Kemper Reaches Renewal Rights Agreement with Old Republic on Large Risk National Accounts

Business Wire, Jan 15, 2003

Business Editors

LONG GROVE, Ill.--(BUSINESS WIRE)--Jan. 15, 2003

The Kemper Insurance Companies today announced it has reached a definitive agreement to sell the renewal rights to a significant number of its large risk national accounts to Old Republic Insurance Company, a wholly owned subsidiary of Old Republic International Corporation. (NYSE:ORI).

"This transaction will be good for both Kemper and Old Republic," said Kemper Chairman and CEO David B. Mathis. "This agreement is in keeping with Kemper's strategy to become a smaller, more profitable company, allowing us the opportunity to enhance our balance sheet and allocate capital and resources to support other lines of business."

Mathis added that Kemper has been an insurer in the large risk national account business for some time and the decision to exit the insured business was not an easy one. However, Kemper will continue through its NATLSCO operation to be a premier provider of claim, medical management and safety engineering services to all market segments.

Old Republic is purchasing the renewal rights to Kemper's unbundled risk management accounts and will not be assuming liabilities under existing policies. In an unbundled arrangement, the underwriting and policy issuance portion of a program is purchased from one insurer while ancillary services in support of that program can be obtained from another provider, usually a non-affiliated third party administrator (TPA).

"Old Republic Insurance Company is a leader in the unbundled risk management area. Kemper's unbundled business is a good fit with our business," said Jim Kellogg, President of Old Republic's property and liability insurance segment. "We're excited about this opportunity. Although there is no guaranty we'll renew each of the accounts, we feel that this book of business represents a good strategic fit with Old Republic. Customers renewing their accounts with Old Republic can expect to receive excellent service, just as they have with Kemper, and we plan to effect a seamless transition for each account transferred."

Chicago-based Old Republic International Corporation is an insurance holding company whose subsidiaries market, underwrite and provide risk management services for a wide variety of coverages in the property and liability, mortgage guaranty, title and life and health insurance fields. One of the nation's 50 largest publicly owned insurance organizations, Old Republic International has assets of approximately $8.4 billion and capitalization of $3.1 billion. Its current stock market valuation is approximately $3.5 billion. Old Republic Insurance Company is rated A by A.M. Best, Aa2 by Moody's and AA by Standard & 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.