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Progressive (PGR) Q4 Earnings Top, Premiums Earned Up Y/Y

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The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2020 earnings per share of $1.83 beat the Zacks Consensus Estimate of $1.68. Moreover, the bottom line increased 1.1% from the year-ago quarter.

Behind the Headlines

Net premiums written were $9.5 billion in the quarter, down 1% from $9.6 billion a year ago. Net premiums earned grew 3% to nearly $10.2 billion.

Net realized gains on securities were $760.2 million, which more than doubled year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — improved 400 basis points (bps) from the prior-year quarter to 88.

The Progressive Corporation Price, Consensus and EPS Surprise

Revenues and Expenses Down In December

Operating revenues in December were $3.3 million, down 10.7% year over year. The decline can be attributed to a 10.7% decrease in premiums, 8.1% decline in fees and other revenues, 4.3% lower service revenues and 14.6% lower investment income.

Total expenses decreased 17.9% year over year to $2.8 billion in December due to 21.6% lower losses and loss adjustment expenses, 9.3% lower other underwriting expenses, and 6.8% decrease in policy acquisition costs. Expenses also include $10.4 million in policyholder credit costs.

In December, policies in force were impressive at the Personal Auto segment, having improved 11% from the year-ago month to 16.5 million. Special Lines improved 8% to 4.9 million.

In Progressive’s Personal Auto segment, Direct Auto grew 9% year over year to 7.6 million while Agency Auto improved 13% to 8.9 million.

Progressive’s Commercial Auto segment rose 9% year over year to 0.8 million. The Property business had about 2.5 million policies in force in September, up 13%.

Financial Update

Progressive’s book value per share was $28.27 as of Dec 31, 2020, up 24.5% from $22.54 on Dec 31, 2019.

Return-on-equity in December 2020 was 39.3%, up 430 bps year over year. Debt-to-total capital ratio improved 30 bps to 24.1%.

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 Some Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown (BRO - Free Report) beat the Zacks Consensus Estimate for earnings.

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