With fewer miles driven, he reasoned, personal lines auto insurers should produce better than expected underwriting results. He surmised this trend may be reflected in the stronger than expected April results of Progressive Insurance.

For April, Progressive reported net income stood at $109 million, off by $28 million compared to the same period last year, resulting in a 2 cent drop per share to 16 cents. The results reflected a 2 percent drop in net premium written of $23 million to $1.4 billion. The combined ratio deteriorated 2.9 points to 91.7.

Mr. Shields warned, however, that the impact of higher gas prices on driving habits has faded quickly in the past.

Because of these trends, two companies he watches–Allstate and Progressive–received “Buy” ratings from the firm.

“In the near term, we believe these companies should benefit from reduced driving, which should reduce accident frequency and boost underwriting profits, while still benefiting from increasing consumer shopping that should improve their policy and premium growth,” he wrote.

Coincidentally, the Mississippi Insurance Department announced yesterday that State Farm filed a rate reduction of 2.9 percent on automobile insurance in the state for both new and renewal business to take effect June 23. State Insurance Commissioner Mike Chaney said the reductions were the result of improvements in accident frequency.

The Transportation Department's Federal Highway Administration reported last week that on a year-over-year basis the estimated vehicle miles traveled in March dropped 4.3 percent, or a total of 11 billion miles. The authority called it “the sharpest yearly drop for any month” in the history of reporting, which began back in 1942.

February showed a “modest increase” of one billion more miles, but the cumulative vehicle miles traveled has dropped 17.3 billion miles since November 2006.

Total vehicle miles traveled in the United States as of 2006, the most recent data available, topped three trillion miles, the department said in a statement.

From an environmental standpoint, the drop in vehicle miles traveled translates into an estimated cut in greenhouse gas emissions of nine million metric tons, the department added.

According to Highline Data, State Farm is the number one insurer of private passenger auto with 18 percent of the market nationally. Allstate is second with 11 percent of the market, followed by Progressive at 7 percent. Berkshire Hathaway Insurance Group (GEICO) is next with 7 percent, and Zurich Insurance Group (Farmers Insurance) rounds out the top five with more than 5 percent of the market.