Good morning, and thank you for joining us today for Progressive's Fourth Quarter Investor Event. I am Doug Constantine, Director of Investor Relations, and I will be the moderator for today's event. The company will not make detailed statements related to its results in addition to those provided in its annual report on Form 10-K and the letter to shareholders, which have been posted to the company's website. This quarter includes a presentation on a specific portion of our business, followed by a question-and-answer session with members of our leadership team. The introductory comments and the presentation were previously recorded. Upon completion of the previously recorded remarks, we used the balance of the 90 minutes scheduled for this event for live questions and answers with the leaders featured in our recorded remarks as well as other members of our management team. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2023, where you will find discussions of the risk factors affecting our businesses, safe harbor statements related to forward-looking statements and other discussions of the challenges we face. These documents can be found via the Investor Relations section of our website at investors.progressive.com. To begin today, I am pleased to introduce our Customer Relationship President, Lori Niederst, who will kick us off with some introductory comments. Lori?

Good morning, and thank you for joining us today. As Doug said, my name is Lori Niederst and I'm excited to be the first to participate in our new format. Traditionally, Tricia provides the opening comments for these presentations. But going forward, members of our leadership team will have the opportunity to speak to topics in our area of responsibility and introduce the talented individuals executing on these initiatives that we highlight during the event. In previous presentations, we've discussed our strategic pillars, which serve as the foundation of our vision. Today, we're focusing on one of those pillars, serving the broad needs of our customers. This pillar is synonymous with our strategy to become a destination company, providing products that meet our customers' changing needs throughout their lifetime. We seek to instill customer confidence in both the products and the prices that we offer. To set the stage for today's presentation, I thought it would be helpful to recap the history of Progressive's evolution as a destination company. Back in 2008, we publicly introduced our now ubiquitous customer segments, Sams, Dianes, Wrights, and Robinsons. In 2014, we first spoke of our destination strategy, stating our intention to invest in the products, services and experiences to better serve customers from all four segments. Since then, we've had a relentless focus on not only maintaining and growing the Sams, Dianes, and Wrights, who have always been well served by Progressive, but significantly increasing our market share with Robinsons, which we estimate represent just under half of the personal insurance direct written premium in the United States. We've been very successful growing Robinsons who in December of 2023, accounted for just under 13% of our direct written premium. Countless efforts have contributed to Robinsons being our fastest-growing segment, but it was two strategic decisions that really drove our success. Even before the introduction of the destination strategy, in 2006, we began offering homeowners insurance from other carriers in our Progressive Advantage Agency, or PAA. What began as a small endeavor has evolved into HomeQuote Explorer, or HQX, where we now offer customers competitive homeowner rates from a lineup of reputable carriers. This success in direct and our desire to grow Robinsons in the independent agent channel, led Progressive to purchase a stake and eventually fully acquire American Strategic Insurance. ASI, now branded Progressive Home, has enabled us to offer both underwritten home and auto bundles as well as partner bundles to significantly increase our appeal to the Wrights and Robinsons. We've since leveraged our learnings and success in bundling personal insurance products in the commercial market, where we continue to be an industry leader. In 2018, we first introduced BusinessQuote Explorer, or BQX, which enabled direct customers to purchase a variety of commercial insurance products from other carriers, and bundle with our Commercial Auto and BOP coverages. More recently, we're exploring this winning strategy in Personal Auto with AutoQuote Explorer, or AQX, which enables customers to compare rates and purchase products from other personal auto carriers on progressive.com. This gives us another avenue to serve more customers and cross-sell from our expanding portfolio of products. Customer bundling doesn't end with Home and Personal Auto, our Commercial Auto and BOP. We have a whole suite of offerings, which includes Progressive underwritten Special Lines, Renters and Umbrella products. By expanding our portfolio of products, we have continued to increase our addressable market and capture new business. The result of these efforts has been pretty incredible. We now estimate that 19% of households in the United States have at least one Progressive sold product, an increase of over 80% in the last 10 years. The benefits of these efforts on our business are far-reaching. The top line growth from increased sales of progressive underwritten products and commissions earned from sales of partner products is just the beginning. The more products the customer purchases from Progressive, the stickier the customer becomes, leading to higher lifetime profits and lower per policy acquisition costs. Fueling the virtuous cycle that results in greater market share. But it's not just Progressive; the benefits also extend to our partners. We're making insurance easier for customers by providing options to meet their insurance and other financial needs now and in the future. Additionally, our industry-leading brand and acquisition engine provides growth opportunities for our partners, making this destination strategy a win-win-win. It's important to note that today, we're talking about the direct channel. Like many efforts Progressive has undertaken we often leverage the direct channel to test, learn, and perfect new ideas. While doing so, we're always looking for ways to deploy our successes in direct to benefit our independent agents. For decades, the agency channel has been vital to Progressive's growth and independent agents will continue to be the face of Progressive for millions of customers. While we're focusing on Direct today, we fully recognize that Robinsons are the largest segment of consumers served by independent agents in the United States, and we have a number of significant investments underway to continue our leadership in this channel and our partnership with our 40,000-plus independent agents. For a deeper dive into our evolution as a destination company, I'd like to introduce Kathryn Lemieux, a 42-year Progressive veteran and our Business Leader for CRM Sales Experience. Kathy will share more detail on how we're leveraging our HQX, BQX and AQX platforms to provide choice and build customer confidence.

Hello. I appreciate the opportunity to deliver some highlights on our progress toward achieving our destination company vision. Today, we'll focus on how the Progressive Advantage Agency is becoming a primary source for insurance products for consumers who prefer the direct channel. We strive to provide access to a broad portfolio of products, so customers begin and then keep their relationship with us without the need to look elsewhere. Let me begin by introducing the journey of Sam and Ashley, two actual Progressive customers. Back in 2009, when Sam first contacted Progressive, he was seeking insurance for his 1999 Saturn. Eventually, he bought a motorcycle, which needed insurance as well. Later, he married Ashley, and together, they acquired renters insurance until eventually, they bought a home, which required homeowners insurance. Both our renters and homeowners insurance policies were purchased through the Progressive Advantage Agency. In the case of Sam and Ashley, we were able to offer them different products as live events triggered the need for additional and more complex insurance coverage. We would have loved to sell a Progressive manufactured property product to the couple, but that wasn't the right solution for them. So we had other options ready. Let's talk more about that approach. Our multi-carrier marketplace for property and small business insurance products allows us to meet the needs of more and more customers. We are leveraging the Progressive brand, building on our industry-leading digital tools and working with a growing number of reputable carriers to make buying and maintaining insurance easier. This recipe is proving very successful, delivering 200% growth in premiums written through our agency in less than a decade. Over the years, we've evolved the comparison shopping experience from property to commercial lines, from one carrier to many, from the phone to the online channel and from quote to also buy without agent intervention. While the large majority of our insurance customers start their shopping experience online, using our HomeQuote Explorer or BusinessQuote Explorer digital experiences, which launched after our shop by phone-only models, the majority work with our team of knowledgeable in-house agents to customize their policy before purchasing. As you've come to expect from Progressive, we continue to invest in improving the quote and buy experience, always focusing on the needs of our customers. We introduced a Digital Multi-carrier Quote experience, which we call HomeQuote Explorer, in 2017. Over the course of the next several years, we made enhancements and introduced new features to improve the quoter experience and the platform's efficiency. These efforts have generated close to a 10% increase in quote completions over early HQX results. One of our most recent changes was the introduction of a QuickQuote Experience, which displays prefilled data from third-party providers upfront so that customers can easily review and edit. Leveraging our proprietary models, we customize prompts and details to assist customers in selecting coverages and qualifying for discounts. This change alone decreased quote time by 20%, reducing the effort for customers and increasing their likelihood to purchase as a result. This is just one example of our work to simplify what has traditionally been a complicated shopping experience for both homeowners and small business owners. Our dedication to continuous improvement is bolstered by a rigorous A/B testing approach aimed at making a fully digital quote and purchase available to more shoppers. However, our in-house agents are always here to provide guidance and instill customer confidence. The investments in our HQX and BQX platforms only produce value when they're backed by a broad portfolio of products underwritten by reputable brands. Both the breadth of carriers in our network and the depth of their product suite have grown over the last decade. Presently, 13 carriers comprise our HomeQuote Explorer portfolio and nine for BusinessQuote Explorer. There are major benefits to having a large contingent of carriers in the PAA, which Sean will get into later, but there is also a risk because we are exposing Progressive customers and thus the Progressive brand to the services of another carrier. To protect our customers and the Progressive brand, we are selective about the carriers we partner with. They must meet our standards for customer care. They must offer a quality product at a fair price, pass our information security assessments and they must have the financial strength and standing to uphold the promise we make to customers that we will be there when they need us most. Additionally, we'll consider a carrier's technological capabilities so that we can provide a seamless integrated digital customer experience for quoting and servicing. Also worthy of note is that our carrier networks include a number of companies that provide both property and small business insurance offers in HQX and BQX. We take pride in this fact as it demonstrates the strength of our mutually beneficial relationships. The benefits of our multi-carrier model extend far beyond quote and buy and are evident throughout the customer insurance journey for significant life changes, such as Sam and Ashley getting married and buying a house, perhaps experiencing a future job relocation or if they eventually need to ensure their teenage driver. Our agency is ready with the products they need and the customer service to help them navigate these events. Recall that Sam and Ashley added a home policy underwritten by one of our network carriers several years after acquiring their Progressive Auto Insurance and built a bundle, becoming one of the more than 1 million Robinsons we ensure through the PAA. The portfolio of products and carriers who underwrite them that are available to our customers allows us to grow more bundles over time. But even when the event isn't life-changing, for example, a policy renewal accompanied by a steep rate increase, we are presented with an opportunity to support our customers by offering options, which gives us the chance to retain the customer. Often, we are able to anticipate customer shopping by leveraging our proprietary data models and proactively reach out to offer assistance. Even subtle nudges such as the email presented here, reinforce the value our in-house agency offers. That leaves our longest running product comparison experience, Auto Insurance. More than 30 years ago, we introduced auto comparison rating as a fee-based service in California. Insurance products were much simpler in those days, so at the time, rates were manually calculated by a team of Progressive people who reverse-engineered them from public filings. This industry-altering idea proved to be a winner with customers, prompting us to make the service available countrywide and to build our brand on comparison rates. Our early marketing messages combined the ease and savings from one-stop rate comparison with a message of transparency. If our rate isn't the lowest, we'll tell you whose is? And challenging the status quo was what you'd expect from an insurance company as early brand differentiators. As Progressive and its competitors advance their products, adding credit, underwriting and tiering, our precision in providing comparison rates declined. Consumers saw decreasing value in the range of rates we provided to adjust to these conditions. The next evolution of comparison rates came in 2016 when we began purchasing discrete auto rates from a third party. This model has proven to be a lower-cost way to provide a service that is to this day, valuable to our customers. Over the past five years, we've conducted dozens of tests leveraging comparison rates to improve customer experiences, increase Progressive's conversion and monetize click referrals. Our decades of experience led us to take the next step in the auto rate comparison journey AutoQuote Explorer. Bringing our CRE, HQX and consumer insights together, we've been piloting a multi-carrier auto quoting experience since the third quarter of 2022. We launched a quote and buy experience over the phone first and have refined the delivery with our in-house agents through several iterations. We're ready to introduce the AQX Experience online soon. The screens that you see on this page were developed using focus group and agent feedback when testing with prototypes. Early results give us confidence that the comparison quote and purchase experience with a reputable set of carriers will give us the opportunity to better meet consumer needs, starting new customer relationships in those cases where insurance shoppers would not purchase a Progressive policy, getting their auto insurance needs met elsewhere. Progressive continues to be known for providing comparison rates, but our launch of AQX provides an opportunity to refine our brand positioning. The key is to generate interest by conveying that we've taken the hassle out of shopping for car insurance, while giving customers confidence in the products, prices, and providers that we offer. But just like HQX and BQX, the customer value of AQX extends beyond the purchase and we continue to refine the benefit statements, taking advantage of our market research. Thank you again for the opportunity to speak today. I'll now hand it over to Sean.

Thank you, Kathy. Following that overview of the operations of the Progressive Advantage Agency and the many unique shopping experiences we have deployed as part of it, I will now be walking you through the robust benefits of this Destination Era strategy. As Lori referenced earlier, any discussion about the benefits of the Progressive Advantage Agency should be viewed through the lens of a win-win-win strategy. As with everything we do at Progressive, our customers really come first. The PAA was created to ensure we had a full suite of insurance products within our direct channel that can meet consumer needs throughout their lifetime. But beyond just offering a broad collection of types of insurance, we look to ensure that our customers are confident in their purchases through education and choice. Being able to provide quotes for other insurance companies in addition to our own underwritten policies ensures that customers feel empowered in their decision and are confident with their price and coverage. Additionally, our customers benefit from the ease of the shopping experiences, with our best-in-class quoting capabilities, saving them time and frustration. When thinking about the benefits enjoyed by our participating network of carriers, the list really starts with the access they gain to millions of qualified customers that were generated through Progressive's marketing and media efforts. Given the strength of the Progressive brand and our advertising experience, this can frequently be greater consideration or at bats than many of these participating brands would experience on their own. Progressive also understands what is critical to writing profitable business. So we allow the carriers on our network to apply any of their proprietary acceptance and pricing rules in addition to our strong adherence to any provided procedures as of their appointed agencies. Furthermore, Progressive has been a leader in innovative customer experiences, both offline and online for many years. Being a part of our carrier network allows for leveraging these experiences to efficiently and effectively quote and bind customers, which presumably leads to positive brand association for our participating carriers. Finally, the creation of the Progressive Advantage Agency creates a multitude of benefits for Progressive and our shareholders. I will be highlighting many of these in more detail in the upcoming slides. But in general, this Destination Era Strategy allows us to achieve greater top line growth, better efficiency in our media spend, extends household retention and serves as a stable source of revenues complementary to our underwriting profits. As we have covered in past IR calls, Progressive has been focused for several years on expanding our addressable market and improving our penetration into multi-product households or Robinsons as well as increasing our product offerings outside of those traditionally underwritten by Progressive. In doing so, we have seen a steady trend up in our multi-product households on both an absolute and relative basis. Through our Progressive Advantage Agency, we are able to offer complementary products within a unified bundle experience. For example, in Personal Lines, we can offer renters and/or home insurance to go along with the customer's auto policy or in Commercial Lines where we are able to offer general liability or business owner policies to complement their commercial auto coverage. These are prime examples of how the internal agency is able to help us provide a full suite of insurance solutions to meet customer needs and in turn help us grow. Another important component to our overall growth strategy is understanding how consumers view comparison quoting experiences. We know through our research that there are many key drivers of consumer consideration and ultimately, how they decide what insurance carriers they're going to receive a quote or purchase a policy from. Several of these considerations align nicely with the solutions that we are delivering as part of the Progressive Advantage Agency. This includes consumer confidence that they are getting the right coverage or rates, making the entire insurance process easy to navigate, feeling in control of their insurance decisions, getting good value and demonstrating an understanding of what is important to the consumers. Each of these drivers is met in some way through our comparison quoting experiences and agency operation, and will serve as guiding principles as we expand and refine our consumer messages and experiences. Along with the previous slide, these top of funnel benefits are foundational to the win-win-win dynamic that I started with. As these expand the total volume shopping with Progressive and thus leads to a greater pie to be shared by Progressive and our network of carriers. This offsets any minimal cannibalization risk that may be present through the providing of comparison quotes. With that said, we monitor very closely these trade-offs to ensure we achieve the most optimal outcomes. As highlighted in the last two slides, the Progressive Advantage Agency operation allows us to attract more customers at the top of the funnel and drive them to progressive.com or to our call centers. The next critical step is to get the most out of these interactions. Our multi-carrier model allows for a greater likelihood of returning competitive rates that meet consumers' needs. As the chart on the left indicates, by having more carrier appointments in a geography, we increase the likelihood that we can return at least one rate for our consumer. This is not surprising, but still critical in the face of greater underwriting restrictions for specific products such as homeowners. As a result of our carrier coverage, we were able to successfully provide a home or condo rate to more than 80% of all shoppers seeking these coverages on progressive.com in 2023. Additionally, we know that offering multiple comparison rates increases the chance we return a competitive rate to the customer. The chart on the right indicates that our conversion relativity is directly correlated with the number of rates we return. While there is diminishing return with every addition, we have seen more than a doubling of our conversion rate due to our portfolio of carriers as compared to a single carrier platform. This means more people finding a policy that works for them and more households having a relationship with Progressive. Transitioning from getting more customers in the door, I would like to highlight the value of the internal agency and maintaining these relationships through increased retention. As mentioned earlier, our goal is to meet customer needs throughout their lifetime. We hope that the policy we initially sell to a customer does just that. However, if this initial policy is no longer the best match, we have the ability to offer alternative carriers and coverage that may be a better fit. In doing so, we maintain a relationship with that customer and household longer. In the current environment, while rates are rising and underwriting is more restrictive, the ability to shop several carriers across the same product produces significant value to the customer and in turn Progressive. Within our homeowners portfolio, we see that we extend this household relationship nine months longer on average as a result of this multi-carrier safe practice. The other form of retention benefits comes as a result of increasing the number of policies that exist within a household. Not only does selling an additional policy lead to increased sales and profit from those other policies, but the expected retention of the original policy also dramatically improves. Across all products within our portfolio, the policy life expectancy grows meaningfully as you add products to the relationship and by a magnitude of up to 2x or more. It is important to note that we see this retention improvement, whether they are Progressive underwritten policies or network carrier policies, leading us to believe that meeting all insurance needs is the driver of customer loyalty even if we leverage other insurance carriers to do so. Many of these benefits come together in what we call a media virtuous cycle. With access to a multi-carrier model, we can offer consumers more choice that meets their needs. In doing so, this elevates our sales yield per visitor to progressive.com or into our call centers. Getting a more efficient return on every visitor to Progressive allows us to increase our media spend while still hitting our target economics. This increased spend drives greater awareness of Progressive's offerings, driving traffic to progressive.com, our call centers as well as our appointed independent agents. This, in turn, increases the volume available to Progressive and the carriers within our network, incentivizing more carrier participation within our agency, strengthening the multi-carrier model further. This starts the cycle all over again. As we have especially seen in recent years, marketing spend is an important tool to stand out in the crowded insurance marketplace. This virtuous cycle is valuable to ensuring Progressive can rationally be in the top tier of marketing spenders and further widens the financial moat with lesser-known brands. The scaling of the Progressive Advantage Agency and its corresponding revenue expansion has several risk mitigating benefits. Commission revenue is a predictable annuity and has minimal exposure to the loss and cap risks that come along with underwriting insurance policies directly. This includes prominent risks such as weather and natural disasters. As agency compensation is really directly impacted by these risk exposures, this serves as a complementary source of revenue to our standard underwriting operation. Additionally, as previously highlighted, meeting more customer needs strengthens our brand and improves our sales yield, mitigating some of the standard competitive risk that insurance companies face. The many benefits that I've highlighted, stemming from the PAA can be found throughout our income statement. Our top line net premiums earned includes the premiums from our Progressive's underwritten products and is impacted by the agency's brand and consideration lift, the household retention improvements, increased additional protection sales and the increased media spend associated with the PAA operation. Additionally, our success is penetrating the Robinson customer segment roll up within these figures. As we have expanded our PAA operation and product offerings, we have experienced net earned premium growth for Robinsons that has outpaced that of our other customer segments. The service revenue line on the income statement includes the commissions earned from our carrier network. As the chart on the lower right demonstrates, this is the most direct way to gauge the trajectory of our internal agency operation, as it clearly shows our steady growth throughout the past decade. While it has not lost and made this as an Investor Relations call, and thus, the financial results are the primary focus, the story of the Progressive Advantage Agency still really comes down to the customer journey and ensuring that we are offering products and services that meet our customers' needs. Kathy previously highlighted the journey of Sam and Ashley as they progress through their lives and the evolution of their insurance needs along the way. Without bringing together a network of insurance carriers who offer complementary products like BOP or Life Insurance, we may not have been in a position to satisfy all of these needs and possibly would have lost the household relationship entirely. Happily, this is not the case as we are pleased to be able to continue to build and grow our Progressive Advantage Agency with a full suite of insurance products and a network of participating carriers. And ultimately, we believe, make good on our win-win-win strategy of delivering value to our direct customers, our network of carriers and to Progressive and our shareholders through the operation of this best-in-class internal agency.

This concludes the previously recorded portion of today's event. We now have members of our management team available live to answer questions, including presenters Lori Niederst, Kathy Lemieux, and Sean Freeman, who can address inquiries regarding the presentation. To ensure we cover as many questions as possible, please limit yourself to one question and one follow-up. We will now take our first question.

Thank you. Our first question comes from the line of Michael Zaremski with BMO. Your line is open.

Hey, great. Good morning. Thanks. The first question is regarding some of the commentary regarding kind of going back on the growth offensive given that profits are healed in a good chunk of your territories. So I guess on the last earnings call, I recall you alluded to growth likely being a little more subdued versus the beginning of '23 when you last won one of the offenses. So I guess is that still the right way to think about things? Or any context around how you're thinking about growth, either by state or direct versus agency channel would be helpful?

Yes. Thanks, Mike. Here's how we're thinking about growth right now, which is somewhat different and somewhat alike last year. So we went into 2023 feeling like we had the right rate in the system. Clearly, as the year unfolded, and we realized that inflation was still going up, so they hadn't abated, and we needed more rate. So our sole concentration last year was to get the right rate on the street. And we feel like we're in a really great position right now. So if you think about the overarching belief that we have the right rates in the system, and we believe we do now understand there's all the caveats about we don't have every state. We're still working with some states to get rate. But for the most part, we feel really good about our rate. This is how we're thinking about growth, really sort of the trifecta. So we have a continued hard market. Ambient shopping is still up. So we know our competitors are still getting rate. So those customers are shopping and we're able to get that at a really inexpensive acquisition cost. Then we also know that we're unraveling a lot of our non-rate actions, our underwriting actions. We talked about that a little bit in November, but we're going to continue to do that. And then really the third part of that trifecta is our ability to be able to spend a lot on media. So we are really excited about heading into 2024. Obviously, my whole theme for the annual report was uncertainty, so, or the letter I should say, is uncertainty. We feel much more certain and much more confident we will watch as the data unfolds, and we're pretty excited. The one caveat I would say, Mike, is when we're starting to look at the first quarter of this year, versus the first quarter of last year, you're going to see some really odd comparisons on new App growth. So we are growing new Apps like crazy last year. In fact, on the Direct Side, our new apps were up 93%. Overall, in Auto up, I think, like 83% or 82%. So huge comparisons if you're going to compare it to this quarter. So keep that in mind as this quarter closes, we believe it will smooth out over the year, but that's something we should just make a note of.

Okay. That's helpful. My last follow-up is regarding your commentary about segmentation and continuous product model delivery is the term you also use in the letter. And I appreciate that it's probably, some of this is your special sauce and you might be, you want to be limited to how much you can say. But I'm curious, if we look at Progressive frequency and severities, but especially frequency over time. It tends to be better than the industry. I know there's different definitions. So you reminded us of frequency and severity, too? So we've got to be a little bit careful. But I Progressive still continues to do better than the industry on loss cost trends. Curious if you're willing to add any context about what what's driving the pricing segmentation? And is telematics a material kind of driver of you being able to do that? Thanks.

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

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

Thank you.

Thank you. Please standby for our next question. Our next question comes from the line of Bob Huang with Morgan Stanley. Your line is open.

Maybe just a follow-up on one of the comments that you made when you earlier talked about you plan to spend a lot on media to drive growth. Can you maybe help us understand like when you say a lot, like how should we think about it from just a modeling a forecasting perspective because, the way we think about it, obviously, there's going to be a lot of growth potential for Progressive. How should we think about the impact on expense ratio? And as well as what is a ballpark target that you're thinking about when you're normalizing expenses back to a more historical level?

Yes, I would say back to more historical levels. We've had a couple of several rough years where we've had to pull back on media I mentioned that in my letter. They've been incredible. We have a media machine, a marketing machine, and both are working really well, and we want to leverage that. We're not going to spend if we don't think it's efficient. When I talked about our growth in sort of the trifecta, we're getting a lot of ambient shopping still, and we'll continue to watch that. However, we think there's an opportunity to kind of open up the spigot and get more business in the door. We feel like we're in a really prime time now, especially with our rates. So while we're not going to share our full budget, we believe we can spend assuming all things with our pricing is right and we get pricing and some rate in some of the states that we need, I think we'll be able to spend a tremendous amount to really leverage what we think could be a great growth year.

Okay. That's very helpful. My second question, I think you addressed some of this in the prepared remarks. I just want to see if we can dig a little bit deeper into it is the broader competitive environment, and obviously, it seems like you made it very clear that you want to expand, especially in the off market, the bundled market Robinsons market, so to speak. But is there, can you maybe give us a more in-depth view on what are the competitors that are already in those positions? What does the current environment look like for you to take share? Is it going to be in your view, much more difficult than before? Or is the current environment a much easier competitive dynamic for you to grab market share, especially within the Robinsons market?

Yes, I think a lot of it has to do with timing. Many of our competitors have raised their rates significantly, which creates a certain timeframe. I'm not certain when it will stabilize, but at this moment, we believe we can gain market share. Eventually, there will be more stability in rates across the industry, leading to less shopping around. Our focus on market share this year is to capture as much new business as we can, aligning with or below our targeted profit. Ultimately, retaining customers is crucial. This year, we aim to provide our customers with the stability they deserve, especially after several years of rate increases. We're committed to monitoring trends and will need to respond accordingly. However, I believe that if we can attract new business while retaining customers, it will be a significant success. Additionally, we’ve seen continued growth with Robinsons, and we're excited about ongoing investments in our HomeQuote Explorer and the Progressive Advantage Agency, collaborating with excellent partners.

Okay. Thank you very much. I think after all these years, we're all looking for comfortability. So thank you for that.

Absolutely. Thanks, Bob.

Thank you. Please standby for our next question. Our next question comes from the line of Josh Shanker with Bank of America. Your line is open.

Yes, hi there. Thank you for taking my question. My first question, given the growth the company has had over the last couple of years, can you talk about what economy of scale has done to the other expense ratio?

Well, I think any time you have an economy of scale, you'll be able to push down the expense ratio. We're always trying to balance out our expenses with investments and what the customers want. So digital and other things like that. So the bigger you get, I think the more you can, whether it's brand or expenses you can push on that, but we have been investing a lot in digital for our customers, and we'll continue to do that. One of our other pillars, and we talked about broad coverage today, is competitive prices. And the two parts of competitive prices are really what we talked about a little bit earlier with Mike's question, that's segmentation having industry-leading segmentation. Understanding rate to risk. And the other is expenses. And we are constantly challenging ourselves to what's that right balance of investing, but getting those economies of scale. We'll continue to work on that for as long as I'm here for sure. And as long as John Sauerland is for sure.

Josh, sorry. As I think you know, we focus internally on what we call our non-acquisition expense ratio. So we talked a lot about media. We're always looking to optimize media relative to where we are in terms of rate adequacy and market opportunity on the non-acquisition expense ratio side, we're always looking to optimize costs. And of course, scale is a part of the way to do that. We have been successful in taking, if you look over the longer run, at least four points out of our cost structure on our non-acquisition expense ratio. Tricia mentioned, it's always a balance in investing and relative to the longer run, but we continue to expect to find opportunities to drive our non-acquisition expense ratio lower across all three of our businesses.

Hi, good morning. I have a question regarding how impactful you think unraveling some of the non-rate actions could be on PIF growth. I'm curious, historically, has there been more influence on PIF growth from adjusting marketing spend compared to non-rate actions? Also, can you provide an estimate of the potential growth from reversing those non-rate actions?

It's really hard to size because I think I feel like we've never been tighter in our non-rate actions than we were last year. Again, it's hard to quantify because there's a bunch of different actions we'll do, and we'll do some on different products, different states. It could be different in channels. So it's hard to quantify. I think if you want to have a quicker reaction, the media spend does that. But it's hard to discern exactly what would go into each. What we do know is we were really tight trying to slow growth, making sure we got rate in the system and now we're able to unwind that. But we're not doing it full bore. We're doing it very logically to make sure that we reach our target profit margins.

And I'd add, if we're looking towards PIF growth, new business is one driver, but retention is a far stronger driver of PIF growth. And as Tricia mentioned, we are looking forward to more stable rates this year. We are feeling very adequate in most environments. So we have already enjoyed retention improvements, and we expect to continue to enjoy retention improvements. Competitors are certainly in a better place, but are continuing to raise rates as well. So on a competitiveness basis when the renewals come through, we think we're going to be in a good place, and that will help drive policy in force growth as well.

Thank you. Please standby for our next question. Our next question comes from the line of Ryan Tunis with Autonomous Research. Your line is open.

Hey, thanks. Good morning. Could you just talk a little bit about, Tricia, I guess, across the book, how you're thinking about severity in 2024?

Yes. I mean, I like the fact that severity seems to moderate a little bit. And so we're hoping that it's a little bit benign. When you look at, last year, we were affected by fixing cars, and that seems to be a little bit calmer. So I think auto parts inflation is nearing 0 and auto services is in the kind of mid-single-digits. So we're, that's how we're thinking about it. We'll obviously watch if something changed as they did last year. But I'm thinking, I think benign and kind of moderate is what I would say from a severity perspective. And I feel the same way with the inflation right in the 8% to 10%.

Thank you. Please standby for our next question. Our next question comes from the line of Michael Ward with Citi. Your line is open.

Thanks. Good morning. Just following up on Elyse's question, the Florida releases. Was that some of the litigation-related reserves from last year? And I guess, how are you feeling about those reserves in that kind of situation?

It was mostly Florida, kind of across the board, a couple of different things. Some were some settlements on glass, some from House Bill. So there were a couple of different inputs to the release, we are feeling positive about the tort reform change in Florida. And we're starting to see a little bit of that. I don't want to get ahead of my skis with that. But we believe, especially the new comp negligence law should be very helpful. But again, we'll watch that really closely because it's still new, and there's a lot of things that can unfold, but we're positive about the changes that have been made in Florida.

Okay. Thanks. And then on frequency, curious about frequency kind of like year-to-date? Just following the very favorable December.

I don't, if I were looking at frequency, I would look at it more on the trailing 12 over current 12 and about 2% because there's a lot that goes into the data that you saw from this quarter in terms of mix. So John talked about that a little bit. We were really tight with our underwriting. So our mix of business is more preferred which causes less frequency of accidents. You'll hear this a lot. But since we're changing to a Gregorian calendar, there is a little bit of data in there. And then, of course, weather in December was really benign. So I would think that, and of course, we can't predict frequency or severity. But I would be thinking of frequency as more of reverting back to our normal trend ex-all COVID, et cetera, the last 60 years, frequencies continue to decline a couple of points every year.

That concludes our event. And Towando, I'll hand it back over to you for the closing scripts.

Thank you. Ladies and gentlemen, that concludes the Progressive Corporation's fourth quarter investor event. Information about a replay of the event will be available on the Investor Relations section of Progressive's website for the next year. Ladies and gentlemen, you may now disconnect. Everyone, have a wonderful day.