Progressive's (PGR) November Earnings & Revenues Rise Y/Y

The Progressive Corporation (NYSE:PGR) reported earnings per share of 52 cents for November 2019. Earnings rose 26% year over year on the back of an increase in the top line.

Year to date, shares of Progressive have rallied 18% against the industry’s decline of 10.1%. Sustained solid operational results drove the outperformance.

November Numbers

Progressive recorded net premiums written of $2.6 billion in the month, up 12% from $2.3 billion in the year-earlier period. Net premiums earned were about $2.8 billion, up 12% from $2.5 billion recorded last year in November.

Net realized income on securities was $150.3 million, substantially up from $18.5 million in the year-ago month.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 280 basis points (bps) year over year to 94.1%.

Total operating revenues came in at $3 billion. The top line improved 12.3% year over year owing to a 12.5% increase in premiums, a 4.8% rise in investment income, 16.6% growth in fees and other revenues plus a 12.8% rise in service revenues.

Total expenses shot up 15.8% to $2.8 billion. This increase can be primarily attributed to 16.3% higher losses and loss adjustment expenses, 11.3% rise in policy acquisition costs, a 16.6% jump in other underwriting expenses and 26.2% increase in service expenses.

In November, policies in force were impressive in both Vehicle and Property businesses. In its vehicle business, Personal Auto, the same improved 11% year over year to 14.8 million. In Special Lines, policies in force inched up 4% from the year-earlier month to 4.5 million.

In Progressive’s Personal Auto segment, Agency Auto policies in force expanded 10% to nearly 7 million while Direct Auto increased 12% to $ 7.8 million.

Progressive’s Commercial Auto segment policies in force 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.

Progressive’s book value per share was $24.24 as of Nov 30, 2019, up 21.9% from $19.88 as of Nov 30, 2018.

Return on equity in the trailing 12 months was 34.1%, up 920 bps from 21% in November 2018. Debt-to-total-capital ratio improved 360 bps year over year to 23.1% as of Nov 30, 2019.

The board of directors of Progressive recently declared a quarterly dividend of 10 cents per share and an annual payout of $2.25 per share. The dividend will be paid out on Jan 15, 2020 to shareholders of record as of Jan 8, 2020. The company’s current dividend yield is 0.6%, noticeably better than the industry average of 0.4%.

Zacks Rank and Key Insurers

Progressive currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Donegal Group Incorporation (NASDAQ:DGICA) , RLI Corporation (NYSE:RLI) and Cincinnati Financial Corporation (NASDAQ:CINF) . While Donegal Group and RLI sport a Zacks Rank #1 (Strong Buy), Cincinnati Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company beat estimates in the trailing four quarters by 248.34% on average.

RLI underwrites property and casualty insurance in the United States and internationally. The company beat estimates in the trailing four quarters by 154.89% on average.

Cincinnati Financial provides property casualty insurance products in the United States and offers coverage for commercial casualty, commercial property, commercial auto, and workers' compensation. The company beat estimates in the trailing four quarters by 20.79%, on average.

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