'Amercan Financial Corp.-Chubb Corp. "International Telephone & Telegraph-Hartford Fire. National General Corp.-Republic Indemnity Co. MERGER CANCELLATIONS The number of merger cancellations in 1969 continued at about the same level as the year before. Since the number of merger announcements in 1969 (net of cancellations) declined 22.2% from the 1968 level, the number of cancellations expressed as a percentage of transactions reported in higher than the 1968 figure. Some unsuccessful merger and acquisition bids during the past year were: "Fidelity Corp.-Monumental Life Fireman's Fund Amer. Life-Great Intl. Life Government Employees-Putnam Management Co. BANK HOLDING COMPANIES As 1968 came to a close, there was a general feeling in the financial community that a rush of bank-insurance company affiliations loomed on the horizon. Federal legislative efforts to curb the activities of one-bank holding companies during the past year, however have proved eminently successful. The House passed and sent to the Senate a very restrictive one-bank holding company bill last November. If the bill becomes law, the banking industry will be forced to divest many subsidiary operations, including most insurance operations. In the face of this threatened legislation, bank-insurance company affiliations via the the one-bank holding company mechanism came to an abrupt halt in 1969. Some of the companies affected by this proposed legislation were: "Citizens & Southern National Bank-Palmetto State Life 12 First National City Corp.-Chubb Corp. 13NLT Corp. 14South Carolina National Bank-Liberty Corp. HOLDING UNITS FORMED Holding company reorganizations during 1969 were down slightly from the previous year's level. A total of 55 insurers said they planned to adopt the holding company form in 1969, compared with 65 companies in 1968. American Financial Corp. was authorized by the New York Department to acquire up to 663,000, or 14.1%, of Chubb Corp.'s 4.7 million shares outstanding. American Financial has purchased or offered to purchase a total of 568,694, or 12%, of Chubb's outstanding stock to date. The proposed acquisition of Hartford Fire by International Telephone & Telegraph Corp. has been pending since January, 1969. ITT disposed of its interest in Hartford stock during the year in order to receive a favorable tax ruling from the Internal Revenue Service. The Department of Justice filed a civil suit to bar the merger, and a new hearing was set by Commissioner William R. Cottor of Connecticut for Mar. 10, to hear ITT's proposed voluntary offer for Hartford's shares. Mr. Cotter disapproved the original merger plan primarily on the grounds that it was not in the best interests of Hartford shareholders. Fidelity Corp. made an unsuccessful tender offer for the shares of Monumental Life. Levin Townsend Computer, a firm 17 times smaller than I.N.A. Corp., sought, but failed. to make a tender bid for the insurance holding company in February, 1969. While Fidelity & Deposit was completing its merger with Monumental Corp. via the formation of a single holding company, Security Corp. made a hostile tender bid for F. & D. which forced F. & D. to seek and complete a merger with American General. "The acquisition of Industrial Life by Teledyne was opposed by the Canadian govern ment. 19 The acquisition of Crum & Forster by Walter Kidde & Co., a conglomerate, was rejected by the preferred shareholders of Kidde. "Citizens & Southern and Palmetto State Life planned to combine by forming a single holding company. The plan was subsequently abandoned. First National City Corp., parent of First National City Bank of New York, planned to acquire all of the shares of Chubb Corp. The proposed acquisition was canceled to avoid threatened litigation by the Department of Justice. 13 NLT Corp. is the holding company formed by Third National Bank of Nashville and National Life & Accident. NLT plans to spin off the bank's shares to its stockholders because of pending restrictive legislation. 14 South Carolina National Bank and Liberty Corp. also planned to combine via the formation of a single holding company, but canceled the plan because of the unfavorable legislative atmosphere in Washington, D.C. JAN FEB MAR APR MAY JUN JUL HOLDING COMPANY REORGANIZATIONS AUG 1968- SEP OCT NOV DEC 1 2 3 4 5 6 7 8 9 10 Holding company reorganizations have continued at a relatively heavy pace for the past three years, but it would appear from the third and fourth quarter 1969 statistics that such reorganizations will diminish in number during 1970. Among the insurers that announced planned reorganizations in 1969 were: Commonwealth Life of Kentucky-Capital Holding Corp. Employers Re-ERC Corp. Alexander Hamilton Life-Hamilton International Corp. 15Lumbermen's of Mansfield, O.-Lumbermens Financial Corp. Time Ins. Co.-Time Holdings, Inc. 16 Union Mutual Life-Union Mutual Corp. 15 Downstream holding company. 16 Downstream holding company. EQUITIES Mutual fund activity during 1969 was slightly below the 1968 level. During the past year, 54 insurers announced they intended to sell mutual funds either by forming their own fund. buying an existing fund, or via a joint venture arrangement with an established fund. The number of insurers that entered the mutual fund field in 1968 totaled 57. The bulk of mutual fund activity during both years occurred during the first six-month period, as the equities chart illustrates. Since the pattern of mutual fund activity for the past two years has been remarkably similar, with about 70% of the entries occurring during the first six-month period of either year, it would be premature to conclude that the downturn in activity during the latter half of 1969 heralds an abatement of the industry's move into equities. Indications from some sources, in fact, suggest that the opposite may be true. Some insurers that entered the mutual fund field in 1969 were: City Investing has agreed to acquire Westamerica, a Denver mutual fund sales organization, but does not plan to ally its mutual fund operation with that of its propertyliability subsidiary, Home Ins. Co. 18 Continental Investment Corp., a financial company with insurance interests, acquired Waddell & Reed, mutual fund managers. VARIABLE ANNUITIES There was a dramatic decline in the number of insurers that announced plans to market some form of either individual or group variable annuities during the past year. The total number of insurers entering this field was 14, compared with 25 in 1968. The relationship of heavy mutual fund activity and the move to variables during the first six months of 1968 continued in 1969. As with mutual funds, most of the variable annuity moves occurred during the first two quarters of each year. Some of the insurers that decided to market some form of variable annuity during 1969 were: Connecticut General Connecticut Mutual Life Government Employees New England Life Occidental of California Union Mutual Life Up to this point, all of the major classifications cited experienced a decline in activity compared with 1968 levels. The only major decline was in the area of variable annuities. DIVERSIFICATION The last category to be considered is diversified financial transactions. The most significant financial activity during 1969 occurred in this category. During the past year, 257 miscellaneous financial transactions were reported, compared with only 81 during 1968. This represents an increase in diversified transactions of 217.3%. The nature of these transactions encompassed a very broad range of activities. Some of the major classifications include real estate investment, computer technology expansion, consumer finance company acquisitions, bank and savings and loan association acquisitions, agency and brokerage acquisitions, and investment company formations and acquisitions. Other transactions involve travel services, food franchising, cattle raising, etc. The following affiliations involving the banking and insurance industries occurred during 1969: 19A vemco Corp.-Metropolitan National Bank, Md. Equity Funding Corp.-Bishop's Bank & Trust Co., Nassau, Bahamas 20Manchester Life & Casualty -Missouri State Bank & Trust -Mound City Trust -Valley Bank of Florissant Provident National Bank-Commonwealth Land Title Time Ins. Co.-Bank of Commerce USLIFE Corp.-Sterling Savings & Loan Assn., Cal. "Vanguard International-First State Bank of San Leandro, Cal. Real Estate investments and agency and brokerage acquisitions led the various classifications of related financial transactions during 1969. With the exception of the agency and brokerage classification, practically all of the transactions were initiated by or involved insurance companies. Much of the activity in the agency and brokerage classification involved the acquisition of smaller producers by larger agents and brokers. Some of the important transactions during 1969 were: Alexander & Alexander -Hutchinson, Rivinus & Co. -Hanson-Fuller Co. -Detroit Insurance Agency Corroon & Black Corp.-Alexander & Co. Frank B. Hall & Co. -William F. Reichel & Co. -Talbott Carroll Co. -Olson & Bartholomay Fred S. James & Co. -R. C. Rathbone & Son -O-W & Criddle Associates -M. F. O'Brien & Co. -Joseph K. Dennis Companies Great Eastern Management Co. -Coleman, Ledbetter & Buchanan Agency -Allman Brothers Agency International Utilities Corp.-Parker & Co. International Marsh & McLennan -Mann-Kline -Victor O. Shinnerer & Co. Some notable transactions involving insurers or insurance holding companies in the real estate field were: Aetna Life & Casualty Co. -Kaiser-Aetna (Joint Venture) -Urban Investment & Development Co. 10 Avemco Corp. made a tender offer for Metropolitan National Bank shares which expired on Dec. 15. The bank's managerment opposed the offer. Following Avemco's bid, Union Trust Co. of Maryland offered to acquire Metropolitan National Bank through a share-for-share exchange. 20 Manchester Life & Casualty proposed to acquire controlling interest in the four Missouri banks from a St. Louis business man for over $8.5 million in cash and stocks. 21 Vanguard International acquired California Life, First State Bank and some real estate in San Francisco in a combined transaction. |