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Progressive Q4 Profit Down 3% Despite Higher Net Premiums Written

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1/18/2013 10:04 AM ET

Auto insurance group Progressive Corp. (PGR: Quote) on Friday reported a 3 percent decline in profit for the fourth quarter, despite recording higher net premiums written as well as investment gains compared to last year.

Progressive's fourth-quarter net income decreased to $249.1 million or $0.41 per share from $256.7 million or $0.42 per share in the year-ago period.

The latest quarter's results include pretax net realized gains of $62.1 million, compared to gains of $29.5 million in the year-ago period.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings per share of $0.34 for the quarter. Analysts' estimates typically exclude special items.

Net premiums written in the quarter increased 9 percent to $3.84 billion from $3.54 billion in the same period last year. Analysts had a consensus revenue estimate of $3.79 billion.

Net premiums earned also grew 9 percent in the quarter to $4.11 billion from $3.78 billion in the prior-year period.

Combined ratio, or the amount of premiums paid as claims, increased 1.6 points to 94.6 percent. Progressive incurred catastrophe losses of $103 million or 2.5 points in the latest quarter.

For the month of December, Progressive's net income rose to $95.1 million or $0.16 per share from $76.3 million or $0.12 per share in the prior year. Total revenues for the month were $1.33 billion.

Net premiums written increased 12 percent to $1.14 billion, while net premiums earned grew 9 percent to $1.26 billion.

Combined ratio for the month rose 2.3 points to 93.5. The company incurred catastrophe losses of about $15 million or 1.2 loss ratio points in the month related to Superstorm Sandy.

For the month, the company's total personal lines policies in force increased 4 percent to 12.74 million. Of this, total personal auto policies grew 4 percent to 8.79 million, with a 3 percent rise in agency auto policies and 4 percent growth in direct auto policies. Total special lines policies for the month grew 4 percent from last year to 3.94 million.

Total commercial auto policies in the month rose 2 percent.

For fiscal year 2012, Progressive's net income declined to $902.3 million or $1.48 per share from $1.02 billion or $1.59 per share in the previous year. Total revenues for the year grew 8 percent to $16.80 billion from $15.51 billion in the prior year.

Net premiums earned rose 7 percent to $16.02 billion, while net premiums written increased 8 percent to $16.37 billion.

Analysts expected the company to earn $1.15 per share for the year on revenues of $16.32 billion.

Progressive incurred catastrophe losses of about $279 million or 1.7 points in the year, up from $212 million or 1.4 points last year.

On December 7, 2012, Progressive's board of directors declared an annual variable dividend to be paid on February 1, 2013, to shareholders of record at the close of business on January 25, 2013. The amount of the dividend is $0.2845 per common share, or an estimated $172 million in the aggregate.

In Friday's regular session, PGR is trading at $22.35, down $0.25 or 1.08 percent on a volume of 1.16 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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