8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)       June 18, 2007      

THE PROGRESSIVE CORPORATION
(Exact name of registrant as specified in its charter)

Ohio	1-9518	34-0963169
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6300 Wilson Mills Road, Mayfield Village, Ohio	44143
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code      440-461-5000     

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events.

     On June 18, 2007, The Progressive Corporation, an Ohio corporation (“Progressive”), agreed to issue and sell $1 billion in aggregate principal amount of its 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “Debentures”), pursuant to an Underwriting Agreement (the “Underwriting Agreement”) dated as of June 18, 2007, with Goldman, Sachs & Co., as representative of the underwriters named therein. The Underwriting Agreement is being filed as Exhibit 1.1 to this Current Report on Form 8-K. The sale of the Debentures was registered pursuant to an automatic shelf registration statement on Form S-3 (SEC File No. 333-143824) filed with the U.S. Securities and Exchange Commission (“SEC”) on June 18, 2007 (the “Registration Statement”).

     The Debentures will be issued pursuant to the Junior Subordinated Indenture (the “Junior Subordinated Indenture”) to be entered into by and between Progressive and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture (the “First Supplemental Indenture”) to be entered into by and between Progressive and the Trustee. Forms of the Junior Subordinated Indenture and the First Supplemental Indenture are being filed as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K. The form of the Debentures is included as Exhibit A to the First Supplemental Indenture.

     In connection with the issuance of the Debentures, Baker & Hostetler LLP has rendered an opinion regarding certain tax matters. A copy of that opinion is filed as Exhibit 8.1 to this Current Report on Form 8-K.

     In connection with the issuance of the Debentures, Progressive will enter into a Replacement Capital Covenant (the “RCC”), pursuant to which Progressive will agree for the benefit of certain of its senior debtholders named therein that it shall not repay, redeem, defease or purchase, and that its subsidiaries shall not purchase, all or any part of the Debentures before June 15, 2047, unless during the applicable measurement period with respect to such repayment, redemption, defeasance or purchase Progressive and its subsidiaries shall have issued specified amounts of certain replacement capital securities on the terms and conditions set forth therein. The form of the RCC is being filed as Exhibit 4.4 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

1.1	Underwriting Agreement dated as of June 18, 2007, between The Progressive Corporation and Goldman, Sachs & Co., as representative of the underwriters named therein
4.1	Form of Junior Subordinated Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee; incorporated by reference to Exhibit 4.8 of the Company’s Registration Statement No. 333-143824 (filed with the SEC on June 18, 2007)
4.2	Form of First Supplemental Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee

4.3	Form of Debenture (included as Exhibit A to the First Supplemental Indenture)
4.4	Form of Replacement Capital Covenant of The Progressive Corporation
8.1	Opinion of Baker & Hostetler LLP regarding certain tax matters
99.1	News Release dated June 18, 2007

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 18, 2007

THE PROGRESSIVE CORPORATION
By:	/s/ Jeffrey W. Basch
	Name: Jeffrey W. Basch Title: Vice President and Chief Accounting Officer

EXHIBIT INDEX

Exhibit No.
Under
Reg. S-K	Form 8-K
Item 601	Exhibit No.		Description
1		1.1	Underwriting Agreement dated as of June 18, 2007, between The Progressive Corporation and Goldman, Sachs & Co., as representative of the underwriters named therein
4		4.1	Form of Junior Subordinated Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee; incorporated by reference to Exhibit 4.8 of the Company’s Registration Statement No. 333-143824 (filed with the SEC on June 18, 2007)
4		4.2	Form of First Supplemental Indenture between The Progressive Corporation and The Bank of New York Trust Company, N.A., as Trustee
4		4.3	Form of Debenture (included as Exhibit A to the First Supplemental Indenture)
4		4.4	Form of Replacement Capital Covenant of The Progressive Corporation
8		8.1	Opinion of Baker & Hostetler LLP regarding certain tax matters
9		99.1	News Release dated June 18, 2007

EX-1.1

Exhibit 1.1

The Progressive Corporation

6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067

Underwriting Agreement

June 18, 2007

Goldman, Sachs & Co.,
      As representative (the “Representative”) of the
      several Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

     The Progressive Corporation, an Ohio corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of $1,000,000,000 principal amount of its 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “Debentures”).

     1. The Company represents and warrants to, and agrees with, each of the Underwriters that:

     (a) An “automatic shelf registration statement” as defined under Rule 405 under the Securities Act of 1933, as amended (the “Act”) on Form S-3 (File No. 333-143824) in respect of the Debentures has been filed with the Securities and Exchange Commission (the “Commission”) not earlier than three years prior to the date hereof; such registration statement, and any post-effective amendment thereto, became effective on filing; and no stop order suspending the effectiveness of such registration statement or any part thereof has been issued and no proceeding for that purpose has been initiated or threatened by the Commission, and no notice of objection of the Commission to the use of such registration statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act has been received by the Company (the base prospectus filed as part of such

1

registration statement, in the form in which it has most recently been filed with the Commission on or prior to the date of this Agreement, is hereinafter called the “Basic Prospectus”; any preliminary prospectus (including any preliminary prospectus supplement) relating to the Debentures filed with the Commission pursuant to Rule 424(b) under the Act is hereinafter called a “Preliminary Prospectus”; the various parts of such registration statement, including all exhibits thereto but excluding any Form T-1 and including any prospectus supplement relating to the Debentures that is filed with the Commission and deemed by virtue of Rule 430B to be part of such registration statement, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the “Registration Statement”; the Basic Prospectus, as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is hereinafter called the “Pricing Prospectus”; the form of the final prospectus relating to the Debentures filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof is hereinafter called the “Prospectus”; any reference herein to the Basic Prospectus, the Pricing Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such prospectus; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment to the Registration Statement, any prospectus supplement relating to the Debentures filed with the Commission pursuant to Rule 424(b) under the Act and any documents filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated therein, in each case after the date of the Basic Prospectus, such Preliminary Prospectus, or the Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be deemed to refer to and include any annual report of the Company on Form 10-K filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Debentures is hereinafter called an “Issuer Free Writing Prospectus”);

     (b) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”) and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or

-2-

omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative expressly for use therein;

     (c) For the purposes of this Agreement, the “Applicable Time” is 5:30 p.m. (Eastern time) on the date of this Agreement; the Pricing Prospectus as supplemented by the final term sheet prepared and filed pursuant to Section 5(a) hereof, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus listed on Schedule II(a) hereto does not conflict in any material respect with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus and each such Issuer Free Writing Prospectus, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in an Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative expressly for use therein;

     (d) The documents incorporated by reference in the Pricing Prospectus and the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided,

-3-

however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative expressly for use therein or the Statement of Eligibility and Qualification on Form T-1 under the Trust Indenture Act; and no such documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule II(b) hereto;

     (e) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative expressly for use therein;

     (f) Neither the Company nor any of its Principal Subsidiaries (“Principal Subsidiaries” means and includes Progressive Casualty Insurance Company and Progressive Direct Insurance Company) has sustained since the date of the latest audited financial statements included or incorporated by reference in the Pricing Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree that is material to the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been any decrease in the capital stock, other than as a result of share repurchases authorized by the Company’s board of directors and disclosed to you, or material increase in long term debt of the Company or any of its Principal Subsidiaries, or any material adverse change in, or any adverse development involving a prospective material adverse change, in or affecting the business, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Pricing Prospectus;

-4-

     (g) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Ohio, with the corporate power and authority to own its properties and conduct its business as described in the Pricing Prospectus, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole; and each Principal Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation except to the extent that the failure to be so qualified or in good standing would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole;

     (h) The Company has an authorized capitalization as set forth in the Pricing Prospectus and all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and all of the issued and outstanding shares of capital stock of each Principal Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except to the extent that such liens, encumbrances, equities or claims would not individually or in the aggregate have a material adverse effect on the Company and its subsidiaries taken as a whole;

     (i) The Debentures have been duly authorized and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the indenture to be dated as of June 21, 2007, as supplemented by the First Supplemental Indenture thereto to be dated June 21, 2007 (together, the “Indenture”) between the Company and The Bank of New York Trust Company, NA as Trustee (the “Trustee”), under which they are to be issued, which is substantially in the form provided to you; the Indenture has been or will be duly authorized and duly qualified under the Trust Indenture Act and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles (the “Bankruptcy Exceptions”); and the Debentures and the Indenture will conform to the descriptions thereof in the Pricing Disclosure Package and the Prospectus;

-5-

     (j) The Replacement Capital Covenant to be entered into by the Company in connection with the Debentures for the benefit of the covered debtholders described therein and to be dated June 21, 2007 (the “Replacement Capital Covenant”), has been duly authorized and, when executed and delivered as contemplated hereby, will have been duly executed and delivered and will constitute a valid and legally binding obligation of the Company subject, as to enforcement, to the Bankruptcy Exceptions;

     (k) The issue and sale of the Debentures and the compliance by the Company with all of the provisions of the Debentures, the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated (A) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (B) nor will such action result in any violation of (x) the provisions of the Company’s Amended Articles of Incorporation (the “Certificate of Incorporation”) or Code of Regulations (the “Code of Regulations”) of the Company or (y) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, in each of case (A) and (B)(y), other than such breaches, conflicts, violations or defaults which, individually or in the aggregate, would not have a material adverse effect on the Company and its subsidiaries taken as a whole; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Debentures or the consummation by the Company of the transactions contemplated by this Agreement or the Indenture except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Debentures by the Underwriters, in each case, other than such authorizations, approvals, orders, consents, registrations or qualifications which, individually or in the aggregate, the failure to obtain would not have a material adverse effect on the Company and its subsidiaries taken as a whole or affect the validity or enforceability of the Debentures;

     (l) Neither the Company nor any of its Principal Subsidiaries nor Progressive County Mutual Insurance Company is (i) in violation of its Certificate of Incorporation, By-laws or Code of Regulations or (ii) in default in the performance or observance of any obligation, covenant or

-6-

condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except where such defaults would not, individually or in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole;

     (m) Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its Principal Subsidiaries is a party or of which any property of the Company or any of its Principal Subsidiaries is the subject which would individually or in the aggregate be reasonably expected to have a material adverse effect on the current or future financial position, shareholders’ equity or results of operations of the Company and its subsidiaries taken as a whole; and, to the best of the Company’s knowledge, no such proceedings are threatened or, to the best knowledge of the Company, contemplated by governmental authorities or others;

     (n) The Company is not and, after giving effect to the offering and sale of the Debentures and the application of the proceeds thereof, will not be an “investment company”, as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”);

     (o) (A)(i) At the time of filing the Registration Statement, (ii) at the time of the most recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Act (whether such amendment was by post-effective amendment, incorporated report filed pursuant to Section 13 or 15(d) of the Exchange Act or form of prospectus), and (iii) at the time the Company or any person acting on its behalf (within the meaning, for this clause only, of Rule 163(c) under the Act) made any offer relating to the Debentures in reliance on the exemption of Rule 163 under the Act, the Company was a “well-known seasoned issuer” as defined in Rule 405 under the Act; and (B) at the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Debentures, the Company was not an “ineligible issuer” as defined in Rule 405 under the Act;

     (p) The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) designed by the Company’s principal executive officer and principal financial officer, or under their supervision, that is sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial

-7-

statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences; in each case, within the meaning of and to the extent required by Section 13(b)(2)(B) of the Exchange Act;

     (q) Since the date of the latest audited financial statements included or incorporated by reference in the Pricing Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

     (r) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are effective in providing reasonable assurance that material information required to be disclosed in its reports filed with or submitted to the Commission under the Exchange Act relating to the Company and its subsidiaries and Progressive County Mutual Insurance Company is made known to the Company’s principal executive officer and principal financial officer by others within those entities as appropriate to allow timely decisions regarding required disclosure.

     2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price of 98.729% of the principal amount thereof, plus accrued interest, if any, from June 21, 2007 to the Time of Delivery (as defined below) hereunder, the principal amount of Debentures set forth opposite the name of such Underwriter in Schedule I hereto.

     3. Upon the authorization by the Representative of the release of the Debentures, the several Underwriters propose to offer the Debentures for sale upon the terms and conditions set forth in the Prospectus.

     4. (a) The Debentures to be purchased by each Underwriter hereunder will be represented by one or more definitive global Debentures in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Debentures to Goldman, Sachs & Co., for the account of each Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company to Goldman, Sachs & Co., by causing DTC to credit the Debentures to the account of Goldman, Sachs & Co. at DTC. The time

-8-

and date of such delivery and payment shall be 9:30 a.m., New York City time, on June 19, 2007 or such other time and date as the Representative and the Company may agree upon in writing. Such time and date are herein called the “Time of Delivery”.

     (b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Debentures and any additional documents requested by the Underwriters pursuant to Section 8(j) hereof, will be delivered at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004 (the “Closing Location”), and the Debentures will be delivered at the office of DTC or its designated custodian (the “Designated Office”), all at the Time of Delivery. A meeting will be held at the Closing Location at 4:00 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.

     5. The Company agrees with each of the Underwriters:

     (a) To prepare the Prospectus in a form approved by the Representative and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission’s close of business on the second business day following the date of this Agreement; to make no further amendment or any supplement to the Registration Statement, the Basic Prospectus or the Prospectus prior to the Time of Delivery which shall be disapproved by the Representative promptly after reasonable notice thereof; to advise the Representative, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish the Representative with copies thereof; to prepare a final term sheet, containing solely a description of the Debentures, in a form approved by the Representative and to file such term sheet pursuant to Rule 433(d) under the Act within the time required by such Rule; to file promptly all other material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Debentures; to advise the Representative, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order

-9-

preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Debentures, of any notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act, of the suspension of the qualification of the Debentures for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; and in the event of any such issuance of a notice of objection, promptly to take such steps including, without limitation, amending the Registration Statement or filing a new registration statement, at its own expense, as may be necessary to permit offers and sales of the Debentures by the Underwriters (references herein to the Registration Statement shall include any such amendment or new registration statement);

     (b) If required by Rule 430B(h) under the Act, to prepare a form of prospectus in a form approved by the Representative and to file such form of prospectus pursuant to Rule 424(b) under the Act not later than may be required by Rule 424(b) under the Act; and to make no further amendment or supplement to such form of prospectus which shall be disapproved by the Representative promptly after reasonable notice thereof;

     (c) If by the third anniversary (the “Renewal Deadline”) of the initial effective date of the Registration Statement, any of the Debentures remain unsold by the Underwriters, the Company will file, if it has not already done so and is eligible to do so, a new automatic shelf registration statement relating to the Debentures, in a form satisfactory to the Representative. If at the Renewal Deadline the Company is no longer eligible to file an automatic shelf registration statement, the Company, if it has not already done so, will file a new shelf registration statement relating to the Debentures, in a form satisfactory to the Representative and will use commercially reasonable efforts to cause such registration statement to be declared effective within 180 days after the Renewal Deadline. The Company will take all other commercially reasonable action necessary or appropriate to permit the public offering and sale of the Debentures to continue as contemplated in the expired registration statement relating to the Debentures. References herein to the Registration Statement shall include such new automatic shelf registration statement or such new shelf registration statement, as the case may be;

     (d) Promptly from time to time to take such action as the Representative may reasonably request to qualify the Debentures for offering and sale under the securities laws of such United States jurisdictions as the

-10-

Representative may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Debentures, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;

     (e) Prior to 2:00 p.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as the Representative may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Debentures and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representative and upon its request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as the Representative may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Debentures at any time nine months or more after the time of issue of the Prospectus, upon the request of the Representative but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representative may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

     (f) To make generally available to its securityholders as soon as practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);

     (g) During the period beginning from the date hereof and continuing to and including the date 30 days after the date of the Prospectus, not to offer, sell,

-11-

contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose, except as provided hereunder of, any securities of the Company that are substantially similar to the Debentures without the prior written consent of the Representative;

     (h) To pay the required Commission filing fees relating to the Debentures within the time required by Rule 456(b)(1) under the Act and otherwise in accordance with Rules 456(b) and 457(r) under the Act; and

     (i) To use the net proceeds received by it from the sale of the Debentures pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption “Use of Proceeds”.

     6.

     (a) (i) The Company represents and agrees that, other than as set forth in Schedule II(a), without the prior consent of the Representative (not to be unreasonably delayed), it has not made and will not make any offer relating to the Debentures that would constitute a “free writing prospectus” as defined in Rule 405 under the Act;

          (ii) each Underwriter represents and agrees that, without the prior consent of the Company and the Representative, other one or more final term sheets relating to the Debentures containing substantially similar, customary information set forth therein and conveyed to purchasers of Debentures, it has not made and will not make any offer relating to the Debentures that would constitute a free writing prospectus; and

          (iii) any such free writing prospectus the use of which has been consented to by the Company and the Representative (including the final term sheet prepared and filed pursuant to Section 5(a) hereof) is listed on Schedule II(a) hereto;

     (b) The Company has complied and will comply in all material respects with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and

     (c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representative and, if requested by the Representative, will

-12-

prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or omission; provided, however, that this representation and warranty shall not apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter through the Representative expressly for use therein.

     7. The Company covenants and agrees with the several Underwriters that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Debentures under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Indenture, the Blue Sky Memorandum, and closing documents (including any compilations thereof) contemplated by this Agreement or the Indenture; (iii) all expenses in connection with the qualification of the Debentures for offering and sale under state securities laws as provided in Section 5(d) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) any fees charged by securities rating services for rating the Debentures; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Debentures; (vi) the cost of preparing the Debentures; (vii) the fees and expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Debentures; and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 9 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Debentures by them, and any advertising expenses connected with any offers they may make.

     8. The obligations of the Underwriters hereunder shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of the Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:

-13-

     (a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; the final term sheet contemplated by Section 5(a) hereof, and any other material required to be filed by the Company pursuant to Rule 433(d) under the Act, shall have been filed with the Commission within the applicable time periods prescribed for such filings by Rule 433; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission and no notice of objection of the Commission to the use of the Registration Statement or any post-effective amendment thereto pursuant to Rule 401(g)(2) under the Act shall have been received; no stop order suspending or preventing the use of the Prospectus or any Issuer Free Writing Prospectus shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Representative;

     (b) Sullivan & Cromwell LLP, counsel for the Underwriters, shall have furnished to the Representative such written opinion or opinions (a form of each such opinion is attached as Annex II(a) hereto), dated the Time of Delivery, in form and substance satisfactory to the Representative, with respect to the matters covered in paragraphs (i), (iv), (v) and (vi) of subsection (c) below as well as such other related matters as the Representative may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

     (c) Baker & Hostetler LLP, counsel for the Company, shall have furnished to the Representative their written opinion, dated the Time of Delivery, in form and substance satisfactory to the Representative, to the effect that:

     (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Ohio, with corporate power and authority to own its properties and conduct its business as described in the Prospectus;

     (ii) To the best of such counsel’s knowledge and other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which would individually or in the aggregate be reasonably expected to have a material adverse effect on the current or future consolidated financial position, stockholders’ equity or results of operations of the Company and its subsidiaries taken as a whole; and, to

-14-

the best of such counsel’s knowledge, no such proceedings are threatened by governmental authorities or threatened by others;

     (iii) This Agreement has been duly authorized, executed and delivered by the Company;

     (iv) The Debentures have been duly authorized, executed, issued and delivered by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with this Agreement, will constitute valid and binding obligations of the Company entitled to the benefits provided by the Indenture; and the Debentures and the Indenture conform in all material respects to the descriptions thereof in the Prospectus;

     (v) Each of the Indenture and the Replacement Capital Covenant has been duly authorized, executed and delivered by the Company and, assuming the due authorization, execution and delivery of the other parties thereto, constitutes a valid and binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to the Bankruptcy Exceptions; and the Indenture has been duly qualified under the Trust Indenture Act;

     (vi) The issue and sale of the Debentures and the compliance by the Company with all of the provisions of the Debentures and the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated will not result in any violation of the provisions of the Articles of Incorporation or Code of Regulations of the Company or result in the violation of any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties except in any such instance or instances in which the breach or violation would not have a material adverse effect on the Company and its subsidiaries taken as a whole;

     (vii) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Debentures or the consummation by the Company of the transactions contemplated by this Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under any state securities or Blue Sky laws or any insurance laws in connection with the purchase and distribution of the Debentures by the Underwriters;

-15-

     (viii) The statements set forth in the Prospectus under the caption “Description of the Junior Subordinated Debentures”, insofar as they purport to constitute a summary of the terms of the Debentures, and under the caption “Certain United States Federal Income and Estate Tax Consequences”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are fair summaries thereof;

     (ix) The Company is not and, after giving effect to the offering and sale of the Debentures and the application of the proceeds thereof as described in the Prospectus, will not be an “investment company”, as such term is defined in the Investment Company Act;

     (x) The documents incorporated by reference in the Prospectus or any further amendment or supplement thereto made by the Company prior to the Time of Delivery (other than the financial statements and related schedules or other financial or statistical data included or incorporated by reference therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder;

     (xi) The Registration Statement, the Prospectus and any further amendments and supplements thereto, as applicable, made by the Company prior to the Time of Delivery (other than the financial statements and related schedules or other financial or statistical data included or incorporated by reference therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; and they do not know of any amendment to the Registration Statement required to be filed such as would be necessary for the Registration Statement to so comply or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement, the Basic Prospectus or the Prospectus which are not filed or incorporated by reference or described as required; and

     (xii) Although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Pricing Prospectus or the Prospectus, except for those referred to in the opinion in subsection (viii) of this Section 8(c), such counsel has no reason to believe that (i) the Registration Statement or any further amendment thereto made by the Company prior to the Time of Delivery (other than the financial statements and related schedules or

-16-

other financial or statistical information contained or incorporated by reference therein, as to which such counsel need express no opinion), when such part or amendment became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) the Pricing Disclosure Package (other than the financial statements and related schedules or other financial or statistical information contained or incorporated by reference therein, as to which such counsel need express no opinion), as of the Applicable Time, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of circumstances under which they were made, not misleading; or (iii) as of its date and as of the Time of Delivery, the Prospectus or any further amendment or supplement thereto made by the Company prior to the Time of Delivery (other than the financial statements and related schedules or other financial or statistical information contained or incorporated by reference therein, as to which such counsel need express no opinion) contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

     (d) Charles E. Jarrett, General Counsel for the Company, shall have furnished to the Representative his written opinion, dated the Time of Delivery in form and substance satisfactory to the Representative, to the effect that:

     (i) each Principal Subsidiary of the Company and Progressive County Mutual Insurance Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; and all of the issued and outstanding shares of capital stock of each such Principal Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable, and (except for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;

     (ii) the issue and sale of the Debentures and the compliance by the Company with all of the provisions of the Debentures and the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries

-17-

is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject other than as would not have, individually or in the aggregate, a material adverse effect on the Company and its subsidiaries taken as a whole; and

     (iii) Neither the Company nor any of its subsidiaries is in violation of its Certificate of Incorporation, Code of Regulations or By-laws or in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound other than as would not have, individually or in the aggregate, a material adverse effect on the Company and its subsidiaries taken as a whole.

     (e) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at the Time of Delivery, PricewaterhouseCoopers L.L.P. shall have furnished to the Representative a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to them, to the effect set forth in Annex I hereto (the executed copy of the letter delivered prior to the execution of this Agreement is attached as Annex I(a) hereto and a form of letter to be delivered on the effective date of any post-effective amendment to the Registration Statement, and as of the Time of Delivery is attached as Annex I(b) hereto);

     (f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the capital stock, other than as a result of share repurchases authorized by the Company’s board of directors and disclosed to you, or long term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the business, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Pricing Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representative so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Debentures on the terms and in the manner contemplated in the Prospectus;

-18-

     (g) On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, and noting an intended or possible decrease in its rating of any of the Company’s debt securities;

     (h) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Company’s securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in the judgment of the Representative makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Debentures on the terms and in the manner contemplated in the Prospectus;

     (i) The Company shall have complied with the provisions of Section 5(e) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and

     (j) The Company shall have furnished or caused to be furnished to the Representative at the Time of Delivery certificates of officers of the Company satisfactory to them as to the accuracy of the representations and warranties of the Company herein at and as of such time, as to the performance by the Company of all of its obligations hereunder to be performed at or prior to such time, as to the matters set forth in subsection (a) of this Section.

     9. (a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the

-19-

statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representative expressly for use therein.

     (b) Each Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any such amendment or supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.

     (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any such action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder except to the extent that the indemnifying party is prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this Section 9. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the

-20-

extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party, which consent shall not be unreasonably withheld), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable out-of-pocket costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

     (d) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Debentures. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above (unless the failure to give such notice does not materially prejudice the indemnifying party), then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits received, but also the relative fault of, the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the

-21-

omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Debentures underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint.

     (e) The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act.

     10. (a) If any Underwriter shall default in its obligation to purchase the Debentures which it has agreed to purchase hereunder, the Representative may in their discretion arrange for the Representative or another party or other parties to purchase such Debentures on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representative does not arrange for the purchase of such Debentures, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representative to purchase such Debentures on such terms. In the event that, within the respective prescribed periods, the Representative notifies the Company that it has so arranged for the purchase of

-22-

such Debentures, or the Company notifies the Representative that it has so arranged for the purchase of such Debentures, the Representative or the Company shall have the right to postpone the Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representative may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Debentures. Nothing in this Section 10 shall relieve a defaulting underwriter from liability for its default, provided that the foregoing shall not reduce the Company’s obligation to mitigate damages in the event of such a default.

     (b) If, after giving effect to any arrangements for the purchase of the Debentures of a defaulting Underwriter or Underwriters by the Representative and the Company as provided in subsection (a) above, the aggregate principal amount of such Debentures which remains unpurchased does not exceed one eleventh of the aggregate principal amount of all the Debentures, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Debentures which such Underwriter agreed to purchase hereunder and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Debentures which such Underwriter agreed to purchase hereunder) of the Debentures of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

     (c) If, after giving effect to any arrangements for the purchase of the Debentures of a defaulting Underwriter or Underwriters by the Representative and the Company as provided in subsection (a) above, the aggregate principal amount of Debentures which remains unpurchased exceeds one eleventh of the aggregate principal amount of all the Debentures, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Debentures of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

     11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Underwriters,

-23-

as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Debentures.

     12. If this Agreement shall be terminated pursuant to Section 10 hereof, the Company shall not then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason, the Debentures are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Underwriters through the Representative for all reasonable out of pocket expenses approved in writing by the Representative, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Debentures, but the Company shall then be under no further liability to any Underwriter except as provided in Sections 7 and 9 hereof.

     13. In all dealings hereunder, the Representative shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representative.

     All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representative in care of Goldman, Sachs & Co., One New York Plaza, 42nd Floor, New York, New York 10004, Attention: Registration Department; and if to the Company shall be sent by mail to the address of the Company set forth in the Registration Statement, Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by Goldman, Sachs & Co. upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

     14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Debentures from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

-24-

     15. Time shall be of the essence of this Agreement.

     16. The Company acknowledges and agrees that (i) the purchase and sale of the Debentures pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

     17. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.

     18. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

     19. The Company and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

     20. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument.

     21. Notwithstanding anything herein to the contrary, the Company is authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.

-25-

     If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by the Representative, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters and the Company. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof.

Very truly yours, The Progressive Corporation
By:	/s/ Thomas A. King
	Name:	Thomas A. King
	Title:	Vice President and Treasurer

Accepted as of the date hereof:
Goldman, Sachs & Co.
By:	/s/ Goldman, Sachs & Co.
	(Goldman, Sachs & Co.)
	On behalf of each of the Underwriters

-26-

SCHEDULE I

	Principal
	Amount of
	Debentures to
Underwriter	be Purchased
Goldman, Sachs & Co.	$	700,000,000
J.P. Morgan Securities Inc.	$	150,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated	$	150,000,000
Total	$	1,000,000,000

-1-

SCHEDULE II

     (a) 

          1. The Progressive Corporation 2007 Investor Relations Meetings presentation filed June 18, 2007.

          2. Press Release of The Progressive Corporation furnished on Form 8-K on June 14, 2007.

          3. Final Term Sheet dated June 18, 2007.

     (b) Additional Documents Incorporated by Reference:

          N/A

-2-

ANNEX I

DESCRIPTION OF COMFORT LETTER

     Pursuant to Section 8(d) of the Underwriting Agreement, the accountants shall furnish letters to the Underwriters to the effect that:

     (i) They are independent certified public accountants with respect to the Company and its subsidiaries within the meaning of the Act and the applicable published rules and regulations thereunder;

     (ii) In their opinion, the financial statements and any supplementary financial information and schedules examined by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act or the Exchange Act, as applicable, and the related published rules and regulations thereunder; and, if applicable, they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the consolidated interim financial statements, and/or condensed financial statements derived from audited financial statements of the Company for the periods specified in such letter, as indicated in their reports thereon, copies of which have been separately furnished to the representatives of the Underwriters (the “Representative”) and are attached hereto;

     (iii) They have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the unaudited condensed consolidated statement of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus and/or included in the Company’s quarterly report on Form 10-Q incorporated by reference into the Prospectus as indicated in their reports thereon copies of which have been separately furnished to the Representative; and on the basis of specified procedures including inquiries of officials of the Company who have responsibility for financial and accounting matters regarding whether the unaudited condensed consolidated financial statements referred to in paragraph (vi)(A)(i) below comply as to form in the related in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations, nothing came to their attention that caused them to believe that the unaudited condensed consolidated financial statements do not comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations;

-1-

     (iv) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Company for the five most recent fiscal years included in the Prospectus and included or incorporated by reference in Item 6 of the Company’s Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for such five fiscal years which were included or incorporated by reference in the Company’s Annual Reports on Form 10-K for such fiscal years;

     (v) On the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that:

     (A) (i) the unaudited condensed consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Prospectus and/or included or incorporated by reference in the Company’s Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act and the related published rules and regulations, or (ii) any material modifications should be made to the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included or incorporated by reference in the Company’s Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus, for them to be in conformity with generally accepted accounting principles;

     (B) any other unaudited income statement data and balance sheet items included in the Prospectus do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included

-2-

or incorporated by reference in the Company’s Annual Report on Form 10-K for the most recent fiscal year;

     (C) the unaudited financial statements which were not included in the Prospectus but from which were derived the unaudited condensed financial statements referred to in clause (A) and any unaudited income statement data and balance sheet items included in the Prospectus and referred to in clause (B) were not determined on a basis substantially consistent with the basis for the audited financial statements included or incorporated by reference in the Company’s Annual Report on Form 10-K for the most recent fiscal year;

     (D) any unaudited pro forma consolidated condensed financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements;

     (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn outs of performance shares and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus) or any increase in the consolidated long term debt of the Company and its subsidiaries, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and

     (F) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in clause (E) there were any decreases in consolidated net premiums earned or other items specified by the Representative, or any increases in any items specified by the Representative, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representative, except in each case for increases or decreases which the Prospectus

-3-

discloses have occurred or may occur or which are described in such letter; and

     (vi) In addition to the examination referred to in their report(s) included or incorporated by reference in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (vi) above, they have carried out certain specified procedures, not constituting an examination in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representative which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Prospectus (excluding documents incorporated by reference) or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representative or in documents incorporated by reference in the Prospectus specified by the Representative, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries and have found them to be in agreement.

-4-

EX-4.2

Exhibit 4.2

FIRST SUPPLEMENTAL INDENTURE

between

THE PROGRESSIVE CORPORATION

and

THE BANK OF NEW YORK TRUST COMPANY, N.A.

as Trustee

Supplemental to Junior Subordinated Indenture

dated as of June 21, 2007

TABLE OF CONTENTS

		Page
ARTICLE ONE	Definitions		1
Section 1.01.	Definitions		1
ARTICLE TWO	General Terms and Conditions of the Debentures		10
Section 2.01.	Designation, Principal Amount and Authorized Denominations		10
Section 2.02.	Repayment		11
Section 2.03.	Form		14
Section 2.04.	Rate of Interest; Interest Payment Date		14
Section 2.05.	Interest Deferral		15
Section 2.06.	Alternative Payment Mechanism		16
Section 2.07.	Events of Default		20
Section 2.08.	Securities Registrar; Paying Agent; Delegation of Trustee Duties		23
Section 2.09.	Limitation on Claims in the Event of Bankruptcy,
	Insolvency or Receivership		24
Section 2.10.	Location of Payment		24
Section 2.11.	No Sinking Fund		24
Section 2.12.	Subordination		25
Section 2.13.	Defeasance		25
ARTICLE THREE	Covenants		25
Section 3.01.	Dividend and Other Payment Stoppages		25
Section 3.02.	Additional Limitation on Deferral Over One Year		26
ARTICLE FOUR	Redemption of the Debentures		27
Section 4.01.	Redemption Price		27
Section 4.02.	Limitation on Partial Redemption		27
ARTICLE FIVE	Repayment of Debentures		27
Section 5.01.	Repayments		27
Section 5.02.	Selection of the Debentures to be Repaid		27
Section 5.03.	Notice of Repayment		28
Section 5.04.	Deposit of Repayment Amount		28
Section 5.05.	Repayment of Debentures		29
ARTICLE SIX	Original Issue of Debentures		29
Section 6.01.	Calculation of Original Issue Discount		29
ARTICLE SEVEN	Supplemental Indentures		29
Section 7.01.	Supplemental Indentures Without Consent of Holders		29
ARTICLE EIGHT	Miscellaneous		30
Section 8.01.	Effectiveness		30
Section 8.02.	Successors and Assigns		30
Section 8.03	Effect of Recitals		31
Section 8.04.	Ratification of Indenture		31
Section 8.05.	Governing Law		31
Section 8.06.	Severability		31

-i-

FIRST SUPPLEMENTAL INDENTURE

     First Supplemental Indenture, dated as of June 21, 2007 (the “First Supplemental Indenture”), between The Progressive Corporation, an Ohio corporation (the “Issuer”), having its principal office at 6300 Wilson Mills Road, Mayfield Village, Ohio 44143, and The Bank of New York Trust Company, N.A., a national banking association, as trustee (hereinafter called the “Trustee”).

RECITALS OF THE ISSUER

     The Issuer and the Trustee entered into a Junior Subordinated Indenture, dated as of June 21, 2007 (the “Indenture”).

     Section 8.1 of the Indenture provides that the Issuer and the Trustee, without the consent of any Holder, may enter into a supplemental indenture to establish the form or terms of Securities of any series as permitted by Section 2.3 thereof.

     Pursuant to Section 2.3 of the Indenture, the Issuer desires to provide for the establishment of a series of Securities under the Indenture, and the form and terms thereof, as hereinafter set forth.

     The Issuer has requested that the Trustee execute and deliver this First Supplemental Indenture. The Issuer has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate pursuant to Section 2.4 of the Indenture to the effect, among other things, that all conditions precedent provided for in the Indenture to the Trustee’s execution and delivery of this First Supplemental Indenture have been complied with. All acts and things necessary have been done and performed to make this First Supplemental Indenture enforceable in accordance with its terms, and the execution and delivery of this First Supplemental Indenture has been duly authorized in all respects.

     NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debentures (as herein defined) by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debentures, as follows:

ARTICLE ONE
Definitions

Section 1.01. Definitions

     For all purposes of this First Supplemental Indenture, except as otherwise expressly provided herein or unless the context otherwise requires:

          (a) Terms defined in the Indenture have the same meanings when used in this First Supplemental Indenture unless otherwise defined herein.

          (b) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular.

          (c) The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision, and any reference to an Article, Section or other subdivision refers to an Article, Section or other subdivision of this First Supplemental Indenture unless otherwise specified.

          (d) Any reference herein to “interest” shall include any Additional Interest, except where the context requires otherwise.

     In addition, the following terms used in this First Supplemental Indenture have the following respective meanings:

     “Additional Interest” means the interest, if any, that shall accrue on any interest on the Debentures the payment of which has not been made on the applicable Interest Payment Date, compounded on each subsequent Interest Payment Date.

     “Applicable Spread” means (i) with respect to a redemption of all outstanding Debentures in connection with a Tax Event, 0.50%, (ii) with respect to a redemption of all outstanding Debentures in connection with a Rating Agency Event, 0.50% and (iii) in all other cases, 0.25%.

     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed, (iii) a day on which the corporate trust office of the Trustee is closed for business or (iv) on or after June 15, 2017, a day that is not a London Banking Day.

     “Business Combination” means any transaction that is subject to Section 9.1 of the Indenture.

     “Calculation Agent” means, with respect to the Debentures, The Bank of New York Trust Company, N.A., or any other firm appointed by the Issuer, acting as calculation agent in respect of the Debentures.

     “Commercially Reasonable Efforts” to sell Qualifying Capital Securities means commercially reasonable efforts to complete the offer and sale of Qualifying Capital Securities to Persons other than Subsidiaries in public offerings or private placements, provided that the Issuer shall not be considered to have made Commercially Reasonable Efforts to effect a sale of Qualifying Capital Securities if it determines not to pursue or complete such sale solely due to pricing, coupon, dividend rate or dilution considerations.

     “Common Equity Issuance Cap” has the meaning specified in Section 2.06(a).

-2-

     “Common Shares” means (i) the Issuer’s common shares, including common shares issued pursuant to any dividend reinvestment plan or the Issuer’s employee benefit plans, (ii) a security of the Issuer ranking upon the Issuer’s liquidation, dissolution or winding up junior to Qualifying Non-Cumulative Preferred Shares and pari passu with the common shares that tracks the performance of, or relates to the results of, a business, unit or division of the Issuer or its Subsidiaries, and (iii) any securities issued in exchange for the securities described in clause (i) or (ii) above in connection with a merger, consolidation, binding share exchange, business combination, recapitalization or other similar event.

     “Current Stock Market Price” means, with respect to the Common Shares on any date, (i) the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date (a) as reported in composite transactions by the New York Stock Exchange or (b) if the Common Shares are not then listed on the New York Stock Exchange on such date, as reported by the principal U.S. securities exchange on which the Common Shares are traded or quoted or (ii) if the Common Shares are not listed on any U.S. securities exchange on such date, the last quoted bid price for the Common Shares in the over-the-counter market on such date as reported by the National Quotation Bureau or similar organization or (iii) if the Common Shares are not so quoted, the average of the mid-point of the last bid and ask prices for the Common Shares on such date from each of at least three nationally recognized independent investment banking firms selected by the Issuer for this purpose.

     “Date of QCS Notice” has the meaning specified in Section 2.02(a).

     “Debentures” has the meaning specified in Section 2.01(a).

     “Deferral Period” means the period commencing on an Interest Payment Date with respect to which the Issuer elects to defer interest pursuant to Section 2.05 and ending on the earlier of (i) the tenth anniversary of that Interest Payment Date or (ii) the next Interest Payment Date on which the Issuer has paid all deferred interest and all other accrued interest on the Debentures.

     “Depositary” means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, The Depository Trust Company (or any successor thereto).

     “Eligible Proceeds” means, for each relevant Interest Payment Date, the net proceeds (after deducting underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance or sale) the Issuer has received during the 180-day period prior to such Interest Payment Date from the issuance or sale of Qualifying APM Securities (excluding sales of Qualifying Non-Cumulative Preferred Shares and Mandatorily Convertible Preferred Shares in excess of the Preferred Shares Issuance Cap) to Persons that are not Subsidiaries.

     “Final Maturity Date” has the meaning specified in Section 2.02(b).

     “First Supplemental Indenture” means this instrument as originally executed or as it from time to time may be supplemented or amended by one or more agreements supplemental hereto.

-3-

     “Fixed Rate Portion” has the meaning specified in Section 2.06(a).

     “Global Security” means a Security evidencing all or part of a series of Debentures, issued to the Depositary or its nominee for such series, and registered in the name of such Depositary or its nominee.

     “Indenture” has the meaning specified in the Recitals.

     “Intent-Based Replacement Disclosure” has the meaning specified in the Replacement Capital Covenant.

     “Interest Payment Dates” has the meaning specified in Section 2.04.

     “Interest Period” means a Semi-Annual Interest Period or a Quarterly Interest Period, as the case may be.

     “Issuer” has the meaning specified in the Recitals.

     “LIBOR Determination Date” means the second London Banking Day immediately preceding the first day of the relevant Quarterly Interest Period.

     “London Banking Day” means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England.

     “Make-Whole Redemption Price” means, with respect to a redemption of the Debentures in whole or in part, the present value of a principal payment on June 15, 2017 and scheduled payments of interest that would have accrued from the Redemption Date to June 15, 2017 on the Debentures being redeemed, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate (as determined and provided to the Issuer by the Treasury Dealer) plus the Applicable Spread, plus accrued and unpaid interest to the Redemption Date.

     “Mandatorily Convertible Preferred Shares” means Preferred Shares with (i) no prepayment obligation of the liquidation preference on the part of the Issuer, whether at the election of the holders or otherwise, and (ii) a requirement that the Preferred Shares mandatorily convert into Common Shares within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of such Preferred Shares.

     “Market Disruption Event” means, with respect to the issuance or sale of Qualifying Capital Securities pursuant to Section 2.02 or Qualifying APM Securities pursuant to Section 2.06, the occurrence or existence of any of the following events or set of circumstances:

          (i) Trading in securities generally, or in shares of the Issuer’s securities specifically, on the New York Stock Exchange or any other national securities exchange or in the over-the-counter market on which Qualifying APM Securities or Qualifying Capital Securities, as the case may be, are then listed or traded shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or market by the United States Securities and Exchange

-4-

Commission, by the relevant exchange or by any other regulatory agency or governmental body having jurisdiction such that trading shall have been materially disrupted;

          (ii) The Issuer would be required to obtain the consent or approval of the Issuer’s shareholders or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue or sell Qualifying APM Securities pursuant to Section 2.06 or to issue Qualifying Capital Securities pursuant to Section 2.02, as the case may be, and such consent or approval has not yet been obtained notwithstanding the Issuer’s commercially reasonable efforts to obtain such consent or approval;

          (iii) A banking moratorium shall have been declared by the federal or state authorities of the United States such that the issuance of, or market trading in, the Qualifying APM Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased;

          (iv) A material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States such that the issuance of, or market trading in, the Qualifying APM Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased;

          (v) The United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or international calamity or crisis such that, in any such case, the issuance of, or market trading in, the Qualifying APM Securities or the Qualifying Capital Securities, as applicable, has been disrupted or ceased;

          (vi) There shall have occurred such a material adverse change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such that the issuance of, or market trading in, Qualifying APM Securities or Qualifying Capital Securities, as applicable, shall have been materially disrupted;

          (vii) An event occurs and is continuing as a result of which the offering document for such offer and sale of Qualifying APM Securities or Qualifying Capital Securities, as the case may be, in the reasonable judgment of the Issuer, would contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and either (x) the disclosure of that event at such time, in the reasonable judgment of the Issuer, is not otherwise required by law and would have a material adverse effect on the business of the Issuer or (y) the disclosure relates to a previously undisclosed proposed or pending material business transaction, provided that no single suspension period contemplated by this clause (vii) shall exceed 90 consecutive days and multiple suspension periods contemplated by this clause (vii) shall not exceed an aggregate of 180 days in any 360-day period; or

          (viii) The Issuer reasonably believes that the offering document for such offer and sale of Qualifying APM Securities or Qualifying Capital Securities, as the case may be, would not be in compliance with a rule or regulation of the United States Securities and

-5-

Exchange Commission (for reasons other than those referred to in clause (vii) above), and the Issuer determines it is unable to comply with such rule or regulation or such compliance is unduly burdensome, provided that no single suspension period contemplated by this clause (viii) shall exceed 90 consecutive days and multiple suspension periods contemplated by this clause (viii) shall not exceed an aggregate of 180 days in any 360-day period.

     “Pari Passu Securities” means debt securities of the Issuer that rank in right of payment upon liquidation on a parity with the Debentures, and includes the Debentures.

     “Permitted Remedies” has the meaning specified in the Replacement Capital Covenant.

     “Preferred Shares” means the preferred shares of the Issuer.

     “Preferred Shares Issuance Cap” has the meaning specified in Section 2.06(a).

     “Qualifying APM Securities” means Common Shares, Qualifying Non-Cumulative Preferred Shares, Qualifying Warrants and Mandatorily Convertible Preferred Shares, provided that the Issuer may amend this definition in accordance with Section 2.06(e).

     “Qualifying Capital Securities” has the meaning specified in the Replacement Capital Covenant.

     “Qualifying Non-Cumulative Preferred Shares” means the Issuer’s non-cumulative Preferred Shares that (w) rank pari passu with or junior to all of the Issuer’s other Preferred Shares, (x) are perpetual, (y) are subject to (a) a Qualifying Replacement Capital Covenant or (b) both (i) mandatory suspension of dividends in the event the Issuer breaches certain financial metrics specified in the offering documents relating to such Preferred Shares and (ii) Intent-Based Replacement Disclosure, and (z) as to which, in both clauses (a) and (b) the transaction documents for such Preferred Shares shall provide for no remedies as a consequence of non-payment of distributions other than Permitted Remedies.

     “Qualifying Replacement Capital Covenant” has the meaning specified in the Replacement Capital Covenant.

     “Qualifying Warrants” means any net share-settled warrants to purchase Common Shares (i) which have an exercise price at the time of issuance greater than the Current Shares Market Price and (ii) which the Issuer is not entitled to redeem for cash and the holders of which are not entitled to require the Issuer to purchase for cash in any circumstances.

     “Quarterly Interest Payment Date” shall have the meaning specified in Section 2.04.

     “Quarterly Interest Period” means the period beginning on and including June 15, 2017 and ending on but excluding the next Interest Payment Date and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date.

     “Rating Agency Event” means that any nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Securities Exchange Act of 1934 that

-6-

then publishes a rating for the Issuer (a “rating agency”) amends, clarifies or changes the criteria it uses to assign equity credit to securities such as the Debentures, which amendment, clarification or change results in:

(i)	the shortening of the length of time the Debentures are assigned a particular level of equity credit by that rating agency as compared to the length of time they would have been assigned that level of equity credit by that rating agency or its predecessor on the issue date of the Debentures, or
(ii)	the lowering of the equity credit (including up to a lesser amount) assigned to the Debentures by that rating agency as compared to the equity credit assigned by that rating agency or its predecessor on the issue date of the Debentures.

     “Redemption Date” has the meaning specified in Section 4.01.

     “Redemption Price” has the meaning specified in Section 4.01.

     “Regular Record Date” means (i) with respect to a Semi-Annual Interest Payment Date, June 1 or December 1, as the case may be, immediately preceding the relevant Semi-Annual Interest Payment Date, and (ii) with respect any Quarterly Interest Payment Date, March 1, June 1, September 1 and December 1, as the case may be, immediately preceding the relevant Quarterly Interest Payment Date.

     “Repayment Date” means the Scheduled Maturity Date, each Quarterly Interest Payment Date thereafter until the Issuer shall have repaid or redeemed all of the Debentures and, to the extent that any principal is repaid thereon, the Final Maturity Date.

     “Replacement Capital Covenant” means the Replacement Capital Covenant, dated as of June 21, 2007, by the Issuer, as the same may be amended or supplemented from time to time in accordance with the provisions thereof and Section 2.02(a)(vii) hereof.

     “Responsible Officer of the Paying Agent” means, with respect to the Trustee in its capacity as Paying Agent, any officer within the corporate trust department (or any successor department, unit or division) who has direct responsibility for the administration of the Paying Agent functions of the Indenture.

     “Reuters Page LIBOR01” means the display so designated on the Reuters 3000 Xtra (or such other page as may replace that page on that service, or such other service as may be nominated by the Issuer as the information vendor, for the purpose of displaying rates or prices comparable to the London Interbank Offered Rate for U.S. dollar deposits).

     “Scheduled Maturity Date” has the meaning specified in Section 2.02(a).

     “Securities Registrar” means, with respect to the Debentures, The Bank of New York Trust Company, N.A., or any other firm appointed by the Issuer, acting as securities registrar for the Debentures.

-7-

     “Securities Registrar Office” means the office of the applicable Securities Registrar at which at any particular time its corporate agency business shall principally be administered, which office at the date hereof is the Corporate Trust Office of the Trustee.

     “Semi-Annual Interest Payment Date” has the meaning specified in Section 2.04.

     “Semi-Annual Interest Period” means the period beginning on and including June 21, 2007 and ending on but excluding the first Interest Payment Date thereafter and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date until June 15, 2017.

     “Share Cap Amount” has the meaning specified in Section 2.06(a).

     “Shares Available for Issuance” has the meaning specified in Section 2.06(a).

     “Subsidiary” means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Issuer. For the purposes of this definition, “voting stock” means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

     “Tax Event” means the receipt by the Issuer of an opinion of counsel experienced in such matters to the effect that, as a result of any:

(i)	amendment to or change (including any officially announced proposed change) in the laws or regulations of the United States or any political subdivision or taxing authority of or in the United States that is effective on or after June 21, 2007;
(ii)	official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced on or after June 21, 2007; or
(iii)	threatened challenge asserted in connection with an audit of the Issuer or any of its Subsidiaries, or a threatened challenge asserted in writing against the Issuer, any of its Subsidiaries or any tax payer that has raised capital through the issuance of securities that are substantially similar to the Debentures and which securities, as of their issue date, were rated investment grade by at least one nationally recognized statistical rating organization within the meaning of Rule 15c3-1 under the U.S. Securities Exchange Act of 1934, as amended,

there is more than an insubstantial increase in the risk that interest payable by the Issuer on the Debentures is not, or within 90 days of the date of such opinion will not be, deductible by the Issuer, in whole or in part, for United States federal income tax purposes.

     “Three-Month LIBOR” means, with respect to any Quarterly Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period commencing on the first day of that Quarterly Interest Period that appears on Reuters Page

-8-

LIBOR01 as of 11:00 a.m., London time, on the LIBOR Determination Date for that Quarterly Interest Period. If such rate does not appear on Reuters Page LIBOR01, Three-Month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a three-month period commencing on the first day of that Quarterly Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent (after consultation with the Issuer), at approximately 11:00 a.m., London time, on the LIBOR Determination Date for that Quarterly Interest Period. The Calculation Agent will request the principal London office of each of these banks to provide a quotation of its rate. If at least two such quotations are provided, Three-Month LIBOR with respect to that Quarterly Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of such quotations. If fewer than two quotations are provided, Three-Month LIBOR with respect to that Quarterly Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks in New York City selected by the Calculation Agent (after consultation with the Issuer), at approximately 11:00 a.m., New York City time, on the first day of that Quarterly Interest Period for loans in U.S. dollars to leading European banks for a three-month period commencing on the first day of that Quarterly Interest Period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, Three-Month LIBOR for that Quarterly Interest Period will be the same as Three-Month LIBOR as determined for the previous Quarterly Interest Period or, in the case of the Quarterly Interest Period beginning on June 15, 2017, 5.360%. The establishment of Three-Month LIBOR for each Quarterly Interest Period by the Calculation Agent shall be final and binding (in the absence of manifest error).

     “Trading Day” means a day on which Common Shares are traded on the New York Stock Exchange, or if not then listed on the New York Stock Exchange, a day on which Common Shares are traded or quoted on the principal U.S. securities exchange on which it is listed or quoted, or if not then listed or quoted on a U.S. securities exchange, a day on which Common Shares are quoted in the over-the-counter market.

     “Treasury Dealer” means J.P. Morgan Securities Inc. and Goldman, Sachs & Co. (or their successors) or, if J.P. Morgan Securities Inc. and Goldman, Sachs & Co., (or their successors) refuse to act as Treasury Dealer for the purpose of determining the Make-Whole Redemption Price or ceases to be a primary U.S. government securities dealer, another nationally recognized investment banking firm that is a primary U.S. government securities dealer specified by the Issuer to act as Treasury Dealer for the purpose of determining the Make-Whole Redemption Price.

     “Treasury Price” means, with respect to a Redemption Date, the bid-side price for the Treasury Security as of the third Trading Day preceding the Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York on that Trading Day and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities”, as determined by the Treasury Dealer, except that: (i) if that release (or any successor release) is not published or does not contain that price information on that Trading Day or (ii) if the Treasury Dealer determines that the price information is not reasonably reflective of the actual bid-side price of the Treasury Security prevailing at 3:30 p.m.,

-9-

New York City time, on that Trading Day, then Treasury Price will instead mean the bid-side price for the Treasury Security at or around 3:30 p.m., New York City time, on that Trading Day (expressed on a next Trading Day settlement basis) as determined by the Treasury Dealer through such alternative means as are commercially reasonable under the circumstances.

     “Treasury Rate” means, with respect to a Redemption Date, the semi-annual equivalent yield to maturity of the Treasury Security that corresponds to the Treasury Price (calculated by the Treasury Dealer in accordance with standard market practice and computed as of the second Trading Day preceding the Redemption Date).

     “Treasury Security” means the United States Treasury security that the Treasury Dealer determines would be appropriate to use, at the time of determination and in accordance with standard market practice, in pricing the Debentures being redeemed in a tender offer based on a spread to United States Treasury yields.

ARTICLE TWO
General Terms and Conditions of the Debentures

Section 2.01. Designation, Principal Amount and Authorized Denominations

          (a) Designation

          Pursuant to Section 2.3 of the Indenture, there is hereby established a series of Securities of the Issuer designated as the 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “Debentures”), the principal amount of which to be issued shall be in accordance with Section 2.01(b) hereof and as set forth in any order executed by the Issuer for the authentication and delivery of Debentures pursuant to the Indenture, and the form and terms of which shall be as set forth hereinafter.

          (b) Principal Amount; Additional Debentures

          Debentures in an initial aggregate principal amount of $1,000,000,000, upon execution of this First Supplemental Indenture, shall be executed by the Issuer and delivered to the Trustee, and the Trustee shall thereupon authenticate and deliver said Debentures in accordance with an order executed by the Issuer. At any time and from time to time after the execution and delivery of this First Supplemental Indenture, without the consent of any Holders, the Issuer may execute and deliver additional Debentures to the Trustee for authentication, together with an order executed by the Issuer for the authentication and delivery of such additional Debentures, so long as such additional Debentures are fungible for U.S. tax purposes with the Debentures issued as of the date of this First Supplemental Indenture. Any additional Debentures so issued shall be governed by this First Supplemental Indenture and shall rank equally and ratably in right of payment with the Debentures issued on the date of this First Supplemental Indenture and, together with the Debentures issued as of the date of this First Supplemental Indenture, shall be treated as a single series of Debentures for all purposes.

-10-

          (c) Authorized Denominations

          The denominations in which Debentures shall be issuable is $1,000 principal amount and integral multiples thereof.

Section 2.02. Repayment

          (a) Scheduled Maturity Date

               (i) The principal amount of, and all accrued and unpaid interest on, the Debentures shall be payable in full on June 15, 2037 or, if such day is not a Business Day, the following Business Day (the “Scheduled Maturity Date”) to the extent of net proceeds received by the Issuer to the Date of QCS Notice from the issuance of Qualifying Capital Securities as contemplated by Section 2.02(a)(iv). In the event the Issuer has delivered an Officers’ Certificate to the Trustee pursuant to clause (v) of this Section 2.02(a) in connection with the Scheduled Maturity Date, (x) the principal amount of Debentures payable on the Scheduled Maturity Date, if any, shall be the principal amount set forth in the notice of repayment, if any, accompanying such Officers’ Certificate, (y) such principal amount of Debentures shall be repaid on the Scheduled Maturity Date pursuant to Article 5 hereof, and (z) subject to clause (ii) of this Section 2.02(a), the remaining Debentures shall remain outstanding and shall be payable on the immediately succeeding Quarterly Interest Payment Date to the extent of net proceeds received by the Issuer to the Date of QCS Notice, without duplication of prior amounts received, of the issuance of Qualifying Capital Securities as contemplated by Section 2.02(a)(iv), and to like extent on each Quarterly Interest Payment Date thereafter until the Debentures are paid in full, or such earlier date on which they are redeemed pursuant to Article 4 hereof or become due and payable pursuant to Section 5.1 of the Indenture.

               (ii) In the event the Issuer has delivered an Officers’ Certificate to the Trustee pursuant to clause (v) of this Section 2.02(a) in connection with any Quarterly Interest Payment Date, (x) the principal amount of the Debentures payable on such Quarterly Interest Payment Date shall be the principal amount set forth in the notice of repayment, if any, accompanying such Officers’ Certificate, (y) such principal amount shall be repaid on such Quarterly Interest Payment Date pursuant to Article 5 hereof to the extent of net proceeds received by the Issuer to the Date of QCS Notice, without duplication of prior amounts received, of the issuance of Qualifying Capital Securities as contemplated by Section 2.02 (a)(iv), and (z) the remaining Debentures shall remain outstanding and shall be payable on the immediately succeeding Quarterly Interest Payment Date to the extent of net proceeds received by the Issuer to the Date of QCS Notice, without duplication of prior amounts received, of the issuance of Qualifying Capital Securities as contemplated by Section 2.02 (a)(iv), and on each Quarterly Interest Payment Date thereafter to like extent until the Debentures are paid in full, or such earlier date on which they are redeemed pursuant to Article 4 hereof or become due and payable pursuant to Section 5.1 of the Indenture.

               (iii) The obligation of the Issuer to repay the Debentures pursuant to this Section 2.02(a) on any date prior to the Final Maturity Date shall be subject to (x) its obligations under Article Thirteen of the Indenture to the holders of Senior Indebtedness and

-11-

(y) its obligations under Section 2.05 hereof with respect to the payment of deferred interest on the Debentures.

               (iv) Until the Debentures are paid in full:

                    (A) the Issuer shall use Commercially Reasonable Efforts, subject to a Market Disruption Event, to raise sufficient net proceeds from the issuance of Qualifying Capital Securities during a 180-day period ending on the date, not more than 15 and not less than ten Business Days prior to the Scheduled Maturity Date, on which the Issuer delivers the notice required by clause (v) of this Section 2.02(a) and Section 5.01, to permit repayment of the Debentures in full on the Scheduled Maturity Date pursuant to clause (i) of this Section 2.02(a); and

                    (B) if the Issuer is unable for any reason to raise sufficient net proceeds from the issuance of Qualifying Capital Securities to permit repayment in full of the Debentures on the Scheduled Maturity Date or any subsequent Quarterly Interest Payment Date, the Issuer shall use Commercially Reasonable Efforts, subject to a Market Disruption Event, to raise sufficient net proceeds from the issuance of Qualifying Capital Securities during a 90-day period ending on the date, not more than 15 and not less than ten Business Days prior to the following Quarterly Interest Payment Date, on which the Issuer delivers the notice required by clause (v) of this Section 2.02(a) and Section 5.01, to permit repayment of the Debentures in full on such following Quarterly Interest Payment Date pursuant to clause (i) of this Section 2.02(a); and

                    (C) the Issuer shall apply any such net proceeds to the repayment of the Debentures as provided in clause (vi) of this Section 2.02(a).

For the avoidance of doubt, the Issuer is not obligated to sell any securities other than Qualifying Capital Securities to raise net proceeds for repayment of the Debentures pursuant to this Section 2.02(a), or to apply the proceeds of any such sale of other securities to repayment of the Debentures pursuant to this Section 2.02(a), and no Holder of Debentures may require the Issuer to issue any such other securities in satisfaction of its obligations under this Section 2.02(a).

               (v) The Issuer, if it has not raised sufficient net proceeds from the issuance of Qualifying Capital Securities pursuant to clause (iv) above in connection with any Repayment Date, shall deliver an Officers’ Certificate to the Trustee (who shall forward such certificate to each Holder of the Debentures) no more than 15 and no less than ten Business Days prior to such Repayment Date (the date of such delivery, the “Date of QCS Notice”) stating the amount of net proceeds, if any, raised pursuant to clause (iv) above in connection with such Repayment Date. The Issuer shall be excused from its obligation to use Commercially Reasonable Efforts to sell Qualifying Capital Securities pursuant to clause (iv) above if such Officers’ Certificate further certifies that: (A) a Market Disruption Event was existing during the 180-day period preceding the date of such Officers’ Certificate or, in the case of any Repayment Date after the Scheduled Maturity Date, the 90-day period preceding the date of such Officers’ Certificate; and (B) either (x) the Market Disruption Event continued for the entire 180-day period or 90-day period, as the case may be, or (y) the Market Disruption Event continued for only part of the period but the Issuer was unable after Commercially Reasonable Efforts to raise

-12-

sufficient net proceeds during the rest of that period to permit repayment of the Debentures in full. Each Officers’ Certificate delivered pursuant to this clause (v), unless no principal amount of Debentures is to be repaid on the applicable Repayment Date, shall be accompanied by a notice of repayment pursuant to Section 5.01 setting forth the principal amount of the Debentures to be repaid on such Repayment Date, which amount shall be determined after giving effect to clause (vi) of this Section 2.02(a). In the event the Issuer fails to deliver an Officer’s Certificate to the Trustee in the manner described herein in connection with a Repayment Date, the Issuer shall be deemed to have confirmed that sufficient proceeds have been raised from an issuance of Qualifying Capital Securities, and all outstanding principal will be due on such Repayment Date.

               (vi) Payments in respect of the Debentures on any Repayment Date will be applied, first, to deferred interest on the Debentures to the extent of Eligible Proceeds raised pursuant to Section 2.06; second, to pay current interest on the Debentures to the extent not paid from other sources; and third, to repay the outstanding principal amount of the Debentures, subject to a minimum principal amount of $5,000,000 to be repaid on any Repayment Date; provided that if the Issuer is obligated to sell Qualifying Capital Securities and apply the net proceeds therefrom to payments of principal of or interest on any Pari Passu Securities in addition to the Debentures, then on any date and for any period, the amount of net proceeds received by the Issuer from those sales and available for such payments shall be applied to the Debentures and those other Pari Passu Securities having the same scheduled maturity date as the Debentures pro rata in accordance with their respective outstanding principal amounts, and no such payments shall be made to any other such Pari Passu Securities having a later scheduled maturity date until the principal of and all accrued and unpaid interest on the Debentures have been paid in full, except to the extent permitted by Sections 3.01 and 2.06(c). If the Issuer raises less than $5,000,000 of net proceeds from the sale of Qualifying Capital Securities during the relevant 180-day or 90-day period, the Issuer will not be required to repay any Debentures on the Scheduled Maturity Date or the next Quarterly Interest Payment Date, as applicable. On the next Quarterly Interest Payment Date as of which the Issuer has raised at least $5,000,000 of net proceeds during the 180-day period (or, if shorter, the period beginning on the date on which the Issuer last repaid any principal amount of Debentures) ending on the date not more than 15 and not less than ten Business Days prior to such Quarterly Interest Payment Date, on which the Issuer delivers the notice required by clause (v) of this Section 2.02(a) and Section 5.01, the Issuer shall be required to repay a principal amount of the Debentures equal to the entire net proceeds from the sale of Qualifying Capital Securities during such 180-day or shorter period on such Quarterly Interest Payment Date.

               (vii) The Issuer shall not amend the Replacement Capital Covenant to impose additional restrictions on the type or amount of Qualifying Capital Securities that the Issuer may include for purposes of determining whether or to what extent repayment, redemption or purchase of the Debentures is permitted under the Replacement Capital Covenant, except with the consent of Holders of a majority in principal amount of the Debentures. Except as aforesaid, the Issuer may amend or supplement the Replacement Capital Covenant in accordance with its terms and without the consent of the Holders of the Debentures.

-13-

          (b) Final Maturity Date

          The principal of, and all accrued and unpaid interest on, all outstanding Debentures shall be due and payable on June 15, 2067 or, if such date is not a Business Day, the following Business Day (the “Final Maturity Date”), regardless of the amount of Qualifying Capital Securities the Issuer may have issued and sold by that time.

Section 2.03. Form

     The Debentures shall be substantially in the form of Exhibit A attached hereto and shall be issued in fully registered definitive form without interest coupons. Principal of and interest on the Debentures will be payable, the transfer of such Debentures will be registrable and such Debentures will be exchangeable for Debentures bearing identical terms and provisions, and notices and demands to or upon the Issuer in respect of the Debentures and the Indenture may be served, at the Corporate Trust Office of the Trustee, and the Issuer appoints the Trustee as its agent for the foregoing purposes, provided that payment of interest may be made at the option of the Issuer by check mailed to the Holders at such address as shall appear in the Securities Register or by wire transfer in immediately available funds to the bank account number of the Holders specified in writing by the Holders not less than ten days before the relevant Interest Payment Date and entered in the Securities Register by the Securities registrar. The Debentures may be presented for registration of transfer or exchange at the Securities Registrar Office.

     The Debentures initially are issuable solely as Global Securities. The Debentures shall be physically transferred to all beneficial owners in definitive form in exchange for their beneficial interests in a Global Security if the Depositary with respect to such Global Securities notifies the Issuer that it is unwilling or unable to continue as Depositary for such Global Security or if it ceases to be a clearing agency registered under the Exchange Act, as the case may be, and a successor Depositary is not appointed by the Issuer within 90 days of such notice.

Section 2.04. Rate of Interest; Interest Payment Date

          (a) Rate of Interest; Accrual

          The Debentures shall bear interest from and including June 21, 2007, to but excluding, June 15, 2017 (or any earlier date on which the Debentures are redeemed pursuant to Article Four), at the rate of 6.70% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months. Commencing on and including June 15, 2017, the Debentures shall bear interest at an annual rate of Three-Month LIBOR plus 2.0175% (the “Floating Rate”), computed for each Quarterly Interest Period on the basis of a 360-day year and the actual number of days elapsed. Except as provided in Section 2.04(b), interest will accrue from and including each Interest Payment Date to, but excluding, the immediately succeeding Interest Payment Date. Accrued interest that is not paid on the applicable Interest Payment Date, including interest deferred pursuant to Section 2.05, will bear Additional Interest, to the extent permitted by law, at the interest rate in effect from time to time provided in this Section 2.04(a), from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date.

-14-

          (b) Interest Payment Dates

          Subject to the other provisions hereof, accrued interest on the Debentures shall be payable (i) semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2007 and ending on June 15, 2017, or if any such day is not a Business Day, the following Business Day (and no interest shall accrue as a result of such postponement) (each such date, a “Semi-Annual Interest Payment Date”), and (ii) thereafter, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2017, or if any such day is not a Business Day, the following Business Day (each such date, a “Quarterly Interest Payment Date” and, together with Semi-Annual Interest Payment Dates, each, an “Interest Payment Date”), except that if such Business Day is in the immediately succeeding calendar month, such Quarterly Interest Payment Date shall be the immediately preceding Business Day (and interest shall accrue to but excluding the date that interest is actually paid).

          (c) Interest Payment to Holders

          Interest will be payable to the Persons in whose name the Debentures are registered at the close of business on the Regular Record Date immediately preceding the relevant Interest Payment Date, except that interest payable at maturity shall be paid to the Person to whom principal is paid.

Section 2.05. Interest Deferral

          (a) Option to Defer Interest Payments

               (i) Subject to other provisions hereof, the Issuer shall have the right, at any time and from time to time, to defer the payment of interest on the Debentures for one or more consecutive Interest Periods that do not exceed ten years for any single Deferral Period, provided that no Deferral Period shall extend beyond the Final Maturity Date or the earlier repayment or redemption in full of the Debentures. If the Issuer has paid all deferred interest on the Debentures, the Issuer shall have the right to elect to begin a new Deferral Period pursuant to this Section 2.05.

               (ii) At the end of any Deferral Period, the Issuer shall pay all deferred interest on the Debentures (including Additional Interest thereon) to the Persons in whose names the Debentures are registered in the Securities Register at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period.

               (iii) The Issuer may elect to pay interest on any Interest Payment Date during any Deferral Period to the extent permitted by Section 2.05(b).

          (b) Payment of Deferred Interest

          Subject to a Market Disruption Event as described under Section 2.06(b), the Issuer will not pay any deferred interest on the Debentures from any source other than Eligible Proceeds prior to the Final Maturity Date, except at any time that the principal amount of the Debentures has been accelerated and such acceleration has not been rescinded or in the case of a

-15-

Business Combination to the extent described below in Section 2.05(c). Notwithstanding the foregoing, the Issuer may pay current interest from any available funds.

          (c) Business Combination Exception

          If (i) the Issuer is involved in a Business Combination where immediately after its consummation more than 50% of the voting shares of the surviving entity of such Business Combination, or the Person to whom all or substantially all of the Issuer’s properties or assets are conveyed, transferred or leased in such Business Combination, is owned, directly or indirectly, by the shareholders of the other party to such Business Combination, and (ii) at the time the Business Combination is consummated a Deferral Period is continuing, then Section 2.05(b) shall not apply to any payment of deferred interest for such Deferral Period, if such Deferral Period is terminated on the next Interest Payment Date following the date of consummation of the Business Combination.

          (d) Notice of Deferral

          The Issuer shall give written notice of its election to commence or continue any Deferral Period to the Trustee and the Holders of the Debentures at least one Business Day and not more than 60 Business Days before the next Interest Payment Date. Such notice shall be given to the Trustee and each Holder of Debentures at such Holder’s address appearing in the Security Register by first-class mail, postage prepaid.

Section 2.06. Alternative Payment Mechanism

          (a) Obligation to Issue Qualifying APM Securities

          Immediately following the earlier of (i) the first Interest Payment Date following the commencement of a Deferral Period on which the Issuer pays any current interest on the Debentures (which the Issuer may do from any source of funds) or (ii) the fifth anniversary of the commencement of the Deferral Period, the Issuer, subject to the occurrence and continuation of a Market Disruption Event as described under Section 2.06(b) and subject to Section 2.05(b) and Section 2.06(c), shall issue one or more types of Qualifying APM Securities until the Issuer has raised an amount of Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid deferred interest (including compounding interest thereon) on the Debentures. The Issuer shall apply such Eligible Proceeds on the next Interest Payment Date to the payment of deferred interest in accordance with this Section 2.06. The requirement set forth in this Section 2.06(a) shall be in effect until the end of such Deferral Period. Notwithstanding (and as a qualification to) the foregoing:

               (i) the Issuer shall not be required to issue Common Shares or, if the definition of Qualifying APM Securities has been amended to eliminate Common Shares, Qualifying Warrants prior to the fifth anniversary of the commencement of a Deferral Period, to the extent that the number of Common Shares issued or issuable upon exercise of Qualifying Warrants to be applied for purposes of funding deferred interest hereunder, together with the number of Common Shares previously issued or issuable upon exercise of Qualifying Warrants previously issued during such Deferral Period, to the extent still outstanding, and applied for such purposes, would exceed an amount equal to 2% of the total number of issued and

-16-

outstanding Common Shares reported in the Issuer’s then most recent publicly available consolidated financial statements immediately prior to the date of such issuance (the “Common Equity Issuance Cap”); provided that the Common Equity Issuance Cap will cease to apply with respect to a Deferral Period following the fifth anniversary of the commencement of such Deferral Period, at which point the Issuer must pay any deferred interest, regardless of the time at which it was deferred, pursuant to this Section 2.06, subject to a Market Disruption Event and the Share Cap Amount; and provided, further, that if the Common Equity Issuance Cap is reached during a Deferral Period and the Issuer subsequently pays all deferred interest, the Common Equity Issuance Cap will cease to apply with respect to such Deferral Period at the termination of such Deferral Period and will not apply again unless and until the Issuer starts a new Deferral Period;

               (ii) the Issuer shall not be permitted to issue Qualifying Non-Cumulative Preferred Shares or Mandatorily Convertible Preferred Shares to the extent that the net proceeds of any issuance of Qualifying Non-Cumulative Preferred Shares and Mandatorily Convertible Preferred Shares, together with the net proceeds of all prior issuances of Qualifying Non-Cumulative Preferred Shares and Mandatorily Convertible Preferred Shares during the current and all prior Deferral Periods, to the extent still outstanding, would exceed 25% of the aggregate principal amount of the Debentures (the “Preferred Share Issuance Cap”); and

               (iii) notwithstanding the Common Equity Issuance Cap and the Preferred Share Issuance Cap, so long as there are outstanding Debentures, the Issuer shall not be permitted, subject to the provisions of the three immediately succeeding paragraphs, to sell Common Shares, Qualifying Warrants or Mandatorily Convertible Preferred Shares to pay deferred interest on the Debentures if the number of Common Shares to be issued (or which would be issuable upon exercise or conversion of such Qualifying Warrants or Mandatorily Convertible Preferred Shares) to pay such deferred interest would be in excess of an amount (the “Share Cap Amount”, subject to adjustment as provided in the second succeeding paragraph) equal to the greater of (a) 150,000,000 Common Shares plus the number of Common Shares that the Issuer repurchases or that are added to Shares Available for Issuance (as defined below) pursuant to the second paragraph below, in either case after the date of issuance of the Debentures (the “Fixed Rate Portion” of the Share Cap Amount, provided that the Fixed Rate Portion shall not exceed 250,000,000 shares), in the aggregate, during the period the Debentures are outstanding or (b) on any date on which the Issuer is otherwise obligated to sell Qualifying APM Securities pursuant to this Section 2.06, the Issuer’s then effective Shares Available for Issuance; provided that if the issued and outstanding Common Shares are changed into a different number of shares or a different class by reason of any share split, reverse share split, share dividend, reclassification, recapitalization, split-up, combination, exchange of shares or other similar transaction, the Fixed Rate Portion of the Share Cap Amount shall be correspondingly adjusted. If the Issuer issues additional Debentures, then the Share Cap Amount will be increased accordingly.

               The Issuer’s “Shares Available for Issuance” shall be calculated as of any day in two steps. First, from the number of authorized and unissued Common Shares, the maximum number of Common Shares that can be issued under existing options, warrants, convertible securities, any equity-linked contracts, any equity compensation plans for directors,

-17-

officers or employees and other plans and agreements which require or permit the Issuer to issue a determinable number of Common Shares shall be deducted. After deduction of that number of Common Shares from authorized and unissued Common Shares, the remaining available Common Shares shall be allocated on a pro rata basis or on such other basis as the Issuer deems appropriate to the obligation to issue securities under this Section 2.06 and to any other similar commitment that is of an indeterminate nature and under which the Issuer is then required to issue Common Shares. If the Shares Available for Issuance are zero after the two steps described above, there shall be no obligation to obtain additional Common Shares other than the obligation to use commercially reasonable efforts to seek adoption of a shareholder vote at the Issuer’s next occurring annual shareholders’ meeting to increase the number of authorized Common Shares as described below.

               The Issuer in any event shall use its commercially reasonable efforts to increase Shares Available for Issuance to at least 250,000,000 Common Shares by not later than five years after initial issuance of the Debentures. Once Shares Available for Issuance are at least 250,000,000 Common Shares, then the Share Cap Amount shall automatically be amended to mean 250,000,000 Common Shares minus the number of Common Shares, if any, sold prior to such date to settle deferred interest pursuant to this Section 2.06 and thereafter will not be determined in part by reference to Shares Available for Issuance. Promptly after each increase in the Share Cap Amount of 50,000,000 Common Shares, the Issuer will file a current report on Form 8-K with the Securities and Exchange Commission giving notice of such increase.

               In addition to the Issuer’s obligation described in the preceding paragraph, if the Share Cap Amount has been reached and such amount is not sufficient to allow the Issuer to raise sufficient Eligible Proceeds to pay all deferred interest then accrued in full, the Issuer shall use its commercially reasonable efforts to increase the Share Cap Amount (which it may do in its discretion without the approval of any Holder) (1) only to the extent that the Issuer can do so and simultaneously satisfy its future fixed or contingent obligations under other securities and derivative instruments that provide for settlement or payment in Common Shares or (2) if the Issuer cannot increase the Share Cap Amount as contemplated in the preceding clause (1), by requesting the Issuer’s Board of Directors to adopt a resolution for shareholder vote at the next occurring annual shareholders meeting to increase the number of the Issuer’s authorized Common Shares for purposes of satisfying the Issuer’s obligations to pay deferred interest.

               For the avoidance of doubt, (x) once the Issuer reaches the Common Equity Issuance Cap for a Deferral Period, the Issuer shall not be obligated to issue more Common Shares, or if the definition of Qualifying APM Securities has been amended to eliminate Common Shares, more Qualifying Warrants pursuant to this Section 2.06(a) prior to the fifth anniversary of the commencement of such Deferral Period even if the number of outstanding Common Shares subsequently increases, and (y) so long as the definition of Qualifying APM Securities has not been amended to eliminate Common Shares, the sale of Qualifying Warrants to pay deferred interest is an option that may be exercised at the Issuer’s sole discretion, subject to the Common Equity Issuance Cap and the Share Cap Amount, and the Issuer is not obligated to sell Qualifying Warrants or to apply the proceeds of any such sale to pay deferred interest on the Debentures, and no class of holders of the Issuer’s securities, or any other party, may require the Issuer to issue Qualifying Warrants in satisfaction of its obligations under this Section 2.06(a).

-18-

          (b) Market Disruption Event

          Section 2.06(a) shall not apply, with respect to any Interest Payment Date, if the Issuer shall have provided to the Trustee (which the Trustee will promptly forward upon receipt to each Holder of Debentures) no more than 15 and no less than ten Business Days prior to such Interest Payment Date an Officers’ Certificate stating that (i) a Market Disruption Event was existing after the immediately preceding Interest Payment Date and (ii) either (A) the Market Disruption Event continued for the entire period from the Business Day immediately following the preceding Interest Payment Date to the Business Day immediately preceding the date on which such Officers’ Certificate is provided or (B) the Market Disruption Event continued for only part of such period, but the Issuer was unable despite using commercially reasonable efforts to raise sufficient Eligible Proceeds during the rest of that period to pay all accrued and unpaid interest.

          (c) Partial Payment of Deferred Interest

               (i) If the Issuer has raised some but not all Eligible Proceeds necessary to pay all deferred interest on any Interest Payment Date pursuant to this Section 2.06, such Eligible Proceeds shall be applied to pay accrued and unpaid interest on the applicable Interest Payment Date in chronological order based on the date each payment was first deferred, subject to the Common Equity Issuance Cap, the Preferred Shares Issuance Cap and the Share Cap Amount, as applicable, and payment on each installment of deferred interest shall be distributed to Holders of the Debentures on a pro rata basis.

               (ii) If the Issuer has other outstanding Pari Passu Securities under which the Issuer is obligated to sell securities that are Qualifying APM Securities and apply the Eligible Proceeds to the payment of deferred interest or distributions, then on any date and for any period the amount of Eligible Proceeds received by the Issuer from those sales and available for payment of the deferred interest and distributions shall be applied to the Debentures and those other Pari Passu Securities on a pro rata basis up to the Common Equity Issuance Cap or the Preferred Shares Issuance Cap and the Share Cap Amount (or comparable provisions in the instruments governing those other Pari Passu Securities) in proportion to the total amounts that are due on the Debentures and such other Pari Passu Securities.

          (d) Qualifying Warrants

          If the Issuer sells Qualifying Warrants to pay deferred interest to satisfy its obligations pursuant to this Section 2.06, the Issuer shall use commercially reasonable efforts, subject to the Common Equity Issuance Cap, to set the terms of such Qualifying Warrants so as to raise sufficient proceeds from their issuance to pay all deferred interest on the Debentures in accordance with this Section 2.06.

          (e) Qualifying APM Securities Definition Change

          The Issuer may, without the consent of any Holders of the Debentures, amend the definition of Qualifying APM Securities in Section 1.01 to eliminate Common Shares or Qualifying Warrants (but not both) and/or Mandatorily Convertible Preferred Shares from the definition of Qualifying APM Securities if, after the date of the first issuance of any Debentures,

-19-

an accounting standard or interpretive guidance of an existing accounting standard issued by an organization or regulator that has responsibility for establishing or interpreting accounting standards in the United States becomes effective such that there is more than an insubstantial risk that failure to eliminate Common Shares, Qualifying Warrants and/or Mandatorily Convertible Preferred Shares, as the case may be, from the definition would result in a reduction in the Issuer’s earnings per share as calculated in accordance with generally accepted accounting principles in the United States. The Issuer shall send written notice to the Trustee (who shall promptly forward such notice to each Holder of the Debentures) in advance of any such change in the definition of Qualifying APM Securities.

Section 2.07. Events of Default

          (a) Solely for purposes of the Debentures, Section 5.1 (other than the last paragraph thereof) of the Indenture shall be deleted and replaced by the following (capitalized terms used in the following text that are not defined in the Indenture but are defined herein shall have the meanings ascribed to such terms herein):

SECTION 5.1. Events of Default Defined; Acceleration of Maturity; Waiver of Default.

     “Event of Default”, wherever used herein with respect to the Debentures, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

     (1) default in the payment of accrued interest in full on the Debentures on any Interest Payment Date (whether or not such Interest Payment Date commenced a Deferral Period) and the failure of the Issuer on or before the conclusion of a ten-year period following such Interest Payment Date to pay interest (including compounded interest) then accrued in full; or

     (2) default in the payment of principal on the Debentures when due, whether on the Scheduled Maturity Date or the Final Maturity Date, upon redemption, upon a declaration of acceleration, or otherwise, except that the failure to use Commercially Reasonable Efforts to issue Qualifying Capital Securities pursuant to Section 2.02(a)(iv) shall not constitute an Event of Default; or

     (3) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or

-20-

composition of or in respect of the Issuer under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or

     (4) the commencement by the Issuer of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Issuer or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Issuer in furtherance of any such action.

     If the Issuer gives a timely written notice of its election to commence or continue a Deferral Period on any Interest Payment Date (and, if such notice continues a Deferral Period, the Deferral Period has not continued for ten years), then no “default” or “Event of Default” shall be deemed to arise from the Issuer’s non-payment of interest on such Interest Payment Date.

     If the Issuer fails to pay principal on the Debentures on the Scheduled Maturity Date or any subsequent Interest Payment Date as a result of the failure to raise sufficient proceeds from the issuance of Qualifying Capital Securities despite the Issuer’s Commercially Reasonable Efforts to do so pursuant to Section 2.02(a)(iv), such failure shall not constitute a “default” or “Event of Default” hereunder.

     When the Trustee incurs expenses or renders services in connection with an Event of Default specified in clauses (3) and (4) set forth in this Section 5.01, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law.

-21-

     If an Event of Default (other than an Event of Default specified in (3) or (4) above) with respect to the Debentures occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the outstanding Debentures may declare the principal amount of all of the Debentures and interest accrued but unpaid thereon, if any, to be due and payable immediately, by a notice in writing to the Issuer (and to the Trustee if given by the Holders), and upon any such declaration, such amount shall become immediately due and payable. If an Event of Default specified in (3) or (4) above occurs, the principal amount of all the Debentures (or, if any Debentures are Original Issue Discount Securities, such portion of the principal amount of such Debentures as may be specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable.

     At any time after such a declaration of acceleration with respect to the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as provided in Article Five of the Indenture, the Holders of a majority in aggregate principal amount of the outstanding Debentures by written notice to the Issuer and the Trustee, may rescind and annul such declaration and its consequences if:

     (x) the Issuer has paid or deposited with the Trustee a sum sufficient to pay:

     (A) all Additional Interest on all Debentures,

     (B) the principal of (and premium, if any, on) the Debentures which has become due otherwise than by such declaration of acceleration and all interest accrued thereon at the rate or rates prescribed therefor in the Debentures,

     (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in the Debentures, and

     (D) all sums paid or advanced by the Trustee hereunder and the agreed upon compensation and reasonable expenses, disbursements and advances of the Trustee, its agents and counsel; and

     (y) all Events of Default with respect to the Debentures, other than the non-payment of the principal of the Debentures which has become due solely by such declaration of acceleration, have been cured or waived as provided under Section 5.10 of the Indenture.

-22-

     No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon.

          (b) The Trustee shall provide to the Holders of the Debentures such notices as it shall from time to time provide with respect to the Debentures under Section 5.11 of the Indenture. In addition, the Trustee shall provide to the Holders of the Debentures notice of any Event of Default or event that, with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the Debentures within 90 days after the actual knowledge of a Responsible Officer of the Trustee of such Event of Default or other event. However, except in cases of a default or an Event of Default in payment on the Debentures, the Trustee will be protected in withholding the notice if one of its Responsible Officers determines that withholding of the notice is in the interest of such Holders.

          (c) The Issuer’s failure to pay interest on the Debentures during a Deferral Period in accordance with Sections 2.05 and 2.06 of this First Supplemental Indenture shall constitute a default under the Indenture, but in no event shall constitute an Event of Default. Notwithstanding anything to the contrary in the Indenture or this First Supplemental Indenture, the Trustee shall have no obligation to exercise any remedies hereunder unless and except to the extent directed in writing to do so by the Holders of a majority in principal amount of the outstanding Debentures in accordance with and subject to the conditions set forth in Section 5.8 of the Indenture. The Trustee may conclusively assume that Sections 2.05 and 2.06 of this First Supplemental Indenture have been complied with unless the Issuer or the Holders of 25% in aggregate principal amount of the Debentures have given the Trustee written notice to the contrary.

          (d) For the avoidance of doubt, and without prejudice to any other remedies that may be available to the Trustee or the Holders of the Debentures under the Indenture, no breach by the Issuer of any covenant or obligation under the Indenture or the terms of the Debentures or the terms of this First Supplemental Indenture, including the Issuer’s obligations under Section 2.02(a)(iv), Section 2.05 or Section 2.06, shall be an Event of Default with respect to the Debentures, other than those specified in this Section 2.07; and except as provided herein and in the Indenture with respect to Events of Default, and as provided in Section 2.07(c) above, the Trustee shall be under no duty or obligation to exercise any remedies or otherwise take any action in respect of any other default that may occur under or in respect of this First Supplemental Indenture or the Indenture.

Section 2.08. Securities Registrar; Paying Agent; Delegation of Trustee Duties

          (a) The Issuer appoints the Trustee as Securities Registrar and Paying Agent with respect to the Debentures.

          (b) Notwithstanding any provision contained herein, to the extent permitted by applicable law, the Trustee may delegate its duty to provide such notices and to perform such other duties as may be required to be provided or performed by the Trustee under the Indenture, and, to the extent such obligation has been so delegated, the Trustee shall not be responsible for monitoring the compliance of, nor be liable for the default or misconduct of, any such designee.

-23-

Section 2.09. Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership

     Each Holder, by such Holder’s acceptance of the Debentures, agrees that if a bankruptcy event of the Issuer shall occur prior to the redemption or repayment of such Debentures, such Holder shall have no claim for, and thus no right to receive, any deferred interest pursuant to Section 2.05 that has not been paid pursuant to Sections 2.05 and 2.06 to the extent the amount of such interest exceeds the sum of (x) interest that relates to the earliest two years of the portion of the Deferral Period for which interest has not been paid and (y) an amount equal to such Holder’s pro rata share of the excess, if any, of the Preferred Shares Issuance Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative Preferred Shares and unconverted Mandatorily Convertible Preferred Shares that the Issuer has applied to pay deferred interest pursuant to the alternative payment mechanism set forth in Section 2.06; provided that each Holder is deemed to agree that to the extent the claim for deferred interest exceeds the amount set forth in clause (x), the amount it receives in respect of such excess shall not exceed the amount it would have received had the claim for such excess ranked pari passu with the interests of the holders, if any, of Qualifying Non-Cumulative Preferred Shares.

Section 2.10. Location of Payment

     Solely for the purposes of the Debentures, the text of Section 3.1 of the Indenture following the first sentence thereof shall be deleted and replaced by the following (capitalized terms used in the following text that are not defined in the Indenture but are defined herein shall have the meanings ascribed to such terms herein):

     Payment of the principal of (and premium, if any) and interest on the Debentures will be made at the Paying Agent office, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Issuer payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such bank account number as may be designated by the Person entitled thereto as specified in the Securities Register in writing not less than ten days before the relevant Interest Payment Date. The office where the Debentures may be presented or surrendered for payment and the office where the Debentures may be surrendered for transfer or exchange and where notices and demands to or upon the Issuer in respect of the Debentures and the Indenture may be served shall be the Paying Agent office.

Section 2.11. No Sinking Fund

     The Debentures shall not be subject to any sinking fund or analogous provisions.

-24-

Section 2.12. Subordination

     The subordination provisions of Article Thirteen of the Indenture shall apply to the Debentures.

Section 2.13. Defeasance

     The provisions of Section 10.1(B) of the Indenture (relating to discharge of the Indenture) shall apply to the Debentures.

ARTICLE THREE
Covenants

Section 3.01. Dividend and Other Payment Stoppages

     So long as any Debentures remain outstanding, if the Issuer has given notice of its election to defer interest payments on the Debentures but the related Deferral Period has not yet commenced or a Deferral Period is continuing, the Issuer shall not, and shall not permit any Subsidiary to:

          (a) declare or pay any dividends or other distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of capital stock of the Issuer;

          (b) make any payment of principal of, or interest or premium, if any, on, or repay, purchase or redeem any of the Issuer’s debt securities that rank upon the Issuer’s liquidation on a parity with or junior to the Debentures; or

          (c) make any guarantee payments regarding any guarantee issued by the Issuer of securities of any Subsidiary if the guarantee ranks upon the Issuer’s liquidation on a parity with or junior to the Debentures;

provided, however, the restrictions in clauses (a), (b) and (c) above do not apply to:

               (i) any purchase, redemption or other acquisition of shares of its capital stock by the Issuer in connection with;

     (A) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors;

     (B) the satisfaction of the Issuer’s obligations pursuant to any contract entered into in the ordinary course of business prior to the beginning of the applicable Deferral Period;

     (C) a dividend reinvestment or shareholder purchase plan; or

-25-

     (D) the issuance of shares of the Issuer’s capital stock, or securities convertible into or exercisable for such shares, as consideration in an acquisition transaction, the definitive agreement for which is entered into prior to the applicable Deferral Period;

               (ii) any exchange, redemption or conversion of any class or series of the Issuer’s capital stock, or shares of the capital stock of one of its Subsidiaries, for any other class or series of the Issuer’s capital stock, or of any class or series of the Issuer’s indebtedness for any class or series of the Issuer’s capital stock;

               (iii) any purchase of fractional interests in shares of the Issuer’s capital stock pursuant to the conversion or exchange provisions of such shares or the securities being converted or exchanged;

               (iv) any declaration of a dividend in connection with any shareholder rights plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto; or

               (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such stock;

               (vi) (A) any payment of current or deferred interest on Pari Passu Securities that is made pro rata to the amounts due on such Pari Passu Securities; provided that such payments are made in accordance with Section 2.06(c)(ii) to the extent it applies, and (B) any payments of principal or current or deferred interest on Pari Passu Securities that, if not made, would cause the Issuer to breach the terms of the instrument governing such Pari Passu Securities; or

               (vii) any payment of principal in respect of Pari Passu Securities having the same scheduled maturity date as the Debentures, as required under a provision of such other Pari Passu Securities that is substantially the same as the provisions in Section 2.02(a), and that is made on a pro rata basis among one or more series of Pari Passu Securities having such a provision and the Debentures.

Section 3.02. Additional Limitation on Deferral Over One Year

     If any Deferral Period lasts longer than one year, the Issuer may not redeem or purchase any securities of the Issuer that on the Issuer’s bankruptcy or liquidation rank pari passu with or junior to any of its Qualifying APM Securities the proceeds of which were applied, pursuant to Section 2.06, to fund deferred interest on the Debentures during the relevant Deferral Period until the first anniversary of the date on which all deferred interest on the Debentures has been paid. However, if the Issuer is involved in a Business Combination where immediately after its consummation more than 50% of the voting shares of the surviving entity of such Business Combination, or the Person to whom all or substantially all of the Issuer’s properties or assets are conveyed, transferred or leased in such Business Combination, is owned, directly or indirectly, by the shareholders of the other party to such Business Combination, then the immediately

-26-

preceding sentence shall not apply during the Deferral Period that is terminated on the next Interest Payment Date following the date of consummation of such Business Combination.

ARTICLE FOUR
Redemption of the Debentures

Section 4.01. Redemption Price

     The Debentures shall be redeemable in accordance with Article Twelve of the Indenture. The Debentures are redeemable in whole or in part at the option of the Issuer at any time and from time to time after the date of this First Supplemental Indenture. In the case of any redemption, the Redemption Price shall be equal to (1) in the case of any redemption on or after June 15, 2017, 100% of the principal amount of the Debentures being redeemed plus accrued and unpaid interest to the Redemption Date or (2) in the case of any redemption prior to June 15, 2017, the greater of (i) 100% of the principal amount of the Debentures being redeemed plus accrued and unpaid interest to the Redemption Date and (ii) the Make-Whole Redemption Price (the price set forth in (1) or (2), as applicable, the “Redemption Price”). If a proposed redemption of Debentures is not to be for all of the Debentures in whole, the Issuer may not effect such redemption unless at least $25,000,000 aggregate principal amount of the Debentures, excluding any Debentures held by the Issuer or any of its affiliates, remains outstanding after giving effect to such redemption. The date on which Debentures are to be redeemed pursuant hereto is referred to as the “Redemption Date”.

Section 4.02. Limitation on Partial Redemption

     Notwithstanding the foregoing, the Issuer may not redeem the Debentures in part if the principal amount of the Debentures has been accelerated pursuant to Section 5.1 of the Indenture (as amended by Section 2.07(a) hereof) and such acceleration has not been rescinded. In addition, the Issuer may not redeem the Debentures in part unless all accrued and unpaid interest, including deferred interest, has been paid in full on all Outstanding Debentures for all Interest Periods terminating on or before the Redemption Date.

ARTICLE FIVE
Repayment of Debentures

Section 5.01. Repayments

     The Issuer, not more than 15 nor less than ten Business Days prior to each Repayment Date (unless a shorter notice shall be satisfactory to the Trustee), shall notify the Trustee of the principal amount of Debentures to be repaid on such date pursuant to Section 2.02(a).

Section 5.02. Selection of the Debentures to be Repaid

     If less than all the Debentures are to be repaid on any Repayment Date (unless the Debentures are issued in the form of a Global Security), the particular Debentures to be repaid shall be selected not more than 60 days prior to such Repayment Date by the Trustee, from the Outstanding Debentures not previously repaid or called for redemption, by such method as then may be required by law or if no such legal requirement shall then exist, by lot or such other

-27-

method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Debentures, provided that the portion of the principal amount of any Debentures not repaid shall be in an authorized denomination (which shall not be less than the minimum authorized denomination).

     The Trustee shall promptly notify the Issuer in writing of the Debentures selected for partial repayment and the principal amount thereof to be repaid. For all purposes hereof, unless the context otherwise requires, all provisions relating to the repayment of Debentures shall relate, in the case of any Debentures repaid or to be repaid only in part, to the portion of the principal amount of such Debentures which has been or is to be repaid.

Section 5.03. Notice of Repayment

     Notice of repayment shall be given by first-class mail, postage prepaid, mailed not earlier than the 60th day, and not later than the 30^th day, prior to the Repayment Date, to each Holder of Debentures to be repaid, at the address of such Holder as it appears in the Security Register.

     Each notice of repayment shall identify the Debentures to be repaid (including the Debentures’ CUSIP number, if a CUSIP number has been assigned to the Debentures) and shall state:

          (a) the Repayment Date;

          (b) if less than all Outstanding Debentures are to be repaid, the identification (and, in the case of partial repayment, the respective principal amounts) of the particular Debentures to be repaid;

          (c) that on the Repayment Date, the principal amount of the Debentures to be repaid will become due and payable upon each such Debentures or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; and

          (d) the place or places where such Debentures are to be surrendered for payment of the principal amount thereof.

     Notice of repayment shall be given by the Issuer or, if the Issuer timely notifies the Trustee, at the Issuer’s request, by the Trustee in the name and at the expense of the Issuer and shall be irrevocable. The notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holders receive such notice. In any case, a failure to give such notice by mail or any defect in the notice to any Holder of any Debentures designated for repayment as a whole or in part shall not affect the validity of the proceedings for the repayment of any other Debentures.

Section 5.04. Deposit of Repayment Amount

     Prior to 11:00 a.m. New York City time on the Repayment Date specified in the notice of repayment given as provided in Section 5.03, the Issuer will deposit with the Trustee or with one or more Paying Agents (or if the Issuer is acting as its own Paying Agent, the Issuer will segregate and hold in trust as provided in Section 3.4 of the Indenture) an amount of money, in

-28-

immediately available funds, sufficient to pay the principal amount of, and any accrued interest on, all the Debentures which are to be repaid on that date.

Section 5.05. Repayment of Debentures

     If any notice of repayment has been given as provided in Section 5.03, the Debentures or portion of the Debentures with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice. On surrender of such Debentures at a place of payment in said notice specified, the said Debentures or the specified portions thereof shall be paid by the Issuer at their principal amount, together with accrued interest to but excluding the Repayment Date; provided that, except in the case of a repayment in full of all Outstanding Debentures, installments of interest due on or prior to the Repayment Date will be payable to the Holders of such Debentures, registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of Section 3.1 of the Indenture.

     Upon surrender of any Debentures repaid in part only, the Issuer shall execute and the Trustee shall authenticate and make available for delivery to the Holders thereof, at the expense of the Issuer, a new Debenture, of authorized denominations, in aggregate principal amount equal to the portion of the Debentures not repaid and so presented and having the same Scheduled Maturity Date and other terms. If a Global Security is so surrendered, such new Debentures will be a new Global Security.

     If any Debentures required to be repaid shall not be so repaid upon surrender thereof, the principal of such Debentures shall bear interest from the applicable Repayment Date until paid at the rate prescribed therefor in the Debentures.

ARTICLE SIX
Original Issue of Debentures

Section 6.01. Calculation of Original Issue Discount

     If during any calendar year any original issue discount shall have accrued on the Debentures, the Issuer shall file with each Paying Agent (including the Trustee if it is a Paying Agent) promptly at the end of each calendar year (a) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of the end of such year and (b) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time.

ARTICLE SEVEN
Supplemental Indentures

Section 7.01. Supplemental Indentures Without Consent of Holders

     Solely for purposes of the Debentures, Section 8.1 of the Indenture shall be deleted and replaced with the following (capitalized terms used in the following text that are not defined in the Indenture but are defined herein shall have the meanings ascribed to such terms herein):

-29-

          SECTION 8.1. Supplemental Indentures Without Consent of Holders

     Without the consent of any Holders, the Issuer, when authorized by a resolution of the Board of Directors, and the Trustee, at any time and from time to time, may supplement or amend the Indenture and this First Supplemental Indenture for any of the following purposes:

     (1) to evidence the succession of another Person to the Issuer and the assumption by any such successor of the covenants of the Issuer herein and in the Debentures; or

     (2) to add to or modify the covenants of the Issuer for the benefit of the Holders of Debentures or to surrender any right or power herein conferred upon the Issuer; provided that no such amendment or modification may add Events of Default or acceleration events with respect to the Debentures; or

     (3) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debentures; or

     (4) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein or in any supplemental indenture, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Debentures in any material respect; or

     (5) to make any changes to the Indenture or this First Supplemental Indenture in order to conform the Indenture and this First Supplemental Indenture to the final prospectus supplement provided to investors in connection with the offering of the Debentures.

ARTICLE EIGHT
Miscellaneous

Section 8.01. Effectiveness

     This First Supplemental Indenture will become effective upon its execution and delivery.

Section 8.02. Successors and Assigns

     All covenants and agreements in the Indenture, as supplemented and amended by this First Supplemental Indenture, by the Issuer shall bind its successors and assigns, whether so expressed or not.

-30-

Section 8.03 Effect of Recitals

     The recitals contained herein and in the Debentures, except the Trustee’s certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee does not assume any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Issuer of the Debentures or the proceeds thereof.

Section 8.04. Ratification of Indenture

     The Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided.

Section 8.05. Governing Law

     This First Supplemental Indenture and the Debentures shall be governed by and construed in accordance with the laws of the State of New York.

Section 8.06. Severability

     If any provision of the Indenture, as supplemented and amended by this First Supplemental Indenture, shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever.

* * *

     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

-31-

     IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the day and year first above written.

[Corporate Seal]		THE PROGRESSIVE CORPORATION
Attest:
By:		By:
Name:	Charles E. Jarrett	Name:
Title:	Vice President, Secretary and Chief Legal Officer	Title:
		THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee
		By:
		Name:
		Title:	Authorized Signatory

EXHIBIT A

FORM OF DEBENTURES

The Debentures are to be substantially in the following form and shall bear the following legend and shall include the Trustee’s certificate of authentication in the form required by Section 2.2 of the Indenture:

[If a Global Security:] [THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED

IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

No. •	Principal Amount: $•
Issue Date: •

THE PROGRESSIVE CORPORATION

6.70% FIXED-TO-FLOATING RATE
JUNIOR SUBORDINATED DEBENTURES DUE 2067

     The Progressive Corporation, a corporation organized and existing under the laws of the State of Ohio (hereinafter called the “Issuer”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to • [If Global Security:] [Cede & Co.,] or registered assigns, the principal sum of • dollars ($•) as may be revised from time to time on Schedule I hereto on June 15, 2037, or if such day is not a Business Day, the following Business Day (the “Scheduled Maturity Date”) or any subsequent Interest Payment Date (as defined in the First Supplemental Indenture) to the extent set forth in the First Supplemental Indenture. If that amount is not paid in full on the Scheduled Maturity Date or any subsequent Interest Payment Date, the remaining principal amount will be due and payable on the Final Maturity Date. The Final Maturity Date will be June 15, 2067, or if such day is not a Business Day, the following Business Day.

     The Issuer further promises to pay interest on said principal sum from and including June 21, 2007, or from and including the most recent Interest Payment Date on which interest has been paid or duly provided for, until the principal thereof is paid or made available for payment semi-annually (subject to deferral as set forth herein) in arrears on June 15 and December 15 of each year, commencing on December 15, 2007 and ending on June 15, 2017, at the rate of 6.70% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months), and thereafter to pay interest on said outstanding principal sum quarterly in arrears on March 15, June 15, September 15, and December 15 of each year, commencing on September 15, 2017 at a floating annual rate equal to Three-Month LIBOR (as defined in the First Supplemental Indenture) plus 2.0175% (computed on the basis of a 360-day year and the actual number of days elapsed in the 360-day year). Accrued interest that is not paid on the

A-1

applicable Interest Payment Date, including interest deferred pursuant to Section 2.05 of the First Supplemental Indenture, will bear Additional Interest, to the extent permitted by law, at the interest rate in effect from time to time provided in Section 2.04(a) of the First Supplemental Indenture, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date.

     In the event that any Semi-Annual Interest Payment Date on which interest is payable on this Security is not a Business Day, then payment of the interest payable on such date will be made on the immediately succeeding day that is a Business Day (and, in the case of payments on or prior to June 15, 2017, without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. In the event that any Quarterly Interest Payment Date on which interest is payable on this Security is not a Business Day, then payment of the interest payable on such date shall be postponed to the immediately succeeding day that is a Business Day, provided that if such Business Day is in the immediately succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day, and interest will accrue to but excluding the date on which the interest is actually paid. A “Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) on or after June 15, 2017, a day that is not a London Banking Day. “London Banking Day” means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date, as provided in the Indenture, will be paid to the Person in whose name this Security (or one or more predecessor securities) is registered at the close of business on the Regular Record Date for such interest installment, which shall be June 1 or December 1, as the case may be, immediately preceding such Interest Payment Date until June 15, 2017 (whether or not a Business Day), and shall be March 1, June 1, September 1 and December 1, as the case may be, immediately preceding the relevant Interest Payment Date after June 15, 2017. Any such interest installment not so punctually paid or duly provided for (other than interest deferred in accordance with the next paragraph) shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more predecessor securities) is registered at the close of business on a special record date for the payment of such Additional Interest on such date to be fixed by the Trustee (the “Special Record Date”), notice whereof shall be given to Holders of Securities of this series not less than ten days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

     The Issuer shall have the right at any time or from time to time during the term of this Security to defer payment of interest on this Security for one or more consecutive Interest Periods (each a “Deferral Period”) that do not exceed ten years for the applicable Deferral Period, during which Deferral Periods the Issuer shall have the right, subject to Sections 2.05 and 2.06 of the First Supplemental Indenture, to make partial payments of interest on any Interest Payment Date, and at the end of which the Issuer shall pay all interest then accrued and unpaid; provided, however, that no Deferral Period shall extend beyond the Final Maturity Date or the earlier repayment or redemption in full of the Securities. Upon the termination of any Deferral

A-2

Period and upon the payment of all deferred interest then due, the Issuer may elect to begin a new Deferral Period, subject to the above requirements. Except as provided in Section 2.06 of the First Supplemental Indenture, no interest shall be due and payable during a Deferral Period except at the end thereof.

     So long as any Securities remain outstanding, if the Issuer has given notice of its election to defer interest payments on the Securities but the related Deferral Period has not yet commenced or a Deferral Period is continuing, the Issuer shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividends or other distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Issuer’s capital stock, (ii) make any payment of principal of, or interest or premium, if any, on or repay, purchase or redeem any debt securities of the Issuer that rank upon the Issuer’s liquidation on a parity with this Security (including this Security, the “Pari Passu Securities”) or junior to this Security or (iii) make any guarantee payments regarding any guarantee issued by the Issuer of securities of any Subsidiary if the guarantee ranks upon the Issuer’s liquidation on a parity with or junior to this Security (other than (a) any purchase, redemption or other acquisition of shares of its capital stock by the Issuer in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors, (2) the satisfaction of the Issuer’s obligations pursuant to any contract entered into in the ordinary course of business prior to the beginning of the applicable Deferral Period, (3) a dividend reinvestment or shareholder purchase plan, or (4) the issuance of shares of the Issuer’s capital stock, or securities convertible into or exercisable for such shares, as consideration in an acquisition transaction entered into prior to the applicable Deferral Period, (b) any exchange, redemption or conversion of any class or series of the Issuer’s capital stock, or the capital stock of one of its Subsidiaries, for any other class or series of its capital stock, or of any class or series of its indebtedness for any class or series of its capital stock, (c) any purchase of fractional interests in shares of the Issuer’s capital stock pursuant to the conversion or exchange provisions of such shares or the securities being converted or exchanged, (d) any declaration of a dividend in connection with any shareholder rights plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such stock, (f) (1) any payment of current or deferred interest on Pari Passu Securities that is made pro rata to the amounts due on such Pari Passu Securities (including the this Security); provided that such payments are made in accordance with Section 2.06(c)(ii) of the First Supplemental Indenture to the extent it applies, and (2) any payments of principal or current or deferred interest on Pari Passu Securities that, if not made, would cause the Issuer to breach the terms of the instrument governing such Pari Passu Securities; or (g) any payment of principal in respect of Pari Passu Securities having the same scheduled maturity date as this Security, as required under a provision of such other Pari Passu Securities that is substantially the same as the provisions in Section 2.02(a) of the First Supplemental Indenture, and that is made on a pro rata basis among one or more series of Pari Passu Securities (including this Security) having such a provision. In addition, if any Deferral Period lasts longer than one year, the Issuer may not redeem or purchase any securities of the Issuer that on the Issuer’s bankruptcy or liquidation rank pari passu or junior to any of its Qualifying APM Securities the proceeds of which were used to settle deferred interest on the

A-3

Debentures during the relevant Deferral Period until the first anniversary of the date on which all deferred interest on this Security has been paid. However, if the Issuer is involved in a Business Combination where immediately after its consummation more than 50% of the voting shares of the surviving entity of such Business Combination, or the Person to whom all or substantially all of the Issuer’s properties or assets are conveyed, transferred or leased in such Business Combination, is owned, directly or indirectly, by the shareholders of the other party to such Business Combination, then the immediately preceding sentence will not apply during the Deferral Period that is terminated on the next Interest Payment Date following the date of consummation of such Business Combination.

     The Issuer shall give written notice of its election to commence or continue any Deferral Period to the Trustee and the Holders of all Securities then Outstanding at least one Business Day and not more than 60 Business Days before the next Interest Payment Date. Such notice shall be given to the Trustee and each Holder of this Security at such Holder’s address appearing in the Security Register by first-class mail, postage prepaid.

     Payment of the principal of (and premium, if any) and interest on this Security will be made at the paying agency office or agency of the Issuer maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Issuer, payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such bank account number as may be designated by the Person entitled thereto as specified in the Securities Register in writing not less than ten days before the relevant Interest Payment Date.

     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on such Holder’s behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes. Each Holder hereof, by such Holder’s acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions.

     The Issuer and, by acceptance of this Security or a beneficial interest in this Security, each Holder hereof and any person acquiring a beneficial interest herein, agree that for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

     Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

A-4

     Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

A-5

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

[Corporate Seal]	THE PROGRESSIVE CORPORATION
Attest:	By:
Name:		Name:
Title:		Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

	THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee
Dated:	By:
		Name: Title:      Authorized Signatory

A-6

(FORM OF REVERSE OF DEBENTURES)

     This Security is one of a duly authorized issue of securities of the Issuer (herein called the "Securities”), issued and to be issued in one or more series under the Junior Subordinated Indenture, dated as of June 21, 2007 (herein called the “Base Indenture”), between the Issuer and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture, dated as of June 21, 2007, between the Issuer and the Trustee (the “First Supplemental Indenture”, and together with the Base Indenture, the “Indenture”), to which Indenture and all other indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. By the terms of the Indenture, the Securities are issuable in series that may vary as to amount, date of maturity, rate of interest, rank and in any other respect provided in the Indenture.

     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

     The Securities shall be redeemable at the option of the Issuer in accordance with the terms of the Indenture. The Securities are redeemable in whole or in part at the option of the Issuer at any time after the date hereof. In the case of any redemption, the Redemption Price shall be equal to (1) in the case of any redemption on or after June 15, 2017, 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest to the Redemption Date or (2) in the case of any redemption prior to June 15, 2017, the greater of (i) 100% of the principal amount plus accrued and unpaid interest to the Redemption Date, and (ii) the Make-Whole Redemption Price. If the Securities are not redeemed in whole, the Issuer may not effect such redemption unless at least $25 million aggregate principal amount of the Securities, excluding any Securities held by the Issuer or any of its affiliates, remains outstanding after giving effect to such redemption.

     Notwithstanding the foregoing, the Issuer may not redeem the Securities in part if the principal amount of the Securities has been accelerated pursuant to Section 5.1 of the Base Indenture (as amended by Section 2.07(a) of the First Supplemental Indenture) and such acceleration has not been rescinded. In addition, the Issuer may not redeem the Securities in part unless all accrued and unpaid interest, including deferred interest, has been paid in full on all Outstanding Securities for all Interest Periods terminating on or before the Redemption Date.

     No sinking fund is provided for the Securities.

     The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Issuer with certain conditions set forth in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the Issuer and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Issuer and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the

A-7

Outstanding Securities to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities at the time Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

     As provided in and subject to the provisions of the Indenture, (i) if an Event of Default (other than an Event of Default relating to certain insolvency events, as set forth in the Indenture) with respect to the Securities at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities may declare the entire principal amount and all accrued but unpaid interest of all the Securities to be due and payable immediately, by a notice in writing to the Issuer (and to the Trustee if given by Holders), and (ii) if an Event of Default relating to insolvency events as set forth in the Indenture occurs, the principal amount of the Securities shall automatically become due and payable; provided that in any such case the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article Eleven of the Indenture.

     The Holder of this Security, by such Holder’s acceptance hereof, agrees that if a bankruptcy event of the Issuer shall occur prior to the redemption or repayment of such Securities, such Holder shall have no claim for, and thus no right to receive, any deferred interest pursuant to Section 2.05 that has not been paid pursuant to Sections 2.05 and 2.06 to the extent the amount of such interest exceeds the sum of (x) interest that relates to the earliest two years of the portion of the Deferral Period for which interest has not been paid and (y) an amount equal to such Holder’s pro rata share of the excess, if any, of the Preferred Shares Issuance Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative Preferred Shares and unconverted Mandatorily Convertible Preferred Shares that has been applied to fund deferred interest pursuant to the alternative payment mechanism set forth in Section 2.06; provided that each Holder is deemed to agree that to the extent the remaining claim exceeds the amount set forth in clause (x), the amount it receives in respect of such excess shall not exceed the amount it would have received had the claim for such excess ranked pari passu with the interests of the holders, if any, of Qualifying Non-Cumulative Preferred Shares.

     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Issuer maintained under Section 3.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized

A-8

denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Security for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee shall have the right to treat and shall treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary.

     The Securities are issuable only in registered form without coupons in minimum denominations of $1,000 and any integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same.

     The Issuer and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree to treat for United States Federal income tax purposes (i) the Securities as indebtedness of the Issuer, and (ii) the stated interest on the Securities as ordinary interest income that is includible in the Holder’s or beneficial owner’s gross income at the time the interest is paid or accrued in accordance with the Holder’s or beneficial owner’s regular method of tax accounting, and otherwise to treat the Securities as described in the final prospectus supplement provided to investors in connection with the offering of the Securities.

     THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     This is one of the Securities referred to in the within mentioned Indenture.

A-9

ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:

(Insert assignee’s social security or tax identification number)

(Insert address and zip code of assignee)

agent to transfer this Security on the books of the Securities Registrar. The agent may substitute another to act for him or her.

Dated:	Signature:
	Signature Guarantee:

(Sign exactly as your name appears on the other side of this Security)

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Securities Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-10

SCHEDULE I

SCHEDULE OF PRINCIPAL AMOUNT REDUCTIONS

     Principal amount of Debentures outstanding represented by this Security as of      ,     :     .

     Thereafter, the following decreases have been made:

Date of Repayment,	Principal Amount		Notation Made by or
Redemption	Repaid, Redeemed	Principal Amount	on Behalf of the
or Purchase	or Purchased	Remaining	Trustee
	$	$

-1-

EX-4.4

Exhibit 4.4

REPLACEMENT CAPITAL COVENANT

     REPLACEMENT CAPITAL COVENANT, dated as of •, 2007 (this “Replacement Capital Covenant”), by The Progressive Corporation, an Ohio corporation (together with its successors and assigns, the “Corporation”), in favor of and for the benefit of each Covered Debtholder (as defined below).

RECITALS

     A. On the date hereof, the Corporation is issuing $1,000,000,000 aggregate principal amount of its 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “Debentures”).

     B. This Replacement Capital Covenant is the “Replacement Capital Covenant” referred to in the Corporation’s Prospectus Supplement, dated June 18, 2007, to the Corporation’s prospectus, dated June 18, 2007, included in the registration statement on Form S-3 (File No. 333-143824), relating to the Debentures.

     C. The Corporation is entering into and disclosing the content of this Replacement Capital Covenant in the manner provided below with the intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law.

     D. The Corporation acknowledges that reliance by each Covered Debtholder upon the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Corporation and that, were the Corporation to disregard its covenants in this Replacement Capital Covenant, each Covered Debtholder would have sustained an injury as a result of its reliance on such covenants.

     NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor of and for the benefit of each Covered Debtholder.

SECTION 1. Definitions

     Capitalized terms used in this Replacement Capital Covenant (including the Recitals) have the meanings set forth in Schedule I hereto.

SECTION 2. Limitations on Repayment, Redemption and Purchase of Debentures

     The Corporation hereby promises and covenants to and for the benefit of each Covered Debtholder that the Corporation shall not repay, redeem or purchase, nor shall any Subsidiary of the Corporation purchase, any of the Debentures prior to the Termination Date except to the extent that the principal amount repaid or the applicable redemption or purchase price does not exceed the sum of the Applicable Percentages of the following amounts:

     (i) the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period) from the sale of Replacement Capital Securities, plus

     (ii) (A) the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries from the sale of Common Shares and Qualifying Warrants and (B) the Current Stock Market Price of any Common Shares that the Corporation and its Subsidiaries have issued (determined as of the date of issuance) in connection with the conversion of any convertible or

exchangeable securities, other than securities for which the Corporation or any of its Subsidiaries has received equity credit from any NRSRO, in each case since the most recent Measurement Date (without double counting proceeds received in any prior Measurement Period),

in each case to Persons other than the Corporation and its Subsidiaries. For purposes of this Replacement Capital Covenant, the terms “repay” and “repayment” include the defeasance by the Corporation of the Debentures as well as the satisfaction and discharge of its obligations under the Indenture with respect to the Debentures.

SECTION 3. Covered Debt

     (a) The Corporation represents and warrants that the Initial Covered Debt is Eligible Debt.

     (b) On or during the 30-day period immediately preceding any Redesignation Date with respect to the Covered Debt then in effect, the Corporation shall identify the series of Eligible Debt that will become the Covered Debt on and after such Redesignation Date in accordance with the following procedures:

     (i) the Corporation shall identify each series of its then-outstanding long-term indebtedness for money borrowed that is Eligible Debt;

     (ii) if only one series of the Corporation’s then outstanding long-term indebtedness for money borrowed is Eligible Debt, such series shall become the Covered Debt commencing on the related Redesignation Date;

     (iii) if the Corporation has more than one outstanding series of long-term indebtedness for money borrowed that is Eligible Debt, then the Corporation shall identify the series that has the latest occurring final maturity date as of the date the Corporation is applying the procedures in this Section 3(b) and such series shall become the Covered Debt on the related Redesignation Date;

     (iv) the series of outstanding long-term indebtedness for money borrowed that is determined to be Covered Debt pursuant to clause (ii) or (iii) above shall be the Covered Debt for purposes of this Replacement Capital Covenant for the period commencing on the related Redesignation Date and continuing to but excluding the Redesignation Date as of which a new series of outstanding long-term indebtedness for money borrowed is next determined to be the Covered Debt pursuant to the procedures set forth in this Section 3(b); and

     (v) in connection with such identification of a new series of Covered Debt, the Corporation shall, as provided for in Section 3(c), give a notice and file with the Commission a current report on Form 8-K including or incorporating by reference this Replacement Capital Covenant as an exhibit within the time frame provided for in Section 3(c).

     (c) Notice. In order to give effect to the intent of the Corporation described in Recital C, the Corporation covenants that (i) simultaneously with the execution of this Replacement Capital Covenant or as soon as practicable after the date hereof, it shall (x) give notice to the Holders of the Initial Covered Debt, in the manner provided in the indenture relating to the Initial Covered Debt, of this Replacement Capital Covenant and the rights granted to such Holders hereunder and (y) file a copy of this Replacement Capital Covenant with the Commission as an exhibit to a Form 8-K under the Securities Exchange Act; (ii) so long as the Corporation is a reporting company under the Securities Exchange Act, the Corporation shall include in each annual report filed with the Commission on Form 10-K under the Securities Exchange Act a description of the covenant set forth in Section 2 and identify the series of long-term

- 2 -

indebtedness for borrowed money that is Covered Debt as of the date such Form 10-K is filed with the Commission; (iii) if a series of the Corporation’s long-term indebtedness for money borrowed (1) becomes Covered Debt or (2) ceases to be Covered Debt, the Corporation shall give notice of such occurrence within 30 days to the holders of such long-term indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency agreement or other instrument under which such long-term indebtedness for money borrowed was issued and report such change in a current report on Form 8-K including or incorporating by reference this Replacement Capital Covenant, and in the Corporation’s next annual report on Form 10-K, as applicable; (iv) if, and only if, the Corporation ceases to be a reporting company under the Securities Exchange Act, the Corporation shall (x) post on its website the information otherwise required to be included in Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this Section 3(c) and (y) cause a notice of the execution of this Replacement Capital Covenant to be posted on the Bloomberg screen for the Covered Debt or any successor Bloomberg screen and each similar third-party vendor’s screen the Corporation reasonably believes is appropriate (each an “Investor Screen”) and cause a hyperlink to a definitive copy of this Replacement Capital Covenant to be included on the Investor Screen for each series of Covered Debt, in each case to the extent permitted by Bloomberg or such similar third-party vendor, as the case may be; and (v) promptly upon request by any Holder of Covered Debt, the Corporation shall provide such Holder with a copy of this Replacement Capital Covenant as executed.

     (d) The Corporation agrees that, if at any time the Covered Debt is held by a trust (for example, where the Covered Debt is part of an issuance of trust preferred securities), a holder of the securities issued by such trust may enforce (including by instituting legal proceedings) this Replacement Capital Covenant directly against the Corporation as though such holder owned Covered Debt directly, and such holder shall be deemed to be a holder of “Covered Debt” for purposes of this Replacement Capital Covenant for so long as the indebtedness held by such trust remains Covered Debt hereunder.

SECTION 4. Termination, Amendment and Waiver

     (a) The obligations of the Corporation pursuant to this Replacement Capital Covenant shall remain in full force and effect until the earliest date (the “Termination Date”) to occur of (i) the date, if any, on which the Holders of a majority in principal amount of the then-effective series of Covered Debt consent or agree in writing to the termination of this Replacement Capital Covenant and the obligations of the Corporation hereunder, (ii) the date on which the Corporation ceases to have any series of outstanding Eligible Senior Debt or Eligible Subordinated Debt (in each case without giving effect to the rating requirement in clause (b) of the definition of each such term), (iii) June 15, 2047 or, if earlier, the date on which the Debentures are otherwise repaid, redeemed or purchased in full in accordance with this Replacement Capital Covenant, and (iv) the date on which the Debentures become accelerated due to the occurrence of an event of default. From and after the Termination Date, the obligations of the Corporation pursuant to this Replacement Capital Covenant shall be of no further force and effect.

     (b) This Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed by the Corporation with the consent of the Holders of a majority in principal amount of the then-effective series of Covered Debt, provided that this Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed only by the Corporation (and without the consent of any Covered Debtholder) if (i) such amendment or supplement eliminates Common Shares, Qualifying Warrants, Mandatorily Convertible Preferred Shares and/or Debt Exchangeable for Common Equity as a Replacement Capital Security and, in the case of this clause (i), after the date of this Replacement Capital Covenant, an accounting standard or interpretive guidance of an existing accounting standard issued by an organization or regulator that has responsibility for establishing or interpreting accounting standards in the United States becomes effective such that there is more than an

- 3 -

insubstantial risk that failure to eliminate Common Shares, Qualifying Warrants, Mandatorily Convertible Preferred Shares and/or Debt Exchangeable for Common Equity as a Replacement Capital Security would result in a reduction in the Corporation’s earnings per share as calculated in accordance with generally accepted accounting principles in the United States, (ii) such amendment or supplement is not adverse to the Holders of the then-effective series of Covered Debt and an officer of the Corporation has delivered to the Holders of the then-effective series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate stating that, in his or her determination, such amendment or supplement is not adverse to the Holders of the then-effective series of Covered Debt, or (iii) the effect of such amendment or supplement is solely to impose additional restrictions on, or eliminate (subject to clause (i) in the circumstances where it applies) certain of, the types of securities qualifying as Replacement Capital Securities, and an officer of the Corporation has delivered to the Holders of the then-effective series of Covered Debt in the manner provided for in the indenture, fiscal agency agreement or other instrument with respect to such Covered Debt a written certificate to that effect.

     (c) For purposes of Sections 4(a) and 4(b), the Holders whose consent or agreement is required to terminate, amend or supplement the obligations of the Corporation under this Replacement Capital Covenant shall be the Holders of the then-effective Covered Debt as of a record date established by the Corporation that is not more than 30 days prior to the date on which the Corporation proposes that such termination, amendment or supplement becomes effective.

SECTION 5. Miscellaneous

     (a) This Replacement Capital Covenant shall be governed by and construed in accordance with the laws of the State of New York.

     (b) This Replacement Capital Covenant shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the Covered Debtholders as they exist from time-to-time (it being understood and agreed by the Corporation that any Person who is a Covered Debtholder shall retain its status as a Covered Debtholder for so long as the series of long-term indebtedness for borrowed money owned by such Person is Covered Debt and if such Person initiates an action, claim or proceeding to enforce its rights under this Replacement Capital Covenant after the Corporation has violated its covenants in Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not terminate by reason of such series of long-term indebtedness for money borrowed no longer being Covered Debt).

     (c) All demands, notices, requests and other communications to the Corporation under this Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and (i) if served by personal delivery upon the Corporation, on the day so delivered (or, if such day is not a Business Day, the next succeeding Business Day), or (ii) if delivered by registered post or certified mail, return receipt requested, or sent to the Corporation by a national or international courier service, on the date of receipt by the Corporation (or, if such date of receipt is not a Business Day, the next succeeding Business Day), and in each case to the Corporation at the address set forth below, or at such other address as the Corporation may thereafter notify to Covered Debtholders or post on its website as the address for notices under this Replacement Capital Covenant:

- 4 -

The Progressive Corporation
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
Attention: Treasurer

[Remainder of Page Intentionally Left Blank]

- 5 -

     IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be executed by its duly authorized officer, as of the day and year first above written.

THE PROGRESSIVE CORPORATION
By:
	Name:
	Title:

Schedule I

SCHEDULE I

DEFINITIONS

     “Alternative Payment Mechanism” means, with respect to any Qualifying Capital Securities, provisions in the related transaction documents permitting the Corporation, in its sole discretion, to defer or skip in whole or in part payment of Distributions on such Qualifying Capital Securities for one or more consecutive Distribution Periods not to exceed ten years and requiring the Corporation to issue (or use Commercially Reasonable Efforts to issue) one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the deferred Distributions on such Qualifying Capital Securities and apply the proceeds to pay unpaid Distributions on such Qualifying Capital Securities, commencing on the earlier of (x) the first Distribution Date after commencement of a deferral period on which the Corporation pays current Distributions on such Qualifying Capital Securities and (y) the fifth anniversary of the commencement of such deferral period, and that:

     (i) define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance or sale of the relevant securities, where applicable, and including the fair market value of property received by the Corporation or any of its Subsidiaries as consideration for such APM Qualifying Securities) that the Corporation has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities, up to the Preferred Cap in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Preferred Shares or Mandatorily Convertible Preferred Shares;

     (ii) permit the Corporation to pay current Distributions on any Distribution Date out of any source of funds but (x) require the Corporation to pay deferred Distributions only out of eligible proceeds and (y) prohibit the Corporation from paying deferred Distributions out of any source of funds other than eligible proceeds;

     (iii) if deferral of Distributions continues for more than one year (or such shorter period as provided for in the terms of such securities), require the Corporation and its Subsidiaries not to repay, redeem or purchase any of its securities ranking junior to or pari passu with any APM Qualifying Securities on a bankruptcy or liquidation of the Corporation the proceeds of which were used to settle deferred interest during the relevant deferral period until at least one year after all deferred Distributions have been paid (a “Repurchase Restriction”), other than the following (none of which shall be restricted or prohibited by a Repurchase Restriction):

     (A) purchases of such securities by the Corporation’s Subsidiaries in connection with the distribution thereof or market-making or other secondary-market activities;

     (B) purchases, redemptions or other acquisitions of Common Shares in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants; or

     (C) purchases of Common Shares pursuant to a contractually binding requirement to buy Common Shares entered into prior to the beginning of the

I-1

related deferral period, including under a contractually binding stock repurchase plan;

     (iv) may include a provision that, notwithstanding the Common Cap and the Preferred Cap, for purposes of paying deferred Distributions, limits the Corporation’s ability to sell Common Shares, Qualifying Warrants or Mandatorily Convertible Preferred Shares above the Share Cap;

     (v) in the case of Qualifying Capital Securities other than Qualifying Non-Cumulative Preferred Shares, include a Bankruptcy Claim Limitation Provision;

     (vi) permit the Corporation, at its option, to provide that if it is involved in a merger, consolidation, amalgamation, binding share exchange or conveyance, transfer or lease of assets substantially as an entirety to any other person or a similar transaction (a “Business Combination”) where immediately after the consummation of the Business Combination more than 50% of the voting stock of the surviving entity of the Business Combination or the Person to whom all or substantially all of the Corporation’s assets have been transferred, conveyed or leased is owned, directly or indirectly, by the shareholders of the other party to the Business Combination, then clauses (i) through (iii) of this definition will not apply to any deferral period that is terminated on the next Distribution Date following the date of the Business Combination;

     (vii) limit the obligation of the Corporation to issue (or use Commercially Reasonable Efforts to issue) APM Qualifying Securities that are Common Shares and Qualifying Warrants to settle deferred Distributions pursuant to the Alternative Payment Mechanism either (A) during the first five years of any deferral period or (B) before an anniversary of the commencement of any deferral period that is not earlier than the fifth such anniversary and not later than the ninth such anniversary (as designated in the terms of such Qualifying Capital Securities) with respect to deferred Distributions attributable to the first five years of such deferral period, either:

     (X) to an aggregate amount of such securities, the net proceeds from the issuance of which is equal to 2% of the product of the average of the Current Stock Market Price of the Common Shares on the ten consecutive trading days ending on the fourth trading day immediately preceding the date of issuance multiplied by the total number of issued and outstanding Common Shares as of the date of the Corporation’s most recent publicly available consolidated financial statements; or

     (Y) to a number of Common Shares and Qualifying Warrants, in the aggregate, not in excess of 2% of the outstanding number of Common Shares (such limitation set forth in (X) or (Y), the “Common Cap”); and

     (viii) limit the right of the Corporation to issue APM Qualifying Securities that are Qualifying Non-Cumulative Preferred Shares and Mandatorily Convertible Preferred Shares to settle deferred Distributions pursuant to the Alternative Payment Mechanism to an aggregate amount of Qualifying Non-Cumulative Preferred Shares and still-outstanding Mandatorily Convertible Preferred Shares, the net proceeds from the issuance of which with respect to all deferral periods is equal to 25% of the liquidation or principal amount of such Qualifying Capital Securities (the “Preferred Cap”);

     provided (and it being understood) that:

I-2

               (A) the Corporation shall not be obligated to issue (or use Commercially Reasonable Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is continuing;

               (B) if, due to a Market Disruption Event or otherwise, the Corporation is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the Corporation will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order subject to the Common Cap, Preferred Cap and Share Cap, as applicable; and

               (C) if the Corporation has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the Corporation from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis up to the Common Cap, the Preferred Cap and the Share Cap, as applicable, in proportion to the total amounts that are due on such securities.

     “APM Qualifying Securities” means, with respect to an Alternative Payment Mechanism, or any Mandatory Trigger Provision, one or more of the following (as designated in the transaction documents for any Qualifying Capital Securities that include an Alternative Payment Mechanism or a Mandatory Trigger Provision, as applicable):

     (i) Common Shares;

     (ii) Qualifying Warrants;

     (iii) Qualifying Non-Cumulative Preferred Shares; or

     (iv) Mandatorily Convertible Preferred Shares;

provided (and it being understood) that (i) if the APM Qualifying Securities for any Alternative Payment Mechanism or Mandatory Trigger Provision include both Common Shares and Qualifying Warrants, such Alternative Payment Mechanism or Mandatory Trigger Provision may permit, but need not require, the Corporation to issue Qualifying Warrants and (ii) such Alternative Payment Mechanism or Mandatory Trigger Provision may permit, but need not require, the Corporation to issue Mandatorily Convertible Preferred Shares.

     “Applicable Percentage” means:

     (i) in the case of any Common Shares or Qualifying Warrants, (a) 133% with respect to any repayment, redemption or purchase prior to June 15, 2017, (b) 200% with respect to any repayment, redemption or purchase on or after June 15, 2017 and prior to June 15, 2037 and (c) 400% with respect to any repayment, redemption or purchase on or after June 15, 2037;

     (ii) in the case of any Mandatorily Convertible Preferred Shares, Debt Exchangeable for Common Equity, Debt Exchangeable for Preferred Equity or any Qualifying Capital Securities described in clause (i) of the definition of such term, (a) 100% with respect to any

I-3

repayment, redemption or purchase prior to June 15, 2037 and (b) 300% with respect to any repayment, redemption or purchase on or after June 15, 2037;

     (iii) in the case of any Qualifying Capital Securities described in clause (ii) of the definition of such term, (a) 100% with respect to any repayment, redemption or purchase prior to June 15, 2037 and (b) 200% with respect to any repayment, redemption or purchase on or after June 15, 2037; and

     (iv) in the case of any Qualifying Capital Securities described in clause (iii) of the definition of such term, 100%.

     “Bankruptcy Claim Limitation Provision” means, with respect to any Qualifying Capital Securities that have an Alternative Payment Mechanism or a Mandatory Trigger Provision, provisions that, upon any liquidation, dissolution, winding up or reorganization or in connection with any insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer, limit the claim of the holders of such securities to Distributions that accumulate during (A) any deferral period, in the case of securities that have an Alternative Payment Mechanism or (B) any period in which the issuer fails to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in the case of securities that have a Mandatory Trigger Provision, to:

     (i) in the case of Qualifying Capital Securities that have an Alternative Payment Mechanism or Mandatory Trigger Provision with respect to which the APM Qualifying Securities do not include Qualifying Non-Cumulative Preferred Shares or Mandatorily Convertible Preferred Shares, 25% of the stated or principal amount of such Qualifying Capital Securities then outstanding; and

     (ii) in the case of any other Qualifying Capital Securities, an amount not in excess of the sum of (x) the first two years of accumulated and unpaid Distributions and (y) an amount equal to the excess, if any, of the Preferred Cap over the aggregate amount of net proceeds from the sale of Qualifying Non-Cumulative Preferred Shares and Mandatorily Convertible Preferred Shares that is still outstanding that the issuer has applied to pay such Distributions pursuant to the Alternative Payment Mechanism or the Mandatory Trigger Provision; provided that the holders of such Qualifying Capital Securities are deemed to agree that, to the extent the remaining claim exceeds the amount set forth in clause (x), the amount they receive in respect of such excess shall not exceed the amount they would have received the claim for such excess ranked pari passu with the interests of the holders, if any, of Qualifying Non-Cumulative Preferred Shares.

     “Business Combination” has the meaning specified in clause (vi) of the definition of Alternative Payment Mechanism.

     “Business Day” means each day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed.

     “Commercially Reasonable Efforts” means, for purposes of selling APM Qualifying Securities, commercially reasonable efforts to complete the offer and sale of APM Qualifying Securities to third parties that are not Subsidiaries of the Corporation in public offerings or private placements. The Corporation shall not be considered to have made Commercially

I-4

Reasonable Efforts to effect a sale of APM Qualifying Securities if it determines not to pursue or complete such sale due to pricing, coupon, dividend rate or dilution considerations.

     “Commission” means the United States Securities and Exchange Commission.

     “Common Cap” has the meaning specified in clause (vii) of the definition of Alternative Payment Mechanism.

     “Common Shares” means (i) common shares of the Corporation, including common shares issued pursuant to any dividend reinvestment plan or employee benefit plan of the Corporation, (ii) a security of the Corporation, ranking upon the Corporation’s liquidation, dissolution or winding up junior to its Qualifying Non-Cumulative Preferred Shares and pari passu with its Common Shares, that tracks the performance of, or relates to the results of, a business, unit or division of the Corporation, and (iii) any securities issued in exchange for the securities described in clause (i) or (ii) above in connection with a Business Combination.

     “Corporation” has the meaning specified in the introduction to this instrument.

     “Covered Debt” means (a) at the date of this Replacement Capital Covenant and continuing to but excluding the first Redesignation Date, the Initial Covered Debt and (b) thereafter, commencing with each Redesignation Date and continuing to but excluding the next succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such period.

     “Covered Debtholder” means each Person to the extent that that Person holds (whether as a Holder or a beneficial owner holding through a participant in a clearing agency) long-term indebtedness for money borrowed of the Corporation during the period that such long-term indebtedness for money borrowed is Covered Debt.

     “Current Stock Market Price” means, with respect to the Common Shares on any date, (i) the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions by the New York Stock Exchange or, (ii) if the Common Shares are not then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange on which the Common Shares are traded or quoted on the relevant date or, (iii) if the Common Shares are not listed on any U.S. securities exchange on the relevant date, the last quoted bid price for the Common Shares in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization, or (iv) if the Common Shares are not so quoted, the average of the mid-point of the last bid and ask prices for the Common Shares on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose.

     “Debentures” has the meaning specified in Recital A.

     “Debt Exchangeable for Common Equity” means a security or combination of securities (together in this definition, “such securities”) that:

     (i) gives the holder a beneficial interest in (a) subordinated debt securities of the Corporation that are not redeemable prior to the settlement date of a related stock purchase contract and (b) a fractional interest in the related stock purchase contract for a Common Share that will be settled in three years or less, with the number of Common Shares purchasable

I-5

pursuant to such stock purchase contract to be within a range established at the time of issuance of such subordinated debt securities and having customary anti-dilution provisions;

     (ii) provides that the holders directly or indirectly grant the Corporation a security interest in such subordinated debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the holders’ direct or indirect obligation to purchase Common Shares pursuant to such stock purchase contracts;

     (iii) includes a remarketing feature pursuant to which such subordinated debt securities are remarketed to new investors commencing not later than the last Distribution Date that is at least one month prior to the settlement date of the stock purchase contract; and

     (iv) provides for the proceeds raised in the remarketing to be used to purchase Common Shares under the stock purchase contracts and, if there has not been a successful remarketing by the settlement date of the stock purchase contract, provides that the stock purchase contracts will be settled by the Corporation exercising its remedies as a secured party with respect to the subordinated debt securities or other collateral directly or indirectly pledged by holders in the Debt Exchangeable for Common Equity.

     “Debt Exchangeable for Preferred Equity” means a security or combination of securities (together in this definition, “such securities”) that:

     (i) gives the holder a beneficial interest in (a) subordinated debt securities of the Corporation or one of its Subsidiaries (in this definition, the “issuer”) that include a provision permitting the issuer to defer Distributions in whole or in part on such securities for one or more Distribution Periods of up to at least seven years without any remedies other than Permitted Remedies and that are the most junior subordinated debt of the issuer (or rank pari passu with the most junior subordinated debt of the issuer) and (b) an interest in a stock purchase contract that obligates the holder to acquire a beneficial interest in the Company’s Qualifying Non-Cumulative Preferred Shares;

     (ii) provides that the holders directly or indirectly grant to the Corporation a security interest in such subordinated debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase Qualifying Non-Cumulative Preferred Shares pursuant to such stock purchase contracts;

     (iii) includes a remarketing feature pursuant to which such subordinated debt securities are remarketed to new investors commencing not later than the first Distribution Date that is at least five years after the date of issuance of such securities or earlier in the event of an early settlement event based on (a) the dissolution of the issuer of such Debt Exchangeable for Preferred Equity or (b) one or more financial tests set forth in the terms of the instrument governing such Debt Exchangeable for Preferred Equity;

     (iv) provides for the proceeds raised in the remarketing to be used to purchase Qualifying Non-Cumulative Preferred Shares under the stock purchase contracts and, if there has not been a successful remarketing by the first Distribution Date that is six years after the date of issuance of such securities, provides that the stock purchase contracts will be settled by the Corporation exercising its rights as a secured creditor with respect to the subordinated debt securities or other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Preferred Equity;

I-6

     (v) includes a Qualifying Replacement Capital Covenant that will apply to such securities and to any Qualifying Non-Cumulative Preferred Shares issued pursuant to the stock purchase contracts; provided that such Qualifying Replacement Capital Covenant will not include Debt Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity as “Replacement Capital Securities”; and

     (vi) if applicable, after the issuance of such Qualifying Non-Cumulative Preferred Shares, provides the holders with a beneficial interest in such Qualifying Non-Cumulative Preferred Shares.

     “Distribution Date” means, as to any Qualifying Capital Securities, Debt Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity, the dates on which Distributions on such securities are scheduled to be made.

     “Distribution Period” means, as to any Qualifying Capital Securities, Debt Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity, each period from and including a Distribution Date for such securities to but excluding the next succeeding Distribution Date for such securities.

     “Distribution Rate Step-Up” means, as to any Qualifying Capital Securities, Debt Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity, that the rate at which Distributions accrue or are paid on such securities increases over time (including by an increase in the fixed rate of Distributions in the case of securities that accrue and pay Distributions at a fixed rate or by an increase in the margin above the applicable index in the case of securities that accrue and pay Distributions based upon a margin above an index, but not including an increase in the rate of Distributions merely because the index used in calculating such rate increases).

     “Distributions” means, as to any Qualifying Capital Securities, Debt Exchangeable for Common Equity or Debt Exchangeable for Preferred Equity, dividends, interest or other income distributions to the holders thereof that are not Subsidiaries of the Corporation.

     “Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

     “Eligible Senior Debt” means, at any time in respect of any issuer, each series of outstanding unsecured long-term indebtedness for money borrowed of such issuer that (a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks most senior among the issuer’s then outstanding classes of unsecured indebtedness for money borrowed, (b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of

I-7

the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

     “Eligible Subordinated Debt” means, at any time in respect of any issuer, each series of the issuer’s then-outstanding unsecured long-term indebtedness for money borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks subordinate to the issuer’s then outstanding series of unsecured indebtedness for money borrowed that ranks most senior and ranks senior to the Debentures, (b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding subordinated long-term indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents. For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

     “Holder” means, as to the Covered Debt then in effect, each holder of such Covered Debt as reflected on the securities register maintained by or on behalf of the Corporation with respect to such Covered Debt.

     “Indenture” means the Junior Subordinated Indenture, dated June 21, 2007, between the Corporation and The Bank of New York Trust Company, N.A., as Trustee, as amended and supplemented by a First Supplemental Indenture, dated June 21, 2007.

     “Initial Covered Debt” means the Corporation’s 6.25% Senior Notes due December 1, 2032, which have CUSIP No. 743315AL7.

     “Intent-Based Replacement Disclosure” means, as to any Qualifying Non-Cumulative Preferred Shares or Qualifying Capital Securities, that the issuer has publicly stated its intention, either in the prospectus or other offering document under which such securities were initially offered for sale or in filings with the Commission made by the issuer under the Securities Exchange Act prior to or contemporaneously with the issuance of such securities, that the issuer and its subsidiaries, to the extent such securities provide the issuer with equity credit for purposes of rating by an NRSRO, will repay, redeem or purchase such securities only with the proceeds of replacement capital securities that have terms and provisions at the time of repayment, redemption or purchase that are as or more equity-like than the securities then being repaid, redeemed or purchased, raised within 180 days prior to the applicable repayment, redemption or purchase date.

     “Mandatorily Convertible Preferred Shares” means cumulative preferred shares with (a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and (b) a requirement that such preferred shares convert into common shares of the issuer within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of such preferred shares and having customary anti-dilution provisions.

I-8

     “Mandatory Trigger Provision” means, as to any Qualifying Capital Securities, provisions in the terms thereof or of the related transaction agreements that:

     (i) require the issuer of such securities to make payment of Distributions on such securities only pursuant to the issue and sale of APM Qualifying Securities within two years of a failure of the issuer to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements, in an amount such that the net proceeds of such sale are at least equal to the amount of unpaid Distributions on such securities (including without limitation all deferred and accumulated amounts) and require the application of the net proceeds of such sale to pay such unpaid Distributions, provided that (a) if the Mandatory Trigger Provision does not require the issuance and sale within one year of such failure, the amount of Common Shares and/or Qualifying Warrants the net proceeds of which the issuer must apply to pay such Distributions pursuant to such provision may not exceed the Common Cap and (b) the amount of Qualifying Non-Cumulative Preferred Shares and still outstanding Mandatorily Convertible Preferred Shares the net proceeds of which the issuer may apply to pay such Distributions pursuant to such provision may not exceed the Preferred Cap;

     (ii) if the provisions described in clause (i) above do not require such issuance and sale within one year of such failure, include a Repurchase Restriction;

     (iii) prohibit the issuer of such securities from redeeming or purchasing any of its securities ranking upon the Corporation’s liquidation, dissolution or winding up junior to or pari passu with any APM Qualifying Securities the proceeds of which were used to settle deferred interest during the relevant Deferral Period prior to the date six months after the issuer applies the net proceeds of the sales described in (i) to pay such deferred Distributions in full; and

     (iv) include a Bankruptcy Claim Limitation Provision;

provided (and it being understood) that:

     (A) the issuer will not be obligated to issue (or use Commercially Reasonable Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is continuing;

     (B) if, due to a Market Disruption Event or otherwise, the issuer is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the issuer will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order subject to the Common Cap, Preferred Cap and Share Cap, as applicable; and

     (C) if the issuer has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and applies some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the issuer from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis up to the Common Cap and the Preferred Cap, as applicable, in proportion to the total amounts that are due on such securities.

I-9

No remedy other than Permitted Remedies will arise by the terms of such securities or related transaction agreements in favor of the holders of such Qualifying Capital Securities as a result of the issuer’s failure to pay Distributions because of the Mandatory Trigger Provision until Distributions have been deferred for one or more Distribution Periods that total together at least ten years.

     “Market Disruption Event” means the occurrence or existence of any of the following events or sets of circumstances:

     (i) trading in securities generally, or shares of the Corporation’s securities specifically, on the New York Stock Exchange or any other national securities exchange, or in the over-the-counter market on which APM Qualifying Securities are then listed or traded shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or market by the Commission, the relevant exchange or by any other regulatory body or governmental agency having jurisdiction such that trading shall have been materially disrupted;

     (ii) the Corporation would be required to obtain the consent or approval of the Corporation’s shareholders or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue or sell APM Qualifying Securities pursuant to the Alternative Payment Mechanism and that consent or approval has not yet been obtained notwithstanding the Corporation’s Commercially Reasonable Efforts to obtain that consent or approval;

     (iii) a banking moratorium shall have been declared by the federal or state authorities of the United States such that the issuance of, or market trading in, the APM Qualifying Securities has been disrupted or ceased;

     (iv) a material disruption shall have occurred in commercial banking or securities settlement or clearance services in the United States such that the issuance of, or market trading in, the APM Qualifying Securities has been disrupted or ceased;

     (v) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States, there shall have been a declaration of a national emergency or war by the United States or there shall have occurred any other national or international calamity or crisis such that the issuance of, or market trading in, the APM Qualifying Securities has been disrupted or ceased;

     (vi) there shall have occurred such a material adverse change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such that the issuance of, or market trading in, the APM Qualifying Securities has been materially disrupted;

     (vii) an event occurs and is continuing as a result of which the offering document for the offer and sale of APM Qualifying Securities would, in the reasonable judgment of the Corporation, contain an untrue statement of a material fact or omit to state a material fact required to be stated in that offering document or necessary to make the statements in that offering document not misleading and either (a) the disclosure of that event at such time, in the reasonable judgment of the Corporation, is not otherwise required by law and would have a material adverse

I-10

effect on the Corporation or (b) the disclosure relates to a previously undisclosed proposed or pending material business transaction, provided that no single suspension period described in this clause (vii) shall exceed 90 consecutive days and multiple suspension periods described in this clause (vii) shall not exceed an aggregate of 180 days in any 360-day period; or

     (viii) the Corporation reasonably believes that the offering document for the offer and the sale of APM Qualifying Securities would not be in compliance with a rule or regulation of the Commission (for reasons other than those described in clause (vii) above) and the Corporation determines that it is unable to comply with such rule or regulation or such compliance is unduly burdensome, provided that no single suspension period described in this clause (viii) shall exceed 90 consecutive days and multiple suspension periods described in this clause (viii) shall not exceed an aggregate of 180 days in any 360-day period.

The definition of “Market Disruption Event” as used in any Replacement Capital Securities may include less than all of the paragraphs outlined above, as determined by the Corporation at the time of issuance of such securities, and in the case of clauses (i), (ii) and (iii) above, as applicable to a circumstance where the Corporation would otherwise endeavor to issue preferred shares, shall be limited to circumstances affecting markets where the Corporation’s preferred shares traded or where a listing for their trading is being sought.

     “Measurement Date” means (a) with respect to any repayment, redemption or purchase of the Debentures on or prior to the Scheduled Maturity Date, the date that is 180 days prior to delivery of notice of such repayment or redemption or the date of such purchase; and (b) with respect to any repayment, redemption or purchase of the Debentures after the Scheduled Maturity Date, the date that is 90 days prior to the date of such repayment, redemption or purchase, except that, if during the 90-day (or any shorter) period preceding the date that is 90 days prior to the date of such repayment, redemption or purchase, the Corporation or its Subsidiaries issued Replacement Capital Securities to Persons other than the Corporation and its Subsidiaries but no repayment, redemption or purchase was made pursuant to Section 2 in connection therewith, the date upon which such 90-day (or shorter) period prior to the date of such repayment, redemption or purchase began.

     “Measurement Period” means, with respect to any date on which notice of repayment or redemption is delivered with respect to the Debentures or on which the Corporation purchases, or any Subsidiary of the Corporation purchases, any Debentures, the period beginning on the Measurement Date with respect to such notice or purchase date and ending on such notice or purchase date, as the case may be. Measurement Periods cannot run concurrently.

     “No Payment Provision” means a provision or provisions in the transaction documents for securities (referred to in this definition as “such securities”) that include the following:

     (i) an Alternative Payment Mechanism; and

     (ii) an Optional Deferral Provision modified and supplemented from the general definition of that term to provide that the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if a Market Disruption Event has occurred and is continuing, ten years, without any remedy other than Permitted Remedies and the obligations (and limitations on obligations) described in the definition of “Alternative Payment Mechanism” applying.

I-11

     “Non-Cumulative” means, with respect to any Qualifying Capital Securities, that the issuer may elect not to make any number of periodic Distributions without any remedy arising under the terms of the securities or related agreements in favor of the holders, other than one or more Permitted Remedies.

     “NRSRO” means a nationally recognized statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.

     “Optional Deferral Provision” means, as to any Qualifying Capital Securities, a provision in the terms thereof or of the related transaction agreements to the effect that:

     (a) (i) the issuer of such Qualifying Capital Securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if a Market Disruption Event is continuing, ten years, without any remedy other than Permitted Remedies and (ii) such Qualifying Capital Securities are subject to an Alternative Payment Mechanism (provided that such Alternative Payment Mechanism need not apply during the first five years of any deferral period and need not include a Common Cap, Preferred Cap, Share Cap, Bankruptcy Claims Limitation Provision or Repurchase Restriction); or

     (b) the issuer of such Qualifying Capital Securities may, in its sole discretion, defer or skip in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to ten years without any remedy other than Permitted Remedies.

     “Permitted Remedies” means, with respect to any securities, one or more of the following remedies:

     (a) rights in favor of the holders of such securities permitting such holders to elect one or more directors of the issuer (including any such rights required by the listing requirements of any stock or securities exchange on which such securities may be listed or traded); and

     (b) complete or partial prohibitions on the issuer paying Distributions on or repurchasing common shares or other securities that rank pari passu with or junior as to Distributions to such securities for so long as distributions on such securities, including unpaid distributions, remain unpaid.

     “Person” means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof.

     “Preferred Cap” has the meaning specified in clause (viii) of the definition of Alternative Payment Mechanism.

     “Qualifying Capital Securities” means securities or combinations of securities (other than Common Shares, Qualifying Warrants, Mandatorily Convertible Preferred Shares, Debt Exchangeable for Common Equity and Debt Exchangeable for Preferred Equity) that, in the determination of the Corporation’s Board of Directors reasonably construing the definitions and other terms of this Replacement Capital Covenant, meet one of the following criteria:

I-12

     (i) in connection with any repayment, redemption or purchase of Debentures prior to June 15, 2017:

     (A) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 60 years and (3) either:

     (x) (I) are subject to a Qualifying Replacement Capital Covenant and (II) have a No Payment Provision or are Non-Cumulative, or

     (y) (I) have a Mandatory Trigger Provision and are subject to Intent-Based Replacement Disclosure and (II) have an Optional Deferral Provision or a No Payment Provision;

     (B) preferred shares issued by the Corporation or its Subsidiaries that (1) are Non-Cumulative, (2) have no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, (3) have no maturity or a maturity of at least 60 years and (4) either:

     (x) are subject to a Qualifying Replacement Capital Covenant, or

     (y) have a Mandatory Trigger Provision and are subject to Intent-Based Replacement Disclosure; or

     (C) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 40 years, (3) are subject to a Qualifying Replacement Capital Covenant and (4) have an Optional Deferral Provision and a Mandatory Trigger Provision; or

     (ii) in connection with any repayment, redemption or purchase of Debentures at any time on or after June 15, 2017 but prior to June 15, 2037:

     (A) securities described under clause (i) of this definition that would be Qualifying Capital Securities prior to June 15, 2017;

     (B) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 60 years, (3) are subject to a Qualifying Replacement Capital Covenant and (4) have an Optional Deferral Provision;

     (C) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 60 years, (3) are Non-Cumulative or have a No Payment Provision and (4) are subject to Intent-Based Replacement Disclosure;

     (D) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 40 years, (3) are

I-13

Non-Cumulative or have a No Payment Provision and (d) are subject to a Qualifying Replacement Capital Covenant;

     (E) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 40 years, (3) have an Optional Deferral Provision and a Mandatory Trigger Provision and (4) are subject to Intent-Based Replacement Disclosure;

     (F) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding-up of the Corporation, (2) have no maturity or a maturity of at least 25 years, (3) are subject to a Qualifying Replacement Capital Covenant and (4) have an Optional Deferral Provision and a Mandatory Trigger Provision;

     (G) cumulative preferred shares issued by the Corporation or its Subsidiaries that (1) have no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, (2) have no maturity or a maturity of at least 60 years and (3) are subject to a Qualifying Replacement Capital Covenant; or

     (H) securities issued by the Corporation or its Subsidiaries that rank (i) senior to the Debentures and securities that are pari passu with the Debentures but (ii) junior to all other debt securities of the Corporation (other than (x) the Debentures and securities that are pari passu with the Debentures and (y) securities that are pari passu with such Qualifying Capital Securities) upon its liquidation, dissolution or winding-up, and (2) either:

     (x) have no maturity or a maturity of at least 60 years and either (I) are (a) Non-Cumulative or subject to a No Payment Provision and (b) subject to a Qualifying Replacement Capital Covenant or (II) have a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to Intent-Based Replacement Disclosure, or

     (y) have no maturity or a maturity of at least 40 years, are subject to a Qualifying Replacement Capital Covenant and have a Mandatory Trigger Provision and an Optional Deferral Provision; or

     (iii) in connection with any repayment, redemption or purchase of Debentures at any time on or after June 15, 2037:

     (A) securities described under clause (ii) of this definition that would be Qualifying Capital Securities on or after June 15, 2017 but prior to June 15, 2037;

     (B) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have an Optional Deferral Provision and (3) either:

     (x) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure, or

I-14

     (y) have no maturity or a maturity of at least 40 years and are subject to a Qualifying Replacement Capital Covenant;

     (C) securities issued by the Corporation or its Subsidiaries that (1) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (2) have no maturity or a maturity of at least 40 years and are subject to Intent-Based Replacement Disclosure and (3) are Non-Cumulative or have a No Payment Provision;

     (D) securities issued by the Corporation or its Subsidiaries that rank (1) senior to the Debentures and securities that are pari passu with the Debentures but junior to all other debt securities of the Corporation (other than (x) the Debentures and securities that are pari passu with the Debentures and (y) securities that are pari passu with such Qualifying Capital Securities) upon its liquidation, dissolution or winding-up, and (2) either:

     (x) have no maturity or a maturity of at least 60 years and either (i) have an Optional Deferral Provision and are subject to a Qualifying Replacement Capital Covenant or (ii) (a) are Non-Cumulative or have a No Payment Provision and (b) are subject to Intent-Based Replacement Disclosure, or

     (y) have no maturity or a maturity of at least 40 years and either (i) (a) are Non-Cumulative or have a No Payment Provision and (b) are subject to a Qualifying Replacement Capital Covenant or (ii) are subject to Intent-Based Replacement Disclosure and have a Mandatory Trigger Provision and an Optional Deferral Provision; or

     (E) cumulative preferred shares issued by the Corporation or its Subsidiaries that either (1) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure or (2) have a maturity of at least 40 years and are subject to a Qualifying Replacement Capital Covenant.

Notwithstanding the foregoing, no securities or combination of securities will be included in Qualifying Capital Securities if such securities (i) applying the tests set forth above, are required to include Intent-Based Replacement Disclosure and (ii) include a Distribution Rate Step-Up.

     “Qualifying Non-Cumulative Preferred Shares” means non-cumulative preferred shares of the Corporation that rank pari passu with or junior to all other preferred shares of the Corporation, are perpetual and are subject to (a) a Qualifying Replacement Capital Covenant or (b) both (i) mandatory suspension of dividends in the event the Corporation breaches certain financial metrics specified in the offering documents relating to such preferred shares and (ii) Intent-Based Replacement Disclosure, provided that with respect to both clauses (a) and (b) the transaction documents shall provide for no remedies as a consequence of non-payment of Distributions other than Permitted Remedies.

     “Qualifying Replacement Capital Covenant” means a replacement capital covenant that is substantially similar to this Replacement Capital Covenant or a replacement capital covenant, as identified by the Corporation’s Board of Directors acting in good faith and in its reasonable discretion and reasonably construing the definitions and other terms of this Replacement Capital Covenant, (i) entered into by a company that at the time it enters into such replacement capital

I-15

covenant is a reporting company under the Securities Exchange Act and (ii) that restricts the related issuer from repaying, redeeming or purchasing, and its Subsidiaries from purchasing, identified securities, except to the extent of the applicable percentage of the net proceeds from the issuance of specified replacement capital securities that have terms and provisions at the time of repayment, redemption or purchase that are as or more equity-like than the securities then being repaid, redeemed or purchased within the 180-day period prior to the applicable repayment, redemption or purchase date; provided that the term of such replacement capital covenant shall be determined at the time of issuance of the related Replacement Capital Securities taking into account the other characteristics of such securities.

     “Qualifying Warrants” means any net share-settled warrants to purchase the Common Shares that (i) have an exercise price greater than the Current Stock Market Price of the Common Shares, and (ii) the Corporation is not entitled to redeem for cash and the holders of which are not entitled to require the Corporation to purchase for cash in any circumstances.

     “Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest of (a) the date that is two years prior to the final maturity date of such Covered Debt, (b) if the Corporation elects to redeem, or the Corporation or a Subsidiary of the Corporation elects to repurchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such redemption or repurchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption or repurchase date and (c) if such Covered Debt is not Eligible Subordinated Debt of the Corporation, the date on which the Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.

     “Replacement Capital Covenant” has the meaning specified in the introduction to this instrument.

     “Replacement Capital Securities” means Mandatorily Convertible Preferred Shares, Debt Exchangeable for Common Equity, Debt Exchangeable for Preferred Equity and Qualifying Capital Securities.

     “Repurchase Restriction” has the meaning specified in clause (iii) of the definition of Alternative Payment Mechanism.

     “Scheduled Maturity Date” has the meaning specified in the Supplemental Indenture.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Share Cap” means, with respect to any Qualifying Capital Securities, a limit on the total number of Common Shares that may be issued by the Corporation pursuant to the Alternative Payment Mechanism with respect to such Qualifying Capital Securities or on the total number of Common Shares underlying all Qualifying Warrants and Mandatorily Convertible Preferred Shares that may be issued by the Corporation pursuant to such Alternative Payment Mechanism, provided that the product of such Share Cap and the Market Value of the Common Shares as of the date of issuance of such Qualifying Capital Securities shall not represent a lower proportion of the aggregate principal or liquidation amount, as applicable, of such Qualifying Capital Securities than the product of the Share Cap applicable to the Debentures and the Current Stock Market Price of the Common Shares as of the date of issuance of such Debentures represents of the aggregate principal amount of such Debentures at the time of issuance.

I-16

     “Subsidiary” means, at any time, any Person the shares of stock or other ownership interests of which having ordinary voting power to elect a majority of the board of directors or other managers of such Person are at the time owned, or the management or policies of which are otherwise at the time controlled, directly or indirectly through one or more intermediaries (including other Subsidiaries) or both, by another Person (and as of the date of this Replacement Capital Covenant includes Progressive County Mutual Insurance Company, a mutual company affiliate of the Corporation).

     “Supplemental Indenture” means the First Supplemental Indenture, dated as of June 21, 2007, between the Corporation and The Bank of New York Trust Company, N.A., as Trustee, to the Indenture.

     “Termination Date” has the meaning specified in Section 4(a).

I-17

EX-8.1

Exhibit 8.1

[Letterhead of Baker & Hostetler LLP]

June 18, 2007

The Progressive Corporation
6300 Wilson Mills Road
Mayfield Village, OH 44143

Re:	Issuance and Sale of 6.70% Fixed-to-Floating Rate Junior
	Subordinated Debentures due 2067, The Progressive Corporation

Ladies and Gentlemen:

     We have acted as tax counsel to The Progressive Corporation, an Ohio corporation (the “Corporation”), in connection with the preparation and filing by the Corporation with the Securities and Exchange Commission (the “Commission”) the Registration Statement (the “Registration Statement”) on Form S-3 (File No. 333-143824), under the Securities Act of 1933, as amended (the “Act”), as it became effective under the Act, and with respect to the issuance and sale of the Corporation’s 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067 (the “Debentures”) to be issued pursuant to an indenture identical in all material respects to the form of Junior Subordinated Indenture (the “Junior Subordinated Indenture”) between the Corporation and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”) filed as an exhibit to the Registration Statement, to be supplemented by a supplemental indenture identical in all material respects to the form of First Supplemental Indenture (the “First Supplemental Indenture” and, together with the Junior Subordinated Indenture, the “Indenture”), between the Corporation and the Trustee filed as an exhibit to the Registration Statement. The Debentures will be offered for sale to investors pursuant to the Corporation’s prospectus dated June 18, 2007 as supplemented by the prospectus supplement dated June 18, 2007 (the “Prospectus”), filed by the Corporation pursuant to Rule 424(b) of the rules and regulations of the Commission under the Act.

     In delivering this opinion letter, we have reviewed and relied upon: (i) the Prospectus; (ii) the Indenture; (iii) a form of the Debentures; (iv) the form of Replacement Capital Covenant filed on a Current Report on Form 8-K dated June 18, 2007 (the “Replacement Capital Covenant”) to be entered into by the Corporation in favor of and for the benefit of each Covered Debtholder; and (v) the executed officer’s certificate dated the date hereof; and have made such other investigations as we have deemed necessary or appropriate as a basis for the opinions set forth herein.

Page 2
June 18, 2007

     In rendering the opinions described below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as forms, duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents. We also have assumed that the transactions related to the issuance of the Debentures will be consummated in accordance with the terms of the documents and forms of documents described herein.

     Based on the foregoing and subject to the qualifications, assumptions and limitations stated herein and in the Prospectus herein and in the Prospectus, we are of the opinion that, (i) although the matter is not free from doubt, the Debentures when issued will be treated as debt for federal income tax purposes, and (ii) the statements made in the Prospectus under the caption, “Certain United States Federal Income and Estate Tax Consequences” insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects.

     Our opinion is based upon the Internal Revenue Code of 1986, as amended; Treasury Regulations (including temporary and proposed Treasury Regulations) issued thereunder; Internal Revenue Service rulings and pronouncements; and judicial decisions now in effect, all of which are subject to change, possibly with retroactive effect. Our opinion is limited to the matters expressly stated herein. Our opinion is rendered only as of the date hereof, and its validity could be affected by subsequent changes in applicable law. We have not undertaken and will not undertake to advise you or any other person with respect to any such change subsequent to the date hereof, and we are under no obligation to supplement or revise our opinion to reflect any legal developments or factual matters arising subsequent to the date hereof or the impact of any information, document, certificate, record, statement, representation, covenant, or assumption relied upon herein that becomes incorrect or untrue. In the event that any one or more of the factual matters referred to herein is untrue, inaccurate, or incomplete, our opinion shall be void and of no force or effect, but only to the extent that such untruth, inaccuracy, or incompletion affects the accuracy of the opinion provided herein. Our opinion is provided solely as a legal opinion and not as a guaranty or warranty.

     We express no opinions with respect to the transactions referred to herein or in the Prospectus other than as expressly set forth herein. Moreover, we note that there is no authority directly on point dealing with securities such as the Debentures or transactions of the type described herein and that our opinions are not binding on the Internal Revenue Service or the courts, either of which could take a contrary position. Nevertheless, we believe that the opinions expressed herein, if challenged, would be sustained by a court with jurisdiction in a properly presented case.

     We do not express any opinion herein concerning any law other than the federal tax law of the United States.

Page 3
June 18, 2007

     We hereby consent to the filing of this opinion letter as an exhibit to the Corporation’s report on Form 8-K (which is deemed incorporated by reference into the Prospectus and to the use of our name under the captions “Certain United States Federal Income and Estate Tax Consequences” and “Validity of Securities” in the Prospectus.

Very truly yours,

/s/ Baker & Hostetler LLP

Baker & Hostetler LLP

EX-99.1

Exhibit 99.1

NEWS
RELEASE

The Progressive Corporation
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
http://www.progressive.com

Company Contact:
Patrick Brennan
(440) 395-2370

PROGRESSIVE ANNOUNCES PUBLIC OFFERING OF $1 BILLION JUNIOR SUBORDINATED DEBENTURES

     MAYFIELD VILLAGE, OHIO — June 18, 2007 — The Progressive Corporation today announced the public offering of $1 billion aggregate principal amount of its 6.70% Fixed-to-Floating Rate Junior Subordinated Debentures due 2067. The debentures were priced at 99.729% of par. Goldman, Sachs & Co. is the sole structuring coordinator for the offering and is a joint book-running manager with JPMorgan. Merrill Lynch & Co. is co-manager.

     The Progressive Corporation is a Cleveland-based insurance holding company. Its insurance subsidiaries offer private passenger automobile, commercial auto and specialty property-casualty insurance and related services throughout the United States. Progressive’s Common Shares (symbol PGR) are listed on the New York Stock Exchange.

     In connection with the debentures, Progressive has filed a registration statement, prospectus and prospectus supplement, and one or more free writing prospectuses, with the Securities and Exchange Commission (SEC). In addition, Progressive expects to file the form of debenture, related offering documents and certain additional information with the SEC in the near future. Requests for copies of the offering materials should be submitted to Jeffrey W. Basch, Chief Accounting Officer, The Progressive Corporation, 6300 Wilson Mills Road, Mayfield Village, Ohio 44143, or by telephone at (440) 446-2851 or toll-free at (877) 820-4002.