Progressive (PGR) Q4 Earnings Top, Premiums Earned Up Y/Y

Zacks Equity Research
·3-min read

The Progressive Corporation’s PGR fourth-quarter 2020 earnings per share of $1.83 beat the Zacks Consensus Estimate of $1.68. Moreover, the bottom line increased 1.1% from the year-ago quarter.

Behind the Headlines

Net premiums written were $9.5 billion in the quarter, down 1% from $9.6 billion a year ago. Net premiums earned grew 3% to nearly $10.2 billion.

Net realized gains on securities were $760.2 million, which more than doubled year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 400 basis points (bps) from the prior-year quarter to 88.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation Price, Consensus and EPS Surprise
The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation Quote

Revenues and Expenses Down In December

Operating revenues in December were $3.3 million, down 10.7% year over year. The decline can be attributed to a 10.7% decrease in premiums, 8.1% decline in fees and other revenues, 4.3% lower service revenues and 14.6% lower investment income.

Total expenses decreased 17.9% year over year to $2.8 billion in December due to 21.6% lower losses and loss adjustment expenses, 9.3% lower other underwriting expenses, and 6.8% decrease in policy acquisition costs. Expenses also include $10.4 million in policyholder credit costs.

In December, policies in force were impressive at the Personal Auto segment, having improved 11% from the year-ago month to 16.5 million. Special Lines improved 8% to 4.9 million.

In Progressive’s Personal Auto segment, Direct Auto grew 9% year over year to 7.6 million while Agency Auto improved 13% to 8.9 million.

Progressive’s Commercial Auto segment rose 9% year over year to 0.8 million. The Property business had about 2.5 million policies in force in September, up 13%.

Financial Update

Progressive’s book value per share was $28.27 as of Dec 31, 2020, up 24.5% from $22.54 on Dec 31, 2019.

Return-on-equity in December 2020 was 39.3%, up 430 bps year over year. Debt-to-total capital ratio improved 30 bps to 24.1%.

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.

Performance of Some Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies TRV, W.R. Berkley Corporation WRB and Brown & Brown BRO beat the Zacks Consensus Estimate for earnings.

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