June 8, 2001 Notice of Legal Rights and Obligations

Subject: Notice of Liquidation — Amwest Surety Insurance Company

An Order to Liquidate Amwest Surety Insurance Company ("Amwest Surety"), a Nebraska domiciled insurer with its principal office at Calabasas, California, was entered by the District Court of Lancaster County Nebraska, on Thursday, June 7, 2001, in CI 01-2102. The Order of Liquidation was entered under Neb. Rev. Stat. §44-4818 (Reissue 1998) and appointed L. Tim Wagner, Director of Insurance for the State of Nebraska, the Liquidator. Michael J. FitzGibbons has been appointed as Special Deputy Liquidator.

Under an Order of Liquidation ("Order"), the Liquidator is authorized and directed to forthwith take possession and control of the assets of Amwest Surety and administer them under the general supervision of the Court. Pursuant to Neb. Rev. Stat. §44-4818, the Liquidator is directed to exercise any and all rights of Amwest Surety in connection with any collateral or other assets being held for the benefit of Amwest Surety by any person or entity. The Liquidator is vested by operation of law with title to all of the property, contracts, and rights of action and all of the books and records of Amwest Surety, wherever located, as of the entry of this Order of Liquidation and further succeeds to the title of all assets, claims and rights of the insurer.

Upon issuance of the Order, the rights and liabilities of Amwest Surety and its creditors, shareholders, and all other persons interested in this estate shall become fixed as of the date of the entry of the Order except as provided in Neb. Rev. Stat. §44-4818 and §44-4837 (Reissue 1998). The Liquidator exercises and is subject to all of the rights, powers and duties of a liquidator under Neb. Rev. Stat. §44-4801 et seq. (Reissue 1998).

All persons or other legal entities shall pay all sums or premiums due Amwest Surety in accordance with Neb. Rev. Stat. §44-4833 (Reissue 1998) and deliver any and all property of Amwest Surety, personal or real, of every kind or nature, to the Liquidator or his designated representatives.

Please TAKE NOTE THAT all policies including bonds and other non-cancellable business in effect at the time of issuance of the Order of Liquidation shall continue in force until the earliest of:

(1)thirty days from the date of entry of the liquidation order;

(2)the expiration of the policy coverage;

(3)the date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy, or

(4) the liquidator has effected a transfer of the policy obligation pursuant to subdivision (1)(j) of section 44-4821 (Reissue 1998).

Pursuant to Neb. Rev. Stat. §44-4824 (Reissue 1998), no action at law or in equity or in arbitration whether in this state or elsewhere, may be brought against Amwest Surety, or its Liquidator, nor shall any existing actions be maintained or further presented after issuance of the Order. The Liquidator may intervene in any pending action in order to protect the estate of the insurer at the expense of the estate of Amwest Surety.

The Liquidator may institute all actions and proceedings on behalf of Amwest Surety subject to Neb. Rev. Stat. §44-4824. Mutual debts or credits between Amwest Surety and another person in connection with this liquidation shall be subject to Neb. Rev. Stat. §44-4830 (Reissue 1998). Any amount recoverable by the Liquidator from reinsurers shall not be reduced as a result of this Order regardless of any provision in the reinsurance contract or other agreement pursuant to Neb. Rev. Stat. §44-4832 (Reissue 1998).

ATTENTION AGENTS: Every person who receives notice of this Order pursuant to Neb. Rev. Stat. §44-4822 (Reissue 1998) and who represents Amwest Surety as an agent shall, absent written waiver of this requirement by the Liquidator within fifteen days of such notice, give written notice of this Order by first class mail to the last address contained in the agent’s records to each policyholder or other person named in any policy issued through the agent by Amwest Surety if such agent has a record of the address of the policyholder or other person. Such written notice shall include the name and address of the insurer, the name and address of the agent, identification of the policy impaired, and the nature of the impairment, including termination of coverage as provided by Neb. Rev. Stat. §44-4819 which provides in the pertinent part as follows:

(1) All policies including bonds and other noncancellable business in effect at the time or issuance of the order of liquidation shall continue in force until the earliest of:

(a) thirty days from the date of entry of the liquidation order;

(b) the expiration of the policy coverage;

(c) the date when the insured has replaced the insurance coverage with equivalent insurance in another insurer or otherwise terminated the policy; or

(d) the liquidator has effected a transfer of the policy obligation pursuant to subdivision (1) (j) of section 44-4821.

Notice by a general agent satisfies the notice requirement of this paragraph for any agents under contract to him or her. Each agent obligated to give notice pursuant to this paragraph shall file a report of compliance with the Liquidator. Any agent failing to give notice or file a report of compliance as required by Neb. Rev. Stat. §44-4823 (Reissue 1998) for whom the Liquidator has not waived such requirement may be subject to payment of a civil penalty of not more than $1,000 and may have his or her license suspended.

All agents, brokers, premium finance companies and other persons, other than insureds, responsible for the payment of premiums shall be obligated to pay to the Liquidator any unpaid earned premium and all earned premium of Amwest Surety and all unearned commissions as of the date of the Order.

All insureds of Amwest Surety are obligated to pay to the Liquidator any earned premium due as of the date of the Order.

Any person failing to comply with the provisions of Neb. Stat. Stat. §44-4833 is subject to the penalties provided therein, including imposition of civil penalties by the Director of Insurance of not more than for $1,000 for each act in violation of said statute.

The Liquidator will be petitioning the Court for an Order implementing a claims process and adopting a Proof of Claim form. All insureds of Amwest Surety will be provided a Proof of Claim form for filing claims once this process has been implemented. Please keep the Liquidator informed of any changes of address. The bar date (last day to file a timely Proof of Claim) is June 7, 2002.

If you have questions or need further information concerning the liquidation of Amwest Surety, any inquiries may be directed to claimant services Amwest Surety Insurance Company 5230 Las Virgenes Road, Calabasas, CA 91302. The claimant service department is also available for inquiries at their toll free number — (866) 789-8119 or direct number — (818) 871-3614. Additionally, Amwest Surety Insurance Company’s web site (www.Amwest.com) is a source for news regarding the ongoing liquidation.


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