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Progressive's January Earnings Improve on Higher Premiums

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The Progressive CorporationPGR reported earnings per share of 52 cents for January 2018, soaring 73% year over year. Moreover, the bottom line is driven by an improved top line.

Year to date, Progressive's shares have gained 3%, outperforming the industry 's 1.1% increase. This share price rise was courtesy of the company's sustained strong results.

Numbers in January

Progressive recorded net premiums written of $2.7 billion in the month, up 22% from $2.2 billion in the year-ago period. Net premiums earned were about $2.7 billion, up 18% from $1.8 billion last January.

Net realized gains on securities in the quarter were $181.1 million, skyrocketing from $9.4 million in the prior-year quarter.

Combined ratio - percentage of premiums paid out as claims and expenses - improved 230 basis points year over year to 87.4%.

Total operating revenues came in at $2.9 billion. The top line improved 18% year over year owing to an 18% increase in premiums, 27% higher investment income, 15% growth in fees and other revenues plus a 21% rise in service revenues.

Total expenses shot up 15% to nearly $2.4 billion. This increase can be primarily attributed to 15% higher losses and loss adjustment expenses, 17% climb in policy acquisition costs and a 16% jump in other underwriting expenses.

In January, policies in force were impressive in both Vehicle and property business. In its vehicle business, Personal Auto segment improved 13% year over year to nearly 11.9 million. Special Lines inched up 1% from the year-earlier month to 4.3 million.

In Progressive's Personal Auto segment, both Direct Auto and Agency Auto expanded 14% to 6.1 million and 13% to nearly 5.7 million, respectively.

Progressive's Commercial Auto segment rose 7% year over year to 0.6 million. The Property business had about 1.6 million policies in force in the reported month, up 27% year over year.

Progressive's book value per share was $16.49 as of Jan 31, 2018, up nearly 17% from $14.10 as of Jan 31, 2017.

Return on equity in the trailing 12 months was 22.5%, improved 510 bps from 17.4% in January 2017. Debt-to-total-capital ratio improved 220 bps year over year to 25.6% as of Jan 31, 2018.

Zacks Rank and Other Insurers

Progressive carries a Zacks Rank #2 (Buy). Investors interested in the property and casualty insurance industry can also look at Infinity Property and Casualty Corporation IPCC , NMI Holdings Inc. NMIH and CNA Financial Corporation CNA .

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company's average four-quarter positive surprise is 262.25% and it sports a Zacks Rank #1 (Strong Buy). Shares have gained 11.1% year to date, outperforming the industry's rally. You can see the complete list of today's Zacks #1 Rank stocks here .

NMI Holdings provides private mortgage guaranty insurance services in the United States. The company's average four-quarter positive surprise is 11.72% and it carries a Zacks Rank of 1. Shares have risen 11.8% year to date, outperforming the industry's increase.

CNA Financial provides commercial property and casualty insurance products, primarily in the United States. The company delivered an average four-quarter beat of 46.88%. Shares of the company have inched up 0.6% year to date. The stock has a Zacks Rank of 2.

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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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