Q3 2023 The Progressive Corp Earnings Call

Speaker 1: Good morning and thank you for joining us today for Progress' third quarter investor event. I am Doug Capitantine, Director of Investor Relations, and I will be moderator for today's event. The company will not make detailed comments related to its results in addition to those provided in it to annual report on form 10K, quarterly reports on form 10Q and the letter to shareholders, which have been posted to the company's website.

Good morning, and thank you for joining us today for progressive third quarter Investor event.

Instantly and director of Investor Relations and I will be moderator for today's event. The company will not make detailed comments related to its results. In addition to those provided in its annual report on Form 10-K quarterly reports on Form 10-Q, and the letter to shareholders, which have been posted to the company's website, although our quarterly investor relation as events often include the present.

Speaker 1: Although our quarterly investor relations events often include the presentation on a specific portion of our business, we will instead use the 60 minutes scheduled for today's event for introductory comments by our CEO and a question and answer session with members of our leadership team.

<unk> on a specific portion of our business, we will instead use the 60 minutes scheduled for today's event for introductory comments by our CEO and our question and answer session with members of our leadership team.

Speaker 1: Introductory comments by our CEO or previously recorded. Upon completion of the previous recorded remarks, we'll use the balance of the 60-minute schedule for this event for live question and answers with members of our leadership team.

Trajectory comments by our CEO or previously recorded.

Completion of the previously recorded remarks, we'll use the balance of the 60 minutes scheduled for this event for a live question and answers with members of our leadership team.

Speaker 1: As always, discussion in this event may include forward-looking statements. These statements are raised in management's current expectations and are subject to many risks and uncertainties that can cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available and our annual report on Form 10K for the year ended December 31st, 2022 as supplemented by our 10K reports for the first, second, and third quarters of 2023. We will find discussions of the risk factors affecting our business, safe harbor statements related to forward-looking statements, and other discussions of the challenges we face. These documents can be found via the Investor Relations section of our website at investors.progressive.com.

As always discussions in this event may include forward looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the.

The year ended December 31, 2022, as supplemented by our 10-Q reports for the first second and third quarters of 2023, where you will find discussions of the risk factors affecting our business safe Harbor statements related to forward looking statements and other discussions of the challenges. We face. These documents can be found via the Investor Relations section of our website.

At investors Progressive Dot com.

Speaker 1: To begin today, I'm pleased to introduce our CEO , Tricia Griffiths, who will kick us off with some introductory comments. Tricia?

Begin today I am pleased to introduce our CEO Tricia Griffith, who okay. That's all for some introductory comments Tricia.

Speaker 2: Good morning and thank you for joining us today. At the end of the second quarter, we were in a difficult place. Rising loss cost, adverse development, and catastrophic weather events meant we were facing a significant uphill battle to deliver on our calendar year 96 combined ratio target, while facing a very uncertain future.

Good morning, and thank you for joining us today at the end of the second quarter, we were in a difficult place rising loss cost adverse development in catastrophic weather events that we were facing a significant uphill battle to deliver on our calendar year 96, combined ratio target, while facing a very uncertain future.

Speaker 2: we made difficult decisions to steer the business through this challenging time.

We made difficult decisions to steer the business through this challenging time.

Speaker 2: Despite the headwinds, I believed in our strategy and the leaders who were in charge of delivering that strategy.

Despite the headwinds I believed in our strategy and our leaders who are in charge of delivering that strategy.

Speaker 2: Well, we knew it wouldn't be easy. We knew that if we executed properly, we'd come out better on the other side.

While we knew it wouldn't be easy we knew that if we execute properly we come out better on the other side.

Speaker 2: While there's still much uncertainty in our future and more work to do, the results in the third quarter suggest our strategy is working.

While there is still much uncertainty in our future and more work to do the results in the third quarter suggests our strategy is working.

Speaker 2: Before discussing what did happen in the third quarter, let's first discuss what did not happen. First, unlike the first half of the year, the third quarter saw modest company-wide reserve development of only point-to-point unfavorable across all lines.

Before discussing what did happen in the third quarter, let's first discuss what did not happen first unlike the first half of the year. The third quarter saw modest companywide reserve development of only point to point unfavorable across all lines.

Speaker 2: As we discussed in our presentation during our last call, our reserving group adjusted reserves in the first half to react to many things, including higher severity caused by steepening trends in our fixing vehicle co-verages, and higher attorney representation rates in Florida, precipitated by House Bill 837.

As we discussed in our presentation during our last call our reserving group adjusted reserves in the first half correct in many things, including higher severity caused by Steepening trends and are fixing vehicle conferences.

And higher attorney representation rates in Florida precipitated by House fell 837.

Speaker 2: in contrast to the first half. In the third quarter, we saw some flattening and a loss cost transfer fixing and replacing vehicles.

In contrast to the first half in the third quarter, we saw some flattening in the loss cost trends for fixing and replacing vehicles.

Speaker 2: We also now believe we have adequately reserved for the higher severity related to pre-hospital 837 loss.

We also now believe we have adequately reserved for the higher severity related to pre hospital 837 lawsuits.

Speaker 2: In the third quarter, catastrophe losses were 1.3 points lower in total after reinsurance than the first half of the year.

Second in the third quarter catastrophe losses were one three points lower in total after reinsurance than the first half of the year we.

Speaker 2: We do not rain homeowners in Hawaii, so our exposure to the heart-wrenching mow-y fires was limited.

We do not write homeowners in Hawaii, So our exposure to the heart wrenching Maui fires with limited.

Speaker 2: After re-insurance, our property catastrophe losses in the third quarter were 28 points lower than the first six months of the year. And while hurricane adalue was devastating to the people caught in this path of destruction, the density of homes and autos we insured in that path was relatively low.

After reinsurance our property catastrophe losses in the third quarter were 28 points lower than the first six months of the year.

Unknown Executive: Good morning, and thank you for joining us today for Progressive's third quarter investor event.

Douglas Constantine: I am Doug Constantine, Director of Investor Relations, and I will be moderator for today's event. The company will not make detailed comments related to its results in addition to those provided in its annual report on form 10K, quarterly reports on form 10Q, and the letter to shareholders, which have been posted to the company's website.

And while Hurricane Italia is devastating to the people cost is path of destruction. The density of the homes in autos, we insured in that path was relatively low.

Speaker 2: What did happen in the third quarter is that our rates and non-rate actions had a positive effect on premium and profitability.

It did happen in the third quarter is that our res and non rate actions had a positive effect on premium and profitability.

Unknown Executive: Although our quarterly investor relation of the events often includes a presentation on a specific portion of our business, we will instead use the 60-minute schedule for today's event for introductory comments by our CEO and a question and answer session with members of our leadership team, introductory comments by our CEO were previously recorded. On completion of the previous recorded remarks, we will use the balance of the 60-minute schedule for this event for live question and answers with members of our leadership team.

Speaker 2: including the four points of rate we took in the third quarter. We have now taken approximately 16 points in personal auto year to date with more of that rate earning in every day.

Including the four points of rate, we took in the third quarter. We have now taken approximately 16 points in personal auto year to date with more of that rate or any and every day.

Speaker 2: Both commercial lines and homeowners also took great as we looked to address lost trends in those lines.

Both commercial lines and homeowners also took rate as we look to address loss trends in those lines.

Speaker 2: continue to adjust and refine non-rate actions across the portfolio to help the business we are writing to meet our profitability targets.

We continue to adjust and refine non rate actions across the portfolio to help the business. We are writing to meet our profitability targets.

Unknown Executive: As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that can cause actual events and results to differ materially from those discussed during today's event.

Speaker 2: In addition to improved underwriting results, our net income is also benefiting from the higher interest rate environment.

In addition to improved underwriting results. Our net income is also benefiting from the higher interest rate environment.

Speaker 2: For the first nine months, our investment portfolio yield is 90 basis points higher, and recurring investment income is 59 percent higher than the same period last year. With sustained higher interest rates, we expect yields to continue to increase as securities with lower interest rates mature, and those funds are reinvested at higher rates.

For the first nine months, our investment portfolio yield is 90 basis points higher and recurring investment income was 59% higher than the same period last year.

With sustained higher interest rates, we expect yields to continue to increase our securities with lower interest rates in mature and those funds are reinvested at higher rates.

Speaker 2: Many of the actions we took and continue to take to address profitability have an adverse impact on unit growth.

Many of the actions, we took and continue to take to address profitability have an adverse impact on unit growth.

Speaker 2: New apps and personal auto were down 20% in the third quarter compared to the prior year and contributed to a decrease in PIFs compared to the end of the second quarter.

New apps and personal auto are down 20% in the third quarter compared to the prior year and contributed to a decrease in tests compared to the end of the second quarter. This is a reflection of our self imposed pullback in media spend as we seek to manage our combined ratio through the acquisition expense ratio and find the right balance in cohort pricing.

Trisha Griffiths: To begin today, I am pleased to introduce our CEO, Trisha Griffiths, who will take us off as an introductory comment. Trisha? Good morning and thank you for joining us today.

Speaker 2: This is a reflection of our self-imposed pullback and media spend as we seek to manage our combined ratio through the acquisition expense ratio and find the right balance and cohort pricing which we talked about at length in our last quarterly call.

Trisha Griffiths: At the end of the second quarter, we were in a difficult place. Rising loss costs, adverse development, and catastrophic weather events meant we were facing a significant uphill battle to deliver on our calendar year 96 combined ratio target, while facing a very uncertain future. We made difficult decisions to steer the business through this challenging time. Despite the headwinds, I believed in our strategy and the leaders who were in charge of delivering that strategy. While we knew it wouldn't be easy, we knew that if we executed properly, we'd come out better on the other side.

We talked about at length in our last quarterly call. We continue to assess our marketing spend and as always we endeavor to find the right balance between profitability and new business growth.

Speaker 2: We continue to assess our marketing spend and as always we endeavor to find the right balance between profitability and new business growth.

Speaker 2: Well, new applications shrink year-over-year in personal auto. Retention reflected through our PLE measure continues to be robust at 35% in personal auto on a trailing three base.

While new application shrank year over year in personal auto retention reflected through our PLE measure continues to be robust at 35% in personal auto on a trailing three basis.

Speaker 2: We believe robust retention, especially in the face of higher rates than a year ago, is an indicator that many of our competitors are still tight on underwriting and we remain competitive in the marketplace.

We believe robust retention, especially in the face of higher rates than a year ago is an indicator that many of our competitors are still tight on underwriting and we remain competitive in the marketplace.

Trisha Griffiths: While there's still much uncertainty in our future and more work to do, the results in the third quarter suggest our strategy is working.

Speaker 2: Despite the headbands created by our profitability actions, our year-over-year growth was very strong. Through September , company-wide tips were up 10% year-over-year.

Despite the headwinds created by our profitability actions our year over year growth was very strong.

Trisha Griffiths: Before discussing what did happen in a third quarter, let's first discuss what did not happen. First, unlike the first half of the year, the third quarter saw modest company-wide reserve development of only 0.2 points unfavorable across all lines. As we discussed in our presentation during our last call, our reserving group adjusted reserves in the first half to react to many things, including higher severity caused by steepening trends in our fixing vehicle coverages, and higher attorney representation rates in Florida precipitated by House Bill 837.

Through September our companywide tests were up 10% year over year.

Speaker 2: positive year over year PIF growth plus higher rates means our premium growth was spectacular with net written premium up 20% year to date or 7.9 billion to put the first three quarters premium growth into perspective We've added a premium equivalent to a top eight personal auto insurance carrier Which is a truly amazing statistics?

Positive year over year, Pip growth plus higher rates means our premium growth was spectacular with net written premium up 20% year to date or seven 9 billion to put the first three quarters premium growth into perspective, we've added the premium equivalent to a top eight personal auto insurance carrier, which is a truly.

Amazing statistic.

Speaker 2: Despite the successes that occurred in Quarter 3, we are not yet declaring victory. Our calendar year combined ratio currently stands 1.2 points above our 96 target. While loss trends have flattened, they are still elevated. MacReconomic indicators suggest inflation is abating, but we are vigilant.

Despite the successes that occurred in quarter three we are not yet declaring victory our calendar year combined ratio currently stands at 1.2 points above our 96 target while loss trends have flattened, they're still elevated macroeconomic indicators suggest inflation is abating, but we're vigilant.

Trisha Griffiths: In contrast to the first half, in the third quarter, we saw some flattening into loss cost trends for fixing and replacing vehicles. We also now believe we have adequately reserved for the higher severity related to pre-house Bill 837 lawsuit. Second, in the third quarter, catastrophe losses were 1.3 points lower in total after reinsurance than the first half of the year. We do not write homeowners in Hawaii, so our exposure to the heart-wrenching Maui fires was limited.

Speaker 2: Given the geopolitical and macroeconomic environment, our view of the future could change overnight.

Given the geopolitical and macroeconomic environment, our view of the future could change overnight.

Speaker 2: continue to refine our plans for the rest of 2023 and 2024 as new information comes in.

We continue to refine our plans for the rest of 2023 and 2024 as new information comes in.

Speaker 2: We have built a business where we can quickly take advantage of the opportunities the market offers us, so I'm confident that as things change, we'll react with the goal of delivering the best-in-class results we expect of ourselves.

We have built a business, where we can quickly take advantage of the opportunities. The market offers us so I'm confident that as things change, we will react with a goal of delivering the best in class results, we expect of ourselves.

Trisha Griffiths: After re-insurance, our property catastrophe losses in the third quarter were 28 points lower than the first six months of the year. And while Hurricane Adelio was devastating to the people caught in this path of destruction, the density of homes and autos we ensured in that path was relatively low.

Speaker 2: Finally, as a reminder, and as we've previously announced, beginning this fourth quarter, we will move to reporting results on a Gregorian calendar basis versus our historical approach of a 544 convention. Consequently, for the next year, we will limit historical comparisons on a monthly basis and will continue such comparisons on a quarterly basis. Thank you again for joining us.

Finally, as a reminder, and as we've previously announced beginning this fourth quarter, we will move to reporting results on a Gregorian calendar basis versus our historical approach of a 504 for convention cons.

Trisha Griffiths: What did happen in the third quarter is that our rates and non-rate actions had a positive effect on premium and profitability. Including the four points of rate we took in the third quarter, we have now taken approximately 16 points in personal auto year-to-date with more of that rate earning in every day. Both commercial lines and homeowners also took rate as we looked to address loss trends in those lines. We continue to adjust and refine non-rate actions across the portfolio to help the business we are writing to meet our profitability targets.

Consequently for the next year, we will limit historical comparisons on a monthly basis, and we'll continue such comparisons on a quarterly basis.

Thank you again for joining us and I will now take your questions.

Speaker 1: This concludes the previously recorded portion of today's event. We now have members of our management team available live to answer questions. Questions can only be submitted over the phone by pressing star 1 on your keypad. In order to get to as many questions as possible, please limit yourself to one question and one follow-up. We will now take our first question.

This concludes the previously recorded portion of todays event. We now have members of our management team available to answer questions questions can only be submitted over the phone by pressing star one on your keypad.

In order to get to as many questions as possible. Please limit yourself to one question and one follow up we will now take our first question.

Trisha Griffiths: In addition to improved underwriting results, our net income is also benefiting from the higher interest rate environment. For the first nine months, our investment portfolio yield is 90 basis points higher, and recurring investment income is 59% higher than the same period last year. With sustained higher interest rates, we expect yields to continue to increase as securities with lower interest rates mature, and those funds are reinvested at higher rates.

Yes.

Speaker 3: Our first question comes from the line of Bob Kuang with Morgan Stanley . Your line is now open.

Our first question comes from the line of Bob <unk> with Morgan Stanley. Your line is now open.

Speaker 4: Thank you. Just a quick question on the way you think about growth. Obviously, you are getting closer and closer to your 96 percent targeted combined ratio. Curious as to how should we think about the future growth trajectory going forward? Once now there appears a loss, are improving reservings appears to be more manageable? Heading into 2024, assuming you get to a 96 percent combined ratio in 2023, should...

Thank you.

A quick question.

Way you think about growth, obviously, you are getting closer and closer to your 96% target a combined ratio.

Curious as to how should we think about the.

The future growth trajectory going forward now that it appears that losses are improving reserving for appears to be more manageable.

Trisha Griffiths: Many of the actions we took in continue to take to address profitability have an adverse impact on unit growth. New apps and personal auto were down 20% in the third quarter compared to the prior year, and contributed to a decrease in PIFS compared to the end of the second quarter. This is a reflection of our self-imposed pullback and media spend as we seek to manage our combined ratio through the acquisition expense ratio, and find the right balance and cohort pricing, which we talked about at length in our last quarterly call.

Heading into 2024, once you're assuming you get to a 96% combined ratio in 2023 should is it reasonable to assume that you would reaccelerate growth into 2024.

Speaker 4: Is it reasonable to assume that you would re-accelerate growth into 2024?

Speaker 2: Yeah, that's definitely reasonable, Bob. Here's how I'm thinking about it. We obviously have 1.2 points to diminish to get to our 96. We're going to continue to work on that. We're still seeing a pretty hard market out there, so we're getting a lot of ambient shopping. And if you caught the last part.

Yes, that's definitely a reasonable Bob here's how I'm thinking about it we obviously have 1.2 points.

To diminish to get to our 96, we're going to continue to work on that we're still seeing a pretty hard market out there. So we're getting a lot of ambien shopping and if you caught the last part of the statement, even with US doing the self imposed pull back from our media spend and from non rate actions, we were able to grow the company.

Trisha Griffiths: We continue to assess our marketing spend, and as always, we endeavor to find the right balance between profitability and new business growth. While new applications shrink year-over-year in personal auto, retention reflected through our PLE measure continues to be robust at 35% in personal auto on a trailing three basis. We believe robust retention, especially in the face of higher rates than a year ago, is an indicator that many of our competitors are still tight on underwriting, and we remain competitive in the marketplace.

Speaker 2: of the statement, even with us doing the self-imposed pullback from our media spend and from non-rate actions, we were able to grow the company nearly $8 billion compared to the first nine months of last year, 10% PIF, it was a little bit higher in the direct auto side. So we're pretty excited about what we were able to achieve this year, and I say that not necessarily for the analytical community out there, but mostly for the 60,000 people that got us there. So profit comes before growth, we'll continue to work on that. And what we'll start to do in the relatively near future is start to pull back some of our non-rate actions. So we have a hierarchy of non-rate actions.

Nearly 8 billion compared to the first nine months of last year, 10% path is a little bit higher than the direct auto side. So we're pretty excited about what we were able to achieve this year and I say that not necessarily for that analytical community out there, but mostly for the 60000 people that got us there.

Trisha Griffiths: Despite the had been created by our profitability actions, our year-over-year growth was very strong. Through September, company-wide PIFS were up 10% year-over-year. Positive year-over-year PIF growth plus higher rates means our premium growth was spectacular with net-written premium up 20% year-to-date, or $7.9 billion.

Profit comes before growth will continue to work on that.

And what will start to do.

And they're in the relatively near future start to pull back some of our non rate actions. So we have a hierarchy of non rate actions that we will look to start to pull back. We can test. There's obviously been a lot of uncertainty out there. So we're going to go we're going to be measured and then we can pull back that next tranche and the <unk>.

Speaker 2: that we'll look to start to pull back. We can test. There's obviously been a lot of uncertainty out there, so we're going to go, we're going to be measured. And then we can pull back that next tranche in the hierarchy of non-rate actions. And we just met with our media team and are working on a pretty robust budget that we'll plan to put into effect. You know, we still have obviously marketing the rest of this quarter, but into 2024. So I would say we're excited. I will say that, you know, there's been a lot of uncertainty. So we're going to be really diligent and cautious. But our goal is to grow as fast as we can at a 96 or better.

Trisha Griffiths: To put the first three quarters premium growth into perspective, we've added the premium equivalent to a top eight personal auto insurance carrier, which is a truly amazing statistic.

If you have non rate actions and we just met with our media team and are working on a pretty robust budget that we'll plan to put into effect. We still have obviously marketing the rest of this quarter, but into 2024. So I would say we're excited I will say that there's been a lot of uncertainty and so we're going to we're going to be really diligent and cautious.

Trisha Griffiths: Despite the successes that occurred in quarter three, we are not yet declaring victory. Our calendar year combined ratio currently stands 1.2 points above our 96 target. While loss trends have flattened, they are still elevated. Macroeconomic indicators suggest inflation is abating, but we are vigilant.

But our goal is to grow as fast as we can at a 96 or better.

Trisha Griffiths: Given the geopolitical and macroeconomic environment, our view of the future could change overnight. We continue to refine our plans for the rest of 2023 and 2024 as new information comes in. We have built a business where we can quickly take advantage of the opportunities the market offers us, so I'm confident that as things change, we'll react with the goal of delivering the best in class results we expect of ourselves.

Speaker 4: Thank you. That's very helpful. Maybe pivot a little bit on reserving. On the 10-Q, you had a lot of disclosure on and explanation on how severity trends are developing over time. But just kind of curious in terms of frequency, specifically on bodily injuries.

Thank you that's very helpful, maybe pivot a little bit on our reserving on the 10-Q, you you had a lot of disclosure on.

And explanation on how severity trends are developing overtime.

But just kind of curious in terms of frequency specifically on.

Speaker 4: It looks like frequency normalized, improved quite a bit. Just curious if you have any commentary there around what's causing the frequency numbers to improve and is that a trend that we should be expecting that it will normalize back to a generally negative frequency number going forward.

Bodily injuries.

It looks like frequency normalized improved quite a bit just curious if you have any commentary there around whats, causing the frequency numbers to improve.

Trisha Griffiths: Finally, as a reminder, and as we've previously announced, beginning this fourth quarter, we will move to reporting results on a Gregorian calendar basis versus our history. The historical approach of a 544 convention. Consequently, for the next year, we will limit historical comparisons on a monthly basis and will continue such comparisons on a quarterly basis.

Is that a trend that we should be expecting that it will normalize back to a generally negative frequency number going forward.

Speaker 2: Yeah, it's really hard to discern frequency. A lot of it has to do with geography mix, CMT mix. It could have to do with our underwriting effects. So I don't really want to focus too much on that because there's just a lot of inputs. What I would say from a stability perspective is we're down, you know, overall about 1.5%, 13 to 24 months. So we've been pretty stable as far as frequency overall.

Yeah, it's really hard to discern frequency a lot of it has to do with.

Geography mix.

CMT mix it could be I have to do with our underwriting effects. So I don't really want to focus too much on that because theres just a lot of inputs, what I would say from a stability perspective is were down.

Unknown Executive: Thank you again for joining us and I will now take your questions.

Unknown Executive: This concludes the previous recorded portion of today's event.

Unknown Executive: We now have members of our management team available live to answer questions. Questions can only be submitted over the phone by pressing star one on your key pet. In order to get to as many questions as possible, please limit yourself to one question and one follow up.

Overall about one 5%, 13% to 24 months, so we've been pretty stable as far as frequency overall, but I'll also say is when we look at our UBI data, we're seeing about 15 months of stability, where <unk> are still down about 15% pre COVID-19.

Unknown Executive: We will now take our first question.

Speaker 2: What I'll also say is when we look at our UBI data, we are seeing about 15 months of stability where VMTs are still down about 15% pre-COVID. Now again, I can't confirm that that stability will continue, but what we're seeing is not a lot more movement to commute hours and we have some external data that shows that badge swipes in office remain pretty stable at about 50% of office workers working from home versus office. So there is some stability, there's always a lot of inputs, there's always a lot of change that's happening, especially as we talked about

Bob Wong: Our first question comes from the line of Bob Wong with Morgan Stanley. Your line is now open. Thank you. Just a quick question on the way you think about growth. Obviously, you are getting closer and closer to your 96% target of combined ratio. Curious as to how should we think about the future growth trajectory going forward? Once, now that it appears that our improving reserving appears to be more manageable, hiding into 2024.

Now again I can't confirm that that stability will continue but what we're seeing is not a lot of lot more movement to commute hours and we have some external data that shows that badge swipes and office remain pretty stable at about 50% of office workers are working.

From home versus office. So there is some stability there is always a lot of inputs and theres always a lot of change that's happening, especially as we talked about rolling back some of our non rate actions, but it's been stable for quite a while.

Bob Wong: Assuming you get to a 96% combined ratio in 2023, is it reasonable to assume that you would reaccelerate growth into 2024? Yeah, that's definitely reasonable, Bob. Here's how I'm thinking about it. We obviously have 1.2 points to diminish to get to our 96%. We're going to continue to work on that. We're still seeing a pretty hard market out there, so we're getting a lot of ambient shopping. If you caught the last part of the statement, even with us doing the self-imposed pullback from our media spend and from non-rate actions, we were able to grow the company nearly 8 billion.

Speaker 2: you know, rolling back some of our non-rate actions, but it's been stable for quite a while.

Speaker 4: Okay. Thank you. That's very helpful. And congratulations on a solid three months.

Okay. Thank you that's that's very helpful and congratulations on a solid three months.

Thank you Bob.

Speaker 3: Thank you. The next question comes from the line of Mike Zaremsky with BMO. Your line is now open.

Thank you. The next question comes from the line of Mike Zaremski with BMO.

Your line is now open.

[laughter].

Hey, good morning.

Speaker 5: I guess a follow-up on ambient shopping.

I guess, a follow up on ambien shopping.

Bob Wong: Compared to the first nine months of last year, 10% PIF is a little bit higher on the direct auto side, so we're pretty excited about what we were able to achieve this year. I say that not necessarily for the analytical community out there, mostly for the 60,000 people that got us there.

Speaker 5: You know, should we be thinking about it as kind of looking at the industries?

Should we be thinking about it as kind of looking at the industry's profitability and capital position and then ultimately.

Speaker 5: profitability and capital position. And then ultimately, you know, as, as the industry heals, as long as, as well as progressives profit margins healed the ambient shopping benefit which is pretty extraordinary kind of should dissipate or how are you guys internally, do you guys have a have your own kind of view or has your view evolved at all on, on the benefit you're getting from kind of lower LTV, the CAC and, and, and ambient shopping.

As the industry heels as long as as well as progressive profit margins healed, the ambient shopping benefit which is pretty extraordinary kind of should dissipate or how are you guys internally do you guys have had your own kind of Europe has your view evolved at all.

Trisha Griffiths: So, profit comes before growth. We'll continue to work on that. And what we'll start to do in the relatively near future is start to pull back some of our non-rate actions. So, we have a hierarchy of non-rate actions that will look to start to pull back. We can test. There's obviously been a lot of uncertainty out there, so we're going to be measured. And then we can pull back that next tranche in the hierarchy of non-rate actions.

On the benefit Youre getting from kind of lower LTV to CAC.

Shopping.

Speaker 2: How I think about that, Mike, is, you know, it's been a hard market for a while. We did get out in front of rates to begin with and then again at the beginning of this year as we saw the trends change specifically in severity of fixing cars. So getting out in front of that when others might be behind, we're going to get that ambient shopping. We watch it really closely in the auction environment and the great part about that is that you can get a really low cost per sale. So we'll watch that, but we will definitely put on the gas as needed if we feel like the market is softening at all. I can't really speak to what other competitors do, but I imagine that they're trying to get to their target profit margins and that means they're going to put a lot of rate out there, which means shopping is going to happen and that's how we get that business.

How I think about that Mike is it's been a hard market for a while we did get out in front of rates to begin with and then again at the beginning of this year as we saw.

Trisha Griffiths: And we just met with our media team and are working on a pretty robust budget that will plan to put into effect. We still have obviously marketing the rest of this quarter, but into 2024. So, I would say we're excited. I will say that there's been a lot of uncertainty, and so we're going to be really diligent and cautious. But our goal is to grow as fast as we can at a 96 or better. Thank you. That's very helpful.

The trends change specifically in severity of fixing cars, so getting out in front of that when others might be behind you or we're going to get that ambient shopping we watch it really closely in the auction environment and the great part about that is that you can you can get a really low cost per sale. So we'll watch that but we will definitely.

Put on the gas is needed if we feel like the market is softening at all I can't really speak to what other competitors do but I.

Unknown Executive: Maybe pivot a little bit on reserving. On the 10Q, you had a lot of disclosure on any and explanation on how severity trends are developing over time, but just kind of curious in terms of frequency specifically on bodily injuries. It looks like frequency normalized improved quite a bit. This curious if you have any commentaries that are around what's causing the frequency numbers to improve. And is that a trend that we should be expecting that it will normalize back to a generally negative frequency number going forward?

I imagine as Theyre trying to get to their target profit margins and that means theyre going to put a lot of rate out there, which means shopping is going to happen and that's how we get that business.

Speaker 6: Much of the ambient shopping today, we are dissuading from purchasing a policy with progressives. So as Tricia was saying, we are going to pull back on some of the non-rate actions we've had in place.

Mike.

Much of the ambient shopping today, we are dissuading from purchasing a policy with progressive So Patricia was saying we are going to hold.

Pullback on some of the non rate actions we've had in place.

Speaker 6: That have been obviously designed to improve profitability and as we do so more of those ambient shoppers are going to get through to potentially Buy a progressive policy. So we have some what I'll call unmet demand out there that as we're more adequately priced will be

That had been obviously designed to improve profitability and as we do so more of those ambient shoppers are going to get through to potentially buy a progressive policy. So we have some what I'll call me Matt.

Unknown Executive: Yeah, it's really hard to discern frequency. A lot of it has to do with geography mix, CMT mix. It could be, I have to do with our underwriting effect. So I don't really want to focus too much on that because there's just a lot of inputs. What I would say from a stability perspective is we're down, you know, overall about 1.5% 13 to 24 months. So we've been pretty stable as far as frequency overall, but I'll also say is when we look at our UBI data, we are seeing about 15 months of stability where VMTs are still down about 15% pre COVID.

The demand out there that is where more adequately priced.

Will become growth.

Speaker 5: that's helpful. Lastly, I was hoping to switch gears to the TNC business on the commercial side.

Okay. That's helpful.

Lastly.

I was hoping to switch gears to the <unk>.

P&C business on the commercial side.

Speaker 5: There's been a lot of growth there. You've taken a lot of market share to peers. I'm assuming that that business is coming to you at hefty.

There's been a lot of growth there you've taken a lot of market share it appears.

I'm, assuming that that business is coming to you at hefty.

Speaker 5: price increases. But, you know, it's also been a cause of reserve development. I guess, you know, any color you can offer on what's going on with that business. And just lastly, does this business come with a bigger new business penalty than other parts of, you know, than personal auto or commercial non-TNC?

Price increases.

It's also been a.

Cause of reserve development.

I guess.

Any color you can offer on what's going on with that business and then just lastly does this business come with a bigger new business penalty.

Unknown Executive: Now, again, yeah, I can't confirm that that stability will continue. But what we're seeing is not a lot of more more movement to commute hours and we have some external data that shows that badge swipes in office remain pretty stable at about 50% of office workers of working from home versus office. So there is some stability. There's always a lot of inputs and there's always a lot of changes happening, especially as we talked about, you know, rolling back some of our non rate actions, but it's been stable for quite a while. Okay. Thank you. That's that's very helpful. And congratulations on a solid three months. Thank you, mom.

Unknown Executive: Thank you.

And then other.

Parts of <unk>.

Personal auto or commercial P&C.

Speaker 2: Yeah, I'll start with the last part. I think what it comes with is, you know, sometimes we don't necessarily know that product in a state. So just like any new business where we're learning the cost associated with it, we've seen that in TNC. So said another way, the more mature states that we've had are performing much better. But you're right on the rate increases. We've over doubled the rates since 2021 in the TNC business. And specifically what we're seeing is the rate increases are driven by just a few states. And those states have some structural challenges relating to limit mixes, specifically UM-UIM.

Yeah, I'll start with the last part of it I think what it comes with is sometimes we don't necessarily know that product in the states. So just like any new business, where we're learning on the costs associated with it we see we've seen that in Tennessee. So.

Another way the more mature states that we've had are performing much better but you are right on the rate increases we've.

Over double the rates since 19 since 2021, sorry, 2021, and the TNC business and specifically what we're seeing is.

Mike Zyrinsky: The next question comes from a line of Mike Zyrinsky with BMO. Your line is now open. Hey, good morning. I guess I'll follow up on ambient shopping. You know, should we be thinking about it as kind of looking at the industry's profitability and capital position and then hopefully, you know, as the industry heals as long as as well as progressives proper margins healed. The ambient shopping benefit, which is pretty extraordinary kind of should dissipate or how are you guys internally you guys have have your own kind of view or has your view evolved at all on the benefit you're getting from kind of lower LCB the cat and and ambient shopping.

The rate increases are driven by just a few states and those states have some structural challenges relating to limit mixes specifically <unk>. So what we've been doing with both of our customers is really gathering the data that we have we have a treasure trove of data being the largest commercial auto rider and then they have their own.

Speaker 2: So, what we've been doing with both of our customers is really gathering the data that we have. You know, we have a treasure trove of data being the largest commercial auto writer, and then they have their own data. We obviously separate and bifurcate the two companies, but talk with them about how to get to the right rates in a more timely fashion, and work with them to develop approaches just around flexibility. So, think of six-month policies or greater segmentation. And that's what we're working on right now. I can't go into a lot of specifics because it is proprietary, but we're working very closely to get the rate we need, specifically in the states I talked about with the high UMUIM limits. And the other states, we're more comfortable with because they're performing better.

We obviously are separate and bifurcate the two companies, but talk with them about how to get to the right rates in a more timely fashion and work with them to develop approaches just around flexibility. So think of six month policies or greater segmentation and that's what we're working on right now I can't go into a lot of specifics because.

It is proprietary.

But we're working very closely to get the rate we need specifically in <unk>.

Mike Zyrinsky: How I think about that, Mike, is, you know, it's been a hard market for a while. We did get out in front of rates to begin with and then again to beginning of this year as we saw the trends change specifically in severity of fixing cars. So getting out in front of that when others might be behind, we're going to get that ambient shopping. We watch it really closely in the auction environment and the great part about that is that you can, you can get a really low cost per sale.

Stacy I talked about with the high <unk> limits and the other states, we're more comfortable with because they are performing better.

Speaker 7: Thank you.

Thank you.

Thanks, Mike.

Speaker 3: Thank you. The next question comes from the line of Jimmy Buller with JP Morgan. Your line is now open.

Thank you the next.

Question comes from the line of Jimmy Buhler with Jpmorgan. Your line is now open.

Speaker 8: Hey, good morning. So first had a question on commercial line reserves. We had an issue for several months where you guys had consistent adverse development in the personal auto side. And I think in

Hey, good morning, So first I had a question on commercial loan reserves.

Mike Zyrinsky: So we'll watch that, but we will definitely put on the gas as needed if we feel like the market is softening it all. I can't really speak to what other competitors do, but, you know, I imagine as they're trying to get to their target profit margins and that means they're going to put a lot of rate out there, which means shopping is going to happen and that's how we get that business.

We had an issue.

Several months ago, you guys had.

The adverse development in the personal auto side.

I think.

Speaker 8: September you had adverse development on the commercial side as well. So maybe discuss what the drivers of that work and what gives you the confidence that this is sort of not the beginning of trend where you adverse development might continue for a few months in commercial lines as well.

In.

September you had adverse development on the commercial side as well so maybe discuss what the drivers of that were.

Mike Zyrinsky: Michael, you know, much of the ambient shopping today, we are dissuading from purchasing a policy with progressive. So, the district was saying we are going to pull back on some of the non-rate actions we've had in place that have been obviously designed to improve profitability. And as we do so, more of those ambient shoppers are going to get through to potentially buy a progressive policy. So we have some, what I'll call unmanned demand out there that is where more adequately priced will become growth.

And what gives you the confidence that this is sort of not the beginning.

Trend where you.

The adverse development might continue for a few months in commercial lines as well.

Unknown Executive: Okay, that's helpful.

Speaker 2: Yes, we saw some of some of the similar things we did in private passenger auto in commercial lines Really the two factors are the one I just talked about was the TNC reserves in those specific states And the other was late reported injury claims, and I think those make up the majority of the commercial lines

Yes, we saw some are some of the similar things we did in private passenger auto in commercial lines.

Really the two factors of the one I just talked about was the TNC reserves in those specific states and the other was late reported injury claims and I think those make up the majority of the commercial lines.

Speaker 2: you know, we'll continue to look. We obviously feel in some of the reserving that, you know, Gary's Gary and his team have looked at it pretty deeply. So think of the florida House bill 8 37. Think of 16 cars and Gary will continue to look at those high limit states throughout the year to make sure we're adequately reserved for commercial lines as well.

We will continue to look we obviously feel in some of the reserving that Gary Gary and his team have looked at it pretty deeply so think of the Florida House Bill 837 think of fixing cars and Gary will continue to look at those high limit states throughout the year to make sure we're adequately reserved for commercial lines as well.

Mike Zyrinsky: Lastly, I was hoping to switch gears to the TNC business on the commercial side. You know, there's been a lot of growth there, you've taken a lot of market share to peers. I'm assuming that that business is coming to you at that hefty price increases. But I'm, you know, it's also been a cause of reserve development.

Speaker 8: Okay. And then secondly, on your expense ratio, has the decline been mostly driven by just a proactive view on your part to pull back from the market while you're seeking Christite and not be as active on marketing, or are there any structural changes and trends as well?

Okay, and then secondly on your expense ratio has the decline been mostly driven by.

Just a proactive view on your <unk>.

Unknown Executive: I guess, you know, any color you can offer on what's going on with that business and just lastly, do this business come with a bigger new business penalty than other parts of, you know, then personal auto or commercial non-TNC? Yeah, I'll start with the last part. I think what it comes with is, you know, sometimes we don't necessarily know that product in a state. So just like any new business where we're learning on the cost associated with it, we've seen that in TNC.

The pullback from the market, while you are seeking price hike the lumpy as active on marketing or.

Are there any structural changes really from goodwill.

Speaker 2: Well, we're always looking to reduce expenses, especially on the non-acquisition expense ratio, but we've pulled back significantly in advertising and that obviously hits the expense ratio as well as the increase in premium.

Well, we're always looking to reduce expenses, especially on the non acquisition expense ratio, but we've pulled back significantly.

And advertising and that obviously hit the expense ratio as well as the increase in premiums.

Speaker 8: And you'll come back, I guess, what do you need to see before you start coming back into the market with more marketing spending?

And you will come back I guess, what do you need to see before you start coming back into the market with more marketing spending.

Unknown Executive: So set another way, the more mature state that we've had are performing much better. But you're right on the rate increases. We've over doubled the rates since 19 since 2021, sorry, 2021 in a TNC business. And specifically what we're seeing is the rate increases are driven by just a few states. And those states have some structural challenges relating to limit mixes, specifically UM UIM. So what we've been doing with both of our customers is really gathering the data that we have, you know, we have a treasure trove of data being the largest commercial auto rider.

Speaker 2: Yeah, we have, even if you look at our marketing spend and the reduction, we spend a significant amount in marketing. And that will continue into the fourth quarter of preplanned spends that we already have. But like I said, what we're going to do is be really cautious and initially start to roll back non-rate actions. And we have a robust media spend planned for 2024. Again, that's a plan. So that is one lever where we can pull forward if we think there's a lot of business to be had, as long as we're making our target profit margins, or pull back if we find ourselves in the place that we did in the first half of 2023.

Yes.

We have even if you look at our marketing spend and the reduction we spend a significant amount in marketing and that will continue into the fourth quarter of Preplanned spends that we already have.

Like I said, what we're going to do is be really cautious and initially start to roll back non rate actions and we have a robust.

Media spend.

Land for 2024 again Thats a plan. So that is one lever we can pull forward. If we think there's a lot of business to be had as long as we're making our target profit margins or pull back if we find ourselves in a place that we did in the first half of 2023.

Unknown Executive: And then they have their own data. We obviously separate and bifurcate the two companies but talk with them about how to get to the right rates in a more timely fashion and work with them to develop approaches just around flexibility. So think of six month policies or greater segmentation. And that's where we're working on right now.

Speaker 9: Thank you.

Thank you.

Thank you.

Speaker 3: Thank you for your questions. The next question comes from a line of Yeren Kienar with jeffries. Your line is now open.

Thank you for your questions. The next question comes from the line of Yaron Qunar with Jefferies. Your line is now open.

Unknown Executive: I can't go into a lot of specifics because it is proprietary. But we're working very closely to get the rate we need specifically in the states I talked about with the high UM UIM limits and the other states we're more comfortable with because they're performing better.

Speaker 10: Thank you, good morning. Two questions. So first, do you see any potential impact from the UAW strike, which is hopefully behind us now?

Thank you good morning, two questions. So first do you see any potential impact from the UAW strike, which is hopefully behind us now.

Speaker 2: We do a little bit because even though the strike wasn't that long, I think around eight weeks total, there's about 12 to 18 weeks before we start to see recovery in some of the parts as well as new vehicles being made. So immediately when we saw the strike happen, John Murphy and his group went into this sort of mode of sensitivity analysis around this. We have deployed and executed a plan on that, and our main issue for this next 12 or so weeks is really to just minimize the disruption in both our customers and the company.

We do a little bit because even though the strike it wasn't that long I think around eight weeks total.

Mike Zyrinsky: Thank you. Thanks, Mike.

Unknown Executive: Thank you.

Theres about 12 to 18 weeks before we start to see recovery in some of the parts.

Jimmy Buller: The next question comes from the line of Jimmy Buller with JP Morgan. Your line is now open. Hey, good morning. So first had a question on commercial line users. We had an issue for several months where you guys had a consistent adverse development in the personal auto side.

New vehicles being made so.

Mediately when we.

We saw the strike happen John.

John Murphy and his group went into this sort of mode. A sensitivity analysis around this we have dipped.

Deployed and executed a plan on that and are our main issue for this next 12 or so weeks is really to just.

Unknown Executive: And I think in September you had adverse development on the commercial side as well, so maybe discuss what the drivers of that were, and what gives you the confidence that this is sort of not the beginning of a trend where you are very adverse to open might continue for a few months in commercial line as well. Yes, we saw some of the similar things we did in private passenger auto in commercial lines.

Minimize the disruption in both our customers and the company.

Speaker 10: Got it. So near term impact potentially, but not really beyond 12 to 16 weeks or so.

Alright, so near term impact potentially but not really beyond 12 to 16 weeks or so.

Speaker 2: That's what we're thinking, of course, every now we'll watch just like all of the data and especially as we continue to earn in more rate or the states who are at a free price, it may not have any impact. The thing we worry about the most is delays in fixing vehicles, which is then, a concern going forward in the past, I should say, just based on talent in the body shops and having the right mechanics to do that. We'll be able to see that really quickly and react to that should we need to.

That's what we're thinking of course every now we'll watch just like all of the data and especially as we continue.

Continue to earn in more rate toward the state. So radically priced it may not have any impact the thing we worry about the most is delays in fixing vehicles, which has been a <unk>.

Unknown Executive: Really, the two factors, the one I just talked about was the TNC reserves in those specific states and the other was late reported injury claims and I think those make up the majority of the commercial lines. You know, we'll continue to look, we obviously feel in some of the reserving that you know Gary's in the team have looked at it pretty deeply so think of the Florida House Bill 837 think of 16 cars and Gary will continue to look at those high limit states throughout the year to make sure we're adequately reserved for commercial lines as well.

Going forward in the past I should say just based on talent and the body shops, and having the right mechanics to do that but we will be able to see that really quickly and react to that should we need to.

Speaker 10: Got it. And then my second question, maybe you can help us think through this. So you've implemented a lot of rate and personal auto, still earning in a good chunk of that as well. You're talking about some stabilization of the loss trends. So if and when you accelerate this growth on a much healthier rate adequacy,

Got it and then my second question, maybe you can help us think through this so.

And a lot of rate in personal auto so, earning and a good chunk of that as well you were talking about some stabilization of the loss trends.

Unknown Executive: Okay, and then secondly on your expense ratio has the decline been mostly driven by just a proactive view on your part to pull back from the market while you're seeking crisis and not be as active on marketing or are there any structural transition in the front as well. Well, we're always looking to reduce expenses, especially on the non acquisition expense ratio, but we've pulled back significantly in advertising and obviously hit the expense ratio as well as the increase in premium.

So if and when you accelerate.

<unk> growth.

On a much healthier.

Speaker 10: Do you expect that to ultimately improve the loss ratio, or is the immediate impact still an adverse impact because of the new business penalty?

Rate adequacy.

Do you expect that to ultimately improve the loss ratio or is the immediate impact so an adverse impact because of the new business penalty.

Speaker 2: Well, you know, if we spend more on marketing, there's, you know, there is a new business talent. But if we believe we are putting new units on the book at a lifetime 96, the cohort 96 calendar year, then we feel good about it. And we'll price to that. We are very efficient in our media spend and we'll price to that. And really, we feel better every day in all products as each day goes by as more rate earns in. But we know that's part of new business and we're happy to do it if we think we can make the target profit margin that we...

Well, if we spend more on marketing. There is there is there is a new business penalty, but if we believe we are putting new.

Units on the book at a lifetime 96, a cohort 96 calendar year, then we feel good about it and we'll price that we we are very efficient in our media spend and we'll price to that and really we feel.

Unknown Executive: And you'll come back, I guess, what do you need to see before you start coming back into the market with more marketing spending. Yeah, we, you know, we, we have even if you look at our marketing spend and the reduction, we spend a significant amount of marketing and that I'll continue into the fourth quarter of pre plan spends that we already have. But like I said, what we're going to do is be really cautious and initially start to roll back non rate actions and we have a robust media spend planned for 2024 again that's a plan.

Better every day and our products as each day goes by as more rate earns in.

We know Thats part of new business and we're happy to do it. If we think we can make the target profit margin that we go.

Speaker 11: Go to.

<unk>.

Thank you and good luck.

Thank you.

Yes.

Speaker 3: The next question comes from the line of Josh Schenker with Bank of America. Your line is now open.

Thank you.

The next question comes from the line of Josh Shanker with Bank of America. Your line is now open.

Speaker 12: Thank you for taking my question. Looking at competitor behavior, I don't need to speak about individual competitors, but Geico lost a lot of customers over the past year. And I look at some other publicly traded companies and the leakage of policies has not been so significant elsewhere where I can tell, yet Progressive has grown dramatically.

Unknown Executive: So that is one lever we can pull forward if we think there's a lot of business to be had as long as we're making our target profit margins or pull back if we find ourselves in the place that we did in the first half of 2023. Thank you.

Thank you for taking my question.

Looking at competitor behavior, I don't need to speak about individual competitors.

But geico lost a lot of customers over the past year.

And I look at some other publicly traded companies.

The leakage of.

Policies have not been so significant elsewhere, where I can tell yet progressive has grown dramatically.

Unknown Executive: Thank you for your questions.

Speaker 12: In thinking about the year to come and the year that's past.

Yaron Kinar: The next question comes from a line of year and can are with jeffries. Your line is now open. Thank you.

Thinking about the year to come in the year that parents.

Speaker 12: When you think about captive, independent, and direct channels, where has most of the market share growth that Progressive has achieved come from?

When you think about captive independent and direct channels, whereas most of the market share growth recognize a cheap come from.

Unknown Executive: Good morning. Two questions. So first, do you see any potential impacts from the UAW strike, which is hopefully behind us now? We do a little bit because even though this strike wasn't that long, I think, around eight weeks total. There's about 12 to 18 weeks before we start to see recovery and some of the parts as well as new vehicles being made. So immediately when we, we saw this strike happen, John Murphy and his group went into this sort of motive sensitivity analysis around this.

Speaker 12: And next year, if a company like Geico becomes more aggressive in its desire to add new customers, does that change the calculus on what the market share gains and the type of customers might be in a new year?

And next year for company like Geico becomes more aggressive.

To add new customers does that change the calculus on what.

<unk>.

Market share gains and the type of customers might be in the new year.

Speaker 2: Well, I think we're a growth company, Josh, and I think we're gonna try to do anything we can to grow as long as we make our target profit margins. We understand where much of our business is coming through because we know the proof of the prior carrier. And so it's been not just Geico, but other companies that I wanna talk specifically about the percentage of where it's coming from, but it really depends on our people price-dry in the market. Do they have the right brand? Do they care about expense ratio which keeps the prices competitive? And so, you know, for us, it's really, and we've talked about before, it's making sure that we have all four of our strategic pillars really starting with our people in culture and then going on to our brand competitive prices and broad coverage. And that's where I think we're able to win and continue to grow. We can react very quickly when our competitors do have actions. And really, that's our focus is to make sure that we have those four strategic pillars and that we invest in all of them to continue to be a high growth company.

Well I think we're a growth company, Josh and I think we're going to try to do anything we can do as long as we make our target profit margins, we understand where much of our business is coming through because we know the proof of the prior carrier and so it's been not just geico, but other companies I don't want to talk specifically.

Unknown Executive: We have deployed and executed a plan on that and our main issue for this next 12 or so weeks is really to just minimize the disruption in both our customers and the company. Johnson. So near term impact, potentially, but not really beyond 12 to 16 weeks or so. That's what we're thinking, you know, of course every, you know, we'll watch just like all of the data and especially as we continue to earn in more rates where the states were adequately priced.

About the percentage of where it's coming from but it really depends on our people priced right in the market do they have the right brand do they care about expense ratio, which keeps the prices competitive and so for us, it's really and we've talked about before it is making sure that we have all four of our strategic pillars really starting with our people on call.

And then going onto our brand competitive prices and broad coverage and that's where I think we're able to win and continue to grow we can react very quickly when our competitors do have actions and really that's our focus is to make sure that we have those four strategic pillars in that we invest in all of them to continue to be a high <unk>.

Unknown Executive: You know, it may not have any impact. The thing we worry about the most is delays in fixing vehicles, which is then, you know, the concerns going forward in the past, I should say, just based on talent in the body shots and having the right mechanics to do that, but we'll be able to see that really quickly and react to that should we need to. Got it.

Speaker 6: thing to consider there, Josh, is which segments we're growing in would be somewhat indicative of where they're coming from. So we're growing, continue to grow well in the more preferred segments of our business, the Robinsons, but also we call Wrights, who are homeowners that do not bundle yet their home and auto with Progressive. And we have not been growing, actually this year we've been shrinking a little bit on the stand-in, so the non-standard end of the spectrum. So that is, bodes really well for our future growth because obviously those customers...

Growth company.

Consider there Josh is which segments, we're growing in would be somewhat indicative of where theyre coming from so we are growing.

Unknown Executive: And then my second question, maybe you can help us think through this. So, you implemented a lot of rate in personal auto, so earning in a good chunk of that as well. You're talking about some civilization of the lost trends. So, it's been when you accelerate test growth on a much healthier rate adequacy. Do you expect that to ultimately improve the loss ratio or is the immediate impact so an adverse impact because of the new business penalty?

Two to grow well in the more preferred segments of our business. The Robinson, but also we call rights, who are homeowners that bundle their.

Our home and auto with progressive.

We have not been going actually this year, we've been shrinking a little bit on the salmon. So the non standard than the spectrum. So that is.

Bodes really well for our future growth because obviously those customers.

Speaker 6: stick with us longer. So I think where they come from is important, but also whom we're bringing into our customer set is a really important way to think about it.

Stick with us longer so I think where they come from is important but also rumored whom we're bringing to our customers is they're actually.

Unknown Executive: Well, you know, if we spend more marketing, there's, you know, there's a new business penalty. But if we believe we are putting new units on the block at a lifetime, 96th of cohort, 96th calendar year, then we feel good about it. And we'll, we'll price to that. We are very efficient in our media spend and we'll price to that. And really, we feel better every day in all products as each day goes by as more rate earns in. But we know that's part of new business and we're happy to do it. If we think we can make the target profit margin that we go to.

A really important way to think about it.

Speaker 12: And given that answer, is there a way of bifurcating or segmenting the property business such that, I guess I'll ask a question, what percentage of the business is operating at a 96% or better and growing as fast as it can? Obviously, there's some states where you're not there yet, and maybe it's segmented by state, but to what extent have you achieved the goal of the property business running the way you want it in the geographies that you operate?

And given that answer.

Is there a way of bifurcate our segmenting.

The property business such that I guess, the last question what percentage of the business is operating at a 96% or better and growing as fast as it can obviously there are some states where youre not there yet and maybe it's.

Segments by state, but to what extent have you achieved the goal of the property because it's running the way you want it in the geographies that you operate.

Speaker 2: Yeah I think we start with what we started with about a year ago and that was to de-risk the book and you know have less new apps and policies in volatile states and more in non-volatile and you saw the data on that and the queue that we we believe we're doing a great job. You know we're non-renewing about 115,000 policies in Florida. You know Florida we're just over indexed in Florida and so we love Florida. We have a lot of Robinsons. We have a lot of autos and continue to have a lot of homes but we were not making money and we needed to non-renew some so that'll happen over the next year or so. We knew it would take a long time but I think really what our strategy is on the property channel is not unlike it was years ago on the auto channel. We're investing more in segmentation. We're investing more in understanding rate to risk and the necessary need for reinsurance but we will we will get there and obviously third quarter was a lot better than it was in the past and you know there's a lot of there's a lot of buzz because Ian came off and there wasn't as many storms but we feel good about our plan. It'll still take some time to execute but we're in the heart of that.

Unknown Executive: Thank you and good luck. Thank you.

Yes, I think we start with we started with about a year ago and that was to Derisk the book and.

Have less new apps and policies and volatile states and more in non volatile and you saw the data on that in the Q that we we believe we're doing a great job you know, we're non renewing about 115000 policies in Florida, Florida, where just over indexed in Florida, and so we love, Florida, we have a lot of Robyn.

Joshua Shanker: The next question comes from the line of Josh Schinger with Bank of America. Your line is now open. Thank you for taking my question. Looking at a competitor behavior, I don't need you to speak about individual competitors. But I go lost a lot of customers over the past year. And I look at some other publicly traded companies. The leakage of policies has not been so significant elsewhere where I can tell. Yet progressive has grown dramatically.

Since we have a lot of auto as we continue to have a lot of homes.

But we were not making money and we needed to non renew some so that'll happen over the next year or so.

We knew it would take a long time, but I think really what.

Our strategy is on the property channel is not unlike it was years ago and the auto channel, we're investing more in segmentation, we're investing more in understanding our rates for risk and the necessary need for reinsurance, but we will we will get there and obviously third quarter was a lot better than it was.

Joshua Shanker: In thinking about the year to come in the year that's passed, when you think about captive independent and direct channels, where has most of the market share growth that the rest of has achieved come from? And next year for company like Geico becomes more aggressive in its desire to add new customers. Does that change the counter us on what the market share gains, the type of customers might be in a new year?

In the past and Theres a lot of there's a lot of buzz because Ian came off and there wasn't as many storms, but we.

We feel good about our plan it will still take some time to.

Joshua Shanker: Well, I think, you know, we're a growth company Josh. And I think we're going to try to do anything we can to grow as long as we make our target profit margins. We understand where much of our business is coming through because we know the proof of the prior carrier. And so it's been not just Geico, but other companies that I want to talk specifically about the percentage of where it's come from.

To execute but we're in the heart of that.

Speaker 12: I would forward to speaking again in the new year and good luck to you.

I look forward to speaking again in the new year and good luck to you.

Thanks, Josh.

Speaker 3: The next question comes from the line of Greg Peters with Raymond James. Your line is now open.

Thank you.

The next question comes from the line of Greg Peters with Raymond James Your line is now open.

Joshua Shanker: But it really depends on our people price right in the market. Do they have the right brand? Do they care about expense ratio, which keeps the prices competitive? And so, you know, for us it's really, and we've talked about before. It's making sure that we have all four of our strategic pillars really starting with our people and culture. And then going on to our brand competitive prices and broad coverage. And that's where I think we're able to win and continue to grow.

Speaker 13: Good morning, everyone. I want to step back to your comments about the non rate action. And, you know, sounds like you're getting ready to dial back some of those actions. Can you can you remind us exactly what some of those actions were. Did they include any Things around commission or fees to lead gen companies. Do you expect, you know, those things to change, you know,

Good morning, everyone.

Wanted to step back to your comments about the non rate action and.

It sounds like Youre getting ready to dial back some of those actions can you can you remind us exactly what some of those actions where did they include any.

Things around commission fees to the Gen companies do you expect.

Joshua Shanker: We can react very quickly when our competitors do have actions. And really, that's our focus that's to make sure that we have those four strategic pillars. And that we invest in all of them to continue to be a high growth company. The thing to consider their gestures is which segments we're growing in would be someone indicative of where they're coming from, so we're growing continued to grow well in the more preferred segments of our business, the Robinson's, but also we call rights who are homeowners that do not bundle yet their home and auto with progressive, and we have not been going actually as you've been drinking a little bit on the salmon, so the non-standard end of the spectrum, so that is both really important.

Those things to change over the next year.

Speaker 1: I'll let Pat come on in that. I was less about commissions and more on star strategy around some underwriting pay plans, but Pat, you wanna talk about that a little bit? Yeah, Greg, just comments are centered around kind of.

I'll, let Pat comment on that was that was less about commissions and more on so our strategy around some underwriting and pay plans, but Pat you want to talk about that a little bit yes, Greg tricia's comments are centered around kind of.

Speaker 14: John's comments as well around how much business we let in the front door. So we have more restrictive bill plans in place, we have more verification to require additional checks and make sure we get the accurate information on the risks that are coming in the door to ensure we're priced adequately. So that's when we talk about non-rate actions, those are the primary things.

Jon has comments as well around how much business. We led in the front door. So we have more restricted bill plans in place we have more verification to require additional checks and make sure we get the accurate information on the risks that are coming in the door to ensure we're priced adequately. So thats when we talk about non rate actions those are the primary.

Speaker 14: that we are leaning into lifting in some markets.

Things that we are leaning into lifting in some markets as we approach the end of the year.

Speaker 14: as we approach the end of the year. Your point about lead gen and actually spending more.

Joshua Shanker: Really well for our future growth because obviously those customers stick with us longer, so I think where they come from is important, but also who we're bringing in to our customer set is a really important way to think about it.

About lead Gen and actually spending more that would be a 2024 thing where once we're confident that we've put the 96 in the books for calendar year 'twenty. Three then we would start investing more to generate demand as needed and we've been out of the market for a while and those markets. So we do expect.

Speaker 14: That would be a 2024 thing where once we're confident that we put the 96 in the books for calendar year 23 then we would start investing more to generate demand as needed. And we've been out of the market for a while in those markets. So we do expect that you know that will ramp back up.

Unknown Executive: And given that answer, is there a way of bifurcating or segmenting the property business that I guess about this question, what percentage of the business is operating at a 96% or better and growing as fast as it can, obviously there's some states where you're not there yet and maybe it's segments by state, but to what extent have you achieved the goal of the property that's running the way you want it in the geographies that you operate. Yeah, I think we started with about a year ago, and that was to de-risk the block and you know have less new apps and policies, and volatile states, and more, and non-volatile, and you saw the data on that and the queue that we, we believe we're doing a great job, you know we're not renewing about 115,000 policies in Florida, you know Florida, we're just over indexed in Florida.

Speaker 14: But it'll be a ramp as we spend only what we need to, to efficiently and cost effectively attract customers.

That will ramp back up but it'll be a ramp as we spend only what we need to to efficiently and cost effectively attract customers. We've seen that the hard market persists. We've seen there's a lot of competitors, who still need to push rate through their systems and all outright annual policies. So theres still a lot of rate.

Speaker 14: You know, we've seen that the hard market persists. We've seen there's a lot of competitors who still need to push rate through their systems and a lot write annual policies. So there's still a lot of rate effect to be had in the market on consumers. And we'll lean into that as we get more into the new year from a spending perspective.

Effect to be had in the market on consumers and we'll lean into that as we get more into the new year from a spend perspective.

Speaker 13: Great, thanks for that answer. I guess the other question, you know, pivoting to some of the previous comments around the property business.

Great. Thanks for that answer.

I guess the other question.

Getting to some of the previous comments around the property business.

Speaker 13: You're definitely trending in the right direction from a combined ratio perspective, but it's still running above your 96 target for a quote that wide. Is it your objective that or your view that you're gonna get that property business to a 96 combined ratio next year? It seems like it's been a drag on your consolidated results for several years now.

You are definitely trending in the right direction from a combined ratio perspective, but it's still running above.

Unknown Executive: And so we love Florida, we have a lot of Robinson, we have a lot of autism, we continue to have a lot of homes, but we were not making money, and we needed to not renew some, so that'll happen over the next year or so. We knew it would take a long time, but I think really what our strategy is on the property channel is not unlike it was years ago in our channel.

You're 96 target.

For our corporate wide is it your objective.

Your view that you're going to get that property business to a 96 combined ratio next year.

It seems like it's been a drag on our consolidated results for several years now.

Speaker 13: Or maybe you're using it as a loss leader to grab share in the Robinson cohort. I just some updated views on that would be helpful.

Unknown Executive: We're investing more in segmentation, we're investing more in understanding rate to risk, and the necessary need for reinsurance, but we will, we will get there. And obviously third quarter was a lot better than it was in the past, and you know there's a lot of, there's a lot of buds, because I mean came off, and there wasn't as many storms, but we feel good about our plan, it'll still take some time to execute, but we're in the heart of that. I was forward speaking again in the new year and good luck to you. Thanks, Josh. Thank you.

Maybe youre using it as a loss leader to grab share in the Robinson cohort.

Updated views on that would be helpful.

Speaker 2: Yeah, we're not attempting to use it as a loss leader, I'll tell you that. It has been a drag. Over time, when you look back, home has done pretty well. Now, what we did was, we should have probably seen the need to de-risk a little bit in states like Florida, Texas, Louisiana, and across the country. That's why we're doing that now. That's why we're investing in technology and segmentation, new product models. So we do feel good. We have different target profit margins, depending on if you're bundled or not, et cetera. But no, our desire, I can't predict the future. I have no idea what's gonna happen next year. But our goal is to continue our plan to de-risk and make the target margins that we have on property and have that be a robust part of our book because we know the Robinson cohort is super important to our future.

Yeah, we're not we're not attempting to use that as a loss leader I would tell you that it has been a drag over time when you. When you look back home has done pretty well know what we did was we should have probably seen the need to derisk, a little bit in states, like Florida, Texas, Louisiana and across the.

A country. That's why we're doing that now thats why were investing in technology and segmentation and new product models. So we do feel good.

Have different.

Greg Peters: The next question comes from the line of Greg Peters with Raymond James, your line is now open.

Our target profit margins, depending on if you're bundles or not et cetera, but no our desire I can't predict the future I have no idea, what's going to happen next year, but our goal is to continue our plan to derisk and make the target margins that we have in property and have that be a robust part of our book because we know the Robinson cohort.

Unknown Executive: Good morning, everyone. I want to step back to your comments about the non-rate action, and you know, it sounds like you're getting ready to dial back. Some of those actions. Can you remind us exactly what some of those actions were? Did they include any things around commission or fees to lead gen companies to expect, you know, those things to change, you know, over the next year? I'll let Pat come on in.

Ford is super important to our future.

Speaker 6: And we have actually been exceeding the objectives we set out for the 2023 period in terms of growing more where we think, well, we know historically results are far less volatile in property and shrinking considerably in areas including Florida's Trisha noted that have been way more volatile from a weather perspective historically. And just to the 96 point, as Trisha was noting,

And we have actually been exceeding the objectives, we set out for the 2023 period in terms of growing more where we think we know historically results are far less volatile than property and shrinking considerably in areas, including Florida as Tricia noted that.

Unknown Executive: That was I was less about commissions and more on source strategy around some underwriting pay plans, but Pat, you want to talk about that a little bit. Yeah, Greg, your comments are centered around kind of. John's comments as well around how much business we let in the front door. So we have more restricted bill plans in place. We have more verification to require additional checks to make sure we get the accurate information on the risks that are coming in the door to ensure we're priced adequately.

It had been more volatile from a weather perspective, historically and just to the 96 point as Tricia noted.

Speaker 6: We priced to an aggregate 96 for the company. So by segment, we actually have different combined ratio targets. And we think about those as all deriving a return on capital equivalent to or better than the personal auto business. So the 96 calendar year.

Price to an aggregate 96 for the company so bye.

Segment, we actually have different combined ratio targets and we think about those as all deriving a return on capital.

Equivalent to or better than the personal auto business. So the 96 calendar year.

Unknown Executive: So that's when we talk about non-rate actions. Those are the primary things that we are leaning into lifting in some markets as we approach the end of the year. Your point about lead gen and actually spending more that would be at 2024 thing, where once we're confident that we put the 96 in the books for calendar year 23, then we would start investing more at the generate demand as needed. And we've been out of the market for a while in those markets.

Speaker 6: is our commitment to achieve that in aggregate, both below that, we're pricing.

As our commitment to achieve that in aggregate, but below that we're pricing.

Speaker 6: to different targets based on the characteristics of each business.

The different target space.

The characteristics of each business.

Got it thanks for the detail.

Speaker 3: The next question comes from the line of David Mote-Maden with Evercore. Your line is now open.

Thank you.

The next question comes from the line of David Mcmahon with Evercore. Your line is now open.

Speaker 15: Thanks. Good morning. So I had a my first question was just on the auto accident year loss ratio, excluding catastrophes.

Unknown Executive: So we do expect that that will ramp back up, but it'll be a ramp as we spend only what we need to efficiently and cost effectively attract customers. We've seen that the hard market persists, we've seen there's a lot of competitors who still need to push rate through their systems and a lot right annual policies. So there's still a lot of rate effect to be had in the market on consumers. And we'll lean into that as we get more into the new year from a spent perspective.

Thanks, Good morning.

So I had my first question was just on the <unk>.

Auto accident year loss ratio excluding catastrophes.

Unknown Executive: Great. Thanks for that answer.

Speaker 15: And last quarter in the presentation, you spoke about mix shift between renewal and new business and the benefit that that could have, having less new business could have on the loss ratio. I'm wondering if you can just size how much of the improvement in the loss ratio this quarter is coming from just that lower new business as opposed to improvement on the renewal book.

And last quarter in the presentation, you spoke about mix shifts between renewal and new business and the benefit that that could have having less new business could could have on the loss ratio.

I'm wondering if you can just size.

How much of the improvement in the loss ratio. This quarter is coming from just that lower new business as opposed to improvement on the renewal book.

Unknown Executive: I guess the other question pivoting to some of the previous comments around the property business. You know, you're definitely trending in the right direction from a combined ratio perspective, but it's still running above your, your 96 target, you know, for a corporate wide. Is it your objectives that, you know, you're, you're, you're going to get that property business to a 96 combined ratio next year. It seems like it's been a drag on the consolidated results for several years now, just or maybe you're using it as a loss leader to grab share in the Robinson cohort.

Speaker 2: Uh, that's pretty tough to size. And I think when we, when we obviously renewal, we know more about you as a customer. Um, but we, when we bring new business on our intentions are that we reach our target profit margin.

And that's pretty tough to size and I think when we when we obviously renewal we know more about you as a customer.

But when we bring new business on our intentions are that we reach our target profit margin.

Speaker 6: And I would offer that the rate actions we've taken have

I'd offer that the rate actions, we've taken have far larger influence on the accident year loss ratio than the new renewal mix. So as we noted we had five points earn in.

Speaker 6: than the new renewal mix. So as we noted, we had five points earn in just in the third quarter alone for a personal auto business. A year-to-date basis, that's more than double that number. So when you get the denominator up significantly, that's the best way to improve, well, that's, obviously there's the numerator, but that is where we have gotten most of the loss ratio improvement from. Obviously, severity, moderating, a bit this quarter has helped us considerably as well, but the rate that we've taken and continue to take is burning in and you're seeing that in the loss ratio.

In the third quarter alone for our personal auto business on a year to date basis.

It's more than double that number so when you get the denominator up significantly.

Unknown Executive: I just some update views on that would be helpful. Yeah, we're not, we're not attempting to use it as a lot later, I'll tell you that it has been a drag over time when you, when you look back home has done pretty well. Now, what we did was, you know, we should have probably seen the need to do risk a little bit in states like Florida, Texas, Louisiana and across the country.

Best way to improve.

Obviously, theres the numerator, but.

That is where we have gotten most of the loss ratio improvement from obviously severity moderating a bit this quarter has helped us considerably as well.

But the rate that we've taken and continue to take is earning in and youre seeing that in the loss ratio.

Unknown Executive: That's why we're doing that now that's why we're investing in technology and segmentation and new product models. So we do feel good. We have, you know, different target profit margins depending on if you're bundled or not, et cetera, but no, our desire. I can't predict a future. I have no idea what's going to happen next year, but our goal is to continue our plan to do risk and make the target margins that we have in property and have that be a robust part of our book because we know the Robinson cohort is super important to our future.

Speaker 15: Great, thank you. And then...

Great. Thank you.

Speaker 15: Just a question I guess just on.

And then.

<unk>.

Just a question I guess just on.

Speaker 15: You know, it seems like, I mean, the retention has definitely been better than I would have thought. It's obviously a hard market out there. I guess has that surprised you at all and influence that all how you guys are thinking about growth and maybe adding a little bit more business in 2024, just given how strong the retention is on the renewal book. And Pat, as you just said, that seems to have a better or more profound impact on the loss ratio than the new business.

Yes.

It seems like I mean, the retention has definitely been better than I would've thought.

It's obviously a hard market out there I guess has that surprised you at all and influenced at all how you guys are thinking about growth.

And maybe adding a little bit more business in 2024, just given how strong the retention is on the renewal book.

Unknown Executive: And we have actually been exceeding the objectives we set out for the 2023 period in terms of growing more where we think what we know historically results are far less volatile and property and shrinking considerably in areas including Florida's tradition noted that you know have been way more volatile from a weather perspective historically. And just to the 96 point, as Trish was known, we priced to an aggregate 96 for the company.

Pat as you just said that seems to have a better or more profound impact on the loss ratio.

Then the new business.

Speaker 2: I mean, I don't know if it's surprising us because we watch the data. It certainly is.

I mean, I don't know if it's surprised us because we watch the data as certainly.

Speaker 2: Delights us I would say that and what we want to do you know really the thing with retention is having some stable rates and We have been increasing rates as has the competition in an extraordinary fashion based on inflation trends So what we'd love to do is Have tremendous growth in 2024 but have some Stability around the trends and I was saying I haven't been able to say on this call for a while small bites of the apple where we take really small rate and And you know our customers feel that you know that makes sense that they don't shop so that's our goal But you know we're very happy with the retention on both the trailing three and a trailing 12

Is.

Delights us I would say that and we want to do and really the thing with retention is having some stable rates and we have been increasing rates as has the competition and an extraordinary fashion based on inflation trends. So what we'd love to do is.

Unknown Executive: So by segment, we actually have different combined ratio targets and we think about those as all deriving a return on capital equivalent to a better than the personal auto business. So the 96 calendar year is our commitment to achieve that in aggregate, but below that we're pricing the different targets based on the characteristics of each business. I got it. Thanks for the detail.

Have tremendous growth in 2024, but have some stability around the trends.

And I was saying I haven't been able to say on this call for a while small bites of the Apple, where we take really small rate and and.

David Motemaden: Thank you.

Our customers feel that that makes sense and they don't shop. So that's our goal, but we're very happy with their attention on both the trailing three and a trailing 12.

Like to see some stability and we will grow as fast as we can as long as we see that stability.

Speaker 6: And I'll say it to you obvious, but we're coming off a fairly low point from the retention last year. So last year we were ahead of the market in taking rate. And I would think of it in sort of like maybe 10 points ahead of the market in terms of taking rate that we saw the need for. And as our customers got those rate increases, they shopped and they could still find a better rate. Competitors now have caught up. And in some cases actually surpassed us on rate take.

I'll state the obvious, but we're coming off a fairly low point.

Unknown Executive: The next question comes from the line of David Motemaden with Evercore. Your line is now open. Thanks, good morning.

Pension last year. So last year, we were ahead of the market and taking rate and I would think of it in sort of like maybe 10 points ahead of the market in terms of taking rate that we saw the need for.

Unknown Executive: So I had my first question was just on the auto accident near loss ratio, excluding catastrophes. And last quarter in the presentation you spoke about mixed shift between renewal and new business and the benefit that that could have having less new business could have on the loss ratio. I'm wondering if you can just size how much of the improvement in the loss ratio this quarter is coming from just that well-renew business as opposed to improvement on the renewal book.

And as our customers got those rate increases they shop and they can still find a better rate competitors now have caught up and in some cases actually surpassed his salary cake.

Speaker 6: And consequently, even though our rates continue to rise as customers shop, they're less able to find a better rate. And so, you know, our annual rates are...

And consequently, even though our rates continue to rise as customers.

Customers shop, they are less able to find a better rate and so.

Year over year renewal rates are the changes are robust and we are getting back closer to.

Speaker 6: the changes are robust and we're getting back closer to PLE's lifetime expectancies that we've enjoyed previously. We're not yet back up to historical highs.

Ple's lifetime expectancies that we've enjoyed previously we are not yet back up to historical highs.

Speaker 6: But as Tricia noted, we're delighted with the trends we're seeing and we think they're going to continue.

Unknown Executive: That's pretty tough to size and I think when we obviously renewal we know more about you as a customer but when we bring new business on our intentions are that we reach our target profit margin. I would offer that the rate actions we've taken have far larger influence on that accident at your loss ratio than the new renewal mix. So as we noted we had five points earn in just in the third quarter alone for our personal auto business.

But as Tricia noted, we're delighted with the trends, we're seeing and we think that we're going to continue.

Great. Thank you.

Thanks.

Speaker 3: Thank you. The next question comes from the line of a lease green stand with Wells Fargo. Your line is now open.

Thank you.

The next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is now open.

Speaker 16: Hi, thanks. Good morning. My first question, you know, you guys pointed out right that you're a little bit above the 96 year to date. You guys have a sense of what rate you're going to earn in in the 4th quarter, right?

Hi, Thanks. Good morning. My first question you guys pointed out right that youre, a little bit above the 96 year to date.

Unknown Executive: A year-to-date basis that's more than double that number. So when you get the denominator up significantly that's the best way to improve. Well, obviously there's the numerator but you know that is where we have gotten most of the loss ratio improvement from. Obviously severity, moderating a bit this quarter has helped us considerably as well but the rate that we've taken and continue to take is burning in and you're seeing that in the loss ratio.

Unknown Executive: Great, thank you.

You guys have a sense of what youre going to earn in the fourth quarter right.

Speaker 16: And it sounds like Lost Tran right in the Q3, you know, got better relative to Q2. So I'm sure you have expectations there as well. So what's like the biggest swing variable as we go into the next few months of earnings with whether you ultimately...

And it sounds like loss trend right in the Q3 got better relative to the Q2. So I'm sure you have expectations there as well so what's like the biggest swing variable as we go into the next few months of earnings with whether you'll ultimately.

Speaker 16: you know, get below that 96% target for the year.

Get below that 96% target for the year.

Speaker 2: Yeah, I think weather is huge, and so watching that closely. We have another three points to earn in on the private passenger auto side. On the commercial line side.

Yes, I think weather is huge and so watching that closely we have another three points to earn in on that.

Unknown Executive: And then just a question I guess just on you know it seems like I mean the retention has definitely been better than I would have thought. It's obviously a hard market out there. I guess has that surprised you at all an influence that all how you guys are thinking about growth and maybe adding a little bit more business in 2024 just given how strong the retention is on the renewal book and Pat as you just said that seems to have a better or a more profound impact on the loss ratio than the new business.

Divot passenger auto side on the commercial line side, we've been earning in rate from.

Speaker 2: We've been earning in rate from both 21 and our 22 and 23 revisions. But a lot of our improvement, we believe in commercial lines, that the calendar year has been through non-rate actions. And so we're headed into 24 with a lot of rate really starting to earn on the commercial line side. But we do some analysis quite often on what we think we need to do to get there. We care deeply about expenses. So as a company, we've been trying to reduce expenses. We can continuously do that. I think whether it's going to be the big variable at least.

<unk> 'twenty, one until 'twenty, two and 'twenty three revisions, but a lot of.

Our improvement we believe in commercial lines is calendar year has been through non rate actions and so where we're headed into 24 with a lot of rate really starting to earn on the commercial line side.

But we do some analysis quite often on what we think.

We need to do to get there we care deeply about expenses. So as a company we've been trying to reduce expenses.

Unknown Executive: I mean I don't know if it surprised us because we watched the data certainly is delights us I would say that and what we want to do you know really the thing with retention is having some stable rates and we have been increasing rates as has the competition in an extraordinary fashion based on inflation trends so what we'd love to do is have tremendous growth in 2024 but have some stability around the trends and I was saying I haven't been able to say on this call for a while small bites of the apple where we take really small rate and and you know our customers feel that you know that that makes sense that they don't shop so that's our goal but you know we're very happy with the retention on both the trailing three and a trailing 12. We'd like to see some stability and we will grow as fast as we can as long as we see that stability And I'll state the obvious, but we're coming off a fairly low point to the retention last year, so last year we were ahead of the market in taking rate, and I would think of it in sort of like maybe 10 points ahead of the market in terms of taking rate that we saw the need for, and as our customers got those rate increases, they shop and they could still find a better rate.

We can continuously do that I think while there's going to be the big variable Elyse.

Speaker 16: Okay, thanks. And then my second question, advertising has come up a bunch on this call. So it sounds like the clock obviously and the calendar right resets, we get to the start of next year. So is that when you expect to kind of push more advertising right considering where we're starting? And then you can go for the 96 next year. I'm just trying to think through the thought process around when you ultimately turn on the marketing machine. And then how do you balance not growing too fast too soon, recognizing that?

Okay. Thanks, and then my second question.

Advertising has come up a bunch on this call. So it sounds like the clock, obviously in the calendar right resets.

Get to the start of next year, so well is.

Is that when you expect to kind of.

Push more advertising my considering where we starting and you can go for the 96 next year I'm just trying to think through the thought process around when you ultimately turn on the marketing machine and then.

How do you balance.

Not growing too fast too soon recognizing right.

Speaker 16: That's what happened at the start of this year.

That's what happened at the start of this year.

Speaker 14: Yeah, I can let Pat comment a little bit, but our intentions are if we see, if weather is sort of normal in the next several months, and we see some of the non-rate actions that we're pulling back on, achieve new business, then we are gonna be able to do like likely, put a lot more media spend into play in the first quarter. But a lot of that depends on what we're seeing, depending on how much we need to. But I think that excites us because we do sort of get the start of a clock starts over, but Pat, do you want to add anything? Yeah, the only thing I would that is, you know, last.

Yeah look I can let Pat comment a little bit, but our intentions are if we see if.

Weather is sort of.

Normal in the next several months.

And we see some of the non rate actions that we're pulling back on achieving new business than we are going to be able to do like likely put us put a lot more media spend into play.

First quarter, but a lot of that depends on what we're seeing a lot of it depends on how much we need to but.

Unknown Executive: Competitors now have caught up, and in some cases actually surpassed us on rate take, and consequently even though our rates continued to rise, as customers shop, they're less able to find a better rate. And so you know, our year renewal rates are the changes are robust, and we're getting back closer to PLEs, like time expectancy that we've enjoyed previously. We're not yet back up to historical highs, but as Trisha noted, we're delighted with the trends we're seeing, and we think they're going to continue.

But I think that excites us because we do sort of get the start of.

The clock starts over but Pat do you want to add anything yes. The only thing I would add is less first quarter. So first quarter of 2023, we had sort of a perfect storm of lots of AD spend and a really hard market and what we don't yet know is how much ambient shopping remains in March.

Speaker 14: first quarter, so first quarter of 2023, we had sort of the perfect storm of lots of ads spend in a really hard market.

Unknown Executive: Great, thank you. Thanks.

Speaker 14: And what we don't yet know is how much ambient shopping remains in market and how much shopping fatigue could be in market. So John's point about when shopping pays off because you find a lower price.

Unknown Executive: Thank you.

And how much shopping fatigue could be end market. So John's point about when shopping pays off because you find a lower price.

Speaker 14: that reinforces or rewards that if consumers shop on the first quarter and our rates.

It reinforces our rewards that if consumers shop in the first quarter and our rates are similar to where they are there may not be as much ambient shopping and switching available in market. So we don't yet know, but as Tricia mentioned, there's markets, where we're off most markets for local advertising.

Speaker 14: are similar to where they are. There may not be as much ambient shopping and switching available in market. So we don't yet know, but as Trisha mentioned, there's markets where...

Elyse Greenspan: The next question comes from the line of elite screen spam with Wells Fargo. Your line is now open. Hi, thanks.

Speaker 14: We're off most markets for local advertising today, but there were markets we were off at the start of this year too. So it's very dynamic based on our lifetime expectation of hitting our profit targets for new business that we generate during the period. So dynamic system and you're right that we will start spending more after the first of the year.

Unknown Executive: Good morning. My first question, you know, you guys pointed out right that you're a little bit above the 96 here to date. You guys have a sense of what weight you're going to earn in in the fourth quarter, right? And it sounds like lost trend right in the Q3, you know, got better relative to Q2, so I'm sure you have expectations there as well. So what's like the biggest swing variable as we go into the next few months of earnings with whether you ultimately, you know, get below that 96% target for the year.

Today, but there were markets we were off at the start of this year or two so it's very dynamic based on our lifetime expectation of hitting our profit targets for new business that we generated during the period. So dynamic system and you are right that we will start spending more after the first of the year.

Speaker 14: But we will be leaning into that and ramping that up as needed depending on how much is available in the ambient market and which markets we feel we've got adequate rates to support the ads ban.

But we will be leaning into that and ramping that up as needed depending on how much is available and the ambient market and which markets. We feel we've got adequate rates to support the ad spend.

Unknown Executive: Yeah, I think whether is huge and so watching that closely, we have another three points to earn in on the private passenger auto side on the commercial line side. We've been earning in rate from both 21 and 22 and 23 revisions, but a lot of our improvement, we believe in commercial line. We've got to challenge you and spend through non-rate actions, and so we're, you know, we're headed into 24 with a lot of rate, really starting to earn on the commercial line side.

Thank you.

Speaker 3: Thank you. The next question comes from the line of Brian Meredith with UBS. Your line is now open.

Thank you.

The next question comes from the line of Brian Meredith with UBS. Your line is now open.

Speaker 1: Yeah, thank you. I'm just curious, kind of going maybe a little bit to least his question. Given the experience we saw earlier this year, where you guys were growing really quickly, and then all of a sudden, you saw this pop in inflationary pressures. And given the continued uncertainty, just from a macroeconomic perspective, are you probably going to, are you're going to be a little more cautious to kind of open up that growth engine this time around, maybe get a little bit more data under your belts before you're going to go after it?

Yes. Thank you.

I'm just curious.

Going maybe a little bit to Lisa's question given the experience. We saw earlier this year, where you guys are growing really quickly and then all of a sudden saw this pop in inflationary pressures given the continued uncertainty just from a macroeconomic perspective are.

Unknown Executive: But we do have some analysis quite often on what we think we need to do to get there. We care deeply about expenses, so as a company we've been, you know, trying to reduce expenses. And, you know, we can continuously do that. I think whether is going to be the big variable at least.

You're probably going to.

Give me a little more cautious to kind of open up that growth engine.

This time around maybe get a little bit more data under your belt before you kind of go after it.

Speaker 2: Yeah, I think we will be more cautious. And that's why that's sort of the beauty around the 96 and the discipline around the 96, whether it's on a calendar year or a co-oper year. And that's why we'll slowly pull back, watch, test, and we'll only be pulling back in states where we feel like we've got enough rate. And so that's a little bit of a limiting factor, but we want to grow, but I do think that there's been uncertainty that we will watch it closely. So we aren't in the same position where we have to crank up rates like we did this year.

Yeah, I think we will be more cautious and that's why that's sort of the beauty around the 96 and the discipline around the 96, whether it's southern calendar year or a cohort here.

Unknown Executive: Okay, thanks, and then my second question, you know, advertising has come up a bunch on this call, so it sounds like, you know, the clock, obviously, in the calendar, right, resets, you know, we get to the start of next year. So, will, is that when you expect to kind of, you know, push more advertising right considering where we're starting and you then you can go for the 96 next year. I'm just trying to think through the thought process around when you ultimately turn on the marketing machine, and then, how do you balance, you know, not growing too fast too soon, recognizing right, you know, that's, that's what happened at the start of this year.

And that's why I will slowly pull back watch test and will only willing be pulling back in the states, where we feel like we've got enough rate and so that that's a little bit of a limiting factor but.

We want to grow but I do think that there's been so much uncertainty that we will watch it closely. So we are in the same position, where we have to crank up rates like we did this year.

Speaker 1: makes sense. And then the second question, and we haven't talked about this topic as for a while, and I saw it in the letter to the Bob business. Maybe you can talk a little bit about how the rollout on the Bob is going. I know you're in 46 days. It has a profitability trend in that business relative to what you can thought it was going to be. And at some point here, we're going to see that start to ramp up from a growth perspective.

Makes sense and then the second question, we haven't talked about this topic is for a while and I saw it in the letter at the BOP business.

Unknown Executive: [inaudible] we're seeing a lot of it depends on how much we need to, but I think that excites us, because we do sort of get the start of a clock starts over, but how do you want to add anything? Yeah, the only thing I would add is, you know, last first quarter, so first quarter of 2023, we had sort of the perfect storm of lots of ad spend and a really hard market, and what we don't yet know is how much ambient shopping remains in market, and how much shopping fatigue could be in market.

Maybe you could talk a little bit about how the rollout on the BOP is going I know you were in 46 states. How is the profitability trend of that business relative to what you thought it was going to be in.

At some point here, we are going to are we going to see that.

Start to kind of ramp up from a growth perspective.

Speaker 2: Yeah, we're super excited about how many states we are in BOP. It's still a relatively small part of the business, so we won't actually comment on it publicly. And it is ?? we have targets, and, of course, with new business, when you think about acquisition costs and understanding loss costs, it's obviously going to be higher than stable business, but it is what we expect, and so we'll continue to watch that and grow the business as we get more comfortable. Great. No surprise.

Yes, we're super excited about how many states we are in BOP, it's still relatively small part of the business. So we won't actually comment on it publicly.

And it is.

<unk> targets and of course with new business. When you think about acquisition costs and understanding loss cost is obviously going to be higher than stable business, but it is what we expect and so we'll continue to watch that and grow the business as we get more comfortable.

Great So no surprises.

So far exactly yep.

Speaker 17: Great, thank you.

Great. Thank you. Thanks.

Thanks, Brian.

Speaker 3: Thank you. The next question comes from the line of Myer Shields with Steeple. Your line is now open.

Thank you. The next question comes from the line of Meyer Shields with Stifel. Your line is now open.

Unknown Executive: So John's point about when shopping pays off, because you find a lower price that, you know, reinforces a rewards that. If consumers shop in the first quarter and our rates are similar to where they are, there may not be as much ambient shopping and switching available in market. So we don't yet know, but as Trisha mentioned, there's markets where we're off, most markets for local advertising today, but there were markets we were off at the start of this year too.

Speaker 8: Great good morning. Thank you so much for taking my questions. As we get back to, you know, what should be normal, is there any way of quantifying both in terms of growth and profitability?

Yeah.

Great. Good morning. Thank you so much for taking my questions.

As we get back to what should be normal.

Is there any way of quantifying both in terms of growth and profitability.

Speaker 8: how much impact the fact that you're fully pricing to the telematics curve to the head before COVID.

Much impact the fact that youre fully pricing to the telematics curves have had before COVID-19.

Speaker 8: I assume that you're probably generating access projects for growing a little bit less quickly than you could have.

I assume that Youre probably.

Generally the excess profit for growing a little bit less quickly than you could have been.

Unknown Executive: So it's very dynamic based on our lifetime expectation of hitting our profit targets for new business that we generate during the period. So, dynamic system and here right there we will start spending more after the first of the year, but we will be leaning into that and ramping that up as needed depending on how much is available in the ambient market and which markets we feel we've got adequate rates to support the ad spend.

Speaker 18: Well, we don't price fully to the curve. We have expanded on both the surcharge and the discount. I think it's pretty tough to quantify, but that was really what I'd say.

Well, we we don't price fully to the curve, we have expanded on both the surcharge and the discount.

Unknown Executive: Thank you.

I think it's pretty tough to quantify that.

No.

Speaker 14: Trish is right, we've been expanding our offering to price closer to the curve over time, and we've been expanding to continuous monitoring in the EBI world to collect more data and to be able to more continuously price policies more accurately. As far as specific quantification of how much growth is coming from it or profit coming from it.

Yes, so I think.

Tricia is right, we've been expanding our offering to price closer to the curve over time, and we've been expanding to continuous monitoring and the UBI world to collect more data and to be able to more continuously price policies more accurately as far as specific.

Brian Meredith: The next question comes from the line of Brian Meredith with UBS. Your line is now open. Yeah, thank you. I'm just curious, kind of going maybe a little bit to leave this question. You know, given the experience we saw earlier this year, we're, you know, you guys are growing really quickly and then all of a sudden saw this pop in inflationary pressures. And given the continued uncertainty just from the macroeconomic perspective, are you probably going to, you know, are you going to be a little more cautious to kind of open up that growth engine.

<unk> of how much growth is coming from it or profit coming from it.

Speaker 14: I wouldn't comment on that at this point. And it's a meaningful piece of our business. It's our most powerful rating variable. And we continue to invest in both the times.

Wouldn't comment on that at this point, it's a meaningful piece of our business. That's our most powerful rating variable and we continue to invest in both the technology.

Speaker 14: to lower the expense of collecting data and to analyze the data more precisely to price more accurately over time on a continuous basis. So I think we're in probably 50% of our own premium states. I think 29 states have continuous monitoring at this point in time. So we feel really good about continuing to invest, to maintain, or even widen that moat that we think we have in the uses based insurance space.

Lower the expense of collecting data.

<unk> to analyze the data more precisely the price more accurately overtime on a continuous basis. So I think we're in probably 50% of our earned premium states I think 29 states have continuous monitoring at this point in time, so we feel really good about continuing to invest to maintain.

Brian Meredith: This time around maybe get a little bit more data under your belt before you're going to go after it. Yeah, I think we will be more cautious and that's why that's sort of the beauty around the 96 and the discipline around the 96, whether it's on a calendar year or a cohort year. And that's why we'll slowly pull back, watch, test and we'll only be pulling back in states where we feel like we've got enough rate.

When are you going to widen that moat that we think we have and the usage based insurance space.

Speaker 8: Okay, that's very helpful. So, I have some question, and again, this is more somatic. There are clearly a lot of smaller personal auto-inchairs out there that frankly probably can't compete. Those progressive look at the option of maybe buying renewal rights as opposed to simply out competing in the marketplace, is that more or less economically efficient?

Okay.

Very helpful.

And then again more thematic there clearly a lot of.

Smaller personal auto insurers out there.

Brian Meredith: And so that's a little bit of a limiting factor, but we want to grow, but I do think that there's been so much uncertainty that we will watch it closely, so we aren't in the same position where we have to crank up rates like we did this year.

That frankly, probably can't compete does look at the.

Option.

Maybe buying renewal rates as opposed to competing in the marketplace that more or less economically efficient.

Speaker 2: I think that depends. We always look to, if we can, do book roles. But like you said, a smaller company is going to have a more difficult time investing in technology, segmentation, brand, distribution. And so as you've seen this last couple years, we've gotten some of that on its own. So we want to pay a premium to get that, to get those policies on our book. I think we can get them regardless, just based on our size and our efficiency.

Unknown Executive: Makes sense. And in the second question, Chris, and we haven't talked about this topic as for a while and I saw it in the letter at the Bob business. Maybe we could talk a little bit about, you know, how the rollout on the Bob is going and now you're in 46 states, you know, how's the profitability trying to net business relative to what you're going to thought it was going to be.

I think that's about it.

<unk> look too if we if we can do book roles, but.

Like you said a smaller company is going to have a more difficult time investing in technology segmentation brand distribution and so as you've seen this last couple of years, we've gotten some of that on itself. So I wouldn't want to pay a premium to get that to get those policies on our book I think we can get them, regardless just based on.

Unknown Executive: And you know, at some point here, we're going to see that, you know, start to kind of ramp up from a growth perspective. Yeah, we're super excited about how many states we are in Bob. It's still relatively small part of the business, so we won't actually comment on it publicly. And it is, we have targets in a course with new business. When you think about acquisition costs and understanding loss costs, it's obviously going to be higher than stable business, but it is what we expect. And so we'll continue to watch that and grow the business as we get more company.

Our size and our efficiency.

Okay perfect. Thank you.

Thanks.

Speaker 1: We will take the next question.

Question.

Number one on your phone.

Speaker 3: The next question comes from the line of Tracy Bendigi with Barkley's. Your line is now open.

We will take the next question.

The next question comes from the line of Tracy <unk> with Barclays. Your line is now open.

Speaker 3: Thank you. Just some quick math. You achieved 16% year-to-date rate increases in auto, and then the 10Q, you said that you plan to take an additional 3% in 4Q, so that will get us something like 19% for the full year. I think last quarter you penciled in 17% personal auto rate increases for the full year, so it feels like you need to take more right now. It's not a lot, but can you share the key drivers behind this additional rate need?

Unknown Executive: Okay, well, great. No surprises so far. Exactly. Yep. Great. Thank you. Thanks, Brian. Thank you.

Thank you just some quick math, you achieved 16% year to date rate increases in auto and in the 10-Q, you said that you plan to take an additional 3% and <unk>, so that will get us something like 19% for the full year.

Meyer Shields: The next question comes from the line of Meyer Shields with Steeple. Your line is now open. Great.

Last quarter, you pencil in 17% personal auto rate increases for the full year. So it feels like you need to take more right now not a lot, but can you share the key drivers behind this additional rate need.

Unknown Executive: Good morning. Thank you so much for taking my questions. As we get back to, you know, which should be normal. Is there any way of quantifying both in terms of growth and profitability? How much impact the fact that you're fully pricing to the telematics curve to have had before COVID? I assume that you are probably generating access profits for growing a little bit less quickly than you could have been. Well, we don't price fully to the curve.

Speaker 6: Yeah, I mean I think, I don't know that I would read too much into a point difference. Sometimes it could be a delay in having it approved. We have to go through each department. But the same trends that we have been seeing that we've talked about are what the rate is about. So whether it's attorney reps or fixing cars. So if you want to comment any more on that? Our forward-looking rate action statements, it's dynamic, obviously, as you know.

Yes, I mean, I think I don't know that I would read.

Read too much into a point of difference.

Sometimes it could be a delay in having an approved we have to go through each of the parties department, but the same trends that we've been seeing that we've talked about are what the rate is about so whether it's.

Unknown Executive: We have expanded on both the surcharge and the discount. I think it's pretty tough to quantify that was way what I'd say. Yeah, so I think Trisha is right. We've been expanding our offering to price closer to the curve over time. And we've been expanding to continuous monitoring in the FBI world to collect more data and to be able to more continuously price policies more accurately as far as specific quantification of how much growth is coming from it or profit coming from it.

Attorney reps or fixing cars.

My final comment anymore.

Our forward looking rate action.

Thanks.

Speaker 6: And it is down to the state and segment level. So it's important to remind how we manage the business. We have product managers who manage at the state and product level, and even some cases lower than that. And they are all assessing what is going on in their specific marketplaces, trends, projecting the trends, understanding, as we noted, what they plan to do in terms of non-rate actions, as well as ad spend. So there's a lot that goes into the aggregate rate changes we take and that we say we plan to take. And again, it's going to be dynamic.

Dynamic obviously as you note.

And it is down to the state and segment level. So it's important to remind how we manage the business. We are product managers, who manage at the state and product level and even some cases lower than that and they are all assessing what is going on in their specific marketplaces trends projecting.

The trends understanding as we noted.

What they plan to do in terms of non rate actions as well as AD spend so there's a lot that goes into that.

Unknown Executive: I wouldn't comment on that at this point. It's a meaningful piece of our business. It's our most powerful rating variable. And we continue to invest in both the technology to lower the expense of collecting data and to analyze the data more precisely to price more accurately over time on a continuous basis. So I think we're in probably 50% of our premium states. I think 29 states have continuous monitoring at this point in time. So we feel really good about continuing to invest to maintain or even widen that moat that we think we have in the uses based insurance space.

Aggregate rate changes, we take and that we say we plan to take and again, it's going to be dynamic.

Speaker 6: We obviously have seen

Speaker 6: severity moderate, you know, back down to the single vision, which is fantastic.

We obviously have seen severity moderate.

Speaker 6: Where that goes, it's tough to know, but from what we can see, we think we're moving into a more normal environment when it comes to change in claim severity.

Back down to the single business, which is fantastic.

That goes it's tough to know but from what we can see we think we are.

Moving it to a more normal environment when it comes to.

Speaker 6: But in aggregate, it's very hard to dissect that, you know, 19 or 17, and it's changed today, I assure you.

Change in claims severity.

But in aggregate it is.

It's very hard to dissect it.

19 or 17.

Trisha Griffiths: Okay, that's very helpful. The question, and again, this is more somatic. There are clearly a lot of smaller personal auto insurers out there that frankly probably can't compete. Does Trisha look at the option of maybe buying renewal rights as opposed to simply out competing in the marketplace? Is that more or less economically efficient? I think that depends. We always look to, you know, if we can do book roles, but like you said, a smaller company is going to have a more difficult time investing in technology, segmentation, brand, distribution.

It's changed today I assure you.

Speaker 19: Okay, great. It also looks like you had modest, favorable personal auto prior to your development this quarter. The adverse mostly came from commercial lines. Was that because you feel good about adequately reserving the Florida tort reform? Were there other factors? And I'm curious if you're seeing reopened claims in the quarter.

Okay, Great and also looks like you had modest favorable personal auto prior year development. This quarter the adverse mostly came from commercial lines.

Is that because you feel good about adequately reserving the Florida tort reform or are there other factors.

Im curious if youre seeing reopened claims in the quarter.

Speaker 18: That's exactly right. We're feeling much more confident in both the house bill and fixing cars.

That's exactly right, we're feeling much more confident in both the house Bill and fixing cars.

Speaker 19: Okay, and you know you touched on it last quarter, but can you remind me what caused the reopen claim in the first half of the year that you haven't seen in the past? What a change.

Okay.

Touched on it last quarter, but can you remind me what caused the reopened claims in the firm.

Trisha Griffiths: And so as you've seen this last couple of years, we've gotten some of that on its own. So we want to pay a premium to get that to get those policies on our book. I think we can get them regardless just based on our size and our efficiency.

First half of the year.

But you haven't seen in the past what had changed.

Speaker 18: Yeah, I mean, there's a couple things that happen, but you can write an estimate. And then when the person, the customer, whether it's an insured or claimant, goes to get the car repaired. So we've paid, we've made that payment, the feature's closed. And it gets into the shop and they find more damage, and it's maybe delayed repair. It increases rental. So it really was the lead time with, to get parts, it's labor rates, it's length of time. The rentals increase, a couple different factors that have gone into fixing cars.

Yeah, I mean, there's a couple of things that happen, but you can write an estimate and then when the person customer whether its an insurance claim it goes to get the car repair. So we've paid we've made that payment.

Unknown Executive: Thank you. Okay, perfect, thank you. Thanks.

<unk> features closed and it gets into the shop and they find more damage and it may be delayed repair it increases rental so it really was the lead time with to get parts.

Trisha Griffiths: The next question comes from the line of Tracy Ben Gigi with Barclays, your line is now open. Thank you. Just some quick math, you achieved 16% year-to-date rate increases in auto and in the 10 queues that you said that you plan to take an additional 3% and 4Q, so that will get us something like 19% for the full year. I think last quarter you penciled in 17% personal auto rate increases for the full year.

It's labor rates, it's the length of time, so rentals increase there's a couple of different factors that have gone into fixing cars.

Speaker 6: And on the injury side, there's a lot of Florida influence there. I'm sorry. And, you know, so hospitalization, 837 drove a influx of...

And on the injury side, Okay. So a lot of Florida influence there I'm sorry.

<unk> 837 drove a influx.

Speaker 6: representation and lawsuits, and we had to take reserve increases to reflect what we believe the future cost of settling those claims will be.

Terry representation in lawsuits.

We had to take reserve increases.

Trisha Griffiths: So it feels like you need to take more rate now. It's not a lot, but can you share the key drivers behind this additional rate need? Yeah, I mean, I think I don't know that I would reach you much into a point difference. Sometimes it could be a delay in having it approved. We have to go through each department, but the same trends that we have been seeing that we've talked about are what the rate is about.

To reflect what we believe the future cost of sending one claims will be.

Speaker 19: Okay, so you don't wait until an actual claim closes you estimate what the close would look like.

Okay. So you don't wait until an actual claim closes you estimate what.

Speaker 19: Was it maybe perhaps premature in calling those claims closed?

With the close would look like.

Is it maybe perhaps premature and calling those clean close.

Speaker 6: No, it's the way our system works. So we have reserves set for different line coverages. And then if those change, and they change dynamically, not one file or two files, that's when we know we need to strengthen our reserves. But yes, we are absolutely estimating the ultimate loss cost.

No it's good.

Our system more so we have reserves that for <unk>.

Different in line coverages, and then if those change and they change dynamically not what one file or two files. That's when we know we need to strengthen our reserves, but yes, we are absolutely estimating the ultimate loss costs.

Trisha Griffiths: So whether it's attorney reps or fixing cars, so I don't know if I can come any more. Our full-we're looking rate action statements, it's dynamic, obviously, as you know, and it is down to the state and segment level. So it's important to remind how we manage the business. We are product managers who manage at the state and product level and even some cases lower than that. And they are all assessing what is going on in their specific marketplaces, trends, projecting trends, understanding as we noted what they plan to do in terms of non-rate actions as well as ad spend.

Speaker 6: with the best information we have at this time.

With the best information we have.

This time.

Speaker 18: I think it's very common in our business to have supplements because you can have parts of vehicles that you can't even see, so suspension and other parts, so you write what you can see, you shouldn't write more or less, and then as the claim evolves, especially with collision or property damage, you'll be able to see more. Sometimes it's nothing, but there could be supplements, but that's really common.

So I think it's very comment David as to how the supplements because youre getting.

Parts of vehicles that are you can't even see suspension and and other parts. So you right. What you can see it shouldn't right more or less and then as the claim evolves, especially with collision or property damage youll be able to see more sometimes there's nothing but there could be supplements, but that's really common.

Trisha Griffiths: So there's a lot that goes into the aggregate rate changes we take and that we say we plan to take. And again, it's going to be dynamic. We obviously have seen severity moderate, you know, back down to the single business, which is fantastic. Where that goes, it's tough to know, but from what we can see, we think we're moving it to a more normal environment when it comes to change and claim severity. But in aggregate, it's very hard to dissect that, you know, 19 or 17, and it's changed today, I assure you.

Thank you appreciate it.

Speaker 3: Thank you. The next question comes from the line of Mike Zorimski with BMO. Your line is now open.

Thank you.

The next question comes from the line of Mike Zaremski with BMO. Your line is now open.

Speaker 5: Okay, thanks for the follow-up. Just one on Florida. So I guess, you know, now that the, I guess the pig has made its way through the python in terms of reserving mostly, you know, are you seeing any positive influences from the legislation on the recently written business? I know you guys have a big pit book in Florida or is it just too soon to tell?

Oh, Hey, thanks for the follow up just one.

On Florida.

I guess now that the I guess, the peg has made its way through the Python in terms of preserving mostly.

Are you seeing any.

Positive influences from the legislation on the recently written business I know you guys have a big pit book.

In Florida or is it just too soon to tell.

Speaker 18: I'd say it's too soon to tell. We anticipate that it'll be positive, but we have to let this play out a bit.

I'd say, it's too soon to tell we anticipate that it will be positive, but we have to let this play out a bit.

Trisha Griffiths: Okay, great. It also looks like you had modest, favorable personal auto prior your development disorder that adversely came from commercial lines. Was that because you feel good about adequately reserving the Florida toilet reform, where there are other factors, and I'm curious if you're seeing reopened claims in the quarter. That's exactly right. We're feeling much more confident in both the house bill and fixing cars. Okay, and you know you touched on it last quarter, but can you remind me what caused the reopen claim in the first half of the year that you haven't seen in the past?

Thank you.

Thanks, Mike.

Speaker 1: That appears to have been our last question, so that concludes our event. Melissa, I will hand the call back over to you for the closing scripts.

That appears to have been our last questions. So that concludes our event Alissa I'll hand, the call back over to you for the closing scripts.

Speaker 3: That concludes the Progressive Corporation's third quarter investor event. Information about a replay of the event will be available on the Investor Relations section of Progressive's website for the next year. You may now disconnect.

That concludes the progressive Corporation's third quarter Investor event information about a replay of the event will be available on the Investor Relations section of Progressive Web site for the next year you may now disconnect.

Yeah.

Trisha Griffiths: What a change. Yeah, I mean, there's a couple of things that happen, but you can write an estimate, and then when the person, the customer, whether it's an insured or claimant, goes to get the car repair, so we've paid, we've made that payment, the, the features closed, and it gets into the shop and they find more damage, and it's maybe delayed repair, it increases rentals. So it really was the lead time to get parts, it's labor rates, it's length of time, so rentals increase.

Trisha Griffiths: So a couple different factors that have gone into fixing cars. And on the injury side, there's a lot of Florida influence there, I'm sorry, and you know, so hospitalization, 837 drove a influx of attorney representation and lawsuits, and we had to take reserve increases to reflect what we believe the future cost of sending land claims will be. Okay, so you don't wait until an actual claim closes, you estimate what the close would look like, was it maybe perhaps premature and calling those claims closed.

Trisha Griffiths: No, it's the way our system works, so we have reserves that for different line coverages, and then if those change, and they change dynamically, not one file or two files, that's when we know we need to strengthen our reserves. But yes, we're absolutely estimating the ultimate lost cost with the best information we have at this time. But I think it's very common in our business to have supplements because you're getting, you know, you can have parts of vehicles that are, you can't even see, so suspension and other parts.

Trisha Griffiths: So you write what you can see, you shouldn't write more or less, and then as the claim evolves, especially with collision or property damage, you'll be able to see more. Sometimes there's nothing, but there could be supplements, but that's really common.

Unknown Executive: Thank you, appreciate it.

Mike Zaremski: Thank you.

Unknown Executive: The next question comes from the line of Mike Zaremsky with BMO. Your line is now open. Okay, thanks for the follow up. Just one on Florida. So I guess, you know, now that the, I guess the pig has made its way through the Python in terms of preserving, mostly, you know, are you seeing any positive influences from the legislation on the recently written business? I know you got some big pit book. In Florida, or is it just too soon to tell? I think it's too soon to tell. We anticipate it'll be positive, but we have to let this play out a bit. Thank you. Thanks, Mike.

Unknown Executive: That appears to have been our last question, so that concludes our event. Alyssa, I will hand the call back over to you for the closing scripts. That concludes the Progressive Corporation's third quarter investor event. Information about a replay of the event will be available on the investor relations section, a progressive website for the next year.

Unknown Executive: You may now disconnect.