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The Progressive Corporation (PGR) reported solid fourth-quarter 2024 results, wherein both the top and bottom lines increased year over year. Net premiums written improved 20%, driven by the strong performance of operating businesses.Combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 basis points (bps) from the prior-year quarter’s level to 87.9%.PGR is one of the country’s largest auto insurance groups, the largest seller of motorcycle and boat policies, the market le ...

Core Insights - Progressive reported strong fourth-quarter results, exceeding both earnings and revenue expectations, with diluted EPS of $4.01 and revenue of $19.144 billion [1][2] Financial Performance - EPS (diluted) for Q4 2024 was $4.01, surpassing analysts' estimate of $3.57 and showing a 19.0% increase from $3.37 in Q4 2023 [2] - Revenue reached $19.144 billion, exceeding the estimated $18.297 billion and reflecting a 21.3% growth from $15.773 billion in the previous year [2] - Net income for the quarter was $2.356 billion, an 18.5% increase from $1.988 billion in Q4 2023 [2] - The combined ratio improved to 87.9%, a decrease of 80 basis points from 88.7% in the prior year [2] Business Overview - Progressive is the second-largest auto insurance provider in the U.S., with personal lines insurance, including auto policies, accounting for 79% of total net premiums in 2023 [3] - The company has focused on expanding market share through competitive pricing and technology, emphasizing a bundling strategy for auto and property insurance [4] Growth Highlights - Net premiums written in Q4 reached $18.105 billion, a 19.7% increase from $15.130 billion in the prior-year period [5] - The direct auto line saw a significant 32% year-over-year growth in net premiums written in December [5] - The number of property insurance policies in force increased by 14% from the previous year, with a 10% rise in net premiums earned in December [6] Strategic Focus - Progressive aims to maintain growth in both commercial and personal lines while leveraging its bundling strategy [7] - The company is committed to technological adoption to enhance customer experiences and operational efficiency [8]

Core Insights - The Progressive Corporation reported a fourth-quarter 2024 earnings per share of $4.08, exceeding the Zacks Consensus Estimate by 19% and reflecting a year-over-year increase of 37.8% [1] - Operating revenues for the quarter rose 20.3% year over year to $20.3 billion, surpassing the consensus estimate by 2.5% [2] Financial Performance - Net premiums written reached $18.1 billion, a 20% increase from $15.1 billion in the previous year [3] - Net premiums earned grew 21% to $19.1 billion, exceeding the Zacks Consensus Estimate of $18.7 billion [3] - The combined ratio improved by 80 basis points to 87.9% compared to the prior-year quarter [3] Full-Year Highlights - For the full year, operating revenues increased 21.6% to $75.1 billion, driven by a 20.7% rise in net premiums earned and a 49.7% increase in net investment income [4] - Total expenses rose 13% to $64.7 billion, influenced by higher losses, policy acquisition costs, and underwriting expenses [4] - The combined ratio improved by 610 basis points to 88.8% for the full year [4] Policy Growth - Policies in force in the Personal Lines segment increased 18% year over year to 33.8 million [5] - The Direct Auto segment saw a 25% increase to 14 million policies, while Agency Auto increased 17% to 9.8 million [5] - The Commercial Auto segment rose 4% year over year to 1.1 million policies [5] Financial Metrics - Progressive's book value per share was $43.67 as of December 30, 2024, a 29.2% increase from $33.80 a year earlier [6] - Return on equity improved to 36.4% from 30% in the previous year [6] - The total debt-to-total capital ratio improved by 420 basis points to 21.2% [6]

Financial Performance - Net premiums written increased by 22% year-over-year to $5,964 million in December 2024, and by 20% to $18,105 million for the full year 2024[2] - Net premiums earned rose by 26% to $6,717 million in December 2024, and by 21% to $19,144 million for the full year 2024[2] - Net income for December 2024 was $942 million, a 5% increase from $901 million in December 2023, and for the full year, net income reached $2,356 million, up 19% from $1,988 million[2] - The combined ratio improved slightly to 84.1 in December 2024 from 83.4 in December 2023, and for the full year, it was 87.9 compared to 88.7 in 2023[2] - Net Premiums Written for the year ended December 31, 2024, totaled $74,424 million, reflecting a 21% growth[12] - Net Premiums Earned for the same period reached $70,799 million, with a growth rate of 21%[12] - The Loss/LAE ratio for the full year was 69.1%, while the Expense ratio was 19.7%, resulting in a Combined ratio of 88.8%[12] - The company reported a net catastrophe loss ratio of 3.6% for the year, indicating a relatively low impact from catastrophic events[12] - The total portfolio return for the full year 2024 was 4.6%, down from 6.3% in 2023[8] Assets and Equity - Total assets as of December 31, 2024, amounted to $105,745 million, with shareholders' equity at $25,591 million[14] - The average diluted equivalent common shares outstanding remained stable at 587.7 million for both December 2024 and the full year 2024[2] - The Debt-to-total capital ratio stood at 21.2%, indicating a moderate level of leverage[14] - The average cost per common share repurchased was $266.98, with 79 million shares repurchased[14] - The trailing 12-month return on average common shareholders' equity was 35.5%[14] Revenue and Expenses - Investment income for December 2024 was $269 million, with total revenues for the month reaching $6,974 million[4] - Total expenses for December 2024 were $5,804 million, leading to income before income taxes of $1,170 million[4] - The company reported a total comprehensive income of $486 million for December 2024, compared to $8,673 million for the full year 2024[8] Operational Challenges and Risks - The company emphasizes the importance of accurately underwriting and pricing risks, as well as establishing accurate loss reserves[25] - The impact of severe weather and climate change on the company's operations is a significant concern[25] - The effectiveness and availability of reinsurance programs are critical to the company's risk management strategy[25] - The company faces challenges related to maintaining a trusted brand and reputation in a highly competitive property-casualty insurance market[25] - The ability to innovate and respond to competitors' initiatives is essential for the company's growth[25] - The company is focused on attracting and retaining talent to maintain appropriate staffing levels[25] - Compliance with complex and changing laws and regulations is a key operational risk[25] - The company is navigating risks associated with the development and use of new technology[25] - The performance of fixed-income and equity investment portfolios is crucial for the company's financial health[25] - The company is aware of the potential impacts of epidemics and pandemics on its business operations[25] Future Outlook - The company plans to release January results on February 19, 2025, before the market opens[17]

Core Insights - Progressive reported revenue of $20.33 billion for the quarter ended December 2024, marking a 22.6% increase year-over-year [1] - The company's EPS was $4.08, up from $2.96 in the same quarter last year, exceeding the consensus estimate of $3.43 by 18.95% [1] - The reported revenue surpassed the Zacks Consensus Estimate of $19.82 billion, resulting in a surprise of 2.55% [1] Financial Performance Metrics - The combined ratio for the company was 87.9%, better than the estimated 89.8% by analysts [4] - Total personal lines policies in force reached 33.81 million, exceeding the average estimate of 30.38 million [4] - Net premiums earned were $19.14 billion, surpassing the estimated $18.66 billion, reflecting a 21.4% increase compared to the previous year [4] Stock Performance - Progressive's shares returned 2.3% over the past month, outperforming the Zacks S&P 500 composite's 1.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Group 1 - Progressive reported quarterly earnings of $4.08 per share, exceeding the Zacks Consensus Estimate of $3.43 per share, and up from $2.96 per share a year ago, representing an earnings surprise of 18.95% [1] - The company achieved revenues of $20.33 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.55%, and an increase from $16.59 billion year-over-year [2] - Progressive has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - Progressive shares have increased by approximately 2.3% since the beginning of the year, compared to a 3.2% gain for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $3.58, with expected revenues of $20.36 billion, and for the current fiscal year, the estimate is $14.02 on $87.1 billion in revenues [7] Group 3 - The Zacks Industry Rank places the Insurance - Property and Casualty sector in the bottom 44% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5][6]

Core Insights - Progressive Corporation reported significant growth in net premiums written and earned for the quarter and year ended December 31, 2024, indicating strong business performance [4] - The company experienced a 22% increase in net premiums written for the December quarter compared to the previous year, reaching $5.964 billion, and a 20% increase for the full year, totaling $18.105 billion [4] - Net income for the December quarter rose by 5% to $942 million, while the full year net income increased by 19% to $2.356 billion [4] - The combined ratio improved slightly, indicating better underwriting performance, with a ratio of 84.1 for the December quarter compared to 83.4 in the previous year [4] Personal Lines Performance - Total personal lines policies in force increased by 18% year-over-year, reaching 33,811 thousand [1] - Direct auto policies saw a notable 25% increase, growing from 11,190 thousand to 13,996 thousand [1] - Agency auto policies also grew by 17%, from 8,336 thousand to 9,778 thousand [1] - Special lines and property insurance policies increased by 9% and 14%, respectively, reflecting overall growth in personal lines [1] Commercial Lines Performance - Commercial lines policies in force showed a modest increase of 4%, rising from 1,099 thousand to 1,141 thousand [1] - The overall companywide policies in force increased by 18%, reaching a total of 34,952 thousand [1] Company Overview - Progressive is the second largest personal auto insurer in the United States and a leading provider of commercial auto, motorcycle, and boat insurance [3] - The company was founded in 1937 and has a history of offering innovative tools and services to help customers save time and money [3] - Progressive's shares are publicly traded on the NYSE under the ticker symbol PGR [4]

Core Viewpoint - The Progressive Corporation (PGR) is anticipated to show improvements in both revenue and earnings for the fourth quarter of 2024, with results expected to be reported on January 29, 2024 [1] Revenue and Earnings Estimates - The Zacks Consensus Estimate for PGR's fourth-quarter revenues is $19.8 billion, reflecting a 19.5% increase year-over-year [2] - The consensus estimate for earnings is $3.43 per share, indicating a year-over-year growth of 15.9%, with a 2.7% upward revision in the past 30 days [2][3] Earnings Surprise History - PGR has consistently beaten the Zacks Consensus Estimates in the last four quarters, with an average surprise of 19.85% [3][4] Earnings Prediction Model - The earnings prediction model indicates a likely earnings beat for PGR, supported by a positive Earnings ESP of +3.13% and a Zacks Rank of 3 (Hold) [5] Factors Influencing Q4 Results - Revenue growth is expected to be driven by improved premiums, higher net investment income, and increased fees and service revenues [6] - The Zacks Consensus Estimate for net premiums earned is $18.7 billion, supported by a strong product portfolio and market presence [7] - Net investment income is projected at $772.6 million, benefiting from a higher invested asset base and improved interest rates [8] Expense Considerations - Higher loss and loss-adjustment expenses, policy acquisition costs, and underwriting expenses are anticipated to increase overall expenses, with the loss and loss-adjustment expense ratio estimated at 69.1 [8] - Despite catastrophe losses, prudent underwriting is expected to improve the combined ratio, which is pegged at 89.8 [9] Stock Performance and Valuation - PGR's stock has outperformed the industry, sector, and the Zacks S&P 500 composite index in 2024 [10] - The stock is currently considered expensive, with a price-to-book value of 5.17X compared to the industry's 1.56X [12][14] Investment Thesis - PGR's strategy includes bundling auto with lower-risk properties and focusing on segmentation and prudent pricing to enhance customer retention [15] - Investments in digitalization are expected to support continued growth, with a Growth Score of A [16] Financial Stability - PGR's solid capital position allows it to navigate market volatility and invest in growth opportunities, despite higher leverage compared to industry averages [17] Market Position - PGR is a leading player in the auto insurance market and is committed to enhancing customer experience while managing expenses and expanding margins [18] Investor Sentiment - PGR's strong dividend history, growth prospects, and favorable return on capital contribute to positive investor sentiment, although new investors may consider waiting for a better entry point due to premium valuation [19]

Group 1 - Significant improvements in private-passenger auto insurance underwriting results in 2024 have triggered changes in the competitive environment [1] - The competitive landscape is beginning to manifest in the third-largest US state [1] - Longtime rivals The Progressive Corp. (PGR) and Geico Corp. are planning to adapt to these changes [1]