Overall, the company has seen modest growth in its agent-produced business, Renwick said in the letter to shareholders. He surmised that some of that growth extends from possible rate increases by competitors, something that Progressive has been able to keep a lid on. Renwick said in the conference call the company has been able to keep its rate changes at around 1 percent.

"Our competitiveness appears to be increasing modestly as others are taking rate in the channel," Renwick stated in the shareholders letter. "The rate-comparison nature of agent quoting makes price transparency very clear and changes in competitive positioning very rapid - it also increases the penalty for pricing inaccuracies for the companies displayed. New business sales in agency were as strong as we have seen for some time as the quarter drew to a close."

According to Renwick, the company is particularly concerned about the performance of its agency business in California.

"We've not been happy with our production there," Renwick said during the call with analysts, adding that it is one of the states in which its agency business "is underperforming expectations, primarily on a volume basis."

However, he noted that profitability levels in California are good and that the direct sales channel is thriving. "It's one of a few states ... where our direct production is actually greater than our agency production. ... We are seeing continuous movement in California as far as their willingness to look at and accept things like mileage based rating ... nothing overly dramatic yet, but those are things that could actually play to our favor."

Renwick and Brian Domeck, Progressive's chief financial officer, commented in the conference call that the company has been building initiatives to reinforce renewal rates and extend policy life expectancies.

Progressive's "internal focus on retention has been an extraordinarily dramatic change in focus," Renwick said. "We have treated the renewal customer very differently by introducing things that might be more in the line of a loyalty program."

The company has also strived to make it easier for customers to consult about their policies. The "huge internal focus on what we can do for the customer experience around renewal ... there's no question that has actually produced results," Renwick said.

A second area of focus for Progressive is stabilization of rates for renewals. "We are trying where possible and where appropriate to file, so that we don't subject our renewal customers to quite the same rate shock as we might have done a few years ago when we were trying to get the best of all of our new information into the market as quickly as possible," Renwick said.

Progressive is also increasing its efforts to cross-sell, which Domeck said helps retention. "We focus a lot on trying to be able to offer a homeowners offering to our consumers both on the agents channel, as well as the direct channel. And we have initiatives to cross-sell existing policy-holders with our specialized products or if they are a specialized policyholder with our auto products," he said.

According to renwick, in the current economic environment, customers are "clearly shopping for price." Adding that he feels strongly about Progressive's "brand position in the market place," Renwick said: "Our value proposition has been and continues to be is that we are extremely open and transparent about competitive pricing."

Returning to the strength of its Internet presence, Renwick said: "When you've got that kind of initial feed system, the likelihood of it flowing through to people who can actually sell on the Internet is going to be stronger. ...

"What you don't see as clearly is the response of agents that they truly have now access to sell a company that has a very positive brand to sell. I spent a lot of time in the second quarter with agents and there's a consistent theme of how good they're feeling about the brand and the umbrella effect that brand has had on them." Journal