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Press Releases 2004

Pethealth Reports an Increase of 141% in New Pet Insurance Policy Sales for Year-end December 31, 2003

OAKVILLE, ON, January 21, 2004. Pethealth Inc. ("Pethealth" or "the Company") (TSX Venture Exchange Tier 1: PTZ) today announced record policy sales for the quarter and year ended December 31, 2003.

• Total paid policies in force as at December 31, 2003 were 106,260 vs 60,977 for 2002, an increase of 74%. The Company had 69,790 core paid policies in force, an increase of 71% over the previous year. ShelterCare policies in force as at December 31, 2003 totalled 36,470, up 81% from the previous year.
• Total new policy sales were 234,154 for the year ended December 31, 2003, up 141% over the previous year. Core policy sales increased by 61% to 46,903. ShelterCare policy sales increased by 172% to 187,251.
• For Q4 2003, core policy sales totalled 13,424, or an average of 4,475 per month, a quarterly record for the Company. ShelterCare policy sales of 54,362 or 18,120 per month during Q4 were also a quarterly record.
• The Company expects to report Q4 2003 revenue in excess of $2.0-million on gross premium of over $5.1-million and revenue for all of 2003 in excess of $7.0-million on gross premium in excess of $17.5-million, up approximately 90% and 65%, respectively, over 2002.
• When annualised, December gross premium on the 106,260 paid policies in force is expected to be in excess of $20-million.

On-line sales of core policies in 2003 increased by 117% to 12,456 over the previous year. On-line core policy sales were effected through nine unique Web sites owned and operated by Pethealth including www.petcareinsurance.com ; www.petcarepals.com and www.unionpluspets.com . On-line core policy sales during Q4 totalled 3,671, up 115% from Q4 2002.

Approximately 65% of ShelterCare policy sales in 2003 were also completed on-line at www.sheltercare.com . Since its inception, approximately 14% of pets registered under the ShelterCare insurance program have subsequently been enrolled into one of the family of core PetCare programs during the 60-day ShelterCare gift period provided by one of the Company's exclusive partners, Petfinder.com.

Additionally, as part of its core policy sales, the Company sold 1,446 EmergencyCare policies. EmergencyCare is a new insurance program introduced by the Company in Q2 2003 designed to complement the registration of dogs and cats with 24PetWatch. 24PetWatch is the microchip pet registry and recovery program that Pethealth established in February 2003 and May 2003 in Canada and the United States, respectively, and can be reached at www.24petwatch.com.

U.S. core policy sales increased in 2003 by 120% over 2002. For 2003 U.S. core policy sales represented 74% of total core policy sales. U.S. core policies as at December 31, 2003 represented 54% of total core paid policies in force.

“We are delighted with the increase in policy sales in Q4,” said Mark Warren, President and Chief Executive Officer of Pethealth Inc. “Core policy sales exceeded our internal forecasts in each month. Further development and refinement of our distribution channels is increasingly paying dividends, particularly business through our various on-line channels, which has significantly reduced the need to increase personnel.”

About Pethealth

Founded in February 1998, Pethealth is Canada's number one provider of pet insurance and is number two in North America, currently offering its PetCare pet insurance programs in 10 provinces, 45 states and Washington, D.C. In addition to the ShelterCare Pet Insurance programs, Pethealth offers its pet insurance programs under a variety of names, including QuickCare, the PetCare Pet Insurance Programs, ShelterCare and Union Plus Pet Insurance. In the United States, the PetCare Pet Insurance Programs are underwritten by Lincoln General Insurance Company, York, PA, through Avalon Risk Management Inc. In Canada, the Company's pet insurance is offered to owners of dogs and cats through its wholly owned subsidiary, PetCare Insurance Brokers Ltd. ING Novex, a member of the ING Group, and Kingsway General Insurance Company underwrite PetCare products in Canada. The PetCare programs also carry the exclusive endorsements of a number of industry leaders, including veterinary medical associations representing approximately four out of five practising veterinarians in Canada. In addition, Pethealth, through its wholly owned subsidiaries Pethealth Services Inc. and Pethealth Services (USA) Inc., sells and distributes Allflex pet microchip supplies to the companion animal market in North America and operates the related pet recovery registry under the trade name 24PetWatch. Pethealth is based in Oakville, Ontario.

The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Statements contained in this news release, if not historical, are forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from the results described in forward-looking statements.

Not for dissemination in the United States of America or to United States news wire services.

For further information contact:
Mark Warren, President and CEO of Pethealth at (905) 842-2615
Glen Tennison, Chief Financial Officer of Pethealth at (905) 842-2615

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