The parties have reached a tentative settlement, valued at at least $1.6 million, of a class action filed against Frontier Insurance Group, Inc. (Pink Sheets: FTER, formerly OTCBB: FTER and certain of its officers and directors by stockholders who purchased the company's common stock between February 10 and November 8, 1994. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. To recover under the settlement, a completed proof of claim postmarked no later than October 30, 2003, must be mailed to the claims administrator.

The settlement fund is composed of the proceeds of a Frontier directors and officers liability insurance policy in the amount of approximately $500,000 and the proceeds of the sale of the property at 217 Broadway, Monticello, New York, with the sale to yield not less than $1,100,000.

The action claims that, during the time period involved, the defendants made material misstatements in statements to the public and in publicly-filed financial statements regarding Frontier's net revenue and earnings and how these were affected by the company's reserves.

On March 13, 2001, Frontier Insurance Company, Inc., the primary operating subsidiary of Frontier Insurance Group, announced that it would withdraw voluntarily from writing new and renewal insurance business and would work with regulatory agencies on a plan to withdraw from the market in an orderly fashion. Then, on August 27, 2001, Frontier Insurance Company consented to the entry of an order of rehabilitation, after which the New York State Commissioner of Insurance took control of the company.

The settlement will not be effective until the court grants it final approval. The court has scheduled a hearing on the matter for September 4, 2003.