Meriden CT – September 15, 2003 |  Response Insurance Company, a direct-to-the-consumer auto insurer, announced it has signed a stock purchase agreement to acquire National Merit Insurance Company from Unigard Insurance Company, a subsidiary of Winterthur Swiss Insurance Company.

The purchase will provide Response with a highly attractive customer base in the strategic northwest region of the country. This is the latest acquisition in a string of purchases that has made Response the most prolific acquirer in the direct auto insurance industry. In April, Response closed on the purchase of the Worldwide Insurance companies that doubled the size of the Company.

Mory Katz, President & Chief Executive Officer of Direct Response Corporation and Chairman of the subsidiary Response Insurance Company, made the announcement stating, “As with all of our prior acquisitions, National Merit strengthens our position in the market and enables us to continue our highly targeted growth strategy in key markets.” Katz noted that, “National Merit has a strong name that represents quality to its customers. We share that commitment to excellence and look forward to serving them.”

National Merit Insurance Company is a direct-to-the-customer insurer licensed in the states of Washington, Oregon and Idaho. The acquisition, for an amount equal to $3.5 million over the policyholders’ surplus at closing, includes a personal auto book of business and a call center in Bellevue, WA. Upon completion of the sale and regulatory approval by the Washington Office of the Insurance Commissioner, the Response Insurance Group will have more than 95,000 in-force policies in 45 states. Response’s policies in force in Washington State will be nearly 18,000 as a result of the acquisition.

The Response Insurance Group is the 14th largest direct auto insurer in the nation and among the 100 largest personal auto insurers. Over the past three years the Company has acquired several insurance companies and programs including Teachers’ Insurance Plan, Warner Insurance, Connecticut Life & Casualty Insurance Company, DE Love Associates, Andrews & Murray, and both Worldwide Insurance Company and Worldwide Direct Auto Insurance Company.

Philo Smith Capital Corporation advised and initiated this transaction on behalf of Response Insurance Company

About Response Insurance: Response Insurance is a national auto insurance company focusing on insuring safe, responsible drivers. Response Insurance’s parent company, Direct Response Corporation (DRC), was formed in 1995. DRC and its subsidiaries including its educator-specific program, Teachers’ Insurance Plan, are headquartered in Meriden, CT.

About National Merit Insurance Company: National Merit Insurance Company and its parent company, Unigard Insurance Company, are both headquartered in Bellevue, WA. National Merit was founded in 1980 and was purchased by Unigard in 1997. Unigard was founded in 1901 as the Northwest Mutual Fire Association. Unigard is a subsidiary of Winterthur Swiss Insurance Company, which is owned by Credit Suisse Group.