Progressive Lays-Off 341; Sees Oct. Income Drop 42%

Progressive Group of Insurance Companies said net income in October was down 42 percent and it is laying off 341 employees on Nov. 30 as part of a reorganization plan.

The Mayfield Village, Ohio-based auto insurer said it will cut 263 people in its information technology division and 78 people in its personal lines group.

The cuts amount to 7 percent of the IT staff and one percent of the personal lines group nationally. This amounts to about one percent of the company's total workforce of more than 20,000. Most of the people affected are based in Cleveland, the company said.

The cuts in the personal lines group were mainly of managers and supervisors in the sales and customer service call center operations, Progressive said.

"This is undesirable and difficult, but necessary," said Progressive President and Chief Executive Officer Glenn Renwick in a statement. "This industry, like many, is extremely competitive. We are constantly challenged to streamline our operations to compete effectively. This is a critical step we need to take now to remain competitive and to help ensure our future success in the industry."

He said the company is assisting employees in trying to find new employment.

The company also reported that net income in October dropped $55 million to $75.5 million. Net premiums written dropped four percent, or $55 million, to $1.26 billion. The company's combined ratio rose 5.8 percent, 94.9 from 89.1, for the same period last year.

For the ten months of this year net income is down 26 percent, or $355 million, to $1.02 billion. Earnings per share have dropped 34 cents to $1.41 a share. Net written premiums are down two percent, or $304 million, to $11.95 billion from $12.25 billion in 2006.

Progressive said that approximately $8 million in severance expense associated with the lay-offs will be included in its November results.