View this article online: https://www.insurancejournal.com/news/national/2000/08/24/11315.htm
Reliance Group Holdings Inc. was granted more time from creditors to deal with repaying $237.5 million in bank debt. The troubled insurer said bankers have extended the due date to Nov. 10 on debt that was due at the end of this month. No information was available on whether other terms of the insurers’ debt have been changed.
The extension will give Reliance more time to restructure its debt, and also pushes the maturity date closer to Nov. 15, which is when a $291.7 million bond debt comes due. The move will allow for an overall restructuring of debt according to industry analysts.
On Monday, Reliance Insurance Co. announced its agreement with the Pennsylvania Insurance Department to seek its approval before making major financial transactions, including paying dividends to Reliance Group Holdings, selling assets or making significant withdrawals from bank accounts.
The company maintains it can pay off debts and stave off bankruptcy, but analysts are skeptical. Standard & Poor’s has dropped the company’s ratings to R (under regulatory supervision) from CCC (very weak), and A.M. Best and Fitch IBCA have lowered ratings as well.
Regulators can still step in if it is determined Reliance cannot pay off claims and debts, putting the company into complete supervision. Meanwhile, rumors of Warren Buffet’s company Berkshire Hathaway purchasing a chunk of Reliance remain. The company is reportedly preparing a reinsurance deal that would take some of Reliance’s liabilities according to a Wall Street Journal report. While the deal could reassure Reliance creditors, it is not a sure bet.