The company also reported that its net realized losses on securities dropped for the quarter, to $3 million from $37.1 million posted during the corresponding period in 2002.

Progressive said recurring investment income also improved during the quarter, reaching $90.5 million after taxes, compared to $82.0 million after taxes for the fourth quarter of 2002. During fourth-quarter 2003, Progressive produced a combined ratio of 85.9 percent, compared to 93.3 during the corresponding quarter for 2002.

For 2003 overall, Progressive, based in Mayfield Village, Ohio, said its net income went up 88 percent to $1.26 billion, compared to $667.3 million reported in 2002. Annual revenues also rose to reach $11.89 billion, a 28 percent improvement over $9.29 billion recorded for 2002.

Results for the year also included a 26 percent year-over-year improvement in net premiums written, which reached $11.9 billion in 2003; a combined ratio of 87.3 percent, down from 92.4 in 2002; and a return on average shareholder's equity of 29.1 percent.

Mr. Renwick told analysts 2003 was a good year and he is "pleased with the results for both the quarter and the year."

"There is not much we would change about the year," Mr. Renwick said. "We met our financial goals of getting at least a four-point underwriting profit and then maximizing growth."

Progressive also reported positive developments for its loss reserves. During the year, the company experienced a favorable prior-year development of $56.1 million. During the fourth quarter, the insurer's actuarial group reduced reserves by $4.1 million and the company experienced $40.9 million of favorable development, reducing the quarterly combined ratio by 1.3 points.

The favorable reserve development, Progressive said, came evenly from private passenger auto, commercial auto and assigned risk reserves. "In short, reserving has been right on the money," Mr. Renwick said.

In his outlook for 2004, Mr. Renwick told analysts that he sees "a somewhat softer market" and that Progressive may implement rate cuts to stay competitive.

"As you all know, the terms soft and hard are used pretty widely in the industry, but no one has quite the right definition to describe what I see as somewhat softer market conditions," he said.

Mr. Renwick observed that many of his competitors have gotten rate adequacies during 2003 and that he is seeing some rate reductions happening. One notable development is the Bloomington, Ill.-based State Farm Insurance Companies' announcement of lower rates in Arizona, he said.

Going forward, Progressive may lower rates selectively. Mr. Renwick explained that there are markets where his company has outperformed its own expectations and that in such areas, "it might be prudent to take a rate change to stay very competitive."

"We certainly don't want to see any situation where we could perhaps fall back. So anything that would preserve our market share within reason is something we would consider," he said. But Mr. Renwick stressed that his primary strategy will not be reducing rates. "The key message is that it is not a whole-sale rate reduction," he said.

The Progressive group of insurance companies ranks third in the country for auto insurance based on premiums written. The insurer offers its products by a toll-free phone number and online at progressive.com, as well as through more than 30,000 independent insurance agencies and brokers.