Alea Sells Renewal Rights of U.S. Primary Program Business

November 22, 2005

Bermuda-based Alea Group Holdings Ltd. has announced that it has entered into an agreement to sell the renewal rights to certain portions of its U.S. primary program business written by Alea Alternative Risk (AAR) to subsidiaries of AmTrust Group, a privately held, New York-based insurance and financial services company.

The terms of the agreement include an initial advance payment of $12 million in cash, to be made at closing. The agreement also provides for additional cash payments of 3 percent of gross premiums written in the five years from closing (to be offset against the $12 million advance payment). The consideration to the Group over the five-year period is estimated in the range of $20 million to $40 million and is capped at $75 million. Certain software and other assets with value of less than $3 million will also be transferred. Proceeds will be placed on deposit until the strategic direction of the Group has been finalized.
Distribution of proceeds is subject to regulatory approval.

The Group retains ownership of Alea North America Insurance Company and Alea North America Specialty Insurance Company along with their admitted and their excess and surplus licenses. It is anticipated that a substantial number of the 110 AAR employees will be offered employment by AmTrust.

“I am pleased to announce this renewal rights transaction,” said Mark L. Ricciardelli, Chief Executive Officer. “I am also pleased that many members of AAR’s strong management and underwriting team, led by AAR’s CEO, Rob Byler will be joining AmTrust. We continue to explore all options for the Group and its remaining businesses.”

For the full year 2004, the book of business, which is the subject of the transaction, generated $216.3 million in gross premiums written and underwriting profit of $11.2 million before allocation of central corporate expenses.

The sale is subject to regulatory approval. Alea will continue to manage net claims outstanding after discount of $406.9 million (as at 30 June 2005) relating to business written by AAR in the period prior to completion. The remainder of AAR’s portfolio will be placed into run-off, and the Group will be aligning the remaining staff with the residual operations. The Group estimates annualized savings of approximately $6 million from the transaction and as a result of this realignment.

AmTrust is headquartered in New York, and its operations center is in Beachwood, Ohio, and has an A- rating from A.M. Best.

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