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Progressive's (PGR) Premium Growth Impresses, Cat Loss a Woe

Zacks Equity Research
Commodity prices risk along with stiff competition and risk from adverse foreign currency translations are likely to hurt 3M Company's (MMM) financials in first-quarter 2018.

The Progressive Corporation PGR has successfully catered to the evolving demands and expectations of clients for years, thereby building a robust product and service portfolio over time. This in turn has helped the property and casualty (P&C) insurer become a one-stop insurance destination through the meeting of its customers’ requirements, mainly opting for a combination of home and auto.

Progressive has maintained its industry-leading position in product, service and distribution innovation, particularly personal auto. The company’s net premiums written have been steadily improving over a considerable period of time. We expect Progressive to continue benefiting from the competitive rates in all its markets and diversified multi-product offerings. This will further assist the company to experience improved premiums in the future.

Additionally, Progressive remains focused on boosting customer retention. It anticipates a higher Policy Life Expectancy (PLE) — a measure for customer retention —– in the near term on the back of competitive pricing. Also, the company is estimated to record a higher PLE in the short term, banking on competitive pricing and continued new offerings.

The company’s inorganic growth carries on to impress with strategic buyouts, which will aid the P&C insurer in boosting overall results, thus accelerating growth on the whole.

The company remains committed toward enhancing shareholder value through dividends and share buybacks. This lowers share count and improves the bottom line.

However, exposure to catastrophe losses will continue to hurt the company’s underwriting results. With the recent occurrences of Hurricanes Harvey and Irma, the company expects its underwriting results to take a hit in the immediate term. As a result, the company worries over witnessing deterioration in the overall performance.

Some Stocks that Warrant a Look

Some stocks from the insurance industry that warrant a look are look at CNO Financial Group, Inc. CNO, Cincinnati Financial Corporation CINF and Mercury General Corporation MCY.

CNO Financial develops, markets and administers health insurance, annuity, individual life insurance and other insurance products for senior and middle-income markets in the United States. The company has seen upward estimate revisions in the last few weeks.

Cincinnati Financial deals in property and casualty insurance business in the United States. Notably, the company has seen positive estimate revisions in the last few weeks.

Mercury General engages in writing personal automobile insurance in the United States. The company has experienced upward estimate revisions in the last few weeks.

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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
 
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
 
Progressive Corporation (The) (PGR) : Free Stock Analysis Report
 
Mercury General Corporation (MCY) : Free Stock Analysis Report
 
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