STATE NATIONAL ADDS SURPLUS LINES INSURANCE COMPANY

Fort Worth, TX – April 25, 2006 – State National Companies announced the formation of a new affiliate, United Specialty Insurance Company (USIC). The company will exclusively service the surplus lines market.

The company began operation in March following admission to the state of Delaware.  United Specialty will carry the ‘A’ (Excellent) A.M. Best rating of the group once regulators approve a pooling agreement with State National Insurance Company and National Specialty Insurance Company.

State National President Terry Ledbetter comments, “United Specialty provides greater flexibility to our existing clients and offers surplus lines capacity to new client programs. We are pleased to be entering the surplus lines market and anticipate being authorized in a significant number of states by the end of the year.”

State National Companies is a privately held group of insurance companies and agencies. Affiliates include two companies rated ‘A’ (Excellent) by A.M. Best, the premier source of insurance company ratings. A fourth affiliate is Texas-based State & County Mutual Fire Insurance Company. The company has its headquarters in Fort Worth, Texas.