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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 4)
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN BANKERS INSURANCE
GROUP, INC.
(NAME OF SUBJECT COMPANY)
AMERICAN BANKERS INSURANCE
GROUP, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.00 PER SHARE,
INCLUDING THE ASSOCIATED SERIES A PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
(TITLE OF CLASS OF SECURITIES)
24456 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
GERALD N. GASTON
VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN BANKERS INSURANCE GROUP, INC.
11222 QUAIL ROOST DRIVE
MIAMI, FL 33157-6596
(305) 253-2244
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
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COPIES TO:
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MORTON A. PIERCE, ESQ. JOSEPHINE CICCHETTI, ESQ.
JONATHAN L. FREEDMAN, ESQ. JORDEN BURT BOROS CICCHETTI
DEWEY BALLANTINE LLP BERENSON & JOHNSON LLP
1301 AVENUE OF THE AMERICAS 777 BRICKELL AVENUE, SUITE 500
NEW YORK, NY 10019 MIAMI, FL 33131
(212) 259-8000 (305) 371-2600
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This Amendment No. 4 amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9, dated February 6, 1998 (as amended, the "Schedule
14D-9") of American Bankers Insurance Group, Inc., a Florida corporation (the
"Company"), filed in connection with the Cendant Offer. Capitalized terms used
herein shall have the definitions set forth in the Schedule 14D-9 unless
otherwise provided herein.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The response to Item 8 is hereby amended and supplemented as follows:
Regulatory Process
On February 24, 1998, the Company submitted to Commissioner William Nelson
of the Florida Insurance Department (the "Department") a letter (the "Letter")
which raises questions and solicits information from Cendant in connection with
Cendant's application before the Department to acquire control of the Company's
Florida insurance subsidiaries. Copies of the Letter were also sent to the
Insurance Departments of the states of Arizona, Georgia, New York, South
Carolina and Texas. A copy of the Letter is filed as Exhibit 28 hereto and is
incorporated by reference herein in its entirety. The Company's press release
with respect to the Letter is filed as Exhibit 29 hereto and is incorporated by
reference in its entirety herein.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
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Exhibit 28...... Letter, dated February 24, 1998, from the Company to the
Florida Insurance Department.
Exhibit 29...... Press Release, dated February 24, 1998, of the Company
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICAN BANKERS INSURANCE GROUP, INC.
By: /s/ GERALD N. GASTON
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Name: Gerald N. Gaston
Title: Chief Executive Officer,
President and Vice Chairman
Date: February 24, 1998
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EXHIBIT NO. DESCRIPTION
- --------------------- ----------------------------------------------------------------------
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Exhibit 28........... Letter, dated February 24, 1998, from the Company to the Florida
Insurance Department
Exhibit 29........... Press Release, dated February 24, 1998, of the Company
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EXHIBIT 28
[American Bankers Insurance Group, Inc. Letterhead]
February 24, 1998
Commissioner William Nelson
Department of Insurance
State Treasurer's Office, State Capitol
Plaza Level Eleven
Tallahassee, Florida 32399-0300
Re: Application of Cendant Corporation and Season Acquisition Corp. to
Acquire Control of American Bankers Insurance Group, Inc. Pursuant
to Section 628.461 of the Florida Insurance Code
Dear Commissioner Nelson:
On March 19, 1998, the Florida Insurance Department (the "Department") will
conduct a proceeding to consider the application of Cendant Corporation
("Cendant") and Season Acquisition Corp., a wholly-owned subsidiary of Cendant
("Season"), to acquire control of American Bankers Insurance Company of Florida
and American Bankers Life Assurance Company of Florida (together, the "Domestic
Insurers"), each wholly-owned subsidiaries of American Bankers Insurance Group,
Inc. ("American Bankers"). The Domestic Insurers submit this letter in
conjunction with that proceeding.
Reference is made to the Solicitation/Recommendation Statement of American
Bankers on Schedule 14D-9, filed with the Securities and Exchange Commission on
February 6, 1998 (as amended, the "14D-9"), a copy of which previously has been
provided to the Department. The 14D-9 was filed by American Bankers pursuant to
its obligation under the federal securities laws to respond to the tender offer
of Cendant and Season to purchase 51% of the outstanding shares of common stock
of American Bankers, and proposed second-step merger to acquire the remainder of
the outstanding shares of common stock of American Bankers (the "Cendant
Offer"). In Item 4 of the 14D-9, the Board of Directors of American Bankers (the
"Board") stated that it was unable to take a position with respect to the
Cendant Offer and was making no recommendation at that time with respect to the
Cendant Offer.
As you know, on December 21, 1997, American Bankers entered into a merger
agreement with American International Group, Inc. ("AIG") and AIGF, Inc., a
wholly-owned subsidiary of AIG (the "AIG Merger Agreement"). The process of
negotiating the AIG Merger Agreement enabled the Board and management to obtain
information with respect to AIG sufficient for the Board to understand the
impact of the proposed merger on American Bankers, its shareholders,
policyholders, accounts and employees. The AIG Merger Agreement contains certain
provisions which prohibit American Bankers from engaging in negotiations with or
having discussions with third parties concerning competing proposals until April
21, 1998. As a result, at the current time American Bankers is contractually
prohibited from contacting Cendant or negotiating directly with Cendant
concerning the Cendant Offer until that date. Since the filing of its 14D-9,
American Bankers has received no information from Cendant addressing the
specific issues raised in the 14D-9. Publicly available information, including
filings made in connection with the regulatory process, regarding Cendant, its
financial condition, management experience and past acquisition practices, raise
concerns for the Board as to whether an acquisition of American Bankers by
Cendant could be prejudicial to American Bankers' policyholders and employees,
the Miami area and the State of Florida. Accordingly, the Board must obtain
certain information regarding Cendant and the Cendant Offer that will assist the
Board in assessing the impact of the Cendant Offer on American Bankers and its
shareholders, policyholders, accounts and employees.
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American Bankers believes that the Department's evaluation of Cendant and
the information Cendant is required to disclose pursuant to Section 628.461 of
the Florida Insurance Laws and Section 4-143.056 of the Florida Administrative
Code, including but not limited to the information required by:
- Form DI4-918, "Acquisition of Controlling Interest of a Domestic Insurer"
- Form DI4-516, "Insurance Company System Registration Statement"
- Form DI4-904, "Proformas, Life Companies"
- Form DI4-896, "Proformas, Property and Casualty Companies,"
- Form DI4-921, "Management Information," and
- Forms DI4-422 "Biographical Statement and Affidavit"
will significantly assist the Board in evaluating the Cendant Offer. Among other
things, American Bankers is interested in the Department's evaluation and
determination of the character, experience, ability and other qualifications of
the directors and officers and affiliated persons of Cendant for the protection
of the policyholders and shareholders of the Domestic Insurers and the public,
as well as the following, all of which constitute statutory criteria under
Section 628.461(7) of the Florida Insurance Laws:
- Whether the financial condition of Cendant will jeopardize the financial
stability of the Domestic Insurers or prejudice the interests of the
policyholders or the public;
- Whether any plans or proposals may have been made to liquidate the
Domestic Insurers, to sell any of their assets or merge or consolidate
the Domestic Insurers with any person, or to make any major change in
their respective businesses or corporate structure or management, and
whether any such plan or proposal is fair and free of prejudice to the
policyholders of the Domestic Insurers and to the public;
- Whether the competence, experience and integrity of those persons who
will control directly or indirectly the operation of the Domestic
Insurers indicate that the transactions contemplated by the Cendant Offer
are in the best interest of the policyholders of the Domestic Insurers
and in the public interest;
- Whether the natural persons for whom background information is required
to be furnished pursuant to Section 628.461 of the Florida Insurance Code
have such backgrounds as to indicate that it is in the best interests of
the policyholders of the Domestic Insurers, and in the public interest,
to permit such persons to exercise control over the Domestic Insurers;
- Whether the officers and directors to be employed after the consummation
of the transactions contemplated by the Cendant Offer have sufficient
insurance experience and ability to assure reasonable promise of
successful operation; and
- Whether the acquisition is likely to be hazardous or prejudicial to the
Domestic Insurers' policyholders or the public.
With reference to Item 4 of the 14D-9, in which American Bankers noted its
lack of certain information with respect to the Cendant Offer as a significant
factor in reaching its determination to make no recommendation with respect to
the Cendant Offer, American Bankers believes that the Department's evaluation of
the information required to be furnished by Cendant with respect to the Cendant
Offer, in light of the criteria under which the Department is required to
evaluate the Cendant Offer under Section 628.461(7) of the Florida Insurance
Code, will assist the Board in assessing the following aspects of the Cendant
Offer, which aspects it has been unable to fully assess to date:
- Cendant's level of financial leverage both before and after the
consummation of the transactions contemplated by the Cendant Offer, and
the effect of such leverage on the operations of American Bankers and the
Domestic Insurers;
- Cendant's proposed business plans for American Bankers and the Domestic
Insurers following the Cendant Offer if the Cendant Offer were
successful, including treatment of policyholders, accounts and employees;
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- Cendant's experience in owning and operating insurance companies,
including but not limited to, underwriting and claims-paying experience;
- Whether increased revenue levels projected by Cendant will require
additional capital infusions in the Domestic Insurers and the source of
such capital; and
- Cendant's plans with respect to intercompany transactions with the
Domestic Insurers involving intercompany royalties and fees.
The executive staff of American Bankers has reviewed publicly available
information regarding Cendant, and, based upon such review, has prepared a list
of concerns and questions. For the benefit of the Department and to assist in
focusing Cendant's response, the questions and concerns are attached to this
letter as Exhibit A. We request that Cendant respond to these questions in
writing and provide supporting documentation at least five (5) business days
prior to the hearing on its application.
The Board of Directors of American Bankers wishes to make its decisions and
recommendations with respect to the Cendant Offer based upon a thorough and
complete analysis of all relevant information, taking into consideration the
best interests of policyholders, the insurance-buying public, shareholders, and
other relevant constituencies. The Board strongly believes that discussions
between its representatives and the Department regarding the Department's review
and evaluation of the Cendant Offer are in the best interests of the
policyholders of the Domestic Insurers and the public.
Please contact the undersigned at your earliest convenience to discuss the
foregoing. Thank you in advance for your time and consideration.
Sincerely,
/s/ R. Kirk Landon
R. Kirk Landon
Chairman
Attachment
copy to (w/attachment):
Maurice R. Greenberg
American International Group, Inc.
Henry R. Silverman
Cendant Corporation
Director John A. Greene
Department of Insurance
State of Arizona
Commissioner John Oxendine
Department of Insurance
State of Georgia
Superintendent Neil D. Levin
Department of Insurance
State of New York
Director Lee P. Jedziniak
Department of Insurance
State of South Carolina
Commissioner Elton Bomer
Department of Insurance
State of Texas
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EXHIBIT A
QUESTIONS REGARDING THE APPLICATION OF
CENDANT CORPORATION ("CENDANT") TO ACQUIRE CONTROL OF
AMERICAN BANKERS INSURANCE GROUP, INC. ("ABIG")
ABIG requests that the Department require Cendant to provide written
responses to the following questions, together with supporting documentation, by
March 12, 1998, which is five (5) business days prior to the hearing on
Cendant's application:
A. FINANCIAL INFORMATION REGARDING CENDANT
1. Please provide pro forma consolidated financial statements from January
1, 1995 through December 31, 1997 for all companies acquired through pooling or
purchase transactions by Cendant and its predecessors as if such acquisitions
had occurred on January 1, 1995.
2. Please provide information concerning every material acquisition ($50
million or more) made by Cendant and its predecessors during the past five
years. For each transaction please provide the following information:
a. the amount and description of any restructuring charges related to
the transaction;
b. the value of assets sold from the acquired company within six
months, one year and two years of the acquisition; and
c. the number of employees of the acquired company terminated within
six months, one year and two years of the acquisition.
3. With regard to restructuring charges related to past acquisitions,
please describe the reserves that remain on Cendant's balance sheet, describe
how these reserves have been utilized, and indicate whether any of the reserves
previously established have been brought back into income.
4. It appears that Cendant and predecessors have amortized intangible
assets of acquired companies for periods up to 40 years. Please describe the
rationale and GAAP authority for this practice.
5. Please describe in detail what Cendant has characterized as its "free
cash flow" including any limitations on or required uses of this cash flow.
6. Please provide a projection of Cendant's debt requirements for the next
five years, including schedules of amortization and debt repayment. Will these
projections support Cendant's current Moody's and Standard and Poor's debt
ratings for the next three years?
7. Please describe in detail any restrictive covenants on existing loan
agreements that Cendant (or predecessors) has entered into, including but not
limited to restrictions on indebtedness, mergers, and maintenance of certain
financial ratios.
B. PROJECTIONS RELATING TO THE ABIG ACQUISITION
1. Please describe in detail the manner in which Cendant expects to realize
the reported $140 million pre-tax synergies arising from its acquisition of
ABIG, including:
a. anticipated revenues;
b. the source(s) (by lines of business, both domestic and
international) of those revenues; and
c. the source(s) and type(s) of expenses Cendant will incur to achieve
those revenues, including commissions and anticipated reserves for claims.
2. Please describe in detail the manner in which Cendant expects to realize
$10 million per year in cost savings as a result of its proposed acquisition of
ABIG.
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3. What are Cendant's projected revenue and earnings growth rates for
American Bankers' insurance subsidiaries? What are the assumptions underlying
these projected growth rates?
4. What are Cendant's intentions during the next three years for payment of
dividends from the insurance subsidiaries of ABIG, and the holding company of
ABIG, to the Cendant holding company, and/or its subsidiaries?
5. What are Cendant's intentions with respect to the current outstanding
debt of ABIG? Please provide projections detailing how this debt will be
serviced.
6. What are Cendant's projections for the insurance companies' statutory
capital requirements, and how will these requirements be funded?
7. Given projected growth, will Cendant provide any additional statutory
capital necessary to maintain the current risk-based capital ratios and A.M.
Best ratings of the insurance companies? If so, what is the anticipated source
of that capital?
8. Please state the amount of Cendant's purchase price for ABIG that it
anticipates allocating to goodwill and other intangible assets.
9. Please state the amount of and describe any restructuring charges
Cendant anticipates taking if it were to acquire ABIG.
10. Will the acquisition of ABIG be accretive to Cendant's earnings? Please
provide a supporting schedule.
11. Does Cendant plan to use the ABIG insurance companies' cash flow to
fund future acquisitions, either through the use of dividends or the purchase of
assets? Please provide details of any such plan.
12. What is Cendant's projected maximum percentage of debt as a percent of
total capitalization for ABIG and Cendant for each of the next three years?
13. Were Cendant to acquire ABIG, what would be Cendant's tangible net
worth?
C. BUSINESS AND OPERATIONS OF ABIG
1. Who will Cendant select as the Chief Executive Officer and/or Chairman
of ABIG for the next three years?
2. Who will constitute the board of directors of ABIG under Cendant for the
next three years?
3. What changes in executive management of ABIG does Cendant intend to make
during the next three years?
4. Please describe in detail the channels that Cendant currently has
established through which it believes it can sell ABIG's insurance products.
5. Please describe in detail how Cendant plans to sell its products to
ABIG's current customers.
6. Does Cendant plan to maintain the current level of asset quality of the
insurance companies' investment portfolios?
7. What administrative agreements and fee arrangements does Cendant intend
to initiate among the insurance subsidiaries of ABIG and other
subsidiaries/affiliates of Cendant? What would be the level of the fees, and on
what basis would they be charged?
8. What types of accounts and/or subsidiaries of ABIG do not fit into the
business model of Cendant? Does Cendant plan to dispose of any of the insurance
companies, their assets or operating subsidiaries, or to discontinue any of the
insurance companies' lines of business?
9. What are Cendant's plans for further acquisitions in the insurance area
during the next three years?
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10. What infrastructure does Cendant have to support American Bankers'
expansion internationally (e.g., insurance licenses, local country operations,
claims processing facilities)?
11. In which additional countries does Cendant intend ABIG to do business
during the next three years? How much capital does Cendant intend to deploy to
execute these expansions?
12. Does Cendant intend to modify the amount of catastrophe protection
purchased by ABIG's subsidiaries during the next three years?
D. TREATMENT OF EMPLOYEES, ACCOUNTS AND POLICYHOLDERS
1. Will Cendant commit to continued employment at current levels for ABIG
employees for a specified period following the acquisition?
2. Will Cendant commit to maintain ABIG's current employee benefit
policies, plans (including LESOP and retirement plans), procedures, compensation
and benefits (including corporate day care and school) for a specified period
following the acquisition?
3. Will ABIG's headquarters and other facilities be kept in the same
locations in Florida for a specified period following the acquisition?
4. Will ABIG employees be required to relocate to other Cendant locations
in order to keep their jobs?
5. Will Cendant commit to maintain ABIG's policies on charitable donations
and other community activities for a specified period following the acquisition?
6. Will Cendant outsource any functions currently being performed by ABIG
employees (e.g., telemarketing, data processing, investments, actuarial)?
7. What changes in other management and other personnel, policies,
procedures, quality goals, and customer service philosophy does Cendant intend
to make during the next three years for ABIG and/or its subsidiaries?
8. Does Cendant intend to make any changes in ABIG's marketing policies
and/or relationships with producers and/or reinsurers during the next three
years?
E. EXPERIENCE IN OWNING AND OPERATING INSURANCE COMPANIES
1. What insurance products does Cendant currently sell?
2. What insurance experience does Cendant have in each of the countries in
which ABIG currently operates?
3. What self-regulatory association activities, such as the Insurance
Marketing Standards Association ("IMSA"), has Cendant participated in?
4. Have any material consumer complaints been filed against Cendant with
any regulatory agencies, including insurance departments?
5. Are there any material pending regulatory proceedings relating to
current products Cendant has sold or sales methods which Cendant has employed?
6. Have any regulatory actions been taken against Cendant, any senior
executives of Cendant or members of Cendant board of directors during the last
five years?
F. PROVIDIAN TRANSACTION
1. What is the status of the regulatory proceedings with respect to the
Providian transaction? Please provide copies of the regulatory filings made in
connection with the transaction.
2. What are Cendant's anticipated dividends from the Providian companies?
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3. Does Cendant plan to integrate or combine Providian and/or its
operations with ABIG and its subsidiaries?
4. If necessary, will Cendant provide additional statutory capital in order
to maintain the current risk-based capital ratios and A.M. Best ratings of
Providian? If so, what is the anticipated source of that capital?
G. YEAR 2000 COMPUTER COMPLIANCE
1. Please describe in detail the audit controls and procedures that have
been put into place to ensure year 2000 compliance at Cendant and its
subsidiaries, the results of any such audits, and the projected timetable and
costs with respect to such compliance.
2. When will all of Cendant's distributors, producers, and franchisees
become year 2000 compliant? How is Cendant monitoring this activity?
3. What year 2000 warranties has Cendant given to its customers in the
software division?
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[LETTERHEAD OF AMERICAN BANKERS INSURANCE GROUP, INC.]
February 24, 1998
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Director John A. Greene Commissioner John Oxendine
Department of Insurance Department of Insurance
State of Arizona State of Georgia
2910 North 44th Street, Suite 210 2 Martin Luther King, Jr. Drive
Phoenix, Arizona 85018-7526 Floyd Memorial Building
704 West Tower
Atlanta, Georgia 30334
Superintendent Neil D. Levin Director Lee P. Jedziniak
Department of Insurance Department of Insurance
State of New York State of South Carolina
25 Beaver Street 1612 Marion Street
New York, New York 10004 P.O. Box 100105
Columbia, South Carolina 29202-3105
Commissioner Elton Bomer
Department of Insurance
State of Texas
P.O. Box 149104
Austin, Texas 78714-9104
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Re: Application of Cendant Corporation and Season Acquisition Corp. to
Acquire Control of American Bankers Insurance Group, Inc.
Honorable Gentlemen:
Enclosed please find a copy of a letter submitted today by American Bankers
Insurance Group, Inc. ("American Bankers") to the Florida Insurance Department
(the "Florida Department"), which raises questions and solicits information from
Cendant Corporation ("Cendant") in connection with Cendant's application before
the Florida Department to acquire control of the American Bankers' Florida
insurance subsidiaries. American Bankers believes that the questions raised in
the letter to the Florida Department are equally relevant to Cendant's
applications to acquire the insurance subsidiaries of American Bankers domiciled
in your states.
Please contact the undersigned at your earliest convenience to discuss the
foregoing. Thank you in advance for your time and consideration.
Sincerely,
/s/ R. Kirk Landon
R. Kirk Landon
Chairman
Attachment
copy to (w/attachment):
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Commissioner William Nelson
Florida Department of Insurance
Maurice R. Greenberg
American International Group, Inc.
Henry R. Silverman
Cendant Corporation
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EXHIBIT 29
(LETTERHEAD OF AMERICAN BANKERS INSURANCE GROUP, INC.)
FOR IMMEDIATE RELEASE
AMERICAN BANKERS INSURANCE GROUP, INC.
SUBMITS LETTER TO FLORIDA INSURANCE DEPARTMENT
IN CONNECTION WITH CENDANT'S OFFER
Miami, Florida, February 24, 1998. American Bankers Insurance Group, Inc.
announced today that it had submitted to Commissioner William Nelson of the
Florida Insurance Department a letter which raises questions and solicits
information from Cendant in connection with Cendant's application before the
Department to acquire control of the Company's Florida insurance subsidiaries.
Copies of the letter were also sent to the Insurance Departments of the states
of Arizona, Georgia, New York, South Carolina and Texas.
American Bankers Insurance Group, Inc. (ABI) concentrates on marketing
affordable, specialty insurance products and services through financial
institutions, retailers and other entities offering consumer financing as a
regular part of their business. ABI, through its insurance subsidiaries,
operates in the United States, Canada, the Caribbean, Latin America and the
United Kingdom.
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