<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _)*
The Centris Group, Inc.
-------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
-------------------------------------------------
(Title of Class of Securities)
155904105
-------------------------------------------------
(CUSIP Number)
Stephen L. Way
HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040-6094
(713) 690-7300
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications)
with copies to:
Arthur S. Berner
Winstead Sechrest & Minick P.C.
910 Travis, Suite 2400
Houston, Texas 77002
(713) 650-2729
December 30, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13-1(e), (f) or (g), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP NO. 404132102
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HCC Insurance Holdings, Inc. 76-0336636
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7. SOLE VOTING POWER
NUMBER OF
911,200
---------------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
---------------------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON 911,200
---------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
WITH
-0-
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
911,200
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES*
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.79% (See Item 5)
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON *
CO and HC
-------------------------------------------------------------------------------
2
<PAGE>
CUSIP NO. 404132102
The following constitutes the Schedule 13D filed by the undersigned (the
"Schedule 13D").
ITEM 1. SECURITY AND ISSUER
The class of equity securities to which this Schedule 13D relates is
the common stock, $.01 par value (the "Shares") of The Centris Group,
Inc., a Delaware corporation (the "Issuer"). The principal executive
offices of the Issuer are located at 650 Town Center Drive, Suite
1600, Costa Mesa, California 92626.
ITEM 2. IDENTITY AND BACKGROUND
This Schedule 13D is being filed by HCC Insurance Holdings, Inc., a
Delaware corporation ("HCC" or the "Company"). The principal
executive offices of the Company are located at 13403 Northwest
Freeway, Houston, Texas 77040-6094.
HCC is a parent holding corporation whose subsidiaries, including
Houston Casualty Company ("HC"), are engaged in providing specialized
property and casualty insurance coverages, managing general agency
services and insurance related services both to commercial customers
and individuals. The Company's insurance products are underwritten
on both a direct and reinsurance basis and are marketed by the Company
itself and through a network of independent and affiliated agents and
brokers.
The Company's insurance company subsidiaries' underwriting activities
are focused on providing aviation, marine, offshore energy, property,
medical stop-loss, accident and health, workers' compensation, and
lenders single interest insurance and reinsurance on a worldwide
basis. As an insurer, the Company operates on a surplus lines or a
non-admitted basis through HC and on an admitted basis through other
insurance company subsidiaries.
The Company also underwrites on behalf of affiliated and
non-affiliated insurance companies through its managing general agency
operations. These agency operations specialize in domestic general
aviation insurance, medical stop-loss coverage for employee sponsored
self-insured health plans, occupational accident coverage for
self-insured truckers, workers' compensation and a variety of accident
and health related insurance and reinsurance products. Beginning in
1996, in an effort to further diversify its operations to enhance the
Company's ability to anticipate and capitalize on opportunities
resulting from changing market conditions in the insurance industry,
the Company commenced a strategy of acquiring through merger or
purchase, a number of privately held companies whose business was
managing general agency activities, primarily in the medical stop-loss
and domestic general aviation insurance businesses.
The name, business address, present principal occupation and
citizenship of each Executive Officer and Director of HCC are set
forth in Appendix A to this Schedule 13D, which is incorporated herein
by reference.
During the last five years neither HCC, nor, to the best of its
knowledge, any of its Executive Officers or Directors listed on
Appendix A to this Schedule 13D, has been convicted in any criminal
3
<PAGE>
CUSIP NO. 404132102
proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding is
or was subject to a judgement, decree or final order enjoining future
violations of, or prohibiting or mandating the activity subject to,
federal or state securities laws or finding any violations with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The amount of the funds used to purchase the Shares reported as
beneficially owned in Item 5 hereof was approximately $9.0 million,
all of which was provided from HCC's cash reserves and short term
investments.
ITEM 4. PURPOSE OF THE TRANSACTION
The purpose of the purchase by the Company of the Shares referred to
in Item 5 is to acquire a significant equity position in the Issuer
with the desire to acquire all of the equity securities of the Issuer,
through a merger, tender offer, or other business combination.
Commencing in May, 1998 the Company, through its subsidiary, HC,
purchased Shares of the Issuer in order to acquire an equity position
in the Issuer. Through January 11, 1999, HCC owned 911,200 Shares
constituting approximately 7.79% of the outstanding Shares of the
Issuer (based on 11,702,296 shares of the Issuer outstanding on
September 30, 1998).
During 1998, HCC initiated informal discussions with the Issuer
relating to a possible business combination. The Issuer, through its
Chief Executive Officer, advised HCC that it did not wish to have
combination discussions and that it preferred to remain an independent
company. These discussions were generally cordial, but the
discussions did not result in any agreement being reached between HCC
and the Issuer.
HCC has a high regard for the management and directors of the Issuer.
However, HCC reserves the right to take whatever action may be
necessary to accomplish its goal of entering into a business
4
<PAGE>
CUSIP NO. 404132102
combination with the Issuer. In that connection, HCC intends to seek
to acquire control of the Issuer.
HCC, concurrently with the filing of this Schedule 13D, has notified
the Issuer of its ultimate goal. In such notification, a copy of
which is attached as Exhibit 1 hereto, HCC offered to acquire 100%
of the Issurer's Common Stock at a price of $13.25 per share in a
negotiated business combination. HCC also issued a Press Release
announcing its actions. Such Press Release is attached as Exhibit
2, hereto. HCC has not yet determined whether to pursue any specific
plan or proposal for such business combination if such negotiations
do not result in a business combination. There can be no assurance
as to whether or when any specific plan or proposal will be
pursued if such negotiations are unsuccessful. In such event, any
such plan or proposal could include making a tender offer or exchange
offer for some or all of the outstanding common stock of the Issuer,
soliciting proxies, or proposing a business combination transaction
with the Issuer. Such a business combination might also involve a
distribution of certain of the Issuer's assets to its Shareholders or
another disposition of some or all of such Issuer's assets.
In connection with any such plan or proposal, HCC may seek redemption
or judicial invalidation of the Issuer's Stock Purchase Rights Plan
(the "Rights Plan") or may acquire some or all of the outstanding
rights which may be issued thereunder (the "Rights"). The Rights
provide that 10 days following the announcement that a person or group
is the beneficial owner of at least 15% of the outstanding Shares of
the Issuer, the Rights will become exercisable and will trade
separately from the Shares of common stock of the Issuer. In
addition, as set forth under the Rights Plan, under certain
circumstances, the Rights will become nonredeemable unless the
Issuer's Board of Directors extends the period of redeemability of the
Rights. Although HCC has had no discussions with the Issuer with
respect to the Rights, HCC believes that in light of existing market
conditions and the Issuer's announced plans, the Issuer's Board of
Directors should redeem the Rights in favor of any proposal by HCC
that would maximize Shareholder values.
Subject to the factors discussed below, the Company currently intends
to purchase additional Shares in the open market or otherwise. The
Company intends to review on a continuing basis various factors
relating to its investment in the Issuer, including the Issuer's
business and prospects, the price and availability of Shares,
subsequent developments affecting the Issuer, other investment and
business opportunities available to the Company, regulatory
restrictions on additional Share ownership, and general stock market
and economic conditions. Based on these factors, the Company may
decide to change its current intention to purchase additional Shares
and may determine to sell all or part of its investment in the Issuer.
If required, HCC will make the necessary filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), in order to permit HCC to increase its investment in the
Issuer. Once such HSR Act filing is made, HCC may not be able to
purchase additional Shares in the Issuer for a period of time until
the expiration of a thirty-calendar day waiting period beginning on
the date of such filing, unless both the Federal Trade Commission
("FTC") and the Antitrust Division of the Department of Justice
("Antitrust Division") terminates such waiting period on an earlier
date. Additionally, if within such a waiting period either the FTC or
the Antitrust Division requests that HCC provide additional
information of documentary material, the waiting period will be
extended for an additional period of 20 days following the date of
substantial compliance by HCC with such request. The waiting period
may be further extended only by a court order based upon the finding
that HCC failed to comply substantially with the notification
requirements of the HSR Act or with any request for additional
information.
5
<PAGE>
CUSIP NO. 404132102
If HCC were to commence a cash tender offer for some or all of the
Shares, HCC could make a new filing under the HSR Act that would
require only a 15-calendar day waiting period rather than a 30-day
period subject to earlier termination or extension as described above.
Except as otherwise indicated in this Item 4, the Company has no
present plans or proposals with respect to the Issuer (although it
reserves the right to develop any such plan or proposals).
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a) HCC owns 911,200 Shares representing approximately 7.79% of the
total number of Shares outstanding (based upon the 11,702,296
Shares outstanding on September 30, 1998 as disclosed in the
Issuer's quarterly report on Form 10-Q for the nine months ended
September 30, 1998). Such Shares are held solely by HCC. To the
best knowledge of HCC, no director or executive officer of HCC
beneficially owns any Shares of the Issuer, except that Alan
W. Fulkerson, a Director of HCC, is a Director, Shareholder and
President of Century Capital Management, Inc., a registered
investment advisor which exercises both voting and investment
power with respect to 90,000 shares of the Issuer owned of record
by ISF Limited Partnership ("ISF"). Although Mr. Fulkerson may
be deemed to beneficially own the 90,000 shares owned of record
by ISF, he disclaims beneficial ownership of such shares, except
to the extent of his less than 1% actual pecuniary interest
therein.
(b) HCC has the sole power to vote or to direct the vote and the sole
power to dispose of, or to direct the disposition of, the Shares
owned by it.
(c) The table set forth in Appendix B to this Schedule 13D contains
certain information with respect to all transactions in the
Shares effected by the Company during the past 60 days and is
incorporated herein by reference.
(d) No person other than HCC has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the
sale of, the Shares beneficially owned by HCC.
(e) N/A
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as set forth under Item 4 above, neither HCC nor to the best of
its knowledge any of its executive officers and directors has any
contracts, arrangements, understandings or relationships (legal or
otherwise) with any person with respect to any securities of the
Issuer, finder's fees, joint
6
<PAGE>
CUSIP NO. 404132102
ventures, loan or option agreements, or arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. EXHIBITS
1. Letter dated January 11, 1999 from HCC to the Issuer.
2. Press release dated January 11, 1999.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
HCC Insurance Holdings, Inc.
January 11, 1999
By: /s/ Stephen L. Way
--------------------------------
Stephen L. Way
Chief Executive Officer
and Chairman of the Board
7
<PAGE>
APPENDIX A
INFORMATION CONCERNING DIRECTORS AND
EXECUTIVE OFFICERS OF HCC
DIRECTORS AND EXECUTIVE OFFICERS OF HCC. The following table sets forth the
name, business address, present principal occupation, and employment and
material occupations, positions, officers or employments for the past five years
of certain directors, officers and employees of HCC. Unless otherwise
indicated, the principal business address of each executive officer of HCC is
13403 Northwest Freeway, Houston, Texas 77040 and each occupation set forth
opposite an individual's name refers to employment with HCC. Where no date is
given for commencement of the indicated office or position, such office or
position was assumed prior to January 11, 1994. Each person listed below is a
citizen of the United States.
PRINCIPAL OCCUPATION
NAME DURING THE PAST FIVE YEARS
- -------------------------------- ---------------------------------------------
Stephen L. Way . . . . . . . . Mr. Way is the founder of the Company and has
served as a Director, Chairman of the Board
of Directors and Chief Executive Officer of
the Company since its organization. He
served as President from the Company's
founding until May, 1996. Mr. Way has also
served as a Director, Chairman of the Board
of Directors and, until June, 1997, President
of Houston Casualty Company ("HC"), the
Company's principal insurance company
subsidiary, since its organization in 1981.
Mr. Way also serves as a director and officer
of various of the Company's other
subsidiaries. In addition, in January, 1998,
Mr. Way was appointed as a member of the
Board of Directors of Fresh Del Monte
Produce, Inc. (NYSE-- Symbol: FDP). Mr.
Way was appointed to the Board of Directors
of The Bradstock Group (London Stock Exchange
Symbol: BDK) in December, 1998.
Arthur S. Berner . . . . . . . Mr. Berner is a Shareholder in the law firm
Winstead Sechrest & Minick P.C. of Winstead Sechrest & Minick, in Houston,
910 Travis, Suite 2400 Texas. Mr. Berner has been a Director of the
Houston, TX 77002 Company since December, 1998. Mr. Berner is
a member of the Audit Committee.
James M. Berry . . . . . . . . Mr. Berry is the retired Vice Chairman of
Belk Store Services, Inc. NationsBank of Texas, N.A., a wholly owned
2801 West Tyrola Road subsidiary of NationsBank, N.A., having
Charlotte, N.C. 28213 served in such capacity from August, 1988
until December, 1992. He was Corporate
Executive Vice President of NCNB of North
Carolina from 1983 to 1988. Mr. Berry also
serves as a Director of Williams-Sonoma, Inc.
(Nasdaq--Symbol: WSGC). Mr. Berry has
served as a Director of the Company since
March, 1992 and as a Director of HC from
December, 1993 to May, 1996.
- -------------------------------------------------------------------------------
8
<PAGE>
PRINCIPAL OCCUPATION
NAME DURING THE PAST FIVE YEARS
- -------------------------------- ---------------------------------------------
Frank J. Bramanti . . . . . . . Mr. Bramanti currently serves as Executive
Vice President of the Company. Mr. Bramanti
has served as a Director from the Company's
organization until May, 1996, as Secretary
until July, 1997, as Chief Financial Officer
until October, 1997, and as interim President
from June, 1997 to November, 1997.
Mr. Bramanti was re-appointed by the Board of
Directors to serve as a Director in August,
1997. Mr. Bramanti has also served as
Executive Vice President of HC since
September, 1994 and as a Director of
HC from March, 1982 to December, 1988,
and from December, 1990, to the
present. Mr. Bramanti also serves as a
director and officer of various of the
Company's other subsidiaries.
Patrick B. Collins . . . . . . Mr. Collins is a retired partner of the
PricewaterhouseCoopers LLP international accounting firm of
1100 Louisiana, 46th Floor PricewaterhouseCoopers LLP, where he held
Houston, TX 77002 that position from 1967 through 1991.
Mr. Collins was appointed as a Director of
the Company in December, 1993 and was a
Director of HC from the same date to May,
1996. Mr. Collins is the Chairman of the
Audit Committee.
J. Robert Dickerson . . . . . . Mr. Dickerson is an attorney and from May,
6110 Pebble Beach 1991 to August, 1993, he was a member in the
Houston, TX 77069 law firm of Dickerson, Carmouche & Jones, a
Professional Corporation. Mr. Dickerson has
served as a Director of the Company since its
organization. He served as a Director of HC
from its organization in 1981 through
December 31, 1990, and was re-elected as a
Director of HC in December, 1993, and served
until May, 1996. Mr. Dickerson is the
Chairman of the Compensation Committee.
Edwin H. Frank, III . . . . . . Mr. Frank is a principal shareholder of
Underwriters Indemnity Company Underwriters Indemnity Holdings, Inc. and
8 Greenway Plaza, Suite 400 President of its subsidiaries, Underwriters
Houston, TX 77046 Indemnity Company and Planet Indemnity
Company having served in such capacities
since 1985. Both subsidiary companies are
property and casualty insurance companies.
Mr. Frank has served as a Director of the
Company since May, 1993 and as a Director of
HC from December, 1993 until May, 1996.
Mr. Frank is a member of the Audit and
Compensation Committees.
- -------------------------------------------------------------------------------
9
<PAGE>
PRINCIPAL OCCUPATION
NAME DURING THE PAST FIVE YEARS
- -------------------------------- ---------------------------------------------
Allan W. Fulkerson . . . . . . Mr. Fulkerson is President and a Director of
Century Capital Management, Century Capital Management, Inc., a
Inc. registered investment advisor which
1 Liberty Square specializes in the insurance industry and
Boston, MA 02109 President and a Director of Massachusetts
Fiduciary Advisors, Inc., a registered
investment advisor. In addition, he serves
as Chairman and Trustee of Century Shares
Trust, a mutual fund which invests
exclusively in the stocks of larger insurance
companies and banks since 1976. Mr.
Fulkerson has served as a Director of the
Company since May, 1997. Mr. Fulkerson is
also a Director of Mutual Risk Management,
Ltd., Terra Nova (Bermuda) Holdings, Ltd. and
Wellington Underwriting plc.
Walter J. Lack . . . . . . . . Mr. Lack is an attorney and a shareholder in
Engstrom, Lipscomb & Lack the law firm of Engstrom, Lipscomb & Lack, a
10100 Santa Monica Blvd., 16th professional corporation in Los Angeles,
Floor California. Mr. Lack has been a Director of
Los Angeles, CA 90067-4107 the Company since its organization and has
also served as a Director of HC from
October, 1985 until May, 1996. Mr. Lack is a
member of the Compensation Committee.
Mr. Lack also serves as a director of
Microvision, Inc. (Nasdaq--Symbol: MVIS).
Stephen J. Lockwood . . . . . . Mr. Lockwood serves as Vice-Chairman of the
LDG Reinsurance Corporation Board of Directors. Mr. Lockwood was
401 Edgewater Place appointed President of the Company in May,
Wakefield, MA 01880 1996 in connection with the Company's
acquisition of the company he founded, LDG
Management Company, Incorporated ("LDG") and
served in that capacity until May, 1997. He
has been President and Chief Executive
Officer of LDG since 1988. Mr. Lockwood
served as a Director of the Company from its
inception to May, 1993, but did not stand for
re-election in 1993. Mr. Lockwood was
re-appointed as a Director of the Company in
December, 1993 to fill a vacancy. He also
has served as a Director of HC from October,
1985 until July, 1997. Mr. Lockwood also
serves as a director and officer of various
of the Company's other subsidiaries.
Mr. Lockwood also serves as a board member of
four mutual funds managed by The Dreyfus
Corporation, a subsidiary of Mellon Bank
Corporation (NYSE--MEL).
- -------------------------------------------------------------------------------
10
<PAGE>
PRINCIPAL OCCUPATION
NAME DURING THE PAST FIVE YEARS
- -------------------------------- ---------------------------------------------
John N. Molbeck, Jr. . . . . . Upon joining the Company as its President,
Mr. Molbeck was appointed as a Director by
the Board of Directors in November, 1997.
Mr. Molbeck has over 22 years of experience
within the insurance industry. Prior to
joining the Company, Mr. Molbeck was the
Managing Director of AON Natural Resources
Group, a subsidiary of AON Corporation which
specializes in energy related insurance and
reinsurance brokerage. Prior to its
acquisition by AON Corporation, Mr. Molbeck
served as the President and Chief Operating
Officer of Energy Insurance International,
Inc., an independent retail insurance and
reinsurance brokerage company. Mr. Molbeck
also serves as a director and officer of
various of the Company's subsidiaries.
Peter B. Smith, Jr. . . . . . . Mr. Smith was appointed Vice President of the
Company in January, 1993, and Executive Vice
President in December, 1994 and served as a
Director of the Company from May, 1994 until
May, 1996. Mr. Smith was re-appointed as a
Director by the Board of Directors in August,
1997. Mr. Smith has served as Chief
Executive Officer of HC since September,
1997, as President from June, 1997 to
December, 1998, as Executive Vice President
from January, 1993 to June, 1997, and Senior
Vice President of HC from September, 1990 to
December, 1992. Mr. Smith has served as a
Director of HC from December, 1990 to
December, 1993 and from August, 1994 to the
present. Mr. Smith also serves as a director
and officer of various of the Company's other
subsidiaries.
Edward H. Ellis, Jr. . . . . . Mr. Ellis joined the Company as Senior Vice
President and Chief Financial Officer in
October, 1997. Prior to joining the Company,
Mr. Ellis served as a partner with the
international accounting firm of
PricewaterhouseCoopers, LLP from November,
1988 to September, 1997, specializing in the
insurance industry. Mr. Ellis is a Certified
Public Accountant with over 32 years of
public accounting experience. Mr. Ellis
also serves as a director and officer of
various of the Company's subsidiaries.
Christopher L. Martin . . . . . Mr. Martin joined the Company as Vice
President, Secretary and General Counsel in
July, 1997. Prior to joining the Company,
Mr. Martin was associated with the law firm
of Winstead Sechrest & Minick PC in Houston,
Texas from August, 1992 to June, 1997.
Mr. Martin also serves as an officer of
various of the Company's subsidiaries.
- -------------------------------------------------------------------------------
11
<PAGE>
APPENDIX B
TRANSACTIONS IN THE ISSUER'S STOCK
SINCE NOVEMBER 1, 1998
<TABLE>
<CAPTION>
Number Average Cost
Purchase Date of Shares per Share
<S> <C> <C>
12/30/98 272,500 $9.23
12/31/98 543,700(1) 9.83
01/07/99 50,000 9.63
01/08/99 45,000 9.75
Total. . . . . 911,200
</TABLE>
- ---------------------------------
(1) Acquired in a private purchase effective as of December 31, 1998 by HCC
Insurance Holdings, Inc. from HC, its wholly-owned subsidiary. Prior
to the time of such acquisition, by virtue of the fact that HC is a
wholly-owned subsidiary of HCC, HCC may be deemed to have shared
voting and dispositive power of the Shares which were owned by HC.
Since November 1, 1998, HC acquired the shares of the Issuer set
forth in the following table:
<TABLE>
<CAPTION>
Number Average Cost
Purchase Date of Shares per Share
<S> <C> <C>
12/11/98 75,000 $9.50
12/16/98 13,700 9.01
12/28/98 20,000 9.15
12/28/98 10,000 9.06
12/28/98 50,000 9.00
12/28/98 165,000 9.13
Total. . . . . . 333,700
</TABLE>
12
<PAGE>
EXHIBIT 1
HCC INSURANCE HOLDINGS, INC.
13403 NORTHWEST FREEWAY
HOUSTON, TEXAS 77040
January 11, 1999
Mr. David L. Cargile
Chairman, President and
Chief Executive Officer
The Centris Group, Inc.
650 Town Center Drive
Costa Mesa, CA 92626
Dear David:
Over the past year, we have had several discussions regarding a possible
strategic business combination between The Centris Group, Inc. ("Centris") and
HCC Insurance Holdings, Inc. ("HCC").
In January 1998, you and Howard Singer visited our offices in Houston where
we had very cordial, and we thought, productive discussions regarding a merger
of our businesses. After further conversations between our President, John
Molbeck and Mr. Singer, you invited us to visit you in Costa Mesa, which we did
in August 1998. At that meeting, we again discussed the obvious advantages and
benefits of a combination between our companies and, other than your prospective
role, you were very positive.
In my letter to your Board of Directors dated October 26th, 1998, I
again outlined some of the benefits of such a transaction and confirmed that
we were prepared to make an all cash offer to acquire all outstanding shares
of Centris Common Stock, with no financing contingencies and at a meaningful
premium to your share price which at that time was $8-7/16. We were still
very encouraged when we received your reply dated October 28th, 1998 as it
led us to believe that you were going forward with this idea. Naturally, we
were surprised and disappointed to receive your next correspondence dated
November 12th, 1998, in which you rejected our serious offer and request for
further discussions.
We have continued to study the potential advantages of a business
combination between HCC and Centris and, as a result, we now feel even more
strongly that such a transaction would result in significant strategic benefits
for both companies. Competitive factors in the insurance industry have become
much tougher, such as the extended soft market conditions, the importance of
financial size and the "flight to quality" by policyholders. Clearly, the
stand-alone mono-line business plan for Centris will be very challenging. The
combined company would be a leader in the medical stop-loss market and HCC's
excellent financial strength and prospects make it an ideal marriage, rewarding
Centris shareholders, and benefitting policyholders and employees.
<PAGE>
Mr. David L. Cargile
January 11, 1999
Page 2
In light of your current position and given what we continue to view as the
compelling rationale for a business combination, we have decided that the best
way to proceed is for HCC to submit a specific proposal to your Board of
Directors. Accordingly, on behalf of the Board of Directors of HCC, I am
pleased to offer to acquire 100% of the currently outstanding common stock of
Centris at a price of $13.25 per share in cash. This offer is, in our
judgement, a full and fair price and represents a 40% premium over the Centris
price on the New York Stock Exchange for the previous 20 trading days and a 34%
premium over the average closing Centris price on the New York Stock Exchange
for the previous six months trading. Furthermore, HCC is prepared to consider
increasing its offer price to acquire Centris if you can demonstrate through
the due diligence process, the economic justification for a higher price.
Our offer is based on our present knowledge of Centris, which is limited
to public information. Our offer is subject to the negotiation of a mutually
satisfactory definitive stock purchase agreement containing customary terms
and closing conditions, including certain insurance regulatory approvals.
Our acquisition proposal is not, however, subject to any due diligence
condition or any financing contingency, and it does not require any vote from
our shareholders. As indicated in each of our prior discussions, please
advise your management team and your Board of Directors that we are
interested in discussing a friendly, negotiated transaction.
I hope that you and your Board of Directors will recognize the powerful
business logic behind our offer and the substantial premium to your
shareholders. We hope that, after appropriate consideration, your Board of
Directors will authorize proceeding with the negotiation of a definitive stock
purchase agreement on the terms that we have proposed. We are prepared to move
promptly in connection with our offer. We would be happy to meet with you and
other members of your Board of Directors and senior management as soon as
practicable to discuss our offer in detail and to answer any questions you may
have.
We currently own 911,200 shares or approximately 7.79% of the
outstanding shares of Centris and are filing the appropriate 13D with the
Securities and Exchange Commission, a copy of which is attached. In view of
the impact that this proposal could have on the market for the shares of both
companies and our respective obligations under the Federal Securities laws, I
am sure that both Companies will want to make prompt public disclosure of our
proposal. We will be advising the New York Stock Exchange of this proposal
prior to the close of business on January 11, 1999 and issuing a public
announcement at that time.
I look forward to a positive response from your Board of Directors.
Yours sincerely,
Stephen L. Way
Chairman and
Chief Executive Offices
Attachment
<PAGE>
EXHIBIT 2
Contact: Frank J. Bramanti, Executive Vice President
HCC Insurance Holdings, Inc.
(713) 690-7300
FOR IMMEDIATE RELEASE
[LOGO]
HCC OFFERS TO ACQUIRE THE CENTRIS GROUP, INC.
FOR $13.25 PER SHARE IN CASH
HOUSTON (January 11, 1999) . . . Stephen L. Way, Chairman and Chief Executive
Officer of HCC INSURANCE HOLDINGS, INC., (NYSE symbol: HCC) today announced
that HCC has offered to acquire The Centris Group, Inc. ("Centris") (NYSE
symbol:CGE) for $13.25 per share in cash. In a letter sent today, HCC has
proposed to merge Centris with HCC on a negotiated basis. The HCC proposal
is not subject to any due diligence condition or any financing contingencies.
Additionally, HCC announced that it had acquired 911,200 shares or 7.79% of
the Common Stock of Centris and that it had filed a Form 13D with the
Securities and Exchange Commission.
Mr. Way stated that he had informed the Board of Directors of Centris of
HCC's intent and requested a meeting with the Board of Centris as quickly
as possible.
Mr. Way stated in his letter to the Centris Board that HCC believes the $13.25
per share offer was a full and fair price for Centris, representing a 40%
premium over the average closing Centris price on the New York Stock Exchange
for the previous 20 trading days and a 34%
<PAGE>
premium over the average closing Centris price on the New York Stock Exchange
for the previous six months trading. He noted HCC was prepared to consider
increasing its offer price to acquire Centris if it was demonstrated through
the due diligence process that a higher cash price was justified.
Mr. Way further noted the offer was subject to customary conditions,
negotiations of definitive agreements, and regulatory approvals, but not
subject to any due diligence or financing conditions.
In proposing the transaction, Mr. Way advised the Centris Board that HCC
"feels . . . strongly that such a transaction would result in significant
strategic benefits for both companies."
HCC is an international insurance holding company with assets exceeding $1.5
billion and whose shares are traded on the NYSE (SYMBOL:HCC). Operations
consist of property and casualty insurance companies which are rated A+
(SUPERIOR) by A.M. Best Company, insurance underwriting agencies,
intermediaries and insurance related services, specializing in aviation,
marine, offshore energy, property, workers' compensation, medical stop loss,
accident and health insurance and reinsurance worldwide, with total premium
exceeding $1.2 billion.
SHAREHOLDERS AND OTHERS ARE CAUTIONED THIS ANNOUNCEMENT MAY CONTAIN
FORWARD-LOOKING STATEMENTS AND THAT ALL FORWARD-LOOKING STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES, INCLUDING WITHOUT LIMITATION, STATEMENTS ABOUT THE
CONSUMMATION OF A PROPOSED BUSINESS COMBINATION AND THE PRICE UPON WHICH SUCH
CONSUMMATION MIGHT BE CONCLUDED. ALTHOUGH HCC BELIEVES THAT THE ASSUMPTIONS
UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE REASONABLE,
ANY OF THE ASSUMPTIONS COULD BE INACCURATE AND THERE CAN, THEREFORE, BE NO
ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS INCLUDED
2
<PAGE>
HEREIN WILL PROVE ACCURATE. BECAUSE OF THE SIGNIFICANT UNCERTAINTIES INHERENT
IN THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, THE INCLUSION OF SUCH
INFORMATION SHOULD NOT BE REGARDED AS A REPRESENTATION BY HCC OR ANY OTHER
PERSON THAT THE OBJECTIVES AND PLANS OF HCC WILL BE ACHIEVED.
* * * *
3
