Progressive’s Q3 Earnings Beat Estimates, Premiums Rise Y/Y

Source: Progressive | Published on October 16, 2023

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The Progressive Corporation’s third-quarter 2023 earnings per share of $2.09 beat the Zacks Consensus Estimate of $1.71. The bottom line improved more than fourfold year over year.

Shares gained 3.9% in the pre-market trading session, reflecting the earnings outperformance.

Net premiums written were $15.6 billion in the quarter, rising 20% from $13 billion a year ago and beating our estimate of $14.2 billion.

Net premiums earned grew 20% to $14.9 billion and beat our estimate of $13.6 billion as well as the Zacks Consensus Estimate of 14.8 billion.

Net realized losses on securities were $149 million, narrower than a loss of $216.4 million in the year-ago quarter.

The combined ratio — the percentage of premiums paid out as claims and expenses — improved 680 basis points (bps) from the prior-year quarter’s level to 92.4.

September Policies in Force

Operating revenues were about $4.9 billion, up 20.4% year over year. This improvement was driven by a 20.2% increase in premiums, 19.3% higher fees and other revenues and 33.3% higher investment income.

Total expenses decreased 6.7% year over year to $4.3 billion due to 9.6% lower losses and loss adjustment expenses and 2.2% lower other underwriting expenses.

Policies in force were solid in the Personal Auto segment, increasing 12% from the year-ago month’s figure to 19.5 million. Special Lines improved 7% to 6 million.

In Progressive’s Personal Auto segment, Direct Auto increased 14% year over year to 11.2 million, while Agency Auto increased 10% to 8.4 million.

Progressive’s Commercial Auto segment rose 7% year over year to 1.1 million. The Property business had 3 million policies in force, up 7%.

Financial Update

Progressive’s book value per share was $28.29 as of Sep 30, 2023, up 18.4% from $24.41 on Sep 30, 2022.

Return on equity in September 2023 was 17.4% against (15.9%) in the year-ago period. The total debt-to-total capital ratio improved 180 bps to 28.4.