Progressive 2005 Q1 Profit Skids 10%
By Michael Ha
NU Online News Service, April 14,3:22 p.m. EDT?Progressive Corporation, the country's third-largest auto insurer, reported a 10 percent drop in its quarterly profit, hurt by significantly lower realized investment gains and a slight deterioration in underwriting results.[@@]
Thomas King, a Progressive spokesman, said the $412.7 million net income appeared diminished only because last year the insurer enjoyed exceptional results for the quarter thanks in part to a low accident frequency. First-quarter 2004 net income was $460 million.
The company's underwriting performance, while weakened a bit from the year-ago period, still remained profitable.
The combined ratio for this year's first quarter was 85, declining from 83.2 one year ago.
Overall, pre-tax underwriting income was $500 million, down from $520 million one year ago. Net written premiums, on the other hand, rose 10 percent to $3.6 billion from $3.28 billion.
Mr. King said the company's income this year "fell off from an exceptionally high base. It's not like something went wrong this quarter."
Progressive saw a small improvement in investment income, which rose 5 percent to $120.4 million from $114.9 million one year ago.
The biggest factor that contributed to Progressive's 10 percent decline in quarterly income was the drop in one-time net realized investment gains on securities.
For the 2005 first quarter, the carrier realized only $10.2 million gains on securities, while one year ago it realized $59.5 million. "This explains a big part of the net income difference," Mr. King said.
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