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AMERICAN RELIANCE COMPANIES ANNOUNCE DETAILS OF LETTER OF INTENT WITH VIK BROTHERS INSURANCE GROUP

 LAWRENCEVILLE, N.J., Dec. 28 /PRNewswire/ -- American Reliance Group, Inc. (AMEX: ARI) and its principle shareholder American Reliance Insurance Company announced today further details of their letter of intent with Vik Brothers International USA, Inc., in order to clarify the consideration to be received by the American Reliance companies in the transaction.
 Pursuant to the letter of intent, which was announced originally on Dec. 23, 1992, the Vik Brothers insurance group will assume all of the American Reliance companies' insurance business, other than business in the State of Florida and New Jersey private passenger automobile business, and will assume certain non-insurance liabilities of the American Reliance companies and purchase certain assets, including the headquarters building located in Lawrenceville. In addition, subject to definitive documentation, the Vik Brothers insurance group will enter into an indemnity reinsurance agreement with the American Reliance companies, to be effective as of Dec. 31, 1992, to indemnify the American Reliance companies with respect to policies it will ultimately assume.
 At the closing, the Vik Brothers insurance group will pay a ceding commission and purchase the American Reliance companies' headquarters building and other tangible assets for a aggregate consideration of at least $21 million, subject to upward adjustment based on the American Reliance companies' unearned premium reserve at the end of 1992. Such consideration will consist of $6 million for the headquarters building and other tangible assets transferred at the closing, and a ceding commission in connection with the assumption reinsurance equal to 30 percent of the net unearned premium reserve at year-end 1992 for the policies being assumed, subject to a minimum ceding commission of $15 million. The companies' net unearned premium reserves for the policies being assumed were $54 million at Sept. 30, 1992.
 American Reliance Group, Inc. through its subsidiary insurer American Reliance Casualty Company, participates in a pooling arrangement with American Reliance Insurance Company and assumes 60 percent of the pooled insurance results. Accordingly, American Reliance Group, Inc. will receive 60 percent of the ceding commission for a minimum of $9 million in connection with the reinsurance transaction. In addition, as the owner of the headquarters building and the other tangible assets being transferred, American Reliance Group, Inc. will receive the $6 million to be paid for such assets.
 As post-closing consideration, the American Reliance companies will receive in the first quarter of 1994, an additional payment of 8 percent of the premiums written in 1993 on the assumed and related business, and in the first quarter of 1995, a profit participation payment based on the underwriting results in 1994 of such business.
 The board of directors of American Reliance Group, Inc. has as yet made no determination as to what distribution to stockholders will be made from the proceeds of the transaction. There can be no assurance as to the amount or timing of the consideration that stockholders may ultimately receive in connection with the transaction.
 Consummation of the transaction is subject to, among other conditions, receipt of regulatory approval from the New Jersey Department of Insurance and approval of the stockholders of American Reliance Group, Inc.
 /delval/
 -0- 12/28/92
 /CONTACT: Bruce W. Herrick, chairman and president, or Dennis M. Bandish, senior vp-finance of American Reliance, 609-896-1921/
 (ARI)


CO: American Reliance Group, Inc.; American Reliance Insurance Company;
 Vik Brothers International USA, Inc. ST: New Jersey IN: INS SU:


CC-JS -- PH020 -- 0095 12/28/92 13:55 EST
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Publication:PR Newswire
Date:Dec 28, 1992
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