It’s just this blip in here where everyone is raising prices a lot, including us, as Mario pointed out, in auto alone, it was 16% in each of the last two years. Homeowners is not — it’s slightly lower, but also has the same trends to it. So — we feel confident that the product offering we have, the technology we have, the agents we have, the broad set of distribution that will enable us to grow price is clearly an important part of that. And we’re focused on making sure we’re competitive, but we’re not going to not take rate so that we can grow. One of our big competitors, State Farm’s picked up almost a couple of points of market share over the last couple of years because we chose to run fairly large underwriting losses that won’t be us.
Bob Jian Huang: Okay. That’s very helpful. But just curious, are there any other relatively large states outside of New York, New Jersey, California, where you still need rate at this point in time?
Tom Wilson: No. Like if you go back to Page 6 that you mentioned that the top bar on the right, the 26%, the vast majority of that is those three states: California, New York and New Jersey. And then the — both the light blue and the dark blue, when you kind of add those together, and we talked about unwinding underwriting restrictions in about 3/4 of the states. Again, we base those decisions on rate adequacy versus kind of a backward-looking combined ratio. And we feel good about where we’re positioned, the growth opportunity. And as we said a couple of times, we’re going to stay on top of the loss trend in those states. But the states that are in that top section are the ones that we’re going to continue to push incremental rate through because we’re not at target margins yet.
Bob Jian Huang: All right. Excellent. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Elyse Greenspan from Wells Fargo. Your question please.
Elyse Greenspan: Hi, thanks. Good morning. My first question is on the auto. I guess it’s more on the underlying loss ratio. I thought in the past, right, the first quarter would seasonally be a better quarter for just an auto book in general, but understanding rate increases that can earn in can kind of mask that as we go through the year. And then I’m also not sure if there was maybe some favorable non-cat weather in the Q1 numbers. So just can you give us a sense of the cadence would you expect on the underlying loss ratio within auto to improve as we go through the year given the rate to earn in? Or is there some seasonality or other factors that we need to consider?
Jess Merten: Let me start, and Mario, you can jump in. First, you’re correct in that first quarter is usually a better quarter in combined ratio in auto insurance than like the summer months when everybody is driving. To be able to do attribution of this current quarter versus other quarters and weather and how much — what the sustainable [indiscernible] is really difficult to get it with any sort of precision. It’s not that we don’t try and we look at it when we come up with numbers, but they’re not numbers that I would say would be for public consumption. What I would say is we feel really good about the trend in auto insurance profitability. As you point out, we got a lot more rates still coming through. We’ve gotten good control over our expenses.
We’re working hard on claims to try to deal with a high inflationary environment. Make, sure we keep costs down and not just accept that they have to go up at high single digits. So we feel really good about the trend, at least I don’t know that I feel like one quarter makes a trend in that, I would say, this first quarter x percent was due to just some of all. Mario, anything you would add to that?
Mario Rizzo: Yes. I think, Elyse, the components you mentioned are the right ones. And while I can’t — I’m not going to give you the guidance on continually improving loss ratio going forward. What we do know are a handful of things. Number one, we took over 16 points of rate last year and another 2.4 points in the first quarter. That’s going to continue to earn through the book, and you’re going to continue to see average earned premium growth going forward. That’s just based on the actions we’ve taken so far. I talked a little bit about the loss trend earlier and where that was running — we’ll see how that plays out over the duration of the year. The only other piece I’d give you is the frequency component of that, there clearly is a weather benefit we got difficult to quantify.
So the frequency benefit may or may not persist going forward. That would be the only thing in addition to just the Q1 seasonality that exists. But we feel good about where the earned premium trend is going and then we’re obviously going to watch both components of the loss trend, and we’re going to continue to push hard on expenses to drive cost out of the system, which will also help from a margin perspective.
Elyse Greenspan: Thanks. And then my second question, going back to earlier comments on the Health and Benefits transaction, is your plan still to expect to announce and close the transaction this year? And then I think based on your comments to a prior question, you implied right, that there was conversations with parties. It sounds like you’re going down the route of one counterparty instead of perhaps maybe multiple. But can you just confirm, I guess, that that’s the thought as well just to find one counterparty to buy the entirety of the business?
Jess Merten: It’s a normal process, Elyse. We’re not going to go through globin it. We still think we’ll sell it this year. A lot of people are interested in the business, and we’re confident we made the right choice.
Elyse Greenspan: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Yaron Kinar from Jefferies. Your question please.
Yaron Kinar: Thank you. Good morning. Most of my questions have been asked, but I did want to dig a little deeper into NatGen, if I could, in the PIF growth there. So I understand you have the Custom 360 that should drive further growth. At the same time, we also see maybe some competitive pressures rising in nonstandard auto, which may actually result in a little bit of a decrease in that segment’s growth? Maybe you can help us think through the two combined.
