8-KMaterial AgreementsExhibits & Filings

PROGRESSIVE CORP/OH/ 8-K Report, Material Agreement (Sep 20, 2006)

Filed September 20, 2006For Securities:PGR

Summary

The Progressive Corporation (PGR) announced through its subsidiary, Progressive Casualty Insurance Company (PCIC), the execution of a sublease agreement with Acme Operating Corporation. Acme is a company affiliated with Peter B. Lewis, the Chairman of the Board. This sublease pertains to a portion of an airplane hangar that PCIC had previously leased to house its aircraft and flight operations. The purpose of the sublease is to offset PCIC's hangar costs, making it a more cost-effective arrangement. The agreement involves Acme subleasing approximately half of the office space and two-thirds of the hangar/shop space for an initial term of five years, with options for two additional five-year extensions. The rent structure includes a fixed annual amount plus a share of operating expenses, and Acme will also reimburse PCIC for a portion of the initial tenant improvement costs. The transaction was unanimously approved by disinterested members of the Company's Board of Directors.

Key Highlights

  • 1Progressive Casualty Insurance Company (PCIC) entered into a sublease agreement with Acme Operating Corporation, a company owned by Chairman Peter B. Lewis.
  • 2The sublease is for space within an airplane hangar leased by PCIC.
  • 3The agreement aims to reduce PCIC's operating expenses related to the hangar.
  • 4Acme will sublease approximately 1,000 sq ft of office space and 13,750 sq ft of hangar/shop space.
  • 5The initial sublease term is five years, with two five-year extension options.
  • 6Acme's rent will be approximately 63% of PCIC's total annual fixed rent for the hangar, plus 50% of certain operating expenses.
  • 7The sublease was unanimously approved by the disinterested members of The Progressive Corporation's Board of Directors.

Frequently Asked Questions

Progressive Casualty Insurance Company, a subsidiary, entered into a sublease agreement with Acme Operating Corporation for space in an airplane hangar.

Acme Operating Corporation is owned by Peter B. Lewis, who is the Chairman of the Board of The Progressive Corporation. This indicates a related-party transaction.

The sublease is intended to defray the costs of the hangar for PCIC, making it a more cost-effective alternative to commercial hangar space. Acme's rent payments and reimbursement for tenant improvements will offset PCIC's expenses.

Yes, the Sublease was unanimously approved by the disinterested members of the Company's Board of Directors prior to its execution, indicating oversight and approval from those without a direct conflict of interest.