SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: March 16, 1999
(Date of earliest event reported)
NORTH EAST INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Maine 0-11184 01-0278387
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
482 Payne Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (207) 883-2232
Item 5. Other Events.
On March 17, 1999 the Registrant and Motor Club of America announced the
signing of a definitive merger agreement. The merger agreement is dated as
of March 16, 1999. A copy of the merger agreement and a copy of the
parties' joint press release are filed as exhibits to this report.
Item 6. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Agreement and Plan of Merger between the
Registrant and Motor Club of America,
dated as of March 16, 1999; incorporated
herein by reference to Exhibit 2 to Form 8-K
filed by Motor Club of America (Commission
File No. 0-671) on March 18, 1999
99.2 Press release dated March 17, 1999 of
Registrant and Motor Club of America,
announcing execution of Agreement and
Plan of Merger
SIGNATURE
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.
NORTH EAST INSURANCE COMPANY
Date: March 19, 1999 By: /s/ Robert G. Schatz
President and Chief
Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- ----------------------------------------
99.1 Agreement and Plan of Merger between the
Registrant and Motor Club of America,
dated as of March 16, 1999; incorporated
herein by reference to Exhibit 2 to Form 8-K
filed by Motor Club of America (Commission
File No. 0-671) on March 18, 1999
99.2 Press release dated March 17, 1999 of
Registrant and Motor Club of America,
announcing execution of Agreement and
Plan of Merger
EXHIBIT 99.2
MOTOR CLUB OF AMERICA AND NORTH EAST INSURANCE
COMPANY REACH DEFINITIVE AGREEMENT
PARAMUS, N.J. and SCARBOROUGH, Maine, March 17 -- Motor Club of America
(Nasdaq: MOTR), a property and casualty insurance holding company, and
North East Insurance Company (Nasdaq: NEIC), a property and casualty
insurer, today announced that they have signed a definitive agreement for
MOTR to acquire NEIC through a merger.
The terms of the agreement are as first announced on January 26, 1999
wherein NEIC shareholders will receive, at their individual election, (a)
$3.30 per share of NEIC common stock, (b) one share of MOTR common stock
for each 5.25 shares of NEIC common stock, or (c) a combination thereof. If
the NEIC shareholders in the aggregate elect to exchange more than 50% of
their shares for MOTR stock, the aggregate percentage will be ratably
reduced to 50%.
Consummation of the merger is subject to the satisfaction of certain
conditions set forth in the merger agreement, including approval from the
shareholders of MOTR and NEIC shareholders and authorization by state
insurance regulators. Both MOTR and NEIC expect that these conditions will
be satisfied in due course.
Stephen A. Gilbert, President and CEO of Motor Club, said, "We are very
pleased to reach a definitive merger agreement with North East. We look
forward to working with Ron Libby and the Maine-based North East team once
all of the necessary regulatory and shareholder approvals are received. We
together believe that the merger will enable North East to enhance its
profitability and prospects by diversifying product offerings, reducing its
expense ratio and strengthening its distribution system."
The parties also announced that, upon effectiveness of the merger, Ronald
A. Libby will become President, Chief Operating Officer and a Director of
North East. Mr. Libby has been Chief Operating Officer of NEIC since
December 1994.
Ron Libby stated, "We have a partner in Motor Club which is committed to
maintaining North East as an independent operation with a Maine presence.
Our merger with Motor Club will only serve to strengthen our financial
position and ability to compete in Maine and the nearby region for both
personal and commercial lines business."
The conclusion of the merger will also mark the end of the direct
involvement of Robert G. Schatz, North East's President and CEO for the
last ten years. "North East's shareholders and policyholders are now able
to look at a solid organization as a result of Bob's leadership," stated
Ron Libby. "His efforts and vision have remade North East and enabled this
merger to proceed -- we all owe him a sincere debt of gratitude," Libby
added.
Cochran, Caronia & Co. is serving as financial advisor to Motor Club of
America. Sandler, O'Neill & Partners, L.P. is serving as financial advisor
to North East.
Motor Club of America is a property and casualty insurance holding company
for Motor Club of America Insurance Company, which writes personal
automobile insurance, and Preserver Insurance Company, which writes small
commercial and homeowners insurance. Both subsidiaries are separately rated
B+ (Very Good) by A.M. Best, a widely recognized insurance rating and
information service.
North East Insurance Company is a property and casualty insurer located in
Scarborough, Maine. North East is rated B- (Fair) by A.M. Best. Its common
stock has been publicly traded since 1981.
FORWARD-LOOKING STATEMENT DISCLAIMER. This press release contains
statements that are not historical facts and are considered "forward-
looking statements" (as defined in the Private Securities Litigation Reform
Act of 1995), including statements concerning the expected benefits of the
merger and the expected future satisfaction of conditions to consummation
of the merger. Consummation of the merger and future benefits therefrom
involve various risks and uncertainties, including the risk of material
adverse changes in financial markets or the condition of MOTR and NEIC;
risks of the imposition of unanticipated regulatory conditions to the
merger; risks associated with MOTR's and NEIC's entry into new markets; and
state regulatory and legislative actions which can affect the profitability
of certain lines of business and impede the companies' ability to charge
adequate rates.
