Good morning, and thank you for joining us today for Progressive's first quarter investor event. I'm Douglas Constantine, Director of Investor Relations, and I will be your moderator for today's event. The company will not make detailed comments related to its results in addition to those provided in its annual report on Form 10-K, quarterly reports on Form 10-Q and the letter to shareholders, which have been posted to the company's website. Although our quarterly Investor Relations events often include a presentation on a specific portion of our business, we will instead use the 60 minutes scheduled for today's event for introductory comments by our CEO and a question-and-answer session with members of our leadership team. The introductory comments by our CEO were previously recorded. Upon completion of the previously recorded remarks, we will use the balance of the 60 minutes scheduled for this event for live questions and answers with members of our leadership team. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2023, as supplemented by our Form 10-Q for the first quarter of 2024. 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'm pleased to introduce our CEO, Tricia Griffith, who will pick us off with introductory comments. Tricia?

Good morning, and thank you for joining us today. In many ways, this first quarter has felt like we have turned a page. Since mid-2021, inflationary pressure and its subsequent effect on our profit margins have been a predominant factor in our strategic decision-making. Even in the second half of 2023, when we started to see indications that severity trends were stabilizing, more rate was earning in and accident year loss ratios approached our target. We continue to flex in order to deliver on our calendar year 96 combined ratio goal. In our August Investor Relations call, I was asked if we should put aside our 96 target and instead capitalize on the perceived growth opportunity at the time. In my answer, I cited our core values and the belief that our strategy to put profit before growth would prove to be a winning formula. As we look back to the second half of 2023 and the stellar results of the first quarter 2024, we feel stronger than ever that sticking to the core values that have served us well for so long was absolutely the right call. By adhering to who we are, it looks like we have turned that page and we're now seeing the benefits of the tough decisions and hard work over the last several years since inflation took off. Our first quarter of 2024 has really set the stage for us to capitalize on both growth and profitability. During the quarter, net premiums written grew 18%, and we produced a solid combined ratio of 86.1%. Our profitability was made possible from rate continuing to earn in from the rate revisions we took in the last year, seasonably favorable frequency, mix changes in our book from the non-rate actions we implemented over the last two years, continued improvements in segmentation and less prior year loss reserve development, among other factors. In Personal Auto, our calendar year margins mean we've been able to shift more focus into growth with incredible results. In the first quarter, we added over 900,000 policies in force, one of the best quarters in our history and second only to the first quarter of 2023. We did this on the back of strong retention on our renewals and new application growth that is ramping up as we increase our media spend and pull back on some of our non-rate actions. During the first quarter, media spend was down 7% versus the first quarter 2023, and new auto applications were down 9% compared to a record growth in the first quarter last year. The year-to-year gap in both spend and sales declined as the quarter progressed. When comparing March 2024 to March 2023, ad spend was up and new auto applications were nearly flat. We continue to see opportunity for growth as the market is still very tight. We have non-rate actions we are unwinding and still have a few states where we are working to get rate revisions approved. As we look forward to the rest of 2024, we will continue to seek to strike the right balance between efficient marketing spend, our calendar year profit targets and maximizing our growth. In Commercial Lines, the first quarter saw better results as compared to 2023. Our core commercial business continues to run well with almost 10 points of rates still to earn in from revisions in 2023 and 2024. As a reminder, 90% of our policies in commercial lines are on 12-month terms, so it takes much longer for rates to earn in as compared to personal auto. The trucking insurance market continues to be soft due to macroeconomic factors. As a result, we are experiencing a year-over-year decline in policies in force in our for-hire transportation and specialty business market targets. While our other three BMTs are growing year-over-year from both a unit and premium perspective, in property, we continue to execute on our strategy to reduce our exposure to catastrophe-prone states, growing states that have less volatile weather profiles and improve the underwriting and segmentation of our products. Policies in force in volatile states decreased about 5% year-over-year in the first quarter 2024 and grew about 20% in the nonvolatile state. We now have five states on our 5.0 product model, which improves segmentation throughout the product. While results are unpredictable, we shouldn't look too deeply into the results of a single quarter, as the uncertainty in the last several years has shown us, it's difficult to predict where the future is heading. Given what we know now, however, we're encouraged about the future. Inflationary trends are showing indications of stabilizing, and we believe we're well positioned to capitalize on a marketplace that is still reeling from the profit challenges of the last two years. It's comforting to be able to report that we're pivoting to a more normalized operation where, in most states, we can take small bites of the apple when it comes to rate and can focus on growth and increasing our market share. While challenges undoubtedly lay ahead, we're confident in where we stand today and look forward to maximizing our potential in the future. Thank you again for joining us, and I'll now take your questions.

This concludes the previously recorded portion of today's event. We now have members of our management team available live to answer questions. Operator Instructions. We will now take our first question.

The first question comes from the line of Bob Huang with Morgan Stanley.

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

Yes. Bob, I think you know our retention is sort of our holy grail. We continue to feel good about our trailing 12. Our three months is flat. We're going to focus now, like we said, like I just said in the opening comments on having more stable rates because that's really what consumers want. So will they shop, if the rate is better, then their option is to leave. We've got to make sure we have competitive rates. So as we think about growth, we just think about new business. We think about renewal business, we think about our service and growing PIF, the units of both new and renewals. So we'll continue to focus on that, focus on having more stable rates and continuing to be ahead of the competition.

Okay. My follow-up is on your distribution channel, and this is a little bit more hypothetical. Your direct channel obviously has a little bit less of an underwriting margin versus your agency. As you continue to push for growth going forward, is it fair to assume that that's going to have somewhat of a headwind challenge to your overall combined ratio, given your direct channel continues to be sort of a focus on the growth side? Should we expect our current underwriting margin to normalize a bit with the combination of focus on growth, your distribution channel mix and things of that nature for the personal line model?

We will concentrate on growth in both channels. However, you will notice an increase in the expense ratio, particularly in the direct channel as we ramp up media spending. In January, the expense ratio was approximately 15 points, which rose to 17.5 in February and around 18 in March. I was applying increasing pressure on media investments throughout the quarter. When we assess non-acquisition expense ratios, we will aim to maximize our media spending as long as it remains efficient. For overall combined ratios, we will certainly consider the types of business we are acquiring, with a preference for bundled business. We believe we have the most effective segmentation model in the industry.

The next question comes from the line of Michael Zaremski with BMO.

Question on Personal Auto. Historically, not every year, but historically a disproportionate amount of Progressive's organic growth sales have come in the kind of the January through April time frame. Given the current dynamics, do you feel that that's the right type of seasonality we should be thinking about? And if not, what factors should we be thinking about?

Yes. I believe much of that is related to tax refunds and other annual occurrences. However, I wouldn't focus on that this year because even last year, we experienced growth; in fact, we were trying to slow down a bit due to margin pressures. I feel very optimistic about our ongoing growth in both premium and unit terms, which are our favored measures of growth. Our success will depend on a few factors. We aim to continue reducing our non-rate actions, leaving us with more opportunities. We have the premium earning in place and believe we won’t have to, at least for now, reach the extensive premium levels we needed previously to achieve our target margin and manage our media spending effectively. We're doing approximately 10 points better than our target of 96. There are many options available to us to enhance growth. I've emphasized this in my letter, during my opening remarks, and several times throughout the 10-Q. We have discussed this in our management analysis, focusing on maximizing growth rather than just optimizing it. I felt that maximizing was the correct term to use since that is precisely our goal.

In my follow-up, I know you've addressed this previously, but I want to confirm something. The expense ratio, excluding advertising expenses, in the first quarter of this year is approximately 14.1%, which is slightly lower than full-year levels. While one quarter may not establish a trend, the loss adjustment expense ratio in 2023 has decreased compared to the levels of the previous couple of years. I just want to confirm if this represents a structural efficiency run rate or if there is some cyclicality that could cause these figures to fluctuate.

I mean the figures have bounced around, depending on what's happening. Clearly, we're going to want to spend more. And in March, that was on an absolute basis, the highest amount we've ever spent in media. And so we're going to spend more on that as long as it's efficient. I think you want to look at the whole spectrum of what makes up the combined ratio. We're constantly investing to push down both loss adjustment expense and non-acquisition expense. Figuring out ways with technology, people, and processes to reduce those expenses, because we can give those back in competitive prices, and that's really important. But remember, anywhere between $0.70 to $0.75 of every dollar that goes out, comes and goes out at LAE and loss. So that segmentation piece is really important, understanding our rate to risk. I mentioned this in the first question, and I think I don't think I talk about this enough, and you get little glimpses of it in my letters when I talk about our different product models, be it on the private passenger auto side, commercial lines, and now property. It is really a special sauce, and it's not something that you build in a year or two. In fact, we've been building this for many decades. About ten years ago, we recognized the need for continuous product models, which we have been implementing since then. We initiated this in 2014 and significantly increased our efforts in 2015 and 2016. We have developed several models, ensuring that no state lags more than a couple of miles behind, and we are constantly enhancing our segmentation. This requires substantial investment, which can cause fluctuations in our expense ratio. However, these models have been built over more than a decade. While I mention the product models, I don’t emphasize enough the exceptional work of our R&D and product teams. They are unparalleled in their efforts and continuously work to refine segmentation and rate-to-risk analysis, which means considerable investment impacts our combined ratio. Although expense ratios may rise and fall based on media spending and other factors, we continually strive to lower them, with a significant focus on understanding indemnification accuracy and developing robust segmentation models.

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

In your 10-Q, there was a comment about rate increases having an adverse impact on retention. And then you guys highlighted that the 3-month PLE was slowed in the quarter. I'm just trying to reconcile that with your comments, Tricia, that the rate increases are slowing in terms of both magnitude and frequency. So any color that you could help us tie that 3-month PLE and impact comment about rate increases to your overall comments just about the level of rate increases slowing?

Yes. Sure, Elyse. I think at this juncture in its last year, so many customers are getting their renewal bills and the rate increases that are playing through will cause you to shop. So we're always at risk losing customers when that happens. We knew that was a possibility last year as well when we were first to market, getting the rates that we needed on the street. So while we don't know exactly what the trailing 3 will continue to be, and it's on a lagged basis, we'll obviously inform you next quarter. That's really why we feel like we're in a much better position to take those small bites and take smaller increases just to stay ahead of trend.

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

Yes, I'll start. And Pat, if you want to weigh in, you can, if there's anything to add. At this juncture with the margins that we have, we do want to use our spend levels to our advantage as long as it's efficient. So like I said, we've got a lot of other levers. We've pulled back on many non-rate actions that still have room to go on that. And I think if we can spend efficiently in the states where we believe we're adequately priced, we're going to do that, I won’t say to the full capacity, but until we feel like it's inefficient to really leverage this opportunity to maximize growth. Pat, do you want to add anything?

No, I think that's great. Thanks.

The next question comes from the line of Charles Peters with Raymond James.

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

That's a great question. Our goal is to grow as fast as we can, which we've been doing, with $19 billion in quarter-over-quarter growth and 7% growth in policyholders. However, we must ensure that we support our customers as they deserve. There have been times in our history when we've had to slow down our growth for this reason. A few years ago, we faced significant challenges in recruiting, retaining, and compensating our CRM team. We made changes to compensation about two years ago and invested heavily in the work environment and digital tools to enable customers to serve themselves. We are now seeing the benefits of those investments through improved employee retention and better customer service. We are always striving to enhance our customer service and are currently developing a new customer commitment. We need to be extremely focused on customer support because some customers prefer speaking to a representative instead of using our top-notch digital services. Our phone handling times for both sales and service have significantly improved compared to two years ago. I think we've done a great job in staffing, training, and equipping our team to assist customers as they deserve, which makes me optimistic about maximizing our growth.

In addition to that, my follow-up question is regarding the common areas we are exploring, specifically your investment in technology, including generative AI and large language models. I'm curious about what you can share regarding your spending this year compared to last year and how you are using these tools to enhance your company's efficiency. Any insight into your technology investments and the new options you are exploring would be appreciated.

Yes, absolutely. We have been making strong investments in technology. Our focus is on being a technology company that sells insurance, so our technology capabilities are integrated into everything we do. We have a top-notch IT organization and consistently aim to stay ahead of trends, such as the direct channel and usage-based insurance. These features are integrated into our products but originate from our IT innovations. We've been working with machine learning and large language models for over a decade, which has allowed us to implement various tools like a Chatbot that can provide documents without human intervention. Our website, progressive.com, utilizes machine learning to suggest optimal coverage options, and currently, we have over 100 different models in various stages of development, including several focused on generative AI. Recently, we conducted an in-depth session with our Board on our AI initiatives, which are generating a lot of excitement for the efficiencies they may bring. While I can’t share all the details, we believe these models and tests will significantly impact every area of our business, including recruiting and media. We're reviewing successful AI media tests in an upcoming Board meeting. We are committed to responsibly implementing these technologies and ensuring oversight to avoid biases. Overall, we are thrilled to continue leveraging technology, as we have for nearly 90 years, to provide competitive pricing that attracts and retains our customers while growing our market share.

The next question comes from the line of Joshua Shanker with Bank of America.

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

Yes. I'll start and John Sauerland, you can weigh in. We are growing in one. But again, we want to grow across the board, so we'll continue that. Our property profile, as we talked about, we are growing in what we would call growth states or more non-volatile states as far as weather, and we're shrinking in the volatile state. So that's been a plan we put into place quite some time ago. A lot of this takes time. As I laid out last year, we're starting to see the over 100,000 homeowners policies in Florida start to non-renew that took a while because we needed to notify the customers and talk with the DOI.

We believe that our long-term strategy should involve having our portfolio distributed across the country. When considering capital, it's important to account for regulatory requirements. For example, in auto insurance, we follow a 3:1 model, meaning that for every billion dollars written, we need to have $300 million in capital. Additionally, we maintain contingent capital to prepare for unforeseen events, such as major storms or financial crises, along with extra capital beyond that. The capital requirements for home insurance are even higher due to its volatility. Currently, we are in an exceptionally strong capital position, which makes me optimistic about our growth prospects.

Thank you for all the detail. And one quick question. With the Florida policies that you're not renewing to the Loggerhead company, is that going to be significant enough that we should expect your attritional loss ratios to be higher at the end of this year, although when the added benefit of lower capacity volatility is added, they'll be lower, but on an attritional basis, will they rise?

I couldn't really answer that. The first priority was to offload some units that we believe won't be profitable. A lot of it depends on weather, which has been a major factor over the past several years. That's why we aim for a more balanced approach. We still have a significant presence in Florida due to our large auto base, and we believe we can succeed in Florida with both home and auto, especially when bundled. However, we realized we were a bit too heavy there, along with a few other states, which is understandable since ASI, now Progressive Home, was established and grew in that region. It's challenging to assess loss ratios without knowing what will happen with the weather.

The next question comes from the line of Michael Phillips with Oppenheimer.

Speaking of Florida, you mentioned some favorable frequency trends in the state and your auto book because of the total refunds. Can you share any thoughts on what you've seen on the property side because of that?

On the property side, we haven't noticed much. The changes were mainly related to auto. Is there anything notable on the property side, Pat?

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

Okay. And then you mentioned the policy life expectation has been improving month to month to month. I guess given all the dynamics in auto, maybe what's behind that? And is that harder for you to get your hands around and predict when shopping at such a high level?

We understand that shopping behavior tends to increase when rates rise. This can vary by demographic, as some groups are more price-sensitive. Analyzing our different demographics shows significant variations. Last year, we experienced inflationary impacts, which isn't surprising given the increased shopping activity. The key is to proactively manage rates; it may involve short-term challenges, but it leads to long-term growth, which is our current approach. We aim to maintain stable rates while monitoring severity trends. When customers recognize this, along with our excellent claims service and customer relationship management, we provide them with reasons to stay, as well as access to all the products we offer through Progressive.

Next question comes from the line of David Motemaden Evercore.

Tricia, you mentioned that ad spending increased in March to the highest level we've ever seen, but app performance remained flat. It seems there may be a lag, but I suspect some of the non-rate actions are hindering conversion. Can you provide an estimate of how many areas still had non-rate actions in place now compared to three months ago? Also, what are your plans for reversing those actions throughout the year?

Yes, David, that's a great question. One thing to consider is our remarkable growth in the first quarter of 2023, which makes comparisons challenging since we experienced significant growth. We didn't aim for such high growth because we lacked the desired margins. This comparison will be difficult as well. We have reduced many non-rate actions, including build plans, proof of garaging, and other pre-binding activities. We have pulled back on some of these actions more quickly and completely than others. In certain states, we haven't scaled back much at all because we still need the necessary rates. However, we are actively addressing that. Percentage-wise, I would estimate we are around 60% or 70%.

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

Yes. And I feel like just even in the last couple of weeks or during the month of March, I feel like in some of the places where we've needed rate, we're starting to have some much more productive conversations.

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

Yes. I think it's different if you're thinking about it from the agency's channel versus the direct channel. On the agency channel, we continue to have our preferred agents, our platinum agents and no, we want the bundle, and they can be compensated for that. And so that is a big part of the agency channel. On the direct channel. We have our HomeQuote Explorer, where we saw Progressive Home, and I know they've been working diligently with some really great unaffiliated partners to be able to place that coverage even if it is not with Progressive Home. We're continuing to work on having a stable group of companies in that mix. Last quarter, we discussed our approach to evolving the products we offer. We believe it's beneficial for customers to have access to a variety of options when they visit us. This is something we've been actively working on and will continue to enhance, especially as the market stabilizes. I recall years ago when John expressed our goal for clients to call us with specific requests and for us to be able to respond affirmatively. We're getting closer to becoming not just an insurance provider but a comprehensive destination for our customers. When clients come to us, they not only seek auto and home insurance but may also be interested in additional products like umbrella coverage. Each additional offering helps improve customer retention, which is significantly higher among our primary clients compared to other segments, although we don't disclose specific figures.

The next question comes from the line of Jimmy Bhullar with JPMorgan.

I have a question regarding the expense ratio. Given the increase in premiums over the last few years, should we expect that your expense ratio, particularly non-acquisition or non-discretionary expenses, will be structurally lower for the next several years? If this is true, will you let that benefit the bottom line and expect a lower combined ratio moving forward? Or should we anticipate that you will use it to remain competitive on pricing, potentially leading to better growth, or will it be mitigated by competition?

Yes. Good question, Jimmy. Probably a little bit of both. So I think we'll try to continue to push expenses, and we need to be efficient. And we don't necessarily though, need to be the lowest cost. We want to have low costs because that equates to competitive prices and that equates to growth. And that growth, of course, is a great cycle because that unit growth is important, especially as you've seen in the past years when severity trends go up and down because those can be less stable than having a unit growth. But yes, I think we're going to spend where we can to maximize on this growth. We're going to continue to think about expenses and utilize the investments that we make across the board to become more efficient. But a lot of it too, and the reason we're able to do this is because of the investments we've made over the many years on technology, on people, on processes, on just our overall people and culture to be there. So I would expect that we'll be able to do a little bit of both.

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

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

It's difficult to comment on what other companies are doing. However, we believe it’s still a challenging market. We feel we have taken proactive steps in terms of pricing, which is reflected in our growth, and we hope to maintain this momentum. I'm sure you're aware of the competition, and it appears that margins are favorable across the board. Everyone seems to have recognized the same trends we have and responded accordingly. There is a specific timeframe where quicker reactions can provide a competitive edge, leading to growth. Reflecting on last year, when I mentioned in November that we were considering pulling back on certain actions and testing the waters, we fully committed and have now fully immersed ourselves in our strategies. We are confident in our growth potential. Others in the industry will eventually catch up, as this sector experiences cycles of soft and hard markets; it's essential to be proactive. I want to emphasize how crucial it is to segment our approach and align pricing with risk. We must remain vigilant and not become complacent, thinking we can sit back and see the results after years of waiting. The interactions between our various factors are of utmost importance, making it a significant component of our strategy.

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

When we analyze the year-over-year growth in personal lines policy counts, we observed an increase in direct but a slight sequential decline in agency. I was hoping you could clarify what is happening and explain why we are seeing these differing trends.

Yes. I believe that agency performance in March was relatively stable. You might notice that it will take a bit longer to see changes compared to direct channels, where we have more control over media spending. The agency model operates differently. Pat, feel free to elaborate on that. However, if I remember correctly, March indicated a slight improvement in agency trends.

Yes. So we've been slower to open things back up in the agency channel and specifically things like returning rates on comparative raters across the board, which thus put our rate in a more competitive position and potentially drive more growth. But know that we are leaning into that at this point. As we're more confident in our rate adequacy we are opening up some of those non-rate actions in the agency channel. We have fewer top-of-funnel levers in the agency channel. It's more mid-funnel. So you will see that delayed effect when media, we can fill the top of the funnel on the direct channel much more responsibly and quickly when we decide we're rate adequate.

Okay. Perfect. That's very helpful. And to response your comments earlier, would it make sense to have more 6-month policies in commercial lines?

We've been discussing this for years, and I would say it heavily depends on the BMT. When obtaining a quote and completing the process, some business marketing tiers are quite complex and take a lot of time. Collecting the necessary information is not easy, and you don't want to go through that process every six months. Therefore, it's crucial to have the right pricing and the ability to manage adjustments to expedite the process. We've experienced a lot of this in the past and continue to consider it. I know Karen and her team are looking into some of the BMTs that might offer more flexibility. That said, I'm very excited to address the commercial aspect. I believe we're in a strong position, with still 10 points to earn for the remainder of this calendar year. The key has been to stay proactive, especially regarding those 12-month policies. One thing we established many years ago, possibly in my first investor relations call or shortly after I assumed my role, was our approach to company growth. Commercial lines play a significant role in that strategy. If you consider small fleets, our business has tripled over the past five years. We are now present in Florida and have a presence in 45 states. The new product files I mentioned for private passenger auto and commercial sides are progressing well. Recently, we have seen app volume reach all-time highs, and importantly, the utilization rate for ProView, which is our usage-based insurance, has doubled for our business auto contractor customers. While it's difficult to draw comparisons directly to the pandemic, we are focused on assessing growth relative to 2019. What I can say about For Hire Transportation is that the outlook is positive.

The next question comes from the line of Michael Ward with Citi.

I was wondering about Telematics. We noticed adoption was down, I think, 20% in agency. I think you said because of the mix of agencies, just hoping you could help us understand why that is? Is Telematics more specific to certain customer segmentations or geographies? Maybe Robinsons just aren't as big of adopters of it.

Yes, Mark, that was mostly a couple of big national account agencies. That started happening maybe around mid-2023. So nothing much to read into. We're still really excited. In fact, take rate in agency really has peaked up since pre-pandemic. And so we continue to believe that's a big part of our model. We have 57 billion miles driven. So we have a lot of data, 7 billion trips. We continue to have that be a big part of it, and we're constantly talking to agents about the importance of that to get those great drivers, great discounts.

Okay. And then maybe just on recent loss experience. We've seen accident frequency ticked down high single digits into the last two consecutive quarters. Just wondering if you could share your view on maybe what's driving that? Is it mix? And I guess or mild winter? And what are you seeing more recently?

Yes, those are definitely two of the variables involved. The mile-to-mile quarter positively influenced our business mix along with our self-imposed underwriting measures. Additionally, we have experienced a positive impact from billing 37. These factors likely contributed to our results. Instead of concentrating solely on this quarter, I recommend looking at the trailing 12 months compared to previous frequency, as those elements played a significant role this quarter.

The next question comes from Brian Meredith of UBS.

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

It's difficult to identify that precisely. We've been examining the situation, and there may be some regional variations in terms of frequencies, including factors related to fault states. It's challenging to determine the exact causes. We'll keep working on this analysis. However, what I mentioned earlier regarding the first quarter reflects our self-imposed underwriting restrictions, a mix of factors that make sense, weather impacts, and changes stemming from the Florida House bill. Those are the elements that we can quantify more effectively.

Right. So you're not pricing for it basically?

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

Great. And then my second question, just curious, getting into the smart commercial business, obviously, the homeowners. Can you talk a little bit, do you have or are you thinking about E&S capabilities? And would that be an area into and we get more from the full package business and you have it in the other side?

I'm really sorry, but you broke out completely there. We didn't understand the question.

Sorry, can you hear me now?

Yes, perfect.

I was asking more about E&S capabilities in maybe homeowners or commercial or plans to have some of those excess and surplus line capabilities just given the regulatory and risk landscape out there?

Yes, those are things to think about all the time we have. We actually utilize the E&S capabilities in some venues in commercial already. We always look at the best way to understand if we can't get the rate we need in the admitted market, and we have an opportunity and an ability to do that should that arise.

The next question comes from Yaron Kinar with Jefferies.

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

Yes. We set prices for every customer, state, or channel with a long-term perspective, understanding that the limits vary if you're preferred and might come with higher limits. We are transparent about this and have made necessary reservations. This is also part of what makes us unique.

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

Commercial is state-specific, and some states are more volatile than others, which requires us to adjust our pricing accordingly. Currently, we have some business restrictions that limit our ability to achieve the necessary prices and implement non-rate actions. As I mentioned earlier, the various business model types react differently and have varying levels of exposure, so we approach them with different segmentation strategies. Regarding TNC, we successfully negotiated a significant increase with one of our partners, which gives us confidence in our success with TNC organizations. However, we recognize that the exposure levels vary, and we need to stay vigilant in managing pricing and claims.

Those in the queue appear to be those who've already asked questions. So that concludes our event. Those left in the queue can direct your questions directly to me via e-mail or my direct phone line. Tia, I will hand the call back over to you for closing scripts.

That concludes the Progressive Corporation's First 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.