PAULA NEGOTIATES QUOTA SHARE

PAULA Insurance Company entered into a prospective quota share reinsurance agreement with the Insurance Corporation of Hannover (ICH). The treaty terms allow for a variable cession of premiums by PAULA to ICH. Under the terms of the agreement, PAULA may cede no less than 10 percent and no more than $12.5 million of premiums earned in fiscal year 2000 on policies that are effective on or after Jan. 1, 2000. In 2001, PAULA may cede no less than 10 percent and up to 25 percent of earned premiums to its new reinsurance partner. The treaty has an effective date of July 1, 2000.