Tom Wilson: I’ll let Mario jump in, I know you’re probably referring to numbers. I’ll let Mario jump in on state. But let me just mentioned something, I think kind of we talk about, but I’m not sure it gets as much focus as I think it should, which is homeowners. The homeowners business is a really attractive business for us. We’re really good at it. We have an integrated business model that you can see Mario showed the slide where we’ve earned a 92 combined ratio over a 10-year period. The industry dynamics today. A lot of that business is sold through independent agents, about half of it. and industry dynamics are right for us to leverage that position. There’s a great interest in independent agents and having what they call markets or we would call availability.
And when you look at why that is, this is — the first customer risks are increasing, right, whether that’s inflation in home values, whether it’s demographic trends, people moving in the way of where there’s severe weather or just increased severe weather. So there’s increased need for risks. And then at the same time, the industry has lost money. So the industry lost money over the last three years, last five years, over the last 10 years, it made money but we made about 3/4 of that money. So the industry made about $10 billion over a 10-year period, and we made about 75% of that. So we’re really good at it. And so we think that one of the ways to grow there is in the independent agent channel is by leveraging our homeowners. So we obviously can grow in homeowners in the Allstate agent channel.
You see that our funding stuff, whether you look at any of the industry reports, we’re really good at bundling there. And you see the PIF growth there even when auto growth is going down, which wasn’t always the case. They used to trend more together, but we’ve got so much better at bundling. So that’s — I don’t want to leave homeowners on the cutting-room floor, as it relates to growth, both in the National General channel and the Allstate channel. Mario, do you want to talk about that.
Mario Rizzo: Yes. Thanks for the question, Yaron. Look, where I start is the National General nonstandard auto business is a really well-run business for us. And when we acquired NatGen several years ago, it allowed us to get into a business that Allstate was not in at that time in a particularly meaningful way. And we’ve been able to grow that pretty aggressively and grow it profitably. Over the last several years. Some of the ways we’ve been able to expand is we’ve expanded geographically, so we’re in a lot more states with nonstandard auto now than when we bought the business. We’ve also expanded from a channel perspective, we allow Allstate agents to sell nonstandard auto through National General for business that’s outside of Allstate’s risk appetite.
We sell it direct to consumer. So we’ve been able to expand the business, both geographically as well as across channels. And the business has been subject to the same inflationary pressures that the standard and preferred auto business has been subject to. But we’ve stayed on top of rate need. We’ve taken a lot of rate over the last couple of years, I believe, over 15 points in the last 12 months. So we’ve stayed on top of the rate need. It’s a business that you can effectively reprice most of the book almost every policy period, just given the deflection rates. And we’ve been able to, over the last couple of years, take advantage of the competitive dislocation in nonstandard auto as a number of carriers have backed off from that business.
We’ve taken advantage of that opportunity and taking advantage of by leveraging our capabilities in that space. And as much as the competition might be heating up there, we feel really good about our capabilities, and we’re going to continue to look to grow that business as well as the standard preferred and homeowners that Tom talked about with Custom 360.
Yaron Kinar: Thank you. Very good.
Operator: Thank you. One moment for our next question. And our next question comes from the line of David Motemaden from Evercore ISI. Your question please.
David Motemaden: Hi, thanks. Good morning. I had a question just on the brand auto PIF. So the brand auto PIF was down about 15% compared to the fourth quarter. And I guess I’m wondering how. And now is for the entire book, the entire brand auto book. I guess I’m wondering how that PIF growth trended versus the fourth quarter in the 64% of the book that is at target margins that you showed on Slide 6, are you guys growing PIF in that part of the book?.
Tom Wilson: We wouldn’t break those numbers out for competitive reasons. When it’s big enough, so David, you could do math on it. So you could say, okay, here’s when the churn is going to come. We would say it. But obviously, there are some markets, we’re growing in other markets. We’re not growing in some of those markets. Some of those are space. When we get to the point where you can do the math to show when — I know you — I totally get where you’re going because you want to figure out when the turn is. But we don’t like to show what states were growing in at higher rates than others because then they get our competitors interested in going to those states. And we’d rather grow without having them be aware of where we’re growing.
David Motemaden: No, understood. It was worth a shot anyway. Just another question, just on the agent productivity. You gave some interesting stats last quarter that agent productivity was up 6%. And excluding California, New York, New Jersey. I’m just wondering how the productivity looked this quarter. Did that improve significantly? Or just how to think about that as a potential growth driver?
Tom Wilson: Let me go up to transformative growth and get Mario to talk about the specifics of your question. So as part of transformative growth, we said we want to improve customer value. And that meant getting our agents to really focus on there were those things that customers really want them to do for them, which includes helping them buy insurance. It doesn’t necessarily include having them there when they have to pay a bill for retention. They will pay for that, but they won’t pay as much as they will for when they get to new business. So we shifted our compensation program to move to lower our cost for customers and better align it with what customers want to pay for. As a result of that, we both lowered distribution expense and we’ve had some agents who had the word had built business models on higher retention.
