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FTR Press Releases -Investor Relations <br />Page 1 of I <br />Go back to article list <br />Frontier Insurance Group, Inc. Announces: Purchase of Aggregate Stop Loss Reinsurance --~~11 <br />ConUnuatlon of Expense Management Measures I <br />ROCK HILL, N.Y. -Sept. 27, 2000-Frontier Insurance Group, Inc. (Frontier) (NYSE:FTR) announced today it l <br />has exercised its option to purchase $800 million in aggregate reinsurance for Frontier Insurance Company from <br />National Indemnity Company, a subsidiary of Berkshire Hathaway, Inc. The reinsurance covers approximately <br />$514 million in loss and loss adjustment expense (LAE) reserves held on June 30, 2000 for accident years 1999 <br />and prior. The agreement also provides for up to $286 million in adverse development cover for loss and LAE <br />reserves above the held reserves. Benfield Greig LLC represented Frontier in this transaction. <br />Continuation of expense management measures <br />Frontier also announced the implementation of salary reductions for senior management and a reduction of staff. <br />Since Febr~ nary Of this year Fr~ntier•s Executive Manageme.^.t Group (EP1!+S) ha., been reduced frer~ eleven to <br />seven members, creating an annualized savings of approximately $1.2 million. <br />Effective immediately, President and Chief Executive Officer, Harry W. Rhulen, and each of the other six <br />members of the EMG are taking salary reductions that amount to an additional annualized decrease of 25% in <br />total current EMG compensation. In addition, several other members of Frontiers senior management will take <br />salary reductions, resulting in further expense savings. <br />The reduction in staff was predominately within the Undervvriting and Information Technology areas of the Rock <br />Hill, New York location. In connection with the staff reduction, Frontier will take a restructuring charge for <br />severance benefits in the third quarter 2000. During the fourth quarter, the Company will continue to restructure, <br />resulting in the elimination of additional positions. The reduction in work force is part of the Company's ongoing <br />expense management plan that began in 1999. Since January of 2000, Frontier's total employee count has <br />decreased from approximately 1600 to 680 through asset sales, attrition and job elimination. <br />Harry W. Rhulen, President and Chief Executive Officer, stated, "Although the implementation of salary cuts and <br />additional lay-offs are difficult, these actions are necessary to reach appropriate staffing and related expense <br />levels to support Frontiers current and forecasted volume of business. Both the purchase of the aggregate stop <br />loss and the continued implementation of expense measures are important steps toward achieving our goals of <br />protecting the Company's surplus, improving our outlook and supporting Frontiers ongoing viability." <br />Frontier is an insurance holding company, which through its subsidiaries, is a national underwriter and creator of <br />specialty insurance products serving the needs of insureds in niche markets. <br />Special Note Regarding Forward-Looking Statements <br />This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 <br />(the "Securities Act") and Section 21 E of the Securities Exchange Act of 1934 (the "Exchange Act") which are <br />not historical facts and involve risks and uncertainties that could cause actual results to differ materially from <br />those expected and projected. Such risks and uncertainties include, but are not limited to, the following: (i) <br />general economic conditions; (ii) wnditions specific to the property and casualty insurance industry, including its <br />cyclical nature, regulatory changes, rating agency policies and practices, competitive factors and claims <br />development and the impact thereof on loss reserves, the Company's reserving policies and the adequacy of the <br />Company's reinsurance programs; (iii) developments in the securities markets and the impact thereof on the <br />Company's investment portfolio; (iv) changes in generally accepted accounting principles; and (vii) the risk <br />factors set forth in this release. Accordingly, there can be no assurance that the actual results will conform to the <br />forward-looking statements in this release. The words "believes," "anticipates," "expects" and similar expressions <br />are intended to identify forward-looking statements. <br />http://ir.stockmaster.com/wc/form/P 1 ?template=ir/FTR/view_article&Symbol=FTR&first=&~... 10/2100 <br />