Q1 2024 The Progressive Corp Earnings Call

No.

Okay.

[music].

Good morning, and thank you for joining us today for Progressive first quarter Investor event, I'm, Doug Johnston Senior director of Investor Relations and I will be moderator for today's event the.

Douglas S. Constantine: Good morning, and thank you for joining us today for Progressive's first 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 comments related to its results in addition to those provided in its annual report on Form 10-K, quarterly reports on Form 10-Q, and a letter to shareholders, which have been posted to the company's website.

Douglas S. Constantine: The company will not make detailed comments related to its results. In addition to those provided in its annual report on Form 10-K quarterly reports on Form 10-Q, and the letter to shareholders, which have been posted to the company's website.

Douglas S. Constantine: Although our quarterly investor relations events often include a presentation on a specific portion of our business, we will instead use the 60 minutes scheduled for today's event for introductory comments by our CEO and a question and answer session with members of our leadership team. The introductory comments by our CEO were previously recorded. Upon completion of the previously recorded remarks, we will use the balance of the 60-minute schedule for this event for live questions and answers with members of our leadership team.

Douglas S. Constantine: Although our quarterly Investor relations events often include a presentation at a specific portion of our business. We will instead use the 60 minutes scheduled for today's event for introductory comments by our CEO and our question and answer session with members of our leadership team.

Douglas S. Constantine: Introductory comments by our CEO or previously recorded.

Douglas S. Constantine: Upon completion of the previously recorded remarks, we use the balance of the 60 minutes scheduled for this event and for live questions and answers with members of our leadership team 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 or results to differ materially from those <unk>.

Douglas S. Constantine: As always, discussions of 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, as supplemented by our Form 10-Q for the first quarter of 2024, where you'll 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 via the investor relations section of our website at investors.progressive.com. To begin today, I'm pleased to introduce our CEO, Tricia Griffith, who will kick us off with some introductory comments.

Douglas S. Constantine: 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 as supplemented by our Form 10-Q for the first quarter of 2024, where you will find discussions of the risk factors affecting our businesses safe Harbor statements related to forward looking statements.

Douglas S. Constantine: Other discussions of the challenges we face. These documents can be found via the Investor Relations section of our website at investors Progressive Dot com.

Douglas S. Constantine: To begin today I am pleased to introduce our CEO, Tricia Griffith, who will kick us off with some introductory comments trisha.

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

Tricia Griffith: Good morning, and thank you for joining us today. In many ways, this first quarter has felt like we have turned a page. Since mid 2021, inflationary pressure and its subsequent effect on our profit margin have been a predominant factor in our strategic decision making. Even in the second half of 2023, when we started to see indications that severity trends were stabilizing, more rates were earning in, and accident year loss ratios approached our targets, we continued to flex in order to deliver on our calendar year 96 combined ratio goal.

Tricia Griffith: In many ways. This first quarter has felt like we've turned the page.

Tricia Griffith: Since mid 2021 inflationary pressure and its subsequent effect on our profit margin has been the predominant factor in our strategic decision making.

Tricia Griffith: Even in the second half of 2023, when we started to see indications that severity trends are stabilizing more rate was earning in accident year loss ratios approached our targets. We continue to flex in order to deliver on our calendar year 96 combined ratio goal.

Tricia Griffith: In our August Investor Relations call I was asked if we should put aside our 96 target and instead capitalize on the perceived growth opportunity at the time.

Tricia Griffith: In our August investor relations call, I was asked if we should put aside our 96 target and instead capitalize on the perceived growth opportunity of the time. In my answer, I cited our core values and the belief that our strategy to put profit before growth would prove to be a winning formula. As we look back on the second half of 2023 and the stellar results of the first quarter of 2024, we feel stronger than ever that sticking to the core values that have served us well for so long was absolutely the right call.

Tricia Griffith: And my answer I cited our core values and our belief that our strategy to put profit before gross would prove to be a winning formula.

Tricia Griffith: As we look back to the second half of 2023 and the stellar results of the first quarter 2024, we.

Tricia Griffith: We feel stronger than ever the sticking to the core values that have served us well for so long was absolutely the right call by adhering to who we are it looks like we have turned that page and we're now seeing the benefits of the tough decisions and hard work over the last several years since inflation took off.

Tricia Griffith: By adhering to who we are, it looks like we have turned that page, and we're now seeing the benefits of the tough decisions and hard work over the last several years since inflation took off. Our first quarter of 2024 has really set the stage for us to capitalize on both growth and profitability. During the quarter, net premiums written grew 18%, and we produced a solid combined ratio of 86.1.

Tricia Griffith: First quarter of 2024 has really set the stage for us to capitalize on both growth and profitability.

Tricia Griffith: During the quarter net premiums written grew 18% and we produced a solid combined ratio of $86 one.

Tricia Griffith: Our profitability was made possible from rates continuing to earn from the rate revisions we took in the last year, seasonably favorable frequency, making changes in our book from the non-rate actions we implemented over the last two years, continued improvements in segmentation, and less prior year loss reserve development, among other factors. In personal auto, our calendar year margins mean we've been able to shift more focus into growth, with incredible results. In the first quarter, we added over 900,000 policies in force, one of the best quarters in our history and second only to the first quarter of 2023.

Tricia Griffith: Our profitability was made possible from rate continuing to earn in from the rate revisions, we tuck in the last year.

Tricia Griffith: Billy favorable frequency.

Tricia Griffith: Mix changes in our book from the non rate actions, we implemented over the last two years continued improvements in segmentation and less prior year loss reserve development among other factors.

Tricia Griffith: We did this on the back of strong retention on our renewals and new application growth that is ramping up as we increase our media spend and pull back on some of our non-rate actions. During the first quarter, media spend was down 7% versus the first quarter, 2023, and new auto applications were down 9% compared to record growth in the first quarter last year. The year-over-year gap in both spend and sales declined as the quarter progressed.

Tricia Griffith: In personal auto are calendar year margins mean, we've been able to shift more focus undergrowth with incredible resolve.

Tricia Griffith: In the first quarter, we added over 900000 policies in force one of the best quarters in our history and second only to the first quarter of 2023. We did this on the back of strong retention on our renewals and new application growth that is ramping up as we increase our media spend and pull back on some of our non rate actions.

Tricia Griffith: During the first quarter media spend was down 7% versus the first quarter 2023.

Tricia Griffith: New auto applications were down 9% compared to record growth in the first quarter of last year the year over year gap in both spend and sales declined as the quarter progressed when comparing March 2024 to March 2023 AD spend was up a new auto applications were nearly flat.

Tricia Griffith: When comparing March 2024 to March 2023, ad spend was up, and new auto applications were nearly flat. We continue to see opportunity for growth as the market is still very tight. We have non-rate actions we are unwinding, and we still have a few states where we are working to get rate revisions approved. As we look forward to the rest of 2024, we will continue to seek to strike the right balance between efficient marketing spend, our calendar year profit targets, and maximizing our growth.

Tricia Griffith: We continue to see opportunity for growth as the market is still very tight.

Tricia Griffith: We have non rate actions, we are unwinding and still have a few states, where we are working to get rate revisions approved.

Tricia Griffith: As we look forward to the rest of 2024, we will continue to seek to strike the right balance between efficient marketing spend are calendar year profit targets and maximizing our growth in commercial lines. The first quarter saw better results as compared to 2023.

Tricia Griffith: In commercial lines, the first quarter saw better results as compared to 2023. Our core commercial business continues to run well with almost 10 points of rate still to earn from revisions in 2023 and 2024. As a reminder, 90% of our policies and commercial lines are on 12-month terms, so it takes much longer for rates to earn in as compared to personal auto.

Tricia Griffith: Our core commercial business continues to run well with almost 10 points of rate is still to earn in from revisions in 2023 and 2024.

Tricia Griffith: As a reminder, 90% of our policies in commercial lines are on 12 month term. So it takes much longer for rates to earn in as compared to personal auto.

Tricia Griffith: The trucking insurance market continues to be soft due to macroeconomic factors, and as a result, we are experiencing year-over-year declines in policies enforced in our four higher transportation and specialty business market targets, while our other three BMTs are growing year-over-year from both a unit and a premium perspective. In property, we continue to execute on our strategy to reduce our exposure to catastrophe-prone states, grow in states that have less volatile weather profiles, and improve the underwriting and segmentation of our products.

Tricia Griffith: The trucking insurance market continues to be soft due to macroeconomic factors and as a result, we are experiencing year over year decline in policies in force in our for hire transportation and specialty business market targets.

Tricia Griffith: Our other three bmt's are growing year over year from both a unit and premium perspective and property. We continue to execute on our strategy to reduce our exposure to catastrophe prone states grow in states that have less volatile weather profiles and improve the underwriting and segmentation of our products policies enforced.

Tricia Griffith: Policies in force in volatile states decreased about 5% year-over-year in the first quarter of 2024 and grew about 20% in the non-volatile states. We now have five states on our 5.0 product model, which improves segmentation throughout the product.

Tricia Griffith: In volatile states decreased about 5% year over year in the first quarter 2024 and grew about 20% in the non volatile state.

Tricia Griffith: We now have five states on our <unk> product model, which improves the segmentation throughout the product.

Douglas S. Constantine: While results are unpredictable, we shouldn't look too deeply into the results of a single quarter. As the uncertainty of the last several years has shown us, it's difficult to predict where the future is heading. Given what we know now, however, we're encouraged about the future. Inflationary Trends are Showing Indications of Stabilization. And we believe we're well positioned to capitalize on a marketplace that is still reeling from the profit challenges of the last two years.

Tricia Griffith: While results are unpredictable, we shouldn't look too deeply into the results of a single quarter as the uncertainty of the last several years has shown us is difficult to predict where the future is heading.

Douglas S. Constantine: Given what we know now however, we are encouraged about the future.

Douglas S. Constantine: Inflationary trends are showing indications of stabilizing and we believe we're well positioned to capitalize on a marketplace that is still reeling from the profit challenges of the last two years.

Douglas S. Constantine: It's comforting to be able to report that we're pivoting to a more normalized operation where, in most states, we can take small bites of the apple when it comes to rates and can focus on growth and increasing our market share. While challenges undoubtedly lay ahead. We're confident in where we stand today and look forward to maximizing our potential in the future. Thank you again for joining us, and I'll now take your questions.

Douglas S. Constantine: It's comforting to be able to report that we're pivoting to a more normalized operation where in most states. We can take small bites of the Apple when it comes to rate and can focus on growth and increasing our market share.

Douglas S. Constantine: While challenges undoubtedly lay ahead.

Douglas S. Constantine: We're confident in where we stand today and look forward to maximizing our potential in the future.

Speaker Change: Thank you again for joining us and I'll now take your questions.

Douglas S. Constantine: This.

Douglas S. Constantine: This concludes the previously recorded portion of today's event. We now have members of our management team available live to answer questions. Questions can only be submitted over the phone by pressing star 1 on your keypad. In order to get to as many questions as possible, please limit yourself to one question and one follow-up. We also ask that you use restraint in re-entering the queue to ask additional questions. We will now take our first question.

Speaker Change: <unk>. The previously recorded portion of todays event, we now have members of our management team available lives to answer questions questions can be only submitted over the phone by progressive by pressing star one on your keypad.

Douglas S. Constantine: To get to as many questions as possible. Please limit yourself to one question and one follow up we also ask that you use your strained re entering the queue to ask additional questions.

Speaker Change: We will now take our first question.

Douglas S. Constantine: The first question comes from the line of Bob <unk> with Morgan Stanley. Please proceed.

Operator: The first question comes from the line of Bob Hong with Morgan Stanley. Please proceed.

Unknown Executive: Good morning. My first question is regarding retention. On your 10Q, you talked about improved retention both in personalized and property business. Given that you're unlikely to be the only company that is positioned for growth as we head into 2024, I'd be curious about your view on retention going forward in terms of the broader market competitive dynamics. Do you see people potentially coming in and challenging your market share position just going forward, and then, broadly speaking, just retention in general?

Unknown Executive: Good morning first question is regarding our retention.

Unknown Executive: Your 10-Q, you talked about improved retention both in personal lines, our property business given that you're unlikely to be the only company that is positioned for growth as we head into 2024 curious to your view on retention going forward in terms of the broader market competitive dynamics do you see people.

Unknown Executive: Potentially coming in challenger your market share position.

Unknown Executive: Going forward and then broadly speaking just retention in general.

Speaker Change: Yeah, Bob I think you know our retention is sort of our holding grill and we still continue to feel good about our trailing 12 or three months is flat we're going to focus now like we said like I just said in the opening comments on having more stable race, because that's really what consumers want so.

Tricia Griffith: Yeah, Bob, I think, you know, retention is sort of our holy grail, and we continue to feel good about our trailing 12.

Tricia Griffith: Where do they go to shop, if they if the rate is better than either option is to leave we've got to make sure. We have competitive rates. So as we think about growth. We don't just think about new business. We think about renewal business, we think about our service.

Tricia Griffith: Our three months are flat, and we're going to focus now, like we said, like I just said, in the opening comments on having more stable rates, because that's really what consumers want. So when they go to shop, you know, if the rate is better than theirs, their option is to leave. We've got to make sure we have competitive rates. So as we think about growth, we don't just think about new business, we think about renewal business, we think about our service, and growing pets, the units of both new and renewal. So we'll continue to focus on that focus on having more stable rates and continuing to be ahead of the competition.

Tricia Griffith: And growing pest units in both new and renewal. So we will continue to focus on that focus on having more stable rates and continuing to be ahead of the competition.

Tricia Griffith: Okay, thank you. My follow-up question is on your distribution channel, and this is a little bit more hypothetical. Your direct channel obviously has a little bit less of an underwriting margin versus your agency. As you continue to push for growth going forward, is it fair to assume that that's going to have somewhat of a headwind challenge to your overall combined ratio, given your direct channel continues to be sort of a focus on the growth side?

Speaker Change: Okay. Thank you my follow up is on the.

Tricia Griffith: Distribution channel and this is a little bit more hypothetical.

Tricia Griffith: Your direct channel, obviously have a little bit less of underwriting margin versus your agency.

Tricia Griffith: As you continue to push for growth going forward.

Tricia Griffith: Is it is it fair to assume that that's going to have somewhat of a headwind challenge to your overall combined ratio given your direct channel continue to be a sort of a focus on the growth side should we expect our current underwriting margin to normalize a bit with the combination of.

Tricia Griffith: Should we expect our current underwriting margin to normalize a bit with the combination of focus on growth, your distribution channel mix, and things of that nature for the personal auto business? Yeah, we're going to focus on growth in both channels.

Tricia Griffith: Focus on growth that your distribution channel mix.

Tricia Griffith: Things of that nature for the personal lines personal auto.

Speaker Change: Yeah, we're going to focus on growth in both channels and of course Youll see the trend in the expense ratio specifically on the direct side as we start to increase media. If you look if you look at January was around $15 February was 17 and a half.

Tricia Griffith: Yeah, we're going to focus on growth in both channels. But, of course, you'll see the trend in the expense rates, specifically on the direct side, as we start to increase media. If you look, January was around 15 points, February was 17 and a half, March was in the 18 area. That was our I was putting more and more pressure as the quarter developed on the media spend.

Tricia Griffith: Because in the Asian area that was I was putting more and more pressure as the quarter developed on the media spend now when we look at expenses, we look at non acquisition expense ratios and then as much as we can spend in media as long. It is sufficient so when we look at overall combined ratios, we're going to look at obviously at the type of <unk>.

Michael David Zaremski: Now, when we look at expenses, we look at non-acquisition expense ratios, and then as much as we can spend on media as long as it's efficient. So when we look at overall combined ratios, we're going to look at, obviously, the type of business we're bringing on; we have a preference to bring on bundled business. And we believe we have the best segmentation model in the industry, so that's a big part of it understanding rate to risk.

Michael David Zaremski: For bringing on we have a preference to bring on bundled business.

Michael David Zaremski: And we believe we have the best segmentation model in the industry. So that's a big part of that understanding right to risk. So all of those flow together, but we're excited and really thrilled to be able to.

Michael David Zaremski: So all those flow together, but we're excited and really thrilled to be able to continue to continue with our growth method because even in the last two years, with all the headwinds and all the uncertainty, we've still been able to grow, but to be able to grow at these margins is really exciting.

Michael David Zaremski: Continue continuing our growth and that's because even in the last few years with all the headwinds that all of the uncertainty we've still been able to crawl and then to be able to grow at these margins is really exciting.

Speaker Change: Great. Thank you very much.

Speaker Change: Thank you.

Michael David Zaremski: The next question comes from the line of Michaels, our mesquite with BMO. Please proceed.

Operator: The next question comes from the line of Michael Zaremski with BMO. Please proceed.

Operator: Okay.

Michael David Zaremski: Hey, thanks. Good morning. Question on personal auto.

Michael David Zaremski: Hey, Thanks, good morning.

Michael David Zaremski: Question on personal auto.

Tricia Griffith: Historically, not every year, but historically, a disproportionate amount of progressive organic growth sales have come in the kind of January through April time frame. You know, given the current dynamics, do you feel that that's the right type of seasonality we should be thinking about? And if not, you know, what factors should we be thinking about?

Michael David Zaremski: Historically, not every year, but historically.

Tricia Griffith: A disproportionate amount of progressives organic growth sales have come in the kind of the January through April timeframe, given the current dynamics do you feel that that's the right type of seasonality, we should be thinking about or and if not what.

Tricia Griffith: What factors should be thinking about.

Tricia Griffith: Okay.

Speaker Change: Yeah, I think a lot of that comes from tax refunds and other things that happen in a yearly basis I wouldn't necessarily think about that this year, though because even last year. When we were growing we were actually trying to kind of stop a little bit because of the pressures on our margin I I feel.

Tricia Griffith: Yeah, I think a lot of that comes from tax refunds and other things that happen on a yearly basis. I wouldn't necessarily think about that this year, though, because even last year we were growing, but we were actually trying to kind of stop a little bit because of the pressures on our margin. I feel very bullish about our continued growth on both a premium basis and a unit basis, and the unit is our preferred measure of growth.

Tricia Griffith: Very bullish about our continued growth on both and premium basis a unit basis.

Tricia Griffith: And you know that is our preferred measure of growth so.

Tricia Griffith: It's all going to be about our ability to do a couple of things we want to continue to roll back our non rate actions. So there's no. We still have more levers there we have the premium earn in and we believe that we're not gonna have to at least at this juncture take the wide swath of premium that we had to take it to our our target market our target Mark.

Tricia Griffith: So it's all going to be about our ability to do a couple things. We want to continue to roll back our non-rate actions so that we still have more leverage there. We have the premium earnings in, and we believe that we're not going to have to, at least at this juncture, take the wide swaths of premium that we had to to get to our target margin and then our media spend to be able to have those margins. We're about 10 points better than our target 96.

Tricia Griffith: And then.

Tricia Griffith: And then our media spend to be able to have those margins were about 10 points better than our target 96. So we have a lot of levers to pull to be able to really maximize growth you'll notice I said. This in my letter in my opening statements in several times throughout the 10-Q, when we talked about it is we were right.

Michael David Zaremski: So we have a lot of levers to pull to be able to really maximize growth. You'll notice I said this in my letter, in my opening statements, and several times throughout the 10Q, and we talked about it as we were writing the management discussion analysis about whether maximize growth was the right word versus optimize. And I felt maximize was absolutely the right word to use because that's exactly what we're going to do.

Michael David Zaremski: The management discussion and analysis about is maximize growth the right word versus optimized and I felt maximized was absolutely the right word to use because that's exactly what we're going to do.

Speaker Change: Okay. Thank you my follow up.

Michael David Zaremski: Thank you. My follow-up, I know we've touched on this a bit even today and in past letters, but I just want to confirm that if we look at the expense ratio, excluding advertising expense, you know, in 1Q of this year, it's about 14.1, which is a little bit lower than full year levels. And so, you know, maybe 1Q might not make a trend, but the LE ratio of 2 and 23, you know, down a little bit versus the previous couple of years' levels. Just wanted to confirm whether this is kind of a structural kind of efficiency run rate, or is there some kind of cyclicality in here that could bounce those figures around?

Michael David Zaremski: I know it's tough.

Michael David Zaremski: And that's a bit.

Michael David Zaremski: Even today and in past letters, but if I.

Speaker Change: Just want to confirm Sophie look at the expense ratio excluding ad expense.

Michael David Zaremski: And <unk> of this year.

Michael David Zaremski: 14, one which is a little bit lower than all your levels and the so maybe one quarter it might not make a trend, but the LAE ratio two and 'twenty three down a little bit versus the previous couple of years levels. Just just wanted to confirm whether this is kind of a structural kind of efficiency.

Michael David Zaremski: Run rate or is there kind of cyclicality in here.

Michael David Zaremski: That could bounce those those figures around.

Speaker Change: I mean in figures can bounce around depending on what's happening clearly, where we're going to want to spend more in in March that was on an absolute basis. The highest amount we've ever spent in media and so we're going to spend more on that as long as it is sufficient I think you want to look at the whole spectrum of what makes up the combined ratio.

Tricia Griffith: I mean, the figures can bounce around depending on what's happening. Clearly, we're going to want to spend more, and in March, that was, on an absolute basis, the highest amount we've ever spent on media, and so we're going to spend more on that as long as it's efficient. I think you want to look at the whole spectrum of what makes up the combined ratio, so we're constantly investing to push down both loss adjustment expense and non-acquisition expense, figuring out ways with technology, with people, with processes to reduce those expenses because we can give those back at competitive prices, and that's really important.

Tricia Griffith: So we're constantly investing to push down both a loss adjustment expense and non acquisition expense figuring out ways with technology with people with processes to reduce those expenses because we can give those back in competitive prices and that's really important but remember anywhere between 70 to 75.

Tricia Griffith: But remember, anywhere between 70 to 75 cents of every dollar that goes out goes to LAE and loss, so that segmentation piece is really important, understanding our rate to risk, and I mentioned this in the first question, and I don't think I talk about We started in 2014, really ramped up in 2015 and 2016, so think of it as we put a couple models out there, no state is ever more than a couple miles behind, and we're That takes a lot of investment, so sometimes you can see the expense ratio peak up with that, but those things are built in over decades, and I talked about the product models, but I don't probably give that enough attention because our R&D groups and our product groups are phenomenal.

Tricia Griffith: So every dollar that goes out because it goes out in L. A and loss so that that segmentation piece is really important to understanding our rates a risk and I mentioned this in the first question and I think I don't think I talk about this enough and you get little glimpses of it in my letters when I talk about our different product models.

Tricia Griffith: Be it on the private passenger auto side commercial lines and now property.

Tricia Griffith: It is really a special sauce and its not something that you build in a year or two in fact, we've been building. This for many decades, but about 10 years ago, We decided we needed to have continuous product models and so we continue to do those when we started in 2014 really ramped up in 2015 and 16.

Tricia Griffith: Think of it as you know we put a couple of models out there no state has ever more than a couple of miles behind it we're constantly improving that segmentation that takes a lot of investment. So sometimes you can see the expense ratio.

Tricia Griffith: Pick up with that but those things are built in over a decade.

Tricia Griffith: Yeah, I talked about the product models, but I don't probably give that enough highlight because our R&D groups and our product groups are are phenomenal, they're second to none and they never as they continue to understand segmentation rates are up and that's a lot of the money that goes into the combined ratio so while expense ratios.

Tricia Griffith: They're second to none. They never rest. They continue to understand segmentation, rate to risk, and that's a lot of the money that goes into the combined ratio, so while expense ratios kind of can come up and down depending on media spend, et cetera, and I don't, obviously, we're always trying to push them down, a lot of it is the identification, understanding accuracy, and having great segmentation.

Tricia Griffith: Kind of can come up and down depending on media spend et cetera, and I don't obviously, we're always trying to push them down a lot of it is the indemnification and understand the accuracy and having great segmentation models.

Tricia Griffith: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you.

Tricia Griffith: Okay.

Tricia Griffith: The next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed.

Elyse Beth Greenspan: The next question comes from the line of Elyse Greenspan with Wells Fargo; please proceed.

Elyse Beth Greenspan: Hi, Thanks, good morning.

Operator: Hi, thanks. Good morning.

Elyse Beth Greenspan: In your 10-Q, there was a comment about rate increases having an adverse impact on retention and then you guys highlighted that the three months PLE was slowed in the quarter.

Elyse Beth Greenspan: In your 10-Q, there was a comment about rate increases having an adverse impact on retention, and then you guys highlighted that the three-month PLE was slowed in the quarter. I'm just trying to reconcile that with, you know, your comments, Tricia, right, that rate increases are slowing in terms of both magnitude and frequency. So, any color that you could just help us tie that three-month PLE and impact comment about rate increases, you know, to your overall comments about the level of rate increases slowing?

Elyse Beth Greenspan: Im just trying to reconcile that with your comments Tricia right that rate increases are smelling.

Elyse Beth Greenspan: In terms of both magnitude and frequency. So any color that you could just help us tie that three months PLE and impact.

Elyse Beth Greenspan: Impact comment about wage rate increases.

Elyse Beth Greenspan: Does your overall comments just about the level of rate increases flowing.

Tricia Griffith: Yeah, Shirley I think at this juncture in its last year or so so many customers are getting their renewables in the rate increases that are playing through what caused you to shop. So we're always at risk losing customers when that happens we knew.

Elyse Beth Greenspan: That was a possibility last year as well when we were first to market and getting the rates that we needed on the street. So while we don't know exactly what the trailing two three we will continue to be and it's on a lagged basis. We'll obviously inform you on next quarter. That's really why we feel like we're in a much better position today, so small bites and take smaller increases just to stay ahead of trend.

Tricia Griffith: continue to be, and it's on a lagged basis; we'll obviously inform you next quarter. That's really why we feel like we're in a much better position to take those small bites and take smaller increases just to stay ahead of the trend.

Speaker Change: Thanks, and then my second question on <unk>.

Elyse Beth Greenspan: Thanks. And then my second question on the last, you know, quarterly call, when you guys were asked about advertising, you had pointed to it, you know, potentially being more even right for Q1 and the Q2 and Q3 than normal. It sounds like that's still the plan, given, you know, how positive you guys are about growth. But can you just give us a sense of how you expect the advertising spend cadence to be this year compared to last year?

Elyse Beth Greenspan: Last two.

Elyse Beth Greenspan: Quarter's call. When you guys were asked about advertising you had pointed to it potentially being more even write to the Q1 and the Q2 and Q3 than normal.

Elyse Beth Greenspan: It sounds like that's still the plan given how positive you guys are on growth, but can you just give us a sense of how you expect the advertising spend cadence to be this year.

Elyse Beth Greenspan: Compared to historical.

Speaker Change: Yeah, I'll start and kind of if you went that way and you can if there's anything to add.

Tricia Griffith: Yeah, I'll start. And Pat, if you want to weigh in, you can, if there's anything to add. You know, at this juncture with the margins that we have, we do want to use our spend levels to our advantage as long as it's efficient. So, like I said, we've got a lot of other levers we've pulled back on many non-rate actions that still have room to grow. And I think if we can spend efficiently in the states where we believe we're adequately priced, we're going to do that, you know, I don't want to say to the fullest capacity, but until we feel like it's inefficient to really leverage this opportunity to maximize growth. Pat, do you want to add anything? No, no; I think that's great. Thanks.

Speaker Change: At this juncture with the margins that we have we do want to use our spend levels to our advantage as long as it's sufficient so.

Pat: I said, we've got a lot of other levers we've pulled back on many non rate actions that still have room to run off to go on that.

Pat: And I think if we can spend efficiently in the states, where we believe we're adequately priced we're going to do that.

Pat: I want to say to the false capacity, but until we feel like it's inefficient to REO.

Tricia Griffith: Really leverage this opportunity to maximize on growth Pat do you want add anything no I think that's great. Thanks.

Pat: No, no; I think that's great. Thanks.

Pat: Yeah.

Speaker Change: Thank you.

Speaker Change: The next question comes from the line of Jimmy <unk> with Jpmorgan. Please proceed.

Operator: The next question comes from the line of Jimmy Hummer with JP Morgan. Please proceed. The next question comes from the line of Gregory Peters with Raymond James. Please proceed.

Operator: Dropped.

Operator: The next question comes from the line of Gregory Peterson Raymond James. Please proceed.

Speaker Change: Good morning, everyone.

Gregory Peters: Good morning, everyone. So I'd like to focus the first question on the customer relationship management organization that you called out in your letter. You know, it feels at times like it's almost impossible to get timely service in so many areas compared with what we were used to pre-COVID. And so I'm wondering if you could comment on the CRM piece and the challenges you're having with the growth you're reporting and finding people and making sure they're compensated appropriately.

Operator: So I'd like to.

Gregory Peters: The first question on the customer relationship management organization that you called out in your letter.

Gregory Peters: It feels at times like it's almost impossible to get timely service in so many areas compared with what we were used to pre COVID-19.

Gregory Peters: And so I'm wondering if you could comment on the CRM piece and the challenges you're having with the growth you're reporting and finding people and making sure they are compensated appropriately.

Speaker Change: That's a really great question and I should've brought that up when I when I think about the overall our goal is to grow as fast as we can which we've been doing 19 billion to <unk> nine are.

Gregory Peters: Comparing quarter over quarter and 7% of crowd.

Gregory Peters: But the caveat as always if we can support and serve our customers and the way they deserve to be support and that's the big caveat because there've been times in our history, where we've had to slow growth because of that so a few years ago. We found it I'm really challenging both from a recruiting and a retention in a compensation perspective in our CRM organization.

Tricia Griffith: A few years ago, we found it really challenging, both from a recruiting and retention and a compensation perspective in our CRM organization. We made some changes in compensation about two years ago. We've invested a lot in the work environment, in the digital capacity for our customers to be able to serve themselves should they want to, and we are seeing the fruits of that. Our phone handling times have been really great for both sales and service.

Tricia Griffith: We made some changes in compensation about two years ago.

Tricia Griffith: We've.

Tricia Griffith: <unk> invested a lot in the work environment and the digital capacity for our customers to be able to serve themselves do they want to and we are seeing the fruits of those investments through greater tenure and and better customer service now we are never at rest in terms of customer service. In fact, we're just we're.

Tricia Griffith: On a new customer commitment and we need to be you know frankly fanatical about customer service because those that can call in either they don't want to use our digital online services, which we believe are really best in class.

Tricia Griffith: So they really need somebody to talk to and they need someone to answer the phone ours or our phone handling times have been really great for both sales and service I feel I mean, the world of difference than two years ago. So I think we've done a great job staffing training and giving them the tools they need to help our customers in the way they deserve announced.

Tricia Griffith: I feel a world of difference than two years ago. I think we've done a great job staffing, training, and giving them the tools they need to help our customers in the way they deserve. That's one of the other reasons why I feel so positive about maximizing on our growth.

Tricia Griffith: The other reasons why I feel so positive about maximizing on our growth.

Tricia Griffith: Yeah.

Tricia Griffith: Maybe.

Tricia Griffith: Yeah.

Gregory Peters: Maybe In conjunction with that, my follow-up question would be one of the common areas that we're trying to figure out is how you're investing in technology, the generative AI, the large language models, et cetera. I don't know what you're going to be willing to share with us on that front, how much you're spending this year versus last year, or how you're deploying these tools to make your company more efficient, but any color on technology and the emerging options that you have available to you and how you're deploying them in your company would be interesting. Yeah, absolutely. So, you know, what I would say...

Speaker Change: In conjunction with that my follow up question would be one of the common areas that we're trying to figure out is how you are investing in technology. The generative AI the large language models et cetera.

Gregory Peters: So I don't know, what youre going to be willing to share with us on that front, whether what how much you're spending this year versus last year or how you're deploying these tools to make the company more efficient, but any color on technology and emerging.

Gregory Peters:

Gregory Peters: Options that you have available to you and how you're deploying that your company would be interesting.

Speaker Change: Yeah, absolutely. So what I would say is we have been investing well, let me step back.

Tricia Griffith: Yeah, absolutely. So, you know, what I would say is we have been investing in — well, let me step back. Peter Lewis used to say we are a technology company that happens to sell insurance. So everything we do has technology built into it. We have, I believe, again, a best-in-class IT organization. With that, we're always trying to stay ahead of the trends.

Tricia Griffith: Peter Lewis, who is to say we are a technology company that happens to sell insurance [laughter]. So everything we do has technology built into it and we have I believe again, a best in class I T organization with that we're always trying to stay ahead of the trends so think of being in the direct channel think of usage based insurance all those things even.

Tricia Griffith: So think of being in the direct channel, think of usage-based insurance, all those things, even though they have become, you know, actually a part of the product, they start with IT and our ability to have innovative technology. We started with machine learning and large language models probably over a decade ago, and we put a lot of those into place. So think of, like, we have a chat bot that can give you documents about having a human involved.

Tricia Griffith: Though there they become.

Tricia Griffith: Actually.

Tricia Griffith: Part of the product they start with IC and our ability to have innovative technology, we started it with.

Tricia Griffith: Our machine learning and large language models, probably over a decade ago. When we put a lot of that is in place. So think of like we had a we have a chat bot that can give you documents without having a human involved and we've continued on those and progressive dot com as he has a lot of machine learning to give you the best choice for what you need for coverage right now.

Tricia Griffith: We've continued on those, and on Progressive.com, we've used a lot of machine learning to give you the best choice for what you need for coverage. Right now, we have well over 100 different models in different formats. Some are tests, some are full bore, and some are thoughts, including many in generative AI.

Tricia Griffith: Well over 100 different models in different formats summer test summer or fall full bore and some of our thoughts including many in generative AI. We did an entire a several day session with our board of directors a few months ago on all that we're doing in AI and I got to tell you, it's pretty exciting and it's exciting because.

Tricia Griffith: We did an entire several-day session with our board of directors a few months ago on all that we're doing in AI, and I've got to tell you, it's pretty exciting. And it's exciting because of the efficiencies we're going to get. I can't go into a lot of the details, but we have some great models, and great tests that we're doing, and we believe it's going to be a game changer, really, in every single aspect of our company.

Tricia Griffith: The efficiency is we're gonna get I can't go into a lot of details.

Tricia Griffith: But we have some great models great.

Tricia Griffith: Tests that we're doing and we believe it's going to be a game changer really in every single aspect of our company. So think of recruiting thing because media and in fact, we've been board meeting this week and we're going to go over some AI testing media that have proven to be really successful.

Tricia Griffith: So think of recruiting, think of media, and in fact, we have a board meeting this week, and we're going to go over some AI tests in media that have proven to be really successful. We lean into that technology. Clearly, you always want to think about biases, and you want to have responsible AI, so we have a committee that oversees every test that we do to make sure that we're doing it responsibly.

Tricia Griffith: We lean into that technology, clearly you always want to think about biases and you want to have responsible AI. So we have a committee that overlooks every test that we do to make sure that we're doing it responsibly.

Tricia Griffith: But I think we're excited just like we have for the last nearly 90 years leaning into technology I'm using it some benefit really competitive prices, so that our customers calm and stay with us and we grow market share.

Tricia Griffith: But I think we're excited, just like we have for the last nearly 90 years, leaning into technology, using it to offer really competitive prices so that our customers come and stay with us, and we grow market share.

Speaker Change: Thank you for the answers.

Speaker Change: Thank you.

Speaker Change: Thank you.

Joshua David Shanker: The next question comes from the line of Josh Shanker with Bank of America. Please proceed.

Tricia Griffith: The next question comes from the line of Josh Shanker with Bank of America. Please proceed.

Joshua David Shanker: Yeah.

Joshua David Shanker: Yes. Thank you very much for taking my question.

Joshua David Shanker: Yeah, thank you very much for taking my question. Obviously, the subject of the quarterly letter was growth. And the company is successfully converting on that. But there are gating factors in terms of capital. And one of the areas where you're growing is in the Robinsons, and it looks like you're picking up more homeowner property exposure than you have in the past. Can you talk about your internal capital model and how much you can grow and the extent to which capital is a gating factor? Could you be 10-15% larger tomorrow and still have the capital to do that without earning it? Where does that stand, exactly?

Joshua David Shanker: The subject for the.

Joshua David Shanker: Quarterly letter was growth and.

Joshua David Shanker: The company has successfully converting on that but there are gating factors in terms of capital and one of the areas where you are growing is in the Robinson and it looks like you're picking up more homeowner property exposure. They have in the past can you talk about your internal capital model and how much you can grow.

Joshua David Shanker: To which capital is a gating factor.

Joshua David Shanker: Could you be 10, 15% larger tomorrow.

Joshua David Shanker: You will have the capital.

Joshua David Shanker: To do that without.

Joshua David Shanker: What about earning it where does that stand exactly.

Tricia Griffith: Yeah, I'll start, and John Sauerland, you can weigh in. Yeah, we are growing in Robinson's, but again, we want to grow across the board, so we'll continue that. Our property profile, as we talked about, we are growing in what we would call growth states or more non-volatile states as far as weather is concerned, and we're shrinking PIFs in the volatile states. So that's been a plan we put into place quite some time ago.

Speaker Change: Yeah, I'll start and then John Sorel and you can weigh in.

Tricia Griffith: We are growing in Robinson is but again, we want to grow across the board. So we'll continue that our property profile as we've talked about we are growing in what we would call growth states or more non volatile states as far as weather and we're shrinking pests in the volatile state. So that's been a plan we put into place.

Tricia Griffith: Quite some time ago allowed this takes time as I laid out last year and we're starting to see the over 100000 homeowners policies in Florida start to non renew that took a while because.

Tricia Griffith: A lot of this takes time. As I laid out last year, we're starting to see the over 100,000 homeowners policies in Florida start to non-renew. That took a while because we needed to notify the customers and talk with the DOI.

Tricia Griffith: We needed to notify the customers and talk with the DIY. So we believe that that our long term strategy has to be to have our portfolio of sort of across the country. So when you think about capital you have to have regulatory capital. So think of auto having a three to one.

Tricia Griffith: So we believe that our long-term strategy has to be to have our portfolio sort of across the country. So when you think about capital, you have to have regulatory capital. So think of an auto company having a three-to-one model. So you need to, if you write a billion dollars, you have to have $300 million in capital. And then we have contingent capital in case something unforeseen happens, a big storm, a financial crisis, and then we have capital even above that for that. And there's even more for homes because it's more of a volatile product.

Tricia Griffith: Our models. So you need to see if you write $1 billion you have to have $300 million in capital and then we have contingent capital in case, something unforeseen happens big storm.

Tricia Griffith: Crisis, and then we have capital even above that for that and then theres, even more for home because it's more of a volatile.

Tricia Griffith: Product.

Speaker Change: I'd say right now we are in an incredibly comfortable capital position, which is another reason why I'm. So excited about this growth do you want add anything sure yeah, we are growing robinsons.

John Peter Sauerland: Sure, yeah, we are growing Robinson's more than other segments right now, and some of that requires our own home product; some of it doesn't. So in the Direct Channel, we sell a number of other competitors' home products.

John Peter Sauerland: More than other segments right now.

John Peter Sauerland: Some of that requires our own home products some of it doesn't and so on the direct channel we saw a number of other competitors home products.

John Peter Sauerland: But for our own home product, as Tricia mentioned, we're growing a lot in non-volatile states and shrinking in volatile states. And when we look at our PMLs, so our Probable Maximum Losses, that's actually come down as a result of our shift. We also recently wrapped up our June 1 reinsurance renewals, and we are very comfortable with the risk we're taking there and actually got slightly more competitive rates. So we feel great about that portion of our risk management program.

John Peter Sauerland: For our own home products as Tricia mentioned, we're growing a lot in nonvolatile stays shrinking actually in volatile states.

John Peter Sauerland: We look at our P&L, so our probable maximum losses.

John Peter Sauerland: Actually come down as a result of our shift we also recently wrapped up our June one reinsurance renewals.

John Peter Sauerland: We are very comfortable with the risk we're taking there.

John Peter Sauerland: Dan.

John Peter Sauerland: Actually got slightly more competitive rates. So we feel great about that portion of our risk management program and as Tricia noted we have we're generating ample capital right now we're growing a lot certainly.

John Peter Sauerland: And as Tricia noted, we're generating ample capital right now. We're growing a lot, certainly, at $2.9 billion year-over-year in the first quarter, and of course, that requires significant, probably around a billion dollars, regulatory capital. But we are generating that with underwriting margins and, to some degree, as well, year-to-date on investment returns. So we feel very comfortable with our capital level and our ability to grow as fast as we can, again hitting those margins.

John Peter Sauerland: $2 9 billion a year.

John Peter Sauerland: Every year in the first quarter and of course that requires.

John Peter Sauerland: Significant inbound at probably around 1 billion regulatory capital.

John Peter Sauerland: We are generating that with underwriting margins and to some degree as well year to date.

John Peter Sauerland: The investment return, so we feel very comfortable with our capital levels and our ability to grow.

John Peter Sauerland: First as we can again hitting those margins.

Speaker Change: Thank you for all the detail and one quick question.

Joshua David Shanker: Thank you for all the detail. And one quick question. With the Florida policies that you're non-renewing to the loggerhead company, is that going to be significant enough that we should expect your attritional loss ratios to be higher at the end of this year? Although when the added benefit of lower capacity volatility is added, they'll be lower, but on an attritional basis, will they rise?

Joshua David Shanker: The Florida policies that your non renewing the loggerhead company.

Joshua David Shanker: Is that going to be significant enough that we should expect your attritional loss ratios to be higher at the end of this year, although wouldn't be as the benefit of lower catastrophe volatility is added there'll be lower but Rhode Island peripheral business will be right.

Speaker Change: I I couldn't cause I mean, a lot obviously in the first things first we wanted to get off some.

Tricia Griffith: I couldn't really answer that. I mean, a lot, obviously, the first thing's first, we wanted to get off some, some, uh... In addition to a couple of other states, which makes sense because ASI, now Progressive Home, was based there and kind of grew in that area.

Tricia Griffith: Some units that we believe will not be profitable.

Tricia Griffith: And a lot of it of course from a loss perspective depends on weather, which is really bad.

Tricia Griffith: The clincher for the last several years and so that's why we're trying to make sure that we're just more balanced.

Tricia Griffith: Still very large in Florida, because we have a large auto base and.

Tricia Griffith: We believe that we can win in Florida on both the home and auto and especially bundles, but we just need it and we were just a little bit you have are there. In addition to a couple of other states, which makes sense because ASI now progressive home with base, there and kind of grew in that area, but it's hard to it's hard to think about loss ratios when I don't have sort of a.

Joshua David Shanker: But it's hard to think about loss ratios when I don't have sort of the crystal ball of what will happen with weather. Thank you very much.

Joshua David Shanker: Our crystal ball of what will happen with weather.

Joshua David Shanker: Thank you very much for all the details.

Speaker Change: Thank you very much for all the detail.

Joshua David Shanker: Thanks.

Speaker Change: Thank you.

Joshua David Shanker: The next question comes from the line of Michael Phillips with Oppenheimer. Please proceed.

Michael Wayne Phillips: The next question comes from the line of Michael Phillips with Oppenheimer. Please proceed.

Michael Wayne Phillips: Thanks, Good morning speaking to Florida, you mentioned, some favorable frequency trends in the state in your auto book because of tort reform can you share any thoughts of what you're seeing on the property side because of that.

Operator: Thanks. Good morning. Speaking of Florida, you mentioned some favorable frequency trends.

Michael Wayne Phillips: Transcripts by Transcription Outsourcing, LLC.

Tricia Griffith: Can you share any thoughts of what you've seen on the property side because of that?

Pat: Uh, on the property side. Uh, no, we haven't seen much. Those are mostly, uh, on the auto side, the tour reform. There's a little bit on the property. Have you seen much, Pat? It's too early to tell.

Michael Wayne Phillips: Property side.

Michael Wayne Phillips: No we haven't seen much those were mostly on the auto side, the tort reform, there's a little bit on the property have you seen much that it's too early to tell on the property side right. We've got different statute of limitations, we've got different kind of assignment of benefits that will play through the book over time.

Pat: It's too early to tell on the property side, right? We've got different statutes of limitations. We've got different kinds of assignment of benefits that we'll play through the book over time, but not as immediate as we're seeing on the auto book.

Pat: Not as immediate as we're seeing on the auto book.

Pat: Okay. Thanks, and then you mentioned the policy life expectancy has been improving month after month to month I guess, given all the dynamics in the auto maybe whats behind that and is that harder for you to get your hands around it predict.

Michael Wayne Phillips: Okay, thanks. And then you mentioned that the policy life expectancy has been improving month after month after month. I guess, given

Operator: Transcripts provided by Transcription Outsourcing, LLC.

Tricia Griffith: for you to get your hands around and predict when shopping is at such a high level. Well, we know most shopping happens when rates go up, and...

Tricia Griffith: When when shopping is at such a high level.

Tricia Griffith: Well, we know most shopping happens when rates go up and I think it's a little bit difference I think depending on the demographics. So if you you know when you read through the 10-Q. It sounds are much more likely to be sharp sensitive because they're price sensitive and so it's very different when you when you kind of Peel back down.

Tricia Griffith: Well, we know most shopping happens when rates go up, and I think it's a little bit different, I think, depending on the demographics. So when you read through the 10Q, SAMs are much more likely to be shop sensitive because they're price sensitive. And so it's very different when you kind of peel back the onion and look at our different demographics as well. But like I said, in the last couple of calls, last year, we had never seen inflationary factors like that.

Tricia Griffith: When you look at our different demographics as well, but like I said the last couple of calls.

Tricia Griffith: Last year, we had never seen inflationary factors like that and so I'm not surprised that there's been a lot more shopping and that's why he is too.

Tricia Griffith: And so I'm not surprised that there's been a lot more shopping. And that's why the key is to get out ahead of the rate. It's short-term pain for long-term growth. And that's exactly what we did and why we're sitting in this position. So we're going to continue to try to have stable rates, just stay ahead of the severity trends, and go from there. And I think when customers see that, and then they are able to also, like I said, have great claim service, have great service from our CRM, we want to give them a reason to stay and all the products that they can have from Progressive.

Tricia Griffith: To get out ahead of the rate. It is short term pain for a long term growth and that's exactly what we did and why were sitting in this position. So we're going to continue to have tried to have stable rates. Just stay ahead of the severity trends and go from there and I think of when customers see that and then they are able to offer like I said have great claim service.

Tricia Griffith: Have a great service from our CRM.

Tricia Griffith: Give them a reason to say.

Tricia Griffith: All the products that they can have from progressive.

Tricia Griffith: Yeah.

Speaker Change: Thank you.

Tricia Griffith: The next question comes from the line of David Mcmahon.

David Kenneth Motemaden: The next question comes from the line of David Motemaden.

David Kenneth Motemaden: With Evercore.

David Kenneth Motemaden: Please proceed.

David Kenneth Motemaden: Alright. Thanks.

David Kenneth Motemaden: Hi Tricia, you mentioned ad spend was up in March, and it was the highest amount we've ever seen or you've ever seen. But the apps were flat, so it feels like I know there's some lag there. But you know, I'm sure that some of the non-rate actions are limiting conversion. Is there any way to quantify how much of the country still had non-rate actions in place today, versus three months ago, and how you're thinking about rolling those back throughout the rest of the year?

David Kenneth Motemaden: Tricia you had mentioned AD spend was up in March and it was the highest amount we've ever seen or you've ever seen but.

David Kenneth Motemaden: But the apps were flat so it feels like I know there is some lag there but.

Tricia Griffith: Yes, I'm sure that some of the non rate actions are limiting conversion.

David Kenneth Motemaden: Is there any way to size how much of the countries still had non rate actions in place today versus three months ago, and how you're thinking about rolling those back throughout the rest of the year.

Tricia Griffith: Yes, David that's a great question and one of the other things you have to compare is our extraordinary growth in quarter, one and 2023. So that comparison is really because we were growing a lot. We really didn't want to be is growing as much because we didn't have the margin. It was that we wanted to that.

Tricia Griffith: Yeah, David, that's a great question. And one of the other things you have to compare is our extraordinary growth in quarter one of 2023. So that comparison is really off because we were growing a lot. We really didn't want to be growing as much because we didn't have the margin that we wanted, but that comparison is going to be hard as well. So that's the first factor.

Tricia Griffith: Parents, who is going to be hard as well. So that's the first factor.

Tricia Griffith: We have pulled back, and there's a lot of levers of non-rate action. So there's bill plans, there's proof of garaging, there's a bunch of different sort of pre-binding things that we do. So there are several different ones.

Tricia Griffith: We have pulled back our it and Theres a lot of levers of non rate actions. So theres build plans there.

Tricia Griffith: The approval of <unk>, there is a bunch of different like sort of a pre buy binding things that we do so there's there are several different ones and we've pulled back more quickly.

Tricia Griffith: We've pulled back more quickly and fully in some states. There are some states where we haven't pulled back hardly at all because we don't have the rate that we need yet, but we're working on that pretty diligently. Percentage wise, I would say we're, what would you say Pat, 60% there, 70?

Tricia Griffith: And fully there are some states, where we havent pulled back hardly at all because we don't have the rate that we need yet, but we're working on that pretty diligently.

Tricia Griffith: From a percentage percentage for tonnage wise I would say, we're willing to say, Pat 60% or 70, Yeah I would say.

Pat: Yeah, I would say, as you broke it down on the bill plan side, we are getting close to back to pre-pullback, and on the verification side, it really depends at the state level, right? We still have about 20% of our states where we have media off, which is a good indication that if we have media off, we probably still have significant non-rate actions or verification in place. But we have, you know, lots of, I would say, room to run as we unwind those across both channels throughout the remainder of the year Yeah.

Pat: As you broke it down on the build plan side, we are getting close to back to pre pullback and on the verification side. It really depends at the state level right. We still have about 20% of our states, where we have media off which is a good indication that if.

Pat: We have media, if we probably still have significant non rate actions or verification in place, but we have lots of I would say room to run as we unwind those across both channels throughout the remainder of the year yeah.

Tricia Griffith: Yeah. And I feel like just even in the last couple of weeks or during the month of March, I feel like in some of the places where we've needed rates, we're starting to have some much more productive conversations. Yeah, I would agree.

Pat: Feel like just even in the last couple of weeks or during the month of March I feel like some of the places where we've needed right. We're starting to have some much more productive conversation.

Pat: Yeah, I would agree. On the regulatory side, there's certainly, you know, we've had a couple recent approvals, and we're getting more comfortable with more of our calendar year premium earned in that margins continue to be where we expect them to be in more and more of our states. So that gives our general managers and product managers greater confidence that they should open up and write more volume because we think we're priced adequately.

Speaker Change: Yes, I would agree on the regulatory side. They are certainly we've had a couple.

Pat: Approvals.

Pat: Getting more comfortable with more of our calendar year premium earned in that margins continue to be where we expect them to be.

Pat: More and more of our states. So that gives our general managers and product manager with greater confidence that they should open up and write more volume because we think we're priced adequately.

Speaker Change: Thanks, David.

Speaker Change: No great.

David Kenneth Motemaden: No, great. That's, that's, that's really helpful. That's encouraging to hear. And then for my follow-up question, you know, it was good to see Robinson's new apps up almost double digits. In the first quarter, it sounded like conversion also increased on Robinsons in the agency channel. Could you maybe just talk about how you're attracting, you know, the Robinsons and how you're achieving this increased conversion and whether you're seeing any improvement on retention of Robinsons as well?

Speaker Change: That's really helpful. That's encouraging to hear.

Speaker Change: And then for my my follow up question.

Speaker Change: Yeah. It was.

David Kenneth Motemaden: Good to see the Robinsons, new apps up almost double digits.

David Kenneth Motemaden: In the first quarter it sounded like conversion also increased on Robinsons in the agency channel.

David Kenneth Motemaden: Could you maybe just talk about how you're attracting.

David Kenneth Motemaden: The Robinson and how you're achieving this.

David Kenneth Motemaden: This increase conversion and whether youre seeing any improvement on the retention of Robinsons are as well.

Speaker Change: Yeah, I think it's different if you're thinking about it from the agency channel versus the direct channels on that.

David Kenneth Motemaden: The agency channel we continue to have.

David Kenneth Motemaden: Our preferred agents are platinum agents are no.

David Kenneth Motemaden: Want to bundle and they can be compensated for that and so that is a big part of the agency channel on the direct channel we have our home closed, Florida, where we saw progressive home and I know <unk> been working diligently with some really great unaffiliated partners to be able to place that coverage.

Tricia Griffith: to be able to place that coverage, even if it's not with Progressive Home. And we're continuing to work on having a stable group of companies in that mix. Last quarter, we went through sort of how we think about evolving with what we write in our paper and not in our paper.

Tricia Griffith: Even if it's not even if not with progressive home.

Tricia Griffith: And we're continuing to work on having a stable group of companies in that mix.

Tricia Griffith: Last quarter, we went through you know sort of how we think about evolving with what we write on our paper and not on our paper and we think that's good for customers to be able to have an outlet when they come in so that's proven to be something that we were working diligently on and will continue to work on especially as the <unk>.

Tricia Griffith: And we think that's good for customers to be able to have an outlet when they come in. So that's proven to be something that we're working diligently on and will continue to work on, especially as the market, I think, gets more stable. And I think, you know, the Robinsons, now they come to us. I remember years ago, John, you might remember, I remember John standing up here on an IR call and saying that we want to be the company that when they call, they say, do you have this?

Tricia Griffith: <unk> I think it's more stable.

Tricia Griffith: And I think.

Tricia Griffith: The Robinson now they come to us I remember years ago, John you might remember I said remember Jon standing up here at an IR call in saying that.

Tricia Griffith: That'd be the company that when they call and they say do you have this we say, yes, we do and so we're getting closer and closer to being not just said destination insurer, but it does finishing company. So when you and you are a robinson youre going to want auto home, but you're gonna, possibly want umbrella youre going to want and some other things and so each each.

Tricia Griffith: We say, "Yes, we do." So we're getting closer and closer to being not just a destination insurer but a destination company. So when you come and you're a Robinson, you're going to want an auto home, but you're going to possibly want an umbrella. You're going to want some other things. And so, you know, each added product increases retention. But we don't share those. But if you look at our overall retention on the Robinsons versus the other segments, it's much higher.

David Kenneth Motemaden: understood. Thank you.

David Kenneth Motemaden: Added product increases retention, we don't share those.

David Kenneth Motemaden: But if you look at our overall retention on the Robinson versus the other.

David Kenneth Motemaden: Segments, it's much higher.

David Kenneth Motemaden: Yeah.

David Kenneth Motemaden: Yeah.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Jimmy Homer: The next question comes from the line of Jimmy Homer with J.P. Morgan. Please proceed.

David Kenneth Motemaden: The next question comes from the line of Jimmy Hummer with Jpmorgan. Please proceed.

Jimmy Homer: Okay.

Jimmy Homer: Hi, good morning. So, first I had a question just on the expense ratio. Should we assume that given how much premiums have gone up the last few years that your expense ratio should be, especially the non-acquisition or the sort of non-discretionary expenses should be structurally lower for the next several years? And if that is the case, then would you let that fall to the bottom line and assume a lower combined ratio going forward? Or should we assume that you'll use it to be more competitive on pricing and it'll show up in the form of better growth potentially? or Gets Competed Away.

Jimmy Homer: Hi, Good morning. So first question just on the.

Jimmy Homer: The expense ratio should we assume that given how much premiums have gone up the last few years that your expense ratio should be especially the non acquisition or the sort of non discretionary.

Jimmy Homer: <unk> expenses should be structurally lower for the next several years and if that is the case then would you.

Jimmy Homer: Let that fall to the bottom line and assume a lower combined ratio going forward.

Jimmy Homer: Or should we assume the deal use it.

Jimmy Homer: To be more competitive on pricing and it'll show up in the form of better growth potentially.

Jimmy Homer: Or it gets competed away.

Tricia Griffith: and down because those can be less stable than having a unit growth. But yeah, I think we're going to spend where we can to maximize this growth. We're going to continue to think about expenses and utilize the investments that we make across the board to become more efficient. But a lot of it, too, and the reason we're able to do this is because of the investments we've made over the many years in technology, on people, on processes, on just our overall people and culture to be there. So I would expect that we'll be able to do a little bit of both. I'd just add.

Speaker Change: Yeah. Good question, Jimmy probably a little bit above so I think we will try to continue to push expenses and.

Tricia Griffith: We need to be efficient.

Tricia Griffith: Not necessarily though need to be the lowest cost we want to have low cost because that equates to competitive prices and that equates to growth and that growth of course is a great cycle because that unit growth is important, especially as you've seen in the past years when severity trends go up and down because those can be less stable than have.

Tricia Griffith: Our unit growth, but yeah.

Tricia Griffith: I think we're going to spend when we where we can to maximize on this growth we're going to continue to thinking about expenses and.

Tricia Griffith: Utilize the.

Tricia Griffith: The investments that we make across the board to become more efficient.

Tricia Griffith: But a lot of it too and the reason we're able to do this is because of the investments we've made over the many years on technology on people on processes on just our overall people and culture to be there. So.

Tricia Griffith: I would expect that we will be able to do a little bit of both.

Tricia Griffith: I'd just add that we have continued to make progress on our non-acquisition expense ratio, and we've been doing so for at least the past decade. So structurally, as you say, as we increase average premium, not only the efficiencies we plow into our business, but the denominator is a tailwind for sure, but we will always price to that 96 combined ratio at the company level. So to the extent that we get efficiencies, we're going to plow that back into growth and target the same margin over time.

Tricia Griffith: We have continued to make progress on our non acquisition expense ratio. So we've been doing so over at least the past decades. So structurally as you say as we increased average premium not only the efficiencies we plow into our business, but the denominator is a tailwind for <unk>.

Tricia Griffith: Sure, but we will always be price to that 96.

Tricia Griffith: Combined ratio.

Tricia Griffith: Company level, so to the extent, we get efficiencies, we're going part of that back into growth and target the same margin overtime.

Tricia Griffith: Okay.

Jimmy Homer: And then maybe you could talk about the competitive environment and just competitor behavior. Overall, it seems like almost every company is still in the process of repricing its book, but I'm assuming that trends vary by state. And there are a few states where several other companies decide that you are at adequate margins. So are you seeing price competition pick up in those markets? And are companies being disciplined overall, or are you even seeing some companies maybe be a little bit too loose in terms of pricing and underwriting in areas where the loss trends have been good, and states were early in allowing companies to raise prices? It's hard to say what other companies are doing.

Tricia Griffith: And then maybe if you could talk about the competitive environment and just.

Jimmy Homer: Better behavior overall, it seems like almost every company is still in the process of repricing, it's book, but I'm, assuming the trends vary by state and there are a few states where.

Jimmy Homer: Several other companies. Besides you are at adequate margin. So are you seeing price competition pick up in those markets.

Jimmy Homer: And our company is being disciplined overall or are you even seeing some companies maybe be a little bit too loose in terms of pricing and underwriting in areas, where the loss trends have been good.

Jimmy Homer: We're early in allowing companies to raise prices.

Jimmy Homer: Yes.

Jimmy Homer: It was hard to say what other companies are doing I can say that we still feel like it's a hard market and we feel like we got ahead of the curve as far as far as pricing and we're seeing that with our growth and I hope to continue to see that I think if you you know if you follow which I'm sure you do on the competition margins.

Jimmy Homer: Margins look good and so I think everyone saw what we saw in terms of trends and reacted again, if you have a certain period of time, where if you react more quickly you have an advantage and that advantage sort of <unk> growth and sort of is like you know I feel like.

Tricia Griffith: advantage, and that advantage sort of begets growth and sort of is like, you know, I feel like at this juncture last year, when I talked about it in November, about starting to think about pulling back some non-rate actions and doing some things. It was like we kind of put our toe in the water, and everybody else wasn't quite there. Then, you know, we put our whole foot in, then we sat at the edge of the pool, and now we're diving in.

Tricia Griffith: At this juncture last year, when I talked about it in November about starting to think about pulling back some non rate actions and doing some things. There was like we kind of put our toe in the water and everybody else wasn't quite there then you know we put our whole foot than we saw at the edge of the pool and our diving in and so I think we feel really great about our ability to.

Tricia Griffith: So I think we feel really great about our ability to grow. People will catch up. That's this industry. It's an ebb and flow of soft markets and hard markets, and it's just about getting out ahead of it. And again, I can't stress enough how much our segmentation and our ability to match rate to risk matters and not ever rest and say, okay, we've got, you know, whatever, 8.8, 5.0, 4.0, and we were very creative in our model naming.

Tricia Griffith: Grow.

Tricia Griffith: People will catch up that this industry. It's a it's an ebb and flow of soft markets hard markets and it's just about getting out ahead of it and again I can't stress enough how much are.

Tricia Griffith: Our segmentation and our ability to match rates or risk matters and to not ever Russ and say, okay. We've got you know whatever.

Tricia Griffith: <unk>, Florida, and we are very creative and our model naming.

Tricia Griffith: But the bottom line is, it's constant, and we don't put one in and say, okay, we'll wait for 10 years and see how that works. And the interactions of our different variables with each other are so important. So that's a big piece of it as well. So it's about having the right rate on the street, of course. That's table stakes. It's also about having product models where you really understand the ultimate loss cost.

Tricia Griffith: But the bottom line is is constant and we don't put one in and say, okay, well wait for 10 years, and see how that works and and they and the interactions with our with our different variables with each other are so important so that's the big piece of it as well so it's about it's about having the right way on the Street of course, that's table Stakes. So it's also about.

Tricia Griffith: Having product models, where you really understand the ultimate loss costs.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Meyer Shields: The next question comes from the line of Meyer Shields with KBW. Please proceed.

Tricia Griffith: The next question comes from the line of Meyer Shields with <unk>. Please proceed.

Meyer Shields: Great, thank you, and good morning. When we look at year-over-year policy outgrowth in personal lines, we saw a pickup in direct but modest sequential slowdown in agency, and I was hoping you could, I'm sorry, in March, and I was hoping you could explain what actually is going on, like why we're seeing that sort of different trend.

Meyer Shields: Great. Thank you and good morning.

Meyer Shields: When we look at year over year <unk> growth in personal lines, we saw a pickup in direct but modest sequential slowdown and agency I was hoping you could kind of im sorry in March I was hoping you could translate what actually is going on.

Meyer Shields: Like why we're seeing that sort of difference.

Meyer Shields: Prince.

Tricia Griffith: Yeah, I think if you look at agency in March, it was more flat. I think it was, I think you'll see that a little bit. It'll be a little bit more delayed than direct, where we have more access to put on the media spend. Whereas I think agents, it's just a different model. Pat, you can add more on that.

Speaker Change: Yeah, I think it is I think agency in March was more flat I think it was I think you'll see that a little bit there'll be a little bit a little bit more delayed than direct where we have more access to put on the media spend whereas I think agents.

Pat: It's a different model that you can add more on that but from what I recall March starting to be a little bit the trend started to return a little bit of an agency. Yeah. So we've been slower to open things back up in the agency channel and specifically things like returning rates on comparative raters across the board, which does put our.

Pat: But from what I recall, March started to be a little bit, the trend started to return a little bit in agency. Yeah, so we've been slower to open things back up in the agency channel. And specifically things like returning rates on comparative raters across the board, which does put our rate in a more competitive position and potentially drives more growth. But know that we are leaning into that at this point. And as we're more confident in our rate adequacy, we are opening up some of those non-rate actions in the agency channel; we have fewer top of funnel levers in the agency channel; it's more mid funnel. So you will see that delayed effect when media we can fill the top of the funnel on the direct channel much more responsibly and quickly when we decide we're rate adequate.

Pat: And a more competitive position and potentially drive more growth, but know that we are leaning into that at this point and as more and more confident in our rate adequacy. We are opening up some of those non rate actions in the agency channel we have fewer top of funnel levers in the agency channel it's more of a mid.

Pat: Funnel. So you will see that delayed effect when media, we can fill the top of the funnel on the direct channel much more responsibly and quickly when we decide where rate adequate.

Meyer Shields: Okay, perfect. That's very helpful. And as Trish pointed out in your comments earlier, would it make sense to have more six-month policies in commercial lines?

Speaker Change: Okay, perfect Thats very helpful.

Meyer Shields: And then going to your comments earlier would it make sense to have more six month policies in commercial lines.

Tricia Griffith: You know, we've talked about that for years, and I think what I would say is that it's very dependent on the BMT, you know, some when you go in to get a quote and ultimately convert, there are some business marketing tiers that are really complex and time-consuming, and you're gathering information, and it's not an easy process. You don't want to do that every six months.

Speaker Change: Yeah, we will.

Meyer Shields: We've talked about that for years and I think what I would say, it's very dependent on the BMT.

Tricia Griffith: When you when you go into get.

Tricia Griffith: And ultimately converge there are some.

Tricia Griffith: Some business marketing tiers that are really complex and time consuming and your gathering information and it's not an easy process you don't want to do that every six months. So with those you just have to be priced right and have the ability to do things like debits and credits to to.

Tricia Griffith: So with those, you just have to be priced right and have the ability to do things like debits and credits to get things right more quickly. We have some, and we have had a lot in the past, and we continue to think about that. I know Karen and her team are thinking about that in some of the BMTs that could be more flexible.

Tricia Griffith: To get things right more quickly.

Tricia Griffith: We have scale and we had a lot in the past and we continue to think about that I know Karen and her team are thinking about that and some of the BMT is that could be more flexible that said I'm Super excited and I'm glad you brought up commercial cause I'm Super excited to talk about commercial I feel like we're in a great position, we still have 10 points to earn in.

Tricia Griffith: That said, I'm super excited, and I'm glad you brought up commercial, because I'm super excited to talk about commercial. I feel like we're in a great position. We still have 10 points to earn in the rest of this calendar year.

Tricia Griffith: In the rest of this calendar year again, the key was getting out in front of it and it's especially important because of those 12 month policies, but.

Tricia Griffith: Again, the key was getting out in front of it, and it's especially important because of those 12-month policies, but you know, one of the things that we did many, many years ago, and I think this might have been the first IR call or maybe in the first year or so after I took over, my team and I, you know, we didn't really develop the Horizon concept. That came from McKinsey, but we developed how we were going to think about growing the company, and commercial lines was a big part of that.

Tricia Griffith: One of the one of the things that we did many many years ago and I think I might've.

Tricia Griffith: Might have been the first IR call or maybe in the first year or so after I took over.

Tricia Griffith: Even I developed just we didnt develop the horizon concept they came from Mckinsey, but redeveloped, how we were going to think about growing the company and commercial lines is a big part of that they were already in horizon, one with commercial auto being the number one writer, but in horizon. Two we wanted to do is really understand.

Tricia Griffith: They were already in Horizon 1, with commercial auto being the number one rider, but in Horizon 2, what we wanted to do was really, you know, understand adjacent products that we could develop, and they really fall mostly within the commercial lines organization. So if you think of small fleet, that has tripled business over the last five years. You saw that we're now in Florida; we have BOP in 45 states.

Tricia Griffith: And adjacent products that we can develop.

Tricia Griffith: And they really fall, mostly within the commercial lines organization. So if you think of small fleet.

Tricia Griffith: That has tripled business over the last five years you saw that we're now in Florida, we have bought in 45 states.

Meyer Shields: The new product files I've been talking about on the private passenger auto side are also on the commercial side, and our business auto contractor customers right now, just recently in the last several weeks, we've seen new app volume hit new all-time highs, and, as importantly, the take rate for ProView, which is the usage-based insurance, I think snapshot, for the business auto contractor customers, has doubled. So really excited about the growth and the different levers because of such a variety of types of products in the commercial lines organization, and what we'll do is we'll look at those and see if there is an opportunity to have more in six months, what does that mean for your retention, what does that mean for your conversion, etc.

Meyer Shields: <unk> product sales I've been talking about on the private passenger auto side or also on the commercial side.

Meyer Shields: And our business auto contractor right now just recently in the last several weeks, we've seen new App volume have new all time highs and as importantly, the take rate for <unk>, which is a usage based insurance I think snapshot for the business auto contractor customers.

Meyer Shields: Has doubled so.

Meyer Shields: Really excited about the growth and the different levers because of such a variety of types of products in the commercial lines organization and what we'll do is we'll look at those.

Meyer Shields: And see or is there an opportunity to have more on six months, what does that mean to your retention what does that mean.

Meyer Shields: So conversion et cetera, So we'll test some of those things likely.

Meyer Shields: In the next year or so, but I am excited and even when you think about S. H T. We've been talking a lot about macroeconomic trends. When you go back pre pandemic and then of course, we were sad, we knew that market really well, we leveraged and capitalize on the fact that the trucking industry exploded because people are moving.

Meyer Shields: So we'll test some of those things likely in the next year or so, but I am excited, and even when you think about FHT, we've been talking a lot about macroeconomic trends. When you go back pre-pandemic, and then of course we were set, we knew that market really well, we leveraged and capitalized on the fact that the trucking industry exploded because people were moving goods across the country, spot rates were high, and now that we're sort of a little bit back to normal, what we're seeing is when we look at federal motor carrier authorizations, we they're up a certain amount, we're actually up higher than that on new business with FHT.

Meyer Shields: Goods across the country spot rates were high and now that we're sort of a little bit back to normal what we're seeing is when we look at federal motor carrier authorization.

Meyer Shields: They're off a certain amount were actually up higher than that on new business with FHA. So.

Meyer Shields: So I'm going to, it's hard not to compare the pandemic and subsequently what happened, but what we're really trying to look at is how growth looks compared to 2019, and what I would say with FHT, the four higher transportation modes, it looks good. Okay, fantastic. That was very helpful.

Meyer Shields: It's hard to not compare the pandemic and subsequently what happened before what we're really trying to look at is how does the growth look compared to 2019, and what I would say with FHA the for hire transportation it looks good.

Meyer Shields: Okay Fantastic that's very helpful.

Speaker Change: Thank you.

Michael Augustus Ward: The next question comes from the line of Mike Ward with Citi. Please proceed.

Meyer Shields: The next question comes from the line of Mike Wood with Citi. Please proceed.

Operator: Thanks. Good morning.

Michael Augustus Ward: Thanks.

Michael Augustus Ward: Morning, I was wondering about telematics, we noticed adoption was down 20% and agency.

Michael Augustus Ward: I was wondering about telematics. We noticed adoption was down, I think 20% in agency. I think you said it was because of the mix of agencies. Just hoping you can help us understand why that is. Is telematics more specific to certain customer segmentations or geographies? Um, you know, maybe Robinson's just aren't as bigger adopters of it.

Michael Augustus Ward: I think you said because of the mix of of agencies, just hoping you could help us understand why that is is telematics more specific to certain customer segmentation or geographies.

Michael Augustus Ward: Maybe Robinson, just aren't as bigger adopters of it.

Tricia Griffith: Yeah, Mark, that was mostly a couple big national account agencies, and that started happening maybe around the mid-2023. So nothing much to read into.

Speaker Change: Yeah, Mark that was that was mostly a couple of big National account agencies and that started happening maybe around mid 2023, so nothing much to read into we're still really excited in fact.

Tricia Griffith: We're still really excited. In fact, take rate and agency really have peaked since before the pandemic. And so we've continued to believe that's a big part of our model. We have 57 billion miles driven. So we have a lot of data 7 billion trips. We continue to have that be a big part of it. And we're constantly talking to agents about the importance of that to get those great drivers a great discount.

Tricia Griffith: Great and agency really has picked up since pre pandemic and so we continue to believe that's a big part of our model. We have 57 billion miles driven so we have a lot of data 7 billion shrubs. So we continue to have that be a big part of it and we're constantly talking to agents about the importance of that to get those.

Tricia Griffith: Great drivers great discounts.

Tricia Griffith: Yeah.

Michael Augustus Ward: Okay, um, and then maybe just on recent loss experience. We've seen Accident Frequency ticked down to high single digits in the last two consecutive quarters. Just wondering if you could share your view on maybe what's driving that. Is it mixed, I guess, or mild winter, and what are you seeing more recently? Thanks. Yeah, that's good. Those are two of the variables for sure.

Tricia Griffith: Okay.

Tricia Griffith: And then maybe just on recent loss experience we've seen.

Michael Augustus Ward: Freak accident frequency ticked down high single digits into last two consecutive quarters. Just wondering if you could share your view on maybe what's driving that.

Michael Augustus Ward: Is it mix and I guess.

Michael Augustus Ward: Or mild winter and what are you what are you seeing more recently thanks.

Speaker Change: Yeah. That's that's good and that those are two of the variables for sure. So the miles and miles quarter helped our mix of business or sort of self imposed underwriting actions and actually we've seen a tailwind from housebuilding 37, So those would probably be for the contributing factors what I wouldn't look at instead of focusing on the quarter that would be.

Tricia Griffith: Yeah, that's good. And those are two of the variables for sure. So the mild to mild quarter helped our mix of business, our sort of self-imposed underwriting actions, and actually, we've seen a tailwind from House Bill 837. So those would probably be the contributing factors. What I would look at instead of focusing on the quarter would be I would look at the trailing 12 over the prior 12 from frequency because those those were some factors in this quarter for sure.

Tricia Griffith: Look at the trailing 12 over prior 12 from frequency because those.

Tricia Griffith: Those those were some factors in this quarter for sure.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you.

Tricia Griffith: Yeah.

Speaker Change: Thank you.

Operator: The next question comes from Delana, Brian Meredith, UBS. Please proceed.

Tricia Griffith: The next question comes from the line of Brian Meredith UBS. Please proceed.

Brian Robert Meredith: Yeah, thanks. Just following up on the frequency questions. I'm just curious, do you think changes in terms and conditions or customers maybe raising deductibles or anything is causing the benefit to frequency right now? I think we've seen that in prior kind of cycles like we're in right now.

Delana: Yes. Thanks, just following up on the frequency questions I'm. Just curious do you think changes in Cogs for charging conditions. Your customers may be raising deductibles or anything that is causing the benefit their frequency right. Now I think we've seen that prior kind of cycles like we're in right now.

Speaker Change: Yes, so hard to discern that and we've been playing around in there there could be and maybe mark brought that up a little bit there could be a little bit of regional differences.

Speaker Change: In terms of.

Brian Robert Meredith: Frequency so no false state versus non it's hard to really pinpoint that we're going to continue to work on that but it's it really is hard to pinpoint those exact things from frequency. So really what I said before and what we're seeing at least in that first quarter was really.

Tricia Griffith: So really, what I said before, what we're seeing, at least in that first quarter, is really our self-imposed underwriting restrictions, some mixed differences, which makes sense, and then some weather and some changes from the Florida House bill. Those are the parts that we can better quantify.

Tricia Griffith: Our self imposed underwriting restrictions.

Tricia Griffith: So next difference, which makes sense and then some weather and some changes from the Florida House Bill those those are the parts that we can better quantify.

Brian Robert Meredith: Right, so you're not pricing it forward, basically.

Speaker Change: Alright, Okay. Thanks fair enough pricing for it basically.

Brian Robert Meredith: We we look at it and we priced for frequency and severity, but we can't predict frequency, we we know when we see it.

Tricia Griffith: We, you know, we look at it, and we price for frequency and severity, but we can't predict frequency. We know it when we see it.

Brian Robert Meredith: And then my second question, just curious, you know, getting into the small commercial business, you know, obviously homeowners. Can you talk a little bit about that? Do you have a, you know, are you thinking about EMS capabilities, and would that be an area of interest to you all, and particularly to get more into the clinical practice business, and does that have it on Jamminder's side?

Speaker Change: Great and then.

Brian Robert Meredith: Second question, just curious getting into the small commercial business.

Brian Robert Meredith: Homeowners.

Brian Robert Meredith: You talked a little bit skewed.

Brian Robert Meredith: Are you talking about the E&S capabilities.

Speaker Change: I see.

Brian Robert Meredith: Yes.

Speaker Change: Good morning.

Brian Robert Meredith: Business.

Brian Robert Meredith: Sure.

Speaker Change: I'm really sorry, but you broke up completely there and we didnt understand the question.

Brian Robert Meredith: I am really sorry, but you broke up completely there, and we didn't understand the question.

Brian Robert Meredith: Oh, sorry. Can you hear me now?

Speaker Change: Oh, sorry can you hear me now.

Operator: Yeah, perfect.

Speaker Change: Yes perfect.

Brian Robert Meredith: Okay, sorry. I was asking more about ENS capabilities and maybe homeowners or commercial or plans to have some of those access and surplus lines capabilities, you know, just given the regulatory and risk landscape out there. Yeah, those are things we think about all the time. We have, we actually utilize.

Operator: Okay, sorry, I was asking more about E&S capabilities.

Brian Robert Meredith: And maybe homeowners or commercial or plan to have some of those excess and surplus lines capabilities.

Brian Robert Meredith: Just given the regulatory and risk landscape out there.

Tricia Griffith: Yeah, those are things we think about all the time. We have, we actually utilize the ENS capabilities in some venues in commercial already. And we always look at kind of the best way to understand if we can't get the rate we need it needs in the admitted market. And we have an opportunity, opportunity, and ability to do that should that arise.

Brian Robert Meredith: Yeah. Those are things to think about all the time, we have we actually utilize the E&S capabilities in some venues and commercial already.

Tricia Griffith: And we always look at kind of the best way to understand if we can't get the rate we need to meet in the admitted market and we have an opportunity to opportunity and an ability to do that should that arise.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you.

Yaron Joseph Kinar: The next question comes from Yaron Kinar with Jefferies. Please proceed.

Tricia Griffith: The next question comes from Darren <unk> with Jefferies. Please proceed.

Yaron Joseph Kinar: Thank you. Good morning. I wanted to start with a couple of mixed shifts and the potential impact, if we could, and maybe we could start with the Robinsons. Would the greater weighting of Robinsons ultimately also lead to greater exposure and bodily injury, where I think severity trends remain a bit higher? And if so, how do you address that or price for that to keep the profit targets in line with where you want them to be?

Yaron Joseph Kinar: Thank you good morning.

Yaron Joseph Kinar: Wanted to start with a couple of mix shift and the potential impact if we can and then maybe we start with the Robinson.

Yaron Joseph Kinar: Woods.

Yaron Joseph Kinar: The greater weighting of Robinson, ultimately also lead to greater exposure in bodily injury.

Yaron Joseph Kinar: Where I think severity trends remain a bit higher and if so how do you address that or price for that.

Yaron Joseph Kinar: Keep the profit.

Yaron Joseph Kinar: Targets in line with where you want them to be.

Tricia Griffith: Yeah, we price, like John was saying, every customer, every state, every channel to lifetime 96, knowing that the limit difference is different if you're preferred, if you're going to have higher limits. So we price for that and are very clear on and reserve for that. And so that's, that's sort of our secret sauce as well.

Speaker Change: Yeah, and we price like Jon was saying every customer every state every channel to a lifetime ninety-six knowing that the limits difference is different if your preferred if youre going to have higher limit. So we price for that and and are very clear on and reserve for that and so that's that's sort of our.

Tricia Griffith: Secret sauce as well.

Yaron Joseph Kinar: Okay, and then if we switch to commercial, so historically, if I look at Progressive, I think the company's been able to avoid a lot of the severity pressures that the industry has seen in commercial auto. And I think a lot of that has to do, obviously, with your underwriting and segmentation, but also because you had a small trucking orientation. But now, you know, post the protective acquisition and with the growth in the TNC business, do you see these, I guess, severity trends different in the overall commercial auto book than they had been in the past, and how are you managing those? I mean, commercials.

Tricia Griffith: Okay.

Tricia Griffith: And then if we switch to commercial so.

Yaron Joseph Kinar: If we if I look at Progressive I think the company has been able to avoid a lot of the severity pressures that have been.

Yaron Joseph Kinar: That the industry had seen in commercial auto and I think a lot of that has to do.

Yaron Joseph Kinar: Obviously with your underwriting and segmentation, but also because you had a small trucking orientation.

Yaron Joseph Kinar: But now that posted protective acquisition and with the growth in the P&C.

Yaron Joseph Kinar: Business do you see this.

Yaron Joseph Kinar: I guess severity trends different than the overall commercial auto book than they had been in the past and how are you managing those.

Yaron Joseph Kinar: I mean commercial is very much I mean, all of our businesses state by state, but commercial has a few states that are much more volatile and we have to price for those or.

Tricia Griffith: I mean, commercial is very much, I mean all of our business is state by state, but commercial has a few states that are much more volatile, and we have to price for those, or, like Karen is doing now, and actually Pat on the PL side is having a lot of business restrictions until we can get the prices we need and non-rate actions, but I think, like I said when I was outlining the variety of BMTs, they react very You mentioned TNC; we needed a huge increase with one of our partners there and were able to get that, so our comfort level with success in the TNC organizations is very high now, and we feel good about that, but yeah, the exposure is different; you just have to stay on top of it from a pricing perspective and from a claims perspective.

Douglas S. Constantine: You appear to be those who have already asked questions, so that concludes our event. Those left in the queue can direct their questions directly to me via email or my direct phone line. TI will hand the call back over to you for closing remarks.

Douglas S. Constantine: Karen is doing now and actually Pat on the appeal side is having a lot of business restrictions until we can get the prices, we need and non rate actions.

Douglas S. Constantine: But I think like I said, when I was outlining the variety of BMT.

Douglas S. Constantine: They react very differently and exposure to very differently and we treat them differently in terms of a segmentation perspective, you mentioned, Tennessee.

Douglas S. Constantine: We needed.

Douglas S. Constantine: Huge increase increase with one of our partners there and we're able to get that so our comfort level of success in the N C. A.

Douglas S. Constantine: The organization is very high now and we feel we feel good about that but yet exposures different you have to stay on top of it from a pricing perspective and from a claims perspective.

Speaker Change: Thank you.

Speaker Change: Thank you.

Douglas S. Constantine: It was in the queue appear to be those who have already asked questions. So that concludes our event still left in the queue can direct your questions directly to me via email or my direct phone line.

Speaker Change: I'll hand, the call back over to you for closing scripts.

Douglas S. Constantine: Okay.

Operator: That concludes the Progressive Corporation First Quarter Investor Event. Information about a replay of the event will be available in the investor relations section of

Speaker Change: That concludes the progressive Corporation's first quarter Investor you pegged.

Operator: Information about a replay of the event will be available on the Investor Relations section.