which corporate raider Saul Steinberg used to mount daring takeover bids in the 1980s, faces collapse as Leucadia National Corp. backed away from an agreement to buy the company on Friday.

New York-based Reliance must repay more than $700 million of debt over the next three years, but has no financing arranged, and has already sold off most of its ongoing businesses after cuts in its financial-strength ratings drove away its security-conscious customers.

A planned purchase by Leucadia would have alleviated Reliance's problems, but the New York-based financial services investment firm said on Friday that it did not want to go ahead with the deal under the agreed terms. The companies said they were now discussing alternative transactions, though Leucadia might exercise its right to terminate the deal by July 21.

Leucadia agreed to buy Reliance in late May for $2.55 per share, or $293 million overall, but the insurer's shares hit an all-time low of 1/2 earlier this week, after rating agencies issued downgrades on liquidity fears.

Reliance shares fell a further 1/8 to 7/16 on Friday on the New York Stock Exchange, while Leucadia shares rose 5/16 to 24-1/2.

Reliance's shares have collapsed from highs above 19 two years ago, as the insurer has faced problems with its reserves and heavy losses from business stemming from the collapsed Unicover workers compensation insurance pool.

Steinberg, who stepped down as Reliance CEO in February but still owns about 42 percent of the company along with his brother Robert, has been looking to sell Reliance since last November after a disastrous 1999 in which the insurer lost $310 million, mostly due to charges to boost reserves and settle Unicover-related liabilities.

Steinberg, one of Wall Street's most adventurous corporate raiders, bought Reliance in 1968 and merged it with his own computer-leasing company before buying up big stakes in Chemical Bank in 1969 and Walt Disney Co. in the mid-1980s. He failed to gain control of either company but made huge profits as his targets were forced to buy back his stakes, giving Steinberg the reputation as Wall Street's leading "greenmailer''. Steinberg later re-launched Reliance as a publicly traded company in 1986.

Known for his expensive tastes and high wages, Steinberg paid himself $3.6 million in 1999, less than half his $10 million compensation the previous year.

Facing debts on loans guaranteed by Reliance stock, Steinberg sold his 34-room Manhattan apartment on Park Avenue earlier this year for between $30-$40 million, and later sold his art and furniture collection for $12 million. None of the proceeds were invested in Reliance.

"The deal's off the table,'' said one Wall Street analyst, who asked not to be named, saying Reliance faced too many problems with its ongoing business and debt repayment for the deal to make sense at the original terms.

Reliance owes more than $700 million, including $237.5 in bank debt due in August, $291.7 million in bond debt due in November, and a further $172 million in bond debt due in 2003.

At the end of May, Reliance sold its profitable surety business for $580 million to insurer Travelers Property Casualty, now part of Citigroup , making an after-tax gain of $240 million.

Since the deal with Leucadia was announced, Reliance agreed to sell its ongoing financial products, excess and surplus and inland marine insurance businesses to insurer Hartford Financial Services and sold its reinsurance business to Bermuda-based Overseas Partners Ltd.

Under the terms of the proposed deal, Leucadia would have kept some ongoing Reliance business, but was effectively buying Reliance in order to wind down its operations in the hope that its reserves would exceed its debt and claims to be paid out over a number of years, known in the business as run-off.