Lexington Offers New Property Terrorism Endorsement

March 23, 2005

Lexington Insurance Company, a member company of American International Group Inc. (AIG), has introduced OpShield, a new property terrorism endorsement that provides coverage for losses incurred when a civil or military order related to a terrorist act or threat impedes business operations. The OpShield endorsement offers a maximum aggregate of $25 million as a sublimit to the Property Terrorism policy.

OpShield coverage is triggered when a civil or military order takes effect within a specified distance around the insured’s business, and may be extended to respond when an order is issued for certain areas surrounding non-owned locations, such as shipping ports or railways. The endorsement can be extended to include coverage for the operational impact on an insured’s business when a civil or military order impedes their ability to work with third party business relationships such as suppliers or vendors. Additionally, OpShield can be written to cover terrorist attacks or threats involving use of biological and chemical agents at locations owned, operated, or specified as “dependent” by the insured.

“Civil or military orders imposed following a terrorist attack or threat can have serious ramifications for businesses, even those located a significant distance from the area that is directly targeted by the terrorist act,” said Kevin Kelley, Chairman and Chief Executive Officer of Lexington Insurance Company. “For example, the closing of major roads, ports, or airways can leave a business inaccessible to customers or unable to receive vital supplies. OpShield responds to this exposure by covering the business interruption losses or extra expenses an insured may suffer when such an order affects its business or that of its key vendors and suppliers.”

Traditional property terrorism insurance policies provide limited business interruption coverage, typically responding only when civil or military orders take effect in very close proximity to the insured’s business. Such coverage often fails to address losses the insured could suffer when orders impact important third-party supply chain facilities. In contrast, a facility need not suffer direct physical damage or have access directly impeded by a terrorist threat or act in order for OpShield to respond.

OpShield is the newest addition to Lexington’s Homeland Protector, a comprehensive portfolio of property and casualty insurance products and services that address terrorism and homeland security-related exposures.

For more information on OpShield or the Homeland Protector portfolio, please contact Charles Benda, Practice Leader – Lexington Homeland Security Practice, at (212) 770-3745 or e-mail HomelandProtector@aig.com.

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