Progessive Profit Falls 2.9% to $249.1 Million on Sandy
Progressive Corp. (PGR), the fourth- largest U.S. automobile insurer, said profit declined 2.9 percent as the company faced claims from Superstorm Sandy.
Fourth-quarter net income fell to $249.1 million, or 41 cents a share, from $256.7 million, or 42 cents, a year earlier, the Mayfield Village, Ohio-based company said today in a statement.
The October storm flooded streets and parking lots, damaging 230,000 vehicles, mostly in New York and New Jersey, according to an estimate last month from the National Insurance Crime Bureau. Natural disasters add pressure to car insurers that have already faced increased costs for some medical treatments.
“PGR’s recent results have been challenged by rising loss severity,” said Jay Gelb, an analyst at Barclays Plc, in a Jan. 3 note using Progressive’s ticker symbol. Gelb rates the company overweight and expects it to benefit from rising prices.
The insurer, which reports results monthly, gained 15 percent in the past year through yesterday, compared with the 17 percent gain of the 24-company KBW Insurance Index. (KIX)
The insurer has increased Internet sales as it competes with larger rivals including State Farm Mutual Automobile Insurance Co. and Allstate Corp. (ALL), which rely more on walk-in agencies.
Miles traveled in October on U.S. roads rose by 0.3 percent, or 900 million miles, from a year earlier, according to the most recent monthly report from the Federal Highway Administration. More miles driven may result in a higher frequency of collision claims for auto insurers.
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