Reliance Group Reports $546 Million Loss for Third Quarter

November 15, 2000

Reliance Group Holdings reported a net loss of $546.5 million, or $4.76 per diluted share, for the third quarter, including an after-tax charge of $215.8 million for increasing net loss reserves by $332 million pretax. It also includes an after-tax restructuring charge of $18.1 million resulting from continued consolidation, and a charge of $186.3 million for an increase in the company’s deferred tax valuation allowance.

In the third quarter of 1999, Reliance Group had a net loss of $15.1 million, with $582.9 million in revenues. The reduction in revenues resulted from the company’s previously announced decision to run-off its insurance operations.

As of Sept. 30, 2000, the company had $711.4 million in outstanding debt, including $237.5 million in bank borrowings with a maturity date of Nov.10, 2000 (those loans have been extended indefinitely) and $291.7 million in senior notes due November 15, 2000 (including $7.5 million held by Reliance Insurance Company). The company does not have sufficient cash resources to meet these obligations, and is in discussions with its creditors and insurance regulators.

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