Hartville Group, Inc. Announces Financial Results for the Second Quarter of 2008

As of June 30, 2008, the number of pets insured by Hartville was 79,079, up 54% from the 51,368 pet lives covered as of June 30, 2007. In the second quarter of 2008, Hartville added 5,715 net pet policies, an increase of 8% from 73,364 pets at March 31, 2008. The year-over-year and sequential increases in pet lives covered are indicative of Hartville Group's successful marketing efforts.

Reflecting the rapid growth in pet lives covered, gross revenue for the three months ended June 30, 2008 increased by 84% to $4.6 million, up from $2.5 million for the comparable period of 2007. Hartville Group's operating loss in the second quarter of 2008 narrowed to $0.8 million, from $1.7 million in the second quarter of 2007. The net loss for the second quarter of 2008 was $0.7 million, or $(0.06) per fully diluted share based on 12.3 million shares, compared to a net loss of $2.5 million, or $(0.68) per fully diluted share based on 3.7 million shares. In the second quarter of 2007, Hartville Group had other expenses of $0.9 million, which was largely amortization expenses on prepaid interest and discount on debt outstanding. This debt was converted to equity in October 2007, eliminating expenses related to debt going forward.

As of June 30, 2008, Hartville Group had $2.9 million in cash and equivalents, up from $2.4 million as of year end. In February of 2008, Hartville Group received $2.25 million in an equity funding by existing investors. With this funding, Hartville Group expects to ultimately achieve positive cash flow and earnings, assuming the current operating environment and external economic factors do not deteriorate substantially.

Dennis C. Rushovich, Chief Executive Officer of Hartville Group, commented on the quarter, "We are again very pleased with our operating performance in the quarter, as we grew our pet lives insured by 54%, compared to the second quarter of last year. This most recent quarter represents the seventh consecutive quarter of significant policy expansion for Hartville. We continue to see ample opportunity to further grow our policies in the highly fragmented and under-penetrated U.S. pet health care industry. Furthermore, ongoing improvements to our operating systems continue to help us provide better products and services to our customers, even at higher operating volumes."

BUSINESS SEGMENT RESULTS

Reinsurance Company

Premiums retained by Hartville Re in the second quarter of 2008 were $3.0 million, 92% higher than premiums retained of $1.6 million for the second quarter of 2007. After adjusting for a previous retrocession agreement which impacted retained premiums in the second quarter of 2007, premiums retained would have increased by 72% in the second quarter of 2008, from adjusted premiums retained of $1.8 million in the second quarter of 2007.

Retained losses (claims paid plus claims reserve movement) for the three months ending June 30, 2008 of $1.7 million were 88% higher than losses of $0.9 million for the comparative period of 2007. The higher retained losses are a result of the increase in pets insured. Adjusting second quarter 2007 retained losses for the retroceded losses of $0.1 million, losses would have been $1.0 million, for a 69% increase.

Insurance Agency and Holding Company

Commission income earned by Petsmarketing for the three months ending June 30, 2008 increased by 72% to $1.6 million, compared to commission income earned of $0.9 million for the prior year period.

General and administrative expense for the second quarter of 2008 decreased by 4% to $2.7 million. General and administrative expenses decreased due primarily to the following factors:

-- Marketing expenses as reported increased by approximately $91,000; however, the marketing expenses in the second quarter 2008 were expensed, whereas the amounts were capitalized in the second quarter of 2007. If the second quarter 2007 marketing expenses had been expensed, just as they were in 2008, then the marketing expense would have been approximately $1,663,000 compared to $795,000 for the second quarter 2008, reflecting a decrease of approximately $868,000 in marketing expenses.

-- Compensation increased by approximately $114,000 as the result of change in the infrastructure with increased sales and overall number of pets. For the three months ended June 30, 2007 there was $35,000 expense for stock compensation to our Chief Marketing Officer, which means that cash-related compensation increased by $149,000 from June 30, 2007 to June 30, 2008.

-- Compensation decreased by approximately $114,000 due to lower expense for stock options.

-- Depreciation decreased by approximately $169,000 as the result of a fully depreciated software system which has been retired.

Other income increased by 268% to $65,000 in the second quarter of 2008, compared to $18,000 in the prior-year period, due to higher interest income on cash and accounts receivable.

Other expenses for the three months ended June 30, 2008 were only $2,000, compared to $0.9 million for the comparative period of 2007. The decrease in other expenses was due to the conversion of debt in October 2007 which eliminated amortization expenses on prepaid interest and discount on debt.

Six-Month Financial Results

Gross revenue for the six-month period ended June 30, 2008 was $8.7 million, up 100% from gross revenue of $4.4 million in the prior year period. The net loss for the six-month period ended June 30, 2007 narrowed to $2.2 million, or $(0.19) per fully diluted share based on 11.9 million shares outstanding, compared to a net loss of $4.3 million, or $(1.15) per fully diluted share based on 3.7 million shares outstanding.

About Hartville Corporation

Hartville Group, Inc. ("Hartville Group") is a holding company whose wholly owned subsidiaries include Hartville Re Ltd. ("Hartville") and Petsmarketing Insurance.com Agency, Inc. ("the Agency"). Hartville is a reinsurance company that is registered in the Cayman Islands, British West Indies. Hartville was formed to reinsure pet health insurance that is being marketed by the Agency. The Agency is primarily a marketing and administration company concentrating on the sale of its proprietary health insurance plans for domestic pets. The Company accepts applications, underwrites and issues policies. For more information on Hartville Group and its insurance offerings, please visit http://www.hartvillegroup.com.

Forward-Looking Statement

Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in the Company's Form 10-KSB, Form 8-K and Form 10-Q reports. The Company undertakes no obligation to update or revise any forward-looking statement.

Hartville Group, Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2008 (Unaudited) and December 31, 2007 June 30, December 31, 2008 2007 ------------- ------------- ASSETS Cash and cash equivalents $ 2,939,381 $ 2,441,203 Other receivables 5,003,293 3,184,727 Prepaid expenses 127,136 122,559 Property and equipment - net 541,430 615,069 Deferred policy acquisition costs - net 528,535 426,507 Other assets 67,757 68,298 ------------- ------------- Total Assets $ 9,207,532 $ 6,858,363 ============= ============= June 30, December 31, 2008 2007 ------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 1,174,211 $ 1,254,540 Reserve for claims 2,435,504 1,491,204 Premium deposits 1,701,349 1,268,048 Return premium payable 4,482 36,364 Unearned commissions 774,434 616,391 Unearned premium 1,554,515 1,254,434 Capitalized Lease 50,391 53,672 ------------- ------------- Total Liabilities 7,694,886 5,974,653 Stockholders' Equity Preferred stock, 5,000,000 shares authorized at June 30, 2008 and December 31, 2007. $0.001 par value; 0 issued and outstanding at June 30, 2008 and December 31, 2007 - - Common stock, 400,000,000 shares authorized at June 30, 2008 and December 31, 2007. $.001 par value; 12,362,160 issued and 12,355,893 outstanding at June 30, 2008 and 10,748,909 issued and 10,742,642 outstanding at December 31, 2007 12,362 10,749 Additional paid in capital 53,384,675 50,519,209 Retained deficit (51,813,891) (49,575,748) Less: treasury stock at cost, 6,267 shares (70,500) (70,500) ------------- ------------- 1,512,646 883,710 ------------- ------------- Total Liabilities and Stockholders' Equity $ 9,207,532 $ 6,858,363 ============= =============

Hartville Group, Inc. and Subsidiaries Consolidated Statements of Income For the Three and Six Months Ended June 30, 2008 and 2007 Unaudited Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 ------------ ------------ ------------ ------------ Premiums $ 3,023,987 $ 1,577,057 $ 5,757,374 $ 2,690,517 Losses (1,664,503) (883,345) (3,169,534) (1,522,249) Ceded costs (1,041,105) (536,215) (1,982,049) (914,801) ------------ ------------ ------------ ------------ Reinsurance income 318,379 157,497 605,791 253,467 Commission income 1,579,701 919,248 2,988,945 1,665,106 General and administrative expenses (2,651,289) (2,749,441) (5,650,935) (5,262,359) ------------ ------------ ------------ ------------ Operating loss (753,209) (1,672,696) (2,056,199) (3,343,786) ------------ ------------ ------------ ------------ Other income 65,352 17,749 88,537 30,993 Other expenses (2,363) (877,074) (270,481) (985,164) ------------ ------------ ------------ ------------ Loss before taxes (690,220) (2,532,021) (2,238,143) (4,297,957) Provision for taxes - - - - ------------ ------------ ------------ ------------ Net loss $ (690,220) $(2,532,021) $(2,238,143) $(4,297,957) ============ ============ ============ ============ Net loss per common share $ (0.06) $ (0.68) $ (0.19) $ (1.15) Weighted average common shares outstanding 12,355,893 3,750,738 11,850,962 3,735,082

SOURCE: Hartville Group, Inc.

Investors: Cameron Associates Amy Glynn, CFA, 212-554-5464 amy@cameronassoc.com