THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING Since We Last Met Glenn Renwick
The Progressive Corporation 2013 Investor Relations Meeting 1 2012 FULL YEAR PERSONAL AUTO RESULTS
11% Cincinnati ESURANCE: +64.2% NWP, CR = 119.9 GEICO STATE AUTO: +20.8% NWP, CR = 99.5 USAA PGR PGR Direct INFINITY: +16.1% NWP, CR = 101.3 PGR Agency
Erie Industry Nationwide Mercury Farmers (incl. 21st) Encompass (ALL-IA) State Farm The Hanover Group Chubb Allstate (total) 0 Horace Mann
Written Premium Growth Premium Written Allstate (ALL-Brand) Hartford
Travelers (IA only) -5% 108 100 96 90 Combined Ratio - Inverted Scale
*Source: SNL data, company disclosures and Progressive analysis
The Progressive Corporation 2013 Investor Relations Meeting 2 DEMAND FOR OUR PRODUCT IS UP PERSONAL AUTO RESULTS
15% AGENCY 15% DIRECT
10% 10%
5% 5%
0 0 Quotes- Direct YOY Growth YOY Quotes- Direct Quotes - Agency YOY Growth Quotes - Agency YOY
-5% -5%
(EX CALIFORNIA) (EX AFFILIATES) -10% -10% JAN 12 DEC 12 APR 13 JAN 12 DEC 12 APR 13
Ex California due to conversion of comparative rater to real-time Ex Affiliates due to variable quote quality
The Progressive Corporation 2013 Investor Relations Meeting 3 MARKET DYNAMICS VS RATE MAKING PROCESS
RATE MAKING DOESN’T MODEL REALITY. SPEED OF RESPONSE DIRECTLY RELATES TO SIZE OF SUBSIDY. THE CONSUMER IS DISADVANTAGED BY INADEQUATE KNOWLEDGE OF THE PHASE OF THE CYCLE.
CONSUMER PAYS SUBSIDY - RATE EXCESSIVE PLE Agency COMPANY PAYS SUBSIDY - RATE INADEQUATE
R3
JUL DEC MAR
R2 PLE Direct Rate Level
R1
JUL DEC MAR
T1 T2 T3 Time
The Progressive Corporation 2013 Investor Relations Meeting 4 AVERAGE WRITTEN PREMIUMS ARE UP
Agency Auto Direct Auto PCA (6 month) (6 month) (Annual) $820 $820 $2900
$2000 $700 $700
2010 2013 2010 2013 2010 2013
Trailing 12-month data
The Progressive Corporation 2013 Investor Relations Meeting 5 even more WE BECAME CONFIDENT IN OUR REALIZATION AND CALIBRATION OF CLEAR COST + QUALITY ADVANTAGE
Drive down the curve TACTICAL DELTA LAE (as of YE 2012) 1 YR < 0.1 > 3 YR < 0.7 > 5 YR < 1.4 >
Move the curve Can claims create a
Total Loss Costs & LAE Total sustainable pricing STRATEGIC COMPETITIVENESS GAIN advantage?
Loss Adjustment Expenses (LAE)
The Progressive Corporation 2013 Investor Relations Meeting 6 Direct Channel Premium CONTINUED TO CONFIRM OUR BRAND AND PROGRESSIVE $BILLIONS ® HOME ADVANTAGE WORK WELL TOGETHER 20 AUTO + HOME
18 AUTO ONLY
Auto Insurance DIRECT Industry Premium 2.2x $BILLIONS 50% OF DIRECT SALES FROM 167 IA Channel Premium ≈ 2x $BILLIONS EXISTING CUSTOMERS DIRECT 38
36 AUTO + HOME 1.8x
IA 56 20 AUTO ONLY 1.6x
CAPTIVE 73 IA 1.4x Captive Channel Premium 1.2x $BILLIONS DIRECT 57 AUTO + HOME TOTAL INDUSTRY 1x AGENCY PHA Bundled PIFs Relative 2011 to January
0.8x 16 AUTO ONLY 2011 2012 2013 Source: SNL, Progressive Estimates CAPTIVE
The Progressive Corporation 2013 Investor Relations Meeting 7 STEEPEST DEMAND CURVE YET = MOBILE
2x
MOBILE QUOTES (T3 average monthly counts)
WIRELESS PAYMENT COUNTS (monthly)
1x
0 2010 2011 2012 2013
The Progressive Corporation 2013 Investor Relations Meeting 8 RELEVANCE OF “FOR ME” MESSAGE NEEDED MORE / SINCE WE LAST MET... THAN A CALL FOR SAVINGS
ANTI-SUBSIDIZATION CAMPAIGN
The Progressive Corporation 2013 Investor Relations Meeting 9 The Progressive Corporation 2013 Investor Relations Meeting 10 The Progressive Corporation 2013 Investor Relations Meeting 11 6% of PPA market
SAM
BIOGRAPHICAL SYNOPSIS -25-year-old single male - Inconsistently insured -Often a renter -Liability only policy -Agency bias
The Progressive Corporation 2013 Investor Relations Meeting 12 39% of PPA market
DIANE
BIOGRAPHICAL SYNOPSIS -38-year-old single female -Renter -Full coverage policy -Increasing direct bias
The Progressive Corporation 2013 Investor Relations Meeting 13 43% of PPA market
Robinson Family
BIOGRAPHICAL SYNOPSIS -49-year-old married male -47-year-old married female -19-year-old son -Home, boat owner (bundled) -Full coverage and umbrella -Agency customer
The Progressive Corporation 2013 Investor Relations Meeting 14 12% of PPA market
WRIGHT Family
BIOGRAPHICAL SYNOPSIS -37-year-old married male -35-year-old married female -3 children -Homeowner (self-packaged) -Continuous insurance -Full coverage, higher deductibles -Increasing direct bias
The Progressive Corporation 2013 Investor Relations Meeting 15 PROGRESSIVE RELATIVE High MARKET WRIGHT FAMILY Very Low SHARE ROBINSON Average FAMILY DIANE
Very High SAM
The Progressive Corporation 2013 Investor Relations Meeting 16 BRAND SWITCHERS PGR estimate based on sample of 18-54 11-15% year-old survey participants WRIGHT FAMILY 6-8% ROBINSON 10-14% FAMILY DIANE 25-35% SAM
The Progressive Corporation 2013 Investor Relations Meeting 17 STRATEGY
Know your target - act with purpose.
The Progressive Corporation 2013 Investor Relations Meeting 18 intensity high 4
3 3
3 2 4 low 1
1 PHA STRATEGY maximize retention
The Progressive Corporation 2013 Investor Relations Meeting 19 intensity high 4
3 3
4 2 2 low 1
1 SNAPSHOT STRATEGY maximize conversion and retention
The Progressive Corporation 2013 Investor Relations Meeting 20 intensity high 4
4 3
3 2 4 low 1
1 TEST DRIVE snapshot STRATEGY maximize addressable marketplace
The Progressive Corporation 2013 Investor Relations Meeting 21 intensity high 4
3 3
4 2 3 low 1
4 MOBILE STRATEGY maximize consumer choice
The Progressive Corporation 2013 Investor Relations Meeting 22 intensity high 4
2 3
3 2 1 low 1
4 NAME YOUR PRICE® STRATEGY maximize conversion
The Progressive Corporation 2013 Investor Relations Meeting 23 intensity high 4
4 3
4 2 4 low 1
4 SERVICE CENTER STRATEGY build confidence
The Progressive Corporation 2013 Investor Relations Meeting 24 Durable Business Model Brian Domeck
The Progressive Corporation 2013 Investor Relations Meeting 25 GROW AS FAST AS POSSIBLE AT A 96 CR
100
96
92
88 Combined Ratio … a 96 combined ratio is not a ‘solve 84 for’ variable … but rather a constant
80 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 2013
The Progressive Corporation 2013 Investor Relations Meeting 26 MORE LEVERAGE TO UNDERWRITING RESULTS
PROGRESSIVE PEER GROUP 8% 8% To maintain 2012 ROE of 14.5%, a To maintain 2012 ROE of 10.5%, a 6% 1-point drop in investment income requires 6% 1-point drop in investment income requires ~1-point drop in combined ratio. ~3.4-point drop in combined ratio. 4% 4%
2% 2%
Investment Income 0% Investment Income 0%
-2% -2%
-4% -4% 84 86 88 90 92 94 96 98 84 86 88 90 92 94 96 98 Combined Ratio Combined Ratio
PORTFOLIO $ / EQUITY $ 2.7x PORTFOLIO $ / EQUITY $ 3.5x PREMIUM $ / EQUITY $ 2.7x PREMIUM $ / EQUITY $ 1.0x1.1x
The Progressive Corporation 2013 Investor Relations Meeting 27 LOWER COSTS YIELD COMPETITIVE PRICES
LOSS ADJUSTMENT EXPENSE RATIO TOTAL CUSTOMER SERVICING COST PER PIF 12.5% $66
$62 11.5% $58 10.5% $54
9.5% $50 2007 2008 2009 2010 2011 2012 Q1 2013 2007 2008 2009 2010 2011 2012 Q1 2013
INFORMATION TECHNOLOGY COST PER PIF REAL ESTATE COST PER PIF
$80 $25 $20 $70 $15 $60 $10 $50 $5 $40 $0 2007 2008 2009 2010 2011 2012 Q1 2013 2007 2008 2009 2010 2011 2012 Q1 2013
The Progressive Corporation 2013 Investor Relations Meeting 28 COSTS LOWER, AND QUALITY IMPROVING
JD POWER CUSTOMER SERVICE INDEX STUDY SM PROGRESSIVE’S CLAIMS QUALITY INDEX
820 1.0
800 0.8 780
760 0.6
740 INSURANCE INDUSTRY AVG. CLAIMS QUALITY INDEX PROGRESSIVE 0.4 720 Claims Quality Index* Customer Service Index 700 0.2 680
660 0.0 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Q1 2013
*The Claims Quality Index (CQI) is an internal measure of the quality of our claim file handling. A higher CQI value indicates higher quality.
The Progressive Corporation 2013 Investor Relations Meeting 29 LOWER COSTS YIELD COMPETITIVE PRICES
2012 FULL YEAR PERSONAL AUTO RESULTS 11% Cincinnati
ESURANCE: +19.9% NWP, CR = 119.9 GEICO USAA PGR Direct STATE AUTO: -20.8% NWP, CR = 99.5 PGR Agency PGR INFINITY: +16.1% NWP, CR = 101.3
Erie Industry Nationwide Mercury Farmers (incl. 21st) Encompass (ALL-IA) State Farm The Hanover Group Chubb Allstate (total) 0 Horace Mann
Written Premium Growth Premium Written Allstate (ALL-Brand) Hartford
Travelers (IA only) -5% 108 100 96 90 Combined Ratio - Inverted Scale
Source: SNL data, company disclosures and Progressive analysis
The Progressive Corporation 2013 Investor Relations Meeting 30 EFFICIENT CAPITAL MANAGEMENT
From January 2010 through April 2013, Progressive generated $4.0B of comprehensive income, and have returned $3.6B in the form of share repurchases and dividends.
YEAR VARIABLE DIVIDEND SPECIAL DIVIDEND SHARE REPURCHASE DEBT
2010 $108M $663M $259M $223M REPURCHASED
($497M) NET ISSUED 2011 $264M $998M $15M REPURCHASED
$350M RETIRED 2012 $249M $605M $174M $31M REPURCHASED
2013 YTD $172M $72M
TOTAL $793M $1,268M $1,503M NET REDUCTION: $122M
$3.6 Billion
The Progressive Corporation 2013 Investor Relations Meeting 31 KNOW YOUR RISK PROFILE: SHORT-TAILED / HIGH FREQUENCY / LOW SEVERITY PRODUCTS
PHYSICAL DAMAGE TOTAL PERSONAL AUTO
100% 100%
90% 90%
80% 80% COUNTS COUNTS 70% DOLLARS 70% DOLLARS Percent Paid Percent Paid Percent 60% 60%
50% 50% 10 2 3 4 5 6 7 8 9 10 11 12 0 4 8 12 16 Months Quarters
/ Many personal and commercial auto insurance consumers prefer to bundle their auto policies with higher severity products.
/ Progressive Home Advantage® and Progressive Commercial AdvantageSM enable us to address those customers without adding exposure to the balance sheet and diverting from our strategic discipline.
The Progressive Corporation 2013 Investor Relations Meeting 32 Distribution & Product John Sauerland & Dan Witalec
The Progressive Corporation 2013 Investor Relations Meeting 33 10% UNIT GROWTH IS T3 NWP CHANGE 8% PRIMARY OBJECTIVE PIF CHANGE 6%
4% PLE Agency 2%
0% APR 11 APR 12 APR 13
2013 SALES GROWTH CHANGE 5% JUL 12 DEC 12 MAR 13
0% PLE Direct -5%
-10%
AGENCY -15% DIRECT JUL 12 DEC 12 MAR 13 -20% JAN 13 FEB 13 MAR 13 APR 13
The Progressive Corporation 2013 Investor Relations Meeting 34 PRIMARY COMPETITOR RATE ADJUSTMENTS
25%
20%
15%
10%
5% 0%
-5%
-10%
-15%
-20% JAN 11 JAN 12 JAN 13
SOURCE: A.M. BEST, Perr & Knight or calculated internally from CRE rate revision fiilings
The Progressive Corporation 2013 Investor Relations Meeting 35 MARKET OVERVIEW CHANNEL MIGRATION
PERSONAL AUTO, NET WRITTEN PREMIUM BY CHANNEL Annual Growth Rate* By Channel 1996-2012
CAP AGENT 2% IND AGENT 3% DIRECT 6%
50% TOTAL 3%
IND AGENT DIRECT
PROGRESSIVE IA PROGRESSIVE DIRECT
0% 1996 199819971999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20092010 2011 2012
*CAGR, or Compounded Annual Growth Rate Source: SNL, AM Best, Progressive analysis
The Progressive Corporation 2013 Investor Relations Meeting 36 / Comparative Raters (Agency) / Mobile (Direct) / Multi-product (Both Channels)
The Progressive Corporation 2013 Investor Relations Meeting 37 AGENCY: TREND TO COMPARATIVE RATERS HAS NOT ABATED
COMPARATIVE RATER AGENT PENETRATION
3x
2x
Comparative Rater Comparative 1x a a Mix of Progressive Agents using
0 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013
Excludes National Account agencies
The Progressive Corporation 2013 Investor Relations Meeting 38 WITH COMPARATIVE RATERS, WE GET EVEN MORE SHOTS AT PREFERRED CUSTOMERS
PROGRESSIVE MIX OF “PREFERRED” QUOTES OVER TIME
COMP RATERS PROGRESSIVE QUOTE SYSTEM 2x Index
1x
JAN 07 JAN 08 JAN 09 JAN 10 JAN 11 JAN 12 JAN 13
Preferred Definition: Consistently insured homeowners (Robinson’s and Wright’s)
The Progressive Corporation 2013 Investor Relations Meeting 39 KEYS TO WINNING IN A “COMPARATIVE RATER WORLD”
/ Low Expense Ratio (competitive pricing)
/ Segmentation (right prices)
/ “Retailing” efforts
/ Retention/Cross-sell
The Progressive Corporation 2013 Investor Relations Meeting 40 IND AGENT MKT SHR ER GROUP 2012* 2012** 14.4% 20.6% 5.9% 25.8%
*** 5.8% 27.3% EXPENSE RATIO: *** 5.5% 28.6% WE HAVE AN EXPENSE 3.7% 26.6% RATIO ADVANTAGE IN THE 3.6% 25.6% IA CHANNEL, AND IT’S A 3.0% 21.8% CONTINUING FOCUS *** 2.9% 23.2% 2.7% 25.1% 2.7% 29.6% 2.5% 22.8% 2.1% 21.2%
*Independent Agency Market Share Data Source: SNL data and Progressive analysis **Independent Agency Expense Ratio Data Source: SNL data, company disclosures and Progressive analysis ***ER Analysis for Liberty Mutual, Nationwide, and Zurich is focused on Independent Agent companies within each of these insurance groups.
The Progressive Corporation 2013 Investor Relations Meeting 41 RETAILING: PRESENTING OUR BEST RATES ON COMPARATIVE RATERS
The Progressive Corporation 2013 Investor Relations Meeting 42 RETAILING/RETENTION: MAKING CROSS-SELL EASIER FOR OUR AGENTS
The Progressive Corporation 2013 Investor Relations Meeting 43 RETAILING/RETENTION: MAKING CROSS-SELL EASIER FOR OUR AGENTS
/ PRE-FILL INFORMATION / HIGHLIGHT MULTI-POLICY DISCOUNT
The Progressive Corporation 2013 Investor Relations Meeting 44 MOBILE IS HELPING DRIVE GROWTH IN DIRECT QUOTES
TOTAL QUOTE CHANGE: BEFORE AND AFTER ELEVATING MOBILE QUOTING IN SELECT STATES
+8%
MOBILE QUOTES
PHONE/DESKTOP QUOTES Quotes
BEFORE AFTER
Data is from 8 states where we went from no mobile quoting to mobile quoting and buying (3 drivers x 3 vehicles). Before and after periods were 28 days each.
The Progressive Corporation 2013 Investor Relations Meeting 45 MOBILE MIX IS BECOMING MORE PREFERRED OVER TIME RELATIVE MIX OF “PREFERRED” QUOTES– MOBILE TO DESKTOP INTERNET
.7x Index
MOBILE PREFERRED MIX INDEX = DESKTOP PREFERRED MIX .5x
NOV 2010 MAR 2013
Preferred Definition: Consistently insured homeowners (Robinson’s and Wright’s)
The Progressive Corporation 2013 Investor Relations Meeting 46 OUR MOBILE CONVERSION IS APPROACHING “DESKTOP” INTERNET CONVERSION RELATIVE CONVERSION–MOBILE TO DESKTOP INTERNET
Responsive Design, 5 drivers x 4 vehicles
.7x MOBILE CONVERSION INDEX = DESKTOP CONVERSION
Mobile Quote & Buy, 3 drivers x 3 vehicles Index
Photograph Mobile Quote & Buy, Driver’s License to Mobile Quote Only, 1 driver x 1 vehicle pre-fill quote 1 .5xdriver x 1 vehicle
NOV 2010 MAR 2013
The Progressive Corporation 2013 Investor Relations Meeting 47 RESPONSIVE DESIGN: OPTIMIZING THE MOBILE EXPERIENCE FOR DIFFERENT MOBILE DEVICES
The Progressive Corporation 2013 Investor Relations Meeting 48 RESPONSIVE DESIGN: OPTIMIZING THE MOBILE EXPERIENCE FOR DIFFERENT MOBILE DEVICES
The Progressive Corporation 2013 Investor Relations Meeting 49 GROWING OUR MULTI-PRODUCT BUSINESS
% OF AUTO CUSTOMERS WITH MORE THAN 1 PRODUCT
DIRECT AGENCY
JAN 08 MAR 13 JAN 08 MAR 13
SPECIAL LINES PROGRESSIVE UMBRELLA 3+ PGR PRODUCTS +AUTO HOME ADVANTAGE +AUTO +AUTO
The Progressive Corporation 2013 Investor Relations Meeting 50 EXPANDING OUR PHA UNDERWRITERS PROGRESSIVE HOME ADVANTAGE POLICIES-IN-FORCE 10 30x
25x PHA UNDERWRITERS 8
20x
15x
PHA PIFs 4 10x 3
5x 1
2007 2009 2011 2012 2013
The Progressive Corporation 2013 Investor Relations Meeting 51 2009 2010 2011 PROGRESSIVE 2012 2013 AGENCY HOME ADVANTAGE 2013/14* ROLLOUT WITH ASI
*Plans subject to change
The Progressive Corporation 2013 Investor Relations Meeting 52 / Underwriting / Renewal Pricing / Snapshot
The Progressive Corporation 2013 Investor Relations Meeting 53 UNDERWRITING
1. Charge the right price for a risk, whenever possible 2. Recognize that there is some business that we cannot adequately price 3. Underwrite these policies:
/ POLICIES WITH SUSPECTED FRAUDULENT BEHAVIOR / POLICIES THAT ARE UNDERPRICED DUE TO REGULATORY CONSTRAINTS / POLICIES WITH HIGH CLAIMING BEHAVIOR 4. Balance impact on costs (work/policy-in-force, false positives) and customer experience
The Progressive Corporation 2013 Investor Relations Meeting 54 FL UNDERWRITING EXAMPLES
/ PRE-BINDING RISK VALIDATION / PRIOR MEDICAL CLAIMS EXPERIENCE CEILING / PRIOR DRIVING RECORD VERIFICATION HURDLE
8WQV\[WN 5IZOQV*MVMÅ\-IKP AQMTLQVO+TMIZ/ZW_\P/IQV[
The Progressive Corporation 2013 Investor Relations Meeting 55 NEXT PRODUCT MODEL: RENEWAL PRICING
Improve segmentation allowing more competitive rates for the majority of customers
/ Very frequent policy changes
/ Poor payment behavior
/ Permissive user claims
The Progressive Corporation 2013 Investor Relations Meeting 56 SNAPSHOT “TRY BEFORE YOU BUY” UPDATE CONSUMERS RECOGNIZE PROGRESSIVE AS THE LEADER
TEST DRIVE ENROLLEES PER WEEK
SNAPSHOT AWARENESS SNAPSHOT ATTRIBUTION TO PROGRESSIVE
70% 90% LAUNCH OF AGENT “SNEAK “RATE SUCKERS” MEDIA BLITZ PEEK” PROGRAM LAUNCH 80% SNAPSHOT: 60% SNAPSHOT SNAPSHOT NATIONAL LAUNCH 70% NATIONAL LAUNCH 50% MARCH 13, 2011 MARCH 13, 2011 60% APPENDIX SLIDES 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% 2010 2011 2012 2013 Q1 2010 2011 2012 2013 Q1
5/21/12 6/21/12 7/21/12 8/21/12 9/21/12 10/21/12 11/21/12 12/21/12 1/21/13 2/21/13 3/21/13 4/21/13
Source: Millward Brown Brand Tracker. Data: Q1 2013
SNAPSHOT: CONTINUING EVOLUTION AS WE COLLECT MORE DATA… SNAPSHOT “TRY BEFORE YOU BUY” UPDATE
100% 8.0 2,000 90% MILES 80% POLICIES 6.0 1,500 70% CONSISTENTLY INSURED, HOMEOWNER 60% (ROBINSON’S AND WRIGHT’S) 50% CONSISTENTLY INSURED, RENTER 4.0 1,000 (DIANE) 40% INCONSISTENTLY INSURED (SAM) 30% Mix of New Business Policies Miles Driven - Billions 2.0 500 Cumulative Policies - 000s Cumulative Policies 20%
10%
0 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TEST DRIVE SNAPSHOT NON-SNAPSHOT
SNAPSHOT: ULTIMATE PRICING SOPHISTICATION ADJUSTED LOSS RATIO BY UBI GROUP PREDICTIVE POWER RANKING FOR MAJOR RATING VARIABLES SNAPSHOT TECH EXPENSE RATIO
700
600 4x COHORT LR 9x 8.0% 8.0% 13/1 RETENTION 8x 7.0% COHORT 7.0% 500 GAAP 7x 6.0% 6.0% 3x 400 6x 5.0% 5.0% 5x 4.0% 4.0% 300 Cohort Vehicle
4x 13/1 Retention Loss Ratio Index 2x 3.0% 3.0% 3x Predictable Power Index Power Predictable 200 2.0% 2.0% 2x 1.0% 1.0% 100 1x 1x NON- 0 1-5 6-10 11-15 16-20 21-25 26-30 0.0% 0.0% 0 SNAPSHOT Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Discount % Driving V1 V2 V3 V4 V5 V6 V7 V8 Behavior Rating Variable
The Progressive Corporation 2013 Investor Relations Meeting 57 INTELLECTUAL PROPERTY LEADERSHIP
PROGRESSIVE’S U.S. UBI PATENT PORTFOLIO
Patent No. 5,797,134, issued August 18, 1998 Patent No. 6,064,970, issued May 16, 2000 Patent No. 6,868,386, issued March 15, 2005 Patent No. 8,090,598, issued January 3, 2012 Patent No. 8,140,358, issued March 20, 2012 Patent No. 8,311,858, issued November 13, 2012 Patent Application No. 13/338,959, filed December 28, 2011 Patent Application No. 13/617,929, filed September 14, 2012 Patent Application No. 13/618,021, filed September 14, 2012
The Progressive Corporation 2013 Investor Relations Meeting 58
The Progressive Corporation 2013 Investor Relations Meeting 59 SNAPSHOT: STRATEGIC QUESTIONS
/ How will the market address the worst drivers?
/ To what extent can we modify driving behavior by providing feedback to drivers?
/ What are the economics of long-term monitoring? Does an individual’s driving behavior change over time, or do they have driving DNA? / What data will auto manufacturers make available on driving behavior?
/ Will third party data aggregators emerge?
/ Are there additional “value-added” services that a UBI device can provide?
/ Will hand-held devices replace on-board monitoring devices?
The Progressive Corporation 2013 Investor Relations Meeting 60 Customer Centric Tricia Griffith / Jonathan Beamer
The Progressive Corporation 2013 Investor Relations Meeting 61 VALUE VS. QUALITY
LONGITUDINAL PERCEPTION MAP (2005)
50 State Farm
Allstate
25
Quality GEICO Nationwide
Esurance
0 25 50 Value
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 62 VALUE VS. QUALITY
LONGITUDINALQUALITY PERCEPTION ATTRIBUTES MAP (2005) 50 State Farm Is honest and open with customers Customer AllstateUnderstands customer needs Care Cares about its customers Will take care of you if you get in an accident
25 Resolves customer problems quickly and efficiently
Quality GEICO Nationwide Leadership Has a strong reputation in the community Brand Will be in business for a long time Esurance
0 25 50 Value
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 63 VALUE VS. QUALITY
LONGITUDINAL PERCEPTION MAP
50 State Farm 2005 2012 FUTURE Allstate
25
Quality GEICO Nationwide
Esurance
0 25 50 Value
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 64 CHANGE IN PROGRESSIVE QUALITY PERCEPTION GAP OVER TIME
14 7-YEAR CUMULATIVE 12 GAP CHANGE
10 vs. STATE FARM 9.8pts
8
6 vs. ALLSTATE 4.7pts
GAINED GROUND 4 vs. GEICO 4.2pts vs. NATIONWIDE 2.4pts 2
0 vs. ESURANCE 0.8pts -2
-4
LOST GROUND -6 Q2 05 Q2 06 Q2 07 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 65 ACSI CORROBORATES OUR INTERNAL DATA
84
82
80
78
76 STATE FARM ALLSTATE 74 FARMERS GEICO PROGRESSIVE
American Customer Satisfaction Index (ACSI) 72 2006 2007 2008 2009 2010 2011 2012
Source: December 2012 American Customer Satisfaction Index
The Progressive Corporation 2013 Investor Relations Meeting 66 BEING PROGRESSIVE
CLAIMS CUSTOMER SERVICING
Ease Ease Confidence Cares Value
Value Accuracy
PRODUCT/PRICING
The Progressive Corporation 2013 Investor Relations Meeting 67 Loyalty Program Life Events Coverage Checker Deductible Savings Mobile Bank
The Progressive Corporation 2013 Investor Relations Meeting 68 The Progressive Corporation 2013 Investor Relations Meeting 69 MOVED FROM A POLICY TO HOUSEHOLD VIEW
The Progressive Corporation 2013 Investor Relations Meeting 70 ...ALLOWING US TO MAKE RELEVANT AND RESPECTFUL OFFERS
The Progressive Corporation 2013 Investor Relations Meeting 71 OFFERS TOOL USAGE PHA TAKE RATE TRENDS
40% 6x
5x 30% 4x
20% 3x Index 2x 10% 1x # of Offers/# of Opportunities 0 0x JAN 2011 JUL 2011 JAN 2012 JUL 2012 JAN 2013 JAN 2011 JUL 2011 JAN 2012 JUL 2012 JAN 2013
The Progressive Corporation 2013 Investor Relations Meeting 72 NET PROMOTER® SCORE RESULTS BY OFFERS 20% 13% NPS
Offer available, Offer made but Offer but we didn’t make it not accepted accepted
Net Promoter® is a registered trademark of Satmetrix Systems, Inc.
The Progressive Corporation 2013 Investor Relations Meeting 73 The Progressive Corporation 2013 Investor Relations Meeting 74 A YEAR AGO ...... best on all four measures that we care about. — GLENN RENWICK My frustration is not enough of our customers get to use it. — GLENN RENWICK A YEAR AGO ...... turn something that’s working well into something that’s working extremely well. ...at this time next year, we’ll — GLENN RENWICK have significantly more customers choosing our Service Centers as their preferred option. — MIKE SIEGER
The Progressive Corporation 2013 Investor Relations Meeting 75 The Progressive Corporation 2013 Investor Relations Meeting 76 THE RESULTS ARE IN ...
˜25% YOY 45%
40% Confidence Latent Demand 35% TEST BEGAN
30%
Repairs Within Service Center Designated Marketing Area 25% DEC 2011 MAR 2012 JUN 2012 SEP 2012 DEC 2012 MAR 2013
The Progressive Corporation 2013 Investor Relations Meeting 77 SAME-DAY DROP-OFF IS A HUGE WIN
˜80 ˜60 NPS Drop-off 30% 12%
T12 CW Test T12 CW Test
The Progressive Corporation 2013 Investor Relations Meeting 78 EXISTING SCHEDULED TO OPEN 2013
PROGRESSIVE SERVICE CENTER LOCATIONS
The Progressive Corporation 2013 Investor Relations Meeting 79 VALUE VS. QUALITY
LONGITUDINAL PERCEPTION MAP
50 State Farm 2005 2012 FUTURE Allstate
25
Quality GEICO Nationwide
Esurance
0 25 50 Value
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 80 Growing the Brand: Maximizing the Investment Jeff Charney / Andrew Quigg
The Progressive Corporation 2013 Investor Relations Meeting 81 MARKETING CHANGE IS CONSTANT
1,300 new mobile users
47,000 apps downloaded
100,000 new tweets
1.3 million video views
6 million Facebook views
Source: Intel
The Progressive Corporation 2013 Investor Relations Meeting 82 KEY INVESTOR QUESTIONS
1. With so much change in the marketplace, how do you ensure that you’re getting the most bang for your marketing buck?
2. What’s the future of Superstore and how long can Flo last?
3. Where do you see the next marketing opportunities?
The Progressive Corporation 2013 Investor Relations Meeting 83 With so much change in the marketplace, how do you ensure that you’re getting the most bang for your marketing buck?
The Progressive Corporation 2013 Investor Relations Meeting 84 AUTO INSURANCE ADVERTISING CONTINUES TO GROW
2012 2011 2010 $5.0 Billion 2009 2008 2007 2006 2005 2004 2003 ADVERTISING 2002 EXPENSE FOR TOP 10 2001 AUTO CARRIERS 2000 1999 1998 1997 $0.6 Billion $0B $2.5B $5.0B
Source: SNL
The Progressive Corporation 2013 Investor Relations Meeting 85 REFINING DIGITAL DEMAND ATTRIBUTION
“Last Touch” Attribution A + B + C = SALE
IMPACTA = 0%
“Multi-Touch” Attribution A + B + C = SALE
Probability (Sale | A+B+C) IMPACT A = Probability (Sale | B+C)
45 billion impressions per year £ Big data solution
The Progressive Corporation 2013 Investor Relations Meeting 86 PERFORMANCE MEASURED BY LAST TOUCH ATTRIBUTION
Motorcycle Portal Portal Ad Network Sports Site Boat Site RV Site Site Homepage 1 Homepage 2
– + Less Effective Effectiveness More Effective
The Progressive Corporation 2013 Investor Relations Meeting 87 PERFORMANCE MEASURED BY MULTI-TOUCH ATTRIBUTION
Portal Portal Motorcycle Ad Network Sports Site Boat Site RV Site Homepage 1 Homepage 2 Site
– + Less Effective Effectiveness More Effective
The Progressive Corporation 2013 Investor Relations Meeting 88 SEGMENTATION OF REMNANT DIGITAL DISPLAY ADS
UNSEGMENTED RESULTS PROGRESSIVE INSIGHT – SEGMENTED RESULTS
% $ % 32.7x $ $8.43
A = IN MARKET CONSUMERS B = OTHER NON-CUSTOMERS $0.47 C = CURRENT CUSTOMERS 1.0x $0.41 0.8x
0.0x $0.00
A B C A B C ATTRIBUTED SALES PER BID PER THOUSAND ATTRIBUTED SALES PER BID PER THOUSAND THOUSAND IMPRESSIONS IMPRESSIONS THOUSAND IMPRESSIONS IMPRESSIONS
Remnant digital display ads are sold on a real-time basis through a digital ad exchange
The Progressive Corporation 2013 Investor Relations Meeting 89 SEGMENTATION OF PAID SEARCH ADVERTISING
UNSEGMENTED RESULTS
% $ 1.0x $47 1
2
3 Average Rank Average 4
ATTRIBUTED SALES BID PER CLICK A B PGR C PER CLICK
Paid search advertisements are paid listings which are provided with organic results in online search
The Progressive Corporation 2013 Investor Relations Meeting 90 SEGMENTATION OF PAID SEARCH ADVERTISING
PROGRESSIVE INSIGHT – SEGMENTED RESULTS
% $ 1
0.7x $35 2
3 Average Rank Average 4
Not Bid
ATTRIBUTED SALES BID PER CLICK A C D PGR B PER CLICK
Paid search advertisements are paid listings which are provided with organic results in online search
The Progressive Corporation 2013 Investor Relations Meeting 91 What’s the future for Superstore and how long can Flo last?
The Progressive Corporation 2013 Investor Relations Meeting 92 OUTCREATE, NOT OUTSPEND
The Progressive Corporation 2013 Investor Relations Meeting 93 1-800-Progressive Progressive.com
The Progressive Corporation 2013 Investor Relations Meeting 94 NETWORK RATINGS CONSUMER DEMAND
The Progressive Corporation 2013 Investor Relations Meeting 95 FRESH CONTENT DRIVES QUOTES
TBD Effectiveness / Demand
HERO ENSEMBLE SET CHANGE FOIL SPIN-OFF FLASHBACK
The Progressive Corporation 2013 Investor Relations Meeting 96 SUPERSTORE “TIRED OF SEEING” Over the past two years, we’ve significantly reduced the number of people that are tired of seeing the Superstore campaign Percent ofPercent Consumers
Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012
Source: Millward Brown
The Progressive Corporation 2013 Investor Relations Meeting 97 BRAND ARCHITECTURE: SUPERSTORE SHORTHAND ELEMENTS
The Progressive Corporation 2013 Investor Relations Meeting 98 BRAND ARCHITECTURE: TELEVISION
CHARACTER AND SUPERSTORE ELEMENTS CREATE THE MOST CONSUMER INTEREST / ENGAGEMENT Consumer Interest
SAMPLE 18-34 YEAR OLDS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Ad Length (Seconds)
The Progressive Corporation 2013 Investor Relations Meeting 99 CREATIVE TEST “LAB”
The Progressive Corporation 2013 Investor Relations Meeting 100 BRAND ARCHITECTURE: DIGITAL
3x more effective
The Progressive Corporation 2013 Investor Relations Meeting 101 BRAND ARCHITECTURE: GAMING
LITTLE BIG PLANET
The Progressive Corporation 2013 Investor Relations Meeting 102 TODAY BRAND ARCHITECTURE: SOCIAL 5.2 MILLION ~2 MILLION MORE than our top three competitors combined
SEPTEMBER 2010 500,000
The Progressive Corporation 2013 Investor Relations Meeting 103 NETWORK + BRAND ARCHITECTURE
The Progressive Corporation 2013 Investor Relations Meeting 104 DEMAND FOR OUR PRODUCT IS UP PERSONAL AUTO RESULTS
15% AGENCY 15% DIRECT
10% 10%
5% 5%
0 0 Quotes - Direct YOY Growth YOY Quotes - Direct Quotes - Agency YOY Growth Quotes - Agency YOY -5% -5%
(EX CALIFORNIA) (EX AFFILIATES) -10% -10% JAN 12 DEC 12 APR 13 JAN 12 DEC 12 APR 13
Ex California due to conversion of comparative rater to real-time Ex Affiliates due to variable quote quality
The Progressive Corporation 2013 Investor Relations Meeting 105 Where do you see the next marketing opportunities?
The Progressive Corporation 2013 Investor Relations Meeting 106 MESSAGE EFFECTIVENESS IN GENERATING NEAR-TERM DEMAND
Snapshot Messenger PHA CRE Discounts NYP
Effectiveness £ Higher
The Progressive Corporation 2013 Investor Relations Meeting 107 CONSUMERS BELIEVE SNAPSHOT IS NEW AND DIFFERENT
70% 65% 70% 60% 49% 46%
35% 35% 27% 22% Percentage ofPercentage Respondents ofPercentage Respondents
0% 0% SNAPSHOT AVG. PROGRESSIVE TOP COMPETITOR SNAPSHOT AVG. PROGRESSIVE TOP COMPETITOR Contained new info about the brand Contained different info than other ads about Auto Insurance Source: Millward Brown
The Progressive Corporation 2013 Investor Relations Meeting 108 INSIGHT FROM CONSUMER SURVEY ON SNAPSHOT
My auto insurance costs are based on factors like my age, gender and driving history, and are not higher because of the bad driving of other people. A. 63% B. 89% of all respondents agreed of respondents indicated that they would be upset
Source: Internal Study
The Progressive Corporation 2013 Investor Relations Meeting 109 RATE SUCKERS CONCEPT LAUNCHED TO PERSONIFY RATE SUBSIDIZATION
/ New message / new concept / Highly visible / Full evaluation still in-flight
The Progressive Corporation 2013 Investor Relations Meeting 110 VALUE VS. QUALITY QUALITY
LONGITUDINALLONGITUDINAL PERCEPTIONPERCEPTION MAPMAP (2005 – 2012)
50 State Farm 2005 2012 FUTURE Allstate
25
Quality GEICO Nationwide
Esurance
0 25 50 Value
Source: Millward Brown National Tracking Study, Q2 05 – Q4 12
The Progressive Corporation 2013 Investor Relations Meeting 111 NEW B2B MARKETING
/ True power of messaging
/ 35,000+ strong
/ Constant, connected... drive confidence
/ B2B marketing momentum
The Progressive Corporation 2013 Investor Relations Meeting 112 OWNING THE NAME “PROGRESSIVE”
/ Continuing to leverage the PGR Network
® / Engaging consumers on an emotional level / Inspiring confidence in choice of PGR
The Progressive Corporation 2013 Investor Relations Meeting 113 STAY TUNED
PGRNETWORKBiographies
The Progressive Corporation 2013 Investor Relations Meeting 114 Market Forecasting John Curtiss
The Progressive Corporation 2013 Investor Relations Meeting 115 LONG-TERM VIEW OF INFLATION-ADJUSTED MARKET GROWTH AND GROWTH FACTORS
PPA MARKET (IN $2011) ACCIDENT FREQUENCY (ALL COVERAGES) $200 25%
$160 20% Up Down $120 90% 15% 22% Billions $80 10%
$40 5%
0 0 1982 1986 1990 1994 1998 2002 2006 2010 1982 1986 1990 1994 1998 2002 2006 2010
NUMBER OF DRIVERS AND VEHICLES IN U.S. ACCIDENT SEVERITY (IN $2011) 300 $3500
250 $3000 $2500 200 % 53 Growth in Vehicles $2000 Up 150 % % Growth in Drivers $1500 Millions 41 56 100 VEHICLES $1000 50 DRIVERS $500 0 0 1982 1986 1990 1994 1998 2002 2006 2010 1982 1986 1990 1994 1998 2002 2006 2010
Sources: Best’s Aggregates and Averages, Bureau of Labor Statistics, Property Casualty Insurers Association of America, USDOT Federal Highway Administration
The Progressive Corporation 2013 Investor Relations Meeting 116 MACROECONOMIC TRENDS
UTILIZATION FREQUENCY SEVERITY
Behavioral Shifts Vehicle Technology Medical Inflation
Aging Population Macroeconomic Trends Repair Inflation
Vehicle Sharing Distracted Driving Vehicle Construction
The Progressive Corporation 2013 Investor Relations Meeting 117 STRUCTURED APPROACH TO SIZING MARKET AND UNDERSTANDING TRENDS
Short-Term Pricing New Insurance Product Features Product Features
Capacity Planning / Resources New Business Considerations
The Progressive Corporation 2013 Investor Relations Meeting 118 FORWARD COLLISION AVOIDANCE (INTRODUCED 2007)
ESTIMATED VEHICLE ACCIDENT CRASH MIX* REDUCTION
REAR-END 30% 33%33% CROSSING PATHS 25%
OFF-ROADWAY 20%
LANE CHANGE 9%
ANIMAL 5%
OPPOSITE DIRECTION 3%
BACKING 3% PEDESTRIAN 2% 33%33% BICYCLIST 1% 33%33% OTHER 3%
100% 11%
*Source: Progressive data and analysis
The Progressive Corporation 2013 Investor Relations Meeting 119 FLEET ADOPTION OF NEW TECHNOLOGY
ADOPTION ON MODELED FLEET NEW MODEL YEARS SURVIVAL CURVE FOR PERSONAL AUTOMOBILES ADOPTION PATTERN 100% 100% 100% 80% 80% 80%
60% 60% 60% FITTED ESC 40% SIDE AIRBAGS 40% 40% FRONT AIRBAGS Percent Adoption Percent 20% ABS SurvivingPercent 20% 20% Percent of Fleet Adoption Percent
0 5 10 15 20 25 0 5 10 15 20 25 0 5 10 15 20 25 30 35 Years Since Introduction TimeTime (Years) TimeTime (Years)
Source: Insurance Institute for Highway Safety
The Progressive Corporation 2013 Investor Relations Meeting 120 CRASH AVOIDANCE SAFETY SYSTEM EVOLUTION SAFETY BENEFITS EXPECTED
1971 Today Future
Park Assist Forward Adaptive Lane and Lane Blind Forward VEHICLE Anti-Lock Traction 3rd Brake Collision Cruise Departure Backover Adaptive Departure Spot Collision Fatigue Evasive CRASH TYPE Brakes Control Light ESC Warning Control Warning Prevention Headlights Prevention Detection Avoidance Warning Maneuvers Exit to Exit V2V V2x
REAR-END
CROSSING PATHS
OFF-ROADWAY
LANE CHANGE
ANIMAL
OPPOSITE DIRECTION
BACKING
PEDESTRIAN
BICYCLIST
OTHER
The Progressive Corporation 2013 Investor Relations Meeting 121 PROGRESSIVE 15-YEAR FREQUENCY FORECAST
25%
20%
15%
10%
5% ACTUAL FREQUENCY PGR PROJECTION WITHOUT CRASH AVOIDANCE PGR PROJECTION WITH CRASH AVOIDANCE 0 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028
The Progressive Corporation 2013 Investor Relations Meeting 122 The Progressive Corporation 2013 Investor Relations Meeting 123 The Progressive Corporation 2013 Investor Relations Meeting 124 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4
Driver retains complete Shared authority, driver Driver cedes full control in Driver provides only authority, cedes limited cedes primary control but limited conditions other destination input, cedes control under normal still has to monitor for safe than parking all control to the vehicle driving circumstances operation
Examples Examples Examples Examples ELECTRONIC STABILITY CONTROL, LANE KEEPING, STOP & GO ADAPTIVE SPEED AND LANE KEEPING ON “TAKE ME TO WORK” ADAPTIVE CRUISE CONTROL CRUISE CONTROL LIMITED ACCESS ROADS “GO PARK”
Timing Timing Timing Timing AVAILABLE FOR 10 YEARS 5 – 10 YEARS 15 – 25 YEARS ??
The Progressive Corporation 2013 Investor Relations Meeting 125 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
Statements in this presentation that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions, and projections generally; inflation and changes in economic conditions (including changes in interest rates and financial markets); the possible failure of one or more governmental entities to make scheduled debt payments or satisfy other obligations; the potential or actual downgrading of governmental, corporate, or other securities by a rating agency; the financial condition of, and other issues relating to the strength of and liquidity available to, issuers of securities held in our investment portfolios and other companies with which we have ongoing business relationships, including counterparties to certain financial transactions; the accuracy and adequacy of our pricing and loss reserving methodologies; the competitiveness of our pricing and the effectiveness of our initiatives to retain more customers; initiatives by competitors and the effectiveness of our response; our ability to obtain regulatory approval for requested rate changes and the timing thereof; the effectiveness of our brand strategy and advertising campaigns relative to those of competitors; legislative and regulatory developments, including, but not limited to, health care reform and tax law changes; disputes relating to intellectual property rights; the outcome of litigation pending or that may be filed against INVESTOR us; weather conditions (including the severity and frequency of storms, hurricanes, snowfalls, hail, and winter conditions); changes in RELATIONS driving patterns and loss trends; acts of war and terrorist activities; our ability to maintain the uninterrupted operation of our facilities, systems (including information technology systems), and business functions; court decisions and trends in litigation and health care and MEETING auto repair costs; and other matters described from time to time in our releases and publications, and in our periodic reports and other documents filed with the United States Securities and Exchange Commission. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.
The Progressive Corporation 2013 Investor Relations Meeting 126 Appendix
The Progressive Corporation 2013 Investor Relations Meeting 127 SNAPSHOT: ULTIMATE PRICING SOPHISTICATION
PREDICTIVE POWER RANKING FOR MAJOR RATING VARIABLES
700
600
500
400
300
Predictable Power Index Power Predictable 200
100
0 Driving V1 V2 V3 V4 V5 V6 V7 V8 Behavior Rating Variable
The Progressive Corporation 2013 Investor Relations Meeting 128 SNAPSHOT: CONTINUING EVOLUTION AS WE COLLECT MORE DATA…
8.0 2,000 MILES POLICIES 6.0 1,500
4.0 1,000
Miles Driven - Billions 2.0 500 Cumulative Policies - ThousandsCumulative Policies
0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 2013
The Progressive Corporation 2013 Investor Relations Meeting 129 CONSUMERS RECOGNIZE PROGRESSIVE AS THE LEADER
SNAPSHOT AWARENESS SNAPSHOT ATTRIBUTION TO PROGRESSIVE
70% 90%
60% SNAPSHOT 80% SNAPSHOT NATIONAL LAUNCH 70% NATIONAL LAUNCH 50% MARCH 13, 2011 MARCH 13, 2011 60% 40% 50% 30% 40% 30% 20% 20% 10% 10% 0% 0% 2010 2011 2012 Q1 2013 2010 2011 2012 Q1 2013
The Progressive Corporation 2013 Investor Relations Meeting 130 SNAPSHOT “TRY BEFORE YOU BUY” UPDATE
TEST DRIVE ENROLLEES PER WEEK
LAUNCH OF AGENT “SNEAK “RATE SUCKERS” MEDIA BLITZ PEEK” PROGRAM LAUNCH
5/21/12 6/21/12 7/21/12 8/21/12 9/21/12 10/21/12 11/21/12 12/21/12 1/21/13 2/21/13 3/21/13 4/21/13
The Progressive Corporation 2013 Investor Relations Meeting 131 SNAPSHOT “TRY BEFORE YOU BUY” UPDATE
100%
90%
80%
70% CONSISTENTLY INSURED, HOMEOWNER 60% (ROBINSON’S AND WRIGHT’S) 50% CONSISTENTLY INSURED, RENTER (DIANE) 40% INCONSISTENTLY INSURED (SAM) 30% Mix of New Business Policies 20%
10%
0% TEST DRIVE SNAPSHOT NON-SNAPSHOT
The Progressive Corporation 2013 Investor Relations Meeting 132 ADJUSTED LOSS RATIO BY UBI GROUP
4x COHORT LR 9x
13/1 RETENTION 8x
7x 3x 6x
5x Cohort Vehicle
4x 13/1 Retention Loss Ratio Index 2x 3x
2x
1x 1x NON- 0 1-5 6-10 11-15 16-20 21-25 26-30 SNAPSHOT Discount %
The Progressive Corporation 2013 Investor Relations Meeting 133 SNAPSHOT TECH EXPENSE RATIO
8.0% 8.0%
7.0% COHORT 7.0% GAAP 6.0% 6.0%
5.0% 5.0%
4.0% 4.0%
3.0% 3.0%
2.0% 2.0%
1.0% 1.0%
0.0% 0.0% Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013
The Progressive Corporation 2013 Investor Relations Meeting 134 THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING
Biographies Glenn Renwick President and Chief Executive Officer
Glenn is President and Chief Executive Officer of Progressive. Prior to being named CEO in January 2001, Glenn served as Chief Executive Officer– Insurance Operations. In this role, Glenn led the company’s product and claims development and delivery, customer service function, and insurance sales efforts (through independent agencies, the Internet, and Direct over the phone).
Glenn served as Business Technology Leader from 1998 through 2000. Prior to serving as Business Technology Leader, Glenn led the company’s Consumer Marketing group in developing and communicating Progressive’s consumer proposition–competitively priced auto insurance that comes with 24/7 in-person services from a company that listens and responds to consumer needs.
Glenn joined the company in 1986 as Auto Product Manager for Florida. In 1988, he became President of several Mid-Atlantic states, headquartered in Richmond, Va. Prior to assuming the Consumer Marketing role, he served as President of the California division in Sacramento, Calif.
Glenn has an undergraduate degree in mathematics and economics from the University of Canterbury, Christchurch, New Zealand. He has a master’s degree in engineering from the University of Florida, Gainesville.
THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING Brian Domeck John Curtiss Chief Financial Officer Auto Product Development Leader
Brian joined Progressive in 1987 as Controller for Central States John leads the team responsible for ensuring industry leading Division (an Agency business unit). He went on to serve in segmentation in our auto insurance product. numerous other roles, including general management, product John joined Progressive in 2003 as an Auto Product Manager management, and business controllerships. Prior to becoming CFO and has managed our Personal Auto business in six states. in March 2007, Brian served as Demand Manager, overseeing all Subsequently, John worked in a variety of roles, including media buying for Progressive Direct. Agency Distribution Manager, Personal Lines Controller, Brian holds a bachelor’s degree from Duke University and an MBA and Business Leader of Marketing Strategy. Prior to joining from the Kellogg School at Northwestern University. Progressive, John worked at Capital One Financial Services, JPMorgan Chase, and Salomon Brothers (now part of CitiGroup).
John has a bachelor’s degree in Finance from the College of William & Mary and an MBA from Harvard Business School.
THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING John Sauerland Dan Witalec Group President, Personal Lines Personal Lines Controller
John joined Progressive in 1990 as a summer intern before starting Dan Witalec is the Controller for Progressive’s Personal Lines full time in 1991 as an Assistant Product Manager in Cleveland, business, a role he has held since late 2012. Ohio. Since then he has served as Product Manager for, at various Dan joined Progressive in 2004, and held a series of Product Manager times, Iowa, Kansas, South Dakota, and Pennsylvania. He has also positions, managing P&L responsibility for auto insurance in states served as General Manager for Mississippi and later as General including Ohio, Wisconsin, Alabama, North Dakota, and South Dakota. Manager for Minnesota and Wisconsin. John was the Midwest In late 2009 he took on the role of Media Business Leader, overseeing Claims General Manager responsible for the delivery of 24/7 Progressive’s media budget and advertising placements. Progressive Claims Service in Illinois, Indiana, Iowa, Michigan, Minnesota, Ohio, and Wisconsin. In 2006 he was named President Prior to Progressive, Dan worked as a consultant for the Monitor of our Direct business, and following the 2007 reorganization was Group, in Cambridge, Mass. His work focused on marketing named President of Personal Lines. strategy in a wide range of industries.
John has a bachelor’s degree in applied mathematics from UCLA Dan has a bachelor’s degree in economics with a minor in and an MBA from the University of Chicago. mathematics from the Massachusetts Institute of Technology and an MBA from the Harvard Business school.
THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING Tricia Griffith Jonathan Beamer Group President, Claims Business Leader, Marketing Strategy
Tricia was named Progressive’s Claims Group President in March 2008. Jonathan joined Progressive in 2011 to lead marketing brand strategy and execution of that strategy across digital channels. Prior to his Tricia joined Progressive as a Claims Representative in 1988. She work at Progressive, Jonathan was an SVP of Strategy and Analysis has held a variety of managerial positions in Progressive’s Claims at Digitas, an integrated brand advertising agency with digital at its organization, including Unit Supervisor, Branch Manager, and Auditor. core, and part of the Publicis network of agencies. Jonathan worked She served as Regional Claims Manager in the Pittsburgh area with many clients on the marketing big picture—identifying where from 1996 to 1998 and became Head of Claims and Regional Sales firms should spend their marketing dollars and assessing the types of Manager for western Pennsylvania in 1999. She later served as a programs that generate positive marketing ROI. During his tenure at Claims Consultant, collaborating with claims managers countrywide Digitas, Jonathan worked to improve marketing investment at Aflac, to improve the claims review process. She also was the Process Goodyear, P&G, General Motors, and AT&T. Manager responsible for Subrogation, the National Glass Unit, and the 24-Hour Claims Loss Reporting Unit. Before her current position, Jonathan holds a bachelor’s degree and a master’s degree in Tricia served as Chief Human Resources Officer for six years. mechanical engineering from Stanford University, with a focus on embedded microcontrollers in mechanical systems. He earned his Tricia has a bachelor’s degree from Illinois State University. MBA, with Distinction, from Tuck School of Business at Dartmouth in 2002.
THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING Jeff Charney Andrew Quigg Chief Marketing Officer Business Leader for Direct Media
Jeff joined Progressive in 2010 from insurance company Aflac, Andrew is the Business Leader for Direct Media, leading the team where he was Senior Vice President and Chief Marketing Officer. responsible for our media buying. He previously held CMO posts at multimedia retailer QVC and Andrew joined Progressive in 2007 as an Agency Auto Product Homestore.com (now Move.com) and was President of Fringe Manager and has managed our Personal Auto business in five Ventures, an experiential digital/marketing and consulting states for both the Agency and Direct channels. Andrew most company he founded. recently managed Massachusetts for more than three years, Jeff holds a bachelor’s degree in journalism with a focus on bringing the state to profitability after Progressive’s market entry. advertising and public relations from the University of South Carolina Prior to joining Progressive, Andrew worked at Merrill Lynch and a master’s degree in journalism from The Ohio State University. Investment Banking, General Mills, and McKinsey.
Andrew has a bachelor’s degree in applied mathematics and economics from Yale University and an MBA from Harvard Business School.
THE PROGRESSIVE CORPORATION 2013 INVESTOR RELATIONS MEETING