Download - Quantify 2016 - Progressive
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Michael Ezzat, Ethan Le, Ye Na Lee, Ahraniya Ragavan
Introducing: Snapshot Plus
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Industry Trends
Industry Overview Snapshot Plus Implementation Forecast Risk Managmenet
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Progressive Position
Industry Overview Snapshot PlusInvestment
ThesisValuation Risks & Catalysts Recommendation
The Current Model: Snapshot
Usage-based telematics device using GPS
Collects information about driving habits
PROS: Reward good driver up to 30% discount, competitive pricing model and accurate information
CONS: Privacy concerns and Reservation to change
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Snapshot Plus
Industry Overview Snapshot Plus Implementation Forecast Risk Managmenet
Accelerometer
• Speeding
• Breaking Pattern
Motion Sensor
• Hard Turn
• DUI
Light Sensor
• Night Driving
Environmental Sensors
• Weather Condition
• Distracted Driver through Music
Position Sensor
• Distracted Driver through Phone Usage
Snapshot Plus
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Rethink Insurance
Policy
Holders
Insurance
Company
Risk
Premium/
Restrictions
Reducing
Risk
Reducing Claim
Snapshot Plus
Watch your speed! Speed
Limit: 80kmSnapShot+
Driving Your Saving
Level of Assisstance
Off
Minimal
Moderate
Recommended
Industry Overview Snapshot Plus Implementation Forecast Risk Managmenet
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BenefitsWecome to SnapShot+
Driving Your Saving
Ready to Save?
GO!
Reducing manufacturing costs
Utilizing build-in sensors of mobile phones
Monitoring the safety of your vehicle, home and more
Reducing privacy concern
Industry Overview Snapshot Plus Implementation Forecast Risk Managmenet
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Implementation
Industry Overview Snapshot Plus Implementation Forecast Risk Managmenet
Beta launch to Snapshot user
Open to public
Covering more
products line
Developing
App
3-6 months 6 months -
1 year
1st year 2nd year
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Industry Overview Snapshot Plus Implementation Forecast Risk Management
115,580,040$Sales Growth
800,000$Cost
42,576,929$Saving on Claim from 9,160 cases
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Risk Management
Industry Overview Snapshot Plus Implementation Forecast Risk Management
Apps Hacking
• Audit
• Contract
• Incentives
• Patents
• Regulations
• Copy
Future Risks
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Assumptions
Snapshot will be implemented on all products lines
In 2013, 11% people who shop Progressive, opt for Snapshot
We plan to increase number by 5-15% after Snapshot+
In 2013, 15% policies are closed by Progressive with the aid of Snapshot
We plan to increase this number by 2-10% after Snapshot+
We assume that Snapshot+ will reduce 1-5% number of claim due to safer driving behaviors
cost of changing the apps is insignificant, less than 1 million
Appendix
https://www.jdpower.com/sites/default/files/InfluenceofTelematics%20JDPower%20Insights.pdf
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Assumption Rationale
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Cost of Making An Apps
http://www.formotus.com/14018/b
log-mobility/figuring-the-costs-of-
custom-mobile-business-app-
development
Appendix
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Sensitivity Analysis
28.8951 10% 8% 6% 4% 2%
15% 289.0$ 231.2$ 173.4$ 115.6$ 57.8$
12% 231.2$ 184.9$ 138.7$ 92.5$ 46.2$
10% 192.6$ 154.1$ 115.6$ 77.1$ 38.5$
8% 154.1$ 123.3$ 92.5$ 61.6$ 30.8$
5% 96.3$ 77.1$ 57.8$ 38.5$ 19.3$
21.288465 5% 4% 3% 2% 1%
15% 106.4$ 85.2$ 63.9$ 42.6$ 21.3$
12% 85.2$ 68.1$ 51.1$ 34.1$ 17.0$
10% 71.0$ 56.8$ 42.6$ 28.4$ 14.2$
8% 56.8$ 45.4$ 34.1$ 22.7$ 11.4$
5% 35.5$ 28.4$ 21.3$ 14.2$ 7.1$
5% 4% 3% 2% 1%
15% 395.4$ 316.3$ 237.2$ 158.2$ 79.1$
12% 316.3$ 253.1$ 189.8$ 126.5$ 63.3$
10% 263.6$ 210.9$ 158.2$ 105.4$ 52.7$
8% 210.9$ 168.7$ 126.5$ 84.4$ 42.2$
5% 131.8$ 105.4$ 79.1$ 52.7$ 26.4$
Sales 19,263.4
Opt in Snapshot 5%
Policy Closed 3%
Claim 14,192.31
Opt in Snapshot 5%
Accident Reduction 3%
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Revenue Forecast bases on historical performance(In Millions) 2011A 2012 A 2013 A 2014 A 2015 A 2016 E 2017 E 2018 E 2019 E 2020 E
Agency 7,627$ 8,104$ 8,602$ 9,087$ 9,109$ 9,473$ 9,852$ 10,246$ 10,656$ 11,082$
Growth 6.2% 6.1% 5.6% 0.2% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Direct 5,804$ 6,264$ 6,740$ 7,474$ 8,159$ 8,812$ 9,517$ 10,278$ 11,100$ 11,988$
Growth 7.9% 7.6% 10.9% 9.2% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Commercial Line 1,467$ 1,649$ 1,762$ 1,838$ 1,996$ 2,108$ 2,226$ 2,350$ 2,482$ 2,621$
Growth 12.4% 6.8% 4.3% 8.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6%
Loss Ratio 71.2 74.6 73.0 72.8 73.7 73.0 72.3 71.6 71.0 70.3
Growth 4.9% -2.2% -0.3% 1.2% -0.9% -0.9% -0.9% -0.9% -0.9% -0.9%
Expense Ratio 21.6 21.3 20.4 19.8 19.8 20.0 20.2 20.3 20.5 20.7
Growth -1.5% -4.3% -2.9% 0.3% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
Combine Ratio 92.8 95.9 93.4 92.6 93.5 93.0 92.5 92.0 91.5 91.0
Growth 3.4% -2.6% -0.9% 1.0% -0.5% -0.5% -0.5% -0.5% -0.5% -0.5%
Appendix: Company Financial Forecast
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Earning Analysis and Forecast
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Industry Comparison