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Progressive (PGR) October Earnings Up Y/Y as Revenues Rise

The Progressive Corporation PGR reported earnings per share of 64 cents for October 2022, up 1.6% year over year. The improvement stemmed from higher revenues, partially offset by higher expenses.

October Numbers in Detail

Progressive recorded net premiums written of $5.2 billion, up 19% from $4.3 billion in the year-ago month. Net premiums earned were $4.9 billion, up 11% from $4.4 billion reported in the year-ago month.

Net realized loss on securities was $178.6 million, down 41% year over year.

The combined ratio — the percentage of premiums paid out as claims and expenses — improved 130 basis points (bps) year over year to 95.9.

Progressive’s operating revenues were $5.1 billion, improving 11.7% year over year, owing to a 10.8% increase in premiums, 0.4% higher service revenues, a 77.9% jump in investment income and 9.9% higher fees.

Total expenses increased 9.4% to $4.8 billion, largely due to 9.1% higher losses and loss adjustment expenses, 9.8% higher policy acquisition costs and an increase of 10% in other underwriting expenses, which weighed on the upside.

In October, policies in force (PIF) were impressive for both Vehicle and Property businesses. In its Vehicle business, the Personal Auto segment increased 1% year over year to 17.7 million. Special Lines increased 5% from the year-earlier month to 5.6 million policies.

In Progressive’s Personal Auto segment, Agency Auto PIF declined 4% to 7.7 million, while Direct Auto improved 4% to 10 million.

Progressive’s Commercial Auto segment rose 9% year over year to about 1 million. The Property business had 2.8 million policies in force in the reported month, up 3% year over year.

Progressive’s book value per share was $24.68 as of Oct 31, 2022, down 20.7% from $31.13 on Oct 31, 2021.

Return on equity in the trailing 12 months was -16.3%, having contracted 3620 bps from 19.9% in August 2021. The debt-to-total-capital ratio deteriorated 920 bps year over year to 30 as of Oct 31, 2022.

Price Performance

Progressive’s shares have rallied 22.7% year to date compared with the industry’s increase of 3.8%.

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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.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation WRB, Berkshire Hathaway (BRK.B) and American Financial Group, Inc. AFG. While W.R. Berkley sports a Zacks Rank #1 (Strong Buy), Berkshire Hathaway and American Financial carry a Zacks Rank #2 (Buy).

The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 26.9%.

The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days.

Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%.  In the past year, Berkshire Hathaway has gained 9%.

The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 0.4%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.


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