Allcity Insurance Company announces its results for the year.

NEW YORK--(BUSINESS WIRE)--March 31, 1998--Allcity Insurance Co. (the "Company") today announced its operating results for the year ended Dec. 31, 1997. Net loss was $(0.1) million or $(0.01) per share for the year ended Dec. 31, 1997 compared to $2.6 million or $0.37 per share for 1996.

Net earned premium revenues declined by $15.2 million or 15.8% primarily due to the depopulation of the assigned risk automobile pools and reduced volume in certain commercial lines, principally voluntary commercial automobile and workers' compensation due to competition, reunderwriting and repricing. Net earned premium revenues were negatively affected by $1.7 million in reinsurance premiums for retrospectively rated reinsurance contracts written for 1995 and prior accident years.

The net loss reflects an increase in the 1997 accident year loss ratios, principally for the private passenger automobile and commercial assigned risk lines of business, based upon increased claim frequency and continued unfavorable development of prior accident year losses. Included in the company's results for 1997 were approximately $8.3 million in reserve strengthening related to losses from prior accident years.

Investment income decreased by $0.6 million primarily as a result of negative cashflow and lower yields. Service fee income declined by $0.9 million due to the continued depopulation of assigned risk pools.

Included in total revenues and net income for the years ended Dec. 31, 1997 and 1996 are net securities losses of $(0.2) million and gains of $1.1 million, respectively, which decreased and increased per share earnings by $(0.02) and $0.10, respectively (net of tax). -0-

                       Three Months              Twelve Months
                       Ended Dec. 31,            Ended Dec. 31,
                     1997           1996      1997            1996

Total Revenues    $22.1 mill.  $28.6 mill.  $102.6 mill.  $120.8 mill.

Net Securities    $(0.1)mill.  $(0.2)mill.  $(0.2) mill.  $  1.1 mill.
(Losses) gains

Net (Loss) Income $(0.8)mill.  $ 0.8 mill.  $(0.1) mill.  $  2.6 mill.

Basic (Loss)
Earnings per
share:
Basic (Loss)
Earnings          $(0.12)      $(0.11)      $(0.01)       $0.37

CONTACT: Allcity Insurance Company

212/387-3000