NU Online News Service, Nov. 9, 10:52 a.m. EST

The Progressive Corp. said its 2010 third quarter net income dropped 3 percent, compared to the same period a year ago, to $261.6 million.

Glenn M. Renwick, president and chief executive officer of the auto insurer, told shareholders in a letter that the company is still seeing a drop in bodily injury severity and “manageable” trends in frequency.

Mr. Renwick said many of the Mayfield Village, Ohio-based company’s “most challenging states are continuing to experience improved results” and Progressive will “now focus on restoring growth in these states.”

In defining “challenging,” the chief executive said to think about the personal injury protection states. More than a dozen states require PIP, or “no-fault,” coverage.

Net premiums written in personal lines grew 5 percent over the 2009 third quarter and it has grown 6 percent for the year thus far. Mr. Renwick credited conversion and retention levels.

Agency and direct business grew 2 percent and 10 percent, respectively, while commercial auto net premiums written declined 4 percent during the third quarter.

Mr. Renwick said Progressive believes “it will take new growth in large markets, like Florida, to put commercial auto back into the positive territory on most measures.”

New and renewal application in commercial auto each declines 1 percent. In personal lines new and renewal applications increased 4 percent and 7 percent, Progressive said.

The company said it largely attributed the increases in personal lines to its Name Your Own Price initiative for direct auto customers and more of a focus on customers that bundle auto and homeowners policies.

Concerning the commercial auto market, Progressive said, “We believe it will take time for the economy to significantly rebound, especially in the housing and construction sectors.”