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Progressive (PGR) Q1 Earnings Top Estimates, Revenues Up Y/Y

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The Progressive Corporation’s (PGR - Free Report) first-quarter 2019 earnings per share of $1.83 beat the Zacks Consensus Estimate of $1.38. The bottom line improved 50% from $1.22 earned in the year-ago quarter.

Behind the Headlines

Net premiums written were $9.2 billion in the quarter under review, up 16% from nearly $8 billion in the year-ago period. Net premiums earned grew 18% year over year to $8.5 billion from $7.2 billion a year ago.

Net realized gains on securities were $414.5 million against the year-ago loss of $48.2 million.

Operating revenues were $8.9 million, up 19% year over year. The improvement was owing to an 18% increase in premiums, 52% higher investment income, and 25% growth in fees and other revenues as well as service revenues. The top line however marginally missed the Zacks Consensus Estimate.

Total expenses increased 19% year over year to $7.7 billion driven by 18% rise in losses and loss adjustment expenses, 19% increase in policy acquisition costs and 19% higher other underwriting expenses.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 40 basis points (bps) from the prior-year quarter’s level to 88.8%.

The Progressive Corporation Price, Consensus and EPS Surprise

Policies in Force Solid in March

In March, policies in force were impressive at the Personal Auto segment, having improved 13% from the year-ago month to 13.9 million. Special Lines improved 3% from the prior-year month’s figure to 4.4 million.

In Progressive’s Personal Auto segment, Direct Auto grew 12% year over year to 6.6 million while Agency Auto improved 15% year over year to 7.3 million.

Progressive’s Commercial Auto segment rose 8% year over year to 0.7 million. The Property business had about 2 million policies in force in the reported month, up 21% year over year.

Financial Update

Progressive’s book value per share was $19.89 as of Mar 31, 2019, up 12.3% from $17.71 as of Dec 31, 2018.

Return-on-equity for March 2019 was 30.4%, having expanded 940 bps year over year. Debt-to-total capital ratio improved 220 bps year over year to 26.7% as of Mar 31, 2019.

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.

Upcoming Releases

RLI Corp. (RLI - Free Report) will release first-quarter 2019 earnings on Apr 17. The Zacks Consensus Estimate for the same stands at 59 cents per share, indicating a year-over-year decline of 1.7%.

The Travelers Companies, Inc. (TRV - Free Report) will release first-quarter 2019 earnings on Apr 18. The Zacks Consensus Estimate for the same stands at $2.76 per share, up 12.2% year-over-year.

Brown and Brown Inc. (BRO - Free Report) will release first-quarter 2019 earnings on Apr 22. The Zacks Consensus Estimate for the same is pegged at 36 cents per share, indicating a year-over-year rise of 9.1%.

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