<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _________ to ________
Commission File Number 1-10545
-----------------
TRANSATLANTIC HOLDINGS, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3355897
---------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
80 Pine Street, New York, New York 10005
---------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 770-2000
---------------------------
NONE
--------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------------ ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 2000 34,755,836
----------------
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
<CAPTION>
(Unaudited)
2000 1999
-------------- ---------------
ASSETS (in thousands, except share data)
<S> <C> <C>
Investments and cash:
Fixed maturities:
Bonds held to maturity, at amortized cost (market value:
2000-$1,002,085; 1999-$1,083,740) $ 974,764 $1,062,968
Bonds available for sale, at market value (amortized cost:
2000-$2,519,260; 1999-$2,479,930) 2,468,842 2,399,158
Equities:
Common stocks available for sale, at market value (cost:
2000-$385,488; 1999-$408,465) 493,050 537,149
Nonredeemable preferred stocks available for sale, at market value
(cost: 2000-$27,009; 1999-$52,324) 25,236 51,192
Other invested assets 139,642 173,043
Short-term investments, at cost which approximates market value 3,272 5,935
Cash and cash equivalents 114,103 104,017
-------------- --------------
Total investments and cash 4,218,909 4,333,462
Accrued investment income 67,811 73,578
Premium balances receivable, net 243,317 208,525
Reinsurance recoverable on paid and unpaid losses and loss adjustment expenses:
Affiliates 285,965 294,147
Other 297,196 274,414
Deferred acquisition costs 70,767 71,022
Prepaid reinsurance premiums 38,925 32,188
Deferred income taxes 157,045 153,548
Other assets 32,401 39,314
-------------- --------------
Total assets $ 5,412,336 $5,480,198
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Unpaid losses and loss adjustment expenses $ 3,171,359 $3,304,931
Unearned premiums 402,525 397,783
Reinsurance balances payable 38,439 82,942
Other liabilities 52,527 52,025
-------------- --------------
Total liabilities 3,664,850 3,837,681
-------------- --------------
Commitments and contingent liabilities
Preferred Stock, $1.00 par value; shares authorized: 5,000,000 - -
Common Stock, $1.00 par value; shares authorized: 100,000,000;
shares issued: 2000-35,555,836; 1999-35,527,822 35,556 35,528
Additional paid-in capital 201,783 200,567
Accumulated other comprehensive income 23,630 18,212
Retained earnings 1,496,517 1,398,210
Treasury Stock, at cost; 800,000 shares (10,000) (10,000)
-------------- --------------
Total stockholders' equity 1,747,486 1,642,517
-------------- --------------
Total liabilities and stockholders' equity $ 5,412,336 $5,480,198
============== ==============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 1 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------- ------------ -------------- --------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Income:
Net premiums written $402,770 $360,043 $795,283 $717,261
Decrease (increase) in net unearned premiums 980 2,273 (1,351) (22,904)
------------- ------------ -------------- --------------
Net premiums earned 403,750 362,316 793,932 694,357
Net investment income 57,820 58,495 116,457 113,808
------------- ------------ -------------- --------------
461,570 420,811 910,389 808,165
------------- ------------ -------------- --------------
Expenses:
Net losses and loss adjustment expenses 294,897 257,470 583,786 501,889
Net commissions 94,504 91,408 183,310 170,086
Other operating expenses 12,872 12,355 26,077 25,742
Decrease (increase) in deferred acquisition costs 617 722 255 (3,365)
------------- ------------ -------------- --------------
402,890 361,955 793,428 694,352
------------- ------------ -------------- --------------
58,680 58,856 116,961 113,813
Realized net capital gains 5,928 18,015 19,805 59,743
------------- ------------ -------------- --------------
Operating income 64,608 76,871 136,766 173,556
Other (deductions) income (188) 20 (737) (7)
------------- ------------ -------------- --------------
Income before income taxes 64,420 76,891 136,029 173,549
Income taxes 13,435 17,612 28,686 40,042
------------- ------------ -------------- --------------
Net income $50,985 $59,279 $107,343 $133,507
============= ============ ============== ==============
Net income per common share:
Basic $1.47 $1.71 $3.09 $3.85
Diluted 1.46 1.70 3.07 3.83
Dividends per common share 0.135 0.125 0.260 0.235
Weighted average common shares outstanding:
Basic 34,747 34,702 34,740 34,692
Diluted 34,975 34,885 34,945 34,878
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 2 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------- -------------
(in thousands)
<S> <C> <C>
Net cash (used in) provided by operating activities ($104,136) $92,892
------------- -------------
Cash flows from investing activities:
Proceeds of bonds available for sale sold 194,369 308,004
Proceeds of bonds held to maturity redeemed 95,155 37,804
Proceeds of bonds available for sale redeemed or matured 219,505 115,114
Proceeds of equities sold 425,711 251,885
Purchase of bonds held to maturity (5,989) -
Purchase of bonds available for sale (494,846) (572,767)
Purchase of equities (344,504) (163,026)
Net proceeds (purchase) of other invested assets 30,494 (30,080)
Net proceeds (purchase) of short-term investments 1,082 (8,017)
Change in other liabilities for securities in course of settlement 9,991 7,357
Other, net (114) 9,597
------------- -------------
Net cash provided by (used in) investing activities 130,854 (44,129)
------------- -------------
Cash flows from financing activities:
Dividends to stockholders (8,686) (7,633)
Proceeds from common stock issued 1,244 1,869
Net disbursements from reinsurance deposits (4,489) (10,715)
------------- -------------
Net cash used in financing activities (11,931) (16,479)
------------- -------------
Effect of exchange rate changes on cash and cash equivalents (4,701) (2,302)
------------- -------------
Change in cash and cash equivalents 10,086 29,982
Cash and cash equivalents, beginning of period 104,017 70,589
------------- -------------
Cash and cash equivalents, end of period $114,103 $100,571
============= =============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 3 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------- ----------- ----------- ------------
(in thousands)
<S> <C> <C> <C> <C>
Net income $50,985 $59,279 $107,343 $133,507
----------- ----------- ------------ ------------
Other comprehensive (loss) income:
Net unrealized (depreciation) appreciation of investments:
Net unrealized holding (losses) gains arising during period (13,761) (27,857) 25,099 (44,440)
Related income tax effect 4,816 9,750 (8,785) 15,554
Reclassification adjustment for gains included in net income (5,928) (18,015) (19,805) (59,743)
Related income tax effect 2,075 6,305 6,932 20,910
----------- ----------- ------------ ------------
(12,798) (29,817) 3,441 (67,719)
----------- ----------- ------------ ------------
Net unrealized currency translation gain (loss) 19,603 (7,348) 3,042 (28,035)
Related income tax effect (6,862) 2,572 (1,065) 9,813
----------- ----------- ------------ ------------
12,741 (4,776) 1,977 (18,222)
----------- ----------- ------------ ------------
Other comprehensive (loss) income (57) (34,593) 5,418 (85,941)
----------- ----------- ------------ ------------
Comprehensive income $50,928 $24,686 $112,761 $47,566
=========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
- 4 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
1. General
The condensed consolidated financial statements are unaudited, but have
been prepared on the basis of accounting principles generally accepted in the
United States and, in the opinion of management, reflect all adjustments
(consisting of normal accruals) necessary for a fair presentation of results for
such periods. The results of operations and cash flows for any interim period
are not necessarily indicative of results for the full year.
2. Per Common Share Information
Net income per common share for the periods presented has been computed
below in accordance with Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings Per Share," and is based on the weighted average number of common
shares outstanding.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------- ----------- ------------ -------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net income (numerator) $50,985 $59,279 $107,343 $133,507
=========== =========== ============ =============
Weighted average common shares outstanding
used in the computation of net income per share:
Average shares issued 35,547 35,502 35,540 35,492
Less: Average shares in treasury 800 800 800 800
----------- ----------- ------------ -------------
Average outstanding shares - basic (denominator) 34,747 34,702 34,740 34,692
Average potential shares, principally stock options 228 183 205 186
----------- ----------- ------------ -------------
Average outstanding shares - diluted (denominator) 34,975 34,885 34,945 34,878
=========== =========== ============ =============
Net income per common share:
Basic $ 1.47 $ 1.71 $ 3.09 $ 3.85
Diluted 1.46 1.70 3.07 3.83
</TABLE>
- 5 -
<PAGE>
3. Reinsurance
Premiums written and earned and losses and loss adjustment expenses
incurred were comprised of the following:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands)
<S> <C> <C> <C> <C>
Gross premiums written $440,929 $400,565 $893,468 $806,668
Reinsurance ceded (38,159) (40,522) (98,185) (89,407)
------------- ------------- ------------- -------------
Net premiums written $402,770 $360,043 $795,283 $717,261
============= ============= ============= =============
Gross premiums earned $444,653 $412,100 $885,380 $781,820
Reinsurance ceded (40,903) (49,784) (91,448) (87,463)
------------- ------------- ------------- -------------
Net premiums earned $403,750 $362,316 $793,932 $694,357
============= ============= ============= =============
Gross incurred losses and
loss adjustment expenses $336,716 $289,383 $689,576 $569,561
Reinsurance ceded (41,819) (31,913) (105,790) (67,672)
------------- ------------- ------------- -------------
Net losses and loss
adjustment expenses $294,897 $257,470 $583,786 $501,889
============= ============= ============= =============
</TABLE>
4. Dividends
During the second quarter of 2000, the Board of Directors of Transatlantic
Holdings, Inc. declared a dividend of $4,700,000 or $0.135 per common share.
5. Income Taxes
Income taxes paid, net, in the second quarter totaled $22,105,000 and
$39,036,000 in 2000 and 1999, respectively. For the 2000 and 1999 six month
periods, income taxes paid, net, totaled $26,053,000 and $42,947,000,
respectively.
- 6 -
<PAGE>
6. Segment Information
The following table presents a summary of comparative financial data by
segment:
<TABLE>
<CAPTION>
International
---------------------------
Domestic Europe(3) Other Consolidated
------------ ----------- ------------- --------------
(in thousands)
<S> <C> <C> <C> <C>
Three Months Ended June 30, 2000:
Revenues(1)(2) $249,049 $174,147 $44,302 $ 467,498
Income before income taxes(2) 59,616 1,879 2,925 64,420
Three Months Ended June 30, 1999:
Revenues(1)(2) $240,464 $155,209 $43,153 $ 438,826
Income before income taxes(2) 72,487 2,924 1,480 76,891
</TABLE>
<TABLE>
<CAPTION>
International
---------------------------
Domestic Europe(3) Other Consolidated
------------ ------------ ------------ --------------
(in thousands)
<S> <C> <C> <C> <C>
Six Months Ended June 30, 2000:
Revenues(1)(2) $500,416 $323,801 $105,977 $ 930,194
Income before income taxes(2) 126,124 4,581 5,324 136,029
Six Months Ended June 30, 1999:
Revenues(1)(2) $491,517 $290,509 $85,882 $ 867,908
Income before income taxes(2) 152,927 16,167 4,455 173,549
</TABLE>
-----------------------------------------
(1) Revenues represent the sum of net premiums earned, net investment income
and realized net capital gains.
(2) Domestic revenues and income before income taxes include realized net
capital gains of $6,165 and $17,530 for the three months ended June 30,
2000 and 1999, respectively, and $18,417 and $59,024 for the six months
ended June 30, 2000 and 1999, respectively. Realized net capital gains
(losses) for other segments in each of the periods presented is not
material.
(3) Includes revenues from the London, England office of $98,896 and $90,438
for the three months ended June 30, 2000 and 1999, respectively, and
$188,884 and $175,992 for the six months ended June 30, 2000 and 1999,
respectively.
7. Additional Information
For further information, refer to the Transatlantic Holdings, Inc. Form
10-K filing for the year ended December 31, 1999 and Form 10-Q filing for the
quarter ended March 31, 2000.
- 7 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
JUNE 30, 2000
OPERATIONAL REVIEW. The following table presents net premiums written, net
premiums earned and net investment income for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
2000 1999 Change 2000 1999 Change
--------------------------------- ---------------------------------
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Net premiums written $ 402.8 $ 360.0 11.9 % $ 795.3 $ 717.3 10.9 %
Net premiums earned 403.8 362.3 11.4 793.9 694.4 14.3
Net investment income 57.8 58.5 (1.2) 116.5 113.8 2.3
</TABLE>
Net premiums written for the second quarter and first six months of
2000 exceeded the comparable 1999 periods as a result of increases in domestic
and, to a lesser extent, international treaty business. With respect to
comparative second quarter information, significant increases in domestic
business occurred in certain specialty casualty (principally accident and health
and other professional liability) and general casualty classes. In international
business, property lines rose significantly. With respect to comparative six
month data, significant increases in domestic business occurred in certain
specialty casualty classes and in the aviation line (principally from experience
rated treaties), while significant increases in international business occurred
in certain property lines (including the automobile physical damage line).
International business represented 49 percent of worldwide net premiums written
for the first six months of 2000 compared to 51 percent for the same 1999
period. While rate firming continues to be evident in certain classes of
business, the reinsurance marketplace worldwide remained competitive.
The decrease in investment income in the current quarter compared to
the same 1999 quarter was due to the reduction in investments and cash caused by
negative operating cash flow resulting from significant increases in paid losses
in the first two quarters of 2000 and the negative impact of foreign exchange on
investment income earned by certain of our international locations in the
current period. The increase in net investment income for the first six months
of 2000 versus the comparable 1999 period resulted from the increase in first
quarter investment income versus the 1999 first quarter (caused by the continued
investment of positive operating cash flow generated throughout 1999), partially
offset by the decrease in investment income experienced in the second quarter.
The following table presents loss and loss adjustment expense ratios,
underwriting expense ratios and combined ratios for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
2000 1999 2000 1999
------------------------- -------------------------
<S> <C> <C> <C> <C>
Loss and loss adjustment
expense ratio 73.0 71.1 73.6 72.3
Underwriting expense ratio 26.7 28.8 26.3 27.3
Combined ratio 99.7 99.9 99.9 99.6
</TABLE>
- 8 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONT'D
JUNE 30, 2000
For the second quarter and first six month periods, the loss and loss
adjustment expense ratio rose as a result of increased loss activity from
international operations (particularly Europe), offset in part by reduced losses
incurred domestically. The decrease in the underwriting expense ratio in the
second quarter of 2000 compared to the same prior year period, reflects a
decrease of 1.9 in the ratio of net commissions to net premiums written and a
reduction of 0.2 in the ratio of other operating expenses to net premiums
written. The decrease in the underwriting expense ratio for the first six months
of 2000 reflects a decrease of 0.7 in the commission ratio and a decrease of 0.3
in the other operating expense ratio. The reduced commission ratios in 2000
versus the comparable 1999 periods were caused, in part, by a reduction in
contingent commissions internationally and a change in the mix of business in
the 2000 periods.
Realized net capital gains on the disposition of investments totaled
$5.9 million in the second quarter of 2000 compared with $18.0 million for the
same period of 1999. For the first six months of 2000 and 1999, realized net
capital gains totaled $19.8 million and $59.7 million, respectively. The
redeployment of a portion of the equity portfolio generally into fixed income
investments in the 1999 first quarter accounted for the high level of realized
net capital gains in the first six months of 1999.
Income before income taxes in the second quarter of 2000 decreased 16.2
percent to $64.4 million from $76.9 million recorded in the same 1999 period.
For the first six months of 2000, income before income taxes totaled $136.0
million versus $173.5 million in the comparable prior year period, a decrease of
21.6 percent. These decreases were principally due to a reduction in realized
net capital gains in 2000 versus the comparable 1999 periods.
The effective tax rates for the second quarter and first six months
of 2000 were 20.9 percent and 21.1 percent, respectively, versus 22.9 percent
and 23.1 percent for the comparable 1999 periods. The lower effective tax rates
in the second quarter and first six months of 2000 resulted, in large part, from
the fact that tax-exempt interest income represented a higher percentage of
income before income taxes in the 2000 periods than in comparable 1999 periods.
Income excluding after-tax realized capital gains decreased 0.9 percent
to $47.1 million, or $1.35 per common share (diluted), compared to $47.6
million, or $1.36 per common share (diluted), in the same prior year quarter.
For the first six months of 2000, income excluding after-tax realized capital
gains totaled $94.5 million, or $2.70 per common share (diluted), a 0.2 percent
decrease compared to the six month 1999 amount of $94.7 million, or $2.71 per
common share (diluted).
Net income for the second quarter of 2000 totaled $51.0 million
compared to $59.3 million for the comparable prior year period. On a diluted per
common share basis, net income for the second quarters of 2000 and 1999 was
$1.46 and $1.70, respectively. For the first six months of 2000, net income was
$107.3 million versus $133.5 million in the same 1999 period. On a diluted per
common share basis, net income was $3.07 and $3.83 for the first six months of
2000 and 1999, respectively. Reasons for these fluctuations are as discussed
above.
In the second quarter of 2000, the Board of Directors declared a
quarterly dividend of $0.135 per common share to stockholders of record as of
September 8, 2000, payable on September 15, 2000. This represents an 8 percent
increase over the prior quarterly dividend.
FINANCIAL CONDITION AND LIQUIDITY. Stockholders' equity totaled
$1,747.5 million at June 30, 2000, an increase of $105.0 million from year-end
1999. The increase in stockholders' equity is primarily composed of net income
of $107.3 million and an increase in accumulated other comprehensive income of
$5.4 million (consisting of an increase in net unrealized appreciation of
investments, net of taxes, of $3.4 million and a net unrealized currency
translation gain, net of taxes, of $2.0 million) less dividends of $9.1 million.
- 9 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONT'D
JUNE 30, 2000
Unrealized appreciation (depreciation) of investments, net of taxes, a
component of accumulated other comprehensive income, is subject to significant
volatility resulting from changes in the market value of bonds and equities
available for sale and certain other invested assets. Market values may
fluctuate due to changes in general economic conditions, market interest rates
and other factors.
Operating cash flow in the second quarter and first six months of 2000
was negative, a substantial reduction from the positive amounts reported in the
comparable 1999 periods. The reduction in cash flow in the 2000 periods was
caused largely by significant increases in paid losses. Paid loss levels in 2000
were significantly elevated due to payments related to 1999 catastrophe losses.
Such payments also contributed to the reduction in unpaid losses and loss
adjustment expenses since December 31, 1999. Management believes that the
liquidity of Transatlantic Holdings, Inc. and subsidiaries (TRH) has not
materially changed since the end of 1999.
TRH's operations are exposed to market risk. Market risk is the risk of
loss of fair market value resulting from adverse fluctuations in interest rates,
equity prices and foreign currency exchange rates.
Measuring potential losses in fair values is the focus of risk
management efforts by many companies. Such measurements are performed through
the application of various statistical techniques. One such technique is Value
at Risk (VaR). VaR is a summary statistical measure that uses historical
interest and foreign currency exchange rates and equity prices and estimates the
volatility and correlation of each of these rates and prices to calculate the
maximum loss that could occur over a defined period of time given a certain
probability.
TRH believes that statistical models alone do not provide a reliable
method of monitoring and controlling market risk. While VaR models are
relatively sophisticated, the quantitative market risk information generated is
limited by the assumptions and parameters established in creating the related
models. Therefore, such models are tools and do not substitute for the
experience or judgment of senior management.
TRH has performed VaR analyses to estimate the maximum potential loss
of fair value for financial instruments for each type of market risk. In these
analyses, financial instrument assets include all investments and cash and
accrued investment income. Financial instrument liabilities include unpaid
losses and loss adjustment expenses, net of reinsurance, and unearned premiums.
TRH calculated the VaR as of December 31, 1999 and 1998. Through June
30, 2000 and 1999, the economic facts and circumstances had not significantly
changed from the respective prior year ends. Therefore, the VaR amounts at
December 31, 1999 and 1998 are representative of the VaRs which could be
calculated at June 30, 2000 and 1999, respectively. The VaR calculations as of
December 31, 1999 and 1998 used the variance-covariance (delta-normal)
methodology. The calculation also used daily historical interest and foreign
currency exchange rates and equity prices in the two years ended December 31,
1999 and 1998, as applicable. The VaR model estimated the volatility of each of
these rates and equity prices and the correlation among them. For interest
rates, each country's yield curve was constructed using eleven separate points
on this curve to model possible curve movements. Inter-country correlations were
also used. The redemption experience of municipal and corporate fixed maturities
as well as the use of financial modeling were employed in the analysis process.
Thus, the VaR measured the sensitivity of the asset and the liability portfolios
to each of the aforementioned market risk exposures. Each sensitivity was
estimated separately to capture the market risk. The following table presents
the VaR of each component of market risk as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
MARKET RISK 1999 1998
----------- ---- ----
(in millions)
<S> <C> <C>
Interest rate $38 $24
Equity 65 62
Currency 8 8
</TABLE>
- 10 -
<PAGE>
TRANSATLANTIC HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONT'D
JUNE 30, 2000
Each sensitivity was then applied to a database which contained both
historical ranges of movements in all market factors and the correlations among
them. The results were aggregated to provide a single amount that depicts the
maximum potential loss in fair value at a confidence level of 95% for a time
period of one month. VaR with respect to the aggregate of the three components
of market risk cannot be derived by summing the individual risk amounts in the
table above. At December 31, 1999 and 1998, the VaRs for TRH's financial
instruments were approximately $76 million and $69 million, respectively.
Any statements contained in this discussion that are not historical
facts, or that might be considered an opinion or projection, whether expressed
or implied, are meant as, and should be considered, forward-looking statements
as that term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on assumptions and opinions concerning a
variety of known and unknown risks. If any assumptions or opinions prove
incorrect, any forward-looking statements made on that basis may also prove
materially incorrect.
- 11 -
<PAGE>
PART II - OTHER INFORMATION
ITEM #4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders held on May 18, 2000, the
stockholders:
(a) elected nine directors as follows:
<TABLE>
<CAPTION>
SHARES SHARES NOT
NOMINEE SHARES FOR WITHHELD VOTING
------- ---------- -------- ------
<S> <C> <C> <C>
James Balog 32,049,135 137,023 2,547,263
C. Fred Bergsten 32,005,288 180,870 2,547,263
Ikuo Egashira 30,815,978 1,370,180 2,547,263
Maurice R. Greenberg 31,508,166 677,992 2,547,263
John J. Mackowski 32,049,135 137,023 2,547,263
Edward E. Matthews 31,507,660 678,498 2,547,263
Robert F. Orlich 31,508,436 677,722 2,547,263
Howard I. Smith 31,508,436 677,722 2,547,263
Thomas R. Tizzio 31,533,736 652,422 2,547,263
</TABLE>
(b) approved, by a vote of 31,240,483 shares to 929,887 shares, with 15,788
abstentions and 2,547,263 shares not voting, a proposal to adopt the 2000 Stock
Option Plan.
(c) approved, by a vote of 32,165,592 shares to 19,127 shares, with 1,439
abstentions and 2,547,263 shares not voting, a proposal to select
PricewaterhouseCoopers LLP as independent accountants of Transatlantic Holdings,
Inc. for 2000.
- 12 -
<PAGE>
PART II - OTHER INFORMATION
ITEM #6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See accompanying Exhibit index.
(b) There were no reports on Form 8-K for the three months ended
June 30, 2000.
Omitted from this Part II are items which are inapplicable or to
which the answer is negative for the period covered.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSATLANTIC HOLDINGS, INC.
----------------------------
(Registrant)
/s/ STEVEN S. SKALICKY
----------------------------
Steven S. Skalicky
On behalf of the registrant and in his capacity as
Executive Vice President - Chief Financial Officer
(Principal Financial and Accounting Officer)
Dated August 10, 2000
- 13 -
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Location
------- ----------- ---------
<S> <C> <C>
27.0 Financial data schedule Provided herewith.
</TABLE>
- 14 -
