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Progressive (PGR) Q1 Earnings Top Estimates, Premiums Up Y/Y

Zacks

The Progressive Corporation PGR first-quarter 2018 operating earnings per share of $1.22 per share beat the Zacks Consensus Estimate of $1.18. The bottom line soared 82.1% year over year.

Price, Consensus and EPS Surprise


Price, Consensus and EPS Surprise | Quote

Behind the Headlines

Progressive recorded net premiums written of $7.9 billion in the quarter under review, up 23% from $6.5 billion in the year-ago quarter. Also, net premiums earned grew 19% year over year to $7.2 billion from $6 billion.

Net realized loss on securities was $48.2 million against a gain of $51.9 million in the year-earlier quarter. Combined ratio — percentage of premiums paid out as claims and expenses — improved 330 basis points (bps) from the prior-year quarter to 88.4%.

Operating revenues improved 19.3% year over year to $7.5 billion. This top-line growth was driven by a 20% increase in service revenues, 22% higher fees and other revenues, 19% rise in premiums earned and 29% higher investment income.

Total expense increased 14.8% to nearly $6.5 billion. This increase in expenses can be primarily attributed to 14.2% higher loss and loss adjustment expenses, 18.6% increase in policy acquisition costs, 15.9% higher other underwriting expenses, 7.1% increase in investment expenses and 13.1% higher service expenses.

Numbers in March 2018

In March, policies in force were impressive at the Personal Auto segment, improving 14% from last March to 12.3 million. Special Lines inched up 1% from the prior-year month to 4.3 million.

In Progressive’s Personal Auto segment, Direct Auto grew 15% year over year to 6.4 million while Agency Auto improved 13% year over year to 5.9 million.

Progressive’s Commercial Auto segment grew 8% year over year to 0.7 million. The Property business had about 1.7 million policies in force in the reported month, up 30% year over year.

Progressive’s book value per share was $16.88 as of Mar 31, 2018, up 15.1% from $14.67 as of Mar 31, 2017.

Return-on-equity on a trailing 12-month basis was 21.0%, having expanded 360 bps from 17.4% in March 2017. Debt-to-total capital ratio expanded 50 bps year over year to 27.2% as of Mar 31, 2018.

Zacks Rank

Progressive carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Insurance Stocks Worth a Look

Investors interested in other top-ranked stocks from the same space can also consider RLI Corp. RLI, American Financial Group, Inc. AFG and Berkshire Hathaway Inc. BRK.B, each holding a Zacks Rank of 2.

RLI Corp. is set to release first-quarter 2018 earnings on Apr 18 and the Zacks Consensus Estimate for the current quarter is pegged at 52 cents per share, reflecting a year-over-year increase of 18.2%.

American Financial is slated to release first-quarter 2018 earnings on May 2 and the Zacks Consensus Estimate for the current quarter is pegged at $1.94 per share, registering a year-over-year rise of 14.8%.

Berkshire Hathaway is expected to release its first-quarter 2018 earnings on May 4 and the consensus mark for the current quarter stands at $2.01 per share, representing year-over-year growth of 39.6%.

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