Shares of Progressive Corp .'s PGR gained 6.1% in the last two trading sessions after the company posted improved January results. Shares outperformed the Property and Casualty Insurance industry that gained 3.71% in the last two trading sessions.
Operating earnings per share of 30 cents surged nearly 67% year over year on higher revenues. Including net realized gains, net income per share was 31 cents, up about 82% year over year.
Numbers in January
Progressive recorded net premiums written of $2.4 billion in Jan 2016, up 11% from $2.0 billion in the year-ago month. Net premiums earned were about $2.3 billion, up 14% year over year from $2.0 billion.
Net realized gains on securities in the quarter were $9.41million. The company had incurred a loss of $6.2 million a year ago. Combined ratio − the percentage of premiums paid out as claims and expenses − improved 340 basis points (bps) from the prior-year quarter to 89.7%.
Total operating revenue came in at $2.4 billion. The top line improved 14% year over year due to a 14% increase in premiums, 8% higher fees and other revenues, 6% rise in investment income and 13% growth in service revenues.
Total expense increased 10% to $2.1 billion. The increase in expenses can be primarily attributed to 9% higher losses and loss adjustment expenses, 14% rise in policy acquisition costs and 13% higher other underwriting expenses.
In Jan 2017, policies in force were impressive with the Personal Auto segment improving 8% year over year to 10.5 million. Special Lines inched up 3% from the prior-year month to 4.2 million.
In Progressive's Personal Auto segment, Direct Auto grew 8% year over year to 5.4 million. Agency Auto climbed 7% from the comparable year-ago month to 5.1 million.
Progressive's Commercial Auto segment grew 8% year over year to 0.6 million. The Property business had about 1.2 million policies in force in the reported month, up 16% year over year.
Progressive's book value per share was $14.10 as of Jan 31 2017, down 17% from $12.53 as of Jan 31, 2016.
Return on equity on a trailing 12-month basis was 17.4%, up 380 bps from 13.6% in Jan 2016. Debt-to-total capital ratio too deteriorated 80 bps year over year to 28.3% as of Jan 31, 2017.
Progressive Corporation (The) Price
Zacks Rank and Other Insurers
Progressive carries a Zacks rank #2 (Buy). Investors interested in the property and casualty industry can also consider American Financial Group, Inc. AFG , Everest e Group Ltd. RE and White Mountains Insurance Group, Ltd. WTM . Each of these stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
American Financial Group engages primarily in property and casualty (P&C) insurance with focus on specialized commercial products for businesses. Shares of the company gained 5.74% year to date.
Everest Re Group writes P&C, reinsurance and insurance in the U.S, Bermuda and international markets. Its shares rallied 8.94% year to date.
White Mountains engages in insurance, reinsurance, and insurance services businesses. Its shares gained 8.69% year to date.
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