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Progressive (PGR) Q4 Earnings Top Estimates, Premiums Rise Y/Y

The Progressive Corporation’s PGR fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year.

Behind the Headlines

Net premiums written were $12.5 billion in the quarter, up 16% from $10.7 billion a year ago and beat our estimate of $12.2 billion.

Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion.

Net realized loss on securities was $72.8 billion against a gain of $425.3 million in the year-ago quarter.

The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 basis points (bps) from the prior-year quarter’s level to 93.9.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation Price, Consensus and EPS Surprise
The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation Quote

December Policies in Force

Policies in force were soft in the Personal Auto segment, increasing 3% from the year-ago month’s figure to 17.9 million. Special Lines improved 5% to 5.6 million.

In Progressive’s Personal Auto segment, Direct Auto increased 6% year over year to 10.1 million, while Agency Auto dropped 1% to 7.8 million.

Progressive’s Commercial Auto segment rose 8% year over year to 1 million. The Property business had 2.9 million policies in force, up 3%.

Full-Year Numbers

Operating revenues were about $51.5 billion in 2022, up 11.5% year over year. This improvement was driven by an 11% increase in premiums, 4.4% higher fees and other revenues, a 10.3% increase in service revenues and 46.4% higher investment income.

Total expenses increased 12% year over year to $48.7 billion due to 13% higher losses and loss adjustment expenses,5% higher policy acquisition costs and a 4% rise in other underwriting expenses.

Financial Update

Progressive’s book value per share was $26.32 as of Dec 31, 2022, down 13.3% from $30.35 on Dec 31, 2021.

Return on equity in December 2022 was -13.5%, down 2710 bps year over year. The total debt-to-total capital ratio deteriorated 750 bps to 28.7.

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.

Performance of Other Insurers

The Travelers Companies, Inc. TRV reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.

Net written premiums increased 10% year over year to $8.8 billion, driven by strong renewal premium change and retention as well as higher levels of new business, strong production in surety and strong renewal premium change, higher pricing in both Domestic Automobile and Domestic Homeowners and Other. The figure was higher than our estimate of $8.6 billion.

Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year.  The combined ratio deteriorated 650 bps year over year to 94.5.

Brown & Brown, Inc.’s BRO fourth-quarter 2022 adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 13.4%. The bottom line increased 19% year over year. Total revenues of $901.4 million beat the Zacks Consensus Estimate by 0.6%. The top line improved 22.1% year over year. The upside can be primarily attributed to commission and fees, which grew 21.3% year over year to $864.8 million. Organic revenues improved 7.8% to $764.7 million in the quarter under review.

Adjusted EBITDAC of Brown and Brown was $283.1 million, up 34.9% year over year. EBITDAC margin expanded 560 basis points year over year to 31.2%.

Upcoming Release

W.R. Berkley Corporation WRB will report fourth-quarter 2022 results on Jan 26. The Zacks Consensus Estimate for the fourth quarter is pegged at $1.07, suggesting an increase of 4.9% from the year-ago quarter’s reported figure.

WRB’s earnings beat estimates in the last four quarters.

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