) earnings per share (EPS) for the fourth quarter of 2012 were 41
cents, declining 2% from 42 cents in the year-ago quarter.
Results outpaced the Zacks Consensus Estimate of 34 cents. Net
income declined 3% from the fourth quarter of 2011 to $249.1
million in the quarter under review.
The company recorded net premiums of $3.84 billion in the
quarter under review, up 9% from $3.54 billion in the year-ago
quarter. Net premiums earned were $4.11 billion, up 9% from $3.78
billion in the year-ago quarter.
Net realized gains on securities in the quarter were $62.1
million, improving 111% from $29.5 million in the year-ago
quarter. The combined ratio − the percentage of premiums paid out
as claims and expenses − deteriorated 160 basis points (bps) from
the prior-year quarter to 94.6% in the reported quarter.
Full Year Results
Progressive's earnings for 2012 came in at $1.48 per share,
down 7% from $1.59 in 2011. Results outpaced the Zacks Consensus
Estimate of $1.16 per share. Net income declined 11% from 2011 to
$902.3 million in 2012.
The company recorded net premiums of $16.37 billion in 2012,
up 8% from $15.15 billion in 2011. Net premiums earned were
$16.02 billion, up 7% from $14.90 billion in 2011.
Net realized gains on securities in the year were $314.8
million, improving 191% from $108.1 million in the prior year.
The combined ratio amounted to 95.2% in 2012.
Numbers in December
Progressive publishes monthly financial reports. During
December, policies in force remained healthy, with the Personal
Auto segment increasing 4% year over year but down 0.2%
sequentially. Special Lines also increased 4% year over year,
though it declined 0.3% from the preceding month.
In Personal Auto, Direct Auto reported a profit of 4% year
over year but inched down 0.03% from the preceding month. Agency
Auto was up 3% year over year but down 0.4% from the last month.
Progressive's Commercial Auto segment reported an increase of 2%
year over year and a sequential decline of 0.5%.
Total expenses for the reported month increased 11.1% to $1.20
billion from $1.08 billion in Dec 2011. The major components
contributing to the increase in total expenses were a 14%
increase in losses and loss adjustment expenses, a 5% increase in
other underwriting expenses and a 0.4% increase in policy
Progressive reported book value per share of $9.94, up from
$9.47 as of Dec 31, 2011 but declining from $10.08 as of Nov 30,
Return on equity on a trailing 12-month basis was 17.4%, up
from 15.0% in Dec 2011 but declining from 17.9% in Nov 2012. The
debt-to-total-capital ratio was 25.6% as of Dec 31, 2012, down
from 29.6% as of Dec 31, 2011 but increasing marginally from
25.3% as of Nov 30, 2012.
Progressive carries a Zacks Rank #3 (Hold). We maintain a
long-term Neutral recommendation on the stock.
), which closely competes with Progressive, carries Zacks Rank #1
(Strong Buy), along with a long-term Outperform
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PROGRESSIVE COR (PGR): Free Stock Analysis
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