NJM News

November 11, 2008

Contact: Patrick W. Breslin, 609-883-1300, ext. 7070

NJM to Mail $61 Million Special Dividend Checks to Policyholders

Amid national financial crisis, conservative management again pays off for policyholders

New Jersey Manufacturers Insurance Company, the largest auto insurer in New Jersey, will continue its unbroken tradition of paying dividends to policyholders in every year since 1918, despite the current turbulent economic climate. In addition to paying Regular Dividends when each policyholder's one-year policy expires, NJM is pleased to announce that Special Dividend checks will be mailed to policyholders for the 15th year in a row, this year totaling $61 million.

Approximately 405,000 personal auto policyholders in New Jersey and Pennsylvania will receive Special Dividend checks averaging about $149 each from mid-November through mid-December. Since 1994, when NJM began its streak of Special Dividend payments, the average check has been about $166 per year.

Additionally, NJM's workers' compensation Regular Dividend will rise from 15% to 20% of premium. It will be returned to policyholders after an audit of their accounts for contracts expiring in January through March 2009. New Jersey Manufacturers Insurance Company is by far the largest workers' compensation insurer in New Jersey, covering about 6,000 businesses, or roughly 19.1% of the voluntary market by premium in 2007.

In all, NJM has returned $4.6 billion to policyholders for all lines of insurance over the past nine decades — a timeframe that encompasses not only the current economic turmoil but both World Wars, the Great Depression, periods of double-digit inflation and unemployment, and the rise of global and local terrorism.

"While some other companies have raised their auto insurance rates, relied on government bailouts or spent money on extravagant marketing campaigns, NJM remains a careful steward of policyholder resources without compromising service to customers," said Bernard M. Flynn, President and CEO of NJM. "We are well positioned to serve policyholders for many years to come with an A.M. Best rating for financial strength of A++ (Superior) — the highest possible rating and a distinction shared by only 1.5% of rated U.S. property-casualty insurance companies."

Further evidence of the Company's financial stability is that NJM's investment portfolio is comprised mostly of high-quality bonds, of which 98% are rated "A" or better. The Company's carefully selected equity investments comprise less than 8% of total assets.

Each personal auto policyholder's Special Dividend check will be 10% of the premium he or she paid for the 12-month policy that began in 2007 for all coverages except Personal Injury Protection (PIP) no-fault medical coverage. This is in addition to a 5% Regular Dividend already provided as a credit to the same customers when their policies renewed in 2008. Dividend payments have not been returned on PIP for the past six years due to ever-increasing costs to provide quality healthcare.

The return of dividends to policyholders enhances an already attractive value from NJM. The most recent statistics of NJM's average price per vehicle are:

* As calculated by the New Jersey Department of Banking and Insurance (DOBI).

Price is not the only consideration that makes NJM a premium value for personal auto insurance in the Garden State. Consider that NJM:

• Does not charge an additional premium for an accident-forgiveness option.
• Does not use tiers, credit scoring, occupation or education in setting prices.
• Does not spend policyholder money on company cars, luxury sports boxes, or expensive advertising campaigns.
• Is the only auto insurer in New Jersey to offer $1 million in PIP coverage compared to a maximum offer of $250,000 by most other carriers.
• Writes full-year policies so customers know their rates will be stable for twice as long as the six-month policies that some other carriers provide.
• Has not increased overall rates since 1996, and has reduced overall rates in 1997, 1999, 2004, 2007 and 2008.
• Has consistently scored some of the lowest complaint ratios among major insurers since DOBI began compiling records for valid complaints against auto insurers in 1987, including just one valid complaint over the past two years.
• Is a direct writer, handling customer service and claims functions with in-house salaried staff rather than agents who work on commission. This keeps costs low: NJM's underwriting expenses in 2007 were just 11.6% of premium, less than half the 25% to 26% property-casualty insurance industry national average.

NJM Bank, a wholly owned subsidiary of NJM Insurance Group, also maintains a sound balance sheet and stable liquidity position. Specifically, the Bank has no exposure to the sub-prime lending practices that are a root cause of much of the instability in the banking sector. All deposit accounts are federally insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation. The funds are backed by the full faith and credit of the United States government.

Based in West Trenton, NJM conducts more than 98% of its business in New Jersey. The Company operates in the mutual fashion, exclusively for the benefit of policyholders. Dividends depend on the Company's experience each year, including claims, administrative expenses, investment income and any extraordinary expenses imposed by state government.

In order to be eligible to apply for coverage with NJM, an individual or spouse must be currently employed by a company that is a member of the New Jersey Business & Industry Association (NJBIA) or by the State of New Jersey.

The following is a geographic breakdown of NJM's Special Dividend recipients:

*All numbers have been rounded.