ALL Allstate Corporation

Progressive Corp.’s (PGR) earnings per share for April 2011 were 18 cents, up a penny from the year-ago earnings of 17 cents. Net income increased 5.9% from the year-ago period to total $118 million.

The company recorded net premiums of $1.54 billion during April 2011, up 4.5% from $1.47 billion in April 2010 and 26% from $1.2 billion during March 2011. Net premiums earned were $1.43 billion, up 4.3% from $1.37 billion in the year-ago period and up 25.7% from $1.14 billion in the prior month.

Net realized gains on securities were $24.6 million during April 2011, a considerable improvement from $8.0 million in April 2010, but lower than $48.8 million in March 2011. The combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 70 basis points over the prior-year period to 91.4% in the month under review.

Progressive reports its results every month. During April, policies in force remained healthy, with the Personal Auto segment increasing 6% year over year and 0.6% sequentially. Special Lines increased 5% year over year and 2% over the preceding month.

In Personal Auto, Direct Auto reported a growth of 9% year over year and 0.8% from the preceding month. Agency Auto was up 4% year over year and 0.8% from the last month. However, Progressive’s Commercial Auto segment continued to drag results, reporting declines of 1.6% year over year.

Total expenses for the reported month increased 5% to $1.3 billion from $1 billion in April 2010. The major components contributing to the increase in total expenses were a 6% year-over-year increase in losses and loss adjustment expenses, a 3% increase in policy acquisition costs and a 4% increase in underwriting expenses.

Progressive reported a book value per share of $9.91, up from $9.52 as of April 30, 2010 and from $9.64 as of March 31, 2011.

Return on equity on a trailing 12-month basis was 18.1%, down from 20.1% in April 2010 but up from 18% in March 2011. The debt-to-total-capital ratio was 23.2 % as of April 2011, down from 25.4% as of April 2010 and from 23.7% as of March 2011.

We maintain our Neutral recommendation on Progressive. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

Headquartered in Mayfield Village, Ohio, The Progressive Corporation is one of the largest auto insurers in the country. It is a leading independent agency writer of private passenger auto coverage, market leader for the motorcycle product and is one of the leading companies in the commercial auto insurance market. It competes with Allstate Corporation (ALL).

 
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