We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Progressive's Profitability Anchored by Combined Ratio?
Read MoreHide Full Article
Key Takeaways
Progressive has averaged a combined ratio under 93% over the past decade, beating peers.
Loss costs, catastrophes and expenses are the key factors that contribute to Progressive's combined ratio.
PGR shares have inched up 1.8% YTD, though valuation is above industry average at a 4.39 price-to-book ratio.
The Progressive Corporation’s (PGR - Free Report) profitability is underpinned by its combined ratio, a key measure of underwriting performance in the property and casualty (P&C) insurance industry. The combined ratio reflects the share of premiums used to cover claims and expenses, with levels below 100% signaling underwriting profitability before investment income.
Over the past decade, Progressive has averaged a combined ratio under 93%, outperforming industry peers, and continues to target a ratio of 96 or better.
Several factors influence this ratio. Loss costs, shaped by the frequency and severity of auto accidents, remain the largest driver, particularly as inflation increases vehicle repair and replacement costs. Catastrophic weather events, injury claims and litigation add volatility.
On the expense side, spending on advertising, distribution and technology affects operating efficiency, while regulatory shifts and reinsurance pricing play important roles. Progressive mitigates these pressures with disciplined pricing, telematics adoption and advanced data-driven risk selection.
Higher loss costs compress margins and force responses such as repricing, stricter underwriting, or expense control. Conversely, a favorable combined ratio strengthens profitability, supports market share growth, and funds reinvestment in customer acquisition and digital platforms. Progressive has built leadership in personal auto through product innovation, distribution reach and cutting-edge underwriting technology.
Looking ahead, prudent pricing, strong underwriting discipline and continued leverage of telematics and AI analytics should help Progressive maintain attractive combined ratios. With its history of adaptability and consistent execution, Progressive remains a compelling investment in a P&C leader with sustained profitability and competitive edge.
What About PGR’s Peers?
Travelers Companies’ (TRV - Free Report) combined ratio reflects claims costs, catastrophe losses and operating expenses. Travelers Companies manages these factors through disciplined pricing, advanced underwriting technology and diversified risk strategies. By focusing on data-driven insights and operational efficiency, Travelers Companies seeks ongoing improvement in its combined ratio, reinforcing stability and long-term profitability.
Allstate Corporation’s (ALL - Free Report) combined ratio is shaped by claim severity, catastrophe costs and operating expenses. Allstate addresses these challenges through pricing adjustments, disciplined underwriting and advanced risk analytics. By improving efficiency and using data-driven strategies, Allstate targets continued progress in its combined ratio, reinforcing profitability and long-term financial resilience.
PGR’s Price Performance
Shares of Progressive have gained 1.8% year to date, underperforming the industry.
Image Source: Zacks Investment Research
PGR’s Expensive Valuation
PGR trades at a price-to-book value ratio of 4.39, above the industry average of 1.52. But it carries a Value Score of B.
Image Source: Zacks Investment Research
Estimates for PGR
The Zacks Consensus Estimate for Progressive’s third-quarter 2025 EPS has moved up 6.6%, while that of fourth-quarter 2025 has moved down 1.2% in the past seven days. The same for 2025 and 2026 has increased 1% and 0.1%, respectively.
Image Source: Zacks Investment Research
The consensus estimate for PGR’s 2025 revenues and EPS indicates year-over-year increases. While the consensus estimate for 2026 revenues suggests a year-over-year rally, the same for EPS implies a decline.
Image: Shutterstock
Is Progressive's Profitability Anchored by Combined Ratio?
Key Takeaways
The Progressive Corporation’s (PGR - Free Report) profitability is underpinned by its combined ratio, a key measure of underwriting performance in the property and casualty (P&C) insurance industry. The combined ratio reflects the share of premiums used to cover claims and expenses, with levels below 100% signaling underwriting profitability before investment income.
Over the past decade, Progressive has averaged a combined ratio under 93%, outperforming industry peers, and continues to target a ratio of 96 or better.
Several factors influence this ratio. Loss costs, shaped by the frequency and severity of auto accidents, remain the largest driver, particularly as inflation increases vehicle repair and replacement costs. Catastrophic weather events, injury claims and litigation add volatility.
On the expense side, spending on advertising, distribution and technology affects operating efficiency, while regulatory shifts and reinsurance pricing play important roles. Progressive mitigates these pressures with disciplined pricing, telematics adoption and advanced data-driven risk selection.
Higher loss costs compress margins and force responses such as repricing, stricter underwriting, or expense control. Conversely, a favorable combined ratio strengthens profitability, supports market share growth, and funds reinvestment in customer acquisition and digital platforms. Progressive has built leadership in personal auto through product innovation, distribution reach and cutting-edge underwriting technology.
Looking ahead, prudent pricing, strong underwriting discipline and continued leverage of telematics and AI analytics should help Progressive maintain attractive combined ratios. With its history of adaptability and consistent execution, Progressive remains a compelling investment in a P&C leader with sustained profitability and competitive edge.
What About PGR’s Peers?
Travelers Companies’ (TRV - Free Report) combined ratio reflects claims costs, catastrophe losses and operating expenses. Travelers Companies manages these factors through disciplined pricing, advanced underwriting technology and diversified risk strategies. By focusing on data-driven insights and operational efficiency, Travelers Companies seeks ongoing improvement in its combined ratio, reinforcing stability and long-term profitability.
Allstate Corporation’s (ALL - Free Report) combined ratio is shaped by claim severity, catastrophe costs and operating expenses. Allstate addresses these challenges through pricing adjustments, disciplined underwriting and advanced risk analytics. By improving efficiency and using data-driven strategies, Allstate targets continued progress in its combined ratio, reinforcing profitability and long-term financial resilience.
PGR’s Price Performance
Shares of Progressive have gained 1.8% year to date, underperforming the industry.
Image Source: Zacks Investment Research
PGR’s Expensive Valuation
PGR trades at a price-to-book value ratio of 4.39, above the industry average of 1.52. But it carries a Value Score of B.
Image Source: Zacks Investment Research
Estimates for PGR
The Zacks Consensus Estimate for Progressive’s third-quarter 2025 EPS has moved up 6.6%, while that of fourth-quarter 2025 has moved down 1.2% in the past seven days. The same for 2025 and 2026 has increased 1% and 0.1%, respectively.
Image Source: Zacks Investment Research
The consensus estimate for PGR’s 2025 revenues and EPS indicates year-over-year increases. While the consensus estimate for 2026 revenues suggests a year-over-year rally, the same for EPS implies a decline.
PGR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.