Posted on 14 Oct 2009
Progressive Corp., the first of the 10 largest U.S. property and casualty insurers to report third-quarter results, said it swung to a profit, earning $269.9 million on investment gains.
Net income of 40 cents a share compares with a loss of $684.2 million, or $1.03, in the same period a year earlier, the Mayfield Village, Ohio-based company said today in a statement. Last year’s loss was Progressive’s first since 2000. Operating income, which excludes some investment results, was 36 cents a share, beating by 3 cents the average estimate of 12 analysts surveyed by Bloomberg.
The insurer, hobbled last year by writedowns on holdings tied to mortgage lenders Fannie Mae and Freddie Mac, has posted investment gains four straight months. Progressive, the fourth- largest U.S. auto insurer, is competing against Allstate Corp. and Berkshire Hathaway’sGeico Corp. to gain market share as customers reduce spending amid the recession.
“You’ve had positive performance in things like municipal bonds, corporates, pretty much across the fixed-income spectrum,” said Brian Meredith, an analyst with UBS AG, in an interview before results were released. “Progressive has exposure to a lot of those asset classes.”
Progressive bought U.S. Treasuries and other securities it deemed lower-risk this year to limit writedowns after a slump in more volatile holdings cost $1.45 billion before taxes in 2008.