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State National Announces Extension of Nephila Partnership


State National Companies, Inc. (NASDAQ: SNC), a leading specialty provider of property and casualty insurance, today announced that it has extended its partnership with Nephila Capital Ltd., a leading investment manager specializing in catastrophe insurance risk.

This new arrangement demonstrates Nephila's long-term commitment to State National as its partner to access the primary market for U.S. catastrophe exposed property business. In exchange for the continued exclusive right to produce such catastrophe exposed property insurance via State National, Nephila has agreed to pay State National contractual minimum ceding fees through 2019.

"This is a transformative alliance in our industry. We are proud to extend our partnership with Nephila, and thereby further validate the pairing of a leading investment manager specializing in catastrophe insurance risk with our preeminent fronting services and access to the U.S. market. We are now both better positioned to benefit from the market trends that we believe will generate attractive growth for both Nephila and State National," commented Terry Ledbetter, State National's Chairman, President and Chief Executive Officer.

New Extended Agreement - Minimum Fees

Prior 2014 New Extended
($ millions) Agreement Agreement Change
2016 $ 19.50 $ 14.00 $ (5.50 )
2017 5.00 10.00 5.00
Two year total $ 24.50 $ 24.00 $ (0.50 )
2018 - 12.50 12.50
2019 - 15.00 15.00
Four year total $ 24.50 $ 51.50 $ 27.00

The contractual minimum fees are subject to State National's maintaining its "A" A.M Best rating, with potential reductions if State National is unable to provide production year capacity or is otherwise constrained from writing premium. Furthermore, under certain circumstances, Nephila may terminate the exclusivity, which would reduce the minimum fees to a total of $32.5 million for 2016 through 2019. In the event of such a termination, State National would have the ability to write the catastrophe exposed property business for other capacity providers.

"Working with State National provides the conduit necessary for us to access the primary insurance market. We are pleased to have strengthened our partnership with State National through this new arrangement, which aligns with our business plan and provides enhanced opportunities to efficiently deliver insurance risk to our investors," said Frank Majors, Nephila's Managing Partner.

Conference Call

State National will host a conference on November 13, 2015 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss its third quarter 2015 results and the new arrangements with Nephila. To access the call live, dial (716) 247-5810 and use the passcode 53788912# at least 10 minutes prior to the start time. Alternatively, investors can listen live over the Internet by visiting the Company's website at For those who cannot listen to the live call, a telephonic replay will be available through November 20, 2015 and may be accessed by calling (404) 537-3406 and using pass code 53788912#. Also, an archive of the webcast will be available after the call for a period of 90 days on the "Investor Relations" section of the Company's website at


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