Alfa and Vesta Announce Intent to Enter Into Strategic Alliance With Alfa Becoming Principal Vesta Stockholder.

MONTGOMERY, Ala.--(BUSINESS WIRE)--Nov. 6, 1998--Alfa Insurance Group (Alfa), consisting of Alfa Mutual Insurance Company, Alfa Mutual Fire Insurance Company, and their 50.8% owned subsidiary, Alfa Corporation (Nasdaq/NMS: ALFA), today announced that they have signed a Letter of Intent to enter into a Strategic Alliance with Vesta Insurance Group, Inc. (Vesta) (NYSE: VTA), headquartered in Birmingham, Alabama. Under the Strategic Alliance, Alfa will invest $17 million in Vesta 9.75% Convertible Preferred Stock, convertible at $5.75 per Vesta Common Stock share, and will also receive Warrants to acquire 5 million shares of Vesta Common Stock at $8.00 per share. Concurrently, Alfa has also reached an agreement with Torchmark Corporation (NYSE: TMK), currently the largest stockholder of Vesta, to purchase 9.9% of the outstanding Common Stock of Vesta, at $7.42 per share. After the transactions are closed, Alfa will have an ownership stake in Vesta of approximately 22% without exercise of the Warrants and an ownership stake of 36% with exercise of the Warrants.

In addition to the equity investments and Warrants, terms of the Strategic Alliance set forth in the Letter of Intent include (1) up to four Alfa nominees serving on the Vesta Board of Directors, (2) Alfa reinsuring certain personal lines of insurance business currently written by Vesta, up to $50 million in premiums beginning in 1999, (3) Alfa's assistance in connection with Vesta's reinsurance assumed program, (4) a cooperative effort to develop mutually beneficial information systems and technology, and (5) Alfa's assumption of asset management of Vesta's investment portfolios.

The formal establishment of the Strategic Alliance is subject to a number of conditions, including execution of definitive agreements, regulatory and corporate approvals, including Vesta shareholder approval, and satisfactory completion of Alfa's due diligence. The transactions are expected to be completed in the first quarter of 1999.

Alfa's Chairman, Goodwin L. Myrick, said "On behalf of the Board of Directors and the entire Alfa organization, I pledge our commitment to this exciting new alliance with Vesta. We believe this strategic alliance will result in significant benefits to both organizations."

Ken Wallis, Alfa's Executive Vice President, Operations, said "Alfa's strategic alliance with Vesta reflects our interest in assisting Vesta to preserve its value and build for the future. Alfa will work closely with the Vesta Board to substantially boost profitability by sharing Alfa's expertise and success in underwriting and pricing, tight expense control, and technological advancements. We at Alfa view this alliance as a great opportunity to benefit from the strengths of two high-quality organizations, to the betterment of both. We have been extremely impressed by the current management and employees of Vesta and look forward to benefitting from their experience, energy and expertise."

Vesta's President and Chief Executive Officer, Norman W. Gayle, III, said "The Strategic Alliance with Alfa represents a major step forward for Vesta and its constituents. We are privileged to enter into this long term alliance with Alfa, a highly respected insurance organization whose property/casualty insurers are rated 'A++' by A.M. Best. Vesta will clearly benefit in all aspects of its business from the financial strength and support of Alfa. Furthermore, our alliance addresses in a powerful manner the recent uncertainty surrounding Vesta and enables us to concentrate on our core competencies and an exciting future."

Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions and opinions concerning a variety of known and unknown risks and uncertainties that may cause actual future results to differ materially from those contemplated, projected, estimated or budgeted in such forward-looking statements. A discussion of these risks and uncertainties is included in the periodic reports filed by Vesta Insurance Group, Inc. and Alfa Corporation with the Securities and Exchange Commission.