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, 1996 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 provides information required by Items 10, 11, 12 & 13 of
Form 10-K.
<PAGE>
PART III
ITEM 10
Directors and Executive Officers of the Registrant
The directors and executive officers of American Premier
Underwriters, Inc.("APU") at March 31, 1997 were as follows:
<TABLE>
<CAPTION>
Director
or Executive
Name Age Position Since
<S> <C> <C> <C>
Carl H. Lindner 77 Chairman of the Board and Chief
Executive Officer 1982
S. Craig Lindner 42 Co-President and a Director 1995
Keith E. Lindner 37 Co-President and a Director 1995
Carl H. Lindner III 43 Co-President and a Director 1991
Theodore H. Emmerich 70 Director 1988
James E. Evans 51 Senior Vice President, General
Counsel and a Director 1985
Thomas M. Hunt 73 Director 1982
William R. Martin 68 Director 1994
Thomas E. Mischell 49 Senior Vice President - Taxes 1995
Fred J. Runk 54 Senior Vice President and Treasurer 1995
</TABLE>
Carl H. Lindner has been Chairman of the Board and Chief Executive
Officer of AFG for more than five years. During the past five years, Mr.
Lindner has also been Chairman of the Board and Chief Executive Officer of
APU and AFC, diversified financial services companies which became
subsidiaries of AFG as a result of Mergers occurring in April 1995. He is
Chairman of the Board of Directors of American Annuity Group, Inc. ("AAG"),
American Financial Enterprises, Inc. ("AFEI") and Chiquita Brands
International, Inc. ("Chiquita"). Mr. Lindner is the father of Carl H.
Lindner III, S. Craig Lindner and Keith E. Lindner.
S. Craig Lindner, since March 1993, has been President of AAG, an 81%-
owned subsidiary of AFC that markets tax-deferred annuities principally to
employees of educational institutions. Mr. Lindner is also President of
American Money Management Corporation ("AMMC"), a subsidiary of AFC which
provides investment services for AFG and its affiliated companies. For over
five years prior thereto, he had served as Senior Executive Vice President of
AMMC. Mr. Lindner is a director of AFG, AAG, AFC and APU.
Keith E. Lindner, in March 1997, was named Vice Chairman of the Board
of Directors of Chiquita, a worldwide marketer and producer of bananas and
other food products in which AFG has a 43% ownership interest. For more than
five years prior to that time, Mr. Lindner had been President and Chief
Operating Officer and a director of Chiquita. Mr. Lindner is also a director
of AFG, AFC and APU.
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<PAGE>
Carl H. Lindner III was President of AFG from February 1992 until he
became Co-President in March 1996. For more than five years, Mr. Lindner has
been President of Great American Insurance Company ("Great American") and has
been principally responsible for AFG's property and casualty insurance
operations. Mr. Lindner is a director of AFG, AFC and APU.
Theodore H. Emmerich was, until his retirement in 1986, the managing
partner of the Cincinnati office of the independent accounting firm of Ernst
& Whinney. He is a director of AFG, AFC, APU, Carillon Fund, Inc., Carillon
Investment Trust, Gradison Custodial Trust, Gradison-McDonald Municipal
Custodial Trust, Gradison-McDonald Cash Reserve Trust and Summit Investment
Trust.
James E. Evans is Senior Vice President and General Counsel of AFG.
He has served as Vice President and General Counsel of AFC for more than five
years. Mr. Evans is a director of AFG, AFC, AFEI and APU.
Thomas M. Hunt has, during the past five years, been Chairman of the
Board of Hunt Petroleum Corporation, an oil and gas production company. He
is also a director of AFG, AFC and APU.
William R. Martin has, during the past five years, been Chairman of
the Board (since 1993) and President and Chief Executive Officer (until 1993)
of MB Computing, Inc., a computer software and services company. Mr. Martin
is also a director of AFG, AAG, AFC and APU.
Thomas E. Mischell is Senior Vice President - Taxes of AFG. He has
served as a Vice President of AFC for over five years.
Fred J. Runk is Senior Vice President and Treasurer of AFG. He has
served as Vice President and Treasurer of AFC for more than five years.
In December 1993, Great American Communications Company, which
subsequently changed its name to Citicasters Inc., completed a
comprehensive financial restructuring that included a prepackaged plan of
reorganization filed in November of that year under Chapter 11 of the
Bankruptcy Code. Carl H. Lindner, Thomas E. Mischell and Fred J. Runk
had been executive officers of that company within two years before its
bankruptcy reorganization.
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<PAGE>
ITEM 11
Executive Compensation
Compensation
The following table summarizes the aggregate cash compensation for 1996, 1995
and 1994 of the Chairman of the Board and Chief Executive Officer and the
four other most highly compensated executive officers during 1996 (such five
executive officers being herein referred to as the "Named Executive
Officers"). Such compensation includes amounts paid by AFG, AFC, APU and
their subsidiaries and certain affiliates during 1995 and 1996, including the
period prior to the Mergers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Annual Compensation
Compensation --------------------------------------------
-------------------------- Other Annual Securities All Other
Name and Compensation Underlying Compensation
Principal Position (a) Year Salary (b) Bonus (c) (d) Options Granted (f)
(# of Shares) (e)
- ---------------------------- ---- ---------- ----------- ----------- ------------------ ------------
Carl H. Lindner 1996 $913,000 $900,000 $156,000 --- $70,900
Chairman of the Board and 1995 1,364,000 900,000 254,000 --- 169,000
Chief Executive Officer 1994 981,000 800,000 --- --- 87,000
Keith E. Lindner 1996 $917,000 $900,000 $28,000 --- $31,000
Co-President 1995 935,000 900,000 --- 400,000 30,000
Carl H. Lindner III 1996 $917,000 $900,000 $174,000 --- $39,500
Co-President 1995 1,076,000 900,000 223,000 --- 103,000
1994 1,011,000 800,000 --- --- 53,000
S. Craig Lindner 1996 $917,000 $900,000 $137,000 --- $31,000
Co-President 1995 1,121,000 900,000 142,000 388,181 83,000
James E. Evans 1996 $917,000 $639,000 $14,000 --- $49,500
Senior Vice President and 1995 948,000 850,000 10,000 150,000 58,000
General Counsel
</TABLE>
(a) Keith E. Lindner, S. Craig Lindner and James E. Evans became executive
officers of APU in April 1995.
(b) This column includes $200,000 (1996) and $269,000 (1995) with respect
to Carl H. Lindner and $900,000 (1996) and $935,000 (1995) with respect
to Keith E. Lindner, representing salary paid by Chiquita.
(c) Approximately one quarter of the 1996 bonus for each individual was
paid in shares of AFG Common Stock.
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<PAGE>
<TABLE>
<CAPTION>
(d) This column includes amounts for (i) personal homeowners and automobile
insurance coverage, and (ii) the use of corporate aircraft and value of
automobiles.
Name Year Insurance Aircraft & Automobile
-------------------- ---- ---------- ---------------------
<S> <C> <C>
<C>
Carl H. Lindner 1996 $16,000 $140,000
1995 18,000 236,000
Keith E. Lindner 1996 $12,000 $ 16,000
1995 --- ---
Carl H. Lindner III 1996 $19,000 $155,000
1995 17,000 206,000
S. Craig Lindner 1996 $23,000 $114,000
1995 20,000 122,000
James E. Evans 1996 --- $14,000
1995 --- 10,000
</TABLE>
(e) Represents options granted by AFG.
(f) 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 a benefit equalization plan
which generally makes up certain reductions caused by Internal
Revenue Code limitations in contributions to certain retirement
plans) and company paid group life insurance, as follows:
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<PAGE>
<TABLE>
<CAPTION>
AFC Savings and
Auxiliary Retirement
Directors'
Name Year ESORP Plans Fees Term Life
------------------ ---- ------ ------------ ---- ---------
<S> <C> <C> <C> <C> <C>
Carl H. Lindner 1996 $21,400 $12,000 $14,500 $23,000
1995 30,000 74,000 25,000 40,000
1994 --- 49,000 --- 38,000
Keith E. Lindner 1996 $30,000 --- --- $1,000
1995 30,000 --- --- ---
Carl H. Lindner III 1996 $30,000 $7,500 --- $2,000
1995 30,000 67,000 --- 6,000
1994 --- 51,000 --- 2,000
S. Craig Lindner 1996 $30,000 --- --- $2,000
1995 30,000 --- $51,000 2,000
James E. Evans 1996 $30,000 --- $14,500 $5,000
1995 30,000 --- 25,000 3,000
</TABLE>
Option Information
As a result of the Mergers, all APU stock options became stock options
of AFG. No APU stock options were granted to, or exercised by, the Named
Executive Officers during 1996. Certain Executive officers of APU also serve
as executive officers of AFG and certain AFG subsidiaries and may be granted
employee stock options by such companies. The table set forth below
discloses the number and value of unexercised stock options held by the Named
Executive Officers at December 31, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
Shares Number of Shares Underlying Value of Unexercised
Acquired on Unexercised Options In-the-Money Options
Exercise at Year End at Year End (a)
(# of --------------------------- --------------------
Name Company Shares) Exercisable Unexrcisable Exercisable Unexercisable
- ------------------ ------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Carl H. Lindner AFG - 31,818 20,000 $500,429 $191,200
S. Craig Lindner AFG - 89,455 310,545 1,246,981 4,279,310
Keith E. Lindner AFG - 80,000 320,000 1,102,400 4,409,600
Carl H. Lindner III AFG - 400,000 0 5,511,883 0
James E. Evans AFG - 31,000 120,000 237,070 922,800
AFEI (b) - 115,000 0 812,500 0
</TABLE>
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<PAGE>
(a) The value of unexercised in-the-money options is calculated based on
the closing market price on December 31, 1996 for AFG's Common Stock
on the New York Stock Exchange of $37.75 per share and AFEI's common
stock on the Pacific Stock Exchange of $28.25 per share.
(b) American Financial Enterprises, Inc., an 83%-owned subsidiary of AFG.
ITEM 12
Security Ownership of Certain Beneficial Owners and Management
Principal Shareholders
The following shareholders are the only persons known to own
beneficially 5% or more of APU's outstanding voting securities as of March
31, 1997:
<TABLE>
Name and Address
of Amount and Nature of Voting Percent of
Beneficial Owner (a) Securities Held (b) Voting Securities
- --------------------------------- --------------------------- -----------------
<S> <C> <C>
American Financial Corporation
One East Fourth Street
Cincinnati, Ohio 45202 38,000,000 80.9%
American Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202 9,000,000 19.1%
</TABLE>
(a) Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E.
Lindner and trusts for their benefit (collectively the "Lindner
Family") are the beneficial owners of approximately 45% of the voting
stock of AFG. AFG and the Lindner Family may be deemed to be
controlling persons of AFC and APU.
(b) Shares of Common Stock.
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<PAGE>
Securities Ownership
The voting equity securities of APU consist of its Common Stock. All
of APU's Common Stock is owned by AFC and AFG. At March 31, 1997, the
beneficial ownership of AFC voting preferred stock and the equity securities
of AFC's parent and subsidiaries by each director, nominee for director, the
executive officers named in the Summary Compensation Table and by all
directors and executive officers as a group was as set forth below.
Mr. Martin and all directors and executive officers as a group beneficially
own 40,483 and 60,810 shares, respectively, of the voting preferred stock of
AFC. Messrs. Emmerich, Evans, Hunt, S.C. Lindner, Martin and all directors
and executive officers as a group beneficially own 1,561; 19,638; 382;
69,308; 15,063; and 118,219 shares, respectively, of the common stock of AAG.
Mr. Evans and all directors and executive officers as a group beneficially
own 116,000 and 279,194 (2.1%) shares, respectively, of the common stock of
AFEI. Beneficial ownership of shares of common stock of AFG was as follows:
Carl H. Lindner - 5,557,020 (9.6%); Carl H. Lindner III - 5,119,929 (8.7%);
S. Craig Lindner - 4,887,271 (8.4%); Keith E. Lindner - 4,880,231 (8.4%); Mr.
Emmerich - 17,899; Mr. Evans - 78,507; Mr. Hunt - 17,371; Mr. Martin -
41,280; and all directors and executive officers as a group - 20,776,397
(35.2%).
In addition, Messrs. Emmerich, C.H. Lindner, K.E. Lindner and all
directors and executive officers as a group beneficially own 1,000; 43,134;
11,887; and 253,500 shares, respectively, of the common stock of Chiquita.
ITEM 13
Certain Relationships and Related Transactions
Various business has been transacted between APU 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.
Directors and executive officers of APU 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 APU is
not included herein with respect to periods during which any such person did
not hold such a position with APU.
Asset Transactions
Following the Mergers, AFC and APU agreed that APU would make loans
available to AFC of up to $675 million under a line of credit. Loans under
the credit line bear interest at 11-5/8% and convert to a four-year term loan
in March 2005. On December 27, 1996, APU paid a dividend to AFG which
consisted of a $675 million note receivable from AFC, plus approximately
$18.1 million of accrued interest, representing amounts outstanding at that
date under the credit line with AFC.
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<PAGE>
During 1996, APU and Pennsylvania Company ("Pennco"), a wholly-owned
subsidiary of APU, entered into separate revolving credit agreements with two
AFC subsidiaries under which aggregate loans are available to those
subsidiaries of up to $170 million. Loans made under the credit lines bear
interest at floating rates based on prime or LIBOR. At December 31, 1996,
aggregate amounts outstanding under the credit lines totaled $96.5 million
(plus $1.0 million of accrued interest).
During 1996, APU purchased marketable securities from subsidiaries of
AFC for $627 million. During the fourth quarter of 1996, APU sold
(i) marketable securities to subsidiaries of AFC for aggregate proceeds of
$566 million; and (ii) certain coal properties and other real estate to AFC
in return for promissory notes totaling $54.1 million. The notes each bear
interest at prime plus 2%. Notes totaling $40.0 million are due on December
23, 1997 and the remaining notes are due on December 31, 1997.
In 1988, APU'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. Cumulative paid losses at December 31, 1996 pertaining to claims
during this period exceeded the threshold amount by approximately $3 million.
In addition, GAI has agreed to reimburse Republic Indemnity for its loss
adjustment expenses pertaining to this period up to a maximum of
$4.9 million.
Liability Transactions
Following the Mergers, APU entered into a credit agreement with AFG
under which APU and AFG can make loans of up to $200 million available to
each other. In January 1997, the amount of available loans was increased to
$250 million. 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, 1996, amounts payable to AFG under the credit
agreement totaled $175.5 million, plus $2.5 million of accrued interest.
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<PAGE>
Operations (Income/Expense) Transactions
The respective investment portfolios of APU's non-standard automobile
and workers' compensation insurance subsidiaries have been managed by AMMC
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 which exceeds $500 million. The
aggregate market value at December 31, 1996 of APU's insurance company
portfolios managed by AMMC was approximately $1.8 billion. AMMC has also
managed APU'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, 1996 was approximately $7 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 $2.4 million under the foregoing
agreements for 1996.
APU's insurance subsidiaries received an aggregate of approximately
$68.8 million in premiums from GAI and its insurance company subsidiaries
under various reinsurance arrangements in 1996. APU's subsidiaries paid
Great American insurance companies an aggregate of approximately $73,000 in
premiums for 1996 for general liability and other insurance coverage, and
paid approximately $183,000 in commissions for 1996 to insurance agencies
owned by GAI.
APU leases office space in Cincinnati, Ohio from AFC. Rental amounts
paid to AFC under the lease for 1996, including APU's proportionate share of
operating and tax expense increases, were approximately $400,000.
In 1996, APU utilized the services of Provident Travel Corporation, an
AFC subsidiary, to facilitate business travel by their employees on terms and
conditions customarily offered by commercial travel agencies in the area.
During 1996, APU purchased approximately $258,000 of travel related services
through Provident Travel. This amount includes the portion ultimately paid
to the airlines or other service providers.
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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 30, 1997
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