Progressive (PGR) Q4 Earnings Improve Year Over Year

The Progressive Corporation’s (NYSE:PGR) reported net income of $1070.8 million or earning per share of $1.81 which reflects year over year growth of 305% in the fourth quarter.

The Zacks Consencus Estimate for the quarter is $1.14 per share.

The Progressive Corporation Price, Consensus and EPS Surprise

Behind the Headlines

Net premiums written were $9.6 billion in the quarter under review, up 21% from $7.9 billion in the year-ago period. Net premiums earned grew 21% year over year to $9.9 billion from $8.2 billion a year ago.

Net realized gains on securities were $369.4 million.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 10 basis points (bps) from the prior-year quarter’s level to 92.4%.

Full Year Highlights

Operating revenues rose 16.9% year over year to $37.9 billion driven by 27% higher investment income, 17% rise in premiums earned, 23% rise in service revenues and 19% higher fees as well as other revenues.

Total expense increased 18% to $33.8 billion. This increase can be primarily attributed to 17% rise in loss and loss adjustment expenses, 17% increase in policy acquisition costs, 33% increase in service expense and 19% increase in other underwriting expenses.

Policies in Force Solid in December

In December, "policies in force" were impressive at the Personal Auto segment, up 11% from the year-ago month to 14.9 million. Special Lines inched up 4% from the prior-year month’s figure to 4.5 million.

In Progressive’s Personal Auto segment, Direct Auto grew 12% year over year to 7.9 million while Agency Auto improved 10% year over year to 7 million.

Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 2.2 million policies in force in the reported month, up 14% year over year.

Financial Update

Progressive’s book value per share was $22.54 as of Dec 31, 2019, up 27.3% from $17.71 as of Dec 31, 2018.

Return-on-equity on a trailing 12-month basis was 35%, up 1120 bps year over year. Debt-to-total capital ratio deteriorated 450 bps year over year to 24.4% as of Dec 31, 2018.

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 Other Investment Managers

Of the insurance industry players that have reported fourth-quarter results so far, RLI Corp. (NYSE:RLI) , Brown & Brown, Inc. BRO and The Travelers Companies, Inc. (NYSE:TRV) beat the respective Zacks Consensus Estimate for earnings.

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