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Meridian Insurance Group, Inc.
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<PAGE>
FOR IMMEDIATE RELEASE
CONTACT:
State Auto Financial Corp.
James E. Duemey
614-464-5373
Meridian Insurance Group, Inc.
Steven R. Hazelbaker
317-931-7269
MERGER AGREEMENT REACHED BY
STATE AUTO MUTUAL AND MERIDIAN MUTUAL
Columbus, Ohio and Indianapolis, Indiana (October 25, 2000) -- State Auto
Financial Corporation of Columbus, Ohio, (NASDAQ:STFC) and Meridian Insurance
Group, Inc. (NASDAQ:MIGI) of Indianapolis, Indiana, jointly announced today that
their principal stockholders, State Automobile Mutual Insurance Company (State
Auto) and Meridian Mutual Insurance Company (Meridian Mutual), have agreed to
merge the two mutual companies. In addition, outstanding publicly owned shares
of MIGI are to be purchased by State Automobile Mutual for $30 per share upon
the closing of the transaction.
Direct sales for the State Auto Companies totaled $746 million in 1999.
Meridian's total 1999 sales were $302 million. The combined companies will be
the 48th largest property/casualty insurance group in the United States. The
merger is conditioned upon approval by regulators, MIGI shareholders, and
policyholders of both mutual companies.
"Meridian's 18 state operating territory meshes with State Auto's," said State
Auto Chairman Robert L. Bailey. "In virtually every respect the fit is perfect,
in terms of marketing system, products, people and philosophy. We intend to
utilize fully the skills and experience of the entire Meridian staff."
"We are convinced that a combination with State Auto is beneficial for all of
our constituencies," said Norma J. Oman, Meridian's President and CEO. "In
addition to excellent value for shareholders, no Meridian employee will be
displaced as a result of this transaction. The current Meridian corporate office
in Indianapolis will become the largest State Auto regional office, handling a
growing volume of business. Community financial support and employee
volunteerism will continue at an equivalent level. Agents and policyholders will
continue receiving broad products, competitive pricing and excellent service
with a financially stronger combined organization. We write the same types of
business, have comparable agency forces and have similar corporate cultures.
We're looking forward to what we believe will be a winning combination."
<PAGE>
MIGI is a holding company principally engaged in the property and casualty
insurance business through its wholly owned subsidiaries, Meridian Security
Insurance Company, Meridian Citizens Security Insurance Company and Insurance
Company of Ohio. Business is written primarily through nearly 1,400 independent
insurance agencies.
STFC is a regional property and casualty insurance company engaged primarily in
writing personal and commercial automobile, homeowners, commercial multi-peril,
workers' compensation and fire insurance. The company currently markets its
products through more than 13,100 agents associated with approximately 2,200
agencies in 26 states. Products are marketed primarily in the Midwest and
Eastern United States, excluding New York, New Jersey and the New England
states.
Except for historical information, all other information in this news release
consists of forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. The most significant of
these uncertainties are described in State Auto Financial's and Meridian
Insurance Group, Inc.'s Form 10-K and Form 10-Q reports and exhibits to those
reports, and include (but are not limited to) legislative changes at both the
state and federal level, state and federal regulatory rule making
promulgation's, class action litigation involving the insurance industry and
judicial decisions affecting claims, policy coverages and the general costs of
doing business, the impact of competition on products and pricing, inflation in
the costs of the products and services insurance pays for, product development,
geographic spread of risk, weather and weather-related events, and other types
of catastrophic events. State Auto Financial and Meridian Insurance Group, Inc.
undertake no obligation to update or revise any forward-looking statements.
This release is neither an offer to sell nor a solicitation of an offer to buy
the securities of either company, nor a solicitation of a proxy. Any such offer
or solicitation will only be made in compliance with applicable securities law.
