Good morning, and thank you for joining us today for Progressive's Second Quarter Investor Event. I am Julianna Paterra, Director of Investor Relations, and I will be 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.
This quarter includes a presentation on a specific portion of our business, followed by a question-and-answer session with members of our leadership team. The introductory comments and the presentation were previously recorded. Upon completion of the previously recorded remarks, we will use the balance of the 90 minutes scheduled for this event for live questions and answers with leaders featured in our recorded remarks as well as other members of our management team.
As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2025, and supplemented by our Form 10-Q for the second quarter of 2026, where you will find discussions of the risk factors affecting our businesses, safe harbor statements related to forward-looking statements and other discussions of the challenges we face.
These documents can be found via the Investor Relations section of our website at investors.progressive.com. To begin today, I am pleased to introduce our CEO, Tricia Griffith, who will kick us off with some introductory comments. Tricia?
Thanks, everyone, for joining us today. At Progressive, one of the areas we really pride ourselves on is creating internal career paths and developing talent. Our ability to move people around the company to expand their experience and deepen their skill set is what helps us build an extremely strong bench.
That approach leads to very robust and extensive succession plans that are created years in advance of need. As we previously announced, Pat Callahan will be retiring in January. So before we begin, I'd like to thank him for his extraordinary leadership and service to Progressive over nearly 24 years.
He has certainly made a lasting impact on our business and our people. As we manage this transition, I've asked Lori Niederst to step into the newly created role of Chief Personal Lines Officer, overseeing both Personal Lines and CRM. Lori's appointment reflects our deep bench, and she brings a wealth of experience having been CRM President, Chief Human Resources Officer and in claims HR.
I'm very excited to introduce Lori as she leads Personal Lines into the next chapter.
Thanks, Tricia. Good morning, and thank you for joining us. I recently assumed the role of Chief Personal Lines Officer.
And while the title is new, many of our strategic priorities have been in place for quite some time. In fact, during a 2023 IR call, I presented our Robinsons agenda in the direct channel, and you'll get an update on these efforts today. But before we jump into the details, let me start with the foundation that guides our decision-making.
As you know, Progressive segmentation capabilities have enabled us to outperform over the short and long term in a very competitive industry. Ask any Progressive person, and they'll tell you that our objective is to grow as fast as possible at or below a 96 while delivering high-quality customer service. It's our reverence for data and ability to match rate to risk that have enabled us to grow twice as fast as the private passenger auto industry over the past 10 years at a combined ratio that's 7 points lower.
That's a combination that no other carrier has delivered on a consistent basis. This discipline is supported by our four strategic pillars that have guided us since we formally established them in 2015, and they continue to serve us well today. First, people and culture.
The positioning is intentional as our people and our culture are our strongest and most durable competitive advantage and everything else builds from this foundation. Second, broad needs. We're focused on serving customers across more of their insurance needs over their lifetime, not just in a single transaction or at a single point in time.
This helps us build meaningful customer relationships and improves retention. Third, our leading brand. The Progressive brand is widely recognized, and we support it with innovative products and experiences that give customers confidence.
And fourth, competitive prices. This reflects the underwriting and operating discipline that is central to how we run the business, including strong segmentation, claims accuracy and organizational efficiency that allows us to offer competitive rates. Taken together, these four pillars are how we compete in the marketplace, serve customers and position the business for profitable growth.
Today, we're focusing on two of these strategic pillars, broad needs and competitive prices, with the goal of having products to meet customer needs throughout their lifetime. Next up, Pat Callahan, our Personal Lines President, is going to set the stage for a detailed discussion of our auto and home products. John Curtiss will cover home.
And because Jim Curtis, our National Auto Leader, couldn't be here today, I'll be back to explain how we're leveraging our strength in auto to create a compelling bundled offering. Pat, over to you.
Thanks, Lori. Today, we're going to cover three topics. I'll lead off setting up some context on the Robinsons opportunity, then John Curtiss, our National Property Leader, will provide an update on our property business turnaround and how we're working to deliver both broadly available and competitively priced property products to meet the needs of Robinsons customers.
Following John's update on property, we'll go back to Lori for some more details on how Jim's national auto team continues to leverage our scale, breadth of distribution and auto product to create competitive advantage for our bundled home and auto offering. Let's begin with a quick level set on the incredible strength and momentum of our auto franchise. As Lori highlighted, our continued investment across all four strategic pillars enables us to profitably grow in the highly competitive U.S. auto market.
Coming off an incredibly strong 2025 when we captured approximately 75% of the total industry premium growth, we recently achieved the milestone of becoming the largest U.S. personal auto writer in the trailing 12-month period as measured by direct premiums written. We're thrilled to continue to see how our focus on delivering a broad suite of competitively priced products enables us to help a growing share of U.S. households save money on their protection products by switching to Progressive. Today, nearly 1 in 4 U.S. households trust Progressive for at least one Personal Lines protection product, and we're just getting started.
As you all know, we break down the U.S. personal auto market across four segments: Sam's who are inconsistently insured, which make up about 15% of the market; Diane's who are continuously insured non-homeowners and make up about 24% of the market; Wrights, who are consistently insured unbundled auto home customers and make up about 27% of the market; and Robinsons, who are consistently insured bundled auto and home customers who make up almost 35% of the auto market. Our #1 position in auto is impressive, but it's even more impressive when you see that we achieved that position while primarily focusing on the Sam, Diane and Wright segments, which represent roughly 2/3 of the total U.S. auto market. We continue to enjoy both strong double-digit market share and PIF growth in those three segments, while our single-digit market share and PIF growth in Robinsons highlights the significant growth opportunity that Robinsons represent.
Going deeper and looking at the segment market share by distribution channel, the opportunity becomes even clearer. Today, the U.S. auto market is about 37% captive or exclusive agent, about 31% independent agent and about 32% in the direct channel. Focusing on the left side for the direct channel, you'll see we enjoy solid double-digit share and auto PIF growth across segments.
We estimate our share of direct Robinsons is roughly half our share of direct rights, demonstrating that the combination of our industry-leading auto product, combined with our direct multi-carrier property offering is meeting the bundling needs of many direct auto customers who own their homes. However, we still have plenty of room to grow Direct Robinsons share while the direct channel continues to grow share of the overall auto market. The right side shows the opportunity in Agency Robinsons. 85% of Robinsons auto premiums are sold through agents, roughly 2/3 captive, 1/3 independent agent.
And given our auto leadership in the IA channel and customer migration from captive to IA, we see significant tailwinds to the size of the IA Robinsons market. Our low market share and flat PIF growth in the Agency Robinsons segment reinforces both the growth potential in Agency Robinsons and how recent initiatives to reposition our property business for profitable growth halted Robinsons PIF growth in 2025. Without stealing John and Lori's thunder, I believe we're investing in the right places to unlock the potential in the Agency Robinsons segment.
Beyond being a large and largely unpenetrated segment, the value of our Robinsons household is significantly higher than any other customer segment, generating about 70% higher lifetime premium than monoline rights and fivefold the lifetime premium of a Sam. In summary, we've become the largest writer of U.S. personal auto while significantly penetrating only about 2/3 of the overall market for the Sam, Diane's and Wrights segments. Our growth in Wrights PIFs across channels and in direct Robinsons demonstrate that our auto product is highly competitive for preferred households.
A key area of focus in agency is having a broadly available, competitively priced property offering, and we're aggressively investing to leverage broader Progressive segmentation, risk selection and distribution strengths to address this opportunity. For more on where we are and where we're going with property, I'll turn it over to John Curtiss.
As Pat mentioned, my name is John Curtiss, and I'm the National Property Leader in Personal Lines at Progressive. I'm excited to give you an overview of our progress and plans in our property business. Since our last update in 2022, we have made meaningful progress.
We have improved profitability, reduced volatility, strengthened core capabilities and positioned the business to better support Progressive's growth in the Robinson bundled home and auto segment. Property plays a distinct and important role within Progressive's strategy. Our focus is on owner-occupied homes that are bundled with Progressive auto, supported by a broad property product portfolio and partner agents who understand and support our underwriting strategy.
Our objective is to provide broadly available competitive property offerings that help grow Robinson market share while meeting our financial and return objectives. While Progressive broadly manages the business to grow as fast as possible at or below a 96 combined ratio, property is different. Given its greater volatility and higher capital requirements, we manage it to generate an appropriate return on capital while ensuring volatility does not create outsized pressure on Progressive's results.
If we execute well, property can support meaningful bundled home and auto growth while delivering more consistent profitability and allow us to close the market share gap in the Robinsons segment that Pat referenced a few minutes ago. Since 2015, property direct written premium has grown by 3.7x, and we are now a top 12 carrier in the industry. When ASI was acquired, it was a regional carrier with meaningful concentration in hurricane-exposed states.
Since then, we've expanded to 48 states and built a multichannel distribution strategy, selling both through independent agents and as a leading carrier with our Progressive Advantage Agency. But scale alone is not the only objective. After several years of profitability pressure, we made deliberate choices to slow growth to improve profitability, reduce volatility and enhance our capabilities to manage this business more effectively.
The rest of this presentation is organized around two themes: what we did to restore profitability in our property business and how we are now converting improved health into disciplined growth in support of our mission of becoming more broadly available with competitive offerings. First, I'll recap the progress we've made since our 2022 update when we outlined three key opportunities: improving profitability, reducing volatility and advancing capabilities. Then I'll shift to where we're headed, including the actions we are taking to become more broadly available with competitive property offerings while continuing to meet our financial objectives.
The key message is that this turnaround is substantially complete, and the next phase is about disciplined and targeted growth. First, profitability has improved meaningfully. In 2022, we acknowledged that property had not achieved its target margin, largely because weather losses were running above expectations.
Since then, we've improved results through rate increases, better pricing and segmentation, enhanced risk selection and more disciplined exposure management. The improvement is summarized in the graph, which shows our net combined ratio broken out into three components: weather and catastrophic losses, attritional losses and expense ratio. Through 2022, the net combined ratio was above 100.
In 2023 and 2024, we moved below 100, but we're still above our targets. In 2025, we delivered a 75 combined ratio, which is a superior result. While 2025 benefited from a mild catastrophe season and favorable prior year development, underlying profitability was in line with our targets even after accounting for these tailwinds.
Our strong profitability is continuing into 2026 with a year-to-date combined ratio of 78. The second opportunity was reducing volatility, and we have materially improved the risk profile of our overall property book. In 2022, we shared our goal to reduce Florida exposure and limit growth in states exposed to heavy cat risk to reduce volatility over time as the total property book grew.
Today, we have rightsized our Florida exposure, reduced our exposure to other cat-prone states and improved our portfolio metrics. The chart in the upper right shows high weather risk states as a percentage of total insured value in 2022 and 2025. During this time, we reduced high weather risk state total insured value mix by 23%.
We did this through a series of actions, which included nonrenewals in Florida focused on high-risk coastal properties and properties not compliant with recommended building codes, deliberate growth management in states with high severe convective storm and wildfire risk and growing faster in lower weather risk markets. The graph on the bottom shows the cumulative change in our portfolio metrics over time. Since 2022, total insured value has increased 30%, while our modeled 1 in 100-year probable maximum loss has declined by nearly 33%.
Simply said, we have grown the book while reducing tail risk. This creates a stronger, less volatile portfolio and reduces the likelihood that severe weather events create outsized pressure on our results. The third opportunity we focused on was advancing our capabilities.
Over the last 3 years, we have made meaningful progress building the property capabilities needed to complement Progressive's industry-leading auto position and support our bundled home and auto strategy. In 2022, we acknowledged that while we had invested in organizational capabilities and improved price segmentation, we were not best-in-class yet. Since then, we have doubled down on the investments needed to bring broadly available competitive property products to market.
These investments are focused in six key areas. pricing accuracy, product segmentation with speed to market, risk selection models, cost sharing, exposure management and distribution strategy. Together, these are helping us strengthen segmentation, manage risk more effectively and support disciplined growth going forward. Across the six capability areas, we have made meaningful progress, and I will quickly highlight our advancements on each.
The table on the following slides highlights a key tactic for each capability and the progress we have made deploying them since 2024. First, we improved pricing accuracy by implementing a by-peril pricing strategy that allows us to price at a more granular level and for differences in peril mix and target returns. This strategy has been deployed in all but one state, up significantly from states representing 39% of Progressive Homes premium in 2024.
Second, we advanced product segmentation and speed to market. In late 2023, we began deployment of our 5.0 product model, which was a significant advancement and included expanded by-peril rate order of calculations and several new variables. Since then, we've introduced our 5.1 product model.
And just last month, we launched 6.0, which adds new segmentation such as aerial imagery and predictive auto variables. We also established a dedicated product model development team to increase speed to market, and we are actively reducing our model upgrade rate revision timelines. Through June, states representing 93% of Progressive Homes premium are on our 5.0 product model or newer.
Third, we deployed a new risk model countrywide to help identify segments we cannot profitably write and policies that require more information before binding coverage. Research on next-generation risk models is in development with plans to deploy later this year. Fourth, we expanded cost sharing through higher wind hail deductibles and roof material payment schedules where permitted, with a particular focus on severe convective storm states to help reduce volatility in our results.
Fifth, we strengthened exposure management through targeted nonrenewals of wildfire and wind pool exposures where our modeled losses exceeded our risk appetite. This is in addition to the work done to rightsize Florida and reduce our cat exposure to other cat-prone states. These wildfire and wind pool nonrenewals are now 73% complete.
Lastly, we formalized our distribution strategy by removing property appointments from agents whose business models would make it difficult for them to be successful with us given our volume, bundle and other expectations. We're also working closely with many of our agents to make sure they have the resources to achieve our goals. Through June, nearly 92% of this remediation is complete or in progress.
Together, these investments are allowing us to compete more confidently in more markets. The result of this work is a materially healthier homeowners business and a much broader set of markets where we can now confidently pursue growth. The maps on the right show the shift from May 2025 to June 2026.
In May 2025, 18 states were classified as healthy and well positioned for growth. By June 2026, this number had increased to 41 states. This represents a significant expansion of our addressable growth opportunity, more than doubling from 40% to 82% of the property insurance market.
Our green and yellow designations reflect both controllable business factors and external market conditions. Controllable factors include rate adequacy, segmentation, contract and cost sharing terms, risk selection and exposure management. External factors include the regulatory environment and broader market dynamics.
A yellow designation does not necessarily indicate poor performance. It may reflect timing, regulatory constraints or markets where we need to remain more selective. The broader point is that we now have a much larger set of markets where we can pursue growth with greater confidence and control.
So with the turnaround substantially complete, our focus now shifts to disciplined growth. We are working to become more broadly available with competitive property offerings in markets where we have high confidence in the health of the business. This is an important enabler of Progressive's ability to grow share in the highly attractive Robinson bundled home and auto segment.
This phase is about converting improved business health into targeted growth while maintaining the same financial discipline that enabled the turnaround. As business health has improved, we have deliberately restored availability and expanded distribution in markets where the economics support growth. The chart on the left shows availability, which we define as the percentage of quotes eligible for a policy without additional underwriting review.
During the turnaround, we intentionally reduced availability by requiring more underwriting reviews as a way to carefully control growth and protect profitability. As state health improved, we began restoring availability in a targeted way. Since the third quarter of 2024, availability has more than doubled.
We have moved more quickly in lower weather risk states where the lower risk profile gives us greater confidence. At the same time, we are also slowly expanding in higher weather risk states as our pricing, underwriting and exposure management capabilities mature. The actions supporting this increase are practical and targeted and include enabling quoting and binding where restrictions are no longer needed, retiring obsolete underwriting limitations and expanding appetite where the business case supports profitable growth.
We are also investing in distribution more strategically, such as reopening new agent appointments with a focus on agents with large monoline auto books, expanding our relationships with national agency partners and creating a more efficient appointment process for former captive agents. The point is that growth is being rebuilt deliberately based on stronger business health and more intentional distribution choices. The second imperative is to improve our competitive position.
The actions required to restore property profitability created pressure on both price and nonprice competitiveness. As the business has stabilized, we are focused on rebuilding competitiveness without compromising the pricing, underwriting and exposure management discipline that supported the turnaround. On price competitiveness, significant rate actions, combined with more competitors returning to the market have reduced our estimated win rate on comparative raters.
This trend is shown by the blue line on the graph. Part of this reflects Progressive taking more rate than competitors to restore profitability, but it also reflects a broader market shift. Since the first quarter of 2024, the average number of carriers returning rates on comparative raters has increased by just over 30%, which naturally lowers expected win rates.
This is represented by the gray line. In that context, our competitiveness appears broadly aligned with market participation levels. These comparisons are directional estimates as carrier settings and defaults vary across comparative raters.
On nonprice competitiveness, our market intelligence shows that some of our actions created friction that reduced agent consideration for certain consumer segments. We are addressing these barriers in a targeted way with the goal of improving the agent and the customer experience without compromising risk discipline. Our actions fall into three areas: lowering rates where indications support it, continuing to deploy segmentation advancements and reducing agent and customer friction.
This includes adjusting cost-sharing mandates in key growth markets, aligning underwriting appetite and processes with market expectations and improving system ease of use. In closing, we are beginning to see meaningful progress from our disciplined approach to growth. The graph on the lower left shows same-day issued policies on a 4-week average.
It reflects the intentional slowdown in new business volume from the actions we took to restore business health in 2024, followed by the flat period while we executed our turnaround tactics and most recently, the volume rebound as we expand availability, strengthen distribution and improve our competitive position. The three primary takeaways I want to leave with you are: first, the property turnaround is substantially complete. We have improved profitability, reduced volatility and strengthen the capabilities needed to manage this business more effectively.
Second, we are positioned well for disciplined growth. We have materially expanded the number of states that are healthy and growth ready, and we are increasing availability and distribution where we have confidence in the economics. And third, property is actively working to become a stronger enabler of Progressive's Robinson strategy.
By offering more broadly available and competitive property products while maintaining financial discipline, we can help Progressive grow bundled home and auto market share in a more sustainable way. Thank you for your time, and I will now hand it over to Lori Niederst, who will discuss how the improvements in property will help to enable our broader auto Robinson strategy.
Thanks, John. Building on Pat's framing of the Robinson opportunity and John's overview of the progress we've made repositioning our property business, I'll now complete the picture. I'll cover what we're seeing in the auto marketplace, the progress we've made and discuss how our market position and continued investments support future growth.
I want to briefly come back to the market share view that Pat covered earlier, not to repeat the full discussion, but to reinforce why it's such an important page in the auto opportunity story. Pat showed how meaningful the Robinson opportunity is across both direct and agency, but Progressive's opportunity differs by channel. In direct, we have solid Robinson share, but it remains well below [ Wrights ], which tells us there's still meaningful upside.
In agency, the opportunity is even greater. Building on Pat's point that most Robinson auto premium is sold through agents, the opportunity is especially important because our relative share remains low. This reflects, in part, the intentional work John just covered, repositioning property for improved business health, profitability and disciplined growth, which creates more visible upside as our capabilities continue to advance.
So the reason to revisit this slide is simple. The Robinson opportunity is large. It exists across our channels and the market is moving in ways that will impact how Progressive pursues it.
The next slide steps back to look at shifts in auto distribution, changes in consumer shopping behavior and the relationship between auto and home premiums that influence how customers think about bundling. Before we move to Progressive's auto position and our investments to grow Robinsons, it's helpful to step back and look at the market dynamics shaping the opportunity. Starting in the upper right, over the last 10 years, we've seen a shift in industry premium from the combined agency channels towards direct, with direct now representing nearly 1/3 of the private passenger auto market.
In the lower right, we see a second important shift within the channel. Premium is moving from captive to independent agents, which matters because captive carriers have historically held a disproportionate share of bundled customers. As Pat noted earlier, more than half of Robinsons were still with a captive carrier in 2025.
As more of that opportunity becomes reachable through direct and independent agents, the market backdrop becomes more favorable for Progressive. At the same time, consumer behavior is changing. Shopping has slowed somewhat from recent peaks, but remains elevated with more customers comparing options and shopping annually.
We're also seeing older households represent a growing share of shoppers, which is particularly relevant for the Robinson opportunity. The economics of the bundle also matter. Industry-wide, auto premiums represent roughly half of the combined auto and home premium.
That means auto is often a large and highly visible part of the consumer's total insurance cost. That sets up the next question. When a customer is evaluating both home and auto, how do they think about the shopping experience?
And how does Progressive benefit when the experience starts with auto? This slide brings the market dynamics to life through a simple customer journey. When a household is shopping, the decision is not always a bundle-first comparison.
Often, the customer starts with the most visible and costly product. In many cases, that starting point is auto. Auto renewals are more frequent with 6-month policy terms, more visible as they not embedded in escrow and often a meaningful portion of the household budget.
That can make auto a natural lead product when consumers are comparing options, especially when they're motivated by price, ease and confidence in the carrier. When the journey is auto-led, Progressive is starting from a position of strength. Our auto brand competitive position, scale and distribution reach allow us to enter the customers' consideration set early and find opportunities to extend the customer value proposition to the broader household relationship.
The opportunity is to make that bridge from auto consideration to bundled consideration as seamless as possible. This is where property availability, product competitiveness, ease of quoting and channel execution all matter. They determine whether an auto shopping moment can become a Robinson relationship.
Consistent with our business model of being available when, where and how consumers choose to purchase, the point of this journey is straightforward. As more bundled customers become reachable through direct and independent agents, Progressive's ability to lead with auto and complement with a competitive property product is a critical path to increasing Robinson share. After framing the share opportunity, market backdrop and the importance of an auto-led shopping experience, this slide brings the discussion back to our Robinson growth opportunity.
Robinsons continue to grow in aggregate, but the results vary by channel because direct and agency have distinctly different business models. In direct, Robinson policy in force growth has remained positive. This is squarely in Progressive's wheelhouse.
We've proven we can generate demand, offer consumers choice and continually improve conversion. In agency, Robinson growth has slowed as we intentionally reposition property for profitability, business health and long-term competitiveness. That slowdown was expected, given the choices John described earlier.
And it creates a stronger foundation for disciplined growth going forward. The key message is that growth in direct and agency will take different paths. Direct is growing and operating in continuous improvement mode, while agency represents a meaningful upside as property health allows for targeted investments that help us compete more effectively in the independent agent channel.
I'll use that distinction to organize the next few slides to go deeper in each channel. Let's start with direct, where HomeQuote Explorer, our distinctive platform for quoting property and bundles, provides customer choice. The HQX proposition is simple.
When consumers come to Progressive for auto and home or just home, HQX provides options to ensure consumers get the coverage they need at a fair price. In a 2023 Investor Relations call, I discussed the HQX business model in detail. I described our in-house agency, our ability to quote both affiliated and unaffiliated carriers and the win-win-win proposition it creates.
Customers are provided choice, progressive is able to satisfy more household insurance needs, and partner carriers benefit from our acquisition engine. HQX also meaningfully contributes to our Robinsons growth. The model combines digital and voice experiences.
Customers can shop online, compare options based on price, coverage and service preferences, and they can call to receive guidance from nearly 2,000 Progressive in-house agents when they have questions or they need help. Since launching online quoting in 2017, quote starts have grown at a 27% compound annual growth rate, increasing from just under 1 million annual quotes to more than 6 million today. A key driver of that growth has been expanding choice.
We began with one carrier in 2007 and now offer 26 product options across 19 carriers. This expanded network increases our capacity and supports the broader customer-first value proposition. Our success in direct is creating momentum with Progressive's brand consideration among Robinsons, having increased 13% over the last 3 years in our proprietary brand tracking study.
The opportunity in direct is continuous improvement. At our scale, minor modifications can produce meaningful improvement in conversion while offering adjacent products like umbrella and renters strengthen the household relationship. With that direct foundation established, let's shift to agency where the model and investment needs are different.
With the progress John described in property, we believe Progressive is uniquely positioned to expand the value proposition we bring to independent agents and their customers. We're not starting from scratch. With decades of experience, we've built a broad network of valued independent agents that creates a durable distribution channel.
Today, we estimate that more than 40,000 agencies represent Progressive with over 90,000 storefronts. To put that in context, this footprint is larger than the U.S. presence of several of the most recognizable national restaurant and coffee brands combined. This distribution breadth provides incredible market access.
When combined with Progressive's national brand and the broad acceptability of our auto product, we've got all the right ingredients to scale. And in the independent agent channel, scale matters. We estimate that Progressive is roughly 3x the size of our largest competitor in the channel.
Our scale gives us a differentiated data advantage, creating producer level insights that help shape the capabilities we build for agents, which strengthens our position in the channel and feeds the flywheel over time. Said simply, we have the infrastructure, brand, product breadth, scale and data advantage to make targeted property and bundled acquisition investments from a position of strength. Next, I'll focus on two areas of investment in property and bundled acquisition, improving ease of use for agents and strengthening the value proposition we bring to the channel.
Ease of use is central to how agents operate, and it's an area where Progressive has invested for many years. In auto, that investment includes desktop quoting, server-based rating, for agents only and integration with third-party comparative raters, all with the goal of making it easier for agents to quote, sell and service Progressive customers. The results of a blind survey of independent agents highlights our advantage.
Agents consistently rate our auto sales and service functionality more favorably than competitors, which gives us confidence that we've built strong infrastructure on the agent desktop. The opportunity now is to extend this ease of use in property and bundling. We've already made meaningful progress by investing in property quoting, providing adjacent products such as umbrella and renters, improving integration with the FAO portal and continued refinement of the property experience.
The next phase is focused on providing seamless bundled quoting for agents. That includes improving how auto and property are presented together, simplifying the sales flow and making the benefits of Progressive easy for agents to explain to customers. The broader point is that this investment builds on a proven auto platform.
We're not creating agent-facing infrastructure from scratch. We're extending capabilities that agents already know and use into the property and bundled experience. The second area of investment is the value proposition we provide agents and compensation is an important part of that equation.
Robinson customers are important to both Progressive and agents because they retain longer and offer a larger share of household insurance spend. Our Platinum program is designed to recognize the role agents play in developing and retaining Robinson relationships and align incentives with that shared value. Beyond commission, Platinum provides agency development opportunities and features that help independent agents grow their business.
This includes access to annual policies, enhanced system functionality to create bundles later in the policy life cycle and continuing education to support staff development. We're investing in our independent agents. So together, we can capitalize on the growth opportunity with bundled households, and we're focusing on their needs as business owners serving customers every day.
Much like agency distribution, Progressive scale creates meaningful advantage in product design. The size of our auto book gives us an exhaustive data set and a clear view into how customer needs differ across segments. When we look at characteristics such as vehicle count, coverage limits, payment preferences and household composition, we see meaningful differences across Sam's, Diane's, Wrights and Robinsons.
Those differences matter and inform how we design products, price risk and create experiences that match customer needs. For Robinsons, that means building an auto product that supports bundled households with multi-policy discounts, higher coverage limits, pricing stability, billing options that fit different payment preferences and ease of use across agency and direct. Our ambition is to become a destination insurer.
We know customers' needs don't start and stop with bundled home and auto. So we're designing adjacent product options to extend the relationship over time. Trip interruption and Progressive vehicle protection are examples of optional protections that expand the value of the auto product.
I'm especially excited about embedded renters because it provides a great precursor for bundling. Consider a household with a young adult starting out on their own. If that customer begins with the Progressive auto policy that also meets their needs as a renter, we have an opportunity to protect them during a meaningful life transition, and we're positioned to remain the trusted insurance provider as their needs evolve.
That's the power of product design that supports both today's needs and tomorrow's graduation opportunities. As a reminder, we define graduation as moving from a single product to a broader household relationship. Back to the embedded renters example.
This product feature allows us to meet a need early in the customer life cycle, stay connected as their needs evolve and create a natural path toward a future Robinson relationship. Graduation also happens through more traditional cross-selling. Across both direct and agency, we look for opportunities to add auto or home to an existing monoline relationship to create the bundle.
That allows us to anchor on an initial customer need, build trust and expand the relationship when the timing is right. Our cross-sell workflows begin with identifying customers who may benefit from a multiproduct relationship and include policy reviews, customer communications and agent prompts. The impact of our graduation efforts is meaningful.
Since 2023, we've created nearly 0.5 million Robinsons. We view cross-selling not as an incremental tactic, but rather an important strategy to grow our Robinson share. Taken together, our strong auto position, property progress and channel-specific execution create a clear path for Robinson growth.
Thank you for your time today. I hope you leave with a better understanding of both the opportunity before us and the investments we're making to continue growing responsibly and profitably in Personal Lines.
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.
And our first question will be coming from the line of Elyse Greenspan of Wells Fargo.
My first question, I was just hoping to just kind of get your current thoughts on just how you guys are thinking about just the personal auto overall growth environment. I know in the Q, there were some comments just pointing to more competitive pressures, and we could see what's going on with rates throughout the industry. And so if you can just give us a sense of just the growth view and outlook.
And I don't know if it's helpful to just break it out between agency and direct.
Great. Thanks, Elyse. Let me start at a high level about how we see growth.
And then it might even go -- we'll go to private passenger I'll have Lori take that, but I'll go to some growth in the Commercial Lines area, which is a big part of our business as well. So when I look at so far, some of the companies that have released earnings, comparatively speaking, we were very proud of our growth, especially when you look at our PIF growth. So take Personal Lines PIF growth at 8%, but that's based on 16% the following year, there the previous year and our best year ever.
So the fact the comparisons are kind of tough maybe don't look as great, but we are really proud of our growth. And of course, our unit of growth measurement that we care about the most is PIF growth, and we've surpassed 40 million PIFs. We've grown 2.8 million PIFs overall, 2.2 million auto, private passenger auto PIFs.
So that's kind of the upfront thing. But I think about, and Lori mentioned this in her opening, the advantage that we have, I think, about the strategic pillar of broad coverage. I think about having been embedded in two really solid channels for a very long time.
So our roots in the independent agent channel go back 90 years. And of course, we were the first online in 1995 to sell auto. So having a reliance on two steady channels really gives us a good opportunity.
So that's just sort of my overarching part on our ability to grow and hopefully, the -- what we just talked about on the Robinsons growth gives you reasons to believe. Let me go to Commercial just because I think we have some exciting things, and we have some -- we're pretty optimistic in Commercial Lines. And then I'll have Lori who, as you know, just took over as our Chief PL Officer; to talk about what they're working on in personal lines.
So from a Commercial Lines perspective, we are really in a good position from a profit perspective, which really allows us to focus more on growth. The industry in Commercial Lines continues to be over 100 CR. The last data point we have is about 104 CR, which is down from 110, but nowhere where we want to be.
So we're taking some of that margin and increasing our media spend and our agent incentives, which is exciting. And then here's kind of sort of three data points that give us reason to believe that we're at a turning point. We had positive new app growth in the Commercial Lines organization in the quarter, and it was most positive in June.
So we see that as a turning point for growth. It is a signal. And then on a PLE, our trailing 12 PLE is up, and we see that as our renewal rates being more competitive.
Probably most importantly, and what we're excited about is our medium fleet program. So our quoting volume is the highest it's been since we purchased protective over 5 years ago. So we call that FSP now.
So that's an exciting trend to think about. And probably the last data point, I'll give you is on our medium our PIF growth year-over-year is up 30%. So while we usually focus on private passenger auto and it is a big growth trajectory for us, as you've seen in the Robinsons channel, our Commercial Lines is at a turning point, and we're pretty optimistic about the future with that.
And now I'll turn it over to Lori to talk a little bit more about private passenger auto.
Thanks, Tricia. Elyse, I'm going to add just a few data points to the setup that Tricia provided. And then I'll talk in detail about some of the actions we're taking in Personal Lines related to growth.
So if your question is partially being driven by our June results, we added 45,000 auto PIFs in the month, but one thing to remember is that the rate of growth in December is typically slower. And so that's going to translate to June being a slower renewal month. But if you take a step back and look again a bit more broadly, Tricia mentioned it, our growth rates have slowed from the peak levels that we experienced in 2024 and 2025, but we continue to gain new customers, we're growing the top line, and we're investing in our business from a position of really strong profitability.
When we looked at the first quarter statutory data for the top 20 auto carriers, Progressive grew direct written premiums by $1.3 billion, while the remaining 19 carriers lost a combined $1.3 billion. And the second quarter for us was our sixth best sales quarter ever for direct auto new business apps. We also reached another pretty major milestone for us, we mentioned it in the Q, but 40 million company-wide PIFs.
In PL, PIFs were up 8%, as Tricia mentioned, and that includes 8% growth in agency auto, 10% growth in direct auto, 1% in property and 6% in special lines. I'm anticipating a bunch of our commentary will mention the soft market conditions that we're experiencing. Competition is increasing.
We're seeing more carriers take on additional risk, and they're increasing their appetite for growth. And at the same time, shopping activity appears to be leveling off. Although when you compare it to historical standards, it really remains high.
Our PLE is another function of growth. They're down here. But again, we're coming off of that post pandemic peak.
And so when we look at the drivers of the decline, we believe it's largely consumer price sensitivity, which is leading to that sustained elevated shopping along with mix shifts that are resulting from our broader appetite. Despite that backdrop, we continue to see really strong evidence that we've got competitive products in the market. Conversion is up in both channels, and we continue to win business when consumers shop.
All that said, let me spend a minute talking about the actions that we're taking to generate growth. First, we continue to take targeted rate decreases. During the quarter, we decreased auto rates in 16 states, and that represents 37% of our country-wide net written premium.
Second, we're investing in both acquisition in both channels. Tricia mentioned, increasing agent incentives, and we're also increasing advertising expenses. We reported $1.4 billion of advertising spend in the second quarter, and that's up 16% from last year.
Despite the increase in spend, though, our cost per sale remains below our TAC, which gives us a bunch of confidence that the dollars we're spending are producing profitable growth. Third, we continue to strengthen our competitive position, and we're doing it through segmentation, product enhancements and distribution improvements. So in auto, we continue to expand new snapshot and non-UBI product models, which leads for us to even greater accuracy matching rate to risk.
In property, you heard John talk about 42 states now operating on our latest 2 product models in 41 states positioned for growth as we continue to broaden availability. So I share all that. And despite the fact that growth is moderated from the very elevated levels that we've experienced in recent years, our strategy really hasn't changed a bit.
We remain focused on growing as fast as we can while maintaining our profitability objectives. And this means we're comfortable at points losing some volume, if it's at a rate that we believe is underpriced. And over the long term, this discipline has proven to generate market share gains for Progressive.
And then my follow-up question, you guys have been talking about, I think, on a couple of calls, right, about getting approval to go to a 3.5x premium to surplus, right, in most of your states, I believe. I think you guys were talking about working towards that this year. Can you just provide an update on where we are?
And then how does that tie into your capital plan, right? We did see elevated share repurchases so far this year, just hoping to tie together those two things.
Yes. I'll let Andrew take that one, Elyse, and he'll talk about the premium surplus because we're well on our way there. And then this will give him a good opportunity to talk about how he's thinking about capital overall.
Yes. Thanks, Tricia. Elyse, that's a great question.
On the 3.5% premium to surplus, we were able to move towards it at the end of 2025. And we continue to move towards it in mid-2026 here. We did get some dividends from some of our insurance entities up to the parent.
And then we continue that effort at the end of 2026. And so of course, there are risk ratios, risk-based capital, things like that, that we have to think about and have to compute when we get towards the end of the year, but we remain bullish that for the vast majority of the entities that can move to 3.5 to 1, we'll be able to get there towards the end of the year. So we feel good about that.
On your larger question about capital and share repurchase, I can take a few minutes just to provide how I think about it in my new role and a bit on the wider topic of our use of capital. I'll start with the big picture, which is, over the past 2 decades, we've generated more than $50 billion in net income and returned more than $30 billion to our shareholders. And so we have a policy of returning capital when we feel it's under leveraged within the company.
Overall, we think our operating financial strategies have rewarded our shareholders well. And so we plan to continue them. In the March investor call, we did a deep dive on our capital, how we think about our capital and the avenues we have with it.
Just as a sink summary on that is that we believe our operational competitive advantage generates consistent underwriting margins while growing our market share. And once we take on high operating leverage, which the [ 3.5:1 ] is a representative of, we get to magnify that operating competitive advantage. And this combination of operational excellence and our leverage is the core of generating the high ROEs that we've been able to generate over time.
We also invest conservatively because of our high operating leverage. And so we want to make sure we have that stability for the company given the operating leverage that we employ. With our high ROEs, we have the capacity to generate significant capital.
When we generate capital, our top priority is to reinvest this into our business. This is our primary objective as management. Progressive has shown the ability to grow quickly during hard markets, and so we've also engineered our financial policies to allow us flexibility to reinvest in our business when these opportunities present themselves.
This is why we have a relatively low quarterly dividend, along with the flexibility of an annual variable dividend. Now once we funded our underwriting growth, we have a strong preference to return capital to shareholders. We do retain some flexibility for corporate opportunities, but our bias is to return capital.
In returning capital, we've had a historical preference for dividends as our primary mode of capital return. For many years, we had a formulaic variable dividend that essentially pushed all of our excess capital towards dividends. We moved away from this process in 2019.
And with this, we started refining our share repurchase decision process. As you called out, we've repurchased more this year than we have in previous years. Our share repurchase process includes an intrinsic value model along with peer and historical valuation benchmarks.
And so we have a process by which we evaluate the share repurchase decision. And so as CFO, I plan to have the same approach that we've had historically, which is to support the same stability and excellent returns for our shareholders. But our top priority will be to grow our business and to reinvest in our high-ROE business.
In times when our growth slows, and we have additional capital, such as capital, we might be able to bring out of our insurance entities as we move to the [ 3.5:1 ], we do plan to return that to shareholders, and we will look at the different modes between dividend and share repurchases in order to do that. But either way, between growing fast and reinvesting or returning capital to shareholders, we believe our shareholders win, and so we will continue to go down that path.
Our next question will be coming from the line of Tracy Benguigui of Wolfe Research.
On homeowners as a path to more Robinsons share, Florida moved from yellow to green state this year. Is that tort reform or your larger capital base, making your 100 PML to capital more supportive of growth?
Yes. I'll let John Curtiss take that. But we've obviously watched Florida closely since we nonrenewed some of the homes that we knew we couldn't make a profit margin on, and we're feeling a little bit better about that as well.
Go ahead, John.
Yes, sure. That's a great question. Historically, Florida was our largest state in property.
We did have profitability issues historically in the state. We do think that the tort reform has been helpful and is allowing not only Progressive but other carriers to kind of achieve better results. One of the main drivers for the decrease in our 1 in 100-year PML were the actions that Tricia mentioned, which were -- or nonrenewing a big portion of our Florida book with a focus on coastal risk and properties that were on older building codes.
And I think we're feeling a lot better. We're going to maintain our underwriting appetite, and we are starting to, in a very focused way, expand our distribution with agency partners.
Got it. But besides just the absolute 1 in 100 PML, is it fair that you're also measuring that against capital since capital has grown that suggestive that you could also grow more in that state?
Well, I think we'll grow if we think we can make our target profit margins. And so I think John really outlined, even if we -- capital will be separate from growth, we need capital to grow, but we're not going to grow unprofitably just because we have capital, is what I'd say.
Got it. And I like the property comparative radar screen where you're now blue, we can clearly see that you're now more competitive than peers. But what would the screen look like for auto?
I think the -- for auto, one of our strategic pillars is competitive pricing. And if you look at our history of segmentation, all the data we have, I don't know, I think it would look very promising because we're very competitive in the private passenger and have been for quite some time, really based on our constant segmentation and new product models and our treasure trove of data that allows us to understand it and be best in market. I think I talk about our industry-leading segmentation all the time.
Do you want to add anything, Pat?
No, other than the agency channel is highly competitive. It has been for a long time, and it's one of our more elastic channels in that comparative raters have a high penetration of quotes. And we think that is the core value proposition that comes from the independent agency channel, the ease and savings that consumers are looking for when they shop with an agent and they can look for multiple carriers to meet that client's needs.
What we have seen is our conversion remains very strong in the agency channel, which tells us that our offering remains highly competitive regardless of whether it's quoted directly with us. through our proprietary quoting or on the many comparative raters that are in market.
Next question will be coming from the line of Alex Scott of Barclays.
First question I have you is on what you're seeing in frequency trends. I think we've seen one of your peers talk about potentially increasing frequency. I think when we looked at the results from the last month, I think there is some concern that maybe frequency was starting to uptick as well.
So maybe you could just give us a feel for the environment there and if at all or how it's affecting loss trend?
Yes. I'll start, and I'll ask Andrew to add anything that I've missed. Our frequency has been pretty stable.
It's down this quarter, about 2.5%, down 2% for trailing 12. So we feel like our frequency trends are pretty much in line with what we intended. It's always hard to understand.
But we've talked about a couple of things that attribute to that and that is mix shift and also our vehicle miles traveled are down about 4 points in the quarter. So I'm pretty benign. Same thing on the Commercial Lines.
Our frequency is down more in Commercial Lines based on our mix shift to more business auto contractor mixes. Do you want to add anything, Andrew?
Yes. Last quarter, when you talked about frequency, we said we thought it might be moderating a little bit. Last quarter, it was flat year-over-year.
This quarter, it's down 2%. And so right now, it doesn't look like we're seeing flattening trends. It's a little bit back and forth, but there's no signs that it's ticking up even given our June results.
Got it. That's all helpful. Second question I had is on the things you're doing with artificial intelligence and technology, maybe you could just give us a feel for how you expect that to influence your expense ratio, loss ratio, and your ability to compete with what you're doing relative to what you see in the marketplace?
Yes. I've shared a little bit about this in the last couple of calls, and we have a lot going on in this area, as you can imagine. We've always been a technology-forward company.
So we're really studying what's out there, learning, growing and kind of have that on rents and repeat. But the confidence that this audience should have in Progressive is, one, we have been a technology for company, and that we have a history of innovation, going back a long, long time. And in fact, we have made investments in the last 10 years plus in a lot of digital initiatives that have helped our customers with ease of use.
They include chatbots. And of course, we've had predictive AI in our world for some time now as well on, say, like things like prog.com to make decisions on a package that's good for you. We've now turned to Gen AI and Agentic AI in many areas of our business.
Here's what I'd say. I'd say that we have about a dozen or dozens, I should say, of advanced AI initiatives that are producing meaningful -- and we'll put some dollars to that at some point in the future, but meaningful results and an exciting pipeline of future initiatives. We feel really good about where we're testing, what we're doing.
And at some future meeting when we have a more complete story, we'll tell you more about that. I think I talked before that about 6 months ago or so, we formed an AI Strategy Council. We had -- I mean, AI council.
We had strategy counts, and that's why we thought that would be good to have an AI council. So we -- they've come up with some really thoughtful things that we need to do across the enterprise, are actually going to communicate those during our next Board meeting to our Board of Directors. But they really took a look at overall the whole company and what we were doing and just to make sense of what our process is going to be short term, medium term, long term.
And then, of course, a little while ago about a month ago, we started -- we added our first Chief Strategy Officer. He works kind of hand in glove with our Chief Technology Officer. So we think of the business side of AI and the technology side of and they're helping manage it across the enterprise.
So we know what our right-hand knows what our left hand's doing. From a process perspective, our Board has a technology committee in-house for many, many years, so they have oversight to what we're doing from AI and other technology advances because everything that we do technology touches, but AI is touching more and more of it. And of course, we do it based on our core value.
So we have a responsible AI committee that make sure that we do the right thing, and we always think that process through. In terms of probably the first foray that you're going to see with most companies with AI is going to be more of a cost reduction. So I think it'd be more on the LAE side and the loss ratio -- and the expense ratio so, excuse me.
And then as we get further and further into our AI initiatives, I think it could hit more on loss cost depending on what route we go. But we'll share more about. I don't want to make headlines that are just -- that are out there.
I could give you numbers now, but I think they're not as complete as I'd like them to be. Rest assured we're doing a lot in this area. I feel really comfortable with what we're investing and the returns we're getting to date.
And our next question will come from the line of Andrew Kligerman of TD Cowen.
Yes, that was a really impressive overview. On a blunt basis, I look at your property premium and it's a bit more than $3 billion out of, let's call it, roughly $80 billion in consolidated premium. How should I think about -- and I know you don't give guidance, but as we look maybe 10 years from now, how big a share of your premium could the coal owners get to?
And you insure about 1 in every 5 autos, that amazes me as well. what percent of homeowners could you get to? So I'm just kind of thinking very long term and wondering if you can help size what that opportunity is.
Yes. Andrew, if I had a crystal ball, I would absolutely give you some information. Here's what I'd say.
What we're trying to give you today in our overview is this is a huge opportunity. And as you know, because we've brought you along in the journey, we've had fits and starts, but we feel like we're in such a good position, mainly because we took the last several years to invest in IT systems, in people and processes and segmentation. I -- probably some of you remember this, but John Curtiss ran our auto, what we call PACE initiative, which was continuous getting new product models out to make sure we have rate to risk and that we continue to increase our preferred market share.
That's one of the reasons why we asked him several years ago to run property because this is right in his wheelhouse, and he's doing a tremendous job. So here's what I would say, huge runway, a lot of opportunity. I'm not going to give you -- we have obviously internal models that we work on.
I'm not going to share those. I think what we're going to do is just put our money where our mouth is and continue to try to grow Robinsons and that starts with growing auto. Andrew is going to add -- Andrew Quigg is going to add on something as well.
Andrew, I'm just going to add on one thing there, which is when you think about -- we do have about 1 in 5 vehicles insured with Progressive. When you think about the home market that we're going after, it is on the slides that were presented, our Progressive Home business is primarily targeting properties that are bundled with Progressive Auto. And so not every home in America, right, is going to be bundled we're targeting those that will be bundled.
And so as you think about the addressable market we're going after today, might be something to put into your calculus as you try to figure out where we might go over the next decade.
Got it. Got it. Very helpful.
And with regard to -- you mentioned that -- you mentioned umbrella and renters products sold through other carriers. Kind of curious, could you share with us premium volume done through third parties? And with that, maybe even shifting over to the Commercial end and what you're doing right now there in terms of premium volumes and -- anything to help size what it means to progress it today in terms of premiums or fees to Progressive?
And I'll stop there.
Yes. I think more important than volume because when we're working with unaffiliated partners that what we're getting from them is a commission and we work with a lot of unaffiliated customers kind of across the board. So Lori has been working on two parts in the last several years.
She talked about HQX, HomeQuote Explorer. And we've increased our stable of carriers there to really make sure that we are able to help out customers depending on their needs. We have AutoQuote Explorer.
So if you go to search for Progressive auto and for whatever reason, we don't seal a deal, it could be pricing, it could be one of many different things. we will provide for you unaffiliated partners we work with to make sure that we take care of our customers. That's the main thing. And that's why I think it's important that many of us work with other companies, we don't necessarily write the businesses coming in on our own paper.
What we're doing it for customers. They've gone to the process of trying to get coverage. And of course, we've been doing that for many years in the Commercial Lines side with BusinessQuote Explorer, and making sure that maybe it's some of our products aligned with some products of other carriers.
So we think it's important. It is -- it does affect incoming revenue from a commission perspective. And Andrew can share a little bit more about that.
Yes, Andrew, if you -- of course, if you read our 10-Q and our 10-K, the commissions we receive from these third-party carriers can be found under our service revenues. And so through the first half of the year, we have $274 million of commissions and other fees that come from these relationships. And it's growing at a steady pace.
And so that's one way for you to monitor how we're doing with those relationships and the economic benefit that it brings to progress.
Yes, I think what -- go ahead, Lori.
Just one more detail. Andrew, if you take a look at the presentation, I think the HQX model and our ability to sell partner carrier products is really what's leading to the difference in our Robinson share in the direct channel as compared to agency. And so I would suggest continue to focus on the gains we're going to make in market share as opposed to necessarily the commission volume.
And our next question will be coming from the line of Pablo Singzon of JPMorgan.
So from your presentation, you highlighted the importance of agents in pursuing your bundled strategy. So if we take the Robinsons segment, can you talk about the rough split between direct and agent there? And I guess what I'm most interested in is -- has the market there stayed firmly within agency?
Or are you seeing evidence of more bundled buyers might be in direct over time? And I guess, perhaps more broadly, maybe you can sort of give your thoughts about what how this market may look like down via-a-vis distribution?
Yes. I think we're going to depend on growth in both, especially I think we share sort of the trend in going from more captive agents to independent agents. Our model has always been around choice.
And so we think there's obviously a huge opportunity in the agency channel. John Curtiss just met with some Platinum agents a few weeks ago, and we'll continue to work with them and they're excited about that product. So that right now is a bigger opportunity, as you saw from the chart.
But we think there's opportunity -- a pretty big opportunity in both agency and the direct channel and growing Robinsons.
Yes. If I could add just quickly, if you think about auto as sort of the leading direct versus agency indicator, in the presentation, we talked about, about 1/3 of U.S. auto insurance is sold direct to consumer. And on the property side, it's less than half of that.
Part of that is because the product simply is more complex and not designed yet for direct distribution. So think about you don't have [ even ] on a home. You have a lot of questions in the home insurance quote that require or typically are better answered when engaging a third party like a local independent agent, who can walk you through questions around your roof shape and your plumbing type and your wiring type or they just know the local market when it comes to what part of town you happen to be in, what the age of construction was and frankly, some details around what construction materials were in use at the time the home was built.
So we think there's a product opportunity that we have been investing in to close as we bring an easier to understand data fill enabled direct-to-consumer property product to market. So if we think long term, if a household wants to buy their auto insurance directly, we think they should be able to buy their home insurance directly to. So if you think about closing that 15-point gap on the $160 billion, $170 billion homeowners insurance market, it's $20 billion that's just getting to where the auto market share is of direct that we think we will play a material role in closing and ultimately capture over time.
And then second question. So Lori, in your comments, you had mentioned some areas of irrational competition in Personal Auto. I was just hoping you could help contextualize that given combined ratios are very good for the industry overall and also for individual companies.
So I guess are you seeing pricing behavior that effectively consumes all that margin that the industry is sitting on? Or are companies being more surgical in their competitive approach?
Yes. Sure. I'll handle that one.
We talked about the soft market. And clearly, the industry is underwriting profitably, competition is getting more aggressive, and media spend is increasing both for us and for our competitors. And so you're seeing acquisition costs rise.
Related to profitability for us, you can count on us to maintain discipline. We're only going to spend when our cost per sale is below our target acquisition cost. And for us, when we talk about how media spend influences profitability, it's not just about how much we spend, we get to leverage our segmentation skills to determine where we spend.
And so our media team is looking at how many clicks, how many sales, how many quotes we're getting for every dollar we spend. And we're going to spend more where we know that there's room for incremental investment. And so we're going to continue to evaluate that spend in a very detailed and disciplined way.
We're going to look to optimize growth, but we're going to look to maintain our cost per sale at or below TAC, which sits comfortably today.
Yes. I think Lori said it well. Segmentation and our scale of data will help us win in a soft market.
It's very competitive. That's great for consumers. This is typically where we win.
And our next question will be coming from the line of David Motemaden of Evercore ISI.
I'm surprised within the within auto that you guys are still not really cutting price by that much. I'm surprised just given where the margins are running and I see that agent incentive spend has increased and Agency Robinson quote volume was up low double digits, but the Robinsons conversion in auto within the agency declined. So I guess I'm wondering if auto is such a large driver of the purchase decision for those bundled households in a lot of cases, why not lower priced by more to increase conversion?
Yes. I mean I think we're in the position we've wanted to be in for a few years, and Pat can talk more about this as well. But we want to take small bites.
I think historically, especially with inflation when it went up in 2023, we've had to take such large swings after COVID, large decreases. Consumers want stable rates. So we want to take a small bite to the apple.
So we feel good about what we're doing. We're very surgically decreasing rates, looking at state by state, segment by segment, and we believe that is a winning proposition. If we continue -- if we -- if there's a state as an example or a product where we don't think we can grow and we think giving away some of that margin will help us grow, we'll do it.
If there's a place where we don't think that will help, we won't give away margin for growth, and so it really is something that has been a highlight of what our pricing and product managers do to really understand that surgically and looking at it constantly. So we feel good about where we're going, we don't want to swing the pendulum the other way. We want to be very deliberate and use any margins for having growth.
Yes. The only quick thing I would add is, year-to-date, we had 30 states representing 63% of our premium, where we've taken new business rate decreases. And Tricia mentioned the kind of surgical bottoms-up way that our local product managers assess profitability it's not just at the state level, they're looking at the product and line coverage level in excruciating detail, honestly.
And it's been really fun to be a part of the Personal Lines organization, working side by side with our product managers as they continue to assess profitability in this bottoms-up surgical way.
Yes. I mean -- but remember, our goal will continue to be grow as fast as we can. So know that, that's on our mind at all times.
Got it. And then maybe just bigger picture, you guys have been talking about growing the Robinsons for, I think, well over a decade. But the market share, I think it was like 1% back in 2017, and we're sitting here at 4%.
So obviously, there's been some underwriting actions that's blunted the share gain over the last few years here. But I'm just wondering, I mean, this has been something that you guys have been attacking for a while and have not had as much success as you have had in the other segments. So I'm wondering, from your perspective, what's structurally different this time versus some of the prior attempts to really grow share within the Robinsons segment?
And do you think you have the expertise in-house? Or is this something that you might think about addressing through M&A or other means?
Yes. I mean I think we -- you're right, you're absolutely right. We've known this is an opportunity for Progressive for a long time.
What we didn't have -- and there was also some catastrophic losses that happened over those years. So there's a lot of different things that happen. So I think our first point of sort of restructuring to understand where it would be is what we did in Florida with the nonrenewal of properties that we knew we could make money on.
But through that, our realization came that we just did not -- had not invested enough in cost sharing and segmentation by payroll in understanding just modeling like we did in the private passenger auto side, and that's where we're in a different position now. It doesn't happen overnight for a couple of reasons. One, there's 12-month policies typically.
And two, it took us a long time to get off the Florida property because of some other reasons. But that's, I think, why we're so bullish right now, is that we've invested in those, we've invested in technology. And we have invested in people, some within Progressive that are learning this, but also some that have come to us that have more of this knowledge.
So I do feel like -- you're right, we've been searching for this for a while, but I think we need to put our money where our mouth is, and we've done that. And as you can see the percentages that John Curtiss has been through on each of the slides, we're just really well positioned now to be able to have that growth.
And our next question will be coming from the line of Paul Newsome of Piper Sandler.
I just have one really probably a simple question. The growth in property, does that include thoughts or changes about your reinsurance purchasing as well? I mean a lot of folks use that as a pretty meaningful tool when they're increasing their property exposures.
Yes. We do think about reinsurance, obviously, a lot, and we'll be putting a primer out on that. shortly to be able to say that. But I'll have Brandon Hopkins, who runs our reinsurance, talk a little bit how he thinks about exposure and the reinsurance market.
Yes. Thanks for the question. I think this is the second time in the last 5 or 6 years, we've been asked about reinsurance.
The last several years, we've maintained our overall capacity pretty stable despite recognizing decreasing exposures. That was a conscious decision. So now I think we're pretty well positioned to grow into the program that we have.
Does that include particular financial targets that -- exposure that you're managing with that? Or just where you are now in growing the value?
We do have group risk appetite statements in addition to our property business unit financial constraints that we manage around, and we've been well within those the last few years.
I would now like to turn the call back to Julianna for closing remarks.
That appears to have been our final question. With approximately 1 or 2 minutes left here, I'm going to pass it back to Tricia to conclude with a few remarks.
Yes. Thank you for your questions, your thoughtful questions. We're excited about our growth, we're excited about where we're at.
I'm glad you got to see Lori again as she starts her new role. And the great news about Pat is that even after he formally retires from PL President in January, he will be around to be an adviser to me, and we have a lot of fun things planned for his "retirement." So a lot of work for him to do. But I'm very proud of where we're at.
As you can see from my letter, I'm proud of our employees and our culture and what we do to serve the customers we're privileged to serve. So I appreciate all of your time today and look forward to the next update. Thanks.
And this concludes today's conference call. Thank you for participating. You may now disconnect.
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