1. The Progressive Corporation (NYSE:PGR)
Year-to-Date Performance: 52.97%
Number of Hedge Fund Holders: 89
The Progressive Corporation (NYSE:PGR) is a prominent American insurance provider, well-known for its diverse offerings, including auto, home, and commercial insurance. As the second-largest personal auto insurer in the US, the company has established a strong market presence. It is also a leading seller of commercial auto, motorcycle, and boat insurance.
The company is focused on enhancing its commercial auto and business owners’ policy (BOP) products. In the second quarter of 2024, The Progressive Corporation (NYSE:PGR) introduced a new commercial auto product model in two additional states and plans to expand this to 14 states by the end of the year. The company’s BOP product is currently available in 46 states. During the second quarter, Progressive also rolled out its newest BOP product model in 4 states, increasing its total to 22 states. Furthermore, the company initiated a pilot program for a multi-product quoting system that allows agents to quote both commercial auto and BOP products seamlessly.
Progressive (NYSE:PGR) reported impressive financial results for Q2 2024. The company achieved a 22% increase in net premiums written compared to the same period in the previous year, alongside a combined ratio of 91.9, indicating strong profitability despite challenges from severe weather events. Additionally, policies in force grew by 9% year-over-year.
The personal auto segment saw significant growth in Q2 2024, adding 1.1 million policies since Q1 2024 and totaling 2 million new policies in the first half of the year. This growth underscores Progressive’s (NYSE:PGR) ability to attract new customers.
The Personal Lines segment also exhibited robust performance with net premiums written reaching $14.6 billion in Q2 2024, a 26% increase year-over-year. This surge was fueled by a substantial rise in new business applications, resulting in nearly 28 million policies in force by the end of Q2.
Over the past five years, The Progressive Corporation (NYSE:PGR) has demonstrated solid financial health with a compound annual growth rate (CAGR) of 20% in net income and an 11% CAGR in levered free cash flow. These metrics reflect not only profitability but also a strong demand for its insurance products.
Given its strategic initiatives to enhance product offerings and its impressive financial performance, The Progressive Corporation (NYSE:PGR) presents itself as a compelling investment opportunity. The consistent growth in net premiums and policies indicates robust market demand and effective management strategies.
According to Insider Monkey’s Q2 database, 89 hedge funds held stakes in PGR. Middle Coast Investing stated the following regarding The Progressive Corporation (NYSE:PGR) in its Q3 2024 investor letter:
“Progressive Insurance (NYSE:PGR) is the best example of both a macro and micro transition. Used car repair cost inflation (macro) hurt its profitability. It was early in raising prices to deal with that, and has been growing new policies in force much faster than competitors. As it has overcome the cost inflation issue, its profits have soared, and should continue to grow. The stock price has doubled in the last 14 months.”
Overall, PGR ranks first among the 7 hot insurance stocks to buy right now. While we acknowledge the potential of insurance companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PGR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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