Progressive Insurance Company reported virtually flat earnings for the month of May compared to last year, while premium grew 3 percent. The Mayfield, Ohio-based company reported net income in May of $125.8 million.
Net premium earned came in at $1.10 billion, compared to $1.06 billion for May of 2005. The combined ratio increased .9 points to 86.7.
Bear Stearns analyst David Small said the results were "marginally better than we expected."
"The driver of this upside was continued rate stability, as the rate of decline of premium per policy slowed for the second consecutive month," he wrote.
Progressive's pricing moves earlier this year may not have had the impact on policies in force that it hoped for, Mr. Small opined, and thus the carrier has tempered them.
With two-thirds of the quarter now history, the carrier is tracking to surpass both Bear Stearns' revenue and earnings projections for the period, Mr. Small noted.
Continued pressure on auto line pricing is likely for the near future, if May's Consumer Price Index auto inflation figures are any indication.
Bank of America property-casualty analyst Brian Meredith said the figure rose a scant .5 percent year over year last month, compared with a peak rise of 9.5 percent in September of 2002.
"We believe that the spread between price increases and loss cost inflation remains negative, as all the components of personal auto loss severity are running well above pricing," Mr. Meredith wrote.
Morgan Stanley property-casualty analyst William Wilt said in an investors' note Tuesday that GEICO seems to be winning the battle against Progressive.
"Progressive is looking for a new ad agency while the new heads of its Agency and Direct channels settle into unfamiliar roles," Mr. Wilt wrote.
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