Kemper Reaches Agreement with Argonaut on Bundled Large Risk Nat’l Accounts

January 24, 2003

The Kemper Insurance Companies announced it has reached a definitive agreement to sell the renewal rights to its bundled large risk national accounts to Argonaut Insurance Company, a member of Argonaut Group, Inc., a national underwriter of specialty insurance products in niche areas of the property and casualty market.

For the bundled segment of the large risk business, Kemper Risk Management has provided the underwriting and policy issuance portions of the programs along with the claims and safety engineering services.

“This transaction provides Argonaut Insurance with the opportunity to expand our portfolio of large, upper-middle market clients by adding superior talent and a book of business that matches our strategic focus and competency,” said John G. Gantz Jr., president of Argonaut Insurance Company. “We look forward to maintaining the relationships that Kemper Risk Management has built so effectively.”

The transaction is part of Kemper’s commitment to become a smaller, more profitable insurance company.

“Going forward, Kemper will have a two-pronged strategy,” said David B. Mathis, Kemper chairman and CEO. “First, we will be primarily a standard commercial lines insurance provider with deep expertise in the lines of business we offer. The second key component is leveraging the strength of our service platform, both in terms of serving existing Kemper customers and selling our services independently.”

In a separate transaction, Kemper recently reached a definitive agreement with Old Republic Insurance Company, a wholly-owned subsidiary of Old Republic International Corporation, to sell the renewal rights to its unbundled risk management accounts.

Although Kemper will no longer underwrite risk management business, it will continue through its NATLSCO and Kemper National Services (KNS) operations to be a premier provider of claim, medical management and safety engineering services to all market segments. Those existing Kemper customers renewing with Argonaut will have the opportunity to continue to receive support services directly from NATLSCO and KNS in this arrangement.

Kemper large risk customers whose accounts are not compatible with Argonaut’s underwriting appetite will also have the option to access services from Kemper NATLSCO and KNS regardless of their underwriting provider.

In addition, Argonaut will consider providing customers with novations on current, in-force Kemper contracts to facilitate their transition.

Argonaut will be offering employment to an undisclosed number of Kemper employees. Other terms of the agreement were not disclosed.

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