Progressive: Higher Premiums Drive April Earnings - Analyst Blog

Progressive Corp.'s PGR operating earnings in Apr 2014 improved 33% year over year to 24 cents per share on higher premiums.

Including net realized gains on securities (including net impairment losses), net income came in at $155.8 million or 26 cents per share, up from $139.5 million or 23 cents per share in the year-ago month.

Progressive recorded net premiums of $1.88 billion in Apr 2014, up 5% from $1.78 billion in the comparable year-ago month. Net premiums earned improved year over year to $1.73 billion in the reported month.

Net investment income declined 6.2% year over year to $30.1 million.

Total revenue in the month improved 4.6% year over year to $1.83 billion.

On the other hand, total expense increased 2.3% to $1.58 billion in the reported month. The major components contributing to the increase in total expense were a 3.2% increase in policy acquisition costs, a 1.2% rise in losses and loss adjustment expenses and a 7% increase in other underwriting expenses.

Combined ratio improved 290 basis points year over year to 88.4%.

In the month of April, policies in force remained healthy, with the Personal Auto segment increasing 3% year over year to 13.33 million. Special Lines increased 1% year over year to 4.01 million.

In Progressive's Personal Auto segment, Direct Auto grew 7% year over year to 4.41 million. Agency Auto increased only 1% year over year to 4.90 million. Progressive's Commercial Auto segment declined 2% on a year-over-year basis.  

Progressive reported book value per share of $11.13 as of Apr 30, 2014, up from $10.86 as of Mar 31.

Return on equity on a trailing 12-month basis was 18.1% compared with 17.6% in Mar 2014. The debt-to-total capital ratio was 25.1% as of Apr 30, 2014, reflecting deterioration from 22.4% as of Mar 31, 2014.

Zacks Rank

Progressive carries a Zacks Rank #3 (Hold). Some better-ranked insurers worth considering include Aspen Insurance Holdings Ltd. AHL, AmTrust Financial Services, Inc. AFSI and Atlas Financial Holdings, Inc. AFH. All these stocks sport a Zacks Rank #1 (Strong Buy).