As television commercials go, they're all quirky, humorous and unusually watchable. Ads run by the auto insurers that feature such memorable characters as a talking gecko, a bunch of cavemen that appear stuck in the '80s, and a snappy salesgirl sporting a big name tag with "Flo" emblazoned on it, inhabiting a strange ethereal superstore.

IN PICTURES: 8 Tips For Starting Your Own Business

But in terms of effectiveness, it appears that "Flo" is producing the kind of results for her sponsor, Progressive Corp. (NYSE:PGR) that has the company's shareholders laughing all the way to the bank.

Progressive Winning Market Share Battle
Based on the strong response that the ad appears to be getting from auto insurance buyers, combined with the company's aggressive pricing policies, Progressive appears to be gaining market share against its principal rivals Allstate Corp. (NYSE:ALL), and Berkshire Hathaway's (NYSE:BRK.A, BRK.B) insurance unit Geico.

And those share gains are now translating into impressive bottom line performance. The company recently reported a 27% jump in quarterly profit that sailed past analysts' expectations. Strong premium growth was largely behind the profit gains. This is the fifth quarter that Progressive's auto policy count has been up; a striking contrast to the disappointing performance of Allstate, which has seen its auto policy business volumes decline for eight straight quarters.

But, despite the increase in business competition, Allstate has still managed to report an increase in its latest quarterly results, primarily from a reduction in losses on the investment side of its balance sheet.

Industry Hit Hard During Financial Meltdown
Huge investment losses resulting from the financial market meltdown have hurt the broader insurance industry. Life and property insurance giant Hartford Financial (NYSE:HIG) recently moved back into the black after suffering huge losses connected to stock-market linked annuities and investments. That forced the company to take $3.4 billion in government bailout money.

The Bottom Line
Recent strong auto sales appear to be driving the growth in demand for auto insurance. And Progressive's gal appears to be winning over new customers with her quirky appeal and competitive prices. (Find the perfect policy that suits both your coverage and budgetary needs. to learn more, read Beginner's Guide To Auto Insurance.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!



Filed Under:
Tickers in this Article: PRG, ALL, BRK.A, HIG, BRK.B

comments powered by Disqus

Trading Center