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Progressive (PGR) April Earnings Fall Y/Y, Share Buyback OK'd

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The Progressive Corporation PGR reported loss per share of 34 cents for April 2022 versus earnings of 54 cents. The decline was due to higher expenses and net realized loss on securities.

Concurrently, the board of directors approved a 25 million share buyback program. In the first quarter of 2022, PGR bought back 0.3 million shares for $28.7 million. As of Mar 31, 2022, PGR, being one of the major auto insurers in the country, had 23.2 million shares available for buyback. Given the solid financial flexibility, the insurer engages in share buyback to lower dilution and enhance shareholders value.

April Numbers in Detail

Progressive recorded net premiums written of $4.8 billion, up 8% from $4.5 billion in the year-ago month. Net premiums earned were $4.6 billion, up 12% from $4.1 billion reported in the year-ago month.

Net realized loss on securities was $524.5 million versus a gain of $191.3 million in the year-ago month.

The combined ratio — the percentage of premiums paid out as claims and expenses — improved 50 basis points (bps) year over year to 95.5.

Progressive’s operating revenues were $4.8 billion, improving 11.7% year over year, owing to an 11.6% increase in premiums, an 8.9% jump in service revenues and a 34.7% higher investment income, partially offset by 4.9% lower higher fees.

Total expenses rose 10.8% to $4.5 billion, primarily on account of 14.2% higher losses and loss adjustment expenses, and a 6.6% rise in policy acquisition costs. However, a 6% decrease in other underwriting expenses limited the downside.

In April, policies in force were impressive for both Vehicle and Property businesses. In its Vehicle business, the Personal Auto segment declined 1% year over year to 17.2 million. Special Lines increased 6% from the year-earlier month to 5.4 million policies.

In Progressive’s Personal Auto segment, Agency Auto declined 3% to 7.7 million while Direct Auto increased 1% to 9.5 million.

Progressive’s Commercial Auto segment rose 15% year over year to about 1 million. The Property business had 2.8 million policies in force in the reported month, up 8% year over year.

Progressive’s book value per share was $27.02 as of Apr 30, 2022, down 10.9% from $30.34 on Apr 30, 2021.

Return on equity in the trailing 12 months was -4.4%, having contracted 3750 bps from 33.1% in April 2021. The debt-to-total-capital ratio deteriorated 530 bps year over year to 28.1 as of Apr 30, 2022.

Price Performance

Progressive’s shares have gained 9% in the past year, outperforming the industry’s increase of 2.5%.

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Zacks Rank

Progressive currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance sector are RLI Corp. RLI, W.R. Berkley Corporation WRB and American Financial Group, Inc. AFG. While RLI Corp. currently sports a Zacks Rank #1 (Strong Buy), American Financial and W.R. Berkley carry a Zacks Rank #2 (Buy).

RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 10.7%.

The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 29.7%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 30 days.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 8.2%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past seven days.


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