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):
APRIL 11, 1997
AMERICAN EAGLE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12922 75-2100622
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
12801 N. CENTRAL EXPRESSWAY, SUITE 800, DALLAS, TEXAS 75243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 448-1400
ITEM 5. OTHER EVENTS
American Eagle Insurance Company (the "Company"), a subsidiary of
American Eagle Group, Inc., has entered into an agreement, dated
April 11, 1997, with American Financial Group, Inc. ("AFG"),
pursuant to which the Company will sell its general aviation
insurance business to AFG.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following Exhibits are filed herewith:
99.1 April 11, 1997 American Eagle Group, Inc. press release
setting forth the details of the sale of the general
aviation insurance business of American Eagle Insurance
Company, a subsidiary of American Eagle Group, Inc., to
American Financial Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN EAGLE GROUP, INC.
By: /s/ M. Philip Guthrie
----------------------------------
M. Philip Guthrie
Chairman of the Board, Chief Executive
Officer and President
Dated: April 15, 1997
EXHIBIT INDEX
Exhibit
Number Description Page
- -------- ----------- ----
99.1 April 11, 1997 American Eagle Group, Inc. press release
setting forth the details of the sale of the general
aviation insurance business of American Eagle Insurance
Company, a subsidiary of American Eagle Group, Inc., to
American Financial Group, Inc.
EXHIBIT 99.1
[AMERICAN EAGLE LOGO]
NEWS RELEASE
AMERICAN EAGLE GROUP, INC. ANNOUNCES
SALE OF ITS AVIATION OPERATIONS TO AMERICAN FINANCIAL GROUP, INC.
Dallas, Texas; Friday, April 11, 1997 -- American Eagle Group, Inc.
(NYSE:FLI) announced that its insurance subsidiary, American Eagle
Insurance Company (AEIC), has agreed to sell its general aviation insurance
business to American Financial Group, Inc. (AFG) in exchange for (i) 30% of
the estimated $30 million of unearned premiums to be transferred to AFG;
(ii) the book value of all furniture, fixtures and equipment to be
transferred to AFG; (iii) all funds collected by AFG with respect to
agents' balances relating to the general aviation insurance business and
which are in excess of 90 days old as of the closing of the transaction;
(iv) commissions of 4%, 2% and 1% of the direct written premiums on renewal
policies relating to the general aviation insurance business during the
first, second and third years, respectively, following the closing of the
transaction; (v) the assumption of certain liabilities including all
liabilities relating to general aviation policies issued by American Eagle
since 1993; and (vi) the transfer to AEIC of the Series D Preferred Stock
issued by the Company to AFG in December 1996. As a result of the
transaction, AFG's ownership in the Company will be reduced from 6,932,667
shares of the outstanding common stock (calculated on a fully converted
basis) to 116,000 shares.
AFG is a holding company which, through its subsidiaries, is engaged
primarily in specialty and multi-line property and casualty insurance
businesses and in the sale of tax-deferred annuities and certain life and
health insurance products. AFG's insurance group has in excess of $1.5
billion in policyholders' surplus. AFG's affiliate, Great American
Insurance Company (Great American) A.M. Best rated "A," and AEIC have
entered into a Reinsurance Agreement, pursuant to which Great American will
reinsure all aviation policies in force as of March 31, 1997 and all
aviation policies written or renewed by AEIC after March 31, 1997. In
addition, Great American will make available A.M. Best "A" rated paper for
all of American Eagle's general aviation product lines in the near future.
Additional regulatory filings to provide this coverage are in progress.
On March 25, 1997, A.M. Best downgraded AEIC from "B" to "D" after the
Company's announcement on March 22, 1997, of its results for the year ended
December 31, 1996, primarily attributable to the Company's previously
discontinued property and casualty operations. Such downgrading adversely
affected the acceptability in the marketplace of American Eagle's products,
even when assumption of liability endorsements of Best "A" rated carriers
were attached. The downgrade and financial condition of AEIC also
adversely affected the Company's ability to implement the previously
announced strategy of making "A" rated paper available for its general
aviation product lines through its reinsurers. The Company's financial
advisor, Credit Suisse First Boston, was engaged to review and develop
capital and strategic alternatives to maximize shareholder value, including
a sale of the Company or assets of the Company, a rights offering to
stockholders, a sale of securities, and other alternatives to increase
underwriting capacity. The Company did not receive any proposal for the
acquisition of the entire Company, and the only other proposal received by
the Company, which was not as favorable as the AFG proposal, was also for
the purchase of the general aviation insurance business. In light of the
adverse operating results for 1996 and the related downgrading in rating by
A.M. Best and resulting lack of access to "A" rated paper, the Board of
Directors of the Company concluded that the sale of the general aviation
insurance business was in the best interest of the Company's stockholders.
Subsequent to closing the transaction, AEIC will no longer issue insurance
policies but, instead, will be in runoff. Management of the Company will
focus on managing the claims under existing policies and the investment
portfolio, attempting to create residual value for the Company's
stockholders after satisfaction of AEIC's liabilities. It is not currently
possible to determine how much residual value, if any, will inure to the
Company's stockholders.
The Company, AEIC and AFG all have secured Board of Director's approval to
proceed with the transaction. The transaction will require approval by the
Company's stockholders, although stockholders owning a majority of the
Company's voting stock have agreed to vote in favor of the transaction.
The transaction is also subject to regulatory approval and other customary
conditions.
The common stock of American Eagle Group, Inc. trades on the New York Stock
Exchange under the symbol "FLI".
American Eagle Group is an insurance holding company that, through its
subsidiaries, markets and underwrites specialized property and casualty
coverages in the general aviation and private yacht markets.
Contacts:
M. Philip Guthrie Richard M. Kurz
Chairman, CEO Sr. Vice President, CFO
American Eagle Group, Inc. American Eagle Group, Inc.
12801 N. Central Expressway, #800 12801 N. Central Expressway, #800
Dallas, TX 75243 Dallas, TX 75243
(972) 448-1460 (972) 448-1477
