Mayfield, Ohio-based Progressive Insurance Company reported this year's first-quarter net income dropped 17 percent compared with the 2006 period.

The company posted first-quarter net income of $363 million, compared with $436 million last year.

Bear Stearns analyst David Small said “the report should quell investor fears somewhat that the 'sky is falling' in the personal auto segment as accident-year profitability was solid.”

“Additionally, the flat year-over-year top line in March should be seen as an improvement following six consecutive quarters of declines,” he wrote.

Overall, Bear Stearns believes “the auto cycle will play out slower and less severely than many expect,” Mr. Small related.

Net written premiums declined 1 percent for the same period with a $3.5 billion figure compared with a $3.6 billion for the first quarter of 2006.

The combined ratio for the quarter rose to 89.5 from 85.2 last year.

In its monthly commentary, the company said there was an unfavorable prior accident development primarily related to the emergence of larger losses from prior years in commercial auto products.

While Mr. Small noted this “negative surprise,” he also said that the greater than expected share repurchase highlights the company's solid capital position.

Special Reports /

Progressive Reports 1st-Quarter Decline

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