Thank you, Latoya, and good afternoon to all. Today, we will begin with a presentation about efficient marketing to maintain a leading brand. Our presentation will last approximately 45 minutes and be followed by Q&A with our CEO, Tricia Griffith; our CFO, John Sauerland; and our guest speakers, Dan Witalec and Cat Kolodij. Our Chief Investment Officer, Bill Cody, will also join us by phone for Q&A. 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 the event. Additional information concerning those risks and uncertainties is available in our 2017 annual report on Form 10-K, 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 Investors page of our website, Progressive.com. It is now my pleasure to introduce our CEO, Tricia Griffith.

Thanks, Julia, and welcome to Progressive's Fourth Quarter Webcast. During the last few webcasts, we talked a lot about top line growth as far as revenue. We really outlined on the addressable market on both the auto and home side. It's almost $300 billion of which we have about $30 billion, so a lot of runway, and we're very excited to continue to execute on that plan and continue to gain market share. For today and the next webcast, we're going to talk a little bit more about bottom line growth, specifically efficiency. Today, we will be on brand efficiency and in creative. But before I go into that, I want to talk about how we think about winning at Progressive and winning in the right way. And we use what we call our four cornerstones: our core values, who we are; our purpose statement, why we're here; our vision, where we're headed; and our strategy, how we're going to get there. Let me start with our core values. Our core values were penned by Peter Lewis back in 1986. And although the words have been tweaked a little bit along the years, they are really special to Progressive and really special to our culture. They are not just posted on the wall. We really try to bring them to life all the time. In fact, I think I've mentioned before, I attempt to do every new hire class across the Company. And believe me, that's been a lot in the last couple of years because of our growth. And I do so, obviously, to welcome the new hires, but to be able to talk about our core values and how important they are and make sure that they know that they need to nurture our culture, and it starts…

Thank you, Tricia. So why are we talking about marketing spend today, as you likely know, we have seen a real explosion in industry, insurance industry, advertising spend over the last two decades. This chart shows U.S. P&C insurance advertising from 1996 through 2016, the last few that we had, industry spend available. And you can see, there’s been about an 11% average annual increase in advertising spend and the insurance industry. When you compare that to overall advertising spend in the U.S. only going up about 2% or 3% per year, you can really see why insurance has become one of the most heavily advertised industries across the entire country. The rest of it’s certainly been a big part of that, and increase it's spend along the way actually slightly outpacing industry spend during this time. So that’s why we’re here with all of this spend going on, we want to make the case if you’re spending it efficiently. And we will do that by hitting on these four different topics. So I am going to talk a little bit about the discipline controls that we have around our media spending, then I am also going to talk about our media mix, and then I am going to turn it over to Cat Kolodij to talk about some of our efforts beyond auto and our creative network. So let’s start on discipline, the natural question is, are we getting a good return for all of that spend that we have going on? So one simple way to look at that is, are we getting incremental sales as we spend more? Here is a chart that shows a scatter-plot that has media spend on the horizontal axis and direct auto unit sales on the vertical axis Each dot here is…

Well, thank you, Dan, I think we've made it pretty clear line why marketing loves to work with acquisition, in fact Dan did a really job of explaining how we measure and distribute our marketing message is critical in today's highly competitive environment, now we're proud to be able to do so efficiently and effectively because of this disciplined approach to media planning and buying. As we flex our marketing agent for the Destination Era, what we say and how we say it is going to become as important as where we say it. I am thrilled to be able to take some time with you today in order to talk about how we are expanding the brand so that we are known for more than just auto, and also, how we are evolving our creative platform so that we really can manage our network just more likely to connect with more types of people. Now with everything that progresses, we’ve taken disciplined approach to both message development and creative management in order to generate growth. Let’s talk a bit about how. Let’s begin actually by talking about how we are efficiently expanding our brand beyond being known as an auto insurer. Now a moment ago, Dan talked about the importance of driving shift in our customer mix. In order to attract additional customers segments, we actually need to improve how we talk about our products and the kinds of services that we provide in order to meet the new and emerging needs of these segments and specifically, meeting these as they evolve over their lifetime. This means we need to expand what our brand is known for, which means we have to begin with the customer segmentation. Now as a reminder, you’ve probably seen us before, if you've actually…

[Operator Instructions] Before taking our first participant from the conference call line, Tricia and John would like to answer a question that is likely on the top of many minds.

So John and I are were talking a couple of weeks ago and considering a lot of the questions we're seeing around the Tax and Jobs Act of 2017, so we thought we'd get out in front of it and how we think about it really from all three constituencies, which all we are both aware both customers, employees and stockholders. So we're going to answer sort of a high level. If you have other questions, we can answer them. We also have our resident expert, Jim Cruzman in the audience, if you want a deep dive into anything tax-related. So let's think about investors. So as a growing company, we need more capital for more growth and to satisfy our regulators. So any profits will help with that. It's always our first choice to reinvest in the Company. In addition, our annual variable dividend considers the tax rate. So all things equal, we'll be about 21% higher. So that's really how we think about it from an investor perspective, growing the Company and our annual dividend. When we think about customers, we sort of put customers and communities together. So we have a Progressive foundation. It's been in force for over 15 years, and our employees really like it because they're able to give and get a match up to $3,000. In fact, the average amount we paid out of the foundation over the last five years has been $4 million a year, and they can give us as long as it's a not for profit of 501(c)(3) to either national or local communities, a lot of people love giving to the local communities, which, of course, where our customers are, to churches, to schools. And so, we continue to fund the foundation. And because it's based on underwriting…

Great, Latoya, we will now take our first question from the conference call lines.

The first question comes from Ian Gutterman of Balyasny. Mr. Gutterman, your line is now is now open.

So I guess first just to follow up on what you're talking about on the employee growth. I think there was a newspaper article around you and they suggested, you were hiring 7,500 new people, which is I guess a 20 plus percent growth rate and given there's quite a little bit of wage in there too. Should I -- does that put pressure on expense ratio or I'm reading too much into that? Is that a gross number, not a net number? There's attrition that offsets that just how should I think about that?

Yes, Ian, there will some attrition to offset that. What we've been trying to do is grow in customer facing organizations, we've been trying to keep our non-servicing headcount fairly flat and add when we need to. But again as we grow the ratio of our premium, so as we've grown and added people, it’s worked out. So it hasn't put the pressure you would think on our expense ratio or LAE.

So then just one other topic real quick is on capital, I think there was some language in the K about essentially the strain from some growth, and you mentioned maybe having to raise some debt. I guess I was hoping you could give a little more detail on that. I guess as I was -- I was just taking sort of consensus numbers just as a proxy and it looks like, if I look at where premium growth in street models that requires adding near 3 to 1, as much as a 1.5 billion capital for growth, which is greater than your dividend capacity. So when I look through that, it seems that I shouldn't expect much of a stack dividend this year. Is that the right way to think about it that essentially earnings growth is going to fund the growth and this have to be all the kind of small and the debt will pay the corporate dividend, the debt raise?

Here's how I would think of it, and John you can weigh in. Earnings are material source of our capital and when that's not enough than you can expect that we'd go to the capital markets for more. So we do have a lot of earnings coming in, but that's how we think of it. And literally John and I, and Bill Cody from our Capital Management, and Katherine Brennan our treasurer, we talk about capital all the time in terms of how we can continue our growth knowing the regulatory and constraints you put on the 3 to 1 on the auto. And so, we think about that all the time, but earnings will be a material source of our growth. But again, we can expect to go to the capital markets, if in fact we needed more.

And to that, you mentioned our dividend, our dividend is an annual variable dividend and is tied to our gain share score, which is a function of growth and profit across our business lines, multiplied times a third of after-tax abstract underwriting income. So, we have established that dividend program for the year, and we would use any capital beyond that obviously as efficiently as possible and today that means reinvesting in the business.

The next question will come from of Gary Ransom of Dowling & Partners. Mr. Ransom, your line is now open.

I had a question on the announcement that came across recently about Uber and your relationship with Uber, this has expanded. I know you went into Texas a couple of years ago, but you haven’t talked about it recently and it seems like it’s an important source of additional data that can be used in commercial lines and may be there’s some overlap with what you’ve learned in Snapshot with that. And I wondered if you could just update on, how you are looking at that program? What it might mean for your data analytics in your long run? And any other thoughts you have on that program?

Thanks, Gary. Yes, so we started with Uber in Texas in 2015 when it was a pilot on the commercial side, and we’ve been learning a lot and of course this moved from pilot last year to full board and that was added on as of today Arizona, Colorado and Florida. I wouldn’t say it’s necessarily related to an UBI, I would kind of bifurcate though. But I would say that we’re learning a lot about the transportation industry and the T&C industry. And so, we are really excited to continue to work with Uber and add on three more states. Again because it’s new to us, we are going to take a measured approach. And I think we are really excited about that. But I wouldn’t necessarily correlate it to our usage-based insurance.

Maybe you could talk about a little bit -- then about the usage-based. Is there anything that you’ve learned or discovered, just update of how powerful you think your Snapshot program has become?

Yes, what I would say is we are really happy about the mobile device specifically on the direct side and the take rate on the mobile device. And so, we are learning more and more and I would say we are learning more and more about distracted driving. We are not ready to use that data in ringing but we are learning a lot, so more to come on that. It’s going to take a while before you gather in and our customers still have the option to have the dongle or the mobile. But we are finding, we are gathering a lot of data on the mobile, and we are learning I would say very interesting segmentation things around distracted driving.

Right, Latoya, I am actually going to take a question from the webcast now. The next question is frequency versus surprising benefit in 2017, and one that you probably didn’t plan for in fact I think we’ve said we didn’t plan for. How do you view giving back some of -- the possibility of giving back some of that critical "excess" profit to further accelerate growth?

Yes, so when we think about -- yes, one, it’s really hard to understand and predict frequency and in fact -- so over the last trailing 12, we have been -- we had a frequency much more negative than the competition. Third quarter 2017, the rest of the industry kind of changed a little bit as we saw compete fair results. So we are seeing as an industry. Again, we don’t necessarily bake that into our rate. We don’t see where we are at as of the end of 2017 or even January in excess profits. We think about it as continuing to invest in the business. And again, this is very capital intensive when you think of the regulatory capital we have to have. But in addition, I might see differently if we weren’t growing. So we have that balance of growth and profit. And so I believe when you’re in a really sweet spot and able to roll really fast and make at least $0.04, remember it’s at least $0.04, we want to do both. And if either one of those change, as you know from 2016, we will monitor that and react to that. But we're going to need capital to grow.

Thank you. Latoya, if we could take the next caller from the line please?

Yes, the next question comes from the line of Brian Meredith at UBS. Mr. Meredith, your line is now open.

Tricia, I'm just curious, as I look at your loss ratios and loss ratios going forward. Are you seeing a benefit from the Robinsons to on your loss ratios kind of increasing the mix? And is that perhaps maybe mitigating some of the kind 10-year effect that you typically see with the growth you're putting on?

We would say that our Robinsons are considered lower pure premium, in that they're less likely to get into a loss. The hard part is we look at everything so granularly in terms of states, channels, the products, and I think you would see -- what you'll see probably more movement on, when you think about ratios, would be more on the LAE or NAER side. Do you want to add anything to that?

Yes, I think you start hitting on the fact that we priced all segments to a common combined ratio target. And the preferred segment, we look at both the loss side as well as the expense side, so both of those are considered in the pricing. There are some segments that drive higher expenses. We build that into the prices as well. So you will find segments for our business that have actually lower loss ratios, higher expense ratios than perhaps the Robinsons in aggregate. But the point is, is that we are looking very granularly at each segment and making sure that we're pricing to the same lifetime combined ratio target.

And then my second question, I'm just curious, going back to the tax stuff, and thanks for the -- your answers there on that one. But my question is more from a regulatory perspective. How do you deal with regulatory potential pushback? Do you expect it, particularly when you make rate filings? You've obviously got very attractive margins and returns right now. Are we going to see pushback? And how do you respond to that?

Yes. I haven't -- it's too soon to tell would be the answer. I haven't really seen -- we have good relationships in the 51 jurisdictions that we're in. Really, a regulator's job is to make sure that we are not excessive, inadequate or unfairly discriminatory. And if they look at that and they -- we have actuarial justification that should really be the job of the regulator. And so again, it's too soon to tell, but we have not had any pushback at this juncture.

Latoya, can we take the next caller please?

The next question comes from the line of Yaron Kinar of Goldman Sachs. Mr. Kinar, your line is open.

I had a couple of questions. First, on the Snapshot mobile device, Tricia, it sounds like one of the aspects of the device or the app -- sorry, may give you access to is distracted driving behavior. Are there any other real significant differences between the data collected on the mobile app as opposed to the dongle?

I would say it likes it's same as the dongle, and then we're able to see if you are -- if it's handheld, a call or an app and hands-free. So we're able to see that, and not sort of using that for rating but just understanding that, as well as location. So those are the things. Again, we're not rating that. We're just gathering data to kind of understand if it correlates to different losses depending on what we see.

And then the other question I had was more on the agency side. So I think you had added about 1,500 new agencies in 2017. Can you maybe talk about, what the main drivers for that were? And then is there any difference in the profile of these agencies.

No, I wouldn't say so, I mean we have a very broad distribution of agents and if we believe they follow our values and they will sell our products then we will likely have them be a part of the Progressive family. So they're kind of straight across the country 35,000 so, some come and go but I wouldn't say they have anything necessary. The different agents that we talked about in the past really around are platinum agents which we give a different commission base to and access to annual policies on the auto side as well as the home and the ability to earn more depending on how many Robinsons that they get.

Thank you. The next question will come from the line of Meyer Shields of KBW. Mr. Shields your line is open.

John, I want to sneak in a little bit to one of your early responses where you talked about pricing to lifetime profits. Does that imply a bigger initial I'm going to call it new business penalty on the Robinsons because they're expected to stick around for a longer time?

Great question, it depends on the channel, it depends on the segments. Certainly in the direct channel, we have a material "new business penalty." We don't think of it as a penalty we think of that as the cost of acquiring customers that we're going to keep for a long time. And we again are pricing in the target acquisition costs that Dan was talking about across the life of that policy holders. So even though we will run well above a 100 combined ratio for a new direct customer we are going to recoup that over the life of the customer. So, the Robinsons into that spectrum certainly is generally speaking a longer retaining end of the spectrum, so we have longer to recoup those costs. We've normally then would be able to have a smaller load if you will on each policy term, but again the new business combined ratio for direct is going to be far higher, in agency channel there's far less disparity across expenses for new and renewal customers and in the Robinson the spectrum is actually less disparity on the lost performance as well. Relative to sort of the same end of the spectrum so there's certainly a new business penalty for growing we think the lifetime combines for all those customers are well within our targets so we're very excited to be growing at the pace we are and delivering the calendar year combined ratio results we have as well.

Okay and I guess, that's very helpful, second question is. Are there any calendar year constraints that you're enduring right now?

Right now calendar, our calendar year constraint is the same it’s always been, it's 96 calendar year growth fast as we can as long as we can service our customers. So when we were in a similar position a couple years ago with being able to get out in front of hiring and make sure that we could service our customers and we we're had this competitive price and a great product our 8 to 4 product on the street. We really wanted to make sure to capture as much of the market as we could. Of course, you remember in the fall of 2016, we pulled back on advertising because of the CAT losses and that's always our constraint. Every calendar year, our constraints are going to be 96 that is a constant its part of our culture, it's not a sale for, and so that will obviously be a constraint. Clearly, right now, one month in its results. We are not seeing that as a constraint. But again we’ve got one month of results in. It’s a long year. We don’t know it’s going to happen with another nature. I wouldn’t have thought the 2017 would have been a more difficult CAT year than 2016, but of course it was. So that’s really our biggest constraint is our profit goal and making sure we can take care of our customers. And we have been very, very happy. I wrote in my letter of -- what I call our recruiting machine. Not just the amount of people we have been able to hire but the caliber of people. When I am ended doing hire classes, I am amazed. And one of the ways we look at that especially in the claims organization is how their accuracy is going. So that’s a large part of what we pay out in loss cause and our accuracy continues to be at record level. So that’s really what excites us about having few constraints right now. It’s a good time here.

The next question comes from the line of Mike Zaremski of Credit Suisse. Mr. Zaremski, your line is open.

I had a follow-up to the earlier ride-share question but along different lines. So specifically what’s in the personal auto segment, are you able to comment on whether you feel ride-share services are impacting the loss cause? And I guess one of the reasons I’d ask is because an increasing number of insured drivers are making ride-share services a part of their lifestyle, and I’m also pretty sure your client base is relatively more tech savvy than many peers as well?

Yes, we have a personal auto endorsement in 22 of our states. So we always offer them and ask when we are getting navigation as well as a loss if you’re an Uber or Lyft driver. And so we do strive to flush out, and it helps to understand if we need to charge them differently, add an endorsement that is covered. It’s really hard to understand fraud that could happen to people on it, it’s actually why we are offering endorsement. And so I think we believe you’re asking the right questions to the right people at the right time.

It’s very hard I think to tease out what you are getting at. We do generally younger clientele than some of our competitors certainly on the direct side of business. We think we skew more towards urban areas where we would expect there would be higher penetration of T&C users. But it’s very hard to definitively understand, if and to what degree people using Uber, Lyft et cetera at different times of the evening or weekend are helping a loss experience at all. But it certainly is a great hypothesis, but one that we really can’t answer with any surety.

The next question will come from the line of Elyse Greenspan of Wells Fargo. Ms. Greenspan, your line is now open.

My first question was related on, in your Tricia you mentioned an internal strategy council that you guys are forming on. I just was hoping to get some additional color there. Is this in response to autonomous vehicle? Is there something else in the industry? And how would that potentially include Progressive potentially expanding and to underwriting its small commercial policies on to our own balance sheet or potentially include additional M&A?

Okay, so if you recall a couple of webcast ago, I went over sort of our Horizon concepts that we have Horizon 1, which we talked a lot about today, execute Horizon 2 which was Expand and also we talked a lot about the commercial that you talked about a little bit Elyse with Bob in small business. What I am having the strategy council really focused on is Horizon 2, which is explored. So you can think of it as assumed there's a day where all these vehicles are autonomous or half of that et cetera, so we're modeling out opportunities for us. And so right now, the Strategy Council is fairly new. John and I meet with them very regularly. It's a group of 10 folks within the Company. Andrew Quigg, who I think you have met, is doing it as a side to his job of retention and PLE. I mean, we have other people taking some of his work. He's doing a tremendous job. And the team around him, we picked because they had a diversity of a careers for Progressive, and so we're able to leverage those careers to kind of think about what are things that we do really well and if we want to either grow our revenue or replace revenue; if the market gets smaller, what are opportunities we can do. So we're excited about this council. Again, we're pretty new there, 90 days in. So I'll have more to come as we flesh out more. But we're really excited, and I've been very impressed with their work today.

Okay. And my second question, you guys have been growing a lot over the past couple of years. As some of your peers have been retrenching, taking a lot more rate as they've seen pretty high frequency and, in some cases, severity trends. As we think about the overall, it seems like most players in the space are more or less at peak rate taking levels will take less rate and look to grow in '18. As you envision that environment, how does that play into how you think about continuing to go after the Robinson cohort and growing your policies in force?

Yes, I mean, so we've always talked about rate in terms of not having to rate shock our customers. When we've had to do that, you see PLE decline. So we've got out ahead of rates, probably 2015. And we've often said, it's better to have smaller bites of the apple. So 3 1 is better than 1 3 in terms of increase, and so we're really comfortable with our rate right now. And we have watched our competition, and that's what happens. And that's why shopping occurs. This hard market, we've been privileged to get those customers while they're shopping. And because we have a competitive rate, we've been able to grow. So at this juncture, I don't know, obviously, what all the competition is doing. Very few companies when we look at statutory data, actually, I think as of Q3, only 2 companies were growing profitably. And so I imagine those companies are going to want to get out in front of rate. And hopefully, as people shop, we will continue to be the recipient of those customers, Robinsons, of course, but actually, every customer. We want every Sam, Diane Wright, Robinson we can get as long as we can service them. We have obviously talked about the Robinsons a lot, because that's really the customer that we want based on our acquisition of ASI on the agency channel and working with other affiliated – unaffiliated companies on the direct side. So we'll continue to push those. But I think Cat talked a little bit about our changing creative. And really when you think about the Parentamorphosis and owning your first home, that's really addressed to the Robinsons. And so we are seeing -- we're seeing that happen. So we're going to continue with more creative around trying to retain more Robinsons.

We actually only have one more caller in the queue, which is perfect given our time right now. So, Latoya, can you introduce last caller please?

Yes. The next question comes from the line of Jeff Schmitt at William Blair. Mr. Schmitt, your line is now open.

Just a quick question on some of the comments from state insurance commissioners, recently about passing on the benefits of the new tax rate or the lower tax rate on to consumers; do you have any view on the likelihood of that or a sense on what that impact may be?

It's hard to say -- it's hard to say, there's a few states out there that will likely do that and we'll react to that. Remember, our combined ratio goal is pre-tax, so our CR496 vehicle is pre-tax. So we will work with the department to make sure we have a product that the citizens of the states. Again, our hope is that once regulators regulate in terms of what I talked about in terms of not being -- not having our rates inadequate, excessive or unfairly discriminatory. But again we're nimble and we'll work with it to make sure that we provide a good rate for the customers and not change our stands on our 96 combined ration goal.

Okay, and then I'm not sure if you mentioned it, but did you say what the growth of the platinum agents was in '17 and what percentage of total agents is that now?

It sells us small percent, we didn't say, it grew must say like 2000ish.

In terms of agents it agent headcounts, that's a reasonable number, Yes.

Yes, it's around 2000-2500 somewhere in there. We sort of stopped mentioning it just because we're really focusing on the agents that we have and making sure they have all the tools necessary to get those Robinsons. Again when we rolled out the Robinson model, we really rolled it out as a scarcity model because we wanted to be able to have these agents really wanted to have access to these customers. So they access that was great and then did they want to have us be number one in their shops. So we're really working now, especially as we integrated the company's, really working on making sure they had everything they need to have us be the number one choice in their agencies. So it's less about adding so many more, I'm sure we'll add more this year but it is really more about the ones that we have really making sure that they have what they need to provide more Robinsons for us.

Well, we've actually exhausted our scheduled time, so that concludes the event.