SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1995 No. 1-1569
AMERICAN PREMIER UNDERWRITERS, INC.
Incorporated under IRS Employer I.D.
the Laws of Pennsylvania No. 23-6000765
One East Fourth Street, Cincinnati, Ohio 45202
(513) 579-6600
This Form 10-K/A amends certain information in Item 8 and provides
information required by Items 11, 12 & 13 of Form 10-K.
<PAGE>
PART II
ITEM 8
Financial Statements and Supplementary Data
E. Amounts Due from Affiliates
Subsequent to the Mergers, the Company entered into a credit agreement under
which loans are available to AFC of up to $675 million (the "AFC Credit
Agreement"). The credit line bears interest at 11-5/8% and converts to a
four-year term loan in March 2005 with scheduled principal payments to begin
in April 2005. At December 31, 1995, amounts outstanding under the AFC
Credit Agreement totalled $623.2 million, plus $16.3 million of accrued
interest.
Also subsequent to the Mergers, the Company entered into a credit agreement
with AFG under which the Company and AFG will make loans of up to $200
million available to each other (the "AFG Credit Agreement"). The balance
outstanding under the credit line bears interest at a variable rate of one
percent over LIBOR and is payable on December 31, 2010. At December 31,
1995, amounts payable to AFG under the AFG Credit Agreement totalled $84.0
million, plus $1.1 million of accrued interest.
F-12
<PAGE>
PART III
ITEM 11
Executive Compensation
Compensation
The following table summarizes the aggregate cash compensation for 1995, 1994
and 1993 of the Company's Chairman of the Board and Chief Executive Officer
and its four other most highly compensated executive officers during 1995
(such five executive officers being herein referred to as the "Named
Executive Officers"). Such compensation includes amounts paid by the
Company, AFC, and their subsidiaries and certain affiliates during 1995,
including the period prior to the Mergers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------------------- ---------------------
Name Other Annual Securities Underlying All Other
and Salary Compensation Options Granted Compensation
Principal Position (a) Year (b) Bonus (c) (# of Shares) (d) (e)
- ---------------------- ---- ------- -------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1995 $1,364,000 $900,000 $254,000 --- $169,000
Chairman of the Board and 1994 981,000 800,000 --- --- 87,000
Chief Executive Officer 1993 894,000 1,000,000 --- 50,000 125,000
Carl H. Lindner III 1995 $1,076,000 $900,000 $223,000 --- $ 2,000
Co-President 1994 1,011,000 800,000 --- --- 53,000
1993 879,000 1,000,000 --- 105,000 99,000
S. Craig Lindner (a) 1995 $1,121,000 $900,000 $142,000 388,181 83,000
Co-President
Keith E. Lindner (a) 1995 $935,000 $900,000 $ --- 400,000 $ 30,000
Co-President
James E. Evans (a) 1995 $948,000 $850,000 $ 10,000 50,000 $ 58,000
Senior Vice President and
General Counsel
</TABLE>
(a) S. Craig Lindner, Keith E. Lindner and James E. Evans became executive
officers of the Company in April 1995. In March 1996, Messrs. Carl H.
Lindner III (formerly President), S. Craig Lindner and Keith E. Lindner (each
formerly a Vice Chairman) were elected to the position of Co-President.
(b) Overall, the 1995 annual cash compensation paid by the Company and its
affiliates to the four Lindner family members listed above was substantially
less than they received prior to the Mergers from AFC and its affiliates,
including the Company. The 1996 base annual salary for the Chief Executive
Officer and Co-Presidents has been set at $900,000.
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<PAGE>
(c) This column includes amounts for (i) personal homeowners and automobile
insurance coverage, and (ii) the use of corporate aircraft and value of
automobiles. The Company's business requires executives to travel
frequently. To assure security and to minimize travel time, the Company
requires or encourages certain executives and their families to utilize
corporate aircraft for personal travel. The Company does not incur
significant additional cost for such personal use and reports such use as
additional compensation for income tax purposes.
<TABLE>
<CAPTION>
Name Year Insurance Aircraft & Automobile
-------------------- ----- ----------- ---------------------
<S> <C> <C> <C>
Carl H. Lindner 1995 $18,000 $236,000
Carl H. Lindner III 1995 $17,000 $206,000
S. Craig Lindner 1995 $20,000 $122,000
Keith E. Lindner 1995 --- ---
James E. Evans 1995 --- $10,000
</TABLE>
(d) The options listed for 1995 were granted by AFG.
<PAGE>
(e) Consists of company contributions or allocations under the (i) defined
contribution retirement plans and (ii) employee savings plan in which the
following Named Executive Officers participate (and related accruals for
their benefit under the Company's benefit equalization plan which generally
makes up certain reductions caused by Internal Revenue Code limitations in
the Company's contributions to certain of the Company's retirement plans) and
Company paid group life insurance, as follows:
<TABLE>
<CAPTION>
Retirement Savings Directors' Term
Name Year ESORP Plan Plan Fees Life
- ----------------- ----- ------- ----------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner 1995 $30,000 $ 56,000 $18,000 $25,000 $40,000
1994 --- 49,000 --- --- 38,000
1993 --- 100,000 --- --- 25,000
Carl H. Lindner III 1995 $30,000 $67,000 --- --- $6,000
1994 --- 51,000 --- --- 2,000
1993 --- 97,000 --- --- 2,000
S. Craig Lindner 1995 $30,000 --- --- $51,000 $2,000
Keith E. Lindner 1995 $30,000 --- --- --- ---
James E. Evans 1995 $30,000 --- --- $25,000 $3,000
</TABLE>
Option Information
As a result of the Mergers, all Company stock options became stock
options of AFG. During 1995, no Company stock options were granted or
exercised by the Named Executive Officers.
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<PAGE>
ITEM 12
Security Ownership of Certain Beneficial Owners and Management
As a result of the Mergers in April 1995, and at all times since then, all of
the Company's Common Stock was owned by American Financial Group, Inc. (One
East Fourth Street, Cincinnati, Ohio 45202). The Common Stock is the
Company's only class of outstanding voting securities. At March 31, 1996,
the beneficial ownership of common stock of American Financial Group, Inc.
was as follows: Carl H. Lindner - 6,793,221 shares (11.4%); Carl H. Lindner
III - 4,449,233 (7.4%); S. Craig Lindner - 4,027,871 (6.8%); Keith E. Lindner
- - 6,212,775 (10.4%); Theodore H. Emmerich - 16,219 (less than 1%); James E.
Evans - 42,846 (less than 1%); Thomas M. Hunt - 15,819 (less than 1%);
William R. Martin - 6,000 (less than 1%); and all directors and executive
officers as a group - 22,158,730 (36.4%).
<PAGE>
ITEM 13
Certain Relationships and Related Transactions
Various business has been transacted between the Company and certain
affiliates, including rentals, investment management services, insurance and
sales of assets. The financial terms (costs, interest rates, collateral,
risks of collectibility and other) of these transactions are comparable to
those prevailing at the time of consummation which would apply to unrelated
parties, unless noted otherwise.
Since April 3, 1995, the Company has been a wholly-owned subsidiary of
American Financial Group, Inc. ("AFG"). Directors and executive officers of
the Company are also directors and executive officers of AFG and AFC.
Information with regard to transactions involving persons who are or
were directors or executive officers of the Company is not included herein
with respect to periods during which any such person did not hold such a
position with the Company.
Asset Transactions
In March 1996, the Company sold the stock of a subsidiary, Buckeye
Management Company ("Buckeye"), to an investment group consisting of members
of Buckeye's management team and employees for approximately $63 million in
cash. The Chairman of the Board and Chief Executive Officer of Buckeye was
also a director of the Company until his resignation in late March 1996.
Subsequent to the Mergers, the Company entered into a credit agreement
under which loans are available to AFC of up to $675 million. The credit
line bears interest at 11-5/8% and converts to a four-year term loan in March
2005 with scheduled principal payments to begin in April 2005. At December
31, 1995, amounts receivable from AFC under the credit agreement totalled
$623.2 million, plus $16.3 million of accrued interest.
During 1995, the Company purchased 3.2 million shares of Chiquita from
AFC for $43.7 million. Also during 1995, the Company sold (i) certain
properties to a subsidiary of AFC for aggregate proceeds of $15.9 million;
(ii) a small reinsurance subsidiary to AFC for $13.7 million; and (iii)
shares of an affiliate to AFC for $553,000. The Company recognized a loss of
$2.1 million on the sales.
In 1988, the Company's workers' compensation insurance operations
("Republic Indemnity") entered into a reinsurance contract with Great
American Insurance Company, a subsidiary of AFC ("GAI"), to cover the
aggregate losses on workers' compensation coverage for the accident years
1980-1987, inclusive. The contract provides for coverage by GAI of net
aggregate paid losses of Republic Indemnity in excess of a certain threshold,
up to a maximum of $35.1 million. At December 31, 1995, amounts receivable
from GAI under this arrangement totalled approximately $1 million.
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<PAGE>
Liability Transactions
Subsequent to the Mergers, the Company entered into a credit agreement
with AFG under which the Company and AFG will make loans of up to $200
million available to each other. The balance outstanding under the credit
line bears interest at a variable rate of one percent over LIBOR and is
payable on December 31, 2010. At December 31, 1995, amounts payable to AFG
under the credit agreement totalled $84.0 million, plus $1.1 million of
accrued interest.
Operations (Income/Expense) Transactions
The respective investment portfolios of the Company's non-standard
automobile and workers' compensation insurance subsidiaries have been managed
by American Money Management Corporation ("AMMC"), a subsidiary of AFC, for
an aggregate annual management fee equal to 0.20% of that portion of the
aggregate value of such companies' investment portfolios which is less than
$500 million and 0.10% of that portion of such portfolio value which exceeds
$500 million. The aggregate market value at December 31, 1995 of the
Company's insurance company portfolios managed by AMMC was approximately $2.0
billion. AMMC has also managed the Company's fixed income investment
portfolio for an annual fee equal to .025% of the aggregate value of the
portfolio, subject to a $125,000 annual minimum fee. The aggregate market
value of the fixed income investment portfolio at December 31, 1995 was
approximately $53 million. Each of the foregoing fees has been payable in
quarterly installments based on asset values measured as of the end of the
preceding calendar quarter. AMMC was paid an aggregate of approximately
[$2.3] million under the foregoing agreements in 1995.
The Company's insurance subsidiaries received an aggregate of
approximately $134.3 million in premiums from GAI and its insurance company
subsidiaries under various reinsurance arrangements in 1995. The Company's
subsidiaries paid Great American insurance companies an aggregate of
approximately $155,000 in premiums for 1995 for general liability and other
insurance coverage, and paid approximately $298,000 in commissions for 1995
to insurance agencies owned by GAI.
The Company's subsidiaries have provided various risk management and
real estate management services to AFC and its subsidiaries and affiliates.
Operating costs for services provided under these arrangements have been
allocated to AFC based upon estimated hourly rate charges for salary and
fringe benefits, supplies and rental expense in respect of the services
performed. AFC and its subsidiaries and affiliates were billed approximately
$200,000 in the aggregate for the services of such Company subsidiaries in
1995.
The Company leases office space for its headquarters in The Provident
Tower building in Cincinnati, Ohio, which is owned by AFC. Rental amounts
paid or payable to AFC under the lease were approximately $850,000 for 1995.
Under the lease terms, the Company also paid a proportionate share of
operating and tax expense increases.
<PAGE>
In 1995, the Company utilized the services of Provident Travel
Corporation, an AFC subsidiary, to facilitate business travel by Company
employees on terms and conditions customarily offered by commercial travel
agencies in the area. During 1995, the Company paid Provident Travel
approximately $482,000 for travel related services.
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment to be signed on its behalf by
the undersigned, duly authorized.
AMERICAN PREMIER UNDERWRITERS, INC.
BY:Fred J. Runk
---------------------------------
Fred J. Runk
Senior Vice President and
Treasurer
Dated: April 26, 1996
