Redeemable Noncontrolling Interest

3 Months Ended

Mar. 31, 2017

Temporary Equity Disclosure [Abstract]

Redeemable Noncontrolling Interest — In connection with the April 2015 acquisition of a controlling interest in ARX, The Progressive Corporation entered into a stockholders’ agreement with the other ARX stockholders. As part of the stockholders’ agreement, the minority ARX shareholders have the right to “put” their ARX shares to Progressive in two installments, one in early 2018 and one in early 2021, and Progressive has the ability to "call" a portion of the outstanding shares shortly thereafter. If these rights are exercised in full when available, our ownership stake in ARX capital stock will exceed 80% in 2018 and will reach 100% in 2021.

Since these securities are redeemable upon the occurrence of an event that is not solely within the control of Progressive, we have recorded the redeemable noncontrolling interest (NCI) as mezzanine equity on our consolidated balance sheets, which represents the minority shares at the current estimated purchase price pursuant to the put and call provisions of the stockholders' agreement. The estimated purchase price is based, in part, on the change in tangible net book value of ARX from December 31, 2014 to the balance sheet dates.

In addition to these minority shares, at March 31, 2017, ARX employees hold options to purchase 22,550 ARX shares. These options and any shares issued upon exercise are subject to the stockholders' agreement, including the right to "put" these shares to Progressive, as described above. Until the options are exercised, the underlying obligation of approximately $31.9 million is not recorded as part of redeemable NCI.

The changes in the components of redeemable NCI during the three months ended March 31, 2017 and 2016, and the year ended December 31, 2016, were:



(millions)	March 31, 2017		March 31, 2016			December 31, 2016
Balance, Beginning of period	$	483.7	$	464.9		$	464.9
Net income attributable to NCI	6.0		0.5			26.2
Other comprehensive income (loss) attributable to NCI	0.9		2.1			(3.2		)
Exercise of employee stock options	3.4		0			0
Change in redemption value of NCI	0.2		(0.1		)	(4.2		)
Balance, End of period	$	494.2	$	467.4		$	483.7