AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JUNE 28, 1996
================================================================================
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 (Date of earliest event reported): June 27, 1996
CHANDLER INSURANCE COMPANY, LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or jurisdiction of incorporation)
0-15286 N/A
(Commission File Number) (IRS Employer Identification No.)
Anderson Square, 5th Floor
Grand Cayman, Cayman Islands, B.W.I. N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (809) 949-8177
================================================================================
Page 1 of 2
<PAGE>
ITEM 5. OTHER EVENTS
------------
See Item 7, Exhibit 28.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
------------------------------------------------------------------
(a) Not applicable.
(b) Not applicable.
(c) The following exhibit is furnished in accordance with the
provisions of Item 601 of Regulation S-K:
28.1 Press Release, dated June 26, 1996, of Chandler Insurance
Company, Ltd.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned.
CHANDLER INSURANCE COMPANY, LTD.
Date: June 28, 1996 By: /S/ MARK T. PADEN
-----------------------------
Mark T. Paden
Vice President - Finance and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
Page 2 of 2
EXHIBIT 28.1
CHANDLER INSURANCE ANNOUNCES UPGRADED
BEST'S RATING FOR SUBSIDIARY
Chandler Insurance Company, Ltd. (CHANDLER) announced today that National
American Insurance Company (NAICO) has received an A- (Excellent) rating from
A.M. Best Company.
CHANDLER is a Cayman Islands based company traded on the NASDAQ Stock
Exchange under the symbol CHANF. NAICO is a Nebraska domiciled insurance
company with principal executive offices in Chandler, Oklahoma. A.M. Best
Company is the nation's oldest insurance company rating service and is based in
Oldwick, N.J.
"A Best rating in the "A" category has been one of our chief goals since
1987 when current management began to operate the company," said W. Brent
LaGere, Chairman of the Board and CEO of both CHANDLER and NAICO. "Our
management and employees have always worked hard, but we have had difficulty
overcoming obstacles created by business relationships we entered in the late
1980's. We still have work to do and we will continue to give primary attention
to service for our customers and enhancing our long term relationships with
quality insurance agents. Our plan of concentrating our efforts in Oklahoma and
adjoining states is working well and will continue."
LaGere also announced:
* On May 13, 1996, the U.S. Supreme Court refused to hear an appeal by the
CenTra Group of a decision by the Nebraska Supreme Court rejecting its
attempt to complete a CHANDLER takeover;
* NAICO concluded an extended binding arbitration process with 3
reinsurers of its Trucker's Workers Compensation Program relating to
business written from 1988 through 1991.
* The agent which produced most of NAICO's surety bond business from 1987
through 1995 has made a demand for binding arbitration of certain
differences existing between it and NAICO.
"The decision by the U.S. Supreme Court is a major blow to CenTra's hopes
to control CHANDLER, but the related litigation will likely continue at least
through 1996," said LaGere. CenTra is a Detroit area based company engaged
primarily in the trucking business and is led by M. J. Moroun. Moroun and
certain affiliates purchased or acquired rights in almost 50% of CHANDLER's
outstanding shares over a period of years between 1988 and 1992 including
approximately 22% acquired during July of 1992. The takeover effort was
thwarted by the Nebraska Insurance Department which said that because CHANDLER
controlled NAICO and Moroun and his affiliates lacked the experience, integrity
and financial stability to satisfy its requirements, Moroun must cease his
efforts to control CHANDLER. After exhausting his Nebraska appeals, Moroun
appealed to the U.S. Supreme Court which let the Nebraska high court decision
stand. A lawsuit is currently pending in Nebraska Federal Court in which NAICO
has asked the court to take possession of all of Moroun's CHANDLER shares and to
enter an order directing the manner, method and timing of divestiture.
Page 1 of 2
<PAGE>
CHANDLER announced it will take an after-tax charge of approximately
$800,000 to offset a smaller than expected award in arbitration with the 3
reinsurers. Because NAICO is required to adjust its statutory surplus for
past due reinsurance recoverables, the net effect of the charge on its statutory
surplus is basically neutral according to NAICO officers.
On May 24, 1996, Midwest Indemnity Corporation (MIDWEST), a Skokie,
Illinois based surety bond producer made a demand upon NAICO for binding
arbitration of certain claims against NAICO. The claims are allegedly based
upon a contractual relationship dating back to 1987 and accuse NAICO of libeling
MIDWEST and attempting to wrongfully appropriate business belonging to MIDWEST
"We don't think the claims are subject to arbitration, but even if they are,
they are without merit" LaGere said. "Our legal counsel believe the claims are
a response to our efforts to force MIDWEST to abide by the terms of our
contract. In the arbitration demand MIDWEST alleges its corporate value has
been diminished by approximately $20 million and that security it gave NAICO to
secure MIDWEST's debt to NAICO should be released." On June 20, 1996, NAICO
filed a lawsuit in State Court in Chandler, Oklahoma against MIDWEST and certain
affiliates seeking a stay of the arbitration and asserting claims against
MIDWEST for debts owed to NAICO, breach of fiduciary duty by MIDWEST and certain
of its officers, various declaratory judgments and seeking relief in connection
with those claims. The Court granted an immediate Temporary Restraining Order
staying the requested arbitration pending further hearing. On June 25, 1996 the
action was removed to Federal Court in Oklahoma City. No hearing has been set.
MIDWEST currently owes NAICO approximately $7.9 million related to a
commission arrangement contingent on the loss experience of the program.
Pursuant to NAICO's agreement with Midwest, the obligation is to be reduced by
$1.5 million during the remainder of 1996 with the balance due in January, 1997.
In addition, MIDWEST owes approximately $474,000 for premiums it collected in
1995 and 1996 but which have not been paid to NAICO.
"Obviously, we still have issues arising from the early NAICO
relationships, but the related problems have been identified and we have made
huge strides toward solving them." LaGere concluded.
Chandler Insurance Company, Ltd. is a leading niche specialty lines
company. Through its subsidiary, NAICO, it underwrites various lines of
property and casualty insurance including surety performance bonds and workers
compensation. The company's main areas of concentration include contractors,
healthcare facilities, school districts, municipalities, counties, nonstandard
private passenger automobile and standard lines of business, primarily for
agents in Oklahoma and surrounding states.
For further information on Chandler Insurance free of charge via fax,
dial 1-800-PRO-INFO and enter the number 032.
Page 2 of 2
