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Progressive (PGR) Q4 Earnings Beat, Premiums Improve Y/Y

The Progressive Corporation’s PGR fourth-quarter 2021 earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents. However, the bottom line declined 43.2% from the year-ago quarter.

The Progressive Corporation Price, Consensus and EPS Surprise

The Progressive Corporation price-consensus-eps-surprise-chart | The Progressive Corporation Quote

Shares of Progressive gained 0.7% in the pre-market trading session, reflecting the outperformance.

Behind the Headlines

Net premiums written were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. Net premiums earned grew 14% to nearly $11.6 billion.

Net realized gains on securities were $425.3 million, which slumped 44% year over year.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 630 basis points (bps) from the prior-year quarter to 94.7.

Revenues and Expenses Rise in December

Operating revenues in December were $3.8 million, up 14.1% year over year. The improvement was driven by a 14.2% increase in premiums, 8.8% higher fees and other revenues, 12.2% increase in service revenues and 14% higher investment income.

Total expenses increased 26.2% year over year to $3.5 billion in December due to 35.9% higher losses and loss adjustment expenses and 12.3% increase in policy acquisition costs.

In December, policies in force were impressive at the Personal Auto segment, having improved 6% from the year-ago month to 17.4 million. Special Lines improved 8% to 5.3 million.

In Progressive’s Personal Auto segment, Direct Auto grew 3% year over year to 7.9 million while Agency Auto improved 8% to 9.6 million.

Progressive’s Commercial Auto segment rose 18% year over year to about 1 million. The Property business had about 2.8 million policies in force in December, up 12%.

Full Year Highlights

Net premiums written increased 14% year over year to $46.4 billion.

Combined ratio of 95.3 improved 760 bps over 2020.

Financial Update

Progressive’s book value per share was $30.35 as of Dec 31, 2021, up 7.4% from $28.27 on Dec 31, 2020.

Return-on-equity in December 2021 was 13.6%, down 2570 bps year over year. Debt-to-total capital ratio improved 290 bps to 21.2%.

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.

Performance of Some Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies Inc. TRV, RenaissanceRe Holdings Ltd. (RNR) and Brown & Brown Inc. BRO beat the Zacks Consensus Estimate for earnings.

Travelers’ core income of $5.20 per share surpassed the Zacks Consensus Estimate of $3.86 and increased 6% year over year. Total revenues rose 7% to about $9 billion and beat the Zacks Consensus Estimate of $8.7 billion. Net written premiums increased 10% year over year to a record $8 billion. The combined ratio deteriorated 130 basis points (bps) year over year to 88.

RenaissanceRe’s operating earnings per share of $4.71 surpassed the Zacks Consensus Estimate by 27% and rebounded from a year-ago loss of $1.59 per share. Total revenues of $1.39 billion dipped 0.1% year over year. Gross premiums written surged 40.4% year over year to $1.3 billion. Combined ratio improved 3530 basis points (bps) year over year to 79.4.

Brown & Brown’s reported an adjusted earnings of 42 cents per share, which outpaced the Zacks Consensus Estimate by 10.5% and the year-ago figure by 31.2%. Adjusted revenues of $739 million beat the Zacks Consensus Estimate by 1.5% and improved 15.1% year over year. Commissions and fees grew 15.3% year over year to $737.9 million.


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