The Progressive Corporation (PGR) 8-K Entry into a Material Definitive Agreement

EXHIBIT NO. 99

NEWS
RELEASE

The Progressive Corporation	Company Contact:
6300 Wilson Mills Road Mayfield Village, Ohio 44143 http://www.progressive.com	Thomas A. King (440) 395-2260

FOR IMMEDIATE RELEASE

MAYFIELD VILLAGE, OHIO — December 9, 2004 — The Progressive Corporation today reported the following results for November 2004:

	November		November
(millions, except per share amounts)	2004		2003		Change
Net premiums written	$	937.0	$	875.5		7	%
Net premiums earned		1,019.3		939.5		8	%
Net income		93.8		99.5		(6	)%
Per share		.46		.45		2	%
Combined ratio		89.6		86.7	(2.9) 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
November 2004
(millions – except per share amounts)
(unaudited)

	Current Month			Comments on Monthly Results1
Direct premiums written	$	961.1
Net premiums written	$	937.0
Revenues:
Net premiums earned	$	1,019.3
Investment income		42.8		Includes $3.8 million of special common stock dividends received.
Net realized gains (losses) on securities		(4.3	)	Includes $6.0 million of write-downs on common stocks determined to be other-than-temporarily impaired.
Service revenues		3.6
Total revenues		1,061.4
Expenses:
Losses and loss adjustment expenses		699.6
Policy acquisition costs		109.4
Other underwriting expenses		104.7
Investment expenses		.8
Service expenses		2.3
Interest expense		6.8
Total expenses		923.6
Income before income taxes		137.8
Provision for income taxes		44.0
Net income	$	93.8
COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding		199.1
Per share	$	.47
Diluted:
Average shares outstanding		199.1
Net effect of dilutive stock-based compensation		3.3
Total equivalent shares		202.4
Per share	$	.46

¹See the Monthly Commentary at the end of this release for additional discussion. Also see Note 1 to the Company’s 2003 audited consolidated financial statements included in the Company’s 2003 Annual Report, which can be found at progressive.com/annualreport, for a description of the Company’s 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	(.6	)%
Common stocks	4.6	%
Total portfolio	.1	%

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

	Year-to-Date
	2004		2003		% Change
Direct premiums written	$	12,533.0	$	11,304.5		11
Net premiums written	$	12,242.6	$	11,052.1		11
Revenues:
Net premiums earned	$	11,899.7	$	10,405.6		14
Investment income		444.9		421.3		6
Net realized gains (losses) on securities		89.9		15.3		488
Service revenues		44.1		38.1		16
Other income1		—		31.2	NM
Total revenues		12,478.6		10,911.5		14
Expenses:
Losses and loss adjustment expenses		7,778.5		7,018.8		11
Policy acquisition costs		1,282.5		1,146.7		12
Other underwriting expenses		1,126.5		924.3		22
Investment expenses		12.8		10.7		20
Service expenses		22.6		23.9		(5	)
Interest expense		73.8		87.7		(16	)
Total expenses		10,296.7		9,212.1		12
Income before income taxes		2,181.9		1,699.4		28
Provision for income taxes		712.7		556.6		28
Net income	$	1,469.2	$	1,142.8		29
COMPUTATION OF EARNINGS PER SHARE
Basic:
Average shares outstanding		214.1		216.9		(1	)
Per share	$	6.86	$	5.27		30
Diluted:
Average shares outstanding		214.1		216.9		(1	)
Net effect of dilutive stock-based compensation		3.4		4.0		(15	)
Total equivalent shares		217.5		220.9		(2	)
Per share	$	6.76	$	5.17		31

NM = Not Meaningful

¹Amount represents estimated interest earned through November 30, 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		3.4	%		4.6	%
Common stocks		7.7	%		22.8	%
Total portfolio		4.0	%		7.2	%

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

Current Month

	Personal Lines									Commercial
										Auto			Other			Companywide
	Agency			Direct			Total			Business			Businesses2			Total
Net Premiums Written	$	550.4		$	263.3		$	813.7		$	121.8		$	1.5		$	937.0
% Growth in NPW		4	%		9	%		5	%		20	%		(6	)%		7	%
Net Premiums Earned	$	605.6		$	290.5		$	896.1		$	120.8		$	2.4		$	1,019.3
% Growth in NPE		6	%		12	%		8	%		15	%		(29	)%		8	%
GAAP Ratios
Loss/LAE ratio		68.9			71.4			69.7			62.7			(17.5	)		68.6
Expense ratio		20.8			21.7			21.1			19.9			33.7			21.0
Combined ratio		89.7			93.1			90.8			82.6			16.2			89.6
Actuarial Adjustments1
Reserve Decrease/(Increase)
Prior accident years																$	(4.3	)
Current accident year																	(7.1	)
Calendar year actuarial adjustment	$	(7.6	)	$	(4.1	)	$	(11.7	)	$	.5		$	(.2	)	$	(11.4	)
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	(4.3	)
All other development																	3.6
Total development																$	(.7	)
Calendar year loss/LAE ratio																	68.6
Accident year loss/LAE ratio																	68.5
Statutory Ratios
Loss/LAE ratio																	68.7
Expense ratio																	21.4
Combined ratio																	90.1

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

²Negative loss/LAE ratio reflects favorable “other development” in the Company’s other businesses.

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
November 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	$	7,267.1		$	3,471.1		$	10,738.2		$	1,481.3		$	23.1		$	12,242.6
% Growth in NPW		8	%		15	%		10	%		17	%		(55	)%		11	%
Net Premiums Earned	$	7,141.4		$	3,354.8		$	10,496.2		$	1,372.5		$	31.0		$	11,899.7
% Growth in NPE		12	%		18	%		14	%		22	%		(49	)%		14	%
GAAP Ratios
Loss/LAE ratio		66.2			65.7			66.0			60.8			50.4			65.4
Expense ratio		20.2			20.5			20.3			19.2			46.7			20.2
Combined ratio		86.4			86.2			86.3			80.0			97.1			85.6
Actuarial Adjustments1
Reserve Decrease/(Increase)
Prior accident years																$	33.8
Current accident year																	(22.1	)
Calendar year actuarial adjustment	$	10.3		$	3.8		$	14.1		$	(2.0	)	$	(.4	)	$	11.7
Prior Accident Years Development
Favorable/(Unfavorable)
Actuarial adjustment																$	33.8
All other development																	49.4
Total development																$	83.2
Calendar year loss/LAE ratio																	65.4
Accident year loss/LAE ratio																	66.1
Statutory Ratios
Loss/LAE ratio																	65.4
Expense ratio																	19.6
Combined ratio																	85.0
Statutory surplus																$	5,002.3

	November		November
Policies in Force	2004		2003		Change
(in thousands)
Agency – Auto		4,262		3,967		7	%
Direct – Auto		2,077		1,839		13	%
Other Personal Lines2		2,352		1,989		18	%
Total Personal Lines		8,691		7,795		11	%
Commercial Auto Business		420		364		15	%

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)

	November
	2004
CONDENSED GAAP BALANCE SHEET:1
Investments -
Available-for-sale:
Fixed maturities, at market (amortized cost: $9,160.2)	$	9,226.6
Equity securities, at market:
Preferred stocks (cost: $723.4)		742.5
Common equities (cost: $1,312.8)		1,783.9
Short-term investments, at amortized cost (market: $1,881.9)		1,881.9
Total investments2		13,634.9
Net premiums receivable		2,351.0
Deferred acquisition costs		451.6
Other assets		1,309.6
Total assets	$	17,747.1
Unearned premiums	$	4,245.7
Loss and loss adjustment expense reserves		5,267.7
Other liabilities2		2,039.8
Debt		1,290.3
Shareholders’ equity		4,903.6
Total liabilities and shareholders’ equity	$	17,747.1
Common Shares outstanding		200.4
Shares repurchased – November		—
Average cost per share	$	—
Book value per share	$	24.47
Return on average shareholders’ equity		29.5	%
Net unrealized pre-tax gains on investments	$	556.6
Debt to total capital ratio		20.8	%

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 $262.6 million.

²Amounts include net unsettled security acquisitions, including repurchase commitments, of $444.8 million.

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Monthly Commentary

• Growth continued to slow in the Company’s Personal Lines businesses. Six markets had year-to-date net premiums written growth of 20% or greater; these markets represented 11% of the total Personal Lines premiums. Nineteen states (44% of total Personal Lines) grew less than 10%.

• The Commercial Auto business growth is also slowing; however, reported November growth was favorably impacted by the continued reduction in an inventory of unprocessed applications. The Company does not expect this issue to have an effect on future month’s reported results.

• The Company continued to experience strong profitability. Five 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 4.1% for the month and 3.8% year-to-date.

• At November month-end, the net unrealized gains in the investment portfolio were $556.6 million, a decrease of $33.7 million from October 2004 and $86.8 million from year-end 2003. In the fixed-income portfolio, the duration was 2.9 years and the weighted average credit quality remained AA+.

• Pursuant to the Company’s fiscal calendar for 2004, December will be a 5-week month. The Company operates on a fiscal calendar that typically consists of a 52-week year, with 13-week quarters and a 4-week December. Under this accounting calendar, the Company periodically recognizes an additional week of activity, as is the case for 2004. Consequently, the Company’s fiscal 2004, fourth quarter and December will each include an additional week, which will affect comparisons of those periods to prior years.

The Progressive group of insurance companies ranks third in the nation for auto insurance based on premiums written. The companies that offer insurance directly (by phone at 1-800-PROGRESSIVE and online at progressive.com) market their products and services through the “Progressive Direct” brand, while the companies that offer insurance through more than 30,000 independent agencies in the U.S. market their products and services through the “Drive Insurance from Progressive” brand. The Common Shares of The Progressive Corporation, the holding company, are publicly traded at NYSE:PGR. More information can be found at progressive.com.

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; the Company’s ability to maintain the uninterrupted operation of its facilities, systems (including information technology systems) and business functions; 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 one or more contingencies. Reported results, therefore, may appear to be volatile in certain accounting periods.

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