AAI Syndicate #1 Ltd. Liquidated

Chicago, IL -- AAI Syndicate #1 Ltd., a member of the INEX Insurance Exchange (formerly known as the Illinois Insurance Exchange), was placed under an Agreed Order of Liquidation yesterday, Feb. 9. The Cook County Circuit Court granted Illinois Insurance Director Nat Shapo's petition based on the Insurance Department's finding that the company's policyholders' surplus was impaired by over $2 million. The Court's order includes a finding of insolvency.

AAI's most recent financials reflect approximately $2.5 million in direct premium as of December 31, 1998. The company wrote excess and surplus lines policies in seventeen states, primarily in garage keepers' liability, commercial trucks, and errors & omissions programs. Policyholders will be notified that all policies will be canceled as of 12:01 a.m. March 12, 1999, unless they expire or are terminated at an earlier date.

The company has been under an Order of Conservation since February 2, 1999, and will continue under Director Shapo's control in liquidation.

The syndicate, a wholly owned subsidiary of AAI Holdings, Ltd., an insurance holding company, which in turn is principally owned by CMA Holdings, commenced business in 1987, under the rules and regulations of the Illinois Insurance Exchange.

AAI is a member of the INEX Insurance Exchange Guaranty Fund which may provide up to an aggregate $15 million of coverage, not to exceed $300,000 per claimant, to assist the liquidator in meeting obligations of policyholders. Due to the number and complexity of claims against AAI, it is not known when or to what degree those funds will be available.

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