Growth remains a challenge at Progressive Corporation’s (PGR) Commercial Auto and Agency Auto businesses. The economic downturn combined with increased competition has adversely affected both of these markets.

The Commercial Auto business continues to be negatively impacted by the downturn in the economy, primarily in the housing and construction sectors. Policies in force in July for Commercial Auto and Agency Auto were down 5% and 1%, respectively. However, Direct Auto and Special Lines were up 12% and 3%, respectively.

Ohio-based auto insurer Progressive Corporation reports earnings on a monthly basis. The company has announced its July results yesterday after market close. For July, earnings came in at 17 cents per share, significantly up from 12 cents per share reported in the year-ago period.

Results reflected investment gains and favorable prior-period reserve releases. For July, Progressive experienced $37.3 million of total favorable prior accident year reserve development, primarily in its personal and commercial auto products.

Net premiums earned increased 1% year-over-year to $1.3 billion. Progressive experienced pre-tax investment gains of $25.8 million, compared to a loss of $16.1 million in the year-ago period. The combined ratio improved slightly to 91.0% from 92.8% in the year ago quarter.

At July 31, 2009, book value per share was $7.62 compared to $7.24 at June 30, 2009. During July, the company repurchased 1.5 million shares at an average price of $15.23 per share.

Like Progressive, the other auto insurance providers such as Allstate Corp. (ALL), Infinity Property and Casualty Corp. (IPCC) and State Auto Financial Corp. (STFC) have experienced the severe impact of the weak economy, which has significantly hampered consumers’ confidence and their ability to purchase automobile insurance policies. Additionally, the U.S. auto insurance industry has been subject to unusually high expenses due to fraudulent activities.
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