Progressive Corp.'s September results brought mixed reviews from two financial analysts, as the auto insurer continued to report positive earnings, but some declines in its business segments.
The Mayfield, Ohio-based carrier's September financial results showed net income increased 32 percent from $104.7 million, or 13 cents a share, for the month last year to $138.1 million, or 18 cents a share, this September. However, net premiums written dropped 1 percent from $1.06 billion to $1.05 billion.
So far this quarter, net income is up 34 percent from $305 million, or 38 cents a share, to $410 million, or 53 cents a share. Net premiums written were up 1 percent, from $3.56 billion to $3.58 billion.
Bear Stearns, in an analyst's report, said strong underlying profitability was not a surprise, but pointed to lackluster top-line growth in net premiums.
Premium growth remains a strong challenge for the insurer, the report went on, adding that the company is maintaining price discipline and underlying frequency and severity trends continue to support strong profitability.
Bear Stearns said it tweaked its full-year earnings per share estimate from $2.10 to $2.12, reflecting this quarter's results.
Deutsche Bank, in its own note, said it expects "margins to compress unless loss cost frequency trends continue to improve. Slowing growth remains a concern given the valuation of the stock."
The company reported a combined ratio of 86.9 percent for September and 86 percent for the 9 months.
Policies in force for the company's Drive insurance brand, personal auto insurance distributed through independent agents, dropped 1 percent in September from 4.5 million policies to 4.48 million. However, its direct personal lines auto business increased 5 percent from 2.3 million to 2.4 million policies. Overall, total personal lines policies rose 3 percent from 9.5 million to 9.8 million.
The carrier's commercial auto business increased 9 percent from 464,000 to 506,000 policies.
In terms of dollars, net premiums written for commercial auto decreased 5 percent to $132.5 million. The company said it suffered a decrease in commercial auto premium primarily due to post-hurricane activity in the Gulf states.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.