<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 Section 240.14a-11c or 240.14a-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:
--------------------------------------------------------------------
<PAGE>
TRANSATLANTIC HOLDINGS, INC.
80 Pine Street, New York, New York 10005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
April 6, 1998
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 21, 1998, 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 1998; and
3. Any other business that may properly come before the meeting.
Stockholders of record at the close of business on March 24, 1998 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 6, 1998
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 21, 1998, 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 1998.
Only stockholders of record at the close of business on March 24, 1998 will
be entitled to vote at the meeting. On that date 34,621,467 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 6,
1998.
BENEFICIAL OWNERSHIP
The following table lists the beneficial ownership of each person or group
who, as of March 24, 1998, 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)........................... 16,937,220 48.92
70 Pine Street
New York, NY 10270
</TABLE>
- ------------------------
(1) Includes 11,743,452 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,
[PHOTO] Age 69 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), GREAT-WEST LIFE
REINSURANCE COMPANY AND ANNUITY INSURANCE COMPANY AND
("TRC"), A WHOLLY- OWNED TRUSTEE, ZWEIG SERIES TRUST (MUTUAL
SUBSIDIARY OF TRH, SINCE FUNDS).
1990 AND OF PUTNAM
REINSURANCE COMPANY
("PUTNAM"), A WHOLLY-OWNED
SUBSIDIARY OF TRC, SINCE
1988.
IKUO EGASHIRA CHAIRMAN OF THE BOARD OF DIRECTORS,
[PHOTO] Age 67 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
[PHOTO] Age 49 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
PUTNAM SINCE 1989. CORPORATION
MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
[PHOTO] Age 72 (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
[PHOTO] Age 72 EXECUTIVE OFFICER, THE ATLANTIC
Director since 1990. HE HAS MUTUAL COMPANIES (INSURANCE)
ALSO SERVED AS A DIRECTOR DIRECTOR, F.W. WOOLWORTH COMPANY AND NORTHERN
OF TRC AND OF PUTNAM SINCE TRUST COMPANY OF CONNECTICUT
1990.
EDWARD E. MATTHEWS VICE CHAIRMAN-INVESTMENTS AND FINANCIAL
[PHOTO] Age 66 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
[PHOTO] Age 50 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
[PHOTO] Age 53 OFFICER AND COMPTROLLER, AIG
Director since 1994. HE HAS DIRECTOR, AIG, STARR, SICO, ILFC, TWENTIETH
ALSO SERVED AS A DIRECTOR CENTURY INDUSTRIES (INSURANCE) AND THE
OF TRC AND OF PUTNAM SINCE KROLL-O'GARA COMPANY
1994.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
THOMAS R. TIZZIO SENIOR VICE CHAIRMAN-GENERAL INSURANCE, AIG
[PHOTO] Age 60 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>
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, 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 1997. 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 71% and Mr. Fowler who attended 29% of the meetings
they were each eligible to attend. There are four regular meetings of the Board
of Directors scheduled to be held during 1998.
Messrs. Balog and Mackowski are the current members of the Audit Committee,
which held three meetings during 1997. There are three Audit Committee meetings
scheduled to be held during 1998. 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 the independent accountants.
The Stock Option and Purchase Plan Committee administers the TRH employee
benefit plans. The current members of the Stock Option and Purchase Plan
Committee are Messrs. Balog and Mackowski. There was one Stock Option and
Purchase Plan Committee meeting during 1997. One Stock Option and Purchase Plan
Committee meeting is scheduled for 1998.
The Compensation Committee determines the cash compensation for senior
management. The current members of the Compensation Committee are Messrs. Balog,
Greenberg, Mackowski and Tizzio. There was one Compensation Committee meeting
during 1997, and one Compensation Committee meeting is scheduled for 1998.
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 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.
Messrs. Greenberg, Matthews and Orlich are the current members of the Executive
Committee. There was one Executive Committee action in 1997.
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, 1998(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)(3) CLASS OWNERSHIP(4)(5) CLASS OWNERSHIP(6) CLASS
- ------------------------ ---------------- ----------- ---------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
James Balog............. 12,000 .03 -- -- -- --
Paul A. Bonny........... 24,800 .07 2,979 (7) -- --
Ikuo Egashira........... -- -- -- -- -- --
John M. Fowler.......... -- -- -- -- -- --
M.R. Greenberg.......... 37,500 .11 16,205,932 2.32 5,000 24.84
John J. Mackowski....... 1,500 (7) -- -- -- --
Edward E. Matthews...... 18,750 .05 609,642 .09 2,250 11.18
Robert V. Mucci......... 47,101 .14 5,588 (7) -- --
Robert F. Orlich........ 93,290 .27 4,563 (7) 250 1.24
Steven S. Skalicky...... 5,874 .02 12,589 (7) -- --
Howard I. Smith......... 750 (7) 99,671 .01 1,375 6.83
Thomas R. Tizzio........ 18,750 .05 339,984 .05 1,750 8.70
Javier E. Vijil......... 16,128 .05 -- -- -- --
All Directors and
Executive Officers of
TRH as a Group
(14 individuals)...... 278,317 .80 17,280,949 2.47 10,625 52.79
<CAPTION>
SICO
VOTING 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 8.33
John J. Mackowski....... -- --
Edward E. Matthews...... 10 8.33
Robert V. Mucci......... -- --
Robert F. Orlich........ -- --
Steven S. Skalicky...... -- --
Howard I. Smith......... 10 8.33
Thomas R. Tizzio........ 10 8.33
Javier E. Vijil......... -- --
All Directors and
Executive Officers of
TRH as a Group
(14 individuals)...... 40 33.32
</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:
Balog--750 shares, Bonny--24,562 shares, Greenberg--37,500 shares,
Mackowski--750 shares, Matthews--18,750 shares, Mucci--39,373 shares,
Orlich--87,155 shares, Skalicky-- 5,625 shares, Smith--750 shares,
Tizzio--18,750 shares, Vijil--15,937 shares, all directors and executive
officers of TRH as a group, 251,776 shares.
Amounts of equity securities shown include shares as to which the individual
shares voting and investment power as follows: Orlich--138 shares with his
wife, Skalicky--108 shares with his wife, all directors and executive
officers of TRH as a group--246 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--450 shares, all directors and executive officers of TRH as a
group--450 shares.
(3) Reflects a stock split effected as a 50 percent stock dividend on the TRH
Common Stock, paid July 18, 1997.
(4) Amounts of equity securities shown include shares of AIG Common Stock
subject to options which may be exercised within 60 days as follows:
Bonny--1,265 shares, Greenberg--542,813 shares, Matthews--200,718 shares,
Orlich--3,375 shares, Skalicky--3,656 shares, Smith--78,515 shares,
Tizzio--204,938 shares, all directors and executive officers of TRH as a
group--1,035,281, shares.
Amounts of equity securities shown include shares as to which the individual
shares voting and investment power as follows: Greenberg--15,261,417 shares
with his wife and 40,699 shares with co-trustees, Orlich--1,188 shares with
his wife, Skalicky--919 shares with his wife, Tizzio--135,046 shares with
his wife, all executive officers and directors of TRH as a group--15,439,269
shares.
Amounts of equity securities also excludes the following securities owned by
members of the named individual's immediate family as to which securities
such individual has disclaimed beneficial ownership: Matthews--7,500 shares,
Tizzio--19,953 shares, all directors and executive officers as a
group--27,453 shares.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
5
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
Amount of shares shown for Mr. Greenberg does not include 7,213,222 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 1.03 percent. Amount of shares shown for Mr.
Greenberg also excludes 2,393,340 shares owned directly by Starr
(representing 24.84 percent of the shares owned directly by Starr) as to
which Mr. Greenberg disclaims beneficial ownership.
(5) Reflects a stock split effected as a 50 percent stock dividend on the AIG
Common Stock, paid July 25, 1997.
(6) As of February 1, 1998, Starr also had outstanding 5,250 shares of Common
Stock Class B, a non-voting stock. None of the nominees hold such shares.
Shares of Starr's Series A through Series P Preferred Stock, and its 5%
Subordinated Preferred Stock were held by the nominees as follows on January
31, 1998: 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), Smith
(125), Tizzio (625); Preferred Stock, Series F--Greenberg (5,000), Matthews
(2,000), Smith (250), Tizzio (1,000); Preferred Stock, Series G--Greenberg
(5,000), Matthews (2,250), Smith (375), Tizzio (1,000); Preferred Stock,
Series H--Greenberg (5,000), Matthews (2,250), Smith (500), Tizzio (1,000);
Preferred Stock, Series I--Greenberg (5,000), Matthews (2,250), Smith (500),
Tizzio (1,000); Preferred Stock, Series J--Greenberg (5,000), Matthews
(2,250), Smith (625), Tizzio (1,000); Preferred Stock, Series K--Greenberg
(5,000), Matthews (2,250), Smith (625), Tizzio (1,250); Preferred Stock,
Series L--Greenberg (5,000), Matthews (2,250), Smith (625), Tizzio (1,250);
Preferred Stock, Series M--Greenberg (5,000), Matthews (2,250), Smith (750),
Tizzio (1,500); Preferred Stock, Series N--Greenberg (5,000), Matthews
(2,250), Smith (1,000), Tizzio (1,500); Preferred Stock, Series O--Greenberg
(5,000), Matthews (2,250), Smith (1,000), Tizzio (1,500); Preferred Stock
Series P--Greenberg (5,000), Matthews (2,250), Orlich (125), 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 (19,375), Preferred
Stock, Series J (20,375), Preferred Stock, Series K (21,250), Preferred
Stock, Series L (21,250), Preferred Stock, Series M (20,625), Preferred
Stock, Series N (21,250), Preferred Stock, Series O (21,250), Preferred
Stock, Series P (22,250) and 5% Subordinated Preferred Stock (340).
(7) 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
All directors, except those who are TRH employees, receive an annual
retainer of $17,500 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
receives an annual retainer of $75,000. In addition, certain directors may be
granted stock options in recognition of extraordinary service to the Company. On
December 3, 1997, the Stock Option and Purchase Plan Committee granted a total
of 22,000 options to purchase TRH Common Stock to Messrs. Greenberg (10,000
options), Matthews (5,000 options), Smith (2,000 options) and Tizzio (5,000
options). Additionally, on December 4, 1997, the full Board of Directors granted
2,000 options to purchase TRH Common Stock to each of Messrs. Balog and
Mackowski. 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
($71.875 per share) and first become exercisable at a rate of 25% per year
commencing in December, 1998.
6
<PAGE>
The following table sets forth the compensation, for services in all
capacities to TRH and its subsidiaries during 1997, 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 SICO
---------------------- UNDERLYING LTIP
NAME PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS PAYOUTS(2)
- ------------------------------- ------------------------- --------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Orlich............... President and CEO 1997 $ 403,847 $ 295,000 25,000 $ --
1996 327,885 220,000 30,000(4) 568,313
1995 264,423 160,000 26,250(4) --
Paul A. Bonny.................. Sr. Vice President 1997 $ 267,112 $ 82,000 10,000 $ --
1996 191,807 74,000 11,250(4) 162,375
1995 166,769 51,500 7,500(4) --
Steven S. Skalicky............. Sr. Vice President and 1997 $ 251,538 $ 68,000 6,000 $ --
Controller 1996 203,981 63,000 7,500(4) 189,438
1995 154,008 53,000 7,500(4) --
Robert V. Mucci................ Sr. Vice President and 1997 $ 241,154 $ 62,000 6,000 $ --
Actuary 1996 220,770 57,000 11,250(4) 216,500
1995 200,770 57,000 11,250(4) --
Javier E. Vijil................ Sr. Vice President 1997 $ 241,538 $ 64,000 10,000 $ --
Sr. Vice President 1996 196,731 52,000 11,250(4) 81,188
Sr. Vice President TRC 1995 175,769 37,000 7,500(4) --
and Putnam
<CAPTION>
ALL OTHER
NAME COMPENSATION(3)
- ------------------------------- ----------------
<S> <C>
Robert F. Orlich............... $ 9,500
7,750
6,160
Paul A. Bonny.................. $ 33,389
18,701
15,061
Steven S. Skalicky............. $ 9,500
9,500
6,077
Robert V. Mucci................ $ 9,500
9,500
9,086
Javier E. Vijil................ $ 3,166
3,167
2,929
</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) The LTIP payouts will be made by SICO pursuant to its Deferred Compensation
Profit Participation Plan (the "SICO Plan") and will not be paid by or
charged to TRH. Amounts shown in 1996 represent the value, based on the
closing sale price of AIG Common Stock on December 31, 1996 ($72.17), of
shares of AIG Common Stock allocated with respect to the January 1, 1995 to
December 31, 1996 period but not distributed under the SICO Plan. 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. In September, 1997 Messrs. Orlich, Bonny, Skalicky and
Mucci received a partial payout relating to the 1991-1992 and 1993-1994 SICO
Plans. The amounts received by the participants represented the market value
of shares of AIG Common Stock at September 15, 1997, were as follows:
Orlich--$130,181; Bonny--$79,179; Skalicky-- $122,573; Mucci--$100,876.
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 TRH or AIG 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,
1997, a determination was made as to the number of AIG shares allocable to
the
7
<PAGE>
accounts of the participants in the SICO Plan with respect to units awarded
in December, 1994 with respect to the January 1, 1995 to December 31, 1996
period. The values shown for the year 1996 represent the number of AIG
shares allocated to named executive officers as follows: Orlich-7,875
shares; Bonny-2,250 shares; Skalicky-2,625 shares; Mucci-3,000 shares;
Vijil-1,125 shares. All 1996 share amounts and sale prices are adjusted to
reflect the stock split effected as a 50 percent stock dividend on the AIG
Common Stock, paid on July 25, 1997.
(3) Amounts shown for Messrs. Orlich, Skalicky, Mucci 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.)
(4) Adjusted to reflect a stock split effected as a 50 percent stock dividend
on the TRH Common Stock, paid July 18, 1997.
Messrs. Greenberg, Matthews, Orlich, 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, 1998 is approximately
$423,000.
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
Bonny................................................. 400 Two years 2,000 shares
Skalicky.............................................. 350 Two years 1,750 shares
Mucci................................................. 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 TRH or AIG 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 1997, and (ii)
option exercises during 1997, and option values as of December 31, 1997, 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 1997 PRICE EXPIRATION DATE 5%(2) 10%(3)
- --------------------------------- ----------- ----------- --------- ---------------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Orlich........................... 25,000 17.22 $ 71.875 December 3, 2007 $ 1,132,125 $ 2,857,125
Bonny............................ 10,000 6.89 71.875 December 3, 2007 452,850 1,142,850
Skalicky......................... 6,000 4.13 71.875 December 3, 2007 271,710 685,710
Mucci............................ 6,000 4.13 71.875 December 3, 2007 271,710 685,710
Vijil............................ 10,000 6.89 71.875 December 3, 2007 452,850 1,142,850
</TABLE>
- ------------------------
(1) The options reflected in the table were granted in December 1997 and will
become exercisable at a rate of 25% per year, commencing in December 1998.
(2) The appreciated price would be $117.16 per share.
(3) The appreciated price would be $186.16 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 TOTAL VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
SHARES ACQUIRED AT FISCAL YEAR END(2)(3) AT FISCAL YEAR END(5)(6)
ON EXER- VALUE -------------------------- ---------------------------
NAME CISE(1)(2)(3) REALIZED(4) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Orlich................................. 3,000 $ 174,249 90,530 66,251 $ 3,490,956 $ 999,408
Bonny.................................. 0 0 25,827 24,063 1,003,579 336,107
Skalicky............................... 0 0 9,281 15,656 390,707 227,524
Mucci.................................. 11,928 552,324 39,373 22,877 1,442,759 419,120
Vijil.................................. 0 0 15,937 24,063 495,460 336,107
</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(3) AT FISCAL YEAR END(5)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE(1)(3) REALIZED(4) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Orlich................................. 3,000 $ 174,249 87,155 66,251 $ 3,187,318 $ 999,408
Bonny.................................. 0 0 24,562 24,063 881,303 336,107
Skalicky............................... 0 0 5,625 15,375 133,438 209,064
Mucci.................................. 7,500 280,000 39,373 22,877 1,442,759 419,120
Vijil.................................. 0 0 15,937 24,063 495,460 336,107
</TABLE>
9
<PAGE>
AMERICAN INTERNATIONAL GROUP, INC.
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL VALUE OF UNEXERCISED,
NUMBER OF UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
SHARES ACQUIRED AT FISCAL YEAR END(2) AT FISCAL YEAR END(6)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(1)(2) REALIZED(4) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Orlich........................ 0 $ 0 3,375 0 $ 303,638 $ 0
Bonny......................... 0 0 1,265 0 122,276 0
Skalicky...................... 0 0 3,656 281 257,269 18,460
Mucci......................... 4,428 272,324 0 0 0 0
Vijil......................... 0 0 0 0 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) Adjusted for 50 percent AIG Common Stock split in July 1993, July 1995 and
July 1997.
(3) Reflects a stock split effected as a 50 percent stock dividend on the TRH
Common Stock, paid July 18, 1997.
(4) Aggregate market value on date of exercise less aggregate option price.
(5) Total value of vested and unvested options based on a fair market value of
TRH Common Stock of $71.50 per share, as of December 31, 1997.
(6) Total value of vested and unvested options based on a fair market value of
AIG Common Stock of $108.75 per share, as of December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Balog, Greenberg, Mackowski 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 Senior Vice Chairman-General Insurance of AIG. Mr. Greenberg and
Mr. Tizzio are stockholders, directors and/or executive officers of SICO and
Starr. AIG owns 48.92% 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 $181 million (12%) of gross premiums written by TRH in
1997 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 $32 million in such year. TRH retroceded approximately $84.4
million of gross premiums written to the AIG Group in 1997 and received ceding
commissions of approximately $8.4 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 $3.3 million to the AIG Group
for these services in 1997. Pursuant to an investment management contract, AIG
Global Investment Corp., an AIG subsidiary, acts as investment manager for TRH.
In addition, during 1997, AIG Capital Management Corp., an AIG subsidiary,
provided investment advisory and management services for substantially all TRH's
assets held as cash equivalents. TRH paid an aggregate of approximately $6.0
million to AIG Global Investment Corp. and AIG Capital Management Corp. for such
investment management services in 1997. TRH receives services for the
maintenance of certain computer equipment from A.I. Credit Corp., an AIG
subsidiary. TRH paid approximately $4,400 for such services in 1997. SICO and
Starr owned 16.21% and 2.41%, respectively, of AIG Common Stock at January 31,
1998. 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 $1.6 million in 1997. From these payments, which
constituted less than 1.3% of Starr's gross revenues in 1997, 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 1997. The members
of the Stock Option and Purchase Plan Committee are Messrs Balog and Mackowski,
each of whom is 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 3, 1997. The
Committee is composed solely of non-employee directors. 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
10
<PAGE>
Company's performance. The Committee reviews the 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 policies continue to be subjective, and no
specific formulas are applied in making compensation decisions. Before making
any compensation recommendations, the Committee reviewed and compared the
compensation of each of the senior executive officers of the Company to data
from a special cut of the 1997 Sibson Reinsurance Survey ("Sibson"). The Sibson
special cut is comprised of companies in the New York area against which the
Company competes for personnel. The Committee also reviewed the 1996
compensation of the highest paid executive officers of selected competitors from
publicly available information, as well as financial data such as return on
equity, expense ratio, combined ratio, change in reserves, and the value today
of $100 invested in June 1990. The Committee believes that the Company's
continued strong performance in 1997 was largely attributable to the leadership
of senior management. It was agreed that it would be in the best interest of the
Company and its shareholders to compensate these individuals in a manner
commensurate with their contributions to the Company's success. Accordingly,
based solely on a subjective review, Robert F. Orlich, the Company's President
and Chief Executive Officer, was given an increase in base salary to $500,000
from $400,000 in 1997. Mr. Orlich was also given a year-end 1997 bonus.
Management's recommendations with respect to the other executives of the Company
were also reviewed, considered and approved, based upon a subjective review of
their respective responsibilities and contributions 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 1997 exceeded $1 million. No executive officer's
cash compensation which may be deductible by the Company in 1998 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,
THOMAS R. TIZZIO
DECEMBER 3, 1997
REPORT OF THE STOCK OPTION AND PURCHASE PLAN COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Purchase Plan Committee ("Committee") met on December
3, 1997. The Committee is composed solely of non-employee directors. 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 as described above, 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 167,150 stock
options under the TRH 1995 Stock Option Plan at an exercise price of $71.875 per
share, which includes 25,000 options granted to the Company's President and
Chief Executive Officer, Robert F. Orlich; 10,000 options granted to the
Company's Senior Vice President, Paul A. Bonny; 6,000 options granted to the
Company's Senior Vice President, Steven S. Skalicky; 6,000 options granted to
the Company's Senior Vice President, Robert V. Mucci and 10,000 options granted
to the Company's Senior Vice President, Javier E. Vijil. 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 options, Thomas R. Tizzio--5,000 options,
Edward E. Matthews--5,000 options and Howard I. Smith--2,000 options. The option
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
DECEMBER 3, 1997
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, 1992 through December 31, 1997, 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, 1992
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRANSATLANTIC HOLDINGS,
INC. INSURANCE (PPTY-CAS)-500 S&P MIDCAP 400 INDEX
<S> <C> <C> <C>
Dec-92 $100 $100 $100
Dec-93 93.80 98.23 113.95
Dec-94 100.77 103.04 109.87
Dec-95 133.13 139.51 143.86
Dec-96 147.04 169.53 171.49
Dec-97 197.03 246.60 226.80
</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 benefit 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
12
<PAGE>
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 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 (up to 35 years) plus 1.75% times Average Final Compensation times years of
credited service in excess of 35 years but limited to 40 years; 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 (up to 35
years) plus 1.425% times Average Final Compensation times years of credited
service in excess of 35 years but limited to 44 years.
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................................. $ 15,478 $ 23,217 $ 30,956 $ 38,695 $ 46,434 $ 54,173 $ 63,078
150,000................................. 19,040 28,561 38,080 47,602 57,121 66,642 77,328
175,000................................. 22,603 33,905 45,206 56,508 67,809 79,111 91,578
200,000................................. 26,165 39,249 52,331 65,414 78,496 91,579 105,828
225,000................................. 29,728 44,592 59,456 74,320 89,184 104,048 120,078
250,000................................. 33,290 49,936 66,581 83,227 99,871 116,517 134,328
300,000................................. 40,415 60,624 80,831 101,039 121,246 141,454 162,828
375,000................................. 51,103 76,655 102,206 127,758 153,309 178,861 205,578
400,000................................. 54,665 81,999 109,331 136,664 163,996 191,329 219,828
500,000................................. 68,915 103,374 137,831 172,289 206,746 241,204 276,828
</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, 1997 are as follows: Orlich 11.17 years,
Skalicky 11.42 years, Mucci 14.67 years, Vijil 3.92 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 1997 was as follows: Orlich--$403,847;
Skalicky--$251,538; Mucci-- $241,154; Vijil--$241,538.
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,
Skalicky, Mucci and Vijil were participants in the Supplemental Plan at December
31, 1997.
13
<PAGE>
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 2 percent of his pensionable
salary in 1997. Contributions to this plan by TRH vary based on employee age,
pensionable service and the employee's voluntary contributions. During 1997, TRH
contributed approximately 13 percent of Mr. Bonny's pensionable salary of
$267,112 to the plan based on his age, voluntary contribution and his 15.9 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 48.92% 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--Investments and Financial Services; Mr. Smith is a Director, Executive
Vice President, Chief Financial Officer and Comptroller and Mr. Tizzio is a
Director and Senior Vice Chairman--General Insurance.
AIG GROUP REINSURANCE
TRH, through its wholly-owned subsidiaries TRC, Putnam and Trans Re Zurich
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 $181 million (12%), $232 million (18%) and $189 million (17%)
of gross premiums written by TRH in the years 1997, 1996 and 1995, 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 $32
million, $33 million and $40 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 $84.4 million of gross premiums written to the
AIG Group in 1997 and received ceding commissions of approximately $8.4 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 $3.3 million to the AIG Group for
these services in 1997. (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 1997, 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 $6.0 million to AIG Global Investment Corp. and AIG Capital
Management Corp. for such investment management services in 1997.
14
<PAGE>
TRH receives services for the maintenance of certain computer equipment from
A.I. Credit Corp., an AIG subsidiary. TRH paid approximately $4,400 for such
services in 1997.
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,
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 16.21% and 2.41%, respectively of AIG's outstanding
common stock at January 31, 1998. Messrs. Greenberg, Matthews, Orlich, 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 $1.6 million in 1997. From these payments, which
constituted less than 1.3% of Starr's gross revenues in 1997, 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 1997.
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
1998. 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 1999 ANNUAL MEETING
All suggestions from stockholders are given careful attention. Proposals
intended to be presented at the 1999 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, 1998.
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.
15
<PAGE>
PROXY TRANSATLANTIC HOLDINGS, INC. PROXY
Proxy Solicited on behalf of the Board of Directors
Annual Meeting of Stockholders -- May 21, 1998
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 24,
1998 by the undersigned at the Annual Meeting of Stockholders to be held on
May 21, 1998 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 1997.
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 election 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 21, 1998.
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. /X/
The Board of Directors Recommends a Vote FOR Proposal 1 and FOR Proposal 2.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD FOR ALL
ALL ALL (EXCEPT NOMINEE(S) WRITTEN BELOW)
1. Election of Directors --
Nominees: James Balog, Ikuo / / / / / / -----------------------------------------------------------------------
Egashira, John M. Fowler, 2. Proposal to select Coopers & Lybrand L.L.P. For Against Abstain
Maurice R. Greenberg, John as independent accountants: / / / / / /
J. Mackowski, Edward E.
Matthews, Robert F. Orlich, 3. In their discretion with respect to any other matters that may
Howard I. Smith and Thomas properly come before the meeting.
R. Tizzio Dated: 1998
------------------
Signature(s) ---------------------------------------------------------
----------------------------------------------------------------------
Signature of stockholder should correspond exactly with the name
stencilled 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.
</TABLE>
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
