Paula Financial announced that the Board of Directors has declared an additional liquidating distribution in the amount of $0.09 per common share. The distribution will be paid to holders of record as of December 1, 2008 and will be paid on December 15, 2008. This will be the third liquidating distribution paid by the Company since it sold its sole operating business in February 2008 for $50,000,000 or $6.86 per common share. An initial liquidating distribution of $3.89 per common share was completed in March 2008 followed by another $1.52 in September 2008. The current liquidating distribution combined with the earlier ones totals $5.50 per common share and represents 80% of proceeds from the transaction.

Paula Financial reported earnings results for the six months ended June 30, 2008. For the six months ended June 30, 2008, the company reported net income of $22,314,000 or $3.06 per share.

The Board of Directors of Paula Financial has declared a special cash dividend in the amount of $1.52 per common share. The distribution will be paid to holders of record as of September 3, 2008 and will be paid on September 15, 2008.