Progressives (PGR) August Earnings Rise on Higher Revenues

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The progressive society PGR reported earnings per share of 20 cents for August 2022, rebounding from the loss of 2 cents a year ago. The improvement stems from higher revenues combined with lower expenses.

August figures in detail

Progressive recorded net premiums written of $4.1 billion, up 5% from $3.9 billion in the month a year earlier. Net premiums earned were $3.8 billion, up 9% from $3.5 billion a year ago.

Net realized loss on securities was $175.4 million compared to a gain of $131.5 million a year ago.

The combined ratio — the percentage of premiums paid as claims and expenses — improved 1,170 basis points (bps) year-over-year to 93.6.

Progressive operating revenue was $4.1 billion, up 9.9% year-over-year, due to a 9.2% increase in premiums, 13 .1% in service income, a 52.1% increase in investment income and 1.3% in fees.

Total expenses decreased 2.7% to $3.7 billion, primarily due to a 6.3% decline in claims and claims adjustment expenses. However, policy acquisition costs up 9.8% and a 12.8% increase in other technical charges weighed on the increase.

In August, policies in force (PIF) were impressive for both Vehicles and Real Estate. In its Vehicles business, the Personal Auto segment was down 2% year-on-year to 17.3 million. Special lines increased 5% from the previous month to 5.5 million policies.

In Progressive’s Personal Auto segment, Agency Auto PIF was down 5% to 7.6 million while Direct Auto was up 1% to 9.7 million.

Progressive’s Commercial Auto segment grew 10% year-over-year to around 1 million. The Property business had 2.8 million policies in force in the month under review, up 4% year-over-year.

Progressive’s book value per share was $26.94 as of August 31, 2022, down 14.4% from $31.47 on August 31, 2021.

Return on equity over the past 12 months was -8.8%, after contracting 3110 basis points from 22.3% in August 2021. The debt-to-total capital ratio s deteriorated by 760 basis points year-on-year to 28.2 as of August 30, 2022.

Price performance

Shares of Progressive are up 23.8% year-to-date, versus a 5.1% decline in the industry.

Image source: Zacks Investment Research

Zacks Rank

Progressive currently carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Actions to consider

Some higher ranked stocks in the insurance industry are Berkshire Hathaway (BRK.B), American financial group AFG and WR Berkley Corporation WRB, each sporting a No. 1 Zacks rank.

The Zacks consensus estimate for Berkshire Hathaway’s earnings in 2022 and 2023 implies year-over-year growth of 14.4% and 5.9%, respectively. The average surprise over four quarters is 17.55%.

The Zacks consensus estimate for BRK.B’s revenue in 2022 and 2023 has moved 7.6% and 8.8% north, respectively, over the past 60 days. Year-to-date, BRK.B shares have lost 6.9%.

American Financial’s earnings have exceeded estimates for the past four quarters, with the average earnings surprise of 37.09%.

The Zacks consensus estimate for AFG’s revenue in 2022 and 2023 has moved north 1%, respectively, over the past 30 days. Year-to-date, AFG shares have lost 5.4%.

The Zacks consensus estimate for WR Berkley’s earnings in 2022 and 2023 implies year-over-year growth of 20.6% and 10.4%, respectively. The average surprise over four quarters is 29.95%.

The Zacks consensus estimate for WRB revenue in 2022 and 2023 has moved north 8.8% and 6.8%, respectively, over the past 60 days. Year-to-date, WRB shares are up 21.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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