Bloomberg News
NEW YORK - Reliance Group Holdings Inc., the troubled insurer controlled by financier Saul Steinberg, said it has agreed in principal to sell its accident and health business to Combined Insurance Company of America.
The sale, at a price still to be negotiated, continues the dismantling of the New York insurer, which has said it probably would not be able to repay $735.1 million of debt due at the end of the month and might seek bankruptcy protection.
A plan to sell out to Leucadia National Corp., an investment company with a bank charter that manages the finances of several insurers that no longer write new business, fell through last month when the bank said it was unwilling to proceed with its $1.03 billion deal.
At the time, analysts said the move suggested that Reliance's assets were worse than Leucadia had thought, or that Leucadia could not buy affordable reinsurance to cover Reliance's spiraling losses.
Reliance said Thursday that premiums from its accident and health business represented less than 10% of the $2.5 billion in premiums it earned last year. Combined Insurance is a unit of Aon Corp., the world's second-largest insurance brokerage.
Reliance has been struggling with widening losses due to falling prices for commercial property and casualty insurance. Its second-quarter net loss increased to $504.5 million, or $4.40 a share, from $156.9 million, or $1.38 a share, a year ago.
The company is in talks with regulators and creditors to refinance its debt.
Reliance has already sold most of its other insurance units, including its surety bond business and the renewal rights to its reinsurance, financial, and specialty units.
The company also is seeking buyers for several other units including RCG Technology Inc., an information technology provider; Cybercomp, a company that uses the Internet to write workers' compensation business; and its international business.
