<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities and Exchange Act of 1934
Date of Report: February 19, 1997
ACORDIA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11446
(Commission File Number)
31-127880
(IRS Employer Identification Number)
120 Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices and zip code)
(317) 488-6666
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On February 6, 1997, the registrant issued a News Release in which the
Board of Directors of the registrant announced that its review of the 1997
business plan has led to a decision to undertake a strategic review to access
the changes occurring in the health care industry and the potential implications
of those changes on the registrant's relationship with its majority stockholder,
Anthem Insurance Companies, Inc. ("Anthem"). The registrant's Board has been
informed by Anthem that Anthem is similarly undertaking its own strategic
review, which includes an analysis of its business relationship with and
investment in the registrant. Anthem further informed the registrant that
Anthem has retained Credit Suisse First Boston to assist Anthem in this
analysis.
The registrant's Board has created a special committee made up of all of
the independent members of the Board who are unaffiliated with Anthem or
registrant's management to evaluate any proposals made by or involving Anthem.
The special committee has been empowered to retain such financial or other
advisors as are necessary to assist it in that responsiblity. John C. Crane,
Chairman of the registrant's Audit and Finance Committee, will chair the special
committee. The registrant, through the special committee and management, has
agreed to cooperate with Anthem and its advisors.
Anthem has informed the registrant that no decision has as yet been made
by Anthem as to which, if any, changes it believes should be made with respect
to its business relationship with and investment in the registrant. As part of
the reevaluation process, Credit Suisse First Boston has been asked to explore
the possible sale of the registrant's property and casualty brokerage business
and the possible reorganization of the registrant's health business.
A copy of that News Release is filed herewith as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
--------
Exhibit No. Description
- ----------- -----------
99.1 News Release of the registrant dated February 6, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACORDIA, INC.
/S/ Keith A. Maib
-----------------
Keith A. Maib
Executive Vice President and
Chief Financial Officer
Date: February 19, 1997
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
99.1 News Release of the 5
registrant dated
February 6, 1997
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Exhibit 99.1
[LETTERHEAD OF ACCORDIA]
ACORDIA ANNOUNCES FOURTH QUARTER EARNINGS AND
INITIATES STRATEGIC REVIEW
FOR IMMEDIATE RELEASE--February 6, 1997
INDIANAPOLIS--Today Acordia, Inc. (NYSE: ACO) reported financial results
for the fourth quarter and year ended December 31, 1996.
In the fourth quarter of 1996, revenues increased 13 percent to $170,951,000
compared to $151,934,000 for the fourth quarter in 1995. Operating income
increased 8 percent to $23,901,000 compared to $22,157,000 in the fourth
quarter of 1995. Net income increased 19 percent to $8,870,000 ($0.64 per
share) from $7,443,000 ($0.52 per share) in the same period in 1995. Results
for the fourth quarter of 1996 include a gain, net of taxes, of $799,000 ($0.06
per share) related to the sale of assets.
For the year ended December 31, 1996, revenues increased 19 percent to
$660,950,000 compared to $555,064,000 in 1995. Operating income increased 17
percent to $87,928,000 compared to $75,400,000 for the same period last year.
Net income increased 27 percent to $29,888,000 ($2.09 per share) from
$23,582,000 ($1.64 per share) in 1995. Results for the year include gains, net
of taxes, of $1,527,000 ($0.11 per share) related to the sale of assets.
Acordia reported that its health-related operations, which primarily result
from its strategic relationship with Anthem Insurance Companies, Inc., its
majority stockholder, contributed revenues of $326,000,000 for the year ended
December 31, 1996. When compared to 1995, the health-related operations
revenues increased 20 percent, primarily due to Anthem's merger with Community
Mutual and the assumption of the administration operation for Anthem's Indiana
HMO.
The brokerage operations total revenues for the year ended December 31, 1996
were $335,000,000, an 18 percent increase over 1995.
Frank C. Witthun, President and Chief Executive Officer of Acordia stated,
"The driver for growth in our health-related operations has been our work for
Anthem. We are currently projecting that revenues from Acordia's
health-related operations will be flat to slightly down when compared to 1996.
However, we do not anticipate a material effect on Acordia's operating profit
derived from those operations." With regards to the brokerage operations,
Witthun stated, "We are very pleased with our results from the brokerage
operations. While the overall market continues to be intensely competitive,
our focus on the middle market is proving to be successful."
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The Board of Directors of Acordia also announced that its review of the 1997
business plan has led to a decision to undertake a strategic review to assess
the changes occurring in the health care industry and the potential implication
of those changes on Acordia's relationship with Anthem. Acordia's Board has
been informed by Anthem that Anthem is similarly undertaking its own strategic
review, which includes an analysis of its business relationship with and
investment in Acordia. Anthem further informed Acordia that Anthem has
retained Credit Suisse First Boston to assist Anthem in this analysis.
The Acordia Board has created a special committee made up of all of the
independent members of the Board who are unaffiliated with Anthem or Acordia
management to evaluate any proposals made by or involving Anthem. The special
committee has been empowered to retain such financial or other advisors as are
necessary to assist it in that responsibility. John C. Crane, Chairman of
Acordia's Audit and Finance Committee, will chair the special committee.
Acordia, through the special committee and management, has agreed to cooperate
with Anthem and its advisors.
Anthem has informed Acordia that no decision has as yet been made by Anthem
as to what, if any, changes it believes should be made with respect to its
business relationship with and investment in Acordia. As part of the
reevaluation process, Credit Suisse First Boston has been asked to explore the
possible sale of Acordia's property and casualty brokerage business and the
possible reorganization of Acordia's health business.
In commenting upon Anthem's strategic evaluation, L. Ben Lytle, President
and Chief Executive Officer of Anthem, stated, "Acordia and Anthem have been
looking at ways to reduce the administrative and marketing expense portion of
the total health care premium dollar in light of the intense competition and
changes occurring in the health care industry. Anthem has also been redefining
its strategic direction to focus on its health care mission, in line with its
assessment of the opportunities presented by the changing dynamics of the
industry, and has been divesting its interests in other lines of business. In
this context, Anthem has undertaken a strategic review, which includes an
analysis of its relationship with Acordia. We are extremely proud of the
brokerage business which Acordia has built. Historically, it has financially
outperformed its competitors. However, we have determined, preliminarily, that
the property and casualty brokerage business and the structure of the current
business relationship between Anthem and Acordia may no longer be consistent
with Anthem's mission. Therefore, we believe that in light of the brokerage
industry consolidation that now may be an opportune time to capitalize on the
value of Acordia's brokerage business."
Frank C. Witthun also stated, "Acordia is well aware of intensifying
competitive pressures in the health care industry and of Anthem's need to
reduce the administrative and marketing cost associated with its health care
business. Because approximately 44 percent of Acordia's 1996 revenues were
derived from the sale and servicing of Anthem life and health insurance
products, it is inevitable that industry forces affecting Anthem will also
impact Acordia. We are working closely with Anthem so that each company may
develop a plan which accomplishes each of our strategic objectives and delivers
shareholder value."
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Acordia, the seventh largest insurance brokerage firm in the United States
and the world, is a nationwide network of companies that provide insurance
broking, managed health care and consulting services. Anthem is an
Indianapolis-based mutual insurance company and leading provider of health
insurance and managed health care services in Indiana, Kentucky and Ohio, and
has pending merger agreements covering the Blue Cross and Blue Shield Plans in
New Jersey, Delaware and Connecticut.
Certain statements herein are not historical facts and are forward looking.
Such statements involve a number of risks and uncertainties. While the
statements represent Acordia's current judgment as to the near term future of
its business, such risks and uncertainties could cause actual results to differ
materially from the above statements. Factors which could cause actual results
to differ are set forth in Acordia's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996.
###
MEDIA Inquiries: INVESTOR RELATIONS Inquiries:
Don Stengele Keith A. Maib
317-488-6255 Executive Vice President
Chief Financial Officer
317-488-6561
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ACORDIA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended December 31
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Commissions and fees $650,794 $545,626 $404,737
Investment income 6,636 6,346 4,669
Net realized investment gains 267 966 990
Other 3,253 2,126 1,807
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Total revenues 660,950 555,064 412,203
Operating Expenses:
Employee compensation and benefits 361,514 296,046 215,286
Other 211,508 183,618 124,656
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573,022 479,664 339,942
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Operating income 87,928 75,400 72,261
Other Income (Expense):
Interest expense (10,399) (8,517) (3,328)
Amortization of goodwill and other intangibles (25,711) (23,216) (17,758)
Gain on sale of assets 2,789 -- --
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Income before income taxes 54,607 43,667 51,175
Income taxes 24,719 20,085 22,389
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Net income $ 29,888 $ 23,582 $ 28,786
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Earnings per share $2.09 $1.64 $2.04
======== ======== ========
Weighted average shares outstanding 14,323,555 14,378,596 14,140,011
</TABLE>
