Progressive Falls Most Since August as Profit Drops on Hailby
Operating earnings per share of 42 cents missed estimates
Insurer had $82 million of catastrophe losses in March
Progressive Corp., the fourth-largest U.S. auto insurer, fell the most since August after profit declined on higher costs from catastrophes including hailstorms.
The insurer slumped 3.4 percent to $33.57 at 4:15 p.m. in New York.
First-quarter net income fell 13 percent to $258.2 million, or 44 cents a share, from $295.6 million, or 50 cents, a year earlier, the Mayfield Village, Ohio-based company said in a statement Thursday. Operating profit, which excludes some investment results, was 42 cents a share, trailing by 8 cents the average estimate of 20 analysts surveyed by Bloomberg.
The weather was “unfavorable in the quarter, contributing to the miss,” Robert Glasspiegel, an analyst with Janney Montgomery Scott, wrote in a report. “Shares are likely to correct in response to the earnings miss.”
Chief Executive Officer Glen Renwick bought a home insurer last year to help retain and attract drivers who want to buy multiple products from a single company. That strategy also increased Progressive’s vulnerability to natural disasters, like the wind and hail that struck Texas and Louisiana last month. The company incurred $82 million of catastrophe losses in March, compared with just $6 million in the same month of 2015.