Progressive 2014 Annual Report Download - page 51

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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 debt11,424.6 121.3 221.3 157.7 924.3
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
1Includes 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-50