The Progressive Corporation is hosting their Third Quarter Investor Event, with Doug Constantine as the moderator. The company will not be discussing their results in detail, but instead will have a recorded presentation from their CEO and a live question-and-answer session with the leadership team. There may be forward-looking statements made during the event, and more information on the company's risks and challenges can be found on their website. The event will begin with introductory comments from CEO Tricia Griffith.

In the third quarter, the company faced challenges due to rising loss costs and adverse weather events. However, they made difficult decisions and stayed committed to their strategy. The third quarter saw modest reserve development and lower catastrophe losses compared to the first half of the year. This was due to flattening loss cost trends and adequate reserves for pre-House Bill 837 lawsuits. The company's exposure to the Maui fires was limited, resulting in lower property catastrophe losses. Overall, the results suggest that their strategy is working.

In the third quarter, the company's rate and non-rate actions had a positive effect on premium and profitability. They took approximately 16 points in personal auto rate and also adjusted non-rate actions in other lines to address loss trends. The company's net income is also benefiting from the higher interest rate environment. However, these actions have had an adverse impact on unit growth, with new apps in personal auto down 20% and a decrease in PIF compared to the previous quarter. The company is reassessing their marketing spend to find the right balance between profitability and new business growth.

Despite a decline in new applications for personal auto, the company's retention rate remains strong, indicating that competitors may still be struggling with underwriting. The company's year-over-year growth has been impressive, with a 10% increase in policies and a 20% increase in net written premium. However, the company is still facing challenges, with a combined ratio above their target and elevated loss trends. They are closely monitoring the macroeconomic environment and adjusting their plans accordingly. Starting in the fourth quarter, the company will report results on a Gregorian calendar basis, limiting historical comparisons on a monthly basis but continuing them on a quarterly basis.

The speaker thanks the attendees for joining and announces that the management team is available for questions. The first question is about the company's growth trajectory, with the attendee asking if they will reaccelerate growth in 2024 once they reach their targeted combined ratio of 96%. The speaker confirms that this is reasonable and explains that they still have work to do to reach their goal, but they have seen growth in the company despite a self-imposed pullback in media spending and non-rate actions. The focus is on maintaining profitability before increasing growth, and they plan to start pulling back on non-rate actions in the near future.

The company is implementing a plan to grow and increase their budget for marketing. They are being cautious due to uncertainty but aim to grow at a rate of 96 or better. The frequency of bodily injuries has improved, but it is difficult to determine the exact cause. Overall, the company has been stable in terms of frequency and their UBI data shows a 15% decrease in VMTs compared to pre-COVID levels. There is also stability in the number of office workers working from home.

The speaker discusses the stability of the industry and the impact of ambient shopping on profitability and capital position. They mention their strategy of getting ahead of rates and closely monitoring the auction environment, and state that they will continue to adjust their actions as needed. They also mention that they are dissuading some customers from purchasing a policy with Progressive.

In this paragraph, the speaker discusses the potential for growth in Progressive's business as they continue to adequately price their policies. They also mention the growth of their TNC (transportation network company) business and the challenges they face with rate increases and reserve development in certain states. They are working on developing approaches to address these challenges and improve their performance in this area.

The speaker cannot reveal specific details about the company's efforts to improve rates in certain states due to proprietary reasons. They mention adverse development in commercial line reserves, particularly in TNC reserves and late reported injury claims. The decline in the company's expense ratio is partially due to pulling back from the market while seeking price hikes and reducing non-acquisition expenses.

The company has reduced its marketing spending and plans to be cautious in increasing it again. They have a significant amount of planned marketing spend for the fourth quarter and have the flexibility to adjust it based on their profit margins. The UAW strike may have a short-term impact on their business, but they have a plan in place to minimize the disruption. They will continue to monitor the situation and adjust their strategies accordingly.

The speaker discusses their concerns about delays in fixing vehicles and the impact on the business. They also mention implementing rate changes in personal auto and the potential impact on loss ratios. They mention being efficient in media spend and pricing to achieve target profit margins. The speaker also mentions competitor behavior and the market share growth that Progressive has achieved.

The company GEICO is focused on growth and will do whatever it takes to add new customers, as long as they maintain their target profit margins. They pay attention to where their business is coming from and make sure they have the right brand and competitive prices. They have 4 strategic pillars and invest in all of them to continue being a high-growth company. They are growing in preferred segments of their business, such as homeowners who do not bundle their home and auto with Progressive, but have been shrinking in the nonstandard end of the spectrum. This is a positive sign for their future growth as these customers tend to stick with them longer.

CEO Susan Griffith discusses the importance of both the origin and customer base of the property business. She also addresses the goal of achieving a 96% or better operating status in all geographies, and the progress made in derisking the book and non-renewing policies in volatile states. Griffith mentions investing in segmentation and understanding rate to risk, and expresses confidence in the company's plan for the property channel. Analyst Joshua Shanker asks about segmenting the property business and the percentage of the business operating at a 96% or better. Griffith explains the strategy is similar to that of the auto channel and that it will take time to execute, but the company is making progress. Analyst Greg Peters asks about non-rate action.

Susan Griffith and Pat Callahan discuss the company's plans to dial back on some of their actions, which include implementing more restricted billing plans and requiring additional checks for accurate risk assessment. They also mention that they may start investing more in lead generation in 2024, once they are confident in their 2023 results. They believe there is still room for rate increases in the market and will spend efficiently to attract customers. They also briefly touch on the property business.

The company's combined ratio is improving but still above their target of 96. They are working to improve their property business and derisk in certain states. Their goal is to have a strong property book and the Robinsons cohort is important to their future. They have been exceeding their objectives for growth and have different combined ratio targets by segment. They aim for a return on capital equal to or better than their personal auto business.

The company's goal is to achieve a 96% calendar year loss ratio, but each business is priced differently based on its characteristics. The improvement in the auto accident year loss ratio this quarter is largely due to rate actions and a decrease in new business, rather than a change in the mix of new versus renewal business. The company has also seen better retention rates in a challenging market.

The retention rates for the insurance company have been strong, which is not surprising but still pleasing. The company's goal is to have stable rates and increase growth while maintaining this retention. Last year, the company was ahead of the market in taking rate, but now competitors have caught up and surpassed them, resulting in customers being less likely to find a better rate when shopping. This has led to robust year-over-year renewal rates and a return to previous lifetime expectancies.

The speaker, Susan Griffith, discusses the company's positive trends and expectations for the future. She mentions the potential impact of weather and the company's efforts to reduce expenses. The discussion of advertising comes up again, with the speaker noting that they may ramp up advertising efforts at the start of next year to reach their goals.

The company is cautious about growing too quickly, as they experienced at the start of the year. They plan to increase media spending in the first quarter if weather is normal and non-rate actions are successful. However, they are unsure of the impact of ambient shopping and shopping fatigue on their advertising efforts. They will ramp up spending as needed based on market conditions and their profit targets. Analysts on the call also asked about the company's growth plans.

Brian Meredith asks about the company's plans for growth in light of inflationary pressures and uncertainty in the market. CEO Susan Griffith says they will be more cautious and will slowly pull back in states where they have enough rate. They will closely monitor the situation. Meredith also asks about the rollout of the BOP business, and Griffith says they are excited about being in 46 states, but it is still a small part of their business and they will not comment on it publicly.

The speaker discusses the impact of fully pricing to telematics curves before and during COVID. They mention expanding their offerings and investing in technology to collect and analyze data more accurately. They estimate that about 50% of their earned premium states have continuous monitoring.

The speaker responds to a question about Progressive's strategy for competing with smaller personal auto insurers. They mention that they often look for opportunities to acquire smaller companies, but they also believe their size and efficiency allow them to outcompete on their own. The next question is about the company's rate increases, and the speaker clarifies that they plan to take an additional 3% in the fourth quarter, bringing the total for the year to 19%. They attribute this to ongoing trends such as attorney representation and car repair costs. A company representative adds that their rate actions are dynamic and vary by state and segment.

The company has product managers who are responsible for managing different levels of the market and predicting trends and non-rate actions. The severity of claims has decreased, which is a positive sign. The company also saw favorable development in personal auto and believes this is due to feeling confident about adequately reserving for Florida's reform. The company has seen an increase in reopened claims due to delays in repairs and increased rental costs.

The company representative and Tracy Benguigui discussed the factors that went into fixing cars, including the influence of Florida legislation on injury claims. The company had to increase reserves to reflect future costs, and they estimate ultimate loss costs based on the best information available. They also mentioned that it is common to have supplements in claims as more information becomes available. When asked about the positive influence of the legislation on recently written business, the company stated it is too soon to tell.

The event has ended and the operator is handing the call back to the host for the closing scripts. The operator also mentions that information about a replay of the event will be available on the company's website for the next year. The call can now be disconnected.

This summary was generated with AI and may contain some inaccuracies.