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Progressive Tops 3Q Earnings Estimates

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Progressive Corp.’s (PGR - Free Report) earnings per share for the third quarter of 2013 were 39 cents, down nearly 16% from 46 cents in the year-ago quarter. The result, however, surpassed the Zacks Consensus Estimate of 36 cents. Net income also declined 16% from the third quarter of 2012 to $232.4 million in the reported quarter.

Progressive recorded net premiums of $4.5 billion in the quarter under review, up 5% from $4.2 billion in the year-ago quarter. Net premiums earned were $4.3 billion, up 6% from $4.1 billion in the year-ago quarter.

Net realized gains on securities in the quarter were $27.9 million, down from $171.9 million in the year-ago quarter. Combined ratio − the percentage of premiums paid out as claims and expenses − improved 170 basis points from the prior-year quarter to 94.2% in the reported quarter.

Numbers in September

Progressive publishes monthly financial reports. During September, policies in force remained healthy, with the Personal Auto segment increasing 2% year over year and 0.4% sequentially. Special Lines increased 1% year over year but decreased 0.2% sequentially.

In Progressive's Personal Auto segment, Direct Auto grew 4% year over year and 0.7% from the preceding month. Agency Auto remained unchanged year-over-year, although it improved 0.2% from the preceding month. Progressive’s Commercial Auto segment remained unchanged relative to the year-ago period, but declined by 0.2% sequentially.

Total expenses for the reported month increased 8.3% to $1.30 billion from $1.20 billion in Sep 2012. The major components contributing to the increase in total expenses were a 5.8% increase in losses and loss adjustment expenses.

Progressive reported book value per share of $11.32, up from $11.07 as of Aug 31, 2013 but down from $10.84 as of Sep 31, 2012.

Return on equity on a trailing 12-month basis was 17.5%, compared with 14.8% in Sep 2012 and 17.7% in Aug 2013. The debt-to-total capital ratio was 22.8% as of Sep 30, 2013, down from 23.9% as of Sep 30, 2012 and from 23.7% as of Aug 31, 2013.

Progressive carries a Zacks Rank #3 (Hold). Insurers Alleghany Corporation (Y - Free Report) , Everest Re Group Ltd. (RE) and The Hanover Insurance Group Inc. (THG - Free Report) with Zacks Rank #1 (Strong Buy) appear impressive.

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