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Progressive's April Earnings Grow on Robust Revenue Rise

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The Progressive Corporation PGR reported earnings per share of 45 cents for April 2018, surging 36% year over year. Moreover, the bottom line is driven by an improved top line.

Quarter to date, Progressive’s shares have gained 1.1%, outperforming the industry’s 1.2% decrease. This share price rise was courtesy of the company’s sustained strong results.


Numbers in April

Progressive recorded net premiums written of $3.2 billion in the month, up 19% from $2.7 billion in the year-ago period. Net premiums earned were about $2.9 billion, up 21% from $2.4 billion last April.

Net realized loss on securities in the month was $6.6 million against the gain of $9.5 million in the prior-year time frame. Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 100 basis points year over year to 89.9.

Total operating revenues came in at $3 billion. The top line improved 21% year over year owing to a 21% increase in premiums, 34% higher investment income, 30% growth in fees and other revenues plus a 36% rise in service revenues.

Total expenses shot up 57% to nearly $2.7 billion. This upside can be primarily attributed to 21.7% higher loss and loss adjustment expenses, 23% climb in policy acquisition costs and a 24% escalation in other underwriting expenses.

In April, policies in force were impressive in both Vehicle and Property business. In its Vehicle business, Personal Auto segment improved 15% year over year to nearly 12.5 million. Special Lines inched up 1% from the year-earlier month to 4.3 million.

In Progressive’s Personal Auto segment, both Direct Auto and Agency Auto expanded 14% to 6 million and 16% to nearly 6.5 million, respectively.

Progressive’s Commercial Auto segment rose 7% year over year to 0.7 million. The Property business had about 1.7 million policies in force in the reported month, up 32% year over year.

Progressive’s book value per share was $17.21 as of Apr 30, 2018, up nearly 13.9% from $15.11 as of Apr 30, 2017.

Return on equity in the trailing 12 months was 22.5%, expanding 80 bps from 19.2% in April 2017. Debt-to-total-capital ratio improved 410 bps year over year to 26.9% as of Apr 30, 2018.

Zacks Rank and Other Insurers

Progressive sports a Zacks Rank #1 (Strong Buy). Investors interested in other top-ranked stocks from the insurance industry can also look at Alleghany Corporation Y, Infinity Property and Casualty Corporation IPCC and MetLife Inc. MET.

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company has an average positive surprise of 17.61% in the last four quarters. The stock has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company has an average four-quarter beat of 273.95% and a Zacks Rank #2 (Buy).

MetLife engages in the insurance, annuities, employee benefits and asset management businesses. The company’s average positive earnings surprise in the last four quarters is 9.96%. The stock holds a Zacks Rank of 2.

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