The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2018 operating earnings per share of $1.13 beat the Zacks Consensus Estimate of $1.01. The bottom line nearly doubled from 65 cents in the year-ago quarter.
Behind the Headlines
Net premiums written were $17.9 billion in the quarter under review, up 18% from $6.8 billion in the year-ago period. Net premiums earned grew 20% year over year to $8.2 billion from $6.8 billion a year ago.
Net realized losses on securities were $572.2 million, wider than the year-ago loss of $9.7 million.
Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 110 basis points (bps) from the prior-year quarter’s level to 92.5%.
The Progressive Corporation Price, Consensus and EPS Surprise
Full Year Highlights
Operating income of 52 cents per share in 2018 surged 70% year over year.
Operating revenues rose 21% year over year to $32.4 billion driven by 46% higher investment income, 20% rise in premiums earned, 25% rise in service revenues and 27% higher fees as well as other revenues.
Total expense increased 16.7% to $28.8 billion. This increase can be primarily attributed to 15.5% rise in loss and loss adjustment expenses, 21.1% increase in policy acquisition costs and 21% increase in other underwriting expenses.
Policies in Force Solid in December
In December, policies in force were impressive at the Personal Auto segment, having improved 14% from the year-ago month to 13.4 million. Special Lines inched up 0.4% from the prior-year month’s figure to 4.4 million.
In Progressive’s Personal Auto segment, Direct Auto grew 16% year over year to 7 million while Agency Auto improved 12% year over year to 6.4 million.
Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 1.9 million policies in force in the reported month, up 32% year over year.
Financial Update
Progressive’s book value per share was $17.71 as of Dec 31, 2018, up 11% from $15.96 as of Dec 31, 2017.
Return-on-equity on a trailing 12-month basis was 23.81%, having expanded 210 bps year over year. Debt-to-total capital ratio deteriorated 260 bps year over year to 28.9% as of Dec 31, 2018.
Dividend Update
The company will pay annual variable dividend of $2.5140 per share on Feb 11, 2019
Zacks Rank
Progressive currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2018 operating net income per share of 42 cents, beating the Zacks Consensus Estimate by 13.5%.
The Travelers Companies, Inc.’s (TRV - Free Report) fourth-quarter 2018 core income of $2.13 per share beat the Zacks Consensus Estimate of $1.98 by 7.6%.
Upcoming Industry Release
RLI Corp. (RLI - Free Report) will release fourth-quarter 2018 earnings on Jan 23. The Zacks Consensus Estimate for the same stands at 6 cents per share, indicating a year-over-year plunge of 88.2%.
Zacks' Top 10 Stocks for 2019
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The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2018 operating earnings per share of $1.13 beat the Zacks Consensus Estimate of $1.01. The bottom line nearly doubled from 65 cents in the year-ago quarter.
Behind the Headlines
Net premiums written were $17.9 billion in the quarter under review, up 18% from $6.8 billion in the year-ago period. Net premiums earned grew 20% year over year to $8.2 billion from $6.8 billion a year ago.
Net realized losses on securities were $572.2 million, wider than the year-ago loss of $9.7 million.
Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 110 basis points (bps) from the prior-year quarter’s level to 92.5%.
The Progressive Corporation Price, Consensus and EPS Surprise
Full Year Highlights
Operating income of 52 cents per share in 2018 surged 70% year over year.
Operating revenues rose 21% year over year to $32.4 billion driven by 46% higher investment income, 20% rise in premiums earned, 25% rise in service revenues and 27% higher fees as well as other revenues.
Total expense increased 16.7% to $28.8 billion. This increase can be primarily attributed to 15.5% rise in loss and loss adjustment expenses, 21.1% increase in policy acquisition costs and 21% increase in other underwriting expenses.
Policies in Force Solid in December
In December, policies in force were impressive at the Personal Auto segment, having improved 14% from the year-ago month to 13.4 million. Special Lines inched up 0.4% from the prior-year month’s figure to 4.4 million.
In Progressive’s Personal Auto segment, Direct Auto grew 16% year over year to 7 million while Agency Auto improved 12% year over year to 6.4 million.
Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 1.9 million policies in force in the reported month, up 32% year over year.
Financial Update
Progressive’s book value per share was $17.71 as of Dec 31, 2018, up 11% from $15.96 as of Dec 31, 2017.
Return-on-equity on a trailing 12-month basis was 23.81%, having expanded 210 bps year over year. Debt-to-total capital ratio deteriorated 260 bps year over year to 28.9% as of Dec 31, 2018.
Dividend Update
The company will pay annual variable dividend of $2.5140 per share on Feb 11, 2019
Zacks Rank
Progressive currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
MGIC Investment Corporation (MTG - Free Report) reported fourth-quarter 2018 operating net income per share of 42 cents, beating the Zacks Consensus Estimate by 13.5%.
The Travelers Companies, Inc.’s (TRV - Free Report) fourth-quarter 2018 core income of $2.13 per share beat the Zacks Consensus Estimate of $1.98 by 7.6%.
Upcoming Industry Release
RLI Corp. (RLI - Free Report) will release fourth-quarter 2018 earnings on Jan 23. The Zacks Consensus Estimate for the same stands at 6 cents per share, indicating a year-over-year plunge of 88.2%.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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