American Eagle Group, Inc. Reports Third Quarter 1996 Results.

DALLAS--(BUSINESS WIRE)--Nov. 6, 1996--American Eagle Group, Inc. reported a net loss of $1.2 million in the third quarter of 1996, compared to net income of $2.4 million in the third quarter of 1995.

Operating income (loss), which excludes realized investment gains or losses, was approximately equal to net income (loss), as there were no significant realized investment gains or losses in the third quarter and first nine months of 1996 or 1995. Earned premiums, net of reinsurance, increased 2% to $27.6 million in the third quarter of 1996 from $27.2 million in the third quarter of 1995.

Gross premiums produced declined 22% to $37.4 million in the third quarter of 1996 from $48.0 million in the third quarter of 1995. The third quarter combined ratio was 108.5% in 1996, up 14.8 points from 93.7% in the same period of 1995. The net loss available for common stockholders was ($0.17) per share for the third quarter of 1996 compared to net income of $0.34 per share in the third quarter of 1995.

For the first nine months of 1996 the company reported a net loss of $4.5 million compared to a net income of $5.2 million in the comparable period of 1995. Earned premiums, net of reinsurance, for the nine-month period ended September 30, 1996 increased 30% to $94.0 million from $72.4 million in 1995. Gross premiums produced declined 13% to $121.1 million for the nine-month period ended September 30, 1996 from $138.7 million in 1995. The first nine months combined ratio was 109.7% in 1996, up 14.1 points from 95.6% in 1995 as a result of a 7.5 point increase in the loss ratio and a 6.6 point increase in the expense ratio.

Net book value per common share at September 30, 1996 is $6.68.

M. Philip Guthrie, Chairman and Chief Executive Officer stated, "Total company results for the third quarter continued to be affected by unsatisfactory results from discontinued Property and Casualty lines of business. The Aviation Division, our core business, continued to reflect improvement and performed at overall acceptable levels. The Aviation Division combined ratio remained in line with historical levels, with third quarter at 93.6% and 95.2% in 1996 and 1995, respectively.

The year-to-date aviation combined ratio was 99.2% and 98.1% in 1996 and 1995, respectively. These results, we believe, continue to confirm the trend we saw in the first six months of 1996 of improved results generated by previous underwriting actions in the under- performing segments of the commercial aviation line of business. The Property and Casualty Division's performance in the third quarter continued at unacceptable levels primarily as a result of the transportation portion of the division.

As previously announced, we have withdrawn from this segment effective October 1, 1996, due to its poor financial performance and the sustained increase in price competition in this market.

"Today the Company is also announcing a new strategic alliance and the terms of $35 million in new capital in a separate news release. This strategic relationship with American Financial Group, Inc., a Cincinnati, Ohio-based property and casualty insurer with $1.6 billion in statutory surplus and an A.M. Best rating of "A", is a significant event with which we are extremely pleased. We believe that the new strategic alliance and new capital will have a very positive, long-term effect on the Company's performance in 1997 and beyond."

The common stock of American Eagle Group, Inc. trades on the New York Stock Exchange under the symbol "FLI."

American Eagle Group is an insurance holding company that, through its subsidiaries, markets and underwrites specialized property and casualty coverages in selected niche markets. These markets include general aviation, selected artisan contractors, and yachts. The company's business is organized in three divisions, the Aviation Division, headquartered in Dallas, Texas; the Property & Casualty Division, headquartered in Sacramento, California; and the Marine Division, headquartered in Baltimore, Maryland. -0-

                     American Eagle Group, Inc.
                       1996 Financial Results
                (In thousands, except per share data)


                    Three Months ended            Nine Months ended
                       September  30                 September 30
                    1996           1995         1996            1995
                    ----           ----         ----            ----

Gross premiums
 produced        $ 37,408      $ 47,984       $121,113      $138,679
Earned premiums  $ 27,634      $ 27,171       $ 93,965      $ 72,415
Operating income
 (loss)          $ (1,122)     $  2,087       $ (4,504)     $  4,926
Net realized
 investment gains
 (losses), after
 federal income
 tax (AFIT)      $    (37)     $    312       $     37      $    316
Net income (loss)$ (1,159)     $  2,399       $ (4,467)     $  5,242
Preferred stock
 dividends       $     24      $     24       $     73      $     73
Net income (loss)
 available for
 common
 stockholders    $ (1,183)     $  2,375       $ (4,540)     $  5,169

Per share data:
---------------
  Operating
   income (loss) $  (0.16)     $   0.30       $  (0.64)     $   0.70
  Net income
   (loss)        $  (0.16)     $   0.34       $  (0.63)     $   0.74
  Net income (loss)
   available for
   common
   stockholders  $  (0.17)     $   0.34       $  (0.64)     $   0.73

  Weighted average
   shares           7,048         7,053          7,049         7,054

Underwriting ratios (GAAP)
--------------------------
  Losses and LAE
   ratio             63.7%         60.2%          70.5%        63.0%
  Expense ratio      44.8          33.5           39.2         32.6
                    ------        ------         ------       ------
  Combined ratio    108.5%         93.7%         109.7%        95.6%

CONTACT: American Eagle Group, Inc.

M. Philip Guthrie, 972/448-1460, or

Richard M. Kurz, 972/448-1477