-----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, RFDW7gZRtxTi6xz3MVHz4j4VjMCcNdhgFWirJwDlYKv7TE9xRz/jTiesODb2kYc4 k71YJTajgAga0/gGyrk4KQ== 0000914121-99-000388.txt : 19990426 0000914121-99-000388.hdr.sgml : 19990426 ACCESSION NUMBER: 0000914121-99-000388 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990421 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAC RE CORP CENTRAL INDEX KEY: 0000775542 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 133297840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13720 FILM NUMBER: 99600099 BUSINESS ADDRESS: STREET 1: PO BOX 2568 STREET 2: ONE GREENWICH PLAZA CITY: GREENWICH STATE: CT ZIP: 06836-2568 BUSINESS PHONE: 2036225200 MAIL ADDRESS: STREET 1: PO BOX 2568 CITY: GREENWICH STATE: CT ZIP: 06836-2568 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 21, 1999 NAC Re Corp. (Exact Name of Registrant as Specified in its Charter) Delaware 0-13891 13-3297840 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation) Identification No.) One Greenwich Plaza, CT 06836-2568 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (203) 622-5200 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. The registrant's press release dated April 21, 1999, regarding its financial results for the 1999 first quarter ended March 31, 1999, as well as consolidated financial statements for the period ended March 31, 1999, are filed herewith as Exhibits 99.1 and 99.2 respectively and are incorporated herein by reference. The registrant's press release dated April 23, 1999, regarding the expansion of the registrant's stock repurchase program to repurchase up to an additional two million shares of common stock is filed herewith as Exhibit 99.3 and is incorporated herein by reference. Item 7. Financial Statements and Exhibits. (c) The following exhibits are filed with this report: Exhibit Number Description - -------------- ----------- 99.1 Press Release of the registrant, dated April 21, 1999. 99.2 NAC Re Corp. and Subsidiaries Consolidated Financial Supplement. 99.3 Press Release of the registrant, dated April 23, 1999. 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 hereunto duly authorized. NAC RE CORP. By: /s/ Richard H. Miller ------------------------- Name: Richard H. Miller Title: Chief Financial Officer & Treasurer Dated: April 23, 1999 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Press Release of the registrant, dated April 21, 1999. 99.2 NAC Re Corp. and Subsidiaries Consolidated Financial Supplement. 99.3 Press Release of the registrant, dated April 23, 1999. EX-99.1 2 PRESS RELEASE Exhibit 99.1 [NAC RE Corp. Letterhead] NAC RE Corporation One Greenwich Plaza P.O. Box 2568 Greenwich, CT 06836-2568 (203) 622-5200 FAX: 2036221494 - -------------------------------------------------------------------------------- PRESS RELEASE NYSE SYMBOL NRC CONTACT: Richard H. Miller Chief Financial Officer & Treasurer (203) 622-5535 FOR IMMEDIATE RELEASE NAC RE REPORTS OPERATING EARNINGS INCREASE FOR THE 1999 FIRST QUARTER Greenwich, CT, April 21, 1999 . . . . NAC Re Corp. (NYSE-NRC) reports operating earnings, excluding realized investment gains, of $19.1 million or $.95 per diluted share for the 1999 first quarter. This represents an increase of 5.6% over the $.90 per diluted share that was reported in the comparable quarter of 1998. Net income for the first quarter of 1999 was $20.8 million or $1.03 per diluted share, compared to $1.14 per diluted share in the first quarter of 1998. Net income for the 1999 first quarter includes after-tax realized investment gains of $1.7 million or $.08 per diluted share compared to $5.1 million or $.24 per diluted share in the first quarter of 1998. "We are particularly pleased to report another quarterly increase in operating earnings, especially considering the difficult pricing environment in the insurance and reinsurance industry," commented Nicholas M. Brown, Jr., President and Chief Executive Officer. "Maintaining our disciplined underwriting approach was a key contributor to NAC Re's improved operating results. "As we approach the second half of 1999, we are enthusiastic about consummating our merger with XL Capital. XL is extremely well respected and highly successful in the worldwide insurance and reinsurance markets, offering a unique blend of capital and innovative talent. We are confident that this combination will create new and superior products and capabilities for our customers and we are pleased with the overwhelmingly positive response we have received from our shareholders, brokers and clients." The Company's worldwide gross premiums written for the 1999 first quarter totaled $181.1 million, an increase of 9.5% over the 1998 first quarter. The Company's worldwide net premiums written for the 1999 first quarter totaled $142.9 million, an increase of 4.9% over the 1998 first quarter. Press Release April 21, 1999 Page 2 Domestic gross premiums written for the 1999 first quarter were $150.4 million, representing an increase of 1.1% over the comparable 1998 period. Domestic net premiums written for the 1999 first quarter were $117.9 million, representing a decrease of 2.8% from the 1998 first quarter. Overall, the decline in net premiums written is principally attributable to the cost of additional retrocessional coverages purchased to limit the Company's net retention and to supplement its core reinsurance protection. This decline was partially offset by premium growth in the Company's primary business segment. Domestic casualty net premiums for the 1999 first quarter were $72.1 million, an increase of 7.2% over the 1998 first quarter. This growth is primarily attributable to new contracts written in our treaty operation. Domestic property net premiums for the 1999 first quarter were $25.6 million, representing a decline of 25.5%. This decline reflects a continued soft pricing environment in both our treaty and facultative business, as well as increases in ceded premium charges. Net premiums written in specialty/other lines were $20.2 million, an increase of 2.9% over the comparable 1998 period. This increase is primarily due to growth in the Company's primary programs. NAC Re International Holdings Limited reported consolidated gross premiums written of $30.3 million for the 1999 first quarter, representing an increase of 68.3% over the comparable 1998 period. Net premiums written for the 1999 first quarter were $25.0 million, an increase of 67.6% over the 1998 first quarter. Net premiums written for the international reinsurance operation were $16.5 million for the first quarter of 1999, representing a 29.7% increase over the comparable 1998 period. The increase in the international reinsurance operation is attributable to growth in the casualty business resulting primarily from new business opportunities. Net premiums written for the international primary operation were $8.5 million for the 1999 first quarter, compared to $2.2 million in the 1998 first quarter. The growth in premiums are attributable to Stonebridge Underwriting Ltd., a subsidiary of NAC Re International Holdings Limited, which is participating at Lloyd's as a corporate capital vehicle on the Denham Syndicate. The domestic statutory composite ratio for the 1999 first quarter was 102.4%, compared to 102.8% for the comparable 1998 period. The first quarter statutory composite ratio for NAC Reinsurance International Limited was 104.1%, compared to 108.9% for the same prior year period. The Company's claims and claims expense reserves, net of reinsurance, were $1.7 billion at March 31, 1999. Press Release April 21, 1999 Page 3 After-tax net investment income was $26.5 million or $ 1.26 per diluted share for the 1999 first quarter, an increase of 3.3% over the $1.22 per diluted share in the 1998 first quarter. This increase is attributable to the growth in invested assets. As of March 31,1999, the Company's investment portfolio of $2.4 billion consisted primarily of fixed income investments with average quality ratings of AA/Aa2. The Company's investment portfolio generated an after-tax yield of 4.5% in the first quarter of 1999, which is the same yield in the first quarter of 1998. The Company reported net cash used for operations of $1.8 million, compared to cash flow from operations of $13.9 for the comparable 1998 period. The 1999 first quarter cash flow was lower due to increases in paid claim activity and retrocessional costs. Consolidated stockholders' equity totaled $752.7 million compared to $750.7 million at December 31, 1998. Stockholders' equity per basic share at March 31, 1999 was $40.79 compared to $40.86 at December 31, 1998. The unrealized appreciation of investments, net of tax, was $40.3 million at March 31, 1999, compared to $57.7 million at December 31, 1998, a decline of $17.4 million or $.94 per book value share. Statutory surplus of the Company's reinsurance subsidiary, NAC Reinsurance Corporation, was $732.9 million at March 31,1999. Through April 1999, the Company repurchased over 421,000 shares of Common Stock at a cost of $22.2 million or at an average cost of $52.74 per share. From the inception of the Company's stock repurchase program in 1988, approximately 4.1 million shares have been repurchased at an average cost of $29.90 per share. **************** NAC Re Corporation is the parent company of NAC Reinsurance Corporation which is an "A+" rated reinsurer, licensed to write reinsurance in all fifty states, the District of Columbia and all provinces of Canada. NAC Re Corp news releases, including quarterly financial results, are available on its website at www.nacre.com. Press Release April 21, 1999 Page 4 Safe Harbor for Forward-Looking Statements Certain statements made during the course of NAC Re Corp.'s presentation that are not based on current or historical fact are forward-looking in nature including, without limitation, statements containing words "believes," "anticipates," "intends," "expects," "estimates," "predicts," and words of similar import. Such forward-looking statements involve known and unknown risks, assumptions, uncertainties, and other factors that may cause actual results, performance, or achievements of NAC Re or the industry to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. NAC Re has identified certain risk factors which could cause actual plans or results to differ substantially from those included in any forward-looking statements. These risk factors are discussed in NAC Re's Securities and Exchange Commission filings including, but not limited to, its most recent Forms 10-K, 10-Q, 8-K; Annual Report, and all such discussions regarding risk factors are hereby incorporated by reference into this presentation. Copies of these filings are available from NAC Re or directly from the SEC. EX-99.2 3 CONSOLIDATED FINANCIAL SUPPLEMENT Exhibit 99.2 ================================================================================ NAC RE CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL SUPPLEMENT ================================================================================
(Unaudited) Three months ended March 31, -------------------------------------------- SUMMARY PERFORMANCE DATA: 1999 1998 % Chg ---- ---- ---- Gross premiums written $181.1 $165.4 9.5% Net premiums written 142.9 136.2 4.9 Net investment income: - After-tax 26.5 25.6 3.4 - Pretax 32.9 32.1 2.6 Cash flow from operations (1.8) 13.9 (112.8) Statutory composite ratio: - Domestic 102.4% 102.8% - International 104.1% 108.9% - Consolidated 102.6% 103.5% PER SHARE DATA: Basic: Average shares outstanding 18,411 18,355 --------- --------- Operating, excluding investment gains $1.04 $0.97 7.2% Investment gains, net of tax 0.09 0.28 --------- --------- Net income $1.13 $1.25 (9.6)% ========= ========= Diluted (assuming conversion of dilutive convertible securities): Average shares outstanding 21,000 20,954 --------- --------- Operating, excluding investment gains $0.95 $0.90 5.6% Investment gains, net of tax 0.08 0.24 --------- --------- Net income $1.03 $1.14 (9.6)% ========= ========= MARCH 31, DECEMBER 31, % 1993 1998 Chg ------------------- ------------------- ------------------ BALANCE SHEET DATA: Total assets $3,248.3 $3,227.6 .6% Cash and invested assets (A) 2,413.9 2,448.8 (1.4) Stockholders' equity 752.7 750.7 .3 Per basic share (B)(C) 40.79 40.86 (.2) Per diluted share 41.62 41.69 (.2) Statutory surplus 732.9 737. (.6)
(A) Excluding net investment payables of $7.6 million for 1999 and 1998. (B) Shares outstanding are 18,452,660 and 18.374,355, respectively. (C) Assuming bonds are carried at amortized cost, stockholders' equity per basic share would be $38.77 and $37.96, respectively. - 1 - NAC RE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (In thousands, except per share amounts)
(Unaudited) Three months ended March 31, ---------------------------------------- 1999 1998 -------------- -------------- PREMIUMS AND OTHER REVENUES Net premiums written $142,871 $136,190 Increase in unearned premiums (10,206) (2,836) -------------- -------------- Premiums earned 132,665 133,354 Net investment income 32,905 32,085 Net investment gains 2,673 7,874 -------------- -------------- Total revenues 168,243 173,313 Operating Costs and Expenses Claims and claims expenses 84,022 88,692 Commissions and brokerage 35,980 33,443 Other operating expenses 17,966 17,126 Interest expense 5,402 5,426 -------------- -------------- Total operating costs and expenses 143,370 144,687 INCOME Income before income taxes 24,873 28,626 -------------- -------------- Federal and foreign income taxes: Current 3,793 6,684 Deferred 252 (1,064) -------------- -------------- Income tax expense (benefit) 4,045 5,620 -------------- -------------- Net income $20,828 $23,006 ============== ============== PER SHARE DATA Basic: Average shares outstanding 18,411 18,355 Operating, excluding investment gains $1.04 $0.97 Investment gains, net of tax 0.09 0.28 -------------- -------------- Net income $1.13 $1.25 ============== ============== Diluted (assuming conversion of dilutive convertible securities): Average shares outstanding 21,000 20,954 Operating, excluding investment gains $0.95 $0.90 Investment gains, net of tax 0.08 0.24 -------------- -------------- Net income $1.03 $1.14 ============== ============== Cash dividends declared per share $0.09 $0.075 ============== ==============
- 2 - NAC RE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands)
(Unaudited) March 31, December 31, 1999 1998 ---------------- ---------------- ASSETS Investments: Available for sale: Fixed maturities (amortized cost: 1999, $2,122,326; 1998, $2,108,692) $2,179,670 $2,190,617 Equity securities (cost: 1999, $87,517; 1998, $108,276) 92,140 115,064 Short-term investments 136,669 146,828 ---------------- ---------------- TOTAL INVESTMENTS 2,408,479 2,452,509 Cash 13,042 3,915 Accrued investment income 37,318 36,270 Premiums receivable 249,875 239,674 Reinsurance recoverable balances, net 284,897 262,872 Reinsurance recoverable on unearned premiums 43,017 49,962 Deferred policy acquisition costs 101,944 98,874 Excess of cost over net assets acquired 7,861 8,013 Deferred tax asset, net 48,211 37,481 Other assets 53,657 38,062 ---------------- ---------------- TOTAL ASSETS $3,248,301 $3,227,632 ---------------- ---------------- LIABILITIES Claims and claims expenses $1,732,095 $1,718,237 Unearned premiums 344,133 341,443 8% Notes due 1999 100,000 100,000 7.15% Notes due 2005 99,951 99,949 5.25% Convertible Subordinated Debentures due 2002 100,000 100,000 Investment accounts payable 7,612 7,612 Revolving credit agreement 12,924 12,924 Other liabilities 98,903 96,742 ---------------- ---------------- TOTAL LIABILITIES 2,495,618 2,476,907 ---------------- ---------------- STOCKHOLDERS' EQUITY Preferred stock, $1.00 par value: 1,000 shares authorized, none issued (Includes 277.5 shares of Series A Junior Preferred Stock) - - Common stock, $.10 par value: 25,000 shares authorized (1999, 22,069; 199 8, 21,991 shares issued) 2,207 2,199 Additional paid-in capital 271,587 268,468 Accumulated other comprehensive income 42,411 62,778 Retained earnings 535,204 516,036 Less treasury stock, at cost (1999, 3,616; 1998, 3,617 shares) (98,726) (98,756) ---------------- ---------------- TOTAL STOCKHOLDERS' EQUITY 752,683 750,725 ---------------- ---------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,248,301 $3,227,632 ================ ================
- 3 - NAC RE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In thousands)
(Unaudited) --------------------------------------------------------------------------------------------- Accumulated Other Total Common Paid-in Comprehensive Retained Treasury Comprehensive Stockholders' Stock Capital Income Earnings Stock Income Equity ----- ------- ------ -------- ----- ------ ------ Balance, At December 31, 1998 $2,199 $268,468 $516,036 ($98,756) $62,778 $750,725 Comprehensive income: Net income $20,828 20,828 20,828 Other comprehensive income, net of tax: Unrealized depreciation of investments (17,382) (17,382) Currency translation adjustments (2,985) (2,985) ------- Other comprehensive income (20,367) (20,367) -------- Total comprehensive income $461 ==== Issuance of shares 8 3,119 3,127 Dividends declared on common stock (1,660) (1,660) Reissuance of treasury shares 30 30 ----------------------- ---------------------------------------------------- Balance at March 31, 1999 $2,207 $271,587 $535,204 ($98,726) $42,411 $752,683 ----------------------- ----------------------------------------------------
(Unaudited) -------------------------------------------------------------------------------------------- Accumulated Other Total Common Paid-in Comprehensive Retained Treasury Comprehensive Stockholders' Stock Capital Income Earnings Stock Income Equity ----- ------- ------ -------- ----- ------ ------ Balance, At December 31, 1997 $2,171 $255,424 $426,309 ($87,832) $60,989 $657,061 Comprehensive income: Net income $23,006 23,006 23,006 Other comprehensive income, net of tax: Unrealized appreciation of investments 3,384 3,384 Currency translation adjustments 908 908 --- Other comprehensive income 4,292 4,292 ----- Total comprehensive income $27,298 ======= Issuance of shares 7 2,482 2,489 Dividends declared on common stock (1,377) (1,377) Purchase of treasury shares, net of reissuance (2,326) (2,326) ----------------------- ----------------------------------------------------- Balance at March 31, 1998 $2,178 $257,906 $447,938 ($90,158) $65,281 $683,145 ======================= =====================================================
- 4 - NAC RE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands)
(Unaudited) Three months ended March 31, ---------------------------------------- 1999 1998 ---------------- ---------------- OPERATING ACTIVITIES Net income $20,828 $23,006 Adjustments to reconcile net income to net cash provided by operating activities: Reserve for claims and claims expenses, net (4,866) 4,929 Unearned premiums, net 10,347 2,819 Premiums receivable (11,077) (1,991) Accrued investment income (1,111) 2,848 Reinsurance balances, net 4,834 6,508 Deferred policy acquisition costs (3,233) (805) Net investment gains (2,654) (7,874) Deferred tax asset, net 231 (1,082) Other liabilities 6,787 (4,002) Other items, net (21,872) (10,455) ---------------- ---------------- NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (1,786) 13,901 ---------------- ---------------- INVESTING ACTIVITIES Sales of fixed maturity investments 230,481 310,627 Maturities of fixed maturity investments 4,237 3,522 Purchases of fixed maturity investments (253,546) (340,404) Net sales of short-term investments 8,458 21,753 Sales of equity securities 34,655 7,951 Purchases of equity securities (13,863) (14,296) Purchases of furniture and equipment (691) (1,799) ---------------- ---------------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 9,731 (12,646) ---------------- ---------------- FINANCING ACTIVITIES Issuance of shares 2,780 2,309 Net reissuance (purchase) of treasury shares 30 (2,326) Cash dividends paid to stockholders (1,652) (1,372) ---------------- ---------------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 1,158 (1,389) ---------------- ---------------- Effects of exchange rate changes on cash 24 142 ---------------- ---------------- Increase in cash 9,127 8 Cash - beginning of year 3,915 8,430 ---------------- ---------------- Cash - end of period $13,042 $8,438 ---------------- ---------------- - 5 -
EX-99.3 4 PRESS RELEASE Exhibit 99.3 [NAC RE Corp. Letterhead] NAC RE Corporation One Greenwich Plaza P.O. Box 2568 Greenwich, CT 06836-2568 (203) 622-5200 FAX: 2036221494 - -------------------------------------------------------------------------------- CONTACT: Richard H. Miller (203) 622-5535 FOR IMMEDIATE RELEASE NAC RE CORP. INCREASES ITS STOCK REPURCHASE AUTHORIZATION Greenwich, CT, April 23, 1999 --- NAC Re Corporation (NYSE:NRC) announced today that the Board of Directors has approved the expansion of the Company's stock repurchase program initially authorized in January 1988. The Board authorized the Company to repurchase up to an additional two million shares of Common Stock. The Company has repurchased approximately four million shares of its Common Stock since the inception of the program, including approximately 400,000 shares thus far in 1999. NAC Re Corporation is the parent company of NAC Reinsurance Corporation, which is an "A+" rated reinsurer licensed to write business in all fifty states, the District of Columbia and all provinces of Canada. -----END PRIVACY-ENHANCED MESSAGE-----