New York, New York, February 9, 1998  --  Gryphon Holdings Inc. announced today
that it has agreed to acquire The First Reinsurance Company of Hartford ("FRH")
and certain affiliated entities from Dearborn Risk Management, Inc. for a
combination of cash and preferred stock valued at $43.6 million, plus certain
other performance-driven contingent consideration.  The transaction, which is
subject only to regulatory approvals and other customary conditions, is
expected to close during the second quarter of 1998.

The purchase consideration of $43.6 million consists of $31.9 million of cash
and $11.7 million fair value of a new issue of Gryphon perpetual convertible
preferred stock.  The preferred stock, which will have a face amount of $14.4
million, will be convertible into 643,672 shares of Gryphon common stock,
reflecting a conversion price of $22.44 per share.  No cash dividends will 
be paid or owed during the first four and one-half years; a cash dividend 
at the rate of 4.0% of the face amount will be paid thereafter.  The 
preferred shares, which are non-callable for three years, have
no sinking fund or mandatory redemption features.  In connection with the
transaction, Gryphon intends to enter into a $55 million credit facility with 
a group of financial institutions, the proceeds of which will be used to pay 
the cash portion of the purchase price and to repay existing bank borrowings.

Gryphon has also agreed to underwrite on a prospective basis certain property-
casualty program business, currently underwritten by an affiliate of FRH which
will remain a subsidiary of Dearborn, that may be transferred by producing
agents to FRH or another Gryphon subsidiary.  If such business is transferred,
Gryphon will pay for it on a contingency basis, related to its underwriting
profitability in 1998, 1999, and 2000.

FRH, a Connecticut corporation with headquarters in Chicago,
is a specialty insurer of professional liability risks.
Through its affiliate, Oakley Underwriting Agency, which is
also being purchased by Gryphon in the transaction, FRH
provides Directors & Officers and Errors & Omissions
coverages for corporations, professional firms, not-for-
profit entities, and public entities.  Originally chartered
as a reinsurance company, FRH currently operates mainly as a
primary property and casualty company issuing its own
policies in the 29 states in which FRH is licensed as an
admitted carrier.  To a lesser extent, it has been a
reinsurer of Virginia Surety Company (with respect to Oakley-
underwritten business) in those states where FRH is not yet
licensed to write business.  It is anticipated that, over
time, all primary policy issuance with respect to FRH's book
of business will migrate to FRH or other subsidiaries of
Gryphon.

The GAAP shareholders' equity of FRH at December 31, 1997 
was approximately $35 million.  Its statutory surplus at 
that date was approximately $31.5 million.  FRH is currently
rated A- (excellent) by A.M. Best.

The business of FRH and Oakley is managed by John A. Dore, 46, who is President
& Chief Executive Officer of FRH and its parent, Dearborn.  Following the
transaction, Mr. Dore will remain President & Chief Executive of FRH and will
be appointed Executive Vice President of Gryphon and Vice Chairman of Gryphon's
main operating company, Gryphon Insurance Group ("GIG").  He will also be 
elected to Gryphon's Board of Directors.  Mr. Dore will report directly to 
Stephen A. Crane, President & Chief Executive Officer of Gryphon and 
Chairman & CEO of GIG.  In addition to being responsible
for FRH and Oakley, Mr. Dore will work closely with Mr. Crane in the
implementation of Gryphon's strategic plan, including other possible 
acquisitions.

In announcing the transaction, Mr. Crane stated, "We are very excited about
welcoming The First Reinsurance Company of Hartford to Gryphon.  FRH is a high-
quality specialty company that embodies our vision of building a highly
differentiated underwriting-driven operation based on the development of
specialized expertise.  This transaction establishes Gryphon as a major player 
in professional liability, an area of business we find very attractive.  
We are very pleased with the terms of the acquisition
and of its proposed financing and expect the transaction to be accretive to
Gryphon's earnings per share.  We are also extremely happy to have John Dore
join the Gryphon team.  He is a seasoned insurance executive with an 
excellent professional reputation, and he will add significantly to our 
senior executive strength and depth."

Gryphon already writes a substantial amount of professional liability coverages
for architects, engineers, and other design professionals.  After Gryphon
acquires FRH, professional liability would represent the Company's largest
class of business.  Gryphon is also a significant underwriter of West Coast
earthquake insurance for commercial insureds.

Dearborn is owned by Castle Harlan Partners II and certain
other institutional and individual shareholders.  The Castle
Harlan partnership, the majority shareholder of Dearborn, is
managed by Castle Harlan, Inc., a private New York merchant
bank.  Following the closing of the transaction, Gryphon
will also elect to its Board of Directors John K. Castle,
Chairman of Castle Harlan, Inc. and a director of Dearborn.
The relationship among Gryphon, Castle Harlan Partners II,
and Castle Harlan, Inc. will be governed by a Shareholders
Agreement that will be executed by the parties at the time
of closing.

In concluding the announcement, Mr. Crane said, "We expect the acquisition of
FRH to enhance our specialized expertise, add to our management strength, build
toward the achievement of critical mass, and increase our earnings per share.
As we continue to pursue our long-term strategic plan, we hope to identify
other opportunities to create value for shareholders."

In another development, Gryphon also announced that it will
incur a charge in its 1997 results for the strengthening of
reserves.  The charge will address adverse prior-year
development of losses and loss adjustment expenses, a
significant portion of which relate to pre-1986 or
discontinued lines of business.  Quantification of the
reserve strengthening has not yet been finalized, but the
Company currently estimates that it will report net income
(after the charge) for 1997 of between $1.25 and $1.35 per
share, of which $.60 per share is attributable to realized
capital gains.

Gryphon Holdings operates through its main subsidiary,
Gryphon Insurance Group, as a specialty property and
casualty underwriting organization.  The Company's wholly
owned insurance company subsidiaries are Associated
International Insurance Company and Calvert Insurance
Company.




Forward-Looking Information:  The Private Securities Litigation Reform Act of
1995 provides a "safe harbor" for forward-looking statements.  This press
release or any other written or oral statements made by or on behalf of Gryphon
may include forward-looking statements which reflect Gryphon's current views
with respect to future events and financial performance.  These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from such statements.  These
uncertainties and other factors (which are described in more detail elsewhere
in documents filed by Gryphon with the Securities and Exchange Commission)
include, but are not limited to, uncertainties relating to general economic
conditions and cyclical industry conditions, uncertainties relating to
government and regulatory policies, volatile and unpredictable developments
(including storms and catastrophes), the legal environment, the uncertainties
of the reserving process, and the competitive environment in which Gryphon
operates.  The words "believe", "expect", "anticipate",
"project", "plan", and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates.  Gryphon undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.