After 2017 left private-passenger auto insurance industry observers wondering how much market share the rapidly growing Progressive Corp. had gained, the company's January 2018 earnings report shows that its top-line momentum did not stop at year-end.
Total personal auto policies in force rose 13.2% year over year to nearly 11.9 million at a company that ranked in 2016 as the fourth-largest U.S. personal auto insurer at the group level. It was the fifth consecutive month in which personal auto policy count had increased year over year by a double-digit percentage, and the January growth was the largest in percentage terms Progressive had recorded since April 2004.
Progressive's resurgence in the agency channel had been one of the company's highlights in 2017 as it repeatedly sets new multiyear highs in its policy count growth rate. The expansion has continued in recent months, and the January growth rate of 12.7% was the highest in Progressive's agency channel since it produced the same level of increase in April 2004.
January marked the 26th straight month in which Progressive's agency channel policies in force have seen year-over-year increases and the 25th consecutive sequential rise. Prior to the current run, it had not strung together more than 10 straight sequential increases in agency auto policy count since the start of 2005.
Although Progressive's expansion in its direct auto channel had uncharacteristically lagged the more mature agency channel in the middle part of 2017, it has gained steam in recent months. The January year-over-year growth rate of 13.7% marked a fifth consecutive quarter of double-digit percentage expansion in direct auto policy count. It represented the fastest rate of expansion Progressive had posted in the business since October 2010, which occurred amid a 25-month long stretch of double-digit year-over-year growth in direct auto policies in force.
In commercial lines, where Progressive had deliberately dialed back its growth in response to a series of monthly combined ratios in mid-2016 that exceeded management's 96% target, the company's policy count expansion remains on an upward swing.
The year-over-year growth rate in commercial lines policies in force bottomed at a two-year low of 3.8% in August 2017. The 7.3% rate of expansion the commercial lines business achieved in January was the highest result Progressive had produced in the business since the same month in 2017.
Data in forthcoming annual statutory statements will confirm whether Progressive surpassed Allstate Corp. as the nation's No. 3 personal auto insurer for a full year for the first time, behind the group led by State Farm Mutual Automobile Insurance Co. and GEICO Corp. parent Berkshire Hathaway Inc. Progressive topped Travelers Cos. Inc. in the commercial auto business in 2015 and widened its lead in that market in 2016.
Allstate's U.S. property and casualty units generated $20.81 billion in private auto direct premiums written in 2016, ahead of the $19.63 billion attributable to Progressive's U.S. subsidiaries.
Although statutory results are likely to differ at least to some extent, a review of private auto premium writings reported by Allstate and Progressive in connection with their respective GAAP earnings releases suggests the companies may have traded places in 2017.
As reported in Allstate's 2017 statistical supplement, the company's Allstate Protection segment generated written premiums of $20.63 billion in 2016 when excluding Allstate-brand business written in Canada. The 2017 value using the same inputs is $21.21 billion.
Progressive, meanwhile, reported $22.93 billion in personal lines net premiums written for full year 2017 from its agency auto and direct auto channels. Its business volume in 2016 was $19.82 billion on the same basis.
As the company's policy count continues to climb at an historically high clip, its personal vehicle net premiums written is following suit. Progressive's personal vehicle net premiums written hit a new high of $23.32 billion for the trailing-12-month period ended in January.
With Progressive's companywide combined ratio improving 2.3 percentage points year over year to 87.4% in January after its 2017 combined ratio amounted to 93.4% in a year marked by elevated catastrophe losses, the company would appear to have even more room to expand while maintaining management's targeted underwriting margins.