ENFORCE34262

• Permit No: C1981041
• IBM Index Class Name: Enforcement
• Doc Date: 10/16/2001
• Doc Name: RELIANCE-FRONTIER
• Violation No.: CV2000010
• Media Type: D
• Archive: No

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Subject: Reliance/Frontier
Date: 10/16/01
Reliance
The Pennsylvania Insurance Commission requested and the Commonwealth Court
granted their request to place Reliance Insurance Company into rehabilitation
on May 29, 2001. Included in the Order of Rehabilitation were the following
companies: Reliance Insurance Company; Reliance Insurance Company of
Illinois; Reliance Direct Insurance Company; Reliance Surety Company; Reliance
National Insurance Company; Reliance Universal Insurance Company, Inc.;
Reliance National Indemnity Company; Reliance Lloyds; United Pacific Insurance
Company of New York; and United Pacific Insurance Company.
On October 3, 2001, the Pennsylvania Insurance Commission sought, and a
Commonwealth Court approved, an order of liquidation for Reliance and its
operating companies. Normally this would require bond replacement, but a
review of a recent lOQ SEC Report of Travelers Property Casualty Corp.
revealed that Travelers acquired the surety business of Reliance Group
Holdings on May 31, 2000, for $580 million. This includes Reliance and its
operating companies, including United Pacific.
Kevin Hughes is an Attorney for Travelers (860(954-2646). According to Kevin,
Travelers Property Casualty Corp. did purchase the Reliance surety business.
He said that they have submitted a draft assumption certificate to the PA
Insurance Commissioner for approval. If approved, they will provide notices
to the principals (coal companies), but only to the obligees (regulatory
authorities, etc.), upon request. He said that they hope to have the approval
next week and begin mailing the notices shortly thereafter. By issuing the
assumption certificate, they hope to avoid having to issue replacement bonds.
Kevin said that if offices can provide him an Excel listing of all outstanding
Reliance/United Pacific bonds showing the Bond ID Number, Issue Date and Bond
Amount, he could tell you if the bond is to be assumed by Travelers. You can
e-mail this information to him at: [e-mail]
Frontier
Travelers lOQ SEC Report also stated that during the third quarter of 2001, it
purchased the renewal rights to a portion of Frontier Insurance Group's .
environmental and certain classes of surety businesses. Spiro Bantis is Chief
Counsel for Gulf Insurance Company, an operating company of Travelers.
According to Mr. BanCis, Gulf Insurance Company has acquired the renewal
rights to some o£ Frontier's surety business. As such, Gulf has the ability
to replace Frontier as surety on various types of bonds. Mr. Bantis said that
Gulf has already replaced Frontier on some surety bonds. They do "not" have
to wait until the bonds come up for renewal. Mr. Bantis said that the
company or regulatory authority should contact the bonding agent to see if
Frontier has already been replaced. If they have not been, the company can
request that they start the process by contacting the Gulf Underwriting Team.
If the bonding agent has any questions, they should contact Gulf Insurance
Company.
If you need to talk Co Spiro Bantis, Chief Counsel, Travelers, his phone
number is [phone]. He coordinated Travelers' acquisition of the
renewal rights to a portion of Frontier's surety business.
As mentioned above, Gulf Insurance Company is the operating company of
Travelers that purchased those rights. Any questions about replacing Frontier
surety bonds with Gulf surety bonds should be directed to the surety bond
agent, who in turn should contact the Gulf Underwriting Team to start the
process, if they haven't already done so.
Given these developments, it looks like most of the Reliance and United