Progressive Misses on Q2 Earnings, Up Y/Y on Higher Premiums - Analyst Blog

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Progressive Corp .'s ( PGR ) 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 year.

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.

Zacks Rank

Progressive carries a Zacks Rank #2 (Buy). Investors interested in the property and casualty industry can also look at Arch Capital Group Ltd. ( ACGL ), AmTrust Financial Services, Inc . ( AFSI ) and W.R. Berkley Corp. ( WRB ). 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 , WR , WRB , AFSI , ACGL

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