UPDATE 1-Auto insurer Progressive posts earnings drop

(Adds detail, share decline)

HAMILTON, Bermuda , July 10 (Reuters) - Auto insurer Progressive Corp (PGR.N) reported on Thursday a drop in second-quarter net income as it absorbed higher claims from natural catastrophes and wrote off $40.8 million in investments.

The third-largest auto insurer in the United States said net income declined by 24 percent to $215.5 million, or 32 cents a share, from $283.7 million, or 39 cents a share, a year earlier.

Analysts on average were expecting 37 cents a share, according to Thomson Reuters Estimates.

Progressive shares fell 2.2 percent to $19.59 in morning trading on the New York Stock Exchange.

Net written premiums in the quarter fell 1 percent to $3.51 billion.

Progressive, based in Mayfield Village, Ohio, said that as of the end of June, its policies in force had risen 1 percent in personal auto and 8 percent in its special lines.

Progressive's combined ratio, which reflects how much it made on premiums earned before losses and expenses, was 93.6, up from 92.3 a year ago. A lower combined ratio is better for an insurer.

Progressive said the increase in its combined ratio was largely due to weather-related catastrophe losses, which were nearly three times greater than the same period a year ago.