-----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, UQtljNDoUcKRUKoumbwuKUJTnY6u7/voSCP2b+xWrSnSBx1hh8Bed6bYA81kewdN U/3Ng1R6UiCFxKJHVNbtEg== 0000950144-99-010394.txt : 19990817 0000950144-99-010394.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950144-99-010394 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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-Q SEC ACT: SEC FILE NUMBER: 001-13137 FILM NUMBER: 99692983 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-Q 1 AMERICAN BANKERS INS.GP INC QUARTERLY D/D 6/30/99 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO AMERICAN BANKERS INSURANCE GROUP, INC. 11222 QUAIL ROOST DRIVE MIAMI, FLORIDA 33157 (305) 253-2244 Commission File Number: 0-9633 State of Incorporation: Florida I.R.S. Employer Identification Number: 59-1985922 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 period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Common Stock - Par Value $1.00 43,196,305 Shares Outstanding on August 09, 1999 1 2 Form 10-Q Company or group of companies for which report is filed: AMERICAN BANKERS INSURANCE GROUP, INC. This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q. PART I - FINANCIAL INFORMATION ITEM 1 - Financial Statements 1. Consolidated Balance Sheets at June 30, 1999 and December 31, 1998. 2. Consolidated Statements of Income for the three months ended June 30, 1999 and 1998. 3. Consolidated Statements of Comprehensive Income for the three months ended June 30, 1999 and 1998. 4. Consolidated Statements of Income for the six months ended June 30, 1999 and 1998. 5. Consolidated Statements of Comprehensive Income for the six months ended June 30, 1999 and 1998. 6. Consolidated Statements of Cash Flows for the six months ended June 30, 1999 and 1998. 7. Notes to Consolidated Financial Statements. ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II - OTHER INFORMATION ITEM 1 - Legal Proceedings ITEM 4 - Submission of Matters to a Vote of Security Holders ITEM 6 - Exhibits and Reports a. Exhibits. The following exhibits are included herein: (10.1) First Amendment to the Voting Agreement between certain Stockholders and American Bankers Insurance Group Inc., a Florida Corporation and Fortis, Inc., a Nevada Corporation. (27) Financial Data Schedule b. Report on Form 8-K. None. 2 3 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. AMERICAN BANKERS INSURANCE GROUP, INC. August 13, 1999 /s/ Robert Hill - --------------- ---------------------------- Date Robert Hill Principal Accounting Officer 3 4 PART I FINANCIAL INFORMATION 4 5 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 1999 AND DECEMBER 31, 1998 (in thousands)
1999 1998 ----------- ----------- ASSETS (unaudited) Investments Held-to-maturity securities, at amortized cost $ 697,672 $ 775,305 Available-for-sale securities, at fair value 1,247,580 1,254,876 Equity securities, at approximate market value 144,274 130,437 Mortgage loans on real estate 5,355 6,969 Policy loans 10,270 9,873 Short-term and other investments 272,666 352,764 ----------- ----------- Total investments 2,377,817 2,530,224 ----------- ----------- Cash 5,066 12,755 Accounts receivable, net of allowance for doubtful accounts of $9,913 in 1999 and $7,516 in 1998 149,718 136,049 Reinsurance receivable 344,152 315,477 Accrued investment income 32,111 30,586 Deferred policy acquisition costs 466,930 482,995 Prepaid reinsurance premiums 701,109 661,665 Other assets 197,113 198,756 ----------- ----------- Total assets $ 4,274,016 $ 4,368,507 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Policy liabilities $ 349,204 $ 336,982 Unearned premiums 1,610,216 1,611,886 Claim liabilities 632,769 608,501 ----------- ----------- 2,592,189 2,557,369 Other policyholders' funds 11,266 5,976 Notes payable 168,401 193,753 Deferred income taxes 13,649 32,824 Accrued commissions and other expenses 123,386 140,055 Other liabilities 313,638 377,648 ----------- ----------- Total liabilities 3,222,529 3,307,625 ----------- ----------- Commitments and Contingencies (Note 6) STOCKHOLDERS' EQUITY Preferred stock: authorized 10,000 shares $3.125 Series B Cumulative Convertible Preferred Stock (stated at liquidation preference of $50 per share), issued and outstanding 1,983 shares in 1999 and 1,983 shares in 1998 99,160 99,160 Common stock of $1 par value. Authorized 100,000 shares; issued and outstanding 43,195 shares in 1999 and 43,080 shares in 1998 43,195 43,080 Additional paid-in capital 252,365 245,389 Accumulated other comprehensive income (31,697) 2,593 Retained earnings 731,993 690,726 Less: Treasury stock at cost - 836 shares in 1999 and 360 shares in 1998 (34,580) (11,876) Unamortized restricted stock (8,949) (8,190) ----------- ----------- Total stockholders' equity 1,051,487 1,060,882 ----------- ----------- Total liabilities and stockholders' equity $ 4,274,016 $ 4,368,507 =========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 6 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS ENDED JUNE 30, 1999 AND 1998 (IN THOUSANDS EXCEPT PER COMMON SHARE DATA) (UNAUDITED)
1999 1998 --------- --------- Gross collected premiums $ 686,786 $ 696,939 ========= ========= Premiums and other revenues: Net premiums earned $ 351,437 $ 362,860 Net investment income 35,033 36,527 Realized investment gains 7,726 6,836 Other income 7,706 7,790 --------- --------- Total premiums and other revenues 401,902 414,013 --------- --------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 123,941 126,249 Commissions 158,058 158,960 Operating expense 86,868 82,613 Interest expense 2,722 5,482 --------- --------- Total benefits and expenses 371,589 373,304 --------- --------- Income before taxes 30,313 40,709 --------- --------- Income tax expense: Current 13,142 9,563 Deferred (4,587) 977 --------- --------- 8,555 10,540 --------- --------- Net income $ 21,758 $ 30,169 ========= ========= PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Basic: Net income $ 0.48 $ 0.67 ========= ========= Weighted average number of shares outstanding 42,360 42,662 ========= ========= Diluted: Net income $ 0.47 $ 0.64 ========= ========= Weighted average number of shares outstanding 46,636 46,932 ========= ========= Dividends per common share $ 0.12 $ 0.11 ========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 7 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THREE MONTHS ENDED JUNE 30, 1999 AND 1998 (in thousands) (unaudited)
1999 1998 -------- -------- Net income $ 21,758 $ 30,169 -------- -------- Other comprehensive income, net of tax: Foreign currency translation adjustments (10) (779) Unrealized (losses) gains on securities: Unrealized holding (losses) gains arising during period (28,093) 2,985 Reclassification adjustment for gains on securities available for sale included in net income (2,144) (4,311) -------- -------- Other comprehensive (loss) (30,247) (2,105) -------- -------- Comprehensive (loss) income $ (8,489) $ 28,064 ======== ========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 7 8 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (IN THOUSANDS) (UNAUDITED)
1999 1998 ----------- ----------- Gross collected premiums $ 1,356,999 $ 1,394,810 ----------- ----------- Premiums and other revenues: Net premiums earned $ 708,401 $ 719,707 Net investment income 74,420 71,705 Realized investment gains 10,727 9,014 Merger termination fee (100,000) Other income 20,246 13,754 ----------- ----------- Total premiums and other revenues 813,794 714,180 ----------- ----------- Benefits and expenses: Net benefits, claims, losses and settlement expenses 240,205 249,187 Commissions 321,739 312,725 Operating expense 170,418 171,516 Interest expense 5,443 9,659 ----------- ----------- Total benefits and expenses 737,805 743,087 ----------- ----------- Income (loss) before taxes 75,989 (28,907) ----------- ----------- Income tax expense (benefit): Current 22,626 (10,383) Deferred (2,401) (6,013) ----------- ----------- 20,225 (16,396) ----------- ----------- Net income (loss) $ 55,764 $ (12,511) =========== =========== PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA Primary: Net income (loss) $ 1.24 $ (0.37) =========== =========== Weighted average number of shares outstanding 42,379 42,328 =========== =========== Diluted: Net income $ 1.19 $ N/A =========== =========== Weighted average number of shares outstanding 46,671 46,951 =========== =========== Dividends per common share $ 0.24 $ 0.22 =========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 8 9 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (IN THOUSANDS) (UNAUDITED)
1999 1998 -------- -------- Net income (loss) $ 55,764 $(12,511) -------- -------- Other comprehensive income, net of tax: Foreign currency translation adjustments 869 (1,174) Unrealized (losses) gains on securities: Unrealized holding (losses) gains arising during period (30,628) 12,290 Reclassification adjustment for gains on securities available for sale included in net income (4,531) (4,542) -------- -------- Other comprehensive (loss) income (34,290) 6,574 -------- -------- Comprehensive income (loss) $ 21,474 $ (5,937) ======== ========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 9 10 AMERICAN BANKERS INSURANCE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (IN THOUSANDS) (UNAUDITED)
1999 1998 --------- --------- OPERATING ACTIVITIES: Net income (loss) $ 55,764 $ (12,511) Adjustments to reconcile net income to net cash provided by operating activities: Change in policy liabilities, unearned premiums, claim liabilities, reinsurance receivable and prepaid reinsurance premiums (38,943) 5,418 Change in other assets and other liabilities (61,362) (45,943) (Increase) decrease in accounts receivable (13,669) 9,468 Increase in accrued investment income (1,525) (61) Decrease in accrued commissions and expenses (16,669) (14,480) Increase in policyholders' funds 5,290 92 Increase in policy loans (397) (361) Amortization of deferred policy acquisition costs 259,109 267,336 Amortization of cost of insurance acquired 528 616 Policy acquisition costs deferred (243,044) (259,594) Provision for amortization and depreciation 7,863 6,330 Provision for deferred income taxes (2,401) (6,013) Net gain on sale of investments (10,727) (9,014) Compensation and tax effect on stock option shares 3,492 6,809 --------- --------- Net cash used in operating activities (56,691) (51,908) --------- --------- INVESTING ACTIVITIES: Purchase of investments Held-to-maturity securities (12,244) (27,731) Available-for-sale securities (311,763) (434,849) Proceeds from sale of investments Available-for-sale securities 153,197 272,102 Mortgage loans 1,878 2,348 Real Estate 2,169 12 Proceeds from maturities of investments Held-to-maturity securities 87,661 55,951 Available-for-sale securities 110,930 71,633 Decrease (increase) in short-term investments 82,449 (6,665) Transactions related to capital assets Capital expenditures (5,758) (4,713) Sales of capital assets 194 56 --------- --------- Net cash provided by (used in) investing activities 108,713 (71,856) --------- --------- FINANCING ACTIVITIES: Proceeds from issuance of debt 82,148 116,981 Repayment of debt (107,500) Dividends paid to shareholders (14,445) (12,718) Proceeds from issuance of stock 2,787 2,197 Purchase of treasury stock (22,703) --------- --------- Net cash (used in) provided by financing activities (59,713) 106,460 --------- --------- Net decrease in cash (7,691) (17,304) Cash at beginning of period 12,755 23,265 Rate change effect on cash flow 2 (65) --------- --------- Cash at end of period $ 5,066 $ 5,896 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 5,805 $ 10,303 Income taxes $ 68,952 $ 4,769
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 10 11 AMERICAN BANKERS INSURANCE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) (1) FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Certain items have been reclassed to conform with 1999 presentation. (2) ACQUISITION OF THE COMPANY On July 22, 1999, American Bankers Insurance Group, Inc. announced that at a special meeting held on that day, holders of American Bankers' common stock approved the previously announced merger of American Bankers into a wholly-owned subsidiary of Fortis, Inc., part of the international insurance, banking, and investment group Fortis. Under the terms of the Merger Agreement, common stockholders of American Bankers will receive $55, without interest, in cash in exchange for each share of American Bankers common stock upon completion of the merger. American Bankers also announced that at another special meeting held on July 22, 1999, holders of American Bankers' preferred stock approved the merger. Under the terms of the Merger Agreement, preferred stockholders of American Bankers will receive $109.857, without interest, in cash in exchange for each share of American Bankers preferred stock upon completion of the merger. Final regulatory approvals have recently been received and it is expected that a closing date will be determined and announced shortly. (3) ADOPTION OF NEW FASB STATEMENTS In 1998, the Company adopted FASB Statement 131, "Disclosures about Segments of an Enterprise and Related Information." FASB Statement 131 supersedes FASB Statement 14, "Financial Reporting for Segments of a Business Enterprise," replacing the "industry segment" approach with the "management" approach. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments. FASB Statement 131 also requires disclosures about products and services, geographic areas, and major customers. The adoption of FASB Statement 131 did not affect results of operations or financial position of the Company but did affect the disclosure of segment information. The Company has restated all previously reported segment information to conform to the new presentation. The provisions of FASB Statement 131 were adopted for quarterly reporting in March of 1999. 11 12 (4) COMPREHENSIVE INCOME Related tax effects are allocated to each component of other comprehensive income for the three months ended June 30,
(in thousands) 1999 1998 -------- -------- Foreign currency translation adjustments Before tax amount $ 1,980 $ (1,784) Tax (expense) or benefit (1,990) 1,005 -------- -------- Net of tax amount (10) (779) -------- -------- Unrealized (losses) gains on securities: Unrealized holding (losses) gains arising during period Before tax amount (41,936) 4,429 Tax benefit or (expense) 13,843 (1,444) -------- -------- Net of tax amount (28,093) 2,985 -------- -------- Reclassification adjustment for gains on securities available for sale included in net income Before tax amount (3,298) (6,632) Tax expense 1,154 2,321 -------- -------- Net of tax amount (2,144) (4,311) -------- -------- Net unrealized gains/losses Before tax amount (45,234) (2,203) Tax benefit 14,997 877 -------- -------- Net of tax amount (30,237) (1,326) -------- -------- Other comprehensive (loss), net of tax $(30,247) $ (2,105) ======== ========
12 13 Related tax effects are allocated to each component of other comprehensive income for the six months ended June 30,:
(in thousands) 1999 1998 -------- -------- Foreign currency translation adjustments Before tax amount $ 2,626 $ (2,336) Tax (expense) or benefit (1,757) 1,162 -------- -------- Net of tax amount 869 (1,174) -------- -------- Unrealized (losses) gains on securities: Unrealized holding (losses) gains arising during period Before tax amount (45,795) 17,790 Tax benefit or (expense) 15,167 (5,500) -------- -------- Net of tax amount (30,628) 12,290 -------- -------- Reclassification adjustment for gains on securities available for sale included in net income Before tax amount (6,971) (6,987) Tax expense 2,440 2,445 -------- -------- Net of tax amount (4,531) (4,542) -------- -------- Net unrealized gains/losses Before tax amount (52,766) 10,803 Tax benefit or (expense) 17,607 (3,055) -------- -------- Net of tax amount (35,159) 7,748 -------- -------- Other comprehensive (loss) income, net of tax $(34,290) $ 6,574 ======== ========
Accumulated Other Comprehensive Income Balances at June 30, 1999:
Unrealized Accumulated Foreign Gains/ Other Currency (Losses) on Comprehensive Items Securities Income -------- ----------- ------------- Beginning balance $(14,339) $ 16,932 $ 2,593 Current-period change 869 (35,159) (34,290) -------- -------- -------- Ending balance $(13,470) $(18,227) $(31,697) ======== ======== ========
13 14 (5) REINSURANCE The Company accounts for reinsurance contracts under FASB Statement 113. The Company recognizes the income on reinsurance contracts principally on a pro-rata basis over the life of the policies covered under the reinsurance agreements. Reinsurance Recoverables on Unpaid Losses are included as an asset in the Balance Sheet under the caption "Reinsurance Receivable." Ceded Unearned Premiums are included as an asset in the Balance Sheet under the caption "Prepaid Reinsurance Premiums." The effect of reinsurance on premiums earned is as follows for the six months and three months ended June 30, 1999 and 1998: (in thousands) Six Months Ended June 30, 1999 June 30, 1998 ------------- ------------- Direct premiums $ 1,300,449 $ 1,284,949 Reinsurance assumed 58,809 60,643 Reinsurance ceded (650,857) (625,885) ----------- ----------- Net premiums earned $ 708,401 $ 719,707 =========== =========== (in thousands) Three Months Ended June 30, 1999 June 30, 1998 ------------- ------------- Direct premiums $ 646,557 $ 648,614 Reinsurance assumed 27,400 23,605 Reinsurance ceded (322,520) (309,359) --------- --------- Net premiums earned $ 351,437 $ 362,860 ========= ========= (6) COMMITMENTS AND CONTINGENCIES For a comprehensive description of the Company's litigation, see Item III of the Company's 1998 Form 10-K. 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. Two classes have recently been certified against the Company: one class involving collateral protection insurance sold by American Bankers Insurance Company of Florida in the state of Tennessee after March 1990 to customers of Mercury Finance of Tennessee, Inc., and a second class involving holders of credit card insurance in the United States after March 1990 who had claims denied based upon eligibility restrictions not conspicuosly displayed on the solicitation materials. The Company and its affiliates intend to appeal these determinations and have been advised by counsel that they have meritorious defenses. 14 15 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. 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 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 vigorously contest them. 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. 15 16 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. (7) LIABILITES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES The Company's U.K. subsidiary participated in certain personal accident programs from other insurance companies during 1994 to 1997. The Company ceased writing this reinsurance in 1997; however, certain risk may continue beyond 1997 due to the nature of the reinsurance contracts written. The Company has retroceded the majority of its personal accident liability to other insurance companies. On a gross basis, the personal accident loss ratios are substantially higher than that expected at the time the programs were written. However, due to the nature of the Company's retrocessional coverage, net losses on these programs have not been material to the Company's operating results. At June 30, 1999, the Company had gross payables of $22.9 million, ceded recoverable of $24.0 million, gross reserves of $72.4 million and ceded reserves of $60.8 million relating to the personal accident business. The Company is currently actively investigating the cause for the significant increase in the personal accident gross loss ratio. The outcome of that investigation is currently uncertain but may result in the Company taking legal or other action against its brokers, reinsurers or others. The Company is currently involved in arbitration over payment of certain claims with one of the cedants, and several of the Company's retrocessioners have delayed payment pending further review. The June 30, 1999 loss reserves and reinsurance recoverables are based on various estimates that are subject to considerable uncertainty. However, it is management's opinion that due to the direct relationship of the business written to the Company's reinsurance coverage that future development on these programs will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. 16 17 (8) SEGMENT INFORMATION In 1998, the Company adopted FASB Statement 131 , "Disclosures about Segments of an Enterprise and Related Information." The prior years' segment information has been restated to present the Company's reportable segments, Financial Markets, Personal Lines Markets and Other. Segment data includes allocated overhead costs to each of the operating segments. Asset information by reportable segment is not reported. The Company does not produce such information internally as it reviews its assets and liabilities at the individual affiliated company level. The Company is organized primarily on the basis of its distribution channels. There are ten separate markets, six of the markets are aggregated into the "Financial Markets." Two are combined to form the "Personal Lines." The Financial Markets' products, consisting primarily of credit-related insurance, are sold through retailers, financial institutions, manufactured housing, travel trailer and equipment manufacturers, dealers and lenders, and utility companies. The Personal Lines' business, consisting of non credit-related products and services, is sold primarily through independent agents. All other business has been included in "Other." "Other" includes principally foreign subsidiaries, except Canada and corporate activity. The Company's business is generally not concentrated, and no single customer accounted for 10% or more of the Company's consolidated gross collected premiums in 1999 or 1998. Gross collected premiums, net premiums earned and income(loss) before federal income taxes are summarized as follows:
(in thousands) Six Months Ended June 30, -------- 1999 1998 ----------- ----------- Gross collected premiums: Financial markets $ 1,155,931 $ 1,170,500 Personal lines 164,784 169,241 Other 36,284 55,069 ----------- ----------- Total $ 1,356,999 $ 1,394,810 =========== =========== Net premiums earned: Financial markets $ 595,091 $ 604,723 Personal lines 96,536 98,646 Other 16,774 16,338 ----------- ----------- Total $ 708,401 $ 719,707 =========== =========== Income (loss) before interest and income taxes: Financial markets $ 52,703 $ 58,411 Personal lines 7,843 12,644 Other (1) 20,886 (2) (90,303) ----------- ----------- 81,432 (19,248) Interest expense 5,443 9,659 ----------- ----------- Total income before income (loss) taxes $ 75,989 $ (28,907) =========== ===========
(1) Includes $4.3 million pre-tax income from the sale of assets and liabilities of one of the Company's smaller non-insurance subsidiaries. (2) Includes $100 million merger termination fee paid to AIG and $12.8 million in merger-related expenses. 17 18 (9) ACCOUNTING FOR INVESTMENTS The Company accounts for its investments according to the Financial Accounting Standards Board's Statement 115 "Accounting for Certain Investments in Debt and Equity Securities". This Statement addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. Those investments are to be classified in three categories and accounted for as follows: HELD-TO-MATURITY - Securities for which the enterprise has the positive intent and ability to hold to maturity. These securities are carried at amortized cost. AVAILABLE-FOR-SALE - Securities not classified as trading or held-to-maturity. These securities are carried at market value with the unrealized holding gain or loss reported as a separate component of equity, net of the income tax effect. TRADING SECURITIES - Securities that are bought and held principally for the purpose of selling them in the near term. These securities are carried at market value with the unrealized holding gain or loss included in earnings. The detail of Cost and Statement Value for the Fixed Maturities and Equity Securities held at June 30, 1999 is as follows
(in thousands) Amortized Market Cost Value ------------------- ---------------- FIXED MATURITIES Held-to-Maturity Securities $ 697,672 $ 701,060 Available-for-Sale Securities 1,283,764 1,247,580 --------------- ---------------- Total Fixed Maturities $ 1,981,436 $ 1,948,640 =============== ================ Net unrealized loss on available-for-sale securities $ (36,184) ================
Market Cost Value --------------- ---------------- EQUITY SECURITIES Available-for-Sale Securities 135,463 144,274 --------------- ---------------- Total Equity Securities $ 135,463 $ 144,274 =============== ================ Net unrealized gain on available-for-sale securities $ 8,811 ================
18 19 An analysis of the realized gains and losses of the Company for the six months and three months ended June 30, 1999, is as follows:
(in thousands) Three Months Six Months Ended Ended ------------------ --------------- Gross realized gains from sales of Available-for-Sale Securities $ 10,520 $ 17,054 Gross realized losses from sales of Available-for-Sale Securities (4,122) (7,404) --------------- --------------- Net realized gain from investment activity 6,398 9,650 Net realized gain from other investment activity 1,328 1,077 --------------- --------------- Total realized gain $ 7,726 $ 10,727 =============== ===============
The Company uses the specific identification method to determine cost for computing the realized gains and losses. 19 20 (10) EARNINGS PER SHARE The Company reports earnings per share according to the Financial Accounting Standards Board's Statement 128 "Earnings per Share", which specifies the computation, presentation, and disclosure requirements for earnings per share. The following is the required reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ---------------------- ---------------------- 1999 1998 1999 1998 -------- -------- -------- -------- BASIC EPS: Net income (loss) $ 21,758 $ 30,169 $ 55,764 $(12,511) Less convertible preferred stock dividends 1,549 1,554 3,099 3,351 -------- -------- -------- -------- Income (loss) available to common stockholders $ 20,209 $ 28,615 $ 52,665 $(15,862) ======== ======== ======== ======== Weighted average shares outstanding 42,360 42,662 42,379 42,328 ======== ======== ======== ======== Net income (loss) - per share $ 0.48 $ 0.67 $ 1.24 $ (0.37) ======== ======== ======== ======== DILUTED EPS: Income (loss) available to common stockholders $ 20,209 $ 28,615 $ 52,665 $(15,862) Convertible preferred stock dividends 1,549 1,554 3,099 3,351 Convertible debentures interest 0 0 0 15 -------- -------- -------- -------- Income available to common stockholders plus assumed conversions $ 21,758 $ 30,169 $ 55,764 $ N/A ======== ======== ======== ======== Weighted average shares outstanding-Basic EPS 42,360 42,662 42,379 42,328 Common stock options 315 309 331 661 Convertible preferred stock 3,961 3,961 3,961 3,962 Convertible debentures 0 0 0 0 -------- -------- -------- -------- Weighted average shares outstanding-Diluted EPS 46,636 46,932 46,671 46,951 ======== ======== ======== ======== Net income - per share $ 0.47 $ 0.64 $ 1.19 $ N/A ======== ======== ======== ========
20 21 AMERICAN BANKERS INSURANCE GROUP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Gross collected premiums were $686.8 million for the three months ended June 30, 1999 compared to $696.9 million for the same period of 1998. This represents a decrease of 1%. Gross collected premiums were $1.3 billion for the six months ended June 30, 1999 and $ 1.4 billion for the same period of 1998. During the three months ended June 30, 1999, total premiums and other revenues were $ 401.9 million, a decrease of $12.1 million over total premiums and other revenues of $414.0 million for the same period in 1998. Investment income decreased by $1.5 million and realized gains increased by $.9 million for the second quarter of 1999 as compared to the same period of 1998. The benefits and claims ratio was 35% for the six months ended June 30, 1999 and 1998. The commission ratio increase from 44% for the three months ended June 30, 1998, to 45% for the same period in 1999. Net income for the second quarter of 1999 was $21.8 million, which includes $4.6 million in losses related to the personal accident program written by the Company's UK subsidiary. This compares with net income of $30.2 million for the same period in 1998. Net income for the six months ended June 30, 1999 was $55.8 million, which includes $2.8 million from the sale of assets and liabilities of one of the Company's smaller non-insurance subsidiaries during the first quarter of 1999. This compares with net income of $61.9 million for the same period in 1998, excluding the merger termination and other merger related expenses. Including the merger termination and other merger related expenses, the Company reported a net loss for the six moths ended June 30, 1998 of $12.5 million. FINANCIAL CONDITION Stockholders' Equity decreased $9 million from $1.061 billion at December 31, 1998, to $1.052 billion at June 30, 1999. The primary cause for the decrease was $22.7 million of treasury stock purchased during the first quarter of 1999 and a reduction in the market value of the available-for-sale securities. LIQUIDITY AND CAPITAL RESOURCES On June 30, 1999, $2.4 billion of securities, short-term investments and cash comprised 56% of the Company's total assets. The securities were principally readily marketable and did not include any significant concentration in private placements. The Fortis Merger Agreement requires the Company, under certain circumstances, to pay Fortis a fee of $100 million, if the Merger is not consummated. If such payments were required, the Company would obtain such funds from available credit facilities and/or operating cash flows. The Company does not hold significant investments in equity securities; consequently, market changes in the equity securities markets do not significantly affect the investment portfolio. Prior to the closing of the pending merger with Fortis, the Company expects to continue its policy of paying regular cash dividends; however, future dividends are dependent on the Company's future earnings, capital requirements and financial condition. In addition, the payment of dividends is subject to the restrictions, and conditions described in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 21 22 YEAR 2000 The Year 2000 project at ABIG was developed in early 1997. The entire project reports to an Executive Steering Committee and is being monitored by the Internal Audit Group. The Internal Audit Group reports the progress of the Company's Year 2000 project to the Board of Directors. The project involves the entire enterprise and its major accounts and vendors. It has four phases, Awareness, Assessment, Remediation, and Validation. In early 1997, a Corporate project team was created and included Executive Management. At this point the Company began its Awareness phase. In the Assessment phase, ABIG inventoried all computer hardware and software. All specific systems that required modification or replacement were assessed to determine the steps necessary to remediate the Year 2000 issue. The Assessment phase was completed during the fourth quarter of 1997. The Remediation phase began in 1997. Remediation efforts on all core insurance and accounting information processing systems have been completed and the systems returned to production. In addition, in early 1997, ABIG completed an impact analysis of all major third party vendors to determine their Year 2000 compliance. Every software and hardware vendor was contacted and plans were executed to upgrade to the vendor's Year 2000 ready release. All vendor Year 2000 compliant software upgrades have been installed and tested successfully. A few PC/Server hardware and software upgrades and replacements remain to be deployed, this will be completed during the 4th quarter of 1999. In 1997, ABIG designed and configured isolated testing labs for both mainframe and network client server technologies. The technology infrastructure, such as operating systems, third party software, wiring, and network hardware, were all upgraded to Year 2000 compliant releases before being used for lab testing. The labs provide the ability to perform validation testing for systems using various future Year 2000 date/time scenarios. The Validation testing phase started in 1998 and was completed during the first half of 1999. Validation testing was a joint effort by the Information Systems Department and senior analysts from each business area. Testing procedures were documented using guidelines developed by the ABIG Internal Audit Group. ABIG surveyed its network of corporate clients and other third parties regarding their Year 2000 readiness in our Assessment phase. All, but a few, have responded to the surveys and have represented that they expect to be compliant by the Year 2000. Our Validation phase includes plans to audit the readiness of our major corporate clients and to test electronic interface files throughout 1999. Non-information technology systems such as those pertaining to the operations of the building were evaluated and tested using the same four phases described above. While the Company is not presently aware of any significant exposure, there can be no guarantee that the systems of ABIG's corporate clients and other third parties will be converted in a timely manner, or that a failure to properly convert by another company would not have a material adverse effect on the Company. In the event the Company, clients or other third parties fail to be converted in a timely manner, the Company intends to implement the necessary portions of its disaster recovery plan. The Company as part of its overall business operation, has developed a disaster recovery plan which includes electronic as well as non-electronic processes. Additional internal resources will be focused to address each failure on a case-by-case basis. The recovery steps necessary will vary considerably depending on the nature of the Year 2000 issue being addressed. The worst case scenario would be where the Company's systems do not operate as expected and/or major clients and major service providers fail to achieve their Year 2000 compliance. Consequently, no assurance can be given that Year 2000 compliance can be achieved without costs that might affect future financial results or cause reported financial information to not be necessarily indicative of future operating results or future financial condition. Through June 30, 1999, the Company has expensed approximately $9.4 million and estimates another $.5 million to substantially complete the project. 22 23 REGULATIONS ABIG's domestic insurance subsidiaries, like other insurance companies, are subject to regulation and supervision by the insurance regulatory authorities of the jurisdictions in which it is authorized to engage in business. Regulations vary by state, but generally they relate to standards of solvency, pricing, licensing, investment restrictions, policy form approval, sales and marketing practices, claims handling, computation of reserves, assessments and financial reporting. In recent years, state regulators, directly and through the NAIC, have placed greater scrutiny on the market conduct activities of credit insurers such as ABIG. In May 1998, after market conduct examinations by several states, the Company received notice from the Kentucky Commissioner of Insurance that certain states intended to conduct a multi-state market conduct examination of ABIG. The Commissioner offered that in lieu of such examination, the Company could choose to enter into a comprehensive compliance plan agreeable to the several states. To avoid the significant cost and business disruption that would likely result from an multi-state examination, the Company chose to implement a comprehensive compliance plan. Accordingly, on November 23, 1998, the Company entered into a Consent Order and Compliance Plan signed by 39 participating states. Pursuant to the terms of the Consent Order and Compliance Plan, the Company agreed to pay $12,000,000 to be disbursed to the 39 participating states and agreed to pay to insureds any monies which may be owing due to instances of excess premium charges or less than appropriate claims payments made during a specified period. Subsequent to November 1998, four additional states signed the Consent Order and Compliance Plan bringing to 43 the number of participating states. In November 1999, pursuant to the Consent Order and Compliance Plan, the Company is subject to examination by the participating states to review the Company's implementation of the Compliance Plan. An additional amount of $3,000,000 may be payable to the participating states should they determine the Company has not complied with the provisions of the Consent Order and Compliance Plan. The Company continues to take steps to implement the Compliance Plan, but there can be no assurances that the Company will fully implement the Compliance Plan by November, 1999. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 - SAFE HARBOR CAUTIONARY STATEMENT Except for the historical information contained herein, certain of the matters discussed in this quarterly report are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, which involve certain risks and uncertainties, including but not limited to, changes in general economic conditions, interest rates, consumer confidence, competition, environmental factors, and governmental regulations affecting the Company's operations. See the Company's Annual Report Form on 10-K for the year ended December 31, 1998, for a further discussion of these and other risks and uncertainties applicable to the Company's business. 23 24 PART II OTHER INFORMATION 24 25 ITEM 1 - LEGAL PROCEEDINGS Commitments and Contingencies information which appears on page 14 elsewhere in this report is incorporated by reference in this item. Additional information regarding litigation can be found in the Company's 1998 Annual Report on Form 10-K. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Stockholders meeting was held on May 7, 1999 at the Company's Headquarters. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Act of 1934. The following matters were submitted to a vote by the shareholders:
TOTAL VOTES FOR WITHHELD ABSTAIN --- -------- ------- Election of ten directors: William Allen, Jr. 35,871,809 201,706 Jack Kemp 35,686,213 387,302 James Jorden 35,870,085 203,430 R. Kirk Landon 35,854,481 219,034 Robert Strauss 35,870,809 202,706 Nicholas Buoniconti 35,686,411 387,104 Armando Codina 35,871,511 202,004 Peter Dolara 35,872,079 201,436 Eugene Matalene, Jr. 35,872,009 201,506 Nicholas St. George 35,871,109 202,406 Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for fiscal 1999 35,936,839 81,058 55,618
Continuing directors are: Gerald N. Gaston, Daryl L. Jones, Bernard P.Knoth, S.J., Albert H. Nahmad and George E. Williamson II. On July 22, 1999, two special meetings were held for the holders of common and preferred stock at the Company's Headquarters for the following purpose: To approve and adopt an Agreement and Plan of Merger, dated as of March 5, 1999, among American Bankers Insurance Group, Inc., Fortis, Inc., and Greenland Acquisition Corp. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Act of 1934.
TOTAL VOTES FOR WITHHELD ABSTAIN --- -------- ------- Common Shareholders 31,049,809 182,767 20,747 Preferred Shareholders 1,341,825 0 45
25 26 ITEM 6(A) - EXHIBITS (10.1) First Amendment to the Voting Agreement between certain Stockholders and American Bankers Insurance Group Inc., a Florida Corporation and Fortis, Inc., a Nevada Corporation. (27) Financial Data Schedule (for SEC use only) ITEM 6(B) - REPORTS ON FORM 8-K None 26 EX-10.1 2 AMENDMENT TO VOTINF AGREEMENT/FORTIS INC. 1 FIRST AMENDMENT TO VOTING AGREEMENT FIRST Amendment, dated as of June ____, 1999 (the "First Amendment"), amending the VOTING AGREEMENT, dated March 5, 1999 (the "Agreement"), between certain Stockholders named therein (each a "Stockholder," and collectively, the "Stockholders") of AMERICAN BANKERS INSURANCE GROUP, INC., a Florida corporation (the "Company"), and FORTIS, INC., a Nevada corporation ("Parent," and together with the Stockholders, the "Original Parties"). W I T N E S S E T H WHEREAS, the Original Parties have heretofore entered into a Voting Agreement, dated as of March 5, 1999 (the "Agreement"); and WHEREAS, R. Kirk Landon and the Landon Corporation, a Florida corporation, desire to transfer Shares to Landon Beta Limited Partnership ("Beta") and Landon Gamma Limited Partnership ("Gamma," and together with Beta, the "New Parties"), both Nevada limited partnerships; and WHEREAS, the New Parties have agreed to be bound by the terms and conditions of the Voting Agreement; and NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the Original Parties and the New Parties agree as follows: 1. The New Parties are hereby added to the Agreement as Stockholders, and agree to be bound by the terms and conditions of the Agreement. 2. The second sentence of Section 5 of the Agreement be and hereby is deleted in its entirety and the following is inserted in lieu thereof: Notwithstanding anything to the contrary in this Agreement, (A) Mr. Landon shall be permitted to Transfer (i) Shares or New Shares Transferred for net after-tax proceeds of not in excess of $10,000,000, (ii) Shares or New Shares Transferred pursuant to any decision by a court or alternative dispute resolution entity, or in settlement of any legal proceeding and (iii) Shares Transferred 2 from one Stockholder to another Stockholder (an "Intra-Stockholder Transfer") PROVIDED, HOWEVER, that any shares acquired by a Stockholder pursuant to an Intra-Stockholder Transfer shall be subject to the terms of this Agreement to the same extent as if they constituted Shares and (B) Mr. Gaston shall be permitted to Transfer Shares or New Shares Transferred for net after-tax proceeds not in excess of $2,000,000." 3. Exhibit A to the Agreement be and is hereby deleted in its entirety and the Exhibit A attached to this First Amendment is inserted in lieu thereof. 2 3 IN WITNESS WHEREOF, the Parties have executed this First Amendment and caused the same of be duly delivered on their behalf on the day and year first written above. FORTIS, INC. By: ----------------------------- Name: --------------------------- Title: -------------------------- THE STOCKHOLDERS: -------------------------------- Name: Gerald N. Gaston -------------------------------- Name: R. Kirk Landon R. KIRK LANDON/B. LANDON FOUNDATION -------------------------------- By: R. Kirk Landon R. KIRK LANDON REVOCABLE TRUST By: ----------------------------- Name: R. Kirk Landon, Trustee LANDON CORPORATION By: ----------------------------- Name: R. Kirk Landon 3 4 LANDON BETA LIMITED PARTNERSHIP By: ----------------------------- Name: --------------------------- Title: -------------------------- LANDON GAMMA LIMITED PARTNERSHIP By: ----------------------------- Name: --------------------------- Title: -------------------------- 4 5 EXHIBIT A STOCKHOLDERS
NAME: NUMBER OF SHARES: TYPE OF OWNERSHIP - ----- ----------------- ----------------- R. KIRK LANDON 561,145(1) Direct 81,000 Directly, subject to restriction under 1991 Stock Option /Restricted Stock Award Plan 1,370,450 Through the Landon Corporation 126,555(2) Through the R. Kirk/B. Landon Foundation 90,079 Through the Landon Foundation 140,500 Through R. Kirk Landon Remainder Unitrust 129,824 Through R. Kirk Landon Revocable Trust Through the Landon Beta Limited Partnership Through the Landon Gamma Limited Partnership 15,562 Allocated under American Bankers Insurance Group, Inc. 401(k) and Employee Stock Ownership Plan 27,892 Acquirable under the 1994 Amended and Restated Deferred Compensation Plan --------- TOTAL: 2,543,007 =========
- ---------- 1 Includes 40,000 shares of Company Common Stock subject to an option granted by Mr. Landon to a third-party on May 24, 1995 (the "Option"). If the Option is exercised at any time prior to the termination hereof, the shares of Company Common Stock subject to the Option shall no longer be deemed Shares for purposes of this Agreement. 2 It is possible that the R. Kirk Landon Foundation (the "Foundation") will be terminated and in connection therewith, the Company Common Stock owned by the Foundation will be distributed equally to two new foundations, one of which is to be created by R. Kirk Landon and the other by B. Landon. If the Foundation is terminated at any time prior to the termination of this Agreement, 63,277 of the shares of Company Common Stock owned by the Foundation shall no longer be deemed Shares for purposes of this Agreement. 5 6 GERALD N. GASTON 589,436 Direct 15,562 Allocated under the American Bankers Insurance Group, Inc. 401(k) and Employee Stock Ownership Plan -------- TOTAL: 604,999 ========
6 EX-27 3 FINANCIAL DATA SCHEDULE
7 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 1,247,580 697,672 701,060 144,274 5,355 0 2,377,817 5,066 344,152 466,930 4,274,016 349,204 1,610,216 632,769 11,266 168,401 99,160 0 43,195 909,132 4,274,016 708,401 74,420 10,727 20,246 240,205 0 0 75,989 20,225 55,764 0 0 0 55,764 1.24 1.19 0 0 0 0 0 0 0
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