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Progressive (PGR) Q2 Earnings Top Estimates, Premiums Up Y/Y

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The Progressive Corporation’s (PGR - Free Report) second-quarter 2021 earnings per share of $1.51 beat the Zacks Consensus Estimate of $1.17. The bottom line however declined 17.5% year over year.

Behind the Headlines

Net premiums written were $11.5 billion in the quarter, up 13% from $10.1 billion a year ago. Net premiums earned grew 14% to nearly $11 billion.

Net realized gains on securities were $461.8 million, down 48% year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 880 basis points (bps) from the prior-year quarter to 96.5.

The Progressive Corporation Price, Consensus and EPS Surprise

Operating revenues were $3.6 million, up 14.3% year over year. The improvement can be attributed to a 14.4% increase in premiums, 24.4% higher fees and other revenues, and 27% higher service revenues. This was partially offset by 1.4% lower investment income.

Premium improvement was driven by increase in premiums across all lines of business.

Total expenses increased 32% year over year to $3.6 billion due to 43.7% higher losses and loss adjustment expenses and 16.8% higher other underwriting expenses. A 1.3% lower Other underwriting expenses limited the downside.

Policies in force were impressive at the Personal Auto segment, having improved 11% from the year-ago month to 17.6 million. Special Lines climbed 9% to 5.2 million.

In Progressive’s Personal Auto segment, Direct Auto advanced 13% year over year to 9.6 million while Agency Auto improved 9% to 8 million.

Progressive’s Commercial Auto segment rose 18% year over year to 0.9 million. The Property business had about 2.7 million policies in force in June, up 14%.

Financial Update

Progressive’s book value per share was $31.07 as of Jun 30, 2021, up 12.5% from $27.63 on Jun 30, 2020.

Return on equity in June 2021 was 28.5%, down 640 bps year over year. Debt-to-total capital ratio improved 200 bps to 22.4

Zacks Rank

Progressive currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

The Travelers Companies, Inc. (TRV - Free Report) is set to report second-quarter 2021 results on Jul 20. The Zacks Consensus Estimate for the second quarter is pegged at $2.35, indicating a rebound from the year-ago loss of 20 cents.

W.R. Berkley Corporation (WRB - Free Report) is set to report second-quarter 2021 results on Jul 21. The Zacks Consensus Estimate for the second quarter is pegged at 95 cents, implying an increase from 6 cents reported in the year-ago quarter.

First American Financial Corporation (FAF - Free Report) is set to report first-quarter 2021 results on Jul 22. The Zacks Consensus Estimate for the first quarter is pegged at $1.63, suggesting an improvement of 55.2% year over year.


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