Progressive Corp.'s
(
PGR
) earnings per share for the first quarter of 2012 were 42 cents,
down 24% from 55 cents in the year-ago quarter. Results, however,
beat the Zacks Consensus Estimate of 39 cents. Net income dropped
29% from first quarter 2011 to $257.6 million in the quarter under
review.
Lower net investment gains and higher expenses resulted in lower
numbers during the quarter.
The company recorded net premiums of $4.16 billion in the
quarter under review, up 7% from $3.90 billion in the year-ago
quarter. Net premiums earned were $3.86 billion, up 5% from $3.66
billion in the year-ago quarter.
Net realized gains on securities in the quarter were $77.5
million, declining 22% from $99.7 million in the first quarter of
2011. The combined ratio − the percentage of premiums paid out as
claims and expenses − deteriorated 380 basis points over the
prior-year quarter to 94.1% in the reported quarter.
Numbers in March
Progressive publishes monthly financial reports. During March,
policies in force remained healthy, with the Personal Auto segment
increasing 6% year overyear and 0.9% sequentially. Special Lines
also increased 6% year over year and 1.3% from the preceding
month.
In Personal Auto, Direct Auto reported a growth of 7% year over
year and 0.8% from the preceding month. Agency Auto was up 5% year
over year and 0.9% from the last month. Progressive's Commercial
Auto segment reported an increase of 1% year over
year.
Total expenses for the reported month increased 14.5% to $1.18
billion from $1.03 billion in March 2011. The major components
contributing to the increase in total expenses were a 16% increase
in losses and loss adjustment expenses, 14% increase in other
underwriting expenses and a 4% increase in policy acquisition
costs.
Progressive reported book value per share of $10.23, up from
$10.06 as of February 29, 2012 and $9.64 as of March 31,
2011.
Return on equity on a trailing 12-month basis was 14.7%, down
from 18% in March 2011 and 15.8% in February 2012. The
debt-to-total-capital ratio was 25% as of March 2012, up from 23.7%
as of March 2011 but slightly down from 25.4% as of February
2012.
We maintain our Neutral recommendation on Progressive. The
quantitative Zacks #4 Rank (short-term Sell rating) for the company
indicates downward pressure on the shares over the near term.
Headquartered in Mayfield Village, Ohio, Progressive Corporation
is one of the largest auto insurers in the country. It is a leading
independent agency writer of private passenger auto coverage,
market leader for the motorcycle product and is one of the leading
companies in the commercial auto insurance market. It competes with
Allstate Corporation
(
ALL
).
ALLSTATE CORP (
ALL
): Free Stock Analysis Report
PROGRESSIVE COR (
PGR
): Free Stock Analysis Report
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