Fox Paine to Purchase Controlling Interest in UNG

March 20, 2003

The United National Group of insurance companies, a provider of specialty and surplus lines property and casualty insurance, announced that its controlling shareholders have entered into an agreement whereby Fox Paine Capital Fund II, L.P., an investment fund managed by Fox Paine & Company, LLC ("FPC"), and certain other funds under common control with Fox Paine Fund II (collectively, "Fox Paine"), would acquire a controlling interest in UNG. Present ownership of UNG will maintain a minority interest.

In conjunction with this transaction, Fox Paine intends to make a substantial capital contribution to properly position UNG to take advantage of the strengthening market conditions in the U.S. property and casualty insurance industry.

UNG is primarily composed of four operating insurance companies: United National Insurance Company, Diamond State Insurance Company, United National Specialty Insurance Company and United National Casualty Insurance Company.

The proposed transaction is subject to the execution of a Definitive Agreement and customary closing conditions including certain regulatory approvals.