The Progressive Corporation (PGR) 8-K Regulation FD Disclosure

Exhibit 99

	NEWS RELEASE
The Progressive Corporation	Company Contact:
6300 Wilson Mills Road	Jeffrey W. Basch
Mayfield Village, Ohio 44143	(440) 446-2851
http://www.progressive.com

FOR IMMEDIATE RELEASE

MAYFIELD VILLAGE, OHIO—August 12, 2004 — The Progressive Corporation today reported the following results for July 2004:

	July		July
($ in millions, except per share amounts)	2004		2003		Change
Net premiums written	$	1,298.8	$	1,212.1		7	%
Net premiums earned		1,257.1		1,110.0		13	%
Net income		168.1		141.9		18	%
Per share		.77		.64		19	%
Combined ratio		82.6		85.9	3.3 pts.

See the “Income Statement” for further month and year-to-date information.

     Progressive’s Personal Lines business units write insurance for private passenger automobiles and recreation vehicles. Progressive’s Commercial Auto business unit writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned by small businesses. The Company’s other businesses principally include writing directors’ and officers’ liability insurance and managing the Company’s run-off businesses. See “Supplemental Information” for the month and year-to-date results.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
INCOME STATEMENT
July 2004
(millions – except per share amounts)
(unaudited)

	Current Month			Comments on Monthly Results1
Direct premiums written	$	1,333.2
Net premiums written	$	1,298.8
Revenues:
Net premiums earned	$	1,257.1
Investment income		40.0
Net realized losses on securities		(.6	)
Service revenues		4.7
Total revenues		1,301.2
Expenses:
Losses and loss adjustment expenses		796.0
Policy acquisition costs		134.8
Other underwriting expenses		107.1
Investment expenses		1.5
Service expenses		2.3
Interest expense		6.7
Total expenses		1,048.4
Income before income taxes		252.8
Provision for income taxes		84.7
Net income	$	168.1
COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding		216.2
Per share	$	.78
Diluted:
Average shares outstanding		216.2
Net effect of dilutive stock-based compensation		3.1
Total equivalent shares		219.3
Per share	$	.77

¹See the Monthly Commentary at the end of this release for additional discussion. Also see the Company’s 2003 Annual Report at progressive.com/annualreport for a complete description of its reporting and accounting policies.

The following table sets forth the total return on investments for the month:

       Fully taxable equivalent total return:

Fixed income securities	.8	%
Common stocks	(3.7	)%
Total portfolio	.1	%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
INCOME STATEMENTS
July 2004 Year-to-Date
(millions – except per share amounts)
(unaudited)

	Year-to-Date
	2004		2003		% Change
Direct premiums written	$	8,141.8	$	7,278.5		12
Net premiums written	$	7,937.7	$	7,114.2		12
Revenues:
Net premiums earned	$	7,584.6	$	6,483.2		17
Investment income		279.6		264.3		6
Net realized gains on securities		55.5		17.8		212
Service revenues		29.2		23.3		25
Other income1		—		30.4	NM
Total revenues		7,948.9		6,819.0		17
Expenses:
Losses and loss adjustment expenses		4,848.8		4,391.3		10
Policy acquisition costs		817.1		716.2		14
Other underwriting expenses		707.5		562.6		26
Investment expenses		7.7		6.6		17
Service expenses		14.4		14.8		(3	)
Interest expense		46.9		55.8		(16	)
Total expenses		6,442.4		5,747.3		12
Income before income taxes		1,506.5		1,071.7		41
Provision for income taxes		492.1		352.0		40
Net income	$	1,014.4	$	719.7		41
COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding		216.3		217.7		(1	)
Per share	$	4.69	$	3.31		42
Diluted:
Average shares outstanding		216.3		217.7		(1	)
Net effect of dilutive stock-based compensation		3.5		3.7		(5	)
Total equivalent shares		219.8		221.4		(1	)
Per share	$	4.62	$	3.25		42

¹Amount represents estimated interest earned through July 2003 on an income tax refund the Company received in 2004.

The following table sets forth the total return on investments for the year-to-date period:

	2004			2003
Fully taxable equivalent total return:
Fixed income securities		1.6	%		1.9	%
Common stocks		(.6	)%		13.8	%
Total portfolio		1.4	%		3.6	%

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
July 2004
($ in millions)
(unaudited)

Current Month

	Personal Lines									Commercial
										Auto			Other			Companywide
	Agency			Direct			Total			Business			Businesses			Total
Net Premiums Written	$	768.8		$	370.2		$	1,139.0		$	156.9		$	2.9		$	1,298.8
% Growth in NPW		4	%		11	%		6	%		19	%		(59	)%		7	%
Net Premiums Earned	$	752.9		$	354.4		$	1,107.3		$	146.3		$	3.5		$	1,257.1
% Growth in NPE		11	%		17	%		13	%		22	%		(50	)%		13	%
GAAP Ratios
Loss/LAE ratio		64.7			62.4			63.9			58.8			52.6			63.3
Expense ratio		19.2			19.4			19.3			18.6			36.6			19.3
Combined ratio		83.9			81.8			83.2			77.4			89.2			82.6
Actuarial Adjustments1
Reserve Decrease/(Increase)
Prior accident years																$	2.5
Current accident year																	(8.8	)
Calendar year actuarial adjustment	$	(3.8	)	$	(2.5	)	$	(6.3	)	$	(.3	)	$	.3		$	(6.3	)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	2.5
All other development																	26.7
Total development																$	29.2
Calendar year loss/LAE ratio																	63.3
Accident year loss/LAE ratio																	65.6
Statutory Ratios
Loss/LAE ratio																	63.4
Expense ratio																	18.9
Combined ratio																	82.3

¹ Represents adjustments solely based on the Company’s corporate actuarial review.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
July 2004 Year-to-Date
($ in millions)
(unaudited)

Year-to-Date

	Personal Lines									Commercial
										Auto			Other			Companywide
	Agency			Direct			Total			Business			Businesses			Total
Net Premiums Written	$	4,733.4		$	2,236.4		$	6,969.8		$	952.8		$	15.1		$	7,937.7
% Growth in NPW		9	%		16	%		11	%		17	%		(66	)%		12	%
Net Premiums Earned	$	4,570.2		$	2,129.9		$	6,700.1		$	863.5		$	21.0		$	7,584.6
% Growth in NPE		15	%		21	%		16	%		25	%		(52	)%		17	%
GAAP Ratios
Loss/LAE ratio		64.9			63.8			64.6			58.8			67.0			63.9
Expense ratio		20.0			20.6			20.2			19.0			39.8			20.1
Combined ratio		84.9			84.4			84.8			77.8			106.8			84.0
Actuarial Adjustments1
Reserve Decrease/(Increase)
Prior accident years																$	28.2
Current accident year																	(17.2	)
Calendar year actuarial adjustment	$	5.7		$	2.4		$	8.1		$	3.5		$	(.6	)	$	11.0
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	28.2
All other development																	15.2
Total development																$	43.4
Calendar year loss/LAE ratio																	63.9
Accident year loss/LAE ratio																	64.5
Statutory Ratios
Loss/LAE ratio																	64.0
Expense ratio																	19.4
Combined ratio																	83.4
Statutory surplus																$	5,471.3

Policies in Force	July		July
(in thousands)	2004		2003		Change
Agency – Auto		4,201		3,849		9	%
Direct – Auto		2,012		1,763		14	%
Other Personal Lines2		2,306		1,939		19	%
Total Personal Lines		8,519		7,551		13	%
Commercial Auto Business		410		343		19	%

¹ Represents adjustments solely based on the Company’s corporate actuarial review.

² Includes insurance for motorcycles, recreation vehicles, mobile homes, watercraft, snowmobiles, homeowners and similar items.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
BALANCE SHEET AND OTHER INFORMATION
(millions– except per share amounts)
(unaudited)

	July
	2004
CONDENSED GAAP BALANCE SHEET:1
Investments -
Available-for-sale:
Fixed maturities, at market (amortized cost: $9,762.1)	$	9,829.4
Equity securities, at market:
Preferred stocks (cost: $857.6)		864.4
Common equities (cost: $1,600.8)		1,950.3
Short-term investments, at amortized cost (market: $1,899.2)		1,899.2
Total investments2		14,543.3
Net premiums receivable		2,354.0
Deferred acquisition costs		456.1
Other assets		1,296.6
Total assets	$	18,650.0
Unearned premiums	$	4,265.4
Loss and loss adjustment expense reserves		4,995.7
Other liabilities2		2,254.6
Debt		1,290.1
Shareholders’ equity		5,844.2
Total liabilities and shareholders’ equity	$	18,650.0

Common Shares outstanding		217.0
Shares repurchased – July		.5
Average cost per share	$	76.80
Book value per share	$	26.93
Return on average shareholders’ equity		29.5	%
Net unrealized pre-tax gains on investments	$	423.6
Debt to total capital ratio		18.1	%

¹Pursuant to SFAS 113, “Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,” loss and loss adjustment expense reserves are stated gross of reinsurance recoverables on unpaid losses of $252.5 million.

²Amounts include net unsettled security acquisitions of $741.8 million.

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     Monthly Commentary

• Growth continued to slow in the Company’s Personal Lines businesses. Ten markets had year-to-date net premiums written growth of 20% or greater; these markets represented 14% of the total Personal Lines premiums. Eighteen states (42% of total Personal Lines) grew less than 10%.

• The growth in Commercial Auto reflects variation in the processing of applications on a month-to-month basis. Accordingly, June written premium was depressed while July was enhanced.

• The Company continued to experience strong profitability. Only two markets in which the Company writes Personal Lines business were unprofitable for the month; for the year-to-date period, all Personal Lines markets were profitable.

• The pretax recurring book yield of the investment portfolio was 3.6% for the month and 3.8% year-to-date.

• At July month-end, the net unrealized gains in the investment portfolio were $423.6 million, a decrease of $219.8 million from year-end 2003. In the fixed-income portfolio, the duration was 2.9 years and the weighted average credit quality remained AA.

The Progressive group of insurance companies ranks third in the nation for auto insurance based on premiums written, offering its products by phone at 1-800-PROGRESSIVE, online at progressive.com and through more than 30,000 independent agencies and insurance brokers. The Common Shares of The Progressive Corporation, the holding company, are publicly traded at NYSE:PGR.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this release that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. These risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions and projections generally; inflation and changes in economic conditions (including changes in interest rates and financial markets); the accuracy and adequacy of the Company’s pricing and loss reserving methodologies; pricing competition and other initiatives by competitors; the Company’s ability to obtain regulatory approval for requested rate changes and the timing thereof; the effectiveness of the Company’s advertising campaigns; legislative and regulatory developments; the outcome of litigation pending or that may be filed against the Company; weather conditions (including the severity and frequency of storms, hurricanes, snowfalls, hail and winter conditions); changes in driving patterns and loss trends; acts of war and terrorist activities; court decisions and trends in litigation and health care and auto repair costs; and other matters described from time to time by the Company in releases and publications, and in periodic reports and other documents filed with the United States Securities and Exchange Commission. In addition, investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when a reserve is established for a major contingency. Reported results, therefore, may appear to be volatile in certain accounting periods.

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