GALLANT AND VALOR INSURANCE COMPANIES ORDERED INTO CONSERVATION

Chicago, IL -- Illinois Insurance Director Nathaniel S. Shapo announced today that he obtained an Order of Conservation against Gallant and Valor Insurance Companies on February 25, 2002, following the Department of Insurance's determination that both companies are insolvent by more than $1 million. Pursuant to statute, the order had been confidential until the Circuit Court of Cook County lifted the sequestration today (March 14, 2002).

Gallant is a wholly owned subsidiary of J and P Holdings Incorporated. Valor, in turn, is a wholly owned subsidiary of Gallant Insurance Company. Both companies are members of the Warrior Insurance Group of Bedford Park, Illinois. Gallant was originally incorporated in November 1977 as the Allied American Insurance Company. The current name was adopted in July 1995. Valor was incorporated in December 1989 as the Unicorn Insurance Company. Its name was changed to the Hallberg Direct Insurance Company in 1992, and to Valor in July 1995.

Both companies are licensed in the states of Illinois and Indiana, and primarily write private passenger automobile liability and physical damage coverages. As of February 20, 2002, the companies insured 115,980 drivers in Illinois and 23,352 in Indiana.

The Conservation Order allows the Director to conserve the assets of the company for the protection of its claimants and creditors, pending further recommendations to the Supervising Court. The order also contains an injunction prohibiting suits against the company outside of the conservation proceedings, as well as a moratorium on the payment of claims and loss adjustment expenses subject to certain hardship provisions for claims occurring prior to January 1, 2002.

Shapo said the Department of Insurance has approved an arrangement for Affirmative Insurance Company to assume or reinsure all in-force business of Gallant and Valor effective January 1, 2002. As such, Affirmative is responsible for policy claims which occurred on or after that date. Affirmative is an Illinois domestic carrier and member of the Vesta Insurance Group of Birmingham, AL, and is licensed in 25 states including Illinois and Indiana.

Conservation proceedings are being handled by the Office of the Special Deputy Receiver representing the Director of Insurance, 222 Merchandise Mart Plaza, Suite 1450, Chicago, Illinois 60654; (312) 836-9500.