Sometimes we acquire companies. So if you look at our protection plans business, it’s like 10x its size and we bought it for $1.4 billion. We look at National General, we paid $4.1 billion, I think just — and that’s like double its size. So we did haven’t done as well harvesting the value out of our identity protection business yet, but we’re confident we got the right pick there that people are at greater risk, recently figure out how to grow it faster and make more money. So we have a whole bunch of opportunities that we look at. So I don’t think you should just automatically default to something that falls into an easy analysis if you got the extra money to do share repurchases. No, we’ll think about it hard. We’ll do the right thing for shareholders, and then we’ll make sure we’re communicating with people.
Jimmy Bhullar: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Andrew Kligerman from TD Cowen.
Andrew Kligerman: Hey, good morning. Yes, it seems like your PIF growth is right around the corner of pivoting down only 1.4% year-over-year. So I’m wondering on the Allstate brand your expense ratio on advertising was 2.2%. Historically, if I look back at 2017 to ’19, it was roughly 2.5%. So is there, first question, is there much to go in terms of your ad campaigns? Or do you feel like you’re kind of at a level where you need to be?
Tom Wilson: I’ll let Mario talk about how he’s reorganizing the business and really going to market in an integrated fashion to drive growth. As it relates to advertising, we don’t like to give those numbers out just because we’ve got other people out there doing their advertising as well. What I will point out is one of the key components of transformative growth was improving our sophistication of customer acquisition. So no matter what percentage it is we want it to be more effective. But Mario, maybe you should talk about how you’re changing your go-to-market.
Mario Rizzo: Yes. Thanks for the question, Andrew. I guess where I start. First, the good news, as we pointed out, in the presentation as more and more states are achieving rate adequacy. And right now, in about 75% of the states we operate in, we’ve began to unwind underwriting restrictions. And to your point, begin investing in marketing to look to grow. The other thing we’ve done in anticipation of that opportunity, not only being there, but continuing to expand, is we’re organizing ourselves in what we call go-to-market teams that are local market focused that are really intended to drive kind of bottoms-up opportunity identification and capture again, at the local market level so that we can get the highest possible return on things like the marketing investments we’re making, the continued expansion of distribution as well as the growth opportunity that exists across channels in those states.
So we’re early days in that, but we are putting behind our organization structure to be more focused on local market growth. And you remember, we manage this business state-by-state, market-by-market. So having local market insight, intelligence and the ability to move rapidly to capture opportunities is really going to be critical. And we think that alongside the expanded investment we’re making in growth, will create significant growth opportunity for us going forward.
Tom Wilson: And we know that it works because we’ve used it for a long time. So — and we dismantled some of it about two or three years ago when we were cutting expenses that didn’t want to grow. And now that we’re back into growth mode, we’re just expanding what we know works.
Andrew Kligerman: That’s very helpful. And then the second question with regard to National General, just trying to get my arms around how much growth potential there. How much of the book right now is non-standard versus the Customs 360s. Is the Custom 360 relatively very small. And are those the right agents to generate big time growth on the more traditional or more standard products?
Tom Wilson: Well, we wouldn’t give out that percentage in each, but you’re correct. And then it’s — when we bought National General, it was mostly a non-standard company. And we bought it for the strategic opportunity to leverage our capabilities in lets called preferred auto and home insurance and that’s turning out to be true. Mario, maybe you want to talk about the success you’re having with Custom 360.
Mario Rizzo: Yes. So Andrew, I guess the place I’d start is, first of all, we’re really happy with the acquisition of National General. As Tom mentioned, we’ve effectively doubled the size of our independent agent business since we bought it in early 2021. And there’s really three pieces to the business. There’s the nonstandard auto piece, which is the by far the biggest component. And then there’s what we call the legacy household business, which is think about our Encompass business that we integrated into it along with the legacy National General Standard Auto, Preferred and home business. And then there’s Custom 360. And Custom 360 is the new product offering. We’re in about 17 states currently with the intent to expand pretty much into every state by the end of this year or into 2025.
And we think that really represents an additive growth opportunity. The product offering itself is built on the Allstate product chassis. So think about the sophisticated rating plans that we have in standard and preferred auto in Allstate, the host and home product that we have in Allstate. So those are the products that we’re launching in the independent agent channel. And really, to your point, there’s a different distribution, a different segment of the independent agent distribution system that we’re looking to engage with to really grow that product portfolio. We’re early stages. As I said, we’re in 17 states. We’re really encouraged by the early growth that we’re seeing in the states that we’ve rolled out and more importantly, the agency engagement we’re seeing on the IA side.
We’re going to continue to look to expand on that and leverage that going forward, but we’re really optimistic around Custom 360 and the opportunity beyond non-standard auto and the IA channel.
Andrew Kligerman: Thanks a lot.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Gregory Peters from Raymond James. Your question please.
Greg Peters: Well, good morning everyone. So for the first question, I’d like to just have you comment on both frequency and severity, frequency trends through the first quarter and sort of how you’re thinking about severity for 2024, both inside the Allstate brand and also at NatGen.
