Last week, the Pension Benefit Guaranty Corporation (PBGC) assumed control of Reliance Insurance Co.’s pension plan – which the agency said was underfunded by $124 million.
According to a news release, the PBGC said it was stepping in because the property-casualty insurance company was being liquidated by regulators and that without government intervention, the firm’s pension plan would have been unable to make payments to its 8,700 retired former employees.
Reliance’s plan had assets of $143 million and benefit obligations of $267 million.
Reliance’s former parent, Reliance Group Holdings Inc., New York, filed for bankruptcy-court protection in June – a victim of a large debt load, poor underwriting and swollen management salaries and stock dividends.
A spokeswoman for the Pennsylvania Insurance Department said there was no indication of wrongdoing related to the handling of Reliance’s pension assets, according to the Wall Street Journal.
Some former Reliance staffers are working for the department to assist in the liquidation process.