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Exhibit No. 10(H)

                       2004 PROGRESSIVE CAPITAL MANAGEMENT
                                   BONUS PLAN

1.       The Progressive Corporation and its subsidiaries (collectively
         "Progressive" or "Company") have adopted the 2004 Progressive Capital
         Management Bonus Plan ("Plan") as part of their compensation program
         for investment professionals. The Plan is performance-based and is
         administered under the direction of the Compensation Committee of the
         Board of Directors of The Progressive Corporation ("Committee").

2.       Progressive employees who are assigned primarily to the Company's
         capital management function are eligible to be selected for
         participation in the Plan. Eligible employees may be selected by the
         Chief Executive Officer ("CEO") to participate in the Plan for one or
         more Plan years. Participants may also participate in other
         gainsharing, bonus or incentive compensation plans maintained by
         Progressive, if so determined in the discretion of the CEO. Plan years
         shall coincide with Progressive's fiscal years. For 2004, and each Plan
         year thereafter until otherwise determined by the CEO, the following
         individuals will be entitled to participate in the Plan: William Cody,
         Steve Anderson, Evelyn Erb, David Benson, Anthony Grandolfo, Eleanora
         Crosby, Nhu Nguyen, Dominic Visco and Sandy Richards. Other eligible
         employees of the Company may be selected for participation in the Plan
         for or at any time during a Plan year by the CEO.

3.       The Plan offers participants the opportunity to earn bonus compensation
         through two (2) separate components: the Portfolio Performance
         Component and the Discretionary Bonus Pool Component, as described in
         Sections 4 and 5 below ("Bonus Components"). The term "Annual Bonus,"
         as used herein, shall mean the aggregate of all bonuses earned by or
         awarded to a participant under the two (2) Bonus Components.

4.       The Portfolio Performance Component

         A.       The amount of the Portfolio Performance Bonus earned by any
                  participant under the Plan for any Plan year will be
                  determined by application of the following formula:

                  Portfolio Performance Bonus = Paid Earnings x Target
                  Percentage x Portfolio Performance Factor

         B.       For purposes of the Plan, "Paid Earnings" shall include (a)
                  regular, used Earned Time Benefit, sick, holiday and funeral
                  pay received by the participant during the Plan year for work
                  or services performed

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                  by the participant as an officer or employee of Progressive,
                  and (b) retroactive payments of any of the foregoing relating
                  to the same Plan year.

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                  For purposes of the Plan, Paid Earnings shall not include any
                  (a) short-term or long-term disability payments, (b) lump sum
                  merit awards, (c) payments from the merit cash pool, (d)
                  discretionary or other bonus or incentive payments, (e) the
                  earnings replacement component of any worker's compensation
                  award or (f) any unused Earned Time Benefit. If additional
                  participants are added during the course of a given Plan year,
                  their Portfolio Performance Bonus will be based on the portion
                  of their salary earned during the part of the Plan year during
                  which they participated in the Plan.

         C.       The Target Percentages for participants in the Plan shall be
                  determined by the Committee, but will not exceed 125% for any
                  participant. Target Percentages may vary among Plan
                  participants and may be changed from year to year by the
                  Committee. For 2004, and each Plan year thereafter until
                  otherwise determined by the Committee, the Target Percentages
                  for the Plan participants shall be as follows:

<TABLE>
<CAPTION>
     Name                             Target Percentages
     ----                             ------------------
<S>                                   <C>
William Cody                                 100%
Steve Anderson                               100%
Evelyn Erb                                   100%
David Benson                                 100%
Anthony Grandolfo                            100%
Eleanora Crosby                            18.75%
Nhu Nguyen                                 11.25%
Dominic Visco                              11.25%
Sandy Richards                               6.0%
</TABLE>

         D.       Portfolio Performance Factor

                  The Portfolio Performance Factor is determined by comparing
                  the actual performance of designated segments of Progressive's
                  investment portfolio ("Portfolio Segments") against specified
                  external benchmarks, which shall be risk-adjusted as provided
                  herein ("Investment Benchmarks").

                  The applicable Portfolio Segments, the weighting of the
                  applicable Portfolio Segments for any participant, the related
                  Investment Benchmarks and the funds, collection of funds or
                  indexes which comprise the Investment Benchmarks will be
                  designated, and may be changed from year to year, by the
                  Committee.

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                  The Portfolio Performance Factor is based on Plan year
                  performance of each designated Portfolio Segment of
                  Progressive's investment portfolio. Investment results are
                  marked to market in order to calculate total return, which is
                  then compared against the designated risk-adjusted Investment
                  Benchmark to produce a Performance Score for the applicable
                  Portfolio Segment.

                  For 2004, and for each Plan year thereafter until otherwise
                  determined by the Committee, for purposes of the Plan,
                  performance shall be measured on the basis of a single
                  Portfolio Segment: the fixed income portfolio ("Fixed Income
                  Portfolio").

                  Fixed Income Portfolio. At the conclusion of a Plan year, the
                  investment funds which comprise the selected Investment
                  Benchmark for the Fixed Income Portfolio will be risk-adjusted
                  through application of the Modigliani formula for measuring
                  risk-adjusted performance ("Modigliani Formula") in accordance
                  with the provisions of Exhibit I hereto, and ranked according
                  to their respective risk-adjusted returns for the Plan year.
                  In applying the Modigliani Formula to the Investment Benchmark
                  for the Fixed Income Portfolio, risk-adjusted returns are
                  calculated using the standard deviation of three years of
                  quarterly returns (i.e. 12 data points). The investment
                  performance achieved by the Fixed Income Portfolio for the
                  Plan year will then be compared against the risk-adjusted
                  performance of the several investments which comprise the
                  applicable Investment Benchmark to determine the decile in
                  which such Portfolio's performance falls ("Decile Ranking").
                  The Performance Score of the Fixed Income Portfolio is
                  determined by its Decile Ranking for the Plan year, as
                  follows:

<TABLE>
<CAPTION>
DECILE              PERFORMANCE
RANKING                SCORE
-------------------------------
<S>                 <C>
  1st                  2.00
-------------------------------
  2nd                  1.78
-------------------------------
  3rd                  1.56
-------------------------------
  4th                  1.33
-------------------------------
  5th                  1.11
-------------------------------
  6th                   .89
-------------------------------
  7th                   .67
</TABLE>

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<TABLE>
<S>                     <C>
-------------------------------
  8th                   .44
-------------------------------
  9th                   .22
-------------------------------
  10th                    0
-------------------------------
</TABLE>

                  Performance of the Fixed Income Portfolio shall be measured by
                  any one, or a combination of any two or more, of the following
                  benchmarks, or such other benchmark or benchmarks, as shall be
                  designated by the Committee, which will be risk-adjusted as
                  described above:

                           Rogers Casey Intermediate Fixed Income Funds

                           Rogers Casey Limited Duration Fixed Income Funds

                           Lehman Intermediate Corp./Gov. Index

                  The applicable Investment Benchmark(s), or combination
                  thereof, will be selected, and may be changed on an annual or
                  quarterly basis, by or with the approval of the Committee. For
                  2004, and for all subsequent Plan years until otherwise
                  determined by the Committee, the performance of the Fixed
                  Income Portfolio will be measured by the Rogers Casey
                  Intermediate Fixed Income Funds benchmark. In the event that
                  different Investment Benchmarks are applicable to different
                  quarterly periods within a given Plan year, the quarterly
                  performance results will be combined and the arithmetic mean
                  of such results will equal the Performance Score for the Plan
                  year.

                  The Portfolio Performance Factor for any participant can vary
                  from 0 to 2.0, based on actual performance versus the
                  pre-established Benchmarks.

5.       Discretionary Bonus Pool Component

         A.       A pool of bonus money will be objectively determined and made
                  available to the CEO to distribute among designated
                  participants at his or her sole discretion, subject to
                  approval by either the Chief Human Resource Officer or Chief
                  Financial Officer. The CEO shall designate the individuals, if
                  any, who are eligible to participate in the Discretionary
                  Bonus Pool Component for a given Plan year. For 2004, and each

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                  Plan year thereafter until otherwise determined by the CEO,
                  the eligible participants for the Discretionary Bonus Pool
                  Component are Steve Anderson, Evelyn Erb, David Benson and
                  Anthony Grandolfo. The CEO is not obligated to disburse all of
                  the funds in the bonus pool, and may not disburse more than
                  the value of the pool. Undisbursed funds will not be carried
                  over to future years.

         B.       The Discretionary Bonus Pool is based on the Fixed Income
                  Portfolio performance and is calculated by adding the product
                  of each participant's Paid Earnings multiplied by the target
                  percentage designated by the CEO for the purpose of
                  determining the amount of the Discretionary Bonus Pool (not to
                  exceed 20%), multiplied by the performance score of the Fixed
                  Income Portfolio, which can range from 0 to 2. The
                  Discretionary Bonus Pool will be calculated using the amount
                  of salary actually paid to eligible participants during the
                  course of the Plan year.

6.       After the end of each Plan year, and after the investment results and
         Benchmark data for such Plan year have become available, the bonuses
         earned by each participant pursuant to the provisions of Sections 4 and
         5 of this Plan will be calculated and then aggregated to determine the
         Annual Bonus earned by each participant in the Plan. Subject to the
         following paragraph and Paragraph 7 below, the Annual Bonuses for a
         Plan year will be paid to Plan participants as soon as practicable
         after investment results and Benchmark data for such Plan year become
         available, but no later than March 15th of the following year.

         Any Plan participant who is eligible to participate in The Progressive
         Corporation Executive Deferred Compensation Plan ("Deferral Plan") may
         elect to defer all or any portion of his or her annual Portfolio
         Performance Bonus otherwise payable under this Plan, subject to and in
         accordance with the terms of the Deferral Plan. Bonuses based on the
         Discretionary Bonus Pool Component are not eligible for deferral under
         the Deferred Plan.

7.       Unless otherwise determined by the Committee, and except as otherwise
         provided herein, in order to be entitled to receive an Annual Bonus for
         any Plan year, the participant must be an active employee of
         Progressive on the last day of such Plan year ("Qualification Date").
         Any participant who is on a leave of absence covered by the Family and
         Medical Leave Act of 1993, personal leave approved by the Company,
         military leave or short or long-term disability on the Qualification
         Date relating to any Plan year will be entitled to receive an Annual
         Bonus for the Plan year based on the

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         Paid Earnings received by the participant during the Plan year. Annual
         Bonus payments made to participants will be net of any legally required
         deductions for federal, state and local taxes and other items.

8.       The right to any Annual Bonuses hereunder may not be sold, transferred,
         assigned or encumbered by any participant. Nothing herein shall prevent
         any participant's interest hereunder from being subject to involuntary
         attachment, levy or other legal process.

9.       The Plan will be administered by or under the direction of the
         Committee. The Committee will have the authority to adopt, alter,
         amend, modify and repeal such rules, guidelines, procedures and
         practices governing the Plan as it, from time to time, in its sole
         discretion deems advisable.

         The Committee will have full authority to determine the manner in which
         the Plan will operate, to interpret the provisions of the Plan and to
         make all determinations thereunder. All such interpretations and
         determinations will be final and binding on Progressive, all Plan
         participants and all other parties. No such interpretation or
         determination may be relied on as a precedent for any similar action or
         decision.

         Unless otherwise determined by the Committee, all of the authority of
         the Committee hereunder (including, without limitation, the authority
         to administer the Plan, select the persons entitled to participate
         herein or with respect to the various Bonus Components provided for
         herein, interpret the provisions hereof, waive any of the requirements
         specified herein and make determinations hereunder and to establish,
         change or modify Bonus Components, Component weightings, Investment
         Benchmarks, Performance Targets and Target Percentages) may be
         exercised by the CEO and Chief Human Resource Officer, acting jointly.
         If either of said officers is unavailable or unable to participate, or
         if either of such positions are vacant, the Chief Financial Officer may
         act instead of such officer. In the event of a dispute or conflict, the
         determination of the Committee will govern.

10.      The Plan may be terminated, amended or revised, in whole or in part, at
         any time and from time to time by the Committee, in its sole
         discretion.

11.      The Plan will be unfunded and all payments due under the Plan will be
         made from Progressive's general assets.

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12.      Nothing in the Plan shall be construed as conferring upon any person
         the right to remain a participant in the Plan or to remain employed by
         Progressive, nor shall the Plan limit Progressive's right to discipline
         or discharge any of its officers or employees or change any of their
         job titles, duties or compensation.

13.      Progressive shall have the unrestricted right to set off against or
         recover out of any bonuses or other sums owed to any participant under
         the Plan any amounts owed by such participant to Progressive.

14.      This Plan supersedes all prior plans, agreements, understandings and
         arrangements regarding bonuses or other cash incentive compensation
         payable or due to any participant from Progressive with respect to the
         performance of Progressive's investment portfolio. Without limiting the
         generality of the foregoing, this Plan supersedes and replaces the 2003
         Progressive Capital Management Bonus Plan (the "Prior Plan"), which is
         and shall be deemed to be terminated as of December 27, 2003 (the
         "Termination Date"); provided, that any bonuses or other sums earned
         and payable under the Prior Plan with respect to any Plan year ended on
         or prior to the Termination Date shall be unaffected by such
         termination and shall be paid to the appropriate participants when and
         as provided thereunder.

15.      This Plan is adopted and, is to be effective, as of December 28, 2003,
         which is the commencement of Progressive's 2004 fiscal year. This Plan
         shall be effective for the 2004 Plan year (which coincides with
         Progressive's 2004 fiscal year) and for each Plan year thereafter
         unless and until terminated by the Committee.

16.      This Plan shall be interpreted and construed in accordance with the
         laws of the State of Ohio.

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 METHOD USED TO CALCULATE THE BONUS COMPENSATION FOR PCM FIXED INCOME PORTFOLIO

The performance factor that determines the bonus component of PCM compensation
depends on the decile ranking of the PCM Portfolio Segment's total return
compared to the risk-adjusted total return of its peers from the Rogers-Casey
survey of Intermediate Fixed Income fund managers. Because the R-C survey is
only conducted quarterly, we must use quarterly data for both returns standard
deviation. The annual returns are calculated from the 4 quarterly returns of the
year, but the standard deviation calculation is derived from the most recent 12
quarters (3 years) and converted to annual terms. A fund must have return data
for all 12 quarters to be included in the comparison sample.

To calculate the decile ranking of PCM returns relative to the returns from the
Rogers-Casey survey, we adjust the individual R-C fund managers' returns to
match the risk of the PCM Portfolio Segment by applying the Modigliani &
Modigliani (M2) formula. Thus, the raw PCM return and the risk-adjusted PCM
return will be identical, while the individual fund manager returns will be
adjusted according to how much risk each has relative to PCM. The formula and
definitions are given below.

RA Return (fund) = [STDpgr/STDfund] * [Raw Return (fund) - Rf] + Rf

         STDpgr = Sample Standard Deviation of Quarterly Returns (Annualized)
         for 3 Years (i.e., 12 data points)

         STDfund = Sample Standard Deviation of Quarterly Returns (Annualized)
         for 3 Years (i.e., 12 data points)

         Raw Return (fund) = Total Return of Individual R-C Fund Manager for 4
         Quarters (Annual return)

         Rf = "Risk-free rate" 90-day LIBOR Rate at Beginning of Each Quarter
         for 4 Quarters (Annual return)

<TABLE>
<CAPTION>
Example 1:                                             Example 2:
Fund had more risk than PCM                            Fund had less risk than PCM
<S>                                                    <C>
STDpgr = 15%                                           STDpgr = 15%
STDfund = 20%                                          STDfund = 10%
Raw Return (fund) = 8%                                 Raw Return (fund) = 8%
Rf = 4%                                                Rf = 4%

RA Return (fund) = [15% / 20%]*[8% - 4%] + 4%          RA Return (fund) = [15% / 10%]*[8% - 4%] + 4%
</TABLE>

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<TABLE>
<S>                                                    <C>
RA Return (fund) = 7%                                  RA Return (fund) = 10%

Because the fund was riskier, its RA return is lower   Because the fund was less risky, its RA return is higher
</TABLE>

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