Reliance Group Holdings Inc (REL.N),
the 183-year-old insurance company used by financier Saul
Steinberg to mount daring takeover bids in the 1980s, on Monday
said it may seek bankruptcy protection amid mounting losses so
it can restructure its debt.
Reliance said it plans to operate its property and casualty
insurance businesses as a run-off company, meaning it will pay
off claims and continue to seek buyers for most of its
insurance lines while not renewing other insurance lines.
On Monday, Reliance posted a second-quarter net loss of
$504.5 million, or $4.40 per diluted share, compared with a net
loss of $156.9 million, or $1.38 per share, last year.
The move did not come as a surprise, one industry watcher
said, speaking on the condition of anonymity. Years of bad risk
selection has led the company to this position, the source told
In July, Leucadia National Corp (LUK.N) backed away from a
proposed $293 million purchase of Reliance, a deal that would
have alleviated some of the company's problems. Reliance must
repay more than $700 million of debt over the next three years
but it has no financing arranged.
Steinberg, who owns 42 percent of Reliance, stepped down as
chief executive in February and has been looking to sell the
company since last November. Shares of the company have shed
more than 85 percent of their value in the past two years and
closed in trading on the New York Stock Exchange at 3/16, below
their 52-week high of 7-11/16 and highs above 19 two years