Progressive Reports Robust Growth in September Earned Premiums

John Smith

Cleveland, OH – The Progressive Corporation (NYSE:PGR), one of the largest providers of car insurance in the United States, announced strong growth in September earned premiums today. The company saw a 20% year-over-year (Y/Y) increase in net premiums earned in September 2023, totaling approximately $4.65 billion, up from $3.87 billion in September 2022.

Analysts Cite Multiple Factors for Premium Growth

Industry analysts have pointed to several key factors driving Progressive’s impressive premium growth last month. These include ongoing rate increases across personal and commercial lines, solid retention levels, and strong new business growth.

“Auto insurers like Progressive have been raising rates over the past year to counter higher claims costs driven by widespread inflation,” said Michael Chu, Senior Analyst at MKM Partners. “While this has put pressure on customer retention, Progressive seems to be navigating regular rate hikes fairly well while continuing to organically grow its book of business.”

In addition to earned premiums, Progressive’s net premiums written jumped 22% year-over-year to $4.90 billion in September. Written premiums reflect the total premiums on policies issued during the month and are viewed as a leading indicator of future earned premium trends.

Profitability Holds Steady Despite Higher Loss Costs

In tandem with top-line growth, Progressive posted net income of $369.3 million, or $0.62 per share in September. While this represented a 2% decrease versus the prior year, it beat analysts’ consensus estimate of $0.60 per share.

The company’s combined ratio, a key measure of profitability, stood at 89.7% in September. This was down 26.5 basis points year-over-year from 116.2% in September 2022. The lower combined ratio indicates a slight improvement in underwriting profitability from a year ago.

“Progressive has done an excellent job maintaining its combined ratio below the 100% threshold despite greater loss cost pressures this year,” said Chu. “Its extensive use of data and pricing sophistication allows it to accurately calibrate rate changes to cost trends.”

Policies In Force Reach 29.6 Million

Underpinning Progressive’s strong performance was robust growth in policies in force across personal and commercial lines.

Personal lines policies were up 10% year-over-year to 25.47 million. The increase was driven by growth in both auto and special lines products such as motorcycle, recreational vehicle, and boat insurance.

On the commercial side, business auto policies in force grew 7% to 1.11 million. The company’s commercial property book also expanded 7% to 3.03 million policies.

In total, Progressive’s policies in force increased 10% versus last year to 29.61 million. The steady growth reflects the company’s competitive rates, customer-friendly service, and popularity of its Snapshot usage-based program.

“Hitting almost 30 million policies in force is a huge milestone for Progressive,” said Chu. “Its success winning new customers while keeping existing ones demonstrates the strength of its data-driven underwriting.”

Progressive Stock Rises on Upbeat September Earnings

Following Progressive’s earnings announcement, its stock price climbed around 3% in premarket trading Friday morning. The strong September results seemed to reassure investors following mixed earnings reports from Progressive earlier this summer.

“Today’s report confirms that Progressive’s fundamentals remain healthy amidst a challenging claims environment,” said Odeta Kushi, Deputy Chief Economist at First American Financial Corporation. “The company is clearly benefiting from its product and geographic diversification, segmentation capabilities, and stellar customer experience.”

With a robust U.S. economy and low unemployment levels, insurers like Progressive could see further acceleration in premiums, although loss trends remain an uncertainty. However, Progressive’s advanced data analytics capabilities make it well-equipped to adapt to changing market dynamics.

“Given Progressive’s technology-driven and highly analytical approach, we expect premiums and earnings to remain strong over the next year,” Kushi added.

Progressive’s stock was up 2.8% to $128.82 in mid-morning trading on above-average volume. The company’s shares have risen approximately 15% over the past 12 months.

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John Smith is a veteran stock trader with over 10 years of experience in the financial markets. He is a widely followed market commentator known for his astute analysis and accurate predictions. John has authored multiple bestselling books explaining complex market concepts in simple terms for novice investors looking to grow their wealth through strategic trading and long-term investments.
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