Letter to Shareholders

致股东信

What does an apron have to do with car insurance?

围裙与汽车保险有什么关系？

Designed to be thought provoking and, for most, rhetorical, we featured this question to open the newest visual expression of the evolving Progressive brand. Brands in some form are an emotive consumer response, and a brand owner’s best efforts are directed toward shaping that response to match the character of the company. We see Progressive from the inside-out as a company with strong values, a clear sense of purpose, a refreshingly positive work culture focused on the customer, and a demonstrated sense of innovation in the auto insurance space - insight not so easily expressed to others with the same veracity as observed by those of us in an advantaged position. However, our best research suggests these qualities are highly valued by consumers and additive to the product-centric dimensions proffered by Flo.

为了引发思考，并对大多数人来说带有修辞意味，我们以这个问题开启了进化中Progressive品牌最新的视觉表达。品牌在某种程度上是一种情感化的消费者反应，而品牌所有者的最大努力则在于塑造这种反应，使之与公司的特质相符。我们从内部视角看Progressive，认为它是一家拥有坚定价值观、明确使命、以客户为中心且拥有令人耳目一新的积极工作文化，并在汽车保险领域展示出创新精神的公司——这种洞察力很难以同样的真实性传达给其他处于优势地位的人。然而，我们最好的研究表明，消费者高度重视这些品质，并认为这能补充Flo所提供的以产品为中心的维度。

We set out to answer the question using the apron Flo has worn in close to 100 commercial appearances, and borrowed the universality of the apron as a tool for helping make things and making things better. We blended the two into a visual presentation that we believe portrays Progressive in the disarmingly humble, but highly credible, light of a company that works every day to make things better. Thus answering our own question with a straightforward - Everything!

我们决定用Flo在近100次商业广告中穿过的围裙来回答这个问题，并借用围裙这一普遍存在的工具，象征着制作与改善事物的能力。我们将二者融合成一场视觉展示，展现出Progressive那种令人意外的谦逊却又极具可信度的形象——一家每天都在努力让一切变得更好的公司。这样，我们以一句直白的回答解答了自己的问题——一切皆可改善！

There’s considerably more depth to this initiative and interested readers are directed to progressive.com. Regardless, expect to see more, but only selectively so, as we add this important dimension to our marketing efforts for 2014.

这一举措还有更深层的意义，感兴趣的读者请访问progressive.com了解更多。无论如何，随着我们为2014年的营销工作增添这一重要维度，未来还会有更多相关内容，但将会是经过精心选择的展示。

Making things better

让一切变得更好

In 2013 we made a lot of things better and, while accepting that this task is never done, I’d enjoy sharing a few of them with you.

2013年，我们使许多事物得到了改善，虽然我们知道这项任务永远不会结束，但我还是想与大家分享其中的一些成果。

Notwithstanding a long history of underwriting results that have met or exceeded our targets, we did get to make them even better this year. Written premiums grew close to 6% and topped $17 billion for the year, continuing a numeric progression of topping $15 billion in 2011 and $16 billion in 2012. I can envision more rapid sequences, but I like the direction. We have every reason to be pleased with a 93.5 combined ratio, and the resulting pretax underwriting income of $1.1 billion, both markedly better than last year. Completing our revenue and income model, we added $422 million in investment income and $318 million of net realized gains, along with a $130 million increase to our unrealized gains balance, now standing at $1.5 billion. The all-in measures of net income per share and, our preferred, comprehensive income per share were $1.93 and $2.06, respectively, both better than the equivalent result last year by 30% and 16%, and our return on shareholders’ equity using both measures approximated 18% and 19%. On these important financial dimensions, I’m happy to say I think we made things better in 2013.

尽管我们在承保业绩上已有长期达标或超越目标的历史，但今年我们确实让这些成绩变得更好。账面保费增长近6%，全年超过170亿美元，延续了2011年超过150亿美元和2012年超过160亿美元的数字趋势。我可以设想更快的增长序列，但我喜欢这种发展方向。我们有充分理由对93.5的综合比率以及11亿美元的税前承保利润感到满意，这两项指标均明显优于去年。为了完善我们的收入和利润模型，我们增加了4.22亿美元的投资收益和3.18亿美元的净实现收益，同时未实现收益余额增加1.3亿美元，目前达到15亿美元。每股净收入和我们偏爱的综合每股收益分别为1.93美元和2.06美元，均比去年高出30%和16%，而股东权益回报率分别约为18%和19%。在这些重要的财务指标上，我很高兴地说，我们在2013年做得更好了。

By the time this letter is posted, these results will be well known. Let’s take a look at the story behind the numbers. In some ways 2013 was for Progressive’s auto product line a year of two contrasting market dynamics. The first was the extended earn-in period of the fairly significant and geographically wide-spread rate increases we took in mid-2012, the reasons for which I highlighted in this letter last year. While unquestionably necessary to maintain our unbending commitment to meeting or exceeding our profitability targets, this discipline also comes with a large dose of frustration. At a time when our marketing efforts were producing record numbers of new prospects, as they did for the entire year, our rate competitiveness - a highly complex notion which spans across 51 rating jurisdictions, two channels of distribution, and numerous products - was not as productive in converting them into customers as we would like. Our premium growth was more a function of the increase in average rate per customer on a year-over-year basis, not as we prefer from increasing numbers of customers. In fact our new business conversion rate against the higher prospects was down significantly and, even more frustratingly, some of our current customers chose to shop and change based on rate at renewal. Customer retention is so obviously the key to many positives in our business and our decade long assault on intense measurement and actions designed to increase policy life expectancy for each customer took an unwelcomed hit. One might ask - then why do it? While acknowledging there are alternatives, the constancy of the central elements of our business model has been tested over short and long time periods and is in so many ways the DNA of Progressive. I have reprinted in Exhibit A my articulation of our business model, in part incorporated in last year’s letter.

在这封信发布时，这些结果将广为人知。让我们看看数字背后的故事。从某种程度上说，2013年对Progressive的汽车产品线来说，是两个截然不同市场动态并存的一年。第一种是我们在2012年年中采取的相当大幅且地域广泛的费率提升的延长期，这也是我去年在信中强调过的原因。毫无疑问，这种做法对于维持我们坚持不懈地实现或超越盈利目标是必要的，但这种纪律性同时也伴随着大量挫折。当我们的营销努力整年都在创造创纪录的新潜在客户数量时，我们的费率竞争力——这一涵盖51个评级辖区、两个分销渠道及众多产品的复杂概念——在将潜在客户转化为实际客户方面，并未达到我们的预期。我们的保费增长更多地依赖于每位客户平均费率的同比提升，而不是客户数量的增加。事实上，我们针对高潜在客户的新业务转化率大幅下降，更令人沮丧的是，一些现有客户在续保时选择更换供应商以获得更低费率。客户留存无疑是我们业务中许多积极因素的关键，而我们十年来对每位客户延长保单有效期的严格测量和行动受到了不受欢迎的冲击。有人可能会问——那为什么还要这么做？尽管我们承认有其他选择，但我们商业模式核心要素的一贯性经过了长短不一时间段的考验，在许多方面已成为Progressive的DNA。我在附件A中重新印刷了我们商业模式的阐述，部分内容已在去年的信中体现。

Since, I have already suggested two market dynamics, it’s a good guess the second was more favorable.

既然我已经提到了两种市场动态，可以合理推测第二种更为有利。

At slightly different rates, both our Agency and Direct auto channels were reporting double digit growth in new business applications by roughly mid-third quarter and showing healthy signs of reduced retention losses and increased Net Promoter® Scores. Unfortunately, consumers may be at a disadvantage when comparing insurance rates at a single point in time since the lowest might be just about to change, discoverable upon renewal offer, and higher rates may present more stability. That, however, is the basis of a competitive market which for all its failings, currently provides consumers with a very easily accessed and competitive market for auto insurance, and one in which we enjoy competing. For the last third of the year, the continued willingness of agents to quote us and the strong flow of prospects was capitalized on in both our Agency and Direct distributions, and premium growth at about the same rates as earlier in the year was logged in the second half, but for reasons that felt even better - increasing new customer counts.

在略有不同的费率下，我们的代理和直销汽车渠道在大约第三季度中期均报告了两位数的新业务申请增长，并显示出降低客户流失和提升净推荐分数的健康迹象。不幸的是，消费者在单一时点比较保险费率时可能处于劣势，因为最低费率可能即将变动，续保报价时会显现，而较高费率可能更为稳定。然而，这正是竞争市场的基础，尽管存在不足，但目前为消费者提供了一个非常便捷且具竞争力的汽车保险市场，而我们也乐于在其中竞争。在年底最后三分之一时间内，代理商持续愿意为我们报价，加上大量潜在客户流量，使我们的代理和直销渠道均实现了与年初相似的保费增长，但更令人欣喜的是，新客户数量在增加。

This would not be the game plan that we would draw up as a preference, and we certainly favor the closing chapters. Our overall rate change for the year was minimal and, with the benefit of hindsight, we might have been able to be a little softer in 2012 and slightly stronger in 2013 - hindsight on future inflationary trends is a wonderful thing, just not very realistic for our purposes. Of course, we did make numerous adjustments during the year as best determined by the state product managers, and that process remains the heart and soul of our ability over any extended period as we seek profitable growth in every state in which we do business. We added a net 276,000 auto customers for the year and most of the increase was in the last four months overcoming the earlier deficit. This does not come close to our potential to add customers nor the demand we are experiencing for our product. So, while 2013 was better in many ways, some yet to come in this note, only half the year might best fit the definition, but for the 2014 outlook, the right half.

这并不是我们偏好所制定的游戏计划，我们当然更看重结局部分。全年整体费率变化极小，事后看来，我们也许能在2012年稍微放缓，而在2013年稍微加强——对未来通胀趋势的事后判断虽美好，却不切实际。当然，我们在全年根据各州产品经理的最佳判断做出了许多调整，这一过程仍然是我们在每个经营州实现盈利增长能力的核心。全年净增了276,000个汽车客户，其中大部分增长出现在最后四个月，以弥补之前的不足。这远未达到我们增加客户的潜力，也未满足我们产品的市场需求。因此，虽然2013年在许多方面都有所改善（本说明中还有一些未提及的），可能只有一半年份最符合定义，但对于2014年的展望，则是正确的那一半。

Our special lines products, including motorcycle, recreational vehicle, personal watercraft, and boat, have a great deal of seasonality in most states, and this year the weather conditions across the country were less than favorable for much of the potential use season. While that dampened losses, it also dampened policy growth in these products and, although the results were attractive, we had only marginal growth in policyholders - something we look forward to reversing in 2014.

我们的特别险产品，包括摩托车、休闲车、个人水上交通工具和船只，在大多数州都有明显的季节性，今年全国范围内的天气状况对大部分使用季节来说不甚理想。虽然这降低了赔付损失，但也抑制了这些产品的保单增长，尽管结果颇具吸引力，但保单持有量仅有微弱增长——这是我们期望在2014年扭转的局面。

Our Commercial Lines business had a solid year with more variability in results than we would like, but management was consistently on top of the issues and market conditions. While parts of the commercial market we serve, notably the business auto and contractor segment, have been reasonably predictable throughout the economic recovery, others have been highly variable with a feast or famine type usage (e.g., double shifts on major infrastructure jobs), presenting accident frequency patterns very hard to predict. Acknowledging the challenges, we like this business and seek to engage even greater numbers of customers by meeting their other business insurance needs in a manner similar to our approach with homeowners and renters insurance in Personal Lines.

我们的商业险业务今年表现稳健，尽管结果波动较我们预期的更大，但管理层始终密切关注问题和市场状况。我们服务的商业市场部分领域，尤其是商业汽车和承包商细分市场，在整个经济复苏期间相对可预测，而其他领域则呈现“丰年或歉年”的使用情况（例如，重大基础设施工程中的双班制），导致事故频率模式极难预测。面对这些挑战，我们依然看好这项业务，并力求通过类似于我们在个人险中处理房主和租客保险的方式，满足客户的其他商业保险需求，从而吸引更多客户。

We hope we made things better for shareholders by declaring both a variable dividend and a $1.00 per share special dividend in December 2013, both paid in February 2014. The annual variable dividend was completely consistent with our published methodology and resulted in an approximately $0.49 per share amount based on our post tax underwriting profit and our Gainshare factor of 1.21. Further, the Board of Directors confirmed the variable dividend calculation process for calendar year 2014 to be consistent with 2013. Our comfort in paying these dividends stems from our rigorous efforts to determine the capital we need for regulatory purposes to support our writings, including expected growth, and a layer of contingency capital adequate to cover the many possible contingencies we can envision for our business. Capital in excess of these combined layers is by design available for share repurchases, acquisitions, and shareholder dividends. Our philosophy continues to favor the return of capital above our estimated needs over any reasonable planning horizon.

我们希望通过宣布2013年12月的可变股息和每股1.00美元的特别股息（均于2014年2月支付）使股东的利益得到改善。年度可变股息完全遵循我们公布的方法论，基于税后承保利润和1.21的收益分享系数，约为每股0.49美元。此外，董事会确认2014年度可变股息的计算过程与2013年一致。我们之所以有信心支付这些股息，是因为我们经过严格努力确定了满足监管要求、支持业务增长以及足以覆盖我们预见到的各类意外情况的应急资本层次。超出这些综合层次的资本，按计划将用于股票回购、收购和股东分红。我们的理念始终倾向于在任何合理的规划期内返还超过预估需求的资本。

Our complementary income stream, investing the often called “insurance float,” has performed very well, relative to our desired constraints and guidelines, during a prolonged period of low interest rates and did so again in 2013, posting a total return on our fixed-income portfolio of 1.7%. In fact, with interest rates so low, any desire for long-term increases has to be moderated by the potentially sudden and dramatic price depreciation that may be incurred in current holdings. We had a preview to this potential in the second quarter, but our short-duration position and heavier exposure to the front end of the yield curve provided some insulation to the interest rate increase and steepening yield curve. While our current recurring interest income by historical standards is frustratingly low at a pretax book yield of 2.6%, we remain confident in our preference for shorter duration positioning during times of extremely low interest rates, but will certainly benefit from a return to more substantial yields and are well prepared to act. We were more than happy to be among the boats on a rising 2013 tide for equities, and our approximately 14% allocation of the portfolio to equities - largely indexed - recorded a total return of 32.8%.

我们的补充收入来源——即所谓的“保险浮存金”投资，在长期低利率环境下，根据我们期望的限制和指导方针表现非常出色，2013年再次实现固定收益组合总回报率为1.7%。事实上，在利率如此低的情况下，任何对长期收益增长的期望都必须受到当前持仓可能出现的突然且剧烈的价格贬值的限制。我们在第二季度预见到了这种可能性，但我们的短期持仓以及对收益率曲线前端的较高敞口为利率上升和收益率曲线陡峭化提供了一定的缓冲。虽然按历史标准，我们当前的经常性利息收入令人沮丧地低，税前账面收益率仅为2.6%，但我们仍然坚信在极低利率时期采用较短期限配置的偏好，并必将从更高收益率的回归中受益，我们也已做好充分准备。我们非常高兴能在2013年股市上扬的浪潮中站稳脚跟，我们大约14%的股票配置（主要为指数型）录得了32.8%的总回报。

As selective signs perhaps suggest a slow strengthening of the economy, we would welcome an improved investment environment with interest rates more comfortably matching our longer-term investment income preference, but, by design, we are not dependent on it. We enter 2014 with a very strong and well-structured capital position, and an investment portfolio positioned to support our current and future objectives, and prospects for our underwriting business that always seem brighter based on the past year’s accomplishments.

一些选择性迹象或许表明经济在缓慢走强，我们欢迎一个投资环境改善、利率更好地符合我们长期投资收益偏好的局面，但按设计，我们并不依赖于此。我们以非常强大且结构良好的资本状况进入2014年，同时拥有一个能够支持当前及未来目标的投资组合，以及基于过去一年成就而前景更为光明的承保业务。

More and Better Snapshot®, our usage-based insurance program, contributed to making things better in 2013, in part by contributing over $2 billion to our auto written premium and in part by continuing to help us better understand much of what we didn’t know, we didn’t know as we introduced this rating breakthrough to the market. Least among the unknowns was the premise that driving behavior matters, and another year and significant data confirmed, in no uncertain terms, that observed and measured driving behavior is an extraordinarily powerful basis for matching a rate with the risk presented. Perhaps higher on the list of unknowns was the willingness and degree of engagement customers would be comfortable with when it comes to auto insurance. Historically, a low engagement product after quotation and payment, excluding any claims activity, we are now asking consumers to actively select an option requiring the insertion of a device into the automobile, at their discretion track progress, and in time return the device. Needless to say, not all devices are installed and not all returned, but our focus on these new dimensions to our business and our communication with customers is improving every day. To highlight the notion of engagement, the art in this year’s annual report is entirely dependent on the viewer’s active engagement since the works, including the one commissioned for our campus which is reproduced on the cover of this report, can only be fully appreciated by the observer finding the exact viewing spot and thus point-of-view. We hope, as with Snapshot, the engagement has disproportionate benefits for most.

我们的使用型保险项目——More and Better Snapshot®，在2013年对改善业绩做出了贡献，部分原因是为我们的汽车账面保费贡献了超过20亿美元，部分原因则在于它持续帮助我们更好地理解许多未知的信息，当我们将这一定价突破推向市场时，最不容置疑的是驾驶行为的重要性，而又一年的时间和大量数据明确证实，观察和测量到的驾驶行为是匹配费率与所呈现风险的极其有力的基础。也许在未知因素中更高的是消费者对汽车保险中参与程度的意愿和程度。历史上，在报价和付款后（不包括任何理赔活动），这类产品的参与度较低，而我们现在要求消费者主动选择一种选项，该选项需要在汽车中安装一个设备，自主跟踪进度，并在适当时候归还该设备。不用说，并非所有设备都会安装，也非全部归还，但我们对业务新维度和与客户沟通的关注每天都在改善。为了突出参与这一概念，今年年报中的艺术作品完全依赖于观者的主动参与，因为这些作品，包括为我们园区委托创作并在本报告封面再现的作品，只有当观察者找到最佳观赏点和视角时才能得到充分欣赏。我们希望，正如Snapshot一样，这种参与能为大多数人带来超出预期的好处。

We had a very good year increasing the percentage of customers accepting the increased level of Snapshot engagement. Notably, Internet customers were accepting at significantly higher rates than at initial introduction and year-end 2012. The most notable, which is far from a surprise, is the high acceptance rates among our customers using mobile devices to buy policies, to whom this seems apparently quite natural. This trend bodes well for us in 2014 and beyond.

我们在提高接受更高水平Snapshot参与度的客户比例方面取得了非常好的成绩。值得注意的是，互联网客户的接受率明显高于2012年初和年末的水平。其中最显著的（也不令人意外）是使用移动设备购买保单的客户具有极高的接受率，这对他们来说似乎非常自然。这一趋势对我们2014年及以后的发展非常有利。

Our advertising efforts for Snapshot now use the full gambit of options available to us: we have Flo communicating in multiple ways; we have the “Rate Suckers” campaign strongly suggesting if you’re not in you may be subsidizing the poor driving habits of others; and soon we will use the “Policy Box” to reinforce the key messages. Each has an appeal and a message designed to cover an ever wider spectrum of consumers and a priori concerns. Our research shows three groups of customers: those very encouraged by this type of option; those less persuaded but open; and those with little or no interest for reasons often regarding their perception of privacy. We remain confident that clearer concept communication, greater general awareness, high integrity execution, and changing societal expectations, all work to our and consumers’ advantage going forward. While it’s invigorating to be the pioneer in this extraordinary rating dimension, it may well prove even more rewarding to be the advantaged player when it’s a mainstream consumer expectation.

我们针对Snapshot的广告宣传现在采用了所有可用选项：Flo通过多种方式进行传播；“Rate Suckers”广告活动强烈暗示如果你不参与，可能在为他人不良驾驶习惯买单；而很快我们将使用“Policy Box”来强化关键信息。每种方式都有其吸引力和信息，旨在覆盖更广泛的消费者群体及其先验顾虑。我们的研究显示，消费者大致分为三类：非常受此类选项鼓舞的；不那么被说服但持开放态度的；以及因对隐私的看法而几乎不感兴趣的。我们仍然相信，更清晰的概念传达、更广泛的公众认知、高诚信的执行以及不断变化的社会预期，都将使我们和消费者在未来共同受益。虽然作为这一非凡定价维度的先驱令人振奋，但当这种预期成为主流时，作为处于优势地位的参与者可能会获得更大的回报。

2013 saw significant progress on our efforts at managing and mining “Big Data” - Snapshot will be a primary beneficiary. As good as our understanding of our data is today, we see continued potential to extract greater value and improve our ability to accurately distinguish between consumer risk profiles. Continuing to evolve our products, including features like Snapshot, is at the very heart of what we do and a clear basis for how we see our ability to outperform in a competitive market. 2014 will be a year where many of the research initiatives of 2013 will come to market.

2013年，我们在管理和挖掘“大数据”方面取得了重大进展——Snapshot将是主要受益者。尽管我们对数据的理解已经相当不错，但我们看到仍有潜力进一步提取更大价值，并提升准确区分消费者风险特征的能力。不断发展我们的产品，包括像Snapshot这样的功能，正是我们工作的核心所在，也是我们在竞争市场中胜出的明确基础。2014年将是2013年众多研究计划推向市场的一年。

Each year it seems we need a new vocabulary for mobile computing and communication devices - once simply a phone and desktop, then add tablet and now an evolving array of screen sizes in between, tablets, phones, minis, etc. The common denominator is simple - people want to and do transact all forms of business when and where they want and on whatever device best suits the moment. Quoting, sales, payments, and document requests by mobile device all now represent strong double digit percentages, and in some cases approaching a quarter, of all such transactions. Our challenge is to provide an appealing, easy to use interface for our customers and prospective customers, regardless of the means by which they interact with us. Our efforts on quoting and buying have been at the forefront of our industry and those were enhanced in 2013 with car and driver combinations that meet 99% of consumer needs. Our mobile servicing efforts, for reasons no longer important, were not as responsive to customer preferences as we would desire for much of the year, but our intensive effort to redirect was released late in the year and now forms the basis for our mobile servicing initiative that is fully extensible for 2014. We can never stray far from where it all started, and Progressive’s website design and user experience still represents the base functionality for all else; as such, we were pleased to be again recognized by Keynote Competitive Research as the No. 1 website in the insurance industry for now our ninth year running.

每年似乎我们都需要为移动计算和通讯设备创造新的词汇——曾经仅仅是电话和台式机，后来增加了平板电脑，如今中间出现了不断变化的多种屏幕尺寸，如平板、手机、小型设备等。共同点很简单——人们希望并且确实在任何时间、任何地点、任何最适合当下设备上进行各种业务交易。通过移动设备进行报价、销售、支付和文件请求现在均占所有此类交易的两位数百分比，有时甚至接近四分之一。我们的挑战是，无论客户以何种方式与我们互动，都能为他们提供一个吸引人、易于使用的界面。我们的报价和购买工作一直处于行业前沿，并在2013年通过满足99%消费者需求的车辆和驾驶员组合得到了加强。由于种种原因，我们的移动服务响应客户偏好的表现全年并不尽如人意，但我们在年底集中力量进行的调整现已成为可完全扩展至2014年的移动服务计划的基础。我们永远不会远离最初的起点，而Progressive的网站设计和用户体验依然构成了其他所有功能的基本平台；因此，我们很高兴连续九年再次被Keynote Competitive Research评为保险行业第一网站。

One of the most dramatic differences in Progressive today versus a decade or so ago, and certainly for the better, is operating with the umbrella of a high profile brand. We are unquestionably challenged when occasionally pricing or servicing actions, perceived or real, don’t match the consumer’s perception of what our brand and their expectations of it call for and, in those cases with merit, it serves us well to reevaluate. However, by far the biggest difference is the consumer awareness, consideration, and preference for Progressive products and service - all measures we track with great interest. 2013 was a great year for our ongoing brand development with the Superstore creative campaign starring Flo performing at some of our best yet response levels. Additionally, we pulled the Policy Box off the shelf of the Superstore and using a witty, slightly boastful caricature of it, delivered targeted messages expanding our network of delivery options.

Progressive如今与十年前相比，最显著的变化之一，且无疑是向好的方面，是在一个高知名度品牌的保护伞下运营。当我们偶尔在定价或服务行动上，无论是感知上还是实际情况，都未能符合消费者对我们品牌和期望的认知时，我们无疑会面临挑战，并在那些合理的情况下重新评估。然而，最大不同在于消费者对Progressive产品和服务的认知、考虑和偏好——所有这些我们都极为关注的指标。2013年，在Superstore创意活动中，由Flo主演并取得了迄今为止最佳反响的品牌建设方面，Progressive迎来了一个伟大之年。此外，我们从Superstore的货架上撤下了Policy Box，并通过一个机智、略显自夸的夸张漫画，传递了扩展我们配送选项网络的定向信息。

Our objective is not to become simply the decision brand for consumers when considering auto insurance, but also for complementary personal insurance products, primarily home and renter’s coverage. Our Progressive Home Advantage® Program (PHA), supported by the offerings of 11 unaffiliated underwriters, now serves over a million customers, most of whom have a bundled auto and home combination - clearly our retention focused objective. From modest beginnings, the PHA program has become a very significant part of our strategy to attract and retain customers - in some cases those who may not have previously considered us or may have felt the need to leave us when their needs expanded. Our interpretation of an independent survey of customer satisfaction with household insurance bundling, published in 2013, ranking Progressive higher than many traditional underwriters of both auto and home products, was confirming for us of our original premise and research results, that consumers are very comfortable bundling products from different underwriters, conditioned on a brand they can relate to, trust, and one that provides the ease of use we all want when assembling the pieces of our aggregate needs. Our transformation of Progressive from a transaction brand to a destination brand is well underway. The combination of excellent consumer-facing technology, a product array designed for all customer life stages, and a decision brand, makes for an effective portal to attract long-term customers and develop a relationship that meaningfully addresses their specific needs over their lifetime. The potential here is far greater than the to-date realization, but is exciting both in numeric reach and strategic breadth. More and more of our customers, especially our direct customers, are now multi-product customers with combinations of auto, special lines, home, or renters.

我们的目标不仅仅是成为消费者考虑汽车保险时的决策品牌，而还要成为互补个人保险产品（主要是房屋和租客保险）的决策品牌。我们的Progressive Home Advantage®计划（PHA），由11家非隶属承保商支持，目前服务超过一百万客户，其中大部分客户同时绑定了汽车和房屋保险——这显然是我们以客户留存为核心的目标。PHA计划从最初的 modest 起步已成为我们吸引和留住客户战略中非常重要的一部分——在某些情况下，这些客户此前可能并未考虑过我们，或在需求扩大时曾感到需要离开我们。我们对2013年发布的一项独立家庭保险捆绑客户满意度调查的解读，将Progressive的评分高于许多传统汽车和房屋承保商，进一步验证了我们的初衷和研究结果，即消费者在绑定来自不同承保商的产品时，如果基于他们能够认同、信任并且提供我们所期望的易用性品牌，他们会非常安心。我们正将Progressive从一个交易型品牌转变为一个目的地品牌，这一进程正稳步推进。卓越的面向消费者技术、适用于所有客户生命周期的产品组合以及决策型品牌的结合，为吸引长期客户并建立能切实满足其终身特定需求的关系提供了有效入口。这里的潜力远远超过目前的实现，但无论在数字覆盖还是战略广度上都令人激动。越来越多的客户，尤其是我们的直销客户，现在都是多产品客户，他们组合购买汽车、特别险、房屋或租客保险。

Our relationship with American Strategic Insurance (ASI), our key provider for the PHA experience through agents, flourished in 2013, with PHA available to Agency customers in 23 states and Washington D.C., with several more states planned for 2014. Working closely with ASI, our goal, as it is in general, is to design in the product features that make its use more consumer intuitive versus the all too often rough edges associated with different products attempting to work together. Our Agent’s customers are a tremendous source of the multi-product business we seek, and we fully appreciate the need to bring them a strong product portfolio to earn a greater share of this business. Our strong brand is now seen by most agents as a huge positive and a business-generating asset they value and can effectively leverage.

我们与American Strategic Insurance (ASI)——通过代理为PHA体验提供关键支持的供应商——的合作在2013年蓬勃发展，PHA已在23个州及华盛顿特区为代理客户提供服务，并计划在2014年扩展到更多州。与ASI密切合作，我们的目标一贯是设计出使产品使用更直观的功能，以克服不同产品协同工作时常见的粗糙边缘。我们的代理客户是我们追求多产品业务的巨大来源，我们深知为他们提供强大的产品组合以赢得更大市场份额的必要性。如今，大多数代理商都将我们强大的品牌视为一项极大的正面资产和能有效产生业务的资源。

In 2013, our claims organization was able to make what was already a strong track record of extraordinary results in claims resolution even better - quality, efficiency, and customer experience all improved from previously very high benchmarks. In addition to normal claim volume, fires, tornadoes, flooding, hail, and late season snow storms all left their mark on the year, each demanding greater and immediate commitment of our people. Thankfully, the Atlantic hurricane season was not of much note. We opened nine new Service Centers during the year, expanding our footprint to sixty three countrywide. The quality of the claims experience provided at these facilities has from the very first implementation been a model that we believed consumers would come to expect if they only knew how easy it was to use and could take advantage of it. Our work in 2013 was directed squarely at communicating the benefits and increasing our responsiveness and availability so more customers could use the option. As a selected method of repair, the Service Centers now represent more than a third of our physical damage features in the areas served and one of the best benefits of being a Progressive customer. We believe, for those non-customers using the center, being involved in an accident with a Progressive customer is better than alternatives, as demonstrated by their subsequent switching behavior.

2013年，我们的理赔部门在已有的卓越理赔记录基础上进一步提升了表现——理赔质量、效率和客户体验均超过以往的高标准。除了正常的理赔量外，火灾、龙卷风、洪水、冰雹以及晚季暴雪等都在这一年留下了印记，各自都要求我们的员工付出更多、更迅速的努力。幸运的是，大西洋飓风季表现平平。我们在年内新开设了九个服务中心，全国范围内的服务网点扩展到63个。这些设施自首次运行以来所提供的理赔体验质量，就已成为我们认为消费者一旦了解其易用性和可利用性后必定会期望的标准。我们2013年的工作明确致力于传达这些好处，并提高响应速度和可用性，使更多客户能使用这一选项。作为一种精选维修方式，这些服务中心现在在所服务地区的物理损害修复中占比超过三分之一，是Progressive客户的一大优点。我们相信，对于那些非客户使用服务中心的人来说，与Progressive客户发生事故比其他替代方案更好，这一点从他们之后的更换行为中得到了证明。

Loss and loss adjustment expense is such a dominant percentage of our economics that we never think of claims handling as anything other than directly integral to the business success. Even seemingly marginal gains in claim quality, efficiency, and customer experience translate disproportionately to continued attractive pricing and gains in customer retention. I’m happy to report 2013 was another very good year for our claims organization.

损失及损失调整费用在我们经济中占比极大，因此我们始终将理赔处理视为业务成功的直接组成部分。即便理赔质量、效率和客户体验看似微小的提升，也会不成比例地转化为持续有吸引力的定价和客户留存率的提高。我很高兴报告，2013年我们的理赔部门又取得了非常优异的成绩。

Our People and Culture

我们的员工与文化

Sadly, late in the year our Chairman and friend Peter B. Lewis died. Peter’s life work was largely centered on Progressive, the only company he ever worked for. Since drawing his first paycheck in 1945 for stuffing envelopes for the company’s first-ever direct mail campaign until his death, he never wavered in his commitment to the essential elements that have come to make Progressive, progressive and our culture so special. Any attempt to recap the depth of what he meant to Progressive would fall short, but there can be no doubt Progressive lost its best cheerleader of all time. I have traditionally closed my letter with an appropriate tribute to our people and the work environment that make all that we do possible. This year, in honor of Peter, I would like to yield that same task to Peter’s own words selectively chosen from his last shareholders letter in 2000 and reprinted as Exhibit B.

令人悲痛的是，年末我们的董事长兼好友Peter B. Lewis去世了。Peter的一生工作几乎都围绕着Progressive展开，这也是他唯一工作过的公司。从1945年为公司首次直邮活动塞信封拿到第一份薪水起，到他去世为止，他对成就Progressive及其独特文化的核心要素始终坚持不渝。任何试图概括他对Progressive意义深远的贡献都显得捉襟见肘，但毫无疑问，Progressive失去了史上最杰出的支持者。我一直以来都以适当的方式在信末向我们的员工和构成我们一切可能的工作环境致敬。今年，为了纪念Peter，我愿意把这项任务交给Peter自己在2000年最后一封股东信中精选的几段话，并作为附件B重印。

To all the people of Progressive, our agents, customers, shareholders, and perhaps most of all Peter B. Lewis-

致所有Progressive的员工、我们的代理、客户、股东，也许最重要的是致Peter B. Lewis——

Thanks for making Progressive, progressive.

感谢你们让Progressive变得进步。