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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-04195
Prospectus Supplement No. 3
to
Prospectus Dated July 18, 1998
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GCR HOLDINGS LIMITED
ORDINARY SHARES
(par value $0.10 per share)
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SEE "RISK FACTORS" ON PAGES 13 THROUGH 23 OF THE PROSPECTUS DATED JULY
18, 1996 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE ORDINARY
SHARES.
The Ordinary Shares have been approved for quotation in the Nasdaq
National Market under the symbol "GCREF."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus Supplement, together with the Prospectus dated July 18,
1996, has been prepared for and is to be used by Goldman, Sachs & Co. in
connection with offers and sales of the Ordinary Shares related to market-making
transactions, at prevailing market prices, related prices or negotiated
prices. This Company will not receive any of the proceeds of such sales.
Goldman, Sachs & Co. may act as a principal or agent in such transactions. See
"Plan of Distribution."
GOLDMAN, SACHS & CO.
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The date of this Prospectus Supplement is November 5, 1996.
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This Prospectus Supplement is intended to be read in conjunction with
the Prospectus dated July 18, 1996 (the "Prospectus"). Capitalized terms used
in this Prospectus Supplement and not otherwise defined herein have the same
meanings as in the Prospectus.
The closing for the Offering referred to in the Prospectus occurred on
July 24, 1996. The underwriters exercised a portion of their over-allotment
option which represented 600,000 shares on July 29, 1996. The closing for the
shares represented by the underwriters' over-allotment option occurred on
August 1, 1996.
On November 4, 1996, the Company issued a press release, a copy of
which is attached hereto and deemed to be a part hereof.
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[GCR Holdings Limited Letterhead]
FOR IMMEDIATE RELEASE
CONTACT: Lawrence S. Doyle Andrew R. Baer
Frederick W. Deichmann Tracey T. Stearns
GCR Holdings Limited Kekst and Company
441-292-9415 212-593-2655
GCR REPORTS FISCAL YEAR 1996 RESULTS
Hamilton, Bermuda. November 4, 1996 -- GCR Holdings Limited (Nasdaq:GCREF)
today reported that net income for the fourth quarter of its 1996 fiscal year
was $17.6 million, or $0.70 per share, compared to $17.1 million, or $0.73 per
share, in the fourth quarter of the prior fiscal year. Net income for the 1996
fiscal year ended September 30, 1996, was $90.8 million, or $3.63 per share,
compared to $90.7 million, or $3.94 per share, for the 1995 fiscal year. Pro
forma net income per share was $0.71 and $0.69 for the quarters and $3.64 and
$3.65 for the fiscal years ended September 30, 1996 and 1995, respectively,
after giving effect to shares issued pursuant to sponsor options as if those
shares were outstanding for all periods and shares repurchased as if those
shares were constructively retired for all periods. Net operating income,
excluding net realized gains and losses on investments, for the year was $90.8
million, or $3.63 per share, compared to $90.3 million, or $3.92 per share, in
the prior year.
For the Company's fourth quarter, premiums written were $20.1 million, compared
to $17.1 million for the fourth quarter of the prior fiscal year. Premiums
earned were $30.5 million and $32.9 million for the quarters ended September
30, 1996 and 1995, respectively. Premiums written for the year ended September
30, 1996, were $119.8 million, compared to $136.9 million in the prior year.
Premiums earned were $124.5 million for the year, compared to $120.6 million in
the 1995 fiscal year.
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Lawrence S. Doyle, President and Chief Executive Officer, said "We are pleased
with our earnings performance for the quarter and 1996 fiscal year. Despite
losses of $6.8 million from Hurricane Fran in our fourth quarter, our loss
experience and our loss ratio remain very favorable by industry standards. We
believe this is a result of our disciplined underwriting strategy. The year
over year decline in written premium resulted from pricing competition related
to very favorable loss experience. The quarter's written premium was positively
impacted by the shift in renewal date of a significant program from the third
to the fourth quarter of our fiscal year. Although continued softness in the
property catastrophe market can be expected in the near term, pricing on our
overall book and in the property catastrophe market generally is still very
attractive on a historical basis.
"Our strong operating results have allowed GCR to maintain a $0.62 quarterly
dividend which is consistent with our goal of paying 60% - 80% of operating
earnings for the prior fiscal year, subject to loss experience and other
factors.
"The Company recently announced its establishment of a Lloyd's corporate
syndicate providing capacity for marine insurance. This initiative, while
relatively modest in size, is expected to have a positive impact on earnings in
the Company's 1997 fiscal year."
Investment income in the most recent year was $29.0 million, compared to $32.7
million in the prior year, reflecting declining yields and the elimination of
our debt in late February.
Total revenues for the fourth quarter were $36.6 million, down 15% from $43.0
million in 1995 as a result of decreases in premiums earned and investment
income and increased realized investment losses. Total revenues for the year
ended September 30, 1996, were $153.3 million, essentially level with the
$153.6 million reported for the year ended September 30, 1995.
For the quarter, loss and loss expenses were $10.6 million, an improvement of
29.5% compared to $15.0 million for the fourth quarter of fiscal 1995. Loss and
loss expenses for
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the year were $28.0 million, compared to $35.3 million last year, an
improvement of 20.6%. GCR was affected by two catastrophic events in the 1996
fiscal year: Hurricane Opal, which struck the Florida Panhandle in October 1995,
and Hurricane Fran, which struck the coast of North Carolina in September 1996.
The Company's loss ratio -- i.e., the ratio of losses and loss expenses to
earned premium -- was 34.8% for the quarter and 22.5% for the year ended
September 30, 1996, compared to 45.7% and 29.3% for the fourth quarter of
fiscal 1995 and prior year.
Acquisition expenses were $5.4 million for the fourth quarter of fiscal 1996,
compared to $5.2 million for the fourth quarter of fiscal 1995 and $20.0
million for the year, compared to $17.1 million a year ago. The increase in
acquisition expenses is related to a changing mix of business. General and
administrative expenses decreased 20% to $3.0 million for the quarter compared
to the prior year reflecting public offering expenses included in the fourth
quarter of fiscal 1995 which were largely absent in the fourth quarter of
fiscal 1996. General and administrative expenses increased 25% to $10.7 million
for the year reflecting additions to the Company's staff, compensation expense
related to adjustments in the exercise price of outstanding options and
certain non-recurring expenses associated with the initial public offering in
December 1995 and the second public offering in July 1996. The Company's
combined ratio was 44.0% for the 1996 fiscal year, compared to 47.9% for the
1995 fiscal year due to favorable underwriting results.
An initial public offering of 7.6 million shares of the Company held on behalf
of existing shareholders was completed on December 22, 1995. In connection with
the offering, the Company's sponsors exercised all of their options to acquire
3.3 million shares at an aggregate exercise price of $36.3 million, which was
added to the capital of the Company. A second public offering of 5.4 million
shares held on behalf of existing shareholders was completed on July 24, 1996.
A company subsidiary repurchased one million shares in that offering.
Total assets at September 30, 1996, were $516.8 million, compared to $597.6
million at September 30, 1995, reflecting the utilization of investment assets
to full repay borrowings
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under the Company's line of credit and dividends to shareholders. Shareholders'
equity increased from $356.4 million at the 1995 fiscal year end, September 30,
1995, to $417.0 million at September 30, 1996. Book value per share increased
from $15.07 (on a pro forma basis, giving effect to the exercise of sponsor
options and shares repurchased) to $16.87 per share over the same period.
On October 31, 1996, the Board of Directors declared a dividend of $0.62 per
share payable on November 27, 1996, to shareholders of record on November 14,
1996.
GCR Holdings Limited provides property catastrophe, property risk
excess-of-loss, property pro rata, marine, energy and satellite reinsurance to
insurers on a worldwide basis through its wholly-owned subsidiary, Global
Capital Reinsurance Limited.
###
(Financial information follows)
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GCR HOLDINGS LIMITED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30 SEPTEMBER 30
1996 1995
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<S> <C> <C>
ASSETS
Fixed maturity investments, at fair value (amortized
cost $438,393 and $484,858).............................. $438,204 $485,322
Cash and cash equivalent................................... 14,070 41,490
Premiums receivable........................................ 45,542 49,716
Accrued investment income.................................. 8,941 10,073
Deferred acquisition costs................................. 9,416 10,257
Other assets............................................... 667 783
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Total Assets............................................... $516,840 $597,641
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LIABILITIES
Reserve for losses and loss expenses...................... $ 39,934 $ 33,390
Unearned premium reserve.................................. 57,029 61,688
Loss payable.............................................. -- 142,000
Accrued expenses.......................................... 2,840 4,166
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Total Liabilities......................................... 99,803 241,244
======== ========
SHAREHOLDERS' EQUITY
Share capital (par value $0.10; authorized
50,000,000 shares; issued and outstanding
24,674,255 and 22,361,000)............................. 2,467 2,236
Paid-in capital.......................................... 355,295 338,353
Notes receivable for shares issued....................... (1,359) (1,783)
Unrealized gains (losses) on investments, net............ (129) 464
Retained earnings........................................ 60,763 17,127
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Total Shareholders' Equity............................... 417,037 356,397
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Total Liabilities and Shareholders' Equity............... 516,840 597,641
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Pro firma value per share (giving effect to sponsor
warrant exercise and share repurchase)................. $ 16.87 $ 15.07
</TABLE>
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GCR HOLDINGS LIMITED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED SEPT. 30 YEAR ENDED SEPT. 30
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1996 1995 1996 1995
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES
Premiums written................................ $ 20,063 $ 17,139 $ 119,802 $ 136,884
Change in unearned premiums..................... 10,387 15,737 4,659 (16,328)
----------- ----------- ----------- -----------
Premiums earned................................. 30,450 32,876 124,461 120,556
Investment income, net.......................... 6,359 8,755 28,964 32,651
Realized gains (losses) on investments, net..... (112) 1,718 (17) 391
Exchange gain (loss)............................ (89) (339) (147) (20)
----------- ----------- ----------- -----------
Total Revenues.................................. 36,608 43,010 153,261 153,578
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EXPENSES
Losses and loss expenses....................... 10,580 15,016 28,028 35,293
Acquisition expenses........................... 5,442 5,198 20,025 17,063
General and administrative expenses............ 2,955 3,705 10,722 8,602
Interest expense............................... -- 1,964 3,724 1,964
----------- ----------- ----------- -----------
Total Expenses................................. 18,977 25,883 62,499 62,992
----------- ----------- ----------- -----------
Net Income..................................... 17,631 17,127 90,762 90,656
Retained earnings, beginning of period......... 58,430 103,344 17,127 29,815
Dividends to shareholders...................... (15,298) (103,344) (47,126) (103,344)
----------- ----------- ----------- -----------
Retained earnings, end of period............... $ 60,763 $ 17,127 $ 60,763 $ 17,127
=========== =========== =========== ===========
Net income per share........................... $ 0.70 $ 0.73 $ 3.63 $ 3.94
Pro forma net income per share
(giving effect to sponsor warrant exercise
and share repurchase)........................ $ 0.71 $ 0.69 $ 3.64 $ 3.65
Weighted average shares outstanding............ 25,175,808 23,462,371 24,989,506 23,009,828
Loss ratio..................................... 34.8% 45.7% 22.5% 29.3%
Expense ratio.................................. 23.1 20.8 21.5 18.6
----- ----- ----- -----
Combined ratio................................. 57.9% 66.5% 44.0% 47.9%
===== ===== ===== =====
</TABLE>
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