May Earnings: Underwriting Profitability Drives Sizable Beat

Research evidence excerpt

May Earnings: Underwriting Profitability Drives Sizable Beat

$55.60

• We are bullish on personal lines writers relative to commercial lines writers at this Price/Book 352%

point in the cycle. PGR's history is to take only modest rate decreases when necessary Price/Tang.Book 368%

52-Week High / Low US$253.79 / US$188.05 and to maintain profitability well inside its 96% combined ratio target. Growth should

Avg Daily Vol (000) 2,933

stabilize toward its long-term rate of approximately 10% which should support earnings Div Yield 0.20%

growth over time. The key risk to multiple expansion is near-term earnings uncertainty, Total Assets ($mil) 122,209

but we believe the underlying business is performing better than feared. ROE 45.79%

Shares Out (mil) 585.3

• We are raising our EPS estimates. We are raising our 2026E EPS to $18.25 from Div (ann) US$0.40

$17.20, and our 2027E EPS to $17.30 from $17.25 reflecting the strong May earnings Institutional Ownership 88.0%

results. Insider Ownership 0.3%

Fiscal Year End Dec

• The underlying combined ratio of 83.8% continues to hold up well inside the Price Performance - 1 Year

96% long-term target, even as pricing moderates. Catastrophe losses of 1.4 points USD

reversed April's elevated 7.0 points, and reserve development swung to 3.1 points 280

favorable from our estimate of 4.0 points unfavorable. PIF growth of 8.0% remains above

peer levels, and while we estimate it normalizes around 5.7% for the full year, the fact 260

that it remains elevated suggests the competitive response to PGR's rate actions has 240

been more measured than feared. Bullets continued on page 2...

RISKS TO ACHIEVEMENT OF PT & RECOMMENDATION

Slower LT growth rate than expected, earnings sensitivity, and regulatory interference. 200

COMPANY DESCRIPTION 180