First, the company’s chief executive stepped down amid pressure from stockholders. Then, the company’s surety group withdrew its proposal for an initial public offering. Then sprung up reports of the company selling to Leucadia National Corp. for a meager $293 million stock swap. Now, Reliance Group Holdings is selling its D&O, E&S and Inland Marine lines to The Hartford for an undisclosed amount.
While the due diligence phase of Leucadia’s intended purchase of Reliance continues, Standard & Poor’s analysts are closely monitoring the situation.
“Certainly, the sale of these business units begs the question, “will Leucadia proceed with the purchase?” I think the jury’s still out on that one,” said Matthew Coyle, a director with S&P’s U.S. non-life insurance rating department. And, according to Coyle, there is potential for further sales by Reliance.
As a result of the transaction between The Hartford and Reliance, The Hartford’s specialty operation expects to write nearly $250 million in additional annual gross premium. Reliance’s financial products and E&S staff of more than 100 employees will join The Hartford’s subsidiary, Hartford Specialty Company, and remain in New York to manage the business being assumed
. David H. McElroy, executive vice president of Reliance and head of its financial products and excess and surplus divisions, will join The Hartford to manage the business. McElroy, who joined Reliance in 1987, has managed Reliance’s directors and officers liability; excess and surplus; and property custom casualty departments.
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