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Progressive’s (PGR) May Earnings Ride on Higher Revenues


The Progressive Corporation PGR reported earnings per share of 37 cents for May 2018, skyrocketing 208.3% year over year. Moreover, the bottom line is driven by an improved top line and solid policies in force.

Quarter to date, shares of Progressive have gained 2.3% against the industry’s 2.2% decrease. This share price rise was courtesy of the company’s sustained strong results.

Numbers in May

Progressive recorded net premiums written of $2.4 billion in the month, up 20% from $2 billion in the year-ago period. Net premiums earned were about $2.3 billion, up 21% from $1.9 billion last May.

Net realized loss on securities in the month was $55.7 million, up 224% from $17.2 million in the prior-year time frame. Combined ratio — percentage of premiums paid out as claims and expenses — improved 610 basis points year over year to 90.3%.

Total operating revenues came in at $2.5 billion. The top line improved 21% year over year owing to a 21% increase in premiums, 36% higher investment income, 28% growth in fees and other revenues plus a 30% rise in service revenues.

Total expenses escalated 13.3% to nearly $2.2 billion. This downside can be primarily attributed to 9.7% higher loss and loss adjustment expenses, 22% climb in policy acquisition costs and a 29% elevation in other underwriting expenses.

In May, policies in force were impressive in both Vehicle and Property businesses. In its Vehicle business, Personal Auto segment improved 15% year over year to nearly 12.6 million. Special Lines inched up 1% from the year-earlier month to 4.4 million.

In Progressive’s Personal Auto segment, both Direct Auto and Agency Auto expanded 14% to 6.1 million and 16% to nearly 6.6 million, respectively.

Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 1.7 million policies in force in the reported month, up 34% year over year.

Progressive’s book value per share was $17.75 as of May 31, 2018, up nearly 15.6% from $15.35 as of May 31, 2017.

Return on equity in the trailing 12 months was 21.7%, expanding 210 bps from 19.6% in May 2017. Debt-to-total-capital ratio improved 410 bps year over year to 26.3% as of May 31, 2018.

Zacks Rank and Other Insurers

Progressive sports a Zacks Rank #1 (Strong Buy). Investors interested in other top-ranked stocks from the insurance industry can also check out Alleghany Corp. Y, Markel Corp. MKL and RLI Corp. RLI.

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered an average positive surprise of 17.61% in the last four quarters. The stock has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here..

Markel markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada and globally. The company came up with positive surprises in the last four quarters, the average beat being 15.54%. The stock carries a Zacks Rank #2 (Buy).

RLI Corp. underwrites property and casualty insurance in the United States and internationally. The company pulled off an average four-quarter positive earnings surprise of 33.65%. The stock holds a Zacks Rank of 2.

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