Progressive's (PGR) Q4 Earnings Beat, Premiums Increase
Progressive Corp.’s PGR fourth-quarter 2016 operating earnings per share of 64 cents surpassed the Zacks Consensus Estimate by 25.5%. Earnings improved nearly 19% year over year.
Including net realized losses, net income per share was 66 cents, up about 18% year over year.
Progressive recorded net premiums written of $5.6 billion in the quarter under review, up 15% from $4.8 billion in the year-ago quarter. Net premiums earned were about $5.8 billion, up 14% year over year from $5.2 billion.
Net realized gains on securities in the quarter were $22.1million, up 13% year over year. Combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 70 basis points (bps) from the prior-year quarter to 92.7%.
Numbers in December
Total operating revenue came in at $1.9 billion. The top line improved 14% year over year due to a 14% increase in premiums, 23% higher fees and other revenues, 8% rise in investment income and 17% growth in service revenues.
Total expense increased 14.6% to $1.7 billion. The increase in expenses can be primarily attributed to 15.9% higher losses and loss adjustment expenses, 13.6% increase in policy acquisition costs and 9% higher other underwriting expenses.
In Dec 2016, policies in force were impressive with the Personal Auto segment improving 8% from Dec 2015 to 10.4 million. Special Lines increased 4% from the prior-year month to 4.3 million.
In Progressive's Personal Auto segment, Direct Auto grew 9% year over year to 5.4 million. Agency Auto increased 7% from the comparable year-ago month to 5 million.
Progressive’s Commercial Auto segment grew 9% year over year to 0.6 million. The Property business had about 1.2 million policies in force in the reported month, up 12% year over year.
Progressive’s book value per share was $13.72 as of Dec 31 2016, up 9.8% from $12.49 as of Dec 31, 2015.
Return on equity on a trailing 12-month basis was 14.9%, up 70 bps from 14.2% in Dec 2016. Debt-to-total capital ratio too deteriorated 120 bps year over year to 28.3% as of Dec 31, 2016.
Dividend Update
The board of directors announced an annual variable dividend of 68.08 cents per share. The dividend will be paid on Feb 10, to shareholders on record as of Feb 3, 2017.
Progressive Corporation (The) Price, Consensus and EPS Surprise
Progressive Corporation (The) Price, Consensus and EPS Surprise | Progressive Corporation (The) Quote
Zacks Rank and Performance of Other Insurers
Progressive carries a Zacks rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MGIC Investment Corp. MTG, The Travelers Companies, Inc. TRV and Brown & Brown Inc. BRO beat their respective Zacks Consensus Estimate in the fourth quarter.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Brown & Brown, Inc. (BRO): Free Stock Analysis Report
MGIC Investment Corporation (MTG): Free Stock Analysis Report
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
Progressive Corporation (The) (PGR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
