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                      ORION CAPITAL CORPORATION LETTERHEAD
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NEWS RELEASE                   From: Vincent T. Papa          Dawn W. Dover
NYSE Symbol: OC                (212) 332-8088                 (212) 593-2655
                               Jeanne Hotchkiss               Kekst & Company
                               (860) 674-6754                 437 Madison Avenue
                                                              New York, NY 10022

 
FOR IMMEDIATE RELEASE
 
           ORION CAPITAL CORPORATION WILL COMMENCE CASH TENDER OFFER
       TO INCREASE ITS OWNERSHIP OF GUARANTY NATIONAL CORPORATION TO 80%
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New York, New York, May 7, 1996 -- Orion Capital Corporation and several of its
subsidiaries will tomorrow commence a cash tender offer at a price of $17.50 per
share net to the seller for up to 4,600,000 shares of the common stock of
Guaranty National Corporation (NYSE: GNC). The tender offer expires at midnight
on June 5, 1996, unless extended. Orion Capital currently owns through its
subsidiaries approximately 49.5% of the outstanding common stock of Guaranty
National. The purchase of 4,600,000 shares would increase Orion's ownership to
slightly more than 80%.
 
The tender offer is not subject to a minimum number of shares being tendered. If
more than 4,600,000 shares are properly tendered and not withdrawn prior to the
expiration of the offer, then shares will be accepted on a pro rata basis. The
tender offer is conditioned on, among other things, the receipt of all required
approvals of state insurance regulators and Hart-Scott-Rodino clearance. The
terms and conditions of the offer are set forth in tender offer materials that
will be filed on May 8, 1996 with the Securities and Exchange Commission, and
subsequently mailed to Guaranty National Corporation shareholders. The Dealer
Manager for the offer is Donaldson, Lufkin & Jenrette Securities Corporation.
 
"We have had a very rewarding relationship with Guaranty National since we
acquired a significant ownership interest in 1984," said Alan R. Gruber,
Chairman and Chief Executive Officer of Orion Capital Corporation. "An increase
in our percentage of ownership will allow us to become more involved in setting
the strategic direction of Guaranty National, and to participate to a greater
extent in its future growth." An 80% ownership will also allow Orion the benefit
of including Guaranty National in its consolidated federal income tax return.
 
Guaranty National is a Colorado-based property and casualty insurance holding
company with operating subsidiaries which write specialty commercial and private
passenger automobile insurance, as well as collateral protection and other
commercial coverages. Guaranty National is a leading provider of nonstandard
personal automobile insurance written through independent agents.
 
Orion Capital Corporation is engaged in the specialty property and casualty
insurance business through wholly-owned subsidiaries, which include EBI
Companies, DPIC Companies, Connecticut Specialty Insurance Group, SecurityRe
Companies and Wm. H. McGee & Co. Inc., as well as through its 49.5% ownership
interest in Guaranty National Corporation.