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Progressive (PGR) Q2 Earnings Surpass Estimates, Rise Y/Y

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The Progressive Corporation’s (PGR - Free Report) second-quarter 2020 earnings per share of $1.83 beat the Zacks Consensus Estimate of $1.72. Moreover, the bottom line increased 10.2% from the year-ago quarter.

Behind the Headlines

Net premiums written were $10.1 billion in the quarter under review, up 11% from $9.1 billion in the year-ago period. Net premiums earned grew 9% year over year to $9.6 billion.

Net realized gains on securities were $890.8 million, marking a nearly five-fold increase year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 27 basis points (bps) from the prior-year quarter’s level to 87.7.

The Progressive Corporation Price, Consensus and EPS Surprise

June Numbers Solid

Operating revenues were $3.2 million, up 9.3% year over year. The improvement can be attributed to a 10.1% increase in premiums, 3.3% growth in fees and other revenues and 18.8% rise in service revenues. However, 16% lower investment income was a partial offset.

Total expenses increased 3.4% year over year to $2.7 billion due to 25.2% higher other underwriting expenses and 9.4% increase in policy acquisition costs. Expenses also include $16 million in policyholder credit expense.

In June, policies in force were impressive at the Personal Auto segment, having improved 11% from the year-ago month to 15.9 million. Special Lines improved 6% from the prior-year month’s figure to 4.8 million.

In Progressive’s Personal Auto segment, Direct Auto grew 13% year over year to 8.5 million while Agency Auto improved 9% year over year to 7.4 million.

Progressive’s Commercial Auto segment rose 6% year over year to 0.8 million. The Property business had about 2.3 million policies in force in the month, up 13% year over year.

Financial Update

Progressive’s book value per share was $27.63, as of Jun 30, 2020, up 25.7% from $21.98 as of Jun 30, 2019.

Return-on-equity in the second quarter of 2020 was 34.9%, having expanded 60 bps year over year. Debt-to-total capital ratio improved 40 bps year over year to 24.4% as of Jun 30, 2020.

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.

Upcoming Releases

W.R. Berkley Corporation (WRB - Free Report) will release second-quarter 2020 earnings on Jul 21. The Zacks Consensus Estimate for the same stands at 40 cents per share.

RLI Corporation (RLI - Free Report) will release second-quarter 2020 earnings on Jul 22. The Zacks Consensus Estimate for the same stands at 47 cents per share.

The Travelers Companies (TRV - Free Report) will release second-quarter 2019 earnings on Jul 23. The Zacks Consensus Estimate for the same stands at $1.31 per share.

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