Beth Costello: Yeah. So I’ll start. So first of all, in Q3, as we said in our remarks, we did not make any adjustments to prior accident years for the auto line, for auto liability or auto physical damage. If you — I’ll remind you, if you go back to the first half of the year, in the first quarter, we did record about $20 million related to physical damage for the 2022 year. And also, in the first quarter and second quarter, we increased our estimates for auto liability for the 2022 year, but those were offset by releases for years ’21 and prior. So that’s why that development on a net basis is not showing up in that table. So we were experiencing some of the same trends that others were seeing. We reacted to them. As I said, we are very pleased that in the third quarter, our loss picks for prior accident years as well as the first half of the year did remain unchanged.
And the last thing that I’ll just point out on that, because I know some have looked at sort of our year-over-year results in auto. And I’ll just remind you that because we have booked prior year development for the ’22 year in ’23, when you look at that third quarter reported underlying loss ratio for auto, it would probably be about 4 to 5 points higher reflecting some of that PYD we’ve seen. So hopefully, that helps some people who are looking at sort of that year-over-year comparison in the underlying auto ratio.
Greg Peters : Thank you very much for that detail.
Operator: And we will take our next question from Josh Shanker with Bank of America. Your line is open.
Josh Shanker : Yeah, thank you very much. I’m looking at all this auto stuff. One thing that was a big change in your is the GEICO really improved a lot in their margins and, at the same time, they churned a significant portion of their book of business. One of the things that you’re looking for to improve profitability long term in the AARP business was the opportunity to non-renew customers who shouldn’t renew. To what extent do you think there’s a solution in your profitability, a combination of non-renewing customers as opposed to achieving through rate alone?
Chris Swift: Josh, it’s Chris. I’ll start and then I’ll ask Stephanie to add her color. Again, we’re very proud of the AARP relationship for over the last 35 years. I think you will recall, we did renew a contract and extended it to 2033. Part of that then, we launched the Prevail product and platform. But the in-force business, both auto and home, it does have lifetime continuity agreements still on, on the policy that prohibits us from just canceling a customer unless their risk profile, particularly in the homeowners’ line, really changed. That’s different with Prevail, but that’s going to take some time to sort of work its way all into the in-force business. Because 90% of the business that we still have on the books, it relates to lifetime continuity agreements.
So we have to be sensitive there. That’s why we’re pushing for rate as aggressively as we’ve had. And I think Stephanie and the team, the numbers and the results speak for themselves, and that will begin to earn in. But Stephanie, what would you add?
Stephanie Bush : No, I think you framed it really well, Chris. When you think about really where our focus, Josh, is, it’s responding to the loss trend environment. You see that materializing in our rate actions. We’re also deploying our Prevail products, 39 states and market as of today. About 50% of our new written premium is on the Prevail product but that is a very small portion of our in force. So just to go back to underscore, Chris’ comment on the overall in-force, and share of that does have the lifetime continuation endorsement and then the preponderance of our in-force book being 12-month policies takes time for that rate to earn in. But wholly focused on bringing this book back to profitability.
Josh Shanker : And when we look at that new business, is the rate increase is similar between what’s going through on the Prevail book and what’s going on in the lifetime continuity book?
