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Progressive (PGR) April Earnings Decline, Revenues Rise Y/Y

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The Progressive Corporation PGR reported earnings per share of 54 cents for April 2021, down 67% year over year. The decline was due to higher expenses and lower net realized gain on securities.

In the past year, Progressive’s shares have gained 34.6% compared with the industry’s increase of 49.6%.

Numbers in April

Progressive recorded net premiums written of $4.4 billion in the month, up 18% from $3.8 billion in the year-ago quarter. Net premiums earned were about $4.1 billion, up 14% from $3.6 billion last April.

Net realized gain on securities in the quarter was $191.3 million, down 64% from the prior-year quarter.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 1260 basis points (bps) year over year to 96%.

Total operating revenues came in at $4.3 billion, improving 13.6% year over year owing to 13.7% increase in premiums, 60.5% rise in fees and other revenues plus a 24.6% rise in service revenues. However, the uptick was partly offset by 21.6% lower investment income.

Total expenses rose 31.2% to nearly $4 billion, primarily because of 80.5% rise in losses and loss adjustment expenses, 17.4% rise in policy acquisition costs and 2.6% growth in other underwriting expenses and 37.7% jump in service expenses.

In April, policies in force were impressive in both Vehicle and Property business. In its vehicle business, Personal Auto segment improved 12% year over year to nearly 17.4 million. Special Lines increased 11% from the year-earlier month to 5.1 million policies.

In Progressive’s Personal Auto segment, Agency Auto expanded 10% to 7.9 million while Direct Auto increased 15% to nearly 9.5 million.

Progressive’s Commercial Auto segment rose 15% year over year to 0.9 million. The Property business had 2.6 million policies in force in the reported month, up 14% year over year.

Progressive’s book value per share was $30.34 as of Apr 30, 2021, up 17.9% from $25.74 as of Apr 30, 2020.

Return on equity in the trailing 12 months was 33.1%, down 30 bps from 33.4% in April 2020. The debt-to-total-capital ratio improved 290 bps year over year to 22.8 as of Apr 30, 2021.

Zacks Rank and Stocks to Consider

Progressive currently carries a Zacks Rank #3 (Hold). Some better-ranked insurance stocks from the same space are HCI Group, Inc. HCI, American Financial Group, Inc. AFG and Alleghany Corporation Y. While HCI Group sports a Zacks Rank #1 (Strong Buy), American Financial and Alleghany carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of HCI Group surpassed estimates in three of the last four quarters and missed in the other one, the average being 42.91%.

American Financial surpassed estimates in three of the last four quarters and missed in the other one, the average earnings surprise being 32.2%.

Alleghany’s earnings surpassed estimates in each of the last four quarters, the average being 128.63%.

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The Progressive Corporation (PGR) : Free Stock Analysis Report

HCI Group, Inc. (HCI) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

Alleghany Corporation (Y) : Free Stock Analysis Report

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