Kemper Reaches Renewal Rights Agreement With Argonaut Insurance Company On Bundled Large Risk National Accounts.

Business Editors

LONG GROVE, Ill.--(BUSINESS WIRE)--Jan. 23, 2003

The Kemper Insurance Companies today announced it has reached a definitive agreement to sell the renewal rights to its bundled large risk national accounts to Argonaut Insurance Company, a member of Argonaut Group, Inc., a national underwriter of specialty insurance products in niche areas of the property and casualty market (NASDAQ:AGII).

For the bundled segment of the large risk business, Kemper Risk Management has provided the underwriting and policy issuance portions of the programs along with the claims and safety engineering services.

"This transaction provides Argonaut Insurance with the opportunity to expand our portfolio of large, upper-middle market clients by adding superior talent and a book of business that matches our strategic focus and competency," said John G. Gantz Jr., president of Argonaut Insurance Company. "We look forward to maintaining the relationships that Kemper Risk Management has built so effectively."

The transaction is part of Kemper's commitment to become a smaller, more profitable insurance company.

"Going forward, Kemper will have a two-pronged strategy," said David B. Mathis, Kemper chairman and CEO. "First, we will be primarily a standard commercial lines insurance provider with deep expertise in the lines of business we offer. The second key component is leveraging the strength of our service platform, both in terms of serving existing Kemper customers and selling our services independently."

In a separate transaction, Kemper recently reached a definitive agreement with Old Republic Insurance Company, a wholly owned subsidiary of Old Republic International Corporation (NYSE:ORI), to sell the renewal rights to its unbundled risk management accounts.

Although Kemper will no longer underwrite risk management business, it will continue through its NATLSCO and Kemper National Services (KNS) operations to be a premier provider of claim, medical management and safety engineering services to all market segments. Those existing Kemper customers renewing with Argonaut will have the opportunity to continue to receive support services directly from NATLSCO and KNS in this arrangement.

Kemper large risk customers whose accounts are not compatible with Argonaut's underwriting appetite will also have the option to access services from Kemper NATLSCO and KNS regardless of their underwriting provider.

In addition, Argonaut will consider providing customers with novations on current, in-force Kemper contracts to facilitate their transition.

Argonaut will be offering employment to an undisclosed number of Kemper employees. Other terms of the agreement were not disclosed.

Headquartered in San Antonio, Texas, Argonaut Group, Inc. (NASDAQ:AGII) is a national underwriter of specialty insurance products in niche areas of the property & casualty market. Through its operating subsidiaries, Argonaut Group offers high quality customer service in programs tailored to the needs of its customers' business and risk management strategies. Collectively, Colony Insurance, Rockwood Casualty Insurance Company, Argonaut Insurance Company, Argonaut Great Central, and Trident Insurance Services underwrite a full line of products in four primary areas: excess and surplus, specialty commercial, specialty workers' compensation, and public entity. Information on Argonaut Group and its subsidiaries is available at www.argonautgroup.com.

Argonaut Insurance Company is currently rated A (Excellent) by A.M. Best and A by Standard and Poor's.

The Kemper Insurance Companies is a leading provider of property/casualty insurance. Kemper is headquartered in Long Grove, Ill. For more information about Kemper, visit www.kemperinsurance.com.

The information contained in this release contains forward-looking statements, which usually include words such as "believe(s)," "goal(s)," "target(s)," "estimate(s)," "anticipate(s)," "forecast(s)" and similar expressions. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date specified on this release. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those contemplated in such statements. Such risks and uncertainties include, but are not limited to, changes in economic factors (such as interest rates and stock market fluctuations), changes in competitive conditions (including availability of labor with required technical or other skills), the number and severity of insurance claims (including those associated with catastrophe losses), regulatory approval of certain insurance rates, license applications and similar matters, governmental actions (including new laws or regulations or court decisions interpreting existing laws and regulations), and adverse judgments in litigation to which the Company or its subsidiaries are parties. No assurances can be given that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular time table. The Company assumes no obligation to release publicly any revisions to any forward-looking statements as a result of events or developments subsequent to the date of this release.