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Progressive's (PGR) July Earnings Decrease Y/Y, Revenues Rise

The Progressive Corporation PGR reported earnings per share of 43 cents for July 2021, down 69% year over year. Improvement in the top line was offset by a rise in expenses.

Progressive’s shares have gained 5.9% in a year, underperforming the industry’s 28.9% increase.

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July Numbers in Detail

Progressive recorded net premiums written of $4.6 billion, up 11% from $3.2 billion in the year-ago month. Net premiums earned were $4.3 billion, up 14% from about $3.8 billion reported the year-ago month.

Net realized gain on securities of $122.7 million declined 63% year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 1320 basis points (bps) year over year to 96.7.

Total operating revenues were $4.5 billion, improving 12.7% year over year, owing to a 14.1% increase in premiums, 18.2% higher fee income and a 22% jump in service revenues. However, investment income, which was 9.5% lower, was a drag.

Total expenses rose 31.6% to $4.3 billion, primarily because of 37.6% higher losses and loss adjustment expenses, 16.8% rise in other underwriting expenses and a 15.3% jump in policy acquisition costs.

In July, policies in force were impressive for both Vehicle and Property businesses. In its Vehicle business, the Personal Auto segment improved 9% year over year to 22.8 million. Special Lines increased 8% from the year-earlier month to 5.2 million policies.

In Progressive’s Personal Auto segment, Agency Auto expanded 8% to 8 million, while Direct Auto increased 11% to 9.6 million.

Progressive’s Commercial Auto segment rose 18% year over year to 0.9 million. The Property business had 2.7 million policies in force in the reported month, up 13% year over year.

The company’s book value per share was $31.70 as of Jul 31, 2021, up 8.7% from $29.17 on Jul 31, 2020.

Return on equity in the trailing 12 months was 25.2%, down 1310 bps from 38.3% in July 2020. Debt-to-total-capital ratio improved 140 bps year over year to 22.1 as of Jul 31, 2021.

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

Stocks to Consider

Some better-ranked stocks from the same space include Cincinnati Financial Corporation CINF, Everest Re Group, Ltd. RE and Fidelity National Financial, Inc. FNF, each sporting a Zacks Rank #1 (Strong Buy) You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati Financial surpassed estimates in three of the last four quarters and missed in the other one, the average earnings surprise being 36.01%.

The bottom line of Everest Re surpassed estimates in two of the last four quarters and missed in the other two, the average being 20.33%.

Fidelity National’s earnings surpassed estimates in each of the last four quarters, the average being 37.32%.


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