Progressive Corp. said today its July earnings rose 3 percent, posting net income of $149 million compared with $144 million in the year-ago period.

Net premiums written rose 2 percent to $1.43 billion, while the combined ratio fell slightly to 86.6 from 86.9 in July 2005.

Bear Stearns analyst David Small said in a note to investors the results continued to show strong underlying profitability while top-line growth remained sluggish.

“In particular, policies in-force were essentially flat year-over-year in the agent channel,” he wrote. “This is the first time the company has not grown PIF since it began reporting this data roughly five years ago.”

An increasingly competitive environment in the independent agency channel, where players like St. Paul Travelers seek to expand their presence, could account for that fact, he asserted.

The 3 percent premium per policy rise in the direct channel indicates that Progressive has decided lowering prices is not an effective way to drive growth. “As management indicated at its analyst day, price does not appear to be stimulating increased shopping, a trend that should buoy profitability for the larger and better quality players yet constrain growth,” he wrote.

The Mayfield, Ohio-based company also announced a partnership with Homesite Insurance that would allow independent agents to offer standalone homeowners products to eligible Progressive customers in three test markets.

Special Reports /

Progressive July Net Rises Slightly

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