Insurance Management Solutions Group Inc. Reports Intent to Enter Into Self-Tender Offer and Go Private

Business Wire, August 19, 2002

Business Editors

ST. PETERSBURG, Fla.--(BUSINESS WIRE)--Aug. 19, 2002

Insurance Management Solutions Group, Inc. (OTC:INMG.OB) (the "Company"), a provider of business process outsourcing solutions serving insurance companies and financial institutions, announced in a public filing made with the Securities and Exchange Commission late last week that it intends to commence shortly a cash tender offer for all presently outstanding publicly-held shares of its common stock, $0.01 per share ("Common Stock"), at a price of $3.08 per share, net to the seller in cash. The offer will be conditioned upon at least a majority of the shares of Common Stock not held by the BIG Group (as hereinafter defined) being tendered and other closing conditions typical of this type of transaction.

The offer is to be made as part of an Agreement and Plan of Merger, dated August 15, 2002, (the "BIG Agreement"), by and among the Company, Bankers Insurance Group, Inc. ("BIG"), Bankers Insurance Company ("BIC"), Bankers Security Insurance Company ("BSIC"), and Bankers Management Corporation ("Acquisition Corp."). BIC and BSIC are wholly-owned subsidiaries of BIG. Acquisition Corp. is a Florida corporation wholly owned by BIC and BSIC and formed solely for purposes of consummating the Merger (as hereinafter defined). As of the date hereof, the members of the BIG Group collectively own approximately 68.0% of the outstanding shares of Common Stock. Pursuant to the BIG Agreement, each member of the BIG Group has agreed not to tender the shares of Common Stock owned by it in the tender offer to be made by the Company. Also pursuant to the BIG Agreement, the Company will loan BIG up to $7.0 million under a revolving line of credit secured by the flood insurance book owned by a subsidiary of BIG. As of the date hereof, the principal amount outstanding under the line of credit is $6.1 million. All amounts due under the line of credit will by due July 31, 2003; interest is payable monthly on amounts outstanding thereunder at an annual rate equal to 10.75%. The loan proceeds are to be used by BIG exclusively (i) to pay off a $5,000,000 loan and other indebtedness outstanding from BIG to AMS Staff Leasing and (ii) for other working capital needs of BIG, as determined from time to time by BIG.

Pursuant to the BIG Agreement, if the tender offer is consummated, Acquisition Corp. will be merged with and into the Company (the "Merger"). When the Merger is consummated, any shares of Common Stock not tendered in the tender offer would be cashed out at the same $3.08 per share price as offered in the tender offer, subject to any appraisal rights shareholders may have under Florida law.

The Company has 12,276,063 shares of Common Stock outstanding. The members of the BIG Group currently own 8,349,884 shares of Common Stock, representing approximately 68.0% of the outstanding shares of Common Stock. The funding of the transaction is expected to come from cash currently held by the Company.

A Special Committee comprised of independent directors reviewed and recommended approval of the tender offer by the full Board of Directors, which approved the BIG Agreement, the tender offer and the Merger. The Special Committee's recommendation and the Board's approval are based on a number of factors, including the opinion of Houlihan Lokey Howard & Zukin Financial Advisors, Inc., the financial advisor to the Special Committee, that the $3.08 per share consideration is fair from a financial point of view to the Company's shareholders (other than the members of the BIG Group).

The tender offer will commence shortly and will be made only by an Offer to Purchase and other offering documents, copies of which will be filed with the Securities and Exchange Commission and mailed to Company shareholders. Investors and shareholders are strongly advised to read the tender offer statements when they become available, because they will contain important information. Investors and security holders may obtain a free copy of these statements (when available) and other documents filed by the Company at the SEC's web site at http://www.sec.gov. The tender offer statement and related materials may be obtained for free by directing such requests to the information agent to be designated for the tender offer.

Insurance Management Solutions Group, Inc. (http://www.outsourceimsg.com), including its subsidiaries, is a provider of business process outsourcing solutions serving insurance companies and financial institutions nationwide. The Company offers an array of policy and claims administration services as well as financial and statistical reporting, information technology support services, and training and marketing support.

Certain statements contained in this press release, including statements regarding the proposed tender offer and merger described herein, and the other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Words such as "expects," "intends," variations of these words and similar expressions are intended to identify forward-looking statements. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, uncertainties regarding economic conditions and the market as those affect both the Company and BIG, other uncertainties regarding BIG (including its subsidiaries), its business and financial condition, and those risks and uncertainties discussed in filings made from time to time by the Company with the Securities and Exchange Commission.