NU Online News Service, Feb. 16, 2:16 p.m. EST
Mayfield Village, Ohio-based auto insurer Progressive Corp. reported January results, stating that net income increased 58 percent over last year on favorable prior accident year reserve development.
For the month of January this year, Progressive said net income rose $41 million to $113 million over the prior year. That translated into a 6-cents per share earnings increase to 17 cents a share. Net premium written rose 3 percent, or $38 million to $1.38 billion.
The company's combined ratio improved 1.4 points to 92.2.
Progressive said it experienced favorable prior accident year reserve development of 5.1 points. Approximately one-third of that development was the result of December claims that settled in January for less than the original reserve. The remainder of the favorable development for the month "reflects the continuation of trends we experienced throughout 2010." The trend includes favorable settlement of larger losses and lower than expected defense and cost containment costs.
Progressive noted that in January, settlements of prior month claims "are reflected in prior year development, rather than development in the current accident year as is the case for" the rest of the year.
Progressive said its policies in force grew for almost all of its auto lines from the previous year. Overall, total personal lines grew 6 percent, or 713,000 policies, to 11.7 million. Commercial auto was virtually flat with 507,000 policies in force.
Agency written policies in force grew 4 percent, or 167,000 policies, to 4.5 million policies. The direct auto business jumped 11 percent, or 372,000 policies, to 3.6 million.
In January, Progressive reported December and fourth-quarter results were down from the prior year, but for the year the company experienced a slight increase.
Net income in December declined by 5 percent, while fourth-quarter results dropped 2 percent. For the year, the company eked out a gain of 1 percent over 2009.
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