Progressive Corp.'s (PGR) earnings per share for November 2010 were 17 cents, up 42% from 12 cents in November 2009. Results of the reported month also increased 42% over October 2010. Net income for the month improved 37% to $109.9 million from $80.0 million in the year-ago period. On a sequential basis, net income improved 44% from $81.9 million in the previous month.
Progressive reports its results every month. The company recorded net premiums of $1.01 billion, up 7% from $942 million in November 2009 but down 24% from $1.34 billion in October 2010. Net premiums earned were $1.11 billion, up 5% from $1.06 billion in the year-ago period but down 20% from $1.39 billion in the prior month.
Progressive reported net realized gain on securities of $29.4 million, compared with $6.1 million in November 2009 and $25.6 million in the preceding month. The combined ratio − the percentage of premiums paid out as claims and expenses − at 90.7% improved 150 basis points from 92.2% recorded in the year-ago period and 520 basis points from 95.9% in the preceding month.
During November, policies in force remained healthy, with the Personal Auto segment increasing 8% year over year and 0.1% sequentially. Special Lines increased 5% year over year but declined 0.5% over the preceding month.
In Personal Auto, Direct Auto reported a double-digit growth of 13% year over year, but showed a slight improvement of 0.3% in policies-in-force from the last month. Agency Auto was up 4% year over year but down 0.1% from the last month. However, Progressive's Commercial Auto segment continued to drag results, reporting declines of 1% year over year and 0.4% from the preceding month.
Total expenses for the reported month increased 3% to $1.03 billion from $995.1 million in November 2009. The major components contributing to the increase in total expenses were a 4% year-over-year increase in losses and loss adjustment expenses reaching $782 million and a 3% year-over-year increase in policy acquisition costs climbing to $106.6 million.
Progressive continues to actively manage its capital position. Reported book value per share was $9.38, up from $8.56 as of November 30, 2009, and $9.31 as of October 30, 2010.
Return on equity on a trailing 12-month basis was 17.2%, up from 17% in November 2009 and from 16.9% in October 2010. The debt-to-total-capital ratio was 23.9% as of November 2010, down from 27.4% as of November 2009 and 24.1% as of October 2010.
In October, Progressive reported third quarter earnings of 40 cents per share, beating the Zacks Consensus Estimate of 37 cents. However, earnings lagged year-ago results as lower investment gains more than offset premiums earned.
Allstate Corporation (ALL), which competes with Progressive, registered third quarter operating earnings of 83 cents per share, way behind the Zacks Consensus Estimate of 97 cents and 99 cents recorded in the year-ago quarter. Results for the quarter deteriorated primarily due to lower-than-expected premiums coupled with higher expenses in the Property-Liability insurance segment, along with relatively higher tax expenses.
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.
ALLSTATE CORP (ALL): Free Stock Analysis Report
PROGRESSIVE COR (PGR): Free Stock Analysis Report
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