Progressive 2012 Annual Report Download - page 35

Download and view the complete annual report

Please find page 35 of the 2012 Progressive annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

11. OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the years ended December 31, were as follows:
2012 2011 2010
(millions) Pretax
Tax
(Provision)
Benefit
After
Tax Pretax
Tax
(Provision)
Benefit
After
Tax Pretax
Tax
(Provision)
Benefit
After
Tax
Net unrealized gains (losses) on
securities:
Arising during period:
Fixed maturities $ 165.0 $ (57.7) $107.3 $ 132.9 $(46.5) $ 86.4 $302.9 $(106.0) $196.9
Equity securities 323.0 (113.1) 209.9 (57.5) 20.1 (37.4) 241.7 (84.6) 157.1
Net non-credit related OTTI losses,
adjusted for valuation changes 7.9 (2.8) 5.1 (5.5) 1.9 (3.6) 21.4 (7.5) 13.9
Reclassification adjustment for
(gains) losses realized in net
income:
Fixed maturities (75.9) 26.6 (49.3) (47.4) 16.6 (30.8) 46.3 (16.2) 30.1
Equity securities (143.2) 50.1 (93.1) (152.5) 53.4 (99.1) (93.7) 32.8 (60.9)
Change in net unrealized gains (losses)
on securities 276.8 (96.9) 179.9 (130.0) 45.5 (84.5) 518.6 (181.5) 337.1
Net unrealized gains (losses) on
forecasted transactions:1
Arising during period 0 0 0 (5.1) 1.8 (3.3) 0 0 0
Reclassification adjustment for
amounts realized in net income2(2.8) 1.0 (1.8) (5.3) 1.8 (3.5) (10.6) 3.7 (6.9)
Change in net unrealized gains on
forecasted transactions (2.8) 1.0 (1.8) (10.4) 3.6 (6.8) (10.6) 3.7 (6.9)
Foreign currency translation adjustment .6 (.2) .4 .2 (.1) .1 1.2 (.9) .3
Other comprehensive income (loss) $ 274.6 $ (96.1) $178.5 $(140.2) $ 49.0 $(91.2) $509.2 $(178.7) $330.5
1Entered into for the purpose of managing interest rate risk associated with our debt issuances.
2We expect to reclassify $2.2 million (pretax) into income during the next 12 months. During 2012, 2011, and 2010, we reclassified $0.6 million,
$0.3 million, and $5.8 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 (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 in the ordinary course of our 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 these cases are
uncertain at this time.
We establish accruals for lawsuits when it is probable that a loss has been 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, we have not established
a liability at this time. 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.
App.-A-35