<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: November 5, 1998
(Date of earliest event reported)
Central Reserve Life Corporation
(Exact Name of Registrant as specified in its charter)
Ohio 0-8483
---- ------
(State or other jurisdiction of (Commission File Number)
Incorporation)
34-1017531
----------
(IRS Employer
Identification Number)
17800 Royalton Road, Strongsville, Ohio 44136
--------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(440) 572-2400
--------------
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events
On November 5, 1998, Central Reserve Life Corporation issued a press
release regarding its definitive agreement to purchase Continental General
Corporation and its wholly-owned insurance subsidiary, Continental General Life
and Accident Insurance Company. The press release is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated November 5, 1998, issued by
Central Reserve Life Corporation
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 hereunto duly authorized.
Date: November 5, 1998 CENTRAL RESERVE LIFE CORPORATION
By: /s/ Charles E. Miller, Jr.
------------------------------------
Chief Financial Officer
<PAGE> 3
EXHIBITS
Exhibit No. Exhibit
99.1 Press Release dated November 5, 1998
<PAGE> 1
CENTRAL RESERVE LIFE CORPORATION
17800 ROYALTON ROAD
STRONGSVILLE, OHIO 44136
www.centralreserve.com
NASDAQ: CRLC
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
Gayle Vixler Jeff Wilhoit Janine Warell Margie Baigh
First Vice President General Information Analyst Inquiries Media Inquiries
(440) 572-2400 (312) 640-6757 (312) 640-6775 (312) 640-6690
FOR IMMEDIATE RELEASE
THURSDAY, NOVEMBER 5, 1998
CENTRAL RESERVE LIFE CORPORATION TO ACQUIRE
CONTINENTAL GENERAL CORPORATION
DEAL HELPS CENTRAL RESERVE EXCEED STATED GROWTH GOALS
FOR REVENUE AND ASSET BASE, PROVIDES IMMEDIATE ACCESS
TO SENIOR HEALTH & LIFE INSURANCE MARKET
STRONGSVILLE, OH, NOVEMBER 5, 1998--CENTRAL RESERVE LIFE CORPORATION (NASDAQ:
CRLC) has announced a definitive agreement to purchase Continental General
Corporation and its wholly-owned insurance subsidiary, Continental General
Insurance Company, from The Western and Southern Life Insurance Company of
Cincinnati, Ohio, for a purchase price of $84 million.
Insurance administrative functions of Continental General Insurance and its
approximately 325 employees are expected to remain in Omaha, Nebraska, after
the acquisition is completed. The acquisition will not affect the policies or
benefits of insured customers.
With a distribution system of 30,000 agents throughout 49 states, Continental
General Insurance provides health and life insurance products for the senior
market, including long term care, Medicare supplement, and senior life and
annuity products, as well as major medical plans. As of September 30, 1998, on a
statutory basis, Continental General had assets of approximately $425 million,
capital and surplus over $37 million and year to date revenue of over $180
million.
<PAGE> 2
CENTRAL RESERVE LIFE CORPORATION
ADD -1-
The acquisition is expected to be completed within the next ninety days, and is
subject to regulatory approvals and other customary terms and conditions. At
completion, Continental General Corporation and Continental General Insurance
Company will be wholly-owned subsidiaries of CRLC.
The purchase price will be financed through approximately $40 million of bank
financing and $15 million of newly issued equity with the remainder derived
from cash proceeds available at CRLC and reinsurance funding provided by
Reassurance Company of Hannover (RCH). RCH is a member of the Hannover Re
Group, a multi-billion dollar international reinsurer and the fifth largest
insurer worldwide. In addition to RCH, CRLC investor, Insurance Partners, will
participate in the transaction. Insurance Partners is a private equity fund
formed in 1994 to make significant equity investments in the insurance
industry.
This transaction marks CRLC's second acquisition announced since its $40
million equity funding was completed in July 1998. Adding Continental General,
CRLC's total annualized revenue will be over $600 million.
ACQUISITION BRINGS GROWTH AND NEW SENIOR MARKET ACTIVITY
"This is a fabulous opportunity for CRLC," said Peter W. Nauert, President and
Chief Executive Officer of CRLC. "It nearly doubles the size of our company. It
also puts us a full year ahead of our business plan by providing us immediate
access to the senior health and life insurance market. We plan to substantially
expand Continental's marketing of its senior product line by introducing early
in 1999 a completely revised portfolio of senior products, including Medicare
supplement, long term care, home health care, senior life and annuity products.
In addition, we will immediately develop a new line of major medical and small
group health products for introduction to Continental General's distribution
system."
Nauert, who was previously Chairman and Chief Executive Officer of Pioneer
Financial Services, Inc. (PFS), has brought to CRLC his 30 years of experience
in the senior market. Before PFS was acquired by Conseco, Inc. in June 1997,
Nauert was the key figure in PFS' innovative product development and marketing
activities for the senior market, Nauert's major PFS subsidiary, Pioneer Life
Insurance Company, was a prominent brand name and market leader in Medicare
supplement and long term care insurance in many areas of the country.
"Through the acquisition, we triple the size of our distribution system to a
total of 45,000 agents nationwide," Nauert said, "This increase is substantial
and provides us with the platform to significantly increase our retail sales
activities and to pursue additional acquisitions."
"We also plan to capitalize on Continental's broad range of established
intercompany relationships by continuing to market Continental products through
Western and Southern's agents as well as 45 other companies with which
Continental has marketing alliances."
-more-
<PAGE> 3
CENTRAL RESERVE LIFE CORPORATION
ADD -2-
In addition to enhanced sales opportunities, CRLC also expects to lower
Continental's cost of operations by increasing administrative efficiency and
consolidating certain corporate functions. These changes are expected to save $5
million in annual expenses among CRLC's several insurance subsidiaries beginning
in 1999.
CRLC will also maintain an investment advisory relationship with Western and
Southern's subsidiary, Fort Washington Investment Advisors, Inc., to manage
Continental's $400 million plus portfolio as well as the growing portfolio of
other CRLC companies.
"We are very impressed with Fort Washington's investment performance, which has
been ranked at the top of insurance investment advisory services. It makes sense
to continue to use and expand our investment activities with them," Nauert
said.
This news release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the company.
Forward-looking statements are statements other than historical information or
statements of current condition. In light of the risks and uncertainties
inherent in all future projections, the inclusion of forward-looking statements
herein should not be regarded as representation by the company or any other
person that the objectives or plans of the company will be achieved. There is no
assurance that the acquisition of Continental General will be completed. Many
other factors could cause actual results to differ materially from those
contemplated by such forward-looking statements, including, among others,
failure to successfully implement the business plan for the company, rising
healthcare costs, business conditions and competition in the healthcare
industry, developments in healthcare reform and other regulatory issues. The
foregoing review of important factors should not be construed as exhaustive. The
company undertakes no obligation to update forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Central Reserve Life Corporation, through its subsidiaries, specializes in
meeting the accident and health insurance needs of individuals and small to
mid-sized businesses and the health and life insurance needs of Americans age 65
and over.
Visit on the worldwide web at www.centralreserve.com
----------------------
FOR MORE INFORMATION ABOUT CENTRAL RESERVE LIFE CORPORATION
TOLL-FREE VIA FAX, DIAL 1-800-PRO-INFO ENTER COMPANY CODE "CRLC"
###
-more-
