Barclays on U.S. Insurance/Non-Life: Reducing PGR & ALL Estimates; August 2011 Results Lower Than Expected
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Rating Summary:
16 Buy, 16 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Barclays on U.S. Insurance/Non-Life: Reducing PGR & ALL Estimates; PGR August 2011 Results Lower Than Expected
Barclays analyst, Jay Gelb, says, "Progressive (NYSE: PGR) is one of the largest automobile insurers in the U.S. with a superior ROE. The company continues to gain profitable market share particularly in its direct sales channel. Results so far in 3Q11 are below our expectations even excluding catastrophe losses. However, this impact appears to be already reflected in PGR's valuation, which is attractive in our view at 1.89x book value and near the low end of its valuation range since the financial crisis."
"We are reducing our EPS estimates for PGR to $1.40 from $1.55 in 2011 and to $1.50 from $1.65 in 2012 to reflect worse than expected profitability. Laterals: We believe deterioration in PGR's accident year combined ratio in July is a negative lateral for Allstate (NYSE: ALL) and The Hartford (NYSE: THG). Separately, we are reducing our EPS outlook for ALL to $0.90 in 2011 from $1.35 to reflect higher than expected 3Q11 July and August catastrophe losses of $865 mn pre-tax (including $500 mn from Hurricane Irene). Losses from Hurricane Irene are in line with our outlook, although total 3Q11 catastrophe losses are higher than we projected, which we think is a negative lateral for THG and, to a lesser extent, Travelers (NYSE: TRV) and Chubb (NYSE: CB)."
Barclays analyst, Jay Gelb, says, "Progressive (NYSE: PGR) is one of the largest automobile insurers in the U.S. with a superior ROE. The company continues to gain profitable market share particularly in its direct sales channel. Results so far in 3Q11 are below our expectations even excluding catastrophe losses. However, this impact appears to be already reflected in PGR's valuation, which is attractive in our view at 1.89x book value and near the low end of its valuation range since the financial crisis."
"We are reducing our EPS estimates for PGR to $1.40 from $1.55 in 2011 and to $1.50 from $1.65 in 2012 to reflect worse than expected profitability. Laterals: We believe deterioration in PGR's accident year combined ratio in July is a negative lateral for Allstate (NYSE: ALL) and The Hartford (NYSE: THG). Separately, we are reducing our EPS outlook for ALL to $0.90 in 2011 from $1.35 to reflect higher than expected 3Q11 July and August catastrophe losses of $865 mn pre-tax (including $500 mn from Hurricane Irene). Losses from Hurricane Irene are in line with our outlook, although total 3Q11 catastrophe losses are higher than we projected, which we think is a negative lateral for THG and, to a lesser extent, Travelers (NYSE: TRV) and Chubb (NYSE: CB)."
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