Progressive (PGR) Q3 Earnings Top Estimates, Premiums Up Y/Y

The Progressive Corporation’s PGR third-quarter 2020 earnings per share of $1.87 beat the Zacks Consensus Estimate of $1.69. Moreover, the bottom line increased 31.7% from the year-ago quarter.

Behind the Headlines

Net premiums written were $11.1 billion in the quarter, up 14% from $9.6 billion a year ago. Net premiums earned grew 11% to nearly $10 billion.

Net realized gains on securities were $532.6 million, marking a nearly eight-fold increase year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 410 basis points (bps) from the prior-year quarter to 87.8.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation Quote

Revenues Rise, Expenses Up

Operating revenues, in September, were $3.2 million, up 10.2% year over year. The improvement can be attributed to a 10.8% increase in premiums, 10.7% growth in fees and other revenues and 4.3% rise in service revenues. However, 10.1% lower investment income was a partial offset.

Total expenses increased 6.1% year over year to $2.8 billion due to 3.9% rise in losses and loss adjustment expenses, 12.6% higher other underwriting expenses, and 12% jump in policy acquisition costs. Expenses also include $3.1 million in policyholder credit costs.

In September, policies in force were impressive at the Personal Auto segment, having improved 12% from the year-ago month to 16.3 million. Special Lines improved 7% to 4.9 million.

In Progressive’s Personal Auto segment, Direct Auto grew 14% year over year to 8.8 million while Agency Auto improved 9% to 7.5 million.

Progressive’s Commercial Auto segment rose 7% year over year to 0.8 million. The Property business had about 2.4 million policies in force in September, up 13%.

Financial Update

Progressive’s book value per share was $30.04 as of Sep 30, 2020, up 28.9% from $23.31 on Sep 30, 2019.

Return-on-equity in September 2020 was 36.7%, up 400 bps year over year. Debt-to-total capital ratio improved 80 bps to 23%.

Zacks Rank

Progressive currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

W.R. Berkley Corporation WRB is set to release third-quarter 2020 earnings on Oct 20. The Zacks Consensus Estimate for the same stands at 79 cents per share.

The Travelers Companies TRV is scheduled to release third-quarter 2020 earnings on Oct 20. The Zacks Consensus Estimate for the same stands at $3.02 per share.

Cincinnati Financial Corporation CINF is set to release third-quarter 2020 earnings on Oct 26. The Zacks Consensus Estimate for the same stands at 55 cents per share.

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