Bear Stearns analyst David Small said the trend has been evident over the past several quarters. “Policy In Force growth rates for personal auto, and premium per policy, also declined, suggesting the company continues to lower price,” he wrote.

Mr. Small said management's assertion that frequency and severity trends were below historical averages should quell investor fears in these areas. “We have not been believers that a reversal of the declining trend for frequency and severity was imminent, and continue to believe that the industry will benefit from a secular decline in auto frequency,” he wrote.

Bank of America securities analyst Brian Meredith expressed concern that Progressive's improving frequency and severity gains were at odds with recently released industry-level data.

“We continue to expect margin compression throughout 2006,” Mr. Meredith wrote.

Continued reserve releases and capital management, however, could help bolster the share price. The company purchased 1.1 million shares in March, “marking a return to its aggressive capital management activities,” the analyst noted.