Progressive's chief executive said the insurer does not need to raise cash, but it has developed several plans to do so in a crisis, and keeping a profitability level at a 96 point combined ratio is key to avoiding problems with capital.

In response to a question on the need for capital asked during an analyst's conference call today, Glenn M. Renwick, president and chief executive officer for the Mayfield Village, Ohio-based insurer, said the company is currently comfortable with its capital position.

However, because of the current turbulence in the economy, he said the company has developed plans to raise capital.

Mr. Renwick would not share details of those plans but added that the need to execute any of those plans “is very low.”

“It is not something we are being cavalier about,” he said. “We simply don't know what is going to happen in November and December.”

He said writing at a 96 combined ratio remains paramount to its performance and ensuring the company has enough capital.

Progressive has also reduced its risky investments, increasing its holdings in cash and treasury bonds. “We will be extremely disciplined,” promised Mr. Renwick.

Progressive held its analyst's call today after issuing its financial report for the month of October. It filed its 10-Q for the third quarter on Monday.

The company reported net income rose 92 percent for the month of October from $75.5 million to $145 million. Net premiums written remained virtually unchanged at $1.3 billion. The combined ratio dropped 1.7 points for the month to 93.2.

For the third quarter the company had net loss of $684 million, down from the prior year's net income of $299 million.

Mr. Renwick said that generally, rates are pointing upward and the company is getting increases in a number of states. Despite the economic turbulence, there are no signs that customer debt is affecting buying, he said.

The company is hoping to nationally launch its “Name Your Price” buying plan during the first half of next year. The plan has received high customer acceptance in the four states it was launched in (Illinois, Ohio, Pennsylvania and Washington), said Mr. Renwick. He said average premium rates were not materially different from traditional plans and, in some cases, were higher.

The other program, “MyRate,” where Progressive monitors a policyholder's driving habits with an electronic device and charges the customer accordingly, covers 18 percent of countrywide premium.

He said the company hopes to expand that program nationally next year. The product is sold by some independent agents and appears to have strong appeal.

He said no one is coming close to using these programs.

When asked if customers from American International Group are gravitating to Progressive, Mr. Renwick said there is some increase in the number of customers who were with the insurer. He said the motivation for switching appears to be driven by the issues surrounding AIG and not so much price.

“Perception is perception,” he said.

Asked about federal regulation of the industry, he said he saw no need for it and that there would be no advantage for insurers in a federal regulator. The state-based system works, said Mr. Renwick, but needs modernization to benefit consumers.

(This story was updated at 9:31 a.m. on Nov. 13)

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Progressive Sees No Need To Raise Capital

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