SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
_______________________________________________________
(Name of Issuer)
COMMON STOCK
_______________________________________________________
(Title of Class of Securities)
989822101
_______________________________________________________
(CUSIP Number)
Henry H. Hopkins
T. Rowe Price Associates, Inc.
100 East Pratt Street - 8th Floor
Baltimore, Maryland 21202
410-345-6640
_______________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 5, 1997
_______________________________________________________
(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
13d-1(b)(3) or (4), check the following box .
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) 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).
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
T. ROWE PRICE ASSOCIATES, INC.
52-0556948
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
NOT APPLICABLE
3 SEC USE ONLY
_________________________________________
4 SOURCE OF FUNDS*
_________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND
Number of 7 SOLE VOTING POWER 173,700
Shares
Beneficially 8 SHARED VOTING POWER NONE
Owned By Each
Reporting 9 SOLE DISPOSITIVE POWER 1,321,200
Person
With: 10 SHARED DISPOSITIVE POWER NONE
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,321,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.04%
14 TYPE OF REPORTING PERSON*
1A
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
This Statement relates to shares of common stock, par
value $.01 per share (the "Common Stock") of Zurich Reinsurance
Centre Holdings, Inc. (the "Issuer"). The Issuer's principal
executive offices are located at One Chase Manhattan Plaza, 43rd
Floor, New York, New York 10005.
Item 2. Identity and Background.
(a) - (c), (f) This statement is being filed by T. Rowe
Price Associates, Inc., a Maryland corporation (the "Adviser"),
with its principal business office being located at 100 East
Pratt Street, Baltimore, Maryland 21202. The Adviser is
registered as an investment adviser under the Investment Advisers
Act of 1940, as amended, and is engaged in the business of
rendering investment advisory, sub-advisory and supervisory
services to investment companies (the "Funds") registered under
the Investment Company Act of 1940, as amended, as well as to
individually managed accounts for institutional and other clients
(the "Accounts").
Attached as Schedule A hereto and incorporated herein
by reference is a table setting forth all of the executive
officers and directors of the Adviser and the business address,
principal occupation and citizenship of each such person. The
Adviser is a public corporation and has no controlling
shareholder.
(d) During the last five years, neither the Adviser
nor any of the specifically named persons listed on Schedule A
hereto has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) During the last five years, neither the Adviser
nor any of the specifically named persons listed on Schedule A
hereto has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The 136,100 shares of Common Stock heretofore acquired
on behalf of Accounts managed by the Adviser on a discretionary
basis were acquired for the aggregate purchase price of
$4,139,820 (including commissions), using the funds of the
respective Accounts. The 1,185,100 shares of Common Stock
heretofore acquired by ten Funds were acquired for the aggregate
purchase price of $35,699,212 (including commissions), using the
funds of the respective Funds. Three of the Funds are sponsored <PAGE>
by the Adviser and serviced by its affiliates (the "Adviser-
Sponsored Funds"). The remaining seven Funds for which the
Adviser serves as sub-adviser are sponsored by other financial
institutions (the "Sub-Advised Funds").
Item 4. Purpose of the Transaction.
On behalf of the Funds and the Accounts, the Adviser
acquired and continues to hold the shares of Common Stock for
investment purposes. However, in order to serve the interests of
the Funds and Accounts, the Adviser may consider alternatives
which may be available in light of the Issuer's recent
announcement to merge with its parent company, Zurich Insurance
Group ("Zurich"), at a price of $39.50 per share for all
remaining outstanding shares of Common Stock not already owned by
Zurich.
Accordingly, the Adviser may communicate with
management, other shareholders, or any other interested persons
to determine what alternative courses of action may better serve
the interests of the Funds and Accounts. To that end, the
Adviser has sent a letter (attached as Exhibit 1) to the Special
Committee of the Issuer's Board of Directors expressing its
dissatisfaction with the merger consideration and outlining a
number of factors it believes should be considered by the
Committee in re-evaluating the fairness of the transaction to
minority shareholders. In addition, within the applicable
policies and individual investment objectives of each Fund and
Account, and subject to market conditions and other pertinent
circumstances existing from time to time, additional shares of
Common Stock may be acquired or, alternatively, shares of Common
Stock may be sold, in either event, through open market or
privately negotiated transactions.
Except as specifically set forth herein, neither the
Adviser nor any of the persons listed on Schedule A has any
present plans or proposals which relate to or would result in any
of the events listed in paragraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, an aggregate of 136,100
shares of Common Stock, or 0.51% of the 26,205,569 shares of
Common Stock issued and outstanding as of March 21, 1997 (as
reported in the Issuer's annual report on Form 10-K for the 1996
fiscal year), are owned on behalf of Accounts; and ten Funds own
an aggregate of 1,185,100 shares of Common Stock or 4.52% of the
outstanding. Of this amount, an aggregate of 1,070,000 shares
of Common Stock are owned by the Adviser-Sponsored Funds. The
Adviser has investment discretion with respect to each of the
Accounts and the Funds and the investment decisions with respect
to each Account or Fund are made separately. By virtue of its <PAGE>
authority to dispose or direct the disposition of the shares of
Common Stock owned by or on behalf of the Accounts and Funds, the
Adviser may be deemed to beneficially own, within the meaning of
Rule 13d-3(a) under the Securities Exchange Act of 1934, all such
shares, or an aggregate of 1,321,200 shares or 5.04% of the
shares outstanding (see paragraph (b) of this Item 5). Each
Account and Fund may terminate the grant of discretionary
authority to the Adviser at any time.
(b) The Adviser has sole power to vote or direct the
vote of Accounts holding an aggregate of 62,700 shares of Common
Stock. With respect to 73,400 shares of Common Stock held on
behalf of other Accounts and 4,100 shares held by two Sub-Advised
Funds, each such respective Account or Sub-Advised Fund votes or
directs the vote of the shares held on its behalf and the Adviser
has no authority to vote or direct the vote of any such shares of
Common Stock. For the other Sub-Advised Funds, the Adviser has
the sole power to direct the vote of the 111,000 shares of Common
Stock held by such Funds. Each Adviser-Sponsored Fund votes or
directs the vote of the shares of Common Stock owned by it and
the Adviser has no authority to vote any such shares; but the
personnel making the decision with respect to the voting of
shares owned by each Fund are also officers or employees of the
Adviser.
As discretionary adviser to the Accounts and the Funds, the
Adviser has the authority to dispose or to direct the disposition
of all shares of Common Stock in the portfolio of each such
Account or Fund. Such authority is subject, in the case of both
the Accounts and the Funds, to each client's right to terminate
the advisory relationship and revoke the discretionary authority,
and, in the case of the Funds, to the general supervision of each
Fund's Board of Directors or Trustees.
(c) 24,500 shares of Common Stock were purchased by
the Adviser within the past sixty days on behalf of four Funds
and one Account between March 19, 1997 and April 18, 1997 at
prices ranging between $37.875 and $38.375 per share.
9,100 shares of Common Stock were sold by the
Adviser within the past sixty days on behalf of four Accounts
between March 18, 1997 and April 23, 1997 at prices ranging
between $37.8065 to $38.375 per share.
All of the above transactions were effected in the
secondary market through broker-dealers or an electronic
automated trading system.
(d) The Adviser does not serve as custodian of the
assets of any of the Accounts; accordingly, in each instance only
the Account or the Account's custodian or trustee bank has the
right to receive dividends paid with respect to, and proceeds
from the sale of, the shares of Common Stock held for the benefit <PAGE>
of such Account. The ultimate power to direct the receipt of
dividends paid with respect to, and the proceeds of the sale of,
shares of Common Stock is vested in each Account.
With respect to the shares of Common Stock owned by the
Funds, the Funds' custodians, as appointed by the Funds' Boards,
have the right to receive dividends paid with respect to, and
proceeds from the sale of, such shares. No other person is known
to have such right or the right to direct receipt of dividends
paid with respect to, or the proceeds of the sale of, such
shares, except that the shareholders of each Fund participate
proportionately in any dividends and distributions so paid.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Not applicable.
Item 7. Material to Be Filed as Exhibits.
1. Letter dated May 5, 1997 to Special Committee of
the Board of Directors of Zurich Reinsurance Centre Holdings,
Inc.
SIGNATURE
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.
Date: May 5, 1997
T. ROWE PRICE ASSOCIATES, INC.
By:
Henry H. Hopkins,
Managing Director
<PAGE>
SCHEDULE A
EXECUTIVE OFFICERS AND DIRECTORS - T. ROWE PRICE ASSOCIATES, INC.
Listed below are the directors and executive officers of T. Rowe
Price Associates, Inc., all of whom are citizens of the U.S.A.
The principal occupation of each of the directors and executive
officers is as an employee of T. Rowe Price Associates, Inc., and
the business address of each is 100 East Pratt Street, Baltimore,
Maryland 21202.
George A. Roche, Chairman of the Board and Managing Director
James S. Riepe, Vice Chairman of the Board and Managing
Director
M. David Testa, Vice Chairman of the Board, Chief Investment
Officer, and Managing Director
George J. Collins, Director (Outside Director effective May
31, 1997)
Alvin M. Younger, Jr., Chief Financial Officer, Managing
Director, Secretary and Treasurer
Preston G. Athey, Managing Director
Brian W.G. Berghuis, Managing Director
Edward C. Bernard, Managing Director
Stephen W. Boesel, Managing Director
Thomas H. Broadus, Jr., Managing Director
Michael A. Goff, Managing Director
Andrew C. Goresh, Managing Director
Henry H. Hopkins, Director and Managing Director
James A.C. Kennedy, Director and Managing Director
John H. Laporte, Director and Managing Director
Mary J. Miller, Managing Director
George A. Murnaghan, Managing Director
Edmund M. Notzon, III, Managing Director
Mark E. Rayford, Managing Director
William T. Reynolds, Director and Managing Director
Brian C. Rogers, Director and Managing Director
R. Todd Ruppert, Managing Director
Charles P. Smith, Managing Director
Peter Van Dyke, Managing Director
Charles E. Vieth, Managing Director
Richard T. Whitney, Managing Director
<PAGE>
In addition, the following individuals are outside directors of
T. Rowe Price Associates, Inc.:
George J. Collins, 747 Bywater Road, Gibson Island, MD 21056
Mr. Collins was the former President, Chief Executive
Officer, Director and Managing Director of T. Rowe Price.
Effective May 31, 1997, Mr. Collins will no longer be an
employee of T. Rowe Price and will become an outside
director.
James E. Halbkat, Jr., P.O. Box 23109, Hilton Head Island, SC
29925
Mr. Halbkat is President of U.S. Monitor Corporation.
Richard L. Menschel, 660 Park Avenue, New York, NY 10021
Mr. Menschel is a Limited Partner of The Goldman Sachs
Group, L.P.
John W. Rosenblum, University of Virginia, P.O. Box 6550,
Charlottesville, VA 22906
Mr. Rosenblum is Dean of the Jepson School of Leadership
Studies, University of Richmond, The Darden Graduate School
of Business Administration, University of Virginia, and a
director of the Chesapeake Corporation, Cadmus
Communications Corp., Comdial Corp., Cone Mills Corporation
and Providence Journal Company.
Robert L. Strickland, Lowe's Companies, Inc., 604 Two Piedmont
Plaza Building, Winston-Salem, NC 27104
Mr. Strickland is Chairman of Lowe's Companies, Inc. and a
director of Hannaford Bros, Co.
Philip C. Walsh, Blue Mill Road, Morristown, NJ 07960
Mr. Walsh is a retired mining industry executive.
Anne Marie Whittemore, McGuire, Woods, Battle & Boothe, One James
Center, Richmond, VA 23219
Ms. Whittemore is a partner and a member of the Executive
Committee of McGuire, Woods, Battle & Boothe, a Richmond-based
law firm. in addition, she is a director of Owens &Minor,
Inc., USF&G Corporation, James River Corporation, and
Albemarle Corporation.
In addition, approximately 132 employees of T. Rowe Price
Associates, Inc. are Vice Presidents of the firm.
May 2, 1997<PAGE>
EXHIBIT 1
May 5, 1997
{Name of Committee Member; Title}
Member of Special Committee for the Board of Directors of
Zurich Reinsurance Centre Holdings, Inc.
{Office Address of Committee Member}
Re: Merger Offer by Zurich Insurance Group
Dear Mr. [Marto, Parker, and Neff]:
T. Rowe Price Associates, Inc. ("TRPA"), as investment
adviser to registered investment companies and a number of
individually managed accounts for institutional and other
clients, is writing to express its dissatisfaction with the
recently announced offer by Zurich Insurance Group ("Zurich") to
purchase all of the remaining shares of Zurich Reinsurance Centre
Holdings, Inc. ("ZRC") not already owned by Zurich for $39.50 per
share. TRPA has filed a Schedule 13D dated May 5, 1997,
reporting beneficial ownership of 1,321,200 shares of ZRC (5.04%
of ZRC's outstanding common stock as of March 21, 1997) on behalf
of its clients.
We believe the $39.50 offer price is inadequate and that the
Special Committee should re-evaluate the fairness of the merger
price to ZRC's minority shareholders in light of the following
factors:
Zurich's bid price of $39.50 per share is less than our
estimate of ZRC's intrinsic value of $39.77 per share.
Zurich's bid price does not assign any "franchise" value to
ZRC, which we believe to be considerable.
Zurich's bid price, as a multiple to ZRC's estimated October
31, 1997 book value (1.40X), is less than the multiple at
the time of ZRC's initial public offering (1.47X). This
1.40X bid price-to-book value multiple is also less than the
multiples for two recent, comparable acquisitions involving
reinsurers.
Zurich's bid price does not adequately compensate ZRC
minority shareholders for the growth in ZRC's business since
its May 1993 IPO. If a ZRC minority shareholder who
purchased in the IPO were to accept Zurich's bid offer, the
aggregate return to that shareholder over that 47 month
period would be 13% based upon share price appreciation
alone.
1. ZRC has reported a $27.18 book value per share as of
December 31, 1996. ZRC also has reported a $35.08 "economic
book value" or "intrinsic value" per share as of the same
date. We refer you to pages 38-39 of ZRC's 1995 Annual
Report for a discussion of this valuation measure. Assuming
the merger closes on October 31, 1997, TRPA estimates that
ZRC's book value per share may approximate $28.24 (based
upon the consensus earnings estimates by independent
analysts covering ZRC and assuming the $0.10 annual dividend
paid in 1996 is paid quarterly in 1997). TRPA believes that
ZRC's corresponding intrinsic value per share would be
approximately $37.00.
The proposed offering price represents a multiple of 1.40X
estimated October 31, 1997 book value per share. This
multiple compares to multiples of 2.35X book value per share
for General Re's acquisition of National Re (NRE) in 1996
and 3.48X book value per share for Munich Re's acquisition
of American Re (ARN) in 1996.
TRPA recognizes the premium that direct-writing reinsurer
franchises such as NRE and ARN command in the marketplace;
however, the disparity between the premiums paid for NRE/ARN
and the ZRC transaction appears to us to be too high.
We believe ZRC's own measure of intrinsic value per share is
a better valuation benchmark for this transaction than that
of ZRC's GAAP book value. ZRC's 1995 Annual Report supports
this notion:
"GAAP accounting ... does not reveal ZRC's full
created value. Last year we introduced the concept of
intrinsic value to give our shareholders a standard by
which to measure our performance as managers. We
believe that this measure of economic book value sheds
more -- but not full -- light on our development. This
measure attempts to present an economic value,
factoring in the time value of money. It looks
strictly at business in-hand, based on premiums in
force and loss reserves, as well as the value of our
debt, marked-to-market . . . . This value does not,
however, present our full value because it omits
certain soft' or intangible measures, such as market
penetration, our powerful and expanding franchise or
our superior quality staff."
Based upon TRPA estimates for ZRC's intrinsic value at
$37.00 per share as of October 31, 1997, Zurich's bid represents
a mere 7% premium to estimated intrinsic value and does not, in
our view, reflect an appropriate value for ZRC's "franchise."
2. Based upon local press reports and a provision of the merger
agreement, we believe that Zurich may proceed to consolidate
its reinsurance operations in Stamford, CT, after it
completes the acquisition of ZRC. It has been reported that
this move could generate as much as $190 million in tax
credits for Zurich from the state of Connecticut under the
Connecticut Insurance Reinvestment Act. Assuming these tax
credits are utilized by Zurich, TRPA would estimate their
present value to be $110 million using a 7.5% discount rate
over a ten-year period.
We believe the portion of the potential tax credit allocable
to ZRC shareholders should be approximately 66% based upon
our understanding of the number of ZRC employees relative to
the total number of Zurich employees in Connecticut. This
allocation of the tax credits approximates $2.77 per share
((($110mm X .66)/26.2 mm shares outstanding) = $2.77).
We believe ZRC's intrinsic value should be increased by this
$2.77 per share for the following reasons:
a. Tax credits may be used to offset future investment
income generated by reserves on ZRC business entered
into prior to an assumed merger closing date of October
31, 1997.
b. The public shareholders have borne at least part of the
economic cost of hiring ZRC employees since May of 1993
(ZRC's IPO date) and building the ZRC "franchise."
From an estimated start-up in May 1993, ZRC now has 235
employees and we believe only recently have
shareholders begun to reap the economic benefits of
ZRC's "ramp-up."
Estimated intrinsic value as of 10/31/97
$ 37.00
Tax Credits per ZRC share $ 2.77
Intrinsic value @ 10/31/97 $ 39.77
Zurich's offer of $39.50 per share is less than ZRC's
estimated intrinsic value of $39.77 per share as of October
31, 1997.
<PAGE>
The above tax credit calculation is estimated and based upon
information provided to TRPA by an independent investment
research firm we deem reliable. We have not had the
opportunity to confirm this information with representatives
of either ZRC or Zurich. We merely wish to bring this
information to the attention of the Special Committee so
that you may determine whether, and the extent to which,
your own financial advisers have considered the value of the
tax credits in evaluating the fairness of the $39.50 offer
price.
3. We believe that by proposing an inadequate offer of $39.50
and by taking their time in the negotiations with the
Special Committee (Zurich's original offer of $36 per share
was made more than three months ago on January 13, 1997),
Zurich has potentially damaged the "value" of the ZRC
"franchise" through continued uncertainty. We believe this
uncertainty could impact the morale of current employees,
and potentially could prompt some to leave. At the very
least, this uncertainty does not make for an ideal working
environment, and could potentially impact worker
productivity. We also believe that the uncertainty regarding
ZRC's sale may negatively affect ZRC's ability to attract
new business. Thus, the uncertainty regarding ZRC's ultimate
ownership structure, we believe, has caused a diminution in
economic value for ZRC shareholders. Accordingly, we
request that the Special Committee consider the impact of
these uncertainties upon the value of ZRC's business, and
address whether the $39.50 offer price adequately
compensates minority shareholders in light of this potential
diminution in value.
4. In May of 1993, Zurich brought ZRC public in an IPO valued
at $35 per share, or 1.47X ZRC's book value per share at
that date. We note that Zurich's bid of $39.50 is 1.40X
TRPA's estimate of ZRC's book value per share at October 31,
1997. This valuation is at a discount to the original IPO
when ZRC was essentially a start-up enterprise and did not
have a significant amount of written premium. We also note
that the minority shareholders did not pay a control premium
as part of the 1993 IPO price; in fact, given Zurich's
majority ownership, the IPO price most likely reflected a
discount for Zurich's majority ownership position. Based
upon the difference between the IPO price and Zurich's bid,
the aggregate return to minority shareholders over the past
47 months is approximately 13% based upon share price
appreciation alone.
<PAGE>
Thus, we believe that the offer price of $39.50 assigns
insufficient value to ZRC's "franchise value" based upon the
growth of ZRC's business since the date of its IPO. In
fact, as illustrated above, when we factor in the potential
tax credits the transaction would create for the combined
ZRC/Zurich enterprise, a negative value would be assigned to
the ZRC "franchise." Zurich's bid does not, in our view,
adequately compensate minority shareholders for the"intangible
measures" that ZRC's management has previously stated are
not reflected in ZRC's economic book value.
We trust that the Special Committee of the Board of
Directors will consider the above factors in re-evaluating
the fairness of the transaction to ZRC's minority
shareholders. We stand ready to assist the Special
Committee in their deliberations and we welcome the
opportunity to discuss our views with the Committee and
their financial advisers.
Sincerely,
Daniel M. Theriault, C.P.A., C.F.A.
