SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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):
February 12, 1998
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LIFE RE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-11340 01-0437851
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(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
969 HIGH RIDGE ROAD, STAMFORD, CONNECTICUT 06905
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(Address of Principal Executive Offices) (Zip Code)
(203) 321-3000
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(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
NYFS07...:\51\59451\0014\2119\RPT2118A.130
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ITEM 5. OTHER EVENTS
On February 12, 1998, Life Re Corporation (the "Company") released its
operating results and its unaudited consolidated financial data for the fiscal
year and the fourth quarter ended December 31, 1997. The Company also described
its recent Administrative Reinsurance(sm) transactions with respect to the
fourth quarter of 1997 and the first two months of fiscal year 1998. In
addition, the Company disclosed the discontinuance of its stock repurchase
program as well as the proposed addition of 1,500,000 shares to its stock option
plan.
The foregoing information is qualified in its entirety by reference to the
Exhibit which is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release, dated February 12, 1998.
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
LIFE RE CORPORATION
Date: February 13, 1998 By: /s/ W. Weldon Wilson
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Name: W. Weldon Wilson
Title: Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
Exhibit No.
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99.1 Press Release, dated February 12, 1998.
EXHIBIT 99.1
LIFE RE CORPORATION ANNOUNCES
19% INCREASE IN 1997 OPERATING EARNINGS,
DECLARES DIVIDEND INCREASE
Stamford, Connecticut -- February 12, 1998, Life Re Corporation (NYSE:LRE)
today announced that for the year ended December 31, 1997, operating earnings
(net income excluding after-tax realized investment gains) totaled $46.6
million, or $3.28 per share, compared to $38.3 million, or $2.75 per share in
1996, representing a 19% increase on a per share basis. Net income for 1997
totaled $49.5 million, or $3.48 per share, compared to $54.2 million, or $3.89
per share, in 1996. After-tax realized investment gains were $2.9 million in
1997 and $15.9 million in 1996, with 1996 gains including a $13.5 million gain
resulting from the sale of a strategic investment.
Fourth quarter operating earnings totaled $13.5 million, or $.94 per
share, compared to $12.2 million, or $.88 per share in last year's fourth
quarter, representing a 7% increase on a per share basis. For the same periods,
net income totaled $14.6 million, or $1.01 per share, and $13.2 million, or $.95
per share. After-tax realized investment gains were $1.1 million and $1.0
million in each of the respective quarterly periods.
Total revenues for the year were $645.8 million, an increase of 9% over
last year's total of $592.5 million. Total revenues in 1997 include realized
investment gains of $4.5 million compared to $17.2 million in 1996. Policy
revenues increased by 9% for the same period to $490.3 million from $451.0
million last year. Ordinary life policy revenues increased by 17% to $336.6
million from $286.9 million and group policy revenues decreased by 6% to $153.6
million from $164.1 million. Investment income increased by 21% to $151.0
million from $124.3 million last year.
Revenues totaled $172.0 million in the fourth quarter compared to $158.0
million last year, an increase of 9%. This increase is mainly attributable to
investment earnings which increased by 19% to $40.9 million from $34.5 million.
Policy revenues increased by 6% to $129.4 million from $122.0 million and
realized investment gains were basically level. Ordinary life policy revenues
increased by 17% to $90.1 million from $77.2 million, and group policy revenues
decreased by 12% to $39.3 million from $44.9 million.
Rodney A. Hawes, Jr., Chairman of Life Re, commented, "The 1997 fourth
quarter and full year results represented solid earnings for Life Re and reflect
strong growth in our ordinary life reinsurance business as well as favorable
results from several recent Administrative Reinsurance(sm)
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transactions. We reached $60 million in first year ordinary life reinsurance
premiums and, with the completion of the recently announced block reinsurance
transaction from Allianz Life Insurance Company of North America and the
acquisition of Mission Life Insurance Company, which is expected to close in the
first quarter of 1998, we secured four Administrative Reinsurance(sm)
transactions in 1997."
Life Re earlier announced its withdrawal from the group accident and
health and special risk pool reinsurance marketplace. Life Re will not renew or
accept new participations in group accident and health and special risk
reinsurance pools. Life Re previously had reduced or canceled certain pool
participations, and effective January 1, 1997, retroceded 50% of its 1997 group
accident and health and special risk reinsurance risks. For the quarter and year
ended December 31, 1997, Life Re had $32.0 million and $121.2 million,
respectively, of policy revenues related to group accident and health and
special risk reinsurance, reductions of 19% and 13%, respectively, from the same
periods last year. Life Re anticipates further declines of 50% in 1998 and 80%
in 1999. Life Re expects no adverse financial impact from its withdrawal from
this business.
On February 12, 1998 Life Re's Board of Directors authorized and declared
an increase in the Company's annualized cash dividend to $0.60 per share from
$0.52 per share, or to $0.15 per share per quarter from $0.13. The increase is
effective with the first quarter 1998 dividend payment. The first quarter
dividend for 1998 is payable on March 25, 1998 to stockholders of record at the
close of business on March 4, 1998. Furthermore, in light of the Company's
proposed offerings, the Board of Directors of the Company has elected to
discontinue Life Re's stock repurchase program. In addition, the Board approved
an amendment to the Company's Stock Option Plan, to be effective as of the date
it is approved by stockholders, whereby 1,500,000 additional shares will be
allocated to the Plan.
Since 1995, Life Re has acquired or is under contract to acquire ten
blocks of life insurance in force representing in excess of $2.0 billion in
assets. Mr. Hawes concluded: "The significant growth in our ordinary life
reinsurance business and an increasing number of Administrative Reinsurance(sm)
transactions, including our recent agreement to acquire 100% of the outstanding
stock of Lincoln Liberty Life Insurance Company and First Delaware Life
Insurance Company from First Lincoln Holdings, Inc., reflect our success in the
markets in which we have chosen to concentrate. We believe the Company is well
positioned to continue its growth in its two core lines of business as we enter
1998."
Life Re Corporation is a leading provider of ordinary life and group life
reinsurance in the United States through its subsidiary, Life Reassurance
Corporation of America.
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For Additional Information Contact:
Bruce I. Weiser - (203) 321-3084
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LIFE RE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS,
(UNAUDITED) EXCEPT PER SHARE DATA)
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THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
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REVENUES
<S> <C> <C> <C> <C>
Policy revenues $ 129,384 $ 122,047 $ 490,278 $ 450,992
Investment income 40,939 34,467 150,960 124,340
Realized investment gains 1,656 1,491 4,514 17,210
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Total revenues 171,979 158,005 645,752 592,542
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BENEFITS AND EXPENSES
Policy claims and benefits 88,518 86,848 341,044 332,476
Policy acquisition costs 37,005 30,338 142,144 111,933
Interest credited to policyholder
accounts 12,019 10,518 40,647 34,637
Interest expense 2,009 1,906 7,997 8,356
Distributions on capital securities 2,184 4,970
Other operating expenses 7,773 8,059 32,726 29,049
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Total benefits and expenses 149,508 137,669 569,528 516,451
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Income before federal income taxes 22,471 20,336 76,224 76,091
Provision for federal income taxes 7,864 7,118 26,678 21,890
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NET INCOME $ 14,607 $ 13,218 $ 49,546 $ 54,201
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PER SHARE INFORMATION:
Basic earnings per share 1.07 0.98 3.64 3.97
Diluted earnings per share 1.01 0.95 3.48 3.89
Diluted earnings per common share,
Excluding realized investment gains 0.94 0.88 3.28 2.75
Dividends per share 0.13 0.10 0.52 0.40
Weighted average shares outstanding
(diluted) 14,398 13,955 14,228 13,918
</TABLE>
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LIFE RE CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS,
(UNAUDITED) EXCEPT PER SHARE DATA)
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DECEMBER 31,
1997 1996
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CAPITAL STRUCTURE
<S> <C> <C>
Loans payable (average dollar-weighted interest rates
at December 31, 1997 and 1996 were 6.26% and 6.01%,
respectively) $ 125,000 $ 125,000
Capital securities (effective interest rate of 8.75%) $ 100,000
Common shareholders' equity:
Including the effect of FAS 115 $ 373,790 $ 290,111
Excluding the effect of FAS 115 $ 312,374 $ 265,257
Total capitalization:
Including the effect of FAS 115 $ 598,790 $ 415,111
Excluding the effect of FAS 115 $ 537,374 $ 390,257
Common shares outstanding, in thousands 13,631 13,528
Book value per common share:
Including the effect of FAS 115 $ 27.42 $ 21.45
Excluding the effect of FAS 115 $ 22.92 $ 19.61
Ratio of debt to total capitalization:
Including the effect of FAS 115 21% 30%
Excluding the effect of FAS 115 23% 32%
Ratio of debt and capital securities to total
capitalization:
Including the effect of FAS 115 38% 30%
Excluding the effect of FAS 115 42% 32%
ASSETS
Total assets $ 3,700,242 $ 2,519,320
Invested assets
At fair value $ 2,784,630 $ 1,833,242
At book value $ 2,683,155 $ 1,793,497
Effective yield 7.13% 7.59%
Fixed maturities (at fair value) $ 2,442,897 $ 1,720,589
Noninvestment grade $ 70,630 $ 75,761
Noninvestment grade as a percentage of total
invested assets 2.5% 4.1%
Effective yield 7.41% 7.80%
Average quality rating (Moody's/S&P) A1/A+ A2/A
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