Progressive's (PGR) August Earnings Up as Revenues Rise Y/Y
The Progressive Corporation PGR reported earnings per share of 83 cents for August 2020, increasing nearly three-fold year over year on an improved top line.
Year to date, Progressive’s shares have gained 31.9% against the industry’s 7.6% decline. The rise was backed by the company’s consistently strong results.
Numbers in August
Progressive recorded net premiums written of $3.4 billion in the month, up 18% from $2.9 billion in the year-ago quarter. Net premiums earned were about $3.1 billion, up 11% from $2.8 billion last May.
Net realized gain on securities in the quarter was $330.9 million against loss of $33.7 million in the prior-year quarter.
Combined ratio — percentage of premiums paid out as claims and expenses — improved 80 basis points (bps) year over year to 92.3%.
Total operating revenues came in at $3.2 billion, improving 10.3% year over year owing to a 10.9% increase in premiums, 10.5% rise in fees and other revenues and 14.4% ijump in service revenues. However, 10.5% lower investment income was a partial offset.
Total expenses rose 10% to $2.9 billion, primarily because of 8.8% higher losses and loss adjustment expense, and 11.4% jump in policy acquisition costs and 12.4% higher other underwriting expenses in August 2020. The company incurred $11.5 million in policyholder credit expense in tandem with the plan to issue a credit to personal auto customers with a policy in force, in response to the reduction in auto accident frequency resulting from COVID-19 restrictions.
In August, policies in force were impressive in both Vehicle and Property business. In its vehicle business, Personal Auto segment improved 11% year over year to nearly 21.1 million. Special Lines increased 7% from the year-earlier month to 4.9 million policies.
In Progressive’s Personal Auto segment, Agency Auto expanded 7.5% to 9 million while Direct Auto increased 14% to nearly 8.7 million.
Progressive’s Commercial Auto segment rose 7% year over year to 0.8 million. The Property business had 2.4 million policies in force in the reported month, up 13% year over year.
Progressive’s book value per share was $29.76 as of Aug 31, 2020, up 29.1% from $21.08 on Aug 31, 2019.
Return on equity in the trailing 12 months was 35%, up 390 bps from 37.4% in August 2019. Debt-to-total-capital ratio improved 90 bps year over year to 23.1 as of Aug 31, 2020.
Progressive currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked companies in the insurance industry are Donegal Group DGICA, Markel Corporation MKL and Fidelity National Financial FNF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Donegal Group delivered a positive earnings surprise of 134.62% in the last reported quarter.
Markel came up with a positive earnings surprise of 57.01% in the last reported quarter.
Fidelity National delivered a positive earnings surprise of 53.52% in the last reported quarter.
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