Good morning, and thank you for joining us today for Progressive's Fourth Quarter Investor Event. I'm Doug Constantine, Director of Investor Relations, and I will be a 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 and a letter to shareholders, which have been posted to the company's website.

This quarter includes 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 will use the balance of the 90 minutes scheduled for this event for live questions and answers with the leaders features 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, 2024, 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'm pleased to introduce our CEO, Tricia Griffith, who will kick us off with some introductory comments.

Tricia?.

People and culture where everything starts for us and competitive prices with a focus on technology investments in our Claims process. To present these topics today, we've enlisted two experts in Progressive. First, we have John Murphy, Claims President.

John assumed the role of Claims President in December 2021 after spending nearly seven years as Progressive's customer relationship management President. In this role, he was responsible for all aspects of Claims strategy and resolution across all product lines. John joined Progressive as a Claims representative in 1992.

During his initial tenure in Claims, he held various strategy, process and operations roles across the country, including regional Claims manager, national implementation leader, Claims business leader and physical damage process business leader. After John, we have Matt White wide joining us today.

Matt has been our Claims business leader for data and analytics since May of 2022, after spending six years in Personal Lines managing our technology and innovation team in direct acquisition.

In this role, he's responsible for our Claims data science, business intelligence and data strategy teams to build solutions for all aspects of Claims handling. Matt joined Progressive in 2014 as an IT Manager after serving the CoStar.

His military career took him from various leadership positions on ships petroleum in the Caribbean and Eastern Pacific to Washington, D.C., where he worked on Capitol Hill in Budget and Program Management.

He was the Director of Operations in Key West Florida and ultimately to Cleveland, where he oversaw several business lines across the Great Lakes region. Again, thank you for joining us this morning, and I will now pass it on to John.

John?.

First, people and culture, which is where our long history of success starts and then competitive pricing. We will focus on the critical role that Claims plays in creating a competitive advantage that helps fuel business growth.

And finally, we'll share just one of the many examples where the effective use of data and technology at Progressive enhances our Claims team's accuracy and efficiency. Now before I get to the topics at hand, I wanted to acknowledge the devastating wildfires that ravaged the Los Angeles area injury.

Our thoughts and prayers remain with those affected by this event. In that vein, we know our customers want and expect action to support their recovery. Our catastrophe services team responded quickly with empathy and respect to meet their needs.

While the majority of the claims we received are now resolved, our team continues to assist our customers however they can. I also wanted to acknowledge our human resources and local leadership team who responded quickly to support our employees who are impacted by these fires.

As a senior leader in this organization, the urgency, empathy and care that our collective team has shown here is an excellent example of our core values in action and fills me with incredible pride. Quickly recapping 2024. In short, this was arguably the greatest year in the 87-year history of Progressive.

Net premiums written grew approximately 21% year-over-year, finishing the year at $74.4 billion. In absolute dollars, premium grew by nearly $13 billion in this single calendar year. So let me try and put that in perspective.

That nearly $13 billion net premium increase in '24 is equivalent to adding the premium of the eighth largest auto insurer in the calendar year of 2023. For those who have been following us for a while, the premium growth in '24 is about $1 billion more than we wrote for the entire calendar year of 2003.

Average written premium increases provided a little bit of a tailwind here, but the majority of this premium growth comes from customer growth, which is our preferred measure, and 2024 was a record year here as well.

We increased active policy by more than 5 million this year, which is more than twice the previous highest annual rate of policy growth in our history. Growth is one important objective for us and profitability is the other. You're well aware of our stated calendar year goal of a 96 combined ratio or below.

And in 2024, we produced a CR of 88.8, well below the 96 and also about 6 points lower than 2023. We often say that growing or generating a profit individually is fairly straightforward. To do both simultaneously and at the performance levels that we did in 2024 is significantly more challenging.

In true Progressive fashion, more than 65,000 of us worked diligently together to deliver what may very well be the best combination of growth and profitability in the industry. While we celebrate these successes, our excellence core value challenges us to continually improve for our teammates, our customers, partners and investors.

I believe strategic investments in our people, data, processes and technology position us to perhaps have an even better 2025. The fourth cornerstones is a construct that we've shared in the past. It's how we think about competitive advantage and defines how we win and win in the right way. We start with our core values or who we are.

These are unifying statements that provide the very foundation of our company culture since the late 1980s. Next is our purpose or why we're here. We evolved this statement in 2022 to build on the legacy of our core values, and our history of challenging the status quo to accelerate progress. Then we have our vision of where we're headed.

This company-wide objective highlights the constituents that we feel so fortunate to serve and our never-ending pursuit of becoming the #1 destination. Finally, is our strategy or how we'll get there. These are the 4 important pillars of this strategy, and two of them will be the focus of today's discussion.

People and culture, which are collectively our most powerful source of competitive advantage and competitive pricing is driven by industry-leading segmentation, claims accuracy and operational efficiency.

Progressive people and culture are collectively our most powerful source of competitive advantage, a very well-known and respected brand, a routinely recognized top work environment and sustained business success makes us an attractive option for folks in market looking for jobs.

While our growth rate in staff over the past 10 years lags PIF growth and premium, it has been substantial. Our outstanding talent acquisition group generates robust Canada pools for our roles from which we then choose top talent with personal values that align with our core values.

Due to the very significant number of people interested in working at Progressive, we're able to be highly selective. In fact, we hire less than 3% of people who apply for jobs at Progressive. This scale advantage allows us to bring additive skills and experiences to our team, ensuring that we're always growing and always evolving.

Our culture is built on the foundation of our core values, and it has evolved beautifully with our people growth over several years. A transparent, inclusive and forward-thinking environment ensures our people feel empowered, welcomed, valued and respected.

Development focus allows our people to build careers have become talented business leaders who can drive enduring success for decades to come. Gallup is a multinational analytics and advisory company well known for its public opinion polls and surveys conducted worldwide. In an article published on January 14, 2025, Gallup reported that U.S.

employee engagement sank to a 10-year low. That is not the case at Progressive. At Progressive 2024 marked a significant year of achievement where engagement has surpassed previous records. Progressive ranks in the 98th percentile of engagement and the 99th percentile in overall satisfaction.

These results have us in the top 10 and top 5, respectively, for U.S. companies in Gallup's client database. As we look a level deeper into our 2024 survey results, we see year-over-year increases in every single question and in every tenure bucket.

As we explore the tens of thousands of comments from our team, responses to the question, the one thing I like most, generates themes of a positive work environment, care for customers and colleagues, strong leadership and support, career growth and development, flexibility and values. You can see just a few of the comments here on this slide.

Once again, consistent with our excellence core value and our desire to consistently improve, we also ask about things that should change. The data that we collect from that question, really all others are rich and guide our efforts to further nurture our special culture.

We believe firmly that the investments we've made in our people and culture have fueled our growth and success for several years now. We'll continue to care for both to position us to be e-better in the future.

In prior presentations, we've discussed our ability to rapidly deploy risk selection and new product models, our segmentation excellence as well as efficient media and agency compensation each of which has had a positive impact on rate competitiveness. Claims plays a very important role here as well.

The combination of loss costs and loss adjustment expenses typically represents between 70% and 75% of our total company expenditures. So we focus heavily on producing accurate claim outcomes while optimizing efficiency, customer experiences and employee engagement.

We refer to these as our 4 guiding principles, and they have helped inform our daily efforts, investments and priorities in Claims for more than two decades. On the left and right, you see the two key constituencies that we are privileged to serve.

In the middle are the two items that have the most linear connection to our combined ratio and ultimately the rates that we then have in market. If we don't deliver here, we simply can't compete at the level we become accustomed to and continue to aspire to. This chart is our theoretical cost curve and gives incident to how we approach our work.

The x-axis represents loss adjustment expenses, or LAE, essentially what we spend to operate the claims organization. The Y-axis represents loss costs, both claims payments and reserves plus LAE. Much like my commentary earlier about growth and profitability, being accurate or being efficient individually are straightforward.

Doing both at the same time is a far greater challenge, and we believe we do it better than anyone in the industry. Now there are downsides to focusing too much on either side of this curve. If sole objective was to be the lowest cost, we couldn't make the investments in people, data and technology that enable us to pay the right amount.

Quality would suffer, cycle time would increase, rentals would extend and ultimately, loss costs would rise. Likewise, if accurate as the sole objective, you would need to overspend to eliminate the potential for errors likely spend on non-value-added activities and end up with a cost structure that would be uncompetitive.

We leverage operational excellence to drive us down this curve. This is where having the best people in the industry who are willing to get into the details, investigate tirelessly and effectively and make the right decisions around coverage, liability and damages, really pays dividends and moves us down the left side of this curve.

Empowering them with the right data, processes and tools, increases their efficiency and throughput, moving us down the right side of this curve.

Now this view of driving down total cost is more about the journey and the incremental gains that come with it than any theoretical destination because no matter how good we get, we will always seek to be better. In the Claims organization, we constantly measure accuracy and efficiency, so we always know how we're doing.

Objective assessments of the work provide valuable insights into how and where we can be even better. And while we're always trying to find the optimal spot on this curve, we also strategically target efforts to shift the curve to a better position for us and for our customers.

You'll hear from Matt White shortly about how we invest in new technology, data and processes to shift this curve. And this is what driving down and shifting the curve looks like in practical application, using perhaps the best measure of success for Claims, which total cost.

While Claims supports all manufactured products across auto, special lines, commercial lines and home, I use private passenger auto data here because it offers the cleanest comparison relative to industry.

This graph is a visual representation of the competitive advantage our claims organization in conjunction with all other business areas brings to Progressive and shows why we're able to grow faster and with better margins than the industry as a whole.

Total cost is a combination of loss costs, which tied directly to accuracy and LAE, which is our primary efficiency metric. This slide compares Progressive reflected by the to the industry ex Progressive, which is in orange, and shows that we've maintained an advantage for more than a decade. More recently, though, you can see the gap widen.

And while we don't have complete 2024 statutory data for the industry yet, we have loss ratio data through the first three quarters of '24, and we maintain a seven point advantage in loss ratio alone. As we compare our own results for 2024 to 2023 for total indemnity, we see a near nine point improvement and finish the most recent year, sub-70%.

Back to our full set of guiding principles. I'm proud to say that in 2024, our Claims organization had the highest engagement in our history. The lowest LAE ratio in our history, improved accuracy, and generated the best customer satisfaction and retention that we have in several years. These results don't just happen and they don't happen overnight.

This culture of execution excellence has been developed over years, and isn't easily replicable, but we believe it can be improved upon. And now Matt White, our Claims Business Leader of Data and Analytics is going to share with you how we use data and technology to enable and enhance our human capital.

While the efficiency and cost wins you'll hear about are very significant, it's our intentionality around also increasing accuracy that makes these efforts really valuable.

Matt?.

the bumper, front fender, and molding, the details of which we achieved by much more fine-grained part segmentation capability. Our approach ensures both broad applicability and precise customization across vehicle reducing the need for extensive label data sets.

It has enabled us to achieve a 10x speed improvement in training while providing more accurate identification of all relevant external parts. It's important to recognize that such techniques are not possible without very trustworthy and accurate labels and a large data set upon which to extend them.

Our subject matter experts and tens of millions of available photos give us both. This is obviously a very fast-moving space. We continue to keep our eyes on. This animation illustrates a newer approach called 3D Gaussian Splatting. It allows us to transform 2-dimensional images into dynamic three-dimensional models.

Doing this well requires a lot of photos. But back to those trade-offs of accuracy, efficiency and customer experience, we can't reasonably ask customers to take hundreds of photos. But we do ask them to take a video in addition to around eight to 12 photos on average.

A one-minute video at 30 frames per second of the car yields us around 1,800 frames, and it's that data we are increasingly leveraging as part of our solution. Some research scientists have suggested that what large language models are to text, Gaussian Splatting is to graphics. The latter is what's interesting to us.

Being able to reconstruct the vehicle as if we were in person to understand the full extent of damage. 3D Gaussian Splatting builds on previous work in the field of reconstruction such as neuroradiance field, but it's much more computationally efficient and as a solution that meets our operational needs. Remember, we must be efficient and accurate.

While we won't walk through the math here, there are 4 primary steps to this technique. First, we use the underlying data, again, thousands of frames to understand the position of the Cara and construct a three-dimensional coordinate grid to understand the relative position of every pixel in the frame.

In parallel with understanding camera position, algorithmic techniques such as motion create a point cloud or mesh of the vehicle. This essentially gives us the center point or mean upon which to locate the gaussian splats. On those points, we gaussian functions onto each pixel to simulate the physical characteristics of the vehicle surface.

It can capture intricate details, providing a more comprehensive reconstruction of the vehicle surface and geometry. Those 3-dimensional splits or blobs help us render the point cloud, representing every point as a gaussian or normal distribution in three-dimensional space.

From there, we optimize using traditional graphic rasterization techniques and adjusting the density of the gaussians until we get results representative of the original training data. What's ultimately produced is a fully interactive 3D model of the vehicle.

This is important because it allows you to view the vehicle and damaged regions from novel angles and views that may not have been fully captured in the original data and also provide for more accurate scale and distance measurement enabled by full understanding the relative camera angles.

Such approaches can enable more accurate labor hour predictions where the service and depth are very relevant to how long it will take to repair a part. Longer term, we think it could enable virtual inspections of additional damage types.

Vehicle conditioning in the case of total loss and perhaps enable LEAP decisions by anticipating damage to interior parts that aren't visible from external pictures alone because we have a more detailed understanding damage depth. Lastly, I do want to reiterate that at Progressive, this isn't about cool science or gaussian math for its own sake.

It's about our excellence core view striving for continuous improvement and better business outcomes, for our customers, employees and investors. And as John mentioned previously, we are willing to dig deep and work hard to achieve those outcomes consistent with our core values.

Before wrapping up, I wanted to share our general approach when we consider build and buy decisions. First, we think those are complementary and not competitive sides of the same coin.

For example, our vision solution for photo estimating is powered by things we have built, but also relies on very tight integrations with our EX platform partner to turn those predictions into the correct part numbers and actual estimates. When building or buying, we prefer to keep things decoupled.

Rather than monolithic solutions, good for one purpose, but perhaps difficult to change or modify for other purposes, we prefer to build or buy systems that are open or can be decoupled so that some of the pieces and parts can be reassembled and is something entirely new.

This gives us the potential to earn outsized returns on the initial technology investment and provides flexibility when new technology solutions inevitably arise. We can use those decouple pieces to drive near-term value but it also allows us to be agile in adopting new solutions like pseudo labeling, gaussian splatting and whatever may be next.

We can also start to apply parts of the original solution to build something entirely new that we may not have even considered at the time. On the right is an example of that potential emerging.

When we began a firm commitment to our claims Machine Vision journey with photo estimating back in 2019, we were focused on photos that were submitted after first notice of loss from customers that had selected photo estimating as their vehicle inspection option.

But as we've iterated on that experience or funnel, we're now receiving hundreds of thousands of photos per year at first notice of loss, and that is an accelerating rate as we optimize. This is before a customer may have decided to opt in for photo estimating.

We can and do use those for photo estimating, but we can also apply our existing machine vision capabilities in that initial triage and segmentation decision and not just photo estimating. It could allow us to make even more fine grand triage decisions based on a much more accurate damage estimate.

We can also use those photos to enable more sophisticated review processes of estimates that weren't written through the photo estimating channel. We hope a few things came through today as we conclude.

First, I'll remind again that the 2024 company-wide results John shared and our efforts in Claims to help enable competitive pricing starts with our people and culture. They and it are what makes such things possible.

Secondly, we remain tirelessly committed and energized to chase that ever-elusive perfect cost curve balance while simultaneously investing strategically to shift it further downward, and we see further opportunities ahead to continue doing just that.

And as shared in the photo estimating example, we continue to exploit advanced technology by putting it in the hands of our people because we know they will generate outcomes fully aligned with our Progressive core values and claims guiding principles and keep those virtuous cycles turning.

On behalf of John and I and 65,000-plus Progressive teammates, thank you for your attention..

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, John Murphy and Matt White, who can answer questions about the presentation. The Q&A session will be audio only. [Operator Instructions].

In order to get to as many questions as possible, please limit yourself to one question and one follow-up. We also ask that you use restraint and reentering the queue to ask additional questions. We will now take our first question..

Thank you. Our first question comes from Michael Zaremski with BMO. You may proceed..

Hey, thanks. Good morning. First question, in John Murphy's prepared remarks and he set up perhaps having even better 2025. I guess -- it was good to hear that, but bit surprising, given that the tailwind from pricing increases has looks like it's meaningfully moderated.

I don't know if you want to comment on sorting is roughly, but it looks like low single digits at best. So I thought it was fair to assume the combined ratio mean reverts higher and also the frequency tailwind you guys received as well in the industry in 2024. It seems like that was much better than a normal year..

Yes. I mean I can comment overall on pricing, if you want to add anything, Pat, you can. I feel like we are in a really great position pricing-wise. And we're in more of the position that we have wanted to be in the last several years when I've talked frequently about small bites of the apple. So we've taken rates up slightly in a handful of states.

We've taken rates down slightly in a handful of states. And that's really where we want to be to be able to allow our product managers to tweak as needed to make sure that we reach our target profit margins. And then we obviously want to grow and grow as fast as we can. So we always are balancing those.

So we feel really good about our pricing, and we'll continue to watch it very closely, and we believe -- and we believe we can grow more that we want to let out some of that in terms of rate decreases like we did in Florida will do so. But we feel like we are in a really, really good position.

And starting 2025, I think, just in a position of strength with all that we have done. And I have to take this moment to thank the 66,000-plus Progressive people of what we accomplished last year. It was a volatile year before and as we headed into 2024, but the fact.

And John referenced it, the fact that we grew premium 21% to nearly $75 billion, added 18% in PIFs, 5.3 million additional PIFs, and 888 is really nothing short of phenomenal. But more importantly, we did it with great results of our culture and engagement scores. And -- all those together are really difficult.

It really takes a team in unison, reaching for the same thing as everything is based on our core values. Thanks, Mike. Mike, also, I wanted to comment, I appreciated your in-depth Florida piece, that was good reading.

Do you have anything?.

Appreciate it.

Can I have one quick follow-up?.

Sure, can..

On policy growth seasonality, historically, this time of the year exhibit faster growth.

Any comments on whether that would or wouldn't be the case in '25 just given I feel like the dynamics of the cycle is they're always a bit different?.

Yes, I think typically, first quarter is higher. You've got tax payments dropping, so people shop. You saw the 18% PIF increase in our January results. So we feel good about our growth -- our intended growth in the first quarter. We spent a lot on advertising last year, especially in the second half.

And a lot of that was because we saw an opportunity to gain share, especially when our competitors did not quite priced in like we had more quickly, I think, than others. And so -- basically, we'll have to let that play out. We're going to grow as fast as we can and do so to get to our target profit margins.

But yes, I would say typically, first quarter is a pretty big shopping season, especially in the private passenger auto part of the business..

Okay, thank you..

Thank you. Our next question comes from David Motemaden with Evercore ISI. You may proceed..

Thanks, good morning. Tricia, I just wanted to talk a little bit about your appetite for continuing to ramp the advertising spend. And I think in August, you had noted that the cost per sale was about -- I think it was like 25% below your targeted acquisition costs.

Wondering where that is today? And what sort of runway you think you can continue to increase ad spend to capitalize on the growth opportunity?.

Yes. Our CPS and TAC are much closer than that now because of what we have spent. And we also did invest in Q4 and some delayed response ads. So we did something that we called Progressive's overnight. And so those are things that we think about that really increase our brand and our presence in terms of hopefully engine.

So those are a little delayed response. So we're a little bit tighter now. We were actually talking about this before the call. We look at our budget for media at the beginning of the year, we work with Pat's team on upfront buys and things that we know we need to put into the system that we have to be very thoughtful about for the year.

And then we have a lot of ability to flex both ways. And you've seen it both ways, and we but it up against our 96 and you saw it last year when we were able to spend more. So that's how we're going to look at it this year. We're going to continue to spend to the efficiency. We obviously want to keep CPS below TAC. It's a little bit closer now.

And a lot of it depends on what competitors do. And if they're -- in the auctions, if they're spending more, they're spending less, can react really quickly to all of those things like we have in the past..

Got it. That's helpful. And then for my follow-up, I noticed the policy life expectancy continued to tick down this quarter sort of has been moderating a bit. But I think if I look at the comps, they're pretty high comps a year ago.

Could you just talk through how you guys are feeling on the retention side of things because it feels like the new business is definitely robust, but some of the retention numbers have been moderating a bit..

Yes. You're spot on with that. And obviously retention is such a big piece of our growth and really sort of the holy grail. We're not surprised because of the rate increase we've taken over the years that retention has dipped. We're hopeful that turn it started to turn on the trailing 30 commercial auto.

So yes, we're -- it's never great to have our PLEs go down, either on a T3 or T12. We're working diligently, and you heard about that from John Murphy in terms of just making sure that we have this near-perfect balance of our claims guiding principles.

And what we know is when people have a claim, they're more likely to stay because of the service we give them, we look at it from an NPS perspective. So what I would say is, we're going to work diligently on turning that around. I think one of the biggest things you can do is have stable rates for your customers.

With all the things that have happened from an inflationary perspective, people are shopping. It's easy to shop, and there's a lot of shopping going on still. So if we can keep these prices stable, I think that is really a key when you get that renewal rate and you don't have to shop because it's stable or, in some cases, even going down.

So that's really where we're at now. We obviously want that to improve our overall PIF growth..

Great, thank you..

Thank you..

Thank you. Our next question comes from [indiscernible] with Wells Fargo. You may proceed..

Hi, good morning. So it's been very topical just to talk about like the tariffs, and I think your call is obviously lined out at kind of going through a today. So have you guys sized the potential impact on margins? It seems like it's going to be more of a second half story.

But I guess, how are you kind of balancing growing as fast as you can with something that's going to potentially go cash cost up in the second half? I guess where do you find the balance between the two?.

Yes, super relevant and timely question. And clearly, typically tariffs are a one-sided risk to our loss cost. So yes, we've been thinking about that a lot. And in fact, our pricing team is working with our economics team at PCM, and they have been for a while to understand the implication of tariffs.

And so we have a lot of -- I'm not going to share with you the raw data or the assumption we use, but I will tell you, about three weeks ago, I was reading through some of the materials they're putting out and it's evolving every day. And I called Pat to say what incredible work these two groups were doing and just really diligent.

So yes, we actually have what we think at this time, percentages would be on certain -- if certain tariffs happen. Now those will ultimately change, and we'll be able to kind of flex our models. It will depend on the countries, the products, the magnitude of severity, but ultimately, we into our indications.

There's a lot of, I think, puts into as things have inflow. So with the tariffs that went to effect today, we'll have to think about new car prices. Are those prices -- do those prices get passed on from the OEs to our customers? What does that mean to values? Obviously, from both Mexico and Canada, we get a lot of our parts to repair cars.

And so when will those play out? And I do agree with you. I think if things go as planned, I think it will be more second half and into 2026.

And then there are some other things we're thinking about that we're modeling and that is if there tariffs on oil, does that increase gas prices, does that make people drive less, does that change frequency, even with -- there a talent shortage in the body shop industry that happened a couple of years ago.

This morning, it looks like there might be some additional tariffs on lumber for Canada at a minimum, will that due to a home price? Of course, home repair prices and we've modeled that in as well as what I talked about with fixing cars. So we're modeling all of that together, and a lot of it will depend on how much inventory is out there.

And then if you think about the future, I'm always trying to think about second and third order effects. If you think about the future, and I was watching CNBC this morning, I thought, well, if we want to have more of our lumber that starts here in the United States, then we're going to need to build more sawmills.

Those are going to -- that can't happen overnight, but what does that do to trucking and loggers. And so it could be a tailwind in terms of our Commercial Lines organization because that's very much based on macroeconomic data. But here's where we're at. We have a bunch of models.

We were able to flex those models every time we get a new piece of data or the data changes. David, [indiscernible] and his team are reading through all the executive orders and understanding how that affects us. And there's disruption in pricing, we are really good to react really quickly and you've seen that.

And probably the last thing I'll say on this is that we are sitting in a good position because right now, our margins are below our 96. So we're sitting on some margins, so we can kind of see this out as things evolve..

Great. Thank you for the holistic response. And then for my follow-up for the ad spend. So it kind of sounds like it will be maybe not to the same absolute dollar amount, but it sounds like the seasonality on the ad spend because you typically spend a little bit more in the first half.

It sounds like it will continue to be kind of like spread out as we go through the year. And I understand there's some uncertainty with the tariffs so that could change drastically.

But is it kind of right to think about in terms of the seasonality and ad spend seasonality kind of continuing to be huge just given the higher customer shopping?.

I mean, yes, for the most part, we will spend when people are shopping and people have typically shops in the quarter. But we're going to be really flexible to see what plays out. A lot of it isn't just what we're doing, it's what the competitors are doing.

So like last year, we had a budget and then we increased it based on the opportunity to gain share when we could. So we -- that's a great part about the flexibility. We don't have a budget where we say we have to spend this much or it's gone the next year. It's flowing.

It's -- and it changes depending on the needs of our growth and watching what the competitors are doing and watching what's happening in pricing. Overall, for both media spend as well as just overall pricing.

So we're flexible is what I'd say as we talk about this all the time, what we need and why we need it and we're going to try to reach our main objective in that is grow as fast as we can at or below a 96..

Great, thank you..

Thank you..

Thank you. Our next question comes from Joshua Shanker with Bank of America. You may proceed..

Yes, good morning everybody. I'm going to ask a similar question maybe in a different way. If I look at the ad spending, it seems like you spent more in 4Q than you spent in 3Q. And the PIF growth slowed down in November a little bit and then much in December as we expect it's normal. That's the seasonality of it.

But -- you talked about this, I guess, delayed response advertising in some ways.

How does it work exactly? And if we look at how should we compare ad spend to PIF growth? What's the relationship there?.

Well, we look at -- when we spend, we look at a measure -- take the delayed response that. We look at a measure called MP6 [ph] -- the new prospects that are shopping new in the last six months. And we look at MP6 and how that increases. So we know people are shopping, and we know they're active. So that's how we look at that.

And of course, we look at our targeted acquisition cost and our cost per sale. So we look at all that together, and that's for the immediate response. For the delayed response, and this is something slightly new. And John Murphy talked about it during his slides, we have a new purpose statement that we developed a few years ago.

And we started what we call our Anthem and that is progresses overnight, and we spent some money on that in the fourth quarter, which we it's going to be harder to measure and so we have some different measurements in the longer term. I'd probably be able to share this with you once we have them because they'll play out.

But that's how we think about those two differently. Do you want to add anything, Pat, are you -- thanks, Josh..

Then on claims, is there any evidence or numbers you give that about cost per claim that the efficiencies you're building in are delivering a cheaper cost per claim than it would have been a year earlier under the same circumstances? I think back 15 years ago when you added the Claims centers.

This is a goal that the same Claim could be satisfied more cheaply.

Are there any statistics or confidence you have around your ability to resolve the same claim cheaper with the same input costs?.

Yes. We have a lot of data and care deeply, obviously, about our LAE, but we look at cost per feature for Claims. We look at features per day per FTE. So when you're thinking about what goes into all the different Claim features, it's really getting it to the right person at the right time.

And if we can do that throughput, that's going to be much more efficient. And as long as accuracy is still great, then that's what we care about. So we look at a lot of -- actually a lot of data across the board, my team and I talk a lot about efficiency. And when I think about that, I think about it from a non-acquisition expense ratio.

But how can we continue to get efficient because competitive prices is one of our strategic pillars. And so we have to continue to push that cost down. And of course, the curve that John showed, we want to continue to push that down to the left..

Thank you for taking my questions..

Thank you..

Thank you. Our next question comes from Andrew Andersen with Jefferies. You may proceed..

Hey, good morning.

Could you maybe talk about any changes you're seeing in bundle rates? And perhaps it would be helpful to break it down between in areas where you are growing the property book and areas where you're derisking?.

Yes, that's a great question. We've been talking a lot about this. And we refer to this in the annual report documents when we talk about our blueprint for the future. And so -- it's a good time, I guess, to step back a little bit.

And I'm going to read you our mission statement for property because this has really been evolving and it's really important and all is a big piece of it. So our mission statement is Progressive Home primarily offers products for owner-occupied property bundles with Progressive Auto. So that is going to be where permitted.

The main thing we're going to have a -- we will restrict business coming in where we can to have a B home bundle, whether it's condo or home. We will build a diverse portfolio of products with partner agents who understand our underwriting strategy and proactively support it.

When capacity is limited, we use that capacity for bundles written with our partners in the agency channel. So that's the overarching mission statement. So we'll be referring to that over the next few years as we continue to have our blueprint for the future. Of course, first in source, we have to get the rate we need.

So we had right into the system in 2024, and that will continue into 2025. Meanwhile, balancing that out with investments we're making in people, processes, IT, segmentation. And then we have the blueprint that talks about bundling, which I just talked about. We want to accept new business with auto, home bundle were permitted.

We've talked, I think, a couple of times about exiting the DP3. So we've in 44 states and that is, I think, of rental properties. And then really aged alignment, holding our agent partners to volume and quality bundles, and we have very specific expectations for our agents. And then we have to cost share with our insurers.

Insurance, home insurance shouldn't be a maintenance on products. So we cost share with mandatory wind inhaled deductibles and then what we call roofing materials payment schedule, think of sort of a sliding scale on roof depreciation as the roof ages.

And then, of course, we've talked a lot in the last couple of years about derisking and making sure that our portfolio across the board. So I'm not going to share specifics of bundles. The majority of our homes are bundled with our auto. I will tell you that much.

And I think probably another data that I won't share either, but it's a very high percentage. And very much a majority is how many of our rental policies are bundled with auto. So think of what we call future Robinson. So these are people that are already bundled with us.

And as they do buy a home, the next step would get to be Progressive Home in their auto. So that's a reason to believe of the future that we'll continue to bundle more auto and home, and there's a lot in the pipeline for us as we grow..

Thank you. Maybe just going back to tariffs.

I suppose you can't prospectively reflect it in pricing, but the extent to which you start to see it, how many quarters or periods would it have to take before you would kind of be allowed to reflect that in a rate filing and have it be approved?.

Well, it's a little bit different in different states. But as soon as we see the data, we try to put that into our pricing indications, and our -- and that, of course, is state by state. And then we work there's different regulations in different departments. We work with each department to get that in there as soon as possible..

So it could be relatively quickly, I suppose once there is an impact....

Yes. As soon as we see it in our data, we're able to -- we'll be able to present it to the Department of Insurance to try to get the necessary rate..

Great, thank you..

Thanks..

That appears to have been our final question. So that concludes our event. Josh, I will hand the call back over to you for the closing scripts..

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. You may now disconnect..