Vesta Group Reports Gains in 4thQ 2002

March 3, 2003

Vesta Insurance Group Inc. of Birmingham, Ala., reported net operating earnings of $4.5 million, or $0.13 per share in the fourth quarter 2002 compared to a loss of $2.3 million, or $(0.07) per share for the corresponding period in 2001. Net income from continuing operations was $1.1 million, or $0.03 per share for the quarter ending December 31, 2002 compared to a net loss of $1.6 million, or $(0.05) per share in the fourth quarter of 2001.

Net premiums written for the quarter were $110.3 million compared to $85.1 million in the fourth quarter of 2001, a 30 percent increase.

For the full year, net operating earnings were $7.2 million, or $0.21 per share compared to $5.3 million, or $0.20 per share in 2001. For the full year, the company reported a net loss from continuing operations of $9.7 million, or $(0.29) per share compared to a loss of $10.2 million or $(0.38) per share in 2001. Net premiums written for the full year were $552 million compared to $286 million in 2001, a 93 percent increase.

Vesta’s standard property-casualty business reported net operating earnings of $1.3 million. Effective Dec. 1, 2002, Vesta entered a 50 percent quota share reinsurance agreement for residential property business in Texas. During 2002, Vesta’s subsidiary, Texas Select Lloyds, wrote approximately $184 million of gross written premiums.

The company’s GAAP combined ratio for its residential property business and standard auto business was 96.8 percent and 99.6 percent, respectively. Overall, the standard property-casualty combined ratio was 97.7 percent for the fourth quarter compared to 109.9 percent for the same period in 2001. For the full year, the standard property-casualty combined ratio was 102.1 percent compared to 99.4 percent for 2001.

Vesta’s non-standard automobile businesses produced another strong quarter. Net operating earnings from the agency segment were $1.2 million. The specialty underwriting segment, which includes our underwriting risk on non-standard automobile insurance, added $1.6 million in net operating earnings.

In addition, Vesta announced that Hopson Nance who has served as interim chief financial officer since Oct. 2002, was elected the permanent CFO and treasurer.

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