Glenn Renwick, the company's chief executive officer, said Progressive has gained business where State Farm has left the marketplace.

During a conference call yesterday, executives said one of the class action categories related to the company's use of alternative commission programs. A second category, they said, related to "charges for betterment in first-party physical damage claims."

Progressive's legal counsel, Chuck Jarrett, further explained the "betterment" issue. "It is essentially charging for improving the condition of a car. It is a deduction from the amount of money that a claimant would receive if they get a car back that's in better condition than before the accident," he said.

Mr. Renwick focused on the company's growth opportunities in personal and commercial auto businesses that he said are coming as a result of competitors' actions?notably those of State Farm.

The CEO said when his competitor in Bloomington, Ill., as well as other national and regional companies raise rates, withdraw from a market or put a sales moritorium in force, a partial result is growth in Progressive's new business applications and policies-in-force, particularly from agents.

He went on to describe State Farm's actions in Louisiana, Ohio, Texas and Florida, suggesting that even a 5 percent rate increase by competitors in a state like Ohio?"a stable, lower-priced market"?sends business in the direction of Mayfield Village, Ohio-based Progressive.

Mr. Renwick told listeners that he was highlighting State Farm's changes because other companies often use State Farm's actions as the basis for setting their own rates or underwriting strategies, thereby potentially increasing the flow of business to Progressive even more.

With regional carriers increasing rates and withdrawing from the Florida market, he also reported a "continued surge" in new nonstandard private passenger auto business in that state.

As he had on prior calls, Mr. Renwick cautioned about the need to manage growth to a level consistent with the company's ability to handle claims?a strategy needed to avoid a repeat of past problems the company encountered when it grew too aggressively in the 1990s.

In the past quarter, he said, the company hired 600 new claims people (to an overall force of 8,500) and the company was "brushing up against" self-imposed growth limits in a few states.

In total, for the quarter, Progressive reported a 29 percent jump in net written premiums to $2.4 billion, with personal lines business rising 28 percent (to $2.1 billion) and commercial growth coming in at about 39 percent (to $288 million).

For commercial auto business, Mr. Renwick said that the company had experienced over 50 percent year-to-date growth, suggesting that if growth continued at the current pace, the company could move from being the fifth-largest writer of commercial auto to the third-largest within a year.

Mr. Renwick spent more time than usual discussing Progressive's position in the commercial auto market during yesterday's conference call--a decision he may have regretted when several analysts focused on the commercial auto as the one dark spot on the company's underwriting profit picture for the month of June.

Mr. Renwick said an unusual number of claims and reserving actions for some large loss development added 7 points to the commercial lines combined ratio for June.

"Just to put this in perspective, this was one month at 101 combined," reported Tom Forrester, Progressive's chief financial officer.

For the second quarter, over all lines, Progressive's GAAP combined ratio improved 3 points to 93.4, compared to 96.4 in second-quarter 2001.

In spite of the litigation charges Progressive reported for the quarter, Mr. Renwick had some positive news to report on the legal front. He noted that the company received a decision from Florida Supreme Court that diminution of value is not covered by Progressive's auto policies in the state (contrary to unfavorable decisions Progressive and other carriers faced in Georgia last year.) He also said that during the quarter an Ohio trial court had denied class certification of an action over auto collision repairs with generic parts rather than original manufacturer equipment.