Progressive: Higher Premiums Drive April Earnings - Analyst Blog
16 May 2014 - 6:00AM
Zacks
Progressive Corp.’s (PGR) operating earnings in
Apr 2014 improved 33% year over year to 24 cents per share on
higher premiums.
Including net realized gains on securities (including net
impairment losses), net income came in at $155.8 million or 26
cents per share, up from $139.5 million or 23 cents per share in
the year-ago month.
Progressive recorded net premiums of $1.88 billion in Apr 2014, up
5% from $1.78 billion in the comparable year-ago month. Net
premiums earned improved year over year to $1.73 billion in the
reported month.
Net investment income declined 6.2% year over year to $30.1
million.
Total revenue in the month improved 4.6% year over year to $1.83
billion.
On the other hand, total expense increased 2.3% to $1.58 billion in
the reported month. The major components contributing to the
increase in total expense were a 3.2% increase in policy
acquisition costs, a 1.2% rise in losses and loss adjustment
expenses and a 7% increase in other underwriting expenses.
Combined ratio improved 290 basis points year over year to
88.4%.
In the month of April, policies in force remained healthy, with the
Personal Auto segment increasing 3% year over year to 13.33
million. Special Lines increased 1% year over year to 4.01
million.
In Progressive's Personal Auto segment, Direct Auto grew 7% year
over year to 4.41 million. Agency Auto increased only 1% year over
year to 4.90 million. Progressive’s Commercial Auto segment
declined 2% on a year-over-year basis.
Progressive reported book value per share of $11.13 as of Apr 30,
2014, up from $10.86 as of Mar 31.
Return on equity on a trailing 12-month basis was 18.1% compared
with 17.6% in Mar 2014. The debt-to-total capital ratio was 25.1%
as of Apr 30, 2014, reflecting deterioration from 22.4% as of Mar
31, 2014.
Zacks Rank
Progressive carries a Zacks Rank #3 (Hold). Some better-ranked
insurers worth considering include Aspen Insurance Holdings
Ltd. (AHL), AmTrust Financial Services,
Inc. (AFSI) and Atlas Financial Holdings,
Inc. (AFH). All these stocks sport a Zacks Rank #1 (Strong
Buy).
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