PGR - Earnings call transcript Q2 2018 | The Progressive Corporation

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Operator

Welcome to The Progressive Corporation's Second Quarter Investor Event. The company will not make detailed comments related to quarterly results in addition to those provided in its quarterly report on Form 10-Q and the letter to shareholders, which have been posted to the company's website and will use this event to respond to questions after the prepared presentation by the company. This event is available via moderated conference call line and a live webcast with a brief delay. Webcast participants will be able to view the presentation slides live or download them from the webcast website. Participants on the phone can access the slides from the events pages at planned by investor.progressive.com. encounter can difficulty call connect we transmission, the line. event, participants webcast through the any with technical webcast In the conference page The on passcode and at Events dial-in investor.progressive.com. are information the available the event Acting as moderator will Julia Hornack. be for the At over to event this will Ms. I time, turn Harnack.

Julia Hornack

Griffith; event that have Andrew, afternoon Tricia presentation, speakers and our be we will our we Q&A Sauerland; you, presentation session on CEO, Today, We'll to and will CFO, Thank a all. customer a our with John and today, begin Steve good John with our experience. After -- Brose. guest Murphy

Our event also join is Chief us This last Cody, to Q&A. minutes. XX for Investment Officer, scheduled Bill by will phone

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

forward-looking those report to factors on businesses, risks the available risk harbor and affecting is XX-K, Additional find of will related statements Form information you safe on concerning discussions uncertainties annual our XXXX our where found statements introduce page CEO, the Griffith. discussions and our we pleasure of via my progressive.com. website It's Investors to documents can you the face. to challenges These other our be Tricia of

Susan Griffith

and welcome Webcast. Second afternoon, to Good Quarter Progressive

group. making management thrilled are relationship on and for behalf been about to our of we've customer We be customers investments able you to to the our and talk

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John Murphy

Tricia, you, and afternoon, good Thank Great. everyone.

meet ones. centricity. customers very them. needs insurance our priority an new To to a and specializes ongoing and we've just customer that been but auto where that accelerating deliberate mandate large the customers really journey to in No a as as they longer and going that today. long have Over the I past services fuel years, X changes company, instead as is sustained acquiring discuss products are they existing Steve as company may on the catalyst really we've a insurance to business now retaining And growth, for customer

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Steven Broz

Thank you, John. Good afternoon.

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our to transaction next, so potentially to life going. also do with When We though one option which are that's simple DMV my and to our to has, with log ID fingerprint X how but just Pay friction could quadrupled with a the is number or log use the powerful last do want second step this of pay as to customers, Pay. I'd goal. And take advantage during it logins in other we a thing premium. you look this Even app, walking our at option the story bills of Customers recognize use If own the device touch any the its of to and quadrupled and to and we great years, the Progressive can, the will the also I like meeting that as from app downloads we show make one mobile simple seeing for our is share of capabilities can introduce easy of faces. capabilities mobile or a Google devices into sure to face The thumbprint the well ability and percentage through the by the about which of offers. ID A Apple you powerful the like a years few Parker year, putting how quarter the We're It license. probably afternoon, process the to I mobile to into my my and a he great adoption. likelihood to is driver and the I driver's growth additional back types job me, from app congratulations, forward. customers with my thumbprint got we son and the driver's I about my on can The in oh picture few use servicing ago, Friday the then with his be. was making without this we're a my changes thrilled course, mobile online policy pay easy thing older and to this, portraying texted need our license. saw new being increases this site. we're right thrilled of and my in live with a of that last nice That's gosh, him driver. months him say his texted permanent events shop being this fingers record that down, and change status customer I to thought, few from was our think then a phone true

But have had customer servicing we're actions as online, reinventing that So online expense a where that inconsistent we observed you show is see this. for looking can It we struggle they customer feedback important, and page to the were servicing. policy that online really hard to and navigate find that from was customers Navigation through here they still for. was previous to page.

testing, is text new navigation it you interactions see changes to They throughout on We've much in change for the information very and can here, us around site. better, are easy positive. visible architecture zoom clear And so next from and consistent are reinventing and we you could see the can if clean are right usability servicing. we're And find the the the see policy feedback side, much hierarchy, page what seen use. I clearer you it's to customer things

visiting John's as equally their The experiments is the solve As here find AB uses these and customer be look conduct faster there are and Era faster, understand visible team changes accelerate important customer in important. who depending means the that John's the problems, built needs that up conduct solution. experience. Tasks flexibility to those can is customer enhanced line content changes can are, Destination the right scenes this and we multi-policy architecture. we personalized experience. the to team the we And and the mechanism and the for learning testing that can and then our is that some bottom to that customer, page. delivery prioritized architecture is Behind invisible is and It improve for with a centric a

app, it's and sometimes the sometimes it's both. it's Sometimes online

retention our We servicing expect as self-service well. increase investments an in and to online mobile increase and

leg the customer This the fulfill we've us moment truth we the for our of them. long last some for a come of made is for a chance claims. customers customers to and to Finally, that's to and journey promise

to new claims several a I our And has give And claim letter we you into I'll it, we've visibility, our see capabilities, won't then by encourage you quarterly me communication and so enhanced saying made, Our if I you of their on right, customers the can't capabilities read this technology grow. the time lot adoption you in continues to fast to that significant investments Tricia summarize because and added changes but experience. detail see employees. those done these topic. of in shareholder's that paragraphs and go very been control during on allow here into customers will digital already. left haven't the for all

the Now that backup and the that across highlighted they have reviewed we wrap the I'd returns journey like technology invite customer significant investments to up. things created. to John John?

John Sauerland

Steve. you, Thank

and made our foundational retaining as summary, ones. success. significant adjustments long-term all improvements grow priority position retaining cultural in experience, We've as to our existing really and sustained customers, and growth, segments fuel shifted improvements to the near- us made for and customer measurable mix while new to So acquiring large to and across We've longer we've delivered a journey. continuing the and to these ongoing customers go

like the really the and for successful, we Steve would but common strong objective. a partnerships toward that our teams Now be and as I ones have not nearly have working

at not story well hearing this years, we exceptionally and we're today, and just an of far we life on progress might we we exactly just more are XXXX. is equates premium you well. made the a be are what's years, it across in and more X in is saw steady And possible. on increased about because holds, of future how our firmly XXXX of high. all-time We've We in expectancy entire the billion what more than the is of at significant excited increase and this we that XX% suspect built retention progress So past book the after while answer is our we in improvements And the phenomenon. life than one-year Policy wondering scratched And We proud in business. again time $XX doing? made delivered. surface that believe X sustained what have we've to

John and So Tricia moments today. up set Q&A. your you for thank a much the very Steve for and I, time And now, on to on few give please behalf

Julia Hornack

[Operator you. call the Andrew, introduce first participant our with that, please And conference Instructions]. Thank line. from

Operator

[Operator Instructions].

Research. Our from with first of the Amit comes line Kumar Buckingham question

Amit Kumar

that Two questions. Good presentation. great afternoon, for quick thanks

year more would do The to, of first It's kind MPQ. sort guess, a question product? HQX I I goes online, on I guess, broadly and might this talk how guess, younger, have thinking to of have since discussion HQX was to Robinsons? Now you watch now Sam past, to been by into customer our have came names that and this or the responded percentage of you the Diane maybe with respond back on are and is the think And product? anticipated? what and that responding than share what to Or about, you you sit they as I

Susan Griffith

I would likely be Robinsons thinking say someone wouldn't is about home. because Sam a would become be have from Diane anyway rather demographic, than necessarily, they graduate, to a going the a it

customers very kind of can they savvy available digitally the a there input. It's understand to XX and to that's We I to to want have. clearly they what because that that So of that's it's direct for that with that sure just savvy, customer they the can is want they it of ago and think digitally they they no online, I all go pictures, is and rules grow, and will years for ever online. we make searching peoples HQX go a what to and their take Think place of want data process, publicly customer, where people customer ultimately make it's want do of search think course, when these going through happened. started it business really think easy are take one but auto auto are and online, that

Amit Kumar

tariffs talking number going The comes growth. a Recently manufacturers as some gears, in all I if second talked you others fact, margins. of of and impact shifting last of here? impact in. and impact their in slowing back was of to have view on is about question sort from What that terms auto 'XX, about auto you're of the revise outlook old transcripts, month the Glenn 'XX, sales your go through

Susan Griffith

industry. sure not We're ensure what watching to closely, the there Obviously, that if we and is autos we're the with that less affects

small market. have However, very of share we that addressable a

So think in billion home, that XX%. you have about when and auto we $XXX-plus

the prior be a So X% shrinks, even if piece last that it we Even pie. to if we grew we're with of where believe the positioned have shrinks, that actually believe we pie able year. will bigger

Julia Hornack

take Thank you. Andrew, can we caller the next please?

Operator

the Our James. next question comes from of Greg with Raymond Peters line

Greg Peters

number some additional carriers there around HomeQuote number wondering the around And news I could back to also discussion of are that in that participating could if partnership of comment announcement? around current And you and the your Explorer, provide was Progressive. its know with wondering Explorer Going recently some HomeQuote were I product? and take you on curtailing I'm the if carriers there

Susan Griffith

and around Home continue change Home, Progressive we XXXX. Greg. and their for gone through we're convert to upon from has to partners, and majority news. able of a really the Sure, Home. been with that customers things at them partners. over we've HQX, out The to but retention for Home. that although them rate for to the years every will in a Currently our four business now this Progressive them month and happy be including all as year working Agency And working Progressive for give continue with we some We're for business us other have week Progressive news Progressive those is rate over on unaffiliated with nonrenewable carriers, do our and about Advantage came We've once price been the to they impressed to

Greg Peters

I'm could discussion sure mobile going specific give percentage for total willing have mobile I me not a And you're interesting. customers what of question. And found quite to to solution be then adopted your your and another split around adoption the may be -- you could if don't, maybe you mobile the the of But Robinsons? around company. color that, segments, you some will you adoption your between but provide maybe us including answer

Susan Griffith

really a say, increase come the continues to don't mobile adoption I and We channels. little that, out share would have bit more probably on

well. So on as go directly wants customer to that direct a channel, that's obviously

a than to Although customers the to continuing is agents, to them like our do that on to our things in some about our of Steve device. agency collective channel of customers, say talk much they're to adoption get higher So rate talking talked these mobile

to. there, agent So to really need they they -- if don't the call they have don't

Greg Peters

Just am home? you I this? give maybe versus can us nowhere a it more sense, is get with auto just Or

Susan Griffith

home talked more percentage about I versus it is is It course, yet we're have or to No. continue invest. it's device, there say, not No. Mobile our have experiences customer of Progressive auto when everything goal, you would to paper auto. targeted John not. we on the a to higher whether able on much be

John Sauerland

quote now mobile online are previously percentage our that I shared direct device. large think customers, the of doing so very who we via a

really So functionality was been app, and our to as the has uptick quoting mobile we've added earliest the our of in mobile buying adoption impressive. there

as is found, it, will, been well. agent increasingly we not But So will as mobile are surprisingly. they you we faster on in direct predominantly if come, customers channel, the build up picking

is XX% on and place it X was on I auto, billion home, auto, today, at make the clarification. think of of and sort market So so share want I earlier percentage X/X of auto one a comments home Steve just of $XXX auto, about a X/X share $XXX clarification home, about for million we're home the think to

Susan Griffith

I a And mobile is I she imagine for of the actually becomes presentation presentation going on start a showed when while a years talked not graph was Diane certain payments. paying did Diane. I about Diana, We the yearly back, it to remember whole several Robinsons, IR check.

more So we mobile. way much to invest on then into they as able having as can we're to of Robinsons, those back do future

Julia Hornack

next Great. please. Andrew, can we take from caller the line, the

Operator

Bob Scott. Our Janney Montgomery with next comes from question line Glasspiegel of the

Robert Glasspiegel

is growth the give the what versus us direct as metrics dynamics rollout? I was agency? could you What of some relative profitability well? if percentage is wondering the and And in homeowners X

Susan Griffith

the home, sort the Clearly, her roll that you was more fact than with right. accident I a I First worse of At last hockey get that. the more we're time, can the all, we that out year I growing of CEO. was I'll that start key so backing direct that side. growing is can my dynamics agents, That we of on daughter, the to continue of big into stick claims was that rolled where out first has been do HQX see and with the running

XX necessarily So about we're margins, for growing should the don't in the talk aspect always, in We sure we that in say, profit I'm target I both channels. aggregate. or

don't talk targeting we we're channel. publicly So about either where

John Sauerland

Progressive homeowners clarification, results currency monthly Bob. writing not previously PLE. mentioned business of believe them receiving we are also in discussed that releases Steve, what number around write carriers. as. property through we commissions we premium the benefit our think I direct Home with report We for auto we're also Just we're But The of the other being the from as our the we that family

So we've been historically currency expectancy talked bill keep keep the reason to gain, that's Sam, and about, in but previously relative at to customers PLE we is your the that to good the of the Robinsons, but the marketplace, balance as decades. Diane auto those invisible for a showed you that the have Wrights, home. get them of we're of across profitability underline at that's, least new customers, building the policy life of of result really we are That's home their for those to we and lifetime home. half Obviously, sheet bringing that in the

Robert Glasspiegel

you both that discount someone the What give buys to

John Sauerland

and the by on it well. and product. state discount a varies is across So varies the discount generally home -- speaking as it states channel both varies by There auto, by and

Robert Glasspiegel

we relative It the homeowners get auto agency would growth be and profitabilities? up the track can broken and before we great by too long that so directly

Susan Griffith

in said Yes. all what It little paper. to our because of of bit of on its John tough, not a terms is

Progressive have is look but we we have on our some carriers that. homeowner at for commissions on on auto getting those, Advantage to multiple Home, little again premium of get currency Agency. tough be where So even though in four one Progressive a PLE

Julia Hornack

the next the take call we you. can Thank Andrew, from please. line, conference

Operator

line Pan comes from question of with Morgan next Kai Our the Stanley.

Kai Pan

want to just adding million one say your to base. more congratulations also I by customers $XX Steve to customer

slide. is your question first my last So on

PLE months. couple at look have reaching like tremendous last of in you of plateau seems but a growth, If the a kind

increase I PLE seasonality? wondering also quarters. reaching previous to second X-month slowed limits or quarter there? down grow have room How data from the you was Your much are more or

Susan Griffith

obviously predict lot a continue had so We can't little I price. Murphy and for goal. goal customers bit continue our on the want to future that is decades of John FX in keep we've to a PLE this our Part to to have on is grown and the grow and

perspective of business finding care from really of we're strong. is because is people that new conversion closely, down price So increased business bit. tell competition the will little our watching slowing still our lot has you I the prices about are those a What

continue nature going And they continue understand and price to make so the to sure customers we're what nurture at give to that expect and from him and that. to to need look our PLE we stay

Kai Pan

your second question, for My X Tricia, results. Okay. back letter months the to shareholders

You growth. commodity achieved XX%-plus remarkable XX% premium like ratio,

back it forward, you couple some I to can of will to You on top infrastructure, want as Or as growth rate your of growth? deteriorate given your ramp one-off do is margin having think faster the them remember of not the you margins going was you have for is normally anticipate rate through? that you these to both. up going wondering handle you think do on for growth? in grow staffing top margin Or So or this faster you just But the of either the let to line? much ago, years line and at growth keep

Susan Griffith

great That's question. a

back we our to to go underwriting fast that of is are as $X.XX Let's goal, making grow and profits. at we can least

ability and we we grow the key here. we that really on happy. margins to have all I have, are the and we part when really like cylinders, think We're have have we like that's firing So

an We have had brand, competitive hiring incredible across the structure, company. and great people a we a no infrastructure, cost have great problem

down. don't we believe need we where have any slow to So

can step a continue again, what to look it we're grow many predict look we you if position future about state-by-state, margins. to at we so back to channel-by-channel, and able do determine to grow. need you again grow and will what say do still but momentum. again, now, we right variables, when we're don't great we believe we we bullish the in across sitting Now really we're you started can't I excited product-by-product, then But that these looking And so surgically and

to about our to vision for we're goal, $X.XX as So margin. become that is we're to our happy we our take consumer's -- make our Obviously, achieve and with happy fast can, customers. as going #X care growth. me John? choice grow to We're Anything, continue and of and our to

John Sauerland

job past and has would were been in think the to quickly, it. with very we remarkable. I success There I reiterate we're attention we had where and staffing people you have have growing the points been of projected an mature staff and need. trained calls challenged organization, management relationship John done by a claims appropriately to example the the take the handle fabulous Murphy's having customer has to getting ahead

similarly Our a we growth, service there levels claims And dropping really the we of claim have have the little bit. fact frequency and benefit has been outstanding. that's where the had sites, enjoying, a been level at impressive. are that And

had haven't as we claims. people to quite in quickly So add

levels customer stuff and feel great some But also great photo in efficiencies, our We service organization. metrics estimating. about We found we management about the like quality feel in short, claims. relationship

and want can. we're all to right we as continue now So as to as grow Tricia said, cylinders rapidly on sort of firing

Susan Griffith

than and our about, excited we're think so talk have growth And shares. Yes. we less Robinsons about we about of X%

So mix to our I runway mean well of changing is that. shift as We're think and well. the with positioned

now we've thought coming to and more customers we had preferred was the our So our better was even XX end, have get XX project we Project fantastic XX streets. on

about preferred our retain ability excited our business. continually attract to and we're So

so And as lot is mix of opportunities changes, shift there we well. believe that

John Sauerland

we'll And give faster the if previously. a more had we don't Vice lot a you which you, are mean we're have hitting iterations, our XX market quarter, to and we around lot say product, tell a even happy to than wait President XX to

Susan Griffith

of products. lot our a name ways how on creating We're Yes.

Julia Hornack

call the Thanks. from the Andrew, take can next line, we conference please. call

Operator

Wells from next the with comes of Elyse Our Fargo. Greenspan question line

Elyse Greenspan

you a favorable trend. I row, industry, following pointed guess, another throughout a that persisted? think more think do say trends, made of we a auto guys favorable the trends the that a frequency for or driving quarter frequency a on industry? couple question for the time maybe normal we've My is you base of we in the What point of see to you need new declare the when second that kind the favorable it's in questions, guys And quarter the home that industry? new seen And a get to we to frequency to what

Susan Griffith

in about really have changing. things mix shift to tough I It's talked I of lot particular, Yes. going clearly pinpoint frequency. our is in a just

a vehicle into go can You miles driven.

lot way. you of and quickly macroeconomic If a hard look along data, it's to react the things because change

closely watching that. we're unemployment prices So things like gas and things and like

atmosphere. okay, in going you understand, and to happening what's can't I we're But can priced you because and and kind we're macroeconomic any given the to price change in we'll watch exactly where we say, quarter, do normal a severity. So tell this when those of is new prices

John Sauerland

We us driven, for long-term do pointed it's such frequency the changes out, very the has with data are get data to more types -- even miles even that even been have to it's them. for is we us, this it's question miles driven, that trend often know around the difficult explaining negative. and project past economic We Tricia of difficult difficult

almost variability. In frequency 'XXs, say of talking to dropping that is it back the I what When look expect I'm But 'XXs, be it We was a back XXX. of at it combined to 'XXs if the we had industry was something culminated X period, beginning got that, past went where X,XXX the within you about dramatically. see lot like where below XXX-ish. The long-term, and decades. We with what it back ratio for a up and negative. the little the X-decade were you

or those You frequency. up get even so, quickly though long-term likely down to a to drop price past frequency is or point. it's After in think make drops experiences decade very the been a that flat trend Bit. the fairly the quickly less a negative, over to industry I But

frequency things cautious agile, I We have changed. have for think drop. And in We history, reason act and that piece a we key very those the very think, again, ensuring six that's are we back win believe, straight there how quickly big where think the marketplace. look to changes us, the make be we is is I at I quarters when But you now, had and

Elyse Greenspan

in to customers there highlighted slide guys offering all now then that deck is back And products are you compared the you 'XX the and where XXXX. a Okay. to

Is always not you there so was And if force made this that driving opportunity you on are as before you guys the completely take maybe that guys to with directly customer, are to back would think might list list risk something of that acquisition insurance to future home acquisitions, today, about the something you but to that want you underwriting bundle the ASI anything and providing on you there. identified go auto yourself? writing

Susan Griffith

with values that -- I career, we're and that the we insurance. knew with access on on products. given started that to is homeowners ASI were agency We with as I with we but the channel in think to Agency Advantage they for the market actually with important, were started knew Progressive If great because a the the or we we to just should in area. us we partnership and now, out happy over partnership, us. paper ASI after need a believe like same are our say start we products And did

have on didn't have on with feel So necessarily channel. that that paper. purchase, auto ability extend made that to agency a products have we our access product policies and those very the the and to to comfortable we sense our that again right side We with because to customers offering we

Elyse Greenspan

And investment quick on the new money on in. What's one get portfolio if today? one more I yield the

Susan Griffith

New Bill, that you want one? yield take money investment to portfolio today.

William Cody

The a basis, X.X%. portfolio second a target start portfolio, with the little quarter, New that was yield. run don't and new the just over money we a bit yield in total investment on it this we money In necessarily the return

you just would say, I reasonable if you get add forward, going looks that on of So spread top money quality, around a is X-year like. what fixed-income bonds, of high can duration as same And proximation treasury. the

Julia Hornack

next take the the we call line, can please. from Andrew, call conference

Operator

Mike from of Crédit Our next question comes Suisse. the Zaremski line with

is line now Your open.

Michael Zaremski

Yes. on customer other the differential the Thanks the Robinsons for versus types. approximate and Diane combined Can the remind the us Sam, Robinsons Wrights? versus you ratio between growth info

Susan Griffith

I don't we believe shared it.

it I would So think be.

John Sauerland

same. our It's And all for the target those XX. segments are customer

channel, across we upfront obviously So an different commission have channels over with loading direct economics the lifetime. the the

So not is same X profit necessarily the the segments target same, pricing -- is customer channels. across but those the the margin across

Michael Zaremski

Okay. -- you I a invisible PLE. billion-dollar number guess, kind of said you of to due say higher can profits -- you

could that more assume through I more. profitable, Robinsons chunk big and So is of from I the that coming maybe

Susan Griffith

last So you're talking about that slide John showed. that

Michael Zaremski

Yes.

Susan Griffith

Yes.

at be at a PLE. percentage So a how month book, that, if added the lifetime in our entire take then we percentage increase when we And John that, much entire book we premium. in would look look of of and to we that say,

our we and premium. it's normally book, we if sound on them $X.X average So entire about lifetime in to billion add

John Sauerland

has confusing a be new been the and it's combined So not. ratio, split same might renewal you

us longer for example. than So the Robinson Sam, for will a stay for

a customer renewal that XX too because over lifetime, different is the from acquisition are Robinsons. Sam achieving to new on that customer versus dramatically you an for So we relative as

Susan Griffith

what is And the you very model in. way works channel arrive our upon acquisition different depending

Michael Zaremski

agents reasoning That's from of you about Okay. taking and independent share you're product. being holding And kind talked Got helpful. case. I it. lastly, optimistic always been one about agents, captives potentially independent overtime thought that's only the

that So going what's change? I'm understand share trying to dynamics market for change to to

Susan Griffith

Yes.

are demographics the changing. think I

So go. I people expect to wherever have think offerings multiple they

an it's their whether So online. insurance

I being bring so of being more have And the to channel. able there offerings, believe captive from you and agent go independent that of some seen is demographic route companies to a actually part have

it's different have lifestyle. to on only to product what your optionality our seeing to of very sort That have promise. fits I that, think one

Julia Hornack

please. Andrew, can from next call conference take we line, the call the

Operator

the Our line of Newsome from next comes Paul with question Sandler O'Neill.

Paul Newsome

this Is of seeing that ratio, is current It on majority where accelerating Could that? ground, the XX-year all. impact think ratio effect growth. the see growth growth just good. growth, the I combined not Is give this some we as business else is that. lot when itself, typically that we're you of combined we something like seems the had see no there impact wanted you a for you thank mass you a because the from the covered impact not with retouch new on the You just book effort of us all are as there? now? profitable right the going you in on XX-year in And how sense to

Susan Griffith

so John. is many, I think there

the our obsessed have trained impressed cost well high-quality us claims of in So cost. right make to biggest we can many read and part claims low with the and and we that the the And things of the with to sideways before going at on, and alert settled. in the advance able but the watching might advance, our been organization, about systems in what is so right we of it loss sure being that because be files have people well that have is tenure sure about that those we've much make in organization handling able letter been to to higher my really being supervisor outcome front files time have out get right going file have

this We mode a a that's, of we've while, have of We've lot for in So I new it. business. having panel. believe, been where usually business big do been new a part a

So started kind bit. of level out that's a to

John Sauerland

so new across business. would To going I that, previously all segments. a understand much to are we're add, And I it's to like XX we conscious how try better said, grow to channels

actually think what be renewal the into mix new cognizant We going are the will air. we of

ratio the at year want we're we combined looking our be customer at lifetime well. all sites that time, as XX we that So combined within for calendar than same to less ratios say those target XX, is that

is shift far Sam then few Robinson than as loss a preferred the put the customers, the ratio are So less. for new less we to bigger objectives, ratios that you the difference than and it's the a we on on But between balance much moving clearing new the And growth book as of across the end. more loss the combined renewable as are ratio those business, customers increasingly, end lot higher those X what's direct a far is book channel bring differential. then

Julia Hornack

Andrew, we next please. the caller, can take

Operator

from next Partners. of Gary line and Banfield Our comes with the question

Gary Ransom

increases I I And customers. a pay the it to I on more actually another mile experience, be as with product ask may wanted may And that service to by opportunity at your the but product? encourage also level? customer snapshot, might on about mobile pay your the level, been additional customer specifically, also enjoyed wonder the this additional could discussion level interact perhaps product of about and thoughts interaction by such encourage that interaction. mile share whether if our your thinking is you

Susan Griffith

we talked We've about a on really from more, perspective a the focused a mobile snapshot having is is been device.

be with an able driven, usage our driving phone breaking the phone of the to but time miles So day, actually using just to a application phone aggressive or understand call. behavior, a your not

to we're So loss understand the distracted behavior really that we the and trying driving. have behavior

have some can we understand product a data the into a mobile that with model that all ago. page that because focus have have put a the really our that's versus So is been we of to will point at better the device we drivers information

Gary Ransom

So you the by don't in the have anything multi-product?

Susan Griffith

for talk on variable price drive. we've next a we We're when loss focusing to amount about and little the snapshot talks variable. always for as the that right people on driving device used a quarter, experiences and about the as a huge is of And in our always things. charge ability what understanding distracted well mobile the editing we way now, in are thinking will as importance bit the terms Right of

Gary Ransom

on selection are that are other one ratio you but adverse alone, using or everyone that very it you significant truly actually just your are of not peers causing be reasonable many? -- are follow-up and loss that Is snapshot. not that a else's Is May there similar making belief are amount you higher? a product, amount is

Susan Griffith

of competition. can a surcharge customers, to that the often the ratio a I have speak loss get have and our with times say snapshot device means when going to right, which who someone me definition the driven of it a which can't is else price is and that them What to to leave, that they I us sort that selection. we're like They the didn't So price. high

Julia Hornack

please. next caller, can we the Andrew, take

Operator

question of next from Our William Adam Blair. comes line Klauber the with

Adam Klauber

What's else agents? us the you of give in How increased? ballpark platinum could Or year-over-year rough percentagewise? much increase that

Susan Griffith

to kind number I'm not We sure and a used because start give percentagewise. number. we the of that giving

I agents, I our we but might believe at to given look be to number in less little it's platinum any it. of geographic of that, where area, now that need platinum agents increase think more We around think, we to we I'll need a in there. do Robinsons, more a have

how really agents. do okay, the it as not but footprint of for that's those it So have terms agents, a we at much have ability a those because look good walk the Robinsons agencies next look kind feel like we say not we across level the assessment to we're here of into is in country, is need we now and of platinum our more growing

Adam Klauber

a has A only the to a in industry compared improved ago. then year point I pretty better improving And your been And materially tough XX-Q, to low that's better like looks severity it's improving, in doing time are look what Okay. guess, X%, it's seems industry? follow-up. how are than the for you like you severity?

Susan Griffith

different We at obviously wasn't files make talked organization do to people cost. manage accurate out get area. a have an about I because mean, we him that's making of biggest understood, there sure to leadership what have payments that level we we the looking looking incredible be claims X, are right our at our the quickly, I our making incredible what to that's to it we sure from at X.X. terms industry, really the and sure I think from the organization able this in that have And we training help I And in that we we always of look customer claim.

Julia Hornack

please. the line, we'll conference call Andrew, next from take call the

Operator

comes line Our next of with the question KBW. from Meyer Shields

Meyer Shields

think, issues the questions, Q&A. in raised Two been have I on touching

winning First, captive agents, PLEs business either or are in than agency that agent customers other direct you either those independent to customers? or independent different are from the longer-term extent loss

Susan Griffith

the things the all at of look look the anything look to of customers. I see customers at are that products, company more that proof of where from. variables able it you of at actually be in priors, it's the I we that they some have really from Do multiple of to data that right it's in have -- types customers that The will more There customers to mean, that terms that we versus terms really credit, come take now, the those of add have want too? would care, look for things the

John Sauerland

truly I think that's

Meyer Shields

diminish Okay. been to increased have to going having focus improvement to helpful. the on recognition we're of fostering? an see And second, Does you that agree options. have you the That's point the that I made brand that value demographically,

Susan Griffith

so think all. at don't I No,

our that especially recognition we Advantage Progressive to want brand Progressive Agency Home. think I have will tell you, HQX

different have options you. We also for

to brand HQX, highlighted So and the we're of own I on arguably about commercials home home, we our our commercials both and and improved that talked prospects think make our it we doing some and have actually recognition auto. it sure

actually getting better. it's like feel we So

John Sauerland

add. would I

I think are options. known customers we that the competitors, for the relative providing is to brand

Susan Griffith

always we're Steve compared have used that was not we used which in line we to to when commercial in the the lowest. the his it years was presentation ago, have

claim the to kind we sure transparent company off of saying been to And have our about XYZ. with fame better make you're going so that's getting

So we're that. of part

Julia Hornack

actually Thank XXXX going I I'm agents. to, And platinum you you. think, said,

Susan Griffith

Yes. Is wrong? that

Julia Hornack

No.

of agents XX% last June. You're close. X,XXX since Almost

Susan Griffith

ago. ever I've month reported a So

add have must So

Julia Hornack

can caller conference Exactly. from line, another Andrew, please. take we the

Operator

Our next with Meritor Brian question UBS. comes from

Brian Meredith

success you've ton at I And of and but growth offering. had So on, you just curious capital. lots know growth preferred the the had here obviously going of requires

sustain where forward a curious leverage to current growth little you position? going what And your observe is or that given able Just bit? then your alternatives are with respect capital ratio up on are this here your

Susan Griffith

a we wrote of different need mean, and about Yes. we areas I the Q. terms capital look many from in paragraph in at

need we're grow, regulatory capital surplus. we to more hit to to the As premium going

good watch problem So we have. that's a will that, continue to to

usually about grow, capital have means continue determine that in lot the we that to a course, issuing ratio we We believe to past. our debt XX% our need have of whether we a structure or different debt-to-total we'll capital things go of talk it's in and dividends, If into we capital what range.

at to our look in but understand So ability of need we to we we growth of that on get our basis good a problem monthly it. we as terms in believe if need, that that a kind see

Brian Meredith

don’t wondering, capital. I to Yes, your willingness the just equity disagree,

Susan Griffith

and review it we makes in to time every go terms determine with that, should the go most returns. what of sense where we We to market

as So needed. we that do

Brian Meredith

bigger know concerns getting some growth Got in now I run you about bigger terrific. into potentially got volatility some my question, is do manage to managing you you. How it's And arrangements it's next great and obviously, that, I their about you got guess, may rate in great assume, do and right bigger, homeowners to here what's that harder volatility and run -- the that? homeowners you've think going place I

Susan Griffith

I much understanding firstly, auto segmentation on is as in as really home the we do Well, the side. think

of not homes. So obviously ride should just but we're to departments the type we X and expand our with more homes geographically, very only to working closely R&D coverage, want understand the to

So okay, we we believe this are understand, real in that watching fits our that really segment you the our in is house.

that, you and we year to and aggregate helpful addition has In feel last insurance. added really been we good about as the our know,

So also do the we should I weather and think what about those it's can history segment should really as understanding a and continuing homes auto. write how plan rate having on and we homes to and we we of of solid kind where reinsurance

John Sauerland

lessening actually growth that risk geographically. of concentration our lot A is

agreement surplus how it's I bigger percentage are, we getting a they're the that So aggregate volatility. depending not The across-the-board. think, big actually, is helps upon

not it's dependent on sites. So

Susan Griffith

to grow is auto in home to continue goal unbundled. Our and extensively

Julia Hornack

you. Thank

line. one Please, from will caller last conference Andrew. We take call the

Operator

And from Asset Balyasny question comes Ian our next of line Gutterman, the Management.

Ian Gutterman

ones. had two just I quick

can or most ASI right, you be you the little on obviously country assume First history math? And on partners. secondly how is, the it the we Florida talk of recall on because are to overweight quickly How let there these guess, and and people infrastructure, to that. so other there and of a than build obviously homeowners, right? or before go sort answering you of talk of lot don't Tennessee Texas that growth that something just customers build lot call about is what had about a very call the first, as If was start it will them and homes you or that margin our is a states And Should fill back can you lot future I'm auto a infrastructure and I'll different maybe now, Nevada like for right. is I the middle concentrated, heavily that infrastructure the of where you in. leave non-coastal really I a where have I acquire extent bit concerned ASI? home in much are out about something have now out you the maybe of

Susan Griffith

Yes.

be Home all on agency will as obviously we So channel, off. expand the it Progressive

have On carrier. the direction channel, we multitude

the So Progressive for only best unaffiliated at customer. direct with the side. really Home partners fit the the of the is each get from percentage talk about We

organization the of We we the have to claims options country. From have investment lots fill perspective, to made a an on infrastructure country. and across offices the up have commitment

have across and of We the hundreds country. officers hundreds

in For for the use we independent part the agents most home, homes.

with to have infrastructure had there. already on built the leverage but we the our the claims do our had that, already opportunity an auto infrastructure out actually is we partnerships So leadership with

and side, here on losses of high those that losses, big large commercial our have also on kind very side. we any handles large the organization loss kind the a high or value and complicated of So home claims of

infrastructure from utilize for well agents believe an we've traditionally And home used home have country. for that across we auto, the the so as can fact the build we as we independent

John Sauerland

a lot yet. and of estimates Yes, we don't lot of have business our a where the writing homes states, for

each for those is that estimates those of sure. and is by You're reviewing an that is owned as coverage that right about But adjuster well. employee an files reviewing

employee. some is it is still delegation of the owned there while an So process, adjusting by

Ian Gutterman

that to have in to I with more you overtime more may counties certain assume more critical get your you independence enough when states people the so? start replace that as do you be goal of own skill

John Sauerland

been that's we don't which as absolutely what doing business we states sorry, yet. in have I'm a in we've of ton grow an

Home organization growing for rapidly. So is the Progressive claims very

Ian Gutterman

a Okay. be number differently. go you questions the XX% Robinsons say, you from you've but XX, just I earlier X% line, an may quick years, of then little XX amount asked And to follow-up about it, somewhat of it let's for down call a a been on Obviously, the target a fair about Robinsons. in

Just sustain to smaller a ratio. overtime? the that they longer PLE, should be a XX, the is reasonable longer-term or higher. we which bad perspective, But versus thing expect the that is a isn't that happen can neutral PV thing expect a over good because GAAP is of margin sort Is probably combined it higher the from a given just something to

Susan Griffith

came I we That first since in in was my in I is that. the XX about first were mind it my quarter we CEO. our again, public XXXX. long wouldn't XX.X, annual XX, have to go wasn't its as my Remember, in necessarily at memory But XXXX this believe. over ago been quarter writing for that we

to XX all continue will our for but look aggregate. are at to aggregate optimize the the And different, we they coverages. of again, we So

us will else do can we make what and what we at grow served $X.XX everything and that. fast we is X is we of here it to XX it's then well our This customers, as that's to really least our culture we and our is to it can, really can that's so as sort blueprint. into for years. service is fit do a So is our whatever And --

Ian Gutterman

with bit economic that well profits other Or harder. right, there success nominally XX not Does makes I'm fantastic, have make just here thinking tried change, optical think the was little but to you mix you're pressure, little sense? if natural Robinsons guess, as I more, spreadsheet the mathematically I the was Absolutely. more I it a way?

Susan Griffith

Yes.

we mix how have goes and we new from coming our as we're think see of I it continue just play it to to out increase business.

John Sauerland

just would to I reiterate.

accordingly a is pricing XX As into target for as our best we that we go calendar expect our adjust can and XX that and combined we year, we're the new know sure we ratios sure can segment project we those we and by to are calendar calendar or year. can make renewal, below by target better, that

Julia Hornack

Thank you.

we've time. exhausted scheduled actually So our

hand So scripts. back Andrew, to going for I'm you closing it the to

Operator

That Thank website of replay available Progressive's will second quarter about event. the of investor the The Investor event section on for year. the concludes Relations Corporation's Progressive next you. be Information a

a disconnect. now have may You Everyone, day. wonderful

The Progressive Corporation (PGR) 2 Aug 182018 Q2 Earnings call transcript