PAULA Financial Pays Special Cash Distribution

PASADENA, Calif.--(Business Wire)--
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.

PAULA Financial
Investor Relations, 626-844-7500

Copyright Business Wire 2008