Progressive Corporation 2026 Q2 Earnings Call

Good morning. Thank you for joining us today for Progressive's second quarter investor event. I am Juliana Patera, 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 skillset 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. 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. 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. 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 a private passenger auto industry over the past 10 years at a combined ratio that's seven 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. 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 Curtis 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. John Curtis, our National Property Leader, will provide an update on our property business turnaround and how we're working to deliver both broadly available 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 one in four 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. Sams, who are inconsistently insured, which make up about 15% of the market, Dianes, 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 number one position in auto is impressive, but it's even more impressive when you see that we achieve that position while primarily focusing on the Sams, Dianes, and Wrights segments, which represent roughly two-thirds 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 Wrights, 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. 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 two-thirds captive, one-third independent agent. 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.