Progressive (PGR) Q4 Earnings Surpass, Premiums Grow Y/Y

The Progressive Corp.’s (NYSE:PGR) fourth-quarter 2017 operating earnings per share of 99 cents beat the Zacks Consensus Estimate of 77 cents. The bottom line improved 55% year over year.

Progressive Corporation (The) Price, Consensus and EPS Surprise

Progressive Corporation (The) Price, Consensus and EPS Surprise | Progressive Corporation (The) Quote

Including net realized losses, net income per share was 98 cents, up 48% year over year.

Behind the Headlines

Progressive recorded net premiums written of $6.8 billion in the quarter under review, up 22% from $5.6 billion in the year-ago quarter. Also, net premiums earned grew 17% year over year to $6.8 billion from $5.9 billion

Net realized loss on securities was $9.7 million, comparing unfavorably with a gain of $22.1 million in the year-ago quarter. Combined ratio — percentage of premiums paid out as claims and expenses — improved 130 basis points (bps) from the prior-year quarter to 91.4%.

Numbers in December 2017

Operating revenues improved 18% year over year to $1.97 billion. This top-line growth was driven by a 40% surge in service revenues, 16% higher fees and other revenues and 17% increase in both premiums and investment income.

Total expense increased 19.6% to nearly $2 billion. This rise in expenses can be primarily attributed to 19.8% higher loss and loss adjustment expenses, 16.5% increase in policy acquisition costs and 22% higher other underwriting expenses.

In December 2017, policies in force were impressive at the Personal Auto segment, improving 13% from December 2016 to 11.7 million. Special Lines inched up 2% from the prior-year month to 4.4 million.

In Progressive’s Personal Auto segment, Direct Auto grew 13% year over year to 6 million while Agency Auto ascended 12% year over year to 5.7 million.

Progressive’s Commercial Auto segment grew 6% year over year to 0.6 million. The Property business had about 1.5 million policies in force in the reported month, up 22% year over year.

Progressive’s book value per share was $15.96 as of Dec 31, 2017, up 16.3% from $13.72 as of Dec 31, 2016.

Return-on-equity on a trailing 12-month basis was 21.7%, having expanded 680 bps from 14.9% in December 2016. Debt-to-total capital ratio contracted 200 bps year over year to 26.3% as of Dec 31, 2017.

Zacks Rank and Performance of Insurer

Progressive carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The bottom line at Brown & Brown, Inc. (NYSE:BRO) , MGIC Investment Corporation (NYSE:MTG) and The Travelers Companies, Inc. (NYSE:TRV) surpassed their respective Zacks Consensus Estimate in the fourth quarter.

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