ALL Allstate Corporation

Progressive Corp.’s (PGR) earnings per share for the second quarter of 2011 were 38 cents, lagging the Zacks Consensus Estimate by a penny.

Results, however, compared favorably with the year ago earnings of 32 cents. Net income increased 16% from the year-ago period to total $245 million.

The company recorded net premiums of $3.8 billion during the quarter under review, up 3% year over year. Net premiums earned were $3.7 billion, up 4% from the year-ago period.

Net realized gains on securities were $26 million during the second quarter of 2011, reversing the loss of $39.5 million in the year ago quarter. The combined ratio − the percentage of premiums paid out as claims and expenses − deteriorated 70 basis points over the prior-year period to 93.4% in the quarter under review.

Progressive reports its results every month. During June, policies in force remained healthy, with the Personal Auto segment increasing 5% year over year and 0.6% sequentially. Special Lines also showed an improvement of 5% year over year and 1.2% over the preceding month.

In Personal Auto, Direct Auto reported a growth of 8% year over year and 0.3% from the preceding month. Agency Auto was up 3% year over year and 0.2% from the last month. However, Progressive’s Commercial Auto segment continued to drag results, reporting declines of 2% year over year.

Total expenses for the reported month increased 7.2% to $1.12 billion from $1.04 billion in June 2010. The major components contributing to the increase in total expenses were a 8.4% year over year increase in loss and loss adjustment expenses, a 2.3% increase in policy acquisition costs and a 6.4% increase in underwriting expenses.

Progressive reported a book value per share of $9.88, up from $9.44 as of June 30, 2010 but down from $9.97 as of May 31, 2011.

Return on equity on a trailing 12-month basis was 18.4%, down from 18.7% in June 2010 and 18.5% in May 2011. The debt-to-total-capital ratio was 23.6% as of June 2011, down from 25.7% as of June 2010 but up from 23.3% in the last month.

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 competes with Allstate Corporation (ALL).

 
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