Progressive's July Earnings Rise

Progressive Corp.’s ( PGR - Analyst Report ) earnings per share for July 2012 were 10 cents, up 21% from 8 cents in the year-ago quarter. Net income climbed 15% year over year to $59 million in the quarter.

The company recorded net premiums of $1.65 billion in July 2012, up 10% from $1.50 billion in July 2011. Net premiums earned were $1.55 billion, up 8% from $1.44 billion in the year-ago period.

Net realized gain on securities in the quarter was $16.9 million, reversing the loss of $16.5 million incurred in July 2011. The combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 120 basis points over the prior-year quarter to 96.9% in the reported quarter.

Numbers in July

Progressive publishes monthly financial reports. During July, policies in force remained healthy, with the Personal Auto segment increasing 6% year over year but skidding 0.2% sequentially. Special Lines also increased 4% year over year and 0.6% from the preceding month.

In Personal Auto, Direct Auto reported an increase of 6% year over year but down 0.2% from the preceding month. Agency Auto was up 6% year over year, but down 0.2% from the last month. Progressive’s Commercial Auto segment reported an increase of 3% year over year.

Total expenses for the reported month increased 9.8% to $1.52 billion from $1.39 billion in July 2011. The major components contributing to the increase in total expenses were a 12.3% increase in losses and loss adjustment expenses, and a 3% increase in policy acquisition costs. However, a meager decline of 0.3% in underwriting expenses acted as a partial offset.

Progressive reported book value per share of $10.49, up from $9.91 as of July 31, 2011 and $10.32 as of June 30, 2012.

Return on equity on a trailing 12-month basis was 13.5%, down from 17.4% in July 2011 and up from 12.9% in June 2012. The debt-to-total-capital ratio was 24.5% as of July 31 2012, up from 23.6% as of July 31 2011 but falling slightly from 24.9% as of June 2012.

The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

Headquartered in Mayfield Village, Ohio, Progressive Corporation is one of the largest auto insurers in the country. It is a leading independent agency writer of private passenger auto coverage, market leader for the motorcycle insurance and is one of the leading companies in the commercial auto insurance market. It competes with Allstate Corporation ( ALL - Analyst Report ) .