A.M. Best Maintains Reliance Insurance Group's Under Review Status.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--May 26, 2000 A.M. Best Co. has announced the continuation of the financial strength rating of A- (Excellent) under review with developing implications status 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 . The continuation follows the May 26, 2000, announcement by Reliance Group Holdings, Inc. that it has entered into a definitive agreement to be acquired by 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., New York, for approximately $300 million. The agreement is subject to various closing conditions, which include the satisfactory completion of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. by Leucadia. The completion of the proposed transaction would appear to address Reliance's most immediate and pressing financial issue--a suitable plan 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. more than $500 million of holding company debt maturing during the latter half of 2000. A.M. Best expects to continue discussions with representatives of Leucadia and evaluate the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma capital structure of Reliance, as well as the financial flexibility and strength of the combined entity. This latter issue is crucial in light of Reliance's marginal holding company flexibility as well as weakening profitability, operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and business persistency trends within its property/casualty insurance operations. Reliance remains in a delicate state given its worse-than-expected operating leverage and performance since A.M. Best's last rating update in February, and the open-ended nature of the merger agreement that allows Leucadia to unilaterally u·ni·lat·er·al adj. 1. Of, on, relating to, involving, or affecting only one side: "a unilateral advantage in defense" New Republic. 2. cancel the agreement for a variety of reasons during the 30-day due diligence period. Lastly, the timing of the close of the announced transaction could be a risk factor vis-a-vis Reliance's bank debt that matures in August and its public debt that matures in November. 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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