HOME STATE HOLDINGS, INC.


                                [GRAPHIC OMITTED]

                                  Press Release

For More Information, Contact:                             For Immediate Release
Investor Relations - (908) 935-2736                                 May 21, 1997



Shrewsbury, NJ - May 21, 1997 - Home State Holdings, Inc. (NASDAQ-HOMS)
announced today that it incurred a substantial operating loss for the first
quarter of 1997 resulting primarily from unanticipated loss development below
the attachment points of reinsurance coverage, losses for the 1997 year and
related adjustments to reinsurance profit sharing, deferred acquisition costs
and other assets. The net loss brings statutory surplus in its insurance company
subsidiaries to a level approaching regulatory required minimums and, as a
result of these losses, the Company is in violation of certain covenants in
agreements with its banks and its subordinated note holders. The Company is
continuing to work with its financial advisor, Donaldson, Lufkin & Jenrette, in
evaluating all of its alternatives in its efforts to obtain an infusion of
capital or other support which will be required for the operations of its
insurance company subsidiaries.



                              CAUTIONARY STATEMENT

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This press release or any other written or oral
statements made by or on behalf of the Company may include forward-looking
statements which reflect the Company's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain uncertainties and other factors that could cause actual results to
differ materially from such statements. These uncertainties and other factors
(which are described in more detail elsewhere in documents filed by the Company
with the Securities and Exchange Commission, including the Company's Annual
Report on Form 10-K for the year ended December 31, 1996) include, but are not
limited to, uncertainties relating to general economic conditions and cyclical
industry conditions, uncertainties relating to government and regulatory
policies, volatile and unpredictable developments (include storms and
catastrophes), the legal environment, the uncertainties of the reserving process
and the competitive environment in which the Company operates. The words
"believe," "expect," "anticipate," "project," "plan," "expect" and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
their dates. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.


Home State Holdings, Inc. is a property and casualty insurance holding company
primarily engaged in providing standard and preferred personal and commercial
auto insurance through its subsidiaries in New Jersey, New York, Pennsylvania,
Connecticut, Delaware, West Virginia, Georgia and Florida. Home State Holdings,
through several of its financial service subsidiaries, is engaged in certain
insurance related financial services activities.