United National In Triple Merger

United America Indemnity will have over $700 million in direct written premiums and net commission revenues, more than $1.1 billion in invested assets, and shareholders' equity of roughly $550 million.

Under the transaction, shares of United National Group will continue to be traded, but under the new name. Shares of Penn-America Group will be traded for approximately $15.38, representing a $13.88 share of the new company and a cash premium of $1.50.

Roughly 75 percent of the new company would be held by current shareholders of United National Group, the companies said, with the remaining 25 percent controlled by the shareholders of Penn-America Group. Shareholders of Penn Independent Corporation will receive cash totaling $97 million.

"By combining the breadth and depth of the UNGL, PNG, and PIC property and casualty insurance operations under United America Indemnity's umbrella, each company will significantly enhance its ability to provide specialized products and services to its clients," said United National Group chairman Saul Fox, who will hold a similar position with United American Indemnity.

Mr. Fox said United America Indemnity's "larger footprint in the marketplace and the consequent strengthening of the competitive position of each company should materially assist the management teams of UNGL, PNG and PIC in achieving their long-term growth objectives."

Mr. Fox is also the chief executive officer of San Francisco-based Fox Paine & Company, LLC, whose affiliated private equity funds acquired a controlling interest in United National in September 2003 and will be the largest shareholder in United America Indemnity.

The executive team of the new company will also include Penn-America Group president and chief executive officer Jon S. Saltzman as president of United America Indemnity. Mr. Saltzman will be replaced at Penn-America Group by current senior vice president, CFO & treasurer Joseph F. Morris.