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Progressive's April Earnings Grow on Robust Revenue Rise

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The Progressive Corporation (PGR - Free Report) reported earnings per share of 45 cents for April 2018, surging 36% year over year. Moreover, the bottom line is driven by an improved top line.

Quarter to date, Progressive’s shares have gained 1.1%, outperforming the industry’s 1.2% decrease. This share price rise was courtesy of the company’s sustained strong results.


 

Numbers in April

Progressive recorded net premiums written of $3.2 billion in the month, up 19% from $2.7 billion in the year-ago period. Net premiums earned were about $2.9 billion, up 21% from $2.4 billion last April.

Net realized loss on securities in the month was $6.6 million against the gain of $9.5 million in the prior-year time frame. Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 100 basis points year over year to 89.9.

Total operating revenues came in at $3 billion. The top line improved 21% year over year owing to a 21% increase in premiums, 34% higher investment income, 30% growth in fees and other revenues plus a 36% rise in service revenues.

Total expenses shot up 57% to nearly $2.7 billion. This upside can be primarily attributed to 21.7% higher loss and loss adjustment expenses, 23% climb in policy acquisition costs and a 24% escalation in other underwriting expenses.

In April, policies in force were impressive in both Vehicle and Property business. In its Vehicle business, Personal Auto segment improved 15% year over year to nearly 12.5 million. Special Lines inched up 1% from the year-earlier month to 4.3 million.

In Progressive’s Personal Auto segment, both Direct Auto and Agency Auto expanded 14% to 6 million and 16% to nearly 6.5 million, respectively.

Progressive’s Commercial Auto segment rose 7% year over year to 0.7 million. The Property business had about 1.7 million policies in force in the reported month, up 32% year over year.

Progressive’s book value per share was $17.21 as of Apr 30, 2018, up nearly 13.9% from $15.11 as of Apr 30, 2017.

Return on equity in the trailing 12 months was 22.5%, expanding 80 bps from 19.2% in April 2017. Debt-to-total-capital ratio improved 410 bps year over year to 26.9% as of Apr 30, 2018.

Zacks Rank and Other Insurers

Progressive sports a Zacks Rank #1 (Strong Buy). Investors interested in other top-ranked stocks from the insurance industry can also look at Alleghany Corporation (Y - Free Report) , Infinity Property and Casualty Corporation and MetLife Inc. (MET - Free Report) .

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company has an average positive surprise of 17.61% in the last four quarters. The stock has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company has an average four-quarter beat of 273.95% and a Zacks Rank #2 (Buy).

MetLife engages in the insurance, annuities, employee benefits and asset management businesses. The company’s average positive earnings surprise in the last four quarters is 9.96%. The stock holds a Zacks Rank of 2.

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