Progressive Corp.'s July results showed an acceleration of expansion in both units and premium volume as the company continues to capture what President and CEO Tricia Griffith recently characterized as "a huge opportunity for more growth."
The company's nearly 11.2 million personal auto policies in force in July marked an increase of just over 9% from the year-ago month. It was the first time since August 2010 in which that growth rate equaled or exceeded 9%, and strength in both of Progressive's business channels contributed to the company's success.
Agency auto policies in force grew by nearly 9.4% to 5.4 million. Direct auto policies in force of nearly 5.8 million represented an expansion of 8.7% from a year earlier.
Company officials credited internal and external factors for the momentum in the agency channel, which has posted the kinds of growth rates in recent months that Progressive last experienced well over a decade ago.
Griffth, speaking during an investor relations presentation on Aug. 3, said that Progressive's acquisition of the group of homeowners insurers that includes American Strategic Insurance Corp. was "huge" in that it gave the company access to a new set of agency customers. Company officials also credited a new product focused on preferred customers that Progressive "put on the street several years ago" and recently updated for generating profitable growth.
Griffith also noted that Progressive did not have to boost rates as much as its competitors in 2016. "There was a lot of shopping in the agency channel and so we saw stronger quoting and conversion from our agents," she said.
July represented the 20th consecutive month of year-over-year growth in agency policies in force for the company, which followed a stretch of 17 straight months of declines. The year-over-year growth rate was the highest for the agency channel in any month since June 2004, when its pace of expansion approached 10.3%.
The growth rate in direct policies, meanwhile, was the strongest Progressive had posted since December 2016. The company dialed back advertising efforts in the second half of 2016 as management sought to ensure the business achieved the targeted combined ratio of 96%, but it has since restored and accelerated its initiatives in that regard.
The year-over-year direct auto policies in force growth rate peaked in July 2016 at 11.6%, and had slid to 7.6% by April. It has since ticked higher in the three subsequent months in a pattern that would appear to track the company's retreat and restoration of its ad spending.
Net premiums written in Progressive's personal vehicle insurance businesses totaled $2.30 billion in July, an increase of 18.3% from the year-earlier month. On a trailing-12-month basis, net premiums written in the personal vehicle businesses of $21.49 billion represented an increase of 13.8% from the comparable period ended in July 2016. It was the eighth consecutive month of double-digit percentage growth in trailing-12-month premium volume
Progressive's underwriting margins improved even as its growth rate accelerated during the month. The July combined ratios of 90.1% in the agency business and 88.8% in the direct business represented marked improvement from the year-ago month, when both channels delivered below-target underwriting margins. They also compared favorable to June, when agency and direct combined ratios were 97.1% and 95.3%, respectively.
The commercial lines combined ratio, which represented a particular area of consternation during the summer of 2016, totaled 91.5% for July. That business generated combined ratios in excess of 96% for four consecutive months through September 2016, but it has produced results of no higher than 94.4% in the subsequent 10 months.
Progressive is not alone in posting historically significant growth rates in its personal auto business. Berkshire Hathaway Inc. recently reported a 10th consecutive quarter of double-digit percentage growth in GEICO Corp.'s net premiums written as that insurer continued to reel in new business.