Progressive 2011 Annual Report Download - page 22

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Flash (Daniel, age 46)
Ongoing efforts to improve the competitiveness and value
of our for-hire transportation product produced good results
in the past year. We remain focused on small owner operators
and fleets of one to five vehicles operating across a range of
transportation sectors. In the second quarter 2011, we success-
fully completed our pilot for non-fleet long-haul operators
and began expanding our regional trucking business to include
this class. The quality and performance of this incremental
business is meeting all expectations and, more significantly,
has helped increase the flow of other transportation business
from key agents.
We saw a nice rebound in demand in key trucking segments,
including for-hire specialty and towing operations. The com-
bination of slow, but continuing economic growth and the
withdrawal of some insurance capacity from unprofitable
sectors led to quote growth in these segments of our core
business in the second half of 2011. This helped to reaffirm
our market leading position as America’s number one insurer
of trucks.
We built on our emerging direct Commercial Auto business,
setting new records for new business applications and poli-
cies in force. We completed the rollout of customer Internet
quoting in the second quarter, which increased quote flow
and lifted conversion. “Insure My Truck,” Progressive’s mobile
quoting app for Commercial Auto insurance, was also released
and became a popular download for those attending the many
truck and small business specialty shows where Progressive
was present during the year. Strong performance in our direct
business, coupled with favorable returns on our targeted
marketing investment, encourages us to increase our market-
ing spend and extend our brand building to a broader market.
Direct distribution of Commercial Auto insurance remains
an area of focus as we seek to secure the leadership position
in this channel.
Increasing our market share and attracting more preferred
profile business in the business auto and contractor tiers
continues to be a high value opportunity. These customers
often require other commercial coverage and, as demonstrated
in our Personal Lines business, packaging of insurance needs
is a strong characteristic of preferred business. In 2 0 11, we
expanded our Progressive Commercial AdvantageSM program
to include 19 states where we can offer small business cus-
tomers the opportunity to package Progressive Commercial
Auto with business owners and general liability policies
from partner companies. A desktop solution for independent
agents was also piloted for these products with encouraging
results. We are confident we have developed a scalable
platform and will look to expand it with additional markets
and states in 2012.
A final but significant contributor to the positive momentum
we bring into 2012 is improved operating performance in
our second largest Commercial Auto state, Florida. Corrective
underwriting actions and improved fraud detection proto-
cols implemented in 2010 restored Florida’s profitability but
with a substantial loss in customers that weighed down
growth across the business. The return to profitable growth
in this large and diverse market in
2011 greatly elevates our
prospects for future success.
Operating Results 2011 2010 Change
PERSONAL LINES
Net premiums written (in billions) $ 13.6 $ 13.0 5%
Net premiums earned (in billions) $ 13.4 $ 12.8 5%
Loss and loss adjustment expense ratio 71.6 71.4 .2 pts.
Underwriting expense ratio 21.6 21.6 0 pts.
Combined ratio 93.2 93.0 .2 pts.
Policies in force (in thousands) 12,283.8 11,702.7 5%
COMMERCIAL AUTO
Net premiums written (in billions) $ 1.5 $ 1.4 6%
Net premiums earned (in billions) $ 1.5 $ 1.5 0%
Loss and loss adjustment expense ratio 68.9 65.1 3.8 pts.
Underwriting expense ratio 22.0 22.4 (.4) pts.
Combined ratio 90.9 87.5 3.4 pts.
Policies in force (in thousands) 509.1 510.4 0%
Baron (Beni, age 30)