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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-04195
Prospectus Supplement No. 1
to
Prospectus Dated July 18, 1996
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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 July 26, 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.
On each of July 25 and July 26, 1996 the Company issued a press release,
copies of which are attached hereto and deemed to be a part hereof.
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[LOGO GCR HOLDINGS LIMITED]
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 HOLDINGS LIMITED DECLARES $0.62 QUARTERLY DIVIDEND
Hamilton, Bermuda, July 25, 1996 - The Board of Directors of GCR Holdings
Limited (NASDAQ:GCREF) today declared a regular quarterly dividend of $0.62 per
share payable on August 20, 1996 to shareholders of record at close of business
on August 5, 1996.
GCR Holdings Limited commenced operations in October 1993 and, through its
wholly owned subsidiary Global Capital Reinsurance Limited, provides property
catastrophe reinsurance to insurers on a world wide basis.
###
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<PAGE> 4
[LOGO GCR HOLDINGS LIMITED]
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 THIRD QUARTER FISCAL YEAR 1996 RESULTS
Hamilton, Bermuda, July 26, 1996 - GCR Holdings Limited (NASDAQ:GCREF) today
reported that net income for the third quarter ended June 30, 1996 of the 1996
fiscal year was $24.0 million, or $0.92 per share, compared to $30.7 million,
or $1.33 per share, for the third quarter of the 1995 fiscal year, which
contained reserve releases of $2.5 million from the Kobe earthquake in Japan.
Net operating income, excluding net realized gains and losses on investments,
for the third quarter was $25.0 million, or $0.96 per share, compared to $30.5
million, or $1.33 per share, in the prior year's third quarter. Net income for
the first nine months of GCR's 1996 fiscal year was $73.1 million, or $2.93 per
share, compared to $73.5 million, or $3.22 per share, in the first nine months
of the prior fiscal year.
An initial public offering of 7.6 million shares of the Company on behalf of
existing shareholders was completed on December 22, 1995. In connection with the
offering, the Company's sponsors exercised warrants 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 4.8 million shares on
behalf of existing shareholders was completed on July 24, 1996. A company
subsidiary repurchased one million shares in that offering. Giving effect to
shares subject to sponsor warrants as if those shares were outstanding and the
share repurchase as if those shares were constructively retired for all
periods, pro forma net income per share was $0.96 and $1.24 for the quarters
and $2.94 and $2.96 for the nine months ended June 30, 1996 and 1995,
respectively.
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Premiums written for the quarter ended June 30, 1996 were $25.7 million,
compared to $40.5 million in the same period a year ago. Premiums earned were
$30.5 million for the quarter, compared to $31.8 million in the third quarter
of the 1995 fiscal year. For the nine months to date, premiums written were
$99.7 million, compared to $119.7 million for the first nine months of the
prior fiscal year. Premiums earned were $94.0 million and $87.7 million for the
nine months ended June 30, 1996 and 1995, respectively.
Lawrence S. Doyle, President and Chief Executive Officer, said "We are pleased
with our earnings performance for the quarter and year to date. Our loss
experience, and consequently our loss ratio, remains very favorable by industry
standards. We believe this is a result of our disciplined underwriting
strategy. The decline in written premium resulted from pricing competition
related to very favorable loss experience. On average, we saw premium rates
decline 12-15% during the most recent quarter and 20% in Japan. Japanese
business was also negatively affected by a weakening of the Yen. The quarter's
written premium was also negatively impacted by the shift in renewal date of a
significant program 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 underwriters are
maintaining our rigorous standards and scaling back exposure to risks which we
believe are inadequately priced since we believe this is the most appropriate
strategy for the current market cycle.
"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 earnings for
the prior fiscal year, subject to loss experience and other factors."
Investment income in the most recent quarter was $6.7 million compared to $8.7
million in the same quarter of the prior year, reflecting declining yields and
the liquidation of investments to repay borrowings in late February. Investment
income declined 5.4% to $22.6 million for nine months compared to the same
period a year ago for the same
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reasons, offset in part by additions to the investment portfolio resulting from
positive cash flow from operations. Realized losses on investments were $1.0
million for the quarter, compared to realized gains of $0.1 million in last
year's third quarter. Realized gains were $0.1 million for the first nine
months compared to realized losses of $1.3 million in the prior year.
Total revenues for the quarter ended June 30, 1996 were $36.0 million compared
to $40.6 million reported for the quarter ended June 30, 1995. Total revenues
for nine months were $116.7 million, up 5.5% from $110.6 million in 1995 as a
result of increases in premiums earned and realized investment gains.
Loss and loss expenses for the quarter were $4.1 million, compared to $3.1
last year, in which $2.5 million of reserves established related to the Kobe,
Japan earthquake earlier in the year were released. For the year to date, loss
and loss expenses were $17.4 million, an improvement of 14% compared to $20.3
million for the first nine months of fiscal 1995. The Company was not affected
by any significant catastrophe events in the quarter. The Company's loss
ratio-i.e., the ratio of losses and loss expenses to earned premium-was 13.3%
for the quarter and 18.6% for the nine months, compared to 9.7% and 23.1% for
the same periods of the prior year.
Acquisition expenses were $5.2 million for the third quarter, compared to $5.1
million for the same quarter a year ago, and $14.6 million for the first nine
months of fiscal 1996, compared to $11.9 million for the first nine months of
fiscal 1995. The increase in acquisition expenses is related to a changing mix
of business. General and administrative expenses increased 64% to $2.8 million
in the quarter and 62% to $7.9 million for the year to date compared to the
prior year. These increases reflect an increase in 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.
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Total assets at June 30, 1996 were $537.9 million, compared to $597.6 million
at September 30, 1995 reflecting the utilization of investment assets to fully
repay borrowings under the Company's line of credit and dividends to
shareholders of $15.9 million paid in February and May. Shareholders' equity
increased from $356.4 million at the 1995 fiscal year end, September 30, 1995,
to $434.7 million at June 30, 1996. Book value per share increased from $15.07
(on a pro forma basis, giving effect to the exercise of sponsor warrants and
share repurchase) to $16.40 per share over the same period.
On July 25, 1996, the Board of Directors declared a dividend of $0.62 per share
payable on August 20, 1996 to shareholders of record on August 5, 1996.
GCR Holdings Limited provides property catastrophe reinsurance to insurers on a
worldwide basis through its wholly owned subsidiary, Global Capital Reinsurance
Limited.
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(Financial information follows)
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GCR Holdings Limited and Subsidiary
Consolidated Balance Sheets
(in thousands of U.S. dollars)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
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(unaudited)
<S> <C> <C>
Assets
Fixed maturity investments, at fair value
(amortized cost $428,394 and $484,858) ......... $ 427,581 $ 485,322
Cash and cash equivalents ........................ 32,077 41,490
Premiums receivable .............................. 63,572 49,716
Deferred acquisition costs ....................... 9,882 10,257
Accrued investment income ........................ 3,924 10,073
Other assets ..................................... 864 783
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Total Assets ..................................... $ 537,900 $ 597,641
========= =========
Liabilities
Reserve for losses and loss expenses ............. $ 33,922 $ 33,390
Unearned premium reserve ......................... 67,499 61,688
Loans payable .................................... -- 142,000
Accrued expenses ................................. 1,742 4,165
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Total Liabilities ................................ 103,163 241,243
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Shareholders' Equity
Share capital (par value $0.10: authorized
50,000,000 shares; issued and outstanding
25,668,255 and 22,361,000 ...................... 2,567 2,236
Paid in capital .................................. 375,912 338,354
Notes receivable for shares issued ............... (1,359) (1,783)
Unrealized appreciation (depreciation) on
investments, net ............................... (813) 464
Retained earnings ................................ 58,430 17,127
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Total Shareholders' Equity ....................... 434,737 356,398
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Total Liabilities and Shareholders' Equity ........ $ 537,900 $ 597,641
========= =========
Pro forma value per share (giving effect to
sponsor warrant exercise and share repurchase).. $ 16.40 $ 15.07
</TABLE>
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GCR Holdings Limited and Subsidiary
Consolidated Statements of Income (unaudited)
(in thousands of U.S. dollars, except per share data)
<TABLE>
<CAPTION>
Quarter Ended June 30, Nine Months Ended June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Premiums written ................................... $ 25,715 $ 40,455 $ 99,739 $ 119,745
Change in unearned premiums ........................ 4,792 (8,607) (5,728) (32,065)
----------- ----------- ----------- -----------
Premiums earned .................................... 30,507 31,848 94,011 87,680
Investment income, net ............................. 6,661 8,675 22,605 23,897
Realized gains (losses) on investments, net ........ (1,045) 146 95 (1,327)
Exchange gain (loss) ............................... (75) (88) (58) 318
----------- ----------- ----------- -----------
Total Revenues ..................................... 36,048 40,581 116,653 110,568
----------- ----------- ----------- -----------
Expenses
Losses and loss expenses ........................... 4,054 3,085 17,448 20,278
Acquisition expenses ............................... 5,203 5,122 14,583 11,865
General and administrative expenses ................ 2,818 1,717 7,928 4,895
Interest expense ................................... -- -- 3,563 --
----------- ----------- ----------- -----------
Total Expenses ..................................... 12,075 9,924 43,522 37,038
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Net Income ......................................... 23,973 30,657 73,131 73,530
Retained earnings, beginning of period ............. 50,371 72,688 17,127 29,815
Dividends to shareholders .......................... (15,914) -- (31,828) --
----------- ----------- ----------- -----------
Retained earnings, end of period ................... $ 58,430 $ 103,345 $ 58,430 $ 103,345
=========== =========== =========== ===========
Net income per share ............................... $ 0.92 $ 1.33 $ 2.93 $ 3.22
Pro forma net income per share (giving effect to
sponsor warrant exercise and share repurchase) ... $ 0.96 $ 1.24 $ 2.94 $ 2.96
Weighted average shares outstanding ................ 25,668,255 22,457,015 24,666,111 22,506,720
Loss ratio ......................................... 13.3% 9.7% 18.6% 23.1%
Expense ratio ...................................... 22.7 20.0 21.0 17.8
---- ---- ---- ----
Combined ratio ..................................... 36.0% 29.7% 39.6% 40.9%
==== ==== ==== ====
</TABLE>
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