Transfer of Massachusetts Personal Automobile Business from Berkshire Mutual Insurance Company to Commerce Insurance Company

    WEBSTER, Mass.--Oct. 4, 2001--The Commerce Group, Inc. today announced that it entered into an agreement on September 28, 2001, with Berkshire Mutual Insurance Company for the transfer of Massachusetts personal automobile business written by Berkshire to Commerce Insurance Company, effective January 1, 2002. Under terms of the agreement, Commerce Insurance shall offer agency contracts to independent agencies that represent Berkshire for personal automobile insurance in Massachusetts. This will allow agents of Berkshire the opportunity to offer Commerce automobile insurance policies to their customers, who are currently insured by Berkshire, beginning with policies that renew in 2002. Commerce will assume all of Berkshire's obligations for future policy years beyond 2001 under the Massachusetts residual market system, commonly known as C.A.R. (Commonwealth Automobile Reinsurers), and receive consideration of $7,000,000 from Berkshire in early January, 2002.

    The Commerce Group, Inc. is headquartered in Webster, Massachusetts. Property and casualty insurance subsidiaries include The Commerce Insurance Company and Citation Insurance Company in Massachusetts, Commerce West Insurance Company in California and American Commerce Insurance Company in Ohio. The Commerce Group, Inc. companies predominantly offer personal automobile insurance along with a broad range of other personal and small commercial products. These products are marketed to affinity groups, individuals, families and businesses through the Company's strong relationships with professional independent insurance agents. Commerce's A.M. Best group rating is A+ (Superior) and it is ranked as the 28th largest combined personal and commercial automobile writer in the country based on direct premiums written.

    Forward Looking Statements

    This press release contains some statements that are not historical facts and are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve opinions, assumptions 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, those risks and uncertainties in our business that are described in the Company's Forms 10-K and 10-Q, Schedules 13D and 13G, and other documents filed with the SEC, the possibility of adverse catastrophe experience and severe weather, adverse trends in claim severity or frequency, adverse state and federal regulation and legislation, interest rate risk, rate making decisions for private passenger automobile policies in Massachusetts, potential rate filings outside of Massachusetts, adverse impacts related to consolidation activities, heightened competition, as well as the economic, market or regulatory conditions and risks associated with entry into new markets and diversification. Commerce Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.