<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ To _____
Commission File Number 1-8278
RELIANCE GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3082071
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 909-1100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
As of May 1, 1995, 113,201,000 shares of common stock of Reliance Group
Holdings, Inc. were outstanding.
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
I N D E X
Page
No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Operations for the Quarters Ended
March 31, 1995 and 1994 (Unaudited).......................... 2
Consolidated Balance Sheet at March 31, 1995 (Unaudited) and
December 31, 1994............................................ 3
Consolidated Statement of Changes in Shareholders' Equity for the
Quarter Ended March 31, 1995 (Unaudited)..................... 4
Consolidated Condensed Statement of Cash Flows for the Quarters
Ended March 31, 1995 and 1994 (Unaudited).................... 5
Notes to Consolidated Financial Statements (Unaudited)........... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................ 8
PART II. OTHER INFORMATION, AS APPLICABLE................................ 14
SIGNATURES............................................................... 15
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Quarter Ended March 31 1995 1994
- -----------------------------------------------------------------
(In thousands, except per-share amounts)
Revenues:
Premiums earned............................... $604,666 $685,885
Net investment income......................... 69,378 62,650
Gain on sales of investments.................. 8,286 2,037
Other......................................... 38,976 32,390
-------- --------
721,306 782,962
-------- --------
Claims and expenses:
Policy claims and settlement expenses......... 323,755 368,574
Policy acquisition costs and other insurance
expenses.................................... 295,404 358,804
Interest...................................... 22,378 21,821
Other operating expenses...................... 51,224 43,543
-------- --------
692,761 792,742
-------- --------
Income (loss) before income taxes, minority
interests and equity in investee company.... 28,545 (9,780)
Income tax (provision) benefit................ (8,000) 2,700
Minority interests............................ (759) (854)
Equity in investee company.................... 1,754 2,285
-------- --------
Net income (loss)............................. $ 21,540 $ (5,649)
======== ========
Per-share information:
Net income (loss)............................. $ 0.19 $ (0.05)
======== ========
Average number of common and common equivalent
shares outstanding.......................... 114,805 112,086
See notes to consolidated financial statements
-2-
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31 December 31
ASSETS 1995 1994
- ------------------------------------------------------------------------------
(In thousands, except per-share amount)
Marketable securities:
Fixed maturities held for investment - at
amortized cost (quoted market $1,121,050 and
$1,053,551)..................................... $1,184,285 $1,166,020
Fixed maturities available for sale - at quoted
market (amortized cost $1,881,784 and
$1,945,919)..................................... 1,826,708 1,839,312
Equity securities - at quoted market (cost
$496,518 and $482,529).......................... 601,891 564,636
Short-term investments............................ 171,676 229,906
Cash................................................ 63,760 48,977
Premiums and other receivables...................... 1,306,783 1,262,554
Reinsurance recoverables............................ 3,078,531 2,928,533
Federal and foreign income taxes, including deferred
taxes............................................. 51,286 84,899
Investments in real estate - at cost, less
accumulated depreciation.......................... 290,575 291,666
Investment in investee company...................... 145,699 148,776
Deferred policy acquisition costs................... 187,939 181,938
Excess of cost over fair value of net assets
acquired, less accumulated amortization........... 266,929 269,424
Other assets........................................ 384,973 352,912
---------- ----------
$9,561,035 $9,369,553
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------
Unearned premiums................................... $1,324,966 $1,288,454
Unpaid claims and related expenses.................. 5,935,988 5,809,546
Accounts payable and accrued expenses............... 668,206 700,380
Reinsurance ceded premiums payable.................. 301,010 291,844
Term loans and short-term debt...................... 132,547 141,355
Debentures and notes................................ 730,601 730,596
Minority interests - redeemable preferred stock of a
subsidiary........................................ 20,740 20,628
---------- ----------
9,114,058 8,982,803
---------- ----------
Contingencies and commitments
Shareholders' equity:
Common stock, par value $.10 per share, 225,000
shares authorized, 113,190 and 113,127 shares
issued and outstanding.......................... 11,319 11,313
Additional paid-in capital........................ 534,472 533,979
Retained earnings (deficit)....................... (97,994) (110,479)
Net unrealized gain (loss) on investments......... 19,529 (27,881)
Net unrealized loss on foreign currency
translation..................................... (20,349) (20,182)
---------- ----------
446,977 386,750
---------- ----------
$9,561,035 $9,369,553
========== ==========
See notes to consolidated financial statements
-3-
<PAGE>
<TABLE>
<CAPTION>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Net
Unrealized
Net Loss on
Additional Retained Unrealized Foreign
Common Paid-In Earnings Gain (Loss) on Currency Shareholders'
Stock Capital (Deficit) Investments Translation Equity
- ------------------------------------------------------------------------------------------------------
(In thousands, except per-share amount)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995.. $11,313 $533,979 $(110,479) $(27,881) $(20,182) $386,750
Issuance of common stock.. 6 235 241
Transactions of investee
company and other....... 258 (2,473) (2,215)
Net income................ 21,540 21,540
Dividends ($.08 per share) (9,055) (9,055)
Appreciation after
deferred income taxes... 49,883 49,883
Foreign currency
translation............. (167) (167)
------- -------- --------- -------- -------- --------
Balance, March 31, 1995... $11,319 $534,472 $(97,994) $19,529 $(20,349) $446,977
======= ======== ======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Quarter Ended March 31 1995 1994
- ------------------------------------------------------------------------------
(In thousands)
CASH FLOWS (USED BY) FROM OPERATING ACTIVITIES...... $(64,531) $ 67,749
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of fixed maturities available
for sale.......................................... 128,922 63,463
Proceeds from sales of fixed maturities held for
investment........................................ 14,419 5,021
Proceeds from redemptions of fixed maturities
available for sale................................ 4,224 6,777
Proceeds from redemptions of fixed maturities held
for investment.................................... 439 9,035
Proceeds from sales of equity securities............ 64,415 119,928
Decrease in short-term investments - net............ 55,494 193,368
Purchases of fixed maturities available for sale.... (56,821) (141,732)
Purchases of fixed maturities held for investment... (33,965) (229,619)
Purchases of equity securities...................... (59,848) (80,335)
Other - net......................................... (20,343) (18,693)
-------- ---------
96,936 (72,787)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in term loans.............................. 69 -
Increase (decrease) in short-term debt - net........ (6,257) 1,569
Repayments of term loans............................ (2,620) (27,983)
Issuance of common stock............................ 241 6,997
Dividends........................................... (9,055) (9,015)
-------- ---------
(17,622) (28,432)
-------- ---------
Increase (decrease) in cash......................... 14,783 (33,470)
Cash, beginning of period........................... 48,977 94,114
-------- ---------
Cash, end of period................................. $ 63,760 $ 60,644
======== =========
Supplemental disclosures of cash flow information:
Interest paid....................................... $ 2,200 $ 1,700
======== =========
Income taxes refunded............................... $ 1,100 $ 10,300
======== =========
See notes to consolidated financial statements
-5-
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments (consisting of normal recurring accruals
only) considered necessary to present fairly the financial position at March 31,
1995, and the results of operations, changes in shareholders' equity and cash
flows for all periods presented. The results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
any other interim period or for the entire year.
For a summary of significant accounting policies (which have not changed from
December 31, 1994) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
2. EQUITY IN INVESTEE COMPANY
Equity income in Zenith National Insurance Corp. was $1.8 million for the
quarter ended March 31, 1995 compared to $2.3 million in the corresponding 1994
period.
Summarized financial information for Zenith National Insurance Corp. is as
follows:
Quarter Ended March 31 1995 1994
- -----------------------------------------------------------------------------
(In thousands, except per-share amounts)
Revenues........................................ $149,562 $138,252
Net income...................................... 6,900 8,200
Net income per share............................ 0.36 0.43
-6-
<PAGE>
3. REINSURANCE
The reconciliation of property and casualty insurance direct premiums to net
premiums is as follows (in thousands):
Quarter Ended March 31
------------------------------------------
1995 1994
------------------------------------------
Premiums Premiums Premiums Premiums
Written Earned Written Earned
--------- --------- --------- ---------
Direct........................... $ 683,908 $ 681,275 $ 711,679 $ 678,463
Assumed.......................... 111,369 81,865 89,931 79,306
Ceded............................ (334,358) (311,335) (305,252) (297,115)
--------- --------- --------- ---------
Net Premiums..................... $ 460,919 $ 451,805 $ 496,358 $ 460,654
========= ========= ========= =========
The reconciliation of property and casualty insurance gross policy claims and
settlement expenses to net policy claims and settlement expenses is as follows
(in thousands):
Quarter Ended March 31
----------------------
1995 1994
--------- ---------
Gross.................................................. $ 510,470 $ 589,730
Reinsurance recoveries................................. (200,004) (241,350)
--------- ---------
Net policy claims and settlement expenses.............. $ 310,466 $ 348,380
========= =========
-7-
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
================================================================================
OVERVIEW
The Company had income from operations, before gain on sales of investments, of
$16.2 million ($.14 per share) in the first quarter of 1995 compared to a loss
from operations of $7.0 million ($.06 per share) in the corresponding 1994
period. The improvement in operating income reflects significantly stronger
underwriting results in property and casualty insurance operations and lower
catastrophe losses. Net income in the first quarter of 1995 was $21.5 million
($.19 per share) which included an after-tax gain on sales of investments of
$5.4 million ($.05 per share), compared to a net loss in the first quarter of
1994 of $5.6 million ($.05 per share) which included an after-tax gain on sales
of investments of $1.3 million ($.01 per share).
PROPERTY AND CASUALTY INSURANCE OPERATIONS
Net premiums written and net premiums earned were $460.9 million and $451.8
million in the first quarter of 1995 compared to $496.4 million and $460.7
million in the corresponding 1994 period. The decline in net written and net
earned premiums in 1995 reflects lower writings in workers' compensation
resulting from the trend towards high deductible insurance and captive insurance
programs, both of which result in the recognition of lower premiums and lower
losses. Workers' compensation premiums also reflect an increase in return
premiums on retrospectively rated policies due to improved loss experience. The
decline in workers' compensation net premiums written was partially offset by
growth in general liability, reinsurance, surety and inland marine lines of
business.
The underwriting loss for the first three months of 1995 was $5.2 million
compared to $44.4 million in the corresponding 1994 period. The improved
underwriting results reflect lower catastrophe losses which were $3.4 million
($7.2 million before reinsurance) in the first quarter of 1995 compared to $28.7
million ($73.4 million before reinsurance) in the corresponding 1994 period.
Catastrophe losses in the first quarter of 1994 arose primarily from the January
1994 California earthquake. The underwriting results in 1995 also reflect
improved loss experience in workers' compensation and record underwriting
profits in the surety line of business of $11.4 million compared to $6.1 million
in the first three months of 1994. The combined ratio (calculated on a GAAP
basis), after policyholders' dividends was 101.4% in the first three months of
1995 compared to 109.1% in the corresponding 1994 period. Excluding the effects
of catastrophes, the combined ratio was 100.7% in the first quarter of 1995
compared to 102.9% in the first quarter of 1994.
-8-
<PAGE>
PROPERTY AND CASUALTY INSURANCE INVESTMENT RESULTS
Net investment income of the property and casualty insurance operations
increased to $62.4 million during the three-month period ending March 31, 1995
from $56.0 million in the corresponding 1994 period. This increase resulted from
growth in the size of the fixed maturity investment portfolio and, to a lesser
extent, the increase in interest rates.
Gain on sales of investments was $8.1 million in the first quarter of 1995 and
$3.2 million in the corresponding 1994 period.
TITLE INSURANCE OPERATIONS
Premiums and fees in the first quarter of 1995 were $152.9 million compared to
$225.2 million in the corresponding quarter of 1994. This decrease resulted from
significantly lower levels of residential refinancing activity, as well as
declines in resale and new home sale activity. While the first quarter is
traditionally the weakest in the title insurance industry, in 1994 that seasonal
weakness was more than offset by strong residential refinancing activity.
Partially offsetting this decline in 1995 premiums and fees from residential
transactions was an increase in commercial real estate activity where operating
margins are generally higher.
As a result of lower agency revenues, agency commissions declined to $75.2
million during the three-month period ended March 31, 1995 from $110.0 million
in the corresponding 1994 period. Other expenses were $75.6 million in the first
quarter of 1995 compared to $93.8 million in the corresponding 1994 period. The
decline in other expenses reflects various cost control programs, including
staff reductions, undertaken by the Company. The expense ratio of the title
insurance operations (which includes agency commissions) was 98.2% in the first
quarter of 1995 compared to 89.9% in the corresponding 1994 period. The increase
in the expense ratio resulted from the decline in premiums. As a result of lower
premiums, the provision for claim losses declined to $13.3 million in the first
three months of 1995 from $20.2 million in the first three months of 1994.
INVESTMENT PORTFOLIO
At March 31, 1995, the Company's investment portfolio aggregated $3.73 billion
(at cost), of which 13% was invested in equity securities. The Company seeks to
maintain a diversified and balanced fixed maturity portfolio representing a
broad spectrum of industries and types of securities. At March 31, 1995, no one
issuer comprised more than 2.5% of the fixed maturity and short-term investment
portfolio. Furthermore, the Company holds virtually no investments in commercial
real estate mortgages in its investment portfolio. Purchases of fixed maturity
securities are researched individually based on in-depth analysis and objective
predetermined investment criteria and the portfolio is managed to achieve a
proper balance of safety, liquidity and investment yields.
-9-
<PAGE>
The Company's fixed maturity portfolio consists of investment grade securities
(those rated "BBB" or better by Standard & Poor's) and, to a lesser extent,
non-investment grade and non-rated securities. The risk of default is generally
considered to be greater for non-investment grade securities, when compared to
investment grade securities, since these issues may be more susceptible to
severe economic downturns. At March 31, 1995, the carrying values of
non-investment grade securities and securities not rated by Standard & Poor's
were $330.8 million (10% of the fixed income portfolio) and $118.3 million (4%
of the fixed income portfolio), respectively. Substantially all of the Company's
non-investment grade and non-rated securities are classified as available for
sale and, accordingly, are carried at market value.
OTHER OPERATIONS
The Company's consulting and technical services operations provide services in
the information technology and energy and environmental fields. Revenues for
these operations were $37.8 million in the first quarter of 1995 compared to
$31.5 million in the corresponding 1994 period. The increase in revenues
resulted from growth in the information technology business. Operating expenses
incurred by these operations were $36.8 million in the first three months of
1995 compared to $30.7 million in the corresponding 1994 period. Revenues and
expenses of these operations are included in other revenues and other operating
expenses in the accompanying statement of operations.
At March 31, 1995, the Company's real estate holdings had a carrying value of
$290.6 million, which includes 11 shopping centers with an aggregate carrying
value of $128.9 million, office buildings and other commercial properties, with
an aggregate carrying value of $100.9 million, and undeveloped land with a
carrying value of $60.8 million.
INTEREST EXPENSE
Interest expense increased to $22.4 million in the first quarter of 1995 from
$21.8 million in the corresponding 1994 period reflecting increased interest
rates on amounts borrowed under the Company's revolving credit facility.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds consist of dividends, advances and net
tax payments from its subsidiaries. These net payments aggregated $24.5 million
for the three months ended March 31, 1995. The Company's ability to receive cash
dividends has depended upon and continues to depend upon the dividend paying
ability of its insurance subsidiaries. The Insurance Law of Pennsylvania, where
Reliance Insurance Company (the Company's principal property and casualty
insurance subsidiary) is domiciled, limits the maximum amount of dividends which
may be paid without approval by the Pennsylvania Insurance Department. Under
such law, Reliance Insurance Company may pay dividends during the year equal to
the greater of (a) 10% of the preceding year-end policyholders' surplus or (b)
the preceding year's statutory net
-10-
<PAGE>
income, but in no event to exceed the amount of unassigned funds, which are
defined as "undistributed, accumulated surplus including net income and
unrealized gains since the organization of the insurer". In addition, the
Pennsylvania law specifies factors to be considered by the Pennsylvania
Insurance Department to allow it to determine that statutory surplus after the
payment of dividends is reasonable in relation to an insurance company's
outstanding liabilities and adequate for its financial needs. Such factors
include the size of the company, the extent to which its business is diversified
among several lines of insurance, the number and size of risks insured, the
nature and extent of the company's reinsurance and the adequacy of the company's
reserves. The maximum dividend permitted by law is not indicative of an
insurer's actual ability to pay dividends, which may be constrained by business
and regulatory considerations, such as the impact of dividends on surplus, which
could affect an insurer's ratings, competitive position, the amount of premiums
that can be written and the ability to pay future dividends. Furthermore, the
Pennsylvania Insurance Department has broad discretion to limit the payment of
dividends by insurance companies.
In addition, under California Insurance law, Reliance Insurance Company is
deemed to be a "commercially domiciled" California insurer and therefore subject
to the dividend payment laws of California. The California laws which limit the
maximum amount of dividends which may be paid without approval by the California
Insurance Department and specify the factors to be considered by the California
Insurance Department to determine if the payment of the dividend is reasonable
in relation to an insurance company's outstanding liabilities and financial
needs are substantially the same as the laws of Pennsylvania. As in
Pennsylvania, the California Insurance Department has broad discretion to limit
the payment of dividends by insurance companies.
Total common and preferred stock dividends paid by Reliance Insurance Company
during the first three months of 1995 were $20.7 million ($20.1 million for
common stock). During 1995, $124.5 million would be available for dividend
payments by Reliance Insurance Company under Pennsylvania and California law.
The Company believes such amount, together with net tax payments from its
subsidiaries, will be sufficient to meet its cash needs.
There is no assurance that Reliance Insurance Company will meet the tests in
effect from time to time under Pennsylvania or California law for the payment of
dividends without prior Insurance Department approvals or that any requested
approvals will be obtained. However, Reliance Insurance Company has been advised
by the California Insurance Department that any required prior approval will be
based on the financial stability of the Company. Reliance Insurance Company has
also been advised by the Pennsylvania Insurance Department that any required
prior approval will be based upon a solvency standard and will not be
unreasonably withheld. Any significant limitation of Reliance Insurance
Company's dividends would adversely effect the Company's ability to service its
debt and to pay dividends on its common stock.
Reliance Insurance Company collects and invests premiums prior to payment of
associated claims, which are generally made months or years subsequent to the
receipt
-11-
<PAGE>
of premiums. For the three months ended March 31, 1995, Reliance Insurance
Company utilized $45.8 million of cash flow from operating activities. Cash flow
from operating activities is traditionally low during the first quarter of the
year, reflecting the increase in accounts receivable and payments of certain
expenses, such as premium taxes and contingent commissions of the property and
casualty insurance operations, which are accrued during the previous year.
Reliance Insurance Company carefully monitors its cash, short-term investments
and marketable securities to maintain adequate balances for the timely payment
of claims and other operating requirements. At March 31, 1995, Reliance
Insurance Company had $228.8 million of cash and short-term investments.
For the three months ended March 31, 1995, the Company used $64.5 million of
cash flow from operating activities while, in the comparable 1994 period, the
Company generated $67.7 million of operating cash flow. The decline in operating
cash flow reflects higher ceded premium payments and higher payments for policy
claims and related expenses.
The Company generated $96.9 million of cash flow from investing activities for
the three months ended March 31, 1995. For the three months ended March 31,
1994, the Company used $72.8 million of cash flow for investing activities. Net
sales of marketable securities generated $117.3 million of cash flow in 1995
while net purchases of marketable securities utilized $54.1 million of cash flow
in the corresponding 1994 period. During the first three months of 1995 and 1994
the Company sold fixed maturities held for investment with an amortized cost of
$15.0 million and $4.8 million. These sales were in response to a significant
deterioration in the issuers' creditworthiness.
The Company used $17.6 million and $28.4 million of cash flow from financing
activities for the three months ended March 31, 1995 and 1994, respectively.
Cash was used principally for the reduction of debt and payment of dividends
which, in the 1994 period, was partially offset by the issuance of $7.0 million
of common stock.
The Company has a revolving credit facility with various banks providing for
aggregate maximum outstanding borrowings of $100 million. At March 31, 1995,
borrowings aggregating $40.0 million were outstanding under this facility. On
April 26, 1995, the Company extended the revolving credit facility through March
31, 2000 from December 31, 1998. In addition, the Company increased term loan
borrowings to $137.5 million from $62.5 million and extended the maturity dates
of the term loan borrowings through March 31, 2000. The additional $75 million
of borrowings under the term loan were used to redeem all of the outstanding
redeemable preferred stock of Reliance Insurance Company ($24.0 million) and
will be used to redeem $25.0 million of the Company's 10.36% and $25.0 million
of 9.48% senior reset notes, which may include a portion of the notes currently
held by Reliance Insurance Company. In connection with these transactions, the
Company will incur an after-tax extraordinary loss of approximately $3.4 million
in the second quarter of 1995.
-12-
<PAGE>
The National Association of Insurance Commissioners has adopted a risk-based
capital requirement for the property and casualty insurance industry, effective
in 1995, based on 1994 annual statutory financial statements. Risk-based capital
refers to the determination of the amount of statutory capital required for an
insurer based on the risks assumed by the insurer (including, for example,
investment risks, credit risks relating to reinsurance recoverables and
underwriting risks) rather than just the amount of net premiums written by the
insurer. A formula that applies prescribed factors to the various risk elements
in an insurer's business is used to determine the minimum statutory capital
requirement for the insurer. An insurer having less statutory capital than the
formula calculates would be subject to varying degrees of regulatory
intervention, depending on the level of capital inadequacy. All of the Company's
statutory insurance companies have statutory capital in excess of the minimum
required risk-based capital.
Maintaining appropriate levels of statutory surplus is considered important by
the Company's management, state insurance regulatory authorities and the
agencies that rate insurers' claims-paying abilities and financial strength.
Failure to maintain certain levels of statutory capital and surplus could result
in increased scrutiny or, in some cases, action taken by state regulatory
authorities and/or downgrades in an insurer's ratings.
-13-
<PAGE>
RELIANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended March
31, 1995.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RELIANCE GROUP HOLDINGS, INC.
-----------------------------
(Registrant)
Date: May 12, 1995 /s/ George E. Bello
--------------- -----------------------------
George E. Bello
Executive Vice President and Controller
(Chief Accounting Officer)
-15-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
Exhibit 27
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet and the Consolidated Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 1,826,708
<DEBT-CARRYING-VALUE> 1,184,285
<DEBT-MARKET-VALUE> 1,121,050
<EQUITIES> 601,891
<MORTGAGE> 0
<REAL-ESTATE> 290,575
<TOTAL-INVEST> 4,075,135
<CASH> 63,760
<RECOVER-REINSURE> 3,078,531
<DEFERRED-ACQUISITION> 187,939
<TOTAL-ASSETS> 9,561,035
<POLICY-LOSSES> 5,935,988
<UNEARNED-PREMIUMS> 1,324,966
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 863,148
0
0
<COMMON> 11,319
<OTHER-SE> 435,658
<TOTAL-LIABILITY-AND-EQUITY> 9,561,035
604,666
<INVESTMENT-INCOME> 69,378
<INVESTMENT-GAINS> 8,286
<OTHER-INCOME> 38,976
<BENEFITS> 323,755
<UNDERWRITING-AMORTIZATION> 295,404
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 28,545
<INCOME-TAX> (8,000)
<INCOME-CONTINUING> 21,540
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,540
<EPS-PRIMARY> $0.19
<EPS-DILUTED> $0.00
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
