SUAI Specialty Underwriters Allianc (MM)

CHICAGO, July 2 /PRNewswire-FirstCall/ -- Specialty Underwriters' Alliance, Inc. (NASDAQ:SUAI) today announced that it has responded to a letter, dated July 1, 2008, from Hallmark Financial Services, Inc. ("Hallmark") in which Hallmark stated that it was reaffirming its conditional proposal to acquire all the outstanding stock of SUAI for shares of common stock of Hallmark, valuing each share of SUAI stock at $6.50. As previously disclosed by SUAI on June 26, 2008, the Board of Directors of SUAI, in consultation with its financial and legal advisors, reviewed Hallmark's proposal to acquire SUAI. After a thorough deliberation, the SUAI Board unanimously concluded that the Hallmark proposal should be rejected and that SUAI should remain independent and continue with the execution of its current business strategy, which the Board believes represents a better long-term value for the company's shareholders. In a letter to Hallmark, dated July 2, 2008, SUAI informed Hallmark that, given that Hallmark's letter of July 1, 2008 was just a restatement of the original Hallmark proposal, there was no reason for the Board of SUAI to reconsider. The following is a copy of SUAI's letter to Hallmark: July 2, 2008 Mark E. Schwarz Executive Chairman Hallmark Financial Services, Inc. 777 Main Street Suite 1000 Fort Worth, Texas 76102 Dear Mark: I am writing in response to your letter of July 1, 2008 (the "July 1st Letter") in which you state that you reaffirm the conditional proposal Hallmark Financial Services, Inc. ("Hallmark") made, in a letter dated June 16, 2008 (the "June 16th Letter") to the Board of Directors of Specialty Underwriters' Alliance, Inc. (the Company"), to acquire all the outstanding stock of the Company for shares of common stock of Hallmark, valuing each share of the Company's stock at $6.50. The July 1st Letter does not constitute a new proposal, nor does it modify any of the material terms of the proposal that was set forth in the June 16th Letter and that was carefully considered by our Board and its advisers. The July 1st Letter also incorrectly characterizes the Company as not having responded to your inquires since June 17, 2008. In fact, in an email to you on June 20, 2008, I invited you to send me any additional information that you felt our Board should consider which you did not provide. As the Company publicly announced on June 26, 2008, our Board, in the exercise of its fiduciary duties, thoroughly considered the Hallmark proposal in light of the Company's current business strategy and with input from our financial and legal advisors. After our Board's review of the Hallmark proposal, it unanimously concluded that the Hallmark proposal should be rejected and that execution of the Company's current business strategy represents a better long-term value for our shareholders. Given that the July 1st Letter is just a restatement of the original Hallmark proposal that our Board rejected, we see no reason for our Board to reconsider that proposal. Very truly yours, Courtney Smith Chairman of the Board and Chief Executive Officer Specialty Underwriters' Alliance, Inc. About Specialty Underwriters' Alliance, Inc. Specialty Underwriters' Alliance, Inc., through its subsidiary SUA Insurance Company, is a specialty property and casualty insurance company that provides commercial insurance products through exclusive wholesale partner agents that serve niche groups of insureds. These targeted customers require highly specialized knowledge due to their unique risk characteristics. Examples include tow trucks, building contractors, professional employee organizations and public entities. SUAI's innovative approach provides products and claims handling, allowing the partner agent to focus on distribution and customer relationships. Safe Harbor Statement The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This release or any other written or oral statements made by or on behalf of the company may include forward- looking statements that reflect the company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this release are forward-looking statements. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "may," "will," "plan," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include but are not limited to ineffectiveness or obsolescence of our business strategy due to changes in current or future market conditions; increased competition on the basis of pricing, capacity, coverage terms or other factors; greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data; the effects of acts of terrorism or war; developments in the world's financial and capital markets that adversely affect the performance of our investments; changes in regulations or laws applicable to us, our subsidiaries, brokers or customers; acceptance of our products and services, including new products and services; changes in the availability, cost or quality of reinsurance and failure of our reinsurers to pay claims timely or at all; decreased demand for our insurance or reinsurance products; loss of the services of any of our executive officers or other key personnel; the effects of mergers, acquisitions and divestitures; changes in rating agency policies or practices; changes in legal theories of liability under our insurance policies; changes in accounting policies or practices; and changes in general economic conditions, including inflation and other factors. Forward-looking statements speak only as of the date on which they are made, and the company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. To learn more about Specialty Underwriters' Alliance Inc., please visit http://www.suainsurance.com/. DATASOURCE: Specialty Underwriters' Alliance, Inc. CONTACT: Leslie Loyet of Financial Relations Board, +1-312-640-6672, , for Specialty Underwriters' Alliance, Inc.; or Scott Goodreau of Specialty Underwriters' Alliance, Inc., 1-888-782-4672, Web site: http://www.suainsurance.com/

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