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Progressive (PGR) Q2 Earnings Beat on Higher Premiums

The Progressive Corporation’s PGR second-quarter 2018 operating earnings per share of $1.15 beat the Zacks Consensus Estimate of $1.08. The bottom line soared nearly 95% year over year.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation Price, Consensus and EPS Surprise | The Progressive Corporation Quote

Behind the Headlines

Progressive recorded net premiums written of $8.1 billion in the quarter under review, up 20% from $6.7 billion in the year-ago period. Also, net premiums earned grew 21% year over year to $7.6 billion from $6 billion a year ago.

Net realized gains on securities were $32.8 million, up 2% from $32.1 million in the year-earlier quarter. Combined ratio — percentage of premiums paid out as claims and expenses — improved 230 basis points (bps) from the prior-year quarter to 90.9%.

Numbers in June 2018

Operating revenues rose 22% year over year to $2.5 billion. This top-line growth was driven by a 44% higher investment income, 21% rise in premiums earned, 28% increase in service revenues and 34% higher fees and other revenues.

Total expense increased 18.1% to nearly $2.3 billion. The increase can be primarily attributed to 17.5% higher loss and loss adjustment expenses, 22.9% increase in policy acquisition costs and 19% higher other underwriting expenses.

In June, policies in force were impressive at the Personal Auto segment, improving 16% from last June to 12.8 million. Special Lines inched up 1% from the prior-year month to 4.4 million.

In Progressive’s Personal Auto segment, Direct Auto grew 17% year over year to 6.7 million while Agency Auto improved 14% year over year to 6.1 million.

Progressive’s Commercial Auto segment grew 9% year over year to 0.7 million. The Property business had about 1.8 million policies in force in the reported month, up 35% year over year.

Progressive’s book value per share was $18.04 as of Jun 30, 2018, up 16.5% from $15.48 as of Jun 30, 2017.

Return-on-equity on a trailing 12-month basis was 22.3%, having expanded 340 bps from 17.4% in June 2017. Debt-to-total capital ratio improved 180 bps year over year to 27.3% as of Jun 30, 2018.

Zacks Rank

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

Other Insurance Stocks Worth a Look

Investors interested in other top-ranked stocks from the same space can also consider Arch Capital Group Ltd. ACGL, First American Financial Corporation FAF and Everest Re Group, Ltd. RE, each carrying a Zacks Rank #2 (Buy).

Arch Capital is set to release second-quarter 2018 earnings on Jul 31 and the Zacks Consensus Estimate for the same period is pegged at 52 cents per share, reflecting a year-over-year surge of 30%.

First American Financial is slated to release second-quarter 2018 earnings on Jul 26 and the Zacks Consensus Estimate for the same period is $1.24 per share, registering a year-over-year rise of 26.5%.

Everest Re is set to release second-quarter 2018 earnings on Jul 30 and the consensus mark for the quarter to be reported stands at $6.38 per share, representing year-over-year growth of 15.8%.

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