RELIANCE PAYS PAULA $42M IN UNICOVER SETTLEMENT

Reliance Insurance is to pay $42m to California-based workers’ compensation carrier PAULA Financial in connection with Reliance’s settlement and commutation of reinsurance contracts associated with the Unicover Managers reinsurance spiral. The deal was one of many settlements that the Reliance group has reached with ceding companies and retrocessionaires in recent weeks, which will result in overall charges of $100m. PAULA said that the payment it received covered the return of premiums it had ceded to Reliance, plus a “substantial” fee for the break-up of the reinsurance contract. Meanwhile, PAULA said that it would strengthen reserves by $23.7m for the 1997 and 1998 accident years for business that largely pre-dated treaties with Reliance.