Progressive 2015 Annual Report Download - page 43

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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, 2012 $1,340.0 $(469.0) $871.0 $862.7 $ 6.1 $2.2 $0
Other comprehensive income (loss)
before reclassifications:
Investment securities 368.2 (128.9) 239.3 239.3 0 0 0
Net non-credit related OTTI losses,
adjusted for valuation changes 0.4 (0.1) 0.3 0.3 0 0 0
Forecasted transactions 0 0 0 0 0 0 0
Foreign currency translation
adjustment (2.5) 0.9 (1.6) 0 0 (1.6) 0
Loss attributable to noncontrolling
interest 0 0 0 0 0 0 0
Total other comprehensive income
(loss) before reclassifications 366.1 (128.1) 238.0 239.6 0 (1.6) 0
Less: Reclassification adjustment for
amounts realized in net income by
income statement line item:
Net impairment losses recognized
in earnings (5.7) 2.0 (3.7) (3.7) 0 0 0
Net realized gains (losses) on
securities 245.5 (86.0) 159.5 159.0 0.5 0 0
Interest expense 2.2 (0.7) 1.5 0 1.5 0 0
Total reclassification adjustment for
amounts realized in net income 242.0 (84.7) 157.3 155.3 2.0 0 0
Total other comprehensive income
(loss) 124.1 (43.4) 80.7 84.3 (2.0) (1.6) 0
Balance at December 31, 2013 $1,464.1 $(512.4) $951.7 $947.0 $ 4.1 $0.6 $0
In an effort to manage interest rate risk, we entered into forecasted transactions on each of The Progressive Corporation’s
outstanding debt issuances. Upon issuing the debt, the gains (losses) recognized on these cash flow hedges are recorded
as unrealized gains (losses) in accumulated other comprehensive income and amortized into interest expense over the term
of the related debt issuance. We expect to reclassify $1.9 million (pretax) into income during the next 12 months, related to
net unrealized gains on forecasted transactions.
To the extent we repurchased any of our outstanding debt, a portion of the unrealized gain (loss) would need to be
recognized as a realized gain (loss) since the cash flow hedge is deemed ineffective. During 2015, 2014, and 2013, we
repurchased in the open market a portion of our 6.70% Debentures and reclassified $0.2 million, $0.5 million, and $0.8
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 (see Note 4 – Debt for further discussion).
App.-A-42