Progressive Corp (NYSE: ) is one of the leading property & casualty (P&C) insurers in the US. It has also been one of the fastest growing auto insurers in recent years. Much of PGR’s strength has come from the fact that it is big and well-known, but have room to grow.
PGR: The Most Tech Savvy Insurance Company
And that growth comes in two flavors. One is taking business away from its competitors. PGR is probably the most tech savvy insurer out there. And by that I mean it has been an early adopter of technologies that allow better analysis of smaller sets of the insured.
Progressive was the first auto insurer in the world to launch a website in 1995. By the next year you could compare rates online. The following year, you could buy a policy online.
Continuing in that vein, PGR was one of the first insurers to use driver feedback information in cars to customize a customers’ insurance premiums based directly on their driving data.
What’s more, drivers who use this program also give PGR an enormous amount of information about that driver — driving patterns, where they drive, etc. — that PGR can then compile and slice and dice to build more accurate modeling.
Progressive was also the company that would compare rates among it and other insurers on its website, even if its rates weren’t the best. This was a big deal in an industry that usually keeps its numbers to itself.
The other flavor that has helped PGR grow the fact that its tech-forward approach has allowed it to keep its margins near the top of the industry. That means it has more wiggle room when it comes to competing on price, relative to its competitors.
Progressive is able to leverage technology to help its customers access its services and thus create a stronger relationship with its customers.
And PGR’s tech focus also lead to new business divisions. For example, in 2006, PGR was looking to expand its concierge service to customers that had totaled their cars and help them look for a replacement vehicle.
The Progressive Car Shopping Service was transformed into the online shopping service TrueCar where you can compare prices of cars in your area to make sure you’re paying a fair price.
That kind of service also opens opportunities for PGR to work with dealerships that will deliver special pricing or offers to PGR customers since they know some or all of the car will be financed from the insurer.
And with all this tech, you would assume that the company is a relative newcomer to the insurance sector. But you’d be wrong. PGR has roots that go back to 1937. And while it has continued to adapt and grow, it also has its feet solidly on the ground.
The Bottom Line for PGR
PGR stock is up 25% year to date, and that’s after having a mixed Q4 earnings report in January. And even with that run, it’s trading at a trailing P/E of 15, significantly below the average P/E for the S&P 500.
My Portfolio Grader rates PGR stock a B right now, which reflects its Q4 stumble. But a good Q1 report and it’s going to be off to the race for PGR stock. Now is a good time to start nibbling.
is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, , Accelerated Profits and . His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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