American Eagle Group, Inc. announces a strategic refocusing, an update on capital plans and dividend policy and retirement of president.

DALLAS--(BUSINESS WIRE)--Sept. 30, 1996--American Eagle Group, Inc. (NYSE: FLI) announces today that it is placing increased strategic emphasis on those product lines where both historic profitability and sustainable competitive advantages are greatest Aviation, Marine, and Artisan Contractors.

This emphasis is the result of an extensive strategic review. The Company is withdrawing from the local and intermediate-haul trucking line of business due to the poor financial performance of this segment and the dramatic and sustained increase in price competition in this market. During 1996 the Company's trucking line of business has been its primary source of unacceptable underwriting results. The Company's current, in-force premiums in this line of business are approximately $20 million.

M. Philip Guthrie, Chairman and Chief Executive Officer, stated: "American Eagle has recently had several challenging quarters. We have reviewed each of our operating segments and taken aggressive actions to improve the operating results of the segments not performing up to our expectations. The changes made earlier in the commercial aviation segment continue to produce increasing improvements in this segments performance. Our decision to withdraw from the local and intermediate-haul trucking program will allow us to focus on our core businesses, where we have significant competitive advantages, and allow us to utilize our capital in the segments which, we believe, offer the greatest potential long-term returns to our shareholders. Consistent with the decision on local and intermediate-haul trucking, significant staff reductions are being made in this program. In connection with the aviation underwriting and other actions previously disclosed, the Company also has reduced its staff in some areas of the Aviation Division.

"We have made significant progress to date related to raising additional capital. We are currently evaluating various alternatives and structures and plan to have a transaction announced in the near future. In order to more quickly build the capital level of American Eagle and its insurance company subsidiary, the Board of Directors decided that American Eagle would discontinue the quarterly dividend on its common stock, effective with the dividend scheduled to have been paid in October 1996.

"Our fundamental strategy of an emphasis on underwriting profitability in carefully selected and defined specialty market niches, excellence in customer service, and high productivity levels is unchanged. Our primary objective, in everything we do, is to provide our customers with valued service and competitively priced products. This approach, we believe, will generate underwriting and operating profits resulting in improved ratings and long-term stockholder value."

Also, today George F. Cass announced his retirement as President and Chief Operating Officer and member of the Board of Directors of American Eagle. Mr. Guthrie has been elected to the additional position of President. Mr. Guthrie stated, "I am pleased to announce that Mr. Cass and the Company have entered into a consulting agreement, and Mr. Cass will concentrate his consulting activities on the continuing development and support of the Marine Division and other special projects".

American Eagle Group, Inc. 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 private yachts. The Company's business is organized in three divisions: the Aviation Division, headquartered in Dallas, Texas; the Property and Casualty Division, headquartered in Sacramento, Calif.; and the Marine Division, headquartered in Baltimore, Md.

CONTACT: American Eagle Group, Inc., Dallas

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

Richard M. Kurz, CFO, 972/448-1477