UNITED STATES
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): December 28, 1995
Commission file number 1-9627
ZENITH NATIONAL INSURANCE CORP.
[Exact name of registrant as specified in its charter]
DELAWARE 95-2702776
[State or other jurisdiction of [I.R.S. Employer
incorporation or organization] identification No.]
21255 Califa Street, Woodland Hills, California 91367-5021
[Address of principal executive offices] [Zip Code]
Registrant's telephone number, including area code: [818] 713-1000
Page 1
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
As previously reported, on October 6, 1995, Zenith National Insurance Corp.
("Zenith") and Anchor National Life Insurance Company ("Anchor"), a wholly-owned
subsidiary of SunAmerica, Inc., entered into a Stock Acquisition Agreement dated
September 19, 1995 (the "Agreement") pursuant to which Zenith agreed to sell to
Anchor, or a designated affiliate of Anchor, all of the issued and outstanding
capital stock of CalFarm Life Insurance Company ("CalFarm Life") for $120
million in cash. Anchor designated SunAmerica Life Insurance Company as the
affiliate to purchase CalFarm Life. The closing (the "Closing") of this
transaction occurred on December 28, 1995.
Prior to the Closing, certain assets of CalFarm Life were transferred to CalFarm
Insurance Company ("CalFarm Insurance"), a wholly owned subsidiary of Zenith.
These assets included CalFarm Life's group health insurance business, its
subsidiary, CalFarm Properties, Inc., its shares of common and preferred stock
of Delta Life Corporation and certain real estate and personal property. In
addition, prior to the Closing CalFarm Life paid a cash dividend to Zenith of
$500,000. For a fee, CalFarm Insurance has agreed to continue to provide
administrative services to CalFarm Life for a period of time not to exceed 6
months.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro forma financial information
The following unaudited pro forma condensed consolidated balance sheet of Zenith
at September 30, 1995 reflects the sale of CalFarm Life, excluding the health
operations and other assets which Zenith is retaining, as if the sale occurred
on that date. The pro forma condensed consolidated statements of operations for
the year ended December 31, 1994 and nine months ended September 30, 1995
present Zenith's continuing operations assuming the sale had occurred on
January 1, 1994.
The pro forma information is based upon the historical statements of Zenith
and reflect all material adjustments necessary to reflect the foregoing
assumptions.
The pro forma financial information is not necessarily indicative of the results
which actually would have occurred for the periods presented if the sale had
occurred on the dates indicated, nor is it indicative of results which may be
obtained in the future. The pro forma financial information should be read in
conjunction with the Financial Statements included in Item 8 of Zenith's 1994
Form 10-K.
(c) Exhibits
2.1 Amendment No. 1 to Stock Acquisition Agreement, dated as of
December 27, 1995, by and among Anchor National Life Insurance
Company, SunAmerica Life Insurance Company and Zenith National
Insurance Corp.
Page 2
Condensed Consolidated Pro Forma Balance Sheet (Unaudited)
Zenith National Insurance Corp.
September 30, 1995
Pro Forma
(Amounts in thousands) Historical (a) Adjustments Pro Forma
-------------- ------------ ------------
Assets
Investments
Fixed maturities $ 596,504 $ 596,504
Other investments 141,422 141,422
-------------- ------------ ------------
Total investments 737,926 737,926
Cash 8,070 $ 113,433 (b) 121,503
Premiums receivable 83,318 83,318
Receivable from reinsurers and prepaid reinsurance premiums 58,723 58,723
Properties and equipment, less accumulated depreciation 48,721 48,721
Federal income taxes 15,860 5,600 (b) 21,460
Other assets 70,651 70,651
Net assets of discontinued operations held for sale 119,033 (119,033) (b)
-------------- ------------ ------------
Total Assets $ 1,142,302 $ 1,142,302
-------------- ------------ ------------
-------------- ------------ ------------
Liabilities
Policy liabilities and accruals
Unpaid losses and loss expenses $ 505,378 $ 505,378
Unearned premiums 139,391 139,391
Senior notes payable, less unamortized issue costs 74,202 74,202
Other liabilities 96,800 96,800
-------------- ------------
Total Liabilities 815,771 815,771
-------------- ------------
Stockholders' Equity
Preferred stock, none issued and outstanding
Common stock 24,180 24,180
Additional paid-in capital 253,969 253,969
Retained earnings 158,794 158,794
Net unrealized appreciation on investments, net of deferred taxes 1,663 1,663
-------------- ------------
438,606 438,606
Less treasury stock (112,075) (112,075)
-------------- ------------
Total Stockholders' Equity 326,531 326,531
-------------- ------------
Total Liabilities and Stockholders' Equity $ 1,142,302 $ 1,142,302
-------------- ------------
-------------- ------------
____________________
(a) Historical information is as previously published in Zenith's Report on Form
10-Q for the period ended September 30, 1995 and reflects the estimated impact
of the pending sale of CalFarm Life through discontinued operations.
(b) To record the receipt of net proceeds on the sale of CalFarm Life.
Page 3
Condensed Consolidated Pro Forma Statement of Operations (Unaudited)
Zenith National Insurance Corp.
For the Nine Months Ended September 30, 1995
Pro Forma
(Amounts in thousands, except per share data) Historical (c) Adjustments (d) Pro Forma
-------------- ---------------- ------------
Consolidated Revenues
Property and casualty premium income $ 321,899 $ 321,899
Net investment income 34,750 34,750
Real estate sales 28,952 28,952
Other income 2,727 2,727
-------------- ------------ ------------
Total Revenues 388,328 388,328
Expenses
Property and casualty losses and loss expenses incurred 233,936 233,936
Policy acquisition costs 57,559 57,559
Other underwriting and operating expenses 34,064 34,064
Real estate construction costs 27,170 27,170
Other expenses 9,150 9,150
-------------- ------------ ------------
Total Expenses 361,879 361,879
-------------- ------------ ------------
Income from continuing operations before federal income tax 26,449 26,449
Federal income tax 8,580 8,580
-------------- ------------ ------------
Income from continuing operations $ 17,869 $ 17,869
-------------- ------------ ------------
-------------- ------------ ------------
Earnings per share from continuing operations $ 0.97 $ 0.97
-------------- ------------
-------------- ------------
Weighted average number of shares of common stock 18,535 18,535
____________________
(c) Historical information is as previously published in Zenith's Report on Form
10-Q for the period ended September 30, 1995 and reflects the estimated impact
of the pending sale of CalFarm Life through removing discontinued operations.
(d) No pro forma adjustments are required since the pending sale of CalFarm Life
was previously reflected as a discontinued operation on Zenith's Report on Form
10-Q for the period ended September 30, 1995. No interest has been imputed on
net proceeds of the sale which, under this assumption, would have been
received January 1, 1994.
Page 4
Condensed Consolidated Pro Forma Statement of Operations (Unaudited)
Zenith National Insurance Corp.
For the Year Ended December 31, 1994
Pro Forma
(Amounts in thousands, except per share data) Historical Adjustments(e) Pro Forma
------------ -------------- ------------
Consolidated Revenues
Property and casualty premium income $ 401,925 $ 36,904 $ 438,829
Health and life premium income and other policy charges 61,270 (61,270)
Net investment income 98,042 (57,974) 40,068
Realized gains on investments 2,446 (1,018) 1,428
Real estate sales 30,220 30,220
Other income 1,210 700 1,910
------------ ------------ ------------
Total Revenues 595,113 (82,658) 512,455
Expenses
Property and casualty losses and loss expenses incurred 263,457 29,516 292,973
Health and life benefits and other policy credits 80,104 (80,104)
Policy acquisition costs 83,653 (9,554) 74,099
Other underwriting and operating expenses 57,548 (8,651) 48,897
Real estate construction costs 28,031 28,031
Other expenses 24,749 (1,400) 23,349
------------ ------------ ------------
Total Expenses 537,542 (70,193) 467,349
------------ ------------ ------------
Income before federal income tax 57,571 (12,465) 45,106
Federal income tax 19,671 (4,363) 15,308
------------ ------------ ------------
Net Income $ 37,900 $ (8,102) $ 29,798
------------ ------------ ------------
------------ ------------ ------------
Earnings per share $ 1.99 $ 1.56
------------ ------------
------------ ------------
Weighted average number of shares of common stock 19,090 19,090
- -----------------
(e)To reflect the elimination of the results of operations for 1994 for the Life
and Annuity operations of CalFarm Life and to reclassify the health insurance
operations of CalFarm Life to the Zenith property and casualty insurance
operation as if the sale had occurred on January 1, 1994. No interest has been
imputed on net proceeds of the sale which, under this assumption, would have
been received January 1, 1994.
Page 5
ZENITH NATIONAL INSURANCE CORP. AND SUBSIDIARIES
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.
ZENITH NATIONAL INSURANCE CORP.
Registrant
Date: January 9, 1996 Stanley R. Zax
--------------------------------------------
Stanley R. Zax, Chairman of the Board
& President (Principal Executive Officer)
Fredricka Taubitz
--------------------------------------------
Date: January 9, 1996 Fredricka Taubitz, Executive Vice President
& Chief Financial Officer (Principal
Accounting Officer)
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