Progressive Corp. reported late Wednesday profits dropped 27% in its third-quarter earnings. The first of the large insurers to report, the company's net income came in at $299.2 million ($0.42/share), compared to last year's $409.6 million ($0.53/share). Analysts expected a net income of $273.3 million ($0.37/share). Net premiums earned were down 2.3% to $3.461 billion from $3.544 billion last year, despite the number of policyholders increasing 3.9%; the company has been lowering prices to compete with other insurance companies. "Aggressive pricing actions have yet to generate meaningful improvements in new business production," said Thomas Cholnoky, an analyst at Goldman Sachs. In September, Progressive retained $0.052 for each dollar collected after paying claims and expenses. A year ago, the company retained $0.131 for each dollar collected. The company's progressively worse performance has been reflected in its price, as shares of Progressive are down 18% this year. After outgaining every stock in the Standard & Poor's 500 Insurance Index in 2001-2006, it is the second worst performer in the 24 member index in 2007. In Wednesday's session, Progressive's shares were down 1.64% to $19.83.
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