MAYFIELD VILLAGE, Ohio--(BUSINESS WIRE)--The Board of Directors of The Progressive Corporation today declared an annual dividend to be paid on January 31, 2008, to shareholders of record at the close of business on

December 31, 2007. The amount of the dividend will be determined based on the Company’s 2007 financial results and the formula discussed below, and announced in the Company’s year-end earnings release, which is currently scheduled for January 16, 2008. This declaration represents the first dividend paid under the Company’s annual variable dividend policy that was announced in early 2006.

The dividend amount will be calculated using the Company’s operating results for the full year of 2007, as follows:

Dividend Amount Per Share

=

After-Tax Underwriting Income

X

20% Target

X

Gainshare Factor

Common Shares Outstanding on 12/31/07

The amount of “After-Tax Underwriting Income” will be derived from the Company’s insurance operating results, using the following calculation:

Net premiums earned
Less:	Losses and loss adjustment expenses
	Policy acquisition costs
	Other underwriting expenses
Pre-tax underwriting income
x 65% (represents 1.00 less the statutory tax rate of 35%)
After-tax underwriting income

The “Gainshare Factor” will be a number between 0.00 and 2.00 that is determined under our cash bonus plan for employees, based on the levels of growth and profitability achieved by our principal business units in 2007. The Gainshare Factor through November was .75.

The Gainshare Factor and the components of underwriting income are disclosed by the Company throughout the year in its monthly earnings releases, and the final amounts will be included in the full-year results to be published in January 2008.

Consistent with the Company’s policy of not providing projections of its financial results, the Company is not providing an estimate of the 2007 dividend at this time. Interested parties may find the Company’s financial results through the end of November 2007 in an earnings release dated December 12, 2007, which can be found at http://investors.progressive.com/pdf/mreport-1107.pdf. Investors who choose to calculate or project a dividend amount based on the November 2007 year-to-date results are cautioned, however, that any such estimates may vary from the dividend that is ultimately calculated on the basis of the Company’s full-year results and the final Gainshare Factor.

In addition, the Board today determined that the dividend for 2008 will be calculated using the same criteria used for the 2007 calculation as described above, subject to the Board’s discretion and a declaration of such a dividend at the end of 2008.

About Progressive

The Progressive Group of Insurance Companies, in business since 1937, is the country’s third largest auto insurance group and largest seller of motorcycle and personal watercraft policies based on premiums written, and is a market leader in commercial auto insurance.

Progressive is committed to becoming consumers’ #1 choice for auto insurance by providing competitive rates and products that meet drivers’ needs throughout their lifetimes, superior online and in-person customer service, and best-in-class, 24-hour claims service, including its concierge level of claims service available at service centers located in major metropolitan areas throughout the United States.

Progressive companies offer consumers choices in how to shop for, buy and manage their auto insurance policies. Progressive offers its products, including personal and commercial auto, motorcycle, boat and recreational vehicle insurance, through more than 30,000 independent insurance agencies throughout the U.S. and online and by phone directly from the Company. To find an agent or to get a quote, go to www.progressive.com.

The Common Shares of The Progressive Corporation, the Mayfield Village, Ohio-based holding company, are publicly traded at (NYSE:PGR - News). For more information, visit www.progressive.com.

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Source: The Progressive Corporation

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