Business Moves

November 5, 2006

Affirmative Insurance Holdings, USAgencies

Affirmative Insurance Holdings Inc., Addison, Texas, and privately-held USAgencies L.L.C., based in Baton Rouge, La., announced a definitive agreement under which Affirmative will acquire 100 percent of the membership units of USAgencies, in a fully-financed all cash transaction valued at approximately $200 million. The transaction is subject to regulatory approval and other usual closing conditions associated with similar transactions.

USAgencies is a privately held non-standard automobile insurance provider headquartered in Baton Rouge. It has 92 sales offices in Louisiana, Illinois and Alabama selling its products directly to consumers through its retail stores, virtual call centers and Internet site. The retail stores in Louisiana will continue to operate under the USAgencies brand. In 2005, USAgencies had gross written premium of approximately $157 million.

Source: Affirmative Insurance Holdings

Roach Howard Smith & Barton

Dallas-based insurance brokerage firm Roach Howard Smith & Barton announced it has expanded its servicing capabilities by adding Elite Client Services to their Personal Client Services division.

The company said that through this exclusive program, Roach Howard Smith & Barton (RHSB) will review, analyze and design insurance solutions for individuals and families to protect their multiple homes, high-valued vehicles, personal aircraft, yachts, wine collections, vintage cars, fine art, jewelry and other unique assets. Further, they will offer special coverage for domestic help, kidnap and ransom, worldwide travel, medical coverage, directors and officers liability and excess liability.

RHSB has added Kathleen Roth to manage the Elite Client Services division.

Since 1955, Roach Howard Smith & Barton has provided personal and business insurance solutions on a local, national and global level through its offices located in Dallas and Fort Worth.

Source: RHSB

Texas Mutual, TAA, Whorton Insurance Services

Texas Mutual Insurance Company announced its newest workers’ compensation purchasing group: Texas Apartment Association (TAA). The group provides qualifying members with a competitive option for workers’ comp coverage.

State law allows employers in similar industries to reduce their workers’ comp premiums by purchasing their coverage as a group. TAA is an approved purchasing group for property and condo managers.

Members get a premium discount based on the premium volume of the entire group, regardless of their individual premium size. They can also adopt an industry-specific safety plan and participate in Texas Mutual Insurance Company’s individual and group dividend programs.

Texas Mutual Insurance Company underwrites the TAA purchasing group and Whorton Insurance Services, Austin, administers the program. Any licensed, Texas insurance agent can submit qualifying clients for membership.

For more information about TAA and other purchasing groups, visit the Agents section at www.texasmutual.com.

Source: Texas Mutual

Western Security Surplus

Kyle Stevens, executive vice president of Western Security Surplus Insurance Brokers, announced that the firm has outgrown its current offices in Dallas and has moved to a larger space in Plano, Texas.

Effective Oct. 16, the new offices are located at 6504 International Business Parkway, Suite 1100, Plano, Texas 75093.

The phone, fax and e-mail addresses remain the same: Phone is (972) 702-0500 and fax is (972) 702-0504.

Aon, Old Republic Insurance Co.

Chicago-based Aon has taken further steps to exit the property/casualty underwriting business by moving to sell its Construction Program Group (CPG). Aon also announced that it would strengthen reserves for its remaining specialty property and casualty business by approximately $100 million, while continuing to exploring the sale of the remaining underwriting business.

Aon signed a letter of intent to sell its CPG, a managing general underwriter, to Old Republic Insurance Co. for cash consideration of $85 million. The transaction also includes the transfer of approximately $300 million of unearned premium and claim reserves currently on the books of Virginia Surety Co. Inc., which relate to business previously written through CPG.

The sale of CPG and previously announced pending sale of Aon Warranty Group and Virginia Surety, part of the strategic exit of underwriting, are anticipated to be completed in the fourth quarter of 2006.

Aon has placed the balance of its specialty property and casualty business related to Aon Warranty Group, Virginia Surety and CPG in run-off. The firm expects to strengthen specialty reserves by approximately $100 million effective in the third quarter of 2006. The majority of the increase relates to National Program Services (NPS), an independent managing general underwriter that wrote habitational risk on behalf of Virginia Surety. The principal of NPS was convicted of criminal theft in 2004 in connection with NPS’s actions with respect to Virginia Surety and other insurers.

Aon officials said the exiting of the underwriting business would permit the firm to focus on its core businesses, including brokerage.

USI Holdings

USI Holdings Corp. received an inquiry from a private equity firm interested in acquiring all of the outstanding common stock of the company. In response, the company’s board of directors formed a special committee consisting of outside directors to review the proposal and consider all of the company’s options.

Lazard Freres & Co. LLC and Dewey Ballantine LLP have been engaged by the special committee to assist in its review. No details of any offer were disclosed. USI said it could give no assurance that any transaction will be entered into or consummated.

For the third quarter of 2006, the company expects to report total revenues of approximately $130.5 to $131.5 million compared to total revenues of $127.3 million in the third quarter of 2005, and income from continuing operations, before taxes, of approximately $8 to $9 million compared to $9.8 million in the third quarter of 2005.

National Indemnity, Equitas

Equitas, the Lloyd’s vehicle set up in 1996 to run off a mountain of asbestos and environmental claims, and Berkshire Hathaway’s subsidiary National Indemnity reached an agreement in principle where National Indemnity would acquire Equitas.

Subject to approval from Lloyd’s, the Names and the U.K.’s Financial Services Authority (FSA), on a structure in which National Indemnity will undertake to reinsure all Equitas’ liabilities; Provide up to a further $7 billion of reinsurance cover to Equitas; Take on the staff and operations of Equitas and conduct the run-off of Equitas’ liabilities.

The transaction would occur in two phases. In Phase I National Indemnity Company would provide reinsurance cover to Equitas of $8.7 billion over and above the March 31, 2006, reserves of Equitas less adjustment for payments and recoveries since that date. The premium payable to National Indemnity Company would be all of Equitas’ assets less $324 million and a contribution of $135.67 million from the Corporation of Lloyd’s.

In Phase II Equitas would seek approval of the High Court to transfer all the liabilities of Reinsured Names into Equitas or a subsidiary of Berkshire Hathaway. If such a business transfer occurs before the end of 2009 National Indemnity Company would provide up to $1.3 billion of additional reinsurance cover for a further premium of up to $75.4 million.

At the time of any such business transfer, or on Dec. 31, 2009, if a transfer has not occurred, Lloyd’s will provide a further contribution of $34 million.