Republic Reports on Losses from Hurricane Katrina

September 14, 2005

Republic Companies Group Inc., headquartered in Dallas, released information regarding its response to Hurricane Katrina and the financial effects of this Category 4 hurricane on the third quarter results of Republic. In summary, the company’s personnel and representatives have been mobilized to assist policyholders since Aug. 30, the day following the onslaught of this devastating storm.

While responding fully to its responsibilities to policyholders, the financial effect on Republic’s financials should be within the loss expected from a major wind-related catastrophe. Specifically, the after tax impact on Republic’s third quarter net income, net of recoveries from catastrophe reinsurance treaties, is estimated at approximately $3.3 million.

Member companies of The Republic Group provide insurance for windstorm damage and related risks to homes, automobiles and commercial businesses in Louisiana. Consistent with industry practice, Republic’s policy terms do not include losses related to flood damage.

Republic has no property risks in Alabama, Mississippi or Florida, the other states struck by Katrina.

Parker Rush, president and chief executive officer commented, “We know this is a difficult time for our policyholders and independent agents residing in Katrina’s path. We are working to assist them in rebuilding their lives and their businesses. This is a particularly trying process for all parties, as physical access to the areas damaged by Katrina remains difficult for policyholders and for our claims representatives who are attempting to provide assistance. In addition to responding to contractually insured obligations to our policyholders and independent agents, Republic and its employees are providing other financial and volunteer assistance to residents impacted by Hurricane Katrina.”

The losses related to Katrina are a subject of continuing assessment, and the mix of insured losses to total losses is particularly complex in this case. As such, Republic is not yet able to fully assess the gross losses incurred by the company as a result of Hurricane Katrina. However, sufficient information is now available to report that the gross loss is expected to be within the limits of the company’s excess of loss reinsurance coverage. This estimate is preliminary and based on broad assumptions about coverage, damage and reinsurance including claims received to date, industry loss estimates, estimates from industry and proprietary models, and contract language, among other factors.

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