Vesta Offers Preliminary Hurricane Loss Estimates

October 7, 2004

Alabama-based Vesta Insurance Group Inc. announced that its gross loss, before reinsurance, from Hurricane Ivan is expected to be in the range of approximately $7.0 to $12.0 million and approximately $23.0 to $37.0 million from Hurricane Jeanne.

In addition, the company has updated its gross loss estimates for
Hurricanes Charley and Frances. Currently, Vesta estimates that the gross loss, before reinsurance, is approximately $27.0 to $33.0 million from Hurricane Charley and $18.0 to $23.0 million from Hurricane Frances.

Previously, the company had estimated gross losses of between $25.0 and $35.0 million from Hurricane Charley and $10.0 to $20.0 million from Hurricane Frances.

For the third quarter, Vesta currently estimates that its total gross loss from the four hurricanes, before reinsurance, is approximately $75.0 to $105.0 million. The gross loss is reduced by recoveries from a 50% property quota share reinsurance agreement, the Florida Hurricane Catastrophe Fund, and the company’s catastrophe excess of loss reinsurance program to a total net loss, after reinsurance, of between $45.0 and $55.0 million from all four hurricanes.

The preliminary loss estimate is based on catastrophe simulation models and initial loss reports from policyholders. According to the Insurance Information Institute, more than 2 million claims have been filed from the four hurricanes, which is more than triple the number of claims from Hurricane Andrew in 1992.

As a result, the claims reporting and adjusting process remains in a preliminary stage and the ultimate impact of the total gross loss
from the hurricanes may differ substantially. However, on an after
reinsurance basis, Vesta’s net loss estimates should not vary significantly due to the structure of the company’s reinsurance program.

“Despite the unprecedented number of hurricanes to make landfall in
Florida in a six-week period, our capital base remains solid and we have the liquidity to pay for repairs so our policyholders can return to their normal lives as quickly as possible,” said Norman Gayle, president and CEO.

In addition, the company announced that it has settled its previously
announced dispute with Dorinco Reinsurance Company regarding the 20% whole account quota share reinsurance agreement.

Under the settlement, Vesta will receive $12.0 million cash from Dorinco and will record a one-time gain of approximately $3.0 million in the third quarter.

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