Progressive 2012 Annual Report Download - page 33

We reserved 11.1 million 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) 2012 2011
Progressive common shares1$ 53.3 $ 35.2
Other investment funds 73.4 66.2
Total $126.7 $101.4
1Includes 1.3 million and 0.7 million common shares as of December 31, 2012 and 2011, respectively, to be distributed in common shares.
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 a mobile device.
Our Commercial Auto segment writes primary liability and physical damage insurance for automobiles and trucks owned by
small businesses in the business auto, for-hire transportation, contractor, for-hire specialty, and tow 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 Auto segments
and for the other indemnity businesses. Pretax underwriting profit (loss) is calculated as net premiums earned plus fees and
other revenues less each of: (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 $94.4 million in 2012, $88.5 million in 2011, and
$83.1 million in 2010. The accounting policies of the operating segments are the same as those described in Note 1—
Reporting and Accounting Policies.
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