Progressive Third-Quarter Profit Down 42 Percent from 2010

Progressive logoProgressive announced Wednesday that its profits for the third quarter of 2011 were down 42 percent compared to the same period last year.

The auto and home insurer, which suffered major losses from Hurricane Irene and other natural disasters, said in a release that net income for the quarter fell from $261.6 million in 2010 to $150.7 million this year.

Net income for September decreased 6 percent, from $81.9 million last year to $77.1 million in 2011, despite a 5 percent increase in total personal auto policies for the month and a 4 percent increase for the year to date.

The company reported last month that catastrophe losses in August had totaled $37 million, slashing profits by 66 percent—from $66.5 million to $22.5 million—compared with the same month in 2010.

Progressive blamed Irene for nearly two-thirds of those losses.

The company incurred significant losses as a result of damage claims filed on Virginia auto insurance policies and coverage in New York, New Jersey and other states hit hard by natural disasters.

Other Insurers Also Feeling the Pain

Other major insurers, including State Farm, Allstate and MetLife Auto & Home, have reported major losses this year as a result of catastrophes, which insurers typically define as events causing $25 million or more in insured property losses and impacting many policyholders and coverage providers.

According to information released this week by ISO and the Property Casualty Insurers Association of America (PCI), catastrophes in the first half of this year cut profits for property/casualty insurers to $4.8 billion from $16.8 billion in first-half 2010.

ISO reported that domestic catastrophes—including tornadoes, windstorms and other natural disasters—caused $23 billion in direct insured losses for insurers, up $14.1 billion from last year and about three times the average for first-half losses over the past decade.

Last week, MetLife announced an estimated $80 million to $100 million in after-tax catastrophe losses on auto and homeowner policies during the third quarter. Those figures were $42 million to $62 million higher than the company’s expected catastrophe losses of $38 million for the quarter.

State Farm reported it had paid out $5 billion on more than 970,000 weather-related claims as of Sept. 23. And Allstate reported $735 million in catastrophe losses in August, including about $500 million from Irene. The company said its estimated pretax losses from Irene and seven other storms in July and August added up to $865 million.

To find out how policyholders rank Progressive on claims, rates and service, readers can research user-submitted Progressive auto insurance reviews online.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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