Three years after taking over Reliance Insurance Co., the Pennsylvania Insurance Department is attempting to raise cash by selling far-flung properties of the failed company.
Reliance Insurance faces a $3 billion shortfall between more than 100,000 claims filed by customers and the assets the company has to pay such claims, the department said in a May 20 report.
The state took over Reliance in May 2001, after the 184-year-old business, workers’ compensation and auto insurer had run out of money. The failed company is unrelated to Reliance Standard Life Insurance Co., of Philadelphia.
The shortfall will be paid partly by insurers, who are likely to pass the cost on to homeowners, drivers and businesses through higher premiums, partly by taxpayers and partly by former Reliance corporate customers who will be paid partial amounts on their claims.
The state planned to start settlement talks Tuesday and continue them in July in an effort to collect millions from former Reliance Group owner Saul P. Steinberg, his officers, directors, lawyers and auditor, and their insurers.
Since Jan. 1, the state has collected $55.5 million from the sale of RCG Moody International Ltd., an engineering inspection firm, to Close Bros. Private Equity, of Britain, and $45 million from Reliance’s former owner, Reliance Group Holdings, under a 2003 Bankruptcy Court agreement.
A bankruptcy proposal filed in April also would allocate $45 million to Reliance Group’s bankers and other debtors. The federal Pension Benefit Guaranty Corp., which is bailing out Reliance’s employee pension plan, objects to that proposal.
The state has also received $5.3 million from the sale of Reliance National Asia Re Ltd., of Singapore, to Omni Whittington Investments (Guernsey), a British-managed, Dutch-owned company. It had bought Reliance National Insurance Co. of Europe last year for about $11 million.
Sales of shares of Symbol Technologies, which makes bar-code readers for stores, have brought $11.5 million. The Insurance Department still holds more than $150 million in Symbol shares.
In addition to the sales of properties, the state is trying to collect millions more from big corporations it says owe Reliance money, including $36 million from John Hancock Life Insurance Co.; $34 million from US Airways; and $13 million from Agway Inc., the department said.
Meanwhile, Reliance shareholders have filed shareholder lawsuits, including one in which lawyers from three states have contacted investors about a proposed settlement of $5 million, minus $2 million for the lawyers.
Former Reliance worker William Seybold of Philadelphia called that offer “peanuts, without the shells.”
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Was this article valuable?
Here are more articles you may enjoy.