Progressive 2015 Annual Report Download - page 41

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Our 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:
2015 2014 2013
Underwriting
Margin
Combined
Ratio
Underwriting
Margin
Combined
Ratio
Underwriting
Margin
Combined
Ratio
Personal Lines
Agency 7.8% 92.2 7.5% 92.5 6.3% 93.7
Direct 4.9 95.1 5.7 94.3 7.0 93.0
Total Personal Lines 6.5 93.5 6.7 93.3 6.6 93.4
Commercial Lines 15.9 84.1 17.2 82.8 6.5 93.5
Property110.1 89.9 0 0 0 0
Other indemnity2NM NM NM NM NM NM
Total underwriting operations 7.5 92.5 7.7 92.3 6.5 93.5
1Included is 7.4 points of amortization/depreciation expense associated with the acquisition of a controlling interest in ARX.
2Underwriting 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), including reclassification adjustments by income statement line
item, 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
Loss
attributable
to NCI
Balance at December 31, 2014 $1,574.0 $(550.9) $1,023.1 $1,021.9 $ 1.5 $(0.3) $ 0
Other comprehensive income (loss)
before reclassifications:
Investment securities (198.7) 67.5 (131.2) (131.2) 0 0 0
Net non-credit related OTTI losses,
adjusted for valuation changes 0 0 0 0 0 0 0
Forecasted transactions (12.9) 4.5 (8.4) 0 (8.4) 0 0
Foreign currency translation
adjustment (1.8) 0.6 (1.2) 0 0 (1.2) 0
Loss attributable to noncontrolling
interest 1.6 (0.5) 1.1 0 0 0 1.1
Total other comprehensive income
(loss) before reclassifications (211.8) 72.1 (139.7) (131.2) (8.4) (1.2) 1.1
Less: Reclassification adjustment for
amounts realized in net income by
income statement line item:
Net impairment losses recognized
in earnings (23.8) 8.4 (15.4) (15.4) 0 0 0
Net realized gains (losses) on
securities 149.7 (52.5) 97.2 97.1 0.1 0 0
Interest expense 1.8 (0.6) 1.2 0 1.2 0 0
Total reclassification adjustment for
amounts realized in net income 127.7 (44.7) 83.0 81.7 1.3 0 0
Total other comprehensive income
(loss) (339.5) 116.8 (222.7) (212.9) (9.7) (1.2) 1.1
Balance at December 31, 2015 $1,234.5 $(434.1) $ 800.4 $ 809.0 $(8.2) $(1.5) $1.1
App.-A-40