Exhibit 99.9
October 25, 1999
Board of Directors
Capital Re Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter is to propose a further improvement to our October 14, 1999 and
October 18, 1999 offers (the October 14 letter, as revised by the October 18
letter and this letter, the "Revised Offer") to amend the terms of our existing
merger agreement, dated June 10, 1999 (the "Merger Agreement"). ACE Limited
("ACE") hereby offers to amend the terms of the existing Merger Agreement to
provide for the acquisition of the shares of common stock of Capital Re
Corporation ("Capital Re") not already owned by ACE for $14.00 per share in
ordinary shares of ACE and cash, as more fully set forth below. We and our
financial advisors strongly believe that our Revised Offer is more favorable,
from a financial point of view, to your stockholders than the current proposal
made by XL Capital Ltd. XXX remains committed to completing a strategic
combination with Capital Re which is in the best interests of both ACE's and
Capital Re's stockholders.
For each outstanding share of Capital Re common stock not currently owned
by ACE, ACE is offering 0.65 of an ACE ordinary share plus an amount of cash
which, on a per share basis, will deliver $14.00 per share to Capital Re
stockholders, subject to a minimum of $1.30 per Capital Re share in cash (or
approximately $42 million) and a maximum of $4.68 per Capital Re share (or $150
million). The value of the ACE ordinary shares to be delivered to Capital Re
stockholders would be valued based upon the average closing price of the
ordinary shares over the five-day trading period ending three business days
prior to the stockholder vote on an amended agreement. Based upon an assumed
average closing price of $16.9375 (ACE's closing price on October 22, 1999),
Capital Re stockholders would receive for each Capital Re share 0.65 ACE
ordinary share and $3.00 in cash.
This offer would provide Capital Re stockholders with $14.00 per share in
value at closing for ACE five-day average closing prices from $14.34 to $19.54.
Capital Re stockholders would receive even greater value as ACE's share price
climbs above $19.54 per share since our revised offer does not limit the maximum
value of the consideration to be received by Capital Re shareholders.
There continues to be no financing contingency to our revised offer and the
terms and conditions of our offer are consistent in all other respects with our
letter of October 14, 1999 letter as revised by our letter of October 18, 1999.
We have reviewed the proposal made by XL in its letter dated October 15,
1999. We will provide to employees and other non-executive management
substantially similar compensation, bonus and option arrangements as contained
in the XL October 15, 1999 letter. We reserve the right to substantially match
the XL offer with respect to executive management compensation, bonus and option
arrangements.
In light of our Revised Offer, we would expect that you would promptly (i)
execute an amendment to the Merger Agreement, (ii) withdraw your notices of
October 10, 1999 and October 14, 1999 regarding your intention to enter into a
binding agreement with XL and (iii) terminate all negotiations with XL Capital.
Should you require additional information or clarification regarding any of
the matters discussed in this letter, please call me at (000) 000-0000, Xxxxxxx
Xxxxxxxxx at (000) 000-0000, our outside counsel, Xxxxx Xxxx at (000) 000-0000
or our outside financial advisor, Xxxx Xxxxx of Credit Suisse First Boston at
(000) 000-0000.
Very truly yours,
Xxxxx Xxxxxxxxxxx
Chairman, President and Chief Executive Officer
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