The carrier said yesterday it will return $1.46 billion to shareholders in the form of an extraordinary dividend and execute a repurchase program over the next two years of roughly 100 million shares.

Moody's Investor Service affirmed Progressive's "A1" senior debt rating yesterday but also noted it expects to see the carrier's combined ratio rise soon as a result of rate decreases.

"Moody's nevertheless expects Progressive to continue to achieve solid returns on equity as the company's expense ratio advantage and its superior underwriting skills and pricing segmentation capabilities leave it well positioned to react quickly to changes in the marketplace," the report said.

Mr. Small said one new driver of growth for the company could be further development of usage-based insurance, which could be important given the company's significant presence in the nonstandard auto market.

"However, we believe it is too early to tell if the new designs and implementation that the company described will be accepted by the customer," he wrote. "It is interesting that this type of technology is successfully used by some companies in Europe."