American Overseas Group Limited Releases Q1 2012 Results (Excerpt)

Hamilton, Bermuda – 03 July, 2012 – American Overseas Group Limited (“AOG” or the “Company”; Tickers: BSX – AORE.BH; Pink Sheets - AORE.PK) reported first quarter 2012 net loss available to common shareholders of $4.5 million, or $1.69 per diluted share. This compares to net income available to common shareholders of $6.0 million, or $2.28 per diluted share, for the first quarter 2011.

During the first quarter of 2012, operating income, a non GAAP financial measure, was $0.2 million, or $0.08 per diluted share, compared to operating income of $4.8 million, or $1.83 per diluted share, during the first quarter of 2011.

The Company’s net income (loss) is calculated in conformity with U.S. generally accepted accounting principles (“GAAP”). The Company also provides information regarding its operating income, a non-GAAP financial measure, because the Company’s management and Board of Directors, as well as many research analysts and investors, also evaluate financial performance on the basis of operating income, which excludes non-operating items such as realized investment gains or losses, unrealized gains or losses on credit derivatives and foreign currency gains or losses. Please refer to “Explanation of Non-GAAP Financial Measures” below.

Commenting on the financial results, the Company’s Chief Executive Officer, David Steel, noted that, “Our 2012 first quarter net loss was largely the result of a $6.3 million unrealized loss in the change in fair value of credit derivatives during the period and to a lesser extent loss development on our financial guaranty reinsurance exposures. As noted in the past, we view operating income, which among other items excludes unrealized gains and losses on derivatives, as a better measure of quarterly performance. Our 2012 first quarter operating income of $0.2 million was largely driven by loss development primarily related to our US RMBS exposures.”

Summary of Operating Results

The Company reported a net loss of $4.5 million for the quarter ended March 31, 2012.

Earned premiums in the first quarter 2012 of $3.0 million were 32% lower than the $4.4 million earned in the first quarter 2011. After eliminating accelerated premiums from refundings of $0.7 million from total earned premiums, earned premiums in the first quarter 2012 were $2.3 million; this was 26% lower than the comparable 2011 period, which included accelerated premiums from refundings of $1.3 million. The decrease in earned premiums in the first quarter 2012 as compared to the 2011 period was primarily due to commutations and run off of the insured portfolio.

Net change in fair value of credit derivatives totaled a loss of $5.8 million in the first quarter 2012, compared to a $2.5 million gain in the first quarter of 2011. Net change in fair value of credit derivatives for the first quarters of 2012 and 2011 were comprised of $6.3 million in unrealized losses and $1.0 million in unrealized gains on derivatives, respectively, and $0.6 million and $1.5 million of realized gains, respectively. The net unrealized loss in the first quarter 2012 was primarily attributable to: (i) the decrease in the adjustment for the Company’s own non-performance risk of $27.8 million, offset by (ii) the decrease in gross unrealized losses on credit derivative policies of $21.5 million. The decrease in gross unrealized losses on credit derivative policies was primarily due to improvements in pricing across the majority of the portfolio. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 - “Fair Value Measurements and Disclosures” (“ASC 820”), the Company calculates an adjustment for its own non-performance risk. The effect of the ASC 820 requirement on AOG’s derivative liabilities on the balance sheet was a reduction of $69.9 million at March 31, 2012.

Net investment income for the first quarter 2012 was $2.1 million, 13% below the $2.4 million recorded in the first quarter 2011. The decrease in investment income in the first quarter 2012 was primarily the result of a decline in the book yield from 3.3% as of March 31, 2011, to 2.7% as of March 31, 2012.

There were no realized gains on investments for the first quarter 2012 compared to $0.7 million in realized gains for the same period in 2011.

Losses and loss adjustment expenses were $0.7 million in the first quarter 2012, contributing to a loss ratio of 23%, compared to losses and loss adjustment expenses of $0.4 million and a loss ratio of 9% for the comparable 2011 period. The increase in the 2012 loss ratio was primarily attributable to further adverse development on US residential mortgage backed securities (“RMBS”) policies.

Acquisition expenses were $1.5 million in the first quarter of 2012 compared to $1.9 million for the comparable 2011 period. Acquisition expenses are closely related to earned premiums, and the decrease in acquisition expenses for the first quarter 2012 as compared to the comparable 2011 period was also due to the decrease in earned premiums in the period.

First quarter 2012 operating expenses of $1.8 million were $0.1 million, or 5%, below the level in the first quarter of 2011. The decrease in operating expenses reflects the Company’s cost reduction efforts.

Balance Sheet

Total assets of $400.1 million at March 31, 2012 were $1.1 million below the level at December 31, 2011. This decrease was primarily related to the reduction in deferred policy acquisition costs and net reinsurance balances receivable due to the run off of the Company’s insured portfolio and was offset by the increase in the Company’s recoverable on paid losses. Shareholders' equity of $88.9 million was $5.0 million, or 5%, below the level at December 31, 2011, primarily due to unrealized losses in the first quarter 2012, together with the net loss from operations. Book value per share was $33.63, a decrease of 5.3% from year-end 2011. Operating book value and adjusted operating book value per share, both of which are non-GAAP financial measures, were $51.59 and $79.47, respectively, at March 31, 2012, compared to $51.64 and $80.20, respectively, at December 31, 2011.

Subsequent Events:

On June 11, 2012, Financial Guaranty Insurance Company (“FGIC”), one of the Company’s ceding companies, announced that Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services, filed a verified petition with the Supreme Court of the State of New York (the “Court”) for an order of rehabilitation (i) appointing the Superintendent as Rehabilitator of FGIC; (ii) directing the Rehabilitator to take possession of the property and assets of FGIC and to conduct its business; and (iii) directing the Rehabilitator to take steps toward removing the causes and conditions which have made the rehabilitation proceeding necessary. FGIC has consented to the commencement of the rehabilitation proceeding. On June 11, 2012, the Court signed the Order to Show Cause. On June 28, 2012, a hearing was held and the Rehabilitation Order was signed. The Superintendent, in his capacity as Rehabilitator, intends to file a plan of rehabilitation that will provide fair and equitable treatment of FGIC’s policyholders and other creditors.

Information About the Company

American Overseas Group Limited is a Bermuda-based holding company. Its operating subsidiary, American Overseas Reinsurance Company Ltd., has historically provided financial guaranty reinsurance for U.S. and international public finance and structured finance transactions. More information can be found at www.aoreltd.com

The Company will post the full text of this release with its first quarter 2012 financial results to its website at www.aoreltd.com under "Investor Information". If you are a shareholder of American Overseas Group Limited and wish to receive a hard copy of the financial statements by mail, please contact:

American Overseas Group Limited

Schroders House, 1st Floor

131 Front Street

Hamilton, HM 12

Bermuda

Attention: David Steel

Telephone: 441-296-6501

Email: info@aoreltd.com