Kemper Reaches Renewal Rights Agreement with Arch Insurance Group on Surety Business

Business Wire, Feb 27, 2003

Business Editors

LONG GROVE, Ill.--(BUSINESS WIRE)--Feb. 27, 2003

The Kemper Insurance Companies today announced it has reached an agreement in principle to sell the renewal rights to its surety business to Arch Insurance Group, a division of Arch Capital Group Ltd.

Kemper's agreement with Arch includes contract and specialty surety products written through Kemper's Surety division, including Lou Jones & Associates.

"This transaction continues Kemper's efforts to become primarily a standard commercial lines insurance provider," said David B. Mathis, Kemper chairman and CEO. "Kemper Surety accounts were not included in the previously announced cut-through arrangement with Berkshire Hathaway subsidiary National Indemnity Company."

To provide continuity, the transaction also includes some Kemper Surety staff and certain assets used in the business.

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.

Arch Capital Group Ltd., a Bermuda-based company with over $1.4 billion in equity capital, provides insurance and reinsurance on a worldwide basis through its wholly owned subsidiaries. Arch Insurance Group's principal insurance subsidiaries - Arch Insurance Company, Arch Specialty Insurance Company, and Arch Excess & Surplus Insurance Company - are rated A- (Excellent) by A.M. Best.

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.