ACCEL International Corp. terminates agreement to sell credit insurance business; restructures debt; is awarded judgment in lawsuit and agrees to sell home office building.

DUBLIN, Ohio--(BUSINESS WIRE)--Jan. 16, 1996--ACCEL International Corp. (ACCEL) (NASDAQ/NMS:ACLE) announced today that in late December it had terminated the letter of intent, according to its provisions, that provided for the acquisition of the in-force credit insurance business, and the purchase of all of the issued and outstanding shares of Acceleration Life Insurance Co. (ALIC) by Consumers Financial Corp. (Consumers) from ACCEL.

This action was the result of delays in the due diligence process which made it apparent that no part of the proposed transaction, announced on Aug. 18, 1995, would take place before the end of 1995, as planned.

ACCEL also announced that effective Dec. 29, 1995, the company issued new Senior Notes totaling $16.5 million, at 9.50 percent, maturing on April 1, 2001. The proceeds therefrom together with other funds of the company were used to pay the outstanding balance of an existing term bank loan and an intercompany loan between the company and a subsidiary.

The company also stated that, effective Jan. 1, 1996, it had concluded a Reinsurance Agreement with a major life insurance company to reinsure ALIC's in-force Credit Life and Health insurance business that was structured in such a manner that the future profits emerging under this agreement would be used to pay the interest and redeem the new notes. Both of these transactions were undertaken only after obtaining all requisite approvals.

In addition, ACCEL reported that its subsidiary, Acceleration National Insurance Co. (ANIC) had been awarded $5.32 million in damages in a lawsuit that ANIC had undertaken against the marketing and administration organization and the broker involved in a Realtors E&O insurance program that had been underwritten by ANIC from 1986 to 1991. This award was the result of litigation commenced in November 1991 and followed a lengthy trial. While both defendants have indicated their intention to appeal the verdict, the company is aggressively pursuing efforts to collect on these judgments.

Finally, ACCEL announced that a letter of intent had been signed to sell its home office building for $3.6 million in cash. After expenses, this sale price will result in a nominal gain over the carrying value of the building, but the building is approximately 70-75 percent vacant and the company will be relieved of the burden and expense of managing and maintaining the building. Upon closing, which is anticipated to take place during the first quarter, ACCEL will enter into a five-year, market-rate lease for only sufficient space to house its operations.

Thomas H. Friedberg, ACCEL's chairman, president and chief executive officer viewed the announcements as extremely exciting for the company. "To have resolved our debt situation without having to sell the life insurance company and the credit insurance business means we can now move forward on a very positive basis in our existing core lines as well as our new property-casualty activities. Our subsidiaries' balance sheets have been enhanced by the elimination of the intercompany loan and the sale of the home office building, and when collected, the proceeds from the judgment will be used to retire debt."

"With our new programs having begun to generate premium and our ability to develop synergism between the life and non-life activities, 1996 will be the beginning of a new era for ACCEL, and we are all excited about the possibilities."

ACCEL International Corp. is a Dublin, Ohio-based holding company that provides specialty insurance products and services through its insurance subsidiaries operating throughout the United States.

CONTACT: ACCEL International Corp., Dublin

Nicholas Z. Alexander, 614/764-7180