IMMEDIATE 12 July 1999 ROYAL & SUNALLIANCE OFFER TO ACQUIRE ORION

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IMMEDIATE 12 July 1999 ROYAL & SUNALLIANCE OFFER TO ACQUIRE ORION Powered By Docstoc
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IMMEDIATE                                                                                                                 12 July 1999

                         ROYAL & SUNALLIANCE OFFER TO ACQUIRE
                                 ORION CAPITAL CORPORATION, USA


Royal & Sun Alliance Insurance Group plc and Orion Capital Corporation
(NYSE:OC) today announced that Orion and a wholly-owned US subsidiary of Royal
& SunAlliance have signed a definitive agreement providing for the acquisition of
Orion Capital for $50 per Orion share in cash, or approximately $1.4 billion. The $50
per share price represents a 23% premium on Orion’s Friday closing price.


The transaction has been unanimously approved by the boards of both companies.
Pursuant to the terms of the agreement, a wholly owned subsidiary of Royal &
SunAlliance USA, will, within five business days, commence an offer to purchase
any and all outstanding shares of Orion's common stock. Due to the need for
insurance regulatory approvals, it is not expected that the transaction will be
completed until the fourth quarter of 1999.


Royal & SunAlliance’s tender offer will be conditioned on the tender of at least a
majority of Orion's outstanding shares. The agreement provides for the payment to
Royal & SunAlliance of a fee of $45 million if the agreement is terminated in certain
circumstances. Orion has also granted to Royal & SunAlliance an option to purchase
up to 19.9% of Orion's shares, exercisable under the same circumstances.


Orion focuses on specialised niches and high margin insurance products. It is a
highly successful specialty company and over the last 5 years has averaged annual
written premium growth of 19%; operating earnings growth of 7%; ROE of 11% and
a combined ratio of 102%. Orion’s three major business segments are Workers’
Compensation, Non-standard Personal Auto and Specialty Insurance Products. Its
1998 written premiums were $1430m (£920m), excluding 1999 disposals. At 31
March 1999 net assets were $650m (£430m) and year end 1998 profit before tax
was $157m (£101m).

     Issued by Royal & Sun Alliance Insurance Group plc, 30 Berkeley Square, London W1X 5HA Telephone 0171 569 6137 Facsimile 0171 569 6587
Expected synergies will arise in respect of both expenses and revenue
enhancement. In terms of profit before tax, expense synergies are expected to
amount to $50m (£33m) with revenue synergies of $14m (£9m).


The acquisition of Orion will improve Royal & SunAlliance’s strategic position in the
USA, the world’s largest insurance market, and extends Royal & SunAlliance’s
penetration into target specialty areas. Orion specialises in providing high margin
products to niche markets. It has a consistent, profitable growth record, which
complements that of Royal & SunAlliance in this area. The deal will also double
Royal & SunAlliance’s size in the USA, adding mass to both personal and
commercial lines, and substantially diversifying the product mix so improving the
balance of the portfolio. This is consistent with the strategy of enhancing shareholder
value by the building of accretive, high value businesses and the leveraging of sales
opportunities of complementary products and distribution systems.


Bob Mendelsohn, Royal & SunAlliance’s Group Chief Executive said,
“The addition of Orion's distinctive specialty franchises and the complementary
nature of the respective product and skill portfolios of our companies create broad
product line potential and revenue synergies. This transaction effectively doubles
the size of Royal & SunAlliance USA.


Together, the combined 1998 net written premium would have been $3.0bn (£1.9bn),
placing the company among the top 25 US property and casualty insurers, and the
13th largest US commercial carrier. The proposed transaction represents the latest
step in Royal & SunAlliance’s strategic development of its businesses worldwide. It
furthers our aim of being a major player in our chosen markets, building leadership
positions to serve commercial clients everywhere in the world, and to serve personal
financial services clients in those markets where we can offer a superior value
proposition.”
                                      --ENDS--




     Issued by Royal & Sun Alliance Insurance Group plc, 30 Berkeley Square, London W1X 5HA Telephone 0171 569 6137 Facsimile 0171 569 6587
Enquiries to:

                   Roy Randall, Director, Investor Relations
                   Tel: 0171 569 6139
                   Email: roy.randall@notes.royalsun.com

                   Karen Donhue, External Communications Manager
                   Tel: 0171 569 6133
                   Email: karen.donhue@notes.royalsun.com



Notes to Editors:

   Royal & SunAlliance operate in over 55 countries worldwide and transacts
   business in over 130
   1998 worldwide general insurance premium income amounted to £6.9bn
   (US$11.4bn)
   Royal & SunAlliance employs over 42000 staff worldwide
   1998 USA general insurance premium income amounted to £913m
   (US$ 1520m)
   1998 USA staff numbers were 3500
   Royal & SunAlliance USA is one of the top 30 insurers in the USA and operates
   in all 50 states through over 2300 independent agents and brokers
   Orion is one of the top 40 property and casualty insurers in the USA and one of
   the largest specialty companies
   Orion writes its 3 main classes of business through subsidiaries:
   non-standard automobile through OrionAuto; workers’ compensation through EBI
   Companies and specialty commercial through Orion Specialty which includes
   DPIC Companies
   OrionAuto writes business in 35 states through 12000 independent agents and is
   one of the top 10 non-standard automobile writers in the US
   EBI have 46 offices in 27 states and write business through 1000 independent
   agents. They are the 14th largest workers’ compensation writer in the US
   DPIC is the market leader in professional liability for architects, engineers and
   environmental consultants
   Orion currently employs 3900 staff
   During 1999 Royal & SunAlliance has purchased: Trygg-Hansa of Sweden; the
   Italian commercial operations of AGF; a 60% controlling interest in T.U. PBK
   Zycie S.A. of Poland; Lietuvos Draudimas of Lithuania and Tyndall Australia
   Limited
   During 1999 Royal & SunAlliance has disposed of: its USA life operations, Royal
   Maccabees Life Insurance Company and Royal Life Insurance Company of New
   York; Sun Direct, its German direct writing operation and Tellit Assurances its
   French direct writing operation.




     Issued by Royal & Sun Alliance Insurance Group plc, 30 Berkeley Square, London W1X 5HA Telephone 0171 569 6137 Facsimile 0171 569 6587

				
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