-----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, RlaXGA7qZUtPOjDFv3w0Ohu5ysGq6eNG9dZGs8sngmWG9aLQ3rNuCYKPl70qIAsH JT1Ezx1fm7Y1rfV9g3UwVQ== 0000317745-96-000003.txt : 19960723 0000317745-96-000003.hdr.sgml : 19960723 ACCESSION NUMBER: 0000317745-96-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960701 ITEM INFORMATION: Other events FILED AS OF DATE: 19960719 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL RE CORP CENTRAL INDEX KEY: 0000317745 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 061026471 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08026 FILM NUMBER: 96597001 BUSINESS ADDRESS: STREET 1: FINANCIAL CENTRE P O BOX 10351 STREET 2: 695 EAST MAIN STREET CITY: STAMFORD STATE: CT ZIP: 06904-2351 BUSINESS PHONE: 2033285000 MAIL ADDRESS: STREET 1: FINANCIAL CENTRE STREET 2: P O BOX 10350 CITY: STAMFORD STATE: CT ZIP: 06904-2350 8-K 1 July 19, 1996 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Gentlemen: Pursuant to the requirements of the Securities and Exchange Act of 1934, we are transmitting herewith the attached Form 8-K, dated July 1, 1996. Very truly yours, Charles F. Barr Vice President, General Counsel and Secretary 07/19/96 9:10 AM 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 July 1, 1996 __________________________ (Date of earliest event reported) GENERAL RE CORPORATION ________________________________________________________ (Exact name of Registrant as specified in its charter) Delaware 1-8026 06-1026471 ___________________ __________________ ________________ (State of (Commission File No.) (IRS Employer Incorporation) Identification No.) Financial Centre, P.O. Box 10350. Stamford, Connecticut 06904-2350 _____________________________________________________________________ (Address of principal executive offices, including zip code) (203) 328-5000 ________________________________________________________________ (Registrant's telephone number, including area code) Not applicable _____________________________________________________________________ (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS. On July 1, 1996, General Re Corporation (the "Corporation") entered into an Agreement and Plan of Merger (the "Merger Agreement") with National Re Corporation ("National Re") and N Acquisition Corporation ("Sub"), a wholly owned subsidiary of the Corporation, pursuant to which National Re will merge with and into Sub, with Sub surviving as a wholly owned subsidiary of the Corporation (the "Merger"). A copy of the Merger Agreement is filed as Exhibit 99.1 and is incorporated herein by reference to Exhibit #1 of the Statement on Schedule 13D dated July 11, 1996 filed by the Corporation and Sub (the "Schedule 13D"). Pursuant to the Merger Agreement, each share of Common Stock, no par value, of National Re (the "National Re Common Stock") outstanding immediately prior to the effective time of the Merger (the "Effective Time") shall (except for shares of National Re Common Stock held by National Re as treasury stock or owned by the Corporation or any subsidiary of the Corporation immediately prior to the Merger Date and as otherwise provided for in the Merger Agreement and as to which dissenters rights have been exercised in accordance with and subject to the provisions of Delaware law) be converted into the right to receive, at the election of the holder and subject to the limitations set forth in the MergerAgreement either: (i) a fraction of a share of the Corporation's common stock, par value $.50 per share (the "General Re Common Stock"), together with the attached Preferred Stock Purchase Rights, determined by dividing $53 by the average of the closing prices per share of General Re Common Stock on the New York Stock Exchange ("NYSE") as reported by the NYSE Composite Tape for the ten consecutive NYSE trading days ending on the second NYSE trading day immediately preceding the closing date of the Merger, but not more than .39259 shares of General Re Common Stock or less than .32121 shares of General Re Common Stock, or (ii) $53 in cash, without any interest thereon. The Merger Agreement provides for a minimum stock component of 50%. There is no minimum cash component. The Merger is expected to qualify as a tax-free transaction to the Corporation, National Re and Sub and, except to the extent they receive cash in the Merger, the stockholders of National Re. The Merger is subject to a number of conditions, including, among other things, (i) approval of the Merger by National Re's stockholders, (ii) receipt of all required governmental approvals, (iii) absence of any statute or injunction which would have an adverse effect on the consummation of the Merger, (iv) declaration of effectiveness of the registration statement relating to the shares of General Re Common Stock issuable in the Merger, (v) absence of any change that would have a material adverse effect on any of the Corporation, National Re or Sub, (vi) receipt by each of the Corporation and National Re of tax opinions of their respective tax counsel, and (vii) approval for listing on the NYSE of the shares of General Re Common Stock issuable in the Merger. In addition, on July 1, 1996, the Corporation and Sub entered into Stockholder Agreements (each, a "Stockholders Agreement") with certain major stockholders of National Re, who own in the aggregate approximately 22.58% of National Re Common Stock, pursuant to which such stockholders agreed, among other things, to (i) vote all of their National Re Common Stock in favor of the Merger and the Merger Agreement and (ii) not sell or transfer any of their shares of National Re Common Stock prior to the earlier of the Effective Time or the termination of the Merger Agreement in accordance with its terms. Copies of the Stockholders Agreements are filed herewith as Exhibits 99.2 through 99.7 and are incorporated herein by reference to Exhibits #2-7 of the Schedule 13D. On July 1, 1996, the Corporation issued a press release announcing, among other matters, the execution of the Merger Agreement. A copy of such press release is filed as Exhibit 99.8 hereto and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of the Businesses Acquired. Not Applicable (b) Pro Forma Financial Information. The following unaudited, pro forma consolidated statements of income for the year ended December 31, 1995 and for the quarter ended March 31, 1996 present the results for the Corporation as if the Merger had occurred on January 1, 1995. The accompanying unaudited pro forma consolidated balance sheet as of March 31, 1996 gives effect to the Merger as of that date (see the notes to the pro forma consolidated statements of income and balance sheet for more information). These pro forma consolidated statements of income and balance sheet neither purport to represent what the Corporation's results of operations actually would have been had the Merger and related transactions in fact occurred on the assumed dates, nor to project the Corporation's results of operations and financial position for any future period. The pro forma adjustments are based upon preliminary estimates, information currently available and certain assumptions that management believes are reasonable in the circumstances. The pro forma consolidated statements of income and balance sheet should be read in conjunction with the historical financial statements of the Corporation and National Re, including the notes thereto. The pro forma adjustments and pro forma consolidated information are provided for informational purposes only. The Corporation's actual financial statements will reflect the effects of the Merger on the closing date rather than the dates Indicated above. The pro forma adjustments applied in the pro forma financial statements record the Merger as a purchase. Under purchase accounting, the total purchase cost of the assets acquired will be allocated to the National Re assets and liabilities based on fair values as of the closing date with the excess over fair value recorded as goodwill. Allocations included in the pro forma statements are based on analysis which is not yet completed. Accordingly, the final allocations of purchase price will be different from the amounts included in the pro forma statements. Subsequent to the closing of the Merger, management anticipates there will be annual cost savings and synergies from the integration of the Corporation's and National Re's operations. These cost savings and synergies are expected to result from a reduction in overhead expenses, increased investment income, reduced investment management fees, and adjustments to National Re's retrocessional program. Consequently, the transaction is expected to be non-dilutive to the Corporation's 1997 results from operations. There can be no assurance that the Corporation will achieve these projected savings and actual savings could be materially different than those currently projected. Anticipated future cost savings and other synergies are not included in the pro forma financial statements. General Re Corporation Unaudited Pro Forma Consolidated Statement of Income Year ended December 31, 1995 (in millions, except per share information)
General Re National Re Pro Forma Pro Forma Historical (1) Historical (2) Adjustments (3) Consolidated Premiums and other revenues Net premiums earned Property/casualty $5,141 $314 $5,455 Life/health 696 696 Total net premiums earned 5,837 314 6,151 Net investment income 1,017 76 $(33)(A) 1,060 Other revenues 292 292 Net realized gains on investments 64 1 65 Total revenues 7,210 391 (33) 7,568 Expenses Claims and claim expenses 3,680 201 3,881 Life/health benefits 505 505 Acquisition costs 1,345 103 1,448 Other operating costs and expenses 563 25 6 (B) 594 Total expenses 6,093 329 6 6,428 Income before taxes and minority interest 1,117 62 (39) 1,140 Income tax expense 247 14 (9) (C) 252 Income before minority interest 870 48 (30) 888 Minority interest 45 45 Net income $825 $48 ($30) $843 Share data: Net income per common share $9.92 $9.75 Average shares outstanding 82.1 3.2 (D) 85.3 See the accompanying notes to the pro forma consolidated statement of income. General Re Corporation Unaudited Pro Forma Consolidated Statement of Income Quarter ended March 31, 1996 (in millions, except per share information) General Re National Re Pro Forma Pro Forma Historical (1) Historical (2) Adjustments (3) Consolidated Premiums and other revenues Net premiums earned Property/casualty $1,294 $93 $1,387 Life/health 245 245 Total net premiums earned 1,539 93 1,632 Net investment income 285 20 $(8) (A) 297 Other revenues 68 68 Net realized gains on investments 50 4 54 Total revenues 1,942 117 (8) 2,051 Expenses Claims and claim expenses 908 61 969 Life/health benefits 180 180 Acquisition costs 355 28 383 Other operating costs and expenses 152 7 2 (B) 161 Total expenses 1,595 96 2 1,693 Income before taxes and minority interest 347 21 (10) 358 Income tax expense 87 6 (2) (C) 91 Income before minority interest 260 15 (8) 267 Minority interest 23 23 Net income $237 $15 ($8) $244 Share data: Net income per common share $2.87 $2.86 Average shares outstanding 81.5 3.2 (D) 84.7 See the accompanying notes to the pro forma consolidated statement of income. General Re Corporation Notes to the Unaudited Pro Forma Consolidated Statements of Income The pro forma income statements present the results of the Corporation as if the Merger had occurred on January 1, 1995. It is not appropriate to assume the results presented would have been the actual amounts reported by the Corporation if the transaction had occurred on January 1, 1995. The pro forma consolidated income statements assume the consideration to purchase National Re was in the form of 50 percent General Re Common Stock and 50 percent cash. (1) The first column presents the historical results from operations reported by the Corporation in its annual report on Form 10-K for the year ended December 31, 1995 and on Form 10-Q for the quarter ended March 31, 1996. (2) The second column presents National Re's historical results from operations for the year ended December 31, 1995 and quarter ended March 31, 1996. (3) The third column includes purchase accounting and pro forma adjustments to the Corporation's and National Re's historical results from operations which are described below. Increase (decrease) in income (in millions) 1995 1996 (A) It was assumed that the Corporation would have paid in cash on January 1, 1995, $465 million for 50 percent of the total purchase consideration. These funds were assumed to have earned annual pretax investment income at 7.13 percent based on the historical United States portfolio yield. $(33) $(8) (B) The amortization of the excess of purchase price over the fair value of net assets acquired was assumed to occur over 40 years. $(15) $(4) National Re's amortization for future value of treaties, which was included in its historical results, would have been reversed under purchase accounting. 8 2 National Re's amortization for goodwill related to prior transactions and deferred financing costs would also have been reversed under purchase accounting. 1 - $(6) $(2) (C) An adjustment would have been made to record the tax effect of items A and B, excluding goodwill, using a 35 percent statutory tax rate. $9 $2 (D) It was assumed that the Corporation would have issued General Re Common Stock for aggregate value of $465 million for 50 percent of the total purchase consideration. Using the then current common stock price, the Corporation would have issued 3.2 million shares. GENERAL RE CORPORATION Unaudited Pro Forma Consolidated Balance Sheet March 31, 1996 (in millions) General Re National Re Pro Forma Pro Forma Historical (1) Historical (2) Adjustments (3) Consolidated Assets Investments: Fixed maturities: Available-for-sale $15,402 $1,116 $(442) (A) $16,076 Trading 2,607 2,607 Equity securities 3,813 177 3,990 Short-term investments 1,760 8 1,768 Other invested assets 841 841 Total investments 24,423 1,301 (442) 25,282 Cash 323 323 Accrued investment income 329 17 346 Accounts receivable 2,104 222 2,326 Funds held by reinsured companies 2,161 2,161 Reinsurance recoverable 2,864 83 2,947 Deferred acquisition costs 401 35 (9) (B) 427 Sec. purchased under agreements to resell 110 110 Trading account assets 2,336 2,336 Other assets 1,489 92 550 (C) 2,131 Total assets $36,540 $1,750 $99 $38,389 Liabilities Claims and claim expenses $14,306 $1,016 $15,322 Policy benefits for life/health 0contracts 2,340 2,340 Unearned premiums 1,812 115 1,927 Other reinsurance balances 3,060 3,060 Notes payable and commercial paper 155 211 $ 9 (D) 375 Income taxes 651 (29) (F) 622 Sec. sold under agreements to repurchase 2,283 2,283 Sec. sold but not yet purchased 329 329 Trading account liabilities 2,577 2,577 Other liabilities 1,341 35 27 (E) 1,403 Minority interest 1,218 1,218 Total liabilities 30,072 1,377 7 31,456 Cumulative convertible preferred stock 147 147 Loan to ESSOP (146) (146) 1 1 Common stockholders' equity Common stock 51 51 Paid-in capital 650 218 72 (G) 940 Unrealized appreciation of investments 1,418 12 (12) (H) 1,418 Currency translation adjustments (23) (23) Retained earnings 6,179 156 (156) (H) 6,179 Less common stock in treasury (1,808) (13) 188 (I) (1,633) Total common stockholders' equity 6,467 373 92 6,932 Total liabilities, cum. convertible preferred stock and common equity $36,540 $1,750 $99 $38,389 See the accompanying notes to the pro forma consolidated balance sheet. General Re Corporation Notes to the Unaudited Pro Forma Consolidated Statements of Income The pro forma balance sheet presents the results of the Corporation as if the Merger had occurred on March 31, 1996. It is not appropriate to assume the results presented would have been the actual amounts reported by the Corporation if the transaction had occurred on March 31, 1996. The pro forma consolidated balance sheet assumes the consideration to purchase National Re was in the form of 50 percent General Re Common Stock and 50 percent cash. (1) The first column of each pro forma income statement presents the historical balance sheet reported by the Corporation in its quarterly report on Form 10-Q for the quarter ended March 31, 1996, respectively. (2) The second column presents National Re's historical balance sheet as of March 31, 1996. (3) The third column includes purchase accounting adjustments and pro forma adjustments to the Corporation's and National Re's historical balance sheets, respectively. Increase (decrease) in net assets (in millions) (A) It was assumed that the Corporation would have paid cash on March 31, 1996 for 50 percent of the purchase consideration. $(465) It was assumed that all outstanding National Re stock options (801,800 shares) would have been exercised prior to the purchase. 23 $(442) (B) Deferred acquisition costs would have been reduced for deferred costs other than commissions to conform to the Corporation's accounting. $(9) (C) The excess of purchase price paid over the fair value of net assets acquired would have been recorded. $593 Intangible assets included in National Re's historical balance sheet would have been reduced for the following items not carried forward under purchase accounting: - Future value of treaties (34) - Goodwill (6) - Deferred financing costs (3) $550 (D) The carrying value of National Re's senior notes would have been adjusted to fair value using current market quotations. $(9) (E) A liability for estimated severance and closing costs would have been accrued. $(27) General Re Corporation Notes to the Unaudited Pro Forma Consolidated Balance Sheet Increase (decrease) in net assets (in millions) (F) The tax effect of items A through E, excluding goodwill, would have been recorded using a 35 percent statutory tax rate. $29 (G) The issuance of General Re common stock would have increased paid in capital. $290 National Re's paid in capital would have been eliminated. (218) $72 (H) National Re's unrealized appreciation in investments and retained earnings would have been eliminated. (I) The issuance of General Re common stock would have increased treasury stock by $55 per share issued. $175 National Re's treasury stock would have been eliminated. 13 $188 (c) Exhibits: Ex. No. Description 99.1 Agreement and Plan of Merger, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and National Re Corporation (incorporated by reference to Exhibit 1 of the Schedule 13D). 99.2 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and Acadia Partners, L.P. (incorporated by reference to Exhibit 2 of the Schedule 13D). 99.3 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and Keystone, Inc. (incorporated by reference to Exhibit 3 of the Schedule 13D). 99.4 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and Robert W. Eager, Jr. (incorporated by reference to Exhibit 4 of the Schedule 13D). 99.5 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and Peter A. Cheney (incorporated by reference to Exhibit 5 of the Schedule 13D). 99.6 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and William D. Warren (incorporated by reference to Exhibit 6 of the Schedule 13D). 99.7 Stockholders Agreement, dated as of July 1, 1996, by and among General Re Corporation, N Acquisition Corporation and Timothy T. McCaffrey (incorporated by reference to Exhibit 7 of the Schedule 13D). 99.8 Text of Press Release issued by General Re Corporation on July 1, 1996. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on behalf of the undersigned hereunto duly authorized. Dated: July 19, 1996 GENERAL RE CORPORATION Registrant By: Charles F. Barr Vice President, General Counsel and Secretary 13
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