Auto insurance group Progressive Corp. (PGR), reported Wednesday a profit for the fourth quarter that nearly doubled from last year, following a 10% rise in net premiums written and net premiums earned. The company also posted a profit for the month of December compared to a loss reported in the same month last year.
The Mayfield Village, Ohio-based company posted net income of $305.0 million or $0.46 per share for the fourth quarter, nearly double the $159.3 million or $0.24 per share reported in the prior-year quarter.
On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.37 per share for the quarter. Analysts' estimates typically exclude special items.
Net premiums written were $3.40 billion, up 10% from $3.09 billion in the comparable quarter a year ago. Net premiums earned for the fourth quarter increased 9% to $3.72 billion from $3.41 billion in the same quarter last year. Ten Wall Street analysts had a consensus revenue estimate of $3.29 billion for the quarter.
Progressive reported that combined ratio for the fourth quarter declined 3.7 points to 91.5 points from 95.2 points in the year-ago quarter.
For the month of December, Progressive posted net income of $118.3 million or $0.18 per share, compared to a net loss of $123.2 million or $0.18 per share in the same month last year.
Net premiums earned for the month of December increased 27% to $1.33 billion from $1.05 billion in the prior-year period. Net premiums written were $1.16 billion, up 28% from $0.91 billion in the same month last year. Total revenues for the month were $1.40 billion, the company said.
Progressive reported that combined ratio for December dropped 8.0 points to 90.9 points from 98.9 points in the year-ago period. Meanwhile, the number of personal auto policies in effect was up 4.6% at 7.5 million for the month of December, while the commercial auto policies declined 5% to 512.8 million from last year.
The company noted that net premiums written growth would have been about 2% for both the month and fourth quarter, and net premiums earned growth would have been about 1% for both periods, excluding the additional week of activity for the latest periods.
In November, the company reported net income of $80 million or $0.12 per share, sharply down from $137.5 million or $0.20 per share in the year-ago period. Net premium earned for the month increased 1% to $1.06 billion from $1.05 billion in the prior-year period. Net premium written for the month was $942.1 million, up 2% from $926.9 million in the year ago period. Investment income for the month amounted to $41.4 million.
In October, net income declined 26% to $106.7 million or $0.16 per share from $145.0 million or $0.22 per share in the year-ago period, despite a growth in net premium written and net premium earned. Net premium written increased 3% to $1.30 billion, and net premium earned edged up 1% to $1.32 billion from the prior-year period. Investment income during the month was $40.2 million.
In its third quarter, Progressive had posted a profit compared to a loss in the prior-year quarter, following a modest 1% rise in net premiums written and net premiums earned. Net income was $269.9 million or $0.40 per share, compared to a net loss of $684.2 million or $1.03 per share in the prior-year quarter. Net premiums earned increased 1% to $3.44 billion, and net premiums written were $3.55 billion, up 1% from the comparable quarter a year ago.
For the year ended December 31, 2009, Progressive reported net income of $1.06 billion or $1.57 per share, compared to a net loss of $70.3 million or $0.10 per share posted last year. Analysts expected the company to report earnings of $1.51 per share for the full-year 2009.
Net premiums written for the year was $14.0 billion, up 3% from $13.60 billion posted last year. Net premiums earned also increased 3% to $14.01 billion from $13.63 billion in the same period last year. The Street was looking for full year revenues of $13.85 billion.
On January 7, Credit Suisse downgraded Progressive shares to 'Underperform' from 'Neutral' with a price target of $18. Analyst Misquith downgraded the stock due to relative valuation and concerns about top line and earnings growth. While profitability is strong and the company gained market share due to increased shopping for lower priced policies, the analyst does not believe the top line will grow significantly to justify a higher valuation.
In Wednesday's regular trading session, PGR is currently trading at $17.48, down $0.23 or 1.30% on a volume of 2.08 million shares. In the past 52-week period, the stock has been trading in a broad range of $9.76 to $18.22.
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