Net premiums earned growth slowed to 6% from 18% a year earlier
Progressive recovered faster than rivals from post-pandemic inflation, using data analytics to fine-tune pricing and secure regulatory approvals to hold less capital against its policies. The company’s combined ratio — an underwriting profitability metric — was 87.3 in the June quarter, well below its goal of 96, which equates to 4 cents of operating profit per premium dollar. Analyst Gregory Peters of Raymond James called the results “exceptional.”
With growth tapering, management faces pressure to deploy capital. “Our situation has changed, but our approach to capital has not changed,” said John Sauerland, Progressive’s former chief financial officer, who retired this month. Andrew Quigg, the new CFO, said the company remains disciplined and committed to returning excess capital to shareholders. Progressive spent about $170 million on share buybacks in June, up from $4 million in the same month a year earlier.
Analyst Tracy Dolin-Benguigui of Wolfe Research said Progressive is “past their peak growth” and that capital returns will likely remain elevated because organic expansion opportunities are limited. Piper Sandler’s Paul Newsome noted that as the insurer accumulates capital, “the capital needs to go somewhere — such as shareholder returns.”
Progressive’s stock closed at $207.95 on Friday, down 15% from a year earlier, which analysts attributed in part to investor concerns over decelerating growth.