-----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, KCUWdWzTraDGNNVOtfGVYm9c+Bw1m5EPNziiJgvtscKgqnNGSgMaWq/2i/3kRNUN ywwY9jsESqrvA/1zac9dnQ== 0000950144-99-006468.txt : 19990520 0000950144-99-006468.hdr.sgml : 19990520 ACCESSION NUMBER: 0000950144-99-006468 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-13137 FILM NUMBER: 99630125 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 10-K/A 1 AMERICAN BANKERS INSURANCE FORM 10-K/A 12/31/98 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the fiscal year ended December 31, 1998 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from __________ to __________ Commission File Number 0-9633 AMERICAN BANKERS INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Florida 59-1985922 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11222 Quail Roost Drive, Miami, Fl 33157 (Address of principal executive offices) Registrant's telephone number, including area code: (305) 253-2244 Securities registered pursuant to Section 12(b) of the act:
Title of Class Name of each exchange on which registered -------------- ----------------------------------------- Common Stock, $1 Par Value New York Stock Exchange, Inc. $3.125 Series B Cumulative Convertible New York Stock Exchange, Inc. Preferred Stock, $50 Liquidation Preference
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value on March 19, 1999, of the voting Common Stock held by non-affiliates of the registrant was approximately $2,100,000,000. Shares of Common Stock held by executive officers and directors who individually own 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates; however, this determination of affiliate status is not necessarily determinative for other purposes. There were approximately 43,200,000 shares outstanding of the Registrant's Common Stock, $1 par value, as of march 19, 1999. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of Registrant's Proxy Statement for the annual shareholders meeting to be held May 7, 1999 to be filed within 120 days of Registrant's fiscal year end are incorporated by reference in part III of this Form 10-K. (2) Portions of Registrant's Schedule 14D-9 and Amendment No. 3, Amendment No. 6, Amendment No. 10, Amendment No. 11, and Amendment No. 22 Thereto; the Form S-3 Registration Statement Number 2-94359; the Registrant's Annual Report on Form 10-K for the years ending 1990, 1993, 1994, 1995, and 1997; the Registrant's Current Report on Form 10-Q dated March 31, 1994; March 31, 1995; September 30, 1997; and June 30, 1998; the 1987 Annual Meeting Proxy Statement; the Registrant's Current Report on Form 8-K dated November 14, 1990, January 13, 1998, and March 10, 1999; Registrant's Statements on Form S-8 filed on February 19, 1999 Number 333-72615 and 333-72619 are incorporated by reference, in Part IV of this Form 10-K. 2 ITEM 3 LEGAL PROCEEDINGS Except as discussed in the following paragraphs, there are no material legal proceedings, other than ordinary routine litigation incident to the business, to which the Registrant or any of its subsidiaries is a party or of which any of their property is subject. LITIGATION The following describes the material legal proceedings of the Company. Alabama and other litigation Certain of ABIG's subsidiaries, including the Company, are presently parties to a number of individual consumer and class action lawsuits pending in Alabama involving premium, rate, marketing, sales practices, disclosure, and policy coverage issues. While a number of similar suits have been filed in other jurisdictions, the insurance and finance industries have been targeted in Alabama by plaintiffs' lawyers who enjoy a favorable judicial climate. The Company typically has been named as a co-defendant with one or several retailer or finance companies who have sold the Company's product to a consumer. Other insurers are also joined as co-defendants in some of the suits. Although the Alabama lawsuits and similar suits pending in Mississippi and other jurisdictions generally involve relatively small amounts of actual or compensatory damages, they typically assert claims requesting substantial punitive awards or purport to represent a large class of policyholders. On November 12, 1998, the Company and three of its clients entered into a settlement of all claims in class action litigation consolidated by the Panel on Multi-District Litigation in the United States District Court for the Middle District of Alabama, contingent upon approval of the fairness of the settlement by the District Court and other conditions. This series of class actions involved the largest collective class exposure to the Company. Under the terms of the settlement, without admitting any liability, the Company will contribute approximately $15 million in distributions to the classes and subclasses, and has agreed to be bound by an injunction limiting the percentage of authorized non-file insurance premium to be charged consumer finance and retailer accounts during 6 year and 18 month periods, respectively. The Company has accrued additional expenses associated with implementing the settlement. While none of the Company's remaining cases are necessarily significant in terms of financial risk to the Company, the judicial climate in certain jurisdictions is such that the outcome of these cases is extremely unpredictable. Moreover, class action lawsuits to which the Company is a party do not lend themselves to potential damage calculation. There are still a number of cases pending, and it is expected that more suits alleging essentially the same causes of action are likely to continue to be filed during 1999. The Company denies any wrongdoing in any of these suits and believes that it has not engaged in any conduct that would warrant an award of punitive damages or that the class allegations have merit. The Company has been advised by legal counsel that it has meritorious defenses to all claims being asserted against it. The Company believes, based on information currently available, that any liabilities that could result are not expected to have a material effect on the Company's financial position, results of operations, or cash flows. 2 3 Merger-related Litigation In late January and early February 1998, Cendant Corporation ("Cendant") commenced litigation (the "Cendant Florida Litigation") in the United States District Court for the Southern District of Florida, Miami Division, against the Company, members of the Company's Board, American International Group, Inc. ("AIG") and a wholly owned subsidiary of AIG, challenging the validity of certain provisions in the merger agreement the Company originally entered into with AIG on December 21, 1997, which agreement was amended in January 1998 and again at the end of February 1998 ("AIG Merger Agreement"), with respect to acquisition proposals by third parties. Cendant's complaint in the Cendant Florida Litigation also challenged the terms of the stock option agreement between the Company and AIG. Pursuant to the terms of a settlement agreement providing for the termination of the AIG Merger Agreement and the payment to AIG by the Company of $100 million and by Cendant of $10 million (the "Settlement Agreement"), Cendant has taken the necessary actions to cause the dismissal of all claims asserted in the Cendant Florida Litigation against all defendants, including the Company and members of the Company's Board. Also pursuant to the terms of the Settlement Agreement, AIG has taken the necessary actions to cause the dismissal of claims against Cendant alleging violations of the federal securities laws in connection with Cendant's bid to acquire the Company. In late January and early February 1998, five putative class actions on behalf of American Bankers' shareholders were filed in United States District Court for the Southern District of Florida alleging causes of action arising out of the then proposed merger with AIG and agreeing to pay and paying the $100 million termination fee prior to the closing of the proposed acquisition by Cendant. The District Court Judge ordered that these cases be consolidated and that the plaintiffs file a consolidated complaint (the "Complaint"). That Complaint was filed in May 1998 alleging claims against the Company, all directors, except for Messrs. Kemp and Allen, and AIG. The Complaint alleges that directors of the Company breached their fiduciary duties and violated their duty to act with due care and in a disinterested manner and to maximize shareholder value by entering into the AIG Merger Agreement and agreeing to pay and paying the $100 million termination fee. The Complaint also alleges that the Company and AIG violated Section 14(a) and 14(e) of the Exchange Act by making materially false and misleading statements in the proxy statement, as amended, for the AIG Merger Agreement. The Complaint seeks an order requiring the directors to carry out their fiduciary duties to the plaintiffs and other class members, damages suffered by the results of the alleged acts, an order declaring null and void the $100 million termination fee, an order requiring defendants to make full disclosure of all material information, and an award of plaintiff's cost and disbursements, including plaintiff's attorney's fees. The Company and directors filed an answer on or about June 16, 1998. Thereafter, the Company and Cendant entered into termination arrangements under which the Company was paid $400 million. The Company and its directors believe that the claims asserted in these actions are totally without merit, particularly in light of the termination of the Cendant Merger Agreement and payment by Cendant of $400 million, and intend to continue to vigorously contest them. 3 4 OTHER The Company, in the normal course, is subject to regulatory reviews and market conduct examinations from each of the states in which it conducts business. During 1998, a multi-state market conduct review was initiated under the auspices of the NAIC by several states. On November 23, 1998, the Company entered into a Consent Order and comprehensive Compliance Plan with 39 participating states relating to compliance with the disparate state insurance laws, regulations and administrative interpretations which have been difficult to apply to the marketing of the Company's credit related insurance products through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. The Company and participating state regulators have pledged to cooperate in rationalizing existing insurance laws and regulations to the marketing and administration of credit-related insurance products on a more comprehensive and uniform basis. As a part of the adoption of the Compliance Plan, the Company agreed in a Consent Order to pay $12 million to the participating states, and through implementation of the Compliance Plan, to provide restitution to insureds, if instances of excess premiums or less than appropriate claims payments were discovered in that process. No accrual has been made for any possible restitution since an estimate of any possible restitution is not known. Since November 1998, four additional states have executed Addenda joining in the multi-state Consent Order. The Company also agreed to a multi-state market conduct examination commencing in November 1999 for review of the Company's implementation of the Compliance Plan, and to a payment of $3 million to participating states if the Compliance Plan is not fully implemented by that time. The Company took a charge against earnings for $15 million during the fourth quarter of 1998. As of the first quarter of 1999, the Company has paid $12 million to the participating states. The Company is involved with a number of cases in the ordinary course of business relating to insurance matters, or more infrequently, certain corporate matters. Generally, the Company's liability is limited to specific amounts relating to insurance or policy coverage for which provision has been made in the financial statements. Other cases involve general corporate matters which generally do not represent significant contingencies for the Company. 4 5 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. American Bankers Insurance Group, Inc.
By: /s/ Gerald N. Gaston Chief Executive Officer, President, May 17, 1999 ---------------------------------- and Vice Chairman of the Board Gerald N. Gaston By: /s/ Robert Hill Senior Vice President and May 17, 1999 ---------------------------------- Principal Accounting Officer Robert Hill
Pursuant to the requirements of the Securities Exchange Act of 1934, this report signed below by the following persons on behalf of the Registrant and in the capacities and on May 17, 1999. American Bankers Insurance Group, Inc.
/s/ R. Kirk Landon Chairman of the Board May 17, 1999 - ------------------------------------- and Director R. Kirk Landon /s/ Gerald N. Gaston Chief Executive Officer, May 17, 1999 - ------------------------------------- President, Vice Chairman of the Gerald N. Gaston Board and Director /s/ William H. Allen Jr. Director May 17, 1999 - ------------------------------------- William H. Allen Jr. Director May 17, 1999 - ------------------------------------- Nicholas A. Buoniconti Director May 17, 1999 - ------------------------------------- Armando M. Codina /s/ Peter J. Dolara Director May 17, 1999 - ------------------------------------- Peter J. Dolara
5 6
Director May 17, 1999 - ------------------------------------- Jack F. Kemp /s/ Bernard P. Knoth, S.J. Director May 17, 1999 - ------------------------------------- Bernard P. Knoth, S.J. Director May 17, 1999 - ------------------------------------- James F. Jorden Director May 17, 1999 - ------------------------------------- Daryl L. Jones /s/ Eugene M. Matalene Jr. Director May 17, 1999 - ------------------------------------- Eugene M. Matalene Jr. /s/ Albert H. Nahmad Director May 17, 1999 - ------------------------------------- Albert H. Nahmad /s/ Nicholas J. St. George Director May 17, 1999 - ------------------------------------- Nicholas J. St. George /s/ Robert C. Strauss Director May 17, 1999 - ------------------------------------- Robert C. Strauss Director May 17, 1999 - ------------------------------------- George E. Williamson II
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