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Progressive’s Personal Lines Expand on Direct Auto in 3Q15

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Personal Lines business

With its October 16 3Q15 earnings release, Progressive (PGR) reported a 6.6% increase in the total revenues from its Personal Lines segment, up to $4.35 billion from $4.10 billion in 3Q14. The Personal Lines segment contributed approximately 86% of Progressive’s total revenues.

The company’s Personal Lines business writes insurance for personal cars and recreational vehicles. There are two Personal Lines subsegments—Direct and Agency. The Direct business recorded revenue growth of 11.9% for a total of $2.07 billion, contributing 41% of the total revenues. Meanwhile, despite just 2.2% growth, the Agency business reported total revenues of $2.28 billion, contributing 45% of the segment’s overall revenues.

In the first nine months of 2015, Progressive recorded a total net premium of $12.86 billion from its Personal Lines segment, with an overall growth of 6%. The growth came primarily from an 11% increase in the Direct business.

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Expanding customer base

As of September 30, 2015, the personal lines division had a total of 13.7 million policies in force, up by 3% compared to 13.3 million as of September 30, 2014. The agency, direct, and special lines registered growth of 8.5%, -0.9%, and 1.7%, respectively compared to the prior year’s corresponding quarter. Its distribution of business remained similar to previous quarters, especially in the Commercial and Auto segments. On the pricing front, Progressive maintained reasonable rates in the quarter, with no substantial increases in overall pricing.

The company registered earnings per share growth of 11.3% in the last fiscal year. Here’s how its peers compare:

  • American International Group (AIG) – -13.1%
  • Mercury General (MCY) – 58.3%
  • Ace (ACE) – -22.9%
  • Allstate (ALL) – 30.8%
  • Travelers Companies (TRV) – 10.0%

Together, these companies form 1.1% of the SPDR S&P 500 ETF (SPY).

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