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Progressive Weathers Turbulent Times

By    |   Friday, 12 Aug 2011 11:57 AM

Progressive Corp. (PGR) is weathering some tough times, literally. The insurance giant reports rising premiums and stronger profits despite a tough economy and a spate of inclement weather.

Net premiums earned came to $3.7 billion in the second quarter of 2011, up 4 percent from the same period a year earlier. Net income came to $245.2 million, up 16 percent from the second quarter of last year.

On a companywide basis, policies in force grew 5 percent, with personal lines growing 5 percent and commercial auto decreasing 2 percent. "We cannot predict when the commercial auto market will begin to expand and will stay focused on our efforts in capturing additional business within the existing market," Progressive management say in an earnings filing.

"To continue to grow policies in force, it is critical that we retain our customers for longer periods, which is why increasing retention remains one of our most important priorities and why we have stepped up our efforts to increase the number of multi-product households."

Weather played a factor also, especially as spring storms inflicted damage across large swathes of the country. "The second quarter of 2011 will surely be an expensive one for the insurance industry. The country had more than its fair share of severe weather conditions," says CEO Brian C. Domeck.

Progressive did say, however, that the impact storms had on business was manageable.

String of upgrades

Standard and Poor's has assigned a A+ rating and a stable outlook. Since March 2010, the company has seen a slew of upgrades.

In August of this year, Barclays Capital upgraded the company's stock to overweight from equal weight while Ticonderoga went to buy from neutral in June. In 2010, the company saw five upgrades and one coverage initiation at an outperform rating and another at hold. Progress next reports on or about Nov. 8.

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Progressive Corp. (PGR) is weathering some tough times, literally. The insurance giant reports rising premiums and stronger profits despite a tough economy and a spate of inclement weather. Net premiums earned came to $3.7 billion in the second quarter of 2011, up 4...
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Friday, 12 Aug 2011 11:57 AM
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