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CNA-CAPSURE AGREEMENT EXHIBIT 28
New Release Page 1
NEWS
Contact:
CNA
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Roger Morris
(312) 822-4195
Capsure Holdings
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Mary Jane Robertson
(770) 668-1216
For Immediate Release
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CNA AND CAPSURE HOLDINGS AGREE TO FORM LARGEST U.S. SURETY COMPANY
CHICAGO, Dec. 19, 1996 -- CNA Financial Corporation (NYSE: CNA) and Capsure
Holdings Corp. (NYSE: CSH) today announced a definitive agreement to form a new
stock company, CNA Surety Corporation, which will be the largest surety company
in the United States.
On a pro forma basis, CNA Surety Corporation's net written premiums for the 12
months ended September 30, 1996 would total $232.8 million out of a total
surety market of $2.7 billion, making it 30 percent larger than the next
largest U.S. surety operation. In addition, the combination of Capsure and
CNA's surety operations presents opportunities for expense savings by
consolidating all processing and agency management functions; moving towards a
common information technology platform; and combining various administrative
functions. CNA Surety Corporation will combine the 320 employees from CNA's
existing surety operations in Chicago and 41 branches with Capsure Holdings'
570 employees.
"CNA Surety Corporation will be the premier surety operation in the United
States with a strong presence across virtually all segments of the surety
market," said Mark C. Vonnahme, head of CNA surety operations, who has been
named president and chief executive officer of CNA Surety Corporation. "We have
substantial capacity as a result of CNA's commitment to provide co-surety or
reinsurance on multi-million dollar accounts. That, along with excellent
industry ratings based on a strong balance sheet and a history of
profitability, positions us to provide our agents and brokers with the most
diversified and competitive line of surety products in the United States."
CNA Financial Corporation, through its subsidiaries, will be the majority
shareholder of the new company, owning 61.75 percent of the shares. The
remaining shares will be issued to the existing Capsure shareholders (a portion
of these shares will be held as options for the existing holders of Capsure
options) in a tax-free exchange for their Capsure shares on a one-for-one basis
and are expected to be traded on the New York Stock Exchange. Samuel Zell,
Capsure's largest shareholder with a 26.2 percent ownership interest, has
agreed to vote his shares in favor of the merger. Because of the required
regulatory reviews and approvals, the transaction is not expected to be
finalized until the second quarter of 1997.
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CNA-CAPSURE AGREEMENT
News Release Page 2
CNA's surety operations have a leading position in the commercial surety and
contract bond market. Capsure Holdings, through its Western Surety Company and
Universal Surety of America subsidiaries, has concentrated on the small
contract and commercial surety market segments. Western Surety also has one of
the most advanced commercial surety processing centers in the industry and a
62-person national marketing force. CNA Surety Corporation will offer a
complete line of surety and bond products through what are regarded as the
strongest producer relationships in the business.
"We are very excited about this combination, a natural extension of our
'one-stop shopping' vision of USA/Western," said Bruce A. Esselborn, president
of Capsure. "At almost three times the size of Capsure in terms of premium
volume and statutory capital, the new CNA Surety Corporation may be expected to
enjoy meaningful economies of scale as the operations are merged and to realize
additional savings by way of a lower cost of capital. Also, the continuing
support of CNA through the various reinsurance arrangements offers underwriting
capacity well beyond Capsure's current level and helps protect the surplus and
earnings stream of the new company going forward."
"We've felt for a long time that it would be in our best interests to
eventually be a part of a larger insurance organization, and we're fortunate to
be part of the CNA group of companies," commented Joe P. Kirby, CEO at Western
Surety Company.
CNA Financial Corporation, the parent company of the CNA insurance companies,
is one of the ten largest U.S. insurance organizations and the third largest
U. S. property/casualty insurance group as measured by 1995 premium volume.
Loews Corporation owns 84 percent of the common stock of CNA Financial
Corporation. For the 12 months ended September 30, 1996, CNA had revenues of
$16.7 billion. Assets at September 30, 1996 were $60.8 billion.
Capsure Holdings Corp. provides surety and fidelity bonds nationwide through
its subsidiaries Western Surety Company and Universal Surety of America.
Western Surety, with offices in Sioux Falls and Dallas, markets license and
permit, fiduciary and probate, fidelity, public official and notary public
bonds in all 50 states through 37,000 independent property and casualty
insurance agencies. Universal Surety markets its products through approximately
1,800 independent property and casualty insurance agents through its
headquarters in Houston and branches in Austin, Dallas, Denver, Kansas City and
San Antonio. For the 12 months ended September 30, 1996, Capsure had revenues
of $113.7 million. Assets at September 30, 1996 were $408.2 million.
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The transaction is subject to approval of the shareholders of Capsure and
ginsurance regulators in the domiciliary states of Western and Universal.
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CNA-CAPSURE AGREEMENT
News Release Page 3
Under the Private Securities Litigation Reform Act of 1995: The statements
which are not historical facts contained in this release are forward-looking
statements that involve risks and uncertainties including, but not limited to,
product and policy demand and market response risks, the effect of economic
conditions, the impact of competitive products, policies and pricing, product
and policy development, regulatory changes and conditions, rating agency
policies and practices, development of claims and the effect on loss reserves,
the performance of reinsurance companies under reinsurance contracts,
investment portfolio developments and reaction to market conditions, the
results of financing efforts, the actual closing of contemplated transactions
and agreements, the effect of accounting policies, and other risks detailed in
Securities and Exchange Commission filings. No assurance can be given that the
actual results of operations and financial condition will conform to the
forward-looking statements contained herein.