10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2014

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________to__________             

Commission file number 1-9518

THE PROGRESSIVE CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	34-0963169
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6300 Wilson Mills Road, Mayfield Village, Ohio	44143
(Address of principal executive offices)	(Zip Code)

(440) 461-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, $1.00 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ý  Yes    ¨  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨  Yes    ý  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     ý  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    ý  No

The aggregate market value of the voting stock held by non-affiliates of the registrant at June 30, 2014: $14,825,867,953

The number of the registrant’s Common Shares, $1.00 par value, outstanding as of January 30, 2015: 588,932,479

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 15, 2015, and the Annual Report to Shareholders of The Progressive Corporation and subsidiaries for the year ended December 31, 2014, included as Exhibit 13 to this Form 10-K, are incorporated by reference in Parts I, II, III, and IV hereof.

PART I

ITEM 1. BUSINESS

(a) General Development of Business

The Progressive insurance organization began business in 1937. The Progressive Corporation, an insurance holding company formed in 1965, currently has 53 subsidiaries, one mutual insurance company affiliate, and one limited partnership investment affiliate. Our insurance subsidiaries and mutual insurance company affiliate provide personal auto insurance, commercial auto and truck insurance principally for small businesses, and other specialty property-casualty insurance and related services. Our property-casualty insurance products protect our customers against losses due to collision and physical damage to their motor vehicles, uninsured and underinsured bodily injury, and liability to others for personal injury or property damage arising out of the use of those vehicles. Our non-insurance subsidiaries and limited partnership investment affiliate generally support our insurance and investment operations. We operate our businesses throughout the United States and sell personal auto physical damage and property damage liability insurance on an Internet-only basis in Australia.

In December 2014, we signed a purchase agreement to acquire a controlling interest in ARX Holding Corp. (ARX), the parent company of American Strategic Insurance Corp. (ASI) and its affiliates, our current provider of homeowners insurance in the Agency channel (see Narrative Description of Business-Pending Acquisition for further discussion).

(b) Financial Information About Segments

Incorporated by reference from Note 10 - Segment Information in the 2014 Annual Report to Shareholders of The Progressive Corporation and subsidiaries (the "Annual Report"), which is included as Exhibit 13 to this Form 10-K.

(c) Narrative Description of Business

We offer a number of personal and commercial property-casualty insurance products primarily related to motor vehicles. Net premiums written were $18.7 billion in 2014, compared to $17.3 billion in 2013 and $16.4 billion in 2012. Our combined ratio, which we calculate by dividing the sum of our loss and loss adjustment expenses, policy acquisition costs, and other underwriting expenses, net of fees and other revenues, by our net premiums earned, was 92.3 in 2014, 93.5 in 2013, and 95.6 in 2012.

Organization

Auto insurance differs greatly by community because legal requirements and decisions vary by state and because, among other factors, traffic, law enforcement, cultural attitudes, insurance agents, medical services, and auto repair services vary by community. We are organized as follows:

• Personal Lines – A Group President manages our Personal Lines business, which includes insurance for personal autos and special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items):

• We currently write personal auto insurance in all 50 of the United States, the District of Columbia, and on an Internet-only basis in Australia. Our personal auto management group is organized by state into four geographic regions in the United States, plus a region for Australia. Each region is led by a general manager. We also have a separate manager for our California Agency organization.

• We write the majority of our special lines products in all 50 states. Our special lines management group is organized by product and led by a general manager.

• Commercial Lines – A Group President manages our Commercial Lines business, which offers products in 49 states; we do not currently write Commercial Lines in Hawaii or the District of Columbia. The Commercial Lines business is organized by state, with product managers responsible for local implementation. These state-level managers are led by two regional directors who report to a general manager.

• Customer Operations – Our President of Customer Operations manages our claims and customer relations business functions.

▪ Claims - A Claims Operations Leader manages our claims business function, which is organized into four groups. Three of the groups are organized by geographic region, and one is a countrywide group that provides various claims-related services, including catastrophe response and special investigations. Each group is headed by a general manager, and each handles both Personal Lines and Commercial Lines claims.

▪ Customer Relations - Our customer relations groups conduct direct sales and support our policyservicing, agency distribution, claims, and direct sales operations.

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Our executive management team sets policies and makes key strategic decisions. This team includes the Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Chief Investment Officer, Chief Information Officer, Chief Human Resource Officer, and Chief Marketing Officer, as well as our three Presidents (discussed above). The Presidents are responsible for the development and management of our product offerings and customer service processes that are tailored to the unique characteristics and purchasing preferences of customers who shop for and select our insurance products.

Personal Lines

Our Personal Lines segment writes insurance for personal autos and recreational and other vehicles. This business generally offers more than one program in a single state, with each program targeted to a specific distribution channel, market, or customer group. The Personal Lines business accounted for approximately 90% of total net premiums written during each of the last three years. Our strategy is to be a competitively priced provider of a full line of auto insurance products with distinctive service, distributed through whichever channel the customer prefers. Volume potential is driven by our price competitiveness, brand recognition, service quality, and the actions of our competitors, among other factors. See “Competitive Factors” below for further discussion.

The Personal Lines segment consists of our personal auto insurance products, as well as our special lines products.

• Personal auto insurance represented approximately 90% of our total Personal Lines net premiums written for each of the last three years. This business includes Snapshot^®, our usage-based insurance program, which is available to consumers through both the Agency and Direct channels in 45 states and the District of Columbia. During 2014, we wrote over $2.6 billion of premium with customers who are part of our Snapshot program.

We ranked fourth in market share in the U.S. private passenger auto market for 2013 based on net premiums written and believe that we held that position for 2014. There are approximately 310 competitors in this market. Progressive and the other leading 14 private passenger auto insurers, each of which writes over $2.0 billion of premiums, comprise about 75% of this market. For 2013, the industry net premiums written for private passenger auto insurance in the United States was $174.5 billion, and our share of this market was approximately 8.7%, compared to $168.0 billion and 8.5% in 2012, respectively; comparable industry data is not available for 2014 at this time. 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.

• Special lines products include insurance for motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items, and represented about 10% of our Personal Lines business. 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 these products, and that we have been the market share leader for the motorcycle product since 1998. As of December 31, 2014, we offered a personal umbrella insurance product in 37 states and the District of Columbia through certain independent agents and to Direct customers via telephone. We also offered a renters insurance product in three states through certain independent agents as of December 31, 2014; we intend to roll out this product to additional states and agents as part of our bundling strategy.

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Our Personal Lines products are sold through both the Agency and Direct channels.

• The Agency businessincludes 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. These 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. Our guidelines prescribe the kinds and amounts of coverage that may be written and the premium rates that may be charged for specified categories of risk. 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 business represented 54% of our Personal Lines volume in 2014, compared to 56% in both 2013 and 2012.

• The Direct business includes business written directly by us on the Internet, through mobile devices, and over the phone. The Direct business represented 46% of our Personal Lines volume in 2014, compared to 44% in both 2013 and 2012.

In our Personal Lines segment, we are also continuing with our efforts to further penetrate customer households through cross-selling auto policies with our special lines products and vice versa, as well as through Progressive Home Advantage^® (PHA). PHA is the program in which we “bundle” our auto product with property insurance provided by unaffiliated insurance carriers. Bundled products are an integral part of our consumer offerings and an important part of our strategic agenda. As of December 31, 2014, PHA was available to Direct customers in 49 states, Agency customers in 26 states, including three states added during 2014, and to both Direct and Agency customers in the District of Columbia. PHA is available to Agency customers in Florida and, in 2014, was made available to Direct customers in that state. PHA is not yet available to customers in Alaska. In the Direct channel, PHA is provided by 12 unaffiliated insurance carriers. In the Agency channel, ASI will be our exclusive provider of homeowners products for new business (see "Pending Acquisition" below for further discussion).

Commercial Lines

The Commercial Lines business writes primary liability, physical damage, and other auto-related insurance for automobiles and trucks owned and/or operated predominately by small businesses as a part of the commercial auto market. This business represented approximately 10% of our total net premiums written during each of the last three years. Our Commercial Lines customers on average insure approximately two vehicles. Even though we continue to write over 90% of our Commercial Lines business through the Agency channel, net premiums written through the Direct channel increased by 13% in 2014. The Commercial Lines business operates in the following business market targets:

• Business auto – autos, vans, and pick-up trucks used by small businesses, such as retailing, farming, services, and private trucking,

• For-hire transportation – tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses and non-fleet long-haul operators,

• Contractor – vans, pick-up trucks, and dump trucks used by small businesses, such as artisans, heavy construction, and landscapers/snowplowers,

• For-hire specialty – dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses,

• Tow – tow trucks and wreckers used in towing services and gas/service station businesses, and

• For-hire livery – non-fleet (i.e., five or fewer vehicles) taxis, black-car services, and airport taxis.

Business auto is our largest business market target, measured by premium volume, and accounts for approximately one third of our total Commercial Lines premiums, while the for-hire transportation and contractor business market targets each account for about another 25%. Business auto and contractor together account for approximately 75% of the vehicles we insure in this business, while for-hire transportation accounts for about 10%. Although Commercial Lines differs from Personal Lines auto in its customer base and products written, both businesses require the same fundamental skills, including disciplined underwriting and pricing, as well as excellent claims service.

There are approximately 340 competitors in the total U.S. commercial auto market. We primarily compete with about 37 other large companies/groups, each with over $150 million of commercial auto premiums written annually. These leading commercial auto insurers comprise about 75% of this market. Our Commercial Lines business ranked second in the commercial auto insurance market for 2013 based on net premiums written; we estimate this business to be ranked in the top two for 2014.

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Other Indemnity

Our other indemnity businesses consist of managing our run-off businesses, including the run-off of our professional liability business, which was sold in 2010. Pursuant to our agreement with the purchaser of this business, from the date of sale through April 30, 2012, we continued to write these policies, principally directors and officers liability insurance for community banks. All professional liability insurance policies written in July 2010 and later were 100% reinsured. From August 2009 through June 2010, the substantial majority of the risks on this business were 100% reinsured and prior to August 2009, a majority of the risks on this business were reinsured. We have only 15 policies in force as of December 31, 2014.

Pending Acquisition

In December 2014, we signed a purchase agreement to acquire a controlling interest in ARX, the parent company of ASI and its affiliates. ASI, one of the 20 largest homeowners carriers in the United States, specializes in personal and commercial property insurance, personal umbrella insurance, and primary and excess flood insurance. After closing, we expect that ASI will continue to be the exclusive provider of homeowners products for new business in our Agency channel.

The transaction is expected to close in April 2015, subject to closing conditions, at an estimated cost of $875 million. If the transaction closes, we expect that Progressive and the other continuing ARX shareholders and stock option holders will enter into a new stockholders’ agreement to address the parties’ respective rights and obligations after the closing. Among other provisions, the stockholders’ agreement will provide the non-Progressive shareholders with rights to put all of their shares to Progressive in two installments, one in early 2018 and one in early 2021. Progressive likewise will have the right to call shares from the other ARX shareholders in each of 2018 and 2021. If these rights are exercised in full when available, Progressive’s ownership stake in ARX capital stock would exceed 80% in 2018, and Progressive would acquire all of the remaining capital stock of ARX in 2021. The purchase prices for shares to be purchased by Progressive pursuant to these put or call rights will be determined by adding (A) the price per share paid in the closing currently expected in April 2015, to (B) the product of the change in the per share net tangible book value of ARX between December 31, 2014 and December 31, 2017 (for the 2018 put or call purchases) or December 31, 2020 (for the 2021 put or call purchases) times a multiple of between 1.0 and 2.0. The multiple will be determined based on the growth and profitability of ARX’s business over the applicable time period, pursuant to criteria to be included in the stockholders’ agreement.

Service Businesses

Our service businesses, which represent less than 1% of our total revenues and do not have a material effect on our overall operations, primarily include:

• Commercial Auto 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. We have an agreement with AIPSO (the national organization responsible for administering the involuntary insurance market) under which we will receive a supplemental fee, when necessary, to satisfy a minimum servicing fee requirement; this agreement is scheduled to expire on August 31, 2018. We cede 100% of the premiums and losses to the plans. Reimbursements to us from the CAIP plans are required by state laws and regulations. Material violations of contractual service standards can result in ceding restrictions for the affected business. We have maintained, and plan to continue to maintain, compliance with these standards. Any changes in our participation as a CAIP service provider would not materially affect our financial condition, results of operations, or cash flows.

• Commission-based businesses – We have two commission-based service businesses:

In our Direct business, through Progressive Home Advantage^®, we offer home, condominium, and renters insurance, among other products, written by unaffiliated insurance companies. We receive commissions for policies written under this program, all of which are used to offset the expenses associated with maintaining this program. Progressive Home Advantage is not currently available to customers in Alaska.

Through Progressive Commercial Advantage^SM, we offer our customers the ability to package their auto coverage with other commercial coverages that are written by unaffiliated insurance companies or placed with additional companies through unaffiliated insurance agencies. This program offers general liability and business owners policies throughout the continental United States and workers’ compensation coverage in 44 states as of December 31, 2014. We receive commissions for the policies written under this program, all of which are used to offset the expenses associated with maintaining this program.

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Claims

We manage our claims handling on a companywide basis through approximately 270 claims offices located throughout the United States. We have in operation 67 Service Centers in 51 metropolitan areas across the country, of which 44 have combined claims offices and Service Centers to improve our efficiency and manage costs. Insureds and other claimants can elect to have their vehicles repaired by their own repair shops, have their vehicles repaired by one of our network shops, or have the entire repair process coordinated by one of our Service Centers. If a customer elects to repair their vehicle through a Service Center, we provide end-to-end resolution for auto physical damage losses. Customers can choose to bring their vehicles to one of these sites, where they can pick up a rental vehicle. Our representatives will arrange the repair, including pick-up and delivery of the vehicle, and inspect the vehicle once the repairs are complete. This innovative, patented approach to the vehicle repair process increases consumer satisfaction and our productivity and improves the cycle time in comparison to our other claims settlement processes. Under the Service Center and network shop options, we guarantee the repairs for as long as the customer owns or leases their car. If a customer decides not to repair their vehicle, our representatives will write an estimate and the customer can receive payment on the spot.

Competitive Factors

The automobile insurance and other property-casualty markets in which we operate are highly competitive. Property-casualty insurers generally compete on the basis of price, agent commission rates, consumer recognition and confidence, coverages offered and other product features, claims handling, financial stability, customer service, and geographic coverage. Vigorous competition is provided by large, well-capitalized national companies in both the Agency and Direct channels, and by smaller regional insurers. In the Agency channel, some of our competitors have broad distribution networks of employed or captive agents. With widely available comparative rating services, consumers can easily compare prices among competitors. Many competitors invest heavily in advertising and marketing efforts and/or expanding their online or mobile service offerings. Over the past decade, these changes have further intensified the competitive nature of the automobile and other property-casualty insurance markets in which we operate.

We rely heavily on technology and extensive data gathering and analysis to segment markets and price accurately according to risk potential. We have remained competitive by refining our risk measurement and price segmentation skills, closely managing expenses, and achieving operating efficiencies. Superior customer service, fair and accurate claims adjusting, and strong brand recognition are also important factors in our competitive strategy.

Competition in our insurance market is affected by the pace of technological developments.  An insurer’s ability to adapt to change, innovate, develop, and implement new applications and other technologies can affect its competitive position.  In addition, there has been a proliferation of patents related to new ways in which technologies can affect competitive positions. We have eight U.S. patents, and additional patent applications pending, with respect to certain methods, systems, and devices related to usage-based insurance.  Certain of these patents expire on or about January 29, 2016, while others extend well beyond that date. Three of these eight patents were challenged in actions filed with the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office. The challenger prevailed in the initial proceeding on all three of those patents. Perhaps more significantly, we have a substantial amount of “know-how” developed from years of experience with usage-based insurance, and from analyzing the data from over 12 billion driving miles derived from usage-based devices. We believe this intellectual property provides us with a competitive advantage in the usage-based insurance market. We also hold a U.S. patent (expiring June 2021), and have a U.S. patent application pending, on the innovative approach to vehicle repair service used in our Service Centers, as described above, and a U.S. patent (expiring in June 2028) on the Name Your Price^® functionality on our website. In addition, we hold four patents (expiring July 2019), and additional patent applications pending, related to our online policy self-service technology. Two of these four patents have been challenged in actions filed with the PTAB. The challenger has prevailed in these initial proceedings. We have appealed all of the adverse rulings from the PTAB. The patents that are the subject of these rulings remain valid and in effect until all appeals are exhausted.

In addition, we have licensed certain of our patent rights for domestic use to other insurance companies, and we continue to pursue other ways in which to leverage this intellectual property. Currently, we do not expect these licensing activities to have a material effect on our financial condition, results of operations, or cash flows.

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State Insurance Licenses

Our insurance subsidiaries operate under licenses issued by various state insurance authorities. These licenses may be of perpetual duration or renewable periodically, provided the holder continues to meet applicable regulatory requirements. Our licenses govern the kinds of insurance coverages that may be written by our insurance subsidiaries in the issuing state. Such licenses are normally issued only after the filing of an appropriate application and the satisfaction of prescribed criteria. All licenses that are material to our subsidiaries’ businesses are in good standing.

Insurance Regulation 

Progressive’s insurance subsidiaries are generally subject to regulation and supervision by insurance departments of the jurisdictions in which they are domiciled or licensed to transact business. At least one of our insurance subsidiaries is licensed and subject to regulation in each of the 50 states and the District of Columbia. The nature and extent of such regulation and supervision varies from jurisdiction to jurisdiction. Generally, an insurance company is subject to a higher degree of regulation and supervision in its state of domicile. Progressive’s insurance subsidiaries and its mutual insurance company affiliate are domiciled in the states of Indiana, Louisiana, Michigan, New Jersey, New York, Ohio, Texas, and Wisconsin. In addition, California and Florida treat certain Progressive subsidiaries as domestic insurers for certain purposes under their “commercial domicile” laws.

State insurance laws impose numerous requirements, conditions, and limitations on the operations of insurance companies. Insurance departments have broad regulatory powers relating to those operations. Regulated areas include, among others:

• Licensing of insurers and agents,

• Capital and surplus requirements,

• Statutory accounting principles specific to insurance companies and the content of required financial and other reports,

• Requirements for establishing insurance reserves,

• Investments,

• Acquisitions of insurers and transactions between insurers and affiliates,

• Limitations on rates of return or profitability,

• Rating criteria, rate levels, and rate changes,

• Insolvencies of insurance companies,

• Assigned risk programs,

• Authority to exit a business, and

• Numerous requirements relating to other areas of insurance operations, including: required coverages, policy forms, underwriting standards, and claims handling.

Insurance departments are authorized to conduct periodic and other examinations of regulated insurers’ financial condition and operations to monitor the financial stability of the insurers and to ensure adherence to statutory accounting principles and compliance with state insurance laws and regulations. In addition, in some states, the attorney general’s office may exercise certain supervisory authority over insurance companies and, from time to time, may investigate certain insurance company practices.

Insurance departments establish and monitor compliance with capital and surplus requirements. Although the ratio of writings to surplus that the regulators will allow is a function of a number of factors (including applicable law, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write historically have been perceived to be limited to a specified multiple of the insurer’s total surplus, generally 3 to 1. Thus, the amount of an insurer’s statutory surplus, in certain cases, may limit its ability to grow its business. At year-end 2014, we had net premiums written of $18.7 billion and statutory surplus of $6.4 billion. The combined premiums-to-surplus ratio for all Progressive insurance companies was 2.9 to 1. In addition, as of December 31, 2014, we had access to $1.9 billion of securities held in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth or for other purposes. The National Association of Insurance Commissioners (NAIC) also has developed a risk-based capital (RBC) program to enable regulators to identify and take appropriate and timely regulatory actions relating to insurers that show signs of weak or deteriorating financial condition. RBC is a series of dynamic surplus-related formulas that contain a variety of factors that are applied to financial balances based on the degree of certain risks, such as asset, credit, and underwriting risks. At December 31, 2014, Progressive’s RBC ratios were well in excess of minimum requirements.

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Insurance companies are generally required to file detailed annual and other reports with the insurance department of each jurisdiction in which they conduct business. These reports include:

• the insurer’s financial statements under statutory accounting principles

• details concerning claims reserves held by the insurer

• specific investments held by the insurer, and

• numerous other disclosures about the insurer’s financial condition and operations.

State insurance laws and insurance departments also regulate investments that insurers are permitted to make. Limitations are placed on the amounts an insurer may invest in a particular issuer, as well as the aggregate amount an insurer may invest in certain types of investments. Certain investments are prohibited.

Insurance holding company laws enacted in many jurisdictions authorize insurance departments to regulate acquisitions of insurers and certain other transactions and to require periodic disclosure of specified information. These laws impose prior approval requirements for certain transactions between insurers and their affiliates and generally regulate dividend and other distributions, including loans and cash advances, between insurers and their affiliates. See the “Dividends” discussion in Item 5(c) below for further information on these dividend limitations. The scope of insurance holding company regulation has expanded as states have adopted the revised model holding company act promulgated by the NAIC in 2010.

Under state insolvency and guaranty laws, insurers can be assessed or required to contribute to state guaranty funds to cover policyholder losses resulting from the insolvency of other insurers. Insurers are also required by many states, as a condition of doing business in the state, to provide coverage to certain risks that cannot find coverage in the voluntary market. These “assigned risk” plans generally specify the types of insurance and the level of coverage that must be offered to such involuntary risks, as well as the allowable premium. Many states also have involuntary market plans, which hire a limited number of servicing carriers to provide insurance to involuntary risks. These plans, through assessments, pass underwriting and administrative expenses on to insurers that write voluntary coverages in those states.

Many states have laws and regulations that limit an insurer’s ability to exit a market. For example, certain states limit an automobile insurer’s ability to cancel or non-renew policies. Certain states also prohibit an insurer from withdrawing one or more lines of business from the state, except pursuant to a plan that is approved by the state insurance department. The state insurance department may disapprove a plan that may lead to market disruption. Laws and regulations that limit the cancellation or non-renewal of policies, or that subject program withdrawals to prior approval requirements, may restrict an insurer’s ability to exit unprofitable markets or businesses.

As mentioned above, insurance departments have regulatory authority over many other aspects of an insurer’s insurance operations, including coverages, forms, rating criteria, and rate levels. The ability to implement changes to these items on a timely basis is critical to our ability to compete effectively in the marketplace. Rate regulation varies from “use and file,” to “file and use,” to prior approval.

Regulation of insurance constantly changes as real or perceived issues and developments arise. Some changes may be due to economic developments, such as changes in investment laws made to recognize new investment products or to respond to perceived investment risks, while others reflect concerns about consumer privacy, insurance availability, prices, allegations of discriminatory pricing, underwriting practices, and solvency. In recent years, legislation, regulatory measures, and voter initiatives have been introduced, and in some cases adopted, which deal with use of non-public consumer information, use of credit information in underwriting and rating, insurance rate development, rate of return limitations, and the ability of insurers to cancel or non-renew insurance policies. In addition, from time to time, the United States Congress and certain federal agencies investigate the current condition of the insurance industry to determine whether federal regulation is necessary. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act created a new Federal Insurance Office, which is required to collect information about the insurance industry and monitor the industry for systemic risk.

In addition to our U.S. operations, we write personal auto physical damage and property damage liability insurance in Australia through a branch of one of our U.S. insurance subsidiaries. This insurance is offered solely through the Internet. We do not write auto bodily injury liability or medical payment insurance in Australia. There are two primary agencies that regulate insurance in Australia: the Australian Securities and Investment Commission, which regulates consumer disclosures, and the Australian Prudential Regulatory Authority, which regulates solvency. Both agencies enforce laws within their jurisdiction, issue regulations, take enforcement actions, and, in general, have broad regulatory powers. Progressive Direct Insurance Company has been issued licenses by both agencies and the licenses are in good standing.

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Statutory Accounting Principles

Our results are reported in accordance with accounting principles generally accepted in the United States of America (GAAP), which differ in certain respects from amounts reported under statutory accounting principles (SAP) prescribed by insurance regulatory authorities. Certain significant differences are described below:

Category	GAAP Accounting	SAP Accounting
Acquisition Expenses	Commissions, premium taxes, and other variable costs incurred in connection with the successful acquisition of new and renewal business are capitalized and amortized pro rata over the policy term as premiums are earned.	Commissions, premium taxes, and all other acquisition expenses are expensed as incurred.
Non-admitted Assets	Premiums receivable are reported net of an allowance for doubtful accounts.	Premiums receivable over 90 days past due are “non-admitted,” which means they are excluded from surplus. For premiums receivable less than 90 days past due, we also estimate a bad debt reserve.
	Furniture, equipment, application software, leasehold improvements, and prepaid expenses are capitalized and amortized over their useful lives or periods benefited.	Excluding computer equipment and operating software, the value of all other furniture, equipment, application software, leasehold improvements, and prepaid expenses, net of accumulated depreciation or amortization, is non-admitted against surplus. Computer equipment and operating software are capitalized, subject to statutory limitations based on surplus, and depreciated over three years.
	Deferred tax assets are recorded based on estimated future tax effects attributable to temporary differences. A valuation allowance would be recorded for any tax benefits that are not expected to be realized.	The accounting for deferred tax assets is consistent with GAAP, except for deferred tax assets that do not meet statutory requirements for recognition, which are non-admitted against surplus.
Reinsurance	Ceded reinsurance balances are shown as an asset on the balance sheet as “prepaid reinsurance premiums” and “reinsurance recoverables.”	Ceded unearned premiums are netted against the “unearned premiums” liability. Ceded unpaid loss and loss adjustment expense (LAE) amounts are netted against “loss and LAE reserves.” Only ceded paid loss and LAE are shown as a “reinsurance recoverables” asset.
Investment Valuation	Fixed-maturity securities, which are classified as available-for-sale, are reported at fair values.	Fixed-maturity securities are reported at amortized cost or the lower of amortized cost or fair value, depending on the NAIC designation of the security.
	Preferred stocks, both redeemable and nonredeemable, are reported at fair values.	Redeemable preferred stocks are reported at amortized cost or the lower of amortized cost or fair value, depending on the NAIC designation of the security. Nonredeemable preferred stocks are reported at fair value, consistent with GAAP.
Federal Income Taxes	Federal tax expense includes current and deferred income taxes.	For income statement reporting, federal tax expense only includes the current tax provision. Deferred taxes are posted to surplus. SAP deferred tax assets are subject to certain limitations on admissibility.

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Investments

Our principal investment goals are to manage our portfolio on a total return basis to support all of the insurance premiums that we can profitably write and contribute to our comprehensive income. Our portfolio is invested primarily in short-term and intermediate-term, investment-grade fixed-income securities. Our investment portfolio had a fair value of $19.0 billion at December 31, 2014, compared to $18.1 billion at December 31, 2013. Investment income is affected by the variability of cash flows to or from the portfolio, shifts in the type and quality of investments in the portfolio, changes in yield, and other factors. Total investment income, including net realized gains (losses) on securities, before expenses and taxes, was $632.6 million in 2014, compared to $740.4 million in 2013 and $749.8 million in 2012. On a pretax total return basis (i.e., total investment income plus changes in unrealized gains/losses), investment income was $747.9 million, $870.0 million, and $1,026.6 million for the years ended December 31, 2014, 2013, and 2012, respectively. For more detailed discussion, see Note 2 – Investments, Note 3 – Fair Value, and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Employees

The number of employees, excluding temporary employees, at December 31, 2014 was 26,501, all of whom were employed by subsidiaries of The Progressive Corporation.

Liability for Property-Casualty Losses and Loss Adjustment Expenses

The consolidated financial statements include the estimated liability for unpaid losses and loss adjustment expenses (LAE) of Progressive’s insurance subsidiaries. Our objective is to ensure that total reserves (i.e., case reserves and incurred but not recorded reserves, or “IBNR”) are adequate to cover all loss costs, while sustaining minimal variation from the time reserves are initially established until losses are fully developed. The liabilities for losses and LAE are determined using actuarial and statistical procedures and represent undiscounted estimates of the ultimate net cost of all unpaid losses and LAE incurred through December 31 of each year. These estimates are subject to the effect of future trends on claims settlement, among other factors. These estimates are continually reviewed and adjusted as experience develops and new information becomes known. Adjustments, if any, relating to accidents that occurred in prior years are reflected in the current year results of operations and are referred to as “development” of the prior year estimates. A detailed discussion of our loss reserving practices can be found in our “Report on Loss Reserving Practices,” which was filed with the Securities and Exchange Commission (SEC) on Form 8-K on August 8, 2014, as well as in section “V. Critical Accounting Policies” of our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report, which is included as Exhibit 13 to this Form 10-K. The accompanying tables present information concerning our property-casualty losses and LAE.

The following table provides a reconciliation of beginning and ending estimated liability balances for the last three years:

RECONCILIATION OF NET RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

(millions)	2014			2013		2012
Balance at January 1	$	8,479.7		$	7,838.4	$	7,245.8
Less reinsurance recoverables on unpaid losses	1,045.9			862.1		785.7
Net balance at January 1	7,433.8			6,976.3		6,460.1
Incurred related to:
Current year	13,330.3			12,427.3		11,926.0
Prior years	(24.1		)	45.1		22.0
Total incurred	13,306.2			12,472.4		11,948.0
Paid related to:
Current year	8,831.5			8,095.0		7,895.3
Prior years	4,237.0			3,919.9		3,536.5
Total paid	13,068.5			12,014.9		11,431.8
Net balance at December 31	7,671.5			7,433.8		6,976.3
Plus reinsurance recoverables on unpaid losses	1,185.9			1,045.9		862.1
Balance at December 31	$	8,857.4		$	8,479.7	$	7,838.4

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Our reserves developed favorably by $24.1 million in 2014, compared to unfavorable development of $45.1 million in 2013 and $22.0 million in 2012, which is reflected as “Incurred related to prior years” in the table above. Total development consists of net changes made by our actuarial department on prior accident year reserves, based on regularly scheduled reviews, claims settling for more or less than reserved, changes in reserve estimates by claim representatives, and emergence of unrecorded claims at rates different than anticipated.

During 2014, favorable reserve development in our Commercial Lines business was primarily related to favorable case reserve development on our high limit policies. This favorable development was partially offset by unfavorable development in our Agency auto business, which was primarily in our personal injury protection (PIP) loss reserves and our adjusting and other LAE reserves. Our Direct auto business experienced slight favorable development.

During 2013, unfavorable reserve development in our Commercial Lines business was primarily attributable to higher frequency and severity on late emerging IBNR claims primarily in bodily injury coverage for our truck business. In addition, unfavorable development in our Personal Lines business reflected unfavorable reserve development in our Agency auto business IBNR reserves due to higher frequency and severity on late emerging claims, offset in large part by favorable development in our Direct auto business due to lower than anticipated severity costs on case reserves. We also experienced unfavorable reserve development in our other businesses, primarily due to reserve increases in our run-off professional liability group business, based on internal actuarial reviews of our claims history.

During 2012, unfavorable reserve development in our personal auto product was primarily attributable to reserve development in our Florida PIP coverage and an increase in our estimate of bodily injury severity for accident year 2011. In addition, unfavorable development in our Commercial Lines business reflected higher than anticipated frequency and severity costs on late emerging claims and higher settlements on large losses. This unfavorable development was partially offset by favorable reserve adjustments, primarily in our loss adjustment expense reserves and our personal auto bodily injury reserves for accident years 2009 and 2008.

In establishing loss reserves, we take into account projected changes in claim severity caused by anticipated inflation and a number of factors that vary with the individual type of policy written. These severities are projected based on historical trends, adjusted for anticipated changes in underwriting standards, inflation, policy provisions, claims resolution practices, and general economic trends. These anticipated trends are reconsidered periodically based on actual development and are modified if necessary.

We have not entered into any loss reserve transfers or similar transactions having a material effect on earnings or reserves.

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ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSES DEVELOPMENT
($ in millions)
	2004		2005			2006			2007			2008			2009		2010		2011			2012			2013			2014
LIABILITY FOR UNPAID LOSSES AND LAE - GROSS	$	5,285.6	$	5,660.3		$	5,725.0		$	5,942.7		$	6,177.4		$	6,653.0	$	7,071.0	$	7,245.8		$	7,838.4		$	8,479.7		$	8,857.4
LESS: REINSURANCE RECOVERABLES ON UNPAID LOSSES	337.1		347.2			361.4			287.5			244.5			529.4		704.1		785.7			862.1			1,045.9			1,185.9
LIABILITY FOR UNPAID LOSSES AND LAE - NET1	4,948.5		5,313.1			5,363.6			5,655.2			5,932.9			6,123.6		6,366.9		6,460.1			6,976.3			7,433.8			7,671.5
PAID (CUMULATIVE) AS OF:
One year later	2,355.5		2,662.1			2,897.4			3,036.9			3,172.0			3,047.0		3,252.3		3,536.5			3,919.9			4,237.0
Two years later	3,430.6		3,931.0			4,240.4			4,361.4			4,427.8			4,348.4		4,724.0		5,111.6			5,580.8			—
Three years later	3,999.9		4,584.7			4,856.2			4,966.1			5,031.7			5,007.9		5,459.4		5,876.1			—			—
Four years later	4,269.6		4,839.1			5,121.9			5,227.5			5,314.7			5,323.9		5,794.3		—			—			—
Five years later	4,368.6		4,948.7			5,229.0			5,340.1			5,452.0			5,467.9		—		—			—			—
Six years later	4,419.2		4,995.6			5,282.1			5,402.3			5,521.1			—		—		—			—			—
Seven years later	4,445.7		5,023.7			5,317.8			5,443.0			—			—		—		—			—			—
Eight years later	4,459.8		5,042.3			5,344.5			—			—			—		—		—			—			—
Nine years later	4,467.4		5,061.2			—			—			—			—		—		—			—			—
Ten years later	4,484.2		—			—			—			—			—		—		—			—			—
LIABILITY RE-ESTIMATED AS OF:
One year later	4,592.6		5,066.2			5,443.9			5,688.4			5,796.9			5,803.2		6,124.9		6,482.1			7,021.4			7,409.7
Two years later	4,485.2		5,130.5			5,469.8			5,593.8			5,702.1			5,647.7		6,074.4		6,519.6			6,994.7			—
Three years later	4,501.6		5,093.6			5,381.9			5,508.0			5,573.8			5,575.0		6,075.9		6,495.4			—			—
Four years later	4,471.0		5,046.7			5,336.5			5,442.1			5,538.5			5,564.6		6,050.6		—			—			—
Five years later	4,475.5		5,054.6			5,342.8			5,452.8			5,580.0			5,605.6		—		—			—			—
Six years later	4,486.4		5,060.8			5,352.8			5,475.6			5,609.1			—		—		—			—			—
Seven years later	4,486.3		5,070.2			5,369.7			5,501.3			—			—		—		—			—			—
Eight years later	4,493.3		5,081.7			5,391.2			—			—			—		—		—			—			—
Nine years later	4,497.5		5,100.6			—			—			—			—		—		—			—			—
Ten years later	4,518.8		—			—			—			—			—		—		—			—			—
NET CUMULATIVE DEVELOPMENT FAVORABLE/ (UNFAVORABLE)	$	429.7	$	212.5		$	(27.6	)	$	153.9		$	323.8		$	518.0	$	316.3	$	(35.3	)	$	(18.4	)	$	24.1
PERCENTAGE2	8.7		4.0			(0.5		)	2.7			5.5			8.5		5.0		(0.5		)	(0.3		)	0.3
RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - GROSS	$	5,031.1	$	5,719.3		$	6,060.7		$	6,196.1		$	6,338.8		$	6,395.3	$	6,957.0	$	7,443.1		$	8,026.7		$	8,513.4
LESS: RE-ESTIMATED REINSURANCE RECOVERABLES ON UNPAID LOSSES	512.3		618.7			669.5			694.8			729.7			789.7		906.4		947.7			1,032.0			1,103.7
RE-ESTIMATED LIABILITY FOR UNPAID LOSSES AND LAE - NET1	$	4,518.8	$	5,100.6		$	5,391.2		$	5,501.3		$	5,609.1		$	5,605.6	$	6,050.6	$	6,495.4		$	6,994.7		$	7,409.7
GROSS CUMULATIVE DEVELOPMENT: FAVORABLE/ (UNFAVORABLE)	$	254.5	$	(59.0	)	$	(335.7	)	$	(253.4	)	$	(161.4	)	$	257.7	$	114.0	$	(197.3	)	$	(188.3	)	$	(33.7	)

¹Represents loss and LAE reserves net of reinsurance recoverables on net unpaid losses at the balance sheet date.

²Cumulative development ÷ liability for unpaid losses and LAE - net.

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The above table presents the development of balance sheet liabilities for losses and LAE from 2004 through 2013. The top line of the table shows the estimated liability for unpaid losses and LAE recorded at December 31 for each of the indicated years for the property-casualty insurance subsidiaries only. This liability represents the estimated amount of losses and LAE for claims that were unpaid at the balance sheet date, including IBNR. The table also presents the re-estimated liability for unpaid losses and LAE on a gross and net basis, with separate disclosure of the re-estimated reinsurance recoverables on unpaid losses.

The upper section of the table (labeled “Paid (Cumulative) as of”) shows the cumulative amount paid with respect to the previously recorded liability as of the end of each succeeding year. The middle portion of the table (labeled “Liability Re-estimated as of”) shows the re-estimated amount of the previously recorded liability based on experience as of the end of each succeeding year. The re-estimated amount is the sum of the paid amounts above and the outstanding reserve for occurrences prior to the balance sheet date. The estimate is increased or decreased as more information about the claims becomes known for individual years. For example, as of December 31, 2014, our insurance subsidiaries had paid $5,061.2 million of the currently estimated $5,100.6 million of losses and LAE that had been unpaid at the end of 2005; thus, an estimated $39.4 million of losses incurred through 2005 remain unpaid as of the current financial statement date.

The “Net Cumulative Development” represents the aggregate change in the ultimate loss estimate over all prior years. For example, the 2004 liability has developed favorably by $429.7 million over ten years. That amount has been reflected in income over the ten years and had the largest impact on income in calendar year 2005. The effects on income during the past three years due to changes in estimates of the liabilities for losses and LAE are shown in the reconciliation table on page 11 as the “prior years” contribution to incurred losses and LAE.

In evaluating this information, note that each cumulative development amount includes the effects of all changes in amounts during the current year for prior periods. For example, the amount of the development related to losses settled in 2014, but incurred in 2011, will be included in the cumulative development amount for years 2011, 2012, and 2013. Conditions and trends that have affected development of the liability in the past may not necessarily occur in the future. Accordingly, it generally is not appropriate to extrapolate future development based on this table.

Our bodily injury severity change was much lower than we expected between 2004 and 2005; thus, the reserve run-off for these years was very favorable following the end of each year. The favorable reserve development for 2007 through 2010 was about 3% to 9% of our original carried reserves, which primarily reflects the decreases in severity between our original estimate and what we experienced in both our personal auto and commercial auto businesses during that period. For 2011, 2012, and 2013, we experienced very minimal development, or less than 1% of our original estimate.

Although the detail is not presented in the table on page 13, we also re-estimate the reinsurance recoverables on unpaid losses each year. The top of the table shows the amount of reinsurance recoverables on unpaid losses that we had at the end of the calendar year, while the bottom shows the reserves re-estimated based on development in subsequent years. For example, at December 31, 2013, we estimated our reinsurance recoverables on unpaid losses to be $1,045.9 million. During 2014, these reserves developed unfavorably by $57.8 million, bringing the re-estimated reinsurance recoverables on unpaid losses to $1,103.7 million, as shown at the bottom of the table. Over the last ten years, we have experienced unfavorable development in our reinsurance recoverables on unpaid losses. The majority of this development reflects our continuing process of re-evaluating Michigan PIP claims that require lifetime reserve estimates. As a result, we have increased both our direct reserves and corresponding reinsurance recoverables, since these claims are reinsured through the Michigan Catastrophic Claims Association (MCCA) state-mandated plan. The MCCA is funded through an assessment that insurance companies collect from policyholders in the state; therefore, our exposure to losses from the failure of this reinsurer is minimal.

The Analysis of Loss and Loss Adjustment Expenses Development table on page 13 is constructed from Schedule P, Part-1, from the Consolidated Annual Statements of Progressive’s insurance subsidiaries, as filed with the state insurance departments.

(d) Financial Information About Geographic Areas

We operate our businesses throughout the United States; we also sell personal auto physical damage and property damage liability insurance via the Internet in Australia. For the years ended December 31, 2014, 2013, and 2012, net premiums earned in our Australian business were $17.1 million, $13.0 million, and $7.1 million, respectively. The amount of Australian assets is immaterial to our consolidated financial condition.

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(e) Available Information

Our website is located at progressive.com. As soon as reasonably practicable, we make all documents that we file with, or furnish to, the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, available free of charge via our website at progressive.com/investors. These reports are also available on the SEC’s website: http://www.sec.gov.

ITEM 1A. RISK FACTORS

Progressive’s business involves various risks and uncertainties, certain of which are discussed in this section. Management divides these risks into four broad categories in assessing how they may affect our financial condition and operating results, as well as our ability to achieve our business objectives:

• Insurance Risks - risks associated with assuming, or indemnifying for, the losses or liabilities incurred by policyholders

• Operating Risks - therisks stemming from external or internal events or circumstances that directly or indirectly may affect our insurance operations

• Market Risks - changes in the value of assets held in our investment portfolios, which might result from a variety of factors impacting the investment marketplace generally, or the sectors, industries, or individual securities in which we have invested, and

• Credit and Other Financial Risks - the 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.

In addition, we discuss below certain risks associated with our entering into an agreement to acquire a controlling interest in ARX Holding Corp.

Although we have organized risks generally according to these categories in the discussion below, many of the risks may have ramifications in more than one category. For example, although presented as an Operating Risk below, governmental regulation of insurance companies also affects our underwriting, investing and financing activities, which are addressed separately under Insurance Risks, Market Risks, and Credit Risks below. These categories, therefore, should be viewed as a starting point for understanding the significant risks facing us and not as a limitation on the potential impact of the matters discussed.

It also should be noted that our business and that of other insurers may be adversely affected by a downturn in general economic conditions and other forces beyond our control. Issues such as unemployment rates, the number of vehicles sold, inflation or deflation, consumer confidence, and construction spending, among a host of other factors, will have a bearing on the amount of insurance that is purchased by consumers and small businesses. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. If any such risks or uncertainties, or any of the following risks or uncertainties, develop into actual events, we could experience a materially adverse effect on our business, financial condition, cash flows, or results of operations. In that case, the market price of our common shares or debt securities could decline materially.

This information is not all encompassing and should be considered carefully together with the other information contained in this report and in the other reports and materials filed by us with the SEC, as well as news releases and other information we publicly disseminate from time to time.

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I. Insurance Risks

Our success depends on our ability to underwrite risks accurately and to charge adequate rates to policyholders.

Our financial condition, cash flows, and results of operations depend on our ability to underwrite and set rates accurately for a full spectrum of risks. A primary role of the pricing function is to ensure that rates are adequate to generate sufficient premiums to pay losses, loss adjustment expenses, and underwriting expenses, and to earn a profit.

Pricing involves the acquisition and analysis of historical accident and loss data, and the projection of future accident trends, loss costs and expenses, and inflation trends, among other factors, for each of our products in multiple risk tiers and many different markets. Our ability to price accurately is subject to a number of risks and uncertainties, including, without limitation:

• the availability of sufficient, reliable data

• our ability to conduct a complete and accurate analysis of available data

• uncertainties inherent in estimates and assumptions, generally

• 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

• the development, selection, and application of appropriate rating formulae or other pricing methodologies

• our ability to innovate with new pricing strategies, and the success of those strategies

• our ability to implement rate changes and obtain any required regulatory approvals on a timely basis

• our ability to predict policyholder retention accurately

• unanticipated court decisions, legislation, or regulatory actions

• the frequency and severity of catastrophic events, such as hurricanes, hail storms, floods, other severe weather, and terrorist events

• our ability to understand the impact of ongoing changes in our claims settlement practices

• changing vehicle usage and driving patterns, as influenced by oil and gas prices, among other factors

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

• 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

• unforeseen disruptive technologies and events, and

• unanticipated changes in auto repair costs, auto parts prices, and used car prices.

The realization of one or more of these risks may result in our pricing being based on inadequate or inaccurate data or inappropriate analyses, assumptions, or methodologies, and may cause us to estimate incorrectly future changes in the frequency or severity of claims. As a result, we could underprice risks, which would negatively affect our underwriting profit margins, or we could overprice risks, which could reduce our competitiveness and growth prospects. In either event, our operating results, financial condition, and cash flows could be materially adversely affected. In addition, underpricing insurance policies over time could erode the capital position of one or more of our insurance subsidiaries, thereby constraining our ability to write new business.

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Our success depends on our ability to establish accurate loss reserves.

Our financial statements include loss reserves, which represent our best estimate of the amounts that the subsidiaries ultimately will pay on claims that have been incurred, and the related costs of adjusting those claims, as of the date of the financial statements. There is inherent uncertainty in the process of establishing property and casualty insurance loss reserves, which can arise from a number of factors, including:

• the availability of sufficient, reliable data

• 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

• unexpected changes in medical and auto repair costs

• unanticipated changes in governing statutes and regulations

• new or changing interpretations of insurance policy provisions and coverage-related issues by courts

• the effects of changes in our claims settlement practices

• our ability to recognize fraudulent or inflated claims

• the accuracy of our estimates regarding claims that have been incurred but not recorded as of the date of the financial statements

• the accuracy and adequacy of actuarial techniques and databases used in estimating loss reserves, and

• the accuracy and timeliness of estimates of loss and loss adjustment expenses as determined by our employees for different categories of claims.

As a result of these and other risks and uncertainties, 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 materially adverse effect on our results of operations, liquidity, and financial position. Further information on our loss reserves can be found in the “Liability for Property-Casualty Losses and Loss Adjustment Expenses” discussion beginning on page 11 of this report, as well as our “Report on Loss Reserving Practices,” which was filed with the SEC on Form 8-K on August 8, 2014.

Our insurance operating results may be materially adversely affected by severe weather conditions or other catastrophic events.

Catastrophes can be caused by natural events, such as hurricanes, tornadoes, windstorms, floods, earthquakes, hailstorms, severe winter weather, and fires, or other events, such as explosions, terrorist attacks, riots, and hazardous material releases. The incidence and severity of such events are inherently unpredictable. Moreover, changing climate conditions, whether due to an increase in average temperatures (global climate change) or other causes, may increase how often severe weather events and other natural disasters occur and how much insured damage they cause.

The extent of insured losses from a catastrophe is a function of both our total net insured exposure in the area affected by the event and the nature and severity of the event. We use catastrophe modeling tools and third-party experts to help estimate our exposures to such events. Those tools and expert opinions are based on historical data and other assumptions that limit their reliability, and they may become even less reliable as climatic conditions change. As a result, our forecasting efforts may generate projections that prove to be materially inaccurate. An increase in the frequency or severity of catastrophes during a given period could materially adversely affect our financial performance, cash flows, and results of operations.

II. Operating Risks

We compete in the automobile insurance and other property-casualty markets, which are highly competitive.

We face vigorous competition from large, well-capitalized national and international companies, as well as smaller regional insurers. Other large national and international insurance or financial services companies also may enter these markets in the future. Many of these companies have substantial resources, experienced management, and strong marketing, underwriting, and pricing capabilities. The property and casualty insurance industry is a relatively mature industry, in which brand recognition, marketing skills, operational effectiveness (including, for example, rate and claim-paying accuracy, customer experience, and application of information and other technologies), pricing, scale, and cost control are major competitive factors.

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Our business focuses on insurance for personal autos and recreational vehicles and on commercial auto policies for small businesses, all of which are highly competitive markets. If our competitors offer similar insurance products at lower prices, offer such insurance products bundled with other products or services that we do not offer, or engage in other successful competitive initiatives, our ability to generate new business or to retain a sufficient number of our existing customers could be seriously compromised. In addition, due to our focus on the auto insurance market, we may be more sensitive than other insurers to trends that could affect auto insurance coverages and rates over time. For example, if governmental mandates or restrictions, economic conditions, demographic trends, changing driving patterns, rising gasoline prices, advancements in vehicle technology or safety features, or other factors, were to result in decreased demand for auto insurance or decreased auto insurance rates for an extended period, the automobile insurance market as a whole could shrink and our ability to generate revenue growth could be significantly impaired.

Historically, the auto insurance industry has been known as a cyclical industry, with periods of relatively strong profitability being followed by increased pricing competition among insurers. This price competition, which is sometimes referred to as a “soft market,” can adversely affect revenue and profitability levels. Unexpected increases in the insurers’ underlying costs (such as vehicle repair costs, medical costs, and the expenses to resolve claims) can reduce profits or result in underwriting losses. As the insurers recognize this situation (which can occur at different times for different companies, as a result of varying loss cost experiences, trend recognition capabilities, and profitability goals), the historical reaction has been for insurers to raise their rates (sometimes referred to as a “hard market”) in an attempt to restore profitability to acceptable levels. As more insurers react in this way, profit levels in the industry may increase to a point where some insurers begin to lower their rates, starting the cycle over again. In the past, this cycle has generally played out over a number of years. We cannot be certain whether and to what extent such cyclicality is currently impacting the auto insurance market, nor can we predict whether it will do so in the future.

The highly competitive nature of the insurance marketplace could result in the consolidation of our competition, or in the failure of one or more competitors. The concentration of premium volume in a reduced number of major competitors could significantly alter the competitive landscape in ways that cannot be predicted, but which may or may not be favorable for Progressive’s business prospects at that time. In addition, in the event of a failure of a major insurer or a state-sponsored catastrophic fund, we could be adversely affected, as our company and other insurance companies may be required under the laws of various jurisdictions to absorb the losses of the failed insurer or fund, and we could be faced with an unexpected surge in new business from a failed insurer’s former policyholders, which could strain our service capabilities in the near term.

Our success depends on our ability to innovate effectively, respond to our competitors’ initiatives, and efficiently manage complexity, while delivering high quality products and services.

From time to time, we undertake strategic initiatives to maintain and improve our competitive position in auto insurance markets. Based on a culture that encourages innovation, these strategies at times involve significant departures from our, and/or our competitors’, then-current or historical modes of doing business, and must be instituted in the context of a complicated regulatory environment. These innovations also may require extensive modifications to our systems and processes, and thus may add to our costs and entail a high degree of complexity and risk, which makes their implementation a challenge. In addition, our efforts may disrupt our relationships with certain of our customers and producers (i.e., agents and brokers). Many of these initiatives are also implemented in cooperation with, or in reliance on, third-party vendors and their systems, which may further limit our control of implementation, quality, customer experiences, and successful outcomes. Our efforts ultimately may not achieve the business goals that we have set. Our ability to develop and implement such strategic initiatives that are accepted and valued by our customers and create a sustainable advantage is critical, however, to maintaining or enhancing our competitive position; if we fail to do so, or if we are unable to maintain the advantage over our competition, our business could be materially adversely affected.

At the same time, innovations by competitors or other market participants may increase the level of competition in the industry and adversely affect our competitive position. These developments can include product, pricing, or marketing innovations, new or improved services, technological advances, or new ways of doing business, among other initiatives. Recent examples of significant developments in the marketplace include: new ways for customers to shop and compare prices from multiple companies, the growth in mobile communications and consumers’ desire to transact business on mobile devices, the prominence of social media as a source of information for consumers, and the availability of very large volumes of data and the challenges related to analyzing those data sets (sometimes referred to as “Big Data”). Our ability to react to such advances, develop and maintain winning strategies, and then navigate the new competitive environment is important to our success.

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Ongoing competitive, technological, regulatory, and other developments result in significant levels of complexity in our products and in the systems and processes we use to run our business. This complexity may create barriers to implementing or defending certain new ideas or providing high-quality products and customer experiences, may require us to modify our business practices, to adopt new systems, or to upgrade or replace outdated systems, each at significant expense, and may lead to the increased possibility of error in executing our business strategies. In addition, we must make difficult decisions regarding the optimal allocation of available resources (such as information technology resources) for competing initiatives or projects.

Complexity in our industry is compounded by the proliferation of patents related to new ways in which vehicle insurance is being marketed, sold, and serviced, which may result in legal challenges to certain of our business practices by other insurance companies and non-insurance entities alleging that we are violating their patent rights.  Similarly, we may seek or obtain patent protection for innovations developed by us.  However, defending our business practices against patent challenges, and enforcing and defending our patent rights, including if necessary through litigation, can be time consuming and expensive, and the results are inherently uncertain, further complicating business plans related to these efforts.

If we are unable to manage this complexity effectively, to bring new ideas to market, to allocate and prioritize appropriately our resources, or to prevent errors, our businesses could experience a decreased ability to compete effectively for insurance business, poor experiences for customers, substantially increased costs, liability to third parties, the need to modify our business processes, regulatory investigations and sanctions, and damage to our brand.

We must develop and maintain a brand that is recognized and trusted by consumers.

It is critical to our business that consumers recognize and trust the Progressive brand. We undertake distinctive advertising and marketing campaigns and other efforts to improve brand recognition, enhance consumers’ perceptions of us, generate new business, and increase the retention of our current customers. We believe that improving the effectiveness of our advertising and marketing campaigns relative to those of our competitors is particularly important given the significance of brand and reputation in the marketplace and the continuing high level of advertising and marketing efforts and related expenditures within the automobile insurance market. If our campaigns are unsuccessful or are less effective than those of competitors, or if our reliance on a particular spokesperson or character is compromised, our business could be materially adversely affected.

Our brand also could be adversely affected by incidents that reflect negatively on our company. These situations might include, among others, failing to protect sensitive customer information, systems failures, effects of actual or perceived vulnerabilities to cyber attacks (such as computer hacking, data theft, system disruption, and viruses and malware), errors in handling a customer’s policy, inappropriate handling of claims, misconduct by our officers, directors or employees or others acting on our behalf, inability to service outstanding policies or write new business due to our systems failures or the failure of third-party systems that we use, facility shut-downs or other causes, litigation or regulatory actions challenging our business practices, and actions by our other business partners, including unaffiliated businesses through which we offer bundled products (such as homeowners insurance), and many of the other matters that are discussed in these Risk Factors. Moreover, the negative impacts of these or other events may be aggravated as the perceptions of consumers and others are formed based on modern communication and social media tools over which we have no control.

Our ability to attract, develop, and retain talented employees, managers, and executives, and to maintain appropriate staffing levels, is critical to our success.

Our success depends on our ability to attract, develop, compensate, motivate, and retain talented employees, including executives, other key managers, and employees with strong technical, analytical, and other skills necessary for us to run our business. Our loss of certain key officers and employees, or the failure to attract or develop talented executives and managers with diverse backgrounds and experiences, could have a materially adverse effect on our business.

In addition, we must forecast sales and claims volume and other factors in changing business environments (for multiple business units and in many geographic markets) with reasonable accuracy and adjust our hiring and training programs and employment levels accordingly. Our failure to recognize the need for such adjustments, or our failure or inability to react appropriately on a timely basis, could lead either to over-staffing (which would adversely affect our cost structure) or under-staffing (impairing quality and our ability to service our ongoing and new business) in one or more business units or locations. In either such event, our financial results, customer relationships, employee morale, and brand could be materially adversely affected.

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

The Progressive Corporation and its insurance subsidiaries are subject to a variety of complex laws and regulations.

Progressive’s insurance businesses operate in highly regulated environments. Our insurance subsidiaries are subject to regulation and supervision by state insurance departments in all 50 states, the District of Columbia, and Australia, each of which has a unique and complex set of laws and regulations. In addition, certain federal laws impose additional requirements on businesses, including insurers, in a wide range of areas, such as the use of credit information, privacy, and the reimbursement of certain medical costs incurred by the government. Our insurance subsidiaries’ ability to implement business plans and remain competitive while complying with these laws and regulations, and to obtain necessary regulatory action in a timely manner, is and will continue to be critical to our success.

Most jurisdictions impose restrictions on, or require prior regulatory approval of, various actions by regulated insurers, which may adversely affect our insurance subsidiaries’ ability to operate, innovate, and obtain necessary rate adjustments in a timely manner. Our compliance efforts are further complicated by changes in laws or regulations applicable to insurance companies, or by court-imposed interpretations of those laws or regulations, such as, in recent years, matters concerning the use of nonpublic consumer information and related privacy issues, the use of credit scoring in underwriting, procedures for settling claims with our insureds and claimants, and efforts to freeze, set, or roll back insurance premium rates or limit the rate of return that an insurance company may earn. Insurance laws and regulations may limit, among other things, our insurance subsidiaries’ ability to underwrite and price risks accurately, prevent our subsidiaries from obtaining timely rate changes to recognize increased or decreased costs, restrict our subsidiaries’ ability to discontinue unprofitable businesses or exit unprofitable markets, prevent insurers from terminating policies under certain circumstances, prescribe the form and content of certain disclosures and notices to policyholders, and dictate the types of investments that an insurance company may hold. Moreover, inconsistencies between requirements at the state and federal level may further complicate our compliance efforts, potentially resulting in additional costs being imposed on us. In addition, laws in certain jurisdictions mandate that insurance companies pay assessments in a number of circumstances, including assessments to pay claims upon the insolvency of other insurance companies or to cover losses in government-provided insurance programs for high risk auto and homeowners coverages. Compliance with laws and regulations often results in increased costs, which can be substantial, to our insurance subsidiaries. These costs, in turn, may adversely affect our profitability or our ability or desire to grow or operate our business in the applicable jurisdictions.

The actual or alleged failure to comply with this complex variety of laws and regulations by us or other companies in the insurance, financial services, or related industries, also could result in actions or investigations by regulators, state attorneys general, federal officials, or other law enforcement officials. Such actions and investigations, and any determination that we have not complied with an applicable law or regulation, could potentially lead to significant monetary payments, fines and penalties, adverse publicity and damage to our reputation in the marketplace, and in certain cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions. In addition, The Progressive Corporation and its subsidiaries could face individual and class action lawsuits by insureds and other parties for alleged violations of certain of these laws or regulations.

New federal or state legislation or regulations may be adopted in the future which could adversely affect our operations or ability to write business profitably in one or more jurisdictions. From time to time, the United States Congress and certain federal agencies investigate the current condition of the insurance industry to determine whether federal regulation is necessary. At this time, we are unable to predict whether any additional state or federal laws or regulations will be enacted as a result of legislative, regulatory or reform efforts, and how and to what extent such laws and regulations would affect our businesses.

Insurance regulation may create risks and uncertainties for Progressive’s insurance subsidiaries in other ways as well. For further information on these risks and uncertainties, see the “Insurance Regulation” discussion beginning on page 8 of this report.

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Our success depends on our ability to adjust claims accurately.

We must accurately evaluate and pay claims that are made under our insurance policies. Many factors can affect our ability to pay claims accurately, including the training, experience, and skill of our claims representatives, the extent of and our ability to recognize and respond to fraudulent or inflated claims, the claims organization’s culture and the effectiveness of its management, our ability to develop or select and implement appropriate procedures, technologies, and systems to support our claims functions, and the effectiveness of our Service Center program and other methods of resolving claims. Our failure to pay claims fairly, accurately, and in a timely manner, or to deploy claims resources appropriately, could result in unanticipated costs to us, lead to material litigation, undermine customer goodwill and our reputation in the marketplace, and impair our brand image and, as a result, materially adversely affect our competitiveness, financial results, prospects, and liquidity.

Lawsuits challenging our business practices, and those of our competitors and other companies, are pending and more may be filed in the future.

The Progressive Corporation and/or its subsidiaries are named as defendants in class action and other lawsuits challenging various aspects of the subsidiaries’ business operations. Other such litigation may arise in the future concerning similar or other business practices. These lawsuits have recently included cases alleging damages as a result of our subsidiaries’ use of credit in underwriting and related requirements under the U.S. Fair Credit Reporting Act; methods used for evaluating and paying certain bodily injury, personal injury protection, and medical payment claims; other claims handling procedures; challenges to our direct repair program and Service Center program; interpretations of the provisions of our insurance policies; policy implementation and renewal procedures; and employment-related litigation, including federal wage and hour claims, among other matters. From time to time, we also may be involved in litigation or other disputes alleging that certain of our subsidiaries’ business practices or systems violate the patent, trademark, or other intellectual property rights of third parties. Additional litigation may be filed against us concerning allegations of other general liability theories. In addition, lawsuits have been filed, and other lawsuits may be filed in the future, against our competitors and other businesses, and although we are not a party to such litigation, the results of those cases may create additional risks for, and/or impose additional costs and/or limitations on, our subsidiaries’ business operations.

Lawsuits against us often seek significant monetary damages and injunctive relief. The potential for injunctive relief can threaten our use of important business practices, including how vehicles are repaired and other claims are settled. Moreover, the resolution of individual or class action litigation in insurance or related fields may lead to a new layer of court-imposed regulation, resulting in material increases in our costs of doing business.

Litigation is inherently unpredictable. Except to the extent we have established reserves with respect to particular lawsuits that are currently pending against us, we are unable to predict the effect, if any, that these pending or any future lawsuits may have on our business, operations, profitability, or financial condition. For further information on pending litigation, see Note 12 - Litigation in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Our business could be materially and adversely affected by a security breach or other attack involving our computer systems or the systems of one or more of our vendors.

Our business requires that we build and maintain large and complex computer systems to run our operations and to store the significant volume of data that we acquire, including the personal confidential information of our customers and employees and our intellectual property, trade secrets, and other sensitive business and financial information. These systems are subject to attacks by sophisticated third parties with substantial computing resources and capabilities. Such attacks may include, among other things, attempts to gain unauthorized access to:

• steal, corrupt, or destroy data

• misappropriate funds

• disrupt or shut down our systems

• deny customers, agents, brokers, or others access to our systems, or

• infect our systems with viruses or malware.

Similarly, an employee, consultant, agent, or other person with legitimate access to our systems may take actions, or be the subject of a security breach or cyber attack, which could result in improper or unauthorized access to our systems, and in the loss, corruption, or theft of our intellectual property or the personal information of our customers or employees.

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We also conduct significant business functions and computer operations using the systems of third-party vendors, which may provide software, data storage, communication, and other computer services to us (some of which may be referred to as “cloud computing”). These third-party systems may experience cyber attacks and other security breaches, along with the possible risk of loss, corruption, or unauthorized publication of Progressive’s information or the confidential information of our customers and employees. These relationships present further risk management challenges for us, including, among others: confirming and monitoring the third-party’s security measures; the potential for improper handling of or access to, or the inability to retrieve, our data; and data location uncertainty and the possibility of data storage in inappropriate jurisdictions, where laws or security measures may be inadequate.

We undertake substantial efforts to protect our systems and sensitive or confidential information. These efforts include internal processes and technological defenses that are preventative or detective, and other controls designed to provide multiple layers of security protection. Examples include physical security measures, access and password policies, firewalls, systems monitoring, malicious code protection, network and host-based intrusion detection and prevention measures, data loss prevention measures, configuration assurance, data encryption, and event management, as well as third-party testing. In addition, we seek to protect the security and confidentiality of information provided to our vendors under “cloud computing” or other arrangements through appropriate risk evaluation, security and financial due diligence, contracts designed to set and maintain high security and confidentiality standards, and ongoing testing, auditing, and evaluation of third-party compliance with the required standards. While we expend significant resources on these defensive measures, there can be no assurance that we will be successful in preventing attacks or detecting and stopping them once they have begun.

Our business could be significantly damaged by a security breach, data loss or corruption, or cyber attack. In addition to the potentially high costs of investigating and stopping such an event and implementing necessary fixes, we could incur substantial liability if confidential customer information is stolen or if another party’s systems are adversely affected. In addition, such an event could cause a significant disruption of our ability to conduct our insurance operations, adversely affect our competitive position if material trade secrets or other confidential information are stolen, and have severe ramifications on our reputation and brand, potentially causing customers to refrain from buying insurance from us or other businesses to refrain from doing business with us. We have elected to self-insure these risks at this time. The occurrence of a security breach, data loss or corruption, or cyber attack, if sufficiently severe, could have a materially adverse effect on our business results, prospects, and liquidity.

We also rely heavily on credit card acceptance for payment of premiums and claims deductibles. Data security standards for merchants and service providers that accept credit card payments are prescribed by the Payment Card Industry Security Standards Council (PCI), an independent body formed by an association of the major credit card vendors. These standards are intended to promote a common set of data security measures that companies accepting credit card payments, such as Progressive, must satisfy with respect to the handling of sensitive information. While the PCI standards set a high bar for data security, compliance with them does not alone ensure that sensitive information will be maintained on a secure basis. In September 2014, an independent organization recognized by PCI for such purposes, recertified Progressive as being in compliance with the current PCI standards. The PCI data security standards, however, will likely evolve over time to address emerging payment security risks and other issues, requiring additional compliance efforts by us and annual recertification of our processes. Our intention is to maintain compliance with PCI's data security standards. The failure to do so could result in contractual fines or disruption of our ability to receive credit card payments.

Our business depends on the secure and uninterrupted operation of our facilities, systems, and business functions.

Our business is highly dependent upon our employees’ ability to perform, in an efficient and uninterrupted manner, necessary business functions (such as Internet support and 24-hour call centers), processing new and renewal business, and processing and paying claims and other obligations. Our facilities and systems could become unavailable, inoperable, or otherwise impaired from a variety of causes, including, without limitation, natural events, such as hurricanes, tornadoes, windstorms, earthquakes, severe winter weather and fires, or other events, such as explosions, terrorist attacks, computer security breaches or cyber attacks (as discussed above), riots, hazardous material releases, medical epidemics, utility outages, interruptions of our data processing and storage systems or the systems of third-party vendors, or unavailability of communications facilities. Likewise, we could experience a failure or corruption of one or more of our information technology, telecommunications, or other systems for various reasons, including failures that might occur as existing systems are replaced or upgraded.

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The shut-down or unavailability of one or more of our systems or facilities for any reason could significantly impair our ability to perform critical business functions on a timely basis. In addition, many of our critical business systems interface with and depend on third-party systems; we could experience service denials if demand for a third party’s services exceeds capacity or if a third-party system fails or experiences an interruption. If sustained or repeated, and if an alternate system, process, or vendor is not immediately available to us, such events could result in a deterioration of our ability to write and process new and renewal business, provide customer service, resolve and pay claims in a timely manner, or perform other necessary business functions. Any such event could have a material adverse effect on our business results, prospects, and liquidity, as well as damage to customer goodwill and to our brand.

We maintain insurance on our real property and other physical assets, including coverage for losses due to business interruptions caused by covered property damage. However, the insurance will not compensate us for losses that may occur due to disruptions in service as a result of a computer, data processing, or telecommunications systems failure, cyber attack, or other event that is unrelated to covered property damage, nor will the insurance necessarily compensate us for all losses resulting from covered events. To help maintain functionality and reduce the risk of significant interruptions of our operations, we maintain back-up systems or facilities for certain of our systems. In addition, if such a significant interruption occurs or is threatened, we have developed processes designed to maintain certain of our business operations and, if necessary, to recover our systems after such an event has occurred. We still may be exposed, however, should these measures prove to be unsuccessful or inadequate to protect against interruptions of systems where no back-up currently exists or against severe, multiple, or prolonged service interruptions. We have established emergency management teams, which are responsible for responding to business disruptions and other risk events. The teams’ ability to respond successfully may be limited depending on the nature of the event, the completeness and effectiveness of our plans to maintain business continuity and recover our systems upon the occurrence of such an event, and other factors beyond our control.

We rely on access to various financial networks to process payments received from our customers. These include credit card and debit card networks and the Automated Clearing House (ACH) network; other such networks or payment systems may be developed in the future. Our ability to participate in these networks is dependent on our compliance with applicable laws and regulations and with the complex rules of each network and any related industry supervisory authorities. If we fail to comply with legal requirements or a network’s rules, we could be assessed significant monetary fines and other penalties, including, in certain cases, the termination of our right to use the applicable network or system. Such fines and penalties, and any disruption in or termination of our ability to process customer payments electronically, could materially adversely affect our business and our brand.

Our business is also highly dependent on access to, and the operation of, the financial markets and related facilities to provide us with the ability to liquidate securities and transfer or receive funds on a timely basis. Disruptions in financial markets, or an interruption or breakdown in the federal wire transfer systems, could limit our ability to meet payment obligations. A mismatch or timing difference between our cash inflows and our cash needs, or the inability to convert investment securities into cash when needed, also could adversely affect our ability to make timely payments.

III. Market Risks

The performance of our fixed-income and equity investment portfolios is subject to a variety of investment risks.

Our investment portfolio is comprised principally of fixed-income securities and common equities. Our fixed-income portfolio is actively managed by our investment group and includes short-term investments, fixed-maturity securities, and preferred stocks. The performance of the fixed-income portfolio is subject to a number of risks, including:

• 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. This risk includes the possibility of permanent loss. In the case of governmental issuers, the risk includes the potential for unbalanced budgets, required austerity measures, debt defaults, bankruptcies, or other social or political turmoil.

• 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.

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• 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. Disruptions in the financial markets, or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us.

In addition, the success of our investment strategies and asset allocations in the fixed-income portfolio may vary depending on the market environment. The fixed-income portfolio’s performance also may be adversely impacted if, among other factors: there is a deterioration in the underlying businesses of the issuers of the securities that we purchase; credit ratings assigned to such securities by nationally recognized statistical rating organizations are based on incomplete or inaccurate information or otherwise prove unwarranted; or our risk mitigation strategies are ineffective for the applicable market conditions.

The common equity portfolio is primarily managed by a third party to track the Russell 1000 Index, with a small portion actively managed by external investment advisory firms. Our equity investments are subject to general movements in the values of equity markets and to the changes in the prices of the securities we hold. An investment portfolio that is designed to track an index, such as the Russell 1000, or that follows a specific investment discipline, such as value investing, does not reduce the risks inherent in equity investing and is not necessarily less risky than other equity investment strategies. Equity markets, sectors, industries, and individual securities may be subject to high volatility and to long periods of depressed or declining valuations, and also may be subject to some of the same risks that affect our fixed-income portfolio, as discussed above. In addition, even though the Russell 1000 Index is broadly diversified, significant portions of the index may be concentrated in one or more sectors, such as energy, technology, or financial services, which may adversely affect the performance of our common equity portfolio if such a sector underperforms. A decline in the aggregate value of the equities that make up the index would be expected to result in a commensurate decline both in the value of our common equity portfolio and in our capital. Likewise, the actively managed equity portfolio will be subject to risks arising from the investment decisions of the investment advisors, including sector or industry concentrations, lack of geographic diversification, and the performance of individual issuers.

Both the fixed-income and the common equity portfolios are also subject to risks inherent in the nation’s and world’s capital markets. The functioning of those markets, the values of the investments we hold, and our ability to liquidate them when desired may be adversely affected if those markets are disrupted or otherwise affected by significant negative factors, including, without limitation:

• local, national, or international events, such as regulatory changes, power outages, system failures, wars, or terrorist attacks

• a recession, depression, political or social upheaval, or other development in either the U.S. or other economies that adversely affects the value of securities held in our portfolios

• financial weakness or failure of one or more financial institutions that play a prominent role in securities markets or act as a counterparty for various financial instruments, such as derivative transactions, which could further disrupt the markets or cause us to incur losses if counterparties to one or more of our transactions should default

• inactive markets for specific kinds of securities, or for the securities of certain issuers or in certain sectors, which could result in decreased valuations and impact our ability to sell a specific security or a group of securities at a reasonable price when desired

• the failure, or perceived failure, of governmental attempts to stabilize their budgets or economies through austerity programs, tax increases or other measures, to stabilize specific companies or groups of companies through capital injections, to shore up markets, or otherwise to spur economic recovery or growth, or the failure or refusal of a government to engage in such efforts

• investor fear, whether substantiated or not

• a significant change in inflation expectations or the onset of deflation

• a default on sovereign debt, or the perception that such a default is likely, and

• a significant devaluation of governmental or private sector credit, currencies or financial markets, or other factors or events.

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If the fixed-income or equity portfolios, or both, were to suffer a substantial decrease in value due to market, sector, or issuer-specific conditions, our liquidity, financial position, and financial results could be materially adversely affected. Under these circumstances, our income from these investments could be materially reduced, and declines in the value of certain securities could further reduce our reported earnings and capital levels. A decrease in value of an insurance subsidiary’s investment portfolio could also put the subsidiary at risk of failing to satisfy regulatory minimum capital requirements and could limit the subsidiary’s ability to write new business. In any such event, our business could be materially adversely affected.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report, which is included as Exhibit 13 to this Form 10-K, for additional discussion of the composition of our investment portfolio as of December 31, 2014, and of the market risk associated with our investment portfolio.

IV. Credit and Other Financial Risks

Our financial condition may be adversely affected if one or more parties with which we enter into significant contracts become insolvent, experience other financial difficulties, or default in the performance of contractual obligations.

Our business is dependent on the performance by third parties of their responsibilities under various contractual or service arrangements. These include, for example: contracts for the acquisition of goods and services (such as telecommunications and information technology facilities, equipment and support, and other systems and services that are integral to our operations); agreements with other insurance carriers to bundle products that we do not offer; and arrangements for transferring certain of our risks (including reinsurance used by us in connection with certain of our insurance products and our corporate insurance policies and the performance of certain state reinsurance facilities/associations relating to extreme events or certain catastrophic claims). In addition, from time to time, we enter into significant financial transactions, such as derivative instruments, with major banks, other financial institutions, or security clearinghouses. If one or more of these parties were to default in the performance of their obligations under their respective contracts or determine to abandon or terminate support for a system, product, obligation, or service that is significant to our business, we could suffer significant financial losses and operational interruptions or other problems, which in turn could adversely affect our financial performance, cash flows, or results of operations and cause damage to our brand and reputation.

Our insurance subsidiaries may be limited in the amount of dividends that they can pay, which in turn may limit the holding company’s ability to repay indebtedness, make capital contributions to its other subsidiaries or affiliates, pay dividends to shareholders, or repurchase its securities, or meet its other obligations.

The Progressive Corporation is a holding company with no business operations of its own. Consequently, if its subsidiaries are unable to pay dividends or make other distributions to The Progressive Corporation, or are able to pay only limited amounts, Progressive may be unable to make payments on its indebtedness, make capital contributions to or otherwise fund its subsidiaries or affiliates, pay dividends to shareholders, repurchase its common shares or other securities, or meet its other obligations. Each insurance subsidiary’s ability to pay dividends may be limited by one or more of the following factors:

• 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.

Further information on insurance laws and regulations that may limit the ability of our insurance subsidiaries to pay dividends can be found in Item 5(c), “Dividends,” of this report.

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If we fail to maintain sufficient capital to support our business, our financial condition and our ability to grow could be adversely affected.

We intend to maintain capital levels as necessary to pay all claims and other business expenses, to meet regulatory requirements, to support the growth of our insurance businesses, to provide for additional protection against possible large, unexpected losses, and to provide the necessary resources to pay dividends, repurchase stock or other securities, and fund corporate opportunities. Management determines our capital needs at any given time based on a number of factors, including:

• regulatory capital and surplus requirements applicable to our insurance subsidiaries

• current and anticipated performance of our insurance operations and investment portfolios

• growth prospects for our insurance businesses

• expected significant expenditures and available business opportunities

• our capital management activities, such as scheduled debt payments, the payment of cash dividends, repurchases of our common shares and debt securities, the availability of credit lines, and the issuance by us of debt, equity, or other securities, and

• projections of the levels of capital needed to protect us against unexpected events within a confidence level determined through our risk management process.

The amount of capital that we seek to maintain also is driven by our assessment of potential exposures and correlations to our underwriting, investing, and operating risks, including those discussed in these Risk Factors. The estimates for unexpected events are internally produced and are the result of extensive analysis and modeling of the types and magnitude of risks that we are likely to face. While we regularly implement new measures to improve our techniques for estimating our capital needs, our ability to predict accurately the nature, size, and scope of unexpected events is inherently uncertain.

If regulatory requirements for capital and surplus were to increase, we likely would be required to increase the amount of capital held by our insurance subsidiaries. Also, if we experience losses in our insurance operations or from our investment portfolio, our capital levels may be reduced, perhaps significantly. If our capital level falls lower than the amount needed at a given time, our ability to grow and successfully operate the insurance business could be constrained, and our flexibility to pay dividends, repurchase our securities, or engage in other corporate transactions could be limited, until additional sources of capital are secured. Such a deterioration of our financial condition could adversely affect the perception of our company by insurance regulators and other third parties (such as rating agencies, underwriters, institutional and other investors, and consumers), potentially resulting in regulatory actions or our inability to gain access to debt or equity markets at favorable rates, and the price of our common shares or debt securities could fall significantly.

In addition, the recoverability of certain of our deferred tax assets is predicated on the market valuation of our invested assets and certain tax planning strategies that, in part, depend on the substantial recovery to original cost of our fixed-income securities and redeemable preferred stocks. Should fair values of such securities decline or not substantially recover in value, a valuation allowance against the related deferred tax assets may become necessary, which would reduce our capital levels.

Our access to capital markets, ability to enter into new or renew existing financing arrangements, obligations to post collateral under certain derivative contracts, and business operations are dependent on favorable evaluations and ratings by credit and other rating agencies.

Our credit and financial strength are evaluated and rated by various rating agencies, such as Standard & Poor’s, Moody’s Investors Service, Fitch Ratings, and A.M. Best. Progressive and its insurance subsidiaries currently enjoy favorable, stable ratings. Downgrades in our credit ratings could adversely affect our ability to access the capital markets and/or lead to increased borrowing costs in the future (although the interest rates we pay on our current indebtedness would not be affected), as would adverse recommendations by equity analysts at the various brokerage houses and investment firms. Perceptions of our company by investors, producers, other businesses, and consumers could also be significantly impaired. In addition, a downgrade could trigger contractual obligations in certain derivative transactions requiring us to post substantial amounts of collateral, in cash or high-grade assets, for the benefit of the other party to the transaction, or allow the other party to liquidate the derivatives transaction. Downgrades in the ratings of our insurance subsidiaries could likewise negatively impact our operations, potentially resulting in lower or negative premium growth. In any such event, our financial performance could be materially adversely affected.

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The Progressive Corporation’s annual dividend policy will result in a variable payment to shareholders each year, or no payment in some years, and the dividend program ultimately may be changed in the discretion of the Board of Directors.

We have previously announced our intention to pay a dividend to shareholders on an annual basis under a formula that multiplies our annual after-tax underwriting income by a percentage factor set by the Board of Directors (33-1/3% for 2014 and 2015) and then by the Gainshare factor (determined under our employee Gainsharing (cash bonus) plans based on the operating performance of our principal insurance businesses). If our Gainshare factor for the year is zero or after-tax comprehensive income (which includes net investment income, realized investment gains and losses, and the change in unrealized investment gains and losses) is less than after-tax underwriting income, no dividend will be paid under our annual variable dividend policy.

Because the dividend calculation is performance-based, the amount (if any) to be paid in any particular year may not be subject to accurate prediction and will likely vary, perhaps significantly, from the amounts paid in the preceding year(s). As a result, the amount paid may be inconsistent with some shareholders’ expectations. In addition, although we have announced our intent to repeat the annual variable dividend in 2015 (to be paid early in 2016), the dividend, if any, would not be declared by the Board until late 2015 or early 2016, and the Board retains the discretion, at any time, to alter our policy or not to pay the annual dividend for 2015 or future years. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in U.S. federal income tax laws, disruptions of national or international capital markets, or other events affecting our liquidity, financial position or prospects, as described above under “Market Risks.” Any such change could adversely affect investors’ perceptions of the company and the value of, or the total return of an investment in, our common shares or debt securities.

We do not manage to short-term earnings expectations; our goal is to maximize the long-term value of the enterprise, which, at times, may adversely affect short-term results.

We believe that shareholder value will be increased in the long run if we meet or exceed the financial goals and policies that we establish each year. We do not manage our business to maximize short-term stock performance or the amount of the dividend that may be paid under our annual variable dividend policy or otherwise. We report earnings and other operating results on a monthly basis. We also do not provide earnings estimates to the market and do not comment on earnings estimates by analysts. As a result, our reported results for a particular period may vary, perhaps significantly, from investors’ expectations, which could result in significant volatility in the price of our common shares or debt securities.

In addition, due to our focus on the long-term value of the enterprise, we may undertake business strategies and establish related financial goals for a specific year that are designed to enhance our longer-term performance, while understanding that such strategies may not always similarly benefit short-term results, such as our annual underwriting profit or earnings per share. Such strategies, for example, may involve a reduction in premiums for certain products or customers, or increases in advertising spend, to support growth or enhance retention of current customers. Consequently, these strategies may adversely affect short-term performance or the amount of our variable dividend for a given year, and may result in additional volatility in the price of our common shares or debt securities.

V.Risks Associated with the ARX Transaction

The anticipated acquisition of control of ARX Holding Corp. may not occur or may occur on terms

different than those initially contemplated.

It is possible that the contemplated acquisition of ARX capital stock may not occur because the conditions to the closing of the transaction are not satisfied or for another reason. In addition, there is a risk that the transactions may not be consummated on the terms contemplated, as a result of changed circumstances or because of requirements imposed by insurance or other regulatory authorities.

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If the anticipated acquisition is consummated, it may not produce the anticipated benefits to the company and may present new operational or other risks for us.

If the acquisition is consummated, it may not produce the anticipated benefits to the company, or such benefits may be delayed longer than anticipated, and ARX may not perform as expected, may have unknown liabilities and may present unanticipated operational or other risks. ARX will continue to be, and the company will become, dependent on the experience and industry knowledge of ARX’s officers and key employees to execute their business plans. In addition, the homeowners insurance business differs from our current business in certain respects. Catastrophe losses, including those caused by adverse weather conditions (including hurricanes, floods, tornadoes and severe storms), may impact homeowners insurance results more than they impact our current results. Further, like many homeowners insurance companies, ARX relies on reinsurance contracts to reduce its exposure to certain catastrophe events. Nonetheless, ARX remains liable as the direct insurer on all risks reinsured and is subject to credit risk with respect to its ability to recover from reinsurers for the claims it paid.

Our consolidated debt is expected to increase as a result of the acquisition and our debt rating may be adversely affected.

As of December 31, 2014, ARX had outstanding external borrowings of $191.3 million, a significant portion of which is secured by the stock of certain of ARX’s key subsidiaries. This debt will remain outstanding after the acquisition, and it is possible that our debt rating could be adversely affected as a result, which may reduce our flexibility to respond to changing business and economic conditions, adversely affect our ability to access the debt markets, and increase our interest expense on any future indebtedness.

The anticipated acquisition will affect our accounting and the comparability of our results.

If the acquisition is consummated, the financial results of ARX and its subsidiaries will be consolidated in our financial results. Reporting the results of a writer of homeowners insurance may introduce additional volatility in our consolidated results, particularly because we report our results on a monthly basis. In addition, because we will own less than one hundred percent of ARX for some period of time, the other holders of ARX capital stock will have an interest in the assets and operating results of ARX, and their interests will be reflected on our financial statements. These changes will introduce more complexity to our financial statements and may affect the ability of investors or analysts to assess our financial results.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We currently do not have any unresolved comments from the SEC staff.

ITEM 2. PROPERTIES

All of our properties are owned or leased by subsidiaries of The Progressive Corporation and are used for office functions (corporate, claims, and business unit), as call centers, for training, for warehouse space, or as Service Centers.

We own 88 buildings located throughout the United States. Nearly two-thirds of our owned buildings are for our Service Centers, the majority of which are combined with a claims office. Our owned facilities, which contain approximately 4.6 million square feet of space, are not segregated by industry segment. In addition to our corporate headquarters and another office complex and call center in Mayfield Village, Ohio, we own significant locations in Colorado Springs, Colorado; Tampa, Florida; and Tempe, Arizona.

We lease approximately 2.1 million square feet of space throughout the United States and one location in Australia. These leases are generally short-term to medium-term leases of commercial space.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated by reference from information with respect to executive officers of The Progressive Corporation and its subsidiaries set forth in Item 10 in Part III of this Form 10-K.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) Market Information

Progressive’s Common Shares, $1.00 par value, are traded on the New York Stock Exchange under the symbol PGR. The high and low prices set forth below are as reported on the consolidated transaction reporting system.

Year	Quarter	High		Low		Close		Dividends Declared Per Share
2014	1	$	27.30	$	22.53	$	24.22	$	0
	2	26.03		23.40		25.36		0
	3	25.63		23.20		25.28		0
	4	27.52		24.16		26.99		0.6862
		$	27.52	$	22.53	$	26.99	$	0.6862
2013	1	$	25.38	$	21.36	$	25.27	$	0
	2	26.39		23.99		25.42		0
	3	27.55		24.86		27.23		0
	4	28.54		25.81		27.27		1.4929
		$	28.54	$	21.36	$	27.27	$	1.4929

The closing price of our common shares on January 30, 2015, was $25.95.

(b) Holders

We had 2,359 shareholders of record on December 31, 2014.

(c) Dividends

We maintain a policy of paying an annual variable dividend that, if declared, would be payable shortly after the close of the year. This annual variable dividend is based on a target percentage of after-tax underwriting income multiplied by a companywide performance factor (“Gainshare factor”), subject to the limitations discussed below. The target percentage is determined by our Board of Directors on an annual basis and announced to shareholders and the public. In December 2013, the Board determined the target percentage for 2014 to be 33-1/3% of annual after-tax underwriting income, which is unchanged from the target percentage in both 2013 and 2012. The Board also determined that this target will remain at 33-1/3% for 2015.

The Gainshare factor can range from zero to two and is determined by comparing our operating performance for the year to certain predetermined profitability and growth objectives for our core insurance businesses, as approved by the Compensation Committee of the Board. This Gainshare factor is also used in the annual cash incentive program currently in place for our employees (our “Gainsharing program”). Although recalibrated every year, the structure of the Gainsharing program generally remains the same. Our annual dividend program will result in a variable payment to shareholders each year, subject to certain limitations. If the Gainshare factor is zero or if our comprehensive income is less than after-tax underwriting income, no dividend would be payable under our annual variable dividend policy.

Although it is our intent to calculate an annual variable dividend based on the formula outlined above, the Board could decide to alter our policy, or not to pay the annual variable dividend for 2015 or future years, at any time prior to the declaration of the dividend for the year. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in federal income tax laws, disruptions of national or international capital markets, or other events affecting our business, liquidity, or financial position.

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Following is a summary of our shareholder dividends, both variable and special, that were paid in the last three years:

(millions, except per share amounts)			Amount
Dividend Type	Declared	Paid	Per Share		Total1
Annual – Variable	December 2014	February 2015	$	0.6862	$	404.1
Annual – Variable	December 2013	February 2014	0.4929		293.9
Special	December 2013	February 2014	1.0000		596.3
Annual – Variable	December 2012	February 2013	0.2845		172.0
Special	October 2012	November 2012	1.0000		604.7

¹ Based on shares outstanding as of the record date.

Consolidated statutory surplus was $6.4 billion on December 31, 2014, and $6.0 billion on December 31, 2013. At December 31, 2014, $549.2 million of consolidated statutory surplus represented net admitted assets of Progressive’s insurance subsidiaries and affiliate that are required to meet minimum statutory surplus requirements in such entities’ states of domicile. The companies may be licensed in states other than their states of domicile, however, which may have higher minimum statutory surplus requirements. Generally, the net admitted assets of insurance companies that, subject to other applicable insurance laws and regulations, are available for transfer to the parent company cannot include the net admitted assets required to meet the minimum statutory surplus requirements of the states where the companies are licensed. Based on the dividend laws currently in effect, the insurance subsidiaries could pay aggregate dividends of $1,346.5 million in 2015 without prior approval from regulatory authorities, provided the dividend payments are not made within 12 months of previous dividends paid by the applicable subsidiary.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information about securities authorized for issuance under our equity compensation plans.

(e) Performance Graph

Incorporated by reference from the Performance Graph section in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

(f) Recent Sales of Unregistered Securities

None.

(g) Share Repurchases

ISSUER PURCHASES OF EQUITY SECURITIES
2014 Calendar Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
October	1,460,483	$	25.10	54,997,782	20,002,218
November	3,094	26.37		55,000,876	19,999,124
December	1,096	27.15		55,001,972	19,998,028
Total	1,464,673	$	25.10

In June 2011, the Board approved an authorization to repurchase up to 75 million of our common shares; this Board authorization does not have an expiration date. Share repurchases under this authorization may be accomplished through open market purchases, privately negotiated transactions, or otherwise, and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. In the fourth quarter 2014, all repurchases were accomplished through the open market or in conjunction with our incentive compensation plans at the then-current market prices.

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Progressive’s financial policies state that we will repurchase shares to neutralize dilution from equity-based compensation in the year of issuance and as an option to effectively use underleveraged capital. See Note 9 - Employee Benefit Plans, “Incentive Compensation Plans” in our Annual Report, which is included as Exhibit 13 to this Form 10-K, for a summary of our restricted equity grants.

ITEM 6.SELECTED FINANCIAL DATA

(millions - except per share amounts)

	For the years ended December 31,
	2014		2013		2012		2011		2010
Total revenues	$	19,391.4	$	18,170.9	$	17,083.9	$	15,774.6	$	15,215.5
Net income	1,281.0		1,165.4		902.3		1,015.5		1,068.3
Per share:
Net income	2.15		1.93		1.48		1.59		1.61
Dividends	0.6862		1.4929		1.2845		0.4072		1.3987
Comprehensive income	1,352.4		1,246.1		1,080.8		924.3		1,398.8
Total assets	25,787.6		24,408.2		22,694.7		21,844.8		21,150.3
Debt outstanding	2,164.7		1,860.9		2,063.1		2,442.1		1,958.2

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Incorporated by reference from Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The quantitative and qualitative disclosures about market risk are incorporated by reference from section “IV. Results of Operations – Investments” in our Management’s Discussion and Analysis of Financial Condition and Results of Operations, as described in Item 7 above. Additional information is incorporated by reference from the Quantitative Market Risk Disclosures section in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of Progressive, along with the related notes, supplementary data, and report of the independent registered public accounting firm, are incorporated by reference from our Annual Report, which is included as Exhibit 13 to this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Progressive, under the direction of the Chief Executive Officer and the Chief Financial Officer, has established disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

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The Chief Executive Officer and the Chief Financial Officer reviewed and evaluated Progressive’s disclosure controls and procedures as of the end of the period covered by this report. Based on that review and evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Progressive’s disclosure controls and procedures are effectively serving the stated purposes as of the end of the period covered by this report.

Management’s Report on Internal Control over Financial Reporting is incorporated by reference from our Annual Report, which is included as Exhibit 13 to this Form 10-K.

The attestation of the independent registered public accounting firm is incorporated by reference from our Annual Report, which is included as Exhibit 13 to this Form 10-K.

There has been no change in Progressive’s internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information relating to all of the directors, each of whom has been nominated for election as a director at the 2015 Annual Meeting of Shareholders of the Registrant, is incorporated herein by reference from the section entitled “Item 1: Election of Directors” in The Progressive Corporation's Proxy Statement for the Annual Meeting of Shareholders to be held on May 15, 2015 (the "Proxy Statement").

Information relating to executive officers of Progressive follows. Unless otherwise indicated, the executive officer has held the position(s) indicated for at least the last five years.

Name	Age	Offices Held and Last Five Years’ Business Experience
Glenn M. Renwick	59	Chairman of the Board since November 2013; President and Chief Executive Officer
Brian C. Domeck	55	Vice President and Chief Financial Officer
Charles E. Jarrett	57	Vice President, Secretary, and Chief Legal Officer
Thomas A. King	55	Vice President and Treasurer
Jeffrey W. Basch	56	Vice President and Chief Accounting Officer
John A. Barbagallo	55	Commercial Lines Group President, including Agency Operations
M. Jeffrey Charney	55	Chief Marketing Officer since November 2010; Senior Vice President and Chief Marketing Officer of Aflac Incorporated prior to November 2010
William M. Cody	52	Chief Investment Officer
Susan Patricia Griffith	50	President of Customer Operations since April 2014; Claims Group President prior to April 2014
Valerie Krasowski	49	Chief Human Resource Officer
John P. Sauerland	50	Personal Lines Group President
Michael D. Sieger	53	Claims Operations Leader since January 2015; Claims Process General Manager prior to January 2015
Raymond M. Voelker	51	Chief Information Officer

As we previously announced, Mr. Domeck intends to retire in May 2015, and Mr. Sauerland is expected to be appointed as our Chief Financial Officer in April 2015. In addition, Mr. Voelker notified us that he intends to retire in January 2016.

Section 16(a) Beneficial Ownership Reporting Compliance. None.

Code of Ethics. Progressive has a Code of Ethics for the Chief Executive Officer, Chief Financial Officer, and other senior financial officers. This Code of Ethics is available at: progressive.com/governance. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, and waivers from, the provisions of the foregoing Code of Ethics by posting such information on our Internet website at: progressive.com/governance.

Shareholder-Proposed Candidate Procedures. There were no material changes to Progressive’s shareholder-proposed candidate procedures during 2014. The description of those procedures is incorporated by reference from the “Shareholder-Proposed Candidate Procedures” section of the Proxy Statement (which can be found in “Other Board of Directors Information”).

Audit Committee. Incorporated by reference from the “Audit Committee” section of the Proxy Statement.

Financial Expert. Incorporated by reference from the “Audit Committee Financial Experts” section of the Proxy Statement (which can be found in “Audit Committee”).

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the sections of the Proxy Statement entitled “Compensation Discussion and Analysis,” “Executive Compensation,” “Other Board of Directors Information: Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report.”

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Incorporated by reference from the section of the Proxy Statement entitled “Security Ownership of Certain Beneficial Owners and Management.”

The following information is set forth with respect to our equity compensation plans at December 31, 2014.

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:
2010 Equity Incentive Plan	7,726,619	1,2	NM	5,206,913	3
2003 Incentive Plan4	1,324,945	1	NM	0
Subtotal Employee Plans	9,051,564		NM	5,206,913
Director Plans:
2003 Directors Equity Incentive Plan	81,579		NM	395,305
Subtotal Director Plans	81,579		NM	395,305
Equity compensation plans not approved by security holders:
None
Total	9,133,143		NM	5,602,218

NM = Not meaningful since restricted stock and restricted stock unit awards do not have an exercise price.

¹ Includes restricted stock unit awards, including reinvested dividend equivalents, under which, upon vesting, the holder has the right to receive common shares on a one-to-one basis; there is no exercise price associated with restricted stock unit awards.

² Performance-based restricted stock unit awards, including dividend equivalents of 2,013,147 units, are included under the 2010 Equity Incentive Plan at their target value. The ultimate amount that could vest can range from 0 to 250% of target amount for the 2013 and 2014 awards based on insurance operating results, and from 0 to 200% of target for all other awards, or from 0 to 4,608,644 units. For further discussion of these awards, see Note 9—Employee Benefit Plans in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

³ Gives effect to reservation of common shares subject to performance-based awards at maximum potential payout.

⁴ This plan expired on January 31, 2013 and no further awards can be made thereunder; however, awards remain outstanding and dividend equivalents will still be issued on outstanding awards up to the remaining authorization of 1,874,405 units. This plan does not have any performance-based awards outstanding that can vest at greater than their target values.

In January 2015, the Board of Directors approved The Progressive Corporation 2015 Equity Incentive Plan. This new plan, which remains subject to shareholder approval at our upcoming Annual Meeting scheduled for May 15, 2015, authorizes up to an additional 13 million shares for issuance.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Incorporated by reference from the section of the Proxy Statement entitled “Other Board of Directors Information,” subsections “Board of Directors Independence Determinations” and “Transactions with Related Parties.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Incorporated by reference from the section of the Proxy Statement entitled “Other Independent Registered Public Accounting Firm Information.”

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Listing of Financial Statements

The following consolidated financial statements included in Progressive’s 2014 Annual Report, which is included as Exhibit 13 to this Form 10-K, are incorporated by reference in Item 8:

• Report of Independent Registered Public Accounting Firm

• Consolidated Statements of Comprehensive Income - For the Years Ended December 31, 2014, 2013, and 2012

• Consolidated Balance Sheets - December 31, 2014 and 2013

• Consolidated Statements of Changes in Shareholders’ Equity - For the Years Ended December 31, 2014, 2013, and 2012

• Consolidated Statements of Cash Flows - For the Years Ended December 31, 2014, 2013, and 2012

• Notes to Consolidated Financial Statements

• Supplemental Information (Unaudited)

(a)(2) Listing of Financial Statement Schedules

The following financial statement schedules, Report of Independent Registered Public Accounting Firm and Consent of Independent Registered Public Accounting Firm are included in Item 15(c):

• 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

• Schedule VI - Supplemental Information Concerning Property-Casualty Insurance Operations

• 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.

(a)(3) Listing of Exhibits

See exhibit index contained herein beginning at page 48. Management contracts and compensatory plans and arrangements are identified in the Exhibit Index as Exhibit Nos. 10.5 through 10.90.

(b) Exhibits

The exhibits in response to this portion of Item 15 are submitted concurrently with this report.

(c) Financial Statement Schedules

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SCHEDULE I — SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

	December 31, 2014
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	$	2,641.1	$	2,667.1	$	2,667.1
States, municipalities, and political subdivisions	2,095.7		2,139.2		2,139.2
Foreign government obligations	14.2		14.2		14.2
Public utilities	63.1		66.6		66.6
Corporate and other debt securities	2,750.8		2,770.1		2,770.1
Asset-backed securities	5,549.1		5,612.8		5,612.8
Redeemable preferred stocks	260.2		279.2		279.2
Total fixed maturities	13,374.2		13,549.2		13,549.2
Equity securities:
Common stocks:
Public utilities	95.0		143.3		143.3
Banks, trusts, and insurance companies	220.1		438.4		438.4
Industrial, miscellaneous, and all other	974.1		1,910.6		1,910.6
Nonredeemable preferred stocks	590.4		827.5		827.5
Total equity securities	1,879.6		3,319.8		3,319.8
Short-term investments1	2,149.0		2,149.0		2,149.0
Total investments	$	17,402.8	$	19,018.0	$	19,018.0

¹ Includes $5.7 million in treasury bills issued by the Australian government.

Progressive did not have any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at December 31, 2014.

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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	Years Ended December 31,
	2014			2013			2012
Revenues
Dividends from subsidiaries	$	1,000.2		$	1,119.7		$	782.3
Undistributed income (loss) from subsidiaries	358.3			117.5			193.1
Equity in net income of subsidiaries*	1,358.5			1,237.2			975.4
Intercompany investment income*	2.4			2.8			6.1
Gains (losses) on extinguishment of debt	(4.8		)	(4.3		)	(1.8		)
Other income1	0			2.6			0
Total revenues	1,356.1			1,238.3			979.7
Expenses
Interest expense	120.2			121.2			126.3
Deferred compensation2	2.8			9.5			5.5
Other operating costs and expenses	4.4			4.0			3.7
Total expenses	127.4			134.7			135.5
Income before income taxes	1,228.7			1,103.6			844.2
Benefit for income taxes	(52.3		)	(61.8		)	(58.1		)
Net income	$	1,281.0		$	1,165.4		$	902.3
Other comprehensive income	71.4			80.7			178.5
Comprehensive income	$	1,352.4		$	1,246.1		$	1,080.8

* Eliminated in consolidation.

¹ Represents gain on net death benefit received on life insurance policies.

² See Note 4 – Employee Benefit Plans in these condensed financial statements.

See notes to condensed financial statements.

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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

CONDENSED BALANCE SHEETS

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	December 31,
	2014		2013
Assets
Investment in affiliate	$	5.0	$	5.0
Investment in subsidiaries*	7,423.5		6,923.5
Receivable from investment subsidiary*	1,677.5		1,648.4
Intercompany receivable*	413.0		307.6
Net deferred income taxes	74.5		69.1
Other assets	123.9		141.8
Total Assets	$	9,717.4	$	9,095.4
Liabilities and Shareholders’ Equity
Accounts payable, accrued expenses, and other liabilities	$	220.0	$	154.8
Dividend payable	404.1		890.2
Debt	2,164.7		1,860.9
Total liabilities	2,788.8		2,905.9
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8		595.8
Paid-in capital	1,184.3		1,142.0
Retained earnings	4,133.4		3,500.0
Total accumulated other comprehensive income	1,023.1		951.7
Total shareholders’ equity	6,928.6		6,189.5
Total Liabilities and Shareholders’ Equity	$	9,717.4	$	9,095.4

*Eliminated in consolidation.

See notes to condensed financial statements.

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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	Years Ended December 31,
	2014			2013			2012
Cash Flows From Operating Activities:
Net income	$	1,281.0		$	1,165.4		$	902.3
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed (income) loss from subsidiaries	(358.3		)	(117.5		)	(193.1		)
Amortization of equity-based compensation	2.2			2.1			2.0
(Gains) losses on extinguishment of debt	4.8			4.3			1.8
Changes in:
Intercompany receivable	(105.4		)	(11.4		)	(58.6		)
Accounts payable, accrued expenses, and other liabilities	18.2			19.4			0.3
Income taxes	61.1			(55.8		)	21.7
Other, net	0.4			(16.3		)	(9.9		)
Net cash provided by operating activities	904.0			990.2			666.5
Cash Flows From Investing Activities:
Additional investments in equity securities of consolidated subsidiaries	(21.1		)	(13.9		)	(36.1		)
Investment in affiliate	0			(4.0		)	0
(Paid to) received from investment subsidiary	(29.1		)	(325.5		)	773.7
Net cash provided by (used in) investing activities	(50.2		)	(343.4		)	737.6
Cash Flows From Financing Activities:
Proceeds from exercise of stock options	0			0			0.5
Tax benefit from exercise/vesting of equity-based compensation	12.8			10.3			5.8
Net proceeds from debt issuance	346.3			0			0
Payment of debt	0			(150.0		)	(350.0		)
Reacquisition of debt	(48.9		)	(58.1		)	(32.5		)
Dividends paid to shareholders	(892.6		)	(175.6		)	(853.7		)
Acquisition of treasury shares	(271.4		)	(273.4		)	(174.2		)
Net cash used in financing activities	(853.8		)	(646.8		)	(1,404.1		)
Change in cash	0			0			0
Cash, beginning of year	0			0			0
Cash, end of year	$	0		$	0		$	0

See notes to condensed financial statements.

- 38 -

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)

NOTES TO CONDENSED FINANCIAL STATEMENTS

The accompanying condensed financial statements of The Progressive Corporation (parent company) should be read in conjunction with the consolidated financial statements and notes thereto in the Annual Report to Shareholders of The Progressive Corporation and its subsidiaries, which is included as Exhibit 13 to this Form 10-K.

Note 1. Statements of Cash Flows — For the purpose of the Statements of Cash Flows, cash includes only bank demand deposits. The Progressive Corporation does not hold any cash but has unrestricted access to funds maintained in a non-insurance, investment subsidiary to meet its holding company obligations; at year-end 2014 and 2013, $1.9 billion and $1.8 billion, respectively, of marketable securities were available in this subsidiary. Non-cash activity includes declared but unpaid dividends. For the years ended December 31, we paid the following:

(millions)	2014		2013		2012
Income taxes	$	515.0	$	497.0	$	389.1
Interest	116.0		122.3		135.0

Note 2. Income Taxes — The Progressive Corporation files a consolidated federal income tax return with all subsidiaries and acts as an agent for the consolidated tax group when making payments to the Internal Revenue Service. The consolidated group’s net income taxes currently payable/recoverable are included in other liabilities/assets, respectively, in the accompanying Condensed Balance Sheets based on the balance at the end of the year. The Progressive Corporation and its subsidiaries have adopted, pursuant to a written agreement, a method of allocating consolidated federal income taxes. Amounts allocated to the subsidiaries under the written agreement are included in “Intercompany Receivable” in the accompanying Condensed Balance Sheets.

Note 3. Debt — The information relating to debt is incorporated by reference from Note 4 – Debt in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Note 4. Employee Benefit Plans — The information relating to incentive compensation plans and deferred compensation is incorporated by reference from Note 9 – Employee Benefit Plans in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Note 5. Other Comprehensive Income — On the condensed Statements of Comprehensive Income, other comprehensive income represents activity of the subsidiaries of The Progressive Corporation and includes net unrealized gains (losses) on securities, net unrealized gains on forecasted transactions, and foreign currency translation adjustments.

Note 6. Dividends — The information relating to our dividend policy is incorporated by reference from Note 14 – Dividends in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

- 39 -

SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

Segment	Deferred policy acquisition costs1		Future policy benefits, losses, claims, and loss expenses1		Unearned premiums1		Other policy claims and benefits payable1		Premium revenue		Net investment income1,2		Benefits, claims, losses, and settlement expenses		Amortization of deferred policy acquisition costs		Other operating expenses		Net premiums written
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
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 December 31, 2013:
Personal Lines									$	15,341.6			$	11,194.6	$	1,257.5	$	2,149.2	$	15,569.2
Commercial Lines									1,761.6				1,267.3		194.3		201.2		1,770.5
Other indemnity									0.2				10.5		0		0.5		0
Total	$	447.6	$	8,479.7	$	5,174.5	$	0	$	17,103.4	$	403.2	$	12,472.4	$	1,451.8	$	2,350.9	$	17,339.7
Year ended December 31, 2012:
Personal Lines									$	14,368.1			$	10,745.3	$	1,250.4	$	2,010.5	$	14,636.8
Commercial Lines									1,649.0				1,196.6		186.2		195.2		1,735.9
Other indemnity									0.9				6.1		0		0.6		0
Total	$	434.5	$	7,838.4	$	4,930.7	$	0	$	16,018.0	$	427.6	$	11,948.0	$	1,436.6	$	2,206.3	$	16,372.7

¹ Progressive does not allocate assets, liabilities, or investment income to operating segments.

² Excludes total net realized gains (losses) on securities.

- 40 -

SCHEDULE IV — REINSURANCE

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

Year Ended:	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
December 31, 2014
Premiums earned:
Property and liability insurance	$	18,648.4	$	249.9	$	0	$	18,398.5	0
December 31, 2013
Premiums earned:
Property and liability insurance	$	17,317.9	$	214.5	$	0	$	17,103.4	0
December 31, 2012
Premiums earned:
Property and liability insurance	$	16,207.6	$	189.6	$	0	$	16,018.0	0

- 41 -

SCHEDULE VI — SUPPLEMENTAL INFORMATION CONCERNING PROPERTY - CASUALTY INSURANCE OPERATIONS

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

	Losses and Loss Adjustment Expenses Incurred Related to
Year Ended	Current Year		Prior Years			Paid Losses and Loss Adjustment Expenses
December 31, 2014	$	13,330.3	$	(24.1	)	$	13,068.5
December 31, 2013	$	12,427.3	$	45.1		$	12,014.9
December 31, 2012	$	11,926.0	$	22.0		$	11,431.8

Pursuant to Rule 12-18 of Regulation S-X. See Schedule III for the additional information required in Schedule VI.

- 42 -

Report of Independent Registered Public Accounting Firm on Financial Statement Schedules

To the Board of Directors and Shareholders of The Progressive Corporation

Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated March 2, 2015 appearing in the 2014 Annual Report to Shareholders of The Progressive Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

March 2, 2015

- 43 -

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statements on Forms:

Form	Filing No.	Filing Date
S-8	333-185704	December 27, 2012
S-8	333-185703	December 27, 2012
S-8	333-172663	March 8, 2011
S-8	333-104646	April 21, 2003
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

of The Progressive Corporation of our report dated March 2, 2015 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in the 2014 Annual Report to Shareholders, which is incorporated by reference in The Progressive Corporation’s Annual Report on Form 10‑K for the year ended December 31, 2014. We also consent to the incorporation by reference of our report dated March 2, 2015 relating to the financial statement schedules, which appears in such Annual Report on Form 10‑K.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

March 2, 2015

- 44 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE PROGRESSIVE CORPORATION
March 2, 2015	By:	/s/ Glenn M. Renwick
		Glenn M. Renwick
		Chairman of the Board, President, and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Glenn M. Renwick	Director, Chairman of the Board, President, and Chief Executive Officer	March 2, 2015
Glenn M. Renwick
/s/ Brian C. Domeck	Vice President and Chief Financial Officer	March 2, 2015
Brian C. Domeck
/s/ Jeffrey W. Basch	Vice President and Chief Accounting Officer	March 2, 2015
Jeffrey W. Basch
*	Lead Independent Director	March 2, 2015
Stephen R. Hardis
*	Director	March 2, 2015
Stuart B. Burgdoerfer
*	Director	March 2, 2015
Charles A. Davis
*	Director	March 2, 2015
Roger N. Farah
*	Director	March 2, 2015
Lawton W. Fitt
*	Director	March 2, 2015
Jeffrey D. Kelly
*	Director	March 2, 2015
Patrick H. Nettles, Ph.D.
*	Director	March 2, 2015
Bradley T. Sheares, Ph.D.
*	Director	March 2, 2015
Barbara R. Snyder

- 45 -

* Charles E. Jarrett, by signing his name hereto, does sign this document on behalf of the persons indicated above pursuant to powers of attorney duly executed by such persons.

By:	/s/ Charles E. Jarrett	March 2, 2015
	Charles E. Jarrett
	Attorney-in-fact

- 46 -

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
3(i)	3.1	Amended Articles of Incorporation of The Progressive Corporation (as amended April 18, 2008)	Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 3.1 therein)
3(ii)	3.2	Code of Regulations of The Progressive Corporation (as amended October 10, 2014)	Current Report on Form 8-K (filed on October 14, 2014; Exhibit 3 therein)
4	4.1	Form of 3.75% Senior Notes due 2021, issued in the aggregate principal amount of $500,000,000 under the 1993 Senior Indenture (see exhibit 4.5 below), as amended and supplemented	Current Report on Form 8-K (filed on August 22, 2011; Exhibit 4.2 therein)
4	4.2	Form of 6 5/8% Senior Notes due 2029, issued in the aggregate principal amount of $300,000,000 under the 1993 Senior Indenture, as amended and supplemented	Filed herewith
4	4.3	Form of 6.25% Senior Notes due 2032, issued in the aggregate principal amount of $400,000,000 under the 1993 Senior Indenture, as amended and supplemented	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.4 therein)
4	4.4	Form of 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067, issued in the original aggregate principal amount of $1,000,000,000 under the Junior Subordinated Indenture (see exhibit 4.11 below), as amended and supplemented	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.5 therein)
4	4.5	Form of 4.35% Senior Notes due 2044, issued in the aggregate principal amount of $350,000,000 under the 1993 Senior Indenture, as amended and supplemented	Current Report on Form 8-K (filed on April 25, 2014; Exhibit 4.2 therein)
4	4.6	Form of 3.70% Senior Notes due 2045, issued in the aggregate principal amount of $400,000,000 under the 1993 Senior Indenture, as amended and supplemented	Current Report on Form 8-K (filed on January 26, 2015; Exhibit 4.2 therein)
4	4.7	Indenture dated as of September 15, 1993 between The Progressive Corporation and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee (“1993 Senior Indenture”) (including table of contents and cross-reference sheet)	Registration Statement No. 333-48935 (filed on March 31, 1998; Exhibit 4.1 therein)
4	4.8	First Supplemental Indenture dated March 15, 1996 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company	Registration Statement No. 333-01745 (filed on March 15, 1996; Exhibit 4.2 therein)
4	4.9	Second Supplemental Indenture dated February 26, 1999 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee	Registration Statement No. 333-100674 (filed on October 22, 2002; Exhibit 4.3 therein)

- 47 -

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	4.10	Fourth Supplemental Indenture dated November 21, 2002 to the 1993 Senior Indenture between The Progressive Corporation and State Street Bank and Trust Company, as Trustee	Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.5 therein)
4	4.11	Fifth Supplemental Indenture dated June 13, 2007 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, evidencing the designation of U.S. Bank National Association as successor Trustee under the 1993 Senior Indenture	Registration Statement No. 333-143824 (filed on June 18, 2007; Exhibit 4.6 therein)
4	4.12	Sixth Supplemental Indenture dated August 22, 2011 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, as Trustee	Quarterly Report on Form 10-Q (filed on November 7, 2011; Exhibit 4.1 therein)
4	4.13	Seventh Supplemental Indenture dated April 25, 2014 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, as Trustee	Current Report on Form 8-K (filed on April 25, 2014; Exhibit 4.1 therein)
4	4.14	Eighth Supplemental Indenture dated January 26, 2015 to the 1993 Senior Indenture between The Progressive Corporation and U.S. Bank National Association, as Trustee	Current Report on Form 8-K (filed on January 26, 2015; Exhibit 4.1 therein)
4	4.15	Junior Subordinated Indenture dated as of June 21, 2007 between The Progressive Corporation and The Bank of New York Trust Company, N.A., Trustee (“Junior Subordinated Indenture”) (including table of contents and cross-reference sheet)	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.12 therein)
4	4.16	First Supplemental Indenture dated June 21, 2007 to the Junior Subordinated Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.13 therein)
4	4.17	Second Supplemental Indenture dated September 2, 2011, to the Junior Subordinated Indenture dated June 21, 2007, between The Progressive Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee	Current Report on Form 8-K (filed on September 7, 2011; Exhibit 4 therein)
4	4.18	Replacement Capital Covenant dated June 21, 2007, of The Progressive Corporation	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 4.15 therein)
4	4.19	Termination of Replacement Capital Covenant, dated June 23, 2010	Current Report on Form 8-K (filed on June 24, 2010; Exhibit 4 therein)

- 48 -

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	4.20	Confirmation Letter-Discretionary Line of Credit dated March 24, 2014 from PNC Bank, National Association to The Progressive Corporation	Current Report on Form 8-K (filed on March 25, 2014; Exhibit 4.1 therein)
4	4.21	Discretionary Line of Credit Note dated March 24, 2014 from The Progressive Corporation to PNC Bank, National Association	Current Report on Form 8-K (filed on March 25, 2014; Exhibit 4.2 therein)
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	Filed herewith
10(ii)	10.2	Sublease Agreement for Aircraft Hangar dated as of August 21, 2006 between Progressive Casualty Insurance Company and Acme Operating Corporation	Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.1 therein)
10(ii)	10.3	First Amendment to Sublease Agreement for Aircraft Hangar dated June 6, 2011 between Progressive Casualty Insurance Company and Acme Operating Corporation	Quarterly Report on Form 10-Q (filed on August 9, 2011; Exhibit 10.1 therein)
10(ii)	10.4	Assignment and Assumption of Lease Agreement dated July 7, 2010, between Acme Operating Company and Acme Acquisition Company	Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.2 therein)
10(iii)	10.5	The Progressive Corporation 2012 Gainsharing Plan	Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.7 therein)
10(iii)	10.6	The Progressive Corporation 2013 Gainsharing Plan	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.6 therein)
10(iii)	10.7	The Progressive Corporation 2014 Gainsharing Plan	Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.7 therein)
10(iii)	10.8	The Progressive Corporation 2015 Gainsharing Plan	Filed herewith
10(iii)	10.9	The Progressive Corporation 2007 Executive Bonus Plan	Annual Report on Form 10-K (filed on February 28, 2012; Exhibit 10.8 therein)
10(iii)	10.10	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	Filed herewith

- 49 -

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)	10.13	Third Amendment to The Progressive Corporation 2003 Incentive Plan	Current Report on Form 8-K (filed on February 2, 2011; Exhibit 10.2 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 (Time-Based Award) (for March 2007 through 2010)	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.13 therein)
10(iii)	10.16	Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for 2004 through February 2007)	Filed herewith
10(iii)	10.17	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)	10.18	Form of The Progressive Corporation 2003 Incentive Plan Restricted Stock Award Agreement (Performance-Based Award) (for March 2009 through February 2010)	Filed herewith
10(iii)	10.19	Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2003 Incentive Plan	Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.1 therein)
10(iii)	10.20	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards under The Progressive Corporation 2003 Incentive Plan	Current Report on Form 8-K (filed on March 30, 2010; Exhibit 10.2 therein)
10(iii)	10.21	The Progressive Corporation 2010 Equity Incentive Plan	Registration Statement No. 333-172663 (filed on March 8, 2011; Exhibit 4.1 therein)
10(iii)	10.22	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)	10.23	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)	10.24	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)	10.25	Fourth Amendment to The Progressive Corporation 2010 Equity Incentive Plan	Current Report on Form 8-K (filed on February 2, 2012; Exhibit 10.1 therein)
10(iii)	10.26	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)

- 50 -

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)	10.27	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)	10.28	Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012)	Current Report on Form 8-K (filed on March 25, 2011; Exhibit 10.1 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 2013)	Current Report on Form 8-K (filed on March 22, 2013; Exhibit 10.1 therein)
10(iii)	10.30	Form of Restricted Stock Unit Award Agreement for Time-Based Awards under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)	Filed herewith
10(iii)	10.31	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Performance) under The Progressive Corporation 2010 Equity Incentive Plan (for 2011 and 2012)	Current Report on Form 8-K (filed on March 25, 2011; Exhibit 10.2 therein)
10(iii)	10.32	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)	10.33	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)	10.34	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)	10.35	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Insurance Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)	Filed herewith
10(iii)	10.36	Form of Restricted Stock Unit Award Agreement for Performance-Based Awards (Investment Results) under The Progressive Corporation 2010 Equity Incentive Plan (for 2014)	Filed herewith
10(iii)	10.37	The Progressive Corporation 2015 Equity Incentive Plan	Current Report on Form 8-K (filed on February 4, 2015; Exhibit 10.1 therein)

- 51 -

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)	10.38	The Progressive Corporation 2003 Directors Equity Incentive Plan	Registration Statement No. 333-104653 (filed on April 21, 2003; Exhibit 4(a) therein)
10(iii)	10.39	Amendment No. 1 to The Progressive Corporation 2003 Directors Equity Incentive Plan	Filed herewith
10(iii)	10.40	Amendment No. 2 to The Progressive Corporation 2003 Directors Equity Incentive Plan	Current Report on Form 8-K (filed on February 2, 2012; Exhibit 10.2 therein)
10(iii)	10.41	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)	10.42	Form of The Progressive Corporation 2003 Directors Equity Incentive Plan Restricted Stock Award Agreement (for 2004 and thereafter)	Filed herewith
10(iii)	10.43	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)	10.44	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)	10.45	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)	10.46	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)	10.47	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)
10(iii)	10.48	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)	10.49	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)	10.50	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)

- 52 -

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)	10.51	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)	10.52	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)	10.53	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)	10.54	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)	10.55	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)	10.56	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)	10.57	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)	10.58	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)	10.59	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)	10.60	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)
10(iii)	10.61	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)

- 53 -

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)	10.62	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)	10.63	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)	10.64	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)	10.65	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)	10.66	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)	10.67	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)	10.68	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)	10.69	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)	10.70	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)	10.71	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)	10.72	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)	10.73	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)	10.74	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)	10.75	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)	10.76	Form of The Progressive Corporation Directors Restricted Stock Deferral Plan Deferral Agreement	Filed herewith

- 54 -

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)	10.77	Director Compensation Schedule for 2011 and 2012	Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.64 therein)
10(iii)	10.78	Director Compensation Schedule for 2013	Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.72 therein)
10(iii)	10.79	Director Compensation Schedule for 2014	Filed herewith
10(iii)	10.80	The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Annual Report on Form 10-K (filed on March 1, 2011; Exhibit 10.65 therein)
10(iii)	10.81	First Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.68 therein)
10(iii)	10.82	Second Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Quarterly Report on Form 10-Q (filed on May 9, 2011; Exhibit 10.1 therein)
10(iii)	10.83	Third Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Quarterly Report on Form 10-Q (filed on May 9, 2011; Exhibit 10.2 therein)
10(iii)	10.84	Fourth Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Quarterly Report on Form 10-Q (filed on August 6, 2013; Exhibit 10.2 therein)
10(iii)	10.85	Fifth Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Quarterly Report on Form 10-Q (filed on August 6, 2013; Exhibit 10.3 therein)
10(iii)	10.86	Sixth Amendment to The Progressive Corporation Executive Separation Allowance Plan (2006 Amendment and Restatement)	Filed herewith
10(iii)	10.87	2012 Progressive Capital Management Bonus Plan	Current Report on Form 8-K (filed on March 6, 2012; Exhibit 10.1 therein)
10(iii)	10.88	2013 Progressive Capital Management Bonus Plan	Annual Report on Form 10-K (filed on February 26, 2013; Exhibit 10.73 therein)
10(iii)	10.89	2014 Progressive Capital Management Bonus Plan	Annual Report on Form 10-K (filed on February 26, 2014; Exhibit 10.82 therein)
10(iii)	10.90	2015 Progressive Capital Management Bonus Plan	Filed herewith

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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
11	11	Computation of Earnings Per Share	Filed herewith
13	13	The Progressive Corporation 2014 Annual Report to Shareholders	Filed herewith
21	21	Subsidiaries of The Progressive Corporation	Filed herewith
23	23	Consent of Independent Registered Public Accounting Firm	Incorporated herein by reference to page 45 of this Annual Report on Form 10-K
24	24	Powers of Attorney	Filed herewith
31	31.1	Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer, Glenn M. Renwick	Filed herewith
31	31.2	Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer, Brian C. Domeck	Filed herewith
32	32.1	Section 1350 Certification of the Principal Executive Officer, Glenn M. Renwick	Furnished herewith
32	32.2	Section 1350 Certification of the Principal Financial Officer, Brian C. Domeck	Furnished herewith
99	99	Letter to Shareholders from Glenn M. Renwick, President and Chief Executive Officer	Furnished herewith
101	101.INS	XBRL Instance Document	Filed herewith
101	101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101	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	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith

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EX-4.2

Exhibit 4.2

Form of 6-5/8% Senior Notes due 2029

(FACE OF SECURITY)

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”) to the Issuer or its agent for registration of transfer, exchange or payment, and such certificate is registered in the name of Cede & Co., or in such other name as requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

REGISTERED	REGISTERED
NO. R-	$

CUSIP No. 743315 AJ 2

THE PROGRESSIVE CORPORATION

6-5/8% SENIOR NOTE DUE 2029

THE PROGRESSIVE CORPORATION, an Ohio corporation (the “Issuer”), for value received, hereby promises to pay to CEDE & Co., c/o The Depository Trust Company, 55 Water Street, New York, New York 10041 or registered assigns, at the office or agency of the Issuer at the office of the Trustee in Boston, Massachusetts, the principal sum of ($ ) on March 1, 2029, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest semiannually on March 1 and September 1 of each year, commencing on September 1, 1999, on said principal sum at said office or agency, in like coin or currency, at the rate per annum specified in the title of this Note, from the March 1 or the September 1, as the case may be, next preceding the date of this Note to which interest has been paid, unless the date hereof is a date to which interest has been paid, in which case from the date of this Note, or unless no interest has been paid on the Notes, in which case from March 1, 1999, until payment of said principal sum has been made or duly provided for; provided, that payment of interest may be made at the option of the Issuer by check mailed to the address of the person entitled thereto as such address shall appear on the Security Register. Notwithstanding the foregoing, if the date hereof is after the fifteenth day of March or September, as the case may be, and before the following March 1 or September 1, this Note shall bear interest from such March 1 or September 1; provided, that if the Issuer shall default in the payment of interest due on such March 1 or September 1, then this Note shall bear interest from the next preceding March 1 or September 1, to which interest has been paid or, if no interest has been paid on this Note, from March 1, 1999. The interest so payable on any March 1 or September 1 will, subject to certain exceptions provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Note is registered at the close of business on February 15 or August 15, as the case may be, next preceding such March 1 or September 1.

Reference is made to the further provisions of this Note set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.

IN WITNESS WHEREOF, The Progressive Corporation has caused this instrument to be signed by its duly authorized officers and has caused its corporate seal to be affixed hereto or imprinted hereon.

		THE PROGRESSIVE CORPORATION
[CORPORATE SEAL]		By:
			W. Thomas Forrester
			Treasurer
Attest:
	David M. Schneider
	Secretary

Dated:

- 1 -

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities, of the series designated herein, referred to in the within-mentioned Indenture.

STATE STREET BANK AND TRUST COMPANY as Trustee
By:
	Authorized Signatory

- 2 -

(BACK OF SECURITY)

THE PROGRESSIVE CORPORATION

6-5/8% SENIOR NOTE DUE 2029

This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of indebtedness of the Issuer (hereinafter called the “Securities”) of the series hereinafter specified, all issued or to be issued under and pursuant to an indenture dated as of September 15, 1993, as heretofore supplemented and amended (herein called the “Indenture”), between the Issuer and State Street Bank and Trust Company, as Trustee (herein called the “Trustee”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Securities. The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any) and may otherwise vary as in the Indenture provided. This Note is one of a series designated as the 6-5/8% Senior Notes Due 2029 of the Issuer, limited in aggregate principal amount to $300,000,000.

In case an Event of Default, as defined in the Indenture, with respect to the 6-5/8% Senior Notes Due 2029 shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Securities at the time Outstanding (as defined in the Indenture) of all series to be affected (voting as one class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Securities of each such series; provided, however, that no such supplemental indenture shall (i) extend the final maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of any interest thereon, or impair or affect the rights of any Holder to institute suit for the payment thereof, without the consent of the Holder of each Security so affected or (ii) reduce the aforesaid percentage of Securities, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holder of each Security so affected. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, prior to any declaration accelerating the maturity of such Securities, the Holders of a majority in aggregate principal amount Outstanding of the Securities of such series may on behalf of the Holders of all the Securities of such series waive any such past default or Event of Default and its consequences. The preceding sentence shall not, however, apply to a default in the payment of the principal of or premium, if any, or interest on any of the Securities. Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and any Note which may be issued in exchange or substitution herefor, irrespective of whether or not any notation thereof is made upon this Note or such other Note.

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note in the manner, at the respective times, at the rate and in the coin or currency herein prescribed.

The Notes are issuable in registered form without coupons in denominations of $1,000 and any integral multiple of $1,000 at the office or agency of the Issuer at the office of the Trustee in Boston, Massachusetts, and in the manner and subject to the limitations provided in the Indenture, but without the payment of any service charge. Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations.

The Notes of the series designated as the 6-5/8% Senior Notes due 2029 are subject to redemption upon not more than 60 or less than 30 days’ notice by mail, at any time or from time to time, in whole or in part, at the option of the Issuer on any date (a “Redemption Date”), at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii) a “Make Whole Amount,” calculated as described below, plus, in either case, accrued and unpaid interest on the principal amount being redeemed to such Redemption Date; provided that installments of interest on Notes which are due and payable on an interest payment date falling on or prior to the relevant Redemption Date shall be payable to the Holders of such Notes, registered as such at the close of business on the relevant record date, according to the terms and the provisions of the Indenture.

The “Make Whole Amount” means an amount equal to the sum of the present values of the Remaining Scheduled Payments discounted to such Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the Treasury Rate plus 25 basis points.

“Remaining Scheduled Payments” means the remaining scheduled payments of the principal and interest that would be due on the Note being redeemed after the relevant Redemption Date; provided, however, that if the redemption date is not a scheduled interest payment date, the amount of the next succeeding scheduled interest payment on such Note will be reduced by the amount of interest accrued on such Note to such Redemption Date.

“Treasury Rate” means, with respect to any Redemption Date for the Notes, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day immediately preceding the Redemption Date.

“Comparable Treasury Issue” means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

“Independent Investment Banker” means Donaldson, Lufkin & Jenrette Securities Corporation or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee after consultation with the Issuer.

“Comparable Treasury Price” means with respect to any Redemption Date for the Notes the average of three Reference Treasury Dealer Quotations obtained by the Trustee for such Redemption Date.

“Reference Treasury Dealer” means: (i) Donaldson, Lufkin & Jenrette Securities Corporation and its successor; provided, however, that if the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Issuer will substitute therefore another nationally-recognized investment banking firm that is a Primary Treasury Dealer, and (ii) any other two Primary Treasury Dealers selected by the Issuer.

- 3 -

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York City time, on the third Business Day preceding such Redemption Date.

In the event of redemption of this Note in part only, a new Note or Notes of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

Upon due presentment for registration of transfer of this Note at the office or agency of the Issuer at the office of the Trustee in Boston, Massachusetts, a new Note or Notes of authorized denominations for an equal aggregate principal amount will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture, without charge except for any tax or other governmental charge imposed in connection therewith.

The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment of, or on account of, the principal hereof and, subject to the provisions on the face hereof, interest hereon, and for all other purposes, and neither the Issuer nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by notice to the contrary.

No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture or any indenture supplemental thereto or in any Note, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, officer or director, as such, of the Issuer or of any successor corporation, either directly or through the Issuer or any successor corporation, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof.

Terms used herein which are defined in the Indenture shall have the respective meanings assigned thereto in the Indenture.

- 4 -

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS

INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Note on the books of the Issuer, with full power of substitution in the premises.

Dated
	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.

- 5 -

EX-10.1

Exhibit 10.1

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of the 15th day of December 2014, by and among ARX HOLDING CORP., a Delaware corporation (the “Company”); THE PROGRESSIVE CORPORATION, an Ohio corporation (“Progressive”); XL RE LTD., a Bermuda company (“XL”); FASTEAU INSURANCE HOLDING, LLC, a Delaware limited liability company (“Fasteau Holding”); MARC FASTEAU, an individual (“Fasteau”); MARC FASTEAU, AS TRUSTEE OF THE MARC FASTEAU 2012 IRREVOCABLE TRUST (“2012 Trustee”); MARC FASTEAU, AS TRUSTEE OF THE ALEXIS FASTEAU 2008 IRREVOCABLE TRUST (“2008 Trustee,” and together with Fasteau, 2012 Trustee and Fasteau Holding, the “Fasteau Group”); FLEXPOINT FUND, L.P., a Delaware limited partnership (“Flexpoint”); NEW CAPITAL PARTNERS PRIVATE EQUITY FUND, L.P., a Delaware limited partnership (“New Capital”); GREGORY E. STEWART, an individual (“Stewart”); and STEWART INSURANCE HOLDINGS, LLLP, a Florida limited liability limited partnership (“Stewart Holdings”) (XL, Fasteau Holding, Fasteau, 2008 Trustee, 2012 Trustee, Flexpoint, New Capital, Stewart and Stewart Holdings, are referred to herein, individually, as a “Selling Shareholder” and, collectively, as the “Selling Shareholders”).

W I T N E S S E T H:

WHEREAS, Progressive currently holds, directly or indirectly, a 5.0% equity interest in the Company; and

WHEREAS, Progressive desires to acquire a controlling interest in the Company by acquiring additional shares of the Company's capital stock; and

1

WHEREAS, each of the Selling Shareholders desires to sell to Progressive some or all of its/his shares of the Company's capital stock; and

WHEREAS, Progressive and the Selling Shareholders have reached an agreement on the terms and conditions pursuant to which Progressive will acquire from the Selling Shareholders certain or all of their shares of the Company's capital stock and on various other matters, as set forth herein;

NOW, THEREFORE, in consideration of the above recitals, the mutual promises and covenants hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the following meanings:

“Accredited Investor” shall have the meaning specified in Section 5.9.

“Adjusted Tax Distributions” shall have the meaning specified in the SHH LLC Agreement.

“Affiliate” shall mean, with respect to any Person, (a) any other Person that, directly or indirectly, controls, is controlled by, or is under common control with the Person first mentioned, and (b) in the case of a Person who is a natural person, his or her spouse, issue, or estate, and any trust entirely for the benefit of his or her spouse and/or issue. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power (i) to vote more than fifty percent (50%) of the voting interests in such Person, or (ii)

2

to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise.

“Agreement” shall mean this document, including all schedules and exhibits hereto.

“ARX Companies” shall have the meaning specified in Section 4.20.

“Audit Report” shall have the meaning specified in Section 2.2(C).

“BDO” shall have the meaning specified in Section 2.2(B).

“Business Days” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday, excluding federal holidays.

“Capital Contributions” shall mean any cash, cash equivalents, promissory obligations, or the Fair Market Value of other property that an Investor Stockholder contributes or is deemed to have contributed to the Company or (prior to June 30, 2012) SHH with respect to the issuance of any Shares or Class A membership units in SHH.

“Certificate of Designation” shall have the meaning specified in Section 4.6(B).

“Certificate of Incorporation” shall have the meaning specified in Section 4.6(B).

“Certificates of Authority” shall have the meaning specified in Section 4.12(B).

“Closing” shall have the meaning specified in Section 2.3(A).

“Closing Balance Sheet” shall have the meaning specified in Section 2.2(B).

“Closing Date” shall have the meaning specified in Section 2.3(A).

“Common Stock” shall have the meaning specified in Section 4.6(A).

“Company” shall have the meaning specified in the Preamble.

“Company Stock” shall have the meaning specified in Section 4.7.

“Contract” shall have the meaning specified in Section 4.13.

“Dispute Period” shall have the meaning specified in Section 2.2(E).

3

“Distributions” shall mean (i) from and after June 30, 2012, each dividend paid by the Company to a Stockholder with respect to such Person’s Shares, or (ii) prior to June 30, 2012, each distribution made by SHH to its members with respect to such Person’s Class A membership units, in each case whether in cash, property or securities of the Company or SHH, as applicable, and whether by liquidating distribution, dividend or otherwise; provided that Distributions shall not include any recapitalization or exchange of securities of the Company or SHH (whether resulting from the conversion of the Company or SHH or otherwise), any subdivision (by share or unit split or otherwise), any combination (by reverse share or unit split or otherwise) of any outstanding shares or units or any repurchase or redemption of shares or units by the Company or SHH, respectively.

“Draft 2014 Financial Statements” shall have the meaning specified in Section 2.2(B).

“Encumbrance” shall mean any lien, charge, claim, encumbrance, pledge, condition, equitable interest, option, security interest, mortgage, liability, commitment, covenant, right of first refusal or any other right, agreement or restriction of any kind, whether accrued, absolute, contingent or otherwise, including, without limitation, any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Enforceability Exceptions” shall mean (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws now or hereafter in effect relating to or affecting the rights of creditors of insurance companies or creditors’ rights generally; and (b) general principles of equity (regardless of whether considered in a proceeding at law or in equity).

“Equity Proceeds” shall have the meaning specified in Section 9.2.

“Fair Market Value” shall have the meaning specified in Section 9.3.

“Fasteau” shall have the meaning specified in the Preamble.

4

“Fasteau Group” shall have the meaning specified in the Preamble.

“Fasteau Holding” shall have the meaning specified in the Preamble.

“First Reference Date” shall have the meaning specified in Section 2.2(A).

“Flexpoint” shall have the meaning specified in the Preamble.

“Fourth Amended Stockholders' Agreement” shall mean the Fourth Amended and Restated Stockholders' Agreement, which is to be executed and delivered on the Closing Date by the Company, Progressive and the Remaining Stockholders of the Company, including all supplements, exhibits and amendments thereto, substantially in the form of Exhibit H.

“Fully Diluted Basis” shall mean all of the equity securities of the Company, including all of the issued and outstanding shares of capital stock of the Company, including, without limitation, shares of Common Stock and Series A Preferred Stock, and, without duplication, all shares of Common Stock or Series A Preferred Stock that are issuable upon the exercise or conversion of outstanding in-the-money options, warrants, convertible securities and other in-the-money rights to acquire any shares of the capital stock of the Company, including (without limitation) any rights granted in connection with any merger, consolidation, acquisition or other transaction involving the Company or any of its Subsidiaries.

“GAAP” means accounting principles generally accepted in the United States in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision, or any agency or instrumentality thereof, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

5

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all of the rules and regulations promulgated thereunder.

“Independent Accounting Firm” shall have the meaning specified in Section 2.2(E).

“Internal Control Letter” shall have the meaning specified in Section 2.2(C).

“IRR” shall have the meaning specified in Section 9.2.

“Investor Contributions” shall have the meaning specified in Section 9.2.

“Investor Distributions” shall have the meaning specified in Section 9.2.

“Investor Stockholders” shall have the meaning specified in Section 9.1.

“Law” or “law” shall mean any statute, law, ordinance, regulation, code, order, constitution, treaty, common law, judgment, decree, or other requirement or rule of law of any Governmental Authority.

“Management Certification” shall have the meaning specified in Section 2.2(G).

“Marketable Securities” shall mean securities (i) issued by an issuer with a public float equal to or greater than $2 billion; (ii) that are of a class of securities listed on major national or international stock exchange; (iii) that constitute, in the aggregate, not more than 2.0% of the outstanding securities of such class; (iv) that are eligible for immediate sale by the distributee pursuant to a registration statement effective under the Securities Act; and (v) are not subject to any contractual or legal limitations on disposition, including any “hold-back” or “lock-up” agreement.

“Marketable Securities Proceeds” shall have the meaning specified in Section 9.2.

“Material Adverse Effect” shall mean any event, occurrence, fact, condition or change that has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on (a) the business, operations, results of operations, prospects (as currently contemplated by the Company’s business plan), financial condition, properties or assets (relative to liabilities) of

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the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company or any Selling Shareholder to consummate the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change, directly or indirectly, arising out of or attributable to (i) any changes, conditions or effects in the United States economy or financial, banking or securities markets in general; (ii) conditions generally affecting the industries in which the Company and its Subsidiaries operate; (iii) any action required or expressly authorized by this Agreement or any action taken (or omitted to be taken) by Progressive or with the written consent of or at the written request of Progressive and the Selling Shareholders; (iv) any changes in applicable Laws or accounting rules (including GAAP and statutory accounting principles) or the enforcement, implementation or interpretation thereof; or (v) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, agents, suppliers, distributors or others having relationships with the Company or its Subsidiaries.

“Maximum Premium” shall have the meaning specified in Section 6.2.

“New Capital” shall have the meaning specified in the Preamble.

“Objection Notice” shall have the meaning specified in Section 2.2(D).

“Option Plan” shall have the meaning specified in Section 4.10.

“Option” shall mean the right and option granted to an employee, former employee or any other person or entity to acquire one or more shares of Company Stock at a fixed price per share or at a price determined by formula.

“Optionees” shall mean have the meaning specified in Section 4.9.

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“Parties” or “parties” shall mean the Company, Progressive and the Selling Shareholders.

“PCI” shall mean PC Investment Company, a Delaware corporation.

“Permitted Encumbrance” shall mean the rights, limitations, conditions and covenants contained in the Third Amended Stockholders’ Agreement (prior to the Closing Date) or the Fourth Amended Stockholders’ Agreement (on or after the Closing Date), and any restrictions on or conditions to transfer imposed by federal or state securities laws.

“Person” shall mean an individual, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority, or other entity of any kind.

“Progressive” shall have the meaning specified in the Preamble.

“Progressive Representatives” shall have the meaning specified in Section 7.3.

“Purchase Price Per Share” shall have the meaning specified in Section 2.2(A).

“Remaining Stockholders” shall mean all entities and persons that hold any shares of Company Stock, or hold any Options to acquire any shares of Company Stock, immediately after the time of Closing, other than Progressive, any of its Affiliates, the Selling Shareholders that are not members of the Fasteau Group and their respective successors and assigns.

“Review Period” shall have the meaning specified in Section 2.2(D).

“Safe Harbour” or “SHH” shall mean Safe Harbour Holdings, LLC, a former Delaware limited liability company that was merged into ARX. For purposes of this Agreement, Safe Harbour and its Subsidiaries shall be considered and treated as wholly-owned Subsidiaries of the Company.

“Second Reference Date” shall have the meaning specified in Section 2.2(A).

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“Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated by the Securities and Exchange Commission thereunder.

“Selling Shareholders” shall have the meaning specified in the Preamble.

“Series A Preferred Stock” shall have the meaning specified in Section 4.6(B).

“Shares” shall have the meaning specified in Section 2.1.

“Special Payment” shall have the meaning specified in Section 9.1.

“SHH LLC Agreement” shall mean the Amended and Restated Limited Liability Company Agreement dated March 26, 2007.

“Stewart” shall have the meaning specified in the Preamble.

“Stewart Holdings” shall have the meaning specified in the Preamble.

“Stockholders” shall have the meaning specified in Section 4.9.

“Subsidiaries” shall have the meaning specified in Section 4.11.

“Tangible Net Book Value” shall mean, without duplication, the consolidated assets of the ARX Companies, including deferred commissions and deferred insurance premium taxes, less its intangible assets, total liabilities and non-controlling interests, determined in accordance with GAAP from amounts set forth on the 2014 Financial Statements as finally determined in accordance with Section 2.2.

“Taxes” shall mean all federal, state, local, foreign and other income, gross receipts, sales, use, ad valorem, transfer, franchise, registration, profits, license, lease, service, withholding, payroll, employment, unemployment, excise, severance, environmental, stamp, occupation, premium, retaliatory, property (real or personal), or other taxes, fees, assessments or charges of any kind, together with any interest, penalties or additions with respect thereto.

“Termination Date” shall have the meaning specified in Section 13.1(F).

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“Third Amended Stockholders' Agreement” shall mean the Third Amended and Restated Stockholders' Agreement dated August 14, 2012, among the Company and each of Company's Stockholders, including all amendments, exhibits, supplements and any successor agreements thereto.

“Third Quarter Financial Statements” shall have the meaning specified in Section 4.17(B).

“Transfer” or “transfer” shall mean (a) when used as a verb, the act of selling, pledging, mortgaging, hypothecating, giving, transferring, creating a security interest, lien or trust (voting or otherwise), assigning, or otherwise encumbering or disposing of, and (b) when used as a noun, any sale, pledge, mortgage, hypothecation, gift, transfer, creation of security interest, lien or trust, any assignment, or other encumbrance or disposition.

“2008 Trustee” shall have the meaning specified in the Preamble.

“2012 Trustee” shall have the meaning specified in the Preamble.

“2012 Purchase Agreement” shall mean the Stock Purchase Agreement dated August 14, 2012, entered into by and between the Company, Progressive, PCI and the Selling Shareholders named therein, pursuant to which PCI acquired a 4.9% equity interest in the Company, which interest may be transferred to Progressive.

“2013 Financial Statements” shall have the meaning specified in Section 4.17(A).

“2014 Financial Statements” shall have the meaning specified in Section 2.2(C).

“XL” shall have the meaning specified in the Preamble.

ARTICLE II

PURCHASE AND SALE OF SHARES

2.1. Purchase and Sale of Shares.

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This Agreement contemplates that, at the Closing, on the terms and subject to the conditions set forth herein, an aggregate of 706,858 shares of Company Stock, which shall constitute approximately 61.8% of the issued and outstanding capital stock of the Company on a Fully Diluted Basis as of the Closing Date (collectively, and including any shares of Company Stock resulting from a conversion thereof, the “Shares”) will be sold, assigned and transferred to Progressive. Specifically, at Closing, each of the Selling Shareholders shall sell, assign and transfer to Progressive, and Progressive shall acquire from each Selling Shareholder, good and marketable title to the number and type of Shares set forth opposite such Selling Shareholder’s name on Exhibit A hereto for the Purchase Price Per Share determined as provided in Section 2.2 hereof. All of such Shares shall be sold free and clear of any and all Encumbrances, other than Permitted Encumbrances.

2.2.Purchase Price Per Share.

(A)    The Purchase Price Per Share of the Shares to be acquired by Progressive hereunder will be equal to the sum of (i) 2.6 multiplied by the Tangible Net Book Value of the Company as of December 31, 2014 (the “First Reference Date”), determined in accordance with the procedures set forth in Section 2.2(B)-(F) hereof, plus (ii) an additional amount equal to the exercise price of all in-the-money options to purchase Company Stock outstanding as of December 31, 2014, divided by (iii) the total number of outstanding shares of Company Stock, determined on a Fully Diluted Basis, as of the date that is ten (10) Business Days prior to the Closing Date (the “Second Reference Date”). To illustrate application of this formula, pro forma calculations of the Tangible Net Book Value of the Company as of September 30, 2014, and of the resulting Purchase Price Per Share as of that date, are set forth in Exhibit B attached hereto.

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(B)    The Tangible Net Book Value of the Company as of the First Reference Date will be determined in accordance with GAAP, and will be based on the consolidated balance sheet of the Company and its Subsidiaries as of such date that is included in the 2014 Financial Statements, which are to be prepared by the Company and audited by BDO USA, LLC (“BDO”) in accordance with and as the same may be adjusted pursuant to this Section 2.2 (the “Closing Balance Sheet”). Promptly after December 31, 2014, the Company will prepare consolidated balance sheets and consolidated statements of shareholders' equity as of December 31, 2014 and consolidated income statements and consolidated statements of cash flows for the twelve-month period then ended for the Company and its consolidated Subsidiaries in accordance with GAAP applied on a basis consistent with the application of GAAP by the Company in preparation of the 2013 Financial Statements, except as necessary to correct any errors and improve accuracy (collectively, the “Draft 2014 Financial Statements”), and shall use its best efforts to complete the Draft 2014 Financial Statements, and provide Progressive and the Selling Shareholders with copies thereof, together with an explanation of any material or unusual changes or variations in the financial balances or results of operations from the Third Quarter Financial Statements, no later than January 31, 2015. Progressive and the Selling Shareholders shall have twenty (20) Business Days to review and raise objections with the Company to the Draft 2014 Financial Statements, which objections shall be delivered in writing to the other Parties and shall be described in reasonable detail. The Parties shall use their commercially reasonable efforts to resolve any such objections during such twenty (20) Business Day period, and if such objections are resolved, the Company shall deliver an update of the Draft 2014 Financial Statements to BDO. In the event the Parties are not able to resolve any such objections during such twenty (20) Business Day period, the Company shall deliver such

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objections to BDO for BDO’s review and consideration during its audit of the Draft 2014 Financial Statements.

(C)     The Company will use its reasonable best efforts to deliver to Progressive, no later than March 15, 2015, (i) an audited consolidated balance sheet and consolidated statement of shareholders’ equity as of December 31, 2014 and the related consolidated income statement and consolidated statement of cash flows for the twelve-month period then ended of the Company and its Subsidiaries (collectively, the “2014 Financial Statements”) prepared in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the 2013 Financial Statements, except as necessary to correct any errors and improve accuracy, and provided the applicable GAAP standards were properly selected and applied; (ii) the unqualified opinion addressed to the Company from BDO ("Audit Report"), confirming that it has audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the 2014 Financial Statements, that such financial statements were prepared in accordance with GAAP, as stated above; that such financial statements fairly present, in all material respects, the financial condition, results of operation and cash flows of the Company and its consolidated subsidiaries as at the end of and for the period represented thereby; and that, during the course of its audit of the Company’s 2014 Financial Statements, it did not become aware of any material deficiencies, misstatements or omissions in the reported information; and (iii) an Internal Control Letter addressed to the Company from BDO confirming that no material weaknesses or significant deficiencies in the Company’s and its Subsidiaries’ systems of internal control or any other material irregularity in accounting or control came to its attention since year end 2013, or, to its knowledge, exists as of the date of the Internal Control Letter (“Internal Control Letter”).

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(D)     Progressive and the Selling Shareholders shall have a period of ten (10) Business Days after receipt of the audited 2014 Financial Statements, Audit Report and Internal Control Letter (the "Review Period") within which to review and raise objections to the 2014 Financial Statements. If within such period of ten (10) Business Days neither Progressive nor any Selling Shareholder has delivered to the other Parties written notice of objection to the 2014 Financial Statements (which notice shall state the basis of objection in reasonable detail) (the “Objection Notice”), then the 2014 Financial Statements shall be deemed approved, be binding and conclusive on the Parties and used in computing the Tangible Net Book Value and any other computations provided herein.

(E)    If a Party delivers to the other Parties an Objection Notice in accordance with Section 2.2(D), the Company, Progressive, and the Selling Shareholders agree to work together, in good faith, to promptly resolve any items identified in the Objection Notice that may affect the Closing Balance Sheet and that are necessary to determine the Purchase Price Per Share. In the event that Progressive, the Company and the Selling Shareholders are unable to resolve to their mutual satisfaction any such differences within ten (10) Business Days of the delivery of the Objection Notice (“Dispute Period”), then the Parties shall engage an independent, nationally recognized accounting firm mutually acceptable to Progressive, the Company, and the Selling Shareholders (the “Independent Accounting Firm”) to resolve the items included in the Objection Notice that remain in dispute, and all other items shall be deemed final and binding on the Parties.

(F)    Within ten (10) Business Days following the end of the Dispute Period, the Company, Progressive and the Selling Shareholders shall submit their proposed resolutions of the items in dispute to the Independent Accounting Firm. The Independent Accounting Firm shall have thirty (30) days to deliver its determination on each of the items set forth in the Objection Notice that

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remain in dispute. The Independent Accounting Firm shall be instructed to only resolve the matters identified in the Objection Notice that are submitted to the Independent Accounting Firm and not to investigate any other matters. During the thirty (30) day review by the Independent Accounting Firm, the Parties shall make available to the Independent Accounting Firm such individuals and such information, books and records as may be reasonably requested by the Independent Accounting Firm to make its determination. If GAAP allows more than one method and the Independent Accounting Firm finds that one of those methods is preferable to the other(s) under GAAP, then the Independent Accounting Firm will choose the more preferable method. The determination by the Independent Accounting Firm shall be final and binding on the Parties, except in the case of fraud or manifest error, and such determination shall be used in computing the Tangible Net Book Value and any other computations provided for herein. The Independent Accounting Firm shall act as an expert, not as an arbitrator, in resolving the dispute. The proceeding before the Independent Accounting Firm shall be an expert determination under the law governing expert determination and appraisal proceedings. All costs and expenses, including, fees and disbursements, of the Independent Accounting Firm shall be borne equally by the Company, Progressive and the Selling Shareholders as a group (shared on a pro rata basis), each of which shall bear one-third (1/3) of such costs and expenses.

(G)     At least five (5) days prior to the Closing, the Company will prepare and deliver to Progressive and the Selling Shareholders a statement, in form attached hereto as Exhibit B, and signed by the Company’s Chief Executive Officer and the principal financial or accounting officer of the Company, certifying to Progressive and the Selling Shareholders the Company’s Tangible Net Book Value as of the First Reference Date and detailing the calculation of the total number of outstanding shares of Company Stock (determined on a Fully Diluted Basis) as of the Second

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Reference Date, and the calculation of the Purchase Price Per Share (the “Management Certification”).

2.3.Closing, Delivery and Payment.

(A)    The closing of the purchase and sale of the Shares pursuant to thisAgreement (the “Closing”) shall take place at 10:00 a.m. on the date (the “Closing Date”) that is the first (1st) Business Day of the calendar month after the Purchase Price Per Share has been determined in accordance with Section 2.2, the Parties have secured all necessary regulatory approvals for the consummation of the transactions contemplated hereby (as contemplated by Section 10.1) and all other conditions to Closing have been satisfied or waived in writing (other than those conditions that by their nature are to be satisfied at the Closing, and subject to the satisfaction or written waiver of such conditions), at the offices of the Company, or at such other time or place as the Company and Progressive may mutually agree.

(B)    At the Closing, subject to the terms and conditions hereof, each of the Selling Shareholders will deliver to Progressive certificates for all of the Shares to be sold by such Selling Shareholder as set forth on Exhibit A, with all required transfer tax stamps attached, accompanied by irrevocable stock powers for the Shares, duly endorsed to Progressive or in blank, and signed by or on behalf of the appropriate Selling Shareholder, which, in the aggregate, will represent all of the Shares to be purchased by Progressive at the Closing. Following receipt of such share certificates by Progressive, Progressive will deliver them to the Company for cancellation, and the Company will cancel such share certificates and will deliver to Progressive a new share certificate representing the total number of Shares acquired by Progressive pursuant to this Agreement. Contemporaneously therewith, subject to the terms and conditions hereof, Progressive shall deliver the aggregate Purchase Price Per Share payable to each of the Selling Shareholders for the Shares

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sold by such Selling Shareholders to Progressive hereunder (which are as set forth on Exhibit A) by wire transfer of immediately available funds to such account or accounts as the Selling Shareholders shall designate not less than five (5) Business Days prior to the Closing Date.

(C)     In addition, at Closing:

(i)    The Company shall deliver to Progressive (a) good standing certificates, dated as of a date not more than five (5) days prior to the Closing Date, for the Company and each of its Subsidiaries, issued by the Office of the Secretary of State for the state(s) of incorporation of the respective companies, and (b) copies of each Certificate of Authority then held by the Company and/or any of its Subsidiaries as listed on Exhibit F.

(ii)    The Company and the Selling Shareholders shall execute and deliver to Progressive a certificate or certificates referred to in Section 11.3, dated the Closing Date.

(iii)    Progressive shall execute and deliver to the Company and the Selling Shareholders a certificate referred to in Section 12.3 dated the Closing Date.

(iv)    The Selling Shareholders will deliver to Progressive written opinions from their respective legal counsel with respect to the matters described at Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.7(a) (subject to usual and customary qualifications, exceptions and assumptions), substantially in the forms attached as Exhibit J.

(v)     The Company will deliver to Progressive a written opinion from its legal counsel as to the matters described in Sections 4.1, 4.2, 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11 and 4.12 hereof (subject to usual and customary qualifications, exceptions and assumptions), in form substantially similar to the form of the opinion delivered by the Company to Progressive at the closing of the transactions contemplated by the 2012 Purchase Agreement.

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(vi)    Progressive will deliver to the Company and the Selling Shareholders a written opinion from its General Counsel as to the matters described in Sections 5.1, 5.2, 5.3 and 5.4 hereof (subject to usual and customary qualifications, exceptions and assumptions), in form and substance reasonably acceptable to General Counsel of the Company.

(vii)    Immediately after and subject to the acquisition by Progressive of all of the tendered Shares of the Selling Shareholders, the Company, the Remaining Stockholders (subject to the proviso contained in Section 11.8) and Progressive shall deliver counterparts of the Fourth Amended Stockholders’ Agreement, which shall have been executed by the Company, Progressive and all Remaining Stockholders, including all individuals who are holding options to acquire any shares of the Company's capital stock.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS

Each of the Selling Shareholders hereby represents and warrants to Progressive that, as of the date of this Agreement, as to itself/himself only and not as to any other Selling Shareholder, except as set forth on the Schedule of Exceptions attached hereto (which specifically identifies the relevant subsection(s) hereof):

3.1.    Organization; Good Standing. If such Selling Shareholder is a corporate entity, limited liability company, partnership or other artificial entity, such Selling Shareholder has been duly organized and is validly existing and in good standing under the laws of its state or other jurisdiction of organization, and has all requisite corporate, limited liability company or other power and authority to own and operate its properties and assets, and to carry on its business as now conducted, except in each case for any such failure that would not have a material adverse

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effect on the ability of such Selling Shareholder to consummate the transactions contemplated to be consummated by such Selling Shareholder under this Agreement.

3.2.Authorization. Such Selling Shareholder has all necessary right and authority to enter into this Agreement and, if such Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders’ Agreement and to carry out all of its/his respective obligations hereunder and thereunder, and to sell to Progressive all of the Shares that such Selling Shareholder has agreed to convey to Progressive hereunder, as set forth on Exhibit A hereto, for the consideration herein provided. All corporate, limited liability company or other action on the part of such Selling Shareholder, its officers, directors, members, managers, partners and/or stockholders (as applicable), necessary to authorize its or his execution and delivery of this Agreement and, if such Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders’ Agreement, and the performance of all obligations of such Selling Shareholder hereunder and thereunder has been taken, and this Agreement and, if the Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders’ Agreement, when executed and delivered, will constitute valid and legally binding obligations of such Selling Shareholder, enforceable in accordance with their terms, subject to the Enforceability Exceptions. The sale to Progressive of the Shares provided for hereunder is not and will not be subject to any preemptive rights, rights of first refusal, co-sale rights, tag-along rights or other rights, restrictions or limitations that have not been properly waived.

3.3.Stock Ownership. Such Selling Shareholder is the sole owner of, and owns, beneficially and of record, all of the Shares to be conveyed by it/him to Progressive hereunder, as set forth in Exhibit A hereto, free and clear of any and all Encumbrances, other than Permitted Encumbrances. By the deliveries to be made at Closing, and the other actions to be taken at or

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prior to the Closing, Progressive shall own, beneficially and of record, good and marketable title to all of such Shares, free and clear of any and all Encumbrances, other than Permitted Encumbrances and any Encumbrances placed on the Shares by or pursuant to any actions taken by Progressive.

3.4.Absence of Conflict. Neither the execution and delivery of this Agreement and, if such Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders’ Agreement by such Selling Shareholder, nor the performance by such Selling Shareholder of any of its/his obligations hereunder or thereunder, (i) conflicts with or results in, or will conflict with or result in, a breach or violation of any article, by-law, regulation, judgment, decree, order, writ, injunction, statute, rule or regulation applicable to such Selling Shareholder, or (ii) conflicts with or constitutes, or will conflict with or constitute, a default under or a breach or violation of any of the terms of any note, bond, mortgage, deed, trust, indenture, instrument or agreement to which such Selling Shareholder is a party, or to which such Selling Shareholder owes any duty or obligation, or by which such Selling Shareholder, or any of its/his respective assets or property, is bound.

3.5.Governmental and Third Party Consents. No consent, approval, qualification, order or authorization of, or filing with or notice to, any Governmental Authority or other public or private party is required on the part of such Selling Shareholder in connection with such Selling Shareholder’s valid execution, delivery and performance of this Agreement and, if the Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders’ Agreement, and the offer and sale of the Shares to Progressive by such Selling Shareholder, except for those filings, authorizations and approvals described in Sections 8.4 and 8.5 hereof.

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3.6.Absence of Certain Litigation. There is no action, suit, proceeding, or investigation pending or, to the knowledge of such Selling Shareholder, threatened as of the date of this Agreement, against such Selling Shareholder that questions or challenges the validity of this Agreement or, if such Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders' Agreement, or the right of such Selling Shareholder to enter into this Agreement or, if such Selling Shareholder is a member of the Fasteau Group, the Fourth Amended Stockholders' Agreement, or to consummate any of the transactions contemplated hereby or thereby, including the sale of Shares to Progressive as herein provided.

3.7.Offering. (a) Subject to the truth and accuracy of Progressive's representations set forth in Sections 5.1 to 5.11 of this Agreement, the offer and sale of the Shares to Progressive by such Selling Shareholder, as contemplated by this Agreement, are exempt from the registration requirements of the Securities Act, and (b) none of the Selling Shareholders, and no agent or other person acting on its/his/her or their behalf, will take any action that would cause the loss of such exemption.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE

COMPANY AND THE FASTEAU GROUP

The Company hereby represents and warrants, and each member of the Fasteau Group hereby represents and warrants on a pro rata basis (based on the ratio of the number of Shares to be conveyed hereunder by the Fasteau Group, in the aggregate, to the total number of Shares to be conveyed hereunder by all of the Selling Shareholders as shown on Exhibit A), to Progressive that, as of the date of this Agreement, except as set forth on the Schedule of Exceptions attached hereto (which specifically identifies the relevant subsection(s) hereof):

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4.1.    Organization; Good Standing; Qualification. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted. The Company is duly qualified and is authorized to transact business and is in good standing as a foreign corporation in each jurisdiction in which it presently conducts business and in which the failure to be so qualified would have a Material Adverse Effect.

4.2.Authorization. The Company has all necessary power and authority to enter into this Agreement and the Fourth Amended Stockholders’ Agreement and to perform all of its obligations hereunder and thereunder. All corporate and other action on the part of the Company, its officers, directors and stockholders, necessary to authorize its execution and delivery of this Agreement and the Fourth Amended Stockholders’ Agreement, and the performance by the Company of all of its obligations hereunder and thereunder, has been taken, and this Agreement and the Fourth Amended Stockholders’ Agreement, when executed and delivered, will constitute the valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to the Enforceability Exceptions.

4.3.Absence of Conflict. Neither the execution and delivery of this Agreement and the Fourth Amended Stockholders’ Agreement by the Company, nor the performance by the Company of any of its obligations hereunder or thereunder, (a) conflicts with or results in, or will conflict with or result in, a breach or violation of any article, by-law, regulation, judgment, decree, order, writ, injunction, statute, rule or regulation applicable to the Company, or (b) conflicts with or constitutes, or will conflict with or constitute, a default under or a breach or violation of any of the

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terms of any note, bond, mortgage, deed, indenture, instrument or agreement to which the Company is a party or by which the Company, or any of its assets or property, is bound.

4.4.Articles and Bylaws. The Certificate of Incorporation, Bylaws and Certificate of Designation of the Company, each as amended to date, true, complete and current copies of which have heretofore been delivered to Progressive, are in effect on the date hereof and no amendment or modification thereof will be made prior to the Closing.

4.5.Governmental and Third Party Consents. No consent, approval, qualification, order or authorization of, or filing with or notice to, any Governmental Authority or other public or private party is required on the part of the Company or any of its Subsidiaries in connection with the Company's valid execution, delivery and performance of this Agreement and the Fourth Amended Stockholders’ Agreement and the offer and sale of the Shares to Progressive as provided hereunder, except for (a) the filing of a premerger notification report, and any related information, documents or materials, by the Company under the HSR Act, and (b) any filings required to be made with the Delaware, Florida or Texas Departments of Insurance.

4.6.Capitalization of the Company. The authorized capital of the Company consists solely of:

(A)     Common Stock. 1,500,000 shares of common stock, par value $.01 per share (“Common Stock”), of which 241,500 shares have been issued and 197,000 shares are outstanding.

(B)    Preferred Stock. 950,000 shares of Preferred Stock, par value $.01 per share, all of which have been designated “Series A Convertible Preferred Stock,” of which 942,625 shares have been issued and 921,125 shares are outstanding (the “Series A Preferred Stock”). The rights, privileges and preferences of the Series A Preferred Stock are as stated in the Company’s Amended and Restated Certificate of Incorporation, as filed with the Delaware Secretary of State on October

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8, 1997, as amended on November 2, 2007, April 2, 2008, December 6, 2011 and July 24, 2012 (“Certificate of Incorporation”), and supplemented by the Certificate of Designation, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock of ARX Holding Corp., filed with the Delaware Secretary of State on October 8, 1997, and amended on December 6, 2011 and July 24, 2012 (“Certificate of Designation”). Each share of Series A Preferred Stock is convertible into one (1) share of Common Stock, subject to adjustment as set forth in the Certificate of Designation.

4.7.Authorization and Issuance. All of the outstanding shares of Common Stock and Series A Preferred Stock (collectively, the “Company Stock”) have been duly authorized and validly issued, are fully paid and non-assessable, and were issued in compliance with the registration or qualification provisions of the Securities Act and any relevant state securities laws or pursuant to valid exemptions therefrom.

4.8.Valid Issuance of the Shares; Progressive Ownership. All of the Shares to be purchased by Progressive hereunder have been duly and validly authorized and issued in accordance with all applicable Law, and are fully paid and non-assessable and, as of the Closing, will constitute approximately 61.8% of the issued and outstanding capital stock of the Company, calculated on a Fully Diluted Basis.

4.9.Ownership of Company Stock; Options, etc. All of the outstanding shares of Company Stock are owned by the Company’s stockholders identified on Exhibit C hereto (“Stockholders”), in the respective numbers specified in said Exhibit. All outstanding options, warrants and other rights to acquire any shares of Company Stock are held by the persons identified in Exhibit D hereto (“Optionees”). The number of Company Shares which may be purchased by each such Optionee upon exercise of his or her respective Option(s) is set forth in Exhibit D.

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4.10.Outstanding Options and Rights. Except for (i) the conversion privileges relating to the Series A Preferred Stock, (ii) the rights provided to Progressive in this Agreement, (iii) currently outstanding options to purchase 26,000 shares of Common Stock granted to employees of the Company pursuant to the Company's 2007 Stock Option Plan, as listed in Exhibit D (the “Option Plan”), and (iv) rights and options provided for in the Third Amended Stockholders’ Agreement (prior to the Closing) and Fourth Amended Stockholders’ Agreement (on or after the Closing), there are no outstanding options, warrants, debentures, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements or agreements of any kind for the purchase or acquisition from the Company of, or that requires or may require the Company to issue, any of its securities, upon exercise, conversion or otherwise. No additional Options or other rights to acquire any shares of the Company’s capital stock will be granted by the Company without the prior written consent of Progressive.

4.11.Subsidiaries. Except for the entities identified on Exhibit E hereto (collectively, the “Subsidiaries”), the Company does not own or control, directly or indirectly, any interest in any other corporation, partnership, limited liability company, association, or other business entity, other than fixed-income securities held in the Company’s investment portfolios. Each of the Subsidiaries is a corporation duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted, except where the failure to meet any of those requirements does not have a Material Adverse Effect. Except as specified in the Schedule of Exceptions, all of the outstanding capital stock of each of the Subsidiaries is owned directly by the Company or indirectly through one or more wholly-owned subsidiaries of the Company, and is free and clear of all Encumbrances. There

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are no outstanding rights, agreements, warrants or options to acquire any of the capital stock of, or any other interest in, any Subsidiary, or to acquire any security or other instrument exercisable for or convertible into any capital stock of any Subsidiary or any such right, interest, agreement, warrant or option.

4.12.Licenses, Permits and Certificates of Authority.

(A)    The Company and each of its Subsidiaries has all franchises, permits, licenses and certificates of authority that are necessary for the conduct of its business as now being conducted by it. Neither the Company nor any of its Subsidiaries is in material default under, or out of compliance in any material respect with, any of such franchises, permits, licenses or certificates of authority or has received any notice alleging any such default or non-compliance exists, nor are there any proceedings pending, or to the knowledge of the Company or any member of the Fasteau Group threatened, to revoke, suspend, limit or restrict any such franchise, permit, license or certificate of authority.

(B)    The Company or its Subsidiaries hold, and as of the Closing Date will hold, each of the certificates of authority identified in Exhibit F hereto (the “Certificates of Authority”). The Certificates of Authority authorize the Company or its Subsidiaries to write property and casualty insurance (including homeowner’s insurance) in each of the states identified in Exhibit F. True, complete and correct copies or other verifiable evidence of all Certificates of Authority held by the Company and its Subsidiaries have been delivered to Progressive. None of the Certificates of Authority has been suspended at any time, and each of the Certificates of Authority is currently unencumbered, in good standing and in full force and effect. The Certificates of Authority will be maintained unencumbered, in good standing and in full force and effect through the Closing Date. Between January 1, 2010 and the date of this Agreement, neither the Company, nor any of its

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Subsidiaries, has been subject to any market conduct exams by any insurance or other regulatory authority.

(C)    Neither the Company nor any of its Subsidiaries writes or has written insurance coverage for or that is applicable to asbestos or environmental risks or exposures, or has incurred any liability for any such risks or exposures, as an underwriter or otherwise.

4.13.Compliance With Instruments and Laws. Neither the Company nor any of its Subsidiaries is in violation or default of any provision of its Articles or Certificate of Incorporation or Bylaws (or other organizational documents), or in violation of or default, in any material respect, under any note, bond, mortgage, contract, indenture, agreement or instrument to which it is a party or by which it is bound (individually, a “Contract” and, collectively, “Contracts”) or, to the Company’s and each member of the Fasteau Group's knowledge, of any federal or state judgment, order, writ, decree, statute, rule, regulation or restriction applicable to the Company or any of its Subsidiaries, and the Company and each of its Subsidiaries have made all required filings with, and have otherwise complied, in all material respects, with, all Laws to which they are subject.

4.14.Litigation. There is no action, suit, proceeding, or investigation pending or, to the Company's knowledge and to the knowledge of the Fasteau Group, threatened as of the date of this Agreement, against the Company, any of its Subsidiaries or any of the Selling Shareholders that questions the validity of this Agreement or the Fourth Amended Stockholders' Agreement, or the right of the Company or any of the Selling Shareholders to enter into this Agreement or the Fourth Amended Stockholders' Agreement, or to consummate any of the transactions contemplated hereby or thereby, or that could reasonably be expected to result in a loss to the Company or any of its Subsidiaries (after reinsurance) in excess of $2.5 million or that could reasonably be expected to have, either individually or in the aggregate, any Material Adverse Effect. Except as specified in

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the Schedule of Exceptions, neither the Company nor any of its Subsidiaries is a party to or, to the knowledge of the Company and the Fasteau Group, named in or subject to any order, writ, injunction, judgment, or decree of any court, government agency, or instrumentality which could have a Material Adverse Effect.

4.15.Information Delivered to Progressive; Knowledge of Certain Circumstances.

(A)    The written information and materials previously delivered, or to be delivered, to Progressive by or on behalf of the Company or its Subsidiaries and/or the Selling Shareholders was, or will be, prepared in good faith by the Company, such Subsidiary or the Selling Shareholders (as applicable) and, together with the information set forth herein, does not and will not, to the Company's knowledge and to the knowledge of each member of the Fasteau Group, contain any untrue statement of a material fact, nor to the knowledge of the Company or any member of the Fasteau Group does it or will it omit to state a material fact necessary to make the statements herein or therein not misleading.

(B)    Except as set forth in the Schedule of Exceptions, neither the Company nor any member of the Fasteau Group has received any notice of, or is aware of, any event or set of facts or circumstances involving or relating to the Company or any of its Subsidiaries that could reasonably be expected to have or result in a Material Adverse Effect.

4.16.Title to Property and Assets. Except (i) as specified in the Schedule of Exceptions, (ii) for liens for current taxes not yet delinquent, (iii) for liens imposed by law and incurred in the ordinary course of business for obligations not past due to laborers, materialmen and the like, (iv) for liens in respect of pledges or deposits under workers' compensation or state insurance laws or similar legislation or (v) for minor defects in title, none of which, individually or in the aggregate,

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materially interferes with the use of such property, the Company and its Subsidiaries have good and marketable title to all of their respective properties and assets free and clear of all Encumbrances.

4.17.Financial Statements; Internal Controls.

(A)    The Company has delivered to Progressive audited consolidated financial statements (balance sheet, statement of income, statement of stockholders' equity and statement of cash flows) of the Company and its Subsidiaries at December 31, 2013 and for the fiscal year then ended (the “2013 Financial Statements”). The 2013 Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. The 2013 Financial Statements fairly and accurately present, in all material respects, the consolidated financial condition, operating results and cash flows of the Company and its Subsidiaries as of December 31, 2013, and for the twelve-month period then ended, and is free of material errors, misstatements and omissions. Except as set forth in the 2013 Financial Statements and as specified in the Schedule of Exceptions, the Company and its Subsidiaries have no material liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business subsequent to December 31, 2013, which, individually and in the aggregate, are not material to the financial condition or operating results of the Company and its Subsidiaries taken as a whole. The Company and its Subsidiaries maintain and will continue to maintain a standard system of accounting established and administered in accordance with GAAP.

(B)    The Company has delivered to Progressive unaudited consolidated financial statements (balance sheet, statement of income, statement of stockholders’ equity and statement of cash flows) of the Company and its Subsidiaries at September 30, 2014 and for the three- and nine-month periods then ended (the “Third Quarter Financial Statements”). The Third Quarter Financial Statements have been prepared in accordance with GAAP applied on a basis consistent with the

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2013 Financial Statements. The Third Quarter Financial Statements fairly and accurately present in all material respects the consolidated financial condition, operating results and cash flows of the Company and its Subsidiaries as of September 30, 2014, and for the three- and nine- month periods then ended, and are free of material errors, misstatements and omissions. Except as set forth in the Third Quarter Financial Statements and as specified in the Schedule of Exceptions, the Company and its Subsidiaries had no material liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business subsequent to September 30, 2014, which, individually and in the aggregate, are not material to the financial condition or operating results of the Company and its Subsidiaries taken as a whole.

(C)     The 2014 Financial Statements to be prepared by the Company pursuant to Section 2.2 (B), when delivered to Progressive, will have been prepared in accordance with GAAP applied on a consistent basis with the Company's 2013 Annual Statements, and will fairly and accurately present, in all material respects, the consolidated financial condition, operating results and cash flows of the Company and its Subsidiaries as of December 31, 2014, and for the twelve-month period then ended, and will be free of material errors, misstatements and omissions. Except as set forth in the 2014 Financial Statements, the Company and its Subsidiaries will have no material liabilities, contingent or otherwise as of December 31, 2014.

(D)     Since December 31, 2013, there has not been, and from the date hereof through the Closing Date, there will not be, any contribution or other addition to the consolidated stockholders' equity of the Company and its Subsidiaries, or any transaction that has or will have the purpose or effect of increasing the consolidated stockholders' equity of the Company and its Subsidiaries, other than income generated by the Company's Subsidiaries in the ordinary course of their respective

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property and casualty insurance businesses and recurring income and realized and unrealized capital gains in the investment portfolios of the Company and its Subsidiaries.

(E)    Neither the Company nor any of its Subsidiaries is a party to or bound by any note, bond, debenture or other agreement or instrument that contains any provision pursuant to which the rights or obligations of the Company or any of its Subsidiaries, as applicable, thereunder are or can be accelerated or are or can be in any manner altered as a result of any change in control of the Company or any such Subsidiary; nor would the acquisition of control of the Company or any of its Subsidiaries by Progressive or any of its Affiliates constitute a breach of or default under, or require the payment of any additional license fee or other sum under, any software license or other agreement or instrument to which the Company or any of its Subsidiaries is subject or bound.

(F)    The Company and its Subsidiaries maintain a system of internal control that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP or statutory financial principles, as applicable, and in accordance with a recognized framework of internal control. To the knowledge of the Company and each member of the Fasteau Group, there are no material weaknesses or significant deficiencies in such system of internal control. Each of the Subsidiaries has duly complied with, and is currently in compliance with, the provisions of the NAIC’s Model Audit Rule and has taken all actions, and has made all filings with the appropriate state insurance regulatory bodies required under that Rule.

4.18.Absence of Certain Changes. Except as specified in the Schedule of Exceptions, since December 31, 2013, there has not been:

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(A)     Any change in the assets, liabilities, financial condition, or operating results of the Company and its Subsidiaries from that reflected in the 2013 Financial Statements, except changes in the ordinary course of business that have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(B)     Any damage, destruction or loss, whether or not covered by insurance, affecting the business, operations, properties, assets, prospects, or financial condition of the Company and its Subsidiaries that could reasonably be expected to have a Material Adverse Effect;

(C)     Receipt of any notice that there has been or will be any regulatory or other governmental investigation, proceeding or adverse action involving the Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, or the revocation, suspension or material restriction of any significant permit, license or Certificate of Authority, held by the Company or any of its Subsidiaries;

(D)     Any action, suit or proceeding filed, or to the knowledge of Company or any member of the Fasteau Group threatened, against the Company or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;

(E)     Any declaration, setting aside, or payment of any dividend or other distribution of the Company's assets in respect of any of the Company's capital stock or other securities, or any direct or indirect redemption, purchase, or other acquisition of any of such stock or other securities by the Company or any of its Subsidiaries;

(F)     Any other event, condition or circumstance of any character that has had or could reasonably be expected to have a Material Adverse Effect;

(G)    The issuance of any Company Stock or other securities of the Company or any of its Subsidiaries (except for the issuance of shares upon the exercise of any of the Options disclosed

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in Exhibit D), or the granting or issuance of any warrant, option or other right to subscribe for, purchase or otherwise acquire any shares of the Company Stock or other securities of the Company or any of its Subsidiaries or any contribution to the capital of the Company or any of its Subsidiaries; or

(H)    The cancellation, revocation or expiration (without renewal) of any policy of reinsurance issued to the Company or any of its Subsidiaries or any threat of such cancellation or revocation, or the repudiation by any reinsurer of any of its obligations under any such policy of reinsurance.

4.19.Tax Returns and Payments.

(A)    The Company and its Subsidiaries have timely filed with the appropriate Government Authorities all tax returns and reports (federal, state, local and foreign) required by law. All such returns and reports are true and correct in all material respects and properly reflect the tax liability of the Company or the Subsidiary, as applicable. All Taxes applicable to the businesses or operations of the Company and its Subsidiaries or in respect of any of their assets through September 30, 2014, have been fully paid or reserved or accrued in the Third Quarter Financial Statements. All Taxes attributable to the businesses or operations of the Company and its Subsidiaries or in respect of any of their assets through the First Reference Date will have been paid at that time or reserved or accrued in the 2014 Financial Statements. None of the federal, state, local or foreign tax returns of the Company or any of its Subsidiaries have been examined or audited, or are currently under examination or audit, by the Internal Revenue Service or other Government Authority.

(B)    Since the date of the Third Quarter Financial Statements, the Company and its Subsidiaries have made adequate provisions on their books of account for all Taxes with respect to their respective businesses, properties, assets and operations for such period. The Company and

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the Subsidiaries have withheld or collected from each payment made to each of their respective employees and independent contractors (if applicable), the amount of all applicable Taxes (including, but not limited to, federal income taxes and federal unemployment taxes) required to be withheld or collected therefrom, and have paid the same to the proper tax receiving officers or authorized depositories.

4.20.Reinsurance. Except for risks wholly or partially retained by the applicable ARX Company, as outlined in Exhibit G, all insurance policies written by the Company and the Subsidiaries at any time, including all policies in effect on the date of this Agreement, and all policies issued by the Company or any of its Subsidiaries that have previously terminated or been terminated (including, without limitation, by cancellation, by nonrenewal, or by declining to offer or accept renewal) are, with respect to policies in effect on the date of this Agreement, or have been, with respect to policies that have terminated or been terminated, reinsured by substantial reinsurers (a) with a current Financial Strength rating of A- or better by A.M. Best Company or with a current Financial Strength rating of A- or better by Standard & Poor’s Financial Services or (b) that have fully collateralized their obligations. Exhibit G hereto contains a general description of the structure of the reinsurance programs maintained by the Company and its Subsidiaries (each, an “ARX Company”) since January 1, 2010, and a list of all Reinsurance Agreements to which any ARX Company is or has been a party since that date. Exhibit G sets forth, for each such Reinsurance Agreement, the name of each reinsurer thereunder, the term of the applicable Reinsurance Agreement, the termination date, if any, of the Reinsurance Agreement, the nature of the reinsurance provided, the risks reinsured, the amount or percentage of the risk reinsured (including any aggregate limits) and the amount or percentage of the risk retained by the applicable ARX Company and for each Reinsurance Agreement if a reinstatement is required. All of such Reinsurance Agreements

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have been duly executed and delivered, are, with respect to policies in effect on the date of this Agreement, in full force and effect, and are enforceable against each ARX Company and reinsurer that is a party thereto or bound thereby, subject to the Enforceability Exceptions. To the knowledge of the Company and each member of the Fasteau Group, none of the ARX Companies or any of the reinsurers under any such Reinsurance Agreement is currently in default under, or in violation of, any of the provisions of any such Reinsurance Agreement. None of such reinsurers has denied coverage or repudiated any of its obligations under any such Reinsurance Agreement or has given the Company or any Subsidiary notice, orally or in writing, of any alleged default or non-compliance thereunder or of any proposed termination, lapse, or material modification thereof, and none of the Reinsurance Agreements may lapse without notice to Company or a Subsidiary. The Company is not aware of any event, condition, occurrence or circumstance that could be deemed to be a default or event of default under any such Reinsurance Agreement, with the giving of notice, lapse of time or otherwise.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PROGRESSIVE

Progressive hereby represents and warrants to the Company and the Selling Shareholders that:

5.1.    Organization and Standing. Progressive is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio, and has all necessary power and authority to own its property and assets and to conduct its business as currently conducted.

5.2.Authorization. Progressive has full power and authority to enter into this Agreement and the Fourth Amended Stockholders’ Agreement and to perform all of its obligations hereunder

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and thereunder. Progressive has taken all action necessary to authorize its execution and delivery of this Agreement and the Fourth Amended Stockholders’ Agreement, and the performance by Progressive of all of its obligations hereunder and thereunder, and this Agreement and the Fourth Amended Stockholders’ Agreement, when executed and delivered, will constitute valid and legally binding obligations of Progressive, enforceable in accordance with their terms, subject to the Enforceability Exceptions.

5.3.Absence of Conflict. Neither the execution and delivery of this Agreement and the Fourth Amended Stockholders’ Agreement by Progressive, nor the performance by Progressive of any of its obligations hereunder or thereunder, (i) conflicts with or results in, or will conflict with or result in, a breach or violation of any article, by-law, regulation, judgment, decree, order, writ, injunction, statute, rule or regulation applicable to Progressive, or (ii) conflicts with or constitutes, or will conflict with or constitute, a default under or a breach or violation of any of the terms of any note, bond, mortgage, deed, indenture, instrument or agreement to which Progressive is a party or by which Progressive, or any of its assets or property, is bound.

5.4.Governmental and Third Party Consents. No consent, approval, qualification, order or authorization of, or filing with, any Governmental Authority or other public or private party is required on the part of Progressive in connection with Progressive’s valid execution, delivery or performance of this Agreement and the Fourth Amended Stockholders’ Agreement, except (a) the filing of a premerger notification report, and any related information, documents or materials, by Progressive under the HSR Act, and (b) any filings required to be made by Progressive with the Delaware, Florida or Texas Departments of Insurance or any other regulatory authority which is charged with regulating or supervising the Company or any of its Subsidiaries in each jurisdiction

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in which the Company or any of its Subsidiaries conducts insurance business or holds a license to conduct such business.

5.5.Purchase Entirely for Own Account. This Agreement is made in reliance upon Progressive's representation to the Selling Shareholders, which by Progressive's execution of this Agreement Progressive hereby confirms, that the Shares to be purchased by Progressive hereunder will be acquired for investment for Progressive's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Progressive has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Progressive further represents that Progressive does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person with respect to any of the Shares.

5.6.Reliance Upon Progressive’s Representations. Progressive understands that the Shares are not registered under the Securities Act based on an exemption from registration, and that the Selling Shareholders’ reliance on such exemption is predicated on Progressive’s representations set forth herein.

5.7.Receipt of Information. Progressive further represents that Progressive has had an opportunity to ask questions and receive answers from the Company and the Selling Shareholders regarding the business, properties, prospects, and financial condition of the Company and its Subsidiaries. The foregoing, however, does not limit or modify the representations and warranties of the Company or the Selling Shareholders in this Agreement or the right of Progressive to rely thereon.

5.8.Investment Experience. Progressive represents that it is experienced in evaluating various kinds of investments and acknowledges that it is able to fend for itself, can bear the economic

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risk of an investment in the Shares, and has such knowledge and experience in financial and business matters that Progressive is capable of evaluating the merits and risks of an investment in the Shares.

5.9.Accredited Investor. Progressive is an “Accredited Investor,” as that term is defined in Rule 501(a) promulgated by the Securities and Exchange Commission under the Securities Act.

5.10.Restricted Securities. Progressive understands that the Shares (and any shares of Common Stock issued upon any conversion thereof) may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the Securities Act, the Shares must be held indefinitely. In particular, Progressive is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 is the availability of current information to the public about the Company. Such information is not now available and the Company has no present plans to make such information available.

5.11.Legends. To the extent applicable, each certificate or other document evidencing any of the Shares shall be endorsed with the following legends:

(A)     The following legend under the Securities Act:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED EXCEPT (i) IN COMPLIANCE WITH THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES OR ‘BLUE SKY’ LAWS AND (ii) PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY,

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QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.”

(B)     Any legend imposed or required by the Company's Bylaws or applicable state securities laws or any stockholders’ agreement to which Progressive is a party.

5.12.Absence of Certain Litigation. There is no action, suit, proceeding, or investigation pending or, to the knowledge of Progressive, threatened as of the date of this Agreement, against Progressive that questions or challenges the validity of this Agreement or the Fourth Amended Stockholders’ Agreement or the right of Progressive to enter into this Agreement or the Fourth Amended Stockholders’ Agreement or to consummate any of the transactions contemplated hereby or thereby, including its purchase of Shares as herein provided.

5.13.No Other Agreements. Except as contemplated by this Agreement, the Third Amended Stockholders’ Agreement or the Fourth Amended Stockholders’ Agreement as of the date hereof, and, except as contemplated by Section 7.5 as the Closing, Progressive has not entered into any other agreements or arrangements with any Selling Shareholder or Remaining Stockholder with respect to the Shares, or other securities of the Company, or the transactions contemplated by this Agreement.

5.14.Financial Ability. Progressive has and on the Closing Date will have sufficient funds available to purchase the Shares on the terms contemplated by this Agreement, to consummate the other transactions to be completed at Closing, as contemplated by this Agreement, and to pay all associated costs and expenses required to be paid by Progressive pursuant to the terms of this Agreement.

ARTICLE VI

COVENANTS OF THE COMPANY

6.1.    The Company covenants and agrees that prior to the Closing Date:

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(A)     No amendment to or change in the Certificate of Incorporation, Bylaws or Certificate of Designation of the Company, or to or in any of the organizational documents of any of its Subsidiaries, will be made or initiated without the prior written consent of Progressive and the Selling Shareholders.

(B)    The Company will not issue or agree to issue any stock or other securities, or any debt, warrant, option or any other right or instrument that is exercisable for or convertible into any stock or other securities of the Company, in connection with a merger, consolidation, acquisition or otherwise (other than the issuance of shares of Company Stock upon and pursuant to the exercise of any Options listed on Exhibit D), enter into or effectuate any transaction that could alter the conversion rate or price of the Series A Preferred Stock, or declare or pay, or agree to declare or pay, any dividend or distribution in respect of Company Stock or other securities of the Company, or repurchase or agree to repurchase any shares of Company Stock or other securities of the Company.

(C)    The Company and each of its Subsidiaries shall duly observe and comply in all material respects with all Laws relating to the conduct of their businesses or to their properties or assets.

(D)    Each of the Company and its Subsidiaries shall maintain in full force and effect its corporate existence, and use all commercially reasonable efforts to maintain all franchises, licenses, permits, Certificates of Authority and other rights, including without limitation all rights in or to use all patents, processes, technologies, licenses, trademarks, trade names or copyrights owned, licensed or possessed by the Company or any Subsidiary that is necessary to or useful in the conduct of its business, and shall use all commercially reasonable efforts to keep in full force and effect and

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in good standing all of the Reinsurance Agreements listed on Exhibit G and to maintain a good business relationship with each of its reinsurers.

(E)     (i) The Company will, and will cause each of its Subsidiaries to, conduct its business only in the ordinary course consistent with past practice, (ii) the Company will not, and the Company will cause each of its Subsidiaries not to, take any action or enter into any material transaction other than in the ordinary course of business consistent with past practice, and (iii) the Company will, and will cause each of its Subsidiaries to use commercially reasonable efforts to preserve intact its current business organization and reputation, keep available the services of its current officers and employees, preserve its relationships with customers, suppliers, government officials, regulatory authorities and others having business dealings with it, with the objective that their goodwill and ongoing businesses shall be unimpaired at the Closing Date.

(F)     Without the prior written consent of Progressive and each of the Selling Shareholders, the Company will not, and will not permit any of its Subsidiaries to (i) increase in any manner the compensation or fringe benefits of any of its directors, officers or employees, except for normal increases in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company and its Subsidiaries, taken as a whole, (ii) pay or agree to pay any pension, retirement allowance or other employee benefit not required or contemplated by any of the existing benefit, severance, pension or employment plans, agreements or arrangements of the Company or any of its Subsidiaries, as in effect on the date hereof, to any such director, officer or employee, whether past or present, that, in the aggregate, result in a material increase in benefits or compensation expense to the Company and its Subsidiaries, taken as a whole, (iii) enter into any new or amend any existing employment agreement with any such director, officer or employee, (iv) enter into any new or amend any existing

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severance agreement with any such director, officer or employee, except for severance agreements in the ordinary course of business consistent with past practice that in the aggregate do not and will not result in a material increase in the benefits or compensation expense to the Company and its Subsidiaries, taken as a whole, or (v) except as may be required to comply with applicable law, become obligated under any new pension plan or arrangement, welfare plan or arrangement, multiemployer plan or arrangement, benefit plan or arrangement, severance plan or arrangement, or similar plan or arrangement, which was not in existence on the date hereof or a renewal of any such plan or arrangement that is effective on the date hereof, or amend, modify or supplement any such plan or arrangement in existence on the date hereof if such action would have the effect of enhancing or accelerating any benefits thereunder.

(G)    The Company will not, and will not permit any of its Subsidiaries to, make any acquisition, by means of merger, consolidation, purchase of a substantial equity interest in or a substantial portion of the assets of, or otherwise, of any business or corporation, partnership, association or other business organization or division thereof.

(H)    Other than borrowings under existing credit facilities or other borrowings in the ordinary course (but in all cases only in the aggregate at any time outstanding up to $1,000,000 of additional borrowings after the date hereof) or borrowings disclosed in the Schedule of Exceptions, without Progressive’s prior written consent (and, until December 31, 2014, the prior written consent of the Selling Shareholders) the Company will not, and will not permit any of its Subsidiaries to, incur any indebtedness for borrowed money, or guarantee any indebtedness or other obligation or enter into any lease or other commitment other than in the ordinary course of business consistent with past practices, or make any loans, advances or capital contributions to, or investments in, any other Person (other than to any Subsidiary of the Company).                

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(I)    The Company will promptly notify Progressive and each of the Selling Shareholders if, prior to the Closing Date, any litigation or governmental investigation is instituted or threatened against the Company or any of its Subsidiaries (other than ordinary course claim litigation in the ordinary course of business, but excluding any bad faith or other extra-contractual claims that the Company views as non-substantive), or any other event occurs, that has had or could reasonably be expected to have a Material Adverse Effect.

6.2.    Directors’ and Officers’ Insurance. The Company shall (i) maintain in effect for a period of six (6) years after the Closing Date, if available, the current policies of directors' and officers' liability insurance maintained by the Company immediately prior to the Closing Date (provided that the Company may substitute therefor policies of at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of the Company and its Subsidiaries when compared to the insurance maintained by the Company as of the date hereof), or (ii) obtain as of the Closing Date "tail" insurance policies with a claims period of six (6) years from the Closing Date with at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of the Company and its Subsidiaries, in each case with respect to claims arising out of or relating to events which occurred before or at the Closing Date (including in connection with the transactions contemplated by this Agreement); provided, however, that in no event will the Company be required to expend an annual premium for such coverage in excess of one hundred fifty percent (150%) of the last annual premium paid by the Company for such insurance prior to the date of this Agreement, which amount is set forth the Schedule of Exceptions (the "Maximum Premium"). If such insurance coverage cannot be obtained at an annual premium equal to or less than the Maximum Premium,

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the Company will obtain that amount of directors' and officers' insurance (or "tail" coverage) obtainable for an annual premium equal to the Maximum Premium.

ARTICLE VII

OTHER AGREEMENTS BETWEEN THE PARTIES

7.1.    Fourth Amended Stockholders’ Agreement. At the Closing, immediately after and subject to the acquisition by Progressive of all of the Shares of the Selling Shareholders that are not members of the Fasteau Group, the Company, Progressive, the Fasteau Group and other Remaining Stockholders will enter into the Fourth Amended Stockholders' Agreement, substantially in the form of Exhibit H hereto, which Agreement will be conditioned on and become effective as of the Closing (or such other date as may be specified therein). Each member of the Fasteau Group hereby agrees to execute and deliver, or cause to be delivered, executed counterparts to the Fourth Amended Stockholders' Agreement contemporaneously with the execution and delivery of this Agreement to be held by Progressive in escrow pending the execution and delivery of the Fourth Amended Stockholders’ Agreement at the Closing as contemplated by this Agreement.

7.2.Extinguishment of Certain Provisions; Suspension of Certain Rights.

(A)    Effective as of the Closing, Sections 7.1, 7.2, 9.4, 9.5, 9.6 and 9.7 of the 2012 Purchase Agreement will be extinguished in their entirety and no longer of any force or effect.

(B)    In addition, and in consideration of the covenants and agreements made hereunder, Flexpoint and New Capital agree not to exercise the redemption rights granted to them under Section 4.10 of the Third Amended Stockholders’ Agreement prior to the date this Agreement is terminated in accordance with its terms. If this Agreement is terminated, such right shall be fully exercisable in accordance with the terms of Section 4.10 of said Agreement if Flexpoint or New Capital, as applicable, is then a shareholder of the Company.

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7.3.Due Diligence.

(A)    From the date hereof and until and through the Closing or termination of this Agreement, the Company shall (and shall cause each of its Subsidiaries to) afford to Progressive, including its officers, employees, counsel, accountants and other authorized representatives (“Progressive Representatives”), reasonableaccess, during normal business hours, to all of the Company's and its Subsidiaries' assets, properties, financial statements, papers, files, contracts, documents, books and records (including without limitation, the work papers of independent accountants) and, during such period, shall (and shall cause each of its Subsidiaries to) furnish promptly to such Progressive Representatives, upon request, all information concerning its organization, ownership, business, operations, assets, properties, personnel and affairs as may reasonably be requested, and access to all of its personnel and representatives (including its independent accountants), provided that neither the investigation conducted pursuant to this Section 7.3, nor Progressive's review of the 2014 Financial Statements and Closing Balance Sheet nor any resulting adjustments made therein, shall affect or be deemed to modify, compromise or negate any of the representations or warranties made by the Company or any of the Selling Shareholders under this Agreement. Notwithstanding the foregoing, the Company shall not be required to provide access to or to disclose information where such access or disclosure could jeopardize the attorney-client privilege of the Company or any of its Subsidiaries or contravene applicable Law, any fiduciary duty or any binding confidentiality agreement or arrangement existing as of the date hereof.

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(B)    Subject to the requirements of law, Progressive will keep confidential, and will cause the Progressive Representatives to keep confidential, all information and documents obtained pursuant to this Section 7.3 except as otherwise consented to by the Company; provided, however, that Progressive shall not be precluded from making any disclosure which it deems required by law in connection with the transactions contemplated by this Agreement. If Progressive is required to disclose any information or documents pursuant to the immediately preceding sentence, Progressive shall promptly give written notice of such disclosure that is proposed to be made to the Company so that the parties can work together to limit the disclosure to the greatest extent possible and, in the event that Progressive is legally compelled to disclose any information, to seek a protective order or other appropriate remedy or both. Upon any termination of this Agreement, Progressive will collect and return to the Company all documents obtained pursuant to this Section 7.3 or otherwise by it or any of the Progressive Representatives then in their possession and any copies thereof.

7.4.Confirmations and Signatures. From the date hereof and through the 15^th Business Day following the date of this Agreement, the Company shall use its reasonable best efforts to obtain, from each current party to the Third Amended and Restated Stockholders’ Agreement other than the Selling Shareholders and the stockholders identified in Section 8.1(B), (i) confirmation that Section 3.7 of the Third Amended and Restated Stockholders’ Agreement is not applicable to the transactions contemplated hereby, and (ii) a signature page to the Fourth Amended and Restated Stockholders’ Agreement, to be held in escrow as provided by Section 7.1.

7.5.Additional Sellers. From the date hereof and through the Closing, Progressive may, but shall not be obligated to, enter into one or more agreements with stockholders of the Company pursuant to which Progressive would purchase from such stockholders additional shares of the

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Company’s capital stock, not to exceed 5,000 shares of Company Stock at a per share purchase price equal to the Purchase Price Per Share. The Company and each Selling Shareholder consent to any such sale by a stockholder and purchase by Progressive for purposes of, and waive any rights they may have related to such transaction under, the Third Amended Stockholders’ Agreement.

7.6.Consideration. Progressive covenants and agrees that, except as contemplated by Article IX, it will not provide to any Selling Shareholder for such Selling Shareholder’s Shares or otherwise, pursuant to or in connection with the transactions contemplated by this Agreement, any consideration (measured on a per Share basis) in excess of the Purchase Price Per Share.

ARTICLE VIII

WAIVERS AND GOVERNMENTAL APPROVALS

8.1.    Consents and Waivers.

(A) The Company and each of the Selling Shareholders hereby consent to the Company’s execution of this Agreement and the Fourth Amended Stockholders’ Agreement, and hereby, unless and until this Agreement has been terminated in accordance with its terms, irrevocably waive any and all rights that it/he may have to receive notice of and/or to participate in or pre-empt the sale of Shares to Progressive provided for hereunder, including (without limitation) any and all rights of first refusal, rights of first offer, co-sale rights, tag-along rights and/or any and all other rights that it/he may have that may be triggered by or applicable to the sale of Shares to Progressive as provided herein, including, without limitation, any and all such rights that it/he may have or have had under Article III of the Third Amended Stockholders' Agreement; provided, however, that if this Agreement is terminated, Flexpoint and New Capital shall not be deemed to have waived any rights under Section 4.10 of the Third Amended Stockholders’ Agreement, all of which rights shall continue in accordance with Section 4.10 of the Third Amended Stockholders’ Agreement.

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(B)    Prior to or simultaneously with the execution of this Agreement, the Company, ARX Executive Holdings, LLLP, PCI, Fasteau Insurance Holding II, LLC, John F. Auer and Kevin R. Milkey shall execute and deliver to Progressive (i) a Consent and Waiver of ARX Holding Corp. and Certain Stockholders, waiving any rights that they may have in connection with the sale of Shares provided for in this Agreement, and (ii) counterparts to the Fourth Amended and Restated Stockholders’ Agreement, to be held in escrow as provided in Section 7.1.

8.2.Filings and Authorizations. Each of the Company and Progressive will proceed diligently and in good faith and will use their reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to, as promptly as practicable, (a) make, or cause to be made, all such other filings and submissions as may be required to consummate the transactions contemplated hereby in accordance with the terms of this Agreement, (b) obtain, or cause to be obtained, all authorizations, approvals, consents and waivers from all entities, persons and/or governmental authorities that are necessary to be obtained in order to consummate such transactions, as set forth in Section 10.1 of the Schedule of Exceptions, and (c) take, or cause to be taken, all other actions necessary, proper or advisable in order to fulfill their respective obligations hereunder.

8.3.Third Party Consents. Between the date hereof and the Closing Date, the Company, each of the Selling Shareholders and Progressive shall use their respective best efforts to obtain at the earliest practicable date, and prior to the Closing Date, all consents and agreements of third parties necessary for the performance by the Company, the Selling Shareholders and Progressive of their respective obligations under this Agreement or the consummation of the transactions contemplated hereby.

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8.4.HSR Act. Following the execution and delivery of this Agreement, the Company and Progressive shall prepare, file or supply, or cause to be prepared, filed or supplied, all notifications, reports, materials and other information required to be filed or supplied pursuant to the HSR Act in connection with the transactions contemplated by this Agreement. In addition to and not in limitation of the foregoing, each of Progressive and the Company will (w) take promptly all actions necessary to make the filings required of Progressive and the Company or their Affiliates under the HSR Act, (a) comply at the earliest practicable date with any request for additional information received by such party or its Affiliates from the Federal Trade Commission (the “FTC”) or the Antitrust Division of the Department of Justice (the “Antitrust Division”) pursuant to the HSR Act, (b) cooperate with the other party in connection with such party's filings under the HSR Act and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement commenced by either the FTC or the Antitrust Division or state attorneys general and (c) request early termination of the waiting period under the HSR Act.

8.5.State Insurance Department Approvals. (a) Promptly after execution of this Agreement, Progressive shall use its reasonable best efforts to prepare, assemble and file, at its own cost and expense, with the Florida, Delaware and Texas Departments of Insurance, and, if required, any other insurance regulatory authority that is charged with supervising or regulating the insurance businesses of the Company and its Subsidiaries (as set forth in Section 10.1 of the Schedule of Exceptions), applications seeking each such Department’s consent to and/or approval of the transactions provided for herein, including the transfer to Progressive of control of the Company and its Subsidiaries, or for an exemption from any such consent or approval requirement. The parties hereto agree to fully cooperate with each other in the preparation of such applications, the

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furnishing of all information, testimony, documents and data required in connection therewith and in the diligent prosecution of the same.

(b) Subject to Section 8.6, if any such application relating to an authorization listed in Section 10.1 of the Schedule of Exceptions shall be denied, in whole or in part, by any such regulatory authority, or if any such regulatory authority attempts or threatens to prevent the consummation of the transactions provided for herein, Progressive shall continue to prosecute such application until either all administrative remedies have been exhausted or the Termination Date has passed, whichever occurs first. If such application is finally denied, or if the Closing has not been consummated on or prior to the Termination Date, Progressive shall promptly notify the Company and the Selling Shareholders of its election to (i) to the extent legally permissible in light of such denial(s) or delay(s), and, subject to the Parties’ respective conditions set forth in Articles X-XII, acquire the Shares and otherwise consummate all of the transactions provided for in this Agreement, or (ii) declare this Agreement to be terminated, in which event the terms of Section 13.2 will apply.

8.6.Best Efforts. Progressive agrees to use commercially reasonable best efforts to obtain all of the necessary authorizations, consents and/or approvals described in Sections 8.4 and 8.5 hereof.

ARTICLE IX

TREATMENT OF CERTAIN PAYMENTS OR DISTRIBUTIONS

9.1.    After Flexpoint or New Capital (together, “Investor Stockholders” or individually, an “Investor Stockholder”) has received cash payments and/or Marketable Securities for its Shares

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with respect to which such Investor Stockholder has obtained an IRR of 35%, then, at the Closing, such Investor Stockholder shall pay pro rata to the Stockholders specified in Exhibit I attached hereto, an aggregate amount equal to 10% of the amount of all cash payments and Marketable Securities received by such Investor Stockholder with respect to such Shares in excess of those providing such Investor Stockholder with an IRR of 35% (such aggregate amount, the “Special Payment”); provided, however, that the Special Payment shall be reduced by, and each Investor Stockholder shall deduct and retain from the Special Payment, an amount of cash equal to the product of (i) the maximum aggregate U.S. federal, state and local capital gain tax rate applicable to any direct or indirect partner in Flexpoint or New Capital then in effect under the Internal Revenue Code of 1986, as amended, and any corresponding provision of state or local law (and including an successor provisions thereto), and (ii) the Special Payment. The Investor Stockholders will only be required to pay any amounts pursuant to this Section 9.1 to one (1) account or recipient designated in writing by the Company and the Company shall be responsible for any further payments or distributions to the Stockholders specified in Exhibit I.

9.2.“IRR” means, as of any measurement date, with respect to the Investor Stockholders, the interest rate (compounded annually) which, when used as the discount rate to calculate the net present value as of December 15, 2006 of the sum of (i) the aggregate amount of all cash Distributions, excluding all Adjusted Tax Distributions (as defined in the SHH LLC Agreement), made to the Investor Stockholders on or prior to such measurement date with respect to their Shares and their Class A membership units in SHH (collectively, “Investor Distributions”), (ii) the aggregate cash proceeds (that have not been included in Investor Distributions) received by the Investor Stockholders in the sale of their Shares (collectively, “Equity Proceeds”), (iii) the aggregate amount of all Capital Contributions made by the Investor Stockholders on or prior to such measurement

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date with respect to their Shares and Class A membership units in SHH (collectively, “Investor Contributions”), and (iv) the Fair Market Value of any Marketable Securities received by the Investor Stockholders in the sale of their Shares (collectively, “Marketable Securities Proceeds”), causes such net present value to equal zero. For purposes of the net present value calculation, (A) Investor Distributions, Equity Proceeds and Marketable Securities Proceeds shall be positive numbers, (B) the Investor Contributions shall be negative numbers and (C) all Investor Distributions, Equity Proceeds, Marketable Securities Proceeds and Investor Contributions shall be deemed to have been made on the date when actually paid or received.

9.3.The “Fair Market Value” of any assets to be valued under this Agreement shall be determined in accordance with this Section 9.3. The Fair Market Value of any asset constituting cash or cash equivalents shall be equal to the amount of such cash or cash equivalents. The Fair Market Value of any asset constituting Marketable Securities shall be the average, over a period of 21 days consisting of the date of valuation and the 20 consecutive business days prior to that date, of the average of the closing prices of the sales of such securities on the primary securities exchange on which such securities may be at that time be listed, or, if there have been no sales on such exchange on any day, the average of the highest bid and lowest asked prices on such exchanges at the end of such day, or, if on any day such securities are not so listed, the average of the representative bid and asked prices quoted in the Nasdaq System as of 4:00 P.M., New York time, or, if on any day such securities are not quoted in the Nasdaq System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization; provided that if such determination is made within 20 days of an initial public offering, the Fair Market Value of such publicly traded

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securities shall be the price at which such securities were sold to the public pursuant to such initial public offering.

9.4.In the case of any conflict or inconsistency between this Article IX and Section 4.9 of the Third Amended Stockholders’ Agreement with respect to the matters covered hereby (including as to the interpretation or enforceability of such provisions), the terms of the Third Amended Stockholders’ Agreement shall prevail and govern such matters; provided that the terms of this Article IX shall apply notwithstanding any termination of the Third Amended Stockholders’ Agreement. The Parties may, by mutual written agreement, arrange for any amounts required to be paid pursuant to Section 9.1 to be settled through the adjustment of the amounts payable by Progressive at the Closing pursuant to Article II rather than through the payment mechanics set forth in Section 9.1; provided that in no event will any such arrangement alter to increase the aggregate amount Progressive is required to pay to all Selling Shareholders hereunder.

ARTICLE X

CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT

THE PURCHASE OR SALE OF THE SHARES

The obligations of the Parties under this Agreement are subject to the fulfillment or written waiver on or before the Closing Date of each of the following conditions:

10.1.    Any applicable waiting period under the HSR Act shall have expired or been terminated and all other governmental, regulatory and administrative consents and approvals (including without limitation, those described at Article VIII) required for the consummation of the transactions contemplated hereby, the sale to and retention by Progressive of the Shares, the acquisition by Progressive of majority control of the Company and its Subsidiaries that are set forth in Section 10.1 of the Schedule of Exceptions shall have been obtained, and the parties shall have

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complied with all related notice, declaration, filing and other governmental or regulatory requirements.

10.2.    No claim, investigation, proceeding or litigation, either administrative or judicial, shall be initiated or pending against Progressive, the Company or any of its Subsidiaries or any of the Selling Shareholders (a) for the purpose of enjoining, delaying or preventing the consummation of the transactions contemplated by this Agreement, (b) which alleges that this Agreement, or the consummation of the transactions contemplated hereby, is improper or illegal or (c) which, if decided adversely, would prevent Progressive from purchasing or retaining the Shares, or acquiring and owning a controlling interest in each of the Company and its Subsidiaries.

10.3.    There shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction or other Governmental Authority that restrains, enjoins or otherwise prohibits consummation of the transactions contemplated hereby.

10.4.    The Purchase Price Per Share shall have been determined pursuant to the procedures set forth in Section 2.2 hereof.

ARTICLE XI

CONDITIONS TO PROGRESSIVE’S OBLIGATIONS AT CLOSING

The obligations of Progressive under this Agreement with respect to the acquisition of Shares of any Selling Shareholder are subject to the fulfillment on or before the Closing of each of the following conditions:

11.1.    Representations and Warranties. Each of the representations and warranties of the Company or such Selling Shareholder that is set forth in Section 3.4, 3.5, 4.3, 4.5, 4.12, 4.18(H), 4.19 or 4.20 shall be true and correct on and as of the Closing Date with the same effect as though

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such representations and warranties have been made on and as of the Closing Date, except where the failure to be so true and correct would not, individually or in the aggregate, reasonably be expected to be materially adverse to the business, operations, results of operations, prospects (as currently contemplated by the Company’s business plan), financial condition, properties or assets (relative to liabilities) of the Company and its Subsidiaries, taken as a whole, or to the ability of such Selling Shareholder to consummate the transactions contemplated to be consummated by such Selling Shareholder under this Agreement.  Each of the other representations and warranties of the Company and/or such Selling Shareholder set forth in this Agreement shall be true and correct on and as of the Closing Date with the same effect as though such representations and warranties have been made on and as of the Closing Date.

11.2.    Performance. The Company and such Selling Shareholders shall have performed and complied, in all material respects, with all agreements, covenants, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before the Closing and each of the Selling Shareholders will be ready, willing and able to deliver to Progressive stock certificates for the Shares being sold by such Selling Shareholder and all other documents required to be delivered at Closing by such Selling Shareholder.

11.3.    Certificates. Each of the Company and such Selling Shareholder shall have delivered to Progressive a certificate, dated the Closing Date, certifying that each of the applicable conditions set forth in Sections 11.1 and 11.2 have been satisfied with respect to the Company or such Selling Shareholder, as applicable.

11.4.    Preservation of Licenses and Business. There shall not have been any surrender, revocation, material restriction, material adverse modification, suspension or cancellation of any of the significant insurance licenses or authorities held by the Company or any of its Subsidiaries

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as of the date of this Agreement, except that the Company may, in the ordinary course of business, voluntarily restrict or modify a license or authority provided the modification or restriction will not result in a material adverse change in the financial condition, results of operations, businesses or prospects (as set forth in the Company’s current business plan) of the Company and its Subsidiaries from September 30, 2014, and is otherwise not significant to the Company and its Subsidiaries. 

11.5.    No Material Adverse Effect. Since the date hereof, there has not been a Material Adverse Effect.

11.6.    Legal Opinions. The Company and each of the Selling Shareholders shall have furnished to Progressive written opinions of its or his legal counsel, dated as of the Closing Date, addressing the matters referred to in Section 2.3(C)(iv) and (v), as applicable, addressed to Progressive and in the forms specified in Sections 2.3(C)(iv) and (v), as applicable.

11.7.    Third Party Consents. In each instance in which both (i) consent to the sale, and the transfer of title and ownership, of the Shares to Progressive, as herein provided, is required from any third party under any agreement, commitment or understanding to which any Selling Shareholder or the Company or any of its Subsidiaries is subject or bound, and (ii) the failure to obtain such consent prior to the Closing would have a material adverse effect on the ability of such Selling Shareholder to sell its or his Shares to Progressive as contemplated hereunder or a material adverse effect on the business, operations or financial condition of the Company and its Subsidiaries taken as a whole, such Selling Shareholder and/or the Company or such Subsidiary (as applicable) shall have secured the written consent of such third party to such sale and transfer.

11.8.    Fourth Amended and Restated Stockholders' Agreement. The Company, each of the Remaining Stockholders and all individuals or entities who will hold immediately after the Closing any shares of Company Stock or any options, warrants or other rights to purchase any shares of

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Company Stock shall have executed and delivered, at or prior to the time of Closing, the Fourth Amended Stockholders' Agreement, provided that this condition will be deemed to have been satisfied even if holders of no more than 4,000 Shares of Company Stock (not including any Selling Shareholders), in the aggregate, on a fully converted basis, have not executed and delivered the Fourth Amended Stockholders’ Agreement at the time of Closing.

11.9.    Release of Encumbrance. All Encumbrances on Shares (including any pledge thereof) owned by and to be conveyed by Fasteau Holding, including those described on the Schedule of Exceptions, shall be released at the time of Closing, and all documents relating to such release shall be acceptable to Progressive, in its reasonable judgment.

ARTICLE XII

CONDITIONS TO THE COMPANY’S AND SELLING

SHAREHOLDERS’ OBLIGATIONS AT CLOSING

The obligations of the Company and the Selling Shareholders under this Agreement are subject to the fulfillment or written waiver on or before the Closing of each of the following conditions:

12.1.    Representations and Warranties. The representations and warranties of Progressive contained in this Agreement shall be true and correct as of the date hereof and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

12.2.    Performance. Progressive shall have performed and complied, in all material respects, with all agreements, covenants, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

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12.3.    Certificate. Progressive shall have delivered to the Company and the Selling Shareholders a certificate, dated the Closing Date, certifying that each of the conditions set forth in this Article XII has been satisfied.

12.4.    Certain Provisions. The obligations of the Selling Shareholders under this Agreement are further subject to the fulfillment or written waiver on or before the Closing of each of the following conditions: (a) the representations and warranties of the Company that are set forth in Section 4.6 shall be true and correct in all respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for changes resulting from the exercise of Options existing as of the date of this Agreement; and (b) the Company shall have performed and complied in all material respects with its covenants and agreements set forth in paragraphs (A), (B) and (H) of Section 6.1.

ARTICLE XIII

TERMINATION

13.1.    This Agreement may be terminated at any time prior to Closing under any of the following circumstances:

(A)     This Agreement may be terminated by written instrument duly executed by all of the parties hereto.

(B)     This Agreement may be terminated in its entirety by Progressive, at its option, if it is not in material breach of any provisions of this Agreement and any of the Selling Shareholders shall fail to tender its/his Shares at Closing in violation of the terms of this Agreement, or if the Company or any of the Selling Shareholders shall fail to observe or perform, in any material respect, any of its/his other covenants or agreements hereunder, or if any representation or warranty made by the Company or any of the Selling Shareholders shall be false or inaccurate in any material

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respect, and such failure, falsehood or inaccuracy would give rise to the failure of any of the conditions specified in Article X or Article XI and continues for twenty (20) or more days after its/his receipt of written notice thereof.

(C)     This Agreement may be terminated by the Company or any Selling Shareholder with respect to itself, if such Party is not in material breach of any of the provisions of this Agreement and Progressive shall fail to observe or perform, in any material respect, any of its covenants or agreements hereunder, or if Progressive shall breach, in any material respect, any representation or warranty made by Progressive hereunder, and such failure or breach would give rise to the failure of any of the conditions specified in Section XII and continues for twenty (20) or more days after its receipt of written notice thereof.

(D)     This Agreement may be terminated by Progressive, upon written notice to the Company and the Selling Shareholders, if the consolidated stockholders’ equity of the Company and its Subsidiaries as of December 31, 2014, as reflected in the 2014 Financial Statements delivered to Progressive pursuant to Section 2.2(C), has been overstated by five percent (5%) or more as compared to the consolidated stockholders’ equity of the Company and its Subsidiaries as of December 31, 2014, as set forth in the 2014 Financial Statements, as such 2014 Financial Statements may be adjusted in accordance with Sections 2.2(D)-(F); provided that Progressive shall not be entitled to terminate this Agreement pursuant to this Section 13.1(D) if it fails to raise any objection to the calculation of the consolidated stockholders’ equity of the Company and its Subsidiaries as of December 31, 2014 during the ten (10) Business Day period referred to in Section 2.2(D).

(E)    This Agreement may be terminated by Progressive if the Selling Shareholders, in the aggregate, fail to tender to Progressive, at the Closing, a sufficient number of Shares to give

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Progressive, together with Shares currently held by Progressive or any of its Affiliates, an ownership interest of at least 55% of the Company’s equity interests, determined on a Fully Diluted Basis.

(F)     This Agreement may be terminated with respect to any Party upon written notice delivered by such Party to the other Parties if the Closing does not occur on or before July 1, 2015 or such other date as the parties hereto may designate (the “Termination Date”); provided that (i) if, on or prior to such date, any Party brings any legal action in accordance with Section 14.17 to enforce specifically the terms or provisions of this Agreement by any other Party, the Termination Date shall automatically be extended for a period of up to six (6) months during which such action is pending, and (ii) if as of the Termination Date any Objection Notice has been delivered with respect to the 2014 Financial Statements pursuant to Section 2.2(D), then no Party may terminate this Agreement pursuant to this Section 13.1(F) prior to the third Business Day of the calendar month following the month in which the review and dispute resolution process contemplated by Sections 2.2(D)-(F) has been fully and finally completed.

(G)    Progressive shall have the right to terminate this Agreement if, during the course of its due diligence review provided for under Section 7.3 hereof, Progressive has identified or discovered any event, circumstance or condition that, in its reasonable judgment, could reasonably be expected to have a Material Adverse Effect, or that is reasonably likely to materially and adversely affect the future income, cash flow or prospects (as contemplated by the Company’s current business plan) of the Company and its Subsidiaries, taken as a whole, or evidence of significant financial or accounting irregularities (“Adverse Condition”). Some examples (non-exclusive) of an Adverse Condition include: significant unrecorded or potential liabilities, material financial accounting errors that cannot be reconciled, evidence of fraud and loss of significant reinsurance coverage (without obtaining equivalent replacement coverage) or producer relationships. The right under

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this Section 13.1(G) shall be deemed to have been waived if Progressive does not notify the Company and the Selling Shareholders, in writing, within fifteen (15) Business Days after the date of this Agreement, that it elects to terminate this Agreement due to the existence of an Adverse Condition.

(H)    This Agreement may be terminated by Progressive, upon written notice to the Company and the Selling Shareholders, if the Company does not obtain the executed documents described in Section 7.4 (subject to the proviso set forth in Section 11.8) by the end of the timeframe stated in such Section.

13.2.    Effect of Termination. In the event of termination of this Agreement as provided in Section 13.1, this Agreement shall forthwith become void and there shall be no liability on the part of any Party hereto except that (a) Section 7.3(B), this Section 13.2 and Article XIV shall survive any termination, and (b) nothing herein shall relieve any Party from liability for any willful and material default under or breach of this Agreement. For purposes hereof, “willful and material default under or breach” means a material default under or breach of this Agreement by a Party as a result of an action or failure to act by such Party that such Party knew, or reasonably should have known, would result in a breach of this Agreement.

ARTICLE XIV

MISCELLANEOUS

14.1.    No Additional Representations. None of the parties to this Agreement shall be deemed to have made any representation or warranty with respect to the subject matter hereof, other than those expressly made by such party in, or in certifications delivered pursuant to the terms of, this Agreement or in the Exhibits or disclosure schedules hereto.

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14.2.    Survival of Warranties and Representations; Limitations.

(A)    All of the warranties, representations, covenants and agreements of each of the respective parties contained in or made pursuant to this Agreement shall be deemed renewed by such party on the Closing Date, as if again made at and as of such time, and shall survive the execution and delivery of this Agreement and the Closing for a period of three (3) years, except for the following:

(i)    The representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.7(a), 4.1, 4.2, 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 5.1, 5.2, 5.3 and 5.4 shall have no expiration;

(ii)    The representations and warranties set forth in Section 4.19 shall expire upon the expiration of the applicable statute of limitations; and

(iii)    The covenants and agreements set forth in this Article XIV shall have no expiration, except as expressly set forth therein.

(B)    The representations and warranties made by each member of the Fasteau Group in Article IV are made to the best knowledge of each member of the Fasteau Group, which can be established by evidence that such member has made a reasonable inquiry of the President, Executive Vice President, Vice President-Finance and Accounting and Vice President-General Counsel of the Company, and has received a written response that is supportive with the applicable representations or warranties made.

(C)    For those representations and warranties made by each Selling Shareholder in this Agreement for which actual or best knowledge is required, actual or best knowledge shall mean the individual is actually aware of the fact or matter or reasonably should be aware of such fact or matter given its/his position (or the position of any of its officers, partners, members or controlling shareholders) with the Company.

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(D)    Notwithstanding anything provided herein to the contrary, the liability of each Selling Shareholder for a breach or violation of any of the representations or warranties made herein shall not exceed the aggregate sale proceeds of the Shares conveyed by such Selling Shareholder to Progressive hereunder, provided that for liability purposes, Fasteau and the other members of the Fasteau Group shall be considered to be a single entity. Except as expressly provided in this Section 14.2(D) and Section 14.2(E) with respect to members of the Fasteau Group, no Selling Shareholder shall be responsible for or have any liability for the breach of any representation, warranty or covenant made by any other Party, including the Company.

(E)    None of the Company or the Selling Shareholders shall have any liability with respect to any representation or warranty in this Agreement unless Progressive gives written notice to the Company and the Selling Shareholders of the particular claim, describing such claim in reasonable detail, no later than thirty (30) days after expiration of the applicable surviving period, as specified in Section 14.2. Notwithstanding the foregoing, the members of the Fasteau Group shall be deemed to be and shall be treated as a single entity.

(F) Notwithstanding anything to the contrary in this Agreement, no member of the Fasteau Group shall be responsible for, or have any liability for, the breach of any representation, warranty or covenant by any other Selling Shareholder who is not a member of the Fasteau Group.

14.3.    Liability of Selling Shareholders. Except as expressly provided in Sections 14.2(D) and (E) with respect to members of the Fasteau Group, the liabilities of the Selling Shareholders hereunder are several (not joint and several), and each Selling Shareholder shall only be responsible for obligations that relate solely to that Selling Shareholder and the Shares that such Selling Shareholder is to convey hereunder.

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14.4.    Limitation of Damages. In no event shall any of the parties hereto, or any of their respective officers, directors, members, partners, employees, agents or representatives, be liable for any consequential, incidental, indirect, remote, speculative, exemplary, special or punitive damages (such as treble damages), or damages arising out of lost profits or loss of revenue, in each case arising out of any breach or violation of any representation, warranty, covenant or agreement set forth in this Agreement or with respect to any other obligation or liability arising out of this Agreement.

14.5.    Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of each of the parties thereto. Nothing in this Agreement, express or implied, is intended to confer upon any person or entity other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement. Neither this Agreement, nor any of the rights or obligations of any of the parties hereunder, may be assigned without the prior written consent of all of the other parties hereto; provided, however, that, without such consent, Progressive may assign any of its rights or obligations hereunder, and ownership of the Shares, to any direct or indirect wholly owned subsidiary of Progressive; provided, further, that no such assignment shall relieve Progressive of its obligations hereunder.

14.6.    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In addition to original signatures, signatures may be in the form of facsimile or a .pdf, each of which shall be valid and fully effective for all purposes.

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14.7.    Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

14.8.    Expenses. Except as otherwise expressly provided herein, each of the parties hereto shall be responsible for all costs and expenses (including, without limitation, all legal, accounting and consulting fees and all tax liabilities) incurred at its/his/her initiative or to which it/he/she may be subject in connection with preparation, negotiation and execution of this Agreement and/or in preparation for the transactions contemplated hereby.

14.9.    Public Disclosure. No press release or similar public announcement or communication will be made concerning the existence, execution, delivery or performance of this Agreement unless the timing, content and method of such disclosure has been previously approved by both Progressive and the Company; provided that, without any such prior approval, each of Progressive and XL or any of their respective Affiliates may make any such disclosures in one or more news release or filings under the Securities Exchange Act of 1934, as amended, as it believes to be required by law or otherwise advisable; provided, further, that none of the Parties shall be required to consult with the others prior to (1) making any communications substantially similar to communications previously issued after consultation with such other Parties, or (1) in the case of a Selling Shareholder, disclosing such information on a confidential basis to its limited partners and members, if applicable.

14.10    Notice. Any notice or other communication required or permitted to be given hereunder shall be hand-delivered, sent by facsimile, electronic mail or overnight courier or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as follows:    

(a)    If to the Company:

Angel D. Bostick, General Counsel    

ARX Holding Corp.

1 ASI Way

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St. Petersburg, FL 33702

Fax: (727) 374-0466

Email: abostick@asicorp.org

(b)    If to Progressive :

Charles E. Jarrett, Chief Legal Officer

The Progressive Corporation

6300 Wilson Mills Road

Mayfield Village, Ohio 44143

Fax: (440) 395-3678

Email: chuck_jarrett@progressive.com

(c)    If to XL Re Ltd.:

XL Re Ltd.

1 Bermudiana Road

Hamilton HM EX Bermuda

Attn: Derrick Irby, Executive Vice President

                 H. Matthew Crusey, SVP and Assistant General Counsel

Fax: (441) 296-9936

Email: matthew.crusey@xlgroup.com

with a copy (which shall not constitute notice) to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attn: Rajab S. Abbassi

Fax: (212) 728-8111

Email: rabbassi@willkie.com

(d)    If to Fasteau Insurance Holding, LLC:

Fasteau Insurance Holding, LLC

c/o Marc Fasteau

77 Seekonk Cross Road

Great Barrington, MA 01230-1565

marc.fasteau@fulcrum-llc.com and

fasteaumarc@gmail.com

(e)    If to Marc Fasteau, individually, or Marc Fasteau, as Trustee of the Alexis Fasteau 2008 Irrevocable Trust:

Mr. Marc Fasteau

77 Seekonk Cross Road

Great Barrington, MA 01230-1565

marc.fasteau@fulcrum-llc.com and

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fasteaumarc@gmail.com

(f)    If to Marc Fasteau, as Trustee of the Marc Fasteau 2012 Irrevocable Trust:

Mr. Marc Fasteau

77 Seekonk Cross Road

Great Barrington, MA 01230-1565

marc.fasteau@fulcrum-llc.com and

fasteaumarc@gmail.com

In the case of clauses (d) – (f), with a copy to (which shall not constitute notice):

Shearman & Sterling LLP

599 Lexington Avenue

New York, NY 10022

Attn:     John A. Marzulli, Jr.

                        David Connolly

                    Fax:     (646) 848-8590

                         (646) 848-4274

Email: jmarzulli@shearman.com

david.connolly@shearman.com

(g)    If to Flexpoint Fund, L.P.

Flexpoint Fund, L.P.

676 N. Michigan Avenue, Suite 3300

Chicago, IL 60611

Attn: Christopher J. Ackerman

Fax: (312) 327-4525

Email: cackerman@flexpointford.com

with a copy (which shall not constitute notice) to:

Kirkland & Ellis LLP

300 North LaSalle

Chicago, IL  60654

Attn:  Sanford E. Perl, P.C.

           Mark A. Fennell, P.C.

Fax:  (312) 862-2200

Email: sanford.perl@kirkland.com

mfennell@kirkland.com

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(h)    If to New Capital Partners Private Equity Fund, L.P.:

New Capital Partners Private Equity Fund, L.P.

2101 Highland Ave. South

Suite 700

Birmingham, AL 35205

Attn: James B. Little, III

Fax: (205) 939-8402

Email: jlittle@newcapitalpartners.com

with a copy (which shall not constitute notice) to:

Maynard, Cooper & Gale, P.C.

1901 Sixth Avenue North

2400 Regions/Harbert Plaza

Birmingham, AL 35203

Attn: Gregory S. Curran

Fax: (205) 254-1999

(i)    If to Stewart Insurance Holdings, LLLP:

Stewart Insurance Holdings, LLLP

c/o Gregory E. Stewart

1 ASI Way

St. Petersburg, FL 33702

Fax: (727) 374-0466

Email: gstewart.pro@gmail.com

(j)    If to Gregory E. Stewart:

Gregory E. Stewart            

1 ASI Way

St. Petersburg, FL 33702

Fax: (727) 374-0466

Email: gstewart.pro@gmail.com

or such other address as shall be furnished in writing by such Party. Notices or other communications shall be deemed given: (i) when sent by electronic mail; (ii) one (1) Business Day after being sent by overnight courier, (iii) three (3) Business Days after being sent by certified, registered, or United States Post Office priority mail; and (iv) when received, for all other methods; provided, however,

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that any notice or communication changing any of the addresses set forth above shall be effective and deemed given only upon its receipt.

14.11.    Entire Agreement. This Agreement, together with the Exhibits and Schedule of Exceptions attached hereto, constitute and include the complete understanding and agreement between the parties hereto in relation to the subject matter hereof. All prior representations, covenants, undertakings and agreements between any of the parties hereto are of no further force or effect.

14.12.    Rights and Remedies. No right or remedy conferred upon or reserved to any party by this Agreement shall exclude any other right or remedy, but each such right or remedy shall be cumulative and shall be in addition to every other right or remedy hereunder or available at law or in equity.

14.13.    Amendment. Once executed by all of the parties hereto, this Agreement may not be amended or terminated orally, but only by an instrument in writing duly executed by all of the parties hereto.

14.14.    Interpretation and Construction. This Agreement shall in all respects be interpreted, construed and governed by and in accordance with the laws of the State of Delaware. In the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed to be severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect.

14.15.    Jurisdiction. The Parties agree that all actions arising out of or relating to this Agreement shall be brought in the United States District Court for the District of Delaware or the Delaware Court of Chancery. Consistent with the preceding sentence, the Parties hereby (a) submit to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) for

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the purpose of any action arising out of or relating to this Agreement brought by any Party hereto and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts.

14.16. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

14.17. Specific Performance. The Parties hereto acknowledge and agree that the Parties would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that any non-performance or breach of this Agreement by any Party hereto could not be adequately compensated by monetary damages alone and that the Parties hereto would not have any adequate remedy at Law. Accordingly, in addition to any other right or remedy to which a Party may be entitled, at Law or in equity (including monetary damages), such Party shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement without posting any bond or other undertaking.

[Signatures on following pages]

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IN WITNESS WHEREOF, the parties hereunder have executed and delivered this Agreement in any number of counterparts, each of which fully executed counterparts shall be deemed an original for all purposes.

THE PROGRESSIVE CORPORATION

By:/s/Glenn M. Renwick

    Name: Glenn M. Renwick

    Title: President

71

ARX HOLDING CORP.

By:/s/John F. Auer            

Name: John F. Auer

Title: President & CEO

72

SELLING SHAREHOLDERS:

XL RE LTD.

By:/s/Charles Cooper

    Name: Charles Cooper

    Title: President and CUO

73

/s/ Marc Fasteau

MARC FASTEAU

FASTEAU INSURANCE HOLDING, LLC

By:    /s/ Marc Fasteau            

Name Marc Fasteau

Title Managing Member

MARC FASTEAU, AS TRUSTEE OF THE

ALEXIS FASTEAU 2008 IRREVOCABLE TRUST

By:/s/Marc Fasteau                

Marc Fasteau, Trustee

MARC FASTEAU, AS TRUSTEE OF THE

MARC FASTEAU 2012 IRREVOCABLE TRUST

By:/s/Marc Fasteau                

Marc Fasteau, Trustee

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STEWART INSURANCE HOLDINGS, LLLP

By:/s/Gregory Stewart        

Name Gregory Stewart

Title General Partner

/s/Gregory E. Stewart            

GREGORY E. STEWART

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FLEXPOINT FUND, L.P.

By: Flexpoint Management, L.P.

Its: General Partner

By: Flexpoint Ultimate Management, LLC

Its: General Partner

By:/s/Donald Edwards

Name: Donald Edwards

Title: Manager

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NEW CAPITAL PARTNERS PRIVATE

EQUITY FUND, L.P.

By:New Capital Partners, LLC

Its:General Partner

By:/s/James B. Little, III

Name James B. Little, III

Title Managing Member

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EXHIBIT H TO STOCK PURCHASE AGREEMENT

FOURTH AMENDED AND RESTATEDSTOCKHOLDERS’ AGREEMENT

This FOURTH AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT (“Agreement”), dated ________________, 2015 is among ARX Holding Corp., a Delaware corporation (the “Company”), Marc Fasteau (“Fasteau”), Fasteau Insurance Holding, LLC, a Delaware limited liability company (“Fasteau Holding”), Fasteau Insurance Holding II, LLC (“Fasteau Holding II”), ARX Executive Holdings, LLLP, a Florida limited liability limited partnership (“LLLP”), The Progressive Corporation, an Ohio corporation(“Progressive”), PC Investment Company, a Delaware corporation (“PCI”), John F. Auer (“Auer”), Kevin R. Milkey (“Milkey”), Antonio Scognamiglio (“Scognamiglio”), Mary Frances Fournet (“Fournet”), Marc Fasteau, as Trustee of the Alexis Fasteau 2008 Irrevocable Trust (the “2008 Trustee”), Marc Fasteau, as Trustee of the Marc Fasteau 2012 Irrevocable Trust” “(2012 Trustee”), Phillip Brubaker (“Brubaker”), Angel Bostick, (“Bostick”) Tanya Fjare (“Fjare”), Trevor Hillier (“Hillier”), Jeffrey Hannon (“Hannon”), Garrett Pless (“Pless”), Stephanie Sullens (“Sullens”), Daryl Chance (“Chance”), Patrick McCrink (“McCrink”) and Richard Hanlon (“Hanlon”). Fasteau, Fasteau Holding, Fasteau Holding II, LLLP, Progressive, PCI, Auer, Milkey, Scognamiglio, Fournet, the 2008 Trustee, the 2012 Trustee, Brubaker, Bostick, Fjare, Hillier, Hannon, Pless, Sullens, Chance, McCrink and Hanlon are individually referred to herein as a “Stockholder” and collectively as the “Stockholders”.

WITNESSETH:

WHEREAS, the Company has authorized capital stock of (i) 1,500,000 shares of common stock, par value $.01 per share (“Common Stock”), and (ii) 950,000 shares of preferred stock, par value $.01 per share, all of which are designated as Series A Convertible Preferred Stock (“Series A Preferred Stock”); and

WHEREAS, the Company, American Strategic Insurance Corp., a Florida corporation and wholly owned subsidiary of the Company, Risk Capital Reinsurance Company, a Nebraska corporation (n/k/a Arch Reinsurance Company, a Nebraska corporation), XL Re Ltd., a Bermuda company formerly known as X.L. Global Reinsurance Company, Ltd., Fasteau, The Jerger Company, Inc., a Florida corporation, and Auer (and joined by Milkey) entered into that certain Stockholders’ Agreement, dated as of October 17, 1997 (the “Original Agreement”); and

WHEREAS, the Original Agreement was amended pursuant to a First Amendment to Stockholders’ Agreement dated March 30, 2004 (“Amended Original Agreement”); and

WHEREAS, all of the then-existing stockholders of the Company amended and restated the Amended Original Agreement pursuant to a First Amended and Restated Stockholders’ Agreement effective as of December 4, 2003 (“First Amended and Restated Agreement”); and

WHEREAS, all of the then-existing stockholders of the Company amended and restated the First Amended and Restated Agreement pursuant to a Second Amended and Restated

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Stockholders’ Agreement effective as of June 30, 2012 (“Second Amended and Restated Agreement”); and

WHEREAS, all of the then existing stockholders of the Company amended and restated the Second Amended and Restated Agreement pursuant to a Third Amended and Restated Stockholders’ Agreement effective as of August 14, 2012 (“Third Amended and Restated Agreement”); and

WHEREAS, the Stockholders desire to amend and to restate in its entirety the Third Amended and Restated Agreement to be effective immediately after the closing of the transactions contemplated by the Stock Purchase Agreement, dated December __, 2014, among Progressive, the Company and the selling stockholders identified therein (the “Progressive Purchase Agreement”);

NOW, THEREFORE, in consideration of the mutual terms, conditions, covenants and agreements made herein, the Company, on behalf of itself and its Subsidiaries, and the Stockholders hereby agree as follows:

ARTICLE I
WAIVER; EFFECTIVENESS; DEFINITIONS

SECTION 1.1Consent to Amendment to Certificate of Incorporation.

By signing this Agreement, each Stockholder approves and consents to the amendment to the Company’s certificate of incorporation as set forth on Exhibit A attached hereto, and agrees to take such additional actions, including the voting of their Shares and the execution of such written consents, as may be necessary or advisable to authorize and approve such amendment, file such amendment with the Secretary of State of the State of Delaware, and otherwise effect such amendment.

SECTION 1.2Effectiveness. This Agreement shall be effective immediately after the closing of the transactions contemplated by the Progressive Purchase Agreement (the “Effective Date”).

SECTION 1.3Certain Definitions. As used in this Agreement, the following terms shall have the following meanings:

“2008 Trustee” shall have the meaning specified in the preamble.

“2012 Trustee” shall have the meaning specified in the preamble.

“Affiliate” shall mean, with respect to any Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract, or otherwise.

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“Agreement” shall have the meaning specified in the preamble.

“Amended Original Agreement” shall have the meaning specified in the recitals.

“Auer” shall have the meaning specified in the preamble.

“Board” shall have the meaning specified in Section 2.1(a).

“Board Designees” shall have the meaning specified in Section 2.1(a).

“Bostick” shall have the meaning specified in the preamble.

“Brubaker” shall have the meaning specified in the preamble.

“Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday, and Friday, excluding federal holidays.

“Call Notice” shall mean the First Call Notice or the Second Call Notice, as applicable.

“Chance” shall have the meaning specified in the preamble.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Common Stock” shall have the meaning specified in the recitals.

“Companies” shall mean the Company and any Subsidiaries of the Company.

“Company” shall have the meaning specified in the preamble.

“CPR” shall have the meaning specified in Section 4.15.

“Designated Courts” shall have the meaning specified in Section 4.16.

“Dispute” shall have the meaning specified in Section 4.15.

“Dispute Period” shall have the meaning specified in Section 3.3(c)(v)(B).

“Effective Date” shall have the meaning specified in Section 1.2.

“Family Affiliate” shall mean, with respect to a Stockholder who is a natural person, (i) during the lifetime of such Stockholder, provided that such Stockholder retains effective voting control over the Shares at issue, (A) the Stockholder’s spouse or issue, or (B) a trust or other similar arrangement, the primary beneficiaries of which are the Stockholder, the Stockholder’s spouse or issue, or one or more entities or organizations contributions to which would qualify for a charitable deduction for federal income tax purposes under Section 170 of the Code, for federal estate tax purposes under Section 2055 of the Code or for federal gift tax purposes under Section 2522 of the Code, and (ii) upon such Stockholder’s death, the estate of such Stockholder.

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“Fasteau” shall have the meaning specified in the preamble.

“Fasteau Group” shall mean Fasteau, Fasteau Holding, Fasteau Holding II, the 2008 Trustee, the 2012 Trustee, and any Affiliate or Family Affiliate of Fasteau to which Fasteau may Transfer Shares after the date hereof in accordance with Section 3.1(c).

“Fasteau Holding” shall have the meaning specified in the preamble.

“Fasteau Holding II” shall have the meaning specified in the preamble.

“Fasteau First Put Shares” shall have the meaning specified in Section 3.3(c)(i).

“Fasteau Rights Termination Date” shall have the meaning specified in Section 2.1(a).

“First Amended and Restated Agreement” shall have the meaning specified in the recitals.

“First Call Actual Sellers” shall have the meaning specified in Section 3.3(c)(ii).

“First Call Closing Date” shall have the meaning specified in Section 3.3(c)(ii).

“First Call Notice” shall have the meaning specified in Section 3.3(c)(ii).

“First Call Shares” shall have the meaning specified in Section 3.3(c)(ii).

“First Call Potential Sellers” shall have the meaning specified in Section 3.3(c)(ii).

“First Put Closing Date” shall have the meaning specified in Section 3.3(c)(i).

“First Put Notice” shall have the meaning specified in Section 3.3(c)(i).

“First Put Price” shall be the per Share price calculated in the manner described on Exhibit B, as finally determined in accordance with Section 3.3(c)(v)if there is a dispute regarding the calculation.

“First Put Seller” shall have the meaning specified in Section 3.3(c)(i).

“First Put Shares” shall have the meaning specified in Section 3.3(c)(i).

“Fjare” shall have the meaning specified in the preamble.

“Fully Diluted Basis” shall mean all of the issued and outstanding shares of capital stock of the Company, including without limitation, shares of Series A Preferred Stock and Common Stock of the Company plus, without duplication, shares of Common Stock or Series A Preferred Stock into which outstanding convertible or exchangeable securities may be converted, including options for any such shares of capital stock under any stock option plan duly adopted by the Company.

“GAAP” shall have the meaning specified in Section 4.7(a)(i).

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“Hanlon” shall have the meaning specified in the preamble.

“Hannon” shall have the meaning specified in the preamble.

“Hillier” shall have the meaning specified in the preamble.

“Independent Accounting Firm” shall have the meaning specified in Section 3.3(c)(v)(B).

“Initial Meeting” shall have the meaning specified in Section 4.15.

“Initial Public Offering” shall mean the first consummation of a sale of Common Stock to the public in a firm commitment underwriting pursuant to a registration statement which has been filed by the Company and has become effective under the Securities Act (excluding registration statements on Form S-4, S-8 or similar forms).

“LLLP” shall have the meaning specified in the preamble.

“LLLP Interest” shall mean any interest or rights in the capital, profits, loss, or management or control and any other rights or interest in LLLP as a limited partner or as a general partner of LLLP or otherwise.

“Losses” shall have the meaning specified in Section 4.8(e).

“Mandatory Conversion Time” shall mean the earliest to occur of the following: (a) the first Business Day immediately following the First Put Closing Date, (b) the Business Day immediately prior to the date of the consummation of a Qualified Public Offering, and (c) the written consent of sixty six and two-thirds percent (66-2/3%) of the outstanding Series A Preferred Stock.

“Marketable Securities” shall mean securities (i) issued by an issuer with a public float equal to or greater than $2 billion; (ii) that are of a class of securities listed on major national or international stock exchange; (iii) that constitute, in the aggregate, not more than 2.0% of the outstanding securities of such class; (iv) that are eligible for immediate sale by the distributee pursuant to a registration statement effective under the Securities Act of 1933, as amended and (v) are not subject to any contractual or legal limitations on disposition, including any “hold-back” or “lock-up” agreement. For avoidance of doubt, Marketable Securities will include shares of capital stock of the Company received in connection with a Qualified Public Offering if each of clauses (i) through (v) above is satisfied.

“McCrink” shall have the meaning specified in the preamble.

“Milkey” shall have the meaning specified in the preamble.

“New Securities” shall mean any debt or equity securities or instruments, including any loans or any options, warrants or other rights to purchase debt or equity securities of the Company, other than the securities or instruments issued (i) upon conversion of Series A Preferred Stock, (ii) upon the conversion or exchange of any of the Company’s debt securities by an unaffiliated

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lender, (iii) in connection with any stock split, stock dividend or recapitalization of the Company, (iv) to the public in a Qualified Public Offering, (v) pursuant to the acquisition of another Person by the Company by merger, purchase of substantially all of the assets or other form of reorganization, (vi) pursuant to an employee stock option plan, stock bonus plan, stock purchase plan, or other management equity program approved by the Board, (vii) to unaffiliated vendors, customers, and consultants to the Company, (viii) to unaffiliated lenders to the Company or its Subsidiaries in future debt financings or (ix) to unaffiliated Persons with whom the Company or its Subsidiaries have marketing arrangements.

“Non-Demanding Substantial Stockholder” shall have the meaning specified in Section 4.8(c).

“Non-Fasteau First Put Shares” shall have the meaning specified in Section 3.3(c)(i).

“Objection Notice” shall have the meaning specified in Section 3.3(c)(v)(A).

“Objector” shall have the meaning specified in Section 3.3(c)(v)(B).

“Original Agreement” shall have the meaning specified in the recitals.

“PCI” shall have the meaning specified in the preamble.

“Person” shall mean an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, government (or an agency or political subdivision thereof), or other entity of any kind.

“Piggyback Registration” shall have the meaning specified in Section 4.8(a).

“Pless” shall have the meaning specified in the preamble.

“Progressive” shall have the meaning specified in the preamble.

“Progressive Purchase Agreement” shall have the meanings specified in the recitals.

“Proposed Sale Notice” shall have the meaning specified in Section 3.2(a).

“Proposed Securities” shall have the meaning specified in Section 3.6(a)(i).

“Public Float Date” shall mean the date on which shares of Common Stock shall have been sold by the Company pursuant to a Qualified Public Offering.

“Put Notice” shall mean the First Put Notice or Second Put Notice, as applicable.

“Put Price” shall mean the First Put Price or the Second Put Price, as applicable.

“Qualified Public Offering” shall mean the consummation of a sale of Common Stock to the public in a firm commitment underwriting pursuant to a registration statement which has become

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effective under the Securities Act (excluding registration statements on Form S-4, S-8 or similar forms) with aggregate net proceeds to the Company in excess of $150 million.

“Representative” shall have the meaning specified in Section 3.3(c)(v).

“Required Shares” shall have the meaning specified in Section 3.3(c)(ii).

“Scognamiglio” shall have the meaning specified in the preamble.

“Second Amended and Restated Agreement” shall have the meaning specified in the recitals.

“Second Call Actual Sellers” shall have the meaning specified in Section 3.3(c)(iv).

“Second Call Closing Date” shall have the meaning specified in Section 3.3(c)(iv).

“Second Call Notice” shall have the meaning specified in Section 3.3(c)(iv).

“Second Call Period” shall have the meaning specified in Section 3.3(c)(iv).

“Second Call Potential Sellers” shall have the meaning specified in Section 3.3(c)(iv).

“Second Call Shares” shall have the meaning specified in Section 3.3(c)(iv).

“Second Put Closing Date” shall have the meaning specified in Section 3.3(c)(iii

“Second Put Notice” shall have the meaning specified in Section 3.3(c)(iii).

“Second Put Price” shall be the per share price calculated in the manner described in Exhibit B.

“Second Put Seller” shall have the meaning specified in Section 3.3(c)(iii).

“Second Put Shares” shall have the meaning specified in Section 3.3(c)(iii).

“Section 3.2(d) Shares” shall have the meaning specified in Section 3.2(e).

“Section 3.2(d) Transferee” shall have the meaning specified in Section 3.2(e).

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Securities and Exchange Commission thereunder.

“Selling Party” shall have the meaning specified in Section 3.2(a).

“Series A Preferred Stock” shall have the meaning specified in the recitals.

“Series A Shares” shall mean all outstanding shares of Series A Preferred Stock and shares of Common Stock received upon conversion of such Series A Preferred Stock.

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“Shares” shall mean the issued and outstanding shares of capital stock of the Company at any time, including without limitation, the Series A Preferred Stock and the Common Stock and all securities convertible into or exchangeable for shares of capital stock of the Company and any other warrants or options or other similar rights.

“Stockholder” or “Stockholders” shall have the meaning specified in the preamble.

“Subscription Notice” shall have the meaning specified in Section 3.6(a)(i).

“Subsidiary” shall mean (i) a corporation with a majority of capital stock with voting power, under ordinary circumstances, to elect directors at the time and that is, directly or indirectly, owned by the Company or a Stockholder or (ii) any other Person (other than a corporation) in which the Company or a Stockholder, directly or indirectly, at the date of determination thereof, has at least a majority ownership interest.

“Substantial Stockholder” or “Substantial Stockholders” shall mean LLLP, each member of the Fasteau Group, Progressive, and Auer (and any Affiliate or Family Affiliate, as applicable, thereof to whom Shares are transferred by any such Stockholder, or by any Affiliate or Family Affiliate thereof, in accordance with this Agreement after the date hereof). A Stockholder shall cease to be a Substantial Stockholder when such Stockholder ceases to own any Shares.

“Substitute Director” shall have the meaning specified in Section 2.1(b).

“Sullens” shall have the meaning specified in the preamble.

“Tag-Along Holder” shall have the meaning specified in Section 3.3(a)(i).

“Tag-Along Participation Notice” shall have the meaning specified in Section 3.3(a)(iii).

“Tag-Along Right” shall have the meaning specified in Section 3.3(a)(ii).

“Tag-Along Sale” shall have the meaning specified in Section 3.3(a)(i).

“Tag-Along Sale Notice” shall have the meaning specified in Section 3.3(a)(i).

“Take-Along Right” shall have the meaning specified in Section 3.3(b)(i).

“Take-Along Notice” shall have the meaning specified in Section 3.3(b)(ii).

“Take-Along Transferee” and “Take-Along Transferor” shall have the meanings specified in Section 3.3(b)(i).

“Third Amended and Restated Agreement” shall have the meaning specified in the recitals.

“Transfer” shall mean (i) when used as a verb, the act of selling, pledging, mortgaging, hypothecating, giving, transferring, creating a security interest, lien or trust (voting or otherwise),

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assigning, or otherwise encumbering or disposing of, and (ii) when used as a noun, any sale, pledge, mortgage, hypothecation, gift, transfer, creation of security interest, lien or trust, any assignment, or other encumbrance or disposition.

“Transferor” and “Transferee” shall mean any Person who Transfers Shares and any Person who acquires Shares pursuant to a Transfer.

“Withdrawing Director” shall have the meaning specified in Section 2.1(b).

ARTICLE II

MANAGEMENT OF THE COMPANY;ACTIVITIES OF THE STOCKHOLDERS

SECTION 2.1Board of Directors.

(a)Number and Membership. The Stockholders shall take all action within their power, including, but not limited to, the voting of capital stock of the Company, required to cause the Boards of Directors of the Company and each of its Subsidiaries (each a “Board”) to consist of no fewer than five (5) members (“Board Designees”). With respect to the Company, the Board shall consist of three (3) members as determined by Progressive from time to time, one (1) member as determined by Fasteau from time to time, and one (1) member as determined by LLLP from time to time. With respect to each of the Company’s Subsidiaries, the Board shall consist of three (3) members as determined by Progressive from time to time, one (1) member as determined by Fasteau from time to time and one (1) member as determined by LLLP from time to time. Additional directors, if any, shall be designated by agreement of Progressive, Fasteau, and LLLP. The initial Board Designees of the Company shall be fixed at five (5) as follows: Fasteau (the initial Fasteau Board Designee), Auer (the initial LLLP Board Designee), Glenn Renwick, Brian Domeck and ___________________________[to be completed by Progressive prior to the closing of the transactions contemplated by the Progressive Purchase Agreement] (the initial Progressive Board Designees). The initial Board Designees of each of the Company’s Subsidiaries shall be fixed at five (5) as follows: Fasteau (the initial Fasteau Subsidiary Board Designee), Auer (the initial LLLP Subsidiary Board Designee), Glenn Renwick, Brian Domeck and _________________________[to be completed by Progressive prior to the closing of the transactions contemplated by the Progressive Purchase Agreement] (the initial Progressive Subsidiary Board Designees). On the earlier to occur of the date on which all of the members of the Fasteau Group cease to own any Shares and the First Put Closing Date (the “Fasteau Rights Termination Date”), Fausteau’s rights to designate directors under this Section 2.1(a) will terminate, and thereafter each Board will consist of no fewer than five (5) members, with four (4) Board Designees as determined by Progressive from time to time, one (1) Board Designee as determined by LLLP from time to time and any additional directors, if any, being designated by agreement of Progressive and LLLP.

(b)Substitute Director. In the event that any director (a “Withdrawing Director”) designated in the manner set forth in Section 2.1(a) is unable to serve, or, once having commenced to serve, is removed or withdraws from a Board, such Withdrawing Director’s replacement (the “Substitute Director”) on such Board shall be designated by the Stockholder who designated the Withdrawing Director in the manner provided in Section 2.1(a). Subject to the foregoing, any director

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may only be removed, with or without cause, by the Stockholder who designated such director, and such Stockholder may thereafter designate a replacement for such director. The Stockholders and the Company shall, and the Company shall cause its Subsidiaries to, take all action within their respective powers including, but not limited to, the voting of capital stock of such Companies, to cause the election of such Substitute Director.

(c)Director Expenses. The Company shall reimburse each Board Designee for all reasonable costs and expenses (including reasonable travel expenses) incurred in connection with such person’s attendance at meetings of the Boards and committees thereof. Other than such reimbursement, except for employee compensation arrangements between the Company and a Board Designee, Board Designees will not receive compensation from the Company or any of its Subsidiaries for their service as directors of the Company and/or any Subsidiary of the Company. Nothing in this Section 2.1(c) shall prevent Progressive, LLLP or Fasteau from compensating a Board Designee designated by such Stockholder for such service.

SECTION 2.2Management. The senior management of the Companies shall have responsibility for the day-to-day management of the Companies, subject in all cases to the oversight, instructions and requirements of their respective boards of directors or equivalent governing bodies.

SECTION 2.3Consent Rights.

(a)Without the prior written consent of Progressive, LLLP and Fasteau, the Company shall not (and shall cause its Subsidiaries not to):

(i)amend or repeal any provision of its articles or certificate of incorporation or bylaws (including without limitation the number of directors comprising its board of directors) other than (A) changes of an administrative or ministerial nature, (B) changes required by applicable laws, rules, or regulations or (C) changes required to effect the provisions of Section 1.1 of this Agreement;

(ii)directly or indirectly redeem, purchase, or otherwise acquire any shares of its capital stock or rights to acquire its capital stock other than pursuant to the terms of this Agreement or any employee stock option;

(iii)exercise its rights to repurchase any Shares pursuant to the terms of any employee stock option, if such rights arise from the death or permanent disability of a Stockholder;

(iv)issue any shares of capital stock or rights to acquire capital stock other than the issuance of Shares upon the exercise of any employee stock option outstanding on the date hereof; provided however, that nothing in this Section 2.3(a)(iv) shall abrogate the preemptive rights of each Substantial Stockholder set forth in Section 3.6 herein;

(v)make any payment (in cash or property) to, or enter into any other transaction with, any of its Affiliates or any Stockholder, other than (i) any payments or transactions that are competitive with those available from unrelated parties in an arms-length transaction,

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and (ii) employment arrangements with a Stockholder who is also an employee of the Company;

(vi)file a registration statement with the Securities and Exchange Commission for an Initial Public Offering;

(vii)merge or consolidate with any Person, or sell, lease, transfer, exchange, or dispose of all or substantially all of its assets;

(viii)liquidate, wind up, dissolve, or adopt any plan with respect to liquidation, winding-up, or dissolution;

(ix)file any petition under the United States Bankruptcy Code or any other insolvency law, or admit in writing its bankruptcy, insolvency, or general inability to pay its debts, or consent to the appointment of any receiver, liquidator, or other Person performing similar functions;

(x)create any Subsidiary that is not wholly-owned by the Company or one of its wholly-owned Subsidiaries; or

(xi)authorize, agree, or permit any of its Subsidiaries to authorize or agree, to do any of the foregoing.

(b)Notwithstanding anything to the contrary contained herein and without in any way limiting the consent rights of Progressive, LLLP and Fasteau contained in Section 2.3(a), the Company shall not amend or repeal any provision of its certificate of incorporation or bylaws, in each case as in effect on the date hereof, in a manner that would materially and adversely affect any Substantial Stockholder in its capacity as a stockholder disproportionate to any other Substantial Stockholder in its capacity as a stockholder, without the consent of the affected Substantial Stockholder. For the avoidance of doubt, the parties hereto acknowledge and agree that while the amendment or repeal of provisions of the Company’s certificate of incorporation or bylaws that by their terms affect all classes of Shares and all Substantial Stockholders uniformly may, because of the different circumstances of the individual Substantial Stockholders, result in different and possibly adverse economic effects to some Substantial Stockholders, the mere existence of such different economic consequences shall not require the consent of any such affected Substantial Stockholders under this Section 2.3(b) for any amendment or repeal of provisions of the Company’s certificate of incorporation or bylaws that by its terms affects all classes of Shares and all Substantial Stockholders uniformly. Notwithstanding the foregoing, (i) the authorization or issuance of new shares of the Company's capital stock, (ii) any public offering of any of the Company's Shares, (iii) any amendment to effect the provisions of Section 1.1, and (iv) any conversion of Series A Preferred Stock to Common Stock that are in accordance with the terms and provisions of this Agreement shall not require the consent of the Substantial Stockholders under this subsection.

(c)On the Fasteau Rights Termination Date, all of Fausteau’s rights under Section 2.3(a) will terminate.

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(d)For purposes of Section 2.3(a), the consent of each of LLLP, Progressive and Fasteau shall be deemed to have been given if such Stockholder’s Board Designee(s) (i) attended a meeting of the Board at which an action or transaction was discussed and approved by the Board and such Board Designee(s) voted for such action or transaction, did not vote against such action or transaction, or did not object on the record to such action or transaction, (ii) failed to attend a meeting of the Board at which an action or transaction was discussed and approved by the Board, if (x) notice of such meeting of the Board was given by electronic mail, in accordance with Section 4.10, at least five (5) Business Days in advance of such meeting, and (y) such Board Designee failed to notify the other members of the Board prior to such meeting that such Board Designee would not be present at such meeting or failed to make his or her self reasonably available for a Board meeting at another mutually agreeable time within one (1) week of such originally scheduled meeting date, or (iii) executed a written consent of the Board approving such action or transaction.

ARTICLE III

TRANSFER AND ISSUANCE OF SECURITIES

SECTION 3.1General Restrictions.

(a)No Stockholder shall, directly or indirectly, Transfer any Shares or any interest therein, whether voluntarily or involuntarily, unless:

(i)(A) such Transfer complies with Section 3.2 or Section 3.3 of this Agreement, as applicable, and (B) the Transferee (if other than the Company or another Stockholder) agrees to be bound by this Agreement and executes a counterpart hereof and such further documents as may be necessary, in the opinion of the Company, to make it a party hereto (any such Transferee shall be deemed to be a Stockholder for purposes of this Agreement); and

(ii)such Transfer is made pursuant to either (i) an effective registration statement under the Securities Act and any applicable state securities laws or (ii) an available exemption from the registration requirements of the Securities Act and such laws and, prior to any such Transfer (other than a Transfer to the Company or Progressive), the Person proposing the Transfer provides to the Company a written opinion of legal counsel satisfactory in form and substance to the Company and its counsel to the effect that the proposed Transfer may be effected without registration under the Securities Act and any applicable state securities laws.

(b)For purposes of this Agreement, any direct or indirect Transfer of an interest in a Stockholder or in an Affiliate or Affiliates that own any interest in a Stockholder, or any direct or indirect change in the beneficiaries of a Stockholder or a Family Affiliate that is a trust or other similar arrangement to include an individual or entity that does not fall within the categories identified in clause (i)(B) of the definition of Family Affiliate, shall be deemed to constitute a Transfer of the Shares owned or held by such Stockholder and shall be subject to the restrictions of Section 3.1 of this Agreement. Notwithstanding the foregoing, the provisions of this Section 3.1(b) shall not apply to (x) any Transfer of an interest in Progressive, and (y) any Transfer by Progressive of an interest in any Subsidiary or other Affiliate of Progressive unless the assets of

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such Subsidiary or other Affiliate of Progressive are comprised primarily of a direct or indirect ownership interest in Shares.

(c)Notwithstanding the provisions of Section 3.1(a)(i)(A), at any time and from time to time, a Stockholder who is a natural person may effect a Transfer of Shares to a Family Affiliate without having to comply with any provision of Section 3.2, and, if such Transfer is in accordance with the terms of this Agreement other than Section 3.2, then the Family Affiliate shall not be deemed to be a Section 3.2(d) Transferee and the Shares transferred to the Family Affiliate shall not be deemed to be Section 3.2(d) Shares.

(d)Notwithstanding any other provision of this Agreement, at any time and from time to time, PCI may Transfer any or all of its Shares to Progressive or an Affiliate of Progressive, and Progressive may Transfer any or all of its Shares to any Affiliate of Progressive, without having to comply with any provision of this Article III other than Section 3.1(a)(i)(B).

SECTION 3.2Right of First Refusal; Requirement of Notice of Intention to Transfer; Option to Purchase.

(a)Notice. In the event a Stockholder other than Progressive (the “Selling Party”) proposes to Transfer any Shares (other than to the Company or Progressive pursuant to the terms of this Agreement), the Selling Party shall give to the Company and to Progressive written notice of its intention to sell Shares and of a bona fide offer from a financially qualified buyer to purchase such Shares for cash (the “Proposed Sale Notice”). The Proposed Sale Notice shall include: (i) the number of Shares to be sold, (ii) the name of the proposed buyer, (iii) any other material terms and conditions of the proposed sale, and (iv) information demonstrating to the reasonable satisfaction of the Company that the proposed buyer is financially able to make the purchase.

(b)Option to Purchase. For thirty (30) calendar days after receipt of the Proposed Sale Notice by the Company, the Company shall have the option to purchase all (but not less than all) of the Shares the Selling Party proposes to sell on the same terms and conditions as described in the Proposed Sale Notice. If the Company does not exercise its option by delivering notice to the Selling Party within such thirty (30) day option period, then during the twenty (20) calendar days after the expiration of such thirty (30) day option period, Progressive shall have the option to purchase all (but not less than all) of the Shares that the Selling Party has offered to sell, on the same terms and conditions as described in the Proposed Sale Notice.

(c)Election to Purchase; Closing. If the Company or Progressive elects to purchase all of the Shares covered by a Proposed Sale Notice, such election shall constitute the agreement by the Company or Progressive (as applicable) to purchase such Shares for which a valid exercise has been tendered at the price and in accordance with the terms contained in the Proposed Sale Notice and the closing of such sale shall occur on a date agreed to by the Selling Party and the Company or Progressive (as the case may be); provided that, subject to applicable regulatory requirements (which may result in a delay in the closing), such date shall not be later than thirty (30) days after the Company or Progressive has elected to purchase the Shares pursuant to Section 3.2(b). The closing shall take place at the Company’s offices, and the tender of payment for Shares to be purchased shall be made in immediately available funds against delivery of the certificates

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representing the Shares so purchased, a stock power duly endorsed to the Company or Progressive, as applicable (or signed in blank), by the Selling Party, and such additional information and documentation, including representations as to ownership and title to the Shares to be sold by the Selling Party, authority of the Selling Party to sell such Shares, and the absence of encumbrances and required governmental and third party approvals and consents, as the Company or Progressive (as applicable) may reasonably request from the Selling Party.

(d)No Election to Purchase. If the Company and Progressive do not exercise their options by delivering notice to the Selling Party before the expiration of Progressive’s twenty (20) day option period, then during the thirty (30) calendar days following the expiration of such twenty (20) day option period, the Selling Party may sell the Shares to the proposed buyer on the terms and conditions in the Proposed Sale Notice. If the sale does not close within such thirty (30) day period (as such period may be extended to obtain any required regulatory approvals), any such Transfer of the Shares shall be again restricted in accordance with this Agreement.

(e)Rights of Purchaser Transferee. Any purchaser to whom a Selling Party transfers shares (“Section 3.2(d) Shares”) pursuant to Section 3.2(d) (each a “Section 3.2(d) Transferee”) shall not have any rights under Section 3.3(c)(i) or Section 3.3(c)(iii) of this Agreement.

SECTION 3.3Tag-Along, Take-Along, Put and Call Rights and Obligations.

(a)Tag-Along Right.

(i)Tag-Along Sale Notice. If Progressive or any of its Affiliates (a “Selling Holder”) intends to Transfer, in one transaction or a series of related transactions (other than (x) to Progressive or any of its Affiliates or (y) pursuant to the Take-Along Right), any Shares (a “Tag-Along Sale”), then such Selling Holder shall be required to notify the other Substantial Stockholders and Milkey (the “Tag-Along Holders”) not less than thirty (30) calendar days prior to the proposed Tag-Along Sale, of such proposed sale, and the Tag-Along Holders shall have the option to participate in such Tag-Along Sale as set forth in clause (ii) of this Section 3.3(a). The notice from the Selling Holder (the “Tag‑Along Sale Notice”) shall specify (A) the number of Shares proposed to be Transferred, (B) the name and address of the proposed purchaser, (C) the proposed amount of consideration and terms and conditions of payment offered by or to such proposed purchaser and (D) that the proposed purchaser has been informed of the Tag-Along Rights provided for in this Section 3.3(a) and has agreed to purchase the Shares proposed to be Transferred in accordance with the terms hereof.

(ii)Tag-Along Right. In connection with any Tag-Along Sale, each Tag-Along Holder shall have the right (the “Tag-Along Right”) to sell in the Tag-Along Sale a number of whole Shares up to the number of Shares equal to the product of (x) the total number of Shares to be sold to the proposed purchaser multiplied by (y) a fraction, the numerator of which is the number of Shares held by such Tag-Along Holder and the denominator of which is the total number of Shares held by all other Tag-Along Holders and the Selling Holder. Any Shares purchased from a Tag-Along Holder pursuant to this Section 3.3(a) shall be paid for upon the same terms and conditions (including as to price and type of consideration)

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received by the Selling Holder. Notwithstanding the foregoing, if a Tag-Along Sale Notice is delivered prior to the First Put Closing Date, and the number of Shares proposed to be Transferred by the Selling Holder in such Tag-Along Sale Notice constitutes more than 50% of the issued and outstanding Shares on a Fully Diluted Basis as of the date of the Tag-Along Sale Notice, then each Stockholder (other than Progressive and its Affiliates) shall have the right to sell in such Tag-Along Sale up to 100% of the Shares then owned by such Stockholder for a price per Share equal to the same per Share consideration received by the Selling Holder. The Selling Holder will not Transfer any of its Shares to the prospective purchaser(s) unless:

A. the prospective purchaser(s) agrees to the participation of all electing Tag-Along Holders in such contemplated Tag-Along Sale and to the inclusion of the Shares held by such holders that are entitled to be sold in such Tag-Along Sale on the following terms: no Tag-Along Holder shall be obligated to indemnify any party to the Transfer, except for indemnification obligations of such Tag-Along Holder that are pro rata (and not joint and several) based on such Tag-Along Holder’s share of the consideration received on terms consistent with the indemnification required of the Selling Holder and all Tag-Along Holders; or

B. the Selling Holder purchases from each electing Tag-Along Holder the same number of Shares (at the same price and on the same terms, including pro rata (and not joint and several) indemnification) that such Tag-Along Holder would have been entitled to sell had the prospective transferee(s) so agreed.

(iii)Tag-Along Participation Notice. If a Tag-Along Holder elects to exercise the Tag-Along Right, it must deliver written notice to the Selling Holder (the “Tag-Along Participation Notice”) within thirty (30) calendar days following receipt by it of the Tag‑Along Sale Notice. If such Tag-Along Holder does not deliver a Tag‑Along Participation Notice within such thirty (30) day period, it shall be deemed to have waived its Tag-Along Right with respect to the proposed Tag-Along Sale. Each Tag-Along Participation Notice shall specify the number of Shares that such Tag-Along Holder proposes to include in such Transfer to the proposed purchaser up to the number of Shares determined in accordance with Section 3.3(a)(ii).

(iv)Termination of Tag-Along Right. The tag-along rights set forth in this Section 3.3(a) shall continue with respect to each Share held by each Substantial Stockholder and Milkey until the earliest of (A) the date on which such Shares have been transferred in a sale (1) to the public pursuant to an offering registered under the Securities Act or (2) to the public through a broker, dealer or market maker on a securities exchange or in the over-the-counter market pursuant to the provisions of Rule 144 adopted under the Securities Act, (B) the consummation of a sale of the Company pursuant to Section 3.3(b), (C) the date on which Progressive and its Affiliates cease to own any Shares, and (D) the prior written consent of all of the Substantial Stockholders and Milkey.

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(v)For the avoidance of doubt, the failure by a Tag-Along Holder to exercise its Tag-Along Right pursuant to Section 3.3(a)(ii) shall not affect the rights of such Tag-Along Holder under Section 3.3(c)(i) or Section 3.3(c)(iii), which shall remain exercisable in accordance with the provisions thereof.

(b)Take-Along Right.

(i)Take-Along Right. At any time before the Public Float Date, the holders of at least 66 2/3% of the outstanding Series A Shares (the “Take-Along Transferor”) shall have the right to arrange for a sale of the Company to any Person or Persons who are not Affiliates of the Company or the Stockholders (the “Take-Along Transferee”) and, if such sale is structured as a sale of capital stock, the Take-Along Transferor shall have the right (the “Take-Along Right”) to require each Stockholder to sell to the proposed Take-Along Transferee all of the Shares then owned by such Stockholder (for the same per share consideration received by the Take-Along Transferor). Each Stockholder agrees to take all steps reasonably necessary to enable it to comply with the provisions of this Section 3.3(b), including, if necessary, converting shares of Series A Preferred Stock into Common Stock to facilitate the Take-Along Transferor’s exercise of the Take-Along Right. The obligations of the Stockholder(s) other than the Take-Along Transferors with respect to the Take-Along Right are subject to the following conditions:

(A) no Stockholder shall be required to provide representations, warranties or covenants in connection with such Transfer, except for representations and warranties related to such Stockholder’s title to and ownership of its Shares, the absence of encumbrances on the Shares, authority to enter into the transactions contemplated in such sale and required governmental and third party consents;

(B) no Stockholder shall be required to enter into any non-competition or non-solicitation obligation or other restrictive covenant;

(C) no Stockholder shall be obligated to indemnify any party to the sale, except for indemnification obligations of such Stockholder that are (1) pro rata (and not joint and several) based on such Stockholder’s share of the consideration received on terms consistent with the indemnification required of all Stockholders and (2) limited to an amount no greater than the net cash proceeds paid to such Stockholder in connection with such sale; and

(D) each Stockholder shall receive consideration for the sale of the Shares in the form of cash or Marketable Securities.

(ii)Take-Along Notice. To exercise the Take-Along Right, the Take-Along Transferor shall deliver to each Stockholder a written notice (a “Take-Along Notice”) specifying (A) the name and address of the proposed Take-Along Transferee, (B) the proposed purchase price, terms of payment and other material terms and conditions of the

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proposed Take-Along Transferee’s offer, and (C) that the proposed Take-Along Transferee has been informed of the Take-Along Rights provided for in this Section 3.3(b) and has agreed to purchase Shares in accordance with the terms thereof. Each Stockholder shall thereafter be obligated to sell the Shares subject to such Take‑Along Notice, provided that the sale to the proposed Take-Along Transferee is consummated within ninety (90) calendar days of delivery of the Take-Along Notice, unless such sale cannot be completed within such ninety (90) day period as a result of delays in obtaining necessary regulatory approvals, in which case such sale shall, in any event be completed within one hundred and fifty (150) calendar days of delivery of such notice. If such sale is not consummated within such ninety (90) day period (or such one hundred and fifty (150) day period, as applicable), then each Stockholder shall no longer be obligated to sell its Shares pursuant to that specific Take-Along Right but shall remain subject to the provisions of this Section 3.3(b).

(c)Put and Call Rights. Except as provided in Section 3.2(e) above with respect to Section 3.2(d) Shares held by a Section 3.2(d) Transferee, none of whom shall have any rights under Section 3.3(c)(i) or 3.3(c)(iii):

(i)First Put Right. Each Stockholder other than a member of the Fasteau Group and Progressive and their respective Affiliates and Family Affiliates, as the case may be, shall have the right, on April 1, 2018 or, if such date is not a Business Day, the next Business Day (the “First Put Closing Date”), to sell to Progressive up to fifty percent (50%) of the Shares then held by such Stockholder, including Shares issuable upon the exercise of any vested stock option held by such Stockholder (the “Non-Fasteau First Put Shares”) at the First Put Price. Each member of the Fasteau Group shall have the right, on the First Put Closing Date, to have Progressive purchase up to 100% of the Shares then held by them (the “Fasteau First Put Shares” and, together with the Non-Fasteau First Put Shares, the “First Put Shares”) at the First Put Price. A Stockholder wishing to exercise such right shall provide notice to Progressive (each a “First Put Notice”) of its intent to sell the Non-Fasteau First Put Shares or the Fasteau First Put Shares, as applicable, to Progressive at the First Put Price; such First Put Notice shall be delivered no earlier than ninety (90) days nor later than thirty (30) days prior to the First Put Closing Date and shall specify the number of First Put Shares to be sold by such Stockholder. At least twenty (20) days prior to the First Put Closing Date, Progressive shall calculate the First Put Price in the manner described in Exhibit B and provide notice thereof to each Stockholder who delivered a First Put Notice (each a “First Put Seller”) and to any of Auer, LLLP and Fasteau that are not First Put Sellers. The calculation of the First Put Price shall be subject to adjustment as set forth in Section 3.3(c)(v). On the First Put Closing Date, at the Company’s offices, Progressive shall pay to each First Put Seller in immediately available funds an amount equal to the First Put Price times the number of First Put Shares to be sold by such First Put Seller, and each First Put Seller shall deliver to Progressive stock certificates representing the First Put Shares to be sold by such First Put Seller, a stock power duly endorsed to Progressive (or signed in blank) by the First Put Seller, and such additional information and documentation, including representations as to title to and ownership of the First Put Shares to be sold by such First Put Seller, authority of the First Put Seller to sell such First Put Shares, and the absence of encumbrances and required governmental and third party approvals and consents, as

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Progressive may reasonably request from the First Put Seller. Notwithstanding the foregoing, (A) if the First Put Price is the subject of a dispute pursuant to this Section 3.3(c)(i) and Section 3.3(c)(v), then the closing of the transactions contemplated by this Section 3.3(c)(i) shall be delayed until the third (3^rd) Business Day following the date on which such dispute is resolved in accordance with Section 3.3(c)(v), (B) Progressive or a First Put Seller may delay the closing of the transactions contemplated by this Section 3.3(c)(i) to the extent necessary to satisfy any applicable regulatory requirements, including obtaining any required consent or approval of any state insurance regulatory authority, and (C) if any First Put Shares being sold by a First Put Seller are Shares issuable upon the exercise of one or more outstanding and vested stock options (“Option Shares”), then at the request of the First Put Seller and with the consent of the Company, on the First Put Closing Date, (I) Progressive shall pay to the Company on behalf of such First Put Seller, in consideration for the exercise of such stock option(s), the portion of the aggregate First Put Price that is equal to the exercise price for the Option Shares and the mandatory tax withholding related to such exercise, (II) Progressive shall pay to the First Put Seller the balance of the aggregate purchase price for the First Put Shares being sold by such First Put Seller, and (III) the Company shall issue such Option Shares to Progressive.

(ii)First Call Right for Required Shares. Progressive shall have the right, between thirty (30) and sixty (60) days after the First Put Closing Date (the “First Call Period”), to purchase at the First Put Price from Auer, LLLP, and each member of the Fasteau Group (the “First Call Potential Sellers”) that number of Shares (the “Required Shares”) that will result in Progressive and its Affiliates owning at least eighty percent (80%) of the total voting power of the stock of the Company and of the total value of the stock of the Company, within the meaning of Section 1504(a)(2) of the Code, on a Fully Diluted Basis. The number and class of shares to be sold by each such First Call Potential Seller to make up the Required Shares shall be determined in the following order: first, up to 100% of the Shares then held by the members of the Fasteau Group, in such proportion among the members of the Fasteau Group as Fasteau may reasonably request; second, up to 100% of the Shares then held by LLLP; and finally, up to 100% of the Shares then held by Auer. Progressive shall exercise its right to purchase the Required Shares by providing notice during the First Call Period (the “First Call Notice”) to each of the First Call Potential Sellers of its intention to exercise its call right set forth in this Section 3.3(c)(ii) and including in the First Call Notice the following information: the number of Shares held by Progressive and its Affiliates at the end of the First Put Closing Date; the number of Required Shares; and the number of Shares (the “First Call Shares”) required to be sold by each of the First Call Potential Sellers to make up the Required Shares in accordance with the priorities set forth in this Section 3.3(c)(ii) (the “First Call Actual Sellers”). The First Call Notice also shall include the First Put Price and the closing date for the purchase, which shall be a date that is not less than thirty (30) days and not more than forty-five (45) days after the First Call Notice (the “First Call Closing Date”). On the First Call Closing Date, at the Company’s offices, Progressive shall pay to each First Call Actual Seller in immediately available funds an amount equal to the First Put Price times the number of First Call Shares to be sold by such First Call Actual Seller, and each First Call Actual Seller shall deliver to Progressive stock certificates representing the First Call Shares to be sold by such First Call Actual

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Seller, a stock power duly endorsed to Progressive (or signed in blank) by such First Call Actual Seller, and such additional information and documentation, including representations as to title to and ownership of the First Call Shares to be sold by such First Call Actual Seller, authority of the First Call Actual Seller to sell such First Call Shares, and the absence of encumbrances and required governmental and third party approvals and consents, as Progressive may reasonably request from such First Call Actual Seller. Notwithstanding the foregoing, (A) if the First Put Price is the subject of a dispute pursuant to Section 3.3(c)(i) and Section 3.3(c)(v), then the closing of the transactions contemplated by this Section 3.3(c)(ii) shall be delayed until the third (3^rd) Business Day following the date on which such dispute is resolved in accordance with Section 3.3(c)(v), and (B) Progressive or a First Call Actual Seller may delay the closing of the transactions contemplated by this Section 3.3(c)(ii) to the extent necessary to satisfy any applicable regulatory requirements, including obtaining any required consent or approval of any state insurance regulatory authority.

(iii)Second Put Right. Each Stockholder, other than Progressive and its Affiliates, shall have the right, on April 1, 2021 or, if such date is not a Business Day, the next Business Day (the “Second Put Closing Date”), to sell to Progressive up to one hundred percent (100%) of the Shares then held by such Stockholder, including Shares issuable upon the exercise of any vested stock option held by such Stockholder (the “Second Put Shares”) at the Second Put Price. A Stockholder wishing to exercise such right shall provide notice to Progressive (each a “Second Put Notice”) of its intent to sell the Second Put Shares to Progressive at the Second Put Price; such Second Put Notice shall be delivered no earlier than ninety (90) days nor later than thirty (30) days prior to the Second Put Closing Date and shall specify the number of Second Put Shares to be sold by such Stockholder. At least twenty (20) days prior to the Second Put Closing Date, Progressive shall calculate the Second Put Price in the manner described in Exhibit B and provide notice thereof to each Stockholder who delivered a Second Put Notice (each a “Second Put Seller”) and to each other Stockholder. The calculation of the Second Put Price shall be subject to adjustment as set forth in Section 3.3(c)(v). On the Second Put Closing Date, at the Company’s offices, Progressive shall pay to each Second Put Seller in immediately available funds an amount equal to the Second Put Price times the number of Second Put Shares to be sold by such Second Put Seller, and each Second Put Seller shall deliver to Progressive stock certificates representing the Second Put Shares to be sold by such Second Put Seller, a stock power duly endorsed to Progressive (or signed in blank) by the Second Put Seller, and such additional information and documentation, including representations as to title to and ownership of the Second Put Shares to be sold by such Second Put Seller, authority of the Second Put Seller to sell such Second Put Shares, and the absence of encumbrances and required governmental and third party approvals and consents, as Progressive may reasonably request from the Second Put Seller. Notwithstanding the foregoing, (A) if the Second Put Price is the subject of a dispute pursuant to this Section 3.3(c)(iii) and Section 3.3(c)(v), then the closing of the transactions contemplated by this Section 3.3(c)(iii) shall be delayed until the third (3^rd) Business Day following the date on which such dispute is resolved in accordance with Section 3.3(c)(v), (B) Progressive or a Second Put Seller may delay the closing of the transactions contemplated by this Section 3.3(c)(iii) to the extent necessary to satisfy any applicable regulatory requirements, including obtaining any required consent or approval

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of any state insurance regulatory authority, and (C) if any Second Put Shares being sold by a Second Put Seller are Option Shares, then at the request of the Second Put Seller and with the consent of the Company, on the Second Put Closing Date, (I) Progressive shall pay to the Company on behalf of such Second Put Seller, in consideration for the exercise of such stock option(s), the portion of the aggregate Second Put Price that is equal to the exercise price for the Option Shares and the mandatory tax withholding related to such exercise, (II) Progressive shall pay to the Second Put Seller the balance of the aggregate purchase price for the Second Put Shares being sold by such Second Put Seller, and (III) the Company shall issue such Option Shares to Progressive.

(iv)Second Call Right. Progressive shall have the right, between thirty (30) and sixty (60) days after the Second Put Closing Date (the “Second Call Period”), to purchase at the Second Put Price up to one hundred percent (100%) of the Shares held by any Stockholder other than Progressive or any of its Affiliates (the “Second Call Potential Sellers”), including Shares issuable upon the exercise of any outstanding stock option (the “Second Call Shares”). Progressive shall exercise its right to purchase the Second Call Shares by providing notice during the Second Call Period (the “Second Call Notice”) to each of the Second Call Potential Sellers of its intention to exercise its call right set forth in this Section 3.3(c)(iv) and including in the Second Call Notice the following information: the number of Second Call Shares that Progressive is electing to purchase and the number of Shares required to be sold by each of the Second Call Potential Sellers (the “Second Call Actual Sellers”), which shall be determined by the percentage of all Second Call Shares held by such Second Call Actual Seller. The Second Call Notice also shall include the Second Put Price and the closing date for the purchase, which shall be a date that is not less than thirty (30) days and not more than forty-five (45) days after the date of the Second Call Notice (the “Second Call Closing Date”). On the Second Call Closing Date, at the Company’s offices, Progressive shall pay to each Second Call Actual Seller in immediately available funds an amount equal to the Second Put Price times the number of Second Call Shares to be sold by such Second Call Actual Seller, and each Second Call Actual Seller shall deliver to Progressive stock certificates representing the Second Call Shares to be sold by such Second Call Actual Seller, a stock power duly endorsed to Progressive (or signed in blank) by such Second Call Actual Seller, and such additional information and documentation, including representations as to title to and ownership of the Second Call Shares to be sold by such Second Call Actual Seller, authority of the Second Call Actual Seller to sell such Second Call Shares, and the absence of encumbrances and required governmental and third party approvals and consents, as Progressive may reasonably request from such Second Call Actual Seller. Notwithstanding the foregoing, (A) if the Second Put Price is the subject of a dispute pursuant to Section 3.3(c)(iii) and Section 3.3(c)(v), then the closing of the transactions contemplated by this Section 3.3(c)(iv) shall be delayed until the third (3^rd) Business Day following the date on which such dispute is resolved in accordance with Section 3.3(c)(v), (B) Progressive or a Second Call Actual Seller may delay the closing of the transactions contemplated by this Section 3.3(c)(iv) to the extent necessary to satisfy any applicable regulatory requirements, including obtaining any required consent or approval of any state insurance regulatory authority, and (C) if any Second Call Shares being sold by a Second Call Actual Seller are Option Shares, then at the request of the Second

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Call Actual Seller and with the consent of the Company, on the Second Call Closing Date, (I) Progressive shall pay to the Company on behalf of such Second Call Actual Seller, in consideration for the exercise of such stock option(s), the portion of the aggregate Second Put Price that is equal to the exercise price for the Option Shares and the mandatory tax withholding related to such exercise, (II) Progressive shall pay to the Second Call Actual Seller the balance of the aggregate purchase price for the Second Call Shares being sold by such Second Call Actual Seller, and (III) the Company shall issue such Option Shares to Progressive.

(v)Disputes regarding Put Prices. Within five (5) Business Days of receipt from Progressive of its calculation of the First Put Price or the Second Put Price, as applicable, LLLP or Fasteau, on behalf of each Stockholder who has delivered a Put Notice or whose Shares could become the subject of a Call Notice which will include such Put Price, or, if both LLLP and Fasteau are no longer Stockholders, a Stockholder designated by a majority of such Stockholders (a “Representative”), as applicable, shall have the right to object to the calculation of such Put Price, as follows:

(A)    If within such period of five (5) Business Days, neither LLLP or, if applicable, Fasteau or a Representative, has delivered to Progressive written notice of objection to the applicable Put Price (which notice shall state the basis of objection in reasonable detail) (the “Objection Notice”), then the applicable Put Price shall be deemed approved, and shall be binding and conclusive on each Stockholder.

(B)    If either LLLP or, if applicable, Fasteau or a Representative, delivers to Progressive an Objection Notice in accordance with this Section 3.3(c)(v), the Company, Progressive and the person providing the Objection Notice (the “Objector”) agree to work together, in good faith, to promptly resolve any items identified in the Objection Notice and to agree on the applicable Put Price. In the event that Progressive, the Company and the Objector are unable to resolve to their mutual satisfaction any such differences within ten (10) Business Days of the delivery of the Objection Notice (“Dispute Period”), then the parties shall engage an independent, nationally recognized accounting firm mutually acceptable to Progressive, the Company, and the Objector (the “Independent Accounting Firm”) to resolve the items included in the Objection Notice that remain in dispute, and all other items shall be deemed final and binding on Progressive and the Stockholders.

(C)    Within ten (10) Business Days following the end of the Dispute Period, the Company, Progressive and the Objector shall submit their proposed resolutions of the items in dispute to the Independent Accounting Firm. The Independent Accounting Firm shall have thirty (30) days to deliver its determination on each of the items set forth in the Objection Notice that remain in Dispute. The Independent Accounting Firm shall be instructed to only resolve the matters identified in the Objection Notice that are submitted to the Independent Accounting Firm and not to investigate any other matters. During the thirty (30) day review by the Independent Accounting Firm, the Company shall make available to the

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Independent Accounting Firm such individuals and such information, books and records as may be reasonably requested by the Independent Accounting Firm to make its determination. If GAAP allows more than one method and the Independent Accounting Firm finds that one of those methods is preferable to the other(s) under GAAP, then the Independent Accounting Firm will choose the more preferable method. The determination by the Independent Accounting Firm shall be final and binding on Progressive and the Stockholders, except in the case of fraud or manifest error. The Independent Accounting Firm shall act as an expert, not as an arbitrator, in resolving the dispute. The proceeding before the Independent Accounting Firm shall be an expert determination under the law governing expert determination and appraisal proceedings. All costs and expenses, including, fees and disbursements, of the Independent Accounting Firm shall be borne fifty percent (50%) by Progressive and fifty percent (50%) by the Stockholders who are selling Shares at the applicable Put Price, pro rata based on the number of Shares being sold.

(D)    Fasteau’s rights under this Section 3(c)(v) shall terminate on the First Put Closing Date.

(d)Other Purchases by Progressive. From time to time, Progressive may enter into one or more transactions pursuant to which Progressive may purchase Shares from any Stockholder. Progressive shall not be under any obligation to purchase Shares held by any Stockholder at any time, other than as expressly required by Section 3.3(c)(i) or Section 3.3(c)(iii), or at any price, other than expressly required by Section 3.3(c). If Progressive is willing to purchase Shares at any time other than as required by Section 3.3(c)(i) or Section 3.3(c)(iii), or other than pursuant to its rights under Sections 3.3(c)(ii) or Section 3.3(c)(iv), then Progressive will be entitled to negotiate the terms of any such purchase, including the purchase price (which may be less than, equal to or in excess of the Company’s net tangible book value) with the applicable Stockholder. Other than as stated in Section 3.3(c), no Stockholder shall be entitled to receive the same purchase price from Progressive for Shares as any other Stockholder who may have sold Shares to Progressive.

(e)Repurchases Under Outstanding Options. Nothing in this Agreement will be deemed to interfere with the Company’s right to repurchase Shares from any employee or former employee of the Company or one of its Subsidiaries pursuant to and in accordance with the terms of any equity plan or any agreement evidencing an employee stock option.

SECTION 3.4Legends on Stock Certificates. For so long as Shares held by a Stockholder are subject to this Agreement, all certificates representing such Shares shall bear the following legends:

“The securities represented by this certificate are subject to restrictions on transfer and certain other provisions of a Fourth Amended and Restated Stockholders’ Agreement (as amended from time to time, the ‘Stockholders’ Agreement’) by and among ARX Holding Corp. (the ‘Company’), the stockholders of the Company, and others who may from time to time become parties to such

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Stockholders’ Agreement, a copy of which may be obtained at the offices of the Company.”

“The securities evidenced hereby have not been registered under the Securities Act of 1933, as amended (the ‘Securities Act’), and may not be transferred except (i) in compliance with the provisions of any applicable state securities or ‘Blue Sky’ laws and (ii) pursuant to an effective registration under the Securities Act or in a transaction which, in the opinion of counsel reasonably satisfactory to the Company, qualifies as an exempt transaction under the Securities Act and the rules and regulations promulgated thereunder.”

SECTION 3.5Improper Transfers Ineffective. Any purported Transfer of Shares or an LLLP Interest by a Stockholder, or in the interests or beneficiaries of a Stockholder, as the case may be, which is not permitted by the foregoing provisions of this Article III, or which is in violation of such provisions, shall be void and of no force and effect whatsoever.

SECTION 3.6Preemptive Right.

(a)If the Company proposes to issue New Securities of any kind, then, as to each Substantial Stockholder, the Company shall:

(i)give written notice (the “Subscription Notice”) specifying in reasonable detail (A) the designation and all of the terms and provisions of the New Securities proposed to be issued (the “Proposed Securities”), including, where applicable, the voting powers, preferences, and relative participating, optional, or other special rights, and the qualification, limitations, or restrictions thereof and interest rate and maturity, (B) the price and other terms of the proposed sale of such securities, (C) the amount of such securities proposed to be issued and (D) such other information as the Substantial Stockholders may reasonably request in order to evaluate the proposed issuance; and

(ii)offer to issue to each Substantial Stockholder a portion of the Proposed Securities equal to a percentage determined by dividing (x) the number of Shares held by such Substantial Stockholder by (y) the total number of Shares issued and outstanding as to all of the Substantial Stockholders, calculated on a Fully Diluted Basis.

(b)Each Substantial Stockholder must exercise its purchase rights hereunder by giving written notice to the Company within thirty (30) calendar days following delivery of the Subscription Notice. If all of the Proposed Securities offered to the Substantial Stockholders are not fully subscribed for by such Substantial Stockholders, the remaining Proposed Securities will be reoffered to the participating Substantial Stockholders pro rata based on their participation in the preceding round upon the terms set forth in this Section 3.6, until all such Proposed Securities are fully subscribed for or until all such Substantial Stockholders have subscribed for all such Proposed Securities that they desire to purchase, except that such Substantial Stockholders must exercise their purchase rights within five (5) calendar days after receipt of all such reoffers. To the extent that the Company offers two or more classes of securities in connection with an issuance, Substantial

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Stockholders must purchase their pro rata portion of all such classes of securities and will not be given the opportunity to purchase only one class of the securities being offered.

(c)Upon the expiration of the offering periods described above, the Company will be free to sell such Proposed Securities that the Substantial Stockholders have not elected to purchase during the ninety (90) calendar days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to the Substantial Stockholders. Any Proposed Securities offered or sold by the Company after such ninety (90) day period must be reoffered to the Substantial Stockholders pursuant to this Section 3.6.

(d)The election by a Substantial Stockholder not to exercise its subscription rights under this Section 3.6 in any one instance shall not affect its right (other than in respect of a reduction in its percentage holdings) as to any subsequent proposed issuance. Any sale of such securities by the Company without first giving the Substantial Stockholders the rights described in this Section 3.6 shall be void and of no force and effect.

SECTION 3.7Sale of the Company. In the event of a sale or exchange by the Stockholders of all or substantially all of the Shares by sale, merger, recapitalization, reorganization, consolidation, combination or otherwise, including by exercise of the Take-Along Right, the Company and each Stockholder shall take all necessary and desirable actions in order that each Stockholder shall receive in exchange for such Stockholder’s Shares the same portion of the aggregate consideration from such sale or exchange that such Stockholder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Company’s Certificate of Incorporation as in effect immediately prior to such exchange. For purposes of this Section 3.7, “substantially all” of the Shares shall mean at least eighty percent (80%) of the outstanding Shares immediately prior to the consummation of such sale or exchange.

SECTION 3.8Conversion of Series A Preferred Stock. At the Mandatory Conversion Time, without any further action by or consent of any Stockholder or holder of Series A Preferred Stock, all shares of Series A Preferred Stock shall be automatically converted into Common Stock as provided in the Company’s certificate of incorporation.

ARTICLE IV

MISCELLANEOUS

SECTION 4.1Term. Beginning on the Effective Date, this Agreement shall continue in force until the earlier of (i) the date this Agreement is terminated by the unanimous written consent of all Substantial Stockholders, (ii) in respect of any Stockholder, when such Stockholder no longer owns any Shares, (iii) in respect of Auer and Milkey as partners of LLLP, when LLLP no longer owns any Shares or (iv) the occurrence of a Qualified Public Offering; provided, however, and notwithstanding the foregoing, that the provisions set forth in Section 1.1, Sections 4.2 through 4.5, Sections 4.8 through 4.19 shall not terminate upon the occurrence of a Qualified Public Offering and shall continue to apply to and be binding on the Company and the Stockholders.

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SECTION 4.2Amendment; Waiver. This Agreement may be altered or amended only with the written consent of the Company and the holders of at least two-thirds of the outstanding Shares subject to this Agreement; provided that no alteration or amendment which adversely affects the rights of a Stockholder hereunder shall be made without the written consent of such Stockholder. Any term of this Agreement and the observance of any term herein may be waived (either generally or in a particular instance and either retroactively or prospectively) by any Stockholder hereto only with the written consent of such Stockholder, provided that any such waiver by any Stockholder hereto shall not operate or be construed as a waiver of any other term or observance of any term herein, whether or not similar.

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SECTION 4.3     Specific Performance. The Company, on behalf of itself and its Subsidiaries, and the Stockholders recognize that the obligations imposed on them in this Agreement are special, unique, and of extraordinary character, and that in the event of breach by the Company or any Stockholder, damages will be an insufficient remedy; consequently, it is agreed that the Stockholders may have specific performance (in addition to damages) as a remedy for the enforcement hereof, without proving damages.

SECTION 4.4    Assignment. Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the Stockholders. This Agreement may be assigned by a Stockholder only in connection with a Transfer of any Shares or LLLP Interest, as the case may be, in accordance with the terms of this Agreement. Notwithstanding the foregoing, Progressive and PCI may assign their respective rights under this Agreement to any of their Affiliates to whom Shares are transferred in accordance with this Agreement and their respective obligations under this Agreement to any of their Affiliates. No assignment of this Agreement shall relieve the assignor from any liability hereunder. Nothing in this Agreement is intended to confer upon any Person that is not a party to this Agreement any rights or remedies of any nature whatsoever under or by reason of this Agreement.

SECTION 4.5Applications to Shares of Company. The provisions of this Agreement shall apply mutatis mutandis (i.e., generally the same, with necessary alterations) to any shares into which any of the Shares may hereafter be converted or changed or to any shares resulting from a reclassification, subdivision, or consolidation of any such Shares and also to any shares of the Company which are received by the Stockholders as a stock dividend on the Shares and to any shares or other securities of the Company or of a successor company thereof respectively that may be received by the Stockholders upon a merger, consolidation, reorganization, or reconstruction of the Company.

SECTION 4.6Additional Stockholders. Subject to Section 4.5, the Company covenants that, without the prior written approval of all of the Substantial Stockholders, it shall not issue or cause to be issued at any time on or prior to the Public Float Date any Shares to any Person, unless as a condition to such issuance such Person agrees to become a party to this Agreement and to be bound by all the obligations of a Stockholder, as the case may be, under this Agreement. Stock certificates issued to such Persons shall be marked as provided in Section 3.4. No Shares of the Company shall be transferred on its books until all the applicable provisions of this Agreement have been complied with.

SECTION 4.7Substantial Stockholder Access to Financial Statements and Other Information.

(a)Financial Statements. The Company shall, and shall cause each of its Subsidiaries to, deliver to each Substantial Stockholder, for so long as such Substantial Stockholder holds any Shares, the following:

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(i)as soon as available, but in any event within fifteen (15) calendar days after the end of each calendar month in each fiscal year, unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for such monthly period and for the period from the beginning of the fiscal year to the end of such month, and unaudited consolidated balance sheets of the Company and its Subsidiaries as of the end of such monthly period, setting forth, in each case, comparisons to the annual budget for such fiscal year and to the corresponding period in the preceding fiscal year, and all such statements shall be prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) consistently applied, subject to the absence of footnote disclosures and to normal year-end adjustments for recurring accruals;

(ii)as soon as available, but in any event within twenty (20) calendar days after the end of each fiscal year, unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for such fiscal year, and unaudited consolidated balance sheets of the Company and its Subsidiaries as of the end of such fiscal year, setting forth, in each case, comparisons to the annual budget for such fiscal year and to the preceding fiscal year, all prepared in accordance with GAAP consistently applied, subject to the absence of footnote disclosures;

(iii)as soon as available, but in any event within seventy-five (75) calendar days after the end of each fiscal year, audited consolidated statements of income and cash flows of the Company and its Subsidiaries for such fiscal year, and audited consolidated balance sheets of the Company and its Subsidiaries as of the end of such fiscal year, all prepared in accordance with GAAP consistently applied, and accompanied by an opinion, unqualified as to scope or compliance with GAAP, of the Company’s accountants; and

(iv)as soon as practicable, but in any event within five (5) calendar days after so filed or delivered, all financial statements filed or delivered by the Company or any of its Subsidiaries with any governmental body, department, commission, board, agency or instrumentality, legislative, executive or regulatory authority or agency.

(b)Other Information. The Company shall, and shall cause each of its Subsidiaries to, deliver to each Substantial Stockholder, for so long as such Substantial Stockholder holds any Shares:

(i)at such time as any draft of the annual business plan and budget is provided to the Board for its consideration, a copy of such draft, and, as soon as practicable before the end of each fiscal year, a copy of the annual budget approved by the Board, including projected income statement, cash flow and balance sheet, on a monthly basis for the ensuing fiscal year, together with underlying assumptions and a brief qualitative description of the Company’s plan by the Company’s senior management in support of such budget; and

(ii)promptly upon receipt thereof, any additional reports, management letters or other detailed information concerning material aspects of the Company’s or such Subsidiary’s operations or financial affairs given to the Company or any Subsidiary by its independent accountants (and not otherwise contained in other materials provided hereunder); and

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(iii)with reasonable promptness, such other information and financial data concerning the Company and its Subsidiaries as any Person entitled to receive information under this Section 4.7 may reasonably request.

(c)Deemed Delivery. For purposes of Sections 4.8(a) and 4.8(b), delivery of information to Fasteau shall constitute delivery to each member of the Fasteau Group.

SECTION 4.8Piggyback Registration Rights.

(a)Right to Piggyback. If the Company at any time or from time to time proposes or is required to register any of its securities (including any proposed registration of the Company’s securities on behalf of any third party) under the Securities Act (other than in connection with registrations on Form S-4, S-8 or any successor or similar forms) (a “Piggyback Registration”), the Company shall deliver prompt written notice (which notice shall be given at least thirty (30) days prior to the filing of any registration statement) to all of the Substantial Stockholders of its intention to undertake such registration and describing the right of the Substantial Stockholders to participate in such registration under this Section 4.8 as hereinafter provided. Subject to the other provisions of this Section 4.8, upon the written request of any Substantial Stockholder made within twenty (20) calendar days after the receipt of such written notice (which request shall specify the amount of Shares to be registered and the intended method of disposition thereof), the Company shall effect the registration under the Securities Act of all Shares requested by the Substantial Stockholders to be so registered and shall use reasonable efforts to cause such registration statement to become and remain effective with respect to such Shares until all of such Shares have been sold. If a registration involves an underwritten offering, immediately upon notification to the Company from the underwriter of the price at which such securities are to be sold, the Company shall so advise each participating Stockholder. The Stockholder requesting inclusion in a registration may, at any time prior to the effective date of such registration statement (and for any reason), revoke such request by delivering written notice to the Company revoking such requested inclusion.

(b)Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, then the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Shares requested to be included in such registration, pro rata among the Substantial Stockholders on the basis of the number of Shares owned by each such Substantial Stockholder and (iii) third, the other securities requested to be included in such registration.

(c)Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities other than a Substantial Stockholder (each such Substantial Stockholder, a “Non-Demanding Substantial Stockholder”), and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the securities to be included in such registration, then the Company shall include in

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such registration (i) first, the securities requested to be included therein by the holders requesting such registration, (ii) second, the Shares requested to be included in such registration, pro rata among the Non-Demanding Substantial Stockholders on the basis of the number of Shares owned by each such Non-Demanding Substantial Stockholders and (iii) third, the other securities requested to be included in such registration.

(d)Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Section 4.8, including all registration and filing fees, fees and expenses of compliance with securities or blue-sky laws, printing expenses, travel expenses, filing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company, and fees and disbursements of all independent certified public accountants, underwriters including, if necessary, a “qualified independent underwriter” within the meaning of the rules of the National Association of Securities Dealers, Inc. (in each case, excluding discounts and commissions), and other Persons retained by the Company or by holders of Shares or their Affiliates on behalf of the Company, shall be borne as provided in this Agreement, except that (i) the Company shall, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance, and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system (or any successor or similar system), and (ii) the selling holder of Shares shall pay all underwriting discounts or commissions applicable to their Shares as well as their own attorney’s fees and related legal costs.

(e)Indemnification. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Shares, its officers, directors, agents, and employees, and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, demands, damages, liabilities, and expenses (or actions, investigations or proceedings, whether commenced or threatened, in respect thereof), whether joint and several or several, together with reasonable costs and expenses (including reasonable attorneys’ fees) to which any such indemnified party may become subject under the Securities Act or otherwise (collectively, “Losses”) caused by, resulting from, arising out of, based upon, or relating to (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 4.8(e), collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the “blue sky” or securities laws thereof or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each such director, officer, and controlling Person for any legal or any other expenses incurred by them in connection with investigating, defending or settling any such Losses; provided that the Company shall not be liable in any such case to the extent that any such Losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished

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in writing to the Company or the underwriters by such holder expressly for use therein or by such holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. The indemnification provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract, and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and shall survive the transfer of securities.

SECTION 4.9Severability. In the event that any court of competent jurisdiction shall determine that any provision, or any portion thereof, contained in this Agreement shall be unenforceable in any respect, then such provision shall be deemed limited to the extent that such court deems it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall deem any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect.

SECTION 4.10Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be delivered personally, sent by electronic mail, facsimile transmission, certified, registered, or express mail (return receipt requested), postage prepaid, or sent by Federal Express or other recognized overnight courier to the Companies and the Stockholders at the addresses set forth below:

If to the Company:ARX Holding Corp.805 Executive Center Dr. West, Suite 300St. Petersburg, FL 33702Facsimile No: (727) 374-0466Attn: John F. Auer
Email: jauer@asicorp.org

With a copy to:ARX Holding Corp.805 Executive Center Dr. West, Suite 300St. Petersburg, FL 33702Facsimile No: (866) 641-1332
Attn: Angel D. Bostick, Esq., General Counsel
Email: abostick@asicorp.org

And

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If to Fasteau:Marc Fasteau
77 Seekonk Cross Road
Great Barrington, MA 01230-1565
Email: marc.fasteau@fulcrum-llc.com AND fasteaumarc@gmail.com

And

If to any other member of the Fasteau Group:
c/o Marc Fasteau
77 Seekonk Cross Road
Great Barrington, MA 01230-1565Facsimile No.: (413) 528-1009
Email: marc.fasteau@fulcrum-llc.com AND fasteaumarc@gmail.com

And

If to LLLP:
ARX Executive Holdings, LLLP
1817 Brightwaters Blvd.St. Petersburg, FL 33704Attention: John F. Auer
Email: jauer@asicorp.org

And

If to Progressive or PCI:

Charles E. Jarrett, Chief Legal Officer

The Progressive Corporation and/or PC Investment Company

6300 Wilson Mills Road

Mayfield Village, Ohio 44143

Facsimile No.: (440) 395-3678
Email: Chuck_Jarrett@Progressive.com

And

If to Auer:John F. Auer
1817 Brightwaters Blvd.

St. Petersburg, FL 33704
Email: jauer@asicorp.org

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And

If to Milkey:Kevin R. Milkey
2813 Sunset Way

St. Pete Beach, FL 33706
Email:

And

If to Fournet:c/o Mary Frances FournetAmerican Strategic Insurance Corp.805 Executive Center Dr. West, Suite 300St. Petersburg, FL 33702
Email:

And

If to Scognamiglio:
[TO COME]

And

If to Fjare, Brubaker, Bostick, Hillier, Hannon, Pless, Sullens, Chance, McCrink and Hanlon:

c/o ARX Holding Corp.805 Executive Center Dr. West, Suite 300St. Petersburg, FL 33702Facsimile No: (727) 374-0466
Email:

or such other address as shall be furnished in writing by the Company or such Stockholder, as the case may be. Notices or other communications shall be deemed given: (i) when sent by electronic mail; (ii) one (1) Business Day after being sent by overnight courier, (iii) three (3) Business Days after being sent by certified, registered, or United States Post Office priority mail; and (iv) when received, for all other methods; provided, however, that any notice or communication changing any of the addresses set forth above shall be effective and deemed given only upon its receipt.

SECTION 4.11Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in any number of counterparts, each of which shall be deemed

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to be an original, and which counterparts together shall constitute one and the same agreement of the Stockholders.

SECTION 4.12Section Headings. Headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provisions hereof.

SECTION 4.13GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PROVISIONS THEREOF.

SECTION 4.14Entire Agreement. This Agreement contains the entire agreement and understanding of the Company, on behalf of itself and its Subsidiaries, and the Stockholders respecting the subject matter hereof. Except with respect to the terms of the Company’s stock option plans and the terms of the agreements evidencing stock options granted to employees of the Company, this Agreement supersedes all prior agreements (including the Original Agreement, the Amended Original Agreement, the First Amended and Restated Agreement, the Second Amended and Restated Agreement and the Third Amended and Restated Agreement), discussions, and understandings among the Companies and the Stockholders with respect to the subject matter hereof.

SECTION 4.15Mediation. In the event a dispute or controversy between any two or more parties arises in connection with this Agreement (a “Dispute”), prior to a party to this Agreement filing any legal action or proceeding against any other party with respect to such Dispute, such party shall provide notice to the other party or parties to the Dispute of its intent to invoke the procedures outlined in this Section 4.15 and shall include in such notice a summary of the Dispute. The parties to the Dispute shall confer in person or by telephone as promptly as possible (but not more than thirty (30) days after receiving notice of the Dispute in accordance with the preceding sentence) and shall attempt to resolve the Dispute (the “Initial Meeting”). If the Dispute remains unresolved after the Initial Meeting, or if the parties to the Dispute fail to meet as required, then a party to the Dispute may initiate non-binding mediation of the dispute in accordance with the CPR Institute for Dispute Resolution Model Procedures for Mediation of Business Disputes (“CPR”). Unless otherwise agreed, the parties to the Dispute will select a mediator from the CPR “panel of distinguished neutrals.” If the Dispute is not resolved via mediation within thirty (30) days after initiation of mediation, then a party to the Dispute may initiate a legal action or proceeding, in accordance with the applicable terms and conditions of this Agreement. Notwithstanding anything to the contrary contained in this Section 4.15, a party to a Dispute may initiate litigation immediately if such litigation seeks only equitable remedies. All discussions and negotiations pursuant to this Section 4.15 are confidential and shall be treated as compromise and settlement negotiations under the Federal Rules of Evidence and state rules of evidence. All applicable statutes of limitation and defenses based on the passage of time shall be tolled while the procedures specified in this Section 4.15 are pending. Notwithstanding the foregoing, the provisions of this Section 4.15 will not apply to any dispute with respect to a Put Price, and any dispute with respect to a Put Price will be governed by, and resolved in accordance with, the terms of Section 3.3(c)(v).

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SECTION 4.16Designation of Forum. Except as provided in Section 3.3(c)(v), and subject to its compliance with the provisions of Section 4.15, any party to this Agreement bringing a legal action or proceeding against any other party arising out of or relating to this Agreement or the transactions contemplated hereby shall bring the legal action or proceeding exclusively in the courts of the State of New York sitting in the City of New York, Borough of Manhattan and if it has or can acquire jurisdiction, the United States District Court for the Southern District of New York located in New York, New York (the “Designated Courts”). Each party consents to the exclusive personal jurisdiction of the Designated Courts for the purpose of all legal actions and proceedings arising out of or relating to this Agreement or the transactions contemplated hereby other than disputes with respect to Put Prices, which shall be governed by, and resolved in accordance with the terms of, Section 3.3(c)(v). Each party agrees that the exclusive choice of forum set forth in this Section does not prohibit the enforcement of any judgment obtained in the Designated Courts or any other appropriate forum.

SECTION 4.17Waiver of Right to Contest Venue. Subject to Section 4.15, each party to this Agreement consents to the Designated Courts as the sole and exclusive venue for any legal action or other proceeding arising out of or relating to this Agreement or the transactions contemplated hereby other than disputes with respect to Put Prices, which shall be governed by, and resolved in accordance with the terms of, Section 3.3(c)(v). Each party to this Agreement waives, to the fullest extent permitted by law, (a) any objection which it may now or later have to the Designated Courts as the proper venue for any legal action or proceeding arising out of or relating to this Agreement other than disputes with respect to Put Prices, which shall be governed by, and resolved in accordance with the terms of, Section 3.3(c)(v), and (b) any claim that any action or proceeding brought in the Designated Courts have been brought in an inconvenient forum.

SECTION 4.18Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 4.19Authority. If a party to this Agreement is not a natural person, no party will: (A) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual, or (B) be responsible for the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity.

111

[Signatures on Following Pages]

112

IN WITNESS WHEREOF, the Company and the Stockholders have executed this Agreement on the date first written above.

ARX HOLDING CORP.

By:    

Name:

Title:

113

MARC FASTEAU

FASTEAU INSURANCE HOLDING, LLC

By:    

Name:

Title:

FASTEAU INSURANCE HOLDING II, LLC

By:    

Name:

Title:

MARC FASTEAU, AS TRUSTEE OF THE ALEXIS FASTEAU 2008 IRREVOCABLE TRUST

MARC FASTEAU, AS TRUSTEE OF THE MARC FASTEAU 2012 IRREVOCABLE TRUST

114

THE PROGRESSIVE CORPORATION

By:    

Name:

Title:

PC INVESTMENT COMPANY

By:    

Name:

Title:

115

ARX EXECUTIVE HOLDINGS, LLLP

By:    

Name:

Title:

JOHN F. AUER

KEVIN R. MILKEY

MARY FRANCES FOURNET

PHILLIP BRUBAKER

ANGEL BOSTICK

TANYA FJARE

TREVOR HILLIER

116

JEFFREY HANNON

GARRETT PLESS

STEPHANIE SULLENS

DARYL CHANCE

PATRICK MCCRINK

RICHARD HANLON

117

ANTONIO SCOGNAMIGLIO

118

EXHIBIT A

FORM OF

THIRD AMENDMENT OF DESIGNATIONS, NUMBER, VOTING POWERS,

PREFERENCES AND RIGHTS OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF

ARX HOLDING CORP.

*****

Pursuant to Section 151

of the General Corporation Law of the State of Delaware

*****

The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors of ARX Holding Corp., a Delaware corporation (hereinafter called the “Corporation”), with the preferences and rights set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation having been fixed by the Board of Directors pursuant to authority granted to it under Paragraph 4 of the Corporation’s Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware:

RESOLVED that, pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation, the Board of Directors hereby authorized the amendment to that certain Certificate of Designations, Number, Voting powers, Preferences and Rights of Series A Convertible Preferred Stock of ARX Holding Corp. filed with the Delaware Secretary of State on October 8, 1997, as amended by a Certificate of Amendment filed with the Secretary of state on December 6, 2011 and as further amended by a Second Certificate of Amendment filed with the Secretary of State on July 224, 2012, (“Certificate of Designations”), as follows:

The first paragraph of Section 6 of the Certificate of Designations shall be amended and restated so that such first paragraph of Section 6 shall read in its entirety as follows:

“6.    CONVERSION. Except as provided below, each share of Series A Preferred Stock may be converted at any time, at the option of the holder thereof, in the manner hereinafter provided, into fully-paid and nonassessable shares of Common Stock. Notwithstanding the foregoing or anything to the contrary herein, without any further action by or consent of any stockholder or holder of Series A Preferred Stock, all shares of Series A Preferred Stock shall be automatically converted into Common Stock at the earlier to occur of (x) the first business day following the First Put Closing Date (as defined in the Fourth Amended and Restated Stockholders’ Agreement, dated as of [ ], 2015 among the Corporation and other signatories thereto) or (y) the business day immediately prior to the consummation of a Qualified Public Offering, or (z) upon the written consent of the holders of 66 2/3% of the outstanding Series A Preferred Stock. “Qualified Public Offering” shall mean the consummation of a sale of Common Stock to the public in a firm commitment underwriting pursuant to a registration

119

statement which has become effective under the Securities Act (excluding registration statements on Form S-4, S-8 or similar forms) with aggregate net proceeds to the Corporation in excess of $150 million.”

IN WITNESS WHEREOF, ARX Holding Corp. has caused this Third Amendment to Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock to be duly executed by its President and attested to by its Secretary this ___ day of _______, 2015.

ARX HOLDING CORP..

a Delaware corporation

John F. Auer

President

ATTEST:

[Kevin R. Milkey]

Secretary

120

EXHIBIT B

First Put Price Calculation:

The per Share First Put Price shall be determined by the following formula:

Per Share First Put Price = PSP Price + (BV¹ x M) + ((D x M) – D)

PSP Price shall be the per share price paid by Progressive to Selling Shareholders (as defined in the Progressive Purchase Agreement) at the closing of the transactions contemplated by the Progressive Purchase Agreement, as such price shall be adjusted to reflect any stock dividend, stock split, reverse stock split, combination or consolidation of shares, recapitalization or other changes in the corporate or capital structure of the Company (other than any conversion of Series A Preferred Stock into Common Stock) affecting the Shares after December 31, 2014.

BV¹ shall be the difference between the net tangible book value per Share on a Fully Diluted Basis on December 31, 2017 and the net tangible book value per Share on a Fully Diluted Basis on December 31, 2014. For purposes of this calculation, the net tangible book value of the Company on December 31, 2017 shall be determined by reference to the Company’s audited financial statements prepared in accordance with GAAP as it is in effect at the time of such financial statements, but then will be adjusted, if necessary, so that the calculations are in accordance with GAAP as it is in effect for financial statements for periods ending on December 31, 2014 and applied in a manner consistent to its application when determining the PSP Price.

M shall be the multiple between 1.0 and 2.0 determined by reference to the matrix on Exhibit C.

D shall be the per share amount of any dividends paid, or distributions made, to stockholders (other than dividends paid or distributions made in Shares) by the Company between December 31, 2014 and December 31, 2017; provided, however, (i) that such amount shall be adjusted to reflect any stock dividend, stock split, reverse stock split, combination or consolidation of shares, recapitalization or other changes in the corporate or capital structure of the Company (other than any conversion of Series A Preferred Stock into Common Stock) affecting the Shares after the date of payment of such dividend, and (ii) any payments related to redemptions, repurchases or purchases of Shares by the Company with respect to some but not all outstanding Shares, or all outstanding Shares of a particular series of Shares, will not be treated as dividends or distributions for purposes of this definition.

Second Put Price Calculation:

The per share Second Put Price shall be determined by the following formula:

Per Share Second Put Price = PSP Price + (BV² x M) + ((D x M) – D)

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PSP Price shall be the per share price paid by Progressive to Selling Shareholders at the closing of the transactions contemplated by the Progressive Purchase Agreement, as such price shall be adjusted to reflect any stock dividend, stock split, reverse stock split, combination or consolidation of shares, recapitalization or other changes in the corporate or capital structure of the Company (other than any conversion of Series A Preferred Stock into Common Stock) affecting the Shares after December 31, 2014.

BV² shall be the difference between the net tangible book value per Share on a Fully Diluted Basis on December 31, 2020 and the net tangible book value per Share on a Fully Diluted Basis on December 31, 2014. For purposes of this calculation, the net tangible book value of the Company on December 31, 2020 shall be determined by reference to the Company’s audited financial statements prepared in accordance with GAAP as it is in effect at the time of such financial statements, but then will be adjusted, if necessary, so that the calculations are in accordance with GAAP as it is in effect for financial statements for periods ending on December 31, 2014 and applied in a manner consistent to its application when determining the PSP Price.

M shall be the multiple between 1.0 and 2.0 determined by reference to the matrix on Exhibit C.

D shall be the per share amount of any dividends paid, or distributions made, to stockholders (other than dividends paid or distributions made in Shares) by the Company between December 31, 2014 and December 31, 2020; provided, however, (i) that such amount shall be adjusted to reflect any stock dividend, stock split, reverse stock split, combination or consolidation of Shares, recapitalization or other changes in the corporate or capital structure of the Company (other than any conversion of Series A Preferred Stock into Common Stock) affecting the Shares after the date of payment of such dividend, and (ii) any payments related to redemptions, repurchases or purchases of Shares by the Company with respect to some but not all outstanding Shares, or all outstanding shares of a particular series of Shares, will not be treated as dividends or distributions for purposes of this definition.

Exhibit C

MATRIX

			Direct Written Premium CAGR
		<10%	10%	15%	20%	25%	30%	>30%
	>=95	1.00	1.00	1.00	1.00	1.00	1.00	1.00
	90	1.00	1.00	1.25	1.50	1.75	2.00	2.00
Net CR	85	1.00	1.25	1.50	1.75	2.00	2.00	2.00
	80	1.00	1.50	1.50	2.00	2.00	2.00	2.00
	<=75	1.00	1.50	1.75	2.00	2.00	2.00	2.00

The multiple will be determined by reference to the Company’s cumulative and consolidated Net combined ratio (CR) and Direct Written Premium compounded annual growth rate (CAGR), for the period from January 1, 2015 through December 31, 2017 (for purposes of the First Put Price) and for the period from January 1, 2015 through December 31, 2020 (for purposes of the Second Put Price), as indicated in the matrix above.

For purposes of the calculation of the multiple, (a) “Net combined ratio (CR)” shall mean the GAAP consolidated combined ratio of the Company and its Subsidiaries calculated in a manner consistent with “Net Combined Ratio” in the Company’s monthly management report for October 2014, and (b) “Direct Written Premium” means premiums written directly during the applicable time period, including policy fees, without taking into account reinsurance, calculated in a manner consistent with “Direct Written Premium” in the Company’s monthly management report for October 2014, and related to the lines of business written by the Company as of October 31, 2014.

By way of example only, if Direct Written Premium is $1 million for the fiscal year ended December 31, 2014 and is $1.5 million for the fiscal year ended December 31, 2017, then the Direct Written Premium CAGR for the three year period would be 14.5%. [i.e., ($1.5 million/$1 million) = 1.5. 1.5^{^(1/3 )} = 1.145]

Further, by way of example, if Net CR is 90 and Direct Written Premium CAGR is 20%, then the multiple will be 1.5. If either Net CR or Direct Written Premium CAGR (or both) is between the values identified above, the results will be interpolated on a straight-line basis to generate the applicable multiple. By way of example only, according to the sub-matrix below reflecting an interpolation between a Net CR of 90 and a Net CR of 95 and between Direct Written Premium CAGR of 20% and Direct Written Premium CAGR of 25% , if Net CR is 92 and Direct Written Premium CAGR is 22%, then the multiple will be 1.36.

SUB-MATRIX EXAMPLE

			Direct Written Premium CAGR
		20%	21%	22%	23%	24%	25%
	>=95	1.00	1.00	1.00	1.00	1.00	1.00
	94	1.10	1.11	1.12	1.13	1.14	1.15
Net CR	93	1.20	1.22	1.24	1.26	1.28	1.30
	92	1.30	1.33	1.36	1.39	1.42	1.45
	91	1.40	1.44	1.48	1.52	1.56	1.60
	90	1.50	1.55	1.60	1.65	1.70	1.75

EX-10.8

Exhibit 10.8

THE PROGRESSIVE CORPORATION

2015 GAINSHARING PLAN

1.    The Plan. The Progressive Corporation and its subsidiaries as of January 29, 2015 and mutual insurance company affiliate (collectively, "Progressive" or the "Company") have adopted The Progressive Corporation 2015 Gainsharing Plan (the "Plan") as part of their overall compensation program. The Plan is performance-based and is administered under the direction of the Compensation Committee of the Board of Directors of The Progressive Corporation (the “Committee”). Plan years will coincide with Progressive’s fiscal years.

2.    Participants. Plan participants for each Plan year shall include all officers and regular employees of Progressive, unless determined otherwise by the Committee. Temporary employees are not eligible to participate in the Plan. The Gainsharing opportunity, if any, for those executive officers who participate in The Progressive Corporation 2007 Executive Bonus Plan (the “Executive Bonus Plan”) will be provided by the Executive Bonus Plan, although participants in that plan may also participate in this Plan if and to the extent determined by the Committee. Throughout this Plan, references to “executive officers” refer to executive officers within the meaning of any Securities and Exchange Commission (“SEC”) or New York Stock Exchange rule applicable to the Company.

3.    Gainsharing Formula. Annual Gainsharing Payments under the Plan will be determined by application of the following formula:

Annual Gainsharing = Paid Eligible Earnings x Target Percentage x Performance Factor

Payment

4.    Paid Eligible Earnings. Paid Eligible Earnings for any 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, overtime pay, military make-up pay, shift differential, and retroactive payments of any of the foregoing items, received by the participant during the Plan year for work or services performed as an officer or employee of Progressive.

For purposes of the Plan, Paid Eligible Earnings shall exclude all other types of compensation, including, without limitation, any short-term or long-term disability payments made to the participant, the earnings replacement component of any workers’ compensation benefit or award, any bonus, Gainsharing or other incentive compensation or equity-based awards, including, without limitation, payments from any discretionary cash fund, any dividend payments and any unused Earned Time Benefit.

5.    Target Percentages. Target Percentages vary by position. Target Percentages for Plan participants typically are as follows:

1

POSITION	TARGET %
Senior Executives and Executive Level Managers	60 - 150%
Business Leaders	35 - 60%
Directors and Senior Directors	20 - 35%
Middle Managers and Senior Managers	15 - 20%
Senior Professionals and Entry Level Managers	8 - 20%
Administrative Support and Entry Level Professionals	0 - 8%

Target Percentages will be established within the above ranges by, and may be changed with the approval of, the following officers of The Progressive Corporation (collectively, the “Designated Executives”): (a) the Chief Executive Officer, and (b) either the Chief Human Resource Officer or the Chief Financial Officer; provided that the Chief Human Resource Officer may establish appropriate procedures to evaluate the need for, and if appropriate, implement individual exceptions to the foregoing ranges. Target Percentages may be changed from year to year by the Designated Executives. Notwithstanding anything herein to the contrary, only the Committee may establish or modify the Target Percentages for the Company’s executive officers.

If a participant’s Target Percentage changes during a Plan year, the Target Percentages used to calculate such participant’s Annual Gainsharing Payment hereunder shall be weighted appropriately to reflect such participant’s tenure in each such position during the Plan year.

6. The Performance Factor.

A.    Core Business Defined

The Performance Factor shall be determined by the performance of the Core Business during the Plan year, pursuant to the procedures and calculations described below. The “Core Business” shall be comprised of the following:

• 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;

• 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;

• 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, but excluding umbrella policies; and

• The Commercial Lines business unit.

Each of the Agency Auto, Direct Auto, Special Lines and Commercial Lines business units is referred to herein as a “Business Unit” or “Unit.” For all purposes under this Plan, the following are excluded from the Core Business results (both growth and profitability): results of the Professional Liability business, the Midland Financial Group, Inc., other businesses in run-off, the CAIP Servicing Group, the Company’s Australian operations, renters insurance policies and related expenses, the results of any entity or business acquired after January 1, 2015, and umbrella policies.

2

B.    Matrices

For purposes of computing a performance score for the Core Business, operating performance results for each Business Unit are evaluated using a performance matrix for the Plan year. Each matrix assigns performance scores to various combinations of profitability and growth outcomes for the applicable Business Unit.

For 2015, and for each Plan year thereafter until otherwise determined by the Committee, each Business Unit will be evaluated according to the performance of the Business Unit as a whole. Therefore, separate Gainsharing matrices will be established by the Committee for the following:

• Agency Auto;

• Direct Auto;

• Special Lines; and

• Commercial Lines.

C.    Performance Measures

Growth. The growth measure for the Plan year under all matrices will be based on policies in force (“PIFs”).

For all matrices, growth will be measured by the percentage change in average PIFs for the Plan year compared to the average PIFs of the immediately preceding fiscal year. Average PIFs for the Plan year and for the immediately preceding fiscal year will be determined by adding the fiscal-month-end number of PIFs for each month during such year and dividing the total by twelve.

Assigned risk business will not be included in determining the growth of any Business Unit.

Profitability. For all Business Unit matrices, the measurement of profitability will be the combined ratio (calculated in accordance with U.S. generally accepted accounting principles) (the “GAAP Combined Ratio”) for the Plan year for the applicable Unit.

Assigned risk business will be included in determining the GAAP Combined Ratio for the applicable Business Unit. The net operating expense of Corporate Products (e.g., self-insurance) shall be apportioned among the appropriate Business Units in accordance with the respective amount(s) of net earned premiums generated by each such Business Unit and will be reflected in the calculation of the GAAP Combined Ratio for such Business Units.

D.    Calculation of Performance Factor

3

Performance Scores

Using the actual performance results and the Gainsharing matrix for each Business Unit, the GAAP Combined Ratio for each such Unit will be matched with the growth levels achieved by such Unit, to determine the performance score for each such Unit. The performance score for each Business Unit, which will be used to calculate the Performance Factor as described further below, can vary from 0 to 2.0.

Performance Factor

The resulting performance scores for each of the Agency Auto, Direct Auto, Commercial Lines and Special Lines Business Units will then be multiplied by a weighting factor, which shall be a fraction or decimal equivalent, determined by dividing the net earned premiums generated by such Business Unit during the Plan year by the net earned premiums generated by all of the Business Units comprising the Core Business in the aggregate. The sum of these weighted performance scores will be the Performance Factor for the Plan year.

E.    Limitations

The final Performance Factor cannot exceed 2.0.

7.    Payment Procedures; Deferral. Subject to Paragraphs 9 and 16 below, no later than December 31 of each Plan year, each participant will receive an initial payment in respect of his or her Annual Gainsharing Payment for that Plan year, if any, equal to 75% of an amount calculated on the basis of Paid Eligible Earnings for the first 24 pay periods of the Plan year, estimated earnings for the remainder of the Plan year, and an estimated performance factor determined using the performance data for each Business Unit through the first 11 months of the Plan year (estimated, if necessary), the applicable Gainsharing matrix and the calculations described above. No later than February 28 of the following year, each participant will receive the balance of his or her Annual Gainsharing Payment, if any, for such Plan year, based on his or her Paid Eligible Earnings and performance data for the entire Plan year.

Any Plan participant who is then eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan ("Deferral Plan") may elect to defer all or a portion of the Annual Gainsharing Payment otherwise payable to him/her under this Plan, subject to and in accordance with the terms of the Deferral Plan.

8.Other Plans. If, for any Plan year, an employee has been selected to participate in both this Plan and another cash incentive plan offered by the Company, then with respect to such employee, the Gainsharing formula set forth in Paragraph 3 hereof shall be appropriately adjusted by applying a weighting factor to reflect the proportion of the employee’s total annual incentive opportunity that is being provided by this Plan. The Committee shall have full authority to determine the incentive plan or plans in which any employee will participate during any plan year and, if an employee is selected to participate in more than one plan, the weighting factor that will apply to each such plan.

9.Qualification Date; Leave of Absence; Withholding. Unless otherwise determined by the Committee, and except as expressly provided herein, in order to be entitled to receive an Annual Gainsharing Payment for any Plan year, the participant must be an active officer or regular employee of the Company on November 30 of the Plan year (“Qualification Date”). Individuals who are hired on or after December 1 of any Plan year are not entitled to an Annual Gainsharing Payment for that Plan year.

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Any participant who is on a leave of absence covered by the Family and Medical Leave Act of 1993, as amended (or equivalent state or local law), the Americans with Disabilities Act of 1991, as amended (or equivalent state or local law), personal leave of absence with the approval of the Company, military leave or short or long-term disability (provided that, in the case of a long-term disability, the participant is still an employee of the Company) on the Qualification Date with respect to any Plan year will be entitled to receive an Annual Gainsharing Payment for such Plan year, calculated as provided in Paragraphs 3 through 6 above, based on the amount of Paid Eligible Earnings received by such participant during the Plan year and paid in the manner and at the times as are described in Paragraph 7 above but subject to Paragraph 16 below.

All payments made hereunder will be net of any legally required deductions and/or withholdings for federal, state and local taxes and other items.

10.Non-Transferability. The right to any Annual Gainsharing Payment 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.

11.Administration. The Plan shall be administered by or under the direction of the Committee. The Committee shall have the authority to adopt, amend, revise and repeal such rules, guidelines, procedures and practices governing the Plan as it shall, from time to time, in its sole discretion, deem advisable.

The Committee shall have full authority to determine the manner in which the Plan will operate, to interpret the provisions of the Plan and to make all determinations hereunder. All such interpretations and determinations shall be final and binding on Progressive, all Plan participants and all other parties. No such interpretation or determination shall be relied on as a precedent for any similar action or decision.

Unless otherwise determined by the Committee, all of the authority of the Committee hereunder (including, without limitation, the authority to administer the Plan, select the persons entitled to participate herein, interpret the provisions thereof, waive any of the requirements specified herein and make determinations hereunder and to select, approve, establish, change or modify the Business Units and the Gainsharing formulae, weighting factors, performance targets and Target Percentages) may be exercised by the Designated Executives; provided, however, that only the Committee may take such actions or make such determinations for the Company’s executive officers. In the event of a dispute or conflict, the determination of the Committee will govern.

12.    Miscellaneous.

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

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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 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 Gainsharing 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.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 promulgates 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, that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to the Annual Gainsharing Payments awarded pursuant to the Plan, then the following shall apply:

In the event that the Company is required to prepare a restatement of one or more of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will be entitled to recover from each participant hereunder who was at the time of grant or payment of an Annual Gainsharing Payment an executive officer of the Company under applicable SEC rules (whether or not such participant remains an executive officer of the Company at the time of such restatement or thereafter), the amount of any Annual Gainsharing Payment that (i) was paid during the three year period preceding the date on which the Company is required to prepare such restatement and (ii) is in excess of what would have been paid to the participant under the restatement, or as may otherwise be required by such rules to be promulgated by the SEC.

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13.Termination; Amendment. 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.

14.    Unfunded Obligations. The Plan will be unfunded and all payments due under the Plan shall be made from Progressive's general assets.

15.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.

16.Misconduct; Set-Off Rights. No Participant shall have the right to receive any portion of any annual Gainsharing 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 Annual Gainsharing Payment or other sums owed to any participant under the Plan any amounts owed by such participant to Progressive.

17.Prior Plans. This Plan supersedes all prior plans, agreements, understandings and arrangements regarding bonuses or other cash incentive compensation payable to participants by or due from Progressive. Without limiting the generality of the foregoing, this Plan supersedes and replaces The Progressive Corporation 2014 Gainsharing Plan (the "Prior Plan”), which is and shall be deemed to have terminated on the last day of the Company’s 2014 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.

18.Effective Date. This Plan is adopted, and is to be effective, as of the first day of Progressive’s 2015 fiscal year. This Plan shall be effective for the 2015 Plan year and for each Plan year thereafter unless and until terminated by the Committee.

19.Governing Law. This Plan shall be interpreted and construed in accordance with the laws of the State of Ohio.

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EX-10.12

Exhibit 10.12

SECOND AMENDMENT

TO

THE PROGRESSIVE CORPORATION

2003 INCENTIVE PLAN

WHEREAS, The Progressive Corporation 2003 Incentive Plan, as heretofore amended (the “Plan”) is currently in effect; and

WHEREAS, the Board of Directors believes that it is desirable to further amend the Plan;

NOW, THEREFORE, the Plan is hereby amended as follows:

1. Section 1(a) of the Plan is hereby deleted in its entirety and the following is substituted in its place:

(a) The Progressive Corporation, an Ohio corporation (the “Company”), hereby establishes an incentive compensation plan for key employees, to be known as “The Progressive Corporation 2003 Incentive Plan” (the “Plan”), as set forth in this document. The Plan permits the grant of Restricted Stock, Stock Options and Restricted Stock Units to key employees of the Company and its Subsidiaries and Affiliates.

2. The definitions of the following terms, as set forth in Section 1(c) of the Plan, are hereby amended and restated in their entirety to provide as follows:

“Award” means any award of Restricted Stock, Stock Options, or Restricted Stock Units under the Plan.

“Fair Market Value” means, as of any given date, the mean between the highest and lowest quoted selling price of the Stock on such date on the New York Stock Exchange or, if no such sale of the Stock occurs on the New York Stock Exchange on such date, then (i) with respect to any Award made on or before January 31, 2010, such mean price on the next preceding day on which the Stock was traded on that Exchange, and (ii) with respect to any Award made after January 31, 2010, such mean price on the next succeeding day on which the Stock was traded on that Exchange. If the Stock is no longer traded on the New York Stock Exchange, then the Fair Market Value of the Stock shall be determined by the Committee in good faith.

“Minimum Restriction Period” shall have the meaning assigned to it in Section 5(b)(7) of the Plan.

“Restriction Period” means the period commencing on the date of the Award and expiring on the date on which all restrictions thereon have lapsed and all conditions to vesting of such Award have been satisfied.

3. The following definitions are hereby added to and inserted into Section 1(c) of the Plan:

“Dividend Equivalent” means, with respect to an outstanding Restricted Stock Unit, an amount equal to a cash dividend paid or property distribution awarded upon one share of Stock.

“Performance-Based Restricted Stock Unit” means an Award of a Restricted Stock Unit that will vest upon the achievement of Performance Goals established by or under the direction of the Committee and set forth in the related Award Agreement, provided all other conditions to vesting have been met.

“Restricted Stock Unit” or “Unit” means the contractual right awarded pursuant to Section 13 of the Plan to receive one share of Stock upon the expiration of a specified time period or upon the satisfaction of specified Performance Goals, as determined by or under the direction of the Committee.

“Time-Based Restricted Stock Unit” means an Award of a Restricted Stock Unit that will vest upon the lapse of a time period determined by or under the direction of the Committee and specified in the related Award Agreement, provided all other conditions to vesting have been met.

4. Sections 3(c) and (d) of the Plan are hereby deleted in their entirety and the following is substituted in their place:

(c) Adjustment. In the event of any merger, reorganization, consolidation, recapitalization (including, without limitation, extraordinary cash dividends), share dividend, share split, reverse share split, combination of shares or other change in the corporate or capital structure of the Company affecting the Stock, such substitution or adjustment shall be made in the aggregate number of shares of Stock reserved for issuance under the Plan, in the maximum number of shares or Units that may be subject to Awards granted to any Participant during any calendar year or other period, in the number and Option Exercise Price of shares subject to outstanding Options granted under the Plan, in the number of shares subject to Restricted Stock Awards granted under the Plan, and in the number of Restricted Stock Units granted under the Plan, to prevent dilution or enlargement of rights. Notwithstanding the foregoing, the number of shares subject to any Award of Restricted Stock or Stock Options shall always be a whole number, and any fractional shares shall be eliminated.

(d) Annual Award Limitation. No Participant may be granted Awards under the Plan with respect to an aggregate of more than 1,200,000 Restricted Stock Units and shares of Stock (subject to adjustment as provided in Section 3(c) hereof) during any calendar year.

5. The first sentence of Section 5(b)(7) is hereby deleted in its entirety and the following is substituted in its place:

Subject to the provisions of this Plan and the related Restricted Stock Award Agreement, during the applicable Restriction Period, as determined by or under the direction of the Committee, the Participant who has received such Award shall not be permitted to sell, transfer, pledge, assign or otherwise encumber the shares of Restricted Stock which are subject to such Award.

6. The introductory paragraph to Section 7(a) and Section 7(a)(2) of the Plan are hereby deleted in their entirety and the following are substituted in their place:

(a) Impact of Event. Except as provided in Section 7(e), in the event of and upon: (i) a “Change in Control” as defined in Section 7(b) or (ii) a “Potential Change in Control” as defined in Section 7(c); and subject to such additional conditions as the Committee may determine in its discretion at the time of the Award, the following acceleration and valuation provisions shall apply:

* * * *

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(2) All restrictions, limitations and Performance Goals, if any, applicable to any Restricted Stock, Stock Options or Restricted Stock Units shall terminate and such Stock, Stock Options or Restricted Stock Units, as applicable, shall be deemed fully vested; and

7. The following new Section 7(e) is hereby added to and inserted into the Plan after Section 7(d):

(e) Notwithstanding anything to the contrary contained in this Section 7, with respect to Awards of Restricted Stock Units: (i) the term “Change in Control” means a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, each as determined in accordance with Section 409A of the Code; and (ii) a Potential Change in Control shall not trigger the acceleration and valuation provisions set forth in Section 7(a).

8. The first sentence of Section 10(e) of the Plan is hereby deleted in its entirety and the following is substituted in its place:

No later than the date as of which an amount relating to any Award under the Plan first becomes taxable, the Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state and local taxes and other items of any kind required by law to be withheld with respect to such amount.

9. Section 10(f) of the Plan is hereby deleted in its entirety and the following is substituted in its place:

(f) The actual or deemed reinvestment of dividends, other distributions or Dividend Equivalents in additional Stock, Restricted Stock or Restricted Stock Units, as applicable, shall only be permissible if sufficient shares of Stock are available under Section 3 for such reinvestment (taking into account the then outstanding and previously granted Restricted Stock, Stock Options and Restricted Stock Units).

10. Subsections (i) and (ii) of Section 10(k) of the Plan (as added by the First Amendment to the Plan) are hereby deleted in their entirety and the following are substituted in their place:

(i) If (A) Performance-Based Restricted Stock or Performance-Based Restricted Stock Units granted to any executive officer shall vest hereunder on the basis of the achievement of certain financial or operating results as specified by the Committee (which includes, for purposes hereof, all of the Performance Goals that are available to the Committee under this Plan), (B) those financial or operating results were incorrect and were subsequently the subject of a restatement by Progressive within three (3) years after the date of vesting, and (C) the vesting event would not have occurred as to some or all of such shares if the actual financial or operating results had been known as of the date of vesting, then the Company shall have the right of recoupment from the executive officer who received such shares of Stock upon such vesting or who elected to defer such shares at vesting. The Company will have this right of recoupment whether or not the executive officer in question was at fault or responsible in any way in causing such restatement. In such circumstances, the Company, in its sole discretion, will have the right to recover from each executive officer, and each such executive officer will refund to the Company promptly on demand, at the Company’s discretion, either (X) the number of shares of Stock that vested, were distributed or were deferred (as applicable) based on the incorrect operating or financial results, or (Y) the dollar equivalent of such number of Shares as of the date of such vesting, without interest. Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against unvested Awards made hereunder, credits against future bonus or other incentive payments or awards, or other appropriate mechanism.

(ii) If any Participant 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 to determine the vesting of Performance-Based Restricted Stock or Performance-Based Restricted Stock Units hereunder, the Company will have the right to recoup from such Participant, and the Participant will transfer or pay to the Company promptly upon demand, in the Company’s discretion, either (A) the number of shares of Stock that vested, were distributed or were deferred (as applicable) based on the incorrect operating or financial results, or (B) the dollar equivalent to such number of shares determined as of the date of such vesting plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from such vesting date. The Company further shall have the right to terminate and cancel any and all Awards previously made to such Participant at any time hereunder that are then unvested, and to recover from such Participant the Company’s costs and expenses incurred in connection with recovering such Shares or funds from Participant and enforcing its rights under this subsection (ii), including, without limitation, reasonable attorneys’ fees and court costs. There shall be no time limit on the Company’s right to recover such amounts under this subsection (ii), except as otherwise provided by applicable law.

11. The following new Section 13 is hereby added to and inserted into the Plan after Section 12:

SECTION 13. Restricted Stock Units.

(a) Grant. Subject to the terms and conditions of the Plan, Restricted Stock Units may be awarded to Eligible Persons at any time and from time to time as shall be determined by the Committee. The Committee shall determine, in its sole discretion, the individuals to whom, and the time or times at which, grants of Restricted Stock Units will be made; the number of Restricted Stock Units to be awarded to each Participant; the price (if any) to be paid by the Participant; whether the Awards will consist of Performance-Based Restricted Stock Units or Time-Based Restricted Stock Units or a combination thereof; the date or dates or conditions upon which Restricted Stock Unit Awards will vest, whether through lapse of time or the achievement of specified Performance Goals; the Performance Goal or Goals, if any, that must be satisfied as a condition to the vesting of any Awards of Restricted Stock Units; the period or periods within which such Awards of Restricted Stock Units may be subject to forfeiture; and the other terms and conditions of such Awards in addition to those set forth in Section 13(b).

(b) Terms and Conditions. Restricted Stock Units awarded under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

(1) The purchase price for Restricted Stock Units, if any, shall be determined by the Committee at the time of grant.

(2) Awards of Restricted Stock Units must be accepted by executing the related Award Agreement, delivering an executed copy of such Award Agreement to the Company and paying whatever price (if any) is required under Section 13(b)(1). A Participant who receives an Award of Restricted Stock Units shall not have any rights with respect to such Award, unless and until such Participant has executed and delivered to the Company an Award Agreement evidencing the Award, in the form approved from time to time by the Committee, and has otherwise complied with the applicable terms and conditions of such Award. In the Company’s discretion, the execution and delivery of such Award Agreement may be accomplished electronically or by other legally acceptable means.

(3) No instruments or certificates evidencing such Units will be issued, but record thereof will be maintained by the Company or its designee.

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(4) A Participant may be granted an Award of Time-Based Restricted Stock Units or Performance-Based Restricted Stock Units, or a combination thereof.

(A) Awards of Time-Based Restricted Stock Units will vest and all restrictions thereon will terminate upon the lapse of a period of time specified by the Committee, provided all other conditions to vesting have been met. The Committee, in its sole discretion, may provide for the lapse of such restrictions in installments.

(B) Awards of Performance-Based Restricted Stock Units will vest and all restrictions thereon will terminate upon the certification by the Committee of the achievement of the specified Performance Goals, provided all other conditions to vesting have been met.

(i) In the Committee’s discretion, such Awards of Performance-Based Restricted Stock Units may (a) stipulate a number of Units that will vest only in whole upon the satisfaction of the specified Performance Goals, (b) stipulate a number of Units that will vest either in whole or in part, depending on the level of achievement in comparison to the specified Performance Goals, pursuant to a formula, calculation or other objective mechanism approved by the Committee at the time of the Award, or (c) stipulate a target number of Units (the “Target”) that may vest in part, in whole or up to a specified multiple of the Target, depending on the level of achievement in comparison to the specified Performance Goals pursuant to a formula, calculation or other objective mechanism approved by the Committee at the time of the Award. In the case of any Award authorized under clause (c) of the previous sentence, a number of shares of Stock equal to the maximum possible distribution at vesting will be reserved by the Company until such time as the distribution or forfeiture event occurs. If Performance-Based Restricted Stock Units do not vest in whole or in part under the applicable Performance Goals, on or before the expiration date, in each case as determined by the Committee at the time of the Award, such Units will be forfeited.

(ii) Notwithstanding anything to the contrary contained herein, the Committee, in its sole discretion, may reduce the amount of, or eliminate in full, any Performance-Based Restricted Stock Award at, or at any time prior to, the Committee’s certification of the vesting of such Award. The Committee, in its sole discretion, may treat individual Participants differently for these purposes. Any such determination by the Committee shall be final and binding on each Participant who is affected thereby. Under no circumstances shall the Committee have discretion to increase the distribution to any Participant in excess of the number of shares of Stock that would have been awarded at vesting based on the Performance Goals and related formula and calculation approved by the Committee at the time of the applicable Award (except for adjustments under the circumstances described in Section 3(c)).

(5) Subject to the provisions of this Plan and the related Award Agreement, during the Restriction Period, the Participant who has received such Award shall not be permitted to sell, transfer, pledge, assign or otherwise encumber the Restricted Stock Units which are subject to such Award.

(6) The Participant shall not have the right to vote the shares of Stock represented by the Restricted Stock Units prior to the vesting of such Units.

(7) The Participant shall not have the right to receive any dividends in respect of the shares of Stock represented by the Restricted Stock Units prior to the vesting of such Units. At the discretion of the Committee determined at the time of the Award, the Participant may be credited with Dividend Equivalents during the Restriction Period. In such case, unless determined otherwise by the Committee at or after the time of the Award and subject to Section 10(f) of the Plan:

(A) all Dividend Equivalents payable in respect of Restricted Stock Units shall be deemed reinvested on the date that the applicable dividend or distribution is made to the Company’s shareholders, in that number of Units determined by dividing the value of the Dividend Equivalent by the Fair Market Value of a share of Stock on such date. The Units resulting from the reinvestment of such Dividend Equivalents (i) shall be subject to the same terms and conditions as the Restricted Stock Units to which they relate, and (ii) shall vest or be forfeited (if applicable), at the same time as the Restricted Stock Units to which they relate; and

(B) with respect to Awards of Performance-Based Restricted Stock Units described in Section 13(b)(4)(B)(i)(b) and (c), Dividend Equivalents will be reinvested in Restricted Stock Units based on, as applicable, the number of Units comprising such Award or the Target number of Units stated in such Award, and such reinvested Restricted Stock Units shall vest or be forfeited (to the extent applicable) in the same proportion as the underlying Units to which they relate.

If Dividend Equivalents cannot be reinvested in Units due to the operation of Section 10(f), then the Committee, in its sole discretion, may determine alternative mechanism(s) to credit the value of those Dividend Equivalents to the Participants (provided that in all events, such Dividend Equivalents shall vest or be forfeited (if applicable), at the same time as the Restricted Stock Units to which they relate), or may discontinue the crediting of such Dividend Equivalents on a prospective basis only.

(8) No Restricted Stock Units shall be transferable by any Participant other than by will or by the laws of descent and distribution, except that, if determined by the Committee at the time of grant and so provided in the applicable Award Agreement, a Participant may transfer Restricted Stock Units during his or her lifetime to one or more of his or her Family Members, provided that no consideration is paid for the transfer and that the transfer would not result in the loss of any exemption under Rule 16b-3 of the Exchange Act with respect to any Restricted Stock Units. The transferee of Restricted Stock Units will be subject to all restrictions, terms and conditions applicable to the Restricted Stock Units (including, without limitation, the terms and conditions relating to vesting and forfeiture) prior to their transfer, except that the Restricted Stock Units will not be further transferable by the transferee other than by will or by the laws of descent and distribution.

(9) If a Participant’s employment by the Company or any Subsidiary or Affiliate terminates by reason of death, any Restricted Stock Units held by such Participant at the time of death shall thereafter vest or any restrictions lapse, at the time and to the extent such Restricted Stock Units would have become vested or no longer subject to restriction within one year from the time of death had the Participant continued to fulfill all of the conditions of the Award of Restricted Stock Units during such period; provided that, (i) such determination shall be made without regard to whether the Participant could have been eligible for a RSU Qualified Retirement during such one year period, and (ii) if the vesting of such Award is conditioned on or subject to the achievement of specified Performance Goals, such Performance Goals are achieved prior to the earlier of the expiration of such one year period or the Expiration Date of the Award. The balance of the Restricted Stock Units shall be forfeited.

(10) Unless otherwise determined by the Committee at or after the time of granting any Award of Restricted Stock Units, and except as provided in Section 13(b)(11) hereof, if a Participant’s employment by the Company or any Subsidiary or Affiliate terminates for any reason other than death, all Restricted Stock Units held by such Participant that are unvested or subject to restriction at the time of such termination shall thereupon be forfeited.

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(11) If a Participant’s employment with the Company (or any of its Subsidiaries or Affiliates) terminates due to a RSU Qualified Retirement (as defined below), the following provisions shall apply (subject in all cases to Section 13(b)(11)(C) hereof):

(A) if and to the extent that any RSU Award Installment (as defined below) is vested as of the RSU Qualified Retirement Date (as defined below), all Restricted Stock Units held by the Participant in connection with such RSU Award Installment shall be free of applicable restrictions and delivered to the Participant;

(B) (i) with respect to all Awards of Time-Based Restricted Stock Units held by the Participant on his or her RSU Qualified Retirement Date, if and to the extent that any RSU Award Installment is not vested as of such RSU Qualified Retirement Date, such RSU Award Installment (a) shall remain in effect with respect to fifty percent (50%) of the Restricted Stock Units covered thereby and, as to such Units, shall vest on such RSU Qualified Retirement Date, except that as to any Participant who is a “specified employee” as defined in Section 409A of the Code, any distribution or exercise of rights with respect to such Awards may not occur until the date that is six (6) months plus one (1) day after Participant’s RSU Qualified Retirement Date, and shall thereafter be free of applicable restrictions; and (b) shall terminate, effective as of the RSU Qualified Retirement Date, with respect to the remaining fifty percent (50%) of the Restricted Stock Units covered by such RSU Award Installment.

(ii) with respect to all Awards of Performance-Based Restricted Stock Units held by the Participant on his or her RSU Qualified Retirement Date, if and to the extent that any RSU Award Installment is not vested as of the RSU Qualified Retirement Date, such RSU Award Installment (a) shall remain in effect with respect to fifty percent (50%) of the Restricted Stock Units covered thereby and, as to such Units, shall vest upon the achievement of the related Performance Goals (unless such Performance Goals are not achieved prior to the Expiration Date applicable to such RSU Award Installment, in which event the RSU Award Installment will terminate, and all Restricted Stock Units covered by such RSU Award Installment will be forfeited, as of such Expiration Date), and (b) shall terminate, effective as of the RSU Qualified Retirement Date, with respect to the remaining fifty percent (50%) of the Restricted Stock Units covered by such RSU Award Installment; provided that, with respect to any member of the Company’s Senior Management Group (as defined in Section 5(b)(13)(D)(viii)) who has given the Company at least one (1) full year’s prior written notice of his or her retirement, upon any RSU Qualified Retirement of such individual, no portion of any Awards of Performance-Based Restricted Stock Units held by such Participant on his or her RSU Qualified Retirement Date will terminate on such date, but such Awards will remain in effect and one hundred percent (100%) of the Restricted Stock Units subject to each such Award held by such Participant on his or her RSU Qualified Retirement Date shall vest as of the date on which the applicable Performance Goals have been achieved (unless such Performance Goals are not achieved prior to the Expiration Date applicable to such Award, in which event the Award will terminate, and all Restricted Stock Units covered by such Award will be forfeited, as of such Expiration Date).

(C) if the Committee determines that the Participant is or has engaged in any Disqualifying Activity (as defined in Section 5(b)(13)(D)(iii)), then (1) to the extent that any RSU Award Installment held by such Participant has vested as of the Disqualification Date (as defined in Section 5(b)(13)(D)(v)), the Participant shall have the right to receive all related Restricted Stock Units which are vested as of such date (subject to Section 13(b)(2)) and (2) to the extent that any RSU Award Installment held by such Participant has not vested as of the Disqualification Date, the Award shall terminate, and all related Restricted Stock Units shall be forfeited, as of such date. Any determination by the Committee, which may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company, that the Participant is or has engaged in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive.

(D) For purposes of this Section 13(b)(11), the following terms are defined as follows:

(i) RSU Qualified Retirement - any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (other than death or an involuntary termination for Cause) that (a) qualifies as a “separation of service” under Section 409A of the Code, and (b) occurs on or after the first day of the calendar month in which both of the following conditions are scheduled to be satisfied:

(1) the Participant is 55 year of age or older; and

(2) the Participant has completed at least fifteen (15) years of service as an employee of the Company or its Subsidiaries or Affiliates;

provided, however, that on the Participant’s most recent performance evaluation (or, at or after a Change in Control, if applicable, the Participant’s most recent performance evaluation preceding the Change in Control), he or she was determined to have “met” expectations (or higher) or to have satisfied such other evaluation criteria then employed by the Company and its subsidiaries that indicates an acceptable (or higher) level of performance by the Participant for the period covered by such performance evaluation.

(ii) RSU Qualified Retirement Date - the date as of which the Participant’s employment with the Company or its Subsidiaries or Affiliates terminates pursuant to a RSU Qualified Retirement.

(iii) RSU Award Installment - if the Restricted Stock Units Award consists of multiple Awards, each with a separate RSU Vesting Date (as defined below), separate Expiration Date and/or other unique term or condition, any one of such Awards; or, if the Restricted Stock Units Award consists of a single Award, with a single RSU Vesting Date and a single Expiration Date, then the entire Award.

(iv) RSU Vesting Date - the date on which any restrictions on a Restricted Stock Units Award terminate and such Award vests, whether by reason of lapse of time, the achievement of specified Performance Goals or both.

(12) Upon the satisfaction of all conditions to vesting of, and the lapse of all other restrictions applicable to, all or part of an Award of Restricted Stock Units, as set forth in this Plan and the applicable Award Agreement, (i) the Company shall distribute to the Participant one share of Stock in exchange for each such vested Restricted Stock Unit, and (ii) the applicable Restricted Stock Units shall be cancelled, and the shares of Stock so distributed shall not be subject to any further restrictions or limitations pursuant to this Plan. Unless determined otherwise by the Company at any time prior to the applicable distribution, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of Stock.

(13) Any Participant who is then eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan or any other deferral plan hereafter adopted or maintained by the Company (a “Deferral Plan”) may elect to defer all or any portion of any Awards of Restricted Stock Units granted to him or her under this Plan, subject to and in accordance with the terms of the applicable Deferral Plan.

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EX-10.16

Exhibit 10.16

THE PROGRESSIVE CORPORATION

2003 INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

(<Year of Grant> Performance-Based Award)

This Agreement (“Agreement”) is made this <Grant Date> by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1. Award of Restricted Stock. The Company hereby grants to Participant an award (the “Award”) of restricted stock (the “Restricted Stock”) consisting of <# of Shares> of the Company’s Common Shares, $1 Par Value (“Common Shares”), pursuant and subject to The Progressive Corporation 2003 Incentive Plan (the “Plan”).

2. Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or the Restricted Stock, unless and until the Participant has fully executed this Agreement and delivered it to the Company (in the Company’s discretion, such execution and delivery may be accomplished through electronic means).

3. Restrictions; Vesting. The Restricted Stock shall be subject to the restrictions and other terms and conditions set forth in the Plan, which are hereby incorporated herein by reference, and in this Agreement. Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to the shares of Restricted Stock shall vest on the date <Performance-Based Goals>.

The shares of Restricted Stock awarded under this Agreement shall vest in accordance with the foregoing unless, prior thereto, the Award and the applicable shares of Restricted Stock are forfeited or have become subject to accelerated vesting under the terms and conditions of the Plan. Until the shares of Restricted Stock vest, Participant shall not sell, transfer, pledge, assign or otherwise encumber such shares of Restricted Stock or any interest therein.

4. Expiration of Award. Notwithstanding anything to the contrary in this Agreement, if Participant’s rights in and to the shares of Restricted Stock granted hereunder have not vested in accordance with Section 3 of this Agreement on or before <Expiration Date>, this Award shall expire on that date. Upon such expiration, the Common Shares issued pursuant to this Agreement shall automatically be forfeited, and Participant shall have no further rights with respect thereto.

5. Manner In Which Shares Will Be Held. Subject to the provisions of this Paragraph 5, stock certificates evidencing the shares of Restricted Stock awarded under this Agreement shall be registered in the name of Participant and shall be delivered to and held in custody by the Company, or its designee, until the restrictions thereon shall have lapsed or any conditions to the vesting of such Award have been satisfied. Such certificates shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

In the discretion of the Company, any or all shares of Restricted Stock awarded to Participant hereunder may be issued in, or after issuance may be transferred to, book-entry form and held by the Company, or its designee, in such form. In such event, no stock certificates evidencing such shares will be held and the applicable restrictions will be noted in the records of the Company’s transfer agent and in the book-entry system.

Participant hereby irrevocably authorizes the Company and the Compensation Committee of the Board of Directors (the “Committee”) to take any and all appropriate action with respect to the evidence of Participant’s Restricted Stock, including, without limitation, issuing certificates for such Restricted Stock, issuing such Restricted Stock in book-entry form, transferring any previously issued certificates into book-entry form, transferring any Restricted Stock (whether held in certificate or book-entry form) into unrestricted form at vesting, or canceling any Restricted Stock (whether held in certificate or book-entry form) as and when required by this Agreement or the Plan, or undertaking any other action which may be done lawfully by the Company or the Committee in the administration of the Plan and this Agreement. Participant specifically acknowledges and agrees that such certificates and/or book-entry evidence of Participant’s Restricted Stock may be transferred or cancelled pursuant to this Agreement and the Plan without requiring that a Stock Power be executed and delivered by the Participant or requiring any other action on the part of Participant, and Participant authorizes the Company to undertake each such action without such Stock Powers.

Participant hereby further irrevocably appoints the Secretary of the Company and any employee of the Company who may be designated by the Secretary, and each of them, my true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to execute and deliver each and every document (including, without limitation, any such Stock Powers) which may be necessary or appropriate in connection with the issuance, transfer, cancellation or other action taken in connection with the Restricted Stock awarded hereunder pursuant to this Agreement or the Plan. The rights granted by Participant under this paragraph shall automatically expire as to shares of Restricted Stock awarded hereunder upon the transfer of such shares into unrestricted form at vesting or upon the cancellation of such shares at any time, as applicable, pursuant to this Agreement and the Plan.

6. Rights of Shareholder. Except as otherwise provided in this Agreement or the Plan, Participant shall have, with respect to the shares of Restricted Stock awarded hereunder, all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive any dividends as declared by the Company’s Board of Directors.

7. Shares Non-Transferable. No shares of Restricted Stock shall be transferable by Participant other than by will or by the laws of descent and distribution. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

8. Executive Deferred Compensation Plan. If Participant is eligible, and has made the appropriate election, to defer the Restricted Stock awarded hereunder into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral Plan”), upon vesting, the shares of Restricted Stock awarded hereunder shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any deferral agreement entered into by Participant thereunder.

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9. Termination of Employment. Except as otherwise provided in the Plan or as determined by the Compensation Committee of the Company’s Board of Directors, if Participant’s employment with the Company is terminated for any reason other than death, Disability or Qualified Retirement, all Restricted Stock held by Participant which is unvested or subject to restriction at the time of such termination shall be automatically forfeited.

10. Taxes. No later than the date as of which an amount first becomes includable in the gross income of Participant for federal income tax purposes with respect to shares of Restricted Stock awarded under this Agreement, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, all federal, state or local taxes or other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliates, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At vesting, shares of Restricted Stock awarded hereunder will be valued at Fair Market Value, as defined in the Plan.

Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of shares of Restricted Stock (“Minimum Withholding Obligations”) either (a) by surrendering to Company shares of Restricted Stock which are then vesting in an amount sufficient to satisfy the Minimum Withholding Obligations, (b) by surrendering to the Company other unrestricted Common Shares of the Company owned by Participant in an amount sufficient to satisfy the Minimum Withholding Obligations, or (c) by paying the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company shares of Restricted Stock which are then vesting in an amount sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either (x) by paying the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted Common Shares which are not part of the Restricted Stock then vesting and which have then been owned by the Participant in unrestricted form more than six (6) months.

Under no circumstances will Participant be entitled to satisfy any such additional withholding by surrendering shares of Restricted Stock which are then vesting or other Common Shares which have then been owned by Participant in unrestricted form for six months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding hereunder by surrendering shares of Restricted Stock which are not then vesting or any Restricted Stock which Participant has elected to defer under Paragraph 8 hereof. All payments, surrenders of shares, elections or requests for approval hereunder must be made by Participant in accordance with such procedures as may be adopted by the Company in connection therewith, and subject to such rules as have been or may hereafter be adopted by the Committee with respect thereto.

11. Dividends. Participant acknowledges and agrees that the Company will pay, or cause to be paid, any cash dividends payable in respect of Restricted Stock through such method(s) of payment as the Company deems advisable, on or promptly after the date established by the Board of Directors for the payment of such cash dividend to holders of the Company’s Common Shares (the “Dividend Payment Date”), including, but not limited to: (i) payment by the Company’s transfer agent through the procedures established generally for shareholders of record; or (ii) payment by the Company to Participants directly either through the Company’s payroll system in the first payroll check which is issued to the Participant after the Dividend Payment Date or by appropriate check, draft or automatic deposit.

12. Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties hereto relating to subject matter hereof, provided that the Agreement shall be at all times subject to the Plan as provided above.

13. Amendment. The Committee, in its sole discretion, may hereafter amend the terms of this Award, but no such amendment shall be made which would impair the rights of Participant, without Participant’s consent.

14. Definitions: Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in the Plan.

Participant hereby: (i) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (ii) accepts this Agreement and the Restricted Stock awarded pursuant hereto subject to all provisions of the Plan and this Agreement; and (iii) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Restricted Stock awarded hereunder.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound hereby, by electronically accepting the Award granted hereunder pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION
By:	/s/ Charles E. Jarrett
	Vice President & Secretary

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EX-10.18

Exhibit 10.18

RESTRICTED STOCK AWARD AGREEMENT

(2009 Performance-Based Award)

This Agreement (“Agreement”) is made this <Grant Date> by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1. Award of Restricted Stock. The Company hereby grants to Participant an award (the “Award”) of restricted stock (the “Restricted Stock”) consisting of <# of Shares> of the Company’s Common Shares, $1 Par Value (“Common Shares”), pursuant and subject to The Progressive Corporation 2003 Incentive Plan, as amended by the First Amendment to The Progressive Corporation 2003 Incentive Plan (collectively, the “Plan”).

2. Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or the Restricted Stock, unless and until the Participant has fully executed this Agreement and delivered it to the Company (in the Company’s discretion, such execution and delivery may be accomplished through electronic means).

3. Restrictions; Vesting. The Restricted Stock shall be subject to the restrictions and other terms and conditions set forth in the Plan, which are hereby incorporated herein by reference, and in this Agreement. Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to the shares of Restricted Stock shall vest, if at all, as follows:

a. Evaluation Period. The Evaluation Period shall be the <#>-year period comprised of the years <Calendar Years>.

b. Vesting. An Award, or portion of an Award, shall vest hereunder only if and when the Compensation Committee of the Board of Directors (the “Committee”) certifies (the “Certification Requirement”):

1. the extent to which the Company’s performance results have satisfied the performance criteria set forth in both subparagraphs (c) and (d) below; and

2. the corresponding number of Common Shares (if any) that have vested as a result of such performance.

Such certification shall occur as soon as practicable after the end of the Evaluation Period, but in any event must occur (if at all) on or before <expiration date> (the “Expiration Date”).

c. Profitability Requirement. No Award, or portion of an Award, shall vest hereunder unless the Company has achieved a combined ratio of 96 or less, determined in accordance with GAAP, for the twelve (12) consecutive fiscal months immediately preceding the date of the certification described in subparagraph (b) above (the “Profitability Requirement”).

d. Number of Shares Vesting. Provided that the Profitability Requirement and the Certification Requirement have both been satisfied, the number of Common Shares (if any) that vest hereunder will be determined as follows:

1. If the Company’s compounded annual rate of growth in direct premiums written for the Evaluation Period (“Company Growth Rate,” determined as provided below) exceeds the compounded annual rate of growth of the market as a whole for the Evaluation Period (“Market Growth Rate,” determined as provided below), by < Full Vesting Goal> percentage points or more, then the entire Award will vest;

2. If the Company Growth Rate exceeds <Partial Vesting Goal>, a portion of the Award (rounded up, if necessary, to the nearest whole number of Common Shares) will vest, according to the following calculation:

<Partial Vesting Formula>

The portion of the Award that will not vest under the foregoing calculation shall be immediately forfeited; and

3. If the Company Growth Rate is equal to or less than the <Minimum Vesting Requirement>, or if either the Profitability Requirement or the Certification Requirement has not been satisfied with respect to the Award on or before the applicable date provided for herein, none of the Award shall vest, and the Award shall be immediately forfeited;

4. For purposes of these determinations:

A. Subject to any adjustment(s) that may be required by subparagraphs (B), (C) or (D) below:

i.

The Company Growth Rate will be the compounded annual rate of growth in direct premiums written during the Evaluation Period, determined by comparing (a) the annual aggregate direct premiums written by the Company in its Private Passenger Auto and Commercial Auto businesses for <Last Year of Evaluation Period>, as reported by A.M. Best in its annual report currently know as the “A2 Report,” with (b) such direct premiums written by the Company for <Comparison Year> as reported in A.M. Best’s A2 Report; and

ii.

The Market Growth Rate will be the compounded annual rate of growth in direct premiums written during the Evaluation Period, determined by comparing (a) the aggregate direct premiums written for the Private Passenger Auto market and the Commercial Auto market for <Last Year of Evaluation Period>, as reported in A.M. Best’s A2 Report, with (b) such direct premiums written for <Comparison Year> as reported in A.M. Best’s A2 Report;

B. If <Last Year of Evaluation Period> is a 53-week year under the Company’s fiscal calendar, then in determining the Company Growth Rate and the Market Growth Rate as set forth in subparagraph (A) above, the aggregate direct premiums written for such year will be reduced, for both the Company and the market as a whole, by an amount equal to twenty percent (20%) of the direct premiums written by the Company in fiscal December for such year in its Private Passenger Auto and Commercial Auto businesses, as determined from the Company’s records;

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C. In making the calculations required hereunder, the Company Growth Rate and the Market Growth Rate shall each be rounded to the nearest one-thousandth of a whole percentage point (e.g., a growth rate of 2.376666% will be rounded to 2.377%); and

D. In the event that A.M. Best ceases to publish the A2 Report, or modifies the A2 Report in such a way as to render the comparisons required by this calculation to be not meaningful, in the Committee’s sole judgment, the determinations required above shall be made using such comparable Company and industry-wide data as may be then available from A.M. Best in any successor or replacement report or publication, or such comparable data as may be available from another nationally recognized provider of insurance industry data, in each case as the Committee may approve in its sole discretion.

e. Notwithstanding anything to the contrary contained herein, at the time of vesting or at any time prior thereto, the Committee, in its sole discretion, may reduce the number of Common Shares that otherwise would vest according to this Agreement, or eliminate the Award in full. The Committee may, in its sole discretion, treat individual participants differently for these purposes. Any such determination by the Committee shall be final and binding on the Participant. Under no circumstances shall the Committee have discretion to increase the number of Common Shares that are subject to the Award hereunder.

The shares of Restricted Stock awarded under this Agreement shall vest in accordance with and subject to the foregoing unless, prior thereto, the Award and the applicable shares of Restricted Stock are forfeited or have become subject to accelerated vesting under the terms and conditions of the Plan. Until the shares of Restricted Stock vest, Participant shall not sell, transfer, pledge, assign or otherwise encumber such shares of Restricted Stock or any interest therein.

4. Expiration of Award. Notwithstanding anything to the contrary in this Agreement, if Participant’s rights in and to the shares of Restricted Stock granted hereunder have not vested in accordance with Section 3 of this Agreement on or before the Expiration Date, this Award shall expire at 11:59 p.m. on the Expiration Date. Upon such expiration, the Common Shares issued pursuant to this Agreement shall automatically be forfeited, and Participant shall have no further rights with respect thereto.

5. Manner In Which Shares Will Be Held. All shares of Restricted Stock awarded to Participant hereunder shall be issued in book-entry form and held by the Company, or its designee, in such form, and as such, no stock certificates evidencing such shares will be issued or held with respect to such Restricted Stock. Certain terms, conditions and restrictions applicable to such Restricted Stock will be noted in the records of the Company’s transfer agent and in the book-entry system. At the Company’s discretion, and subject to the provisions of this Paragraph 5, stock certificates evidencing the shares of Restricted Stock awarded under this Agreement may be issued and registered in the name of Participant. In such event, such certificates shall be delivered to and held in custody by the Company, or its designee, until the restrictions thereon shall have lapsed or any conditions to the vesting of such Award, or a portion thereof, have been satisfied, and such certificates shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

Participant hereby irrevocably authorizes the Company and the Committee to take any and all appropriate action with respect to the evidence of Participant’s Restricted Stock, including, without limitation, issuing certificates for such Restricted Stock, issuing such Restricted Stock in book-entry form, transferring any previously issued certificates into book-entry form, transferring any Restricted Stock (whether held in certificate or book-entry form) into unrestricted form at vesting, or canceling any Restricted Stock (whether held in certificate or book-entry form) as and when required by this Agreement or the Plan, or undertaking any other action which may be done lawfully by the Company or the Committee in the administration of the Plan and this Agreement. Participant specifically acknowledges and agrees that such certificates and/or book-entry evidence of Participant’s Restricted Stock may be transferred or cancelled pursuant to this Agreement and the Plan without requiring that a Stock Power be executed and delivered by Participant or requiring any other action on the part of Participant, and Participant authorizes the Company to undertake each such action without such Stock Powers.

Participant hereby further irrevocably appoints the Secretary of the Company and any employee of the Company who may be designated by the Secretary, and each of them, my true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to execute and deliver each and every document (including, without limitation, any such Stock Powers) which may be necessary or appropriate in connection with the issuance, transfer, cancellation or other action taken in connection with the Restricted Stock awarded hereunder pursuant to this Agreement or the Plan. The rights granted by Participant under this paragraph shall automatically expire as to shares of Restricted Stock awarded hereunder upon the transfer of such shares into unrestricted form at vesting or upon the cancellation of such shares at any time, as applicable, pursuant to this Agreement and the Plan.

6. Rights of Shareholder; Restrictions on Cash Dividends. Except as otherwise provided in this Agreement or the Plan, Participant shall have, with respect to the shares of Restricted Stock awarded hereunder, all of the rights of a shareholder of the Company, including the right to vote the shares; provided, however, that notwithstanding the foregoing, Participant’s rights to receive cash dividends on the shares of Restricted Stock awarded hereunder (“Restricted Cash Dividends”) shall be subject to all the terms and conditions regarding vesting and forfeitability that apply to the shares of Restricted Stock to which such Restricted Cash Dividends relate, as set forth in the Plan and this Agreement, and Participant will be paid such Restricted Cash Dividends only if the Restricted Stock to which the Restricted Cash Dividends relate vests, and all restrictions with respect thereto lapse. In addition, such Restricted Cash Dividends shall be subject to the terms and conditions set forth in Section 5(b)(8) of the Plan.

7. Shares Non-Transferable. No shares of Restricted Stock shall be transferable by Participant other than by will or by the laws of descent and distribution. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

8. Executive Deferred Compensation Plan. If Participant is eligible, and has made the appropriate election, to defer the Restricted Stock awarded hereunder into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral Plan”), upon vesting, the shares of Restricted Stock awarded hereunder shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any deferral agreement entered into by Participant thereunder.

9. Termination of Employment. Except as otherwise provided in the Plan or as determined by the Committee, if Participant’s employment with the Company is terminated for any reason other than death, Disability or Qualified Retirement, all Restricted Stock held by Participant which is unvested or subject to restriction at the time of such termination shall be automatically forfeited. Without limiting the foregoing, in the event that any such termination occurs after the end of the Evaluation Period but prior to the Committee’s certification as described in Section 3(b) above, the Restricted Stock shall be automatically forfeited hereunder.

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10. Taxes. No later than the date as of which an amount first becomes includable in the gross income of Participant for federal income tax purposes with respect to shares of Restricted Stock awarded under this Agreement, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, all federal, state or local taxes or other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliates, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At vesting, shares of Restricted Stock awarded hereunder will be valued at Fair Market Value, as defined in the Plan.

Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of shares of Restricted Stock (“Minimum Withholding Obligations”) either (a) by surrendering to the Company shares of Restricted Stock which are then vesting in an amount sufficient to satisfy the Minimum Withholding Obligations, (b) by surrendering to the Company other unrestricted Common Shares of the Company owned by Participant in an amount sufficient to satisfy the Minimum Withholding Obligations, or (c) by paying the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company shares of Restricted Stock which are then vesting in an amount sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either (x) by paying the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted Common Shares which are not part of the Restricted Stock then vesting and which have then been owned by Participant in unrestricted form for more than six (6) months.

Under no circumstances will Participant be entitled to satisfy any such additional withholding by surrendering shares of Restricted Stock which are then vesting or other Common Shares which have then been owned by Participant in unrestricted form for six months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding hereunder by surrendering shares of Restricted Stock which are not then vesting or any Restricted Stock which Participant has elected to defer under Paragraph 8 hereof. All payments, surrenders of shares, elections or requests for approval hereunder must be made by Participant in accordance with such procedures as may be adopted by the Company in connection therewith, and subject to such rules as have been or may hereafter be adopted by the Committee with respect thereto.

11. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties hereto relating to subject matter hereof, provided that the Agreement shall be at all times subject to the Plan as provided above.

12. Amendment. The Committee, in its sole discretion, may hereafter amend the terms of this Award, but no such amendment shall be made which would impair the rights of Participant, without Participant’s consent.

13. Definitions. Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in the Plan.

14. Acknowledgments. Participant hereby: (i) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (ii) accepts this Agreement and the Restricted Stock awarded pursuant hereto subject to all provisions of the Plan and this Agreement; and (iii) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Restricted Stock awarded hereunder.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound hereby, by electronically accepting the Award granted hereunder pursuant to the procedures adopted by the Company.Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION
By:	/s/ Charles E. Jarrett
	Vice President & Secretary

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EX-10.30

Exhibit 10.30

RESTRICTED STOCK UNIT AWARD AGREEMENT

(2014 Time-Based Award)

This Agreement (“Agreement”) is made this <Grant Date> (“Grant Date”) by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1.    Definitions. Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in The Progressive Corporation 2010 Equity Incentive Plan, as amended (collectively, the “Plan”).

2.    Award of Restricted Stock Units. The Company grants to Participant an award (the “Award”) consisting of <# of Units> restricted stock units (the “Restricted Stock Units” or “Units”), pursuant and subject to the Plan.

3.    Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or the Restricted Stock Units, unless and until Participant has fully executed this Agreement and delivered it to the Company. In the Company’s discretion, such execution and delivery may be accomplished through electronic means.

4.    Restrictions; Vesting.

(a) Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to the Units shall vest, if at all, according to the following schedule:

i.    One-third of the Units shall vest on January 1, 2017;

ii.    One-third of the Units shall vest on January 1, 2018; and

iii.    One-third of the Units shall vest on January 1, 2019.

The Restricted Stock Units awarded under this Agreement shall vest in accordance with the schedule set forth above unless, prior to the vesting date set forth above, the Award and the applicable Units are forfeited or have become subject to accelerated vesting under the terms and conditions of the Plan or this Agreement.

(b) Notwithstanding Paragraph 4(a) above, but subject to Paragraph 4(c) below:

i. If Participant’s Qualified Retirement Eligibility Date occurred prior to the Grant Date specified above, then fifty percent (50%) of each Award Installment shall vest on the Specified Date (defined below) and the remaining fifty percent (50%) of each Award Installment shall remain unvested and subject to the terms of this Agreement;

ii. If Participant’s Qualified Retirement Eligibility Date occurs after the Grant Date but prior to the Specified Date:

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A. If Participant’s employment terminates in a Qualified Retirement prior to the Specified Date, the provisions of Section 10 of the Plan will continue to govern the Award; and

B. If Participant’s employment does not terminate in a Qualified Retirement prior to the Specified Date, then fifty percent (50%) of each Award Installment shall vest on the Specified Date and the remaining fifty percent (50%) of each Award Installment shall remain unvested and subject to the terms of this Agreement; and

iii. If Participant’s Qualified Retirement Eligibility Date occurs on or after the Specified Date but prior to any vesting date specified in Paragraph 4(a) above, then fifty percent (50%) of each unvested Award Installment shall vest on the Participant’s Qualified Retirement Eligibility Date and the remaining fifty percent (50%) of each unvested Award Installment shall remain unvested and subject to the terms of this Agreement.

iv. For purposes of this Paragraph 4(b), Specified Date shall mean: May 1, 2014 if the Grant Date is in March 2014; August 1, 2014 if the Grant Date is in July 2014; November 1, 2014 if the Grant Date is in October 2014; and February 1, 2015 if the Grant Date is in January 2015; provided, however, in each case, that if no such sale of Stock occurs on the New York Stock Exchange (the “NYSE”) on such date, then the next succeeding day on which the Stock is traded on the NYSE shall be the Specified Date.

(c) Notwithstanding Paragraph 4(b) above, if the Committee determines that on or before the Specified Date or any subsequent vesting date described in Paragraph 4(b) above, the Participant engaged or was engaging in any Disqualifying Activity, then:

i. To the extent that the Award has not yet vested pursuant to Paragraph 4(b) prior to the Committee’s determination, the Award shall terminate immediately and all related Units shall be forfeited automatically at that time; and

ii. To the extent that the Award has vested pursuant to Paragraph 4(b) prior to the Committee’s determination, the Award shall be deemed to have automatically terminated and forfeited as of the Disqualification Date. Accordingly, promptly upon the Company’s demand, the Participant shall transfer or pay to the Company all shares of Stock (or, if such Stock has been sold or otherwise transferred by the Participant, an equivalent number of shares of Stock or, at the Company’s election, the value thereof as of the applicable vesting date) or other proceeds received or deferred by the Participant in connection with such vesting pursuant to Paragraph 4(b), and the Participant will be entitled to no consideration in connection therewith. If such shares of Stock or other proceeds are not transferred or paid to the Company promptly upon such demand, then the Company will have the right to recover from the Participant all such shares or other proceeds, plus the costs and expenses incurred by the Company in recovering such shares or other proceeds from the Participant and enforcing its rights hereunder, including, without limitation, reasonable attorneys’ fees and court costs, plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from the applicable vesting date.

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The Committee may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company when addressing the possibility of Disqualifying Activity, and any determination by the Committee under this Paragraph 4(c) that the Participant has engaged or is engaging in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive.

5.    Dividend Equivalents. Subject to this Paragraph 5, Participant shall be credited with Dividend Equivalents with respect to outstanding Restricted Stock Units with respect to dividends for which a record date occurs prior to the applicable vesting date, including any Units resulting from prior reinvestments of Dividend Equivalents as provided in this Paragraph. All Dividend Equivalents so credited will be deemed to be reinvested in Restricted Stock Units on the date that the applicable dividend or distribution is made to the Company’s shareholders, in the number of Units determined by dividing the value of the Dividend Equivalents by the Fair Market Value of the Company’s Stock on such date (rounded to the nearest thousandth of a whole Unit or as otherwise reasonably determined by the Company); provided, however, that if Dividend Equivalents cannot be reinvested in Units due to the operation of Section 3(a) of the Plan, such Dividend Equivalents will be credited to Participant as a cash value, which shall be held by the Company (without interest) subject hereto. The Units resulting from the reinvestment of such Dividend Equivalents (“Dividend Equivalent Units”) and, if applicable, cash value resulting from such reinvestment, shall be subject to the same terms and conditions, and shall vest or be forfeited (as applicable) at the same time, as the Restricted Stock Units to which they relate; provided, however, that if a vesting date occurs after the record date for, but before the payment date of, a dividend, then the Dividend Equivalent Units related to such dividend and to Units vesting on such vesting date will be paid in cash or in Stock, in the sole discretion of the Company, as soon as practicable following the payment date for such dividend.

6.    Units Non-Transferable. No Restricted Stock Units (and no Dividend Equivalents credited hereunder) shall be transferable by Participant other than by will or by the laws of descent and distribution, and then only in accordance with the Plan. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

7.    Executive Deferred Compensation Plan. If Participant is eligible, and has made the appropriate election, to defer the Award into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral Plan”), at the time of vesting, the Restricted Stock Units that would otherwise vest under this Agreement (but not any Dividend Equivalent Units, which shall be distributed in accordance with Paragraph 9) shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any related deferral agreement.

8.    Termination of Employment. Except as otherwise provided in the Plan or as determined by the Committee, if Participant’s employment with the Company is terminated for any reason other than death or Qualified Retirement, the Award and all applicable Restricted Stock Units held by Participant that are unvested or subject to restriction at the time of such termination shall be forfeited automatically. Notwithstanding the foregoing, after the Participant’s Qualified Retirement Eligibility Date, except as provided in Paragraph 4(b)(ii)(A) above, the Award and all applicable Restricted Stock Units held by Participant that are unvested or subject to restriction at the time of Participant’s termination of employment for any reason, including death, shall be forfeited automatically.

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9.    Distribution at Vesting. Subject to the provisions of the Plan and this Agreement, upon vesting of all or part of the Award, the Company shall distribute to the Participant one share of the Company’s Stock in exchange for each such vested Restricted Stock Unit and for each Dividend Equivalent Unit related thereto, and the applicable Restricted Stock Units shall be cancelled. Unless determined otherwise by the Company at any time prior to the applicable distribution, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of the Company’s Stock.

10.    Taxes. No later than the date as of which an amount relating to the Award first becomes taxable, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state and local taxes and other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliates, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At vesting, Restricted Stock Units awarded under this Agreement will be valued at the Fair Market Value of the Company’s Stock on such date.

Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of Restricted Stock Units (“Minimum Withholding Obligations”) either (a) by surrendering to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations, or (b) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either (x) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted shares of the Company’s Stock that are not being distributed to Participant as a result of the vesting event and that have then been owned by Participant in unrestricted form for more than six (6) months.

Under no circumstances will Participant be entitled to satisfy any such additional withholding by surrendering Restricted Stock Units, shares of the Company’s Stock that are being distributed to Participant as a result of the vesting event, or other shares of Stock that have then been owned by Participant in unrestricted form for six (6) months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding by surrendering Restricted Stock Units that are not then vesting or any Restricted Stock Units that Participant has elected to defer under Paragraph 7 above. All payments, surrenders of Units or shares, elections or requests for approval must be made by Participant in accordance with such procedures as may be adopted by the Company in connection therewith, and subject to such rules as have been or may be adopted by the Committee.

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11.    Non-Solicitation. In consideration of the Award made to Participant under this Agreement, for a period of twelve (12) months immediately following Participant's “Separation Date” (defined below), Participant shall not directly or indirectly recruit or solicit for hire, or hire, or assist in any manner in the recruitment, solicitation for hire or hiring, of any employee or officer of the Company or its Subsidiaries or Affiliates, or in any way induce any such employee or officer to terminate his or her employment with the Company or any of its Subsidiaries or Affiliates. For purposes of this Paragraph, "Separation Date" means the date on which Participant's employment with the Company or its subsidiaries is terminated for any reason.

12.    Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan.

13.    Amendment. The Committee, in its sole discretion, may amend the terms of this Award, but no such amendment shall be made that would impair the rights of Participant, without Participant’s consent.

14.     Acknowledgments. Participant: (i) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (ii) accepts this Agreement and the Award subject to all provisions of the Plan and this Agreement; and (iii) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound by this Agreement, by electronically accepting the Award pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION

By: /s/     Charles E. Jarrett        

Vice President & Secretary

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EX-10.35

Exhibit 10.35

RESTRICTED STOCK UNIT AWARD AGREEMENT

(2014 Performance-Based Award – Insurance Results)

This Agreement (“Agreement”) is made this <Grant Date> by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1.    Definitions. Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in The Progressive Corporation 2010 Equity Incentive Plan, as amended (collectively, the “Plan”). It is understood that references herein to any performance results of the Company mean the applicable operating results of the insurance Subsidiaries and mutual company Affiliate of the Company.

2.    Award of Restricted Stock Units. The Company grants to Participant an award (the “Award”) of performance-based restricted stock units (“Restricted Stock Units” or “Units”), pursuant and subject to the Plan. The Award is based on an initial award value of <# of Units> Units (the “Initial Award Value”). The number of Restricted Stock Units that are ultimately earned pursuant to the Award (if any) will be determined based on the Initial Award Value and the procedures and calculations set forth in this Agreement. Under the calculations set forth below, the maximum potential Award is a number of Units equal to two and one-half (2.5) times the Initial Award Value (the “Maximum Award Value”) plus Dividend Equivalent Units (defined below).

3.    Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or any Restricted Stock Units, unless and until Participant has fully executed this Agreement and delivered it to the Company. In the Company’s sole discretion, such execution and delivery may be accomplished through electronic means.

4.    Restrictions; Vesting. Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to Restricted Stock Units shall vest, if at all, as follows:

a.    Growth Evaluation Period. The “Growth Evaluation Period” shall be the three-year period comprised of the years 2014, 2015 and 2016.

b.    Certification. The Award shall vest (if at all) only if, to the extent, and when the Compensation Committee of the Board of Directors (the “Committee”) certifies:

i.     the extent to which the Company’s performance results have satisfied the performance criteria set forth in both Subparagraphs c. and d. below; and

ii.     the corresponding number of Restricted Stock Units (if any) that have vested as a result of such performance.

Such certification shall occur as soon as practicable after the end of the Growth Evaluation Period, but in any event must occur (if at all) on or before January 31, 2019 (the “Expiration Date”). If the Committee certifies the vesting of a number of Units that is less than the Maximum Award Value, then with respect to all other Units that could have been earned under this Agreement, the Award will terminate and be forfeited automatically.

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c.    Profitability Requirement. The Award shall not vest unless the Company has achieved a combined ratio of 96 or less, calculated by reference to the Company’s GAAP financial results, for the twelve (12) fiscal month period immediately preceding the date of the certification described in Subparagraph b. above (the “Profitability Requirement”).

d.    Number of Units Vesting. Provided that the Profitability Requirement has been satisfied, the number of Restricted Stock Units (if any) that vest in connection with the Award will be determined as follows:

i.    The Company’s compounded annual rate of growth in “Written Premiums” (defined below) for the Growth Evaluation Period for the Company’s Private Passenger Auto and Commercial Auto businesses (“Company Growth Rate”) will be compared to the compounded annual rate of growth of the Private Passenger Auto and Commercial Auto markets as a whole for the Growth Evaluation Period (“Market Growth Rate”), in each case determined as provided below. If the Company Growth Rate exceeds the Market Growth Rate, the applicable calculation required by the following table will determine the number of Restricted Stock Units vesting:

Performance vs. Market	Determination of the Number of Units Vesting
If the Company Growth Rate exceeds the Market Growth Rate by 3.5 percentage points or more	Initial Award Value x 2.50 (i.e., the Maximum Award Value)
If the Company Growth Rate exceeds the Market Growth Rate by more than 2 but less than 3.5 percentage points	Initial Award Value x (1.00 + (Company Growth Rate – Market Growth Rate – 2.00)) Example: Company Growth Rate = 2.50%; Market Growth Rate = 0.10%; Number of Units vesting will equal Initial Award Value x (1.00 + (2.50 - 0.10 - 2.00)) = Initial Award Value x 1.40
If the Company Growth Rate exceeds the Market Growth Rate by exactly 2 percentage points	Initial Award Value
If the Company Growth Rate exceeds the Market Growth Rate by less than 2 percentage points	Initial Award Value x ((Company Growth Rate – Market Growth Rate) / 2.00) Example: Company Growth Rate = 2.50%; Market Growth Rate = 1.10%; Number of Units vesting will equal Initial Award Value x ((2.50 – 1.10) / 2.00) = Initial Award Value x 0.70

ii.    If the Company Growth Rate is equal to or less than the Market Growth Rate, or if the Profitability Requirement has not been satisfied with respect to the Award prior to the Expiration Date, none of the Award shall vest, and the Award shall be forfeited in its entirety.

iii.    For purposes of these determinations:

A.    Subject to the provisions of Subparagraphs B., C. and D. below:

1.    “Written Premiums” shall mean premiums written directly during the applicable time period for the specified types of business, without taking into account reinsurance;

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2.    The Company Growth Rate will be the compounded annual rate of growth in Written Premiums during the Growth Evaluation Period, determined by comparing (a) the annual aggregate Written Premiums of the Company in its Private Passenger Auto and Commercial Auto businesses for 2016, as reported by A.M Best in its annual report currently known as the “A2 Report,” with (b) such Written Premiums of the Company for 2013 as reported in A.M. Best’s A2 Report; and

3.    The Market Growth Rate will be the compounded annual rate of growth in Written Premiums during the Growth Evaluation Period, determined by comparing (a) the aggregate Written Premiums of the U.S. Private Passenger Auto market and the Commercial Auto market for 2016, as reported in A.M. Best’s A2 Report, with (b) such Written Premiums for 2013 as reported in A.M. Best’s A2 Report, but excluding (in each case) the applicable Written Premiums of the Company;

B.    If either 2013 or 2016 is a 53-week year under the Company’s fiscal calendar, then in determining the Company Growth Rate as set forth in Subparagraph A. above, the aggregate Written Premiums for such year will be reduced by an amount equal to twenty percent (20%) of the Written Premiums of the Company in fiscal December 2013 or 2016, as applicable, in its Private Passenger Auto and Commercial Auto businesses, as determined from the Company’s records;

C.    In making the calculations required under this Agreement, the Company Growth Rate and the Market Growth Rate shall each be rounded to the nearest thousandth of a whole percentage point and (if applicable) the number of Restricted Stock Units vesting shall be rounded to the nearest thousandth of a whole Unit (or, in each case, as otherwise reasonably determined by the Company); and

D.    In the event that A.M. Best ceases to publish the A2 Report, or modifies the A2 Report in such a way as to render the comparisons required by this Agreement to be not meaningful, in the Committee’s sole judgment, the determinations required above shall be made using such comparable Company and industrywide data as may be then available from A.M. Best in any successor or replacement report or publication, or such comparable data as may be available from another nationally recognized provider of insurance industry data, in each case as the Committee may approve in its sole discretion.

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e.    Committee Discretion. Notwithstanding anything to the contrary contained in this Agreement, at or prior to the time of vesting, the Committee, in its sole discretion, may reduce the number of Restricted Stock Units that otherwise would vest according to this Agreement, or eliminate the Award in full. The Committee, in its sole discretion, may treat individual participants differently for these purposes. Any such determination by the Committee shall be final and binding on Participant. Under no circumstances shall the Committee have discretion to increase the award to any Participant in excess of the number of Units that would have been awarded at vesting based on this Paragraph 4 (excluding adjustments required by Section 3(c) of the Plan).

The Award shall vest in accordance with and subject to the foregoing except to the extent that, prior to the Committee’s certification of the Award, the Award has been forfeited under the terms and conditions of the Plan or this Agreement.

5.    Expiration of Award. Notwithstanding anything to the contrary in this Agreement, if Participant’s rights in and to the Award have not vested in accordance with Paragraph 4 of this Agreement on or before the Expiration Date, this Award shall expire at 11:59 p.m. on the Expiration Date. Upon such expiration, the Award shall terminate automatically, and Participant shall have no further rights with respect to the Award.

6.    Dividend Equivalents. Subject to this Paragraph 6, Participant shall be credited with Dividend Equivalents with respect to the outstanding Award with respect to dividends for which a record date occurs prior to the applicable vesting date. All Dividend Equivalents so credited will be deemed to be reinvested in Restricted Stock Units on the date that the applicable dividend or distribution is made to the Company’s shareholders, based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, in the number of Units determined by dividing the value of the Dividend Equivalents by the Fair Market Value of the Company’s Stock on such date (rounded to the nearest thousandth of a whole Unit or as otherwise reasonably determined by the Company); provided, however, that if Dividend Equivalents cannot be reinvested in Units due to the operation of Section 3(a) of the Plan, such Dividend Equivalents will be credited to Participant as a cash value based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, which cash value shall be held by the Company (without interest) subject to this Agreement. The Units resulting from the reinvestment of such Dividend Equivalents (“Dividend Equivalent Units”) and, if applicable, cash value resulting from such reinvestment, shall be subject to the same terms and conditions, and shall vest or be forfeited (as applicable) at the same time, upon the same conditions, and in the same proportion, as the Initial Award Value set forth in this Award; provided, however, that if a vesting date occurs after the record date for, but before the payment date of, a dividend, then the Dividend Equivalent Units related to such dividend and to Units vesting on such vesting date will be paid in cash or in Stock, in the sole discretion of the Company, as soon as practicable following the payment date for such dividend.

7.    Units Non-Transferable. No Restricted Stock Units (and no Dividend Equivalent Units) shall be transferable by Participant other than by will or by the laws of descent and distribution, and then only in accordance with the Plan. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

8.    Deferral of Award. If Participant is eligible, and has made the appropriate election, to defer the Award into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral

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Plan”), at the time of vesting, the Restricted Stock Units that would otherwise vest under this Agreement (excluding any Dividend Equivalent Units, which shall be distributed in accordance with Paragraph 10) shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any related deferral agreement.

9.    Termination of Employment. Except as otherwise provided in the Plan or in this Paragraph 9, or as determined by the Committee, if Participant’s employment with the Company is terminated for any reason other than death or Qualified Retirement, the Award and all Restricted Stock Units held by Participant that are unvested or subject to restriction at the time of such termination shall be forfeited automatically. In the event that any such termination of employment occurs, for any reason other than for Cause, after the end of the Growth Evaluation Period but prior to the “first opportunity to certify results” (defined below), the Award shall not be forfeited at the time of Participant’s termination, and:

a. if the termination is a result of Participant’s death before his or her Qualified Eligibility Retirement Date, the provisions of Section 6(b)(v) of the Plan will continue to apply to the Award;

b. if Participant has not satisfied the requirements for a Qualified Retirement at the time of termination, Participant shall be eligible to participate in the vesting of Restricted Stock Units under this Agreement only to the extent certified by the Committee at the time of such first opportunity to certify results, but if certification does not occur upon such first opportunity to certify results, the Award shall be forfeited automatically; or

c. if Participant has satisfied the requirements for a Qualified Retirement at the time of termination (including a termination resulting from death on or after the Participant’s Qualified Eligibility Retirement Date), Participant shall be eligible to participate in the vesting of Restricted Stock Units under this Agreement only to the extent certified by the Committee at the time of such first opportunity to certify results, but if certification does not occur upon such first opportunity to certify results, then pursuant to Section 10 of the Plan, fifty percent (50%) of such Award shall remain in effect and fifty percent (50%) of the Award shall be forfeited (or in certain cases, if the applicable requirements are satisfied, all of such Award shall remain in effect), and the portion that remains in effect shall thereafter vest, if at all, in accordance with this Agreement, but subject at all times to Section 10 of the Plan;

provided, however, in any case, that if the Committee determines that Participant is engaging in, or has engaged in, a Disqualifying Activity and that Disqualifying Activity occurred prior to the vesting of the Award, the Award and all applicable Restricted Stock Units that are then unvested or subject to restriction shall be forfeited or deemed to be forfeited automatically as of the Disqualification Date determined by the Committee and, if the vesting has already occurred, the provisions of Section 10(d)(ii) of the Plan will apply (without regard to whether a Qualified Retirement has occurred). Any determination by the Committee that the Participant is engaging in, or has engaged in, any Disqualifying Activity, and of the Disqualification Date, shall be final and conclusive on Participant.

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For purposes of this Paragraph 9, the phrase “first opportunity to certify results” means the date which is the earlier to occur of: (i) the last day of the calendar month immediately following the month in which A.M. Best publishes the A2 Report (or, if applicable, the calendar month immediately following the month in which the successor or replacement report or data described in Subparagraph 4.d.iii.D. above is published) for the third year of the Growth Evaluation Period, or (ii) a meeting of the Compensation Committee is held at which such report or data is reviewed (whether or not a certification occurs) or a written action is executed by the Committee in lieu of such a meeting.

10.    Distribution at Vesting. Subject to the provisions of the Plan and this Agreement, upon vesting of all or part of the Award, the Company shall distribute to Participant one share of the Company’s Stock in exchange for each such vested Restricted Stock Unit and for each Dividend Equivalent Unit related thereto, and the remaining Restricted Stock Units (if any) shall be cancelled. Unless determined otherwise by the Company at any time prior to the applicable distribution, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of the Company’s Stock.

11.    Taxes. No later than the date as of which an amount relating to the Award first becomes taxable, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state and local taxes and other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliate, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At vesting, Restricted Stock Units awarded under this Agreement will be valued at the Fair Market Value of the Company’s Stock on such date.

Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of Restricted Stock Units (“Minimum Withholding Obligations”) either (a) by surrendering to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations, or (b) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either (x) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted shares of the Company’s Stock that are not being distributed to Participant as a result of the vesting event and that have then been owned by Participant in unrestricted form for more than six (6) months.

Under no circumstances will Participant be entitled to satisfy any such additional withholding by surrendering Restricted Stock Units, shares of the Company’s Stock that are being distributed to Participant as a result of the vesting event, or other shares of Stock that have then been owned by Participant in unrestricted form for six (6) months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding by surrendering Restricted Stock Units that are not then vesting or any Restricted Stock Units that Participant has elected to defer under Paragraph 8 above. All payments, surrenders of Units or shares, elections or requests for approval must be made by Participant in accordance with such procedures as may be adopted

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by the Company in connection therewith, and subject to such rules as have been or may be adopted by the Committee.

12.    Non-Solicitation. In consideration of the Award made to Participant under this Agreement, for a period of twelve (12) months immediately following Participant's “Separation Date” (defined below), Participant shall not directly or indirectly recruit or solicit for hire, or hire, or assist in any manner in the recruitment, solicitation for hire or hiring, of any employee or officer of the Company or any of its Subsidiaries or Affiliates, or in any way induce any such employee or officer to terminate his or her employment with the Company or any of its Subsidiaries or Affiliates. For purposes of this Paragraph, "Separation Date" means the date on which Participant's employment with the Company or its Subsidiaries is terminated for any reason.

13.    Recoupment. If the Securities and Exchange Commission 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, that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to Participant and the Award granted pursuant to this Agreement, then the following shall apply:

In the event that the Company is required to prepare a restatement of one or more of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws, the Company will be entitled to recover from Participant, and Participant will promptly upon written demand return to the Company (whether or not Participant remains an employee of the Company at the time of such restatement or thereafter), the amount of any Award granted hereunder that (i) was paid or distributed to Participant (or any assignee or transferee permitted under Paragraph 7 above) during the three year period preceding the date on which the Company is required to prepare such restatement, and (ii) is in excess of what would have been paid or distributed to Participant (or any such assignee or transferee) under the restatement, or such other amount as may be required by the rules of the Securities and Exchange Commission or, if applicable, the New York Stock Exchange.

The provisions of this Paragraph 13 are in addition to the rights of the Company as set forth in Section 14(h) of the Plan.

14.    Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan.

15.    Amendment. The Committee, in its sole discretion, may amend the terms of this Award, but no such amendment shall be made that would impair the rights of Participant, without Participant’s consent.

16.     Acknowledgments. Participant: (a) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (b) accepts this Agreement and the Award subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award.

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Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound by this Agreement, by electronically accepting the Award pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION

By: /s/     Charles E. Jarrett        

Vice President & Secretary

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EX-10.36

Exhibit 10.36

RESTRICTED STOCK UNIT AWARD AGREEMENT

(2014 Performance-Based Award – Investment Results)

This Agreement (“Agreement”) is made this <Grant Date> by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1.    Definitions. Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in The Progressive Corporation 2010 Equity Incentive Plan, as amended (collectively, the “Plan”). References herein to performance results of the Company mean the applicable results achieved by the Subsidiaries and Affiliate of the Company.

2.    Award of Restricted Stock Units. The Company grants to Participant an award (the “Award”) of performance-based restricted stock units (“Restricted Stock Units” or “Units”), pursuant and subject to the Plan. The Award is based on an initial award value of <# of Units> Units (the “Initial Award Value”). The number of Restricted Stock Units that are ultimately earned pursuant to the Award (if any) will be determined based on the Initial Award Value and the procedures and calculations set forth in this Agreement. The maximum potential Award is a number of Units equal to two (2) times the Initial Award Value (the “Maximum Award Value”) plus Dividend Equivalent Units (defined below).

3.    Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or any Restricted Stock Units, unless and until Participant has fully executed this Agreement and delivered it to the Company. In the Company’s sole discretion, such execution and delivery may be accomplished through electronic means.

4.    Restrictions; Vesting. Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to Restricted Stock Units shall vest, if at all, as follows:

a.    Evaluation Period. The “Evaluation Period” shall be the three-year period comprised of the calendar years 2014, 2015 and 2016.

b.    Certification. The Award shall vest (if at all) only if, to the extent, and when the Compensation Committee of the Board of Directors (the “Committee”) certifies:

i.     the Performance Ranking of, and Performance Factor for, the Company’s Fixed-Income Portfolio (as each of those terms are defined in Subparagraph c. below); and

ii.     the corresponding number of Restricted Stock Units (if any) that have vested as a result of such performance.

If the Committee certifies the vesting of a number of Units that is less than the Maximum Award Value, then with respect to all other Units that could have been earned under this Agreement, the Award will terminate and be forfeited automatically.

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c.    Number of Units Vesting. The number of Restricted Stock Units (if any) that vest in connection with the Award will be determined by application of the following formula:

Number of Units Vesting = Initial Award Value x Performance Factor

i.    The Performance Factor will be determined after the expiration of the Evaluation Period based on the fully taxable equivalent total return of the Company’s fixed-income investment portfolio (the “Fixed-Income Portfolio” or “Portfolio”), in comparison to the total returns of the group of comparable investment firms identified by Rogers Casey (the “Investment Benchmark”), each calculated for the three calendar years comprising the Evaluation Period. After the end of the Evaluation Period, Rogers Casey will determine the firms that are included in the Investment Benchmark in accordance with the criteria specified on Exhibit I hereto. Rogers Casey will also supply to the Company the monthly total return data for each of the Investment Benchmark firms for the three-year period ending on the last day of the Evaluation Period.

Investment results for the Fixed-Income Portfolio will be marked to market, including the benefit of any state premium tax abatements for municipal securities held in the Portfolio that are realized by the Company during the Evaluation Period, in order to calculate the Portfolio’s fully taxable equivalent total return, compounded on a monthly basis, for the Evaluation Period. The investment performance achieved by the Fixed-Income Portfolio for the Evaluation Period will then be compared against the total returns of the firms included in the Investment Benchmark for the same period, also compounded on a monthly basis, as determined by the Company from the monthly performance data supplied by Rogers Casey for each firm in the Investment Benchmark, to determine where the Fixed-Income Portfolio’s performance falls on a percentile basis when compared to the firms in the Investment Benchmark, as further described in Exhibit II hereto (“Performance Ranking”).

The Portfolio’s Performance Ranking will be used to determine a performance score of between 0.00 and 2.00 for the Evaluation Period, based on the following schedule:

Score = 0.00 Rank at or below	Score = 1.00 Rank equal to	Score = 2.00 Rank at or above
25th Percentile	50th Percentile	75th Percentile

A Performance Ranking between the values identified in the schedule will be interpolated on a straight-line basis to generate the Performance Factor, as further described on Exhibit II.

ii.    The Company will work with Rogers Casey to ensure, to the extent practicable, that the list of firms comprising the Investment Benchmark and all data necessary to calculate the Performance Ranking and the Performance Factor are received by March 1^st of the year immediately following the Evaluation Period. In all events, distributions under this Agreement must be made on or before March 15^th of the year immediately following the Evaluation Period.

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iii.    In the event that Rogers Casey (or its successors or assigns) ceases to provide or publish the information required to calculate the Performance Factor, or modifies the information in such a way as to render the comparisons required by this Agreement to be not meaningful, in the Committee’s sole judgment, the determinations required above shall be made using such comparable Company and other investment data as may be available from another recognized provider of investment industry data as the Committee may approve in its sole discretion.

d.    Committee Discretion. Notwithstanding anything to the contrary contained in this Agreement, at or prior to the time of vesting, the Committee, in its sole discretion, may reduce the number of Restricted Stock Units that otherwise would vest according to this Agreement, or eliminate the Award in full. The Committee, in its sole discretion, may treat individual participants differently for these purposes. Any such determination by the Committee shall be final and binding on the Participant. Under no circumstances shall the Committee have discretion to increase the award to any Participant in excess of the number of Units that would have been awarded at vesting based on this Paragraph 4 (excluding Dividend Equivalent Units and adjustments required by Section 3(c) of the Plan).

The Award shall vest in accordance with and subject to the foregoing except to the extent that, prior to the Committee’s certification of the Award, the Award has been forfeited under the terms and conditions of the Plan or this Agreement.

5.    Dividend Equivalents. Subject to this Paragraph 5, Participant shall be credited with Dividend Equivalents with respect to the outstanding Award with respect to dividends for which a record date occurs prior to the applicable vesting date. All Dividend Equivalents so credited will be deemed to be reinvested in Restricted Stock Units on the date that the applicable dividend or distribution is made to the Company’s shareholders, based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, in the number of Units determined by dividing the value of the Dividend Equivalents by the Fair Market Value of the Company’s Stock on such date (rounded to the nearest thousandth of a whole Unit or as otherwise reasonably determined by the Company); provided, however, that if Dividend Equivalents cannot be reinvested in Units due to the operation of Section 3(a) of the Plan, such Dividend Equivalents will be credited to Participant as a cash value based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, which cash value shall be held by the Company (without interest) subject to this Agreement. The Units resulting from the reinvestment of such Dividend Equivalents (“Dividend Equivalent Units”) and, if applicable, cash value resulting from such reinvestment, shall be subject to the same terms and conditions, and shall vest or be forfeited (if applicable) at the same time, upon the same conditions, and in the same proportion, as the Initial Award Value set forth in this Award; provided, however, that if a vesting date occurs after the record date for, but before the payment date of, a dividend, then the Dividend Equivalent Units related to such dividend will be paid in cash or in Stock, in the sole discretion of the Company, as soon as practicable following the payment date for such dividend.

6.    Units Non-Transferable. No Restricted Stock Units (and no Dividend Equivalent Units) shall be transferable by Participant other than by will or by the laws of descent and distribution, and then only in accordance with the Plan. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

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7.    Deferral of Award. If Participant is eligible, and has made the appropriate election, to defer the Award into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral Plan”), at the time of vesting, the Restricted Stock Units that would otherwise vest under this Agreement (excluding any Dividend Equivalent Units, which shall be distributed in accordance with Paragraph 9) shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any related deferral agreement.

8.    Termination of Employment. Except as otherwise provided in the Plan or in this Paragraph 8, or as determined by the Committee, if Participant’s employment with the Company is terminated for any reason other than death or Qualified Retirement, the Award and all Restricted Stock Units held by Participant that are unvested or subject to restriction at the time of such termination shall be forfeited automatically. In the event that any such termination of employment occurs, for any reason other than for Cause, after the end of the Evaluation Period but prior to the Committee’s certification of results for the Evaluation Period, the Award shall not be forfeited at the time of Participant’s termination, and Participant shall be eligible to participate in the vesting of Restricted Stock Units under this Agreement only to the extent certified by the Committee, subject to the provisions of the Plan; provided, however, that if the Committee determines that Participant is engaging in, or has engaged in, a Disqualifying Activity and that such Disqualifying Activity occurred before the vesting of the Award, the Award and all applicable Restricted Stock Units that are then unvested or subject to restriction shall be forfeited or deemed to be forfeited automatically as of the Disqualification Date determined by the Committee and, if the vesting has already occurred, the provisions of Section 10(d)(ii) of the Plan will apply (without regard to whether a Qualified Retirement has occurred). Any determination by the Committee that the Participant is engaging in, or has engaged in, any Disqualifying Activity, and of the Disqualification Date, shall be final and conclusive on Participant.

9.    Distribution at Vesting. Subject to the provisions of the Plan and this Agreement, upon vesting of all or part of the Award, the Company shall distribute to Participant one share of the Company’s Stock in exchange for each such vested Restricted Stock Unit and for each Dividend Equivalent Unit related thereto, and the remaining Restricted Stock Units (if any) shall be cancelled. Unless determined otherwise by the Company at any time prior to the applicable distribution, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of the Company’s Stock.

10.    Taxes. No later than the date as of which an amount relating to the Award first becomes taxable, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state and local taxes and other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliate, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At vesting, Restricted Stock Units awarded under this Agreement will be valued at the Fair Market Value of the Company’s Stock on such date.

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Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of Restricted Stock Units (“Minimum Withholding Obligations”) either (a) by surrendering to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations, or (b) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either (x) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted shares of the Company’s Stock that are not being distributed to Participant as a result of the vesting event and that have then been owned by Participant in unrestricted form for more than six (6) months.

Under no circumstances will Participant be entitled to satisfy any such additional withholding by surrendering Restricted Stock Units, shares of the Company’s Stock that are being distributed to Participant as a result of the vesting event, or other shares of Stock that have then been owned by Participant in unrestricted form for six (6) months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding by surrendering Restricted Stock Units that are not then vesting or any Restricted Stock Units that Participant has elected to defer under Paragraph 7 above. All payments, surrenders of Units or shares, elections or requests for approval must be made by Participant in accordance with such procedures as may be adopted by the Company in connection therewith, and subject to such rules as have been or may be adopted by the Committee.

11.    Non-Solicitation. In consideration of the Award made to Participant under this Agreement, for a period of twelve (12) months immediately following Participant's Separation Date (defined below), Participant shall not directly or indirectly recruit or solicit for hire, or hire, or assist in any manner in the recruitment, solicitation for hire or hiring, of any employee or officer of the Company or any of its Subsidiaries, or in any way induce any such employee or officer to terminate his or her employment with the Company or any of its Subsidiaries. For purposes of this Paragraph, "Separation Date" means the date on which Participant's employment with the Company or its Subsidiaries is terminated for any reason.

12.    Recoupment. If the Securities and Exchange Commission 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, that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to Participant and the Award granted pursuant to this Agreement, then the following shall apply:

In the event that the Company is required to prepare a restatement of one or more of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws, the Company will be entitled to recover from Participant, and Participant will promptly upon written demand return to the Company (whether or not Participant remains an employee of the Company at the time of such restatement or thereafter), the amount of any Award granted hereunder that (i) was paid or distributed to

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Participant (or any assignee or transferee permitted under Paragraph 6 above) during the three year period preceding the date on which the Company is required to prepare such restatement, and (ii) is in excess of what would have been paid or distributed to Participant (or any such assignee or transferee) under the restatement, or such other amount as may be required by the rules of the Securities and Exchange Commission or, if applicable, the New York Stock Exchange.

The provisions of this Paragraph 12 are in addition to the rights of the Company as set forth in Section 14(h) of the Plan.

13.    Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan.

14.    Amendment. The Committee, in its sole discretion, may amend the terms of this Award, but no such amendment shall be made that would impair the rights of Participant, without Participant’s consent.

15.     Acknowledgments. Participant: (a) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (b) accepts this Agreement and the Award subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound by this Agreement, by electronically accepting the Award pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION

By: /s/     Charles E. Jarrett        

Vice President & Secretary

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EXHIBIT I

INVESTMENT BENCHMARK CRITERIA

After the end of the Evaluation Period, Rogers Casey will determine the firms comprising the Investment Benchmark for the Plan year from its records and will supply to the Company the monthly total returns and any other relevant data for each of those firms for the Evaluation Period.

A firm will be included in the Investment Benchmark if Rogers Casey is able to determine from its records that:

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 Evaluation Period; and

2. At all times during the Evaluation Period, 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:

Duration:             Effective Duration between 1.5 years and 5.0 years

Credit Quality Average         = A, or = AA, or = AAA, or = AAA+

Convexity (%)             >= -1

Sector Allocation:         U.S. High-Yield Corporate Debt <= 10%

Sector Allocation:         Mortgages <= 60%

Sector Allocation:         U.S. Investment-Grade Corporate Debt <= 60%

Sector Allocation:         CMBS <= 60%

Sector Allocation:         ABS <= 60%

Sector Allocation:         Emerging Markets Debt <= 5%

3. The Company will have no discretion to alter the Investment Benchmark list after it is finalized by Rogers Casey.

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EXHIBIT II

DETERMINATION OF PERFORMANCE RANKING
AND PERFORMANCE FACTOR

Once all the total returns are calculated, the data is sorted in descending order from highest to lowest total return. From here, the process to compute the Performance Factor is as follows:

INTERPOLATED VALUES FOR SETTING TOP AND BOTTOM 25% LEVELS

The top 25% and bottom 25% total return rankings are computed based on the total number of firms in the Investment Benchmark, excluding the PCM Fixed-Income Portfolio return. For example, if there were 279 participants, the return required to earn a 2.00 portfolio performance factor would be determined by interpolating between the sixty-ninth and seventieth firm’s returns, since 25% of 279 = 69.75. The same procedure would be used to determine the 0.00 portfolio performance factor.

The total returns, computed by Investment Accounting, for the interpolated positions are calculated as follows (continuing to use an example of 279 survey firms):

Interpolated Value = Firm 69 return – ((Firm 69 Return - Firm 70 Return)*0.75)

Firm 69 = 18.35%

Firm 70 = 18.23%

Firm 69.75 (Interpolated Value) = 18.35% - ((18.35%-18.23%)*0.75) = 18.26%.

In this case, the PCM Performance Factor will equal 2.00 if its total return equals the interpolated value for Firm 69.75 or 18.26%. A similar calculation is then used to determine the bottom 25% group and interpolated value for a 0.00 performance score.

Once the two groups are computed, top and bottom 25%, the remainder of the performance scores are calculated as follows:

Performance score variance = (2.00) / Number of positions from first participant after the top 25% ranking to the 1^st participant in the bottom 25% ranking. In the case of 279 participants, the number of positions to divide the 2.00 performance factors by would be 142.

The calculation for the performance score variance from 2.00 – 0.00 would be:

2.00 / 142 = .014085 per position for 279 firms

In the case of a tie in total returns between firms, each firm will have the same performance score, one step under the next higher position. The next lowest position would then be stepped down by a factor based on the number of participants who tie. In the case of a tie between two firms, the step down will be twice the performance score variance to maintain the proper stepping to the 0.00 performance score level.

Example: If firms 70 and 71 each had the same total return in the 279 firm example, then firms 70 and 71 would each have a Performance Factor of 1.985915, which is 2.00 - .014085. The number 72 position in this example would have a performance score of 1.957746, which is the required step down from 70 to 72.

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In addition, if the returns are tied between the interpolated value set for the 2.00 performance score and any position below the 2.00 level, those lower positions will also be set to a 2.00 performance score. The step down factor in the performance score will work similarly as noted in the example above. For the last 25% group, all firms with total returns equaling the last interpolated total return value would have the same performance score as the last interpolated value (.014085), and all others in the last 25% group would have a 0.00 Portfolio Performance Factor.

Once all the performance scores have been created, from 2.00 to 0.00, PCM’s return is compared to the rankings to determine its Performance Factor. If the PCM return is not in the top or bottom 25% and does not match the return of any participant, then PCM’s Performance Factor is an interpolated value between the firms with the next highest and next lowest returns.

The interpolation computation for the Performance Factor based on PCM’s return is as follows:

Performance score of firm below PCM return + (PCM’s Return – Return below PCM) / (Return above PCM – Return below PCM) * (Performance score of firm above PCM – Performance score of firm below PCM)

Assuming the following data, using the 279 firm example:

Firm	Performance score	Total return
Firm above PCM	.90	13.61
PCM		13.39
Firm below PCM	.89	13.34

The calculation of PCM’s Performance Factor is:

0.89 + (13.39-13.34) / (13.61-13.34) * (0.90-0.89) = 0.89

The final performance score is rounded to the nearest one-hundredth, if necessary.

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EX-10.39

Exhibit 10.39

AMENDMENT NO. 1

TO

THE PROGRESSIVE CORPORATION

2003 DIRECTORS EQUITY INCENTIVE PLAN

The Progressive Corporation 2003 Directors Equity Incentive Plan (the “Plan”) is hereby amended as follows:

1. The following is hereby added as Paragraph (13) of SECTION 5, thereof:

(13) Any Participant who is then eligible to participate in The Progressive Corporation Directors Restricted Stock Deferral Plan, or any other deferral plan hereafter adopted or maintained by the Company for the benefit of Eligible Directors which allows for the deferral of Restricted Stock Awards, (a “Deferral Plan”), may elect to defer all or any portion of any Restricted Stock Award granted to him or her under this Plan, subject to and in accordance with the terms of the applicable Deferral Plan.

This Amendment will be effective as of February 1, 2004.

/s/ Charles E. Jarrett

Charles E. Jarrett

Secretary

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EX-10.42

Exhibit 10.42

THE PROGRESSIVE CORPORATION

2003 DIRECTORS EQUITY INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

This Agreement (“Agreement”) is made this <Grant Date> by and between <Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1. Award of Restricted Stock. The Company hereby grants to Participant an award (the “Award”) of restricted stock (the “Restricted Stock”) consisting of <# of Shares> of the Company’s Common Shares, $1 Par Value (“Common Shares”), pursuant and subject to The Progressive Corporation 2003 Directors Equity Incentive Plan (the “Plan”).

2. Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or the Restricted Stock, unless and until the Participant has fully executed this Agreement and delivered it to the Company (in the Company’s discretion, such execution and delivery may be accomplished through electronic means).

3. Restrictions; Vesting. The Restricted Stock shall be subject to the restrictions and other terms and conditions set forth in the Plan, which are hereby incorporated herein by reference, and in this Agreement. Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to the shares of Restricted Stock shall vest on <Vesting Date>.

The shares of Restricted Stock awarded under this Agreement shall vest as set forth above unless, prior to such vesting date, the Award and the applicable shares of Restricted Stock are forfeited or have become subject to accelerated vesting under the terms and conditions of the Plan. Until the shares of Restricted Stock vest, Participant shall not sell, transfer, pledge, assign or otherwise encumber such shares of Restricted Stock or any interest therein.

4. Manner In Which Shares Will Be Held. Subject to the provisions of this Paragraph 4, stock certificates evidencing the shares of Restricted Stock awarded under this Agreement shall be registered in the name of Participant and shall be delivered to and held in custody by the Company, or its designee, until the restrictions thereon shall have lapsed or any conditions to the vesting of such Award have been satisfied. Such certificates shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

In the discretion of the Company, any or all shares of Restricted Stock awarded to Participant hereunder may be issued in, or after issuance may be transferred to, book-entry form and held by the Company, or its designee, in such form. In such event, no stock certificates evidencing such shares will be held, the applicable restrictions will be noted in the records of the Company’s transfer agent and in the book-entry system.

Participant hereby irrevocably authorizes the Company and the Compensation Committee of the Board of Directors (the “Committee”) to take any and all appropriate action with respect to the evidence of Participant’s Restricted Stock, including, without limitation, issuing certificates for such Restricted Stock, issuing such Restricted Stock in book-entry form, transferring any previously issued certificates into book-entry form, transferring any Restricted Stock (whether held in certificate or book-entry form) into unrestricted form at vesting, or canceling any Restricted Stock (whether held in certificate or book-entry form) as and when required by this Agreement or the Plan, or undertaking any other action which may be done lawfully by the Company or the Committee in the administration of the Plan and this Agreement. Participant specifically acknowledges and agrees that such certificates and/or book-entry evidence of Participant’s Restricted Stock may be transferred or cancelled pursuant to this Agreement and the Plan without requiring that a Stock Power be executed and delivered by the Participant or requiring any other action on the part of Participant, and Participant authorizes the Company to undertake each such action without such Stock Powers.

Participant hereby further irrevocably appoints the Secretary of the Company and any employee of the Company who may be designated by the Secretary, and each of them, my true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to execute and deliver each and every document (including, without limitation, any such Stock Powers) which may be necessary or appropriate in connection with the issuance, transfer, cancellation or other action taken in connection with the Restricted Stock awarded hereunder pursuant to this Agreement or the Plan. The rights granted by Participant under this paragraph shall automatically expire as to shares of Restricted Stock awarded hereunder upon the transfer of such shares into unrestricted form at vesting or upon the cancellation of such shares at any time, as applicable, pursuant to this Agreement and the Plan.

5. Rights of Shareholder. Except as otherwise provided in this Agreement or the Plan, Participant shall have, with respect to the shares of Restricted Stock awarded hereunder, all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive any dividends as declared by the Company’s Board of Directors.

6. Shares Non-Transferable. No shares of Restricted Stock shall be transferable by Participant other than by will or by the laws of descent and distribution. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

7. Restricted Stock Deferral Plan. If Participant is eligible, and has made the appropriate election, to defer the Restricted Stock awarded hereunder into The Progressive Corporation Directors Restricted Stock Deferral Plan (the “Deferral Plan”), upon vesting, the shares of Restricted Stock awarded hereunder shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any deferral agreement entered into by Participant thereunder.

8. Dividends. Participant acknowledges and agrees that the Company will pay, or cause to be paid, any cash dividends payable in respect of Restricted Stock through such method(s) of payment as the Company deems advisable, on or promptly after the date established by the Board of Directors for the payment of such cash dividend to holders of the Company’s Common Shares (the “Dividend Payment Date”), including, but not limited to: (i) payment by the Company’s transfer agent through the procedures established generally for shareholders of record; or (ii) payment by the Company to Participants directly by appropriate check, draft or automatic deposit.

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9. Termination of Service. Except as otherwise provided in the Plan or as determined by the Committee, if Participant resigns or is removed from the Board of Directors for any reason other than death or Disability or does not stand for re-election, all Restricted Stock held by Participant which is unvested or subject to restriction at the time of such resignation or removal, or at the time Participant leaves the Board, shall be automatically forfeited.

10. Entire Agreement: This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties hereto relating to subject matter hereof, provided that the Agreement shall be at all times subject to the Plan as provided above.

11. Amendment. The Committee, in its sole discretion, may hereafter amend the terms of this Award, but no such amendment shall be made which would impair the rights of Participant, without Participant’s consent.

12. Definitions: Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in the Plan.

Participant hereby: (i) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (ii) accepts this Agreement and the Restricted Stock awarded pursuant hereto subject to all provisions of the Plan and this Agreement; and (iii) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Restricted Stock awarded hereunder.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound hereby, by electronically accepting the Award granted hereunder pursuant to the procedures adopted by the Company.Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION
By:	/s/ Charles E. Jarrett
	Vice President & Secretary

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EX-10.76

Exhibit 10.76

Directors Restricted Stock Deferral Agreement

The Progressive Corporation Directors

Restricted Stock Deferral Plan

Deferral Agreement

ONLY COMPLETE THIS AGREEMENT IF YOU WISH TO DEFER YOUR RESTRICTED STOCK AWARD

THIS DEFERRAL AGREEMENT is entered into pursuant to the provisions of The Progressive Corporation Directors Restricted Stock Deferral Plan (“Plan”). All capitalized terms in this Agreement shall have the meanings ascribed to them in the Plan.

1. Deferral Election. I hereby elect to defer receipt of the following portion of each Restricted Stock Award granted to me in  under The Progressive Corporation 2003 Directors Equity Incentive Plan. This election shall become effective as of the date the restrictions applicable to such Awards (or portion thereof) expire and shall not apply to any Award (or portion thereof) that fails to vest free of all restrictions.

Please indicate the percentage of each Award you would like to defer:%

2. Designated Deferral Period. (The Plan gives you the option of electing a Designated Deferral Period. If you elect a Designated Deferral Period, the balance of your deferral account established pursuant to this Agreement will be distributed to you within thirty (30) days following the date the Designated Deferral Period ends, or, if earlier, the date you die or terminate your service as a director of The Progressive Corporation or the date a Change in Control occurs. If you do not elect a Designated Deferral Period, your account will be distributed within thirty (30) days following the earlier of the date you die or terminate your service as a director of The Progressive Corporation or the date a Change in Control occurs.)

Please check one of the following:

o   I elect a Designated Deferral Period ending on the day of , .

OR

o   I do not wish to elect a Designated Deferral Period.

3. Method of Distribution. I hereby elect that any distribution of the balance of the deferral account established pursuant to this Agreement made on account of termination of service as a director or expiration of a Designated Deferral Period be paid as follows:  (check one)

in a single lump sum payment	o
OR in
Three annual installments	o
Five annual installments	o
Ten annual installments	o

I understand that Plan distributions made on account of reasons other than termination of service as a director or expiration of a Designated Deferral Period will be made in a single lump sum payment, unless the Plan provides otherwise.

4. Investment of Deferral Account. I understand that each amount credited to the deferral account established pursuant to this Agreement shall be deemed to be invested in the Common Shares, $1.00 par value, of The Progressive Corporation until distribution of the balance of the account. I also understand that this deemed investment is merely a device used to determine the amount payable to me under the Plan and does not provide me with any actual rights or interests in such Common Shares or any other particular funds, securities or property of The Progressive Corporation or any of its affiliates. I also understand that my right to receive distributions under the Plan makes me a general creditor of The Progressive Corporation with no greater right or priority than any other general creditor of The Progressive Corporation.

5. Miscellaneous. I understand that this Agreement is subject to the terms, conditions and limitations of the Plan, as in effect from time to time, in all respects and that, except as expressly permitted by the Plan, all elections made in this Agreement are irrevocable. I acknowledge that I have received, read and understand the Plan document establishing the Plan. I agree to accept as final and binding all decisions and interpretations of the Committee relating to the Plan and this Agreement.

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NAME OF ELIGIBLE DIRECTOR:

SIGNATURE:

DATE:

SSN:

The Deferral Agreement must be postmarked by , .

Received and accepted on behalf of the Committee this day of , .

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EX-10.79

Exhibit 10.79

THE PROGRESSIVE CORPORATION

DIRECTORS' COMPENSATION

Proposal to approve directors' compensation as indicated in the right hand column below.

These amounts are consistent with the amounts recommended by management, and discussed by the Compensation Committee and the Board of Directors, at the meetings held in January 2014.

Amounts in middle column are the levels of compensation in effect for the preceding compensation period.

	Annual Compensation May 2013-May2014	Annual Compensation May 2014-May 2015
Audit Committee Chair	$250,000	$250,000
Audit Committee Member	$230,000	$230,000
Compensation Committee Chair	$240,000	$240,000
Compensation Committee Member	$225,000	$225,000
Investment Committee Chair	$230,000	$230,000
Investment Committee Member	$225,000	$225,000
Nominating and Governance Chair	$20,000 additional	$20,000 additional
Nominating and Governance Member	$15,000 additional	$15,000 additional
Lead Independent Director	$25,000 additional	$25,000 additional

Note: Members of the Executive Committee do not receive additional compensation.

EX-10.86

Exhibit 10.86

SIXTH AMENDMENT TO

THE PROGRESSIVE CORPORATION

EXECUTIVE SEPARATION ALLOWANCE PLAN

(2006 AMENDMENT AND RESTATEMENT)

WHEREAS, The Progressive Corporation Executive Separation Allowance Plan (“Plan”) is currently maintained pursuant to the 2006 Amendment and Restatement and five amendments thereto; and

WHEREAS, it is deemed desirable to amend the Plan further;

NOW, THEREFORE, effective January 29, 2015, the Plan is hereby amended as set forth below:

1.Section 3.1 is hereby amended and restated in its entirety to provide as follows:

3.1 The separation allowance payable to each Eligible Employee who is entitled to such allowance under Section 2 above shall be equal to the number of weeks of Compensation set forth in the table below, based on the Eligible Employee’s Grade Level and Years of Service as of his/her Separation Date:

Eligible Employees at Grade Levels 47 through 52	26 weeks of Compensation plus two additional weeks of Compensation for each full Year of Service in excess of 13 Years of Service, not to exceed an aggregate of 52 weeks of Compensation
Eligible Employees at Grade Levels 53, 54 and 55	52 weeks of Compensation
(1) The Company’s Chief Executive Officer; (2) Eligible Employees who (i) report directly to him/her and (ii) have no assigned Grade Level; (3) Any other Eligible Employee designated in writing by (i) the Compensation Committee of the Company’s Board of Directors, if the Eligible Employee is an executive officer, or (ii) the Company’s Chief Executive Officer and Chief Human Resources Officer, if the Eligible Employee is not an executive officer.	•    Less than one Year of Service: 52 weeks of Compensation •    At least one, but less than two, Years of Service: 104 weeks of Compensation •    At least two Years of Service: 156 weeks of Compensation

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2. Except as expressly set forth in this Amendment, the terms and provisions of the Plan shall remain entirely unchanged and continue in full force and effect.

IN WITNESS WHEREOF, the Company has hereunto caused this Amendment to be executed by its duly authorized representative as of the 29th day of January, 2015.

The Progressive Corporation

By:     /s/Charles E. Jarrett                

Title:     Vice President and Secretary            

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EX-10.90

Exhibit 10.90

2015 PROGRESSIVE CAPITAL

MANAGEMENT BONUS PLAN

1. The Plan. The Progressive Corporation and its subsidiaries (collectively "Progressive" or the “Company”) have adopted the 2015 Progressive Capital Management Bonus Plan (the “Plan”) as part of their compensation program for the Company’s investment professionals for the Company’s 2015 fiscal year (the “Plan year”). The Plan is performance-based and is administered under the direction of the Compensation Committee of the Board of Directors of The Progressive Corporation (the “Compensation Committee” or “Committee”). References in this Plan to the Company’s portfolio mean the respective portfolios of the Company’s subsidiaries and mutual insurance company affiliate 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.

The Company’s investment professionals invest the funds of the Company in accordance with investment guidelines approved from time to time by the Investment and Capital Committee of the Board of Directors. Those guidelines address such matters as minimum average credit quality and the duration of the portfolio, as well as limitations on the extent to which the portfolio can be concentrated in individual issuers. Compliance with the guidelines is routinely monitored and variations therefrom must be reported to, and approved by, the Investment and Capital Committee.

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”) and 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 within the meaning of any Securities and Exchange Commission (“SEC”) or New York Stock Exchange rule applicable to the Company.

3.    Annual Bonus Determination.

A. Annual Bonus. Each participant may earn an annual cash bonus (the “Annual Bonus”), subject to the terms of this Plan. The amount of the Annual Bonus earned by any participant will be determined by application of the following formula:

Annual Bonus = Paid Eligible Earnings x Target Percentage x Performance Factor

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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, received by the participant during the Plan year for work or services performed as an officer or employee of Progressive.

For purposes of the Plan, Paid Eligible Earnings shall exclude all other types of compensation, including, without limitation, any short-term or long-term disability payments made to the participant, the earnings replacement component of any worker's compensation benefit or award, any bonus (including PCM Bonus Plan bonus), Gainsharing or other incentive compensation or equity-based award, including, without limitation, payments from any discretionary cash fund, any dividend payments and any unused Earned Time Benefit.

C.    Target Percentage. The Target Percentages for participants in the Plan shall be determined by or under the direction of the Committee, but will not exceed 125% for any participant. Target Percentages may vary among Plan participants and may be changed from year to year by or under the direction of the Designated Executives (or in the case of the CIO or any other executive officer, by the Compensation Committee).

D.    Performance Factor. The Performance Factor will be determined by the Committee after the expiration of the Plan year based on the performance of the Company’s fixed-income investment portfolio (the “Fixed-Income Portfolio” or “Portfolio”), and such other factors and information relating to the performance of the Company’s investment professionals as the Committee shall determine.

First, an indicated performance factor will be determined based on the fully taxable equivalent total return of the Fixed-Income Portfolio, in comparison to the total returns of the group of comparable investment firms identified by Rogers Casey (the “Investment Benchmark”), over the one- and three-year periods ending on December 31 of the Plan year, as described below. After the end of the Plan year, Rogers Casey will determine the firms that are included in the Investment Benchmark in accordance with the criteria specified on Exhibit I hereto. Rogers Casey will also provide to the Company the monthly total return data for each of the Investment Benchmark firms for the three-year period ending on December 31 of the Plan year.

Investment results for the Fixed-Income Portfolio will be marked to market, including the benefit of any state premium tax abatements for municipal securities held in the Portfolio that are realized by the Company during the Plan year, in order to calculate the Portfolio’s fully taxable equivalent total return for the one-year (2015) and three-year period (2013-2015) periods, in each case compounded on a monthly basis. The investment performance achieved by the Fixed-Income Portfolio for the one- and three-year periods (each, a “comparison period”) will then be compared against the total returns of the firms included in the Investment Benchmark for the same periods, also compounded on a monthly basis, as determined by the Company from the monthly performance data supplied by Rogers Casey for each firm in the Investment Benchmark, to determine, for each comparison period, where the Fixed Income Portfolio’s performance falls on a percentile basis when compared to the firms in the Investment Benchmark, as further described on Exhibit II (“Performance Ranking”).

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The Portfolio’s Performance Ranking will be used to determine a performance score of between 0 and 2.0 for each comparison period, based on the following schedule:

Comparison Period	Score = 0 Rank at or below	Score = 1.0 Rank equal to	Score = 2.0 Rank at or above
One year	15th Percentile	50th Percentile	85th Percentile
Three year	25th Percentile	50th Percentile	75th Percentile

A Performance Ranking between the values identified in the schedule will be interpolated on a straight-line basis to generate the applicable performance score, as further described on Exhibit II. Once these performance scores are determined, an overall indicated performance factor will be determined by averaging the performance scores for the one- and three-year comparison periods.

The overall indicated performance factor will be reported to the Compensation Committee after the expiration of the Plan year, together with such supporting documentation as the Committee may require. The Committee may consider such additional information as it deems necessary or appropriate in its discretion. Such information may include, without limitation:

• 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.

In addition, the Committee may choose to consult with others, including, without limitation, management, the Board’s Investment and Capital Committee, other Board members, and outside compensation and investment professionals, in evaluating the performance of the Company’s investment professionals for the year. The Committee will then determine the Performance Factor, provided that under no circumstances may the Performance Factor exceed 2.0 for the year.

E.    In the event that Rogers Casey (or its successor or assigns) discontinues providing the data that is necessary to make the calculations required by this Plan, or modifies the information in such a way as to render the comparisons required by this Plan to be not meaningful, in the Committee’s sole judgment, the determinations required above shall be made using investment return data for comparable firms satisfying the criteria set forth on Exhibit I as may be available from another recognized provider of investment industry data as the Committee may approve in its sole discretion.

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4. Payment Procedures; Deferral. The Annual Bonuses 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.

Any Plan participant who is eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan ("Deferral Plan") may elect to defer all or any portion of his or her Annual Bonus otherwise payable under this Plan, subject to and in accordance with the terms of the Deferral Plan.

5. Qualification Date; Leave of Absence; Withholding. Unless otherwise determined by the Committee, and except as otherwise provided herein, in order to be entitled to receive an Annual Bonus for the Plan year, the participant must be an active regular employee of Progressive on November 30 of the Plan year (“Qualification Date”). Individuals who are hired on or after December 1 of any Plan year are not entitled to an Annual Bonus for that Plan year. Any participant who is on a leave of absence covered by the Family and Medical Leave Act of 1993, as amended (or equivalent state or local law), the American with Disabilities Act of 1991, as amended (or equivalent state or local law), personal leave approved by the Company, military leave or short- or long-term disability (provided that, in the case of a long-term disability, the participant is still an employee of the Company) on the Qualification Date relating to the Plan year will be entitled to receive an Annual Bonus for the Plan year based on the Paid Eligible Earnings received by the participant during the Plan year. Annual Bonus payments made to participants will be net of any legally required deductions and/or withholdings for federal, state and local taxes and other items.

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 Bonuses 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.

The Committee will have full authority to determine the manner in which the Plan will operate, to interpret the provisions of the Plan and to make all determinations thereunder. All such interpretations and determinations will be final and binding on Progressive, all Plan participants and all other parties. No such interpretation or determination may be relied on as a precedent for any similar action or decision.

Unless otherwise determined by the Committee and except as provided in the immediately succeeding paragraph, all of the authority of the Committee hereunder (including, without limitation, the authority to administer the Plan, select the persons entitled to participate herein, interpret the provisions hereof, waive any of the requirements specified herein and make determinations

4

hereunder and to establish, approve, change or modify Investment Benchmarks, Performance Targets and Target Percentages) may be exercised by the Designated Officers. If one or more of said officers is unavailable or unable to participate, or if such position is vacant, the Chief Financial Officer may act instead of such officer.

Notwithstanding anything in this Plan to the contrary: (a) all determinations made under this Plan with respect to the CIO or any other individual deemed to be an executive officer of the Company must be made only by the Compensation Committee; and (b) only the Committee may make the determination of the Performance Factor required by Section 3.D. above.

9. Miscellaneous.

A. Recoupment.Progressive shall have the right to recoup any Annual Bonus (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 Bonus 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 Bonus 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 Bonus 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 Bonus 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 Bonuses 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 Bonus 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 Bonus 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.

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D. Compliance with Law.The Annual Bonuses 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 promulgates 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, that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to the Annual Bonuses awarded pursuant to the Plan, then the following shall apply:

In the event that the Company is required to prepare a restatement of one or more of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, the Company will be entitled to recover from each participant hereunder who was at the time of grant or payment of an Annual Bonus an executive officer of the Company under applicable SEC rules (whether or not such participant remains an executive officer of the Company at the time of such restatement or thereafter), the amount of any Annual Bonus that (i) was paid during the three year period preceding the date on which the Company is required to prepare such restatement and (ii) is in excess of what would have been paid to the participant under the restatement, or as may otherwise be required by such rules to be promulgated by the SEC.

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 Bonus 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 2014 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 2014 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.

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15. Effective Date. This Plan is adopted, and is effective, as of the first day of the Company’s 2015 fiscal year and will be effective for the 2015 Plan year (which coincides with Progressive’s 2015 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.

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EXHIBIT I

INVESTMENT BENCHMARK CRITERIA

After the end of the Plan year, Rogers Casey will determine the firms comprising the Investment Benchmark for the Plan year from its records and will supply to the Company the monthly total returns and any other relevant data for each of those firms for the three-year period ending on December 31 of the Plan year.

A firm will be included in the Investment Benchmark if Rogers Casey is able to determine from its records that:

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:

Duration:             Effective Duration between 1.5 years and 5.0 years

Credit Quality Average         = A, or = AA, or = AAA, or = AAA+

Convexity (%)             >= -1

Sector Allocation:         U.S. High Yield Corporate Debt <= 10%

Sector Allocation:         Mortgages <= 60%

Sector Allocation:         U.S. Investment Grade Corporate Debt <= 60%

Sector Allocation:         CMBS <= 60%

Sector Allocation:         ABS <= 60%

Sector Allocation:         Emerging Markets Debt <= 5%

3. The Company will have no discretion to alter the Investment Benchmark list after it is finalized by Rogers Casey.

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EXHIBIT II

DETERMINATION OF PERFORMANCE RANKING AND PERFORMANCE SCORES

Once all the total returns are calculated, the data is sorted in descending order from highest to lowest total return. From here, the process to compute the Performance Factor is as follows (this Exhibit shows the procedures and related calculations for the 1-year comparison period required by the Plan; the calculations for the 3-year comparison period would follow the same procedures, except that necessary adjustments would be made to determine the top and bottom 25% levels and the performance score variances between those levels):

INTERPOLATED VALUES FOR SETTING TOP AND BOTTOM 15% LEVELS

The top 15% and bottom 15% total return rankings are computed based on the total number of firms in the Investment Benchmark, excluding the PCM Fixed-Income Portfolio return. For example, if there were 279 participants, the return required to earn a 2.0 portfolio performance factor would be determined by interpolating between the forty-first and forty-second firm’s returns, since 15% of 279 = 41.85. The same procedure would be used to determine the 0.0 portfolio performance factor.

The total returns, computed by Investment Accounting, for the interpolated positions are calculated as follows (continuing to use an example of 279 survey firms):

Interpolated Value = Firm 41 return – ((Firm 41 Return - Firm 42 Return)*0.85)

Firm 41 = 18.35%

Firm 42 = 18.23%

Firm 41.85 (Interpolated Value) = 18.35% - ((18.35%-18.23%)*0.85) = 18.25%.

In this case, the PCM Performance Factor will equal 2.0 if its total return equals the interpolated value for Firm 41.85 of 18.25%. A similar calculation is then used to determine the bottom 15% group and interpolated value for a 0.0 performance score.

Once the two groups are computed, top and bottom 15%, the remainder of the performance scores are calculated as follows:

Performance score variance = (2.00) / Number of positions from first participant after the top 15% ranking to the 1^st participant in the bottom 15% ranking. In the case of 279 participants, the number of positions to divide the 2.00 performance factors by would be 198.

The calculation for the performance score variance from 2.00 – 0.00 would be:

2.00 / 198 = .010101 per position for 279 firms

In the case of a tie in total returns between firms, each firm will have the same performance score, one step under the next higher position. The next lowest position would then be stepped down by a factor based on the number of participants who tie. In the case of a tie between two firms, the step down will be twice the performance score variance to maintain the proper stepping to the 0.00 performance score level.

Example: If firms 42 and 43 each had the same total return in the 279 firm example, then firms 42 and 43 would each have a Performance Factor of 1.989899, which is 2.00 - .0010101. The number 44

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position in this example would have a performance score of 1.969697, which is the required step down from 42 to 44.

In addition, if the returns are tied between the interpolated value set for the 2.00 performance score and any position below the 2.00 level, those lower positions will also be set to a 2.00 performance score. The step down factor in the performance score will work similarly as noted in the example above. For the last 15% group, all firms with total returns equaling the last interpolated total return value would have the same performance score as the last interpolated value (.0101012), and all others in the last 15% group would have a 0.00 Portfolio Performance Factor.

Once all the performance scores have been created, from 2.00 to 0.00, PCM’s return is compared to the rankings to determine its Performance Factor. If the PCM return is not in the top or bottom 15% and does not match the return of any participant, then PCM’s Performance Factor is an interpolated value between the firms with the next highest and next lowest returns.

The interpolation computation for the Performance Factor based on PCM’s return is as follows:

Performance score of firm below PCM return + (PCM’s Return – Return below PCM) / (Return above PCM – Return below PCM) * (Performance score of firm above PCM –Performance score of firm below PCM)

Assuming the following data, using the 279 firm example:

Firm	Performance score	Total return
Firm above PCM	.90	13.61
PCM		13.39
Firm below PCM	.89	13.34

The calculation of PCM’s Performance Factor is:

0.89 + (13.39-13.34) / (13.61-13.34) * (0.90-0.89) = 0.89

The final performance score is rounded to the nearest one-hundredth, if necessary.

10

EX-11

Exhibit 11

THE PROGRESSIVE CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(millions - except per share amounts)
	Years Ended December 31,
	2014		2013		2012
Net Income	$	1,281.0	$	1,165.4	$	902.3
Computation of Net Income Per Share
Average shares outstanding - Basic	590.6		599.1		603.3
Net effect of dilutive stock-based compensation	4.2		4.5		4.5
Total equivalent shares - Diluted	594.8		603.6		607.8
Basic: Net income per share	$	2.17	$	1.95	$	1.50
Diluted: Net income per share	$	2.15	$	1.93	$	1.48

EX-13

Exhibit 13

THE PROGRESSIVE CORPORATION

2014 ANNUAL REPORT TO SHAREHOLDERS

App.-A-1

The Progressive Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31,

(millions — except per share amounts)	2014			2013			2012
Revenues
Net premiums earned	$	18,398.5		$	17,103.4		$	16,018.0
Investment income	408.4			422.0			443.0
Net realized gains (losses) on securities:
Other-than-temporary impairment (OTTI) losses:
Total OTTI losses	(7.9		)	(6.0		)	(7.3		)
Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses	0			(0.1		)	(0.7		)
Net impairment losses recognized in earnings	(7.9		)	(6.1		)	(8.0		)
Net realized gains (losses) on securities	232.1			324.5			314.8
Total net realized gains (losses) on securities	224.2			318.4			306.8
Fees and other revenues	309.1			291.8			281.8
Service revenues	56.0			39.6			36.1
Gains (losses) on extinguishment of debt	(4.8		)	(4.3		)	(1.8		)
Total revenues	19,391.4			18,170.9			17,083.9
Expenses
Losses and loss adjustment expenses	13,306.2			12,472.4			11,948.0
Policy acquisition costs	1,524.0			1,451.8			1,436.6
Other underwriting expenses	2,467.1			2,350.9			2,206.3
Investment expenses	18.9			18.8			15.4
Service expenses	50.9			38.8			36.1
Interest expense	116.9			118.2			123.8
Total expenses	17,484.0			16,450.9			15,766.2
Net Income
Income before income taxes	1,907.4			1,720.0			1,317.7
Provision for income taxes	626.4			554.6			415.4
Net income	$	1,281.0		$	1,165.4		$	902.3
Other Comprehensive Income (Loss), Net of Tax
Net unrealized gains (losses) on securities:
Net non-credit related OTTI losses, adjusted for valuation changes	$	0		$	0.3		$	5.1
Other net unrealized gains (losses) on securities	74.9			84.0			174.8
Total net unrealized gains (losses) on securities	74.9			84.3			179.9
Net unrealized gains on forecasted transactions	(2.6		)	(2.0		)	(1.8		)
Foreign currency translation adjustment	(0.9		)	(1.6		)	0.4
Other comprehensive income	71.4			80.7			178.5
Comprehensive income	$	1,352.4		$	1,246.1		$	1,080.8
Computation of Net Income Per Share
Average shares outstanding — Basic	590.6			599.1			603.3
Net effect of dilutive stock-based compensation	4.2			4.5			4.5
Total equivalent shares — Diluted	594.8			603.6			607.8
Basic: Net income per share	$	2.17		$	1.95		$	1.50
Diluted: Net income per share	$	2.15		$	1.93		$	1.48

See notes to consolidated financial statements.

App.-A-2

The Progressive Corporation and Subsidiaries

Consolidated Balance Sheets

December 31,

(millions)	2014			2013
Assets
Investments — Available-for-sale, at fair value:
Fixed maturities (amortized cost: $13,374.2 and $13,415.3)	$	13,549.2		$	13,540.4
Equity securities:
Nonredeemable preferred stocks (cost: $590.4 and $445.7)	827.5			711.2
Common equities (cost: $1,289.2 and $1,451.1)	2,492.3			2,530.5
Short-term investments (amortized cost: $2,149.0 and $1,272.6)	2,149.0			1,272.6
Total investments	19,018.0			18,054.7
Cash	108.4			75.1
Accrued investment income	87.3			89.8
Premiums receivable, net of allowance for doubtful accounts of $152.2 and $142.4	3,537.5			3,310.7
Reinsurance recoverables, including $46.0 and $44.3 on paid losses and loss adjustment expenses	1,231.9			1,090.2
Prepaid reinsurance premiums	85.3			74.9
Deferred acquisition costs	457.2			447.6
Property and equipment, net of accumulated depreciation of $731.0 and $680.4	960.6			960.9
Other assets	301.4			304.3
Total assets	$	25,787.6		$	24,408.2
Liabilities and Shareholders’ Equity
Unearned premiums	$	5,440.1		$	5,174.5
Loss and loss adjustment expense reserves	8,857.4			8,479.7
Net deferred income taxes	98.9			28.4
Dividends payable	404.1			890.2
Accounts payable, accrued expenses, and other liabilities1	1,893.8			1,785.0
Debt2	2,164.7			1,860.9
Total liabilities	18,859.0			18,218.7
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8			595.8
Paid-in capital	1,184.3			1,142.0
Retained earnings	4,133.4			3,500.0
Accumulated other comprehensive income, net of tax:
Net non-credit related OTTI losses, adjusted for valuation changes	0			0
Other net unrealized gains (losses) on securities	1,021.9			947.0
Total net unrealized gains (losses) on securities	1,021.9			947.0
Net unrealized gains on forecasted transactions	1.5			4.1
Foreign currency translation adjustment	(0.3		)	0.6
Total accumulated other comprehensive income	1,023.1			951.7
Total shareholders’ equity	6,928.6			6,189.5
Total liabilities and shareholders’ equity	$	25,787.6		$	24,408.2

¹ See Note 12 – Litigation and Note 13 – Commitments and Contingencies for further discussion.

² Consists of long-term debt. See Note 4 – Debt for further discussion.

See notes to consolidated financial statements.

App.-A-3

The Progressive Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the years ended December 31,

(millions — except per share amounts)	2014			2013			2012
Common Shares, $1.00 Par Value
Balance, Beginning of year	$	595.8		$	604.6		$	613.0
Stock options exercised	0			0			0.1
Treasury shares purchased1	(11.1		)	(11.0		)	(8.6		)
Net restricted equity awards issued/vested/(forfeited)	3.1			2.2			0.1
Balance, End of year	$	587.8		$	595.8		$	604.6
Paid-In Capital
Balance, Beginning of year	$	1,142.0		$	1,077.0		$	1,006.2
Stock options exercised	0			0			0.4
Tax benefit from exercise/vesting of equity-based compensation	12.8			10.3			5.8
Treasury shares purchased1	(21.6		)	(20.4		)	(14.5		)
Net restricted equity awards (issued)/(vested)/forfeited	(3.1		)	(2.2		)	(0.1		)
Amortization of equity-based compensation	51.4			64.9			62.4
Reinvested dividends on restricted stock units	2.8			12.4			11.2
Other	0			0			5.6
Balance, End of year	$	1,184.3		$	1,142.0		$	1,077.0
Retained Earnings
Balance, Beginning of year	$	3,500.0		$	3,454.4		$	3,495.0
Net income	1,281.0			1,165.4			902.3
Treasury shares purchased1	(238.7		)	(242.0		)	(151.1		)
Cash dividends declared on common shares ($0.6862, $1.4929, and $1.2845 per share)	(402.6		)	(889.2		)	(772.5		)
Reinvested dividends on restricted stock units	(2.8		)	(12.4		)	(11.2		)
Other, net	(3.5		)	23.8			(8.1		)
Balance, End of year	$	4,133.4		$	3,500.0		$	3,454.4
Accumulated Other Comprehensive Income, Net of Tax
Balance, Beginning of year	$	951.7		$	871.0		$	692.5
Other comprehensive income	71.4			80.7			178.5
Balance, End of year	$	1,023.1		$	951.7		$	871.0
Total Shareholders’ Equity	$	6,928.6		$	6,189.5		$	6,007.0

¹ In December 2013, we purchased 4.0 million shares at a price of $25.50 per share in a privately negotiated transaction with the "Peter B. Lewis Trust under Agreement dated December 21, 1994, as modified." Mr. Lewis was our non-executive Chairman of the Board until his death in November 2013.

There are 20.0 million Serial Preferred Shares authorized; no such shares are issued or outstanding.

There are 5.0 million Voting Preference Shares authorized; no such shares have been issued.

See notes to consolidated financial statements.

App.-A-4

The Progressive Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31,

(millions)	2014			2013			2012
Cash Flows From Operating Activities
Net income	$	1,281.0		$	1,165.4		$	902.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	97.1			101.3			94.4
Net amortization of fixed-income securities	78.2			134.0			186.7
Amortization of equity-based compensation	51.4			64.9			63.4
Net realized (gains) losses on securities	(224.2		)	(318.4		)	(306.8		)
Net (gains) losses on disposition of property and equipment	5.4			5.6			7.1
(Gains) losses on extinguishment of debt	4.8			4.3			1.8
Changes in:
Premiums receivable	(227.1		)	(127.4		)	(253.8		)
Reinsurance recoverables	(141.7		)	(189.2		)	(83.0		)
Prepaid reinsurance premiums	(10.4		)	(8.6		)	3.5
Deferred acquisition costs	(9.6		)	(13.1		)	(0.9		)
Income taxes	97.5			57.8			19.8
Unearned premiums	266.4			244.8			351.1
Loss and loss adjustment expense reserves	378.0			641.6			592.6
Accounts payable, accrued expenses, and other liabilities	92.0			165.0			123.6
Other, net	(13.2		)	(28.1		)	(10.4		)
Net cash provided by operating activities	1,725.6			1,899.9			1,691.4
Cash Flows From Investing Activities
Purchases:
Fixed maturities	(7,967.5		)	(7,100.6		)	(5,199.2		)
Equity securities	(369.7		)	(322.2		)	(463.1		)
Sales:
Fixed maturities	5,637.5			3,083.9			3,705.6
Equity securities	560.1			369.2			793.0
Maturities, paydowns, calls, and other:
Fixed maturities	2,296.6			1,859.6			1,488.9
Equity securities	14.3			21.5			16.0
Net sales (purchases) of short-term investments	(876.0		)	716.6			(438.2		)
Net unsettled security transactions	(30.0		)	152.2			(44.0		)
Purchases of property and equipment	(108.1		)	(140.4		)	(127.7		)
Sales of property and equipment	5.9			3.7			3.8
Net cash used in investing activities	(836.9		)	(1,356.5		)	(264.9		)
Cash Flows From Financing Activities
Proceeds from exercise of stock options	0			0			0.5
Tax benefit from exercise/vesting of equity-based compensation	12.8			10.3			5.8
Net proceeds from debt issuance	344.7			0			0
Payment of debt	0			(150.0		)	(350.0		)
Reacquisition of debt	(48.9		)	(58.1		)	(32.5		)
Dividends paid to shareholders	(892.6		)	(175.6		)	(853.7		)
Acquisition of treasury shares	(271.4		)	(273.4		)	(174.2		)
Net cash used in financing activities	(855.4		)	(646.8		)	(1,404.1		)
Effect of exchange rate changes on cash	0			(0.6		)	1.0
Increase (decrease) in cash	33.3			(104.0		)	23.4
Cash, Beginning of year	75.1			179.1			155.7
Cash, End of year	$	108.4		$	75.1		$	179.1

See notes to consolidated financial statements.

App.-A-5

The Progressive Corporation and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2014, 2013, and 2012

1.  REPORTING AND ACCOUNTING POLICIES

Nature of OperationsThe Progressive Corporation, an insurance holding company formed in 1965, had 53 subsidiaries, one mutual insurance company affiliate, and one limited partnership investment affiliate (collectively the “subsidiaries”) as of December 31, 2014. Our insurance subsidiaries and mutual company affiliate (collectively the Progressive Group of Insurance Companies) provide personal and commercial automobile insurance and other specialty property-casualty insurance and related services. Our Personal Lines segment writes insurance for personal autos and recreational vehicles through both an independent insurance agency channel and a direct channel. Our Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses through both the independent agency and direct channels. We operate our businesses throughout the United States; we also sell personal auto physical damage and property damage liability insurance via the Internet in Australia.

Basis of Consolidation and ReportingThe accompanying consolidated financial statements include the accounts of The Progressive Corporation, its wholly owned subsidiaries, and its affiliates, in which we have a controlling financial interest. All intercompany accounts and transactions are eliminated in consolidation.

EstimatesWe are required to make estimates and assumptions when preparing our financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (GAAP). As estimates develop into fact (e.g., losses are paid), results may, and will likely, differ from those estimates.

InvestmentsOur fixed-maturity securities, equity securities, and short-term investments are accounted for on an available-for-sale basis. See Note 2 – Investments for details regarding the composition of our investment portfolio.

Fixed-maturity securities include debt securities and redeemable preferred stocks, which may have fixed or variable principal payment schedules, may be held for indefinite periods of time, and may be used as a part of our asset/liability strategy or sold in response to changes in interest rates, anticipated prepayments, risk/reward characteristics, liquidity needs, or other economic factors. These securities are carried at fair value with the corresponding unrealized gains (losses), net of deferred income taxes, reported in accumulated other comprehensive income. Fair values are obtained from recognized pricing services or are quoted by market makers and dealers, with limited exceptions discussed in Note 3 – Fair Value.

Included in the fixed-maturity portfolio are asset-backed securities. The asset-backed securities are generally accounted for under the retrospective method. The retrospective method recalculates yield assumptions (based on changes in interest rates or cash flow expectations) historically to the inception of the investment holding period, and applies the required adjustment, if any, to the cost basis, with the offset recorded to investment income. The prospective method is used primarily for interest-only securities, non-investment-grade asset-backed securities, and certain asset-backed securities with sub-prime loan exposure or where there is a greater risk of non-performance and where it is possible the initial investment may not be substantially recovered. The prospective method requires a calculation of expected future repayments and resets the yield to allow for future period adjustments; no current period impact to investment income or the security’s cost is made based on the cash flow update. Prepayment assumptions are based on market expectations and are updated quarterly.

Equity securities include common stocks, nonredeemable preferred stocks, and other risk investments, and are reported at fair values. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income. To the extent we hold any foreign equities or foreign currency hedges, any change in value due to exchange rate fluctuations would be limited by foreign currency hedges, if any, and would be recognized in income in the current period.

Short-term investments may include Eurodollar deposits, commercial paper, repurchase transactions, and other securities expected to mature within one year. In addition, short-term investments can include auction rate securities (i.e., certain municipal bonds and preferred stocks). Due to the nature of auction rate securities, these securities are classified as short-term based upon their expected auction date (generally 7-49 days) rather than on their contractual maturity date (which is greater than one year at original issuance). In the event that an auction fails, the security may need to be reclassified from short-term. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income.

Trading securities are securities bought principally for the purpose of sale in the near term. To the extent we have trading securities, changes in fair value would be recognized in income in the current period. Derivative instruments, which may be used for trading purposes or classified as trading derivatives due to the characteristics of the transaction, are discussed below.

App.-A-6

Derivative instruments may include futures, options, forward positions, foreign currency forwards, interest rate swap agreements, and credit default swaps and may be used in the portfolio for general investment purposes or to hedge the exposure to:

• 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).

To the extent we have derivatives held for general investment purposes, these derivative instruments are recognized as either assets or liabilities and measured at fair value, with changes in fair value recognized in income as a component of net realized gains (losses) on securities during the period of change.

Derivatives designated as hedges are required to be evaluated on established criteria to determine the effectiveness of their correlation to, and ability to reduce the designated risk of, specific securities or transactions. Effectiveness is required to be reassessed regularly. Hedges that are deemed to be effective would be accounted for as follows:

• 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.

If a hedge is deemed to become ineffective or discontinued, the following accounting treatment would be applied:

• 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.

For all derivative positions, net cash requirements are limited to changes in fair values, which may vary resulting from changes in interest rates, currency exchange rates, and other factors. Exposure to credit risk is limited to the carrying value; collateral may be required to limit credit risk. We have elected not to offset fair value amounts that arise from derivative positions with the same counterparty under a master netting arrangement.

Investment securities are exposed to various risks such as interest rate, market, credit, and liquidity risk. Fair values of securities fluctuate based on the nature and magnitude of changing market conditions; significant changes in market conditions could materially affect the portfolio’s value in the near term. We regularly monitor our portfolio for price changes, which might indicate potential impairments, and perform detailed reviews of securities with unrealized losses. In such cases, changes in fair value are evaluated to determine the extent to which such changes are attributable to: (i) fundamental factors specific to the issuer, such as financial condition, business prospects, or other factors, (ii) market-related factors, such as interest rates or equity market declines, or (iii) credit-related losses, where the present value of cash flows expected to be collected are lower than the amortized cost basis of the security.

We analyze our debt securities that are in a loss position to determine if we intend to sell, or if it is more likely than not that we will be required to sell, the security prior to recovery and, if so, we write down the security to its current fair value, with the entire amount of the write-down recorded to earnings. To the extent that it is more likely than not that we will hold the debt security until recovery (which could be maturity), we determine if any of the decline in value is due to a credit loss (i.e., where the present value of future cash flows expected to be collected is lower than the amortized cost basis of the security) and, if so, we recognize that portion of the impairment as a component of net realized gains (losses) in the comprehensive income statement, with the difference (i.e., non-credit related impairment) recognized as part of our net unrealized gains (losses) in accumulated other comprehensive income. When an equity security (common equity and nonredeemable preferred stock) in our investment portfolio has an unrealized loss in fair value that is deemed to be other-than-temporary, we reduce the book value of such security to its current fair value, recognizing the decline as a realized loss in the comprehensive income statement. Any future changes in fair value, either increases or decreases, are reflected as changes in unrealized gains (losses) as part of accumulated other comprehensive income.

App.-A-7

Investment income consists of interest, dividends, and amortization. In addition to the discussion above for asset-backed securities, interest is recognized on an accrual basis using the effective yield method. Depending on the nature of the equity instruments, dividends are recorded at either the ex-dividend date or on an accrual basis.

Realized gains (losses) on securities are computed based on the first-in first-out method and include write-downs on available-for-sale securities considered to have other-than-temporary declines in fair value (excluding non-credit related impairments), as well as holding period valuation changes on derivatives, trading securities, and hybrid instruments (e.g., securities with embedded options, where the option is a feature of the overall change in the value of the instrument).

Insurance Premiums and Receivables  Insurance premiums written are earned into income on a pro rata basis over the period of risk, based on a daily earnings convention. Accordingly, unearned premiums represent the portion of premiums written that are applicable to the unexpired risk. We provide insurance and related services to individuals and small commercial accounts and offer a variety of payment plans. Generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. We perform a policy level evaluation to determine the extent to which the premiums receivable balance exceeds the unearned premiums balance. We then age this exposure to establish an allowance for doubtful accounts based on prior experience.

Deferred Acquisition CostsDeferred acquisition costs include commissions, premium taxes, and other variable underwriting and direct sales costs incurred in connection with the successful acquisition or renewal of insurance contracts. These acquisition costs are deferred and amortized over the policy period in which the related premiums are earned. We consider anticipated investment income in determining the recoverability of these costs. Management believes that these costs will be fully recoverable in the near term.

We do not defer any advertising costs. Total advertising costs, which are expensed as incurred, for the years ended December 31, were:

(millions)	Advertising Costs
2014	$	681.8
2013	619.3
2012	546.8

Loss and Loss Adjustment Expense ReservesLoss reserves represent the estimated liability on claims reported to us, plus reserves for losses incurred but not recorded (IBNR). These estimates are reported net of amounts estimated to be recoverable from salvage and subrogation. Loss adjustment expense reserves represent the estimated expenses required to settle these claims and losses. The methods of making estimates and establishing these reserves are reviewed regularly, and resulting adjustments are reflected in income in the current period. Such loss and loss adjustment expense reserves are susceptible to change in the near term.

ReinsuranceOur reinsurance transactions primarily include premiums ceded to state-provided reinsurance facilities (e.g., Michigan Catastrophic Claims Association and North Carolina Reinsurance Facility) and premiums written under state-mandated involuntary plans for commercial vehicles (Commercial Auto Insurance Procedures/Plans – “CAIP”). Prepaid reinsurance premiums are earned on a pro rata basis over the period of risk, based on a daily earnings convention, which is consistent with premiums written. See Note 7 – Reinsurance for further discussion.

Income Taxes  The income tax provision is calculated under the balance sheet approach. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal items giving rise to such differences are investment securities (e.g., net unrealized gains (losses), write-downs on securities determined to be other-than-temporarily impaired, and derivative instruments), loss and loss adjustment expense reserves, unearned premiums reserves, deferred acquisition costs, property and equipment, and non-deductible accruals. We review our deferred tax assets regularly for recoverability. See Note 5 – Income Taxes for further discussion.

Property and Equipment  Property and equipment are recorded at cost, less accumulated depreciation, and include capitalized software developed or acquired for internal use. Depreciation is recognized over the estimated useful lives of the assets using accelerated methods for computer equipment and the straight-line method for all other fixed assets. The useful life for computer equipment and laptop computers is 3 years. The useful lives range from 7 to 40 years for buildings, improvements, and integrated components and 3 to 15 years for all other property and equipment. Land and buildings comprised 77% and 76% of total property and equipment at December 31, 2014 and 2013, respectively.

App.-A-8

During 2014, decisions were made to sell one property originally purchased for a future Service Center site. At December 31, 2014, included in other assets in the consolidated balance sheets is $8.7 million of "held for sale" property, which represents the fair value of this property less the estimated costs to sell.

Total capitalized interest, which primarily relates to capitalized software projects, for the years ended December 31, was:

(millions)	Capitalized Interest
2014	$	1.3
2013	0.8
2012	0.3

Guaranty Fund Assessments  We are subject to state guaranty fund assessments, which provide for the payment of covered claims or other insurance obligations of insurance companies deemed insolvent. These assessments are accrued after a formal determination of insolvency has occurred, and we have written the premiums on which the assessments will be based.

Fees and Other Revenues  Fees and other revenues primarily represent fees collected from policyholders relating to installment charges in accordance with our bill plans, as well as late payment and insufficient funds fees. Other revenues may include revenue from the sale of tax credits, rental income, and other revenue transactions.

Service Revenues and ExpensesOur service businesses provide insurance-related services. Service revenues generated from processing business for involuntary CAIP plans are earned on a pro rata basis over the term of the related policies. Service expenses related to these CAIP plans include acquisition expenses, which are deferred and amortized over the period in which the related revenues are earned. Other service business revenues and expenses are recorded in the period in which they are earned or incurred.

Equity-Based Compensation  We currently issue time-based and performance-based restricted stock unit awards to key members of management as our form of equity compensation, and time-based restricted stock awards to non-employee directors. Prior to 2010, we issued restricted stock awards, instead of restricted stock unit awards, to employees. Collectively, we refer to these awards as “restricted equity awards.” We currently do not issue stock options as a form of equity compensation, and no such awards remain outstanding. Compensation expense for time-based restricted equity awards with installment vesting is recognized over each respective vesting period. For performance-based restricted equity awards, compensation expense is recognized over the respective estimated vesting periods. Dividend equivalent units are credited

to outstanding restricted units awards, both time-based and performance-based, at the time a dividend is paid to shareholders.

We record an estimate for expected forfeitures of restricted equity awards based on our historical forfeiture rates. In addition, we shorten the vesting periods of certain restricted equity awards based on the “qualified retirement” provisions in our incentive compensation plans, under which (among other provisions) the vesting of 50% of outstanding time-based restricted equity awards will accelerate upon retirement if the participant is 55 years of age or older and satisfies certain years-of-service requirements. For time-based awards granted after February 2013, we modified our "qualified retirement" provisions to vest and distribute 50% of the unvested portion of the award upon reaching eligibility for a qualified retirement and shortly after the grant date for each subsequent award.

The total compensation expense recognized for our equity-based compensation for the years ended December 31, was:

(millions)	2014		2013		2012
Pretax expense	$	51.4	$	64.9	$	63.4
Tax benefit	18.0		22.7		22.2

The decrease in expense for 2014 reflects adjustments recorded to our performance-based equity awards based on current estimates of the level of performance expected to be reached.

Net Income Per Share  Basic net income per share is computed using the weighted average number of common shares outstanding during the reporting period, excluding unvested time-based and performance-based restricted equity awards that are subject to forfeiture. Diluted net income per share includes common stock equivalents assumed outstanding during the period. Our common stock equivalents include the incremental shares assumed to be issued for:

• 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.

App.-A-9

Supplemental Cash Flow InformationCash includes only bank demand deposits. Non-cash activity includes declared but unpaid dividends. For the years ended December 31, we paid the following:

(millions)	2014		2013		2012
Income taxes	$	515.0	$	497.0	$	389.1
Interest	116.0		122.3		135.0

New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update (ASU) related to the accounting for revenue from contracts with customers. This standard is intended to help reduce diversity in practice and enhance comparability between entities related to revenue recognition and is effective for fiscal years beginning after December 15, 2016 (2017 for calendar-year companies). Since the accounting for insurance contracts is outside of the scope of this ASU, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB issued an ASU related to the accounting for share-based payments when the terms of an employee award can be achieved after the requisite service period. To the extent an equity award contains provisions that permit an employee who leaves the company before the performance targets are reached to receive some or all of the benefits of the award if and as the award later vests, this standard requires companies to recognize the compensation cost during the employee's remaining service period. This standard is effective for fiscal years beginning after December 15, 2015 (2016 for calendar-year companies). We plan to adopt this standard prospectively.  Although this standard may require an acceleration of the expense recognition of our share-based payment awards, we do not expect it to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB also issued an ASU related to repurchase-to-maturity transactions, repurchase financings, and related disclosures. The intent is to clarify that repurchase-to-maturity transactions must be accounted for and disclosed as secured borrowings, rather than potentially accounted for as sales, as permissible under certain circumstances in the previous guidance. This guidance is effective for annual and interim periods after December 15, 2014 (2015 for calendar-year companies). We do not typically engage in these type of transactions; therefore, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

App.-A-10

2.  INVESTMENTS

The following tables present the composition of our investment portfolio by major security type, consistent with our internal classification of how we manage, monitor, and measure the portfolio:

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1			Fair Value		% of Total Fair Value
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,641.1	$	27.3	$	(1.3	)	$	0		$	2,667.1	14.0	%
State and local government obligations	2,095.7		44.6		(1.1		)	0			2,139.2		11.2
Foreign government obligations	14.2		0		0			0			14.2		0.1
Corporate debt securities	2,813.9		32.9		(10.4		)	0.3			2,836.7		14.9
Residential mortgage-backed securities	1,635.5		34.5		(10.8		)	(0.7		)	1,658.5		8.7
Commercial mortgage-backed securities	2,278.7		39.3		(2.6		)	0.2			2,315.6		12.2
Other asset-backed securities	1,634.9		3.8		(0.8		)	0.8			1,638.7		8.6
Redeemable preferred stocks	260.2		24.7		(5.7		)	0			279.2		1.5
Total fixed maturities	13,374.2		207.1		(32.7		)	0.6			13,549.2		71.2
Equity securities:
Nonredeemable preferred stocks	590.4		201.1		(6.4		)	42.4			827.5		4.4
Common equities	1,289.2		1,213.2		(10.1		)	0			2,492.3		13.1
Short-term investments	2,149.0		0		0			0			2,149.0		11.3
Total portfolio2,3	$	17,402.8	$	1,621.4	$	(49.2	)	$	43.0		$	19,018.0	100.0	%

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1		Fair Value		% of Total Fair Value
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,630.4	$	48.4	$	(16.6	)	$	0	$	3,662.2	20.3	%
State and local government obligations	2,247.3		27.1		(18.4		)	0		2,256.0		12.5
Foreign government obligations	15.6		0		0			0		15.6		0.1
Corporate debt securities	2,885.0		60.4		(20.4		)	1.6		2,926.6		16.2
Residential mortgage-backed securities	1,110.1		31.9		(14.1		)	0		1,127.9		6.2
Commercial mortgage-backed securities	2,154.4		43.9		(37.8		)	0		2,160.5		12.0
Other asset-backed securities	1,073.0		6.6		(2.1		)	0.2		1,077.7		6.0
Redeemable preferred stocks	299.5		24.1		(9.7		)	0		313.9		1.7
Total fixed maturities	13,415.3		242.4		(119.1		)	1.8		13,540.4		75.0
Equity securities:
Nonredeemable preferred stocks	445.7		258.7		(4.5		)	11.3		711.2		3.9
Common equities	1,451.1		1,081.8		(2.4		)	0		2,530.5		14.0
Short-term investments	1,272.6		0		0			0		1,272.6		7.1
Total portfolio2,3	$	16,584.7	$	1,582.9	$	(126.0	)	$	13.1	$	18,054.7	100.0	%

¹ Represents net holding period gains (losses) on certain hybrid securities (discussed below).

² Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

³ The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

App.-A-11

Our short-term investments include commercial paper and other investments that are expected to mature within one year. At December 31, 2014 and 2013, we had $5.7 million and $6.3 million, respectively, in treasury bills issued by the Australian government, included in short-term investments. We did not hold any repurchase transactions where we lent collateral at December 31, 2014 or 2013. To the extent our repurchase transactions were with the same counterparty and subject to an enforceable master netting arrangement, we could elect to offset these transactions. Consistent with past practice, we have elected not to offset these transactions and therefore report these transactions on a gross basis on our balance sheets.

Also included in short-term investments are reverse repurchase commitment transactions, where we loan cash to internally approved counterparties and receive U.S. Treasury Notes pledged as collateral against the cash borrowed. Our exposure to credit risk is limited due to the nature of the collateral (i.e., U.S. Treasury Notes) received. We have counterparty exposure on these trades in the event of a counterparty default to the extent the general collateral security's value is below the amount of cash we delivered to acquire the collateral. The short-term duration of the transactions (primarily overnight) reduces that exposure.

We had no open reverse repurchase commitments at December 31, 2014, compared to $200.0 million with one counterparty at December 31, 2013. During 2014, our largest outstanding balance of reverse repurchase commitments was $500.0 million, which was open for one day; the average daily balance of reverse repurchase commitments was $158.8 million.

Included in our fixed-maturity and equity securities are hybrid securities, which are reported at fair value at December 31:

(millions)	2014		2013
Fixed maturities:
Corporate debt securities	$	139.8	$	164.2
Residential mortgage-backed securities	120.7		0
Commercial mortgage-backed securities	31.2		0
Other asset-backed securities	13.7		14.8
Total fixed maturities	305.4		179.0
Equity securities:
Nonredeemable preferred stocks	122.3		60.3
Total hybrid securities	$	427.7	$	239.3

Certain corporate debt securities are accounted for as hybrid securities since they were acquired at a substantial premium and contain a change-in-control put option (derivative) that permits the investor, at its sole option if and when a change in control is triggered, to put the security back to the issuer at a 1% premium to par. Due to this change-in-control put option and the substantial market premium paid to acquire these securities, there is the potential that the election to put, upon the change in control, would result in an acceleration of the recognition of the remaining premium paid on these securities in our results of operations. This would result in a loss of $9.3 million as of December 31, 2014, if all of these bonds experienced a simultaneous change in control and we elected to exercise all of our put options. The put feature limits the potential loss in value that could be experienced in the event a corporate action occurs that results in a change in control that materially diminishes the credit quality of the issuer. We are under no obligation to exercise the put option we hold if a change in control occurs.

The residential mortgage-backed securities accounted for as hybrid securities are obligations of the issuer with payments of principal based on the performance of a reference pool of loans. This embedded derivative results in the securities incorporating the risk of default from both the issuer and the related loan pool.

The commercial mortgage-backed securities in the table above contain fixed interest rate reset features that will increase the coupons in the event the securities are not fully paid off on the anticipated repayment date. These reset features have the potential to more than double our initial purchase yield for each security.

The other asset-backed security in the table above represents one hybrid security that was acquired at a deep discount to par due to a failing auction, and contains a put option that allows the investor to put that security back to the auction at par if the auction is restored. This embedded derivative had the potential to more than double our initial investment yield at acquisition.

The hybrid securities in our nonredeemable preferred stock portfolio are perpetual preferred stocks that have call features with fixed-rate coupons, whereby the change in value of the call features is a component of the overall change in value of the preferred stocks.

App.-A-12

Our securities are reported at fair value, with the changes in fair value of these securities (other than hybrid securities and derivative instruments) reported as a component of accumulated other comprehensive income, net of deferred income taxes. The changes in fair value of the hybrid securities and derivative instruments are recorded as a component of net realized gains (losses) on securities.

At December 31, 2014, bonds and certificates of deposit in the principal amount of $153.7 million were on deposit to meet state insurance regulatory and/or rating agency requirements. We did not have any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at December 31, 2014 or 2013. At December 31, 2014, we did not have any debt securities that were non-income producing during the preceding 12 months.

Fixed Maturities  The composition of fixed maturities by maturity at December 31, 2014, was:

(millions)	Cost		Fair Value
Less than one year	$	3,180.1	$	3,217.4
One to five years	7,026.3		7,097.2
Five to ten years	3,093.0		3,152.9
Ten years or greater	59.0		65.9
Total1	$	13,358.4	$	13,533.4

¹ Excludes $15.8 million related to our open interest rate swap positions.

Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities which do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.

Gross Unrealized Losses  As of December 31, 2014, we had $39.1 million of gross unrealized losses in our fixed-income securities (i.e., fixed-maturity securities, nonredeemable preferred stocks, and short-term investments) and $10.1 million in our common equities. We currently do not intend to sell the fixed-income securities and determined that it is more likely than not that we will not be required to sell these securities for the period of time necessary to recover their cost bases. A review of our fixed-income securities indicated that the issuers were current with respect to their interest obligations and that there was no evidence of any deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity. For common equities, 88% of our common stock portfolio was indexed to the Russell 1000; as such, this portfolio may contain securities in a loss position for an extended period of time, subject to possible write-downs, as described below. We may retain these securities as long as the portfolio and index correlation remain similar. To the extent there is issuer-specific deterioration, we may write-down the securities of that issuer. The remaining 12% of our common stocks were part of a managed equity strategy selected and administered by external investment advisors. If our review of loss position securities indicated there was a fundamental, or market, impairment on these securities that was determined to be other-than-temporary, we would recognize a write-down in accordance with our stated policy.

App.-A-13

The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:

	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, 2014
Fixed maturities:
U.S. government obligations	11	$	428.2	$	(1.3	)	5	$	150.7	$	(0.3	)	6	$	277.5	$	(1.0	)
State and local government obligations	46	234.2		(1.1		)	28	177.9		(0.4		)	18	56.3		(0.7		)
Corporate debt securities	53	843.2		(10.4		)	43	647.5		(6.1		)	10	195.7		(4.3		)
Residential mortgage-backed securities	70	844.2		(10.8		)	33	465.2		(3.1		)	37	379.0		(7.7		)
Commercial mortgage-backed securities	63	723.4		(2.6		)	54	667.5		(1.4		)	9	55.9		(1.2		)
Other asset-backed securities	44	741.8		(0.8		)	42	715.7		(0.7		)	2	26.1		(0.1		)
Redeemable preferred stocks	3	103.0		(5.7		)	1	33.0		(1.0		)	2	70.0		(4.7		)
Total fixed maturities	290	3,918.0		(32.7		)	206	2,857.5		(13.0		)	84	1,060.5		(19.7		)
Equity securities:
Nonredeemable preferred stocks	8	231.4		(6.4		)	5	143.2		(3.6		)	3	88.2		(2.8		)
Common equities	20	68.4		(10.1		)	19	61.8		(9.6		)	1	6.6		(0.5		)
Total equity securities	28	299.8		(16.5		)	24	205.0		(13.2		)	4	94.8		(3.3		)
Total portfolio	318	$	4,217.8	$	(49.2	)	230	$	3,062.5	$	(26.2	)	88	$	1,155.3	$	(23.0	)

	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, 2013
Fixed maturities:
U.S. government obligations	29	$	1,444.3	$	(16.6	)	28	$	1,434.6	$	(16.3	)	1	$	9.7	$	(0.3	)
State and local government obligations	141	844.2		(18.4		)	119	759.3		(17.1		)	22	84.9		(1.3		)
Corporate debt securities	51	997.6		(20.4		)	45	831.1		(17.8		)	6	166.5		(2.6		)
Residential mortgage-backed securities	66	763.5		(14.1		)	45	597.6		(7.9		)	21	165.9		(6.2		)
Commercial mortgage-backed securities	76	1,061.9		(37.8		)	60	809.2		(19.7		)	16	252.7		(18.1		)
Other asset-backed securities	25	287.2		(2.1		)	22	233.3		(1.8		)	3	53.9		(0.3		)
Redeemable preferred stocks	4	122.7		(9.7		)	0	0		0			4	122.7		(9.7		)
Total fixed maturities	392	5,521.4		(119.1		)	319	4,665.1		(80.6		)	73	856.3		(38.5		)
Equity securities:
Nonredeemable preferred stocks	7	142.3		(4.5		)	7	142.3		(4.5		)	0	0		0
Common equities	24	59.7		(2.4		)	20	58.5		(2.4		)	4	1.2		0
Total equity securities	31	202.0		(6.9		)	27	200.8		(6.9		)	4	1.2		0
Total portfolio	423	$	5,723.4	$	(126.0	)	346	$	4,865.9	$	(87.5	)	77	$	857.5	$	(38.5	)

App.-A-14

During 2014, the number of securities in our fixed-maturity portfolio with unrealized losses decreased, reflecting a combination of an increase in prices associated with a general decline in interest rates at certain maturities, as well as sales of securities for portfolio management reasons. We had no material decreases in valuation as a result of credit rating downgrades on our fixed-maturity securities during the year. All of the fixed-maturity securities in an unrealized loss position at December 31, 2014 in the table above are current with respect to required principal and interest payments. Unrealized losses on our nonredeemable preferred stocks related to eight issues with unrealized losses, averaging approximately 3% of our total cost of those securities. A review of these securities concluded that the unrealized losses are market-related adjustments to the values, which were determined not to be other-than-temporary, and we continue to expect to recover our initial investments on these securities. The unrealized losses in our common stock portfolio in the less than 12 months category reflect losses that developed late in the fourth quarter 2014. A review of the securities in a loss position did not uncover fundamental issues with the issuers that would indicate other-than-temporary impairments existed. Additionally, expectations for recovery in the next 12 months would put the fair values at or above our current book values. Lastly, we determined, as of the balance sheet date, that it was not likely these securities would be sold prior to that recovery.

Other-Than-Temporary Impairment (OTTI)  The following table shows the total non-credit portion of the OTTI recorded in accumulated other comprehensive income, reflecting the original non-credit loss at the time the credit impairment was determined:

	December 31,
(millions)	2014			2013
Fixed maturities:
Residential mortgage-backed securities	$	(44.1	)	$	(44.1	)
Commercial mortgage-backed securities	(0.6		)	(0.9		)
Total fixed maturities	$	(44.7	)	$	(45.0	)

The following tables provide rollforwards of the amounts related to credit losses recognized in earnings for the periods ended December 31, 2014, 2013, and 2012, for which a portion of the OTTI losses were also recognized in accumulated other comprehensive income at the time the credit impairments were determined and recognized:

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed		Total
Balance at December 31, 2013	$	19.2		$	0.4	$	19.6
Credit losses for which an OTTI was previously recognized	0			0		0
Credit losses for which an OTTI was not previously recognized	0			0		0
Reductions for securities sold/matured	(0.1		)	0		(0.1		)
Change in recoveries of future cash flows expected to be collected1,2	(6.4		)	0		(6.4		)
Reductions for previously recognized credit impairments written-down to fair value3	0			0		0
Balance at December 31, 2014	$	12.7		$	0.4	$	13.1

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0			0			0
Reductions for securities sold/matured	0			0			0
Change in recoveries of future cash flows expected to be collected1,2	(7.8		)	(0.2		)	(8.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(0.2		)	0			(0.2		)
Balance at December 31, 2013	$	19.2		$	0.4		$	19.6

App.-A-15

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2011	$	34.5		$	1.3		$	35.8
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0.3			0			0.3
Reductions for securities sold/matured	0			(0.2		)	(0.2		)
Change in recoveries of future cash flows expected to be collected1,2	(3.8		)	(0.2		)	(4.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(4.0		)	(0.3		)	(4.3		)
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7

¹ Reflects expected recovery of prior period impairments that will be accreted into income over the remaining life of the security.

² Includes $4.3 million, $2.6 million, and $1.4 million at December 31, 2014, 2013, and 2012, respectively, recognized in income in excess of the cash flows expected to be collected at the time of the write-downs.

³ Reflects reductions of prior credit impairments where the current credit impairment requires writing securities down to fair value (i.e., no remaining non-credit loss).

Although we determined that it is more likely than not that we will not be required to sell the securities prior to the recovery of their respective cost bases (which could be maturity), we are required to measure the amount of credit losses on the securities that were determined to be other-than-temporarily impaired. In that process, we considered a number of factors and inputs related to the individual securities. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included: current performance indicators on the underlying assets (e.g., delinquency rates, foreclosure rates, and default rates); credit support (via current levels of subordination); historical credit ratings; and updated cash flow expectations based upon these performance indicators. In order to determine the amount of credit loss, if any, the net present value of the cash flows expected (i.e., expected recovery value) was calculated using the current book yield for each security, and was compared to its current amortized value. In the event that the net present value was below the amortized value, a credit loss was deemed to exist, and the security was written down.

App.-A-16

Net Realized Gains (Losses)  The components of net realized gains (losses) for the years ended December 31, were:

(millions)	2014			2013			2012
Gross realized gains on security sales
Fixed maturities:
U.S. government obligations	$	24.0		$	8.5		$	20.2
State and local government obligations	9.3			7.7			15.0
Corporate and other debt securities	37.2			47.7			58.1
Residential mortgage-backed securities	2.7			3.0			1.2
Commercial mortgage-backed securities	17.0			10.0			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	2.7			0			0.7
Total fixed maturities	92.9			76.9			115.4
Equity securities:
Nonredeemable preferred stocks	90.0			126.3			78.2
Common equities	107.3			68.6			167.0
Subtotal gross realized gains on security sales	290.2			271.8			360.6
Gross realized losses on security sales
Fixed maturities:
U.S. government obligations	(7.6		)	(3.7		)	(1.9		)
State and local government obligations	(0.5		)	0			0
Corporate and other debt securities	(2.8		)	(6.2		)	(0.6		)
Residential mortgage-backed securities	(0.2		)	0			0
Commercial mortgage-backed securities	(8.3		)	(1.8		)	0
Redeemable preferred stocks	(3.2		)	(0.1		)	(0.4		)
Total fixed maturities	(22.6		)	(11.8		)	(2.9		)
Equity securities:
Nonredeemable preferred stocks	0			(0.1		)	(1.1		)
Common equities	(7.3		)	(0.6		)	(27.1		)
Subtotal gross realized losses on security sales	(29.9		)	(12.5		)	(31.1		)
Net realized gains (losses) on security sales
Fixed maturities:
U.S. government obligations	16.4			4.8			18.3
State and local government obligations	8.8			7.7			15.0
Corporate and other debt securities	34.4			41.5			57.5
Residential mortgage-backed securities	2.5			3.0			1.2
Commercial mortgage-backed securities	8.7			8.2			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	(0.5		)	(0.1		)	0.3
Total fixed maturities	70.3			65.1			112.5
Equity securities:
Nonredeemable preferred stocks	90.0			126.2			77.1
Common equities	100.0			68.0			139.9
Subtotal net realized gains (losses) on security sales	260.3			259.3			329.5
Other-than-temporary impairment losses
Fixed maturities:
Residential mortgage-backed securities	0			(0.6		)	(1.6		)
Commercial mortgage-backed securities	0			0			(0.1		)
Total fixed maturities	0			(0.6		)	(1.7		)
Equity securities:
Common equities	(7.2		)	(5.5		)	(1.8		)
Subtotal other-than-temporary impairment losses	(7.2		)	(6.1		)	(3.5		)
Other gains (losses)
Hybrid securities	30.5			6.4			14.3
Derivative instruments	(64.1		)	56.6			(43.1		)
Litigation settlements	4.7			2.2			9.6
Subtotal other gains (losses)	(28.9		)	65.2			(19.2		)
Total net realized gains (losses) on securities	$	224.2		$	318.4		$	306.8

Gross realized gains and losses were predominantly the result of sales transactions in our fixed-income portfolio related to

movements in credit spreads and interest rates and sales from our equity-indexed portfolio. In addition, gains and losses reflect recoveries from litigation settlements and holding period valuation changes on hybrids and derivatives. Also included are write-downs for securities determined to be other-than-temporarily impaired in our fixed-maturity and/or equity portfolios.

App.-A-17

Net Investment Income  The components of net investment income for the years ended December 31, were:

(millions)	2014			2013			2012
Fixed maturities:
U.S. government obligations	$	46.2		$	50.2		$	49.8
State and local government obligations	50.1			48.0			51.1
Foreign government obligations	0.4			0.2			0
Corporate debt securities	82.1			98.8			107.5
Residential mortgage-backed securities	44.9			28.1			16.1
Commercial mortgage-backed securities	66.0			74.8			82.2
Other asset-backed securities	16.7			16.7			20.3
Redeemable preferred stocks	15.5			21.2			24.2
Total fixed maturities	321.9			338.0			351.2
Equity securities:
Nonredeemable preferred stocks	38.6			36.2			43.8
Common equities	46.6			45.8			44.9
Short-term investments	1.3			2.0			3.1
Investment income	408.4			422.0			443.0
Investment expenses	(18.9		)	(18.8		)	(15.4		)
Net investment income	$	389.5		$	403.2		$	427.6

The decrease in our investment income during 2014 was due in part to an increase in short-term investments held and lower yields on securities purchased during the year.

Trading Securities  At December 31, 2014 and 2013, we did not hold any trading securities and we did not have any net realized gains (losses) on trading securities for the years ended December 31, 2014, 2013, and 2012.

Derivative Instruments  For all derivative positions discussed below, realized holding period gains and losses are netted with any upfront cash that may be exchanged under the contract to determine if the net position should be classified either as an asset or liability. To be reported as a net derivative asset and a component of the available-for-sale portfolio, the inception-to-date realized gain on the derivative position at period end would have to exceed any upfront cash received. On the other hand, a net derivative liability would include any inception-to-date realized loss plus the amount of upfront cash received (or netted, if upfront cash was paid) and would be reported as a component of other liabilities. These net derivative assets/liabilities are not separately disclosed on the balance sheet due to their immaterial effect on our financial condition, cash flows, and results of operations.

App.-A-18

The following table shows the status of our derivative instruments at December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013, and 2012:

(millions)								Balance Sheet2					Comprehensive Income Statement
	Notional Value1								Assets (Liabilities) Fair Value				Pretax Net Realized Gains (Losses)
													Years ended
	December 31,								December 31,				December 31,
Derivatives designated as:	2014		2013		2012		Purpose	Classification	2014		2013		2014			2013			2012
Hedging instruments
Closed:
Ineffective cash flow hedge	$	44	$	54	$	31	Manage interest rate risk	NA	$	0	$	0	$	0.5		$	0.8		$	0.6
Non-hedging instruments
Assets:
Interest rate swaps	750		750		0		Manage portfolio duration	Investments - fixed maturities	15.8		68.1		(64.6		)	59.8			0
Liabilities:
Interest rate swaps	0		0		1,263		Manage portfolio duration	Other liabilities	0		0		0			0			(42.7		)
Closed:
Interest rate swaps	0		1,263		0		Manage portfolio duration	NA	0		0		0			(4.0		)	0
Corporate credit default swaps	0		0		25		Manage credit risk	NA	0		0		0			0			(1.0		)
Total	NA		NA		NA				$	15.8	$	68.1	$	(64.1	)	$	56.6		$	(43.1	)

NA = Not Applicable

¹ The amounts represent the value held at year end for open positions and the maximum amount held during the year for closed positions.

² To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we expect that we will report them on a gross basis on our balance sheets, consistent with our historical presentation.

CASH FLOW HEDGES

In April 2014, upon issuance of $350 million of 4.35% Senior Notes due 2044 (the “4.35% Senior Notes”), we closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $1.6 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 4.35% Senior Notes.

Our ineffective cash flow hedge, which is reflected in the table above, resulted from the repurchase of a portion of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 during each of the last three years, and we reclassified the unrealized gain on forecasted transactions to net realized gains on securities.

During 2014, we recognized $2.0 million as a net decrease to interest expense on our closed debt issuance cash flow hedges, compared to $2.1 million during both 2013 and 2012.

See Note 4 – Debt for further discussion.

App.-A-19

INTEREST RATE SWAPS

We use interest rate swap contracts primarily to manage the fixed-income portfolio duration. At December 31, 2014, 2013, and 2012, we held interest rate swap positions for which we are paying a fixed rate and receiving a variable rate, effectively shortening the duration of our fixed-income portfolio. On the open positions, since inception, interest rates have increased; however, as interest rates fell during 2014, our fair value gain decreased by $52.3 million.

During 2013, we closed three interest rate swap positions including a 9-year interest rate swap position (opened in 2009) and two5-year interest rate swap positions (opened in 2011); in each case, we were paying a fixed rate and receiving a variable rate, effectively shortening the duration of our fixed-income portfolio.

As of December 31, 2014 and 2013, the balance of the cash collateral that we had received from the applicable counterparty on our open positions was $16.1 million and $62.7 million, respectively. As of December 31, 2012, the balance of the cash collateral that we had delivered to the applicable counterparty on the then open positions was $105.0 million.

CORPORATE CREDIT DEFAULT SWAPS

We held no credit default swaps during 2014 or 2013. During 2012, we closed one position that was opened during 2008, on a corporate issuer within the financial services sector for which we bought credit default protection in the form of a credit default swap for a 5-year time horizon. We held this protection to reduce our exposure to additional valuation declines on a preferred stock position of the same issuer.

3. FAIR VALUE

We have categorized our financial instruments, based on the degree of subjectivity inherent in the method by which they are valued, into a fair value hierarchy of three levels, as follows:

• 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).

Determining the fair value of the investment portfolio is the responsibility of management. As part of the responsibility, we evaluate whether a market is distressed or inactive in determining the fair value for our portfolio. We review certain market level inputs to evaluate whether sufficient activity, volume, and new issuances exist to create an active market. Based on this evaluation, we concluded that there was sufficient activity related to the sectors and securities for which we obtained valuations.

App.-A-20

The composition of the investment portfolio by major security type was:

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,667.1	$	0	$	0	$	2,667.1	$	2,641.1
State and local government obligations	0		2,139.2		0		2,139.2		2,095.7
Foreign government obligations	14.2		0		0		14.2		14.2
Corporate debt securities	0		2,836.7		0		2,836.7		2,813.9
Subtotal	2,681.3		4,975.9		0		7,657.2		7,564.9
Asset-backed securities:
Residential mortgage-backed	0		1,658.5		0		1,658.5		1,635.5
Commercial mortgage-backed	0		2,304.0		11.6		2,315.6		2,278.7
Other asset-backed	0		1,638.7		0		1,638.7		1,634.9
Subtotal asset-backed securities	0		5,601.2		11.6		5,612.8		5,549.1
Redeemable preferred stocks:
Financials	0		97.9		0		97.9		77.3
Utilities	0		65.3		0		65.3		65.0
Industrials	0		116.0		0		116.0		117.9
Subtotal redeemable preferred stocks	0		279.2		0		279.2		260.2
Total fixed maturities	2,681.3		10,856.3		11.6		13,549.2		13,374.2
Equity securities:
Nonredeemable preferred stocks:
Financials	204.1		554.1		69.3		827.5		590.4
Utilities	0		0		0		0		0
Subtotal nonredeemable preferred stocks	204.1		554.1		69.3		827.5		590.4
Common equities:
Common stocks	2,491.9		0		0		2,491.9		1,288.8
Other risk investments	0		0		0.4		0.4		0.4
Subtotal common equities	2,491.9		0		0.4		2,492.3		1,289.2
Total fixed maturities and equity securities	5,377.3		11,410.4		81.3		16,869.0		15,253.8
Short-term investments	1,937.0		212.0		0		2,149.0		2,149.0
Total portfolio	$	7,314.3	$	11,622.4	$	81.3	$	19,018.0	$	17,402.8
Debt	$	0	$	2,527.5	$	0	$	2,527.5	$	2,164.7

App.-A-21

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,662.2	$	0	$	0	$	3,662.2	$	3,630.4
State and local government obligations	0		2,256.0		0		2,256.0		2,247.3
Foreign government obligations	15.6		0		0		15.6		15.6
Corporate debt securities	0		2,926.6		0		2,926.6		2,885.0
Subtotal	3,677.8		5,182.6		0		8,860.4		8,778.3
Asset-backed securities:
Residential mortgage-backed	0		1,127.7		0.2		1,127.9		1,110.1
Commercial mortgage-backed	0		2,131.5		29.0		2,160.5		2,154.4
Other asset-backed	0		1,077.7		0		1,077.7		1,073.0
Subtotal asset-backed securities	0		4,336.9		29.2		4,366.1		4,337.5
Redeemable preferred stocks:
Financials	0		102.8		0		102.8		84.2
Utilities	0		65.6		0		65.6		64.9
Industrials	0		145.5		0		145.5		150.4
Subtotal redeemable preferred stocks	0		313.9		0		313.9		299.5
Total fixed maturities	3,677.8		9,833.4		29.2		13,540.4		13,415.3
Equity securities:
Nonredeemable preferred stocks:
Financials	240.8		414.6		39.0		694.4		431.5
Utilities	0		16.8		0		16.8		14.2
Subtotal nonredeemable preferred stocks	240.8		431.4		39.0		711.2		445.7
Common equities:
Common stocks	2,530.0		0		0		2,530.0		1,450.6
Other risk investments	0		0		0.5		0.5		0.5
Subtotal common equities	2,530.0		0		0.5		2,530.5		1,451.1
Total fixed maturities and equity securities	6,448.6		10,264.8		68.7		16,782.1		15,312.1
Short-term investments	987.8		284.8		0		1,272.6		1,272.6
Total portfolio	$	7,436.4	$	10,549.6	$	68.7	$	18,054.7	$	16,584.7
Debt	$	0	$	2,073.7	$	0	$	2,073.7	$	1,860.9

Our portfolio valuations classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including: pricing vendors, dealers/market makers, and exchange-quoted prices. During 2014, we had two nonredeemable preferred stocks with a value of $41.7 million that were transferred from Level 2 to Level 1 due to the availability of a consistent exchange price. During 2013, we did not have any securities that were transferred between Level 1 and Level 2. We recognize transfers between levels at the end of the reporting period.

Our short-term security holdings classified as Level 1 are highly liquid, actively marketed, and have a very short duration, primarily 30 days or less to redemption. These securities are held at their original cost, adjusted for any accretion of discount, since that value very closely approximates what an active market participant would be willing to pay for such securities. The remainder of our short-term securities are classified as Level 2 and are not priced externally since these securities continually trade at par value. These securities are classified as Level 2 since they are primarily longer-dated auction securities issued by municipalities that contain a redemption put feature back to the auction pool with a redemption period typically less than seven days. The auction pool is created by a liquidity provider and if the auction is not available at the end of the seven days, we have the right to put the security back to the issuer at par.

App.-A-22

At December 31, 2014, vendor-quoted prices represented 50% of our Level 1 classifications (excluding short-term investments), compared to 56% at December 31, 2013. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges. The year-over-year decline in vendor-quoted Level 1 prices was due to a reduction of U.S. Treasury Notes with the funds deployed primarily to short-term investments.

At December 31, 2014, vendor-quoted prices comprised 97% of our Level 2 classifications (excluding short-term investments), while dealer-quoted prices represented 3%, compared to 98% and 2% at December 31, 2013, respectively. In our process for selecting a source (e.g., dealer, pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.

As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance, which often leads the source to adjust their pricing input data for future pricing.

To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. We frequently challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.

For our structured debt securities, including commercial, residential, and asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates. We further stratify each class of our structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, subordinated, etc.) and use duration, credit quality, and coupon to determine the appropriate fair value.

For our corporate debt and preferred stock (redeemable and nonredeemable) portfolios, we review securities by duration, coupon, and credit quality, as well as changes in interest rate and credit spread movements within that stratification. The review also includes recent trades, including: volume traded at various levels that establish a market, issuer specific fundamentals, and industry specific economic news as it comes to light.

For our municipal securities (e.g., general obligations, revenue, and housing), we stratify the portfolio to evaluate securities by type, coupon, credit quality, and duration to review price changes relative to credit spread and interest rate changes. Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.

Lastly, for our short-term securities, we look at acquisition price relative to the coupon or yield. Since our short-term securities are typically 90 days or less to maturity, with the majority listed in Level 2 being seven days or less to redemption, acquisition price is the best estimate of fair value.

App.-A-23

We also review data assumptions as supplied by our sources to determine if that data is relevant to current market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.

During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our internally generated portfolio results with those generated based on quotes we received externally and research material valuation differences. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review on a monthly basis our external sales transactions and compare the actual final market sales price to a previous market valuation price. This review provides us further validation that our pricing sources are providing market level prices, since we are able to explain significant price changes (i.e., greater than 2%) as known events occur in the marketplace and affect a particular security’s price at sale.

This analysis provides us with additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients. We believe this effort helps ensure that we are reporting the most representative fair values for our securities.

Except as described below, our Level 3 securities are also priced externally; however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature. Certain private equity investments and fixed-income investments included in the Level 3 category are valued using external pricing supplemented by internal review and analysis.

After all the valuations are received and our review is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected security valuations to Level 3. At December 31, 2014 and 2013, securities in our fixed-maturity portfolio listed as Level 3 were comprised substantially of securities that were either: (i) private placement deals, (ii) thinly held and/or traded securities, or (iii) non-investment-grade securities with little liquidity. Based on these factors, it was difficult to independently verify observable market inputs that were used to generate the external valuations we received. Despite the lack of sufficient observable market information for our Level 3 securities, we believe the valuations received in conjunction with our procedures for evaluating third-party prices support the fair values reported in the financial statements.

At December 31, 2014, we had one private preferred equity security (in ARX Holding Corp.) with a value of $69.3 million that was priced internally. The same security had a value of $39.0 million at December 31, 2013. The increase in value is due to a higher price to book ratio multiple included in the terms of the stock purchase agreement we entered into during December 2014 to purchase a majority interest in ARX Holding Corp. This was the only internally-priced security in the portfolio at December 31, 2014 and 2013.

We review the prices from our external sources for reasonableness using internally developed assumptions to derive prices for the securities, which are then compared to the prices we received. Based on our review, all the prices received from external sources remain unadjusted.

App.-A-24

The following tables provide a summary of changes in fair value associated with Level 3 assets for the years ended December 31, 2014 and 2013:

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2013		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales		Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2014
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	$	0		$	0	$	(0.1	)	$	0.1	$	(0.2	)	$	0		$	0
Commercial mortgage-backed	29.0		(3.6		)	0		0			0		(0.2		)	(13.6		)	11.6
Total fixed maturities	29.2		(3.6		)	0		(0.1		)	0.1		(0.4		)	(13.6		)	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials2	39.0		0			0		0			0		30.3			0			69.3
Common equities:
Other risk investments	0.5		(0.1		)	0		0			0		0			0			0.4
Total Level 3 securities	$	68.7	$	(3.7	)	$	0	$	(0.1	)	$	0.1	$	29.9		$	(13.6	)	$	81.3

¹ The $13.6 million was transferred out of Level 3 and into Level 2 due to an improvement in the security's underlying collateral and an increase in liquidity and market activity in comparable securities.

² The $30.3 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2012		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales			Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2013
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	45.5	$	(28.6	)	$	125.1	$	0		$	0		$	(0.4	)	$	(141.4	)	$	0.2
Commercial mortgage-backed	25.3		(3.4		)	0		0			0			7.1			0			29.0
Total fixed maturities	70.8		(32.0		)	125.1		0			0			6.7			(141.4		)	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials2	31.9		0			0		0			0			7.1			0			39.0
Common equities:
Other risk investments	12.0		(0.5		)	0.3		(2.4		)	(36.0		)	27.1			0			0.5
Total Level 3 securities	$	114.7	$	(32.5	)	$	125.4	$	(2.4	)	$	(36.0	)	$	40.9		$	(141.4	)	$	68.7

¹ The $141.4 million was transferred out of Level 3 and into Level 2 due to an increase in liquidity and trading volume in the market.

² The $7.1 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

App.-A-25

The following table provides a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at December 31:

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2014		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0	NA	NA	NA
Commercial mortgage-backed	11.6		External vendor	Prepayment rate1	0
Total fixed maturities	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials	69.3		Multiple of tangible net book value	Price to book ratio multiple	2.6
Subtotal Level 3 securities	80.9
Third-party pricing exemption securities2	0.4
Total Level 3 securities	$	81.3

NA= Not Applicable since we did not hold any residential mortgage-backed Level 3 securities at December 31, 2014.

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2013		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	External vendor	Prepayment rate1	0
Commercial mortgage-backed	29.0		External vendor	Prepayment rate2	0
Total fixed maturities	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials	39.0		Multiple of tangible net book value	Price to book ratio multiple	1.9
Subtotal Level 3 securities	68.2
Third-party pricing exemption securities3	0.5
Total Level 3 securities	$	68.7

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² Assumes that two securities have 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

³ The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

Due to the relative size of the securities’ fair values compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net and comprehensive income. During the years ended December 31, 2014 and 2013, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

App.-A-26

4.  DEBT

Debt at December 31 consisted of:

	2014				2013
(millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Senior Notes due 2021 (issued: $500.0, August 2011)	$	497.8	$	535.6	$	497.6	$	509.1
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)	295.5		400.6		295.3		359.6
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)	394.8		527.9		394.6		473.7
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)	346.3		378.9		0		0
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (issued: $1,000.0, June 2007; outstanding: $632.8 and $677.1)	630.3		684.5		673.4		731.3
Total	$	2,164.7	$	2,527.5	$	1,860.9	$	2,073.7

All of the outstanding debt was issued by The Progressive Corporation. Debt includes amounts we have borrowed and contributed to the capital of our insurance subsidiaries or used, or have available for use, for other business purposes. Fair values are obtained from external sources. There are no restrictive financial covenants or credit rating triggers on our debt.

Interest on all debt is payable semiannually at the stated rates. However, the 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “6.70% Debentures”) will only bear interest at this fixed annual rate through, but excluding, June 15, 2017. Thereafter, the 6.70% Debentures will bear interest at an annual rate equal to the three-month LIBOR plus 2.0175%, and interest will be payable quarterly until the 6.70% Debentures are redeemed or retired.

Except for the 6.70% Debentures, all principal is due at the maturity stated in the table above. The 6.70% Debentures will become due on June 15, 2037, the scheduled maturity date, but only to the extent that we have received sufficient net proceeds from the sale of certain qualifying capital securities. We must use our commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the 6.70% Debentures in full on the scheduled maturity date or, if sufficient proceeds are not realized from the sale of such qualifying capital securities by such date, on each interest payment date thereafter. Any remaining outstanding principal will be due on June 15, 2067, the final maturity date.

In April 2014, we issued $350 million of 4.35% Senior Notes due 2044 (the “4.35% Senior Notes”).  We received proceeds of $346.3 million, after deducting underwriter’s discounts and commissions. In addition, we incurred expenses of approximately $0.7 million related to the issuance.  Upon issuance of the 4.35% Senior Notes, we closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $1.6 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 4.35% Senior Notes.

We retired the entire $150 million of our 7% Notes at maturity in October 2013. The 3.75% Senior Notes, the 6 5/8% Senior Notes, the 6.25% Senior Notes, and the 4.35% Senior Notes (collectively, “Senior Notes”) may be redeemed in whole or in part at any time, at our option, subject to a “make-whole” provision. The 6.70% Debentures may be redeemed, in whole or in part, at any time: (a) prior to June 15, 2017, at a redemption price equal to the greater of (i) 100% of the principal amount of the 6.70% Debentures being redeemed, or (ii) a “make-whole” amount, in each case plus any accrued and unpaid interest; or (b) on or after June 15, 2017, at a redemption price equal to 100% of the principal amount of the 6.70% Debentures being redeemed, plus any accrued and unpaid interest.

During 2014 and 2013, we repurchased, in the open market, $44.3 million and $54.1 million, respectively, in aggregate principal amount of our 6.70% Debentures. Since the amount paid exceeded the carrying value of the debt we repurchased, we recognized losses on these extinguishments of $4.8 million and $4.3 million for 2014 and 2013, respectively.

App.-A-27

Prior to issuance of each of the Senior Notes and 6.70% Debentures, we entered into forecasted debt issuance hedges against possible rises in interest rates. Upon issuance of the applicable debt securities, the hedges were closed and we recognized unrealized gains (losses) as part of accumulated other comprehensive income. The original unrealized gain (loss) at the time of each debt issuance and the unamortized balance at December 31, 2014, on a pretax basis, of these hedges, were as follows:

(millions)	Unrealized Gain (Loss) at Debt Issuance			Unamortized Balance at December 31, 2014
3.75% Senior Notes	$	(5.1	)	$	(3.6	)
6 5/8% Senior Notes	(4.2		)	(3.2		)
6.25% Senior Notes	5.1			4.0
4.35% Senior Notes	(1.6		)	(1.6		)
6.70% Debentures	34.4			6.6

The gains (losses) on these hedges are deferred and are being amortized as adjustments to interest expense over the life of the related Senior Notes, and over the 10-year fixed interest rate term for the 6.70% Debentures. In addition to this amortization, during 2014 and 2013, we reclassified $0.5 million and $0.8 million, respectively, on a pretax basis, from accumulated other comprehensive income on the balance sheet to net realized gains on securities on the comprehensive income statement, reflecting the portion of the unrealized gain on forecasted transactions that was related to the portion of the 6.70% Debentures repurchased during the periods.

In March 2014, we renewed the unsecured, discretionary line of credit (the "Line of Credit") with PNC Bank, National Association (PNC) in the maximum principal amount of $100 million. The prior line of credit, entered into in March 2013, has expired. The Line of Credit is on substantially the same terms and conditions as the prior line of credit. Subject to the terms and conditions of the Line of Credit documents, advances under the Line of Credit (if any) will bear interest at a variable rate equal to the higher of PNC's Prime Rate or the sum of the Federal Funds Open Rate plus 50 basis points. Each advance must be repaid on the 30th day after the advance or, if earlier, on March 25, 2015, the expiration date of the Line of Credit. Prepayments are permitted without penalty. All advances under the Line of Credit are subject to PNC's discretion. We had no borrowings under the Line of Credit or the prior line of credit in 2014 or 2013.

Aggregate required principal payments on debt outstanding are as follows:

(millions)
Year	Payments
2015	$	0
2016	0
2017	0
2018	0
2019	0
Thereafter	2,182.8
Total	$	2,182.8

5.  INCOME TAXES

The components of our income tax provision were as follows:

(millions)	2014		2013		2012
Current tax provision	$	594.4	$	460.2	$	424.8
Deferred tax expense (benefit)	32.0		94.4		(9.4		)
Total income tax provision	$	626.4	$	554.6	$	415.4

App.-A-28

The provision for income taxes in the accompanying consolidated statements of comprehensive income differed from the statutory rate as follows:

($ in millions)	2014					2013					2012
Income before income taxes	$	1,907.4				$	1,720.0				$	1,317.7
Tax at statutory rate	$	667.6		35	%	$	602.0		35	%	$	461.2		35	%
Tax effect of:
Dividends received deduction	(18.3		)	(1	)	(17.6		)	(1	)	(18.2		)	(1	)
Exempt interest income	(13.8		)	(1	)	(13.1		)	(1	)	(14.7		)	(1	)
Tax-deductible dividends	(6.5		)	0		(13.6		)	(1	)	(11.9		)	(1	)
Tax credits	(2.2		)	0		(2.3		)	0		0			0
Other items, net	(0.4		)	0		(0.8		)	0		(1.0		)	0
Total income tax provision	$	626.4		33	%	$	554.6		32	%	$	415.4		32	%

Deferred income taxes reflect the effect for financial statement reporting purposes of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. At December 31, 2014 and 2013, the components of the net deferred tax asset (liability) were as follows:

(millions)	2014			2013
Deferred tax assets:
Unearned premiums reserve	$	378.8		$	361.0
Investment basis differences	60.6			94.8
Non-deductible accruals	208.0			200.7
Loss and loss adjustment expense reserves	76.9			92.0
Other	7.5			14.7
Deferred tax liabilities:
Net unrealized gains on securities	(550.3		)	(509.9		)
Hedges on forecasted transactions	(0.8		)	(2.2		)
Deferred acquisition costs	(160.0		)	(156.7		)
Property and equipment	(100.9		)	(99.6		)
Prepaid expenses	(11.4		)	(14.4		)
Deferred gain on extinguishment of debt	(3.0		)	(4.8		)
Other	(4.3		)	(4.0		)
Net deferred tax liability	$	(98.9	)	$	(28.4	)

Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at December 31, 2014 or 2013.

At December 31, 2014, we had $49.4 million of net taxes payable (included in other liabilities on the balance sheet), compared to net taxes recoverable of $17.1 million at December 31, 2013 (included in other assets on the balance sheet).

We have been a participant in the Compliance Assurance Program (CAP) since 2007. Under CAP, the Internal Revenue Service (IRS) begins its examination process for the tax year before the tax return is filed, by examining significant transactions and events as they occur. The goal of the CAP program is to expedite the exam process and to reduce the level of uncertainty regarding a taxpayer’s tax filing positions.

All federal income tax years prior to 2011 are closed. The IRS exams for 2011-2013 have been completed; therefore, we consider these years to be effectively settled.

We recognize interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. We have not recorded any unrecognized tax benefits, or any related interest and penalties, as of December 31, 2014 and 2013. For the year ended December 31, 2013, $0.2 million of interest benefit has been recorded in the tax provision. For the years ended December 31, 2014 and 2012, no interest expense or benefit has been recorded in the tax provision.

App.-A-29

6.  LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:

(millions)	2014			2013		2012
Balance at January 1	$	8,479.7		$	7,838.4	$	7,245.8
Less reinsurance recoverables on unpaid losses	1,045.9			862.1		785.7
Net balance at January 1	7,433.8			6,976.3		6,460.1
Incurred related to:
Current year	13,330.3			12,427.3		11,926.0
Prior years	(24.1		)	45.1		22.0
Total incurred	13,306.2			12,472.4		11,948.0
Paid related to:
Current year	8,831.5			8,095.0		7,895.3
Prior years	4,237.0			3,919.9		3,536.5
Total paid	13,068.5			12,014.9		11,431.8
Net balance at December 31	7,671.5			7,433.8		6,976.3
Plus reinsurance recoverables on unpaid losses	1,185.9			1,045.9		862.1
Balance at December 31	$	8,857.4		$	8,479.7	$	7,838.4

We experienced favorable reserve development of $24.1 million in 2014, compared to unfavorable reserve development of $45.1 million and $22.0 million in 2013 and 2012, respectively, which is reflected as “Incurred related to prior years” in the table above.

2014

•The favorable prior year reserve development was primarily attributable to accident year 2010.

• Favorable reserve development in our Commercial Lines business was partially offset by unfavorable development in our Agency auto business. Our Direct auto business experienced slightly 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 (PIP)loss reserves and to the adjusting and other loss adjustment expense reserves.

2013

• Approximately 80% of the unfavorable reserve development was attributable to accident year 2011, while the remaining 20% was related to accident year 2012. The aggregate reserve development for accident years 2010 and prior was slightly favorable.

• About 55% of our unfavorable reserve development was in our Commercial Lines business, with the remainder split about equally between our Personal Lines business and our run-off businesses. In our Personal Lines business, unfavorable development in our Agency auto channel was offset in large part by favorable development in our Direct auto channel.

• The unfavorable reserve development in our Agency auto business was in our IBNR reserves due to higher frequency and severity on late emerging claims, as primarily reflected in the “all other development.”

• Lower than anticipated severity costs on case reserves were the primary contributor to the favorable development in our Direct auto business.

• In our Commercial Lines business, we experienced unfavorable development due to higher frequency and severity on late emerging claims primarily in our bodily injury coverage for our truck business.

• In our other businesses, we experienced unfavorable development primarily due to reserve increases in our run-off professional liability group business based on internal actuarial reviews of our claims history.

App.-A-30

2012

• The unfavorable prior year reserve development was primarily attributable to accident year 2011 and, to a lesser extent, accident year 2010. The aggregate reserve development for accident years 2009 and prior was favorable. Despite overall unfavorable reserve development, we did experience favorable reserve adjustments, primarily in our loss adjustment expenses and our personal auto bodily injury reserves for accident years 2009 and 2008.

• Slightly more than half of the total unfavorable reserve development was attributable to our Commercial Lines business, with the remainder in our personal auto business. In our personal auto business, unfavorable development in the Agency channel was partially offset by favorable development in the Direct channel, primarily reflecting that unfavorable development on our PIP coverage was more skewed to the Agency channel, and that our Direct business had favorable development on our collision coverage, as we experienced more subrogation recoveries in this channel.

• Our personal auto product’s development was primarily attributable to unfavorable development in our Florida PIP coverage and an increase in our estimate of bodily injury severity for accident year 2011.

• Unfavorable development in our Commercial Lines business reflects higher than anticipated frequency and severity costs on late emerging claims and higher settlements on large losses.

Because we are primarily an insurer of motor vehicles, we have limited exposure to environmental, asbestos, and general liability claims. We have established reserves for such exposures, in amounts that we believe to be adequate based on information currently known. These claims are not expected to have a material effect on our liquidity, financial condition, cash flows, or results of operations.

We write personal and commercial auto insurance throughout the United States and could be exposed to hurricanes or other catastrophes. Although the occurrence of a major catastrophe could have a significant effect on our monthly or quarterly results, we believe that, based on historical experience, such an event would not be so material as to disrupt the overall normal operations of Progressive. We are unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

7.  REINSURANCE

The effect of reinsurance on premiums written and earned for the years ended December 31, was as follows:

	2014						2013						2012
(millions)	Written			Earned			Written			Earned			Written			Earned
Direct premiums	$	18,914.8		$	18,648.4		$	17,562.8		$	17,317.9		$	16,558.8		$	16,207.6
Ceded	(260.2		)	(249.9		)	(223.1		)	(214.5		)	(186.1		)	(189.6		)
Net premiums	$	18,654.6		$	18,398.5		$	17,339.7		$	17,103.4		$	16,372.7		$	16,018.0

Our ceded premiums consist of “State Plans” and “Non-State Plans.” State Plans include: (i) amounts ceded to state-provided reinsurance facilities, including the Michigan Catastrophic Claims Association (MCCA) and the North Carolina Reinsurance Facility (NCRF), and (ii) state-mandated involuntary Commercial Auto Insurance Procedures/Plans (CAIP). Collectively, the State Plans accounted for 97%, 97%, and 98% of our ceded premiums for the years ended December 31, 2014, 2013, and 2012, respectively; the MCCA and NCRF together accounted for 75%, 77%, and 80% of the ceded premiums for these same time periods.

Losses and loss adjustment expenses were net of reinsurance ceded of $322.7 million in 2014, $347.0 million in 2013, and $230.7 million in 2012.

App.-A-31

Our prepaid reinsurance premiums and reinsurance recoverables were comprised of the following at December 31:

	Prepaid Reinsurance Premiums								Reinsurance Recoverables
($ in millions)	2014				2013				2014				2013
MCCA	$	32.8	38	%	$	29.5	40	%	$	1,018.8	83	%	$	875.9	80	%
CAIP	26.5		31		21.1		28		110.1		9		79.3		7
NCRF	21.9		26		20.5		27		51.1		4		50.1		5
State Plans	81.2		95		71.1		95		1,180.0		96		1,005.3		92
Non-State Plans	4.1		5		3.8		5		51.9		4		84.9		8
Total	$	85.3	100	%	$	74.9	100	%	$	1,231.9	100	%	$	1,090.2	100	%

Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to Progressive. Since substantially all of our reinsurance is through State Plans, our exposure to losses from their failure is minimal, since the plans are funded by mechanisms supported by the insurance companies in the state. We evaluate the financial condition of our other reinsurers and monitor concentrations of credit risk to minimize our exposure to significant losses from reinsurer insolvencies.

8.  STATUTORY FINANCIAL INFORMATION

Consolidated statutory surplus was $6,442.8 million and $5,991.0 million at December 31, 2014 and 2013, respectively. Statutory net income was $1,289.5 million, $1,086.3 million, and $808.3 million for the years ended December 31, 2014, 2013, and 2012, respectively.

At December 31, 2014, $549.2 million of consolidated statutory surplus represented net admitted assets of our insurance subsidiaries and affiliate that are required to meet minimum statutory surplus requirements in such entities’ states of domicile. The companies may be licensed in states other than their states of domicile, which may have higher minimum statutory surplus requirements. Generally, the net admitted assets of insurance companies that, subject to other applicable insurance laws and regulations, are available for transfer to the parent company cannot include the net admitted assets required to meet the minimum statutory surplus requirements of the states where the companies are licensed.

During 2014, the insurance subsidiaries paid aggregate cash dividends of $1,000.2 million to the parent company. Based on the dividend laws currently in effect, the insurance subsidiaries could pay aggregate dividends of $1,346.5 million in 2015 without prior approval from regulatory authorities, provided the dividend payments are not made within 12 months of previous dividends paid by the applicable subsidiary.

9.  EMPLOYEE BENEFIT PLANS

Retirement Plans  Progressive has a defined contribution pension plan (401(k) Plan) that covers most employees who are United States residents and have been employed with the company for at least 30 days. Under this plan, Progressive matches up to a maximum of 6% of an employee’s eligible compensation contributed to the plan. Employee and company matching contributions are invested, at the direction of the employee, in a number of investment options available under the plan, including various mutual funds, a self-directed brokerage option, and a Progressive common stock fund. The Progressive common stock fund is an employee stock ownership program (ESOP) within the 401(k) Plan. At December 31, 2014, the ESOP held 26.2 million of our common shares, all of which are included in shares outstanding. Dividends on these shares are reinvested in common shares or paid out in cash at the election of the participant and the related tax benefit is recorded as part of our tax provision.

Matching contributions made by the company for the 401(k) Plan were $74.8 million, $69.9 million, and $66.5 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Postemployment BenefitsProgressive provides various postemployment benefits to former or inactive employees who meet eligibility requirements, and to their beneficiaries and covered dependents. Postemployment benefits include salary continuation and disability-related benefits, including workers’ compensation and, if elected, continuation of health-care benefits for specified limited periods. The liability for these benefits was $22.5 million and $24.0 million at December 31, 2014 and 2013, respectively.

App.-A-32

Postretirement BenefitsWe provide postretirement health and life insurance benefits to all employees who met requirements as to age and length of service at December 31, 1988. There are approximately 115 people who are eligible for these postretirement benefits. Our funding policy for these benefits is to contribute annually, to a 501(c)(9) trust, the maximum amount that can be deducted for federal income tax purposes.

Incentive Compensation Plans – EmployeesOur incentive compensation programs include both non-equity incentive plans (cash) and equity incentive plans. Cash incentive compensation includes a cash bonus program for a limited number of senior executives and our Gainsharing program for other employees; the structures of these programs are similar in nature. Equity incentive compensation plans provide for the granting of restricted stock awards and restricted stock unit awards (collectively, “restricted equity awards”) to key members of management. The amounts charged to income for the incentive compensation plans for the years ended December 31, were:

	2014				2013				2012
(millions)	Pretax		After Tax		Pretax		After Tax		Pretax		After Tax
Cash	$	266.2	$	173.0	$	234.5	$	152.4	$	207.0	$	134.6
Equity	51.4		33.4		64.9		42.2		63.4		41.2

Our 2003 Incentive Plan has expired, and no new awards may be made under this plan; however, awards granted prior to the plan’s expiration remain outstanding. Our 2010 Equity Incentive Plan, which provides for the granting of equity-based compensation to officers and other key employees, originally authorized 18.0 million shares.

We have issued restricted equity awards since 2003. In March 2010, we began issuing restricted stock units in lieu of restricted stock as the form of our equity awards. The restricted equity awards are issued as either time-based or performance-based awards. The time-based awards vest in equal installments upon the lapse of specified periods of time, typically three, four, and five years. All restricted stock units are settled at or after vesting in Progressive common shares from existing treasury shares on a one-to-one basis.

The performance-based awards were granted to our Chief Executive Officer as his sole equity award in each of the last five years, and to approximately 45 other executives and senior managers in addition to their time-based awards, to provide additional incentive to achieve pre-established profitability and growth targets. Vesting of these awards is contingent upon the achievement of predetermined performance goals within specified time periods. The targets for the performance-based awards, as well as the number of units that ultimately may vest, vary by grant. All performance-based awards include a specified number of shares or units that will be issued if performance meets a specified target. For awards granted in 2013 and 2014, performance-based awards based on insurance operating results may vest between 0% to 250% of target depending on the results achieved. The performance-based awards based on insurance operating results granted in 2010 through 2012, and all performance awards based on investment results, may vest from 0% to 200% of the target amount depending on the results achieved. Outstanding performance-based awards made prior to March 2009 will either vest or be forfeited in full (i.e., no partial vesting), and if performance goals are not achieved within the contractual term, the awards will expire. For awards granted prior to 2009, the maximum contractual term is ten years from the grant date, and for awards granted in or after 2009, the maximum contractual term is 5 years from the date of grant.

Generally, time-based and performance-based equity awards are expensed pro rata over their respective vesting periods based on the market value of the awards at the time of grant. Performance-based equity awards that contain variable vesting criteria are expensed based on management’s expectation of the percentage of the award, if any, that will ultimately vest. These estimates can change periodically throughout the measurement period.

App.-A-33

A summary of all employee restricted equity award activity during the years ended December 31, follows:

	2014				2013				2012
Restricted Equity Awards	Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value
Beginning of year	9,918,575		$	20.13	11,625,981		$	17.80	12,296,847		$	16.86
Add (deduct):
Granted2	3,542,984		19.32		2,738,809		22.73		2,680,229		19.11
Vested	(4,228,673	)	16.99		(4,293,605	)	15.54		(3,188,111	)	15.23
Forfeited	(181,322	)	20.75		(152,610	)	18.28		(162,984	)	17.93
End of year3,4	9,051,564		$	21.27	9,918,575		$	20.13	11,625,981		$	17.80

¹ Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common shares funded from existing treasury shares. All performance-based awards are included at their target amounts.

² In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2014, 2013, and 2012, the number of units "granted" shown in the table above includes 538,749, 161,077, and 440,029 of dividend equivalent units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair value of the original grant.

³ At December 31, 2014, the number of shares included 2,647,530 performance-based awards at their target amounts. We expect 2,208,731 of these performance-based awards to vest, based upon our current estimate of the likelihood of achieving these pre-determined performance goals.

⁴ At December 31, 2014, the total unrecognized compensation cost related to unvested equity awards was $70.5 million, which includes performance-based awards at their currently estimated vesting value. This compensation expense will be recognized into the income statement over the weighted average vesting period of 2.3 years.

The aggregate fair value of the restricted equity awards that vested during the years ended December 31, 2014, 2013, and 2012, was $100.9 million, $91.8 million, and $57.7 million, respectively, based on the actual stock price on the vesting date. In 2014 and 2013, 340,949 and 272,617, respectively, of dividend equivalent units vested with no intrinsic value. In 2012, we also had 246,200 deferred liability awards vest with no intrinsic value since these awards were expensed based on the current market value at the end of each reporting period.

Incentive Compensation Plans – Directors  Our 2003 Directors Equity Incentive Plan, which provides for the granting of equity-based awards, including restricted stock awards, to non-employee directors of Progressive, originally authorized 1.4 million shares.

We currently grant restricted stock awards to our non-employee directors as their sole compensation for serving as members of the Board of Directors. The restricted stock awards are issued as time-based awards. The vesting period (i.e., requisite service period) must be a minimum of six months and one day. The time-based awards granted to date have typically included vesting periods of 11 months from the date of each grant. To the extent a director is newly appointed during the year, or a director's committee assignments change, the vesting period may be shorter, but always at least equal to six months, one day per the plan’s specifications. The restricted stock awards are expensed pro rata over their respective vesting periods based on the market value of the awards at the time of grant.

A summary of all directors’ restricted stock activity during the years ended December 31, follows:

	2014				2013				2012
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	93,254		$	26.19	92,957		$	21.41	94,106		$	21.80
Add (deduct):
Granted	90,649		25.44		93,254		26.19		92,957		21.41
Vested	(93,254	)	26.19		(92,957	)	21.41		(94,106	)	21.80
Forfeited	(9,070	)	25.36		0		0		0		0
End of year	81,579		$	25.45	93,254		$	26.19	92,957		$	21.41

App.-A-34

Prior to 2003, we granted nonqualified stock options as the equity component of the directors’ compensation. These options became exercisable at various dates not earlier than six months, and remain exercisable for up to ten years from the date of grant. All options granted had an exercise price equal to the market value of the common shares on the date of grant and, under the then applicable accounting guidance, no compensation expense was recorded. All option exercises were settled in Progressive common shares from existing treasury shares. All remaining 36,237 options outstanding under the 1998 Directors' Stock Option Plan were exercised during the year ended December 31, 2012.

The total pretax intrinsic value of options exercised, and the fair value of the restricted stock vested, during the years ended December 31, 2014, 2013, and 2012, was $2.2 million, $2.3 million, and $2.5 million, respectively, based on the actual stock price at time of exercise/vesting.

Deferred CompensationWe maintain The Progressive Corporation Executive Deferred Compensation Plan (Deferral Plan) that permits eligible executives to defer receipt of some or all of their annual bonuses and all of their annual equity awards. Deferred cash compensation is deemed invested in one or more investment funds, including common shares of Progressive, offered under the Deferral Plan and elected by the participant. All Deferral Plan distributions attributable to deferred cash compensation will be paid in cash.

For all equity awards granted in or after March 2005, and deferred pursuant to the Deferral Plan, the deferred amounts are deemed invested in our common shares and are ineligible for transfer to other investment funds in the Deferral Plan; distributions of these deferred awards will be made in our common shares. For all restricted stock awards granted prior to that date, the deferred amounts are eligible to be transferred to any of the investment funds in the Deferral Plan; distributions of these deferred awards will be made in cash. We reserved 11.1 million of our common shares for issuance under the Deferral Plan. An irrevocable grantor trust has been established to provide a source of funds to assist us in meeting our liabilities under the Deferral Plan.

The Deferral Plan Irrevocable Grantor Trust account held the following assets at December 31:

(millions)	2014		2013
Progressive common shares1	$	83.2	$	57.1
Other investment funds2	123.9		113.1
Total	$	207.1	$	170.2

¹Includes 3.6 million and 2.5 million common shares as of December 31, 2014 and 2013, respectively, to be distributed in common shares.

² Amount is included in other assets on the balance sheet.

10.  SEGMENT INFORMATION

We write personal auto and other specialty property-casualty insurance and provide related services throughout the United States. Our Personal Lines segment writes insurance for personal autos and recreational vehicles. The Personal Lines segment is comprised of both the Agency and Direct businesses. The Agency business includes business written by our network of more than 35,000 independent insurance agencies, including brokerages in New York and California, and strategic alliance business relationships (other insurance companies, financial institutions, and national agencies). The Direct business includes business written directly by us online, by phone, or on mobile devices. We also sell personal auto physical damage and property damage liability insurance via the Internet in Australia. For the years ended December 31, 2014, 2013, and 2012, net premiums earned on our Australian business were $17.1 million, $13.0 million, and $7.1 million, respectively.

Our Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses in the business auto, for-hire transportation, contractor, for-hire specialty, tow, and for-hire livery markets. This segment is distributed through both the independent agency and direct channels.

Our other indemnity businesses manage our run-off businesses, including the run-off of our professional liability insurance for community banks, which was sold in 2010.

Our service businesses provide insurance-related services, including processing CAIP business and serving as an agent for homeowners, general liability, and workers’ compensation insurance through our programs with unaffiliated insurance companies.

All segment revenues are generated from external customers and we do not have a reliance on any major customer.

App.-A-35

We evaluate profitability based on pretax underwriting profit (loss) for the Personal Lines and Commercial Lines segments and for the other indemnity businesses. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Service business pretax profit (loss) is the difference between service business revenues and service business expenses.

Expense allocations are based on certain assumptions and estimates primarily related to revenue and volume; stated segment operating results would change if different methods were applied. We do not allocate assets or income taxes to operating segments. In addition, we do not separately identify depreciation and amortization expense by segment, and such allocation would be impractical. Companywide depreciation expense was $97.1 million in 2014, $101.3 million in 2013, and $94.4 million in 2012. The accounting policies of the operating segments are the same as those described in Note 1 - Reporting and Accounting Policies.

Following are the operating results for the years ended December 31:

	2014						2013						2012
(millions)	Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)
Personal Lines
Agency	$	9,087.0		$	683.0		$	8,601.5		$	542.9		$	8,103.9		$	338.9
Direct	7,474.0			423.4			6,740.1			473.9			6,264.2			289.5
Total Personal Lines1	16,561.0			1,106.4			15,341.6			1,016.8			14,368.1			628.4
Commercial Lines	1,837.5			315.8			1,761.6			114.1			1,649.0			86.3
Other indemnity	0			(11.9		)	0.2			(10.8		)	0.9			(5.8		)
Total underwriting operations	18,398.5			1,410.3			17,103.4			1,120.1			16,018.0			708.9
Fees and other revenues2	309.1			NA			291.8			NA			281.8			NA
Service businesses	56.0			5.1			39.6			0.8			36.1			0
Investments3	632.6			613.7			740.4			721.6			749.8			734.4
Gains (losses) on extinguishment of debt	(4.8		)	(4.8		)	(4.3		)	(4.3		)	(1.8		)	(1.8		)
Interest expense	NA			(116.9		)	NA			(118.2		)	NA			(123.8		)
Consolidated total	$	19,391.4		$	1,907.4		$	18,170.9		$	1,720.0		$	17,083.9		$	1,317.7

NA = Not Applicable

¹ Personal auto insurance accounted for 92% of the total Personal Lines segment net premiums earned in 2014, compared to 91% in 2013 and 2012; insurance for our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

² Pretax profit (loss) for fees and other revenues are allocated to operating segments.

³ Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expenses.

App.-A-36

Progressive’s management uses underwriting margin and combined ratio as primary measures of underwriting profitability. Underwriting profitability is calculated by subtracting losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses from the total of net premiums earned and fees and other revenues. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned (i.e., revenues from underwriting operations). Combined ratio is the complement of the underwriting margin. Following are the underwriting margins/combined ratios for our underwriting operations for the years ended December 31:

	2014			2013			2012
	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio
Personal Lines
Agency	7.5	%	92.5	6.3	%	93.7	4.2	%	95.8
Direct	5.7		94.3	7.0		93.0	4.6		95.4
Total Personal Lines	6.7		93.3	6.6		93.4	4.4		95.6
Commercial Lines	17.2		82.8	6.5		93.5	5.2		94.8
Other indemnity1	NM		NM	NM		NM	NM		NM
Total underwriting operations	7.7		92.3	6.5		93.5	4.4		95.6

¹ Underwriting margins/combined ratios are not meaningful (NM) for our other indemnity businesses due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

11.  OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss) for the years ended December 31, were as follows:

										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
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6
Other comprehensive income (loss) before reclassifications:
Investment securities	362.1			(126.7		)	235.4			235.4			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0			0			0			0			0			0
Forecasted transactions	(1.6		)	0.6			(1.0		)	0			(1.0		)	0
Foreign currency translation adjustment	(1.3		)	0.4			(0.9		)	0			0			(0.9		)
Total other comprehensive income (loss) before reclassifications	359.2			(125.7		)	233.5			235.4			(1.0		)	(0.9		)
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
Net realized gains (losses) on securities	255.0			(89.2		)	165.8			165.5			0.3			0
Interest expense	2.0			(0.7		)	1.3			0			1.3			0
Total reclassification adjustment for amounts realized in net income	249.3			(87.2		)	162.1			160.5			1.6			0
Total other comprehensive income (loss)	109.9			(38.5		)	71.4			74.9			(2.6		)	(0.9		)
Balance at December 31, 2014	$	1,574.0		$	(550.9	)	$	1,023.1		$	1,021.9		$	1.5		$	(0.3	)

App.-A-37

										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
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2
Other comprehensive income (loss) before reclassifications:
Investment securities	368.2			(128.9		)	239.3			239.3			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0.4			(0.1		)	0.3			0.3			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	(2.5		)	0.9			(1.6		)	0			0			(1.6		)
Total other comprehensive income (loss) before reclassifications	366.1			(128.1		)	238.0			239.6			0			(1.6		)
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(5.7		)	2.0			(3.7		)	(3.7		)	0			0
Net realized gains (losses) on securities	245.5			(86.0		)	159.5			159.0			0.5			0
Interest expense	2.2			(0.7		)	1.5			0			1.5			0
Total reclassification adjustment for amounts realized in net income	242.0			(84.7		)	157.3			155.3			2.0			0
Total other comprehensive income (loss)	124.1			(43.4		)	80.7			84.3			(2.0		)	(1.6		)
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6

										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
Balance at December 31, 2011	$	1,065.4		$	(372.9	)	$	692.5		$	682.8		$	7.9		$	1.8
Other comprehensive income (loss) before reclassifications:
Investment securities	488.0			(170.8		)	317.2			317.2			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	7.9			(2.8		)	5.1			5.1			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	0.6			(0.2		)	0.4			0			0			0.4
Total other comprehensive income (loss) before reclassifications	496.5			(173.8		)	322.7			322.3			0			0.4
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(0.4		)	0.1			(0.3		)	(0.3		)	0			0
Net realized gains (losses) on securities	220.1			(77.0		)	143.1			142.7			0.4			0
Interest expense	2.2			(0.8		)	1.4			0			1.4			0
Total reclassification adjustment for amounts realized in net income	221.9			(77.7		)	144.2			142.4			1.8			0
Total other comprehensive income (loss)	274.6			(96.1		)	178.5			179.9			(1.8		)	0.4
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2

App.-A-38

In an effort to manage interest rate risk, we entered into forecasted transactions on each of our outstanding debt issuances. Upon issuing the debt, the gains (losses) recognized on these cash flow hedges are recorded as unrealized gains (losses) in accumulated other comprehensive income and amortized into interest expense over the term of the related debt issuance. We expect to reclassify $2.0 million (pretax) into income during the next 12 months, related to net unrealized gains on forecasted transactions.

To the extent we repurchased any of our outstanding debt, a portion of the unrealized gain (loss) would need to be recognized as a realized gain (loss) since the cash flow hedge is deemed ineffective. During 2014, 2013, and 2012, we repurchased in the open market a portion of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 and reclassified $0.5 million, $0.8 million, $0.6 million, respectively, on a pretax basis, from accumulated other comprehensive income on the balance sheet to net realized gains on securities on the comprehensive income statement (see Note 4 - Debt for further discussion).

12.  LITIGATION

The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.

In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits arising out of the operations of the insurance subsidiaries. Other insurance companies face many of these same issues. The lawsuits discussed below are in various stages of development. We plan to contest these suits vigorously, but may pursue settlement negotiations in some cases, if appropriate. The outcomes of pending cases are uncertain at this time.

We establish accruals for lawsuits when it is probable that a loss has been or will be incurred and we can reasonably estimate its potential exposure, which may include a range of loss (referred to as a loss that is both “probable and estimable” in the discussion below). As to lawsuits in which the loss is not considered both probable and estimable, or is considered probable but not estimable, we do not establish an accrual in accordance with current accounting guidance. It is generally not possible to determine the exposure associated with our lawsuits for a number of reasons, including, without limitation, one or more of the following: liability appears to be remote; putative class action lawsuits generally pose immaterial exposure until a class is actually certified, which, historically, has not been granted by the courts in the vast majority of our cases in which certification has been sought; class definitions are often indefinite and preclude detailed exposure analysis; and complaints rarely state an amount sought as relief, and when such amount is stated, it is often a function of pleading requirements and may be unrelated to the potential exposure. The following is a discussion of potentially significant pending cases at December 31, 2014, and certain cases resolved during the three-year period then ended.

As to the pending cases, although their outcomes are uncertain, in each case we do not believe that the outcome will have a material impact on our consolidated financial condition, cash flows, or results of operations. In addition, we do not consider the losses from the pending cases to be both probable and estimable (except as noted below), and we are unable to estimate a range of loss, if any, at this time, due to the factors discussed above. In the event that any one or more of these cases results in a substantial judgment against, or settlement by, Progressive, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material effect on our consolidated financial condition, cash flows, and/or results of operations.

Pending cases at December 31, 2014 that challenge certain of our insurance subsidiaries' practices, include:

• One putative class action lawsuit alleging that Progressive’s website did not adequately disclose sufficient information concerning the PIP deductibles when customers indicated they are covered by private health insurance.

• One putative class action lawsuit challenging the labor rates our insurance subsidiaries pay to auto body repair shops.

• One patent matter alleging that Progressive infringes on patented marketing technology.

• Two putative class action lawsuits alleging that Progressive steers customers to Service Centers and network shops to have their vehicles repaired.

• Four putative class action lawsuits challenging Progressive’s practice in Florida of adjusting PIP and first-party medical payments.

• Three putative class action lawsuits challenging our adjustment of medical bills submitted by insureds in bodily injury claims.

App.-A-39

• One putative class action lawsuit challenging our policy form with regard to rejecting uninsured motorist coverage. We have established an accrual for this matter because it is probable that a loss has been incurred on this lawsuit and we were able to estimate a loss. The case is ongoing and a settlement has not been reached. The range of possible loss and amount of the accrual are not material to our consolidated financial condition, cash flows, or results of operations.

• One putative class action lawsuit challenging the manner in which Progressive grants a discount for anti-theft devices.

• Two putative class action lawsuits alleging that Progressive charged insureds for illusory uninsured motorist/underinsured motorist coverage.

• One putative and one certified class action lawsuit alleging that Progressive undervalues total loss claims through the use of certain valuation tools.

• Two conditionally certified collective class action lawsuits challenging our exempt employee classification for certain claims employees under applicable wage and hour laws.

• One putative class action lawsuit alleging Progressive fails to timely review and pay diminished value claims.

• Two qui tam lawsuits alleging Progressive does not comply with its purported obligation to reimburse Medicare for medical payments made to Medicare beneficiaries.

• Eighteen individual and one putative class action lawsuit pending as multi-district litigation alleging Progressive and other insurers conspire to suppress body repair shop labor rates.

For cases that have settled, but for which settlement is not complete, an accrual has been established at our best estimate of the exposure. Settlements that are complete are fully reflected in our financial statements. The amounts accrued or paid for these settlements were not material to our consolidated financial condition, cash flows, or results of operations.

Cases settled during 2014 include:

• One putative class action lawsuit alleging that Progressive steers customers to Service Centers and network shops to have their vehicles repaired. This matter was settled on an individual basis.

• One putative class action lawsuit alleging that Progressive negligently designed, manufactured, and deceptively advertised Snapshot^® in that it purportedly drains a vehicle's battery to the point that the battery is non-functional or diminished in value. This matter was settled on an individual basis.

• One putative class action lawsuit alleging that Progressive violated the Telephone Consumer Protection Act in making cell phone calls to insureds. This matter was settled on an individual basis.

Cases settled during 2013 include:

• One putative class action lawsuit alleging that Progressive did not reimburse any of its insureds who incurred legal fees to recover money from another Progressive insured. This case was accrued for, settled, and paid in 2013.

• One putative class action lawsuit alleging that Progressive improperly applies a preferred provider discount to medical payment claims. This case was accrued for and settled in 2013.

• One putative class action lawsuit challenging the manner in which Progressive charges premium and assesses total loss claims for commercial vehicle stated amount policies. This case was accrued for, settled, and paid in 2013.

• Two putative class action lawsuits challenging Progressive’s practice in Florida of adjusting PIP and first-party medical payments. Both cases were settled on an individual basis.

Cases settled during 2012 include:

• One putative class action lawsuit that challenged Progressive’s use of certain automated database vendors or software to assist in the adjustment of bodily injury claims where the plaintiffs alleged that these databases or software systematically undervalued the claims; an accrual was established during 2012, and the case was paid in 2013.

App.-A-40

13.  COMMITMENTS AND CONTINGENCIES

We have certain noncancelable operating lease commitments with lease terms greater than one year for property and computer equipment. The minimum commitments under these agreements at December 31, 2014, were as follows:

(millions)	Commitments
2015	$	46.2
2016	43.7
2017	37.2
2018	27.1
2019	16.4
Thereafter	4.4
Total	$	175.0

Some of the leases have options to renew at the end of the lease periods. The expense we incurred for the leases disclosed above, as well as other operating leases that may be cancelable or have terms less than one year, was:

(millions)	Expense
2014	$	63.4
2013	64.6
2012	71.9

We also have certain noncancelable purchase obligations. The minimum commitment under these agreements at December 31, 2014, was $493.5 million.

As of December 31, 2014, we had no open investment funding commitments; we had no uncollateralized lines or letters of credit as of December 31, 2014 or 2013.

App.-A-41

14. DIVIDENDS

We maintain a policy of paying an annual variable dividend that, if declared, would be payable shortly after the close of the year. This annual variable dividend is based on a target percentage of after-tax underwriting income multiplied by a companywide performance factor (Gainshare factor), subject to the limitations discussed below. The target percentage is determined by our Board of Directors on an annual basis and announced to shareholders and the public. In December 2013, the Board determined the target percentage for 2014 to be 33-1/3% of annual after-tax underwriting income, which is unchanged from the target percentage in both 2013 and 2012.

The Gainshare factor can range from zero to two and is determined by comparing our operating performance for the year to certain predetermined profitability and growth objectives approved by the Compensation Committee of the Board. This Gainshare factor is also used in the annual cash bonus program currently in place for our employees (our “Gainsharing program”). Although recalibrated every year, the structure of the Gainsharing program generally remains the same. For 2014, the Gainshare factor was 1.32, compared to 1.21 in 2013 and 1.12 in 2012.

Our annual dividend program will result in a variable payment to shareholders each year, subject to certain limitations. If the Gainshare factor is zero or if our comprehensive income is less than after-tax underwriting income, no dividend would be payable under our annual variable dividend policy. In addition, the ultimate decision on whether or not a dividend will be paid is in the discretion of the Board of Directors. The Board could decide to alter our policy, or not to pay the annual variable dividend, at any time prior to the declaration of the dividend for the year. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in federal income tax laws, disruptions of national or international capital markets, or other events affecting our business, liquidity, or financial position.

Following is a summary of our shareholder dividends, both variable and special, that were paid in the last three years:

(millions, except per share amounts)			Amount
Dividend Type	Declared	Paid	Per Share		Total1
Annual – Variable	December 2014	February 2015	$	0.6862	$	404.1
Annual – Variable	December 2013	February 2014	0.4929		293.9
Special	December 2013	February 2014	1.0000		596.3
Annual – Variable	December 2012	February 2013	0.2845		172.0
Special	October 2012	November 2012	1.0000		604.7

¹ Based on shares outstanding as of the record date.

15. SUBSEQUENT EVENT

On January 26, 2015, we issued $400.0 million of our 3.70% Senior Notes due 2045 (the “3.70% Senior Notes”).  We received proceeds of $394.9 million, after deducting underwriter’s discounts and commissions. In addition, we incurred expenses of approximately $0.8 million related to the issuance.  Upon issuance of the 3.70% Senior Notes, we also closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $12.9 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 3.70% Senior Notes.

App.-A-42

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of The Progressive Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows, present fairly, in all material respects, the financial position of The Progressive Corporation and its subsidiaries at December 31, 2014 and December 31, 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

March 2, 2015

App.-A-43

Management’s Report on Internal Control over Financial Reporting

Progressive’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control structure was designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control – Integrated Framework (2013), management concluded that our internal control over financial reporting was effective as of December 31, 2014.

During the fourth quarter 2014, there were no changes in our internal control over financial reporting identified in the internal control review process that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PricewaterhouseCoopers LLP, an independent registered public accounting firm that audited the financial statements included in this Annual Report, has audited, and issued an attestation report on the effectiveness of, our internal control over financial reporting as of December 31, 2014; such report appears herein.

CEO and CFO Certifications

Glenn M. Renwick, President and Chief Executive Officer of The Progressive Corporation, and Brian C. Domeck, Vice President and Chief Financial Officer of The Progressive Corporation, have issued the certifications required by Sections 302 and 906 of The Sarbanes-Oxley Act of 2002 and applicable SEC regulations with respect to Progressive’s 2014 Annual Report on Form 10-K, including the financial statements provided in this Report. Among other matters required to be included in those certifications, Mr. Renwick and Mr. Domeck have each certified that, to the best of his knowledge, the financial statements, and other financial information included in the Annual Report on Form 10-K, fairly present in all material respects the financial condition, results of operations, and cash flows of Progressive as of, and for, the periods presented. See Exhibits 31 and 32 to Progressive’s Annual Report on Form 10-K for the complete Section 302 and 906 certifications, respectively.

App.-A-44

The Progressive Corporation and Subsidiaries

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our consolidated financial statements and the related notes, together with the supplemental information, should be read in conjunction with the following discussion and analysis of our consolidated financial condition and results of operations.

I. OVERVIEW

The Progressive Corporation is a holding company that does not have any revenue producing operations, physical property, or employees of its own. The Progressive Group of Insurance Companies consists of our insurance subsidiaries and mutual insurance company affiliate. The Progressive Group of Insurance Companies, together with our holding company, non-insurance subsidiaries, and limited partnership investment affiliate, comprise what we refer to as Progressive.

We have been offering insurance to consumers since 1937 and are estimated to be the country’s fourth largest private passenger auto insurer based on net premiums written during 2014. Our insurance companies offer personal and commercial automobile insurance and other specialty property-casualty insurance and related services throughout the United States, as well as personal auto physical damage and property damage liability insurance on an Internet-only basis in Australia. Our Personal Lines segment writes insurance for private passenger automobiles and recreational vehicles through more than 35,000 independent insurance agencies and directly to consumers online, on mobile devices, and over the phone. Our Commercial Lines segment offers insurance for cars and trucks owned and/or operated predominantly by small businesses through both the independent agency and direct channels; this business is estimated to be ranked in the top two in the commercial auto industry for 2014, based on net premiums written. Our underwriting operations, combined with our service and investment operations, make up the consolidated group.

The Progressive Corporation is a holding company and receives cash through subsidiary dividends, security sales, borrowings, and other transactions, and uses these funds to contribute to its subsidiaries (e.g., to support growth), to make payments to shareholders and debt holders (e.g., dividends and interest, respectively), to repurchase its common shares and debt, as well as for acquisitions and other business purposes that might arise.

The Progressive Corporation received cash through the following ways:

• Subsidiary dividends - received $1.0 billion of dividends, net of capital contributions, from our insurance and non-insurance subsidiaries during 2014, and

• Debt issuances - to take advantage of the low interest rate environment and to increase our financial flexibility, we issued $350 million of 4.35% Senior Notes due 2044 in April 2014 and another $400 million of 3.70% Senior Notes due 2045 in January 2015.

Consistent with our policy to deploy underleveraged capital for share repurchases and shareholder dividends, or consider acquisitions, and in light of our strong capital position, during 2014, we took the following actions:

• Dividends - declared a $0.6862 per share annual variable dividend, which returned $404.1 million of capital to our shareholders,

• Repurchases - repurchased both our common shares and debt securities

◦ Shares - bought back 11.1 million of our common shares at a total cost of $271.4 million

◦ Debt - repurchased, in the open market, $44.3 million principal amount of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067, and

• Acquisitions - signed a purchase agreement to acquire an additional 62% ownership stake in ARX Holding Corp., the parent company of American Strategic Insurance, our current provider of homeowners insurance in our "bundled" auto-homeowners insurance package offered through our Agency channel; the estimated cost of the acquisition, which is expected to close in April 2015, is $875 million.

We ended 2014 with $9.1 billion of total capital (debt and equity). We continue to manage our investing and financing activities in order to maintain sufficient capital to support all the insurance we can profitably write and service, while deploying underleveraged capital to shareholders.

A. Operating Results

Our multi-year trend of crossing another billion dollar threshold continued in 2014 with net premiums written of $18.7 billion. We added approximately 205,600 policies during the year, bringing our total policies in force to nearly 13.8 million by year end. Although new policies are necessary to maintain a growing book of business, we continue to recognize the importance of retaining our current customers as a critical component of our ongoing growth.

App.-A-45

Our net income increased to $1.3 billion, or $2.15 per share, from $1.2 billion, or $1.93 per share, last year, primarily reflecting higher underwriting profitability. Comprehensive income was $1.35 billion, up from $1.25 billion last year. Underwriting profitability for the year of 7.7%, or $1.4 billion on a pretax basis, was 1.2 points better than last year and exceeded our targeted profitability objective of at least 4%. Exceptionally strong profitability in our Commercial Lines business and in our special lines products contributed to this strong outperformance against our target underwriting profitability of 4%. We experienced decreases on a year-over-year basis in both our recurring investment income and our net realized gains (losses) on our investment portfolio of 3% and 30%, respectively. The decrease in investment income was due in part to an increase in short-term investments held during the year and lower yields on securities purchased during the last 12 months. During 2014, our derivative positions, which are used to shorten the duration of our fixed-income portfolio, realized losses of $64.6 million as interest rates continued to decline during the year.

B. Insurance Operations

Our Personal Lines business reported an underwriting profit of 6.7%, with 41 states meeting or exceeding their profitability target; only four states generated an underwriting loss for 2014. Our special lines products had a very profitable year, reflecting the absence of significant storms, favorably impacting our total Personal Lines combined ratio by about 1.3 points. Underwriting profitability in our Commercial Lines business was exceptional at 17.2%, with 47 states generating an underwriting profit. The significant underwriting profitability in our Commercial Lines business was due to a lower loss ratio, following rate increases taken during the last two years, lower frequency, mainly in our truck business, and favorable case reserve development in 2014.

During the year, we recognized about one loss ratio point of catastrophe losses, the same amount we recognized in 2013. The 2014 catastrophe losses were mainly from hail storms in many areas of the country primarily during the first half of 2014, but the year overall was not characterized by significant storms, especially the relative absence of hurricanes.

We also realized minimal overall prior accident year development. During 2014, favorable development in our Commercial Lines business was partially offset by unfavorable development in our Agency auto business. For the year, our overall incurred severity increased about 4%, while frequency was relatively flat, compared to the prior year.

On a year-over-year basis, net premiums written and earned both increased 8%. Changes in net premiums written are a function of new business applications, premium per policy, and retention.

During 2014, total new personal auto applications increased 2% on a year-over-year basis, reflecting a 10% increase in our Direct auto business and a 7% decrease in our Agency auto business. Our Direct auto business sold over two million new policies in 2014, the most new policies we have ever sold in one year. The decline in new business in Agency auto was due in part to rate and underwriting actions we took early in 2014 in several states to meet margin targets, as well as actions by our competitors to increase their competitiveness in the marketplace. Our results in the Agency channel did not meet our expectations, and we are responding with product design, underwriting, and ease-of-use modifications where it makes sense to do so.

Our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) new applications were flat, compared to 2013. New applications for our Commercial Lines business increased about 1% for the year, due to a combination of lowering rates in our business auto and contractor business market targets, lifting some of the underwriting restrictions we placed on new business, and the tightening of conditions in this market.

App.-A-46

We continue to look at ways to help stimulate growth and provide consumers with distinctive insurance options. During 2014, we took the following actions:

• We entered Massachusetts with our Agency auto product, joining our Direct auto product that we began offering several years ago. We now offer our auto product through both our Agency and Direct channel in every state and the District of Columbia.

• We introduced a renters insurance product in the Agency channel to offer our agents the option to bundle renters and auto insurance, thereby increasing the propensity of our customers to stay with us.

• Snapshot^®, our usage-based insurance product, continues to evolve. In our new program that we just began to roll out, we are affording more customers discounts for their good driving behavior while for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates. We are also offering a Snapshot enrollment discount that varies at the customer-segment level, such as a higher discount for more preferred drivers.

• We continued to invest heavily in our mobile experience for both current and prospective customers since the number of our users on this platform for certain transactions now approximates those of the phone and computer-based Internet.

• Our efforts to provide additional insurance products through our strategy of "bundling" our auto coverages with other coverages, such as home, renters, and umbrella insurance, continues to be an important part of our strategy. We remain satisfied with our current unaffiliated providers for these products in the Direct channel but took the opportunity during the year to solidify our auto-homeowners insurance package offered through the Agency channel by signing a purchase agreement to acquire a controlling interest in the parent company of American Strategic Insurance, our current homeowners insurance provider in this channel.

During 2014, on a year-over-year basis, our written premium per policy for our Agency and Direct auto businesses increased 4% and 3%, respectively. Written premium per policy for our special lines products increased 2%, compared to last year. Commercial Lines experienced a 4% increase in written premium per policy. The increases resulted from both rate changes and shifts in our mix of business. Overall, rates are up slightly, year over year, with most of the rate increase taken in the first half of 2014. We will continue to evaluate future rate needs and react quickly as we recognize loss cost trends at the state level.

Companywide policies in force increased 2% on a year-over-year basis since December 31, 2013, reflecting an increase in our Personal Lines business; our Commercial Lines business was flat year over year. The biggest contributor to the Personal Lines growth was our Direct auto business, where policies in force grew 7%. Our special lines products grew slightly at 1% while Agency auto policies in force decreased 2%.

To further grow policies in force, it is critical that we retain our customers for longer periods. Consequently, increasing retention is one of our most important priorities, and our efforts to increase the number of multi-product households continues to be a key initiative to support that goal. Policy life expectancy, which is our actuarial estimate of the average length of time that a policy will remain in force before cancellation or lapse in coverage, is one measure of customer retention. We have historically disclosed our changes in policy life expectancy using a trailing 12-month period since we believe this measure is indicative of recent experience, mitigates the effects of month-to-month variability, and addresses seasonality. Using a trailing 12-month measure, policy life expectancy decreased 2% for our Agency auto business and increased 3% for our Direct auto business, compared to last year. The policy life expectancy for our Commercial Lines business and special lines products were flat, compared to last year.

In 2014, we began to disclose policy life expectancy for our personal auto products using a trailing 3-month measure. Although using a trailing 3-month measure does not address seasonality and can create more volatility, this measure is more responsive to current experience and can be an indicator in how our retention rates are moving. Our trailing 3-month policy life expectancy, on a year-over-year basis, was down 4% in Direct auto and down 7% in Agency auto, resulting from increased rates in both channels early in 2014. We will maintain our focus on providing customers with more stable rates and other insurance-related products and services they may need over time in our ongoing efforts to increase retention.

C. Investments

The fair value of our investment portfolio was $19.0 billion at December 31, 2014. Our asset allocation strategy is to maintain 0-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities. We define Group I securities to include:

• 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.

App.-A-47

Group II securities include:

• short-term securities, and

• all other fixed-maturity securities, including 50% of investment-grade redeemable preferred stocks with cumulative dividends.

We use the credit ratings from models provided by the National Association of Insurance Commissioners (NAIC) for classifying our residential and commercial mortgage-backed securities (excluding interest-only securities), and credit ratings from nationally recognized statistical rating organizations (NRSRO) for all other debt securities, in determining whether securities should be classified as Group I or Group II. At December 31, 2014, 23% of our portfolio was allocated to Group I securities and 77% to Group II securities, compared to 22% and 78%, respectively, at December 31, 2013.

Our investment portfolio produced a fully taxable equivalent (FTE) total return of 4.5% for 2014, compared to 5.4% for 2013. Our common stock and fixed-income portfolios contributed to these total returns with FTE returns of 12.6% and 3.2%, respectively, for 2014, and 32.8% and 1.7%, for 2013. The overall decrease is primarily the result of lower equity market returns in 2014, compared to 2013. At December 31, 2014, the fixed-income portfolio had a weighted average credit quality of A+, compared to AA- at December 31, 2013. We maintain our fixed-income portfolio strategy of investing in high-quality, liquid securities.

Our recurring investment income generated a pretax book yield of 2.4% for 2014, compared to 2.6% for 2013. The decrease in yield for the year was the result of investing new money, including reinvestment of cash, in short-duration securities with lower yields, a decrease in our portfolio duration, which included an increase in the amount of short-term investments we hold, and some sales of higher book yield securities at realized gains. At December 31, 2014, our duration was 1.6 years, compared to 2.0 years at December 31, 2013. We remain confident in our preference for shorter duration positioning during times of low interest rates as a means to limit any decline in portfolio value from an increase in rates, and we expect long-term benefits from any return to more substantial yields.

II.  FINANCIAL CONDITION

A. Holding Company

In 2014, The Progressive Corporation, the holding company, received $1.0 billion of dividends, net of capital contributions, from its subsidiaries. For the three-year period ended December 31, 2014, The Progressive Corporation received $2.8 billion of dividends from its subsidiaries, net of capital contributions. Regulatory restrictions on subsidiary dividends are described in Note 8 – Statutory Financial Information.

In 2014, we issued $350 million of our 4.35% Senior Notes due 2044 (the "4.35% Senior Notes"); no debt was issued in 2013 or 2012. In January 2015, we issued $400 million of our 3.70% Senior Notes due 2045 (the “3.70% Senior Notes”). During 2013, we retired all $150 million of our 7% Notes and in 2012, we retired all $350 million of our 6.375% Senior Notes, each at maturity. Our debt-to-total capital (debt plus equity) ratios at December 31, 2014, 2013, and 2012 were 23.8%, 23.1%, and 25.6%, respectively. If we adjusted the ratio for the 3.70% Senior Notes, our debt-to-total capital ratio would have been 27.0% at December 31, 2014.

From time to time, we may elect to repurchase our outstanding debt securities in the open market, or in privately negotiated transactions, reducing our future interest expense when management believes that such securities are attractively priced and capital is available for such a purpose. During the last three years, we repurchased $129.3 million in aggregate principal amount of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “6.70% Debentures”). See Note 4 – Debt and the Liquidity and Capital Resources section below for a further discussion of our debt activity.

We continued our practice of repurchasing our common shares and paying dividends to our shareholders in accordance with our financial policies. In addition, in December 2014, we signed a purchase agreement to acquire a controlling interest in ARX Holding Corp., the parent company of American Strategic Insurance (ASI), for an estimated cost of $875 million, which will be funded with available cash. The acquisition is expected to close in April 2015.

As of December 31, 2014, we had 20.0 million shares remaining under our 2011 Board repurchase authorization. The following table shows our share repurchase activity during the last three years:

(millions, except per share amounts)	2014		2013		2012
Total number of shares purchased	11.1		11.0		8.6
Total cost	$	271.4	$	273.4	$	174.2
Average price paid per share	$	24.56	$	24.80	$	20.26

App.-A-48

We maintain a policy of paying an annual variable dividend that, if declared, would be payable shortly after the close of the year. See Note 14 - Dividends for a further discussion of our annual variable dividend policy.

Following is a summary of our shareholder dividends, both variable and special, that were either declared or paid in the last three years:

(millions, except per share amounts)			Amount
Dividend Type	Declared	Paid	Per Share		Total1
Annual – Variable	December 2014	February 2015	$	0.6862	$	404.1
Annual – Variable	December 2013	February 2014	0.4929		293.9
Special	December 2013	February 2014	1.0000		596.3
Annual – Variable	December 2012	February 2013	0.2845		172.0
Special	October 2012	November 2012	1.0000		604.7
Annual – Variable	December 2011	February 2012	0.4072		249.4

¹ Based on shares outstanding as of the record date.

The declaration of the special dividends did not affect our annual variable dividend program in those years.

B. Liquidity and Capital Resources

Progressive’s insurance operations create liquidity by collecting and investing premiums from new and renewal business in advance of paying claims. As an auto insurer, our claims liabilities are generally short in duration. Typically, at any point in time, approximately 50% of our outstanding loss and LAE reserves are paid within the following twelve months and about 15% are still outstanding after three years. See Claims Payment Patterns, a supplemental disclosure provided in this Annual Report, for further discussion of the timing of personal auto claims payments.

For the three years ended December 31, 2014, operations generated positive cash flows of about $5.3 billion, and cash flows are expected to remain positive in both the short-term and reasonably foreseeable future. In 2014, our operating cash flows decreased $174.3 million, compared to 2013, primarily due to an increase in our acquisition costs, including higher advertising expenditures and more agent commissions paid.

As of December 31, 2014, our consolidated statutory surplus was $6.4 billion, compared to $6.0 billion at December 31, 2013. Our net premiums written-to-surplus ratio was 2.9 to 1 at year-end in each of the last three years. At year-end 2014, we also had access to $1.9 billion of securities held in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth or, for other purposes. We used $404.1 million of available funds to pay the annual variable dividend in February 2015. These funds are also available to pay the estimated $875 million purchase price for the pending acquisition of a controlling interest in the parent company of ASI.

Our insurance subsidiaries' risk-based capital ratios, which are a series of dynamic surplus-related formulas required by the laws of various states that contain a variety of factors that are applied to financial balances based on the degree of certain risks (e.g., asset, credit, and underwriting), are well in excess of minimum regulatory requirements. Nonetheless, the payment of dividends by our insurance subsidiaries may be subject to certain limitations. See Note 8 – Statutory Financial Information for additional information on insurance subsidiary dividends.

As of December 31, 2014, 77% of our portfolio was invested in Group II securities, as defined above. In addition, our fixed-income portfolio duration was 1.6 years, with a weighted average credit quality of A+. At year end, we held $4.8 billion in short-term investments and U.S. Treasury securities. Based on our portfolio allocation and investment strategies, we believe that we have sufficient readily available marketable securities to cover our claims payments without having a negative effect on our cash flows from operations. See Item 1A, “Risk Factors,” in our Form 10-K filed with the Securities and Exchange Commission (SEC) for a discussion of certain matters that may affect our portfolio and capital position.

App.-A-49

As noted above, we issued, in January 2015, $400 million of our 3.70% Senior Notes due 2045 and, in 2014, $350 million of our 4.35% Senior Notes due 2044, in underwritten public offerings. We received net proceeds, after deducting underwriter's discounts and commissions and other expenses related to the issuances, of approximately $394.1 million and $345.6 million, respectively, which were added to our investment portfolios. We issued this debt to take advantage of attractive terms in the market and allow for financial flexibility. We plan to use these funds for general corporate purposes, which may include the repurchase of our outstanding securities, and repayment or redemption of outstanding indebtedness, among other uses.

During the last three years, we retired the entire $150 million of our 7% Senior Notes due 2013 and the entire $350 million of our 6.375% Senior Notes due 2012, each at maturity. We have no scheduled debt maturities in the next five years.

Based upon our capital planning and forecasting efforts, we believe that we have sufficient capital resources, cash flows from operations, and borrowing capacity to support our current and anticipated business, scheduled principal and interest payments on our debt, any declared dividends, acquisition-related commitments, and other expected capital requirements. The covenants on our existing debt securities do not include any rating or credit triggers that would require an adjustment of the interest rate or an acceleration of principal payments in the event our securities are downgraded by a rating agency.

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

Management views our capital position as consisting of three layers, each with a specific size and purpose:

• 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 quite 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 of capital is capital in excess of the sum of the first two layers and provides maximum flexibility to repurchase stock or other securities, 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.

At all times during the last two years, our total capital exceeded the sum of our regulatory capital layer plus our self-constructed extreme contingency layer. At December 31, 2014, we held total capital (debt plus equity) of $9.1 billion, compared to $8.1 billion at December 31, 2013. During the year, we issued $350 million of our 4.35% Senior Notes in April 2014 and declared our annual variable dividend of $404.1 million in December.

Short-Term Borrowings

During the last three years, we did not engage in short-term borrowings to fund our operations or for liquidity purposes. As discussed above, our insurance operations create liquidity by collecting and investing insurance premiums in advance of paying claims. Information concerning our insurance operations can be found below under Results of Operations – Underwriting, and details about our investment portfolio can be found below under Results of Operations – Investments.

During 2014, we renewed our unsecured, discretionary line of credit (the "Line of Credit") with PNC Bank, National Association (PNC) in the maximum principal amount of $100 million. The prior line of credit, which was entered into during 2013, had expired. The Line of Credit is on substantially the same terms and conditions as the prior line of credit. All advances under this agreement are subject to PNC’s discretion, would bear interest at a variable daily rate, and must be repaid on the earlier of the 30th day after the advance or the expiration date of the facility, March 25, 2015. We had no borrowings under either line of credit throughout 2014 or 2013. Our intent is to renew this line of credit for an additional year.

App.-A-50

We did not enter into any repurchase commitment transactions during 2014. In 2013, we entered into repurchase commitment transactions, which were open for a total of 48 days. In these transactions, we loaned U.S. Treasury securities to internally approved counterparties in exchange for cash equal to the fair value of the securities. These transactions were entered into as overnight arrangements, and we had no open repurchase commitments at December 31, 2013. During the period, we invested in repurchase transactions in 2013, the largest single outstanding balance was $252.5 million, which was open for six days; the average daily balance was $94.8 million. These investment transactions were entered into to enhance the yield from our fixed-income portfolio and not as a source of liquidity or funding for our operations.

C. Commitments and Contingencies

Contractual Obligations

A summary of our noncancelable contractual obligations as of December 31, 2014, follows:

	Payments due by period
(millions)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt	$	2,182.8	$	0	$	0	$	0	$	2,182.8
Interest payments on debt1	1,424.6		121.3		221.3		157.7		924.3
Operating leases	175.0		46.2		80.9		43.5		4.4
Purchase obligations	493.5		240.1		186.3		56.8		10.3
Loss and loss adjustment expense reserves	8,857.4		4,581.9		2,842.8		767.5		665.2
Total	$	13,133.3	$	4,989.5	$	3,331.3	$	1,025.5	$	3,787.0

¹ Includes interest on the 6.70% Debentures at the fixed annual rate through, but excluding, June 15, 2017. See Note 4 – Debt for further discussion on the interest rate and maturity dates for these Debentures.

Purchase obligations represent our noncancelable commitments for goods and services (e.g., software licenses, maintenance on information technology equipment, and media placements). Unlike many other forms of contractual obligations, loss and loss adjustment expense (LAE) reserves do not have definitive due dates and the ultimate payment dates are subject to a number of variables and uncertainties. As a result, the total loss and LAE reserve payments to be made by period, as shown above, are estimates based on our recent payment patterns. To further understand our claims payments, see Claims Payment Patterns, a supplemental disclosure provided in this Annual Report. In addition, we annually publish a comprehensive Report on Loss Reserving Practices, which was most recently filed with the SEC on a Form 8-K on August 8, 2014, that further discusses our claims payment development patterns.

During the last three years, the only other significant new contractual commitments we entered outside the ordinary course of business was the issuance of $350 million of our 4.35% Senior Notes. In January 2015, we issued $400 million of our 3.70% Senior Notes.

As discussed in the Liquidity and Capital Resources section above, we believe that we have sufficient borrowing capability, cash flows, and other capital resources to satisfy these contractual obligations.

Off-Balance-Sheet Arrangements

Our off-balance-sheet leverage includes derivative positions (as disclosed in Note 2 – Investments and the Derivative Instruments section of this Management’s Discussion and Analysis), operating leases, and purchase obligations (disclosed in the table above).

App.-A-51

III.  RESULTS OF OPERATIONS – UNDERWRITING

A. Growth

($ in millions)	2014			2013			2012
NET PREMIUMS WRITTEN
Personal Lines
Agency	$	9,102.8		$	8,702.6		$	8,247.0
Direct	7,656.4			6,866.6			6,389.8
Total Personal Lines	16,759.2			15,569.2			14,636.8
Commercial Lines	1,895.4			1,770.5			1,735.9
Other indemnity	0			0			0
Total underwriting operations	$	18,654.6		$	17,339.7		$	16,372.7
Growth over prior year	8		%	6		%	8		%
NET PREMIUMS EARNED
Personal Lines
Agency	$	9,087.0		$	8,601.5		$	8,103.9
Direct	7,474.0			6,740.1			6,264.2
Total Personal Lines	16,561.0			15,341.6			14,368.1
Commercial Lines	1,837.5			1,761.6			1,649.0
Other indemnity	0			0.2			0.9
Total underwriting operations	$	18,398.5		$	17,103.4		$	16,018.0
Growth over prior year	8		%	7		%	7		%

Net premiums written represent the premiums from policies written during the period less any premiums ceded to reinsurers. Net premiums earned, which are a function of the premiums written in the current and prior periods, are earned as revenue over the life of the policy using a daily earnings convention.

We generated an increase in total written and earned premiums during each of the last three years. The increase in our Personal Lines premiums primarily reflects rate increases and shifts in the mix of our business to higher premium policies, as well as our continued work on several initiatives aimed at providing consumers with distinctive new insurance options (discussed below) and our marketing efforts. The premium increase in our Commercial Lines business is primarily a function of increased average written premium per policy, reflecting rate increases taken over the last few years.

Policies in force, our preferred measure of growth, represents all policies under which coverage was in effect as of the end of the period specified. As of December 31, our policies in force were:

(thousands)	2014		2013		2012
POLICIES IN FORCE
Personal Lines
Agency auto	4,725.5		4,841.9		4,790.4
Direct auto	4,505.5		4,224.2		4,000.1
Total auto	9,231.0		9,066.1		8,790.5
Special lines1	4,030.9		3,990.3		3,944.8
Total Personal Lines	13,261.9		13,056.4		12,735.3
Growth over prior year	2	%	3	%	4	%
POLICIES IN FORCE
Commercial Lines	514.7		514.6		519.6
Growth over prior year	0	%	(1	)%	2	%

¹ Includes insurance for motorcycles, ATVs, RVs, mobile homes, watercraft, snowmobiles, and similar items, as well as personal umbrella and renters products.

App.-A-52

To analyze growth, we review new policies, rate levels, and the retention characteristics of our books of business. The following table shows our year-over-year changes in new and renewal applications (i.e., issued policies):

	Growth Over Prior Year
	2014		2013		2012
APPLICATIONS
Personal Lines
New	1	%	(1	)%	(1	)%
Renewal	5	%	3	%	6	%
Commercial Lines
New	1	%	(6	)%	3	%
Renewal	1	%	0	%	1	%

In our Personal Lines business, for 2014, new applications increased in our Direct auto business, while our Agency auto new applications decreased year over year and our special lines new applications were flat. Rate and underwriting actions we took in the early part of 2014, along with actions by our competitors to increase their competitiveness, impacted our ability to generate new application growth in the Agency channel. In the Direct channel, our advertising expenditures and consumer messaging produced quotes in record numbers driving the increase in new applications. Our auto and special lines renewal applications increased in both distribution channels, with the Direct channel experiencing more significant increases.

Our Commercial Lines business new applications increased slightly for 2014, compared to 2013, due to a combination of lowering rates in our business auto and contractor business market targets during 2014, lifting some of the underwriting restrictions we had previously placed on new business, and the tightening of conditions in this market.

We continue to refine our personal auto segmentation and underwriting models. Our current model, which improved segmentation for preferred customers, adjusted pricing for our highest risk in-force customers, and improved the on-boarding experience for our Direct customers through a redesigned electronic signature process, has performed well. Our next model, which is already being released in its initial state, features more competitive preferred pricing, more sophisticated pricing for households that insure more than one product through Progressive, and enhancements to our usage-based program.

Snapshot^®, our usage-based insurance program, provides customers the opportunity to improve their auto insurance rates based on their personal driving behavior. Snapshot is currently available to our Agency and Direct auto customers in 45 states plus the District of Columbia. We currently have eight patents, and additional patent applications pending, related to usage-based insurance. During 2014, we wrote over $2.6 billion of premiums with customers who are part of our Snapshot program. The Snapshot portion of our business continues to grow at a rate considerably faster than the business as a whole and we continue to revise our product model to respond to demand. In our latest Snapshot program, we are affording more customers discounts for their good driving behavior while, for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates. We are also offering a Snapshot enrollment discount that varies at the customer-segment level, such as a higher discount for more preferred drivers.

We are also continuing with our efforts to further penetrate customer households through cross-selling auto policies with our special lines products and vice versa, as well as through Progressive Home Advantage^® (PHA). PHA is the program in which we “bundle” our auto product with property insurance provided by unaffiliated insurance carriers. Bundled products are an integral part of our consumer offerings and an important part of our strategic agenda. These customers represent a sizable segment of the market, and our experience is that they tend to stay with us longer and generally have a better loss experience. More and more of our customers, especially Direct auto customers, are now multi-product customers with combinations of special lines, homeowners, or renters, as well as auto coverage. As of December 31, 2014, PHA was available to Direct customers in 49 states, Agency customers in 26 states, including three states added during 2014, and to both Direct and Agency customers in the District of Columbia. PHA is available to Agency customers in Florida and, in 2014, was made available to Direct customers in that state. PHA is not yet available to customers in Alaska. In the Direct channel, PHA is provided by 12 unaffiliated insurance carriers.

To further solidify our position in the independent agency channel with our bundling strategy, in December 2014, we signed a purchase agreement to acquire a controlling interest in ARX Holding Corp., the parent entity of our strategic homeowners provider, ASI. After the acquisition is completed, which is expected to be in April 2015, we will own about 67% of ARX, with the ability to achieve 100% ownership within six years. We believe this transaction will advance both companies and attract a market segment of bundled customers that remains under-penetrated by both Progressive and ARX.

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In addition, during 2014, we introduced our own renters insurance product in our Agency channel. As of December 31, 2014, this product was offered in three states. We intend to roll out this product to additional states as part of our bundling strategy. The purpose of selling this renters insurance product is to write and retain more auto business and the size of the program will not significantly change our risk profile.

Expanding our capabilities in the mobile space also remains an important initiative. Consumers want the ability to transact all forms of business when and where they want and on whatever device best suits their needs (e.g., smartphone, tablet). We provide consumers with the ability to obtain a quote for and buy an auto insurance policy on our mobile website in all states and the District of Columbia. Our mobile quoting feature allows consumers nationwide to obtain a quote for at least five drivers and four vehicles. In most states, consumers can quote up to 12 drivers and 12 vehicles. We believe this multi-driver, multi-feature capability meets virtually all of consumer needs. We also provide the comparison rate experience on mobile devices and tablets in most of the country.

During 2014, we enhanced our mobile application for iPhone^® and Android^® smartphones to allow policyholders to easily access their policy documents, make payments directly from their checking account, and view both their payment schedule and billing history. Policyholders can also add endorsements and make account changes from their mobile device, as well as receive text alerts for billing and severe weather. In addition, much of our agency-dedicated website, which includes quote/buy, servicing, and reporting capabilities, is accessible to agents through many brands of tablet computers.

Our mobile application allows policyholders to view, store, and share their digital insurance ID card, which can be used as legal proof of insurance in most of the country. In addition, policyholders can report their claims and submit related photos using the application, as well as use their phone's GPS capabilities to specify the location of the claim. We also allow consumers to use their phone's camera to photograph their driver license and/or current insurance card to provide easy data fill for quotes started from our mobile application in 36 states and the District of Columbia. Our Commercial Lines customers can also now view their identification cards and certificates of insurance through this application.

Quotes, sales, payments, and document requests from mobile devices have been increasing and now represent low double-digit percentages of such transactions with Progressive. We recognize the importance of the mobile space and look for opportunities to add new functionality to our mobile websites and applications.

We are also expanding our Commercial Auto coverage offerings through our latest product model, which simplifies the quoting and claims experience, and provides incentives for customers to stay with us longer. In addition, through our Progressive Commercial Advantage^SM program, we offer general liability and business owners policies and workers' compensation coverage, all of which are written by unaffiliated insurance companies or agencies. The workers' compensation coverage is offered in 44 states, while the other products are offered throughout the continental United States.

We experienced the following changes in written premium per policy:

	Change Over Prior Year
	2014		2013		2012
WRITTEN PREMIUM PER POLICY
Personal Lines – auto	3	%	4	%	3	%
Commercial Lines	4	%	5	%	10	%

The increased written premium per policy in our personal auto business reflects increases in written premium per policy in both our Agency and Direct auto businesses, primarily related to rate increases taken during the first half of 2014. For our Commercial Lines business, the 2014 increase in written premium per policy primarily reflects rate increases taken throughout 2014, principally on new business in our for-hire transportation and for-hire specialty business market targets. Adjusting rates is an ongoing process and we will continue to evaluate future rate needs and react quickly as we recognize changing loss cost trends at the state level. See below for additional discussion on written premium per policy for our Agency and Direct auto channels and our Commercial Lines business.

Another important element affecting growth is customer retention. One measure of retention is policy life expectancy, which is our actuarial estimate of the average length of time that a policy (including any renewals) will remain in force before cancellation or lapse in coverage. The following table shows our year-over-year changes in policy life expectancy using both 3-month and 12-month measures. In addition, we are disclosing our year-over-year change in our renewal ratio. The renewal ratio is the percent of policies that came up for renewal during the year that actually renewed.

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	Change Over Prior Year
	2014		2013		2012
RETENTION MEASURES
Personal Lines - auto
Policy life expectancy
Trailing 3-months	(6	)%	4	%	(7	)%
Trailing 12-months	0	%	(4	)%	(1	)%
Renewal ratio	0.2	%	0.1	%	0.3	%
Commercial Lines - policy life expectancy (trailing 12-months)	0	%	(3	)%	6	%

The personal auto decline in trailing-3 month policy life expectancy, which reflects more recent experience, is primarily due to rate increases in both our Agency and Direct channels in early 2014, compared to relatively stable rates in 2013. The methodology for calculating our policy life expectancy in our Commercial Lines business was changed during 2014 and prior year numbers were revised to reflect this change. The decrease in 2013 reflects rate changes taken during 2012 and 2013, while 2014 was unchanged, reflecting relative rate stability during the year.

Recognizing the importance that retention has on our ability to continue to grow profitably, we emphasize competitive pricing for a given risk, quality service, and having the products and services available for our customers as their needs change during their insurable life.

B. Profitability

Profitability for our underwriting operations is defined by pretax underwriting profit, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses. We also use underwriting profit margin, which is underwriting profit expressed as a percentage of net premiums earned, to analyze our results. For the three years ended December 31, our underwriting profitability results were as follows:

	2014					2013					2012
	Underwriting Profit (Loss)					Underwriting Profit (Loss)					Underwriting Profit (Loss)
($ in millions)	$			Margin		$			Margin		$			Margin
Personal Lines
Agency	$	683.0		7.5	%	$	542.9		6.3	%	$	338.9		4.2	%
Direct	423.4			5.7		473.9			7.0		289.5			4.6
Total Personal Lines	1,106.4			6.7		1,016.8			6.6		628.4			4.4
Commercial Lines	315.8			17.2		114.1			6.5		86.3			5.2
Other indemnity1	(11.9		)	NM		(10.8		)	NM		(5.8		)	NM
Total underwriting operations	$	1,410.3		7.7	%	$	1,120.1		6.5	%	$	708.9		4.4	%

¹ Underwriting margins for our other indemnity businesses are not meaningful (NM) due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

Our underwriting margin met or exceeded our long-term profitability target of at least 4% for the last three years. Pricing and market conditions are always significant drivers of underwriting margins over any defined period. Our Personal Lines profitability increased, compared to 2013. The improvement in our Commercial Lines profitability is due to a lower loss ratio, mainly resulting from rate increases taken during the last two years, lower frequency, mainly in our truck business, and favorable case reserve development in 2014, compared to unfavorable reserve development in 2013. The increase in our underwriting margin in 2013, compared to 2012, was primarily due to an improved loss ratio from our 2012 rate increases, reduced catastrophe losses in 2013, and a lower cost structure.

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Further underwriting results for our Personal Lines business, including results by distribution channel, the Commercial Lines business, and our underwriting operations in total, as defined in Note 10 – Segment Information, were as follows:

Underwriting Performance1	2014	2013	2012
Personal Lines – Agency
Loss & loss adjustment expense ratio	72.8	73.5	75.2
Underwriting expense ratio	19.7	20.2	20.6
Combined ratio	92.5	93.7	95.8
Personal Lines – Direct
Loss & loss adjustment expense ratio	74.2	72.3	74.2
Underwriting expense ratio	20.1	20.7	21.2
Combined ratio	94.3	93.0	95.4
Total Personal Lines
Loss & loss adjustment expense ratio	73.4	73.0	74.8
Underwriting expense ratio	19.9	20.4	20.8
Combined ratio	93.3	93.4	95.6
Commercial Lines
Loss & loss adjustment expense ratio	61.7	71.9	72.6
Underwriting expense ratio	21.1	21.6	22.2
Combined ratio	82.8	93.5	94.8
Total Underwriting Operations2
Loss & loss adjustment expense ratio	72.3	73.0	74.6
Underwriting expense ratio	20.0	20.5	21.0
Combined ratio	92.3	93.5	95.6
Accident year-Loss & loss adjustment expense ratio3	72.4	72.7	74.5

¹ Ratios are expressed as a percentage of net premiums earned; fees and other revenues are netted with underwriting expenses in the ratio calculations.

² Combined ratios for the other indemnity businesses are not presented separately due to the low level of premiums earned by, and the variability of loss costs in, such businesses. For the years ended December 31, 2014, 2013, and 2012, these businesses generated an underwriting loss of $11.9 million, $10.8 million, and $5.8 million, respectively.

³ The accident year ratios include only the losses that occurred during the period noted. As a result, accident period results will change over time, either favorably or unfavorably, as we revise our estimates of loss costs when payments are made or reserves for that accident period are reviewed.

Losses and Loss Adjustment Expenses (LAE)

(millions)	2014		2013		2012
Change in net loss and LAE reserves	$	237.7	$	457.5	$	516.2
Paid losses and LAE	13,068.5		12,014.9		11,431.8
Total incurred losses and LAE	$	13,306.2	$	12,472.4	$	11,948.0

Claims costs, our most significant expense, represent payments made, and estimated future payments to be made, to or on behalf of our policyholders, including expenses needed to adjust or settle claims. Claims costs are a function of loss severity and frequency and are influenced by inflation and driving patterns, among other factors. Accordingly, anticipated changes in these factors are taken into account when we establish premium rates and loss reserves. Our estimated needed reserves are adjusted as these underlying assumptions change. See Critical Accounting Policies for a discussion of the effect of changing estimates.

Our total loss and loss adjustment expense ratio decreased 0.7 points in 2014 and decreased 1.6 points in 2013, compared to the prior year. Our accident year loss and LAE ratio, which excludes the impact of prior accident year reserve development during each calendar year, decreased 0.3 points and 1.8 points in 2014 and 2013, respectively. The decrease in 2013 primarily reflects an increase in average net premiums earned per policy on a year-over-year basis, as well as reduced catastrophe losses in 2013, compared to 2012.

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The loss and LAE ratio for our Commercial Lines business saw significant improvement for 2014, with a decrease of 10.2 points, on a year-over-year basis. The improvement is primarily due to rate increases taken during the last two years, lower frequency, mainly in our truck business, and favorable case reserve development in 2014, compared to unfavorable reserve development in 2013.

The following discussion of our severity and frequency trends excludes comprehensive coverage because of its inherent volatility, as it is typically linked to catastrophic losses generally resulting from adverse weather. Comprehensive coverage insures against damage to a customer’s vehicle due to various causes other than collision, such as windstorm, hail, theft, falling objects, and glass breakage.

Total personal auto incurred severity (i.e., average cost per claim, including both paid losses and the change in case reserves) was up over the prior-year periods in the 2% to 5% range for the last three years.

• 2014 – Severity increased about 7% for our personal injury protection (PIP) coverage, about 5% for our property damage coverage, and approximately 3%-4% for our bodily injury and collision coverages.

• 2013 – Severity for our collision coverage increased about 5%, and severity for both our bodily injury and property damage coverages increased about 3%, while severity in our PIP coverage was down about 4%.

• 2012 – Severity increases in most of our auto coverages were about 5%, including bodily injury, PIP, property damage, and collision.

It is a challenge to estimate future severity, especially for bodily injury and PIP claims, but we continue to monitor changes in the underlying costs, such as medical costs, health care reform, and jury verdicts, along with regulatory changes and other factors that may affect severity.

Our incurred frequency of auto accidents, on a calendar-year basis, was relatively flat in both 2014 and 2012 and increased about 2% in 2013, compared to the prior-year periods.

• 2014 – Our bodily injury coverage had a decline 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%.

• 2013 – Increases in frequency for our collision and property damage coverages contributed to the overall increase while frequency for our bodily injury and PIP coverages was relatively flat.

• 2012 – Our collision coverage had a decline in frequency of about 3%, primarily related to the mild winter weather experienced in the northern states during the first quarter 2012. Frequency in our PIP coverage was also down about 2%. In contrast, our bodily injury coverage had an increase in frequency of about 1%, but had still not returned to the higher frequency levels we experienced in 2010.

We continue to closely monitor the changes in frequency, but the degree or direction of near-term frequency change is not something that we are able to predict with any certainty. We will analyze trends to distinguish changes in our experience from external factors, such as changes in the number of vehicles per household, miles driven, gasoline prices, greater vehicle safety, and unemployment rates, versus those resulting from shifts in the mix of our business, to allow us to reserve more accurately for our loss exposure.

We experienced severe weather conditions in several areas of the country during each of the last three years. Hail storms, tornadoes, wind, and flooding contributed to catastrophe losses each year. Results included 0.6 points due to Superstorm Sandy in 2012. The following table shows catastrophe losses incurred for the years ended December 31:

($ in millions)	2014			2013			2012
Catastrophe losses incurred	$	192.2		$	175.1		$	279.1
Increase to combined ratio	1.0		pts.	1.0		pts.	1.7		pts.

We continue to respond promptly to catastrophic storms when they occur in order to provide exemplary claims service to our customers.

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The table below presents the actuarial adjustments implemented and the loss reserve development experienced in the years ended December 31:

($ in millions)	2014			2013			2012
ACTUARIAL ADJUSTMENTS
Reserve decrease/(increase)
Prior accident years	$	90.9		$	62.4		$	85.1
Current accident year	(81.3		)	22.0			(48.3		)
Calendar year actuarial adjustments	$	9.6		$	84.4		$	36.8
PRIOR ACCIDENT YEARS DEVELOPMENT
Favorable/(Unfavorable)
Actuarial adjustments	$	90.9		$	62.4		$	85.1
All other development	(66.8		)	(107.5		)	(107.1		)
Total development	$	24.1		$	(45.1	)	$	(22.0	)
(Increase)/decrease to calendar year combined ratio	0.1		pts.	(0.3		) pts.	(0.1		) pts.

Total development consists both of actuarial adjustments and “all other development.” The actuarial adjustments represent the net changes made by our actuarial department to both current and prior accident year reserves based on regularly scheduled reviews. Through these reviews, our actuaries identify and measure variances in the projected frequency and severity trends, which allows them to adjust the reserves to reflect the current costs. We report the prior accident years actuarial adjustments separately to reflect these adjustments as part of the total prior accident years’ development.

“All other development” represents claims settling for more or less than reserved, emergence of unrecorded claims at rates different than anticipated in our incurred but not recorded (IBNR) reserves, and changes in reserve estimates on specific claims. Although we believe that the development from both the actuarial adjustments and “all other development” generally results from the same factors, as discussed below, we are unable to quantify the portion of the reserve development that might be applicable to any one or more of those underlying factors.

Our objective is to establish case and IBNR reserves that are adequate to cover all loss costs, while incurring minimal variation from the date that the reserves are initially established until losses are fully developed. As reflected in the table above, we experienced minor reserve development in each of the last three years.

2014

•The favorable prior year reserve development was primarily attributable to accident year 2010.

• Favorable reserve development in our Commercial Lines business was partially offset by unfavorable development in our Agency auto business. 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 PIP loss reserves and adjusting and other LAE reserves.

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2013

• Approximately 80% of the unfavorable reserve development was attributable to accident year 2011, while the remaining 20% was related to accident year 2012. The aggregate reserve development for accident years 2010 and prior was slightly favorable.

• About 55% of our unfavorable reserve development was in our Commercial Lines business, with the remainder split about equally between our Personal Lines business and our run-off businesses. In our Personal Lines business, unfavorable development in our Agency auto channel was offset in large part by favorable development in our Direct auto channel.

• The unfavorable reserve development in our Agency auto business was in our IBNR reserves due to higher frequency and severity on late emerging claims, as primarily reflected in the “all other development.”

• Lower than anticipated severity costs on case reserves were the primary contributor to the favorable development in our Direct auto business.

• In our Commercial Lines business, we experienced unfavorable development due to higher frequency and severity on late emerging claims primarily in our bodily injury coverage for our truck business.

• In our other businesses, we experienced unfavorable development primarily due to reserve increases in our run-off professional liability group business based on internal actuarial reviews of our claims history.

2012

• The unfavorable prior year reserve development was primarily attributable to accident year 2011 and, to a lesser extent, accident year 2010. The aggregate reserve development for accident years 2009 and prior was favorable. Despite overall unfavorable reserve development, we did experience favorable reserve adjustments, primarily in our loss adjustment expenses and our personal auto bodily injury reserves for accident years 2009 and 2008.

• Slightly more than half of the total unfavorable reserve development was attributable to our Commercial Lines business, with the remainder in our personal auto business. In our personal auto business, unfavorable development in the Agency channel was partially offset by favorable development in the Direct channel, primarily reflecting that the unfavorable development on our PIP coverage was more skewed to the Agency channel, and that our Direct business had favorable development on our collision coverage, as we experienced more subrogation recoveries in this channel.

• Our personal auto product’s development was primarily attributable to unfavorable development in our Florida PIP and an increase in our estimate of bodily injury severity for accident year 2011.

• Unfavorable development in our Commercial Lines business reflects higher than anticipated frequency and severity costs on late emerging claims and higher settlements on large losses.

We continue to focus on our loss reserve analysis, attempting to enhance accuracy and to further our understanding of our loss costs. A detailed discussion of our loss reserving practices can be found in our Report on Loss Reserving Practices, which was filed in a Form 8-K on August 8, 2014.

Because we are primarily an insurer of motor vehicles, our exposure as an insurer of environmental, asbestos, and general liability claims is limited. We have established reserves for these exposures, in amounts that we believe to be adequate based on information currently known. These exposures have not had and are not expected to have a material effect on our liquidity, financial condition, cash flows, or results of operations.

Underwriting Expenses

Progressive’s policy acquisition costs and other underwriting expenses, net of fees and other revenues, expressed as a percentage of net premiums earned decreased 0.5 points for both 2014 and 2013, respectively, over the prior-year periods. In both 2014 and 2013, our underwriting expenses grew at a slower rate than net premiums earned, due in part to an increase in earned premium per policy.

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C. Personal Lines

	Growth Over Prior Year
	2014		2013		2012
Net premiums written	8	%	6	%	8	%
Net premiums earned	8	%	7	%	7	%
Policies in force	2	%	3	%	4	%

Progressive’s Personal Lines business writes insurance for personal autos and recreational vehicles and represented 90% of our total net premiums written for both 2014 and 2013 and 89% in 2012. We currently write our Personal Lines products in all 50 states. During 2014, we introduced our Agency auto product in Massachusetts. We are now serving all U.S. auto market/distribution combinations. We also offer our personal auto product (not special lines products) in the District of Columbia and on an Internet-only basis in Australia.

Personal auto represented 92% of our total Personal Lines net premiums written in 2014 and 91% in both 2013 and 2012. These auto policies are primarily written for 6-month terms. The remaining Personal Lines business is comprised of special lines products (e.g., motorcycles, watercraft, and RVs), which are written for 12-month terms, primarily in our Agency channel. Net premiums written for personal auto increased 8% in both 2014 and 2012 and 7% in 2013; special lines net premiums written grew 4% in both 2014 and 2012 and 5% in 2013. Personal auto policies in force increased 2% for 2014, 3% for 2013, and 4% for 2012; policies in force for the special lines products increased 1% in both 2014 and 2013 and 4% in 2012.

Our total Personal Lines business generated a 6.7% underwriting profit margin in 2014, which was widely distributed by product and state. In 2014, 46 states and the District of Columbia were profitable, including all of our 10 largest states. The special lines products had a favorable effect on the total Personal Lines combined ratio of 1.3 points in 2014, 1.0 point in 2013, and 0.6 points in 2012. In 2014, the lack of severe storms helped increase the profitability on our special lines products.

We report our Agency and Direct business results separately as components of our Personal Lines segment to provide further understanding of our products by distribution channel.

The Agency Business

	Growth Over Prior Year
	2014		2012		2012
Net premiums written	5	%	6	%	7	%
Net premiums earned	6	%	6	%	6	%
Auto: policies in force	(2	)%	1	%	3	%
new applications	(7	)%	(3	)%	0	%
renewal applications	3	%	2	%	5	%
written premium per policy	4	%	5	%	3	%
Retention measures:
policy life expectancy - trailing 3-months	(7	)%	1	%	(6	)%
trailing 12-months	(2	)%	(5	)%	0	%
renewal ratio	0.1	%	(0.1	)%	0.2	%

The Agency business includes business written by more than 35,000 independent insurance agencies that represent Progressive, as well as brokerages in New York and California. The decrease in new application growth for 2014, compared to 2013, was due in part to rate increases applied to selected states in early 2014 to meet our margin targets and various actions taken to restrict writing unprofitable business, as well as actions by our competitors to increase their competitiveness in the marketplace. In 2014, we generated new Agency auto application growth in only18 states and the District of Columbia, including four of our top 10 Agency auto states.

Rate increases were the primary factor in the year-over-year increase in written premium per policy in each of the last three years. In 2014, written premium per policy for both new and renewal Agency auto business increased about 4%, compared to 2013. In addition, these rate increases also had an effect on policy life expectancy.

On a year-over-year basis, Agency auto quotes were relatively flat for 2014. We saw a significant increase in Agency auto quotes in 2013, reflecting very strong increases in quoting on third-party comparative rating systems, primarily driven by the

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addition of real-time comparative rating in California. Excluding the quote volume generated in California, our Agency auto quotes experienced a modest increase, compared to 2012. We saw a modest increase in Agency auto quotes in 2012. Our Agency auto rate of conversion (i.e., converting a quote to a sale) decreased in each of the last three years. The decline in conversion for 2014 was primarily due to rate increases taken in early 2014, as well as actions by our competitors to increase their competitiveness in the marketplace.

The Direct Business

	Growth Over Prior Year
	2014		2013		2012
Net premiums written	12	%	7	%	8	%
Net premiums earned	11	%	8	%	8	%
Auto: policies in force	7	%	6	%	4	%
new applications	10	%	6	%	(2	)%
renewal applications	8	%	4	%	7	%
written premium per policy	3	%	3	%	3	%
Retention measures:
policy life expectancy - trailing 3-months	(4	)%	8	%	(8	)%
trailing 12-months	3	%	(2	)%	(2	)%
renewal ratio	0.5	%	0.3	%	0.3	%

The Direct business includes business written directly by Progressive on the Internet, through mobile devices, and over the phone. We experienced new application growth in our Direct auto business for 2014 due to an increase in demand, as well as improvement in conversion. Out of our top 10 Direct auto states, eight states experienced an increase in new auto applications in 2014, compared to nine states in 2013 and four states in 2012.

Written premium per policy for our Direct auto business increased in each of the last three years, primarily due to rate increases. Written premium per policy on both our new and renewal Direct auto business increased in 2014, with the increase for new business about 2% higher than the increase for renewal business.

Policy life expectancy decreased for 2014, using a trailing 3-month measure, reflecting rate increases taken in early 2014, but increased using a trailing 12-month measure due to large gains in the first half of 2014 from rate decreases taken in 2013.

In 2014, the total number of quotes in our Direct auto business reached new highs and increased 8%, on a year-over-year basis, driven by an increase in advertising, as well as increased quoting from mobile devices. In 2013, Direct auto quotes increased 15%, reflecting our strong brand, and an increase in advertising spend, which had a positive impact on our new business application growth. Direct auto quotes decreased 4% in 2012, reflecting decreases in both Internet quotes and quotes generated via the phone. The total Direct auto business conversion rate increased slightly in 2014, reflecting increases in conversion for both phone and Internet-initiated business. The rate of conversion in our Direct auto business decreased in 2013, particularly in conversion for Internet-initiated business, driven by 2012 rate increases and an increase in the number of quotes generated on a mobile device, which had a lower conversion rate. The rate of conversion in our Direct auto business was relatively flat in 2012, compared to the prior year.

The underwriting expense ratio for our Direct business decreased 0.6 points for 2014 and 0.5 points for 2013, compared to the prior year. Higher earned premium in both 2014 and 2013, compared to the prior years, was a primary contributor to the decrease in the underwriting expense ratio in both years. Year over year, total advertising spend was up 10% and 13% in 2014 and 2013, respectively. We remain focused on maintaining a well-respected brand and will continue to spend on advertising as long as we achieve our profitability targets. We continued to use "Flo" both in and out of the "Superstore" to provide fresh and engaging messages. During 2014, our Superstore campaign created and débuted its 100th commercial. In addition, we continued with our branding efforts utilizing the apron, which Progressive people metaphorically tie on as they work to improve the customer experience.

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D. Commercial Lines

	Growth Over Prior Year
	2014		2013		2012
Net premiums written	7	%	2	%	13	%
Net premiums earned	4	%	7	%	12	%
Policies in force	0	%	(1	)%	2	%
New applications	1	%	(6	)%	3	%
Renewal applications	1	%	0	%	1	%
Written premium per policy	4	%	5	%	10	%
Policy life expectancy - trailing 12-months	0	%	(3	)%	6	%

Progressive’s Commercial Lines business writes primary liability, physical damage, and other auto-related insurance for automobiles and trucks owned and/or operated predominantly by small businesses, with the majority of our customers insuring approximately two vehicles. Our Commercial Lines business represented 10% of our total net premiums written in both 2014 and 2013 and 11% in 2012. Even though we continue to write over 90% of our Commercial Lines business through the Agency channel, net premiums written through the Direct channel increased by13% in 2014. This business operates in the following business market targets:

• Business auto – autos, vans, and pick-up trucks used by small businesses, such as retailing, farming, services, and private trucking,

• For-hire transportation – tractors, trailers, and straight trucks primarily used by regional general freight and expeditor-type businesses and non-fleet long-haul operators,

• Contractor – vans, pick-up trucks, and dump trucks used by small businesses, such as artisans, heavy construction, and landscapers/snowplowers,

• For-hire specialty – dump trucks, log trucks, and garbage trucks used by dirt, sand and gravel, logging, and coal-type businesses,

• Tow – tow trucks and wreckers used in towing services and gas/service station businesses, and

• For-hire livery –non-fleet (i.e., five or fewer vehicles) taxis, black-car services, and airport taxis.

Business auto is the largest business market target, measured by premium volume, and accounts for approximately one third of our total Commercial Lines premiums, while the for-hire transportation and contractor business market targets each account for about another 25%. Business auto and contractor together account for approximately 75% of the vehicles we insure in this business, while for-hire transportation accounts for about 10%. We currently write our Commercial Lines business in 49 states; we do not write Commercial Lines in Hawaii or the District of Columbia. The majority of our policies in this business are written for 12-month terms.

Our Commercial Lines business new applications increased slightly for 2014, due to a combination of lowering rates in our business auto and contractor business market targets, lifting some of the underwriting restrictions we placed on new business, and the tightening of general market conditions. The increase in written premium per policy, for 2014, primarily reflects rate increases taken throughout 2014, principally on new business in our truck product, which has higher average premium. Our Commercial Lines business policy life expectancy was flat for 2014, reflecting relative rate stability during the year.

Although Commercial Lines differs from Personal Lines auto in its customer base and products written, both businesses require the same fundamental skills, including disciplined underwriting and pricing, as well as excellent claims service. Since the Commercial Lines policies have higher limits than Personal Lines auto, we analyze Commercial Lines' large loss trends and reserving in more detail to allow us to react quickly to changes in this exposure.

App.-A-62

E. Other Indemnity

Our other indemnity businesses consist of managing our run-off businesses, including the run-off of our professional liability business, which was sold in 2010. Pursuant to our agreement with the purchaser of this business, from the date of sale through April 30, 2012, we continued to write these policies, principally directors and officers liability insurance for community banks. All professional liability insurance policies written in July 2010 and later were 100% reinsured. From August 2009 through June 2010, the substantial majority of the risks on this business were 100% reinsured and prior to August 2009, a majority of the risks on this business were reinsured.  We have only 15 policies in force as of December 31, 2014.

Our other indemnity businesses generated operating losses of $11.9 million, $10.8 million, and $5.8 million in 2014, 2013, and 2012, respectively. The losses primarily reflect actuarial reserve increases and adverse loss development on our run-off businesses, to the extent not reinsured.

F. Service Businesses

Our service businesses, which represent less than 1% of our total revenues and do not have a material effect on our overall operations, primarily include:

• Commercial Auto Insurance Procedures/Plans (CAIP) – We are the only servicing carrier on a nationwide basis for CAIP, 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, subject to a minimum servicing fee requirement; which is scheduled to expire on August 31, 2018. We cede 100% of the premiums and losses to the plans. Reimbursements to us from the CAIP plans are required by state laws and regulations. Material violations of contractual service standards can result in ceding restrictions for the affected business. We have maintained, and plan to continue to maintain, compliance with these standards. Any changes in our participation as a CAIP service provider would not materially affect our financial condition, results of operations, or cash flows.

• Commission-Based Businesses – We have two commission-based service businesses:

In our Direct business, through Progressive Home Advantage^®, we offer home, condominium, and renters insurance, among other products, written by unaffiliated insurance companies. We receive commissions for policies written under this program, all of which are used to offset the expenses associated with maintaining this program.

Through Progressive Commercial Advantage^SM, we offer our customers the ability to package their auto coverage with other commercial coverages that are written by unaffiliated insurance companies or placed with additional companies through unaffiliated insurance agencies. This program offers general liability and business owners policies throughout the continental United States and workers’ compensation coverage in 44 states as of December 31, 2014. We receive commissions for the policies written under this program, all of which are used to offset the expenses associated with maintaining this program.

G. Litigation

The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies issued by the subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.

In addition, various Progressive entities are named as defendants in a number of class action or individual lawsuits arising out of the operations of the insurance subsidiaries. These cases include those alleging damages as a result of our practices in evaluating or paying medical or injury claims or benefits, including, but not limited to, personal injury protection, medical payments, uninsured motorist/underinsured motorist (UM/UIM), and bodily injury benefits; rating practices at policy renewal; the utilization, content, or appearance of UM/UIM rejection forms; labor rates paid to auto body repair shops; employment related practices, including federal wage and hour claims; alleged patent infringement; and cases challenging other aspects of our claims or marketing practices or other business operations. Other insurance companies face many of these same issues. During the last three years, we have settled several class action and individual lawsuits. These settlements did not have a material effect on our financial condition, cash flows, or results of operations. See Note 12 – Litigation for a more detailed discussion.

App.-A-63

H. Income Taxes

Income taxes are comprised of net deferred tax assets and liabilities, as well as net current income taxes payable/recoverable.

Net deferred income tax assets/liabilities are disclosed on the balance sheets. At both December 31, 2014 and 2013, we reported net deferred tax liabilities. The $70.5 million increase in our deferred tax liability during 2014 was primarily due to unrealized gains in the investment portfolio and recognition of losses on sales of securities on which we had previously recorded other-than-temporary impairments.

A deferred tax asset/liability is a tax benefit/expense that is expected to be realized in a future tax return. At both December 31, 2014 and 2013, we determined that we did not need a valuation allowance on our gross deferred tax assets. Although realization of the gross deferred tax assets is not assured, management believes it is more likely than not that the gross deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes.

At December 31, 2014, we had net current income taxes payable of $49.4 million, which were reported as part of "other liabilities," while at December 31, 2013, we had net current income taxes recoverable of $17.1 million, which were reported as part of "other assets."

There were no material changes in our uncertain tax positions during 2014.

See Note 5 – Income Taxes for further information.

App.-A-64

IV.   RESULTS OF OPERATIONS – INVESTMENTS

A. Portfolio Allocation

At year-end 2014, the fair value of our investment portfolio was $19.0 billion, approximately 5% greater than at year-end 2013, reflecting operating and investment returns that more than offset our capital transactions during the year, including share repurchases, debt servicing and retirement, and shareholder dividends. Our investment income (interest and dividends) decreased approximately 3% and 5% in 2014 and 2013, respectively, as compared to the prior years, reflecting lower yields in the portfolio for both periods. In 2014, we recognized $224.2 million in net realized gains, compared to $318.4 million and $306.8 million in 2013 and 2012, respectively.

The composition of the investment portfolio at December 31, was:

($ in millions)	Fair Value		% of Total Portfolio		Duration (years)	Rating1
2014
Fixed maturities	$	13,549.2	71.2	%	1.8	A+
Nonredeemable preferred stocks	827.5		4.4		2.8	BB+
Short-term investments	2,149.0		11.3		<.1	AA
Total fixed-income securities	16,525.7		86.9		1.6	A+
Common equities	2,492.3		13.1		na	na
Total portfolio2,3	$	19,018.0	100.0	%	1.6	A+
2013
Fixed maturities	$	13,540.4	75.0	%	2.1	AA-
Nonredeemable preferred stocks	711.2		3.9		1.3	BB+
Short-term investments	1,272.6		7.1		<.1	AA+
Total fixed-income securities	15,524.2		86.0		2.0	AA-
Common equities	2,530.5		14.0		na	na
Total portfolio2,3	$	18,054.7	100.0	%	2.0	AA-
na = not applicable

¹ Represents ratings at December 31, 2014 and 2013. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and AA+, we assign an internal rating of AAA-.

² Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

³ The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

Our asset allocation strategy is to maintain 0-25% of our portfolio in Group I securities, with the balance (75%-100%) of our portfolio in Group II securities, as defined in the Overview – Investments and Capital Management section and as reflected in the following tables. We believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital purposes and is in line with the treatment by our regulators.

App.-A-65

The following tables show the composition of our Group I and Group II securities at December 31, 2014 and 2013:

($ in millions)	Fair Value		% of Total Portfolio
2014
Group I securities:
Non-investment-grade fixed maturities	$	842.2	4.4	%
Redeemable preferred stocks1	178.6		0.9
Nonredeemable preferred stocks	827.5		4.4
Common equities	2,492.3		13.1
Total Group I securities	4,340.6		22.8
Group II securities:
Other fixed maturities2	12,528.4		65.9
Short-term investments	2,149.0		11.3
Total Group II securities	14,677.4		77.2
Total portfolio	$	19,018.0	100.0	%
2013
Group I securities:
Non-investment-grade fixed maturities	$	592.1	3.3	%
Redeemable preferred stocks1	210.1		1.2
Nonredeemable preferred stocks	711.2		3.9
Common equities	2,530.5		14.0
Total Group I securities	4,043.9		22.4
Group II securities:
Other fixed maturities2	12,738.2		70.5
Short-term investments	1,272.6		7.1
Total Group II securities	14,010.8		77.6
Total portfolio	$	18,054.7	100.0	%

¹ Includes non-investment-grade redeemable preferred stocks of $78.0 million and $106.3 million at December 31, 2014 and 2013, respectively.

² Includes investment-grade redeemable preferred stocks, with cumulative dividends, of $100.6 million at December 31, 2014 and $103.8 million at December 31, 2013.

To determine the allocation between Group I and Group II, we use the credit ratings from models provided by the National Association of Insurance Commissioners (NAIC) for classifying our residential and commercial mortgage-backed securities, excluding interest-only securities, and the credit ratings from nationally recognized statistical rating organizations (NRSROs) for all other debt securities. NAIC ratings are based on a model that considers the book price of our securities when assessing the probability of future losses in assigning a credit rating. As a result, NAIC ratings can vary from credit ratings issued by NRSROs. Management believes NAIC ratings more accurately reflect our risk profile when determining the asset allocation between Group I and II securities.

Unrealized Gains and Losses

As of December 31, 2014, our portfolio had pretax net unrealized gains, recorded as part of accumulated other comprehensive income, of $1,572.2 million, compared to $1,456.9 million at December 31, 2013.

During the year, the net unrealized gains in our fixed-income portfolio decreased$8.4 million, primarily the result of sales of securities with net realized gains in our U.S. Treasury, corporate, and preferred stock portfolios. The contributions by individual sector to the fixed-income portfolio change in net unrealized gains are discussed below. The net unrealized gains in our common stock portfolio increased$123.7 million during 2014, reflecting positive returns in the broad equity market, adjusting for net gains recognized on security sales.

See Note 2 – Investments for a further break-out of our gross unrealized gains and losses.

App.-A-66

Other-Than-Temporary Impairment (OTTI)

Realized losses may include write-downs of securities determined to have had an other-than-temporary decline in fair value. The write-down activity recorded in the comprehensive income statements for the years ended December 31, was as follows:

(millions)	Total Write-downs		Write-downs on Securities Sold			Write-downs on Securities Held at Period End
2014
Prime collateralized mortgage obligations	$	0	$	0		$	0
Alt-A collateralized mortgage obligations	0		0			0
Home equity (sub-prime bonds)	0		0			0
Total residential mortgage-backed securities	0		0			0
Commercial mortgage-backed securities: interest only	0		0			0
Total fixed income	0		0			0
Common equities	7.9		(0.7		)	7.2
Total portfolio	$	7.9	$	(0.7	)	$	7.2
2013
Prime collateralized mortgage obligations	$	0.1	$	0		$	0.1
Alt-A collateralized mortgage obligations	0		0			0
Home equity (sub-prime bonds)	0.5		0			0.5
Total residential mortgage-backed securities	0.6		0			0.6
Commercial mortgage-backed securities: interest only	0		0			0
Total fixed income	0.6		0			0.6
Common equities	5.5		0			5.5
Total portfolio	$	6.1	$	0		$	6.1
2012
Prime collateralized mortgage obligations	$	0.7	$	0		$	0.7
Alt-A collateralized mortgage obligations	0.1		0			0.1
Home equity (sub-prime bonds)	0.8		0			0.8
Total residential mortgage-backed securities	1.6		0			1.6
Commercial mortgage-backed securities: interest only	0.1		0			0.1
Total fixed income	1.7		0			1.7
Common equities	6.3		(4.5		)	1.8
Total portfolio	$	8.0	$	(4.5	)	$	3.5

See Critical Accounting Policies, Other-Than-Temporary Impairment, for a complete discussion on our analysis regarding our treatment of OTTI.

App.-A-67

Fixed-Income Securities

The fixed-income portfolio is managed internally and includes fixed-maturity securities, short-term investments, and nonredeemable preferred stocks. The fixed-maturity securities and short-term investments, as reported on the balance sheets at December 31, were comprised of the following:

($ in millions)	2014				2013
Investment-grade fixed maturities:1
Short/intermediate term	$	14,006.7	89.2	%	$	13,571.5	91.6	%
Long term	43.9		0.3		58.2		0.4
Non-investment-grade fixed maturities:1,2
Short/intermediate term	1,625.6		10.4		1,132.5		7.7
Long term	22.0		0.1		50.8		0.3
Total	$	15,698.2	100.0	%	$	14,813.0	100.0	%

¹Long term includes securities with expected liquidation dates of 10 years or greater. Asset-backed securities are reported at their weighted average maturity based upon their projected cash flows, with the cash flows expected in periods of 10 years or greater reported as part of the long-term category. All other securities that do not have a single expected maturity date are reported at average maturity.

²Non-investment-grade fixed-maturity securities are non-rated or have a credit quality rating of an equivalent BB+ or lower, classified by ratings from NRSROs. The non-investment-grade securities based upon NAIC ratings and our Group I modeling were $920.2 million and $698.4 million at December 31, 2014 and 2013, respectively.

The increase in the dollar amount of our NRSRO non-investment-grade fixed maturities since December 31, 2013, was primarily due to purchases of corporate debt and residential mortgage-backed securities; we did not have any material credit rating downgrades during the year.

A primary exposure for the fixed-income portfolio is interest rate risk, which is managed by maintaining the portfolio’s duration (a measure of the portfolio's exposure to changes in interest rates) between 1.5 and 5 years. Interest rate risk includes the change in value resulting from movements in the underlying market rates of debt securities held. The duration of the fixed-income portfolio was 1.6 years at December 31, 2014, compared to 2.0 years at December 31, 2013, reflecting our preference for shorter duration positioning during times of low interest rates. The distribution of duration and convexity (i.e., a measure of the speed at which the duration of a security is expected to change based on a rise or fall in interest rates) is monitored on a regular basis.

The duration distribution of our fixed-income portfolio, represented by the interest rate sensitivity of the comparable benchmark U.S. Treasury Notes, was:

Duration Distribution	2014		2013
1 year	36.1	%	26.9	%
2 years	19.4		24.9
3 years	15.0		23.4
5 years	23.8		22.2
10 years	5.7		2.6
Total fixed-income portfolio	100.0	%	100.0	%

Another primary exposure related to the fixed-income portfolio is credit risk. This risk is managed by maintaining an A+ minimum average portfolio credit quality rating, as defined by NRSROs.

App.-A-68

The credit quality distribution of the fixed-income portfolio was:

Rating	2014		2013
AAA	45.5	%	50.8	%
AA	13.2		12.7
A	10.2		8.2
BBB	18.4		18.2
Non-investment grade/non-rated1	12.7		10.1
Total fixed-income portfolio	100.0	%	100.0	%

¹The ratings in the table above are assigned by NRSROs. The non-investment grade fixed-income securities based upon our Group I classification represented 8.3% of the total fixed-income portfolio at December 31, 2014, compared to 7.1% at December 31, 2013.

The changes in credit quality profile from December 31, 2013 were the result of a shift in the mix of the investment portfolio in the various credit categories and not due to downgrades in credit quality of the securities we held.

Our portfolio is also exposed to concentration risk. Our investment constraints limit investment in a single issuer, other than U.S. Treasury Notes or a state’s general obligation bonds, to 2.5% of shareholders’ equity, while the single issuer guideline on preferred stocks and/or non-investment-grade debt is 1.25% of shareholders’ equity. Additionally, the guideline applicable to any state’s general obligation bonds is 6% of shareholders’ equity. Our credit risk guidelines limit single issuer exposure; however, we also consider sector concentration a risk, and we frequently evaluate the portfolio’s sector allocation with regard to internal requirements and external market factors. We consider concentration risk both overall and in the context of individual asset classes, including but not limited to common equities, residential and commercial mortgage-backed securities, municipal bonds, and high-yield bonds. At December 31, 2014, we were within all of the constraints described above.

We monitor prepayment and extension risk, especially in our structured product and preferred stock portfolios. Prepayment risk includes the risk of early redemption of security principal that may need to be reinvested at less attractive rates. Extension risk includes the risk that a security will not be redeemed when anticipated, and that the security that is extended has a lower yield than a security we might be able to obtain by reinvesting the expected redemption principal. Our holdings of different types of structured debt and preferred securities help minimize this risk. During 2014, we did not experience significant prepayment or extension of principal relative to our cash flow expectations in the portfolio.

Liquidity risk is another risk factor we monitor. Our overall portfolio remains very liquid and is sufficient to meet expected liquidity requirements. The short-to-intermediate duration of our portfolio provides an additional source of liquidity, as we expect approximately $2.7 billion, or 23%, of principal repayment from our fixed-income portfolio, excluding U.S. Treasury Notes and short-term investments, during 2015. Cash from interest and dividend payments provides an additional source of recurring liquidity.

Included in the fixed-income portfolio are U.S. government obligations, which include U.S. Treasury Notes and interest rate swaps. Although the interest rate swaps are not obligations of the U.S. government, they are recorded in this portfolio as the change in fair value is correlated to movements in the U.S. Treasury market. The duration of these securities was comprised of the following at December 31, 2014:

($ in millions)	Fair Value		Duration (years)
U.S. Treasury Notes
Less than two years	$	2,293.1	1.2
Two to five years	217.9		2.9
Five to ten years	140.3		7.6
Total U.S. Treasury Notes	2,651.3		1.7
Interest Rate Swaps
Five to ten years ($750 notional value)	15.8		(7.9	)
Total U.S. government obligations	$	2,667.1	(0.6	)

App.-A-69

The interest rate swap positions show a fair value of $15.8 million as they were in an overall asset position at year-end, which is fully collateralized by cash payments received from the counterparty. The liability associated with the cash collateral received is reported in the “other liabilities” section of the consolidated balance sheets. The negative duration of the interest rate swaps is due to the positions being short interest-rate exposure (i.e., receiving a variable-rate coupon). In determining duration, we add the interest rate sensitivity of our interest rate swap positions to that of our Treasury holdings, but do not add the notional value of the swaps to our Treasury holdings in order to calculate an unlevered duration for the portfolio.

ASSET-BACKED SECURITIES

Included in the fixed-income portfolio are asset-backed securities, which were comprised of the following at December 31:

($ in millions)	Fair Value		Net Unrealized Gains (Losses)			% of Asset- Backed Securities		Duration (years)	Rating (at period end)
2014
Residential mortgage-backed securities:
Prime collateralized mortgage obligations	$	499.8	$	1.3		8.9	%	0.8	A-
Alt-A collateralized mortgage obligations	224.1		2.4			4.0		1.0	BBB
Collateralized mortgage obligations	723.9		3.7			12.9		0.9	BBB+
Home equity (sub-prime bonds)	934.6		20.0			16.7		<.1	BBB-
Residential mortgage-backed securities	1,658.5		23.7			29.6		0.3	BBB
Commercial mortgage-backed securities:
Commercial mortgage-backed securities	2,139.6		30.3			38.1		3.2	AA-
Commercial mortgage-backed securities: interest only	176.0		6.4			3.1		2.8	AAA-
Commercial mortgage-backed securities	2,315.6		36.7			41.2		3.2	AA-
Other asset-backed securities:
Automobile	815.7		0.6			14.5		0.9	AAA
Credit card	284.2		0.5			5.1		0.8	AAA
Other1	538.8		1.9			9.6		1.1	AAA-
Other asset-backed securities	1,638.7		3.0			29.2		0.9	AAA-
Total asset-backed securities	$	5,612.8	$	63.4		100.0	%	1.7	AA-
2013
Residential mortgage-backed securities:
Prime collateralized mortgage obligations	$	294.6	$	4.4		6.7	%	0.8	A-
Alt-A collateralized mortgage obligations	143.8		3.4			3.3		1.1	A-
Collateralized mortgage obligations	438.4		7.8			10.0		0.9	A-
Home equity (sub-prime bonds)	689.5		10.0			15.8		<.1	BBB-
Residential mortgage-backed securities	1,127.9		17.8			25.8		0.2	BBB
Commercial mortgage-backed securities:
Commercial mortgage-backed securities	2,038.6		(0.1		)	46.7		3.2	AA
Commercial mortgage-backed securities: interest only	121.9		6.2			2.8		2.4	AAA-
Commercial mortgage-backed securities	2,160.5		6.1			49.5		3.1	AA+
Other asset-backed securities:
Automobile	494.1		2.9			11.3		1.2	AAA
Credit card	59.7		1.7			1.4		1.7	AAA
Other1	523.9		(0.1		)	12.0		1.2	AAA-
Other asset-backed securities	1,077.7		4.5			24.7		1.2	AAA-
Total asset-backed securities	$	4,366.1	$	28.4		100.0	%	1.9	AA-

¹Includes equipment leases, manufactured housing, and other types of structured debt.

App.-A-70

The increase in asset-backed securities since December 31, 2013, was mainly in our residential mortgage-backed securities and in our other asset-backed securities, where we acquired a combination of automobile and credit card receivable-backed securities. The securities acquired in the residential mortgage-backed sector were primarily short duration (less than one year) with sufficient collateral, based on our analysis, to mitigate the risk of loss, while the securities in the other asset-backed category were AAA rated paper primarily with durations less than one year. These securities provided additional portfolio yield without significantly increasing our credit or duration risk over that of comparable short-term investments.

Collateralized Mortgage Obligations The following table details the credit quality rating and fair value of our CMOs, along with the loan classification and a comparison of the fair value at December 31, 2014, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

Collateralized Mortgage Obligations (at December 31, 2014)
($ in millions) Rating1	Non-agency prime			Alt-A			Government/GSE2			Total			% of Total
AAA	$	66.4		$	0		$	5.9		$	72.3		10.0	%
AA	13.8			16.6			1.6			32.0			4.4
A	274.2			111.2			0			385.4			53.3
BBB	51.9			38.7			0			90.6			12.5
Non-investment grade	86.0			57.6			0			143.6			19.8
Total	$	492.3		$	224.1		$	7.5		$	723.9		100.0	%
Increase (decrease) in value	(0.1		)%	1.1		%	14.0		%	0.4		%

¹ The credit quality ratings in the table above are assigned by NRSROs; when we assign the NAIC ratings, all of our CMOs are rated investment grade and classified as Group II.

² The securities in this category are insured by a Government Sponsored Entity (GSE) and/or collateralized by mortgage loans insured by the Federal Housing Administration (FHA) or the U.S. Department of Veteran Affairs (VA).

The majority of our CMO portfolio is composed of non-agency mortgage securities. In the largest part of this portfolio, we take advantage of the securitization structure to have an underlying bond split into senior and subordinated classes. In this way, we can add extra credit support to our position. We will choose how much credit support we feel is necessary to protect our position from potential credit losses. 

Home-Equity Securities The following table shows the credit quality rating of our home-equity securities, along with a comparison of the fair value at December 31, 2014, to our original investment value (adjusted for returns of principal, amortization, and write-downs):

Home Equity Securities (at December 31, 2014)
($ in millions) Rating1	Total			% of Total
AAA	$	26.9		2.9	%
AA	14.2			1.5
A	133.0			14.2
BBB	216.9			23.2
Non-investment grade	543.6			58.2
Total	$	934.6		100.0	%
Increase (decrease) in value	2.2		%

¹ The credit quality ratings in the table above are assigned by NRSROs; when we assign the NAIC ratings, all of our home equity securities are rated investment grade and classified as Group II.

We added to our home-equity exposure in 2014. We feel that the market for home equity loan-backed bonds continues to trade with greater return potential than other sectors with comparable risk characteristics. This is most likely due to the negative performance of this sector during the last recession. We look for securities where we feel potential losses are mitigated by credit support. 

App.-A-71

Commercial Mortgage-Backed Securities The following table details the credit quality rating and fair value of our CMBS bond and IO portfolios:

Commercial Mortgage-Backed Securities (at December 31, 2014)1
($ in millions) Category	AAA			AA			A			BBB			Non-Investment Grade			Total			% of Total
Multi-borrower	$	469.4		$	83.7		$	0		$	0		$	23.6		$	576.7		24.9	%
Single-borrower	637.9			281.8			243.6			382.9			16.7			1,562.9			67.5
Total CMBS bonds	1,107.3			365.5			243.6			382.9			40.3			2,139.6			92.4
IO	173.4			0			0			0			2.6			176.0			7.6
Total fair value	$	1,280.7		$	365.5		$	243.6		$	382.9		$	42.9		$	2,315.6		100.0	%
% of Total fair value	55.3		%	15.8		%	10.5		%	16.5		%	1.9		%	100.0		%

¹The credit quality ratings in the table above are assigned by NRSROs; when we assign the NAIC ratings, all of our CMBS bonds are rated investment grade and classified as Group II.

During the year, we increased our allocation to single borrower and floating rate large loan issuances. We have elected to add these securities to our portfolio mix because we believe these transactions provide for the opportunity to select investments based on real estate and underwriting that fit our preferred credit risk and duration profile. Our multi-borrower, fixed-rate CMBS portfolio is concentrated in vintages with more conservative underwriting. We have been very selective with regard to vintage in pre-crisis (legacy) issuances, with a very small allocation to the aggressive 2006-2008 vintages. Also, we have not purchased any new issue fixed-rate, multi-borrower securities since 2012, as we feel that underwriting standards were less stringent and these loans may have more difficulty refinancing at maturity.

With the exception of $167.1 million in Freddie Mac senior multi-family IOs, we have no multi-borrower deal IOs originated after 2006.

MUNICIPAL SECURITIES

Included in the fixed-income portfolio at December 31, 2014 and 2013, were $2,139.2 million and $2,256.0 million, respectively, of state and local government obligations. These securities had a duration of 3.0 years and an overall credit quality rating of AA (excluding the benefit of credit support from bond insurance) at December 31, 2014, compared to 3.1 years and AA at December 31, 2013. These securities had net unrealized gains of $43.5 million and $8.7 million at December 31, 2014 and 2013, respectively.

During 2014, we modestly reduced our exposure to municipals as a percentage of the aggregate portfolio, as the asset class became slightly less attractive on a relative value basis. While holding the duration of our municipal holdings relatively constant, our additions to the portfolio were slightly longer than existing holdings, to take advantage of a steep yield curve. The credit quality of our municipal holdings in aggregate were unchanged year over year, at AA. We continue to have a strong preference for high-quality revenue bonds, and for general obligation bonds issued primarily at the state level.

The following table details the credit quality rating of our municipal securities at December 31, 2014, without the benefit of credit or bond insurance:

Municipal Securities (at December 31, 2014)
(millions) Rating	General Obligations		Revenue Bonds		Total
AAA	$	346.1	$	467.3	$	813.4
AA	315.8		642.2		958.0
A	0		344.3		344.3
BBB	0		23.3		23.3
Non-investment grade/non-rated	0		0.2		0.2
Total	$	661.9	$	1,477.3	$	2,139.2

App.-A-72

Included in revenue bonds were $795.3 million of single family housing revenue bonds issued by state housing finance agencies, of which $453.0 million were supported by individual mortgages held by the state housing finance agencies and $342.3 million were supported by mortgage-backed securities. Of the programs supported by mortgage-backed securities, approximately 25% were collateralized by Fannie Mae and Freddie Mac mortgages; the remaining 75% were collateralized by Ginnie Mae loans, which are fully guaranteed by the U.S. government. Of the programs supported by individual mortgages held by the state housing finance agencies, the overall credit quality rating was AA+. Most of these mortgages were supported by FHA, VA, or private mortgage insurance providers.

CORPORATE SECURITIES

Included in our fixed-income securities at December 31, 2014 and 2013, were $2,836.7 million and $2,926.6 million, respectively, of corporate securities. These securities had a duration of 3.3 years at both December 31, 2014 and 2013 and an overall credit quality rating of BBB- and BBB at December 31, 2014 and 2013, respectively. These securities had net unrealized gains of $22.5 million and $40.0 million at December 31, 2014 and 2013, respectively.

We witnessed a significant increase in volatility in corporate security spreads during 2014. As spreads in both the investment grade and high yield markets tightened in the first half of the year, we sold assets that we viewed to be overvalued. In the second half of 2014, a combination of European economic worries and a sharp decline in commodities caused spreads to widen out to attractive levels. We took advantage of these wider spreads to add exposure in bonds with an appealing risk-return profile.

The table below shows the exposure break-down by sector and rating at year-end:

Corporate Securities (at December 31, 2014)
(millions) Sector	AA		A		BBB		Non-Investment Grade/Non-Rated		Total
Consumer	$	0	$	146.1	$	442.5	$	401.7	$	990.3
Industrial	0		57.0		433.2		222.1		712.3
Communications	0		47.3		349.8		44.3		441.4
Financial Services	30.3		81.4		343.8		167.5		623.0
Technology	0		0		0		4.0		4.0
Basic Materials	0		0		56.1		0		56.1
Energy	0		0		9.6		0		9.6
Total	$	30.3	$	331.8	$	1,635.0	$	839.6	$	2,836.7

We held $483.9 million of U.S. dollar-denominated corporate bonds issued by companies that are domiciled, or whose parent companies are domiciled, in the U.K. and other European companies, primarily in the consumer, industrial, energy, and communications industries. We had no direct exposure to southern European-domiciled companies at December 31, 2014.

PREFERRED STOCKS – REDEEMABLE AND NONREDEEMABLE

We hold both redeemable (i.e., mandatory redemption dates) and nonredeemable (i.e., perpetual with call dates) preferred stocks. At December 31, 2014, we held $279.2 million in redeemable preferred stocks and $827.5 million in nonredeemable preferred stocks, compared to $313.9 million and $711.2 million, respectively, at December 31, 2013.

Our preferred stock portfolio had net unrealized gains of $213.7 million and $268.6 million at December 31, 2014 and 2013, respectively.

Our preferred portfolio had a strong return in 2014, due in part to a rebound from lower prices due to fears of interest rate increases in 2013. Also, because of their higher risk, preferred stocks offer a higher yield than the majority of the fixed-income portfolio. We continue to view preferred stocks as an attractive sector and consequently added to the portfolio in 2014 as several new issues came to market.

App.-A-73

Approximately 59% of our preferred stock securities are fixed-rate securities, and 41% are floating-rate securities. All of our preferred securities have call or mandatory redemption features. Of our fixed-rate securities, approximately 97% will convert to floating-rate dividend payments if not called at their initial call date, providing some protection against extension risk in the event the issuer elects not to call such securities at their initial call date.

Our preferred stock portfolio had a duration of 2.3 years at December 31, 2014, compared to 2.0 years at December 31, 2013. The interest rate duration of our preferred securities is calculated to reflect the call, floor, and floating rate features. Although a preferred security may remain outstanding if not called, its interest rate duration will reflect the variable nature of the dividend. The overall credit quality rating was BB+ at December 31, 2014 and 2013. Our non-investment-grade preferred stocks were with issuers that primarily maintain investment-grade senior debt ratings. The table below shows the exposure break-down by sector and rating at year-end:

Preferred Stocks (at December 31, 2014)
(millions) Sector	BBB		Non-Investment Grade/ Non- Rated		Total
Financial Services
U.S. banks	$	357.6	$	260.7	$	618.3
Foreign banks	30.9		22.1		53.0
Insurance holdings	44.1		167.3		211.4
Other financial institutions	5.8		36.9		42.7
Total financial services	438.4		487.0		925.4
Industrials	73.9		42.0		115.9
Utilities	65.4		0		65.4
Total	$	577.7	$	529.0	$	1,106.7

We also face the risk that dividend payments on our preferred stock holdings could be deferred for one or more periods or skipped entirely. As of December 31, 2014, all of our preferred securities continued to pay their dividends in full and on time. Approximately 67% of our preferred stock securities pay dividends that have tax preferential characteristics, while the balance pay dividends that are fully taxable.

We held $77.8 million of U.S. dollar-denominated nonredeemable preferred stocks issued by financial institutions that are domiciled, or whose parent companies are domiciled, in the U.K. We had no direct exposure to southern European-domiciled companies at December 31, 2014.

Common Equities

Common equities, as reported on the balance sheets at December 31, were comprised of the following:

($ in millions)	2014				2013
Indexed common stocks	$	2,192.1	87.9	%	$	2,244.6	88.6	%
Managed common stocks	299.8		12.0		285.4		11.3
Total common stocks	2,491.9		99.9		2,530.0		99.9
Other risk investments	0.4		0.1		0.5		0.1
Total common equities	$	2,492.3	100.0	%	$	2,530.5	100.0	%

In our indexed common stock portfolio, our individual holdings are selected based on their contribution to the correlation with the index. For both periods reported in the table above, the GAAP basis total return was within the desired tracking error when compared to the Russell 1000 Index. We held 663 out of 1,043, or 64%, of the common stocks comprising the Russell 1000 Index at December 31, 2014, which made up 87% of the total market capitalization of the index.

The actively managed common stock portfolio is managed by two external investment managers. At December 31, 2014, the fair value of the actively managed portfolio was $299.8 million, compared to a cost basis of $248.6 million.

Other risk investments include private equity investments and limited partnership interests in private equity and mezzanine investment funds, which have no off-balance-sheet exposure or contingent obligations.

App.-A-74

The following is a summary of our indexed common stock portfolio holdings by sector compared to the Russell 1000 Index composition:

Sector	Equity Portfolio Allocation at December 31, 2014		Russell 1000 Allocation at December 31, 2014		Russell 1000 Sector Return in 2014
Consumer discretionary	15.1	%	15.0	%	9.5	%
Consumer staples	7.6		7.9		17.0
Financial services	18.3		19.0		14.7
Health care	13.6		13.5		26.0
Materials and processing	3.7		4.1		5.5
Other energy	7.9		7.9		(8.6	)
Producer durable	10.0		11.0		9.8
Technology	17.0		16.4		20.3
Utilities	5.0		5.2		16.3
Other equity	1.8		NA		NA
Total common stocks	100.0	%	100.0	%	13.2	%

NA = Not Applicable

Derivative Instruments

CASH FLOW HEDGES

We issued $350 million of 4.35% Senior Notes in April 2014. Upon issuance, we closed a forecasted debt issuance hedge and recognized a $1.6 million pretax loss as part of accumulated other comprehensive income (loss). During 2014, we repurchased, in the open market, $44.3 million in aggregate principal amount of our 6.70% Debentures and reclassified $0.5 million, on a pretax basis, of the unrealized gain on forecasted transactions from accumulated other comprehensive income on the balance sheet to net realized gains on securities on the comprehensive income statement. See Note 2 – Investments for further discussion.

INTEREST RATE SWAPS

We invest in interest rate swaps primarily to manage the fixed-income portfolio duration. The $750 million notional value swaps reflected a loss for 2014, as interest rates have fallen during the year. These positions reflected a gain for 2013 as interest rates rose during the year. The losses on the $1,263 million notional value swaps during 2013 and 2012 reflected a decline in rates during the applicable periods. The following table summarizes our interest rate swap activity:

										Net Realized Gains (Losses)
										Years ended
(millions)	Date			Notional Value						December 31,
Term	Effective	Maturity	Coupon	2014		2013		2012		2014			2013			2012
Open:
10-year	04/2013	04/2023	Receive variable	$	150	$	150	$	0	$	(12.9	)	$	11.9		$	0
10-year	04/2013	04/2023	Receive variable	185		185		0		(15.9		)	14.8			0
10-year	04/2013	04/2023	Receive variable	415		415		0		(35.8		)	33.1			0
5-year	05/2011	05/2016	Receive variable	0		0		400		0			0			(10.5		)
5-year	08/2011	08/2016	Receive variable	0		0		500		0			0			(13.5		)
9-year	12/2009	01/2019	Receive variable	0		0		363		0			0			(18.7		)
Total open positions				$	750	$	750	$	1,263	$	(64.6	)	$	59.8		$	(42.7	)
Closed:
5-year	NA	NA	Receive variable	$	0	$	400	$	0	$	0		$	(1.0	)	$	0
5-year	NA	NA	Receive variable	0		500		0		0			(1.6		)	0
9-year	NA	NA	Receive variable	0		363		0		0			(1.4		)	0
Total closed positions				$	0	$	1,263	$	0	$	0		$	(4.0	)	$	0
Total interest rate swaps										$	(64.6	)	$	55.8		$	(42.7	)

NA = Not Applicable

App.-A-75

CORPORATE CREDIT DEFAULT SWAPS

We invest in corporate credit default swaps primarily to manage the fixed-income portfolio credit risk. The following table summarizes our corporate credit default swap activity:

(millions)	Date		Bought or Sold Protection	Notional Value						Net Realized Gains (Losses)
										Years ended
										December 31,
Term	Effective	Maturity		2014		2013		2012		2014		2013		2012
Closed:
5-year	NA	NA	Bought	$	0	$	0	$	25	$	0	$	0	$	(1.0	)
Total corporate swaps										$	0	$	0	$	(1.0	)

NA = Not Applicable

B. Investment Results

We report total return to reflect more accurately our management philosophy governing the portfolio and our evaluation of investment results. The fully taxable equivalent (FTE) total return includes recurring investment income, adjusted to a fully taxable amount, based on certain securities that receive tax preferential treatment (e.g., municipal securities), net realized gains (losses) on securities, and changes in unrealized  gains (losses) on investments.

Investment income (interest and dividends, before investment and interest expenses) decreased 3% for 2014, compared to a decrease of 5% for 2013, and a decrease of 8% for 2012. The reductions in all three periods were primarily the result of decreases in investment yields; partially offset by increases in average assets.

The following summarizes investment results for the years ended December 31:

	2014		2013		2012
Pretax recurring investment book yield	2.4	%	2.6	%	2.9	%
Weighted average FTE book yield	2.7	%	2.9	%	3.2	%
FTE total return:
Fixed-income securities	3.2	%	1.7	%	5.5	%
Common stocks	12.6	%	32.8	%	16.7	%
Total portfolio	4.5	%	5.4	%	6.8	%

A further break-down of our FTE total returns for our portfolio, including the net gains (losses) on our derivative positions, for the years ended December 31, follows:

	2014		2013		2012
Fixed-income securities:
U.S. Treasury Notes	(0.3	)%	1.6	%	(0.2	)%
Municipal bonds	6.0	%	2.3	%	4.6	%
Corporate bonds	3.8	%	1.8	%	7.3	%
Commercial mortgage-backed securities	5.1	%	0.1	%	7.0	%
Collateralized mortgage obligations	2.6	%	3.6	%	10.8	%
Asset-backed securities	2.8	%	2.2	%	4.9	%
Preferred stocks	11.3	%	3.7	%	23.3	%
Common stocks:
Indexed	14.3	%	33.8	%	17.0	%
Actively managed	2.9	%	27.1	%	13.7	%

The decline in FTE total return during 2014 reflects lower equity market returns in 2014, compared to 2013.

App.-A-76

V. CRITICAL ACCOUNTING POLICIES

Progressive is required to make certain estimates and assumptions when preparing its financial statements and accompanying notes in conformity with GAAP. Actual results could differ from those estimates in a variety of areas. The two areas that we view as most critical with respect to the application of estimates and assumptions are the establishment of our loss reserves and the method of determining impairments in our investment portfolio.

A. Loss and LAE Reserves

Loss and loss adjustment expense (LAE) reserves represent our best estimate of our ultimate liability for losses and LAE relating to events that occurred prior to the end of any given accounting period but have not yet been paid. At December 31, 2014, we had $7.7 billion of net loss and LAE reserves, which included $6.1 billion of case reserves and $1.6 billion of incurred but not recorded (IBNR) reserves.

Progressive’s actuarial staff reviews over 400 subsets of business data, which are at a combined state, product, and line coverage level (the “products”), to calculate the needed loss and LAE reserves. We begin our review of a set of data by producing multiple estimates of needed reserves, using both paid and incurred data, to determine if a reserve change is required. In the event of a wide variation among results generated by the different projections, our actuarial group will further analyze the data using additional quantitative analysis. Each review develops a point estimate for a relatively small subset of the business, which allows us to establish meaningful reserve levels for that subset. In addition, the actuarial staff completes separate projections of needed case and IBNR reserves.

We do not review loss reserves on a macro level and, therefore, do not derive a companywide range of reserves to compare to a standard deviation. Instead, we review a large majority of our reserves by product/state combination on a quarterly time frame, with the remaining reserves generally reviewed on a semiannual basis. A change in our scheduled reviews of a particular subset of the business depends on the size of the subset or emerging issues relating to the product or state. By reviewing the reserves at such a detailed level, we have the ability to identify and measure variances in the trends by state, product, and line coverage that otherwise would not be seen on a consolidated basis. We believe our comprehensive process of reviewing at a subsegment level provides us more meaningful estimates of our aggregate loss reserves.

In analyzing the ultimate accident year loss and LAE experience, our actuarial staff reviews in detail, at the subset level, frequency (number of losses per earned car year), severity (dollars of loss per each claim), and average premium (dollars of premium per earned car year) of loss, as well as the frequency and severity of our LAE costs. The loss ratio, a primary measure of loss experience, is equal to the product of frequency times severity divided by the average premium. The average premium for personal and commercial auto businesses is not estimated. The actual frequency experienced will vary depending on the change in mix of class of drivers insured by Progressive, but the frequency projections for these lines of business is generally stable in the short term, because a large majority of the parties involved in an accident report their claims within a short time period after the occurrence. The severity experienced by Progressive is much more difficult to estimate, especially for injury claims, since severity is affected by changes in underlying costs, such as medical costs, jury verdicts, and regulatory changes. In addition, severity will vary relative to the change in our mix of business by limit.

Assumptions regarding needed reserve levels made by the actuarial staff take into consideration influences on available historical data that reduce the predictiveness of our projected future loss costs. Internal considerations that are process-related, which generally result from changes in our claims organization’s activities, include claim closure rates, the number of claims that are closed without payment, and the level of the claims representatives’ estimates of the needed case reserve for each claim. These changes and their effect on the historical data are studied at the state level versus on a larger, less indicative, countrywide basis.

External items considered include the litigation atmosphere, state-by-state changes in medical costs, and the availability of services to resolve claims. These also are better understood at the state level versus at a more macro, countrywide level.

The manner in which we consider and analyze the multitude of influences on the historical data, as well as how loss reserves affect our financial results, is discussed in more detail in our Report on Loss Reserving Practices, which was filed on August 8, 2014 via Form 8-K. There have been no significant changes to our reserving practices since this report was filed.

App.-A-77

At December 31, 2014, Progressive had $8.9 billion of carried gross reserves and $7.7 billion of net reserves (net of reinsurance recoverables on unpaid losses). Our net reserve balance implicitly assumes that the loss and LAE severity for accident year 2014 over accident year 2013 would increase by 3.8% for personal auto liability and decrease by 0.4% for commercial auto liability. Personal auto liability and commercial auto liability reserves represent approximately 98% of our total carried net reserves. As discussed above, the severity estimates are influenced by many variables that are difficult to precisely quantify and which influence the final amount of claims settlement. That, coupled with changes in internal claims practices, the legal environment, and state regulatory requirements, requires significant judgment in the estimate of the needed reserves to be carried.

The following table highlights what the effect would be to our carried loss and LAE reserves, on a net basis, as of December 31, 2014, if during 2015 we were to experience the indicated change in our estimate of severity for the 2014 accident year (i.e., claims that occurred in 2014):

	Estimated Changes in Severity for Accident Year 2014
(millions)	-4%		-2%		As Reported		+2%		+4%
Personal auto liability	$	5,851.4	$	6,002.0	$	6,152.6	$	6,303.2	$	6,453.8
Commercial auto liability	1,315.2		1,333.6		1,352.0		1,370.4		1,388.8
Other1	166.9		166.9		166.9		166.9		166.9
Total	$	7,333.5	$	7,502.5	$	7,671.5	$	7,840.5	$	8,009.5

¹ Includes reserves for personal and commercial auto physical damage claims and our non-auto lines of business; no change in estimates is presented due to the immaterial level of these reserves.

Note: Every percentage point change in our estimate of severity for the 2014 accident year would affect our personal auto liability reserves by $75.3 million and our commercial auto reserves by $9.2 million.

Our 2014 year-end loss and LAE reserve balance also includes claims from prior years. Claims that occurred in 2014, 2013, and 2012, in the aggregate, accounted for approximately 92% of our reserve balance. If during 2015 we were to experience the indicated change in our estimate of severity for the total of the prior three accident years (i.e., 2014, 2013, and 2012), the effect to our year-end 2014 reserve balances would be as follows:

	Estimated Changes in Severity for Accident Years 2014, 2013, and 2012
(millions)	-4%		-2%		As Reported		+2%		+4%
Personal auto liability	$	5,306.2	$	5,729.4	$	6,152.6	$	6,575.8	$	6,999.0
Commercial auto liability	1,241.6		1,296.8		1,352.0		1,407.2		1,462.4
Other1	166.9		166.9		166.9		166.9		166.9
Total	$	6,714.7	$	7,193.1	$	7,671.5	$	8,149.9	$	8,628.3

¹ Includes reserves for personal and commercial auto physical damage claims and our non-auto lines of business; no change in estimates is presented due to the immaterial level of these reserves.

Note: Every percentage point change in our estimate of severity for the 2014, 2013, and 2012 accident years would affect our personal auto liability reserves by $211.6 million and our commercial auto reserves by $27.6 million.

App.-A-78

Our best estimate of the appropriate amount for our reserves as of year-end 2014 is included in our financial statements for the year. Our goal is to ensure that total reserves are adequate to cover all loss costs, while sustaining minimal variation from the time reserves are initially established until losses are fully developed. At the point in time when reserves are set, we have no way of knowing whether our reserve estimates will prove to be high or low, or whether one of the alternative scenarios discussed above is “reasonably likely” to occur. The above tables show the possible favorable or unfavorable development we will realize if our estimates miss by 2% or 4%. During 2014, our estimate of the needed reserves at the end of 2013 decreased 0.3%. The following table shows how we have performed against this goal over the last ten years:

($ in millions)
For the years ended December 31,	2004		2005		2006			2007		2008		2009		2010		2011			2012			2013		2014
Loss and LAE Reserves-net1	$	4,948.5	$	5,313.1	$	5,363.6		$	5,655.2	$	5,932.9	$	6,123.6	$	6,366.9	$	6,460.1		$	6,976.3		$	7,433.8	$	7,671.5
Re-estimated reserves as of:
One year later	4,592.6		5,066.2		5,443.9			5,688.4		5,796.9		5,803.2		6,124.9		6,482.1			7,021.4			7,409.7
Two years later	4,485.2		5,130.5		5,469.8			5,593.8		5,702.1		5,647.7		6,074.4		6,519.6			6,994.7			—
Three years later	4,501.6		5,093.6		5,381.9			5,508.0		5,573.8		5,575.0		6,075.9		6,495.4			—			—
Four years later	4,471.0		5,046.7		5,336.5			5,442.1		5,538.5		5,564.6		6,050.6		—			—			—
Five years later	4,475.5		5,054.6		5,342.8			5,452.8		5,580.0		5,605.6		—		—			—			—
Six years later	4,486.4		5,060.8		5,352.8			5,475.6		5,609.1		—		—		—			—			—
Seven years later	4,486.3		5,070.2		5,369.7			5,501.3		—		—		—		—			—			—
Eight years later	4,493.3		5,081.7		5,391.2			—		—		—		—		—			—			—
Nine years later	4,497.5		5,100.6		—			—		—		—		—		—			—			—
Ten years later	4,518.8		—		—			—		—		—		—		—			—			—
Cumulative Development:
Favorable(Unfavorable)	$	429.7	$	212.5	$	(27.6	)	$	153.9	$	323.8	$	518.0	$	316.3	$	(35.3	)	$	(18.4	)	$	24.1
Percentage2	8.7		4.0		(0.5		)	2.7		5.5		8.5		5.0		(0.5		)	(0.3		)	0.3

¹ Represents loss and LAE reserves net of reinsurance recoverables on net unpaid losses at the balance sheet date.

² Cumulative development ÷ loss and LAE reserves.

Note: The chart above represents the development of the property-casualty loss and LAE reserves for 2004 through 2013. The last line in the triangle for each year represents the following:

Re-estimated reserves = Total amount paid to-date + Re-estimated liability for unpaid losses and LAE-net

Changes in the estimated severity and the actual number of late reported claims are the cause of the change in our re-estimated reserves from year to year. The cumulative development represents the aggregate change in our estimates over all years.

Our bodily injury severity change was much lower than we expected between 2004 and 2005; thus, the reserve run-off for these years was very favorable following the end of each year. The favorable reserve development for 2007 through 2010 was about 3% to 9% of our original carried reserves, which primarily reflects the decreases in severity between our original estimate and what we experienced in both our personal auto and commercial auto businesses during that period. For each of the last three years, we experienced very minimal development, or less than 1% of our original estimate.

Because Progressive is primarily an insurer of motor vehicles, we have minimal exposure as an insurer of environmental, asbestos, and general liability claims.

App.-A-79

B. Other-Than-Temporary Impairment (OTTI)

Realized losses may include write-downs of securities determined to have had an other-than-temporary decline in fair value. We routinely monitor our portfolio for pricing changes that might indicate potential impairments and perform detailed reviews of securities with unrealized losses based on predetermined guidelines. In such cases, changes in fair value are evaluated to determine the extent to which such changes are attributable to: (i) fundamental factors specific to the issuer, such as financial conditions, business prospects, or other factors; (ii) market-related factors, such as interest rates or equity market declines (e.g., negative return at either a sector index level or at the broader market level); or (iii) credit-related losses, where the present value of cash flows expected to be collected is lower than the amortized cost basis of the security.

Fixed-income securities and common equities with declines attributable to issuer-specific fundamentals are reviewed to identify available evidence, circumstances, and influences to estimate the potential for, and timing of, recovery of the investment’s impairment. An other-than-temporary impairment loss is deemed to have occurred when the potential for recovery does not satisfy the criteria set forth in the current accounting guidance.

For fixed-income investments with unrealized losses due to market- or sector-related declines, the losses are not deemed to qualify as other-than-temporary if we do not have the intent to sell the investments, and it is more likely than not that we will not be required to sell the investments, prior to the period of time that we anticipate to be necessary for the investments to recover their cost bases. In general, our policy for common equity securities with market- or sector-related declines is to recognize impairment losses on individual securities with losses we cannot reasonably conclude will recover in the near term under historical conditions when: (i) we are able to objectively determine that the loss is other-than-temporary; or (ii) the security has been in a significant loss position for three consecutive quarters.

When a security in our fixed-maturity portfolio has an unrealized loss and we intend to sell the security, or it is more likely than not that we will be required to sell the security, we write down the security to its current fair value and recognize the entire unrealized loss through the comprehensive income statement as a realized loss. If a fixed-maturity security has an unrealized loss and it is more likely than not that we will hold the debt security until recovery (which could be maturity), then we determine if any of the decline in value is due to a credit loss (i.e., where the present value of cash flows expected to be collected is lower than the amortized cost basis of the security) and, if so, we will recognize that portion of the impairment in net income as part of the comprehensive income statement as a realized loss; any remaining unrealized loss on the security is considered to be due to other factors (e.g., interest rate and credit spread movements) and is reflected in other comprehensive income as part of shareholders’ equity, along with unrealized gains or losses on securities that are not deemed to be other-than-temporarily impaired.

The following table stratifies the gross unrealized losses in our fixed-income and common equity portfolios at December 31, 2014, by the duration in a loss position and magnitude of the loss as a percentage of the cost of the security:

	Fair Value		Total Gross Unrealized Losses		Decline of Investment Value
(millions)					>15%		>25%		>35%		>45%
Fixed income:
Unrealized loss for less than 12 months	$	3,000.7	$	16.6	$	0	$	0	$	0	$	0
Unrealized loss for 12 months or greater	1,148.7		22.5		0		0		0		0
Total	$	4,149.4	$	39.1	$	0	$	0	$	0	$	0
Common equity:
Unrealized loss for less than 12 months	$	61.8	$	9.6	$	4.8	$	0	$	0	$	0
Unrealized loss for 12 months or greater	6.6		0.5		0		0		0		0
Total	$	68.4	$	10.1	$	4.8	$	0	$	0	$	0

We completed a thorough review of the existing securities in these loss categories and determined that, applying the procedures and criteria discussed above, these securities were not other-than-temporarily impaired. We do not intend to sell these securities. We also determined that it is more likely than not that we will not be required to sell these securities, for the periods of time necessary to recover the cost bases of these securities, and that there is no additional credit-related impairment on our debt securities.

Since total unrealized losses are already a component of other comprehensive income and included in shareholders’ equity, any recognition of these losses as additional OTTI losses would have no effect on our comprehensive income, book value, or reported investment total return.

App.-A-80

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Statements in this report that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions, and projections generally; inflation and changes in economic conditions (including changes in interest rates and financial markets); the possible failure of one or more governmental, corporate, or other entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading by one or more rating agencies of our securities or governmental, corporate, or other securities we hold; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including reinsurers and other counterparties to certain financial transactions; the accuracy and adequacy of our pricing and loss reserving methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to attract and retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for the introduction of products to new jurisdictions, for requested rate changes and the timing thereof and for any proposed acquisitions; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments at the state and federal levels, including, but not limited to, matters relating to vehicle and homeowners insurance, health care reform and tax law changes; the outcome of disputes relating to intellectual property rights; the outcome of litigation or governmental investigations that may be pending or filed against us; weather conditions (including the severity and frequency of storms, hurricanes, floods, snowfalls, hail, and winter conditions); changes in driving patterns, including vehicle usage as influenced by the level of oil and gas prices, among other factors; our ability to accurately recognize and appropriately respond in a timely manner to changes in loss frequency and severity trends; technological advances; acts of war and terrorist activities; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions, and safeguard personal and sensitive information in our possession; our continued access to and functionality of third-party systems that are critical to our business; court decisions, new theories of insurer liability or interpretations of insurance policy provisions and other trends in litigation; changes in health care and auto and property repair costs; and other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

App.-A-81

Supplemental Information

The Progressive Corporation and Subsidiaries

Ten Year Summary – Selected Financial Information

(unaudited)

(millions – except ratios, policies in force, per share amounts, and number of people employed)	2014			2013			2012			2011			2010
Net premiums written	$	18,654.6		$	17,339.7		$	16,372.7		$	15,146.6		$	14,476.8
Growth	8		%	6		%	8		%	5		%	3		%
Net premiums earned	$	18,398.5		$	17,103.4		$	16,018.0		$	14,902.8		$	14,314.8
Growth	8		%	7		%	7		%	4		%	2		%
Policies in force (thousands):
Personal Lines	13,261.9			13,056.4			12,735.3			12,283.8			11,702.7
Growth	2		%	3		%	4		%	5		%	7		%
Commercial Lines	514.7			514.6			519.6			509.1			510.4
Growth	0		%	(1		)%	2		%	0		%	0		%
Total revenues	$	19,391.4		$	18,170.9		$	17,083.9		$	15,774.6		$	15,215.5
Underwriting margins:1
Personal Lines	6.7		%	6.6		%	4.4		%	6.8		%	7.0		%
Commercial Lines	17.2		%	6.5		%	5.2		%	9.1		%	12.5		%
Total underwriting operations	7.7		%	6.5		%	4.4		%	7.0		%	7.6		%
Net income (loss)	$	1,281.0		$	1,165.4		$	902.3		$	1,015.5		$	1,068.3
Per share2	2.15			1.93			1.48			1.59			1.61
Average equivalent shares2	594.8			603.6			607.8			636.9			663.3
Comprehensive income (loss)	$	1,352.4		$	1,246.1		$	1,080.8		$	924.3		$	1,398.8
Total assets	$	25,787.6		$	24,408.2		$	22,694.7		$	21,844.8		$	21,150.3
Debt outstanding	2,164.7			1,860.9			2,063.1			2,442.1			1,958.2
Total shareholders’ equity	6,928.6			6,189.5			6,007.0			5,806.7			6,048.9
Statutory surplus	6,442.8			5,991.0			5,605.2			5,269.2			5,073.0
Common shares outstanding	587.8			595.8			604.6			613.0			662.4
Common share price:
High	$	27.52		$	28.54		$	23.41		$	22.08		$	22.13
Low	22.53			21.36			19.01			16.88			16.18
Close (at December 31)	26.99			27.27			21.10			19.51			19.87
Market capitalization	$	15,864.7		$	16,247.5		$	12,757.1		$	11,959.6		$	13,161.9
Book value per common share	11.79			10.39			9.94			9.47			9.13
Ratios:
Return on average shareholders’ equity:
Net income	19.1		%	17.7		%	14.5		%	16.5		%	17.1		%
Comprehensive income	20.1		%	19.0		%	17.4		%	15.0		%	22.3		%
Debt to total capital	23.8		%	23.1		%	25.6		%	29.6		%	24.5		%
Price to earnings	12.6			14.1			14.3			12.3			12.3
Price to book	2.3			2.6			2.1			2.1			2.2
Earnings to fixed charges	16.4		x	14.7		x	11.0		x	11.6		x	11.9		x
Net premiums written to statutory surplus	2.9			2.9			2.9			2.9			2.9
Statutory combined ratio	92.1			93.4			95.2			92.9			92.5
Dividends declared per share3	$	0.6862		$	1.4929		$	1.2845		$	0.4072		$	1.3987
Number of people employed	26,501			26,145			25,889			25,007			24,638

All share and per share amounts were adjusted for the May 18, 2006, 4-for-1 stock split.

¹Underwriting margins are calculated as pretax underwriting profit (loss), as defined in Note 10 – Segment Information, as a percentage of net premiums earned.

²Amounts reflect basic net income per share and basic average equivalent shares for 2008 since we reported a net loss; all other periods are presented on a diluted basis.

App.-A-82

(millions – except ratios, policies in force, per share amounts, and number of people employed)	2009			2008			2007			2006			2005
Net premiums written	$	14,002.9		$	13,604.3		$	13,772.5		$	14,132.0		$	14,007.6
Growth	3		%	(1		)%	(3		)%	1		%	5		%
Net premiums earned	$	14,012.8		$	13,631.4		$	13,877.4		$	14,117.9		$	13,764.4
Growth	3		%	(2		)%	(2		)%	3		%	5		%
Policies in force (thousands):
Personal Lines	10,940.6			10,464.9			10,115.6			9,741.1			9,494.0
Growth	5		%	3		%	4		%	3		%	9		%
Commercial Lines	512.8			539.4			539.2			503.2			468.2
Growth	(5		)%	0		%	7		%	7		%	11		%
Total revenues	$	14,791.1		$	13,049.0		$	14,902.9		$	15,008.5		$	14,529.8
Underwriting margins:1
Personal Lines	7.6		%	5.4		%	7.0		%	12.3		%	11.0		%
Commercial Lines	14.2		%	5.3		%	10.1		%	19.8		%	17.9		%
Total underwriting operations	8.4		%	5.4		%	7.4		%	13.3		%	11.9		%
Net income (loss)	$	1,057.5		$	(70.0	)	$	1,182.5		$	1,647.5		$	1,393.9
Per share2	1.57			(0.10		)	1.65			2.10			1.74
Average equivalent shares2	672.2			668.0			718.5			783.8			799.3
Comprehensive income (loss)	$	1,752.2		$	(614.7	)	$	1,071.0		$	1,853.1		$	1,347.8
Total assets	$	20,049.3		$	18,250.5		$	18,843.1		$	19,482.1		$	18,898.6
Debt outstanding	2,177.2			2,175.5			2,173.9			1,185.5			1,284.9
Total shareholders’ equity	5,748.6			4,215.3			4,935.5			6,846.6			6,107.5
Statutory surplus	4,953.6			4,470.6			4,587.3			4,963.7			4,674.1
Common shares outstanding	672.6			676.5			680.2			748.0			789.3
Common share price:
High	$	18.10		$	21.31		$	25.16		$	30.09		$	31.23
Low	9.76			10.29			17.26			22.18			20.35
Close (at December 31)	17.99			14.81			19.16			24.22			29.20
Market capitalization	$	12,100.1		$	10,019.0		$	13,032.6		$	18,116.6		$	23,040.7
Book value per common share	8.55			6.23			7.26			9.15			7.74
Ratios:
Return on average shareholders’ equity:
Net income	21.4		%	(1.5		)%	19.5		%	25.3		%	25.0		%
Comprehensive income	35.5		%	(13.3		)%	17.7		%	28.4		%	24.1		%
Debt to total capital	27.5		%	34.0		%	30.6		%	14.8		%	17.4		%
Price to earnings	11.5			NA			11.6			11.5			16.7
Price to book	2.1			2.4			2.6			2.6			3.8
Earnings to fixed charges	11.3		x	NA			13.5		x	24.7		x	21.3		x
Net premiums written to statutory surplus	2.8			3.0			3.0			2.8			3.0
Statutory combined ratio	91.6			94.6			92.7			86.5			87.4
Dividends declared per share3	$	0.1613		$	0		$	2.1450		$	0.0325		$	0.0300
Number of people employed	24,661			25,929			26,851			27,778			28,336

³Progressive transitioned to an annual variable dividend policy beginning in 2007. In accordance with this policy, no dividend was declared in 2008 since our comprehensive income was less than after-tax underwriting income. In addition to the annual variable dividend, Progressive’s Board declared special cash dividends of $1.00 per common share in 2013, 2012, and 2010, and $2.00 per common share in 2007. Progressive paid quarterly dividends prior to 2007.

NA = Not applicable due to the net loss reported for 2008.

App.-A-83

The Progressive Corporation and Subsidiaries

Quarterly Financial and Common Share Data

(unaudited)

(millions – except per share amounts)
			Net Income				Stock Price1
Quarter	Total Revenues		Total		Per Share2		High		Low		Close		Rate of Return3		Dividends Declared Per Share4
2014
1	$	4,707.6	$	321.3	$	0.54	$	27.30	$	22.53	$	24.22			$	0
2	4,741.5		293.4		0.49		26.03		23.40		25.36				0
3	4,766.1		296.1		0.50		25.63		23.20		25.28				0
4	5,176.2		370.2		0.63		27.52		24.16		26.99				0.6862
	$	19,391.4	$	1,281.0	$	2.15	$	27.52	$	22.53	$	26.99	5.3	%	$	0.6862
2013
1	$	4,437.2	$	308.6	$	0.51	$	25.38	$	21.36	$	25.27			$	0
2	4,593.6		324.6		0.54		26.39		23.99		25.42				0
3	4,521.3		232.4		0.39		27.55		24.86		27.23				0
4	4,618.8		299.8		0.50		28.54		25.81		27.27				1.4929
	$	18,170.9	$	1,165.4	$	1.93	$	28.54	$	21.36	$	27.27	30.9	%	$	1.4929
2012
1	$	4,126.4	$	257.6	$	0.42	$	23.37	$	19.01	$	23.18			$	0
2	4,183.0		118.6		0.19		23.41		20.22		20.83				0
3	4,423.9		277.0		0.46		21.28		19.17		20.74				0
4	4,350.6		249.1		0.41		23.19		20.68		21.10				1.2845
	$	17,083.9	$	902.3	$	1.48	$	23.41	$	19.01	$	21.10	15.4	%	$	1.2845

¹ Prices are as reported on the consolidated transaction reporting system. Progressive’s common shares are listed on the New York Stock Exchange under the symbol PGR.

² The sum may not equal the total because the average equivalent shares differ in the quarterly and annual periods.

³ Represents annual rate of return, assuming dividend reinvestment.

⁴ Progressive maintains an annual variable dividend policy under which a dividend is typically declared each December and paid early the following year. In addition to the annual variable dividend, in each of December 2013 and October 2012, Progressive’s Board declared a special cash dividend of $1.00 per common share. The December 2013 special dividend was paid in February 2014. The October 2012 special dividend was paid in November 2012.

App.-A-84

The Progressive Corporation and Subsidiaries

Performance Graph

(unaudited)

The following performance graph compares the performance of Progressive’s Common Shares (“PGR”) to the Standard & Poor’s Index (“S&P Index”) and the Value Line Property/Casualty Industry Group (“P/C Group”) for the last five years.

Cumulative Five-Year Total Return*

PGR, S&P Index, P/C Group (Performance Results through 12/31/14)

(Assumes $100 was invested at the close of trading on December 31, 2009)
	2010		2011		2012		2013		2014
PGR	$	116.90	$	117.09	$	135.25	$	177.00	$	186.47
S&P Index	115.06		117.49		136.29		180.43		205.13
P/C Group	120.73		129.51		155.29		209.45		239.91

*Assumes reinvestment of dividends

Source: Value Line Publishing LLC

App.-A-85

The Progressive Corporation and Subsidiaries

Claims Payment Patterns

(unaudited)

The Progressive Group of Insurance Companies is primarily an insurer of automobiles and recreational vehicles owned by individuals, and cars and trucks owned and/or operated predominantly by small businesses. As such, our claims liabilities are generally short in duration. Since our incurred losses consist of both payments and changes in the reserve estimates, it is important to understand our paid development patterns. The charts below show our claims payment patterns, reflecting both dollars and claims counts paid, for personal auto physical damage and bodily injury claims, as well as on a total personal auto basis, in each case calculated from the date of loss. Since physical damage claims pay out so quickly, the chart is calibrated on a monthly basis, as compared to a quarterly basis for the bodily injury and total auto payments.

App.-A-86

Note: The above graphs are presented for our personal auto products on an accident period basis and are based on three years of actual experience for physical damage and nine years for bodily injury and total personal auto.

App.-A-87

The Progressive Corporation and Subsidiaries

Quantitative Market Risk Disclosures

(unaudited)

Quantitative market risk disclosures are only presented for market risk categories when risk is considered material. Materiality is determined based on the fair value of the financial instruments at December 31, 2014, and the potential for near-term losses from reasonably possible near-term changes in market rates or prices. We had no trading financial instruments at December 31, 2014 and 2013. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for our discussion of the qualitative information about market risk.

OTHER-THAN-TRADING FINANCIAL INSTRUMENTS

Financial instruments subject to interest rate risk were:

	Fair Value
	-200 bps		-100 bps				+100 bps		+200 bps
(millions)	Change1		Change1		Actual		Change		Change
U.S. government obligations2	$	2,590.3	$	2,637.7	$	2,667.1	$	2,675.9	$	2,682.0
State and local government obligations	2,254.9		2,212.7		2,139.2		2,063.0		1,991.1
Foreign government obligations	14.2		14.2		14.2		14.2		14.2
Asset-backed securities	5,771.4		5,706.4		5,612.8		5,511.3		5,414.4
Corporate securities	2,991.9		2,930.6		2,836.7		2,741.7		2,651.2
Nonredeemable preferred stocks	842.8		839.1		827.5		814.0		798.7
Redeemable preferred stocks	284.4		283.1		279.2		274.6		269.5
Short-term investments	2,149.0		2,149.0		2,149.0		2,149.0		2,149.0
Balance at December 31, 2014	$	16,898.9	$	16,772.8	$	16,525.7	$	16,243.7	$	15,970.1
Balance at December 31, 2013	$	15,936.7	$	15,793.6	$	15,524.2	$	15,197.5	$	14,880.3

¹ The amounts reflect an interest rate of 1 basis point (bps) when the hypothetical decline in interest rates would have pushed yields to a negative level.

² The U.S. government obligations have a negative return in the -100bps and -200bps scenarios due to the negative duration for that portfolio.  The duration for our cash holdings in U.S. government obligations was 1.7, and the duration for our interest swap positions, where we are paying fixed rate on a notional value of $750 million with a maturity of April 2023, was -7.9.  The duration for the U.S. government obligations, which includes the impact of the interest rate swap positions, was -0.6.

Exposure to risk is represented in terms of changes in fair value due to selected hypothetical movements in market rates. Bonds and preferred stocks are individually priced to yield to the worst case scenario, which includes any issuer-specific features, such as a call option. Asset-backed securities and state and local government housing securities are priced assuming deal specific prepayment scenarios, considering the deal structure, prepayment penalties, yield maintenance agreements, and the underlying collateral.

Financial instruments subject to equity market risk were:

	Fair Value
(millions)	-10%		Actual		+10%
Common equities at December 31, 2014	$	2,240.6	$	2,492.3	$	2,744.0
Common equities at December 31, 2013	$	2,272.4	$	2,530.5	$	2,788.6

The model represents the estimated value of our common equity portfolio given a +/-10% change in the market, based on the common stock portfolio’s weighted average beta of 1.01 for 2014 and 1.02 for 2013. The beta is derived from recent historical experience, using the S&P 500 as the market surrogate. The historical relationship of the common stock portfolio’s beta to the S&P 500 is not necessarily indicative of future correlation, as individual company or industry factors may affect price movements. Betas are not available for all securities. In such cases, the change in fair value reflects a direct +/-10% change; the portion of securities without betas is 0.1%.

App.-A-88

The Progressive Corporation and Subsidiaries

Net Premiums Written by State

(unaudited)

($ in millions)	2014				2013				2012				2011				2010
Florida	$	2,399.0	12.9	%	$	2,188.1	12.6	%	$	2,000.1	12.2	%	$	1,683.1	11.1	%	$	1,603.2	11.1	%
Texas	1,664.6		8.9		1,560.7		9.0		1,536.6		9.4		1,403.8		9.3		1,321.4		9.1
California	1,080.6		5.8		996.0		5.7		954.4		5.8		935.8		6.2		914.1		6.3
New York	1,000.7		5.4		882.8		5.1		782.3		4.8		713.4		4.7		685.3		4.7
Ohio	807.7		4.3		757.4		4.4		725.8		4.4		689.0		4.5		652.5		4.5
Georgia	774.0		4.1		771.6		4.5		757.1		4.6		738.2		4.9		714.6		4.9
New Jersey	754.6		4.0		697.4		4.0		600.1		3.7		496.3		3.3		440.6		3.1
Pennsylvania	718.6		3.9		663.8		3.8		644.2		3.9		623.1		4.1		608.5		4.2
Michigan	659.6		3.5		539.5		3.1		488.5		3.0		471.7		3.1		448.4		3.1
Louisiana	552.5		3.0		540.1		3.1		515.9		3.2		496.1		3.3		465.9		3.2
All other	8,242.7		44.2		7,742.3		44.7		7,367.7		45.0		6,896.1		45.5		6,622.3		45.8
Total	$	18,654.6	100.0	%	$	17,339.7	100.0	%	$	16,372.7	100.0	%	$	15,146.6	100.0	%	$	14,476.8	100.0	%

App.-A-89

Principal Office

The Progressive Corporation

6300 Wilson Mills Road

Mayfield Village, Ohio 44143

440-461-5000

progressive.com

24-Hour Insurance Quotes, Claims Reporting, and Customer Service

	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.com1	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
If you have a complaint or concern regarding any claim handling or other claims-related issue2	1-800-274-4641 email: claims@email.progressive.com	1-800-274-4641 email: claims@email.progressive.com
¹ Claims reporting via the website is currently only available for personal auto policies.
² Any policyholder, claimant, or other interested party who has any complaint or concern regarding any claim handling or other claims-related issue may report such complaint or concern using the contact information above. The complaint or concern will be promptly forwarded to the appropriate management personnel in our claims organization for review and response.
In addition, iPhone® and Android® users can download the Progressive App to start a quote, report a claim, or service a policy.

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 15, 2015, at 10 a.m. eastern time. There were 2,359 shareholders of record on December 31, 2014.

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 2015, with a record date in early 2016 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.

App.-A-90

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.

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:

Stephen R. Hardis, Lead Independent Director, The Progressive Corporation, email: stephen_hardis@progressive.com

Charles E. Jarrett, Secretary, The Progressive Corporation, 6300 Wilson Mills Road, Mayfield Village, Ohio 44143 or email: chuck_jarrett@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 or federal securities laws relating to fraud against shareholders. 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  Progressive contributes 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 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 2014 Annual Report to Shareholders can be found at: progressive.com/annualreport.

We have also posted copies of our 2015 Proxy Statement and 2014 Annual Report to Shareholders, in a PDF format, at: progressiveproxy.com.

App.-A-91

Directors
Stuart B. Burgdoerfer1,6	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. Renwick2	5 Nominating and Governance
Charles A. Davis4,5,6	Chairman of the Board, President,	Committee Member
Chief Executive Officer,	and Chief Executive Officer,	6 Independent Director
Stone Point Capital LLC	The Progressive Corporation
(private equity investing)
	Bradley T. Sheares, Ph.D.3,6
Roger N. Farah3,5,6	Former Chief Executive Officer,
Co-Chief Executive Officer,	Reliant Pharmaceuticals, Inc.
Tory Burch, LLC	(pharmaceuticals)
(retailing)
	Barbara R. Snyder6
Lawton W. Fitt2,4,5,6	President,
Retired Partner,	Case Western Reserve University
Goldman Sachs Group	(higher education)
(financial services)
Stephen R. Hardis2,4,5,6
Lead Independent Director,
The Progressive Corporation
Jeffrey D. Kelly1,6
Chief Operating Officer and
Chief Financial Officer,
RenaissanceRe Holdings Ltd.
(reinsurance services)

App.-A-92

Corporate Officers	Other Executive Officers
Glenn M. Renwick	John A. Barbagallo
Chairman of the Board, President,	Commercial Lines Group President
and Chief Executive Officer
	M. Jeffrey Charney
Brian C. Domeck	Chief Marketing Officer
Vice President and Chief Financial Officer
	William M. Cody
Charles E. Jarrett	Chief Investment Officer
Vice President, Secretary,
and Chief Legal Officer	Susan Patricia Griffith
	President of Customer Operations
Thomas A. King
Vice President and Treasurer	Valerie Krasowski
	Chief Human Resource Officer
Jeffrey W. Basch
Vice President	John P. Sauerland
and Chief Accounting Officer	Personal Lines Group President
Mariann Wojtkun Marshall	Michael D. Sieger
Assistant Secretary	Claims Operations Leader
	Raymond M. Voelker
	Chief Information Officer
©2015 The Progressive Corporation

App.-A-93

EX-21

Exhibit 21

SUBSIDIARIES OF THE PROGRESSIVE CORPORATION

	Jurisdiction
Name of Subsidiary	of Incorporation
Drive Insurance Holdings, Inc.	Delaware
Drive New Jersey Insurance Company	New Jersey
Progressive American Insurance Company	Ohio
Progressive Bayside Insurance Company	Ohio
Progressive Casualty Insurance Company	Ohio
PC Investment Company	Delaware
Progressive Gulf Insurance Company	Ohio
Progressive Specialty Insurance Company	Ohio
Trussville/Cahaba, AL, LLC	Ohio
Progressive Classic Insurance Company	Wisconsin
Progressive Commercial Advantage Agency, Inc.	Ohio
Progressive Hawaii Insurance Corp.	Ohio
Progressive Michigan Insurance Company	Michigan
Progressive Mountain Insurance Company	Ohio
Progressive Northern Insurance Company	Wisconsin
Progressive Northwestern Insurance Company	Ohio
Progressive Preferred Insurance Company	Ohio
Progressive Security Insurance Company	Louisiana
Progressive Southeastern Insurance Company	Indiana
Progressive West Insurance Company	Ohio
Garden Sun Insurance Services, Inc.	Hawaii
Pacific Motor Club	California
Progny Agency, Inc.	New York
Progressive Adjusting Company, Inc.	Ohio
Progressive Capital Management Corp.	New York
Progressive Commercial Holdings, Inc.	Delaware
Artisan and Truckers Casualty Company	Wisconsin
National Continental Insurance Company	New York
Progressive Commercial Casualty Company	Ohio
Progressive Express Insurance Company	Ohio
United Financial Casualty Company	Ohio

	Jurisdiction
Name of Subsidiary (con't)	of Incorporation
Progressive Direct Holdings, Inc.	Delaware
Mountain Laurel Assurance Company	Ohio
Progressive Advanced Insurance Company	Ohio
Progressive Auto Pro Insurance Agency, Inc.	Florida
Progressive Choice Insurance Company	Ohio
Progressive Direct Insurance Company	Ohio
Gadsden, AL, LLC	Ohio
Progressive Freedom Insurance Company	New Jersey
Progressive Garden State Insurance Company	New Jersey
Progressive Marathon Insurance Company	Michigan
Progressive Max Insurance Company	Ohio
Progressive Paloverde Insurance Company	Indiana
Progressive Premier Insurance Company of Illinois	Ohio
Progressive Select Insurance Company	Ohio
Progressive Specialty Insurance Agency, Inc.	Ohio
Progressive Universal Insurance Company	Wisconsin
Progressive Investment Company, Inc.	Delaware
Progressive Premium Budget, Inc.	Ohio
Progressive RSC, Inc.	Ohio
Progressive Vehicle Service Company	Ohio
Village Transport Corp.	Delaware
Wilson Mills Land Co.	Ohio
Each subsidiary is wholly owned by its parent.

EX-24

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 15^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

Vice President and

/s/ Jeffrey W. Basch     Chief Accounting Officer

Jeffrey W. Basch

1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 15^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

Vice President and

/s/Brian C. Domeck Chief Financial Officer

Brian C. Domeck    

2

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 15^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

Director, Chairman of the Board,

/s/Glenn M. Renwick     President and Chief Executive Officer

Glenn M. Renwick    

3

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 17^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Stuart B. Burgdoerfer     Director

Stuart B. Burgdoerfer    

4

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 19^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Charles A. Davis     Director

Charles A. Davis    

5

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 19^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Roger N. Farah     Director

Roger N. Farah    

6

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 11^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Lawton W. Fitt     Director

Lawton W. Fitt    

7

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 16^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Stephen R. Hardis    Lead Independent Director

Stephen R. Hardis    

8

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 17^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Jeffrey D. Kelly     Director

Jeffrey D. Kelly    

9

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 19^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Patrick H. Nettles, Ph.D.    Director

Patrick H. Nettles, Ph.D.

10

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 19^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Bradley T. Sheares, Ph.D.    Director

Bradley T. Sheares, Ph.D.

11

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that I hereby constitute and appoint Charles E. Jarrett, Dane A. Shrallow, David M. Coffey and Laurie F. Humphrey, and each of them, my true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for me and in my name, place and stead, in any and all capacities, to sign and file with the Securities and Exchange Commission the Annual Report on Form 10-K of The Progressive Corporation for the year ended December 31, 2014, and any and all amendments relating thereto and other documents in connection therewith, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary and requisite to be done in connection with the foregoing, as fully to all intents and purposes as I might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their respective substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, I have hereunto subscribed my name in the capacity(ies) set forth below this 17^th day of February, 2015.

Position(s) with

SignatureThe Progressive Corporation

/s/Barbara R. Snyder    Director

Barbara R. Snyder    

12

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Glenn M. Renwick, certify that:

1. I have reviewed this annual report on Form 10-K of The Progressive Corporation;

2. 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;

3. 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;

4. 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:

(a) 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;

(b) 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;

(c) 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

(d) 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

5. 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):

(a) 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

(b) 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.

Date:	March 2, 2015	/s/ Glenn M. Renwick
		Glenn M. Renwick
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brian C. Domeck, certify that:

1. I have reviewed this annual report on Form 10-K of The Progressive Corporation;

2. 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;

3. 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;

4. 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:

(a) 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;

(b) 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;

(c) 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

(d) 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

5. 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):

(a) 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

(b) 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.

Date:	March 2, 2015	/s/ Brian C. Domeck
		Brian C. Domeck
		Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION

I, Glenn M. Renwick, President and Chief Executive Officer of The Progressive Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) the Annual Report on Form 10-K of the Company for the period ended December 31, 2014 (the “Report”), which this certification accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Glenn M. Renwick

Glenn M. Renwick

President and Chief Executive Officer

March 2, 2015

EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION

I, Brian C. Domeck, Vice President and Chief Financial Officer of The Progressive Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) the Annual Report on Form 10-K of the Company for the period ended December 31, 2014 (the “Report”), which this certification accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Brian C. Domeck

Brian C. Domeck

Vice President and Chief Financial Officer

March 2, 2015

EX-99

Exhibit 99

Letter to Shareholders

e·ra (îr' ə, ĕr' ə) n.

1. A period of time as reckoned from a specific date serving as the basis of its chronological system. 2a. A period of time characterized by particular circumstances, events, or personages: the Colonial era of US history; the Reagan era. b. A point that marks the beginning of such a period of time. See synonyms at period. 3. The longest division of geologic time, made up of one or more periods. [Late Latin aera, from Latin, counters, pl. of aes, aer-, bronze coin.]

Viewing Progressive as a series of interconnected eras for years since our founding and into the foreseeable future proved to be an interesting way to reflect on how we have been, and will continue, striving to evolve as a contemporary solution to consumers’ insurance needs. Maintaining relevance in a consumer, technology, and marketing driven world is paramount and a constant but rewarding challenge.

Our examination characterized the first era of Progressive as the Manufacturer/Wholesale Era where our reverence to underwriting segmentation, and belief that there were no uninsurable drivers as long as the rate offered reflected the risk, provided a needed solution to agents and to an underserved consumer segment. In the early nineties, the second era of Progressive, the Retail Era, emerged,building on the pricing, claims, and technology skills developed in the first, but expanding our reach to consumers and, more importantly, building the consumer marketing skills en route to a significant elevation of the Progressive brand and consumer profile. As fuzzy as the boundaries may be between eras, the third era has been forming in recent years, and in 2014 we more formally coined the Destination Era moniker and, with that, the growth potential and continuing evolution of Progressive’s consumer driven journey.

The art in this year’s report has been selected as a metaphor for looking forward while reflective of the past, much in the same way Progressive views shaping our future by respecting and building on the past. I’ll enjoy expanding on that future state in greater detail later in this letter, but for now a recap of present accomplishments will set the stage.

Looking back

A retrospective review of 2014 would suggest we had a lot to be pleased with, and as often is the case, the opportunity to formulate even greater aspirations. Our multi-year trend of crossing a new billion dollar threshold continued with 2014 written premiums of $18.7 billion. With no implied estimate of timing, the numerical milestone of $20 billion is now one we can well envision, and I look forward to experiencing the same pride we felt as a company when passing both the $1 billion and $10 billion marks.

While choosing to report premium growth first, it is not in fact our most important goal. Profitability that meets or exceeds our target 96 combined ratio is our non-negotiable job one. We achieved a very desirable 92.3 combined ratio for the year and a resulting pretax underwriting income of $1.4 billion, both notably better than last year, but more importantly clearly meeting or exceeding our benchmark underwriting objective.

Complementing our underwriting income, our investment group contributed $408 million of interest and dividend income, $224 million in realized gains, and about $115 million in unrealized gains for the year, reflecting a 4.5% total return on our $19 billion portfolio. The total return trailed last year’s equivalent, reflecting in large part market conditions, a less robust equities rally, and our continued disciplined fixed-income duration strategy.

The all-in measures of net income per share and, our preferred, comprehensive income per share were $2.15 and $2.27, both improvements over their equivalents last year by 11% and 10%. Our return on shareholders’ equity using both measures was a touch over 19% and 20%, results we would assess as very acceptable, while providing room for even superior outcomes, if and when financial market returns strengthen. Both results are approximately a point better than last year and an important contribution to our long-term track record on this critical financial dimension of our business.

1

We would welcome an improved investment environment with interest rates more comfortably matching our longer-term investment income preference, but, by design, we are not dependent on it. We enter 2015 with a strong, well-structured capital position, bolstered by a $350 million debt offering we completed early in 2014, for a 30-year term at a coupon interest rate of 4.35%. Our debt-to-total capital ratio ended the year at 23.8%, considerably below our self-imposed guideline of not to exceed 30% for any extended period of time and thus preserving significant debt capacity should we need or choose to use it. However, several actions late in 2014 will likely move the pieces and parts of our capital model early in 2015. The most significant was our December 16^th announcement that we would be acquiring a controlling interest in ARX, the parent entity of our strategic homeowners’ provider ASI. Once the acquisition is complete, we expect to hold approximately two thirds of the equity and purchase the remainder over the next six years. Given our strong capital position, we will be paying for this transaction, which I’ll discuss in greater detail later, from current funds on-hand when it is expected to close in early April 2015.

We have consistently stated that capital in excess of regulatory requirements and any contingencies we can envision is available for share repurchases, acquisitions, or shareholder dividends. For 2014 we had some of each. We used $271 million to repurchase 11.1 million shares during the year, the anticipated close of the ARX transaction will require approximately $875 million, and, based on our 2014 underwriting performance and Gainshare score of 1.32, we will pay, in February 2015, a variable dividend of approximately $404 million, or about 69 cents per share.

As breaking news while drafting this letter in mid-January, we capitalized on our debt capacity flexibility and a very favorable interest rate environment, by issuing $400 million of 30-year bonds at a 3.70% coupon. Our strong capital position just got stronger.

A synopsis of our business model in a little more detail is provided in the Objectives and Policies section of this report.

Business Update

With our commitment to monthly reporting, these numerical results are often well known before publication of this letter; however, a review of the market dynamics throughout the year may serve to throw additional light on them.

After an early continuation of the strong new business growth we ended with in 2013, the trajectories for our auto product in our Agency and Direct consumer offerings went in very different directions. By the third quarter, I had characterized our Agency auto growth as flat-out disappointing, with both new application levels and retention measures lagging our plans and expectations from early in the year. We ended the year with a 2% reduction in policyholders in the Agency channel with modest written premium growth. As noted often in this letter, our preferred measure of growth is policies and vehicles in force and, as such, this has our full attention. We are acutely aware of the contributing reasons and are responding with product design, underwriting, and ease-of-use modifications where it makes sense to do so. Our commitment to this channel, and to winning in this channel, should not be underestimated.

The Direct trajectory, predictable from the aggregate results, was much more pleasing. We sold over 2 million policies in 2014, a new high watermark for us. Our advertising expenditures and consumer messaging have also produced prospects in numbers representing new highs. More importantly, our advertising effectiveness measures were strong, notably our incremental cost per sale, and thus very encouraging as we enter 2015. Simple math skills will quickly highlight the difference between additions and the net increase in policies and, while I can report meaningfully improved policy life extension for our Direct customers in 2014, based on the trailing 12-month measure, there remains significant opportunity to retain at levels we know are possible, but to-date have not been a hallmark of Progressive. Our Destination Era thinking will address this head-on for a class of customers who are most open to a longer-term relationship.

The rating environment in 2014, never easily summarized at other than at the state and coverage level, was not inconsistent with other sources of consumer inflation or wage growth and, for us, about 3-4%.

Our Special Lines and Commercial Lines products each had notable years and, in large part, contributed disproportionately to the overall outperformance on margin over our target 96.

2

Hail storms in the first half of the year were definitely notable and our claims response, as always, was our first priority, but the year overall would not be characterized by significant catastrophes, especially the relative absence of hurricanes. With no major storms for boats and motorhomes to weather, and an unremarkable number of riding days for motorcycles, we benefitted from even stronger than planned margins on our special lines products. We take the good years knowing there will always be the exceptions. If the economy strengthens over time, we would hope to see and benefit from increasing sales of discretionary products like RVs, boats, motorcycles, and other “toy” like products where we hold significant market shares and offer recognized market leading products.

At any point over the last couple of years, reading a summary of our Commercial Lines business, it may have appeared that we always had one stronger and one weaker factor in the ordered pair of balanced growth and profitability we seek. Weaker profitability and stronger growth, a dangerous combination, and stronger profitability, suggesting opportunities for growth, have all been experienced en route to our now reporting a very healthy balance. Our challenges, outlined in our investor meeting for the year, were in selected vehicle and use tiers of our broad commercial vehicle offerings and the solution, never as simple as the after-the-fact diagnosis, took some time, but we end 2014 with high confidence in our corrective actions and the emerging results. The year finished with very strong profitability, but equally with growth now beginning to follow.

Greater insights for the year in both our Personal and Commercial Lines are highlighted in the Operations Summaries section of this report.

2014 was a year of some notable milestones and continued execution on several key initiatives I’ve outlined over the years in this letter. Here are a few of those milestones, at least the ones that top my list.

We ended the year with an expense ratio of 20% and, while not as regularly reported, our Loss Adjustment Expense (LAE) was approximately 10%. Both of these measures will move by some basis points in any given time period, but the central message is that these measures respectively represent very significant accomplishments. It perhaps is a little embarrassing to say that these levels were envisioned some 20 plus years ago and at times it seemed that we would only approach them asymptotically from above. Now, like so many once held barriers or constraints, we see opportunities to break through to an even greater degree. Our LAE is certainly among the best and, similar to the expense ratio, has been attained by understanding every aspect of our business and taking a process and quality driven approach to optimize operations, while holding customer service as an inviolate. Our expense ratio is among the top few in the industry, and with an even greater push on customer retention, we assuredly hold the potential for more. It goes without saying how important price is in our business. However, as with most things, there is a balance and efficient cost reductions are welcome, but we take extraordinary measures to be assured they are not traded-off against our commitment to customer care.

A second milestone of some note is that the superstore advertising campaign, starring “the now needs no introduction” Flo, created and débuted its 100^th commercial. While the milestone itself is only of interest to a select audience, the commercial we chose to mark the event, we think, was quite fitting. Flo was not in the store at the time, but rather at home with her extended family for an evening dinner. Believing slightly dysfunctional families are something many can relate to, we see Flo expressing her accomplishments in auto insurance marketing to a somewhat disinterested family. I’ll leave the details to the commercial, but suffice it to say the actress playing Flo also played all the other family members in a marathon of make-up and filming. Quite a performance and one many have expressed to me as having taken them some number of viewings to catch onto – all part of the planned intrigue. Flo’s costume has become quite a “go-to” outfit for many on Halloween, with this year LeBron James donning the uniform and making the switch with Flo and performing on-court antics that probably don’t get much air time in NBA practice sessions. The switch and the social media postings have received over three hundred million views – as Flo might say – Wow!

3

Rounding out my top milestones for the year would be two product initiatives. We entered Massachusetts with an Agency auto product, which we delayed after our Direct entry some years ago gave us good reason to further understand the market. This entry now has us with an Agency and Direct auto offering in every state in the nation. Massachusetts is one of the larger Independent Agent markets in the country and we are delighted to be out of the gates and serving those agents. The second was the introduction of a renters insurance product providing coverage for those of our auto customers wishing to protect assets, often prior to homeownership. More about renters when I discuss the Destination Era.

For notable continued execution in 2014, my list would start with Snapshot^®, our in-vehicle data collection initiative, reporting individual driving behavior that takes a giant step from classical group statistics to the “statistics of one.” Our numerical milestones continue to click-up (over 12 billion miles of recorded driving data and 2.5 million participants), but much more so the growing acceptance in society, and within the industry, that this type of data collection is becoming more the norm versus the exception. We remain extraordinarily bullish on Snapshot and whatever forms it will evolve into over time, simply based on the quality of the data, the more direct and less proxy association with the risk, and the costs and availability curves all bending in our favor. Taken alone, the data collected provides significant insight, but in a world of “Big Data” where data set size, data source, and processing complexity all seem almost trivial compared to just a few years ago, the power is dramatically enhanced. We concatenate our collected data with external data sets, that range from historical accident frequency by GPS location, to matching speed limits and daily local weather data. While not every insight is directly transferable to the product, the analysis and underwriting curiosity is in a different league than when I once fancied myself doing similar work. Our Big Data initiatives now include media analysis and fraud detection, in addition to our vehicle usage-based data, and the methods and tools are emerging as an essential skill to contemporary analysis.

A challenge I have documented previously is getting our Agency channel customer acceptance rate for Snapshot as high as we believe it could be based on comparable results from consumers directly accessing the product. A modified form of the product, advancing part of the expected discount to the point of sale, proved to be a welcomed modification in our introduction of the product to our new Massachusetts agents. Not without risks of rate adjustment for those whose actual driving behavior does not match our a priori estimate, early results suggest this will go a long way to making the concept more agent and consumer friendly. Our expansion of the modification will be ongoing during 2015.

Our mobile device offerings, now for most consumer businesses a necessity, advanced very nicely during the year. Writing in last year’s letter, I noted after some mixed efforts earlier that “our intensive effort to redirect was released late in the year and now forms the basis for our mobile servicing initiative that is fully extensible for 2014.” That proved to be very accurate and the year saw expansion of consumer functionality, matched well with top ratings from the app store and significant increases in feature usage. As we rapidly approach a world in which functionality differences from any type of device are more and more minimal, we never lose sight of the all-important base web site design, and we were again pleased to be recognized for our tenth year running by Keynote Competitive Research as the No.1 website in the insurance industry.

4

The Service Center initiative in claims is an enduring initiative, as is our support of the notion that the ease of resolution provided for damaged cars will become a consumer expectation of the future. We opened 6 additional Service Center locations during the year, bringing our total number to 67. We have successfully retrofitted the majority of our Service Centers to a co-location design, incorporating a fully functional claims office, improving both the economics and operations. We now see about 25% of all repairable vehicles nationwide in our Service Centers and, as previously noted, we are operating at our lowest level of loss adjustment expense matched with maintaining the highest standard of claim quality measures. The synergies and refinement of the concept have now more than met expectations, while continuing to exceed customer expectations. The presence of these centers operating as they now do is an important factor in the expanding customer focus central to the Destination Era. After many years of attempting to capture a summary of consumers’ reactions to using these facilities and the difference in customer experience possible, I recognize that unless the emotive factors surrounding a loss are present, that effort can simply be words, so I’ll attempt an alternative by providing a perspective offered from an interested party in this selected quote from a letter to one of our Service Centers:

My claim was extremely well handled. I am an executive for one of your competitors … The work you are doing is helping change the public opinion of the insurance industry.

Destination Era

We have been communicating for some time what we mean by our consumer “Destination Strategy,” and made the topic the exclusive highlight of our 2014 Investor Relations Meeting in May. During my introduction to that meeting, I very clearly reinforced our commitment to current market segments where we over-index and expect continued future growth. But we decided to dedicate the meeting content to a customer segment we intend to make a meaningful addition to the future Progressive. For simplicity, we called them the “Robinsons,” in a high-level segmentation model, and sized the segment at over 40% of measured auto premium. Historically, our focused product strategy was not well matched to the evolving life cycle needs of these customers, who typically are multi-insurance product customers, more loyal, less price sensitive, and a lower loss frequency book of business. In and of itself that was not our greatest concern, since those consumers are relatively inert and highly retentive in their current situations. Our far greater interest was that we have for many years been what I referred to as the “Prep School” for these customers. Those future Robinsons, for whom we are a leading supplier given the auto product is often the first need met, have often felt the subsequent need to shop for additional products as their lives and needs change, terminating their tenure with Progressive for reasons far from product quality or satisfaction concerns.

For perspective, we have just short of 9% share of the U.S. auto insurance market, but our share of Robinsons is less than 1%. We are confident we can serve a greater share of this segment and continue to earn the financial returns we expect of ourselves.

Most of you are well aware of our efforts over the last several years to become a distributor of those additional insurance products, primarily renters, home, umbrella, classic car, event, collectibles, mechanical breakdown, identity theft, term life, and a long list of other low frequency products, which we continue to round out and, by virtue of those actions, remove a point of inflection for our customers as they become Robinsons and retain them as our customers. Simply put, while we may not choose to manufacture the product, we never want to send our customers off looking for solutions to fulfill their needs – if they wish, we will do the looking for them.

We know after several years of in-market testing that:

Customers are very willing to combine their product needs under the Progressive brand, a brand which for currently emerging Robinsons has real meaning. This is more so to date in the Direct channel, but the ASI transaction should allow us to build on our desire to match our bundling success in the Agency channel.

Retention of multi-product customers is, as has been shown in so many other circumstances, meaningfully extended by bundling and, while we observe this in our current measures, our results may well yet be underestimating the long-term potential and cost advantages.

5

Progressive has become an important contemporary brand for a new generation of consumers and our matching that brand with distinctive and exemplary customer service for claims and policy matters will continue to have Progressive, and in my opinion few others, feature disproportionately in consumers’ selection of auto insurance.

We like our current product focus and fully intend to maintain it. We also like having other focused providers, such as Homesite and Ameriprise along with the other homeowners insurance companies we currently work with, to provide an underwriting and channel distribution breadth to the products we do not intend to produce. Thus, an integral part of our business model will be to continue to invite and attract participation from other quality providers of products our consumers will want and need, all a privilege derived from the consumer brand asset we can now leverage. And while commission income is important, the currency of success for the targeted segment is Policy Life Extension and a longer tenured customer relationship with auto at the core. Just one month of book-level policy life extension represents significant premium, underwriting profit, and cost leverage. I want to stress the point – ours is a market-segmented strategy. We love and expect to grow our traditional segments and have the economic model and all the assets we need to do that, but with this strategy extension, we expect to significantly penetrate an additional larger market segment, and our success will be dependent on a brand and product offerings that result in long-lasting customer relationships.Our long-held goal to be consumers’ #1 choice for auto insurance has not changed.

Without diminishing any of the prior statements, we needed to “ensure the success” of our long-term business expansion strategy. The single most important component for this strategy is a reliable and continuous relationship for home insurance – all other products, as important as they may be in their own right, are in a different league in the overall “Progressive Advantage” strategy. If we were in manufacturing, the analogue might be a reliable supply of quality raw materials that may or may not be from an exclusive provider, or some form of hedge to build greater certainty. In ASI, we found not only a great producer of a product some of our customers need in their transition to Robinson status, but a rare example of the fanatical focus we admire, a demonstrated ability to produce strong returns on equity, and a culture that fits hand in glove with Progressive. 

Establishing a balance between our focused business model and the now established need for quality, reliable homeowner’s capacity to expand our market relevance, for me had only had one solution, and we are delighted that collectively we could make that happen. I should note here that we have no intention of changing critical attributes of the ASI business model – their reinsurance philosophy will continue to be designed to expose only a prudent percentage of ASI’s surplus and, by definition, much less of the combined entity; we want their underwriting focus to remain as is and produce results similar to their track record. We intend to actively use and grow with other homeowner product providers, all doing what they do best. ASI will, however, be our exclusive provider in the Agency channel.

Our comfort with ASI, and I believe theirs with us, comes from a long-standing relationship, which has included shared design and sales efforts, healthy exchanges of market perceptions and needs, joint expansion planning, as the servicing carrier for our Agency renters product mentioned earlier, operational reviews of claims handling, and full access to their financials since our initial investment. Consistently, this has confirmed our unqualified respect for ASI’s operations and management. Progressive is an unusual organization, and I am unaware of very many firms that offer the same prospects of working so effectively with us.

We view the success of this transaction to be measured by increased success and penetration of multi-product customers and notably so in the Agency channel. Making a better product bundle for consumers, and one agents will want to sell, is the game plan. Thinking and acting fast is a quality we both admire, and I’m confident we can learn from one another without losing the benefits of both organizations.

We approach 2015 and beyond with a wider aperture for growth and the long-term positioning of Progressive.

6

Our People and Culture

The formulation of a future era for Progressive is an exciting step in our consumer evolution. However, the foundations of Progressive’s success have always been our Vision, Values, and Objectives and they will continue to guide our evolution as a company. Our Vision is squarely focused on our aspiration to become Consumers’ #1 Choice for Auto Insurance; our Values guide our behavior; and our Objectives allow us to attract special people who enjoy working hard, performing well, and constantly growing. Our people, culture, and aspirations are what make us special. Our work environment is continuously evolving with a shared goal of also being a Destination, and one that others want to join.

Nothing we have achieved has been without the efforts of so many. I deeply appreciate the people of Progressive, our agents and brokers, customers, and shareholders for their support in making all this possible.

Thanks for making Progressive, progressive.

/s/ Glenn M. Renwick

Glenn M. Renwick

President and Chief Executive Officer

7

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Minimum Commitments under Noncancelable Operating Lease Agreements

The minimum commitments under these agreements at December 31, 2014, were as follows:

(millions)	Commitments
2015	$	46.2
2016	43.7
2017	37.2
2018	27.1
2019	16.4
Thereafter	4.4
Total	$	175.0

Expense Incurred for Leases

The expense we incurred for the leases disclosed above, as well as other operating leases that may be cancelable or have terms less than one year, was:

(millions)	Expense
2014	$	63.4
2013	64.6
2012	71.9

XML

Reporting And Accounting Policies Equity Based Compensation (Detail) (Stock Compensation Plan, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Stock Compensation Plan
Incentive Compensation Plans Expense [Line Items]
Pretax expense	$ 51.4	$ 64.9	$ 63.4
Tax benefit	$ 18.0	$ 22.7	$ 22.2

XML

SCHEDULE II - Condensed Financial Information Of Registrant Progressive Corporation Cash Paid (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure Progressive Corporation Cash Paid [Abstract]
Income Taxes	$ 515.0	$ 497.0	$ 389.1
Interest	$ 116.0	$ 122.3	$ 135.0

XML

Fair Value Composition of Investment Portfolio by Major Security Type (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Fair Value Measurements [Line Items]
Portfolio	$ 19,018.0	[1],[2]	$ 18,054.7	[1],[2]
Long-term Debt, Fair Value	2,527.5		2,073.7
Debt	2,164.7	[3]	1,860.9	[3]
Fixed maturities
Fair Value Measurements [Line Items]
Portfolio	13,549.2		13,540.4
Fixed maturities | Redeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	279.2		313.9
Fixed maturities | Redeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	97.9		102.8
Fixed maturities | Redeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	65.3		65.6
Fixed maturities | Redeemable preferred stocks | Industrials
Fair Value Measurements [Line Items]
Portfolio	116.0		145.5
Fixed maturities | Debt Securities
Fair Value Measurements [Line Items]
Portfolio	7,657.2		8,860.4
Fixed maturities | Debt Securities | U.S. government obligations
Fair Value Measurements [Line Items]
Portfolio	2,667.1		3,662.2
Fixed maturities | Debt Securities | State and local government obligations
Fair Value Measurements [Line Items]
Portfolio	2,139.2		2,256.0
Fixed maturities | Debt Securities | Foreign government obligations
Fair Value Measurements [Line Items]
Portfolio	14.2		15.6
Fixed maturities | Debt Securities | Corporate debt securities
Fair Value Measurements [Line Items]
Portfolio	2,836.7		2,926.6
Fixed maturities | Asset-backed Securities
Fair Value Measurements [Line Items]
Portfolio	5,612.8		4,366.1
Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,658.5		1,127.9
Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	2,315.6		2,160.5
Fixed maturities | Asset-backed Securities | Other asset-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,638.7		1,077.7
Equity securities | Nonredeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	827.5		711.2
Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	827.5		694.4
Equity securities | Nonredeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		16.8
Equity securities | Common equities
Fair Value Measurements [Line Items]
Portfolio	2,492.3		2,530.5
Equity securities | Common equities | Common equities
Fair Value Measurements [Line Items]
Portfolio	2,491.9		2,530.0
Equity securities | Common equities | Other risk investments
Fair Value Measurements [Line Items]
Portfolio	0.4		0.5
Total Fixed Maturities and Equity Securities
Fair Value Measurements [Line Items]
Portfolio	16,869.0		16,782.1
Short-term investments
Fair Value Measurements [Line Items]
Portfolio	2,149.0		1,272.6
Carrying (Reported) Amount, Fair Value Disclosure
Fair Value Measurements [Line Items]
Portfolio	17,402.8		16,584.7
Debt	2,164.7		1,860.9
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities
Fair Value Measurements [Line Items]
Portfolio	13,374.2		13,415.3
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Redeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	260.2		299.5
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Redeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	77.3		84.2
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Redeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	65.0		64.9
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Redeemable preferred stocks | Industrials
Fair Value Measurements [Line Items]
Portfolio	117.9		150.4
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Debt Securities
Fair Value Measurements [Line Items]
Portfolio	7,564.9		8,778.3
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Debt Securities | U.S. government obligations
Fair Value Measurements [Line Items]
Portfolio	2,641.1		3,630.4
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Debt Securities | State and local government obligations
Fair Value Measurements [Line Items]
Portfolio	2,095.7		2,247.3
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Debt Securities | Foreign government obligations
Fair Value Measurements [Line Items]
Portfolio	14.2		15.6
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Debt Securities | Corporate debt securities
Fair Value Measurements [Line Items]
Portfolio	2,813.9		2,885.0
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Asset-backed Securities
Fair Value Measurements [Line Items]
Portfolio	5,549.1		4,337.5
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,635.5		1,110.1
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	2,278.7		2,154.4
Carrying (Reported) Amount, Fair Value Disclosure | Fixed maturities | Asset-backed Securities | Other asset-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,634.9		1,073.0
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Nonredeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	590.4		445.7
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	590.4		431.5
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Nonredeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		14.2
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Common equities
Fair Value Measurements [Line Items]
Portfolio	1,289.2		1,451.1
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Common equities | Common equities
Fair Value Measurements [Line Items]
Portfolio	1,288.8		1,450.6
Carrying (Reported) Amount, Fair Value Disclosure | Equity securities | Common equities | Other risk investments
Fair Value Measurements [Line Items]
Portfolio	0.4		0.5
Carrying (Reported) Amount, Fair Value Disclosure | Total Fixed Maturities and Equity Securities
Fair Value Measurements [Line Items]
Portfolio	15,253.8		15,312.1
Carrying (Reported) Amount, Fair Value Disclosure | Short-term investments
Fair Value Measurements [Line Items]
Portfolio	2,149.0		1,272.6
Fair Value, Inputs, Level 1
Fair Value Measurements [Line Items]
Portfolio	7,314.3		7,436.4
Long-term Debt, Fair Value	0		0
Fair Value, Inputs, Level 1 | Fixed maturities
Fair Value Measurements [Line Items]
Portfolio	2,681.3		3,677.8
Fair Value, Inputs, Level 1 | Fixed maturities | Redeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Redeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Redeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Redeemable preferred stocks | Industrials
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Debt Securities
Fair Value Measurements [Line Items]
Portfolio	2,681.3		3,677.8
Fair Value, Inputs, Level 1 | Fixed maturities | Debt Securities | U.S. government obligations
Fair Value Measurements [Line Items]
Portfolio	2,667.1		3,662.2
Fair Value, Inputs, Level 1 | Fixed maturities | Debt Securities | State and local government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Debt Securities | Foreign government obligations
Fair Value Measurements [Line Items]
Portfolio	14.2		15.6
Fair Value, Inputs, Level 1 | Fixed maturities | Debt Securities | Corporate debt securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Asset-backed Securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Fixed maturities | Asset-backed Securities | Other asset-backed securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Equity securities | Nonredeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	204.1		240.8
Fair Value, Inputs, Level 1 | Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	204.1		240.8
Fair Value, Inputs, Level 1 | Equity securities | Nonredeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Equity securities | Common equities
Fair Value Measurements [Line Items]
Portfolio	2,491.9		2,530.0
Fair Value, Inputs, Level 1 | Equity securities | Common equities | Common equities
Fair Value Measurements [Line Items]
Portfolio	2,491.9		2,530.0
Fair Value, Inputs, Level 1 | Equity securities | Common equities | Other risk investments
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 1 | Total Fixed Maturities and Equity Securities
Fair Value Measurements [Line Items]
Portfolio	5,377.3		6,448.6
Fair Value, Inputs, Level 1 | Short-term investments
Fair Value Measurements [Line Items]
Portfolio	1,937.0		987.8
Fair Value, Inputs, Level 2
Fair Value Measurements [Line Items]
Portfolio	11,622.4		10,549.6
Long-term Debt, Fair Value	2,527.5		2,073.7
Fair Value, Inputs, Level 2 | Fixed maturities
Fair Value Measurements [Line Items]
Portfolio	10,856.3		9,833.4
Fair Value, Inputs, Level 2 | Fixed maturities | Redeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	279.2		313.9
Fair Value, Inputs, Level 2 | Fixed maturities | Redeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	97.9		102.8
Fair Value, Inputs, Level 2 | Fixed maturities | Redeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	65.3		65.6
Fair Value, Inputs, Level 2 | Fixed maturities | Redeemable preferred stocks | Industrials
Fair Value Measurements [Line Items]
Portfolio	116.0		145.5
Fair Value, Inputs, Level 2 | Fixed maturities | Debt Securities
Fair Value Measurements [Line Items]
Portfolio	4,975.9		5,182.6
Fair Value, Inputs, Level 2 | Fixed maturities | Debt Securities | U.S. government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 2 | Fixed maturities | Debt Securities | State and local government obligations
Fair Value Measurements [Line Items]
Portfolio	2,139.2		2,256.0
Fair Value, Inputs, Level 2 | Fixed maturities | Debt Securities | Foreign government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 2 | Fixed maturities | Debt Securities | Corporate debt securities
Fair Value Measurements [Line Items]
Portfolio	2,836.7		2,926.6
Fair Value, Inputs, Level 2 | Fixed maturities | Asset-backed Securities
Fair Value Measurements [Line Items]
Portfolio	5,601.2		4,336.9
Fair Value, Inputs, Level 2 | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,658.5		1,127.7
Fair Value, Inputs, Level 2 | Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	2,304.0		2,131.5
Fair Value, Inputs, Level 2 | Fixed maturities | Asset-backed Securities | Other asset-backed securities
Fair Value Measurements [Line Items]
Portfolio	1,638.7		1,077.7
Fair Value, Inputs, Level 2 | Equity securities | Nonredeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	554.1		431.4
Fair Value, Inputs, Level 2 | Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	554.1		414.6
Fair Value, Inputs, Level 2 | Equity securities | Nonredeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		16.8
Fair Value, Inputs, Level 2 | Equity securities | Common equities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 2 | Equity securities | Common equities | Common equities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 2 | Equity securities | Common equities | Other risk investments
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 2 | Total Fixed Maturities and Equity Securities
Fair Value Measurements [Line Items]
Portfolio	11,410.4		10,264.8
Fair Value, Inputs, Level 2 | Short-term investments
Fair Value Measurements [Line Items]
Portfolio	212.0		284.8
Fair Value, Inputs, Level 3
Fair Value Measurements [Line Items]
Portfolio	81.3		68.7
Long-term Debt, Fair Value	0		0
Fair Value, Inputs, Level 3 | Fixed maturities
Fair Value Measurements [Line Items]
Portfolio	11.6		29.2
Fair Value, Inputs, Level 3 | Fixed maturities | Redeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Redeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Redeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Redeemable preferred stocks | Industrials
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Debt Securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Debt Securities | U.S. government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Debt Securities | State and local government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Debt Securities | Foreign government obligations
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Debt Securities | Corporate debt securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities
Fair Value Measurements [Line Items]
Portfolio	11.6		29.2
Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	0		0.2
Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value Measurements [Line Items]
Portfolio	11.6		29.0
Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Other asset-backed securities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Equity securities | Nonredeemable preferred stocks
Fair Value Measurements [Line Items]
Portfolio	69.3		39.0
Fair Value, Inputs, Level 3 | Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Measurements [Line Items]
Portfolio	69.3		39.0
Fair Value, Inputs, Level 3 | Equity securities | Nonredeemable preferred stocks | Utilities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Equity securities | Common equities
Fair Value Measurements [Line Items]
Portfolio	0.4		0.5
Fair Value, Inputs, Level 3 | Equity securities | Common equities | Common equities
Fair Value Measurements [Line Items]
Portfolio	0		0
Fair Value, Inputs, Level 3 | Equity securities | Common equities | Other risk investments
Fair Value Measurements [Line Items]
Portfolio	0.4		0.5
Fair Value, Inputs, Level 3 | Total Fixed Maturities and Equity Securities
Fair Value Measurements [Line Items]
Portfolio	81.3		68.7
Fair Value, Inputs, Level 3 | Short-term investments
Fair Value Measurements [Line Items]
Portfolio	$ 0		$ 0

[1] The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

[2] Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

[3] Consists of long-term debt. See Note 4 – Debt for further discussion.

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Reporting And Accounting Policies Supplemental Cash Flow Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure Supplemental Cash Flow Information [Abstract]
Income Taxes	$ 515.0	$ 497.0	$ 389.1
Interest	$ 116.0	$ 122.3	$ 135.0

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Debt Aggregate Principal Payments On Debt Outstanding (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Debt Disclosure [Abstract]
2015	$ 0
2016	0
2017	0
2018	0
2019	0
Thereafter	2,182.8
Total	$ 2,182.8

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Commitments and Contingencies Expenses Incurred for Leases (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Expense	$ 63.4	$ 64.6	$ 71.9

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SCHEDULE II - Condensed Financial Information Of Registrant Condensed Statements Of Cash Flows (Parent Company) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash Flows From Operating Activities:
Net income	$ 1,281,000,000	$ 1,165,400,000	$ 902,300,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of equity-based compensation	51,400,000	64,900,000	63,400,000
(Gains) losses on extinguishment of debt	4,800,000	4,300,000	1,800,000
Changes in:
Accounts payable, accrued expenses, and other liabilities	92,000,000	165,000,000	123,600,000
Income taxes	97,500,000	57,800,000	19,800,000
Other, net	(13,200,000)	(28,100,000)	(10,400,000)
Net cash provided by operating activities	1,725,600,000	1,899,900,000	1,691,400,000
Cash Flows From Investing Activities:
Net cash provided by (used in) investing activities	(836,900,000)	(1,356,500,000)	(264,900,000)
Cash Flows From Financing Activities:
Proceeds from exercise of stock options	0	0	500,000
Tax benefit from exercise/vesting of equity-based compensation	12,800,000	10,300,000	5,800,000
Net proceeds from debt issuance	344,700,000	0	0
Payment of debt	0	(150,000,000)	(350,000,000)
Reacquisition of debt	(48,900,000)	(58,100,000)	(32,500,000)
Acquisition of treasury shares	(271,400,000)	(273,400,000)	(174,200,000)
Net cash used in financing activities	(855,400,000)	(646,800,000)	(1,404,100,000)
Increase (decrease) in cash	33,300,000	(104,000,000)	23,400,000
Cash, Beginning of year	75,100,000	179,100,000	155,700,000
Cash, End of year	108,400,000	75,100,000	179,100,000
Parent Company
Cash Flows From Operating Activities:
Net income	1,281,000,000	1,165,400,000	902,300,000
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed (income) loss from subsidiaries	(358,300,000)	(117,500,000)	(193,100,000)
Amortization of equity-based compensation	2,200,000	2,100,000	2,000,000
(Gains) losses on extinguishment of debt	4,800,000	4,300,000	1,800,000
Changes in:
Intercompany receivable	(105,400,000)	(11,400,000)	(58,600,000)
Accounts payable, accrued expenses, and other liabilities	18,200,000	19,400,000	300,000
Income taxes	61,100,000	(55,800,000)	21,700,000
Other, net	400,000	(16,300,000)	(9,900,000)
Net cash provided by operating activities	904,000,000	990,200,000	666,500,000
Cash Flows From Investing Activities:
Additional investments in equity securities of consolidated subsidiaries	(21,100,000)	(13,900,000)	(36,100,000)
Investment in affiliate	0	(4,000,000)	0
(Paid to) received from investment subsidiary	(29,100,000)	(325,500,000)	773,700,000
Net cash provided by (used in) investing activities	(50,200,000)	(343,400,000)	737,600,000
Cash Flows From Financing Activities:
Proceeds from exercise of stock options	0	0	500,000
Tax benefit from exercise/vesting of equity-based compensation	12,800,000	10,300,000	5,800,000
Net proceeds from debt issuance	346,300,000	0	0
Payment of debt	0	(150,000,000)	(350,000,000)
Reacquisition of debt	(48,900,000)	(58,100,000)	(32,500,000)
Dividends paid to shareholders	(892,600,000)	(175,600,000)	(853,700,000)
Acquisition of treasury shares	(271,400,000)	(273,400,000)	(174,200,000)
Net cash used in financing activities	(853,800,000)	(646,800,000)	(1,404,100,000)
Increase (decrease) in cash	0	0	0
Cash, Beginning of year	0	0	0
Cash, End of year	$ 0	$ 0	$ 0

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Components of Income Tax Provision

The components of our income tax provision were as follows:

(millions)	2014		2013		2012
Current tax provision	$	594.4	$	460.2	$	424.8
Deferred tax expense (benefit)	32.0		94.4		(9.4		)
Total income tax provision	$	626.4	$	554.6	$	415.4

Reconciliation of Provision (Benefit) for Income Taxes Reported in Consolidated Statements of Income with Tax at Statutory Rate

The provision for income taxes in the accompanying consolidated statements of comprehensive income differed from the statutory rate as follows:

($ in millions)	2014					2013					2012
Income before income taxes	$	1,907.4				$	1,720.0				$	1,317.7
Tax at statutory rate	$	667.6		35	%	$	602.0		35	%	$	461.2		35	%
Tax effect of:
Dividends received deduction	(18.3		)	(1	)	(17.6		)	(1	)	(18.2		)	(1	)
Exempt interest income	(13.8		)	(1	)	(13.1		)	(1	)	(14.7		)	(1	)
Tax-deductible dividends	(6.5		)	0		(13.6		)	(1	)	(11.9		)	(1	)
Tax credits	(2.2		)	0		(2.3		)	0		0			0
Other items, net	(0.4		)	0		(0.8		)	0		(1.0		)	0
Total income tax provision	$	626.4		33	%	$	554.6		32	%	$	415.4		32	%

Components of Net Deferred Tax Assets

At December 31, 2014 and 2013, the components of the net deferred tax asset (liability) were as follows:

(millions)	2014			2013
Deferred tax assets:
Unearned premiums reserve	$	378.8		$	361.0
Investment basis differences	60.6			94.8
Non-deductible accruals	208.0			200.7
Loss and loss adjustment expense reserves	76.9			92.0
Other	7.5			14.7
Deferred tax liabilities:
Net unrealized gains on securities	(550.3		)	(509.9		)
Hedges on forecasted transactions	(0.8		)	(2.2		)
Deferred acquisition costs	(160.0		)	(156.7		)
Property and equipment	(100.9		)	(99.6		)
Prepaid expenses	(11.4		)	(14.4		)
Deferred gain on extinguishment of debt	(3.0		)	(4.8		)
Other	(4.3		)	(4.0		)
Net deferred tax liability	$	(98.9	)	$	(28.4	)

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Debt - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended	12 Months Ended	1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 25, 2014	Dec. 31, 2007	Oct. 31, 2013
Debt Instrument [Line Items]
Debt interest payments	Interest on all debt is payable semiannually at the stated rates. However, the 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “6.70% Debentures”) will only bear interest at this fixed annual rate through, but excluding, June 15, 2017. Thereafter, the 6.70% Debentures will bear interest at an annual rate equal to the three-month LIBOR plus 2.0175%, and interest will be payable quarterly until the 6.70% Debentures are redeemed or retired
Interest payment frequency	Payable semiannually
Payment of debt	$ 0	$ 150,000,000	$ 350,000,000
Gains (losses) on extinguishment of debt	(4,800,000)	(4,300,000)	(1,800,000)
Discretionary Line of Credit
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	100,000,000	100,000,000
Line of Credit Facility, Interest Rate Description	advances under the Line of Credit (if any) will bear interest at a variable rate equal to the higher of PNC's Prime Rate or the sum of the Federal Funds Open Rate plus 50 basis points.
Line of Credit Facility, Amount Outstanding	0	0
Discretionary Line of Credit | Federal Funds Rate
Debt Instrument [Line Items]
Basis points	0.50%
4.35% Senior Notes due 2044
Debt Instrument [Line Items]
Debt Instrument, Face Amount	350,000,000	0		350,000,000
Debt Instrument, Interest Rate, Stated Percentage	4.35%			4.35%
Proceeds from Debt, Net of Issuance Costs				346,300,000
Debt Related Commitment Fees and Debt Issuance Costs				700,000
Unrealized Gain (Loss)	(1,600,000)			(1,600,000)
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067
Debt Instrument [Line Items]
Debt Instrument, Face Amount	1,000,000,000	1,000,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.70%
Unrealized Gain (Loss)					34,400,000
Repurchase of debt, face amount	44,300,000	54,100,000
Gains (losses) on extinguishment of debt	(4,800,000)	(4,300,000)
Fixed interest rate term	10 years
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 | Three Month LIBOR
Debt Instrument [Line Items]
Basis points	2.0175%
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 | Net unrealized gains on forecasted transactions
Debt Instrument [Line Items]
Cash flow hedge gain reclassification from accumulated other comprehensive income to net realized gains/losses on securities	500,000	800,000	600,000
7% Notes due 2013
Debt Instrument [Line Items]
Payment of debt						$ 150,000,000

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Fair Value Summary of Quantitative Information about Level 3 Fair Value Measurements (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Investment		Dec. 31, 2013 Investment
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 19,018.0	[1],[2]	$ 18,054.7	[1],[2]
Fair Value, Inputs, Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	81.3		68.7
Fair Value, Inputs, Level 3 | Fixed maturities
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	11.6		29.2
Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	0
External Pricing | Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities | Prepayment rate zero percent
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Number of securities			1
Fair Value			0.2
Valuation Technique			External vendor
Unobservable Input, prepayment rate			0.00%
External Pricing | Fair Value, Inputs, Level 3 | Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities | Prepayment rate zero percent
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Number of securities	1		2
Fair Value	11.6		29.0
Valuation Technique	External vendor		External vendor
Unobservable Input, prepayment rate	0.00%		0.00%
Internal Pricing | Fair Value, Inputs, Level 3 | Equity securities | Nonredeemable preferred stocks
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Number of securities	1		1
Fair Value	69.3		39.0
Internal Pricing | Fair Value, Inputs, Level 3 | Equity securities | Nonredeemable preferred stocks | Financials
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	69.3		39.0
Valuation Technique	Multiple of tangible net book value		Multiple of tangible net book value
Unobservable Input, price to book ratio multiple	2.6		1.9
Subtotal Level 3 Securities | Fair Value, Inputs, Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	80.9		68.2
Third Party Pricing Exemption Securities | Fair Value, Inputs, Level 3
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 0.4	[3]	$ 0.5	[3]

[1] The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

[2] Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

[3] The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

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Statutory Financial Information - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statutory Financial Information Disclosures [Abstract]
Consolidated statutory policyholders' surplus	$ 6,442.8	$ 5,991.0
Statutory net income	1,289.5	1,086.3	808.3
Consolidated statutory policyholders' surplus, net admitted assets of insurance subsidiaries and affiliate that are required to meet minimum statutory surplus requirements in such entities' states of domicile	549.2
Aggregate cash dividends paid to the parent company by subsidiaries	1,000.2
Maximum aggregate dividend amount subsidiaries could pay without prior approval from regulatory authorities	$ 1,346.5

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Investments Investment Portfolio by Major Security Type (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 17,402.8	[1],[2]	$ 16,584.7	[1],[2]
Gross Unrealized Gains	1,621.4	[1],[2]	1,582.9	[1],[2]
Gross Unrealized Losses	(49.2)	[1],[2]	(126.0)	[1],[2]
Net Realized Gains (Losses)	43.0	[1],[2],[3]	13.1	[1],[2],[3]
Total investments at fair value	19,018.0	[1],[2]	18,054.7	[1],[2]
% of Total Fair Value	100.00%	[1],[2]	100.00%	[1],[2]
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Cost	13,374.2		13,415.3
Gross Unrealized Gains	207.1		242.4
Gross Unrealized Losses	(32.7)		(119.1)
Net Realized Gains (Losses)	0.6	[3]	1.8	[3]
Total investments at fair value	13,549.2		13,540.4
% of Total Fair Value	71.20%		75.00%
Fixed maturities | U.S. government obligations
Schedule of Available-for-sale Securities [Line Items]
Cost	2,641.1		3,630.4
Gross Unrealized Gains	27.3		48.4
Gross Unrealized Losses	(1.3)		(16.6)
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	2,667.1		3,662.2
% of Total Fair Value	14.00%		20.30%
Fixed maturities | State and local government obligations
Schedule of Available-for-sale Securities [Line Items]
Cost	2,095.7		2,247.3
Gross Unrealized Gains	44.6		27.1
Gross Unrealized Losses	(1.1)		(18.4)
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	2,139.2		2,256.0
% of Total Fair Value	11.20%		12.50%
Fixed maturities | Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Cost	14.2		15.6
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	14.2		15.6
% of Total Fair Value	0.10%		0.10%
Fixed maturities | Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Cost	2,813.9		2,885.0
Gross Unrealized Gains	32.9		60.4
Gross Unrealized Losses	(10.4)		(20.4)
Net Realized Gains (Losses)	0.3	[3]	1.6	[3]
Total investments at fair value	2,836.7		2,926.6
% of Total Fair Value	14.90%		16.20%
Fixed maturities | Residential mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Cost	1,635.5		1,110.1
Gross Unrealized Gains	34.5		31.9
Gross Unrealized Losses	(10.8)		(14.1)
Net Realized Gains (Losses)	(0.7)	[3]	0	[3]
Total investments at fair value	1,658.5		1,127.9
% of Total Fair Value	8.70%		6.20%
Fixed maturities | Commercial mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Cost	2,278.7		2,154.4
Gross Unrealized Gains	39.3		43.9
Gross Unrealized Losses	(2.6)		(37.8)
Net Realized Gains (Losses)	0.2	[3]	0	[3]
Total investments at fair value	2,315.6		2,160.5
% of Total Fair Value	12.20%		12.00%
Fixed maturities | Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Cost	1,634.9		1,073.0
Gross Unrealized Gains	3.8		6.6
Gross Unrealized Losses	(0.8)		(2.1)
Net Realized Gains (Losses)	0.8	[3]	0.2	[3]
Total investments at fair value	1,638.7		1,077.7
% of Total Fair Value	8.60%		6.00%
Fixed maturities | Redeemable preferred stocks
Schedule of Available-for-sale Securities [Line Items]
Cost	260.2		299.5
Gross Unrealized Gains	24.7		24.1
Gross Unrealized Losses	(5.7)		(9.7)
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	279.2		313.9
% of Total Fair Value	1.50%		1.70%
Equity securities | Nonredeemable preferred stocks
Schedule of Available-for-sale Securities [Line Items]
Cost	590.4		445.7
Gross Unrealized Gains	201.1		258.7
Gross Unrealized Losses	(6.4)		(4.5)
Net Realized Gains (Losses)	42.4	[3]	11.3	[3]
Total investments at fair value	827.5		711.2
% of Total Fair Value	4.40%		3.90%
Equity securities | Common equities
Schedule of Available-for-sale Securities [Line Items]
Cost	1,289.2		1,451.1
Gross Unrealized Gains	1,213.2		1,081.8
Gross Unrealized Losses	(10.1)		(2.4)
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	2,492.3		2,530.5
% of Total Fair Value	13.10%		14.00%
Short-term investments
Schedule of Available-for-sale Securities [Line Items]
Cost	2,149.0		1,272.6
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Net Realized Gains (Losses)	0	[3]	0	[3]
Total investments at fair value	$ 2,149.0		$ 1,272.6
% of Total Fair Value	11.30%		7.10%

[1] The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

[2] Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

[3] Represents net holding period gains (losses) on certain hybrid securities (discussed below).

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Debt (Parenthetical) (Detail) (USD $)	Dec. 31, 2014	Apr. 25, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Debt instrument, outstanding	$ 2,182,800,000
3.75% Senior Notes due 2021
Debt Instrument [Line Items]
Senior notes, issuance amount	500,000,000		500,000,000
Debt Instrument, Interest Rate, Stated Percentage	3.75%
6 5/8% Senior Notes due 2029
Debt Instrument [Line Items]
Senior notes, issuance amount	300,000,000		300,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.625%
6.25% Senior Notes due 2032
Debt Instrument [Line Items]
Senior notes, issuance amount	400,000,000		400,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.25%
4.35% Senior Notes due 2044
Debt Instrument [Line Items]
Senior notes, issuance amount	350,000,000	350,000,000	0
Debt Instrument, Interest Rate, Stated Percentage	4.35%	4.35%
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067
Debt Instrument [Line Items]
Senior notes, issuance amount	1,000,000,000		1,000,000,000
Debt instrument, outstanding	$ 632,800,000		$ 677,100,000
Debt Instrument, Interest Rate, Stated Percentage	6.70%

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Reinsurance Effect of Reinsurance on Premiums Written and Earned (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reinsurance Disclosures [Abstract]
Direct premiums written	$ 18,914.8	$ 17,562.8	$ 16,558.8
Ceded written	(260.2)	(223.1)	(186.1)
Net premiums written	18,654.6	17,339.7	16,372.7
Direct premiums earned	18,648.4	17,317.9	16,207.6
Ceded earned	(249.9)	(214.5)	(189.6)
Net premiums earned	$ 18,398.5	$ 17,103.4	$ 16,018.0

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Income Taxes Reconciliation of Provision (Benefit) for income Taxes Reported in Consolidated Statements Of Income with Tax at Statutory Rate (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income before income taxes	$ 1,907.4	$ 1,720.0	$ 1,317.7
Tax at statutory rate	667.6	602.0	461.2
Dividends received deduction	(18.3)	(17.6)	(18.2)
Exempt interest income	(13.8)	(13.1)	(14.7)
Tax-deductible dividends	(6.5)	(13.6)	(11.9)
Tax credits	(2.2)	(2.3)	0
Other items, net	(0.4)	(0.8)	(1.0)
Total income tax provision	$ 626.4	$ 554.6	$ 415.4
Tax at statutory rate	35.00%	35.00%	35.00%
Dividends received deduction	(1.00%)	(1.00%)	(1.00%)
Exempt interest income	(1.00%)	(1.00%)	(1.00%)
Tax-deductible dividends	0.00%	(1.00%)	(1.00%)
Tax credits	0.00%	0.00%	0.00%
Other items, net	0.00%	0.00%	0.00%
Total income tax provision	33.00%	32.00%	32.00%

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Reinsurance Prepaid Reinsurance Premiums and Reinsurance Recoverables (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	$ 85.3	$ 74.9
Percentage of Prepaid Reinsurance Premiums	100.00%	100.00%
Reinsurance Recoverables	1,231.9	1,090.2
Percentage of Reinsurance Recoverables	100.00%	100.00%
State Reinsurance Plan
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	81.2	71.1
Percentage of Prepaid Reinsurance Premiums	95.00%	95.00%
Reinsurance Recoverables	1,180.0	1,005.3
Percentage of Reinsurance Recoverables	96.00%	92.00%
State Reinsurance Plan | Michigan Catastrophic Claims Association
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	32.8	29.5
Percentage of Prepaid Reinsurance Premiums	38.00%	40.00%
Reinsurance Recoverables	1,018.8	875.9
Percentage of Reinsurance Recoverables	83.00%	80.00%
State Reinsurance Plan | Commercial Auto Insurance Procedures Plans
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	26.5	21.1
Percentage of Prepaid Reinsurance Premiums	31.00%	28.00%
Reinsurance Recoverables	110.1	79.3
Percentage of Reinsurance Recoverables	9.00%	7.00%
State Reinsurance Plan | North Carolina Reinsurance Facility
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	21.9	20.5
Percentage of Prepaid Reinsurance Premiums	26.00%	27.00%
Reinsurance Recoverables	51.1	50.1
Percentage of Reinsurance Recoverables	4.00%	5.00%
Non-State Reinsurance Plans
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Prepaid reinsurance premiums	4.1	3.8
Percentage of Prepaid Reinsurance Premiums	5.00%	5.00%
Reinsurance Recoverables	$ 51.9	$ 84.9
Percentage of Reinsurance Recoverables	4.00%	8.00%

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Debt Unrealized Gains (Losses) From Debt Hedges Included In Accumulated Other (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended			1 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 1999	Dec. 31, 2002	Apr. 25, 2014	Dec. 31, 2014	Dec. 31, 2007
3.75% Senior Notes due 2021
Debt Instrument [Line Items]
Unrealized Gain (Loss)	$ (5.1)
Unamortized Balance					(3.6)
6 5/8% Senior Notes due 2029
Debt Instrument [Line Items]
Unrealized Gain (Loss)		(4.2)
Unamortized Balance					(3.2)
6.25% Senior Notes due 2032
Debt Instrument [Line Items]
Unrealized Gain (Loss)			5.1
Unamortized Balance					4.0
4.35% Senior Notes due 2044
Debt Instrument [Line Items]
Unrealized Gain (Loss)				(1.6)	(1.6)
Unamortized Balance					(1.6)
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067
Debt Instrument [Line Items]
Unrealized Gain (Loss)						34.4
Unamortized Balance					$ 6.6

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Fair Value Summary of Changes in Fair Value Associated With Level 3 Assets (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	$ 68.7		$ 114.7
Calls/ Maturities/ Paydowns	(3.7)		(32.5)
Purchases	0		125.4
Sales	(0.1)		(2.4)
Net Realized (Gain)/Loss on Sales	0.1		(36.0)
Change in Valuation	29.9		40.9
Net Transfers In (Out)	(13.6)	[1]	(141.4)	[2]
Ending Fair value	81.3		68.7
Fixed maturities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	29.2		70.8
Calls/ Maturities/ Paydowns	(3.6)		(32.0)
Purchases	0		125.1
Sales	(0.1)		0
Net Realized (Gain)/Loss on Sales	0.1		0
Change in Valuation	(0.4)		6.7
Net Transfers In (Out)	(13.6)	[1]	(141.4)	[2]
Ending Fair value	11.6		29.2
Fixed maturities | Asset-backed Securities | Residential mortgage-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	0.2		45.5
Calls/ Maturities/ Paydowns	0		(28.6)
Purchases	0		125.1
Sales	(0.1)		0
Net Realized (Gain)/Loss on Sales	0.1		0
Change in Valuation	(0.2)		(0.4)
Net Transfers In (Out)	0	[1]	(141.4)	[2]
Ending Fair value	0		0.2
Fixed maturities | Asset-backed Securities | Commercial mortgage-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	29.0		25.3
Calls/ Maturities/ Paydowns	(3.6)		(3.4)
Purchases	0		0
Sales	0		0
Net Realized (Gain)/Loss on Sales	0		0
Change in Valuation	(0.2)		7.1
Net Transfers In (Out)	(13.6)	[1]	0	[2]
Ending Fair value	11.6		29.0
Equity securities | Nonredeemable preferred stocks | Financials
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	39.0	[3],[4]	31.9	[3]
Calls/ Maturities/ Paydowns	0	[4]	0	[3]
Purchases	0	[4]	0	[3]
Sales	0	[4]	0	[3]
Net Realized (Gain)/Loss on Sales	0	[4]	0	[3]
Change in Valuation	30.3	[4]	7.1	[3]
Net Transfers In (Out)	0	[1],[4]	0	[2],[3]
Ending Fair value	69.3	[4]	39.0	[3],[4]
Equity securities | Common equities | Other risk investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Fair Value	0.5		12.0
Calls/ Maturities/ Paydowns	(0.1)		(0.5)
Purchases	0		0.3
Sales	0		(2.4)
Net Realized (Gain)/Loss on Sales	0		(36.0)
Change in Valuation	0		27.1
Net Transfers In (Out)	0	[1]	0	[2]
Ending Fair value	$ 0.4		$ 0.5

[1] The $13.6 million was transferred out of Level 3 and into Level 2 due to an improvement in the security's underlying collateral and an increase in liquidity and market activity in comparable securities.

[2] The $141.4 million was transferred out of Level 3 and into Level 2 due to an increase in liquidity and trading volume in the market.

[3] The $7.1 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

[4] The $30.3 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

We have certain noncancelable operating lease commitments with lease terms greater than one year for property and computer equipment. The minimum commitments under these agreements at December 31, 2014, were as follows:

(millions)	Commitments
2015	$	46.2
2016	43.7
2017	37.2
2018	27.1
2019	16.4
Thereafter	4.4
Total	$	175.0

Some of the leases have options to renew at the end of the lease periods. The expense we incurred for the leases disclosed above, as well as other operating leases that may be cancelable or have terms less than one year, was:

(millions)	Expense
2014	$	63.4
2013	64.6
2012	71.9

We also have certain noncancelable purchase obligations. The minimum commitment under these agreements at December 31, 2014, was $493.5 million.

As of December 31, 2014, we had no open investment funding commitments; we had no uncollateralized lines or letters of credit as of December 31, 2014 or 2013.

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SCHEDULE IV - Reinsurance Reinsurance (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Gross Amount	$ 18,648,400,000	$ 17,317,900,000	$ 16,207,600,000
Ceded to Other Companies	249,900,000	214,500,000	189,600,000
Property, Liability and Casualty Insurance Segment
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Gross Amount	18,648,400,000	17,317,900,000	16,207,600,000
Ceded to Other Companies	249,900,000	214,500,000	189,600,000
Assumed From Other Companies	0	0	0
Net Amount	$ 18,398,500,000	$ 17,103,400,000	$ 16,018,000,000
Percentage of Amount Assumed to Net	0.00%	0.00%	0.00%

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SCHEDULE I - Summary Of Investments - Other Than Investments in Related Parties Summary Of Investments - Other than Investments In Related Parties (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	$ 17,402.8
Fair Value	19,018.0
Amount At Which Shown In The Balance Sheet	19,018.0
Short-term investments
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,149.0	[1]
Fair Value	2,149.0	[1]
Amount At Which Shown In The Balance Sheet	2,149.0	[1]
Short-term investments | Foreign Government Debt
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	5.7
Fair Value	5.7
Amount At Which Shown In The Balance Sheet	$ 5.7

[1] Includes $5.7 million in treasury bills issued by the Australian government.

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Debt (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Debt Instrument [Line Items]
Carrying Value	$ 2,164.7	[1]	$ 1,860.9	[1]
Fair Value	2,527.5		2,073.7
3.75% Senior Notes due 2021
Debt Instrument [Line Items]
Carrying Value	497.8		497.6
Fair Value	535.6		509.1
6 5/8% Senior Notes due 2029
Debt Instrument [Line Items]
Carrying Value	295.5		295.3
Fair Value	400.6		359.6
6.25% Senior Notes due 2032
Debt Instrument [Line Items]
Carrying Value	394.8		394.6
Fair Value	527.9		473.7
4.35% Senior Notes due 2044
Debt Instrument [Line Items]
Carrying Value	346.3		0
Fair Value	378.9		0
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067
Debt Instrument [Line Items]
Carrying Value	630.3		673.4
Fair Value	$ 684.5		$ 731.3

[1] Consists of long-term debt. See Note 4 – Debt for further discussion.

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Segment Information Operating Results (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenues	$ 19,391.4		$ 18,170.9		$ 17,083.9
Pretax Profit (Loss)	1,907.4		1,720.0		1,317.7
Underwriting Operations
Segment Reporting Information [Line Items]
Revenues	18,398.5		17,103.4		16,018.0
Pretax Profit (Loss)	1,410.3		1,120.1		708.9
Underwriting Operations | Personal Lines
Segment Reporting Information [Line Items]
Revenues	16,561.0	[1]	15,341.6	[1]	14,368.1	[1]
Pretax Profit (Loss)	1,106.4	[1]	1,016.8	[1]	628.4	[1]
Underwriting Operations | Personal Lines | Agency Channel
Segment Reporting Information [Line Items]
Revenues	9,087.0		8,601.5		8,103.9
Pretax Profit (Loss)	683.0		542.9		338.9
Underwriting Operations | Personal Lines | Direct Channel
Segment Reporting Information [Line Items]
Revenues	7,474.0		6,740.1		6,264.2
Pretax Profit (Loss)	423.4		473.9		289.5
Underwriting Operations | Commercial Lines
Segment Reporting Information [Line Items]
Revenues	1,837.5		1,761.6		1,649.0
Pretax Profit (Loss)	315.8		114.1		86.3
Underwriting Operations | Other Indemnity
Segment Reporting Information [Line Items]
Revenues	0		0.2		0.9
Pretax Profit (Loss)	(11.9)		(10.8)		(5.8)
Fees And Other Revenues
Segment Reporting Information [Line Items]
Revenues	309.1	[2]	291.8	[2]	281.8	[2]
Service Businesses
Segment Reporting Information [Line Items]
Revenues	56.0		39.6		36.1
Pretax Profit (Loss)	5.1		0.8		0
Investments
Segment Reporting Information [Line Items]
Revenues	632.6	[3]	740.4	[3]	749.8	[3]
Pretax Profit (Loss)	613.7	[3]	721.6	[3]	734.4	[3]
Gains (losses) on extinguishment of debt
Segment Reporting Information [Line Items]
Revenues	(4.8)		(4.3)		(1.8)
Pretax Profit (Loss)	(4.8)		(4.3)		(1.8)
Interest Expense
Segment Reporting Information [Line Items]
Pretax Profit (Loss)	$ (116.9)		$ (118.2)		$ (123.8)

[1] Personal auto insurance accounted for 92% of the total Personal Lines segment net premiums earned in 2014, compared to 91% in 2013 and 2012; insurance for our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

[2] Pretax profit (loss) for fees and other revenues are allocated to operating segments.

[3] Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expenses.

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Reconciliation of Revenue and Operating Income from Segments to Consolidated

Following are the operating results for the years ended December 31:

	2014						2013						2012
(millions)	Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)
Personal Lines
Agency	$	9,087.0		$	683.0		$	8,601.5		$	542.9		$	8,103.9		$	338.9
Direct	7,474.0			423.4			6,740.1			473.9			6,264.2			289.5
Total Personal Lines1	16,561.0			1,106.4			15,341.6			1,016.8			14,368.1			628.4
Commercial Lines	1,837.5			315.8			1,761.6			114.1			1,649.0			86.3
Other indemnity	0			(11.9		)	0.2			(10.8		)	0.9			(5.8		)
Total underwriting operations	18,398.5			1,410.3			17,103.4			1,120.1			16,018.0			708.9
Fees and other revenues2	309.1			NA			291.8			NA			281.8			NA
Service businesses	56.0			5.1			39.6			0.8			36.1			0
Investments3	632.6			613.7			740.4			721.6			749.8			734.4
Gains (losses) on extinguishment of debt	(4.8		)	(4.8		)	(4.3		)	(4.3		)	(1.8		)	(1.8		)
Interest expense	NA			(116.9		)	NA			(118.2		)	NA			(123.8		)
Consolidated total	$	19,391.4		$	1,907.4		$	18,170.9		$	1,720.0		$	17,083.9		$	1,317.7

NA = Not Applicable

¹ Personal auto insurance accounted for 92% of the total Personal Lines segment net premiums earned in 2014, compared to 91% in 2013 and 2012; insurance for our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

² Pretax profit (loss) for fees and other revenues are allocated to operating segments.

³ Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expenses.

Underwriting Margins and Combined Ratios for our Underwriting Operations

Following are the underwriting margins/combined ratios for our underwriting operations for the years ended December 31:

	2014			2013			2012
	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio
Personal Lines
Agency	7.5	%	92.5	6.3	%	93.7	4.2	%	95.8
Direct	5.7		94.3	7.0		93.0	4.6		95.4
Total Personal Lines	6.7		93.3	6.6		93.4	4.4		95.6
Commercial Lines	17.2		82.8	6.5		93.5	5.2		94.8
Other indemnity1	NM		NM	NM		NM	NM		NM
Total underwriting operations	7.7		92.3	6.5		93.5	4.4		95.6

¹ Underwriting margins/combined ratios are not meaningful (NM) for our other indemnity businesses due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

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Reporting And Accounting Policies Advertising Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Marketing and Advertising Expense [Abstract]
Advertising Expense	$ 681.8	$ 619.3	$ 546.8

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Investments Components of Net Investment Income (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	$ 408.4	$ 422.0	$ 443.0
Investment expenses	(18.9)	(18.8)	(15.4)
Net investment income	389.5	403.2	427.6
Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	321.9	338.0	351.2
Fixed maturities | U.S. government obligations
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	46.2	50.2	49.8
Fixed maturities | State and local government obligations
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	50.1	48.0	51.1
Fixed maturities | Foreign government obligations
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	0.4	0.2	0
Fixed maturities | Corporate debt securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	82.1	98.8	107.5
Fixed maturities | Residential mortgage-backed securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	44.9	28.1	16.1
Fixed maturities | Commercial mortgage-backed securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	66.0	74.8	82.2
Fixed maturities | Other asset-backed securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	16.7	16.7	20.3
Fixed maturities | Redeemable preferred stocks
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	15.5	21.2	24.2
Equity securities | Nonredeemable preferred stocks
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	38.6	36.2	43.8
Equity securities | Common equities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	46.6	45.8	44.9
Short-term investments
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Investment income	$ 1.3	$ 2.0	$ 3.1

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Investments Composition of Fixed Maturities by Maturity (Parenthetical) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Open interest rate swap positions	$ 15.8	[1]	$ 68.1	[1]
Interest Rate Swaps
Schedule of Available-for-sale Securities [Line Items]
Open interest rate swap positions	$ 15.8

[1] To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we expect that we will report them on a gross basis on our balance sheets, consistent with our historical presentation.

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SCHEDULE II - Condensed Financial Information Of Registrant Condensed Financial Information Of Registrant - Additional Information (Detail) (USD $) In Billions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Disclosure Condensed Financial Information Of Registrant Additional Information [Abstract]
Securities Held in Consolidated Non-Insurance Subsidiary	$ 1.9	$ 1.8

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SCHEDULE II - Condensed Financial Information Of Registrant

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SCHEDULE II - Condensed Financial Information Of Registrant

SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	Years Ended December 31,
	2014			2013			2012
Revenues
Dividends from subsidiaries	$	1,000.2		$	1,119.7		$	782.3
Undistributed income (loss) from subsidiaries	358.3			117.5			193.1
Equity in net income of subsidiaries*	1,358.5			1,237.2			975.4
Intercompany investment income*	2.4			2.8			6.1
Gains (losses) on extinguishment of debt	(4.8		)	(4.3		)	(1.8		)
Other income1	0			2.6			0
Total revenues	1,356.1			1,238.3			979.7
Expenses
Interest expense	120.2			121.2			126.3
Deferred compensation2	2.8			9.5			5.5
Other operating costs and expenses	4.4			4.0			3.7
Total expenses	127.4			134.7			135.5
Income before income taxes	1,228.7			1,103.6			844.2
Benefit for income taxes	(52.3		)	(61.8		)	(58.1		)
Net income	$	1,281.0		$	1,165.4		$	902.3
Other comprehensive income	71.4			80.7			178.5
Comprehensive income	$	1,352.4		$	1,246.1		$	1,080.8

* Eliminated in consolidation.

¹ Represents gain on net death benefit received on life insurance policies.

² See Note 4 – Employee Benefit Plans in these condensed financial statements.

See notes to condensed financial statements.

CONDENSED BALANCE SHEETS

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	December 31,
	2014		2013
Assets
Investment in affiliate	$	5.0	$	5.0
Investment in subsidiaries*	7,423.5		6,923.5
Receivable from investment subsidiary*	1,677.5		1,648.4
Intercompany receivable*	413.0		307.6
Net deferred income taxes	74.5		69.1
Other assets	123.9		141.8
Total Assets	$	9,717.4	$	9,095.4
Liabilities and Shareholders’ Equity
Accounts payable, accrued expenses, and other liabilities	$	220.0	$	154.8
Dividend payable	404.1		890.2
Debt	2,164.7		1,860.9
Total liabilities	2,788.8		2,905.9
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8		595.8
Paid-in capital	1,184.3		1,142.0
Retained earnings	4,133.4		3,500.0
Total accumulated other comprehensive income	1,023.1		951.7
Total shareholders’ equity	6,928.6		6,189.5
Total Liabilities and Shareholders’ Equity	$	9,717.4	$	9,095.4

*Eliminated in consolidation.

See notes to condensed financial statements.

CONDENSED STATEMENTS OF CASH FLOWS

THE PROGRESSIVE CORPORATION (PARENT COMPANY)

(millions)

	Years Ended December 31,
	2014			2013			2012
Cash Flows From Operating Activities:
Net income	$	1,281.0		$	1,165.4		$	902.3
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed (income) loss from subsidiaries	(358.3		)	(117.5		)	(193.1		)
Amortization of equity-based compensation	2.2			2.1			2.0
(Gains) losses on extinguishment of debt	4.8			4.3			1.8
Changes in:
Intercompany receivable	(105.4		)	(11.4		)	(58.6		)
Accounts payable, accrued expenses, and other liabilities	18.2			19.4			0.3
Income taxes	61.1			(55.8		)	21.7
Other, net	0.4			(16.3		)	(9.9		)
Net cash provided by operating activities	904.0			990.2			666.5
Cash Flows From Investing Activities:
Additional investments in equity securities of consolidated subsidiaries	(21.1		)	(13.9		)	(36.1		)
Investment in affiliate	0			(4.0		)	0
(Paid to) received from investment subsidiary	(29.1		)	(325.5		)	773.7
Net cash provided by (used in) investing activities	(50.2		)	(343.4		)	737.6
Cash Flows From Financing Activities:
Proceeds from exercise of stock options	0			0			0.5
Tax benefit from exercise/vesting of equity-based compensation	12.8			10.3			5.8
Net proceeds from debt issuance	346.3			0			0
Payment of debt	0			(150.0		)	(350.0		)
Reacquisition of debt	(48.9		)	(58.1		)	(32.5		)
Dividends paid to shareholders	(892.6		)	(175.6		)	(853.7		)
Acquisition of treasury shares	(271.4		)	(273.4		)	(174.2		)
Net cash used in financing activities	(853.8		)	(646.8		)	(1,404.1		)
Change in cash	0			0			0
Cash, beginning of year	0			0			0
Cash, end of year	$	0		$	0		$	0

See notes to condensed financial statements.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The accompanying condensed financial statements of The Progressive Corporation (parent company) should be read in conjunction with the consolidated financial statements and notes thereto in the Annual Report to Shareholders of The Progressive Corporation and its subsidiaries, which is included as Exhibit 13 to this Form 10-K.

Note 1. Statements of Cash Flows — For the purpose of the Statements of Cash Flows, cash includes only bank demand deposits. The Progressive Corporation does not hold any cash but has unrestricted access to funds maintained in a non-insurance, investment subsidiary to meet its holding company obligations; at year-end 2014 and 2013, $1.9 billion and $1.8 billion, respectively, of marketable securities were available in this subsidiary. Non-cash activity includes declared but unpaid dividends. For the years ended December 31, we paid the following:

(millions)	2014		2013		2012
Income taxes	$	515.0	$	497.0	$	389.1
Interest	116.0		122.3		135.0

Note 2. Income Taxes — The Progressive Corporation files a consolidated federal income tax return with all subsidiaries and acts as an agent for the consolidated tax group when making payments to the Internal Revenue Service. The consolidated group’s net income taxes currently payable/recoverable are included in other liabilities/assets, respectively, in the accompanying Condensed Balance Sheets based on the balance at the end of the year. The Progressive Corporation and its subsidiaries have adopted, pursuant to a written agreement, a method of allocating consolidated federal income taxes. Amounts allocated to the subsidiaries under the written agreement are included in “Intercompany Receivable” in the accompanying Condensed Balance Sheets.

Note 3. Debt — The information relating to debt is incorporated by reference from Note 4 – Debt in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Note 4. Employee Benefit Plans — The information relating to incentive compensation plans and deferred compensation is incorporated by reference from Note 9 – Employee Benefit Plans in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

Note 5. Other Comprehensive Income — On the condensed Statements of Comprehensive Income, other comprehensive income represents activity of the subsidiaries of The Progressive Corporation and includes net unrealized gains (losses) on securities, net unrealized gains on forecasted transactions, and foreign currency translation adjustments.

Note 6. Dividends — The information relating to our dividend policy is incorporated by reference from Note 14 – Dividends in our Annual Report, which is included as Exhibit 13 to this Form 10-K.

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Investments Gross Unrealized losses by Major Security (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	318	423
Total Fair Value	$ 4,217.8	$ 5,723.4
Gross Unrealized Losses	(49.2)	(126.0)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	230	346
Less than 12 Months Fair Value	3,062.5	4,865.9
Less than 12 Months Unrealized Losses	(26.2)	(87.5)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	88	77
12 Months or Greater Fair Value	1,155.3	857.5
12 Months or Greater Unrealized Losses	(23.0)	(38.5)
Fixed maturities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	290	392
Total Fair Value	3,918.0	5,521.4
Gross Unrealized Losses	(32.7)	(119.1)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	206	319
Less than 12 Months Fair Value	2,857.5	4,665.1
Less than 12 Months Unrealized Losses	(13.0)	(80.6)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	84	73
12 Months or Greater Fair Value	1,060.5	856.3
12 Months or Greater Unrealized Losses	(19.7)	(38.5)
Fixed maturities | U.S. government obligations
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	11	29
Total Fair Value	428.2	1,444.3
Gross Unrealized Losses	(1.3)	(16.6)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	5	28
Less than 12 Months Fair Value	150.7	1,434.6
Less than 12 Months Unrealized Losses	(0.3)	(16.3)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	6	1
12 Months or Greater Fair Value	277.5	9.7
12 Months or Greater Unrealized Losses	(1.0)	(0.3)
Fixed maturities | State and local government obligations
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	46	141
Total Fair Value	234.2	844.2
Gross Unrealized Losses	(1.1)	(18.4)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	28	119
Less than 12 Months Fair Value	177.9	759.3
Less than 12 Months Unrealized Losses	(0.4)	(17.1)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	18	22
12 Months or Greater Fair Value	56.3	84.9
12 Months or Greater Unrealized Losses	(0.7)	(1.3)
Fixed maturities | Corporate debt securities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	53	51
Total Fair Value	843.2	997.6
Gross Unrealized Losses	(10.4)	(20.4)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	43	45
Less than 12 Months Fair Value	647.5	831.1
Less than 12 Months Unrealized Losses	(6.1)	(17.8)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	10	6
12 Months or Greater Fair Value	195.7	166.5
12 Months or Greater Unrealized Losses	(4.3)	(2.6)
Fixed maturities | Residential mortgage-backed securities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	70	66
Total Fair Value	844.2	763.5
Gross Unrealized Losses	(10.8)	(14.1)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	33	45
Less than 12 Months Fair Value	465.2	597.6
Less than 12 Months Unrealized Losses	(3.1)	(7.9)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	37	21
12 Months or Greater Fair Value	379.0	165.9
12 Months or Greater Unrealized Losses	(7.7)	(6.2)
Fixed maturities | Commercial mortgage-backed securities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	63	76
Total Fair Value	723.4	1,061.9
Gross Unrealized Losses	(2.6)	(37.8)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	54	60
Less than 12 Months Fair Value	667.5	809.2
Less than 12 Months Unrealized Losses	(1.4)	(19.7)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	9	16
12 Months or Greater Fair Value	55.9	252.7
12 Months or Greater Unrealized Losses	(1.2)	(18.1)
Fixed maturities | Other asset-backed securities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	44	25
Total Fair Value	741.8	287.2
Gross Unrealized Losses	(0.8)	(2.1)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	42	22
Less than 12 Months Fair Value	715.7	233.3
Less than 12 Months Unrealized Losses	(0.7)	(1.8)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	2	3
12 Months or Greater Fair Value	26.1	53.9
12 Months or Greater Unrealized Losses	(0.1)	(0.3)
Fixed maturities | Redeemable preferred stocks
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	3	4
Total Fair Value	103.0	122.7
Gross Unrealized Losses	(5.7)	(9.7)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	1	0
Less than 12 Months Fair Value	33.0	0
Less than 12 Months Unrealized Losses	(1.0)	0
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	2	4
12 Months or Greater Fair Value	70.0	122.7
12 Months or Greater Unrealized Losses	(4.7)	(9.7)
Equity securities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	28	31
Total Fair Value	299.8	202.0
Gross Unrealized Losses	(16.5)	(6.9)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	24	27
Less than 12 Months Fair Value	205.0	200.8
Less than 12 Months Unrealized Losses	(13.2)	(6.9)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	4	4
12 Months or Greater Fair Value	94.8	1.2
12 Months or Greater Unrealized Losses	(3.3)	0
Equity securities | Nonredeemable preferred stocks
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	8	7
Total Fair Value	231.4	142.3
Gross Unrealized Losses	(6.4)	(4.5)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	5	7
Less than 12 Months Fair Value	143.2	142.3
Less than 12 Months Unrealized Losses	(3.6)	(4.5)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	3	0
12 Months or Greater Fair Value	88.2	0
12 Months or Greater Unrealized Losses	(2.8)	0
Equity securities | Common equities
Investments, Unrealized Loss Position [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	20	24
Total Fair Value	68.4	59.7
Gross Unrealized Losses	(10.1)	(2.4)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	19	20
Less than 12 Months Fair Value	61.8	58.5
Less than 12 Months Unrealized Losses	(9.6)	(2.4)
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	1	4
12 Months or Greater Fair Value	6.6	1.2
12 Months or Greater Unrealized Losses	$ (0.5)	$ 0

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SCHEDULE II - Condensed Financial Information Of Registrant Condensed Statements Of Comprehensive Income (Parent Company) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Revenues
Gains (losses) on extinguishment of debt	$ (4.8)		$ (4.3)		$ (1.8)
Total revenues	19,391.4		18,170.9		17,083.9
Expenses
Interest expense	116.9		118.2		123.8
Total expenses	17,484.0		16,450.9		15,766.2
Income before income taxes	1,907.4		1,720.0		1,317.7
Provision (benefit) for income taxes	626.4		554.6		415.4
Net income	1,281.0		1,165.4		902.3
Other comprehensive income (loss)	71.4		80.7		178.5
Comprehensive income	1,352.4		1,246.1		1,080.8
Parent Company
Revenues
Dividends from subsidiaries	1,000.2		1,119.7		782.3
Undistributed income (loss) from subsidiaries	358.3		117.5		193.1
Equity in net income of subsidiaries	1,358.5	[1]	1,237.2	[1]	975.4	[1]
Intercompany investment income	2.4	[1]	2.8	[1]	6.1	[1]
Gains (losses) on extinguishment of debt	(4.8)		(4.3)		(1.8)
Other Income	0	[2]	2.6	[2]	0	[2]
Total revenues	1,356.1		1,238.3		979.7
Expenses
Interest expense	120.2		121.2		126.3
Deferred compensation	2.8	[3]	9.5	[3]	5.5	[3]
Other operating costs and expenses	4.4		4.0		3.7
Total expenses	127.4		134.7		135.5
Income before income taxes	1,228.7		1,103.6		844.2
Provision (benefit) for income taxes	(52.3)		(61.8)		(58.1)
Net income	1,281.0		1,165.4		902.3
Other comprehensive income (loss)	71.4		80.7		178.5
Comprehensive income	$ 1,352.4		$ 1,246.1		$ 1,080.8

[1] Eliminated in consolidation.

[2] Represents gain on net death benefit received on life insurance policies.

[3] See Note 4 – Employee Benefit Plans in these condensed financial statements.

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Reporting And Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Advertising Costs

Total advertising costs, which are expensed as incurred, for the years ended December 31, were:

(millions)	Advertising Costs
2014	$	681.8
2013	619.3
2012	546.8

Interest Capitalized

Total capitalized interest, which primarily relates to capitalized software projects, for the years ended December 31, was:

(millions)	Capitalized Interest
2014	$	1.3
2013	0.8
2012	0.3

Equity-based Compensation and Related Tax Benefits

The total compensation expense recognized for our equity-based compensation for the years ended December 31, was:

(millions)	2014		2013		2012
Pretax expense	$	51.4	$	64.9	$	63.4
Tax benefit	18.0		22.7		22.2

Supplemental Cash Flow Information

For the years ended December 31, we paid the following:

(millions)	2014		2013		2012
Income taxes	$	515.0	$	497.0	$	389.1
Interest	116.0		122.3		135.0

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Reporting And Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Nature of Operations

Nature of OperationsThe Progressive Corporation, an insurance holding company formed in 1965, had 53 subsidiaries, one mutual insurance company affiliate, and one limited partnership investment affiliate (collectively the “subsidiaries”) as of December 31, 2014. Our insurance subsidiaries and mutual company affiliate (collectively the Progressive Group of Insurance Companies) provide personal and commercial automobile insurance and other specialty property-casualty insurance and related services. Our Personal Lines segment writes insurance for personal autos and recreational vehicles through both an independent insurance agency channel and a direct channel. Our Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses through both the independent agency and direct channels. We operate our businesses throughout the United States; we also sell personal auto physical damage and property damage liability insurance via the Internet in Australia.

Consolidation Policy

Basis of Consolidation and ReportingThe accompanying consolidated financial statements include the accounts of The Progressive Corporation, its wholly owned subsidiaries, and its affiliates, in which we have a controlling financial interest. All intercompany accounts and transactions are eliminated in consolidation.

Estimates And Assumptions Policy

EstimatesWe are required to make estimates and assumptions when preparing our financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (GAAP). As estimates develop into fact (e.g., losses are paid), results may, and will likely, differ from those estimates.

Investment Policy

InvestmentsOur fixed-maturity securities, equity securities, and short-term investments are accounted for on an available-for-sale basis. See Note 2 – Investments for details regarding the composition of our investment portfolio.

Fixed-maturity securities include debt securities and redeemable preferred stocks, which may have fixed or variable principal payment schedules, may be held for indefinite periods of time, and may be used as a part of our asset/liability strategy or sold in response to changes in interest rates, anticipated prepayments, risk/reward characteristics, liquidity needs, or other economic factors. These securities are carried at fair value with the corresponding unrealized gains (losses), net of deferred income taxes, reported in accumulated other comprehensive income. Fair values are obtained from recognized pricing services or are quoted by market makers and dealers, with limited exceptions discussed in Note 3 – Fair Value.

Included in the fixed-maturity portfolio are asset-backed securities. The asset-backed securities are generally accounted for under the retrospective method. The retrospective method recalculates yield assumptions (based on changes in interest rates or cash flow expectations) historically to the inception of the investment holding period, and applies the required adjustment, if any, to the cost basis, with the offset recorded to investment income. The prospective method is used primarily for interest-only securities, non-investment-grade asset-backed securities, and certain asset-backed securities with sub-prime loan exposure or where there is a greater risk of non-performance and where it is possible the initial investment may not be substantially recovered. The prospective method requires a calculation of expected future repayments and resets the yield to allow for future period adjustments; no current period impact to investment income or the security’s cost is made based on the cash flow update. Prepayment assumptions are based on market expectations and are updated quarterly.

Equity securities include common stocks, nonredeemable preferred stocks, and other risk investments, and are reported at fair values. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income. To the extent we hold any foreign equities or foreign currency hedges, any change in value due to exchange rate fluctuations would be limited by foreign currency hedges, if any, and would be recognized in income in the current period.

Short-term investments may include Eurodollar deposits, commercial paper, repurchase transactions, and other securities expected to mature within one year. In addition, short-term investments can include auction rate securities (i.e., certain municipal bonds and preferred stocks). Due to the nature of auction rate securities, these securities are classified as short-term based upon their expected auction date (generally 7-49 days) rather than on their contractual maturity date (which is greater than one year at original issuance). In the event that an auction fails, the security may need to be reclassified from short-term. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income.

Trading securities are securities bought principally for the purpose of sale in the near term. To the extent we have trading securities, changes in fair value would be recognized in income in the current period. Derivative instruments, which may be used for trading purposes or classified as trading derivatives due to the characteristics of the transaction, are discussed below.

Derivative instruments may include futures, options, forward positions, foreign currency forwards, interest rate swap agreements, and credit default swaps and may be used in the portfolio for general investment purposes or to hedge the exposure to:

• 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).

To the extent we have derivatives held for general investment purposes, these derivative instruments are recognized as either assets or liabilities and measured at fair value, with changes in fair value recognized in income as a component of net realized gains (losses) on securities during the period of change.

Derivatives designated as hedges are required to be evaluated on established criteria to determine the effectiveness of their correlation to, and ability to reduce the designated risk of, specific securities or transactions. Effectiveness is required to be reassessed regularly. Hedges that are deemed to be effective would be accounted for as follows:

• 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.

If a hedge is deemed to become ineffective or discontinued, the following accounting treatment would be applied:

• 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.

For all derivative positions, net cash requirements are limited to changes in fair values, which may vary resulting from changes in interest rates, currency exchange rates, and other factors. Exposure to credit risk is limited to the carrying value; collateral may be required to limit credit risk. We have elected not to offset fair value amounts that arise from derivative positions with the same counterparty under a master netting arrangement.

Investment securities are exposed to various risks such as interest rate, market, credit, and liquidity risk. Fair values of securities fluctuate based on the nature and magnitude of changing market conditions; significant changes in market conditions could materially affect the portfolio’s value in the near term. We regularly monitor our portfolio for price changes, which might indicate potential impairments, and perform detailed reviews of securities with unrealized losses. In such cases, changes in fair value are evaluated to determine the extent to which such changes are attributable to: (i) fundamental factors specific to the issuer, such as financial condition, business prospects, or other factors, (ii) market-related factors, such as interest rates or equity market declines, or (iii) credit-related losses, where the present value of cash flows expected to be collected are lower than the amortized cost basis of the security.

We analyze our debt securities that are in a loss position to determine if we intend to sell, or if it is more likely than not that we will be required to sell, the security prior to recovery and, if so, we write down the security to its current fair value, with the entire amount of the write-down recorded to earnings. To the extent that it is more likely than not that we will hold the debt security until recovery (which could be maturity), we determine if any of the decline in value is due to a credit loss (i.e., where the present value of future cash flows expected to be collected is lower than the amortized cost basis of the security) and, if so, we recognize that portion of the impairment as a component of net realized gains (losses) in the comprehensive income statement, with the difference (i.e., non-credit related impairment) recognized as part of our net unrealized gains (losses) in accumulated other comprehensive income. When an equity security (common equity and nonredeemable preferred stock) in our investment portfolio has an unrealized loss in fair value that is deemed to be other-than-temporary, we reduce the book value of such security to its current fair value, recognizing the decline as a realized loss in the comprehensive income statement. Any future changes in fair value, either increases or decreases, are reflected as changes in unrealized gains (losses) as part of accumulated other comprehensive income.

Investment income consists of interest, dividends, and amortization. In addition to the discussion above for asset-backed securities, interest is recognized on an accrual basis using the effective yield method. Depending on the nature of the equity instruments, dividends are recorded at either the ex-dividend date or on an accrual basis.

Realized gains (losses) on securities are computed based on the first-in first-out method and include write-downs on available-for-sale securities considered to have other-than-temporary declines in fair value (excluding non-credit related impairments), as well as holding period valuation changes on derivatives, trading securities, and hybrid instruments (e.g., securities with embedded options, where the option is a feature of the overall change in the value of the instrument).

Insurance Premiums and Receivables Policy

Insurance Premiums and Receivables  Insurance premiums written are earned into income on a pro rata basis over the period of risk, based on a daily earnings convention. Accordingly, unearned premiums represent the portion of premiums written that are applicable to the unexpired risk. We provide insurance and related services to individuals and small commercial accounts and offer a variety of payment plans. Generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. We perform a policy level evaluation to determine the extent to which the premiums receivable balance exceeds the unearned premiums balance. We then age this exposure to establish an allowance for doubtful accounts based on prior experience.

Deferred Acquisition Costs Policy

Deferred Acquisition CostsDeferred acquisition costs include commissions, premium taxes, and other variable underwriting and direct sales costs incurred in connection with the successful acquisition or renewal of insurance contracts. These acquisition costs are deferred and amortized over the policy period in which the related premiums are earned. We consider anticipated investment income in determining the recoverability of these costs. Management believes that these costs will be fully recoverable in the near term.

We do not defer any advertising costs.

Reserve For Losses And Loss Adjustment Expenses

Loss and Loss Adjustment Expense ReservesLoss reserves represent the estimated liability on claims reported to us, plus reserves for losses incurred but not recorded (IBNR). These estimates are reported net of amounts estimated to be recoverable from salvage and subrogation. Loss adjustment expense reserves represent the estimated expenses required to settle these claims and losses. The methods of making estimates and establishing these reserves are reviewed regularly, and resulting adjustments are reflected in income in the current period. Such loss and loss adjustment expense reserves are susceptible to change in the near term.

Reinsurance Policy

ReinsuranceOur reinsurance transactions primarily include premiums ceded to state-provided reinsurance facilities (e.g., Michigan Catastrophic Claims Association and North Carolina Reinsurance Facility) and premiums written under state-mandated involuntary plans for commercial vehicles (Commercial Auto Insurance Procedures/Plans – “CAIP”). Prepaid reinsurance premiums are earned on a pro rata basis over the period of risk, based on a daily earnings convention, which is consistent with premiums written. See Note 7 – Reinsurance for further discussion.

Income Tax Policy

Income Taxes  The income tax provision is calculated under the balance sheet approach. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal items giving rise to such differences are investment securities (e.g., net unrealized gains (losses), write-downs on securities determined to be other-than-temporarily impaired, and derivative instruments), loss and loss adjustment expense reserves, unearned premiums reserves, deferred acquisition costs, property and equipment, and non-deductible accruals. We review our deferred tax assets regularly for recoverability. See Note 5 – Income Taxes for further discussion.

Property, Plant and Equipment Policy

Property and Equipment  Property and equipment are recorded at cost, less accumulated depreciation, and include capitalized software developed or acquired for internal use. Depreciation is recognized over the estimated useful lives of the assets using accelerated methods for computer equipment and the straight-line method for all other fixed assets. The useful life for computer equipment and laptop computers is 3 years. The useful lives range from 7 to 40 years for buildings, improvements, and integrated components and 3 to 15 years for all other property and equipment. Land and buildings comprised 77% and 76% of total property and equipment at December 31, 2014 and 2013, respectively.

During 2014, decisions were made to sell one property originally purchased for a future Service Center site. At December 31, 2014, included in other assets in the consolidated balance sheets is $8.7 million of "held for sale" property, which represents the fair value of this property less the estimated costs to sell.

Guaranty Fund Assessments Policy

Guaranty Fund Assessments  We are subject to state guaranty fund assessments, which provide for the payment of covered claims or other insurance obligations of insurance companies deemed insolvent. These assessments are accrued after a formal determination of insolvency has occurred, and we have written the premiums on which the assessments will be based.

Fees and Other Revenues

Fees and Other Revenues  Fees and other revenues primarily represent fees collected from policyholders relating to installment charges in accordance with our bill plans, as well as late payment and insufficient funds fees. Other revenues may include revenue from the sale of tax credits, rental income, and other revenue transactions.

Non-Insurance Service Business

Service Revenues and ExpensesOur service businesses provide insurance-related services. Service revenues generated from processing business for involuntary CAIP plans are earned on a pro rata basis over the term of the related policies. Service expenses related to these CAIP plans include acquisition expenses, which are deferred and amortized over the period in which the related revenues are earned. Other service business revenues and expenses are recorded in the period in which they are earned or incurred.

Equity-Based Compensation

Equity-Based Compensation  We currently issue time-based and performance-based restricted stock unit awards to key members of management as our form of equity compensation, and time-based restricted stock awards to non-employee directors. Prior to 2010, we issued restricted stock awards, instead of restricted stock unit awards, to employees. Collectively, we refer to these awards as “restricted equity awards.” We currently do not issue stock options as a form of equity compensation, and no such awards remain outstanding. Compensation expense for time-based restricted equity awards with installment vesting is recognized over each respective vesting period. For performance-based restricted equity awards, compensation expense is recognized over the respective estimated vesting periods. Dividend equivalent units are credited

to outstanding restricted units awards, both time-based and performance-based, at the time a dividend is paid to shareholders.

We record an estimate for expected forfeitures of restricted equity awards based on our historical forfeiture rates. In addition, we shorten the vesting periods of certain restricted equity awards based on the “qualified retirement” provisions in our incentive compensation plans, under which (among other provisions) the vesting of 50% of outstanding time-based restricted equity awards will accelerate upon retirement if the participant is 55 years of age or older and satisfies certain years-of-service requirements. For time-based awards granted after February 2013, we modified our "qualified retirement" provisions to vest and distribute 50% of the unvested portion of the award upon reaching eligibility for a qualified retirement and shortly after the grant date for each subsequent award.

Net Income Per Share Policy

Net Income Per Share  Basic net income per share is computed using the weighted average number of common shares outstanding during the reporting period, excluding unvested time-based and performance-based restricted equity awards that are subject to forfeiture. Diluted net income per share includes common stock equivalents assumed outstanding during the period. Our common stock equivalents include the incremental shares assumed to be issued for:

• 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.

Cash Flow Supplemental Disclosure

Supplemental Cash Flow InformationCash includes only bank demand deposits. Non-cash activity includes declared but unpaid dividends.

New Accounting Pronouncements

New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update (ASU) related to the accounting for revenue from contracts with customers. This standard is intended to help reduce diversity in practice and enhance comparability between entities related to revenue recognition and is effective for fiscal years beginning after December 15, 2016 (2017 for calendar-year companies). Since the accounting for insurance contracts is outside of the scope of this ASU, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB issued an ASU related to the accounting for share-based payments when the terms of an employee award can be achieved after the requisite service period. To the extent an equity award contains provisions that permit an employee who leaves the company before the performance targets are reached to receive some or all of the benefits of the award if and as the award later vests, this standard requires companies to recognize the compensation cost during the employee's remaining service period. This standard is effective for fiscal years beginning after December 15, 2015 (2016 for calendar-year companies). We plan to adopt this standard prospectively.  Although this standard may require an acceleration of the expense recognition of our share-based payment awards, we do not expect it to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB also issued an ASU related to repurchase-to-maturity transactions, repurchase financings, and related disclosures. The intent is to clarify that repurchase-to-maturity transactions must be accounted for and disclosed as secured borrowings, rather than potentially accounted for as sales, as permissible under certain circumstances in the previous guidance. This guidance is effective for annual and interim periods after December 15, 2014 (2015 for calendar-year companies). We do not typically engage in these type of transactions; therefore, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

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Segment Information - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Net premiums earned	$ 18,398.5	$ 17,103.4	$ 16,018.0
Depreciation	97.1	101.3	94.4
Underwriting Operations | Personal Lines | Agency Channel | Lower Limit
Segment Reporting Information [Line Items]
Independent insurance agencies and brokerages	35,000
Australia
Segment Reporting Information [Line Items]
Net premiums earned	$ 17.1	$ 13.0	$ 7.1

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Reporting And Accounting Policies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Significant Accounting Policies [Line Items]
Number of Subsidiaries	53
Number of Mutual Insurance Company Affiliates	1
Number of Limited Partnership Investment Affiliates	1
Number of Properties Held for Sale	1
Assets Held-for-Sale, Property, Plant and Equipment	8.7
Lower Limit
Significant Accounting Policies [Line Items]
Auction Rate Securities, Period Between Auction Dates	7 days
Upper Limit
Significant Accounting Policies [Line Items]
Auction Rate Securities, Period Between Auction Dates	49 days
computer equipment and laptop computers
Significant Accounting Policies [Line Items]
Estimated useful lives	3 years
Building, Building Improvements, and Integrated Components | Lower Limit
Significant Accounting Policies [Line Items]
Estimated useful lives	7 years
Building, Building Improvements, and Integrated Components | Upper Limit
Significant Accounting Policies [Line Items]
Estimated useful lives	40 years
Property, Plant and Equipment, Other Types | Lower Limit
Significant Accounting Policies [Line Items]
Estimated useful lives	3 years
Property, Plant and Equipment, Other Types | Upper Limit
Significant Accounting Policies [Line Items]
Estimated useful lives	15 years
Land and Building
Significant Accounting Policies [Line Items]
Land and buildings as a percentage of total property and equipment	77.00%	76.00%

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SCHEDULE II - Condensed Financial Information Of Registrant Condensed Balance Sheets (Parent Company) (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012	Dec. 31, 2011
Assets
Other assets	$ 301.4		$ 304.3
Total assets	25,787.6		24,408.2
Liabilities and Shareholders' Equity
Accounts payable, accrued expenses, and other liabilities	1,893.8	[1]	1,785.0	[1]
Dividend payable	404.1		890.2
Debt	2,164.7	[2]	1,860.9	[2]
Total liabilities	18,859.0		18,218.7
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8		595.8
Paid-in capital	1,184.3		1,142.0
Retained earnings	4,133.4		3,500.0
Total accumulated other comprehensive income	1,023.1		951.7		871.0	692.5
Total shareholders' equity	6,928.6		6,189.5		6,007.0
Total liabilities and shareholders' equity	25,787.6		24,408.2
Parent Company
Assets
Investment in affiliate	5.0		5.0
Investment in subsidiaries	7,423.5	[3]	6,923.5	[3]
Receivable from investment subsidiary	1,677.5	[3]	1,648.4	[3]
Intercompany receivable	413.0	[3]	307.6	[3]
Net deferred income taxes	74.5		69.1
Other assets	123.9		141.8
Total assets	9,717.4		9,095.4
Liabilities and Shareholders' Equity
Accounts payable, accrued expenses, and other liabilities	220.0		154.8
Dividend payable	404.1		890.2
Debt	2,164.7		1,860.9
Total liabilities	2,788.8		2,905.9
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8		595.8
Paid-in capital	1,184.3		1,142.0
Retained earnings	4,133.4		3,500.0
Total accumulated other comprehensive income	1,023.1		951.7
Total shareholders' equity	6,928.6		6,189.5
Total liabilities and shareholders' equity	$ 9,717.4		$ 9,095.4

[1] See Note 12 – Litigation and Note 13 – Commitments and Contingencies for further discussion.

[2] Consists of long-term debt. See Note 4 – Debt for further discussion.

[3] Eliminated in consolidation.

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Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments Schedule [Abstract]

Investment Portfolio by Major Security Type

The following tables present the composition of our investment portfolio by major security type, consistent with our internal classification of how we manage, monitor, and measure the portfolio:

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1			Fair Value		% of Total Fair Value
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,641.1	$	27.3	$	(1.3	)	$	0		$	2,667.1	14.0	%
State and local government obligations	2,095.7		44.6		(1.1		)	0			2,139.2		11.2
Foreign government obligations	14.2		0		0			0			14.2		0.1
Corporate debt securities	2,813.9		32.9		(10.4		)	0.3			2,836.7		14.9
Residential mortgage-backed securities	1,635.5		34.5		(10.8		)	(0.7		)	1,658.5		8.7
Commercial mortgage-backed securities	2,278.7		39.3		(2.6		)	0.2			2,315.6		12.2
Other asset-backed securities	1,634.9		3.8		(0.8		)	0.8			1,638.7		8.6
Redeemable preferred stocks	260.2		24.7		(5.7		)	0			279.2		1.5
Total fixed maturities	13,374.2		207.1		(32.7		)	0.6			13,549.2		71.2
Equity securities:
Nonredeemable preferred stocks	590.4		201.1		(6.4		)	42.4			827.5		4.4
Common equities	1,289.2		1,213.2		(10.1		)	0			2,492.3		13.1
Short-term investments	2,149.0		0		0			0			2,149.0		11.3
Total portfolio2,3	$	17,402.8	$	1,621.4	$	(49.2	)	$	43.0		$	19,018.0	100.0	%

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1		Fair Value		% of Total Fair Value
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,630.4	$	48.4	$	(16.6	)	$	0	$	3,662.2	20.3	%
State and local government obligations	2,247.3		27.1		(18.4		)	0		2,256.0		12.5
Foreign government obligations	15.6		0		0			0		15.6		0.1
Corporate debt securities	2,885.0		60.4		(20.4		)	1.6		2,926.6		16.2
Residential mortgage-backed securities	1,110.1		31.9		(14.1		)	0		1,127.9		6.2
Commercial mortgage-backed securities	2,154.4		43.9		(37.8		)	0		2,160.5		12.0
Other asset-backed securities	1,073.0		6.6		(2.1		)	0.2		1,077.7		6.0
Redeemable preferred stocks	299.5		24.1		(9.7		)	0		313.9		1.7
Total fixed maturities	13,415.3		242.4		(119.1		)	1.8		13,540.4		75.0
Equity securities:
Nonredeemable preferred stocks	445.7		258.7		(4.5		)	11.3		711.2		3.9
Common equities	1,451.1		1,081.8		(2.4		)	0		2,530.5		14.0
Short-term investments	1,272.6		0		0			0		1,272.6		7.1
Total portfolio2,3	$	16,584.7	$	1,582.9	$	(126.0	)	$	13.1	$	18,054.7	100.0	%

¹ Represents net holding period gains (losses) on certain hybrid securities (discussed below).

² Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

³ The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

Hybrid Securities

Included in our fixed-maturity and equity securities are hybrid securities, which are reported at fair value at December 31:

(millions)	2014		2013
Fixed maturities:
Corporate debt securities	$	139.8	$	164.2
Residential mortgage-backed securities	120.7		0
Commercial mortgage-backed securities	31.2		0
Other asset-backed securities	13.7		14.8
Total fixed maturities	305.4		179.0
Equity securities:
Nonredeemable preferred stocks	122.3		60.3
Total hybrid securities	$	427.7	$	239.3

Composition of Fixed Maturities by Maturity

The composition of fixed maturities by maturity at December 31, 2014, was:

(millions)	Cost		Fair Value
Less than one year	$	3,180.1	$	3,217.4
One to five years	7,026.3		7,097.2
Five to ten years	3,093.0		3,152.9
Ten years or greater	59.0		65.9
Total1	$	13,358.4	$	13,533.4

¹ Excludes $15.8 million related to our open interest rate swap positions.

Gross Unrealized Losses by Major Security

The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:

	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, 2014
Fixed maturities:
U.S. government obligations	11	$	428.2	$	(1.3	)	5	$	150.7	$	(0.3	)	6	$	277.5	$	(1.0	)
State and local government obligations	46	234.2		(1.1		)	28	177.9		(0.4		)	18	56.3		(0.7		)
Corporate debt securities	53	843.2		(10.4		)	43	647.5		(6.1		)	10	195.7		(4.3		)
Residential mortgage-backed securities	70	844.2		(10.8		)	33	465.2		(3.1		)	37	379.0		(7.7		)
Commercial mortgage-backed securities	63	723.4		(2.6		)	54	667.5		(1.4		)	9	55.9		(1.2		)
Other asset-backed securities	44	741.8		(0.8		)	42	715.7		(0.7		)	2	26.1		(0.1		)
Redeemable preferred stocks	3	103.0		(5.7		)	1	33.0		(1.0		)	2	70.0		(4.7		)
Total fixed maturities	290	3,918.0		(32.7		)	206	2,857.5		(13.0		)	84	1,060.5		(19.7		)
Equity securities:
Nonredeemable preferred stocks	8	231.4		(6.4		)	5	143.2		(3.6		)	3	88.2		(2.8		)
Common equities	20	68.4		(10.1		)	19	61.8		(9.6		)	1	6.6		(0.5		)
Total equity securities	28	299.8		(16.5		)	24	205.0		(13.2		)	4	94.8		(3.3		)
Total portfolio	318	$	4,217.8	$	(49.2	)	230	$	3,062.5	$	(26.2	)	88	$	1,155.3	$	(23.0	)

	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, 2013
Fixed maturities:
U.S. government obligations	29	$	1,444.3	$	(16.6	)	28	$	1,434.6	$	(16.3	)	1	$	9.7	$	(0.3	)
State and local government obligations	141	844.2		(18.4		)	119	759.3		(17.1		)	22	84.9		(1.3		)
Corporate debt securities	51	997.6		(20.4		)	45	831.1		(17.8		)	6	166.5		(2.6		)
Residential mortgage-backed securities	66	763.5		(14.1		)	45	597.6		(7.9		)	21	165.9		(6.2		)
Commercial mortgage-backed securities	76	1,061.9		(37.8		)	60	809.2		(19.7		)	16	252.7		(18.1		)
Other asset-backed securities	25	287.2		(2.1		)	22	233.3		(1.8		)	3	53.9		(0.3		)
Redeemable preferred stocks	4	122.7		(9.7		)	0	0		0			4	122.7		(9.7		)
Total fixed maturities	392	5,521.4		(119.1		)	319	4,665.1		(80.6		)	73	856.3		(38.5		)
Equity securities:
Nonredeemable preferred stocks	7	142.3		(4.5		)	7	142.3		(4.5		)	0	0		0
Common equities	24	59.7		(2.4		)	20	58.5		(2.4		)	4	1.2		0
Total equity securities	31	202.0		(6.9		)	27	200.8		(6.9		)	4	1.2		0
Total portfolio	423	$	5,723.4	$	(126.0	)	346	$	4,865.9	$	(87.5	)	77	$	857.5	$	(38.5	)

Total Non-Credit Portion of Other-Than-Temporary Impairment Recorded in Accumulated Other Comprehensive Income, Reflecting Orginal Non-Credit Loss at the Time Credit Impairment

The following table shows the total non-credit portion of the OTTI recorded in accumulated other comprehensive income, reflecting the original non-credit loss at the time the credit impairment was determined:

	December 31,
(millions)	2014			2013
Fixed maturities:
Residential mortgage-backed securities	$	(44.1	)	$	(44.1	)
Commercial mortgage-backed securities	(0.6		)	(0.9		)
Total fixed maturities	$	(44.7	)	$	(45.0	)

OTTI Credit Losses Recognized in Earnings

The following tables provide rollforwards of the amounts related to credit losses recognized in earnings for the periods ended December 31, 2014, 2013, and 2012, for which a portion of the OTTI losses were also recognized in accumulated other comprehensive income at the time the credit impairments were determined and recognized:

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed		Total
Balance at December 31, 2013	$	19.2		$	0.4	$	19.6
Credit losses for which an OTTI was previously recognized	0			0		0
Credit losses for which an OTTI was not previously recognized	0			0		0
Reductions for securities sold/matured	(0.1		)	0		(0.1		)
Change in recoveries of future cash flows expected to be collected1,2	(6.4		)	0		(6.4		)
Reductions for previously recognized credit impairments written-down to fair value3	0			0		0
Balance at December 31, 2014	$	12.7		$	0.4	$	13.1

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0			0			0
Reductions for securities sold/matured	0			0			0
Change in recoveries of future cash flows expected to be collected1,2	(7.8		)	(0.2		)	(8.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(0.2		)	0			(0.2		)
Balance at December 31, 2013	$	19.2		$	0.4		$	19.6

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2011	$	34.5		$	1.3		$	35.8
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0.3			0			0.3
Reductions for securities sold/matured	0			(0.2		)	(0.2		)
Change in recoveries of future cash flows expected to be collected1,2	(3.8		)	(0.2		)	(4.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(4.0		)	(0.3		)	(4.3		)
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7

¹ Reflects expected recovery of prior period impairments that will be accreted into income over the remaining life of the security.

² Includes $4.3 million, $2.6 million, and $1.4 million at December 31, 2014, 2013, and 2012, respectively, recognized in income in excess of the cash flows expected to be collected at the time of the write-downs.

³ Reflects reductions of prior credit impairments where the current credit impairment requires writing securities down to fair value (i.e., no remaining non-credit loss).

Components of Net Realized Gains (Losses)

The components of net realized gains (losses) for the years ended December 31, were:

(millions)	2014			2013			2012
Gross realized gains on security sales
Fixed maturities:
U.S. government obligations	$	24.0		$	8.5		$	20.2
State and local government obligations	9.3			7.7			15.0
Corporate and other debt securities	37.2			47.7			58.1
Residential mortgage-backed securities	2.7			3.0			1.2
Commercial mortgage-backed securities	17.0			10.0			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	2.7			0			0.7
Total fixed maturities	92.9			76.9			115.4
Equity securities:
Nonredeemable preferred stocks	90.0			126.3			78.2
Common equities	107.3			68.6			167.0
Subtotal gross realized gains on security sales	290.2			271.8			360.6
Gross realized losses on security sales
Fixed maturities:
U.S. government obligations	(7.6		)	(3.7		)	(1.9		)
State and local government obligations	(0.5		)	0			0
Corporate and other debt securities	(2.8		)	(6.2		)	(0.6		)
Residential mortgage-backed securities	(0.2		)	0			0
Commercial mortgage-backed securities	(8.3		)	(1.8		)	0
Redeemable preferred stocks	(3.2		)	(0.1		)	(0.4		)
Total fixed maturities	(22.6		)	(11.8		)	(2.9		)
Equity securities:
Nonredeemable preferred stocks	0			(0.1		)	(1.1		)
Common equities	(7.3		)	(0.6		)	(27.1		)
Subtotal gross realized losses on security sales	(29.9		)	(12.5		)	(31.1		)
Net realized gains (losses) on security sales
Fixed maturities:
U.S. government obligations	16.4			4.8			18.3
State and local government obligations	8.8			7.7			15.0
Corporate and other debt securities	34.4			41.5			57.5
Residential mortgage-backed securities	2.5			3.0			1.2
Commercial mortgage-backed securities	8.7			8.2			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	(0.5		)	(0.1		)	0.3
Total fixed maturities	70.3			65.1			112.5
Equity securities:
Nonredeemable preferred stocks	90.0			126.2			77.1
Common equities	100.0			68.0			139.9
Subtotal net realized gains (losses) on security sales	260.3			259.3			329.5
Other-than-temporary impairment losses
Fixed maturities:
Residential mortgage-backed securities	0			(0.6		)	(1.6		)
Commercial mortgage-backed securities	0			0			(0.1		)
Total fixed maturities	0			(0.6		)	(1.7		)
Equity securities:
Common equities	(7.2		)	(5.5		)	(1.8		)
Subtotal other-than-temporary impairment losses	(7.2		)	(6.1		)	(3.5		)
Other gains (losses)
Hybrid securities	30.5			6.4			14.3
Derivative instruments	(64.1		)	56.6			(43.1		)
Litigation settlements	4.7			2.2			9.6
Subtotal other gains (losses)	(28.9		)	65.2			(19.2		)
Total net realized gains (losses) on securities	$	224.2		$	318.4		$	306.8

Components of Net Investment Income

The components of net investment income for the years ended December 31, were:

(millions)	2014			2013			2012
Fixed maturities:
U.S. government obligations	$	46.2		$	50.2		$	49.8
State and local government obligations	50.1			48.0			51.1
Foreign government obligations	0.4			0.2			0
Corporate debt securities	82.1			98.8			107.5
Residential mortgage-backed securities	44.9			28.1			16.1
Commercial mortgage-backed securities	66.0			74.8			82.2
Other asset-backed securities	16.7			16.7			20.3
Redeemable preferred stocks	15.5			21.2			24.2
Total fixed maturities	321.9			338.0			351.2
Equity securities:
Nonredeemable preferred stocks	38.6			36.2			43.8
Common equities	46.6			45.8			44.9
Short-term investments	1.3			2.0			3.1
Investment income	408.4			422.0			443.0
Investment expenses	(18.9		)	(18.8		)	(15.4		)
Net investment income	$	389.5		$	403.2		$	427.6

Derivative Instruments

The following table shows the status of our derivative instruments at December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013, and 2012:

(millions)								Balance Sheet2					Comprehensive Income Statement
	Notional Value1								Assets (Liabilities) Fair Value				Pretax Net Realized Gains (Losses)
													Years ended
	December 31,								December 31,				December 31,
Derivatives designated as:	2014		2013		2012		Purpose	Classification	2014		2013		2014			2013			2012
Hedging instruments
Closed:
Ineffective cash flow hedge	$	44	$	54	$	31	Manage interest rate risk	NA	$	0	$	0	$	0.5		$	0.8		$	0.6
Non-hedging instruments
Assets:
Interest rate swaps	750		750		0		Manage portfolio duration	Investments - fixed maturities	15.8		68.1		(64.6		)	59.8			0
Liabilities:
Interest rate swaps	0		0		1,263		Manage portfolio duration	Other liabilities	0		0		0			0			(42.7		)
Closed:
Interest rate swaps	0		1,263		0		Manage portfolio duration	NA	0		0		0			(4.0		)	0
Corporate credit default swaps	0		0		25		Manage credit risk	NA	0		0		0			0			(1.0		)
Total	NA		NA		NA				$	15.8	$	68.1	$	(64.1	)	$	56.6		$	(43.1	)

NA = Not Applicable

¹ The amounts represent the value held at year end for open positions and the maximum amount held during the year for closed positions.

² To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we expect that we will report them on a gross basis on our balance sheets, consistent with our historical presentation.

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Composition of Investment Portfolio by Major Security Type

The composition of the investment portfolio by major security type was:

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,667.1	$	0	$	0	$	2,667.1	$	2,641.1
State and local government obligations	0		2,139.2		0		2,139.2		2,095.7
Foreign government obligations	14.2		0		0		14.2		14.2
Corporate debt securities	0		2,836.7		0		2,836.7		2,813.9
Subtotal	2,681.3		4,975.9		0		7,657.2		7,564.9
Asset-backed securities:
Residential mortgage-backed	0		1,658.5		0		1,658.5		1,635.5
Commercial mortgage-backed	0		2,304.0		11.6		2,315.6		2,278.7
Other asset-backed	0		1,638.7		0		1,638.7		1,634.9
Subtotal asset-backed securities	0		5,601.2		11.6		5,612.8		5,549.1
Redeemable preferred stocks:
Financials	0		97.9		0		97.9		77.3
Utilities	0		65.3		0		65.3		65.0
Industrials	0		116.0		0		116.0		117.9
Subtotal redeemable preferred stocks	0		279.2		0		279.2		260.2
Total fixed maturities	2,681.3		10,856.3		11.6		13,549.2		13,374.2
Equity securities:
Nonredeemable preferred stocks:
Financials	204.1		554.1		69.3		827.5		590.4
Utilities	0		0		0		0		0
Subtotal nonredeemable preferred stocks	204.1		554.1		69.3		827.5		590.4
Common equities:
Common stocks	2,491.9		0		0		2,491.9		1,288.8
Other risk investments	0		0		0.4		0.4		0.4
Subtotal common equities	2,491.9		0		0.4		2,492.3		1,289.2
Total fixed maturities and equity securities	5,377.3		11,410.4		81.3		16,869.0		15,253.8
Short-term investments	1,937.0		212.0		0		2,149.0		2,149.0
Total portfolio	$	7,314.3	$	11,622.4	$	81.3	$	19,018.0	$	17,402.8
Debt	$	0	$	2,527.5	$	0	$	2,527.5	$	2,164.7

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,662.2	$	0	$	0	$	3,662.2	$	3,630.4
State and local government obligations	0		2,256.0		0		2,256.0		2,247.3
Foreign government obligations	15.6		0		0		15.6		15.6
Corporate debt securities	0		2,926.6		0		2,926.6		2,885.0
Subtotal	3,677.8		5,182.6		0		8,860.4		8,778.3
Asset-backed securities:
Residential mortgage-backed	0		1,127.7		0.2		1,127.9		1,110.1
Commercial mortgage-backed	0		2,131.5		29.0		2,160.5		2,154.4
Other asset-backed	0		1,077.7		0		1,077.7		1,073.0
Subtotal asset-backed securities	0		4,336.9		29.2		4,366.1		4,337.5
Redeemable preferred stocks:
Financials	0		102.8		0		102.8		84.2
Utilities	0		65.6		0		65.6		64.9
Industrials	0		145.5		0		145.5		150.4
Subtotal redeemable preferred stocks	0		313.9		0		313.9		299.5
Total fixed maturities	3,677.8		9,833.4		29.2		13,540.4		13,415.3
Equity securities:
Nonredeemable preferred stocks:
Financials	240.8		414.6		39.0		694.4		431.5
Utilities	0		16.8		0		16.8		14.2
Subtotal nonredeemable preferred stocks	240.8		431.4		39.0		711.2		445.7
Common equities:
Common stocks	2,530.0		0		0		2,530.0		1,450.6
Other risk investments	0		0		0.5		0.5		0.5
Subtotal common equities	2,530.0		0		0.5		2,530.5		1,451.1
Total fixed maturities and equity securities	6,448.6		10,264.8		68.7		16,782.1		15,312.1
Short-term investments	987.8		284.8		0		1,272.6		1,272.6
Total portfolio	$	7,436.4	$	10,549.6	$	68.7	$	18,054.7	$	16,584.7
Debt	$	0	$	2,073.7	$	0	$	2,073.7	$	1,860.9

Summary of Changes in Fair Value Associated With Level 3 Assets

The following tables provide a summary of changes in fair value associated with Level 3 assets for the years ended December 31, 2014 and 2013:

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2013		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales		Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2014
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	$	0		$	0	$	(0.1	)	$	0.1	$	(0.2	)	$	0		$	0
Commercial mortgage-backed	29.0		(3.6		)	0		0			0		(0.2		)	(13.6		)	11.6
Total fixed maturities	29.2		(3.6		)	0		(0.1		)	0.1		(0.4		)	(13.6		)	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials2	39.0		0			0		0			0		30.3			0			69.3
Common equities:
Other risk investments	0.5		(0.1		)	0		0			0		0			0			0.4
Total Level 3 securities	$	68.7	$	(3.7	)	$	0	$	(0.1	)	$	0.1	$	29.9		$	(13.6	)	$	81.3

¹ The $13.6 million was transferred out of Level 3 and into Level 2 due to an improvement in the security's underlying collateral and an increase in liquidity and market activity in comparable securities.

² The $30.3 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2012		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales			Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2013
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	45.5	$	(28.6	)	$	125.1	$	0		$	0		$	(0.4	)	$	(141.4	)	$	0.2
Commercial mortgage-backed	25.3		(3.4		)	0		0			0			7.1			0			29.0
Total fixed maturities	70.8		(32.0		)	125.1		0			0			6.7			(141.4		)	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials2	31.9		0			0		0			0			7.1			0			39.0
Common equities:
Other risk investments	12.0		(0.5		)	0.3		(2.4		)	(36.0		)	27.1			0			0.5
Total Level 3 securities	$	114.7	$	(32.5	)	$	125.4	$	(2.4	)	$	(36.0	)	$	40.9		$	(141.4	)	$	68.7

¹ The $141.4 million was transferred out of Level 3 and into Level 2 due to an increase in liquidity and trading volume in the market.

² The $7.1 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

Summary of Quantitative Information about Level 3 Fair Value Measurements

The following table provides a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at December 31:

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2014		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0	NA	NA	NA
Commercial mortgage-backed	11.6		External vendor	Prepayment rate1	0
Total fixed maturities	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials	69.3		Multiple of tangible net book value	Price to book ratio multiple	2.6
Subtotal Level 3 securities	80.9
Third-party pricing exemption securities2	0.4
Total Level 3 securities	$	81.3

NA= Not Applicable since we did not hold any residential mortgage-backed Level 3 securities at December 31, 2014.

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2013		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	External vendor	Prepayment rate1	0
Commercial mortgage-backed	29.0		External vendor	Prepayment rate2	0
Total fixed maturities	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials	39.0		Multiple of tangible net book value	Price to book ratio multiple	1.9
Subtotal Level 3 securities	68.2
Third-party pricing exemption securities3	0.5
Total Level 3 securities	$	68.7

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² Assumes that two securities have 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

³ The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

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SCHEDULE I - Summary Of Investments - Other Than Investments in Related Parties

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SCHEDULE I - Summary Of Investments - Other Than Investments In Related Parties

SCHEDULE I — SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

	December 31, 2014
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	$	2,641.1	$	2,667.1	$	2,667.1
States, municipalities, and political subdivisions	2,095.7		2,139.2		2,139.2
Foreign government obligations	14.2		14.2		14.2
Public utilities	63.1		66.6		66.6
Corporate and other debt securities	2,750.8		2,770.1		2,770.1
Asset-backed securities	5,549.1		5,612.8		5,612.8
Redeemable preferred stocks	260.2		279.2		279.2
Total fixed maturities	13,374.2		13,549.2		13,549.2
Equity securities:
Common stocks:
Public utilities	95.0		143.3		143.3
Banks, trusts, and insurance companies	220.1		438.4		438.4
Industrial, miscellaneous, and all other	974.1		1,910.6		1,910.6
Nonredeemable preferred stocks	590.4		827.5		827.5
Total equity securities	1,879.6		3,319.8		3,319.8
Short-term investments1	2,149.0		2,149.0		2,149.0
Total investments	$	17,402.8	$	19,018.0	$	19,018.0

¹ Includes $5.7 million in treasury bills issued by the Australian government.

Progressive did not have any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at December 31, 2014.

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Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Table

Debt at December 31 consisted of:

	2014				2013
(millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Senior Notes due 2021 (issued: $500.0, August 2011)	$	497.8	$	535.6	$	497.6	$	509.1
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)	295.5		400.6		295.3		359.6
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)	394.8		527.9		394.6		473.7
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)	346.3		378.9		0		0
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (issued: $1,000.0, June 2007; outstanding: $632.8 and $677.1)	630.3		684.5		673.4		731.3
Total	$	2,164.7	$	2,527.5	$	1,860.9	$	2,073.7

Aggregate Principal Payments on Debt Outstanding

Aggregate required principal payments on debt outstanding are as follows:

(millions)
Year	Payments
2015	$	0
2016	0
2017	0
2018	0
2019	0
Thereafter	2,182.8
Total	$	2,182.8

Cash Flow Hedging

Unrealized Gain (Loss) on Interest Rate Cash Flow Hedges Included in Accumulated Other Comprehensive Income

The original unrealized gain (loss) at the time of each debt issuance and the unamortized balance at December 31, 2014, on a pretax basis, of these hedges, were as follows:

(millions)	Unrealized Gain (Loss) at Debt Issuance			Unamortized Balance at December 31, 2014
3.75% Senior Notes	$	(5.1	)	$	(3.6	)
6 5/8% Senior Notes	(4.2		)	(3.2		)
6.25% Senior Notes	5.1			4.0
4.35% Senior Notes	(1.6		)	(1.6		)
6.70% Debentures	34.4			6.6

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Taxes [Line Items]
Net taxes payable	$ 49.4
Net taxes recoverable		17.1
Provision (benefit) for income taxes	626.4	554.6	415.4
Interest Expense or Benefit
Income Taxes [Line Items]
Provision (benefit) for income taxes	$ 0	$ (0.2)	$ 0

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Dividends (Tables)

12 Months Ended

Dec. 31, 2014

Dividends [Abstract]

Dividends

Following is a summary of our shareholder dividends, both variable and special, that were paid in the last three years:

(millions, except per share amounts)			Amount
Dividend Type	Declared	Paid	Per Share		Total1
Annual – Variable	December 2014	February 2015	$	0.6862	$	404.1
Annual – Variable	December 2013	February 2014	0.4929		293.9
Special	December 2013	February 2014	1.0000		596.3
Annual – Variable	December 2012	February 2013	0.2845		172.0
Special	October 2012	November 2012	1.0000		604.7

¹ Based on shares outstanding as of the record date.

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Reporting And Accounting Policies Interest Capitalized (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure Interest Capitalized [Abstract]
Capitalized Interest	$ 1.3	$ 0.8	$ 0.3

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Fair Value Summary of Changes in Fair Value Associated With Level 3 Assets (Parenthetical) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net realized gains (losses) on securities	$ 232,100,000	$ 324,500,000	$ 314,800,000
Equity securities | Nonredeemable preferred stocks | Hybrid Securities | Financials
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net realized gains (losses) on securities	30,300,000	7,100,000
Asset-backed Securities | Fixed maturities | Residential mortgage-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Transferred out of Level 3 into Level 2		(141,400,000)
Asset-backed Securities | Fixed maturities | Commercial mortgage-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Transferred out of Level 3 into Level 2	$ (13,600,000)

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Consolidated Statements of Comprehensive Income (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues
Net premiums earned	$ 18,398.5	$ 17,103.4	$ 16,018.0
Investment income	408.4	422.0	443.0
Other-than-temporary impairment (OTTI) losses:
Total OTTI losses	(7.9)	(6.0)	(7.3)
Non-credit losses, net of credit losses recognized on previously recorded non-credit OTTI losses	0	(0.1)	(0.7)
Net impairment losses recognized in earnings	(7.9)	(6.1)	(8.0)
Net realized gains (losses) on securities	232.1	324.5	314.8
Total net realized gains (losses) on securities	224.2	318.4	306.8
Fees and other revenues	309.1	291.8	281.8
Service revenues	56.0	39.6	36.1
Gains (losses) on extinguishment of debt	(4.8)	(4.3)	(1.8)
Total revenues	19,391.4	18,170.9	17,083.9
Expenses
Losses and loss adjustment expenses	13,306.2	12,472.4	11,948.0
Policy acquisition costs	1,524.0	1,451.8	1,436.6
Other underwriting expenses	2,467.1	2,350.9	2,206.3
Investment expenses	18.9	18.8	15.4
Service expenses	50.9	38.8	36.1
Interest expense	116.9	118.2	123.8
Total expenses	17,484.0	16,450.9	15,766.2
Net Income
Income before income taxes	1,907.4	1,720.0	1,317.7
Provision for income taxes	626.4	554.6	415.4
Net income	1,281.0	1,165.4	902.3
Net unrealized gains (losses) on securities:
Net non-credit related OTTI losses, adjusted for valuation changes	0	0.3	5.1
Other net unrealized gains (losses) on securities	74.9	84.0	174.8
Total net unrealized gains (losses) on securities	74.9	84.3	179.9
Net unrealized gains on forecasted transactions	(2.6)	(2.0)	(1.8)
Foreign currency translation adjustment	(0.9)	(1.6)	0.4
Other comprehensive income (loss)	71.4	80.7	178.5
Comprehensive income	$ 1,352.4	$ 1,246.1	$ 1,080.8
Computation of Net Income Per Share
Average shares outstanding - Basic (shares)	590.6	599.1	603.3
Net effect of dilutive stock-based compensation (shares)	4.2	4.5	4.5
Total equivalent shares - Diluted (shares)	594.8	603.6	607.8
Basic: Net income per share (USD per share)	$ 2.17	$ 1.95	$ 1.50
Diluted: Net income per share (USD per share)	$ 2.15	$ 1.93	$ 1.48

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SCHEDULE II - Condensed Financial Information Of Registrant Condensed Balance Sheets (Parent Company) (Parenthetical) (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Condensed Financial Statements, Captions [Line Items]
Common Shares, par value (USD per share)	$ 1.00	$ 1.00
Common Shares, authorized (shares)	900.0	900.0
Common Shares, issued (shares)	797.6	797.6
Common Shares, treasury shares (shares)	209.8	201.8
Parent Company
Condensed Financial Statements, Captions [Line Items]
Common Shares, par value (USD per share)	$ 1.00	$ 1.00
Common Shares, authorized (shares)	900.0	900.0
Common Shares, issued (shares)	797.6	797.6
Common Shares, treasury shares (shares)	209.8	201.8

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Employee Benefit Plans - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended			1 Months Ended	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 28, 2009	Dec. 31, 2011	Dec. 31, 2010
Employee Benefits Disclosure [Line Items]
Employee Stock Ownership Plan Shares held	26,200,000
Postemployment benefits liability	$ 22.5	$ 24.0
Maximum Contractual Term Permformance-Based Awards Granted Prior to 2009	10 years
Maximum Contractual Term Performance Based Awards Granted In or After 2009	5 years
Employee Restricted Equity Awards
Employee Benefits Disclosure [Line Items]
Aggregate fair value of the restricted equity awards that vested during the period	100.9	91.8	57.7
Dividend equivalent units vested	340,949	272,617
Deferred liability awards vested			246,200
Non Employee Director Restricted Equity Awards
Employee Benefits Disclosure [Line Items]
Vesting period of grants to date	11 months
Requisite service period, minimum	6 months 1 day
Total pretax intrinsic value of options exercised and restricted stock vested	2.2	2.3	2.5
Non Employee Director Stock Option
Employee Benefits Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			36,237
Executive Deferred Compensation Plan
Employee Benefits Disclosure [Line Items]
Common shares reserved for issuance under executive deferred compensation plan	11,100,000
2010 Equity Incentive Plan | Employee Restricted Equity Awards
Employee Benefits Disclosure [Line Items]
Shares authorized	18,000,000
2003 Directors Equity Incentive Plan | Non Employee Director Restricted Equity Awards
Employee Benefits Disclosure [Line Items]
Shares authorized	1,400,000
Performance Based Restricted Equity Awards
Employee Benefits Disclosure [Line Items]
Number of employees, approximately	45	45	45
Performance-based awards vesting range				either vest or be forfeited in full (i.e., no partial vesting)
Performance Based Restricted Equity Awards | Insurance Operating Results | Lower Limit
Employee Benefits Disclosure [Line Items]
Performance-based awards granted vesting percentage of the award amount	0.00%	0.00%	0.00%		0.00%	0.00%
Performance Based Restricted Equity Awards | Insurance Operating Results | Upper Limit
Employee Benefits Disclosure [Line Items]
Performance-based awards granted vesting percentage of the award amount	250.00%	250.00%	200.00%		200.00%	200.00%
Performance Based Restricted Equity Awards | Investment Results | Lower Limit
Employee Benefits Disclosure [Line Items]
Performance-based awards granted vesting percentage of the award amount	0.00%	0.00%	0.00%		0.00%	0.00%
Performance Based Restricted Equity Awards | Investment Results | Upper Limit
Employee Benefits Disclosure [Line Items]
Performance-based awards granted vesting percentage of the award amount	200.00%	200.00%	200.00%		200.00%	200.00%
Other Postretirement Benefit Plans, Defined Benefit
Employee Benefits Disclosure [Line Items]
Number of employees, approximately	115
Defined Contribution Pension Plan 401k
Employee Benefits Disclosure [Line Items]
Matching contributions	$ 74.8	$ 69.9	$ 66.5
Defined Contribution Pension Plan 401k | Upper Limit
Employee Benefits Disclosure [Line Items]
Matching contribution to defined contribution pension plan	6.00%

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Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Number of shares acquired in a privately negotiated transaction		4,000,000
Treasury Stock Acquired Cost per Share Privately Negotiated Transaction		$ 25.50
Retained Earnings
Cash dividends declared on common shares, per share	$ 0.6862	$ 1.4929	$ 1.2845
Serial Preferred Stock
Preference Shares authorized	20,000,000
Preference Shares issued	0
Preferred Shares outstanding	0
Voting Preferred Stock
Preference Shares authorized	5,000,000
Preference Shares issued	0

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Employee Benefit Plans Assets Held in Deferral Plan Irrevocable Grantor Trust Account (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assets held in Deferral Plan Irrevocable Grantor Trust account	$ 207.1		$ 170.2
Progressive common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assets held in Deferral Plan Irrevocable Grantor Trust account	83.2	[1]	57.1	[1]
Other Investment Funds
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Assets held in Deferral Plan Irrevocable Grantor Trust account	$ 123.9	[2]	$ 113.1	[2]

[1] Includes 3.6 million and 2.5 million common shares as of December 31, 2014 and 2013, respectively, to be distributed in common shares.

[2] Amount is included in other assets on the balance sheet.

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Investments Hybrid Securities (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Hybrid Securities [Line Items]
Hybrid securities	$ 427.7	$ 239.3
Fixed maturities
Hybrid Securities [Line Items]
Hybrid securities	305.4	179.0
Fixed maturities | Corporate debt securities
Hybrid Securities [Line Items]
Hybrid securities	139.8	164.2
Fixed maturities | Residential mortgage-backed securities
Hybrid Securities [Line Items]
Hybrid securities	120.7	0
Fixed maturities | Commercial mortgage-backed securities
Hybrid Securities [Line Items]
Hybrid securities	31.2	0
Fixed maturities | Other asset-backed securities
Hybrid Securities [Line Items]
Hybrid securities	13.7	14.8
Equity securities | Nonredeemable preferred stocks
Hybrid Securities [Line Items]
Hybrid securities	$ 122.3	$ 60.3

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Segment Information Underwriting Margins and Combined Ratios for our Underwriting Operations (Details) (Underwriting Operations)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Underwriting Margin	7.70%	6.50%	4.40%
Combined Ratio	92.30%	93.50%	95.60%
Personal Lines
Segment Reporting Information [Line Items]
Underwriting Margin	6.70%	6.60%	4.40%
Combined Ratio	93.30%	93.40%	95.60%
Personal Lines | Agency Channel
Segment Reporting Information [Line Items]
Underwriting Margin	7.50%	6.30%	4.20%
Combined Ratio	92.50%	93.70%	95.80%
Personal Lines | Direct Channel
Segment Reporting Information [Line Items]
Underwriting Margin	5.70%	7.00%	4.60%
Combined Ratio	94.30%	93.00%	95.40%
Commercial Lines
Segment Reporting Information [Line Items]
Underwriting Margin	17.20%	6.50%	5.20%
Combined Ratio	82.80%	93.50%	94.80%

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Reinsurance (Tables)

12 Months Ended

Dec. 31, 2014

Reinsurance Disclosures [Abstract]

Effect of Reinsurance on Premiums Written and Earned

The effect of reinsurance on premiums written and earned for the years ended December 31, was as follows:

	2014						2013						2012
(millions)	Written			Earned			Written			Earned			Written			Earned
Direct premiums	$	18,914.8		$	18,648.4		$	17,562.8		$	17,317.9		$	16,558.8		$	16,207.6
Ceded	(260.2		)	(249.9		)	(223.1		)	(214.5		)	(186.1		)	(189.6		)
Net premiums	$	18,654.6		$	18,398.5		$	17,339.7		$	17,103.4		$	16,372.7		$	16,018.0

Prepaid Reinsurance Premiums and Reinsurance Recoverables

Our prepaid reinsurance premiums and reinsurance recoverables were comprised of the following at December 31:

	Prepaid Reinsurance Premiums								Reinsurance Recoverables
($ in millions)	2014				2013				2014				2013
MCCA	$	32.8	38	%	$	29.5	40	%	$	1,018.8	83	%	$	875.9	80	%
CAIP	26.5		31		21.1		28		110.1		9		79.3		7
NCRF	21.9		26		20.5		27		51.1		4		50.1		5
State Plans	81.2		95		71.1		95		1,180.0		96		1,005.3		92
Non-State Plans	4.1		5		3.8		5		51.9		4		84.9		8
Total	$	85.3	100	%	$	74.9	100	%	$	1,231.9	100	%	$	1,090.2	100	%

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Investments OTTI Credit Losses Recognized in Earnings (Parenthetical) (Detail) (Actual Cash Flow Recovery, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Actual Cash Flow Recovery
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Change in recoveries of future cash flows expected to be collected	$ 4.3	$ 2.6	$ 1.4

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Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We write personal auto and other specialty property-casualty insurance and provide related services throughout the United States. Our Personal Lines segment writes insurance for personal autos and recreational vehicles. The Personal Lines segment is comprised of both the Agency and Direct businesses. The Agency business includes business written by our network of more than 35,000 independent insurance agencies, including brokerages in New York and California, and strategic alliance business relationships (other insurance companies, financial institutions, and national agencies). The Direct business includes business written directly by us online, by phone, or on mobile devices. We also sell personal auto physical damage and property damage liability insurance via the Internet in Australia. For the years ended December 31, 2014, 2013, and 2012, net premiums earned on our Australian business were $17.1 million, $13.0 million, and $7.1 million, respectively.

Our Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses in the business auto, for-hire transportation, contractor, for-hire specialty, tow, and for-hire livery markets. This segment is distributed through both the independent agency and direct channels.

Our other indemnity businesses manage our run-off businesses, including the run-off of our professional liability insurance for community banks, which was sold in 2010.

Our service businesses provide insurance-related services, including processing CAIP business and serving as an agent for homeowners, general liability, and workers’ compensation insurance through our programs with unaffiliated insurance companies.

All segment revenues are generated from external customers and we do not have a reliance on any major customer.

We evaluate profitability based on pretax underwriting profit (loss) for the Personal Lines and Commercial Lines segments and for the other indemnity businesses. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and other revenues, less: (i) losses and loss adjustment expenses; (ii) policy acquisition costs; and (iii) other underwriting expenses. Service business pretax profit (loss) is the difference between service business revenues and service business expenses.

Expense allocations are based on certain assumptions and estimates primarily related to revenue and volume; stated segment operating results would change if different methods were applied. We do not allocate assets or income taxes to operating segments. In addition, we do not separately identify depreciation and amortization expense by segment, and such allocation would be impractical. Companywide depreciation expense was $97.1 million in 2014, $101.3 million in 2013, and $94.4 million in 2012. The accounting policies of the operating segments are the same as those described in Note 1 - Reporting and Accounting Policies.

Following are the operating results for the years ended December 31:

	2014						2013						2012
(millions)	Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)			Revenues			Pretax Profit (Loss)
Personal Lines
Agency	$	9,087.0		$	683.0		$	8,601.5		$	542.9		$	8,103.9		$	338.9
Direct	7,474.0			423.4			6,740.1			473.9			6,264.2			289.5
Total Personal Lines1	16,561.0			1,106.4			15,341.6			1,016.8			14,368.1			628.4
Commercial Lines	1,837.5			315.8			1,761.6			114.1			1,649.0			86.3
Other indemnity	0			(11.9		)	0.2			(10.8		)	0.9			(5.8		)
Total underwriting operations	18,398.5			1,410.3			17,103.4			1,120.1			16,018.0			708.9
Fees and other revenues2	309.1			NA			291.8			NA			281.8			NA
Service businesses	56.0			5.1			39.6			0.8			36.1			0
Investments3	632.6			613.7			740.4			721.6			749.8			734.4
Gains (losses) on extinguishment of debt	(4.8		)	(4.8		)	(4.3		)	(4.3		)	(1.8		)	(1.8		)
Interest expense	NA			(116.9		)	NA			(118.2		)	NA			(123.8		)
Consolidated total	$	19,391.4		$	1,907.4		$	18,170.9		$	1,720.0		$	17,083.9		$	1,317.7

NA = Not Applicable

¹ Personal auto insurance accounted for 92% of the total Personal Lines segment net premiums earned in 2014, compared to 91% in 2013 and 2012; insurance for our special lines products (e.g., motorcycles, ATVs, RVs, mobile homes, watercraft, and snowmobiles) accounted for the balance of the Personal Lines net premiums earned.

² Pretax profit (loss) for fees and other revenues are allocated to operating segments.

³ Revenues represent recurring investment income and total net realized gains (losses) on securities; pretax profit is net of investment expenses.

Progressive’s management uses underwriting margin and combined ratio as primary measures of underwriting profitability. Underwriting profitability is calculated by subtracting losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses from the total of net premiums earned and fees and other revenues. The underwriting margin is the pretax underwriting profit (loss) expressed as a percentage of net premiums earned (i.e., revenues from underwriting operations). Combined ratio is the complement of the underwriting margin. Following are the underwriting margins/combined ratios for our underwriting operations for the years ended December 31:

	2014			2013			2012
	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio	Underwriting Margin		Combined Ratio
Personal Lines
Agency	7.5	%	92.5	6.3	%	93.7	4.2	%	95.8
Direct	5.7		94.3	7.0		93.0	4.6		95.4
Total Personal Lines	6.7		93.3	6.6		93.4	4.4		95.6
Commercial Lines	17.2		82.8	6.5		93.5	5.2		94.8
Other indemnity1	NM		NM	NM		NM	NM		NM
Total underwriting operations	7.7		92.3	6.5		93.5	4.4		95.6

¹ Underwriting margins/combined ratios are not meaningful (NM) for our other indemnity businesses due to the low level of premiums earned by, and the variability of loss costs in, such businesses.

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2014

Amounts Charged to Income for Employees Incentive Compensation Plans

The amounts charged to income for the incentive compensation plans for the years ended December 31, were:

	2014				2013				2012
(millions)	Pretax		After Tax		Pretax		After Tax		Pretax		After Tax
Cash	$	266.2	$	173.0	$	234.5	$	152.4	$	207.0	$	134.6
Equity	51.4		33.4		64.9		42.2		63.4		41.2

Assets Held in Deferral Plan Irrevocable Grantor Trust Account

The Deferral Plan Irrevocable Grantor Trust account held the following assets at December 31:

(millions)	2014		2013
Progressive common shares1	$	83.2	$	57.1
Other investment funds2	123.9		113.1
Total	$	207.1	$	170.2

¹Includes 3.6 million and 2.5 million common shares as of December 31, 2014 and 2013, respectively, to be distributed in common shares.

² Amount is included in other assets on the balance sheet.

Employee

Summary of Restricted Stock Activity

A summary of all employee restricted equity award activity during the years ended December 31, follows:

	2014				2013				2012
Restricted Equity Awards	Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value
Beginning of year	9,918,575		$	20.13	11,625,981		$	17.80	12,296,847		$	16.86
Add (deduct):
Granted2	3,542,984		19.32		2,738,809		22.73		2,680,229		19.11
Vested	(4,228,673	)	16.99		(4,293,605	)	15.54		(3,188,111	)	15.23
Forfeited	(181,322	)	20.75		(152,610	)	18.28		(162,984	)	17.93
End of year3,4	9,051,564		$	21.27	9,918,575		$	20.13	11,625,981		$	17.80

¹ Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common shares funded from existing treasury shares. All performance-based awards are included at their target amounts.

² In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2014, 2013, and 2012, the number of units "granted" shown in the table above includes 538,749, 161,077, and 440,029 of dividend equivalent units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair value of the original grant.

³ At December 31, 2014, the number of shares included 2,647,530 performance-based awards at their target amounts. We expect 2,208,731 of these performance-based awards to vest, based upon our current estimate of the likelihood of achieving these pre-determined performance goals.

⁴ At December 31, 2014, the total unrecognized compensation cost related to unvested equity awards was $70.5 million, which includes performance-based awards at their currently estimated vesting value. This compensation expense will be recognized into the income statement over the weighted average vesting period of 2.3 years.

Director

Summary of Restricted Stock Activity

A summary of all directors’ restricted stock activity during the years ended December 31, follows:

	2014				2013				2012
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	93,254		$	26.19	92,957		$	21.41	94,106		$	21.80
Add (deduct):
Granted	90,649		25.44		93,254		26.19		92,957		21.41
Vested	(93,254	)	26.19		(92,957	)	21.41		(94,106	)	21.80
Forfeited	(9,070	)	25.36		0		0		0		0
End of year	81,579		$	25.45	93,254		$	26.19	92,957		$	21.41

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Segment Information Operating Results (Parenthetical) (Details) (Personal Lines, Personal Auto, Underwriting Operations)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Personal Lines | Personal Auto | Underwriting Operations
Segment Reporting Information [Line Items]
Personal auto insurance percentage of the total personal lines segment net premiums earned	92.00%	91.00%	91.00%

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Litigation

12 Months Ended

Dec. 31, 2014

Litigation Disclosures [Abstract]

Litigation

 LITIGATION

The Progressive Corporation and/or its insurance subsidiaries are named as defendants in various lawsuits arising out of claims made under insurance policies written by our insurance subsidiaries in the ordinary course of business. We consider all legal actions relating to such claims in establishing our loss and loss adjustment expense reserves.

In addition, The Progressive Corporation and/or its insurance subsidiaries are named as defendants in a number of class action or individual lawsuits arising out of the operations of the insurance subsidiaries. Other insurance companies face many of these same issues. The lawsuits discussed below are in various stages of development. We plan to contest these suits vigorously, but may pursue settlement negotiations in some cases, if appropriate. The outcomes of pending cases are uncertain at this time.

We establish accruals for lawsuits when it is probable that a loss has been or will be incurred and we can reasonably estimate its potential exposure, which may include a range of loss (referred to as a loss that is both “probable and estimable” in the discussion below). As to lawsuits in which the loss is not considered both probable and estimable, or is considered probable but not estimable, we do not establish an accrual in accordance with current accounting guidance. It is generally not possible to determine the exposure associated with our lawsuits for a number of reasons, including, without limitation, one or more of the following: liability appears to be remote; putative class action lawsuits generally pose immaterial exposure until a class is actually certified, which, historically, has not been granted by the courts in the vast majority of our cases in which certification has been sought; class definitions are often indefinite and preclude detailed exposure analysis; and complaints rarely state an amount sought as relief, and when such amount is stated, it is often a function of pleading requirements and may be unrelated to the potential exposure. The following is a discussion of potentially significant pending cases at December 31, 2014, and certain cases resolved during the three-year period then ended.

As to the pending cases, although their outcomes are uncertain, in each case we do not believe that the outcome will have a material impact on our consolidated financial condition, cash flows, or results of operations. In addition, we do not consider the losses from the pending cases to be both probable and estimable (except as noted below), and we are unable to estimate a range of loss, if any, at this time, due to the factors discussed above. In the event that any one or more of these cases results in a substantial judgment against, or settlement by, Progressive, or if our accruals (if any) prove to be inadequate, the resulting liability could have a material effect on our consolidated financial condition, cash flows, and/or results of operations.

Pending cases at December 31, 2014 that challenge certain of our insurance subsidiaries' practices, include:

• One putative class action lawsuit alleging that Progressive’s website did not adequately disclose sufficient information concerning the PIP deductibles when customers indicated they are covered by private health insurance.

• One putative class action lawsuit challenging the labor rates our insurance subsidiaries pay to auto body repair shops.

• One patent matter alleging that Progressive infringes on patented marketing technology.

• Two putative class action lawsuits alleging that Progressive steers customers to Service Centers and network shops to have their vehicles repaired.

• Four putative class action lawsuits challenging Progressive’s practice in Florida of adjusting PIP and first-party medical payments.

• Three putative class action lawsuits challenging our adjustment of medical bills submitted by insureds in bodily injury claims.

• One putative class action lawsuit challenging our policy form with regard to rejecting uninsured motorist coverage. We have established an accrual for this matter because it is probable that a loss has been incurred on this lawsuit and we were able to estimate a loss. The case is ongoing and a settlement has not been reached. The range of possible loss and amount of the accrual are not material to our consolidated financial condition, cash flows, or results of operations.

• One putative class action lawsuit challenging the manner in which Progressive grants a discount for anti-theft devices.

• Two putative class action lawsuits alleging that Progressive charged insureds for illusory uninsured motorist/underinsured motorist coverage.

• One putative and one certified class action lawsuit alleging that Progressive undervalues total loss claims through the use of certain valuation tools.

• Two conditionally certified collective class action lawsuits challenging our exempt employee classification for certain claims employees under applicable wage and hour laws.

• One putative class action lawsuit alleging Progressive fails to timely review and pay diminished value claims.

• Two qui tam lawsuits alleging Progressive does not comply with its purported obligation to reimburse Medicare for medical payments made to Medicare beneficiaries.

• Eighteen individual and one putative class action lawsuit pending as multi-district litigation alleging Progressive and other insurers conspire to suppress body repair shop labor rates.

For cases that have settled, but for which settlement is not complete, an accrual has been established at our best estimate of the exposure. Settlements that are complete are fully reflected in our financial statements. The amounts accrued or paid for these settlements were not material to our consolidated financial condition, cash flows, or results of operations.

Cases settled during 2014 include:

• One putative class action lawsuit alleging that Progressive steers customers to Service Centers and network shops to have their vehicles repaired. This matter was settled on an individual basis.

• One putative class action lawsuit alleging that Progressive negligently designed, manufactured, and deceptively advertised Snapshot^® in that it purportedly drains a vehicle's battery to the point that the battery is non-functional or diminished in value. This matter was settled on an individual basis.

• One putative class action lawsuit alleging that Progressive violated the Telephone Consumer Protection Act in making cell phone calls to insureds. This matter was settled on an individual basis.

Cases settled during 2013 include:

• One putative class action lawsuit alleging that Progressive did not reimburse any of its insureds who incurred legal fees to recover money from another Progressive insured. This case was accrued for, settled, and paid in 2013.

• One putative class action lawsuit alleging that Progressive improperly applies a preferred provider discount to medical payment claims. This case was accrued for and settled in 2013.

• One putative class action lawsuit challenging the manner in which Progressive charges premium and assesses total loss claims for commercial vehicle stated amount policies. This case was accrued for, settled, and paid in 2013.

• Two putative class action lawsuits challenging Progressive’s practice in Florida of adjusting PIP and first-party medical payments. Both cases were settled on an individual basis.

Cases settled during 2012 include:

• One putative class action lawsuit that challenged Progressive’s use of certain automated database vendors or software to assist in the adjustment of bodily injury claims where the plaintiffs alleged that these databases or software systematically undervalued the claims; an accrual was established during 2012, and the case was paid in 2013.

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Investments Derivative Instruments (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Derivative [Line Items]
Balance Sheet - Fair Value	$ 15.8	[1]	$ 68.1	[1]
Income Statement - Net Realized Gain (Loss) on Securities	(64.1)		56.6		(43.1)
Hedging Instrument | Closed Positions | Ineffective Cash Flow Hedge
Derivative [Line Items]
Notional Value	44	[2]	54	[2]	31	[2]
Purpose	Manage interest rate risk		Manage interest rate risk		Manage interest rate risk
Balance Sheet - Fair Value	0	[1]	0	[1]
Income Statement - Net Realized Gain (Loss) on Securities	0.5		0.8		0.6
Non-hedging Instruments | Closed Positions | Interest Rate Swaps
Derivative [Line Items]
Notional Value	0	[2]	1,263	[2]	0	[2]
Purpose			Manage portfolio duration
Balance Sheet - Fair Value	0	[1]	0	[1]
Income Statement - Net Realized Gain (Loss) on Securities	0		(4.0)		0
Non-hedging Instruments | Closed Positions | Corporate Credit Default Swaps
Derivative [Line Items]
Notional Value	0	[2]	0	[2]	25	[2]
Purpose					Manage credit risk
Balance Sheet - Fair Value	0	[1]	0	[1]
Income Statement - Net Realized Gain (Loss) on Securities	0		0		(1.0)
Non-hedging Instruments | Assets | Interest Rate Swaps | Fixed maturities
Derivative [Line Items]
Notional Value	750	[2]	750	[2]	0	[2]
Purpose	Manage portfolio duration		Manage portfolio duration
Balance Sheet - Fair Value	15.8	[1]	68.1	[1]
Income Statement - Net Realized Gain (Loss) on Securities	(64.6)		59.8		0
Non-hedging Instruments | Liabilities | Interest Rate Swaps | Other Liabilities
Derivative [Line Items]
Notional Value	0	[2]	0	[2]	1,263	[2]
Purpose					Manage portfolio duration
Balance Sheet - Fair Value	0	[1]	0	[1]
Income Statement - Net Realized Gain (Loss) on Securities	$ 0		$ 0		$ (42.7)

[1] To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we expect that we will report them on a gross basis on our balance sheets, consistent with our historical presentation.

[2] The amounts represent the value held at year end for open positions and the maximum amount held during the year for closed positions.

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Subsequent Event Subsequent Event - Additional Information (Details) (Subsequent Event, 3.70% Senior Notes due 2045, USD $)	1 Months Ended
	Jan. 26, 2015
Subsequent Event | 3.70% Senior Notes due 2045
Debt Instrument [Line Items]
Debt Instrument, Issuance Date	Jan. 26, 2015
Debt Instrument, Face Amount	$ 400,000,000
Debt Instrument, Interest Rate, Stated Percentage	3.70%
Proceeds from Debt, Net of Issuance Costs	394,900,000
Debt Related Commitment Fees and Debt Issuance Costs	800,000
Unrealized Gain (Loss)	$ (12,900,000)

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Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash Flows From Operating Activities
Net income	$ 1,281.0	$ 1,165.4	$ 902.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	97.1	101.3	94.4
Amortization of fixed-income securities	78.2	134.0	186.7
Amortization of equity-based compensation	51.4	64.9	63.4
Net realized (gains) losses on securities	(224.2)	(318.4)	(306.8)
Net (gains) losses on disposition of property and equipment	5.4	5.6	7.1
(Gains) losses on extinguishment of debt	4.8	4.3	1.8
Changes in:
Premiums receivable	(227.1)	(127.4)	(253.8)
Reinsurance recoverables	(141.7)	(189.2)	(83.0)
Prepaid reinsurance premiums	(10.4)	(8.6)	3.5
Deferred acquisition costs	(9.6)	(13.1)	(0.9)
Income taxes	97.5	57.8	19.8
Unearned premiums	266.4	244.8	351.1
Loss and loss adjustment expense reserves	378.0	641.6	592.6
Accounts payable, accrued expenses, and other liabilities	92.0	165.0	123.6
Other, net	(13.2)	(28.1)	(10.4)
Net cash provided by operating activities	1,725.6	1,899.9	1,691.4
Purchases:
Fixed maturities	(7,967.5)	(7,100.6)	(5,199.2)
Equity securities	(369.7)	(322.2)	(463.1)
Sales:
Fixed maturities	5,637.5	3,083.9	3,705.6
Equity securities	560.1	369.2	793.0
Maturities, paydowns, calls, and other:
Fixed maturities	2,296.6	1,859.6	1,488.9
Equity securities	14.3	21.5	16.0
Net sales (purchases) of short-term investments	(876.0)	716.6	(438.2)
Net unsettled security transactions	(30.0)	152.2	(44.0)
Purchases of property and equipment	(108.1)	(140.4)	(127.7)
Sales of property and equipment	5.9	3.7	3.8
Net cash provided by (used in) investing activities	(836.9)	(1,356.5)	(264.9)
Cash Flows From Financing Activities
Proceeds from exercise of stock options	0	0	0.5
Tax benefit from exercise/vesting of equity-based compensation	12.8	10.3	5.8
Net proceeds from debt issuance	344.7	0	0
Payment of debt	0	(150.0)	(350.0)
Reacquisition of debt	(48.9)	(58.1)	(32.5)
Dividends paid to shareholders	(892.6)	(175.6)	(853.7)
Acquisition of treasury shares	(271.4)	(273.4)	(174.2)
Net cash used in financing activities	(855.4)	(646.8)	(1,404.1)
Effect of exchange rate changes on cash	0	(0.6)	1.0
Increase (decrease) in cash	33.3	(104.0)	23.4
Cash, Beginning of year	75.1	179.1	155.7
Cash, End of year	$ 108.4	$ 75.1	$ 179.1

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Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2014		Dec. 31, 2013
Investments - Available-for-sale, at fair value:
Fixed maturities (amortized cost: $13,374.2 and $13,415.3)	$ 13,549.2		$ 13,540.4
Equity securities:
Nonredeemable preferred stocks (cost: $590.4 and $445.7)	827.5		711.2
Common equities (cost: $1,289.2 and $1,451.1)	2,492.3		2,530.5
Short-term investments (amortized cost: $2,149.0 and $1,272.6)	2,149.0		1,272.6
Total investments at fair value	19,018.0	[1],[2]	18,054.7	[1],[2]
Cash	108.4		75.1
Accrued investment income	87.3		89.8
Premiums receivable, net of allowance for doubtful accounts of $152.2 and $142.4	3,537.5		3,310.7
Reinsurance recoverables, including $46.0 and $44.3 on paid losses and loss adjustment expenses	1,231.9		1,090.2
Prepaid reinsurance premiums	85.3		74.9
Deferred acquisition costs	457.2		447.6
Property and equipment, net of accumulated depreciation of $731.0 and $680.4	960.6		960.9
Other assets	301.4		304.3
Total assets	25,787.6		24,408.2
Liabilities and Shareholders' Equity
Unearned premiums	5,440.1		5,174.5
Loss and loss adjustment expense reserves	8,857.4		8,479.7
Net deferred income taxes	98.9		28.4
Dividends payable	404.1		890.2
Accounts payable, accrued expenses, and other liabilities	1,893.8	[3]	1,785.0	[3]
Debt	2,164.7	[4]	1,860.9	[4]
Total liabilities	18,859.0		18,218.7
Common shares, $1.00 par value (authorized 900.0; issued 797.6, including treasury shares of 209.8 and 201.8)	587.8		595.8
Paid-in capital	1,184.3		1,142.0
Retained earnings	4,133.4		3,500.0
Accumulated other comprehensive income, net of tax:
Net non-credit related OTTI losses, adjusted for valuation changes	0		0
Other net unrealized gains (losses) on securities	1,021.9		947.0
Total net unrealized gains (losses) on securities	1,021.9		947.0
Net unrealized gains on forecasted transactions	1.5		4.1
Foreign currency translation adjustment	(0.3)		0.6
Total accumulated other comprehensive income	1,023.1		951.7
Total shareholders' equity	6,928.6		6,189.5
Total liabilities and shareholders' equity	$ 25,787.6		$ 24,408.2

[1] The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

[2] Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

[3] See Note 12 – Litigation and Note 13 – Commitments and Contingencies for further discussion.

[4] Consists of long-term debt. See Note 4 – Debt for further discussion.

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The components of our income tax provision were as follows:

(millions)	2014		2013		2012
Current tax provision	$	594.4	$	460.2	$	424.8
Deferred tax expense (benefit)	32.0		94.4		(9.4		)
Total income tax provision	$	626.4	$	554.6	$	415.4

The provision for income taxes in the accompanying consolidated statements of comprehensive income differed from the statutory rate as follows:

($ in millions)	2014					2013					2012
Income before income taxes	$	1,907.4				$	1,720.0				$	1,317.7
Tax at statutory rate	$	667.6		35	%	$	602.0		35	%	$	461.2		35	%
Tax effect of:
Dividends received deduction	(18.3		)	(1	)	(17.6		)	(1	)	(18.2		)	(1	)
Exempt interest income	(13.8		)	(1	)	(13.1		)	(1	)	(14.7		)	(1	)
Tax-deductible dividends	(6.5		)	0		(13.6		)	(1	)	(11.9		)	(1	)
Tax credits	(2.2		)	0		(2.3		)	0		0			0
Other items, net	(0.4		)	0		(0.8		)	0		(1.0		)	0
Total income tax provision	$	626.4		33	%	$	554.6		32	%	$	415.4		32	%

Deferred income taxes reflect the effect for financial statement reporting purposes of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. At December 31, 2014 and 2013, the components of the net deferred tax asset (liability) were as follows:

(millions)	2014			2013
Deferred tax assets:
Unearned premiums reserve	$	378.8		$	361.0
Investment basis differences	60.6			94.8
Non-deductible accruals	208.0			200.7
Loss and loss adjustment expense reserves	76.9			92.0
Other	7.5			14.7
Deferred tax liabilities:
Net unrealized gains on securities	(550.3		)	(509.9		)
Hedges on forecasted transactions	(0.8		)	(2.2		)
Deferred acquisition costs	(160.0		)	(156.7		)
Property and equipment	(100.9		)	(99.6		)
Prepaid expenses	(11.4		)	(14.4		)
Deferred gain on extinguishment of debt	(3.0		)	(4.8		)
Other	(4.3		)	(4.0		)
Net deferred tax liability	$	(98.9	)	$	(28.4	)

Although realization of the deferred tax assets is not assured, management believes that it is more likely than not that the deferred tax assets will be realized based on our expectation that we will be able to fully utilize the deductions that are ultimately recognized for tax purposes and, therefore, no valuation allowance was needed at December 31, 2014 or 2013.

At December 31, 2014, we had $49.4 million of net taxes payable (included in other liabilities on the balance sheet), compared to net taxes recoverable of $17.1 million at December 31, 2013 (included in other assets on the balance sheet).

We have been a participant in the Compliance Assurance Program (CAP) since 2007. Under CAP, the Internal Revenue Service (IRS) begins its examination process for the tax year before the tax return is filed, by examining significant transactions and events as they occur. The goal of the CAP program is to expedite the exam process and to reduce the level of uncertainty regarding a taxpayer’s tax filing positions.

All federal income tax years prior to 2011 are closed. The IRS exams for 2011-2013 have been completed; therefore, we consider these years to be effectively settled.

We recognize interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. We have not recorded any unrecognized tax benefits, or any related interest and penalties, as of December 31, 2014 and 2013. For the year ended December 31, 2013, $0.2 million of interest benefit has been recorded in the tax provision. For the years ended December 31, 2014 and 2012, no interest expense or benefit has been recorded in the tax provision.

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Commitments and Contingencies Minimum Commitments under Noncancelable Operating Lease Agreements (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 46.2
2016	43.7
2017	37.2
2018	27.1
2019	16.4
Thereafter	4.4
Total	$ 175.0

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Employee Benefit Plans Summary of all Directors' Restricted Stock Activity (Detail) (Non Employee Director Restricted Equity Awards, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Non Employee Director Restricted Equity Awards
Number of Shares
Beginning of year	93,254	92,957	94,106
Add (deduct):
Granted	90,649	93,254	92,957
Vested	(93,254)	(92,957)	(94,106)
Forfeited	(9,070)	0	0
End of year	81,579	93,254	92,957
Weighted Average Grant Date Fair Value
Beginning of year	$ 26.19	$ 21.41	$ 21.80
Granted	$ 25.44	$ 26.19	$ 21.41
Vested	$ 26.19	$ 21.41	$ 21.80
Forfeited	$ 25.36	$ 0	$ 0
End of year	$ 25.45	$ 26.19	$ 21.41

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Employee Benefit Plans Summary of All Employee Restricted Equity Award Activity (Detail) (Employee Restricted Equity Awards, USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Employee Restricted Equity Awards
Number of Shares
Beginning of year	9,918,575	[1],[2],[3]	11,625,981	[1],[2],[3]	12,296,847	[1]
Add (deduct):
Granted	3,542,984	[1],[4]	2,738,809	[1],[4]	2,680,229	[1],[4]
Vested	(4,228,673)	[1]	(4,293,605)	[1]	(3,188,111)	[1]
Forfeited	(181,322)	[1]	(152,610)	[1]	(162,984)	[1]
End of year	9,051,564	[1],[2],[3]	9,918,575	[1],[2],[3]	11,625,981	[1],[2],[3]
Weighted Average Grant Date Fair Value
Beginning of year	$ 20.13	[2],[3]	$ 17.80	[2],[3]	$ 16.86
Granted	$ 19.32	[4]	$ 22.73	[4]	$ 19.11	[4]
Vested	$ 16.99		$ 15.54		$ 15.23
Forfeited	$ 20.75		$ 18.28		$ 17.93
End of year	$ 21.27	[2],[3]	$ 20.13	[2],[3]	$ 17.80	[2],[3]

[1] Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common shares funded from existing treasury shares. All performance-based awards are included at their target amounts.

[2] At December 31, 2014, the number of shares included 2,647,530 performance-based awards at their target amounts. We expect 2,208,731 of these performance-based awards to vest, based upon our current estimate of the likelihood of achieving these pre-determined performance goals.

[3] At December 31, 2014, the total unrecognized compensation cost related to unvested equity awards was $70.5 million, which includes performance-based awards at their currently estimated vesting value. This compensation expense will be recognized into the income statement over the weighted average vesting period of 2.3 years.

[4] In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2014, 2013, and 2012, the number of units "granted" shown in the table above includes 538,749, 161,077, and 440,029 of dividend equivalent units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair value of the original grant.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Jan. 30, 2015	Jun. 30, 2014
Document Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	PGR
Entity Registrant Name	PROGRESSIVE CORP/OH/
Entity Central Index Key	0000080661
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		588,932,479
Entity Public Float			$ 14,825,867,953

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Loss And Loss Adjustment Expense Reserves

12 Months Ended

Dec. 31, 2014

Loss and Loss Adjustment Expense Reserves Disclosures [Abstract]

Loss And Loss Adjustment Expense Reserves

LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

Activity in the loss and loss adjustment expense reserves is summarized as follows:

(millions)	2014			2013		2012
Balance at January 1	$	8,479.7		$	7,838.4	$	7,245.8
Less reinsurance recoverables on unpaid losses	1,045.9			862.1		785.7
Net balance at January 1	7,433.8			6,976.3		6,460.1
Incurred related to:
Current year	13,330.3			12,427.3		11,926.0
Prior years	(24.1		)	45.1		22.0
Total incurred	13,306.2			12,472.4		11,948.0
Paid related to:
Current year	8,831.5			8,095.0		7,895.3
Prior years	4,237.0			3,919.9		3,536.5
Total paid	13,068.5			12,014.9		11,431.8
Net balance at December 31	7,671.5			7,433.8		6,976.3
Plus reinsurance recoverables on unpaid losses	1,185.9			1,045.9		862.1
Balance at December 31	$	8,857.4		$	8,479.7	$	7,838.4

We experienced favorable reserve development of $24.1 million in 2014, compared to unfavorable reserve development of $45.1 million and $22.0 million in 2013 and 2012, respectively, which is reflected as “Incurred related to prior years” in the table above.

2014

•The favorable prior year reserve development was primarily attributable to accident year 2010.

• Favorable reserve development in our Commercial Lines business was partially offset by unfavorable development in our Agency auto business. Our Direct auto business experienced slightly 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 (PIP)loss reserves and to the adjusting and other loss adjustment expense reserves.

2013

• Approximately 80% of the unfavorable reserve development was attributable to accident year 2011, while the remaining 20% was related to accident year 2012. The aggregate reserve development for accident years 2010 and prior was slightly favorable.

• About 55% of our unfavorable reserve development was in our Commercial Lines business, with the remainder split about equally between our Personal Lines business and our run-off businesses. In our Personal Lines business, unfavorable development in our Agency auto channel was offset in large part by favorable development in our Direct auto channel.

• The unfavorable reserve development in our Agency auto business was in our IBNR reserves due to higher frequency and severity on late emerging claims, as primarily reflected in the “all other development.”

• Lower than anticipated severity costs on case reserves were the primary contributor to the favorable development in our Direct auto business.

• In our Commercial Lines business, we experienced unfavorable development due to higher frequency and severity on late emerging claims primarily in our bodily injury coverage for our truck business.

• In our other businesses, we experienced unfavorable development primarily due to reserve increases in our run-off professional liability group business based on internal actuarial reviews of our claims history.

2012

• The unfavorable prior year reserve development was primarily attributable to accident year 2011 and, to a lesser extent, accident year 2010. The aggregate reserve development for accident years 2009 and prior was favorable. Despite overall unfavorable reserve development, we did experience favorable reserve adjustments, primarily in our loss adjustment expenses and our personal auto bodily injury reserves for accident years 2009 and 2008.

• Slightly more than half of the total unfavorable reserve development was attributable to our Commercial Lines business, with the remainder in our personal auto business. In our personal auto business, unfavorable development in the Agency channel was partially offset by favorable development in the Direct channel, primarily reflecting that unfavorable development on our PIP coverage was more skewed to the Agency channel, and that our Direct business had favorable development on our collision coverage, as we experienced more subrogation recoveries in this channel.

• Our personal auto product’s development was primarily attributable to unfavorable development in our Florida PIP coverage and an increase in our estimate of bodily injury severity for accident year 2011.

• Unfavorable development in our Commercial Lines business reflects higher than anticipated frequency and severity costs on late emerging claims and higher settlements on large losses.

Because we are primarily an insurer of motor vehicles, we have limited exposure to environmental, asbestos, and general liability claims. We have established reserves for such exposures, in amounts that we believe to be adequate based on information currently known. These claims are not expected to have a material effect on our liquidity, financial condition, cash flows, or results of operations.

We write personal and commercial auto insurance throughout the United States and could be exposed to hurricanes or other catastrophes. Although the occurrence of a major catastrophe could have a significant effect on our monthly or quarterly results, we believe that, based on historical experience, such an event would not be so material as to disrupt the overall normal operations of Progressive. We are unable to predict the frequency or severity of any such events that may occur in the near term or thereafter.

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Income Taxes Components of Income Tax Provision (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Current tax provision	$ 594.4	$ 460.2	$ 424.8
Deferred tax expense (benefit)	32.0	94.4	(9.4)
Total income tax provision	$ 626.4	$ 554.6	$ 415.4

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Employee Benefit Plans Amounts Charged to Income for employees Incentive Compensation Plans (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Incentive Compensation Cash Award
Incentive Compensation Plans Expense [Line Items]
Pretax	$ 266.2	$ 234.5	$ 207.0
After Tax	173.0	152.4	134.6
Stock Compensation Plan
Incentive Compensation Plans Expense [Line Items]
Pretax	51.4	64.9	63.4
After Tax	$ 33.4	$ 42.2	$ 41.2

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Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Fixed maturities, amortized cost	$ 13,374.2	$ 13,415.3
Nonredeemable preferred stocks, cost	590.4	445.7
Common equities, cost	1,289.2	1,451.1
Short-term investments, amortized cost	2,149.0	1,272.6
Premiums receivable, allowance for doubtful accounts	152.2	142.4
Reinsurance recoverables, paid losses and loss adjustment expenses	46.0	44.3
Property and equipment, accumulated depreciation	$ 731.0	$ 680.4
Common Shares, par value (USD per share)	$ 1.00	$ 1.00
Common Shares, authorized (shares)	900.0	900.0
Common Shares, issued (shares)	797.6	797.6
Common Shares, treasury shares (shares)	209.8	201.8

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SCHEDULE VI-Supplemental Information Concerning Property - Casualty Insurance Operations

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SCHEDULE VI-Supplemental Information Concerning Property - Casualty Insurance Operations

SCHEDULE VI — SUPPLEMENTAL INFORMATION CONCERNING PROPERTY - CASUALTY INSURANCE OPERATIONS

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

	Losses and Loss Adjustment Expenses Incurred Related to
Year Ended	Current Year		Prior Years			Paid Losses and Loss Adjustment Expenses
December 31, 2014	$	13,330.3	$	(24.1	)	$	13,068.5
December 31, 2013	$	12,427.3	$	45.1		$	12,014.9
December 31, 2012	$	11,926.0	$	22.0		$	11,431.8

Pursuant to Rule 12-18 of Regulation S-X. See Schedule III for the additional information required in Schedule VI.

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SCHEDULE IV - Reinsurance

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SCHEDULE IV - Reinsurance

SCHEDULE IV — REINSURANCE

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

Year Ended:	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
December 31, 2014
Premiums earned:
Property and liability insurance	$	18,648.4	$	249.9	$	0	$	18,398.5	0
December 31, 2013
Premiums earned:
Property and liability insurance	$	17,317.9	$	214.5	$	0	$	17,103.4	0
December 31, 2012
Premiums earned:
Property and liability insurance	$	16,207.6	$	189.6	$	0	$	16,018.0	0

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Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Other Comprehensive Income (Loss)

OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive income (loss) for the years ended December 31, were as follows:

										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
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6
Other comprehensive income (loss) before reclassifications:
Investment securities	362.1			(126.7		)	235.4			235.4			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0			0			0			0			0			0
Forecasted transactions	(1.6		)	0.6			(1.0		)	0			(1.0		)	0
Foreign currency translation adjustment	(1.3		)	0.4			(0.9		)	0			0			(0.9		)
Total other comprehensive income (loss) before reclassifications	359.2			(125.7		)	233.5			235.4			(1.0		)	(0.9		)
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
Net realized gains (losses) on securities	255.0			(89.2		)	165.8			165.5			0.3			0
Interest expense	2.0			(0.7		)	1.3			0			1.3			0
Total reclassification adjustment for amounts realized in net income	249.3			(87.2		)	162.1			160.5			1.6			0
Total other comprehensive income (loss)	109.9			(38.5		)	71.4			74.9			(2.6		)	(0.9		)
Balance at December 31, 2014	$	1,574.0		$	(550.9	)	$	1,023.1		$	1,021.9		$	1.5		$	(0.3	)

										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
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2
Other comprehensive income (loss) before reclassifications:
Investment securities	368.2			(128.9		)	239.3			239.3			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0.4			(0.1		)	0.3			0.3			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	(2.5		)	0.9			(1.6		)	0			0			(1.6		)
Total other comprehensive income (loss) before reclassifications	366.1			(128.1		)	238.0			239.6			0			(1.6		)
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(5.7		)	2.0			(3.7		)	(3.7		)	0			0
Net realized gains (losses) on securities	245.5			(86.0		)	159.5			159.0			0.5			0
Interest expense	2.2			(0.7		)	1.5			0			1.5			0
Total reclassification adjustment for amounts realized in net income	242.0			(84.7		)	157.3			155.3			2.0			0
Total other comprehensive income (loss)	124.1			(43.4		)	80.7			84.3			(2.0		)	(1.6		)
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6

										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
Balance at December 31, 2011	$	1,065.4		$	(372.9	)	$	692.5		$	682.8		$	7.9		$	1.8
Other comprehensive income (loss) before reclassifications:
Investment securities	488.0			(170.8		)	317.2			317.2			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	7.9			(2.8		)	5.1			5.1			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	0.6			(0.2		)	0.4			0			0			0.4
Total other comprehensive income (loss) before reclassifications	496.5			(173.8		)	322.7			322.3			0			0.4
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(0.4		)	0.1			(0.3		)	(0.3		)	0			0
Net realized gains (losses) on securities	220.1			(77.0		)	143.1			142.7			0.4			0
Interest expense	2.2			(0.8		)	1.4			0			1.4			0
Total reclassification adjustment for amounts realized in net income	221.9			(77.7		)	144.2			142.4			1.8			0
Total other comprehensive income (loss)	274.6			(96.1		)	178.5			179.9			(1.8		)	0.4
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2

In an effort to manage interest rate risk, we entered into forecasted transactions on each of our outstanding debt issuances. Upon issuing the debt, the gains (losses) recognized on these cash flow hedges are recorded as unrealized gains (losses) in accumulated other comprehensive income and amortized into interest expense over the term of the related debt issuance. We expect to reclassify $2.0 million (pretax) into income during the next 12 months, related to net unrealized gains on forecasted transactions.

To the extent we repurchased any of our outstanding debt, a portion of the unrealized gain (loss) would need to be recognized as a realized gain (loss) since the cash flow hedge is deemed ineffective. During 2014, 2013, and 2012, we repurchased in the open market a portion of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 and reclassified $0.5 million, $0.8 million, $0.6 million, respectively, on a pretax basis, from accumulated other comprehensive income on the balance sheet to net realized gains on securities on the comprehensive income statement (see Note 4 - Debt for further discussion).

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Reinsurance

12 Months Ended

Dec. 31, 2014

Reinsurance Disclosures [Abstract]

Reinsurance

REINSURANCE

The effect of reinsurance on premiums written and earned for the years ended December 31, was as follows:

	2014						2013						2012
(millions)	Written			Earned			Written			Earned			Written			Earned
Direct premiums	$	18,914.8		$	18,648.4		$	17,562.8		$	17,317.9		$	16,558.8		$	16,207.6
Ceded	(260.2		)	(249.9		)	(223.1		)	(214.5		)	(186.1		)	(189.6		)
Net premiums	$	18,654.6		$	18,398.5		$	17,339.7		$	17,103.4		$	16,372.7		$	16,018.0

Our ceded premiums consist of “State Plans” and “Non-State Plans.” State Plans include: (i) amounts ceded to state-provided reinsurance facilities, including the Michigan Catastrophic Claims Association (MCCA) and the North Carolina Reinsurance Facility (NCRF), and (ii) state-mandated involuntary Commercial Auto Insurance Procedures/Plans (CAIP). Collectively, the State Plans accounted for 97%, 97%, and 98% of our ceded premiums for the years ended December 31, 2014, 2013, and 2012, respectively; the MCCA and NCRF together accounted for 75%, 77%, and 80% of the ceded premiums for these same time periods.

Losses and loss adjustment expenses were net of reinsurance ceded of $322.7 million in 2014, $347.0 million in 2013, and $230.7 million in 2012.

Our prepaid reinsurance premiums and reinsurance recoverables were comprised of the following at December 31:

	Prepaid Reinsurance Premiums								Reinsurance Recoverables
($ in millions)	2014				2013				2014				2013
MCCA	$	32.8	38	%	$	29.5	40	%	$	1,018.8	83	%	$	875.9	80	%
CAIP	26.5		31		21.1		28		110.1		9		79.3		7
NCRF	21.9		26		20.5		27		51.1		4		50.1		5
State Plans	81.2		95		71.1		95		1,180.0		96		1,005.3		92
Non-State Plans	4.1		5		3.8		5		51.9		4		84.9		8
Total	$	85.3	100	%	$	74.9	100	%	$	1,231.9	100	%	$	1,090.2	100	%

Reinsurance contracts do not relieve us from our obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to Progressive. Since substantially all of our reinsurance is through State Plans, our exposure to losses from their failure is minimal, since the plans are funded by mechanisms supported by the insurance companies in the state. We evaluate the financial condition of our other reinsurers and monitor concentrations of credit risk to minimize our exposure to significant losses from reinsurer insolvencies.

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Loss And Loss Adjustment Expense Reserves Activity in Loss and loss Adjustment Expense Reserves (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Balance at beginning of period	$ 8,479.7	$ 7,838.4	$ 7,245.8
Less reinsurance recoverables on unpaid losses	1,045.9	862.1	785.7
Net balance at beginning of period	7,433.8	6,976.3	6,460.1
Incurred related to:
Current year	13,330.3	12,427.3	11,926.0
Prior years	(24.1)	45.1	22.0
Total incurred	13,306.2	12,472.4	11,948.0
Paid related to:
Current year	8,831.5	8,095.0	7,895.3
Prior years	4,237.0	3,919.9	3,536.5
Total paid	13,068.5	12,014.9	11,431.8
Net balance at ending of period	7,671.5	7,433.8	6,976.3
Plus reinsurance recoverables on unpaid losses	1,185.9	1,045.9	862.1
Balance at ending of period	$ 8,857.4	$ 8,479.7	$ 7,838.4

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Fair Value

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value

FAIR VALUE

We have categorized our financial instruments, based on the degree of subjectivity inherent in the method by which they are valued, into a fair value hierarchy of three levels, as follows:

• 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).

Determining the fair value of the investment portfolio is the responsibility of management. As part of the responsibility, we evaluate whether a market is distressed or inactive in determining the fair value for our portfolio. We review certain market level inputs to evaluate whether sufficient activity, volume, and new issuances exist to create an active market. Based on this evaluation, we concluded that there was sufficient activity related to the sectors and securities for which we obtained valuations.

The composition of the investment portfolio by major security type was:

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,667.1	$	0	$	0	$	2,667.1	$	2,641.1
State and local government obligations	0		2,139.2		0		2,139.2		2,095.7
Foreign government obligations	14.2		0		0		14.2		14.2
Corporate debt securities	0		2,836.7		0		2,836.7		2,813.9
Subtotal	2,681.3		4,975.9		0		7,657.2		7,564.9
Asset-backed securities:
Residential mortgage-backed	0		1,658.5		0		1,658.5		1,635.5
Commercial mortgage-backed	0		2,304.0		11.6		2,315.6		2,278.7
Other asset-backed	0		1,638.7		0		1,638.7		1,634.9
Subtotal asset-backed securities	0		5,601.2		11.6		5,612.8		5,549.1
Redeemable preferred stocks:
Financials	0		97.9		0		97.9		77.3
Utilities	0		65.3		0		65.3		65.0
Industrials	0		116.0		0		116.0		117.9
Subtotal redeemable preferred stocks	0		279.2		0		279.2		260.2
Total fixed maturities	2,681.3		10,856.3		11.6		13,549.2		13,374.2
Equity securities:
Nonredeemable preferred stocks:
Financials	204.1		554.1		69.3		827.5		590.4
Utilities	0		0		0		0		0
Subtotal nonredeemable preferred stocks	204.1		554.1		69.3		827.5		590.4
Common equities:
Common stocks	2,491.9		0		0		2,491.9		1,288.8
Other risk investments	0		0		0.4		0.4		0.4
Subtotal common equities	2,491.9		0		0.4		2,492.3		1,289.2
Total fixed maturities and equity securities	5,377.3		11,410.4		81.3		16,869.0		15,253.8
Short-term investments	1,937.0		212.0		0		2,149.0		2,149.0
Total portfolio	$	7,314.3	$	11,622.4	$	81.3	$	19,018.0	$	17,402.8
Debt	$	0	$	2,527.5	$	0	$	2,527.5	$	2,164.7

	Fair Value
(millions)	Level 1		Level 2		Level 3		Total		Cost
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,662.2	$	0	$	0	$	3,662.2	$	3,630.4
State and local government obligations	0		2,256.0		0		2,256.0		2,247.3
Foreign government obligations	15.6		0		0		15.6		15.6
Corporate debt securities	0		2,926.6		0		2,926.6		2,885.0
Subtotal	3,677.8		5,182.6		0		8,860.4		8,778.3
Asset-backed securities:
Residential mortgage-backed	0		1,127.7		0.2		1,127.9		1,110.1
Commercial mortgage-backed	0		2,131.5		29.0		2,160.5		2,154.4
Other asset-backed	0		1,077.7		0		1,077.7		1,073.0
Subtotal asset-backed securities	0		4,336.9		29.2		4,366.1		4,337.5
Redeemable preferred stocks:
Financials	0		102.8		0		102.8		84.2
Utilities	0		65.6		0		65.6		64.9
Industrials	0		145.5		0		145.5		150.4
Subtotal redeemable preferred stocks	0		313.9		0		313.9		299.5
Total fixed maturities	3,677.8		9,833.4		29.2		13,540.4		13,415.3
Equity securities:
Nonredeemable preferred stocks:
Financials	240.8		414.6		39.0		694.4		431.5
Utilities	0		16.8		0		16.8		14.2
Subtotal nonredeemable preferred stocks	240.8		431.4		39.0		711.2		445.7
Common equities:
Common stocks	2,530.0		0		0		2,530.0		1,450.6
Other risk investments	0		0		0.5		0.5		0.5
Subtotal common equities	2,530.0		0		0.5		2,530.5		1,451.1
Total fixed maturities and equity securities	6,448.6		10,264.8		68.7		16,782.1		15,312.1
Short-term investments	987.8		284.8		0		1,272.6		1,272.6
Total portfolio	$	7,436.4	$	10,549.6	$	68.7	$	18,054.7	$	16,584.7
Debt	$	0	$	2,073.7	$	0	$	2,073.7	$	1,860.9

Our portfolio valuations classified as either Level 1 or Level 2 in the above tables are priced exclusively by external sources, including: pricing vendors, dealers/market makers, and exchange-quoted prices. During 2014, we had two nonredeemable preferred stocks with a value of $41.7 million that were transferred from Level 2 to Level 1 due to the availability of a consistent exchange price. During 2013, we did not have any securities that were transferred between Level 1 and Level 2. We recognize transfers between levels at the end of the reporting period.

Our short-term security holdings classified as Level 1 are highly liquid, actively marketed, and have a very short duration, primarily 30 days or less to redemption. These securities are held at their original cost, adjusted for any accretion of discount, since that value very closely approximates what an active market participant would be willing to pay for such securities. The remainder of our short-term securities are classified as Level 2 and are not priced externally since these securities continually trade at par value. These securities are classified as Level 2 since they are primarily longer-dated auction securities issued by municipalities that contain a redemption put feature back to the auction pool with a redemption period typically less than seven days. The auction pool is created by a liquidity provider and if the auction is not available at the end of the seven days, we have the right to put the security back to the issuer at par.

At December 31, 2014, vendor-quoted prices represented 50% of our Level 1 classifications (excluding short-term investments), compared to 56% at December 31, 2013. The securities quoted by vendors in Level 1 primarily represent our holdings in U.S. Treasury Notes, which are frequently traded and the quotes are considered similar to exchange-traded quotes. The balance of our Level 1 pricing comes from quotes obtained directly from trades made on active exchanges. The year-over-year decline in vendor-quoted Level 1 prices was due to a reduction of U.S. Treasury Notes with the funds deployed primarily to short-term investments.

At December 31, 2014, vendor-quoted prices comprised 97% of our Level 2 classifications (excluding short-term investments), while dealer-quoted prices represented 3%, compared to 98% and 2% at December 31, 2013, respectively. In our process for selecting a source (e.g., dealer, pricing service) to provide pricing for securities in our portfolio, we reviewed documentation from the sources that detailed the pricing techniques and methodologies used by these sources and determined if their policies adequately considered market activity, either based on specific transactions for the particular security type or based on modeling of securities with similar credit quality, duration, yield, and structure that were recently transacted. Once a source is chosen, we continue to monitor any changes or modifications to their processes by reviewing their documentation on internal controls for pricing and market reviews. We review quality control measures of our sources as they become available to determine if any significant changes have occurred from period to period that might indicate issues or concerns regarding their evaluation or market coverage.

As part of our pricing procedures, we obtain quotes from more than one source to help us fully evaluate the market price of securities. However, our internal pricing policy is to use a consistent source for individual securities in order to maintain the integrity of our valuation process. Quotes obtained from the sources are not considered binding offers to transact. Under our policy, when a review of the valuation received from our selected source appears to be outside of what is considered market level activity (which is defined as trading at spreads or yields significantly different than those of comparable securities or outside the general sector level movement without a reasonable explanation), we may use an alternate source’s price. To the extent we determine that it may be prudent to substitute one source’s price for another, we will contact the initial source to obtain an understanding of the factors that may be contributing to the significant price variance, which often leads the source to adjust their pricing input data for future pricing.

To allow us to determine if our initial source is providing a price that is outside of a reasonable range, we review our portfolio pricing on a weekly basis. We frequently challenge prices from our sources when a price provided does not match our expectations based on our evaluation of market trends and activity. Initially, we perform a review of our portfolio by sector to identify securities whose prices appear outside of a reasonable range. We then perform a more detailed review of fair values for securities disclosed as Level 2. We review dealer bids and quotes for these and/or similar securities to determine the market level context for our valuations. We then evaluate inputs relevant for each class of securities disclosed in the preceding hierarchy tables.

For our structured debt securities, including commercial, residential, and asset-backed securities, we evaluate available market-related data for these and similar securities related to collateral, delinquencies, and defaults for historical trends and reasonably estimable projections, as well as historical prepayment rates and current prepayment assumptions and cash flow estimates. We further stratify each class of our structured debt securities into more finite sectors (e.g., planned amortization class, first pay, second pay, senior, subordinated, etc.) and use duration, credit quality, and coupon to determine the appropriate fair value.

For our corporate debt and preferred stock (redeemable and nonredeemable) portfolios, we review securities by duration, coupon, and credit quality, as well as changes in interest rate and credit spread movements within that stratification. The review also includes recent trades, including: volume traded at various levels that establish a market, issuer specific fundamentals, and industry specific economic news as it comes to light.

For our municipal securities (e.g., general obligations, revenue, and housing), we stratify the portfolio to evaluate securities by type, coupon, credit quality, and duration to review price changes relative to credit spread and interest rate changes. Additionally, we look to economic data as it relates to geographic location as an indication of price-to-call or maturity predictors. For municipal housing securities, we look to changes in cash flow projections, both historical and reasonably estimable projections, to understand yield changes and their effect on valuation.

Lastly, for our short-term securities, we look at acquisition price relative to the coupon or yield. Since our short-term securities are typically 90 days or less to maturity, with the majority listed in Level 2 being seven days or less to redemption, acquisition price is the best estimate of fair value.

We also review data assumptions as supplied by our sources to determine if that data is relevant to current market conditions. In addition, we independently review each sector for transaction volumes, new issuances, and changes in spreads, as well as the overall movement of interest rates along the yield curve to determine if sufficient activity and liquidity exists to provide a credible source for our market valuations.

During each valuation period, we create internal estimations of portfolio valuation (performance returns), based on current market-related activity (i.e., interest rate and credit spread movements and other credit-related factors) within each major sector of our portfolio. We compare our internally generated portfolio results with those generated based on quotes we received externally and research material valuation differences. We compare our results to index returns for each major sector adjusting for duration and credit quality differences to better understand our portfolio’s results. Additionally, we review on a monthly basis our external sales transactions and compare the actual final market sales price to a previous market valuation price. This review provides us further validation that our pricing sources are providing market level prices, since we are able to explain significant price changes (i.e., greater than 2%) as known events occur in the marketplace and affect a particular security’s price at sale.

This analysis provides us with additional comfort regarding the source’s process, the quality of its review, and its willingness to improve its analysis based on feedback from clients. We believe this effort helps ensure that we are reporting the most representative fair values for our securities.

Except as described below, our Level 3 securities are also priced externally; however, due to several factors (e.g., nature of the securities, level of activity, and lack of similar securities trading to obtain observable market level inputs), these valuations are more subjective in nature. Certain private equity investments and fixed-income investments included in the Level 3 category are valued using external pricing supplemented by internal review and analysis.

After all the valuations are received and our review is complete, if the inputs used by vendors are determined to not contain sufficient observable market information, we will reclassify the affected security valuations to Level 3. At December 31, 2014 and 2013, securities in our fixed-maturity portfolio listed as Level 3 were comprised substantially of securities that were either: (i) private placement deals, (ii) thinly held and/or traded securities, or (iii) non-investment-grade securities with little liquidity. Based on these factors, it was difficult to independently verify observable market inputs that were used to generate the external valuations we received. Despite the lack of sufficient observable market information for our Level 3 securities, we believe the valuations received in conjunction with our procedures for evaluating third-party prices support the fair values reported in the financial statements.

At December 31, 2014, we had one private preferred equity security (in ARX Holding Corp.) with a value of $69.3 million that was priced internally. The same security had a value of $39.0 million at December 31, 2013. The increase in value is due to a higher price to book ratio multiple included in the terms of the stock purchase agreement we entered into during December 2014 to purchase a majority interest in ARX Holding Corp. This was the only internally-priced security in the portfolio at December 31, 2014 and 2013.

We review the prices from our external sources for reasonableness using internally developed assumptions to derive prices for the securities, which are then compared to the prices we received. Based on our review, all the prices received from external sources remain unadjusted.

The following tables provide a summary of changes in fair value associated with Level 3 assets for the years ended December 31, 2014 and 2013:

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2013		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales		Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2014
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	$	0		$	0	$	(0.1	)	$	0.1	$	(0.2	)	$	0		$	0
Commercial mortgage-backed	29.0		(3.6		)	0		0			0		(0.2		)	(13.6		)	11.6
Total fixed maturities	29.2		(3.6		)	0		(0.1		)	0.1		(0.4		)	(13.6		)	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials2	39.0		0			0		0			0		30.3			0			69.3
Common equities:
Other risk investments	0.5		(0.1		)	0		0			0		0			0			0.4
Total Level 3 securities	$	68.7	$	(3.7	)	$	0	$	(0.1	)	$	0.1	$	29.9		$	(13.6	)	$	81.3

¹ The $13.6 million was transferred out of Level 3 and into Level 2 due to an improvement in the security's underlying collateral and an increase in liquidity and market activity in comparable securities.

² The $30.3 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

	Level 3 Fair Value
(millions)	Fair Value at Dec. 31, 2012		Calls/ Maturities/ Paydowns			Purchases		Sales			Net Realized (Gain)/Loss on Sales			Change in Valuation			Net Transfers In (Out)1			Fair Value at Dec. 31, 2013
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	45.5	$	(28.6	)	$	125.1	$	0		$	0		$	(0.4	)	$	(141.4	)	$	0.2
Commercial mortgage-backed	25.3		(3.4		)	0		0			0			7.1			0			29.0
Total fixed maturities	70.8		(32.0		)	125.1		0			0			6.7			(141.4		)	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials2	31.9		0			0		0			0			7.1			0			39.0
Common equities:
Other risk investments	12.0		(0.5		)	0.3		(2.4		)	(36.0		)	27.1			0			0.5
Total Level 3 securities	$	114.7	$	(32.5	)	$	125.4	$	(2.4	)	$	(36.0	)	$	40.9		$	(141.4	)	$	68.7

¹ The $141.4 million was transferred out of Level 3 and into Level 2 due to an increase in liquidity and trading volume in the market.

² The $7.1 million represents a net holding period gain on our investment in ARX Holding Corp., which is reflected in net realized gains (losses) on securities in the comprehensive income statement.

The following table provides a summary of the quantitative information about Level 3 fair value measurements for our applicable securities at December 31:

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2014		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0	NA	NA	NA
Commercial mortgage-backed	11.6		External vendor	Prepayment rate1	0
Total fixed maturities	11.6
Equity securities:
Nonredeemable preferred stocks:
Financials	69.3		Multiple of tangible net book value	Price to book ratio multiple	2.6
Subtotal Level 3 securities	80.9
Third-party pricing exemption securities2	0.4
Total Level 3 securities	$	81.3

NA= Not Applicable since we did not hold any residential mortgage-backed Level 3 securities at December 31, 2014.

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

	Quantitative Information about Level 3 Fair Value Measurements
($ in millions)	Fair Value at Dec. 31, 2013		Valuation Technique	Unobservable Input	Unobservable Input Assumption
Fixed maturities:
Asset-backed securities:
Residential mortgage-backed	$	0.2	External vendor	Prepayment rate1	0
Commercial mortgage-backed	29.0		External vendor	Prepayment rate2	0
Total fixed maturities	29.2
Equity securities:
Nonredeemable preferred stocks:
Financials	39.0		Multiple of tangible net book value	Price to book ratio multiple	1.9
Subtotal Level 3 securities	68.2
Third-party pricing exemption securities3	0.5
Total Level 3 securities	$	68.7

¹ Assumes that one security has 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

² Assumes that two securities have 0% of the principal amount of the underlying loans that will be paid off prematurely in each year.

³ The fair values for these securities were obtained from non-binding external sources where unobservable inputs are not reasonably available to us.

Due to the relative size of the securities’ fair values compared to the total portfolio’s fair value, any changes in pricing methodology would not have a significant change in valuation that would materially impact net and comprehensive income. During the years ended December 31, 2014 and 2013, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

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Investments Composition of Fixed Maturities by Maturity (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Available for sale, cost
Less than one year	$ 3,180.1
One to five years	7,026.3
Five to ten years	3,093.0
Ten years or greater	59.0
Total	13,358.4	[1]
Available for sale, Fair value
Less than one year	3,217.4
One to five years	7,097.2
Five to ten years	3,152.9
Ten years or greater	65.9
Total	$ 13,533.4	[1]

[1] Excludes $15.8 million related to our open interest rate swap positions.

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Reporting And Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Reporting And Accounting Policies

REPORTING AND ACCOUNTING POLICIES

Nature of OperationsThe Progressive Corporation, an insurance holding company formed in 1965, had 53 subsidiaries, one mutual insurance company affiliate, and one limited partnership investment affiliate (collectively the “subsidiaries”) as of December 31, 2014. Our insurance subsidiaries and mutual company affiliate (collectively the Progressive Group of Insurance Companies) provide personal and commercial automobile insurance and other specialty property-casualty insurance and related services. Our Personal Lines segment writes insurance for personal autos and recreational vehicles through both an independent insurance agency channel and a direct channel. Our Commercial Lines segment writes primary liability and physical damage insurance for automobiles and trucks owned and/or operated predominantly by small businesses through both the independent agency and direct channels. We operate our businesses throughout the United States; we also sell personal auto physical damage and property damage liability insurance via the Internet in Australia.

Basis of Consolidation and ReportingThe accompanying consolidated financial statements include the accounts of The Progressive Corporation, its wholly owned subsidiaries, and its affiliates, in which we have a controlling financial interest. All intercompany accounts and transactions are eliminated in consolidation.

EstimatesWe are required to make estimates and assumptions when preparing our financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America (GAAP). As estimates develop into fact (e.g., losses are paid), results may, and will likely, differ from those estimates.

InvestmentsOur fixed-maturity securities, equity securities, and short-term investments are accounted for on an available-for-sale basis. See Note 2 – Investments for details regarding the composition of our investment portfolio.

Fixed-maturity securities include debt securities and redeemable preferred stocks, which may have fixed or variable principal payment schedules, may be held for indefinite periods of time, and may be used as a part of our asset/liability strategy or sold in response to changes in interest rates, anticipated prepayments, risk/reward characteristics, liquidity needs, or other economic factors. These securities are carried at fair value with the corresponding unrealized gains (losses), net of deferred income taxes, reported in accumulated other comprehensive income. Fair values are obtained from recognized pricing services or are quoted by market makers and dealers, with limited exceptions discussed in Note 3 – Fair Value.

Included in the fixed-maturity portfolio are asset-backed securities. The asset-backed securities are generally accounted for under the retrospective method. The retrospective method recalculates yield assumptions (based on changes in interest rates or cash flow expectations) historically to the inception of the investment holding period, and applies the required adjustment, if any, to the cost basis, with the offset recorded to investment income. The prospective method is used primarily for interest-only securities, non-investment-grade asset-backed securities, and certain asset-backed securities with sub-prime loan exposure or where there is a greater risk of non-performance and where it is possible the initial investment may not be substantially recovered. The prospective method requires a calculation of expected future repayments and resets the yield to allow for future period adjustments; no current period impact to investment income or the security’s cost is made based on the cash flow update. Prepayment assumptions are based on market expectations and are updated quarterly.

Equity securities include common stocks, nonredeemable preferred stocks, and other risk investments, and are reported at fair values. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income. To the extent we hold any foreign equities or foreign currency hedges, any change in value due to exchange rate fluctuations would be limited by foreign currency hedges, if any, and would be recognized in income in the current period.

Short-term investments may include Eurodollar deposits, commercial paper, repurchase transactions, and other securities expected to mature within one year. In addition, short-term investments can include auction rate securities (i.e., certain municipal bonds and preferred stocks). Due to the nature of auction rate securities, these securities are classified as short-term based upon their expected auction date (generally 7-49 days) rather than on their contractual maturity date (which is greater than one year at original issuance). In the event that an auction fails, the security may need to be reclassified from short-term. Changes in fair value of these securities, net of deferred income taxes, are reflected as unrealized gains (losses) in accumulated other comprehensive income.

Trading securities are securities bought principally for the purpose of sale in the near term. To the extent we have trading securities, changes in fair value would be recognized in income in the current period. Derivative instruments, which may be used for trading purposes or classified as trading derivatives due to the characteristics of the transaction, are discussed below.

Derivative instruments may include futures, options, forward positions, foreign currency forwards, interest rate swap agreements, and credit default swaps and may be used in the portfolio for general investment purposes or to hedge the exposure to:

• 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).

To the extent we have derivatives held for general investment purposes, these derivative instruments are recognized as either assets or liabilities and measured at fair value, with changes in fair value recognized in income as a component of net realized gains (losses) on securities during the period of change.

Derivatives designated as hedges are required to be evaluated on established criteria to determine the effectiveness of their correlation to, and ability to reduce the designated risk of, specific securities or transactions. Effectiveness is required to be reassessed regularly. Hedges that are deemed to be effective would be accounted for as follows:

• 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.

If a hedge is deemed to become ineffective or discontinued, the following accounting treatment would be applied:

• 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.

For all derivative positions, net cash requirements are limited to changes in fair values, which may vary resulting from changes in interest rates, currency exchange rates, and other factors. Exposure to credit risk is limited to the carrying value; collateral may be required to limit credit risk. We have elected not to offset fair value amounts that arise from derivative positions with the same counterparty under a master netting arrangement.

Investment securities are exposed to various risks such as interest rate, market, credit, and liquidity risk. Fair values of securities fluctuate based on the nature and magnitude of changing market conditions; significant changes in market conditions could materially affect the portfolio’s value in the near term. We regularly monitor our portfolio for price changes, which might indicate potential impairments, and perform detailed reviews of securities with unrealized losses. In such cases, changes in fair value are evaluated to determine the extent to which such changes are attributable to: (i) fundamental factors specific to the issuer, such as financial condition, business prospects, or other factors, (ii) market-related factors, such as interest rates or equity market declines, or (iii) credit-related losses, where the present value of cash flows expected to be collected are lower than the amortized cost basis of the security.

We analyze our debt securities that are in a loss position to determine if we intend to sell, or if it is more likely than not that we will be required to sell, the security prior to recovery and, if so, we write down the security to its current fair value, with the entire amount of the write-down recorded to earnings. To the extent that it is more likely than not that we will hold the debt security until recovery (which could be maturity), we determine if any of the decline in value is due to a credit loss (i.e., where the present value of future cash flows expected to be collected is lower than the amortized cost basis of the security) and, if so, we recognize that portion of the impairment as a component of net realized gains (losses) in the comprehensive income statement, with the difference (i.e., non-credit related impairment) recognized as part of our net unrealized gains (losses) in accumulated other comprehensive income. When an equity security (common equity and nonredeemable preferred stock) in our investment portfolio has an unrealized loss in fair value that is deemed to be other-than-temporary, we reduce the book value of such security to its current fair value, recognizing the decline as a realized loss in the comprehensive income statement. Any future changes in fair value, either increases or decreases, are reflected as changes in unrealized gains (losses) as part of accumulated other comprehensive income.

Investment income consists of interest, dividends, and amortization. In addition to the discussion above for asset-backed securities, interest is recognized on an accrual basis using the effective yield method. Depending on the nature of the equity instruments, dividends are recorded at either the ex-dividend date or on an accrual basis.

Realized gains (losses) on securities are computed based on the first-in first-out method and include write-downs on available-for-sale securities considered to have other-than-temporary declines in fair value (excluding non-credit related impairments), as well as holding period valuation changes on derivatives, trading securities, and hybrid instruments (e.g., securities with embedded options, where the option is a feature of the overall change in the value of the instrument).

Insurance Premiums and Receivables  Insurance premiums written are earned into income on a pro rata basis over the period of risk, based on a daily earnings convention. Accordingly, unearned premiums represent the portion of premiums written that are applicable to the unexpired risk. We provide insurance and related services to individuals and small commercial accounts and offer a variety of payment plans. Generally, premiums are collected prior to providing risk coverage, minimizing our exposure to credit risk. We perform a policy level evaluation to determine the extent to which the premiums receivable balance exceeds the unearned premiums balance. We then age this exposure to establish an allowance for doubtful accounts based on prior experience.

Deferred Acquisition CostsDeferred acquisition costs include commissions, premium taxes, and other variable underwriting and direct sales costs incurred in connection with the successful acquisition or renewal of insurance contracts. These acquisition costs are deferred and amortized over the policy period in which the related premiums are earned. We consider anticipated investment income in determining the recoverability of these costs. Management believes that these costs will be fully recoverable in the near term.

We do not defer any advertising costs. Total advertising costs, which are expensed as incurred, for the years ended December 31, were:

(millions)	Advertising Costs
2014	$	681.8
2013	619.3
2012	546.8

Loss and Loss Adjustment Expense ReservesLoss reserves represent the estimated liability on claims reported to us, plus reserves for losses incurred but not recorded (IBNR). These estimates are reported net of amounts estimated to be recoverable from salvage and subrogation. Loss adjustment expense reserves represent the estimated expenses required to settle these claims and losses. The methods of making estimates and establishing these reserves are reviewed regularly, and resulting adjustments are reflected in income in the current period. Such loss and loss adjustment expense reserves are susceptible to change in the near term.

ReinsuranceOur reinsurance transactions primarily include premiums ceded to state-provided reinsurance facilities (e.g., Michigan Catastrophic Claims Association and North Carolina Reinsurance Facility) and premiums written under state-mandated involuntary plans for commercial vehicles (Commercial Auto Insurance Procedures/Plans – “CAIP”). Prepaid reinsurance premiums are earned on a pro rata basis over the period of risk, based on a daily earnings convention, which is consistent with premiums written. See Note 7 – Reinsurance for further discussion.

Income Taxes  The income tax provision is calculated under the balance sheet approach. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. The principal items giving rise to such differences are investment securities (e.g., net unrealized gains (losses), write-downs on securities determined to be other-than-temporarily impaired, and derivative instruments), loss and loss adjustment expense reserves, unearned premiums reserves, deferred acquisition costs, property and equipment, and non-deductible accruals. We review our deferred tax assets regularly for recoverability. See Note 5 – Income Taxes for further discussion.

Property and Equipment  Property and equipment are recorded at cost, less accumulated depreciation, and include capitalized software developed or acquired for internal use. Depreciation is recognized over the estimated useful lives of the assets using accelerated methods for computer equipment and the straight-line method for all other fixed assets. The useful life for computer equipment and laptop computers is 3 years. The useful lives range from 7 to 40 years for buildings, improvements, and integrated components and 3 to 15 years for all other property and equipment. Land and buildings comprised 77% and 76% of total property and equipment at December 31, 2014 and 2013, respectively.

During 2014, decisions were made to sell one property originally purchased for a future Service Center site. At December 31, 2014, included in other assets in the consolidated balance sheets is $8.7 million of "held for sale" property, which represents the fair value of this property less the estimated costs to sell.

Total capitalized interest, which primarily relates to capitalized software projects, for the years ended December 31, was:

(millions)	Capitalized Interest
2014	$	1.3
2013	0.8
2012	0.3

Guaranty Fund Assessments  We are subject to state guaranty fund assessments, which provide for the payment of covered claims or other insurance obligations of insurance companies deemed insolvent. These assessments are accrued after a formal determination of insolvency has occurred, and we have written the premiums on which the assessments will be based.

Fees and Other Revenues  Fees and other revenues primarily represent fees collected from policyholders relating to installment charges in accordance with our bill plans, as well as late payment and insufficient funds fees. Other revenues may include revenue from the sale of tax credits, rental income, and other revenue transactions.

Service Revenues and ExpensesOur service businesses provide insurance-related services. Service revenues generated from processing business for involuntary CAIP plans are earned on a pro rata basis over the term of the related policies. Service expenses related to these CAIP plans include acquisition expenses, which are deferred and amortized over the period in which the related revenues are earned. Other service business revenues and expenses are recorded in the period in which they are earned or incurred.

Equity-Based Compensation  We currently issue time-based and performance-based restricted stock unit awards to key members of management as our form of equity compensation, and time-based restricted stock awards to non-employee directors. Prior to 2010, we issued restricted stock awards, instead of restricted stock unit awards, to employees. Collectively, we refer to these awards as “restricted equity awards.” We currently do not issue stock options as a form of equity compensation, and no such awards remain outstanding. Compensation expense for time-based restricted equity awards with installment vesting is recognized over each respective vesting period. For performance-based restricted equity awards, compensation expense is recognized over the respective estimated vesting periods. Dividend equivalent units are credited

to outstanding restricted units awards, both time-based and performance-based, at the time a dividend is paid to shareholders.

We record an estimate for expected forfeitures of restricted equity awards based on our historical forfeiture rates. In addition, we shorten the vesting periods of certain restricted equity awards based on the “qualified retirement” provisions in our incentive compensation plans, under which (among other provisions) the vesting of 50% of outstanding time-based restricted equity awards will accelerate upon retirement if the participant is 55 years of age or older and satisfies certain years-of-service requirements. For time-based awards granted after February 2013, we modified our "qualified retirement" provisions to vest and distribute 50% of the unvested portion of the award upon reaching eligibility for a qualified retirement and shortly after the grant date for each subsequent award.

The total compensation expense recognized for our equity-based compensation for the years ended December 31, was:

(millions)	2014		2013		2012
Pretax expense	$	51.4	$	64.9	$	63.4
Tax benefit	18.0		22.7		22.2

The decrease in expense for 2014 reflects adjustments recorded to our performance-based equity awards based on current estimates of the level of performance expected to be reached.

Net Income Per Share  Basic net income per share is computed using the weighted average number of common shares outstanding during the reporting period, excluding unvested time-based and performance-based restricted equity awards that are subject to forfeiture. Diluted net income per share includes common stock equivalents assumed outstanding during the period. Our common stock equivalents include the incremental shares assumed to be issued for:

• 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.

Supplemental Cash Flow InformationCash includes only bank demand deposits. Non-cash activity includes declared but unpaid dividends. For the years ended December 31, we paid the following:

(millions)	2014		2013		2012
Income taxes	$	515.0	$	497.0	$	389.1
Interest	116.0		122.3		135.0

New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update (ASU) related to the accounting for revenue from contracts with customers. This standard is intended to help reduce diversity in practice and enhance comparability between entities related to revenue recognition and is effective for fiscal years beginning after December 15, 2016 (2017 for calendar-year companies). Since the accounting for insurance contracts is outside of the scope of this ASU, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB issued an ASU related to the accounting for share-based payments when the terms of an employee award can be achieved after the requisite service period. To the extent an equity award contains provisions that permit an employee who leaves the company before the performance targets are reached to receive some or all of the benefits of the award if and as the award later vests, this standard requires companies to recognize the compensation cost during the employee's remaining service period. This standard is effective for fiscal years beginning after December 15, 2015 (2016 for calendar-year companies). We plan to adopt this standard prospectively.  Although this standard may require an acceleration of the expense recognition of our share-based payment awards, we do not expect it to have a significant impact on our financial condition, cash flows, or results of operations.

In June 2014, the FASB also issued an ASU related to repurchase-to-maturity transactions, repurchase financings, and related disclosures. The intent is to clarify that repurchase-to-maturity transactions must be accounted for and disclosed as secured borrowings, rather than potentially accounted for as sales, as permissible under certain circumstances in the previous guidance. This guidance is effective for annual and interim periods after December 15, 2014 (2015 for calendar-year companies). We do not typically engage in these type of transactions; therefore, we do not expect this standard to have a significant impact on our financial condition, cash flows, or results of operations.

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Investments

12 Months Ended

Dec. 31, 2014

Investments Schedule [Abstract]

Investments

INVESTMENTS

The following tables present the composition of our investment portfolio by major security type, consistent with our internal classification of how we manage, monitor, and measure the portfolio:

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1			Fair Value		% of Total Fair Value
December 31, 2014
Fixed maturities:
U.S. government obligations	$	2,641.1	$	27.3	$	(1.3	)	$	0		$	2,667.1	14.0	%
State and local government obligations	2,095.7		44.6		(1.1		)	0			2,139.2		11.2
Foreign government obligations	14.2		0		0			0			14.2		0.1
Corporate debt securities	2,813.9		32.9		(10.4		)	0.3			2,836.7		14.9
Residential mortgage-backed securities	1,635.5		34.5		(10.8		)	(0.7		)	1,658.5		8.7
Commercial mortgage-backed securities	2,278.7		39.3		(2.6		)	0.2			2,315.6		12.2
Other asset-backed securities	1,634.9		3.8		(0.8		)	0.8			1,638.7		8.6
Redeemable preferred stocks	260.2		24.7		(5.7		)	0			279.2		1.5
Total fixed maturities	13,374.2		207.1		(32.7		)	0.6			13,549.2		71.2
Equity securities:
Nonredeemable preferred stocks	590.4		201.1		(6.4		)	42.4			827.5		4.4
Common equities	1,289.2		1,213.2		(10.1		)	0			2,492.3		13.1
Short-term investments	2,149.0		0		0			0			2,149.0		11.3
Total portfolio2,3	$	17,402.8	$	1,621.4	$	(49.2	)	$	43.0		$	19,018.0	100.0	%

($ in millions)	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Net Realized Gains (Losses)1		Fair Value		% of Total Fair Value
December 31, 2013
Fixed maturities:
U.S. government obligations	$	3,630.4	$	48.4	$	(16.6	)	$	0	$	3,662.2	20.3	%
State and local government obligations	2,247.3		27.1		(18.4		)	0		2,256.0		12.5
Foreign government obligations	15.6		0		0			0		15.6		0.1
Corporate debt securities	2,885.0		60.4		(20.4		)	1.6		2,926.6		16.2
Residential mortgage-backed securities	1,110.1		31.9		(14.1		)	0		1,127.9		6.2
Commercial mortgage-backed securities	2,154.4		43.9		(37.8		)	0		2,160.5		12.0
Other asset-backed securities	1,073.0		6.6		(2.1		)	0.2		1,077.7		6.0
Redeemable preferred stocks	299.5		24.1		(9.7		)	0		313.9		1.7
Total fixed maturities	13,415.3		242.4		(119.1		)	1.8		13,540.4		75.0
Equity securities:
Nonredeemable preferred stocks	445.7		258.7		(4.5		)	11.3		711.2		3.9
Common equities	1,451.1		1,081.8		(2.4		)	0		2,530.5		14.0
Short-term investments	1,272.6		0		0			0		1,272.6		7.1
Total portfolio2,3	$	16,584.7	$	1,582.9	$	(126.0	)	$	13.1	$	18,054.7	100.0	%

¹ Represents net holding period gains (losses) on certain hybrid securities (discussed below).

² Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

³ The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

Our short-term investments include commercial paper and other investments that are expected to mature within one year. At December 31, 2014 and 2013, we had $5.7 million and $6.3 million, respectively, in treasury bills issued by the Australian government, included in short-term investments. We did not hold any repurchase transactions where we lent collateral at December 31, 2014 or 2013. To the extent our repurchase transactions were with the same counterparty and subject to an enforceable master netting arrangement, we could elect to offset these transactions. Consistent with past practice, we have elected not to offset these transactions and therefore report these transactions on a gross basis on our balance sheets.

Also included in short-term investments are reverse repurchase commitment transactions, where we loan cash to internally approved counterparties and receive U.S. Treasury Notes pledged as collateral against the cash borrowed. Our exposure to credit risk is limited due to the nature of the collateral (i.e., U.S. Treasury Notes) received. We have counterparty exposure on these trades in the event of a counterparty default to the extent the general collateral security's value is below the amount of cash we delivered to acquire the collateral. The short-term duration of the transactions (primarily overnight) reduces that exposure.

We had no open reverse repurchase commitments at December 31, 2014, compared to $200.0 million with one counterparty at December 31, 2013. During 2014, our largest outstanding balance of reverse repurchase commitments was $500.0 million, which was open for one day; the average daily balance of reverse repurchase commitments was $158.8 million.

Included in our fixed-maturity and equity securities are hybrid securities, which are reported at fair value at December 31:

(millions)	2014		2013
Fixed maturities:
Corporate debt securities	$	139.8	$	164.2
Residential mortgage-backed securities	120.7		0
Commercial mortgage-backed securities	31.2		0
Other asset-backed securities	13.7		14.8
Total fixed maturities	305.4		179.0
Equity securities:
Nonredeemable preferred stocks	122.3		60.3
Total hybrid securities	$	427.7	$	239.3

Certain corporate debt securities are accounted for as hybrid securities since they were acquired at a substantial premium and contain a change-in-control put option (derivative) that permits the investor, at its sole option if and when a change in control is triggered, to put the security back to the issuer at a 1% premium to par. Due to this change-in-control put option and the substantial market premium paid to acquire these securities, there is the potential that the election to put, upon the change in control, would result in an acceleration of the recognition of the remaining premium paid on these securities in our results of operations. This would result in a loss of $9.3 million as of December 31, 2014, if all of these bonds experienced a simultaneous change in control and we elected to exercise all of our put options. The put feature limits the potential loss in value that could be experienced in the event a corporate action occurs that results in a change in control that materially diminishes the credit quality of the issuer. We are under no obligation to exercise the put option we hold if a change in control occurs.

The residential mortgage-backed securities accounted for as hybrid securities are obligations of the issuer with payments of principal based on the performance of a reference pool of loans. This embedded derivative results in the securities incorporating the risk of default from both the issuer and the related loan pool.

The commercial mortgage-backed securities in the table above contain fixed interest rate reset features that will increase the coupons in the event the securities are not fully paid off on the anticipated repayment date. These reset features have the potential to more than double our initial purchase yield for each security.

The other asset-backed security in the table above represents one hybrid security that was acquired at a deep discount to par due to a failing auction, and contains a put option that allows the investor to put that security back to the auction at par if the auction is restored. This embedded derivative had the potential to more than double our initial investment yield at acquisition.

The hybrid securities in our nonredeemable preferred stock portfolio are perpetual preferred stocks that have call features with fixed-rate coupons, whereby the change in value of the call features is a component of the overall change in value of the preferred stocks.

Our securities are reported at fair value, with the changes in fair value of these securities (other than hybrid securities and derivative instruments) reported as a component of accumulated other comprehensive income, net of deferred income taxes. The changes in fair value of the hybrid securities and derivative instruments are recorded as a component of net realized gains (losses) on securities.

At December 31, 2014, bonds and certificates of deposit in the principal amount of $153.7 million were on deposit to meet state insurance regulatory and/or rating agency requirements. We did not have any securities of any one issuer, excluding U.S. government obligations, with an aggregate cost or fair value exceeding 10% of total shareholders’ equity at December 31, 2014 or 2013. At December 31, 2014, we did not have any debt securities that were non-income producing during the preceding 12 months.

Fixed Maturities  The composition of fixed maturities by maturity at December 31, 2014, was:

(millions)	Cost		Fair Value
Less than one year	$	3,180.1	$	3,217.4
One to five years	7,026.3		7,097.2
Five to ten years	3,093.0		3,152.9
Ten years or greater	59.0		65.9
Total1	$	13,358.4	$	13,533.4

¹ Excludes $15.8 million related to our open interest rate swap positions.

Asset-backed securities are classified in the maturity distribution table based upon their projected cash flows. All other securities which do not have a single maturity date are reported based upon expected average maturity. Contractual maturities may differ from expected maturities because the issuers of the securities may have the right to call or prepay obligations.

Gross Unrealized Losses  As of December 31, 2014, we had $39.1 million of gross unrealized losses in our fixed-income securities (i.e., fixed-maturity securities, nonredeemable preferred stocks, and short-term investments) and $10.1 million in our common equities. We currently do not intend to sell the fixed-income securities and determined that it is more likely than not that we will not be required to sell these securities for the period of time necessary to recover their cost bases. A review of our fixed-income securities indicated that the issuers were current with respect to their interest obligations and that there was no evidence of any deterioration of the current cash flow projections that would indicate we would not receive the remaining principal at maturity. For common equities, 88% of our common stock portfolio was indexed to the Russell 1000; as such, this portfolio may contain securities in a loss position for an extended period of time, subject to possible write-downs, as described below. We may retain these securities as long as the portfolio and index correlation remain similar. To the extent there is issuer-specific deterioration, we may write-down the securities of that issuer. The remaining 12% of our common stocks were part of a managed equity strategy selected and administered by external investment advisors. If our review of loss position securities indicated there was a fundamental, or market, impairment on these securities that was determined to be other-than-temporary, we would recognize a write-down in accordance with our stated policy.

The following tables show the composition of gross unrealized losses by major security type and by the length of time that individual securities have been in a continuous unrealized loss position:

	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, 2014
Fixed maturities:
U.S. government obligations	11	$	428.2	$	(1.3	)	5	$	150.7	$	(0.3	)	6	$	277.5	$	(1.0	)
State and local government obligations	46	234.2		(1.1		)	28	177.9		(0.4		)	18	56.3		(0.7		)
Corporate debt securities	53	843.2		(10.4		)	43	647.5		(6.1		)	10	195.7		(4.3		)
Residential mortgage-backed securities	70	844.2		(10.8		)	33	465.2		(3.1		)	37	379.0		(7.7		)
Commercial mortgage-backed securities	63	723.4		(2.6		)	54	667.5		(1.4		)	9	55.9		(1.2		)
Other asset-backed securities	44	741.8		(0.8		)	42	715.7		(0.7		)	2	26.1		(0.1		)
Redeemable preferred stocks	3	103.0		(5.7		)	1	33.0		(1.0		)	2	70.0		(4.7		)
Total fixed maturities	290	3,918.0		(32.7		)	206	2,857.5		(13.0		)	84	1,060.5		(19.7		)
Equity securities:
Nonredeemable preferred stocks	8	231.4		(6.4		)	5	143.2		(3.6		)	3	88.2		(2.8		)
Common equities	20	68.4		(10.1		)	19	61.8		(9.6		)	1	6.6		(0.5		)
Total equity securities	28	299.8		(16.5		)	24	205.0		(13.2		)	4	94.8		(3.3		)
Total portfolio	318	$	4,217.8	$	(49.2	)	230	$	3,062.5	$	(26.2	)	88	$	1,155.3	$	(23.0	)

	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, 2013
Fixed maturities:
U.S. government obligations	29	$	1,444.3	$	(16.6	)	28	$	1,434.6	$	(16.3	)	1	$	9.7	$	(0.3	)
State and local government obligations	141	844.2		(18.4		)	119	759.3		(17.1		)	22	84.9		(1.3		)
Corporate debt securities	51	997.6		(20.4		)	45	831.1		(17.8		)	6	166.5		(2.6		)
Residential mortgage-backed securities	66	763.5		(14.1		)	45	597.6		(7.9		)	21	165.9		(6.2		)
Commercial mortgage-backed securities	76	1,061.9		(37.8		)	60	809.2		(19.7		)	16	252.7		(18.1		)
Other asset-backed securities	25	287.2		(2.1		)	22	233.3		(1.8		)	3	53.9		(0.3		)
Redeemable preferred stocks	4	122.7		(9.7		)	0	0		0			4	122.7		(9.7		)
Total fixed maturities	392	5,521.4		(119.1		)	319	4,665.1		(80.6		)	73	856.3		(38.5		)
Equity securities:
Nonredeemable preferred stocks	7	142.3		(4.5		)	7	142.3		(4.5		)	0	0		0
Common equities	24	59.7		(2.4		)	20	58.5		(2.4		)	4	1.2		0
Total equity securities	31	202.0		(6.9		)	27	200.8		(6.9		)	4	1.2		0
Total portfolio	423	$	5,723.4	$	(126.0	)	346	$	4,865.9	$	(87.5	)	77	$	857.5	$	(38.5	)

During 2014, the number of securities in our fixed-maturity portfolio with unrealized losses decreased, reflecting a combination of an increase in prices associated with a general decline in interest rates at certain maturities, as well as sales of securities for portfolio management reasons. We had no material decreases in valuation as a result of credit rating downgrades on our fixed-maturity securities during the year. All of the fixed-maturity securities in an unrealized loss position at December 31, 2014 in the table above are current with respect to required principal and interest payments. Unrealized losses on our nonredeemable preferred stocks related to eight issues with unrealized losses, averaging approximately 3% of our total cost of those securities. A review of these securities concluded that the unrealized losses are market-related adjustments to the values, which were determined not to be other-than-temporary, and we continue to expect to recover our initial investments on these securities. The unrealized losses in our common stock portfolio in the less than 12 months category reflect losses that developed late in the fourth quarter 2014. A review of the securities in a loss position did not uncover fundamental issues with the issuers that would indicate other-than-temporary impairments existed. Additionally, expectations for recovery in the next 12 months would put the fair values at or above our current book values. Lastly, we determined, as of the balance sheet date, that it was not likely these securities would be sold prior to that recovery.

Other-Than-Temporary Impairment (OTTI)  The following table shows the total non-credit portion of the OTTI recorded in accumulated other comprehensive income, reflecting the original non-credit loss at the time the credit impairment was determined:

	December 31,
(millions)	2014			2013
Fixed maturities:
Residential mortgage-backed securities	$	(44.1	)	$	(44.1	)
Commercial mortgage-backed securities	(0.6		)	(0.9		)
Total fixed maturities	$	(44.7	)	$	(45.0	)

The following tables provide rollforwards of the amounts related to credit losses recognized in earnings for the periods ended December 31, 2014, 2013, and 2012, for which a portion of the OTTI losses were also recognized in accumulated other comprehensive income at the time the credit impairments were determined and recognized:

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed		Total
Balance at December 31, 2013	$	19.2		$	0.4	$	19.6
Credit losses for which an OTTI was previously recognized	0			0		0
Credit losses for which an OTTI was not previously recognized	0			0		0
Reductions for securities sold/matured	(0.1		)	0		(0.1		)
Change in recoveries of future cash flows expected to be collected1,2	(6.4		)	0		(6.4		)
Reductions for previously recognized credit impairments written-down to fair value3	0			0		0
Balance at December 31, 2014	$	12.7		$	0.4	$	13.1

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0			0			0
Reductions for securities sold/matured	0			0			0
Change in recoveries of future cash flows expected to be collected1,2	(7.8		)	(0.2		)	(8.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(0.2		)	0			(0.2		)
Balance at December 31, 2013	$	19.2		$	0.4		$	19.6

(millions)	Residential Mortgage- Backed			Commercial Mortgage- Backed			Total
Balance at December 31, 2011	$	34.5		$	1.3		$	35.8
Credit losses for which an OTTI was previously recognized	0.1			0			0.1
Credit losses for which an OTTI was not previously recognized	0.3			0			0.3
Reductions for securities sold/matured	0			(0.2		)	(0.2		)
Change in recoveries of future cash flows expected to be collected1,2	(3.8		)	(0.2		)	(4.0		)
Reductions for previously recognized credit impairments written-down to fair value3	(4.0		)	(0.3		)	(4.3		)
Balance at December 31, 2012	$	27.1		$	0.6		$	27.7

¹ Reflects expected recovery of prior period impairments that will be accreted into income over the remaining life of the security.

² Includes $4.3 million, $2.6 million, and $1.4 million at December 31, 2014, 2013, and 2012, respectively, recognized in income in excess of the cash flows expected to be collected at the time of the write-downs.

³ Reflects reductions of prior credit impairments where the current credit impairment requires writing securities down to fair value (i.e., no remaining non-credit loss).

Although we determined that it is more likely than not that we will not be required to sell the securities prior to the recovery of their respective cost bases (which could be maturity), we are required to measure the amount of credit losses on the securities that were determined to be other-than-temporarily impaired. In that process, we considered a number of factors and inputs related to the individual securities. The methodology and significant inputs used to measure the amount of credit losses in our portfolio included: current performance indicators on the underlying assets (e.g., delinquency rates, foreclosure rates, and default rates); credit support (via current levels of subordination); historical credit ratings; and updated cash flow expectations based upon these performance indicators. In order to determine the amount of credit loss, if any, the net present value of the cash flows expected (i.e., expected recovery value) was calculated using the current book yield for each security, and was compared to its current amortized value. In the event that the net present value was below the amortized value, a credit loss was deemed to exist, and the security was written down.

Net Realized Gains (Losses)  The components of net realized gains (losses) for the years ended December 31, were:

(millions)	2014			2013			2012
Gross realized gains on security sales
Fixed maturities:
U.S. government obligations	$	24.0		$	8.5		$	20.2
State and local government obligations	9.3			7.7			15.0
Corporate and other debt securities	37.2			47.7			58.1
Residential mortgage-backed securities	2.7			3.0			1.2
Commercial mortgage-backed securities	17.0			10.0			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	2.7			0			0.7
Total fixed maturities	92.9			76.9			115.4
Equity securities:
Nonredeemable preferred stocks	90.0			126.3			78.2
Common equities	107.3			68.6			167.0
Subtotal gross realized gains on security sales	290.2			271.8			360.6
Gross realized losses on security sales
Fixed maturities:
U.S. government obligations	(7.6		)	(3.7		)	(1.9		)
State and local government obligations	(0.5		)	0			0
Corporate and other debt securities	(2.8		)	(6.2		)	(0.6		)
Residential mortgage-backed securities	(0.2		)	0			0
Commercial mortgage-backed securities	(8.3		)	(1.8		)	0
Redeemable preferred stocks	(3.2		)	(0.1		)	(0.4		)
Total fixed maturities	(22.6		)	(11.8		)	(2.9		)
Equity securities:
Nonredeemable preferred stocks	0			(0.1		)	(1.1		)
Common equities	(7.3		)	(0.6		)	(27.1		)
Subtotal gross realized losses on security sales	(29.9		)	(12.5		)	(31.1		)
Net realized gains (losses) on security sales
Fixed maturities:
U.S. government obligations	16.4			4.8			18.3
State and local government obligations	8.8			7.7			15.0
Corporate and other debt securities	34.4			41.5			57.5
Residential mortgage-backed securities	2.5			3.0			1.2
Commercial mortgage-backed securities	8.7			8.2			19.3
Other asset-backed securities	0			0			0.9
Redeemable preferred stocks	(0.5		)	(0.1		)	0.3
Total fixed maturities	70.3			65.1			112.5
Equity securities:
Nonredeemable preferred stocks	90.0			126.2			77.1
Common equities	100.0			68.0			139.9
Subtotal net realized gains (losses) on security sales	260.3			259.3			329.5
Other-than-temporary impairment losses
Fixed maturities:
Residential mortgage-backed securities	0			(0.6		)	(1.6		)
Commercial mortgage-backed securities	0			0			(0.1		)
Total fixed maturities	0			(0.6		)	(1.7		)
Equity securities:
Common equities	(7.2		)	(5.5		)	(1.8		)
Subtotal other-than-temporary impairment losses	(7.2		)	(6.1		)	(3.5		)
Other gains (losses)
Hybrid securities	30.5			6.4			14.3
Derivative instruments	(64.1		)	56.6			(43.1		)
Litigation settlements	4.7			2.2			9.6
Subtotal other gains (losses)	(28.9		)	65.2			(19.2		)
Total net realized gains (losses) on securities	$	224.2		$	318.4		$	306.8

Gross realized gains and losses were predominantly the result of sales transactions in our fixed-income portfolio related to

movements in credit spreads and interest rates and sales from our equity-indexed portfolio. In addition, gains and losses reflect recoveries from litigation settlements and holding period valuation changes on hybrids and derivatives. Also included are write-downs for securities determined to be other-than-temporarily impaired in our fixed-maturity and/or equity portfolios.

Net Investment Income  The components of net investment income for the years ended December 31, were:

(millions)	2014			2013			2012
Fixed maturities:
U.S. government obligations	$	46.2		$	50.2		$	49.8
State and local government obligations	50.1			48.0			51.1
Foreign government obligations	0.4			0.2			0
Corporate debt securities	82.1			98.8			107.5
Residential mortgage-backed securities	44.9			28.1			16.1
Commercial mortgage-backed securities	66.0			74.8			82.2
Other asset-backed securities	16.7			16.7			20.3
Redeemable preferred stocks	15.5			21.2			24.2
Total fixed maturities	321.9			338.0			351.2
Equity securities:
Nonredeemable preferred stocks	38.6			36.2			43.8
Common equities	46.6			45.8			44.9
Short-term investments	1.3			2.0			3.1
Investment income	408.4			422.0			443.0
Investment expenses	(18.9		)	(18.8		)	(15.4		)
Net investment income	$	389.5		$	403.2		$	427.6

The decrease in our investment income during 2014 was due in part to an increase in short-term investments held and lower yields on securities purchased during the year.

Trading Securities  At December 31, 2014 and 2013, we did not hold any trading securities and we did not have any net realized gains (losses) on trading securities for the years ended December 31, 2014, 2013, and 2012.

Derivative Instruments  For all derivative positions discussed below, realized holding period gains and losses are netted with any upfront cash that may be exchanged under the contract to determine if the net position should be classified either as an asset or liability. To be reported as a net derivative asset and a component of the available-for-sale portfolio, the inception-to-date realized gain on the derivative position at period end would have to exceed any upfront cash received. On the other hand, a net derivative liability would include any inception-to-date realized loss plus the amount of upfront cash received (or netted, if upfront cash was paid) and would be reported as a component of other liabilities. These net derivative assets/liabilities are not separately disclosed on the balance sheet due to their immaterial effect on our financial condition, cash flows, and results of operations.

The following table shows the status of our derivative instruments at December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013, and 2012:

(millions)								Balance Sheet2					Comprehensive Income Statement
	Notional Value1								Assets (Liabilities) Fair Value				Pretax Net Realized Gains (Losses)
													Years ended
	December 31,								December 31,				December 31,
Derivatives designated as:	2014		2013		2012		Purpose	Classification	2014		2013		2014			2013			2012
Hedging instruments
Closed:
Ineffective cash flow hedge	$	44	$	54	$	31	Manage interest rate risk	NA	$	0	$	0	$	0.5		$	0.8		$	0.6
Non-hedging instruments
Assets:
Interest rate swaps	750		750		0		Manage portfolio duration	Investments - fixed maturities	15.8		68.1		(64.6		)	59.8			0
Liabilities:
Interest rate swaps	0		0		1,263		Manage portfolio duration	Other liabilities	0		0		0			0			(42.7		)
Closed:
Interest rate swaps	0		1,263		0		Manage portfolio duration	NA	0		0		0			(4.0		)	0
Corporate credit default swaps	0		0		25		Manage credit risk	NA	0		0		0			0			(1.0		)
Total	NA		NA		NA				$	15.8	$	68.1	$	(64.1	)	$	56.6		$	(43.1	)

NA = Not Applicable

¹ The amounts represent the value held at year end for open positions and the maximum amount held during the year for closed positions.

² To the extent we hold both derivative assets and liabilities with the same counterparty that are subject to an enforceable master netting arrangement, we expect that we will report them on a gross basis on our balance sheets, consistent with our historical presentation.

CASH FLOW HEDGES

In April 2014, upon issuance of $350 million of 4.35% Senior Notes due 2044 (the “4.35% Senior Notes”), we closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $1.6 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 4.35% Senior Notes.

Our ineffective cash flow hedge, which is reflected in the table above, resulted from the repurchase of a portion of our 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 during each of the last three years, and we reclassified the unrealized gain on forecasted transactions to net realized gains on securities.

During 2014, we recognized $2.0 million as a net decrease to interest expense on our closed debt issuance cash flow hedges, compared to $2.1 million during both 2013 and 2012.

See Note 4 – Debt for further discussion.

INTEREST RATE SWAPS

We use interest rate swap contracts primarily to manage the fixed-income portfolio duration. At December 31, 2014, 2013, and 2012, we held interest rate swap positions for which we are paying a fixed rate and receiving a variable rate, effectively shortening the duration of our fixed-income portfolio. On the open positions, since inception, interest rates have increased; however, as interest rates fell during 2014, our fair value gain decreased by $52.3 million.

During 2013, we closed three interest rate swap positions including a 9-year interest rate swap position (opened in 2009) and two5-year interest rate swap positions (opened in 2011); in each case, we were paying a fixed rate and receiving a variable rate, effectively shortening the duration of our fixed-income portfolio.

As of December 31, 2014 and 2013, the balance of the cash collateral that we had received from the applicable counterparty on our open positions was $16.1 million and $62.7 million, respectively. As of December 31, 2012, the balance of the cash collateral that we had delivered to the applicable counterparty on the then open positions was $105.0 million.

CORPORATE CREDIT DEFAULT SWAPS

We held no credit default swaps during 2014 or 2013. During 2012, we closed one position that was opened during 2008, on a corporate issuer within the financial services sector for which we bought credit default protection in the form of a credit default swap for a 5-year time horizon. We held this protection to reduce our exposure to additional valuation declines on a preferred stock position of the same issuer.

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Debt

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt

DEBT

Debt at December 31 consisted of:

	2014				2013
(millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Senior Notes due 2021 (issued: $500.0, August 2011)	$	497.8	$	535.6	$	497.6	$	509.1
6 5/8% Senior Notes due 2029 (issued: $300.0, March 1999)	295.5		400.6		295.3		359.6
6.25% Senior Notes due 2032 (issued: $400.0, November 2002)	394.8		527.9		394.6		473.7
4.35% Senior Notes due 2044 (issued: $350.0, April 2014)	346.3		378.9		0		0
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (issued: $1,000.0, June 2007; outstanding: $632.8 and $677.1)	630.3		684.5		673.4		731.3
Total	$	2,164.7	$	2,527.5	$	1,860.9	$	2,073.7

All of the outstanding debt was issued by The Progressive Corporation. Debt includes amounts we have borrowed and contributed to the capital of our insurance subsidiaries or used, or have available for use, for other business purposes. Fair values are obtained from external sources. There are no restrictive financial covenants or credit rating triggers on our debt.

Interest on all debt is payable semiannually at the stated rates. However, the 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “6.70% Debentures”) will only bear interest at this fixed annual rate through, but excluding, June 15, 2017. Thereafter, the 6.70% Debentures will bear interest at an annual rate equal to the three-month LIBOR plus 2.0175%, and interest will be payable quarterly until the 6.70% Debentures are redeemed or retired.

Except for the 6.70% Debentures, all principal is due at the maturity stated in the table above. The 6.70% Debentures will become due on June 15, 2037, the scheduled maturity date, but only to the extent that we have received sufficient net proceeds from the sale of certain qualifying capital securities. We must use our commercially reasonable efforts, subject to certain market disruption events, to sell enough qualifying capital securities to permit repayment of the 6.70% Debentures in full on the scheduled maturity date or, if sufficient proceeds are not realized from the sale of such qualifying capital securities by such date, on each interest payment date thereafter. Any remaining outstanding principal will be due on June 15, 2067, the final maturity date.

In April 2014, we issued $350 million of 4.35% Senior Notes due 2044 (the “4.35% Senior Notes”).  We received proceeds of $346.3 million, after deducting underwriter’s discounts and commissions. In addition, we incurred expenses of approximately $0.7 million related to the issuance.  Upon issuance of the 4.35% Senior Notes, we closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $1.6 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 4.35% Senior Notes.

We retired the entire $150 million of our 7% Notes at maturity in October 2013. The 3.75% Senior Notes, the 6 5/8% Senior Notes, the 6.25% Senior Notes, and the 4.35% Senior Notes (collectively, “Senior Notes”) may be redeemed in whole or in part at any time, at our option, subject to a “make-whole” provision. The 6.70% Debentures may be redeemed, in whole or in part, at any time: (a) prior to June 15, 2017, at a redemption price equal to the greater of (i) 100% of the principal amount of the 6.70% Debentures being redeemed, or (ii) a “make-whole” amount, in each case plus any accrued and unpaid interest; or (b) on or after June 15, 2017, at a redemption price equal to 100% of the principal amount of the 6.70% Debentures being redeemed, plus any accrued and unpaid interest.

During 2014 and 2013, we repurchased, in the open market, $44.3 million and $54.1 million, respectively, in aggregate principal amount of our 6.70% Debentures. Since the amount paid exceeded the carrying value of the debt we repurchased, we recognized losses on these extinguishments of $4.8 million and $4.3 million for 2014 and 2013, respectively.

Prior to issuance of each of the Senior Notes and 6.70% Debentures, we entered into forecasted debt issuance hedges against possible rises in interest rates. Upon issuance of the applicable debt securities, the hedges were closed and we recognized unrealized gains (losses) as part of accumulated other comprehensive income. The original unrealized gain (loss) at the time of each debt issuance and the unamortized balance at December 31, 2014, on a pretax basis, of these hedges, were as follows:

(millions)	Unrealized Gain (Loss) at Debt Issuance			Unamortized Balance at December 31, 2014
3.75% Senior Notes	$	(5.1	)	$	(3.6	)
6 5/8% Senior Notes	(4.2		)	(3.2		)
6.25% Senior Notes	5.1			4.0
4.35% Senior Notes	(1.6		)	(1.6		)
6.70% Debentures	34.4			6.6

The gains (losses) on these hedges are deferred and are being amortized as adjustments to interest expense over the life of the related Senior Notes, and over the 10-year fixed interest rate term for the 6.70% Debentures. In addition to this amortization, during 2014 and 2013, we reclassified $0.5 million and $0.8 million, respectively, on a pretax basis, from accumulated other comprehensive income on the balance sheet to net realized gains on securities on the comprehensive income statement, reflecting the portion of the unrealized gain on forecasted transactions that was related to the portion of the 6.70% Debentures repurchased during the periods.

In March 2014, we renewed the unsecured, discretionary line of credit (the "Line of Credit") with PNC Bank, National Association (PNC) in the maximum principal amount of $100 million. The prior line of credit, entered into in March 2013, has expired. The Line of Credit is on substantially the same terms and conditions as the prior line of credit. Subject to the terms and conditions of the Line of Credit documents, advances under the Line of Credit (if any) will bear interest at a variable rate equal to the higher of PNC's Prime Rate or the sum of the Federal Funds Open Rate plus 50 basis points. Each advance must be repaid on the 30th day after the advance or, if earlier, on March 25, 2015, the expiration date of the Line of Credit. Prepayments are permitted without penalty. All advances under the Line of Credit are subject to PNC's discretion. We had no borrowings under the Line of Credit or the prior line of credit in 2014 or 2013.

Aggregate required principal payments on debt outstanding are as follows:

(millions)
Year	Payments
2015	$	0
2016	0
2017	0
2018	0
2019	0
Thereafter	2,182.8
Total	$	2,182.8

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Investments OTTI Credit Losses Recognized in Earnings (Detail) (Fixed maturities, USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance	$ 19.6		$ 27.7		$ 35.8
Credit losses for which an OTTI was previously recognized	0		0.1		0.1
Credit losses for which an OTTI was not previously recognized	0		0		0.3
Reductions for securities sold/matured	(0.1)		0		(0.2)
Change in recoveries of future cash flows expected to be collected	(6.4)	[1],[2]	(8.0)	[1],[2]	(4.0)	[1],[2]
Reductions for previously recognized credit impairments written-down to fair value	0	[3]	(0.2)	[3]	(4.3)	[3]
Ending balance	13.1		19.6		27.7
Residential mortgage-backed securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance	19.2		27.1		34.5
Credit losses for which an OTTI was previously recognized	0		0.1		0.1
Credit losses for which an OTTI was not previously recognized	0		0		0.3
Reductions for securities sold/matured	(0.1)		0		0
Change in recoveries of future cash flows expected to be collected	(6.4)	[1],[2]	(7.8)	[1],[2]	(3.8)	[1],[2]
Reductions for previously recognized credit impairments written-down to fair value	0	[3]	(0.2)	[3]	(4.0)	[3]
Ending balance	12.7		19.2		27.1
Commercial mortgage-backed securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance	0.4		0.6		1.3
Credit losses for which an OTTI was previously recognized	0		0		0
Credit losses for which an OTTI was not previously recognized	0		0		0
Reductions for securities sold/matured	0		0		(0.2)
Change in recoveries of future cash flows expected to be collected	0	[1],[2]	(0.2)	[1],[2]	(0.2)	[1],[2]
Reductions for previously recognized credit impairments written-down to fair value	0	[3]	0	[3]	(0.3)	[3]
Ending balance	$ 0.4		$ 0.4		$ 0.6

[1] Reflects expected recovery of prior period impairments that will be accreted into income over the remaining life of the security.

[2] Includes $4.3 million, $2.6 million, and $1.4 million at December 31, 2014, 2013, and 2012, respectively, recognized in income in excess of the cash flows expected to be collected at the time of the write-downs.

[3] Reflects reductions of prior credit impairments where the current credit impairment requires writing securities down to fair value (i.e., no remaining non-credit loss).

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Loss And Loss Adjustment Expense Reserves Loss And Loss Adjustment Expense Reserves - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Insurance Reserves [Line Items]
Prior years	$ (24.1)	$ 45.1	$ 22.0
Accident Year 2011
Insurance Reserves [Line Items]
Unfavorable development in loss and loss adjustment expense reserves		80.00%
Accident Year 2012
Insurance Reserves [Line Items]
Unfavorable development in loss and loss adjustment expense reserves		20.00%
Commercial Lines
Insurance Reserves [Line Items]
Unfavorable development in loss and loss adjustment expense reserves		55.00%

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Investments Components of Net Realized Gains (Losses) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	$ 290.2	$ 271.8	$ 360.6
Gross realized losses on securities sales	(29.9)	(12.5)	(31.1)
Net realized gains (losses) on securities sales	260.3	259.3	329.5
Other-than-temporary impairment losses	(7.2)	(6.1)	(3.5)
Total net realized gains (losses) on securities	224.2	318.4	306.8
Fixed maturities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	92.9	76.9	115.4
Gross realized losses on securities sales	(22.6)	(11.8)	(2.9)
Net realized gains (losses) on securities sales	70.3	65.1	112.5
Other-than-temporary impairment losses	0	(0.6)	(1.7)
Fixed maturities | U.S. government obligations
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	24.0	8.5	20.2
Gross realized losses on securities sales	(7.6)	(3.7)	(1.9)
Net realized gains (losses) on securities sales	16.4	4.8	18.3
Fixed maturities | State and local government obligations
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	9.3	7.7	15.0
Gross realized losses on securities sales	(0.5)	0	0
Net realized gains (losses) on securities sales	8.8	7.7	15.0
Fixed maturities | Corporate And Other Debt Securities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	37.2	47.7	58.1
Gross realized losses on securities sales	(2.8)	(6.2)	(0.6)
Net realized gains (losses) on securities sales	34.4	41.5	57.5
Fixed maturities | Residential mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	2.7	3.0	1.2
Gross realized losses on securities sales	(0.2)	0	0
Net realized gains (losses) on securities sales	2.5	3.0	1.2
Other-than-temporary impairment losses	0	(0.6)	(1.6)
Fixed maturities | Commercial mortgage-backed securities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	17.0	10.0	19.3
Gross realized losses on securities sales	(8.3)	(1.8)	0
Net realized gains (losses) on securities sales	8.7	8.2	19.3
Other-than-temporary impairment losses	0	0	(0.1)
Fixed maturities | Other asset-backed securities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	0	0	0.9
Net realized gains (losses) on securities sales	0	0	0.9
Fixed maturities | Redeemable preferred stocks
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	2.7	0	0.7
Gross realized losses on securities sales	(3.2)	(0.1)	(0.4)
Net realized gains (losses) on securities sales	(0.5)	(0.1)	0.3
Equity securities | Nonredeemable preferred stocks
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	90.0	126.3	78.2
Gross realized losses on securities sales	0	(0.1)	(1.1)
Net realized gains (losses) on securities sales	90.0	126.2	77.1
Equity securities | Common equities
Gain (Loss) on Investments [Line Items]
Gross realized gains on securities sales	107.3	68.6	167.0
Gross realized losses on securities sales	(7.3)	(0.6)	(27.1)
Net realized gains (losses) on securities sales	100.0	68.0	139.9
Other-than-temporary impairment losses	(7.2)	(5.5)	(1.8)
Hybrid and Derivative Instruments and Litigation Settlements
Gain (Loss) on Investments [Line Items]
Other gains (losses)	(28.9)	65.2	(19.2)
Hybrid and Derivative Instruments and Litigation Settlements | Litigation Settlements
Gain (Loss) on Investments [Line Items]
Other gains (losses)	4.7	2.2	9.6
Hybrid and Derivative Instruments and Litigation Settlements | Hybrid Preferred Stock
Gain (Loss) on Investments [Line Items]
Other gains (losses)	30.5	6.4	14.3
Hybrid and Derivative Instruments and Litigation Settlements | Derivative Instruments
Gain (Loss) on Investments [Line Items]
Other gains (losses)	$ (64.1)	$ 56.6	$ (43.1)

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Other Comprehensive Income Components of Other Comprehensive Income (Loss) Including Reclassification Adjustments by Income Statement (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Pre Tax
Components Of Other Comprehensive Income Loss [Line Items]
Net unrealized gains on forecasted transactions, expected to reclassify into income within the next 12 months	$ 2.0
6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 | Net unrealized gains on forecasted transactions
Components Of Other Comprehensive Income Loss [Line Items]
Cash flow hedge gain reclassification from accumulated other comprehensive income to net realized gains/losses on securities	$ 0.5	$ 0.8	$ 0.6

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Investments Total Non-Credit Portion of Other-Than-Temporary Impairment Recorded in Accumulated Other Comprehensive Income, Reflecting Original Non-Credit Loss at Time Credit Impairment (Detail) (Fixed maturities, USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Other Than Temporary Impairment Non Credit Losses Recognized In Accumulated Other Comprehensive Income [Line Items]
Accumulated Other Comprehensive Income (Loss), Other than Temporary Impairment, Not Credit Loss, Pre-Tax, Available-for-sale, Debt Securities	$ (44.7)	$ (45.0)
Residential mortgage-backed securities
Other Than Temporary Impairment Non Credit Losses Recognized In Accumulated Other Comprehensive Income [Line Items]
Accumulated Other Comprehensive Income (Loss), Other than Temporary Impairment, Not Credit Loss, Pre-Tax, Available-for-sale, Debt Securities	(44.1)	(44.1)
Commercial mortgage-backed securities
Other Than Temporary Impairment Non Credit Losses Recognized In Accumulated Other Comprehensive Income [Line Items]
Accumulated Other Comprehensive Income (Loss), Other than Temporary Impairment, Not Credit Loss, Pre-Tax, Available-for-sale, Debt Securities	$ (0.6)	$ (0.9)

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Employee Benefit Plans Summary of All Employee Restricted Equity Award Activity (Parenthetical) (Detail) (Employee Restricted Equity Awards, USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number granted units	3,542,984	[1],[2]	2,738,809	[1],[2]	2,680,229	[1],[2]
Weighted average grant date fair value	$ 19.32	[2]	$ 22.73	[2]	$ 19.11	[2]
Unrecognized compensation cost related to unvested equity awards	$ 70.5
Period of recognition of compensation expense related to unvested equity awards	2 years 3 months 15 days
Dividend Equivalent Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number granted units	538,749		161,077		440,029
Weighted average grant date fair value	$ 0		$ 0		$ 0
Performance Based Restricted Equity Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity awards target amount	2,647,530
Equity awards to vest	2,208,731

[1] Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common shares funded from existing treasury shares. All performance-based awards are included at their target amounts.

[2] In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2014, 2013, and 2012, the number of units "granted" shown in the table above includes 538,749, 161,077, and 440,029 of dividend equivalent units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair value of the original grant.

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Loss And Loss Adjustment Expense Reserves (Tables)

12 Months Ended

Dec. 31, 2014

Loss and Loss Adjustment Expense Reserves Disclosures [Abstract]

Activity in Loss and Loss Adjustment Expense Reserves

Activity in the loss and loss adjustment expense reserves is summarized as follows:

(millions)	2014			2013		2012
Balance at January 1	$	8,479.7		$	7,838.4	$	7,245.8
Less reinsurance recoverables on unpaid losses	1,045.9			862.1		785.7
Net balance at January 1	7,433.8			6,976.3		6,460.1
Incurred related to:
Current year	13,330.3			12,427.3		11,926.0
Prior years	(24.1		)	45.1		22.0
Total incurred	13,306.2			12,472.4		11,948.0
Paid related to:
Current year	8,831.5			8,095.0		7,895.3
Prior years	4,237.0			3,919.9		3,536.5
Total paid	13,068.5			12,014.9		11,431.8
Net balance at December 31	7,671.5			7,433.8		6,976.3
Plus reinsurance recoverables on unpaid losses	1,185.9			1,045.9		862.1
Balance at December 31	$	8,857.4		$	8,479.7	$	7,838.4

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SCHEDULE VI-Supplemental Information Concerning Property - Casualty Insurance Operations Supplemental Information Concerning Property - Casualty Insurance Operations (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure Supplemental Information Concerning Property Casualty Insurance Operations [Abstract]
Losses and Loss Adjustment Expenses Incurred Related to Current Year	$ 13,330.3	$ 12,427.3	$ 11,926.0
Losses and Loss Adjustment Expenses Incurred Related to Prior Years	(24.1)	45.1	22.0
Paid Losses and Loss Adjustment Expenses	$ 13,068.5	$ 12,014.9	$ 11,431.8

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2014

Employee Benefit Plans Disclosures [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Retirement Plans  Progressive has a defined contribution pension plan (401(k) Plan) that covers most employees who are United States residents and have been employed with the company for at least 30 days. Under this plan, Progressive matches up to a maximum of 6% of an employee’s eligible compensation contributed to the plan. Employee and company matching contributions are invested, at the direction of the employee, in a number of investment options available under the plan, including various mutual funds, a self-directed brokerage option, and a Progressive common stock fund. The Progressive common stock fund is an employee stock ownership program (ESOP) within the 401(k) Plan. At December 31, 2014, the ESOP held 26.2 million of our common shares, all of which are included in shares outstanding. Dividends on these shares are reinvested in common shares or paid out in cash at the election of the participant and the related tax benefit is recorded as part of our tax provision.

Matching contributions made by the company for the 401(k) Plan were $74.8 million, $69.9 million, and $66.5 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Postemployment BenefitsProgressive provides various postemployment benefits to former or inactive employees who meet eligibility requirements, and to their beneficiaries and covered dependents. Postemployment benefits include salary continuation and disability-related benefits, including workers’ compensation and, if elected, continuation of health-care benefits for specified limited periods. The liability for these benefits was $22.5 million and $24.0 million at December 31, 2014 and 2013, respectively.

Postretirement BenefitsWe provide postretirement health and life insurance benefits to all employees who met requirements as to age and length of service at December 31, 1988. There are approximately 115 people who are eligible for these postretirement benefits. Our funding policy for these benefits is to contribute annually, to a 501(c)(9) trust, the maximum amount that can be deducted for federal income tax purposes.

Incentive Compensation Plans – EmployeesOur incentive compensation programs include both non-equity incentive plans (cash) and equity incentive plans. Cash incentive compensation includes a cash bonus program for a limited number of senior executives and our Gainsharing program for other employees; the structures of these programs are similar in nature. Equity incentive compensation plans provide for the granting of restricted stock awards and restricted stock unit awards (collectively, “restricted equity awards”) to key members of management. The amounts charged to income for the incentive compensation plans for the years ended December 31, were:

	2014				2013				2012
(millions)	Pretax		After Tax		Pretax		After Tax		Pretax		After Tax
Cash	$	266.2	$	173.0	$	234.5	$	152.4	$	207.0	$	134.6
Equity	51.4		33.4		64.9		42.2		63.4		41.2

Our 2003 Incentive Plan has expired, and no new awards may be made under this plan; however, awards granted prior to the plan’s expiration remain outstanding. Our 2010 Equity Incentive Plan, which provides for the granting of equity-based compensation to officers and other key employees, originally authorized 18.0 million shares.

We have issued restricted equity awards since 2003. In March 2010, we began issuing restricted stock units in lieu of restricted stock as the form of our equity awards. The restricted equity awards are issued as either time-based or performance-based awards. The time-based awards vest in equal installments upon the lapse of specified periods of time, typically three, four, and five years. All restricted stock units are settled at or after vesting in Progressive common shares from existing treasury shares on a one-to-one basis.

The performance-based awards were granted to our Chief Executive Officer as his sole equity award in each of the last five years, and to approximately 45 other executives and senior managers in addition to their time-based awards, to provide additional incentive to achieve pre-established profitability and growth targets. Vesting of these awards is contingent upon the achievement of predetermined performance goals within specified time periods. The targets for the performance-based awards, as well as the number of units that ultimately may vest, vary by grant. All performance-based awards include a specified number of shares or units that will be issued if performance meets a specified target. For awards granted in 2013 and 2014, performance-based awards based on insurance operating results may vest between 0% to 250% of target depending on the results achieved. The performance-based awards based on insurance operating results granted in 2010 through 2012, and all performance awards based on investment results, may vest from 0% to 200% of the target amount depending on the results achieved. Outstanding performance-based awards made prior to March 2009 will either vest or be forfeited in full (i.e., no partial vesting), and if performance goals are not achieved within the contractual term, the awards will expire. For awards granted prior to 2009, the maximum contractual term is ten years from the grant date, and for awards granted in or after 2009, the maximum contractual term is 5 years from the date of grant.

Generally, time-based and performance-based equity awards are expensed pro rata over their respective vesting periods based on the market value of the awards at the time of grant. Performance-based equity awards that contain variable vesting criteria are expensed based on management’s expectation of the percentage of the award, if any, that will ultimately vest. These estimates can change periodically throughout the measurement period.

A summary of all employee restricted equity award activity during the years ended December 31, follows:

	2014				2013				2012
Restricted Equity Awards	Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value		Number of Shares1		Weighted Average Grant Date Fair Value
Beginning of year	9,918,575		$	20.13	11,625,981		$	17.80	12,296,847		$	16.86
Add (deduct):
Granted2	3,542,984		19.32		2,738,809		22.73		2,680,229		19.11
Vested	(4,228,673	)	16.99		(4,293,605	)	15.54		(3,188,111	)	15.23
Forfeited	(181,322	)	20.75		(152,610	)	18.28		(162,984	)	17.93
End of year3,4	9,051,564		$	21.27	9,918,575		$	20.13	11,625,981		$	17.80

¹ Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common shares funded from existing treasury shares. All performance-based awards are included at their target amounts.

² In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2014, 2013, and 2012, the number of units "granted" shown in the table above includes 538,749, 161,077, and 440,029 of dividend equivalent units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair value of the original grant.

³ At December 31, 2014, the number of shares included 2,647,530 performance-based awards at their target amounts. We expect 2,208,731 of these performance-based awards to vest, based upon our current estimate of the likelihood of achieving these pre-determined performance goals.

⁴ At December 31, 2014, the total unrecognized compensation cost related to unvested equity awards was $70.5 million, which includes performance-based awards at their currently estimated vesting value. This compensation expense will be recognized into the income statement over the weighted average vesting period of 2.3 years.

The aggregate fair value of the restricted equity awards that vested during the years ended December 31, 2014, 2013, and 2012, was $100.9 million, $91.8 million, and $57.7 million, respectively, based on the actual stock price on the vesting date. In 2014 and 2013, 340,949 and 272,617, respectively, of dividend equivalent units vested with no intrinsic value. In 2012, we also had 246,200 deferred liability awards vest with no intrinsic value since these awards were expensed based on the current market value at the end of each reporting period.

Incentive Compensation Plans – Directors  Our 2003 Directors Equity Incentive Plan, which provides for the granting of equity-based awards, including restricted stock awards, to non-employee directors of Progressive, originally authorized 1.4 million shares.

We currently grant restricted stock awards to our non-employee directors as their sole compensation for serving as members of the Board of Directors. The restricted stock awards are issued as time-based awards. The vesting period (i.e., requisite service period) must be a minimum of six months and one day. The time-based awards granted to date have typically included vesting periods of 11 months from the date of each grant. To the extent a director is newly appointed during the year, or a director's committee assignments change, the vesting period may be shorter, but always at least equal to six months, one day per the plan’s specifications. The restricted stock awards are expensed pro rata over their respective vesting periods based on the market value of the awards at the time of grant.

A summary of all directors’ restricted stock activity during the years ended December 31, follows:

	2014				2013				2012
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	93,254		$	26.19	92,957		$	21.41	94,106		$	21.80
Add (deduct):
Granted	90,649		25.44		93,254		26.19		92,957		21.41
Vested	(93,254	)	26.19		(92,957	)	21.41		(94,106	)	21.80
Forfeited	(9,070	)	25.36		0		0		0		0
End of year	81,579		$	25.45	93,254		$	26.19	92,957		$	21.41

Prior to 2003, we granted nonqualified stock options as the equity component of the directors’ compensation. These options became exercisable at various dates not earlier than six months, and remain exercisable for up to ten years from the date of grant. All options granted had an exercise price equal to the market value of the common shares on the date of grant and, under the then applicable accounting guidance, no compensation expense was recorded. All option exercises were settled in Progressive common shares from existing treasury shares. All remaining 36,237 options outstanding under the 1998 Directors' Stock Option Plan were exercised during the year ended December 31, 2012.

The total pretax intrinsic value of options exercised, and the fair value of the restricted stock vested, during the years ended December 31, 2014, 2013, and 2012, was $2.2 million, $2.3 million, and $2.5 million, respectively, based on the actual stock price at time of exercise/vesting.

Deferred CompensationWe maintain The Progressive Corporation Executive Deferred Compensation Plan (Deferral Plan) that permits eligible executives to defer receipt of some or all of their annual bonuses and all of their annual equity awards. Deferred cash compensation is deemed invested in one or more investment funds, including common shares of Progressive, offered under the Deferral Plan and elected by the participant. All Deferral Plan distributions attributable to deferred cash compensation will be paid in cash.

For all equity awards granted in or after March 2005, and deferred pursuant to the Deferral Plan, the deferred amounts are deemed invested in our common shares and are ineligible for transfer to other investment funds in the Deferral Plan; distributions of these deferred awards will be made in our common shares. For all restricted stock awards granted prior to that date, the deferred amounts are eligible to be transferred to any of the investment funds in the Deferral Plan; distributions of these deferred awards will be made in cash. We reserved 11.1 million of our common shares for issuance under the Deferral Plan. An irrevocable grantor trust has been established to provide a source of funds to assist us in meeting our liabilities under the Deferral Plan.

The Deferral Plan Irrevocable Grantor Trust account held the following assets at December 31:

(millions)	2014		2013
Progressive common shares1	$	83.2	$	57.1
Other investment funds2	123.9		113.1
Total	$	207.1	$	170.2

¹Includes 3.6 million and 2.5 million common shares as of December 31, 2014 and 2013, respectively, to be distributed in common shares.

² Amount is included in other assets on the balance sheet.

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Dividends

12 Months Ended

Dec. 31, 2014

Dividends [Abstract]

Dividends

DIVIDENDS

We maintain a policy of paying an annual variable dividend that, if declared, would be payable shortly after the close of the year. This annual variable dividend is based on a target percentage of after-tax underwriting income multiplied by a companywide performance factor (Gainshare factor), subject to the limitations discussed below. The target percentage is determined by our Board of Directors on an annual basis and announced to shareholders and the public. In December 2013, the Board determined the target percentage for 2014 to be 33-1/3% of annual after-tax underwriting income, which is unchanged from the target percentage in both 2013 and 2012.

The Gainshare factor can range from zero to two and is determined by comparing our operating performance for the year to certain predetermined profitability and growth objectives approved by the Compensation Committee of the Board. This Gainshare factor is also used in the annual cash bonus program currently in place for our employees (our “Gainsharing program”). Although recalibrated every year, the structure of the Gainsharing program generally remains the same. For 2014, the Gainshare factor was 1.32, compared to 1.21 in 2013 and 1.12 in 2012.

Our annual dividend program will result in a variable payment to shareholders each year, subject to certain limitations. If the Gainshare factor is zero or if our comprehensive income is less than after-tax underwriting income, no dividend would be payable under our annual variable dividend policy. In addition, the ultimate decision on whether or not a dividend will be paid is in the discretion of the Board of Directors. The Board could decide to alter our policy, or not to pay the annual variable dividend, at any time prior to the declaration of the dividend for the year. Such an action by the Board could result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs, changes in federal income tax laws, disruptions of national or international capital markets, or other events affecting our business, liquidity, or financial position.

Following is a summary of our shareholder dividends, both variable and special, that were paid in the last three years:

(millions, except per share amounts)			Amount
Dividend Type	Declared	Paid	Per Share		Total1
Annual – Variable	December 2014	February 2015	$	0.6862	$	404.1
Annual – Variable	December 2013	February 2014	0.4929		293.9
Special	December 2013	February 2014	1.0000		596.3
Annual – Variable	December 2012	February 2013	0.2845		172.0
Special	October 2012	November 2012	1.0000		604.7

¹ Based on shares outstanding as of the record date.

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Employee Benefit Plans Assets Held in Deferral Plan Irrevocable Grantor Trust Account (Parenthetical) (Detail) (Progressive common shares) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Progressive common shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares held in Deferral Plan Irrevocable Grantor Trust account to be distributed in-kind	3.6	2.5

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SCHEDULE III - Supplementary Insurance Information Supplementary Insurance Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013		Dec. 31, 2012
Supplementary Insurance Information, by Segment [Line Items]
Deferred policy acquisition costs	$ 457.2	[1]	$ 447.6	[1]	$ 434.5	[1]
Future policy benefits, losses, claims, and loss expenses	8,857.4	[1]	8,479.7	[1]	7,838.4	[1]
Unearned premiums	5,440.1	[1]	5,174.5	[1]	4,930.7	[1]
Other policy claims and benefits payable	0	[1]	0	[1]	0	[1]
Premium revenue	18,398.5		17,103.4		16,018.0
Net investment income	389.5	[1],[2]	403.2	[1],[2]	427.6	[1],[2]
Benefits, claims, losses, and settlement expenses	13,306.2		12,472.4		11,948.0
Amortization of deferred policy acquisition costs	1,524.0		1,451.8		1,436.6
Other operating expenses	2,467.1		2,350.9		2,206.3
Net premiums written	18,654.6		17,339.7		16,372.7
Personal Lines
Supplementary Insurance Information, by Segment [Line Items]
Premium revenue	16,561.0		15,341.6		14,368.1
Benefits, claims, losses, and settlement expenses	12,161.2		11,194.6		10,745.3
Amortization of deferred policy acquisition costs	1,322.9		1,257.5		1,250.4
Other operating expenses	2,262.6		2,149.2		2,010.5
Net premiums written	16,759.2		15,569.2		14,636.8
Commercial Lines
Supplementary Insurance Information, by Segment [Line Items]
Premium revenue	1,837.5		1,761.6		1,649.0
Benefits, claims, losses, and settlement expenses	1,133.4		1,267.3		1,196.6
Amortization of deferred policy acquisition costs	201.1		194.3		186.2
Other operating expenses	204.2		201.2		195.2
Net premiums written	1,895.4		1,770.5		1,735.9
Other Indemnity
Supplementary Insurance Information, by Segment [Line Items]
Premium revenue	0		0.2		0.9
Benefits, claims, losses, and settlement expenses	11.6		10.5		6.1
Amortization of deferred policy acquisition costs	0		0		0
Other operating expenses	0.3		0.5		0.6
Net premiums written	$ 0		$ 0		$ 0

[1] Progressive does not allocate assets, liabilities, or investment income to operating segments.

[2] Excludes total net realized gains (losses) on securities.

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Minimum commitment under noncancelable purchase obligations	$ 493.5

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SCHEDULE I - Summary Of Investments - Other Than Investments in Related Parties Summary Of Investments - Other than Investments In Related Parties (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	$ 17,402.8
Fair Value	19,018.0
Amount At Which Shown In The Balance Sheet	19,018.0
Fixed maturities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	13,374.2
Fair Value	13,549.2
Amount At Which Shown In The Balance Sheet	13,549.2
Fixed maturities | Bonds | US Government and Government Agencies and Authorities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,641.1
Fair Value	2,667.1
Amount At Which Shown In The Balance Sheet	2,667.1
Fixed maturities | Bonds | State and local government obligations
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,095.7
Fair Value	2,139.2
Amount At Which Shown In The Balance Sheet	2,139.2
Fixed maturities | Bonds | Foreign government obligations
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	14.2
Fair Value	14.2
Amount At Which Shown In The Balance Sheet	14.2
Fixed maturities | Bonds | Public Utility, Bonds
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	63.1
Fair Value	66.6
Amount At Which Shown In The Balance Sheet	66.6
Fixed maturities | Bonds | Corporate And Other Debt Securities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,750.8
Fair Value	2,770.1
Amount At Which Shown In The Balance Sheet	2,770.1
Fixed maturities | Bonds | Asset-backed Securities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	5,549.1
Fair Value	5,612.8
Amount At Which Shown In The Balance Sheet	5,612.8
Fixed maturities | Redeemable preferred stocks
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	260.2
Fair Value	279.2
Amount At Which Shown In The Balance Sheet	279.2
Equity securities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	1,879.6
Fair Value	3,319.8
Amount At Which Shown In The Balance Sheet	3,319.8
Equity securities | Common Stocks, by Industry | Utilities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	95.0
Fair Value	143.3
Amount At Which Shown In The Balance Sheet	143.3
Equity securities | Common Stocks, by Industry | Financials
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	220.1
Fair Value	438.4
Amount At Which Shown In The Balance Sheet	438.4
Equity securities | Common Stocks, by Industry | Industrials
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	974.1
Fair Value	1,910.6
Amount At Which Shown In The Balance Sheet	1,910.6
Equity securities | Nonredeemable preferred stocks
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	590.4
Fair Value	827.5
Amount At Which Shown In The Balance Sheet	827.5
Short-term investments
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,149.0	[1]
Fair Value	2,149.0	[1]
Amount At Which Shown In The Balance Sheet	$ 2,149.0	[1]

[1] Includes $5.7 million in treasury bills issued by the Australian government.

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Dividends-Additional Information (Details)	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Dividends [Abstract]
Target percentage used to determine annual variable dividend	33.33%
Gainshare factor used to determine annual variable dividend range, minimum	0
Gainshare factor used to determine annual variable dividend range, maximum	2
Gainshare factor used to determine annual variable dividend	1.32	1.21	1.12

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Consolidated Statements of Changes in Shareholders' Equity (USD $) In Millions		Total	Common Shares, $1.00 Par Value	Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income, Net of Tax
Balance, Beginning of year at Dec. 31, 2011			$ 613.0	$ 1,006.2	$ 3,495.0	$ 692.5
Stock options exercised			0.1	0.4
Net income		902.3			902.3
Other comprehensive income (loss)		178.5				178.5
Tax benefit from exercise/vesting of equity-based compensation				5.8
Treasury shares purchased	[1]		(8.6)	(14.5)	(151.1)
Net restricted equity awards (issued) (vested) forfeited			0.1	(0.1)
Cash dividends declared on common shares ($0.6862, $1.4929, and $1.2845 per share)					(772.5)
Amortization of equity-based compensation				62.4
Reinvested dividends on restricted stock units				11.2	(11.2)
Other				5.6	(8.1)
Balance, End of year at Dec. 31, 2012		6,007.0	604.6	1,077.0	3,454.4	871.0
Stock options exercised			0	0
Net income		1,165.4			1,165.4
Other comprehensive income (loss)		80.7				80.7
Tax benefit from exercise/vesting of equity-based compensation				10.3
Treasury shares purchased	[1]		(11.0)	(20.4)	(242.0)
Net restricted equity awards (issued) (vested) forfeited			2.2	(2.2)
Cash dividends declared on common shares ($0.6862, $1.4929, and $1.2845 per share)					(889.2)
Amortization of equity-based compensation				64.9
Reinvested dividends on restricted stock units				12.4	(12.4)
Other				0	23.8
Balance, End of year at Dec. 31, 2013		6,189.5	595.8	1,142.0	3,500.0	951.7
Stock options exercised			0	0
Net income		1,281.0			1,281.0
Other comprehensive income (loss)		71.4				71.4
Tax benefit from exercise/vesting of equity-based compensation				12.8
Treasury shares purchased	[1]		(11.1)	(21.6)	(238.7)
Net restricted equity awards (issued) (vested) forfeited			3.1	(3.1)
Cash dividends declared on common shares ($0.6862, $1.4929, and $1.2845 per share)					(402.6)
Amortization of equity-based compensation				51.4
Reinvested dividends on restricted stock units				2.8	(2.8)
Other				0	(3.5)
Balance, End of year at Dec. 31, 2014		$ 6,928.6	$ 587.8	$ 1,184.3	$ 4,133.4	$ 1,023.1

[1] In December 2013, we purchased 4.0 million shares at a price of $25.50 per share in a privately negotiated transaction with the "Peter B. Lewis Trust under Agreement dated December 21, 1994, as modified." Mr. Lewis was our non-executive Chairman of the Board until his death in November 2013.

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Reinsurance - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Reinsurance ceded	$ 322.7	$ 347.0	$ 230.7
State Reinsurance Plan
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Percentage of Ceded Premiums	97.00%	97.00%	98.00%
State Reinsurance Plan | Michigan Catastrophic Claims Association And North Carolina Reinsurance Facility
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Percentage of Ceded Premiums	75.00%	77.00%	80.00%

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SCHEDULE III - Supplementary Insurance Information

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SCHEDULE III - Supplementary Insurance Information

SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION

THE PROGRESSIVE CORPORATION AND SUBSIDIARIES

(millions)

Segment	Deferred policy acquisition costs1		Future policy benefits, losses, claims, and loss expenses1		Unearned premiums1		Other policy claims and benefits payable1		Premium revenue		Net investment income1,2		Benefits, claims, losses, and settlement expenses		Amortization of deferred policy acquisition costs		Other operating expenses		Net premiums written
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
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 December 31, 2013:
Personal Lines									$	15,341.6			$	11,194.6	$	1,257.5	$	2,149.2	$	15,569.2
Commercial Lines									1,761.6				1,267.3		194.3		201.2		1,770.5
Other indemnity									0.2				10.5		0		0.5		0
Total	$	447.6	$	8,479.7	$	5,174.5	$	0	$	17,103.4	$	403.2	$	12,472.4	$	1,451.8	$	2,350.9	$	17,339.7
Year ended December 31, 2012:
Personal Lines									$	14,368.1			$	10,745.3	$	1,250.4	$	2,010.5	$	14,636.8
Commercial Lines									1,649.0				1,196.6		186.2		195.2		1,735.9
Other indemnity									0.9				6.1		0		0.6		0
Total	$	434.5	$	7,838.4	$	4,930.7	$	0	$	16,018.0	$	427.6	$	11,948.0	$	1,436.6	$	2,206.3	$	16,372.7

¹ Progressive does not allocate assets, liabilities, or investment income to operating segments.

² Excludes total net realized gains (losses) on securities.

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Investments Investment Portfolio by Major Security Type (Parenthetical) (Detail) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
Net unsettled security transactions offset in other liabilities	$ 31,300,000	$ 61,300,000
Securities in the portfolio of a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions	$ 1,900,000,000	$ 1,800,000,000

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Income Taxes Components of Net Deferred Tax Assets (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred tax assets:
Unearned premiums reserve	$ 378.8	$ 361.0
Investment basis differences	60.6	94.8
Non-deductible accruals	208.0	200.7
Loss and loss adjustment expense reserves	76.9	92.0
Other	7.5	14.7
Deferred tax liabilities:
Net unrealized gains on securities	(550.3)	(509.9)
Hedges on forecasted transactions	(0.8)	(2.2)
Deferred acquisition costs	(160.0)	(156.7)
Property and equipment	(100.9)	(99.6)
Prepaid expenses	(11.4)	(14.4)
Deferred gain on extinguishment of debt	(3.0)	(4.8)
Other	(4.3)	(4.0)
Net deferred tax liability	$ (98.9)	$ (28.4)

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Dividends Dividends (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	1 Months Ended			0 Months Ended
	Feb. 26, 2014	Feb. 28, 2013	Nov. 30, 2012	Feb. 13, 2015
Annual variable dividend
Common Stock, Dividends, Per Share, Cash Paid	$ 0.4929	$ 0.2845
Payments of Ordinary Dividends, Common Stock	$ 293.9	$ 172.0
Special dividend
Common Stock, Dividends, Per Share, Cash Paid	$ 1.0000		$ 1.0000
Payments of Ordinary Dividends, Common Stock	596.3		604.7
Subsequent Event | Annual variable dividend
Common Stock, Dividends, Per Share, Cash Paid				$ 0.6862
Payments of Ordinary Dividends, Common Stock				$ 404.1

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Investments - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 25, 2014
Schedule of Investments [Line Items]
Short-term Investments	$ 2,149,000,000	$ 1,272,600,000
Open reverse repurchase commitments	0	200,000,000
Largest Outstanding Balance of Reverse Repurchase Agreements	500,000,000
RRP Largest Outstanding Balance Number of Days Open	1 day
Reverse Repurchase Agreement Average Daily Balance	158,800,000
Principal amount of bonds and certificates of deposit on deposit to meet state insurance regulatory and/or rating agency requirements	153,700,000
Fair value of fixed-maturity securities that were non-income producing during the preceding 12 months	0
Gross Unrealized Losses	49,200,000	126,000,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	318	423
Trading securities	0	0
Net realized gains (losses) on securities	232,100,000	324,500,000	314,800,000
Reclassification out of Accumulated Other Comprehensive Income
Schedule of Investments [Line Items]
Cash flow hedge gain recognized as an adjustment to interest expense	2,000,000	2,100,000	2,100,000
4.35% Senior Notes due 2044
Schedule of Investments [Line Items]
Unrealized Gain (Loss)	(1,600,000)			(1,600,000)
Senior notes, issuance amount	350,000,000	0		350,000,000
Debt Instrument, Interest Rate, Stated Percentage	4.35%			4.35%
Equity securities
Schedule of Investments [Line Items]
Gross Unrealized Losses	16,500,000	6,900,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	28	31
Equity securities | Common equities
Schedule of Investments [Line Items]
Gross Unrealized Losses	10,100,000	2,400,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	20	24
Equity securities | Nonredeemable preferred stocks
Schedule of Investments [Line Items]
Gross Unrealized Losses	6,400,000	4,500,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	8	7
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Percentage Decline	3.00%
Fixed maturities
Schedule of Investments [Line Items]
Gross Unrealized Losses	32,700,000	119,100,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	290	392
Fixed maturities | Corporate debt securities
Schedule of Investments [Line Items]
Percentage which the issuer receives the security back at once the change of control is triggered	1.00%
Realized investment losses	9,300,000
Gross Unrealized Losses	10,400,000	20,400,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	53	51
Fixed Income Securities
Schedule of Investments [Line Items]
Gross Unrealized Losses	39,100,000
Foreign Government Debt
Schedule of Investments [Line Items]
Short-term Investments	5,700,000	6,300,000
Corporate Credit Default Swaps
Schedule of Investments [Line Items]
Number of derivative positions held during the period	0	0
Corporate Credit Default Swaps | Financial Services Sector
Schedule of Investments [Line Items]
Number of derivative positions closed during the period			1
Derivative Maturity1			5 years
Interest Rate Swaps
Schedule of Investments [Line Items]
Number of derivative positions closed during the period		3
Cash collateral delivered to the counterparties			105,000,000
Cash collateral received from counterparty	16,100,000	62,700,000
Interest Rate Swaps | Opened in 2009 | Closed Positions | Nine Year Time Horizon
Schedule of Investments [Line Items]
Number of derivative positions closed during the period		1
Derivative Maturity1		9 years
Interest Rate Swaps | Opened in 2011 | Closed Positions | Five Year Time Horizon
Schedule of Investments [Line Items]
Number of derivative positions closed during the period		2
Derivative Maturity1		5 years
Value Of Securities Of Any One Issuer Excluding US Government Obligations Exceeding 10 % Of Total Shareholders Equity
Schedule of Investments [Line Items]
Aggregate cost or fair value of securities	0	0
Categories of Investments, Marketable Securities, Trading Securities
Schedule of Investments [Line Items]
Net realized gains (losses) on securities	0	0	0
Russell One Thousand | Equity securities | Common equities
Schedule of Investments [Line Items]
Percentage of common stock portfolio	88.00%
Managed Equity Strategy | Equity securities | Common equities
Schedule of Investments [Line Items]
Percentage of common stock portfolio	12.00%
Non-hedging Instruments | Interest Rate Swaps | Fixed maturities | Assets
Schedule of Investments [Line Items]
Derivative, Loss on Derivative	$ 52,300,000

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Subsequent Event

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

SUBSEQUENT EVENT

On January 26, 2015, we issued $400.0 million of our 3.70% Senior Notes due 2045 (the “3.70% Senior Notes”).  We received proceeds of $394.9 million, after deducting underwriter’s discounts and commissions. In addition, we incurred expenses of approximately $0.8 million related to the issuance.  Upon issuance of the 3.70% Senior Notes, we also closed a forecasted debt issuance hedge, which was entered into to hedge against a possible rise in interest rates, and recognized a $12.9 million pretax loss as part of accumulated other comprehensive income (loss); the loss will be recognized as an adjustment to interest expense and amortized over the life of the 3.70% Senior Notes.

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Fair Value - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013 Investment		Dec. 31, 2014 Investment
Fair Value Measurements [Line Items]
Number of securities transferred out of Level 2 into Level 1	0
Quoted prices percentage of fair value assets	100.00%	[1],[2]	100.00%	[1],[2]
Portfolio	$ 18,054.7	[1],[2]	$ 19,018.0	[1],[2]
Fair Value, Inputs, Level 1
Fair Value Measurements [Line Items]
Portfolio	7,436.4		7,314.3
Fair Value, Inputs, Level 1 | Vendor Quoted Pricing
Fair Value Measurements [Line Items]
Quoted prices percentage of fair value assets	56.00%		50.00%
Fair Value, Inputs, Level 2
Fair Value Measurements [Line Items]
Portfolio	10,549.6		11,622.4
Fair Value, Inputs, Level 2 | Vendor Quoted Pricing
Fair Value Measurements [Line Items]
Quoted prices percentage of fair value assets	98.00%		97.00%
Fair Value, Inputs, Level 2 | Dealer Quoted Pricing
Fair Value Measurements [Line Items]
Quoted prices percentage of fair value assets	2.00%		3.00%
Fair Value, Inputs, Level 3
Fair Value Measurements [Line Items]
Portfolio	68.7		81.3
Nonredeemable preferred stocks | Equity securities
Fair Value Measurements [Line Items]
Number of securities transferred out of Level 2 into Level 1			2
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount			41.7
Nonredeemable preferred stocks | Fair Value, Inputs, Level 3 | Equity securities | Internal Pricing
Fair Value Measurements [Line Items]
Number of securities	1		1
Portfolio	$ 39.0		$ 69.3

[1] The total fair value of the portfolio included $1.9 billion and $1.8 billion at December 31, 2014 and 2013, respectively, of securities held in a consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.

[2] Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2014, $31.3 million was included in "other liabilities," compared to $61.3 million at December 31, 2013.

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Other Comprehensive Income (Loss) (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Components of Other Comprehensive Income (Loss)

The components of other comprehensive income (loss) for the years ended December 31, were as follows:

										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
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6
Other comprehensive income (loss) before reclassifications:
Investment securities	362.1			(126.7		)	235.4			235.4			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0			0			0			0			0			0
Forecasted transactions	(1.6		)	0.6			(1.0		)	0			(1.0		)	0
Foreign currency translation adjustment	(1.3		)	0.4			(0.9		)	0			0			(0.9		)
Total other comprehensive income (loss) before reclassifications	359.2			(125.7		)	233.5			235.4			(1.0		)	(0.9		)
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
Net realized gains (losses) on securities	255.0			(89.2		)	165.8			165.5			0.3			0
Interest expense	2.0			(0.7		)	1.3			0			1.3			0
Total reclassification adjustment for amounts realized in net income	249.3			(87.2		)	162.1			160.5			1.6			0
Total other comprehensive income (loss)	109.9			(38.5		)	71.4			74.9			(2.6		)	(0.9		)
Balance at December 31, 2014	$	1,574.0		$	(550.9	)	$	1,023.1		$	1,021.9		$	1.5		$	(0.3	)

										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
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2
Other comprehensive income (loss) before reclassifications:
Investment securities	368.2			(128.9		)	239.3			239.3			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	0.4			(0.1		)	0.3			0.3			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	(2.5		)	0.9			(1.6		)	0			0			(1.6		)
Total other comprehensive income (loss) before reclassifications	366.1			(128.1		)	238.0			239.6			0			(1.6		)
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(5.7		)	2.0			(3.7		)	(3.7		)	0			0
Net realized gains (losses) on securities	245.5			(86.0		)	159.5			159.0			0.5			0
Interest expense	2.2			(0.7		)	1.5			0			1.5			0
Total reclassification adjustment for amounts realized in net income	242.0			(84.7		)	157.3			155.3			2.0			0
Total other comprehensive income (loss)	124.1			(43.4		)	80.7			84.3			(2.0		)	(1.6		)
Balance at December 31, 2013	$	1,464.1		$	(512.4	)	$	951.7		$	947.0		$	4.1		$	0.6

										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
Balance at December 31, 2011	$	1,065.4		$	(372.9	)	$	692.5		$	682.8		$	7.9		$	1.8
Other comprehensive income (loss) before reclassifications:
Investment securities	488.0			(170.8		)	317.2			317.2			0			0
Net non-credit related OTTI losses, adjusted for valuation changes	7.9			(2.8		)	5.1			5.1			0			0
Forecasted transactions	0			0			0			0			0			0
Foreign currency translation adjustment	0.6			(0.2		)	0.4			0			0			0.4
Total other comprehensive income (loss) before reclassifications	496.5			(173.8		)	322.7			322.3			0			0.4
Less: Reclassification adjustment for amounts realized in net income by income statement line item:
Net impairment losses recognized in earnings	(0.4		)	0.1			(0.3		)	(0.3		)	0			0
Net realized gains (losses) on securities	220.1			(77.0		)	143.1			142.7			0.4			0
Interest expense	2.2			(0.8		)	1.4			0			1.4			0
Total reclassification adjustment for amounts realized in net income	221.9			(77.7		)	144.2			142.4			1.8			0
Total other comprehensive income (loss)	274.6			(96.1		)	178.5			179.9			(1.8		)	0.4
Balance at December 31, 2012	$	1,340.0		$	(469.0	)	$	871.0		$	862.7		$	6.1		$	2.2

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Statutory Financial Information

12 Months Ended

Dec. 31, 2014

Statutory Financial Information Disclosures [Abstract]

Statutory Financial Information

STATUTORY FINANCIAL INFORMATION

Consolidated statutory surplus was $6,442.8 million and $5,991.0 million at December 31, 2014 and 2013, respectively. Statutory net income was $1,289.5 million, $1,086.3 million, and $808.3 million for the years ended December 31, 2014, 2013, and 2012, respectively.

At December 31, 2014, $549.2 million of consolidated statutory surplus represented net admitted assets of our insurance subsidiaries and affiliate that are required to meet minimum statutory surplus requirements in such entities’ states of domicile. The companies may be licensed in states other than their states of domicile, which may have higher minimum statutory surplus requirements. Generally, the net admitted assets of insurance companies that, subject to other applicable insurance laws and regulations, are available for transfer to the parent company cannot include the net admitted assets required to meet the minimum statutory surplus requirements of the states where the companies are licensed.

During 2014, the insurance subsidiaries paid aggregate cash dividends of $1,000.2 million to the parent company. Based on the dividend laws currently in effect, the insurance subsidiaries could pay aggregate dividends of $1,346.5 million in 2015 without prior approval from regulatory authorities, provided the dividend payments are not made within 12 months of previous dividends paid by the applicable subsidiary.

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Other Comprehensive Income Components of Other Comprehensive Income (Loss) Including Reclassification Adjustments by Income Statement (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward]
Pre tax total accumulated other comprehensive income, beginning balance	$ 1,464,100,000	$ 1,340,000,000	$ 1,065,400,000
Investment securities, pre tax	362,100,000	368,200,000	488,000,000
Net non-credit related OTTI losses, adjusted for valuation changes, pre tax	0	400,000	7,900,000
Forecasted transactions, pre tax	(1,600,000)	0	0
Foreign currently translation adjustement, pre tax	(1,300,000)	(2,500,000)	600,000
Total other comprehensive income (loss) before reclassifications, pre tax	359,200,000	366,100,000	496,500,000
Total reclassification adjustment for amounts realized in net income, pre tax	249,300,000	242,000,000	221,900,000
Total other comprehensive income (loss), pre tax	109,900,000	124,100,000	274,600,000
Pre tax total accumulated other comprehensive income, ending balance	1,574,000,000	1,464,100,000	1,340,000,000
Accumulated Other Comprehensive Income (Loss), Tax [Roll Forward]
Accumulated other comprehensive income loss tax (provision) benefit, beginning balance	(512,400,000)	(469,000,000)	(372,900,000)
Investment securities, Total tax (provision) benefit	(126,700,000)	(128,900,000)	(170,800,000)
Net non-credit related OTTI losses, adjusted for valuation changes Total tax (provision) benefit	0	(100,000)	(2,800,000)
Forecasted transactions, Total tax (provision) benefit	600,000	0	0
Foreign currency traslation adjustment, Total tax (provision) benefit	400,000	900,000	(200,000)
Total other comprehensive Income (loss) before reclassifications, Total tax (provision) benefit	(125,700,000)	(128,100,000)	(173,800,000)
Total reclassification adjustment for amounts realized in net income, Total tax (provision) benefit	(87,200,000)	(84,700,000)	(77,700,000)
Total other comprehensive income (loss), Total tax (provision) benefit	(38,500,000)	(43,400,000)	(96,100,000)
Accumulated other comprehensive income loss tax (provision) benefit, ending balance	(550,900,000)	(512,400,000)	(469,000,000)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
After tax total other accumulated comprehensive income, beginning balance	951,700,000	871,000,000	692,500,000
Investment securities, after tax	235,400,000	239,300,000	317,200,000
Net non-credit related OTTI losses, adjusted for valuation changes, after tax	0	300,000	5,100,000
Forecasted transactions, after tax	(1,000,000)	0	0
Foreign currency translation adjustment, after tax	(900,000)	(1,600,000)	400,000
Total other comprehensive income (loss), before reclassifications, after tax	233,500,000	238,000,000	322,700,000
Total reclassification adjustment for amounts realized in net income, after tax	162,100,000	157,300,000	144,200,000
Other comprehensive income (loss)	71,400,000	80,700,000	178,500,000
After tax total other accumulated comprehensive income, ending balance	1,023,100,000	951,700,000	871,000,000
Net impairment losses recognized in earnings	(7,900,000)	(6,100,000)	(8,000,000)
Net realized gains (losses) on securities	232,100,000	324,500,000	314,800,000
Interest expense	116,900,000	118,200,000	123,800,000
Net unrealized gains (losses) on securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
After tax total other accumulated comprehensive income, beginning balance	947,000,000	862,700,000	682,800,000
Investment securities, after tax	235,400,000	239,300,000	317,200,000
Net non-credit related OTTI losses, adjusted for valuation changes, after tax	0	300,000	5,100,000
Forecasted transactions, after tax	0	0	0
Foreign currency translation adjustment, after tax	0	0	0
Total other comprehensive income (loss), before reclassifications, after tax	235,400,000	239,600,000	322,300,000
Total reclassification adjustment for amounts realized in net income, after tax	160,500,000	155,300,000	142,400,000
Other comprehensive income (loss)	74,900,000	84,300,000	179,900,000
After tax total other accumulated comprehensive income, ending balance	1,021,900,000	947,000,000	862,700,000
Net unrealized gains on forecasted transactions
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
After tax total other accumulated comprehensive income, beginning balance	4,100,000	6,100,000	7,900,000
Investment securities, after tax	0	0	0
Net non-credit related OTTI losses, adjusted for valuation changes, after tax	0	0	0
Forecasted transactions, after tax	(1,000,000)	0	0
Foreign currency translation adjustment, after tax	0	0	0
Total other comprehensive income (loss), before reclassifications, after tax	(1,000,000)	0	0
Total reclassification adjustment for amounts realized in net income, after tax	1,600,000	2,000,000	1,800,000
Other comprehensive income (loss)	(2,600,000)	(2,000,000)	(1,800,000)
After tax total other accumulated comprehensive income, ending balance	1,500,000	4,100,000	6,100,000
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
After tax total other accumulated comprehensive income, beginning balance	600,000	2,200,000	1,800,000
Investment securities, after tax	0	0	0
Net non-credit related OTTI losses, adjusted for valuation changes, after tax	0	0	0
Forecasted transactions, after tax	0	0	0
Foreign currency translation adjustment, after tax	(900,000)	(1,600,000)	400,000
Total other comprehensive income (loss), before reclassifications, after tax	(900,000)	(1,600,000)	400,000
Total reclassification adjustment for amounts realized in net income, after tax	0	0	0
Other comprehensive income (loss)	(900,000)	(1,600,000)	400,000
After tax total other accumulated comprehensive income, ending balance	(300,000)	600,000	2,200,000
Reclassification out of Accumulated Other Comprehensive Income | Accumulated other comprehesnive income pretax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	(7,700,000)	(5,700,000)	(400,000)
Net realized gains (losses) on securities	255,000,000	245,500,000	220,100,000
Interest expense	2,000,000	2,200,000	2,200,000
Reclassification out of Accumulated Other Comprehensive Income | Accumulated other comprehensive income tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	2,700,000	2,000,000	100,000
Net realized gains (losses) on securities	(89,200,000)	(86,000,000)	(77,000,000)
Interest expense	(700,000)	(700,000)	(800,000)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated other comprehensive income after tax
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	(5,000,000)	(3,700,000)	(300,000)
Net realized gains (losses) on securities	165,800,000	159,500,000	143,100,000
Interest expense	1,300,000	1,500,000	1,400,000
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains (losses) on securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	(5,000,000)	(3,700,000)	(300,000)
Net realized gains (losses) on securities	165,500,000	159,000,000	142,700,000
Interest expense	0	0	0
Reclassification out of Accumulated Other Comprehensive Income | Net unrealized gains on forecasted transactions
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	0	0	0
Net realized gains (losses) on securities	300,000	500,000	400,000
Interest expense	1,300,000	1,500,000	1,400,000
Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Net impairment losses recognized in earnings	0	0	0
Net realized gains (losses) on securities	0	0	0
Interest expense	$ 0	$ 0	$ 0