Personal Lines Strategic Development for Tower Group Companies

Columbus, Ohio, May 15, 2012:  Adirondack Insurance Exchange (AIE), Financial Stability Rating® of A, Exceptional, and Mountain Valley Indemnity Company (MVIC), Financial Stability Rating® of A′ (A Prime), Unsurpassed, have created a separate, stand-alone multi-state personal lines platform that joins the writing capacity of AIE with the geographic footprint of MVIC.  As a result of the transaction, AIE and MVIC will be positioned for further organic growth and expansion as a dedicated personal lines platform with a geographic footprint that covers 22 states.

While AIE has writing capacity, it is licensed only in New York.  MVIC is licensed in 22 states in addition to New York.  By acquiring and reinsuring MVIC, AIE will have exposure, through reinsurance, to business in jurisdictions other than New York, thereby diversifying AIE’s geographic risk profile.  Separate and apart from any benefits of this transaction for AIE or other members of the Tower holding company system, this transaction will be a positive development for MVIC.

By joining MVIC’s licenses with AIE writing capacity, the sale to AIE will give MVIC a market niche that is unique in the Tower holding company system, and should cause it to feature prominently in future growth strategies.  The combined personal lines platform of AIE and MVIC will play central role in personal lines strategic development, initially in the northeast, with potential for expansion into other areas.

About Tower Group Companies

Tower Group Companies is one of the 50 largest providers of property and casualty insurance products and services in the U.S.  Through its insurance company subsidiaries, Tower (NASDAQ:  TWGP) provides personal and commercial insurance for small to medium-sized businesses through its network of retail and wholesale agents across the country.  Tower also offers specialty insurance products through a national network of program underwriting agents.

ABOUT DEMOTECH, INC.

Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers.  Since 1985, Demotech has served the insurance industry by assigning accurate, reliable and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurers and Title underwriters.  FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer.  Demotech’s philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size.  This philosophy was the catalyst for the Demotech Company Classification System, which was developed and published in Insurance Journal, in order to stratify and categorize insurers into operational categories.  Visit www.demotech.com for more information.