前進保險 (PGR) 2014 Q4 法說會逐字稿

Welcome to The Progressive Corporation's Investor Relations conference call. This conference call is also available via an audio webcast.

(Operator Instructions)

In addition, this conference is being recorded at the request of Progressive. If you have any objections you may disconnect at this time.

The Company will not make detailed comments in addition to those provided in its annual report on Form 10-K, annual report to shareholders and letter to shareholders which have been posted to the Company's website and will use this conference call to respond to questions. Acting as moderator for the call will be Julia Hornack. At this time I will turn the call over to Ms. Hornack.

Thank you, Wendy. Good morning. Welcome to Progressive's conference call.

This is Julia Hornack. I recently assumed the role of business leader of Investor Relations from Matt Downing.

Participating on today's call are Glenn Renwick, our CEO; Brian Domeck, our CFO; and Bill Cody, our Chief Investment Officer. The call is scheduled to last about an hour.

As always our discussions on this call may include forward-looking statements. These forward-looking 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 this call.

Additional information concerning those risks and uncertainties is available in our 2014 annual report on Form 10-K where you will find discussions of the risk factors affecting our business, Safe Harbor statements relating to forward-looking statements and other discussions of the risks, uncertainties and other challenges we face. That document can be found via the investors page of our website, progressive.com.

We are now ready to take our first question.

(Operator Instructions) Max Zormelo, Evercore ISI.

Hi, good morning. First question is on the agency channel. I'm wondering are the group challenges in that channel related to your inability to provide a well branded bundled auto and homeowner product or is there something else going on? And how long do you think it takes before you reach an inflection point in the agency channel and we start to see an improvement in growth and policy life expectancy?

Thanks, Max. Frankly of all the things that are going well for us the one that has my greatest attention is the production in the agency channel so you're right to bring that up as a primary question. Don't look at it as I wouldn't encourage you to look at it as an inability to have that bundled product.

Our traditional offering in the agency channel didn't rely on that. That's really sort of the next generation where we hope that to be simply additive.

Obviously we're doing it for some time but we expect to ramp that up. We've outlined quite a few challenges, some of them competitive, some of our own pricing challenges. Last year we took rate in the channel.

I'll call it 3.5% but most of that was in the first half or around about the midpoint so we're still seeing it come through a little bit in our renewals. But towards the latter part of the year that rate was actually moderated quite substantially so we look forward to that flowing through into the renewals and seeing a different reaction there. The competitive reactions we've said probably on a past call that we had a multi-response to that.

I would say many of those responses were relatively marginal in their results. One of the biggest things that we were doing which is far from marginal is introducing our new product and I want to be careful here since other companies do this a little differently, we're always bringing out not only a new product into the marketplace but we have R&D. So from time to time we'll talk about new product.

And also in R&D it's a continuous process for us. But we did release what we will call our most recent full market product in Missouri very recently and we're starting to see some signs from that introduction that are positive. I'll say positive in a couple of ways.

One it's producing more preferred business and that was one of the goals of that rate revision. Another goal built into that rate revision was the adoption of Snapshot at a higher level inside of the agency than we had seen in the past and we're also seeing that reaction. So identification of the issue is correct.

Agency is not performing as well as we think we should be performing in that sector. Still performing well. But we think we've got a good rate level.

We think we're leaning into a renewal period that will be less dramatic in terms of rate change for consumers and we have new product in the marketplace. And then add onto the top of that a lot of what we talked about in the specific conference call in December where we've entered into our arrangement with ASI. And we expect that as a bundling option to take on a whole different face for agents seeing Progressive/ASI as an entity and bringing something distinct to them.

I've said very clearly that our number one goal with that controlling interest is to actually have something that agents want to sell which is very different than having something that's there it's another alternative. It's something that they want to sell and the consumers will want to have. So we look forward to that.

That's not going to turn the tide in any sort of immediate time frame so we have short term with new product. We have the effect of last year's rate revisions mitigating and we also have a longer-term strategy with our bundled policies that we'll be reporting on a great deal more as that starts to come to life.

Thanks for that thorough answer. One other quick one if I may. Are you willing to -- in the direct channel are you willing to take the consolidated combined ratio up towards 96% in order to grow in that channel meaningfully this year?

Simple answer would be yes. My commitment to shareholders is that the overall Company will produce a 96%. Clearly you know the relative size of the portions, agency and direct, call them roughly equal.

But it is not an intent necessarily to have a combined ratio substantially lower than 96% if we believe we can grow and grow attractively by any closure of the margin that we might be attaining in a 96%. I have quite a physical reaction to going over 96% so that won't happen by design but absolutely a good growth and profitability combination in our direct channel. To put the combined ratio closer to 96% is a very acceptable outcome especially if it's coupled with that growth combination.

Thank you.

This is Brian. The only thing I would add to that is keep in mind in the direct channel particularly as it relates to drivers of demand one of the functions is advertising and advertising spend. And we measure that on the cost per sale or yield relative to allowable acquisition cost.

So as long as we are meeting those new and renewal targets we are more than willing to continue to spend on advertising. And where you might see that is the change in the expense ratio from time to time. And if you saw January's you saw that our direct channel expense ratio was a little bit elevated in January.

And yes indeed in January we did spend a fair amount on the advertising, higher than earned premium growth rate. But we believe meeting those costs per sale versus allowable acquisition targets.

So that is one of the things that we have a lever on in terms of how much we spend on the advertising. But they always have to meet those new and renewal targets.

Okay, thank you.

Josh Stirling, Sanford Bernstein.

Hi, good morning. Thank you for taking the call. So Glenn, I was hoping we could chat a little bit more about your acquisition of the homeowners company.

I think you did a nice job in your shareholders letter of talking about the destination era and how this fits in both as an offensive opportunity as well as a defensive one and making sure you have the ability to continue to manufacture and you continue to have or have partnership and the ability to deliver homeowners business in any conceivable scenario in the future. But I'd love to get a better sense if we think not on the defensive side but on the offensive side what are you guys really hoping to do with this? I think you just said creating a product that agents want to sell.

I think I can imagine a few different things that might fit there that but I'd really love to hear what you guys are thinking that you'd really like to do with this to actually drive agency sales growth of bundled products whether that's commissions, new product designs, introductions in more states. It would be really great to have a better handle on what the actual operating agenda is going to be and then a realistic time frame of what you're going to hold the organization to. Thank you.

Very fair question, Josh and hopefully I have at least outlined what I can outline at this stage. There is work going on and I'm not one to avoid the question so it always makes me awkward when I just know more than I'm prepared to say right now. There is work going on right now in a joint design with ASI, Progressive folks as to what a responsive product for agents will look like.

And you mentioned some factors in there. Those are all being considered. I'm going to suggest to you that that will be a better question for us to address -- we may or may not be ready -- but if we are we will address it in our meeting in May.

I'm not avoiding the question. I'm just saying that it's a real-time discussion going on right now with the answers having not being determined in specific detail but there are a lot of things on the table that could happen. I think you know me well enough to know that we don't sell futures.

We absolutely are working on things. So are things like commissions on the table? Could be.

Are things like policy period and coordination of policy period on the table? Could be. Those sorts of things are absolutely important and do we think that there will be a group of agents that will see the combination of a Progressive and ASI as something potentially special and more importantly those that can thing gee, what will that look like 5 years from now, 10 years from now, we're going to try to put that proposition out there with real substance.

So for me this is exciting. We didn't go in just to get something because it was available or that we liked it. It is to make a meaningful difference for both companies in their ability to create a bundle that will be meaningful for consumers.

And to the extent I think I heard this in your question, yes, it does provide a lot of optionality for us going forward. We won't get everything right out of the gates but this relationship will provide an awful lot of optionality to be able to continuously change, modify and have the relationship that isn't two companies trying to work two agendas, it will be very much a one agenda with regard to bundled policies.

That's great. We will stay tuned for the investor meeting.

If I could I have to ask something, you brought up the Missouri product launch of your most recent Snapshot generation. I'm wondering if you can give us a better sense of what you think the impact of that would be if we could imagine that it were to roll out nationally. Is this going to be something that actually moves the needle on the margin side or is this a new business growth vehicle and if that's the case how do you think we should be thinking about sizing that then?

Of those two choices I wouldn't think about it as a margin issue at all. We try to get the same margin across the board regardless of rating segmentation. So to me it's just a segmentation variable.

If it segments people that are favorable then we will price them to the point that their favorability is incorporated into their rate. So don't think of it as a margin issue, think of it as a growth issue. Last year you almost threw me asking ASI before our Snapshot question so I thought I would cover a couple of other Snapshot issues.

We were up with our Snapshot program about 28% last year, targets or margins very, very close to what we're looking at and where we're off it's off on older model so we're very comfortable with what we're doing in the marketplace. The Missouri entry which will be followed by many other states this year the rollout will start I believe late April into May. What we've seen so far and I'll just restrict this to Snapshot is I'm going to report the news and I will be the first to admit when it's not the news or different but we have seen a substantial tickup in agent take rate as measured by quoting activity.

So first of all it was very low to start with. So the fact that we've seen it tick up is promising, it's encouraging, it's supportive of what we saw in Massachusetts where we tried the same sort of issue. It is not at the levels that we see on a direct basis but we see directionally that we've made a difference and hopefully for agents.

And to be very fair this is something that agents are going to have to get a little bit more comfortable with. But bringing at least partial discounts forward in the rating process I don't think it took that much creativity to believe that that would likely have an effect.

It has had an effect. We will continue to monitor that but based on everything we see, both now in the Massachusetts early pilot and Missouri where it's incorporated into our model design we have every expectation of continuing that rollout and we have every expectation that agent take rate will reflect a better proposition for them to present to their customers.

A couple of other things just on Snapshot since they may or may not be on people's minds we did finalize an agreement with GM very late in the year so it will actually go into effect more in the summer this year where we actually were able to use the OnStar device. I think I've said on this call or other formats I would just assume be long-term device agnostic or not even in the device business.

So this is a very first step where ultimately we'll be able to use the technology that's in the car totally with the consumer's consent to be able to actually have one more source of data. We'll continue to push based on the results that I gave you of the 28% growth last year. And as we recognize premium we're now in the above $2.5 billion that's associated with Snapshot.

I want to point out Snapshot is not a separate program. It's a rating variable.

I suspect one of the questions might be a little bit later so I'll just get right onto it is the indication that we gave maybe on a call last time or the time before that with regard to our interest in using Snapshot to really understand the changing macro economy with regard to gas prices and what gas prices might do, might not do, what mileage might be correlated, might not be correlated. I can tell you it's actually quite fun to be sitting here looking at data on a weekly basis and I'm sure there are people looking at it on a daily basis by state. And I once made a comment I could tell the weather outside by the number of motorcycle losses.

Now I think we've got another way of knowing what the weather is but there is a macro trend to increased mileage. We're not going to be specific with the data that we're seeing. We think that's an important internal data set for us, so we've actually we're doing indications for our rating based on different gas prices and we can actually correlate that to frequency.

So we're actually getting quite sophisticated in our pricing as to what might happen, might not happen but we're prepared in different circumstances. Most importantly the miles that are being driven are not necessarily direct duplicates of the miles that were being driven. People don't commute more to work just because they have lower gas prices, so it's a different type of mile.

You could reasonably imagine it's longer trips and the frequency on those trips or the frequency per mile is different. And those are all sort of intricacies that the Snapshot program is allowing us to see on a pretty large statistical basis that we feel very good about that input and won't have to wait six months or three months to see governmental data to adjust our pricing.

We'll be able to factor that into our trends. So for me that's a very exciting thing to be able to actually see signal as it's starting to develop, imperfect but very exciting.

Glenn, you just answered about seven questions so thank you, thanks for the response.

Okay, thanks, Josh.

Joshua Shanker, Deutsche Bank.

Yes, good morning everyone and thank you for taking my question. Why is the move into homeowners happening now on an equity basis? What changed in the past year?

I'm going to mischaracterize it and you please can correct me but I feel in some ways Progressive has always said we don't want to take on that kind of risk. It doesn't fit with how we run our business and it makes this feel like the least worst option.

Or I'm if I'm totally mischaracterizing it, please disabuse me of that but it seems like this is a change of strategy, something you've avoided in the past. Am I mischaracterizing it?

I'm not going to say you're mischaracterizing that. Look, out of my lips has definitely come the words that I'm not interested in homeowners as a fundamental use of our capital. The leverage is different, auto was absolutely where our focus was and I am if nothing else someone who believes a great deal in focus.

So what has changed? That's a fair question. And I've tried to address that in a couple of different ways but let's take one more shot.

Why now I guess?

Yes, that's fair. Why now? We have for probably and I might mischaracterize it but let me say five years, maybe six, had a multiple relationship with homeowners to be able to bundle our auto.

There is a segment, let's just start with the segment, there is a segment of consumers that we simply don't really have the product that represents their long-term interest. We call them the Robinsons. Doesn't matter if you haven't caught up on that nomenclature but Progressive has been incredibly successful in my mind attacking certain market segments and getting an overindexed marketshare relative to our indexed share of the entire PPA market.

But that leaves about a 40% part of the consumer base that is not really well represented by our product. Is it because our auto product is not a fit? I think the answer to that is no.

It's because those customers need more product and tend to bundle. So I have no interest with the brand that we have of being left out a 40% of the marketplace.

So why now? Because A, we have a brand that's appealing to what we consider to be the future long tenured customers. Auto is a primary first product purchased and we are very aware that many people end their relationship with us simply because their life is changing and they need additional products.

We would like very much to use our business model, leverage the business model that we have had but use it to start to say how can we keep those people for a longer period of time and that does require additional products. We are more than happy to provide those additional products under our brand umbrella which is working well for us even if we don't manufacture them. Even if we don't manufacture them which is true for the vast majority of the ones that we offer.

With regard to ASI it's more difficult to have a strong relationship in the agency channel that works, one that has the capacity, one that has the knowledge of what agents want. And ASI for us was just a perfect match of that and we are delighted to have not only them as a strong partner but we could use them in other ways.

But for right now that gives us something in the agency channel that we simply haven't really cracked into. We have been more successful in creating the bundles on the direct side than we have on the agency side.

If we don't come to the market which is a huge part of our business with something that agents truly want to sell and make sense then we don't really have that part of the marketplace, that 40%, we're not really attacking it. And that seems to be for me a major opportunity for growth and that's pretty much why now.

We're very, very comfortable with the other parts of our business that are growing well. We're very comfortable with our traditional niche in the monoline auto. We're very comfortable with our special lines.

We're very comfortable with our brand, we're very comfortable with our direct position. We want to provide more to our agents, and to the extent that ASI is a viable player in the direct channel we'll consider that as time goes on.

Just to add to that I think we saw the success that we had with Progressive Home Advantage in the direct channel where we had many companies. And we saw the success of having our auto policyholders take a property product, the benefits of the PLE extension and the like. And we wanted to have a similar entry into the agency market for that same type of customer who wants to bundle or have both of their products together.

So the ARX transaction was an investment in the agency channel to give us a vehicle to have agents and consumers in the agency channel also have that opportunity. Prior to this investment and acquisition the penetration in the agency channel was pretty modest. So this is an investment to get to a higher share of those customers in the agency channel.

Our belief was where in the direct channel we had multiple companies a multi-company approach in the agency channel would be very difficult to achieve. So we've worked with ARX, ASI for a number of years, love what they do in terms of their discipline and their results and their management. And so that's why we thought now would be a good time because we need to have a viable product offering that can suit the needs of the agents and the consumers in that channel.

Just one more comment on this so we don't perhaps lose the focus and I've stated this fairly clearly in several places, it is ultimately our goals to retain the customers that we bring on. We lose customers, some don't pay. There's lots of reasons you lose customers early in their tenure.

The last thing I want to do is lose a customer who has been with us for a reasonable period of time and has no dissatisfaction with our service or our product simply because they need more product. We'll find that and meet that need for them even if we don't manufacture it.

That's perfectly reasonable. The one follow-up I'd have is how should the investor think about Progressive's long-term commitment to returning earnings to shareholders in light of this change?

I don't see any change. I was trying to comment but I don't see that at all.

I don't think it's changed at all --

Your ability is unchanged you believe?

Well in terms of the ability. What we have always said is we will return underleveraged capital if you will to shareholders, right? And so to the extent that we have sufficient capital and more capital than we need our commitment is returning that extra capital back to shareholders whether it be via dividends or shareholders.

So that philosophy of returning underleveraged capital hasn't changed at all. How much capital is generated and the like, certainly we believe this acquisition helps us retain some of our auto customers longer which should generate more capital. And we also have expectations based upon ARX's historical results that we can generate capital there as well.

Certainly the capital requirements of the homeowners business will be different. It's unlikely that we can write at a 3 to 1 ratio for homeowners but the philosophy of returning underleveraged capital to the shareholders hasn't changed at all.

Thank you for all your answers and I wish you good luck.

Meyer Shields, KBW.

Thank you, good morning. Glenn, I was hoping you could clarify the comment you made in your letter about commercial auto.

The way it sounded to me was that you're now optimistic about achieving faster growth without really sacrificing the very strong margins that you've been putting up. I just wanted to make sure I was getting that correctly.

Yes, I think you're getting it correctly. Let me put a little color on it. Our commercial lines group is really quite a phenomenal group and they do really great work.

The last couple of years has been a lot more bouncy and John Barbagallo clearly gave some indications of where we got behind the eight ball on a couple of places and they've worked very hard to get caught up. So my commentary there of sort of the ordered pair, we get profitability but no growth, no growth profitability it's been a little rockier than you would take the long-term history of that group.

Where I truly believe they are now is having found a very nice combination of pricing and profitability. The reported numbers that you're seeing in profitability are great when you get them. Don't assume that we price to those and that if all our pricing decisions are as rational as we hope them to be those margins will close to some degree but they will still be very attractive.

And a good way to think about that is that in the last three months or thereabouts, our rate changes in commercial have been plus or minus half a point. So while we have over the last couple of years been taking bigger swings, those swings now have moderated significantly and to me that's really finding the equilibrium.

So not only are we positioned very well in our own internal perspective for where we need to be but the market is coming to us a little bit as well. So trying not to do too many forward-looking statements that I might live to regret but I feel very good about commercial and hopefully that was the general intent of the paragraph in the annual report.

Notwithstanding that has definitely been a lot more rocky for the last couple of years. My expectation is that we're on a much better glide path now.

Okay, that's very positive. On a related note you talked a little bit earlier about the relationship between gas prices and frequency and so on. Is there any similar relationship on the commercial side?

I'm going to have to say better not to answer that because I really don't know with any specificity. We do have an arrangement right now where we actually have in-truck monitoring but it's a fraction, a small, small fraction of anything we have on the auto side.

So I don't really have good indications to that. We as an organization may have information that I'm not up to speed on. I just don't know.

I think freight miles are probably a lot more indicative of supply and demand in supermarkets and other retail and all the rest of it. Fair question. Let's see if we don't have a better answer for you in May but I don't have the level of insight that we do vis-a-vis prime passenger auto.

Okay, thank you very much.

(Operator Instructions) Paul Newsome, Sandler O'Neill.

Good morning and thanks for the call. I was hoping you could give us your most recent thoughts on the aggregators in the direct channel. There's been a lot of talk about various websites trying to aggregate the direct channel more and just maybe talk a little bit about how you see barriers and opportunities within that particular market segment.

Yes, fair question, Paul. We're always very well aware of that. We talked to a lot of them so I'm going to be a little bit hedging on my comments because those conversations are ongoing.

For the most part I would tell you that we concentrate a lot on our own brand and bringing people directly to us rather than intermediation that may or may not be value-added. That's not a commentary on their sites, I'm just saying that we would prefer consumers to understand our brand, respect our brand, know what we can do for them and come directly to us. That's the model that works best for us.

I think it's pretty clear that the other major player in the direct space probably feels the same way. I don't know.

So aggregators don't always get a fair representation of our competitors relative to marketshare. So that's always the challenge for aggregators.

It might sound attractive to some consumers that I have X but if X doesn't necessarily include the major suppliers that can be awkward. So we're going to focus primarily on our own brand from a direct perspective. We're very well aware of aggregators in the agency arena as well, aggregators in the direct arena where I think it's no great surprise that Google has interest in things and where they clearly consult with us we're never exactly certain of time frames on that one.

So a lot of things going on. Ultimately we know best product, best price is going to be a big win and we feel very good about our ability to get that message out. If I were in a different position and didn't have a consumer brand my answer to this might be quite different.

That leads me to a follow-up question. I know you folks have looked outside the US at different markets and had some experiments there. And my sense, and please tell me if I'm wrong, is that the US market is different and that brand has a different impact in the US versus other markets.

Is that right? Have you seen evidence of that? And is there any way to think about and quantify that from our perspective?

I think you are right, Paul and the conference call would not be the right setting to get into it. But for example I know the UK market I think quite well and the differences I think are quite notable and what necessarily or what might work in one market may or may not work in another market.

I'm sure that's a healthy debate with everybody having sides in that but we do think we understand the US market very well. We like our positioning in it. That will be our focus so while we look outside the United States we always look to get different ideas but for the most part our focus is close to 100% here.

Great, thank you. And best for 2015.

Thanks.

(Operator Instructions) Brian Meredith, UBS.

Yes, good morning. A couple of quick questions here for you.

First one, Glenn I'm just curious with respect to getting better growth in your agency segment and the homeowners going in hopefully that helps out but what about commission rates? Is there a need here do you think to raise commission rates to get that preferred customer particularly maybe on package business and stuff?

The answer to that Brian is maybe. We are very comfortable with our commission rate that we provide relative to our monoline auto and so on and so forth. And we recognize where that is in many respects relative to others.

The but on that is we think we're providing agents with effectively a cost structure that is very close if not modeled off what we see in our direct structure. To the extent that we are trying to do something quite different with bundled, treat agents very differently, do what I said before, really have them, feel great about the product, commissions and other things will be on the table. And I'm sure if you caught the very beginning but those are very active conversations going on right now.

So rather than get ahead of those when the decisions haven't been made but do I think commissions may be a part of that when the agent's doing considerably more work to package things together, maintain that relationship? Yes, absolutely. It's not an aversion to paying more commission, it's just trying to make sure that we've got a product that is priced well overall for the consumer that's buying it and wants to stay with that combination for a long period of time.

Great. And then the next question, I'm just curious you all do a terrific job using big data for risk selection pricing and analytics and stuff. I'm just curious from a technology perspective any thoughts on using that for value-added services to customers be it through risk mitigation, loss mitigation for customers when they are driving or homeowners products and that kind of things?

None yet, none yet. We have a pretty long list of things that we're very interested in doing internally which I laugh on that because it's fun, it's exciting but none yet. I suspect there will be other opportunities for us to do things.

You mentioned risk mitigation in homes. We're all very well aware of the daily articles about autonomous cars and driverless cars and this and the like. Clearly what excites me about that, I get excited about it, is the technology journey that will get us there.

I don't necessarily opine exactly what the end outcome might be but the technology journey there we've said very publicly that we expect our long-term trend on frequency to be down. So far that has been matched or more than matched by a severity change.

But I think that same trend will happen in homes. While homes don't drive themselves they certainly could put out their own fires before anyone knew. And technology will have a great deal of influence in the home.

And while we are not homeowner savvy per se ASI certainly is. And as we match our own big data competencies those are opportunities that while will not be next week by any stretch of the imagination you should think of Progressive as continuing to leverage its fundamental strengths around data analysis and segmentation as we create some additional options for ourselves as well.

Great. Thanks for the answers.

(Operator Instructions) Mike Zaremski, Balyasny.

Hi, good morning. I just have a question about frequencies.

One of the largest auto writers in the US saw an uptick in frequencies relative to their expectations late in 2014. I was curious if you guys experienced that phenomenon as well. I believe, Glenn you spoke earlier about being able to I think you were talking about being able to react faster than in the past to the data you've garnered from Snapshot.

That's true. That would be more pricing for frequency so we should see the same frequency. I think I understand the company you're referring to and that's fine and different companies will see different things.

But on a frequency basis we actually saw flat to even slightly negative in the very latter part of the year. Always tricky to take any one measurement in any one quarter. But if we looked at the whole year we probably have a slightly negative frequency in BI that doesn't necessarily match with some of the numbers that I've seen.

That's just data. So we're looking at a flat frequency right now and as we think about the future gas price could very well have an effect on future frequency. Employment while we can't always say what's causative we definitely have correlations between employment and frequency or unemployment and frequency, whichever way you want to look at that.

So there are several things we believe frequency long-term is declining. That is based largely on vehicle technology. But there will always be some short-term variations based on more micro events in the economy, gas prices, employment and those are things that are very hard to forecast with any accuracy but as of right now, we're seeing a more mitigated frequency than some of our competitors apparently.

That's helpful. Thank you.

It looks like that was the last caller so that concludes our call today. Wendy, I will turn it back over to you for the closing script.

Thank you. That concludes The Progressive Corporation's Investor Relations conference call.

An instant replay of the call will be available through Friday, March 20 by calling 1-800-285-8790, or can be accessed via the Investor Relations section of Progressive's website for the next year. Thank you for joining. You may disconnect at this time.