Progressive Corp.’s (PGR) earnings per share for February 2011 were 17 cents, up 2 cents from the year-ago earnings of 15 cents, in line with the prior month’s results. Net income was $114.1 million, increasing 16% from year ago and 1% over the preceding month.
The company recorded net premiums of $1.3 billion during February 2011, up 4% from $1.2 billion in February 2010 and down 5% from $1.4 billion during January 2011. Net premiums earned were $1.12 billion, up 5% from $1.08 billion in the year-ago period and down 19.1% from $1.40 billion in the prior month.
Net realized gains on securities were $23.6 million during February 2011, much higher from net realized gains of $11.9 million in the prior-year period but lower from $32.3 million in January 2011. The combined ratio − the percentage of premiums paid out as claims and expenses − improved 100 basis points over the prior year period to 89.4% in the month under review.
Progressive reports its results every month. During January, policies in force remained healthy, with the Personal Auto segment increasing 7% year over year and a decline of 0.1% sequentially. Special Lines increased 5% year over year but declined 0.2% over the preceding month.
In Personal Auto, Direct Auto reported a double-digit growth of 10% year over year, and grew 1.4% from last month. Agency Auto was up 4% year over year and 1.4% from the last month. However, Progressive’s Commercial Auto segment continued to drag results, reporting declines of 0.4% year over year and 0.1% from the preceding month.
Total expenses for the reported month increased 3% to $1.02 billion from $1.0 billion in February 2010. The major components contributing to the increase in total expenses were a 3% year-over-year increase in losses and loss adjustment expenses and 4% increase in policy acquisition costs as well as underwriting expenses.
Progressive reported a book value per share of $9.51, up from $9.01 as of February 28, 2010 and from $9.31 as of January 31, 2011.
Return on equity on a trailing 12-month basis was 17.9%, down from 19.2% in February 2010 but up from 17.7% in January 2011. The debt-to-total-capital ratio was 23.8% as of February 2011, down from 26.5% as of February 2010 and from 24.2% as of January 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).
ALLSTATE CORP (ALL): Free Stock Analysis Report
PROGRESSIVE COR (PGR): Free Stock Analysis Report
Zacks Investment Research
