accounting diffrences
Steinberg's note a successful track record of putting innovative and specialized skills to work. In the third quarter of 1999 it will be noted that several of these innovations were not as profitable as they thought they were. Note disciplined underwriting approach. Reliance National Reliance Group Holdings largest profit center offering specialized property and casualty insurance and risk management services. They broke new ground in overseas expansion and e-commerce opportunities. These e-commerce opportunities are Cybercomp, a program to offer workmen's compensation insurance over the Internet. Reliance National's international sources generated 12% of the total premium in 1998, through offices in London, China and Argentina. Reliance Insurance This is considered a middle market company, writing insurance for small and mid size companies. The Steinbergs feel this is one of the few companies offering a full range of specialized products delivered locally. This means it is underwritten through local branch offices. Reliance National business is largely underwritten centrally, in their head office in New York. Reliance Reinsurance Reinsurance offers a method of limiting exposure for the generators of insurance policies. A reinsurer will take on a portion of a risk for a portion of the premium. Reliance Reinsurance got out of several less attractive lines of business and as they did not act soon enough as significant reserve adjustments will be made in the third quarter of 1999. Reliance Re grew premiums by offering reinsurance for crop losses. Despite a high level of Catastrophic losses in 1998 in this line, Reliance Re was able to lock in profit by offering reinsurance to other companies, actually reinsure the reinsurer. Reliance Surety Business grew over 20% in 1998 due in large part to the formation of Reliance Specialty division. In 1997 two competitors merged, when St.Paul purchased United States Fidelity and Guarantee USF&G). The management of USF&G was chosen to lead the combined surety operations. Reliance Surety hired 7 people in the senior management ranks of the former St. Paul surety operation and formed the Specialty division. These individuals were able to capitalize on their existing relationships and bring a substantial amount of profitable surety business over to Reliance. Viewed as one of Reliance Group's first specialization success stories. Increased profits as well through he use of technology in the high volume/low premium sector. Relaince Surety was quoted in the Wall Street Journal as being the crown jewel of Reliance Group Holdings (footnote) Personal Auto This is a new venture and grew very fast in 1998. There was a launch of Reliance Direct, an e-commerce venture to offer personal auto insurance over the Internet. This unit had revenue of $201m, with no mention of profit and loss. Two separate efforts in personal auto were included in these numbers and these efforts were subsequently merged. RGC Information Technologies This is a non-insurance related entity, offering computer software services. Started in response to Y2K concerns and revenue growth in 1998 was 29% to close to $250m. Strong Financial Position The company had more capital and less leverage [next page]