Progressive Corp.'s (PGR) second quarter earnings lagged the Zacks Consensus estimate as well as the year-ago results. The magnitude of the increase in expense was more than the increase in revenue, thus inducing lower numbers. Considering the state of the economy, we expect significant pressure on underwriting margins and restriction in its top-line growth in the near term. We retain our Underperform rating. Our six-month target price of $18.00 equates to 15.5x our earnings estimate for 2012. Combined with $0.41 per share annual dividend this price target implies an expected negative total return of 6.2% over that period.