|
|
|||||
Total shareholders’ equity
|
7,957.1
|
|
|
7,289.4
|
|
|
6,928.6
|
|
|
6,189.5
|
|
|
6,007.0
|
|
|||||
Redeemable noncontrolling interest
|
483.7
|
|
|
464.9
|
|
|
--
|
|
|
--
|
|
|
--
|
|
Name
|
|
Age
|
|
Offices Held and Last Five Years’ Business Experience
|
Susan Patricia Griffith
|
|
52
|
|
President and Chief Executive Officer since July 2016; Vice President from May 2015 to June 2016; Personal Lines Chief Operating Officer from April 2015 to June 2016; President of Customer Operations from April 2014 to March 2015; Claims Group President prior to April 2014
|
John P. Sauerland
|
|
52
|
|
Vice President since May 2015; Chief Financial Officer since April 2015; Personal Lines Group President prior to April 2015
|
John F. Auer
|
|
62
|
|
President, Chief Executive Officer, and Treasurer of ARX Holding Corp.
|
John A. Barbagallo
|
|
57
|
|
Commercial Lines President; Commercial Lines Group President, including Agency Operations prior to May 2015
|
Jeffrey W. Basch
|
|
58
|
|
Vice President and Chief Accounting Officer
|
Steven A. Broz
|
|
46
|
|
Chief Information Officer since February 2016; Claims Process General Manager from March 2015 to January 2016; Enterprise Project Management Office Leader prior to March 2015
|
Patrick K. Callahan
|
|
46
|
|
Personal Lines President since April 2015; Direct Acquisition Business Leader from March 2013 to March 2015; Special Lines General Manager prior to March 2013
|
M. Jeffrey Charney
|
|
57
|
|
Chief Marketing Officer
|
William M. Cody
|
|
54
|
|
Chief Investment Officer
|
Daniel P. Mascaro
|
|
53
|
|
Vice President, Secretary, and Chief Legal Officer beginning March 1, 2017; Claims Legal business leader from January 2013 to February 2017; Personal Lines General Manager prior to January 2013
|
John Murphy
|
|
47
|
|
Customer Relationship Management President since January 2016; Customer Relationship Management Business Leader from February 2015 to January 2016; Corporate Process Business Leader prior to February 2015
|
Lori Niederst
|
|
43
|
|
Chief Human Resource Officer since November 2016; Senior Human Resource Business Leader prior to November 2016
|
Michael D. Sieger
|
|
55
|
|
Claims President since January 2015; Claims Process General Manager prior to January 2015
|
Glenn M. Renwick
|
|
61
|
|
Executive Chairman of the Board since July 2016; Chairman of the Board from November 2013 to June 2016; President and Chief Executive Officer prior to July 2016
|
EQUITY COMPENSATION PLAN INFORMATION
|
|
||||||||
Plan Category
|
|
Number of
Securities to be
Issued upon
Exercise
of Outstanding
Options, Warrants
and Rights
|
|
Weighted-Average
Exercise Price
of Outstanding
Options,
Warrants
and Rights
|
|
Number of Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans
|
|
||
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
||
Employee Plans
:
|
|
|
|
|
|
|
|
||
2015 Equity Incentive Plan
|
|
1,736,643
|
|
1,2
|
NA
|
|
10,253,079
|
|
3
|
2010 Equity Incentive Plan
|
|
5,214,730
|
|
1,2
|
NA
|
|
3,885,005
|
|
3
|
Subtotal Employee Plans
|
|
6,951,373
|
|
|
NA
|
|
14,138,084
|
|
|
Director Plans
:
|
|
|
|
|
|
|
|
||
2003 Directors Equity Incentive Plan
|
|
55,839
|
|
|
NA
|
|
250,039
|
|
|
Subtotal Director Plans
|
|
55,839
|
|
|
NA
|
|
250,039
|
|
|
Equity compensation plans not approved by security holders:
|
|
|
|
|
|
|
|
||
None
|
|
|
|
|
|
|
|
||
Total
|
|
7,007,212
|
|
|
NA
|
|
14,388,123
|
|
|
•
|
Report of Independent Registered Public Accounting Firm
|
•
|
Consolidated Statements of Comprehensive Income - For the Years Ended
December 31, 2016
,
2015
, and
2014
|
•
|
Consolidated Balance Sheets -
December 31, 2016
and
2015
|
•
|
Consolidated Statements of Changes in Shareholders’ Equity - For the Years Ended
December 31, 2016
,
2015
, and
2014
|
•
|
Consolidated Statements of Cash Flows - For the Years Ended
December 31, 2016
,
2015
, and
2014
|
•
|
Notes to Consolidated Financial Statements
|
•
|
Supplemental Information (Unaudited)
|
•
|
Schedule I - Summary of Investments - Other than Investments in Related Parties
|
•
|
Schedule II - Condensed Financial Information of Registrant
|
•
|
Schedule III - Supplementary Insurance Information
|
•
|
Schedule IV - Reinsurance
|
•
|
Report of Independent Registered Public Accounting Firm on Financial Statement Schedules
|
•
|
Consent of Independent Registered Public Accounting Firm
|
•
|
No other schedules are required to be filed herewith pursuant to Article 7 of Regulation S-X.
|
|
December 31, 2016
|
||||||||||
Type of Investment
|
Cost
|
|
Fair Value
|
|
Amount At
Which Shown
In The
Balance Sheet
|
||||||
Available-for-sale
|
|
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
|
|
||||||
Bonds:
|
|
|
|
|
|
||||||
United States Government and government agencies and authorities
|
$
|
2,899.2
|
|
|
$
|
2,870.1
|
|
|
$
|
2,870.1
|
|
States, municipalities, and political subdivisions
|
2,509.5
|
|
|
2,502.6
|
|
|
2,502.6
|
|
|||
Foreign government obligations
|
24.5
|
|
|
24.5
|
|
|
24.5
|
|
|||
Public utilities
|
135.6
|
|
|
135.1
|
|
|
135.1
|
|
|||
Corporate and other debt securities
|
4,422.2
|
|
|
4,415.8
|
|
|
4,415.8
|
|
|||
Asset-backed securities
|
6,107.3
|
|
|
6,103.8
|
|
|
6,103.8
|
|
|||
Redeemable preferred stocks
|
188.8
|
|
|
191.9
|
|
|
191.9
|
|
|||
Total fixed maturities
|
16,287.1
|
|
|
16,243.8
|
|
|
16,243.8
|
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Common stocks:
|
|
|
|
|
|
||||||
Public utilities
|
106.7
|
|
|
168.6
|
|
|
168.6
|
|
|||
Banks, trusts, and insurance companies
|
265.5
|
|
|
558.2
|
|
|
558.2
|
|
|||
Industrial, miscellaneous, and all other
|
1,065.3
|
|
|
2,085.6
|
|
|
2,085.6
|
|
|||
Nonredeemable preferred stocks
|
734.2
|
|
|
853.5
|
|
|
853.5
|
|
|||
Total equity securities
|
2,171.7
|
|
|
3,665.9
|
|
|
3,665.9
|
|
|||
Short-term investments
|
3,572.9
|
|
|
3,572.9
|
|
|
3,572.9
|
|
|||
Total investments
|
$
|
22,031.7
|
|
|
$
|
23,482.6
|
|
|
$
|
23,482.6
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues
|
|
|
|
|
|
||||||
Dividends from subsidiaries
|
$
|
375.5
|
|
|
$
|
852.5
|
|
|
$
|
1,000.2
|
|
Undistributed income (loss) from subsidiaries
|
741.9
|
|
|
500.0
|
|
|
358.3
|
|
|||
Equity in net income of subsidiaries*
|
1,117.4
|
|
|
1,352.5
|
|
|
1,358.5
|
|
|||
Intercompany investment income*
|
5.5
|
|
|
3.9
|
|
|
2.4
|
|
|||
Gains (losses) on extinguishment of debt
|
1.6
|
|
|
(0.9
|
)
|
|
(4.8
|
)
|
|||
Total revenues
|
1,124.5
|
|
|
1,355.5
|
|
|
1,356.1
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Interest expense
|
140.4
|
|
|
136.1
|
|
|
120.2
|
|
|||
Deferred compensation
1
|
5.3
|
|
|
5.3
|
|
|
2.8
|
|
|||
Other operating costs and expenses
|
4.2
|
|
|
5.4
|
|
|
4.4
|
|
|||
Total expenses
|
149.9
|
|
|
146.8
|
|
|
127.4
|
|
|||
Income before income taxes
|
974.6
|
|
|
1,208.7
|
|
|
1,228.7
|
|
|||
Benefit for income taxes
|
56.4
|
|
|
58.9
|
|
|
52.3
|
|
|||
Net income attributable to Progressive
|
1,031.0
|
|
|
1,267.6
|
|
|
1,281.0
|
|
|||
Other comprehensive income (loss)
|
133.0
|
|
|
(222.7
|
)
|
|
71.4
|
|
|||
Comprehensive income attributable to Progressive
|
$
|
1,164.0
|
|
|
$
|
1,044.9
|
|
|
$
|
1,352.4
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Investment in affiliate
|
$
|
5.0
|
|
|
$
|
5.0
|
|
Investment in subsidiaries*
|
10,280.9
|
|
|
9,192.3
|
|
||
Receivable from investment subsidiary*
|
1,121.9
|
|
|
1,200.5
|
|
||
Intercompany receivable*
|
443.3
|
|
|
406.0
|
|
||
Net deferred income taxes
|
97.1
|
|
|
90.6
|
|
||
Other assets
|
137.3
|
|
|
124.8
|
|
||
Total assets
|
$
|
12,085.5
|
|
|
$
|
11,019.2
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Accounts payable, accrued expenses, and other liabilities
|
$
|
228.4
|
|
|
$
|
202.7
|
|
Dividend payable
|
395.4
|
|
|
519.2
|
|
||
Debt
|
3,020.9
|
|
|
2,543.0
|
|
||
Total liabilities
|
3,644.7
|
|
|
3,264.9
|
|
||
Redeemable noncontrolling interest (NCI)
|
483.7
|
|
|
464.9
|
|
||
Shareholders' Equity
|
|
|
|
||||
Common shares, $1.00 par value (authorized 900.0; issued 797.5 and 797.6 including treasury shares of 217.6 and 214.0)
|
579.9
|
|
|
583.6
|
|
||
Paid-in capital
|
1,303.4
|
|
|
1,218.8
|
|
||
Retained earnings
|
5,140.4
|
|
|
4,686.6
|
|
||
Total accumulated other comprehensive income attributable to Progressive
|
933.4
|
|
|
800.4
|
|
||
Total shareholders’ equity
|
7,957.1
|
|
|
7,289.4
|
|
||
Total liabilities, redeemable NCI, and shareholders’ equity
|
$
|
12,085.5
|
|
|
$
|
11,019.2
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income attributable to Progressive
|
$
|
1,031.0
|
|
|
$
|
1,267.6
|
|
|
$
|
1,281.0
|
|
Adjustments to reconcile net income attributable to Progressive to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Undistributed (income) loss from subsidiaries
|
(741.9
|
)
|
|
(500.0
|
)
|
|
(358.3
|
)
|
|||
Amortization of equity-based compensation
|
2.2
|
|
|
2.4
|
|
|
2.2
|
|
|||
(Gains) losses on extinguishment of debt
|
(1.6
|
)
|
|
0.9
|
|
|
4.8
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Intercompany receivable
|
(37.3
|
)
|
|
7.0
|
|
|
(105.4
|
)
|
|||
Accounts payable, accrued expenses, and other liabilities
|
24.2
|
|
|
(46.2
|
)
|
|
18.2
|
|
|||
Income taxes
|
(5.0
|
)
|
|
12.3
|
|
|
61.1
|
|
|||
Other, net
|
(13.3
|
)
|
|
(3.1
|
)
|
|
0.4
|
|
|||
Net cash provided by operating activities
|
258.3
|
|
|
740.9
|
|
|
904.0
|
|
|||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Additional investments in equity securities of consolidated subsidiaries
|
(112.0
|
)
|
|
(40.2
|
)
|
|
(21.1
|
)
|
|||
Acquisition of ARX
|
0
|
|
|
(890.1
|
)
|
|
0
|
|
|||
(Paid to) received from investment subsidiary
|
78.6
|
|
|
409.1
|
|
|
(29.1
|
)
|
|||
Net cash used in investing activities
|
(33.4
|
)
|
|
(521.2
|
)
|
|
(50.2
|
)
|
|||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Tax benefit from vesting of equity-based compensation
|
9.2
|
|
|
16.8
|
|
|
12.8
|
|
|||
Net proceeds from debt issuance
|
495.6
|
|
|
394.9
|
|
|
346.3
|
|
|||
Reacquisitions of debt
|
(18.2
|
)
|
|
(19.3
|
)
|
|
(48.9
|
)
|
|||
Dividends paid to shareholders
|
(519.0
|
)
|
|
(403.6
|
)
|
|
(892.6
|
)
|
|||
Acquisition of treasury shares
|
(192.5
|
)
|
|
(208.5
|
)
|
|
(271.4
|
)
|
|||
Net cash used in financing activities
|
(224.9
|
)
|
|
(219.7
|
)
|
|
(853.8
|
)
|
|||
Change in cash
|
0
|
|
|
0
|
|
|
0
|
|
|||
Cash, beginning of year
|
0
|
|
|
0
|
|
|
0
|
|
|||
Cash, end of year
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
(millions)
|
2016
|
2015
|
2014
|
||||||
Income taxes
|
$
|
450.2
|
|
$
|
625.0
|
|
$
|
515.0
|
|
Interest
|
134.2
|
|
128.2
|
|
116.0
|
|
Segment
|
Deferred
policy acquisition costs 1 |
|
Future
policy benefits, losses, claims, and loss expenses 1 |
|
Unearned premiums
1
|
|
Other
policy claims and benefits payable 1 |
|
Premium revenue
|
|
Net
investment income 1,2 |
|
Benefits,
claims, losses, and settlement expenses |
|
Amortization
of deferred policy acquisition costs |
|
Other
operating expenses |
|
Net
premiums
written
|
||||||||||||||||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Personal Lines
|
|
|
|
|
|
|
|
|
$
|
19,188.2
|
|
|
|
|
$
|
14,591.1
|
|
|
$
|
1,446.6
|
|
|
$
|
2,549.2
|
|
|
$
|
19,819.5
|
|
||||||||||
Commercial Lines
|
|
|
|
|
|
|
|
|
2,421.3
|
|
|
|
|
1,741.0
|
|
|
266.7
|
|
|
285.4
|
|
|
2,598.3
|
|
|||||||||||||||
Property
|
|
|
|
|
|
|
|
|
864.5
|
|
|
|
|
546.1
|
|
|
150.5
|
|
|
137.2
|
|
|
935.7
|
|
|||||||||||||||
Other indemnity
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
1.4
|
|
|
0
|
|
|
0.2
|
|
|
0
|
|
|||||||||||||||
Total
|
$
|
651.2
|
|
|
$
|
11,368.0
|
|
|
$
|
7,468.3
|
|
|
$
|
0
|
|
|
$
|
22,474.0
|
|
|
$
|
456.5
|
|
|
$
|
16,879.6
|
|
|
$
|
1,863.8
|
|
|
$
|
2,972.0
|
|
|
$
|
23,353.5
|
|
Year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Personal Lines
|
|
|
|
|
|
|
|
|
$
|
17,294.5
|
|
|
|
|
$
|
12,748.7
|
|
|
$
|
1,331.3
|
|
|
$
|
2,379.9
|
|
|
$
|
17,703.6
|
|
||||||||||
Commercial Lines
|
|
|
|
|
|
|
|
|
1,995.9
|
|
|
|
|
1,244.5
|
|
|
219.4
|
|
|
232.6
|
|
|
2,171.2
|
|
|||||||||||||||
Property
|
|
|
|
|
|
|
|
|
609.1
|
|
|
|
|
349.0
|
|
|
101.1
|
|
|
98.8
|
|
|
689.6
|
|
|||||||||||||||
Other indemnity
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
(0.2
|
)
|
|
0
|
|
|
0.8
|
|
|
(0.4
|
)
|
|||||||||||||||
Total
|
$
|
564.1
|
|
|
$
|
10,039.0
|
|
|
$
|
6,621.8
|
|
|
$
|
0
|
|
|
$
|
19,899.1
|
|
|
$
|
431.8
|
|
|
$
|
14,342.0
|
|
|
$
|
1,651.8
|
|
|
$
|
2,712.1
|
|
|
$
|
20,564.0
|
|
Year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Personal Lines
|
|
|
|
|
|
|
|
|
$
|
16,561.0
|
|
|
|
|
$
|
12,161.2
|
|
|
$
|
1,322.9
|
|
|
$
|
2,262.6
|
|
|
$
|
16,759.2
|
|
||||||||||
Commercial Lines
|
|
|
|
|
|
|
|
|
1,837.5
|
|
|
|
|
1,133.4
|
|
|
201.1
|
|
|
204.2
|
|
|
1,895.4
|
|
|||||||||||||||
Property
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||||||
Other indemnity
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
11.6
|
|
|
0
|
|
|
0.3
|
|
|
0
|
|
|||||||||||||||
Total
|
$
|
457.2
|
|
|
$
|
8,857.4
|
|
|
$
|
5,440.1
|
|
|
$
|
0
|
|
|
$
|
18,398.5
|
|
|
$
|
389.5
|
|
|
$
|
13,306.2
|
|
|
$
|
1,524.0
|
|
|
$
|
2,467.1
|
|
|
$
|
18,654.6
|
|
Year Ended:
|
Gross Amount
|
|
Ceded to
Other Companies |
|
Assumed
From Other Companies |
|
Net Amount
|
|
Percentage
of Amount Assumed to Net |
|||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and liability insurance
|
$
|
23,111.2
|
|
|
$
|
637.2
|
|
|
$
|
0
|
|
|
$
|
22,474.0
|
|
|
0
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and liability insurance
|
$
|
20,454.1
|
|
|
$
|
555.0
|
|
|
$
|
0
|
|
|
$
|
19,899.1
|
|
|
0
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|||||||||
Premiums earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and liability insurance
|
$
|
18,648.4
|
|
|
$
|
249.9
|
|
|
$
|
0
|
|
|
$
|
18,398.5
|
|
|
0
|
|
|
|
|
|
|
Form
|
|
Filing No.
|
|
Filing Date
|
S-8
|
|
333-204406
|
|
May 22, 2015
|
S-8
|
|
333-185704
|
|
December 27, 2012
|
S-8
|
|
333-185703
|
|
December 27, 2012
|
S-8
|
|
333-172663
|
|
March 8, 2011
|
S-8
|
|
333-104653
|
|
April 21, 2003
|
S-8
|
|
333-41238
|
|
July 12, 2000
|
S-8
|
|
33-57121
|
|
December 29, 1994
|
S-8
|
|
33-51034
|
|
August 20, 1992
|
S-8
|
|
33-16509
|
|
August 14, 1987
|
|
|
|
|
THE PROGRESSIVE CORPORATION
|
|
March 1, 2017
|
By:
|
/s/ Susan Patricia Griffith
|
|
|
Susan Patricia Griffith
|
|
|
President and Chief Executive Officer
|
By:
|
/s/ John P. Sauerland
|
March 1, 2017
|
|
John P. Sauerland
|
|
|
Attorney-in-fact
|
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
4
|
|
4.22
|
|
Form of Confirmation Letter-Discretionary Line of Credit from PNC Bank, National Association to The Progressive Corporation
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 4.1 therein)
|
4
|
|
4.23
|
|
Form of Discretionary Line of Credit Note dated from The Progressive Corporation to PNC Bank, National Association
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 4.2 therein)
|
4
|
|
4.24
|
|
The Company agrees, upon request, to furnish to the U.S. Securities and Exchange Commission a copy of any instrument authorizing long-term debt that does not authorize debt in excess of 10% of the total assets of the Company and its subsidiaries on a consolidated basis.
|
|
|
10(i)
|
|
10.1
|
|
Stock Purchase Agreement, dated as of December 15, 2014, among ARX Holding Corp., The Progressive Corporation and the selling shareholders identified therein, including Exhibit H, the form of Stockholders' Agreement to be executed at closing
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.1 therein)
|
10(iii)
|
|
10.2
|
|
The Progressive Corporation 2014 Gainsharing Plan
|
|
Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.7 therein)
|
10(iii)
|
|
10.3
|
|
The Progressive Corporation 2015 Gainsharing Plan
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.8 therein)
|
10(iii)
|
|
10.4
|
|
The Progressive Corporation 2016 Gainsharing Plan
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.5 therein)
|
10(iii)
|
|
10.5
|
|
The Progressive Corporation 2017 Gainsharing Plan
|
|
Filed herewith
|
10(iii)
|
|
10.6
|
|
ARX Holding Corp 2017 Gainsharing Plan
|
|
Current Report on Form 8-K (filed on February 21, 2017; Exhibit 10.4 therein)
|
10(iii)
|
|
10.7
|
|
The Progressive Corporation 2007 Executive Bonus Plan
|
|
Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.8 therein)
|
10(iii)
|
|
10.8
|
|
The Progressive Corporation 2017 Executive Annual Incentive
Plan
|
|
Current Report on Form 8-K (filed on February 21, 2017; Exhibit 10.2 therein)
|
10(iii)
|
|
10.9
|
|
Form of Award Agreement under The Progressive Corporation 2017 Executive Annual Incentive Plan (2017 Fiscal Year)
|
|
Current Report on Form 8-K (filed on February 21, 2017; Exhibit 10.3 therein)
|
10(iii)
|
|
10.10
|
|
The Progressive Corporation 2003 Incentive Plan
|
|
Registration Statement No. 333-104646 (filed on April 21, 2003; Exhibit 4(a) therein)
|
10(iii)
|
|
10.11
|
|
First Amendment to The Progressive Corporation 2003 Incentive Plan
|
|
Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.10 therein)
|
10(iii)
|
|
10.12
|
|
Second Amendment to The Progressive Corporation 2003 Incentive Plan
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.12 therein)
|
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.13
|
|
Third Amendment to The Progressive Corporation 2003 Incentive Plan
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.10 therein)
|
10(iii)
|
|
10.14
|
|
Fourth Amendment to The Progressive Corporation 2003 Incentive Plan
|
|
Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.4 therein)
|
10(iii)
|
|
10.15
|
|
Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for 2004 through February 2007)
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.16 therein)
|
10(iii)
|
|
10.16
|
|
Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for March 2007 through February 2009)
|
|
Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.15 therein)
|
10(iii)
|
|
10.17
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2003 Incentive Plan
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.14 therein)
|
10(iii)
|
|
10.18
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards under The Progressive Corporation 2003 Incentive Plan
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.15 therein)
|
10(iii)
|
|
10.19
|
|
The Progressive Corporation 2010 Equity Incentive Plan
|
|
Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.1 therein)
|
10(iii)
|
|
10.20
|
|
First Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.2 therein)
|
10(iii)
|
|
10.21
|
|
Second Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.3 therein)
|
10(iii)
|
|
10.22
|
|
Third Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.4 therein)
|
10(iii)
|
|
10.23
|
|
Fourth Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Filed herewith
|
10(iii)
|
|
10.24
|
|
Fifth Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.5 therein)
|
10(iii)
|
|
10.25
|
|
Sixth Amendment to The Progressive Corporation 2010 Equity Incentive Plan
|
|
Current Report on Form 8-K (filed on December 11, 2012; Exhibit 10.1 therein)
|
10(iii)
|
|
10.26
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012)
|
|
Filed herewith
|
10(iii)
|
|
10.27
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2013)
|
|
Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.1 therein)
|
10(iii)
|
|
10.28
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.30 therein)
|
10(iii)
|
|
10.29
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2015)
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 10.1 therein)
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.30
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012)
|
|
Filed herewith
|
10(iii)
|
|
10.31
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Performance) under The Progressive Corporation 2010 Equity Incentive Plan (for 2012)
|
|
Current Report on Form 8-K (filed on March 22, 2012; Exhibit 10.1 therein)
|
10(iii)
|
|
10.32
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2013)
|
|
Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.2 therein)
|
10(iii)
|
|
10.33
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2013)
|
|
Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.3 therein)
|
10(iii)
|
|
10.34
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.35 therein)
|
10(iii)
|
|
10.35
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.36 therein)
|
10(iii)
|
|
10.36
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2015)
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 10.2 therein)
|
10(iii)
|
|
10.37
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2015)
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 10.3 therein)
|
10(iii)
|
|
10.38
|
|
The Progressive Corporation 2015 Equity Incentive Plan
|
|
Current Report on Form 8-K (filed on February 4, 2015; Exhibit 10.1 therein)
|
10(iii)
|
|
10.39
|
|
Restricted Stock Unit Award Agreement (2015 Performance-Based Award - Special Award) under the Progressive Corporation 2015 Equity Incentive Plan
|
|
Current Report on Form 8-K (filed on August 14, 2015; Exhibit 10.1 therein)
|
10(iii)
|
|
10.40
|
|
Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2015 Equity Incentive Plan (for 2016)
|
|
Quarterly Report on Form 10-Q (filed on May 5, 2016 ; Exhibit 10.1)
|
10(iii)
|
|
10.41
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Performance versus Market) under The Progressive Corporation 2015 Equity Incentive Plan (for 2016)
|
|
Quarterly Report on Form 10-Q (filed on May 5, 2016; Exhibit 10.2 therein)
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.42
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2015 Equity Incentive Plan (for 2016)
|
|
Quarterly Report on Form 10-Q (filed on May 5, 2016; Exhibit 10.3 therein)
|
10(iii)
|
|
10.43
|
|
Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Robinsons) under The Progressive Corporation 2015 Equity Incentive Plan (for 2016)
|
|
Quarterly Report on Form 10-Q (filed on May 5, 2016; Exhibit 10.4 therein)
|
10(iii)
|
|
10.44
|
|
Employment Agreement, dated March 30, 2004, between ARX Holding Corp. and John F. Auer
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.37 therein)
|
10(iii)
|
|
10.45
|
|
The Progressive Corporation 2003 Directors Equity Incentive Plan
|
|
Registration Statement No. 333-104653 (filed on April 21, 2003; Exhibit 4(a) therein)
|
10(iii)
|
|
10.46
|
|
Amendment No. 1 to The Progressive Corporation 2003 Directors Equity Incentive Plan
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.35 therein)
|
10(iii)
|
|
10.47
|
|
Amendment No. 2 to The Progressive Corporation 2003 Directors Equity Incentive Plan
|
|
Filed herewith
|
10(iii)
|
|
10.48
|
|
Amendment No. 3 to The Progressive Corporation 2003 Directors Equity Incentive Plan
|
|
Quarterly Report on Form 10-Q (filed on May 7, 2012; Exhibit 10.3 therein)
|
10(iii)
|
|
10.49
|
|
Form of Restricted Stock Award Agreement under The Progressive Corporation 2003 Directors Equity Incentive Plan (for 2004 and thereafter)
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.42 therein)
|
10(iii)
|
|
10.50
|
|
The Progressive Corporation 2017 Directors Equity Incentive Plan
|
|
Current Report on Form 8-K (filed on February 21, 2017; Exhibit 10.1 therein)
|
10(iii)
|
|
10.51
|
|
The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.3 therein)
|
10(iii)
|
|
10.52
|
|
First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.4 therein)
|
10(iii)
|
|
10.53
|
|
Second Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.5 therein)
|
10(iii)
|
|
10.54
|
|
Third Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.6 therein)
|
10(iii)
|
|
10.55
|
|
Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2003 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.7 therein)
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.56
|
|
The Progressive Corporation Executive Deferred Compensation Plan (2008 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.8 therein)
|
10(iii)
|
|
10.57
|
|
First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2008 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.9 therein)
|
10(iii)
|
|
10.58
|
|
The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.10 therein)
|
10(iii)
|
|
10.59
|
|
First Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.11 therein)
|
10(iii)
|
|
10.60
|
|
Second Amendment to The Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement)
|
|
Current Report on Form 8-K (filed on October 14, 2014; Exhibit 10 therein)
|
10(iii)
|
|
10.61
|
|
Third Amendment to the Progressive Corporation Executive Deferred Compensation Plan (2010 Amendment and Restatement)
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.53 therein)
|
10(iii)
|
|
10.62
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Deferral Agreement (for 2005 through 2009)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.12 therein)
|
10(iii)
|
|
10.63
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Gainsharing/Bonus Deferral Agreement (for 2010 and thereafter)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.13 therein)
|
10(iii)
|
|
10.64
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2004)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.14 therein)
|
10(iii)
|
|
10.65
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2005)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.15 therein)
|
10(iii)
|
|
10.66
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Deferral Agreement (for 2006 through 2009)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.16 therein)
|
10(iii)
|
|
10.67
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Performance-Based Restricted Stock Unit Deferral Agreement (for 2010 through 2014)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.17 therein)
|
10(iii)
|
|
10.68
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2003)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.18 therein)
|
10(iii)
|
|
10.69
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2004)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.19 therein)
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.70
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2005)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.20 therein)
|
10(iii)
|
|
10.71
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Deferral Agreement (for 2006 through 2009)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.21 therein)
|
10(iii)
|
|
10.72
|
|
Form of The Progressive Corporation Executive Deferred Compensation Plan Time-Based Restricted Stock Unit Deferral Agreement (for 2010 and thereafter)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.22 therein)
|
10(iii)
|
|
10.73
|
|
The Progressive Corporation Executive Deferred Compensation Trust (November 8, 2002 Amendment and Restatement)
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.23 therein)
|
10(iii)
|
|
10.74
|
|
First Amendment to Trust Agreement between Fidelity Management Trust Company and Progressive
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.24 therein)
|
10(iii)
|
|
10.75
|
|
Second Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.25 therein)
|
10(iii)
|
|
10.76
|
|
Third Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.26 therein)
|
10(iii)
|
|
10.77
|
|
Fourth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.27 therein)
|
10(iii)
|
|
10.78
|
|
Fifth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.28 therein)
|
10(iii)
|
|
10.79
|
|
Sixth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.29 therein)
|
10(iii)
|
|
10.80
|
|
Seventh Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Registration Statement No. 333-185704 (filed on December 27, 2012; Exhibit 4.30 therein)
|
10(iii)
|
|
10.81
|
|
Eighth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.66 therein)
|
10(iii)
|
|
10.82
|
|
Ninth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 10.5 therein)
|
10(iii)
|
|
10.83
|
|
Tenth Amendment to The Progressive Corporation Executive Deferred Compensation Trust
|
|
Quarterly Report on Form 10-Q (filed on May 11, 2015; Exhibit 10.6 therein)
|
10(iii)
|
|
10.84
|
|
The Progressive Corporation Directors Deferral Plan (2008 Amendment and Restatement)
|
|
Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.62 therein)
|
10(iii)
|
|
10.85
|
|
The Progressive Corporation Directors Deferral Plan (2015 Amendment and Restatement)
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.77 therein)
|
10(iii)
|
|
10.86
|
|
The Progressive Corporation Directors Restricted Stock Deferral Plan
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.76 therein)
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under
Reg. S-K,
Item 601
|
|
Form 10-K
Exhibit
No.
|
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC
|
10(iii)
|
|
10.87
|
|
The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement)
|
|
Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.63 therein)
|
10(iii)
|
|
10.88
|
|
First Amendment to The Progressive Corporation Directors Restricted Stock Deferral Plan (2008 Amendment and Restatement)
|
|
Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.69 therein)
|
10(iii)
|
|
10.89
|
|
Form of The Progressive Corporation Directors Restricted Stock Deferral Plan Deferral Agreement
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.76 therein)
|
10(iii)
|
|
10.90
|
|
Director Compensation Schedule for 2014 - 2015 Term
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.79 therein)
|
10(iii)
|
|
10.91
|
|
Director Compensation Schedule for 2015 - 2016 Term
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.84 therein)
|
10(iii)
|
|
10.92
|
|
Director Compensation Schedule for 2016 - 2017 Term
|
|
Filed herewith
|
10(iii)
|
|
10.93
|
|
The Progressive Corporation Executive Separation Allowance Plan (2015 Amendment and Restatement)
|
|
Current Report on Form 8-K (filed on August 11, 2015; Exhibit 10.1 therein)
|
10(iii)
|
|
10.94
|
|
First Amendment to the Progressive Corporation Executive Separation Allowance Plan (2015 Amendment and Restatement)
|
|
Current Report on Form 8-K (filed on February 2, 2016; Exhibit 10 therein)
|
10(iii)
|
|
10.95
|
|
Second Amendment to the Progressive Corporation Executive Separation Allowance Plan (2015 Amendment and Restatement)
|
|
Quarterly Report on Form 10-Q (filed on August 3, 2016; Exhibit 10.1 therein)
|
10(iii)
|
|
10.96
|
|
Third Amendment to the Progressive Corporation Executive Separation Allowance Plan (2015 Amendment and Restatement)
|
|
Filed herewith
|
10(iii)
|
|
10.97
|
|
2014 Progressive Capital Management Bonus Plan
|
|
Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.82 therein)
|
10(iii)
|
|
10.98
|
|
2015 Progressive Capital Management Bonus Plan
|
|
Annual Report on Form 10-K (filed on March 2, 2015; Exhibit 10.90 therein)
|
10(iii)
|
|
10.99
|
|
2016 Progressive Capital Management Bonus Plan
|
|
Annual Report on Form 10-K (filed on February 29, 2016; Exhibit 10.90 therein)
|
10(iii)
|
|
10.100
|
|
2017 Progressive Capital Management Annual Incentive Plan
|
|
Filed herewith
|
11
|
|
11
|
|
Computation of Earnings Per Share
|
|
Filed herewith
|
13
|
|
13
|
|
The Progressive Corporation 2016 Annual Report to Shareholders
|
|
Filed herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXHIBIT INDEX
|
||||||
Exhibit No.
Under Reg. S-K, Item 601 |
|
Form 10-K
Exhibit No. |
|
Description of Exhibit
|
|
If Incorporated by Reference, Documents with
Which Exhibit was Previously Filed with SEC |
21
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21
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Subsidiaries of The Progressive Corporation
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Filed herewith
|
23
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23
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Consent of Independent Registered Public Accounting Firm
|
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Incorporated herein by reference to page 37 of this Annual Report on Form 10-K
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24
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24
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Powers of Attorney
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Filed herewith
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31
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31.1
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Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Susan Patricia Griffith
|
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Filed herewith
|
31
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31.2
|
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Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, John P. Sauerland
|
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Filed herewith
|
32
|
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32.1
|
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Section 1350 Certification of the Principal Executive Officer, Susan Patricia Griffith
|
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Furnished herewith
|
32
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32.2
|
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Section 1350 Certification of the Principal Financial Officer, John P. Sauerland
|
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Furnished herewith
|
99
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99
|
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Letter to Shareholders from Susan Patricia Griffith, President and Chief Executive Officer
|
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Furnished herewith
|
101
|
|
101.INS
|
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XBRL Instance Document
|
|
Filed herewith
|
101
|
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101.SCH
|
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XBRL Taxonomy Extension Schema Document
|
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Filed herewith
|
101
|
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101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith
|
101
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith
|
101
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith
|
101
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|
101.PRE
|
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XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith
|
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|
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REGISTERED NO. R-001
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$500,000,000
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THE PROGRESSIVE CORPORATION
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||||
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|||||
[CORPORATE SEAL]
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By:
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Thomas A. King
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Treasurer
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Attest:
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Charles E. Jarrett
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Secretary
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U.S. BANK NATIONAL ASSOCIATION, as Trustee
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By:
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Authorized Signatory
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Dated
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NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.
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THE PROGRESSIVE CORPORATION
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By:
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/s/ Brian C. Domeck
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Name: Brian C. Domeck
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Title: Vice President and Chief Financial Officer
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Attest
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||
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By:
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/s/ Charles E. Jarrett
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Name: Charles E. Jarrett
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Title: Secretary
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U.S. BANK NATIONAL ASSOCIATION,
as Trustee
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By:
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/s/ S. Soltani
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Name: Sam Soltani
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Title: Officer
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Attest
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By:
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/s/ David J. Ganss
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Name: David J. Ganss
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Title: Vice President
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STATE OF OHIO
|
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) ss:
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COUNTY OF CUYAHOGA
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)
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THE PROGRESSIVE CORPORATION
|
||||
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By:
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/s/ Brian C. Domeck
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Name:
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Brian C. Domeck
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Title:
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Vice President and Chief Financial Officer
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Attest:
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||||
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By:
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/s/ Charles E. Jarrett
|
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Name:
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Charles E. Jarrett
|
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Title:
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Vice President and Secretary
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THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
|
||||
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By:
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/s/ Linda Garcia
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Name:
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Linda Garcia
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Title:
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Vice President
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POSITION
|
TARGET %
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Senior Executives and Executive Level Managers
|
60 - 150%
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Business Leaders
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35 - 60%
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Directors and Senior Directors
|
20 - 35%
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Middle Managers and Senior Managers
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15 - 20%
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Senior Professionals and Entry Level Managers
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8 - 20%
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Administrative Support and Entry Level Professionals
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0 - 8%
|
6.
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The Performance Factor
.
|
•
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The Agency Auto business unit, consisting of the auto business produced by independent agents or brokers, including Strategic Alliances Agency auto, but excluding all Agency special lines businesses;
|
•
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The Direct Auto business unit, consisting of the personal auto business produced by phone, over the Internet, or via a mobile device, but excluding all Direct special lines businesses;
|
•
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The special lines business unit, consisting of special lines business generated by agents and brokers or directly by phone, over the Internet, or via a mobile device;
|
•
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The Commercial Lines business unit; and
|
•
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The Property business unit.
|
•
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Agency Auto;
|
•
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Direct Auto;
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•
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Special lines;
|
•
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Commercial Lines; and
|
•
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Property.
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A.
|
Recoupment
. Progressive shall have the right to recoup any Annual Gainsharing Payment (or an appropriate portion thereof, as hereinafter provided) with respect to any Plan year paid to a participant hereunder who was an executive officer of Progressive at any time during such Plan year, if: (i) the Annual Gainsharing Payment was predicated upon the achievement during such Plan year of certain financial or operating results (which includes, for purposes hereof, the Performance Factor described in Section 6); (ii) such financial or operating results were incorrect and were subsequently the subject of a restatement by Progressive within three (3) years after the date on which such Annual Gainsharing Payment was paid to the participant; and (iii) a lower payment would have been made to the participant if the restated financial or operating results had been known at the time the payment was made. Such recoupment right shall be available to Progressive whether or not the participant in question was at fault or responsible in any way in causing such restatement. In such circumstances, Progressive will have the right to recover from each such participant for such Plan year, and each such participant will refund to Progressive, the amount by which the Annual Gainsharing Payment paid to such participant for the Plan year in question exceeded the lower payment that would have been made based on the restated results, without interest; provided, however, that Progressive will not seek to recover such amounts unless the amount due would exceed the lesser of five percent (5%) of the Annual Gainsharing Payment previously paid or twenty-thousand dollars ($20,000). Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against future bonus payments, or other appropriate mechanism.
|
B.
|
Further Rights
. Notwithstanding the foregoing subsection A., if any participant that was an executive officer at any time during such Plan year engaged in fraud or other misconduct (as determined by the Committee or the Board, in their respective sole discretion) resulting, in whole or in part, in a restatement of the financial or operating results used hereunder to determine the Annual Gainsharing Payments for a specific Plan year, Progressive will further have the right to recover from such participant, and the participant will refund to Progressive upon demand, an amount equal to the entire Annual Gainsharing Payment paid to such participant for such Plan year plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from the date that such bonus was paid to the participant. Progressive shall further have the right to recover from such participant Progressive’s costs and expenses incurred in connection with recovering such Annual
|
C.
|
Rights Not Exclusive
. The rights contained in the foregoing subsections A. and B. shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under any applicable law or regulation.
|
D.
|
Compliance with Law and Exchange Requirements
. The Annual Gainsharing Payments determined and paid pursuant to the Plan shall be subject to all applicable laws and regulations. Without limiting the foregoing, and notwithstanding anything to the contrary contained in this Plan, if the SEC adopts final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require, as a condition to the Company’s continued listing on a national securities exchange (“Exchange”), that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to any participant awarded Annual Gainsharing Payments pursuant to the Plan, then the Annual Gainsharing Payment paid to such participant shall be subject to recoupment by the Company pursuant to the terms of the rules of the SEC and any applicable Exchange and any policy of the Company adopted in response to such rules.
|
|
•
|
|
Investment performance of one or more segments of the Company’s investment portfolio; and”
|
|
|
|
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|
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|
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/s/ Charles E. Jarrett
|
|
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Charles E. Jarrett
Secretary
|
|
|
|
THE PROGRESSIVE CORPORATION
|
||
|
|
|
By:
|
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/s/ Charles E. Jarrett
|
|
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Vice President & Secretary
|
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|
|
THE PROGRESSIVE CORPORATION
|
||
|
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By:
|
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/s/ Charles E. Jarrett
|
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Vice President & Secretary
|
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/s/ Charles E. Jarrett
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Charles E. Jarrett
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Secretary
|
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2016-2017 Compensation
|
Lead Independent Director
|
$25,000 additional
|
Audit Committee Chair
|
$280,000
|
Audit Committee Member
|
$255,000
|
Compensation Committee Chair
|
$275,000
|
Compensation Committee Member
|
$250,000
|
Investment Committee Chair
|
$275,000
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Investment Committee Member
|
$250,000
|
Additional Committee Chair*
|
$20,000 additional
|
Additional Committee Member*
|
$15,000 additional
|
1.
|
Section 7.2 of the Plan is hereby amended and restated in its entirety to provide as follows:
|
“7.2
|
Notwithstanding the provisions of Section 7.1, the Company may, by action of its Chief Legal Officer, modify or amend the Executive Separation Agreement and General Release at any time in response to developments in applicable law, without action of the Compensation Committee of its Board of Directors or any Affiliated Company or any other person.”
|
1.
|
The following is hereby added to the Plan as Section 7.3:
|
“7.3
|
Notwithstanding the provisions of Section 7.1 and 7.2, upon the occurrence of a Change in Control, neither the Plan nor the Executive Separation Agreement and General Release may be amended, modified or terminated in a way that impairs or reduces any of the rights or benefits of any individual who was an Eligible Employee as of the date such Change in Control occurred until after the third anniversary of the date such Change in Control occurred.”
|
3.
|
Exhibit A of the Plan is hereby amended and restated in its entirety as provided in the document attached to this Amendment as Exhibit A.
|
a.
|
Progressive shall pay you a separation allowance in the total gross amount of «SepText» Dollars ($«SepNo») (representing «sevwks» weeks of Compensation), less applicable tax withholding, other legally required deductions and (except to the extent prohibited by law) amounts due Progressive for any reason. Such separation allowance shall be paid in a lump sum at the time specified in Section 3.2 of the Plan and subject to the limitations specified in the Plan.
|
b.
|
If you are participating in The Progressive Health, Life and Disability Benefits Plan (“Group Insurance Plan”), you may elect to continue your and your dependents’ medical, dental and vision coverages under the Group Insurance Plan for the periods specified in the Group
|
c.
|
Progressive shall make outplacement services available to you for a period of [ ] months, in accordance with Section 2.5 of the Plan.
|
d.
|
If you are rehired by Progressive or any other Participating Employer as a regular employee within a period of time following your Separation Date that does not exceed the number of weeks of Compensation used in computing your separation allowance under the Plan, you shall repay to Progressive the amount specified in Section 3.7 of the Plan at the time and in the manner specified therein.
|
e.
|
[DELETE IF SEPARATION DATE IS AFTER CHANGE OF CONTROL.]
You shall not be entitled to receive the severance pay and benefits described above, and this Agreement shall be considered null and void, if, at any time prior to payment to you of a separation allowance, Progressive determines that you have committed a violation of Progressive’s Code of Business Conduct and Ethics that would have led Progressive to terminate your employment in accordance with Progressive’s then current disciplinary practices with respect to the type of violation in question had you still been actively employed.
|
a.
|
You agree to continue to honor your obligations with respect to confidential and/or proprietary information belonging to the Progressive Group, including the Confidentiality Statement to which you agreed upon your hire, if any, and all applicable policies as set forth in Progressive’s Code of Business Conduct and Ethics and Workplace Policies. You affirm and represent that you have not taken or misused any such confidential and/or proprietary information and that you have returned to Progressive any records containing such confidential and/or proprietary information and all records that are the Progressive Group’s property.
|
b.
|
Notwithstanding anything in this Agreement to the contrary, you and Progressive acknowledge that you shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law. In addition, you shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Furthermore, in the event you file a lawsuit for retaliation by Progressive for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you file any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
|
a.
|
Unless defined herein, all capitalized terms used in this Agreement shall have the meanings given to them in the Plan. The captions and headings in this Agreement are for convenience only and do not define or describe the scope or content of any provision of this Agreement.
|
b.
|
This Agreement, together with the Plan and the other documents referenced herein, constitutes the entire agreement between the parties and supersedes all prior and contemporaneous oral or written representations, agreements and understandings relating to your employment, its termination and all related matters, excluding only, and subject to Paragraph 11, above, (i) your continuing obligations under Progressive’s Code of Business Conduct and Ethics and any existing agreements between you and Progressive with respect to Confidential Information and/or Proprietary Information and (ii) your rights, if any, under the Executive Compensation Programs and any agreements entered into thereunder. Any modifications or assignments of this Agreement must be in a writing signed by you and Progressive’s Chief Legal Officer (or, in the event of a conflict of interest, Progressive’s Chief Financial Officer) in order to be effective. This Agreement is subject to the terms, provisions and limitations of the Plan in all respects.
|
c.
|
In the event any provision of this Agreement shall be held to be void, unlawful or for any reason unenforceable or otherwise at variance with the intentions of the parties as expressed herein, the remaining portions of the Agreement shall remain in full force and effect. In the event you breach this Agreement or any part of it, or fail to perform your obligations under this Agreement, the Plan or any other agreement relating to your employment that survives this Agreement, Progressive’s obligations hereunder shall terminate but the Agreement otherwise shall remain in full force and effect, including your release of Claims. No waiver of any provision of this Agreement, or the breach thereof, shall be deemed a waiver of any other provision or breach.
|
d.
|
This Agreement may be signed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute the same instrument, though this Agreement shall be of no force or effect until executed by both you and Progressive. A wet signature on an electronically transmitted copy of the Agreement and/or a wet signature transmitted electronically (i.e., a facsimile or scanned image) shall have the same effect as the original.
|
d.
|
This Agreement shall be interpreted, enforced and governed under the laws of the State of Ohio, in which State the Plan was adopted and is maintained.
|
A.
|
The only consideration for signing this Agreement is that stated expressly herein. No person or entity has made other promises or agreements of any kind to cause you to sign this Agreement.
|
B.
|
You fully understand the meaning and intent of this Agreement. You have read the Agreement carefully, know its contents, understand its terms, their meaning and their effect upon your rights and duties. You enter into this Agreement knowingly and voluntarily, agree to all its terms and conditions, understand their final and binding effect, and sign THIS Agreement as your own free act with the full intent of releasing Releasees from all claims AS PROVIDED IN THIS AGREEMENT.
|
C.
|
THIS AGREEMENT DOES NOT WAIVE OR RELEASE ANY RIGHTS OR CLAIMS YOU MAY HAVE UNDER the ADEA THAT ARISE AFTER THE DATE YOU SIGN THIS AGREEMENT.
|
D.
|
The consideration provided to you under THIS AGREEMENT is in addition to anything of value to which you are entitled already.
|
E.
|
You have been advised by Progressive to consult with an attorney prior to executing this Agreement.
|
1.
|
The Plan
.
The Progressive Corporation and its subsidiaries (collectively "Progressive" or the “Company”) have adopted the 2017 Progressive Capital Management Annual Incentive Plan (the “Plan”) as part of their compensation program for the Company’s investment professionals for the Company’s 2017 fiscal year (the “Plan year”). The Plan is performance-based, is not a form of commission compensation, and is administered under the direction of the Compensation Committee of the Board of Directors of The Progressive Corporation (the “Compensation Committee” or “Committee”). Payment under the Plan, if any, is based on Company performance as defined by the Plan, not individual employee performance. References in this Plan to the Company’s portfolio mean the respective portfolios of the Company’s subsidiaries and affiliates that are actively managed by Progressive Capital Management Corp., and references in this Plan to the Company’s investment results mean the investment results of those portfolios only.
|
2.
|
Participants.
Progressive employees who are assigned primarily to the Company’s capital management function, including the Company’s Chief Investment Officer (“CIO”), are eligible to be selected for participation in the Plan. Eligible employees in addition to the CIO will be selected by the CIO in consultation with the Chief Executive Officer (“CEO”) or Chief Human Resource Officer (“CHRO”) (the “Designated Executives”) to participate in the Plan. Participants may also participate in other Gainsharing, bonus or incentive compensation plans maintained by Progressive, if so determined by the Designated Executives (or in the case of the CIO or any other executive officer, by the Compensation Committee). Other eligible employees of the Company may be selected for participation in the Plan for or at any time during the Plan year by the Designated Executives. In such cases, the Designated Executives will determine the new participant’s Target Percentage (described below) and other terms of participation (except with respect to the CIO or any other executive officer, as to whom all determinations must be made by the Committee). Throughout this Plan, references to “executive officers” refer to executive officers of The Progressive Corporation within the meaning of any Securities and Exchange Commission (“SEC”) or New York Stock Exchange rule applicable to the Company.
|
A.
|
Annual Incentive Payment.
Each participant may earn an annual cash bonus (the “Annual Incentive Payment”), subject to the terms of this Plan. The amount of the Annual Incentive Payment earned by any participant will be determined by application of the following formula:
|
B.
|
Paid Eligible Earnings.
Paid Eligible Earnings for the Plan year shall mean and include the following: regular, Earned Time Benefit pay (excluding the payout of unused Earned Time Benefit pay at termination), sick pay, holiday pay, funeral pay, military make-up pay, overtime pay, shift differential, and retroactive payments of any of the foregoing items, in each case received by the participant during the Plan year for work or services performed as an officer or employee of Progressive.
|
Comparison
Period
|
Score = 0
Rank at or below
|
Score = 1.0
Rank equal to
|
Score = 2.0
Rank at or above
|
One year
|
15
th
Percentile
|
50
th
Percentile
|
85
th
Percentile
|
Three year
|
25
th
Percentile
|
50
th
Percentile
|
75
th
Percentile
|
•
|
the primary investment factors that are responsible for favorable or unfavorable results relative to the peer group, such as the Company’s duration and yield curve position and the extent of its exposure to sectors of the fixed-income markets, including corporate bonds, residential mortgage-backed securities, commercial mortgage-backed securities, other asset-backed securities, government bonds, preferred stocks and non-investment-grade bonds;
|
•
|
the Company’s holdings within each sector relative to the general market composition of each sector;
|
•
|
the extent to which material investment decisions may have been driven by Company strategic or capital considerations; and
|
•
|
the impact on investment results of significant portfolio cash flows driven by Company operations, strategic decisions or capital transactions.
|
4.
|
Payment Procedures; Deferral
. The Annual Incentive Payments will be determined and paid to Plan participants as soon as practicable after the Performance Factor has been determined by the Committee, but no later than March 15th following the Plan year.
|
5.
|
Qualification Date; Leave of Absence; Withholding
. Unless otherwise determined by the Committee, and except as otherwise expressly provided herein, in order to be entitled to receive an Annual Incentive Payment for the Plan year, the participant must be an active officer or regular employee of Progressive on November 30 of the Plan year (“Qualification Date”). An individual who (i) is hired on or after December 1 of any Plan year, or (ii) whose employment terminates for any reason prior to the Qualification Date is not entitled to an Annual Incentive Payment for that Plan year. Annual Incentive Payments are not earned until paid.
|
6.
|
Other Plans
. Participants may be selected to participate in this Plan and in one or more other incentive plans offered by the Company. In the case of the CIO or any other executive officer, all determinations with respect to such incentive plans and the executive’s participation therein shall be made by the Compensation Committee. In all other cases, the Designated Executives shall have full authority to determine the incentive plan or plans in which any employee shall participate during the Plan year and the weighting factor (if any) that will apply to each such plan.
|
7.
|
Non-Transferability.
The right to any Annual Incentive Payments hereunder may not be sold, transferred, assigned or encumbered by any participant. Nothing herein shall prevent any participant's interest hereunder from being subject to involuntary attachment, levy or other legal process.
|
8.
|
Administration.
The Plan will be administered by or under the direction of the Committee. The Committee will have the authority to adopt, alter, amend, modify and repeal such rules, guidelines, procedures and practices governing the Plan as it, from time to time, in its sole discretion deems advisable.
|
9.
|
Miscellaneous.
|
A.
|
Recoupment
. Progressive shall have the right to recoup any Annual Incentive Payment (or an appropriate portion thereof, as hereinafter provided) with respect to any Plan year paid to a participant hereunder who was an executive officer of Progressive at any time during such Plan year, if: (i) the Annual Incentive Payment was predicated upon the achievement during such Plan year of certain financial or operating results (which includes, for purposes hereof, the performance of the Fixed-Income Portfolio); (ii) such financial or operating results were incorrect and were subsequently the subject of a restatement by Progressive within three (3) years after the date on which such Annual Incentive Payment was paid to the participant; and (iii) a lower payment would have been made to the participant if the restated financial or operating results had been known at the time the payment was made. Such recoupment right shall be available to Progressive whether or not the participant in question was at fault or responsible in any way in causing such restatement. In such circumstances, Progressive will have the right to recover from each participant for such Plan year, and each such participant will refund to Progressive, the amount by which the Annual Incentive Payment paid to such participant for the Plan year in question exceeded the lower payment that would have been made based on the restated results, without interest; provided, however, that Progressive will not seek to recover such amounts unless the amount due would exceed the lesser of five percent (5%) of the Annual Incentive Payment previously paid or twenty-thousand dollars ($20,000). Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against future bonus payments, or other appropriate mechanism.
|
B.
|
Further Rights
. Notwithstanding the foregoing subsection A., if any participant that was an executive officer at any time during such Plan year engaged in fraud or other misconduct (as determined by the Committee or the Board, in their respective sole discretion) resulting, in whole or in part, in a restatement of the financial or operating results used hereunder to determine the Annual Incentive Payments for a specific Plan year, Progressive will further have the right to recover from such participant, and the participant will refund to Progressive upon demand, an amount equal to the entire Annual Incentive Payment paid to such participant for such Plan year plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from the date that such bonus was paid to the participant. Progressive shall further have the right to recover from such participant Progressive’s costs and expenses incurred in connection with recovering such Annual Incentive Payment from the participant, including, without limitation, reasonable attorneys’ fees. There shall be no time limit on the Company’s right to recover such amounts under this subsection B., except as otherwise provided by applicable law.
|
C.
|
Rights Not Exclusive
. The rights contained in the foregoing subsections A. and B. shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under any applicable law or regulation.
|
D.
|
Compliance with Law and Exchange Requirements
. The Annual Incentive Payments determined and paid pursuant to the Plan shall be subject to all applicable laws and regulations. Without limiting the foregoing, and notwithstanding anything to the contrary contained in this Plan, if the SEC adopts final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require, as a condition to the Company’s continued listing on a national securities exchange (“Exchange”), that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to any participant awarded an Annual Incentive Payment pursuant to the Plan, then the Annual Incentive Payment paid to such participant shall be subject to recoupment by the Company pursuant to the terms of the rules of the SEC and any applicable Exchange and any policy of the Company adopted in response to such rules.
|
10.
|
Termination; Amendments.
The Plan may be terminated, amended or revised, in whole or in part, at any time and from time to time by the Committee, in its sole discretion.
|
11.
|
Unfunded Obligations
. The Plan will be unfunded and all payments due under the Plan will be made from Progressive's general assets.
|
12.
|
No Employment Rights
. Nothing in the Plan shall be construed as conferring upon any person the right to remain a participant in the Plan or to remain employed by Progressive, nor shall the Plan limit Progressive's right to discipline or discharge any of its officers or employees or change any of their job titles, duties or compensation.
|
13.
|
Misconduct; Set-off Rights
. No participant shall have the right to receive any Annual Incentive Payment if, prior to such payment being made, participant’s employment is terminated as a result of any action or inaction that, under Progressive’s employment practices or policies as then in effect, constitutes grounds for immediate termination of employment, as determined by Progressive (or, in the case of an executive officer, the Committee) in its sole discretion. Progressive shall have the unrestricted right to set off against or recover out of any bonuses or other sums owed to any participant under the Plan any amounts owed by such participant to Progressive.
|
14.
|
Prior Plans.
This Plan supersedes all prior plans, agreements, understandings and arrangements regarding bonuses or other cash incentive compensation payable or due to any participant from Progressive with respect to the performance of Progressive’s investment portfolio. Without limiting the generality of the foregoing, this Plan supersedes and replaces the 2016 Progressive Capital Management Bonus Plan (the "Prior Plan”), which is and shall be deemed to have terminated on the last day of the Company’s 2016 fiscal year (the "Prior Plan Termination Date"); provided, however, that any bonuses or other sums earned and payable under the Prior Plan with respect to any Plan year ended on or prior to the Prior Plan Termination Date shall be unaffected by such termination and shall be paid to the appropriate participants when and as provided thereunder.
|
15.
|
Effective Date.
This Plan is adopted, and is effective, as of the first day of the Company’s 2017 fiscal year and will be effective for the 2017 Plan year (which coincides with Progressive’s 2017 fiscal year, except that investment returns are calculated on a calendar year basis).
|
16.
|
Governing Law.
This Plan shall be interpreted and construed in accordance with the laws of the State of Ohio.
|
1.
|
The firm has provided monthly data regarding its holdings and investment return, as necessary to determine or calculate such firm’s monthly total return, and to evaluate such firm’s compliance with each of the criteria set forth below, for the entire three-year period ending on December 31 of the Plan year; and
|
2.
|
At all times during the three-year period ending on December 31 of the Plan year, the information provided by the firm shows, or Rogers Casey is able to calculate, that such firm’s investment portfolio satisfies each of the following criteria:
|
3.
|
The Company will have no discretion to alter the Investment Benchmark list after it is finalized by Rogers Casey.
|
Firm
|
Performance score
|
Total return
|
Firm above PCM
|
.90
|
13.61
|
PCM
|
|
13.39
|
Firm below PCM
|
.89
|
13.34
|
(millions—except per share amounts)
|
2016
|
|
2015
|
|
2014
|
|
|||
Revenues
|
|
|
|
||||||
Net premiums earned
|
$
|
22,474.0
|
|
$
|
19,899.1
|
|
$
|
18,398.5
|
|
Investment income
|
478.9
|
|
454.6
|
|
408.4
|
|
|||
Net realized gains (losses) on securities:
|
|
|
|
||||||
Net impairment losses recognized in earnings
|
(86.8
|
)
|
(23.8
|
)
|
(7.9
|
)
|
|||
Net realized gains (losses) on securities
|
137.9
|
|
136.5
|
|
232.1
|
|
|||
Total net realized gains (losses) on securities
|
51.1
|
|
112.7
|
|
224.2
|
|
|||
Fees and other revenues
|
332.5
|
|
302.0
|
|
309.1
|
|
|||
Service revenues
|
103.3
|
|
86.3
|
|
56.0
|
|
|||
Gains (losses) on extinguishment of debt
|
1.6
|
|
(0.9
|
)
|
(4.8
|
)
|
|||
Total revenues
|
23,441.4
|
|
20,853.8
|
|
19,391.4
|
|
|||
Expenses
|
|
|
|
||||||
Losses and loss adjustment expenses
|
16,879.6
|
|
14,342.0
|
|
13,306.2
|
|
|||
Policy acquisition costs
|
1,863.8
|
|
1,651.8
|
|
1,524.0
|
|
|||
Other underwriting expenses
|
2,972.0
|
|
2,712.1
|
|
2,467.1
|
|
|||
Investment expenses
|
22.4
|
|
22.8
|
|
18.9
|
|
|||
Service expenses
|
92.0
|
|
77.5
|
|
50.9
|
|
|||
Interest expense
|
140.9
|
|
136.0
|
|
116.9
|
|
|||
Total expenses
|
21,970.7
|
|
18,942.2
|
|
17,484.0
|
|
|||
Net Income
|
|
|
|
||||||
Income before income taxes
|
1,470.7
|
|
1,911.6
|
|
1,907.4
|
|
|||
Provision for income taxes
|
413.5
|
|
611.1
|
|
626.4
|
|
|||
Net income
|
1,057.2
|
|
1,300.5
|
|
1,281.0
|
|
|||
Net (income) loss attributable to noncontrolling interest (NCI)
|
(26.2
|
)
|
(32.9
|
)
|
0
|
|
|||
Net income attributable to Progressive
|
$
|
1,031.0
|
|
$
|
1,267.6
|
|
$
|
1,281.0
|
|
Other Comprehensive Income (Loss)
|
|
|
|
||||||
Changes in:
|
|
|
|
||||||
Total net unrealized gains (losses) on securities
|
$
|
130.6
|
|
$
|
(212.9
|
)
|
$
|
74.9
|
|
Net unrealized losses on forecasted transactions
|
(1.2
|
)
|
(9.7
|
)
|
(2.6
|
)
|
|||
Foreign currency translation adjustment
|
0.4
|
|
(1.2
|
)
|
(0.9
|
)
|
|||
Other comprehensive income (loss)
|
129.8
|
|
(223.8
|
)
|
71.4
|
|
|||
Other comprehensive (income) loss attributable to NCI
|
3.2
|
|
1.1
|
|
0
|
|
|||
Comprehensive income attributable to Progressive
|
$
|
1,164.0
|
|
$
|
1,044.9
|
|
$
|
1,352.4
|
|
Computation of Per Share Earnings Attributable to Progressive
|
|
|
|
||||||
Average shares outstanding — Basic
|
581.7
|
|
585.5
|
|
590.6
|
|
|||
Net effect of dilutive stock-based compensation
|
3.3
|
|
3.7
|
|
4.2
|
|
|||
Total average equivalent shares — Diluted
|
585.0
|
|
589.2
|
|
594.8
|
|
|||
Basic: Earnings per share
|
$
|
1.77
|
|
$
|
2.16
|
|
$
|
2.17
|
|
Diluted: Earnings per share
|
$
|
1.76
|
|
$
|
2.15
|
|
$
|
2.15
|
|
(millions)
|
2016
|
|
|
2015
|
|
||
Assets
|
|
|
|
||||
Investments - Available-for-sale, at fair value:
|
|
|
|
||||
Fixed maturities (amortized cost: $16,287.1 and $15,347.9)
|
$
|
16,243.8
|
|
|
$
|
15,332.2
|
|
Equity securities:
|
|
|
|
||||
Nonredeemable preferred stocks (cost: $734.2 and $674.2)
|
853.5
|
|
|
782.6
|
|
||
Common equities (cost: $1,437.5 and $1,494.3)
|
2,812.4
|
|
|
2,650.5
|
|
||
Short-term investments (amortized cost: $3,572.9 and $2,172.0)
|
3,572.9
|
|
|
2,172.0
|
|
||
Total investments
|
23,482.6
|
|
|
20,937.3
|
|
||
Cash
|
211.5
|
|
|
224.1
|
|
||
Restricted cash
1
|
14.9
|
|
|
0.3
|
|
||
Accrued investment income
|
103.9
|
|
|
102.2
|
|
||
Premiums receivable, net of allowance for doubtful accounts of $186.8 and $164.8
|
4,509.2
|
|
|
3,987.7
|
|
||
Reinsurance recoverables, including $83.8 and $46.1 on paid losses and loss adjustment expenses
|
1,884.8
|
|
|
1,488.8
|
|
||
Prepaid reinsurance premiums
|
170.5
|
|
|
199.3
|
|
||
Deferred acquisition costs
|
651.2
|
|
|
564.1
|
|
||
Property and equipment, net of accumulated depreciation of $845.8 and $778.3
|
1,177.1
|
|
|
1,037.2
|
|
||
Goodwill
|
449.4
|
|
|
447.6
|
|
||
Intangible assets, net of accumulated amortization of $109.5 and $47.4
|
432.8
|
|
|
494.9
|
|
||
Other assets
|
339.6
|
|
|
335.8
|
|
||
Total assets
|
$
|
33,427.5
|
|
|
$
|
29,819.3
|
|
Liabilities
|
|
|
|
||||
Unearned premiums
|
$
|
7,468.3
|
|
|
$
|
6,621.8
|
|
Loss and loss adjustment expense reserves
|
11,368.0
|
|
|
10,039.0
|
|
||
Net deferred income taxes
|
111.3
|
|
|
109.3
|
|
||
Dividends payable
|
395.4
|
|
|
519.2
|
|
||
Accounts payable, accrued expenses, and other liabilities
2
|
2,495.5
|
|
|
2,067.8
|
|
||
Debt
3
|
3,148.2
|
|
|
2,707.9
|
|
||
Total liabilities
|
24,986.7
|
|
|
22,065.0
|
|
||
Redeemable noncontrolling interest (NCI)
4
|
483.7
|
|
|
464.9
|
|
||
Shareholders' Equity
|
|
|
|
|
|
||
Common shares, $1.00 par value (authorized 900.0; issued 797.5 and 797.6 including treasury shares of 217.6 and 214.0)
|
579.9
|
|
|
583.6
|
|
||
Paid-in capital
|
1,303.4
|
|
|
1,218.8
|
|
||
Retained earnings
|
5,140.4
|
|
|
4,686.6
|
|
||
Accumulated other comprehensive income:
|
|
|
|
||||
Net unrealized gains (losses) on securities
|
939.6
|
|
|
809.0
|
|
||
Net unrealized losses on forecasted transactions
|
(9.4
|
)
|
|
(8.2
|
)
|
||
Foreign currency translation adjustment
|
(1.1
|
)
|
|
(1.5
|
)
|
||
Accumulated other comprehensive (income) loss attributable to NCI
|
4.3
|
|
|
1.1
|
|
||
Total accumulated other comprehensive income attributable to Progressive
|
933.4
|
|
|
800.4
|
|
||
Total shareholders’ equity
|
7,957.1
|
|
|
7,289.4
|
|
||
Total liabilities, redeemable NCI, and shareholders’ equity
|
$
|
33,427.5
|
|
|
$
|
29,819.3
|
|
(millions — except per share amounts)
|
2016
|
|
2015
|
|
2014
|
|
|||
Common Shares, $1.00 Par Value
|
|
|
|
||||||
Balance, Beginning of year
|
$
|
583.6
|
|
$
|
587.8
|
|
$
|
595.8
|
|
Treasury shares purchased
|
(6.1
|
)
|
(7.3
|
)
|
(11.1
|
)
|
|||
Net restricted equity awards issued/vested/(forfeited)
|
2.4
|
|
3.1
|
|
3.1
|
|
|||
Balance, End of year
|
$
|
579.9
|
|
$
|
583.6
|
|
$
|
587.8
|
|
Paid-In Capital
|
|
|
|
||||||
Balance, Beginning of year
|
$
|
1,218.8
|
|
$
|
1,184.3
|
|
$
|
1,142.0
|
|
Tax benefit from vesting of equity-based compensation
|
9.2
|
|
16.8
|
|
12.8
|
|
|||
Treasury shares purchased
|
(13.4
|
)
|
(15.2
|
)
|
(21.6
|
)
|
|||
Net restricted equity awards (issued)/(vested)/forfeited
|
(2.4
|
)
|
(3.1
|
)
|
(3.1
|
)
|
|||
Amortization of equity-based compensation
|
80.9
|
|
64.5
|
|
51.4
|
|
|||
Reinvested dividends on restricted stock units
|
6.1
|
|
5.7
|
|
2.8
|
|
|||
Adjustment to carrying amount of redeemable noncontrolling interest
|
4.2
|
|
(34.2
|
)
|
0
|
|
|||
Balance, End of year
|
$
|
1,303.4
|
|
$
|
1,218.8
|
|
$
|
1,184.3
|
|
Retained Earnings
|
|
|
|
||||||
Balance, Beginning of year
|
$
|
4,686.6
|
|
$
|
4,133.4
|
|
$
|
3,500.0
|
|
Net income attributable to Progressive
|
1,031.0
|
|
1,267.6
|
|
1,281.0
|
|
|||
Treasury shares purchased
|
(173.0
|
)
|
(186.0
|
)
|
(238.7
|
)
|
|||
Cash dividends declared on common shares ($0.6808, $0.8882, and $0.6862 per share)
|
(394.7
|
)
|
(520.5
|
)
|
(402.6
|
)
|
|||
Reinvested dividends on restricted stock units
|
(6.1
|
)
|
(5.7
|
)
|
(2.8
|
)
|
|||
Other, net
|
(3.4
|
)
|
(2.2
|
)
|
(3.5
|
)
|
|||
Balance, End of year
|
$
|
5,140.4
|
|
$
|
4,686.6
|
|
$
|
4,133.4
|
|
Accumulated Other Comprehensive Income Attributable to Progressive
|
|
|
|
||||||
Balance, Beginning of year
|
$
|
800.4
|
|
$
|
1,023.1
|
|
$
|
951.7
|
|
Attributable to noncontrolling interest
|
3.2
|
|
1.1
|
|
0
|
|
|||
Other comprehensive income (loss)
|
129.8
|
|
(223.8
|
)
|
71.4
|
|
|||
Balance, End of year
|
$
|
933.4
|
|
$
|
800.4
|
|
$
|
1,023.1
|
|
Total Shareholders’ Equity
|
$
|
7,957.1
|
|
$
|
7,289.4
|
|
$
|
6,928.6
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Cash Flows From Operating Activities
|
|
|
|
||||||
Net income
|
$
|
1,057.2
|
|
$
|
1,300.5
|
|
$
|
1,281.0
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation
|
137.4
|
|
103.7
|
|
97.1
|
|
|||
Net amortization of intangible assets
|
62.1
|
|
46.8
|
|
0
|
|
|||
Net amortization of fixed-income securities
|
77.2
|
|
98.4
|
|
78.2
|
|
|||
Amortization of equity-based compensation
|
85.2
|
|
66.2
|
|
51.4
|
|
|||
Net realized (gains) losses on securities
|
(51.1
|
)
|
(112.7
|
)
|
(224.2
|
)
|
|||
Net (gains) losses on disposition of property and equipment
|
6.6
|
|
2.0
|
|
5.4
|
|
|||
(Gains) losses on extinguishment of debt
|
(1.6
|
)
|
0.9
|
|
4.8
|
|
|||
Net loss on exchange transaction
|
4.5
|
|
0
|
|
0
|
|
|||
Changes in:
|
|
|
|
||||||
Premiums receivable
|
(518.5
|
)
|
(421.1
|
)
|
(227.1
|
)
|
|||
Reinsurance recoverables
|
(388.2
|
)
|
(202.6
|
)
|
(141.7
|
)
|
|||
Prepaid reinsurance premiums
|
48.8
|
|
32.5
|
|
(10.4
|
)
|
|||
Deferred acquisition costs
|
(103.8
|
)
|
(42.3
|
)
|
(9.6
|
)
|
|||
Income taxes
|
(55.7
|
)
|
(107.2
|
)
|
97.5
|
|
|||
Unearned premiums
|
830.7
|
|
632.4
|
|
266.4
|
|
|||
Loss and loss adjustment expense reserves
|
1,323.2
|
|
917.7
|
|
378.0
|
|
|||
Accounts payable, accrued expenses, and other liabilities
|
308.9
|
|
37.9
|
|
92.0
|
|
|||
Restricted cash
|
(14.6
|
)
|
(0.3
|
)
|
0
|
|
|||
Other, net
|
(106.4
|
)
|
(60.2
|
)
|
(13.2
|
)
|
|||
Net cash provided by operating activities
|
2,701.9
|
|
2,292.6
|
|
1,725.6
|
|
|||
Cash Flows From Investing Activities
|
|
|
|
||||||
Purchases:
|
|
|
|
||||||
Fixed maturities
|
(11,610.6
|
)
|
(9,311.1
|
)
|
(7,967.5
|
)
|
|||
Equity securities
|
(434.2
|
)
|
(647.1
|
)
|
(369.7
|
)
|
|||
Sales:
|
|
|
|
||||||
Fixed maturities
|
5,694.9
|
|
4,913.5
|
|
5,637.5
|
|
|||
Equity securities
|
484.6
|
|
402.4
|
|
560.1
|
|
|||
Maturities, paydowns, calls, and other:
|
|
|
|
||||||
Fixed maturities
|
4,907.4
|
|
3,579.5
|
|
2,296.6
|
|
|||
Equity securities
|
0
|
|
12.0
|
|
14.3
|
|
|||
Net sales (purchases) of short-term investments
|
(1,357.2
|
)
|
20.5
|
|
(876.0
|
)
|
|||
Net unsettled security transactions
|
50.9
|
|
(8.2
|
)
|
(30.0
|
)
|
|||
Purchases of property and equipment
|
(215.0
|
)
|
(130.7
|
)
|
(108.1
|
)
|
|||
Sales of property and equipment
|
6.2
|
|
10.6
|
|
5.9
|
|
|||
Net cash acquired in exchange transaction
|
8.5
|
|
0
|
|
0
|
|
|||
Acquisition of ARX Holding Corp., net of cash acquired
|
0
|
|
(752.7
|
)
|
0
|
|
|||
Acquisition of additional shares of ARX Holding Corp.
|
0
|
|
(12.6
|
)
|
0
|
|
|||
Net cash used in investing activities
|
(2,464.5
|
)
|
(1,923.9
|
)
|
(836.9
|
)
|
|||
Cash Flows From Financing Activities
|
|
|
|
||||||
Proceeds from exercise of equity options
|
0
|
|
0.2
|
|
0
|
|
|||
Tax benefit from vesting of equity-based compensation
|
9.2
|
|
16.8
|
|
12.8
|
|
|||
Net proceeds from debt issuance
|
495.6
|
|
382.0
|
|
344.7
|
|
|||
Payments of debt
|
(25.5
|
)
|
(20.4
|
)
|
0
|
|
|||
Reacquisitions of debt
|
(18.2
|
)
|
(19.3
|
)
|
(48.9
|
)
|
|||
Dividends paid to shareholders
|
(519.0
|
)
|
(403.6
|
)
|
(892.6
|
)
|
|||
Acquisition of treasury shares
|
(192.5
|
)
|
(208.5
|
)
|
(271.4
|
)
|
|||
Net cash used in financing activities
|
(250.4
|
)
|
(252.8
|
)
|
(855.4
|
)
|
|||
Effect of exchange rate changes on cash
|
0.4
|
|
(0.2
|
)
|
0
|
|
|||
Increase (decrease) in cash
|
(12.6
|
)
|
115.7
|
|
33.3
|
|
|||
Cash, Beginning of year
|
224.1
|
|
108.4
|
|
75.1
|
|
|||
Cash, End of year
|
$
|
211.5
|
|
$
|
224.1
|
|
$
|
108.4
|
|
•
|
Changes in fair value of an asset or liability (fair value hedge),
|
•
|
Foreign currency of an investment in a foreign operation (foreign currency hedge), or
|
•
|
Variable cash flows of a forecasted transaction (cash flow hedge).
|
•
|
Fair value hedge:
changes in fair value of the hedge, as well as the hedged item, would be recognized in income in the period of change while the hedge is in effect.
|
•
|
Foreign currency hedge:
changes in fair value of the hedge, as well as the hedged item, would be reflected as a change in translation adjustment as part of accumulated other comprehensive income. Gains and losses on the foreign currency hedge would offset the foreign exchange gains and losses on the foreign investment as they are recognized into income.
|
•
|
Cash flow hedge:
changes in fair value of the hedge would be reported as a component of accumulated other comprehensive income and subsequently amortized into earnings over the life of the hedged transaction.
|
•
|
Fair value hedge:
the derivative instrument would continue to be adjusted through income, while the adjustment in the change in value of the hedged item would be reflected as a change in unrealized gains (losses) as part of accumulated other comprehensive income.
|
•
|
Foreign currency hedge:
changes in the value of the hedged item would continue to be reflected as a change in translation adjustment as part of accumulated other comprehensive income, but the derivative instrument would be adjusted through income for the current period.
|
•
|
Cash flow hedge:
changes in fair value of the derivative instrument would be reported in income for the current period.
|
(millions)
|
Advertising Costs
|
|
|
2016
|
$
|
756.2
|
|
2015
|
748.3
|
|
|
2014
|
681.8
|
|
|
Useful Lives
|
Computer equipment and laptops
|
3 years
|
Software licenses (internal use)
|
1-5 years
|
Capitalized software
|
3-10 years
|
Buildings, improvements, and integrated components
|
7-40 years
|
All other property and equipment
|
3-15 years
|
(millions)
|
Capitalized
Interest
|
|
|
2016
|
$
|
2.9
|
|
2015
|
2.4
|
|
|
2014
|
1.3
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Pretax expense
|
$
|
85.2
|
|
$
|
66.2
|
|
$
|
51.4
|
|
Tax benefit
|
29.8
|
|
23.2
|
|
18.0
|
|
•
|
earned but unvested time-based restricted equity awards, and
|
•
|
certain unvested performance-based restricted equity awards that satisfied contingency conditions for common stock equivalents during the period.
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Income taxes
|
$
|
459.4
|
|
$
|
701.8
|
|
$
|
515.0
|
|
Interest
|
139.2
|
|
132.0
|
|
116.0
|
|
•
|
All excess tax benefits and tax deficiencies should be recognized as income tax benefit or expense in the comprehensive income statement (applied prospectively) and classified in the statement of cash flows as an operating activity (applied using either a prospective or retrospective transition method).
|
•
|
Companies are allowed to decide whether or not to record forfeitures of share-based awards when the forfeiture occurs or to record compensation expense over the vesting period net of estimated forfeitures (applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity upon adoption).
|
•
|
Companies are permitted to withhold up to the maximum statutory tax rate and still maintain equity classification of share-based awards (applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity upon adoption).
|
•
|
Companies are required to classify as a financing activity in the statement of cash flows the payment of cash to a taxing authority when the company withholds shares for such purpose (applied retrospectively).
|
($ in millions)
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Net Realized Gains (Losses)
|
|
Fair Value
|
|
% of Total Fair Value
|
|
|||||
December 31, 2016
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|||||||||||
U.S. government obligations
|
$
|
2,899.2
|
|
$
|
0
|
|
$
|
(29.1
|
)
|
$
|
0
|
|
$
|
2,870.1
|
|
12.2
|
%
|
State and local government obligations
|
2,509.5
|
|
13.8
|
|
(20.7
|
)
|
0
|
|
2,502.6
|
|
10.7
|
|
|||||
Foreign government obligations
|
24.5
|
|
0
|
|
0
|
|
0
|
|
24.5
|
|
0.1
|
|
|||||
Corporate debt securities
|
4,557.8
|
|
17.3
|
|
(24.3
|
)
|
0.1
|
|
4,550.9
|
|
19.4
|
|
|||||
Residential mortgage-backed securities
|
1,448.5
|
|
23.7
|
|
(15.0
|
)
|
1.5
|
|
1,458.7
|
|
6.2
|
|
|||||
Agency residential pass-through obligations
|
41.2
|
|
0
|
|
(0.6
|
)
|
0
|
|
40.6
|
|
0.2
|
|
|||||
Commercial mortgage-backed securities
|
2,266.9
|
|
12.0
|
|
(25.5
|
)
|
0
|
|
2,253.4
|
|
9.6
|
|
|||||
Other asset-backed securities
|
2,350.7
|
|
4.6
|
|
(4.4
|
)
|
0.2
|
|
2,351.1
|
|
10.0
|
|
|||||
Redeemable preferred stocks
|
188.8
|
|
5.1
|
|
(2.0
|
)
|
0
|
|
191.9
|
|
0.8
|
|
|||||
Total fixed maturities
|
16,287.1
|
|
76.5
|
|
(121.6
|
)
|
1.8
|
|
16,243.8
|
|
69.2
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|||||||||||
Nonredeemable preferred stocks
|
734.2
|
|
135.4
|
|
(16.1
|
)
|
0
|
|
853.5
|
|
3.6
|
|
|||||
Common equities
|
1,437.5
|
|
1,377.0
|
|
(2.1
|
)
|
0
|
|
2,812.4
|
|
12.0
|
|
|||||
Short-term investments
|
3,572.9
|
|
0
|
|
0
|
|
0
|
|
3,572.9
|
|
15.2
|
|
|||||
Total portfolio
1,2
|
$
|
22,031.7
|
|
$
|
1,588.9
|
|
$
|
(139.8
|
)
|
$
|
1.8
|
|
$
|
23,482.6
|
|
100.0
|
%
|
($ in millions)
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Net Realized Gains (Losses)
|
|
Fair Value
|
|
% of Total Fair Value
|
|
|||||
December 31, 2015
|
|
|
|
|
|
|
|||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|||||||||||
U.S. government obligations
|
$
|
2,425.4
|
|
$
|
4.4
|
|
$
|
(0.6
|
)
|
$
|
0
|
|
$
|
2,429.2
|
|
11.6
|
%
|
State and local government obligations
|
2,677.6
|
|
47.5
|
|
(3.7
|
)
|
0
|
|
2,721.4
|
|
13.0
|
|
|||||
Foreign government obligations
|
18.6
|
|
0
|
|
0
|
|
0
|
|
18.6
|
|
0.1
|
|
|||||
Corporate debt securities
|
3,713.2
|
|
11.3
|
|
(33.0
|
)
|
0.1
|
|
3,691.6
|
|
17.6
|
|
|||||
Residential mortgage-backed securities
|
1,726.0
|
|
22.1
|
|
(20.6
|
)
|
(0.8
|
)
|
1,726.7
|
|
8.3
|
|
|||||
Agency residential pass-through obligations
|
90.3
|
|
0.1
|
|
(1.1
|
)
|
0
|
|
89.3
|
|
0.4
|
|
|||||
Commercial mortgage-backed securities
|
2,665.7
|
|
16.9
|
|
(29.4
|
)
|
0
|
|
2,653.2
|
|
12.7
|
|
|||||
Other asset-backed securities
|
1,771.1
|
|
1.4
|
|
(5.1
|
)
|
0.5
|
|
1,767.9
|
|
8.4
|
|
|||||
Redeemable preferred stocks
|
260.0
|
|
17.6
|
|
(43.3
|
)
|
0
|
|
234.3
|
|
1.1
|
|
|||||
Total fixed maturities
|
15,347.9
|
|
121.3
|
|
(136.8
|
)
|
(0.2
|
)
|
15,332.2
|
|
73.2
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|||||||||||
Nonredeemable preferred stocks
|
674.2
|
|
122.8
|
|
(15.7
|
)
|
1.3
|
|
782.6
|
|
3.7
|
|
|||||
Common equities
|
1,494.3
|
|
1,170.4
|
|
(14.2
|
)
|
0
|
|
2,650.5
|
|
12.7
|
|
|||||
Short-term investments
|
2,172.0
|
|
0
|
|
0
|
|
0
|
|
2,172.0
|
|
10.4
|
|
|||||
Total portfolio
1,2
|
$
|
19,688.4
|
|
$
|
1,414.5
|
|
$
|
(166.7
|
)
|
$
|
1.1
|
|
$
|
20,937.3
|
|
100.0
|
%
|
(millions)
|
2016
|
|
|
2015
|
|
||
Fixed maturities:
|
|
|
|
||||
Corporate debt securities
|
$
|
40.1
|
|
|
$
|
49.1
|
|
Residential mortgage-backed securities
|
170.5
|
|
|
144.3
|
|
||
Commercial mortgage-backed securities
|
0
|
|
|
17.3
|
|
||
Other asset-backed securities
|
8.9
|
|
|
11.3
|
|
||
Total fixed maturities
|
219.5
|
|
|
222.0
|
|
||
Equity securities:
|
|
|
|
||||
Nonredeemable preferred stocks
|
0
|
|
|
50.7
|
|
||
Total hybrid securities
|
$
|
219.5
|
|
|
$
|
272.7
|
|
(millions)
|
Cost
|
|
|
Fair Value
|
|
||
Less than one year
|
$
|
3,680.5
|
|
|
$
|
3,682.1
|
|
One to five years
|
9,324.7
|
|
|
9,298.2
|
|
||
Five to ten years
|
3,226.9
|
|
|
3,197.3
|
|
||
Ten years or greater
|
55.0
|
|
|
66.2
|
|
||
Total
|
$
|
16,287.1
|
|
|
$
|
16,243.8
|
|
|
Total No. of Sec.
|
|
Total
Fair
Value
|
Gross Unrealized Losses
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|||||||||||||||||
($ in millions)
|
No. of Sec.
|
|
Fair
Value
|
|
Unrealized Losses
|
|
|
No. of Sec.
|
|
Fair
Value
|
|
Unrealized Losses
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. government obligations
|
30
|
|
$
|
2,774.0
|
|
$
|
(29.1
|
)
|
30
|
|
$
|
2,774.0
|
|
$
|
(29.1
|
)
|
|
0
|
|
$
|
0
|
|
$
|
0
|
|
State and local government obligations
|
618
|
|
1,497.9
|
|
(20.7
|
)
|
584
|
|
1,404.3
|
|
(19.6
|
)
|
|
34
|
|
93.6
|
|
(1.1
|
)
|
||||||
Corporate debt securities
|
184
|
|
2,615.1
|
|
(24.3
|
)
|
175
|
|
2,559.9
|
|
(24.0
|
)
|
|
9
|
|
55.2
|
|
(0.3
|
)
|
||||||
Residential mortgage-backed securities
|
178
|
|
917.7
|
|
(15.0
|
)
|
69
|
|
175.8
|
|
(1.1
|
)
|
|
109
|
|
741.9
|
|
(13.9
|
)
|
||||||
Agency residential pass-through obligations
|
55
|
|
36.0
|
|
(0.6
|
)
|
48
|
|
33.9
|
|
(0.6
|
)
|
|
7
|
|
2.1
|
|
0
|
|
||||||
Commercial mortgage-backed securities
|
111
|
|
1,347.3
|
|
(25.5
|
)
|
85
|
|
1,061.2
|
|
(22.9
|
)
|
|
26
|
|
286.1
|
|
(2.6
|
)
|
||||||
Other asset-backed securities
|
103
|
|
1,605.2
|
|
(4.4
|
)
|
89
|
|
1,423.3
|
|
(3.9
|
)
|
|
14
|
|
181.9
|
|
(0.5
|
)
|
||||||
Redeemable preferred stocks
|
2
|
|
31.0
|
|
(2.0
|
)
|
0
|
|
0
|
|
0
|
|
|
2
|
|
31.0
|
|
(2.0
|
)
|
||||||
Total fixed maturities
|
1,281
|
|
10,824.2
|
|
(121.6
|
)
|
1,080
|
|
9,432.4
|
|
(101.2
|
)
|
|
201
|
|
1,391.8
|
|
(20.4
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Nonredeemable preferred stocks
|
13
|
|
329.6
|
|
(16.1
|
)
|
8
|
|
175.2
|
|
(3.8
|
)
|
|
5
|
|
154.4
|
|
(12.3
|
)
|
||||||
Common equities
|
75
|
|
22.1
|
|
(2.1
|
)
|
69
|
|
19.7
|
|
(1.7
|
)
|
|
6
|
|
2.4
|
|
(0.4
|
)
|
||||||
Total equity securities
|
88
|
|
351.7
|
|
(18.2
|
)
|
77
|
|
194.9
|
|
(5.5
|
)
|
|
11
|
|
156.8
|
|
(12.7
|
)
|
||||||
Total portfolio
|
1,369
|
|
$
|
11,175.9
|
|
$
|
(139.8
|
)
|
1,157
|
|
$
|
9,627.3
|
|
$
|
(106.7
|
)
|
|
212
|
|
$
|
1,548.6
|
|
$
|
(33.1
|
)
|
|
Total No. of Sec.
|
|
Total
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Less than 12 Months
|
|
12 Months or Greater
|
||||||||||||||||
($ in millions)
|
No. of Sec.
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
|
No. of Sec.
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
U.S. government obligations
|
22
|
|
$
|
897.1
|
|
$
|
(0.6
|
)
|
22
|
|
$
|
897.1
|
|
$
|
(0.6
|
)
|
|
0
|
|
$
|
0
|
|
$
|
0
|
|
State and local government obligations
|
290
|
|
606.7
|
|
(3.7
|
)
|
264
|
|
500.7
|
|
(2.6
|
)
|
|
26
|
|
106.0
|
|
(1.1
|
)
|
||||||
Corporate debt securities
|
215
|
|
2,580.6
|
|
(33.0
|
)
|
197
|
|
2,294.6
|
|
(25.2
|
)
|
|
18
|
|
286.0
|
|
(7.8
|
)
|
||||||
Residential mortgage-backed securities
|
188
|
|
1,294.7
|
|
(20.6
|
)
|
115
|
|
493.4
|
|
(3.7
|
)
|
|
73
|
|
801.3
|
|
(16.9
|
)
|
||||||
Agency residential pass-through obligations
|
61
|
|
84.9
|
|
(1.1
|
)
|
61
|
|
84.9
|
|
(1.1
|
)
|
|
0
|
|
0
|
|
0
|
|
||||||
Commercial mortgage-backed securities
|
207
|
|
2,046.5
|
|
(29.4
|
)
|
171
|
|
1,694.6
|
|
(25.8
|
)
|
|
36
|
|
351.9
|
|
(3.6
|
)
|
||||||
Other asset-backed securities
|
101
|
|
1,548.6
|
|
(5.1
|
)
|
92
|
|
1,472.0
|
|
(4.5
|
)
|
|
9
|
|
76.6
|
|
(0.6
|
)
|
||||||
Redeemable preferred stocks
|
9
|
|
199.4
|
|
(43.3
|
)
|
6
|
|
119.4
|
|
(14.5
|
)
|
|
3
|
|
80.0
|
|
(28.8
|
)
|
||||||
Total fixed maturities
|
1,093
|
|
9,258.5
|
|
(136.8
|
)
|
928
|
|
7,556.7
|
|
(78.0
|
)
|
|
165
|
|
1,701.8
|
|
(58.8
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Nonredeemable preferred stocks
|
10
|
|
301.8
|
|
(15.7
|
)
|
5
|
|
124.2
|
|
(1.7
|
)
|
|
5
|
|
177.6
|
|
(14.0
|
)
|
||||||
Common equities
|
64
|
|
164.8
|
|
(14.2
|
)
|
60
|
|
161.4
|
|
(14.2
|
)
|
|
4
|
|
3.4
|
|
0
|
|
||||||
Total equity securities
|
74
|
|
466.6
|
|
(29.9
|
)
|
65
|
|
285.6
|
|
(15.9
|
)
|
|
9
|
|
181.0
|
|
(14.0
|
)
|
||||||
Total portfolio
|
1,167
|
|
$
|
9,725.1
|
|
$
|
(166.7
|
)
|
993
|
|
$
|
7,842.3
|
|
$
|
(93.9
|
)
|
|
174
|
|
$
|
1,882.8
|
|
$
|
(72.8
|
)
|
|
December 31,
|
|||||
(millions)
|
2016
|
|
2015
|
|
||
Fixed maturities:
|
|
|
||||
Residential mortgage-backed securities
|
$
|
(43.3
|
)
|
$
|
(43.3
|
)
|
Commercial mortgage-backed securities
|
(0.6
|
)
|
(0.6
|
)
|
||
Total fixed maturities
|
$
|
(43.9
|
)
|
$
|
(43.9
|
)
|
(millions)
|
Residential
Mortgage-
Backed
|
|
Commercial
Mortgage-
Backed
|
|
Total
|
|
|||
Total at December 31, 2015
|
$
|
12.4
|
|
$
|
0.4
|
|
$
|
12.8
|
|
Reductions for securities sold/matured
|
0
|
|
0
|
|
0
|
|
|||
Change in recoveries of future cash flows expected to be collected
1,2
|
(1.3
|
)
|
0
|
|
(1.3
|
)
|
|||
Total at December 31, 2016
|
$
|
11.1
|
|
$
|
0.4
|
|
$
|
11.5
|
|
(millions)
|
Residential
Mortgage-
Backed
|
|
Commercial
Mortgage-
Backed
|
|
Total
|
|
|||
Total at December 31, 2014
|
$
|
12.7
|
|
$
|
0.4
|
|
$
|
13.1
|
|
Reductions for securities sold/matured
|
(1.4
|
)
|
0
|
|
(1.4
|
)
|
|||
Change in recoveries of future cash flows expected to be collected
1,2
|
1.1
|
|
0
|
|
1.1
|
|
|||
Total at December 31, 2015
|
$
|
12.4
|
|
$
|
0.4
|
|
$
|
12.8
|
|
(millions)
|
Residential
Mortgage-
Backed
|
|
Commercial
Mortgage-
Backed
|
|
Total
|
|
|||
Total at December 31, 2013
|
$
|
19.2
|
|
$
|
0.4
|
|
$
|
19.6
|
|
Reductions for securities sold/matured
|
(0.1
|
)
|
0
|
|
(0.1
|
)
|
|||
Change in recoveries of future cash flows expected to be collected
1,2
|
(6.4
|
)
|
0
|
|
(6.4
|
)
|
|||
Total at December 31, 2014
|
$
|
12.7
|
|
$
|
0.4
|
|
$
|
13.1
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Gross realized gains on security sales
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
||||||
U.S. government obligations
|
$
|
24.6
|
|
$
|
17.5
|
|
$
|
24.0
|
|
State and local government obligations
|
16.0
|
|
7.8
|
|
9.3
|
|
|||
Corporate and other debt securities
|
43.3
|
|
31.2
|
|
37.2
|
|
|||
Residential mortgage-backed securities
|
2.4
|
|
4.9
|
|
2.7
|
|
|||
Agency residential pass-through obligations
|
0.1
|
|
0
|
|
0
|
|
|||
Commercial mortgage-backed securities
|
13.3
|
|
15.7
|
|
17.0
|
|
|||
Redeemable preferred stocks
|
20.9
|
|
0.1
|
|
2.7
|
|
|||
Total fixed maturities
|
120.6
|
|
77.2
|
|
92.9
|
|
|||
Equity securities:
|
|
|
|
||||||
Nonredeemable preferred stocks
|
11.9
|
|
65.3
|
|
90.0
|
|
|||
Common equities
|
61.3
|
|
50.4
|
|
107.3
|
|
|||
Short-term investments
|
0.1
|
|
0
|
|
0
|
|
|||
Subtotal gross realized gains on security sales
|
193.9
|
|
192.9
|
|
290.2
|
|
|||
Gross realized losses on security sales
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
||||||
U.S. government obligations
|
(2.4
|
)
|
(0.9
|
)
|
(7.6
|
)
|
|||
State and local government obligations
|
(1.6
|
)
|
(0.3
|
)
|
(0.5
|
)
|
|||
Corporate and other debt securities
|
(2.5
|
)
|
(5.0
|
)
|
(2.8
|
)
|
|||
Residential mortgage-backed securities
|
0
|
|
(0.4
|
)
|
(0.2
|
)
|
|||
Agency residential pass-through obligations
|
(0.2
|
)
|
(0.4
|
)
|
0
|
|
|||
Commercial mortgage-backed securities
|
(5.6
|
)
|
(1.3
|
)
|
(8.3
|
)
|
|||
Redeemable preferred stocks
|
(6.6
|
)
|
0
|
|
(3.2
|
)
|
|||
Total fixed maturities
|
(18.9
|
)
|
(8.3
|
)
|
(22.6
|
)
|
|||
Equity securities:
|
|
|
|
||||||
Nonredeemable preferred stocks
|
(5.3
|
)
|
(3.2
|
)
|
0
|
|
|||
Common equities
|
(15.7
|
)
|
(38.4
|
)
|
(7.3
|
)
|
|||
Short-term investments
|
(0.1
|
)
|
0
|
|
0
|
|
|||
Subtotal gross realized losses on security sales
|
(40.0
|
)
|
(49.9
|
)
|
(29.9
|
)
|
|||
Net realized gains (losses) on security sales
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
||||||
U.S. government obligations
|
22.2
|
|
16.6
|
|
16.4
|
|
|||
State and local government obligations
|
14.4
|
|
7.5
|
|
8.8
|
|
|||
Corporate and other debt securities
|
40.8
|
|
26.2
|
|
34.4
|
|
|||
Residential mortgage-backed securities
|
2.4
|
|
4.5
|
|
2.5
|
|
|||
Agency residential pass-through obligations
|
(0.1
|
)
|
(0.4
|
)
|
0
|
|
|||
Commercial mortgage-backed securities
|
7.7
|
|
14.4
|
|
8.7
|
|
|||
Redeemable preferred stocks
|
14.3
|
|
0.1
|
|
(0.5
|
)
|
|||
Total fixed maturities
|
101.7
|
|
68.9
|
|
70.3
|
|
|||
Equity securities:
|
|
|
|
||||||
Nonredeemable preferred stocks
|
6.6
|
|
62.1
|
|
90.0
|
|
|||
Common equities
|
45.6
|
|
12.0
|
|
100.0
|
|
|||
Subtotal net realized gains (losses) on security sales
|
153.9
|
|
143.0
|
|
260.3
|
|
|||
Other-than-temporary impairment losses
|
|
|
|
||||||
Fixed maturities:
|
|
|
|
||||||
Redeemable preferred stocks
|
(25.3
|
)
|
0
|
|
0
|
|
|||
Total fixed maturities
|
(25.3
|
)
|
0
|
|
0
|
|
|||
Equity securities:
|
|
|
|
||||||
Common equities
|
(0.3
|
)
|
(8.7
|
)
|
(7.2
|
)
|
|||
Subtotal investment other-than-temporary impairment losses
|
(25.6
|
)
|
(8.7
|
)
|
(7.2
|
)
|
|||
Other asset impairment
|
(59.7
|
)
|
0
|
|
0
|
|
|||
Subtotal other-than-temporary impairment losses
|
(85.3
|
)
|
(8.7
|
)
|
(7.2
|
)
|
|||
Other gains (losses)
|
|
|
|
||||||
Hybrid securities
|
2.1
|
|
(1.3
|
)
|
30.5
|
|
|||
Derivative instruments
|
(20.0
|
)
|
(20.7
|
)
|
(64.1
|
)
|
|||
Litigation settlements
|
0.4
|
|
0.4
|
|
4.7
|
|
|||
Subtotal other gains (losses)
|
(17.5
|
)
|
(21.6
|
)
|
(28.9
|
)
|
|||
Total net realized gains (losses) on securities
|
$
|
51.1
|
|
$
|
112.7
|
|
$
|
224.2
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Fixed maturities:
|
|
|
|
||||||
U.S. government obligations
|
$
|
18.2
|
|
$
|
28.3
|
|
$
|
46.2
|
|
State and local government obligations
|
52.3
|
|
60.7
|
|
50.1
|
|
|||
Foreign government obligations
|
0.4
|
|
0.4
|
|
0.4
|
|
|||
Corporate debt securities
|
110.7
|
|
102.4
|
|
82.1
|
|
|||
Residential mortgage-backed securities
|
46.1
|
|
52.2
|
|
44.9
|
|
|||
Agency residential pass-through obligations
|
1.2
|
|
2.1
|
|
0
|
|
|||
Commercial mortgage-backed securities
|
81.6
|
|
74.6
|
|
66.0
|
|
|||
Other asset-backed securities
|
28.0
|
|
22.0
|
|
16.7
|
|
|||
Redeemable preferred stocks
|
14.9
|
|
15.0
|
|
15.5
|
|
|||
Total fixed maturities
|
353.4
|
|
357.7
|
|
321.9
|
|
|||
Equity securities:
|
|
|
|
||||||
Nonredeemable preferred stocks
|
48.6
|
|
43.7
|
|
38.6
|
|
|||
Common equities
|
57.2
|
|
51.0
|
|
46.6
|
|
|||
Short-term investments
|
19.7
|
|
2.2
|
|
1.3
|
|
|||
Investment income
|
478.9
|
|
454.6
|
|
408.4
|
|
|||
Investment expenses
|
(22.4
|
)
|
(22.8
|
)
|
(18.9
|
)
|
|||
Net investment income
|
$
|
456.5
|
|
$
|
431.8
|
|
$
|
389.5
|
|
(millions)
|
|
Balance Sheet
2
|
Comprehensive
Income Statement
|
|||||||||||||||||||||||
|
Notional Value
1
|
|
|
Assets
(Liabilities)
Fair Value
|
Pretax Net Realized
Gains (Losses)
|
|||||||||||||||||||||
|
|
|
|
|
Years ended
|
|||||||||||||||||||||
|
December 31,
|
|
|
December 31,
|
December 31,
|
|||||||||||||||||||||
Derivatives
designated as:
|
2016
|
|
2015
|
|
2014
|
|
Purpose
|
Classification
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||
Hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Closed:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Ineffective cash flow hedge
|
$
|
370
|
|
$
|
18
|
|
$
|
44
|
|
Manage
interest rate risk |
NA
|
$
|
0
|
|
$
|
0
|
|
$
|
(1.3
|
)
|
$
|
0.2
|
|
$
|
0.5
|
|
Non-hedging instruments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps
|
0
|
|
750
|
|
750
|
|
Manage
portfolio duration |
Investments - fixed
maturities |
0
|
|
4.4
|
|
0
|
|
(23.4
|
)
|
(64.6
|
)
|
||||||||
Closed:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps
|
750
|
|
0
|
|
0
|
|
Manage
portfolio duration |
NA
|
0
|
|
0
|
|
(19.0
|
)
|
0
|
|
0
|
|
||||||||
U.S. Treasury Note futures
|
135
|
|
691
|
|
0
|
|
Manage
portfolio duration |
NA
|
0
|
|
0
|
|
0.3
|
|
2.5
|
|
0
|
|
||||||||
Total
|
NA
|
|
NA
|
|
NA
|
|
|
|
$
|
0
|
|
$
|
4.4
|
|
$
|
(20.0
|
)
|
$
|
(20.7
|
)
|
$
|
(64.1
|
)
|
•
|
Level 1
: Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. government obligations, active exchange-traded equity securities, and certain short-term securities).
|
•
|
Level 2
: Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g., certain corporate and municipal bonds and certain preferred stocks). This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3
: Inputs that are unobservable. Unobservable inputs reflect our subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain structured securities and privately held investments).
|
|
Fair Value
|
|
|||||||||||||
(millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Cost
|
|
|||||
December 31, 2016
|
|
|
|
|
|
||||||||||
Fixed maturities:
|
|
|
|
|
|
||||||||||
U.S. government obligations
|
$
|
2,870.1
|
|
$
|
0
|
|
$
|
0
|
|
$
|
2,870.1
|
|
$
|
2,899.2
|
|
State and local government obligations
|
0
|
|
2,502.6
|
|
0
|
|
2,502.6
|
|
2,509.5
|
|
|||||
Foreign government obligations
|
24.5
|
|
0
|
|
0
|
|
24.5
|
|
24.5
|
|
|||||
Corporate debt securities
|
0
|
|
4,550.9
|
|
0
|
|
4,550.9
|
|
4,557.8
|
|
|||||
Subtotal
|
2,894.6
|
|
7,053.5
|
|
0
|
|
9,948.1
|
|
9,991.0
|
|
|||||
Asset-backed securities:
|
|
|
|
|
|
||||||||||
Residential mortgage-backed
|
0
|
|
1,458.7
|
|
0
|
|
1,458.7
|
|
1,448.5
|
|
|||||
Agency residential pass-through obligations
|
0
|
|
40.6
|
|
0
|
|
40.6
|
|
41.2
|
|
|||||
Commercial mortgage-backed
|
0
|
|
2,253.1
|
|
0.3
|
|
2,253.4
|
|
2,266.9
|
|
|||||
Other asset-backed
|
0
|
|
2,351.1
|
|
0
|
|
2,351.1
|
|
2,350.7
|
|
|||||
Subtotal asset-backed securities
|
0
|
|
6,103.5
|
|
0.3
|
|
6,103.8
|
|
6,107.3
|
|
|||||
Redeemable preferred stocks:
|
|
|
|
|
|
||||||||||
Financials
|
0
|
|
59.5
|
|
0
|
|
59.5
|
|
59.8
|
|
|||||
Utilities
|
0
|
|
30.9
|
|
0
|
|
30.9
|
|
30.5
|
|
|||||
Industrials
|
0
|
|
101.5
|
|
0
|
|
101.5
|
|
98.5
|
|
|||||
Subtotal redeemable preferred stocks
|
0
|
|
191.9
|
|
0
|
|
191.9
|
|
188.8
|
|
|||||
Total fixed maturities
|
2,894.6
|
|
13,348.9
|
|
0.3
|
|
16,243.8
|
|
16,287.1
|
|
|||||
Equity securities:
|
|
|
|
|
|
||||||||||
Nonredeemable preferred stocks:
|
|
|
|
|
|
||||||||||
Financials
|
138.1
|
|
715.4
|
|
0
|
|
853.5
|
|
734.2
|
|
|||||
Subtotal nonredeemable preferred stocks
|
138.1
|
|
715.4
|
|
0
|
|
853.5
|
|
734.2
|
|
|||||
Common equities:
|
|
|
|
|
|
||||||||||
Common stocks
|
2,812.0
|
|
0
|
|
0
|
|
2,812.0
|
|
1,437.1
|
|
|||||
Other risk investments
|
0
|
|
0
|
|
0.4
|
|
0.4
|
|
0.4
|
|
|||||
Subtotal common equities
|
2,812.0
|
|
0
|
|
0.4
|
|
2,812.4
|
|
1,437.5
|
|
|||||
Total fixed maturities and equity securities
|
5,844.7
|
|
14,064.3
|
|
0.7
|
|
19,909.7
|
|
18,458.8
|
|
|||||
Short-term investments
|
3,009.3
|
|
563.6
|
|
0
|
|
3,572.9
|
|
3,572.9
|
|
|||||
Total portfolio
|
$
|
8,854.0
|
|
$
|
14,627.9
|
|
$
|
0.7
|
|
$
|
23,482.6
|
|
$
|
22,031.7
|
|
Debt
|
$
|
0
|
|
$
|
3,188.5
|
|
$
|
127.3
|
|
$
|
3,315.8
|
|
$
|
3,148.2
|
|
|
Fair Value
|
|
|||||||||||||
(millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Cost
|
|
|||||
December 31, 2015
|
|
|
|
|
|
||||||||||
Fixed maturities:
|
|
|
|
|
|
||||||||||
U.S. government obligations
|
$
|
2,429.2
|
|
$
|
0
|
|
$
|
0
|
|
$
|
2,429.2
|
|
$
|
2,425.4
|
|
State and local government obligations
|
0
|
|
2,721.4
|
|
0
|
|
2,721.4
|
|
2,677.6
|
|
|||||
Foreign government obligations
|
18.6
|
|
0
|
|
0
|
|
18.6
|
|
18.6
|
|
|||||
Corporate debt securities
|
0
|
|
3,691.6
|
|
0
|
|
3,691.6
|
|
3,713.2
|
|
|||||
Subtotal
|
2,447.8
|
|
6,413.0
|
|
0
|
|
8,860.8
|
|
8,834.8
|
|
|||||
Asset-backed securities:
|
|
|
|
|
|
||||||||||
Residential mortgage-backed
|
0
|
|
1,726.7
|
|
0
|
|
1,726.7
|
|
1,726.0
|
|
|||||
Agency residential pass-through obligations
|
0
|
|
89.3
|
|
0
|
|
89.3
|
|
90.3
|
|
|||||
Commercial mortgage-backed
|
0
|
|
2,643.3
|
|
9.9
|
|
2,653.2
|
|
2,665.7
|
|
|||||
Other asset-backed
|
0
|
|
1,767.9
|
|
0
|
|
1,767.9
|
|
1,771.1
|
|
|||||
Subtotal asset-backed securities
|
0
|
|
6,227.2
|
|
9.9
|
|
6,237.1
|
|
6,253.1
|
|
|||||
Redeemable preferred stocks:
|
|
|
|
|
|
||||||||||
Financials
|
0
|
|
92.0
|
|
0
|
|
92.0
|
|
76.8
|
|
|||||
Utilities
|
0
|
|
51.2
|
|
0
|
|
51.2
|
|
65.1
|
|
|||||
Industrials
|
0
|
|
91.1
|
|
0
|
|
91.1
|
|
118.1
|
|
|||||
Subtotal redeemable preferred stocks
|
0
|
|
234.3
|
|
0
|
|
234.3
|
|
260.0
|
|
|||||
Total fixed maturities
|
2,447.8
|
|
12,874.5
|
|
9.9
|
|
15,332.2
|
|
15,347.9
|
|
|||||
Equity securities:
|
|
|
|
|
|
||||||||||
Nonredeemable preferred stocks:
|
|
|
|
|
|
||||||||||
Financials
|
154.9
|
|
627.7
|
|
0
|
|
782.6
|
|
674.2
|
|
|||||
Subtotal nonredeemable preferred stocks
|
154.9
|
|
627.7
|
|
0
|
|
782.6
|
|
674.2
|
|
|||||
Common equities:
|
|
|
|
|
|
||||||||||
Common stocks
|
2,650.2
|
|
0
|
|
0
|
|
2,650.2
|
|
1,494.0
|
|
|||||
Other risk investments
|
0
|
|
0
|
|
0.3
|
|
0.3
|
|
0.3
|
|
|||||
Subtotal common equities
|
2,650.2
|
|
0
|
|
0.3
|
|
2,650.5
|
|
1,494.3
|
|
|||||
Total fixed maturities and equity securities
|
5,252.9
|
|
13,502.2
|
|
10.2
|
|
18,765.3
|
|
17,516.4
|
|
|||||
Short-term investments
|
2,056.3
|
|
115.7
|
|
0
|
|
2,172.0
|
|
2,172.0
|
|
|||||
Total portfolio
|
$
|
7,309.2
|
|
$
|
13,617.9
|
|
$
|
10.2
|
|
$
|
20,937.3
|
|
$
|
19,688.4
|
|
Debt
|
$
|
0
|
|
$
|
2,722.9
|
|
$
|
164.9
|
|
$
|
2,887.8
|
|
$
|
2,707.9
|
|
|
Level 3 Fair Value
|
|||||||||||||||||||||||
(millions)
|
Fair Value at Dec. 31, 2015
|
|
Calls/
Maturities/
Paydowns
|
|
Purchases
|
|
Sales
|
|
Net Realized
(Gain)/Loss
on Sales
|
|
Change in
Valuation
|
|
Net
Transfers
In (Out)
|
|
Fair Value at Dec. 31, 2016
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial mortgage-backed
|
$
|
9.9
|
|
$
|
(9.6
|
)
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0.3
|
|
Total fixed maturities
|
9.9
|
|
(9.6
|
)
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0.3
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Nonredeemable preferred stocks:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financials
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
||||||||
Common equities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other risk investments
|
0.3
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0.1
|
|
0
|
|
0.4
|
|
||||||||
Total Level 3 securities
|
$
|
10.2
|
|
$
|
(9.6
|
)
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0.1
|
|
$
|
0
|
|
$
|
0.7
|
|
|
Level 3 Fair Value
|
|||||||||||||||||||||||
(millions)
|
Fair Value at Dec. 31, 2014
|
|
Calls/
Maturities/
Paydowns
|
|
Purchases
|
|
Sales
|
|
Net Realized
(Gain)/Loss
on Sales
|
|
Change in
Valuation
|
|
Net
Transfers
In (Out)
|
|
Fair Value at Dec. 31, 2015
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-backed securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commercial mortgage-backed
|
$
|
11.6
|
|
$
|
(1.3
|
)
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
(0.4
|
)
|
$
|
0
|
|
$
|
9.9
|
|
Total fixed maturities
|
11.6
|
|
(1.3
|
)
|
0
|
|
0
|
|
0
|
|
(0.4
|
)
|
0
|
|
9.9
|
|
||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Nonredeemable preferred stocks:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financials
1
|
69.3
|
|
0
|
|
0
|
|
0
|
|
(39.4
|
)
|
(1.4
|
)
|
(28.5
|
)
|
0
|
|
||||||||
Common equities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other risk investments
|
0.4
|
|
0
|
|
0
|
|
0
|
|
0
|
|
(0.1
|
)
|
0
|
|
0.3
|
|
||||||||
Total Level 3 securities
|
$
|
81.3
|
|
$
|
(1.3
|
)
|
$
|
0
|
|
$
|
0
|
|
$
|
(39.4
|
)
|
$
|
(1.9
|
)
|
$
|
(28.5
|
)
|
$
|
10.2
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||
($ in millions)
|
Fair Value at Dec. 31, 2016
|
|
Valuation Technique
|
Unobservable Input
|
Unobservable Input Assumption
|
|
Fixed maturities:
|
|
|
|
|
||
Asset-backed securities:
|
|
|
|
|
||
Commercial mortgage-backed
|
$
|
0.3
|
|
External vendor
|
Prepayment rate
1
|
0
|
Total fixed maturities
|
0.3
|
|
|
|
|
|
Subtotal Level 3 securities
|
0.3
|
|
|
|
|
|
Third-party pricing exemption securities
2
|
0.4
|
|
|
|
|
|
Total Level 3 securities
|
$
|
0.7
|
|
|
|
|
|
Quantitative Information about Level 3 Fair Value Measurements
|
|||||
($ in millions)
|
Fair Value at Dec. 31, 2015
|
|
Valuation Technique
|
Unobservable Input
|
Unobservable Input Assumption
|
|
Fixed maturities:
|
|
|
|
|
||
Asset-backed securities:
|
|
|
|
|
||
Commercial mortgage-backed
|
$
|
9.9
|
|
External vendor
|
Prepayment rate
1
|
0
|
Total fixed maturities
|
9.9
|
|
|
|
|
|
Subtotal Level 3 securities
|
9.9
|
|
|
|
|
|
Third-party pricing exemption securities
2
|
0.3
|
|
|
|
|
|
Total Level 3 securities
|
$
|
10.2
|
|
|
|
|
|
|
|
2016
|
|
2015
|
||||||||||||
(millions)
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
||||
3.75% Senior Notes due 2021 (issued: $500.0, August 2011)
|
$
|
498.4
|
|
|
$
|
528.8
|
|
|
$
|
498.1
|
|
|
$
|
528.7
|
|
||
2.45% Senior Notes due 2027 (issued: $500.0, August 2016)
|
495.8
|
|
|
464.6
|
|
|
0
|
|
|
0
|
|
||||||
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)
|
295.9
|
|
|
380.1
|
|
|
295.7
|
|
|
376.0
|
|
||||||
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)
|
395.2
|
|
|
499.0
|
|
|
395.0
|
|
|
490.6
|
|
||||||
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)
|
346.4
|
|
|
362.3
|
|
|
346.4
|
|
|
352.8
|
|
||||||
3.70% Senior Notes due 2045 (issued: $400.0, January 2015)
|
395.1
|
|
|
372.5
|
|
|
395.0
|
|
|
362.0
|
|
||||||
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (issued: $1,000.0, June 2007; outstanding: $594.6 and $614.4)
|
594.1
|
|
|
581.2
|
|
|
612.8
|
|
|
612.8
|
|
||||||
Other debt instruments
|
127.3
|
|
|
127.3
|
|
|
164.9
|
|
|
164.9
|
|
||||||
Total
|
$
|
3,148.2
|
|
|
$
|
3,315.8
|
|
|
$
|
2,707.9
|
|
|
$
|
2,887.8
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
||||||||||
Type of debt instrument
|
Number of Instruments
|
|
|
Carrying
Value
|
|
|
Number of Instruments
|
|
|
Carrying
Value |
|
Stated Maturity Date(s)
|
||
Term loans
|
2
|
|
|
$
|
62.1
|
|
|
2
|
|
|
$
|
87.1
|
|
December 2018 and 2019
|
Junior subordinated notes
1
|
2
|
|
|
41.2
|
|
|
2
|
|
|
41.2
|
|
June 2036 and 2037
|
||
Senior notes
|
4
|
|
|
24.0
|
|
|
4
|
|
|
24.0
|
|
Various
2
|
||
Surplus note
3
|
0
|
|
|
0
|
|
|
1
|
|
|
12.6
|
|
November 2021
|
||
Total
|
|
|
$
|
127.3
|
|
|
|
|
$
|
164.9
|
|
|
(millions)
|
Unrealized Gain (Loss)
at Debt Issuance
|
|
Unamortized Balance
at December 31, 2016
|
|
||
3.75% Senior Notes
|
$
|
(5.1
|
)
|
$
|
(2.6
|
)
|
6 5/8% Senior Notes
|
(4.2
|
)
|
(2.9
|
)
|
||
6.25% Senior Notes
|
5.1
|
|
3.7
|
|
||
4.35% Senior Notes
|
(1.6
|
)
|
(1.5
|
)
|
||
3.70% Senior Notes
|
(12.9
|
)
|
(12.4
|
)
|
||
6.70% Debentures
|
34.4
|
|
1.2
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Current tax provision
|
|
|
|
|
|
|
|||
Federal
|
$
|
469.6
|
|
$
|
655.3
|
|
$
|
594.4
|
|
State
|
12.7
|
|
14.7
|
|
0
|
|
|||
Deferred tax expense (benefit)
|
|
|
|
|
|
|
|||
Federal
|
(66.3
|
)
|
(47.7
|
)
|
32.0
|
|
|||
State
|
(2.5
|
)
|
(11.2
|
)
|
0
|
|
|||
Total income tax provision
|
$
|
413.5
|
|
$
|
611.1
|
|
$
|
626.4
|
|
($ in millions)
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Income before income taxes
|
$
|
1,470.7
|
|
|
|
$
|
1,911.6
|
|
|
|
$
|
1,907.4
|
|
|
|||
Tax at statutory federal rate
|
$
|
514.8
|
|
35
|
%
|
|
$
|
669.1
|
|
35
|
%
|
|
$
|
667.6
|
|
35
|
%
|
Tax effect of:
|
|
|
|
|
|
|
|
|
|||||||||
Tax credits
|
(62.2
|
)
|
(4
|
)
|
|
(1.9
|
)
|
0
|
|
|
(2.2
|
)
|
0
|
|
|||
Dividends received deduction
|
(22.6
|
)
|
(2
|
)
|
|
(19.8
|
)
|
(1
|
)
|
|
(18.3
|
)
|
(1
|
)
|
|||
Exempt interest income
|
(15.7
|
)
|
(1
|
)
|
|
(17.8
|
)
|
(1
|
)
|
|
(13.8
|
)
|
(1
|
)
|
|||
Non-taxable gain
1
|
0
|
|
0
|
|
|
(13.8
|
)
|
(1
|
)
|
|
0
|
|
0
|
|
|||
Tax-deductible dividends
|
(6.1
|
)
|
0
|
|
|
(7.9
|
)
|
0
|
|
|
(6.5
|
)
|
0
|
|
|||
State income taxes, net of federal taxes
|
6.6
|
|
0
|
|
|
2.3
|
|
0
|
|
|
0
|
|
0
|
|
|||
Other items, net
|
(1.3
|
)
|
0
|
|
|
0.9
|
|
0
|
|
|
(0.4
|
)
|
0
|
|
|||
Total income tax provision
|
$
|
413.5
|
|
28
|
%
|
|
$
|
611.1
|
|
32
|
%
|
|
$
|
626.4
|
|
33
|
%
|
(millions)
|
2016
|
|
2015
|
|
||
Federal deferred tax assets:
|
|
|
||||
Unearned premiums reserve
|
$
|
515.6
|
|
$
|
453.3
|
|
Investment basis differences
|
31.3
|
|
40.5
|
|
||
Non-deductible accruals
|
259.9
|
|
231.4
|
|
||
Loss and loss adjustment expense reserves
|
76.5
|
|
75.3
|
|
||
Hedges on forecasted transactions
|
5.1
|
|
4.4
|
|
||
Other
|
8.9
|
|
9.6
|
|
||
Federal deferred tax liabilities:
|
|
|
||||
Net unrealized gains on securities
|
(507.2
|
)
|
(436.7
|
)
|
||
Deferred acquisition costs
|
(227.9
|
)
|
(197.4
|
)
|
||
Property and equipment
|
(120.2
|
)
|
(110.7
|
)
|
||
Prepaid expenses
|
(9.2
|
)
|
(11.9
|
)
|
||
Intangible assets-ARX acquisition
|
(145.3
|
)
|
(166.4
|
)
|
||
Deferred gain on extinguishment of debt
|
(1.5
|
)
|
(2.2
|
)
|
||
Other
|
(7.7
|
)
|
(7.0
|
)
|
||
Net federal deferred tax liability
|
(121.7
|
)
|
(117.8
|
)
|
||
Net state deferred tax asset
|
10.4
|
|
8.5
|
|
||
Net deferred tax liability
|
$
|
(111.3
|
)
|
$
|
(109.3
|
)
|
(millions)
|
2016
|
2015
|
2014
|
||||||
Balance at January 1
|
$
|
10,039.0
|
|
$
|
8,857.4
|
|
$
|
8,479.7
|
|
Less reinsurance recoverables on unpaid losses
|
1,442.7
|
|
1,185.9
|
|
1,045.9
|
|
|||
Net balance at January 1
|
8,596.3
|
|
7,671.5
|
|
7,433.8
|
|
|||
Net loss and loss adjustment reserves (disposed) acquired
1
|
(2.5
|
)
|
222.4
|
|
0
|
|
|||
Total beginning reserves
|
8,593.8
|
|
7,893.9
|
|
7,433.8
|
|
|||
Incurred related to:
|
|
|
|
||||||
Current year
|
16,967.1
|
|
14,657.1
|
|
13,330.3
|
|
|||
Prior years
|
(87.5
|
)
|
(315.1
|
)
|
(24.1
|
)
|
|||
Total incurred
|
16,879.6
|
|
14,342.0
|
|
13,306.2
|
|
|||
Paid related to:
|
|
|
|
||||||
Current year
|
11,149.0
|
|
9,577.3
|
|
8,831.5
|
|
|||
Prior years
|
4,757.4
|
|
4,062.3
|
|
4,237.0
|
|
|||
Total paid
|
15,906.4
|
|
13,639.6
|
|
13,068.5
|
|
|||
Net balance at December 31
|
9,567.0
|
|
8,596.3
|
|
7,671.5
|
|
|||
Plus reinsurance recoverables on unpaid losses
|
1,801.0
|
|
1,442.7
|
|
1,185.9
|
|
|||
Balance at December 31
|
$
|
11,368.0
|
|
$
|
10,039.0
|
|
$
|
8,857.4
|
|
•
|
Approximately
$56 million
of the favorable prior year reserve development was attributable to accident year 2015, and approximately
$51 million
of favorable development was attributable to accident years 2013 and prior. This favorable development was partially offset by
$19 million
of unfavorable development attributable to accident year 2014.
|
•
|
Our Personal Lines and Property businesses incurred
$54 million
and
$52 million
, respectively, of favorable loss and LAE reserve development, partially offset by the unfavorable loss and LAE development in Commercial Lines. In our Property business both the severity and frequency of late reported claims was less than anticipated.
|
•
|
Our personal auto product developed favorably
$40 million
, almost evenly split between Direct and Agency.
|
•
|
Our personal auto business incurred favorable case development primarily in bodily injury due to a lower than anticipated severity.
|
•
|
Our personal auto and Commercial Lines businesses incurred unfavorable IBNR loss reserve development, primarily due to a higher severity and frequency of late reported claims than anticipated for accident year 2015, due in part to storms in late December 2015, resulting in a greater number of claims being reported in January 2016 than anticipated.
|
•
|
In addition, our Commercial Lines business experienced unfavorable case reserve development for accident year 2014 primarily due to a higher severity than anticipated on our largest limits, while case reserve development for accident years 2015 and 2013 and prior was favorable.
|
•
|
Approximately
$239 million
of the favorable prior year reserve development was primarily attributable to accident year 2014.
|
•
|
Favorable reserve development occurred in all segments; our combined Agency auto business and Direct auto business experienced approximately
$217 million
of total development, with the remainder split between our Commercial Lines and Property businesses.
|
•
|
In our personal auto and Commercial Lines businesses, we incurred favorable case loss reserve development primarily in bodily injury and uninsured motorist bodily injury coverages, due to lower than anticipated severity.
|
•
|
Our Property business development was favorable due to lower than anticipated severity and frequency across all products, primarily in accident years 2014 and 2013.
|
•
|
Approximately
$25 million
of the favorable prior year reserve development was primarily attributable to accident year 2010.
|
•
|
Favorable reserve development in our Commercial Lines business of
$49 million
was partially offset by unfavorable development in our Agency auto business of
$24 million
. Our Direct auto business experienced slight favorable development.
|
•
|
The favorable reserve development in our Commercial Lines business was primarily related to favorable case reserve development on our high limit policies.
|
•
|
In Agency auto, the unfavorable development was primarily attributable to personal injury protection loss reserves and adjusting and other LAE reserves.
|
Personal Lines - Agency - Liability
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
3,372.5
|
|
|
$
|
3,375.9
|
|
|
$
|
3,385.5
|
|
|
$
|
3,395.0
|
|
|
$
|
3,352.4
|
|
|
$
|
0.1
|
|
|
691,743
|
|
2013
|
|
|
|
3,506.0
|
|
|
3,520.9
|
|
|
3,518.2
|
|
|
3,528.0
|
|
|
53.9
|
|
|
696,614
|
|
|||||||
2014
|
|
|
|
|
|
3,702.1
|
|
|
3,627.7
|
|
|
3,633.2
|
|
|
57.3
|
|
|
701,611
|
|
||||||||
2015
|
|
|
|
|
|
|
|
3,774.9
|
|
|
3,773.8
|
|
|
142.1
|
|
|
702,917
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
4,082.9
|
|
|
555.6
|
|
|
724,842
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
18,370.3
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
1,673.7
|
|
|
$
|
2,690.0
|
|
|
$
|
3,070.2
|
|
|
$
|
3,238.2
|
|
|
$
|
3,308.4
|
|
|
|
|
|
|||
2013
|
|
|
|
1,684.0
|
|
|
2,794.1
|
|
|
3,173.1
|
|
|
3,362.9
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
1,809.0
|
|
|
2,868.1
|
|
|
3,284.5
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
1,793.1
|
|
|
2,976.0
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
1,941.6
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
14,873.4
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
59.0
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
3,555.9
|
|
|
|
|
|
Personal Lines - Agency - Physical Damage
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
1,948.7
|
|
|
$
|
1,954.5
|
|
|
$
|
1,956.6
|
|
|
$
|
1,956.0
|
|
|
$
|
1,958.0
|
|
|
$
|
0
|
|
|
1,302,848
|
|
2013
|
|
|
|
2,014.0
|
|
|
2,001.4
|
|
|
2,000.1
|
|
|
1,999.4
|
|
|
(2.4
|
)
|
|
1,347,820
|
|
|||||||
2014
|
|
|
|
|
|
2,107.5
|
|
|
2,090.3
|
|
|
2,089.9
|
|
|
(2.0
|
)
|
|
1,374,623
|
|
||||||||
2015
|
|
|
|
|
|
|
|
2,136.8
|
|
|
2,137.2
|
|
|
(4.6
|
)
|
|
1,336,089
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
2,423.4
|
|
|
(87.4
|
)
|
|
1,387,512
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
10,607.9
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
1,903.9
|
|
|
$
|
1,958.4
|
|
|
$
|
1,958.1
|
|
|
$
|
1,957.9
|
|
|
$
|
1,957.1
|
|
|
|
|
|
|||
2013
|
|
|
|
1,952.7
|
|
|
2,003.9
|
|
|
2,002.0
|
|
|
2,001.3
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
2,078.8
|
|
|
2,091.6
|
|
|
2,090.6
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
2,106.2
|
|
|
2,138.1
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
2,391.0
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
10,578.1
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
0.3
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
30.1
|
|
|
|
|
|
Personal Lines - Direct - Liability
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
2,507.4
|
|
|
$
|
2,469.1
|
|
|
$
|
2,480.0
|
|
|
$
|
2,488.2
|
|
|
$
|
2,471.6
|
|
|
$
|
(0.1
|
)
|
|
526,665
|
|
2013
|
|
|
|
2,619.4
|
|
|
2,621.8
|
|
|
2,615.8
|
|
|
2,649.8
|
|
|
40.9
|
|
|
550,135
|
|
|||||||
2014
|
|
|
|
|
|
2,946.8
|
|
|
2,887.4
|
|
|
2,898.1
|
|
|
44.0
|
|
|
592,017
|
|
||||||||
2015
|
|
|
|
|
|
|
|
3,330.5
|
|
|
3,328.3
|
|
|
122.4
|
|
|
656,712
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
3,819.0
|
|
|
488.9
|
|
|
722,585
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
15,166.8
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
1,221.9
|
|
|
$
|
1,972.4
|
|
|
$
|
2,264.4
|
|
|
$
|
2,385.0
|
|
|
$
|
2,438.3
|
|
|
|
|
|
|||
2013
|
|
|
|
1,252.0
|
|
|
2,085.1
|
|
|
2,375.5
|
|
|
2,521.3
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
1,413.0
|
|
|
2,278.0
|
|
|
2,624.2
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
1,545.2
|
|
|
2,615.0
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
1,780.6
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
11,979.4
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
31.7
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
3,219.1
|
|
|
|
|
|
Personal Lines - Direct - Physical Damage
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
1,562.4
|
|
|
$
|
1,556.5
|
|
|
$
|
1,557.3
|
|
|
$
|
1,557.0
|
|
|
$
|
1,558.1
|
|
|
$
|
0
|
|
|
1,314,480
|
|
2013
|
|
|
|
1,653.7
|
|
|
1,635.6
|
|
|
1,634.6
|
|
|
1,633.4
|
|
|
(2.3
|
)
|
|
1,367,281
|
|
|||||||
2014
|
|
|
|
|
|
1,889.3
|
|
|
1,862.2
|
|
|
1,861.7
|
|
|
(2.2
|
)
|
|
1,470,879
|
|
||||||||
2015
|
|
|
|
|
|
|
|
2,110.7
|
|
|
2,097.7
|
|
|
(5.7
|
)
|
|
1,539,503
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
2,521.0
|
|
|
(115.0
|
)
|
|
1,673,575
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
9,671.9
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
1,540.1
|
|
|
$
|
1,560.2
|
|
|
$
|
1,559.1
|
|
|
$
|
1,558.4
|
|
|
$
|
1,557.9
|
|
|
|
|
|
|||
2013
|
|
|
|
1,612.9
|
|
|
1,638.2
|
|
|
1,636.2
|
|
|
1,635.3
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
1,874.6
|
|
|
1,864.1
|
|
|
1,862.7
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
2,094.7
|
|
|
2,100.1
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
2,505.0
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
9,661.0
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
0.3
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
11.2
|
|
|
|
|
|
Commercial Lines - Liability
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
800.1
|
|
|
$
|
827.4
|
|
|
$
|
810.7
|
|
|
$
|
807.8
|
|
|
$
|
794.8
|
|
|
$
|
0
|
|
|
78,425
|
|
2013
|
|
|
|
864.2
|
|
|
864.6
|
|
|
865.4
|
|
|
865.0
|
|
|
23.3
|
|
|
78,090
|
|
|||||||
2014
|
|
|
|
|
|
822.5
|
|
|
795.4
|
|
|
820.3
|
|
|
22.6
|
|
|
74,675
|
|
||||||||
2015
|
|
|
|
|
|
|
|
897.6
|
|
|
911.1
|
|
|
51.0
|
|
|
77,263
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
1,185.8
|
|
|
168.4
|
|
|
89,830
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
4,577.0
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
228.6
|
|
|
$
|
465.4
|
|
|
$
|
621.5
|
|
|
$
|
715.8
|
|
|
$
|
759.9
|
|
|
|
|
|
|||
2013
|
|
|
|
233.3
|
|
|
509.4
|
|
|
659.1
|
|
|
752.5
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
234.0
|
|
|
438.7
|
|
|
610.0
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
238.4
|
|
|
501.5
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
298.6
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
2,922.5
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
20.8
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
1,675.3
|
|
|
|
|
|
Commercial Lines - Physical Damage
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
266.6
|
|
|
$
|
267.7
|
|
|
$
|
268.4
|
|
|
$
|
267.6
|
|
|
$
|
267.8
|
|
|
$
|
0
|
|
|
65,804
|
|
2013
|
|
|
|
256.2
|
|
|
254.2
|
|
|
254.5
|
|
|
253.7
|
|
|
(0.5
|
)
|
|
62,654
|
|
|||||||
2014
|
|
|
|
|
|
240.3
|
|
|
239.7
|
|
|
238.6
|
|
|
(0.1
|
)
|
|
59,616
|
|
||||||||
2015
|
|
|
|
|
|
|
|
274.4
|
|
|
274.1
|
|
|
(0.8
|
)
|
|
62,609
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
379.6
|
|
|
(4.6
|
)
|
|
74,810
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,413.8
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
247.6
|
|
|
$
|
266.9
|
|
|
$
|
267.3
|
|
|
$
|
267.8
|
|
|
$
|
267.6
|
|
|
|
|
|
|||
2013
|
|
|
|
239.4
|
|
|
253.1
|
|
|
253.9
|
|
|
253.7
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
224.6
|
|
|
238.3
|
|
|
237.7
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
248.5
|
|
|
271.9
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
336.7
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,367.6
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
0.4
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
46.6
|
|
|
|
|
|
Property Business
|
|
|
|
|
|
|
|||||||||||||||||||||
($ in millions)
|
|
|
|
|
|
|
|
|
|
As of
|
|||||||||||||||||
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
December 31, 2016
|
|||||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
Total of IBNR Liabilities Plus Expected Development on Reported Claims
|
|
|
Cumulative Number of Incurred Claim Counts
|
|
|||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
||||||||||
2012
|
|
$
|
296.4
|
|
|
$
|
273.4
|
|
|
$
|
260.8
|
|
|
$
|
252.9
|
|
|
$
|
253.5
|
|
|
$
|
1.5
|
|
|
33,236
|
|
2013
|
|
|
|
307.3
|
|
|
283.3
|
|
|
254.3
|
|
|
254.1
|
|
|
3.3
|
|
|
30,578
|
|
|||||||
2014
|
|
|
|
|
|
415.5
|
|
|
389.1
|
|
|
379.7
|
|
|
9.5
|
|
|
40,957
|
|
||||||||
2015
|
|
|
|
|
|
|
|
460.0
|
|
|
416.5
|
|
|
31.7
|
|
|
41,788
|
|
|||||||||
2016
|
|
|
|
|
|
|
|
|
|
568.6
|
|
|
98.1
|
|
|
50,159
|
|
||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,872.4
|
|
|
|
|
|
||||||||||
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||
|
|
For the years ended December 31,
|
|
|
|
|
|||||||||||||||||||||
Accident Year
|
|
2012
1
|
|
|
2013
1
|
|
|
2014
1
|
|
|
2015
1
|
|
|
2016
|
|
|
|
|
|
||||||||
2012
|
|
$
|
178.0
|
|
|
$
|
229.7
|
|
|
$
|
242.4
|
|
|
$
|
248.4
|
|
|
$
|
250.2
|
|
|
|
|
|
|||
2013
|
|
|
|
185.1
|
|
|
234.2
|
|
|
244.9
|
|
|
249.5
|
|
|
|
|
|
|||||||||
2014
|
|
|
|
|
|
269.2
|
|
|
351.5
|
|
|
365.9
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
280.3
|
|
|
372.8
|
|
|
|
|
|
|||||||||||
2016
|
|
|
|
|
|
|
|
|
|
415.2
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
1,653.6
|
|
|
|
|
|
||||||||||
|
|
All outstanding liabilities before 2012, net of reinsurance
|
|
|
5.9
|
|
|
|
|
|
|||||||||||||||||
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
|
$
|
224.7
|
|
|
|
|
|
(millions)
|
2016
|
|
|
Net outstanding liabilities
|
|
||
Personal Lines
|
|
||
Agency, Liability
|
$
|
3,555.9
|
|
Agency, Physical Damage
|
30.1
|
|
|
Direct, Liability
|
3,219.1
|
|
|
Direct, Physical Damage
|
11.2
|
|
|
Commercial Lines
|
|
||
Liability
|
1,675.3
|
|
|
Physical Damage
|
46.6
|
|
|
Property
|
224.7
|
|
|
Other business
|
37.1
|
|
|
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
|
8,800.0
|
|
|
|
|
||
Reinsurance recoverable on unpaid claims
|
|
||
Personal Lines
|
|
||
Agency, Liability
|
724.5
|
|
|
Agency, Physical Damage
|
0
|
|
|
Direct, Liability
|
724.3
|
|
|
Direct, Physical Damage
|
0
|
|
|
Commercial Lines
|
|
||
Liability
|
59.5
|
|
|
Physical Damage
|
0
|
|
|
Property
|
132.7
|
|
|
Other business
|
154.9
|
|
|
Total reinsurance recoverable on unpaid claims
|
$
|
1,795.9
|
|
|
|
||
Unallocated claims adjustment expense related to:
|
|
||
Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance
|
767.0
|
|
|
Reinsurance recoverable on unpaid claims
|
5.1
|
|
|
|
|
||
Total gross liability for unpaid claims and claim adjustment expense
|
$
|
11,368.0
|
|
(Required Supplementary Information - Unaudited)
|
|
|
|
|
|
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
|
Years
|
||||
1
|
2
|
3
|
4
|
5
|
|
Personal Lines
|
|
|
|
|
|
Agency, Liability
|
48.5%
|
30.6%
|
11.2%
|
5.2%
|
2.1%
|
Agency, Physical Damage
|
98.3%
|
1.8%
|
(0.1)%
|
—%
|
—%
|
Direct, Liability
|
47.6%
|
31.0%
|
11.6%
|
5.2%
|
2.2%
|
Direct, Physical Damage
|
99.5%
|
0.6%
|
(0.1)%
|
(0.1)%
|
—%
|
Commercial Lines
|
|
|
|
|
|
Liability
|
26.9%
|
28.9%
|
19.2%
|
11.3%
|
5.5%
|
Physical Damage
|
91.7%
|
6.8%
|
0.1%
|
0.1%
|
(0.1)%
|
Property
|
70.9%
|
21.1%
|
4.3%
|
2.1%
|
0.7%
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(millions)
|
Written
|
|
Earned
|
|
|
Written
|
|
Earned
|
|
|
Written
|
|
Earned
|
|
||||||
Direct premiums
|
$
|
23,941.9
|
|
$
|
23,111.2
|
|
|
$
|
21,086.5
|
|
$
|
20,454.1
|
|
|
$
|
18,914.8
|
|
$
|
18,648.4
|
|
Ceded premiums:
|
|
|
|
|
|
|
|
|
||||||||||||
Regulated plans
|
(439.4
|
)
|
(425.1
|
)
|
|
(358.0
|
)
|
(362.6
|
)
|
|
(251.9
|
)
|
(241.4
|
)
|
||||||
Non-Regulated plans
|
(149.0
|
)
|
(212.1
|
)
|
|
(164.5
|
)
|
(192.4
|
)
|
|
(8.3
|
)
|
(8.5
|
)
|
||||||
Total ceded premiums
|
(588.4
|
)
|
(637.2
|
)
|
|
(522.5
|
)
|
(555.0
|
)
|
|
(260.2
|
)
|
(249.9
|
)
|
||||||
Net premiums
|
$
|
23,353.5
|
|
$
|
22,474.0
|
|
|
$
|
20,564.0
|
|
$
|
19,899.1
|
|
|
$
|
18,654.6
|
|
$
|
18,398.5
|
|
•
|
Federal reinsurance plan
|
•
|
National Flood Insurance Program (NFIP)
|
•
|
State-provided reinsurance facilities
|
•
|
Michigan Catastrophic Claims Association (MCCA)
|
•
|
North Carolina Reinsurance Facility (NCRF)
|
•
|
Florida Hurricane Catastrophe Fund (FHCF)
|
•
|
State-mandated involuntary plans
|
•
|
Commercial Automobile Insurance Procedures/Plans (CAIP)
|
|
Prepaid Reinsurance Premiums
|
|
Reinsurance Recoverables
|
||||||||||||||||||||
($ in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Regulated plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
MCCA
|
$
|
36.5
|
|
21
|
%
|
|
$
|
31.4
|
|
16
|
%
|
|
$
|
1,452.7
|
|
77
|
%
|
|
$
|
1,217.6
|
|
82
|
%
|
CAIP
|
40.2
|
|
24
|
|
|
37.1
|
|
19
|
|
|
170.6
|
|
9
|
|
|
134.0
|
|
9
|
|
||||
NCRF
|
27.5
|
|
16
|
|
|
25.6
|
|
13
|
|
|
67.0
|
|
4
|
|
|
56.7
|
|
4
|
|
||||
NFIP
|
49.1
|
|
29
|
|
|
45.0
|
|
22
|
|
|
78.5
|
|
4
|
|
|
10.4
|
|
1
|
|
||||
Other
|
0.1
|
|
0
|
|
|
0
|
|
0
|
|
|
3.5
|
|
0
|
|
|
2.8
|
|
0
|
|
||||
Total Regulated plans
|
153.4
|
|
90
|
|
|
139.1
|
|
70
|
|
|
1,772.3
|
|
94
|
|
|
1,421.5
|
|
96
|
|
||||
Non-Regulated plans:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property
|
3.2
|
|
2
|
|
|
52.6
|
|
26
|
|
|
62.9
|
|
3
|
|
|
35.5
|
|
2
|
|
||||
Other
|
13.9
|
|
8
|
|
|
7.6
|
|
4
|
|
|
49.6
|
|
3
|
|
|
31.8
|
|
2
|
|
||||
Total Non-Regulated plans
|
17.1
|
|
10
|
|
|
60.2
|
|
30
|
|
|
112.5
|
|
6
|
|
|
67.3
|
|
4
|
|
||||
Total
|
$
|
170.5
|
|
100
|
%
|
|
$
|
199.3
|
|
100
|
%
|
|
$
|
1,884.8
|
|
100
|
%
|
|
$
|
1,488.8
|
|
100
|
%
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(millions)
|
Pretax
|
|
After Tax
|
|
|
Pretax
|
|
After Tax
|
|
|
Pretax
|
|
After Tax
|
|
||||||
Non-equity incentive plans
–
cash
|
$
|
386.8
|
|
$
|
251.4
|
|
|
$
|
337.7
|
|
$
|
219.5
|
|
|
$
|
266.2
|
|
$
|
173.0
|
|
Equity incentive plans:
|
|
|
|
|
|
|
|
|
||||||||||||
Equity awards
|
80.9
|
|
52.6
|
|
|
64.5
|
|
41.9
|
|
|
51.4
|
|
33.4
|
|
||||||
Liability awards
|
4.3
|
|
2.8
|
|
|
1.7
|
|
1.1
|
|
|
0
|
|
0
|
|
Performance Measurement
|
Year(s) of Grant
|
Vesting range (as a percentage of target)
|
Growth of our personal and commercial auto businesses, compared to market
|
2013-2016
|
0-250%
|
|
2012
|
0-200%
|
Investment results relative to peer group
|
2012-2016
|
0-200%
|
Growth in percentage of auto policies bundled with other specified types of policies (granted to two senior executive officers)
|
2015
|
0% or 100-200%
|
Unit growth in a particular customer segment (granted to nine senior level employees)
|
2016
|
85-150%
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Restricted Equity Awards
|
Number of Shares
1
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|
Number of
Shares
1
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|
Number of
Shares
1
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|||
Beginning of year
|
7,725,227
|
|
$
|
23.37
|
|
|
9,051,564
|
|
$
|
21.27
|
|
|
9,918,575
|
|
$
|
20.13
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|||||||||
Granted
2
|
1,870,660
|
|
31.54
|
|
|
2,489,976
|
|
25.20
|
|
|
3,542,984
|
|
19.32
|
|
|||
Vested
|
(2,422,700
|
)
|
21.50
|
|
|
(3,682,644
|
)
|
19.53
|
|
|
(4,228,673
|
)
|
16.99
|
|
|||
Forfeited
|
(221,814
|
)
|
24.64
|
|
|
(133,669
|
)
|
21.63
|
|
|
(181,322
|
)
|
20.75
|
|
|||
End of year
3,4
|
6,951,373
|
|
$
|
26.18
|
|
|
7,725,227
|
|
$
|
23.37
|
|
|
9,051,564
|
|
$
|
21.27
|
|
|
2016
|
|
2015
|
||||||||
Options Outstanding
|
Number of Shares
|
|
Weighted Average
Exercise Price |
|
|
Number of Shares
|
|
Weighted Average
Exercise Price |
|
||
Beginning of year
|
24,995
|
|
$
|
526.46
|
|
|
NA
|
|
NA
|
|
|
At acquisition date 4/1/2015
|
NA
|
|
NA
|
|
|
26,000
|
|
$
|
513.72
|
|
|
Add (deduct):
|
|
|
|
|
|
||||||
Exercised
1
|
0
|
|
0
|
|
|
(1,005
|
)
|
197.01
|
|
||
End of year
|
24,995
|
|
$
|
526.46
|
|
|
24,995
|
|
$
|
526.46
|
|
Exercisable, end of year
|
16,995
|
|
$
|
438.77
|
|
|
12,995
|
|
$
|
386.69
|
|
|
2016
|
|
2015
|
||||||||
Non-Vested Options Outstanding
|
Number of Shares
|
|
Weighted Average
Exercise Price |
|
|
Number of Shares
|
|
Weighted Average
Exercise Price |
|
||
Beginning of year
|
12,000
|
|
$
|
677.81
|
|
|
NA
|
|
NA
|
|
|
At acquisition date 4/1/2015
|
NA
|
|
NA
|
|
|
14,800
|
|
$
|
675.55
|
|
|
Add (deduct):
|
|
|
|
|
|
||||||
Vested
|
(4,000
|
)
|
607.95
|
|
|
(2,800
|
)
|
665.85
|
|
||
End of year
1
|
8,000
|
|
$
|
712.74
|
|
|
12,000
|
|
$
|
677.81
|
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Restricted Stock
|
Number of
Shares
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant
Date Fair
Value
|
|
|||
Beginning of year
|
89,427
|
|
$
|
27.23
|
|
|
81,579
|
|
$
|
25.45
|
|
|
93,254
|
|
$
|
26.19
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
|||||||||
Granted
|
55,839
|
|
33.24
|
|
|
89,427
|
|
27.23
|
|
|
90,649
|
|
25.44
|
|
|||
Vested
|
(89,427
|
)
|
27.23
|
|
|
(81,579
|
)
|
25.45
|
|
|
(93,254
|
)
|
26.19
|
|
|||
Forfeited
|
0
|
|
0
|
|
|
0
|
|
0
|
|
|
(9,070
|
)
|
25.36
|
|
|||
End of year
|
55,839
|
|
$
|
33.24
|
|
|
89,427
|
|
$
|
27.23
|
|
|
81,579
|
|
$
|
25.45
|
|
(millions)
|
2016
|
|
2015
|
|
||
Progressive common shares
1
|
$
|
122.2
|
|
$
|
108.5
|
|
Other investment funds
2
|
136.9
|
|
124.8
|
|
||
Total
|
$
|
259.1
|
|
$
|
233.3
|
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
(millions)
|
Revenues
|
|
Pretax
Profit
(Loss)
|
|
|
Revenues
|
|
Pretax
Profit
(Loss)
|
|
|
Revenues
|
|
Pretax
Profit
(Loss)
|
|
||||||
Personal Lines
|
|
|
|
|
|
|
|
|
||||||||||||
Agency
|
$
|
9,791.7
|
|
$
|
492.8
|
|
|
$
|
9,108.6
|
|
$
|
713.2
|
|
|
$
|
9,087.0
|
|
$
|
683.0
|
|
Direct
|
9,396.5
|
|
412.2
|
|
|
8,185.9
|
|
403.4
|
|
|
7,474.0
|
|
423.4
|
|
||||||
Total Personal Lines
1
|
19,188.2
|
|
905.0
|
|
|
17,294.5
|
|
1,116.6
|
|
|
16,561.0
|
|
1,106.4
|
|
||||||
Commercial Lines
|
2,421.3
|
|
155.2
|
|
|
1,995.9
|
|
318.3
|
|
|
1,837.5
|
|
315.8
|
|
||||||
Property
2
|
864.5
|
|
32.5
|
|
|
609.1
|
|
61.3
|
|
|
—
|
|
—
|
|
||||||
Other indemnity
3
|
0
|
|
(1.6
|
)
|
|
(0.4
|
)
|
(1.0
|
)
|
|
0
|
|
(11.9
|
)
|
||||||
Total underwriting operations
|
22,474.0
|
|
1,091.1
|
|
|
19,899.1
|
|
1,495.2
|
|
|
18,398.5
|
|
1,410.3
|
|
||||||
Fees and other revenues
4
|
332.5
|
|
NA
|
|
|
302.0
|
|
NA
|
|
|
309.1
|
|
NA
|
|
||||||
Service businesses
|
103.3
|
|
11.3
|
|
|
86.3
|
|
8.8
|
|
|
56.0
|
|
5.1
|
|
||||||
Investments
5
|
530.0
|
|
507.6
|
|
|
567.3
|
|
544.5
|
|
|
632.6
|
|
613.7
|
|
||||||
Gains (losses) on extinguishment of debt
|
1.6
|
|
1.6
|
|
|
(0.9
|
)
|
(0.9
|
)
|
|
(4.8
|
)
|
(4.8
|
)
|
||||||
Interest expense
|
NA
|
|
(140.9
|
)
|
|
NA
|
|
(136.0
|
)
|
|
NA
|
|
(116.9
|
)
|
||||||
Consolidated total
|
$
|
23,441.4
|
|
$
|
1,470.7
|
|
|
$
|
20,853.8
|
|
$
|
1,911.6
|
|
|
$
|
19,391.4
|
|
$
|
1,907.4
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
Underwriting
Margin
|
|
Combined
Ratio
|
|
Underwriting
Margin
|
|
Combined
Ratio
|
|
Underwriting
Margin
|
|
Combined
Ratio
|
Personal Lines
|
|
|
|
|
|
|
|
|
|||
Agency
|
5.0
|
%
|
95.0
|
|
7.8
|
%
|
92.2
|
|
7.5
|
%
|
92.5
|
Direct
|
4.4
|
|
95.6
|
|
4.9
|
|
95.1
|
|
5.7
|
|
94.3
|
Total Personal Lines
|
4.7
|
|
95.3
|
|
6.5
|
|
93.5
|
|
6.7
|
|
93.3
|
Commercial Lines
|
6.4
|
|
93.6
|
|
15.9
|
|
84.1
|
|
17.2
|
|
82.8
|
Property
1
|
3.8
|
|
96.2
|
|
10.1
|
|
89.9
|
|
NA
|
|
NA
|
Other indemnity
2
|
NM
|
|
NM
|
|
NM
|
|
NM
|
|
NM
|
|
NM
|
Total underwriting operations
|
4.9
|
|
95.1
|
|
7.5
|
|
92.5
|
|
7.7
|
|
92.3
|
|
|
|
|
|
|
|
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
|
||||||||||||||||||||
(millions)
|
Pretax total
accumulated
other
comprehensive
income
|
|
|
Total tax
(provision)
benefit
|
|
|
After tax total
accumulated
other
comprehensive
income
|
|
|
Total net
unrealized
gains
(losses)
on securities
|
|
|
Net
unrealized
gains on
forecasted
transactions
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Loss attributable to NCI
|
|
|||||||
Total at December 31, 2015
|
$
|
1,234.5
|
|
|
$
|
(434.1
|
)
|
|
$
|
800.4
|
|
|
$
|
809.0
|
|
|
$
|
(8.2
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
1.1
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment securities
|
320.5
|
|
|
(112.6
|
)
|
|
207.9
|
|
|
207.9
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net non-credit related OTTI losses, adjusted for valuation changes
|
(0.1
|
)
|
|
0.1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Forecasted transactions
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Foreign currency translation adjustment
|
0.6
|
|
|
(0.2
|
)
|
|
0.4
|
|
|
0
|
|
|
0
|
|
|
0.4
|
|
|
0
|
|
|||||||
Loss attributable to noncontrolling interest
|
5.1
|
|
|
(1.9
|
)
|
|
3.2
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3.2
|
|
|||||||
Total other comprehensive income (loss) before reclassifications
|
326.1
|
|
|
(114.6
|
)
|
|
211.5
|
|
|
207.9
|
|
|
0
|
|
|
0.4
|
|
|
3.2
|
|
|||||||
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net impairment losses recognized in earnings
|
(27.1
|
)
|
|
9.5
|
|
|
(17.6
|
)
|
|
(17.6
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net realized gains (losses) on securities
|
146.3
|
|
|
(51.4
|
)
|
|
94.9
|
|
|
94.9
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Interest expense
|
1.9
|
|
|
(0.7
|
)
|
|
1.2
|
|
|
0
|
|
|
1.2
|
|
|
0
|
|
|
0
|
|
|||||||
Total reclassification adjustment for amounts realized in net income
|
121.1
|
|
|
(42.6
|
)
|
|
78.5
|
|
|
77.3
|
|
|
1.2
|
|
|
0
|
|
|
0
|
|
|||||||
Total other comprehensive income (loss)
|
205.0
|
|
|
(72.0
|
)
|
|
133.0
|
|
|
130.6
|
|
|
(1.2
|
)
|
|
0.4
|
|
|
3.2
|
|
|||||||
Total at December 31, 2016
|
$
|
1,439.5
|
|
|
$
|
(506.1
|
)
|
|
$
|
933.4
|
|
|
$
|
939.6
|
|
|
$
|
(9.4
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
4.3
|
|
|
|
|
|
|
|
|
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
|
||||||||||||||||||||
(millions)
|
Pretax total
accumulated
other
comprehensive
income
|
|
|
Total tax
(provision)
benefit
|
|
|
After tax total
accumulated
other
comprehensive
income
|
|
|
Total net
unrealized
gains
(losses)
on securities
|
|
|
Net
unrealized
gains on
forecasted
transactions
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Loss attributable to NCI
|
|
|||||||
Total at December 31, 2014
|
$
|
1,574.0
|
|
|
$
|
(550.9
|
)
|
|
$
|
1,023.1
|
|
|
$
|
1,021.9
|
|
|
$
|
1.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
0
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment securities
|
(198.7
|
)
|
|
67.5
|
|
|
(131.2
|
)
|
|
(131.2
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net non-credit related OTTI losses, adjusted for valuation changes
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Forecasted transactions
|
(12.9
|
)
|
|
4.5
|
|
|
(8.4
|
)
|
|
0
|
|
|
(8.4
|
)
|
|
0
|
|
|
0
|
|
|||||||
Foreign currency translation adjustment
|
(1.8
|
)
|
|
0.6
|
|
|
(1.2
|
)
|
|
0
|
|
|
0
|
|
|
(1.2
|
)
|
|
0
|
|
|||||||
Loss attributable to noncontrolling interest
|
1.6
|
|
|
(0.5
|
)
|
|
1.1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1.1
|
|
|||||||
Total other comprehensive income (loss) before reclassifications
|
(211.8
|
)
|
|
72.1
|
|
|
(139.7
|
)
|
|
(131.2
|
)
|
|
(8.4
|
)
|
|
(1.2
|
)
|
|
1.1
|
|
|||||||
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net impairment losses recognized in earnings
|
(23.8
|
)
|
|
8.4
|
|
|
(15.4
|
)
|
|
(15.4
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net realized gains (losses) on securities
|
149.7
|
|
|
(52.5
|
)
|
|
97.2
|
|
|
97.1
|
|
|
0.1
|
|
|
0
|
|
|
0
|
|
|||||||
Interest expense
|
1.8
|
|
|
(0.6
|
)
|
|
1.2
|
|
|
0
|
|
|
1.2
|
|
|
0
|
|
|
0
|
|
|||||||
Total reclassification adjustment for amounts realized in net income
|
127.7
|
|
|
(44.7
|
)
|
|
83.0
|
|
|
81.7
|
|
|
1.3
|
|
|
0
|
|
|
0
|
|
|||||||
Total other comprehensive income (loss)
|
(339.5
|
)
|
|
116.8
|
|
|
(222.7
|
)
|
|
(212.9
|
)
|
|
(9.7
|
)
|
|
(1.2
|
)
|
|
1.1
|
|
|||||||
Total at December 31, 2015
|
$
|
1,234.5
|
|
|
$
|
(434.1
|
)
|
|
$
|
800.4
|
|
|
$
|
809.0
|
|
|
$
|
(8.2
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
Components of Changes in
Accumulated Other
Comprehensive Income (after tax)
|
||||||||||||||||||||
(millions)
|
Pretax total
accumulated
other
comprehensive
income
|
|
|
Total tax
(provision)
benefit
|
|
|
After tax total
accumulated
other
comprehensive
income
|
|
|
Total net
unrealized
gains
(losses)
on securities
|
|
|
Net
unrealized
gains on
forecasted
transactions
|
|
|
Foreign
currency
translation
adjustment
|
|
|
Loss attributable to NCI
|
|
|||||||
Total at December 31, 2013
|
$
|
1,464.1
|
|
|
$
|
(512.4
|
)
|
|
$
|
951.7
|
|
|
$
|
947.0
|
|
|
$
|
4.1
|
|
|
$
|
0.6
|
|
|
$
|
0
|
|
Other comprehensive income (loss) before reclassifications:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investment securities
|
362.1
|
|
|
(126.7
|
)
|
|
235.4
|
|
|
235.4
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net non-credit related OTTI losses, adjusted for valuation changes
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Forecasted transactions
|
(1.6
|
)
|
|
0.6
|
|
|
(1.0
|
)
|
|
0
|
|
|
(1.0
|
)
|
|
0
|
|
|
0
|
|
|||||||
Foreign currency translation adjustment
|
(1.3
|
)
|
|
0.4
|
|
|
(0.9
|
)
|
|
0
|
|
|
0
|
|
|
(0.9
|
)
|
|
0
|
|
|||||||
Loss attributable to noncontrolling interest
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Total other comprehensive income (loss) before reclassifications
|
359.2
|
|
|
(125.7
|
)
|
|
233.5
|
|
|
235.4
|
|
|
(1.0
|
)
|
|
(0.9
|
)
|
|
0
|
|
|||||||
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net impairment losses recognized in earnings
|
(7.7
|
)
|
|
2.7
|
|
|
(5.0
|
)
|
|
(5.0
|
)
|
|
0
|
|
|
0
|
|
|
0
|
|
|||||||
Net realized gains (losses) on securities
|
255.0
|
|
|
(89.2
|
)
|
|
165.8
|
|
|
165.5
|
|
|
0.3
|
|
|
0
|
|
|
0
|
|
|||||||
Interest expense
|
2.0
|
|
|
(0.7
|
)
|
|
1.3
|
|
|
0
|
|
|
1.3
|
|
|
0
|
|
|
0
|
|
|||||||
Total reclassification adjustment for amounts realized in net income
|
249.3
|
|
|
(87.2
|
)
|
|
162.1
|
|
|
160.5
|
|
|
1.6
|
|
|
0
|
|
|
0
|
|
|||||||
Total other comprehensive income (loss)
|
109.9
|
|
|
(38.5
|
)
|
|
71.4
|
|
|
74.9
|
|
|
(2.6
|
)
|
|
(0.9
|
)
|
|
0
|
|
|||||||
Total at December 31, 2014
|
$
|
1,574.0
|
|
|
$
|
(550.9
|
)
|
|
$
|
1,023.1
|
|
|
$
|
1,021.9
|
|
|
$
|
1.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
0
|
|
•
|
Putative class actions:
|
•
|
alleging we sell or charge insureds for illusory coverage or coverage lower than amounts allowed by law for personal injury protection (PIP) coverage, uninsured motorist/underinsured motorist coverage and other coverages and pay related claims at levels lower than allowed by law.
|
•
|
challenging our practices in physical damage claims relating to how these claims are handled, adjusted and ultimately paid.
|
•
|
challenging our practice in Florida of adjusting PIP and first-party medical payments.
|
•
|
challenging our adjustment of medical bills submitted by insureds in bodily injury claims.
|
•
|
challenging the manner in which we grant a discount for anti-theft devices.
|
•
|
challenging general claim practices such as subrogation practices, interest payments in arbitration awards, use of deductibles, setting off certain claim payments based on other coverages and payments, and other claim practices.
|
•
|
Certified or conditionally certified class action lawsuits:
|
•
|
alleging that we undervalued total loss claims through the use of certain valuation tools.
|
•
|
alleging that we fail to provide proper uninsured motorist coverage.
|
•
|
challenging our adjustment of medical bills submitted by insureds in bodily injury claims.
|
•
|
Qui tam
lawsuits alleging we did not comply with purported obligations to reimburse Medicare for medical payments made to Medicare beneficiaries.
|
(millions)
|
Commitments
|
|
|
2017
|
$
|
49.8
|
|
2018
|
45.1
|
|
|
2019
|
32.6
|
|
|
2020
|
17.0
|
|
|
2021
|
8.1
|
|
|
Thereafter
|
2.3
|
|
|
Total
|
$
|
154.9
|
|
(millions, except per share amounts)
|
|
Amount
|
||||||
Dividend Type
|
Declared
|
Paid
|
Per
Share |
|
Total
1
|
|
||
Annual – Variable
|
December 2016
|
February 2017
|
$
|
0.6808
|
|
$
|
395.4
|
|
Annual – Variable
|
December 2015
|
February 2016
|
0.8882
|
|
519.2
|
|
||
Annual – Variable
|
December 2014
|
February 2015
|
0.6862
|
|
404.1
|
|
(millions)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Balance, Beginning of period
|
$
|
464.9
|
|
|
$
|
0
|
|
Fair value at date of acquisition
|
0
|
|
|
411.5
|
|
||
Net income attributable to NCI
|
26.2
|
|
|
32.9
|
|
||
Other comprehensive income (loss) attributable to NCI
|
(3.2
|
)
|
|
(1.1
|
)
|
||
Purchase of shares from NCI
|
0
|
|
|
(12.6
|
)
|
||
Change in redemption value of NCI
|
(4.2
|
)
|
|
34.2
|
|
||
Balance, End of period
|
$
|
483.7
|
|
|
$
|
464.9
|
|
(millions)
|
December 31, 2016
|
|
December 31, 2015
|
||||
Intangible assets subject to amortization
|
$
|
420.4
|
|
|
$
|
482.5
|
|
Indefinite-lived intangible assets
1
|
12.4
|
|
|
12.4
|
|
||
Total
|
$
|
432.8
|
|
|
$
|
494.9
|
|
(millions)
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||
Category
|
Gross Carrying Amount
|
|
Accumulated Amortization
1
|
|
Net Carrying Amount
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
1
|
|
Net Carrying Amount
|
|
||||||
Policies in force
|
$
|
256.2
|
|
$
|
64.1
|
|
$
|
192.1
|
|
|
$
|
256.2
|
|
$
|
27.5
|
|
$
|
228.7
|
|
Agency relationships
|
159.2
|
|
19.9
|
|
139.3
|
|
|
159.2
|
|
8.5
|
|
150.7
|
|
||||||
Software rights
|
79.1
|
|
18.8
|
|
60.3
|
|
|
79.1
|
|
8.2
|
|
70.9
|
|
||||||
Trade name
|
34.8
|
|
6.1
|
|
28.7
|
|
|
34.8
|
|
2.6
|
|
32.2
|
|
||||||
Total
|
$
|
529.3
|
|
$
|
108.9
|
|
$
|
420.4
|
|
|
$
|
529.3
|
|
$
|
46.8
|
|
$
|
482.5
|
|
/s/ PricewaterhouseCoopers LLP
|
Cleveland, Ohio
|
March 1, 2017
|
•
|
Subsidiary dividends - received
$263.5
million of dividends, net of capital contributions, from our insurance and non-insurance subsidiaries, and
|
•
|
Debt issuance - issued $500 million of 2.45% Senior Notes due 2027 in August 2016, to take advantage of the low interest rate environment and to increase our financial flexibility.
|
•
|
Dividends - declared a $0.6808 per share annual variable dividend, which returned $395.4 million of capital to our shareholders, and
|
•
|
Repurchases - repurchased both our common shares and debt securities
|
◦
|
Shares - bought back 6.1 million of our common shares at a total cost of $192.5 million
|
◦
|
Debt - repurchased $19.8 million principal amount of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067.
|
(millions, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
|
|||
Total number of shares purchased
|
6.1
|
|
7.3
|
|
11.1
|
|
|||
Total cost
|
$
|
192.5
|
|
$
|
208.5
|
|
$
|
271.4
|
|
Average price paid per share
|
$
|
31.59
|
|
$
|
28.41
|
|
$
|
24.56
|
|
(millions, except per share amounts)
|
|
|
Amount
|
|||||
Dividend Type
|
Declared
|
Paid
|
Per
Share |
|
Total Paid
1
|
|
||
Annual – Variable
|
December 2016
|
February 2017
|
$
|
0.6808
|
|
$
|
395.4
|
|
Annual – Variable
|
December 2015
|
February 2016
|
$
|
0.8882
|
|
$
|
519.0
|
|
Annual – Variable
|
December 2014
|
February 2015
|
$
|
0.6862
|
|
$
|
403.6
|
|
•
|
The first layer of capital, which we refer to as “regulatory capital,” is the amount of capital we need to satisfy state insurance regulatory requirements and support our objective of writing all the business we can write and service, consistent with our underwriting discipline of achieving a combined ratio of 96 or better. This capital is held by our various insurance entities.
|
•
|
The second layer of capital we call “extreme contingency.” While our regulatory capital is, by definition, a cushion for absorbing financial consequences of adverse events, such as loss reserve development, litigation, weather catastrophes, and investment market corrections, we view that as a base and hold additional capital for even more extreme conditions. The modeling used to quantify capital needs for these conditions is extensive, including tens of thousands of simulations, representing our best estimates of such contingencies based on historical experience. This capital is held either at a non-insurance subsidiary of the holding company or in our insurance entities, where it is potentially eligible for a dividend up to the holding company. Regulatory restrictions on subsidiary dividends are discussed in
Note 8
–
Statutory Financial Information.
|
•
|
The third layer is capital in excess of the sum of the first two layers and provides maximum flexibility to repurchase stock or other securities, satisfy acquisition-related commitments, and pay dividends to shareholders, among other purposes. This capital is largely held at a non-insurance subsidiary of the holding company.
|
|
Payments due by period
|
||||||||||||||
(millions)
|
Total
|
|
Less than
1 year
|
|
1-3
years
|
|
3-5
years
|
|
More than
5 years
|
|
|||||
Debt
|
$
|
3,171.9
|
|
$
|
25.0
|
|
$
|
36.3
|
|
$
|
500.8
|
|
$
|
2,609.8
|
|
Interest payments on debt
1
|
1,806.5
|
|
129.8
|
|
220.9
|
|
220.2
|
|
1,235.6
|
|
|||||
Operating leases
|
154.9
|
|
49.8
|
|
77.7
|
|
25.1
|
|
2.3
|
|
|||||
Purchase obligations
|
481.8
|
|
390.9
|
|
78.6
|
|
6.6
|
|
5.7
|
|
|||||
Catastrophe excess of loss reinsurance contracts
2
|
100.5
|
|
73.8
|
|
26.7
|
|
0
|
|
0
|
|
|||||
Loss and loss adjustment expense reserves
|
11,368.0
|
|
5,822.0
|
|
3,516.5
|
|
1,022.7
|
|
1,006.8
|
|
|||||
Total
|
$
|
17,083.6
|
|
$
|
6,491.3
|
|
$
|
3,956.7
|
|
$
|
1,775.4
|
|
$
|
4,860.2
|
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Underwriting
Profit (Loss)
|
|
Underwriting
Profit (Loss)
|
|
Underwriting
Profit (Loss)
|
|||||||||||||
($ in millions)
|
$
|
|
Margin
|
|
|
$
|
|
Margin
|
|
|
$
|
|
Margin
|
|
|||
Personal Lines
|
|
|
|
|
|
|
|
|
|||||||||
Agency
|
$
|
492.8
|
|
5.0
|
%
|
|
$
|
713.2
|
|
7.8
|
%
|
|
$
|
683.0
|
|
7.5
|
%
|
Direct
|
412.2
|
|
4.4
|
|
|
403.4
|
|
4.9
|
|
|
423.4
|
|
5.7
|
|
|||
Total Personal Lines
|
905.0
|
|
4.7
|
|
|
1,116.6
|
|
6.5
|
|
|
1,106.4
|
|
6.7
|
|
|||
Commercial Lines
|
155.2
|
|
6.4
|
|
|
318.3
|
|
15.9
|
|
|
315.8
|
|
17.2
|
|
|||
Property
1
|
32.5
|
|
3.8
|
|
|
61.3
|
|
10.1
|
|
|
—
|
|
—
|
|
|||
Other indemnity
2
|
(1.6
|
)
|
NM
|
|
|
(1.0
|
)
|
NM
|
|
|
(11.9
|
)
|
NM
|
|
|||
Total underwriting operations
|
$
|
1,091.1
|
|
4.9
|
%
|
|
$
|
1,495.2
|
|
7.5
|
%
|
|
$
|
1,410.3
|
|
7.7
|
%
|
Underwriting Performance
1
|
2016
|
|
2015
|
|
2014
|
|
Personal Lines – Agency
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
75.3
|
|
72.6
|
|
72.8
|
|
Underwriting expense ratio
|
19.7
|
|
19.6
|
|
19.7
|
|
Combined ratio
|
95.0
|
|
92.2
|
|
92.5
|
|
Personal Lines – Direct
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
76.8
|
|
75.0
|
|
74.2
|
|
Underwriting expense ratio
|
18.8
|
|
20.1
|
|
20.1
|
|
Combined ratio
|
95.6
|
|
95.1
|
|
94.3
|
|
Total Personal Lines
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
76.1
|
|
73.7
|
|
73.4
|
|
Underwriting expense ratio
|
19.2
|
|
19.8
|
|
19.9
|
|
Combined ratio
|
95.3
|
|
93.5
|
|
93.3
|
|
Commercial Lines
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
71.9
|
|
62.4
|
|
61.7
|
|
Underwriting expense ratio
|
21.7
|
|
21.7
|
|
21.1
|
|
Combined ratio
|
93.6
|
|
84.1
|
|
82.8
|
|
Property
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
63.2
|
|
57.3
|
|
—
|
|
Underwriting expense ratio
2
|
33.0
|
|
32.6
|
|
—
|
|
Combined ratio
2
|
96.2
|
|
89.9
|
|
—
|
|
Total Underwriting Operations
3
|
|
|
|
|||
Loss & loss adjustment expense ratio
|
75.1
|
|
72.1
|
|
72.3
|
|
Underwriting expense ratio
|
20.0
|
|
20.4
|
|
20.0
|
|
Combined ratio
|
95.1
|
|
92.5
|
|
92.3
|
|
Accident year-Loss & loss adjustment expense ratio
4
|
75.5
|
|
73.7
|
|
72.4
|
|
(millions)
|
2016
|
|
2015
|
|
2014
|
|
|||
Change in net loss and LAE reserves
|
$
|
973.2
|
|
$
|
702.4
|
|
$
|
237.7
|
|
Paid losses and LAE
|
15,906.4
|
|
13,639.6
|
|
13,068.5
|
|
|||
Total incurred losses and LAE
|
$
|
16,879.6
|
|
$
|
14,342.0
|
|
$
|
13,306.2
|
|
($ in millions)
|
2016
|
2015
|
2014
|
||||||
Vehicle businesses
|
$
|
381.1
|
|
$
|
152.6
|
|
$
|
192.2
|
|
Property business
1
|
170.7
|
|
101.9
|
|
—
|
|
|||
Total catastrophe losses incurred
|
$
|
551.8
|
|
$
|
254.5
|
|
$
|
192.2
|
|
Increase to combined ratio
|
2.5
|
pts.
|
1.3
|
pts.
|
1.0
|
pts.
|
•
|
2016
- Severity increased about 5% for our personal injury protection (PIP) coverage, about 3% for our property damage coverage, about 4% for collision coverage, and 2% for our bodily injury coverage.
|
•
|
2015
- Severity increased about 1% for our PIP coverage, about 3% for our property damage coverage, and about 4% for collision coverage, while severity in our bodily injury coverage was down about 2%.
|
•
|
2014
- Severity increased about 7% for our PIP coverage, about 5% for our property damage coverage, and approximately 3%-4% for our bodily injury and collision coverages.
|
•
|
2016
- Our collision coverage had a decrease in frequency of about 1%. Our property damage coverage frequency was relatively flat, while our PIP and bodily injury coverages had an increase in frequency of about 1% and 3%, respectively.
|
•
|
2015
- Our property damage and collision coverages had an increase in frequency of about 1%, and approximately 2%-3% for our bodily injury and PIP coverages.
|
•
|
2014
- Our bodily injury coverage had a decrease in frequency of about 2%. Frequency in our PIP coverage was down about 1%. Our property damage coverage frequency was relatively flat, while our collision coverage experienced an increase in frequency of about 1%.
|
For the years ended December 31,
|
2016
|
|
2015
|
|
2014
|
||||||||||||
($ in millions)
|
$
|
% Growth
|
|
$
|
% Growth
|
|
$
|
% Growth
|
|||||||||
NET PREMIUMS WRITTEN
|
|
|
|
|
|
|
|
|
|||||||||
Personal Lines
|
|
|
|
|
|
|
|
|
|||||||||
Agency
|
$
|
10,107.6
|
|
10
|
%
|
|
$
|
9,230.1
|
|
1
|
%
|
|
$
|
9,102.8
|
|
5
|
%
|
Direct
|
9,711.9
|
|
15
|
%
|
|
8,473.5
|
|
11
|
%
|
|
7,656.4
|
|
12
|
%
|
|||
Total Personal Lines
|
19,819.5
|
|
12
|
%
|
|
17,703.6
|
|
6
|
%
|
|
16,759.2
|
|
8
|
%
|
|||
Commercial Lines
|
2,598.3
|
|
20
|
%
|
|
2,171.2
|
|
15
|
%
|
|
1,895.4
|
|
7
|
%
|
|||
Property
|
935.7
|
|
NA
|
|
|
689.6
|
|
NA
|
|
|
NA
|
|
NA
|
|
|||
Total underwriting operations
1
|
$
|
23,353.5
|
|
14
|
%
|
|
$
|
20,564.0
|
|
10
|
%
|
|
$
|
18,654.6
|
|
8
|
%
|
NET PREMIUMS EARNED
|
|
|
|
|
|
|
|
|
|||||||||
Personal Lines
|
|
|
|
|
|
|
|
|
|||||||||
Agency
|
$
|
9,791.7
|
|
7
|
%
|
|
$
|
9,108.6
|
|
0
|
%
|
|
$
|
9,087.0
|
|
6
|
%
|
Direct
|
9,396.5
|
|
15
|
%
|
|
8,185.9
|
|
10
|
%
|
|
7,474.0
|
|
11
|
%
|
|||
Total Personal Lines
|
19,188.2
|
|
11
|
%
|
|
17,294.5
|
|
4
|
%
|
|
16,561.0
|
|
8
|
%
|
|||
Commercial Lines
|
2,421.3
|
|
21
|
%
|
|
1,995.9
|
|
9
|
%
|
|
1,837.5
|
|
4
|
%
|
|||
Property
|
864.5
|
|
NA
|
|
|
609.1
|
|
NA
|
|
|
NA
|
|
NA
|
|
|||
Total underwriting operations
1
|
$
|
22,474.0
|
|
13
|
%
|
|
$
|
19,899.1
|
|
8
|
%
|
|
$
|
18,398.5
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31,
|
2016
|
|
2015
|
|
2014
|
||||||||||||
(thousands)
|
#
|
% Growth
|
|
#
|
% Growth
|
|
#
|
% Growth
|
|||||||||
POLICIES IN FORCE
|
|
|
|
|
|
|
|
|
|||||||||
Agency auto
|
5,045.4
|
|
7%
|
|
|
4,737.1
|
|
0%
|
|
|
4,725.5
|
|
(2
|
)%
|
|||
Direct auto
|
5,348.3
|
|
9%
|
|
|
4,916.2
|
|
9%
|
|
|
4,505.5
|
|
7%
|
|
|||
Total auto
|
10,393.7
|
|
8%
|
|
|
9,653.3
|
|
5%
|
|
|
9,231.0
|
|
2%
|
|
|||
Special lines
2
|
4,263.1
|
|
4%
|
|
|
4,111.4
|
|
2%
|
|
|
4,030.9
|
|
1%
|
|
|||
Personal Lines - total
|
14,656.8
|
|
6%
|
|
|
13,764.7
|
|
4%
|
|
|
13,261.9
|
|
2%
|
|
|||
Commercial Lines
|
607.9
|
|
9%
|
|
|
555.8
|
|
8%
|
|
|
514.7
|
|
0%
|
|
|||
Property
|
1,201.9
|
|
12%
|
|
|
1,076.5
|
|
NA
|
|
|
NA
|
|
NA
|
|
|
Growth Over Prior Year
|
|||||
|
2016
|
|
2015
|
|
2014
|
|
APPLICATIONS
|
|
|
|
|||
New
|
12
|
%
|
7
|
%
|
1
|
%
|
Renewal
|
5
|
%
|
1
|
%
|
5
|
%
|
|
|
|
|
|||
WRITTEN PREMIUM PER POLICY - AUTO
|
5
|
%
|
4
|
%
|
3
|
%
|
|
|
|
|
|||
RETENTION MEASURES-AUTO
|
|
|
|
|||
Policy life expectancy
|
|
|
|
|||
Trailing 3-months
|
3
|
%
|
5
|
%
|
(6
|
)%
|
Trailing 12-months
|
5
|
%
|
(1
|
)%
|
0
|
%
|
Renewal ratio
|
0.0
|
%
|
0.0
|
%
|
0.2
|
%
|
|
Growth Over Prior Year
|
|||||
|
2016
|
|
2015
|
|
2014
|
|
Auto: new applications
|
18
|
%
|
2
|
%
|
(7
|
)%
|
renewal applications
|
2
|
%
|
(4
|
)%
|
3
|
%
|
written premium per policy
|
5
|
%
|
4
|
%
|
4
|
%
|
Auto retention measures:
|
|
|
|
|||
policy life expectancy - trailing 3-months
|
5
|
%
|
5
|
%
|
(7
|
)%
|
trailing 12-months
|
7
|
%
|
(2
|
)%
|
(2
|
)%
|
renewal ratio
|
0.1
|
%
|
(0.1
|
)%
|
0.1
|
%
|
|
Growth Over Prior Year
|
|||||
|
2016
|
|
2015
|
|
2014
|
|
Auto: new applications
|
9
|
%
|
13
|
%
|
10
|
%
|
renewal applications
|
10
|
%
|
5
|
%
|
8
|
%
|
written premium per policy
|
5
|
%
|
4
|
%
|
3
|
%
|
Auto retention measures:
|
|
|
|
|||
policy life expectancy - trailing 3-months
|
1
|
%
|
5
|
%
|
(4
|
)%
|
trailing 12-months
|
4
|
%
|
0
|
%
|
3
|
%
|
renewal ratio
|
(0.1
|
)%
|
0.0
|
%
|
0.5
|
%
|
|
Growth Over Prior Year
|
|||||
|
2016
|
|
2015
|
|
2014
|
|
New applications
|
11
|
%
|
15
|
%
|
1
|
%
|
Renewal applications
|
7
|
%
|
0
|
%
|
1
|
%
|
Written premium per policy
|
10
|
%
|
8
|
%
|
4
|
%
|
Policy life expectancy - trailing 12-months
|
6
|
%
|
13
|
%
|
0
|
%
|
|
Growth Over Prior Year
|
|
|
2016
|
|
New applications
|
17
|
%
|
Renewal applications
|
7
|
%
|
Written premium per policy
|
(7
|
)%
|
|
2016
|
|
2015
|
|
2014
|
|
Pretax recurring investment book yield
|
2.3
|
%
|
2.4
|
%
|
2.4
|
%
|
Weighted average FTE book yield
|
2.6
|
%
|
2.7
|
%
|
2.7
|
%
|
FTE total return:
|
|
|
|
|||
Fixed-income securities
|
2.9
|
%
|
1.7
|
%
|
3.2
|
%
|
Common stocks
|
12.8
|
%
|
0.8
|
%
|
12.6
|
%
|
Total portfolio
|
4.0
|
%
|
1.6
|
%
|
4.5
|
%
|
($ in millions)
|
Fair Value
|
|
% of Total Portfolio
|
|
Duration (years)
|
Rating
1
|
|
2016
|
|
|
|
|
|||
Fixed maturities
|
$
|
16,243.8
|
|
69.2
|
%
|
2.6
|
A+
|
Nonredeemable preferred stocks
|
853.5
|
|
3.6
|
|
3.1
|
BBB-
|
|
Short-term investments
|
3,572.9
|
|
15.2
|
|
0.2
|
AA-
|
|
Total fixed-income securities
|
20,670.2
|
|
88.0
|
|
2.2
|
A+
|
|
Common equities
|
2,812.4
|
|
12.0
|
|
na
|
na
|
|
Total portfolio
2,3
|
$
|
23,482.6
|
|
100.0
|
%
|
2.2
|
A+
|
|
|
|
|
|
|||
2015
|
|
|
|
|
|||
Fixed maturities
|
$
|
15,332.2
|
|
73.2
|
%
|
2.1
|
A+
|
Nonredeemable preferred stocks
|
782.6
|
|
3.7
|
|
2.6
|
BBB-
|
|
Short-term investments
|
2,172.0
|
|
10.4
|
|
<0.1
|
A+
|
|
Total fixed-income securities
|
18,286.8
|
|
87.3
|
|
1.9
|
A+
|
|
Common equities
|
2,650.5
|
|
12.7
|
|
na
|
na
|
|
Total portfolio
2,3
|
$
|
20,937.3
|
|
100.0
|
%
|
1.9
|
A+
|
na = not applicable
|
|
|
|
|
•
|
common equities,
|
•
|
nonredeemable preferred stocks,
|
•
|
redeemable preferred stocks, except for 50% of investment-grade redeemable preferred stocks with cumulative dividends, which are included in Group II, and
|
•
|
all other non-investment-grade fixed-maturity securities.
|
•
|
short-term securities, and
|
•
|
all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.
|
($ in millions)
|
Fair Value
|
|
% of Total Portfolio
|
|
|
2016
|
|
|
|||
Group I securities:
|
|
|
|||
Non-investment-grade fixed maturities
|
$
|
356.2
|
|
1.5
|
%
|
Redeemable preferred stocks
1
|
135.3
|
|
0.6
|
|
|
Nonredeemable preferred stocks
|
853.5
|
|
3.6
|
|
|
Common equities
|
2,812.4
|
|
12.0
|
|
|
Total Group I securities
|
4,157.4
|
|
17.7
|
|
|
Group II securities:
|
|
|
|||
Other fixed maturities
2
|
15,752.3
|
|
67.1
|
|
|
Short-term investments
|
3,572.9
|
|
15.2
|
|
|
Total Group II securities
|
19,325.2
|
|
82.3
|
|
|
Total portfolio
|
$
|
23,482.6
|
|
100.0
|
%
|
2015
|
|
|
|||
Group I securities:
|
|
|
|||
Non-investment-grade fixed maturities
|
$
|
611.7
|
|
2.9
|
%
|
Redeemable preferred stocks
1
|
155.1
|
|
0.7
|
|
|
Nonredeemable preferred stocks
|
782.6
|
|
3.7
|
|
|
Common equities
|
2,650.5
|
|
12.7
|
|
|
Total Group I securities
|
4,199.9
|
|
20.0
|
|
|
Group II securities:
|
|
|
|||
Other fixed maturities
2
|
14,565.4
|
|
69.6
|
|
|
Short-term investments
|
2,172.0
|
|
10.4
|
|
|
Total Group II securities
|
16,737.4
|
|
80.0
|
|
|
Total portfolio
|
$
|
20,937.3
|
|
100.0
|
%
|
(millions)
|
Total
Write-downs
|
|
Write-downs
on Securities
Sold
|
|
Write-downs
on Securities
Held at
Period End
|
|
|||
2016
|
|
|
|
||||||
Redeemable preferred stocks
1
|
$
|
25.4
|
|
$
|
(0.1
|
)
|
$
|
25.3
|
|
Common equities
|
1.7
|
|
(1.4
|
)
|
0.3
|
|
|||
Total investment portfolio
|
27.1
|
|
(1.5
|
)
|
25.6
|
|
|||
Other assets
2
|
59.7
|
|
0
|
|
59.7
|
|
|||
Total write-downs
|
$
|
86.8
|
|
$
|
(1.5
|
)
|
$
|
85.3
|
|
2015
|
|
|
|
||||||
Common equities
|
$
|
23.8
|
|
$
|
(15.1
|
)
|
$
|
8.7
|
|
2014
|
|
|
|
||||||
Common equities
|
$
|
7.9
|
|
$
|
(0.7
|
)
|
$
|
7.2
|
|
($ in millions)
|
2016
|
|
2015
|
||||||||
Investment-grade fixed maturities:
1
|
|
|
|
|
|
||||||
Short/intermediate term
|
$
|
18,883.7
|
|
95.3
|
%
|
|
$
|
16,136.0
|
|
92.2
|
%
|
Long term
|
49.6
|
|
0.2
|
|
|
109.3
|
|
0.6
|
|
||
Non-investment-grade fixed maturities:
1,2
|
|
|
|
|
|
|
|
||||
Short/intermediate term
|
866.8
|
|
4.4
|
|
|
1,246.3
|
|
7.1
|
|
||
Long term
|
16.6
|
|
0.1
|
|
|
12.6
|
|
0.1
|
|
||
Total
|
$
|
19,816.7
|
|
100.0
|
%
|
|
$
|
17,504.2
|
|
100.0
|
%
|
Duration Distribution
|
2016
|
|
2015
|
|
1 year
|
25.9
|
%
|
28.4
|
%
|
2 years
|
13.4
|
|
15.6
|
|
3 years
|
24.2
|
|
18.1
|
|
5 years
|
25.8
|
|
27.7
|
|
10 years
|
10.9
|
|
10.4
|
|
20 years
|
(0.2
|
)
|
0.1
|
|
30 years
|
0
|
|
(0.3
|
)
|
Total fixed-income portfolio
|
100.0
|
%
|
100.0
|
%
|
Rating
|
2016
|
|
2015
|
|
AAA
|
35.7
|
%
|
37.2
|
%
|
AA
|
19.1
|
|
14.2
|
|
A
|
15.3
|
|
15.3
|
|
BBB
|
24.3
|
|
24.7
|
|
Non-investment grade/non-rated
1
|
5.6
|
|
8.6
|
|
Total fixed-income portfolio
|
100.0
|
%
|
100.0
|
%
|
($ in millions)
|
Fair
Value
|
|
|
Duration
(years)
|
|
|
U.S. Treasury Notes
|
|
|
|
|||
Less than two years
|
$
|
259.5
|
|
|
1.4
|
|
Two to five years
|
1,943.0
|
|
|
3.8
|
|
|
Five to ten years
|
667.6
|
|
|
6.8
|
|
|
Total U.S. Treasury Notes
|
$
|
2,870.1
|
|
|
4.3
|
|
($ in millions)
|
Fair
Value
|
|
Net Unrealized
Gains
(Losses)
|
|
% of Asset-
Backed
Securities
|
|
Duration
(years)
|
|
Rating
(at period end)
|
||
2016
|
|
|
|
|
|
||||||
Residential mortgage-backed securities:
|
|
|
|
|
|
||||||
Prime collateralized mortgage obligations
|
$
|
609.9
|
|
$
|
(3.9
|
)
|
10.0
|
%
|
0.9
|
|
A
|
Alt-A collateralized mortgage obligations
1
|
170.8
|
|
(0.4
|
)
|
2.8
|
|
1.0
|
|
BBB-
|
||
Collateralized mortgage obligations
|
780.7
|
|
(4.3
|
)
|
12.8
|
|
0.9
|
|
A-
|
||
Home equity (sub-prime bonds)
|
678.0
|
|
13.0
|
|
11.1
|
|
<0.1
|
|
BBB
|
||
Residential mortgage-backed securities
|
1,458.7
|
|
8.7
|
|
23.9
|
|
0.4
|
|
BBB+
|
||
Agency residential pass-through obligations
|
40.6
|
|
(0.6
|
)
|
0.7
|
|
4.1
|
|
AAA
|
||
Commercial mortgage-backed securities:
|
|
|
|
|
|
||||||
Commercial mortgage-backed securities
|
2,115.2
|
|
(13.7
|
)
|
34.6
|
|
3.7
|
|
A-
|
||
Commercial mortgage-backed securities: interest only
|
138.2
|
|
0.2
|
|
2.3
|
|
2.4
|
|
AAA-
|
||
Commercial mortgage-backed securities
|
2,253.4
|
|
(13.5
|
)
|
36.9
|
|
3.7
|
|
A
|
||
Other asset-backed securities:
|
|
|
|
|
|
||||||
Automobile
|
1,074.9
|
|
(0.4
|
)
|
17.6
|
|
0.8
|
|
AAA-
|
||
Credit card
|
435.3
|
|
(0.4
|
)
|
7.1
|
|
0.5
|
|
AAA
|
||
Other
2
|
840.9
|
|
1.0
|
|
13.8
|
|
1.2
|
|
AA
|
||
Other asset-backed securities
|
2,351.1
|
|
0.2
|
|
38.5
|
|
0.9
|
|
AAA-
|
||
Total asset-backed securities
|
$
|
6,103.8
|
|
$
|
(5.2
|
)
|
100.0
|
%
|
1.8
|
|
A+
|
2015
|
|
|
|
|
|
||||||
Residential mortgage-backed securities:
|
|
|
|
|
|
||||||
Prime collateralized mortgage obligations
|
$
|
583.2
|
|
$
|
(3.1
|
)
|
9.4
|
%
|
0.9
|
|
A-
|
Alt-A collateralized mortgage obligations
1
|
269.2
|
|
0.2
|
|
4.3
|
|
1.2
|
|
BBB
|
||
Collateralized mortgage obligations
|
852.4
|
|
(2.9
|
)
|
13.7
|
|
1.0
|
|
A-
|
||
Home equity (sub-prime bonds)
|
874.3
|
|
4.4
|
|
14.0
|
|
<0.1
|
|
BBB-
|
||
Residential mortgage-backed securities
|
1,726.7
|
|
1.5
|
|
27.7
|
|
0.4
|
|
BBB
|
||
Agency residential pass-through obligations
|
89.3
|
|
(1.0
|
)
|
1.4
|
|
4.8
|
|
AAA
|
||
Commercial mortgage-backed securities:
|
|
|
|
|
|
||||||
Commercial mortgage-backed securities
|
2,476.7
|
|
(13.8
|
)
|
39.7
|
|
3.4
|
|
A+
|
||
Commercial mortgage-backed securities: interest only
|
176.5
|
|
1.3
|
|
2.9
|
|
2.6
|
|
AAA-
|
||
Commercial mortgage-backed securities
|
2,653.2
|
|
(12.5
|
)
|
42.6
|
|
3.3
|
|
A+
|
||
Other asset-backed securities:
|
|
|
|
|
|
||||||
Automobile
|
925.4
|
|
(2.2
|
)
|
14.8
|
|
1.0
|
|
AAA-
|
||
Credit card
|
140.0
|
|
(0.2
|
)
|
2.2
|
|
0.5
|
|
AAA
|
||
Other
2
|
702.5
|
|
(1.3
|
)
|
11.3
|
|
0.7
|
|
AA+
|
||
Other asset-backed securities
|
1,767.9
|
|
(3.7
|
)
|
28.3
|
|
0.8
|
|
AAA-
|
||
Total asset-backed securities
|
$
|
6,237.1
|
|
$
|
(15.7
|
)
|
100.0
|
%
|
1.8
|
|
A+
|
Collateralized Mortgage Obligations (at December 31, 2016)
|
||||||||||||||
($ in millions)
Rating
1
|
Non-agency
prime
|
|
Alt-A
|
|
Government/GSE
2
|
|
Total
|
|
% of
Total
|
|
||||
AAA
|
$
|
166.5
|
|
$
|
15.4
|
|
$
|
75.4
|
|
$
|
257.3
|
|
33.0
|
%
|
AA
|
32.8
|
|
31.2
|
|
5.8
|
|
69.8
|
|
8.9
|
|
||||
A
|
62.6
|
|
15.4
|
|
31.4
|
|
109.4
|
|
14.0
|
|
||||
BBB
|
32.6
|
|
30.9
|
|
134.5
|
|
198.0
|
|
25.4
|
|
||||
Non-investment grade
|
68.3
|
|
77.9
|
|
0
|
|
146.2
|
|
18.7
|
|
||||
Total
|
$
|
362.8
|
|
$
|
170.8
|
|
$
|
247.1
|
|
$
|
780.7
|
|
100.0
|
%
|
Increase (decrease) in value
3
|
(0.9
|
)%
|
(0.2
|
)%
|
(0.2
|
)%
|
(0.5
|
)%
|
|
Commercial Mortgage-Backed Securities (at December 31, 2016)
1
|
||||||||||||||||||||
($ in millions)
Category
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
Non-Investment
Grade
|
|
Total
|
|
% of
Total
|
|
||||||
Multi-borrower
|
$
|
160.5
|
|
$
|
30.8
|
|
$
|
10.9
|
|
$
|
0
|
|
$
|
10.3
|
|
$
|
212.5
|
|
9.4
|
%
|
Single-borrower
|
227.8
|
|
257.1
|
|
488.0
|
|
851.9
|
|
77.9
|
|
1,902.7
|
|
84.5
|
|
||||||
Total CMBS bonds
|
388.3
|
|
287.9
|
|
498.9
|
|
851.9
|
|
88.2
|
|
2,115.2
|
|
93.9
|
|
||||||
IO
|
136.9
|
|
0
|
|
0
|
|
0
|
|
1.3
|
|
138.2
|
|
6.1
|
|
||||||
Total fair value
|
$
|
525.2
|
|
$
|
287.9
|
|
$
|
498.9
|
|
$
|
851.9
|
|
$
|
89.5
|
|
$
|
2,253.4
|
|
100.0
|
%
|
% of Total fair value
|
23.3
|
%
|
12.8
|
%
|
22.1
|
%
|
37.8
|
%
|
4.0
|
%
|
100.0
|
%
|
|
($ in millions)
|
2016
|
|
2015
|
||||||||
Indexed common stocks
|
$
|
2,676.2
|
|
95.1
|
%
|
|
$
|
2,532.3
|
|
95.5
|
%
|
Managed common stocks
|
135.8
|
|
4.8
|
|
|
117.9
|
|
4.4
|
|
||
Total common stocks
|
2,812.0
|
|
99.9
|
|
|
2,650.2
|
|
99.9
|
|
||
Other risk investments
|
0.4
|
|
0.1
|
|
|
0.3
|
|
0.1
|
|
||
Total common equities
|
$
|
2,812.4
|
|
100.0
|
%
|
|
$
|
2,650.5
|
|
100.0
|
%
|
Sector
|
Equity Portfolio Allocation at December 31, 2016
|
|
Russell 1000 Allocation at December 31, 2016
|
|
Russell 1000 Sector Return in 2016
|
|
Consumer discretionary
|
13.9
|
%
|
14.6
|
%
|
6.3
|
%
|
Consumer staples
|
7.3
|
|
8.3
|
|
5.5
|
|
Financial services
|
19.7
|
|
20.4
|
|
16.5
|
|
Health care
|
12.6
|
|
12.6
|
|
(2.9
|
)
|
Materials and processing
|
3.5
|
|
3.7
|
|
20.0
|
|
Other energy
|
7.5
|
|
7.2
|
|
25.9
|
|
Producer durable
|
10.0
|
|
10.6
|
|
19.4
|
|
Technology
|
17.9
|
|
16.9
|
|
14.1
|
|
Utilities
|
5.5
|
|
5.7
|
|
20.4
|
|
Other equity
|
2.1
|
|
NA
|
|
NA
|
|
Total common stocks
|
100.0
|
%
|
100.0
|
%
|
12.0
|
%
|
|
Estimated Changes in Severity for Accident Year 2016
|
||||||||||||||
(millions)
|
-4%
|
|
-2%
|
|
As Reported
|
|
+2%
|
|
+4%
|
|
|||||
Personal auto liability
|
$
|
7,008.6
|
|
$
|
7,188.6
|
|
$
|
7,368.6
|
|
$
|
7,548.6
|
|
$
|
7,728.6
|
|
Commercial auto liability
|
1,707.2
|
|
1,733.2
|
|
1,759.2
|
|
1,785.2
|
|
1,811.2
|
|
|||||
Other
1
|
439.2
|
|
439.2
|
|
439.2
|
|
439.2
|
|
439.2
|
|
|||||
Total
|
$
|
9,155.0
|
|
$
|
9,361.0
|
|
$
|
9,567.0
|
|
$
|
9,773.0
|
|
$
|
9,979.0
|
|
|
Estimated Changes in Severity for Accident Years 2016, 2015, and 2014
|
||||||||||||||
(millions)
|
-4%
|
|
-2%
|
|
As Reported
|
|
+2%
|
|
+4%
|
|
|||||
Personal auto liability
|
$
|
6,389.4
|
|
$
|
6,879.0
|
|
$
|
7,368.6
|
|
$
|
7,858.2
|
|
$
|
8,347.8
|
|
Commercial auto liability
|
1,630.8
|
|
1,695.0
|
|
1,759.2
|
|
1,823.4
|
|
1,887.6
|
|
|||||
Other
1
|
439.2
|
|
439.2
|
|
439.2
|
|
439.2
|
|
439.2
|
|
|||||
Total
|
$
|
8,459.4
|
|
$
|
9,013.2
|
|
$
|
9,567.0
|
|
$
|
10,120.8
|
|
$
|
10,674.6
|
|
|
|
Fair
Value
|
|
|
Total Gross Unrealized Losses
|
|
|
Decline of Investment Value
|
|||||||||||||
(millions)
|
|
>15%
|
|
>25%
|
|
>35%
|
|
>45%
|
|
||||||||||||
Fixed income:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrealized loss for less than 12 months
|
|
$
|
9,607.6
|
|
|
$
|
105.0
|
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Unrealized loss for 12 months or greater
|
|
1,546.2
|
|
|
32.7
|
|
|
2.0
|
|
0
|
|
0
|
|
0
|
|
||||||
Total
|
|
$
|
11,153.8
|
|
|
$
|
137.7
|
|
|
$
|
2.0
|
|
$
|
0
|
|
$
|
0
|
|
$
|
0
|
|
Common equity:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrealized loss for less than 12 months
|
|
$
|
19.7
|
|
|
$
|
1.7
|
|
|
$
|
0.7
|
|
$
|
0.1
|
|
$
|
0
|
|
$
|
0
|
|
Unrealized loss for 12 months or greater
|
|
2.4
|
|
|
0.4
|
|
|
0
|
|
0
|
|
0
|
|
0
|
|
||||||
Total
|
|
$
|
22.1
|
|
|
$
|
2.1
|
|
|
$
|
0.7
|
|
$
|
0.1
|
|
$
|
0
|
|
$
|
0
|
|
(millions – except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
Stock Price
1
|
|
|||||||||||||||||||||
Quarter
|
Total
Revenues
|
|
Net Income
|
|
Net Income Attributable to Progressive
2
|
|
Per
Share
3
|
|
|
High
|
|
Low
|
|
Close
|
|
Rate of
Return
4
|
|
Dividends
Declared
Per Share
5
|
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
1
|
$
|
5,557.5
|
|
$
|
258.7
|
|
$
|
258.2
|
|
$
|
0.44
|
|
|
$
|
35.27
|
|
$
|
29.32
|
|
$
|
35.14
|
|
|
$
|
0
|
|
|
2
|
5,819.3
|
|
194.9
|
|
190.9
|
|
0.33
|
|
|
35.54
|
|
31.14
|
|
33.50
|
|
|
0
|
|
|||||||||
3
|
5,935.0
|
|
205.5
|
|
198.7
|
|
0.34
|
|
|
34.29
|
|
30.54
|
|
31.50
|
|
|
0
|
|
|||||||||
4
|
6,129.6
|
|
398.1
|
|
383.2
|
|
0.66
|
|
|
35.95
|
|
30.66
|
|
35.50
|
|
|
0.6808
|
|
|||||||||
|
$
|
23,441.4
|
|
$
|
1,057.2
|
|
$
|
1,031.0
|
|
$
|
1.76
|
|
|
$
|
35.95
|
|
$
|
29.32
|
|
$
|
35.50
|
|
14.7
|
%
|
$
|
0.6808
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
1
|
$
|
4,895.3
|
|
$
|
295.6
|
|
$
|
295.6
|
|
$
|
0.50
|
|
|
$
|
27.90
|
|
$
|
25.23
|
|
$
|
27.20
|
|
|
$
|
0
|
|
|
2
|
5,283.3
|
|
368.5
|
|
363.3
|
|
0.62
|
|
|
28.50
|
|
26.44
|
|
27.83
|
|
|
0
|
|
|||||||||
3
|
5,273.8
|
|
286.5
|
|
278.3
|
|
0.47
|
|
|
31.70
|
|
27.23
|
|
30.64
|
|
|
0
|
|
|||||||||
4
|
5,401.4
|
|
349.9
|
|
330.4
|
|
0.56
|
|
|
33.95
|
|
30.09
|
|
31.80
|
|
|
0.8882
|
|
|||||||||
|
$
|
20,853.8
|
|
$
|
1,300.5
|
|
$
|
1,267.6
|
|
$
|
2.15
|
|
|
$
|
33.95
|
|
$
|
25.23
|
|
$
|
31.80
|
|
20.9
|
%
|
$
|
0.8882
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
1
|
$
|
4,707.6
|
|
$
|
321.3
|
|
$
|
321.3
|
|
$
|
0.54
|
|
|
$
|
27.30
|
|
$
|
22.53
|
|
$
|
24.22
|
|
|
$
|
0
|
|
|
2
|
4,741.5
|
|
293.4
|
|
293.4
|
|
0.49
|
|
|
26.03
|
|
23.40
|
|
25.36
|
|
|
0
|
|
|||||||||
3
|
4,766.1
|
|
296.1
|
|
296.1
|
|
0.50
|
|
|
25.63
|
|
23.20
|
|
25.28
|
|
|
0
|
|
|||||||||
4
|
5,176.2
|
|
370.2
|
|
370.2
|
|
0.63
|
|
|
27.52
|
|
24.16
|
|
26.99
|
|
|
0.6862
|
|
|||||||||
|
$
|
19,391.4
|
|
$
|
1,281.0
|
|
$
|
1,281.0
|
|
$
|
2.15
|
|
|
$
|
27.52
|
|
$
|
22.53
|
|
$
|
26.99
|
|
5.3
|
%
|
$
|
0.6862
|
|
(millions – except ratios, policies in force, per share
amounts, and number of people employed)
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
|||||
Net premiums written
|
$
|
23,353.5
|
|
$
|
20,564.0
|
|
$
|
18,654.6
|
|
$
|
17,339.7
|
|
$
|
16,372.7
|
|
Growth
|
14
|
%
|
10
|
%
|
8
|
%
|
6
|
%
|
8
|
%
|
|||||
Net premiums earned
|
$
|
22,474.0
|
|
$
|
19,899.1
|
|
$
|
18,398.5
|
|
$
|
17,103.4
|
|
$
|
16,018.0
|
|
Growth
|
13
|
%
|
8
|
%
|
8
|
%
|
7
|
%
|
7
|
%
|
|||||
Policies in force (thousands):
|
|
|
|
|
|
||||||||||
Personal Lines
|
14,656.8
|
|
13,764.7
|
|
13,261.9
|
|
13,056.4
|
|
12,735.3
|
|
|||||
Growth
|
6
|
%
|
4
|
%
|
2
|
%
|
3
|
%
|
4
|
%
|
|||||
Commercial Lines
|
607.9
|
|
555.8
|
|
514.7
|
|
514.6
|
|
519.6
|
|
|||||
Growth
|
9
|
%
|
8
|
%
|
0
|
%
|
(1
|
)%
|
2
|
%
|
|||||
Property
1
|
1,201.9
|
|
1,076.5
|
|
—
|
|
—
|
|
—
|
|
|||||
Growth
1
|
12
|
%
|
NM
|
|
—
|
|
—
|
|
—
|
|
|||||
Total revenues
|
$
|
23,441.4
|
|
$
|
20,853.8
|
|
$
|
19,391.4
|
|
$
|
18,170.9
|
|
$
|
17,083.9
|
|
Underwriting margins:
2
|
|
|
|
|
|
||||||||||
Personal Lines
|
4.7
|
%
|
6.5
|
%
|
6.7
|
%
|
6.6
|
%
|
4.4
|
%
|
|||||
Commercial Lines
|
6.4
|
%
|
15.9
|
%
|
17.2
|
%
|
6.5
|
%
|
5.2
|
%
|
|||||
Property
1
|
3.8
|
%
|
10.1
|
%
|
—
|
|
—
|
|
—
|
|
|||||
Total underwriting operations
|
4.9
|
%
|
7.5
|
%
|
7.7
|
%
|
6.5
|
%
|
4.4
|
%
|
|||||
Net income (loss) attributable to Progressive
|
$
|
1,031.0
|
|
$
|
1,267.6
|
|
$
|
1,281.0
|
|
$
|
1,165.4
|
|
$
|
902.3
|
|
Per share
3
|
1.76
|
|
2.15
|
|
2.15
|
|
1.93
|
|
1.48
|
|
|||||
Average equivalent shares
3
|
585.0
|
|
589.2
|
|
594.8
|
|
603.6
|
|
607.8
|
|
|||||
Comprehensive income (loss) attributable to Progressive
|
$
|
1,164.0
|
|
$
|
1,044.9
|
|
$
|
1,352.4
|
|
$
|
1,246.1
|
|
$
|
1,080.8
|
|
Total assets
|
$
|
33,427.5
|
|
$
|
29,819.3
|
|
$
|
25,787.6
|
|
$
|
24,408.2
|
|
$
|
22,694.7
|
|
Debt outstanding
|
3,148.2
|
|
2,707.9
|
|
2,164.7
|
|
1,860.9
|
|
2,063.1
|
|
|||||
Redeemable noncontrolling interest
|
483.7
|
|
464.9
|
|
—
|
|
—
|
|
—
|
|
|||||
Total shareholders’ equity
|
7,957.1
|
|
7,289.4
|
|
6,928.6
|
|
6,189.5
|
|
6,007.0
|
|
|||||
Statutory surplus
|
8,560.0
|
|
7,575.5
|
|
6,442.8
|
|
5,991.0
|
|
5,605.2
|
|
|||||
Common shares outstanding
|
579.9
|
|
583.6
|
|
587.8
|
|
595.8
|
|
604.6
|
|
|||||
Common share price:
|
|
|
|
|
|
||||||||||
High
|
$
|
35.95
|
|
$
|
33.95
|
|
$
|
27.52
|
|
$
|
28.54
|
|
$
|
23.41
|
|
Low
|
29.32
|
|
25.23
|
|
22.53
|
|
21.36
|
|
19.01
|
|
|||||
Close (at December 31)
|
35.50
|
|
31.80
|
|
26.99
|
|
27.27
|
|
21.10
|
|
|||||
Market capitalization
|
$
|
20,586.5
|
|
$
|
18,558.5
|
|
$
|
15,864.7
|
|
$
|
16,247.5
|
|
$
|
12,757.1
|
|
Book value per common share
|
13.72
|
|
12.49
|
|
11.79
|
|
10.39
|
|
9.94
|
|
|||||
Ratios:
|
|
|
|
|
|
||||||||||
Return on average shareholders’ equity:
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Progressive
|
13.2
|
%
|
17.2
|
%
|
19.1
|
%
|
17.7
|
%
|
14.5
|
%
|
|||||
Comprehensive income (loss) attributable to Progressive
|
14.9
|
%
|
14.2
|
%
|
20.1
|
%
|
19.0
|
%
|
17.4
|
%
|
|||||
Debt to total capital
4
|
28.3
|
%
|
27.1
|
%
|
23.8
|
%
|
23.1
|
%
|
25.6
|
%
|
|||||
Price to earnings
|
20.2
|
|
14.8
|
|
12.6
|
|
14.1
|
|
14.3
|
|
|||||
Price to book
|
2.6
|
|
2.5
|
|
2.3
|
|
2.6
|
|
2.1
|
|
|||||
Earnings to fixed charges
|
10.7
|
x
|
14.2
|
x
|
16.4
|
x
|
14.7
|
x
|
11.0
|
x
|
|||||
Net premiums written to statutory surplus
|
2.7
|
|
2.7
|
|
2.9
|
|
2.9
|
|
2.9
|
|
|||||
Statutory combined ratio
|
94.8
|
|
91.8
|
|
92.1
|
|
93.4
|
|
95.2
|
|
|||||
Dividends declared per share
5
|
$
|
0.6808
|
|
$
|
0.8882
|
|
$
|
0.6862
|
|
$
|
1.4929
|
|
$
|
1.2845
|
|
Number of people employed
1
|
31,721
|
|
28,580
|
|
26,501
|
|
26,145
|
|
25,889
|
|
(millions – except ratios, policies in force, per share
amounts, and number of people employed)
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
|||||
Net premiums written
|
$
|
15,146.6
|
|
$
|
14,476.8
|
|
$
|
14,002.9
|
|
$
|
13,604.3
|
|
$
|
13,772.5
|
|
Growth
|
5
|
%
|
3
|
%
|
3
|
%
|
(1
|
)%
|
(3
|
)%
|
|||||
Net premiums earned
|
$
|
14,902.8
|
|
$
|
14,314.8
|
|
$
|
14,012.8
|
|
$
|
13,631.4
|
|
$
|
13,877.4
|
|
Growth
|
4
|
%
|
2
|
%
|
3
|
%
|
(2
|
)%
|
(2
|
)%
|
|||||
Policies in force (thousands):
|
|
|
|
|
|
||||||||||
Personal Lines
|
12,283.8
|
|
11,702.7
|
|
10,940.6
|
|
10,464.9
|
|
10,115.6
|
|
|||||
Growth
|
5
|
%
|
7
|
%
|
5
|
%
|
3
|
%
|
4
|
%
|
|||||
Commercial Lines
|
509.1
|
|
510.4
|
|
512.8
|
|
539.4
|
|
539.2
|
|
|||||
Growth
|
0
|
%
|
0
|
%
|
(5
|
)%
|
0
|
%
|
7
|
%
|
|||||
Property
1
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Growth
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total revenues
|
$
|
15,774.6
|
|
$
|
15,215.5
|
|
$
|
14,791.1
|
|
$
|
13,049.0
|
|
$
|
14,902.9
|
|
Underwriting margins:
2
|
|
|
|
|
|
||||||||||
Personal Lines
|
6.8
|
%
|
7.0
|
%
|
7.6
|
%
|
5.4
|
%
|
7.0
|
%
|
|||||
Commercial Lines
|
9.1
|
%
|
12.5
|
%
|
14.2
|
%
|
5.3
|
%
|
10.1
|
%
|
|||||
Property
1
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total underwriting operations
|
7.0
|
%
|
7.6
|
%
|
8.4
|
%
|
5.4
|
%
|
7.4
|
%
|
|||||
Net income (loss) attributable to Progressive
|
$
|
1,015.5
|
|
$
|
1,068.3
|
|
$
|
1,057.5
|
|
$
|
(70.0
|
)
|
$
|
1,182.5
|
|
Per share
3
|
1.59
|
|
1.61
|
|
1.57
|
|
(0.10
|
)
|
1.65
|
|
|||||
Average equivalent shares
3
|
636.9
|
|
663.3
|
|
672.2
|
|
668.0
|
|
718.5
|
|
|||||
Comprehensive income (loss) attributable to Progressive
|
$
|
924.3
|
|
$
|
1,398.8
|
|
$
|
1,752.2
|
|
$
|
(614.7
|
)
|
$
|
1,071.0
|
|
Total assets
|
$
|
21,844.8
|
|
$
|
21,150.3
|
|
$
|
20,049.3
|
|
$
|
18,250.5
|
|
$
|
18,843.1
|
|
Debt outstanding
|
2,442.1
|
|
1,958.2
|
|
2,177.2
|
|
2,175.5
|
|
2,173.9
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total shareholders’ equity
|
5,806.7
|
|
6,048.9
|
|
5,748.6
|
|
4,215.3
|
|
4,935.5
|
|
|||||
Statutory surplus
|
5,269.2
|
|
5,073.0
|
|
4,953.6
|
|
4,470.6
|
|
4,587.3
|
|
|||||
Common shares outstanding
|
613.0
|
|
662.4
|
|
672.6
|
|
676.5
|
|
680.2
|
|
|||||
Common share price:
|
|
|
|
|
|
||||||||||
High
|
$
|
22.08
|
|
$
|
22.13
|
|
$
|
18.10
|
|
$
|
21.31
|
|
$
|
25.16
|
|
Low
|
16.88
|
|
16.18
|
|
9.76
|
|
10.29
|
|
17.26
|
|
|||||
Close (at December 31)
|
19.51
|
|
19.87
|
|
17.99
|
|
14.81
|
|
19.16
|
|
|||||
Market capitalization
|
$
|
11,959.6
|
|
$
|
13,161.9
|
|
$
|
12,100.1
|
|
$
|
10,019.0
|
|
$
|
13,032.6
|
|
Book value per common share
|
9.47
|
|
9.13
|
|
8.55
|
|
6.23
|
|
7.26
|
|
|||||
Ratios:
|
|
|
|
|
|
||||||||||
Return on average shareholders’ equity:
|
|
|
|
|
|
||||||||||
Net income (loss) attributable to Progressive
|
16.5
|
%
|
17.1
|
%
|
21.4
|
%
|
(1.5
|
)%
|
19.5
|
%
|
|||||
Comprehensive income (loss) attributable to Progressive
|
15.0
|
%
|
22.3
|
%
|
35.5
|
%
|
(13.3
|
)%
|
17.7
|
%
|
|||||
Debt to total capital
4
|
29.6
|
%
|
24.5
|
%
|
27.5
|
%
|
34.0
|
%
|
30.6
|
%
|
|||||
Price to earnings
|
12.3
|
12.3
|
|
11.5
|
|
NA
|
|
11.6
|
|
||||||
Price to book
|
2.1
|
|
2.2
|
|
2.1
|
|
2.4
|
|
2.6
|
|
|||||
Earnings to fixed charges
|
11.6
|
x
|
11.9
|
x
|
11.3
|
x
|
NA
|
|
13.5
|
x
|
|||||
Net premiums written to statutory surplus
|
2.9
|
|
2.9
|
|
2.8
|
|
3.0
|
|
3.0
|
|
|||||
Statutory combined ratio
|
92.9
|
|
92.5
|
|
91.6
|
|
94.6
|
|
92.7
|
|
|||||
Dividends declared per share
5
|
$
|
0.4072
|
|
$
|
1.3987
|
|
$
|
0.1613
|
|
$
|
0
|
|
$
|
2.1450
|
|
Number of people employed
1
|
25,007
|
|
24,638
|
|
24,661
|
|
25,929
|
|
26,851
|
|
(Assumes $100 was invested at the close of trading on December 31, 2011)
|
|||||||||||||||
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|||||
PGR
|
$
|
115.51
|
|
$
|
151.17
|
|
$
|
159.26
|
|
$
|
192.61
|
|
$
|
221.00
|
|
S&P Index
|
116.00
|
|
153.57
|
|
174.60
|
|
177.04
|
|
198.16
|
|
|||||
P/C Group
1
|
119.90
|
|
161.72
|
|
185.24
|
|
205.66
|
|
243.22
|
|
|
Fair Value
|
||||||||||||||
|
-200 bps
|
|
-100 bps
|
|
|
+100 bps
|
|
+200 bps
|
|
||||||
(millions)
|
Change
1
|
|
Change
1
|
|
Actual
|
|
Change
|
|
Change
|
|
|||||
U.S. government obligations
|
$
|
3,104.6
|
|
$
|
2,996.1
|
|
$
|
2,870.1
|
|
$
|
2,750.7
|
|
$
|
2,638.2
|
|
State and local government obligations
|
2,643.7
|
|
2,573.1
|
|
2,502.6
|
|
2,434.2
|
|
2,370.7
|
|
|||||
Foreign government obligations
|
24.8
|
|
24.7
|
|
24.5
|
|
24.4
|
|
24.2
|
|
|||||
Asset-backed securities
|
6,337.8
|
|
6,230.4
|
|
6,103.8
|
|
5,987.7
|
|
5,869.5
|
|
|||||
Corporate securities
|
4,718.4
|
|
4,674.2
|
|
4,550.9
|
|
4,429.4
|
|
4,312.9
|
|
|||||
Nonredeemable preferred stocks
|
896.6
|
|
877.7
|
|
853.5
|
|
830.0
|
|
808.4
|
|
|||||
Redeemable preferred stocks
2
|
188.5
|
|
190.7
|
|
191.9
|
|
192.3
|
|
192.5
|
|
|||||
Short-term investments
|
3,572.9
|
|
3,572.9
|
|
3,572.9
|
|
3,572.9
|
|
3,572.9
|
|
|||||
Total at December 31, 2016
|
$
|
21,487.3
|
|
$
|
21,139.8
|
|
$
|
20,670.2
|
|
$
|
20,221.6
|
|
$
|
19,789.3
|
|
Total at December 31, 2015
|
$
|
18,839.1
|
|
$
|
18,629.1
|
|
$
|
18,286.8
|
|
$
|
17,944.2
|
|
$
|
17,621.7
|
|
|
Fair Value
|
||||||||
(millions)
|
-10%
|
|
Actual
|
|
+10%
|
|
|||
Common equities at December 31, 2016
|
$
|
2,524.4
|
|
$
|
2,812.4
|
|
$
|
3,100.4
|
|
Common equities at December 31, 2015
|
$
|
2,387.7
|
|
$
|
2,650.5
|
|
$
|
2,913.3
|
|
($ in millions)
|
2016
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|||||
Florida
|
$
|
3,305.1
|
|
14.1
|
%
|
|
$
|
2,839.6
|
|
13.8
|
%
|
|
$
|
2,399.0
|
|
12.9
|
%
|
|
$
|
2,188.1
|
|
12.6
|
%
|
|
$
|
2,000.1
|
|
12.2
|
%
|
Texas
|
2,226.8
|
|
9.5
|
|
|
1,941.5
|
|
9.4
|
|
|
1,664.6
|
|
8.9
|
|
|
1,560.7
|
|
9.0
|
|
|
1,536.6
|
|
9.4
|
|
|||||
California
|
1,284.8
|
|
5.5
|
|
|
1,173.6
|
|
5.7
|
|
|
1,080.6
|
|
5.8
|
|
|
996.0
|
|
5.7
|
|
|
954.4
|
|
5.8
|
|
|||||
New York
|
1,279.4
|
|
5.5
|
|
|
1,095.6
|
|
5.3
|
|
|
1,000.7
|
|
5.4
|
|
|
882.8
|
|
5.1
|
|
|
782.3
|
|
4.8
|
|
|||||
Michigan
|
971.3
|
|
4.2
|
|
|
812.5
|
|
4.0
|
|
|
659.6
|
|
3.5
|
|
|
539.5
|
|
3.1
|
|
|
488.5
|
|
3.0
|
|
|||||
Georgia
|
939.4
|
|
4.0
|
|
|
813.2
|
|
4.0
|
|
|
774.0
|
|
4.1
|
|
|
771.6
|
|
4.5
|
|
|
757.1
|
|
4.6
|
|
|||||
Ohio
|
905.2
|
|
3.9
|
|
|
820.8
|
|
4.0
|
|
|
807.7
|
|
4.3
|
|
|
757.4
|
|
4.4
|
|
|
725.8
|
|
4.4
|
|
|||||
New Jersey
|
902.8
|
|
3.9
|
|
|
820.2
|
|
4.0
|
|
|
754.6
|
|
4.0
|
|
|
697.4
|
|
4.0
|
|
|
600.1
|
|
3.7
|
|
|||||
Pennsylvania
|
895.8
|
|
3.8
|
|
|
787.3
|
|
3.8
|
|
|
718.6
|
|
3.9
|
|
|
663.8
|
|
3.8
|
|
|
644.2
|
|
3.9
|
|
|||||
Louisiana
|
694.7
|
|
3.0
|
|
|
614.9
|
|
3.0
|
|
|
552.5
|
|
3.0
|
|
|
540.1
|
|
3.1
|
|
|
515.9
|
|
3.2
|
|
|||||
All other
|
9,948.2
|
|
42.6
|
|
|
8,844.8
|
|
43.0
|
|
|
8,242.7
|
|
44.2
|
|
|
7,742.3
|
|
44.7
|
|
|
7,367.7
|
|
45.0
|
|
|||||
Total
|
$
|
23,353.5
|
|
100.0
|
%
|
|
$
|
20,564.0
|
|
100.0
|
%
|
|
$
|
18,654.6
|
|
100.0
|
%
|
|
$
|
17,339.7
|
|
100.0
|
%
|
|
$
|
16,372.7
|
|
100.0
|
%
|
Principal Office
|
The Progressive Corporation
|
6300 Wilson Mills Road
|
Mayfield Village, Ohio 44143
|
440-461-5000
|
progressive.com
|
|
Personal autos, motorcycles, and recreational vehicles
|
Commercial autos/trucks
|
To receive a quote
|
1-800-PROGRESSIVE (1-800-776-4737) progressive.com
|
1-888-806-9598 progressivecommercial.com
|
To report a claim
|
1-800-PROGRESSIVE (1-800-776-4737)
progressive.com 1 |
1-800-PROGRESSIVE (1-800-776-4737)
|
For customer service:
|
|
|
If you bought your policy through an independent agent or broker
|
1-800-925-2886
(1-800-300-3693 in California)
progressiveagent.com
|
1-800-444-4487 progressivecommercial.com
|
If you bought your policy directly through Progressive online or by phone
|
1-800-PROGRESSIVE (1-800-776-4737) progressive.com
|
1-800-895-2886 progressivecommercial.com
|
|
||
Homeowners - to receive a quote, report a claim, or speak to a customer service representative, please call 1-800-PROGRESSIVE or visit progressive.com and your inquiry will be routed to the appropriate contact center.
|
||
In addition, iPhone
®
and Android
®
users can download the Progressive App to start a quote, report a claim, or service a policy.
|
||
1
Claims reporting via the website is currently only available for personal auto policies.
|
||
|
|
|
Annual Meeting
The Annual Meeting of Shareholders will be held at the offices of The Progressive Corporation, Studio 96, 6671 Beta Drive, Mayfield Village, Ohio 44143 on May 12, 2017, at 10 a.m. eastern time. There were 2,152 shareholders of record on December 31, 2016.
|
|
Common Shares and Dividends
The Progressive Corporation’s common shares are traded on the New York Stock Exchange (symbol PGR). Progressive currently has an annual variable dividend policy. We expect the Board to declare the next annual variable dividend, subject to policy limitations, in December 2017, with a record date in early 2018 and payment shortly thereafter. A complete description of our annual variable dividend policy can be found at: progressive.com/dividend.
|
|
Shareholder/Investor Relations
Progressive does not maintain a mailing list for distribution of shareholders’ reports. To view Progressive’s publicly filed documents, shareholders can access our website: progressive.com/sec. To view our earnings and other releases, access: progressive.com/investors.
|
|
For financial-related information or to request copies of Progressive’s publicly filed documents free of charge, write to: The Progressive Corporation, Investor Relations, 6300 Wilson Mills Road, Box W33, Mayfield Village, Ohio 44143, email: investor_relations@progressive.com, or call: 440-395-2222.
|
|
For all other company information, call: 440-461-5000 or access our website at: progressive.com/contactus.
|
Transfer Agent and Registrar
|
Registered Shareholders:
If you have questions or changes to your account and your Progressive shares are registered in your name, write to: American Stock Transfer & Trust Company, Attn: Operations Center, 6201 15th Avenue, Brooklyn, NY 11219; phone: 1-866-709-7695; email: info@amstock.com; or visit their website at: amstock.com (after March 6, 2017, email: info@astfinancial.com; or visit their website at: astfinancial.com).
|
|
Beneficial Shareholders
: If your Progressive shares are held in a brokerage or other financial institution account, contact your broker or financial institution directly regarding questions or changes to your account.
|
|
Contact Non-Management Directors
Interested parties have the ability to contact the non-management directors as a group by sending a written communication clearly addressed to the non-management directors to either of the following:
|
|
Lawton W. Fitt, Lead Independent Director, The Progressive Corporation, email: lead_director@progressive.com; or
|
|
Daniel P. Mascaro, Secretary, The Progressive Corporation, 6300 Wilson Mills Road, Mayfield Village, Ohio 44143 or email: secretary@progressive.com.
|
|
The recipient will forward communications so received to the non-management directors.
|
|
Accounting Complaint Procedure
Any employee or other interested party with a complaint or concern regarding accounting, internal accounting controls, or auditing matters relating to Progressive may report such complaint or concern directly to the Chairman of the Audit Committee, as follows: Patrick H. Nettles, Ph.D., Chairman of the Audit Committee, patrick_nettles@progressive.com.
|
|
Any such complaint or concern also may be reported anonymously over the following toll-free Alert Line: 1-800-683-3604 or online at: www.progressivealertline.com. Progressive will not retaliate against any individual by reason of his or her having made such a complaint or reported such a concern in good faith. View the complete procedures at: progressive.com/governance.
|
|
Whistleblower Protections
Progressive will not retaliate against any officer or employee of Progressive because of any lawful act done by the officer or employee to provide information or otherwise assist in investigations regarding conduct that the officer or employee reasonably believes to be a violation of federal securities laws or of any rule or regulation of the Securities and Exchange Commission. View the complete Whistleblower Protections at: progressive.com/governance.
|
|
Corporate Governance
Progressive’s Corporate Governance Guidelines and Board Committee Charters are available at: progressive.com/governance.
|
|
Counsel
Baker & Hostetler LLP, Cleveland, Ohio
|
|
Charitable Contributions
We contribute annually to: (i) The Insurance Institute for Highway Safety to further its work in reducing the human trauma and economic costs of auto accidents; and (ii) The Progressive Insurance Foundation, which provides matching funds to eligible 501(c)(3) charitable organizations to which Progressive employees, other than ARX employees, contribute.
|
|
Social Responsibility
Progressive uses an interactive online format to communicate our social responsibility efforts. This report can be found at: progressive.com/socialresponsibility.
|
|
Online Annual Report and Proxy Statement
Our 2016 Annual Report to Shareholders can be found at: progressive.com/annualreport.
|
|
Our 2017 Proxy Statement and 2016 Annual Report to Shareholders, in a PDF format, can be found at: progressiveproxy.com.
|
Directors
|
|
|
|
|
Stuart B. Burgdoerfer
1,6
|
|
Patrick H. Nettles, Ph.D.
1,6
|
|
1
Audit Committee Member
|
Executive Vice President and
|
|
Executive Chairman,
|
|
2
Executive Committee Member
|
Chief Financial Officer,
|
|
Ciena Corporation
|
|
3
Compensation Committee Member
|
L Brands, Inc.
|
|
(telecommunications)
|
|
4
Investment and Capital Committee
|
(retailing)
|
|
|
|
Member
|
|
|
Glenn M. Renwick
2
|
|
5
Nominating and Governance
|
Charles A. Davis
4,5,6
|
|
Executive Chairman of the Board,
|
|
Committee Member
|
Chief Executive Officer,
|
|
The Progressive Corporation
|
|
6
Independent Director
|
Stone Point Capital LLC
|
|
|
|
|
(private equity investing)
|
|
Bradley T. Sheares, Ph.D.
3,6
|
|
|
|
|
Former Chief Executive Officer,
|
|
|
Roger N. Farah
3,5,6
|
|
Reliant Pharmaceuticals, Inc.
|
|
|
Executive Director,
|
|
(pharmaceuticals)
|
|
|
Tory Burch LLC
|
|
|
|
|
(retailing)
|
|
Barbara R. Snyder
1,6
|
|
|
|
|
President,
|
|
|
Lawton W. Fitt
2,4,5,6
|
|
Case Western Reserve University
|
|
|
Lead Independent Director,
|
|
(higher education)
|
|
|
Retired Partner,
|
|
|
|
|
Goldman Sachs Group
|
|
|
|
|
(financial services)
|
|
|
|
|
|
|
|
|
|
Susan Patricia Griffith
2
|
|
|
|
|
President and Chief Executive Officer,
|
|
|
|
|
The Progressive Corporation
|
|
|
|
|
|
|
|
|
|
Jeffrey D. Kelly
1,6
|
|
|
|
|
Retired Chief Operating Officer and
|
|
|
|
|
Chief Financial Officer,
|
|
|
|
|
RenaissanceRe Holdings Ltd.
|
|
|
|
|
(reinsurance services)
|
|
|
|
|
Corporate Officers
|
|
Other Executive Officers
|
|
|
Susan Patricia Griffith
|
|
John F. Auer
|
|
|
President
|
|
President and Chief Executive Officer,
|
|
|
and Chief Executive Officer
|
|
ARX Holding Corp.
|
|
|
|
|
|
|
|
John P. Sauerland
|
|
John A. Barbagallo
|
|
|
Vice President
|
|
Commercial Lines President
|
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
Steven A. Broz
|
|
|
Daniel P. Mascaro
|
|
Chief Information Officer
|
|
|
Vice President, Secretary,
|
|
|
|
|
and Chief Legal Officer
|
|
Patrick K. Callahan
|
|
|
|
|
Personal Lines President
|
|
|
Jeffrey W. Basch
|
|
|
|
|
Vice President
|
|
M. Jeffrey Charney
|
|
|
and Chief Accounting Officer
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
Patrick S. Brennan
|
|
William M. Cody
|
|
|
Treasurer
|
|
Chief Investment Officer
|
|
|
|
|
|
|
|
Mariann Wojtkun Marshall
|
|
John Murphy
|
|
|
Assistant Secretary
|
|
Customer Relationship Management
|
|
|
|
|
President
|
|
|
Glenn M. Renwick
|
|
|
|
|
Executive Chairman of the Board
|
|
Lori Niederst
|
|
|
|
|
Chief Human Resource Officer
|
|
|
|
|
|
|
|
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Michael D. Sieger
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Claims President
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©
2017 The Progressive Corporation
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Jurisdiction
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Name of Subsidiary
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of Incorporation
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ARX Holding Corp. (owns 69.2% of outstanding capital stock)
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Delaware
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American Strategic Insurance Corp.
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Florida
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ASI RE, LLC
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Florida
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Ark Royal Insurance Company
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Florida
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Ark Royal Underwriters, LLC
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Florida
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ASI Assurance Corp.
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Florida
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ASI Home Insurance Corp.
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Florida
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ASI Lloyds, Inc.
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Texas
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ASI Preferred Insurance, Corp.
*
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Florida
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ASI Select Insurance Corp.
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Delaware
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ASI Services, Inc.
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Florida
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ASI Underwriters Corp.
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Florida
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ASI Underwriters of Texas, Inc.
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Texas
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e-Ins. LLC*
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Florida
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PropertyPlus Insurance Agency, Inc.
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Delaware
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Sunshine Security Insurance Agency, Inc.
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Florida
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Drive Insurance Holdings, Inc.
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Delaware
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Drive New Jersey Insurance Company
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New Jersey
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Progressive American Insurance Company
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Ohio
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Progressive Bayside Insurance Company
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Ohio
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Progressive Casualty Insurance Company
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Ohio
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PC Investment Company
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Delaware
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Progressive Gulf Insurance Company
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Ohio
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Progressive Specialty Insurance Company
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Ohio
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Trussville/Cahaba, AL, LLC
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Ohio
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Progressive Classic Insurance Company
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Wisconsin
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Progressive Commercial Advantage Agency, Inc.
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Ohio
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Progressive Commercial Casualty Company
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Ohio
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Progressive Hawaii Insurance Corp.
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Ohio
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Progressive Michigan Insurance Company
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Michigan
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Progressive Mountain Insurance Company
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Ohio
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Progressive Northern Insurance Company
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Wisconsin
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Progressive Northwestern Insurance Company
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Ohio
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Progressive Preferred Insurance Company
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Ohio
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Progressive Security Insurance Company
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Louisiana
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Progressive Southeastern Insurance Company
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Indiana
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Progressive West Insurance Company
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Ohio
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Garden Sun Insurance Services, Inc.
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Hawaii
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Pacific Motor Club
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California
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Progny Agency, Inc.
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New York
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1.
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I have reviewed this annual report on Form 10-K of The Progressive Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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March 1, 2017
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/s/ Susan Patricia Griffith
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Susan Patricia Griffith
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President and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of The Progressive Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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March 1, 2017
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/s/ John P. Sauerland
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John P. Sauerland
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Vice President and Chief Financial Officer
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/s/ Susan Patricia Griffith
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Susan Patricia Griffith
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President and Chief Executive Officer
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March 1, 2017
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/s/ John P. Sauerland
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John P. Sauerland
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Vice President and Chief Financial Officer
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March 1, 2017
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