(Bloomberg) -- Progressive Corp., the fourth-largest U.S. auto insurer, said second-quarter profit rose 24% after an acquisition that pushed the company into homeowners coverage. The shares gained in New York trading.

Net income climbed to $363.3 million, or 62 cents a share, from $293.4 million, or 49 cents, a year earlier, the Mayfield Village, Ohio-based company said Friday in a statement.

Chief Executive Officer Glenn Renwick expanded into housing insurance with the purchase this year of ARX Holding Corp. The deal was designed to diversify risks and help compete with companies like Allstate Corp. that bundle different policies together.

“There could be a nice growth catalyst here,” Jim Shanahan, an analyst at Edward Jones, said in a phone interview before earnings were released. “They might have been losing some market share because of their inability to bundle. And they would have more of an ability to do that now for their core Progressive customers.”

Book value, a measure of assets minus liabilities, rose to $12.56 per share from $12.26 at the end of March. Second-quarter investment income increased 14% to $113.3 million.

The combined ratio improved to 92.5 in the quarter, meaning it retained 7.5 cents of each premium dollar after paying claims and expenses. That compares with a ratio of 92.6 a year earlier.

Premium Revenue

Progressive, which reports earnings monthly, rose 1.8% to $30.72 at 9:51 a.m., the biggest increase in the 88- company Standard and Poor’s 500 Financials Index. The company climbed 12% this year through Thursday, compared with a 1.3% gain in the Standard & Poor’s 500 Property & Casualty Insurance Index.

Premium revenue rose 11% to $5 billion from $4.51 billion a year earlier. Progressive’s total personal auto policies in force increased 2.2% to 9.5 million as of June 30. Growth slowed from the 3.5% climb in the 12 months through the middle of last year.

Catastrophe costs totaled $154 million in the second quarter as hail, flooding and wind storms pounded Texas and Colorado. That compares with $130 million a year earlier.

Allstate, Geico

Operating profit, which excludes some investment results, was about 53 cents a share, missing the average estimate of 55 cents a share from 20 analysts surveyed by Bloomberg.

State Farm Mutual Automobile Insurance Co. is the largest U.S. car insurer, followed by Geico. Allstate, the third-largest, is scheduled to report earnings Aug. 3. Allstate and Geico said when they reported first-quarter results that they were raising rates after profit margins worsened.

“Progressive is positioned to generate profitable net- premiums-written growth due to competitors raising rates, incremental opportunity from the homeowner’s acquisition in their agency business and continued strength in their direct/commercial lines businesses,” Robert Glasspiegel, an analyst with Janney Montgomery Scott, said in a note Friday after results were posted.

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Progressive profit gains 24% after adding home insurance coverage

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