A.M. Best Downgrades Reliance.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--July 14, 2000 A.M. Best Co. has downgraded the financial strength rating of Reliance Insurance Group, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , to B (Fair) from B++ (Very Good). The property/casualty group's rating remains under review with developing implications. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. applies to the group's 13 domestic members, led by Reliance Insurance Co. The downgrade into A.M. Best's Vulnerable category follows a review of the group's financial condition, its strategic shift from active operations to an asset sale/ run-off run-off n (in contest, election) → desempate m (= extra race); carrera de desempate run-off n (in contest, election) → mode for many of its units and today's announcement that Leucadia National Leucadia National Corporation (traded on the New York Stock Exchange as LUK) is a holding company that, through its subsidiaries, engages in mining & drilling services, telecommunications, healthcare services, manufacturing, banking and lending, real estate, and winery businesses Corp. is unwilling to proceed with the current terms of its previously announced acquisition of Reliance. The downgrade is consistent with risk factors related to the potential non-completion of the Leucadia Leucadia can refer to:
The Vulnerable rating reflects A.M. Best's belief that Reliance will not be able to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. its bank facility and public debt maturing in the latter half of 2000. Further, as management effectively positions the insurance group as more of a run-off entity, there is increased uncertainty related to its loss-reserve adequacy and reduced liquidity margin stemming from negative cash flows that have been exacerbated by the significant fall-off in premium volume recently. In a separate rating action, A.M. Best downgraded the A- (Excellent) financial strength rating of Reliance National Insurance Co. (Europe) Ltd. to B (Fair) and revised its under review status from negative to developing. The action, which equalizes its ratings with its domestic affiliates, is largely based on the poor financial condition of its parent--Reliance Group Holdings, Inc. The ratings will remain under review pending further developments related to an alternative Leucadia deal structure and/or definitive debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: plan with debtholders. Meanwhile, A.M. Best will continue to monitor Reliance's financial condition and will be reviewing stress scenario analyses related to the group's capital and liquidity margin. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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