DRUG COUNT AGAINST CEO AT PROGRESSIVE "DISCHARGED"

Peter B. Lewis, the chairman and chief executive officer of
Progressive Corp. in Mayfield, was arrested Wednesday at the Auckland,
New Zealand, airport and later charged with possession of more than 3
ounces of marijuana and marijuana resin.

Lewis, 66, a proponent of legalizing marijuana for medicinal use,
appeared Friday (Thursday in the United States) in the Otahuhu
District Court, according to a source in Auckland. The source said
Lewis made an unspecified contribution to an Auckland drug
rehabilitation center, and the charges against him were "discharged
without conviction."

Judge David Harvey then suppressed Lewis' name, which is allowed under
provisions of New Zealand law. Marie Dyhrberg, an Auckland attorney
who represents Lewis, declined to comment.

"It would not be in the interest of my client," she
said.

Asked about Lewis' drug arrest, Progressive spokeswoman Leslie Kolleda
said yesterday, "We have reached Peter on vacation and he has no
comment on the situation." She declined to say where Lewis was
vacationing.

Kolleda refused a reporter's request to interview Lewis but offered to
set up an interview when the CEO returns to Cleveland later his month.

New Zealand's strict privacy laws kept much of Lewis' case
confidential.

Robyn Orchard, of the Auckland Police Department, said that because
the case had been discharged and the name suppressed by the judge, she
could not release any information except that a 66-year-old U.S.
citizen had been arrested and appeared in court but was released after
making a contribution to Odyssey House, the rehabilitation center.

A story published yesterday in the Auckland-based New Zealand Herald,
headlined, "Drug-stash billionaire walks free," asks if a foreign
citizen was given preferential treatment by the court but does not
name Lewis. The paper described the citizen as a "a billionaire
businessman visiting Auckland for the America's Cup regatta."

According to the Herald, the businessman admitted to police in a
videotaped interview that he brought drugs into the country for his
own use.

The drugs - about 2 ounces of hashish and a little more than 11/2
ounces of cannabis plant - were found in his briefcase, along with two
pipes, the Herald said, citing a police prosecution summary.

The newspaper also reported it was going to court for access to
information about his arrest and the right to name him.

The Herald also reported that Dyhrberg approached its reporter in
court and warned against publishing her client's name.

"Don't try anything cute because we'll sue the arse off you and he has
the money to do it," the Herald quoted Dyhrberg as telling its reporter.

Asked whether such an arrest was an event that public companies must
disclose, Kolleda said, "I honestly don't know." She wouldn't comment
on whether attorneys for Progressive are looking into the issue.

Cleveland securities lawyer David S. Inglis wouldn't comment on the
Lewis case because he was unaware of it. Generally, he said, what
public companies must disclose depends on the seriousness of the
allegation and the extent to which it would reflect on the executive's
integrity or ability to perform his job. "It's not a black and white
issue," Inglis said.

In 1998, Lewis was one of three financial backers of an estimated $5
million advertising campaign urging voters in five states to legalize
the medical use of marijuana. The initiatives passed in Alaska,
Arizona, Nevada, Oregon and Washington state.

Progressive, the nation's fourth-largest personal auto insurer,
reported revenues of $5.29 billion in 1998 and profits of $456.7
million. The company has more than 12,000 employees.

Lewis owned about 9 million shares of Progressive's stock at the
beginning of last year, according to a Securities and Exchange
Commission filing. His stake would be worth $640.2 million at
Progressive's closing share price of $70.69 yesterday.

A colorful, energetic executive, Lewis also is known for his
philanthropy. He contributed $50 million to the Solomon R. Guggenheim
Museum in New York, and his alma mater, Princeton University,
announced in June that Lewis had given the school its second-largest
grant ever - $55 million - for a center housing biology's biggest
project, the mapping of the human genome.

Two years ago, he gave $28.8 million toward the construction of a new
Weatherhead School of Management Building at Case Western Reserve
University. When completed next year, the 149,000-square-foot
facility, designed by famed architect Frank O. Gehry and estimated to
cost $48.3 million, will house classrooms and faculty offices and
serve as the center of Weatherhead's new Peter B. Lewis campus.