59 slides from Progressive Corporation (the)'s earnings presentation, Mar 4, 2025
Slide 1: Investor Relations Q4 2024: Claims effectiveness and efficiency
Investor 2024 Q4 Relations Claims effectiveness and efficiency
Slide 2: Information Relevant to this Presentation
Information Relevant to this Presentation Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Investors are cautioned that certain statements in this presentation and related comments by management during the earnings call not based upon historical fact are forward-looki
Slide 3: Information Relevant to this Presentation
Information Relevant to this Presentation Regulation FD Disclosure Outlets Progressive disseminates information to the public about Progressive, its products, services and other matters through various outlets in order to achieve broad, non-exclusionary distribution of information to the public. The
Slide 4: Agenda
INVESTOR RELATIONS Q4 Agenda 01 / 2024 recap 02 / Strategic construct 03 / Empowering our people John Murphy Matt White Claims President Business Leader 04 / Photo estimating Claims Data & Analytics 4
Slide 5: John Murphy, Claims President
INVESTOR RELATIONS Q4 John Murphy Claims President 5
Slide 6: 2024 recap
INVESTOR RELATIONS Q4 2024 recap 6
Slide 7: 2024 was arguably the best year in our 87-year history
INVESTOR RELATIONS Q4 2024 was arguably the best year in our 87-year history +21% +18% 88.8 net premiums policies in force combined written (PIF) ratio $74.4B +5.3M (6.1) pts Source: Internal data 7
Slide 8: Strategic construct
INVESTOR RELATIONS Q4 Strategic construct 8
Slide 9: Our four cornerstones
INVESTOR RELATIONS Q4 Our four cornerstones Core Values —Who we are Integrity, Golden Rule, Objectives, Excellence, Profit 9
Slide 10: Our four cornerstones
INVESTOR RELATIONS Q4 Our four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move Excellence, Profit forward and live fully 10
Slide 11: Our four cornerstones
INVESTOR RELATIONS Q4 Our four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move Excellence, Profit forward and live fully Vision —Where we’re headed Become consumers’, agents’, and business owners’ No. 1 destination for ins
Slide 12: Our four cornerstones
INVESTOR RELATIONS Q4 Our four cornerstones Core Values —Who we are Purpose —Why we’re here Integrity, Golden Rule, Objectives, We exist to help people move Excellence, Profit forward and live fully Vision —Where we’re headed Strategy —How we’ll get there Become consumers’, agents’, and business own
Slide 13: Strategic pillars
INVESTOR RELATIONS Q4 Strategic pillars Strategy —How we’ll get there People and Broad Leading Competitive culture needs brand prices People and culture Leading brand Ensuring that our people and culture collectively remain our Maintaining a leading brand recognized for innovative offerings most pow
Slide 14: Strategic pillars
INVESTOR RELATIONS Q4 Strategic pillars Strategy —How we’ll get there People and Broad Leading Competitive culture needs brand prices People and culture Leading brand Ensuring that our people and culture collectively remain our Maintaining a leading brand recognized for innovative offerings most pow
Slide 15: Our success starts with our people and the culture we've nurtured
INVESTOR RELATIONS Q4 Our success starts with our people and the culture we’ve nurtured over decades Strategy —How we’ll get there People and Broad Leading Competitive culture needs brand prices People and culture Leading brand Ensuring that our people and culture collectively remain our Maintaining
Slide 16: Our success starts with our people and the culture we've nurtured
INVESTOR RELATIONS Q4 Our success starts with our people and the culture we’ve nurtured over decades Progressive headcount since 2014 Strategy —How we’ll get there 70,000 60,000 50,000 40,000 People and Broad Leading Competitive 30,000 culture needs brand prices 20,000 2014 2015 2016 2017 2018 2019
Slide 17: People advantages, scale, and culture are difficult to replicate
INVESTOR RELATIONS Q4 People advantages, scale, and culture are difficult to replicate U.S. Gallup results U.S. employee engagement sinks to 10-year low & Progressive Gallup results Progressive is in the 98th percentile for engagement 2024 marks a significant year of achievement • Engagement surpass
Slide 18: Employee Engagement & Culture Survey comments reflect our special environment
INVESTOR RELATIONS Q4 Employee Engagement & Culture Survey comments reflect our special environment The people and our mutual goal I like that Progressive takes care I love that this job provides an of providing the best customer of their employees as much as opportunity to learn, grow, and service
Slide 19: Claims plays a key role in generating competitive rates
INVESTOR RELATIONS Q4 Claims plays a key role in generating competitive rates Strategy —How we’ll get there People and Broad Leading Competitive culture needs brand prices People and culture Leading brand Ensuring that our people and culture collectively remain our Maintaining a leading brand recogn
Slide 20: Claims guiding principles inform our daily efforts, investments, and priorities
INVESTOR RELATIONS Q4 Claims guiding principles inform our daily efforts, investments, and priorities Employee engagement Accuracy and efficiency Customer experience 20
Slide 21: Seek a perfect balance along the accuracy/efficiency cost curve
INVESTOR RELATIONS Q4 Seek a perfect balance along the accuracy/efficiency cost curve Total loss costs + LAE Loss adjustment expense (LAE) Stylistic example 21
Slide 22: Seek a perfect balance along the accuracy/efficiency cost curve
INVESTOR RELATIONS Q4 Seek a perfect balance along the accuracy/efficiency cost curve Total loss costs + LAE Inaccuracy can drive loss costs up Focus only on low cost Loss adjustment expense (LAE) Stylistic example 22
Slide 23: Seek a perfect balance along the accuracy/efficiency cost curve
INVESTOR RELATIONS Q4 Seek a perfect balance along the accuracy/efficiency cost curve Total loss costs + LAE Overspend and increase LAE Focus only on accuracy Loss adjustment expense (LAE) Stylistic example 23
Slide 24: Seek a perfect balance along the accuracy/efficiency cost curve
INVESTOR RELATIONS Q4 Seek a perfect balance along the accuracy/efficiency cost curve Dri ve do wn Total loss costs + LAE Operational the excellence e rv cur cu t he ve wn e do D riv Loss adjustment expense (LAE) Stylistic example 24
Slide 25: Seek a perfect balance along the accuracy/efficiency cost curve
INVESTOR RELATIONS Q4 Seek a perfect balance along the accuracy/efficiency cost curve Strategic initiatives Total loss costs + LAE r ve th e cu ft Shi Competitive gain Loss adjustment expense (LAE) Stylistic example 25
Slide 26: We like our position relative to the industry and seek to widen the gap
INVESTOR RELATIONS Q4 We like our position relative to the industry and seek to widen the gap PERSONAL AUTO TOTAL LOSS COSTS + LAE 95.0% 90.0% 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Progressive Industry excluding Progressive Source: S&P Market
Slide 27: Improvements seen across all four claims guiding principles
INVESTOR RELATIONS Q4 Improvements seen across all four claims guiding principles Employee engagement Accuracy and efficiency Customer experience 27
Slide 28: Matt White
INVESTOR RELATIONS Q4 Matt White Business Leader Claims Data & Analytics 28
Slide 29: Empowering our people and enabling our customers with technology
INVESTOR RELATIONS Q4 Empowering our people and enabling our customers with technology 29
Slide 30: Operational efficiency: growing policies faster than claims staff
INVESTOR RELATIONS Q4 Operational efficiency: growing policies faster than claims staff CLAIMS AUTO STAFF AND AUTO POLICY IN FORCE (PIF) INDEX 4.0 3.5 3.0 Growing auto policy and claims staff gap 2.5 2.0 1.5 1.0 0.5 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 31: Efficient technology investments are key contributors to the widening gap
INVESTOR RELATIONS Q4 Efficient technology investments are key contributors to the widening gap between policies in force and staff need 4.0 3.5 Auto PIF and claims auto staff gap index 3.0 2.5 2.0 1.5 1.0 2007 0.5 0.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Claims IT spend index Source: Internal data 31
Slide 32: Efficient technology investments are key contributors to the widening gap
INVESTOR RELATIONS Q4 Efficient technology investments are key contributors to the widening gap between policies in force and staff need 4.0 3.5 Auto policy and staff gap (index) 3.0 2.5 2.0 1.5 2008 – 2016 +0.5 50% 1.0 2007 0.5 0.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Claims IT spend index Source: Internal
Slide 33: Efficient technology investments are key contributors to the widening gap
INVESTOR RELATIONS Q4 Efficient technology investments are key contributors to the widening gap between policies in force and staff need 4.0 3.5 2024 Auto policy and staff gap (index) 3.0 2021 2023 2.5 2020 2022 +1.9 130% 2019 2.0 2018 2017 1.5 2008 – 2016 +0.5 50% 1.0 2007 0.5 0.0 0.0 0.5 1.0 1.5 2
Slide 34: Translating our digital and segmentation DNA to Claims
INVESTOR RELATIONS Q4 Translating our digital and segmentation DNA to Claims FIRST NOTICE OF LOSS: • Another funnel that allows us to segment • Trade-offs between experience cost and segmentation value • Get claims to the right claims adjuster at the right time • Ahead of industry digital trends but
Slide 35: Digital experiences help accelerate virtuous cycles in Claims
INVESTOR RELATIONS Q4 Digital experiences help accelerate virtuous cycles in Claims DIGITAL EXPERIENCES • For customers and employees CUSTOMERS CLAIMS • Unlocks and accelerates virtuous cycle AND EMPLOYEES • Enabling continued optimization z DATA INTERACTIONS 35
Slide 36: Digital experiences help accelerate virtuous cycles in Claims
INVESTOR RELATIONS Q4 Digital experiences help accelerate virtuous cycles in Claims DIGITAL EXPERIENCES • For customers and employees CUSTOMERS CLAIMS • Unlocks and accelerates virtuous cycle AND EMPLOYEES • Enabling continued optimization Investment in technology and z process improvements Addition
Slide 37: Photo estimating is an example of shifting the curve
INVESTOR RELATIONS Q4 Photo estimating is an example of shifting the curve and then driving down it 37
Slide 38: Photo estimating: digital options that drive efficiency with sustained accuracy
INVESTOR RELATIONS Q4 Photo estimating is an example of digital options for customers that can drive efficiency with sustained accuracy Photo-based estimate volume and accuracy 2.5 82% 2 Estimate quality index (accuracy) compounded Number of estimates annual growth rate 1.5 1 0.5 0 2016 2017 2018 20
Slide 39: Photo estimating: digital options that drive efficiency with sustained accuracy
INVESTOR RELATIONS Q4 Photo estimating is an example of digital options for customers that can drive efficiency with sustained accuracy Photo-based estimate volume and accuracy Estimates per day index 2.5 3 2.5x increase in productivity 82% 2 2.5 Estimate quality index (accuracy) compounded Number o
Slide 40: With data and processes refined, we optimize using technologies like machine vision
INVESTOR RELATIONS Q4 With data and processes refined, we optimize using technologies like machine vision 1) CUSTOMER UPLOADS VEHICLE PHOTOS 2) PART SEGMENTATION MASKS 3) DAMAGE LOCATION/TYPE BY PART Not actual customer images 40
Slide 41: With data and processes refined, we optimize using technologies like machine vision
INVESTOR RELATIONS Q4 With data and processes refined, we optimize using technologies like machine vision 1) CUSTOMER UPLOADS VEHICLE PHOTOS 2) PART SEGMENTATION MASKS 3) DAMAGE LOCATION/TYPE BY PART OUR PHYSICAL DAMAGE PROCESS TEAM Great talent + technology • 18 total team members (25-year average)
Slide 42: Getting it right requires knowing the details
INVESTOR RELATIONS Q4 Getting it right and achieving the right cost curve balance requires knowing the details—and correct part mapping is nuanced __________ Labor __________ ______________________ Part ____________________ Total Total Line # Description Operation Type Type Number Quantity Tax units
Slide 43: Machine vision and task automation have doubled the productivity of our people
INVESTOR RELATIONS Q4 Machine vision and task automation have doubled the productivity of our people and we have not yet hit the ceiling 6 5 2.5x Estimates per day index 4 increase in productivity 3 2 1 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 In person Photo estimating Machine Vision assisted
Slide 44: Machine vision and task automation have doubled the productivity of our people
INVESTOR RELATIONS Q4 Machine vision and task automation have doubled the productivity of our people and we have not yet hit the ceiling 6 5 2.5x Estimates per day index 4 increase in productivity R&D and testing 3 started 2 1 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 In person Photo estimating
Slide 45: Machine vision and task automation have doubled the productivity of our people
INVESTOR RELATIONS Q4 Machine vision and task automation have doubled the productivity of our people and we have not yet hit the ceiling 6 +2x increase in productivity 100% rollout 5 2.5x Expansion Estimates per day index 4 increase in productivity R&D and testing 3 started 2 1 0 2016 2017 2018 2019
Slide 46: Data scale also provides unique advantages with how we improve
INVESTOR RELATIONS Q4 Data scale also provides unique advantages with how we improve PSEUDO-LABELLING MAXIMIZES OUR DATA SCALE Original segmentation model Pseudo-labels Base model 46
Slide 47: Data scale also provides unique advantages with how we improve
INVESTOR RELATIONS Q4 Data scale also provides unique advantages with how we improve PSEUDO-LABELLING MAXIMIZES OUR DATA SCALE Original segmentation model Pseudo-labels Fine-grained Base model labels New segmentation model 47
Slide 48: Data scale also provides unique advantages with how we improve
INVESTOR RELATIONS Q4 Data scale also provides unique advantages with how we improve PSEUDO-LABELLING MAXIMIZES OUR DATA SCALE Original New segmentation Vehicle-specific segmentation model labels model Bootstrap model Pseudo-labels Fine-grained Vehicle-specific Base model labels pseudo-labels New Lo
Slide 49: Data scale also provides unique advantages with how we improve
INVESTOR RELATIONS Q4 Data scale also provides unique advantages with how we improve PSEUDO-LABELLING MAXIMIZES OUR DATA SCALE Original New segmentation Vehicle-specific segmentation model labels model Bootstrap model Pseudo-labels Fine-grained Vehicle-specific Base model labels pseudo-labels New Lo
Slide 50: 3D Gaussian Splatting
INVESTOR RELATIONS Q4 3D GAUSSIAN SPLATTING 50
Slide 51: Continue to invest for even greater accuracy and efficiency
INVESTOR RELATIONS Q4 Continue to invest so that we can achieve even greater accuracy and efficiency and deliver more value for our customers 1. CAMERA POSE Create image coordinate grid Camera Projection 51
Slide 52: Continue to invest for even greater accuracy and efficiency
INVESTOR RELATIONS Q4 Continue to invest so that we can achieve even greater accuracy and efficiency and deliver more value for our customers 1. CAMERA POSE 2. STRUCTURE FROM MOTION Create image coordinate grid Point cloud created Camera Projection Points Initialization 52
Slide 53: Continue to invest for even greater accuracy and efficiency
INVESTOR RELATIONS Q4 Continue to invest so that we can achieve even greater accuracy and efficiency and deliver more value for our customers 1. CAMERA POSE 2. STRUCTURE FROM MOTION 3. GAUSSIAN SPLATTING Create image coordinate grid Point cloud created Density optimization Camera Projection Points I
Slide 54: Continue to invest for even greater accuracy and efficiency
INVESTOR RELATIONS Q4 Continue to invest so that we can achieve even greater accuracy and efficiency and deliver more value for our customers 1. CAMERA POSE 2. STRUCTURE FROM MOTION 3. GAUSSIAN SPLATTING 4. INTERACTIVE 3D MODEL Create image coordinate grid Point cloud created Density optimization Ve
Slide 55: When we build or buy technologies, we do so with extensibility and agility in mind
INVESTOR RELATIONS Q4 When we build or buy technologies—we do so with extensibility and agility in mind Rather than this We like this So we can build these Monolithic, tightly integrated Loosely coupled pieces, Enhance existing or extend solutions expensive to change easily changed to new value stre
Slide 56: When we build or buy technologies, we do so with extensibility and agility in mind
INVESTOR RELATIONS Q4 When we build or buy technologies—we do so with extensibility and agility in mind Photos at first notice of loss Rather than this We like this So we can build these Monolithic, tightly integrated Loosely coupled pieces, Enhance existing or extend solutions expensive to change e
Slide 57: Conclusion
INVESTOR RELATIONS Q4 Conclusion 57
Slide 58: Conclusion: Investments to empower our people via technology shift the curve
INVESTOR RELATIONS Q4 Conclusion: Investments to empower our people via technology enable us to find the balance in the loss/LAE curve while also shifting it Claims enablement of competitive prices Total loss costs + LAE Balance accuracy and efficiency to optimize cost cu rve and experience ft the S
Slide 59: Thank you
Thank you INVESTOR RELATIONS Q4