Motor Club of America Announces Fourth Quarter and 1999 Results

17 March 2000

    PARAMUS, N.J., March 16 Motor Club of America
(the "Company") announced today its results for the fourth
quarter and year ended December 31, 1999.
    For the three months ended December 31, 1999, net loss was $849,866 or
$.40 basic and diluted net loss per share as compared to net income of
$1,080,861 or $.51 basic and diluted net income per share for the same period
in 1998.  Revenues for the three month period were $17,708,809 as compared to
$14,879,605 in 1998.
    For the twelve months ended December 31, 1999, net income was $1,276,933
or $.60 basic and diluted net income per share as compared to $4,255,791 or
$2.02 basic net income per share and $2.01 diluted net income per share for
the same period in 1998.  Revenues for the year were $61,067,719 as compared
to $57,679,886 in 1998.
    Revenues and net income for North East Insurance Company and its
subsidiaries for the three months ended December 31, 1999 were $4,462,341 and
$170,921, respectively.  North East was acquired by the Company on September
24, 1999.
    The Company had previously announced on March 1, 2000 that it expected to
report a consolidated net loss for the three months ended December 31, 1999.
Archer McWhorter, Chairman of the Board of the Company said, "While we were
extremely disappointed with our fourth quarter results, we are heartened by a
number of developments that took place during the fourth quarter 1999 and
first quarter 2000.  Our Commercial Lines efforts continue to meet with
success, with the recent Mountain Valley acquisition being principal among
those achievements.  As we have stated, this acquisition fully establishes the
Company as a regional insurer in New England and the Mid-Atlantic writing
commercial lines."
    "Our Preserver unit continues to contribute strong profits to our overall
results despite losses from Hurricane Floyd in 1999.  Preserver's A.M. Best
rating was just upgraded.  This followed A.M.Best's fourth quarter upgrade of
 North East, which  reported a solid profit in its first full quarter since
its acquisition by Motor Club and we anticipate additional profit improvements
in this unit as well. We look forward to building on these very decisive steps
to continue to transform our companies into a strong regional commercial lines
insurer."
    The Company reported that its Preserver Commercial Lines net premium
increased by $832,000 or 10% as compared to 1998. The Company also reported
that it expected its Commercial Lines net premium in 2000 to approach $30
million.  Thus, for the first time in the Company's history, the revenues from
the New Jersey private passenger automobile unit will constitute less than 50%
of the Company's consolidated revenues.
    The Company reiterated its previous announcement that the cause of the
consolidated net loss for the three months ended December 31, 1999, was the
result of significantly higher Accident Year 1999 New Jersey private passenger
automobile ("PPA") losses, specifically PIP (No Fault) first party claims.
Additional reserves have been provided for these losses. The Company believes
that this development may not be indicative of longer term trends and may be
attributable to the 1999 implementation of the New Jersey Automobile Insurance
Cost Reduction Act ("AICRA"), which was designed to reduce both premium and
losses in that line of business in that State. The reduction in PPA premium
associated with the AICRA rate rollback was in line with the Company's
expectations. New Jersey PPA losses in Accident Year 1999 in coverages the
Company offers other than PIP were only modestly higher as compared to prior
years, and loss development of prior accident years for all coverages
including PIP was not materially different than that previously experienced.
    The Company reported that elements of AICRA and other statutory amendments
have yet to be implemented, and as such, may still have an impact on Motor
Club's operations.  The New Jersey PPA market continues to be subject to
volatility, and consistent with the Company's long-stated goal to increase its
identification as a provider of small commercial lines insurance and expand
and diversify its operations outside the State of New Jersey, the Company is
reviewing strategies to improve the profitability of its PPA business and to
otherwise add more value to its shareholders.
    Losses and expenses from Hurricane Floyd in September 1999 totaled
$511,000 or $.24 per share.  The Company also announced that acquisition
related expenses in connection with the Mountain Valley purchase would total
approximately $182,000 or $.09 per share, net of tax, in the first quarter
2000.

    Motor Club of America is a property and casualty insurance holding company
and is the parent company of the Preserver Insurance Group, which consists of:
Preserver Insurance Company, which writes small commercial and homeowners
insurance in New Jersey and Mountain Valley Indemnity Company, which is
located in Manchester, NH and writes commercial insurance in New England and
New York. Both Companies are rated B++ (Very Good) as part of the Preserver
Insurance Group. Motor Club of America Insurance Company writes personal
automobile insurance in New Jersey and is rated B+ (Very Good) by A.M. Best.
North East Insurance Company writes personal automobile and small commercial
lines insurance in the State of Maine and is rated B (Fair) by Best.  American
Colonial Insurance Company plans to commence operations in New York in the
second quarter of 2000, writing commercial lines in tandem with the products
offered by Mountain Valley.

    Additional information about Motor Club of America can be found on the
Company' s Internet web site http://www.motr.com.

    Forward-Looking Statement Disclaimer.  This press release contains
statement that are not historical facts and are considered "forward-looking
statements" (as defined in the Private Securities Litigation Reform Act of
1995), including statements concerning the expected benefits of the merger
with North East and acquisition of Mountain Valley and the expected future
plans related thereto.  These statements can be identified by terms such as
"believes", "expects", "may", "will", "should", "anticipates", the negatives
thereof, or by discussions of strategy.  Certain statements contained herein
are forward-looking statements that involve risks, uncertainties, opinions and
predictions, and no assurance can be given that the future results will be
achieved since events or results may differ materially as a result of risks
facing the Company.  These include, but are not limited to, economic, market
or regulatory conditions as well as catastrophic events.  Consummation of the
merger with North East and acquisition of Mountain Valley and future benefits
therefrom involve various risks and uncertainties, including the risk of
material adverse changes in financial markets or the condition of Motor Club;
risks associated with Motor Club's entry into new markets; and state
regulatory and legislative actions which can affect the profitability of
certain lines of business and impede the companies' ability to charge adequate
rates.  Accordingly, Motor Club of America's premium growth and underwriting
results have been and will continue to be potentially materially affected by
those factors.

    This News Release Is Also Available At http://www.motr.com


                            MOTOR CLUB OF AMERICA
                               AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                           For the Year Ended       For the Three Months Ended
                        December 31,  December 31,  December 31,  December 31,
                           1999          1998          1999            1998
     Revenues:

    Insurance premiums
     (net of premiums
     ceded totaling
     $8,358,946,
     $6,776,174
     $3,059,232 and
     $1,597,196        $55,807,330   $53,175,663  $16,164,091   $13,694,617
    Net investment
     income              5,080,939     4,304,507    1,480,212     1,143,455
    Realized (losses)
     gains on sales
     of investments         36,040        28,545       30,675          (78)
    Other revenues         143,410       171,171       33,831        41,611
    Total revenues      61,067,719    57,679,886   17,708,809    14,879,605

    Losses and Expenses:

    Insurance losses and
     loss expenses incurred
     (net of reinsurance
     recoveries
     totaling $2,261,608,
     $4,736,671,
     ($570,934)and
     $2,322,004         40,631,053    36,479,591   12,217,750     9,942,623
    Amortization of
     deferred policy
     acquisition costs
     and other operating
     expenses           19,086,403    15,426,743    6,730,895     3,503,734
    Merger expenses        800,000            --           --            --

    Interest expense       448,117        54,146      271,259        54,146
    Total losses and
     expenses           60,965,573    51,960,480   19,219,904    13,500,503
    Income before Federal
     income taxes          102,146     5,719,406  (1,511,095)     1,379,102

    Provision for
     Federal income
     taxes: current        (21,865)      193,121       (67,024)      27,663
    deferred            (1,152,922)    1,270,494      (594,205)     270,578
    Total provision for
    Federal income
     taxes              (1,174,787)    1,463,615      (661,229)     298,421
    Net income (loss)   $1,276,933    $4,255,791     $(849,866)  $1,080,861

    Net Income per
     common share:
    Basic (loss)             $ .60         $2.02         $(.40)       $ .51
    Diluted                  $ .60         $2.01         $(.40)       $ .51

    Weighted average
     common and potential
     common shares outstanding:

    Basic                2,117,912     2,108,722    2,122,311     2,116,429
    Diluted              2,138,797     2,120,525    2,122,311     2,119,370

    Key Financial Statistics:

    Book value per share    $12.97        $13.15           --            --

    Loss ratio (GAAP basis)  72.8%         68.6%        75.6%         72.6%
    Expense ratio
     (GAAP basis)            36.4%         29.1%        43.3%         26.0%
    Combined ratio
     (GAAP basis)           109.2%         97.7%       118.9%         98.6%

    Net premium
     written           $54,508,215   $64,302,715  $17,607,251   $20,253,203