Gregory Peters: Okay. Thanks for the color. Maybe just keeping on auto as my follow-up question on NatGen, you spoke about the reserve strengthening in the quarter, and I guess you also mentioned Florida in your comments. Can you give us any perspective on the reserve strengthening that happened inside NatGen? Is it a true-up and that you’re comfortable where the trends are with matching reserves at this point in time, or is this going to be another situation where we have a couple of quarters of catch-up that we’re having to deal with?
Tom Wilson: Mario can answer how we feel about the growth and the profitability of the growth in National General, Greg, let me just settle up context. So first, the acquisition of National General is exceeding our expectations. As, you know, we bought the company so that we could consolidate our Encompass business into it that would reduce the cost and create a stronger business that we’re serving independent agents. We like what we got there. The consolidation and the cost reductions are exceeding our expectations. And that was the basis under which we agreed to where the economics of the acquisition made at. The upside from there was growing in the IA channel, both through the specialty vehicle product and by building new products for preferred auto and homeowners insurance using Allstate’s expertise, both of which are also becoming reality.
Mario, do you want to talk about, I guess, both reserves. But I think Greg’s underlying question there was like you’re growing, is that a good thing?
Mario Rizzo: Yes. So, Greg, the place I’d start with National General, you’re right. We’re growing in National General that’s principally in the specialty vehicle or the non-standard auto part of the business, which that market continues to experience pretty significant disruption. A couple of things I’d say on NatGen. First of all, the underlying combined ratio in the quarter was 96%, and 96% is slightly higher than we want to run it at, but it’s pretty close to our target margin. And that 96% includes the kind of roll-forward impact of increasing reserves principally in the 2022 accident year and therefore, increasing our loss expectations in the 2023 year. So, that’s all embedded in the 96%. A couple of things in addition to that, that I mentioned.
We’ve talked a lot about the profit improvement plan, we’re implementing that same approach in that same plan in National General across the same levers we’re using in the Allstate brand. We’ve taken 5.5 points of rate this year, 11 points of rate over the last 12 months in NatGen. And given that it’s predominantly a non-standard auto book, the book tends to turn over and get repriced pretty rapidly. So, we’re comfortable that the rate we’ve taken so far this year is working its way into the system. And I would say in response to a higher loss trend that we’ve seen in 2023, we’ve accelerated our plan to take rate in 2023. So, we’re ahead of that 5.5 points is ahead of where we expected to be at this point during the year. We’ve also restricted underwriting guidelines in a number of states, we’re writing more liability-only less full coverage.
So, we’re being really selective about what we’re writing. And the other benefit, as Tom mentioned, part of the rationale around acquiring National General was the opportunity to lower costs and improve the expense ratio, and we’re benefiting from that inside that 96% underlying combined ratio. We’ve seen a pretty significant improvement year-over-year in the underwriting expense ratio as we essentially take advantage of scale through the growth we’re getting. So, comfortable where we’re positioned. We’re taking the appropriate actions from a profitability perspective. And so we’re comfortable with what we’re writing in NatGen right now.
Gregory Peters: Got it. Thank you for the detail and your answers.
Operator: Thank you. And our next question comes from the line of Josh Shanker from Bank of America. Your question please.
Josh Shanker: Thank you very much for taking my question. Yes. Tom, there’s the amount of rate that you need and the amount that you can get over a certain period of time, but when you look back to the beginning of the year and you had your plan for taking rates and you’ve learned about some changes in frequency and severity over the past six, seven months. Has that changed the perspective on how much rate you need and want to ask for? And does that change the 2023 plan, or does that mean that the regulators will give you only so much and you have get that rate in 2024 and beyond?
