Progressive Quarterly, Monthly Profits Rocket Upward

Progressive’s latest financials showed monthly and quarterly profits rocketing upward, with both more than doubling compared to previous-year periods.

The direct-to-consumer car insurer showed $324.6 million in second-quarter profits, far above the $118.6 million reported for the same quarter last year.

Progressive’s profits did even better for the month, with $68.4 million in net income last month that was more than five times the $13.5 million reported for June 2012.

The strong performance was helped in part by a turnaround in investments. This quarter, Progressive reported a net gain in investments of $132.9 million, compared to a quarterly net loss of $4.7 million in 2012. Last month, investment gains were also far better than the year-earlier period.

Progressive also benefitted from lower catastrophe losses this quarter. The second quarter saw $83 million in catastrophe losses compared to $107 million last year. The insurer incurred $18 million in catastrophe losses last month, a little less than half the $37 million reported for June 2012.

However, the $130 million in total catastrophe losses this year is slightly ahead of the $123 million for the previous-year period.

Revenue for this year so far is outpacing the same period last year by about 9 percent while expenses are also up, by about 4 percent, according to the insurer.

Also encouraging were both a monthly and quarterly decrease in combined ratio, which is underwriting profit measured by the amount of premiums paid out on claims. For the quarter, the combined ratio was down from 97.6 percent to 93.3 percent. For the month, the combined ratio was down from 100.9 percent to 96 percent.

There was also an increase in net premiums written and net premiums earned for the quarter of 6.2 percent and 7 percent, respectively.

Monthly personal auto policies for June 2013 in force crept upward by less than 1 percent compared to June 2012.

Snapshot a Central Part of Future Plans

Progressive will discuss its quarterly performance next month in a conference call with investors. Part of the call will undoubtedly include updates on the performance of Snapshot, the insurer’s usage-based insurance (UBI) program that prices coverage based on driver behavior. A driver’s habits are translated into data through an in-car device.

In Progressive’s last quarterly report, CEO Glenn Renwick said that the insurer had just wrapped up its new marketing campaign called Rate Suckers, which focused on the fact that a driver’s premiums are linked to the claims background of other drivers.

“Consumers have a strong reaction to the feeling they may be paying more for insurance due to the poorer driving and insurance profile of others,” Renwick said in the report. “Snapshot is clearly positioned as the antidote.”

Also during that quarter, agents began using Snapshot more extensively themselves to better sell the program to policyholders, he said.

Momentum in mobile offerings could “combine with even greater interest in Snapshot,” Renwick said last quarter.

Late last month, Progressive publicized its first licensing deal with USAA for rights to its UBI-related patents and intellectual properties that are behind the Snapshot program.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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