Progressive Inc., Mayfield Village, Ohio, reported a third-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 share compared with $1.77 for last year's third quarter.

But Lehman Brothers analyst Jay Gelb noted that when the catastrophe costs--which included $185.5 million for Hurricanes Katrina 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 be attributed to better-than-expected underwriting and investment income results, Mr. Gelb wrote.

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

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

The company said that through Oct. 10 it received about 23,000 claims from Hurricane Katrina and 3,100 from Hurricane Rita. About 65 percent of the claims reported on both storms have been settled.

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

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Progressive Earnings Decline 21 Percent

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