SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 24, 1999
Motor Club of America
(Exact name of registrant as specified in its charter)
New Jersey 0-671 22-0747730
(State or other jurisdiction (Commission IRS Employer
of incorporation or organization) File Number) Identification No.)
95 Route 17 South
Paramus, NJ 07653-0931
(Address of principal executive offices)
Registrant's telephone number, including area code: (201) 291-2000
(Former name or former address, if changed since last report)
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Item 2 - Acquisition or Disposition of Assets
On September 24, 1999, Motor Club of America (the "Company") announced that
it had closed its acquisition of North East Insurance Company ("North East"), as
previously described in a Current Report on Form 8-K filed on March 18, 1999.
In connection with the acquisition of North East, Motor Club has announced
that First Union National Bank, the exchange agent for the merger, will shortly
be mailing exchange materials to North East shareholders of record. Those who
hold their North East shares in "street name" will receive similar materials
from their brokers soon thereafter.
As of the closing of the merger, North East's shares are no longer publicly
traded. The exchange materials permit North East shareholders to exchange their
North East shares for cash, an equivalent number of shares of Motor Club common
stock, or a combination thereof. However, only a maximum of 290,389 Motor Club
shares will be issued. If, in the aggregate, North East shareholders seek to
receive more than this maximum, the number of Motor Club shares issued to each
electing shareholder will be reduced pro rata, with cash substituted for the
remainder. North East shareholders who fail to return their completed election
forms within 25 days of the mailing date will receive only cash in exchange for
their North East shares.
In connection with the closing of the North East transaction, Motor Club
reported that it would record charges during the 1999 third quarter of
approximately $1.3 million or $.63 per share, after federal income taxes, the
majority of which are severance costs at North East; these charges also include
Motor Club's own merger-related expenditures.
Item 5 - Other Events.
Simultaneously, the Company announced that its Board of Directors is naming
Patrick J. Haveron as Chief Executive Officer of Motor Club of America. Haveron
will be joining Stephen A. Gilbert in that position, and will focus on further
diversification of the Company outside New Jersey, while continuing to oversee
the Company's financial affairs by remaining Chief Financial Officer. Ronald A.
Libby has been elected as President, Chief Operating Officer and a Director of
North East, and North East's present Treasurer, Graham S. Payne, will join Motor
Club as its Controller and Chief Accounting Officer.
The Company also reported that its Motor Club of America Insurance Company
and Preserver Insurance Company operating units had presently suffered
approximately $485,000 or $.23 per share in net losses, after federal income
taxes, as a result of Hurricane Floyd. While claim reports are still being
submitted, the Company presently anticipates that the amount will not exceed
approximately $625,000 or $.30 per share, largely due to the protection provided
by its catastrophe coverage.
Forward-Looking Statement Disclaimer. This Current Report on Form 8-K
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. 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 Motor Club and North East; risks
associated with Motor Club's and North East's entry into new markets; and state
regulatory and legislative actions which can affect the profitability of certain
lines of business and impeded the companies' ability to charge adequate rates.
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Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
In accordance with paragraph (4) of Item 7, not later than November 23,
1999, the Registrant will file financial statements of North East Insurance
Company and pro forma financial information on an amendment to this Current
Report on Form 8-K.
(c) Exhibits.
Exhibit No. Description
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99.1 Press release dated September 24, 1999
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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, thereto duly authorized.
Dated: September 28, 1999
MOTOR CLUB OF AMERICA
By /s/ Patrick J. Haveron
Patrick J. Haveron
Chief Executive Officer and Chief Financial Officer
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Exhibit 99.1
Patrick J. Haveron, CPA
Chief Executive Officer
Phone : (201) 291-2112
E-Mail: [email protected]
MOTOR CLUB OF AMERICA ANNOUNCES CLOSING OF
NORTH EAST TRANSACTION, APPOINTMENT OF PATRICK J. HAVERON AS CHIEF EXECUTIVE
OFFICER AND THIRD QUARTER CHARGES
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Paramus, NJ, September 24, 1999 - Motor Club of America (NASDAQ : MOTR)
announced today that it had closed its acquisition of North East Insurance
Company (NASDAQ : NEIC). The Company also announced that its Board of Directors
is naming Patrick J. Haveron as Chief Executive Officer of Motor Club of
America. Haveron will be joining Stephen A. Gilbert in that position.
Reporting on the closing of the North East transaction, Stephen A. Gilbert,
President and Chief Executive Officer of Motor Club, said "We look forward to
embarking on a new era at North East which will maximize its potential. We
believe Motor Club offers North East the opportunity to significantly improve
its operations, particularly with regard to its reinsurance programs and other
elements of its cost structure. In addition, Motor Club is making a $2 million
contribution to the surplus of North East, which will increase its surplus by
more than a third. We look forward to Ron Libby and his Maine-based North East
team continuing to serve their Maine agents and policyholders with not only its
present product line, but also enhanced commercial lines product offerings in
the near future. We believe this combination will enable Motor Club to bolster
its returns, and strengthen its operations by expanding its geographic scope and
diversifying its policyholder base."
Ronald A. Libby has been elected as President, Chief Operating Officer and
a Director of North East. Commenting on the closing of the transaction, Libby
said "Our affiliation with Motor Club opens up a wide range of possibilities for
North East which we look forward to capitalizing on. We believe those
possibilities will begin to take shape very quickly and this represents a very
positive step for our Maine-based agents, policyholders and employees."
Gilbert continued, stating, "The North East transaction enables us to begin
our diversification of Motor Club outside the State of New Jersey, which we plan
to continue. This effort will be led by Pat Haveron, who will be joining me as
Chief Executive Officer of Motor Club."
Haveron will be responsible for Motor Club's merger and acquisition
efforts, including post-merger integration. For the present time, Haveron will
continue to oversee the financial management of the Company and remains its
Chief Financial Officer. The Company also announced that North East's present
Treasurer, Graham S. Payne, would be joining Motor Club as its Controller and
Chief Accounting Officer.
Haveron said, "We will continue to expand the Company outside the State of
New Jersey and pursue our plan of growth in the small commercial lines arena,
where our Preserver Insurance Company unit has excelled in recent years. As we
have said, we believe we can achieve both objectives through acquisitions and
while this market is very competitive, we look forward to carrying through on
this critical strategic effort."
Haveron joined Motor Club in 1988 as Controller and was appointed Chief
Financial Officer in 1993. He was also named Executive Vice President in 1996
<PAGE>
and has been a director of Motor Club since 1992. He is a 1983 graduate of the
University of Scranton and is also a certified public accountant.
Motor Club has announced that First Union National Bank, the exchange agent
for the merger, will shortly be mailing exchange materials to North East
shareholders of record. Those who hold their North East shares in "street name"
will receive similar materials from their brokers soon thereafter.
As of the closing of the merger, North East's shares are no longer publicly
traded. The exchange materials permit North East shareholders to exchange their
North East shares for cash, an equivalent number of shares of Motor Club common
stock, or a combination thereof. However, only a maximum of 290,389 Motor Club
shares will be issued. If, in the aggregate, North East shareholders seek to
receive more than this maximum, the number of Motor Club shares issued to each
electing shareholder will be reduced pro rata, with cash substituted for the
remainder. North East shareholders who fail to return their completed election
forms within 25 days of the mailing date will receive only cash in exchange for
their North East shares.
In connection with the closing of the North East transaction, Motor Club
reported that it would record charges during the 1999 third quarter of
approximately $1.3 million or $.63 per share, after federal income taxes, the
majority of which are severance costs at North East; these charges also include
Motor Club's own merger- related expenditures.
The Company also reported that its Motor Club of America Insurance Company
and Preserver Insurance Company operating units had presently suffered
approximately $485,000 or $.23 per share in net losses, after federal income
taxes, as a result of Hurricane Floyd. While claim reports are still being
submitted, the Company presently anticipates that the amount will not exceed
approximately $625,000 or $.30 per share, largely due to the protection provided
by its catastrophe coverage.
Motor Club of America is a property and casualty insurance holding company.
Motor Club of America Insurance Company writes personal automobile insurance.
Preserver Insurance Company writes small commercial and homeowners insurance.
The Companies are separately rated B+ (Very Good) by A.M. Best Company ("Best").
North East writes personal automobile and small commercial insurance and is
presently rated B- (Fair) by Best.
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.
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 Motor Club and North East; risks associated with
Motor Club's and North East's entry into new markets; and state regulatory and
legislative actions which can affect the profitability of certain lines of
business and impeded the companies' ability to charge adequate rates.
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