Capital Raised, Credit Facility in Place for State National

January 20, 2003

State National Companies, headquartered in Fort Worth, Texas, announced it raised $17 million of capital through the issuance of floating rate trust preferred securities by T.B.A. Statutory Trust I. The company also established a $6 million revolving line of credit with Frost Bank of San Antonio to provide flexible liquidity for day-to-day operations.

The floating rate trust preferred securities were issued in connection with a pooled private placement offering. Keefe, Bruyette & Woods Inc., and FTN Financial Capital markets were the placement agents.

The floating rate trust preferred securities pay interest quarterly at a rate equal to a 3-month LIBOR plus 400 basis points, are redeemable at par on or after December 4, 2007 and mature on December 4, 2032. Under the terms of the transactions, T.B.A. Group, Ltd., the ultimate parent of State National Insurance Company and State National Specialty Insurance Company, has guaranteed the payments due under the floating rate trust preferred securities.

State National Companies president, Terry Ledbetter, stated that the proceeds will be used for general corporate purposes, primarily to retire senior debt incurred to increase the capital of State National Insurance Company, its subsidiary rated “A” (Excellent) by A.M. Best.

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