Amwest Insurance Group Inc. Announces Third Quarter Results.

CALABASAS, Calif.--(BUSINESS WIRE)--Nov. 3, 1998--Amwest Insurance Group Inc. (AMEX:AMW) (PSE:AMW) reported net income of $2,098,000, or $.53 per share, and $5,129,000, or $1.30 per share, for the three months and nine months ended Sept. 30, 1998, respectively, as compared with net income of $685,000, or $.18 per share, and $3,784,000, or $1.01 per share, for the three months and nine months ended Sept. 30, 1997, respectively.

Operating income, which excludes net realized gains, was $844,000, or $.21 per share, and $2,630,000, or $.67 per share, for the three months and nine months ended Sept. 30, 1998, respectively, as compared with an operating loss of $4,000, or $.00 per share, and $2,445,000, or $.65 per share, for the three and nine months ended Sept. 30, 1997, respectively.

The amounts have been restated to reflect the 10% stock dividend paid to stockholders of record as of March 31, 1998.

Gross premiums written increased 15% to $34,687,000 for the three months ended Sept. 30, 1998, as compared with $30,083,000 for the three months ended Sept. 30, 1997.

Earned premiums also increased to $25,633,000 in the third quarter of 1998 from $23,736,000 in 1997, an increase of 8%.

The Surety Division continued its recent growth with gross premiums written of $26,594,000, a 15% increase over the three months ended Sept. 30, 1997.

The Surety Division's Commercial Surety product has continued to show substantial increases in written premium, with the gross written premium increasing 56% to $6,336,000 for the three months ended Sept. 30, 1998, vs. $4,064,000 for the comparable 1997 period.

"This growth continues to decrease the company's reliance on the Contract Surety product which has had a higher loss ratio than the Commercial Surety product," commented John Savage, president of Surety Division.

"While the Commercial Surety product generally has higher acquisition costs due primarily to higher commission rates, we believe that the long-term loss characteristics are more favorable than the contract product line and should help the company achieve lower overall combined ratios for the surety product," noted Savage.

For the third quarter of 1998, Contract Surety had a loss and loss adjustment expense ratio of 51% vs. 29% for the comparable 1997 period. The Commercial Surety loss ratio was 16% and 18%, respectively, for the three months ended Sept. 30, 1998 and 1997. This, when combined with the Court Division's results, produced overall loss and loss adjustment expense ratios of 32% for the quarter ended Sept. 30, 1998, vs. 30% for the corresponding 1997 period.

The Property & Casualty Division also showed strong growth for the quarter with gross premiums written increasing to $8,093,000, an 18% increase over the three months ended Sept. 30, 1997.

"The increased writings for the Property & Casualty Division are indicative that the company is making progress in bringing its new programs to market," noted Guy Main, president of the Property & Casualty Division. "We believe that this will have a continuing positive impact on the division's expense ratio, which is essential to our success."

For the quarter, the expense ratio for the division declined to 34% of earned premiums, compared with 42% for the comparable 1997 period.

Additionally, the loss and loss adjustment expense ratio declined to 63% for the quarter, bringing the ratio to 73% for the year-to-date period.

"While still five points higher than the first nine months of 1997, we are pleased that our experience has improved over the first six months of the year," noted Main.

Amwest is a Calabasas-based insurance holding company underwriting surety and property and casualty insurance through Amwest Surety Insurance Co., Condor Insurance Co. and Far West Insurance Co.

Certain statements contained in this news release regard matters which are not historical facts and are forward-looking statements. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: the ineffectiveness of the aforementioned programs, a deterioration in results of the company's other products, or a general economic decline. The company undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. -0-

             Amwest Insurance Group Inc. and Subsidiaries
            (Amounts in thousands, except per share data)

                Consolidated Statements of Operations

                           Three months ended      Nine months ended
                                Sept. 30,               Sept. 30,
                            1998        1997        1998        1997

Gross premiums written   $ 34,687    $ 30,083     $99,073     $79,868
Net premiums earned        25,633      23,736      80,005      66,963
Losses and loss
 adjustment expenses        9,951      10,229      30,047      25,279
Policy acquisition
 costs                     12,072      11,593      39,254      32,561
General operating
 costs                      3,824       3,244      10,539       9,416
  Total underwriting
   expenses                25,847      25,066      79,840      67,256
  Underwriting income
   (loss)                    (214)     (1,330)        165        (293)
Interest expense             (475)       (585)     (1,386)     (1,464)
Net investment income       1,733       1,594       4,870       4,880
Net realized gains          1,901       1,044       3,786       2,029
  Income before income
   taxes                    2,945         723       7,435       5,152
Provision for income
 taxes                        847          38       2,306       1,368
  Net income             $  2,098    $    685    $  5,129    $  3,784
Net earnings per share:
  Basic                  $   0.54    $   0.18    $   1.33    $   1.02
  Diluted                    0.53        0.18        1.30        1.01

                Consolidated Balance Sheet Information

                                  Sept. 30, 1998    Dec. 31, 1997

Total assets                         $215,783          $190,519
Total liabilities                     154,920           133,340
Total stockholders' equity             60,863            57,179
  Book value per share               $  15.54          $  15.05

             Amwest Insurance Group Inc. and Subsidiaries
                        (Amounts in thousands)

                        Summary of Premiums and Losses by Product Line
                           Three months ended      Nine months ended
                                Sept. 30,               Sept. 30,
                            1998        1997        1998        1997
Surety
 Gross premiums written   $26,594     $23,209     $76,437     $60,697
 Net premiums earned       19,887      18,159      63,449      50,479
 Losses and loss
  adjustment expenses       6,308       5,358      17,905      14,039
 Other expenses            13,934      12,500      43,451      35,338
 Underwriting income
  (loss)                  $  (355)    $   301     $ 2,093     $ 1,102
 Loss and loss adjustment
  expense ratio                32%         30%         28%         28%
 Expense ratio                 70%         69%         68%         70%
 Combined ratio               102%         98%         97%         98%

Property & Casualty
 Gross premiums written   $ 8,093     $ 6,874     $22,636     $19,171
 Net premiums earned        5,746       5,577      16,556      16,484
 Losses and loss
  adjustment expenses       3,643       4,871      12,142      11,240
 Other expenses             1,962       2,337       6,342       6,639
 Underwriting income
  (loss)                  $   141     $(1,631)    $(1,928)    $(1,395)
 Loss and loss adjustment
  expense ratio                63%         87%         73%         68%
 Expense ratio                 34%         42%         38%         40%
 Combined ratio                98%        129%        112%        108%

Total Company
 Gross premiums written   $34,687     $30,083     $99,073     $79,868
 Net premiums earned       25,633      23,736      80,005      66,963
 Losses and loss
  adjustment expenses       9,951      10,229      30,047      25,279
 Other expenses            15,896      14,837      49,793      41,977
 Underwriting income
  (loss)                  $  (214)    $(1,330)    $   165     $  (293)
 Loss and loss adjustment
  expense ratio                39%         43%         38%         38%
 Expense ratio                 62%         63%         62%         63%
 Combined ratio               101%        106%        100%        100%