Amwest Insurance Group Reports First- Quarter Results.

Business Editors

CALABASAS, Calif.--(BUSINESS WIRE)--May 19, 2000

Amwest Insurance Group Inc. (AMEX:AMW) (PSX:AMW) today reported first-quarter results for the period ended March 31, 2000.

For the quarter, the company reported net income of $803,000, or $0.19 per share, compared with net income of $2,366,000, or $0.55 per diluted share, for the corresponding prior-year period.

Operating income for the first quarter 2000, which excludes net realized investment gains and special charges, totaled $41,000, or $0.01 per share, contrasted to operating income of $1,878,000, or $0.43 per diluted share, in the prior-year period.

Premiums written grew to $36,673,000 for the first quarter 2000 over premiums written of $32,135,000 for the prior-year quarter. The increase in premiums written was attributable primarily to commercial surety, reflecting Amwest's strategy to grow this business line.

Net premiums earned increased 14% from $26,993,000 for the three months ended March 31, 1999 to $30,737,000 for the three months ended March 31, 2000 primarily due to a decrease in premiums ceded resulting from the nonrenewal, effective Jan. 1, 2000, of the company's annual aggregate stop loss reinsurance treaty and the quota share reinsurance treaty. The company's ceded premium was $6,492,000 for the three months ended March 31, 1999 compared with $1,122,000 for the three months ended March 31, 2000. The amounts ceded for the 2000 period are related to the company's excess of loss and SBA reinsurance programs that remain in place. Effective April 1, 2000, the company signed a term sheet with Underwriters Reinsurance Company (Barbados) Inc. for a three-year annual aggregate stop loss reinsurance treaty. The company is currently evaluating its options with respect to a quota share reinsurance treaty, as well as with respect to the benefits of a more traditional reinsurance program.

"We believe that the aggressive actions taken during the fourth quarter to strengthen the surety division combined with our overall operational tightening efforts worked to return Amwest to improved results from the fourth quarter of 1999," said John E. Savage, president and chief executive officer.

"We continue to see firming market conditions in commercial trucking, the core business in our P&C Division," said Savage. "We believe that our ability to effect rate increases, when combined with expense reductions, will soon yield more favorable results in this division."

On June 17, 1999, the company announced a program to repurchase up to $1.5 million of its common stock, as market conditions warrant. To date, 16,600 shares have been repurchased at an aggregate cost of $171,000.

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 that 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 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 recently modified commercial transportation products; a deterioration in premiums written or losses incurred in the company's surety and other specialty businesses; the ability to achieve increased percentage writings of commercial surety and court products; the lack of adherence by branch personnel to company underwriting guidelines; failure of the company to improve its leverage which could result in a reduction in the ratings from A.M. Best and other industry rating agencies; the ability of the company to obtain a waiver or amendment regarding a covenant included in the company's revolving bank credit agreement; the ability of the company to negotiate a quota share reinsurance treaty; a reduction in the investment yield earned on the company's investment portfolio; 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 to reflect the occurrence of unanticipated events.

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

                                 Consolidated Statements of Operations
                                                Three months ended
                                             March 31,       March 31,
                                               2000             1999

Premiums written                            $ 36,673         $ 32,135
Net premiums earned                         $ 30,737         $ 26,993
Net investment income                          1,877            1,769
Net realized investment gains                  1,155              740
Commissions and fees                             843              742
     Total revenue                            34,612           30,244
Net losses and loss adjustment expenses       13,548            9,086
Policy acquisition costs                      15,254           13,322
General operating costs                        4,053            3,939
Interest expense                                 620              554
     Total  expenses                          33,475           26,901
Income before income taxes                     1,137            3,343
Provision for income taxes                       334              977
      Net income                               $ 803          $ 2,366
    Net earnings per common share (a):
     Basic                                    $ 0.19           $ 0.55
     Diluted                                  $ 0.19           $ 0.55
    Operating earnings per common share (a):
     Basic                                    $ 0.01           $ 0.44
     Diluted                                  $ 0.01           $ 0.43

                              Consolidated Balance Sheet Information
                                      March 31, 2000   Dec. 31, 1999

Total assets                            $ 233,168         $ 241,695
Total liabilities                         176,489           184,893
Total stockholders' equity                 56,679            56,802
     Book value per share                 $ 13.08           $ 13.12

(a) 1999 and 1998 basic and diluted earnings per share have been calculated in accordance with SFAS No. 128.