NEW YORK (TheStreet) -- Shares of Progressive (PGR) dropped 3.8% on Thursday after the auto insurer announced disappointing February results, and analyst opinion on the stock leans toward the negative.
The shares were down another 0.9% in late morning trading Thursday, to $23.38.
Progressive reported February earnings of $47 million, or 8 cents a share, down from $100.2 million, or 17 cents a share, in February 2013. Net premiums written increased 3% year-over-year to $1.539 billion, while net premiums earned grew 5% to $1.253 billion. But loss and loss adjustment expenses rose 13% year-over-year to $1.012 billion during February.
Progressive's combined ratio - losses and expenses divided by earned premiums - rose to 97.2% in February from 91.4% a year earlier. The combined ratio is a profitability measure for an insurer's underwriting business. A ratio under 100% means the underwriting business is profitable, while a ratio over 100% means the insurer's underwriting business is losing money. Many insurers show overall profits even when their underwriting business are losing money, because of earnings from their securities investment portfolios.
The company reported "total development" -- that is, adverse development -- of $29.3 million for prior accident years, meaning it expected that much more in losses on existing policies.
The insurer also reported a trailing 12-month return on average equity of 17.2%, based on net income, and 17.9%, based on comprehensive income.
Here's what three analysts with differing opinions on the outlook for Progressive's stock had to say about the February results:
MKM Partners analyst Harry Fong rates Progressive a "buy," with a $32 price target, and in a client note on Thursday attributed the relatively weak February results to winter storms in December, and "nothing more." Fong did cut his 2014 earnings estimate for Progressive to $1.60 from $1.70, while leaving his 2015 EPS estimate at $1.80.