Progressive Up Big in Third Quarter, Down Slightly for Month

Progressive’s latest quarterly financial report, released Wednesday, showed big year-over-year profit gains, supported largely by investment returns and premium growth.

The $277 million in profits posted by Progressive this quarter was an 83 percent increase compared with last year. Progressive showed net investment gains of $171.9 million during the third quarter of 2012, a whopping rebound compared with an investment loss of $52.6 million during the same quarter last year.

Investment performance has been uneven for Progressive, which posted $78.4 million in gains during the first quarter and $4.7 million in losses the second quarter before the latest quarter’s strong showing.

However, much of the insurer’s third-quarter investment results were the result of a one-time liquidation of $580 million in stocks in October.

For the quarter, the insurer showed a 9 percent year-over-year increase in premiums written. Premiums have been up every quarter this year compared with last year. Meanwhile, losses were up 11 percent, or $318.9 million.

In September, the insurer showed a nominal drop in profits compared with last year, going from $77.1 million to $76.5 million. The insurer saw a $106 million year-over-year jump in loss expenses for the month, but that was largely offset by an accompanying increase of $139 million in premiums written.

Third Quarter Shows Year’s First Turnaround

Progressive’s third-quarter report is the first bright spot in an otherwise dismal year for the insurer, which posted lousy first- and second-quarter financials that saw the company fall 52 percent and 29 percent in profits, respectively, when compared with last year.

In a letter to shareholders addressing the insurer’s second-quarter performance, which was the lowest quarterly profits in at least three years, president Glenn Renwick said that “the immediate condition is serious,” adding that he expected that the insurer’s expansion of usage-based and mobile offerings to boost the numbers as parts of a “diagnosis and treatment plan.”

Progressive has become one of the main players among insurers, buoyed largely by its strongly marketed reputation and online auto insurance sales tactics that forgo the traditional agent at brick-and-mortar businesses.

While State Farm holds the largest share of the auto coverage market, at 18.6 percent, Allstate, GEICO and Progressive are in a tight race for second place at 10.3 percent, 9 percent and 7.9 percent, respectively, according to the latest data from the National Association of Insurance Commissioners.

Usage-based insurance (UBI) programs have been the focal point of a battle between insurers seeking a stronger foothold in a competitive insurance marketplace. Progressive’s Snapshot program made a major splash in the

UBI market this past summer when the insurer offered the program as a 30-day trial to policyholders holding coverage with competitors. The program already is the most widely offered UBI program and is available in more than 40 states.

Allstate recently announced that its UBI program, called Drive Wise, was being made available in seven more states this year with plans to expand further in 2013.

Last month, Esurance, a relatively new Allstate subsidiary, also launched its first UBI program called DriveSense in Texas.

Policyholders in such UBI programs install an in-car device that monitors their driving habits and bases possible insurance discounts in coverage on those habits. Such programs give insurers a unique tool that helps them stay competitive with lower rates.

To read about the experiences of current and former Progressive policyholders, readers can find user-submitted Progressive auto insurance reviews online.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for 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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