Alfa Lowers Auto Insurance Rates, Declares Dividend for Auto Policyholders

Alfa Insurance (NASDAQ: ALFA) today announced it will pay a $13 million cash dividend to Alabama automobile insurance policyholders who have had policies in force since June 30, 2003. The dividend equals about 5 percent of Alfa’s annual premium on 650,000 policies.

“Alfa policyholders are among the most loyal in the industry,” said Jerry A. Newby, Alfa President and Chief Executive Officer. “This dividend is our way of thanking them for their loyalty.”

The policyholder dividend, which was authorized by Alfa’s Board of Directors, will be paid from policyholder surplus on policies in force for the three-year period ending June 30, 2006. Checks will be mailed in the second half of this year to policyholders of Alfa Mutual Insurance Co. and Alfa Mutual General Insurance Co.

Alfa also announced it received approval from the Alabama Department of Insurance for an overall 2 percent reduction in auto rates for Alabama policyholders effective March 1, 2006. The actual premium adjustment for each policy will vary depending on type of coverage, kind of car, drivers, location, the number of driving miles, and other risk characteristics.

“We have worked hard to maintain low rates in an extremely competitive auto insurance market,” Newby said. “In fact, once this rate reduction takes effect, Alfa’s rates will be 4.4 percent lower than our rates 10 years ago.

“We also encourage our customers to talk to their agents about a variety of available discounts that could drive their premiums even lower. These discounts include accident-free, multi-car, driver training and combination auto-home discounts,” Newby said.

Alfa and its affiliates provide insurance and other financial services to more than 1 million customers in 13 states.