The total number of sequentially numbered pages in this manually signed original
is 17. Exhibit Index is sequential page no. 7.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) January 22, 1997
INTEGON CORPORATION
----------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 001-10997 13 3559471
- ---------------------------- ------------------------ ------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
500 West Fifth Street
Winston-Salem, North Carolina 27152
------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(910) 770-2000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
-----------------------------------------------------
(Former name or address, if changed from last report)
<PAGE>
Item 5. Other Events.
On January 22, 1997, Integon Corporation (the "Company") issued a press
release concerning year end 1996 results. A copy of the press release is
attached hereto as Exhibit hereto as Exhibit 99.1.
On January 22, 1997, the Board of Directors of the Company declared a
dividend of one preferred share purchase right (a "Right") for each outstanding
share of common stock, par value $0.01 per share, of the Company (the "Common
Stock"). The dividend is payable on February 11, 1997 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the Company (the
"Preferred Stock") at a price of $70 per one one-thousandth of a share of
Preferred Stock (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights will set forth in a Rights Agreement to be entered into
between the Company and First Chicago Trust Company of New York, as Rights Agent
(the "Rights Agent"), as the same may be amended from time to time (the "Rights
Agreement").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person"), with certain exceptions set forth below, has acquired beneficial
ownership of 20% or more of the outstanding shares of Common Stock or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 20% or more of
the outstanding shares of Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate. An Acquiring Person does not include (A) the Company, any
subsidiary of the Company, any employee benefit plan of the Company or of any
subsidiary of the Company, or any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or of any
subsidiary of the Company, (B) any person that would be deemed an "Acquiring
Person" upon the adoption of the Rights Agreement, unless and until such person
acquires beneficial ownership of any additional shares of Common Stock after the
date of the Rights Agreement, or (C) any person whose beneficial ownership of
20% or more of the outstanding shares of Common Stock results from an
acquisition of shares of Common Stock by the Company that, by reducing the
number of shares outstanding, increases the proportionate number of shares of
Common Stock beneficially owned by such person to 20% or more of the shares of
Common Stock then outstanding, unless such person thereafter become the
beneficial owner of any additional shares of Common Stock and upon the
consummation of such acquisition such person beneficially owns 20% or more of
the shares of Common Stock then outstanding.
2
<PAGE>
The Rights Agreement will provide that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuances of Common Stock will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on January 22, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-thousandths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a dividend on
the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Unless otherwise provided in connection with the creation of a
subsequent series of preferred stock, the Preferred Stock will be subordinate to
any other series of the Company's preferred stock. Each share of Preferred Stock
will be entitled, when, as and if declared, to a minimum quarterly dividend
payment of $10.00 per share but will be entitled to an aggregate dividend of
1000 times the dividend declared per share of Common Stock. In the event of the
liquidation of the Company, the holders of the Preferred Stock will be entitled
to receive a minimum liquidation payment of $1000.00 per share (plus any accrued
but unpaid dividends) but will be entitled to an aggregate payment of 1000 times
the payment made per share of Common Stock. Each share of Preferred Stock will
3
<PAGE>
have 1000 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled to
receive 1000 times the amount received per share of Common Stock. The rights of
Preferred Stock as to dividends, liquidation and voting are protected by
customary antidilution provisions. Because of the nature of the Preferred
Stock's dividend, liquidation and voting rights, the value of the one
one-thousandth interest in a share of Preferred Stock purchasable upon exercise
of each Right should approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive, upon exercise of a Right at the then
current Purchase Price, that number of shares of Common Stock (or other
securities or property) having a market value of two times the Purchase Price.
In the event that, after a person or group of affiliated or associated
persons has become an Acquiring Person, the Company is acquired in a merger or
other business combination transaction or 50% or more of its consolidated assets
or earning power are sold, proper provision will be made so that each holder of
a Right (other than Rights beneficially owned by an Acquiring Person, which will
have become void) will thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, that number of shares of common
stock of the person with whom the Company has engaged in the foregoing
transaction (or its parent), which number of shares at the time of such
transaction will have a market value of two times the Purchase Price.
At any time after any person or group of affiliated or associated persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding shares of Common Stock, the Board of Directors
of the Company may cause the Company to exchange the Rights (other than Rights
owned by such person or group, which will have become void), in whole or in
part, at an exchange ratio of one share of Common Stock (or one one-thousandth
of a share of Preferred Stock, or shares of a class or series of the Company's
preferred stock having equivalent rights, preferences and privileges) per Right,
subject to adjustment.
No fractional shares of Preferred Stock will be issued (other than fractions
that are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary receipts),
and in lieu thereof an adjustment in cash will be made based on the market price
of the Preferred Stock on the last trading day prior to the date of exercise.
At any time prior to the earlier of (i) the tenth day after the time that a
person or group of affiliated or associated persons has become an Acquiring
Person (subject to extension by the Board of Directors, with the approval of a
majority of the Continuing Directors (as defined below)) and (ii) the Final
Expiration Date, the Board of Directors may cause the Company to redeem the
4
<PAGE>
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish, and, after a person or group of affiliated or
associated persons becomes an Acquiring Person, certain circumstances shall
require the concurrence of a two-thirds majority of the Board of Directors.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except with
respect to the Redemption Price, amend the Rights in any manner, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of 0.001% and the largest percentage of the outstanding
shares of Common Stock then known to the Company to be beneficially owned by any
person or group of affiliated or associated persons and (ii) 10%. After the
Rights are no longer redeemable, the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights. Amendments to the Rights Agreement after
a person or group of affiliated or associated persons becomes an Acquiring
Person require the approval of a two-thirds majority of the Board of Directors.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
As of January 22, 1997, there were 15,736,121 shares of Common Stock issued
and outstanding, 3,772,966 shares reserved for issuance upon conversion of the
Company's $3.875 Convertible Preferred Stock, and 2,480,000 shares reserved for
issuance pursuant to employee benefit plans. As long as the Rights are attached
to the Common Stock, the Company will issue one Right with each new share of
Common Stock so that all such shares will have Rights attached.
The press release of the Company dated January 22, 1997, announcing the
distribution of the Rights, is filed herewith as Exhibit 99.2, and is
incorporated herein by reference. A copy of the Rights Agreement when executed
will be available free of charge from the Company. This summary description of
the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, as the same may be amended from time to time.
Item 7. Exhibits.
---------
99.1 Press release, dated January 22, 1997, issued by the Company (earnings
announcement).
99.2 Press release, dated January 22, 1997, issued by the Company (Shareholder
Rights Plan).
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on January 23, 1997.
INTEGON CORPORATION
By: /s/ Donald F. McKee
---------------------------------------
Donald F. McKee
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)
6
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
99.1 Press release, dated January 22,
1997, issued by the Company. Page 8
99.2 Press release, dated January 22, 1997
issued by the Company. Page 15
7
<PAGE>
Exhibit 99.1
Integon Corporation
Winston-Salem, NC 27152
Analysts' Contact:
Gay Huntsman (910) 770-3074
Media Contact:
Turner Coley (910) 760-3000
Integon Corporation Announces Fourth Quarter 1996 Results
Winston-Salem, NC, January 22, 1997 -- Integon Corporation (NYSE:IN) today
reported results for the fourth quarter and year ended December 31, 1996.
Financial Summary Table
(In thousands, except per share data)
(Preliminary and unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
<S> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/96 12/31/95
Net Premiums Written $191,547 $162,321 $797,989 $620,447
Total Revenues 208,194 170,003 783,411 627,458
Operating Earnings (Loss) (16,611) 8,251 (1,592) 30,315
Net Realized Investment Gains (net of taxes) 228 2,294 1,762 6,304
Net Income (Loss) (16,383) 10,545 170 33,995
Net Income (Loss)
Available to Common Stockholders (17,775) 9,153 (5,400) 28,425
Earnings Per Share (fully diluted)
Operating Earnings (Loss) (1.14) 0.41 (.45) 1.54
Net Realized Investment Gains .01 0.12 .11 .32
Net Income (Loss) (1.13) 0.53 (.34) 1.73
Weighted Average Shares Outstanding 15,786 19,655 15,850 19,635
</TABLE>
8
<PAGE>
Integon Corporation
Commenting on the Company's performance, Chairman and Chief Executive
Officer John C Head III said, "We are extremely disappointed with 1996 and
especially the fourth quarter results. However, we took, are taking, and will
take actions that should result in improved performance. Although we took rate
increases throughout 1996, hindsight has shown that those increases were
inadequate in many of our marketing territories. We started taking more
aggressive rate increases in October 1996, as previously reported, and by the
end of March 1997 we will have taken rate increases in states representing more
than 95 percent of the Company's nonstandard auto premium volume. Prices will go
up. Other actions that have been taken include increasing minimum down payments
and implementing underwriting restrictions. We expect these actions to have the
impact of both slowing premium growth and improving profitability. In fact,
growth in net premiums written has already slowed, as evidenced by an 18 percent
increase in the fourth quarter 1996 compared to the same period in 1995, down
significantly from the 31 percent growth rate reported for the third quarter
1996. Furthermore, the combined operating ratio for December was lower than
quarter-to-date through November."
During the fourth quarter 1996, the Company increased loss reserves by
$12.5 million related to adverse development on liability claims, primarily for
the 1996 accident year and wrote off $3.5 million of deferred policy acquisition
costs. Additionally, the reserve for bad debts was increased $2.0 million before
taxes to recognize a pattern of higher write offs in recent months. "Although
these adjustments were painful to make, they will lessen the possibility of 1997
being negatively impacted by business written in 1996. We under reserved and
were under priced. We dealt with the reserves and we are now dealing with the
pricing," Mr. Head said.
"Our business strategy has not changed and we plan to execute the
strategy with a heightened sense of urgency. We will continue our investment in
technology to regain our position of leadership among our competitors in the use
9
<PAGE>
Integon Corporation
of automation. Our focus in 1997 will be on earnings, not growth. Over the long
term, Integon's goal is to grow faster than the nonstandard auto industry
and report a combined ratio of below 96 percent," Mr. Head said.
For the year ended December 31, 1996, operating losses totaled $1.6
million, compared to operating earnings of $30.3 million for the year ended
December 31, 1995. Operating losses per share for the period were 45 cents,
compared to operating earnings per share of $1.54 for the 1995 period. Net
income for the period was $170,000, compared to $34.0 million for the full year
1995. After-tax net realized investment gains in 1996 were $1.8 million compared
to $6.3 million in 1995. Additionally, an extraordinary after-tax loss of $2.6
million, primarily due to the settlement of litigation, is reflected in the 1995
results.
Revenues for the year ended December 31, 1996 totaled $783.4 million,
compared to $627.5 million in 1995. Net premiums written were $798.0 million for
1996 and $620.4 million for 1995, an increase of 28.6 percent.
Integon Corporation, through its wholly owned property and casualty
insurance subsidiaries, specializes in the underwriting and marketing of
nonstandard and other specialty automobile insurance products to individuals.
The Company, headquartered in Winston-Salem, North Carolina, markets its
products through approximately 13,000 independent agencies in 29 states.
Please note that statements in this press release concerning future
profit levels and premium growth look forward in time and involve risks and
uncertainties that may affect the Company's actual results of operations. The
following important factors, among others, could cause actual results to differ
materially from those set forth in the forward looking statements: claims
10
<PAGE>
Integon Corporation
frequency, claims severity, severe adverse weather conditions, the cost of auto-
mobile repair, economic activity, competitive pricing and the regulatory
environment in which the Company operates.
The Company has issued simultaneously herewith a separate press release
concerning a shareholder rights plan adopted today by its Board of Directors.
11
<PAGE>
Integon Corporation
January 22, 1997
INTEGON CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Preliminary and Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 Change 12/31/96 12/31/95 Change
-------- -------- ------ -------- -------- ------
Direct premiums written $226,510 $194,499 16.5% $935,011 $797,373 17.3%
======== ======== ======== ========
Net premiums written $191,547 $162,321 18.0% $797,989 $620,447 28.6%
Change in unearned premium 3,610 (8,448) 142.7% (65,987) (53,429) -23.5%
-------- -------- -------- --------
Premiums earned 195,157 153,873 26.8% 732,002 567,018 29.1%
Net investment income(1) 8,333 7,518 10.8% 31,970 29,937 6.8%
Net realized investment gains 351 3,527 -90.0% 2,711 9,698 -72.0%
Other income 4,353 5,085 -14.4% 16,728 20,805 -19.6%
-------- -------- -------- --------
TOTAL REVENUES 208,194 170,003 22.5% 783,411 627,458 24.9%
-------- -------- -------- --------
Loss and loss adjustment expenses 173,872 114,177 52.3% 585,711 415,973 40.8%
Policy acquisition and other underwriting expenses 49,973 31,615 58.1% 164,015 122,653 33.7%
Other expenses 5,822 4,814 20.9% 17,504 18,286 -4.3%
Amortization of goodwill 764 774 -1.3% 3,072 3,096 -0.8%
Interest expense 3,934 3,593 9.5% 15,021 14,510 3.5%
-------- -------- -------- --------
TOTAL EXPENSES 234,365 154,973 51.2% 785,323 574,518 36.7%
INCOME (LOSS) FROM OPERATIONS BEFORE -------- -------- -------- --------
FEDERAL INCOME TAXES AND
EXTRAORDINARY ITEMS (26,171) 15,030 -274.1% (1,912) 52,940 -103.6%
Federal income taxes(benefit) (9,788) 4,485 -318.2% (2,082) 16,321 -112.8%
-------- -------- -------- --------
Income (loss) from operations before extraordinary items (16,383) 10,545 -255.4% 170 36,619 -99.5%
Extraordinary items (net of taxes) - - 0.0% - (2,624) 100.0%
-------- -------- -------- --------
NET INCOME (LOSS) (16,383) 10,545 -255.4% 170 33,995 -99.5%
Preferred dividends 1,392 1,392 0.0% 5,570 5,570 0.0%
-------- -------- -------- --------
Net income (loss) available to common stockholders ($17,775) $9,153 -294.2% ($5,400) $28,425 -119.0%
======== ======== ======== ========
Operating earnings (loss) ($16,611) $8,251 -301.3% ($1,592) $30,315 -105.3%
Net realized investment gains (net of taxes) 228 2,294 -90.1% 1,762 6,304 -72.0%
Extraordinary items(net of taxes) - - 0.0% - (2,624) 100.0%
-------- -------- -------- --------
Net income (loss) ($16,383) $10,545 -255.4% $170 $33,995 -99.5%
======== ======== ======== ========
PER SHARE:
Primary
Operating earnings (loss) ($1.14) $0.44 -359.1% ($0.45) $1.58 -128.5%
Net realized investment gains (net of taxes) 0.01 0.14 -92.9% 0.11 0.40 -72.5%
Extraordinary items (net of taxes) - - 0.0% - (0.17) 100.0%
-------- -------- -------- --------
Net income (loss) ($1.13) $0.58 -294.8% ($0.34) $1.81 -118.8%
======== ======== ======== ========
Fully diluted
Operating earnings (loss) ($1.14) $0.41 -378.0% ($0.45) $1.54 -129.2%
Net realized investment gains (net of taxes) 0.01 0.12 -91.7% 0.11 0.32 -65.6%
Extraordinary items (net of taxes) - - 0.0% - (0.13) 100.0%
-------- -------- -------- --------
Net income (loss) ($1.13) $0.53 -313.2% ($0.34) $1.73 -119.7%
======== ======== ======== ========
Weighted average shares outstanding
Primary 15,786 15,723 15,850 15,701
======== ======== ======== ========
Fully diluted 15,786 19,655 15,850 19,635
======== ======== ======== ========
(1) Pre-tax yield 5.8% 6.0% 5.9% 6.3%
After tax yield 4.1% 4.3% 4.1% 4.7%
Average duration of portfolio 4.3 yrs 4.7 yrs. n/a n/a
</TABLE>
12
<PAGE>
Integon Corporation
January 22, 1997
INTEGON CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands, Except Per Share Data)
(Preliminary and Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
12/31/96 12/31/95
ASSETS -------- --------
Fixed maturities available for sale
(amortized cost: $522,452 and $469,219) $521,311 $481,944
Other long-term investments 2,743 2,114
Cash and short-term investments 43,838 21,046
Reinsurance receivable 185,077 199,826
Premiums due and uncollected 248,537 199,087
Prepaid reinsurance premiums 48,909 56,726
Accounts and notes receivable 32,957 28,277
Accrued investment income 8,933 7,683
Deferred policy acquisition costs 55,106 46,413
Property and equipment 68,271 65,247
Goodwill 106,957 110,976
Deferred loan costs 1,820 2,195
Deferred income taxes 22,044 12,934
Other 10,296 7,211
---------- ----------
Total assets $1,356,799 $1,241,679
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Unearned premiums $364,081 $305,911
Loss and LAE payable 478,031 416,740
Accrued expenses and other liabilities 104,536 117,374
Short-term debt 44,000 16,000
Notes payable 150,760 150,807
---------- ----------
Total liabilities 1,141,408 1,006,832
---------- ----------
STOCKHOLDERS' EQUITY
Convertible preferred stock 14 14
Common stock 173 173
Additional paid-in capital 147,891 147,296
Net unrealized appreciation (depreciation) of securities (700) 8,288
Retained earnings 105,834 116,897
Treasury stock (37,821) (37,821)
---------- ----------
Total stockholders' equity 215,391 234,847
---------- ----------
Total liabilities and stockholders' equity $1,356,799 $1,241,679
========== ==========
Book value per share $9.33 $10.58
Loss and LAE payable net of reinsurance receivable 306,915 234,788
Estimated statutory surplus 245,919 226,832
Common shares outstanding 15,736 15,705
</TABLE>
13
<PAGE>
Integon Corporation
January 22, 1997
INTEGON CORPORATION AND SUBSIDIARIES
STATISTICAL SUPPLEMENT
(In Thousands, Except Ratios)
(Preliminary and Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
---------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 Change 12/31/96 12/31/95 Change
NET PREMIUMS WRITTEN ---------- ---------- --------- ----------- ---------- ---------
Nonstandard automobile $172,807 $148,015 16.7% $722,941 $568,110 27.3%
Specialty automobile 12,774 6,131 108.4% 49,773 24,576 102.5%
Preferred automobile 5,875 7,855 -25.2% 24,842 26,347 -5.7%
Other 91 320 -71.6% 433 1,414 -69.4%
---------- ---------- ----------- ----------
Total $191,547 $162,321 18.0% $797,989 $620,447 28.6%
========== ========== =========== ==========
GAAP
Loss ratio 89.1% 74.2% 14.9%pts. 80.0% 73.4% 6.6%
Expense ratio 25.6% 20.5% 5.1%pts. 22.4% 21.6% 0.8%
---------- ---------- ----------- ----------
Combined ratio 114.7% 94.7% 20.0%pts. 102.4% 95.0% 7.4%
========== ========== =========== ==========
STATUTORY(1)
Loss ratio 89.0% 74.0% 15.0%pts. 79.4% 73.2% 6.2%
Expense ratio 24.0% 21.1% 2.9%pts. 22.1% 21.5% 0.6%
---------- ---------- ----------- ----------
Combined ratio 113.0% 95.1% 17.9%pts. 101.5% 94.7% 6.8%
========== ========== =========== ==========
</TABLE>
- ----------
(1) The statutory combined ratio for the year ended December 31, 1996 reflects
the cumulative effect of a change in statutory accounting method that reclassed
the deferral of a claims expense allowance from loss reserves to other
liabilities in the first quarter. The year-to-date impact is a reduction in the
loss ratio of 0.6% points and an increase in the expense ratio of 0.6% points.
14
<PAGE>
Exhibit 99.2
Integon Corporation
Winston-Salem, NC 27152
Analysts' Contact:
Gay Huntsman (910) 770-3074
Media Contact:
Turner Coley (910) 760-3000
Integon Corporation Announces
Adoption of Shareholders Rights Plan
Winston-Salem, NC, January 22, 1997 -- Integon Corporation (NYSE:IN) announced
that at a meeting of the Board of Directors of Integon Corporation held today,
the Board adopted a Shareholder Rights Plan designed to enhance the Board's
ability to protect Integon's stockholders from abusive takeover tactics and from
attempts to acquire control of Integon at an inadequate price.
In regard to the Shareholder Rights Plan, the General Counsel of the
Company, John B. Yorke, said, "This action was not taken in response to any
specific effort to acquire control of the Company, nor is the Company aware of
any such effort. The Rights Plan is being adopted after careful study in order
to enhance the ability of the Board to protect the interests of the Company's
stockholders. The Rights Plan does not preclude the Board from considering an
offer to acquire all or part of the Company if it believes the offer to be in
the best interests of the Company's stockholders."
Under the Rights Plan, a dividend distribution of one Right will be
made with respect to each share of common stock outstanding at the close of
business on February 11, 1997. Each Right entitles the holder to purchase
one-thousandth of a share of a newly authorized series of Integon preferred
stock at a purchase price of $70. Each one-thousandth of a share of such
preferred stock is intended to be the economic and voting equivalent of one
15
<PAGE>
Integon Corporation
share of common stock. The Rights are not presently exercisable, and initially
will be evidenced by Integon's common stock certificates and will trade
automatically with the common stock.
In the event any person or group commences a tender or exchange offer
that if consummated would result in such person or group becoming the beneficial
owner of 20 percent or more of Integon's common stock, then after a specified
period separate Rights certificates will be distributed and each Right will
entitle its holder to purchase one-thousandth of a share of such preferred stock
at a purchase price of $70.
In the event a person or group acquires beneficial ownership of 20
percent or more of Integon's common stock, then after a specified period each
Right (other than Rights beneficially owned by such person or group, which
become void) will entitle its holder to purchase, at the purchase price, shares
of Integon common stock, (or, at the option of the Board, such preferred stock)
having a market value equal to twice the purchase price. Additionally, if after
any such person or group acquires beneficial ownership of 20 percent or more of
Integon's common stock, Integon is acquired in a merger or other business
combination or 50 percent or more of its consolidated assets or earning power
are sold, each Right (other than Rights beneficially owned by such person or
group, which will have become void) will entitle its holder to purchase, at the
purchase price, shares of common stock of the person or group with whom Integon
engaged in such transaction having a market value equal to twice the purchase
price.
Under certain circumstances, Integon may, at its option, exchange for
each outstanding Right (other than voided Rights) one share of common stock or
one-thousandth of a share of such preferred stock. Integon may also, at its
option, redeem the Rights at a price of $.01 per Right at any time prior to a
16
<PAGE>
Integon Corporation
specified period of time after a person or group has become the beneficial owner
of 20 percent or more of its common stock.
The Rights will expire on January 22, 2007, unless earlier redeemed.
Details of the plan are contained in a letter that will be mailed to
Integon's stockholders.
Integon Corporation, through its wholly owned property and casualty
insurance subsidiaries, specializes in the underwriting and marketing of
nonstandard and other specialty automobile insurance products to individuals.
The Company, headquartered in Winston-Salem, North Carolina, markets its
products through approximately 13,000 independent agencies in 29 states.
17
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> This schedule contains summary financial information
extracted from Integon Corporation's December 31, 1996
financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000878660
<NAME> Integon Corporation
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Dec-31-1996
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 521,311
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 524,054
<CASH> 43,838
<RECOVER-REINSURE> 185,077
<DEFERRED-ACQUISITION> 55,106
<TOTAL-ASSETS> 1,356,799
<POLICY-LOSSES> 478,031
<UNEARNED-PREMIUMS> 364,081
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 150,760
0
14
<COMMON> 173
<OTHER-SE> 215,204
<TOTAL-LIABILITY-AND-EQUITY> 1,356,799
732,002
<INVESTMENT-INCOME> 31,970
<INVESTMENT-GAINS> 2,711
<OTHER-INCOME> 16,728
<BENEFITS> 585,711
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 164,015
<INCOME-PRETAX> (1,912)
<INCOME-TAX> (2,082)
<INCOME-CONTINUING> 170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170
<EPS-PRIMARY> (.34)
<EPS-DILUTED> (.34)
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
