Argonaut Group Inc. Acquires Holding Company

August 27, 2001

Argonaut Group, Inc. has completed the previously announced acquisition of Front Royal, Inc., an insurance holding company headquartered in Morrisville, N.C. for $165 million in cash.

The acquisition of the Front Royal insurance companies will add to Argonaut Group’s growing specialty insurance franchise, adding products and underwriting capabilities in areas complementary to Argonaut’s traditional products. Front Royal operates specialty niche insurance underwriters with particular expertise in excess and surplus lines and workers compensation for targeted types of businesses. Its principal subsidiaries are Colony Insurance Group, located in Richmond,Va.; Rockwood Casualty Insurance Company, located in Rockwood, Penna.; and The Redwoods Group, a managing general underwriter, headquartered in Morrisville.

The acquisition of these companies, which have been historically profitable in their specialty insurance markets, will more than double the premium revenues of Argonaut Group, and are expected to be accretive to earnings per share from the first year.

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