<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TRANSATLANTIC HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
TRANSATLANTIC HOLDINGS, INC.
80 Pine Street, New York, New York 10005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
April 4, 1997
TO THE STOCKHOLDERS OF
TRANSATLANTIC HOLDINGS, INC.:
The Annual Meeting of stockholders of TRANSATLANTIC HOLDINGS, INC., a
Delaware corporation ("TRH"), will be held at 72 Wall Street, Seventh Floor, New
York, New York, on Thursday, May 22, 1997, at 11:00 o'clock A.M., for the
following purposes:
1. To elect 9 directors of TRH to hold office until the next annual
meeting of stockholders and until their respective successors are
elected and qualified;
2. To act upon a proposal to select Coopers & Lybrand L.L.P. as
independent accountants for 1997; and
3. Any other business that may properly come before the meeting.
Stockholders of record at the close of business on March 25, 1997 will be
entitled to vote at the meeting. During the ten days prior to the meeting, a
list of such stockholders will be available for inspection at the offices of TRH
at 80 Pine Street, New York, New York.
Whether or not you expect to attend the meeting, please complete, date and
sign the enclosed proxy card and mail it promptly in the enclosed postage
prepaid envelope.
By Order of the Board of
Directors
ELIZABETH M. TUCK
SECRETARY
<PAGE>
TRANSATLANTIC HOLDINGS, INC.
80 PINE STREET, NEW YORK, N.Y. 10005
PROXY STATEMENT
April 4, 1997
The enclosed proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting of Stockholders of TRANSATLANTIC HOLDINGS, INC., a
Delaware corporation ("TRH" or the "Company"), to be held on May 22, 1997, and
at any adjournment thereof. It may be revoked, by written notice or by
furnishing a proxy subsequent in time, at any time prior to its use. All shares
represented at the meeting by properly executed proxies will be voted as
specified, and, unless otherwise specified, will be voted for the election of
directors and for the selection of Coopers & Lybrand L.L.P. as independent
accountants for 1997.
Only stockholders of record at the close of business on March 25, 1997 will
be entitled to vote at the meeting. On that date 23,026,222 shares (exclusive of
shares held by TRH) of common stock, par value $1.00 per share ("TRH Common
Stock"), were outstanding, each such share of stock having one vote.
This Proxy Statement, the attached Notice of Annual Meeting and the enclosed
proxy card are first being mailed to stockholders of TRH on or about April 4,
1997.
BENEFICIAL OWNERSHIP
The following table lists the beneficial ownership of each person or group
who, as of March 25, 1997, owned to TRH's knowledge, more than five percent of
the outstanding TRH Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP VOTING SHARES
- ------------------------------------------------------------------------ ------------ ---------------
<S> <C> <C>
American International Group, Inc. ("AIG")(1)........................... 11,291,480 49.04
70 Pine Street
New York, NY 10270
</TABLE>
- ------------------------
(1) Includes 7,828,968 shares directly owned by American Home Assurance Company,
a wholly-owned subsidiary of AIG, which shares with AIG voting and
investment power over such shares. AIG has sole voting and investment power
over the remaining shares.
I. ELECTION OF DIRECTORS
Nine directors are to be elected at the meeting to hold office until the
next annual meeting of stockholders and until their respective successors are
elected and qualified. If a quorum is present at the meeting, the affirmative
vote of a plurality of the shares present in person or by proxy and entitled to
vote thereon is required to elect the directors; abstentions and broker
non-votes will have no effect on the outcome of the vote. It is the intention of
the persons named in the accompanying proxy to vote for the election of the
nominees listed below, all of whom are currently members of your Board of
Directors. It is not expected that any of the nominees will become unavailable
for election as a director, but if any nominee should become unavailable prior
to the meeting, proxies will be voted for such persons as the TRH Board of
Directors shall recommend. The nominees, and certain information supplied by
them to TRH, are as follows:
1
<PAGE>
<TABLE>
<S> <C> <C>
JAMES BALOG RETIRED CHAIRMAN, 1838 INVESTMENT ADVISORS,
Age 68 L.P.
Director since 1988. HE HAS (INVESTMENT MANAGEMENT COMPANY)
ALSO SERVED AS A DIRECTOR DIRECTOR, ELAN, PLC, GALEN PARTNERS, L.P.
OF TRANSATLANTIC (TECHNICAL ADVISORY BOARD) AND GREAT-WEST LIFE
REINSURANCE COMPANY AND ANNUITY INSURANCE COMPANY
("TRC"), A WHOLLY- OWNED
SUBSIDIARY OF TRH, SINCE
1990 AND OF PUTNAM
REINSURANCE COMPANY
("PUTNAM"), A WHOLLY-OWNED
SUBSIDIARY OF TRC, SINCE
1988.
IKUO EGASHIRA CHAIRMAN OF THE BOARD OF DIRECTORS,
Age 66 THE NICHIDO FIRE & MARINE INSURANCE COMPANY,
Director since June 29, LIMITED, TOKYO, JAPAN
1995. HE HAS ALSO SERVED AS (INSURANCE)
A DIRECTOR OF TRC AND OF
PUTNAM SINCE 1995.
JOHN M. FOWLER EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
Age 48 OFFICER AND DIRECTOR, MONEYGRAM PAYMENT
Director since 1989. HE HAS SYSTEMS, INC.
ALSO SERVED AS A DIRECTOR (NON-BANK MONEY-TRANSFER PROVIDER)
OF TRC SINCE 1990 AND OF DIRECTOR,AIR EXPRESS INTERNATIONAL CORPORATION
PUTNAM SINCE 1989.
MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Age 71 (INSURANCE AND FINANCIAL SERVICES HOLDING
Chairman since 1986. HE HAS COMPANY)
ALSO SERVED AS THE CHAIRMAN DIRECTOR, AIG, DIRECTOR, PRESIDENT AND CHIEF
OF TRC SINCE 1977 AND OF EXECUTIVE OFFICER OF C.V. STARR & CO., INC.
PUTNAM SINCE 1986. ("STARR"), A DIRECTOR OF STARR
INTERNATIONAL COMPANY, INC.
("SICO"), PRIVATE HOLDING COMPANIES
(SEE "OWNERSHIP OF CERTAIN
SECURITIES") AND A DIRECTOR OF
INTERNATIONAL LEASE FINANCE
CORPORATION ("ILFC") (A WHOLLY OWNED
SUBSIDIARY OF AIG)
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
JOHN J. MACKOWSKI RETIRED CHAIRMAN AND CHIEF
Age 71 EXECUTIVE OFFICER, THE ATLANTIC
Director since 1990. HE HAS MUTUAL COMPANIES (INSURANCE)
ALSO SERVED AS A DIRECTOR DIRECTOR, F.W. WOOLWORTH COMPANY AND RCB TRUST
OF TRC AND OF PUTNAM SINCE COMPANY
1990.
EDWARD E. MATTHEWS VICE CHAIRMAN-INVESTMENTS AND FINANCIAL
Age 65 SERVICES, AIG
Director since 1986. HE HAS DIRECTOR, AIG, STARR, SICO AND ILFC
ALSO SERVED AS A DIRECTOR
OF TRC SINCE 1977 AND OF
PUTNAM SINCE 1986.
ROBERT F. ORLICH PRESIDENT AND CHIEF EXECUTIVE
Age 49 OFFICER, TRH, TRC AND PUTNAM
Director since 1994. HE HAS CHAIRMAN, TRANS RE ZURICH; DIRECTOR,
ALSO SERVED AS A DIRECTOR TRANSATLANTIC RE ARGENTINA S.A.
OF TRC AND OF PUTNAM SINCE
1992.
HOWARD I. SMITH EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
Age 52 OFFICER AND COMPTROLLER, AIG
Director since 1994. HE HAS DIRECTOR, STARR, SICO, ILFC AND TWENTIETH
ALSO SERVED AS A DIRECTOR CENTURY INDUSTRIES (INSURANCE)
OF TRC AND OF PUTNAM SINCE
1994.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
THOMAS R. TIZZIO PRESIDENT, AIG
Age 59 DIRECTOR, AIG, STARR AND SICO
Director since 1990. HE HAS
ALSO SERVED AS A DIRECTOR
OF TRC SINCE 1979 AND OF
PUTNAM SINCE 1990.
</TABLE>
It is with deep regret that we report the passing of Mr. Joseph F. Murphy. A
board member of our companies since 1984, Mr. Murphy provided invaluable
guidance to Transatlantic and made many important contributions to its success.
The principal occupation or affiliation of each of the nominees is shown in
bold face type. Except as hereinafter noted, each director has occupied an
executive position with his company or an affiliate thereof for at least the
prior five years. Mr. Balog was Chairman of 1838 Investment Advisors, L.P. from
1987 to 1994. Mr. Fowler served as Chief Administrative Officer of Primerica
Corporation from 1986 to 1994, and as Chairman, President and Chief Executive
Officer of Gulf Insurance Company from 1987 to 1994 and as Executive Vice
President of the Travelers, Inc. from 1993 to 1995. Mr. Egashira served as the
President of The Nichido Fire & Marine Insurance Company, Limited from 1988 to
1995.
There were four regularly scheduled meetings of the Board of Directors
during 1996. All current directors attended at least 75% of the aggregate of all
meetings of the Board of Directors and of the committees of the Board of
Directors held during the period in which they were eligible to serve, except
Mr. Egashira, who attended 50% of the meetings he was eligible to attend. There
are four regular meetings of the Board of Directors scheduled to be held during
1997.
Messrs. Balog, Mackowski and Murphy were the members of the Audit Committee,
which held three meetings during 1996. There are three Audit Committee meetings
scheduled to be held during 1997. The primary function of the Audit Committee is
to give general advice to the Board of Directors and the officers in matters
relating to the audits of the records of accounts of TRH and its subsidiaries.
The Committee reviews the performance and scope of the audit and non-audit
services provided by the independent accountants during the fiscal year and
recommends to the Board of Directors a firm of independent accountants to serve
as auditors during the ensuing fiscal year. In addition, the Committee reviews
reports issued by TRH's internal audit division and by AIG's internal audit
division (see "Certain Transactions with the AIG Group") and the independent
accountants.
The Stock Option and Purchase Plan Committee administers the TRH employee
benefit plans. During 1996, the members of the Stock Option and Purchase Plan
Committee were Messrs. Balog, Mackowski and Murphy. There was one Stock Option
and Purchase Plan Committee meeting during 1996. One Stock Option and Purchase
Plan Committee meeting is scheduled for 1997.
The Compensation Committee determines the cash compensation for senior
management. During 1996, the members of the Compensation Committee were Messrs.
Balog, Greenberg, Mackowski, Murphy and Tizzio. There was one Compensation
Committee meeting during 1996, and one Compensation Committee meeting is
scheduled for 1997.
The Board does not have a nominating committee. The full Board would
normally address matters relating to the nomination of directors, but the
Executive Committee of the Board of Directors is also empowered to address such
matters. The Board plans to select a director to replace Mr. Murphy subsequent
to the annual meeting. The Executive Committee has and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of TRH except those powers specifically reserved to the whole Board.
During 1996, Messrs. Greenberg, Matthews, Murphy and Orlich were the members of
the Executive Committee. There were no Executive Committee actions in 1996.
4
<PAGE>
OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of TRH,
and of entities which could be considered parents of TRH, by each of the
directors, each executive officer named in the Summary Compensation Table, and
by the directors and executive officers as a group.
<TABLE>
<CAPTION>
EQUITY SECURITIES OWNED BENEFICIALLY
AS OF JANUARY 31, 1997(1)
----------------------------------------------------------------------------------
TRH AIG STARR
COMMON STOCK COMMON STOCK COMMON STOCK
-------------------------- -------------------------- --------------------------
AMOUNT AND AMOUNT AND AMOUNT AND
NATURE OF PERCENT NATURE OF PERCENT NATURE OF PERCENT
BENEFICIAL OF BENEFICIAL OF BENEFICIAL OF
NAME OWNERSHIP(2) CLASS OWNERSHIP(3) CLASS OWNERSHIP(4) CLASS
- ----------------------------- ------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
James Balog.................. 7,500 .03 -- -- -- --
Paul A. Bonny................ 11,192 .05 1,459 (5) -- --
Ikuo Egashira................ -- -- -- -- -- --
John M. Fowler............... -- -- -- -- -- --
M.R. Greenberg............... 17,500 .08 10,710,188 2.28 5,000 24.39
John J. Mackowski............ 500 (5) -- -- -- --
Edward E. Matthews........... 8,750 .04 381,748 .08 2,250 10.98
Robert V. Mucci.............. 24,435 .11 3,280 (5) -- --
Robert F. Orlich............. 47,500 .21 2,457 (5) 250 1.22
Steven S. Skalicky........... 1,322 .01 8,017 (5) -- --
Howard I. Smith.............. -- -- 59,590 .01 1,250 6.10
Thomas R. Tizzio............. 8,750 .04 210,650 .04 1,750 8.54
Javier E. Vijil.............. 5,686 .02 -- -- -- --
All Directors and Executive
Officers of TRH as a Group
(15 individuals)........... 147,036 .64 11,380,379 2.42 10,500 51.23
<CAPTION>
SICO
COMMON STOCK
----------------------------------
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OWNERSHIP CLASS
- ----------------------------- ------------------- -------------
<S> <C> <C>
James Balog.................. -- --
Paul A. Bonny................ -- --
Ikuo Egashira................ -- --
John M. Fowler............... -- --
M.R. Greenberg............... 10 9.09
John J. Mackowski............ -- --
Edward E. Matthews........... 10 9.09
Robert V. Mucci.............. -- --
Robert F. Orlich............. -- --
Steven S. Skalicky........... -- --
Howard I. Smith.............. 10 9.09
Thomas R. Tizzio............. 10 9.09
Javier E. Vijil.............. -- --
All Directors and Executive
Officers of TRH as a Group
(15 individuals)........... 40 36.36
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the beneficial owners listed have sole voting
and investment power over the shares listed.
(2) Amounts of equity securities shown include shares of TRH Common Stock
subject to options which may be exercised within 60 days as follows:
Bonny--11,125 shares, Greenberg--17,500 shares, Matthews--8,750 shares,
Mucci--19,375 shares, Orlich--45,104 shares, Skalicky--1,250 shares,
Tizzio--8,750 shares, Vijil--5,625 shares, all directors and executive
officers of TRH as a group, 130,604 shares.
Amounts of equity securities shown include shares as to which the individual
shares voting and investment power as follows: Skalicky--72 shares with his
wife, all directors and executive officers of TRH as a group--72 shares.
Amounts of equity securities shown do not include the following securities
owned by members of the named individual's family or by the individual as to
which securities such individual has disclaimed beneficial ownership:
Balog--300 shares, all directors and executive officers of TRH as a
group--300 shares.
(3) Amounts of equity securities shown include shares of AIG Common Stock
subject to options which may be exercised within 60 days as follows:
Bonny--843 shares, Greenberg--374,375 shares, Matthews--117,563 shares,
Orlich--2,249 shares, Skalicky--2,061 shares, H. Smith--51,218 shares,
Tizzio--129,750 shares, all directors and executive officers of TRH as a
group--678,059 shares.
Amounts of equity securities shown include shares as to which the individual
shares voting and investment power as follows: Greenberg--10,119,749 shares
with his wife and 26,704 shares with co-trustees, Orlich--208 shares with
his wife, Skalicky--613 shares with his wife, Tizzio--94,102 shares with his
wife, all executive officers and directors of TRH as a group--10,241,376
shares.
Amounts of equity securities also excludes the following securities owned by
members of the named individual's immediate family or by the individual as
Trustee as to which securities such individual has disclaimed beneficial
ownership: Matthews--4,850 shares, Tizzio--13,302 shares, all directors and
executive officers as a group-- 18,152 shares.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
5
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
Amount of shares shown for Mr. Greenberg does not include 4,890,037 shares
held as trustee for the Starr Trust, as to which Mr. Greenberg disclaims
beneficial ownership. Inclusion of these shares would increase Mr.
Greenberg's total ownership by 1.04 percent. Amount of shares shown for Mr.
Greenberg also excludes 1,547,428 shares owned directly by Starr
(representing 24.39 percent of the shares owned directly by Starr) as to
which Mr. Greenberg disclaims beneficial ownership.
(4) As of February 1, 1997, Starr also had outstanding 4,750 shares of Common
Stock Class B, a non-voting stock. None of the nominees hold such shares.
Shares of Starr's Series A, Series B, Series C, Series D, Series E, Series
F, Series G, Series H, Series I, Series J, Series K, Series L, Series M,
Series N and Series O Preferred Stock, and its 5% Subordinated Preferred
Stock were held by the nominees as follows on January 31, 1997: Preferred
Stock, Series A--Greenberg (5,000), Matthews (1,500); Preferred Stock,
Series B--Greenberg (5,000), Matthews (1,750); Preferred Stock, Series
C--Greenberg (5,000), Matthews (1,750), Tizzio (125); Preferred Stock,
Series D--Greenberg (5,000), Matthews (1,750), Tizzio (375); Preferred
Stock, Series E--Greenberg (5,000), Matthews (2,000), H. Smith (125), Tizzio
(625); Preferred Stock, Series F--Greenberg (5,000), Matthews (2,000), H.
Smith (250), Tizzio (1,000); Preferred Stock, Series G--Greenberg (5,000),
Matthews (2,250), H. Smith (375), Tizzio (1,000); Preferred Stock, Series
H--Greenberg (5,000), Matthews (2,250), H. Smith (500), Tizzio (1,000);
Preferred Stock, Series I--Greenberg (5,000), Matthews (2,250), H. Smith
(500), Tizzio (1,000); Preferred Stock, Series J--Greenberg (5,000),
Matthews (2,250), H. Smith (625), Tizzio (1,000); Preferred Stock, Series
K-- Greenberg (5,000), Matthews (2,250), H. Smith (625), Tizzio (1,250);
Preferred Stock, Series L--Greenberg (5,000), Matthews (2,250), H. Smith
(625), Tizzio (1,250); Preferred Stock, Series M--Greenberg (5,000),
Matthews (2,250), H. Smith (750), Tizzio (1,500); Preferred Stock, Series
N--Greenberg (5,000), Matthews (2,250), H. Smith (1,000), Tizzio (1,500);
Preferred Stock, Series O--Greenberg (5,000), Matthews (2,250), H. Smith
(1,000), Tizzio (1,500); and 5% Subordinated Preferred Stock - Greenberg
(100). The total outstanding shares were: Preferred Stock, Series A
(15,240), Preferred Stock, Series B (15,055), Preferred Stock, Series C
(15,555), Preferred Stock, Series D (16,430), Preferred Stock, Series E
(17,930), Preferred Stock, Series F (19,555), Preferred Stock, Series G
(19,500), Preferred Stock, Series H (19,000), Preferred Stock, Series I
(19,500), Preferred Stock, Series J (20,500), Preferred Stock, Series K
(21,375), Preferred Stock, Series L (21,375), Preferred Stock, Series M
(21,000), Preferred Stock, Series N (21,625), Preferred Stock, Series O
(21,625) and 5% Subordinated Preferred Stock (340).
(5) Less than .01%.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange
Act") requires TRH's directors, officers and persons who own more than ten
percent of a registered class of TRH's equity securities, to file with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in beneficial ownership of
TRH Common Stock. Directors, officers and greater than ten percent stockholders
are required by SEC regulation to furnish TRH with copies of all Section 16(a)
forms they file. To TRH's knowledge, all Section 16(a) filing requirements
applicable to its directors, officers and ten percent stockholders have been
complied with. In making these statements, TRH has relied on written
representations of its directors, officers and ten percent stockholders, and
copies of reports that they have filed with the SEC.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
During 1996, all directors, except those who are TRH employees, received an
annual retainer of $12,500 and a fee of $700 for each meeting of the Board or
any committee of TRH or its subsidiaries attended, except for the Chairman, who
received an annual retainer of $50,000. On December 11, 1996, the Board of
Directors voted to increase the annual retainer for all Directors, except those
who are TRH employees, from $12,500 to $17,500 except for the Chairman who will
receive an annual retainer of $75,000. The current $700 fee for each meeting of
the Board or any committee attended, will remain the same. In addition, certain
directors may be granted stock options in recognition of extraordinary service
to the Company. On December 11, 1996, the Stock Option and Purchase Plan
Committee granted a total of 22,000 options to Messrs. Greenberg (10,000
options), Matthews (5,000 options), H. Smith (2,000 options) and Tizzio (5,000
options). Additionally, on December 11, 1996, the full Board of Directors
granted 2,000 stock options to each of Messrs. Balog and Mackowski in
recognition of their extraordinary contributions to the Audit, Compensation,
Finance and Stock Option and Purchase Plan Committees. These options were
granted pursuant to the TRH 1995 Stock Option Plan. The options were granted at
fair market value on the date of grant ($77 per share) and first become
exercisable at a rate of 25% per year commencing in December, 1997.
6
<PAGE>
The following table sets forth the compensation, for services in all
capacities to TRH and its subsidiaries during 1996, of each of the President and
Chief Executive Officer and the four most highly compensated executive officers
of TRH.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) --------------------------
SECURITIES
---------------------- UNDERLYING LTIP
NAME PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PAYOUTS(2)
- ------------------------------- ------------------------- --------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Orlich............... President and CEO 1996 $ 327,885 $ 220,000 20,000 $ 568,313
1995 264,423 160,000 17,500 --
1994 215,846 96,000 15,000 147,000
Robert V. Mucci................ Sr. Vice President and 1996 $ 220,770 $ 57,000 7,500 $ 216,500
Actuary 1995 200,770 57,000 7,500 --
1994 160,673 42,500 7,500 122,500
Steven S. Skalicky............. Sr. Vice President and 1996 $ 203,981 $ 63,000 5,000 $ 189,438
Controller 1995 154,008 53,000 5,000 --
Paul A. Bonny.................. Sr. Vice President 1996 $ 191,807 $ 74,000 7,500 $ 162,375
1995 166,769 51,500 5,000 --
1994 130,944 34,000 5,000 98,000
Javier E. Vijil................ Sr. Vice President 1996 $ 196,731 $ 52,000 7,500 $ 81,188
Sr. Vice President, 1995 175,769 37,000 5,000 --
TRC and Putnam 1994 147,692 37,500 5,000 --
<CAPTION>
ALL OTHER
NAME COMPENSATION(3)
- ------------------------------- ----------------
<S> <C>
Robert F. Orlich............... $ 9,500
6,160
3,080
Robert V. Mucci................ $ 9,500
9,086
3,080
Steven S. Skalicky............. $ 9,500
6,077
Paul A. Bonny.................. $ 18,701
15,061
7,620
Javier E. Vijil................ $ 9,500
8,789
7,115
</TABLE>
- ------------------------
(1) With respect to each executive officer named in the table, the aggregate
amount of perquisites and other personal benefits, securities or property
was less than either $50,000 or 10% of the total annual salary and bonuses
reported for such executive officer.
(2) Amounts shown in 1994 represent the value, based on the closing sale price
of AIG Common Stock on December 31, 1994 ($65.333), of shares of AIG Common
Stock allocated but not distributed under a Deferred Compensation Profit
Participation Plan (the "SICO Plan") provided to certain senior AIG and TRH
employees, including TRH executive officers, by SICO. The SICO Plan came
into being in 1975 when the voting shareholders and Board of Directors of
SICO, a private holding company whose principal asset consists of AIG Common
Stock, decided that a portion of the capital value of SICO should be used to
provide an incentive plan for the current and succeeding managements of all
American International companies, including TRH. Participation in the SICO
Plan by any person, and the amount of such participation, is at the sole
discretion of SICO's Board of Directors, and none of the costs of the
various benefits provided under such plan is charged to or absorbed by TRH.
The SICO Plan provides that shares may be set aside by SICO for the benefit
of the participant and distributed upon retirement. The SICO Board of
Directors may permit an early pay-out of units under certain circumstances,
and all of the individuals named in the Summary Compensation Table are
eligible for such early pay-out with respect to units awarded to them. Prior
to pay-out, the participant is not entitled to vote, dispose of or receive
dividends with respect to such shares, and shares are subject to forfeiture
under certain conditions, including but not limited to the participant's
voluntary termination of employment with AIG or TRH prior to normal
retirement age. In addition, SICO's Board of Directors may elect to pay a
participant cash in lieu of shares of AIG Common Stock. In March, 1995, a
determination was made as to the number of AIG shares allocable to the
accounts of the participants in the SICO Plan with respect to units awarded
in December, 1992. The values shown for the year 1994 represent the number
of AIG shares allocated to named executive officers as follows: Orlich-2,250
shares; Mucci-1,875 shares; Bonny-1,500 shares; Vijil-0 shares. All 1994
share amounts and sale prices are adjusted to reflect the stock split
effected as a 50 percent stock dividend in July, 1995. Amounts shown in 1996
represent the value, based on the closing sale price of AIG Common Stock on
the New York Stock Exchange on December 31, 1996 ($108.25), of shares of AIG
Common Stock allocated in March, 1997 but not
7
<PAGE>
distributed under the SICO Plan with respect to units awarded in December,
1994. The number of shares allocated to named executive officers is as
follows: Orlich-5,250 shares; Mucci-2,000 shares; Skalicky-1,750 shares;
Bonny-1,500 shares; Vijil-750 shares.
(3) Amounts shown for Messrs. Orlich, Mucci, Skalicky and Vijil represent
matching contributions under TRH's 401(k) Plan. Amounts shown for Mr. Bonny
reflect contributions by TRH to The AIG Pension Plan (United Kingdom) and
The AIG Retirement Savings Plan (United Kingdom.)
Messrs. Greenberg, Matthews, Orlich, H. Smith, and Tizzio or certain of
them, are directors and officers of SICO, directors and members of the Starr
Foundation and directors and officers of Starr. These individuals also receive
compensation as officers of Starr for services rendered to Starr as well as
compensation from SICO for services rendered to SICO. These services are not
considered to detract materially from the business time of these individuals
available for TRH matters and such compensation is not included in the
compensation for services to TRH shown in the Summary Compensation Table above.
TRH maintains policies of directors and officers liability insurance for
itself, its directors and officers, its subsidiaries, and their directors and
officers. The premium for the year ending April 18, 1997 is approximately
$469,880.
The following table summarizes certain information with respect to benefits
that the proxy rules classify as granted under Long-Term Incentive Plans which
were granted during 1996 (with respect to the 1997-1998 period) to the five
individuals named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS--AWARDS IN 1996(1)
<TABLE>
<CAPTION>
ESTIMATED FUTURE
NAME NUMBER OF UNITS PERFORMANCE PERIOD PAYOUTS
- ------------------------------------------------------ ----------------- ------------------ -----------------------
<S> <C> <C> <C>
Orlich................................................ 1,000 Two years 10,000 shares
Mucci................................................. 400 Two years 2,000 shares
Skalicky.............................................. 350 Two years 1,750 shares
Bonny................................................. 400 Two years 2,000 shares
Vijil................................................. 300 Two years 1,500 shares
</TABLE>
- ------------------------
(1) Awards represent grants of units under the SICO Plan described in Note 2 to
the Summary Compensation Table with respect to the two-year period from
January 1, 1997 through December 31, 1998. The SICO Plan contains neither
threshold amounts nor maximum payout limitations. The number of shares of
AIG Common Stock allocated to a unit upon payout is based on a percentage
selected by SICO's Board of Directors of between 20 percent and 100 percent
of the increase of SICO's retained earnings attributable to the AIG Common
Stock held by SICO over the two-year period. As a result, the number of
shares to be allocated with respect to units held for the 1997-1998 period
and the value of such shares cannot be determined at this time. The number
of shares shown under "Estimated Future Payouts" represent the number of
shares allocable to the named individuals based upon the units awarded to
them for the 1997-1998 period, assuming the percentage selected by the SICO
Board of Directors and the increase in SICO's retained earnings for the
1997-1998 period were the same as those used to allocate the shares of AIG
Common Stock for the 1995-1996 period. As noted in the description of the
SICO Plan in Note 2 to the Summary Compensation Table, prior to pay-out, the
participant is not entitled to vote, dispose of or receive dividends with
respect to such shares, and the shares are subject to forfeiture under
certain conditions, including but not limited to the participant's voluntary
termination of employment with AIG or TRH prior to normal retirement age.
The following tables set forth information for each of the five individuals
named in the Summary Compensation Table as to (i) grants of options to purchase
TRH Common Stock under the TRH 1995 Stock Option Plan during 1996, and (ii)
option exercises during 1996, and option values as of December 31, 1996, with
respect to options to purchase TRH Common Stock granted under the TRH 1995 Stock
Option Plan and the TRH 1990 Stock Option Plan.
8
<PAGE>
OPTION GRANTS IN THE LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
% OF POTENTIAL REALIZABLE
NUMBER OF TOTAL VALUE(4) AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE ------------------------------
NAME GRANTED IN 1996 PRICE EXPIRATION DATE 5%(2) 10%(3)
- ---------------------------------- ----------- ----------- ----------- ---------------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Orlich............................ 20,000 16.90 $ 77.00 December 11, 2006 $ 970,200.00 $ 2,448,600.00
Mucci............................. 7,500 6.34 77.00 December 11, 2006 363,825.00 918,225.00
Skalicky.......................... 5,000 4.22 77.00 December 11, 2006 242,550.00 612,150.00
Bonny............................. 7,500 6.34 77.00 December 11, 2006 363,825.00 918,225.00
Vijil............................. 7,500 6.34 77.00 December 11, 2006 363,825.00 918,225.00
</TABLE>
- ------------------------
(1) The options reflected in the table were granted in December 1996 and will
become exercisable at a rate of 25% per year, commencing in December 1997.
(2) The appreciated price would be $125.51 per share.
(3) The appreciated price would be $199.43 per share.
(4) The assumed 5% and 10% annual rates of stock price appreciation used in the
table are prescribed by the proxy rules and are not intended to forecast
possible future appreciation in the price of TRH Common Stock. Options would
have no realized value if there were no appreciation or if there were a
depreciation from the price at which the options were granted.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND YEAR-END OPTION VALUES(1)
TRANSATLANTIC HOLDINGS, INC. AND AMERICAN INTERNATIONAL GROUP, INC.
<TABLE>
<CAPTION>
TOTAL NUMBER OF UNEXERCISED
OPTIONS HELD AT FISCAL YEAR
NUMBER OF END(4)
SHARES ACQUIRED VALUE ---------------------------
NAME ON EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE
- --------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Orlich....................................... 2,396 $138,668.50 45,478 44,375
Mucci........................................ 0 0 27,327 18,125
Skalicky..................................... 900 55,325.03 3,311 9,314
Bonny........................................ 0 0 11,968 14,625
Vijil........................................ 0 0 5,625 14,375
<CAPTION>
TOTAL VALUE OF UNEXERCISED,
IN-THE-MONEY OPTIONS HELD
AT FISCAL YEAR END(3)(5)
----------------------------
NAME EXERCISABLE UNEXERCISABLE
- --------------- ------------- -------------
<S> <C> <C> <C>
Orlich....................................... $1,650,361.96 $ 544,375.00
Mucci........................................ 1,161,341.16 234,218.75
Skalicky..................................... 120,447.41 86,271.34
Bonny........................................ 438,577.76 165,984.38
Vijil........................................ 137,109.38 159,543.13
<CAPTION>
NAME
- ---------------
Orlich.......................................
Mucci........................................
Skalicky.....................................
Bonny........................................
Vijil........................................
</TABLE>
The following tables break out the options exercises and year-end option
values shown in the table above for each of TRH Common Stock and AIG Common
Stock separately.
TRANSATLANTIC HOLDINGS, INC.
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL VALUE OF UNEXERCISED,
UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
NUMBER OF SHARES AT FISCAL YEAR END AT FISCAL YEAR END(3)
ACQUIRED ON VALUE -------------------------- ------------------------------
NAME EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ----------------- ------------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Orlich........................... 2,396 $ 138,668.50 43,229 44,375 $ 1,470,185.50 $ 544,375.00
Mucci............................ 0 0 24,375 18,125 918,906.25 234,218.75
Skalicky......................... 0 0 1,250 8,750 14,375.00 60,625.00
Bonny............................ 0 0 11,125 14,625 362,609.38 165,984.38
Vijil............................ 0 0 5,625 14,375 137,109.38 159,543.13
</TABLE>
9
<PAGE>
AMERICAN INTERNATIONAL GROUP, INC.
<TABLE>
<CAPTION>
TOTAL NUMBER OF UNEXERCISED
OPTIONS HELD AT FISCAL YEAR
NUMBER OF END(4)
SHARES ACQUIRED VALUE ---------------------------
NAME ON EXERCISE(1) REALIZED(2) EXERCISABLE UNEXERCISABLE
- ---------------------------------------- --------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Orlich.................................. 0 $ 0 2,249 0
Mucci................................... 0 0 2,952 0
Skalicky................................ 900 55,325.03 2,061 564
Bonny................................... 0 0 843 0
Vijil................................... 0 0 0 0
<CAPTION>
TOTAL VALUE OF UNEXERCISED,
IN-THE-MONEY OPTIONS HELD
AT FISCAL YEAR END(5)
----------------------------
NAME EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ------------- -------------
<S> <C> <C>
Orlich.................................. $ 180,176.46 $ 0
Mucci................................... 242,434.91 0
Skalicky................................ 106,072.41 25,646.34
Bonny................................... 75,968.38 0
Vijil................................... 0 0
</TABLE>
- ------------------------
(1) TRH options are granted with respect to TRH Common Stock and AIG options are
granted with respect to AIG Common Stock.
(2) Aggregate market value on date of exercise less aggregate option price.
(3) Total value of vested and unvested options based on a fair market value of
TRH Common Stock of $80.50 per share, as of December 31, 1996.
(4) Adjusted for 50 percent AIG Common Stock split in July 1993 and July 1995.
(5) Total value of vested and unvested options based on a fair market value of
AIG Common Stock of $108.25 per share, as of December 31, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Compensation Committee of the Board of Directors consisted
of Messrs. Balog, Greenberg, Mackowski, Murphy and Tizzio. No member of the
Compensation Committee is a current officer or employee of the Company (or any
of its subsidiaries) or was such an officer or employee at any time subsequent
to June 1990, when the Company became a reporting company under the Exchange
Act. Mr. Greenberg is a director and Chairman and Chief Executive Officer of AIG
and Mr. Tizzio is a director and President of AIG. Mr. Greenberg and Mr. Tizzio
are stockholders, directors and/or executive officers of SICO and Starr. AIG
owns 49.04% of the outstanding TRH Common Stock and engages in reinsurance and
retrocession transactions with TRH, and provides certain administrative and
advisory services to TRH, in the ordinary course of TRH's business.
Approximately $232 million (18%) of gross premiums written by TRH in 1996 was
attributable to reinsurance purchased by the AIG Group (AIG, together with its
subsidiaries, is referred to herein as the "AIG Group"), for the production of
which TRH paid ceding commissions to the AIG Group of approximately $33 million
in such year. TRH retroceded approximately $80.8 million of gross premiums
written to the AIG Group in 1996 and received ceding commissions of
approximately $8 million for the production of such business. Pursuant to
service and expense agreements, the AIG Group furnishes to TRH certain office
space, data processing, payroll processing and certain other administrative
services. TRH paid approximately $3.4 million to the AIG Group for these
services in 1996. Pursuant to an investment management contract, AIG Global
Investment Corp., an AIG subsidiary, acts as investment manager for TRH. In
addition, during 1996, AIG Capital Management Corp., an AIG subsidiary, provided
investment advisory and management services for substantially all TRH's cash
equivalents. TRH paid an aggregate of approximately $5.2 million to AIG Global
Investment Corp. and AIG Capital Management Corp. for such investment management
services in 1996. TRH leases certain computer equipment from A.I. Credit Corp.,
an AIG subsidiary. TRH paid approximately $5,700 under such leases in 1996. SICO
and Starr owned 16.12% and 2.39%, respectively, of AIG Common Stock at January
31, 1997. Certain of Starr's subsidiaries operate as insurance agencies or
brokers and in such capacity produce business for TRH. Commissions paid by TRH
to Starr for these services approximated $2.2 million in 1996. From these
payments, which constituted less than 1.9% of Starr's gross revenues in 1996,
Starr is required to pay its operating expenses and commissions due originating
brokers. The amounts represented less than 0.2% of TRH's gross revenues in 1996.
During 1996, the members of the Stock Option and Purchase Plan Committee were
Messrs. Balog, Mackowski and Murphy, each of whom was a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act.
COMMITTEE REPORTS ON EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee ("Committee") met on December 11, 1996. The
Committee is composed solely of non-employee directors. Mr. Murphy was not
present at the meeting. The Committee is responsible for developing and making
recommendations to the Board of Directors with respect to executive officer
compensation policies and determines the cash compensation to be paid to the
President and Chief Executive Officer and each of the other executive officers
of the Company. The objectives of the Committee in determining the amount and
type of cash compensation for each executive officer are to (i) provide a level
of base compensation which would allow the Company to attract, retain and reward
superior talent, and (ii) align the executive officers' interest with the
success of the Company through the payment of a bonus based on the Company's
performance. The Committee reviews the
10
<PAGE>
actions of the Stock Option and Purchase Plan Committee and addresses the mix of
compensation forms (salary, bonus, stock options) to foster long-term management
motivation, development and stability.
The Company's compensation policy is subjective. The Committee did not apply
any specific formula. In the course of its general discussion, the Committee
considered the compensation practices of other reinsurers through a review of
publicly available information and surveys particularly in light of the
Company's financial performance and the level of competitive activity for the
services of exceptional people within the reinsurance industry, and the
Company's long-term compensation goals. The Committee focused on rational
competitive compensation practices in an attempt to avoid those compensation
activities which are neither prudent nor consistent with good business practices
in the long run. The Company continued to post strong financial results in 1996.
The Committee believes that the Company's continued financial success has been
attributable in large measure to the performance and leadership of senior
management. Accordingly, based upon a subjective analysis, the Company's
President and Chief Executive Officer, Robert F. Orlich, was granted an increase
in base salary from $325,000 in 1996 to $400,000 for 1997 and a year-end bonus.
The Committee believes it is in the best interest of the Company and its
stockholders to compensate Mr. Orlich and other executive officers in a manner
that reflects their importance to the Company and that will provide an incentive
for their continued successful performance. The Committee reviewed, considered
and approved management's recommendation as to salaries and bonuses for each of
the other executive officers. Management's recommendations are based on a
subjective assessment of the individuals, the nature of their responsibilities
and their contribution to the Company.
The Committee noted the fact that certain of the Company's executive
officers participate in the SICO Plan. The Company does not have any ownership
interest in, or right to control SICO. Accordingly, the SICO Board makes
determinations about participation in the SICO Plan independently of the Company
and of the Committee.
The Compensation Committee has considered the tax deductibility of
compensation to its executive officers in light of Section 162(m) of the
Internal Revenue Code of 1986. No executive officer's cash compensation that was
deductible by the Company in 1996 exceeded $1 million. No executive officer's
cash compensation which may be deductible by the Company in 1997 is expected to
exceed $1 million. The Company has structured the TRH 1990 and 1995 Stock Option
Plans with the intention that the compensation resulting from such plans would
be deductible in light of Section 162(m).
COMPENSATION COMMITTEE
JAMES BALOG, M.R. GREENBERG, JOHN J. MACKOWSKI,
JOSEPH F. MURPHY, THOMAS R. TIZZIO
DECEMBER 11, 1996
REPORT OF THE STOCK OPTION AND PURCHASE PLAN COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Purchase Plan Committee ("Committee") met on December
11, 1996. The Committee is composed solely of non-employee directors. Mr. Murphy
was not present at the meeting. The Committee is responsible for administering
the TRH employee benefit plans. The Committee's philosophy is that stock options
are a particularly important part of the compensation that inherently correlates
long-term individual motivation and reward to Company performance. The
Committee's approach is subjective. The Committee does not use specific criteria
or formula to calculate the aggregate number of options granted or the grants to
each individual. As part of its general discussion, the Committee considered the
past and potential contribution to the Company of its executive officers, the
amount of options awarded in prior years, the option grants awarded by other
reinsurers as disclosed in publicly available materials, the successful
financial performance of the Company, the Company's long-term compensation goals
and the cash compensation paid to the Company's executive officers. The
Committee reviewed, considered and approved management's recommendation to grant
144,350 stock options under the TRH 1995 Stock Option Plan at an exercise price
of $77 per share, which includes 20,000 shares granted to the Company's
President and Chief Executive Officer, Robert F. Orlich; 7,500 shares granted to
the Company's Senior Vice President, Robert V. Mucci; 7,500 shares granted to
the Company's Senior Vice President, Paul A. Bonny; 7,500 shares granted to the
Company's Senior Vice President, Javier E. Vijil and 5,000 shares granted to the
Company's Senior Vice President, Steven S. Skalicky. Management's
recommendations are based on a subjective assessment of the individuals, the
nature of their responsibilities and their contribution to the Company. Included
in the option grant are a total of 22,000 stock options to the following
Directors: M.R. Greenberg--10,000 shares, Thomas R. Tizzio--5,000 shares, Edward
E. Matthews--5,000 shares and Howard I. Smith--2,000 shares. The options grants
to directors were made after reviewing and approving management's
recommendations, which were based on a subjective assessment of each
individual's past and prospective contribution to the Company.
STOCK OPTION AND PURCHASE PLAN COMMITTEE
JAMES BALOG, JOHN J. MACKOWSKI, JOSEPH F. MURPHY
DECEMBER 11, 1996
11
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total stockholder
return on TRH Common Stock (assuming reinvestment of dividends) from December
31, 1991 through December 31, 1996, with the cumulative total return of the
Standard & Poor's Midcap 400 Index (which includes TRH) and the cumulative total
return of the Insurance (PPTY-CAS)-500 Index which was formerly called Standard
& Poor's Property-Casualty Insurance Index.
CUMULATIVE TOTAL RETURN TO STOCKHOLDERS
VALUE OF $100 INVESTED IN DECEMBER, 1991
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRANSATLANTIC HOLDINGS,
BASE PERIOD INC. INSURANCE (PPTY-CAS)-500 S&P MIDCAP 400 INDEX
<S> <C> <C> <C>
Dec-91 100 100 100
Dec-92 145.28 117.11 111.91
Dec-93 136.27 115.04 127.53
Dec-94 146.4 120.67 122.96
Dec-95 193.41 163.38 161
Dec-96 213.62 198.53 191.91
</TABLE>
PENSION BENEFITS
TRH employees are eligible to participate in or have participated in various
AIG benefit plans.
Through March 31, 1985, when such plan was terminated, employees of AIG and
its subsidiaries, including TRH and its subsidiaries, who are citizens of the
United States or non-citizens working in the United States were covered under
the American International Group, Inc. Pension Plan, a contributory, qualified,
defined benefit plan ("Original Pension Plan"). The annual pension for a
participant was equal to 1.75% of Average Final Compensation multiplied by years
of credited service as a participant (up to 40 years) less 1.4286% of his Social
Security Benefit multiplied by years of credited service (limited to 35 years).
Average Final Compensation was defined as the average annual compensation of a
participant during the 3 consecutive years in the last 10 years of his credited
service affording the highest such average, or during all of the years of his
credited service if less than 3 years. Benefits were paid monthly during the
life of the participant, or, if applicable, during the joint lives of the
participant and his contingent annuitant. The annual retirement allowance for
participants with at least 10 years of credited service was not less than 50% of
1.75% of Average Final Compensation, multiplied by years of credited service, or
$1,200, whichever was greater. On April 1, 1985, a new non-contributory,
qualified, defined plan ("Current Retirement Plan") was established, with
provisions substantially the same as the Original Pension Plan, except for the
non-contributory feature and except that in the annual pension formula described
above, 1.25% of Average Final Compensation is multiplied by years of credited
service as a participant (up to 44 years) less 1.25% of his Social Security
Benefit multiplied by years of credited service (limited to 35 years). The 1.25%
of Average Final Compensation is also used in the determination of
12
<PAGE>
the minimum retirement allowance. Effective January 1, 1989, the Current
Retirement Plan formula changed in accordance with government mandated
regulations from a Social Security offset to a Social Security integration
method of computation where the offset is the average of the final three years'
compensation but no greater than 150% of the employee's "covered compensation"
(the average of the Social Security Wage bases during the 35 years preceding the
Social Security retirement age) times credited service up to 35 years,
multiplied by an applicable Social Security retirement age factor. For employees
terminating from active service after January 1, 1993, the benefit formula for
credited service on and after April 1, 1985 changed from 1.25% to 1.35% of
Average Final Compensation. Effective January 1, 1996, the Current Retirement
Plan formula now equals 1.25% times Average Final Compensation up to 150% of the
employee's "covered compensation" plus 1.75% times Average Final Compensation in
excess of 150% of "covered compensation" times years of credited service prior
to April 1, 1985; plus .925% times Average Final Compensation up to 150% of the
employee's "covered compensation" plus 1.425% times Average Final Compensation
in excess of 150% of "covered compensation" times years of credited service
after April 1, 1985.
As a result of the termination of the Original Pension Plan, all benefits
accruing to the termination date became vested regardless of an employee's years
of service and annuities were purchased for benefits payable under that plan.
AIG was entitled to receive the surplus remaining in the Original Pension Plan,
other than the portion of the surplus attributable to employee contributions.
The AIG savings plan ("401(k) Plan") for employees, including employees of
TRH and its subsidiaries, provides for salary reduction contributions by
employees and matching contributions by TRH. The retirement benefits for most
employees who participate in both the Current Retirement Plan and the 401(k)
Plan will be substantially greater than the benefits which would have been
received under the Original Pension Plan.
Annual amounts of normal retirement pension commencing at normal retirement
age of 65 based upon Average Final Compensation and credited service under the
Current Retirement Plan and the Supplemental Plan are illustrated in the
following table:
ESTIMATED ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
3 YEAR TOTAL YEARS OF CREDITED SERVICE AS A PLAN PARTICIPANT
AVERAGE FINAL ----------------------------------------------------------------------------------
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000................................ $ 17,016 $ 25,525 33,033 $ 42,542 $ 51,051 $ 59,559 $ 68,067
150,000................................ 20,579 30,869 41,158 51,448 61,738 72,027 82,317
175,000................................ 24,141 36,212 48,283 60,354 72,425 84,496 96,567
200,000................................ 27,704 41,556 55,408 69,261 83,113 96,965 110,817
225,000................................ 31,266 46,900 62,533 78,167 93,800 109,444 125,067
250,000................................ 34,827 52,244 69,658 87,073 104,488 121,912 139,317
300,000................................ 41,954 62,931 83,908 104,886 125,863 146,850 167,817
375,000................................ 52,641 78,962 105,283 131,604 157,925 184,256 210,567
400,000................................ 56,204 84,306 112,408 140,511 168,613 197,725 224,817
500,000................................ 70,454 105,681 140,908 176,136 211,363 246,500 281,817
</TABLE>
With respect to the individuals named in the Summary Compensation Table on
page 7, other than Mr. Bonny, their respective years of credited service (under
both plans) through December 31, 1996 are as follows: Orlich 10.17 years, Mucci
13.67 years, Skalicky 10.41 years, Vijil 2.91 years. Pensionable salary includes
only the regular salary paid by TRH and its subsidiaries and does not include
amounts attributable to bonuses or overtime pay. For such named individuals,
pensionable salary during 1996 was as follows: Orlich--$327,885;
Mucci--$220,770; Skalicky-- $203,981; Vijil--$196,731.
Effective January 1, 1991 a Supplemental Plan was provided to pay a benefit
to Current Retirement Plan participants in an amount equal to the reduction in
the benefit payable as a result of the Federal limitation. Messrs. Orlich,
Mucci, Skalicky and Vijil were participants in the Supplemental Plan at December
31, 1996.
During 1993, 1994 and up to June 1, 1995, Mr. Bonny participated in The AIG
Pension Plan (United Kingdom), a defined benefit plan, in which the TRH
contributions were calculated by the actuaries for that plan. Mr. Bonny
currently participates in The AIG Retirement Savings Plan (United Kingdom), a
defined contribution plan, to which he contributed one percent of his salary in
1996. Contributions to this plan by TRH vary based on employee age, pensionable
service and the employee's voluntary contributions. During 1996, under both of
these plans, TRH
13
<PAGE>
contributed 9.75 percent of Mr. Bonny's pensionable salary of $191,807 to the
plans based on his age, voluntary contribution and his 14.9 years of pensionable
service.
RELATIONSHIP WITH AIG
AIG is a holding company which, through its subsidiaries, is primarily
engaged in a broad range of insurance and insurance-related activities in the
United States and abroad. U.S.-based property and casualty insurance
subsidiaries of AIG currently have a group rating of "A++ (Superior)", the
highest rating classification, by A.M. Best Company. The AIG Group is one of the
largest purchasers of reinsurance in the insurance industry based on premiums
ceded.
AIG owns 49.04% of the outstanding TRH Common Stock. Four of TRH's 9 current
directors, including the Chairman, are executive officers of AIG and hold the
following positions with AIG: Mr. Greenberg is a Director and the Chairman and
Chief Executive Officer; Mr. Matthews is a Director and Vice Chairman; Mr. H.
Smith is the Executive Vice President, Chief Financial Officer and Comptroller,
and Mr. Tizzio is a Director and President.
AIG GROUP REINSURANCE
TRH, through its wholly-owned subsidiaries TRC and Putnam, either accepts or
rejects the AIG Group reinsurance offered based upon TRH's assessment of risk
selection, pricing, terms and conditions. Historically, and with few exceptions,
TRH has generally not set terms and conditions as lead underwriter with respect
to the AIG Group treaty reinsurance; however, TRH may in the future set terms
and conditions with respect to such business as a lead underwriter and intends
that the terms and conditions of any such reinsurance will be negotiated on an
arms' length basis. The operating management of TRH is not employed by the AIG
Group, and the Underwriting Committee of the Board of Directors of TRH, which
includes directors of TRH who are not employees of the AIG Group, monitor TRH's
underwriting policies. (See "Compensation Committee Interlocks and Insider
Participation").
Approximately $232 million (18%), $189 million (17%) and $198 million (21%)
of gross premiums written by TRH in the years 1996, 1995 and 1994, respectively,
were attributable to reinsurance purchased by the AIG Group, for the production
of which TRH paid ceding commissions to the AIG Group of approximately $33
million, $40 million and $52 million, respectively, in such years. TRH has no
goal with respect to the portion of AIG Group versus non-AIG Group business it
accepts. TRH's objective in determining its business mix is to evaluate each
underwriting opportunity individually with a view to maximizing overall
underwriting results.
TRH retroceded approximately $80.8 million of gross premiums written to the
AIG Group in 1996 and received ceding commissions of approximately $8.0 million
for the production of such business.
CERTAIN TRANSACTIONS WITH THE AIG GROUP
Pursuant to service and expense agreements, the AIG Group furnishes to TRH
certain office space, data processing, payroll processing and certain other
administrative services. TRH may terminate the agreements by giving six months'
written notice to AIG. TRH paid approximately $3.4 million to the AIG Group for
these services in 1996. (See "Compensation Committee Interlocks and Insider
Participation").
Pursuant to an investment management contract, AIG Global Investment Corp.,
an AIG subsidiary, acts as investment manager for TRH. Under the terms of this
agreement, AIG Global Investment Corp. has discretion to manage all the
investment activities of TRH, except with respect to its cash equivalents,
subject to the directions of TRH's Board of Directors and within the limits
imposed by the New York Insurance Law. The agreement may be terminated by either
party at any time. AIG Global Investment Corp. also provides investment
management services for other clients. In addition, during 1996, AIG Capital
Management Corp., an AIG subsidiary, provided investment advisory and management
services for substantially all TRH's cash equivalents. TRH paid an aggregate of
approximately $5.2 million to AIG Global Investment Corp. and AIG Capital
Management Corp. for such investment management services in 1996.
TRH leases certain computer equipment from A.I. Credit Corp., an AIG
subsidiary. TRH paid approximately $5,700 under such leases in 1996.
These services have been obtained at a cost which, in the opinion of TRH,
has not exceeded the cost of obtaining such services from unaffiliated sources.
The cost of certain of these services may increase or decrease in the future,
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subject to negotiation, but in any event are expected not to exceed the cost of
obtaining such services from unaffiliated sources.
RELATIONSHIP WITH SICO AND STARR
SICO and Starr owned 16.12% and 2.39%, respectively of AIG's outstanding
common stock at January 31, 1997. Messrs. Greenberg, Matthews, Orlich, H. Smith
and Tizzio, directors of TRH, are also stockholders, executive officers or
directors of SICO or Starr. (See "Ownership of Certain Securities").
Certain of Starr's subsidiaries operate as insurance agencies or brokers and
in such capacity produce business for TRH. Commissions paid by TRH to Starr for
these services approximated $2.2 million in 1996. From these payments, which
constituted less than 1.9% of Starr's gross revenues in 1996, Starr is required
to pay its operating expenses and commissions due originating brokers. The
amounts are paid on terms available to unaffiliated parties and represent less
than 0.2% of TRH's gross revenues in 1996.
II. SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
employment of Coopers & Lybrand L.L.P. as independent accountants of TRH for
1997. The firm has served as TRC's independent accountants since 1977 and TRH's
since 1986. The firm has no direct or indirect financial interest in TRH or any
of its parents or subsidiaries. Representatives of the firm are expected to be
present at the Annual Meeting with an opportunity to make a statement if they
desire to do so and to be available to respond to appropriate questions.
Your Board of Directors recommends a vote FOR the proposal to employ Coopers
& Lybrand L.L.P.
III. STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
All suggestions from stockholders are given careful attention. Proposals
intended to be presented at the 1998 annual meeting should be sent to the TRH
Secretary at 80 Pine Street, New York, New York 10005 and must be received by
December 4, 1997.
IV. OTHER MATTERS
While management knows of no other issues, if any other matters properly
come before the meeting, it is the intention of the persons named in the
accompanying proxy form to vote the proxy in accordance with their judgment on
such matters.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any other filing by TRH under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this Proxy Statement entitled "Committee Reports on Executive
Compensation" and "Performance Graph" shall not be deemed to be so incorporated,
unless specifically otherwise provided in such filing.
PROXY SOLICITATION
TRH will bear the cost of this solicitation of proxies. Proxies may be
solicited by mail, personal interview, telephone and telegraph by directors,
their associates and approximately five officers and regular employees of TRH
and its subsidiaries without receiving additional compensation. In addition to
the foregoing, TRH has retained W.F. Doring & Co., Inc. to assist in the
solicitation of proxies for a fee of approximately $3,000 plus reasonable
out-of-pocket expenses and disbursements of that firm. TRH will also reimburse
brokers and others holding stock in their names, or in the names of nominees,
for forwarding proxy materials to their principals.
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PROXY TRANSATLANTIC HOLDINGS, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- MAY 22, 1997
Maurice R. Greenberg and Robert F. Orlich, and each of them with full
power of substitution, are hereby authorized to represent and vote all shares
of common stock of Transatlantic Holdings, Inc. held of record on March 25,
1997 by the undersigned at the Annual Meeting of Stockholders to be held on
May 22, 1997 and at any adjournment thereof.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote such stock, and hereby ratifies and confirms all that said attorneys and
proxies, or their substitutes, may do by virtue hereof. If only one attorney
and proxy shall be present and acting, then that one shall have and may
exercise all of the powers of said attorneys and proxies.
The undersigned hereby acknowledges receipt of the notice of said Annual
Meeting of Stockholders, the Proxy Statement relating thereto and the Annual
Report for 1996.
The shares represented by this proxy will be voted in accordance with
the specifications made herein. If no specifications are made, such shares
will be voted FOR the elections of directors and FOR the proposal described in
item 2.
MANAGEMENT URGES YOU TO SIGN AND RETURN THIS PROXY IMMEDIATELY TO ENSURE ITS
VOTE AT THE ANNUAL MEETING TO BE HELD ON MAY 22, 1997.
No postage is required if returned in the enclosed envelope and mailed in the
United States.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
<PAGE>
TRANSATLANTIC HOLDINGS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND FOR PROPOSAL 2.
1. Election of Directors --
NOMINEES: James Balog, Ikuo Egashira, John M. Fowler, Maurice R. Greenberg,
John J. Mackowski, Edward E. Matthews, Robert F. Orlich, Howard I. Smith
and Thomas R. Tizzio
FOR WITHHOLD FOR ALL
ALL ALL (Except nominee(s) written below)
/ / / / / /
____________________________________________________
2. Proposal to select Coopers & Lybrand L.L.P. FOR AGAINST ABSTAIN
as independent accountants: / / / / / /
3. In their discretion with respect to any other matters that may properly
come before the meeting.
Dated: _____________ , 1997
Signature(s) ____________________________________________________________
_________________________________________________________________________
Signature of stockholder should correspond exactly with the name stenciled
hereon. Joint owners should both sign individually. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title as such. If a corporation, please sign full corporate name by a
duly authorized officer. If a partnership, please sign partnership name by
an authorized person.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
