80661--2/28/2006--PROGRESSIVE

related topics

{loss, insurance, financial}

{capital, credit, financial}

{debt, indebtedness, cash}

{regulation, change, law}

{personnel, key, retain}

{system, service, information}

{financial, litigation, operation}

{operation, natural, condition}

{loan, real, estate}

Our ability to attract, develop and retain talented employees, managers and executives, and to maintain appropriate staffing levels, is critical to our success. Progressive and its insurance subsidiaries are subject to a variety of complex federal and state laws and regulations. Lawsuits challenging our business practices, our competitors and other companies are pending and more may be filed in the future. Our success depends on our ability to underwrite risks accurately and to charge adequate rates to policyholders. Our financial performance may also be materially adversely affected by severe weather conditions or other catastrophic losses. Our success depends on our ability to establish accurate loss reserves and to adjust claims accurately. Our business depends on the uninterrupted operation of our facilities, systems and business functions, including our information technology and other business systems. The performance of our fixed-income and equity investment portfolios is subject to investment risks. Our insurance subsidiaries may be limited in the amount of dividends that they can pay to the holding company, which in turn may limit the holding company s ability to pay dividends to shareholders, repay indebtedness or make capital contributions to its other subsidiaries or affiliates. Our financial condition may be adversely affected if one or more parties with which we enter into significant contracts becomes insolvent or experiences other financial hardship. Our access to capital markets, our financing arrangements and our business operations are dependent on favorable evaluations and ratings by credit and other rating agencies.

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80661--2/28/2006--PROGRESSIVE_CORP/OH/