EXHIBIT 99.3
JOINT PRESS RELEASE
issued by
XL CAPITAL LTD
and
NAC RE CORP.
February 16, 1999
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NAC Re Corporation XL Capital Ltd
One Greenwich Plaza Cumberland House
P.O. Box 2568 One Victoria Street
Greenwich, CT 06836-2568 P. O. Box HM 2245
U.S.A. Hamilton HM JX
Bermuda
Phone: (203) 622- 5200 Phone: (441) 292-8515
Fax: (203) 622-5511 Fax: (441) 292-5280
NEWS RELEASE
IMMEDIATE
Contact: Richard H. Miller Gavin R. Arton
CFO & Treasurer SVP - Investor Relations
NAC Re Corporation XL Capital Ltd
(203) 622-5535 (441) 292-8515
XL CAPITAL LTD AND NAC RE CORPORATION ANNOUNCE
INTENTION TO MERGE
NAC Re Shareholders to receive 0.915 shares of XL Capital in All Stock
Transaction
HAMILTON, BERMUDA and GREENWICH, CT, February 16, 1999 -XL Capital Ltd
(NYSE:XL) ("XL") and NAC Re Corporation (NYSE:NRC) ("NAC Re") announced today
that the two companies have signed a definitive agreement whereby XL and NAC
Re will merge in an all stock transaction. In addition, all outstanding NAC
Re indebtedness will be assumed by XL.
Under the terms of the transaction, shareholders of NAC Re will receive 0.915
XL shares for each NAC Re share in a tax-free exchange of shares that will be
accounted for as a pooling of interests under U.S. generally accepted
accounting principles ("GAAP"). The transaction is subject to the approval
of the NAC Re shareholders, expiration of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act, receipt of insurance,
regulatory approvals and other customary closing conditions. It is expected
that the merger will be completed by late second calendar quarter or early
third quarter of this year. The Boards of Directors of NAC Re and XL have
each voted unanimously to approve the transaction. Based on XL's closing
price of $60.50 on the New York Stock Exchange on Friday, February 12, 1999,
each NAC Re share would be valued at $55.36.
"NAC Re is the premier broker-market reinsurer in the United States and will
be a major cornerstone of XL's business," stated Brian M. O'Hara, President
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and Chief Executive Officer of XL Capital Ltd. "NAC Re will become our
platform for the United States, the largest insurance and reinsurance market
in the world. Its reinsurance portfolio complements our other businesses
very well, particularly XL Mid Ocean Re's existing property and specialty
reinsurance operations. In terms of capital, on a combined basis we will
have the world's largest broker market reinsurance activities. Under the
leadership of Ron Bornhuetter and Nick Brown, NAC Re has become one of the
most respected and successful franchises in the reinsurance business with an
outstanding professional staff. We expect this transaction to be not only
accretive, but the foundation upon which significant future growth in the
U.S. can be built."
Nicholas M. Brown, Jr., President and Chief Executive Officer of NAC Re
Corporation noted "We are very pleased with this new affiliation with XL.
They are a highly successful, well-respected and innovative player in the
global insurance and reinsurance markets. The merger as structured will
maintain the strong NAC Re franchise and enable us to better serve our
clients, providing new and expanded product offerings and increasing our
capacity. This is clearly a combination that will benefit both parties. I
am looking forward to working with Brian O'Hara and his team at XL."
Upon completion of the transaction, Mr. Brown will serve as Chairman,
President and Chief Executive Officer of NAC Re Corporation, which will
retain its name. Ronald L. Bornhuetter, current Chairman of NAC Re, along
with another member of the current NAC Re Board to be designated prior to the
closing, will be invited to join the Board of Directors of XL Capital Ltd.
Mr. Brown will also become President and Chief Executive Officer of XL
America, Inc. and will serve as an Executive Vice President of XL Capital Ltd
with responsibility for North American operations.
On a pro-forma basis at year-end 1998, the combined XL Capital/NAC Re
organization would have had assets of $13.3 billion, $2.3 billion of
revenues, shareholders' equity of $5.6 billion and a market capitalization of
approximately $8 billion.
Donaldson, Lufkin & Jenrette Securities Corporation and Wasserstein Perella &
Co. Inc. acted as financial advisors to XL Capital Ltd and Morgan Stanley,
Dean Witter & Co. Incorporated, CIBC Oppenheimer Corp. and SBC Warburg Dillon
Read acted as financial advisors for NAC Re Corporation.
XL Capital Ltd, through XL Insurance Ltd, XL Mid Ocean Reinsurance Ltd, The
Brockbank Group plc and XL Capital Products Ltd, is a leading provider of
insurance and reinsurance coverages and financial products worldwide. As of
November 30, 1998, XL Capital Ltd had assets of $10.1 billion and
shareholders' equity of $4.8 billion. XL Capital Ltd changed its name from
EXEL Limited on February 1, 1999.
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NAC Re Corporation through its A+ rated subsidiaries writes insurance and
reinsurance throughout the world. As of December 31, 1998, NAC Re Corp. had
assets in excess of $3.2 billion and shareholders' equity in excess of $750
million.
Additional information on both XL Capital and NAC Re is available from their
respective web sites, "www.xl.bm" and "www.nacre.com."
This presentation contains forward looking statements of management beliefs,
estimates, projections, and assumptions for the financial condition, results
of operations, business and prospects of XL for NAC Re and the combined
XL/NAC Re on a pro forma basis, including statements relating to: (a) future
assets, shareholders' equity, market capitalization and market position; (b)
the cost savings, synergies and accretion to reported and cash earnings that
will be realized from the merger; and (c) the restructuring charges expected
to be incurred in connection with the merger. These forward looking
statements involve certain risks and uncertainties, including those detailed
from time to time in XL's and NAC Re's reports and filings with the
Securities and Exchange Commission. Factors that may cause actual results to
differ materially from those contemplated by such forward looking statements
include, among others: (1) expected cost savings and synergies from the
merger cannot be fully realized or realized within the expected time frame;
(2) revenues following the merger are lower than expected or customer loss
and business disruption following the merger are greater than anticipated;
(3) competitive pressure among insurers or reinsurers increases
significantly; (4) costs or difficulties related to the integration of the
businesses of XL and NAC Re are greater than expected; (5) general economic
conditions are less favorable than expected; (6) legislation, tax or
regulatory changes adversely affect the businesses in which the combined
company would be engaged; or (7) natural disasters or other catastrophic
events are more prevalent or significant than expected, or losses have a
greater frequency or severity than anticipated by the companies' reserving
methodologies.
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