Progressive 2015 Annual Report Download - page 71

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C. Portfolio Allocation
The composition of the investment portfolio at December 31, was:
($ in millions) Fair Value
%of
Total
Portfolio
Duration
(years) Rating1
2015
Fixed maturities $15,332.2 73.2% 2.1 A+
Nonredeemable preferred stocks 782.6 3.7 2.6 BBB-
Short-term investments 2,172.0 10.4 <0.1 A+
Total fixed-income securities 18,286.8 87.3 1.9 A+
Common equities 2,650.5 12.7 na na
Total portfolio2,3 $20,937.3 100.0% 1.9 A+
2014
Fixed maturities $13,549.2 71.2% 1.8 A+
Nonredeemable preferred stocks 827.5 4.4 2.8 BB+
Short-term investments 2,149.0 11.3 <0.1 AA
Total fixed-income securities 16,525.7 86.9 1.6 A+
Common equities 2,492.3 13.1 na na
Total portfolio2,3 $19,018.0 100.0% 1.6 A+
na = not applicable
1Represents ratings at December 31, 2015 and 2014. Credit quality ratings are assigned by nationally recognized statistical rating organizations. To
calculate the weighted average credit quality ratings, we weight individual securities based on fair value and assign a numeric score of 0-5, with
non-investment-grade and non-rated securities assigned a score of 0-1. To the extent the weighted average of the ratings falls between AAA and
AA+, we would assign an internal rating of AAA-.
2Our portfolio reflects the effect of unsettled security transactions and collateral on open derivative positions; at December 31, 2015, $23.1 million
was included in “other assets,” compared to $31.3 million in “other liabilities” at December 31, 2014.
3The total fair value of the portfolio included $1.3 billion and $1.9 billion at December 31, 2015 and 2014, respectively, of securities held in a
consolidated, non-insurance subsidiary of the holding company, net of any unsettled security transactions.
Our asset allocation strategy is to maintain 0-25% of our portfolio in Group I securities, with the balance (75%-100%) of our
portfolio in Group II securities, as defined in the Overview – Investments section and as reflected in the following tables. We
believe this asset allocation strategy allows us to appropriately assess the risks associated with these securities for capital
purposes and is in line with the treatment by our regulators.
App.-A-70