APPLIED UNDERWRITERS ANNOUNCES 7% REDUCTION IN ITS CALIFORNIA WORKERS' COMPENSATION RATES EFFECTIVE JULY 1, 2004

SAN FRANCISCO, CA - July 1, 2004 - Applied Underwriters, the industry leader in integrated workers' compensation solutions, announced a seven percent rate decrease on new and renewal policies in California with an effective date on or after July 1, 2004. This decrease, which follows an average decrease of 7% that was effective March 15, 2004, reflects, among other factors, its current estimate of the savings associated with the California workers' compensation reform legislation of 2003 and 2004.

Steve Menzies, President and COO, said, "We are cautiously optimistic about the cumulative financial impact of SB899 and the prior reform legislation. Many factors will influence the ultimate impact of the legislation, including the promulgation of regulations, the fact that several key reforms won't become effective until 2005, the lead time necessary to fully implement mandated changes, and the risk and cost of litigation. However, we are quite optimistic concerning our HCO and the impact it will have given the overwhelming positive support from our customers through the enrollment process."

In June, Applied Underwriters began enrolling all of its California customers in a Workers' Compensation Health Care Organization ("HCO") which has been certified by the State of California Division of Workers' Compensation (DWC) to provide effective and efficient health care to injured workers.

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Applied Underwriters is a premier workers' compensation and financial services company. The company's three products - SolutionOne®, EquityCompT, and Coverage Dynamics® - integrate workers' compensation coverage with employer-related services to ensure the success of small to medium-sized businesses. Its A.M. Best A IX rating assures unparalleled dependability and reliability. Founded in 1994, Applied Underwriters is headquartered in San Francisco, with a national customer service center in Omaha, NE. Additional information about the company is available at: www.applieduw.com.

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