February 27, 2005 by Canadian Underwriter
Reliance Insurance Group, which was placed in liquidation in the U.S. in 2001, has made a settlement with Pennsylvania Insurance Commissioner Diane Koken. Koken filed suit against the parent Reliance Group Holdings’ CEO Saul Steinberg and other directors and officers for mismanagement in 2002.
Essentially the settlement is a means to ensure there are funds left under the Reliance defendants’ directors’ and officers’ (D&O) policies, with significant sums already having been paid in defense costs. The settlement will see Reliance’s insurers pay US$85 million, with US$34 million going to Reliance’s creditors and US$51 reserved for policyholders. Other litigation brought by the Pennsylvania Insurance Department has already brought in US$45 million to go to former policyholders of the insolvent company.
Insurers on the hook for the US$85 million include certain Lloyd’s underwriters, Greenwich Insurance Co. and Clarendon National Insurance Co.
The Canadian branch of Reliance was also ordered to be wound up in 2001.