Progressive Corp.’s PGR third-quarter 2016 operating earnings per share of 36 cents surpassed the Zacks Consensus Estimate by 9.1%. Earnings plunged 26% year over year.
Including net realized losses, net income per share was 34 cents, down 28% year over year.
Progressive recorded net premiums written of $6.04 billion in the quarter under review, up 12% from $5.41 billion in the year-ago quarter. Net premiums earned were about $5.73 billion, up 13% year over year from $5.07 billion.
Net realized losses on securities in the quarter were $20.7 million, wider than a loss of $15.8 million incurred in the year-ago quarter. Combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 380 basis points (bps) from the prior-year quarter to 96.6%.
Numbers in September
Total operating revenue came in at $1.7 billion. Revenues improved 13% year over year due to a 13% increase in premiums and 22% higher service revenues. However, investment income and fees each declined by 2%.
Total expense increased 14.5% to $1.7 billion. The increase in expenses can be primarily attributed to 16.6% higher losses and loss adjustment expenses, 12.8% increase in policy acquisition costs and 4% higher other underwriting expenses.
In Sep 2016, policies in force were healthy with the Personal Auto segment improving 8% from Jun 2015 to 10.3 million. Special Lines inched up 3% from the prior-year month to 4.3 million.
In Progressive's Personal Auto segment, Direct Auto grew 10% year over year to 5.3 million. Agency Auto increased 5% from the comparable year-ago month to nearly 5 million.
Progressive’s Commercial Auto segment grew 12% year over year to 0.6 million. The Property business had about 1.2 million policies in force in the reported month, up 11% year over year.
Progressive’s book value per share was $13.94 as of Sep 30, 2016, up 9.2% from $12.76 as of Sep 30, 2015.
Return on equity on a trailing 12-month basis was 16.4%, down 110 bps from 15.3% in Sep 2015. Debt-to-total capital ratio too deteriorated 130 bps year over year to 28% as of Sep 30, 2016.
Zacks Rank and Other Stocks to Consider
Progressive carries a Zacks Rank #4 (Sell). Some better-ranked property and casualty insurers are Everest Re Group Ltd RE, NMIH Holdings, Inc. NMIH and Selective Insurance Group Inc. SIGI. Each of these carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Everest Re Group, a writer of property and casualty (P&C), reinsurance and insurance in the U.S, Bermuda and international markets has an Earnings ESP of +9.43%. The company is scheduled to report third-quarter earnings on Oct 24. The Zacks Consensus Estimate for the quarter is currently pegged at $3.71 per share.
NMIH Holdings, a provider of private mortgage guaranty insurance services in the United States, has an Earnings ESP of 0.00%. The company is expected to report third-quarter earnings on Oct 25. The Zacks Consensus Estimate for the quarter is currently pegged at 7 cents.
Selective Insurance, a provider of insurance products and services in the United States has an Earnings ESP of 0.00%. The company is scheduled to report third-quarter earnings on Oct 26. The Zacks Consensus Estimate for the quarter is currently pegged at 67 cents.
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