Continue to Objectives and Policies. Note: External data is not available to enable us to report under our current allocation strategy. For , Group I included common equities, all preferred stocks, and below investment-grade fixed-maturity securities, while Group II included short-term securities and all other fixed-maturity securities. The industry underwriting margin excludes the effect of policyholder dividends.
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Final comparable industry data for underwriting margins and net premiums written will not be available until our third quarter report. The 5- and year growth rates are presented on a one-year lag basis for the industry. Our business is a composite of many product offerings defined in part by product type, distribution channel, geography, customer tenure, and underwriting grouping. Each of these products has targeted operating parameters based on level of maturity, underlying cost structures, customer mix, and policy life expectancy.
Our aggregate goal is the balanced blend of these individual performance targets in any calendar year. Growth Our goal is to grow as fast as possible, constrained only by our profitability objective and our ability to provide high-quality customer service.
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Progressive is a growth-oriented company and management incentives are tied to profitable growth. We report Personal Lines and Commercial Auto results separately. Aggregate expense ratios and aggregate growth rates disguise the true nature and performance of each business.
Progressive balances operating risk with risk of investing and financing activities in order to have sufficient capital to support all the insurance we can profitably underwrite and service. Risks arise in all operational and functional areas, and therefore must be assessed holistically, accounting for the offsetting and compounding effects of the separate sources of risk within Progressive. We use risk management tools to quantify the amount of capital needed, in addition to surplus, to absorb consequences of events such as unfavorable loss reserve development, litigation, weather-related catastrophes, and investment-market corrections.
Our financial policies define our allocation of risk and we measure our performance against them. If, in our view, future opportunities meet our financial objectives and policies, we will invest capital in expanding business operations. Underleveraged capital will be returned to investors. We expect to earn a return on equity greater than its cost. We are convinced that the best way to maximize shareholder value is to achieve these financial objectives and policies consistently.
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In the ten years since December 31, , Progressive shareholders have realized compounded annual returns, including dividend reinvestment, of 6. In , the returns were 0. Over the years, when we have had adequate capital and believed it to be appropriate, we have repurchased our shares. In addition, as our Financial Policies state, we will repurchase shares to neutralize the dilution from equity-based compensation programs and return any underleveraged capital to investors. During , we repurchased 51,, common shares.
Final comparable industry data for will not be available until our third quarter report. Continue to Operations Summary. Personal Lines Our focus on growing our policyholder base is now consistently resulting in more customers and more revenues. Industry loss costs have been rising as have industry loss ratios. Agents continue to have an abundance of carriers eager to serve them in most markets.
The new business climate was tougher in than , when we had more shoppers than ever before. Conversion of shoppers was up slightly from and the fourth quarter was more positive than the rest of the year in terms of year-over-year shopping trends and new business applications.
Profitability was better than our targets, driven in part by favorable loss development, which assisted our Our profitability was fairly consistent across products, geography, and distribution channels and we are now eager to grow in virtually all areas. This is a great statement about our field product managers, who fully own profit and growth locally and take swift action when either of those parameters is not meeting our expectations. Progress in Florida and New York, where personal injury protection is a significant exposure, has been encouraging with both states improving profitability and growing while doing so.
That said, these are highly dynamic environments so we remain vigilant in both states. Also encouraging was the fact that our calendar results for Massachusetts showed us close to operating profitability and structurally in a place from which to grow. Our cost structure continues to be very competitive and we lowered what we refer to as our non-acquisition expense ratio. We think of costs other than commission and advertising as structural and reducing these will facilitate more competitive pricing and more growth going forward. Policyholder retention results for the year were mixed.
We believe we have actions underway that have, or will soon have, addressed both of these opportunities in our Direct auto business. We have the luxury of distributing our products direct to consumers and through over 35, agents and brokers. The competition in mass-marketing personal lines insurance continues to escalate with advertising spend in our category now likely 5 times what is was 10 years ago. We continue to grow our own advertising expenditure and do so with prudence around achieving an appropriate yield.
The media consumption of households continues to shift to digital and increasingly mobile, and our media placements reflect those trends. The ongoing trend is the shift to the use of comparative rating systems whereby agents can easily see the most competitive price amongst carriers for specific customers. This is very encouraging as this class of business is by far the largest available to us via our current distribution methods. We always remain diligent around rating segmentation and was no exception. Within our auto products, we added rating on occupation in 12 states, improved rating on household structure, further refined segmentation of non-indemnity costs, and began to get more facile in up-front underwriting.
Our normal course and aspiration is to accept and price all risks. We think this focus allows for substantially more competitive pricing, especially in urban environments.
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In our special lines programs, we continued the roll out of rating based on operator experience and length of ownership, and we introduced optional declining deductibles in motorcycle. Close to half of U.
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Almost 20, of our agents are now trained and certified to sell Snapshot and up-take amongst agents continues to grow as well. We are now quite efficient in the mechanics of the Snapshot experience and we are getting some benefits of scale. At the aggregate level, we also closely manage Snapshot profitability via the distribution of discounts awarded based on driving performance. Suffice it to say, we think our leadership with usage-based rating in the minds of consumers and in our operational abilities grew materially in The digital world continues to expand and we are working hard to ensure our consumer and agent-facing technology keeps pace with developments and adoption.
This applies to personal accomplishments too—instead of just stating you ran a marathon, discuss the self-discipline needed to train for the event! Displaying your portfolio in multiple formats makes it easier for potential employers to spend more time examining your work.
These activities will arm you with intelligent questions to ask, which impresses hiring managers. More and more, I hear of senior executives having informational interviews with aspiring engineers. Could you live in a house for 30 years and not maintain it?
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Of course not. The foundation would start to crumble, literally. Well, the same is true of your career. As an engineer, you constantly have to build new skills.
Look for short-term jobs, freelance assignments, or personal side projects to gain experience. Despite the recession, Sony had its most profitable year that year. Working together is success. But first you need to take the time to measure employee engagement. How do you do this? First and foremost, you must be open to observing and listening without getting defensive. Zappos conducts two sets of interviews, one with the hiring manager who focuses on resume and ability, and one with the HR team which evaluates whether the candidate fits in with their culture.
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Chipotle uses a list of thirteen characteristics that every new hire must possess. They also started a restaurateur program for its employees, allowing hourly crew members to become managers. Successful companies like The Walt Disney Company have strong values that are so essential to their way of life that the company name and company culture are practically the same thing. Disney requires specific work experience for landing a dream job with them: childhood dreams.
Southwest Airlines , a service leader, zeros in on behavior, not just the resume; when they fly candidates in for an interview, gate and flight crew report back on their attitude and how they behaved.