Tower Group, Inc. to Acquire Specialty Underwriters' Alliance, Inc.

Business Wire, June 22, 2009

NEW YORK & CHICAGO -- Tower Group, Inc. (“Tower”; NASDAQ: TWGP) and Specialty Underwriters' Alliance, Inc. (“SUA”; NASDAQ: SUAI) have announced today that they have entered into a definitive agreement for the acquisition of SUA by Tower in a transaction valued at approximately $107 million. Under the terms of that agreement, SUA shareholders would receive Tower common stock equal to $6.72 per SUA share based on Friday’s closing stock price for Tower of $24.00.

Transaction Highlights:

• Financially compelling to Tower and SUA stockholders

[Table Omitted]

• Strengthens specialty business segment

[Table Omitted]

• Establishes a Midwest regional office to support continued geographical expansion

[Table Omitted]

Under the terms of the agreement, SUA shareholders, including Class B shareholders, will receive 0.28 shares of Tower common stock for each share of SUA common stock or SUA class B stock. The exchange ratio is subject to adjustment based on Tower’s volume weighted average price per share during a 15 day trading window prior to closing, and will be fixed at 0.28 if the average price of Tower stock during such period is equal to or greater than $23.25 and equal to or less than $27.75. If the average stock price during such period is greater than $27.75, the exchange ratio will be adjusted downward to provide SUA shareholders with a fixed value per share of $7.77. If the average stock price during such period is less than $23.25 but equal to or more than $20.00, the exchange ratio will be adjusted upward to provide SUA shareholders with a fixed value per share of $6.51. However, if Tower’s average stock price during such period falls below $20.00, the exchange ratio will be fixed at 0.3255, and SUA will have the right, for a limited period, to terminate the agreement, unless Tower elects to add Tower shares to provide SUA shareholders with a value per share of $6.51.

The boards of directors of Tower and SUA have approved the transaction, and the board of directors of SUA has recommended the transaction to its shareholders. The transaction is expected to close approximately at year-end 2009, subject to customary closing conditions, including the approval by SUA shareholders, as well as certain regulatory approvals.

Michael H. Lee, Chairman and CEO of Tower, stated, “Acquiring SUA enables us to raise additional capital cost effectively to support our growth initiatives. It also significantly enhances our profile in the specialty business segment, an area in which we are seeing very strong opportunities for growth. By fully leveraging the operating platform and distribution relationships that SUA has developed, we are confident in our ability to further build on CastlePoint’s specialty business. We particularly value the experienced people at SUA who will help us in executing our plans in the specialty business segment.”

Courtney Smith, SUA’s President and CEO, stated, “We are pleased to join forces with Tower, which has a strong track record in acquisitions and providing meaningful value to shareholders. After a careful review of our strategic alternatives, our board has concluded that this transaction provides our shareholders with the best opportunity to enhance shareholders’ value. In addition, our affiliation with Tower will allow us to improve our profitability and take advantage of the current market opportunities by accessing Tower’s A- rating by A.M. Best Company and strong capitalization.”

Tower retained Debevoise & Plimpton LLP as its legal advisor. FBR Capital Markets & Co. acted as SUA’s exclusive financial advisor, and Stroock & Stroock & Lavan LLP acted as SUA’s independent legal advisor.

Additional Highlights and Disclosures:

Tower 2010 Guidance

For 2010, including the effects of the SUA transaction, Tower projects its diluted earnings per share to be in a range between $3.50 and $3.70 per diluted share.

Investor Call and Presentation

Tower and SUA will host a joint conference call on Tuesday, June 23, 2009 at 10:00 A.M. (Eastern Time) to discuss the transaction. The call-in number is: 877-795-3649; international 719-325-4788. This conference call will also be broadcast live over the Internet. To access the presentation and a listen-only webcast over the Internet, please visit the Investor Information section of Tower’s website, www.twrgrp.com.

Please access the website at least 15 minutes prior to the call to register and to download any necessary audio software. If you are unable to participate during the live conference call, a listen-only webcast will be archived in the Investor Information section of both companies’ websites.

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