Here's an illustration from Progressives 2019 financial results [0]: Revenues: Net Premiums - ~36b Investment income (includes interest, dividends and accret

Here's an illustration from Progressives 2019 financial results [0]: Revenues: Net Premiums - ~36b Investment income (includes interest, dividends and accretion, but not capital gains on sales of securities) - ~1b Gains on securities (capital gains on security sales) - ~1b Fees - 0.5B Service revenues - 0.2b Total revenue: 39b Expenses: Losses and loss adjustment expenses (i.e. payouts to policies) - ~25.5b Policy acquisition costs and other underwriting expenses - ~8b Other - 0.4B Total expenses - ~34b So that's about 5 billion in net income before taxes. Overall, about 80% of profits in this case come from collecting more premium than paying out in claims. About 20% come in from investment income. This is because they collect your premium upfront, but don't need to pay out until you have a claim. So that money can be invested in the meantime. Notably, an insurance company can be profitable if they invest well, even if they take a loss on claims. [0] https://s24.q4cdn.com/447218525/files/doc_financials/2019/annual/assets/pdf/Progressive-2019-Financial-Review.pdf https://s24.q4cdn.com/447218525/files/doc_financials/2019/an...