Courtney Smith, president and chief executive officer, stated, "We are pleased that, despite the persistence of difficult economic times, with respect to the second quarter we have increased our gross written premium quarter over quarter. Also, we recently have renewed contracts with our four original Partner Agents, Risk Transfer, AEON, ATM and SRS.

"Additionally, we recently renewed a large municipality account in the third quarter, increasing the written premiums from $13 million to approximately $40 million on this account.

"In alternative staffing, we renewed a large PEO in the second quarter and continue to maintain a high renewal rate. Also, our e-comp. program in the southeast grew almost 200% from last year's comparable quarter. Countering these positive trends is the decline in payroll that persists.

"As in the first quarter of 2009, we increased our trucking book by approximately 30%. Our contractors book continues to show weak top line but strong profitability. We are optimistic that we will be able to grow this profitable line when economic conditions improve.

"We experienced a net loss for the second quarter of approximately $0.5 million compared to net income of $2.3 million for the comparable quarter in 2008 due, in large part, to the one-time expenses of approximately $1.6 million incurred as a result of both the proxy contest waged in connection with our annual meeting of stockholders held on May 5, 2009 and the negotiation of the merger agreement entered into with Tower Group, Inc. on June 21, 2009.

"Our net income was also impacted by an increase in our net loss and loss adjustment expense ratio. This increase was primarily attributable to several large losses in our commercial automobile line of business which was partially offset by favorable loss development in prior years in our contractors lines of business. We are implementing price increases in our trucking segment to ensure that this book is profitable.

"As previously disclosed, on June 22, 2009, we entered into a definitive agreement to merge with Tower Group, Inc. . We continue to work towards completing that transaction. On July 17, 2009, the Federal Trade Commission granted early termination under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On July 15, 2009 Tower filed a Form A with the Illinois Department of Insurance and the California Department of Insurance. On July 31, 2009, we filed a preliminary proxy statement with the Securities and Exchange Commission on form PREM14A and Tower filed a registration statement on Form S-4."

Financial Results

Gross written premiums were $43.9 million for the three months ended June 30, 2009, versus $41.8 million in the second quarter of 2008. For the six months ended June 30, 2009, gross written premiums were $72.9 million versus $65.9 million for the same period in 2008.

Earned premiums were $35.4 million for the second quarter of 2009 compared to $34.2 million for the same quarter of 2008. Earned premiums were $70.1 million for the six months ended June 30, 2009 compared to $69.9 million for the comparable period in 2008.

Total expenses for the three months ended June 30, 2009, were $38.6 million, consisting of loss and loss adjustment expenses of $23.0 million, acquisition expenses of $8.4 million and other operating expenses of $7.2 million. Total expenses for the three months ended June 30, 2008, were $33.6 million, consisting of loss and loss adjustment expenses of $20.9 million, acquisition expenses of $7.3 million and other operating expenses of $5.4 million.

Total expenses for the six months ended June 30, 2009, were $74.6 million, consisting of loss and loss adjustment expenses of $44.0 million, acquisition expenses of $16.9 million and other operating expenses of $13.7 million. Total expenses for the six months ended June 30, 2008, were $69.3 million, consisting of loss and loss adjustment expenses of $42.0 million, acquisition expenses of 16.0 million and other operating expenses of $11.3 million.

For the second quarter of 2009, net loss and loss adjustment expense ratio was 65.0 percent versus 61.2 percent for the comparable quarter in 2008. Also, the Company's results were primarily impacted by several large losses in its commercial automobile line of business. The Company has increased prices in this line of business and continues to evaluate its underwriting policies.

For the second quarter of 2009, SUA experienced favorable prior year loss development of $1.0 million, primarily attributable to favorable loss development in its contractors line of business, as compared to favorable prior year loss development of $0.6 million across all lines for the three months ended June 30, 2008.

For the six months ended June 30, 2009, net loss and loss adjustment expense ratio was 62.8 percent versus 60.0 percent for the comparable six months in 2008.

For the six months ended June 30, 2009, favorable prior year loss development of $1.8 million primarily attributable to favorable loss development in the Company's contractors and workers' compensation lines of business. For the six months ended June 30, 2008 SUA experienced favorable prior year loss development of $1.3 million primarily within its commercial automobile line of business.

Net investment income for the three months ended June 30, 2009, was $2.8 million, compared to $2.7 million for the prior year period. Total revenues were $37.9 million for the second quarter of 2009, compared to $36.9 million for the second quarter of 2008. Net investment income for the six months ended June 30, 2009, was $5.6 million, compared to $5.3 million for the prior year period. Total revenues were $75.3 million for the six months ended June 30, 2009, and for the comparable period in 2008.

Net loss for the quarter ended June 30, 2009, was $0.5 million, compared to net income of $2.3 million for the comparable period in 2008. Net income for the six months ended June 30, 2009, was $0.5 million, compared to $5.7 million for the comparable period in 2008.

Losses per share for the three months ended June 30, 2009, was $0.03 compared to earnings per share of $0.14 for the same period in 2008. Earnings per share for the six months ended June 30, 2009, was $0.03, basic and diluted, compared to $0.37, basic, and $0.36, diluted, for the same period in 2008.

Financial Condition

As of June 30, 2009, the Company reported investments of $265.0 million, total assets of $462.5 million, total liabilities of $321.8 million and stockholders' equity of $140.7 million. Book value per share as of June 30, 2009, was $8.85 and tangible book value per share was $8.17. As of December 31, 2008, the Company reported investments of $263.4 million, total assets of $454.7 million, total liabilities of $318.4 million and stockholders' equity of $136.3 million. Book value per share as of December 31, 2008 was $8.62 and tangible book value per share was $7.94. Book value includes unrealized gains of $1.3 million as of June 30, 2009 as compared to unrealized losses of $2.2 million as of December 31, 2008.

About Specialty Underwriters' Alliance, Inc.

Specialty Underwriters' Alliance, Inc., through its subsidiary SUA Insurance Company, is a specialty property and casualty insurance company providing 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, professional employer organizations, public entities, and contractors. SUA'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.