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
October 15, 1999
Date of Report (Date of earliest event reported)
Capital Re Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-10995 52-1567009
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
1325 Avenue of the Americas, New York, New York 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 974-0100
Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index is on page 4.
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CAPITAL RE CORPORATION
Item 5. Other Events.
On October 15, 1999, October 19, 1999, and October 21, 1999, Capital Re
Corporation issued press releases which are included as Exhibits 99.1, 99.2,
99.3, and 99.4 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
99.1. Press Release, dated October 15, 1999.
99.2. Press Release, dated October 15, 1999.
99.3. Press Release, dated October 19, 1999.
99.4. Press Release, dated October 21, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CAPITAL RE CORPORATION
Date: October 25, 1999 By: /s/ Alan S. Roseman
-------------------------------
Alan S. Roseman
Executive Vice President,
General Counsel and Secretary
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INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- ------ -------------------
99.1. Press Release, dated October 15, 1999.
99.2. Press Release, dated October 15, 1999.
99.3. Press Release, dated October 19, 1999.
99.4. Press Release, dated October 21, 1999.
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Exhibit 99.1
Contact: NEWS RELEASE
David A. Buzen
Chief Financial Officer
Catherine C. Bailey
Director of Communications
212-974-0100
CAPITAL RE CORPORATION'S BOARD
RECEIVES REVISED OFFER FROM ACE;
RECOMMENDATION IN FAVOR OF ORIGINAL ACE
TRANSACTION WITHDRAWN AFTER BOARD FINDS
XL OFFER "SUPERIOR" TO ORIGINAL ACE OFFER;
BOARD CONSIDERING REVISED ACE OFFER
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NEW YORK, NY, October 15, 1999: Capital Re Corporation (NYSE: KRE) announced
that it had received a revised offer from ACE Limited for a merger under which
ACE would acquire the common shares of Capital Re stock at $13.00 per share in
ordinary shares of ACE and cash. (the "Revised ACE Offer"). ACE is offering
6/10ths (0.6) of an ACE ordinary share plus an amount of cash which, on a per
share basis, is intended to deliver $13.00 per share to Capital Re stockholders
at closing based on various ACE share prices between $13.87 per share and $2.67
per share, subject to a maximum of $150 million of cash (or approximately $4.68
per Capital Re share). Based upon an assumed average closing price of $16-3/8
(ACE's closing price on October 13, 1999), Capital Re stockholders would receive
for each Capital Re share 6/10ths of an ACE ordinary share and $3.175 in cash
per share.
The value of the ACE ordinary shares to be delivered to Capital Re stockholders
would be based upon the average closing price of the ACE ordinary shares over
the five-day trading period ending three business days prior to the closing date
of the merger. As in the existing merger agreement, if the average closing price
equals or exceeds $36.67, the exchange ratio would be decreased so that Capital
Re stockholders would receive ACE shares with a value equal to $22.00. To the
extent ordinary shares are received in the merger, it is intended that
stockholders of Capital Re would not recognize taxable gain or loss on the
exchange. There is no financing contingency to ACE's new offer.
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In addition, Capital Re's Board of Directors, at a meeting held today, formally
determined to withdraw its recommendation that stockholders adopt the Agreement
and Plan of Merger dated as of June 10, 1999 with ACE Limited (the "Original ACE
Agreement"). On October 6, 1999, Capital Re received an unsolicited acquisition
proposal from XL Capital Ltd. and on October 10, 1999, Capital Re's Board
determined that the XL proposal, which offers cash merger consideration of $13
per share to Capital Re stockholders, was a "Superior Proposal" under the
Original ACE Agreement. In light of that determination, the Board resolved today
to withdraw its recommendation in favor of stockholder adoption of the Original
ACE Agreement. The Original ACE Agreement did not permit the Capital Re Board to
take this action or publicly announce an intention to do so without three
business days' prior written notice to ACE, which was given on October 10, 1999.
Capital Re's Board of Directors has formed a committee of disinterested
directors to consider the Revised ACE Offer. The Revised ACE Offer would require
a new proxy solicitation period prior to a required stockholder vote.
Under the terms of the Original ACE Agreement, Capital Re may not terminate the
Original ACE Agreement and accept the XL proposal until the sixth business day
following notice to ACE of its intention to accept the proposal. That notice was
given to ACE on October 10, 1999. The Original ACE Agreement remains in force
until terminated. Unless the revised ACE proposal is deemed by the Capital Re
Board to be at least as favorable as the XL proposal or another alternative
proposal is offered, Capital Re is permitted to terminate the Original ACE
Agreement on Tuesday, October 19, 1999 and may then accept the XL proposal. The
Capital Re Board intends to make a determination regarding the revised ACE
proposal before the close of business on Tuesday, October 19, 1999 and the XL
proposal is irrevocable by its terms until that time.
Capital Re is a specialty reinsurance group providing innovative solutions to
problems of financial risk and management. Capital Re's two principal divisions,
financial guaranty and financial risk, are engaged in the business of municipal
and non-municipal financial guaranty reinsurance, mortgage guaranty reinsurance,
title reinsurance, trade credit reinsurance and financial solutions.
The statements contained in this release and statements that the Company may
make orally in connection with this release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by the Company with the Securities and Exchange
Commission.
# # #
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Exhibit 99.2
Contact: NEWS RELEASE
David A. Buzen
Chief Financial Officer
Catherine C. Bailey
Director of Communications
212-974-0100
CAPITAL RE CORPORATION PUTS DISCONTINUED
LLOYDS OPERATIONS INTO RUN-OFF
NEW YORK, N.Y. October 15, 1999---Capital Re Corporation (NYSE:KRE) announced
today that CRC Capital, Capital Re's corporate name at Lloyd's, will not be
supporting the underwriting of RGB Syndicate 490 for the year 2000 underwriting
year. Partially as a result of this withdrawal of capacity, RGB Agencies, Ltd.
has ceased underwriting on behalf of Syndicate 490. In connection with these
actions Capital Re Corporation will be taking a third quarter charge of $15
million, which is attributable to the expenses related to the cessation of
underwriting. In addition, Capital Re Corporation will strengthen its reserves
in the third quarter against future adverse underwriting development of
Syndicate 490 by $35 million.
Capital Re is a specialty reinsurance group providing innovative solutions to
problems of financial risk management. Capital Re's two principal divisions,
financial guaranty and financial risk, are engaged in the business of municipal
and non-municipal financial guaranty reinsurance, mortgage guaranty reinsurance,
title reinsurance, trade credit reinsurance and financial solutions.
The statements contained in this release and statements that the Company may
make orally in connection with this release that are not historical facts are
forward looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by the Company with the Securities and Exchange
Commission.
# # #
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Exhibit 99.3
Contact: NEWS RELEASE
David A. Buzen
Chief Financial Officer
Catherine C. Bailey
Director of Communications
212-974-0100
CAPITAL RE CORPORATION'S BOARD
RECEIVES REVISED OFFER FROM ACE
AND DEEMS IT "AT LEAST AS FAVORABLE"
AS ORIGINAL XL PROPOSAL
BOARD ALSO RECEIVES REVISED
$14.00 PER SHARE PROPOSAL FROM XL
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NEW YORK, NY, October 19, 1999 - - Capital Re Corporation (NYSE: KRE) announced
that it had received a new offer from ACE Limited (the "New Revised ACE Offer"),
revising ACE's previous offer which was received by Capital Re's Board on
October 15, 1999 and described in an announcement dated October 15, 1999. Under
the New Revised ACE Offer, ACE would acquire each common share of Capital Re
stock for 6/10ths (0.6) of an ACE ordinary share plus an amount of cash equal to
the greater of $1.45 per share or such amount as would give Capital Re
shareholders $13.00 per share in value (but not to exceed $4.68 per share in
cash). Additionally, the previous maximum value to Capital Re shareholders of
$22.00 per share has been eliminated. In all other material respects, the New
Revised ACE Offer is the same as the ACE offer described in Capital Re's
announcement dated October 15, 1999. At a meeting held yesterday, Capital Re's
Board of Directors formally determined that the New Revised ACE Offer was "at
least as favorable" to XL Capital's offer of $13.00 per share in cash under the
terms of the original merger agreement with ACE dated June 10, 1999 (the
"Original ACE Agreement").
Further, Capital Re's Board has also received a revised XL proposal (the
"Revised XL Offer"), which offers cash merger consideration of $14 per share to
Capital Re shareholders and is otherwise identical to XL's prior offer. Capital
Re's Board of Directors has notified ACE of the Revised XL Offer. ACE has five
business days to respond to the Revised XL Offer if it wishes.
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The Capital Re Board has not yet determined whether the New Revised ACE Offer is
as favorable as XL's $14.00 per share offer.
Capital Re is a specialty reinsurance group providing innovative solutions to
problems of financial risk and management. Capital Re's two principal divisions,
financial guaranty and financial risk, are engaged in the business of municipal
and non-municipal financial guaranty reinsurance, mortgage guaranty reinsurance,
title reinsurance, trade credit reinsurance and financial solutions.
The statements contained in this release and statements that the Company may
make orally in connection with this release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by the Company with the Securities and Exchange
Commission.
# # #
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Exhibit 99.4
Contact: NEWS RELEASE
David A. Buzen
Chief Financial Officer
Catherine C. Bailey
Director of Commuications
212-974-0100
ACE Files Suit Against Capital Re
Seeking to Enforce Original Agreement
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NEW YORK, N.Y. October 21, 1999 -- Capital Re Corporation (NYSE: KRE) announced
today that ACE Limited had filed a lawsuit in Delaware Chancery Court seeking to
restrain Capital Re from taking any action to terminate its June 10, 1999 merger
agreement with ACE and seeking to require Capital Re to carry out that
agreement, under which ACE would acquire each Capital Re share for 6/10th's of a
share of ACE. Based on ACE's closing price of $16 3/16 on October 20, that
transaction would provide $10.125 per share in current value to Capital Re
stockholders. As previously reported, Capital Re has received an unsolicited
offer from XL Capital, Ltd. to acquire Capital Re's shares for $14.00 per share
in cash, which Capital Re deemed to be superior to the original ACE transaction.
ACE had previously submitted a revised offer to Capital Re that Capital Re's
Board had determined was "at least as favorable" as a prior XL offer of $13.00
per share in cash. ACE has not submitted a further revised offer.
Capital Re stated that it believes ACE's lawsuit is without merit and
intends to defend the suit vigorously.
Capital Re is a specialty reinsurance group providing innovative solutions to
problems of financial risk and management. Capital Re's two principal divisions,
financial guaranty and financial risk, are engaged in the business of municipal
and non-municipal financial guaranty reinsurance, mortgage guaranty reinsurance,
title reinsurance, trade credit reinsurance and financial solutions.
The statements contained in this release and statements that the Company may
make orally in connection with this release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties and investors are directed to the risks
discussed in documents filed by the Company with the Securities and Exchange
Commissions.
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