Net income of $293.4M fell 10% from a year ago, with net income per share of $0.49 off 8%. Operating profit of $0.45 per share missed estimates by $0.04.
Net premiums written of $4.628B gained 5% Y/Y, but slips from last year's 6.2% growth pace.
The combined ratio improves to 92.6% from 93.3%.
Innovations like allowing clients to do business from smartphones isn't drawing as many policyholders as before, says Sandler O'Neill's Paul Newsome (speaking ahead of earnings). “The biggest issue is that they really haven’t had a major change in the last decade ... It’s really about 10 years ago when they had really rapid premium growth."
Travelers (TRV) is cut to Neutral: "Over the past two years, TRV has been a bellwether in pushing for commercial lines rate, and has improved underlying margins an impressive 6pts from 2011 levels," says analyst Michael Nannizzi, but he notes the stock trades at 1.3x book vs. 0.8x in 2011. "The case for multiple expansion is increasingly difficult."
W.R. Berkely (WRB) is cut to Sell: "We believe that WRB's higher valuation appears ahead of fundamentals in a market where positive trends may be plateauing," says Nannizzi.
Progressive (PGR) is upped to Neutral: Re-emerging growth is a positive catalyst while margins remain within an acceptable range, says Nannizzi. "Over the past year, Progressive, faced with signs of accelerating loss costs, raised pricing, and as a result unit growth declined. As a result of the firm's rate action profitability improved in 2013, and in recent months, running below the firm’s 96 CR target, PGR is no longer aggressively seeking rate increases."
Until EPS growth accelerates, Progressive (PGR) at $26.74 is fairly valued, says the research shop, reiterating its Hold rating. Argus, however, would turn a Buyer on any "nonfundamental pullback" to the $23-$24 level.
Progressive Corp is an insurance holding company, whose subsidiaries provides personal and commercial automobile insurance and other property-casualty insurance and related services throughout the United States.