Exhibit (b)(1) CONFIDENTIAL ============ Goldman Discussion Materials Sachs Project Arctic Prepared by Goldman, Sachs & Co. September 21, 1995 Table of Exhibits Exhibit I. Executive Summary 1 II. Arctic Financial Performance 2 III. Arctic Market Performance 3 IV. Valuation Analysis 4 Exhibit 1 Issues to Consider - Process - Valuation - Offer Price 1 Exhibit 2 ARCTIC FINANCIAL PERFORMANCE Historical Income Statements Year Ended December 31, Year to Date (a) LTM Ended --------------------------- ----------------- (dollars in millions) 1992 1993 1994 1994 1995 6/30/95 - ----------------------------------------------------------------------------------------------------------- Net premiums written $205.5 $245.4 $231.1 $128.9 $127.0 $229.2 Net premiums earned $192.1 $236.1 $228.2 $117.7 $128.8 $239.4 Losses and loss expenses, net (160.5) (156.3) (191.3) (113.5) (85.5) (163.3) Underwriting expenses (79.9) (87.7) (85.4) (44.7) (49.7) (90.5) ------ ------ ------ ------ ------ ---- Net underwriting gain (48.4) (7.9) (48.5) (40.5) (6.4) (14.4) Net investment income 42.9 42.0 41.0 20.2 21.1 41.9 Net realized capital gains 15.0 12.9 1.0 0.7 0.6 0.8 ---- ---- --- --- --- --- Net investment gain 57.9 55.0 42.0 20.9 21.7 42.7 Interest expense (4.6) (8.0) (8.9) (4.5) (4.3) (8.7) Other expenses (4.3) (4.1) (4.0) (1.5) (0.0) (2.6) --- --- --- --- --- --- Income (loss) before taxes and extraordinary items 0.6 35.0 (19.5) (25.6) 10.9 17.0 Income tax expense (benefit) (3.8) 7.0 (11.3) (11.7) 2.2 2.7 Extraordinary gain on sale of debentures, net of tax 0.0 0.0 0.4 0.0 0.6 0.9 Cumulative effect of accounting changes, net of tax 2.8 (2.6) 0.0 0.0 0.0 0.0 --- --- --- --- --- --- Net income (loss) $7.2 $25.4 $(7.8) $(13.8) $9.2 $15.2 === ==== ===== ====== === ==== Dividends $5.0 $5.8 $6.5 $3.3 $1.8 $5.1 Loss Ratio 83.6 % 66.2 % 83.8 % 96.5 % 66.4 % 68.2 % Expense Ratio 41.0 37.4 38.7 35.8 39.2 40.6 Dividend Ratio 2.6 2.5 2.9 2.8 1.4 2.1 --- --- --- --- --- --- Combined Ratio 127.2 106.0 125.4 135.0 106.9 110.9 Investment Ratio 22.3 17.8 18.0 17.2 16.4 17.5 ---- ---- ---- ---- ---- ---- Operating Ratio 104.9 % 88.2 % 107.4 % 117.9 % 90.6 % 93.5 % Operating Margin 3.8 % 10.8 % (3.4)% (11.7)% 7.2 % 6.4 % (a) Six months ended June 30, 1995. 2 ARCTIC FINANCIAL PERFORMANCE Historical Balance Sheets December 31, At June 30, ------------------ (dollars in millions) 1993 1994 1995 - ------------------------------------------------------------------------------------------------------- ASSETS Invested Assets Fixed maturities Available for sale, at fair value $581.1 $563.7 $563.2 Held to maturity, at amortized cost 24.9 22.9 25.8 Equity securities, at fair value 19.0 1.7 0.5 Short-term investments 90.6 83.3 118.5 Other invested assets 1.1 1.2 1.4 --- --- --- Total Invested assets 716.7 672.8 709.4 Cash 17.1 4.8 11.5 Accrued investment income 10.2 10.3 10.1 Premiums receivable 80.3 72.0 90.7 Reinsurance recoverable on paid losses 36.8 23.8 11.8 Reinsurance recoverable on unpaid losses 221.8 222.7 237.1 Prepaid reinsurance premiums Affiliates 14.6 10.5 6.6 Other 11.8 8.8 4.5 Deferred policy acquisition costs 24.1 22.8 22.7 Deferred Federal income tax benefits 11.9 34.8 24.4 Investment in affiliates 10.8 11.5 12.6 Other assets 38.0 48.9 46.1 ---- ---- ---- $1,194.1 $1,143.7 $1,187.6 ======= ======= ======= LIABILITIES Losses and LAE 562.2 604.8 633.3 Unearned premiums 114.4 110.1 100.1 Long-term debt 106.3 102.4 101.0 Other 226.8 189.5 181.5 ----- ----- ----- $903.4 $904.3 $914.9 ===== ===== ===== STOCKHOLDERS' EQUITY Common stock 290.7 239.4 272.7 Preferred stock 0.0 0.0 0.0 $290.7 $239.4 $272.7 ===== ===== ===== 3 - ------------------------------------------------------------------------------------------------------- Exhibit 3 HISTORICAL MARKET PERFORMANCE Monthly Indexed Common Stock Price History: 1986 - Present Reinsurance Industry ====================================================== - -------------------- Composite: - --------- General Re American Re Transatlantic Scor NAC Re Date US Corp Reinsurance S&P 500 National Re ---- --------- ------------------- --------- Trenwick Group Zurich Re 9/30/86 100.000 100 100 10/31/86 97.391304 91.268478 105.47293 11/30/86 86.08696 92.272247 107.73820 12/31/86 83.478264 92.159668 104.69047 1/1/87 97.391304 98.434586 118.48521 2/28/87 99.130432 105.40427 122.86011 3/31/87 109.56522 100.52344 126.10237 4/30/87 95.652176 88.226204 124.65847 5/31/87 78.260872 86.223351 125.41068 6/30/87 92.173912 87.268654 131.42400 7/31/87 93.91304 82.251495 137.75722 8/31/87 100.86957 91.52021 142.57304 9/30/87 83.478264 86.610954 142.57304 10/31/87 52.173912 76.65229 108.84920 11/30/87 64.347824 69.581985 99.559052 12/31/87 64.347824 70.694191 106.81739 1/31/88 57.391304 78.048409 111.13177 2/29/88 57.391304 77.688232 115.77901 3/31/88 62.608696 77.333305 111.91856 4/30/88 62.608696 78.548218 112.97336 5/31/88 59.130436 82.759384 113.33218 6/30/88 54.782608 88.271187 118.23447 7/31/88 54.782608 88.985695 117.59467 8/31/88 54.782608 89.681839 113.05550 9/30/88 53.913044 94.729927 117.54712 10/31/88 56.52174 94.895874 120.59917 11/30/88 48.695652 94.180351 118.32095 12/31/88 63.47826 98.833069 120.05879 1/1/89 56.52174 102.04252 128.59674 2/28/89 57.391304 105.46871 124.87462 3/31/89 60 109.34668 127.47276 4/30/89 60 120.80000 133.85786 5/31/89 59.130436 116.40727 138.56129 6/30/89 60 117.74499 137.46326 7/31/89 62.608696 128.95371 149.61092 8/31/89 72.173912 144.87904 151.93239 9/30/89 85.217392 147.11064 150.93808 10/31/89 85.217392 164.26125 147.13815 11/30/89 92.173912 177.54750 149.57201 12/31/89 98.260872 165.52203 152.77537 1/31/90 80.869568 149.34502 142.26179 2/28/90 82.608696 156.36095 143.47658 3/31/90 81.7391 28 149.63396 146.95659 4/30/90 73.04348 144.79452 143.00536 5/31/90 73.04348 166.15173 156.16029 6/30/90 69.565216 164.88075 154.77260 7/31/90 67.826088 155.07263 153.96420 8/31/90 61.7391 32 131.92732 139.44319 9/30/90 60.869564 125.27144 132.30589 10/31/90 60 134.47366 131.41968 11/30/90 80 155.81903 139.29620 12/31/90 86.08696 163.86333 142.75462 1/1/91 85.217392 166.42462 148.68147 2/28/91 94.782608 181.88431 158.68494 3/31/91 100 191.38438 162.20819 4/30/91 99.130432 196.10689 162.26439 5/31/91 98.260872 193.15184 168.52411 6/30/91 86.95652 189.50565 160.45305 7/31/91 93.04348 193.60390 167.65086 8/31/91 94.782608 185.54352 170.94501 9/30/91 109.56522 179.32993 167.67247 10/31/91 107.82609 185.75618 169.66107 11/30/91 106.95652 184.01003 162.20819 12/31/91 106.95652 214.33855 180.30865 1/31/92 120.86957 206.75487 176.72057 2/29/92 126.08696 207.42914 178.41086 3/31/92 123.47826 194.51637 174.51582 4/30/92 112.17391 180.25714 179.38354 5/31/92 113.91304 180.22928 179.55646 6/30/92 117.39130 182.25078 176.43956 7/31/92 113.91304 195.72369 183.38664 8/31/92 103.47826 198.45435 178.98581 9/30/92 112.17391 235.04269 180.61558 10/31/92 132.17392 270.32129 180.99602 11/30/92 125.21739 267.01315 186.47328 12/31/92 121.73913 280.66949 188.35811 1/1/93 129.56522 302.94806 189.68527 2/28/93 139.13043 296.60886 191.67387 3/31/93 137.39131 301.40573 195.25764 4/30/93 131.30435 301.55255 190.29483 5/31/93 122.60870 281.79242 194.61784 6/30/93 116.52174 281.87524 194.76482 7/31/93 115.65218 289.60071 193.72729 8/31/93 109.56522 300.33533 200.39770 9/30/93 116.52174 292.30957 198.39615 10/31/93 106.08696 268.81906 202.24364 11/30/93 98.260872 255.42137 199.63254 12/31/93 90.434784 254.83379 201.64706 1/31/94 81.739128 255.23187 208.20074 2/28/94 78.260872 237.03886 201.94536 3/31/94 72.173912 234.30518 192.70706 4/30/94 85.217392 238.59853 194.92909 5/31/94 78.260872 265.05127 197.34566 6/30/94 76.521736 252.91299 192.05861 7/31/94 81.739128 252.69917 198.10652 8/31/94 80.869568 248.80762 205.55507 9/30/94 78.260872 241.98091 200.02161 10/31/94 77.391304 240.89282 204.19765 11/30/94 61.739132 238.59822 196.13089 12/31/94 58.260868 273.89551 198.54314 1/1/95 59.130436 275.68790 203.36331 2/28/95 58.260868 288.74335 210.69946 3/31/95 54.782608 285.97424 216.45772 4/30/95 55.652172 296.57468 222.50995 5/31/95 62.608696 296.92847 230.58966 6/30/95 62.608696 302.25738 235.49628 7/31/95 70.434784 314.85586 242.97942 8/31/95 76.521736 325.33105 242.90160 =================================================== Monthly September 30, 1986 to August 31, 1995 \ Arctic \ Reinsurance Industry Composite \ S&P 500 HISTORICAL MARKET PERFORMANCE Monthly Indexed Common Stock Price History: 1992 - Present Reinsurance Industry ================================================== - -------------------- Composite: - --------- General Re American Re Transatlantic Date Arctic Reinsurance S&P 500 NAC Re National Re 11/30/91 100.000 100 100 Trenwick Group 12/31/91 100 112.01035 111.15878 Zurich Re 1/31/92 113.00813 109.09676 108.94675 2/29/92 117.88618 109.07922 109.98881 3/31/92 115.44715 102.18203 107.58755 4/30/92 104.87805 94.853416 110.58845 5/31/92 106.50407 94.835091 110.69506 6/30/92 109.75610 96.278687 108.77352 7/1/92 106.50407 102.50105 113.05634 8/31/92 96.747971 103.62012 110.34326 9/30/92 104.87805 123.98768 111.34801 10/31/92 123.57723 141.69832 111.58253 11/30/92 117.07317 139.75493 114.95923 12/31/92 113.82114 147.57692 116.12121 1/31/93 121.13821 159.94215 116.93939 2/28/93 130.08130 157.41383 118.16534 3/31/93 128.45529 159.70088 120.37472 4/30/93 122.76423 161.60039 117.31518 5/31/93 114.63415 151.64600 119.98028 6/30/93 108.94309 152.22093 120.07089 7/1/93 108.13008 158.33887 119.43127 8/31/93 102.43903 163.81782 123.54352 9/30/93 108.94309 158.32602 122.30958 10/31/93 99.186989 147.33031 124.68152 11/30/93 91.869919 140.76004 123.0718 12/31/93 84.552849 139.13660 124.31374 1/31/94 76.422768 138.02608 128.35403 2/28/94 73.170731 127.82580 124.49764 3/31/94 67.479675 128.79134 118.80230 4/30/94 79.674797 130.71901 120.17217 5/31/94 73.170731 145.91219 121.66196 6/30/94 71.544716 137.80318 118.40253 7/1/94 76.422768 138.83508 122.13102 8/31/94 75.609756 137.58029 126.72298 9/30/94 73.170731 134.04153 123.31166 10/31/94 72.357727 133.00981 125.88615 11/30/94 57.723576 132.06714 120.91306 12/31/94 54.471546 147.66911 122.40019 1/31/95 55.284554 149.16386 125.37179 2/28/95 54.471546 157.21660 129.89447 3/31/95 51.219513 157.82173 133.44438 4/30/95 52.03252 162.2556 137.17552 5/31/95 58.536587 162.44916 142.15660 6/30/95 58.536587 165.36461 145.18149 7/1/95 65.853661 172.25722 149.79478 8/31/95 71.544716 177.98817 149.74681 ========================================================= Monthly December 27, 1991 to August 31, 1995 \ Arctic \ Reinsurance Industry Composite S&P 500 5 HISTORICAL MARKET PERFORMANCE Weekly Indexed Common Stock Price History: 1995 Year-to-Date Reinsurance Industry ================================================== - -------------------- Composite: - --------- General Re American Re Transatlantic Date Arctic Reinsurance S&P 500 NAC Re National Re 12/1/94 100.000 100 100 Trenwick Group 1/6/95 101.49254 99.553741 100.30701 Zurich Re 1/13/95 98.507462 100.37141 101.45884 1/20/95 104.47762 99.829201 101.19973 1/27/95 102.98508 100.11082 102.42124 2/1/95 98.507462 102.69407 104.21757 2/10/95 98.507462 103.75722 104.83158 2/17/95 97.014923 105.22740 104.94263 2/24/95 100 105.20010 106.27953 3/3/95 98.507462 106.14921 105.69383 3/10/95 95.522385 106.33028 106.59743 3/17/95 94.029854 106.67706 107.89296 3/24/95 97.014923 106.32334 109.07963 3/31/95 94.029854 107.02434 109.02302 4/1/95 92.537315 109.37929 110.26630 4/14/95 91.044777 108.82107 110.87814 4/21/95 92.537315 108.41194 110.71701 4/28/95 95.522385 110.02131 112.07134 5/5/95 98.507462 110.57999 113.24929 5/12/95 104.47762 111.98193 114.43160 5/19/95 105.97015 109.22044 113.04679 5/26/95 107.46268 109.82680 114.01791 6/1/95 105.97015 109.68198 115.94705 6/9/95 107.46268 108.88302 114.95200 6/16/95 102.98508 110.31364 117.54089 6/23/95 108.95522 111.74891 119.69213 6/30/95 107.46268 110.79810 118.61214 7/7/95 108.95522 111.16801 121.14225 7/14/95 110.44776 112.59818 121.90868 7/21/95 113.43284 111.72546 120.54347 7/28/95 119.40299 114.80913 120.54347 8/1/95 126.86567 115.14479 121.70184 8/11/95 126.86567 114.8368 120.86790 8/18/95 126.12537 116.21652 121.76063 8/25/95 137.31343 117.73597 121.95441 9/1/95 129.85075 119.20908 122.76875 9/8/95 132.83581 119.46676 124.69353 9/15/95 138.80597 124.07303 127.01679 ======================================================== Weekly 12/30/94 to 9/15/95 \ Arctic \ Reinsurance Industry Composite \ S&P 500 6 HISTORICAL MARKET PERFORMANCE Monthly Common Stock Price: 1986 - Present =============================================================================== Close 8/29/86 14.375 9/30/86 14.375 10/31/86 14 11/28/96 12.375 12/31/86 12 1/30/87 14 2/27/87 14.25 3/31/87 15.75 4/30/87 13.75 5/29/87 11.25 6/30/87 13.25 7/31/87 13.5 8/31/87 14.5 9/30/87 12 10/30/87 7.5 11/30/87 9.25 12/31/87 9.25 1/29/88 8.25 2/29/88 8.25 3/31/88 9 4/29/88 9 5/31/88 8.5 6/30/88 7.875 7/29/88 7.875 8/31/88 7.875 9/30/88 7.75 10/31/88 8.125 11/30/88 7 12/30/88 9.125 1/31/89 8.125 2/28/89 8.25 3/31/89 8.625 4/28/89 8.625 5/31/89 8.5 6/30/89 8.625 7/31/89 9 8/31/89 10.375 9/29/89 12.25 10/31/89 12.25 11/30/89 13.25 12/29/89 14.125 1/31/90 11.625 2/28/90 11.875 3/30/90 11.75 4/30/90 10.5 5/31/90 10.5 6/29/90 10 7/31/90 9.75 8/31/90 8.875 9/28/90 8.75 10/31/90 8.625 11/30/90 11.5 12/31/90 12.375 1/31/91 12.375 2/28/91 13.625 3/29/91 14.375 4/30/91 14.25 5/31/91 14.125 6/28/91 12.5 7/31191 13.375 8/30/91 13.625 9/30/91 15.75 10/31/91 15.5 11/29/91 15.375 12/31/91 15.375 1/31/92 17.375 2/28/92 18.125 3/31/92 17.75 4/30/92 16.125 5/29/92 16.375 6/30/92 16.875 7/31/92 16.5 8/31/92 14.875 9/30/92 16.125 10/30/92 19 11/30/92 18 12/31/92 17.5 1/29/93 18.625 2/26/93 20 3/31/93 19.75 4/30/93 18.875 5/31/93 17.625 6/30/93 16.75 7/30/93 16.625 8/31/93 15.75 9/30/93 16.75 10/29/93 15.25 11/30/93 14.125 12/31/93 13 1/31/94 11.75 2/28/94 11.25 3/31/94 10.375 4/29/94 12.25 5/31/94 11.25 6/30/94 11 7/29/94 11.75 8/31/94 11.625 9/30/94 11.25 10/31/94 11.125 11/30/94 8.875 12/30/94 8.375 1/31/95 8.5 2/28/95 8.375 3/31/95 8 4/28/95 8 5/31/95 9 6/30/95 9 7/31/95 10.125 8/31/95 11 =============================================================================== Monthly 12/2/86 TO 8/31/95 7 HISTORICAL MARKET PERFORMANCE Monthly Common Stock Price & Trading Volume History: Latest 3 Years ================================================================================ High Low Close Volume ---- --- ----- ------ 8/31/92 17 14.75 14.875 145.200 9/30/92 16.25 13.125 16.125 168.600 10/30/92 19 16.25 19 115.100 11/30/92 19.5 18 18 80.000 12/31/92 19 17.375 17.5 111.400 1/29/93 19 17 18.625 44.600 2/26/93 20.625 18.5 20 95.700 3/31/93 20.875 19.75 19.75 104.700 4/30/93 19.75 18.75 18.875 123.300 5/31/93 19.125 17.625 17.625 79.900 6/30/93 17.5 16.125 16.75 106.800 7/30/93 16.75 15.75 16.625 149.000 8/31/93 16.625 14.875 15.75 173.200 9/30/93 16.875 15.125 16.75 313.000 10/29/93 16.75 15 15.25 157.000 11/30/93 15.25 13.5 14.125 281.500 12/31/93 14.25 12.375 13 214.400 1/31/94 13 11.5 11.75 297.400 2/28/94 12.375 11.25 11.25 174.500 3/31/94 11.5 10.25 10.375 398.700 4/29/94 12.25 10.125 12.25 215.000 5/31/94 12.125 10.938 11.25 162.200 6/30/94 11.375 11 11 139.300 7/29/94 11.875 11 11.75 79.700 8/31/94 12.25 11 11.625 242.700 9/30/94 12 11.25 11.25 103.000 10/31/94 11.375 11 11.125 83.000 11/30/94 11.125 8.875 8.875 132.000 12/30/94 9.125 7.5 8.375 2045.300 1/31/95 8.75 7.875 8.5 169.200 2/28/95 8.5 8 8.375 62.000 3/31/95 8.5 7.75 8 103.100 4/28/95 8.125 7.5 8 181.900 5/31/95 9.25 7.875 9 177.100 6/30/95 9.315 8.625 9 71.000 7/31/95 11.5 8.875 10.125 32.700 8/31/95 11.625 10.375 11 112.500 ================================================================================ Monthly 8/31/92 to 8/31/95 Volume High Low Close 8 HISTORICAL MARKET PERFORMANCE Monthly Common Stock Price & Trading Volume History: 1995 Year-to-Date ================================================================================ High Low Close Volume 1/06/95 8.75 8.375 8.5 0 1/13/95 8.625 7.875 8.25 37.1 1/20/95 8.75 8.25 8.75 30 1/27/95 8.75 8.625 8.625 20.1 2/03/95 8.625 8.125 8.25 77.4 2/10/95 8.375 8.125 8.25 35 2/17/95 8.5 8.125 8.125 16.1 2/24/95 8.375 8 8.375 2 3/03/95 8.375 8.125 8.25 3 3/10/95 8.125 8 8 11.7 3/17/95 8.5 7.875 7.875 21.5 3/24/95 8.125 7.75 8.125 48.2 3/31/95 8.375 7.75 8 21.2 4/07/95 7.875 7.5 7.75 51.3 4/14/95 7.75 7.625 7.625 6.5 4/21/95 7.75 7.625 7.75 19.4 4/28/95 8.125 7.5 8 104.7 5/05/95 8.25 7.875 8.25 22.4 5/12/95 8.875 8.25 8.75 131.4 5/19/95 9.125 8.625 8.875 3.1 5/26/95 9.25 8.75 9 18.4 6/02/95 9.25 8.875 8.875 5.8 6/09/95 9.125 8.75 9 3.7 6/16/95 8.875 8.625 8.625 16.9 6/23/95 9.375 8.625 9.125 15 6/30/95 9.125 8.75 9 31.4 7/07/95 9.375 9 9.125 7 7/14/95 11.5 8.875 9.25 3.4 7/21/95 9.75 9 9.5 8.7 7/28/95 10.125 9.375 10 10.2 8/04/95 10.875 10 10.625 19.4 8/11/95 10.875 10.625 10.625 6.7 8/18/95 10.75 10.375 10.563 18.4 8/25/95 11.625 10.5 11.5 66.2 9/01/95 11.375 10.75 10.875 8.2 9/08/95 11.125 10.875 11.125 5.9 9/15/95 11.625 11 11.5 0 ================================================================================ Weekly 1/6/95 to 9/15/95 Volume Close High Low 9 HISTORICAL MARKET PERFORMANCE Common Shares Traded at Various Prices: 1986 - Present ================================================================================ Wt. Avg Wt. Avg Volume Volume Date (000) 7.000000 to 7.990000 1965700 1965700 8.000000 to 8.990000 992100 992100 9.000000 to 9.990000 287900 287900 10.000000 to 10.990000 829300 829300 11.000000 to 11.990000 1244000 1244000 12.000000 to 12.990000 617400 617400 13.000000 to 13.990000 476200 476200 14.000000 to 14.990000 902800 902800 15.000000 to 15.990000 783600 783600 16.000000 to 16.990000 950300 950300 17.000000 to 17.990000 254900 254900 18.000000 to 18.990000 459300 459300 19.000000 to 19.990000 163800 163800 20.000000 to 20.990000 123400 123400 21.000000 to 21.990000 0 0 ================================================================================ Based on Closing Prices From 12/2/86 to 8/31/95 Weighted Average Price: 12.20 Total Shares Traded as Percent of Shares Outstanding: 55.3% 10 HISTORICAL MARKET PERFORMANCE Common Shares Traded at Various Prices: 1992 - Present ================================================================================ Wt. Avg Volume Date 7.000000 to 7.990000 1965700 8.000000 to 8.990000 807400 9.000000 to 9.990000 104800 10.000000 to 10.99000 610000 11.000000 to 11.99000 1138300 12.000000 to 12.99000 509200 13.000000 to 13.99000 119700 14.000000 to 14.99000 370500 15.000000 to 15.99000 476600 16.000000 to 16.99000 934500 17.000000 to 17.99000 254900 18.000000 to 18.99000 459300 19.000000 to 19.99000 163800 20.000000 to 20.99000 123400 21.000000 to 21.99000 0 ================================================================================ Based on Closing Prices From 1/1/92 to 9/15/95 Weighted Average Price: 12.07 Total Shares Traded as Percent of Shares Outstanding: 44.3% 11 HISTORICAL MARKET PERFORMANCE Common Shares Traded at Various Prices: 1995 Year-to-Date ================================================================================ Wt. Avg. Date Volume 7.500000 to 7.740000 56300 7.750000 to 7.990000 103800 8.000000 to 8.240000 172900 8.250000 to 8.490000 95000 8.500000 to 8.740000 133600 8.750000 to 8.990000 176200 9.000000 to 9.240000 58000 9.250000 to 9.490000 6900 9.500000 to 9.740000 12700 9.750000 to 9.990000 1000 10.000000 to 10.24000 9700 10.250000 to 10.49000 0 10.500000 to 10.74000 30500 10.750000 to 10.99000 12400 11.000000 to 11.24000 15900 11.250000 to 11.49000 53800 11.500000 to 11.74000 27800 ================================================================================ Based on Closing Prices From 1/1/95 to 9/15/95 Weighted Average Price: 8.78 Total Shares Traded as Percent of Shares Outstanding: 5.3% 12 COMMON STOCK OWNERSHIP ANALYSIS Quarterly Change in Institutional Ownership 9/31/92 12/31/92 3/31/93 6/30/93 9/31/93 12/31/93 3/31/94 6/30/94 9/31/94 - ---------------------------------------------------------------------------------------------------------------------------------- SHARE HOLDINGS ('000S) Tweedy Browne Co. L.P. 0.0 0.0 0.0 0.0 0.0 0.0 194.7 194.7 239.8 Dimensional Fund Advisors 291.9 293.8 283.0 309.2 360.1 588.8 598.4 601.7 549.8 Prudential Insurance Co. 585.2 598.6 621.5 620.8 570.9 570.0 567.4 570.1 606.4 Wilshire Associates 0.0 0.0 0.0 10.0 10.0 47.8 210.3 418.1 429.8 Wells Fargo Institutional Trust 268.9 262.0 260.7 256.6 221.5 193.7 191.6 189.6 185.2 Sanford C. Bernstein 32.5 33.9 35.9 48.9 48.9 57.4 67.1 78.5 113.5 Mellon Bank 51.6 45.8 45.8 47.1 47.1 54.0 55.5 51.4 50.9 J.P. Morgan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Brandywine Asset Mgmt. 47.6 47.6 47.6 47.6 49.4 51.6 49.6 50.2 52.7 CALSTERS 48.2 48.2 48.2 48.2 48.2 48.2 48.2 50.0 50.0 Bankers Trust 24.2 24.2 45.3 23.1 24.5 46.5 46.2 46.8 46.8 Neville Rodie & Shaw 60.8 60.8 61.5 61.5 59.6 61.1 58.4 52.3 51.9 United States Trust Co. 0.0 0.0 0.0 0.0 0.0 26.2 31.0 33.9 13.1 ANB Investment Mgmt. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Vanguard Index-Small Cap 13.0 13.0 13.0 13.0 13.0 13.0 15.0 16.0 16.0 Vanguard Total Stock Mkt. 0.0 0.0 0.0 4.3 5.6 5.6 5.6 5.6 5.6 Northern Trust 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.2 First Interstate Bancorp 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.0 Weiss Peck & Greer 0.0 0.0 1.7 3.0 137.2 113.2 114.9 154.9 160.9 World Asset Management 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Equitable Life Assurance 0.0 0.0 0.0 0.0 1.9 3.7 4.8 4.8 4.8 Bank of New York 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - ---------------------------------------------------------------------------------------------------------------------------------- Percent of 12/31/94 3/31/95 6/30/95 Common - ----------------------------------------------------------------------------- SHARE HOLDINGS ('000S) Tweedy Browne Co. L.P. 487.7 606.3 949.5 5.1% Dimensional Fund Advisors 565.8 591.7 611.7 3.3 Prudential Insurance Co. 212.0 213.9 213.9 1.1 Wilshire Associates 434.3 255.1 204.1 1.1 Wells Fargo Institutional Trust 184.6 187.2 184.4 1.0 Sanford C. Bernstein 109.6 108.5 106.6 0.6 Mellon Bank 50.9 231.9 102.8 0.6 J.P. Morgan 0.0 56.0 56.0 0.3 Brandywine Asset Mgmt. 54.5 55.3 53.9 0.3 CALSTERS 50.0 50.9 51.5 0.3 Bankers Trust 46.4 42.6 44.6 0.2 Neville Rodie & Shaw 44.0 41.4 37.9 0.2 United States Trust Co. 33.1 33.1 33.1 0.2 ANB Investment Mgmt. 26.4 27.0 26.8 0.1 Vanguard Index-Small Cap 16.0 16.0 16.0 0.1 Vanguard Total Stock Mkt. 5.6 0.0 10.3 0.1 Northern Trust 10.2 10.2 10.2 0.1 First Interstate Bancorp 9.4 9.4 9.4 0.1 Weiss Peck & Greer 112.6 112.6 4.7 0.0 World Asset Management 0.0 0.0 4.1 0.0 Equitable Life Assurance 2.9 2.9 2.9 0.0 Bank of New York 2.0 2.0 2.0 0.0 --- 14.7% ==== - ----------------------------------------------------------------------------- 13 Exhibit 4 DISCOUNTED CASH FLOW ANALYSIS NET PRESENT VALUE PER SHARE OF PROJECTED DIVIDENDS Net Income Discount Terminal Value Multiples ----------------------------------------------------------------------- CAGR Rates 8x 9x 10x 11x 12x 13x 14x 15x - ----------------------------------------------------------------------------------------------------- 5% 12.5% $7 $8 $8 $9 $10 $10 $11 $12 15.0 6 7 8 8 9 9 10 11 10% 12.5% $8 $9 $9 $10 $11 $12 $12 $13 15.0 7 8 9 9 10 11 11 12 15% 12.5% $9 $10 $11 $11 $12 $13 $14 $15 15.0 8 9 10 11 11 12 13 14 - ----------------------------------------------------------------------------------------------------- Assumptions: ----------- Cash Flows discounted to December 31, 1995. Cash Flows represent yearly dividends plus a terminal value at year-end 1999 based on a multiple of 1999 net income. IBES median estimates for 1995-1996 EPS and assumed growth applied thereafter. Dividend payout ratio of 34%. COMPARISON OF SELECTED REINSURANCE COMPANIES (A) (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Price % of 52 Market EPS (b) P/E Ratio Book Price/ Combined Ratio (c) 1994 Dividend (9/19/95) Week High Cap 1995E 1996E 1995E 1996E Value Book 1992 1993 1994 ROE Yield - -------------------------------------------------------------------------------------------------------------------------------- ARTIC $11.25 93.8% $204 $0.88 $0.95 12.8x 11.8x $15.02 0.75x 123.3% 103.7% 118.8% N.M. 1.8% DIRECT - ------ American Re $41.88 97.1% $1,970 $3.00 $3.60 14.0x 11.6x $20.26 2.07x 102.8% 99.5% 103.8% 12.3% 0.8% General Re 151.88 99.8 12,458 9.25 10.35 16.4 14.7 69.59 2.18 108.4 101.5 101.3 12.9 1.3 National Re 34.13 97.8 576 2.80 3.15 12.2 10.8 20.51 1.66 103.3 99.8 98.4 7.2 0.5 Mean 98.3% 14.2x 12.4x 1.97x 104.8% 100.3% 101.2% 10.8% 0.8% BROKER - ------ NAC Re $38.13 99.3% $670 $2.40 $2.80 15.9x 13.6x $2.80 1.65X 126.9% 110.9% 105.7% 9.5% 0.5% Transatlantic 68.75 97.7 1,577 5.15 6.05 13.3 11.4 6.05 1.76 111.6(d) 107.4(d) 105.7(d) 12.7 0.6 Trenwick 50.88 97.8 330 3.75 4.20 13.6 12.1 4.20 1.51 114.0 102.2 103.1 10.5 2.2 MEAN 98.3% 14.3x 12.4x 1.64x 117.5% 106.8% 104.8% 10.9% 1.1% - ---------------------------------------------------------------------------------------------------------------------------------- (a) GAAP financial data as of June 30, 1995, except where otherwise noted. (b) Based on IBES median estimates as of September 7, 1995. (c) Based on statutory data. (d) Based on GAAP data. 15 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS SUMMARY STATISTICS Pre-Announcement Stock Price as % of Initial Offer Premium to Increase Final Offer Premium to ------------------------- ----------------------- 52-Week High Price High in Offer Price High - ------------------------------------------------------------------------------------------------------------- Average of: - ---------- All Buyouts 80.9% 23.4% (1.6)% 9.3% 35.0% 8.0% Domestic Buyouts by 82.3 19.1 (2.6) 6.9 26.6 4.1 European Parent Buyouts of Approximately 82.1 16.9 (5.1) 6.6 23.2 0.8 20% Minority Stake - ------------------------------------------------------------------------------------------------------------- 16 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Inside Prior 1 52 week Initial Premium Ownership Acquiring Company/ day to Date High prior to Over 52 Before the Acquired Company Ann. of Ann. Ann. Week High Transaction - ------------------------------------------------------------------------------------------------------------------------- 8/95 Societe BIC/BIC Corp. $35.75 5/19/95 $37.50 (2.7)% 78.0% 6/95 Club Mediteranee SA/Club Med 22.63 4/5/95 26.00 1.0 70.8 5/95 GTE Corp/ 17.75 9/08/94 21.25 5.9 90.0 Contel Cellular Inc. 3/95 Siemens AG/ 12.25 1/09/95 16.00 (6.25) 14.2 Pyramid Technology 3/95 Dole Food Co. Inc./ 11.63 8/24/94 15.38 (8.9) 82.8 Castle & Cooke Homes Inc. 1/95 WMX Technologies Inc./ 8.00 7/28/94 10.88 (28.3) 78.5 Chemical Waste Management 1/95 Adia SA/ 26.50 3/23/94 33.25 5.3 81.0 Adia Services Inc. 12/94 Ogden Corp./ 17.38 6/06/94 24.25 (29.2) 83.2 Ogden Services 10/94 National Intergroup Inc./ 13.50 3/01/94 13.75 7.3 80.5 FoxMeyer 9/94 EW Scripps Co./ 78.50 2/17/94 86.00 0.7 86.0 Scripps Howard Broadcasting 7/94 Burlington Resources/ 4.63 4/26/94 6.75 (33.6) 87.1 Diamond Shamrock Offshore 6/94 Colonia Konzern AG/ 1,309 2/28/94 1,335 28.3 57.9(e) Nordstern Allgemeine 4/94 Triarc Cos/ 15.50 4/26/93 16.50 2.6 71.0 Southeastern Public Service Co. 4/94 Medco Containment Services/ 25.75 10/13/93 36.50 (25.3) 54.2 Medical Marketing Group 4/94 Quartex Corp/CMS/Data Corp 1.63 7/01/93 2.13 30.8 65.0 Aggregate Initial Consideration For Premium Final Premium Percent Acquiring Company/ Amount Acquired Over Market Over Market Increase Acquired Company (000's) Initial Bid Price Final Bid Price in Offer - ----------------------------------------------------------------------------------------------------------------------------------- 8/95 Societe BIC/BIC Corp. $219,000 $36.50 2.1% $40.50 13.3% 11.0% 6/95 Club Mediteranee SA/Club Med 135.6 26.50 16.0 32.00 41.4 21.9 5/95 GTE Corp/ 254.3 22.50 26.8 25.50 43.7 13.3 Contel Cellular Inc. 3/95 Siemens AG/ 261.7 15.00 22.5 16.00 30.6 6.7 Pyramid Technology 3/95 Dole Food Co. Inc./ 81.5 14.00 20.4 15.75 35.4 12.5 Castle & Cooke Homes Inc. 1/95 WMX Technologies Inc./ 397.4 7.80 (2.5) 8.85 10.6 13.5 Chemical Waste Management 1/95 Adia SA/ 83,639 35.02(a) 32.2 N.A. N.A. N.A. Adia Services Inc. 12/94 Ogden Corp./ 119.0 17.16 (1.3) 18.48 6.3 7.7 Ogden Services 10/94 National Intergroup Inc./ 84,028 14.75(b) 9.3 .904 13.0 3.4 FoxMeyer shares(c) 9/94 EW Scripps Co./ 125,386(d) 3 shares 10.4(d) 3.45 shares 26.9(d) 15.0 Scripps Howard Broadcasting 7/94 Burlington Resources/ 42,600 4.49 (3.1) N.A. N.A. N.A. Diamond Shamrock Offshore 6/94 Colonia Konzern AG/ 520,969(f) 1,713 30.9 $1,713 30.9 0.0 Nordstern Allgemeine 4/94 Triarc Cos/ 86,140 .55 9.2 .80 shares 65.2 51.2 Southeastern Public Service Co. shares and $6 note 4/94 Medco Containment Services/ 122,510 27.25 5.5 27.75 7.8 1.8 Medical Marketing Group 4/94 Quartex Corp/CMS/Data Corp 26,740 6.52 400.0 7.00 328.6 7.4 17 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Initial Inside Prior 1 52 week Premium Ownership Acquiring Company/ day to Date High prior Over 52 Before the Acquired Company Ann. of Ann. to Ann. Week High Transaction - ------------------------------------------------------------------------------------------------------------ 2/94 Holderbank Financiere Glaros/ $6.75 1/07/94 $ 7.75 (1.3)% 95.0% Holham Inc. 1/94 Standard Industries Inc./ 7.00 5/19/93 9.75 (25.6) 88.4 Wellington Leisure Products, Inc. 12/93 Valley Fashions Corp./ 48.88 9/20/93 51.13 (10.0) 95.0 West Point-Pepperell Inc. 10/93 Torchmark/ 26.88 2/22/93 30.25 0.8 83.0 United Investors Management 5/93 Rust International Inc./ 17.88 11/13/92 23.88 (25.1) 56.0 Brand Cos. Inc. 07/92 W.R. Grace & Company/ 15.25 3/02/92 19.00 (13.2) 83.4 Grace Energy Corporation 05/92 Unocal Corp./ 9.88 2/24/92 12.00 (9.8) 95.3% Unocal Exploration Corp. 05/92 Envirosource Inc./ 9.00 8/2/91 15.00(g) (24.3) 62.5 Envirosafe Services Inc. Partially BLV Acquisition Corp./ 4.38 3/20/92 5.38 17.1 54.8 Com- Belvedere Corp. pleted 01/92 Arkla Inc./ 14.25 9/18/91 20.88 (12.3) 82.0 Arkla Exploration Co. 12/91 Siemens AG/ 120.62 10/21/91 N.A. N.A. 78.0(h) Siemens Nixdorf Information Systems 12/91 Tele-Communications Inc./ 13.50 5/01/91 16.50 (20.4) 57.2 United Artists Entertainment Co. 10/91 LAC Minerals/ N.A. 2/8/91 6.25 N.A. 64.7 Bond International 10/91 Air & Water Technologies/ 15.25 3/1/91 31.50 (37.0) 82.0 Metcalf & Eddy Cos. Aggregate Consideration For Initial Premium Final Premium Percent Acquiring Company/ Amount Acquired Initial Over Market Over Market Increase in Acquired Company (000's) Bid Price Final Bid Price Offer - ---------------------------------------------------------------------------------------------------------------------------------- 2/94 Holderbank Financiere Glaros/ $51,700 $7.65 13.3% N.A. N.A. N.A. Holham Inc. 1/94 Standard Industries Inc./ 3,683 7.25 3.6 $7.63 8.9% 5.2% Wellington Leisure Products, Inc. 12/93 Valley Fashions Corp./ 66,300 46.00 (5.9) N.A. N.A. N.A. West Point-Pepperell Inc. 10/93 Torchmark/ 216,591 30.50 13.5 31.25 16.3 2.5 United Investors Management 5/93 Rust International Inc./ 185,000 17.88 0.0 18.75 4.9 4.9 Brand Cos. Inc. 07/92 W.R. Grace & Company/ 77,501 16.50 13.8 19.00 31.0 15.2 Grace Energy Corporation 05/92 Unocal Corp./ 120,418 0.5 9.5 0.54 18.3 8.0 Unocal Exploration Corp. shares shares 05/92 Envirosource Inc./ 14,400 2.7 26.2 5.0 29.0 2.2 Envirosafe Services Inc. shares shares Partially BLV Acquisition Corp./ 16,900 6.30 44.0 N.A. N.A. N.A. Com- Belvedere Corp. pleted 01/92 Arkla Inc./ 92,640 0.9 28.5 0.95 35.6 5.6 Arkla Exploration Co. shares shares 12/91 Siemens AG/ 1,302,423(i) 147.52 22.3 147.52 22.3 0.0 Siemens Nixdorf Information Systems 12/91 Tele-Communications Inc./ 1,189,000 .95(j) (2.7) 1.02(k) 3.6 6.5 United Artists Entertainment Co. shares shares 10/91 LAC Minerals/ 85,000 0.53(l) N.A. N.A. N.A. N.A. Bond International shares 10/91 Air & Water Technologies/ 42,000 0.85 30.1 0.875 33.9 2.9 Metcalf & Eddy Cos. shares shares 18 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Initial Inside Aggregate Prior 1 52 week Premium Ownership Consideration For Acquiring Company/ day to Date High prior Over 52 Before the Amount Acquired Acquired Company Ann. of Ann. to Ann. Week High Transaction (000's) - ------------------------------------------------------------------------------------------------------------------------------- 4/91 Murphy Oil Corp/ $16.63 4/06/89 $22.63 (24.8)% 61.0% $366,242 Ocean Drilling & Exploration 4/91 Ogden Corp./ 11.00 10/23/90 14.75 0.0 68.3 38,000 ERC Environmental & Energy Services 3/91 BHP Holdings/ 33.75 2/06/91 44.50 (10.1) 50.1 530,000 Hamilton Oil Corp. 2/91 Paramount Comm./ N.A. 7/12/90 N.A. N.A. 74.8 46,576 TVX Broadcast Group 11/90 National Intergroup Inc./ 2.62 12/20/89 6.75 40.7 44.1(m) 59,063 Permian Partners L.P. 11/90 Pier 1 Imports Inc. 8.75 9/25/90 N.A. N.A. 50.4 20,704 (of Intermarke Inc.)/ Sunbelt Nursery Group Inc. 11/90 Freeport-McMoRan Inc./ 8.00 7/31/90 11.13(o) (5.70) 81.5 239,161 Freeport-McMoRan Oil & Gas 10/90 Primerica Corp./ 9.75 4/18/89 11.38(r) 10.3 82.6 48,752 American Capital Mgmt. & Research 10/90 Renault Vehicules Industrial/ 5.25 7/06/90 21.13 (71.6) 44.5(u) 103,145 Mack Trucks Inc. 09/90 Kansas City Southern 12.75 5/17/90 15.00 (6.7) 87.1 35,000 Industries, Inc./ DST Systems Inc. 09/90 Fuji Heavy Industries/ 5.13 1/16/90 8.50 (29.4) 49.5 208,414 Subaru of America 08/90 Imetal S.A./ 11.50 1/24/90 16.00 (3.1) 55.6 78,1571 Copperweld Corp. Steel 08/90 American Express Company/ 14.50 3/02/90 N.A. N.A. 66.4(v) 393,515 Shearson Lehman Brothers Initial Premium Over Final Premium Percent Acquiring Company/ Initial Market Over Market Increase in Acquired Company Bid Price Final Bid Price Offer - ----------------------------------------------------------------------------------------------------------- 4/91 Murphy Oil Corp/ $.50 2.3% $.55 12.5% 10.0% Ocean Drilling & Exploration shares shares 4/91 Ogden Corp./ 14.75 34.1 15.13 37.5 2.7 ERC Environmental & Energy Services 3/91 BHP Holdings/ 40.00 18.5 40.00 18.5 0.0 Hamilton Oil Corp. 2/91 Paramount Comm./ 7.50 N.A. 9.50 N.A. 26.7 TVX Broadcast Group 11/90 National Intergroup Inc./ 4.00 52.4 4.425(n) 68.6 10.6 Permian Partners L.P. 11/90 Pier 1 Imports Inc. 12.00 37.1 12.00 37.1 0.0 (of intermarke Inc.)/ Sunbelt Nursery Group Inc. 11/90 Freeport-McMoRan Inc./ 0.27- 31.2 0.283-0.345 37.5 4.8 Freeport-McMoRan Oil & Gas 0.329 shares(q) shares(p) 10/90 Primerica Corp./ 0.30 28.7 0.32 37.3 6.7 American Capital Mgmt. & Research shares(s) shares(t) or 11.50 10/90 Renault Vehicules Industrial/ 6.00 14.3 6.25 19.1 4.2 Mack Trucks Inc. 09/90 Kansas City Southern 14.00 9.8 15.85 24.3 13.2 Industries, Inc./ DST Systems Inc. 09/90 Fuji Heavy Industries/ 6.00 17.1 8.50 65.9 41.7 Subaru of America 08/90 Imetal S.A./ 15.50 34.8 17.00 47.8 9.7 Copperweld Corp. Steel 08/90 American Express Company/ 0.426 0.1 0.48 12.8 12.7 Shearson Lehman Brothers shares(w) shares(x) 19 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Inside Aggregate Owner- Conside- Initial ship ration Initial Final 52 week Premium Before for Premium Premium Acquiring Prior 1 High Over 52 the Amount Over Over Percent Company/Acquired day to Date prior Week Trans- Acquired Initial Market Final Market Increase Company Ann. of Ann. to Ann. High action (000's) Bid Price Bid Price in Offer - ------------------------------------------------------------------------------------------------------------------------------------ 06/90 De Georges/LPL $ 11.50 3/19/90 $27.25 (11.9)% 51.0% $ 37,500 $24.00 23.1% $25.00 28.2% 4.2% Technologies, Inc. 06/90 Esselte 41.83 10/03/89 38.00 14.5 78.5 219,298 43.50 4.0 48.06 14.9 10.5 A.B./Esselte Business Systems, Inc. 05/90 Montedison S.p.A./ 31.12 N.A. 32.13 15.2 71.3 465,904 35.00 18.9 37.00 18.9 0.0 Erbamont 2.00(y) 04/90 Anderson Group PLC/ 7.38 2/16/90 8.38 1.5 51.2 21,000 8.50 15.2 8.88 20.3 4.4 National Mine Service Co. 03/90 Heritage Media 17.00 12/01/88 9.50 115.8 57.0 32,243 20.50 20.6 20.50 20.6 0.0 Corp./Pop Radio Corp. 02/90 Carlson Companies, 13.25 5/19/89 13.75 5.5 68.0 53,525 14.50 9.5 14.88 12.3 2.6 Inc./TGI Friday's Inc. 01/90 Dow Jones & Co. 15.13 9/21/89 16.38 9.8 66.2 657,394 $18.00 19.0 $21.00 38.8 16.7 Inc./Telerate, Inc. 01/90 Montedison 44.13 7/31/89 46.00 6.5 81.0 653,811 47.00 11.1 51.00 15.6 4.1 S.p.A./HIMONT Inc. 2.00(y) 01/90 Tele- 27.00 5/24/89 24.00 32.3 75.0 209,625 31.75 17.5 32.25 19.4 1.6 Communications Inc./WestMarc Communications 11/89 Primerica 17.88 6/09/89 21.25(z) (5.9) 69.8 532,795 0.80 11.7 0.82-0.85 33.4 19.4 Corporation/The shares (1) shares(2) A.L. Williams Corporation 11/89 Mayfair 17.25 4/03/89 25.25 (6.9) 71.0 193,600 $23.50 36.2 24.70 43.2 5.1 Acquisition Corp/Mayfair Super Markets, Inc. 10/89 ENSERCH 11.25 2/15/89 12.75 (13.6) 87.4 151,194 0.50 (2.1) 0.50 10.7 13.0 Corp./ENSERCH shares shares and Exploration 1.00(3) Partners 09/89 United Meridian 6.13 1/27/89 9.00 (11.1) 60.1 26,341 $8.00 30.6 $10.50 71.4 31.3 Corporation/ Ensource Inc. 08/89 The Henley Group, 19.25 6/08/89 21.38 (4.1) 80.2 119,801 20.50 23.3 22.25 33.8 8.5 Inc./Fisher Scientific Group, Inc. 20 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Inside Aggregate Owner- Conside- Initial ship ration Initial Final 52 week Premium Before for Premium Premium Acquiring Prior 1 High Over 52 the Amount Over Over Percent Company/Acquired day to Date prior Week Trans- Acquired Initial Market Final Market Increase Company Ann. of Ann. to Ann. High action (000's) Bid Price Bid Price in Offer - ---------------------------------------------------------------------------------------------------------------------------------- 06/89 Zayre Corp./The $ 26.38 12/05/88 $27.13 28.5% 83.0% $314,081 1.35 32.3% 1.45 42.0% 7.4% TJX Companies, shares(4) shares(4) Inc. 06/89 Allied Irish Banks 25.00 9/12/88 27.68 27.3 49.7 365,000 35.25 41.0 39.25 57.0 11.4 plc/First Maryland Bancorp. 05/89 Investors 5.25 12/06/88 8.50 (30.9) 69.0 22,083 5.88 6.0 6.50 17.3 10.6 (private-USA)/Sage Energy Co. 21 COMPARISON OF SELECTED BUYOUTS BY SIGNIFICANT EXISTING SHAREHOLDERS Footnotes (a) Represents combined share/cash offer. (b) Common shareholders to receive $14.75 in principal amount of 8.25% senior notes due 2004. (c) Valued at $15.25; 5,510,000 outstanding shares. (d) Based on a share price of $28.875. (e) Purchased 37.35% stake from Union des Assurances de Paris; increased ownership to 95.4%. (f) $/DM exchange rate = 1.5356; DM 630 million to UAP for 37.35% stake and a further DM 170 million in cash (DM 2,630 per share) to Nordstern independent shareholders. (g) 1991 high and high since 1989, respectively. (h) 91% of voting interest. (i) $/DM exchange rate = 1.5356. (j) Valued at $15.20. (k) Valued at $16.19. (l) Valued at $4.57. (m) 99.7% voting interest. (n) Final Bid $3.5625 received in tender offer plus three distributions comprised of $.2875 prior to the closing of the tender. (o) 1990 high and high since 1988, respectively. (p) Valued at $10.50. (q) Valued at $11.00. (r) 1989 high and high since 1987, respectively. (s) Number shown represents the number of common shares of Primerica offered. Based on the valuation of the final bid, 0.3 shares of Primerica is approximately a $11.06 value. (t) Valued at $11.80. (u) 61.1% ownership on a fully diluted basis. (v) 60% voting interest. (w) Number shown represents the number of common shares of AMEX offered. Based on the valuation of the final bid, 0.426 shares of AMEX is approximately a $11.45 value. (x) Valued at $12.90. (y) Warrant valued at $2.00. (z) 1988 high and high since 1986, respectively. (1) Number shown represents the number of common shares of Primerica offered. Based on the valuation of the final bid, 0.8 shares of Primerica is approximately a $19.40 value. (2) Valued at $23.165. (3) Valued at $7.6875. (4) Number shown represents the number of common shares of Zayre offered. Based on the valuation of the final bid, 1.35 shares of Zayre is approximately a $32.40 value; final bid valued at $34.80. 22 COMPARISON OF RECENT ACQUISITIONS OF U.S. PROPERTY/CASUALTY REINSURANCE COMPANIES SUMMARY STATISTICS MULTIPLE OF GAAP ---------------------------------------------------------------- LTM NET WRITTEN MULTIPLE OF STATUTORY ----------------------------------- PREMIUMS LTM NET INCOME TANGIBLE BOOK VALUE NET INCOME BOOK VALUE - ------------------------------------------------------------------------------------------------------------------------------------ High 1.80x 21.40x 3.10x 27.90x 1.94x Low 0.48 6.72 0.82 7.69 0.91 Median 1.17 9.91 1.17 10.32 1.13 Mean 1.17 12.88 1.37 12.83 1.26 23 COMPARISON OF RECENT ACQUISITIONS OF U.S. PROPERTY/CASUALTY REINSURANCE COMPANIES - ---------------------------------------------------------------------------------------------------------------------------------- Multiple of GAAP Multiple of Statutory - ---------------------------------------------------------------------------------------------------------------------------------- Acquiring LTM Net Company/Acquired Written LTM Net Tangible Net Book Date Company Consideration Premiums Income Book Value Income Value Comments ($mm) - ---------------------------------------------------------------------------------------------------------------------------------- 7/95 Employers Reinsurance/ N.A. N.A. N.A. N.A. N.M. N.M. . Sale of Germany's Frankona Re fourth largest insurer to GE Capital's ERC creates a global reinsurer to rival General Re/Cologne Re. 5/95 Employers Reinsurance/ $133.2 N.A. N.A. N.A. N.M. N.M. . Employers Re Aachener Re purchased Aachener Re, a "AA" rated reinsurer serving the European market, from Aachener and Munich Insurance. 4/95 Zurich Reinsurance 203.5(a) 1.54x 17.90x 1.04x 27.90x(b) 1.31x(b) . Zurich Re will Centre/Re Capital Corp acquire Re Capital's 7 million primary shares for $18.50 a piece, including 3 million shares owned by John Deere Insurance, and assume $69mm in convertible debt. 4/95 USF&G Corp/Discover 78.5 N.A. N.A. N.A. N.M. N.M.(c) . Sale of Discover Reinsurance Company Re, a provider of insurance to the alternative risk transfer ('ART') market, for $78.5mm in common stock and options. 4/95 Exor America Inc./ 400.0 0.88(b) 12.86(b) 1.00(b) 14.92(b) 1.40(b) . Sale of Constitution Re Corp. Constitution Re, a unit of Talegen Holdings, a wholly owned subsidiary of Xerox. 11/94 St. Paul and Employers N.A. N.A. N.A. N.A. N.A. N.A. . Sale of CIGNA's Re/CIGNA International international Property-Casualty property/casualty Reinsurance reinsurance renewal rights, which consists of $270 million in gross written premiums, to St. Paul and Employers Re. 6/94 General Re/Colonia 875.0(d) 0.48 21.40 3.10(e) N.A. N.A. . Joint venture Konzern AG (Colonia between General Re Konzern AG's 66% stake and Colonia Konzern in Cologne Re AG, the holding announced) group of Cologne Re. This venture will create the third largest reinsurer in the world with NPW of $5.3 billion. - ---------------------------------------------------------------------------------------------------------------------------------- Multiple of GAAP Multiple of Statutory - ---------------------------------------------------------------------------------------------------------------------------------- Acquiring LTM Net Company/Acquired Consideration Written LTM Net Tangible Net Book Date Company ($mm) Premiums Income Book Value Income Value Comments - ---------------------------------------------------------------------------------------------------------------------------------- 11/93 QBE Insurance Group 59.0 N.A. N.A. N.A. N.M. 1.10 . Sale of the New Ltd./American Royal York unit of Royal Reinsurance Co. (Royal Ins. Co. of Canada. Insurance Holdings) 10/93 Allegheny 201.0(f) 1.45(g) 8.82(h) 1.51x(i) 9.13(j) 1.17(h) . Sale of reinsurance Corporation/Underwriters LPD owned by Re Holdings Corp. Continental, Goldman Sachs and management. 09/92 Kohlberg Kravis 1,429.5 1.51(k) 9.91(m) 1.39(n) 9.06(n) 1.94(m) . Sale of reinsurance Roberts/American Re subsidiary of (Sub. of Aetna) Aetna. . Continental adverse loss development cover transferred with sale. 06/90 SCOR U.S. Corp./ 64.2 0.80 19.34 0.96 13.28(o) 0.97(o) . Merger between Rockleigh Management affiliates. Corp. . Seller provided significant protection against adverse reserve development. 24 - ---------------------------------------------------------------------------------------------------------------------------------- Multiple of GAAP Multiple of Statutory - ---------------------------------------------------------------------------------------------------------------------------------- Acquiring LTM Net Company/Acquired Written LTM Net Tangible Net Book Date Company Consideration Premiums Income Book Value Income Value Comments ($mm) - --------------------------------------------------------------------------------------------------------------------------------- 4/90 Putnam Reinsurance Co. 130.7 0.85(p) 6.72(p) 0.95(p) 10.13(p) 1.16(p) . Merger between (Sub. of Transatlantic affiliates. Holdings)/Transatlan- . Both companies tic Reinsurance Co.(q) principally owned by AIG. 04/90 Keystone/Acadia $390.6(r) 1.61x 9.53x 1.31x(s) 10.51x 1.69x(s) . Sale of reinsurance Investor subsidiary for Group/National strategic reasons. Reinsurance Corp. . Seller provided (Sub. of Lincoln significant National Corp.) protection against adverse reserve development. . Clean portfolio was provided. 10/89 Lawrence Insurance 28.0 1.80 9.46 0.82 7.68(t) 0.92(t) . Sale of reinsurance Group, Inc./United division for Republic Reinsurance strategic reasons. Co. 12/87 Management and Broad 118.0(u) 0.74 N.M. 1.30 N.M. 0.91 . Divestiture of Street Investment Fund troubled I, L.P./Underwriters reinsurance Re Corp. subsidiary. . Seller provided significant protection against adverse reserve development. Median $165.5 1.17x 9.91x 1.17x 10.32x 1.13x (12 data (10 data (9 data (10 data (8 data (10 data points) points) points) points) points) points) (a) Zurich Re will acquire Re Capital's 7 million of primary shares and assume $69.5mm in convertible debt. (b) Based on year-end 1993 financial data. (c) Based on year-end 1993 financial data, the book value multiple was 5.12x. (Company completed only third year of operations in 1993.) (d) Consideration for Colonia Konzern AG's 66% stake in Cologne Re is DM 1.4 billion which results in a valuation of DM 2.1 billion for 100% of Cologne Re. Dollar exchange rate of 1.6 used. (e) Book value includes DM 177 million of fluctuation reserves. (f) Aggregate consideration for 93% of Underwriters Re. Multiples based on $216 million. (g) Twelve months ended March 31, 1993. (h) Twelve months ended March 31, 1993, net of after-tax gain/loss on net realized gains. (i) As of March 31, 1993. (j) Based on year-end 1992 financial data, net of after-tax gain on net realized gains. (k) Twelve months ended June, 1992. (l) Twelve months ended June, 1992, net of after-tax gain/loss on net realized gains. (m) As of June 30, 1992. (n) Based on year-end 1991 financial data. (o) Based on year-end 1989 financial data. (p) Based on year-end 1989 financial data for Transatlantic Holdings, Inc. and Subsidiary (formerly called PREINCO Holdings, Inc.). (q) The Transatlantic Holdings transaction was a merger of equals in which Transatlantic Holdings issued 1,957,143 shares. The stock split 8 for 1 on April 18, 1990. (r) Aggregate consideration of $390.6 million consisted of $320.1 million in cash, $75 million in Preferred stock of the holding company, and Lincoln National investing $4.5 in the Holding Company for a common equity interest and a warrant for an additional 10% of the common equity. (s) As of April 30, 1990. (t) Based on year-end 1988 financial data. (u) Continental received $118 million in cash plus $54 million for selling a reinsurance contract to Underwriters Re. 25 Analysis at Various Prices (dollars in millions except per share amounts) Consideration per Common Share $11.25(a) $13.00 $13.50 $14.00 $14.50 $14.74(b) $15.01(c) $15.50 $16.00 Price for Common Stock (d) 41 47 49 51 52 53 54 56 58 Price for convertible (e) 76 76 76 76 76 76 76 76 76 -- -- -- -- -- -- -- -- -- Aggregate Consideration $117 $123 $125 $127 $128 $129 $130 $132 $134 ================================================================================================================================= Premium Over Market Price 9/19/95 $11.25 0.0% 15.6% 20.0% 24.4% 28.9% 31.0% 33.4% 37.8% 42.2% Multiple of EPS LTM $0.75 15.0x 17.3x 18.0x 18.7x 19.3x 19.7x 20.0x 20.7x 21.3x 1995E(f) 0.88 12.8 14.8 15.3 15.9 16.5 16.8 17.1 17.6 18.2 1996E(f) 0.95 11.8 13.7 14.2 14.7 15.3 15.5 15.8 16.3 16.8 Multiple of Book Value/Share Stated at 6/30/95 $15.01 0.75x 0.87x 0.90x 0.93x 0.97x 0.98x 1.00x 1.03x 1.07x Tangible at 6/30/95 14.74 0.76 0.88 0.92 0.95 0.98 1.00 1.02 1.05 1.09 =============================================================================================================================== (a) Equals market value as of 9/19/95. (b) Equals tangible book value per share as of 6/30/95. (c) Equals book value per share as of 6/30/95. (d) Based on acquisition of all 3.6 million publicly traded shares of common stock. (e) Assumes price for convertible is greater of (i) the par value of the convertible ($76.0 million) or (ii) the value of the underlying shares to be issued upon conversion. (f) IBES median estimates as of September 7, 1995. 26