2018-02-27 Tricia Griffith’s Letters to PGR Shareholders

Refer To：《PGR-Form 10-K - Annual report-2017》。

LETTER TO SHAREHOLDERS

致股东的信函

When reflecting on the year, as I was composing the year-end evaluations for my team, the positive adjectives flowed, but the one that I believe best describes this year is “remarkable.” We started the year with a crystal-clear plan of both what we wanted to achieve and the pace with which we wanted to achieve it knowing that we would have glitches along the way, typically coming from mother nature (she did not disappoint). The success we have achieved in growth (both written premium and unit) and profit, on both a relative and absolute basis, would be a great story on its own merit, but that is only one half of the story.

回顾这一年，当我为团队撰写年终评估时，脑海中涌现出许多积极的形容词，但我认为最能描述这一年的词是“非凡”。年初，我们就清晰地制定了目标和实现目标的节奏，同时也清楚过程中难免会遇到一些小插曲，通常来自大自然（她果然没有让我们失望）。我们在增长（包括书面保费和单位数量）和利润方面所取得的成功，无论是相对还是绝对而言，本身已是一个精彩的故事，但这仅仅是故事的一半。

Thanks to our recruiting machine and leaders across the company, we hired almost 6,000 external people in 2017 after hiring over 6,600 new people in 2016. That is a massive amount of new people to onboard and train and doesn’t consider all the people who are also in new leadership roles to support this growth. Many companies might implode with this growth, but we excelled and are prepared for similar increases in 2018. The theme of acceleration for this year’s report seems very fitting based on what we have accomplished and our plans going forward.

得益于我们的招聘机制和公司各部门领导的努力，继 2016 年招聘超过 6600 名新员工后，我们在 2017 年又从外部招聘了近 6000 人。这是一个庞大的新员工群体，需要进行入职培训和培养，而且这还不包括为支持这一增长而担任新领导职务的人员。许多公司可能会因这种增长而崩溃，但我们表现出色，并已为 2018 年类似的增长做好了准备。基于我们已取得的成就和未来的计划，今年报告的主题“加速”显得非常贴切。

配套扩张的行为。

Synopsis of the Year

年度概要

Hurricanes Irma and Harvey mark the first time in U.S. history that two Atlantic Category 4 landfalls have occurred in the same year. Even with these unprecedented storms in two of our biggest states, we ended the year with a 93.4 combined ratio (CR) while net premiums written (NPW) grew 16%. After adding $2.8 billion of NPW in 2016, we added an additional $3.8 billion in 2017, which is larger than the size of the 11th largest private passenger auto insurance company. Once again, we got out ahead of hiring to make sure that we could grow as fast as possible at or below a 96 CR and be able to provide the service our customers have come to expect. I’ve mentioned in past letters how proud I am that nearly every employee helped in some way with the storms, but the claims department deserves special thanks for all they accomplished for the customers we are privileged to serve.

飓风厄玛和哈维标志着美国历史上首次在同一年内发生两次大西洋四级飓风登陆。尽管这两场前所未有的风暴袭击了我们两个最大的州，我们仍以 93.4 的综合比率（CR）结束了这一年，同时净保费收入（NPW）增长了 16%。继 2016 年增加了 28 亿美元的净保费收入后，我们在 2017 年又增加了 38 亿美元，这一增长规模超过了排名第 11 位的私人乘用车保险公司的规模。我们再次提前进行了人员招聘，以确保我们能够在综合比率不超过 96 的情况下尽可能快速地增长，并继续提供客户所期望的服务。我在过去的信件中曾提到，我为几乎每位员工都以某种方式参与了风暴救援而感到自豪，但理赔部门尤其值得特别感谢，他们为我们有幸服务的客户所做的一切。

Often, we are challenged regarding our long-standing goal of making at least four cents of underwriting profit while growing as fast as we can. If we must choose, profit (one of our five Core Values) comes before growth, with the aspiration to always have as much as we can of both in order to sustain an enduring business. This objective has been efficacious as our business model and, because of that, we do whatever we can, within reason, to protect it. In fact, our stated profit objective has been written in some form or another in every annual report since Progressive went public in 1971. That said, we have numerous products, channels, and venues, and the 4% underwriting margin goal is for the business in the aggregate. That goal permits us to make practical decisions on profitably growing the business based on the competitive landscape and allowing for reasonable returns for each product.

我们经常会被质疑我们长期以来的目标，即在尽可能快速增长的同时，实现至少 4%的承保利润。如果必须做出选择，利润（我们的五个核心价值之一）优先于增长，但我们的愿望始终是尽可能同时实现两者，以维持业务的长期发展。这一目标已被证明是我们有效的商业模式，因此我们会在合理范围内尽一切努力保护它。事实上，自从 Progressive 于 1971 年上市以来，我们每年的年度报告中都以某种形式阐述了这一利润目标。尽管如此，我们拥有众多产品、渠道和市场，而 4%的承保利润目标是针对整体业务而言的。这一目标使我们能够根据竞争环境做出务实的决策，以盈利的方式发展业务，并为每个产品实现合理的回报。

Our commitment to this profitability goal continues to move us forward. Based on our estimates using statutory data through September, we think our private passenger auto programs were more profitable than all of our major competitors and about 10 points more profitable than the industry. We also believe we grew our market share by approximately half of a point to almost 10% of the market. There are occasions where the planets (high growth plus profit) align and that occurred for us in 2017.

我们对盈利目标的承诺持续推动我们前进。根据截至 9 月份的法定数据估算，我们认为我们的私人乘用车项目比所有主要竞争对手更具盈利能力，并且比行业平均水平高出约 10 个百分点。我们还认为，我们的市场份额增长了约 0.5 个百分点，达到市场份额的近 10%。有时候，高增长与盈利能力会同时出现，这种情况在 2017 年发生在我们身上。

In Personal Lines, we have created a structure that we use to help guide us in acquiring new customers, deepening our relationships with our current customers, and extending how long our customers stay with us based on our ability to satisfy them from both a product and service perspective.

在个人业务方面，我们建立了一套结构，以帮助我们获取新客户，加深与现有客户的关系，并通过在产品和服务方面满足客户需求，延长客户与我们的合作时间。

Our new auto policy applications increased by 18% year-over-year and our policies in force grew 13%. Our policies in force growth in bundled customers (auto plus home, a.k.a. Robinsons) was just over 30%. Lastly, retention continues to improve with our trailing 12-month policy life expectancy (PLE) for total auto up close to 7%, with PLE in the Agency channel up about 8%.

我们的新汽车保单申请量同比增长了 18%，有效保单数量增长了 13%。捆绑客户（汽车加房屋，即 Robinsons）的有效保单数量增长略高于 30%。最后，客户留存率持续改善，过去 12 个月的汽车保单预期寿命（PLE）总体增长近 7%，其中代理渠道的 PLE 增长约 8%。

We frequently communicate the critical importance of keeping our customers, whom we spend so much time and resources to acquire. I’m thrilled to say that we have seen a steady increase in trailing 12-month auto PLE for some time, and our focus will be to continue to make this a central component of our strategy. Our goal, in addition to having competitive rates, will be to intently focus on the relationships we have with our customers and continue to enhance them.

我们经常强调留住客户的重要性，因为我们花费了大量的时间和资源来获取这些客户。我很高兴地告诉大家，我们的汽车保险过去 12 个月的保单生命周期价值（PLE）持续稳步增长，我们将继续把这一点作为战略的核心组成部分。除了提供有竞争力的价格外，我们的目标还将专注于与客户的关系，并持续加强这些关系。

To that end, we’ve done extensive research into customer desires. We’ve used those insights to form our priorities, and we’ve made considerable investments over these past few years. These include several areas within our Customer Relationship Management organization, such as service design and delivery methods, digital transformation, advanced analytics and modeling, artificial intelligence, and machine learning. These investments are made with our customers in mind and are designed with the intent of allowing them to service their policies when, where, and how they choose, and to receive a personalized, relevant experience that gives them a reason to continue to choose Progressive as their insurance needs evolve.

为此，我们对客户需求进行了广泛的研究，并利用这些洞察确定了我们的优先事项，在过去几年中进行了大量投资。这些投资涵盖了客户关系管理组织内的多个领域，例如服务设计和交付方式、数字化转型、高级分析与建模、人工智能和机器学习。这些投资以客户为中心，旨在使客户能够随时随地以自己选择的方式管理保单，并获得个性化、相关的体验，从而在其保险需求不断变化时，继续选择 Progressive。

On the investment side, our portfolio posted a 5.2% total return for 2017. The year was characterized by low volatility with ever rising equity prices. Interest rates for short-maturity bonds rose as the Federal Open Market Committee followed through on their predicted path of three rate hikes in 2017, while rates for bonds maturing in ten years or longer fell slightly. Strong equity portfolio returns of over 21% contributed almost half of our post-tax comprehensive investment income of almost $825 million, despite comprising around 12% of our portfolio. Our fixed-income portfolio also performed well with a return of 3% for the year. As the yield premium we earn for holding bonds other than U.S. treasuries fell during the year, we reduced our allocation to almost all non-U.S. treasury sectors.

在投资方面，我们的投资组合在 2017 年实现了 5.2%的总回报。这一年市场波动较低，股票价格持续上涨。随着联邦公开市场委员会（FOMC）如期在 2017 年进行了三次加息，短期债券利率上升，而期限为十年或更长的债券利率则略有下降。尽管股票投资仅占我们投资组合的约 12%，但其超过 21%的强劲回报贡献了我们税后综合投资收入近 8.25 亿美元的近一半。我们的固定收益投资组合表现也很好，全年回报率为 3%。由于我们持有的非美国国债债券的收益溢价在年内下降，我们减少了几乎所有非美国国债债券的配置。

第一次看到这个比例，类似于保本+浮动的结构，固定收益的平均回报是3%，占比90%，假如要保本，这个结构可以忍受股票投资出现27%的亏损。

Our strong operating growth and maturities from our portfolio gave us plenty of new cash to invest during 2017. This created the high-class problem of finding investments that meet our criteria for quality and return. We will not relax our quality standards to pursue incremental yield. The rapid growth of our underwriting business makes our goal of protecting the balance sheet paramount.

我们强劲的运营增长和投资组合的到期资产使我们在 2017 年拥有了充裕的新资金进行投资。这也带来了一个高端问题，即寻找符合我们质量和回报标准的投资机会。我们不会为了追求额外收益而放松质量标准。承保业务的快速增长使保护资产负债表成为我们的首要目标。

In April, we issued $850 million of 30-year debt to “pre-fund” the redemption in June of $564 million of our 6.70% fixed-to-floating rate securities and to provide a little more capital to fund our profitable growth. We bought back enough stock to comply with our policy of neutralizing dilution from equity-based compensation in the year of grant, but not much more. The first question we ask, when deciding if we should repurchase stock, is if we can use our capital efficiently to grow our underwriting business. I’m thrilled that last year the answer was unequivocally yes.

4 月份，我们发行了 8.5 亿美元的 30 年期债券，以“预先筹集”资金，用于 6 月份赎回我们 5.64 亿美元的 6.70%固定转浮动利率证券，并为我们的盈利增长提供更多资本。我们回购了足够的股票，以符合我们在授予年度内抵消股权激励稀释的政策，但并未大量回购。在决定是否回购股票时，我们首先要问的问题是，我们能否有效地利用资本来发展我们的承保业务。我很高兴去年这个问题的答案毫无疑问是肯定的。

We celebrated our 25th anniversary of Gainshare with a score of 1.79. This is the best result since 2004 and the 6th year in a row that the score has increased. We declared an annual dividend of $1.1247 per share, based on 2017 results and the formula that we communicate publicly.

我们以 1.79 的得分庆祝了 Gainshare 计划的 25 周年。这是自 2004 年以来的最佳成绩，也是该得分连续第六年增长。根据 2017 年的业绩和我们公开的计算公式，我们宣布了每股 1.1247 美元的年度股息。

Down to the Details

深入细节

After over two decades with a corporate income tax rate of 35%, we head into 2018 with a newly enacted rate of 21%. We are excited by the benefits this brings to our net income, as well as to our shareholders through adjusted valuations and application of the new tax rate to our variable dividend formula. Our effective income tax rate, which historically has been in the 32% to 33% range before tax credits, is expected to be in the neighborhood of 20%. We also continue to pay state premium taxes at a rate close to 1.6% of written premium, which amounted to more than $400 million for 2017.

在经历了二十多年 35%的企业所得税税率后，我们以新颁布的 21%税率进入 2018 年。我们对这一变化给净收入带来的益处感到兴奋，同时也对股东通过调整后的估值以及将新税率应用于我们的浮动股息公式所获得的好处感到满意。我们的实际所得税税率在税收抵免前历史上一直处于 32%至 33%的范围内，预计未来将接近 20%。此外，我们继续支付州保费税，税率接近已承保保费的 1.6%，2017 年该项税额超过 4 亿美元。

We continue to be very pleased with our newest auto product model, and it is performing very well in both channels. We continually keep a close eye on rate need and quickly react when needed. The great story on the auto side continues to be growth in the Agency channel, which had eluded us for years and now seems to be a consistent source of growth. We appreciate the close relationships that we have with our more than 35,000 independent insurance agencies and look forward to continued growth.

我们对最新的汽车产品模式依然非常满意，该模式在两个渠道中均表现出色。我们持续密切关注费率需求，并在必要时迅速作出反应。汽车业务方面的突出表现仍然是代理渠道的增长，这一增长多年来一直未能实现，如今似乎已成为稳定的增长来源。我们珍视与超过 35,000 家独立保险代理机构的紧密合作关系，并期待持续增长。

Our Direct business is humming along as well and we are delighted with our growth in new quotes and conversion. The prolonged hard market has helped us as shopping continues due to rate increases from our competitors. We are well-positioned with our rates and product and our customers are reacting favorably to our media messages (more on that later).

我们的直销业务也进展顺利，新报价和转化率的增长令我们感到欣喜。由于竞争对手持续提价，市场长期处于紧张状态，消费者不断寻求更优选择，这对我们有利。我们的定价和产品定位良好，客户对我们的媒体宣传反响积极（稍后将详细介绍）。

During 2017, we had persistent favorable frequency trends that were not anticipated when we priced the auto book and this is one of the reasons underwriting margins widened. We analyze a variety of factors to separate out frequency changes specific to our book versus underlying macro trends. A few unique things we see are a change in our customer mix towards lower pure premium customers and longer trips by Snapshot® customers, who we view as representative of our entire book. We will continue to dissect our data to aid in understanding the favorable trend, should it persist.

在 2017 年，我们持续经历了未曾预料到的有利频率趋势，这在我们为汽车业务定价时并未考虑到，这也是承保利润率扩大的原因之一。我们分析了多种因素，以区分我们业务特有的频率变化与潜在的宏观趋势。我们观察到的一些独特现象包括客户结构向纯保费较低的客户转变，以及 Snapshot®客户的行驶里程增加，我们认为这些客户能够代表我们的整体业务。如果这种有利趋势持续，我们将继续深入分析数据，以帮助理解其原因。

Our special lines policies in force grew at a rate of 2% with growth coming primarily from our boat and RV businesses, while motorcycle maintained its market-leading position. The concentration of preferred customers in our special lines book of business makes it critically important to take care of these customers when infrequent losses do happen, and the 2017 catastrophe season afforded us ample opportunity to showcase our claims service. These weather losses put some pressure on our special lines margins during 2017, but we’ve responded and adjusted rates accordingly and, as we wrapped up 2017, we felt confident about our positioning from both a profit and growth perspective going into 2018.

我们的特殊险种有效保单数量增长了 2%，增长主要来自于船只和房车业务，而摩托车业务则保持了其市场领先地位。特殊险种业务中优质客户的集中度使得在偶发损失发生时照顾好这些客户尤为重要，而 2017 年的灾害季节为我们提供了充分展示理赔服务的机会。这些天气相关损失在 2017 年对我们的特殊险种利润率造成了一定压力，但我们已做出回应并相应调整了费率。在 2017 年结束之际，我们对 2018 年在盈利和增长方面的定位充满信心。

The special lines markets are an important element of our Destination Era strategy, and during the year we continued to invest to maintain our leadership position through deployment of our new product version and our policy issuance and maintenance system, integration of the special lines products into our upcoming Integrated Agency Quoting (IAQ) system, and transitioning management and expansion of our manufactured home product to our Property business.

特殊险种市场是我们“目标时代”战略的重要组成部分。今年，我们继续通过部署新版本产品和保单签发及维护系统，将特殊险种产品整合到即将推出的综合代理报价（IAQ）系统中，并将活动房屋产品的管理和扩展转移至我们的财产业务，以保持我们的领先地位。

Direct premiums written (DPW) in our Property business grew 15% to $1.35 billion. This total includes around $100 million in flood premium, which is 100% ceded to the national flood insurance program. DPW in our home, condo, renters, and dwelling fire insurance products increased 21% to $1.24 billion. New Property applications increased 48%, with policies in force at year end at almost 1.5 million. The Property business unit's CR was 105.1, which included about 6.7 points of amortization expenses predominately associated with the acquisition of a controlling interest in ARX.

我们财产保险业务的直接承保保费（DPW）增长了 15%，达到 13.5 亿美元。其中包括约 1 亿美元的洪水保险保费，这部分保费 100%再保险给了国家洪水保险计划。我们的房屋、公寓、租客和住宅火灾保险产品的 DPW 增长了 21%，达到 12.4 亿美元。新的财产保险申请增加了 48%，年末有效保单数量接近 150 万份。财产保险业务部门的综合赔付率（CR）为 105.1，其中包括约 6.7 个百分点的摊销费用，这些费用主要与收购 ARX 控股权益相关。

Storm activity was well above previous years in 2017. In our auto programs, we price for storm losses using a “load” based on average storm losses over a reasonable trailing-year period, generally in the 5- to 10-year range. Storm losses in 2017 exceeded that load substantially. We have already adjusted pricing to address half that gap and plan to take further actions to ensure price adequacy as warranted.

2017 年的风暴活动远超往年。在我们的汽车保险项目中，我们根据合理的过往年份（通常为 5 至 10 年）的平均风暴损失，采用“附加费”方式对风暴损失进行定价。2017 年的风暴损失大幅超过了这一附加费。我们已调整定价以弥补一半的差距，并计划根据需要采取进一步措施，以确保价格的充分性。

In our Property business, we employ both occurrence-based and aggregate-based reinsurance. Hurricane Irma was a large event for ASI with more than 28,000 claims reported. Irma losses in excess of $50 million were ceded to reinsurers; therefore, Irma contributed only 5.1 points to the 2017 Property combined ratio. Losses from Hurricane Harvey were under our reinsurance threshold and contributed 1.7 points to the Property results. In addition to the hurricanes, 2017 was a very active year for severe thunderstorms, which include hail storms, with industry catastrophe losses from severe thunderstorms more than 60% above the 20-year average. Losses from severe thunderstorms had a far bigger impact on our Property results in 2017 than named storms and added 25.6 points to the Property combined ratio for the year, which is net of the $5 million recoverable we had under our aggregate stop-loss reinsurance agreement.

在我们的财产保险业务中，我们同时采用基于事故和基于总额的再保险安排。飓风厄玛对 ASI 来说是一次重大事件，报告的索赔超过 28,000 起。超过 5,000 万美元的厄玛损失已转移给再保险公司；因此，厄玛仅使 2017 年财产保险综合赔付率增加了 5.1 个百分点。飓风哈维造成的损失低于我们的再保险门槛，对财产保险业绩的影响为 1.7 个百分点。除了飓风之外，2017 年也是雷暴（包括冰雹风暴）非常活跃的一年，全行业因严重雷暴造成的灾害损失比过去 20 年的平均水平高出 60%以上。严重雷暴造成的损失对我们 2017 年财产保险业绩的影响远大于已命名的风暴，使全年财产保险综合赔付率增加了 25.6 个百分点，这一数字已扣除我们根据总额止损再保险协议可收回的 500 万美元。

While recent storm activity may modestly raise pricing levels in the reinsurance market, we plan to continue to employ a robust reinsurance program for our Property business and we plan to remain diligent in ensuring the costs of this program are expeditiously reflected in our pricing. We plan to also remain diligent in employing an adequate load component for storm losses in our vehicle businesses. These tactics help to ensure that we hit our 96 combined ratio target and produce attractive returns on our capital, and that we do so with modest variation across the year.

尽管近期的风暴活动可能会适度提高再保险市场的价格水平，但我们计划继续为我们的财产业务实施稳健的再保险计划，并将继续谨慎地确保该计划的成本迅速反映在我们的定价中。我们还计划继续谨慎地在车辆业务中采用足够的风暴损失成本负担。这些策略有助于确保我们实现 96%的综合比率目标，并为我们的资本带来可观的回报，同时全年波动保持在较低水平。

Our Commercial Lines profitability and growth continued to outperform the industry and we finished the year writing over $3 billion in NPW. We continue to closely monitor and react to rate need, especially in states and business tiers where we are running close to or above our target profit margins.

我们的商业险业务在盈利能力和增长方面继续优于行业水平，全年净保费收入超过 30 亿美元。我们将继续密切关注费率需求并及时作出反应，尤其是在那些接近或超过我们目标利润率的州和业务层级。

We are acutely aware that this market is very volatile and it can be a challenge to profitable growth. We feel great about our ability to deliver nonetheless. As we expand our transportation network company business and build knowledge in this growing area, we plan to manage our policy portfolio risk and grow at a level that doesn’t outstrip our claims or customer service capabilities or our ability to understand any mix changes in business we are writing.

我们清楚地意识到，这个市场波动性很大，要实现盈利增长可能会面临挑战。但我们对自身的交付能力仍充满信心。随着我们扩大运输网络公司业务并在这一增长领域积累经验，我们计划管理好保单组合风险，以适当的速度增长，确保不会超出我们的理赔或客户服务能力，也不会超出我们对所承保业务组合变化的理解能力。

Throughout the past several years, we have clearly outlined our approach of how we will accomplish becoming a destination for our insureds and we are quite satisfied with our results. Having ASI (which will be transitioned to the Progressive brand over the next few years) as our exclusive homeowners carrier in our agency channel, and one of a strong stable of carriers in our direct channel, has been a key part of attracting customers who prefer their needs be met by the same company.

在过去几年中，我们已清晰地阐明了实现成为客户首选公司的方法，并对我们的成果感到非常满意。拥有 ASI（未来几年内将逐步过渡到 Progressive 品牌）作为我们代理渠道的独家房主保险承保商，以及作为直销渠道中众多强大稳定的承保商之一，是吸引那些希望由同一家公司满足其需求的客户的重要因素。

We are relishing in the momentum of our growth in our auto/home bundled customers we refer to as Robinsons in both channels. During 2017, we grew Robinsons policies in force more than twice as fast as our other consumer segments creating over 45% more bundles in 2017 than in 2016.

我们对汽车/家庭捆绑客户（我们在两个渠道中称之为 Robinsons）的增长势头感到欣喜。在 2017 年，我们 Robinsons 的有效保单增长速度是其他消费者群体的两倍以上，2017 年创建的捆绑套餐数量比 2016 年增加了超过 45%。

The Progressive Advantage Agency’s (our direct in-house agency) focus was to continue to design sales experiences and build operations that support the graduation to Robinsons. We grew staff in the agency by 80% to support our growth both on the phones and online. The growth in staff was a blend of internal and external talent as we attracted skill sets from the financial and insurance sectors, many with property experience. Robinsons policies in force growth via the Progressive Advantage Agency was just over 80% year-over-year.

Progressive Advantage Agency（我们的直属内部代理机构）的重点是继续设计销售体验并建立运营体系，以支持向 Robinsons 的过渡。我们将代理机构的员工人数增加了 80%，以支持电话和在线渠道的增长。员工增长结合了内部和外部人才，我们从金融和保险领域吸引了许多具备财产险经验的人才。通过 Progressive Advantage Agency 实现的 Robinsons 有效保单数量同比增长略高于 80%。

We recently received this compliment from a customer who we would classify as a Diane (think renter who is saving for life events) who graduated to a Robinson. Although this is only a sample from one customer, we are enjoying our journey of being the company where customers can have nearly all of their insurance needs met.

我们最近收到了一位客户的赞扬，这位客户原本属于我们称为“Diane”（租房者，为人生大事储蓄）的群体，现已升级为“Robinson”。尽管这只是来自一位客户的个例，但我们很高兴能够成为一家几乎满足客户所有保险需求的公司，并享受这一过程。

I have been with Progressive since 2011 and I just wanted to praise you all. A couple years ago I added my girlfriend (now wife) Jenna to my policy so we could save money. I bought a house last year and signed up with Progressive for home insurance and saved more money. We just had our wedding and changed her to my spouse and saved more money again. We bought a car 2 weeks ago and it only increased our insurance by $13/month. I never go out of my way to praise a company but I've been so pleased with Progressive over the years I just wanted to say.... thank you. Thank you for being there.

我从 2011 年起就一直使用 Progressive，我只想赞扬你们所有人。几年前，我将我的女朋友（现在的妻子）Jenna 加入了我的保单，这样我们可以省钱。去年我买了一栋房子，并在 Progressive 购买了房屋保险，又节省了一笔钱。我们刚刚举行了婚礼，将她的身份改为我的配偶，再次节省了更多的钱。两周前我们买了一辆车，保险费用每月只增加了 13 美元。我从未特意去称赞过一家公司，但这些年来我对 Progressive 非常满意，我只想说……谢谢你们。谢谢你们一直陪伴着我们。

Not only do our customers transition over time, but so does our management team. In January 2018, John Auer, President and CEO of ARX Holding Corp., announced his retirement, effective April of 2018. At that time, he will become the Chairman of ARX. The Progressive and ARX integration has gone very smoothly largely due to John’s leadership, vision, and values. Dave Pratt, a long-time Progressive leader, will take over the reins at ARX with the predominance of John Auer’s team reporting directly to him. Dave has been at Progressive for 27 years leading a variety of roles including Auto General Manager, Chief Marketing Officer, and most recently Usage-Based Insurance leader.

我们的客户不仅会随着时间而变化，我们的管理团队也是如此。2018 年 1 月，ARX Holding Corp.的总裁兼首席执行官 John Auer 宣布将于 2018 年 4 月退休。届时，他将担任 ARX 董事长。Progressive 与 ARX 的整合进展非常顺利，这在很大程度上归功于 John 的领导力、远见和价值观。Progressive 的资深领导 Dave Pratt 将接任 ARX 的领导职务，John Auer 团队的大部分成员将直接向他汇报。Dave 已在 Progressive 工作 27 年，曾担任多个职位，包括汽车业务总经理、首席营销官，以及最近的基于使用量保险业务负责人。

We are also transitioning some of our claims processing. The Service Center has been part of our claims operating model for almost two decades. Over that time, we have evolved the model to reflect both internal claims process and external environmental changes. As we accelerate into our next claims operating model, we believe that moving away from our Service Center communities to a Network Shop operation will benefit all of our key constituents. Our customers, based on us strengthening our relationships with our network shops, now rate the Network Shop experience as high as our Service Center experience. Allowing our customers to drop off and pick up their vehicles at a shop that is likely closer to their home or work will improve their overall experience. For our employees, moving to a Network operation will provide more certainty around start and finish times, as well as provide multiple career opportunities for future growth as our photo estimating volume increases. Finally, for our shareholders, this evolution of our model is expected to improve our operating efficiency without any loss to claims accuracy or customer service.

我们也正在对部分理赔处理流程进行转型。服务中心作为我们理赔运营模式的一部分已有近二十年历史。在此期间，我们不断调整该模式，以适应内部理赔流程和外部环境的变化。随着我们加速迈向下一代理赔运营模式，我们相信，从服务中心社区转向网络维修店运营模式将使我们所有的主要利益相关方受益。通过加强与网络维修店的关系，我们的客户现在对网络维修店的体验评价已与服务中心体验同样高。允许客户在离家或工作地点更近的维修店交接车辆，将改善他们的整体体验。对我们的员工而言，转向网络运营模式将使工作开始和结束时间更加明确，并随着照片估损业务量的增加，为未来职业发展提供更多机会。最后，对于我们的股东而言，这种模式的演变预计将在不影响理赔准确性或客户服务的前提下，提高我们的运营效率。

The biggest development in our Snapshot® program during 2017 was our completion of the rollout of the Snapshot mobile app that we introduced in late 2016. The app provides consumers with an alternative to the hardware-based method of collecting data for the program, simplifying the experience for consumers and lowering Progressive's costs. The Snapshot mobile app is now available to Direct and Agency consumers in 42 states and the District of Columbia. Results to date have been encouraging, with the availability of the mobile app increasing the number of customers choosing to enroll in Snapshot and nearly half of those enrolling selecting the mobile app when it's available. Even though much of the deployment happened in the latter half of 2017 and volume continues to ramp up, we've already collected over 33 million trips and 300 million miles driven via the mobile app.

2017 年，我们 Snapshot®计划的最大进展是完成了 2016 年底推出的 Snapshot 移动应用程序的全面推广。该应用程序为消费者提供了一种替代硬件设备的数据收集方式，简化了消费者的使用体验，并降低了 Progressive 的成本。目前，Snapshot 移动应用程序已面向 42 个州和哥伦比亚特区的直销和代理渠道消费者开放。迄今为止的结果令人鼓舞，移动应用程序的推出增加了选择加入 Snapshot 计划的客户数量，在可用时，近一半注册用户选择了移动应用程序。尽管大部分部署是在 2017 年下半年进行的，且使用量仍在持续增长，但我们已通过移动应用程序收集了超过 3300 万次行程和 3 亿英里的驾驶数据。

Strategic Pillars

战略支柱

Our Strategy focuses on our unique culture, well-known brand, competitive pricing, and our ability to meet the broader needs of our customers throughout their lives. We think about this when we design our products, services, and marketing messages.

我们的战略专注于我们独特的企业文化、知名品牌、具有竞争力的定价，以及满足客户在人生各阶段更广泛需求的能力。我们在设计产品、服务和营销信息时都会考虑到这一点。

Culture: With the amount of hiring we have completed in the past few years and more on the way, we thought it was time to showcase our company and culture and to show job seekers who we are and ask them in a creative way to “Rethink Progressive.” Our culture is something that most people, even after a few weeks of being employed here, say they did not expect, so the campaign is aptly named “Unexpectedly Progressive.” It is designed to address the common misconceptions of insurance but, more specifically, Progressive insurance. It highlights our legacy of blending technology, art, and science with our unique culture, and it appeals to people looking for an exciting career in technology or quantitative analytics.

文化：鉴于过去几年我们已完成大量招聘，且未来还将继续增加，我们认为现在是时候展示我们的公司及其文化，以富有创意的方式向求职者展示我们是谁，并邀请他们“重新认识 Progressive”。我们的文化是大多数人即使在这里工作几周后也会感到意外的，因此该活动被恰当地命名为“出乎意料的 Progressive”。它旨在消除人们对保险行业，尤其是对 Progressive 保险的常见误解，突出我们将技术、艺术和科学与独特文化相融合的传统，并吸引那些寻求在技术或定量分析领域拥有精彩职业生涯的人才。

Brand: Celebrating 10 years, Flo and the Superstore continue to be our high-performing, value-driving campaign. This anchor program, within our broader content network strategy, grew this year with the introduction of fresh story arcs and the addition of a new cast of characters. We also expanded message mix beyond price to include protection and problem-resolution propositions to broaden brand appeal.

品牌：Flo 和 Superstore 活动迎来十周年庆典，继续成为我们表现出色、推动价值的营销活动。这一核心项目属于我们更广泛的内容网络战略，今年通过引入全新故事情节和增加新角色阵容而进一步发展。我们还将信息组合从单纯的价格扩展到包括保护和问题解决方案，以扩大品牌吸引力。

Even with an extremely successful Superstore campaign, we continue to diversify our creative content. Growing our focus on young homeowners, we launched a second round of “Parentamorphosis” (how you become your parents when you buy your first home) creative this year, which continues to be a top performer across both mass media and digital channels.

尽管超级商店活动取得了巨大成功，我们仍继续丰富创意内容。随着对年轻房主群体关注度的提升，我们今年推出了第二轮“父母化”（即首次购房后逐渐变得像自己父母一样）的创意活动，该活动在大众媒体和数字渠道中持续表现优异。

The success of our homeowner/bundle messaging continued into 2017. Good progress, that we believe will only accelerate, as we continue the balance of work in a market designed to support both our growing customer base and our customers' desire to stay and grow with us.

我们针对房主/捆绑销售的信息传递在 2017 年继续取得成功。随着我们继续在市场中平衡工作，以支持不断增长的客户群以及客户希望与我们保持并共同成长的意愿，我们相信这一良好的进展只会进一步加速。

When we dissect the performance of our ads in 2017, home messaging continues to outperform the other categories in driving new quotes for both auto and home. What’s most exciting is our diversity of messaging and subsequent success. We had four different campaigns and messages with all four showing success in both home and auto, which confirms that our messages and creative are resonating with consumers. Given the success of these messages, comparing 2017 to 2015 (if you recall we pulled back on advertising slightly in 2016), we are more than doubling our impressions against the homeowner/bundle category. Our increased focus on premium programming has helped us to get these messages out to more potential Progressive Robinsons at costs that still allow us to deliver on our target economics.

当我们分析 2017 年广告表现时，家庭相关的信息在推动汽车和房屋新报价方面继续优于其他类别。最令人兴奋的是我们信息的多样性及随之而来的成功。我们推出了四个不同的广告活动和信息，这四个活动在房屋和汽车领域均取得了成功，这证实了我们的信息和创意与消费者产生了共鸣。鉴于这些信息的成功，与 2015 年相比（如果您还记得，我们在 2016 年略微减少了广告投放），我们在房主/捆绑销售类别的广告曝光量增加了一倍以上。我们对高端节目的更多关注帮助我们以符合目标经济效益的成本，将这些信息传递给更多潜在的 Progressive Robinson 客户。

From a volume perspective, we had a very strong year in Direct auto. We entered our fifth consecutive year of new quote growth. Sales have been even stronger. We had 16% growth in new applications in 2017, which was also our fifth consecutive year of new application growth. We have strung together four years of new app growth a couple times since 2002, but this is the first time we have had five years. The five-year compounded average growth rate is 11%. Given our strong position in the market and increase in media spend, I expect us to deliver a sixth consecutive year of growth for both new quotes and applications.

从业务量的角度来看，我们在直销汽车保险领域度过了非常强劲的一年。我们的新报价量连续第五年实现增长，销售表现更为突出。2017 年，我们的新申请量增长了 16%，这也是我们连续第五年实现新申请量增长。自 2002 年以来，我们曾数次连续四年实现新申请量增长，但这是我们首次连续五年实现增长。五年复合年均增长率为 11%。鉴于我们在市场上的强劲地位以及媒体投入的增加，我预计我们将在新报价和新申请量方面连续第六年实现增长。

Competitive Prices: Our focus here has always been on efficiency, claims accuracy, and segmentation. Of recent times, we have spoken more about segmentation and accuracy, which we believe are strengths of ours, so for this communication I’d like to comment more on the importance of efficiency.

有竞争力的价格：我们在这方面一直专注于效率、理赔准确性和细分市场。最近，我们更多地谈到了细分市场和准确性，我们认为这些是我们的优势，因此在本次沟通中，我想更多地谈谈效率的重要性。

We know that price matters and the companies that will win, in the long-run, are the ones that have a competitive cost structure, and much of that comes from operational efficiency defined as both our general expense ratio plus loss adjustment expenses (LAE).

我们知道价格至关重要，从长远来看，能够胜出的公司是那些拥有竞争性成本结构的公司，而这在很大程度上取决于运营效率，即我们的综合费用率加上理赔费用（LAE）。

Our expense ratio for our Personal Lines business is now consistently below 20 points, which, while not the lowest in the industry by design, is quite competitive. Personal auto represents around 90% of that business and, for personal auto, advertising and agent commissions (acquisition costs) make up more than half of our expense ratio. We are happy to spend more on acquisition costs as long as we grow commensurately. We believe that driving non-acquisition expenses down, while maintaining high service levels, is a strong path to competitive prices. We have taken out more than half a point of non-acquisition expenses over the course of the last three years and are focused on continuing to reduce these expenses.

我们个人业务的费用率现已稳定低于 20 个百分点，虽然按设计并非行业最低，但仍极具竞争力。个人汽车保险约占该业务的 90%，而在个人汽车保险中，广告和代理佣金（获客成本）占我们费用率的一半以上。只要增长相应匹配，我们乐于在获客成本上投入更多。我们相信，在保持高服务水平的同时降低非获客成本，是实现价格竞争力的重要途径。在过去三年中，我们已将非获客成本降低了超过 0.5 个百分点，并将继续致力于进一步降低这些费用。

We continue to work on initiatives to reduce adjusting costs per claim and the resulting paid LAE ratio. Our objective has always been to focus on total costs of indemnity plus LAE, so any efficiency improvements we may make relative to claims adjusting must be evaluated against potential changes in indemnity accuracy.

我们继续致力于采取措施降低每项索赔的理赔费用及由此产生的已付理赔费用比率。我们的目标始终是关注赔偿金与理赔费用的总成本，因此，我们在理赔调整方面所做的任何效率提升，都必须与赔偿准确性可能发生的变化进行权衡评估。

Our strategic claims agenda has long focused on what we refer to as our Guiding Principles of Accuracy, Efficiency, Customer Service, and Work Environment. We consider all critical to our claims organization, and measure the effect of any change to claims operations across all four. New initiatives may not move every Guiding Principle in a favorable direction; however, appropriately assessing the trade-offs allows the claims organization to make the most effective process improvement investments. As an example, hiring the amount of people that we have in advance of need put pressure on the LAE side, but we believe it has had favorable results on our Accuracy, Customer Service, and Work Environment. We’d take that trade-off every day.

长期以来，我们的战略理赔议程一直专注于我们所称的准确性、效率、客户服务和工作环境这四项指导原则。我们认为这些原则对我们的理赔组织至关重要，并在所有四个方面衡量任何理赔运营变化的影响。新的举措可能不会使每一项指导原则都朝着有利的方向发展；然而，适当地评估权衡取舍，使理赔组织能够进行最有效的流程改进投资。例如，我们提前招聘了大量人员，这给理赔费用（LAE）方面带来了压力，但我们相信这对我们的准确性、客户服务和工作环境产生了积极的效果。我们愿意每天都接受这样的权衡。

That said, we’re excited about the investments that we made in 2017 in claims technology and process improvements and expect to see the positive results of those on the efficiency side in the coming years.

尽管如此，我们对 2017 年在理赔技术和流程改进方面所做的投资感到兴奋，并期待在未来几年看到这些投资在效率方面带来的积极成果。

Meeting the broader needs of our customers: In July, we announced a new online platform called HomeQuote Explorer® (HQX). HQX allows homeowners to quickly and easily compare home insurance quotes from multiple carriers to find the best option to protect their homes. We leveraged the formula that we used two decades ago when we put the power of comparison shopping in the hands of auto insurance customers.

满足客户更广泛的需求：7 月，我们推出了一个名为 HomeQuote Explorer®（HQX）的全新在线平台。HQX 使房主能够快速、便捷地比较多家保险公司的房屋保险报价，以找到保护其房屋的最佳选择。我们借鉴了二十年前的成功模式，当时我们将比价购物的主动权交到了汽车保险客户手中。

HQX helped drive online home and condo new application growth of 49%. We have enhanced the experience in HQX and with it sales yield has improved over 50% since we initially rolled out the platform.

HQX 推动了在线房屋和公寓新申请量增长 49%。我们提升了 HQX 的用户体验，自平台首次推出以来，其销售转化率提高了 50%以上。

We made significant investments to make the system simple for customers by pulling in publicly available information on a property to save the homeowner time, and providing an easy-to-use series of prompts to help the user enter other required information.

我们进行了大量投资，通过获取房产的公开信息来节省房主的时间，并提供一系列易于使用的提示，帮助用户输入其他所需信息，从而使系统对客户更加简单易用。

For the last 10 years, Flo has represented the nearly 34,000 employees who serve our customers each and every day. In 2017, we were able to bring all Flo represents in broadcast into the digital world and continue our long legacy of innovation by being the first top 10 U.S. insurance company to allow users to start an auto quote via a Flo Chatbot experience in Facebook Messenger. We look forward to expanding that functionality and foundation in 2018 as we strive to provide easy and innovative experiences for current and prospective customers.

在过去的 10 年里，Flo 代表着我们近 34,000 名员工，他们每天都在为客户服务。2017 年，我们成功地将 Flo 在广播中所代表的一切带入数字世界，并延续了我们长期以来的创新传统，成为首家允许用户通过 Facebook Messenger 中的 Flo 聊天机器人开始汽车报价的美国十大保险公司之一。我们期待在 2018 年进一步扩展这一功能和基础，努力为现有和潜在客户提供便捷且创新的体验。

What’s on the Horizon(s)

未来展望

Previously during an investor webcast, I shared some detail into our growth horizons and how we think about growing the current business, mid-term opportunities, and long-term investments. The main essence of this construct is that we must invest in all three horizons to be an enduring company. We accept that challenge with excitement and eagerness as we seek to be the company with the mantra of “always grow” philosophy. That way of thinking has been an unremitting part of who we are at Progressive.

此前在一次投资者网络直播中，我分享了关于我们增长视野的一些细节，以及我们如何看待当前业务增长、中期机遇和长期投资。这一架构的核心在于，我们必须在这三个视野中同时进行投资，才能成为一家持久发展的公司。我们怀着兴奋和热情接受这一挑战，致力于成为一家秉持“持续增长”理念的公司。这种思维方式一直是 Progressive 公司不可或缺的一部分。

As we contemplate the future, knowing that there will be considerable changes to our industry and other industries adjacent to ours, we must think about both expanding our addressable market by leveraging our strengths, but also by exploring new horizons that we haven’t considered in the past.

当我们展望未来，意识到我们的行业及相关行业将发生重大变化时，我们必须考虑通过发挥自身优势来扩大可触及的市场，同时探索过去未曾考虑过的新领域。

With that, and to formalize work being done in several areas within the company, we have assembled an internal Strategy Council. The council will work side-by-side with me and John Sauerland, our CFO, to assess the changing landscape. We have invested, and will continue to invest, in whatever we think it will take to ensure we have the opportunity to grow profitably for many decades to come. Much more to come on this in the next several years.

为此，并为了规范公司内部多个领域正在开展的工作，我们成立了一个内部战略委员会。该委员会将与我以及我们的首席财务官 John Sauerland 密切合作，共同评估不断变化的市场环境。我们已经并将继续进行必要的投资，以确保我们在未来几十年内拥有持续盈利增长的机会。未来几年内，我们将在这方面有更多进展。

Purpose and Pride

目标与自豪

My belief is that when you devise and then pen statements like missions and visions they should be something that the entire company can easily recall, relate to, and reflect upon as they go about their day-to-day work. My senior leadership team and I all agreed that the company’s Core Values, Vision, and Strategy met this test and have been effective in guiding the company’s performance for many years. However, we felt that something else was needed to reflect how the company has evolved in light of our Destination Era strategy. We decided that it would be valuable to create a pithy statement to reflect our purpose.

我认为，当你构思并撰写使命和愿景等声明时，这些内容应当是整个公司员工在日常工作中都能轻松记住、产生共鸣并加以反思的。我和我的高级领导团队一致认为，公司的核心价值观、愿景和战略符合这一标准，并且多年来一直有效地指导着公司的表现。然而，我们感到还需要一些其他内容，以体现公司在“目标时代”战略下的发展演变。我们决定制定一句精炼的表述，以体现我们的宗旨。

We generated several statements through a series of focus groups and ultimately came up with two that we thought reflected why we are here. We asked every Progressive and ASI employee to vote and, although it was very close, the winner was “True to our name. Progressive.” Many employees have told me that they felt that statement was the best choice because it accurately reflects what our name stands for - forward motion, accelerated movement toward a destination, and striving to do things better.

我们通过一系列焦点小组讨论制定了几条表述，最终选出了两条我们认为能够体现我们存在意义的陈述。我们请每一位 Progressive 和 ASI 员工进行投票，尽管票数非常接近，最终胜出的是“忠于我们的名字。Progressive。”许多员工告诉我，他们认为这一表述是最佳选择，因为它准确体现了我们名字所代表的含义——前进、加速向目标迈进，以及努力把事情做得更好。

This year also marks the 25th anniversary of Gainshare, our annual incentive program that is available to all employees and promotes a common culture and rewards employees when annual business goals and objectives are achieved. Payouts can range from 0 to 2 times a target amount under this program. We’ve certainly come a long way from giving each employee a crisp $100 bill. I vividly recall the excitement in my small claims branch because it was the first time many of us had ever held a hundred-dollar bill. I just remember feeling grateful and proud that I worked for a company who did that sort of thing for its people. For 2017, employees received 1.79 times their target payout amount, which for our median employee equated to a payout of just over $8,100. That pride continued when we decided in 2007 to extend Gainshare to our shareholders via our annual variable dividend. Aligning the interests of the employees and shareholders, and sharing when we make gains, are essential parts of who we are as a company.

今年也是 Gainshare 计划实施 25 周年。Gainshare 是我们面向所有员工的年度激励计划，旨在促进共同的企业文化，并在实现年度业务目标时奖励员工。在该计划下，奖金支付范围为目标金额的 0 至 2 倍。从最初给每位员工发放一张崭新的 100 美元钞票，到如今，我们确实走过了很长的路。我清楚地记得当时我所在的小型理赔分支机构的兴奋之情，因为那是我们许多人第一次拿到一张 100 美元的钞票。我只记得自己感到感激和自豪，因为我为一家愿意为员工做这种事情的公司工作。2017 年，员工获得了目标奖金金额的 1.79 倍，对我们收入中位数的员工而言，这相当于略高于 8,100 美元的奖金。这种自豪感在 2007 年我们决定通过年度浮动股息将 Gainshare 计划扩展到股东时得以延续。员工与股东利益的一致性，以及在取得收益时共同分享，是我们公司文化的重要组成部分。

In November, we held our fifth annual Keys to Progress® events to publicly recognize those who have dedicated their lives to serving our country and communities. Together with many of our partners, we donated refurbished vehicles to more than 100 recipients - including our 500th car since the program’s inception in 2013. This is always a proud day at Progressive and one of the many ways we make our new purpose statement come to life.

去年 11 月，我们举办了第五届年度“进步之钥®”（Keys to Progress®）活动，公开表彰那些为国家和社区奉献一生的人士。我们与众多合作伙伴共同向 100 多位受赠者捐赠了翻新车辆，其中包括自 2013 年项目启动以来捐赠的第 500 辆车。这一天始终是 Progressive 值得骄傲的日子，也是我们践行全新宗旨声明的众多方式之一。

As we wrap up another year, I want to reiterate one additional time how honored I am to work with the almost 34,000 Progressive people who make being true to our name something that we will strive to bring to life each day.

在我们结束又一年的同时，我想再次强调，我非常荣幸能与近 34,000 名 Progressive 员工共事，他们每天都努力践行我们的名字所代表的精神。

Thank you for all that you do.

感谢您所做的一切。

/s/ Tricia Griffith

Tricia Griffith

President and Chief Executive Officer

2018-02-27 Tricia Griffith’s Letters to PGR Shareholders

2018-02-27 Tricia Griffith’s Letters to PGR Shareholders

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