As filed with the Securities and Exchange Commission on ______________, 1998
- -------------------------------------------------------------------------------
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYMONS INTERNATIONAL GROUP, INC.
(Exact Name of Registrant as specified in its charter)
INDIANA 35-1707115
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4720 Kingsway Drive
Indianapolis, Indiana 46205
(Address of Principal Executive Offices) (Zip Code)
SYMONS INTERNATIONAL GROUP, INC. 1996 STOCK OPTION PLAN
(Full title of plan)
David L. Bates
Vice President and General Counsel
Goran Capital Inc.
4720 Kingsway Drive
Indianapolis, Indiana 46205
(317) 259-6304
(Name and address of agent for service)
telephone number, including area code, of agent for service
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
be Registered Registered(1) Share(2) Price(2) Fee
Common Shares,
without par 1,000,000 18.00 18,000,000 $5,455
value
============================== ============================ ===================== ===================== ===================
</TABLE>
(1) Any additional shares of Common Shares to be issued as a result of
stock dividends, stock splits or similar transactions shall be covered
by this Registration Statement as provided in Rule 416.
(2) Estimated solely to determine the registration fee and based on the
average of high and low sales per Common Share of Symons International
Group, Inc. on the NASDAQ Stock Market on January 16, 1998, as to
shares not yet subject to options granted under the Plan, pursuant to
Rule 457(c).
<PAGE>
REOFFER PROSPECTUS
Up to 1,000,000 Shares
SYMONS INTERNATIONAL GROUP, INC.
Common Shares, without par value
This Prospectus is a "reoffer prospectus" prepared in accordance with
the requirements of Part I of Form S-3, pursuant to General Instruction C of
Form S-8. The Common Shares covered by this reoffer prospectus ("Prospectus" or
"Reoffer Prospectus") are being sold by certain employees or directors of the
registrant, Symons International Group, Inc. (the "Company") or other persons,
which shares have been or will be acquired by the selling security holders
pursuant to the Symons International Group, Inc. 1996 Stock Option Plan. Resales
of Common Shares by such affiliates may also be made under Rule 144 under the
Securities Act of 1933, as amended (the "1933 Act").
The Common Shares are listed for trading on the NASDAQ Stock Market's
National Market (the "NASDAQ National Market") under the symbol "SIGC". On
January 16, 1998, the last reported sale price on the NASDAQ National Market was
US $18 per share.
The Common Shares may be offered from time to time in transactions on
the NASDAQ National Market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
The enforcement by investors of civil liabilities under the federal
securities laws may be affected adversely by the fact that certain of the
Company's officers and directors may not be residents of the United States, that
some or all of the experts named in the Registration Statement may be residents
of Canada and that a portion of the Company's assets and said persons may be
located outside the United States.
See "Risk Factors" on Page 9 hereof for a discussion of certain risk
factors that should be considered by prospective purchasers of Common Shares.
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.
The date of this Prospectus is January 21, 1998
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). The Company has filed with the Commission a Registration
Statement (the "Registration Statement), of which this Prospectus is a part, on
Form S-8 under the 1933 Act with respect to Common Shares offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits relating thereto. For further information with
respect to the Company and the Common Shares offered by this Prospectus,
reference is made to such Registration Statement and exhibits. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission. Such
information, and the reports and other information filed with the Commission by
the Company can be inspected and copied at the Commission's public reference
facilities located at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at the following Regional Offices: Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World
Trade Center, Suite 1300, New York, New York 1048. Copies of such materials may
also be obtained from the Commission at prescribed rates by mailing a request to
the Public Reference Section of the Commission, at Room 1024, 450 Fifth Street
N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also maintains a
Web site on the Internet that contains reports and other information regarding
registrants that file electronically with the Commission, including the Company.
The address of such site is: http://www.sec.gov. In addition, the Company
furnishes its shareholders with annual reports containing consolidated financial
statements certified by an independent chartered accounting firm. The financial
statements included in such reports will be prepared in accordance with U.S.
generally accepted accounting principles.
The Common Shares are listed for trading on the NASDAQ Stock Market's
National Market under the symbol "SIGC" and reports and other information
concerning the Company can be inspected at such exchange.
3
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INCORPORATION OF DOCUMENTS BY REFERENCE
With respect to any document incorporated by reference in this
Prospectus but not delivered herewith, the Company undertakes to provide without
charge to each person, including a beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any and all of
the information that has been incorporated by reference herein (not including
exhibits to such information unless such exhibits are specifically incorporated
by reference into such information). Such requests may be addressed to Symons
International Group, Inc., 4720 Kingsway Drive, Indianapolis, Indiana 46205. See
"Incorporation of Certain Information by Reference."
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Reoffer Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein, modifies or replaces such
statement. The modifying or superseding statement need not state that it has
modified or superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The making of a modifying
or superseding statement shall not be deemed an admission that the modified or
superseded statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission of a material fact required to be
stated or necessary to make a statement not misleading in light of the
circumstances in which it was made. Any statement so modified or superseded
shall not be deemed, in its unmodified or superseded form, to constitute a part
of this Reoffer Prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAW
The Company is an Indiana corporation. Certain of the directors and
executive officers of the Company are not residents of the United States.
Certain assets of the Company and such individuals and experts are located
outside of the United States. As a result, it may be difficult or impossible for
shareholders of the Company to effect service of process upon such persons
within the United States with respect to matters arising under the United States
federal securities laws or to enforce against them in United States courts
judgments of such courts predicated upon the civil liability provisions of the
Untied States federal securities laws. Shareholders of the Company should be
aware that there is some doubt as to the enforceability in Canada in original
actions, or in actions for enforcement of judgments of United States courts, of
civil liabilities predicated upon the United States federal securities laws. In
addition, awards of punitive damages and actions brought in the United States or
elsewhere may be unenforceable in Canada.
4
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No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations in connection
with this offering other than those contained in this Reoffer Prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company, the Selling Shareholders or any
Underwriter. This Reoffer Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities other than the registered
securities to which it relates or an offer to, or solicitation of, any person in
any jurisdiction where such an offer or solicitation would be unlawful. Neither
the delivery of this Reoffer Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION.................................................... 3
INCORPORATION OF DOCUMENTS BY REFERENCE................................... 4
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES
FEDERAL SECURITIES LAW.................................................. 4
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS....................... 5
PROSPECTUS SUMMARY........................................................ 6
RECENT DEVELOPMENTS....................................................... 9
RISK FACTORS.............................................................. 9
USE OF PROCEEDS........................................................... 19
DETERMINATION OF OFFERING PRICE........................................... 19
SELLING SECURITY HOLDERS; PLAN OF DISTRIBUTION............................ 19
LEGAL MATTERS............................................................. 24
EXPERTS ................................................................. 24
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 24
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS
The statements contained in this Prospectus which are not historical
facts, including but not limited to statements concerning (i) the impact of
federal and state laws and regulations, including but not limited to the 1994
Reform Act and 1996 Reform Act, on the Company's business and results of
operations, (ii) the competitive advantage afforded to IGF by approaches adopted
by management in the areas of information, technology, claims handling and
underwriting, and (iii) the sufficiency of the Company's cash flow to meet the
operating expenses, debt service obligations and capital needs of the Company
and its subsidiaries, are forward-looking statements within the meanings of
Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. From time to time the Company may
also issue other statements either orally or in writing, which are forward
looking within the meaning of these statutory provisions. Forward looking
statements are typically identified by the words "believe", "expect",
"anticipate", "intend", "estimate", "plan" and similar expressions. These
statements involve a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially from the
forward looking statements in this Prospectus or from other forward looking
statements made by the Company. In addition to the risks and uncertainties of
ordinary business operations, some of the facts that could cause actual results
to differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements are the risks and
uncertainties (i) discussed herein, (ii) contained in the Company's other
filings with the Securities and Exchange Commission and public statements made
by the Company from time to time, and (iii) set forth under "Risk Factors."
5
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PROSPECTUS SUMMARY
Unless the context indicates otherwise (i) "Goran" refers to Goran Capital
Inc., a Canadian corporation and its subsidiaries, (ii) the "Company" refers to
Symons International Group, Inc., an Indiana corporation and 67% owned
subsidiary of Goran, and its subsidiaries, (iii) the "Subsidiaries" refer to the
direct and indirect subsidiaries of the Company, and (iv) the "Insurers" refer
to IGF Insurance Company, an Indiana property and casualty insurance company and
an indirect subsidiary of the Company ("IGF"), and, through the Company's 100%
ownership interest in GGS Management Holdings, Inc. ("GGS Holdings"), Pafco
General Insurance Company, an Indiana property and casualty insurance company
("Pafco"), and Superior Insurance Company, a Florida property and casualty
insurance company, together with its subsidiaries ("Superior").
The Company
The Company, a specialty property and casualty insurer, underwrites and
markets nonstandard private passenger automobile insurance and crop insurance.
The Company believes that it has demonstrated an ability to acquire
under-performing niche insurance businesses and develop them toward their full
potential. Through its Subsidiaries, the Company writes business in the U. S.
exclusively through independent agencies and seeks to distinguish itself by
offering high quality, technology-based services for its agents and
policyholders. For the year ended December 31, 1996, the Company had
consolidated gross premiums written of approximately $307.6 million.
The Company writes nonstandard automobile insurance in the U.S. through
approximately 6,000 independent agencies in 18 states and writes crop insurance
in the U.S. through approximately 1,200 independent agencies in 39 states. Based
on a Company analysis of gross premiums written in 1996 as reported by A.M.
Best, the Company believes that the combination of Pafco and Superior makes the
Company's nonstandard automobile group the twelfth largest underwriter of
nonstandard automobile insurance in the United States. Based on premium
information compiled in 1996 by the National Crop Insurance Services, Inc.
("NCIS"), the Company believes that IGF is the fifth largest underwriter of
Multi-Peril Crop Insurance ("MPCI") in the United States.
Nonstandard automobile insurance products are designed for drivers who
are unable to obtain coverage from standard market carriers. These drivers are
normally charged higher premium rates than the rates charged for preferred or
standard risk drivers and generally purchase lower liability limits than
preferred or standard risk policyholders. According to statistical information
derived from insurer annual statements compiled by A.M. Best, the nonstandard
automobile market accounted for $17.4 billion in annual premium volume for 1995.
In April 1996, the Company acquired Superior from Fortis, Inc. (the
"Acquisition") through GGS Holdings, which was then 52% owned by the Company and
48% owned by investment partnerships affiliated with Goldman, Sachs & Co. (the
"GS Funds"). The 48%
6
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interest owned by the GS Funds was purchased by the Company in August, 1997,
utilizing a portion of the proceeds of a $135 million offering of Trust
Preferred Securities. See "Recent Developments." The Acquisition has allowed the
Company to expand its nonstandard automobile business through wider geographic
distribution and a broader range of products. Pafco writes business primarily in
the Midwest and Colorado, and Superior writes business primarily in the
Southeast (particularly Florida) and in California. The Company regularly
evaluates acquisition opportunities. There can be no assurance that any suitable
acquisition opportunities will arise.
IGF is a wholly-owned subsidiary of the Company located in Des Moines,
Iowa. IGF underwrites MPCI, crop hail insurance and other named peril crop
insurance. MPCI is a federally-subsidized program administered by the Federal
Crop Insurance Corporation ("FCIC"), which is a federally chartered corporation
operated through the United States Department of Agriculture ("USDA"). MPCI is
designed to provide farmers who suffer an insured crop loss due to the weather
or other natural perils with the funds needed to continue operations and plant
crops for the next growing season. For purposes of the profit/loss sharing
arrangement with the federal government, MPCI Premium is the amount of premiums
credited to IGF for all Buy-up Coverage (i.e. coverage in excess of CAT Coverage
(defined below)) sold, consisting of amounts paid by farmers plus the amount of
any related federal premium subsidy. For the purpose of such profit/loss sharing
arrangement, MPCI Imputed Premium is the amount of premiums credited to IGF for
all CAT Coverage (i.e. the minimum level of MPCI providing coverage for 50% of
historic yield at 60% of the per unit price set by the FCIC) it sells. For the
year ended December 31, 1996, the Company wrote approximately $82.1 million in
MPCI Premiums and $28.0 million in crop/hail gross premiums. In addition to
premium revenues for the same period, the Company received from FCIC: (i) CAT
Coverage Fees* in the amount of $1.2 million, (ii) Buy-up Expense Reimbursement
Payments** in the amount of $25.0 million and (iii) CAT LAE Reimbursement
Payments*** and MPCI Excess LAE Reimbursement Payments**** in the aggregate
amount of $5.8 million. IGF uses proprietary software to write and service
policies. The Company uses employee claims adjusters rather than relying solely
on part-time, independent contractor adjusters as do many of its competitors.
Management believes that the approaches adopted by IGF's management team in the
information technology, claims handling and underwriting aspects of its business
are innovations which provide IGF with a competitive advantage in the crop
insurance industry. --------
*A fixed administration fee of $50 per policy paid by farmers upon purchase of
CAT Coverage.
**An expense reimbursement payment made by the FCIC to an MPCI insurer equal to
a percentage of gross premiums written for each Buy-up Coverage policy written.
***An LAE (as hereinafter defined) reimbursement payment made by the FCIC to an
MPCI insurer equal to 13% of MPCI Imputed Premiums for each CAT Coverage policy.
****A small excess LAE reimbursement payment made by the FCIC to an MPCI insurer
to the extent that loss ratios on a per state basis exceed certain levels.
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<PAGE>
The Federal Crop Insurance Reform Act of 1994 (the "1994 Reform Act")
required farmers for the first time to purchase at least a basic level of MPCI
coverage ("CAT Coverage") in order to be eligible for other federally-sponsored
farm benefits, including but not limited to low interest loans and crop price
supports. The 1994 Reform Act also authorized for the first time the marketing
and selling of CAT Coverage by Local USDA offices which has been eliminated for
the 1998 crop year. The Federal Agriculture Improvement and Reform Act of 1996
(the "1996 Reform Act"), signed into law by President Clinton in April, 1996,
limited the role of the USDA offices in the delivery of MPCI coverage beginning
in July, 1996, which was the commencement of the 1997 crop year, and also
eliminated the linkage between CAT Coverage and qualification for certain
federal farm program benefits. The limitation of the USDA's role in the delivery
system for MPCI provided the Company with the opportunity to realize increased
revenues from the distribution and servicing of its MPCI product. As a result of
this limitation, the FCIC, through December, 1997, has transferred to IGF
approximately 17,000 insureds for CAT Coverage who previously purchased such
coverage from USDA field offices. The Company has not experienced any material
negative impact in 1997 from the delinkage mandated by the 1996 Reform Act. The
Company believes that any future potential negative impact of the delinkage
mandated by the 1996 Reform Act will be mitigated by, among other factors, the
likelihood that farmers will continue to purchase MPCI to provide basic
protection against natural disasters since ad hoc federal disaster relief
programs have been reduced or eliminated. In addition, the Company believes that
(i) lending institutions would likely continue to require this condition as a
condition to crop lending and (ii) many of the farmers who entered the MPCI
program as a result of the 1994 Reform Act have come to appreciate the
reasonable price of the protection afforded by CAT Coverage and will remain in
the program regardless of delinkage. There can, however, be no assurance as to
the ultimate effect which the 1996 Reform Act may have on the business or
operations of the Company.
On June 9, 1997, the Secretary of Agriculture announced that the USDA
would no longer provide CAT Coverage through USDA offices in any state effective
for the 1998 crop year. This was to be implemented by a transferring of CAT
policies to the various members of the crop insurance industry, including IGF.
At this time, the Company believes that it will retain approximately 9,000
policies that were formerly written by USDA offices, although there can be no
assurance that the Company will retain this number of policies. Based on
historical, per-policy averages, the Company has preliminarily estimated that it
will receive an additional approximate $6 to $7 million in premiums for the 1997
and 1998 crop years from such transferred policies, however, there can be no
assurance that this number will be realized. This estimate assumes that IGF will
retain 100% of such premiums. There can be no assurance as to the ultimate
effect which the 1996 Reform Act may have on the business operations of the
Company.
The Company, through Subsidiaries of Goran, engages in certain reinsurance
and surplus lines operations. Granite Reinsurance Company Ltd. of Barbados
("Granite Re"), a wholly-owned subsidiary of Goran, underwrites finite risk
insurance and stop-loss reinsurance including reinsurance for crop insurance
coverage written by IGF. Granite Re participates in various programs of
reinsurance for Bermudian, Canadian and U.S. reinsurance companies. Symons
8
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International Group, Inc. (Florida) ("SIGF"), also a wholly-owned subsidiary of
Goran, is a specialized surplus lines underwriting unit based in Florida which
provides certain commercial insurance products through retail agencies,
principally in the southeast United States. SIGF writes these specialty products
through a number of different insurers including Pafco, United National
Insurance Group, Munich American Reinsurance Corp. and underwriters of Lloyd's
of London. Effective January 1, 1996, the Company transferred to Goran all of
the shares of capital stock of SIGF. Also, Granite Insurance Company ("Granite
Insurance"), a Canadian federal insurance company and wholly-owned subsidiary of
Goran which stopped writing insurance in 1990, has a book of property and
casualty insurance business which is in run-off.
The Common Shares of the Company are traded on the NASDAQ National Market
under the symbol "SIGC."
The Company is an Indiana corporation and its principal executive
offices in the U.S. are located at 4720 Kingsway Drive, Indianapolis, Indiana
(telephone number (317) 259-6300).
RECENT DEVELOPMENTS
In August, 1997, a $135 million offering of trust preferred securities
("Preferred Securities") was completed by SIG Capital Trust I. SIG Capital Trust
I then invested $135 million in senior subordinated notes of the Company. The
proceeds were used by the Company (i) to retire bank debt of approximately
$44,900,000 in principal amount, (ii) to purchase the shares of GGS Holdings not
owned by the Company and (iii) for general corporate purposes. The Company
invested the net proceeds in short-term, income-generating investment-grade
securities.
In connection with the issuance of the Preferred Securities, the
Company entered into a Senior Subordinated Indenture (the "Indenture"), pursuant
to which the Company became subject to certain covenants and restrictions. The
description of the Indenture and other related documents is contained in the
Company's Registration Statement on Form S-4, which was filed with the
Commission on September 16, 1997, and all amendments of reports filed for the
purpose of updating such description. These covenants and restrictions might
have a material/adverse effect on the ability of the Company to conduct it
business and on the market price of the Common Shares of the Company.
RISK FACTORS
There are certain risks involved in an investment in the Common Shares.
Accordingly, prospective purchasers of the Common Shares should consider
carefully the factors set forth below as well as the other information contained
in this Reoffer Prospectus.
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Uncertain Pricing and Profitability
One of the distinguishing features of the property and casualty
industry is that its products generally are priced before its costs are known,
because premium rates usually are determined before losses are reported. Premium
rate levels are related in part to the availability of insurance coverage, which
varies according to the level of surplus in the industry. Increases in surplus
have generally been accompanied by increased price competition among property
and casualty insurers. The nonstandard automobile insurance business in recent
years has experienced very competitive pricing conditions and there can be no
assurance as to the Company's ability to achieve adequate pricing. Changes in
case law, the passage of new statutes or the adoption of new regulations
relating to the interpretation of insurance contracts can retroactively and
dramatically affect the liabilities associated with known risks after an
insurance contract is in place. New products also present special issues in
establishing appropriate premium levels in the absence of a base of experience
with such products' performance.
The number of competitors and the similarity of products offered, as
well as regulatory constraints, limit the ability of property and casualty
insurers to increase prices in response to declines in profitability or market
demand. In states which require prior approval of rates, it may be more
difficult for the Company to achieve premium rates which are commensurate with
the Company's underwriting experience with respect to risks located in those
states. In addition, the Company does not control rates on its MPCI business,
which are instead set by the FCIC. Accordingly, there can be no assurance that
these rates will be sufficient to produce an underwriting profit.
The reported profits and losses of a property and casualty insurance
company are also determined, in part, by the establishment of, and adjustments
to, reserves reflecting estimates made by management as to the amount of losses
and loss adjustment expenses ("LAE") that will ultimately be incurred in the
settlement of claims. The ultimate liability of the insurer for all losses and
LAE reserved at any given time will likely be greater or less than these
estimates and material differences in the estimates may have a material adverse
effect on the insurer's financial position or results of operations in future
periods.
Nature of Nonstandard Automobile Insurance Business
The nonstandard automobile insurance business is affected by many
factors which can cause fluctuations in the results of operations of this
business. Many of these factors are not subject to the control of the Company.
The size of the nonstandard market can be significantly affected by, among other
factors, the underwriting capacity and underwriting criteria of standard
automobile insurance carriers. In addition, an economic downturn in the states
in which the Company writes business could result in fewer new car sales and
less demand for automobile insurance. Severe weather conditions could also
adversely affect the Company's business through higher losses and LAE. These
factors, together with competitive pricing and other considerations, could
result in fluctuations in the Company's underwriting results and net income.
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Nature of Crop Insurance Business
The Company's operating results from its crop insurance program can
vary substantially from period to period as a result of various factors,
including timing and severity of losses from storms, droughts, floods, freezes
and other natural perils and crop production cycles. Therefore, the results for
any quarter or year are not necessarily indicative of results for any future
period. The underwriting results of the crop insurance business are recognized
throughout the year with a reconciliation for the current crop year in the
fourth quarter.
The Company expects that for the foreseeable future a majority of its
crop insurance business will continue to be derived from MPCI business. The MPCI
program is federally regulated and supported by the federal government by means
of premium subsidies to farmers, expense reimbursement and federal reinsurance
pools for private insurers. As such, legislative or other changes affecting the
MPCI program could impact the Company's business prospects. The MPCI program has
historically been subject to modification at least annually since its
establishment in 1980, and some of these modifications have been significant. No
assurance can be given that future changes will not significantly affect the
MPCI program and the Company's crop insurance business.
The 1994 Reform Act also reduced the expense reimbursement rate payable
to the Company for its costs of servicing MPCI policies that exceed the basic
CAT Coverage level (such policies, "Buy-up Coverage") for the 1997, 1998 and
1999 crop years to 29%, 28% and 27.5%, respectively, of the MPCI Premium
serviced, a decrease from the 31% level established for the 1994, 1995 and 1996
crop years. Historically, the FCIC has paid the maximum MPCI Buy-up Expense
Reimbursement Payment rate allowable by law, although no assurance can be given
that this practice will continue. Although the 1994 Reform Act directs the FCIC
to alter program procedures and administrative requirements so that the
administrative and operating costs of private insurance companies participating
in the MPCI program will be reduced in an amount that corresponds to the
reduction in the expense reimbursement rate, there can be no assurance that the
Company's actual costs will not exceed the expense reimbursement rate. The FCIC
has appointed several committees comprised of members of the insurance industry
to make recommendations concerning this matter.
The crop insurance industry has recently completed negotiation of the
1998 Standard Reinsurance Agreement ("1998 SRA") with the FCIC, with the 1998
SRA providing for a 27% MPCI Expenses Reimbursement Payment rate and no change
to the CAT Coverage program for prior years.
The 1994 Reform Act also directs the FCIC to establish adequate
premiums for all MPCI coverages at such rates as the FCIC determines are
actuarially sufficient to attain a targeted loss ratio. Since 1980, the average
MPCI loss ratio has exceeded this target ratio. There can be no assurance that
the FCIC will not increase rates to farmers in order to achieve the targeted
loss ratio
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in a manner that could adversely affect participation by farmers in the MPCI
program above the CAT Coverage level.
The 1996 Reform Act limited the role of USDA offices in the delivery of
MPCI coverage and eliminated the linkage between CAT Coverage and qualifications
for certain federal farm program benefits. Currently, MPCI coverage is not
required for federal farm program benefits if producers sign a written waiver
that waives eligibility for emergency crop loss assistance. The 1996 Reform Act
also provided that the Secretary of Agriculture may continue to offer CAT
Coverage through USDA offices if the Secretary of Agriculture determines that
the number of approved insurance providers operating in a state is insufficient
to adequately provide catastrophic risk protection coverage to producers.
Effective June 9, 1997, the Secretary of Agriculture announced that the USDA
would no longer provide CAT Coverage through USDA offices in any state. This was
implemented by transferring the collection of premium and administration of CAT
policies to the various members of the crop insurance industry, including IGF.
At this time, the Company believes that it will retain approximately 9,000
policies that were formerly written by USDA offices, although there can be no
assurance that the Company will retain this number of policies. Based on
historical, per-policy averages, the Company has preliminarily estimated that it
will receive approximately an additional $6 to $7 million in premiums from such
transferred policies, for the 1997 and 1998 crop years, however, there can be no
assurance that this number will be realized. This estimate assumes that IGF will
retain 100% of such premiums.
Total MPCI Premium for each farmer depends upon the kind of crops
grown, acreage planted and other factors determined by the FCIC. Each year, the
FCIC sets, by crop, the maximum per unit commodity price ("Price Election") to
be used in computing MPCI Premiums. Any reduction of the Price Election by the
FCIC will reduce the MPCI Premium charged per policy, and accordingly will
adversely impact MPCI Premium volume.
The Company's crop insurance business is also affected by market
conditions in the agricultural industry which vary depending on such factors as
federal legislation and administration policies, foreign country policies
relating to agricultural products and producers, demand for agricultural
products, weather, natural disasters, technological advances in agricultural
practices, international agricultural markets and general economic conditions
both in the United States and abroad. For example, the number of MPCI Buy-up
Coverage policies written has historically tended to increase after a year in
which a major natural disaster adversely affecting crops occurs, and to decrease
following a year in which favorable weather conditions prevail.
Highly Competitive Businesses
Both the nonstandard automobile insurance and crop insurance businesses
are highly competitive. Many of the Company's competitors in both the
nonstandard automobile insurance and crop insurance business segments have
substantially greater financial and other resources than the Company, and there
can be no assurance that the Company will be able to compete effectively against
such competitors in the future.
12
<PAGE>
In its nonstandard automobile business, the Company competes with both
large national writers and smaller regional companies. The Company's competitors
include other companies which, like the Company, serve the independent agency
market, as well as companies which sell insurance directly to customers. Direct
writers may have certain competitive advantages over agency writers, including
increased name recognition, loyalty of the customer base to the insurer rather
than an independent agency and, potentially, reduced acquisition costs. In
addition, certain competitors of the Company have from time to time decreased
their prices in an apparent attempt to gain market share. Also, in certain
states, state assigned risk plans may provide nonstandard automobile insurance
products at a lower price than private insurers.
In the crop insurance business, the Company competes against other crop
insurance companies and, with respect to CAT Coverage, USDA field service
offices in certain areas. In addition, the crop insurance industry has become
increasingly consolidated. From the 1985 crop year to the 1995 crop year, the
number of insurance companies that have entered into agreements with the FCIC to
sell and service MPCI policies has declined from 50 to 17. The Company believes
that to compete successfully in the crop insurance business it will have to
market and service a volume of premiums sufficiently large to enable the Company
to continue to realize operating efficiencies in conducting its business. No
assurance can be given that the company will be able to compete successfully if
this market consolidates further.
Importance of Ratings
A.M. Best has currently assigned Superior a B+ (Very Good) rating and
Pafco a B- (Adequate) rating. A "B+" and a "B-" rating are A.M. Best's sixth and
eighth highest rating classifications, out of 15 ratings. A "B+" rating is
awarded to insurers which, in A.M. Best's opinion, "have demonstrated very good
overall performance when compared to the standards established by the A.M. Best
Company" and "have a good ability to meet their obligations to policyholders
over a long period of time." A "B-" rating is awarded to insurers which, in A.M.
Best's opinion, "have demonstrated adequate overall performance when compared to
the standards established by the A.M. Best Company" and "generally have an
adequate ability to meet their obligations to policyholders, but their financial
strength is vulnerable to unfavorable changes in underwriting or economic
conditions". IGF recently received an "NA-2" rating (a "rating not assigned"
category for companies that do not meet A.M. Best's minimum size requirements)
from A.M. Best. IGF intends to seek a revised rating although there can be no
assurance that a revised rating will be obtained or as to the level of any such
rating. A.M. Best bases its ratings on factors that concern policyholders and
agents and not upon factors concerning investor protection. Such ratings are
subject to change and are not recommendations to buy, sell or hold securities.
One factor is an insurer's ability to compete effectively is its A.M. Best
rating. The A.M. Best ratings for the Company's rated Insurers are lower than
for many of the Company's competitors. There can be no assurance that such
ratings or future changes therein will not affect the Company's competitive
position.
13
<PAGE>
Geographic Concentration
The Company's nonstandard automobile insurance business is concentrated
in the states of Florida, California, Texas, Indiana, Missouri and Virginia;
consequently the Company will be significantly affected by changes in the
regulatory and business climate in those states. The Company's crop insurance
business is concentrated in the states of Iowa, Texas, Illinois, Kansas, Montana
and Minnesota. The Company will be significantly affected by weather conditions,
natural perils and other factors affecting the crop insurance business in those
states.
Future Growth and Continued Operations Dependent on Access to Capital
Property and casualty insurance is a capital intensive business. The
Company must maintain minimum levels of surplus in the Insurers in order to
continue to write business, meet the other related standards established by
insurance regulatory authorities and insurance rating bureaus and satisfy ratio
covenants in loan agreements.
Historically, the Company has achieved premium growth as a result of
both acquisitions and internal growth. It intends to continue to pursue
acquisition and new internal growth opportunities. Among the factors which may
restrict the Company's future growth is the availability of capital. Such
capital will likely have to be obtained through debt or equity financing or
retained earnings. There can be no assurance that the Insurers will have access
to sufficient capital to support future growth and also satisfy the capital
requirements of rating agencies, creditors and regulators. In addition, the
Company will require additional capital to finance future acquisitions.
Uncertainty Associated with Estimating Reserves for Unpaid Losses and LAE
The reserves for unpaid losses and LAE established by the Company are
estimates of amounts needed to pay reported and unreported claims and related
LAE based on facts and circumstances then known. These reserves are based on
estimates of trends in claims severity, judicial theories of liability and other
factors.
Although the nature of the Company's insurance business is primarily
short-tail, the establishment of adequate reserves is an inherently uncertain
process, and there can be no assurance that the ultimate liability will not
materially exceed the Company's reserves for losses and LAE and have a material
adverse effect on the Company's results of operations and financial condition.
Due to the inherent uncertainty of estimating these amounts, it has been
necessary, and may over time continue to be necessary, to revise estimates of
the Company's reserves for losses and LAE. The historic development of reserves
for losses and LAE may not necessarily reflect future trends in the development
of these amounts. Accordingly, it may not be appropriate to extrapolate
redundancies or deficiencies based on historical information.
14
<PAGE>
Reliance Upon Reinsurance
In order to reduce risk and to increase its underwriting capacity, the
Company purchases reinsurance. Reinsurance does not relieve the Company of
liability to its insureds for the risks ceded to reinsurers. As such, the
Company is subject to credit risk with respect to amounts not recoverable from
reinsurers. Although the Company places its reinsurance with reinsurers,
including the FCIC, which the Company generally believes to be financially
stable, a significant reinsurer's insolvency or inability to make payments under
the terms of a reinsurance treaty could have a material adverse effect on the
Company's financial condition or results of operations.
The amount and cost of reinsurance available to companies specializing
in property and casualty insurance are subject, in large part, to prevailing
market conditions beyond the control of such companies. The Company's ability to
provide insurance at competitive premium rates and coverage limits on a
continuing basis depends upon its ability to obtain adequate reinsurance in
amounts and at rates that will not adversely affect its competitive position.
Due to continuing market uncertainties regarding reinsurance capacity,
no assurances can be given as to the Company's ability to maintain its current
reinsurance facilities, which generally are subject to annual renewal. If the
Company is unable to renew such facilities upon their expiration, the Company
may need to reduce the levels of its underwriting commitments.
Risks Associated with Investments
The Company's results of operations depend in part on the performance
of its invested assets. Certain risks are inherent in connection with fixed
maturity securities including loss upon default and price volatility in reaction
to changes in interest rates and general market factors. Equity securities
involve risks arising from the financial performance of, or other developments
affecting particular issuers as well as price volatility arising from general
stock market conditions.
Comprehensive State Regulation
Insurers are subject to comprehensive regulation by government agencies
in the states in which they operate. The nature and extent of that regulation
vary from jurisdiction to jurisdiction, but typically involve prior approval of
the acquisition of control of an insurance company or of any company controlling
an insurance company, regulation of certain transactions entered into by an
insurance company with any of its affiliates, limitations on dividends, approval
or filing of premium rates and policy forms for many lines of insurance,
solvency standards, minimum amounts of capital and surplus which must be
maintained, limitations on types and amounts of investments, restrictions on the
size of risks which may be insured by a single company, limitation of the right
to cancel or non-renew policies in some lines, regulation of the right to
withdraw from markets or agencies, requirements to participate in residual
markets, licensing of insurers and agents, deposits of securities for the
benefit of policyholders, reporting with respect to the financial condition, and
other matters. In addition, state insurance department examiners perform
15
<PAGE>
periodic financial and market conduct examinations of insurance companies. Such
regulation is generally intended for the protection of policyholders rather than
security holders. No assurance can be given that future legislative or
regulatory changes will not adversely affect the Company.
Holding Company Structure; Dividend and Other Restrictions; Management Fees
Holding Company Structure; Dividend and Other Restrictions. Each of the
Company and Goran is a holding company whose principal asset is the capital
stock of its Subsidiaries. Since the Company currently intends to retain
earnings to finance the growth and development of its business and does not
anticipate paying cash dividends on its Common Stock in the near future, Goran
will have to rely on dividends and other payments from Granite Re, SIGF and
Granite Insurance to meet its obligations to creditors and to pay corporate
expenses. There can be no assurance that such dividends and other payments will
be sufficient to allow the Company to meet such obligations and pay such
expenses. The Company relies primarily on dividends and other payments from its
Subsidiaries (including management fees), including the Insurers, to meet its
obligations to creditors and to pay corporate expenses. The Insurers are
domiciled in the states of Indiana and Florida and each of these states limits
the payment of dividends and other distributions by insurance companies.
Under these laws, the maximum aggregate amounts of dividends permitted
to be paid in 1997 by IGF and Pafco without prior regulatory approval is
$12,122,000 and $561,000, respectively, none of which has been paid. In the
consent order approving the Acquisition (the "Consent Order"), the Florida
Department of Insurance ("Florida Department") has prohibited Superior from
paying any dividends (whether extraordinary or not) for four years from the date
of Acquisition without the prior written approval of the Florida Department.
Further, state insurance laws and regulations require that the statutory surplus
of an insurance company following any dividend or distribution by such company
be reasonable in relation to its outstanding liabilities and adequate for its
financial needs.
Management Fees. The management agreement originally entered into
between the Company and Pafco was assigned as of April 30, 1996 by the Company
to GGS Management, Inc., a wholly-owned subsidiary of GGS Holdings ("GGS
Management"). This agreement provides for an annual management fee equal to 15%
of gross premiums written. A similar management agreement with a management fee
of 17% of gross premiums written has been entered into between GGS Management
and Superior. Employees of the Company relating to the nonstandard automobile
insurance business and all Superior employees became employees of GGS Management
effective April 30, 1996. In the Consent Order approving the Acquisition, the
Florida Department has reserved, for a period of three years, the right to
reevaluate the reasonableness of fees provided for in the Superior management
agreement at the end of each calendar year and to require Superior to make
adjustments in the management fees based on the Florida Department's
consideration of the performance and operating percentage of Superior and other
pertinent data. There can be no assurance that either the Indiana Department or
the Florida Department will not in the future require a reduction in these
management fees.
16
<PAGE>
Control by Existing Shareholders
G. Gordon Symons, Chairman of the Board of the Company and Goran and
the father of Alan G. Symons, President and Chief Executive Officer of Goran and
Chief Executive Officer of the Company and Douglas H. Symons, Vice President and
Chief Operating Officer of Goran and President and Chief Operating Officer of
the Company, beneficially own, including their ownership interest in Goran, in
the aggregate approximately 44% of the outstanding Common Shares (inclusive of
Common Shares subject to stock options). Accordingly, since G. Gordon Symons and
members of his family have the ability to elect the Board of Directors of Goran
and hence, the Company, they have the ability to effectively control all of the
Company's policy decisions. Third parties will not be able to obtain control of
the Company through purchases of Common Shares not owned by G. Gordon Symons and
his family.
Potential Limitations on Ability to Raise Additional Capital
Goran's failure to maintain ownership of at least 50% of the Company's
voting securities will expose Goran to a risk that it will be characterized as
an investment company within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), unless Goran's remaining voting securities of the
Company, together with any other investment securities, represent not more than
40% of the total assets of the Company on an unconsolidated basis. In such
event, Goran would be required to comply with the registration and other
requirements of the 1940 Act, which would be significantly burdensome for Goran.
This constraint makes it unlikely that Goran would approve a stock issuance by
the Company that reduces the Company's ownership below 50% and therefore would
likely limit the amount of additional capital which can be raised by the Company
through the issuance of voting securities. Among other consequences, such a
limit could affect the Company's ability to raise funds for acquisition
opportunities which may become available to the Company or to GGS Holdings.
Conflicts of Interest
Conflicts of interest between the Company and Goran could arise with
respect to business dealings between them, including potential acquisitions of
businesses or properties, the issuance of additional securities, the election of
new or additional directors and the payment of dividends by the Company. Of the
seven directors of the Company, five are current directors of Goran (three of
whom are members of the Symons family). The Company has not instituted any
formal plan or arrangement to address potential conflicts of interest that may
arise between the Company and Goran.
Conflicts of interest similar to those which could arise between the
Company and Goran could also arise between each of the Company, Goran and GGS
Holdings. Alan G. Symons, President and Chief Executive Officer of Goran and
Chief Executive Officer of the Company, and Douglas H. Symons, Vice President
and Chief Operating Officer of the Goran and President and Chief Operating
Officer of the Company, also serve as the Chief Executive Officer and President,
17
<PAGE>
and Executive Vice President, respectively, of GGS Holdings. Such individuals
have entered into employment agreements with GGS Holdings requiring them to
devote substantially all of their working time and attention to the business and
affairs of GGS Holdings. Further, Alan G. Symons and certain other members of
management of Goran have received options to purchase shares of common stock of
GGS Holdings. In addition, in the event that the Company does not continue to
own at least 50% of the outstanding voting securities of GGS Holdings and the
voting securities of GGS Holdings owned by the Company, together with any other
investment securities, represent over 40% of the total assets of the Company on
an unconsolidated basis, the Company will be exposed to a risk that it would be
characterized as an investment company within the meaning of the 1940 Act. This
consideration will limit the amount of additional capital which can be raised
through the issuance by GGS Holdings of its voting securities.
Dependence on Key Personnel in Connection with Future Success
The future success of the Company depends significantly upon the
efforts of certain key management personnel including G. Gordon Symons, Chairman
of the Board of the Company, Alan G. Symons, Chief Executive Officer of the
Company, Douglas H. Symons, President and Chief Operating Officer of the Company
and President and Chief Executive Officer of Pafco, Dennis G. Daggett, President
and Chief Operating Officer of IGF, and Roger C. Sullivan, Jr., Executive Vice
President of Superior. A loss of any of these officers could adversely affect
the Company's business.
Possible Liabilities Relating to Transactions
Prior to the offering, the Company entered into a number of
transactions, including the Acquisition and certain other related transactions
(collectively, the "Transactions"). The application of the tax laws to the
factual circumstances relating to certain aspects of the Transactions is
uncertain. The Company cannot predict with certainty whether or when any such
liabilities might arise. Accordingly, the Company's results of operations in one
or more future periods could be materially adversely affected by liabilities
relating to the Transactions. Goran has agreed to indemnify the Company against
any of the foregoing liabilities.
Trading of Common Stock of the Company
The market price of the Common Shares may be significantly affected by
trading in the shares of Common Stock of the Company on the NASDAQ National
Market since the Company currently constitutes a substantial majority of the
consolidated total assets of Goran and contributes a substantial majority of the
consolidated net income of Goran. In addition, factors such as quarterly
variations in the Company's financial results, announcements by the Company,
Goran or others and developments affecting the Company or Goran could cause the
market price of the Common Shares to fluctuate significantly.
18
<PAGE>
Shares Eligible For Future Sale
Sales of substantial amounts of Common Shares in the public market
could adversely affect prevailing market prices for the Common Shares and may
also affect the Company's future ability to raise additional capital in the
equity markets at a time and a price favorable to the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the offer and sale of
Common Shares by selling security holders pursuant to this Prospectus.
DETERMINATION OF OFFERING PRICE
Common Shares offered pursuant to this Prospectus will be sold by
certain affiliates of the Company as determined by them in their discretion.
SELLING SECURITY HOLDERS; PLAN OF DISTRIBUTION
The Common Shares offered pursuant to this Prospectus are being sold by
certain selected employees and directors of the Company or other persons who
have acquired, or will acquire, such shares under the Symons International
Group, Inc. 1996 Stock Option Plan. The names of selected employees or directors
of the Company or other persons who may be selling shareholders from time to
time are listed below. The shares may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The shares may be sold by one or more of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) an exchange distribution in accordance with the rules of such exchange; and
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
selling shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from selling shareholders and/or the purchasers of the
Common Shares. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the 1933 Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 other than pursuant to this Prospectus.
Upon the Company being notified by a selling shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchaser by a broker or dealer, a
19
<PAGE>
supplemented prospectus will be filed, if required, pursuant to Rule 424(c)
under the 1933 Act, disclosing (i) the name of each such selling shareholder and
of the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Common Shares offered hereby may not
simultaneously engage in market making activities with respect to the Common
Shares. In addition, and without limiting the foregoing, each selling
shareholder will be subject to applicable provisions of the 1934 Act and the
rules and regulations thereunder, including, without limitation, Rule 10b-5,
which provisions may limit the timing of purchases and sales of the Common
Shares by the selling shareholder.
The Company is permitted to suspend the use of this Prospectus in
connection with sales of the Common Shares by holders during certain periods of
time under certain circumstances relating to pending corporate developments and
public filings with the Commission and similar events. Expenses of preparing the
filing the registration statements and all post-effective amendments will be
borne by the Company. The following table sets forth information with respect to
certain of the selling shareholders.
<TABLE>
<CAPTION>
Name of Selling Common Stock to Percentage of
Shareholder and Number of be Owned After Common Stock
Position With the Shares Shares Subject Exercise of Owned After
Company Owned(1) to Option Option Exercise of Option
- ------------------------ ------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
G. Gordon Symons,
Chairman 444,900(1a) 434,900 444,900 4.3%
Alan G. Symons,
CEO 288,500(2) 264,900 288,500 2.7%
Douglas H.
Symons, President
and COO 158,300(3) 137,800 158,300 1.5%
David L. Bates,
Vice President,
General Counsel
and Secretary 20,750(4) 13,750 20,750 Less than 1%
Gary P. Hutchcraft,
Vice President,
CFO and Treasurer 17,000(5) 14,500 17,000 Less than 1%
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Name of Selling Common Stock to Percentage of
Shareholder and Number of be Owned After Common Stock
Position With the Shares Shares Subject Exercise of Owned After the
Company Owned (1) to Option Option Exercise of Option
- ------------------------ ------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Dennis G. Daggett,
President, COO of
IGF Insurance
Company 26,500(6) 26,500 26,500 Less than 1%
Thomas F. Gowdy,
Executive Vice
President, IGF
Insurance Company 26,000(7) 26,000 26,000 Less than 1%
Roger C. Sullivan,
Executive Vice
President, Superior
Insurance Company 18,000(8) 18,000 18,000 Less than 1%
Robert C. Whiting,
Director 10,000(9) 5,000 10,000 Less than 1%
James G. Torrance,
Director 7,000(9) 5,000 7,000 Less than 1%
David R. Doyle,
Director 7,000(9) 5,000 7,000 Less than 1%
John K. McKeating,
Director 7,000(9) 5,000 7,000 Less than 1%
Jerome B. Gordon,
Director 5,000(9) 5,000 5,000 Less than 1%
J. Ross Schofield,
Director of Goran
Capital Inc. 3,000(10) 3,000 3,000 Less than 1%
David B. Shapira,
Director of Goran
Capital Inc. 3,000(10) 3,000 3,000 Less than 1%
Ronald Chapman,
Employee, Symons
International Group,
Inc. - Florida 5,000(9) 5,000 5,000 Less than 1%
Elizabeth N.
Symons, Employee,
Symons
International Group,
Inc. - Florida 6,333(10a) 5,000 6,333 Less than 1%
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Name of Selling Common Stock to Percentage of
Shareholder and Number of be Owned After Common Stock
Position With the Shares Shares Subject Exercise of Owned After the
Company Owned (1) to Option Option Exercise of Option
- ------------------------ ------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Terry E. Diers,
Vice President,
Marketing 1,500(11) 1,500 1,500 Less than 1%
John L. Mason,
Treasurer, IGF
Insurance Company 4,000(12) 4,000 4,000 Less than 1%
Carol Sorvik,
Employee, IGF
Insurance Company 2,000(13) 2,000 2,000 Less than 1%
Pamela S. Staal,
Employee 500(14) 500 500 Less than 1%
Tina Lamb,
Employee 500(14) 500 500 Less than 1%
Brian Donoho,
Employee, IGF
Insurance Company 2,000(13) 2,000 2,000 Less than 1%
David Rogers,
Employee, IGF
Insurance Company 1,500(11) 1,500 1,500 Less than 1%
Steven Wilson,
Employee, IGF
Insurance Company 1,500(11) 1,500 1,500 Less than 1%
Steve Griffin,
Employee, IGF
Insurance Company 1,200(15) 1,200 1,200 Less than 1%
Eric Pugh,
Employee, IGF
Insurance Company 1,500(11) 1,500 1,500 Less than 1%
Floyd Crain,
Employee, IGF
Insurance Company 500(14) 500 500 Less than 1%
Laura Britton,
Employee, IGF
Insurance Company 200(16) 200 200 Less than 1%
Debbie Rubadou,
Employee, Superior
Insurance Company 1,000(17) 1,000 1,000 Less than 1%
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Name of Selling Common Stock to Percentage of
Shareholder and Number of be Owned After Common Stock
Position With the Shares Shares Subject Exercise of Owned After the
Company Owned (1) to Option Option Exercise of Option
- ------------------------ ------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Jack Stone,
Employee, Superior
Insurance Company 1,000(17) 1,000 1,000 Less than 1%
Bill Collins,
Employee, Superior
Insurance Company 1,000(17) 1,000 1,000 Less than 1%
Doug Markel,
Employee, Superior
Insurance Company 1,000(17) 1,000 1,000 Less than 1%
Mark Gozdecki,
Employee, Pafco
General Insurance
Company 1,000(17) 1,000 1,000 Less than 1%
Gloria Lukanchoff,
Employee, Goran
Capital Inc. 750(18) 750 750 Less than 1%
</TABLE>
(1) Includes common shares subject to options some of which for certain
individuals have not yet vested and therefore are not exercisable
within 60 days of the date hereof, although such shares are not
"beneficially" owned within the meaning of Section 13(3) of the
Exchange Act.
(1a) Includes 434,900 shares issuable upon exercise of options.
(2) Includes 264,900 shares issuable upon exercise of options.
(3) Includes 137,800 shares issuable upon exercise of options.
(4) Includes 13,750 shares issuable upon exercise of options.
(5) Includes 14,500 shares issuable upon exercise of options.
(6) Includes 26,500 shares issuable upon exercise of options.
(7) Includes 26,000 shares issuable upon exercise of options.
(8) Includes 18,000 shares issuable upon exercise of options.
(9) Includes 5,000 shares issuable upon exercise of options.
(10) Includes 3,000 shares issuable upon exercise of options.
(10a) Includes 3,333 shares issuable upon exercise of options.
(11) Includes 1,500 shares issuable upon exercise of options.
(12) Includes 4,000 shares issuable upon exercise of options.
(13) Includes 2,000 shares issuable upon exercise of options.
(14) Includes 500 shares issuable upon exercise of options.
(15) Includes 1,200 shares issuable upon exercise of options.
(16) Includes 200 shares issuable upon exercise of options.
(17) Includes 1,000 shares issuable upon exercise of options.
(18) Includes 750 shares issuable upon exercise of options.
23
<PAGE>
An aggregate of up to 1,000,000 shares of Common Shares may be offered
and sold pursuant to this Prospectus by the selling shareholders.
LEGAL MATTERS
The valid issuance of the Common Shares offered hereby and certain other
legal matters will be passed upon for the Company by David L. Bates, General
Counsel of the Company.
EXPERTS
The consolidated balance sheets of the Company, as of December 31, 1996
and 1995 and the related consolidated statements of operations, earnings
(deficits) and changes in cash resources and cash flows for each of the years in
the three-year period ended December 31, 1996, have been examined by Coopers &
Lybrand, L.L.P., certified public accountants. Such financial statements have
been incorporated by reference herein and in the Registration Statement in
reliance upon the reports with respect thereto of Coopers & Lybrand, L.L.P. and
upon the authority of said firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are hereby incorporated by reference into this
Prospectus:
(1) The annual report on Form 10-K of the Company for the fiscal
year ended December 31, 1996.
(2) All other reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the
Company since December 31, 1996.
(3) The description of the capital stock of the Company contained
in the Registrant's Registration Statement on Form 8-A, which
was filed with the Commission on October 25, 1996, and all
amendments of reports filed for the purpose of updating such
description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Prospectus and to be a part
thereof from the date they are filed.
24
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
Document(s) containing information specified by Part I of the form of
Registration Statement on Form S-8, promulgated under the Securities Act of
1933, as amended (the "1933 Act"), will be sent or given to participants in the
Symons International Group, Inc. 1996 Stock Option Plan (the "PLAN") as
specified in Rule 428(b)(1) promulgated by the Securities and Exchange
Commission (the "Commission") under the 1933 Act. Such document(s) are not being
filed with the Commission but constitute (along with the documents incorporated
by reference into this Form S-8 Registration Statement (the "Registration
Statement") pursuant to Item 3 of Part II hereof), a prospectus that meets the
requirements of Section 10(a) of the 1933 Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are hereby incorporated by reference into this
Registration Statement.
(1) The annual report on Form 10-K of the Company for the fiscal
year ended December 31, 1996;
(2) All other reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the
Company since December 31, 1996, including the quarterly
reports of the Company on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997; and
(3) The description of the capital stock of the Registrant
contained in the Registrant's Registration Statement on Form
8-A, which was filed with the Commission on October 25, 1996,
and all amendments of reports filed for the purpose of
updating such description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Registration Statement and
to be a part thereof from the date they are filed.
S-1
<PAGE>
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
David L. Bates, Vice President, General Counsel and Secretary of the
Company, owns less than 1% of the Common Shares of the Company.
Item 6. Indemnification of Directors and Officers.
The Indiana Business Corporation Law grants authorization to Indiana
corporations to indemnify officers and directors for their conduct if such
conduct was in good faith and was in the corporation's best interests or, in the
case of directors, was not opposed to such best interests, and permits the
purchase of insurance in this regard. In addition, the shareholders of a
corporation may approve the inclusion of other or additional indemnification
provisions in the articles of incorporation and by-laws.
The By-Laws of the Company provide for the indemnification of any
person made a party to any action, suit or proceeding by reason of the fact that
he is a director, officer or employee of the Company, unless it is adjudged in
such action, suit or proceeding that such person is liable for negligence or
misconduct in the performance of his duties. Such indemnification shall be
against the reasonable expenses, including attorney's fees, incurred by such
person in connection with the defense of such action, suit or proceeding. In
some circumstances, the Company may reimburse any such person for the reasonable
costs of settlement of any such action, suit or proceeding if a majority of the
members of the Board of Directors not involved in the controversy shall
determine that it was in the interests of the Company that such settlement be
made and that such person was not guilty of negligence or misconduct.
The above discussion of the Company's By-Laws and the Indiana Business
Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such By-Laws and the Indiana Business Corporation Law.
As permitted by the Indiana Business Corporation Law, the stockholders
of the Registrant have approved an amendment to its Articles of Incorporation
containing provisions eliminating a director's personal liability for monetary
damages to the Registrant and its stockholders arising from a breach of a
director's fiduciary duty except for liability under IC 23-1-37-12 of the
Indiana Business Corporation Law or liability for any breach of the director's
duty of loyalty to the Registrant or its stockholders, or acts or omissions not
in good faith or which involves intentional misconduct or a knowing violation of
law or for any transaction from which the director derived an improper personal
benefit. The amendment also provides for indemnification of directors, officers
and other persons under certain circumstances.
S-2
<PAGE>
The Registrant maintains policies of insurance under the Registrant and
its directors and officers are insured subject to specified exclusions and
deductible and maximum mounts against loss arising from any claim which may be
made against the Registrant or any director or officers of the Registrant by
reason of any breach of duty, neglect, error, misstatement, omission or act done
or alleged to have been done while acting in their respective capacities.
Item 7. Exemption from Registration Claimed.
The Common Shares which were acquired prior to the date of filing of
this S-8 with the Commission to be reoffered pursuant to the Reoffer Prospectus
were acquired pursuant to options granted under the Plan in transactions not
involving any public offering. Accordingly, such Common Shares were acquired in
private placements which were exempt from registration under Section 4(2) of the
1933 Act.
Item 8. Exhibits.
The exhibits furnished with the Registration Statement are listed on
Page E-7.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes, (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act; (ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement; provided, however, that clauses
(a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those clauses is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the 1934 Act that are
incorporated by reference in the Registration Statement; (2) that, for the
purpose of determining any liability under the 1933 Act, each such
post-effective amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
S-3
<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
S-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis, and the State of Indiana, on this 20th
day of January, 1998.
SYMONS INTERNATIONAL GROUP, INC.
By: /s/ Alan G. Symons
Alan G. Symons
Chief Executive Officer
Each person whose signature appears below hereby severally constitutes
and appoints Alan G. Symons, Douglas H. Symons and David L. Bates and each of
them, as attorney-in-fact for the undersigned, in any and all capacities, with
full power of substitution, to sign any amendments to this Registration
Statement (including post-effective amendments) and any subsequent registration
statement filed by the Registrant pursuant to Rule 462(b) of the Securities Act
of 1933, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each said attorney-in-fact,
or any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
(1) Principal Executive Officer:
/s/ Alan G. Symons Chief
Alan G. Symons Executive Officer January 20, 1998
(2) Principal Financial and Accounting Officer:
/s/ Gary P. Hutchcraft Vice President and
Gary P. Hutchcraft Chief Financial Officer January 20, 1998
and Treasurer
S-5
<PAGE>
(3) The Board of Directors
/s/ G. Gordon Symons Director January 20, 1998
G. Gordon Symons
/s/ Alan G. Symons Director January 20, 1998
Alan G. Symons
/s/ Douglas H. Symons Director January 20, 1998
Douglas H. Symons
/s/ John K. McKeating Director January 20, 1998
John K. McKeating
/s/ James G. Torrance Director January 20, 1998
James G. Torrance
/s/ Robert C. Whiting Director January 20, 1998
Robert C. Whiting
/s/ David R. Doyle Director January 20, 1998
David R. Doyle
/s/ Jerome B. Gordon Director January 20, 1998
Jerome B. Gordon
S-6
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
5 Opinion of David L. Bates
10.20 Symons International Group, Inc. 1996 Stock Option Plan*
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of David L. Bates (included as part of Exhibit 5)
24 Power of Attorney (included on Page S-5 of the Registration
Statement)
* Incorporated by reference to the similarly designated exhibit to the
Registration Statement of Symons International Group, Inc. on S-1, Registration
No. 333-9129
E-7
Exhibit 5
January 21, 1998
Symons International Group, Inc.
4720 Kingsway Drive
Indianapolis, Indiana 46205
Gentlemen:
You have requested my opinion in connection with the Registration Statement
on Form S-8 (the "Registration Statement") of Symons International Group, Inc.
(the "Corporation"), relating to the offer and sale of up to 1,000,000 common
shares of the Corporation (the "Common Shares") under the Symons International
Group, Inc. 1996 Stock Option Plan approved by the Corporation's Board of
Directors on November 1, 1996, and by the Corporation's shareholders on November
1, 1996 (the "Plan"). In connection with your request, I have made such
examination of the corporate records and proceedings of the Corporation and
considered such questions of law and taken such further action as I deemed
necessary or appropriate to enable me to render this opinion.
Based upon such examination, I am of the opinion that when the Common
Shares have been purchased and the purchase price therefor has been paid in
accordance with the Plan, and when the Corporation has complied with the
Securities Act of 1933, as amended, and with the securities laws of all
jurisdiction in which Common Shares are to be sold pursuant to the exercise of
stock options or stock appreciation rights granted under the Plan, the Common
Shares will be legally issued, fully paid and nonassessable.
I consent to the filing of this opinion as Exhibit 5 to the Registration
Statement. In giving this consent, however, I do not admit that I am in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the Rules and Regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ David L. Bates
Vice President, General
Counsel and Secretary
E-8
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Symons International Group, Inc. on Form S-8 (File No. 0-0000) of our report
dated March 21, 1997, on our audits of the consolidated financial statements and
financial statement schedules of Symons International Group, Inc. as of December
31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994,
which was included in the 1996 annual report to shareholders and incorporated by
reference in the Annual Report on Form 10-K (File No. 2-9042) for the year ended
December 31, 1996. We also consent to the reference to our firm under the
caption "Experts".
/s/ Coopers & Lybrand, L.L.P.
Indianapolis, Indiana
January 21, 1998
E-9
