Progressive car insurance recently reported fourth-quarter results, with profit falling 41% due to reduced car insurance rates.

Progressive car insurance’s net income dropped to $236.1 million, down from $400.9 million for the same period last year. As a result of the drop in income Progressive car insurance is eliminating jobs and combining units to reduce expenses. Progressive car insurance announced in November 2007 that it would reduce its workforce by around 1.3%, a cut of 341 jobs.

The car insurance companies attempt to drop car insurance rates to attract customers seems to have worked with the number of Progressive Car Insurance policy holders rising by 4% in the year.

Progressive car insurance ranks in as the third largest car insurer in the U.S., but does appear to be struggling to keep investors happy with the stock dropping 21% during the past year, compared to the 11% drop in the 24 member KBW Insurance Index.

Progressive car insurance states claim costs rose 8.4% in the year to $2.56 billion. The company has managed to retain 5 cents of each dollar after claims and expenses are counted, with investors being reassured in November that the company has almost completed it’s exercise of rate cutting in most states.