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Letter to the Editor

The Progressive Corporation Announces Second Quarter Results

The Progressive Corporation has reported second quarter 2002 net income per share of $.71, compared to $.46 per share earned in the same period last year. Net income for the quarter was $160.4 million, compared to $103.7 million in the second quarter 2001. Investment income, including net realized gains/losses on security sales, was $114.0 million before taxes and $80.7 million after taxes, compared to $100.9 million before taxes and $72.5 million after taxes for the second quarter 2001. Second quarter 2002 results include net realized losses on security sales of $3.0 million, or $.01 per share, compared to net realized losses of $3.1 million, or $.01 per share, last year. In addition, during the second quarter 2002, the Company accrued $35.5 million, or $.10 per share, to reflect the Company's best estimate of its exposure related to two categories of class action lawsuits pending in several states for which the Company has been engaged in settlement negotiations. These accruals are primarily reflected in the Company's underwriting expenses.

For the second quarter 2002, operating income was $162.4 million, compared to $107.0 million last year. Operating income per share was $.72, compared to $.47 per share in the second quarter last year.

The GAAP combined ratio (CR) was 93.4 for the second quarter 2002, compared to 96.4 for the same period last year. Net premiums written for the quarter increased 29 percent to $2,375.4 million, compared to $1,838.8 million last year. Net premiums earned increased 22 percent to $2,136.0 million from $1,755.8 million last year.

For the six months ended June 30, 2002, net income was $336.6 million, or $1.50 per share, compared to $190.3 million, or $.85 per share, for 2001. Year-to-date operating income was $348.2 million, or $1.55 per share, compared to $195.3 million, or $.87 per share, last year. The CR was 92.0 for the first half of 2002, compared to 96.9 in 2001. Net premiums written increased 29 percent to $4,562.2 million for the first half of 2002, compared to $3,541.6 million last year. Net premiums earned for the six months ended June 30, 2002, increased 20 percent to $4,103.5 million from $3,429.7 million for the same period last year. Investment income was $207.3 million before taxes and $147.9 million after taxes, compared to $195.9 million before taxes and $140.8 million after taxes last year. Year-to-date 2002 results include net realized losses on security sales of $17.8 million, or $.05 per share, compared to net realized losses of $5.6 million, or $.02 per share, last year.

Progressive's Personal Lines business units write insurance for private passenger automobiles and recreation vehicles. For the second quarter 2002, net premiums written in Personal Lines increased 28 percent to $2,087.8 million, compared to $1,632.1 million for the same period last year. The Personal Lines CR was 93.5 for the second quarter 2002, compared to 96.9 last year. For the six months ended June 30, 2002, net premiums written in Personal Lines increased 27 percent to $4,013.1 million, compared to $3,171.4 million last year. The Personal Lines CR was 92.2 for the six months ended June 30, 2002, compared to 97.3 last year.

During the second quarter 2002, the company repurchased 2,511,168 of its Common Shares at an average cost of $58.08 per share.

The Progressive group of insurance companies ranks fourth in the nation for auto insurance.

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