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Progressive has launched Snapshot Pro, a single program that brings together its different tools for tracking how business fleets are driven. Telematics uses sensors or apps to monitor driving habits, allowing the company to offer lower rates to safer drivers while gathering data to price its insurance more accurately.
This move simplifies things for business owners and expands the types of devices they can use to share data. For Progressive, it is a step toward growing its commercial business, which is a key part of its plan to find new customers outside of its core personal auto market.
Source: PRNewsWire
After Progressive reported its October results, we updated our fair value. We moved our rating from Buy to Watch. We raised our expectations for growth in total policies in force and lowered our projections for how many customers choose to use data-tracking devices. We have added the cost of advertising and the impact of investment market swings to the specific risks we track.
Progressive reported that its net premiums earned, the money it keeps from policies after accounting for time passed, rose 5 percent to 21.87 billion dollars for the quarter. The company also improved its combined ratio to 88.7 percent. This ratio measures how much an insurer spends on claims and expenses for every dollar it brings in; a lower number means more profit, and anything under 100 percent shows the company is making money on its insurance business.
While the headline earnings per share of 1.08 dollars for September looked lower than some estimates, the underlying business remains strong. The company managed to grow its total policies while keeping costs under control, which is the core of our view on the stock. Its ability to price risk accurately through data continues to give it an edge over rivals who are struggling with rising repair and medical costs.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Hurricane Isaias has already shut down about 63 percent of oil production in the Gulf of Mexico as it moves through the region. While the immediate impact is on energy companies, a storm of this size often leads to significant property damage and vehicle claims once it reaches land.
For an insurer like Progressive, these events are a test of how well they have priced their policies. Large storms can cause a temporary spike in the combined ratio, which tracks how much the company pays out in claims versus what it collects in premiums. We will be watching to see if the eventual damage stays within the levels the company's data models have planned for.
Source: CNBC
The company is scheduled to share its performance for the quarter next Wednesday. Analysts expect earnings to come in at roughly 4.30 dollars per share. Beyond the headline numbers, the focus will likely be on the combined ratio. This is a key measure of insurance health that shows how much an insurer pays out in claims and expenses for every dollar it brings in. Keeping this number below 96 percent is the company's long-standing goal to ensure it is growing profitably rather than just chasing new customers with low prices.
Management has a history of setting a high bar and mostly clearing it, with five beats in the last eight quarters. This suggests a business that is growing faster than even its own optimistic forecasts.
| Expectation | |
|---|---|
| EPS | $4.02 |
| Revenue | $20.11B |
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