Investors had a little bit of a freak out at Progressive Car Insurance’s news that February monthly earnings fell 51%, dropping the share price by 6.6%. I guess the interesting question is; is this a sign of bad things to come?

Overall the situation is far from being bad for Progressive. Lets face it even if the economy is struggling a bit auto insurance is pretty much a necessity especially when you consider a basic level of cover is pretty much mandatory.

It’s not like a luxury good you can eliminate when times get tough, but maybe one you can cut back on a little. So, I wonder if that’s the reason for the decline in premiums written, are people opting out of full coverage and taking the basic policy?

On a yearly basis Feb 2007 – Feb 2008, premiums written for progressive have dropped just 3%, yet February itself is down 8% compared to February 2007. Does this mean the problems are just starting?

Of course investment income is also down which doesn’t help, kinda unavoidable when the interest rate keeps dropping (aren’t we getting close to 0% here people?) and the stock market is giving investors wobbly knees.