Progressive's November Earnings Grow On Higher Revenues

The Progressive Corporation (NYSE:PGR) reported earnings per share of 26 cents for November, rebounding from the year-ago loss of 2 cents. Improvement in the top line drove the bottom line.

Year to date, Progressive’s shares have surged 57.4%, outperforming the industry’s rally of 17.5%. This share price rise was courtesy of the company’s sustained strong results.

Numbers in November

Progressive recorded net premiums written of $2 billion in November, up 20% from $1.7 billion in the year-ago month. Net premiums earned were about $2.1 billion, up 17% from $1.8 billion in the year-ago month.

Net realized gains on securities in the quarter were $0.7 million, plunging 98% year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — remained flat year over year at 90.9%.

Total operating revenues came in at $2.2 billion. The top line improved 17% year over year owing to a 17% increase in premiums, 22% higher investment income, 18% growth in fees and other revenues plus 30% rise in service revenues.

Total expenses shot up 16.3 % to nearly $2 billion. This increase in expenses can be primarily attributed to 14.3% higher losses and loss adjustment expenses, 15.8% climb in policy acquisition costs and a 30% jump in other underwriting expenses.

In November, policies in force were impressive in both Vehicle and property business. In its vehicle business, Personal Auto segment improved 11.6% year over year to nearly 12 million. Special Lines increased 2% from the prior-year month to 4.4 million.

In Progressive’s Personal Auto segment, both Direct Auto and Agency auto expanded 12% each to nearly 6 million.

Progressive’s Commercial Auto segment rose 6% year over year to 0.6 million. The Property business had about 1.3 million policies in force in the reported month, up 20% year over year.

Progressive’s book value per share was $16.60 as of Nov 30, 2017, up 18.1% from $14.05 as of Nov 30, 2016.

Return on equity on a trailing 12-month basis was 21%, up 760 bps from 13.4% in November 2016. Debt-to-total-capital ratio improved 240 bps year over year to 25.5% as of Nov 30, 2017.

Zacks Rank and Other Insurers

Progressive carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are Infinity Property and Casualty Corporation (NASDAQ:IPCC) , CNA Financial Corporation (NYSE:CNA) and NMI Holdings Inc. (NASDAQ:NMIH) .

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company’s four-quarter average positive surprise is 300.65% and it sports a Zacks Rank #1 (Strong Buy). Shares have gained 20.8% year to date, outperforming the industry’s rally. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial provides commercial property and casualty insurance products, primarily in the United States. The company delivered a four-quarter average beat of 39.78%. Shares of the company have gained 27.5% year to date. The stock sports a Zacks Rank of 1.

NMI Holdings provides private mortgage guaranty insurance services in the United States. The company’s four-quarter average positive surprise is 11.72% and carries a Zacks Rank #2 (Buy). Shares have soared 62.9% year to date, outperforming the industry’s increase.

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