Progressive's October Earnings Drop - Analyst Blog
November 17 2011 - 9:22AM
Zacks
Progressive Corp.’s (PGR) earnings per share
for October 2011 were 9 cents, plummeting 50% both year over year
and sequentially. Net income for the month was $55.7 million, down
27% year over year and 28% sequentially.
The company recorded net premiums of $1.45 billion during October
2011, up 9% from $1.34 billion in October 2010 and up 24% from
$1.17 billion during September 2011. Net premiums earned were $1.45
billion, up 4% from $1.39 billion in the year-ago period and up 26%
from $1.15 billion in the prior month.
Net realized gains on securities were $10.5 million during October
2011, a substantial decline from a gain of $25.6 million in October
2010, but reversing a loss of $0.4 million in September 2011. The
combined ratio − the percentage of premiums paid out as claims and
expenses − deteriorated 80 basis points over the prior-year period
to 96.7% in the month under review.
Progressive reports every month. During October, policies in force
remained healthy, with the Personal Auto segment increasing 5% year
over year and 0.9% sequentially. Special Lines also increased 5%
year over year but dragged 0.4% over the preceding month.
In Personal Auto, Direct Auto reported growth of 7% year over year
and 1% 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 a
decline of 1% year over year.
Total expenses for the reported month increased 4.8% to $1.42
billion from $1.35 billion in October 2010. The major components
contributing to the increase in total expenses were a 5.4% increase
in losses and loss adjustment expenses, a 2% increase in
underwriting expenses and a 2% increase in policy acquisition
costs.
Progressive reported a book value per share of $9.63, up from $9.31
as of October 31, 2010 and up from $9.37 as of September 31,
2011.
Return on equity on a trailing 12-month basis was 16.7%, down from
16.9% in October 2010 and 16.9% in September 2011. The
debt-to-total-capital ratio was 29.1% as of October 2011, up from
24.1% as of October 2010 but down from 29.6% as of September
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 stock 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, a 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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PROGRESSIVE COR (PGR): Free Stock Analysis Report
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