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30833 Northwestern Highway,

Suite 220, Farmington Hill, Mich. 48334; 248-932-9000; fax: 248-932-9050

1997 1996

Premium volume $269,895,836 $271,650,000

Gross revenues $39,046,750 $37,896,000

Employees 567 531

Commercial lines 91% 92%

Admitted business 21% 19%

Non-admitted 79% 81%

After years of consistent premium growth increases, the soft prop-erty/casualty pricing market caught up to Burns & Wilcox Ltd. in 1997.

The company's premium volume slipped by less than 1% to $269.9 million for the year. Gross revenues increased, though, rising 3% to $39 million, a reflection of stronger contingency fees from surplus lines insurers.

"We're actually issuing more policies, but we can't catch up to the dollar amount," said Herbert W. Kaufman, president and chief executive officer of Farmington Hills, Mich.-based Burns & Wilcox Ltd.

Despite the slight decline in premium volume, Burns & Wilcox remains the third-largest managing general agency, though it slipped a notch to eighth place among wholesalers, according to Business Insurance's rankings.

To combat the difficult pricing environment, Burns & Wilcox cleaned house throughout 1997 and into 1998, closing several offices, merging others and acquiring other successful books of business.

Burns & Wilcox introduced more than a dozen new products in the past year to help bring in more business.

Mr. Kaufman hopes the one-two punch of greater efficiency and a broader array of products will help offset the soft pricing conditions.

And being one of the remaining independent wholesalers among the ranks of the largest in the United States also has potential advantages for Burns & Wilcox, according to Mr. Kaufman.

"Being an independent managing general agency wholesaler, we're far more flexible, and the opportunity to pick up new business is greater," Mr. Kaufman contends. "Many retail producers do not want to deal with wholesalers run by their competitors," he added.

For the first six months of 1998, premium volume at Burns & Wilcox remains flat at $135 million, but Mr. Kaufman said he expects premium volume to be up between 3% and 4% for the year.

As part of Burns & Wilcox's housecleaning efforts over the past 12 months, it sold its Seattle; Burlington, N.J.; and Boston offices, which Mr. Kaufman said "had for many, many years" not been profitable. The wholesaler also combined its Columbus, Ohio, and Cleveland offices; and its Farmington Hills and Grand Rapids, Mich., offices. Also, its Floyd West & Co. Inc. branch in Dallas was merged into its Arlington, Texas, branch.

At the same time, Burns & Wilcox opened a new office in Little Rock, Ark., and took over the San Jose, Calif., office of Hull & Co. and combined it with an existing Burns & Wilcox office in San Francisco. It also purchased the San Francisco and Jacksonville, Fla., offices of U.S. Risk Insurance Group Inc.

Burns & Wilcox now has 32 branch offices across the United States, down from 38 at the end of 1996.

"We're in good shape now," Mr. Kaufman said of the housecleaning.

Still, when asked if more new offices might be added in the near future, Mr. Kaufman said that "we're still looking at a couple of new ones."

At the same time it was scaling back its number of offices, the wholesaler was expanding its product offerings.

Burns & Wilcox recently introduced several products for which it has binding authority of between $500,000 and $1 million on each.

Burns & Wilcox now has binding authority on an array of new marine policies, including coverage for hull, personal injury, cargo, liability, and a package policy. It also is offering a new high-value homeowners policy and a tenants homeowner policy for "certain sizes in certain areas," Mr. Kaufman said.

Burns & Wilcox also has binding authority on coverages for wind exposure in New Jersey; pollution extra expense; earthquake and difference-in-conditions; miscellaneous errors and omissions; small employment practices liability; commercial general liability package; wind deductible buyback; and new non-profit directors and officers liability coverage offered by Legion Insurance Co.

Among more specialty lines, Burns & Wilcox is offering a new specialty craft beer brewing program; a builders risk program

for builders of log homes; and a program for large prize indemnity.

The wholesaler for example, recently put together a $5 million program for a largemouth bass fishing contest in Florida that will pay $5 million if a person catches a largemouth bass that breaks the existing world record.

Burns & Wilcox targets middle-market accounts, placing $1,000 to $2,500 premium accounts for midsize regional agencies with $5 million to $25 million in annual premium volume.

The wholesaler, however, has the capability to place larger risks -- those generating $50,000 in premium and higher, Mr. Kaufman said, adding that one of the Midwest offices recently placed a $1 million account.

While most of Burns & Wilcox's business stems from placing property/casualty coverage in the surplus lines market for commercial risks, its greatest growth right now is coming from its personal lines business, Mr. Kaufman said.

"There's a definite need all over the country," he said of personal lines coverage.

Burns & Wilcox is answering that need by increasing the number of branch offices with personal lines departments; it calls the departments Service General. Twenty-two branch offices now have Service General departments, compared with only 12 a few years ago.

Service General specializes in homeowners and boat programs with $1 million in limits and personal umbrella programs with up to $5 million in limits. The wholesaler's new high-value homeowners and tenants homeowner policies fall under Service General.

Burns & Wilcox placed 57% of its 1997 premium volume as a managing general agent and has binding authority with 25 insurers. The wholesaler placed 11% of its premium volume as a Lloyd's of London coverholder and has binding authority to issue documentation on behalf of Lloyd's underwriters.

The remaining 32% of its 1997 premium volume was generated as a broker placing coverage with 26 non-admitted markets.

Burns & Wilcox is owned by H.W. Kaufman Financial Group Inc., a private holding company.

In addition to Mr. Kaufman, other top Burns & Wilcox officers include: Gerald W. Horton, executive vp; Steve Allen and David Price, executive vps; Brooke Bothe, corporate secretary; and Gerald Wesolowski, chief financial officer.

Burns & Wilcox is a member of AAMGA and NAPSLO.