(Bloomberg) -- Progressive Corp., the fourth-largest U.S. autoinsurer, said second-quarter profit rose 24% after an acquisitionthat pushed the company into homeowners coverage. The shares gainedin New York trading.

Net income climbed to $363.3 million, or 62 cents a share, from$293.4 million, or 49 cents, a year earlier, the Mayfield Village,Ohio-based company said Friday in a statement.

Chief Executive Officer Glenn Renwick expanded into housinginsurance with the purchase this year of ARX Holding Corp. The dealwas designed to diversify risks and help compete with companieslike Allstate Corp. that bundle different policies together.

“There could be a nice growth catalyst here,” Jim Shanahan, ananalyst at Edward Jones, said in a phone interview before earningswere released. “They might have been losing some market sharebecause of their inability to bundle. And they would have more ofan ability to do that now for their core Progressivecustomers.”

Book value, a measure of assets minus liabilities, rose to$12.56 per share from $12.26 at the end of March. Second-quarterinvestment income increased 14% to $113.3 million.

The combined ratio improved to 92.5 in the quarter, meaning itretained 7.5 cents of each premium dollar after paying claims andexpenses. That compares with a ratio of 92.6 a year earlier.

Premium Revenue

Progressive, which reports earnings monthly, rose 1.8% to $30.72at 9:51 a.m., the biggest increase in the 88- company Standard andPoor’s 500 Financials Index. The company climbed 12% this yearthrough Thursday, compared with a 1.3% gain in the Standard &Poor’s 500 Property & Casualty Insurance Index.

Premium revenue rose 11% to $5 billion from $4.51 billion a yearearlier. Progressive’s total personal auto policies in forceincreased 2.2% to 9.5 million as of June 30. Growth slowed from the3.5% climb in the 12 months through the middle of last year.

Catastrophe costs totaled $154 million in the second quarter ashail, flooding and wind storms pounded Texas and Colorado. Thatcompares with $130 million a year earlier.

Allstate, Geico

Operating profit, which excludes some investment results, wasabout 53 cents a share, missing the average estimate of 55 cents ashare from 20 analysts surveyed by Bloomberg.

State Farm Mutual Automobile Insurance Co. is the largest U.S.car insurer, followed by Geico. Allstate, the third-largest, isscheduled to report earnings Aug. 3. Allstate and Geico said whenthey reported first-quarter results that they were raising ratesafter profit margins worsened.

“Progressive is positioned to generate profitable net-premiums-written growth due to competitors raising rates,incremental opportunity from the homeowner’s acquisition in theiragency business and continued strength in their direct/commerciallines businesses,” Robert Glasspiegel, an analyst with JanneyMontgomery Scott, said in a note Friday after results wereposted.

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