Definitive Additional Materials

CAUTIONARY STATEMENT

This presentation may contain certain “forward-looking statements”

within the meaning of the Private

Securities Litigation Reform Act of 1995, including statements with regard to the future performance of

Signature

Group

Holdings,

Inc.

(“Signature”

the

“Company”).

Words

such

“believes,”

“expects,”

“projects,”

“anticipates,”

and

“future”

similar

expressions

are

intended

identify

forward-looking

statements. These forward-looking statements are subject to the inherent uncertainties in predicting

future results and conditions. Certain factors could cause actual results to differ materially from those

projected in these forward-looking statements, and such factors are identified from time to

time in our

filings with the Securities and Exchange Commission (“SEC”). Pursuant to the Private Securities

Litigation Reform Act of 1995, Signature undertakes no obligation to publicly update or revise any

forward-looking statements, whether as a result of new information, future events or otherwise.

representation

warranty,

express

implied,

made

the

accuracy

completeness

the

information contained herein, and nothing shall be relied upon as a promise or representation as to the

future of the Company.

For more specific financial information please refer to the Company’s Annual Report on form 10-K for

the year ended December 31, 2011, the Quarterly Report on form 10-Q for the quarter ended March,

31, 2012 and other SEC filings.

OVERVIEW

Signature Group Holdings, Inc.

Reorganization

On June 11, 2010, Fremont General Corporation (“Fremont”) emerged

from bankruptcy and was renamed Signature Group Holdings, Inc.

Facilities

Headquartered in Sherman Oaks, CA

Corporate development office in New York, NY

Ticker

SGGH, traded on OTCQX

Cash and Cash

Equivalents

$52.8 million

(1)

Total Assets

$139.2 million

(1)

NOLs

Shareholders’

Equity

$63.3 million

(1)

Shares Outstanding

119,931,857 as of May 11, 2012

(1) Information provided as of March 31, 2012

$889.9 million as of 12/31/2011 – Expire beginning in 2027 (Federal)

SIGNIFICANT PROGRESS SINCE EMERGENCE

In less than two years we have addressed numerous legacy challenges remaining from the

Fremont General Corp. (“Fremont”) bankruptcy which include:

Became

current

with

our

periodic

reporting

requirements

under

the

Securities

Exchange

Act

1934

amended,

which

included

preparing

five

years

audited

financial

statements,

bringing

the

Company

current from its last audit in 2006

–

Remediation included the preparation and filing of three Annual Reports on Form 10-K and eight

Quarterly Reports on Form 10-Q

Resolved in excess of 200 legal proceedings associated with Fremont and its subsidiaries

Implemented value maximizing strategies for the residential loan portfolio and other legacy assets,

including significant divestitures

Reduced staffing and expenses associated with the Fremont legacy operations

Rebuilt an experienced accounting and finance team and made significant progress in remediating the

Company’s

“Material

Weakness”

internal

control

surrounding

financial

reporting

Reduced quarterly net operating losses by 89% from June 2010 to March 2012

BUSINESS PLAN

Our Board and Management have provided a new direction for the organization

–

Signature is now a diversified business and financial services enterprise whose

primary objective is to redeploy assets into successful businesses and utilize our net

operating loss carryforwards (“NOLs”)

Actively seeking acquisition opportunities of successful companies

–

North American Breaker Company, Inc. (“NABCO”) acquired July 2011

–

Cosmed Inc. formed in February 2011 to acquire the assets of Costru, LLC

SEC compliance allows the Company to be in a position to access the broader

capital markets and potentially complete a large acquisition

Acquire and originate debt opportunities through Signature Special Situations division

Ultimately

position

the

Company

take

advantage

its

federal

and

state

NOLs

Clean-up and wind-down of Fremont’s legacy business currently classified as

discontinued operations

ACQUISITIONS

Target Transactions

EBITDA of $7 million to $25 million

Enterprise values up to $300 million

Equity investments up to $100 million

Larger investments are achievable

Industry agnostic

Key Acquisition Criteria

Proven and committed management

team with the ability to operate

autonomously

Market leading or niche oriented

Sustainable business that can be held

long term

Low capital expenditures

Ideal Situations

Companies that do not have a natural strategic buyer or stand alone IPO potential

Private

equity

hedge

fund

holdings

which

need

exit

per

requirements

Companies with limited or declining tax deductions

Non-core divisions of larger enterprises

Family businesses seeking to diversify and/or liquify holdings

NORTH AMERICAN BREAKER COMPANY, INC.

Wholly owned subsidiary acquired July 29, 2011

Aggregate purchase price consideration of approximately $36.9 million with a net cash

outlay of $10.9 million after giving effect to a debt financing facility closed in September

2011

High margin distributor of specialty electrical components, primarily circuit breakers, to

electrical wholesalers throughout the country

–

Increased profit and revenues in each of the three years prior to acquisition despite a

troubled economic climate:

–

Gross Margins approaching 40%

–

Q1 2012 over Q1 2011 sales growth of 14.9%

–

Minimal capital expenditures

Low risk business model:

–

“Need it now”

product critical for safety

–

Operates in steady replacement market with low product obsolescence

–

Strong national market presence with knowledgeable staff

–

Headquartered in Burbank Calif. With four regional distribution centers

SIGNATURE SPECIAL SITUATIONS

Target Types

Interest income

Fees

Recovery of discounted principal

balances

Market value appreciation

Asset Types

Distressed and sub-performing debt

Secured loans

Real estate mortgages

Corporate bonds

Tranche B loans

Public and private debt

Annuity streams

Philosophy and Strategy

Provides alternatives that generate favorable risk adjusted financial returns over holding

virtually zero return cash and helps to defray expense burn while the Company engages

in its acquisition strategy

Positions are frequently purchased at a discount

Maintain focus on managing downside risk and exposure

Residential Loans held for sale transferred to division and reclassified as held for

investment

SPECIAL SITUATIONS –

PORTFOLIO TRANSACTION

March 2011 Signature Special Situations purchased a revolving line of credit and a

term loan from a national lender at a significant discount (50% of par)

Borrower is a manufacturer of store fixtures and merchandising systems for the

retail industry

March

2012

Signature

restructured

the

debt

part

complete

recapitalization

transaction led by the founder who was the former CEO of the business and several

members of his management team

Existing debt was converted to new term and revolving loans and Signature received

preferred

equity

newly

capitalized

company

with

face

value

million

and convertible to 45% of the total outstanding common stock

The debt position has generated greater than a 13.75% effective yield for Signature

since our initial purchase through March 2012

DISCONTINUED OPERATIONS –

LEGACY MATTERS

Converted a substantial portion of Fremont’s legacy assets to cash, including the

sales of:

–

Non-performing residential mortgages for $12.5 million

–

Residential real estate properties for $11.4 million

–

The former headquarters building for $3.9 million

–

Commercial real estate investments for $4.9 million

Monitor repurchase demands for Fremont’s subprime loan originations:

–

Total

outstanding

repurchase

claims

approximately

$101.7

million

(1)

–

Repurchase reserve of $8.3 million (1)

–

No new demands or activity since June 2011

Manage and resolve ongoing and new legacy related litigation:

–

Resolved over 200 lawsuits inherited from the McIntyre-led legacy businesses of Fremont

–

Negotiated over $15 million of savings

(1) As of March 31, 2012

COMPENSATION SUMMARY

Signature

management

team

was

initially

employed

party

management

company

as approved by the bankruptcy court and shareholders

May

2011

after

receiving

critical

negative

feedback

from

McIntyre

and

two

former

directors regarding the external management structure, the GNCC recommended and the

Board

engaged

highly

respected

independent

party

executive

compensation

consulting firm to evaluate management structure alternatives:

–

Ultimately,

July

2011,

the

Board

terminated

the

party

management

agreement

and entered into employment agreements with executives

–

Base

compensation

rates

based

the

percentile

publicly

traded

asset

management companies were identified by the firm and adopted by the Board

–

Equity compensation was issued based on market comparable terms with the largest

component being options for better alignment with shareholder interests and value

creation

McIntyre’s assertion that the warrants purchased under the plan of reorganization are

related to compensation is erroneous

CORPORATE GOVERNANCE

Signature’s board has been constructed with a mindset toward strong corporate

governance

A majority of the board is independent and only independent directors hold positions on

the audit committee and the governance, nominating and compensation committee

There are separate Chairman and CEO positions and the Chairman is independent

The

Board

Directors

very

active

2011,

the

company

held

board

meetings

and

29 committee meetings

The Board and senior management own a significant number of shares aligning the

interests with shareholders

–

Recently, Insiders purchased significant numbers of shares during the first trading

window that opened since the bankruptcy, further aligning interests

The additions of Mr. Tinkler and Mr. Colville will further the Company’s commitment to

strong governance as both have significant senior management experience with public

companies

The GNCC evaluated McIntyre’s slate and elected to nominate more qualified candidates

for the proxy

BOARD PROPOSED SLATE

Signature’s proposed slate is composed of highly qualified, proven business leaders with successful

experience in mergers and acquisitions, operations, and governance in various industries and diverse roles

The

proposed

slate

reduces

the

size

the

Board

from

eight

members

five

which

expected

result

improved efficiency and communication while also reducing costs

The board nominated three current members to the slate who have significantly contributed to the many

accomplishments the Company has made since emerging from bankruptcy:

–

Craig

Noell

implementation

–

Ed Lamb

Company to compliance with the SEC’s Exchange Act Reporting requirements as well as provided valuable

insight to management on a multitude of strategic, governance and operating issues

–

John

Koral

has been actively involved in our SEC compliance project and business plan. Mr. Koral previously served

on the Official Equity Committee during the bankruptcy.

The

board

nominated

two

new

candidates

who

are

represent

large

shareholders

and

have

specific

skills

and experience to bring to Signature

–

Philip

Tinkler

securities offerings. Has successfully worked with other companies to optimize the utilization of their

NOLs

–

Chris

Colville

of acquired entities

Messrs. Lamb, Colville and Tinkler have all held senior executive management roles in financial and

accounting capacities in $1+ billion public companies

our

CEO,

oversees

all

aspects

our

business,

including

business

strategy

and

, the Chairman of our Audit Committee, has overseen the extensive project to return the

, the Chairman of the GNCC, a member of our Audit Committee and a significant shareholder

, significant acquisition experience including structuring, diligence, bank financings, and

, significant acquisition experience with special emphasis on the operations and integration

OTHER PROXY ITEMS

Proposal 2

Increase

the

authorized

number

common

stock

the

Company

–

Currently have 190,000,000 authorized shares, the amendment would increase the amount to

350,000,000

–

Intended to give the company the ability to execute a large transaction whereby the shares could

be utilized for full or partial purchase price consideration

–

The amended amount is the maximum number of shares Signature could issue taking the change

of control limitations into consideration so as not to jeopardize the NOLs

–

New shares can also be used in a non dilutive rights offering to raise equity capital for a large

transaction or a series of transactions

–

If shares are not available, a seller may be discouraged from entering into a transaction

Proposal 3

Increase the authorized number of shares of common stock reserved for issuance under

the Amended and Restated 2006 Performance Incentive Plan

–

Currently have 9,633,105 reserved for issuance, the amendment would increase the amount to

25,000,000

–

Will allow Signature to issue shares to the management of acquired firms

–

Intended to provide equity incentives to a broad base of employees, officers, directors,

consultants, and independent contractors to align long term interests with the Company

–

awards

issued

out

this

plan

will

avoid

triggering

the

ratchet

provision

the

warrants

which is in the best interest of the shareholders

Proposal

and

–

Ratify

the

independent

accountants

and

adjourn

meeting

for

insufficient

votes

MCINTYRE CAMPAIGN

James McIntyre is the former Chairman and Chief Executive Officer of Fremont

–

Seeking to replace entire board, threatens to reverse the progress made since emerging from

bankruptcy

–

Subjecting Company to costly and disruptive proxy fight

–

We believe McIntyre is attempting to mislead stockholders regarding the root causes of the

Company’s legacy issues which stem from McIntyre’s prior leadership of Fremont

–

Leadership nearly destroyed Company during his tenure, while he extracted outsized

compensation

–

Leaves a legacy of failed businesses and poor decisions

–

No tangible business plan for Company

FAIR GAME

When Regulators Knock Twice

By GRETCHEN MORGENSON

Published: March 18, 2007

…The company’s management certainly has experience exiting a business at the request of regulators. In 2000, many of the

same executives were on hand when Fremont’s workers’ compensation insurance unit was placed under the supervision of

the California Department of Insurance. Looking back at that debacle shows striking parallels between Fremont’s troubles

in insurance in the late 1990s and its current subprime woes. In both cases, Fremont used questionable practices to

generate great revenue growth, benefiting executives. Shareholders were left holding the bag. In other words, same plot,

different decade…

MCINTYRE’S RECORD

Significant operating losses and stock declines

–

During the last two years of his stewardship, Fremont recorded net losses of $202.3 million and

$1.0 billion in fiscal 2006 and fiscal 2007, respectively

–

Company’s stock price of $29.25 per share peaked in March 2004 and declined to $3.01 per share

on the date of McIntyre’s resignation from the Board in January 2008

–

Decline of 89% for a total loss in stockholder value of nearly $2.0 billion for the period from March

2004 to January 2008

Runaway compensation

–

From

1998

through

2003,

during

McIntyre’s

tenure

CEO,

received

aggregate

$25.9

million in compensation, which amount includes $4.8 million in salary, $3.3 million in bonus, $13.5

million in equity grants and $4.2 million in other forms of compensation

–

From

2004

through

2007,

during

McIntyre’s

tenure

Chairman

Fremont,

received

aggregate of $22.4 million in compensation, which amount includes $3.1 million in salary, $1.2

million

bonus,

$8.9

million

equity

grants

and

$8.9

million

other

forms

compensation

Self interested

–

Filed

million

bankruptcy

proof

claim

which

sought,

among

other

things,

than

$700,000 in compensation for 2008. McIntyre resigned from the Company on January 8, 2008. So

he was seeking about $100,000 per day (including weekends) for his work during 2008

MCINTYRE’S RECORD

Run-Ins with Regulators

–

Fremont Investment & Loan:

In 2007, the bank consented to enter into a Cease and Desist Order

with the Federal Deposit Insurance Corporation (“FDIC”) and a Final Order with the California

Department of Financial Institutions (“DFI”), finding that FIL operated without effective risk

management policies and procedures and without adequate loan underwriting criteria and

required a variety of changes, including a mandate to retain qualified management acceptable to

the FDIC and DFI

–

Fremont Life Insurance Company:

In 1996, the California Attorney General sued both Fremont

General and Fremont Life Insurance Company alleging that they engaged in unfair business

practices in the sale of more than $200 million in annuities to senior citizens, which resulted in

millions

dollars

civil

fines

and

penalties

and

other

costs

the

Company

Failed Mergers and Acquisitions

–

Fremont Indemnity Company:

From 1995 to 1998, Fremont Indemnity acquired 3 workers’

compensation companies for an aggregate purchase price of $810 million. By 2000, the combined

companies were placed under enhanced regulatory oversight; ultimately the California Insurance

Commissioner seized them in 2003. Fremont wrote off approximately $120.0 million on account

of these failed acquisitions

MCINTYRE’S RECORD

On August 26

2010 Mr. McIntyre was interviewed by the Financial Crisis Inquiry Commission

in Washington D.C. An excerpt from his recorded call includes:

Investigator:

So then what happened after 2004?

McIntyre:

Well,

can't

answer

that

question

exactly

because

said

was

on the periphery of anything that happened and things were going

along

well

far

was

could

see

far

understand

and

then things sort of imploded there in 2007 and so.

Investigator:

Right.

McIntyre:

So I just don't have an answer for that.

Investigator:

I mean you were the Chairman of the Board, right?

McIntyre:

Yeah, but that was more of a titular thing. I didn't, I wasn't involved in

management or I wasn't involved in policy making. I wasn't on the

executive committee. I wasn't even on the board or officer of the thrift,

which

was

the

primary

business

during

that

period

time.

can't

say that, you know, anything precise about that period of time because

I can't recall having a phone call or e-mail or meeting with any of the

directors, outside directors, during that period of time. They all dealt

with the CEO and COO at the time so I'm just, I’m not trying to, I just

don't know a lot about that period of time, that's all.

McIntyre

collected

$22.4

million

from

2004

2007

“titular”

Chairman

CONCLUSION

Signature’s

Board

has

assembled

very

strong

and

highly

experienced

five

member

slate

The

Board

and

management

have

successfully

navigated

the

Company

through a

challenging post-bankruptcy phase of the business plan and accomplished much:

–

Current with its SEC reporting obligations and timely with its filings

–

Resolved hundreds of legal cases with favorable results

–

Reduced quarterly net operating losses by 89% from June 2010 to March 2012

–

Made one material acquisition in 2011, NABCO, and is actively seeking additional

deals

–

Hired an effective team that is committed to the success of Signature

–

Established comprehensive corporate governance

The Company is strategically positioned to achieve our Mission Statement described on

slide 4

McIntyre was a disruptive force at Fremont and has no credible business plan for the

Company

We urge stockholders to vote “FOR”

your boards recommended slate and “FOR”

each of

the other four proposals listed on the White Proxy Card

SIGNATURE’S PROPOSED BOARD

Christopher

Colville

(54):

Since

2007,

Mr.

Colville

has

served

strategic

advisor

various

privately

held

enterprises, including, since 2008, KEG 1, LLC, a special purpose acquisition entity focused on consolidating segments of

the wholesale beer distribution industry. In connection therewith, Mr. Colville’s principal role is to advise and counsel

on capital structures, including negotiation of bank credit facilities, corporate governance and organizational

development. Prior thereto, Mr. Colville served as an executive officer of Consolidated Graphics, Inc. (NYSE: CGX), the

largest general commercial printing company in North America, from 1994 to 2000 and from 2002 to 2007. From 2000

to 2002, Mr. Colville served as Managing Director at Murphy Noell Capital, LLC, an investment banking firm. Mr. Colville

holds Bachelor of Business Administration and Masters in Accounting degrees from Texas Tech University and is a

Certified Public Accountant.

Philip

Tinkler

(47):

Mr.

Tinkler

the

Chief

Operating

and

Financial

Officer

Equity

Group

Investments

(“EGI”).

Mr.

Tinkler has served in various leadership capacities for EGI and its affiliates since 1990. In his role at EGI, he works

closely with the investment team on structuring, diligence, bank

financings, and securities offerings. Since 2009 he has

also been Chief Financial Officer for Chai Trust Company, LLC, an Illinois registered trust company that is trustee for

many of the Zell family trusts. Mr. Tinkler oversees EGI’s financial services group, which houses EGI’s accounting,

treasury, and tax functions. He also serves as Chief Operating Officer, managing EGI’s human resources, administration

and facilities functions. From 2003 to 2004, Mr. Tinkler worked at the company that is known today as Covanta Holding

Corporation (NYSE: CVA), an internationally recognized owner of energy-from-waste and power generation projects.

During his tenure there, Mr. Tinkler served as Chief Financial Officer while the company’s predecessor, Danielson,

purchased Covanta, emerged from bankruptcy, and underwent an integration. He also served on the board of directors

of Covanta’s wholly-owned California-based insurance subsidiary. Earlier in his career, Mr. Tinkler served as the Chief

Executive Officer and Chief Financial Officer at First Capital Financial, L.L.C., and the Managing General Partner of the

First Capital real estate funds. He began his career at Ernst & Young. He is currently on the board of directors of Home

Products International, a global consumer products company specializing in the design and marketing of innovative

house wares products. Mr. Tinkler also serves on the board of directors of WRS Holdings Company, an environmental

construction and remediation company, which is one of EGI’s investments. He holds a Bachelor of Science degree from

Northern Illinois University and a Masters of Science in Taxation from DePaul University.

SIGNATURE’S PROPOSED BOARD

Patrick

Lamb

(52):

Mr.

Lamb

currently

serves

Director

Signature

and

the

Chairman

the

Audit

Committee. Mr. Lamb has served as the Chief Financial Officer for the Los Angeles Clippers of the NBA since July 2007.

Mr. Lamb has over 20 years of chief financial officer experience

in various public and public subsidiary entities,

specifically

the

financial

services

arena,

including

banking,

commercial

finance,

commercial

and

residential

real

estate, capital markets and insurance, as well as experience in public accounting. From 2004 to July 2007, Mr. Lamb

served as the Senior Vice President, Treasurer, Chief Financial Officer and Chief Accounting Officer of Fremont General

Corporation (“Fremont”). Before joining Fremont, Mr. Lamb worked at Ernst & Whinney (now Ernst & Young) in San

Francisco, serving primarily in the financial services industries in various audit and consulting engagements. Mr. Lamb

holds Bachelor of Science and Masters in Accounting degrees from

the Marriott School of Management at Brigham

Young University.

John

Koral

(53):

Mr.

Koral

currently

serves

Director

Signature

and

also

the

Chairman

the

Governance,

Nominating, and Compensation Committee and a member of the Audit

Committee. Mr. Koral has been an active

investor in asset-based loans for the past eighteen years. Mr. Koral is a Senior Vice President responsible for managing

the lending operations of U.S. Capital, Incorporated, an asset-based private lender with a current loan portfolio of

approximately $30 million. In that capacity, Mr. Koral is actively involved in resolving borrower defaults and overseeing

related legal proceedings in default scenarios. Mr. Koral also participates in all of the firm’s efforts to raise capital,

including private participations, general capitalization, subordinated notes and institutional lines of credit. Mr. Koral is

also involved in the development of commercial land and building

projects, having overseen more than $100 million in

construction since 1982. Previously, Mr. Koral served as President of Apex Mechanical Services. Mr. Koral holds an

Associate’s Degree in Mechanical Engineering from Alfred State University with a minor in Business Administration.

SIGNATURE’S PROPOSED BOARD

Craig

Noell

(49):

Mr.

Noell

Chief

Executive

Officer

and

Director

Signature

and

also

member

the

Executive, Legal and Risk Management Committee. Mr. Noell co-founded Signature Capital Partners, a special situation

investment firm in 2004. Mr. Noell brings to Signature over 25 years of experience in corporate finance, investment

banking, and special situation investing with Goldman Sachs, Wells Fargo Foothill, Security Pacific, Barclays and Murphy

Noell Capital. At Murphy Noell Capital, Mr. Noell was involved in dozens of corporate finance transactions including

traditional M&A, distressed M&A, capital raises, recapitalizations and restructurings. Previously, as a member of the

distressed investing area at Goldman Sachs, Mr. Noell founded and ran Goldman Sachs Specialty Lending, investing

Goldman’s proprietary capital in special situations opportunities. At Wells Fargo Foothill, Mr. Noell directed the firm’s

New York and Los Angeles business development teams and was involved in numerous recapitalizations/

restructurings, debtor-in-possession loans and plan of reorganization financings. Mr. Noell was also involved in

establishing multiple joint venture relationships including the acquisition of the loan portfolio of Home Savings of

Alaska from the FSLIC, a joint venture with Ansley Associates to

provide specialized financing to the resort industry and

a joint venture relationship with Ozer to form Paragon Retail Finance, which was subsequently acquired by Wells Fargo

and is now the second largest asset-based lender to the retail trade. Mr. Noell holds a Bachelor of Science from the

Wharton School of Business at the University of Pennsylvania.


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