Progressive Corp July Earnings Improve on Higher Top Line - Analyst Blog


Progressive Corp. 's ( PGR ) operating earnings for July 2014 came in at 18 cents per share, a couple of cents higher year over year.

Including net realized gains on securities (including net impairment losses), net income came in at 20 cents per share, comparing favorably with 17 cents earned in July 2013.

Progressive recorded $1.8 billion net premiums written, up 4% from $1.7 billion in the year-ago month. Net premiums earned of $1.7 billion were up 5% from $1.6 billion in the year-ago month.

Combined ratio − the percentage of premiums paid out as claims and expenses − improved 110 basis points (bps) from the prior-year month to 91.6%.

July Numbers

Progressive publishes monthly financial reports. In the month of July, policies in force were healthy, with the Personal Auto segment increasing 3% year over year to 9.2 million. Special Lines increased 1% year over year to 4.1 million.

In Progressive's Personal Auto segment, Direct Auto grew 7% year over year to 4.4 million. Agency Auto remained almost flat year over year at 4.8 million. Progressive's Commercial Auto segment declined 2% on a year-over-year basis.

Total revenue improved 5% year over year to $1.8 billion, largely driven by higher premiums.

On the other hand, total expense increased 4.2% to $1.6 billion in July. The major components contributing to the rise in total expense were a 5% increase in losses and loss adjustment expenses, 1% higher other underwriting expenses and a 3.2% rise in policy acquisition costs.

Progressive reported book value per share of $11.52 on Jul 31, up 3.3% year over year.

Return on equity on a trailing 12-month basis was 17.5% compared with 18.8% in Jul 2013. The debt-to-total capital ratio was 24.5% as of Jul 31, 2014, deteriorating from 23.5% as of Jul 31, 2013.

Zacks Rank

Progressive carries a Zacks Rank #3 (Hold). Better-ranked property and casualty insurers worth considering are Endurance Specialty Holdings Ltd. ( ENH ), Global Indemnity plc ( GBLI ) and Greenlight Capital Re, Ltd. ( GLRE ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: PGR , GLRE , ENH , GBLI

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