LEGION INDEMNITY COMPANY ORDERED INTO CONSERVATION

Chicago, IL -- Illinois Insurance Director Nathaniel S. Shapo announced today that he obtained an Order of Conservation against Legion Indemnity Company on April 3, 2002. The conservation of Legion was precipitated by Rehabilitation Orders entered in the state of Pennsylvania against two Legion Indemnity Company affiliates, Legion Insurance Company and Villanova Insurance Company.

Because Legion Indemnity's business operations, including its claims and policy administration functions, are closely integrated with the Pennsylvania affiliates, those receiverships could impact the ability of the Illinois company to fulfill its contractual obligations in a timely manner. Legion Indemnity is a member of a reinsurance pool through which it ceded a substantial portion of its premium writings to Legion Insurance Company. With the Rehabilitation Orders entered by Pennsylvania, the collectibility of those reinsurance proceeds is now in question, thereby potentially hindering the ability of Legion Indemnity to meet its contractual obligations.

The Director's complaint alleged that Legion Indemnity is impaired in an amount in excess of $1 million and as such is unable to meet its minimum capital and surplus as required by Illinois statute. The Director therefore determined that conservation would be in the best interest of the company, its policyholders, creditors, and the public.

Legion Indemnity was originally incorporated in January 1987 as the Wacker-Randolph Insurance Company. The name was changed to Dearborn Insurance Company in March 1987 and changed to its current name in May 1996. Legion Indemnity is a wholly owned subsidiary of Legion Financial Corporation, which in turn is owned by Mutual Group Ltd. of Delaware. The ultimate holding company for all of the insurance operations is Mutual Risk Management, Ltd., a Bermudian corporation.

The company is licensed only in the state of Illinois, however; it operates on a surplus lines or non-admitted basis in the District of Columbia, U.S. Virgin Islands, and 49 other jurisdictions. At December 31, 2001, the company reported direct written premium of $89,307,000, and assumed reinsurance premium of $11,500,000.

The Conservation Order allows the Director to conserve the assets of the company for the protection of its claimants and creditors, pending further recommendation 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 upon the payment of claims and loss adjustment expenses, with the exception of discretionary payment of certain workers' compensation and accident and health claims.

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.