Reliance Group Reaches Unicover Settlements

Reliance National Insurance Co.ompany%> says it has reached settlement agreements with various insurance and reinsurance companies to resolve outstanding issues relating to a workers' compensation insurance program created and managed by Unicover Managers, Inc.

The settlement agreements were reached with Reliance's retrocessional reinsurers, Sun Life Assurance Company of Canada, Phoenix Home Life Mutual Insurance Company, American Phoenix Life and Reassurance Company, Cologne Life Reinsurance Company and a majority of the insurance companies that purchased reinsurance from Reliance through the Unicover facility, the company said.

As a result of the settlements, Reliance Group expects to take an after-tax charge of approximately $100 million, to be reflected in its fourth quarter 1999 financial statements. Reliance Group previously disclosed these anticipated settlements and resultant charge in its third quarter 1999 Form 10-Q.

Saul Steinberg, chairman and chief executive officer of Reliance Group, said, "This is an important and positive development for Reliance. Although our legal position is strong and we believe we would ultimately win our case, this settlement is the right step for us to take. The alternative was a protracted arbitration proceeding and litigation. Settling now eliminates a significant lingering uncertainty, strengthens our position in the marketplace and paves the way to rebuild our capital."

The settlement agreements, which substantially terminate the Unicover facility in which Reliance Group's Reliance National unit was a fronting reinsurer, are subject to a number of conditions. The conditions include finalizing settlements with several additional insurance companies that purchased reinsurance from Reliance, as well as certain reinsurers and a reinsurance intermediary. The cost of these additional settlements is included in the after-tax charge of $100 million. Reliance Group expects to conclude the overall Unicover settlement this month.