(Reuters) – Property and casualty insurance company Progressive Corp reported a 19% rise in its fourth-quarter profit on Wednesday, driven by strong demand for personal auto insurance policies.
WHY IT’S IMPORTANT
Insurance spending has remained resilient, as businesses and individuals prioritize coverage to protect against risks. This helped insurers attract and retain customers, despite rising costs for policies.
However, increased frequency of severe weather events like hurricanes, wildfires and other natural calamities are eating into insurer’s profit margins, leading to a hike in premium prices to offset escalating risks.
BY THE NUMBERS
Net income of the insurer rose to $2.36 billion, or $4.01 per share, in the three months ended Dec. 31, compared with $1.99 billion, or $3.37 per share, a year ago.
Its net premiums written jumped 20% to $18.11 billion.
Combined ratio was at 87.9%, versus 88.7% last year. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.
The insurer’s personal insurance policies in force rose 18% to 33.8 million in December, compared with the same month last year. Commercial lines policies in December were also 4% higher than the same month last year.
CONTEXT
Mayfield Village, Ohio-based Progressive provides insurance for personal and commercial autos and trucks, motorcycles, boats, recreational vehicles, and homes.
Founded in 1937, the company is the second largest personal auto insurer in the U.S.
MARKET REACTION
Shares of Progressive were up 50.4% in 2024, outperforming peers like Allstate and Travelers, which rose 37.7% and 26.5%, respectively.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Shailesh Kuber)
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