Progressive Corp., the fourth-largest U.S. auto insurer, declined in New York trading after profit missed analysts’ estimates amid slower growth in the policyholder count.
Progressive dropped 1.1 percent to $25.74 at 4:15 p.m. in New York, the worst performance in the 22-company Standard & Poor’s 500 Insurance Index. Second-quarter net income climbed to $324.6 million from $118.6 million, fueled by investment gains, the company said today in a statement. Operating profit, which excludes some investment results, was about 40 cents a share, missing by a penny the average estimate of 19 analysts surveyed by Bloomberg.
Chief Executive Officer Glenn Renwick has found it harder to add customers at the Mayfield Village, Ohio-based insurer after raising prices to counter higher catastrophe costs and bond yields that were near record lows. Allstate Corp., the second-largest U.S. auto insurer, and No. 3 Geico at Warren Buffett’s Berkshire Hathaway Inc. have been increasing advertising to win business.
“You go back just a few quarters and the policies-in-force growth was consistently 5 to 8 percent” at Progressive, James Shanahan, an analyst at Edward Jones & Co. said in a phone interview. Lately it’s been “very, very low, say 1 percent in personal auto.”
The number of individuals with auto policies climbed less than 1 percent in the 12 months ended June 30 to 8.98 million. The growth in the 12 months through the middle of last year was 6.5 percent.
Premium revenue increased 7 percent to $4.28 billion. Progressive had an underwriting profit margin of 6.7 cents on every dollar in premiums for the quarter, compared with 2.4 cents in the second quarter of 2012.
Book value, a measure of assets minus liabilities, rose to $10.87 a share from $10.59 at the end of the first quarter. The insurer had a net realized gain on securities of $132.9 million in the second quarter, compared with a loss of $4.7 million a year earlier.
Progressive distinguishes itself from its competitors with a device that collects driving data and helps price policies based on a motorist’s habits. Buffett has said he doesn’t think the technology gives Renwick an edge over Geico. Progressive said last month it entered a deal to license its intellectual property to United Services Automobile Association.
Progressive’s stock advanced 23 percent this year through yesterday, compared with the 31 percent gain of the 24-company KBW Insurance Index. The company, which posts results monthly, had previously announced earnings for April and May.
State Farm Mutual Automobile Insurance Co., the largest U.S. auto insurer, is owned by policyholders and reports results once a year.