Reliance to Increase Reserves by $332 Million

October 24, 2000

Reliance Group Holdings subsidiary Reliance Insurance will increase its loss reserves by $332 million in the third quarter as a result of an actuarial review. The review of its reserves identified worsening assumed reinsurance and commercial car insurance lines.

The increase will bring the company’s total reserves to roughly $3.5 billion, which is covered by about $4.6 billion held by Reliance in cash and securities. It also worsens Reliance’s financial outlook, which was not good to begin with. The company must repay $237.5 million in bank debt and $291.7 million in bond debt next month.

The insurer, which is discussing its condition with insurance regulators in Pennsylvania, will likely declare bankruptcy in the next few months. It has sold off almost all of its cash-generating businesses.

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