Progressive profit up 10% in Q1 and combined ratio remained well below 100%

Progressive’s Q1 profit increased by 10% over Q1 2024, reaching nearly $2.6 billion in net income and a 43-cent increase per share, as of March 31.

Specific to auto insurance, revenue from direct personal lines was up by 25%, or nearly $14.8 million, compared to almost $11.9 million brought in during Q1 2024.

Progressive’s combined ratio was 86%, down 0.1% from a year ago. When the combined ratio is below 100%, that shows more revenue was made from premiums than spent on paying claims. Premiums earned increased 20% compared to Q1 2024, and written premiums were up 17%.

Seeking Alpha notes that Progressive’s investments in technology and AI have increased expenses; however, “improved loss performance and a strong combined ratio suggest future profitability and operational efficiency.”

“The company has been aggressively investing in technology and AI, both to automate the claims process as well as better price risk,” Seeking Alpha wrote earlier this week. “Because of these investments, other underwriting expenses, which include items like salaries and tech spending, rose by 41% from last year to $2.7 billion. This was twice as fast as premium growth. As a result of this spending, PGR’s total expense ratio was 20.2%. For comparison, in Q1 2024, its expense ratio was 18.3%.

“Despite spending about 2% more to operate its business, Progressive’s 86% combined ratio was down marginally from 86.1% last year. As a reminder, this ratio covers all costs, both losses on policies as well as operating costs. In other words, its improved loss performance more than paid for investments in its operations.”

Progressive remains the second-largest personal auto insurer in the U.S.

Data on 2024 property and casualty earnings and market share rankings recently released by the National Association of Insurance Commissioners (NAIC) show that the top 10 private passenger auto insurance companies brought in a combined $865.5 billion in direct premiums earned and held nearly 76% of the market.

The 2024 market share data include countrywide direct written premiums for the top 25 groups and companies as reported on the state page of the annual financial statement for insurers that report to the NAIC. The data is based on filings received by March 31. NAIC said in a press release that its full 2024 market share reports with more in-depth information will be available this summer.

According to NAIC, the top 10 private passenger auto insurance groups and companies by countrywide premium were:

1. 1. State Farm Group — earned $65.9 billion and held 18.9% of the market share
   2. Progressive Group — earned $56.8 billion and held 16.7% of the market share
   3. Berkshire Hathaway Group (parent company of GEICO) — earned $41.3 billion and held 11.6% of the market share
   4. Allstate Insurance Group — earned $35.6 billion and held 10.2% of the market share
   5. USAA Group — earned $21.8 billion and held 6.2% of the market share
   6. Farmers Insurance Group — earned $13.7 billion and held 3.8% of the market share
   7. Liberty Mutual Group — earned $12.7 billion and held 3.3% of the market share
   8. Travelers Group — earned $7 billion and held 2% of the market share
   9. Auto Club Enterprises Insurance Group — earned $6 billion and held 1.8% of the market share
   10. American Family Insurance Group — earned $6.1 billion and held 1.7% of the market share

Progressive will hold a Q1 investor event on May 6. The event listing is unclear whether this includes an earnings call. An annual shareholders’ meeting is scheduled for May 9.

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