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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11868
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3703575
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Chase Manhattan Plaza, 43rd Floor
New York, New York 10005
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 898-5000
Former name, former address and former fiscal year, if changed since
last report:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the Exchange Act) during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock:
(Class) (Outstanding at August 1, 1996)
Common Stock, $.01 par value 26,176,440 Shares
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE
NO
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
Independent Accountants' Review Report 3
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 4
Consolidated Statements of Operations -
Three and six months ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows -
Six months ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 13
Signatures 14
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
Zurich Reinsurance Centre Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Zurich
Reinsurance Centre Holdings, Inc. and Subsidiaries as of June 30, 1996, and the
related consolidated statements of operations for the three-month and six-month
periods ended June 30, 1996 and 1995 and the consolidated statements of cash
flows for the six-month periods ended June 30, 1996 and 1995. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the consolidated financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Zurich Reinsurance Centre
Holdings, Inc. and Subsidiaries as of December 31, 1995 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended (but not presented herein) and in our report dated February
12, 1996, we expressed an unqualified opinion on those consolidated financial
statements.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
August 1, 1996
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
JUNE 30, DECEMBER 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Fixed maturities available-for-sale (amortized cost: 6/30/96
$1,094,553; 12/31/95 $1,096,903) $1,086,620 $1,122,822
Equity securities available-for-sale (cost: 6/30/96 $111,412;
12/31/95 $105,542) 132,465 124,543
Investment in affiliate (cost: 6/30/96 $9,769; 12/31/95 $3,973) 9,769 3,973
Short-term investments, at cost, which approximates market 35,293 54,063
Cash and cash equivalents 380,780 206,699
---------- ----------
Total cash and invested assets 1,644,927 1,512,100
---------- ----------
Accrued investment income 16,925 15,734
Premiums receivable 244,901 205,410
Reinsurance recoverables:
Paid losses 996 1,312
Unpaid losses 37,063 30,981
Prepaid reinsurance premiums 3,044 7,126
Deferred policy acquisition costs 80,731 72,200
Deferred federal income taxes 47,276 31,369
Other assets 67,190 47,432
---------- ----------
Total assets $2,143,053 $1,923,664
========== ==========
LIABILITIES
Losses and loss adjustment expenses $ 833,051 $ 689,609
Unearned premiums 294,252 272,132
7 1/8% Senior Notes due 2023 198,403 198,394
Other liabilities 146,656 81,959
---------- ----------
Total liabilities 1,472,362 1,242,094
---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock ($.10 par value, 20,000,000 shares
authorized; no shares outstanding) -- --
Common stock ($.01 par value, 50,000,000 shares
authorized; 26,197,541 and 26,197,541 shares issued
and outstanding at 6/30/96 and 12/31/95, respectively) 262 262
Paid-in capital 623,602 624,068
Unrealized appreciation of investments (net of deferred taxes of
$4,608 and $15,776 at 6/30/96 and 12/31/95, respectively) 8,512 29,144
Retained earnings 38,315 28,096
---------- ----------
Total shareholders' equity 670,691 681,570
---------- ----------
Total liabilities and shareholders' equity $2,143,053 $1,923,664
========== ==========
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- ------------------------
1996 1995 1996 1995
----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
REVENUES
Net premiums written (net of premiums ceded of
$2,418 and $2,026 for the three months and
$2,674 and $3,153 for the six months ended
June 30, 1996 and 1995, respectively) $188,210 $129,102 $364,832 $244,725
Increase in unearned premiums 23,392 11,857 26,202 36,481
-------- -------- -------- --------
Net premiums earned (net of premiums ceded of
$3,318 and $2,404 for the three months and
$6,756 and $3,252 for the six months ended
June 30, 1996 and 1995, respectively) 164,818 117,245 338,630 208,244
Net investment income 22,385 20,620 43,967 37,342
Realized capital gains (losses) (6,844) 12,654 (5,423) 6,758
Other income (loss) 27 (93) 331 461
-------- -------- -------- --------
Total revenues 180,386 150,426 377,505 252,805
-------- -------- -------- --------
EXPENSES
Loss and loss adjustment expenses (net of reinsurance
recoveries of $4,715 and $1,447 for the three months
and $8,554 and $1,746 for the six months ended June 30,
1996 and 1995, respectively) 115,335 88,817 241,612 156,490
Commissions 46,143 28,846 90,756 50,659
Other operating costs and expenses 11,572 10,686 23,395 21,023
Interest and amortization 3,841 4,268 7,685 7,792
-------- -------- -------- --------
Total expenses 176,891 132,617 363,448 235,964
-------- -------- -------- --------
Income before income taxes 3,495 17,809 14,057 16,841
Federal income tax expense (benefit) 682 (1,507) 3,838 118
-------- -------- -------- --------
NET INCOME $ 2,813 $ 19,316 $ 10,219 $ 16,723
======== ======== ======== ========
PER SHARE DATA
Weighted average shares outstanding (in 000's) 26,161 26,169 26,147 26,145
======== ======== ======== ========
Net income $ 0.11 $ 0.74 $ 0.39 $ 0.64
======== ======== ======== ========
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------
1996 1995
------ ------
(UNAUDITED)
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 10,219 $ 16,723
Adjustments to reconcile net income to net cash provided by
operating activities:
Losses and loss adjustment expenses, net 137,360 99,972
Unearned premiums, net 26,202 36,481
Premiums receivable (39,491) (9,937)
Deferred policy acquisition costs (8,531) (9,334)
Current and deferred taxes (17,138) (11,243)
Other assets and other liabilities 3,350 3,124
Realized capital (gains) losses 5,423 (6,758)
--------- ---------
Net cash provided by operating activities 117,394 119,028
--------- ---------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Sales of fixed maturities 1,223,434 893,742
Maturities or calls of fixed maturities 50,104 11,004
Purchases of fixed maturities (1,219,733) (969,847)
Sales of equity securities 30,760 18,008
Purchases of equity securities (37,417) (82,108)
Net (purchases) sales of short-term investments 18,770 (110,115)
Purchase of Re Capital Corporation, net of cash acquired -- 20,563
Cost of additions to property and equipment (2,533) (1,004)
--------- ---------
Net cash provided by (used in) investing activities 63,385 (219,757)
--------- ---------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payment of cash dividend to shareholders (2,619) --
Purchase of treasury stock (3,000) --
Conversion of Re Capital Debentures (1,079) (5,113)
--------- ---------
Net cash used in financing activities (6,698) (5,113)
--------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS 174,081 (105,842)
Cash and cash equivalents, beginning of period 206,699 180,320
--------- ---------
Cash and cash equivalents, end of period $ 380,780 $ 74,478
========= =========
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, such financial statements do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal recurring accruals)
considered necessary for a fair presentation have been included. The results of
operations for the interim period are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996, as quarterly results
may be affected by changes in the interest rate environment and catastrophic
losses. These consolidated financial statements should be read in conjunction
with the consolidated financial statements included in Zurich Reinsurance Centre
Holdings, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1995.
Financial information has been included herein related to the consolidated
financial statements of Zurich Reinsurance Centre Holdings, Inc. ("ZRCH") and
its wholly-owned subsidiaries, principally Zurich Reinsurance Centre, Inc.
("ZRC") and ZC Insurance Company ("ZCIC"), (together with ZRCH, the "Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Losses and Loss Adjustment Expenses
Effective January 1, 1996, the Company adopted discounting for certain tabular
workers' compensation indemnity reserves. This method is preferable as it is
more representationally faithful to the economics of the underlying business and
will enhance comparability of the Company's financial statements as it is the
prevalent method used in the reinsurance industry. Such reserves were
discounted to present value using a 5% interest rate. Since the effect of such
discount as of January 1, 1996 was $0.8 million, it has been reported as a
component of earnings. Discounting had no material effect on net income for the
three and six months ended June 30, 1996 or on the pro forma net income for the
three and six months ended June 30, 1995. Tabular workers' compensation
indemnity reserves, net of discount, were $2.3 million as of June 30, 1996.
Stock-Based Compensation
The Company adopted the accounting provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation"
in 1996. SFAS No. 123 applies a fair value-based accounting method to employee
stock-based compensation arrangements. During May 1996, the Company's
shareholders approved the Company's Stock Option Plan (the "Stock Option Plan"),
and the Company authorized an initial grant of options covering 503,575 shares
of the Company's common stock, effective January 1, 1996. For the six months
ended June 30, 1996, the Company expensed $0.2 million, net of tax, related to
the Stock Option Plan.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INCOME TAXES
The Company's overall effective tax rate for the three and six months ended
June 30, 1996 of 19.5% and 27.3%, respectively, had both operating and realized
capital loss components. The effective tax rate on operating income was 29.8%
and 29.5% for the three and six months ended June 30, 1996, respectively. The
effective tax rate on operating income differed from the federal statutory rate
of 35.12% due principally to tax-exempt investment income and dividends. The
effective tax rate on realized capital losses approximated the federal
statutory rate for the three and six months ended June 30, 1996. The Company's
overall effective tax rate (benefit) for the three and six months ended June
30, 1995 was (8.5)% and 0.7%, respectively. The effective tax rate on
operating income was 29.2% and 31.0% for the three and six months ended June
30, 1995, respectively, and differed from the federal statutory rate of 35.12%
due principally to tax-exempt investment income and dividends. The effective
tax rate (benefit) on realized capital gains was (23.8)% and (44.6)% for the
three months and six months ended June 30, 1995, respectively, and differed
from the federal statutory rate of 35.12% due to the reversal of a valuation
allowance that was previously established by the Company to offset potential
tax benefits from realized capital losses.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OPERATING INCOME
The Company's pre-tax operating income (excluding realized capital gains and
losses) increased 100.6% to $10.3 million in the second quarter of 1996,
compared to $5.2 million for the second quarter of 1995. The Company's pre-tax
operating income increased 93.2% to $19.5 million for the six months ended June
30, 1996, compared to $10.1 million for the six months ended June 30, 1995. The
increase is due primarily to growth in net investment income and improving
underwriting results.
NET INCOME
Net income was $2.8 million for the second quarter of 1996, compared to $19.3
million for the corresponding period of 1995, due to a $20.1 million decline in
after-tax realized capital gain (loss) activity offset by a $3.6 million
increase in after-tax operating income. Net income was $10.2 million for the
six months ended June 30, 1996, compared to $16.7 million for the corresponding
period in 1995, due to a $13.3 million decline in after-tax realized capital
gain (loss) activity offset by a $6.8 million increase in after-tax operating
income.
PREMIUMS
Gross premiums written for the three and six months ended June 30, 1996 were
$190.6 million and $367.5 million, respectively, representing a 45.4% and 48.3%
increase, respectively, over the comparable 1995 periods. Net premiums written
for the three and six months ended June 30, 1996 were $188.2 million and $364.8
million, respectively, representing a 45.8% and 49.1% increase, respectively,
over the comparable 1995 periods. (The growth exhibited by net premiums written
was consistent with gross premiums written since there were no significant
changes in the Company's retention levels or retrocessional programs during the
six months ended June 30, 1996 or 1995.) A quota share treaty with members of
the Zurich American Insurance Group contributed $52.6 million and $51.4 million
to second quarter gross and net premiums written, respectively, and $105.0
million and $102.1 million to year to date gross and net premiums written,
respectively. Net premiums earned were $164.8 million and $338.6 million,
respectively, representing a 40.6% and 62.6% increase, respectively, over the
comparable 1995 periods. For the six months ended June 30, 1996, net premiums
written increased less on a percentage basis than net premiums earned due to the
maturing of the Company's book of business.
LOSS AND LOSS ADJUSTMENT EXPENSES AND COMMISSIONS
Loss and loss adjustment expenses for the second quarter of 1996 increased to
$115.3 million, a 29.9% increase over the comparable 1995 period. For the six
months ended June 30, 1996, loss and loss adjustment expenses increased to
$241.6 million, a 54.4% increase over the comparable 1995 period. There were no
significant catastrophe losses in either the first six months of 1996 or 1995.
Commissions for the three and six months ended June 30, 1996 were $46.1 million
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
and $90.8 million, respectively, compared to $28.8 million and $50.7 million for
the three and six months ended June 30, 1995, respectively. The increase in
both losses and commissions is due to significant growth in earned premiums as
discussed above. The GAAP loss and commission ratio for the three and six
months ended June 30, 1996 was 98.0% and 98.2%, respectively, compared to 100.4%
and 99.5% for the three and six months ended June 30, 1995, respectively. The
loss and commission ratios are relatively consistent with 1995; the components
have shifted due primarily to a greater percentage of business written on a pro
rata basis. Pro rata treaties generally have lower loss ratios but higher
commission ratios than excess of loss treaties.
OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses were $11.6 million in the second quarter of
1996 compared to $10.7 million for the corresponding period of 1995. For the
six months ended June 30, 1996, other operating costs and expenses were $23.4
million compared to $21.0 million for the corresponding period of 1995. The
GAAP expense ratio of 6.1% for the second quarter of 1996 declined 2.2
percentage points from 8.3% in the second quarter of 1995. The GAAP expense
ratio of 6.4% for the six months ended June 30, 1996 declined 2.2 percentage
points from 8.6% for the six months ended June 30, 1995. The decrease in
expense ratios is primarily attributable to an expanded premium base and
normalization of expenses.
STATUTORY COMBINED RATIOS
ZRC's statutory combined ratio for the second quarter of 1996 was 102.9%,
compared to 108.6% for the same period of 1995. The lower combined ratio
results from a 3.7 percentage point decline in the loss and commission ratio and
a 2.0 percentage point decline in the expense ratio. ZRC's statutory combined
ratio for the six months ended June 30, 1996 was 103.5%, compared to 108.0% for
the same period in 1995. The lower combined ratio results from a 2.5 percentage
point decline in the loss and commission ratio and a 2.0 percentage point
decline in the expense ratio. ZRC's statutory combined ratio differs from the
Company's GAAP combined ratio primarily due to the deferral of certain
acquisition costs and the inclusion of certain holding company expenses, each of
which is considered in the Company's GAAP combined ratio.
NET INVESTMENT INCOME
Net investment income for the second quarter of 1996 was $22.4 million, an 8.6%
increase over the comparable 1995 period. Net investment income for the first
six months of 1996 was $44.0 million, a 17.7% increase over the comparable 1995
period. Growth in net investment income continues as the cash and invested
asset base expands due to strong cash flows, primarily attributable to
underwriting operations. The after-tax annualized net investment income yield
of 4.0% for the three months and six months ended June 30, 1996, was comparable
to 4.2% for the three months and six months ended June 30, 1995.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REALIZED CAPITAL GAINS (LOSSES)
Pre-tax realized capital gains (losses) were $(6.8) million for the second
quarter of 1996, compared to $12.7 million for the second quarter of 1995. For
the six months ended June 30, 1996, pre-tax realized capital gains (losses)
were $(5.4) million, compared to $6.8 million for the corresponding period of
1995. The 1996 and 1995 realized capital gain (loss) activity is reflective of
market conditions and consistent with the Company's investment philosophy,
whereby capital gains (losses) are realized to maximize total investment
return.
INTEREST AND AMORTIZATION
Interest and amortization expense for the second quarter of 1996 was $3.8
million, a 10.0% decline compared to the corresponding period of 1995. Interest
and amortization expense for the first six months of 1996 was $7.7 million, a
1.4% decline from the corresponding period of 1995. The decrease in interest
and amortization expense is due to the conversion of substantially all of the
Company's 5 1/2% Convertible Debentures, due 2000 (the "Convertible Debentures")
(assumed from Re Capital Corporation during April, 1995).
TAXES
The Company's overall effective tax rate for the three and six months ended June
30, 1996 of 19.5% and 27.3%, respectively, had both operating and realized
capital loss components. The effective tax rate on operating income was 29.8%
and 29.5% for the three and six months ended June 30, 1996, respectively. The
effective tax rate on operating income differed from the federal statutory rate
of 35.12% due principally to tax-exempt investment income and dividends. The
effective tax rate on realized capital losses approximated the federal statutory
rate for the three and six months ended June 30, 1996. The Company's overall
effective tax rate (benefit) for the three and six months ended June 30, 1995
was (8.5)% and 0.7%, respectively. The effective tax rate on operating income
was 29.2% and 31.0% for the three and six months ended June 30, 1995,
respectively, and differed from the federal statutory rate of 35.12% due
principally to tax-exempt investment income and dividends. The effective tax
rate (benefit) on realized capital gains was (23.8)% and (44.6)% for the three
months and six months ended June 30, 1995, respectively, and differed from the
federal statutory rate of 35.12% due to the reversal of a valuation allowance
that was previously established by the Company to offset potential tax benefits
from realized capital losses.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
CASH AND INVESTED ASSETS
During the first six months of 1996, the Company's cash and invested assets
increased 8.8% to $1,644.9 million. The increase is principally due to cash
flows from operations, offset somewhat by a decrease in the market value of the
Company's investment portfolio. As of June 30, 1996, approximately 66% of the
Company's cash and invested assets were invested in fixed maturity securities,
9% in equity securities and 25% in short-term investments and cash and cash
equivalents, compared to 74%, 9% and 17%, respectively, as of December 31,
1995.
Approximately 83% and 84% of the fixed maturity portfolio at June 30, 1996 and
December 31, 1995, respectively, was invested in U.S. government obligations or
securities rated "triple-A" by Moody's Investors Service. The balance of the
fixed maturity portfolio was invested in other investment-grade fixed
maturities. The duration of the Company's fixed maturity portfolio of 4.5
years as of June 30, 1996 approximated the 4.3 years duration at December 31,
1995.
LOSS RESERVES
Liabilities for gross losses and loss adjustment expenses (together, "loss
reserves") were $833.1 million as of June 30, 1996, a $143.4 million increase
from December 31, 1995. The increase in loss reserves is principally due to
significant growth in premium volume during 1996.
SHAREHOLDERS' EQUITY
Shareholders' equity at June 30, 1996 was $670.7 million compared to $681.6
million at December 31, 1995. Shareholders' equity was affected by several
factors including a $20.6 million decline in the after-tax market value of the
Company's investment portfolio, after-tax operating income of $13.7 million and
after-tax realized capital losses of $3.5 million.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and short-term investments as of June 30, 1996
increased to $416.1 million, or 59.6% since December 31, 1995, as a result of
sector shifts consistent with the Company's investment strategy.
Net cash provided by operating activities for the six months ended June 30,
1996 of $117.4 million was consistent with the $119.0 million for the six
months ended June 30, 1995. The cash flows for both periods are primarily
attributable to underwriting operations and net investment income. For the six
months ended June 30, 1996, net cash used in financing activities of $6.7
million resulted from the Company's repurchase of its common stock, a dividend
payment and the conversion of the Convertible Debentures. Net cash used in
financing activities for the first six months of 1995 was $5.1 million and
resulted from the conversion of the Convertible Debentures.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1996 Annual Meeting of Stockholders of the Company was held on Thursday, May
23, 1996. At such meeting, each of the following individuals was elected to
serve, and consented to so serve, as a Class III director of the Company (with a
term expiring in 1999): Rolf Hueppi (22,063,811 shares voted for, no shares
voted against, 81,156 shares abstaining), Steven M. Gluckstern (22,062,211
shares voted for, no shares voted against, 82,756 shares abstaining), Richard E.
Smith (22,055,311 shares voted for, no shares voted against, 89,656 shares
abstaining) and Detlef Steiner (22,063,811 shares voted for, no shares voted
against, 81,156 shares abstaining). In addition, the Company's stockholders
ratified the appointment of Ernst & Young LLP as independent public accountants
for the Company for its fiscal year ending December 31, 1996 (22,137,633 shares
voted for, 3,740 shares voted against, 3,594 shares abstaining), approved the
adoption of the Company's 1995 Stock Option Plan pursuant to which officers of
the Company will be eligible to receive options to acquire shares of the
Company's common stock, par value $0.01 per share, (20,177,681 shares voted for,
1,385,145 shares voted against, 56,466 shares abstaining, 525,675 broker
non-votes) and approved modifications to the Company's Restricted Stock
Plan and increase from 250,000 to 450,000 the number of shares of the Company's
common stock which may be granted under the plan (21,359,612 shares voted for,
203,731 shares voted against, 55,949 shares abstaining, 525,675 broker
non-votes).
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
15 Letter regarding unaudited interim financial information 15
27 Financial Data Schedule 16
(b) Reports on Form 8-K
There were no reports filed on Form 8-K for the period ended June 30, 1996.
Omitted from this Part II are items which are inapplicable or to which the
answer is negative for the period covered.
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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.
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
----------------------------------------
(Registrant)
Date August 8, 1996 /s/ Richard E. Smith
----------------------------------------
Richard E. Smith
President and Chief Executive Officer
Date August 8, 1996 /s/ Karen O'Connor Rubsam
---------------------------------------
Karen O'Connor Rubsam
Sr. Vice President, Chief Financial Officer
and Treasurer
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