Progressive Inc., Mayfield Village, Ohio, reported athird-quarter earnings decline of 21 percent over last year.

The company reported net income of $305.3 million compared to$389 million for the third quarter of 2004, or $1.55 per sharecompared with $1.77 for last year's third quarter.

But Lehman Brothers analyst Jay Gelb noted that when thecatastrophe costs--which included $185.5 million for HurricanesKatrina and Rita--were factored out, the earnings per share rose to$2.16.

That was well above the Lehman estimate of $2.01 and could beattributed to better-than-expected underwriting and investmentincome results, Mr. Gelb wrote.

Net written premiums grew 5 percent in the quarter to $3.6billion. Progressive said its combined ratio deteriorated to 90.4(85.1, excluding catastrophes), compared to 86.3 percent (84.8excluding catastrophes) for the comparable period last year.

Mr. Gelb wrote that when the ratios exclude catastrophes forboth periods the 85.1 percent combined ratio figure for this yearnearly matches 84.8 last year.

The company said that through Oct. 10 it received about 23,000claims from Hurricane Katrina and 3,100 from Hurricane Rita. About65 percent of the claims reported on both storms have beensettled.

The company's Hurricane Katrina loss figure has increased morethan $55 million since the end of August.