Amwest Insurance Group Inc. announces second-quarter results.

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Aug. 14, 1996--Amwest Insurance Group Inc. (ASE/PSE:AMW) reported a net loss of $1,311,000 for the three months ended June 30, 1996, as compared with net income of $1,682,000 for the three months ended June 30, 1995.

The results for the second quarter of 1995 have been restated to account for the operations of Condor Services Inc., which was acquired on March 14, 1996, in a transaction accounted for as a pooling of interests.

The results for the second quarter of 1996 include a non-recurring $1.3 million pre-tax charge for costs associated with amending the company's current lease, accelerating the lease termination date from July 31, 1998, to June 30, 1997. The company also announced it has entered into a new lease agreement for approximately 63,000 square feet in a building currently under construction in Calabasas, Calif.

The new lease is anticipated to commence on April 1, 1997. The new building will allow the company to consolidate the operations of Amwest Surety with the property and casualty operations of its recently acquired subsidiary, Condor Insurance Co. The consolidation of the two operations is expected to save over $1 million annually in occupancy costs, commencing with occupancy at the new building.

In addition to the new lease agreement, the company has a one-time option to purchase the new headquarters building.

The company also announced that it has amended its Revolving Credit Agreement with Union Bank to increase the amounts available from $12.5 million to $17.5 million. The amount available under the line of credit will be reduced by $2.5 million on Sept. 30, 1996, and by $3 million each Sept. 30 thereafter, with the final payment due on Sept. 30, 2001.

At June 30, 1996, the company had borrowed $12.5 million under the line of credit, leaving $5 million available.

The results for the three months ended June 30, 1996, were hampered by increased loss ratios for both the surety and specialty property and casualty operations. The loss ratio for the surety operations increased from 33 percent for the three months ended June 30, 1995, to 45 percent for the three months ended June 30, 1996, due to increased loss severity in the contract performance and payment product line.

The loss ratio for the specialty property and casualty operations increased from 68 percent for the three months ended June 30, 1995, to 85 percent for the three months ended June 30, 1996, due to adverse results from the private passenger automobile operations in the state of Arizona.

In response to the disappointing results for this program, effective May 1, 1996, the company implemented a rate increase averaging approximately 21.4 percent on the Arizona private passenger automobile program.

In reviewing the results for the three months ended June 30, 1996, John E. Savage, president and co-chief executive officer, noted that the finalization of the costs associated with accelerating the lease termination of the company's current headquarters, together with a new agreement which will both consolidate the company's insurance subsidiaries and reduce the overall cost structure of the company by over $1 million annually is an important step in the company's future.

He also noted that the contract performance and payment product line continues to produce disappointing results, primarily due to several large losses on contractor work programs.

He indicated that the company has performed a thorough review of the loss experience associated with its contract performance and payment product line and continues to believe that the company's underwriting guidelines, with minor adjustments, should produce more favorable results in the future.

He also noted that the company's other surety products continue to produce favorable results.

Amwest is a Woodland Hills-based insurance holding company underwriting specialty property and casualty insurance through Amwest Surety Insurance Co., Condor Insurance Co. and Far West Insurance Co. -0-

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

                                Consolidated Statements of Operations
                                Three Months Ended   Six Months Ended
                                  June 30,                June 30,
                             1996          1995      1996         1995

Premiums written         $ 25,749      $ 25,333  $ 48,957     $ 47,132

Net premiums earned      $ 21,535      $ 21,152  $ 43,370     $ 42,385

Losses and loss
 adjustment expenses       11,830         8,509    21,901       16,643
Policy acquisition costs    9,069         9,668    18,556       18,783
General operating costs     3,287         3,618     7,115        7,757

 Total underwriting
  expenses                 24,186        21,795    47,572       43,183

 Underwriting loss         (2,651)         (643)   (4,202)       (798)

Interest expense             (307)         (268)     (545)       (548)
Collateral interest
 expense                     (291)         (433)     (647)       (878)
Merger expense                 -             -       (710)         -
Lease termination cost     (1,300)           -     (1,300)         -
Recovery on
 misappropriation of
 funds                        -             890       -            890
Net investment income       1,679         1,985     3,486        3,982
Net unrealized gain on
 trading securities           -              44       -             75
Net realized investment
 gains                        516           590     1,541          610
Commissions and fees           80           131       223          312

 Income (loss) before
  income taxes             (2,274)        2,296    (2,154)       3,645

 Provision (benefit)
  for income taxes           (963)          614      (929)         704

 Net income (loss)        $(1,311)      $ 1,682   $(1,225)     $ 2,941

Earnings (loss) per
 common share:

 Operating income (loss)  $ (0.49)       $ 0.38   $ (0.67)      $ 0.76
 Net realized investment
  gains                      0.10          0.12      0.30         0.12

 Net income (loss)        $ (0.39)       $ 0.50   $ (0.37)      $ 0.88

 Weighted average shares
  outstanding               3,353         3,368     3,348        3,357
-0-

                               Consolidated Balance Sheet Information
                               June 30, 1996            Dec. 31, 1995

Total assets                     $ 179,865                $ 183,833
Total liabilities                  128,822                  128,758
Total stockholders' equity          51,043                   55,075

      Book value per share       $   15.37                $   16.76

      Shares outstanding             3,322                    3,287-0-

CONTACT: Amwest Insurance Group Inc., Woodland Hills

Steven R. Kay, 818/592-3200