<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 10, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ENHANCE FINANCIAL SERVICES GROUP INC.
(Exact name of registrant as specified in its charter)
------------------------------
NEW YORK 13-3333448
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
------------------------
335 MADISON AVENUE
NEW YORK, NEW YORK 10017
(212) 983-3100
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
------------------------------
SAMUEL BERGMAN, ESQ.
EXECUTIVE VICE PRESIDENT
ENHANCE FINANCIAL SERVICES GROUP INC.
335 MADISON AVENUE
NEW YORK, NEW YORK 10017
(212) 983-3100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement has been declared effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.10 per share........... 454,473 shares $24.76875 $11,256,455 $3,130
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
- ------------------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
454,473 SHARES OF COMMON STOCK
OF
ENHANCE FINANCIAL SERVICES GROUP INC.
---------------------------------------------
Certain shareholders of Enhance Financial Services Group Inc. are offering
all 454,473 shares of common stock of the Company. We will not receive any
proceeds from the sale of shares by the Selling Shareholders. The common stock
of Enhance Financial is traded on the New York Stock Exchange under the symbol
"EFS."
Investing in the common stock involves certain risks.
See "Risk Factors" starting on page 2.
Neither the Securities and Exchange Commission nor any State securities
commission has approved or disapproved of these securities or
determined if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal
offense.
---------------------------------------------
Limitations on Offers or Solicitations
Neither we nor any Selling Shareholder intends this document to be an offer
or solicitation:
- if used in a jurisdiction in which such offer or solicitation
is not authorized;
- if the person making such offer or solicitation is not
qualified to do so; or
- if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
Prospectus dated December , 1998
<PAGE>
THE COMPANY
Enhance Financial Services Group Inc.
335 Madison Avenue
New York, New York 10017
(212) 983-3100
www.efsgroup.com
We are a holding company that principally reinsures financial
guaranties of municipal and asset-backed debt obligations issued by monoline
financial guaranty insurers. Financial guaranty insurance provides an
unconditional and irrevocable guarantee of the payment of the principal of and
interest on insured obligations when due. Mononline financial guaranty insurers
guaranty to the holders of debt obligations the full and timely payment of
principal and interest. The principal forms of reinsurance arrangements are
treaty and facultative. Under a treaty arrangement the ceding company cedes and
the reinsurer is obligated to assume a specified portion of a specified type of
risk or risks insured by the ceding company during the term of the treaty
(although the reinsurance risk extends for the life of the respective underlying
obligations). Under a facultative arrangement, the ceding company from time to
time offers a portion of specific risks to the reinsurer. We also engage in
other insurance, reinsurance and non-insurance businesses that utilize our
expertise in performing sophisticated analysis of complex, credit-based risks.
We conduct most of our business through our wholly-owned licensed, financial
guaranty insurance subsidiaries, Enhance Reinsurance Company and Asset Guaranty
Insurance Company (together, the "Insurance Subsidiaries"). We conduct a smaller
portion of our business through other insurance and non-insurance subsidiaries
and companies (including a Brazilian surety company) in which we have equity
investments. We expect that a significant portion of our growth will come from
these non-financial guaranty businesses.
The key elements of our business strategy are:
- to maintain our primary and reinsurance financial guaranty business
and our commitment to intensive and prudent credit underwriting and conservative
investment policies;
- to use our expertise in underwriting credit risks to expand and
develop our other insurance businesses; and
- to use our credit analysis skills in areas that we believe have
profit and strong growth potential relative to the risks involved to continue to
accelerate our effort to diversify.
As part of our efforts to diversify and expand globally, we expect to
develop further our strategic relationship with Swiss Reinsurance Company that
we initiated in 1996. We expect a significant portion of our growth will come
from non-financial guaranty businesses.
In this Prospectus, references to the "Company," "we," "us" and "our"
refer to Enhance Financial Services Group Inc. and its consolidated
subsidiaries. References to "Enhance Financial" refer to only Enhance Financial
Services Group Inc. The reference to our World Wide Web site address does not
constitute incorporation by reference of the information contained in the web
site.
RISK FACTORS
The following discussion contains forward-looking statements that
involve inherent risks and uncertainties. Actual results may differ materially
from those contained in such forward-looking statements. Accordingly, readers
should not place undo reliance on such forward-looking statements.
2
<PAGE>
Dependence Upon Claims-Paying Ability Ratings
In the financial guaranty insurance and reinsurance industries, rating
agencies (including Duff & Phelps Credit Rating Company ("D&P"), Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group, a
division of the McGraw-Hill Companies, Inc. ("S&P")) rate the claims-paying
ability of insurers and reinsurers based upon criteria established by the rating
agencies. Periodically the rating agencies evaluate insurers and reinsurers that
they have previously rated to confirm that these insurers and reinsurers
continue to meet the criteria. Certain agencies have rated the claims-paying
ability of the Insurance Subsidiaries. Enhance Reinsurance Company has a
claims-paying ability rating of "AAA" by each of S&P and D&P and "Aaa" by
Moody's. Asset Guaranty has claims-paying ability rating of "AA" by S&P
and "AAA" by D&P. The claims-paying ability ratings assigned by rating agencies
to a reinsurance or insurance company are based upon factors relevant to
policyholders and are not directed toward the protection of investors. Ratings
by rating agencies are not ratings of securities or recommendations to buy,
hold, or sell any security.
Although we intend to continue to comply with the criteria set by the
rating agencies, we can provide no assurance that one or more of the rating
agencies will not downgrade or withdraw their claims-paying ability ratings of
the Insurance Subsidiaries in the future. Our ability to compete with other
triple-A-rated financial guaranty reinsurers and our results of operations would
be materially adversely affected by any ratings downgrade of the Insurance
Subsidiaries. Moreover, the Insurance Subsidiaries are parties to several
agreements that grant the primary insurer the right to recapture business ceded
to the Insurance Subsidiary under the agreement if the claims-paying ability
rating of the Insurance Subsidiaries is downgraded below a minimum rate
established in the agreement. A recapture of business by the primary insurer
could have a material adverse effect on our deferred premium revenue and
recognition of future income from an agreement.
Whether Loss Reserves are Adequate
The Insurance Subsidiaries maintain reserves in amounts sufficient to
pay their estimated ultimate liability for losses and loss adjustment expenses
("LAE"), as required by law. Since neither we nor the financial guaranty
industry has an actuarially significant number of losses in its financial
guaranty reinsurance activities, we do not believe that traditional actuarial
approaches used in the property/casualty industry apply in the determination of
loss reserves for financial guaranty insurers. Instead, we establish reserves
for losses and LAE on our insured and reinsured obligations based upon our best
estimates of specific and non-specific losses, including expenses associated
with the settlement of such losses. We establish a reserve for losses and LAE
either when: (1) a primary insurer provides for losses and LAE or, (2) in our
opinion, a default is probable on an insured risk. The amount of the reserve is
based on an analysis of the individual insured risk. Reserves we establish for
losses and LAE necessarily are based on estimates. Although we believe our
reserves will prove to be adequate, we cannot assure that such reserves actually
will be adequate.
Competition
We face substantial competition from other providers of financial
guaranty reinsurance. One U.S. and two foreign companies, each of which
specializes in the reinsurance of financial guaranties, are our most significant
competition. The Company, together with our three direct competitors, provide
most of the reinsurance available for monoline financial guaranty insurers,
particularly with respect to facultative reinsurance. Several other foreign
insurers and reinsurers compete with us in providing treaty and facultative
reinsurance for municipal and asset-backed transactions. Certain of these
foreign insurers and reinsurers have formed strategic alliances with U.S.
financial guaranty insurers, giving them greater financial resources than we
have. We also compete with banks, other financial institutions and governmental
institutions that issue letters of credit, guaranties, and other forms of credit
enhancement.
We also face substantial competition in our non-financial guaranty
businesses. Some of our competitors have greater financial and other resources
than we do. Increased competition, either in terms of price or in terms
3
<PAGE>
of new entrants into the financial guaranty market or the other insurance
markets, may have an adverse effect on our results of operation.
Concentration Of Clients
In our principal business of reinsuring financial guaranties issued by
monoline financial guaranty insurers, we currently derive substantially all of
our premium revenues from four insurers. A substantial reduction in the amount
of insurance ceded by one or more of our four principal clients would have a
material adverse effect on our gross premiums written and could have a material
adverse effect on our results of operations.
Financial Guaranty Insurance Risks
The demand for financial guaranty insurance and the demand for primary
insurance and reinsurance that we provide, depends upon many factors, which are
generally not in our control, including:
- prevailing interest rates;
- investor concern regarding the credit quality of municipalities
and corporations;
- investor perception of the strength of financial guaranty
providers and the guaranty offered;
- premium rates charged for financial guaranty insurance; and
- the availability of other forms of credit enhancement.
Governmental regulation, including changes in tax laws affecting the
municipal and asset-backed debt markets, directly and indirectly affect the
financial guaranty industry. We can provide no assurance that future legislative
or regulatory changes might not adversely affect our results of operations.
Enhance Financial Depends on Dividends from its Subsidiaries
Enhance Financial conducts substantially all its operations through its
subsidiaries, principally the two Insurance Subsidiaries. The financial
condition and cash flow of Enhance Financial and its ability to pay dividends on
its common stock depends upon the earnings of its subsidiaries and the
distribution of those earnings to Enhance Financial in the form of dividends.
The New York insurance law and related regulations restrict the payment of
dividends by the Insurance Subsidiaries to Enhance Financial. The payment of
such dividends may also be subject to:
- other statutory or contractual restrictions;
- the earnings of the Insurance Subsidiaries; and
- various business considerations.
Risks Relating to the Other Insurance Businesses of the Company
Our non-financial insurance businesses have constituted and will
continue to constitute in the future a significant component of our business. In
certain of these other reinsurance businesses, we anticipate higher loss levels
than the loss levels experienced with our reinsurance of municipal and
asset-backed debt obligations. Higher loss levels are due to the nature of the
risk assumed and the limited history of the business. We believe that the higher
premiums we receive for such activities adequately compensate us for the risks
involved.
Premiums are earned over a significantly shorter period in our other
insurance businesses than in our financial guaranty business. Therefore, our
ability to realize consistent levels of earned premiums in these other
businesses will depend on its ability to write consistent levels of new
insurance.
4
<PAGE>
Diversification Strategy
Although substantially all of our revenues have been generated from
domestic insurance activities, we invested in recent years significant amounts
in our non-financial guaranty businesses, including Singer Asset Finance
Company, L.L.C., Credit-Based Asset Servicing and Securitization LLC and its
affiliates, and Seguradores Brasilieras de Fiancas, one of Brazil's largest
surety companies. We are looking to these businesses to be a source of a
significant portion of our future growth. We can provide no assurance that these
relatively new businesses, or any of our other diversification efforts, will
succeed.
SELLING SHAREHOLDERS
The following table sets forth certain information as of the date of
this Prospectus about the Selling Shareholders. All of the shares of common
stock that may be sold by the Selling Shareholders represent shares acquired or
which may be acquired by them (subject to a final determination of certain
financial information from Enhance Financial) in a private transaction that
occurred on November 13, 1998. Certain of the shares of common stock so acquired
will be held for a period of one year by Firstar Bank Milwaukee, N.A., as escrow
agent (the "Escrow Agent"), pursuant to an escrow agreement among the Escrow
Agent, the Selling Shareholders and Enhance Financial. The Selling Shareholders
will, during the term of the escrow, be entitled to vote all shares of common
stock deposited with the Escrow Agent. The escrow agreement was executed to
insure that funds will be available to Enhance Financial if it is entitled to
certain indemnification payments to be made by the Selling Shareholders. Enhance
Financial will not receive any of the proceeds from the sales of the shares of
common stock offered by this Prospectus. If Enhance Financial is entitled to any
shares of Common Stock in satisfaction of the indemnification obligations of the
Selling Shareholders, shares with an agreed value per share equal to that
indemnification obligation will revert to Enhance Financial and will not be sold
pursuant to this Prospectus. Beneficial ownership after the offering will depend
on the number of shares sold by each of the Selling Shareholders.
<TABLE>
<CAPTION>
Number of Shares
Owned Prior Number of
Selling Shareholder To Offering (1) Shares Offered (1)
- ------------------- --------------- ------------------
<S> <C> <C>
Beverly B. Arnold 49,593 49,593
Edward R. Allen, III 9,922 9,922
Robert E. Birdwell 47,096 47,096
Jamie Campise 804 804
Lonnie L. Dickens 804 804
Duncan Investment Partnership 49,593 49,593
John P. Gaylord Grandchild Trust 24,794 24,794
John F. Howell, Jr. 7,824 7,824
Marty L. Jimmerson 4,950 4,950
George B. Kelly 38,889 38,889
Stephen B. Kelly 9,922 9,922
Fred R. Lummis 38,889 38,889
Ransom C. Lummis 52,977 52,977
William R. Lummis 24,794 24,794
Walid Mansur 19,844 19,844
Frank R. Russo 18,891 18,891
Armand Shapiro 19,844 19,844
Wesley West Investment Company, LLC 24,794 24,794
Robert W. Tobitt 1,004 804
Thomas E. Upton 9,445 9,445
----- -----
454,673(1) 454,473(1)
</TABLE>
5
<PAGE>
- --------------------------------
(1) Includes 135,737 shares placed in escrow for the benefit of the Selling
Shareholders.
The Selling Shareholders may sell shares of the common stock from time
to time in transactions (which may include block transactions by or for the
account of one or more of the Selling Shareholders) on the New York Stock
Exchange ("NYSE"), in over-the-counter distributions in accordance with the
rules of the NYSE, or in negotiated transactions, through the writing of options
on those shares, a combination of those methods of sale, or otherwise. Sales may
be made at fixed prices which may be changed, at market prices prevailing at the
time of sale, or at negotiated prices. Sales may be made individually by one
Selling Shareholder or may be sold by all or any portion of the Selling
Shareholders together as a group. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale.
In connection with the distribution of the shares or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short-sales of the
Company's common stock in the course of hedging the positions they assume with
Selling Shareholders. The Selling Shareholders may also sell the Company's
common stock short and redeliver the shares to close out such short positions.
The Selling Shareholders may also enter into options or other transactions with
broker-dealers or other financial institutions that require the delivery of
shares offered hereby, which shares broker-dealers or other financial
institutions may resell pursuant to this Prospectus (as supplemented or amended
to reflect such transaction). The Selling Shareholders may also pledge shares to
a broker-dealer or other financial institution, and upon the occurrence of
certain events of default contained in the arrangements between the Selling
Shareholders and a broker-dealer or other financial institution, such
broker-dealer or other financial institution may effect sales of the pledged
shares pursuant to this Prospectus (as supplemented or amended to reflect such
transaction).
The Selling Shareholders may sell shares directly to purchasers,
through broker-dealers acting as agents (who in such cases may position and
resell all or a portion of such shares as principal to facilitate the
transaction) for all or any portion of the Selling Shareholders, or to
broker-dealers who may purchase shares as principals and thereafter sell the
shares from time to time on the NYSE or in negotiated transactions, or
otherwise. Those broker-dealers, if any, may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholder(s) and/or
the purchasers for whom the broker-dealers may act as agents or to whom they may
sell as principals or both. This compensation as to a particular broker-dealer
may be in excess of customary commissions.
In connection with the sale by the Selling Shareholders through one or
more broker-dealers of shares of common stock pursuant to this Prospectus, the
Company may, but shall not be required to, agree to indemnify any of such
broker-dealers with respect to certain civil liabilities, including certain
liabilities under the Securities Act of 1933, to which any such broker-dealer
may be subject arising out of its activities relating thereto.
Broker-dealers, if any, acting in connection with any such sale may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Company has agreed with the Selling Shareholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until November 13, 1999.
6
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, information statements
and other information with the Securities and Exchange Commission (the "SEC").
You may read and copy any such report, statement or other information we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for more information on
the public reference rooms and their copy charges. Our SEC filings are also
available to the public from commercial document retrieval services and at the
SEC's web site at http://www.sec.gov.
We have filed a registration statement on Form S-3 with the SEC
registering the common stock. For further information on Enhance Financial and
the common stock, you should refer to our registration statement and exhibits.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" information we file
with them, which means:
- incorporated documents are considered part of this Prospectus;
- we may disclose important information to you by referring you to
those documents; and
- information that we file with the SEC will automatically update
and supersede this Prospectus.
We incorporate by reference the documents listed below, which were
filed with the SEC under the Securities Act of 1934 (the "Exchange Act"):
- Annual Report on Form 10-K for the year ended December 31, 1997;
- Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998; and
- The description of Enhance Financial's common stock contained in
a registration statement on Form 8-A dated February 12, 1992,
including any amendments or reports filed for the purpose of
updating such description.
We also incorporate by reference each of the following documents that
we will file with the SEC after the date of this Prospectus but before the end
of the offering:
- Reports filed under Sections 13(a) and (c) of the Exchange Act;
- Definitive proxy or information statements filed under Section 14
of the Exchange Act; and
- Any reports filed under Section 15(d) of the Exchange Act.
Enhance Financial's file number under the Exchange Act is 1-10967. You
may request a copy of any filings referred to above (excluding exhibits) at no
cost by contacting us (in writing or by telephone) at the following address or
telephone number:
Corporate Secretary
Enhance Financial Services Group Inc.
335 Madison Avenue
New York, New York 10017
(212) 983-3100
7
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. We may also make
written or oral forward-looking statements in our periodic reports to the
Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K, in our annual
report to shareholders, in our proxy statements, in our offering circulars and
prospectuses, in press releases and other written materials and in oral
statements made by our officers, directors or employees to third parties.
Statements that are not historical facts, including statements about our beliefs
and expectations, are forward-looking statements. These statements are based on
current plans, estimates and projections, and therefore you should not place
undue reliance on them. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update publicly any of them in
light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. We
caution you that a number of important factors could cause actual results to
differ materially from those contained in any forward-looking statement. Such
factors include, but are not limited to: dependence upon claims-paying ability
ratings; the adequacy of loss reserves; competition; concentration of clients;
financial guaranty insurance risks; dependence on dividends from subsidiaries;
risks relating to non-financial insurance businesses; and diversification
strategy.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for the Selling Shareholders by Samuel Bergman, Esq., Executive Vice
President and General Counsel of Enhance Financial. As of December 4, 1998, Mr.
Bergman, together with members of his immediate family, owned an aggregate of
8,700 shares of common stock and held options to purchase 216,000 shares of
common stock.
EXPERTS
The consolidated financial statements of the Company incorporated in
this Prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference and has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
8
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
An estimate of the fees and expenses of issuance and distribution
(other than discounts and commissions) of the common stock offered hereby (all
of which will be paid by Enhance Financial) is as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................... $ 3,130
Printing expenses....................................... 2,000
Legal fees and expenses................................. 0
Accounting fees and expenses............................ 2,000
Miscellaneous expenses.................................. 1,870
----------
Total .............................................. $ 10,000
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 722 of the New York Business Corporation Law
(the "BCL"), the amended and restated certificate of incorporation of Enhance
Financial eliminates the personal liability of members of its board of directors
to Enhance Financial or its shareholders for monetary damages for violations of
their fiduciary duty of care. Such a provision has no effect on the availability
of equitable remedies, such as an injunction or rescission, for breach of
fiduciary duty. In addition, such provision may not and does not eliminate or
limit the liability of a director for breaching his or her duty of loyalty,
failing to act in good faith, engaging in intentional misconduct or knowingly
violating the law, paying an unlawful dividend or approving an illegal stock
repurchase, or obtaining an improper personal benefit.
Section 6.5 of Enhance Financial's by-laws provides that, except as
prohibited by the BCL, directors and certain other personnel of Enhance
Financial are to be indemnified against expenses and certain other liabilities
arising out of legal actions brought or threatened against them for their
conduct on behalf of Enhance Financial, subject to certain qualifications and
provided that each such person acted in good faith and in a manner that he or
she reasonably believed was in Enhance Financial's best interest and did not
derive any improper financial profit or other advantage.
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
5 Opinion of Samuel Bergman, Esq., Executive Vice President and General
Counsel of Enhance Financial regarding legality of securities
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Samuel Bergman, Esq. (included in the opinion filed as
Exhibit 5)
24 Powers of Attorney (included on page II-4)
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the registrant pursuant to the provisions described in Item 15 or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer, or
controlling person of the registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on December 9, 1998.
ENHANCE FINANCIAL SERVICES GROUP INC.
By /s/ Daniel Gross
---------------------------------
Daniel Gross
President and
Chief Executive Officer
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Daniel Gross and Samuel Bergman, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, to act, without the other, for him and in his
name, place, and stead, in any and all capacities, to sign a Registration
Statement on Form S-3 of Enhance Financial Services Group Inc., and any or all
amendments (including post-effective amendments) thereto, relating to the
offering of shares of its Common Stock, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as full to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Daniel Gross President, Chief Executive December 9, 1998
- ----------------------------- Officer and Director
Daniel Gross (principal executive officer)
/s/ Arthur Dubroff Executive Vice President December 9, 1998
- ----------------------------- (principal financial
Arthur Dubroff officer and principal
accounting officer)
/s/ Brenton W. Harries Director December 9, 1998
- -----------------------------
Brenton W. Harries
/s/ David R. Markin Director December 9, 1998
- -----------------------------
David R. Markin
/s/ Wallace O. Sellers Director December 9, 9998
- -----------------------------
Wallace O. Sellers
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Richard J. Shima Director December 9, 1998
- -----------------------------
Richard J. Shima
/s/ Robert P. Saltzman Director December 9, 1998
- -----------------------------
Robert P. Saltzman
/s/ Spencer R. Stuart Director December 9, 1998
- -----------------------------
Spencer R. Stuart
Director December 9, 1998
- -----------------------------
Adrian U. Sulzer
/s/ Allen R. Tessler Director December 9, 1998
- -----------------------------
Allan R. Tessler
/s/ Frieda K. Wallison Director December 9, 1998
- -----------------------------
Frieda K. Wallison
/s/ Jerry Wind Director December 9, 1998
- -----------------------------
Jerry Wind
</TABLE>
II-4
<PAGE>
EXHIBIT 5
December 10, 1998
Enhance Financial Services Group Inc.
335 Madison Avenue
New York, New York 10017
Ladies and Gentlemen:
I am General Counsel of Enhance Financial Services Group Inc., a New
York corporation (the "Company"), and I am rendering this opinion in connection
with the Registration Statement on Form S-3 with exhibits thereto (the
"Registration Statement") filed by the Company under the Securities Act of 1933
(the "Act"), relating to the registration of 454, 473 shares (the "Shares") of
common stock, par value $.10 per share, of the Company.
As such counsel, I have participated in the preparation of the
Registration Statement and have reviewed the corporate proceedings in connection
with the issuance of the Shares. I have also examined and relied upon originals
or copies, certified or otherwise authenticated to my satisfaction, of all such
corporate records, documents, agreements, and instruments relating to the
Company, and certificates of public officials and of representatives of the
Company, and have made such investigations of law, and have discussed with
representatives of the Company and such other persons such questions of fact, as
I have deemed proper and necessary as a basis for the rendering of this opinion.
Based upon, and subject to, the foregoing, I am of the opinion that the
Shares are duly authorized, validly issued, fully paid, and non-assessable.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving the foregoing consent, I do not admit that I
am in the category of persons whose consent is required under Section 7 of the
Act, or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
Very truly yours,
/s/Samuel Bergman
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of Enhance Financial Services Group Inc. of our report
dated February 17, 1998, appearing in the Annual Report on Form 10-K of Enhance
Financial Services Group Inc. for the year ended December 31, 1997 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
December 10, 1998
