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ITT INVESTS $680 MILLION IN ITT HARTFORD SUBSIDIARY; COMPANY RECORDS THIRD QUARTER CHARGE OF $582 MILLION TO STRENGTHEN RESERVES

ITT INVESTS $680 MILLION IN ITT HARTFORD SUBSIDIARY; COMPANY RECORDS THIRD
 QUARTER CHARGE OF $582 MILLION TO STRENGTHEN RESERVES
 NEW YORK, Sept. 30 /PRNewswire/ -- ITT Corporation (NYSE: ITT) announced today that it will invest $680 million in the ITT Hartford Insurance Group. This investment decision coincides with the reorganization of this subsidiary's reinsurance and surplus lines businesses and is a major part of ITT's continuing program to enhance cash flow and shareholder value.
 In order to be positioned for growth, ITT Hartford Group will add $594 million after-tax to reserves to fund expected loss developments in surplus lines and reinsurance business written before 1986, by the Cameron and Colby group based in Boston. ITT Hartford has also added reserves of $165 million after-tax for expected legal defense costs associated with environmental-related claims. In addition, ITT Hartford will realize $177 million after-tax in capital gains in the third quarter. In connection with these actions, ITT will record a net third quarter charge against earnings of $582 million, or $4.41 per share fully diluted.
 The ITT investment will be partially in cash -- $300 million -- with $380 million in Alcatel Alsthom stock. The Alcatel Alsthom stock represents a portion of the total ITT holdings in that company, which ITT has committed to hold until July 1997.
 Rand V. Araskog, chairman, president and chief executive of ITT said, "This decision to invest in ITT Hartford is being made for two reasons. First, to protect the ability of ITT Hartford, and therefore ITT, to grow profits and achieve return on equity objectives the corporation has set. Second, ITT Hartford's property and casualty business, excluding the pre-1986 Cameron and Colby portfolio, has performed well, generating returns that meet ITT's return on equity objectives for the Hartford," Mr. Araskog said.
 As part of the reorganization, Cameron and Colby which includes the pre-1986 business, will be transferred to ITT Corporation. This business will be managed as an investment operation until claims have been resolved. Through this action ITT will enable its already strong insurance business to continue to grow without the distraction of the pre-1986 Cameron and Colby business.
 "We plan to strengthen our presence in those markets that we believe have significant growth and profit potential for ITT Hartford, which represents approximately half of ITT's total sales and revenues and total book value of the Corporation," said Mr. Araskog. "ITT Hartford will consolidate its reinsurance operations making it the eighth largest reinsurance company in North America. ITT Hartford is already the ninth largest property and casualty insurance company and 18th largest life insurance operation in North America and has total assets of about $40 billion."
 Current customers of Cameron and Colby will be offered continued insurance coverage through ITT Hartford Reinsurance Management Company and ITT Hartford Specialty Company. Considerable operational efficiencies will be realized from this reorganization.
 Mr. Araskog commented that the addition to reserves for Cameron and Colby reflects ITT Hartford's response to provide for adverse developments on Cameron & Colby's excess and surplus lines and reinsurance business written before 1986. During the last six years, ITT Hartford has been taking charges to its earnings for this pre-1986 business written by Cameron & Colby. In 1985 that business was completely re-underwritten, repriced, and the use of external reinsurance was dramatically reduced. The business written since that time at Cameron & Colby has been profitable. Recent loss developments on the pre-1986 business, particularly associated with asbestos and pollution-related claims and weaknesses in reinsurance markets, require that these adjustments be made now. Because of ITT's financial strength it was able to resolve this issue so that ITT Hartford can more effectively pursue profitable growth opportunities.
 In making this announcement Mr. Araskog emphasized that ITT's earlier estimates of $70 million of after-tax losses from Hurricane Andrew remain unchanged. The loss from Hurricane Iniki will be an additional $25 million. While the hurricane related losses will impact ITT's third quarter results, they are not related to this decision.
 -0- 09/30/92
 CONTACT: Jim Gallagher of ITT, 212-258-1261
 (ITT) CO: ITT CORPORATION; ITT HARTFORD INSURANCE GROUP IN: INS ST: NY,CT -- NY097 -- X732 09/30/92
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Publication:PR Newswire
Date:Sep 30, 1992
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