-----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, OEkkRkSAayPAxvXWgTIITX6OFww23/ud2+jvEUYNMhJ5Yro6zNdVbr5M5iWpTbhU HbcUUOO6hTVxOKAWqeghfw== 0000005016-97-000003.txt : 19970318 0000005016-97-000003.hdr.sgml : 19970318 ACCESSION NUMBER: 0000005016-97-000003 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970317 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN FINANCIAL CORP CENTRAL INDEX KEY: 0000005016 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 310624874 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-07361 FILM NUMBER: 97558012 BUSINESS ADDRESS: STREET 1: ONE E 4TH ST CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5135792121 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Amendment No. 1 to Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of report: December 31, 1996 (Date of earliest event reported) Commission File No. 1-7361 AMERICAN FINANCIAL CORPORATION Incorporated under the laws of Ohio IRS Employer Identification No. 31-0624874 One East Fourth Street Cincinnati, Ohio 45202 Phone: (513) 579-2121 Former name or former address, if changed since last report: Not Applicable. Page 1 of 9 This Amendment No. 1 to Form 8-K is being filed to provide the Pro Forma Financial information required by Item 7(b) of this Form. Item 7(b) Pro Forma Financial Information Effective as of the close of business on December 31, 1996, American Financial Group, Inc. ("AFG"), the owner of 100% of the outstanding common stock of American Financial Corporation ("AFC"), contributed to the capital of AFC, 38 million of the 47 million outstanding shares of common stock of American Premier Underwriters, Inc. ("American Premier"), previously a direct, wholly-owned subsidiary of AFG. No consideration was paid by AFC. AFG was formed in December 1994 for the purpose of acquiring AFC and American Premier. In mergers completed on April 3, 1995, AFG issued 71.4 million shares of its common stock in exchange for all of the outstanding common stock of AFC and American Premier (the "Mergers"). AFC received 18.7 million shares of AFG for its investment in a like number of American Premier shares. The AFG shares held by AFC have been treated as retired in AFG's financial statements. The accompanying Unaudited Pro Forma Condensed Balance Sheet as of September 30, 1996, and Unaudited Pro Forma Statements of Earnings for the nine months ended September 30, 1996 and 1995 and year ended December 31, 1995, assume the contribution of American Premier to AFC occurred on April 3, 1995, the date AFC and American Premier became subsidiaries of AFG. AFC's acquisition of American Premier is accounted for in a manner similar to a pooling of interests whereby the assets and liabilities of American Premier (at AFG's historical cost basis) are combined with those of AFC. The Unaudited Pro Forma Financial Statements should be read in conjunction with the historical financial statements and related notes of AFC and American Premier which are included in their respective Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the periods corresponding to those presented below. Page 2 of 9 AMERICAN FINANCIAL CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1996 (In Millions)
Historical American Pro Forma AFC AFC Premier Adjustments Pro Forma Assets Cash and short-term investments $ 297.8 $ 104.6 $ - $ 402.4 Investments 9,912.3 1,866.7 (575.8) (a) 11,203.2 Recoverables from reinsurers and prepaid reinsurance premiums 966.8 77.9 (97.1) (b) 947.6 Agents' balances and premiums receivable 369.4 288.0 (14.7) (b) 642.7 Deferred acquisition costs 364.5 79.7 - 444.2 Prepaid expenses, deferred charges and other assets 646.7 381.0 (3.2) (b) 1,024.5 Receivable from affiliates - 587.1 (587.1) (b) - Cost in excess of net assets acquired 176.4 381.1 (272.5) (c) 285.0 $ 12,733.9 $ 3,766.1 $ (1,550.4) $ 14,949.6 Liabilities and Shareholders' Equity Unpaid losses and loss adjustment expenses $ 3,139.8 $ 1,097.9 $ (57.1) (b) $ 4,180.6 Unearned insurance premiums 894.2 392.8 (37.2) (b) 1,249.8 Annuity benefits accumulated 5,279.2 - - 5,279.2 Life, accident and health reserves 561.2 - - 561.2 Payable to affiliates 725.4 - (587.1) (b) 138.3 Long-term debt 388.4 264.5 10.9 (d) 663.8 Accounts payable, accrued expenses and other liabilities 840.7 383.6 (61.7) (b) 1,162.6 Minority interest 147.4 - 194.0 (e) 341.4 Total liabilities 11,976.3 2,138.8 (538.2) 13,576.9 Preferred stock 168.5 - - 168.5 Common stock 9.6 47.0 (47.0) (f) 9.6 Capital surplus - 579.1 (100.7) (f) 478.4 Retained earnings 464.9 1,003.9 (885.8) (f) 583.0 Net unrealized gains (losses) on marketable securities, net of deferred income tax 114.6 (2.7) 21.3 (f) 133.2 Total shareholders' equity 757.6 1,627.3 (1,012.2) 1,372.7 $ 12,733.9 $ 3,766.1 $ (1,550.4) $ 14,949.6
Page 3 of 9 AMERICAN FINANCIAL CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS NINE MONTHS ENDED SEPTEMBER 30, 1996 (In Millions)
Historical American Pro Forma AFC AFC Premier Adjustments Pro Forma Income: Property and casualty insurance premiums $ 1,164.4 $ 998.2 $ - $ 2,162.6 Life, accident and health premiums 80.3 - - 80.3 Investment income 517.4 164.6 (54.9) (g) 627.1 Realized gains on sales of securities 16.8 6.6 1.2 (h) 24.6 Equity in net earnings of investee corporations 50.7 1.6 (29.8) (i) 22.5 Gains on sales of investee corporations 169.4 - - 169.4 Gains on sales of subsidiaries 2.9 53.1 (19.2) (k) 36.8 Other income 93.9 11.8 (2.6) (l) 103.1 2,095.8 1,235.9 (105.3) 3,226.4 Costs and Expenses: Property and casualty insurance: Losses and loss adjustment expenses 921.9 733.7 - 1,655.6 Commissions and other underwriting expenses 365.0 231.5 - 596.5 Annuity benefits 206.3 - - 206.3 Life, accident and health benefits 70.2 - - 70.2 Interest charges on borrowed money 102.4 29.6 (63.5) (m) 68.5 Other operating and general expenses 228.3 35.4 17.1 (n) 280.8 1,894.1 1,030.2 (46.4) 2,877.9 Earnings before income taxes and extraordinary items 201.7 205.7 (58.9) 348.5 Provision for income taxes 35.4 79.0 (21.5) (o) 93.0 Earnings before extraordinary items $ 166.3 $ 126.7 $ (37.4) $ 255.5
Page 4 of 9 AMERICAN FINANCIAL CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS NINE MONTHS ENDED SEPTEMBER 30, 1995 (In Millions)
Pro Forma Adjustments Deduct 1st Historical Quarter American American Other AFC AFC Premier Premier Adjustments Pro Forma Income: Property and casualty insurance premiums $ 1,107.1 $ 1,131.5 $ (381.9) $ - $ 1,856.7 Life, accident and health premiums 1.6 - - - 1.6 Investment income 472.3 153.5 (49.3) (24.4) (g) 552.1 Realized gains on sales of securities 22.2 8.5 0.2 4.1 (h) 35.0 Equity in net earnings of investee corporations 44.0 0.7 - (11.2) (i) 33.5 Gains (losses) on sales of investee corporations (0.3) - - 0.4 (j) 0.1 Gains (losses) on sales of subsidiaries - (0.2) - 0.2 (k) - Other income 77.2 9.3 (3.0) (1.1) (l) 82.4 1,724.1 1,303.3 (434.0) (32.0) 2,561.4 Expenses: Property and casualty insurance: Losses and loss adjustment expenses 775.6 899.1 (287.0) - 1,387.7 Commissions and other underwriting expenses 359.1 253.9 (93.0) - 520.0 Annuity benefits 194.2 - - - 194.2 Life, accident and health benefits 1.3 - - - 1.3 Interest charges on borrowed money 103.0 36.1 (13.1) (30.5) (m) 95.5 Other operating and general expenses 176.9 36.5 (14.7) 6.7 (n) 205.4 1,610.1 1,225.6 (407.8) (23.8) 2,404.1 Earnings before income taxes and extraordinary items 114.0 77.7 (26.2) (8.2) 157.3 Provision for income taxes 31.1 29.6 (9.9) (10.8) (o) 40.0 Earnings before extraordinary items $ 82.9 $ 48.1 $ (16.3) $ 2.6 $ 117.3
Page 5 of 9 AMERICAN FINANCIAL CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT 0F EARNINGS YEAR ENDED DECEMBER 31, 1995 (In Millions)
Pro Forma Adjustments Deduct 1st Historical Quarter American American Other AFC AFC Premier Premier Adjustments Pro Forma Income: Property and casualty insurance premiums $ 1,535.2 $ 1,495.4 $ (381.9) $ - $ 2,648.7 Life, accident and health premiums 15.7 - - - 15.7 Investment income 632.6 205.4 (49.3) (39.2) (g) 749.5 Realized gains on sales of securities 56.6 23.8 0.2 3.4 (h) 84.0 Equity in net earnings (losses) of investee corporations 36.9 (2.2) - (19.5) (i) 15.2 Gains (losses) on sales of investee corporations (0.1) - - 0.4 (j) 0.3 Gains (losses) on sales of subsidiaries - (0.3) - 0.3 (k) - Other income 106.6 13.4 (3.0) (2.3) (l) 114.7 2,383.5 1,735.5 (434.0) (56.9) 3,628.1 Expenses: Properly and casualty insurance: Losses and loss adjustment expenses 1,065.9 1,198.5 (287.0) 1,977.4 Commissions and other underwriting expenses 474.2 326.1 (93.0) - 707.3 Annuity benefits 254.7 - - - 254.7 Life, accident and health benefits 13.2 - - - 13.2 Interest charges on borrowed money 138.2 44.9 (13.1) (47.4) (m) 122.6 Other operating and general expenses 254.0 53.0 (14.7) 8.7 (n) 301.0 2,200.2 1,622.5 (407.8) (38.7) 3,376.2 Earnings before income taxes and extraordinary items 183.3 113.0 (26.2) (18.2) 251.9 Provision for income taxes 40.1 45.9 (9.9) (19.7) (o) 56.4 Earnings before extraordinary items $ 143.2 $ 67.1 $ (16.3) $ 1.5 $ 195.5
Page 6 of 9 American Financial Corporation Notes to Unaudited Pro Forma Financial Statements (in millions) (a) Represents (i) the elimination of AFC's $574.3 million investment in AFG whose assets consist principally of its investments in AFC and American Premier and (ii) a $1.5 million adjustment to reduce American Premier's investments to AFG's basis. (b) To eliminate intercompany balances between AFC and American Premier including deferred income tax benefits recorded in consolidation. (c) To adjust American Premier's goodwill to AFG's basis. (d) To adjust American Premier's long-term debt to AFG's basis. (e) Represents common stock of American Premier owned by AFG. (f) Reflects (i) AFG's contribution of American Premier common stock to AFC as if contributed at the date of the Mergers, (ii) the elimination of AFC's investment in AFG and American Premier, and (iii) AFC's share of American Premier's earnings and net unrealized gains on marketable securities from the date of the Mergers to September 30, 1996. (g) Adjustments to investment income consist of the following: Nine Months Ended Year Ended September 30, December 31, 1996 1995 1995 Eliminate intercompany interest ($61.8) ($28.6) ($44.8) Reclassify investment expenses 4.7 2.6 3.0 Adjust to AFG's basis 2.2 1.6 2.6 ($54.9) ($24.4) ($39.2) (h) To adjust American Premier's realized gains to AFG's basis. (i) To eliminate AFC's equity in earnings of AFG. (j) To eliminate AFC's $0.4 million loss on sale of an investee to American Premier. (k) To adjust American Premier's gain on sale of subsidiary in 1996 to AFG's basis and eliminate American Premier's loss on the sale of a subsidiary to AFC in 1995. (l) To eliminate intercompany charges. (m) To eliminate intercompany interest on credit line between AFC and American Premier as detailed in note (g) above and adjust interest on American Premier's debt to AFG's basis. Page 7 of 9 (n) Adjustments to other operating and general expenses consist of the following: Nine Months Ended Year Ended September 30, December 31, 1996 1995 1995 Minority interest in American Premier's earnings $20.7 $9.4 $13.3 Adjust goodwill amortization to AFG's basis (5.7) (4.4) (5.9) Investment expenses from note (g) 4.7 2.6 3.0 Eliminate intercompany charges (2.6) (.9) (1.7) $17.1 $6.7 $ 8.7 (o) Represents primarily the tax benefit on interest expense of AFC on its credit line with American Premier for which AFC did not record a tax benefit. Page 8 of 9 SIGNATURES 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 FINANCIAL CORPORATION March 17, 1997 By: James C. Kennedy James C. Kennedy Deputy General Counsel & Secretary Page 9 of 9 -----END PRIVACY-ENHANCED MESSAGE-----