-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTe6Ryjp4Gj382rUzZxAs898KYMgZXVQepC0jjknljd48XVDz/eZJAq2Hd3YJz0e Nw4VjXHc1HgzRoBWeJCCGA== 0000925600-97-000015.txt : 19970828 0000925600-97-000015.hdr.sgml : 19970828 ACCESSION NUMBER: 0000925600-97-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970827 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMONS INTERNATIONAL GROUP INC CENTRAL INDEX KEY: 0001013698 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 351707115 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-29042 FILM NUMBER: 97670764 BUSINESS ADDRESS: STREET 1: 4720 KINGSWAY DRIVE CITY: INDIANAPOLIS STATE: IN ZIP: 46205 BUSINESS PHONE: 3172596300 MAIL ADDRESS: STREET 1: 11 SOUTH MERIDIAN STREET STREET 2: SUITE 1313 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 8-K 1 REPORT PRO FORMA STATEMENTS AND ACQUISITION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: August 26, 1997 SYMONS INTERNATIONAL GROUP, INC. State of Incorporation: Indiana Commission File Number IRS Employer Id. Number No. 1-12369 No. 35-1707115 Address of Principal Executive Offices: 4720 Kingsway Drive Indianapolis, Indiana 46205 Telephone No. (317) 259-6400 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On August 12, 1997, Symons International Group, Inc. ("Company") acquired from GS Capital Partners II, L.P. and certain other investment funds affiliated with Goldman, Sachs & Co. ("GSCP"), GSCP's 48% interest in the Company's nonstandard automobile insurance business for $61 million in an all cash transaction. The purchase price was determined through arm's-length negotiations. The acquisition was financed by a $135 million offering ("Offering") of trust preferred securities ("Preferred Securities") by SIG Capital Trust 1 which closed on August 12, 1997. The Preferred Securities were offered pursuant to Rule 144A of the Securities Act of 1993 and enabled SIG Capital Trust 1 to invest $135 million in senior subordinated notes ("Sub Notes") of the Company. Both the Preferred Securities and the Sub Notes will carry a 30-year term. In addition to financing the $61 million acquisition from GSCP, the proceeds to the Company from the Offering were used to (1) retire the approximately $45 million term debt incurred in March 1996, (ii) to provide additional capital to the Company's operating insurance subsidiaries, (iii) general corporate purposes, and (iv) pay expenses of the offering of the Preferred Securities. The Preferred Securities have not been registered pursuant to applicable securities laws and may not be offered or sold absent such registration or an applicable exemption from registration requirements. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements. As of the date of filing of this Current Report on Form 8-K, it is impracticable for the Registrant to provide the financial statements required by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K no later than 60 days after August 27, 1997. (b) Pro Forma Financial Information. The following unaudited pro forma consolidated balance sheet and statements of earning of the company for the year ended December 31, 1996 and as of and for the six months ended June 30, 1997 present the financial position and results for the Company as if the Offering had occurred as of January 1, 1996. The pro forma adjustments are based on available information and certain assumptions the Company currently believes are reasonable in the circumstances. The unaudited pro forma consolidated balance sheet and statements of earnings have been derived from and should be read in conjunction with the historical Consolidated six months ended June 30, 1997, and should be read in conjunction with the accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet and Statements of Earnings. The pro forma adjustments and pro forma consolidated amounts are provided for informational purposes only. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial position that would have occurred had the Offering been consummated on the dates assumed, nor is the pro forma information intended to be indicative of the Company's future results. Symons International Group, Inc. Unaudited Pro Forma Consolidated Balance Sheet (in thousands)
SIG Historical Pro Forma Pro Forma As of June 30, 1997 Adjustments for the Offering Assets Investments $ 190,500 $ 24,228 (1) $ 214,728 Cash and cash equivalents 18,329 18,329 Receivables, net 176,045 176,045 Reinsurance recoverable on paid and unpaid losses, net 70,694 70,694 Prepaid reinsurance premiums 73,927 73,927 Deferred policy acquisition costs 13,121 13,121 Deferred income taxes 2,899 118 (2) 3,017 Property and equipment 9,555 9,555 Investments in and advances to related parties 2,418 2,418 4,900 (3) (1,116) (4) 2,034 (5) Other 10,153 34,276 (6) 50,247 ------ -------- ------ Total Assets $ 567,641 $ 64,440 $ 632,081 ========= ======== ========= Liabilities: Losses and loss adjustment expenses $ 137,924 $ 137,924 Unearned premiums 160,741 160,741 Reinsurance payable 100,475 100,475 Federal income tax payable 1,594 (391)(7) 1,203 Term debt 44,872 44,872 (8) 0 Other 23,411 23,411 ------ ------ Total Liabilities 469,017 (45,263) 423,754 Minority interest Preferred Securities 0 135,000 (9) 135,000 Equity in net assets of subsidiary 26,724 (26,724)(10) 0 Stockholders' Equity Common stock 39,019 39,019 Additional paid-in capital 5,905 5,905 Unrealized gain/(loss) on investments, net 2,184 2,034 (5) 4,218 (725)(11) 24,185 Retained earnings 24,792 118 (2) ------ ------- 71,900 1,427 73,327 ------ ------- ------ Total Liabilities and Stockholders' Equity $ 567,641 $ 64,440 $ 632,081 ========= ======== =========
The accompanying notes are an integral part of the pro forma consolidated financial statements. Symons International Group, Inc. Unaudited Pro Forma Consolidated Statement of Earnings (in thousands)
SIG Historical For the Six Months Pro Forma Pro Forma Ended June 30, 1997 Adjustments for the Offering Gross premiums written $ 279,065 $ 279,065 ========= ========= Net premiums written $ 150,523 $ 150,523 ========= ========= Net premiums earned $ 136.012 $ 136,012 Net investment income 5,276 5,276 Other income 10,791 10,791 Net realized capital gain/(loss) 1,684 1,684 ----- ----- Total revenues 153,763 153,763 Losses and loss adjustment expenses 103,293 103,293 Policy acquisition and general and administrative expenses 30,397 82 (12) 31,150 (116) (13) 788 (14) Interest expense 2,744 (2,706) (15) 38 ----- -------- -- Total expenses 136,434 (1,953) 134,481 ------- -------- ------- Earnings before income taxes, minority interest and extraordinary item 17,329 1,953 19,282 Provision for income taxes 6,183 959 (16) 7,024 (118)(17) Minority interest: Distributors on Preferred Securities 4,168 (18) 4,168 Equity in earnings of subsidiary 1,560 (1,560)(19) ----- -------- Net earnings from continuing operations (20) $ 9,586 ($ 1,497) $ 8,089 ======= ========= ======= Net earning per common share from continuing operations-primary (20) $ 0.90 $ 0.76 Weighted average shares outstanding 10,617 10,617
The accompanying notes are an integral part of the pro forma consolidated financial statements. Symons International Group, Inc. Unaudited Pro Forma Consolidated Statement of Earnings (in thousands)
SIG Historical For the Year Pro Forma Pro Forma Ended Dec. 31, 1996 Adjustments for the Offering Gross premiums written $ 305,499 $ 305,499 ========= ========= Net premiums written $ 209,592 $ 209,592 ========= ========= Net premiums earned $ 191,759 $ 191,759 Net investment income 6,733 6,733 Other income 9,286 9,286 Net realized capital gain/(loss) (1,015) (1,015) ------- ------- Total revenues 206,763 206,763 Losses and loss adjustment expenses 137,109 137,109 Policy acquisition and general and administrative expenses 42,013 163 (12) 43,648 (231) (13) 1,703 (14) Interest expense 3,938 (3,927) (15) 11 ----- -------- -- Total expenses 183,060 (2,292) 180,768 Earnings before income taxes, minority interest and extraordinary item 23,703 2,292 25,995 Provision for income taxes 8,046 1,398 (16) 9,444 Minority interest: Preferred Securities Distributions 8,336 (18) 8,336 Equity in net assets of subsidiary 2,401 (2,401) (19) 0 ----- ------- - Net earnings from continuing operations (20) $ 13,256 ($ 5,041) $ 8,215 ======== ========= ======= Net earning per common share from continuing operations-primary (20) $ 1.76 $ 1.09 Weighted average shares outstanding 7,537 7,537
Notes to Unaudited Pro Forma Consolidated Financial Statements (1) Application of the net proceeds from the Offering are invested as of June 30, 1997 as follows: (in thousands) Offering Proceeds $ 135,000 Estimated fees and expenses (4,900) Repayment of GGS Senior Credit Facility (44,872) Purchase of Minority Interest in GGS Holdings (61,000) -------- General corporate purposes $24,228 ======== The pro forma statement of earnings for the six month ended June 30, 1997 and the year ended December 31, 1996 assumes no interest earnings on funds remaining. However, the Company fully expects to invest such funds. (2) Deferred tax assets and retained earnings at June, 1997 increase by $ 118,000 related to the elimination of the deferred tax liability on the unremitted earnings of GGSH due to the purchase of the remaining minority interest share of 48%. (3) Other assets at June 30, 1997 increase by $ 4,900,000 representing deferred Preferred Securities issuance costs to be amortized over their term (30 years). (4) Other assets at June 30, 1997 are reduced by $ 1,116,000 representing the write-off of unamortized debt issuance costs in connection with the GGS Senior Credit Facility that was repaid with the proceeds of the Offering. (5) Goodwill and equity at June 30, 1997 increased by $ 2,034,000 for the after tax effects of the elimination of the minority interest portion of the unrealized loss on investments held for sale. (6) Goodwill at June 30, 1997 is increased by $ 34,276,000 for the excess of the purchase price of the minority interest share, over the minority interest liability of $ 26,724,000 as the entire excess purchase price is applied to goodwill as all identifiable assets approximate fair value. Total goodwill at June 30, 1997, including that existing prior to the Offering aggregates $ 36,390,000. (7) Income taxes payable at June 30, 1997 are reduced by $ 391,000 for the tax effect of the write-off of the debt issuance costs associated with the term debt repaid from the proceeds of the Offering. (8) Existing term debt is completely repaid with the proceeds of the Offering. (9) Issuance of Preferred Securities from the Offering. (10) Minority interest liability at June 30, 1997 is eliminated with the purchase of the minority interest share from the proceeds of the Offering. (11) Retained earnings at June 30, 1997 is reduced by $ 725,000 for the after tax effects of the write-off of the debt issuance costs associated with the GGS Senior Credit Facility repaid from the proceeds of the Offering. (12) Policy acquisition and general and administrative expenses for the six months ended June 30, 1997 and the year ended December 31, 1996 are increased by $ 82,000 and $ 163,000, respectively, for the amortization of the Preferred Securities issuance costs. Such costs are amortized over the life of the Preferred Securities of thirty years. (13) Policy acquisition and general and administrative expenses for the six months ended June 30, 1997 and the year ended December 31, 1996 are decreased by $ 116,000 and $ 231,000, respectively, for the amortization of the debt issuance costs associated with the GGS Senior Credit Facility. (14) Policy acquisition and general and administrative expenses for the six months ended June 30, 1997 and the year ended December 31, 1996 are increased by $ 788,000 and $ 1,703,000, respectively, for the amortization of goodwill created by the excess of the purchase price of the minority interest share in excess of the minority interest liability. Goodwill is amortized over a 25-year period on a straight line basis based upon management's estimate of the expected benefit period. (15) Interest expense for the six months ended June 30, 1997 and the year ended December 31, 1996 is decreased by $ 2,706,000 and $ 3,927,000, respectively, for the interest incurred on the GGS Senior Credit Facility which was repaid from the proceeds of the Offering. (16) All applicable pro forma adjustments to operations are tax affected at a rate of 35%. Amortization on goodwill is added back to earnings in determining the provision for income taxes as goodwill amortization is non-deductible for tax purposes. (17) Income tax expense for the six month ended June 30, 1997 is reduced by $ 118,000 for the elimination of the deferred tax effects of the unremitted earnings to SIG of GGSH due to the purchase of the remaining minority interest. (18) Distributions on Preferred Securities for the six months ended June 30, 1997 and the year ended December 31, 1996, net of income taxes at 35%, of $ 4,168,000 and $ 8,336,000, respectively, were based on an interest rate of 9.50%. (19) Minority interest earnings are eliminated with the purchase of the remaining minority interest share. (20) Net earnings and earnings per common share from continuing operations for the six months ended June 30, 1997 and the year ended December 31, 1996 exclude ($ 725,000)($ 0.07) per share and ($ 801,000)($ 0.08), respectively, for the effects of the write-off of debt issuance costs incurred on the GGS Senior Credit Facility upon repayment of that debt from the proceeds of the Offering. Such amounts will be presented as extraordinary items in accordance with GAAP. (c) Exhibits. As of the date of filing of this Current Report on Form 8-K, it is impracticable for the Registrant to provide all the exhibits required by the provisions of Item 601 of Regulation S-K. In accordance with Item 601 of Regulation S-K, such exhibits shall be filed by amendment to this Form 8-K no later than 60 days after August 27, 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 27, 1997 SYMONS INTERNATIONAL GROUP, INC. By: __/s/ Gary P. Hutchcraft______________ Gary P. Hutchcraft Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. 99 Press Release of Transaction EX-99 2 PRESS RELEASE OF TRANSACTION NEWS RELEASE Media Contact: Alan G. Symons Analyst Contact: Don Franz CEO Advest, Inc. (317) 259-6302 (212) 584-4143 Joanne Smith Mesirow Financial (914) 669-5680 FOR IMMEDIATE RELEASE SYMONS INTERNATIONAL GROUP, INC. ANNOUNCES NONSTANDARD AUTOMOBILE ACQUISITION Indianapolis, Indiana (July , 1997) - Symons International Group, Inc. (NASDAQ/NM: SIGC) a leading provider of crop and nonstandard automobile insurance, today announces today announces that it has completed the acquisition of the remaining 48% interest in its nonstandard automobile insurance business formerly owned by investment funds affiliated with Goldman Sachs & Co. and has also completed the $135,000,000 Offering of Trust Preferred Securities. The Company today announces that it has successfully closed its $135,000,000 Offering of Trust Preferred Securities. The 30 year Trust Preferred Securities carry a 9.5% coupon and are initially callable in 2007. "We chose the Trust Preferred Securities, which are a unique 30-year instrument, in that they afford the Company the ability to defer payment of interest for up to 5 years in kind. These instruments have received broad acceptance with investment grade financial institutions in that the rating authorities give it partial equity credit when examining an issuer's pro forma capitalization of the obligations which support the Trust Preferred Securities. Once the equity credit is granted as a result of the Trust Preferred Securities limited covenants, the issuer's ability to defer payment of interest for up to 5 years and the length of the instrument." says Company CEO, Alan G. Symons. The proceeds of the Company's issuance of Trust Preferred Securities were used to (i) purchase the remaining 48% of the Company's nonstandard automobile insurance business formerly owned by investment funds affiliated with Goldman; Sachs & Co.; (ii) to liquidate the Company's term bank debt initially incurred in March 1996; (iii) to pay the expenses of the Offering; and (iv) provide the Company with approximately $25,000,000 of additional working capital. The Company's Offering of Trust Preferred Securities was well received and was oversubscribed by a ratio of 2 to 1. Symons International Group, Inc. (NASDAQ: SIGC) of Indianapolis is primarily engaged in the nonstandard automobile and crop insurance business and maintains active business licenses in 35 U.S. states. Anyone wishing further information may contact: Alan G. Symons Chief Executive Officer 317 259-6300 -----END PRIVACY-ENHANCED MESSAGE-----