Chicago, May 26 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR)
announced that the ratings of Reliance Group Holdings, Inc. (Reliance) and its
subsidiaries remain on Rating Watch-Uncertain. This action follows today's
announcement that the company has entered into a definitive agreement to be
acquired by Leucadia National Corporation (Leucadia). The company's current
ratings are listed below.
If completed, DCR believes that the acquisition will provide Reliance with
greater flexibility in refinancing approximately $500 million of outstanding
debt that matures in the second half of 2000 given Leucadia's more favorable
balance sheet position and financial strength. Leucadia currently has a
senior debt rating of 'BBB+' (Triple-B-Plus), which has been placed on Rating
Watch-Negative.
However, there is significant uncertainty regarding Leucadia's future
financial and operating strategy for Reliance and its subsidiaries.
Additionally, if the transaction is not completed, there would be significant
negative implications for Reliance's ratings. DCR expects to meet with
Leucadia management in the near term to address these issues more fully before
making a final ratings assessment.
Reliance has primary operations in property/casualty insurance and
information technology consulting. The company reported consolidated GAAP
assets of $14.2 billion and shareholders' equity of $1.1 billion at
March 31, 2000.
The pending sale of REL's surety operations to Travelers Property Casualty
Corp. for $580 million is not anticipated to be affected by this announcement.
This sale will help to significantly enhance the company's capital base
following several charges in 1999.
For additional information, visit DCR's Web site at http://www.dcrco.com
(Quick Search: Reliance). DCR's research is also available on Bloomberg at
DCR, FirstCall's BondCall Direct/Research Direct at
http://www.firstcall.com and Multex at
http://www.multex.com, as well as through other third-party
providers.
Reliance Group Ratings
All Ratings Are On Rating Watch--Uncertain
Debt Ratings Current Ratings
Reliance Group Holdings, Inc.
Senior Debt 'BB+' (Double-B-Plus)
Subordinated Debt 'BB' (Double-B)
Claims Paying Ability Ratings
Reliance Insurance Company 'A-' (Single-A-Minus)
Reliance National Insurance Company 'A-' (Single-A-Minus)
Reliance National Indemnity Company 'A-' (Single-A-Minus)
United Pacific Insurance Company 'A-' (Single-A-Minus)
Reliance Insurance Company of Illinois 'A-' (Single-A-Minus)
Reliance Insurance Company of California 'A-' (Single-A-Minus)
Reliance National Insurance Co. of New York 'A-' (Single-A-Minus)
United Pacific Insurance Company of New York 'A-' (Single-A-Minus)
Reliance National de Mexico S.A. 'A-' (Single-A-Minus)
Reliance Nacional Compania
Argentina de Seguros S.A. 'A-' (Single-A-Minus)
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
James B. Auden, CFA, 312-368-3146,
auden@dcrco.com, or Keith M. Buckley, CFA, 312-368-3121,
buckley@dcrco.com, both of DCR
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