|
| |
This firm does not represent
any insurance carrier, surety, insurance parent company, or related entity.
(Actually, we handle insurance bad faith actions against insurance carriers.)
This is information is provided as a courtesy, much like a phone book or
directory. Please do not serve us with any documents for these insurers,
as your service of process will be ineffective. It would be like serving
the folks that publish the Yellow Pages.
October 3, 2001: Reliance has Entered into
Rehabilitation
Order of Liquidation (Executed October 3, 2001)
Petition for Liquidation (Contains Order of Liquidation and Explanation of
Reasons for Liquidation)
Reliance Liquidation News
Questions and Answers
about the Liquidation
Press Release from the Insurance Commissioner of Pennsylvania
Insurance
Commissioner's Statement on Liquidation
Description of Liquidation Process (Pennsylvania)
Pennsylvania
Insurance Commissioner
Barron's
Bloomberg
Dow Jones Newswires
Forbes
New York Times
Philadelphia Inquirer
 Deadline
Set for Troubled PA Insurer (September 9, 2001)
Pa. battles for
Reliance Insurance Co. assets
(August 8, 2001)
In the Region - Pa. seeks dismissal of Reliance bankruptcy petition
(August 4, 2001)
Loose
Change
(July 24, 2001)
Pennsylvania
sells Reliance's headquarters (July 17, 2001)
Reliance Group
Files for Chap. 11 (June 13, 2001)
Pa.
Given Permission to Take Over Reliance (May 30, 2001)Reuters
US News &
World Report
Wall Street Journal
Barron's
Review & Preview Follow-Up
A
Return Visit to Earlier Stories --
Meltdown:
Reliance files bankruptcy
By Jonathan R. Laing
06/18/2001
Barron's
Page 13
(Copyright (c) 2001, Dow Jones & Company, Inc.)
What we predicted in our August 14, 2000, cover story,
"Lethal Policies," has sadly come to pass.
Last week, former raider Saul Steinberg 's insurance
company, Reliance Group Holdings, filed for Chapter 11 bankruptcy
protection, wiping out its shareholders and leaving even partial repayment of
its some $700 million in debt in serious doubt. In the filing in U.S. Bankruptcy
Court for the Southern District of New York, Reliance claimed assets of
$12.59 billion and liabilities of $12.87 billion. At the same time, the company
reached an agreement with a majority of its bank-debt holders, who have claims
of $237.5 million, and its bondholders, with claims of $463.5 million, on its
restructuring.
The bank lenders have a senior claim and will receive new
10-year notes issued by the reorganized Reliance unit and an 86% voting
power in it. The bondholders will likewise get 10-year notes and receive the
remaining voting power. Interest payments will be "in kind," rather
than in cash.
What has cast a cloud over the likelihood of significant
repayment of the debt is the sad state of the insurance company that underlies
the bankrupt parent. The insurance entity has been under the increasing control
of the Pennsylvania Department of Insurance since last year because of its
parlous finances. Last month, state regulators seized the unit under an order of
rehabilitation. For years, Steinberg and his family had taken huge
salaries and handsome dividends from the company, which impeded growth in a
corrosively competitive insurance market. As we pointed out in our story, Reliance
found itself woefully under-reserved to honor potential policy-liability
obligations. Its net worth is melting faster than a snowman in summer.
No new business is being written. Policy claims are coming in
faster than expected. And some reinsurers are balking at honoring Reliance claims.
In other words, the lethal policies we described have taken a
victim.
Reliance
Group, Unit File for Chapter 11 Protection (June 13, 2001)
Dow Jones Newswires
Dow Jones Newswires
WASHINGTON -- Reliance Group Holdings Inc. (X.RGH) and the
official committees of its unsecured creditors and prepetition lenders contend
that the insurance commissioner of Pennsylvania's bid to dismiss or suspend all
proceedings in the Chapter 11 case is merely an attempt to "jump the queue" and
obtain payment of Reliance
Insurance Co.'s claims ahead of other
creditors' claims.
Insurance Commissioner M. Diane Koken hasn't even come close
to meeting the heavy burden of proving that she is entitled to the extraordinary
remedy of dismissal or suspension of the case, the company and committees
asserted in recently filed court papers.
"The Rehabilitator's actions are brought not to regulate the
conduct of any actor in the insurance industry, but to challenge past
transactions and attempt to gain control of assets in RGH's bankruptcy estate,"
the filing states.
Koken was appointed to take control of Reliance Insurance's
business and property after the Commonwealth Court of Pennsylvania on May 29
granted the Pennsylvania Insurance Department permission to rehabilitate
Reliance Insurance,
a subsidiary of Reliance Group's wholly owned Reliance Financial Services Corp.
unit.
Reliance Group, which files its taxes and those of its units
on a consolidated basis, received a $45.6 million refund from the Internal
Revenue Service on April 3, 2000, for overpayments of
Reliance Insurance income taxes.
Reliance Group didn't forward the refund to Reliance
Insurance.
Reliance
Insurance then paid Reliance Group $50 million
on June 23, 2000, for its estimated tax liability for 2000, but when it was
determined that the insurance unit had no tax liability for 2000, the $50
million wasn't returned.
One day after the commissioner sought a Commonwealth Court
ruling on the $95.6 million, Reliance Group and Reliance Financial filed for
bankruptcy. As an insurance company, Reliance
Insurance is ineligible for bankruptcy
protection from creditors under Section 109 of the U.S. Bankruptcy Code.
In seeking to dismiss or suspend the bankruptcy proceedings,
Koken alleged that the bankruptcy filings were fueled by bad faith and were a
ploy to take control of Reliance Insurance's assets. Koken argued that Reliance
Group has no ongoing business operations, two employees and no source of income
other than the funds of Reliance
Insurance.
Dismissal of a case under section 1112(b) of the Bankruptcy
Code requires both objective futility of the reorganization process and
subjective bad faith in filing the petition.
The commissioner's dismissal motion is based largely on the
false allegations that the company has no assets and is trying to reorganize
with Reliance Insurance's property, Reliance Group and the committees responded.
Rather than attempting to use Reliance Insurance's assets, they said, the
company is trying to reorganize with its own assets and has made no attempt to
disturb the commissioner's possession of assets belonging to the insurance unit.
Even if the commissioner could show that Reliance Group's
reorganization was futile, dismissal still would have to be denied because the
petition was filed in a good faith attempt to reorganize, the company and the
committees asserted.
Responding to the commissioner's assertions that the petition
was filed in bad faith as a last-minute litigation strategy, the company and
committees said this is "completely contrary to the facts." The Chapter 11
filing was long-planned, not a last-ditch effort to forestall the loss of
property to Reliance Insurance's estate. The company discussed a Chapter 11
filing with the Pennsylvania Insurance Department for months.
Reliance Group began debt-restructuring talks with its major
constituencies after its deal to merge with Leucadia National Corp. (LKU) fell
apart in July 2000. The company's quarterly reports filed with the Securities
and Exchange Commission in August 2000 and November 2000 acknowledged the
possibility of a prenegotiated bankruptcy filing.
The principal dispute between the company and the commissioner
is whether Reliance
Insurance should be given equitable ownership,
or so-called "constructive trust," over cash in Reliance Group's possession. The
company argued that its insurance unit has only an ordinary unsecured claim
against it, the same as other creditors. "RGH's mere failure to pay a debt to
RIC cannot give rise to a constructive trust that would allow RIC to jump ahead
of RGH's other creditors," the company and committees said.
At most, the commissioner's allegations suggest that
Reliance Insurance
has an ordinary contractual claim against Reliance Group for payment under the
tax-sharing agreement - placing it in the same position as any other unsecured
creditor, the company and committees concluded.
The U.S. Bankruptcy Court in Manhattan has scheduled a Sept.
12 hearing on the matter.
Reliance Group's June 12 bankruptcy petition listed assets of
$12.59 billion and liabilities of $12.86 billion as of Sept. 30, 2000.
-Carol McCleary, Dow Jones Newswires; 202-628-8916;
carol.mccleary@dowjones.com
PHILADELPHIA (AP)--The Pennsylvania Insurance
Department has cut off severance pay and medical benefits for 340 former Reliance
Insurance Company workers who lost their
jobs as the troubled insurance company was
taken over by the department last month.
The department hopes to save $8 million - an average of
$23,500 a worker - by canceling the promised payments, mostly to older employees
who lost their jobs within the last year.
About 140 of the workers were based in Pennsylvania. The rest
were in New York and other states.
Insurance Department
spokeswoman Rosanne Placey said the money will be diverted to pay policyholder
claims and administrative expenses. She said the promises made to employees
weren't promises the department had to carry.
Placey said the state is suing the insurers' former parent, Reliance
Group Holdings Company (RELHE), and also delaying settlement of legal cases and
selling assets as well as cutting severance payments.
Former employees expressed outrage. Bill Seybold, a 21-year Reliance
telecommunications worker, called it "just another insult to people who put
a lot of sweat and blood into the company."
Insurance
Official Wants Reliance Group Bankruptcy Case Dropped
Dow Jones Newswires
WASHINGTON -- The insurance
commissioner of Pennsylvania wants the bankruptcy court overseeing the Reliance
Group Holdings Inc. (X.RGH) case to either dismiss or suspend all proceedings in
the case.
Characterizing the Chapter 11 filings of Reliance
Group and its Reliance Financial Services
Corp. unit as fueled by bad faith, Insurance
Commissioner M. Diane Koken said the filings on June 12 were merely a ploy to
take control of Reliance Financial unit Reliance
Insurance Co.'s assets.
In a motion filed Wednesday with the U.S. Bankruptcy Court in
Manhattan, Koken argued that Reliance Group
has no ongoing business operations, two employees, and no source of income other
than the funds of Reliance Insurance.
On May 29, the Commonwealth Court of Pennsylvania granted the
Pennsylvania Insurance Department permission
to rehabilitate Reliance Insurance.
Reliance Insurance's board consented to the
order, the motion said.
Under the court order, Koken was named company rehabilitator
and was directed to take control of Reliance
Insurance's business and property. Reliance Insurance
has about 75,000 policyholders and about 200,000 pending and reported
policyholder claims with an estimated exposure of about $8.7 billion, according
to the filing.
On June 11, Koken asked the Commonwealth Court to rule that
about $95.6 million in possession of Reliance
Holdings is being held in trust for Reliance
Insurance.
Reliance Group, which
files its taxes and those of its units on a consolidated basis, received a $45.6
million refund from the Internal Revenue Service on April 3, 2000, for
overpayments of Reliance Insurance
income taxes. Reliance Group didn't forward
the refund to Reliance Insurance.
On June 23, 2000, Reliance
Insurance paid Reliance
Group $50 million for its estimated tax liability for 2000. When it was
determined that Reliance Insurance
had no tax liability for 2000, the $50 million wasn't returned, Koken said.
One day after the commissioner sought a Commonwealth Court
ruling on the $95.6 million, Reliance Group
and Reliance Financial filed for bankruptcy.
Reliance Insurance,
as an insurance company, is ineligible for
bankruptcy protection from creditors under Section 109 of the U.S. Bankruptcy
Code.
The bankruptcy filing "was an obvious effort to impede
and undermine the RIC (Reliance Insurance)
state court rehabilitation proceeding and the Commonwealth Court Action,"
Koken alleges.
Moreover, under Reliance
Group's proposed reorganization term sheet, $284.9 million in intercompany
obligations owed to Reliance Insurance
was to be canceled, but the services agreement between the two companies would
be preserved. The Commissioner opposes the term sheet.
"The Debtors have circulated a proposed term sheet for a
Chapter 11 plan which effectively seeks to utilize RIC's (Reliance
Insurance) assets, without the
Rehabilitator's consent, to fund the Debtors' plan," the motion notes.
The Commissioner argues that Reliance
Group's bankruptcy filing one day after the action was brought in Pennsylvania
provides a clear intent to pre-empt the Pennsylvania state regulatory scheme
regarding insolvent insurance companies and
circumvent the Bankruptcy Code by indirectly placing Reliance
Insurance in bankruptcy.
Also, any reorganization plan derived from the term sheet is
unconfirmable, the Commissioner argues, because its uses Reliance
Insurance's assets to unjustly enrich Reliance
Group's creditors at the expense of Reliance
Insurance's policyholders.
Counsel for Reliance Group
couldn't be reached for comment.
A hearing has yet to be set on the request, according to the
court's docket.
Reliance Group, of New
York, has listed in its bankruptcy petition assets of $12.59 billion and
liabilities of $12.87 billion as of Sept. 30, 2000.
The company reached an agreement in principle with holders of
the majority of Reliance Financial's bank
debt, and an ad hoc committee consisting of holders of about half of the
outstanding principal amount of the company's 9% senior notes and holders of
about half of the outstanding principal amount of its 9.75% senior subordinated
debentures on the major economic terms of a reorganization plan.
-By Bob Braine, Dow Jones Newswires; 202-628-8916; bob.braine@dowjones.com
By DINAH WISENBERG BRIN
Of DOW JONES NEWSWIRES
(This report was originally published late Tuesday.)
PHILADELPHIA -- The Pennsylvania Insurance Department took
control of financially troubled Reliance Insurance Co. after
receiving approval from a state court Tuesday.
A team of department consultants assumed control of operations
at Reliance's Philadelphia headquarters and its New York offices, launching an
intensive review of finances at the company, a subsidiary of Reliance Group
Holdings Inc. (X.RGH), the department said.
The review will determine whether the department will continue
efforts to rehabilitate the insurance company, or take steps to liquidate it.
The department's action pertains only to Reliance Insurance and
not its parent.
Pennsylvania Insurance Commissioner M. Diane Koken planned to
visit both Reliance Insurance offices Wednesday.
Pennsylvania Commonwealth Court granted Koken's request to
place Reliance Insurance under rehabilitation, a process aimed at
returning the company to profitability while protecting policyholders, creditors
and the public. The order allows the commissioner to preserve assets while
overseeing operations and paying claims, the department said.
"Rehabilitation will enable us to immediately protect and
preserve for policyholders all of Reliance's assets. This is the department's
No. 1 priority in the rehabilitation," said Koken in a statement.
Doug Morris, a spokesman for Reliance Group Holdings, said the
Reliance Insurance board had supported the request for the
rehabilitation order, determining it was in the best interest of the company.
The Insurance Department started supervising the company
earlier this year, placing some staff on site. A department spokeswoman, Melissa
Fox, said the court order allows the state to go beyond the previous supervision
and place Reliance under the department's control.
Morris said he believed additional Insurance Department staff
arrived at the offices Tuesday.
Reliance is licensed to write coverage in all 50 states, but
last year stopped writing new and renewal policies while continuing to pay
claims. California, Florida, New York, Pennsylvania, Illinois and Texas have the
largest number of policyholders.
The company provides worker compensation, auto and liability
coverage, and wrote $1.5 billion in premiums in 1999.
Earlier this month, corporate financier Saul Steinberg
resigned as chairman of Reliance Group Holdings and Reliance Insurance.
Reliance Group last month said it expects an audit to show the insurance unit
lost about $2 billion in 2000.
The New York Stock Exchange delisted the debt-ridden Reliance
Group Holdings late last year. Because of its corporate and structural
upheavals, the company has not completed its audit of 2000 financials.
- By Dinah Wisenberg Brin, Dow Jones Newswires,215-656-8285;
dinah.brin@dowjones.com
Forbes
People
Forbes Face:
Saul Steinberg
Dan
Ackman, Forbes.com,
06.18.01, 1:00 PM ET
NEW YORK - That Saul Steinberg's business is
busted is old news. His realtor knew it more than a year ago when he put up
Steinberg's Park Avenue apartment for sale--it fetched $37 million.
His art dealer knew it before then. Steinberg sold his
Old Masters paintings last April for $50 million. His interior decorator also
knew. The once-feared corporate raider whose personal fortune had topped $600
million dumped his antiques for $12 million soon after he unloaded the art. His
mother also knew: She took Steinberg and his brother Robert to court when they
stiffed her for more than $6 million on a promissory note.
Steinberg resigned as chairman of insurer Reliance
Group in May. The company is expected to lose more than $2 billion this
year; the insurance company it owns is now being run by Pennsylvania state
regulators.
 |
 |
Saul and
Gayfryd Steinberg in jollier times
|
|
|
But when Reliance filed for bankruptcy this week, it
was still a stunner. Not because it was unexpected--indeed, it was
long-expected. The real surprise was how boring the ending was: a prepackaged
bankruptcy with debtors politely taking their piece of the onetime insurance
giant.
For Steinberg to go out this way is like Richard III
winding up in his lawyer's office calmly signing away his kingdom: pathetic.
Only the presence of Carl Icahn, a fellow 1980s powerhouse who is still
going strong, could give Steinberg's final demise the drama promised by the
first and second act of the former boy wonder's career.
Steinberg first got rich in the late 1960s--just a few
years out of Wharton--by leasing IBM (nyse: IBM)
computers. He proved so creative at the practice that his company, Leasco,
became valuable enough that in 1968 he could use its stock to buy Reliance
Insurance, a 150-year-old Philadelphia firm. He was just 29 years old. At the
time, Forbes reported that he made more money on his own that year than
anyone in America under 30.
Had he died then, his life would have been a
masterpiece, the James Dean of high finance.
Steinberg used Reliance as his base of operations. In
1969, he mounted a takeover of Chemical Bank, then one of the nation's
largest financial institutions. Chemical and its allies in the establishment
beat him back. But the brashness of the attempt was magnificent.
In 1984, he made a bid for The Walt Disney Co. (nyse:
DIS
- news
- people),
another household name. He didn't get that one either. But he did force Disney
to pay him an almost $60 million premium for his shares, which helped put the
word "greenmail" into the financial lexicon. Reliance and others,
including Drexel Burnham Lambert, which financed his bid, later agreed to
pay $45 million to Disney shareholders who sued in protest of the payment.
If Steinberg made a lot of noise in the business world,
he also rocked socially. The financier threw a 50th-birthday bash for third wife
Gayfryd at his mansion on Long Island, the bill for which was reportedly
over $1 million. When his daughter married into the Tisch family, the
event at the Metropolitan Museum's Temple of Dendur had the air of a royal
wedding.
But when the '80s ended, Steinberg was left with
Reliance, the holding company, whose sole asset (except for cash) was the
insurer. It wasn't bad. The board, dominated by Steinberg, was quite generous to
Steinberg the chief executive. His salary consistently topped that of Maurice
Greenberg of American International Group (nyse: AIG), a legendary
insurance chief who ran a larger and more profitable company. Since 1991,
Steinberg received more than $48 million in salary and bonuses.* He also
received more than $100 million in dividends from his 31% ownership of the
company. Members of his family received millions more. Meanwhile, he was running
the company into the ground.
There was no single catastrophic event to cause the
demise, just garden-variety mismanagement, albeit in a big way. The company was
eager to expand and it wrote policies too cheaply. This brought in cash--the
better to pay dividends--in the short run, but led to payouts in the long run, a
fundamental error in the insurance game. The huge sums the company paid
Steinberg and his brother didn't help.
His family's equity stake in the company has been wiped
out. Steinberg was also a huge spender. Still the question remains, what
happened to all that money? The two divorces no doubt took a bite out of him.
But for all his bravado, the various sales indicate that Steinberg never
invested well.
Having sold the 17,000-square-foot duplex once owned by
John D. Rockefeller, he and Gayfryd are living in a three-bedroom hotel
apartment on Madison Avenue. At this point, his life is a cautionary tale for
the superrich: Even they must take care.
Steinberg, who has suffered a stroke, still faces
fallout from the business devastation. Shareholders who lost it all will
certainly sue. First they will go after the directors-and-officers policy. Some
may lay claim to his personal assets--including the cash from his various sales.
If and when Steinberg winds up in court, he can only
hope his mother is not there, too, to testify against him.
*A previous version of this story incorrectly stated
that Steinberg received more than $48 billion in salary and bonuses.
People
Faces In The News: June 13, 2001
Debra
Lau, Forbes.com,
06.13.01, 1:03 PM ET
NEW YORK - Wealthy, powerful people in the news:
Troubled insurer Reliance Group Holdings has filed for
Chapter 11 bankruptcy protection, agreeing to the main points of a restructuring
plan with some of its creditors. That means Reliance Group, formerly controlled
by financier Saul Steinberg, now faces a fight with billionaire Carl
Icahn, who owns a significant amount of the firm's defaulted bond debt, to
get its restructuring plan approved by the bankruptcy court. The firm has $12.9
billion in debts and $12.6 billion in assets. The debt largely comes from unpaid
insurance claims, which have grown as the group's insurance unit,
Philadelphia-based Reliance Insurance, ran into trouble with mounting claims and
dwindling premiums, exacerbated by large losses stemming from a workers'
compensation insurance scheme. In May, Steinberg stepped down as chairman of
Reliance Group and its insurance subsidiary, and George Baker, interim
CEO of Reliance Insurance, also resigned. Under the planned bankruptcy
restructuring--which will affect Reliance Group and its main subsidiary,
Reliance Financial Services, which in turn owns Reliance Insurance--insurance
policyholders will be repaid first, followed by bank creditors and bondholders.
Icahn was not included in discussions over the restructuring plan. More...
News items can be submitted to Debra Lau at dlau@forbes.net
or by calling her at (212) 366-8847.
UPDATE
1-Insurer Reliance files for bankruptcy
Reuters, 06.12.01,
5:25 PM ET
NEW YORK, June 12 (Reuters) - Troubled
insurer Reliance Group Holdings Inc. <RELH.PK> said on Tuesday it filed
for bankruptcy protection and has agreed on the main points of a restructuring
plan with some, but not all, of its creditors.
Reliance Group Holdings (RGH), formerly controlled by
financier Saul Steinberg, now faces a fight with billionaire investor Carl Icahn,
who owns a significant amount of the firm's defaulted bond debt, to get its
restructuring plan approved by the bankruptcy court.
RGH has $12.9 billion in debts and $12.6 billion in
assets, according to documents filed with the U.S.Bankruptcy Court for the
Southern District of New York on Monday.
That debt is chiefly unpaid insurance claims, which
have built up as the group's insurance unit Reliance Insurance Co. (RIC) ran
into trouble with mounting claims and dwindling premiums, exacerbated by large
losses stemming from a workers compensation insurance scheme.
RIC has stopped writing new business, and is currently
under the supervision of the Pennsylvania Department of Insurance.
Under Reliance's planned bankruptcy restructuring --
which will affect RGH and its main subsidiary Reliance Financial Services Corp.
(RFS), which in turn owns RIC -- insurance policyholders will be repaid first,
followed by bank creditors and bondholders.
RFS owes about $261 million to a group of banks, while
RGH has about $463 million in defaulting bond dent.
Under Reliance's plan, RFS' bank lenders will receive
new 10-year notes issued by a reorganized RFS, and will receive 86 percent
voting control of that entity.
The reorganized RGH will issue 100 percent of its new
common stock to its bond debtors and other claimants.
The main points of that plan have been agreed by
creditors holding a majority of bank and bond debt, Reliance said, but have yet
to be agreed in detail. Any plan needs approval from the bankruptcy court before
it can be implemented.
Billionaire investor Carl Icahn, who owns a significant
minority stake in Reliance's bank and bond debt, and who has set himself against
any of Reliance's bankruptcy plans, was not part of the discussions over the
restructuring plan. Icahn did not return calls seeking comment on Tuesday.
RFS' bank creditors include Chase Manhattan Bank, now
part of JP Morgan Chase & Co. (nyse: JPM
- news
- people),
which is owed $45 million, according to the bankruptcy filing. Other
multi-million bank debtors include Deutsche Banc Alex. Brown, owned by Germany's
Deutsche Bank <DBKGn.DE>, French bank Credit Lyonnais <CRLP.PA>,
Bank of New York (nyse: BK
- news -
people),
Bank of America (nyse: BAC
- news
- people),
Bank of Montreal <BMO.TO>, ABN Amro Bank NV <AAH.AS>, First Union (nyse:
FTU
- news
- people),
and Fleet Bank, now part of FleetBoston Financial (nyse: FBF
- news
- people),
according to the filing.
The bankruptcy filing does not list the holders of
RGH's defaulted bond issues, comprising $291.7 million of 9 percent senior notes
due November 2000, and $171.7 million of 9.75 percent senior subordinated
debentures, due November 2003.
Reliance
Group Holdings on Forbes 500s
Stock prices as of March 14, 2001
| 1997
1998
1999
2000
2001 |
Reliance
Group Holdings on Forbes 500s
Stock prices as of March 14, 2001 |
|
Reliance Group Holdings (Nasdaq/ RELH)
Industry: Insurance
5 Hanover Square
New York, NY 10004
phone: 212-858-3600
fax: 212-909-1864
http://www.rgh.com
CEO: Mr. George R Baker
Executives
at Reliance Group Holdings
|
| Cashflow: $-1,029
mil |
Enterprise
value: $525 mil |
| Operating income: $-915
mil |
Employees:
6 thou |
| |
sales |
profits |
assets |
mkt val |
| total
($mil) |
3,192 |
-1,029 |
12,598 |
4 |
| %
change since 2000 |
8.2 |
n/a |
-13.0 |
n/a |
|
| Performance
Snapshot |
| Price($)
03/14/01 |
0.03 |
 |
| ytd change |
433% |
| ytd rel to
market |
NM |
|
| per
employee ($thou) |
527.6 |
-170 |
2,082.3 |
n/a |
| Industry
median per employee ($thou) |
634.9 |
46.7 |
3,391.9 |
707.3 |
| Valuation |
| Price/Sales |
n/a |
| Enterprise
multiple |
n/a |
| Relative
enterprise multiple |
n/a |
| |
| Dividends
per Share |
| annual
rate |
$n/a |
| yield |
n/a% |
| payout |
n/a% |
| 5yr
growth rate |
n/a% |
|
| 2001
Estimate |
| EPS |
$0.39 |
| P/E |
n/a |
| analyst
agreement |
low |
| latest year
(actual) |
$-8.97 |
| 2001E-2000
change |
D-P% |
| 5 yr projected
growth |
10% |
|
| Dividend
Reinvestment Plan |
| available/discount? |
n/a |
additional
purchase |
amount minimum |
$n/a |
| amount maximum |
$n/a |
| frequency |
n/a |
|
| < Previous |
Next
> |
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Reliance
Group delays quarterly report, sees loss 05/15/2001
NEW YORK, May 15 (Reuters) - Reliance Group Holdings Inc.
<RELH.PK>,
a troubled insurer with ties to financiers Saul Steinberg and Carl Icahn, said
on Tuesday it delayed filing its first-quarter report due to changes in
corporate structure, and added that it expects to book a $30 million loss for
the period.
New York-based Reliance, which has missed debt payments and
stopped writing insurance policies, said that the projected loss would come as
a result of its plan to write off its investment in its Reliance Insurance
subsidiary.
Reliance said the subsidiary estimates an underwriting loss
on a GAAP basis for the first quarter of $110 million to $150 million,
excluding gains and income from investments.
"(Reliance) has been unable to complete its audit of
the 2000 financials due to significant changes in its operational, corporate,
and organizational structure as a result of its decision to discontinue its
ongoing insurance business and commence run-off operations," the company
said in a statement.
Reliance said it notified the Securities and Exchange
Commission that it will "not be timely" in filing its 10-Q for the
the quarter ended March 31. It added that its estimated losses are subject to
an ongoing audit of fiscal year 2000 by accounting firm Deloitte & Touche
LLP and could change.
Reliance said it won't be able to file the quarterly report
until the audit is completed, but did not give a timeframe.
© Copyright 2000 Reuters Limited.
Fortune
Saul Steinberg's spectacular rise and fall reveals deep truths
about doing business in the U.S.
FORTUNE
Monday,
July 9,
2001
By Geoffrey
Colvin
Saul Steinberg's spectacular rise and fall, now that it's
finally over, is too good to let pass without mining it for a bit of wisdom.
Truly, do story lines get much better than this? A brilliant kid graduates
from Wharton at age 19, soon borrows money from his father, and starts a
business. Before age 30 he's a millionaire and tells a newspaper columnist,
I could be President! By 40 he's a billionaire (back when dollars were worth
more and dot-com mania was unheard of). Though investigated or charged or
sued almost continually, he just gets richer. He buys--from the
Rockefellers--the biggest apartment on Park Avenue, fills it with Titians
and Rubenses and other grand-scale paintings you studied in college. His
50th birthday party costs $1 million.
And now? A couple of months ago Steinberg resigned from
the company he had started 40 years earlier with the loan from his father;
its stock having become worthless, it was kicked off the New York Stock
Exchange. It filed for bankruptcy a couple of weeks ago. The apartment is
gone, sold to raise cash; ditto the Old Masters and gilded furniture. His
mother is suing him for $5 million.
Steinberg was not the richest of the business buccaneers
who reached their apogee in the '80s, but he is the sharpest, most perfect
example of the out-of-nowhere wheeler-dealer who hit it huge and demanded
the world pay attention. His career was a real-life novel, and it revealed
more dramatically than any fiction a few deep truths about doing business in
the U.S.
The American system is generous to a fault. The
company Steinberg started was a computer-leasing outfit eventually known as
Leasco. When its stock took off, he used it to buy the venerable Reliance
insurance company of Philadelphia, possessor of considerable old-fashioned
cash, which Steinberg then used to pay for more takeovers. Thus at age 30 he
acquired another youthful distinction: being investigated by a House
committee alarmed that he was using insurance funds to build a conglomerate.
Before long, a federal judge found Steinberg had made
material omissions in a registration statement. The SEC accused him of
violating federal antifraud statutes in a bizarre insider-trading scam. He
was involved in an ugly scandal surrounding New York City's purchase of bus
stop shelters. We won't get into what one of his wives accused him of, since
she was persuaded to retract it.
On this went, year after year, and guess what: Nobody
cared. Steinberg settled most of his civil and regulatory problems, and the
idea that a certain atmosphere seemed to be developing around this guy
didn't bother enough people to matter. It's hard to imagine it not mattering
in any other developed economy.
You can get away with a lot if it's sufficiently
complicated. Leasing and insurance happen to be two of the most
financially convoluted businesses on earth, and explaining them with any
sophistication isn't easy. Yet you must explain them in order to convey how
Steinberg operated. Consider that he launched his company as a private firm,
then brought it public a few years later, then made it private again, then
brought it public again, and seemed to get richer every time, though his
shareholders fared far worse. Steinberg's critics--there are many--include
finance experts who explain how he played accounting assumptions and loss
reserves to the befuddlement of his investors. But scarcely any major
publication, and certainly no nonbusiness publication, even tried to tell
the story. Major profiles were generally about the parties, the ostentation,
the divorces--accessible topics that skirted the issues most important to
those with money at stake.
You'd better know whether you're dealing with a
business builder or a wheeler-dealer. Steinberg created no substantive
institution that would outlive him, and it seems clear he never intended to.
That came as a nasty shock to Reliance's shareholders, lenders, and
policyholders. They'd have been far better off if they'd understood what
kind of business person they were dealing with, and in truth, they should
have known.
It was apparent for years that Steinberg was running his
public company like a family piggy bank. He awarded himself and his brother
huge compensation even when the company was losing hundreds of millions of
dollars. He kept paying a large dividend even when the company had no
earnings, conveying additional cash to himself and family members. He loaded
the board with insiders and friends. This was all public information. Those
who ignored it had only themselves to blame.
"I love this company," Steinberg told the Wall
Street Journal when his stock was getting hammered in 1972. "I'm not
quitting...they're going to have to carry me out."
They've carried him out at last. Now let's see who learned
what his story teaches.
Los Angeles Times
Reliance
Insurance Gets Deadline (September 9, 2001)
By Associated Press
PHILADELPHIA -- A Commonwealth Court judge has given state
regulators a Dec. 4 deadline to salvage Reliance Insurance Co., which lost
more than $1 billion last year, or shut down the troubled company.
If the state chooses the latter, a portion of Reliance's claims would be paid
by a network of national funds that bail out insurers _ and ultimately passed
on to consumers.
The state took over the 184-year-old business insurer May 29.
The Center City-based firm faces 200,000 claims and 15,000 lawsuits filed
against some of its 75,000 clients, ranging from worker's compensation issues
to construction liability to securities fraud complaints.
At a scheduled bankruptcy hearing in New York on Wednesday, state regulators
who want to preserve the company's assets for claimants are expected to
challenge those who want them divided among creditors, including some of the
country's largest financial companies.
"The big issue is how much cash does Reliance have? How long can they continue
to pay claims?" said Tony Grippa, executive director of the Workers
Compensation Guaranty Association of Florida, one of dozens of funds that bail
out failed insurers with surcharges that businesses and consumers pay on their
insurance.
He said his fund plans to charge insurance companies in Florida the maximum 2
percent surcharge next year -- mostly to pay for losses he expects to be
generated by claims against Reliance customers in the state.
Pennsylvania residential and business insurers already charge the maximum 2
percent surcharge because of previous insurance company failures. State
regulators say they do not know how they will meet any additional bailout
costs.
With debts approaching $2 billion, Reliance could become the largest insurance
bailout in state history.
Reliance is not affiliated with Reliance Standard Life Insurance Co., a
profitable health insurer based in Philadelphia.
In an order issued Friday, Commonwealth Court Judge James Gardner Collins set
the December deadline for the Pennsylvania Insurance Department to rescue the
company.
The order comes as the state struggles to have the company pay as much as $10
billion in insurance and reinsurance liabilities.
MARKETS / YOUR MONEY
Individual
Investor to Cease Publication
Associated Press
Individual Investor magazine is being shut down and its mailing
list acquired by rival Kiplinger's Personal Finance.
Kiplinger's, the nation's first magazine to cover personal finance issues,
said Monday it will pay $3.5 million for Individual Investor's subscriber list
and will assume $2.6 million in debt.
Kiplinger's will add Individual Investor's 430,000-subscriber base to its own
list, which is currently about 1 million. Kiplinger's was founded in 1947.
Like other financial magazines, the 13-year-old Individual Investor has been
suffering from a slump in ad sales amid the stock market's downturn over the
last year.
The New York-based magazine's ad pages were down 30% through May compared with
a year earlier, while Kiplinger's were off 10%.
Individual Investor was founded by Jonathan Steinberg, son of Saul Steinberg,
whose Reliance Group insurance firm recently filed for bankruptcy.
While its magazine is shutting down, the parent Individual Investor Group (IIGP)
will continue to put out newsletters and two Web sites. The firm's shares fell
3 cents to 25 cents on the OTC Bulletin Board on Monday.
Reliance
Group, Unit File for Chapter 11
Bloomberg News
Reliance Group Holdings Inc. filed for bankruptcy
protection. The New York insurer listed $12.59 billion in assets and $12.87
billion in debts in a Chapter 11 petition filed in U.S. Bankruptcy Court in New
York City. The company's Reliance Financial Services Corp. unit also sought
bankruptcy protection.
Reliance Insurance Co., the main operating unit of
the company, was taken over May 29 by Pennsylvania insurance regulators under a
state judge's order.
The company said in a statement that it reached
agreement with a majority of Reliance Financial's lenders and Reliance Group's
bondholders "on the major economic terms of a plan of reorganization."
Reliance needs a bankruptcy judge's approval for
its proposed reorganization and also is discussing with the Pennsylvania
Insurance Department the terms of its agreement with creditors.
The company faltered in the late 1990s because of
higher-than-expected workers' compensation costs and other claims. Also, a
string of natural disasters, environmental claims and asbestos liabilities led
to underwriting losses.
Reliance, which traded as high as $19.81 in July
1998, fell .004 cent to 1.3 cents in over-the-counter trading.
Reliance
Insurance Under Regulators' Control
By: From Associated Press
HARRISBURG, Pa. -- State insurance regulators Tuesday assumed control of
financially troubled Reliance Insurance Co. and will review the company's
finances to determine if it should be liquidated.
"At this point we have taken control," said
Insurance Commissioner M. Diane Koken. "We will analyze the financial
position . . . Although we remain optimistic, there is a possibility that this
will not remain in rehabilitation, it will go to liquidation."
Koken said it could be six months or more before the
department is able to make a decision about the company's future.
The department has posted a financial observer at the company
since April, but did not assume control of the company until the Commonwealth
Court granted its request Tuesday afternoon, Koken said.
"Rehabilitation will enable us to immediately protect and
preserve for policyholders all of Reliance's assets," Koken said, adding
that she had hired a team of consultants that were already at Reliance to assume
control of the company's operations and begin the financial review.
Reliance Group defaulted on more than $500 million in bond and
bank debt last year and was delisted by the New York Stock Exchange. The company
stopped writing new policies, and sold some businesses to Citigroup Inc. and
other insurers.
Analysts said Reliance's $2-billion debt poses the possibility
of the largest bailout ever by state funds that settle claims for defunct
companies by assessing other insurers, whose business and home policyholders end
up paying the cost.
The Pennsylvania Property and Casualty Insurance Guaranty
Assn. estimates Reliance losses in the state alone at $350 million, greater than
the $300 million in Pennsylvania losses from the largest U.S. property and
casualty insurance failure of the 1990s, the 1998 liquidation of Physicians
Insurance Co.
Reliance is licensed to write coverage in all 50 states.
Copyright 2001 Los Angeles Times.
Reliance Group Cedes Role to
Regulator
(August 23, 2000)
Reliance Group Holdings Inc., the company that is controlled by Saul Steinberg
and is teetering on the edge of bankruptcy, has ceded control of its finances to
a state insurance regulator.
In a filing with the Securities and Exchange Commission,
Reliance said that it agreed on Thursday to seek approval from the Pennsylvania
Insurance Department before making major financial transactions, including
paying dividends, taking significant withdrawals from its bank accounts or
selling assets.
The filing comes as Reliance, hurt by cuts in credit ratings
and worse-than-expected losses in its insurance business, faces a deadline of
Aug. 30 to pay $735.1 million in debt. It said earlier this month that it might
not make the payment and might seek bankruptcy protection.
Reliance, which was the base for Mr. Steinberg's unsuccessful
bids for the Walt Disney Company and Chemical Bank in headier times for the
former corporate raider, said it would seek approval for dividend payments in
August and November.
The insurer is scheduled to meet Wednesday in Chicago with a
group of regulators from several states. Analysts said the regulators could
order the company not to pay dividends in an effort to safeguard the interests
of policyholders, striking the first blow in what could be a protracted struggle
with creditors.
Reliance bondholders have hired Wasserstein Perella &
Company to advise them on a restructuring of the insurer's debt.
Reliance Group Holdings, the insurer controlled by the financier Saul Steinberg,
said yesterday that it probably would not be able to repay $735.1 million of
debt maturing at the end of the month and might seek bankruptcy protection.
Reliance's bondholders have hired Wasserstein Perella &
Company to advise them on reorganizing the insurer's debt. The insurer said it
was in talks with regulators and creditors on restructuring the debt. Its bonds
trade for about 10 cents on the dollar.
Reliance, a New York insurer, has been struggling with
widening losses caused in large part by falling prices for commercial property
and casualty insurance. Yesterday, it reported a net loss of $504.5 million for
the second quarter.
''Hiring Wasserstein Perella sounds like 'let's find a buyer,'
not a restructuring,'' said Michael Schroeder, a fixed-income analyst at Wasmer,
Schroeder & Company, which considered, but decided against, buying Reliance
debt.
Analysts and regulators say the most troublesome factor for
Reliance is about $6 billion in reinsurance it carries on its books to pay about
the same amount in liabilities. The Leucadia National Corporation last month
scrapped a planned $1.03 billion acquisition of Reliance.
Regulators are scheduled to meet with Reliance executives on
Aug. 31 in Chicago.
Philadelphia
Inquirer
Deadline set for troubled Pa.
insurer (September 9, 2001)
Reliance Insurance Co.
has until Dec. 4 to pay claims
or face insolvency. It lost more than $1 billion last year.
Joseph N. DiStefano INQUIRER
STAFF WRITER
A Commonwealth Court judge has
given Pennsylvania insurance regulators until Dec. 4 to save or shut down
Reliance Insurance Co., the 184-year-old Philadelphia business insurer that lost
more than $1 billion last year and now faces insolvency.
Judge James Gardner Collins issued the order Friday to the Pennsylvania
Insurance Department, which took over Reliance on May 29. Regulators have three
months to reorganize the troubled insurer or declare that it can no longer pay
customers' claims - which likely would boost property-insurance costs across the
country.
Reliance, with headquarters in
Center City, faces 200,000 claims and 15,000 lawsuits directed at some of its
75,000 clients. The claims range from worker's compensation filings to
construction liability and securities fraud complaints.
Reliance Insurance is not related to Reliance Standard Life Insurance Co., a
profitable Philadelphia health insurer.
Observers blame Reliance's troubles on the debt its longtime chairman Saul
Steinberg accumulated during his 33 years in control and on the risky expansion
of several Reliance affiliates (recently consolidated under the name Reliance
Insurance Co.). These units were hit with massive losses on worker's
compensation, environmental and construction claims in the late 1990s.
Judge Collins turned up the heat as Reliance faces these mounting demands for
cash:
Pennsylvania regulators are scrambling to make sure the company can pay up to
$10 billion in insurance and reinsurance liabilities.
J.P. Morgan Chase & Co. and other banking giants are trying to collect
hundreds of millions of dollars in unpaid Reliance loans and bonds.
The federal Pension Benefit Guaranty Corp., which insures corporate
retirement plans, says it may have to raise more than $100 million to cover a
shortfall in Reliance's pension plan.
The IRS has asked federal prosecutors to help investigate $46 million in
questionable tax refunds Reliance Group received last year.
Pennsylvania House Majority Leader John Perzel (R., Phila.) wants the state
Insurance Department to resume severance payments to 340 laid-off Reliance
workers that state Insurance Commissioner Diane Koken suspended in an attempt to
save $8 million.
The University of Pennsylvania may cancel some planned endowed faculty chairs
because Reliance and Steinberg, a major Penn donor, have not come through with
promised grants.
If the state declares Reliance insolvent, a portion of the company's claims
would be paid by a nationwide network of insurance bail-out funds and,
ultimately, through higher consumer insurance rates.
"The big issue is how much cash does Reliance have? How long can they
continue to pay claims?" said Tony Grippa, executive director of the Workers
Compensation Guaranty Association of Florida, one of dozens of funds designed to
bail out failed insurers with money collected from surcharges on business and
consumer insurance policies.
Grippa said his fund plans to charge insurance companies in his state the
legal maximum 2 percent extra next year - mostly to pay losses he expects will
be generated by claims against Reliance customers in Florida.
Pennsylvania home and business insurers already pay the state's 2 percent
maximum surcharge because of previous insurance company failures, such as the
1998 insolvency of Physicians Insurance Co. Many companies have passed the cost
directly along to consumers.
Pennsylvania guaranty-fund officials have said they were unsure how they
would meet any increased bail-out costs.
In their quest for cash, lawyers for the state Insurance Department are
scheduled for a face-off Wednesday against some of the nation's most powerful
financial companies in a New York bankruptcy courtroom.
After writing off its investment in Reliance Insurance last spring, the
Reliance Group now wants Judge Arthur Gonzalez to approve a bankruptcy plan that
would apply its remaining assets to creditors whose Reliance loans and bonds
defaulted last year. The plan is endorsed by J.P. Morgan Chase, Wells Fargo and
other creditors.
But Pennsylvania wants that money to pay claims. The state has asked Gonzalez
to deny bankruptcy protection.
If Gonzalez allows Reliance Group to go ahead with its bankruptcy plan, it
will be more difficult for Pennsylvania to get that money back - or to get money
from Steinberg if he is later found responsible for the company's problems,
state officials said.
Pennsylvania is not the only entity with a lot at stake:
The IRS has asked New York's top federal prosecutor, Mary Jo White, to
monitor the bankruptcy case while it completes an audit of $46 million in
"tentative" federal tax refunds that Reliance Group collected last year.
The federal Pension Benefit Guaranty Corp., which also has a lawyer
monitoring the bankruptcy, estimates it will have to pump $106 million into
Reliance's pension funds so it can maintain pensions for 7,700 current and
future Reliance retirees. Reliance's guaranteed-benefit retirement plans have
assets of $172 million and liabilities of $281 million, according to corporation
spokesman Gary Pastorius.
Perzel wants Insurance Commissioner Koken to restore canceled severance
payments to 340 laid-off Reliance employees. "The department has not taken the
welfare of these individuals into consideration," Perzel wrote to Koken Aug. 23.
Penn anticipates the possible cancellation of a number of endowed
professorships that Steinberg and Reliance promised.
However, unlike the IRS or J.P. Morgan Chase, Penn is unlikely to sue,
spokeswoman Lori Doyle said.
Reliance "made a $600,000 pledge to the Penn School of Medicine, and
naturally we're following the bankruptcy proceedings," Doyle said Thursday.
In a statement released Friday, Doyle added, "Saul Steinberg has been a
generous contributor to the university. His most significant contributions to
Penn were made in the late '80s.There are some outstanding pledges."
Starting in the late 1970s, Steinberg and Reliance pledged $36 million to
Penn, mostly through the Saul and Gayfryd Steinberg Foundation, Doyle said. The
university declined to say how much of the total has been collected.
Two buildings at the Wharton School, which Steinberg attended, are named for
him.
Steinberg funded his philanthropy in part with his income from Reliance. He
collected an average of more than $10 million a year in dividends, salary and
company-subsidized stock options during the 1990s.
Joseph N. DiStefano can be reached at 215-854-5957 or jdistefano@phillynews.com.
Pa. battles for Reliance
Insurance Co. assets
(August 8, 2001)
The insurer's owners and
investors also want the money. The state would use it to pay claims against
policyholders.
By Joseph N. DiStefano
INQUIRER STAFF WRITER
In a high-stakes battle for disputed cash, the
Pennsylvania Department of Insurance is fighting troubled Reliance Insurance
Co.'s owners and investors for assets that would help pay an estimated $8.7
billion in claims against its customers.
The state is even fighting for control of $900 million of
Reliance's estimated losses - which, under corporate accounting rules, could be
converted into lucrative tax benefits.
And, at the same time, the department is seeking to preserve
its right to seek damages from longtime Reliance chairman Saul Steinberg and
other former Reliance officials while it investigates whether they "caused
injury" to the company.
The business insurer is juggling 200,000 claims and 15,000
lawsuits directed at some of its 75,000 clients. The claims range from workers'
compensation filings to construction liability and securities fraud complaints.
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