Progressive Corp.’s (PGR) operating earnings for Oct 2014 came in at 16 cents per share, exhibiting an 11% year-over-year decline.
Including net realized gains, the company reported net income of 17 cents per share, down 9% year over year.
A higher magnitude of increase in expense offset the revenue improvement inducing the earnings decline.
Progressive recorded $1.7 billion net premiums written, up 5% from $1.6 billion in the year-ago month. Net premiums earned of $1.8 billion were up 6% from $1.7 billion in the year-ago month.
Combined ratio − the percentage of premiums paid out as claims and expenses − improved 130 basis points from the prior-year month to 92.8%.
October Numbers
Progressive publishes monthly financial reports. In the month of October, policies in force were healthy, with the Personal Auto segment increasing 1% year over year to 9.2 million. Special Lines increased 1% year over year to 4.1 million.
In Progressive's Personal Auto segment, Direct Auto grew 7% year over year to 4.5 million. However, Agency Auto declined 2% year over year at 4.8 million. Progressive’s Commercial Auto segment again declined 2% on a year-over-year basis.
Total revenue improved 5% year over year to $1.8 billion, largely driven by higher premiums.
On the other hand, total expense increased 7.1% to $1.7 billion in October. The major components contributing to the rise in total expense were an 8.1% increase in losses and loss adjustment expenses, and 3% increase in policy acquisition costs as well as other underwriting expenses.
Progressive reported book value per share of $12.04 on Oct 30, up 2.8% year over year.
Return on equity on a trailing 12-month basis was 18.8%, down 50 basis points year over year. The debt-to-total capital ratio deteriorated 250 basis points from the prior-year level to 23.5% as of Oct 30, 2014.
Zacks Rank
Progressive carries a Zacks Rank #2 (Buy). Investors interested in property and casualty insurers can also consider Arch Capital Group Ltd. (ACGL), AmTrust Financial Services, Inc. (AFSI) and Donegal Group Inc. (DGICA). All these stocks sport a Zacks Rank #1 (Strong Buy).
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