Unitrin, Inc. To Acquire Valley Group, Inc.

Unitrin Property and Casualty Insurance Groupany%> and Fund American Enterprises Holdings, Inc. say they have entered into a definitive agreement under which Unitrin will acquire Fund American's subsidiary, Valley Group, Inc., in a cash transaction. The purchase price is estimated to be $130 million after payment of a special dividend by Valley Group to Fund American of approximately $85 million prior to closing.

The transaction, including the special dividend, is subject to insurance department and other regulatory approvals and the satisfaction of other customary closing conditions. The transaction is expected to close within the next 90 days.

Valley's principal subsidiaries are Valley Insurance Company of Albany, OR; Charter Indemnity Company of Dallas, TX; and White Mountains Insurance Company of Manchester, NH. The group writes personal and commercial lines property and casualty insurance, primarily in the Pacific Northwest, California, Texas and New England. In 1998, Valley Group had consolidated premium revenues of approximately $161 million.

Richard C. Vie, Unitrin's chairman and chief executive officer, said, ``We are extremely pleased at the prospect of Valley Group joining our family of companies. Valley Group and its agency force will enhance our presence in a number of states and write lines of business that are compatible with those written by our Property and Casualty Group.''

Tom Kemp, Fund American's chief executive officer, said, ``We are proud of these fine franchises and outstanding managers. They have done a nice job for their owners. Unitrin will provide a good home and opportunities for an even greater future. We are pleased to have played a role in developing these companies into such attractive properties.''