Progressives (PGR) August Earnings Rise on Higher Revenues

The Progressive Corporation PGR reported earnings per share of 20 cents for August 2022, rebounding from the year-ago loss of 2 cents. The improvement stemmed from higher revenues coupled with lower expenses.

August Numbers in Detail

Progressive recorded net premiums written of $4.1 billion, up 5% from $3.9 billion in the year-ago month. Net premiums earned were $3.8 billion, up 9% from $3.5 billion reported in the year-ago month.

Net realized loss on securities was $175.4 million versus the year-ago gain of $131.5 million.

The combined ratio — the percentage of premiums paid out as claims and expenses — improved 1170 basis points (bps) year over year to 93.6.

Progressive’s operating revenues were $4.1 billion, improving 9.9% year over year, owing to a 9.2% increase in premiums, 13.1% higher service revenues, a 52.1% jump in investment income and 1.3% higher fees.

Total expenses declined 2.7% to $3.7 billion, largely due to 6.3% lower losses and loss adjustment expenses. However, 9.8% higher policy acquisition costs and an increase of 12.8% in other underwriting expenses weighed on the upside.

In August, policies in force (PIF) were impressive for both Vehicle and Property businesses. In its Vehicle business, the Personal Auto segment declined 2% year over year to 17.3 million. Special Lines increased 5% from the year-earlier month to 5.5 million policies.

In Progressive’s Personal Auto segment, Agency Auto PIF declined 5% to 7.6 million while Direct Auto improved 1% to 9.7 million.

Progressive’s Commercial Auto segment rose 10% year over year to about 1 million. The Property business had 2.8 million policies in force in the reported month, up 4% year over year.

Progressive’s book value per share was $26.94 as of Aug 31, 2022, down 14.4% from $31.47 on Aug 31, 2021.

Return on equity in the trailing 12 months was -8.8%, having contracted 3110 bps from 22.3% in August 2021. The debt-to-total-capital ratio deteriorated 760 bps year over year to 28.2 as of Aug 30, 2022.

Price Performance

Progressive’s shares have rallied 23.8% year to date against the industry’s decrease of 5.1%.

Image Source: Zacks Investment Research

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.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Berkshire Hathaway (BRK.B), American Financial Group AFG and W.R. Berkley Corporation WRB, each sporting a Zacks Rank #1.

The Zacks Consensus Estimate for Berkshire Hathaway’s 2022 and 2023 earnings implies 14.4% and 5.9% year-over-year growth, respectively. The average four-quarter surprise is 17.55%.

The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings has moved 7.6% and 8.8% north, respectively, in the past 60 days. Year to date, shares of BRK.B have lost 6.9%.

American Financial’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 37.09%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 1% each north, respectively, in the past 30 days. Year to date, shares of AFG have lost 5.4%.

The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings implies 20.6% and 10.4% year-over-year growth, respectively. The average four-quarter surprise is 29.95%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 8.8% and 6.8% north in the past 60 days, respectively. Year to date, shares of WRB have rallied 21.5%.

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