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AMERICAN RELIANCE COMPANIES ENTER INTO DEFINITIVE ASSET PURCHASE AGREEMENT WITH VIK BROTHERS INSURANCE, INC. AND REVISE STORM RESULTS

 LAWRENCEVILLE, N.J., Feb. 12 /PRNewswire/ -- American Reliance Group, Inc. (AMEX: ARI) and its principal shareholder American Reliance Insurance Company announced today that they had entered into a definitive asset purchase agreement with Vik Brothers Insurance, Inc. with respect to an asset transfer and assumption reinsurance transaction.
 The Vik Brothers insurance group will assume all of the American Reliance companies' insurance business written after 1988, except their Florida business and New Jersey private passenger automobile business. The Vik Brothers insurance group will also assume certain non-insurance liabilities of the American Reliance companies and purchase certain assets, including the headquarters building located in Lawrenceville.
 At closing, which is anticipated to occur during the second quarter of 1993, the Vik Brothers insurance group will pay an initial consideration of approximately $21 million. Such consideration will consist of $6 million for the headquarters building and the other tangible assets transferred at closing, and approximately $15 million for the insurance business.
 As post-closing consideration, the American Reliance companies will receive a payment of 8 percent of the direct premiums written on the assumed business for the one-year period following closing and a payment of up to 3.5 percent of the direct premiums written on the assumed business for the second one-year period following closing.
 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 approximately $9 million in connection with the transfer of the insurance business and 60 percent of any post- closing consideration. 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. The transactions at closing will not have a material effect on shareholders' equity. In 1993 and thereafter American Reliance will have no significant insurance operations.
 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 transactions 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.
 American Reliance Group, Inc. and American Reliance Insurance Company also announced today that they had revised their estimate of pre-tax losses net of reinsurance incurred as a result of Hurricane Andrew from $80 million to $100 million. There can be no assurance that the American Reliance companies' current estimate of Hurricane Andrew losses will not increase in the future. American Reliance Group said it anticipates that it will report the results of operations for the full year 1992 and for the fourth quarter 1992 at the end of the month.
 In addition, the American Reliance companies have entered into reinsurance agreements effective as of Dec. 31, 1992, which will increase their statutory surplus by approximately $14 million.
 Commenting on the signing of the Definitive Agreement with Vik Brothers and the revision in the hurricane loss, Bruce W. Herrick, chairman and chief executive officer, said, "While we found it necessary to raise our estimate on the loss due to Hurricane Andrew by $20 million we believe that the reinsurance and our agreement with Vik Brothers Insurance, Inc. will provide American Reliance the resources necessary to continue the level of service to our policyholders and agents that has been our tradition."
 American Reliance Group, Inc., a property and casualty insurance holding company, specializes in providing insurance coverage in New Jersey, Pennsylvania, Delaware, Maryland and Virginia to small to medium-size businesses and individuals located primarily in rural and suburban locations.
 The Vik Brothers insurance group includes, among others, LMI Insurance Company and State Capital Insurance Company. The group specializes in habitational coverages, both commercial and personal, throughout the United States.
 /delval/
 -0- 2/12/93
 /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 Insurance, Inc. ST: New Jersey IN: INS SU:


MK-CC -- PH012 -- 6199 02/12/93 14:15 EST
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Publication:PR Newswire
Date:Feb 12, 1993
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