-----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, OcuMnK/Ks8EsF/tHM1/gLeiOmtjgWe2tc6kGdciFehgKgT8TlQr0gvNG+VY43duc YXwfMOeKIxCYTZaJoeTlmg== 0001047469-99-000737.txt : 19990112 0001047469-99-000737.hdr.sgml : 19990112 ACCESSION NUMBER: 0001047469-99-000737 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990111 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CENTRIS GROUP INC CENTRAL INDEX KEY: 0000798085 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 330097221 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-37241 FILM NUMBER: 99504237 BUSINESS ADDRESS: STREET 1: 650 TOWN CENTER DR STE 1600 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7145491600 MAIL ADDRESS: STREET 1: 650 TOWN CENTER DRIVE STREET 2: STE 1600 CITY: COSTA MESA STATE: CA ZIP: 92626-1925 FORMER COMPANY: FORMER CONFORMED NAME: US FACILITIES CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HCC INSURANCE HOLDINGS INC/DE/ CENTRAL INDEX KEY: 0000888919 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 760336636 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 13403 NORTHWEST FRWY CITY: HOUSTON STATE: TX ZIP: 77040-6094 BUSINESS PHONE: 7136907300 SC 13D 1 SC 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. _)* The Centris Group, Inc. ------------------------------------------------- (Name of Issuer) Common Stock, par value $.01 per share ------------------------------------------------- (Title of Class of Securities) 155904105 ------------------------------------------------- (CUSIP Number) Stephen L. Way HCC Insurance Holdings, Inc. 13403 Northwest Freeway Houston, Texas 77040-6094 (713) 690-7300 (Name, Address and Telephone Number of Person authorized to Receive Notices and Communications) with copies to: Arthur S. Berner Winstead Sechrest & Minick P.C. 910 Travis, Suite 2400 Houston, Texas 77002 (713) 650-2729 December 30, 1998 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13-1(e), (f) or (g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 404132102 - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON HCC Insurance Holdings, Inc. 76-0336636 - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ] PURSUANT TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 911,200 --------------------------------------------------------------- SHARES 8. SHARED VOTING POWER BENEFICIALLY OWNED BY -0- --------------------------------------------------------------- EACH 9. SOLE DISPOSITIVE POWER REPORTING PERSON 911,200 --------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER WITH -0- - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 911,200 - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ] CERTAIN SHARES* - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.79% (See Item 5) - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON * CO and HC ------------------------------------------------------------------------------- 2 CUSIP NO. 404132102 The following constitutes the Schedule 13D filed by the undersigned (the "Schedule 13D"). ITEM 1. SECURITY AND ISSUER The class of equity securities to which this Schedule 13D relates is the common stock, $.01 par value (the "Shares") of The Centris Group, Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 650 Town Center Drive, Suite 1600, Costa Mesa, California 92626. ITEM 2. IDENTITY AND BACKGROUND This Schedule 13D is being filed by HCC Insurance Holdings, Inc., a Delaware corporation ("HCC" or the "Company"). The principal executive offices of the Company are located at 13403 Northwest Freeway, Houston, Texas 77040-6094. HCC is a parent holding corporation whose subsidiaries, including Houston Casualty Company ("HC"), are engaged in providing specialized property and casualty insurance coverages, managing general agency services and insurance related services both to commercial customers and individuals. The Company's insurance products are underwritten on both a direct and reinsurance basis and are marketed by the Company itself and through a network of independent and affiliated agents and brokers. The Company's insurance company subsidiaries' underwriting activities are focused on providing aviation, marine, offshore energy, property, medical stop-loss, accident and health, workers' compensation, and lenders single interest insurance and reinsurance on a worldwide basis. As an insurer, the Company operates on a surplus lines or a non-admitted basis through HC and on an admitted basis through other insurance company subsidiaries. The Company also underwrites on behalf of affiliated and non-affiliated insurance companies through its managing general agency operations. These agency operations specialize in domestic general aviation insurance, medical stop-loss coverage for employee sponsored self-insured health plans, occupational accident coverage for self-insured truckers, workers' compensation and a variety of accident and health related insurance and reinsurance products. Beginning in 1996, in an effort to further diversify its operations to enhance the Company's ability to anticipate and capitalize on opportunities resulting from changing market conditions in the insurance industry, the Company commenced a strategy of acquiring through merger or purchase, a number of privately held companies whose business was managing general agency activities, primarily in the medical stop-loss and domestic general aviation insurance businesses. The name, business address, present principal occupation and citizenship of each Executive Officer and Director of HCC are set forth in Appendix A to this Schedule 13D, which is incorporated herein by reference. During the last five years neither HCC, nor, to the best of its knowledge, any of its Executive Officers or Directors listed on Appendix A to this Schedule 13D, has been convicted in any criminal 3 CUSIP NO. 404132102 proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgement, decree or final order enjoining future violations of, or prohibiting or mandating the activity subject to, federal or state securities laws or finding any violations with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The amount of the funds used to purchase the Shares reported as beneficially owned in Item 5 hereof was approximately $9.0 million, all of which was provided from HCC's cash reserves and short term investments. ITEM 4. PURPOSE OF THE TRANSACTION The purpose of the purchase by the Company of the Shares referred to in Item 5 is to acquire a significant equity position in the Issuer with the desire to acquire all of the equity securities of the Issuer, through a merger, tender offer, or other business combination. Commencing in May, 1998 the Company, through its subsidiary, HC, purchased Shares of the Issuer in order to acquire an equity position in the Issuer. Through January 11, 1999, HCC owned 911,200 Shares constituting approximately 7.79% of the outstanding Shares of the Issuer (based on 11,702,296 shares of the Issuer outstanding on September 30, 1998). During 1998, HCC initiated informal discussions with the Issuer relating to a possible business combination. The Issuer, through its Chief Executive Officer, advised HCC that it did not wish to have combination discussions and that it preferred to remain an independent company. These discussions were generally cordial, but the discussions did not result in any agreement being reached between HCC and the Issuer. HCC has a high regard for the management and directors of the Issuer. However, HCC reserves the right to take whatever action may be necessary to accomplish its goal of entering into a business 4 CUSIP NO. 404132102 combination with the Issuer. In that connection, HCC intends to seek to acquire control of the Issuer. HCC, concurrently with the filing of this Schedule 13D, has notified the Issuer of its ultimate goal. In such notification, a copy of which is attached as Exhibit 1 hereto, HCC offered to acquire 100% of the Issurer's Common Stock at a price of $13.25 per share in a negotiated business combination. HCC also issued a Press Release announcing its actions. Such Press Release is attached as Exhibit 2, hereto. HCC has not yet determined whether to pursue any specific plan or proposal for such business combination if such negotiations do not result in a business combination. There can be no assurance as to whether or when any specific plan or proposal will be pursued if such negotiations are unsuccessful. In such event, any such plan or proposal could include making a tender offer or exchange offer for some or all of the outstanding common stock of the Issuer, soliciting proxies, or proposing a business combination transaction with the Issuer. Such a business combination might also involve a distribution of certain of the Issuer's assets to its Shareholders or another disposition of some or all of such Issuer's assets. In connection with any such plan or proposal, HCC may seek redemption or judicial invalidation of the Issuer's Stock Purchase Rights Plan (the "Rights Plan") or may acquire some or all of the outstanding rights which may be issued thereunder (the "Rights"). The Rights provide that 10 days following the announcement that a person or group is the beneficial owner of at least 15% of the outstanding Shares of the Issuer, the Rights will become exercisable and will trade separately from the Shares of common stock of the Issuer. In addition, as set forth under the Rights Plan, under certain circumstances, the Rights will become nonredeemable unless the Issuer's Board of Directors extends the period of redeemability of the Rights. Although HCC has had no discussions with the Issuer with respect to the Rights, HCC believes that in light of existing market conditions and the Issuer's announced plans, the Issuer's Board of Directors should redeem the Rights in favor of any proposal by HCC that would maximize Shareholder values. Subject to the factors discussed below, the Company currently intends to purchase additional Shares in the open market or otherwise. The Company intends to review on a continuing basis various factors relating to its investment in the Issuer, including the Issuer's business and prospects, the price and availability of Shares, subsequent developments affecting the Issuer, other investment and business opportunities available to the Company, regulatory restrictions on additional Share ownership, and general stock market and economic conditions. Based on these factors, the Company may decide to change its current intention to purchase additional Shares and may determine to sell all or part of its investment in the Issuer. If required, HCC will make the necessary filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in order to permit HCC to increase its investment in the Issuer. Once such HSR Act filing is made, HCC may not be able to purchase additional Shares in the Issuer for a period of time until the expiration of a thirty-calendar day waiting period beginning on the date of such filing, unless both the Federal Trade Commission ("FTC") and the Antitrust Division of the Department of Justice ("Antitrust Division") terminates such waiting period on an earlier date. Additionally, if within such a waiting period either the FTC or the Antitrust Division requests that HCC provide additional information of documentary material, the waiting period will be extended for an additional period of 20 days following the date of substantial compliance by HCC with such request. The waiting period may be further extended only by a court order based upon the finding that HCC failed to comply substantially with the notification requirements of the HSR Act or with any request for additional information. 5 CUSIP NO. 404132102 If HCC were to commence a cash tender offer for some or all of the Shares, HCC could make a new filing under the HSR Act that would require only a 15-calendar day waiting period rather than a 30-day period subject to earlier termination or extension as described above. Except as otherwise indicated in this Item 4, the Company has no present plans or proposals with respect to the Issuer (although it reserves the right to develop any such plan or proposals). ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER. (a) HCC owns 911,200 Shares representing approximately 7.79% of the total number of Shares outstanding (based upon the 11,702,296 Shares outstanding on September 30, 1998 as disclosed in the Issuer's quarterly report on Form 10-Q for the nine months ended September 30, 1998). Such Shares are held solely by HCC. To the best knowledge of HCC, no director or executive officer of HCC beneficially owns any Shares of the Issuer, except that Alan W. Fulkerson, a Director of HCC, is a Director, Shareholder and President of Century Capital Management, Inc., a registered investment advisor which exercises both voting and investment power with respect to 90,000 shares of the Issuer owned of record by ISF Limited Partnership ("ISF"). Although Mr. Fulkerson may be deemed to beneficially own the 90,000 shares owned of record by ISF, he disclaims beneficial ownership of such shares, except to the extent of his less than 1% actual pecuniary interest therein. (b) HCC has the sole power to vote or to direct the vote and the sole power to dispose of, or to direct the disposition of, the Shares owned by it. (c) The table set forth in Appendix B to this Schedule 13D contains certain information with respect to all transactions in the Shares effected by the Company during the past 60 days and is incorporated herein by reference. (d) No person other than HCC has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares beneficially owned by HCC. (e) N/A ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as set forth under Item 4 above, neither HCC nor to the best of its knowledge any of its executive officers and directors has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Issuer, finder's fees, joint 6 CUSIP NO. 404132102 ventures, loan or option agreements, or arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. EXHIBITS 1. Letter dated January 11, 1999 from HCC to the Issuer. 2. Press release dated January 11, 1999. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. HCC Insurance Holdings, Inc. January 11, 1999 By: /s/ Stephen L. Way -------------------------------- Stephen L. Way Chief Executive Officer and Chairman of the Board 7 APPENDIX A INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS OF HCC DIRECTORS AND EXECUTIVE OFFICERS OF HCC. The following table sets forth the name, business address, present principal occupation, and employment and material occupations, positions, officers or employments for the past five years of certain directors, officers and employees of HCC. Unless otherwise indicated, the principal business address of each executive officer of HCC is 13403 Northwest Freeway, Houston, Texas 77040 and each occupation set forth opposite an individual's name refers to employment with HCC. Where no date is given for commencement of the indicated office or position, such office or position was assumed prior to January 11, 1994. Each person listed below is a citizen of the United States. PRINCIPAL OCCUPATION NAME DURING THE PAST FIVE YEARS - -------------------------------- --------------------------------------------- Stephen L. Way . . . . . . . . Mr. Way is the founder of the Company and has served as a Director, Chairman of the Board of Directors and Chief Executive Officer of the Company since its organization. He served as President from the Company's founding until May, 1996. Mr. Way has also served as a Director, Chairman of the Board of Directors and, until June, 1997, President of Houston Casualty Company ("HC"), the Company's principal insurance company subsidiary, since its organization in 1981. Mr. Way also serves as a director and officer of various of the Company's other subsidiaries. In addition, in January, 1998, Mr. Way was appointed as a member of the Board of Directors of Fresh Del Monte Produce, Inc. (NYSE-- Symbol: FDP). Mr. Way was appointed to the Board of Directors of The Bradstock Group (London Stock Exchange Symbol: BDK) in December, 1998. Arthur S. Berner . . . . . . . Mr. Berner is a Shareholder in the law firm Winstead Sechrest & Minick P.C. of Winstead Sechrest & Minick, in Houston, 910 Travis, Suite 2400 Texas. Mr. Berner has been a Director of the Houston, TX 77002 Company since December, 1998. Mr. Berner is a member of the Audit Committee. James M. Berry . . . . . . . . Mr. Berry is the retired Vice Chairman of Belk Store Services, Inc. NationsBank of Texas, N.A., a wholly owned 2801 West Tyrola Road subsidiary of NationsBank, N.A., having Charlotte, N.C. 28213 served in such capacity from August, 1988 until December, 1992. He was Corporate Executive Vice President of NCNB of North Carolina from 1983 to 1988. Mr. Berry also serves as a Director of Williams-Sonoma, Inc. (Nasdaq--Symbol: WSGC). Mr. Berry has served as a Director of the Company since March, 1992 and as a Director of HC from December, 1993 to May, 1996. - ------------------------------------------------------------------------------- 8 PRINCIPAL OCCUPATION NAME DURING THE PAST FIVE YEARS - -------------------------------- --------------------------------------------- Frank J. Bramanti . . . . . . . Mr. Bramanti currently serves as Executive Vice President of the Company. Mr. Bramanti has served as a Director from the Company's organization until May, 1996, as Secretary until July, 1997, as Chief Financial Officer until October, 1997, and as interim President from June, 1997 to November, 1997. Mr. Bramanti was re-appointed by the Board of Directors to serve as a Director in August, 1997. Mr. Bramanti has also served as Executive Vice President of HC since September, 1994 and as a Director of HC from March, 1982 to December, 1988, and from December, 1990, to the present. Mr. Bramanti also serves as a director and officer of various of the Company's other subsidiaries. Patrick B. Collins . . . . . . Mr. Collins is a retired partner of the PricewaterhouseCoopers LLP international accounting firm of 1100 Louisiana, 46th Floor PricewaterhouseCoopers LLP, where he held Houston, TX 77002 that position from 1967 through 1991. Mr. Collins was appointed as a Director of the Company in December, 1993 and was a Director of HC from the same date to May, 1996. Mr. Collins is the Chairman of the Audit Committee. J. Robert Dickerson . . . . . . Mr. Dickerson is an attorney and from May, 6110 Pebble Beach 1991 to August, 1993, he was a member in the Houston, TX 77069 law firm of Dickerson, Carmouche & Jones, a Professional Corporation. Mr. Dickerson has served as a Director of the Company since its organization. He served as a Director of HC from its organization in 1981 through December 31, 1990, and was re-elected as a Director of HC in December, 1993, and served until May, 1996. Mr. Dickerson is the Chairman of the Compensation Committee. Edwin H. Frank, III . . . . . . Mr. Frank is a principal shareholder of Underwriters Indemnity Company Underwriters Indemnity Holdings, Inc. and 8 Greenway Plaza, Suite 400 President of its subsidiaries, Underwriters Houston, TX 77046 Indemnity Company and Planet Indemnity Company having served in such capacities since 1985. Both subsidiary companies are property and casualty insurance companies. Mr. Frank has served as a Director of the Company since May, 1993 and as a Director of HC from December, 1993 until May, 1996. Mr. Frank is a member of the Audit and Compensation Committees. - ------------------------------------------------------------------------------- 9 PRINCIPAL OCCUPATION NAME DURING THE PAST FIVE YEARS - -------------------------------- --------------------------------------------- Allan W. Fulkerson . . . . . . Mr. Fulkerson is President and a Director of Century Capital Management, Century Capital Management, Inc., a Inc. registered investment advisor which 1 Liberty Square specializes in the insurance industry and Boston, MA 02109 President and a Director of Massachusetts Fiduciary Advisors, Inc., a registered investment advisor. In addition, he serves as Chairman and Trustee of Century Shares Trust, a mutual fund which invests exclusively in the stocks of larger insurance companies and banks since 1976. Mr. Fulkerson has served as a Director of the Company since May, 1997. Mr. Fulkerson is also a Director of Mutual Risk Management, Ltd., Terra Nova (Bermuda) Holdings, Ltd. and Wellington Underwriting plc. Walter J. Lack . . . . . . . . Mr. Lack is an attorney and a shareholder in Engstrom, Lipscomb & Lack the law firm of Engstrom, Lipscomb & Lack, a 10100 Santa Monica Blvd., 16th professional corporation in Los Angeles, Floor California. Mr. Lack has been a Director of Los Angeles, CA 90067-4107 the Company since its organization and has also served as a Director of HC from October, 1985 until May, 1996. Mr. Lack is a member of the Compensation Committee. Mr. Lack also serves as a director of Microvision, Inc. (Nasdaq--Symbol: MVIS). Stephen J. Lockwood . . . . . . Mr. Lockwood serves as Vice-Chairman of the LDG Reinsurance Corporation Board of Directors. Mr. Lockwood was 401 Edgewater Place appointed President of the Company in May, Wakefield, MA 01880 1996 in connection with the Company's acquisition of the company he founded, LDG Management Company, Incorporated ("LDG") and served in that capacity until May, 1997. He has been President and Chief Executive Officer of LDG since 1988. Mr. Lockwood served as a Director of the Company from its inception to May, 1993, but did not stand for re-election in 1993. Mr. Lockwood was re-appointed as a Director of the Company in December, 1993 to fill a vacancy. He also has served as a Director of HC from October, 1985 until July, 1997. Mr. Lockwood also serves as a director and officer of various of the Company's other subsidiaries. Mr. Lockwood also serves as a board member of four mutual funds managed by The Dreyfus Corporation, a subsidiary of Mellon Bank Corporation (NYSE--MEL). - ------------------------------------------------------------------------------- 10 PRINCIPAL OCCUPATION NAME DURING THE PAST FIVE YEARS - -------------------------------- --------------------------------------------- John N. Molbeck, Jr. . . . . . Upon joining the Company as its President, Mr. Molbeck was appointed as a Director by the Board of Directors in November, 1997. Mr. Molbeck has over 22 years of experience within the insurance industry. Prior to joining the Company, Mr. Molbeck was the Managing Director of AON Natural Resources Group, a subsidiary of AON Corporation which specializes in energy related insurance and reinsurance brokerage. Prior to its acquisition by AON Corporation, Mr. Molbeck served as the President and Chief Operating Officer of Energy Insurance International, Inc., an independent retail insurance and reinsurance brokerage company. Mr. Molbeck also serves as a director and officer of various of the Company's subsidiaries. Peter B. Smith, Jr. . . . . . . Mr. Smith was appointed Vice President of the Company in January, 1993, and Executive Vice President in December, 1994 and served as a Director of the Company from May, 1994 until May, 1996. Mr. Smith was re-appointed as a Director by the Board of Directors in August, 1997. Mr. Smith has served as Chief Executive Officer of HC since September, 1997, as President from June, 1997 to December, 1998, as Executive Vice President from January, 1993 to June, 1997, and Senior Vice President of HC from September, 1990 to December, 1992. Mr. Smith has served as a Director of HC from December, 1990 to December, 1993 and from August, 1994 to the present. Mr. Smith also serves as a director and officer of various of the Company's other subsidiaries. Edward H. Ellis, Jr. . . . . . Mr. Ellis joined the Company as Senior Vice President and Chief Financial Officer in October, 1997. Prior to joining the Company, Mr. Ellis served as a partner with the international accounting firm of PricewaterhouseCoopers, LLP from November, 1988 to September, 1997, specializing in the insurance industry. Mr. Ellis is a Certified Public Accountant with over 32 years of public accounting experience. Mr. Ellis also serves as a director and officer of various of the Company's subsidiaries. Christopher L. Martin . . . . . Mr. Martin joined the Company as Vice President, Secretary and General Counsel in July, 1997. Prior to joining the Company, Mr. Martin was associated with the law firm of Winstead Sechrest & Minick PC in Houston, Texas from August, 1992 to June, 1997. Mr. Martin also serves as an officer of various of the Company's subsidiaries. - ------------------------------------------------------------------------------- 11 APPENDIX B TRANSACTIONS IN THE ISSUER'S STOCK SINCE NOVEMBER 1, 1998
Number Average Cost Purchase Date of Shares per Share 12/30/98 272,500 $9.23 12/31/98 543,700(1) 9.83 01/07/99 50,000 9.63 01/08/99 45,000 9.75 Total. . . . . 911,200
- --------------------------------- (1) Acquired in a private purchase effective as of December 31, 1998 by HCC Insurance Holdings, Inc. from HC, its wholly-owned subsidiary. Prior to the time of such acquisition, by virtue of the fact that HC is a wholly-owned subsidiary of HCC, HCC may be deemed to have shared voting and dispositive power of the Shares which were owned by HC. Since November 1, 1998, HC acquired the shares of the Issuer set forth in the following table:
Number Average Cost Purchase Date of Shares per Share 12/11/98 75,000 $9.50 12/16/98 13,700 9.01 12/28/98 20,000 9.15 12/28/98 10,000 9.06 12/28/98 50,000 9.00 12/28/98 165,000 9.13 Total. . . . . . 333,700
12 EX-1 2 EXHIBIT 1 EXHIBIT 1 HCC INSURANCE HOLDINGS, INC. 13403 NORTHWEST FREEWAY HOUSTON, TEXAS 77040 January 11, 1999 Mr. David L. Cargile Chairman, President and Chief Executive Officer The Centris Group, Inc. 650 Town Center Drive Costa Mesa, CA 92626 Dear David: Over the past year, we have had several discussions regarding a possible strategic business combination between The Centris Group, Inc. ("Centris") and HCC Insurance Holdings, Inc. ("HCC"). In January 1998, you and Howard Singer visited our offices in Houston where we had very cordial, and we thought, productive discussions regarding a merger of our businesses. After further conversations between our President, John Molbeck and Mr. Singer, you invited us to visit you in Costa Mesa, which we did in August 1998. At that meeting, we again discussed the obvious advantages and benefits of a combination between our companies and, other than your prospective role, you were very positive. In my letter to your Board of Directors dated October 26th, 1998, I again outlined some of the benefits of such a transaction and confirmed that we were prepared to make an all cash offer to acquire all outstanding shares of Centris Common Stock, with no financing contingencies and at a meaningful premium to your share price which at that time was $8-7/16. We were still very encouraged when we received your reply dated October 28th, 1998 as it led us to believe that you were going forward with this idea. Naturally, we were surprised and disappointed to receive your next correspondence dated November 12th, 1998, in which you rejected our serious offer and request for further discussions. We have continued to study the potential advantages of a business combination between HCC and Centris and, as a result, we now feel even more strongly that such a transaction would result in significant strategic benefits for both companies. Competitive factors in the insurance industry have become much tougher, such as the extended soft market conditions, the importance of financial size and the "flight to quality" by policyholders. Clearly, the stand-alone mono-line business plan for Centris will be very challenging. The combined company would be a leader in the medical stop-loss market and HCC's excellent financial strength and prospects make it an ideal marriage, rewarding Centris shareholders, and benefitting policyholders and employees. Mr. David L. Cargile January 11, 1999 Page 2 In light of your current position and given what we continue to view as the compelling rationale for a business combination, we have decided that the best way to proceed is for HCC to submit a specific proposal to your Board of Directors. Accordingly, on behalf of the Board of Directors of HCC, I am pleased to offer to acquire 100% of the currently outstanding common stock of Centris at a price of $13.25 per share in cash. This offer is, in our judgement, a full and fair price and represents a 40% premium over the Centris price on the New York Stock Exchange for the previous 20 trading days and a 34% premium over the average closing Centris price on the New York Stock Exchange for the previous six months trading. Furthermore, HCC is prepared to consider increasing its offer price to acquire Centris if you can demonstrate through the due diligence process, the economic justification for a higher price. Our offer is based on our present knowledge of Centris, which is limited to public information. Our offer is subject to the negotiation of a mutually satisfactory definitive stock purchase agreement containing customary terms and closing conditions, including certain insurance regulatory approvals. Our acquisition proposal is not, however, subject to any due diligence condition or any financing contingency, and it does not require any vote from our shareholders. As indicated in each of our prior discussions, please advise your management team and your Board of Directors that we are interested in discussing a friendly, negotiated transaction. I hope that you and your Board of Directors will recognize the powerful business logic behind our offer and the substantial premium to your shareholders. We hope that, after appropriate consideration, your Board of Directors will authorize proceeding with the negotiation of a definitive stock purchase agreement on the terms that we have proposed. We are prepared to move promptly in connection with our offer. We would be happy to meet with you and other members of your Board of Directors and senior management as soon as practicable to discuss our offer in detail and to answer any questions you may have. We currently own 911,200 shares or approximately 7.79% of the outstanding shares of Centris and are filing the appropriate 13D with the Securities and Exchange Commission, a copy of which is attached. In view of the impact that this proposal could have on the market for the shares of both companies and our respective obligations under the Federal Securities laws, I am sure that both Companies will want to make prompt public disclosure of our proposal. We will be advising the New York Stock Exchange of this proposal prior to the close of business on January 11, 1999 and issuing a public announcement at that time. I look forward to a positive response from your Board of Directors. Yours sincerely, Stephen L. Way Chairman and Chief Executive Offices Attachment EX-2 3 EXHIBIT 2 EXHIBIT 2 Contact: Frank J. Bramanti, Executive Vice President HCC Insurance Holdings, Inc. (713) 690-7300 FOR IMMEDIATE RELEASE [LOGO] HCC OFFERS TO ACQUIRE THE CENTRIS GROUP, INC. FOR $13.25 PER SHARE IN CASH HOUSTON (January 11, 1999) . . . Stephen L. Way, Chairman and Chief Executive Officer of HCC INSURANCE HOLDINGS, INC., (NYSE symbol: HCC) today announced that HCC has offered to acquire The Centris Group, Inc. ("Centris") (NYSE symbol:CGE) for $13.25 per share in cash. In a letter sent today, HCC has proposed to merge Centris with HCC on a negotiated basis. The HCC proposal is not subject to any due diligence condition or any financing contingencies. Additionally, HCC announced that it had acquired 911,200 shares or 7.79% of the Common Stock of Centris and that it had filed a Form 13D with the Securities and Exchange Commission. Mr. Way stated that he had informed the Board of Directors of Centris of HCC's intent and requested a meeting with the Board of Centris as quickly as possible. Mr. Way stated in his letter to the Centris Board that HCC believes the $13.25 per share offer was a full and fair price for Centris, representing a 40% premium over the average closing Centris price on the New York Stock Exchange for the previous 20 trading days and a 34% premium over the average closing Centris price on the New York Stock Exchange for the previous six months trading. He noted HCC was prepared to consider increasing its offer price to acquire Centris if it was demonstrated through the due diligence process that a higher cash price was justified. Mr. Way further noted the offer was subject to customary conditions, negotiations of definitive agreements, and regulatory approvals, but not subject to any due diligence or financing conditions. In proposing the transaction, Mr. Way advised the Centris Board that HCC "feels . . . strongly that such a transaction would result in significant strategic benefits for both companies." HCC is an international insurance holding company with assets exceeding $1.5 billion and whose shares are traded on the NYSE (SYMBOL:HCC). Operations consist of property and casualty insurance companies which are rated A+ (SUPERIOR) by A.M. Best Company, insurance underwriting agencies, intermediaries and insurance related services, specializing in aviation, marine, offshore energy, property, workers' compensation, medical stop loss, accident and health insurance and reinsurance worldwide, with total premium exceeding $1.2 billion. SHAREHOLDERS AND OTHERS ARE CAUTIONED THIS ANNOUNCEMENT MAY CONTAIN FORWARD-LOOKING STATEMENTS AND THAT ALL FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, INCLUDING WITHOUT LIMITATION, STATEMENTS ABOUT THE CONSUMMATION OF A PROPOSED BUSINESS COMBINATION AND THE PRICE UPON WHICH SUCH CONSUMMATION MIGHT BE CONCLUDED. ALTHOUGH HCC BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE, ANY OF THE ASSUMPTIONS COULD BE INACCURATE AND THERE CAN, THEREFORE, BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS INCLUDED 2 HEREIN WILL PROVE ACCURATE. BECAUSE OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, THE INCLUSION OF SUCH INFORMATION SHOULD NOT BE REGARDED AS A REPRESENTATION BY HCC OR ANY OTHER PERSON THAT THE OBJECTIVES AND PLANS OF HCC WILL BE ACHIEVED. * * * * 3 -----END PRIVACY-ENHANCED MESSAGE-----