Progressive (PGR) Rides On Improved July Results, Shares Up

Shares of The Progressive Corporation (NYSE:PGR) gained 2.35% in the trading session after the company posted improved July results. Operating earnings per share of 34 cents increased more than three-fold year over year, driven by higher revenues.

Year to date, Progressive shares have surged 37.2%, outperforming the industry’s increase of 10.4%. This share price appreciation was courtesy the company’s sustained strong results.

Numbers in July

Progressive recorded net premiums written of $2.7 billion in July, up 19% from $2.3 billion in the year-ago month. Net premiums earned were about $2.5 billion, up 14% from $2.2 billion in the year-ago month.

Net realized gains on securities in the quarter were $0.9 million versus $23.3 million in July 2016. Combined ratio − the percentage of premiums paid out as claims and expenses – improved 720 basis points (bps) from the prior-year quarter to 90.1%.

Total operating revenue came in at $2.7 billion. The top line rallied 14% year over year owing to a 14% increase in premiums, 8% higher fees and other revenues, 13% rise in investment income and 24% improvement in service revenues.

Total expense increased 7.8% to $2.3 billion. This rise in expenses can be primarily attributed to 2.7% higher losses and loss adjustment expenses, 12.9% increase in policy acquisition costs and 18% higher other underwriting expenses.

In July, policies in force were impressive with the Personal Auto segment improving 9% year over year to nearly 11.2 million. Special Lines increased 2% from the prior-year month to 4.4 million.

In Progressive’s Personal Auto segment, Direct Auto as well as Agency Auto climbed 9% each to 5.3 million and 5.7 million, respectively.

Progressive’s Commercial Auto segment grew 4% year over year to 0.6 million. The Property business had about 1.3 million policies in force in the reported month, up 13% year over year.

Progressive’s book value per share was $15.88 as of Jul 31, 2017, up 15.4% from $13.76 as of Jul 31, 2016.

Return on equity on a trailing 12-month basis was 19.7%, up 450 bps from 15.2% in July 2016. Debt-to-total capital ratio deteriorated 190 bps year over year to 26.8% as of Jul 31, 2017.

Zacks Rank and Other Insurers

Progressive carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty (P&C) insurers are American Financial Group, Inc. (NYSE:AFG) , Markel Corporation (NYSE:MKL) and Fidelity National Financial, Inc. (NYSE:FNF) .

Markel markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in two of the last four quarters with an average beat of 21.06%. The company flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group primarily engages in P&C insurance with focus on specialized commercial products for businesses. The company delivered positive surprises in three of the last four quarters with an average beat of 17.03%. The company carries a Zacks Rank #2 (Buy).

Fidelity National provides title insurance, plus technology and transaction services to the real estate and mortgage industries in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.05%. The company carries a Zacks Rank #2.

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