0000080661-26-000177
SEC filingStrong quarter with 8.7% revenue growth and 9.8% net income expansion, driven by premium growth and underwriting discipline despite higher advertising spend.
Profitability for our underwriting operations is defined by pretax underwriting profit or loss, which is calculated as net premiums earned plus fees and other revenues less losses and loss adjustment expenses, policy acquisition costs, and other underwriting expenses. In our commercial auto segment, the decrease in average written premium per policy was due to a shift in the mix of business to BMTs with lower average premiums, as well as a shift in policy term towards more 6-month policies in our contractor and business auto BMTs.
Net cash provided by operating activities was $4.4 billion in the first quarter of 2026, compared to $5.1 billion in the prior year. Capital expenditures were $63 million, resulting in free cash flow of $4.3 billion. We believe cash flows will remain positive in the foreseeable future and do not anticipate the need to raise capital to support our operations, although changes in market or regulatory conditions may necessitate otherwise.
While our focus has been on maintaining stable rates for customers, increases in tariffs and other retaliatory actions may result in higher loss costs, which could reduce profitability and necessitate higher than currently anticipated rate increases throughout 2026. We remain committed to disciplined underwriting and strategic investments to support long-term growth.