SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 3, 1997
HOME HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19347 13-3584978
(State of Incorporation) (Commission file number) (I.R.S. Employer
Identification No.)
59 Maiden Lane, New York, New York 10038-4548
(Address or principal executive office) (Zip Code)
Registrant's telephone number including area code (212) 530-6600
Item 5. Other Events.
On March 3, 1997, The Home Insurance Company ("Home
Insurance"), a New Hampshire-domiciled property and casualty insurer and
the principal subsidiary of the Registrant, was placed under formal
supervision by the New Hampshire Insurance Department (the "Department").
The Department's Order of Supervision (the "Order")
establishes that the Department will oversee and supervise Home Insurance
for the purpose of continuing and intensifying an economic, actuarial and
accounting review of the books, records and business affairs of Home
Insurance so as to determine what future actions may be appropriate. The
Order also provides that Home Insurance may not take certain actions
without the prior approval of the Department.
In connection with the Order, the Services Agreement,
dated June 12, 1995, between Risk Enterprise Management Limited ("REM"),
a Delaware corporation, and Home Insurance (the "Services Agreement"),
under which REM provides claims and administrative personnel to Home
Insurance, will be amended to accommodate the terms of the Order.
On March 3, 1997, the Department also granted permission
for Home Insurance to discount all loss reserves and allocated and
unallocated loss adjustment expense reserves at 7.0%. Home Insurance has
sufficient assets that will earn 7.0% to meet the expected stream of loss
and loss adjustment expense payments. Home Insurance calculated that the
non-tabular discount is $469 million. Home Insurance's statutory surplus
at December 31, 1996, after reflecting the non-tabular discount, was $55
million. The non-tabular discount will not be included in the
Registrant's financial statements prepared under generally accepted
accounting principles.
Item 7(c). Exhibits.
(2.1) Order of Supervision, dated March 3,
1997, issued by the New Hampshire
Insurance Department; and
(99.1) Press release issued on March 4, 1997.
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HOME HOLDINGS INC.
Dated: March 4, 1997 By: /s/ Richard H. Hershman
-----------------------
Richard H. Hershman
Treasurer
(Principal Financial and
Accounting Officer through
the Services Agreement)
THE STATE OF NEW HAMPSHIRE
INSURANCE DEPARTMENT
169 Manchester Street
Concord, New Hampshire 03301-5151
ORDER OF SUPERVISION
WHEREAS, The Home Insurance Company ("The Home") has submitted a
risk based capital report dated February 28, 1997 (the "RBC Report"),
pursuant to RSA 404-F:2; and
WHEREAS, upon examination by the Department, the RBC Report
indicates that a mandatory control level event has occurred within the
meaning of RSA 404-F:6 I(a); and
WHEREAS, the Commissioner has determined that, pursuant to the
specific authority granted to him under RSA 404-F:6 II (b) and the
general authority granted to him under RSA 400-A:14, this Order of
Supervision ("Order") should be issued for the protection of
policyholders, claimants and creditors of The Home, and that such Order
would be in the public interest; and
WHEREAS, The Home has notified the Commissioner of its waiver of
its right to a hearing pursuant to RSA 400-A:14 I.
NOW, THEREFORE, The Home is hereby ordered to be placed under the
supervision of the Department and the Commissioner upon the following
terms and conditions:
1. For purposes of this Order, the term "The Home" shall be
deemed to include The Home and each of its insurance subsidiaries, and
any and all directors and officers of The Home and such subsidiaries. To
the extent necessary to ensure compliance by The Home Insurance Company
with the terms and conditions of this Order, the term "The Home" shall
also be deemed to include, (a) any and all controlling persons of The
Home, including but not limited to Zurich Home Investments Limited
("ZHIL"). Zurich Insurance Company ("Zurich") and Trygg Hansa AB
("Trygg") and (b) any and all directors and officers of such controlling
persons.
2. The Commissioner shall oversee and supervise The Home for the
purpose of continuing and intensifying an economic, actuarial and
accounting review of the books, records and affairs fo the Company so as
to determine what future actions would be appropriate.
3. The provisions of the (i) Services Agreement dated as of June
12, 1995, as amended by and among The Home, Risk Enterprise Management
Limited ("REM") and the other parties specified therein and (ii) the
Consent Order dated June 9, 1995, as amended, by and among The Home,
REM, Zurich and ZCI Investments Limited remain in full force and effect
except to the extent any such provisions directly conflict with the
provisions of this Order in which event the provisions of this Order
shall supersede and control.
4. Consistent with general authority of the Commissioner pursuant
to Paragraph 2 hereof, without the prior approval of the Commissioner (as
such term is defined in the Consent Order), The Home shall not perform,
or permit to be performed, any of the following actions:
(a) make any single payment to a claimant in excess of
$1,000,000, provided that The Home shall not be in
violation of this Order if it is unable, in its good faith
determination, to obtain such approval prior to making
such payment necessitated by a genuine emergency and
without materially and adversely affecting The Home;
(b) other than as set forth in subparagraph (a) make any
payment to creditors or any other persons in excess of
$500,000;
(c) make any single payment to cedents or reinsurers in excess
of $250,000 or out of the ordinary course of business, or
any commutation of any amount with any cedents or
reinsurers;
(d) release any obligation or collateral in excess of
$500,000;
(e) materially change the terms of any contracts, including
but not limited to contracts of insurance and reinsur-
ance, and leases with a consideration in excess of
$500,000 (collectively, "Contracts");
(f) enter into any new Contracts;
(g) engage in any transaction with Home Holdings Inc. REM,
ZHIL, Zurich, or Trygg or any subsidiaries, other
affiliates or agents or such entities.
The Home shall make a recommendation with the reasons therefor in
writing to obtain the prior approval of the Commissioner as to any of
the foregoing actions specified in this Paragraph 4.
5. Without limiting the general authority of the Commissioner
pursuant to Paragraph 2 hereof, the Commissioner shall have the final
authority to approve, disapprove or otherwise control (including the
power to direct) any and all of the following:
(a) the initiation, settlement or withdrawal of any action,
dispute, arbitration, litigation, or proceeding of any
kind involving The Home other than in the ordinary course
of business; and
(b) the location and material terms of all banking, invest-
ment, trust, deposit and custodial accounts for assets of
The Home, including but not limited to reserves.
As to each of the foregoing subparagraphs in this Paragraph 5,
The Home shall prepare a written report to the Commissioner with a
recommendation for approval or disapproval with the reasons therefor.
6. The budget of The Home shall be subject to review by the
Commissioner. The Commissioner shall have the power to direct The Home to
institute and maintain such procedures as he deems appropriate in order
to assess the reasonableness of any cost allocation or cost sharing
arrangement between The Home and any other person, including but not
limited to, REM. The budget shall be subject to such modifications as the
Commissioner shall direct in writing.
7. The Commissioner shall have the power to direct, in such
manner as he sees fit, The Home to invoke any and all of its rights under
amendment number one to the Services Agreement.
8. The Commissioner shall be provided with (i) the final version
and (ii) such draft versions as he shall direct, of any financial,
actuarial, litigation, management or economic statement, model, report,
or audit prepared by or for The Home. In addition, the Commissioner shall
have the power to direct that The Home prepare or cause to be prepared
for his review any financial, actuarial, litigation, management or
economic statement, analysis, model, report, projection or calculation,
or audit that he deems appropriate.
9. Any and all statements, analyses, models, projections, reports
and calculations obtained pursuant to this Order and the Consent Order
and all other materials obtained in connection therewith (collectively,
"the Information"), are subject to the confidentiality provisions of RSA
400-A:37 VI and 401:B:7 and 404-F:8 I (except for annual and quarterly
statements required under RSA 400-A:36), but the Commissioner may, in his
sole discretion, share the Information on a confidential basis with such
of his employees, consultants and advisors and such other insurance
regulatory authorities to the extent he deems appropriate.
10. This Order shall not be construed to cause any officer,
director or employee of The Home or REM to be deemed an employee or agent
of the Commissioner or the New Hampshire Insurance Department.
11. Nothing in this Order shall impede or restrict the right and
ability of the Commissioner to take other or further actions in the
future as the Commissioner in his sole discretion deems appropriate in
light of the financial condition of The Home and its method of conducting
its business and other affairs. The Commissioner may delegate any or all
of the powers provided in this Order to one or more designees as he shall
deem appropriate in his sole discretion. The Commissioner may retain such
personnel or consultants as he deems necessary to implement the
provisions of this Order.
12. This Order may be terminated by the Commissioner in his sole
discretion at such time as the Commissioner determines the supervision of
The Home is no longer necessary or appropriate for the protection of
policy holders, claimants, creditors, or is no longer in the public
interest.
NEW HAMPSHIRE INSURANCE DEPARTMENT
By: /s/ Charles N. Blossom
Charles N. Blossom
Insurance Commissioner
Date: March 3, 1997
FROM: EDWARD G. NOVOTNY & ASSOCIATES, INC.
Two Tudor City Place
New York, NY 10017
Tel. 212/490-2065
(After-hours: 212/490-2740)
FOR: HOME HOLDINGS INC. FOR IMMEDIATE RELEASE
59 Maiden Lane Tuesday, March 4, 1997
New York, NY 10038
THE HOME INSURANCE COMPANY PLACED UNDER FORMAL SUPERVISION
BY THE NEW HAMPSHIRE INSURANCE DEPARTMENT
NEW YORK - Home Holdings Inc. announced today that its principal
subsidiary, The Home Insurance Company, was placed under formal supervision
by the New Hampshire Insurance Department.
Home Insurance ceased writing new business in June of 1995 and since
then has been actively monitored by the Department, its principal
regulator. The Order of Supervision establishes that the Department will
oversee and supervise Home Insurance for the purpose of continuing and
intensifying an economic, actuarial and accounting review of the books,
records and affairs of the company so as to determine what future actions
would be appropriate.
The services agreement, under which Risk Enterprise Management
Limited provides Home Insurance with the claims and administrative
personnel necessary to proceed with an orderly run-off of Home Insurance's
property/casualty business, remains in full force and effect with only
minor modification to be made to accommodate the terms of the new Order.
