ZURICH REINSURANCE CENTRE HOLDINGS INC, DEFM14A, 1997-07-29

ZURICH REINSURANCE CENTRE HOLDINGS INC
DEFM14A, 1997-07-29
FIRE, MARINE & CASUALTY INSURANCE

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<PAGE> 1

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

ZURICH REINSURANCE CENTRE HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------
(3) Filing Party:

- --------------------------------------------------------------------------------
(4) Date Filed:

- --------------------------------------------------------------------------------
<PAGE> 2

LOGO

ZURICH REINSURANCE CENTRE HOLDINGS, INC.

ONE CHASE MANHATTAN PLAZA
43RD FLOOR
NEW YORK, NEW YORK 10005

July 29, 1997

To the Stockholders of ZURICH REINSURANCE CENTRE HOLDINGS, INC.:

You are cordially invited to attend a Special Meeting of Stockholders of
Zurich Reinsurance Centre Holdings, Inc. (the "Company") to be held at 10:00
a.m. on August 29, 1997, on the 60th floor of One Chase Manhattan Plaza, New
York, New York 10005.

As described in the accompanying Proxy Statement, at the Special Meeting
you will be asked to consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated April 17, 1997 (the "Merger Agreement"),
among Zurich Centre Investments Limited ("Parent"), Centre Merger Corp., an
indirect wholly owned subsidiary of Parent ("Sub"), and the Company, pursuant to
which Sub will be merged with and into the Company (the "Merger") and each
outstanding share of Common Stock of the Company ("Common Stock") not owned by
Parent, Zurich Insurance Company, Zurich International (Bermuda) Ltd. or any
subsidiaries of Parent (the "Zurich Stockholders") will be converted into the
right to receive $39.50 in cash, plus interest thereon from the Satisfaction
Date (as defined below) to the closing date for the Merger at the prime rate
announced by The Chase Manhattan Bank, N.A. on the Satisfaction Date if Parent
elects to extend the closing date to a date following the date when the
conditions to closing set forth in the Merger Agreement have been satisfied or
waived (the "Satisfaction Date").

Your Board of Directors, based upon the unanimous recommendation of a
special committee of independent directors (the "Special Committee"), has
determined that the terms of the Merger are fair to, and in the best interests
of, the Company and the holders of shares of Common Stock other than the Zurich
Stockholders (the "Independent Stockholders") and has approved the Merger
Agreement and the Merger by unanimous vote. In arriving at its decision, the
Board of Directors gave careful consideration to a number of factors described
in the accompanying Proxy Statement, including the opinion of Morgan Stanley &
Co. Incorporated ("Morgan Stanley"), financial advisor to the Special Committee,
to the effect that, as of the date of such opinion and based upon and subject to
certain matters stated therein, the consideration to be received in the Merger
by the Independent Stockholders, was fair, from a financial point of view, to
such stockholders. A copy of the written opinion of Morgan Stanley is included
as Appendix B to the accompanying Proxy Statement and should be read in its
entirety. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.

Consummation of the Merger is subject to certain conditions, including
approval and adoption of the Merger Agreement by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
thereon and the receipt of certain approvals from regulatory authorities. Only
holders of Common Stock of record at the close of business on July 28, 1997 are
entitled to notice of, and to vote at, the Special Meeting or any adjournments
or postponements thereof.

As of July 28, 1997, the directors and executive officers of the Company
beneficially owned, in the aggregate, 301,670 shares of Common Stock,
representing approximately 1.2% of such shares outstanding and the Zurich
Stockholders owned, in the aggregate, 17,217,572 shares of Common Stock,
representing approximately 65.7% of such shares outstanding. To the knowledge of
the Company, the directors and executive officers of the Company and the Zurich
Stockholders, who beneficially own enough shares to assure approval of the
Merger Agreement, intend to vote their shares of Common Stock in favor of the
approval and adoption of the Merger Agreement.

You are urged to read the accompanying Proxy Statement, which provides you
with a description of the terms of the proposed Merger and the Merger Agreement.
A copy of the Merger Agreement is included as
<PAGE> 3

Appendix A to the accompanying Proxy Statement. If the Merger is consummated,
holders of Common Stock who properly demand appraisal prior to the stockholder
vote on the Merger Agreement, do not vote in favor of approval of the Merger
Agreement and otherwise comply with the requirements of Section 262 of the
Delaware General Corporation Law will be entitled to statutory appraisal rights.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD. FAILURE TO RETURN A PROPERLY
EXECUTED PROXY CARD OR VOTE AT THE SPECIAL MEETING WOULD HAVE THE SAME EFFECT AS
A VOTE AGAINST THE MERGER AGREEMENT. EXECUTED PROXIES WITH NO INSTRUCTIONS
INDICATED THEREON WILL BE VOTED "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT.

Please do not send in any stock certificates at this time. If the Merger is
consummated, you will be sent instructions concerning the surrender of your
shares.

Thank you for your interest and participation.

Sincerely,

LOGO

STEVEN M. GLUCKSTERN
Chairman
<PAGE> 4

ZURICH REINSURANCE CENTRE HOLDINGS, INC.
ONE CHASE MANHATTAN PLAZA
43RD FLOOR
NEW YORK, NEW YORK 10005

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1997

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of ZURICH
REINSURANCE CENTRE HOLDINGS, INC. (the "Special Meeting") will be held on August
29, 1997, at 10:00 a.m., on the 60th floor of One Chase Manhattan Plaza, New
York, New York 10005, for the following purposes:

(i) To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated April 17, 1997 (the "Merger
Agreement"), among Zurich Centre Investments Limited, a Bermuda corporation
("Parent"), Centre Merger Corp., a Delaware corporation and an indirect
wholly owned subsidiary of Parent ("Sub"), and Zurich Reinsurance Centre
Holdings, Inc., a Delaware corporation (the "Company"). A copy of the
Merger Agreement is attached to the accompanying Proxy Statement as
Appendix A. As more fully described in the Proxy Statement, the Merger
Agreement provides that: (A) Sub would be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation;
(B) the Company would thereupon become an indirect wholly owned subsidiary
of Parent; and (C) each outstanding share of common stock, par value $0.01
per share (the "Common Stock"), of the Company (other than certain shares
owned by the Company, Parent, Zurich Insurance Company, Zurich
International (Bermuda) Ltd. or any subsidiaries of Parent which would be
canceled and shares held by stockholders who exercise their appraisal
rights under Delaware law) would be converted into the right to receive
$39.50 in cash, plus interest thereon from the Satisfaction Date (as
defined below) to the closing date for the Merger at the prime rate
announced by The Chase Manhattan Bank, N.A. on the Satisfaction Date if
Parent elects to extend the closing date to a date following the date when
the conditions to closing set forth in the Merger Agreement have been
satisfied or waived (the "Satisfaction Date").

(ii) To vote to adjourn the Special Meeting to solicit additional
proxies in the event that the number of proxies sufficient to approve the
Merger Agreement has not been received by the date of the Special Meeting.

(iii) To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on July 28, 1997, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Special Meeting. Only holders of Common Stock of record at the
close of business on that date will be entitled to notice of and to vote at the
Special Meeting or any adjournments or postponements thereof.

The accompanying Proxy Statement describes the Merger Agreement, the
proposed Merger and the actions to be taken in connection with the Merger. To
ensure that your vote will be counted, please complete, date, sign and return
the enclosed proxy card, whether or not you plan to attend the Special Meeting.
You may revoke your proxy in the manner described in the accompanying Proxy
Statement at any time before it is voted at the Special Meeting. If the Merger
is consummated, holders of Common Stock who properly demand appraisal prior to
the stockholder vote on the Merger Agreement, do not vote in favor of approval
of the Merger Agreement and otherwise comply with the requirements of Section
262 of the Delaware General Corporation Law will be entitled to statutory
appraisal rights.

By Order of the Board of Directors
LOGO
Mark R. Sarlitto
Secretary
New York, N.Y.
July 29, 1997
<PAGE> 5

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.

THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
COMMON STOCK ENTITLED TO VOTE THEREON IS REQUIRED TO APPROVE AND ADOPT THE
MERGER AGREEMENT. WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER
DESCRIBED IN THE ATTACHED PROXY STATEMENT. ANY STOCKHOLDER PRESENT AT THE
SPECIAL MEETING, INCLUDING ANY ADJOURNMENT OR POSTPONEMENT THEREOF, MAY REVOKE
SUCH HOLDER'S PROXY AND VOTE PERSONALLY ON THE MERGER AGREEMENT AT THE SPECIAL
MEETING. EXECUTED PROXIES WITH NO INSTRUCTIONS INDICATED THEREON WILL BE VOTED
"FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

PLEASE DO NOT SEND YOUR COMMON STOCK CERTIFICATES AT THIS TIME.
<PAGE> 6

ZURICH REINSURANCE CENTRE HOLDINGS, INC.
ONE CHASE MANHATTAN PLAZA
NEW YORK, N.Y. 10005

------------------------

PROXY STATEMENT
------------------------

SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1997
------------------------

This Proxy Statement is being furnished to the holders of outstanding
shares of Common Stock, par value $0.01 per share (the "Common Stock"), of
Zurich Reinsurance Centre Holdings, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") for use at the Special Meeting of
Stockholders to be held on August 29, 1997, at 10:00 a.m. on the 60th floor of
One Chase Manhattan Plaza, New York, New York 10005, and at any adjournments or
postponements thereof (the "Special Meeting"). The Board has fixed the close of
business on July 28, 1997, as the record date (the "Record Date") for the
determination of stockholders entitled to notice of, and to vote at, the Special
Meeting.

At the Special Meeting, the holders of outstanding shares of Common Stock
(the "Stockholders") will consider and vote upon a proposal to approve and adopt
an Agreement and Plan of Merger dated April 17, 1997 (the "Merger Agreement"),
among Zurich Centre Investments Limited, a Bermuda corporation ("Parent"),
Centre Merger Corp., a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Sub"), and the Company. A copy of the Merger Agreement is
attached to this Proxy Statement as Appendix A. Pursuant to the Merger Agreement
and subject to satisfaction of the conditions set forth therein, (i) Sub would
be merged with and into the Company (the "Merger"), with the Company continuing
as the surviving corporation (the "Surviving Corporation"), (ii) the Company
would thereupon become an indirect wholly owned subsidiary of Parent and (iii)
each outstanding share of Common Stock (other than certain shares owned by the
Company which would be canceled, shares owned by Parent, Zurich Insurance
Company ("Zurich Group"), Zurich International (Bermuda) Ltd. or any
subsidiaries of Parent (the "Zurich Stockholders") which would also be canceled
and shares ("Dissenting Shares") held by Stockholders who properly exercise
their appraisal rights pursuant to Section 262 of the Delaware General
Corporation Law (the "DGCL")) would be converted into the right to receive
$39.50 in cash, plus interest thereon from the Satisfaction Date (as defined
below) to the closing date for the Merger at the prime rate announced by The
Chase Manhattan Bank, N.A. on the Satisfaction Date if Parent elects to extend
the closing date to a date following the date when the conditions to closing set
forth in the Merger Agreement have been satisfied or waived (the "Satisfaction
Date").

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.

Stockholders are urged to read and consider carefully the information
contained in this Proxy Statement.

This Proxy Statement, the accompanying Notice of Special Meeting and the
accompanying proxy are first being mailed to Stockholders on or about August 1,
1997.

------------------------

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE PROXY CARD.
<PAGE> 7

------------------------

NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES THEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON.

------------------------

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

------------------------

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH
RESPECT TO THE FINANCIAL CONDITION OF THE COMPANY AND THE PLANS FOR THE COMPANY
FOLLOWING THE MERGER, INCLUDING STATEMENTS RELATING TO PROJECTIONS OF THE
COMPANY'S FINANCIAL PERFORMANCE (SEE "CERTAIN PROJECTED FINANCIAL DATA") AND THE
PLANS FOR THE COMPANY FOLLOWING THE MERGER (SEE "SPECIAL FACTORS -- PLANS FOR
THE COMPANY AFTER THE MERGER"). THESE FORWARD-LOOKING STATEMENTS ARE BASED ON
THE COMPANY'S EXPECTATIONS AND ON THE FACTORS SET FORTH IN THE ABOVE-MENTIONED
SECTIONS OF THE PROXY STATEMENT AND ARE SUBJECT TO THE UNCERTAINTIES AND
ASSUMPTIONS SET FORTH IN SUCH SECTIONS OF THE PROXY STATEMENT, SOME OF WHICH ARE
BEYOND THE COMPANY'S CONTROL. FURTHER INFORMATION ON OTHER FACTORS WHICH COULD
AFFECT SUCH FORWARD-LOOKING STATEMENTS IS INCLUDED IN THE INFORMATION
INCORPORATED BY REFERENCE HEREIN. SEE "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."

------------------------

The date of this Proxy Statement is July 29, 1997.
<PAGE> 8

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS............................ Cover
INDEX TO DEFINED TERMS............................................................... iii
SUMMARY.............................................................................. 1
The Special Meeting................................................................ 1
Special Factors.................................................................... 1
Interests of Certain Persons in the Merger......................................... 4
Appraisal Rights................................................................... 6
Solicitation of Proxies............................................................ 6
The Merger......................................................................... 6
The Parties........................................................................ 8
Security Ownership of Management and Certain Beneficial Owners..................... 9
Market Price and Dividend Information.............................................. 9
Certain Projected Financial Data................................................... 9
Selected Financial Data............................................................ 9
THE SPECIAL MEETING.................................................................. 10
Matters to Be Considered at the Special Meeting.................................... 10
Record Date and Voting............................................................. 10
Vote Required; Revocability of Proxies............................................. 11
Appraisal Rights................................................................... 11
Solicitation of Proxies............................................................ 13
THE PARTIES.......................................................................... 14
The Company........................................................................ 14
Zurich Group....................................................................... 14
Parent............................................................................. 14
Sub................................................................................ 14
SPECIAL FACTORS...................................................................... 15
Background of the Merger........................................................... 15
Purpose and Structure of the Merger................................................ 22
Recommendation of the Special Committee and Board of Directors of the Company;
Fairness of the Merger.......................................................... 22
Opinion of Financial Advisor to the Special Committee.............................. 26
Summary of Financial Analysis of Donaldson, Lufkin & Jenrette Securities
Corporation..................................................................... 29
Plans for the Company after the Merger............................................. 32
Interests of Certain Persons in the Merger......................................... 34
Certain Effects of the Merger...................................................... 36
Certain Federal Income Tax Consequences............................................ 36
Anticipated Accounting Treatment................................................... 37
Regulatory Approvals............................................................... 37
Sources of Funds; Fees and Expenses................................................ 37
THE MERGER AGREEMENT................................................................. 39
Effective Time..................................................................... 39
The Merger......................................................................... 39
Representations and Warranties..................................................... 40
Conduct of the Business Pending the Merger......................................... 41
No Solicitation; Fiduciary Out..................................................... 42
Other Agreements of the Company, Parent and Sub.................................... 42
Stock Options; Restricted Stock.................................................... 43
Indemnification and Insurance...................................................... 43
</TABLE>

i
<PAGE> 9

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Conditions to the Merger........................................................... 44
Termination........................................................................ 44
Expenses........................................................................... 44
Amendment; Waiver.................................................................. 45
CERTAIN PROJECTED FINANCIAL DATA..................................................... 46
SELECTED FINANCIAL DATA.............................................................. 48
RELATED PARTY TRANSACTIONS........................................................... 50
Business with Zurich Group and its Affiliates...................................... 50
Insurance Partners, L.P............................................................ 50
Investment Management Agreements................................................... 50
Real Estate Leasing Arrangements................................................... 51
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS....................... 52
Directors and Executive Officers of the Company, Zurich Group, Parent and Sub...... 52
MARKET PRICE AND DIVIDEND INFORMATION................................................ 53
CERTAIN TRANSACTIONS IN THE COMMON STOCK............................................. 53
STOCKHOLDER LITIGATION............................................................... 54
INDEPENDENT PUBLIC ACCOUNTANTS....................................................... 55
STOCKHOLDER PROPOSALS................................................................ 55
ADDITIONAL INFORMATION............................................................... 55
AVAILABLE INFORMATION................................................................ 55
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................................... 56
APPENDIX A -- THE MERGER AGREEMENT
APPENDIX B -- FAIRNESS OPINION OF MORGAN STANLEY
APPENDIX C -- SECTION 262 OF THE DGCL
APPENDIX D -- CERTAIN INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS OF
ZURICH GROUP, PARENT, SUB AND THE COMPANY
</TABLE>

ii
<PAGE> 10

INDEX TO DEFINED TERMS

<TABLE>
<S> <C>
Acquisition.......................................................................... 33
Act.................................................................................. 33
Adjournment Proposal................................................................. 10
Board................................................................................ Cover
Case One............................................................................. 46
Case Two............................................................................. 46
Case Three........................................................................... 46
CDOI................................................................................. 33
CDRS................................................................................. 33
Centre Merger........................................................................ 2
Centre NY............................................................................ 2
Centre U.S........................................................................... 3
Certificates......................................................................... 40
Certificate of Merger................................................................ 39
CIS.................................................................................. 50
Closing Date......................................................................... 39
Common Stock......................................................................... Cover
Company.............................................................................. Cover
Company Options...................................................................... 4
Company Stock Plan................................................................... 4
Connecticut Department............................................................... 7
Consolidation Order.................................................................. 3
Court................................................................................ 54
Cravath.............................................................................. 18
DCF.................................................................................. 31
December Report...................................................................... 30
Defendants........................................................................... 3
DGCL................................................................................. Cover
Dissenting Shares.................................................................... Cover
DLJ.................................................................................. 2
Effective Time....................................................................... 6
Engagement Letter.................................................................... 29
Exchange Act......................................................................... 3
Financial Projections................................................................ 9
GAAP................................................................................. 46
Group Office Space................................................................... 51
Holders.............................................................................. 43
HSR Act.............................................................................. 37
I/B/E/S.............................................................................. 27
Independent Stockholders............................................................. 2
Insurance Partners................................................................... 50
Investment........................................................................... 3
Investment Agreements................................................................ 50
LeBoeuf.............................................................................. 17
Memorandum of Understanding.......................................................... 54
Merger............................................................................... Cover
Merger Agreement..................................................................... Cover
</TABLE>

iii
<PAGE> 11

<TABLE>
<S> <C>
Merger Consideration................................................................. 39
Morgan Stanley....................................................................... 2
NYSE................................................................................. 55
Office Space......................................................................... 51
Operations........................................................................... 28
Option Consideration................................................................. 4
Parent............................................................................... Cover
Paying Agent......................................................................... 6
Plaintiffs........................................................................... 17
Price................................................................................ 21
price/book multiple.................................................................. 30
Primecap............................................................................. 18
Proposal............................................................................. 3
Proposed Transaction................................................................. 17
Public Shares........................................................................ 2
Record Date.......................................................................... Cover
Relocation........................................................................... 3
Repurchase Price..................................................................... 3
Retrocessional Agreement............................................................. 50
Satisfaction Date.................................................................... Cover
SEC.................................................................................. 55
Senior Notes......................................................................... 15
Schedule 13E-3....................................................................... 55
Special Committee.................................................................... 2
Special Meeting...................................................................... Cover
Stop Loss Agreement.................................................................. 50
Stockholder Litigation............................................................... 3
Stockholders......................................................................... Cover
Sub.................................................................................. Cover
Sublease............................................................................. 51
Subsequent Act....................................................................... 33
Surviving Corporation................................................................ Cover
Takeover Proposal.................................................................... 7
Tax Credits.......................................................................... 33
Unvested Shares...................................................................... 43
Willkie Farr......................................................................... 16
ZA Quota Share Agreement............................................................. 50
ZCIC................................................................................. 14
ZIB.................................................................................. 52
ZRC.................................................................................. 2
Zurich American...................................................................... 50
Zurich Group......................................................................... Cover
Zurich Group Board................................................................... 16
Zurich Stockholders.................................................................. Cover
</TABLE>

iv
<PAGE> 12

SUMMARY

The following is a brief summary of material information contained
elsewhere in this Proxy Statement. This summary is not intended to be a complete
description and is qualified in its entirety by reference to the more detailed
information contained in or incorporated by reference in this Proxy Statement or
in the documents attached as Appendices hereto. Capitalized terms used but not
defined in this Summary shall have the meanings ascribed to them elsewhere in
this Proxy Statement and an index to defined terms is located at pages iii and
iv (see "Index to Defined Terms"). Stockholders are urged to read this Proxy
Statement and the Appendices hereto in their entirety.

THE SPECIAL MEETING

Matters to be Considered at the Special Meeting. The Special Meeting is
scheduled to be held at 10:00 a.m. on August 29, 1997 on the 60th floor of One
Chase Manhattan Plaza, New York, New York 10005. At the Special Meeting,
Stockholders will consider and vote upon (i) a proposal to approve and adopt the
Merger Agreement, (ii) the Adjournment Proposal (as defined below) and (iii)
such other matters as may properly be brought before the Special Meeting. See
"The Special Meeting -- Matters to Be Considered at the Special Meeting."

Record Date and Voting. The Record Date for the Special Meeting is the
close of business on July 28, 1997. At the close of business on the Record Date,
there were 26,205,443 shares of Common Stock outstanding and entitled to vote,
held by approximately 266 Stockholders of record. Each holder of Common Stock on
the Record Date will be entitled to one vote for each share held of record. The
presence, either in person or by proxy, of a majority of the outstanding shares
of Common Stock entitled to be voted is necessary to constitute a quorum at the
Special Meeting. See "The Special Meeting -- Record Date and Voting."

Vote Required; Revocability of Proxies. Approval and adoption of the
Merger Agreement will require the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock entitled to vote thereon. As of July
28, 1997, the directors and executive officers of the Company beneficially
owned, in the aggregate, 301,670 shares of Common Stock, representing
approximately 1.2% of such shares outstanding and the Zurich Stockholders owned,
in the aggregate, 17,217,572 shares of Common Stock, representing approximately
65.7% of such shares outstanding. To the knowledge of the Company, the directors
and executive officers of the Company and the Zurich Stockholders, who
beneficially own enough shares to assure approval of the Merger Agreement,
intend to vote their shares in favor of the approval and adoption of the Merger
Agreement.

The required vote of the Stockholders on the Merger Agreement is based upon
the total number of outstanding shares of Common Stock. The failure to submit a
proxy card (or vote in person at the Special Meeting) or the abstention from
voting by a Stockholder (including broker non-votes) will have the same effect
as a vote against the Merger Agreement. Brokers who hold shares of Common Stock
as nominees will not have discretionary authority to vote such shares in the
absence of instructions from the beneficial owners thereof. See "The Special
Meeting -- Vote Required; Revocability of Proxies."

A Stockholder may revoke a proxy at any time prior to its exercise by (i)
delivering to Mark R. Sarlitto, Corporate Secretary, Zurich Reinsurance Centre
Holdings, Inc., One Chase Manhattan Plaza, 43rd Floor, New York, N.Y. 10005, a
written notice of revocation prior to the Special Meeting, (ii) delivering prior
to the Special Meeting a duly executed proxy bearing a later date or (iii)
attending the Special Meeting and voting in person. The presence of a
Stockholder at the Special Meeting will not in and of itself automatically
revoke such Stockholder's proxy. If no instructions are indicated on a properly
executed proxy, such proxy will be voted "FOR" approval and adoption of the
Merger Agreement.

SPECIAL FACTORS

Background of the Merger. For a description of the events leading to the
approval and adoption of the Merger Agreement by the Company's Board of
Directors, see "Special Factors -- Background of the Merger."
<PAGE> 13

Purpose and Structure of the Merger. The purpose for the Merger is to
effect the acquisition by Parent of all the remaining equity interests in the
Company not currently owned by the Zurich Stockholders for the reasons described
in "Special Factors -- Purpose and Structure of the Merger." The acquisition of
those equity interests, represented by the shares of Common Stock outstanding as
of the Effective Time (as defined below) and not currently owned by the Zurich
Stockholders (the "Public Shares") from the holders of such shares (the
"Independent Stockholders"), is structured as a cash merger in order to transfer
ownership of those equity interests to Parent in a single transaction. Zurich
Group considered various alternatives to the Merger, including the acquisition
by Zurich Group or one of its affiliates of the Public Shares, the possibility
of merging the operations of Centre NY (as defined below) and ZRC (as defined
below), and changing the focus of the Company and Centre NY without concurrent
structural changes. Specifically, consideration was given as to whether ZRC
should attempt to develop a finite risk insurance business without any
reorganization of the corporate structure of the Company. Alternatives to the
Merger were rejected because the Merger was the most efficient way of
accomplishing the purposes set forth in "Special Factors -- Purpose and
Structure of the Merger."

Recommendation of the Special Committee and Board of Directors; Fairness of
the Merger. A special committee (the "Special Committee") of three directors of
the Company who are not directors of Zurich Group or any other Zurich Group
affiliate, or officers or employees of Zurich Group or its affiliates concluded,
and based on such conclusion the Board of Directors of the Company (the "Board")
concluded, that the terms of the Merger are fair to the Independent
Stockholders. Accordingly, the Board, based upon the unanimous recommendation of
the Special Committee, has unanimously approved and adopted the Merger
Agreement. The Board recommends a vote FOR approval and adoption of the Merger
Agreement. For a discussion of the factors considered by the Special Committee
and the Board in making their recommendations, see "Special
Factors -- Recommendation of the Special Committee and Board of Directors of the
Company; Fairness of the Merger."

Opinion of Financial Advisor to the Special Committee. On April 17, 1997,
Morgan Stanley & Co. Incorporated ("Morgan Stanley") delivered its written
opinion to the Special Committee that as of such date the consideration to be
received by the Independent Stockholders in the Merger is fair from a financial
point of view. The full text of the written opinion of Morgan Stanley, which
sets forth assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached hereto as Appendix B and
is incorporated herein by reference. Holders of Public Shares are urged to, and
should, read such opinion in its entirety. See "Special Factors -- Opinion of
Financial Advisor to the Special Committee."

Summary of Financial Analysis of Donaldson, Lufkin & Jenrette Securities
Corporation. Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") was
retained by Parent to act solely as Parent's and Zurich Group's financial
advisor (and not the advisor to or agent of any other Person) in connection with
the Proposed Transaction (as defined below) and the Merger and other matters
arising in connection therewith. DLJ was not requested to, and did not, render
any opinion (oral or written) or advice concerning the fairness of the Merger
Consideration (as defined below) to the Independent Stockholders or to any other
party (including Zurich Group and Parent), although DLJ did conduct various
valuation analyses with respect to the Proposed Transaction. See "Special
Factors -- Summary of Financial Analysis of Donaldson, Lufkin & Jenrette
Securities Corporation."

Plans for the Company after the Merger. Parent intends, subject to certain
conditions, including receipt of all necessary regulatory approvals, to merge
(the "Centre Merger") the operations of Centre Reinsurance Company of New York
("Centre NY"), an indirect wholly owned subsidiary of Parent, with and into the
operations of Zurich Reinsurance Centre, Inc. ("ZRC"), the Company's principal
operating subsidiary, simultaneously with or promptly following the Merger.
Centre NY and ZRC will analyze how best to integrate the management of the two
entities after the Centre Merger. It is expected that the executive officers of
the combined entity will be designated from the executive officers of each of
Centre NY and ZRC. Richard Smith, the Chief Executive Officer and President of
ZRC, will serve as Chief Executive Officer and David Wasserman, the President
and Chief Executive Officer of Centre NY, will serve as Vice Chairman of the
Board of Directors of the surviving corporation of the Centre Merger. Certain
Centre NY and ZRC professionals will be assigned new roles at the holding
company level or other affiliated entities.

2
<PAGE> 14

In connection with the funding of the Merger Consideration (as defined
below) and related fees and expenses, Centre NY intends to repurchase and
subsequently cancel certain common shares of its capital stock from Centre
Reinsurance (U.S.) Limited ("Centre U.S."), an indirect wholly owned subsidiary
of Parent, for approximately $245.9 million (the "Repurchase Price"). The plan
for the stock repurchase and cancellation will be authorized and approved by the
Board of Directors of Centre NY. See "Special Factors -- Sources of Funds; Fees
and Expenses."

Certain Effects of the Merger. Upon consummation of the Merger, each
Public Share, other than shares held by Stockholders who properly exercise their
appraisal rights under the DGCL ("Dissenting Shares"), will be converted into
the right to receive $39.50 in cash, plus interest thereon from the Satisfaction
Date to the closing date for the Merger at the prime rate announced by The Chase
Manhattan Bank, N.A. on the Satisfaction Date if Parent elects to extend the
closing date to a date following the Satisfaction Date. The Independent
Stockholders will cease to have any ownership interest in the Company or rights
as stockholders. The Independent Stockholders will no longer benefit from any
increases in the value of the Company and will no longer bear the risk of any
decreases in value of the Company.

Following the Merger, Parent, which currently owns, together with the other
Zurich Stockholders, approximately 65.7% of the outstanding shares of Common
Stock, will own 100% of the Surviving Corporation's outstanding shares of common
stock.

As a result of the Merger, the Company will be privately held and there
will be no public market for the Common Stock. Upon consummation of the Merger,
the Common Stock will cease to be listed on the NYSE and the registration of the
Common Stock under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") will be terminated. See "Special Factors -- Certain Effects of
the Merger."

Stockholder Litigation. On or about January 13, 1997, various litigation
was commenced against the Company by Stockholders of the Company in Delaware
state court. These actions, purportedly named as class actions on behalf of all
Independent Stockholders, varyingly named the Company, certain of its directors,
certain of its officers, Zurich Group and certain affiliates of Zurich Group as
defendants. In these actions, plaintiffs alleged that the defendants breached
their fiduciary duties to plaintiffs and the Company's other Independent
Stockholders in connection with the original proposal of Zurich Group to acquire
the Public Shares for $36.00 per share. A stipulation and order consolidating
these actions (the "Consolidation Order") under the caption In re Zurich
Reinsurance Centre Holdings Shareholders Litigation (the "Stockholder
Litigation"), Consolidated Index No. 15457-NC, was entered by the Court (as
defined below) on March 14, 1997.

The defendants in the Stockholder Litigation are the Company, Zurich Group,
Parent and the following eleven directors and/or officers of the Company:
William H. Bolinder, Philip Caldwell, Laurence W. Cheng, Steven M. Gluckstern,
Judith Richards Hope, Rolf Hueppi, Robert T. Marto, Michael D. Palm, George G.C.
Parker, Richard E. Smith and Detlef Steiner (collectively, "Defendants").

3
<PAGE> 15

protecting the interests of Plaintiffs because Zurich Group allegedly dominates
and controls the Board; and that Defendants timed the announcement of the offer
to purchase the Public Shares to place an artificial lid or cap on the market
price for the Company's stock to enable Zurich Group to acquire the Public
Shares at the lowest possible price.

The parties to these actions have entered into a Memorandum of
Understanding, dated April 17, 1997, providing for Parent to increase its offer
from $36 per share to $39.50 per share in consideration for the settlement of
such actions. The settlement is subject to execution of a definitive Stipulation
of Settlement, the completion by plaintiffs of any additional necessary
discovery and court approval following notice to the Independent Stockholders.
In connection with the proposed settlement, the plaintiffs intend to apply for
an award of attorneys' fees and litigation expenses in the amount of $600,000.
The defendants have agreed not to oppose this application.

The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Independent Stockholders. See "Stockholder Litigation."

Certain U.S. Federal Income Tax Consequences. The receipt of cash for
Public Shares pursuant to the Merger will be a taxable transaction for U.S.
federal income tax purposes and may be a taxable transaction for foreign, state
and local income tax purposes as well. Independent Stockholders should consult
their own tax advisors regarding the U.S. federal income tax consequences of the
Merger, as well as any tax consequences under the laws of any state or other
jurisdiction. The Company will not recognize any gain or loss as a result of the
Merger for U.S. federal income tax purposes. See "Special Factors -- Certain
Federal Income Tax Consequences."

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the Special Committee and of the Board
with respect to the Merger, the Independent Stockholders should be aware that
certain officers and directors have certain interests summarized below that may
be in addition to, or different from, the interests of the Independent
Stockholders. For a more detailed discussion of such interests, see "Special
Factors -- Interest of Certain Persons in the Merger." The Special Committee and
the Board were aware of these interests and considered them along with other
matters described under "Special Factors -- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger."

Common Stock and Option Ownership. As of July 28, 1997, the executive
officers and directors of the Company beneficially owned an aggregate of 301,670
shares of Common Stock, constituting approximately 1.2% of the total number of
shares of Common Stock then outstanding. To the knowledge of the Company, such
individuals intend to vote all their shares in favor of the Merger. If the
Merger is consummated, such persons will receive, in the aggregate,
approximately $14,201,913 for their shares of Common Stock and Company Options
(as defined below). At the Effective Time, each holder of a then outstanding
option ("Company Options"), whether or not vested and exercisable, to purchase
shares of Common Stock under the Company's 1995 Stock Option Plan (the "Company
Stock Plan"), will, in settlement thereof, receive (except under the
circumstances described in "The Merger Agreement -- Stock Options; Restricted
Stock" relating to the Company's ability to defer certain payments) from the
Company for each share of Common Stock subject to such option an amount (subject
to any applicable withholding tax) in cash equal to the excess of the Merger
Consideration per share over the per share exercise price of such option (the
"Option Consideration"). Under the Merger Agreement, except under the
circumstances described in "The Merger Agreement -- Stock Options; Restricted
Stock" relating to the Company's ability to defer certain payments, shares of
the Common Stock held as of the Effective Time by grantees under the Company's
Restricted Stock Plan, as Amended and Restated, will be treated in a manner
consistent with shares of Common Stock held by the Independent Stockholders,
whether or not the grantee's rights in respect of such shares have vested.

4
<PAGE> 16

For each executive officer and director of the Company who owns shares of
Common Stock or Company Options, the following table sets forth, as of July 28,
1997, (i) the aggregate number of shares of Common Stock owned by such
individuals (including shares currently unvested under the Company's Restricted
Stock Plan), (ii) the number of currently unvested shares granted to such
individuals, (iii) the number of Company Options granted such individuals (none
of which are currently vested), (iv) the amounts to be received by such
individuals for the unvested shares of Common Stock and Company Options pursuant
to the Merger, and (v) the aggregate amounts to be received by such individuals
for shares of Common Stock and Company Options pursuant to the Merger. Other
than the individuals named below, no executive officer or director of the
Company owns shares of Common Stock or Company Options.

<TABLE>
<CAPTION>
AMOUNT TO BE
RECEIVED FOR
AGGREGATE NUMBER OF NUMBER OF UNVESTED SHARES AGGREGATE
DIRECTOR/ NUMBER OF UNVESTED COMPANY AND COMPANY AMOUNT TO BE
EXECUTIVE OFFICER SHARES SHARES OPTIONS OPTIONS(1) RECEIVED(1)
- ------------------------------ --------- --------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Steven M. Gluckstern.......... 106,228 16,667 -- $ 658,346 $4,196,006
Richard E. Smith.............. 61,679 17,980 80,000 1,470,590 3,196,700
Peter R. Porrino.............. 27,848 8,980 44,000 768,590 1,513,876
Gerald S. King................ 18,773 10,817 24,000 658,271 972,533
Isaac Mashitz................. 28,261 8,980 24,000 585,710 1,347,309
Adrienne W. Reid.............. 18,132 13,817 24,000 776,771 947,214
Karen O'Connor Rubsam......... 9,058 3,000 20,000 306,190 545,481
Mark R. Sarlitto.............. 17,493 12,317 24,000 717,521 921,973
William H. Bolinder........... 900 -- -- -- 35,550
Philip Caldwell............... 1,000 -- -- -- 39,500
Laurence W. Cheng............. 2,500 -- -- -- 98,750
Judith Richards Hope.......... 3,000 -- -- -- 118,500
Rolf Hueppi................... 3,000 -- -- -- 118,500
Robert T. Marto............... 1,000 -- -- -- 39,500
George G.C. Parker............ 2,798 -- -- -- 110,521
</TABLE>

- ---------------

(1) Assumes that payments are not deferred as permitted by the Merger Agreement.
See "The Merger Agreement -- Stock Options; Restricted Stock."

Ownership of Common Stock of Zurich Group. The table below sets forth
certain information with respect to the beneficial ownership of the common stock
of Zurich Group as of December 31, 1996 by the executive officers and directors
of the Company and all directors and executive officers of the Company as a
group:

<TABLE>
<CAPTION>
PERCENTAGE
NAME NUMBER OF SHARES OWNERSHIP
- ------------------------------------------------------------------ ---------------- ----------
<S> <C> <C>
Rolf Hueppi....................................................... 8,065 *
Detlef Steiner.................................................... 6,000 *
Steven M. Gluckstern.............................................. 15 *
Richard E. Smith.................................................. 15 *
All Directors and Executive Officers as a Group................... 14,095 *
</TABLE>

- ---------------

* Less than one percent.

5
<PAGE> 17

with the Surviving Corporation until his successor is duly elected or appointed.
Pursuant to the Merger Agreement, the officers of the Company will remain the
officers of the Surviving Corporation until their successors are duly elected or
appointed.

Indemnification of Officers and Directors. The Merger Agreement provides
that for a period of three years from the Effective Time, the Surviving
Corporation will maintain in its Certificate of Incorporation the provisions
with respect to indemnification set forth in the Company's Certificate of
Incorporation as in effect on the date of the Merger Agreement. The Merger
Agreement also provides that for a period of three years from the Effective
Time, the Surviving Corporation will use its best efforts to maintain in effect
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy with respect to actions and omissions occurring prior to the Effective
Time on terms no less favorable than the terms of such current insurance
coverage; provided that if the specified insurance is unavailable at the current
premiums, the Surviving Corporation will obtain as much insurance as can be
obtained for a premium not in excess of 150% of the current premium paid.

APPRAISAL RIGHTS

Under the DGCL, Stockholders who properly demand appraisal prior to the
Stockholder vote on the Merger Agreement, do not vote in favor of approval of
the Merger Agreement and otherwise comply with the requirements of DGCL Section
262 will be entitled to statutory appraisal rights. See "The Special Meeting --
Appraisal Rights" and DGCL Section 262, a copy of which is attached hereto as
Appendix C.

SOLICITATION OF PROXIES

The Company will bear the costs of soliciting proxies from Stockholders. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, by telegram or in person. Arrangements may also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith. See "The Special Meeting -- Solicitation of Proxies."

THE MERGER

General. Upon consummation of the Merger, Sub will be merged with and into
the Company and the Company will be the Surviving Corporation. The Surviving
Corporation will succeed to all the rights and obligations of the Company and
Sub. Subject to the provisions of the Merger Agreement, at the Effective Time
(as defined below): (i) each issued and outstanding share of Common Stock (other
than shares of Common Stock to be canceled in accordance with clause (ii) below
and other than Dissenting Shares) will be converted into the right to receive
$39.50 per share in cash, plus interest thereon from the Satisfaction Date to
the closing date for the Merger at the prime rate announced by The Chase
Manhattan Bank, N.A., on the Satisfaction Date if Parent elects to extend the
closing date to a date following the Satisfaction Date and (ii) each share of
Common Stock that is owned by the Company or the Zurich Stockholders will be
automatically canceled and retired and will cease to exist, and no consideration
will be delivered or deliverable in exchange therefor. See "The Merger
Agreement -- Effective Time" and " -- The Merger."

Effective Time. Pursuant to the Merger Agreement, the "Effective Time" of
the Merger will occur upon the filing of a certificate of merger with the
Secretary of State of the State of Delaware or at such time thereafter as is
agreed to between Parent and the Company and provided in the Certificate of
Merger. The Company currently anticipates that the Effective Time of the Merger
will occur on or about August 29, 1997. As soon as reasonably practicable after
the Effective Time, Parent shall cause First Chicago Trust Company of New York,
as Paying Agent (the "Paying Agent"), to mail to each holder of record as of the
Effective Time (other than the Zurich Stockholders) of an outstanding
certificate or certificates for shares of Common Stock, a letter of transmittal
and instructions for use in effecting the surrender of such certificate for
payment in accordance with the Merger Agreement. See "The Merger
Agreement -- Effective Time."

6
<PAGE> 18

Conditions to the Merger. Consummation of the Merger is subject to various
conditions, including, among others: (i) the approval and adoption of the Merger
Agreement by the affirmative vote of holders of a majority of the outstanding
shares of Common Stock entitled to vote thereon; (ii) the absence of any
injunction preventing consummation of the Merger and (iii) the approval of the
Merger by the Insurance Department of the State of Connecticut (the "Connecticut
Department") and all authorizations, consents, orders or approvals of, or
declarations or filings with, or expiration of waiting periods proposed by, any
government entity the failure to obtain which would have a material adverse
effect on Parent and its subsidiaries or the Surviving Corporation and its
subsidiaries, in each case, taken as a whole, having been filed, occurred or
been obtained. See "The Merger Agreement -- Conditions to the Merger."

No Solicitation; Fiduciary Out. Pursuant to the Merger Agreement, the
Company has agreed that it will not authorize or permit any of its executive
officers or directors or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its subsidiaries to
(i) solicit, initiate or encourage (including by way of furnishing information),
or take any other action to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Takeover Proposal (as defined below) or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal, except under certain circumstances
to the extent required in order that the Board may, in its good faith judgment,
comply with its fiduciary duties to Stockholders. "Takeover Proposal" is defined
in the Merger Agreement to mean any inquiry, proposal or offer from any person
(other than Parent or any of its subsidiaries) relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of the
Company or any of its subsidiaries or of 50% or more of the shares of Common
Stock, any tender offer or exchange offer that if consummated would result in
any person beneficially owning 50% or more of the shares of Common Stock, any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the Merger, or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Merger or which would reasonably be expected to
dilute materially the benefits to Parent of the transactions contemplated by the
Merger Agreement. See "The Merger Agreement -- No Solicitation; Fiduciary Out."

Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the Stockholders, as
follows: (i) by the mutual written consent of the Company and Parent; (ii) by
either the Company or Parent in the event of (A) the failure of the Stockholders
to approve the Merger Agreement or (B) a material breach by the other party
thereto of any representation, warranty, covenant or agreement contained in the
Merger Agreement which is not cured within two business days following receipt
by the breaching party of notice of such breach; (iii) by either the Company or
Parent if any permanent injunction or other order of a court or other competent
authority preventing the consummation of the Merger has become final and
non-appealable; (iv) by either the Company or Parent in the event the Merger is
not consummated by October 1, 1997; or (v) by the Company or Parent under
certain circumstances in connection with a Takeover Proposal. See "The Merger
Agreement -- Termination."

Exchange of Share Certificates. As soon as reasonably practicable after
the Effective Time, Parent shall cause First Chicago Trust Company of New York,
as Paying Agent, to mail to each holder of record as of the Effective Time
(other than the Zurich Stockholders) of an outstanding certificate or
certificates for shares of Common Stock, a letter of transmittal and
instructions for use in effecting the surrender of such certificate for payment
in accordance with the Merger Agreement. Upon surrender to the Paying Agent of a
certificate, together with a duly executed letter of transmittal, the holder
thereof shall be entitled to receive cash in an amount equal to the product of
the number of shares of Common Stock represented by such certificate and the
Merger Consideration (as defined below) in cash, without interest thereon, less
any applicable withholding tax, and such certificate shall then be canceled.

Until surrendered pursuant to the procedures described above, each
certificate (other than certificates representing shares of Common Stock owned
by the Zurich Stockholders and certificates representing Dissenting Shares),
shall represent for all purposes solely the right to receive the Merger
Consideration multiplied by the number of shares of Common Stock evidenced by
such certificate. See "The Merger

7
<PAGE> 19

Agreement -- Exchange Procedures." STOCKHOLDERS SHOULD NOT SEND ANY SHARE
CERTIFICATES WITH THEIR PROXY CARDS.

Sources of Funds; Fees and Expenses. It is currently expected that
approximately $355.0 million will be required to pay the Merger Consideration to
the Independent Stockholders (assuming no such holder exercises appraisal
rights), approximately $4.9 million will be required to pay the Option
Consideration to the holders of Company Options, approximately $2.6 million will
be required to pay the expenses of Zurich Group, Parent and Sub in connection
with the Merger, and approximately $2.7 million will be required to pay the
expenses of the Company in connection with the Merger. It is currently expected
that (i) approximately $248.5 million of such amounts will be funded out of the
general funds of Parent and its affiliates, including a cash contribution of
approximately $245.9 million to Sub by Sub's direct parent, Centre U.S., which
amount will be obtained by Centre U.S. as a result of Centre NY's repurchase
from Centre U.S. of certain of Centre NY's capital stock, and (ii) approximately
$116.7 million of such amounts will be funded out of the general funds of the
Company, of which $26.4 million will be obtained through a dividend from ZRC to
the Company. Parent, its affiliates and the Company currently have sufficient
general funds available to fund their respective portions of the Merger
Consideration and related fees and expenses as specified in clauses (i) and (ii)
above. See "Special Factors -- Sources of Funds; Fees and Expenses."

Accounting Treatment. The Merger will be accounted for as a "purchase" as
such term is used under generally accepted accounting principles for accounting
and financial reporting purposes. See "Special Factors -- Anticipated Accounting
Treatment."

Regulatory Approvals. The obligation of each of Parent and the Company to
consummate the Merger is conditioned upon the approval of the Merger by the
Connecticut Department and all authorizations, consents, orders or approvals of,
or declarations or filings with, or expiration of waiting periods proposed by,
any government entity the failure to obtain which would have a material adverse
effect on Parent and its subsidiaries or the Surviving Corporation and its
subsidiaries, in each case, taken as a whole, having been filed, occurred or
been obtained. See "The Merger Agreement -- Conditions to the Merger." The
Company filed with the Connecticut Insurance Department a request to exempt the
Merger from the insurance holding company laws and regulations of Connecticut
governing an acquisition of control of a domestic insurer, and on July 24, 1997
the Connecticut Insurance Department issued the requested exemption. Similarly,
the Company filed with the New Jersey Insurance Department a request to exempt
the Merger from the insurance holding company laws and regulations of New Jersey
governing an acquisition of control of a domestic insurer and on July 25, 1997
the New Jersey Insurance Department issued the requested exemption. See "Special
Factors -- Regulatory Approvals."

THE PARTIES

The Company. The Company, a Delaware corporation, serves as the holding
company for ZRC, a Connecticut insurance company, and ZC Insurance Company, a
New Jersey insurance company. The Company, together with its wholly owned
operating subsidiaries, is the principal underwriting affiliate of Zurich Group
in the North American market for traditional property and casualty reinsurance.
The Company's executive offices are located at One Chase Manhattan Plaza, 43rd
Floor, New York, New York 10005 and its telephone number is (212) 898-5000.

Zurich Group. Zurich Group, a corporation organized under the laws of
Switzerland, is an insurance company which is engaged in operations in over 40
countries. Zurich Group and its subsidiaries and affiliates are engaged in life
and property and casualty insurance and reinsurance, insurance related
businesses and the asset management business. Zurich Group's principal executive
offices are located at Mythenquai 2, Zurich, Switzerland and its telephone
number is 011 411 205-2121.

Parent. Parent, a corporation organized under the laws of Bermuda, is a
holding company which does not conduct any business of its own. Parent's direct
and indirect subsidiaries are engaged in insurance and reinsurance operations.
Parent is an indirect wholly owned subsidiary of Zurich Group. Parent's
principal executive offices are located at Cumberland House, One Victoria
Street, P.O. Box HM 1788, Hamilton, HM HX Bermuda and its telephone number is
(441) 295-8501.

8
<PAGE> 20

Sub. Sub is a Delaware corporation recently organized by Parent for the
purpose of effecting the Merger. It has no material assets and has not engaged
in any activities except in connection with the Merger. The sole stockholder of
Sub is Centre U.S. Sub's address is c/o Zurich Centre ReSource Limited, One
Chase Manhattan Plaza, New York, New York 10005, Attention: Steven D. Germain,
General Counsel and its telephone number is (212) 898-5350.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

As of July 28, 1997, the directors and executive officers of the Company
beneficially owned, in the aggregate, 301,670 shares of Common Stock,
representing approximately 1.2% of such shares outstanding. To the knowledge of
the Company, all directors and executive officers of the Company intend to vote
their beneficially owned shares of Common Stock in favor of the approval and
adoption of the Merger Agreement. As of July 28, 1997, the Zurich Stockholders
beneficially owned 17,217,572 shares of Common Stock, representing approximately
65.7% of such shares outstanding. To the knowledge of the Company, the Zurich
Stockholders intend to vote their beneficially owned shares of Common Stock in
favor of the approval and adoption of the Merger Agreement. See "The Special
Meeting -- Vote Required; Revocability of Proxies."

MARKET PRICE AND DIVIDEND INFORMATION

The Common Stock is listed on the NYSE under the symbol "ZRC." On January
10, 1997, the last trading day before the public announcement of Zurich Group's
proposal to acquire all the shares of Common Stock held by the Independent
Stockholders, the reported closing price per share of the Common Stock was
$30.75. On April 16, 1997, the last trading day before the public announcement
of the execution of the Merger Agreement, the reported closing sale price per
share of the Common Stock was $38.625. On July 28, 1997, the last full trading
day prior to the date of this Proxy Statement, the reported closing sale price
per share of the Common Stock was $39.3125.

CERTAIN PROJECTED FINANCIAL DATA

In November 1996, in conjunction with its normal corporate planning
process, the Company's management presented to the members of the Board certain
projected financial information for the 1997-2002 period (the "Financial
Projections"). The Financial Projections were provided to representatives of DLJ
as financial advisors to Parent and Zurich Group and later provided to members
of the Special Committee and Morgan Stanley as financial advisors to the Special
Committee.

SELECTED FINANCIAL DATA

Certain selected historical financial data of the Company are set forth
under "Selected Financial Data." That data should be read in conjunction with
the consolidated financial statements and related notes incorporated by
reference in this Proxy Statement. See "Incorporation of Certain Documents by
Reference."

9
<PAGE> 21

THE SPECIAL MEETING

MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING

Each copy of this Proxy Statement mailed to Stockholders is accompanied by
a proxy card furnished in connection with the solicitation of proxies by the
Board for use at the Special Meeting. The Special Meeting is scheduled to be
held at 10:00 a.m., on August 29, 1997, on the 60th floor of One Chase Manhattan
Plaza, New York, New York 10005. At the Special Meeting, Stockholders will
consider and vote upon (i) a proposal to approve and adopt the Merger Agreement,
(ii) a proposal to adjourn the Special Meeting to solicit additional proxies in
the event the number of proxies sufficient to approve the Merger Agreement has
not been received by the date of the Special Meeting (the "Adjournment
Proposal") and (iii) such other matters as may properly be brought before the
Special Meeting.

The Board, based upon the unanimous recommendation of the Special Committee
with respect to the fairness of the Merger and the Merger Agreement, has
determined that the Merger and the Merger Agreement are fair to, and in the best
interests of, the Company and its Independent Stockholders and has approved the
Merger and the Merger Agreement by unanimous vote. ACCORDINGLY, THE BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT. See "Special Factors -- Background of the Merger," " -- Purpose and
Structure of the Merger" and " -- Recommendation of the Special Committee and
the Board of Directors of the Company; Fairness of the Merger." To the knowledge
of the Company, the directors and executive officers of the Company and the
Zurich Stockholders, who beneficially own enough shares to assure approval of
the Merger Agreement, intend to vote their shares in favor of the approval and
adoption of the Merger Agreement.

STOCKHOLDERS ARE REQUESTED PROMPTLY TO COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO
VOTE AT THE SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER AGREEMENT.

RECORD DATE AND VOTING

The Board has fixed the close of business on July 28, 1997, as the Record
Date for the determination of the holders of Common Stock entitled to notice of,
and to vote at, the Special Meeting. Only stockholders of record at the close of
business on that date will be entitled to receive notice of, or to vote at, the
Special Meeting. At the close of business on the Record Date, there were
26,205,443 shares of Common Stock outstanding and entitled to vote at the
Special Meeting, held by approximately 266 stockholders of record.

Each holder of Common Stock on the Record Date will be entitled to one vote
for each share held of record. The presence, in person or by proxy, of a
majority of the outstanding shares of Common Stock entitled to be voted at the
Special Meeting is necessary to constitute a quorum for the transaction of
business. Abstentions (including broker non-votes) will be included in the
calculation of the number of votes represented at the Special Meeting for
purposes of determining whether a quorum has been achieved. The Zurich
Stockholders are expected to vote all their shares of Common Stock at the
Special Meeting which would assure a quorum for the transaction of business at
the Special Meeting.

If the enclosed proxy card is properly executed and received by the Company
in time to be voted at the Special Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. Properly executed
proxies with no instructions indicated thereon will be voted "FOR" approval and
adoption of the Merger Agreement and the Adjournment Proposal.

The Board is not aware of any matters other than that set forth in the
Notice of Special Meeting of Stockholders that may be brought before the Special
Meeting. If any other matters properly come before the Special Meeting, the
persons named in the accompanying proxy will vote the shares represented by all
properly executed proxies on such matters in their discretion. See "-- Vote
Required; Revocability of Proxies."

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STOCKHOLDERS SHOULD NOT FORWARD ANY COMMON STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IN THE EVENT THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD
BE DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF
TRANSMITTAL, WHICH WILL BE SENT TO STOCKHOLDERS BY FIRST CHICAGO TRUST COMPANY
OF NEW YORK, IN ITS CAPACITY AS THE PAYING AGENT, PROMPTLY AFTER THE EFFECTIVE
TIME.

VOTE REQUIRED; REVOCABILITY OF PROXIES

The affirmative vote of holders of a majority of the outstanding shares of
Common Stock entitled to vote thereon is required to approve and adopt the
Merger Agreement. Currently, the Zurich Stockholders beneficially own
approximately 65.7% of the outstanding shares of Common Stock. To the knowledge
of the Company, the Zurich Stockholders, who beneficially own enough shares to
assure approval of the Merger Agreement, intend to vote the shares of Common
Stock beneficially owned by them for the approval and adoption of the Merger
Agreement. Consummation of the Merger will not require the approval of a
majority of the Independent Stockholders.

Because the required vote of the Stockholders on the Merger Agreement is
based upon the total number of outstanding shares of Common Stock, the failure
to submit a proxy card (or to vote in person at the Special Meeting) or the
abstention from voting by a Stockholder will have the same effect as a vote
against approval and adoption of the Merger Agreement. Brokers holding shares of
Common Stock as nominees will not have discretionary authority to vote such
shares in the absence of instructions from the beneficial owners thereof.

If for any reason the Special Meeting is adjourned, at any subsequent
reconvening of the Special Meeting, all proxies will be voted in the same manner
as such proxies would have been voted at the original convening of the Special
Meeting, except for any proxies which have theretofore effectively been revoked
or withdrawn.

The obligations of the Company and Parent to consummate the Merger are
subject, among other things, to the condition that the Stockholders approve and
adopt the Merger Agreement. See "The Merger Agreement -- Conditions to the
Merger."

APPRAISAL RIGHTS

Under the DGCL, record holders of shares of Common Stock who follow the
procedures set forth in Section 262 and who have not voted in favor of the
Merger Agreement will be entitled to have their shares of Common Stock appraised
by the Delaware Court of Chancery and to receive payment of the "fair value" of
such shares, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a fair rate of interest, if any, as
determined by such court. The following is a summary of certain of the
provisions of Section 262 of the DGCL and is qualified in its entirety by
reference to the full text of such Section, a copy of which is attached hereto
as Appendix C.

Under Section 262, where a merger agreement is to be submitted for approval
and adoption at a meeting of stockholders, as in the case of the Special
Meeting, not less than 20 calendar days prior to the meeting, the Company must
notify each of the holders of Common Stock at the close of business on the
Record Date that such appraisal rights are available and include in each such
notice a copy of Section 262. This Proxy Statement constitutes such notice. Any
Stockholder wishing to exercise appraisal rights should review the following
discussion and Appendix C carefully because failure to timely and properly
comply with the procedures specified in Section 262 will result in the loss of
appraisal rights under the DGCL.

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<PAGE> 23

A holder of shares of Common Stock wishing to exercise appraisal rights
must deliver to the Company, before the vote on the approval and adoption of the
Merger Agreement at the Special Meeting, a written demand for appraisal of such
holder's shares of Common Stock. Such demand will be sufficient if it reasonably
informs the Company of the identity of the Stockholder and that the Stockholder
intends thereby to demand the appraisal of his shares. A proxy or vote against
the Merger Agreement will not constitute such a demand. In addition, a holder of
shares of Common Stock wishing to exercise appraisal rights must hold of record
such shares on the date the written demand for appraisal is made and must
continue to hold such shares through the Effective Time.

Only a holder of record of shares of Common Stock is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder of
record fully and correctly, as the holder's name appears on the stock
certificates. Holders of Common Stock who hold their shares in brokerage
accounts or other nominee forms and wish to exercise appraisal rights are urged
to consult with their brokers to determine the appropriate procedures for the
making of a demand for appraisal by such nominee. All written demands for
appraisal of Common Stock should be sent or delivered to Mark R. Sarlitto,
Corporate Secretary, Zurich Reinsurance Centre Holdings, Inc., One Chase
Manhattan Plaza, 43rd Floor, New York, N.Y. 10005, so as to be received before
the vote on the approval and adoption of the Merger Agreement at the Special
Meeting.

If the shares of Common Stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of the demand should be
made in that capacity, and if the shares of Common Stock are owned of record by
more than one person, as in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all joint owners. An authorized agent,
including one or more joint owners, may execute a demand for appraisal on behalf
of a holder of record; however, the agent must identify the record owner or
owners and expressly disclose the fact that, in executing the demand, the agent
is agent for such owner or owners. A record holder such as a broker holding
Common Stock as nominee for several beneficial owners may exercise appraisal
rights with respect to the Common Stock held for one or more beneficial owners
while not exercising such rights with respect to the Common Stock held for other
beneficial owners; in such case, the written demand should set forth the number
of shares as to which appraisal is sought and where no number of shares is
expressly mentioned the demand will be presumed to cover all Common Stock held
in the name of the record owner.

Within 10 calendar days after the Effective Time, the Company, as the
surviving corporation in the Merger, must send a notice as to the effectiveness
of the Merger to each person who has satisfied the appropriate provisions of
Section 262 and who has not voted in favor of the Merger Agreement. Within 120
calendar days after the Effective Time, the Company, or any Stockholder entitled
to appraisal rights under Section 262 and who has complied with the foregoing
procedures, may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of all such Stockholders. The
Company is not under any obligation, and has no present intention, to file a
petition with respect to the appraisal of the fair value of the shares of Common
Stock. Accordingly, it is the obligation of the Stockholders to initiate all
necessary action to perfect their appraisal rights within the time prescribed in
Section 262.

Within 120 calendar days after the Effective Time, any Stockholder of
record who has complied with the requirements for exercise of appraisal rights
will be entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of shares of Common Stock with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such statement must be mailed within 10 calendar days
after a written request therefor has been received by the Company.

If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the Stockholders
entitled to appraisal rights and will appraise the "fair value" of the shares of
Common Stock, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. Holders considering
seeking appraisal should be aware that the fair value of their shares of Common
Stock as determined under Section 262 could be more than, the same as or less
than the amount per share that they would otherwise receive if they did not seek
appraisal of their shares of Common Stock. The Delaware

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<PAGE> 24

Supreme Court has stated that "proof of value by any techniques or methods which
are generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings. In
addition, Delaware courts have decided that the statutory appraisal remedy,
depending on factual circumstances, may or may not be a dissenter's exclusive
remedy. The Court will also determine the amount of interest, if any, to be paid
upon the amounts to be received by persons whose shares of Common Stock have
been appraised. The costs of the action may be determined by the Court and taxed
upon the parties as the Court deems equitable. The Court may also order that all
or a portion of the expenses incurred by any holder of shares of Common Stock in
connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged pro rata against the value of all the shares of Common
Stock entitled to appraisal.

The Court may require Stockholders who have demanded an appraisal and who
hold Common Stock represented by certificates to submit their certificates of
Common Stock to the Court for notation thereon of the pendency of the appraisal
proceedings. If any Stockholder fails to comply with such direction, the Court
may dismiss the proceedings as to such Stockholder.

Any Stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Time, be entitled to vote the shares
of Common Stock subject to such demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares of Common Stock as of
a date prior to the Effective Time).

If any Stockholder who demands appraisal of shares under Section 262 fails
to perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the shares of Common Stock of such holder will be
converted into the right to receive the Merger Consideration in accordance with
the Merger Agreement, without interest. A Stockholder will fail to perfect, or
effectively lose, the right to appraisal if no petition for appraisal is filed
within 120 calendar days after the Effective Time. A Stockholder may withdraw a
demand for appraisal by delivering to the Company a written withdrawal of the
demand for appraisal and acceptance of the Merger, except that any such attempt
to withdraw made more than 60 calendar days after the Effective Time will
require the written approval of the Company. Once a petition for appraisal has
been filed, such appraisal proceeding may not be dismissed as to any Stockholder
without the approval of the Court.

SOLICITATION OF PROXIES

The Company will bear the costs of soliciting proxies from Stockholders. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, by facsimile or in person. Arrangements may also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.

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THE PARTIES

THE COMPANY

The Company, a Delaware corporation, serves as the holding company for ZRC,
a Connecticut insurance company, and ZC Insurance Company ("ZCIC"), a New Jersey
insurance company. The Company, together with its wholly owned operating
subsidiaries, is the principal underwriting affiliate of Zurich Group in the
North American market for traditional property and casualty reinsurance. The
Company's executive offices are located at One Chase Manhattan Plaza, 43rd
Floor, New York, New York 10005 and its telephone number is (212) 898-5000.

ZURICH GROUP

Zurich Group, a corporation organized under the laws of Switzerland, is an
insurance company which is engaged in operations in over 40 countries. Zurich
Group and its subsidiaries and affiliates are engaged in life and property and
casualty insurance and reinsurance, insurance related businesses and the asset
management business. Zurich Group's principal executive offices are located at
Mythenquai 2, Zurich, Switzerland and its telephone number is 011 411 205-2121.

PARENT

Parent, a corporation organized under the laws of Bermuda, is a holding
company which does not conduct any business of its own. Parent's direct and
indirect subsidiaries are engaged in insurance and reinsurance operations.
Parent is an indirect wholly owned subsidiary of Zurich Group. Parent's
principal executive offices are located at Cumberland House, One Victoria
Street, P.O. Box HM 1788, Hamilton, HM HX Bermuda and its telephone number is
(441) 295-8501.

SUB

Sub is a Delaware corporation recently organized by Parent for the purpose
of effecting the Merger. It has no material assets and has not engaged in any
activities except in connection with the Merger. The sole stockholder of Sub is
Centre Reinsurance (U.S.) Limited, an indirect wholly owned subsidiary of
Parent. Sub's address is c/o Zurich Centre ReSource Limited, One Chase Manhattan
Plaza, New York, New York 10005, Attention: Steven D. Germain, General Counsel
and its telephone number is (212) 898-5350.

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<PAGE> 26

SPECIAL FACTORS

BACKGROUND OF THE MERGER

In 1993, the Company was organized and issued 26.1 million shares of its
Common Stock for aggregate proceeds, net of underwriting expenses, of $637.7
million. Of such shares, 8.55 million shares of Common Stock were issued in the
Company's initial public offering at $35.00 per share. In May 1993, the Company
acquired ZRC, a Connecticut reinsurance company and the Company's principal
operating subsidiary, from an affiliate of Zurich Group for aggregate
consideration of $63.3 million. In October 1993, the Company issued $200 million
principal amount of its 7 1/8% Senior Notes due 2023 (the "Senior Notes").

The Company is a 65.7%-owned indirect subsidiary of Zurich Group. Zurich
Group has historically had, and continues to have, a significant influence over
the policies and affairs of the Company and is in a position to determine the
outcome of substantially all corporate actions requiring stockholder approval,
including the election of directors, the merger of the Company (including the
Merger), the sale of all or substantially all of the Company's assets and the
adoption of most amendments to the Company's certificate of incorporation. A
majority of the members of the Board are executive officers of Zurich Group or
its affiliates.

Zurich Group has from time to time considered the possibility of acquiring
all the Public Shares in order to, among other reasons, facilitate the closer
integration of the Company's operations with the global operations of the Zurich
Group of companies. See "-- Purpose and Structure of the Merger." No Board
consideration by Zurich Group or Parent with respect to the acquisition of the
Public Shares was made prior to the September 18, 1996 meeting of the Zurich
Group Board described below. On July 29 through 31, 1996, at the Company's
senior management strategic planning conference, Mr. Steven M. Gluckstern, the
President and Chief Executive Officer of Parent, Chairman of the Board of the
Company, and currently a member of the Corporate Executive Board of Zurich
Group, discussed with Mr. Richard E. Smith, Mr. Peter R. Porrino, Mr. Gerald S.
King, Mr. Isaac Mashitz, Ms. Adrienne W. Reid, Ms. Karen O'Connor Rubsam and Mr.
Mark R. Sarlitto, members of the Company's senior management, Zurich Group's
possible interest in considering an acquisition of all the Public Shares at a
future time.

During the planning conference, Mr. Gluckstern and the members of the
Company's senior management named above participated in a conference call with
representatives of DLJ. At the time of the July discussions, DLJ had not yet
been formally engaged by Zurich Group or Parent. DLJ was invited to participate
in the July discussions by Mr. Gluckstern to discuss the possible form,
structure and process of such a transaction.

The following possible alternatives were discussed during the conference
call with DLJ: (i) an acquisition of the Public Shares for cash and (ii) an
exchange of Zurich Group stock for the stock of the Company structured as a long
form merger. In discussing the cash alternative, three structures were outlined:
(i) a tender offer followed by short form merger, (ii) a one step long form
merger and (iii) a self tender by the Company followed by short form merger.
Various sources of financing for a cash proposal were discussed, including both
third party financing and financing via internally generated funds of the
Company or its affiliates.

During the first two weeks of August 1996, DLJ requested and reviewed
certain public and non-public information with respect to the Company, including
preliminary versions of the Financial Projections. See "Certain Projected
Financial Data." In addition, DLJ met with Mr. Porrino, Ms. Rubsam, Mr. Sarlitto
and Mr. Corcoran H. Byrne, members of the Company's management, on August 9,
1996, regarding the business and financial condition and prospects of the
Company. At the meeting, DLJ reviewed its due diligence agenda and data request
list. In response to DLJ questions, Mr. Porrino, Ms. Rubsam and Mr. Sarlitto
provided an overview of the Company's progress since the Company's initial
public offering as well as an overview of current financial information.
Pursuant to an engagement letter dated August 14, 1996, Parent retained DLJ to
assist Parent in evaluating a possible acquisition of the Public Shares and to
render financial advisory and investment banking services to Parent and Zurich
Group in the event that Parent determined to do so.

On August 15, 1996, Messrs. Smith and Byrne again met with representatives
of DLJ to discuss the Company's developments since the Company's initial public
offering. Mr. Smith also responded to DLJ's

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<PAGE> 27

questions regarding the Company's business strategy. On August 16, 1996, Messrs.
Mashitz and Byrne, Ms. Reid and Ms. Rubsam provided representatives of DLJ with
an overview of the Company's product pricing process. In addition, Ms. Rubsam
responded to DLJ's questions regarding certain financial information of the
Company. Members of the Company's senior management participated in the
discussions with DLJ and representatives of Parent and Zurich Group before being
directed to do so by the Board because they deemed it appropriate to respond to
the inquiries of the Company's majority stockholder and its representatives.

By letter, dated August 27, 1996, Mr. Rolf F. Hueppi, Chairman and Chief
Executive Officer of Zurich Group and Chairman of the Board of Parent, informed
the members of the Executive Committee of the Board of Directors of Zurich Group
that changes in the reinsurance marketplace made a consolidation of Zurich
Group's reinsurance interests in North America seem desirable and that
consequently, the Board of Directors of Zurich Group (the "Zurich Group Board")
should consider a purchase of the Public Shares. These marketplace changes
included the recent competitive consolidation of global reinsurance capacity
requiring Zurich Group to develop a more consistent and flexible global presence
in the property and casualty reinsurance markets, a continuation of highly
competitive conditions in the North American reinsurance marketplace requiring
renewed emphasis on larger, non-commodity opportunities and the increasing
overlap in the markets for the traditional reinsurance approaches generally
employed by ZRC and the non-traditional products offered by ZRC's affiliates in
the Centre Reinsurance group of companies. In the letter, Mr. Hueppi further
indicated that DLJ had been retained to act as financial advisors in connection
with a possible acquisition of the Public Shares.

At a meeting of the Zurich Group Board on September 18, 1996, Mr. Hueppi
stated that owing to the changes in the reinsurance marketplace noted above, the
future strategic direction of the Company and its relation with Centre NY should
be examined and discussed as well as a potential acquisition of the Public
Shares.

On October 18, 1996, Mr. Sarlitto and Mr. Byrne met with Mr. Steven D.
Germain, General Counsel of Parent, and representatives of Willkie Farr &
Gallagher ("Willkie Farr"), counsel to Parent and Zurich Group, regarding the
possible form, structure and timing of a transaction to acquire all of the
outstanding Public Shares. At this meeting, the parties revisited the
implications of structuring the Proposed Transaction as a merger or a tender
offer. Specifically, the benefits and detriments of a merger structure versus a
tender offer structure were discussed. Although no specific conclusion was
reached, it was noted that if Zurich Group intended to acquire all of the
outstanding shares of Common Stock, they could do so in a single step via a
merger transaction, whereas a tender offer structure would generally require two
steps to accomplish the same result.

On October 21, 1996, Mr. Hueppi, Mr. Gluckstern and Mr. Germain met with
Mr. Rolf Hanggi, Mr. Detlef Steiner and Dr. Kaspar Hotz, each an executive
officer of Zurich Group and a director of Parent, and Mr. Richard Johnson, an
executive officer of Zurich Group, to discuss Zurich Group's alternatives with
respect to the Company. At the meeting, various alternatives were discussed,
including the acquisition by Zurich Group or one of its affiliates of the Public
Shares, the possibility of merging the operations of Centre NY and ZRC, and
changing the focus of the Company and Centre NY without concurrent structural
changes. Specifically, consideration was given as to whether ZRC should attempt
to develop a finite risk insurance business without any reorganization of the
corporate structure of the Company. Alternatives to the Merger were rejected
because the Merger was the most efficient way of accomplishing the purposes set
forth in "-- Purpose and Structure of the Merger." Immediately following that
meeting, the same group of Zurich Group officers met with DLJ regarding DLJ's
preliminary analysis from a financial perspective of the potential acquisition
of the Public Shares. At the meeting DLJ gave an oral report summarizing the
preliminary results of the analysis set forth in the December Report (as defined
below) described in "-- Summary of Financial Analysis of Donaldson, Lufkin &
Jenrette Securities Corporation."

On December 4, 1996, the Zurich Group Board met to review the possibility
of a transaction to acquire all of the outstanding Public Shares and the timing
and structure for such a transaction. Present at the meeting were Messrs.
Hueppi, Hanggi, Henry Bodmer, Peter Bockli, David de Pury, Markus Kundig, Yves
Oltramare, Karl Otto Pohl and Lodewijk van Wachem, a quorum of the Zurich Group
Board (Kaspar V. Cassini did not attend the meeting). At that meeting, DLJ
presented the December Report and Mr. Hueppi submitted a proposal that Zurich
Group acquire the Public Shares based on an estimate of the "economic value" of
the

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<PAGE> 28

Company of approximately $35.00 per share and requested an approval in principle
of the proposed acquisition as well as, subject to further review, authorization
to proceed with and implement the proposal in early 1997 and to fix the final
purchase price therefor. For a description of the economic value analysis which
resulted in the $35.00 per share amount, see "-- Summary of Financial Analysis
of Donaldson, Lufkin & Jenrette Securities Corporation." The Zurich Group Board
authorized Mr. Hueppi to proceed with the proposal and submit to the Independent
Stockholders, after completion of final review, an offer to purchase the Public
Shares and delegated to Mr. Hueppi the power and authority to negotiate the
transaction and to fix the purchase price therefor, including any increase in
the purchase price above $35.00 per share. The $35.00 per share price initially
authorized by the Zurich Group Board was never presented to the Company or its
representatives as Zurich Group determined to make an initial offer to the
Company of $36.00 per Public Share as described below.

After discussions in late December 1996 and early January 1997 with
representatives of the Company (including Mr. Porrino and Mr. Sarlitto), DLJ,
Willkie Farr and LeBoeuf, Lamb, Greene & MacRae, L.L.P., special insurance
counsel to Zurich Group and Parent ("LeBoeuf") relating to the possible form,
structure and timing of a transaction to acquire the Public Shares (which
discussions focused on the availability of alternative mechanisms such as tender
offer and merger alternatives, regulatory and shareholder approvals which would
be required under such alternatives and the general processes for effecting such
an acquisition), Messrs. Hueppi, Gluckstern, Johnson and Scott Levine, a
director of Parent, met with DLJ on January 9, 1997 to discuss the price which
Zurich Group should offer for the Public Shares and to review a proposed form of
letter to the Board setting forth the terms of Zurich Group's offer. At the
meeting, Zurich Group determined to offer to acquire all the Public Shares in a
cash merger and DLJ advised Zurich Group to consider making its initial offer
for the Public Shares at a price of $36.00 per share rather than $35.00 per
share given that the initial public offering price of the Common Stock was
$35.00 per share. DLJ suggested the $36.00 price because it fell within the
range of values indicated by the financial analysis described in "-- Summary of
Financial Analysis of Donaldson, Lufkin & Jenrette Securities Corporation" and
because it exceeded the initial public offering price of the Common Stock.
Zurich Group determined that a cash merger represented the most efficient
structure as it would ensure the acquisition of all of the Public Shares in a
single step. In accordance with the authority delegated to him by the Zurich
Group Board, Mr. Hueppi then approved the making of a proposal to acquire all
the Public Shares at $36.00 per share (the "Proposed Transaction"). Zurich Group
selected the $36.00 per share price based principally on historical trading
prices for the Common Stock and the advice received from DLJ. After the close of
business on Friday, January 10, 1997, Zurich Group delivered a letter to the
Company's Board setting forth its proposal to purchase the Public Shares for
$36.00 per share. Prior to the opening of business on Monday, January 13, 1997,
Zurich Group issued a press release announcing the Proposed Transaction.

Beginning on or about January 13, 1997, four lawsuits were commenced
variously naming the Company, Zurich Group, Parent and the following eleven
directors and/or officers of the Company: William H. Bolinder, Philip Caldwell,
Laurence W. Cheng, Steven M. Gluckstern, Judith Richards Hope, Rolf Hueppi,
Robert T. Marto, Michael D. Palm, George G.C. Parker, Richard E. Smith and
Detlef Steiner as defendants. Those actions, purportedly bought by several
Independent Stockholders (the "Plaintiffs") as class actions on behalf of all
Independent Stockholders, alleged that the Defendants had breached their
fiduciary duties to the Plaintiffs and the other Independent Stockholders in
connection with the Proposed Transaction. See "Stockholder Litigation."

At the time Zurich Group informed the Company of Zurich Group's proposal to
acquire all the Public Shares for $36.00 per share in cash, Messrs. Bolinder,
Caldwell, Gluckstern, Hueppi, Smith, Steiner, Cheng and Palm and Ms. Hope (nine
of the Company's twelve directors) were officers, directors or employees of
Zurich Group or Zurich Group affiliates. In order to address actual or perceived
conflicts of interest, at its meeting on January 14, 1997, the Board appointed
three independent directors, Messrs. Robert T. Marto, Peter J. Neff and George
G.C. Parker, as the Special Committee. The purpose of the Special Committee was
for it to determine the fairness, and to negotiate the terms, of the Proposed
Transaction on behalf of the Independent Stockholders. The Board appointed Mr.
Marto as Chairman of the Special Committee and

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<PAGE> 29

authorized the Special Committee to retain such independent financial and legal
advisors as the Special Committee deemed appropriate on such terms as the
Special Committee approved.

On January 14, 1997, immediately following the meeting of the Board at
which the Special Committee was established, the Special Committee met for the
first time. The Special Committee retained Cravath, Swaine & Moore ("Cravath")
as its independent legal counsel. Cravath advised the Special Committee on the
Special Committee's legal responsibilities and the legal principles applicable
to, and the legal consequences of, actions taken by the Special Committee with
respect to the Proposed Transaction. The Special Committee discussed the
criteria that it would use to evaluate investment banking firms to advise it
with respect to the Proposed Transaction. On January 15, 1997, the Special
Committee interviewed several firms, discussing with representatives of each
firm that firm's experience in transactions of this type, its expertise in the
reinsurance industry and the methodologies that the firm would use, if it was
retained, to determine the value of the Public Shares. After full consideration,
the Special Committee decided to retain Morgan Stanley as its independent
financial advisor to act solely on behalf of the Special Committee, which was
acting solely on behalf of the unaffiliated stockholders of the Company, for the
purpose of negotiating the terms of the Merger and the Merger Agreement. For a
description of the terms of the engagement of Morgan Stanley and certain
information concerning Morgan Stanley, see "-- Opinion of Financial Advisor to
the Special Committee." The Special Committee asked Cravath to reach agreement
with Company representatives regarding fair compensation for the work of the
Special Committee. Cravath and Company representatives agreed that the members
of the Special Committee would receive meeting fees of $1,500, plus expenses,
for each meeting of the Special Committee attended by such members, provided no
member of the Special Committee was to receive in the aggregate more than
$25,000 for his service on the Special Committee. The Special Committee met a
total of 9 times, each meeting was attended by all members of the Special
Committee and each member therefore will receive total compensation of $13,500
for meeting fees, plus amounts as reimbursement for expenses.

On January 29, 1997, the Special Committee met with representatives of
Morgan Stanley and Cravath. Morgan Stanley reported that it had begun its
financial due diligence of the Company and presented its schedule and plan for
its continuing financial due diligence and for its analysis of the value of the
Public Shares. Morgan Stanley reported that senior management of the Company had
made themselves readily available for discussions with Morgan Stanley regarding
all aspects of the Company's business and financial condition and that the
Company was promptly satisfying Morgan Stanley's requests for business reports,
plans and projections, accounting information and other relevant documents of
the Company. The Special Committee directed Morgan Stanley to continue its
research and analysis of the Company.

During the period of January 29 through February 12, 1997, representatives
of Morgan Stanley continued their financial due diligence of the Company and had
further discussions with senior managers of the Company. Morgan Stanley also
performed preliminary valuation analyses using various methodologies.

On February 12, 1997, the Special Committee met with representatives of
Morgan Stanley and Cravath. The Special Committee discussed the Proposed
Transaction and the letter that it had received from Primecap Management
Company, an institutional investor owning more than 1.3 million shares of Common
Stock ("Primecap"), in which Primecap discussed its belief that Zurich Group's
offer of $36.00 per Public Share was inadequate. In its letter, Primecap stated
several reasons in support of its belief. First, Primecap noted that the
Company's initial public offering took place in 1993 at $35.00 per share and
that Zurich Group's offer of $36.00 per Public Share represented a very low
return to shareholders who purchased their shares in the initial public offering
of 2.86% over 44 months. Second, Primecap cited analysts (including one analyst
who had opined that the ultimate price Zurich Group would pay would be between
$42 and $47 per share) who believed that Zurich Group's offer was undervalued
and that the ultimate price Zurich Group would pay would exceed $40 per share.
Third, Primecap stated that Zurich Group's $36 per Public Share offer
represented approximately 138% of current book value of the Company and noted
higher price/book multiples for the Company when it went public (i.e., 145% of
book value), for the recent acquisition prices of the direct reinsurers American
Re Corporation and National Re Corporation (i.e., between 2.4 and 3.8 times book
value) and for the public stock market price of General Re Corporation (i.e.,
188% of book value) and Transatlantic Holdings, Inc. (i.e., 159% of book value).
Lastly, Primecap stated that it had been recently told

18
<PAGE> 30

by members of the Company's management that they believed the Company's stock
was undervalued in the public stock market and that the Company was creating
long- term value for Independent Stockholders. The Primecap Letter did not have
a material effect on the negotiations between the Special Committee and Zurich
Group. However, in determining to recommend to the Board that it approve the
Merger and the Merger Agreement, the Special Committee considered the report of
Morgan Stanley to the Board, dated April 17, 1997, and the financial opinion of
Morgan Stanley, dated the same date, which included analyses of precedent
transactions and price/book multiples as well as other analyses customarily
employed in connection with the delivery of financial opinions.

In addition, at the February 12, 1997 meeting, Morgan Stanley
representatives reported that they had completed a substantial portion of their
research and analyses and could be prepared in a few days to discuss their work
with the Special Committee. The Special Committee determined to schedule a
meeting to discuss Morgan Stanley's preliminary findings and to have Mr. Marto
contact representatives of Zurich Group to ascertain Zurich Group's current
thinking with respect to the offer of $36.00 per Public Share. Within a few days
of such meeting, Mr. Marto spoke with representatives of DLJ and expressed his
belief that Zurich Group's offer of $36.00 per Public Share was inadequate.

On February 26, 1997, the Special Committee met with representatives of
Morgan Stanley and Cravath. Morgan Stanley discussed its preliminary evaluation
of the financial terms of the Proposed Transaction. Morgan Stanley
representatives led the Special Committee through a discussion of various
methodologies for determining the value of the Public Shares. The Special
Committee extensively discussed with representatives of Morgan Stanley those
methodologies and various factors related to each. The methodologies used by
Morgan Stanley and various details of the Morgan Stanley analyses are set forth
below under "-- Opinion of Financial Advisor to the Special Committee." The
Special Committee directed Morgan Stanley representatives to meet with and
discuss their analyses of the Zurich Group offer with representatives of DLJ. At
the direction of Mr. Johnson, an executive officer of Zurich Group, DLJ agreed
to meet with Morgan Stanley on March 3, 1997. At the meeting, Morgan Stanley
discussed with DLJ its preliminary views on the methodologies appropriate to
valuation of the Company. Morgan Stanley discussed in particular its view of
relevant precedent transactions, as described in "-- Opinion of Financial
Advisor to the Special Committee." Neither Morgan Stanley nor DLJ proposed any
specific price per share, although Morgan Stanley indicated its view that the
Special Committee was unlikely to recommend acceptance of the offer of $36.00
per share.

In response to Morgan Stanley's indication that the Special Committee was
unlikely to recommend acceptance of the $36.00 per share offer, Messrs. Hueppi,
Johnson, Gluckstern and Markus Rohrbasser, Chief Financial Officer of Zurich
Group, met with DLJ on March 18, 1997 to discuss whether Zurich Group would be
willing to increase its offer above $36.00 per share. Based on the fact that the
Common Stock was trading in the $38.00 range at the time, DLJ advised Zurich
Group that it should consider raising the offer to an amount per share between
$38.00 and $38.50. It was then determined that Zurich Group should indicate to
the Special Committee that it would consider an increase in the price offered to
$38.25 per Public Share. At the meeting, Mr. Hueppi instructed Mr. Rohrbasser to
negotiate with the Special Committee on his behalf in order to determine a final
price for the Public Shares.

On March 20, 1997, members of the Special Committee attended a regular
meeting of the Board of Directors of the Company. Prior to such meeting, members
of the Special Committee discussed the Proposed Transaction with Mr. Hueppi. Mr.
Hueppi indicated to members of the Special Committee that he would consider
recommending an increase in the price offered to $38.25 in cash per Public
Share.

On March 25, 1997, the Special Committee met with representatives of
Cravath. At such meeting, the Special Committee discussed the possibility of a
transaction at a price of $38.25 per Public Share. The Special Committee
discussed at length how it should proceed in its negotiations with Zurich Group.
At the Special Committee's request, representatives of Cravath restated the
duties of the Special Committee, including its duty to negotiate at arm's length
with Zurich Group on behalf of the Independent Stockholders in order to obtain
the best price that Zurich Group would pay for the Public Shares. The Special
Committee noted that unless and until a definitive merger agreement was
executed, Zurich Group could restructure its proposal and proceed directly with
a solicitation of the Independent Stockholders and therefore discussed that an
overly aggressive negotiating posture by the Special Committee might increase
the risk that Zurich Group would

19
<PAGE> 31

choose to forego Special Committee approval of any acquisition, which could
result in the Independent Stockholders ultimately receiving less than $38.25 per
share. The Special Committee also discussed its duty to obtain the best price
that Zurich Group is willing to pay for the Public Shares. The Special Committee
concluded that further discussions with Zurich Group were needed to determine
whether Zurich Group would consider a price higher than $38.25 per Public Share.
The Special Committee authorized Mr. Marto to contact Mr. Hueppi for further
negotiations and to schedule a meeting, if appropriate, between the Special
Committee and representatives of Zurich Group.

On April 10, 1997, Mr. Marto discussed the Zurich Group offer with Mr.
Rohrbasser indicating to Mr. Rohrbasser that $38.25 per Public Share was
inadequate. During that discussion and negotiation, Mr. Rohrbasser suggested
that Zurich Group would consider making a revised offer of $39.50 per Public
Share.

On April 11, 1997, the Special Committee met to discuss the possibility of
a revised Zurich Group offer at $39.50 per Public Share. There was a brief
discussion about an offer of $39.50 per Public Share, and the Special Committee
agreed to meet again on Monday, April 14, with its legal and financial advisors
to discuss the transaction.

On April 14, 1997, the Special Committee met with representatives of Morgan
Stanley and Cravath. At the Special Committee's request, Morgan Stanley
representatives presented their updated analysis from a financial perspective of
the Proposed Transaction, discussing various factors that had changed since
their last presentation. The methodologies used by Morgan Stanley and various
details of their analyses are set forth below under "-- Opinion of Financial
Advisor to the Special Committee." The Special Committee discussed the Proposed
Transaction at length, again revisiting the advantages and disadvantages of
pressing Zurich Group for a yet higher offer. Each Special Committee member
expressed his belief that in his business judgment, based on reports from Mr.
Marto and Morgan Stanley of their discussions with representatives of Zurich
Group and the financial analyses of the Company performed by Morgan Stanley, and
subject to receipt of a final fairness opinion of Morgan Stanley, $39.50 per
Public Share was a fair price to the Independent Stockholders and the best offer
price that could be obtained from Zurich Group. Cravath representatives advised
the Special Committee of Cravath's belief that from a legal perspective the
Special Committee had applied the appropriate process in performing its duties
and that the Special Committee had negotiated with Zurich Group at arm's length
on behalf of the Independent Stockholders. The Special Committee directed Morgan
Stanley to finalize and distribute a written copy of its analyses and
conclusions, and the Special Committee directed Mr. Marto to request of Zurich
Group that the Zurich Group Board of Directors formally approve the making of an
offer of $39.50 per Public Share.

On the evening of April 14, 1997, Willkie Farr indicated that the Proposed
Transaction would be structured as a merger and, at the direction of Zurich
Group and Parent, distributed a draft Merger Agreement which contemplated that
Parent, Sub and the Company would be the parties to the Agreement and a timeline
of events relating to the Merger.

On April 15 and 16, 1997, Mr. Marto and Cravath representatives requested
several changes to the draft Merger Agreement. The Special Committee negotiated
the terms of the Merger Agreement with Zurich Group, on behalf of itself and
Parent, and Willkie Farr. Mr. Marto and Cravath indicated that because Zurich
Group had controlled the Company since its formation four years earlier, it
would be appropriate that the Company's representations to Zurich Group in the
Merger Agreement be few in number and fundamental in nature. Mr. Marto and
Cravath also requested that the closing of the Merger not be conditioned in any
way on the Centre Merger. These suggestions were incorporated into the Merger
Agreement in conjunction with a provision by which Parent can elect to extend
the closing date of the Merger for 90 days, or any portion thereof, following
the date when the conditions to closing set forth in the Merger Agreement have
been satisfied or waived. If Parent makes such election, however, Parent is
obligated to pay interest on the Merger Consideration for the period of that
extension at the prime rate announced by The Chase Manhattan Bank, N.A. Certain
other non-material changes were also made as a result of these discussions. This
provision was added to enable Parent to defer the closing under the Merger
Agreement in the event that certain regulatory approvals relating to the Centre
Merger, which approvals are not conditions to the obligations of Parent to

20
<PAGE> 32

consummate the Merger, are not received prior to the time that the conditions to
the closing of the Merger have been satisfied. For a description of the Merger
Agreement, see "The Merger Agreement."

On April 17, 1997, Mr. Hueppi, on behalf of Zurich Group, confirmed to the
full Board a revised offer of $39.50 per Public Share. At the meeting, the
Special Committee presented to the Board a summary of its deliberations and its
conclusion that the revised offer was fair to the Independent Stockholders. The
Special Committee then recommended that the full Board approve the revised offer
of $39.50 per Public Share. Morgan Stanley gave a presentation of its financial
analysis of the revised offer and indicated its opinion that the proposed price
was fair to the Independent Stockholders from a financial point of view.
Following the Board meeting, Morgan Stanley delivered its written opinion to the
Special Committee and the Merger Agreement was executed by the parties thereto.
For a full description of the April 17 meetings of the Special Committee and the
Board and the presentation by Morgan Stanley, see "-- Recommendation of the
Special Committee and the Board of Directors of the Company; Fairness of the
Merger" and "-- Opinion of Financial Advisor to the Special Committee."

At a special meeting on April 17, 1997, the Compensation Committee of the
Board discussed the treatment under the Merger of certain shares of the
Company's Common Stock and the Company Options issued under the terms of the
Company's various long-term incentive compensation plans. Such discussion
focused on the need to continue the essential incentive features of such plans
while providing for an equitable disposition of these interests. At the meeting,
the members of the Compensation Committee unanimously approved the treatment of
such shares and options reflected in the terms of the Merger Agreement and
described elsewhere in this Proxy Statement.

Subsequently, on May 5, 1997, T. Rowe Price Associates, Inc. ("Price"), a
registered investment advisor which beneficially owns approximately 5% of the
outstanding shares of Common Stock, sent a letter to the members of the Special
Committee expressing its dissatisfaction with the Merger Consideration. In
addition, Price indicated in a Schedule 13D filed with the SEC on May 6, 1997,
that it may consider alternatives which may be available to it in light of the
Company's announcement of the Merger.

In its letter, Price outlined a number of factors in support of its
position that the Merger Consideration is inadequate. First, Price stated that
Zurich Group's offer of $39.50 per Public Share is less than Price's estimate of
the Company's October 31, 1997 "intrinsic value" (or economic book value) of
$39.77 per share and that Zurich Group's offer does not include any "franchise
value" of the Company, which Price believed to be considerable. Of the $39.77
per share "intrinsic value" of the Company advanced by Price, $2.77 per share is
attributable to Price's estimate of the value of a potential tax credit for
Zurich Group from the State of Connecticut under the Connecticut Insurance
Reinvestment Act in connection with possible consolidation of Zurich Group's
reinsurance operations in Stamford, Connecticut following the Merger. Second,
Price stated that Zurich Group's $39.50 per Public Share offer represented
approximately 1.4 times estimated October 31, 1997 book value of the Company per
share and noted higher price/book multiples for the Company when it went public
(i.e., 1.47 times book value) and for the recent acquisition prices of the
direct reinsurers American Re Corporation (i.e., 3.48 times book value) and
National Re Corporation (i.e., 2.35 times book value). Finally, Price stated
that the Merger Consideration would not adequately compensate Independent
Stockholders for the growth in the Company's business since its May 1993 initial
public offering as the aggregate return to a stockholder who bought in the
initial public offering and received the Merger Consideration would be only 13%
over that 47-month period based upon share price appreciation alone.

The claims made by Price in its letter, dated May 5, 1997, were not
directly considered by the Special Committee or Morgan Stanley because that
letter was received more than two weeks after the Special Committee made its
recommendation to the Board and the Board approved and adopted the Merger and
the Merger Agreement. However, in determining to recommend to the Board that it
approve the Merger and the Merger Agreement, the Special Committee considered
the report of Morgan Stanley to the Board, dated April 17, 1997, and the
financial opinion of Morgan Stanley, dated the same date which included analyses
of precedent transactions and price/book multiples as well as other analyses
customarily employed in connection with the delivery of financial opinions. See
"-- Recommendation of the Special Committee and the Board of

21
<PAGE> 33

Directors of the Company; Fairness of the Merger" and "-- Opinion of Financial
Advisor to the Special Committee."

PURPOSE AND STRUCTURE OF THE MERGER

The purpose for the Merger is to effect the acquisition by Parent of all
the equity interests of the Company represented by the Public Shares. In the
Merger, each Public Share will be converted into the right to receive an amount
in cash equal to the Merger Consideration, without interest. The acquisition of
the Public Shares has been structured as a cash merger in order to provide a
prompt and orderly transfer to Parent of ownership of the equity interests
represented by the Public Shares. Given that under the Exchange Act Zurich Group
is a foreign private issuer and that Parent is an indirect wholly owned
subsidiary of Zurich Group, the Company, Zurich Group and Parent believed that
cash would represent a more attractive form of consideration to the holders of
Public Shares than the stock of either Zurich Group or Parent.

In determining to acquire the Public Shares at this time, the Company,
Parent and Zurich Group focused on a number of factors. Specifically, Parent and
Zurich Group considered that recent changes in the reinsurance marketplace made
a consolidation of Zurich Group's reinsurance interests in North America seem
desirable. Parent and Zurich Group further considered that the acquisition of
the Public Shares in conjunction with the Centre Merger would (i) facilitate
Zurich Group's development of a more consistent and flexible global presence in
a property and casualty reinsurance marketplace characterized by recent
corporate consolidations, (ii) improve Zurich Group's ability to compete on
larger, non-commodity reinsurance opportunities in light of the continuation of
highly competitive conditions in the reinsurance industry, (iii) assist Zurich
Group in responding to the increasing overlap in the markets for the traditional
reinsurance approaches generally employed by ZRC and the non-traditional
products offered by ZRC's affiliates, including Centre NY, (iv) create a deeper
and more diverse management group with a more efficient capital structure, (v)
provide for a simpler management reporting process, (vi) allow Zurich Group to
capture 100% of the Company's earnings and cash flow, (vii) reduce compliance
costs, (viii) yield potential overhead savings, and (ix) represent a good use of
Parent's available funds relative to alternative investments. Although the
Company did not initiate the Merger, the Company believes that it will benefit
from the factors enumerated in clauses (i) through (v), (vii) and (viii) above.

Zurich Group considered various alternatives to the Merger including the
acquisition by Zurich Group or one of its affiliates of the Public Shares, the
possibility of merging the operations of Centre NY and ZRC, and changing the
focus of the Company and Centre NY without concurrent structural changes.
Specifically, consideration was given as to whether ZRC should attempt to
develop a finite risk insurance business without any reorganization of the
corporate structure of the Company. Alternatives to the Merger were rejected
because the Merger was the most efficient way of accomplishing the purposes set
forth above. Similarly, the Company did not consider any alternatives to the
Merger because the Merger was the most efficient way of accomplishing the
purposes set forth above and because the Company did not have knowledge of any
other offers to purchase the Company.

Following the Merger, it is anticipated that the Common Stock and the
Senior Notes will be delisted from the NYSE and the registration of such
securities under the Exchange Act will be terminated, thereby allowing the
Company to eliminate certain overhead costs (including the time devoted by its
employees and the fees and expenses of various professional advisors and service
providers of the Company) which relate exclusively to the Company's being a
public company. See "-- Plans for the Company after the Merger" and "-- Certain
Effects of the Merger."

RECOMMENDATION OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS OF THE COMPANY;
FAIRNESS OF THE MERGER

The Company. On April 17, 1997, the Special Committee met with
representatives of Cravath and Morgan Stanley at the Company's headquarters in
New York City, New York. Morgan Stanley informed the Special Committee that it
was prepared to deliver a written opinion to the effect that the proposed price
of $39.50 per Public Share to be received by the Independent Stockholders in the
Merger would be fair to such holders from a financial point of view. Mr. Marto
described the recent changes to the terms of the Merger

22
<PAGE> 34

Agreement and the structure and content of that Agreement to the other members
of the Special Committee. The Special Committee reviewed a draft of the Merger
Agreement, pursuant to which (i) each outstanding share of Common Stock (other
than Dissenting Shares and shares owned by Zurich Stockholders) would be
converted into the right to receive the $39.50 in cash (plus interest on the
period of an extension made at the election of Parent) and (ii) each share of
Common Stock held by the Company as treasury stock or owned by Zurich
Stockholders would be canceled, and no payment would be made with respect
thereto. After a full discussion and on motion duly made and seconded, the
Special Committee unanimously resolved to recommend to the Board that the terms
of the Merger and the Merger Agreement were fair to the Independent Stockholders
and that the Board approve and adopt the Merger and the Merger Agreement.

On April 17, 1997, at a Board meeting immediately following the meeting of
the Special Committee, the Special Committee described to the Board the process
that it employed in determining the fairness of the Merger and the Merger
Agreement. At the Special Committee's request, Morgan Stanley presented its
research, analyses, and conclusion to the full Board of Directors, including its
opinion that the proposed price of $39.50 per Public Share was fair from a
financial point of view to the Independent Stockholders. Morgan Stanley
representatives answered questions directed to them by members of the Board. The
Special Committee then recommended to the Board that the terms of the Merger and
the Merger Agreement were fair to the Independent Stockholders and that it was
the Special Committee's recommendation that the Board approve and adopt the
Merger and the Merger Agreement. Discussion by the Board with respect to the
Merger and the Merger Agreement followed.

The Board, including all members of the Special Committee, then unanimously
determined that the Merger and the Merger Agreement were fair to and in the best
interests of the unaffiliated stockholders of the Company, and approved the
Merger and the Merger Agreement. In finding that the Merger and the Merger
Agreement were fair to and in the best interests of the unaffiliated
stockholders of the Company, the Board relied on the factors (enumerated below)
relied on by the Special Committee and on the recommendation of the Special
Committee that the Board approve and adopt the Merger and the Merger Agreement.

In determining to recommend to the Board that it approve the Merger and the
Merger Agreement, the Special Committee considered a number of factors. The
material factors considered by the Special Committee were:

(a) the Special Committee's evaluation of the Company's business,
financial condition and future prospects (which evaluation was
substantially the same as the evaluation by Morgan Stanley summarized
hereinafter under the caption "-- Opinion of Financial Advisor to the
Special Committee"), including ownership of 65.7% of the outstanding shares
of Common Stock by the Zurich Stockholders;

(b) that the price of $39.50 per Public Share represents a premium of
28.5% over the closing sales price per share on the New York Stock Exchange
on January 10, 1997, the last trading day prior to the public announcement
of the Proposed Transaction;

(c) that the sales price of the Public Shares on the New York Stock
Exchange has never equaled or exceeded $39.50 per share;

(d) presentations by Morgan Stanley regarding the financial condition,
results of operations, business and prospects of the Company;

(e) presentations by Morgan Stanley regarding the industry in which
the Company operates and the financial, operating and stock price history
of the Company in comparison to certain comparable companies operating in
the same industry, including considerations of current market prices,
historical market prices, net book value, going concern value and
liquidation value which are reflected in the report presented by Morgan
Stanley to the Board of Directors of the Company, dated April 17, 1997, and
in the financial opinion of Morgan Stanley;

(f) statements by Morgan Stanley at the April 17, 1997, Special
Committee Meeting that Morgan Stanley would be prepared to deliver to the
Special Committee a written opinion to the effect that the price of $39.50
per Public Share was fair to the Independent Stockholders from a financial
point of view,

23
<PAGE> 35

which written opinion dated as of April 17, 1997, was, in fact, delivered
to the Special Committee by Morgan Stanley; and

(g) the belief of each member of the Special Committee that in his
business judgment, based on reports from Mr. Marto and Morgan Stanley of
their discussions with representatives of Zurich Group and the financial
analyses of the Company performed by Morgan Stanley, the $39.50 price per
Public share is fair and that Zurich Group would not increase its offer
price above $39.50 per Public Share.

The Special Committee's review of current market prices of the Public
Shares included a comparison of the price of $39.50 per Public Share with the
closing price on the last trading day prior to the announcement of the Proposed
Transaction. The Special Committee considered as favorable to its determination
the fact that the $39.50 per share price to be paid in the Merger represents a
premium of 28.5% over the $30.75 price at which the Public Shares closed on
January 10, 1997.

The Special Committee's review of historical market prices of the Public
Shares led it to conclude as favorable to its determination that $39.50 per
share (i) was higher than the highest price ever reached by the Public Shares
prior to the announcement of the Proposed Transaction (which was the initial
public offering price of $35.00 in January 1993), and (ii) represents a premium
of 26% over the median price for the Public Shares of approximately $31.45 over
the four year period ending on April 4, 1997 (during which period the total
number of shares of Common Stock traded represented approximately 367.8% of the
total number of shares held by the Independent Stockholders) estimated by Morgan
Stanley as part of its price/volume analysis of the trading history of the
Common Stock.

The Special Committee's consideration of net book value was reflected in
the Public Market Reference Range, the Adjusted M&A Market Reference Range, the
Adjusted Acquisition Reference Range and the Summary Reference Range presented
by Morgan Stanley in its report dated April 17, 1997. Specifically, Morgan
Stanley used December 31, 1996 GAAP book value of the Company and economic book
value of the Company as calculated by Morgan Stanley equity research in a
November 20, 1996 report, in conjunction with multiples of net book value and
economic book value to market prices of comparable companies, to determine the
Public Market Reference Range. The Public Market Reference Range was then used
by Morgan Stanley in its calculation of the Adjusted M&A Market Reference Range,
so that the Company's net book value and economic book value are also reflected
in the Adjusted M&A Market Reference Range. Morgan Stanley used the June 30,
1997 estimated book value of the Company and the Company-calculated economic
book value, in conjunction with multiples of book values to price paid in
precedent transactions, to calculate the Adjusted Acquisition Reference Range.
Finally, because Morgan Stanley used the Public Market Reference Range, the
Adjusted M&A Market Reference Range and the Adjusted Acquisition Reference
Range, among others, in its determination of the Summary Reference Range, the
Company's net book value was also reflected in the Summary Reference Range. The
Special Committee concluded as favorable to its determination that the price of
$39.50 per Public Share exceeded the high end of the Public Market Reference
Range and was in the very high end of the Summary Reference Range and the
Adjusted M&A Market Reference Range, despite the price of $39.50 being
approximately at the midpoint of the Adjusted Acquisition Reference Range.

The Special Committee's consideration of the Company's going concern value
included its consideration of the Discounted Cash Flow Range presented by Morgan
Stanley in its report dated April 17, 1997. The discounted cash flow analysis of
the Company was performed by adding (i) the present value of the projected
dividend streams of the continuing operations of the Company over a 10-year
period and (ii) the present value of the Operations' (as defined below) terminal
value. The Special Committee considered as favorable to its determination the
fact that the $39.50 per share price to be paid in the Merger exceeded the high
end of the Discounted Cash Flow Range of $33-$37 per share.

The Special Committee's consideration of liquidation value was reflected in
the Liquidation or Runoff Valuation presented by Morgan Stanley in its report
dated April 17, 1997. The Special Committee considered as favorable to its
determination the fact that the $39.50 per share price to be paid in the Merger
represents a premium of 28.5% over the liquidation valuation of $30.74 per share
based on a 6% discount rate, the highest liquidation valuation presented by
Morgan Stanley. The Special Committee did not consider the price paid in

24
<PAGE> 36

prior purchases of shares of Common Stock by the Zurich Stockholders described
in "Certain Transactions in the Common Stock" as a factor because the most
recent of such transactions was consummated approximately one year prior to
Zurich Group's initial offer with respect to the Proposed Transaction. In
addition, there were no firm offers by unaffiliated persons to purchase the
Company of which the Special Committee had knowledge. Accordingly, the Special
Committee did not consider third party offers as a factor. In view of the
variety and nature of the factors considered by the Special Committee, the
Special Committee did not consider it practical to, nor did it attempt to,
quantify or assign relative weights to the specific factors considered in
reaching its determination, except that the Special Committee placed particular
emphasis on the opinion of Morgan Stanley.

As described below, Morgan Stanley performed certain valuation analyses on
the Company in order to reach its opinion. These analyses resulted in the
following per share valuation ranges for the Company (each of which is described
in more detail below under "-- Opinion of Financial Advisor to the Special
Committee"):

<TABLE>
<S> <C>
Public Market Reference Range....................................... $28.00 -- $31.00
Adjusted M&A Market Reference Range................................. $35.67 -- $40.57
Adjusted Acquisition Reference Range................................ $37.63 -- $41.55
Discounted Cash Flow Range.......................................... $33.00 -- $37.00
</TABLE>

The Special Committee determined that the Merger is fair to the Independent
Stockholders notwithstanding the fact that the high end of two of Morgan
Stanley's ranges (the Adjusted M&A Market Reference Range and the Adjusted
Acquisition Reference Range) exceeded $39.50 by approximately $1.00 and $2.00,
respectively, because $39.50 per share is close to the high end of the Adjusted
M&A Market Reference Range and approximately at the midpoint of the Adjusted
Acquisition Reference Range, as well as being in excess of the high end of each
of the other two ranges indicated by Morgan Stanley. See "-- Opinion of
Financial Advisor to the Special Committee."

The Merger is not structured so as to require the approval by a majority of
the unaffiliated stockholders of the Company. Notwithstanding this fact, the
Company, Zurich Group and Parent believe that the Merger and the Merger
Agreement are procedurally fair to the unaffiliated stockholders of the Company
because: (i) the Special Committee consisted of disinterested directors
appointed to represent the interests of, and to negotiate on an arm's-length
basis with Parent and Zurich Group on behalf of, the unaffiliated stockholders
of the Company; (ii) the Special Committee retained and was advised by
independent legal counsel; and (iii) the Special Committee retained Morgan
Stanley as independent financial advisor to assist it in evaluating the Proposed
Transaction. The Special Committee believes the Merger and the Merger Agreement
are procedurally fair for the reasons described in clauses (i) through (iii)
above and because of their belief that Zurich Group and its advisors negotiated
in good faith with the Special Committee and Morgan Stanley. The Special
Committee believes that Zurich Group and its advisors negotiated in good faith
for the following reasons: (i) the $39.50 price per share represented an
increase in the aggregate purchase price for the Public Shares of approximately
$31 million, a price which the Special Committee, based on its business judgment
and the financial opinion of Morgan Stanley, concluded was fair to the
Independent Stockholders; and (ii) material provisions of the Merger Agreement,
including the representations and warranties and closing conditions, were
substantially revised as described in "-- Background of the Merger" to reflect
the Special Committee's comments resulting in a transaction with greater
certainty of closing because it is not conditioned on the Centre Merger or any
other financing and because the Merger Agreement has only a limited number of
representations and warranties given by the Company.

Parent and Zurich Group. Neither Parent nor Zurich Group had any
involvement in the Special Committee's evaluation of the fairness of the Merger
to the unaffiliated stockholders of the Company and did not undertake any formal
evaluation of their own as to the fairness to the unaffiliated stockholders of
the Company. However, Parent and Zurich Group considered the advice of DLJ,
Parent's and Zurich Group's financial advisor, regarding, among other things,
the current and historical market prices for the Common Stock (and the fact that
the Merger Consideration is substantially more than the trading prices of the
Common Stock before Parent proposed the Merger as well as at the time of the
Merger, factors which

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<PAGE> 37

favorably impacted Parent's and Zurich Group's determinations as to the fairness
of the Merger), valuations of other selected companies, the range of premiums
paid in selected minority buyouts since 1990, discounted cash flow analyses and
the all cash consideration. The DLJ analyses resulted in the following per share
valuation ranges for the Company (each of which is described in more detail
below under "-- Summary of Financial Analysis of Donaldson, Lufkin & Jenrette
Securities Corporation"):

<TABLE>
<S> <C>
Public Comparable Company Range............................... $32.87-$33.53
Premiums Paid Range........................................... $33.44-$38.98
Discounted Cash Flow Range
(Book Value Multiple)....................................... $27.96-$35.19
Discounted Cash Flow Range
(Net Income Multiple)....................................... $23.59-$28.28
Intrinsic Value Analysis...................................... $34.18
</TABLE>

The $39.50 per Public Share price exceeds the high end of each of the
valuation ranges indicated by DLJ, thereby supporting each of Parent's and
Zurich Group's belief that the Merger is fair to the unaffiliated stockholders
of the Company. In addition, Parent and Zurich Group considered the same
factors, and the bases therefor, considered by the Special Committee in
evaluating the fairness of the Merger, as set forth above, including the Special
Committee's consideration of current market prices, historical market prices,
net book value, going concern value and liquidation value. Parent and Zurich
Group considered such factors to have the same impact on their fairness
determinations as did the Special Committee. Parent and Zurich Group also
considered the fact that the Special Committee had received the written opinion
of Morgan Stanley addressed to the Special Committee to the effect that, as of
the date thereof, the $39.50 per Public Share to be received by the Independent
Stockholders in the Merger is fair to the Independent Stockholders, from a
financial point of view, and the fact that Parent and Zurich Group determined
such price on an arm's-length basis with the Special Committee, assisted by the
Special Committee's independent legal and financial advisors. Parent and Zurich
Group believe that these factors, each of which favorably impacted Parent's and
Zurich Group's determinations as to fairness, when considered together, provide
a reasonable basis for Parent and Zurich Group to believe, as they do, that the
Merger is fair to the unaffiliated stockholders of the Company. Parent and
Zurich Group did not attach specific relative weights to the factors considered
in reaching their views as to fairness, except that both Parent and Zurich Group
placed particular emphasis on the recommendation of the Special Committee.

Neither Parent nor Zurich Group considered the price paid in prior
purchases of shares of Common Stock by the Zurich Stockholders described in
"Certain Transactions in the Common Stock" as a factor in evaluating the
fairness of the Merger, because the most recent of such transactions was
consummated approximately one year prior to Zurich Group's initial offer with
respect to the Proposed Transaction. In addition, neither Parent nor Zurich
Group had knowledge of any firm offers to purchase the Company made by any
unaffiliated persons. Accordingly, Parent and Zurich Group did not consider
third party offers as a factor.

OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE

Morgan Stanley was retained to act as financial advisor to the Special
Committee in connection with the Merger. Morgan Stanley is an internationally
recognized investment banking firm and was selected by the Special Committee
based on Morgan Stanley's experience and expertise. Morgan Stanley delivered its
written opinion to the Special Committee on April 17, 1997, that, as of such
date, and subject to certain considerations set forth in its opinion, the
consideration to be received by the Independent Stockholders pursuant to the
Merger Agreement is fair from a financial point of view.

THE FULL TEXT OF THE OPINION OF MORGAN STANLEY, WHICH SETS FORTH
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY
MORGAN STANLEY, IS INCLUDED AS APPENDIX B TO THIS PROXY STATEMENT. STOCKHOLDERS
ARE URGED TO READ THE OPINION IN ITS ENTIRETY. THE FULL TEXT OF THE REPORT BY
MORGAN STANLEY RELATING TO ITS OPINION IS ATTACHED AS AN EXHIBIT TO THE SCHEDULE
13E-3 (SEE "ADDITIONAL

26
<PAGE> 38

INFORMATION"). MORGAN STANLEY'S OPINION IS DIRECTED ONLY TO THE CONSIDERATION TO
BE RECEIVED BY THE INDEPENDENT STOCKHOLDERS IN THE MERGER, AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD
VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE OPINION OF MORGAN STANLEY SET
FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF SUCH OPINION.

In arriving at its opinion Morgan Stanley (i) reviewed certain publicly
available financial statements and other information of the Company; (ii)
reviewed certain internal financial statements, assessments of reserves and
other financial and operating data concerning the Company prepared by the
management of the Company; (iii) analyzed certain financial projections
prepared by the management of the Company (see "Certain Projected Financial
Data"); (iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the Company; (v)
reviewed the reported prices and trading activity for the Common Stock; (vi)
compared the financial performance of the Company and the prices and trading
activity of the Common Stock with that of certain other comparable
publicly-traded companies and their securities; (vii) reviewed the financial
terms, to the extent publicly available, of certain comparable acquisition
transactions; (viii) participated in discussions and negotiations among
representatives of the Company and the Special Committee and their respective
financial and legal advisors; (ix) reviewed the draft Merger Agreement; and (x)
performed such other analyses and considered such other factors as Morgan
Stanley deemed appropriate.

Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by it for purposes of
rendering its opinion. Morgan Stanley also assumed that the financial
projections provided to it were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of the Company. Morgan Stanley did not make any independent valuation or
appraisals of the assets or liabilities of the Company. Morgan Stanley's opinion
was based on the economic, market and other conditions in effect on, and the
information made available to it as of, the date of the opinion. In arriving at
its opinion, Morgan Stanley was not authorized to solicit, and did not solicit,
interest from any party with respect to the acquisition of the Company or any of
its assets.

The following is a brief summary of the analyses Morgan Stanley utilized in
arriving at its opinion as to the fairness of the consideration to be received
by the Independent Stockholders in the Merger and that Morgan Stanley discussed
with the Special Committee and the Board on April 17, 1997.

Comparable Company Analysis. Morgan Stanley compared certain financial
information of the Company with the following group of reinsurance companies:
Chartwell Re Corporation, Everest Reinsurance Holdings, Inc., NAC Re Corp.,
Transatlantic Holdings, Inc. and Trenwick Group Inc. The financial information
compared included market capitalization, current price, price as a percentage of
the previous 52-weeks' high and low price, current price as a multiple of
Institutional Brokers Estimate System ("I/B/E/S") estimated earnings per share
for 1997 and 1998, current price as a multiple of December 31, 1996 book value
with and without unrealized investment gains or losses, current price as a
multiple of economic book value as calculated by Morgan Stanley equity research
in a November 20, 1996 report, five year projected I/B/E/S EPS growth rate, 1997
projected return on average equity and dividend yield. In connection with this
analysis, Morgan Stanley reviewed comparable company public market trading
multiples of (i) 1997 I/B/E/S projected net income, (ii) 1998 I/B/E/S projected
net income, (iii) December 31, 1996 GAAP book value and (iv) economic book value
as calculated by Morgan Stanley equity research in a November 20, 1996 report.
The market price information used in such analysis was as of April 14, 1997. The
earnings per share estimates used were based on estimates as of April 12, 1997
provided by I/B/E/S, a data service that monitors and publishes a compilation of
earnings estimates regarding companies of interest to institutional investors
produced by selected research analysts.

This analysis resulted in a public market reference range for the Company
of between $747 million and $827 million (or $28.00 per share to $31.00 per
share). In addition, Morgan Stanley derived an adjusted M&A market reference
range for the Company of between $951 million and $1,082 million (or between
$35.67 per share and $40.57 per share) by applying a premium of approximately
25%-30% to the public market reference

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<PAGE> 39

range derived above, and then adding the net effect of options assumed to be
exercised and the value of I/B/E/S projected earnings for the first two quarters
of 1997.

No company utilized in the comparable companies analysis as a comparison is
identical to the Company. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of the Company and other
factors that could affect the public trading value of the comparable companies
or company to which they are being compared. Mathematical analysis (such as
determining the average or median) is not in itself a meaningful method of using
comparable company data.

Precedent Transactions Analysis. Morgan Stanley also performed an analysis
of certain precedent transactions including Munich Reinsurance Company's
acquisition of American Re Corporation, SCOR Reinsurance Company's acquisition
of Allstate Reinsurance, General Re Corporation's acquisition of National Re
Corporation, Fairfax Financial Holdings Limited's acquisition of Skandia America
Reinsurance Corporation, the public market acquisition of Prudential Reinsurance
Holdings, Inc., Zurich Reinsurance Centre Holdings, Inc.'s acquisition of Re
Capital Corporation, Exor America Inc.'s acquisition of Constitution Re
Corporation, QBE Insurance Group Ltd's acquisition of American Royal Reinsurance
Co., Alleghany Corporation's acquisition of Underwriters Reinsurance Company,
Lumbermens Mutual Casualty Company's acquisition of Kemper Reinsurance Company,
American Re Corporation's acquisition of American Re-Insurance Company,
Christiana General Insurance Corp.'s acquisition of Belvedere Corp., Wand
Partners, Inc./Michigan Mutual Insurance Co.'s acquisition of Chartwell Re
Corporation, and Robert M. Bass Group & Acadia Partners, L.P.'s acquisition of
National Reinsurance Corporation. The financial information compared in the
analysis included aggregate transaction value and return on average equity of
the acquired company. In connection with this analysis, Morgan Stanley derived
multiples for the precedent transactions, including the price paid for the
acquired company as a multiple of GAAP 1996 and 1997 estimated net income, 1997
and 1998 estimated economic net income, and estimated book value and estimated
economic book value for June 30, 1997. Morgan Stanley reviewed the net premiums
paid and total market value in precedent transactions. The following multiples
were derived from this analysis: 14.0x-16.0x 1996 actual net income, 13.0x-15.0x
1997 estimated net income, 13.0x-15.0x 1997 and 12.0x-13.0x 1998 estimated
economic net income and 1.30x-1.60x and 1.05-1.15x June 30, 1997 estimated book
value and Company calculated economic book value, respectively, and applied
these multiples to the Company. Based on these multiples, Morgan Stanley
observed implied per share values of: $17.41 to $19.90 on a 1996 actual net
income basis, $22.05 to $25.44 on a 1997 estimated net income basis, $31.14 to
$35.93 on a 1997 estimated economic net income basis, $35.21 to $38.14 on a 1998
estimated economic net income basis, $35.36 to $43.52 on a June 30, 1997
estimated book value basis, and $38.24 to $41.88 on a June 30, 1997 estimated
economic book value basis. Applying the multiples derived from the precedent
transactions, and accounting for the net effect of options assumed to be
exercised and the value of I/B/E/S projected earnings for the first two quarters
of 1997, resulted in a range of implied values for the Company of between $1,004
million and $1,109 million (or $37.63 per share to $41.55 per share).

No transaction utilized in the comparable transaction analysis is identical
to the Merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of the Company and other factors that
could affect the acquisition value of the companies to which they are being
compared. Mathematical analysis (such as determining the average or median) is
not itself a meaningful method of using comparable transaction data.

Discounted Cash Flow Analysis. The discounted cash flow analysis of the
Company was determined by adding (i) the present value of the projected dividend
streams of the continuing operations of the Company (the "Operations") over a
10-year period from 1997 through 2006, and (ii) the present value of the
Operations' 2006 terminal value. The terminal value of the Operations' common
equity at the end of the 10-year period was determined by multiplying 2007's
projected GAAP net income by numbers representing various terminal multiples
(ranging from 10.0x to 12.0x). Earnings were projected assuming the Company
performed in accordance with the Case One Financial Projections (as defined
below). The dividend streams and terminal values of the Operations were
discounted to present values using different discount rates (ranging from 10% to
12%) chosen to reflect different assumptions regarding the required rates of
return of holders or

28
<PAGE> 40

prospective buyers of the Company's common equity. Morgan Stanley calculated a
summary range of discounted cash flow values per share of Common Stock on a
fully diluted basis of from $33.00 to $37.00.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have given various analyses more or less weight than other
analyses, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting for any particular
analysis described above should not be taken to be Morgan Stanley's view of the
actual value of the Company.

In performing its analysis, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of the Company. The analyses
performed by Morgan Stanley are not necessarily indicative of actual value,
which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as part of Morgan Stanley's
analysis of the fairness of the consideration to be received by the Independent
Stockholders from a financial point of view and were provided to the Special
Committee in connection with the delivery of Morgan Stanley's written opinion
dated April 17, 1997. The analyses do not purport to be appraisals or to reflect
the prices at which the Company might actually be sold. In addition, as
described above, Morgan Stanley's opinion and presentation to the Special
Committee was one of many factors taken into consideration by the Special
Committee in making its determination to recommend to the Board that it approve
the Merger. Consequently, the Morgan Stanley analyses described above should not
be viewed as determinative of the opinion of the Special Committee with respect
to the value of the Company or of whether the Special Committee would have been
willing to agree to a different consideration.

As part of its investment banking business, Morgan Stanley is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuation for estate, corporate and other purposes. In the ordinary course of
its business, Morgan Stanley and its affiliates may actively trade the debt and
equity securities of the Company for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

Pursuant to a letter agreement dated February 12, 1997, between the Special
Committee and Morgan Stanley (the "Engagement Letter"), the Special Committee
agreed that the Company would pay Morgan Stanley an Initial Advisory Fee of
$200,000 to compensate Morgan Stanley for services provided during the first
sixty days of the engagement. Additional advisory fees in an amount equal to
$42,500 is to be paid by the Company to Morgan Stanley for services provided
following the first sixty days of the engagement. In addition, the Company
agreed to pay Morgan Stanley a Financial Opinion Fee of $750,000 plus an
Incremental Financial Opinion Fee equal to $664,216 which is equal to two
percent (2%) of the difference between the purchase price per share paid by the
Zurich Group and $36.00, multiplied by the fully diluted shares of the Company
(not including those shares or options already owned by Zurich Stockholders),
half of which became payable upon delivery of Morgan Stanley's opinion and the
balance of which will be payable upon closing of the Merger. As set forth above,
if the Merger is consummated, the total amount payable to Morgan Stanley is an
amount equal to $1,656,716. In addition to the Advisory Fees and the Opinion
Fees, the Special Committee agreed that the Company would pay Morgan Stanley a
"time and efforts" fee, based on Morgan Stanley's customary charges, if Morgan
Stanley is required to perform material services after the delivery of its
opinion. The Engagement Letter with Morgan Stanley provides that the Company
will reimburse Morgan Stanley for its expenses as incurred and indemnify Morgan
Stanley against certain liabilities incurred in connection with its services.

SUMMARY OF FINANCIAL ANALYSIS OF DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION

As more fully described under "-- Background of the Merger," DLJ was
retained by Parent to act solely as Parent's and Zurich Group's financial
advisor (and not the advisor to or agent of any other person) in connection with
the Proposed Transaction and the Merger and other matters arising in connection
therewith

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<PAGE> 41

pursuant to an engagement letter, dated as of August 14, 1996, between Parent
and DLJ. DLJ was not requested to, and did not, render any opinion (oral or
written) or advice concerning the fairness of the Merger Consideration to the
Independent Stockholders or to any other party (including Zurich Group and
Parent), although DLJ did conduct various valuation analyses in connection with
the December Report, as described below.

A copy of the December Report has been filed as an exhibit to the Schedule
13E-3 filed with the SEC with respect to the Merger and may be inspected and
copied, and may be obtained by mail, from the SEC as set forth in "Available
Information" and will be made available for inspection and copying at the
principal executive offices of the Company at One Chase Manhattan Plaza, New
York, NY 10005, during regular business hours, by any interested stockholder of
the Company or his or her representative who has been so designated in writing.

December Report. On December 4, 1996, DLJ delivered to Parent a written
presentation (the "December Report") regarding the Company's business and
prospects, and containing valuations of the Public Shares using a variety of
different methodologies. In formulating the December Report, DLJ, among other
things: (i) reviewed certain publicly available documents and certain other
information, including the Financial Projections (see "Certain Projected
Financial Data"); (ii) held discussions with senior executive officers of the
Company and Parent; (iii) visited facilities of the Company; (iv) considered
business trends in the business segments in which the Company operates; (v)
reviewed public information with respect to the acquisition of minority
interests; (vi) calculated valuations of the Public Shares using selected
publicly traded company information, premiums paid in other minority interest
acquisitions, and discounted cash flow analyses; and (vii) considered, among
other things, such other information, financial studies, analyses and
investigations and financial, economic and market criteria as it deemed
relevant.

Overview. The December Report reviewed the rationale of the Proposed
Transaction for Parent, as of December 4, 1996, including that the transaction
would (i) allow Parent to offer traditional reinsurance products and finite risk
products from one source; (ii) create a larger, more highly capitalized entity;
(iii) provide for a simpler management reporting process; (iv) allow Parent to
capture 100% of the Company's earnings and cash flow; (v) reduce compliance
costs; (vi) yield potential overhead savings; and (vii) be a good use of
Parent's available funds compared to other investment opportunities.

Selected Company Analysis. DLJ compared the Proposed Transaction to the
recent trading prices for two groups of selected public companies, including
highly capitalized companies (given the Company's high capital base relative to
business written) and property and casualty broker market reinsurance companies
(given the Company's business mix). The highly capitalized companies included
GCR Holdings Limited, IPC Holdings, Ltd., LaSalle Re Holdings Limited, Mid Ocean
Limited, PartnerRe Limited, PXRE Corporation, RenaissanceRe Holdings Ltd. and
the property and casualty broker market reinsurance companies included Chartwell
Re Corporation, Everest Reinsurance Holdings, Inc., NAC Re Corp., Transatlantic
Holdings, Inc. and Trenwick Group Inc. DLJ advised Parent that there are no
companies directly comparable to the Company and the analysis had to be
considered in light of that qualification. DLJ believed the comparison to
trading prices of issuers not currently the subject of an acquisition was
relevant because the Proposed Transaction did not involve a change in control of
the Company.

Given that the Company is highly capitalized, DLJ concluded that the
relevant valuation parameter is price as a multiple of book value per share
("price/book multiple"). The highly capitalized companies price/book multiple
ranged from 1.0x to 1.7x, which implied a valuation range of $26.11 to $44.39,
as compared to the property and casualty broker market reinsurance companies
price/book multiple range of 1.2x to 1.6x, which implied a valuation range of
$31.33 to $41.78.

Premium Analysis. The December Report sets forth DLJ's calculations of an
implied valuation of the Company based on premiums offered in comparable
acquisitions of minority shareholdings during the last six years. DLJ found
that, of 47 minority transactions surveyed since 1990, 29 had a premium of less
than 30%, while 21 had a premium of less than 20%. For the transactions
analyzed, the median premium to the market price one day prior to announcement
was 23.7% (implying a per Public Share price of $38.34); the median premium to
the market price one month prior to announcement was 31.1% (implying a per
Public Share price

30
<PAGE> 42

of $39.98); and the median premium to the high trading price over the preceding
52 weeks was 2.5% (implying a per Public Share price of $33.44).

Discounted Cash Flow Analysis. DLJ prepared two matrices of future per
Public Share values, based on management projections contained in the Financial
Projections as well as a range of 2002 terminal book value multiples and net
income multiples using various discount rates. See "Certain Projected Financial
Data." The first matrix assumed terminal book value multiples of 1.4x to 1.8x
and discount rates of 13% to 17%; this analysis indicated a low per Public Share
value of $24.84, assuming the lowest multiple and the highest discount rate, and
a high per Public Share value of $39.34, assuming the highest multiple and the
lowest discount rate. The second matrix assumed terminal net income multiples of
12.0x to 14.0x and discount rates of 13% to 17%; this analysis indicated a low
per Public Share value of $21.52, assuming the lowest multiple and the highest
discount rate, and a high per Public Share value of $30.93, assuming the highest
multiple and the lowest discount rate. In comparison, the discounted cash flow
analysis ("DCF") of Morgan Stanley indicated a summary range of DCF values per
share of Common Stock on a fully diluted basis of from $33.00 to $37.00. The
differences between the Morgan Stanley and DLJ valuations under the same method
can be explained as follows:

(a) DLJ performed a DCF based on the Company's projections through 2002,
while Morgan Stanley extrapolated from the Financial Projections to
project the Company's performance to 2006 and performed a longer-term
DCF.

(b) DLJ used a higher set of discount rates than Morgan Stanley. DLJ
assumed an equity beta of 1.0 (the market average), a long term risk
free rate of 7.0% and an equity risk premium of 8.0%. Based on the
capital asset pricing model formula, the discount rate would be 15.0%
based on these assumptions. In order to come up with a range of DCF
values, DLJ varied the discount rate from 13.0% to 17.0%. Morgan
Stanley used a discount rate of 10.0% to 12.0%.

(c) DLJ used terminal book value and terminal net income multiples based on
a M&A premium to the multiples of the publicly traded comparable
companies. This produced a multiple range of 12.0x to 14.0x terminal
net income. These multiples differ from Morgan Stanley's assumptions of
10.0x to 12.0x for terminal net income.

Economic Value Analysis. The Company calculates an economic value of its
balance sheet. The economic value calculation takes into account the Company's
tangible book value and adjusts for a mark-to-market of the Company's investment
portfolio and the present value of the Company's loss reserves, reinsurance
recoverables as well as other assets and liabilities. Further adjustments for
one-year treaties are made to account for in force business that is bound by the
Company but not written, business that is written by the Company but not earned
and business that is bound by the Company but not in force. Based on the
Financial Projections prepared by the Company for its November 1996 Board
meeting, the estimate of economic value as of December 31, 1996 was $34.18 per
Public Share.

Accretion/Dilution Analysis. The December Report also contained an
analysis of the Merger's accretive/dilutive impact, on a pro forma basis, on
Parent's estimated 1997 EPS, based on a number of assumptions, including, among
other things, currency exchange rates, the actual performance of the Company and
prevailing interest rates.

DLJ has stated to Parent that, in its view, the December Report is not
necessarily susceptible to partial analysis or summary description. In addition,
DLJ has advised Parent that selecting portions of the December Report or of the
summary set forth above, without considering the analyses as a whole, could
create an incomplete view of the processes underlying DLJ's analyses. No company
or transaction used in the above analyses as comparison is identical to the
Company or the contemplated transaction. The December Report was prepared solely
for the purposes described above and do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities actually may be
sold. Analyses based upon projected future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, as they are based upon numerous factors or events beyond
the control of the parties or their respective advisors, none of Parent,

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<PAGE> 43

the Company or DLJ or any other person assumes responsibility if future results
are materially different from those projected. The foregoing summary does not
purport to be a complete description of the December Report and it is qualified
by reference to the December Report which is filed as an exhibit to the Schedule
13E-3.

In the course of its investigation DLJ relied upon, and assumed the
accuracy and completeness of, publicly available information and the financial
and other information provided by the Company, but DLJ did not assume any
responsibility for independent verification for any of the foregoing
information. In addition, DLJ did not make an independent evaluation or
appraisal of the assets of the Company, nor was DLJ furnished with any such
evaluation or appraisals. The December Report was based on facts and
circumstances existing and disclosed to DLJ on the date such materials were
presented to Parent.

DLJ provides a full range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities or options on securities of
the Company and/or Parent for its own account and for the account of customers.
DLJ has performed investment banking services for the Company and/or Parent in
the past and has been compensated for such services. DLJ served as financial
advisor to Zurich Group in its investment in Provident Companies, Inc. The
Provident investment was consummated in March 1997 and DLJ received a fee for
rendering those services. DLJ also served as a co-manager of the initial public
offering of the Company and as a co-manager in the public offering of the Senior
Notes.

DLJ is acting as financial advisor to Parent in connection with the Merger.
DLJ was selected to act as Parent's financial advisor in connection with the
Merger based upon DLJ's qualifications, expertise and reputation, including the
fact that DLJ, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive bidding,
secondary distributions of listed and unlisted securities, private placements
and valuation for corporate and other purposes. Pursuant to the Parent's August
14, 1996 letter agreement, Parent has agreed to pay DLJ a retainer fee of
$100,000, and additional consideration of $1,900,000 in total, payable as
follows: (i) $400,000, payable in cash at the time a proposal is submitted to
the Board and (ii) $1,500,000, payable in cash promptly upon consummation of the
Merger. Parent has also agreed to reimburse DLJ for its reasonable out-of-pocket
expenses incurred (including the reasonable fees and disbursements of its
counsel) and to indemnify DLJ against certain liabilities, including certain
liabilities under the federal securities laws.

PLANS FOR THE COMPANY AFTER THE MERGER

Parent intends, subject to certain conditions, including receipt of all
necessary regulatory approvals, to consummate the Centre Merger simultaneously
with or promptly following the Merger. Centre NY and ZRC will analyze how best
to integrate the management of the two entities after the Centre Merger. It is
expected that the executive officers of the combined entity will be designated
from the executive officers of each of Centre NY and ZRC. Richard Smith, the
Chief Executive Officer and President of ZRC, will serve as Chief Executive
Officer and David Wasserman, the President and Chief Executive Officer of Centre
NY, will serve as Vice Chairman of the Board of Directors of the surviving
corporation of the Centre Merger. Certain Centre NY and ZRC professionals will
be assigned new roles at the holding company level or other affiliated entities.

In connection with the funding of the Merger Consideration and related fees
and expenses, Centre NY intends to repurchase and subsequently cancel certain
common shares of its capital stock from Centre U.S. for approximately $245.9
million. The plan for the stock repurchase and cancellation will be authorized
and approved by the Board of Directors of Centre NY. See "Special
Factors -- Sources of Funds; Fees and Expenses."

Except as indicated in this Proxy Statement, Parent does not have any
present plans or proposals which relate to, or would result in, an extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company or any of its subsidiaries, a sale or transfer of a material amount
of assets of the Company or any other material changes in the Company's
corporate structure or business or the composition of the Board or management of
the Company.

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<PAGE> 44

Representatives of an affiliate of Parent are engaged in discussions with
representatives of the Office of the Governor of the State of Connecticut
concerning the availability of state tax credits to certain affiliates of Parent
as described below in the event that (i) a relocation (the "Relocation") of the
executive offices of the U.S. subsidiaries of Parent, including the Company and
its subsidiaries, to Stamford, Connecticut, can be completed on terms acceptable
to Parent, (ii) an investment (the "Investment") can be made by certain
affiliates of Parent in the Company or a subsidiary thereof on terms acceptable
to Parent through a qualified fund in securities or debt instruments to be
issued by the Company and (iii) certain other material conditions described
below have been satisfied (together, the "Proposal"). Pursuant to Connecticut
Public Act 94-214 and Connecticut Public Act 95-303 (together, the "Act"),
credits against Connecticut state premium, income and certain other taxes
payable ("Tax Credits") may be allowed as respects investments made through
qualifying funds in Connecticut-based insurance businesses if and to the extent
that such businesses meet certain criteria concerning the development of new
infrastructure and employment opportunities in Connecticut.

Under the terms of an understanding reached in March 1997 with the
Commissioner of the Department of Revenue Services of the State of Connecticut
(the "CDRS") and the Commissioner of the Department of Insurance of the State of
Connecticut (the "CDOI"), Parent believes that implementing the Relocation and
the Investment could generate up to approximately $190.0 million of nominal
value Tax Credits for such investing affiliates over ten years to be utilized by
such affiliates or assignees thereof on a deferred basis (0% for the first three
years following the investment, 10% for each of the next four years and 20% for
each of the following three years). Parent and certain affiliates will be
required to demonstrate the creation of 400 new jobs in the State of
Connecticut, the leasing or acquisition consistent with the terms of the Act of
an office facility in Stamford, Connecticut and the relocation of existing
in-state jobs from other locations into the facility. (Certain affiliates of
Parent (other than the Company and its subsidiaries) now employ approximately
176 persons at their offices in downtown New York City. The Company and its
subsidiaries now employ approximately 134 persons at these offices.) Receipt of
the Tax Credits is now also subject to the condition that Parent or an affiliate
make or cause to be made a payment of up to $12.5 million to fund certain
regional infrastructure development in the State of Connecticut.

No assurances are now possible as to the value to the Company or ZRC of any
Tax Credits which may be realized in the future in connection with the Proposal.
While full implementation of the Proposal (and, accordingly, realization of the
full amount of the Tax Credits) will require the relocation of the Company and
its subsidiaries, under the terms of the Act and as described above, Tax Credits
created by implementing the Proposal will inure directly to the benefit of the
investors in the qualified fund (which will include affiliates of Parent), and
not to the Company or ZRC. In addition, no assurances are now possible that any
Tax Credits will be realized from the Proposal inasmuch as neither the Proposal
nor the Act obligates Parent or its affiliates to take any action whatsoever and
Parent may determine for any reason or for no reason at all not to pursue the
Proposal or meet any of the terms or conditions of the Proposal.

Following the understanding reached with the CDRS and the CDOI, in late
March 1997 certain legislation was introduced into the Connecticut legislature
which, if enacted into law would have had the effect of limiting the
availability of Tax Credits as respects the Proposal. In July 1997, the Governor
of the State of Connecticut signed into law legislation similar to the
legislation introduced in March 1997 (the "Subsequent Act"). Parent has
indicated that its continued willingness to proceed with the Relocation is
contingent upon the receipt of certain written assurances that would increase
the likelihood that the Act, and not the limitations imposed by the Subsequent
Act, would apply in the manner and have the effect intended by Parent as
respects the Relocation. As of the date of this Proxy Statement, Parent believes
that it is likely that such written assurances will be received. In addition,
Parent has indicated that its consideration of the Relocation is further
contingent upon its ability to locate and acquire acceptable office facilities
in Stamford, Connecticut and to effect required renovations and refurbishments
thereof on economic and other terms satisfactory to Parent. Since late May 1997,
an affiliate of Parent has been engaged in discussions to acquire (the
"Acquisition") an office building located in Stamford, Connecticut. As of July
8, 1997, such affiliate entered into a non-binding letter of intent with respect
to the acquisition of such property. Although Parent now expects that the
Acquisition will be consummated, there now can be no assurances as to whether a
definitive purchase and sale agreement will be successfully concluded, whether
the results of a due diligence investigation of the property will be
satisfactory to Parent, when, if at all, the Acquisition could be completed

33
<PAGE> 45

on terms acceptable to Parent, whether required renovations and refurbishments
may be completed on terms satisfactory to Parent or, in the event that such
conditions cannot be satisfied, whether Parent would be willing or able to
identify or complete other alternatives acceptable to it while retaining its
rights as respects the Tax Credits. The net value of the Proposal to Parent and
its affiliates (other than the Company and ZRC) is uncertain because: (i) as set
forth above, consummation of the Proposal remains subject to a number of
conditions and contingencies some of which are beyond the control of Parent,
(ii) the ultimate costs of effecting the Relocation, including, without
limitation, construction/renovation costs and employee relocation costs, remain
uncertain, and (iii) the ultimate amount of Tax Credits, as well as the amount
of value which could be realized by application or assignment of such credits
following completion of the Proposal, remains uncertain and subject to a number
of contingencies beyond the control of Parent, including, without limitation the
ability of Parent's affiliates to fully satisfy the requirements of the Act and
the ability of such affiliates to utilize or otherwise assign any Tax Credits
generated through completion of the Proposal.

Upon consummation of the Merger, Parent intends to retain the Company as an
indirect wholly owned subsidiary of Parent. Parent anticipates that, except as
described above with respect to the Centre Merger, the assets, business and
operations of the Company will be continued substantially as they are currently
being conducted. Management of Parent may, however, cause the Company to make
such changes as are deemed appropriate and intends to continue to review the
Company and its assets, businesses, operations, properties, policies, corporate
structure, capitalization and management and consider if any changes would be
desirable in light of the circumstances then existing. In addition, Parent
intends to continue to review the business of the Company and identify synergies
and potential cost savings.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendations of the Board with respect to the Merger,
the Independent Stockholders should be aware that certain officers and directors
of the Company have certain interests summarized below that may be in addition
to, or different from, the interests of the Independent Stockholders. The
Special Committee and the Board were aware of these interests and considered
them along with other matters described under "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger."

Common Stock and Option Ownership. As of July 28, 1997, the executive
officers and directors of the Company beneficially owned an aggregate of 301,670
shares of Common Stock, constituting approximately 1.2% of the total number of
shares of Common Stock then outstanding. To the knowledge of the Company, such
individuals intend to vote all their shares in favor of the Merger. If the
Merger is consummated, such persons will receive, in the aggregate,
approximately $14,201,913 for their shares of Common Stock and Company Options.
At the Effective Time, each holder of a then outstanding Company Option, whether
or not vested and exercisable, will, in settlement thereof, receive (except
under the circumstances described in "The Merger Agreement -- Stock Options;
Restricted Stock" relating to the Company's ability to defer certain payments)
from the Company for each share of Common Stock subject to such option an amount
(subject to any applicable withholding tax) in cash equal to the Option
Consideration. Under the Merger Agreement, except under the circumstances
described in "The Merger Agreement -- Stock Options; Restricted Stock" relating
to the Company's ability to defer certain payments, shares of the Common Stock
held as of the Effective Time by grantees under the Company's Restricted Stock
Plan, as Amended and Restated, will be treated in a manner consistent with
shares of Common Stock held by the Independent Stockholders, whether or not the
grantee's rights in respect of such shares have vested.

34
<PAGE> 46

Options pursuant to the Merger. Other than the individuals named below, no
executive officer or director of the Company owns shares of Common Stock or
Company Options.

<TABLE>
<CAPTION>
AMOUNT TO BE
RECEIVED FOR
AGGREGATE NUMBER OF NUMBER OF UNVESTED SHARES AGGREGATE
DIRECTOR/ NUMBER OF UNVESTED COMPANY AND COMPANY AMOUNT TO BE
EXECUTIVE OFFICER SHARES SHARES OPTIONS OPTIONS(1) RECEIVED(1)
- ----------------------------- --------- --------- --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Steven M. Gluckstern......... 106,228 16,667 -- $ 658,346 $4,196,006
Richard E. Smith............. 61,679 17,980 80,000 1,470,590 3,196,700
Peter R. Porrino............. 27,848 8,980 44,000 768,590 1,513,876
Gerald S. King............... 18,773 10,817 24,000 658,271 972,533
Isaac Mashitz................ 28,261 8,980 24,000 585,710 1,347,309
Adrienne W. Reid............. 18,132 13,817 24,000 776,771 947,214
Karen O'Connor Rubsam........ 9,058 3,000 20,000 306,190 545,481
Mark R. Sarlitto............. 17,493 12,317 24,000 717,521 921,973
William H. Bolinder.......... 900 -- -- -- 35,550
Philip Caldwell.............. 1,000 -- -- -- 39,500
Laurence W. Cheng............ 2,500 -- -- -- 98,750
Judith Richards Hope......... 3,000 -- -- -- 118,500
Rolf Hueppi.................. 3,000 -- -- -- 118,500
Robert T. Marto.............. 1,000 -- -- -- 39,500
George G.C. Parker........... 2,798 -- -- -- 110,521
</TABLE>

- ---------------
(1) Assumes that payments are not deferred as permitted by the Merger Agreement.
See "The Merger Agreement -- Stock Options; Restricted Stock."

<TABLE>
<CAPTION>
PERCENTAGE
NAME NUMBER OF SHARES OWNERSHIP
---------------------------------------------------------- ---------------- ----------
<S> <C> <C>
Rolf Hueppi............................................... 8,065 *
Detlef Steiner............................................ 6,000 *
Steven M. Gluckstern...................................... 15 *
Richard E. Smith.......................................... 15 *
All Directors and Executive Officers as a Group........... 14,095 *
</TABLE>

- ---------------
* Less than one percent.

Directors and Officers. A majority of the members of the Board and certain
executive officers of the Company are executive officers of Zurich Group or its
affiliates. The Merger Agreement provides that after the Merger, the directors
of Sub will become the directors of the Surviving Corporation. Steven M.
Gluckstern, currently a director of the Company, is also a director of Sub and
he will remain in such capacity with the Surviving Corporation until his
successor is duly elected or appointed. Pursuant to the Merger Agreement, the
officers of the Company will remain the officers of the Surviving Corporation
until their successors are duly elected or appointed.

35
<PAGE> 47

officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy with
respect to actions and omissions occurring prior to the Effective Time on terms
no less favorable than the terms of such current insurance coverage; provided
that if the specified insurance is unavailable at the current premiums, the
Surviving Corporation will obtain as much insurance as can be obtained for a
premium not in excess of 150% of the current premium paid for directors' and
officers' liability insurance.

CERTAIN EFFECTS OF THE MERGER

As a result of the Merger, the entire equity interest of the Surviving
Corporation will be owned indirectly by Parent. Therefore, following the Merger,
the Independent Stockholders will no longer benefit from any increases in the
value of the Company and will no longer bear the risk of any decreases in the
value of the Company. In addition, following the Merger, the interest of Parent
in the Company's net book value and net income will increase to 100% from a
current level of approximately 65.7%.

Following the Merger, in dollar terms, Parent's interest in 1996 fiscal
year-end book value will increase to $711,869,000 from $467,698,000 and its
interest in 1996 fiscal year net income will increase to $29,263,000 from
$19,226,000.

Following the Merger, the Parent will benefit from any increases in the
value of the Company and also bear the risk of any decreases in the value of the
Company.

The Independent Stockholders will have no continuing interest in the
Company following the Merger. As a result, the shares of Common Stock will no
longer meet the requirements of the NYSE for continued listing and will,
therefore, be delisted from the NYSE. In addition, the Company intends to take
such action, in accordance with applicable law and NYSE rules, to cause the
delisting of the Senior Notes following the Merger.

The Common Stock and the Senior Notes are currently registered under the
Exchange Act. Registration under the Exchange Act may be terminated upon
application of the Company to the SEC if such securities are not listed on a
national securities exchange or quoted on NASDAQ and there are fewer than 300
record holders of such securities. Termination of registration of the Common
Stock and the Senior Notes under the Exchange Act would mean certain provisions
of the Exchange Act, such as the short-swing trading provisions of Section
16(b), the requirement to file periodic reports, the requirement of furnishing a
proxy statement in connection with stockholders' meetings pursuant to Section
14(a), and the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions, would no longer be applicable to the Company. If
registration of the shares of Common Stock and the Senior Notes under the
Exchange Act is terminated, the Common Stock and the Senior Notes would no
longer be eligible for NYSE listing. In addition, "affiliates" of the Company
and persons holding "restricted securities" of the Company might as a result be
deprived of the ability to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended. It is the present
intention of the Parent to seek to cause the Company to make an application for
the termination of the registration of the Common Stock and the Senior Notes
under the Exchange Act as soon as practicable after the Effective Time of the
Merger.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The receipt of cash in exchange for Common Stock pursuant to the Merger
will be a taxable transaction for Federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign tax laws. A
Stockholder will generally recognize gain or loss for Federal income tax
purposes in an amount equal to the difference between such Stockholder's
adjusted tax basis in such Stockholder's Common Stock and the consideration
received by such Stockholder in the Merger. Such gain or loss will be calculated
separately for each block of Common Stock exchanged by a Stockholder. Such gain
or loss will be a capital gain or loss if a block of Common Stock is held as a
capital asset and will be a long-term capital gain or loss if, at the Effective
Time, such block of Common Stock has been held for more than one year.

36
<PAGE> 48

The foregoing discussion may not apply to Stockholders who acquired their
Common Stock pursuant to the exercise of employee stock options or other
compensation arrangements with the Company, who are not citizens or residents of
the United States or who are otherwise subject to special tax treatment. EACH
STOCKHOLDER IS URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR WITH RESPECT TO
THE TAX CONSEQUENCES OF THE MERGER, INCLUDING THE EFFECTS OF APPLICABLE STATE,
LOCAL OR OTHER TAX LAWS.

ANTICIPATED ACCOUNTING TREATMENT

The Merger will be accounted for by Parent under the purchase method of
accounting in accordance with Accounting Principles Opinion No. 16, "Business
Combinations", as amended. Under this method of accounting, the purchase price
will be allocated to assets acquired and liabilities assumed based on their
estimated fair values at the Effective Time.

REGULATORY APPROVALS

State Insurance Regulatory Approvals. State insurance holding company laws
and regulations applicable to the Company generally provide that no person may
acquire control of the Company unless such person has provided certain required
information to, and such acquisition has been approved (or not disapproved) by,
the appropriate insurance regulatory authorities. Generally, transactions may be
exempted from these laws and regulations if they are not made or entered into
for the purpose of, and do not have the effect of, changing or influencing
control of an insurance company. The Company filed with the Connecticut
Insurance Department a request to exempt the Merger from the insurance holding
company laws and regulations of Connecticut governing an acquisition of control
of a domestic insurer, and on July 24, 1997 the Connecticut Insurance Department
issued the requested exemption. Similarly, the Company filed with the New Jersey
Insurance Department a request to exempt the Merger from the insurance holding
company laws and regulations of New Jersey governing an acquisition of control
of a domestic insurer and on July 25, 1997 the New Jersey Insurance Department
issued the requested exemption. See "The Merger Agreement -- Conditions to the
Merger."

Hart-Scott-Rodino Antitrust Improvements Act. The acquisition by Parent of
the voting securities of the Company pursuant to the Merger Agreement is exempt
from the notification and waiting period requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") pursuant to 15 U.S.C.
sec.sec. 18a(c)(3) of the HSR Act, which provides that acquisitions of voting
securities of an issuer at least 50% of the voting securities of which are owned
by the acquiring person prior to the acquisition are so exempt.

SOURCES OF FUNDS; FEES AND EXPENSES

It is currently expected that approximately $355.0 million will be required
to pay the Merger Consideration to the Independent Stockholders (assuming no
such holder exercises appraisal rights), approximately $4.9 million will be
required to pay the Option Consideration to the holders of Company Options,
approximately $2.6 million will be required to pay the expenses of Zurich Group,
Parent and Sub in connection with the Merger, and approximately $2.7 million
will be required to pay the expenses of the Company in connection with the
Merger. It is currently expected that (i) approximately $248.5 million of such
amounts will be funded out of the general funds of Parent and its affiliates,
including a cash contribution of approximately $245.9 million to Sub by Sub's
direct parent, Centre U.S., which amount will be obtained by Centre U.S. as a
result of Centre NY's repurchase from Centre U.S. of certain of Centre NY's
capital stock, and (ii) approximately $116.7 million of such amounts will be
funded out of the general funds of the Company, of which $26.4 million will be
obtained through a dividend from ZRC to the Company. Parent, its affiliates and
the Company currently have sufficient general funds available to fund their
respective portions of the Merger Consideration and related fees and expenses as
specified in clauses (i) and (ii) above.

37
<PAGE> 49

Estimated costs and fees incurred or to be incurred by the Company in
connection with the Merger, assuming completion of the Merger, are as follows:

<TABLE>
<S> <C>
Investment banking fees and expenses........................... $2,000,000
Legal fees and expenses........................................ 400,000
SEC filing fee................................................. 71,000
Printing and mailing expenses.................................. 70,000
Paying agent fees.............................................. 20,000
Miscellaneous.................................................. 99,000
----------
Total................................................ $2,660,000
==========
</TABLE>

The above fees and expenses do not include any fees and expenses that may
be payable to the attorneys for the Plaintiffs as described in "Stockholder
Litigation." For information regarding Morgan Stanley's engagement by the
Special Committee, see "-- Opinion of Financial Advisor to the Special
Committee."

Estimated fees and expenses incurred or to be incurred by Zurich Group,
Parent and Sub in connection with the Merger are investment banking fees and
expenses of $2 million, legal fees and expenses of $600,000 and miscellaneous
fees of $20,000. For information regarding DLJ's engagement by Parent, see
"-- Summary of Financial Analysis of Donaldson, Lufkin & Jenrette Securities
Corporation."

The Merger Agreement provides that, generally, all costs and expenses
incurred in connection with the Merger Agreement and the Merger will be paid by
the party incurring the expense; provided, however, that if the Merger Agreement
is terminated because the Board withdraws or modifies its approval or
recommendation of the Merger Agreement and the Merger, approves or recommends a
Takeover Proposal or causes the Company to enter into an agreement with respect
to a Takeover Proposal, the Company has agreed to pay all costs and expenses of
Parent and its affiliates incurred in connection with the Merger Agreement and
the transactions contemplated thereby. See "The Merger Agreement -- Expenses."

Neither Parent nor the Company will pay any fees or commissions to any
broker or dealer or any other person (other than Morgan Stanley, DLJ, and the
Paying Agent) for soliciting Public Shares pursuant to the Merger. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Company for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers.

38
<PAGE> 50

THE MERGER AGREEMENT

The following is a summary of certain provisions of the Merger Agreement, a
copy of which is attached hereto as Appendix A and incorporated by reference
herein. All references to and summaries of the Merger Agreement in this Proxy
Statement are qualified in their entirety by reference to the Merger Agreement.
Stockholders are urged to read the Merger Agreement carefully and in its
entirety.

EFFECTIVE TIME

Subject to the provisions of the Merger Agreement, as soon as practicable
on or after the Closing Date (as defined below), a certificate of merger (the
"Certificate of Merger") will be filed with the Secretary of State of the State
of Delaware. The "Effective Time" of the Merger will be upon the filing of the
Certificate of Merger or at such time thereafter as is provided in the
Certificate of Merger. The "Closing Date" of the Merger will occur on the third
business day after the Satisfaction Date, unless another time or date is agreed
to in writing by the Company, Parent and Sub or unless Parent and Sub exercise
their right under the Merger Agreement to extend the Closing Date to a date not
later than 90 days following the Satisfaction Date. The Company currently
anticipates that the Effective Time and Closing Date of the Merger will occur on
or about August 29, 1997.

THE MERGER

The Merger Agreement provides that, subject to the approval and adoption of
the Merger Agreement by the Stockholders, approval by the Connecticut Department
and all authorizations, consents, orders or approvals of, or declarations or
filings with, or expiration of waiting periods proposed by, any governmental
entity the failure to obtain which would have a material adverse effect on
Parent and its subsidiaries or the Surviving Corporation and its subsidiaries,
in each case, taken as a whole, and compliance with certain other covenants and
conditions, Sub will be merged with and into the Company, at which time the
separate corporate existence of Sub will cease and the Company will continue as
the Surviving Corporation. Following consummation of the Merger, the Company, as
the Surviving Corporation, will be an indirect wholly owned subsidiary of
Parent. As a result of the Merger, all the property, rights, privileges, powers
and franchises of the Company and Sub will vest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Sub will become the
debts, liabilities and duties of the Surviving Corporation.

Conversion of Securities. At the Effective Time, (i) each share of Common
Stock that is owned by the Company or the Zurich Stockholders will be
automatically canceled and retired and will cease to exist, and no consideration
will be delivered or deliverable in exchange therefor, (ii) each issued and
outstanding share of Common Stock (other than shares to be canceled in
accordance with the immediately preceding clause (i) and other than Dissenting
Shares) will be converted into the right to receive the Merger Consideration per
share in cash, without interest thereon, upon surrender of the certificates
representing shares of Common Stock, and (iii) each share of capital stock of
Sub will be converted into and become that number of shares of fully paid and
nonassessable shares of Common Stock equivalent to the quotient obtained by
dividing (A) the total number of outstanding shares of Common Stock immediately
prior to the Effective Time by (B) 1,000,000 (i.e., the number of outstanding
shares of common stock of Sub). As used herein, the term "Merger Consideration"
means $39.50, except that if Parent and Sub elect to extend the Closing Date as
described in "-- Effective Time," such term shall mean $39.50, plus interest on
such amount computed at an annual rate equal to the prime rate announced by The
Chase Manhattan Bank, N.A. and in effect as of the Satisfaction Date, for the
number of days elapsed from (but not including) the third business day following
the Satisfaction Date through (and including) the Closing Date.

Directors and Officers; Governing Documents. At the Effective Time, the
directors of Sub will become the directors, and the officers of the Company will
remain the officers, of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. At the Effective Time, the Certificate of
Incorporation and the By-laws of the Company, as in effect immediately prior to
the Effective Time, will be the Certificate of Incorporation and the By-laws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.

39
<PAGE> 51

Exchange Procedures. Parent has designated First Chicago Trust Company of
New York to act as Paying Agent in the Merger for the payment of the
consideration to be received by Independent Stockholders in the Merger upon
surrender of certificates representing shares of Common Stock, and from time to
time on and after the Effective Time, Parent will make available, or cause its
subsidiaries to make available, to the Paying Agent funds in amounts and at the
times necessary for the payment of the consideration to be received by
Independent Stockholders in the Merger and any payments to holders of Dissenting
Shares pursuant to the Merger Agreement. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to (x) each holder of record
(other than the Zurich Stockholders) of a certificate or certificates which
immediately prior to the Effective Time represented shares of Company Common
Stock (the "Certificates") and (y) each holder of Company Options at the
Effective Time (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in a
form and have such other provisions as Parent may specify) and (ii) instructions
for use in effecting the surrender of the Certificates and Company Options in
exchange for the Merger Consideration or Option Consideration, as applicable.
Upon surrender of a Certificate or Company Option for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate or
Company Option, as the case may be, shall be entitled to receive in exchange
therefor the amount of cash into which the shares theretofore represented by
such Certificate or Company Option, as the case may be, shall have been
converted pursuant to the provisions of the Merger Agreement, and the
Certificate or Company Option, as the case may be, so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares that is
not registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer, and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered, each Certificate and Company Option shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares or Company
Options, as the case may be, theretofore represented by such Certificate or
Company Option, as the case may be, shall have been converted pursuant to the
provisions of the Merger Agreement. No interest will be paid or will accrue on
the cash payable upon the surrender of any Certificate. The right of any
Stockholder to receive the Merger Consideration will be subject to, and reduced
by, the amount of any required tax withholding obligation.

Cancellation and Retirement of Common Stock. All cash paid upon the
surrender of Certificates in accordance with the Merger Agreement will be deemed
to have been paid in full satisfaction of all rights pertaining to the shares of
Common Stock theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company will be closed, and there will be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares that were outstanding immediately prior to
the Effective Time.

At any time following six months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds (including any interest and other income received with respect thereto)
which has been made available to the Paying Agent and which have not been
disbursed to holders of Certificates or Company Options, as the case may be, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration or the Option
Consideration, as the case may be, payable upon due surrender of their
Certificates or Company Options, as the case may be.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains certain representations and warranties of the
Company, including representations and warranties regarding: the due
organization, good standing and authority to conduct business and own, lease and
operate the properties of the Company and its subsidiaries; the capitalization
of

40
<PAGE> 52

the Company; the authority of the Company to enter into the Merger Agreement,
subject to Stockholder approval; the absence of conflict between the
transactions contemplated by the Merger Agreement with other agreements and
documents; consents and approvals; the adequacy of the Company's filings with
the SEC; the opinion of Morgan Stanley as to the fairness, from a financial
point of view, of the consideration to be received by the Independent
Stockholders in the Merger; and the Stockholder vote required to approve the
Merger Agreement.

The Merger Agreement also includes certain representations and warranties
by Parent and Sub, including representations and warranties regarding: the due
organization, good standing and authority to conduct business and own, lease and
operate the properties of Parent and those of its subsidiaries that own Common
Stock; the authority to enter into the Merger Agreement; the absence of conflict
between the transactions contemplated by the Merger Agreement with other
agreements and documents; consents and approvals; the conduct of business by
Sub; and the accuracy and truthfulness of documents filed with or sent to the
SEC in connection with the Merger.

CONDUCT OF THE BUSINESS PENDING THE MERGER

During the period from the date of the Merger Agreement, until the
Effective Time, the Company has agreed as to itself and its subsidiaries that,
except as expressly contemplated or permitted by the Merger Agreement or as
consented to in writing by Parent, the Company and its subsidiaries will carry
on their respective businesses in the usual, regular and ordinary course in
substantially the same manner as conducted prior to the date of the Merger
Agreement and will use all reasonable efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing business will not be impaired in any material respect at the Effective
Time. Except as expressly contemplated or permitted by the Merger Agreement or
as consented to in writing by Parent, the Company also has agreed that it will
not, nor will it permit any of its subsidiaries to, nor will it propose to: (i)
(A) declare or pay any dividends on or make other distributions in respect of
any of its capital stock, other than cash dividends paid to the Company or any
subsidiary on or with respect to the capital stock of another subsidiary, (B)
split, combine or reclassify any of its capital stock or issue, authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (C) repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, redeem or otherwise
acquire, any shares of capital stock of the Company or any of its subsidiaries;
or (ii) issue, deliver or sell, or authorize or propose the issuance, delivery
or sale of, any shares of its capital stock of any class or any securities
convertible into, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, other than (1) the issuance
of shares of Common Stock upon the exercise of employee stock options
outstanding on the date of the Merger Agreement under the Company Stock Plan or
pursuant to regular issuances of Common Stock in the ordinary course in
connection with employee benefit plans in effect on the date of the Merger
Agreement and (2) the issuance by a wholly owned subsidiary of its capital stock
to its parent.

The Company has also agreed that it: (i) will not amend or propose to amend
its Certificate of Incorporation or By-laws; (ii) will confer on a regular and
frequent basis with Parent, report on operational matters and promptly advise
Parent orally and in writing of any change or event having, or which could
reasonably be expected to have, a material adverse affect on the Company and its
subsidiaries taken as a whole; and (iii) will not (1) enter into, adopt, amend
in any material respect (except as may be required by law) or terminate any
employee benefit plan or any agreement, arrangement, plan or policy between the
Company and one or more of its directors or officers or (2) except for normal
increases in the ordinary course of business consistent with past practice that,
in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company, increase in any manner the compensation or
fringe benefits of any director, officer or key employee or pay any benefit not
required by any plan and arrangement as in effect as of the date of the Merger
Agreement (including, without limitation, the granting of stock options) or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing.

41
<PAGE> 53

NO SOLICITATION; FIDUCIARY OUT

The Company has agreed that it will not authorize or permit any of its
executive officers or directors or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to (i) solicit, initiate or encourage (including by way of
furnishing information), or take any other action to facilitate, any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that, if at any
time prior to the Effective Time the Board determines in good faith, after
consultation with counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Stockholders, the Company may, in response to an
unsolicited Takeover Proposal, and subject to compliance with the Merger
Agreement, (x) furnish information with respect to the Company to any person
pursuant to a confidentiality agreement and (y) participate in negotiations
regarding such Takeover Proposal.

Except as set forth in this paragraph, the Merger Agreement provides that
neither the Board nor any committee thereof will (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of the Merger Agreement or the Merger, (ii) approve
or recommend, or propose to approve or recommend, any Takeover Proposal or (iii)
cause the Company to enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time the Board determines in good faith, after consultation with
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to the Stockholders, the Merger Agreement permits the Board to withdraw
or modify its approval or recommendation of the Merger Agreement and the Merger,
approve or recommend a Takeover Proposal or cause the Company to enter into an
agreement with respect to a Takeover Proposal. In evaluating any unsolicited
Takeover Proposal, the Board may consider any statement or indication from, or
on behalf of, Parent that it will not agree to support or approve such Takeover
Proposal, provided that such fact shall not prevent the Board from taking any
action permitted under the Merger Agreement.

The Company also agreed in the Merger Agreement to immediately advise
Parent orally and in writing of any request for information or of any Takeover
Proposal, or any inquiry with respect to or which could lead to any Takeover
Proposal, and to describe the material terms and conditions of such request,
Takeover Proposal or inquiry and the identity of the person making such request,
Takeover Proposal or inquiry. The Company also agreed to keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request, Takeover Proposal or inquiry.

Nothing contained in the Merger Agreement prohibits the Company from taking
and disclosing to the Stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Stockholders if, in the opinion of the Board, after consultation with counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Stockholders; provided, however, that neither the Company nor the Board nor any
committee thereof may, except as permitted by the Merger Agreement, withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Merger or approve or recommend, or propose to approve or recommend, a Takeover
Proposal.

OTHER AGREEMENTS OF THE COMPANY, PARENT AND SUB

In the Merger Agreement, the Company, Parent and Sub have agreed to use
their best efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement, including cooperating fully with the other party,
including by providing information and making all necessary filings under state
insurance laws. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of the Merger Agreement or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of either the Company or Sub, the
proper officers and directors of the Company, Parent and Sub will take all such
necessary action.

Parent and the Company have agreed to cooperate in the preparation,
execution and filing of any returns, questionnaires, applications or other
documents related to any New York State tax on gains derived from

42
<PAGE> 54

certain real property transfers and any other similar taxes that become payable
by the Company or the Surviving Corporation on transfers of the Company's
tangible assets, Parent or Surviving Corporation having agreed to pay, without
deduction or withholding from any amount payable to the Stockholders, any such
taxes.

In the Merger Agreement, the Company, Parent and Sub have agreed to use
their reasonable good faith efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
cause the Centre Merger to occur simultaneously with or promptly following the
Merger on terms reasonably acceptable to Parent, including, without limitation,
causing Centre NY and ZRC to enter into an agreement and plan of merger, or
similar agreement, providing for the Centre Merger and preparing and submitting
all necessary regulatory filings in connection therewith. This provision
terminates in the event the Merger Agreement is terminated.

STOCK OPTIONS; RESTRICTED STOCK

At the Effective Time, each holder of a then outstanding Company Option,
whether or not vested and exercisable, will, in settlement thereof, receive
(except under the circumstances described below relating to the Company's
ability to defer certain payments) from the Company for each share of Common
Stock subject to such option an amount (subject to any applicable withholding
tax) in cash equal to the Option Consideration. Upon such holder's receipt of
such amount, such option will be canceled. Such surrender of an option to the
Company will be deemed a release of any and all rights the holder thereof had or
may have had in respect thereof. Under the Merger Agreement, the Company shall
have the ability with respect to holders of Company Options who are officers of
the Company's operating subsidiaries, other than Steven M. Gluckstern, Richard
Smith, Peter R. Porrino, Gerald S. King, Isaac Mashitz, Adrienne W. Reid and
Mark R. Sarlitto, to defer payments of up to 50% of the Option Consideration
otherwise payable to such holders at the Effective Time for a period of up to
two years from the Effective Time, together with interest thereon computed at a
rate equal to the average yield on U.S. Treasury obligations having a term to
maturity of five years as determined annually in arrears by the Company, and
subject to such other terms and conditions as the Company shall determine.

Under the Merger Agreement, except under the circumstances described below
relating to the Company's ability to defer certain payments, shares of the
Common Stock held as of the Effective Time by grantees under the Company's
Restricted Stock Plan, as Amended and Restated, will be treated in a manner
consistent with shares of Common Stock held by the Independent Stockholders,
whether or not the grantee's rights in respect of such shares have vested. The
Company may, not later than 30 days following the date of the Merger Agreement,
enter into agreements with each holder of Restricted Stock which will not be
vested as of the Effective Time ("Unvested Shares") and/or Company Options
(collectively, the "Holders") providing for the deferral of up to 100% of the
aggregate Merger Consideration and Option Consideration otherwise payable in
respect of such Holder's Unvested Shares and Company Options.

INDEMNIFICATION AND INSURANCE

The Merger Agreement provides that for a period of three years from the
Effective Time, the Surviving Corporation will maintain in its Certificate of
Incorporation the provisions with respect to indemnification set forth in the
Company's Certificate of Incorporation as in effect on the date of the Merger
Agreement. The Merger Agreement also provides that for a period of three years
from the Effective Time, the Surviving Corporation will use its best efforts to
maintain in effect directors' and officers' liability insurance covering those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy with respect to actions and omissions occurring prior
to the Effective Time on terms no less favorable than the terms of such current
insurance coverage; provided that if the specified insurance is unavailable at
the current premiums, the Surviving Corporation will obtain as much insurance as
can be obtained for a premium not in excess of 150% of the current premium paid
for directors' and officers' liability insurance.

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<PAGE> 55

CONDITIONS TO THE MERGER

All Parties. Pursuant to the Merger Agreement, the respective obligation
of each party to effect the Merger are subject to the satisfaction of the
following conditions prior to the Closing Date: (i) approval and adoption of the
Merger Agreement by the holders of a majority of the Company's outstanding
shares of Common Stock; (ii) approval of the Insurance Department of the State
of Connecticut, and all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods proposed by, any
governmental entity the failure to obtain which would have a material adverse
effect on Parent and its subsidiaries or the Surviving Corporation and its
subsidiaries, in each case, taken as a whole, having been filed, occurred or
been obtained; and (iii) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger being in effect.

Parent and Sub. Pursuant to the Merger Agreement, the obligations of
Parent and Sub to effect the Merger are subject to the satisfaction or waiver of
the following conditions: (i) the representations and warranties of the Company
set forth in the Merger Agreement being true and correct in all material
respects as of the date of the Merger Agreement, and (except to the extent such
representations and warranties speak as of an earlier date or except, as to any
failure to be true and correct, to the extent that Parent or Sub had knowledge
of such failure to be true and correct as of the date of the Merger Agreement)
as of the Closing Date, and the Company having performed in all material
respects all obligations required to be performed by it under the Merger
Agreement at or prior to the Closing Date and (ii) the holders of not more than
7% of the outstanding shares of the Common Stock have exercised their appraisal
rights in the Merger in accordance with the DGCL.

The Company. Pursuant to the Merger Agreement, the obligation of the
Company to effect the Merger is subject to the satisfaction or waiver of the
following conditions: the representations and warranties of Parent and Sub set
forth in the Merger Agreement being true and correct in all material respects as
of the date of the Merger Agreement, and (except to the extent such
representations speak as of an earlier date) as of the Closing Date and Parent
and Sub having performed in all material respects all obligations required to be
performed by them under the Merger Agreement at or prior to the Closing Date.

TERMINATION

The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after the approval of the Merger Agreement by the
Stockholders, by mutual consent of Parent and the Company, or by either party
if: (i) there has been a material breach on the part of the other party of any
representation, warranty, covenant or agreement set forth in the Merger
Agreement, which breach has not been cured within two business days following
receipt by the breaching party of notice of such breach; (ii) any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable; (iii) the
Board withdraws or modifies its approval or recommendation of the Merger
Agreement and the Merger, approves or recommends a Takeover Proposal or causes
the Company to enter into an agreement with respect to a Takeover Proposal, all
in accordance with the provisions of the Merger Agreement; (iv) the Merger has
not been consummated on or before October 1, 1997; or (v) the Merger Agreement
is not approved and adopted by the Stockholders at the Special Meeting.

EXPENSES

The Merger Agreement provides that whether or not the Merger is consummated
all costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party incurring such
expenses; provided, however, that if the Merger Agreement is terminated because
the Board withdraws or modifies its approval or recommendation of the Merger
Agreement and the Merger, approves or recommends a Takeover Proposal or causes
the Company to enter into an agreement with respect to a Takeover Proposal, the
Company has agreed to pay all costs and expenses of Parent and its affiliates
incurred in connection with the Merger Agreement and the transactions
contemplated thereby.

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<PAGE> 56

AMENDMENT; WAIVER

The Merger Agreement provides that it may be amended by written instrument
signed on behalf of each of the Company, Parent and Sub pursuant to action taken
or authorized by their respective boards of directors at any time before or
after Stockholder approval of the Merger Agreement, but after any such approval,
no amendment will be made which by law requires further approval by the
Stockholders without obtaining such further approval in accordance with the
Merger Agreement. The Merger Agreement further provides that, at any time prior
to the Effective Time, the parties to the Merger Agreement, by action taken or
authorized by their respective boards of directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other parties thereto, (ii) waive any inaccuracies in the
representations and warranties of any other party contained in the Merger
Agreement or in any document delivered pursuant to the Merger Agreement or (iii)
waive compliance with any of the conditions or agreements contained in the
Merger Agreement.

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<PAGE> 57

CERTAIN PROJECTED FINANCIAL DATA

The Company does not, as a matter of course, publicly disclose projections
as to future revenues or earnings. As the financial extension of its general
corporate planning process, the Company regularly prepares financial projections
the material generally accepted accounting principles ("GAAP") outputs of which
are estimates of operating earnings per share and returns on equity. The
material inputs to this estimation include assumptions pertaining to reinsurance
and financial market conditions, business mix and volume (premium revenues),
investment philosophy and results and assumptions about the Company's operating
infrastructure and capitalization.

In November 1996, in conjunction with its normal corporate planning
process, the Company's management presented to members of the Board certain
projected financial information for the 1997-2002 period (the "Financial
Projections"). Accuracy of the financial projections is largely dependent on
insurance and investment market conditions. Accordingly, absent an extreme
change in either of these markets, projections one year out are more likely to
have greater accuracy than projections several years out. The Financial
Projections were provided to representatives of DLJ as financial advisors to
Parent and Zurich Group and later provided to members of the Special Committee
and Morgan Stanley as financial advisors to the Special Committee. The following
summary of the Financial Projections is included in this Proxy Statement solely
because such data was made available to such parties. In conjunction with the
consummation of the Merger, Parent has indicated its intention to merge the
operations of ZRC with the operations of Centre NY (see "Special
Factors -- Plans for the Company after the Merger"). The Financial Projections
do not reflect any of the effects of the Merger, the Centre Merger or other
changes that may in the future be deemed appropriate concerning the Company and
its assets, business, operations, properties, policies, corporate structure,
capitalization and management in light of the circumstances then existing.
Accordingly, the Financial Projections do not reflect the Company's or
management's view of the Company's expected results following the Merger or the
Centre Merger.

The Financial Projections included financial information pertaining to
three managerial scenarios. The first scenario ("Case One") assumed a
continuation of both the Company's then-current strategies (with modest
modifications in strategy related to business mix, retrocessions and certain
asset allocation changes), the then current interest rate environment (e.g., 6%
yield on 5-year U.S. Treasuries) and the reinsurance market conditions existing
in 1996. The second case ("Case Two") modifies Case One to reflect the
implementation by the Company of a revised investment portfolio management
approach with further diversification into higher return asset classes. The
third case ("Case Three") modifies Case Two to reflect certain returns of
capital. Each of these cases is reviewed briefly below.

1. Case One. The Case One scenario was prepared with the following material
assumptions: (i) overall premium growth for the Company of 10% per annum for
1997 and beyond (somewhat above the then-anticipated overall market growth rate
of between 5% to 8%); (ii) improvement in the Company's overall loss and
commission ratio to 97.25% due to certain changes in business mix, including,
among other things, an increased emphasis on property business and
non-traditional opportunities and increasing use of retrocessional reinsurance
for business produced by ZCIC; and (iii) investment portfolio yields of
approximately 6.2% per annum over the projection period. Case One produced
estimates (x) for operating income for the Company of $44.4 million for 1997,
$56.5 million for 1998, $69.1 million for 1999, $81.7 million for 2000, $95.0
million for 2001 and $109.1 million for 2002, (y) for Operating Earnings per
share for the Company of $1.70 for 1997, $2.16 for 1998, $2.64 for 1999, $3.12
for 2000, $3.63 for 2001 and $4.17 for 2002 and (z) for GAAP Returns (based on
net income) on Equity for the Company of 7.3% for 1997, 8.4% for 1998, 9.3% for
1999, 9.9% for 2000, 10.3% for 2001, and 10.6% for 2002.

2. Case Two. The Case Two scenario was prepared by modifying the Case One
projections to reflect a further increase in the Company's investment portfolio
yields by 25 basis points beginning in 1998. It was suggested that this result
could be achieved by changing the Company's portfolio philosophy with respect to
capital funds (but not liability funds) through allocating additional amounts to
higher-yielding asset classes with low to moderate correlations to then-existing
investment classes. Case Two projections produced estimates (x) for operating
income for the Company of $44.4 million for 1997, 60.1 million for 1998,

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<PAGE> 58

$73.3 million for 1999, $86.6 million for 2000, $100.7 million for 2001 and
$115.6 million for 2002, (y) for Operating Earnings per share for the Company of
$1.70 for 1997, $2.29 for 1998, $2.80 for 1999, $3.31 for 2000, $3.84 for 2001
and $4.41 for 2002 and (z) for GAAP Returns on Equity for the Company of 7.3%
for 1997, 8.8% for 1998, 9.7% for 1999, 10.3% for 2000, 10.7% for 2001 and 11.0%
for 2002.

3. Case Three. The Case Three scenario was prepared by modifying the Case
Two projections to reflect a share repurchase of the Company's common stock of
$100 million in 1997 (at a price of $32.65 per share or 1.23 times then-assumed
book value per share) and $40 million in each of 1998, 1999 and 2000 (at prices
of $35.90, $41.73 and $48.95 per share in each such year, respectively, or 1.3,
1.4 and 1.5 times the Company's then-assumed book value per share in each such
year, respectively). Such repurchases were assumed to have been funded primarily
using dividends from ZRC and new long term debt issues in 1998, 1999 and 2000 of
$20 million each year. Case Three projections produced estimates (x) for
operating income for the Company of $40.0 million for 1997, $52.4 million for
1998, $63.4 million for 1999, $74.5 million for 2000, $88.9 million for 2001 and
$103.4 million for 2002, (y) for Operating Earnings per share for the Company of
$1.73 for 1997, $2.38 for 1998, $3.01 for 1999, $3.68 for 2000, $4.39 for 2001
and $5.11 for 2002 and (z) for estimated GAAP Returns on Equity for the Company
of 7.7% for 1997, 9.6% for 1998, 11.0% for 1999, 12.1% for 2000, 12.8% for 2001
and 13.0% for 2002.

THE FOREGOING INFORMATION WAS NOT PREPARED WITH A VIEW TOWARD COMPLIANCE
WITH PUBLISHED GUIDELINES OF THE COMMISSION OR THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING FORWARD-LOOKING INFORMATION OR GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES AND WAS NOT REVIEWED BY INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY OR PARENT. THE FINANCIAL PROJECTIONS WERE BASED UPON
A VARIETY OF ESTIMATES AND ASSUMPTIONS, SOME (BUT NOT ALL) OF WHICH ARE SET
FORTH ABOVE. THE ESTIMATES AND ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS
INVOLVED JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC,
COMPETITIVE, REGULATORY AND FINANCIAL MARKET CONDITIONS AND FUTURE BUSINESS
DECISIONS WHICH THOUGH CONSIDERED BY MANAGEMENT OF THE COMPANY TO BE REASONABLE
AT THE TIME MADE MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT
BUSINESS, ECONOMIC, COMPETITIVE AND REGULATORY UNCERTAINTIES, ALL OF WHICH ARE
DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY.
THERE CAN BE NO ASSURANCE THAT THE FINANCIAL PROJECTIONS WILL BE REALIZED AND
ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE SHOWN. IN LIGHT OF THE
UNCERTAINTIES INHERENT IN FORWARD-LOOKING INFORMATION OF ANY KIND, THE INCLUSION
OF THE FINANCIAL PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
PARENT, THE COMPANY, THEIR RESPECTIVE FINANCIAL ADVISORS OR ANYONE WHO RECEIVED
THIS INFORMATION CONSIDERED OR CONSIDERS IT A RELIABLE PREDICTOR OF FUTURE
OPERATING RESULTS AND THIS INFORMATION SHOULD NOT BE RELIED ON AS SUCH.
ADDITIONALLY, THE FINANCIAL PROJECTIONS DO NOT REFLECT REVISED PROSPECTS FOR THE
COMPANY'S BUSINESSES, CHANGES IN GENERAL BUSINESS AND ECONOMIC CONDITIONS, OR
ANY OTHER TRANSACTION OR EVENT THAT HAS OCCURRED OR THAT MAY OCCUR AND THAT WAS
NOT ANTICIPATED AT THE TIME SUCH INFORMATION WAS PREPARED. THE COMPANY DOES NOT
INTEND TO UPDATE OR SUPPLEMENT THIS INFORMATION TO REFLECT CHANGING
CIRCUMSTANCES EXISTING AFTER THE PREPARATION OF THE FINANCIAL PROJECTIONS
INCLUDED HEREIN OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS THAT MAY
HAVE OCCURRED.

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<PAGE> 59

SELECTED FINANCIAL DATA

Set forth below is certain historical consolidated financial information of
the Company. The selected financial information for, and as of the end of, each
of the years in the five year period ended December 31, 1996 is derived from,
and should be read in conjunction with, the historical consolidated financial
statements of the Company and its subsidiaries, which consolidated financial
statements have been audited by Ernst & Young LLP, independent accountants. The
selected financial information for, and as of the end of, the three month
periods ended March 31, 1997 and 1996 is derived from, and should be read in
conjunction with, the Company's unaudited financial statements. Operating
results for the three months ended March 31, 1997 are not necessarily indicative
of results for the full year. The financial information that follows is
qualified by reference to the financial statements and related notes
incorporated by reference herein. SAP data are based on statutory accounting
practices prescribed or permitted by the state of ZRC's domicile at the time of
the preparation of such information and have been derived from statutory
financial statements of ZRC as filed with insurance regulatory officials.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------
1997 1996 1996 1995 1994 1993(1) 1992(1)
---------- ---------- ---------- ---------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (PREDECESSOR
COMPANY)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
(GAAP)
Gross premiums written......... $ 196,339 $ 176,878 $ 737,445 $ 613,939 $ 313,149 $ 114,274 $ 70,672
Net premiums written........... 179,237 176,622 729,306 602,294 309,627 101,624 53,600
Net premiums earned............ 184,950 173,812 684,329 502,588 224,603 86,294 46,218
Net investment income.......... 26,650 21,582 92,203 80,049 51,044 28,964 13,275
Realized capital gains
(losses)..................... 5,288 1,421 (5,071) 33,526 (35,631) 22,699 1,478
Total revenues................. 227,999 197,119 775,497 616,683 243,222 137,899 61,370
Losses and loss adjustment
expenses..................... 138,640 126,277 485,805 376,348 182,845 70,147 47,869
Commissions and operating costs
and expenses................. 61,022 56,436 232,405 167,696 87,985 38,417 19,470
Interest and amortization...... 4,203 3,844 15,519 15,882 14,288 4,287 3,150
Pre-tax income (loss).......... 24,134 10,562 41,768 56,757 (41,896) 25,048 (9,119)
Federal income tax expense
(benefit).................... 7,996 3,156 12,505 13,319 (10,704) 7,540 (3,100)
Net income (loss).............. 16,138 7,406 29,263 43,438 (31,192) 17,508 (6,019)
Ratio of earnings to fixed
charges...................... 4.21 3.75 3.73 4.53 (1.75) 6.30 (1.74)
BALANCE SHEET DATA (GAAP)
Cash and invested assets....... $1,856,111 $1,526,311 $1,748,015 $1,512,100 $ 989,395 $ 928,359 $ 169,185
Total assets................... 2,341,882 2,020,707 2,243,044 1,923,664 1,167,912 1,019,981 256,368
Gross unpaid losses and LAE.... 1,012,230 770,879 938,800 689,609 262,866 123,074 116,088
Net unpaid losses and LAE...... 963,142 737,099 898,746 658,628 241,974 97,712 71,066
Note payable to affiliate...... -- -- -- -- -- -- 35,000
7 1/8% Senior Notes due 2023... 198,418 198,399 198,413 198,394 198,376 198,359 --
Total stockholders' equity..... 713,877 670,100 711,869 681,570 565,247 637,682 58,382
SELECTED ZRC SAP DATA(2)
Loss and commission ratio...... 101.4% 98.8% 98.6% 100.7% 105.0% 110.8% 122.4%
Other underwriting expense
ratio........................ 5.1 5.1 5.1 5.8 9.6 15.3 6.9
---------- ---------- ---------- ---------- ---------- ---------- ---------
SAP Combined ratio............. 106.5% 103.9% 103.7% 106.5% 114.6% 126.1% 129.3%
========== ========== ========== ========== ========== ========== =========
Policyholders' surplus......... $ 700,275 $ 664,634 $ 690,099 $ 657,197 $ 607,470 $ 614,650 $ 104,059
========== ========== ========== ========== ========== ========== =========
PER SHARE DATA
Net income (loss).............. $ .62 $ .28 $ 1.12 $ 1.66 $ (1.19) $ 0.77 $ (0.35)
Cash dividends declared........ -- -- $ 0.10 $ 0.10 -- -- --
Book value per share........... $ 27.24 $ 25.65 $ 27.18 $ 26.02 $ 21.64 $ 24.43 $ --(3)
</TABLE>

- ---------------

Footnotes on following page.

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<PAGE> 60

- ---------------
(1) The Company's 1993 acquisition of ZRC was accounted for at historical cost
similar to pooling-of-interests accounting. Based on this methodology, the
Company's consolidated results of operations for 1993 are presented as if
the acquisition of ZRC had occurred on January 1, 1993. As a result of its
recapitalization and strategic redirection in 1993, ZRC has a new senior
management, a new business strategy and underwriting approach, and
significantly more capital. The Company believes that ZRC's historical
financial results are not indicative of results that it may achieve in the
future.

(2) ZRC's statutory combined ratio differs from the Company's GAAP combined
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.

(3) Not meaningful.

49
<PAGE> 61

RELATED PARTY TRANSACTIONS

BUSINESS WITH ZURICH GROUP AND ITS AFFILIATES

From time to time in the ordinary course of their respective businesses,
ZRC enters into reinsurance transactions with Zurich Group and certain of its
domestic affiliates. Approximately $132.9 million (26.6%) of ZRC's 1996 net
premiums earned (net of commissions) were attributable to reinsurance
transactions between ZRC and various affiliates of Zurich Group. Net ceding
commissions incurred by ZRC with respect to this business during 1996 were
approximately $50.1 million. ZRC's objective in determining its business mix is
to evaluate each underwriting opportunity individually with a view to maximizing
overall profitability.

In 1993, Zurich Group and ZRC entered into the Excess of Loss Reinsurance
Agreement under which Zurich Group agreed to reinsure adverse loss development
in respect of ZRC's reserves as of December 31, 1992 and a Stop Loss Reinsurance
Agreement under which Zurich Group agreed to reinsure adverse loss development
on ZRC's reserves as of May 31, 1993 for losses occurring between January 1,
1993, and May 31, 1993. Under the Stop Loss Reinsurance Agreement, ZRC will be
reimbursed for incurred losses and allocated loss adjustment expenses in excess
of 75% of earned premiums for losses occurring after May 31, 1993 on business
written by ZRC prior to June 1993. Coverage provided under the Excess of Loss
Reinsurance Agreement and the Stop Loss Reinsurance Agreement (together, the
"Stop Loss Agreement") is on an incurred basis (rather than as any such losses
are paid), net of recoveries and claims under other retrocessional policies,
except for any claims in respect of which recovery is precluded by the
insolvency or receivership of one of ZRC's other retrocessionaires or by a
verdict of a court or arbitration panel. As of December 31, 1996, there were no
recoverables under the terms of the Stop Loss Agreement.

Effective as of July 1, 1995, ZRC entered into a domestic whole account
quota share agreement (the "ZA Quota Share Agreement") with Zurich Insurance
Company (U.S. Branch), American Guarantee & Liability Insurance Company, a New
York stock insurance company, American Zurich Insurance Company, an Illinois
stock insurance company, Zurich American Insurance Company of Illinois, an
Illinois stock insurance company, and Steadfast Insurance Company, a Delaware
stock insurance company (collectively, "Zurich American") and, concurrently, an
Excess of Loss Retrocession Agreement (the "Retrocessional Agreement"),
primarily to provide loss limitations with respect to business assumed under the
ZA Quota Share Agreement. The entities comprising Zurich American are affiliates
and a branch of Zurich Group.

INSURANCE PARTNERS, L.P.

In February, 1994, the Company committed $25.0 million to investment as a
limited partner in Insurance Partners, L.P., a Delaware limited partnership, and
certain related limited partnerships ("Insurance Partners"). Insurance Partners
is an equity investment fund established to sponsor and participate in
acquisitions, recapitalizations, demutualizations and other structured
transactions in the insurance and reinsurance industries. In addition to the
Company, certain subsidiaries of Parent are limited partners in Insurance
Partners and have an economic interest in the fund's general partner. Certain of
the directors and executive officers of such subsidiaries and the Company have
also committed to invest in Insurance Partners. Such subsidiaries of Parent have
invested an aggregate of $56.6 million and have committed for investment an
aggregate of $102.1 million. The executive officers and directors of such
subsidiaries and the Company have invested an aggregate of $6.3 million and have
committed to invest an aggregate of $12.2 million.

INVESTMENT MANAGEMENT AGREEMENTS

Each of the Company and ZRC has entered into Investment Management
Agreements (together, the "Investment Agreements") with Centre Investment
Services, Limited ("CIS"), a wholly owned subsidiary of Parent. Under the
Investment Agreements, CIS manages a portion of the Company's consolidated
portfolio of investment securities. Investment management fees incurred in the
aggregate during 1996 by the Company and ZRC under the Investment Agreements
were approximately $1.1 million.

50
<PAGE> 62

REAL ESTATE LEASING ARRANGEMENTS

ZRC is party to a sublease agreement, dated as of January 1, 1994, and
amended as of January 26, 1996 (the "Sublease"), with a subsidiary of Parent.
Under the Sublease, ZRC leases approximately 60,000 rentable square feet of
space in New York City for its underwriting, actuarial and certain executive
offices (the "Office Space"). The Sublease has a term of approximately seventeen
years with aggregate future minimum rental payments of approximately $29
million. Together with another affiliate of Parent which occupies space
contiguous to the Office Space, ZRC has guaranteed the performance of the
tenant's obligations under the lease covering the Office Space. Under this
guarantee, ZRC is contingently liable for 36.2% of monetary obligations to the
lessor in respect of the Office Space and other contiguous space leased thereby
(together with the Office Space, the "Group Office Space"). This percentage
represents the approximate percentage which the Office Space bears to the Group
Office Space.

51
<PAGE> 63

SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of July 28, 1997 (unless otherwise
indicated), information concerning beneficial ownership of the Common Stock by
any person known to the Company to be the beneficial owner of more than 5% of
such stock, by each director and executive officer of the Company, individually,
and by directors and executive officers of the Company as a group. Individuals
have sole voting and investment power over such stock unless otherwise indicated
in the footnotes.

<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
- ----------------------------------------------------------------------- ------------ --------
<S> <C> <C>
Zurich Insurance Company............................................... 17,217,572 65.7%
2 Mythenquai, CH-8002 Zurich, Switzerland (1)
T. Rowe Price Associates, Inc.......................................... 1,321,200 5.0%
100 East Pratt Street Baltimore, Maryland 21202 (2)
Steven M. Gluckstern................................................... 106,228 *
Richard E. Smith, Director............................................. 61,679 *
Peter R. Porrino....................................................... 27,848 *
Gerald S. King......................................................... 18,773 *
Isaac Mashitz.......................................................... 28,261 *
Adrienne W. Reid....................................................... 18,132 *
Karen O'Connor Rubsam.................................................. 9,058 *
Mark R. Sarlitto....................................................... 17,493 *
Laurence W. Cheng...................................................... 2,500 *
Judith Richards Hope................................................... 3,000 *
Michael D. Palm........................................................ -- --
George G.C. Parker..................................................... 2,798 *
William H. Bolinder.................................................... 900 *
Philip Caldwell........................................................ 1,000 *
Robert T. Marto........................................................ 1,000 *
Peter J. Neff.......................................................... -- --
Rolf Hueppi............................................................ 3,000 *
Detlef Steiner......................................................... -- --
Directors and Executive Officers as a Group (18 persons)............... 301,670 1.2%
</TABLE>

- ---------------
(1) Zurich Group beneficially owns all the outstanding voting equity of Parent
and Zurich International (Bermuda) Ltd. ("ZIB") and therefore may be deemed
a beneficial owner of the 16,217,572 shares of Common Stock beneficially
owned by Parent and the 350,000 shares of Common Stock beneficially owned by
ZIB. In addition, Zurich Group owns 650,000 shares of Common Stock directly.

(2) Based on a Schedule 13D filed with the SEC by T. Rowe Price Associates, Inc.
on May 6, 1997.

* Less than one percent.

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY, ZURICH GROUP, PARENT AND SUB

As set forth in Appendix D, certain directors and executive officers of the
Company are also directors or executive officers of Zurich Group, Parent or Sub.
With the exception of the ownership of shares of Common Stock by certain of such
persons set forth in "Security Ownership of Management and Certain Beneficial
Owners", no director or executive officer of the Company, Zurich Group, Parent
or Sub owns any shares of Common Stock.

52
<PAGE> 64

MARKET PRICE AND DIVIDEND INFORMATION

In November, 1996, the Board declared a regular $0.10 per share annual cash
dividend, payable in January, 1997. In November, 1995, the Board declared a
regular $0.10 per share annual cash dividend, payable in January, 1996. Prior to
that time, the Company did not declare or pay any cash dividends. The
declaration and payment of dividends by the Company are subject to the
discretion of the Board. Any determination as to the payment of dividends in the
future will depend upon, among other things, general business conditions, legal
and regulatory restrictions regarding the payment of dividends by ZRC and other
factors which the Board may in the future consider to be relevant. As a
reinsurance holding company, the Company depends in part on dividends and other
permitted payments from ZRC to pay cash dividends to its stockholders.

Under the terms of the Merger Agreement, the Company will not declare or
pay any dividends on the Common Stock.

The following table sets forth, for the fiscal quarters indicated, the high
and low closing sales prices per share of the Common Stock, as quoted on the
NYSE.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995
First Quarter.............................................. 30 3/8 28 1/2
Second Quarter............................................. 30 3/4 28 5/8
Third Quarter.............................................. 30 28
Fourth Quarter............................................. 30 1/2 28 1/4
1996
First Quarter.............................................. 32 5/8 29 3/8
Second Quarter............................................. 32 1/4 29 7/8
Third Quarter.............................................. 31 3/8 28 5/8
Fourth Quarter............................................. 32 3/4 29 1/8
1997
First Quarter.............................................. 38 5/8 30 3/8
Second Quarter............................................. 39 1/2 38 1/4
Third Quarter (through July 28, 1997)...................... 39 1/2 39 1/4
</TABLE>

CERTAIN TRANSACTIONS IN THE COMMON STOCK

On January 17, 1996, Parent acquired 2,042,572 shares of Common Stock in a
privately negotiated transaction for $30.50 per share. On April 2, 1997, Isaac
Mashitz, Senior Vice President and Chief Actuarial Officer of the Company,
transferred for no consideration a total of 2,080 shares of the Common Stock to
the accounts of four of his children and on May 29, 1997, Mr. Mashitz
transferred for no consideration 3,908 shares of the Common Stock to a
charitable institution.

Except as set forth above, there were no transactions in the Common Stock
of the Company that were effected during the past 60 days by (i) the Company,
(ii) any director or executive officer of the Company, (iii) any person
controlling the Company or (iv) any director or executive officer of the person
ultimately in control of the Company, Parent and Sub.

53
<PAGE> 65

STOCKHOLDER LITIGATION

Beginning on or about January 13, 1997, four actions were filed in the
Court of Chancery of the State of Delaware (the "Court"), by stockholders of the
Company. These actions, purportedly brought as class actions on behalf of all
Independent Stockholders, named the Company, certain of its directors, certain
of its officers, Zurich Group and certain affiliates of Zurich Group as
defendants, alleging that they breached their fiduciary duties to Plaintiffs and
the other Independent Stockholders in connection with the original proposal of
Zurich Group to acquire the Public Shares for $36.00 per share. A stipulation
and order consolidating these four actions (the "Consolidation Order") under the
caption In re Zurich Reinsurance Centre Holdings Shareholders Litigation (the
"Stockholder Litigation"), Consolidated Index No. 15457-NC, was entered by the
Court on March 14, 1997.

The Stockholder Litigation challenges the procedural and substantive
fairness of the Proposed Transaction on the grounds that Zurich Group offered
unfair and inadequate consideration for the Public Shares in violation of
Defendants' fiduciary duties. Plaintiffs further allege: that Zurich Group's
original offer of $36.00 per share was not the result of arm's-length
negotiations, but was fixed arbitrarily by Zurich Group to permit Zurich Group
to obtain the Public Shares and, consequently, full ownership of the Company,
for inadequate consideration; that the Company's directors are not capable of
representing and protecting the interests of Plaintiffs because Zurich Group
allegedly dominates and controls the Board; and that Defendants timed the
announcement of the offer to purchase the Public Shares to place an artificial
lid or cap on the market price for the Company's stock to enable Zurich Group to
acquire the Public Shares at the lowest possible price.

The parties to the Stockholder Litigation have entered into a Memorandum of
Understanding, dated April 17, 1997 (the "Memorandum of Understanding"), to
settle the Stockholder Litigation, subject to execution of a definitive
Stipulation of Settlement, the completion by Plaintiffs of any additional
necessary discovery and approval by the Court following notice to the
Independent Stockholders and a hearing. The Memorandum of Understanding provides
for Parent to increase its offer from $36.00 per share to $39.50 per share,
certification of a class, for settlement purposes only, consisting of the
Independent Stockholders, the dismissal of the Stockholder Litigation with
prejudice and the release by Plaintiffs and all members of the class of all
claims and causes of action that were or could have been asserted against
Parent, the Company and the individual defendants in the Stockholder Litigation
or that arise out of the matters alleged by Plaintiffs. In connection with the
proposed settlement, Plaintiffs intend to apply for an award of attorneys' fees
and litigation expenses in the amount of $600,000. The defendants have agreed
not to oppose this application.

The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to
Plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expenses of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and the Independent Stockholders.

54
<PAGE> 66

INDEPENDENT PUBLIC ACCOUNTANTS

Ernst & Young LLP serves as the Company's independent certified public
accountants. A representative of Ernst & Young LLP will be at the Special
Meeting to answer questions by stockholders and will have the opportunity to
make a statement, if so desired.

STOCKHOLDER PROPOSALS

Stockholder proposals intended to be presented at the Company's 1997 annual
meeting (which will only be held if the Merger has not been consummated prior
thereto), pursuant to Rule 14a-8(a)(3)(i) promulgated by the SEC, must have been
received by the Company at its principal office at One Chase Manhattan Plaza,
43rd Floor, New York, N.Y. 10005, attention of the Secretary, on or before
December 31, 1996.

ADDITIONAL INFORMATION

Pursuant to the requirements of Section 13(e) of the Exchange Act, and Rule
13e-3 promulgated thereunder, the Company, as issuer of the class of equity
securities that are the subject of the Rule 13e-3 transaction, together with
Parent and Sub, have filed with the Securities and Exchange Commission (the
"SEC") a Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") relating
to the transactions contemplated by the Merger Agreement. As permitted by the
rules and regulations of the SEC, this Proxy Statement omits certain
information, exhibits and undertakings contained in the Schedule 13E-3. Such
additional information can be inspected at and obtained from the SEC and the New
York Stock Exchange ("NYSE") in the manner set forth below under "Available
Information."

Statements contained herein concerning any documents are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Schedule 13E-3. Each such statement is qualified in
its entirety by such reference.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and the rules and regulations thereunder, and in accordance therewith files
reports, proxy statements and other information with the SEC. Such reports,
proxy statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
450 Fifth Street, N.W., Washington, DC 20549, and at the SEC's regional offices
located at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, IL
60661, and Suite 1300, Seven World Trade Center, New York, NY 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, DC 20549. The Common
Stock is listed on the NYSE and certain reports, proxy statements and other
information concerning the Company also can be inspected at the offices of the
NYSE located at 20 Broad Street, New York, NY 10005 or on the SEC's site on the
Internet at http://www.sec.gov. See "Incorporation Of Certain Documents By
Reference."

This Proxy Statement incorporates by reference documents that are not
presented herein or delivered herewith. Copies of such documents (other than
exhibits thereto which are not specifically incorporated by reference herein)
are available, without charge, to any person, including any beneficial owner of
Common Stock, to whom this Proxy Statement is delivered, upon oral or written
request to Mark R. Sarlitto, Corporate Secretary, Zurich Reinsurance Centre
Holdings, Inc., One Chase Manhattan Plaza, New York, N.Y. 10005, telephone (212)
898-5000. In order to ensure delivery of documents prior to the Special Meeting,
requests therefor should be made no later than August 19, 1997.

THE DELIVERY OF THIS PROXY STATEMENT SHALL NOT IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR PARENT SINCE THE DATE HEREOF OR THAT THE
INFORMATION IN THIS PROXY STATEMENT OR IN THE DOCU-

55
<PAGE> 67

MENTS INCORPORATED BY REFERENCE HEREIN IS CURRENT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THEREOF.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company with the SEC
pursuant to the Exchange Act (file number 1-11868) are incorporated herein by
this reference:

1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;

2. The Company's Current Report on Form 8-K dated April 18, 1997; and

3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, as amended by 10-Q/A filed on July 25, 1997.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date hereof and prior to the date of
the Special Meeting shall be deemed to be incorporated by reference herein and
to be a part hereof from the date any such document is filed.

Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded. All information appearing in this Proxy Statement is qualified in
its entirety by the information and financial statements (including notes
thereto) appearing in the documents incorporated herein by reference, except to
the extent set forth in the immediately preceding statement.

56
<PAGE> 68

APPENDIX A

AGREEMENT AND PLAN OF MERGER, dated as of April 17, 1997, by and among
ZURICH CENTRE INVESTMENTS LIMITED, a Bermuda corporation ("Parent"), CENTRE
MERGER CORP., a Delaware corporation and an indirect wholly owned subsidiary of
Parent ("Sub"), and ZURICH REINSURANCE CENTRE HOLDINGS, INC., a Delaware
corporation (the "Company").

WHEREAS the Board of Directors of each of Parent, Sub and the Company deem
it advisable and in the best interests of their respective stockholders to
consummate, and have approved, the transaction provided for herein in which Sub,
which is a wholly owned subsidiary of Centre Reinsurance (U.S.) Limited, would
merge with and into the Company and the Company would become an indirect wholly
owned subsidiary of Parent;

WHEREAS the Board of Directors of the Company has (i) determined that the
consideration to be paid to the Independent Stockholders (as defined below) of
the Company for each share of Common Stock of the Company in the Merger (as
defined below) held by them is fair to such Independent Stockholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved, subject to Section 5.02(b) hereof, to recommend to such stockholders
their approval of the Merger and this Agreement;

WHEREAS the parties hereto intend and acknowledge that, assuming the Merger
takes place as contemplated hereunder, the Merger will be treated for Federal
income tax purposes as a taxable stock acquisition;

WHEREAS the Board of Directors of Sub has approved the merger (the
"Merger") of Sub into the Company in accordance with the General Corporation Law
of the State of Delaware (the "DGCL") upon the terms and subject to the
conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein the
parties hereto agree as follows:

ARTICLE I

THE MERGER

SECTION 1.01. Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") shall be
duly prepared, executed and acknowledged by the Company and thereafter delivered
to the Secretary of State of the State of Delaware for filing, as provided in
the DGCL, as soon as practicable on or after the Closing Date (as defined
below). The Merger shall become effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware or at such time
thereafter as is agreed to between Parent and the Company and provided in the
Certificate of Merger (the "Effective Time").

SECTION 1.02. Closing. The closing of the Merger (the "Closing") will
take place at 9:00 a.m., New York City time, on the third business day after
satisfaction of the latest to occur of the conditions set forth in Section 7.01
(provided that the other closing conditions set forth in Article VII have been
met or waived as provided in Article VII at or prior to the Closing) (the date
by which all such conditions shall have been satisfied or waived being referred
to herein as the "Satisfaction Date"); provided, however, that Parent and Sub
shall have the option to extend (in one or more increments) the date of Closing
to a date not later than 90 days following the Satisfaction Date by written
notice to the Company given within two business days after the Satisfaction Date
(or the last date to which the Closing has been extended by Parent and Sub
pursuant hereto). The date of Closing determined pursuant to the above is
referred to herein as the "Closing Date". The Closing shall take place at the
offices of Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York,
unless another date or place is agreed to in writing by the parties hereto.

SECTION 1.03. Effect of the Merger. At the Effective Time, Sub shall be
merged with and into the Company which shall continue as the surviving
corporation (the Company is sometimes referred to herein as the "Surviving
Corporation").

A-1
<PAGE> 69

SECTION 1.04. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.

(b) The Bylaws of the Company as in effect at the Effective Time shall be
the by-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.

SECTION 1.05. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

SECTION 1.06. Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

ARTICLE II

CONVERSION OF SECURITIES

SECTION 2.01. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock, par value $0.01 per share, of the Company (the "Company
Common Stock") or capital stock of Sub:

(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become that number of
shares of fully paid and nonassessable shares of common stock of the
Surviving Corporation equivalent to the quotient obtained by dividing (i)
the total number of outstanding shares of Company Common Stock immediately
prior to the Effective Time by (ii) 1,000,000 [i.e., the number of
outstanding Sub shares].

(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock or
by Parent, Zurich Insurance Company, Zurich International (Bermuda) Ltd. or
any Subsidiary of Parent (collectively, the "Zurich Stockholders") shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor. As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such
party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party
or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions
with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.

(c) Conversion of Company Common Stock. Subject to Section 2.01(g),
each share of Company Common Stock issued and outstanding (other than
shares to be canceled in accordance with Section 2.01(b)) shall be
converted into the right to receive the Merger Consideration (as defined
below) net of all withholding and deduction other than required for
withholding under the Internal Revenue Code of 1986, as amended, in cash
without interest. As used herein, the term "Merger Consideration" shall
mean $39.50, except that if Parent and Sub elect to extend the Closing Date
pursuant to Section 1.02, such term shall mean $39.50, plus interest on
such amount computed at an annual rate equal to the prime rate announced by
Chase Manhattan Bank, N.A. and in effect as of the Satisfaction Date, for
the number of days elapsed from (but not including) the third business day
following the Satisfaction Date through (and including) the Closing Date.
As of the Effective Time, all such shares shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration without interest.

A-2
<PAGE> 70

(d) Restricted Stock. Subject to Section 2.01(f), shares of the
Company Common Stock held as of the Effective Time by grantees under the
Company's Restricted Stock Plan, as Amended and Restated, shall be treated
consistent with the terms of Section 2.01(c) hereof, whether or not the
grantee's rights in respect of such shares have vested.

(e) Options to Acquire Shares of Company Stock. Subject to Section
2.01(f), at the Effective Time, each holder of a then outstanding option,
whether or not vested and exercisable ("Company Options"), to acquire one
or more shares of Company Common Stock under the Company Stock Plan (as
defined below) shall, in full settlement thereof, receive from the Company
for each share of Company Common Stock subject to such option an amount
(subject to any applicable withholding tax) in cash equal to the excess of
the Merger Consideration over the per share exercise price of such option
(such amount being hereinafter referred to as the "Option Consideration").
The surrender of a Company Option shall be deemed a release of any and all
rights the holder had or may have had in respect of such option and also in
respect to the Company's former Long Term Performance Incentive Plan.

(f) Deferral of Certain Payments. (i) The Company shall have the
ability with respect to holders of Company Options who are officers of the
Company's operating subsidiaries, other than Steven M. Gluckstern, Richard
Smith, Peter R. Porrino, Gerald S. King, Isaac Mashitz, Adrienne W. Reid
and Mark R. Sarlitto, to defer payments of up to 50% of the Option
Consideration otherwise payable to such holders at the Effective Time for a
period of up to two years from the Effective Time, together with interest
thereon computed at a rate equal to the average yield on U.S. Treasury
obligations having a term to maturity of five years as determined annually
in arrears by the Company, and subject to such other terms and conditions
as the Company shall determine.

(ii) The Company may, not later than 30 days following the date of
this Agreement, enter into agreements with the holders of Restricted Stock
which will not be vested as of the Effective Time ("Unvested Shares") and
the Company Options (collectively, the "Holders") providing for the
deferral of up to 100% of the aggregate Merger Consideration and Option
Consideration otherwise payable in respect of such Holder's Unvested Shares
and Company Options.

(g) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of
Company Common Stock held by a person (a "Dissenting Stockholder") who duly
demands appraisal of his shares of Company Common Stock pursuant to the
DGCL and complies with all the provisions of the DGCL concerning the right
of holders of Company Common Stock to demand appraisal of their shares in
connection with the Merger ("Dissenting Shares") shall not be converted as
described in Section 2.01(c) but shall become the right to receive such
cash consideration as may be determined to be due to such Dissenting
Stockholder as provided in the DGCL. If, however, such Dissenting
Stockholder withdraws his demand for appraisal or fails to perfect or
otherwise loses his right of appraisal, in any case pursuant to the DGCL,
his shares shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration without interest. The Company
shall give Parent (i) prompt notice of any demands for appraisal of shares
received by the Company and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Parent, make
any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.

(h) Withholding Tax. The right of any stockholder or optionholder to
receive the Merger Consideration or Option Consideration, as applicable,
shall be subject to and reduced by the amount of any required tax
withholding obligation.

SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, Parent shall designate a bank or trust company to act as paying
agent in the Merger (the "Paying Agent"), and, from time to time on and after
the Effective Time, Parent shall make available, or cause its Subsidiaries to
make available, to the Paying Agent funds in amounts and at the times necessary
for the payment of the Merger Consideration and Option Consideration pursuant to
Sections 2.01(c) and 2.01(e), and any payments to Dissenting Stockholders
pursuant to Section 2.01(g), it being understood that any and all interest
earned on

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funds made available to the Paying Agent pursuant to this Agreement shall be
turned over to, or at the direction of, Parent, the Subsidiary providing such
funds or the Surviving Corporation, as applicable. Such funds shall be invested
by the Paying Agent as directed by Parent, the Subsidiary providing such funds
or the Surviving Corporation, as applicable, provided that such investments
shall be obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Service, Inc. or Standard & Poor's Rating Services, respectively, or in deposit
accounts, certificates of deposit, bank repurchase or reverse repurchase
agreements or banker's acceptances of, or Eurodollar time deposits purchased
from, commercial banks with capital exceeding $250 million (based on the most
recent financial statements of such bank which are then publicly available at
the SEC or otherwise).

(b) Exchange Procedure. Subject to Section 2.01(f), as soon as reasonably
practicable after the Effective Time, the Paying Agent shall mail to (x) each
holder of record (other than the Zurich Stockholders) of a certificate or
certificates which immediately prior to the Effective Time represented shares of
Company Common Stock (the "Certificates") and (y) each holder of Company Options
at the Effective Time (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
a form and have such other provisions as Parent may specify) and (ii)
instructions for use in effecting the surrender of the Certificates and Company
Options in exchange for the Merger Consideration or Option Consideration, as
applicable. Upon surrender of a Certificate or Company Option for cancellation
to the Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate or Company Option, as the case may be, shall be entitled to receive
in exchange therefor the amount of cash into which the shares theretofore
represented by such Certificate or Company Option, as the case may be, shall
have been converted pursuant to Section 2.01, and the Certificate or Company
Option, as the case may be, so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.02, each Certificate and Company Option shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares or Company Options, as the case may be, theretofore represented by such
Certificate or Company Option, as the case may be, shall have been converted
pursuant to Section 2.01. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate.

(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest and other income received with respect
thereto) which has been made available to the Paying Agent and which have not
been disbursed to holders of Certificates or Company Options, as the case may
be, and thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the Merger Consideration or the
Option Consideration, as the case may be, payable upon due surrender of their
Certificates or Company Options, as the case may be.

(d) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of Certificates in accordance with the terms of this Article
II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by such
Certificates. At the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and exchanged as provided in this
Article II.

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(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

SECTION 3.01. Organization. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and corporate authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. As used in
this Agreement, any reference to any event, change or effect being material or
having a material adverse effect on or with respect to an entity (or group of
entities taken as a whole) means such event, change or effect is materially
adverse to the consolidated condition (financial or otherwise), properties,
assets (including intangible assets), liabilities (including contingent
liabilities), businesses or results of operations of such entity (or, if with
respect thereto, of such group of entities, taken as a whole), but shall exclude
any change or effect resulting from general economic conditions (including
without limitation changes in interest rates) and any occurrence or condition
arising out of the transactions contemplated by this Agreement or the public
announcement thereof. The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
in the aggregate have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.

SECTION 3.02. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of Company Common
Stock of which, as of March 21, 1997, 26,205,569 shares were issued and
outstanding and no shares were held in treasury and (ii) 20,000,000 shares of
Preferred Stock, par value $0.10 per share, no shares of which are issued and
outstanding. As of the date hereof, 503,575 shares of Company Common Stock are
reserved for issuance upon exercise of outstanding options pursuant to the
Company's 1995 Stock Option Plan (the "Company Stock Plan"). All the outstanding
shares of Company Common Stock are, and all shares which may be issued pursuant
to the Company Stock Plan will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and free
of any preemptive rights in respect thereto. As of the date hereof, no bonds,
debentures, notes or other indebtedness convertible into securities having the
right to vote ("Convertible Debt") of the Company are issued or outstanding.
Except as set forth above or in respect of the employee benefit plans in effect
as of the date hereof, as of the date hereof, there are no existing options,
warrants, calls, subscriptions or other rights or other agreements or
commitments of any character relating to the issued or unissued capital stock or
Convertible Debt of the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Convertible Debt of,
or other equity interests in, the Company or of any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity interests
or obligating the Company or any of its Subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement or
commitment. As of the date hereof, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries.

SECTION 3.03. Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject to, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock). The execution, delivery and
performance of this Agreement and the

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consummation of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than as aforesaid). This Agreement has been duly executed
and delivered by the Company and, assuming this Agreement constitutes a valid
and binding obligation of Parent and Sub, as the case may be, constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter in
effect, affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.

SECTION 3.04. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
DGCL, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the charter or by-laws
of the Company or of any of its Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole or a material adverse effect on the ability of the
Company to consummate the transactions contemplated by this Agreement), (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, except in the case of (iii) or (iv) for
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries,
taken as a whole or a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Agreement.

SECTION 3.05. SEC Reports and Financial Statements. Each of the Company
and its Subsidiaries has filed with the Securities and Exchange Commission (the
"SEC") and has heretofore made available to Parent true and complete copies of,
all forms, reports, schedules, statements and other documents required to be
filed by it since January 1, 1994, under the Exchange Act or the Securities Act
of 1933, as amended (the "Securities Act") (as such documents have been amended
since the time of their filing, collectively, the "Company SEC Documents"). The
Company SEC Documents, including without limitation any financial statements or
schedules included therein, at the time filed, (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (b) complied in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder. The financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.

SECTION 3.06. Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley & Co. Incorporated, dated the date hereof, to the
effect that, as of such date, the consideration to be

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received in the Merger by the holders of the outstanding shares of Company
Common Stock not owned by the Zurich Stockholders ("Independent Stockholders")
is fair to such Stockholders from a financial point of view.

SECTION 3.07. Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Parent and Sub represent and warrant to the Company as follows:

SECTION 4.01. Organization. Each of Parent and Sub and Parent's
Subsidiaries which own shares of Company Common Stock is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
corporate authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a material
adverse effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement. Parent and each of its Subsidiaries which owns
shares of Company Common Stock is duly qualified or licensed to do business and
in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not in the aggregate have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.

SECTION 4.02. Authority. Parent and Sub have requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent, and no other corporate proceedings on the part of Parent
and Sub are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by Parent and Sub, as the case may be, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, constitutes a valid
and binding obligation of each of Parent and Sub, as the case may be,
enforceable against Parent and Sub in accordance with its respective terms,
except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of court before which any proceeding therefor may
be brought.

SECTION 4.03. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
DGCL, neither the execution, delivery or performance of this Agreement by Parent
and Sub nor the consummation by Parent and Sub of the transactions contemplated
hereby nor compliance by Parent and Sub with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws of Parent and Sub, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a material adverse
effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation to which
Parent or any of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, except in the case of

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(iii) and (iv) for violations, breach or defaults which would not, individually
or in the aggregate, have a material adverse effect on the ability of Parent and
Sub to consummate the transactions contemplated by this Agreement.

SECTION 4.04. Information in Proxy Statement. None of the information
supplied by Parent or Sub in writing specifically for inclusion or incorporation
by reference in the Company's Proxy Statement or Information Statement for the
special meeting of its stockholders to be called to consider the Merger (the
"Proxy Statement") will, at the date mailed to stockholders and at the time of
the meeting of the Company's stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.

SECTION 4.05. Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.

ARTICLE V

COVENANTS

SECTION 5.01. Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees as
to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that Parent shall otherwise
consent in writing):

(a) Ordinary Course. The Company and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use all
reasonable efforts to preserve intact their present business organizations,
keep available the services of their present officers and employees and
preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their goodwill and ongoing
business shall not be impaired in any material respect at the Effective
Time.

(b) Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it propose to, (i) declare or
pay any dividends on or make other distributions in respect of any of its
capital stock, except for dividends by any Subsidiary to the Company or to
another Subsidiary, (ii) split, combine or reclassify its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary
to repurchase, redeem or otherwise acquire, any shares of capital stock of
the Company or any of its Subsidiaries.

(c) Issuance of Securities. The Company shall not, nor shall it
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock
of any class or any securities convertible into, or any rights, warrants,
calls, subscriptions or options to acquire, any such shares or convertible
securities, other than (i) the issuance of shares of Company Common Stock
upon the exercise of employee stock options outstanding on the date hereof
under the Company Stock Plan or pursuant to regular issuances of Company
Common Stock in the ordinary course in connection with employee benefit
plans in effect on the date hereof and (ii) issuance by a wholly owned
Subsidiary of its capital stock to its parent.

(d) Governing Documents. The Company shall not amend or propose to
amend its Certificate of Incorporation or Bylaws.

(e) Advice of Changes; Filings. The Company shall confer on a regular
and frequent basis with Parent, report on operational matters and promptly
advise Parent orally and in writing of any change or event having, or which
could reasonably be expected to have, a material adverse effect on the
Company and its Subsidiaries, taken as a whole. The Company shall promptly
provide Parent copies of all filings made by the Company or any of its
Subsidiaries with any Federal, state or foreign Governmental Entity

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in connection with this Agreement and the transactions contemplated hereby,
other than the portions of such filings that include confidential
information not directly related to the transactions contemplated by this
Agreement.

(f) The Company shall not (i) enter into, adopt, amend in any material
respect (except as may be required by law) or terminate any employee
benefit plan or any agreement, arrangement, plan or policy between the
Company and one or more of its directors or officers or (ii) except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company, increase in any manner the
compensation or fringe benefits of any director, officer or key employee or
pay any benefit not required by any plan and arrangement as in effect as of
the date hereof (including, without limitation, the granting of stock
options or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.

SECTION 5.02. No Solicitation; Fiduciary Out. (a) The Company shall not
authorize or permit any of its executive officers or directors or any investment
banker, financial advisor, attorney, accountant or other representative retained
by it or any of its Subsidiaries to (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal (as defined below)
or (ii) participate in any discussions or negotiations regarding any Takeover
Proposal; provided, however, that, if at any time prior to the Effective Time
the Board of Directors of the Company determines in good faith, after
consultation with counsel, that it is necessary to do so in order to comply with
its fiduciary duties to the Company's stockholders, the Company may, in response
to an unsolicited Takeover Proposal, and subject to compliance with Section
5.02(c), (x) furnish information with respect to the Company to any person
pursuant to a confidentiality agreement and (y) participate in negotiations
regarding such Takeover Proposal. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any director or executive officer of the Company or any of its
Subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative of the Company or any of its Subsidiaries shall be
deemed to be a breach of this Section 5.02(a) by the Company. For purposes of
this Agreement, "Takeover Proposal" means any inquiry, proposal or offer from
any person (other than Parent or any of its Subsidiaries) relating to any direct
or indirect acquisition or purchase of a substantial amount of assets of the
Company or any of its Subsidiaries or of 50% or more of the shares of Company
Common Stock, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 50% or more of the shares of Company
Common Stock, any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company, other than the Merger, or any other
transaction the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which would reasonably
be expected to dilute materially the benefits to Parent of the transactions
contemplated hereby.

(b) Except as set forth in this Section 5.02(b), neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors of this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) cause the Company to enter into any agreement with respect to any
Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time the Board of Directors of the Company determines in good faith,
after consultation with counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders, the Board of
Directors of the Company may withdraw or modify its approval or recommendation
of this Agreement and the Merger, approve or recommend a Takeover Proposal or
cause the Company to enter into an agreement with respect to a Takeover
Proposal. In evaluating any unsolicited Takeover Proposal, the Company's Board
of Directors may consider any statement or indication from or on behalf of
Parent that it will not agree to such Takeover Proposal, provided that such fact
shall not prevent the Company's Board of Directors from taking any action
permitted pursuant to this Section 5.02(b).

(c) In addition to the obligations of the Company set forth in Section
5.02(a), the Company shall immediately advise Parent orally and in writing of
any request for information or of any Takeover Proposal, or

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any inquiry with respect to or which could lead to any Takeover Proposal, and
shall (i) describe the material terms and conditions of such request, Takeover
Proposal or inquiry and the identity of the person making such request, Takeover
Proposal or inquiry and (ii) immediately deliver to Parent a copy of any such
request, Takeover Proposal or inquiry made in writing. The Company will keep
Parent fully informed of the status and details (including amendments or
proposed amendments) of any such request, Takeover Proposal or inquiry.

(d) Nothing contained in this Section 5.02 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the opinion of the Board of Directors of the
Company, after consultation with counsel, failure so to disclose would be
inconsistent with its fiduciary duties to the Company's stockholders; provided,
however, that neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 5.02(b), withdraw or modify, or
propose to withdraw or modify, its position with respect to the Merger or
approve or recommend, or propose to approve or recommend, a Takeover Proposal.

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01. Preparation of the Proxy Statement. The Company shall
promptly prepare and file with the SEC preliminary and final versions of the
Proxy Statement and a Schedule 13E-3 relating to the Merger (the "Schedule
13E-3"). The Company shall use its best efforts to have the Proxy Statement
cleared by the SEC and mailed to its stockholders at the earliest practicable
date. The Company shall cooperate and consult with Parent with respect to the
Proxy Statement and the Schedule 13E-3 and any related SEC comments. The Company
covenants that (i) the Proxy Statement and the Schedule 13E-3 will comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder and (ii) as of the date of mailing of the Proxy Statement
and at the time of the meeting of the Company's stockholders to be held in
connection with the Merger, the Proxy Statement and the Schedule 13E-3 will not
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided that no representation is made by the Company with respect
to any information included in the Proxy Statement and the Schedule 13E-3
regarding Parent or its Subsidiaries supplied by Parent in writing specifically
for inclusion in the Proxy Statement and the Schedule 13E-3.

SECTION 6.02. Access to Information. The Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of Parent, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
shall (and shall cause each of its Subsidiaries to) furnish promptly to Parent
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
Federal securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Unless otherwise
required by law, Parent will hold any such information which is nonpublic in
confidence until such time as such information otherwise becomes publicly
available through no wrongful act of either party, and in the event of
termination of this Agreement for any reason Parent shall promptly upon request
return all nonpublic documents obtained from the Company, and any copies made of
such documents, to the Company.

SECTION 6.03. Stockholders Meeting. The Company shall call a meeting of
its stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and the Merger. Subject to Section 5.02(b), the Company
will, through its Board of Directors, recommend to its stockholders approval of
this Agreement and the Merger and shall use its best efforts to hold such
meeting as soon as reasonably practicable after the date hereof.

SECTION 6.04. Legal Conditions to Merger. Each of the Company, Parent and
Sub will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself

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with respect to the Merger (which actions shall include, without limitation,
furnishing all information in connection with approvals of or filings with state
insurance authorities and any other Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with the Merger. Each of the Company, Parent and Sub will, and will cause its
Subsidiaries to, take all reasonable actions necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by Parent, the Company or
any of their Subsidiaries in connection with the Merger or the taking of any
action contemplated thereby or by this Agreement.

SECTION 6.05. Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that in the event this Agreement is terminated
pursuant to Section 8.01(c), the Company shall pay all costs and expenses of
Parent and its affiliates incurred in connection with this Agreement and the
transactions contemplated hereby.

SECTION 6.06. Brokers or Finders. Each of Parent and the Company
represents, as to itself, its Subsidiaries and its affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except (i) Morgan Stanley & Co. Incorporated, whose fees and expenses will be
paid by the Company in accordance with the Company's agreement with such firm
(copies of which have been delivered by the Company to Parent prior to the date
of this Agreement) and (ii) Donaldson, Lufkin & Jenrette Securities Corp., whose
fees and expenses will be paid by Parent in accordance with Parent's agreement
with such firm (except as contemplated by Section 6.05), and each of Parent and
the Company agree to indemnify and hold the other harmless from and against any
and all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliates.

SECTION 6.07. Indemnification; Insurance. (a) For a period of three years
from the Effective Time, the Surviving Corporation, shall maintain in its
Certificate of Incorporation the provisions with respect to indemnification set
forth in the Company's Certificate of Incorporation as in effect on the date
hereof, which provisions shall not be amended, repealed or otherwise modified
for such a period in any manner that would adversely affect the rights
thereunder of persons who at the Effective Time were directors, officers,
employees or agents of the Company (such persons being third-party beneficiaries
of this Section 6.07) with respect to actions and omissions occurring prior to
the Effective Time, unless such modification is required by law.

(b) For a period of three years from the Effective Time, the Surviving
Corporation shall use its best efforts to maintain in effect directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy with
respect to actions and omissions occurring prior to the Effective Time on terms
no less favorable than the terms of such current insurance coverage.
Notwithstanding the foregoing, if the directors' and officers' liability
insurance referred to in this Section 6.07(b) is unavailable for the Maximum D&O
Premium (as defined below), the Surviving Corporation shall obtain as much
insurance as can be obtained for a premium not in excess (on an annualized
basis) of the Maximum D&O Premium. The Company will use its best efforts to give
to any director and officer covered by this Section 6.07, 30 days prior written
notice of any reduction on coverage or cancellation of the directors' and
officers' liability insurance referred to in this Section 6.07(b). For purposes
of this Section 6.07(b), the "Maximum D&O Premium" shall be an amount not
greater than 150% of the premium paid by the Company (on an annualized basis)
for directors' and officers' liability insurance during the period from June 30,
1996 to the Effective Time.

SECTION 6.08. (a) Additional Agreements; Best Efforts. Subject to the
terms and conditions of this Agreement, each of the parties hereto agrees to use
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party, including by
provision of information and making of all necessary filings under state

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insurance laws. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement including
without limitation, consummation of the Centre Merger (as defined below), or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of either the Company or Sub, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.

(b) Parent or Surviving Corporation agrees, subject to consummation of the
Merger, to pay, without deduction or withholding from any amount payable to the
holders of Company Common Stock, any New York State or City real property
transfer taxes and any other similar taxes that become payable by the
shareholders of the Company, the Company or the Surviving Corporation in
connection with the Merger. The Company and Parent shall cooperate in the
preparation, execution and filing of any returns, questionnaires, applications
and other documents related to such taxes required or permitted to be filed on
or before the Effective Time.

SECTION 6.09. Merger of Operations. Each of the parties hereto agrees to
use its reasonable good faith efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable to
cause the merger (the "Centre Merger") of the operations of Zurich Reinsurance
Centre Inc. ("Centre") and Centre Reinsurance Company of New York ("CRNY")
simultaneously with or promptly following the Merger on terms reasonably
acceptable to Parent, including, without limitation, causing Centre and CRNY to
enter into an agreement and plan of merger or similar agreement providing for
the Centre Merger and preparing and submitting all necessary regulatory filings
in connection therewith. This Section 6.09 shall terminate upon a termination of
this Agreement.

ARTICLE VII

CONDITIONS

SECTION 7.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:

(a) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock.

(b) Other Approvals. The Insurance Department of the State of
Connecticut shall have approved the consummation of the Merger and such
approval shall be in full force and effect. Other than the filing provided
for by Section 1.01, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed
by, any Governmental Entity the failure to obtain which would have a
material adverse effect on Parent and its Subsidiaries or the Surviving
Corporation and its Subsidiaries, in each case taken as a whole, shall have
been filed, occurred or been obtained.

(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect.

SECTION 7.02. Conditions of Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction of the following conditions unless waived by Parent and Sub:

(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date or except, as to any failure to be true and correct, to the
extent that Parent or Sub had knowledge of such failure to be true and
correct as of the date hereof) as of the Closing Date as though made on and
as of the Closing Date, except as otherwise contemplated by this Agreement.

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(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.

(c) Officer's Certificate. Parent and Sub shall have received a
certificate signed by an executive officer of the Company to the effects
set forth in Paragraphs (a) and (b) of this Section 7.02.

(d) Appraisal Rights. The holders of not more than 7% of the
outstanding shares of Company Common Stock shall have exercised their
appraisal rights in the Merger in accordance with the DGCL.

SECTION 7.03. Conditions of Obligations of the Company. The obligation of
the Company to effect the Merger is subject to the satisfaction of the following
conditions unless waived by the Company:

(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.

(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date.

(c) Officer's Certificate. The Company shall have received a
certificate signed by an executive officer of each of Parent and Sub to the
effects set forth in Paragraphs (a) and (b) of this Section 7.03.

ARTICLE VIII

TERMINATION AND AMENDMENT

SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of the Company:

(a) by mutual consent of Parent and the Company;

(b)(i) by either Parent or the Company if there shall have been a
material breach of any representation, warranty, covenant or agreement on
the part of the other set forth in this Agreement which breach shall not
have been cured within two business days following receipt by the breaching
party of notice of such breach, or (ii) by either Parent or the Company if
any permanent injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have become final
and non-appealable;

(c) by either Parent or the Company if the Company's Board of
Directors takes any of the actions permitted by Section 5.02(b); provided
the Company may so terminate only if it has complied with all the
provisions of Section 5.02(c);

(d) by either Parent or the Company if the Merger shall not have been
consummated on or before October 1, 1997; or

(e) by either party if the required approval of the stockholders of
the Company shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of stockholders or at any
adjournment thereof.

SECTION 8.02. Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to any breach of any provision of
this Agreement prior to such termination and except that the last sentence of
Section 6.02 and all of Sections 6.05 and 6.06 shall continue in effect.

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SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval in accordance with Section 7.01(a).
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

SECTION 8.04. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
2.01, 2.02, 6.05, 6.06, 6.07, 6.08 and 6.09 and this Section 9.01.

SECTION 9.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

(a) if to Parent or Sub, to

Zurich Centre Investments Limited
Cumberland House, One Victoria Street
P.O. Box HM 1788
Hamilton, HM HX Bermuda
Attention: General Counsel

Telecopy No.: (441) 292-0951

with copies to:

Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Thomas M. Cerabino, Esq.

Telecopy No.: (212) 821-8111

Zurich Center Resource Limited
One Chase Manhattan Plaza
New York, New York 10005
Attention: General Counsel

Telecopy No.: (212) 898-5002

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(b) if to the Company, to

Zurich Reinsurance Centre
Holdings, Inc.
One Chase Manhattan Plaza
43rd Floor
New York, New York 10005
Attention: Richard E. Smith and Mark R. Sarlitto

Telecopy No.: (212) 898-5028

with a copy to

Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: Samuel C. Butler, Esq.

Telecopy No.: (212) 474-3700

SECTION 9.03. Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (b) except as provided in Section 6.07,
are not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.

SECTION 9.04. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.

SECTION 9.05. Publicity. Except as otherwise required by law or the rules
of the New York Stock Exchange, for so long as this Agreement is in effect,
neither the Company nor Parent shall, or shall permit any of its Subsidiaries
to, issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be unreasonably
withheld.

SECTION 9.06. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.

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IN WITNESS WHEREOF Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.

ZURICH CENTRE INVESTMENTS LIMITED

By: /s/ THOMAS GLEESON

--------------------------------------
Name: Thomas Gleeson
Title: Vice President

CENTRE MERGER CORP.

By: /s/ STEVEN M. GLUCKSTERN

--------------------------------------
Name: Steven M. Gluckstern
Title: President

ZURICH REINSURANCE CENTRE
HOLDINGS, INC.

By: /s/ MARK R. SARLITTO

--------------------------------------
Name: Mark R. Sarlitto
Title: Senior Vice President &
General Counsel

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APPENDIX B

MORGAN STANLEY

MORGAN STANLEY & CO.
INCORPORATED
1588 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000

April 17, 1997

Special Committee of the Board of Directors
Zurich Reinsurance Centre Holdings, Inc.
One Chase Manhattan Plaza
New York, NY

Gentlemen:

We understand that Zurich Reinsurance Centre Holdings, Inc. ("ZRC" or the
"Company"), Zurich Centre Investments Limited ("Parent") and Centre Merger
Corp., an indirect wholly owned subsidiary of Parent ("Merger Sub"), propose to
enter into an Agreement and Plan of Merger substantially in the form of the
draft dated April 16, 1997 (the "Merger Agreement"), which provides, among other
things, for the merger of Merger Sub with and into the Company (the "Merger").
Pursuant to the Merger, the Company will become an indirect wholly owned
subsidiary of Parent and each issued and outstanding share of common stock, par
value $0.01 per share, of the Company (the "Company Common Stock"), other than
shares held in treasury or shares held by Parent, any subsidiary of Parent,
Zurich International (Bermuda) Ltd. ("Zurich Bermuda") or Zurich Insurance
Company ("Zurich Insurance") or shares as to which dissenters' rights have been
perfected, shall be converted into the right to receive $39.50 in cash (the
"Consideration"), without interest, subject to adjustment in certain
circumstances described in Section 2.01(c) of the Merger Agreement. We also
understand that Parent and its affiliates currently own approximately 66% of the
outstanding Company Common Stock. The terms and conditions of the Merger are
more fully set forth in the Merger Agreement.

You have asked for our opinion as to whether the Consideration to be
received by the holders of shares of Company Common Stock (other than Parent,
any subsidiary of Parent, Zurich Bermuda or Zurich Insurance) pursuant to the
Merger Agreement is fair from a financial point of view to such holders.

For purposes of the opinion set forth herein, we have:

(i) reviewed certain publicly available financial statements and other
information of the Company;

(ii) reviewed certain internal financial statements, assessments of
reserves and other financial and operating data concerning the Company
prepared by the management of the Company;

(iii) analyzed certain financial projections prepared by the
management of the Company;

(iv) discussed the past and current operations and financial condition
and the prospects of the Company with senior executives of the Company;

(v) reviewed the reported prices and trading activity for the Company
Common Stock;

(vi) compared the financial performance of the Company and the prices
and trading activity of the Company Common Stock with that of certain other
comparable publicly-traded companies and their securities;

(vii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;

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(viii) participated in discussions and negotiations among
representatives of the Company and their financial and legal advisors;

(ix) reviewed the draft Merger Agreement; and

(x) performed such other analyses and considered such other factors as
we have deemed appropriate.

We assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such appraisals;
however we have relied, with the Company's consent and without independent
verification, upon the Company's assessments of its reserves for purposes of
this opinion. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.

In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Company
or any of its assets.

We have acted as financial advisor to the Special Committee of the Board of
Directors of the Company in connection with this transaction and will receive a
fee for our services.

It is understood that this letter is for the information of the Special
Committee of the Board of Directors of the Company, except that this opinion may
be included in its entirety in any filing made by the Company with the
Securities and Exchange Commission or any regulatory authority in connection
with the Merger. In addition, we express no opinion or recommendation as to how
the holders of Company Common Stock should vote at the stockholders' meeting
held in connection with the Merger.

Based on the foregoing, we are of the opinion on the date hereof that the
Consideration to be received by the holders of shares of Company Common Stock
(other than Parent, any subsidiary of Parent, Zurich Bermuda or Zurich
Insurance) pursuant to the Merger Agreement is fair from a financial point of
view to such holders.

Very truly yours,

MORGAN STANLEY & CO. INCORPORATED

By: /s/ Derek G. Kirkland

------------------------------------
Derek G. Kirkland
Managing Director

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APPENDIX C

DELAWARE GENERAL CORPORATION LAW

SECTION 262. APPRAISAL RIGHTS

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.sec. 251, 252, 254, 257, 258 or 263 of this title:

(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which at
the record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a national
securities exchange or (ii) held of record by more than 2,000 stockholders;
and further provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of sec. 251 of this
title.

(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258 and 263 of this title to accept for such
stock anything except:

a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation;

b. Shares of stock of any other corporation which at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or held of record by more than 2,000 stockholders;

c. Cash in lieu of fractional shares of the corporations described
in the foregoing subparagraphs a., b. and c. of this paragraph; or

d. Any combination of the shares of stock and cash in lieu of
fractional shares described in the foregoing subparagraphs a., b. and c.
of this paragraph.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.

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(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or

(2) If the merger or consolidation was approved pursuant to sec. 228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.

(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by

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publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.

(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.

C-3
<PAGE> 89

APPENDIX D

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY,
ZURICH INSURANCE COMPANY, PARENT AND SUB

Set forth below is the name, business address and citizenship of each
person who is a director or executive officer of the Company, Zurich Insurance
Company, Parent and Sub, and, except as otherwise indicated, the present
principal occupation or employment of each person listed below and the name,
principal business and address of the corporation or other organization in which
such occupation or employment of each such person is conducted and the material
occupation, positions, offices and employment and the name, principal business
and address of any corporation or other organization in which any material
occupational position, office or employment of each such person was held during
the past five years. Unless otherwise indicated, the business address of each
person at (i) the Company is One Chase Manhattan Plaza, New York, NY 10005 and
(ii) Zurich Insurance Company is 2 Mythenquai, CH-8002 Zurich, Switzerland.

EXECUTIVE OFFICERS OF THE COMPANY

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Steven M. Gluckstern..... Chairman of the Company since March 1993. From USA
March 1993 to June 1996, he served as Chief
Executive Officer of the Company and from March
1993 to June 1995 as President of the Company. In
March 1997, Mr. Gluckstern was appointed to serve
as a member of Zurich Insurance Company's Corporate
Executive Board. Mr. Gluckstern is President and a
director of Parent and serves as a director of
Parent's operating subsidiaries. During 1995, he
served as a director of Zurich Kemper Investment
Management, Inc. and certain of its respective
operating subsidiaries. Since 1987, he has served
as an executive officer and a director of Centre
Reinsurance Holdings Limited as well as a director
of certain of its operating subsidiaries.
Richard E. Smith......... Since June 1996, Mr. Smith has served as Chief USA
Executive Officer of the Company and since June
1995 as President of the Company. From March 1993
to June 1996, Mr. Smith served as Chief Operating
Officer. Mr. Smith served as Senior Vice President,
Business Development of Centre Reinsurance from
1992 until March 1993. From 1982 until 1992, Mr.
Smith was employed by Guy Carpenter & Company,
Inc., most recently as Senior Vice President and a
member of the Board of Directors.
Peter R. Porrino......... Executive Vice President of the Company since June USA
1996. From April 1993 to June 1996, Mr. Porrino
served as Senior Vice President, Chief Financial
Officer and Treasurer of the Company. Between 1978
and 1993, Mr. Porrino was employed by Ernst &
Young, where he specialized in the insurance and
reinsurance industries. From 1988 until March 1993,
Mr. Porrino was a partner in Ernst & Young's New
York insurance practice and a member of Ernst &
Young's Insurance Industry Accounting and Auditing
Committee.
Gerald S. King........... Senior Vice President of ZRC since July 1993 and USA
Senior Vice President and Chief Facultative
Underwriting Officer of the Company since June
1995. Mr. King served in various capacities
relating to facultative operations for Skandia
American Reinsurance Corp., from 1990 to 1993.
</TABLE>

D-1
<PAGE> 90

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Isaac Mashitz............ Senior Vice President and Chief Actuarial Officer USA
of the Company since April 1993. Prior to April
1993, Mr. Mashitz was Vice President and Actuary
(Pricing) of North American Reinsurance
Corporation, where he had been employed since 1986.
Adrienne W. Reid......... Senior Vice President of ZRC since August 1993 and USA
Senior Vice President and Chief Treaty Underwriting
Officer of the Company since June 1995. For the 16
years prior, she was employed by General
Reinsurance Corporation, most recently as Vice
President and Facultative Account Executive where
she managed General Reinsurance Corporation's New
York Casualty Program business.
Karen O'Connor Rubsam.... Senior Vice President, Chief Financial Officer and USA
Treasurer of the Company since June 1996. From May
1993 to June 1996, Ms. O'Connor Rubsam served as
Corporate Controller of ZRC. From 1992 to 1993, Ms.
O'Connor Rubsam served as a financial analyst at
Paulsen Dowling Securities.
Mark R. Sarlitto......... Senior Vice President, General Counsel and USA
Secretary of ZRC since June 1993 and Senior Vice
President, General Counsel and Secretary of the
Company since August 1995. Mr. Sarlitto was an
attorney at Willkie Farr & Gallagher from 1988 to
1993.
</TABLE>

DIRECTORS OF THE COMPANY

PRINCIPAL OCCUPATION AND
BUSINESS ADDRESS
(IF OTHER THAN AS INDICATED ABOVE)

D-2
<PAGE> 91

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Detlef Steiner........... Mr. Steiner joined Zurich Insurance Company in July German
1991 as Deputy General Manager and in 1993 was
appointed General Manager and Senior Executive Vice
President of Zurich Insurance Company. Mr.
Steiner's business address is Zurich Insurance
Company, 2 Mythenquai, Ch-8002 Zurich, Switzerland.
Laurence W. Cheng........ Mr. Cheng is Chief Investment Officer of Zurich Canadian
Insurance Company. Since January 1997, Mr. Cheng
has served as a Member of the Corporate Executive
Board of Zurich Insurance Company. In 1996, Mr.
Cheng was appointed President of Zurich Investment
Management, Inc. He has served as a director of
Centre Reinsurance since its founding in 1987 and
as an executive officer since 1991. Mr. Cheng's
business address is Zurich Insurance Company, 2
Mythenquai, CH-8002 Zurich, Switzerland.
Judith Richards Hope..... Since 1981, Mrs. Hope has served as a senior USA
partner in the law firm of Paul, Hastings, Janofsky
& Walker, 1299 Pennsylvania Avenue, NW, 10th Floor,
Washington, D.C. 2004.
Michael D. Palm.......... Mr. Palm is an Executive Vice President and USA
director of Parent. Mr. Palm co-founded Centre
Reinsurance in 1987 and currently serves as Vice
Chairman and a director of that company and its
subsidiaries. Mr. Palm's business address is at
Parent, One Chase Manhattan Plaza, New York, NY
10005.
George G.C. Parker....... Since 1993, Mr. Parker has served as the Dean USA
Witter Professor of Finance, Associate Dean for
Academic Affairs, and director of the MBA Program
at the Graduate School of Business at Stanford
University. Mr. Parker has been affiliated with
Stanford University since 1973. Mr. Parker's
business address is Stanford University Graduate
School of Business, Building 350, Memorial Way,
Stanford, CA 94305-5015.
William H. Bolinder...... Since October 1994, Mr. Bolinder has served as a USA
Member of Corporate Executive Board of Zurich
Insurance Company. Mr. Bolinder joined Zurich
Insurance Company in 1986 as Chief Operating
Officer of Zurich American Insurance Group ("ZA")
and in 1987 was appointed ZA's Chief Executive
Officer. Between 1987 and 1994, Mr. Bolinder served
as President, Chief Executive Officer and a
director of Zurich Insurance Company's affiliated
companies in the U.S. Mr. Bolinder's business
address is Zurich Insurance Company, U.S. Branch,
Zurich Tower, 1400 American Lane, Schaumburg, IL
60196.
Philip Caldwell.......... Since 1985, Mr. Caldwell has been a director and a USA
senior managing director of the investment firm of
Lehman Brothers Inc. (and its predecessor company,
Shearson Lehman Brothers, Inc.), 3 World Financial
Center, 200 Vesey Street, New York, NY 10285.
Robert T. Marto.......... Since 1993, he has served as President, Chief USA
Executive Officer and a director of White River
Corporation, 777 Westchester Avenue, Suite 201,
White Plains, NY 10604. Between 1990 and 1993, Mr.
Marto served as President and a director of Fund
American Enterprises, Inc., a subsidiary of Fund
American Enterprise Holdings, Inc., The 1820 House,
Main Street, Norwich, VT 05055.
</TABLE>

D-3
<PAGE> 92

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Peter J. Neff............ Since January 1997, he has served as Chairman and USA
Chief Executive Officer of Genovo, Inc., 3516 Civic
Center Blvd., Abramson Building 7th Floor,
Philadelphia, PA 19104. From 1991 to 1996, Mr. Neff
served as President and Chief Executive Officer of
Rhone Poulenc, Inc., 231 Black Horse Lane, Monmouth
Junction, NJ 08852.
</TABLE>

EXECUTIVE OFFICERS OF PARENT

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Steven M. Gluckstern..... Chairman of the Company since March 1993. From USA
March 1993 to June 1996, he served as Chief
Executive Officer of the Company and from March
1993 to June 1995 as President of the Company. In
March 1997, Mr. Gluckstern was appointed to serve
as a member of Zurich Insurance Company's Corporate
Executive Board. Mr. Gluckstern is President and a
director of Parent and serves as a director of
Parent's operating subsidiaries. During 1995, he
served as a director of Zurich Kemper Investment
Management, Inc. and certain of its respective
operating subsidiaries. Since 1987, he has served
as an executive officer and a director of Centre
Reinsurance Holdings Limited as well as a director
of certain of its operating subsidiaries. Mr.
Gluckstern's business address is One Chase
Manhattan Plaza, New York, NY 10005.
Rolf F. Hueppi........... Chairman of the Board of Parent. Chairman and Chief Swiss
Executive Officer of Zurich Insurance Company since
1995 and President and Chief Executive Officer of
Zurich Insurance Company since 1991. Mr. Hueppi's
business address is Zurich Insurance, 2 Mythenquai,
CH-8002 Zurich, Switzerland.
Michael D. Palm.......... Mr. Palm is an Executive Vice President and USA
director of Parent. Mr. Palm co-founded Centre
Reinsurance in 1987 and currently serves as Vice
Chairman and a director of that company and its
subsidiaries. Mr. Palm's business address is at
Parent, One Chase Manhattan Plaza, New York, NY
10005.
Laurence W. Cheng........ Executive Vice President of Parent. Mr. Cheng is Canadian
Chief Investment Officer of Zurich Insurance
Company. Since January 1997, Mr. Cheng has served
as a Member of the Corporate Executive Board of
Zurich Insurance Company. In 1996, Mr. Cheng was
appointed President of Zurich Investment
Management, Inc. He has served as a director of
Centre Reinsurance since its founding in 1987 and
as an executive officer since 1991. Mr. Cheng's
business address is Zurich Insurance Company, 2
Mythenguai, CH-8002 Zurich, Switzerland.
Steven D. Germain........ Mr. Germain is Managing Director of Zurich Centre USA
Reinsurance Limited and serves as General Counsel
of Parent and its wholly owned subsidiaries
including the Centre Reinsurance Group of
Companies. Mr. Germain has served as General
Counsel of the Centre Reinsurance Group of
Companies since 1988. His business address is
Zurich Centre ReSource Limited, One Chase Manhattan
Plaza, 44th Floor, New York, NY 10005.
</TABLE>

D-4
<PAGE> 93

DIRECTORS OF PARENT

PRINCIPAL OCCUPATION AND
BUSINESS ADDRESS
(IF OTHER THAN AS INDICATED ABOVE)

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Steven M. Gluckstern..... Chairman of the Company since March 1993. From USA
March 1993 to June 1996, he served as Chief
Executive Officer of the Company and from March
1993 to June 1995 as President of the Company. In
March 1997, Mr. Gluckstern was appointed to serve
as a member of Zurich Insurance Company's Corporate
Executive Board. Mr. Gluckstern is President and a
director of Parent and serves as a director of
Parent's operating subsidiaries. During 1995, he
served as a director of Zurich Kemper Investment
Management, Inc. and certain of its respective
operating subsidiaries. Since 1987, he has served
as an executive officer and a director of Centre
Reinsurance Holdings Limited as well as a director
of certain of its operating subsidiaries. Mr.
Gluckstern's business address is One Chase
Manhattan Plaza, New York, NY 10005.
Michael D. Palm.......... Mr. Palm is an Executive Vice President and USA
director of Parent. Mr. Palm co-founded Centre
Reinsurance in 1987 and currently serves as Vice
Chairman and a director of that company and its
subsidiaries. Mr. Palm's business address is at
Parent, One Chase Manhattan Plaza, New York, NY
10005.
Rolf F. Hueppi........... Chairman and Chief Executive Officer of Zurich Swiss
Insurance Company since 1995 and President and
Chief Executive Officer of Zurich Insurance Company
since 1991. Mr. Hueppi's business address is Zurich
Insurance Company, 2 Mythenquai, CH-8002 Zurich,
Switzerland.
Rolf Hanggi.............. Deputy Chief Executive Officer of Zurich Insurance Swiss
Company since 1991. Mr. Hanggi's business address
is Zurich Insurance Company, 2 Mythenquai, CH-8002
Zurich, Switzerland.
Laurence W. Cheng........ Mr. Cheng is Chief Investment Officer of Zurich Canadian
Insurance Company. Since January 1997, Mr. Cheng
has served as a Member of the Corporate Executive
Board of Zurich Insurance Company. In 1996, Mr.
Cheng was appointed President of Zurich Investment
Management, Inc. He has served as a director of
Centre Reinsurance since its founding in 1987 and
as an executive officer since 1991. Mr. Cheng's
business address is Zurich Insurance Company, 2
Mythenquai, CH-8002 Zurich, Switzerland.
Dr. Kaspar Hotz.......... Corporate Secretary and General Counsel of Zurich Swiss
Insurance Company since 1987. Dr. Hotz's business
address is Zurich Insurance Company, 2 Mythenquai,
CH-8002, Zurich, Switzerland.
Detlef Steiner........... Mr. Steiner joined Zurich Insurance Company in July German
1991 as Deputy General Manager and in 1993 was
appointed General Manager and Senior Executive Vice
President of Zurich Insurance Company. Mr.
Steiner's business address is Zurich Insurance
Company, 2 Mythenquai, CH-8002 Zurich, Switzerland.
</TABLE>

D-5
<PAGE> 94

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Scott Levine............. Since February, 1996, President and Chief Executive USA
Officer of Zurich Centre ReSource Limited. Mr.
Levine's business address is One Chase Manhattan
Plaza, New York, New York 10005. Prior to joining
Zurich Centre ReSource Limited, Mr. Levine was
associated with J.P. Morgan for 14 years, serving
in a variety of capacities, including head of
Mergers and Acquisitions, head of Strategic
Planning and head of the Insurance Products Group.
Andrea Hodson............ Vice President of Human Resources and USA
Administration of Centre Reinsurance Holdings
Limited since May, 1988. Ms. Hodson's business
address is Cumberland House, One Victoria Street,
P.O.Box HM 1788, Hamilton HM HX, Bermuda.
Roger J. Thompson........ Vice President, Controller of Parent and several of Canadian
its subsidiaries since November 1994. Prior to
joining Parent, Mr. Thompson was Vice President and
Treasurer for Western International Financial Group
Ltd., a Bermuda Reinsurer, from July 1992 to
November 1994. Mr. Thompson's business address is
Crawford House, 50 Cedar Ave., Hamilton HM 11,
Bermuda.
</TABLE>

EXECUTIVE OFFICERS OF ZURICH INSURANCE COMPANY

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Rolf F. Hueppi........... Chairman and Chief Executive Officer of Zurich Swiss
Insurance Company since 1995 and President and
Chief Executive Officer of Zurich Insurance Company
since 1991.
Rolf Hanggi.............. Deputy Chief Executive Officer since 1991. Swiss

William H. Bolinder...... Since October 1994, Mr. Bolinder has served as a USA
Member of the Corporate Executive Board of Zurich
Insurance Company. Mr. Bolinder joined Zurich
Insurance Company in 1986 as Chief Operating
Officer of Zurich American Insurance Group ("ZA")
and in 1987 was appointed ZA's Chief Executive
Officer. Between 1987 and 1994, Mr. Bolinder served
as President, Chief Executive Officer and a
director of Zurich Insurance Company's affiliated
companies in the U.S. Mr. Bolinder's business
address is Zurich Insurance Company, U.S. Branch,
Zurich Tower, 1400 American Lane, Schaumburg, IL
60196.
Laurence W. Cheng........ Mr. Cheng is Chief Investment Officer of Zurich Canadian
Insurance Company. Since January 1997, Mr. Cheng
has served as a Member of the Corporate Executive
Board of Zurich Insurance Company. In 1996, Mr.
Cheng was appointed President of Zurich Investment
Management, Inc. He has served as a director of
Centre Reinsurance since its founding in 1987 and
as an executive officer since 1991.
</TABLE>

D-6
<PAGE> 95

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Steven M. Gluckstern..... Chairman of the Company since March 1993. From USA
March 1993 to June 1996, Mr. Gluckstern served as
Chief Executive Officer of the Company and from
March 1993 to June 1995 as President of the
Company. In March 1997, Mr. Gluckstern was
appointed to serve as a member of Zurich Insurance
Company's Corporate Executive Board. Mr. Gluckstern
is President and a director of Parent and serves as
a director of Parent's operating subsidiaries.
During 1995, he served as a director of Zurich
Kemper Investment Management, Inc. and certain of
its operating subsidiaries. Since 1987, he has
served as an executive officer and a director of
Centre Reinsurance Holdings Limited as well as a
director of certain of its operating subsidiaries.
Mr. Gluckstern's business address is One Chase
Manhattan Plaza, New York, NY 10005.
Peter Eckert............. Member of Corporate Executive Board of Zurich Swiss
Insurance Company since 1991.
Dr. Gunther Gose......... Member of Corporate Executive Board of Zurich German
Insurance Company since 1990.
Markus Rohrbasser........ Member of Corporate Executive Board of Zurich Swiss
Insurance Company since 1997. From 1992 to 1997,
Mr. Rohrbasser served as Executive Vice President
and Chief Executive Officer of UBS North America,
New York and has been a member of the Enlarged
Corporate Executive Board of UBS.
Frank Schnewlin.......... Member of Corporate Executive Board of Zurich Swiss
Insurance Company since 1993. Between 1989 and
1993, Mr. Schnewlin was Head of the Corporate
Development and Member of the Executive Staff of
Zurich Insurance Company.
Detlef Steiner........... Member of Corporate Executive Board of Zurich German
Insurance Company since 1991. Mr. Steiner joined
Zurich Insurance Company in July 1991 as Deputy
General Manager and in 1993 was appointed General
Manager and Senior Executive Vice President of
Zurich Insurance Company.
Richard Johnson.......... Member of Enlarged Corporate Executive Board of USA
Zurich Insurance Company since 1997. In 1996, Mr.
Johnson was appointed Member of the Executive Staff
and Head of the Corporate Risk Management of Zurich
Insurance Company. Between 1993 and 1996, Mr.
Johnson was a Managing Director of European
Financial Institutions Group, an affiliate of J.P.
Morgan in London. From 1990 to 1993, Mr. Johnson
was a Managing Director of M&A Advisory Group
Dr. Adriano Passardi..... Member of Enlarged Corporate Executive Board of Swiss
Zurich Insurance Company since 1996. Since 1994,
Dr. Passardi has been Member of Executive Staff of
Zurich Insurance Company and at the head of various
projects of Zurich Insurance Company in the areas
of accounting, organization, information and
management services. Prior to 1994, Dr. Passardi
was a member of the Executive Management and the
head of the Support Services Division of Coutts &
Co. AG (formerly HandelsBank NatWest), Zurich,
Switzerland.
</TABLE>

D-7
<PAGE> 96

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Dr. Daniel Villiger...... Member of Enlarged Corporate Executive Board of Swiss
Zurich Insurance Company since 1997. Mr. Villiger
has been the head of the Corporate Development of
Zurich Insurance Company since 1996 and a member of
the Executive Staff of Zurich Insurance Company
since 1992.
Dr. Kaspar Hotz.......... Corporate Secretary and General Counsel of Zurich Swiss
Insurance Company since 1987.
</TABLE>

DIRECTORS OF ZURICH GROUP

PRINCIPAL OCCUPATION AND
BUSINESS ADDRESS
(IF OTHER THAN AS INDICATED ABOVE)

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Henry C.M. Bodmer........ Chairman and Managing Director of Abegg Holding & Swiss
Co. AG, an asset management company, Bahnhofstrasse
30, 8001 Zurich, Switzerland, since 1978.
Prof. Peter Bockli....... Partner of Law Offices of Bockli Thomann & Swiss
Partners. Mr. Bockli's business address is Law
Offices of Bockli Thomann & Partners, P.O. Box
2348, 4002 Basel, Switzerland.
Kaspar V. Cassani........ Retired in 1989 from IBM Corporation (1987 to 1989 Swiss
Vice-Chairman of IBM Corporation, Armonk, NY). Mr.
Cassani's residence address is Haldenstrasse 53,
8142 Uitikon, Switzerland.
David de Pury............ Chairman of the Board and Partner of de Pury Pictet Swiss
Turretini & Co. Ltd., an asset management and
international consulting company, Zurich and
Geneva, Switzerland, since July 1, 1996. Between
1992 and 1996, Mr. de Pury was Co-Chairman of the
Board of Directors of ABB Asea Brown Boveri Ltd.,
an engineering company, Zurich, Switzerland and
Chairman of BBC Brown Boveri Ltd., Baden,
Switzerland. Mr. de Pury's business address is de
Pury Pictet Turretini & Co. Ltd. P.O. Box 8242,
8050 Zurich, Switzerland.
Rolf Hanggi.............. Deputy Chief Executive Officer of Zurich Insurance Swiss
Company since 1991.
Rolf F. Hueppi........... Chairman and Chief Executive Officer of Zurich Swiss
Insurance Company since 1995 and President and
Chief Executive Officer of Zurich Insurance Company
since 1991.
Markus Kundig............ Owner of Kundig Druck AG, a printing company, since Swiss
1974. Mr. Kundig's business address is Kundig Druck
AG, Sihlbruggstrasse 105A, 6341 Baar, Switzerland.
Yves Oltramare........... Retired since 1991. Formerly partner of Lombard, Swiss
Odier & Cie, Bankers, Geneva, Switzerland. Mr.
Oltramore's residence address is "Monchoisy", 56
route de Meinier 1253 Vandoeuvres, Switzerland.
Karl Otto Pohl........... Managing Partner of Bank Sal. Oppenheim Jr., & Cie German
KGaA, ("Bank Oppenheim") since 1992, Chairman of
the Managing Partners of Bank Oppenheim since 1993.
Mr. Pohl's business address is Bank Sal. Oppenheim
Jr., & Cie KGaA, Bockenheimer Landstrasse 20, 60323
Frankfurt a/Main, Germany.
Lodewijk van Wachem...... Chairman of Supervisory Board of Royal Dutch Dutch
Petroleum Company since 1992. Mr. Wachem's business
address is Royal Dutch Petroleum Company, P.O. Box
162, 2501 Den Haag, Netherlands.
</TABLE>

D-8
<PAGE> 97

EXECUTIVE OFFICERS OF SUB

<TABLE>
<CAPTION>
NAME POSITION CITIZENSHIP
- ------------------------- --------------------------------------------------- ---------
<S> <C> <C>
Steven M. Gluckstern..... President and Chief Executive Officer of Sub. USA
Chairman of the Company since March 1993. From
March 1993 to June 1996, he served as Chief
Executive Officer of the Company and from March
1993 to June 1995 as President of the Company. In
March 1997, Mr. Gluckstern was appointed to serve
as a member of Zurich Insurance Company's Corporate
Executive Board. Mr. Gluckstern is President and a
director of Parent and serves as a director of
Parent's operating subsidiaries. During 1995, he
served as a director of Zurich Kemper Investment
Management, Inc. and certain of its respective
operating subsidiaries. Since 1987, he has served
as an executive officer and a director of Centre
Reinsurance Holdings Limited as well as a director
of certain of its operating subsidiaries. Mr.
Gluckstern's business address is One Chase
Manhattan Plaza, New York, NY 10005.
Steven D. Germain........ Vice President, Secretary and Treasurer of Sub. Mr. USA
Germain is Managing Director of Zurich Centre
Reinsurance Limited and serves as General Counsel
of Parent and its wholly owned subsidiaries
including the Centre Reinsurance Group of
Companies. Mr. Germain has served as General
Counsel of the Centre Reinsurance Group of
Companies since 1988. His business address is
Zurich Centre ReSource Limited, One Chase Manhattan
Plaza, 44th Floor, New York, NY 10005.
</TABLE>

DIRECTORS OF SUB

PRINCIPAL OCCUPATION AND
BUSINESS ADDRESS
(IF OTHER THAN AS INDICATED ABOVE)

D-9
<PAGE> 98
PROXY

ZURICH REINSURANCE CENTRE HOLDINGS, INC.
SPECIAL MEETING OF THE STOCKHOLDERS
AUGUST 29, 1997

The undersigned hereby constitutes and appoints Steven M. Gluckstern and Mark
R. Sarlitto and each of them, the attorneys and proxies of the undersigned,
with full power of substitution, to vote on behalf of the undersigned all the
shares of Common Stock of Zurich Reinsurance Centre Holdings, Inc. (the
"Company") which the undersigned is entitled to vote at the Special Meeting of
the stockholders of the Company, to be held on the 60th Floor of One Chase
Manhattan Plaza, New York, New York 10005, on August 29, 1997, at 10:00 a.m.,
local time, and all adjournments or postponements thereof, upon the matters set
forth on the reverse side and upon all matters incident to the conduct of the
Special Meeting. This proxy revokes all prior proxies given by the undersigned.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)

-----------
SEE REVERSE
SIDE
-----------
<PAGE> 99
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS.

1. To approve and adopt the Agreement and Plan of Merger, dated as of April 17,
1997, by and among Zurich Centre Investments Limited, a Bermuda corporation
("Parent"), Centre Merger Corp., a Delaware corporation ("Sub"), and Zurich
Reinsurance Centre Holdings, Inc., a Delaware corporation (the "Company"), and
the merger of Sub with and into the Company as contemplated thereby.

FOR AGAINST ABSTAIN
/ / / / / /

2. To vote to adjourn the Special Meeting of Stockholders to solicit additional
proxies in the event that the number of proxies sufficient to approve the
Agreement and Plan of Merger has not been received by the date of the Special
Meeting of Stockholders.

FOR AGAINST ABSTAIN
/ / / / / /

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSALS UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED. PLEASE NOTE THAT ALL ABSTAIN VOTES WILL BE COUNTED
IN DETERMINING THE EXISTENCE OF A QUORUM AT THE SPECIAL MEETING BUT WILL NOT BE
VOTED FOR THE PROPOSALS.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

I plan to attend the meeting / /

"PLEASE MARK INSIDE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD YOUR
VOTES"

Please sign as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. Joint
tenants should both sign.

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SIGNATURE(S) DATE