Prepared remarks
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. Pat, over to you.
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's 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 combined ratio 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: 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 #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 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.
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. Eighty-five percent of Robinsons auto premiums are sold through agents, roughly two-thirds captive, one-third independent agent. And given our auto leadership in the independent agent channel and customer migration from captive to independent agents, we see significant tailwinds to the size of the independent agent 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 Wrights 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 two-thirds of the overall market for the Sam, Diane 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 catastrophe risk to reduce volatility over time as the total property book grew. Today, we have right-sized 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 three 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 and 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 and 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 right-size 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 strengthened 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 one-third 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 six-month policy terms, more visible as they are 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 customer's 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 three 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 three times 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 Sams, Dianes, 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 multi-product 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.
Questions and answers
And our first question will be coming from the line of Elyse Greenspan of Wells Fargo.
My first question, I was hoping to get your current thoughts on how you are thinking about the personal auto overall growth environment. I know in the quarter there were comments pointing to more competitive pressures, and we can see what's going on with rates throughout the industry. So if you can give us a sense of the growth view and outlook. It might be helpful to break it out between agency and direct.
Great. Thanks, Elyse. Let me start at a high level about how we see growth, and then I'll go to Personal Lines. I'll also touch on Commercial Lines, which is an important part of our business. So, compared to some companies that have released earnings, we are proud of our growth, especially in PIF growth. Personal Lines PIF growth was 8%, though that follows a very strong 16% the prior year. Our unit of growth measurement is PIF growth, and we've surpassed 40 million PIFs company-wide. We've grown 2.8 million PIFs overall, including 2.2 million private passenger auto PIFs. Our strategic pillar of broad coverage and having two strong channels—independent agents and direct—gives us a good position. Our roots in the independent agent channel go back 90 years, and we were the first online to sell auto in 1995. That dual-channel presence provides steady opportunity. On Commercial Lines, we are optimistic.
We are in a good profit position, which allows us to focus on growth. The industry in Commercial Lines remains above 100 combined ratio; the last data point we have is about 104 combined ratio, down from 110 but still above our target. We're using some margin to increase media spend and agent incentives. Three data points that give us reason to believe we are at a turning point: we had positive new application growth in Commercial Lines in the quarter, especially in June; our trailing 12 PLE is up, which signals more competitive renewal rates; and our medium fleet program quoting volume is the highest it's been since we acquired Protective five years ago, now called FSP. On PIF growth year-over-year in Commercial, it is up 30%. While private passenger auto is a major growth trajectory for us, the Commercial Lines turning point is meaningful and gives us optimism. Now I'll turn it over to Lori to talk about private passenger auto.
Thanks, Tricia. Elyse, I'll add a few data points and discuss actions we're taking in Personal Lines. For context, in June we added 45,000 auto PIFs, but growth in December is typically slower, which affects June as a renewal month. Our growth rates have moderated from the peak levels in 2024 and 2025, but we continue to gain new customers, grow top line and invest from a position of strong profitability. Looking at 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. The second quarter was our sixth best sales quarter ever for direct auto new business applications. We reached the milestone of 40 million company-wide PIFs. In Personal Lines, PIFs were up 8%, including 8% growth in agency auto, 10% growth in direct auto, 1% in property and 6% in special lines. We are experiencing a softer market with increased competition and appetite for growth among carriers, and shopping activity is elevated relative to historical standards.
Our PLE is down from its post-pandemic peak. We believe the drivers of the decline are largely consumer price sensitivity and mix shifts driven by our broader appetite. Despite this, conversion is up in both channels and we continue to win business when consumers shop. Actions to generate growth include: targeted rate decreases—during the quarter we decreased auto rates in 16 states representing 37% of our country-wide net written premium; investing in acquisition in both channels with increased agent incentives and advertising—advertising spend in Q2 was $1.4 billion, up 16% year-over-year, and our cost per sale remains below our target acquisition cost (TAC); and strengthening competitiveness via segmentation, product enhancements and distribution improvements. In auto, we continue to expand new snapshot and non-UBI product models to improve accuracy in matching rate to risk. In property, 42 states are now operating on our latest product models and 41 states are positioned for growth as availability broadens.
Despite moderated growth from recent elevated levels, our strategy remains to grow as fast as we can while maintaining profitability objectives. We are comfortable losing some volume at times if that volume is underpriced. Over the long term, this discipline has generated market share gains for Progressive.
And then my follow-up question: you have been talking about getting approval to move to a 3.5 to 1 premium-to-surplus ratio in most of your states this year. Can you provide an update on where you are? And how does that tie into your capital plan? We did see elevated share repurchases so far this year, so I'm hoping you can tie those two things together.
Yes. I'll let Andrew take that one, Elyse. He'll discuss the premium-to-surplus ratio and how he thinks about capital overall.
Yes. Thanks, Tricia. Elyse, that's a great question. On the 3.5 to 1 premium-to-surplus, we were able to move toward it at the end of 2025 and have continued to progress through mid-2026. We received dividends from some of our insurance entities to the parent, and we'll continue that effort toward the end of the year. There are risk-based capital calculations and other regulatory ratios to consider as we move through year-end, but we remain optimistic that the vast majority of entities that can move to 3.5 to 1 will get there toward the end of the year. On the broader capital and share repurchase topic, I'll provide my view in my new role. Over the past two decades, we've generated more than $50 billion in net income and returned more than $30 billion to shareholders. We have a policy of returning capital when we feel the company is under-levered. Our operating strategy generates consistent underwriting margins while growing market share.
Achieving higher operating leverage, which 3.5 to 1 represents, magnifies our operating competitive advantage. We invest conservatively because of that high operating leverage to maintain stability. Our top priority when we generate capital is to reinvest in the business; we prefer to support growth opportunities when they present themselves. That is why we have a relatively low quarterly dividend with the flexibility for an annual variable dividend. Once we fund our underwriting growth needs, we prefer to return capital to shareholders. Historically, dividends were our primary mode of capital return with a formulaic variable dividend until 2019; since then we've refined our share repurchase process. Our share repurchase decisions include an intrinsic value model and peer and historical valuation benchmarks. As CFO, I will maintain the approach of supporting stability and strong returns.
Our top priority will be to grow the business and reinvest in our high-ROE operations. When growth slows and we have additional capital, such as capital freed by moving entities to a 3.5 to 1 ratio, we plan to return that capital to shareholders via dividends, repurchases, or a mix of both. We believe this approach benefits shareholders and we'll continue along 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 due to tort reform or your larger capital base making your 1-in-100 PML to capital more supportive of growth?
Yes. I'll let John Curtiss take that. We've watched Florida closely since we nonrenewed some homes that we could not profitably underwrite, and we're feeling better about the state as a result.
That's a great question. Historically, Florida was our largest state in property and we did have profitability issues there. We believe tort reform has been helpful and is allowing Progressive and other carriers to achieve better results. A major driver of the decrease in our 1-in-100-year PML was the nonrenewals we executed in Florida, focusing on coastal risk and properties with older building codes. We're feeling much better about our Florida position. We'll maintain our underwriting appetite and are starting to expand distribution in a focused way with agency partners.
But besides the absolute 1-in-100 PML, are you also measuring that against capital? Since capital has grown, does that suggest you could grow more in that state?
I think we'll grow where we can make our target profit margins. Capital is separate from growth: we need capital to grow, but we are not going to grow unprofitably just because we have capital.
I like the property comparative radar screen where you're now blue and clearly more competitive than peers. What would the screen look like for auto?
For auto, one of our strategic pillars is competitive pricing. Given our long history of segmentation, the breadth of our data and our product models, I believe the auto screen would look very promising. We have been competitive in private passenger auto for a long time due to continuous segmentation and product development.
I'll add that the agency channel is highly competitive and has high penetration of comparative raters. That comparative ability is core to the independent agent channel's value. Our conversion remains very strong in agency, which tells us our offering is highly competitive whether quoted directly with us, through our proprietary quoting, or via the comparative raters in the market.
Next question will be coming from the line of Alex/ Taylor Scott of Barclays.
First question I have is on what you're seeing in frequency trends. One of your peers mentioned potentially increasing frequency, and from recent results there is some concern that frequency might be starting to uptick. Could you give us a feel for the environment and whether it's affecting loss trend?
I'll start and then ask Andrew to add. Our frequency has been pretty stable. Frequency is down this quarter about 2.5% and down about 2% on a trailing 12-month basis. We attribute this to mix shift and lower vehicle miles traveled, which were down about 4% this quarter. Overall, frequency trends look in line with our expectations. In Commercial Lines frequency is down more due to mix shifts toward contractor business auto mixes. Andrew, do you want to add?
Yes. Last quarter frequency was flat year-over-year. This quarter it's down about 2%. It looks like some back-and-forth, but currently there's no sign frequency is ticking up even with our June results.
Second question: what are you doing with artificial intelligence and technology, and how do you expect that to influence your expense ratio, loss ratio and competitive position relative to the market?
We have a lot going on in AI. Progressive has been technology-forward for many years, so we're studying, learning and testing Gen AI and agentic AI across many areas. We already have predictive capabilities and chatbots in our digital experience, and we've long used predictive AI for pricing and decisioning on Progressive.com. We now have a broad set of advanced AI initiatives in flight producing meaningful results and a pipeline of future initiatives. We formed an AI Strategy Council about six months ago to set priorities across the enterprise. We've also added a Chief Strategy Officer who works closely with our Chief Technology Officer to align business and technology efforts for AI. Our Board's technology committee has long overseen technology initiatives and will oversee AI activity as well. We also have a Responsible AI Committee to ensure we apply AI appropriately. Early AI adoption tends to produce cost reductions, so initial benefits may show up on LAE and the expense ratio. Over time, depending on use cases, AI could impact loss costs as well. We are intentional and measured in our investments and will share more as we have a more complete story.
And our next question will be coming from the line of Andrew Kligerman of TD Cowen.
On a blunt basis: your property premium is a bit more than $3 billion out of roughly $80 billion consolidated premium. How should I think about how big a share of your premium homeowners could get to over a long-term horizon, say 10 years? Given you insure about 1 in 5 autos, what percent of homeowners could you reach?
If I had a crystal ball I'd share it. What we provided today is that this is a huge opportunity. We've invested in systems, people, processes and segmentation over the last several years. John Curtiss ran our PACE initiative on auto product models, which is directly relevant to property. We brought him into property because that continuous product development mindset is central to this work. We have internal models but won't share them publicly. We'll continue to invest and pursue Robinson growth, starting with auto.
I'll add: we insure roughly 1 in 5 vehicles. The home market we're targeting is primarily properties bundled with Progressive auto. Not every home in America is bundled, so the addressable market should consider only homes likely to be bundled with our auto customers.
Got it. With regard to umbrella and renters products sold through other carriers, could you share premium volume done through third parties? And on the Commercial side, what does it mean to Progressive in terms of premiums or fees?
More important than volume is the customer experience. When our direct quoting doesn't result in a policy on our paper, we provide partner carrier options so customers can get coverage. We do this across Personal and Commercial Lines through HomeQuote Explorer and BusinessQuote Explorer. We write some of the business and distribute other business via unaffiliated partners to serve customers' needs. That generates commission revenue.
If you look at our 10-Q and 10-K, commissions we receive from partner carriers are reflected under service revenues. Through the first half of the year, we recorded $274 million of commissions and other fees from these relationships, and that number is growing steadily.
One more detail: the HQX model and our ability to sell partner carrier products is a big contributor to the difference in our Robinson share in direct versus agency. I would focus on market share gains in Robinsons rather than commission volume as the key metric.
Our next question will be coming from the line of Pablo Singzon of JPMorgan.
From your presentation you highlighted the importance of agents in pursuing the bundled strategy. For the Robinsons segment, can you talk about the rough split between direct and agent? Has the market stayed firmly within agency or are you seeing evidence that more bundled buyers may be in direct over time? More broadly, how do you see distribution evolving?
We expect growth in both channels. The chart showed a bigger opportunity in agency because many Robinsons are still with captive carriers, and agency represents a larger near-term upside as property health improves. But there is meaningful opportunity in direct as well. We continue to work closely with Platinum agents and see opportunities in both direct and agency to grow Robinsons.
To add, about one-third of U.S. auto is sold direct, and the property side is even more weighted to agency because the product is more complex. Many homeowners prefer the guidance of a local independent agent for details such as roof shape, plumbing, wiring, neighborhood characteristics and building materials. We are investing to close the gap on the direct side with an easier-to-understand, data-enabled direct-to-consumer property product. Closing the 15-point gap between direct auto and direct homeowners could represent roughly a $20 billion opportunity in the homeowners market that we expect to participate in over time.
Second question: you mentioned some areas of irrational competition in personal auto. Given the industry combined ratios are strong overall, are you seeing pricing behavior that consumes industry margin, or are competitors being more surgical in their approach?
The market is soft and competition is getting more aggressive. Media spend is increasing across the industry. For us, we will maintain discipline: we only spend where our cost per sale is below our TAC. Our media team focuses on clicks, quotes and sales per dollar spent and we allocate incrementally where we see efficient returns. We will continue to evaluate and optimize spend to maintain cost per sale at or below TAC, which remains comfortable today.
And our next question will be coming from the line of David Motemaden of Evercore ISI.
I'm surprised within auto that you are not cutting price by more given where margins are running. Agent incentive spend increased and Agency Robinson quote volume was up low double digits, but Robinsons conversion in agency declined. If auto is a large driver of purchase decisions for bundled households, why not lower price more to increase conversion?
We prefer to take smaller, surgical price adjustments. Historically, we've had to make larger swings, particularly after the inflationary periods following COVID. Consumers want stable rates, so we take incremental actions state by state and segment by segment. We will lower rates where we believe it will drive profitable growth and avoid giving away margin where it does not help. Our local product managers analyze profitability at very granular levels to inform these decisions.
Year-to-date we have taken new business rate decreases in 30 states representing 63% of our premium. Our local product managers assess profitability at the state and product level in detail, which guides these surgical adjustments.
Our goal remains to grow as fast as we can while maintaining profitability objectives. That drive is always top of mind.
You've been talking about growing Robinsons for many years; market share in 2017 was about 1% and today it's around 4%. Given prior fits and starts, what's structurally different this time versus prior attempts? Do you have the expertise in-house, or would you consider M&A to accelerate?
You're right we've worked on this a long time. Historically we faced catastrophe losses and other challenges. The difference now is we've made deliberate investments in cost sharing, segmentation, modeling and talent. The Florida nonrenewals were part of the process to improve returns. We had to invest in by-peril segmentation, risk modeling and product constructs that are similar to what we've done in auto. It took time to implement because of policy durations and the complexity of the property business, but we've added people with the right expertise and strengthened our capabilities. We feel well positioned now to pursue growth after the significant investments in systems and people.
And our next question will be coming from the line of Jon Paul Newsome of Piper Sandler.
On growth in property, does that include changes to your reinsurance purchasing? Many carriers use reinsurance as a tool when increasing property exposures.
We do think about reinsurance frequently and will provide a primer on it. I'll turn this to Brandon Hopkins, who runs our reinsurance program.
Thanks for the question. Over the last several years, we've maintained our overall reinsurance capacity relatively stable despite decreasing exposures. That was a conscious decision. Given the work we've done to reduce modeled tail risk and the capacity we maintain, we are well positioned to grow into the program we have.
Does that include specific financial targets or exposure limits that you're managing toward, or is it more a statement of current positioning?
We do have group-level risk appetite statements and property business unit financial constraints that we manage to, and we've been well within those parameters in recent years.
That appears to have been our final question. With approximately one to two minutes left, I'm going to pass it back to Tricia to conclude with a few remarks.
Thank you for your thoughtful questions. We're excited about our growth and where we are. I'm glad you heard from Lori as she starts her new role. Pat will formally retire from the Personal Lines President role in January, but he will remain an adviser and stay involved. I'm proud of our employees and our culture and what we do to serve our customers. I appreciate your time today and look forward to the next update. Thanks.
This concludes today's conference call. Thank you for participating. You may now disconnect.