<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11868
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3703575
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Chase Manhattan Plaza, 43rd Floor
New York, New York 10005
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (212) 898-5000
Former name, former address and former fiscal year, if changed since last
report:
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock:
<TABLE>
<S> <C>
(Class) (Outstanding at May 1, 1997)
Common Stock, $.01 par value 26,205,443 Shares
</TABLE>
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
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PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1 - Consolidated Financial Statements
Independent Accountants' Review Report 3
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 4
Consolidated Statements of Operations -
Three months ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings 12
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
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<PAGE> 3
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Stockholders
Zurich Reinsurance Centre Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Zurich
Reinsurance Centre Holdings, Inc. and Subsidiaries as of March 31, 1997, and the
related consolidated statements of operations and cash flows for the three-month
periods ended March 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Zurich Reinsurance Centre Holdings,
Inc. and Subsidiaries as of December 31, 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year then
ended (not presented herein) and in our report dated February 11, 1997, we
expressed an unqualified opinion on those consolidated financial statements.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
May 7, 1997
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<PAGE> 4
ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Fixed maturities available-for-sale (amortized cost: 3/31/97
$1,224,157; 12/31/96 $1,188,344) $1,211,762 $ 1,200,123
Equity securities available-for-sale (cost: 3/31/97 $144,347;
12/31/96 $129,051) 183,559 167,462
Investment in affiliate (cost: 3/31/97 $22,037; 12/31/96 $8,204) 22,037 8,204
Short-term investments, at cost, which approximates market 110,884 120,720
Cash and cash equivalents 327,869 251,506
---------- -----------
Total cash and invested assets 1,856,111 1,748,015
---------- -----------
Accrued investment income 19,525 18,517
Premiums receivable 226,733 235,960
Reinsurance recoverables:
Paid losses 1,400 1,600
Unpaid losses 49,088 40,054
Prepaid reinsurance premiums 8,482 3,208
Deferred policy acquisition costs 86,390 88,304
Deferred federal income taxes 44,044 34,674
Other assets 50,109 72,712
---------- -----------
Total assets $2,341,882 $ 2,243,044
========== ===========
LIABILITIES
Losses and loss adjustment expenses $1,012,230 $ 938,800
Unearned premiums 312,752 313,191
7 1/8% Senior Notes due 2023 198,418 198,413
Other liabilities 104,605 80,771
---------- -----------
Total liabilities 1,628,005 1,531,175
---------- -----------
STOCKHOLDERS' EQUITY
Preferred stock ($.10 par value, 20,000,000 shares
authorized; no shares outstanding) -- --
Common stock ($.01 par value, 50,000,000 shares
authorized; 26,205,443 and 26,191,953 shares issued
and outstanding at 3/31/97 and 12/31/96, respectively) 262 262
Paid-in capital 625,338 624,466
Unrealized appreciation of investments (net of deferred taxes of
$9,418 and $17,627 at 3/31/97 and 12/31/96, respectively) 17,399 32,563
Retained earnings 70,878 54,740
Treasury stock, at cost (0 and 5,588 shares at 3/31/97 and
12/31/96, respectively) -- (162)
---------- -----------
Total stockholders' equity 713,877 711,869
---------- -----------
Total liabilities and stockholders' equity $2,341,882 $ 2,243,044
========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
----------------------------
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
REVENUES
Net premiums written (net of premiums ceded of
$17,102 and $256 for the three months ended
March 31, 1997 and 1996, respectively) $ 179,237 $176,622
Increase (decrease) in unearned premiums (5,713) 2,810
--------- --------
Net premiums earned (net of premiums ceded of
$11,828 and $3,438 for the three months ended
March 31, 1997 and 1996, respectively) 184,950 173,812
Net investment income 26,650 21,582
Income from investment in Insurance Partners 10,949 258
Realized capital gains 5,288 1,421
Other income 162 46
--------- --------
Total revenues 227,999 197,119
--------- --------
EXPENSES
Losses and loss adjustment expenses (net of reinsurance
recoveries of $10,806 and $3,839 for the three months
ended March 31, 1997 and 1996, respectively) 138,640 126,277
Commissions 46,898 44,613
Other operating costs and expenses 14,124 11,823
Interest and amortization 4,203 3,844
--------- --------
Total expenses 203,865 186,557
--------- --------
Income before income taxes 24,134 10,562
Federal income tax expense 7,996 3,156
--------- --------
NET INCOME $ 16,138 $ 7,406
========= ========
PER SHARE DATA
Weighted average shares outstanding (in 000's) 26,196 26,133
========= ========
Net income $ 0.62 $ 0.28
========= ========
</TABLE>
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 16,138 $ 7,406
Adjustments to reconcile net income to net cash provided by
operating activities:
Losses and loss adjustment expenses, net 64,396 78,471
Unearned premiums, net (5,713) 2,810
Premiums receivable 9,227 (23,062)
Deferred policy acquisition costs 1,914 (1,531)
Current and deferred taxes 7,664 (2,519)
Other assets and other liabilities 8,741 4,416
Realized capital gains (5,288) (1,421)
--------- ---------
Net cash provided by operating activities 97,079 64,570
--------- ---------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Sales of fixed maturities 472,687 864,212
Maturities or calls of fixed maturities 24,577 28,360
Purchases of fixed maturities (513,958) (847,789)
Sales of equity securities 32,538 16,110
Purchases of equity securities (43,380) (19,607)
Net sales (purchases) of short-term investments 9,836 (32,561)
Cost of additions to property and equipment (397) (138)
--------- ---------
Net cash provided by (used in) investing activities (18,097) 8,587
--------- ---------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Payments of cash dividend to stockholders (2,619) (2,619)
Purchases of treasury stock -- (3,000)
--------- ---------
Net cash used in financing activities (2,619) (5,619)
--------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS 76,363 67,538
Cash and cash equivalents, beginning of period 251,506 206,699
--------- ---------
Cash and cash equivalents, end of period $ 327,869 $ 274,237
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, such financial statements do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal recurring accruals)
considered necessary for a fair presentation have been included. The results of
operations for the interim period are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997, as quarterly results
may be affected by several factors including, but not limited to, changes in the
interest rate environment and catastrophic losses. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements included in Zurich Reinsurance Centre Holdings, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1996.
Financial information has been included herein related to the consolidated
financial statements of Zurich Reinsurance Centre Holdings, Inc. ("ZRCH") and
its wholly-owned subsidiaries, principally Zurich Reinsurance Centre, Inc.
("ZRC") and ZC Insurance Company ("ZCIC"), (together with ZRCH, the "Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share", effective
for periods ending after December 15, 1997. SFAS No. 128 requires the
calculation and presentation on the face of the income statement of "basic"
earnings per share ("EPS") and, if applicable, "diluted" EPS. The adoption of
SFAS No. 128 is not expected to have a material effect on the Company's
reported EPS.
3. INCOME TAXES
The Company's overall effective tax rates of 33.1% and 29.9% for the three
months ended March 31, 1997 and 1996, respectively, had both operating income
and realized capital gain components. The effective tax rates on operating
income of 32.6% and 29.1% for the three months ended March 31, 1997 and 1996,
respectively, differed from the federal statutory rate of 35.0% due principally
to tax-exempt investment income and dividends. The effective tax rate on
realized capital gains approximated the federal statutory rate for the three
months ended March 31, 1997 and 1996.
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. SUBSEQUENT EVENT
On April 17, 1997, the Company entered into a definitive agreement to merge with
a subsidiary of the Zurich Group, its 65.7% shareholder. Under the agreement,
which was approved by unanimous vote of the Company's Board of Directors, the
Company's public shareholders will receive cash consideration at closing of
$39.50 per share. The agreement contains terms and conditions customary in
transactions of this type including provisions relating to approval of the
transaction by the Company's shareholders and certain regulatory consents. The
transaction is expected to close during the third quarter. The Company has also
reached an agreement in principle for the settlement of the shareholder class
action lawsuits pending in Delaware, which settlement is subject to court
approval.
-8-
<PAGE> 9
ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's pre-tax operating income (excluding realized capital gains)
increased 106.2% to $18.8 million in the first quarter of 1997, compared to $9.1
million for the first quarter of 1996. The Company's investment in Insurance
Partners, L.P. increased pre-tax operating results by $10.9 million and $0.3
million for the first quarter of 1997 and 1996, respectively.
Net income was $16.1 million for the first quarter of 1997, compared to $7.4
million for the corresponding period of 1996, due to a $6.2 million increase in
after-tax operating income and a $2.5 million increase in after-tax realized
capital gain activity.
Gross premiums written for the first quarter of 1997 increased 11.0% to $196.3
million, compared with $176.9 million in the first quarter of 1996. Net premiums
written for the first quarter of 1997 increased 1.5% to $179.2 million, compared
with $176.6 million in the first quarter of 1996. The Company entered into a
quota share treaty with members of the Zurich American Insurance Group (the "ZA
Quota Share") during 1995. The ZA Quota Share contributed $40.5 million and
$52.4 million to first quarter 1997 and 1996 gross premiums written,
respectively. This decline was offset by increased premiums from new bound
business. The increases in gross and net premiums written differ due to a ceded
reinsurance program that covers certain workers' compensation business written
on a primary basis. Net premiums earned for the first quarter of 1997 increased
6.4% to $185.0 million from $173.8 million for the comparable 1996 period. For
the first quarter of 1997, net premiums written increased less on a percentage
basis than net premiums earned due to the maturing of the Company's book of
business.
Losses and loss adjustment expenses for the first quarter of 1997 increased to
$138.6 million, a 9.8% increase over the comparable 1996 period. There were no
significant catastrophe losses in either the first quarter of 1997 or 1996.
Commissions for the first quarter of 1997 were $46.9 million compared to $44.6
million for the corresponding 1996 period. The increase in losses and
commissions is due to the growth in earned premiums as discussed above. The GAAP
loss and commission ratio for the first quarter of 1997 increased to 100.3% from
98.3% for the first quarter of 1996 due primarily to a 2.3 percentage point
increase in the loss ratio as higher reserves were established for certain
casualty business.
Other operating costs and expenses for the first quarter of 1997 increased 19.5%
to $14.1 million, compared to the corresponding period of 1996, due to increased
premium volume and changes in the mix of business written. Interest and
amortization expense for the first quarter of 1997 was $4.2 million compared to
$3.8 million for the first quarter of 1996.
ZRC's statutory combined ratio for the first quarter of 1997 increased to 106.5%
from 103.9% for the same period of 1996, primarily due to a 2.3 percentage point
increase in the loss ratio discussed above. ZRC's statutory combined ratio
differs from the Company's GAAP combined
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ratio primarily due to the deferral of certain acquisition costs and the
inclusion of certain holding company expenses, each of which is considered in
the Company's GAAP combined ratio.
Net investment income for the first quarter of 1997 was $26.7 million, a 23.5%
increase over the comparable 1996 period. Growth in net investment income
continues as the cash and invested asset base expands due to strong cash flows,
primarily attributable to underwriting operations. In addition, profit from the
Company's investment in Insurance Partners, L.P., increased after-tax operating
results for the first quarter of 1997 by $7.1 million, compared to $0.2 million
for the comparable 1996 period. The after-tax annualized net investment income
yield of 4.1% for the first quarter of 1997 was comparable to 4.0% for the first
quarter of 1996.
Pre-tax realized capital gains were $5.3 million for the first quarter of 1997,
compared to $1.4 million for the first quarter of 1996. The 1997 and 1996
realized capital gain activity is reflective of market conditions and is
consistent with the Company's investment philosophy, whereby capital gains
(losses) are realized to maximize total investment return.
The Company's overall effective tax rates of 33.1% and 29.9% for the three
months ended March 31, 1997 and 1996, respectively, had both operating income
and realized capital gain components. The effective tax rates on operating
income of 32.6% and 29.1% for the three months ended March 31, 1997 and 1996,
respectively, differed from the federal statutory rate of 35.0% due principally
to tax-exempt investment income and dividends. The effective tax rate on
realized capital gains approximated the federal statutory rate for the three
months ended March 31, 1997 and 1996.
FINANCIAL CONDITION
During the first three months of 1997, the Company's cash and invested assets
increased 6.2% to $1,856.1 million. The increase is principally due to cash
flows from operations. As of March 31, 1997, approximately 65% of the Company's
cash and invested assets were invested in fixed maturity securities, 11% in
equity securities and 24% in short-term investments and cash and cash
equivalents, compared to 69%, 10% and 21%, respectively, as of December 31,
1996.
Approximately 83% of the fixed maturity portfolio at March 31, 1997 and December
31, 1996 was invested in U.S. government obligations or securities rated
"triple-A" by Moody's Investors Service or Standard & Poor's Corporation. The
balance of the fixed maturity portfolio was invested in other investment-grade
fixed maturities. The duration of the Company's fixed maturity portfolio of 3.9
years as of March 31, 1997 approximated the 4.2 years duration at December 31,
1996.
Liabilities for gross losses and loss adjustment expenses (together, "loss
reserves") were $1,012.2 million as of March 31, 1997, a $73.4 million increase
from December 31, 1996. The increase in
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ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
loss reserves is due to reserves established for 1997 business offset by loss
payments.
Stockholders' equity at March 31, 1997 was $713.9 million compared to
$711.9 million at December 31, 1996. The increase in stockholders' equity is
primarily due to net income, partially offset by unrealized depreciation on the
invested asset portfolio.
Cash and cash equivalents and short-term investments as of March 31, 1997
increased to $438.8 million, or 17.9% since December 31, 1996, as a result of
operating cash flows and sector shifts consistent with the Company's investment
strategy.
Net cash provided by operating activities for the three months ended March 31,
1997 was $97.1 million, compared to $64.6 million for the three months ended
March 31, 1996. The increase in operating cash flows is primarily attributable
to underwriting operations. For the three months ended March 31, 1997, net cash
used in financing activities of $2.6 million resulted from the Company's
dividend payment. Net cash used in financing activities for the first three
months of 1996 was $5.6 million and resulted from the Company's stock repurchase
program and dividend payment.
SUBSEQUENT EVENT
On April 17, 1997, the Company entered into a definitive agreement to merge with
a subsidiary of the Zurich Group, its 65.7% shareholder. Under the agreement,
which was approved by unanimous vote of the Company's Board of Directors, the
Company's public shareholders will receive cash consideration at closing of
$39.50 per share. The agreement contains terms and conditions customary in
transactions of this type including provisions relating to approval of the
transaction by the Company's shareholders and certain regulatory consents. The
transaction is expected to close during the third quarter. The Company has also
reached an agreement in principle for the settlement of the shareholder class
action lawsuits pending in Delaware, which settlement is subject to court
approval.
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<PAGE> 12
ZURICH REINSURANCE CENTRE HOLDINGS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
- ---------------------------
In January 1997, four stockholders, each purporting to represent a class, filed
separate complaints against the Company, certain of the Company's directors and
officers and certain affiliates of the Company in the Court of Chancery of the
State of Delaware. On March 14, 1997, the four actions (William Steiner v.
Detlef Steiner et al., C.A. No. 15457-NC, filed January 13, 1997, Crandon
Capital Partners v. Steven M. Gluckstern et al., C.A. No. 15480-NC, filed
January 13, 1997, Howard Sande Feldman, Custodian for Jan Sharone Feldman v.
Steven M. Gluckstern et al., C.A. No. 15462-NC, filed January 14, 1997 and
Harvey Greenfield v. Zurich Reinsurance Centre Holdings, Inc. et al., C.A. No.
15466-NC, filed January 16, 1997) were consolidated into one suit captioned In
Re Zurich Reinsurance Centre Holdings, Inc. Shareholders Litigation, Cons. C.A.
No. 15457. The consolidated action alleges, among other things, breaches of the
defendants' fiduciary duties in connection with the Zurich Group's proposal made
during January 1997 to acquire all of the Company's publicly held shares for
$36.00 per share. The action seeks unspecified damages, injunctive relief and
attorneys' fees and expenses. On April 17, 1997, the Company reached an
agreement in principle for the settlement of this consolidated action, which
settlement is subject to court approval.
Other litigation pending against the Company and its subsidiaries is not
considered material or is ordinary routine litigation or arbitration incidental
to the business.
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<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description Page
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<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of April 17, 1997, by *
and among Zurich Centre Investments Limited, a Bermuda
corporation, Centre Merger Corp., a Delaware corporation, and
Zurich Reinsurance Centre Holdings, Inc., a Delaware
corporation
15 Letter regarding unaudited interim financial information 15
27 Financial Data Schedule 16
</TABLE>
- ---------------------------------------------
* Incorporated herein by reference from Registrant's Current Report on
Form 8-K, dated April 17,1997.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated April 17, 1997
with the SEC regarding the agreement to merge with a subsidiary of the Zurich
Group.
Omitted from this Part II are items which are inapplicable or to which
the answer is negative for the period covered.
-13-
<PAGE> 14
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.
Zurich Reinsurance Centre Holdings, Inc.
----------------------------------------
(Registrant)
Date May 9, 1997 /s/ Richard E. Smith
----------- ----------------------------------------
Richard E. Smith
President and Chief Executive Officer
Date May 9, 1997 /s/ Karen O'Connor Rubsam
----------- ----------------------------------------
Karen O'Connor Rubsam
Sr. Vice President, Chief Financial Officer
and Treasurer
-14-
<PAGE> 1
Exhibit 15
Acknowledgment Letter
Board of Directors and Stockholders
Zurich Reinsurance Centre Holdings, Inc.
We are aware of the incorporation by reference in the Registration Statement
(Form S-8 No. 33-75598) pertaining to the Zurich Reinsurance Centre, Inc.
Employees' Stock Purchase Plan of our report dated May 7, 1997 relating to the
unaudited consolidated interim financial statements of Zurich Reinsurance Centre
Holdings, Inc. which is included in its Form 10-Q for the quarter ended March
31, 1997.
We are also aware of the incorporation by reference in the Registration
Statement (Form S-8 No. 33-93390) pertaining to the Zurich Reinsurance Centre,
Inc. 401(k) Plan of our report dated May 7, 1997 relating to the unaudited
consolidated interim financial statements of Zurich Reinsurance Centre Holdings,
Inc. which is included in its Form 10-Q for the quarter ended March 31, 1997.
We are also aware of the incorporation by reference in the Registration
Statement (Form S-8 No. 333-04629) pertaining to the Zurich Reinsurance Centre
Holdings, Inc. 1995 Stock Option Plan of our report dated May 7, 1997 relating
to the unaudited consolidated interim financial statements of Zurich Reinsurance
Centre Holdings, Inc. which is included in its Form 10-Q for the quarter ended
March 31, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not part of
these registration statements prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ ERNST & YOUNG LLP
Stamford, Connecticut
May 7, 1997
-15-
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 1,211,762
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 183,559
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,506,205
<CASH> 327,869
<RECOVER-REINSURE> 1,400
<DEFERRED-ACQUISITION> 86,390
<TOTAL-ASSETS> 2,341,882
<POLICY-LOSSES> 1,012,230
<UNEARNED-PREMIUMS> 312,752
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 198,418
0
0
<COMMON> 262
<OTHER-SE> 713,615
<TOTAL-LIABILITY-AND-EQUITY> 2,341,882
184,950
<INVESTMENT-INCOME> 26,650
<INVESTMENT-GAINS> 5,288
<OTHER-INCOME> 11,111
<BENEFITS> 138,640
<UNDERWRITING-AMORTIZATION> 46,898
<UNDERWRITING-OTHER> 14,124
<INCOME-PRETAX> 24,134
<INCOME-TAX> 7,996
<INCOME-CONTINUING> 16,138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,138
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
