) operating earnings for the second quarter of 2014 came in at 45
cents per share, falling short of the Zacks Consensus Estimate by a
couple of cents. However, earnings improved about 10% year over
Including net realized gains on securities (including net
impairment losses), net income came in at $293.4 million or 49
cents per share, comparing unfavorably with $324.6 million or 54
cents in the year-ago quarter.
Progressive recorded net premiums of $4.63 billion, up 5% from
$4.39 billion a year ago. Net premiums earned were $4.51 billion,
up 6% from $4.28 billion in the year-ago quarter.
Combined ratio − the percentage of premiums paid out as claims and
expenses − improved 70 basis points (bps) from the prior-year
quarter to 92.6%.
Numbers in June
Progressive publishes monthly financial reports. In the month of
June, policies in force were healthy, with the Personal Auto
segment increasing 3% year over year to 9.3 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 4.9 million. Progressive's Commercial Auto segment
declined 2% on a year-over-year basis.
Total revenue improved 4.7% year over year to $1.47 billion,
largely driven by higher premiums.
On the other hand, total expense increased 7.5% to $1.4 billion in
June. The major components contributing to the increase in total
expense were an 8.4% increase in losses and loss adjustment
expenses, a 5% increase in other underwriting expenses and a 3.2%
rise in policy acquisition costs.
Progressive reported book value per share of $11.48 on Jun 30,
2014, up 5.6% year over year.
Return on equity on a trailing 12-month basis was 20.7%, compared
with 17.9% in Jun 2013. The debt-to-total capital ratio was 24.5%
as of Jun 30, 2014, deteriorating from 24% as of Jun 30, 2013.
Progressive carries a Zacks Rank #2 (Buy). Investors interested in
the property and casualty industry can also look at
Arch Capital Group Ltd.
AmTrust Financial Services, Inc
W.R. Berkley Corp.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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