Shares of Progressive Corp. (NYSE:PGR) declined Thursday after it reported June and second quarter results. The insurance company reported solid policies-in-force (PIF) growth but reported misses on catastrophes and reserves. Overall, Wall Street analysts characterized results as “poor,” but some continue to see opportunity long-term.
JPMorgan analysts explained, “Business trends were poor …Results were pressured by an elevated AY loss ratio, adverse development, and cat losses, which offset a better than assumed expense ratio. On a positive note, PIF growth was strong in June, with personal auto up 14% (vs. +14% in May), commercial lines up 7% (+7% in May), and homeowners’ up 5% (+5% in May).”
KBW analysts said, “June operating loss per share of ($0.13) missed the Street’s implicit $0.34 estimate and our projected $0.25, as significant reserve charges and higher-than-expected catastrophe losses outpaced lower-than-expected core loss and expense ratios. Personal auto PIF growth was +14.4%, essentially matching May’s +14.3%. We expect the prior-year (including significant current-year prior-month) reserve charge and core loss ratio miss to pressure the shares today.”
Roth MKM analysts also commented on the stock, saying, “Progressive reported an operating loss of $0.13 per share for the June 2023 month against our estimate of $0.45. Catastrophe losses over our estimate amounted to about $0.47 per share. Hence, it was still a miss to our underlying estimate chiefly due to prior year reserve development.”
The analysts added, “Cat losses are very unpredictable and typically averages about 3 points per month … We still believe the company is close to turning the corner on losses as it continues to go after significant rate increases, and we would buy on weakness.”
Shares of Progressive declined by over 10%, its worse decline since March 2020.