AssuranceAmerica Corporation Reports Record Mid-Year Results

Atlanta based ASSURANCEAMERICA CORPORATION (OTC BB: ASAM.OB), announced today its financial results for the second quarter and six months ended June 30, 2005.

Revenues for the second quarter increased 37% to $8.1 million, compared to $5.9 million for the second quarter of 2004. Net income increased 193% for the second quarter of 2005 to $117,607, compared to ($126,001) in the second quarter of 2004. Pretax earnings for the second quarter were $324,204 compared to ($126,001) in the prior year.

Revenues for the six months of 2005 increased 33% to $16.0 million, compared with $12.0 million for the first half of 2004. The Company increased net income 717% for the first half of 2005 to $815,717, compared with $99,769, in the same period last year. Pretax earnings for the six months increased to $1,068,917 from $99,769.

In announcing first quarter results, Lawrence (Bud) Stumbaugh, President and CEO of AssuranceAmerica Corporation said, “Our strategy of entering additional states to enhance our premium growth has paid off handsomely as demonstrated by our six-month increase of 33%. Our loss ratios have shown significant improvement, from 79% to 66% year to date. This coupled with attention to cost control and other economies that come with volume, were the primary drivers of our outstanding results. Our plan is to continue to enter more states before the end of this year. We continue to expect record sales and profits.”

AssuranceAmerica focuses on the specialty automobile insurance marketplace, primarily in Florida, Georgia, Alabama and South Carolina. Its principal operating subsidiaries are TrustWay Insurance Agencies, which sells personal automobile insurance policies through its 32 retail agencies, AssuranceAmerica Managing General Agency, and AssuranceAmerica Insurance Company.

This press release includes statements that may constitute “forward-looking” statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, as discussed in the Company’s filings with the U.S. Securities Exchange Commission (SEC). ASSURANCEAMERICA CORPORATION (Unaudited) CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Six Months Ended June 30, 2005 and 2004 Three Months Six Months 2005 2004 2005 2004 ———– ———– ———— ———— Revenue: Gross premiums written $9,813,137 $7,833,482 $20,577,382 $16,337,206 Gross premiums ceded(6,689,559) (5,347,469) (14,021,473) (11,185,886) Net premiums written 3,123,578 2,486,013 6,555,909 5,151,320 Increase in unearned premiums, net of prepaid reinsurance premiums (200,048) (176,023) (1,034,069) (912,935) Net premiums earned 2,923,530 2,309,990 5,521,840 4,238,385 Commission income 3,900,409 2,564,250 7,768,288 5,554,880 Managing general agent fees 1,156,896 869,885 2,225,631 1,692,934 Net investment income 25,642 8,078 38,833 11,052 Other fee income 137,585 192,490 396,420 493,249 ———– ———– ———— ———— Total revenue 8,144,062 5,944,693 15,951,012 11,990,500 Expenses: Losses and loss adjustment expenses 1,946,677 1,836,313 3,648,453 3,331,957 Selling, general and administrative 5,635,824 4,032,146 10,754,547 8,147,263 Depreciation and amortization expense 93,497 60,300 185,739 127,877 Interest expense 143,857 141,935 293,356 283,634 ———– ———– ———— ———— Total operating expenses 7,819,855 6,070,694 14,882,095 11,890,731 ———– ———– ———— ———— Income (loss) before provision for income tax expense 324,207 (126,001) 1,068,917 99,769 Income tax provision — — — — ———– ———– ———— ———— Net income (loss) 324,207 (126,001) 1,068,917 99,769 ———– ———– ———— ———— Dividends on preferred stock 206,600 — 253,200 — ———– ———– ———— ———— Net income (loss) attributable to common stockholders $117,607 $(126,001) $815,717 $99,769 =========== =========== ============ ============ Earnings per common share Basic 0.002 (0.003) 0.016 0.002 Diluted 0.002 (0.003) 0.013 0.002 Weighted average shares outstanding- basic 50,425,540 45,211,090 50,055,469 45,211,090 Weighted average shares outstanding- diluted 63,565,805 45,211,090 63,195,734 46,182,909

ASSURANCEAMERICA CORPORATION (Unaudited) CONSOLIDATED BALANCE SHEETS June 30, 2005 and December 31, 2004 June 30, December 31, 2005 2004 ———— ———— Assets Cash and cash equivalents $11,928,137 $7,059,188 Short term investments 800,000 400,000 Long term investments 599,808 599,808 Investment income due and accrued 8,412 734 Receivables from insureds 7,347,270 5,170,840 Reinsurance recoverable (including $4,070,051 and $3,084,838 on paid losses) 12,624,692 10,543,775 Prepaid reinsurance premiums 7,645,782 5,291,830 Deferred acquisition costs 280,382 224,842 Property and equipment (net of accumulated depreciation of $1,214,872 and $1,094,131) 1,306,721 1,185,081 Due from related party – 30,783 Other receivables 1,284,077 245,677 Prepaid expenses 371,883 52,260 Intangibles (net of accumulated amortization of $1,263,394 and $1,198,396) 7,494,791 5,399,789 Security deposits 75,043 89,158 ———— ———— Total assets $51,766,998 $36,293,765 ============ ============ Liabilities and Stockholders’ Equity Accounts payable and accrued expenses $3,854,322 $2,904,640 Unearned premiums 11,221,209 7,833,189 Unpaid losses and loss adjustment expenses 12,220,916 10,655,625 Reinsurance payable 8,022,798 4,936,933 Provisional commission reserve 1,146,901 1,060,883 Debt, related party 6,545,644 7,376,279 Capital lease obligations 265,545 265,545 ———— ———— Total liabilities 43,277,335 35,033,094 ———— ———— Stockholders’ equity Common stock, 0.01 par value (authorized 80,000,000, outstanding 50,425,540 and 46,577,090 respectively) 504,257 465,771 Preferred stock, 0.01 par value (authorized 5,000,000, outstanding 1,266,000 and 426,000 respectively) 12,660 4,260 Surplus-paid in 15,239,332 8,872,943 Accumulated deficit (7,266,586) (8,082,303) ———— ———— Total stockholders’ equity 8,489,663 1,260,671 ———— ———— Total liabilities and stockholders’ equity $51,766,998 $36,293,765 ============ ============