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Progressive's (PGR) October Earnings Improve, Revenues Up Y/Y

Zacks Equity Research

The Progressive Corporation PGR reported earnings per share of 52 cents for October 2019, against its year-ago loss of 6 cents. Improvement in the top line was offset by higher expenses.

Year to date, shares of Progressive have gained 18.8%, outperforming the industry’s rally of 9.4%.


Numbers in October

Progressive recorded net premiums written of $3.6 billion in the month, up 12% from $3.2 billion in the prior-year period. Net premiums earned were about $3.5 billion, up 13% year over year.

Net realized gains on securities were $93.6 million against the prior-year‘s loss of $259.9 million.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 190 bps year over year to 94%.

Total operating revenues came in at $3.7 billion. The top line improved 13% year over year on increase in net premium earned, investment income, fees and other revenues plus service revenues.

Total expenses increased 10.7% to $3.4 billion. This increase can be primarily attributed to higher losses and loss adjustment expenses, policy acquisition costs, other underwriting expenses and service and interest expenses.

In October, policies in force were impressive in both Vehicle and Property businesses. In its vehicle business, Personal Auto segment improved 11% year over year to nearly 14.7 million. Special Lines improved 4% from the year-earlier month to 4.6 million policies.

In Progressive’s Personal Auto segment, Agency Auto expanded 10% to 6.9 million while Direct Auto increased 12% to nearly 7.8 million.

Progressive’s Commercial Lines segment advanced 8% year over year to 0.7 million. The Property business had about 2.2 million policies in force in the reported month, up 14% year over year.

Progressive’s book value per share was $23.87 as of Oct 31, 2019, up 23.3% from $19.36 as of Oct 31, 2018.

Return on equity in the trailing 12 months was 28.6%, up 200 bps from 26.6% in Oct 2018. Debt-to-total-capital ratio deteriorated 380 bps year over year to 23.4% as of Oct 31, 2019.

Zacks Rank and Stocks to Consider    

Progressive currently carries a Zacks Rank #3 (Hold).

Some better-ranked property and casualty insurers include RLI Corporation RLI, First American Financial Corporation FAF and Donegal Group DGICA, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI Corporation underwrites property and casualty insurance in the United States and around the globe. The company came up with an average four-quarter positive surprise of 154.89%

First American Financial provides financial services and issues title insurance policies. The company delivered an average four-quarter positive surprise of 12.20%.

Donegal Group provides personal and commercial lines of property and casualty insurance in the Mid-Atlantic, Midwestern, New England, and southern states. The company delivered an average four-quarter positive surprise of 248.34%.

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