AMERICAN RELIANCE GROUP FILES WITH STATE TO TRANSFER NEW JERSEY PERSONAL AUTO INSURANCE BUSINESS TO ITS MUTUAL PARENT
AMERICAN RELIANCE GROUP FILES WITH STATE TO TRANSFER
NEW JERSEY PERSONAL AUTO INSURANCE BUSINESS TO ITS MUTUAL PARENT
LAWRENCEVILLE, N.J., Nov. 12 /PRNewswire/ -- American Reliance Group, Inc. (AMEX: ARI) announced today that it has filed a plan with the New Jersey Department of Insurance to transfer its New Jersey personal auto insurance business to its parent mutual company, American Reliance Insurance Company.
Under the terms of the plan, the mutual company would acquire an inactive insurance subsidiary of American Reliance Group. American Reliance Group shares held by the mutual with a current market value of approximately $4.5 million, would be exchanged for all the shares of the subsidiary with an equal book value. American Reliance shares acquired in the transaction would be held in its treasury, serving to improve book value and earnings per share by reducing the number of shares outstanding. The company said it believes it will receive the necessary approvals from the New Jersey Insurance Department before the end of 1991.
New Jersey personal auto insurance constitutes about 5 percent of the company's annual premium revenue. In the future, personal auto insurance would be written by a subsidiary of the mutual and excluded from the pooling arrangement of certain business of the company and the mutual. The portion of assessments from the New Jersey Fair Automobile Insurance Reform Act (FAIRA) covering personal auto insurance also would be borne by the mutual company.
"The move is aimed at improving our investment value by removing a portion of our business that continues to be under severe profit pressure," said Bruce W. Herrick, chairman and president of American Reliance Group. "It has become increasingly difficult to be profitable in the personal auto insurance business in the state of New Jersey. We believe transferring this business to the mutual will be in the best interest of our policyholders and shareholders."
American Reliance Group, Inc., a regional property and casualty insurance holding company, specializes in providing insurance coverage for small to medium-size businesses and individuals in rural and suburban locations.
/CONTACT: Dennis M. Bandish, senior vp-finance of American Reliance, 609-895-0595/
(ARI) CO: American Reliance Group, Inc. ST: New Jersey IN: INS SU: RCN KA-MK -- PH035 -- 3597 11/12/91 16:10 EST