Progressive Corp., the fourth-largest U.S. auto insurer, said profit more than doubled as premium revenue climbed after the company raised rates for coverage.
Second-quarter net income climbed to $324.6 million, or 54 cents a share, from $118.6 million, or 19 cents, a year earlier, the Mayfield Village, Ohio-based company said today in a statement.
The insurer has begun benefiting from rate increases that pushed away some policyholders last year, James Shanahan, an analyst at Edward Jones & Co. said in a phone interview. Competitors including Allstate Corp. and Travelers Cos. raised prices after natural disaster costs and near record-low bond yields pressured profit.
The “bulk of the increases have been passed through to customers,” Shanahan said before earnings were released. CEO Glenn Renwick “thinks that the bulk of the attrition is passed,” Shanahan said.
Progressive added customers along with the Geico unit at Warren Buffett’s Berkshire Hathaway Inc. in recent years as drivers opted to buy coverage online, including purchases through mobile devices. State Farm Mutual Automobile Insurance Co., the largest provider of U.S. car coverage, and No. 2 Allstate rely more on agents for sales.
“Mobile is just on fire,” Renwick, 58, said in a presentation in May. “Mobile is a primary front door for us and that number is going up on a pretty marked basis.”
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.
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