Business Moves

May 21, 2007

United Heritage, Alliance Mutual Insurance

Alliance Mutual Insurance Co., headquartered in Greensboro, N.C., and United Heritage Financial Group Inc., based in Meridian, Idaho, have reached a preliminary agreement under which United Heritage will acquire Alliance.

Alliance, founded in 1976, is a provider of property and casualty insurance throughout North Carolina through a network of independent agents.

United Heritage is a financial holding company that owns the stock of three insurance companies: United Heritage Life Insurance Co., United Heritage Property & Casualty Co., and Sublimity Insurance Co.

The transaction, which will include Alliance’s conversion from a mutual association to a stock company, is subject to regulatory approval and the approval of Alliance’s members. Financial terms of the transaction were not disclosed.

Alleghany, Employers Direct

Alleghany Corp. has agreed to purchase all outstanding shares of California workers’ compensation writer Employers Direct Corp. for $195 million in cash.

EDC, which was founded in 2002, is an insurance holding company based in Agoura Hills, Calif. Through its wholly-owned subsidiary Employers Direct Insurance Co., it writes workers’ compensation on a direct basis in California.

EDC markets only in California where it reports insuring 740 of businesses with more than 130,000 employees. Its customers are California-based, mid-sized, private businesses. Its average policyholder pays annual premiums of about $240,000, according to the company. At the end of 2005, EDC reported having more than $150 million in written workers’ compensation premiums.

Alleghany Corp., with $6.2 billion in assets and $2.5 billion in stockholders’ equity, is engaged in the property/ casualty insurance business through its subsidiary Alleghany Insurance Holdings LLC, which consists of RSUI Group, Capitol Transamerica Corp. and Darwin Professional Underwriters, Inc.

Upon closing, which is estimated to occur in the third quarter of 2007, Employers Direct will become an indirect wholly-owned subsidiary of Alleghany.

Liberty Mutual, Ohio Casualty

Boston-based Liberty Mutual Group has agreed to buy Ohio Casualty Corp. of Fairfield, Ohio, in a transaction valued at approximately $2.7 billion. Liberty Mutual will acquire all outstanding shares of common stock of Ohio Casualty for $44.00 per share in cash.

Ohio Casualty Corp, is the holding company of The Ohio Casualty Insurance Co. and five other property and casualty insurance companies, which are referred to under the marketing brand Ohio Casualty Group. Ohio Casualty Group sells personal, commercial and bond insurance products through independent agents and brokers.

Liberty Mutual said it intends to fund the purchase with cash on hand and short-term debt; the transaction is not subject to any financing contingencies.

The proposed transaction, which has been approved by the boards of directors of both companies, is subject to approval by shareholders and regulatory approvals It is expected to close in the third quarter of 2007.

Following the acquisition, Ohio Casualty will be part of Liberty Mutual Group’s Agency Markets business unit. The 11 companies in Liberty Mutual Agency Markets have more than 6,800 employees and approximately 6,500 appointed agencies. In 2006, Liberty Mutual Agency Markets’ net written premium was $5.9 billion.

Ohio Casualty, which has approximately 2,100 employees and operations in 48 states, has approximately 3,400 appointed agencies.

Ohio Casualty Group is the marketing brand for six companies: The Ohio Casualty Insurance Co., West American Insurance Co., American Fire and Casualty Co., Ohio Security Insurance Co., Avomark Insurance Co. or Ohio Casualty of New Jersey Inc.

Rated “A” (Excellent) for financial strength by the A.M. Best Co. Inc., the group has written premiums of approximately $1.42 billion as of Dec. 31, 2006.

According to Edmund F. Kelly, Liberty Mutual Group chairman and CEO, through the addition of Ohio Casualty, the firm’s independent agency business will boast combined net written premium exceeding $7.3 billion and become the largest regional provider of property and casualty products distributed through independent agents in the U.S.

BISYS, Citi

Financial services outsourcing firm and insurance wholesaler BISYS has agreed to be acquired by global financial giant Citi. Under the deal, Citi would acquire all of the outstanding shares of BISYS in a transaction valued at approximately $1.47 billion.

At closing, Citi said it will sell the Retirement and Insurance Services Divisions of Bisys to affiliates of J.C. Flowers & Co. LLC, which owns Crump, making the net cost of the transaction to Citi approximately $800 million. The Insurance Services Group provides independent wholesale distribution of life insurance and commercial property/casualty insurance, among other activities.

Citi would combine BISYS Fund Services and Alternative Investment Services, which provide administration and distribution services for mutual funds, hedge funds, private equity funds, and other investment products, with its own investment industry operations.

JC Flowers will be combining BISYS Commercial Insurance Service with Crump. In addition, JC Flowers said its acquisition of BISYS’ life insurance and retirement services business has the potential for creating a leading integrated provider of wholesale insurance brokerage and retirement services.

The transaction is expected to close in the second half of this year. It is subject to BISYS shareholder approval and to regulatory approvals in the U.S, Ireland and Bermuda.

The BISYS Group, Inc. was founded in 1989 through acquisition from ADP and had its initial public offering in 1992.

Through its Insurance Services group, BISYS is a national distributor of commercial property/casualty insurance, long-term care, disability, and annuity products. It has grown through numerous acquisitions including in 2001, Insurance Exchange of America Inc. (IXA), the Toner Organization and Life Brokerage Corp.; in 2002, Harrison James Group, LLC and Career Brokerage (aka Feingold Scott, Limited); in 2003, commercial insurance brokers Tri-City Brokerage and USA Insurance group; in 2006, Ratner Associates and D&O Concepts, a specialist in professional legal liability and JCH Insurance Brokers, which focuses on environmental risk management; and in 2007, Truckwriters Inc., a Zurich program for trucking and transportation risks nationwide.