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Progressive's August Earnings Improve on Higher Revenues

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Progressive Corp .'s PGR operating earnings for Aug 2015 came in at 16 cents per share, up 14% from 14 cents earned in the year-ago month. The improvement was driven by higher revenues, which compensated for an increase in expenses.

August Numbers

Progressive recorded $1.8 billion net premiums written, up 12% from $1.5 billion in the year-ago month. Net premiums earned of $1.6 billion were up 12% from $1.4 billion in the year-ago month.

Combined ratio improved 70 basis points from the prior-year month to 92.1%.

In the month of August, policies in force were healthy, with the Personal Auto segment increasing 3% year over year to 9.5 million. Special Lines increased 2% year over year to 4.1 million.

In Progressive's Personal Auto segment, Direct Auto improved 8% year over year to 4.8 million policies. However, Agency Auto declined 1% year over year to 4.7 million. Progressive's Commercial Auto segment showed 6% improvement to 0.5 million policies on a year-over-year basis. Property business had about 1.1 million policies in force in the reported month.

Total revenue improved 12% year over year to $1.6 billion, largely driven by higher service revenues (up 67% year over year), premiums (up 12% year over year) and investment income (up 21% year over year).

On the other hand, total expense increased 11.5% year over year to $1.5 billion in August. The major components contributing to the rise in total expense were a 13.5% increase in policy acquisition costs, 20% higher other underwriting expenses and 9.4% increase in losses and loss adjustment expenses.

Progressive reported book value per share of $12.69 on Aug 31, up 7.8% year over year.

Return on equity on a trailing 12-month basis was 14.8%, down 700 basis points year over year. The debt-to-total capital ratio deteriorated 270 basis points from the prior-year level to 26.8% as of Aug 31.

Zacks Rank

Progressive carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are First American Financial Corporation FAF , Hallmark Financial Services Inc. HALL and Selective Insurance Group Inc. SIGI . All these stocks sport a Zacks Rank #1 (Strong Buy).

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PROGRESSIVE COR (PGR): Free Stock Analysis Report

FIRST AMER FINL (FAF): Free Stock Analysis Report

HALLMARK FINL (HALL): Free Stock Analysis Report

SELECT INS GRP (SIGI): Free Stock Analysis Report

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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