Q4 2023 The Progressive Corp Earnings Call

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Doug Constantine: Good morning, and thank you for joining us today for Progressive's fourth-quarter investor event. I'm Doug Constantine, Director of Investor Relations, and I will be moderator for today's event. The company will not make detailed statements related to its results in addition to those provided in its annual report on Form 10-K and the letter to shareholders, which have been posted to the company's website.

Good morning, and thank you for joining us today for progress as fourth quarter Investor event.

Speaker Change: Continuing director of Investor Relations, and I will be moderator for today's event.

Speaker Change: The company will not make detailed statements relating to its results. In addition to those provided in its annual report on Form 10-K, and the letter to shareholders, which have been posted to the company's website.

Doug Constantine: This quarter includes a presentation on a specific portion of our business, followed by a question and answer session with members of our leadership team. The introductory comments and the presentation were previously recorded. Upon completion of the previously recorded remarks, we use the balance of the 90 minutes scheduled for this event for live questions and answers with the leaders featured in our recorded remarks, as well as other members of our management team. As always, discussions at 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 year ended December 31, 2023, where you will find discussions of the risk factors affecting our businesses, safe harbor statements related to forward-looking statements, and other discussions of the challenges we face. These documents can be found in the Investor Relations section of our website at investors.progressive.com. And today, I am pleased to introduce our Customer Relationship President, Lori Kneders, who will kick us off with some introductory comments. Lori?

Speaker Change: This quarter includes a presentation on a specific portion of our business followed by a question and answer session with members of our leadership team.

Speaker Change: Introductory comments in the presentation were previously recorded.

Speaker Change: Oh, the previously recorded remarks, we used the bounds of the 90 minutes scheduled for this event for live questions and answers with the leaders featured in our recorded remarks as well as other members of our management team.

Speaker Change: 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.

Speaker Change: Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2023, where you will find discussions of the risk factors affecting our businesses safe Harbor statements related to forward looking statements and other discussions of the challenges we face.

Speaker Change: These documents can be found via the Investor Relations section of our website at investors Progressive Dot com.

Speaker Change: To begin today I am pleased to introduce our customer relationship president Laura meters to kick us off with some introductory comments Laurie.

Lori Niederst: Good morning, and thank you for joining us today. As Doug said, my name is Lori Niederst, and I'm excited to be the first to participate in our new format. Traditionally, Tricia provides the opening comments for these presentations, but going forward, members of our leadership team will have the opportunity to speak to topics in our area of responsibility and introduce the talented individuals executing on these initiatives that we highlight during the event. In previous presentations, we've discussed our strategic pillars, which serve as the foundation of our vision. Today we're focusing on one of those pillars.

Laura: Good morning, and thank you for joining us today.

Laurie: As Doug said my name is Laurie and I am excited to be the first to participate in our new format.

Speaker Change: Traditionally Chris will provide some opening comments for these presentations, but going forward members of our leadership team will have the opportunity to speak to topic.

Speaker Change: Our area of responsibility and introduce the talented individuals executing on these initiatives that we highlight during the event.

Speaker Change: In previous presentations, we've discussed our strategic pillars, which serve as the foundation of our vision.

Speaker Change: Today, we're focusing on one of those pillars.

Lori Niederst: Serving the broad needs of our customers. This pillar is synonymous with our strategy to become a destination company, providing products that meet our customers' changing needs throughout their lifetime. We seek to instill customer confidence in both the products and the prices that we offer. For today's presentation, I thought it would be helpful to recap the history of Progressive's evolution as a destination company. Back in 2008, we publicly introduced our now ubiquitous customer segment: Dams, Dianes, Reitz, and Roberts.

Speaker Change: Serving the broad needs of our customers.

Speaker Change: This pillar is synonymous with our strategy to become a destination company, providing products that meet our customers' changing needs throughout their lifetime.

Speaker Change: We seek to instill customer confidence in both the products and the prices that we offer.

Speaker Change: To set the stage for today's presentation I thought it'd be helpful to recap the history, a progressive evolution as a destination company.

Speaker Change: Back in 2008, we publicly introduced are now ubiquitous customer segments, Sam's Diane's right and Robinson.

Lori Niederst: In 2014, we first spoke of our destination strategy, creating our intention to invest in products, services, and experiences to better serve customers from all four segments. Transcription by CastingWords, We've had relentless focus on not only maintaining and growing the Sam's, Diane's, and Wright's who have always been well served by Progressive, but significantly increasing our market share with Robinson's, which we estimate represent just under half of the personal insurance direct written premium in the United States. We've been very successful growing Robinson's, who in December of 2023 accounted for just under 13% of Countless efforts have contributed to Robinson's being our fastest growing segment, but it was two strategic decisions that really drove our success. Even before the introduction of the destination strategy, in 2006, we began offering homeowners insurance from other carriers in our Progressive Advantage Agency, or PAA. What began as a small endeavor has evolved into Home Quote Explorer, or HQX, where we now offer customers competitive homeowner rates from a lineup of reputable carriers.

Speaker Change: In 2014, we first spoke of our destination strategy, stating our intention to invest in the products services and experiences to better serve customers from all four segments.

Speaker Change: Since then we've had a relentless focus on not.

Speaker Change: Maintaining and growing.

Speaker Change: Diane and right.

Speaker Change: Always been well served by progressive but significantly increasing our market share with Robinson, which we estimate represent just under half of the personal insurance direct written premium in the United States.

Speaker Change: We've been very successful growing Robinson two in December of 2023 accounted for just under 13% of our direct written premium.

Speaker Change: Countless efforts have contributed to Robinson as being our fastest growing segment.

Speaker Change: It was two strategic decisions that really drove our success.

Speaker Change: Even before the introduction of the destination strategy in 2006, we began offering homeowners insurance from other carriers in our progressive advantage agency or PAA.

Speaker Change: What began as a small endeavor has evolved into a home quote explorer or HQ wax, where we now offer our customers competitive homeowner rates from a lineup of reputable carriers.

Lori Niederst: This success and direct, and our desire to grow Robinson's in the independent agent channel, led Progressive to purchase a stake in and eventually fully acquire American Strategic Insurance. ASI, now branded Progressive Home, has enabled us to offer both underwritten home and auto bundles, as well as partner bundles, to significantly increase our appeal to Rice and Robinson. We have since leveraged our learnings and success in bundling personal insurance products in the commercial market, where we continue to be an industry leader. In 2018, we first introduced Business Quote Explorer, or BQX, which enabled direct customers to purchase a variety of commercial insurance products from other carriers and bundle them with our commercial auto and BOP coverages.

Speaker Change: This success in direct and our desire to grow Robinson in the independent agent channel led progressive to purchase a stake and eventually fully acquire American strategic insurance.

Speaker Change: Si now branded Progressive home has enabled us to offer both underwritten home and auto bundles as well as partner bundles to significantly increase our appeal to the rice and Robinson.

Speaker Change: We've since leveraged our learnings and success in bundling personal insurance products in the commercial market, where we continue to be an industry leader.

Speaker Change: In 2018, we first introduced business quote explorer or <unk>, which enabled direct customers to purchase a variety of commercial insurance products from other carriers and bundle with our commercial auto and BOP coverages.

Lori Niederst: More recently, we're exploring this winning strategy in personal auto with Auto Quote Explorer, or AQX, which enables customers to compare rates and purchase products from other personal auto carriers on Progressive.com. This gives us another avenue to serve more customers and cross-sell from our expanding portfolio of products. Customer bundling doesn't end with home and personal auto, or commercial auto and box.

Speaker Change: More recently, we're exploring this winning strategy in personal auto with auto quote explorer or AQR.

Speaker Change: Which enables customers to compare rates and purchase products from other personal auto carriers on progressive Dot com.

Speaker Change: This gives us another avenue to serve more customers and cross sell from our expanding portfolio of products.

Speaker Change: Customer bundling doesn't end with home and personal auto commercial auto and Bob.

Lori Niederst: We have a whole suite of offerings, which includes progressive, underwritten, special lines, renters, and umbrella products. Expanding our portfolio of products has continued to increase our addressable market and capture new business. The result of these efforts has been pretty incredible.

Speaker Change: We have a whole suite of offerings, which includes progressive underwritten special lines renters and umbrella products.

Speaker Change: By expanding our portfolio of products, we have continued to increase our addressable market and capture new business.

Speaker Change: The result of these efforts has been pretty incredible we now estimate that 19% of households in the United States have at least one progressive sold product an increase of over 80% in the last 10 years.

Lori Niederst: We now estimate that 19% of households in the United States have at least one progressive sold product, an increase of over 80% in the last 10 years. The benefits of these efforts for our business are far-reaching. Top-line growth from increased sales of progressive underwritten products and commissions earned from sales of partner products is just the beginning. The more products a customer purchases from Progressive, the stickier the customer becomes, leading to higher lifetime profits and lower per-policy acquisition costs. Fueling the virtuous cycle that results in greater market share, but it's not just Progressive that benefits.

Speaker Change: The benefits of these efforts on our business are far reaching.

Speaker Change: The topline growth from increased sales of progressive underwritten products and commissions earned from sales of partner products is just the beginning.

Speaker Change: The more products the customer purchases from progressive the stickier, the customer becomes leading to higher lifetime profit and lower per policy acquisition costs fueling the virtuous cycle that results in greater market share.

Speaker Change: But it's not just progressive the benefits, we're making insurance easier for customers by providing options to meet their insurance and other financial needs now and in the future.

Lori Niederst: We're making insurance easier for customers by providing options to meet their insurance and other financial needs now and in the future. Additionally, our industry-leading brand and acquisition engine provides growth opportunities for our partners, making this destination strategy a win-win-win. It's important to note that today we're talking about the Direct Channel.

Speaker Change: Additionally, our industry leading brand.

Speaker Change: Physician engine provides growth opportunities for our partners.

Speaker Change: Making this destination strategy a win win win.

Speaker Change: It is important to note that today, we are talking about the direct channel.

Lori Niederst: Like many efforts Progressive has undertaken, we often leverage the direct channel to test, learn, and perfect new ideas. While doing so, we're always looking for ways to deploy our successes indirectly to benefit our independent agents. The agency channel has been vital to Progressive's growth, and independent agents will continue to be the face of Progressive for millions of customers. While we're focusing on Direct today, we fully recognize that Robinsons are the largest segment of consumers served by independent agents in the United States.

Speaker Change: Like many efforts progressive has undertaken we often leverage the direct channel to test learn and perfect new ideas, while doing so we're always looking for ways to deploy our successes in direct to benefit our independent agents.

Speaker Change: For decades the <unk>.

Speaker Change: Agency channel has been vital to progressive growth and independent agents will continue to be the face of progressive for millions of customers.

Speaker Change: While we're focusing on direct today, we fully recognize that Robinsons are the largest segment of consumers served by independent agents in the United States and we have a number of significant investments underway to continue our leadership in this channel and our partnership with our 40000 plus independent agents.

Lori Niederst: And we have a number of significant investments underway to continue our leadership in this channel and our partnership with our 40,000-plus independent agents. For a deeper dive into our evolution as a destination company, I'd like to introduce Kathy Lemieux, a 42-year progressive veteran and our business leader for CRM sales experience. She will share more detail on how we're leveraging our HQX, BQX, and AQX platforms to provide choice and Our second speaker is Sean Freeman.

Speaker Change: Yeah.

Speaker Change: For a deeper dive into our evolution at the destination company I'd like to introduce Kathy Lemieux, a 42 year progressive veteran and our business leader for CRM sales experience.

Kathy Lemieux: Kathy will share more detail on how we're leveraging our <unk> <unk> and <unk> platforms to provide choice and build customer confidence.

Kathy Lemieux: Our second Speaker is Sean Freeman.

Kathy Lemieux: Sean is the business leader of our Comparison Rating Experience and Direct Property Quoting, who's been with Progressive for 14 years. He'll demonstrate the benefits of bundling and multi-product households and explain how these efforts will continue to drive Progressive's growth and profitability. Again, thank you for joining us today, and I'll now hand it over to Cass.

Sean Freeman: Sean as a business leader of our comparison rating experience and direct property quoting who's been with progressive for 14 years.

He'll demonstrate the benefits of bundling and multi product households, and explain how these efforts will continue to drive progressive growth and profitability.

Sean Freeman: Again, thank you for joining us today, and I'll now hand, it over to Kathy.

Kathy Lemieux: We appreciate the opportunity to deliver some highlights on our progress toward achieving our destination company vision. Today, we'll focus on how the Progressive Advantage Agency is becoming a primary source for insurance products for consumers who prefer the direct channel. We strive to provide access to a broad portfolio of products so customers can begin and then keep their relationship with us without the need to look elsewhere. Let me begin by introducing the journey of Sam and Ashley, two actual progressive customers. Back in 2009, when Sam first contacted Progressive, he was seeking insurance for his 1999 Saturn. Eventually, he bought a motorcycle, which needed insurance as well. Later, he married Ashley, and together they acquired renter's insurance until, eventually, they bought a home which required homeowner's insurance.

Kathy Lemieux: Hello, I appreciate the opportunity to deliver some highlights on our progress toward achieving our destination company vision today will focus on how the progressive advantage agency is becoming a primary source for insurance products for consumers, who prefer the direct channel.

Kathy Lemieux: We strive to provide access to a broad portfolio of products. So customers begin and then keep their relationship with us without the need to look elsewhere.

Kathy Lemieux: Let me begin by introducing the journey of Sam and Ashley to actual progressive customers back.

Kathy Lemieux: Back in 2009, when Sam first contacted progressive he was seeking insurance for his 1999 Saturn.

Kathy Lemieux: <unk>, he bought a motorcycle which needed insurance as well.

Kathy Lemieux: Later, he married Ashley and together they acquired renters insurance until eventually they bought a home which required homeowners insurance.

Kathy Lemieux: Both their renters' and homeowners' insurance policies were purchased through the Progressive Advantage Agency. In the case of Sam and Ashley, we were able to offer them different products as life events triggered the need for additional and more complex insurance coverage. We would have loved to sell a Progressive Manufactured Property product to the couple, but that wasn't the right solution for them.

Kathy Lemieux: Both our renters and homeowners insurance policies were purchased through the Progressive advantage agency.

Kathy Lemieux: In the case of salmon Ashley we were able to offer them different products as life events triggered the need for additional and more complex insurance coverage.

Speaker Change: Would have loved to sell a progressive manufactured property product to the couple but that wasn't the right solution for them. So we had other options ready.

Kathy Lemieux: So we had other options ready. Let's talk more about that approach. Our multi-carrier marketplace for property and small business insurance products allows us to meet the needs of more and more customers. We are leveraging the Progressive brand, building on our industry-leading digital tools, and working with a growing number of reputable carriers to make buying and maintaining insurance easier. This recipe is proving very successful, delivering 200% growth in premiums written through our agency in less than a decade. Over the years, we've evolved the comparison shopping experience from property to commercial lines, from one carrier to many, from the phone to the online channel, and from quote to also buy without agent intervention. While the large majority of our insurance customers start their shopping experience online using our Home Quote Explorer or Business Quote Explorer digital experiences, which launched after our shop by phone only models, the majority work with our team of knowledgeable in-house agents to customize their policies before purchasing. As you've come to expect from Progressive, we continue to invest in improving the quote and buy experience, always focusing on the needs of our customers. We introduced a digital multi-carrier code experience, which we call Home Code Explorer, in 2017.

Speaker Change: Let's talk more about that approach.

Speaker Change: Our multi carrier marketplace for property and small business insurance products allows us to meet the needs of more and more customers. We are leveraging the progressive brand building on our industry, leading digital tools and working with a growing number of reputable carriers to make buying and maintaining insurer.

Speaker Change: Easy or this recipe is proving very successful delivering 200% growth in premiums written through our agency in less than a decade.

Over the years, we've evolved the comparison shopping experience from property to commercial lines from one carrier to many from the phone to the online channel and from quote to also buy without agent intervention.

Speaker Change: While the large majority of our insurance customers start their shopping experience online using our home court explorer or business called explorer digital experiences, which launched after our shop by phone only model. The majority of work with our team of knowledgeable in house agents to customize their policy before purchasing.

Speaker Change: As you've come to expect from Progressive we continue to invest in improving the quote and buy experience always focusing on the needs of our customers.

Speaker Change: We introduced a digital multi carrier quote experience, which we call home quote explorer in 2017 over.

Kathy Lemieux: Over the course of the next several years, we made enhancements and introduced new features to improve the quoter experience and the platform's efficiency. These efforts have generated close to a 10% increase in quote completions over early HQX results. One of our most recent changes was the introduction of a quick quote experience that displays pre-filled data from third-party providers up front so that customers can easily review and edit. Leveraging our proprietary models, we customize prompts and details to assist customers in selecting coverages and qualifying for discounts. This change alone decreased quote time by 20%, reducing the effort for customers and increasing their likelihood to purchase as a result.

Speaker Change: Over the course of the next several years, we made enhancements and introduced new features to improve the quarter experience and the platforms efficiency. These efforts have generated close to a 10% increase in completions over early <unk> results.

Speaker Change: One of our most recent changes with the introduction of a quick quote experience, which displays presale data from third party providers upfront so that customers can easily review and edit.

Speaker Change: <unk>, our proprietary models, we customize prompts and details to assist customers in selecting coverages and qualifying for discounts.

Speaker Change: This change alone decreased co time by 20%, reducing the effort for customers and increasing their likelihood to purchase as a result.

Kathy Lemieux: This is just one example of our work to simplify what has traditionally been a complicated shopping experience for both homeowners and small business owners. Our dedication to continuous improvement is bolstered by a rigorous A-B testing approach aimed at making a fully digital quote and purchase available to more shoppers. However, our in-house agents are always here to provide guidance and instill customer confidence. The investments in our HQX and BQX platforms only produce value when they're backed by a broad portfolio of products underwritten by reputable brands. Both the breadth of carriers in our network and the depth of their product suite have grown over the last decade. Presently, 13 carriers comprise our Home Quote Explorer portfolio and 9 for Business Quote Explorer.

Speaker Change: This is just one example of our work to simplify what has traditionally been a complicated shopping experience for both homeowners and small business owners, our dedication to continuous improvement is bolstered by a rigorous a b testing approach.

Speaker Change: Aimed at making our fully digital quote and purchase available to more shoppers. However, our in house agents are always here to provide guidance and instill customer confidence.

Speaker Change: The investments in our HQ accident <unk> platforms, only produce value when they're backed by a broad portfolio of products underwritten by reputable brands.

Speaker Change: Both the breadth of carriers in our network and the depth of their products suite have grown over the last decade presently 13 carriers comprised our home quote explorer portfolio and nine four business quote explorer.

Kathy Lemieux: There are major benefits to having a large contingent of carriers in the PAA, which Sean will get into later, but there is also a risk because we are exposing progressive customers and, thus, the progressive brand to the services of another carrier. To protect our customers and the progressive brand, we're selective about the carriers we partner with. They must meet our standards for customer care. They must offer a quality product at a fair price, pass our information security assessments, and they must have the financial strength and standing to uphold the promise we make to customers that we'll be there when they need us most.

Speaker Change: There are major benefits to having a large contingent of carriers in the P. A a which sean will get into later, but there is also a risk because we are exposing progressive customers and thus the progressive brand to the services of another carrier to.

Speaker Change: To protect our customers and the progressive brand, we're selective about the carriers, we partner with they must meet our standards for customer care. They must offer a quality product at a fair price path, our information security assessment and they must have the financial strength and standing to uphold the promise we make.

Speaker Change: Customers that will be there when they need us most.

Kathy Lemieux: Additionally, we'll consider a carrier's technological capabilities so that we can provide a seamless, integrated digital customer experience for quoting and services. Also, worthy of note is that our carrier networks include a number of companies that provide both property and small business insurance offers in HQX and BQX. We take pride in this fact as it demonstrates the strength of our mutually beneficial relationship.

Speaker Change: Additionally, we will consider a carrier's technological capabilities. So that we can provide a seamless integrated digital customer experience for coding and servicing.

Speaker Change: Also worthy of note is that our carrier networks include a number of companies that provide both property and small business insurance offers in <unk> and <unk>, we take pride in the fact as it demonstrates the strength of our mutually beneficial relationships.

Kathy Lemieux: The benefits of our multi-carrier model extend far beyond quote and buy and are evident throughout the customer insurance journey. For significant life changes, such as Sam and Ashley getting married and buying a house, perhaps experiencing a future job relocation, or if they eventually need to insure their teenage driver, our agency is ready with the products they need and the customer service to help them navigate these events. Recall that Sam and Ashley added a home policy underwritten by one of our network carriers several years after acquiring their Progressive Auto Insurance and built a bundle, becoming one of the more than a million Robinsons we insure through the PAA.

Speaker Change: The benefits of our multi carrier model extend far beyond quote and buy and are evident throughout the customer insurance journey.

Speaker Change: For significant life changes such as salmon, Ashley getting married and buying a house, perhaps experiencing a future job relocation or if they eventually need to ensure their teenage driver. Our agency is ready with the products they need and the customer service to help them navigate these events.

Speaker Change: Recall that salmon Ashley added a home policy underwritten by one of our network carriers several years after acquiring their progressive auto insurance and built a bundle becoming one of the more than a million Robinson, we ensure through the P. A a.

Kathy Lemieux: The portfolio of products and carriers who underwrite them that are available to our customers allows us to grow more bundles over time. But even when an event isn't life-changing, for example, a policy renewal accompanied by a steep rate increase, we're presented with an opportunity to support our customers by offering options, which gives us the chance to retain the customer. Often, we're able to anticipate customer shopping by leveraging our proprietary data models and proactively reach out to offer assistance. Even subtle nudges, such as the email presented here, reinforce the value our in-house agency offers. That leaves our longest-running product comparison experience, Auto Insurance. More than 30 years ago, we introduced the auto comparison rating as a fee-based service in California.

Speaker Change: The portfolio of products and carriers, who underwrite them that are available to our customers allows us to grow more bundles over time.

Speaker Change: But even when the event isn't life changing for example, a policy renewal accompanied by a steep rate increase we're presented with an opportunity to support our customers by offering options, which gives us the chance to retain the customer.

Speaker Change: Often we're able to anticipate customer shopping by leveraging our proprietary data models and proactively reach out to offer assistance.

Speaker Change: Even subtle nudges such as the email presented here reinforced the value our in House agency offers.

Speaker Change: That leaves our longest running product comparison experience auto insurance.

Speaker Change: More than 30 years ago, we introduced auto comparison rating as a fee based service in California.

Kathy Lemieux: Insurance products were much simpler in those days, so at the time, rates were manually calculated by a team of progressive people who reverse engineered them from public filings. This industry-altering idea proved to be a winner with customers, prompting us to make the service available countrywide and to build our brand on comparison rates. Our early marketing messages combine the ease and savings from one-stop rate comparison with a message of transparency. If our rate isn't the lowest, we'll tell you who it is.

Speaker Change: Insurance products were much simpler in those days so at the time right for manually calculated by a team of progressive people, who reverse engineered them from public filings.

Speaker Change: This industry altering idea proved to be a winner with customers, prompting us to make the service available countrywide and to build our brand on comparison rates are.

Speaker Change: Our early marketing messages combined EES and savings from one stop rate comparison with a message of transparency.

Speaker Change: If I rate isn't the lowest will tell you who it is.

Kathy Lemieux: Challenging the status quo, not what you'd expect from an insurance company as early brand differentiators. As progressive and competitors advance their products, adding credit, underwriting, and tiering, our precision in providing comparison rates declined. Consumers saw decreasing value in the range of rates we provided to adjust to these conditions.

Speaker Change: And challenging the status quo.

Speaker Change: What you'd expect from an insurance company as early brand Differentiators.

Speaker Change: As progressive and competitors advance their products, adding credit underwriting and touring our precision and providing comparison rates declined.

Speaker Change: Consumers saw a decrease in value in the range of rates, we provided to adjust to these conditions.

Kathy Lemieux: The next evolution of comparison rates came in 2016, when we began purchasing discrete auto rates from a third party. This model has proven to be a lower cost way to provide a service that is, to this day, valuable to our customers. Over the past five years, we've conducted dozens of tests, leveraging comparison rates to improve customer experiences, increase progressive conversion, and monetize click referrals. Our decades of experience led us to take the next step in the auto rate comparison journey with Auto Quote Explorer. Bringing our CRE, HQX, and Consumer Insights together, we've been piloting a multi-carrier auto quoting experience since the third quarter of 2022. We launched a quote-and-buy experience over the phone first and have refined the delivery with our in-house agents through several iterations. We're ready to introduce the AQX experience online soon. The screens that you see on this page were developed using focus group and agent feedback when testing with prototypes.

Speaker Change: The next evolution of comparison rates came in 2016, when we began purchasing discrete auto rates from a third party.

Speaker Change: This model has proven to be a lower cost way to provide a service that is to this day valuable to our customers.

Speaker Change: Over the past five years, we've conducted dozens of cats, leveraging comparison rates to improve customer experiences increased progressive conversion and monetize click referrals, our decades of experience led us to take the next step in the auto rate comparison journey auto quote explorer.

Speaker Change: Bringing our CRE HQ acts and consumer insights together, we've been piloting a multi carrier auto quoting experience since the third quarter of 2022.

Speaker Change: We launched a quote and buy experience over the phone first and have refined the delivery with our in house agents through several iterations.

Speaker Change: We're ready to introduce the Ecu ex experience online soon.

Speaker Change: The screen that you see on this page were developed using focus group and agent feedback when testing with prototypes.

Kathy Lemieux: Early results give us confidence that the comparison, quote, and purchase experience with a reputable set of carriers will give us the opportunity to better meet consumer needs, starting new customer relationships in those cases where insurance shoppers would not purchase a Progressive policy, getting their auto insurance needs met elsewhere. Progressive continues to be known for providing comparison rates, but our launch of AQX provides an opportunity to refine our brand positioning. The key is to generate interest by conveying that we've taken the hassle out of shopping for car insurance while giving customers confidence in the products, prices, and providers that we offer. But just like HQX and BQX, the customer value of AQX extends beyond the purchase, and we continue to refine the benefit statement, taking advantage of our market research. Thank you again for the opportunity to speak today. I'll now hand it over to Sean. Sean

Speaker Change: Early results give us confidence that the comparison quote and purchase experience with a reputable set of carriers will give us the opportunity to better meet consumer needs, starting new customer relationships in those cases, where insurance shoppers would not purchase a progressive policy getting their auto insurance needs met elsewhere.

Speaker Change: Progressive continues to be known for providing comparison rates, but of our launch of <unk> provides an opportunity to refine our brand positioning.

Speaker Change: The key is to generate interest by conveying that we've taken the hassle out of shopping for car insurance, while giving customers confidence in the product's prices and providers that we offer.

Speaker Change: But just like <unk> and <unk> the customer value of AQR extends beyond the purchase and we continue to refine the benefit statements taking advantage of our market research. Thank.

Speaker Change: Thank you again for the opportunity to speak today, I'll now hand, it over to Sean Sean.

Sean Freeman: Thank you Kathy.

Sean Freeman: Following an overview of the operations of the Progressive Advantage Agency and the many unique shopping experiences we have deployed as part of it, I will now be walking you through the robust benefits of this destination-era strategy. As Lori referenced earlier, any discussion about the benefits of the Progressive Advantage Agency should be viewed through the lens of a win-win-win strategy, as we look to implement programs where all participants stand to benefit. With everything we do at Progressive, our customers really come first. The CIA was created to ensure we had a full suite of insurance products within our direct channel that could meet consumer needs throughout their lifetime.

Sean Freeman: Following an overview of the operations of the Progressive advantage agency.

Sean Freeman: Any unique shopping experiences we have deployed as part of it I will now be walking you through the robust benefit of this destination era strategy.

Sean Freeman: As Lori referenced earlier in your discussion about the benefits of the Progressive advantage agency should be viewed through the lens of a win win win strategy as we look to implement programs, where all participants standard benefit.

Sean Freeman: As with everything we do at progressive are customers really come first.

Sean Freeman: It was created to ensure we had a full suite of insurance products within our direct channel.

Sean Freeman: Can meet consumer needs throughout their lifetime.

Sean Freeman: Beyond just offering a broad collection of types of insurance, we look to ensure that our customers are confident in their purchases through education and choice. We've been able to provide quotes for other insurance companies, in addition to our own underwritten policies, so customers feel empowered in their decision and are confident with their price and coverage. Additionally, our customers benefit from the ease of these shopping experiences with our best-in-class quoting capabilities, saving them time and frustration.

Sean Freeman: But beyond just offering a broad collection of types of insurance.

Sean Freeman: We want to ensure that our customers are confident in their purchases through education and choice.

Sean Freeman: Being able to provide for other insurance companies. In addition to our own underwritten policies ensures that customers feel empowered and their decision and are confident with their price and coverage.

Sean Freeman: Additionally, our customers benefit from the use of your shopping experiences with our best in class quoting capabilities saving them time and frustration.

Sean Freeman: Thinking about the benefits enjoyed by our participating network of carriers, the list really starts with the access they gain to millions of qualified customers that were generated through Progressive's marketing and media efforts, and the strength of the Progressive brand and our advertising experience, can frequently be a greater consideration, or at best, than many of these participating brands would experience on their own. Progressive also understands what is critical to running a profitable business. So we allow the carriers on our network to apply any of their proprietary acceptance and pricing rules in addition to our strong adherence to any provided procedures asked of their appointed agents, and many more. com has been a leader in innovative customer experiences both offline and online for many years.

Sean Freeman: Yeah.

Sean Freeman: When thinking about the benefits enjoyed by participating in network of carriers.

Sean Freeman: It really starts with the access the game to millions of qualified customers that were generated through progressive marketing and media efforts.

Sean Freeman: Given the strength of the progressive brand and our advertising experience.

Sean Freeman: This can frequently be greater consideration or add beds and many of these participating brands what experience on their own.

Sean Freeman: Progressive also understands what is critical to running profitable business. So we allow the carriers in our network to apply any of their proprietary acceptance and pricing models. In addition to our strong adherence to any provided procedures as over the air appointed agencies.

Sean Freeman: Furthermore, progress it has been a leader in innovative customer experiences both offline and online for many years.

Sean Freeman: Being a part of our carrier network allows for leveraging these experiences to efficiently and effectively quote and bind customers, which presumably leads to positive brand association for our participating carriers. And finally, the creation of the Progressive Advantage Agency creates a multitude of benefits for progressives and our shareholders. I will be highlighting many of these and more details in the upcoming slides.

Sean Freeman: Any part of our carrier network allows for leveraging these experiences to efficiently and effectively quote and bind customers, which presumably leads to positive brand association for our participating carriers.

Finally, the creation of the Progressive advantage agency creates a multitude of benefits for progressive and our shareholders.

Sean Freeman: I'll be highlighting many of these in more details in the upcoming slides.

Sean Freeman: But in general, this destination air strategy allows us to achieve greater top-line growth, better efficiency in our media spend, and www.progressivecorps.com. As we have covered in past IR calls, Progressive has been focused for several years on expanding our addressable market and improving our penetration into multiproduct households, or Robinsons, as well as increasing our product offerings outside of those traditionally underwritten by Progressive. In doing so, we have seen a steady trend increase in our multi-product households on both an absolute and relative basis. Through our Progressive Advantage Agency, we are able to offer complementary products within a unified bundle experience. For example, in Personal Lines, we can offer renters and or home insurance to go along with a customer's auto policy, or in commercial lines, where we are able to offer general liability or business owner policies to complement their commercial auto coverage.

Sean Freeman: But in general this destination strategy allows us to achieve greater topline growth better efficiency in our media spend extends household retention and serves as a stable source of revenue is complementary to our underwriting profits.

Sean Freeman: As we have covered in past calls progress that has been focused for several years on expanding our addressable market and improving our penetration into multi product households, a robinson as well as increasing our product offerings outside of those traditionally underwritten by progressive.

Sean Freeman: In doing so we have seen a steady trend in our multi product households on both an absolute and relative basis.

Sean Freeman: Through our Progressive advantage agency, we are able to offer complementary products within a unified bundle experience for example in personal lines, we can offer renters and our home insurance to go along with our customers auto policy.

Sean Freeman: Or in commercial lines, where we were able to offer general liability or business owner policies to complement their commercial auto coverage.

Sean Freeman: These are prime examples of how the internal agency is able to help us provide a full suite of insurance solutions to meet customer needs and, in turn, help us grow. Another important component to our overall growth strategy is understanding how consumers view the comparison quoting experience. We know through our research that there are many key drivers of consumer consideration and ultimately how they decide what insurance carrier they're going to receive a quote from or purchase a policy from. Several of these considerations align nicely with the solutions that we are delivering as part of the Progressive Advantage Agenda. This includes consumer confidence that they're getting the right coverage or rates, making the entire insurance process easy to navigate, and feeling in control of their insurance decisions.

Sean Freeman: These are prime examples of how the internal agency is able to help us provide a full suite of insurance solutions to meet customer needs and in turn help us grow.

Sean Freeman: Another important component to our overall growth strategy is understanding how consumers view comparison quoting experiences.

Sean Freeman: We know through our research that there are many key drivers of consumer consideration and ultimately how they decide what insurance carriers theyre going to receive a quote or purchase a policy from.

Sean Freeman: Several of these considerations align nicely with the solutions that we are delivering that as part of the progressive advantage agency.

Sean Freeman: This includes consumer confidence that they're getting the right coverage of rate, making the entire insurance process easier to navigate feeling.

Sean Freeman: Feeling in control of their insurance decisions.

Sean Freeman: Good value and demonstrating an understanding of what is important to the consumer. These drivers are met in some way by our comparison courting experiences and agency operation and will serve as guiding principles as we expand and refine our consumer messages and experiences, along with the previous slide. Top of Funnel Benefits are foundational to the win-win-win dynamic that I started with. As these expand, the total volume shopping went progressive, and enough leads to a greater pie to be shared by Progressive and our network of carriers. Offsets Any Minimal Cannibalization Risk That May Be Present in the Provision of Comparison Quotes. With that said, we monitor very closely these tradeoffs to ensure we achieve the most optimal outcomes.

Sean Freeman: Getting good value and demonstrating an understanding of what is important to the consumers.

Sean Freeman: Each of these drivers is met in some way to our comparison quoting experiences and agency operation and will serve as guiding principles as we expand and refine our consumer messages and experiences.

Sean Freeman: Along with the previous slide these top of funnel benefits are foundational to the win win win dynamic that I started with as these expanded total volume shopping with progressive.

Sean Freeman: And thus leads to greater pie to be shared by progressive and our network of carriers.

Sean Freeman: This offsets any minimal cannibalization risk that may be present to the providing of comparison quotes.

Sean Freeman: That said, we monitor very closely these tradeoffs to ensure we achieve the most optimal outcomes.

Sean Freeman: As highlighted in the last two slides, the Progressive Advantage Agency operation allows us to attract more customers at the top of the funnel and drive them to Progressive.com or to our call centers. The next critical step is to get the most out of these interactions. Our multi-carrier model allows for a greater likelihood of returning competitive rates that meet consumers' needs. The chart on the left indicates that by having more carrier appointments in a geography, we increase the likelihood that we can return at least one rate for a consumer. This is not surprising but still critical in the face of greater underwriting restrictions for specific products, such as homeowners. As a result of our carrier coverage, we were able to successfully provide a home or condo rate to more than 80% of all shoppers seeking these coverages on Progressive.com in 2023. Additionally, we know that offering multiple comparison rates increases the chance we return a competitive rate to the customer. The chart on the right indicates that our conversion rate is directly correlated with the number of rates we return.

Sean Freeman: As highlighted in the last two slides the progressive advantage agency operation allows us to attract more customers at the top of the funnel and drive them to progressive dot com or through our call centers.

Sean Freeman: Next critical step is to get the most out of these interactions.

Sean Freeman: Our multi carrier model allows for a greater likelihood of returning competitive rates that meet consumers' needs.

Sean Freeman: As the chart on the left indicate by having more carrier appointments and in geography, we increase the likelihood that we can return at least one rate for a consumer.

Sean Freeman: This is not surprising but still critical in the face of greater underwriting restrictions for specific products such as homeowners.

Sean Freeman: As a result of our carrier coverage, we were able to successfully provide a home or condo rate to more than 80% of all shoppers seeking these coverages on progressive dot com in 2023.

Sean Freeman: Additionally, we know that offering multiple comparison rates increases the chance, we return a competitive rate to the customer.

Sean Freeman: The chart on the right indicates that our conversion relativity is directly correlated with the number of rates we return.

Sean Freeman: While there is a diminishing return with every addition, we have seen more than a doubling of our conversion rate due to our portfolio of carriers as compared to a single carrier platform. This means more people finding a policy that works for them and more households having a relationship with Progressive Corp. I would like to highlight the value of the internal agency in maintaining these relationships through increased retention.

Sean Freeman: While there is diminishing return with every addition, we have seen more than a doubling of our conversion rates due to our portfolio of carriers as compared to a single carrier platform.

Sean Freeman: This means more people finding their policy that works for them and more households, having a relationship with progressive.

Sean Freeman: Transitioning from getting more customers in the door I would like to highlight the value of the internal agency and maintaining these relationships through increased retention.

Sean Freeman: As mentioned earlier, our goal is to meet customers' needs throughout their lifetime. We hope that the policy we initially sell to a customer does just that.

Sean Freeman: As mentioned earlier, our goal is to meet customer needs throughout their lifetime, we hope at the policy. We initially sell to a customer it does just that.

Sean Freeman: The initial policy is no longer the best match. We have the ability to offer alternative carriers and coverage that may be a better fit. In doing so, we maintain a relationship with that customer and household longer. In the current environment, while rates are rising and underwriting is more restrictive, the ability to shop several carriers across the same product produces significant value to the customer and, in turn, progressive. In our homeowners portfolio, we see that we extend this household relationship nine months longer on average as a result of this multi-carrier safe practice. Another form of retention benefits comes as a result of increasing the number of policies that exist within a household.

Sean Freeman: However, if this initial policy is no longer the best match, we have the ability to offer alternative carriers and coverage that may be a better fit in doing so we maintain a relationship with that customer and household longer.

Sean Freeman: In the current environment, while rates are rising and underwriting is more restrictive the ability to shop several carriers across the same product produced a significant value to the customer and in turn progressive.

Sean Freeman: Within our homeowners portfolio, where you see that we extend this household relationship nine months longer on average.

Sean Freeman: All of this multi carrier safe practice.

Sean Freeman: The other form of retention benefit comes as a result of increasing the number of policies that exist within a household.

Sean Freeman: Not only does selling an additional policy lead to increased sales and profit from those other policies, but the expected retention of the original policy also dramatically improves. Across all products within our portfolio, the policy life expectancy grows meaningfully as you add products to the relationship, and by a magnitude of up to 2x or more. It is important to note that we see this retention improvement, whether they are progressive underwritten policies or network carrier policies, leading us to believe that meeting all insurance needs is the driver of customer loyalty, even if we leverage other insurance carriers to do so. Many of these benefits come together in what we call a media virtuous cycle.

Sean Freeman: Not only does selling an additional policy lead to increased sales and profit from those other policies, but the expected retention of the original policy also dramatically improves.

Across all products within our portfolio. The policy life expectancy grows meaningfully as you add products to the relationship and by a magnitude of up to two extra more.

Sean Freeman: It is important to note that we see this retention improvement whether they are progressive underwritten policies or network carrier policies, leading us to believe that meeting all insurance needs is the driver of customer loyalty, even if we leverage other insurance carriers to do so.

Sean Freeman: Many of these benefits come together in what we call a media virtuous cycle with.

Sean Freeman: With access to a multi-carrier model, we can offer consumers more choice that meets their needs. The Bulletproof Executive 2013, elevates our sales yield per visitor to Progressive.com or into our call center. Providing a more efficient return on every visitor to Progressive allows us to increase our media spend while still hitting our target economics. The increased spend drives greater awareness of Progressive's offerings, driving traffic to Progressive.com, our call centers, as well as our appointed independent agents. This in turn increases the volume available to Progressive and the carriers within our network, incentivizing more carrier participation within our agency, strengthening the multi-carrier model further, and starts the cycle all over again. As we have seen in recent years, marketing spend is an important tool to stand out in the crowded insurance marketplace.

Sean Freeman: With access to a multi carrier model, we can offer consumers more choice that meets their needs.

Sean Freeman: In doing so this elevates our sales yield per visitor to progressive dot com or into our call centers.

Sean Freeman: Getting the more efficient return on every visitor to progressive allows us to increase our media spend while still hitting our target economics.

Sean Freeman: This increased spend drives greater awareness of progressive offerings, driving traffic to progressive dot com, our call centers as well as our appointed independent agents.

Sean Freeman: This in turn increases the volume available to progressive kind of carriers within our networks incentivizing more carrier participation within our agency strengthening the multi carrier model further.

Sean Freeman: This starts to cycle all over again.

Sean Freeman: As we have especially seen in recent years marketing spend is an important tool to standout in the crowded insurance marketplace.

Sean Freeman: This virtuous cycle is valuable to ensuring Progressive can rationally be in the top tier of marketing spenders and further widens the financial moat with lesser known brands. The handling of the Progressive Advantage Agency and its corresponding revenue expansion have several risk-mitigating benefits. Transcribed by https://otter.ai, including prominent risks such as weather and natural disasters.

This virtuous cycle is valuable to ensuring progressive can rationally and be in the <unk>.

Sean Freeman: Top tier of marketing spenders, and further widened the financial moat with lesser known brands.

Sean Freeman: The scaling of the Progressive advantage agency and its corresponding revenue expansion has several risk mitigating benefits.

Sean Freeman: Revenue is a predictable annuity and has minimal exposure to loss and cat risks that come along with underwriting and insurance policies directly.

Sean Freeman: This includes prominent risks such as weather and natural disasters.

Sean Freeman: This service is a complementary source of revenue to our standard underwriting operation. And finally, as previously highlighted, meeting more customer needs strengthens our brand and improves our sales yield, mitigating some of the standard competitive risks that insurance companies face. Any benefits that I've highlighted, stemming from the PAA, can be found throughout our income statement.

Sean Freeman: As agency compensation Israeli directly impacted by these risks exposures. This serves as a complementary source of revenue to our standard underwriting operation.

Sean Freeman: Additionally, as previously highlighted maybe more customer needs strengthens our brand and improves our sales yield mitigating some of the standard competitive risks that insurance companies.

Sean Freeman: The many benefits that I've highlighted stemming from the PAA can be found throughout our income statement.

Sean Freeman: Our top line net premiums earned includes the premiums from our progressive underwritten products and is impacted by the agency's brand and consideration list. Household Retention Improvement. Additional Protection Sales. Inc., associated with the PAA operation.

Sean Freeman: Our top line net premiums earned includes the premiums from a progressive underwritten products.

Sean Freeman: Impacted by the agencies brand consideration lift.

Sean Freeman: The household retention improvements.

Sean Freeman: Increase additional protection sales.

Sean Freeman: The increased media spend associated with the operation.

Sean Freeman: Our success is penetrating the Robinson customer segment, roll up within these figures. Next, we have expanded our PAA operation and product offerings. We have experienced net earned premium growth for Robinsons that has outpaced that of our other customer segments. The service revenue line on the income statement includes the commissions earned from our carrier network, as the chart in the lower right demonstrates.

Sean Freeman: Additionally, our successes penetrating the Robinson customer segment roll up within these figures.

Sean Freeman: As we have expanded our operation and product offerings. We have experienced net earned premium growth for Robinson is that has outpaced that of our other customer segments.

Sean Freeman: The service revenue line on the income statement includes the commissions earned from our carrier networks.

Sean Freeman: As the chart on the lower right demonstrates this is the most direct way to gauge the trajectory of our internal agency operation as it clearly shows our steady growth throughout the past decade.

Sean Freeman: This is the most direct way to gauge the trajectory of our internal agency operation, as it clearly shows our steady growth throughout the past decade. However, it is not lost on me that this is an investor relations call, and thus, the financial results are the primary focus. The story of the Progressive Advantage Agency still really comes down to the customer journey and ensuring that we are offering products and services that meet our customers' needs. Matthew previously highlighted the journey of Sam and Ashley as they progressed through their lives and the evolution of their insurance needs along the way.

Sean Freeman: While it is not lost on me that this is.

Sean Freeman: As in the Investor Relations call and thus the financial results are the primary focus.

Sean Freeman: Story of the Progressive advantage agency still really comes down to the customer journey and ensuring that we are offering products and services that meet our customers' needs.

Sean Freeman: Kathy previously highlighted the journey of salmon nationally as they progress through their lives and the evolution of their insurance means along the way.

Sean Freeman: Without bringing together a network of insurance carriers who offer complementary products like BOP or life insurance, we may not have been in a position to satisfy all of these needs and possibly would have lost the household relationship entirely. Happily, this is not the case, as we are pleased to continue to build and grow our Progressive Advantage Agency with a full suite of insurance products and a network of participating carriers and, ultimately, we believe, make good on our win-win-win strategy of delivering value to our direct customers, our network of carriers, and to Progressive and our shareholders through the operation of its best-in-class internal agency. This concludes the previously recorded portion of today's event. We now have members of our management team available live to answer questions, including presenters Laurie Niederst, Kathy Lemieux, and Sean Freeman, who can answer questions about the presentation. The Q&A session will be audio only, and questions can only be submitted over the phone by pressing star 11 on your keypad.

Sean Freeman: Without bringing together a network of insurance carriers, who offer complementary products like Bob or life insurance, we may not have been in a position to satisfy all of these themes and possibly would have lost the household relationship entirely.

Sean Freeman: Probably this is not the case as we are pleased to be able to continue to build and grow our progressive advantage agency with a full suite of insurance products and a network of participating carriers and ultimately we believe make good on our win win win strategy of delivering value to our direct customers our network of carriers.

Sean Freeman: And to progressive and our shareholders through the operation of its best in class Internal agency.

Speaker Change: This concludes the previously recorded portion of todays event. We now have members of our management team available live to answer questions, including presenters Lori meters to Kathy Let me you and Sean Finn, who can answer questions about the presentation.

Speaker Change: The Q&A session will be audio only and questions can only be submitted over the phone by pressing star one one on your keypad in order to get to as many questions as possible. Please limit yourself to one question and one follow up follow up we will now take our first question.

Operator: 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. Thank you. Our first question comes from the line of Michael Zaremski with VMO. Your line is open. Hey, great, good morning, thanks.

Speaker Change: Thank you.

Speaker Change: First question comes from the line of Michael Zielinski with BMO. Your line is open.

Michael Zaremski: Hey, great good morning. Thanks.

Michael Zaremski: The first question is, you know, regarding some of the commentary, regarding kind of going back on the growth offensive, given that profits are healed in a good chunk of your, of your territories. So, I guess on the last earnings call, I recall you alluded to growth likely being a little more subdued versus the beginning of 23, when you last went on the offensive. So, I guess, is that still the right way to think about things, or in any context around how you're thinking about growth, either, you know, by state or direct versus agency channel would be helpful. Yeah, thanks, Mike.

Michael Zaremski: The first questions.

Michael Zaremski: Regarding some of the commentary.

Michael Zaremski: Regarding kind of going back on the growth defensive given.

Michael Zaremski: Given that profits are healed in.

Michael Zaremski: A good chunk of your of your territories.

Michael Zaremski: So I guess on the last earnings call I recall, you alluded to growth likely being a little more subdued versus the beginning of 'twenty three when you when the last one on the offensive. So I guess is that still the right way to think about things or in any context around how you're thinking about growth either by state our direct versus agency channel would be helpful.

Yeah, I think it's like here's how we're thinking about growth right now, which is a somewhat different in somewhat of like last year. So you know we went into 2023, feeling like we had the right rate and assess them clearly as the year unfolded, we realized that inflation inflation that are still going up so that.

Tricia Griffith: Here's how we're thinking about growth right now, which is somewhat different and somewhat alike last year. So, you know, we went into 2023 feeling like we had the right rate in the system. Clearly, as the year unfolded, we realized that inflation was still going up, so that hadn't abated, and we needed more rates.

Michael Zaremski: Hasn't abated, and we needed more right so.

Michael Zaremski: Our sole concentration last year it was to get the right rate on the street and we feel like for any really great position right. Now. So if you think about the overarching.

Tricia Griffith: So our sole concentration last year was to get the right rate on the street, and we feel like we're in a really great position right now. So if you think about the overarching belief that we have the right rates in the system, and we believe we do, now understand there's all the caveats about us not having every state. We're still working with some states to get rates, but for the most part, we feel really good about our rates.

Michael Zaremski: Beliefs that we have the right rates in the system and we believe we do now understand Theres all the caveats about we don't have every state we're still working with some states to get rate, but for the most part we feel really good about our rate. This is how we're thinking about cross really sort of a tri sector. So we have a continued hard market.

Michael Zaremski: Shopping is fill up so we know our competitors are still getting rate. So those customers are shopping are able to get that in a really inexpensive acquisition cost.

Tricia Griffith: This is how we're thinking about growth, really sort of the trifecta. So we have a continued hard market. Ambient shopping is still up.

Michael Zaremski: And then we also know that we're unraveling a lot of our non rate actions. Our underwriting actions. We started we talked about that a little bit in November, but we're going to continue to do that and then really the third part of that Tri factor is our ability to be able to spend a lot on media. So we are really excited about heading into 2024.

Tricia Griffith: So we know our competitors are still getting rates, so those customers are shopping, and we're able to get that at a really inexpensive acquisition cost. Then we also know that we're unraveling a lot of our non-rate actions, our underwriting actions. We talked about that a little bit in November, but we're gonna continue to do that. And then, really, the third part of that trifecta is our ability to be able to spend a lot on media. So we are really excited about heading into 2024. Obviously, my whole theme for the annual report was uncertainty, or the letter, I should say, is uncertainty. We feel much more certain and are much more confident.

Speaker Change: Lee My whole theme for the annual report was uncertainty so our that letter I should say is uncertainty we feel much more certain and much more confident we will watch as the data unfolds and we're pretty excited and the one caveat I would say Mike is when we're starting to look at first quarter.

Speaker Change: Of this year versus the first quarter of last year Youre going to see some really I comparisons on new outgrow. So we were growing new apps like Crazy last year in fact, the direct side, our new apps were up 93% overall and auto up I think like 80, 883% or 82% so.

Tricia Griffith: We will watch as the data unfolds, and we're pretty excited. The one caveat I would say, Mike, is when we start to look at the first quarter of this year versus the first quarter of last year, you're gonna see some really odd comparisons on new app growth. So we were growing new apps like crazy last year. In fact, on the direct side, our new apps were up 93%. Overall, in the auto industry, up, I think, like 83% or 82%. So huge comparisons if you're gonna compare it to this quarter.

Speaker Change:

Speaker Change: Comparisons if you're getting compared to this quarter. So keep that in mind as this quarter closes we believe it'll smooth out over the year, but that something we should just make a note of.

Speaker Change: Okay.

Speaker Change: Helpful. My last follow up.

Speaker Change: Regarding.

Speaker Change: Your commentary about segmentation and continuous product model delivery is the term you also use and that in the letter and I appreciate that it's probably.

Tricia Griffith: So keep that in mind as this quarter closes. We believe it'll smooth out over the year, but that's something we should just make a note of. Okay, that's helpful.

Speaker Change: Some of this is your special sauce, and you might be might be it might be limited in how much you can say, but.

Michael Zaremski: My last follow-up question is regarding your commentary about segmentation and continuous product model delivery, the term you also use in the letter. And I appreciate that, you know, it's probably, you know, some of this is your special sauce, and you might wanna be limited in how much you can say. But I'm curious, you know, if we look at Progressive. Progressive still continues to do better than the industry on the loss cost trend. Curious if you're willing to add any context about what's driving the pricing segmentation and is telematics a material kind of driver of you being able to do that? Thanks.

Speaker Change: So curious if we look at progressives free.

Speaker Change: Frequency and severity, but especially frequency.

Speaker Change: Over time, it tends to be better than the industry I know there's different definitions.

Speaker Change: Mind, you that the frequency and severity too so we've got to be a bit careful but I think.

Speaker Change: Progressive still continues to do better than the industry on loss cost trends curious if youre willing to add any context about what what's driving that.

Speaker Change: The pricing segmentation.

Speaker Change: Telematics App.

Speaker Change: Cereal.

Speaker Change: Kind of driver of you being able to do that thanks.

Tricia Griffith: Yeah, I mean, I think our continuous product model is our secret sauce. Over the years, I think we've sort of shared, not in a lot of detail, but how each model sort of adds segmentation and gets us to where we want, especially with the preferred customer. UBI is a big part of it and has been for a long time, and that will continue to be and why we're investing more and more into our latest product model, which is our continuous. I think with Florida added this year, we're at about 70% continuous, and we're learning a lot from that, and we'll be able to do a lot for our customers as well. Maybe sometime when we do some of the deep dives, we can share a little bit more about how we think about our product models. We're never going to share our secret sauce because that is just that, but we literally have our R&D departments working in both personal lines, commercial lines, and property nonstop, thinking about the next model to just get that extra piece of data to understand how it correlates to lost costs. You're right.

Speaker Change: Yeah, I mean, I think our continuous product model is is our secret sauce over the years I think we've sort of shared not and a lot of detail, but how.

Speaker Change: Each each model sort of add segmentation and gets us to where we want especially with the preferred.

Speaker Change: Customer <unk> is a big part of it and has been for a long time and that will continue to be and why we're investing more and more into our latest product motto, which is our continuous.

Speaker Change: With Florida added this year, we're at about 70% continuous learning a lot from that and we were able to do a lot for our customer as well so.

Speaker Change: Maybe at some time and when we do some deep dives, we can share a little bit more about how we think about our product miles, we're never going to say our secret sauce. Because that is that is just that but we literally have our R&D department its working in both personal and commercial lines and property non stop thinking about the next model to just get that extra piece of data to understand.

And that how it correlates to lost cost.

Speaker Change: Hi, good afternoon.

Speaker Change: When you look over even decades, you see our frequency.

John P. Sauerland: When you look over even decades, you see our frequency being more favorable in the industry and severity being somewhat similar to the industry. Tricia noted what we believe are some of the key drivers, but we are also continuing to shift the mix of our business to more preferred customers who generally have lower claims frequency. So it's hard to parse out exactly which piece of those frequency trends are the aforementioned, but we should note that we're also moving more and more to preferred, and that will drive the frequency down as well. Thank you.

Speaker Change: Being more favorable than the industry in severity.

Speaker Change: Similar to the industry and Tricia noted what we believe are some of the key drivers, but we're also continuing to show.

Speaker Change: Shift the mix of our business to more preferred customers, who generally have lower claims frequency. So it's hard to parse out exactly which pieces of those frequency trends are the aforementioned but we should note that we're also moving more and more into preferred and that will drive that frequency down as well.

Speaker Change: Thank you.

Speaker Change: Thank you.

Operator: Please stand by for our next question. Our next question comes from the line of Bob Hung with Morgan Stanley. Your line is open. Hi, thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Bob Hung with Morgan Stanley. Your line is open.

Bob Glasspiegel: Maybe just a follow up on one of the comments that you made when you earlier talked about how you plan to spend a lot on media to drive growth. Can you maybe help us understand, like, when you say a lot, how should we think about it from just a modeling and forecasting perspective? Because the way we think about it, obviously, there's going to be a lot of growth potential for progressive. But how should we think about the impact on the expense ratio?

Bob Glasspiegel: Hi, Thank you maybe just.

Bob Glasspiegel: Follow up on one of the comments that you made.

Bob Glasspiegel: When you earlier talked about.

Bob Glasspiegel: I plan to spend a lot of media too.

Bob Glasspiegel: Drive growth.

Bob Glasspiegel: Can you maybe help us understand like.

Bob Glasspiegel: When you say a lot like how should we think about it from just.

Bob Glasspiegel: Our modeling or forecasting perspective, because of the way we think about the obviously, there's going to be a lot of growth potential for progressive how should we think about the impact on expense ratio.

Tricia Griffith: And as well, what is a ballpark target that you're thinking about when you're normalizing expense back to a more historical level? I think I would say, back to more historical levels. We've had a couple, you know, several rough years where we've had to pull back on media. I mentioned that in my letter. They've been incredible.

Bob Glasspiegel: And as well as in what is a ballpark target that you're thinking about when you're normalizing expense back to a.

Bob Glasspiegel: A more historical level.

Speaker Change: Yeah, I would say back to more historical levels. It would had a couple several rough years, we've had to pull back on media I mentioned that in my letter or they have been incredible we have a medium machine a marketing machine and both are working really well and we want to leverage that we're not going to spend if we don't think it's sufficient so what I talked about.

Tricia Griffith: We have a media machine, and a marketing machine, and both are working really well, and we want to leverage that. But we're not going to spend money if we don't think it's efficient. So when I talked about our growth and sort of the trifecta, we're getting a lot of ambient shopping still, and we'll continue to watch that. However, we think there's an opportunity to kind of open up the spigot and get more business in the door. We feel like we're in a really prime Time now, especially with our rate. So while we're not going to share our full budget, we believe we can spend. Assuming all things are right with our pricing, and we get some pricing and some rates in some of the states that we need, I think we'll be able to spend a tremendous amount to really leverage what we think could be a great growth year. Okay, thanks. Thanks. That's very helpful.

Speaker Change: Growth in sort of the trifecta, we're getting a lot of ambient shopping still and will continue to watch that however, we think theres an opportunity to kind of open up the spigot and <unk>.

Speaker Change: Get more business in the door, we feel like we're in a really prime time, now, especially with our rate. So while we're not going to share our full budget.

Speaker Change: We believe we can spend assuming all things with our pricing is right and we get some pricing on some and some rate in some of the states that we need I think we'll be able to spend a tremendous amount to really.

Speaker Change: Leverage what we think can be a great growth here.

Speaker Change: Okay. Thanks.

Thanks, That's very helpful. My second question I think you addressed some of this in our prepared remarks I just wanted to see if we can keep a little bit take a little bit deeper into it is that.

Speaker Change: But the broader competitive environment, and obviously you seem like you've made it very clear that you want to expand especially in the upmarket the bundled market Robinsons market so to speak but.

Speaker Change: Is there can you maybe give us a more in depth review on what are the.

Bob Glasspiegel: My second question, I think you addressed some of this in your prepared remark, I just want to see if we can dig a little bit deeper into it, is the broader competitive environment. And obviously, it seems like you made it very clear that you want to expand, especially in the upmarket, the bundled market, Robinson's market, so to speak. But, If there are, can you maybe give us a more in-depth view on what the competitors that are already in those positions are?

Speaker Change: Of the competitors that are already in the possession of what is the current environment look like for you to take share is it going to be in your view a much more difficult than before what is the current environment a much easier competitive dynamic for you to grab market share, especially within the Robinsons market.

Speaker Change: Yes, I think that has to do a lot with the timing so a lot of our competitors have.

Speaker Change: Increased rates as well pretty substantially so there's a sort of a timeframe I don't know exactly what that is but right. Now. We believe we are able to take market share again there'll be some at some point there'll be stable rates throughout the industry and there'll be less shopping really the key for us in terms of market share will be to grab as much new business.

Tricia Griffith: What does the current environment look like for you to take a share? Is it going to be, in your view, much more difficult than before? Or is the current environment a much easier competitive dynamic for you to grab market share, especially within the Robinsons market? Yeah, I think that has to do a lot with timing, so a lot of our competitors have increased rates as well pretty substantially, so there's a sort of time frame. I don't know exactly when that is, but right now, we believe we are able to take market share. Again, at some point, there'll be stable rates throughout the industry, and there will be less shopping. Really, the key for us in terms of market share will be to grab as much new business at or below our target market, our target profit, and really, the holy grail is retention and keeping those customers, so the key this year for us, because we've had so many years of rate after rate, is to have some stability for our customers. They deserve that.

Speaker Change: S at or below our target market our target profit.

Speaker Change: And really the Holy Grail is retention and then keeping those customers. So the key issue for us because we've had so many years of rate after rate has to have some stability for our customers. They deserve that we want that of course, we'll watch the trends and we will have to react to those trends, but I'd like to stable rates because I think if we've got the new business coming in the door and then people staying.

Speaker Change: With us that is a huge win and then of course the Robinson as we've continued to grow and we're excited about continuing to invest in our home quote explorer and the Progressive advantage agency working with great partners in that.

Speaker Change: Okay. Thank you very much I think after all these years were all looking for some stability. So thank you for that absolutely. Thanks, Bob.

Tricia Griffith: We want that. Of course, we'll watch the trends, and we'll have to react to those trends, but I'd like some stable rates because I think if we've got new business coming in the door and then people staying with us, that is a huge win, and then, of course, the Robinsons, we've continued to grow. We're excited about continuing to invest in our home, Quote Explorer, and the Progressive Advantage Agency, working with great partners on that. Okay, thank you very much.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Josh Shanker with Bank of America. Your line is open.

Josh Shanker: Yeah, Hi, there. Thank you for taking my question.

Josh Shanker: My first question given the growth. The company has had over last couple of years can you talk about what economies of scale.

Josh Shanker: One to the other expense ratio.

Josh Shanker: Well I think anytime you have economy of scale would you be able to push down the expense ratio. We're always we're always trying to balance out our expenses with investments and what the customers want so digital and other things like that so you know.

Operator: I think after all these years, we're all looking for some stability. So thank you for that. Transcribed by https://otter.ai. Thank you.

Josh Shanker: The bigger you get I think the more you can whether it's brand or expenses you can push on that but we haven't invested a lot in digital for for our customers and we'll continue to do that one of our other pillars and we talked about Brian coverage today is competitive prices and are the two parts of <unk>.

Josh Shanker: Please stand by for our next question. Our next question comes from the line of Josh Shanker with Bank of America. Your line is open. Yeah, hi there.

Tricia Griffith: Thank you for taking my question. My first question is, given the growth the company has had over the last couple of years, can you talk about what economies of scale have done to the other expense ratio? Well, I think anytime you have economy scales, you'll be able to push down the expense ratio. We're always trying to balance out our expenses with investments and what the customers want, so digital and other things like that. So the bigger you get, I think the more you can, whether it's the brand or expenses, you can push on that.

Josh Shanker: The prices are really what we talked about little bit earlier.

Josh Shanker: With Mike's question that segmentation, having industry, leading segmentation understanding rates for risk and the other is expenses and we are constantly challenging ourselves to what's that right balance.

Josh Shanker: Investing but getting those economies of scale and we'll continue to work on that for as long as I'm here for sure and as long as John's Ireland is for sure.

Speaker Change: Hey, Jonathan.

Speaker Change: Sure.

Speaker Change: We focus internally on what we call our non acquisition expense ratio. So we talked a lot about media, we're always looking to optimize media relative to where we are in terms of.

Tricia Griffith: But we have been investing a lot in digital for our customers, and we'll continue to do that. One of the other pillars, and we talked about broad coverage today, is competitive prices. And the two parts of competitive prices are really what we talked about a little bit earlier with Mike's question, that is, segmentation, having industry-leading segmentation, and understanding rate to risk.

Jonathan: Rate adequacy and market opportunity.

Jonathan: Acquisition expense ratio side, we're always looking to optimize costs and of course scale as a part of way to do that.

Jonathan: <unk> been successful in taking if you look over the longer run at least four points out of our cost structure on our non acquisition expense ratio. Chris you mentioned you know, it's always a balance in investing.

Tricia Griffith: And the other is expenses, and we are constantly challenging ourselves to find the right balance of investing but getting those economies of scale, and we'll continue to work on that for sure, as long as I'm here, for sure, and as long as John Sauerlin is, for sure. But, as I think you know, we focus internally on what we call our non-acquisition expense ratio. So we talked a lot about media. We're always looking to optimize media relative to where we are in terms of rate adequacy and market opportunity. On the non-acquisition expense ratio side, we're always looking to optimize costs. And, of course, scale is part of the way to do that.

Jonathan: And relative to the longer run, but we continue to expect to find opportunities to drive our non acquisition expense ratio lower across all three of our businesses.

Speaker Change: My other question at this point in the cycle, where progressive seems to be profitable and most of the competition is not what does the marketplace look like for commissions right now.

Speaker Change: Both of our contingent commissions as well as base rate commissions.

Speaker Change: I can let Pat take that I mean, we are our commission that had been pretty stable and we have different structures, depending on if we have a platinum agents and some other programs. We have with different agents I think I don't I don't want to speak too specifically to our competitors because they also ebb and flow yeah, we've definitely seen compare.

Josh Shanker: We have been successful in taking, if you look over the longer run, at least four points out of our cost structure on our non-acquisition expense ratio. Tricia mentioned it's always a balance in investing relative to the longer run, but we continue to expect to find opportunities to drive our non-acquisition expense ratio lower across all three of our businesses. My other question, at this point in the cycle where Progressive seems to be profitable and most of the competition is not, what does the marketplace look like for commissions right now, both contingent commissions as well as base rate commissions? Let Pat take that.

Speaker Change: <unk> use commission cuts has a profitability or margin restoration lever.

And we haven't done that so we've maintained our commission, we do have a contingent component, which self cures when we're not making money and we think thats a superior design, because we are aligned incentives and when that business performs well agents get paid well and when it doesn't we correct without having to you.

Speaker Change: Hey, don't change commission structures and contract. So we can build and deploy that and had that out end markets. Our competitors, who have pulled back we know agents have long memories, and we think that will potentially hinder our ability to restore growth when they want to come back in the market later in 'twenty four or beyond.

Pat Callahan: I mean, our commissions have been pretty stable, and we have different structures depending on whether we have a platinum agent and some other programs we have with different agents. I think—I don't want to speak too specifically to our competitors because they also ebb and flow. Yeah, we've definitely seen competitors use commission cuts as a profitability or margin restoration lever, and we haven't done that.

Speaker Change: Thank you for the answers.

Speaker Change: Robinson segment. So just for clarity, we do have different commission structures for our platinum agencies to Incent the bundle.

Pat Callahan: So we've maintained our commission—we do have a contingent component, which self-cures when we're not making money, and we think that's a superior design because of your aligned incentives, and when the business performs well, agents get paid well. And when it doesn't, we correct it without having to, you know, change commission structures and contracts. So we've built and deployed that, and we have that out in the market. Now competitors who have pulled back, we know agents have long memories, and we think that will potentially, you know, hinder their ability to restore growth when they want to come back into the market later in 24 or beyond. Thank you for the answers,

Speaker Change: We think we're very competitive with the marketplace. When it comes to compensating our independent agents for bundled business as well as model line business fair to say.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Jimmy Buhler with J P. Morgan Your line is open.

Jimmy Buhler: Hi, Good morning, So just following up on one of your earlier answers you mentioned the up.

Jimmy Buhler: Terrorism's outcomes comparisons being tough.

Jimmy Buhler: And that'll suppressed growth in the Uptown in <unk> should we assume a similar trend for both growth as well to bear.

Jimmy Buhler: It'll be weaker in <unk> and improve thereafter or does that not apply to Pip growth I don't think you're you expect as much of a different trend in Perth, and new apps, new apps for options. So much.

Operator: Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Jimmy Bhullar with J.P. Morgan. Your line is open. Hi, good morning.

Jimmy Buhler: As I said 92 per cent interact to 83% overall it was just a tremendous quarter and we actually tried to slow growth. So he was going to see a little bit of a negative trend, but I think our past of course are not just new apps are also our retention.

Jamminder Singh Bhullar: So just following up on one of your earlier answers, you mentioned app comparisons, and app count comparisons being tough, and that'll suppress growth in the app count in 1Q. Should we assume a similar trend for PIF growth as well, where it'll be weaker in 1Q and improve thereafter? Or does that not apply to PIF growth?

Jimmy Buhler: Because the reason I mentioned, our preferred unit growth is a unit growth because as you've seen over these years, where our average written premium can go up and down that's where you want the unit growth to be able to have that stable value company.

Jimmy Buhler: And the reason is.

Jimmy Buhler: Asking is if growth was good in <unk>, but it wasn't sort of outsized I think you grew 5% in January seven in February and March.

Tricia Griffith: I don't think you're going to expect as much of a different trend in PIFs than new apps. New apps were up just so much, like I said, 92% in direct, 83% overall. It was just a tremendous quarter, and we actually tried to slow growth.

Jimmy Buhler: Personal auto.

Jimmy Buhler: Uh huh.

Jimmy Buhler: And then just following up and how are you good on our book.

Speaker Change: Yeah, I would I anything with it begins with a one another number I'm pretty impressed with unemployment growth with a book of our size.

Tricia Griffith: So you're just going to see a little bit of a negative trend, but I think PIFs, of course, are not just new apps; they're also our retention. Our preferred unit of growth is unit growth because, as you've seen over these years, where average and premium can go up and down, that's where you want the unit growth to be able to have that stable value company. Yeah, and the reason I was asking is PIF growth was good in 1Q, but it wasn't sort of outsized. I think you grew 5% in January, 7% in February, and 10% in March on personal auto. And then just following up, and how are you? Good in our book. Yeah, I would do that. I anything with that begins with the one another number.

Speaker Change: And then just following up on.

Speaker Change: Sort of competitor behavior.

Speaker Change: I realize that you guys are not raising prices as much as many of your peers. Because you started repricing your book earlier.

Speaker Change: But in terms of marketing spend are you seeing competitors pull back on marketing spend as well as they're trying to divide profitability or are they continuing to market pretty heavy.

Speaker Change: I think we're seeing competitors I reenter the market and that's why we believe it's a good time, we still we're still seeing like I said, it's an ambient shopping.

Speaker Change: But I think it's gonna be a really competitive year for everyone and we're excited about it.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Robert Cox with Goldman Sachs. Your line is open.

Speaker Change: Hey, Thanks for taking my question.

Jamminder Singh Bhullar: I'm pretty impressed with how well a pit broke with a book of our size. Okay, and then just following up on sort of competitor behavior, I realized that you guys are not raising prices as much as many of your peers because you started repricing your book earlier. But in terms of marketing spend, are you seeing competitors pull back on marketing spend as well as try to divide profitability, or are they continuing to market pretty heavy? I think we're seeing competitors re-enter the market, and that's why we believe it's a good time. We're still seeing, like I said, some ambient shopping, but I think it's going to be a really competitive year for everyone, and we're excited about it. Thank you.

Robert Cox: Maybe start off with a little bit of a longer term question here, but.

Robert Cox: Progressive is a growth company and has certainly been taking share and it seems like you'll be the market leader in personal auto.

Robert Cox: In short order, if youre not already.

Robert Cox: Is there an internal view on the structural ceiling that progressive can hold over time like us is something around the 19% share of that state farm held in the early two thousands aspirational for progressive or do you think you can gain more share than that.

Speaker Change: I mean, we want to grow as much as we possibly can while we make at least for signs of underwriting profit. So we're going to we're going to continue we're not going to have a ceiling with that what we will do is understand the addressable market.

Operator: Please stand by for our next question. Our next question comes from the line of Robert Cox with Goldman Sachs. Your line is open.

Speaker Change: And kind of go across all of our lines of business to understand where we need to invest where we need to where we think we can gain more share and thats really why we diversify that's really why we've had the home quotes Florida business forest floor auto forest floor to be able to gather more market share be transparent.

Robert Cox: Hey, thanks for taking my question. Maybe start off with a little bit of a longer-term question here. But Progressive, you know, is a growth company and has certainly been taking share, and it seems like you'll be the market leader in personal auto insurance in short order, if you're not already. Is there an internal view on the structural ceiling that Progressive can hold over time?

Speaker Change: For our customers and give them an easy way to.

Speaker Change: To shop and save even if it's if it is not with US. That's also one of the reasons why years ago with a concert together Mackenzie contract at.

Tricia Griffith: Is something around the 19% share that State Farm held in the early 2000s aspirational for Progressive? Or do you think you can gain more share than that? We want to grow as much as we possibly can while we make at least four cents of underwriting profit. So we're going to continue. We won't have a ceiling with that.

Speaker Change: We're called the three horizons in the first one is execute and we've been working on that for 2016 2017 that is execute the heck out of growing our getting as much on private passenger auto and commercial auto and home business that we can as long as we're making money and we've done extraordinarily well there obviously, surpassing our 61 billion.

Tricia Griffith: What we will do is understand the addressable market and kind of go across all of our lines of business to understand where we need to invest, where we think we can gain more share. And that's really why we diversify. That's really why we've had the Home Quote Explorer, Business Quote Explorer, and Auto Quote Explorer, to be able to gather more market share, be transparent for our customers, and give them an easy way to shop and save, even if it's not with us. That's also one of the reasons why years ago, we put together a construct together that we used, this McKinsey construct that we called the Three Horizons. And the first one is, "Execute."

Speaker Change: Dollars in premiums.

Speaker Change: For 2023.

Speaker Change: The second horizon is the exciting part in commercial lines, where we've been growing our BMT is there, but we also have some expansion and coverage that we're excited about we just entered our 45th state with Florida last week. So very excited about that we obviously bought protective to have larger fleets. We're now calling protective just so you know a progressive.

Speaker Change: Fleet in specialty.

Tricia Griffith: We've been working on that since 2016, 2017. And that is to execute the heck out of growing or getting as much private passenger auto and commercial auto and home business that we can as long as we're making money. And we've done extraordinarily well.

Speaker Change: And of course, our KFC business, so those ancillary products that where we believe we kept the right to play and the right to win and those have been really exciting expansion for Karen and her group and then horizon three is a little bit further afield, but those are some products that we believe will fit unmet customer needs.

Tricia Griffith: They're obviously surpassing $61 billion in premiums for 2023. The second horizon is the exciting part in commercial lines where, you know, we've been growing our BMTs there, but we also have some expansion coverage that we're excited about. We just entered our 45th state with Florida last week, so we're very excited about that.

Speaker Change: Do you think kind of longer term out so we're constantly in a cycle of three years five years 10 years and in fact, we have our board retreat. Later this week to outline how we intend to continue to grow market share across the board and do it do so in a profitable manner. So we.

Speaker Change: We were excited about the future. We're excited about the position we're in at this point I've given.

Tricia Griffith: We obviously bought Protective to have larger fleets. We're now calling Protective, just so you know, a progressive fleet and specialty. And, of course, our T&C business. So those ancillary products that we believe we have the right to play and the right to win, and those have been really exciting expansions for Karen and her group. And then Horizon 3 is a little bit further afield, but those are some products that we will fit unmet customer needs, and you'll think kind of longer term. So we're constantly in a cycle of three years, five years, ten years.

Speaker Change: Extreme amount of uncertainty in the last four years and if there's anything that can do it is the team here in Cleveland, Ohio.

Speaker Change: Awesome. Thanks, so much for that.

Speaker Change: And maybe just on the first second question.

Speaker Change: Hoping you could walk us through some of the larger states that youre not yet great adequate and what is the game plan for those states.

Speaker Change: Well.

Speaker Change: It's a typical some of the typical states who've talked about on the coast think of New Jersey, New York, California on the direct side, we just got it.

Speaker Change: <unk> 20 on California agency, so that is a good move towards that.

Tricia Griffith: And in fact, we have our board retreat later this week to outline how we intend to continue to grow market share across the board and do so in a profitable manner. So we're excited about the future. We're excited about the position we're in at this point. I've given it an extreme amount of uncertainty in the last four years, and if there's any team that can do it, it is this team here in Cleveland, Ohio.

Speaker Change: We're having continued conversation that's because this is really about the consumer we don't want to have availability for each consumer to be able to get the coverage they need to protect the things that they love.

Speaker Change: And all we wanted to do is try to make more sense of underwriting profit. So we're going to continue to work with each insurance department to to get the rate that we need and then be fully open and available for those consumers.

Robert Cox: And maybe just for a second question, I was just hoping you could walk us through some of the larger states that you're not yet rate adequate in, and what is your game plan for those states? Well, some of the typical states we've talked about on the coast, think of New Jersey, New York, California on the direct side.

Speaker Change: Thanks.

Speaker Change: Yep.

Speaker Change: Thank you please standby for our next question.

Speaker Change: Our next question comes from alone LC Greenspan with Wells Fargo. Your line is open.

Hi, Thanks.

Elyse Greenspan: Good morning, My first question going back to the marketing and I guess, maybe a little bit tying into the Pip discussion as you guys lay out the marketing budget for this year Tricia you expecting it to be even throughout the four quarters like how do you think about the cadence.

Tricia Griffith: We just got a plus 20 on California agencies, so that is a good move towards that. We're having continued conversations because this is really about the consumer. We want to have availability for each consumer to be able to get the coverage they need to protect the things that they love.

Elyse Greenspan: The marketing spend as you think about trying to acquire customers during 2024.

Tricia: So and some of the some of the marketing spend we already like pre buy so that's sort of out there and then other than we have like digital and some other areas, where we can be more fluid will react to what's happening in the environment. So if we feel like that.

Tricia Griffith: All we want to do is try to make four cents in underwriting profits. We're going to continue to work with each insurance department to get the rate that we need and then be fully open and available for those consumers. Thanks.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Elyse Greenspan with Wells Fargo. Your line is open. Hi, thanks. Good morning.

Tricia: That you know our MP six as sandwiches are new prospects, we can increase it we're always going to do it and try to be efficient around it that's really the game plan and again it has to do with what our customers are doing or sorry, our competitors are doing so that's not an easy question, we continually tweak it to make sure we're efficient while bringing as much new business in.

Elyse Greenspan: My first question, you know, going back to marketing, and I guess maybe a little bit tying into the PIF discussion, as you guys lay out the marketing budget for this year, Tricia, are you expecting it to be even throughout the four quarters? Like, how do you think about the cadence of the marketing spend as you think about trying to acquire customers during 2024? Thanks, Elyse.

The door that we can and then we have some that will already be on the books I do want to add anything Pat So I would say, we normally pace heavier in Q1 than we do in Q4 because of customer shopping. So just as Tricia said, well fish, where the fish are and when there's a lot of people out there and market, we want to advertise to make sure. They know we're available and to bring them.

Tricia Griffith: Some of the marketing spend, we already pre-buy, so that's sort of out there. And then other that we have, like digital and some other areas where we can be more fluid, we'll react to what's happening in the environment. So if we feel like our MP6 is down, which is our new prospect, we can increase it. We're always going to do it and try to be efficient around it. That's really the game plan. Again, it has to do with what our competitors are doing. So it's not an easy question. We continually tweak it to make sure we're efficient while bringing as much new business in the door as we can, and then we have some that will already be on the books. Do you want to add anything, Pat?

Tricia: To progressive.

Tricia: As we've stated this year were opening up maybe a little slower than we did in 2023. So from a pacing perspective will probably be more level between Q1, two and three than we historically would have been.

Tricia: We also know that if the hard market prevails and kind of 10 years, and we will want to continue to spend up to our allowable to capitalize on growth. While people are looking for a new provider of auto home or commercial insurance, yeah, and don't forget about the our other lover than that is opening up an unraveling.

Tricia: Our non rate actions. So we've got a couple of different things in play and that's the reason to believe them or reason to believe that we can capture a lot of market share. This year. So that's another another avenue that we've continued to do since late last year.

Tricia: And then my follow up you guys saw favorable development in January.

Pat Callahan: No. I would say we normally pace ourselves heavier in Q1 than we do in Q4 because of customer shopping. So just as Tricia said, we'll fish where the fish are, and when there are a lot of people out there in the market, we want to advertise to make sure they know we're available and bring them to Progressive. As we've stated, this year we're opening up maybe a little slower than we did in 2023. So from a pacing perspective, we'll probably be more level between Q1, 2, and 3 than we historically would have been. But we also know that if the hard market prevails and continues, then we will want to continue to spend up to our allowables to capitalize on growth while people are looking for a new provider of auto, home, or commercial insurance. Yeah, and don't forget about our other lover, which is opening up and unraveling our non-rate actions.

Tricia: For the first time in a while right typically that's a month filing of late reported claims from from the prior year what drove that development in January.

Speaker Change: Does that.

Speaker Change: That frequency or severity driven.

Speaker Change: Wanted to get a sense that there would be some.

Speaker Change: Expectations for continuation of that better trend in 'twenty four.

Speaker Change: I would say the January decreased the majority of that was Florida. Most of the other states are pretty tight against one month and you know we will let that that year play out.

Speaker Change: Gary's team looks at a lot of data each and every month just to make sure we're adequately reserved and all that and his team do that is very separate from <unk>.

Speaker Change: Gary do the right thing on behalf of the company, but I wouldn't read too much into January. It's obviously, we were pleased to have favorable development, but it was mostly Florida.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you please standby for our next question.

Tricia Griffith: So, we've got a couple different things in play, and that's the reason to believe, and our reason to believe, that we can capture a lot of market share this year. So, that's another avenue that we've continued to do since late last year. And then my follow-up question, you guys saw favorable developments in January, you know, for the first time in a while, right? Typically, that's a month

Speaker Change: Our next question comes from the line of David Mcmahon with Evercore ISI. Your line is open.

David Mcmahon: Hi, good morning.

David Mcmahon: So I had a question just on.

David Mcmahon: Just tricia just how impactful you think unraveling some of the non rate actions can can be on Pip growth.

David Mcmahon: Just wondering relative to AD spend historically.

Speaker Change: Has there been.

Elyse Greenspan: When you have late reporting claims from the prior year, what drove that development in January? And, you know, did that, you know, was that frequency or severity driven? I'm just wanting to get a sense that there would be some expectations for continuation of that better trend in 24. I would say the January decrease was the majority of that was Florida; most of the other states were pretty tight.

Speaker Change: More impact to Pip growth from bringing up or down marketing spend compared to a non rate actions or can you help size the.

Speaker Change: The potential for growth from rolling back those non rate actions.

Tricia: It's really hard to size, because I think I feel like we've never been tighter than our non rate actions than we were last year again, it's hard to quantify because there's a bunch of different actions, we'll do and we'll do some on different products different states it can be different and channels. So.

Tricia Griffith: Again, it's one month, and we will let that year play out. Gary's team looks at a lot of data each and every month just to make sure we're adequately reserved, and I'll let his team do that. It's very separate from... I'd let Gary do the right thing on behalf of the company, but I wouldn't read too much into January. Obviously, we were pleased to have favorable developments, but it was mostly Florida.

Tricia: It's hard to quantify I think if you want to have a quicker reaction the media spend that does that.

Tricia: It's hard to discern exactly what would go into each what we do know is we were really tight trying to slow growth, making sure. We got right in the system and now were able to unwind that but we're not doing at full bore we're doing it very largely to make sure that we reached our target profit margin.

Tricia: Yes.

Operator: Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of David Motemaden with Evercore ISI. Your line is open. Hi, good morning.

Looking towards Pip growth new business is one driver, but retention is a far stronger driver of Pip growth.

Tricia: And as Tricia mentioned, we are looking forward to more stable rates this year.

David Motemaden: So I had a question just on Tricia, just how impactful you think unraveling some of the non-rate reactions can be on PIF growth? Just wondering relative to ad spend historically, has there been more impact on PIF growth from bringing up or down marketing spend compared to non-rate actions, or can you help size the potential for growth from rolling back those non-rate actions? It's really hard to decide because I feel like we've never been tighter in our non-rate actions than we were last year. Again, that's hard to quantify because there are a bunch of different actions we'll do, and we'll do some on different products and different states. It could be different on different channels, so it's hard to quantify.

Tricia: Feeling very adequate in most environments. So we have already enjoyed retention improvements and we expect to continue to enjoy a retention improvements competitors are certainly in a better place, but are continuing to raise rates as well so on a competitiveness basis when the renewals come through we think we're going to be in a good place and that.

Tricia: Will help drive policy in force growth as well.

Speaker Change: Got it thanks for that and that sort of leads into my follow up is just last quarter I think Pat you had said that.

Speaker Change: And Retentions.

Pat: We're improving but not at historical levels or where are we at now.

Tricia Griffith: I think if you want to have a quicker reaction, the media spend does that, but it's hard to discern exactly what would go into each. What we do know is we were really tight, trying to slow growth, making sure we got rate in the system, and now we're able to unwind that, but we're not doing it full bore. We're doing it very logically to make sure that we reach our target profit margin. And I'd add, you know, if we're looking towards PIP growth, new business is one driver, but retention is a far stronger driver of PIP growth. And as Tricia mentioned, we are looking forward to more stable rates this year. We are feeling very adequate in most environments.

Speaker Change: And just and just thinking about that because.

Speaker Change: I recognize there is a tougher comp on new apps, but I would think the retention comp is also a little bit different as well.

Speaker Change: So how far away are we from historical retention.

Speaker Change: Just sort of thinking through some of the drivers of Pip growth.

Speaker Change: I don't know what historical off the top of my head, David but we're pretty excited about both the trailing three and trailing 12 PLE than where we are from a month. Then we certainly have internal data here that we talk about the value of one month of PLE tell our lifetime or in premium.

Speaker Change: I think were pretty high.

Speaker Change: Yes, we are not yet quite back to our all time high for policy life expectancy.

Pat Callahan: So we have already enjoyed retention improvements, and we expect to continue to enjoy retention improvements. Competitors are certainly in a better place, but they are continuing to raise rates as well. So on a competitiveness basis, when the renewals come through, we think we're going to be in a good place, and that will help drive policy-enforced growth as well.

Speaker Change: But we're getting there and our trajectory is certainly indicating that we might be achieving new highs later in the year, we can protect that obviously, but when you look at the charge Thats, what you might conclude so.

Speaker Change: Yes.

Speaker Change: It will depend upon the competitive environment, we think we're in a much more stable place, meaning not having to take nearly as much rate as we have historically the market continues to rise and we think it's going to play well to policyholder retention.

David Motemaden: Thanks for that. And that sort of leads into my follow-up question, which is: just last quarter, I think, Pat, you had said that PLEs and retention are improving, but not at historical levels. Where are we at now? You know, and just thinking about that, because I recognize there is a tougher comp on new apps, but I would think the retention comp is also a little bit different as well.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Ryan Tunis with Autonomous Research. Your line is open.

Ryan Tunis: Hey, Thanks, Good morning could you just talk a little bit about Trisha I guess across the block how youre thinking about.

Ryan Tunis: Severity in 2024.

Ryan Tunis: Yeah, I mean, I liked the fact that severity seemed to moderate a little bit and we're hoping that it's a little bit benign.

Pat Callahan: So how far away are we from historical retention? Just sort of thinking through some of the drivers of PIP growth. I don't know retention rates off the top of my head, David, but we're pretty excited about both the trailing three and trailing 12 PLE and where we are from a month.

Ryan Tunis: Benign when you look at.

Ryan Tunis: Last year, we were affected by a fixing.

Ryan Tunis: Fixing cars and that seems to be a little bit commerce, I think auto parts inflation is nearing zero and auto services is in a kind of mid single digits. So.

Operator: And we sort of have internal data here that we talk about the value of one month of PLE to our lifetime earned premium. I think we're pretty high. Yeah, we're not yet quite back to our all-time high for policy life expectancy, but we're getting there, and our trajectory is certainly indicating that we might be achieving new highs later in the year. We can't predict that, obviously, but when you look at the charts, that's what you might conclude. So, again, we'll depend upon the competitive environment. But we think we're in a much more stable place, meaning not having to take nearly as much rate as we have historically. The market continues to rise, and we think it's going to play well for policyholder retention. Understandable, thank you.

Ryan Tunis: That's how we're thinking about it we'll obviously watch that something's changed as they did last year, but I'm thinking I think benign and kind of moderates is what I would say from a severity perspective, and I feel the same way with the eye right in the 8% to 10%.

Ryan Tunis: Yeah.

Speaker Change: Got it and then I.

Speaker Change: I know last year, you kind of shared with US early in the year I think it is a modest amount of rate that you expect it to be taking over the year you mentioned.

Speaker Change: California, New Jersey, New York could you just give us maybe a placeholder for.

Speaker Change: I guess, what youre thinking in the aggregate if youre able to get those.

Speaker Change: And in those states.

Speaker Change: Cut out.

Speaker Change: Yes in the aggregate what we'll be looking at in terms of.

Ron Tunis: Thank you. Please stand by for our next question. Our next question comes from the line of Ron Tunis with Autonomous Research.

Speaker Change: Rate increases in 'twenty four.

Speaker Change: Yeah, I really cant share that because it's different with each state and we're in the midst of.

Tricia Griffith: Your line is open. Hey, thanks. Good morning.

Speaker Change: Talking to the department and are showing our verification for needs for those rates. All I can say is that well or get what we need to to be at our target profit margins.

Tricia Griffith: Can you just talk a little bit about, Tricia, I guess across the book, how you're thinking about severity in 2024? Yeah, I mean, I like the fact that severity seems to have moderated a little bit, and so we're hoping that it's a little bit benign. When you look at last year, we were affected by fixing cars, and that seems to be a little bit calmer. So I think auto parts inflation is nearing zero, and auto services inflation is in the kind of mid-single digits. So that's how we're thinking about it. We'll obviously watch if something's changed, as they did last year. But I think benign and kind of moderate is what I would say from a severity perspective, and I feel the same way with DI, right in the 8 to 10 percent.

Speaker Change: We won't be able to be as open which is I saw that unfortunate for consumers.

Speaker Change: For the rest of the country, we feel good at our at the rate we have gotten.

Speaker Change: <unk> gotten for the last several years and so that's really what we're focusing on in addition to the conversations and negotiations with our departments.

Speaker Change: Got it and then just one more if I could sneak it in.

Speaker Change: Obviously progress with the Robinson, just curious what the geographic.

Speaker Change: Diversity that book looks like versus your broader auto book is that still.

Speaker Change: Kind of heavily coastal or.

Speaker Change: Alright.

Speaker Change: I like the broader agency book to Us.

Speaker Change: Are you thinking are you Ryan are you talking more like the property side of the Robinson.

Tricia Griffith: I got it. And then I know last year, you kind of shared with us early in the year, I think it was a modest amount of rate that you expected to be taking over the year. You mentioned California, New Jersey, New York. Could you just give us maybe a placeholder for, I guess what you're thinking in the aggregate if you're able to get those rates and in those states, kind of what, yeah, in the aggregate, what we'll be Yeah, I really can't share that because it's different in each state, and we're in the midst of talking to the departments and showing our verification of needs for those rates.

Speaker Change: On the auto so yes, because of the property it had been coastal I'm wondering.

Speaker Change: It's starting to look more like the.

Speaker Change: How you've historically seen the agency book.

Speaker Change: Yeah, I think we're trying to make sure that well Theres Robinson is everywhere and so there's a different there could be a different value out of the insurability of homes et cetera, but yeah, I think that obviously, because robinsons have a property feature to them and we are getting into more non volatile volatile states gross sales.

Speaker Change: C Robinson growth in those states over time, but it will take some time and we were selling in med <unk>.

Tricia Griffith: All I can say is that we'll get what we need to be at our target profit margin or we won't be able to be as open, which is, like I said, unfortunate for consumers. For the rest of the country, we feel good at the rate we have gotten for the last several years, and so that's really what we're focusing on, in addition to the conversations and negotiations with our departments. And then just one more, if I could sneak it in, obviously, progress with the Robinsons, just curious what the geographic...uh, diversity that book looks like versus your broader auto book, is that still kind of heavily coastal or does it doesn't look, I like the broader agency book, though. Are you thinking... Ryan, are you talking more like the property side of the Robinsons? On the auto.

Speaker Change: And moving our book a little bit away from Florida, as we discussed with our 115000 Nonrenewals that actually we sent notices out in January and those will start to non renew into Ah. Another company that we're working with to take those where they want them in may of this year.

Speaker Change: Yeah, where if you're if you read all the data of our Pip growth our premium growth in our new app growth in non volatile versus volatile. We are ahead of plan, but still a long way to go but we should grow Robinson is in those areas for sure.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Mike Ward with Citi. Your line is open.

Mike Ward: Thanks, Good morning.

Mike Ward: Just following up.

Mike Ward: On the <unk> question.

Mike Ward: The Florida releases.

Mike Ward: Was that some of the litigation related reserves from last year and I guess, how are you feeling about those reserves and that kind of situation.

Tricia Griffith: So yeah, because of the property, it had been coastal. I'm wondering if it's starting to look more like the... how you historically came to the agency, Bob. Yeah, I think we're trying to make sure that, well, there are Robinsons everywhere, so there's a different, there could be a different value for the insurability of homes, et cetera. But yeah, I think that obviously because Robinsons have a property feature to them and we are getting into more non-volatile states, you'll see Robinson growth in those states over time. But it'll take some time.

Speaker Change: It was mostly Florida kind of across the board a couple of different things somewhat somewhere some settlements on glass.

Speaker Change: From House Bill So Theres, a couple of different inputs to the relief we're feeling.

Speaker Change: Positive about the tort reform changed in Florida.

Speaker Change: Starting to see a little bit of that I don't want to get ahead of my skis with that but.

Speaker Change: We believe especially on.

Speaker Change: The new comp negligence loss should be very helpful. But again, we'll watch that really closely because it's still new and theres a lot of things that I can count fall, but we're positive about the changes have been made in Florida.

Tricia Griffith: I mean, we were still in the midst of, you know, moving our book a little bit away from Florida as we discussed with our 115,000 non-renewals that actually we sent notices out in January, and those will start to non-renew into another company that we're working with to take those should they want them in May of this year. But yeah, we're, if you read all the data of our PIF growth, our premium growth, and our new app growth in non-volatile versus volatile, we are ahead of plan, but still have a long way to go, but we should grow Robinsons in those areas for sure. Thank you. Will you stand by for our next question? Our next question comes from the line of Mike Ward with Citi. Your line is open. Thanks. Good morning.

Speaker Change: Okay. Thanks, and then on frequency curious about frequency kind of like year to date, just following the very favorable December.

Speaker Change: You know I don't if I were looking at frequency I would look at it more on a trailing 12 over our current 12 at about 2% because there's a lot to go that lots of it goes into the data that you saw from this quarter in terms of our mix. So John talked about that a little bit we're really tight with our underwriting and so our mix of business is more preferred.

Speaker Change: Which.

Speaker Change: Causes less frequency of accidents and you'll hear this a lot, but since we're changing to a Gregorian calendar. There is a little bit of data in there and then of course weather in December was really benign and so I would think that you know of course, where we can't predict frequency or severity, but I wouldn't I would be thinking of frequency as more of a room.

Operator: I'm just following up on Elyse's question, the Florida releases. Was that some of the litigation-related reserves from last year? And, I guess, how are you feeling about those reserves in that kind of situation? It was mostly Florida, kind of across the board, a couple different things.

Speaker Change: Reverting back to our normal trend ex COVID-19.

Speaker Change: Covid et cetera last six years frequency has continued to decline coupled with a couple of points every year.

Michael Zaremski: There were some settlements on Glass, some from House Bill. So there were a couple different inputs to the release. We're feeling positive about the tort reform change in Florida, and we're starting to see a little bit of that. I don't want to get ahead of myself with that, but we believe, especially the new negligence law, should be very helpful. But again, we'll watch that really closely because it's still new and there are a lot of things that can unfold, but we're positive about the changes that have been made in Florida. Okay, thanks. And then on frequency, curious about frequency kind of like year to date, just following the very favorable December. You know, if I were looking at frequency, I would look at it more on the trailing 12 over the current 12, at about 2%, because there's a lot that goes into the data that you saw from this quarter in terms of our mix. So John talked about that a little bit. We were really tight with our underwriting, so our mix of business is more preferred, which causes less frequency of accidents. You'll hear this a lot, but since we're changing to a Gregorian calendar, there's a little bit of data in there. And then, of course, the weather in December was really benign.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Meyer Shields with Keefe Bruyette and work your line is open.

Meyer Shields: Great. Thank you so much two quick questions first.

Meyer Shields: Especially in the past you've talked about how the last sort of piece of the property puzzle was getting non cat weather place correctly do you think that was the issue that kept me about the 96 in 2023.

Speaker Change: Oh Wow.

Speaker Change: And there was a little bit of a lot of things that went into that I'm trying to think of.

Speaker Change: So just taking them in January came because some of the weather in January was actually nonvolatile state. So it's there and so this is why they're just across the board here and there nothing piglets with cats.

Speaker Change: But I would I would say a lot of a lot of things went into 2023.

Speaker Change: Didn't have the right rate, we're still working on our segmentation, we really in earnest just starting to be able to derisk, especially in a really volatile state.

Speaker Change: And I think all those things together kind of.

Speaker Change: Put us where we were at the end of the year.

Okay.

Speaker Change: Second question, just with regard to PAA is there any limitation on your like contractual limitations on your ability to use the data from other companies.

Tricia Griffith: So I would think that, and of course, we can't predict frequency or severity, but I would be thinking of frequency as more of reverting back to our normal trend, X, COVID, et cetera. For the last 60 years, frequency has continued to decline a couple points every year. Great, thank you. Thank you. Please stand by for our next question, which comes from the line of Maya Shields with Keith, Brett, and Wolf. Your line is open. Great, Thank you so much. Two quick questions.

Speaker Change: Yeah. We are very we are a it's a very important thing for the relationships to make sure that their proprietary data is just that and we don't share it within other other place that progressive so as an example, there.

Speaker Change: Company, we've worked with for a long time, they're a great partner and we actually bifurcate. The monthly reports the data because we think that is really important for everyone to have their their algorithms and the same thing with ours.

Tricia Griffith: First, Trisha, in the past, you've talked about how the last sort of piece of the property puzzle was getting non-cat weather priced correctly. Do you think that was the issue that kept you above a 96 in 2023? Well, there are a lot of things that went into that. I'm trying to think of...

Speaker Change: Okay perfect. Thank you so much.

Welcome.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your phone or submit a question on your webcast.

Speaker Change: Please standby for our next question.

Speaker Change: Okay.

Yarn Qunar: Our next question comes from the line of yarn Qunar with Jefferies. Your line is open.

Tricia Griffith: I was just thinking of January too, because some of the weather in January was actually in a non-volatile state. So sometimes there's weather just across the board here and there, nothing big with caps. But I would say a lot of things went into 2023. We didn't have the right rate. We're still working on our segmentation. We really, in earnest, have just started to be able to de-risk, especially in the really volatile state. I think all those things together kind of put us where we were at the end of the year. Okay, second question: with regard to TAA, is there any limitation on your, like contractual limitations on your ability to use the data from other companies?

Yarn Qunar: Thank you good morning, everybody.

Yarn Qunar: My first question ties back to Josh as questions on economies of scale improving expense ratio.

Yarn Qunar: How much room does that leave you guys to maybe increase your AD spend marketing spend.

Qunar: Without really compromising on efficiencies and see.

Qunar: Significantly lower incremental returns there.

Qunar: Well, if you're talking about expense ratio I would look I, probably look more directly at our direct expense ratio because that's forgetting to hit some of the marketing spend and it's pretty low, especially compared to maybe this isn't the right comparison, especially compared to January of last year was like four to five points lower so.

Qunar: There will be pressure on the expense ratio, even though the marketing our marketing spend will be efficient just because its out there and you'll see that I would follow the direct spend if you look at the suburbs direct loss ratio direct loss ratio to January I think December was a little bit over 12, so youre going to start to see that when we put.

Tricia Griffith: Yeah, it's a very important thing for the relationships to make sure that their proprietary data is just that, and we don't share it within other places at Progressive. So, as an example, there's a company we've worked with for a long time, they're a great partner, and we actually bifurcate the monthly reports and data, because we think that is really important for everyone to have their algorithms, and same with ours. Okay, perfect. Thank you so much.

Qunar: Media or media budget into play.

Qunar: Brian I guess, what I'm trying to get out here is.

Brian: Alright, so if we go back we will see an expense ratio of roughly 20%.

Brian: Which is a mix of AD spend and other stuff.

Operator: Ladies and gentlemen, as a reminder to ask a question, please press star 11 on your phone or submit a question on your webcast. Please stand by for our next question. Our next question comes from the line of Yaron Kinar with Jeffrey. Your line is open. Thank you. Good morning, everybody.

Brian: Can you essentially fell the AD spend bucket to get back to 20% or is the economy of scale. So significant today that 20% rate is probably.

Brian: Not so relevant anymore.

Speaker Change: Yeah, I mean, I'll, let Pat add and I think too John talked a little bit about.

Yaron Kinar: My first question ties back to Josh's questions on economies of scale and the improving expense ratio. How much room does that leave you guys to maybe increase your ad spend and marketing spend without really compromising on efficiencies and seeing significantly lower incremental returns there? If you're talking about the expense ratio, I would look, I'd probably look more directly at our direct expense ratio, because that's where you're going to hit some of the marketing spend. And it's pretty low, especially compared, maybe this isn't the right comparison, especially compared to January of last year. It's like four and a half points lower.

Speaker Change: The non acquisition expense trade social acquisition I'll, let Pat weigh in a little bit we're not going to spend just suspending it up to 'twenty, what we're gonna be efficient now if for some reason it goes up to 20, and we are bringing great new business and huge huge amounts and we feel great about that could be one thing and then we'll continue to focus on the pressuring non acquisition expense ratio.

Pat: As one part of that Formula do you want anything yeah. I think your characterization is spot on and that we have a hierarchy of levers that we pull in order to slow the business and in order to grow the business on the other side, so whether it's starting with reducing verification or opening up more favorable build plans.

Tricia Griffith: So there will be pressure on the expense ratio, even though the marketing spend will be efficient, just because it's out there. And you'll see that I would follow the direct spend. If you look at December's direct loss ratio compared to January, I think December was a little bit over 12.

Pat: And then spending more than if we're doing all of those and unable to drive conversion at a level that we want to grow we would potentially lower rates at that point, but that's the hierarchy that we're reversing right now and at this point.

Yaron Kinar: So you're going to start to see that when we put our media budget into play. I guess what I'm trying to get at here is, you know, if we go back, we'll see an expense ratio of roughly 20%, which is a mix of ad spend and other stuff. Can you essentially fill the ad spend bucket to get back to 20%? Or is the economies of scale so significant today that that 20% rate is probably not so relevant anymore?

Pat: Maybe a little deceiving as average premiums have gone up significantly due to the rate increases, which is driving down that expense ratio. So even if we got spending back to an absolute dollar basis, where we were in the past youre not going to get your expense ratio back to where it was in the past, but to tricia's point in our budget.

Pat: Is governed by our ability to efficiently acquire customers against what we expect to be the lifetime value of that customer to progressive and of course to make sure. We can deliver phenomenal claims and customer service and support the growth on that and so hope that helps in that we're not swinging back to a 21.

Pat Callahan: Yeah, I mean, I'll let Pat add in, but I think, too, John talked a little bit about the non-acquisition expense ratio. So acquisition, I'll let Pat weigh in a little bit. We're not going to spend just to spend to get up to 20, we're going to be efficient. Now, if for some reason it gets up to 20 and we are bringing in great new business and huge amounts, and we feel great about it, that could be one thing. And then we'll continue to focus on the pressuring non-acquisition expense ratio as one part of that formula. Do you want anything?

Pat: We are doing is unwinding some of the changes that we've made some have very little expense cost associated with them media. Obviously, it has a greater cost to it on the other side.

Speaker Change: Got it yes.

Speaker Change: Sure.

Speaker Change: I was just wondering a little greater appreciation of how we spend we do it in a extremely surgical and analytical manner, we have loads and our pricing by customer segment at a very finite level and so we understand what we can spend to meet our lifetime.

John P. Sauerland: Yeah, I think that's your characterization spot on in that we have a hierarchy of levers that we pull in order to slow the business down and in order to grow the business on the other side. So whether it's starting with reducing verification or opening up more favorable bill plans, then spending more, then if we're doing all those things and unable to drive conversion at a level that we want to grow, we would potentially lower rates at that point. But that's the hierarchy that we're reversing right now. And at this point, what's maybe a little deceiving is that average premiums have gone up significantly due to the rate increases, which is driving down that expense ratio. So even if we get spending back to an absolute dollar basis where we were in the past, you're not going to get your expense ratio back to where it was in the past.

Speaker Change: The combined ratio targets on each customer segment. So as we go into spend we're not targeting an expense ratio to pat's point, we are being extremely surgical and targeted in going after customer segments, where we know we can spend up to an allowable cost that we are priced into the product at the segment level.

Speaker Change: Different approach than I think.

Speaker Change: Alright.

Speaker Change: I think you've just articulated much better than the way I was able to ask your questions. So thank you.

Speaker Change: My other question, if we could switch to the commercial book I think you had some.

Pat Callahan: But to Tricia's point, our budget is governed by our ability to efficiently acquire customers against what we expect to be the lifetime value of that customer to progressive and, of course, to make sure we can deliver phenomenal claims and customer service and support the growth on that end. So I hope that helps and that we're not swinging back to a 20. What we're doing is unwinding some of the changes that we made. Some have very little expense cost associated with them.

Speaker Change: Some volatility in the TNC business last year.

Speaker Change: Both in terms of the topline growth.

Speaker Change: More importantly that the loss ratio can you maybe give us an update where you are today, how comfortable you are with that.

Speaker Change: The trajectory you see there.

Speaker Change: Yeah, sorry, yeah. So for the let me kind of talk about commercial overall and I'll get into the Tennessee part so for our core commercial business I feel much more positive where we are from a combined ratio perspective, especially with 16 points yet to earn in this year and then I talked a little bit about some expansion products that we talked about.

Yaron Kinar: Media obviously has a greater cost to it on the other side. Got it, yeah, that's it. I just want to give a little greater appreciation for how we spend. We do it in an extremely surgical and analytical manner.

John P. Sauerland: We have loads in our pricing by customer segment at a very finite level, and so we understand what we can spend to meet our lifetime combined ratio targets on each customer segment. So as we go into spend, we are not targeting an expense ratio.

Speaker Change: I can't horizon, two so think of progressive flea think of stance do you think of our BOP those do put a little pressure on our core business, but we think it's important to invest in them. The TNC. We've continued to strengthen reserves as you saw last year.

Yaron Kinar: To Pat's point, we are being extremely surgical and targeted in going after customer segments where we know if we can spend up to that allowable cost that we have priced into the product at the segment level. A little different approach than I think you're thinking. Right. I think you just articulated it much better than the way I was able to ask the question. So thank you. My other question, if we could switch to the commercial book, I think you had some volatility in the TNC business last year, both in terms of the top line growth and, more importantly, the loss ratio. Can you maybe give us an update on where you are today, how comfortable you are with it, and the trajectory you see there?

Speaker Change: And we will have some rate increases that go into play significant one this quarter.

Speaker Change: So we feel much better about and if you go back you know we have we have 20 states total between the two companies that we work with but if you go back to where we started with our first data in 2016 that knowledge that we've learned in the TNC business has really helped us so so each day.

Speaker Change: <unk> is a little bit different depending on the maturity level of that and a lot of what happened last year with the reserve strength thing happened to be in two states, New Jersey, and California and in coverages of our.

Tricia Griffith: Yeah, so let me kind of talk about commercial overall, and I'll get into the TNC part later. So for our core commercial business, I feel much more positive about where we are from a combined ratio perspective, especially with 16 points yet to earn this year. And then I talked a little bit about some expansion products that we talked about in Horizon 2. So think of Progressive Fleet, think of TNC, think of our BOP.

Speaker Change: And you I am so that's where we're working to get the right rate to make sure we can reach our profit margin.

Speaker Change: Thank you.

Speaker Change: Thank you please standby for our next question.

Speaker Change: Our next question comes from the line of Michael Phillips with Oppenheimer. Your line is open.

Michael Phillips: Thanks for putting me on I think I just have.

Tricia Griffith: Those do put a little pressure on our core business, but we think it's important to invest in them. The TNC, we've continued to strengthen reserves as you saw last year, and we'll have some rate increases that go into effect, significant ones this quarter. So we feel much better about it.

Michael Phillips: Maybe to just one.

Michael Phillips: To what extent is the is the hard market in personal auto.

Michael Phillips: Any impact on the mix of customers that stayed bundled.

Michael Phillips: In other words, if theres more maybe sticker shock in one versus the other are you seeing customers kind of get away from the desire to bundle.

Tricia Griffith: And if you go back, we have 20 states total between the two companies that we work with. But if you go back to where we started with our first state in 2016, that knowledge that we've learned in the TNC business has really helped us. So each state is a little bit different, depending on the maturity level of that. And a lot of what happened last year with the reserve strengthening happened to be in two states. It was in New Jersey and California and in the coverage areas of UM and UIM.

Michael Phillips: I mean, I think I think right now customers are looking for a price.

Michael Phillips: Has it gone up so much with everything else. So people do like to bundle because you can also get a discount and most companies. The Harvey marker for me I really equate to more just overall shopping just you know people get their renewals and they shop and can have we already got the rate in the system gets to get them. So we want to get auto we wanted to get home and we want it.

Michael Phillips: The bundled.

Tricia Griffith: So that's where we're working to get the right rate to make sure we can reach our profit margin. Thank you. Thank you. Our next question comes from the line of Michael Phillips with Oppenheimer. Your line is open. Thanks for putting me in. I think I just have one question, well, maybe two.

Michael Phillips: Regardless of either one obviously, we care a lot about the bundle, but it's really I think customers dictate the market based on the trends they're seeing in their bills.

Michael Phillips: Okay.

Speaker Change #101: Then just totally totally separate gears can you share any thoughts on loss trends.

Speaker Change #101: Your your protective business that you did a couple years ago, how is that looking at and any trends there.

Michael Phillips: To what extent is the hard market and personal auto having any impact on the mix of customers that stay bundled? In other words, if there's more, maybe stick a shotgun one versus the other; are you seeing customers kind of get away from the desire to bundle? I mean, I think right now customers are looking for a price because it's gone up so much with everything else. So people do like the bundle because you can also get a discount at most companies. The hard marker for me is really just overall shopping, just people get their renewals, and they shop, and we already have the rate in the system to get them. So we want to get the auto, we want to get the home, and we want to get the bundled regardless of either one. Obviously, we care a lot about the bundle, but it's really I think customers dictate the market based on the trends they're seeing in their bills. Okay, um, and then just totally, totally separate gears.

Speaker Change #101: I'm.

Speaker Change #102: Not really.

Speaker Change #102: No nothing that stands out versus normal the smaller fleet business smaller normal.

Speaker Change #102: Commercial business.

Speaker Change #102: Continue and will continue to grow we've expanded our own fleet before protective from Sunpower units to 40 power units. We continue to expand we continue to work on the integration of the acquisition.

Speaker Change #102: We felt positive about the acquisition and.

Speaker Change #102: We have some rate.

Speaker Change #103: So definitely for progressive fleet, but nothing really more than that to share.

Speaker Change #104: Okay, Alright, thank you very much.

Speaker Change #105: Thank you.

Speaker Change #106: Please standby for our next question.

Speaker Change #105: Okay.

Speaker Change #105: I have a follow up question from the line of Meyer Shields with Keefe Bruyette <unk> Woods. Your line is open.

Meyer Shields: Great. Thank you so much for taking the follow up I was just wondering whether the PAA commissions factor into either the 96% combined ratio targets somehow or if there is a profit goal for that business.

Meyer Shields: The conditions are just that they're just commissions that come in the door that we've agreed with the with the companies and then there of course rating there their auto or their home based on their rating algorithms.

Tricia Griffith: Can you share any thoughts on lost trends in your protective business that you did a couple years ago? How's that looking, and are there any trends there?

Meyer Shields: They flow in as a contra expense down there and that combined rate yeah, Yeah I'm sorry.

Speaker Change #107: Okay perfect. Thank you.

Speaker Change #108: Please standby for our next question.

Speaker Change #108: Yeah.

Tricia Griffith: Okay. Anything that stands out versus the normal, the smaller fleet business, the smaller, normal, you know, commercial business? We continue to grow. We've expanded our own fleet before Protective from 10 power units to 40 power units. We continue to grow. We continue to work on the integration of the acquisition.

Speaker Change #108: We have a follow up question from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Speaker Change #108: Thanks.

Elyse Greenspan: Considering making any changes to your reinsurance program.

Elyse Greenspan: As it comes up for renewal this year.

Elyse Greenspan: I think what you saw what was outlined in the K with the aggregate program and then our Cat Tower program is up for renewal in June and we are working on that right now actually two of the people are in London talking with our reinsurers. So we feel like we'll have some positive results from the general yes. So we don't have anything definitive to all.

Tricia Griffith: We feel positive about the acquisition. We have some rates in the system definitely for Progressive Fleet, but nothing really more than that to share. Okay. All right. Thank you very much.

Operator: Thank you. Please stand by for our next question. We have a follow-up question from the line of Maya Shields with Keith Rhett and Woods. Your line is open. Great, thank you so much for taking the follow-up. I was just wondering whether the PAA commissions factor into either the 96% combined ratio target somehow or if there is a profit goal for that bit.

Elyse Greenspan: Or at least but you can generally think of us targeting retention in generally the same area.

Elyse Greenspan: Guarantee will be exactly the same we have is we've derisked the property portfolio been enjoying decreasing PMO. So.

Maya Shields: And the commissions are just that. They're just commissions that come in the drawer that we've agreed with the companies. And then, of course, rating their auto or their home based on their rating algorithms.

Elyse Greenspan: That helps us at the top of the tower, because we might not have to buy as much.

Elyse Greenspan: But generally speaking you can you can think of the focus and the structure of the cap program at June one is very similar to what we have today.

Tricia Griffith: But they flow as a contra-expense when they are at that combined rate? Yeah. Okay, perfect. Thank you. Please stand by for our next question. We have a follow-up question from the line of Elyse Greenspan with Wells Fargo. Your line is open.

Speaker Change #109: Okay. Thank you.

Speaker Change #110: Thank you.

Speaker Change #111: If you stand back for our next question.

Speaker Change #111: We have a follow up from the line of Michael Zielinski with BMO. Your line is open.

Operator: Thanks. Are you guys considering making any changes to your reinsurance program, you know, as it comes up for renewal this year? I think you saw what was outlined in the K with the agri program, and then our cat tower program is up for renewal in June, and we're working on that right now actually. Two of our people are in London talking with our reinsurers.

Speaker Change #111: [laughter].

Michael Zaremski: Oh great.

Michael Zaremski: Just a quick follow up.

Sure sure I heard you say I think is the first time, you said that you feel that the recent.

Michael Zaremski: Florida Legislative reforms are actually.

Michael Zaremski: A positive.

You gave some context around it but just curious.

Michael Zaremski: Are the reforms are meaningful enough that it might cause you to change your derisking strategy and the state of Florida, which has been I think more.

Elyse Greenspan: We feel like we'll have some positive results come the June renewal. Yeah, so we don't have anything definitive to offer at least, but you can generally think of us targeting retention in the generally the same area. I can't guarantee it'll be exactly the same.

Michael Zaremski: Home insurance centric.

Michael Zaremski: No I think I think what it what it allows me to think about being able to continue to grow there and not and not have so much litigation that puts pressure on the rest of the book.

Tricia Griffith: We have, as we've de-risked the property portfolio, been enjoying decreasing PMLs, so you know that helps us on at the top of the tower because we might not have to buy as much, but generally speaking, you can think of the focus and the structure of the CAP program at June 1 are very similar to what we have today. Okay, thank you. Thank you. Please stand by for our next question. We have a follow-up from the line of Michael Zaremski with BMO. Your line is open.

Michael Zaremski: Still had when we think about the Derisking of the Florida property book, you know half those were where rental properties Costar properties. Those are things that I felt like we should have derisked anyway, regardless. So I think you would do that anyway, and I wouldn't I wouldn't go back from that I mean, I think I think the reforms will be good overall, just for the structure and of course I am.

Michael Zaremski: I don't want to get out ahead of my skis I want to kind of see how it pans out.

Pat Callahan: Oh, great. Just a quick follow up. Tricia, I heard you say, I think it's the first time you've said that you feel the recent Florida legislative reforms are actually positive. You know, you gave some context around it, but just curious, are the reforms meaningful enough that they might cause you to change your de-risking strategy in the state of Florida, which has been, I think, more home insurance centric? I think what it allows me to think about is being able to continue to grow there and not have so much litigation that puts pressure on the rest of the book. We still had, when we think about the de-risking of the Florida property book, half of those were rental properties, coastal properties. Those are things that I feel like we should have de-risked anyway, regardless. I think you would do that anyway, and I wouldn't go back from that. I think the reforms will be good overall, just for the structure. And, of course, again, I don't want to get out of the head of my skis.

Michael Zaremski: But oh, yes, I think that's what I would say so we're seeing we're seeing some small data science that we believe is good again I want to I want to give it some time I want to Derisk. The book and right now we're open for business really in Florida with new construction.

Michael Zaremski: So not that.

Speaker Change #112: Thank you.

Speaker Change #113: Thank you.

Speaker Change #114: Please standby for our next question.

Speaker Change #114: We have a follow up from Milan of David Mcmahon with Evercore. Your line is open.

Milan: Hi, Thanks for taking the follow up.

Milan: Just had a question on the 19 points of personal auto rate that you guys got last year, how much of that is still.

Milan: Yet to earn in.

Speaker Change #116: How much of that Pat I think.

David Mcmahon: So at this point I think we've probably got I don't know eight to nine points that are still learning and I'd have to look at the table for details, but we got some big rate increases later in the year that will still earn in because we've got every six months and then 12 months policy renewals.

Tricia Griffith: I want to kind of see how it pans out, but yeah, I think that's what I would say. We're seeing some small data signs that we believe it's good. Again, I want to give it some time.

Speaker Change #117: Got it understood.

Speaker Change #117: And then just on the ambient shopping levels have you guys seen any changes.

Speaker Change #117: In ambient shopping over the last several months.

Speaker Change #118: Yes, we've seen we've seen the increased ambient shopping and so we'll watch and see if that continues and I think when I think when some of our competitors and get their rate and assistant like like Patrick said it depends on the competitor because some have.

Operator: I want to de-risk the book, and right now, we're really open for business in Florida with new construction on homes, and that's it. Thank you. Please stand by for our next question. We have a follow-up from the line of David Motemaden with Ebicor. Your line is open.

Speaker Change #118: Six month policies. Many have 12 month policies, which obviously takes a lot a lot more time to earn and I'm sure, we'll see that diminish but that's when we have all the other levers that we have for our growth.

Michael Zaremski: Hi, thanks for taking the follow up. Just had a question on the 19 points of personal auto rate that you guys got last year. How much of that is still yet to earn on?

Speaker Change #119: Thank you.

Speaker Change #119: Okay.

Speaker Change #120: Please standby for our next question.

Speaker Change #120: Let's wrap up after this.

Pat Callahan: At this point, I think we've probably got, I don't know, eight to nine points that are still earning in. I'd have to look at the table for details, but we've got some big rate increases later in the year that will still earn in because we've got, obviously, six-month and then 12-month policy renewals. Got it, understood. And then just on the ambient shopping levels, have you guys seen any changes in ambient shopping over the last several months? We've seen an increase in ambient shopping, and so we'll watch and see if that continues. I think when some of our competitors get their rates in the system, like Pat just said, it depends on the competitor, because some have six-month policies; many have 12-month policies, which obviously take a lot more time to earn.

Our final question comes from the line of Michael Ward with Citi. Your line is open.

Speaker Change #120: <unk>.

Speaker Change #120: Thanks.

Michael Zaremski: Was just wondering the claims specialist in property.

Michael Zaremski: Is that the increase in that number is that part of the customer value prop or is it something else.

Michael Zaremski: I'm not clear on your question.

Michael Zaremski: The property claims specialist account.

Michael Zaremski: Increased.

And the 10-K, we noticed a pretty.

Michael Zaremski: Claims is that.

Michael Zaremski: The growth.

Michael Zaremski: The head count growth.

Michael Zaremski: Yes.

Speaker Change #121: Yeah. So we are we are growing our ability to handle our own claims internally historically, especially when we first bought ASI. The majority of the claims that we handled worth or through independent adjusters and while we still use a lot of independent adjusters for our appraisals. We wanted to have that talent in house. So that is the increase sorry I.

Tricia Griffith: I'm sure we'll see that diminish, but that's when we have all the other leverage that we have for our growth. Thank you. Please stand by for our next question, after the break. Our final question comes from the line of Michael Ward with Citi. Your line is open.

Speaker Change #121: Did I understand your question to begin with but yes that that increase is just for us to have that talent and understanding as we grow our property book.

Operator: Last but not least, thanks. I was just wondering whether the claims specialists in property are an increase in that number, is that part of the, you know, customer value proposition, or is it something else? I'm not clear on your question, but the property claims specialist count increased. In the 10K, we know this for the headcount growth. Yeah, so we are growing our ability to handle our own claims internally. Historically, especially when we first bought ASI, the majority of the claims that we handled were through independent adjusters. And while we still use a lot of independent adjusters for our appraisals, we wanted to have that talent in-house.

Speaker Change #122: Awesome. Thank you. Thank you.

Speaker Change #123: Thank you.

I would now like to turn the call back over to Doug.

Doug: That appears to be our final questions. So that concludes our event in Toronto had impact over to you for the closing scripts. Thank you Lee.

Speaker Change #125: Ladies and gentlemen that concludes the progressive Corporation's fourth quarter Investor event.

Doug: Information about a replay of the event will be available on the Investor Relations section of <unk>.

Speaker Change #126: Its website for the next year.

Speaker Change #127: And gentlemen, you may now disconnect everyone have a wonderful day.

Speaker Change #127: Yes.

Speaker Change #127: Yeah.

Speaker Change #127: Okay.

Speaker Change #127: [music].

Speaker Change #127: Okay.

Speaker Change #127: Okay.

Speaker Change #127: [music].

Michael Zaremski: So that is the increase. Sorry, I didn't understand your question to begin with. But yeah, that increase is just for us to have that talent and understanding as we grow our property books.

Tricia Griffith: Thank you. I would now like to turn the call back over to Doug. Thank you. Ladies and gentlemen, that concludes the Progressive Corporation's fourth 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.

Speaker Change #127: Yes.

Speaker Change #127: [music].

Speaker Change #127: [music].

Doug: Ladies and gentlemen, you may now disconnect. Everyone have a wonderful day. ??? ??? ??? ??? ??? ??? ??? ???

Speaker Change #127: Okay.

Speaker Change #127: Hmm.

Speaker Change #127: [music].