TORONTO, Jan. 19, 2006 (PRIMEZONE) -- Boyd Soussana President and CEO of Reliant Home Warranty Corp. (OTCBB:RHWC) today announced the execution of a letter of intent creating the first captive insurance cell in its wholly owned insurance subsidiary, Reliant Insurance SCC. With this captive insurance platform Reliant Insurance has agreed to provide re-insurance to Lux Residential Warranty Corp for coverage of Lux's Residential Latent and Structural Defect programs in Canada.
Reciprocally, Lux has agreed to provide structural warranty coverage for all new properties securing residential mortgages in the Reliant program. This will be the first time that Lux will utilize its proprietary underwriting platform and systems that will soon become industry standard. It is projected that this arrangement will generate a minimum of 10 million dollars in annual premium revenue for Reliant insurance subsidiary.
Lux Residential Warranty Corp underwrites, risk manages and administers a new home warranty program for both one (1) year Latent Defects and ten (10) year Major Structural Defects in Atlantic Canada. The integrity and thoroughness of the program is such that LRWP has yet to experience a warranty claim for calendar year 2005. The program is recognized by Canadian Mortgage Housing Company (CMHC).
According to Soussana, "Lux's success over the past year can be attributed to both the rigorous underwriting criteria used to select their member builders as well as the skill of their team of underwriters who administer them once selected."
Soussana also took the opportunity to announce the commencement of negotiations to expand market penetration of RHWC's complete product line into Eastern and Western Canada. Several major financial groups in each region have expressed firm interest in joining Reliant. Negotiations are well advanced with these potential affiliates, each of which has the potential to substantially impact those markets.
Reliant plans direct oversight of its penetration into the fertile U.S. market. Reliant's first foray into the U.S. will see it concentrate its push into the south western states. An appetite for products similar but less refined than those offered by Reliant has already developed in the area.
RHWC Canadian source revenue and profits projected by Soussana for all Reliant lines, have been estimated at:
-- 1st Year profit of 12 million net before tax on revenues of
750 million USD.
-- 2nd Year profit of 18 million net before tax on revenues of
1.2 billion USD.
-- 3rd Year profit of 30 million net before tax on revenues of
2 billion USD.
It is projected that U.S. market penetration when it occurs, will augment these projections by at least a third.
Soussana concluded with the comment that "if the marketplace in the U.S. is even remotely as receptive as our projections are for Canada, RHWC's product line will meet with overwhelming U.S. homeowner acceptance."
More information is available at www.relianthwc.com.
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussion with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical facts may be forward-looking statements. Forward-looking statements are based on expectations, estimates and projections at the time the statements are made to involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. For a summary of such risks and uncertainties, see the Company's periodic reports and other filings with the Securities and Exchange Commission.