Motor Club of America Announces First Quarter Results

16 May 2000

    PARAMUS, N.J., May 15 Motor Club of America
("Company") announced today its first quarter results for the period ended
March 31, 2000.
    Revenues were $19,698,432 as compared to $14,314,773 for the same period
in 1999. Net income for the three month period was $249,512, or $.12 basic and
diluted net income per share, as compared to $985,621 or $.47 (basic) and $.46
(diluted) per share in 1999.
    The Company acquired North East Insurance Company ("North East") and
Mountain Valley Indemnity Company ("Mountain Valley") on September 24, 1999
and March 1, 2000, respectively. First quarter 2000 results includes non-
recurring expenses related to the Mountain Valley acquisition of $267,804 or
$.13 basic net income per share, net of taxes. Absent these non-recurring
charges, net income for the three months ended March 31, 2000 was $517,316 or
$.25 basic net income per share.
    Revenues and net income (loss) for North East (including its subsidiaries)
and Mountain Valley for the three months ended March 31, 2000 were as follows:

                                                    Revenues     Net Income
                                                                 (Loss)

    North East                                    $4,563,478     ($127,076)
    Mountain Valley                                1,466,823          4,759
    Total                                         $6,030,301     ($122,317)

    Archer McWhorter, Chairman of the Board of the Company, said "The first
quarter saw continued outstanding results at our Preserver unit, where
earnings increased 9% over last year, with personal auto results in New Jersey
improving over the second half of 1999. Although North East lost some money in
the first quarter, this is typical of historical first quarter results that
are affected by winter weather in Maine."
    Motor Club of America owns and operates five regionally focused property
and casualty insurance companies, including companies that specialize in small
and mid-sized insurance through the Preserver Insurance Group.
    The Preserver Insurance Group consists of Preserver Insurance Company,
which writes small commercial and homeowners insurance in New Jersey and
Mountain Valley Indemnity Company, which writes small and mid-sized commercial
insurance in New England and New York. The Preserver Insurance Group is rated
B++ (Very Good) by A.M. Best Company. American Colonial Insurance Company
plans to commence operations in New York in the second quarter 2000, writing
commercial lines in tandem with Mountain Valley.

    


                    Motor Club of America And Subsidiaries
               Condensed Consolidated Statements of Operations
                                 (Unaudited)

                                               For the Three Months Ended
                                              March 31, 2000  March 31,1999
    Revenues:

    Insurance premiums
    (net of
     premiums ceded totaling
     $2,350,518 (2000) and
     $1,818,897 (1999))                          $18,259,427    $13,084,199
    Net investment income                          1,399,286      1,192,532
    Other revenues                                    39,719         38,042
    Total revenues                                19,698,432     14,314,773

    Losses and Expenses:

    Insurance losses and
     loss expenses incurred
     (net of reinsurance recoveries
     totaling $2,684,701 (2000) and
     $883,621 (1999))                             12,482,005      8,882,943
    Amortization of deferred policy
     acquisition costs                             5,195,884      3,832,123
    Other operating expenses                       1,398,042        338,669
    Interest expense                                 323,607         52,969
    Amortization of goodwill                          21,174             --

    Total losses and expenses                     19,420,712     13,106,674
    Income before Federal
     income taxes                                    277,720      1,208,099
    Provision for Federal
     income taxes: current                            14,710         28,070
    deferred                                          13,498        194,408
    Total provision for Federal
     income taxes                                     28,208        222,478

    Net income                                      $249,512       $985,621

    Net Income per common share:
    Basic                                               $.12           $.47
    Diluted                                             $.12           $.46

    Weighted average common and
     potential common shares
    outstanding:
    Basic                                          2,124,387      2,116,429
    Diluted                                        2,124,387      2,127,745

    Key Financial Statistics:
    Book value per share                              $13.07         $13.26

    Loss ratio (GAAP basis)                            68.4%          67.9%
    Expense ratio (GAAP basis)                         36.1%          32.3%
    Combined ratio (GAAP basis)                       104.5%         100.2%

    Net premium written                          $17,621,390    $12,430,243