Progressive Corp., the fourth-largest U.S. auto insurer, said second-quarter profit rose 24 percent after an acquisition that pushed the company into homeowners coverage.
Net income climbed to $363.3 million, or 62 cents a share, from $293.4 million, or 49 cents, a year earlier, the Mayfield Village, Ohio-based company said Friday in a statement.
Chief Executive Officer Glenn Renwick expanded into housing insurance with the purchase this year of ARX Holding Corp. The deal was designed to diversify risks and help compete with companies like Allstate Corp. that bundle different policies together.
“They might have been losing some market share because of their inability to bundle, and they would have more of an ability to do that now for their core Progressive customers,” Jim Shanahan, an analyst at Edward Jones, said in a phone interview before earnings were released. “There could be a nice growth catalyst here.”
Progressive, which reports earnings monthly, rose 12 percent this year through Thursday, compared with a 1.3 percent gain in the Standard & Poor’s 500 Property & Casualty Insurance Index.
Distance traveled on U.S. roads in April increased 3.9 percent, or 10.2 billion vehicle miles, from a year earlier, according to the most recent monthly report from the Federal Highway Administration. Insurance companies tend to see claims increase as more drivers take to the road.
State Farm Mutual Automobile Insurance Co. is the largest U.S. car insurer, followed by Geico. Allstate, the third- largest, is scheduled to report earnings Aug. 3.
Allstate and Geico said when they reported first-quarter results that they were raising rates after profit margins worsened.
[Progressive also reported that during June it incurred about $33 million, or about 2.1 loss ratio points, of catastrophe losses, compared to about $57 million, or 4.1 loss ratio points, last year. Of the total catastrophe losses incurred this month, about $20 million was in its vehicle businesses and $13 million in its property business. Hail, flooding, and wind storms in Texas and Colorado accounted for about half of the total catastrophe losses and about 75 percent of the property losses. For the second quarter 2015, total catastrophe losses were about $154 million, or 3.1 points, compared to $130 million, or 2.9 points, last year. Year to date, total catastrophe losses, which include catastrophe losses on the property business for the second quarter only, were $164 million, or 1.7 points, compared to $139 million, or 1.6 points, last year.]
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