Progressive Corp.'s (PGR) earnings per share for November 2010 were 17 cents, up 42% from 12 cents in November 2009. Results of the reported month also increased 42% over October 2010. Net income for the month improved 37% to $109.9 million from $80.0 million in the year-ago period. On a sequential basis, net income improved 44% from $81.9 million in the previous month.

Progressive reports its results every month. The company recorded net premiums of $1.01 billion, up 7% from $942 million in November 2009 but down 24% from $1.34 billion in October 2010. Net premiums earned were $1.11 billion, up 5% from $1.06 billion in the year-ago period but down 20% from $1.39 billion in the prior month.

Progressive reported net realized gain on securities of $29.4 million, compared with $6.1 million in November 2009 and $25.6 million in the preceding month. The combined ratio − the percentage of premiums paid out as claims and expenses − at 90.7% improved 150 basis points from 92.2% recorded in the year-ago period and 520 basis points from 95.9% in the preceding month.

During November, policies in force remained healthy, with the Personal Auto segment increasing 8% year over year and 0.1% sequentially. Special Lines increased 5% year over year but declined 0.5% over the preceding month.

In Personal Auto, Direct Auto reported a double-digit growth of 13% year over year, but showed a slight improvement of 0.3% in policies-in-force from the last month. Agency Auto was up 4% year over year but down 0.1% from the last month. However, Progressive's Commercial Auto segment continued to drag results, reporting declines of 1% year over year and 0.4% from the preceding month.

Total expenses for the reported month increased 3% to $1.03 billion from $995.1 million in November 2009. The major components contributing to the increase in total expenses were a 4% year-over-year increase in losses and loss adjustment expenses reaching $782 million and a 3% year-over-year increase in policy acquisition costs climbing to $106.6 million.

Progressive continues to actively manage its capital position. Reported book value per share was $9.38, up from $8.56 as of November 30, 2009, and $9.31 as of October 30, 2010.

Return on equity on a trailing 12-month basis was 17.2%, up from 17% in November 2009 and from 16.9% in October 2010. The debt-to-total-capital ratio was 23.9% as of November 2010, down from 27.4% as of November 2009 and 24.1% as of October 2010.

In October, Progressive reported third quarter earnings of 40 cents per share, beating the Zacks Consensus Estimate of 37 cents. However, earnings lagged year-ago results as lower investment gains more than offset premiums earned.

We maintain our Neutral recommendation on Progressive. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.