Progressive Corp.’s PGR operating earnings for Nov 2015 came in at 15 cents per share, a cent above the year-ago earnings month driven by higher revenues. However, increase in expense limited the upside.
November Numbers
Progressive recorded $1.5 billion net premiums written, up 15% from $1.3 billion in the year-ago month. Net premiums earned of $1.6 billion were up 13% from $1.4 billion in the year-ago month.
Combined ratio deteriorated 20 basis points from the prior-year month to 93.1%.
In the month of November, policies in force were healthy, with the Personal Auto segment increasing 4% year over year to 9.6 million. Special Lines increased 2% year over year to 4.1 million.
In Progressive's Personal Auto segment, Direct Auto improved 9% year over year to 4.9 million policies. However, Agency Auto remained flat with the year-ago level at 4.7 million. Progressive’s Commercial Auto segment showed 7% improvement to 0.5 million policies on a year-over-year basis. Property business had about 1.1 million policies in force in the reported month.
Total revenue improved 14% year over year to $1.7 billion, largely driven by higher service revenues (up 29% year over year), premiums (up 13% year over year) and investment income (up 14% year over year).
On the other hand, total expense increased 13% year over year to $1.5 billion in November. The major components contributing to the rise in total expense were a 16% increase in policy acquisition costs, 14% higher other underwriting expenses and a 12% increase in losses and loss adjustment expenses.
Progressive reported book value per share of $13.28 on Nov 30, up 8.8% year over year.
Return on equity on a trailing 12-month basis was 15.4%, down 370 basis points year over year. The debt-to-total capital ratio deteriorated 270 basis points from the prior-year level to 25.9% as of Nov 30.
Zacks Rank
Progressive carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are RLI Corp. RLI, Hallmark Financial Services Inc. HALL and Cincinnati Financial Corp. CINF. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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