The Reliance Insurance Company dates abck to 1817, but was officially incorporated in Pennsylvania on March 27, 1820 (that is correct, 1820!). Despite a long and storied history, the company fell into debt in the 1980’s and was liquidated by the State of Pennsylvania Insurance Commissioner in 2000. The fall of the company was the biggest insurance company failure in United States history.
The scary thing about the demise of Reliance Insurance Co. was the sheer speed of it. As recently as December 1998, the property/casualty company was reporting a $1.7 billion statutory surplus, the biggest in its 181-year history. That same year, Reliance also boosted its profit to $585 million, a huge increase from the $62 million in earnings it recorded the year before.
But then, out of nowhere, Reliance fell into a tailspin. By the end of 1999, an onerous debt load and heavy workers'-compensation reinsurance losses had pushed the insurer toward the brink of insolvency. In its 1999 annual statement, Reliance management acknowledged that the company had lost $500 million of its surplus, on the heels of a $177 million loss in net income. That was followed by another net income loss of $198 million in 2000. A resultant salvage attempt by state insurance regulators failed, and in October 2001, M. Diane Koken, Pennsylvania's insurance commissioner, ordered the liquidation of the venerable company.
In the end, Reliance's liabilities outstripped its assets by $1.2 billion, making it the largest insurer liquidation in U.S. history, according to the Insurance Information Institute (III). But the size of the failure wasn't the only thing that disturbed commercial insurance buyers; many wondered why Reliance's financial woes had slipped under the radar of some top rating agencies for as long as a year. In fact, up until June 2000, A.M. Best Co. rated Reliance's financial strength as an A- (excellent), while Standard & Poor's assigned the insurer an A(strong), according to Schiff's Insurance Observer.
Preferred Stock, issued in the 1970’s
Printed by the Security-Columbian / United States Bank Note Company
8” (h) x 12” (w)
This certificate has vertical fold lines, punch hole cancels in signature areas and body.