Amwest Insurance Group Restructures Surety Division, Trims Staff to Increase Profitability.

Business Editors

CALABASAS, Calif.--(BUSINESS WIRE)--June 19, 2000

Amwest Insurance Group Inc. (AMEX:AMW) (PCX:AMW) today announced that it is restructuring its Surety Division along product lines and trimming its home office and field staff in order to improve performance, reduce expenses and increase profitability.

In addition, the company is centralizing certain of its administrative and bond processing functions in an effort to improve its operational efficiency.

"These major changes in our surety operation demonstrate our ability to adapt to the changing needs of the market and reinforce our commitment to improving corporate profitability," said President and CEO John Savage.

"Our financial performance over the past 12 months has not been acceptable. We, therefore, are taking the necessary steps to streamline our operation, strengthen our position in the market and improve our bottom-line."

Product Line Structure

The newly restructured Surety Division now consists of two separate product lines -- contract surety and commercial surety -- with separate management teams reporting to Executive Vice President Neil Pont.

"This new management structure enables us to bring more focus to each product line and better serve our agents and brokers as the surety industry continues to evolve," said Pont. "It also establishes new accountability throughout the organization, which we believe will significantly improve performance."

John Littler, who recently joined Amwest from Conseco Risk Management Inc., has been named the product line executive for Contract Surety. Littler has more than 25 years of surety experience. Prior to joining Conseco, he spent 22 years with CNA Surety where he held a variety of field and executive management positions, including executive vice president and chief marketing officer.

Doug Paterson, who joined Amwest five years ago to head up Amwest's commercial surety program, is the product line executive for Commercial Surety. Paterson has over 21 years of surety experience, including 12 years with Safeco. Under his leadership, Amwest's annual commercial surety premium has grown to more than $32 million in 1999 from approximately $8 million in 1995.

Littler and Paterson will each have a dedicated home office underwriting team and three regional vice presidents who will provide underwriting and administrative management support to the field managers in their respective regions.

Staff Reductions

As part of this restructuring, Amwest has reduced the support staff in its home office and field network. It is also closing its branch offices in St. Louis and Pittsburgh and transferring the local account relationships to the personnel in its Kansas City and Philadelphia offices, respectively. Since the beginning of the year, the company has already reduced its staff by 10 percent.

"Reducing staff is never easy," said Savage. "But it was necessary to bring our support staff in line with the current needs of our business. The full benefit of these layoffs and expense initiatives will accrue over time and may result in annual savings as high as $8 million and, at the same time, due to the product line organization, will further enhance our ability to serve our customers."

Centralization

In an effort to improve the efficiency of its field operation, Amwest will be centralizing much of its bond processing and eliminating unnecessary procedures.

"We want our local offices to be marketing and underwriting service centers, not processing centers," said Savage. "The more non-revenue producing activities we can remove from the field, the more effective and efficient we will be."

Amwest is also centralizing its surety database to facilitate its planned expansion into the use of Internet technology as a tool for its agents and brokers. Brad Tawa, surety operations vice president, is coordinating Amwest's expanded use of technology and developing the company's approach to the Internet and electronic commerce.

"Improving our corporate profitability is our number one priority," said Savage. "I am confident that the changes we are making will enable us to achieve that goal. We have a compelling mission, extremely capable employees and a new organization to facilitate our success."

Amwest is a Calabasas-based insurance holding company underwriting surety and property & casualty insurance through Amwest Surety Insurance Company, Condor Insurance Company and Far West Insurance Company. Founded in 1970, Amwest is licensed in all 50 states, the District of Columbia, Guam, Puerto Rico and American Samoa.