OSFI to wind up Reliance Canadian operations

Following the insolvency of Pennsylvania-based parent Reliance, the company’s Canadian branch operation will be shut down by the Office of the Superintendent of Financial Services (OSFI). OSFI had frozen the Canadian operation’s assets in August, 2000, and directed it to stop writing new business in early 2001. In October, OSFI seized control of Reliance and now the federal regulator will wind up the operation, with KPMG acting as provisional liquidator. Policyholder claims will be paid out through the Property and Casualty Insurance Compensation Corporation (PACICC), of which Reliance was a member.The parent company was placed under a rehabilitation order by the Pennsylvania Insurance Department in May, 2001, but after efforts were unsuccessful, put the company into liquidation. It was insolvent by US$1.1 billion, with losses of $2-4 million per day upon its seizure. The Pennsylvania department is now investigating potential mishandling of funds by the company’s chairman, to the tune of hundreds of millions of dollars.The Toronto branch operation employs 16 people and writes largely a commercial book of business, including property, general liability and professional liability, according to OSFI.