PAULA Financial Pays Special Cash Distribution

Business Wire, March 20, 2008

PASADENA, Calif. -- PAULA Financial (Pink Sheets: PFCO) today paid a partial liquidating cash distribution in the amount of $3.89 per common share to holders of record as of March 6, 2008.

Information regarding the distribution can be found on PAULA Financial's new website, www.pfco.cc. Determining tax consequences can be complicated. Eligible stockholders should consult their own tax advisor.

PFCO has ongoing obligations but no material ongoing operations. The Company has not adopted a formal plan to wind up its operations as it continues to evaluate its anticipated liabilities, the timing and amount of such liabilities and appropriate reserves. Future special cash distributions to PFCO stockholders are contemplated but have not been determined by the board of directors at this time.

The board of directors voted to suspend indefinitely the Company's regular quarterly dividend of $0.015 per share effective immediately.

The Company cautions readers to recognize the existence of certain forward-looking statements in this press release and in any other statement made by, or on behalf of, the Company. The Company disclaims any obligation to update forward-looking information.