Warren Buffett: An Offer Steinberg May Refuse

The unraveling of Saul Steinberg's Reliance Group took an intriguing turn when Warren Buffett surfaced last week with a way for Steinberg to offload some of his troubled insurance company onto Berkshire Hathaway. But no one expects even Buffett's Midas touch to save Reliance.

Buffett brings a marquee name to a company badly tarnished by ongoing losses, the specter of bankruptcy, and huge debts, including $237.5 million due on Nov. 10. What Berkshire proposes is a reinsurance deal: taking some of Reliance's liabilities, then paying claims as they start coming due several years later, and in the meantime making money off the assets that Reliance would hand over.

"I don't see why Saul Steinberg may go along with that," says longtime Steinberg watcher David Schiff of Schiff's Insurance Observer newsletter. Steinberg, with his family, owns 40% of Reliance. Says Reliance: "We've been in discussion with various parties." Berkshire declined to comment on its plans.

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