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Progressive (PGR) Q2 Earnings Beat, Increase Year Over Year

Zacks Equity Research

The Progressive Corporation’s PGR second-quarter 2019 earnings per share of $1.66 beat the Zacks Consensus Estimate of $1.43. The bottom line improved 39% from the year-ago quarter.

Behind the Headlines

Net premiums written were $9.1 billion in the quarter under review, up 13% from nearly $8.1 billion in the year-ago period. Net premiums earned grew 16% year over year to $8.8 billion.

Net realized gains on securities were $179.9 million compared with $32.8 million in the year-ago quarter.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 50 basis points (bps) from the prior-year quarter’s level to 90.4%.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation Quote

June Numbers Solid

Operating revenues were $2.9 million, up 15.3% year over year. The improvement can be attributed to 14.8% increase in premiums, 35.1% higher investment income, 13.7% growth in fees and other revenues and 11.5% rise in service revenues.

Total expenses increased 14.1% year over year to $2.6 billion due to 14.4% rise in losses and loss adjustment expenses, 15% increase in policy acquisition costs and 4.7% higher other underwriting expenses.

In June, policies in force were impressive at the Personal Auto segment, having improved 12% from the year-ago month to 14.3 million. Special Lines improved 3% from the prior-year month’s figure to 4.5 million.

In Progressive’s Personal Auto segment, Direct Auto grew 13% year over year to 7.5 million while Agency Auto improved 11% year over year to 6.8 million.

Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 2.1 million policies in force in the month, up 17% year over year.

Financial Update

Progressive’s book value per share was $21.98 as of Jun 30, 2019, up 21.8% from $18.04 as of Jun 30, 2018.

Return-on-equity in June 2019 was 34.3%, having expanded 1200 basis points (bps) year over year. Debt-to-total capital ratio improved 120 bps year over year to 24.8% as of Jun 30, 2019.

Zacks Rank

Progressive currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

W.R. Berkley Corporation WRB will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same stands at 62 cents per share, indicating year-over-year decline of 4.6%.

The Travelers Companies, Inc. TRV will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same stands at $2.31 per share, suggesting 27.6% year-over-year increase.

Chubb Corporation CB will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same is pegged at $2.58 cents per share, indicating year-over-year decrease of 3.7%.

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