<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ACCEL INTERNATIONAL CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
ACCEL INTERNATIONAL CORPORATION
12603 SOUTHWEST FREEWAY, SUITE 315
STAFFORD, TX 77477
(281) 565-8010
April 29, 1998
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 9:00 A.M., local time, on Tuesday, June 16, 1998, at the La Quinta Inn,
12727 Southwest Freeway, Stafford, TX. Formal notice of the Annual Meeting and
the Proxy Statement are attached. I hope that you will be able to attend and
participate in the meeting, at which time we will have the opportunity to review
the business and operations of the Company.
The matters to be acted upon by our stockholders are set forth in the attached
Notice of Annual Meeting. It is important that your shares be represented and
voted at the meeting, whether or not you are personally able to attend.
Accordingly, after reading the attached Proxy Statement, would you kindly sign,
date and return the enclosed proxy card.
Sincerely yours,
/s/ Thomas H. Friedberg
Thomas H. Friedberg
Chairman of the Board,
President, & Chief Executive Officer
<PAGE> 3
ACCEL International Corporation
12603 SOUTHWEST FREEWAY, SUITE 315
STAFFORD, TX 77477
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 16, 1998
TO THE STOCKHOLDERS OF ACCEL INTERNATIONAL CORPORATION:
The Annual Meeting of Stockholders of ACCEL International Corporation (the
Company), a Delaware corporation, will be held at the La Quinta Inn, 12727
Southwest Freeway, Stafford, TX, 77477, on June 16, 1998, at 9:00 A.M., to
consider and vote on the following matters described in the attached Proxy
Statement:
1. The election of nine directors to serve for a one-year term.
2. A proposal to approve the adoption of amendments to the 1996 Stock
Incentive Plan.
3. The transaction of such other business as may properly come before the
meeting, or any adjournments thereof.
April 24, 1998 has been fixed as the record date for determining stockholders
entitled to notice of and to vote at the Annual Meeting. Only stockholders of
record at the close of business on that date are entitled to receive notice of
and to vote at the meeting or any adjournments thereof. A complete list of
stockholders entitled to vote at the meeting will be available for examination
by any stockholder at the Company's offices from June 2, 1998 until the day
before the Annual Meeting.
By Order of the Board of Directors
Nicholas Z. Alexander, Secretary
Stafford, Texas
April 29, 1998
IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, WE URGE YOU TO SIGN AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ADDRESSED ENVELOPE WHICH IS INTENDED FOR YOUR
CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.A. THE PROXY IS
REVOCABLE AT ANY TIME AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE
EVENT YOU ATTEND THE MEETING.
<PAGE> 4
ACCEL International Corporation
12603 SOUTHWEST FREEWAY, SUITE 315
STAFFORD, TX 77477
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 16, 1998
FURNISHED BY THE BOARD OF DIRECTORS OF THE COMPANY
April 29, 1998
The Board of Directors of ACCEL International Corporation (the Company), a
Delaware corporation, is soliciting proxies, the form of which is enclosed, for
the Annual Meeting of Stockholders to be held on June 16, 1998. The cost of such
solicitation will be borne by the Company. Officers, directors and regular
employees of the Company may communicate with stockholders personally or by
mail, telephone, telegram or otherwise for the purpose of soliciting such
proxies, but the Company will pay no additional compensation for such
solicitation. The Company and any authorized agent of the Company will request
brokers and other custodians, nominees and fiduciaries to forward proxy
soliciting material to the beneficial owners of shares held of record by such
persons and will reimburse the reasonable out-of-pocket expenses in forwarding
such material. This Proxy Statement is being mailed on or about April 30, 1998.
Any stockholder giving a proxy has the power to revoke it at any time before it
is voted by a later appointment received by the Secretary of the Company or by
giving notice of such revocation to the Secretary of the Company in writing or
in open meeting. All duly executed proxies received prior to the meeting and not
revoked will be voted at the meeting. The enclosed proxy contains space in which
the stockholder may insert instructions as to the way the stockholder wishes his
shares to be voted. When such proxy is properly executed and returned, the
shares it represents will be voted at the meeting as directed. If no
specification is indicated, the shares will be voted For the election as
directors of the nominees listed below under Election of Directors and For the
Adoption of Amendments to the 1996 Stock Incentive Plan.
April 24, 1998 has been fixed as the record date for the determination of
stockholders entitled to such notice of and to vote at the Annual Meeting or any
adjournments thereof. On that date the total number of outstanding shares of the
Company entitled to vote at the meeting was 8,557,659 shares of Common Stock,
$.10 par value, (the Common Stock). The holder of each share of such stock is
entitled to one vote. Pursuant to applicable law, broker non-votes and
abstentions will not be counted in favor of or against the election of any
nominee for director or any other proposals to be presented at the meeting. Any
stockholder who abstains from voting on any such other proposal will in effect
be voting against it.
1. ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the number of directors has been
fixed at nine by action of the Board of Directors. Directors are elected
annually to serve until the next Annual Meeting of Stockholders, and until their
successors are elected and qualified. The election of directors is decided by a
plurality of the votes cast by the shares entitled to vote in the election. In
the absence of instructions to the contrary, it is the intention of the persons
named in the proxy to vote the proxies for the election as directors of the
persons nominated below. Although the Board of Directors has no reason to
believe that any of the nominees set forth below will not serve, in the event
that vacancies occur, the proxies will be voted for the election of such
nominees, if any, as shall be designated by the Board of Directors or a duly
authorized committee thereof.
1
<PAGE> 5
NOMINEES
TERM EXPIRES 1999
<TABLE>
<CAPTION>
Number of shares of
Common Stock
owned beneficially,
directly or indirectly,
Name, Position with the on January 31, 1998
Company and Age Principal Occupation for past five Director (except as otherwise Percent
(as of January 31, 1998) years/other Directorships Since noted) (1) of Class
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert Betagole President of Mike Albert Leasing, 1970 116,491 (5) 1.3%
Director, 69 Inc., Cincinnati, OH.
David T. Chase (2) President and Director of D.T. 1985 4,007,148 (6) 46.3%
Director, 68 Chase Enterprises, Inc., Hartford,
CT.
Douglas J. Coats Executive Vice President of the 1995 112,197 1.3%
Director, 65 Company since May 23, 1995.
Prior thereto he was Executive
Vice President of Ranger Insurance
Company, Houston, TX since
August, 1987.
Raymond H. Deck President of Chase Insurance 1990 242,287 2.8%
Director, 75 Enterprises, Inc., Hartford, CT.
(2)(3)(4) Also, is a director of SCOR U.S.
and Scor Re, New York, NY.
Richard Desich President of Mid-Ohio Securities 1997 38,350 *
Director, 58 Corp., Elyria, Ohio
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Number of shares of
Common Stock
owned beneficially,
directly or indirectly,
Name, Position with the on January 31, 1998
Company and Age Principal Occupation for past five Director (except as otherwise Percent
(as of January 31, 1998) years/other Directorships Since noted) (1) of Class
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas H. Friedberg (2) Chairman of the Board and Chief 1995 382,478 4.4%
President, 59 Executive Officer of the Company
Chief Executive since May 23, 1995. Appointed
Officer and Director President as of October 15, 1995.
Prior thereto he was Chairman of
the Board, President and Chief
Executive Officer of Ranger
Insurance Company, Houston, TX,
since January, 1987. Previously
served as a Director of the
Company from 1990 to March
1995.
Kermit G. Hicks President of Hicks Chevrolet, Inc., 1981 64,314 (7) *
Director, 62 Greencastle, PA. Also, Chairman
(2)(3)(4) of the Board of Tower Bancorp
Inc., and its wholly owned
subsidiary First National Bank of
Greencastle.
Stephen M. Qua President of Qua Buick/Suzuki, 1970 41,313 *
Director, 65 Inc. Cleveland, OH.
(2)(3)(4)
John P. Redding Senior Vice President, David T. 1997 -- --
Director, 39 Chase Enterprises, Inc., Hartford,
CT
All Directors and Officers as a group (13 persons) 5,058,332 (8) 56.6%
</TABLE>
3
<PAGE> 7
- -----------------
(1) On January 31, 1998, there were 8,649,763 shares of the Company's Common
Stock issued and outstanding. Except as noted, includes shares owned by
spouse, minor children or certain other family members, or held as
custodian or trustee for the benefit of spouse or children, or owned by
corporations of which such person is an officer or principal stockholder,
over which shares such directors have sole or shared voting or investment
power. With respect to the Directors, includes an aggregate of 252,500
shares which are subject to immediately exercisable options. Of the 252,500
shares subject to options, the following Directors have options to purchase
the number of shares indicated after their names: Mr. Betagole, 6,500; Mr.
Chase, 6,500; Mr. Coats, 105,000; Mr. Deck, 6,500; Mr. Desich, 0; Mr.
Friedberg, 115,000; Mr. Hicks, 6,500; Mr. Qua, 6,500; and Mr. Redding, 0.
(2) Member of Executive Committee (Mr. Friedberg, Chairman).
(3) Member of Audit Committee (Mr. Qua, Chairman).
(4) Member of Compensation Committee (Mr. Deck, Chairman).
(5) Includes 16,371 shares as to which Mr. Betagole disclaims beneficial
ownership.
(6) See footnotes (2) and (5) at pages 12 and 13 herein.
(7) Includes 9,696 shares as to which Mr. Hicks claims beneficial ownership on
an indirect basis.
(8) This amount includes 30,064 shares which are subject to immediately
exercisable options (other than for Messrs. Friedberg and Coats included in
(1) above), and 17,365 shares owned by all officers in their Acceleration
Retirement Savings and Stock Ownership Plan accounts as of December 31,
1997.
* Less than 1% of outstanding Common Stock.
4
<PAGE> 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the Exchange Act) requires
the Company's officers and directors, and persons who own more than 10% of the
Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the SEC). Officers, directors and greater
than 10% stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it or written
representations from certain reporting persons that no Forms 5 were required of
them, the Company believes that during the fiscal year ended December 31, 1997,
all filing requirements applicable to its officers, directors and greater than
10% stockholders were complied with, except for one transaction filed late by
Mr. Desich.
THE BOARD OF DIRECTOR
COMMITTEES, MEETINGS AND FUNCTIONS
The Board of Directors of the Company met five (5) times during 1997. No
director attended fewer than 75% of the total number of meetings of directors
and of any committees on which he served. The Board of Directors has established
an Executive Committee, an Audit Committee and a Compensation Committee. It does
not have a Nominating Committee.
The Executive Committee, which exercises the powers of the Board of Directors
between regular meetings of the Board, did not meet during 1997. The membership
of the Executive Committee consists of Messrs. Friedberg, Chase, Deck, Hicks and
Qua. The Audit Committee met one (1) time during 1997 to review the results of
the audit of the Company's 1996 financial statements by the independent
auditors, review the scope of the 1997 audit, consider relevant matters
pertaining to internal controls and accounting procedures, perform other
customary functions of Audit Committees, and to make a recommendation to the
Board of Directors on the engagement of independent auditors for fiscal year
1997. The membership of the Audit Committee consists of Messrs. Qua, Deck and
Hicks.
The Compensation Committee met one (1) time during 1997 for the purpose of
reviewing employee compensation and benefit arrangements. The membership of the
Compensation Committee consists of Messrs. Deck, Hicks and Qua. The Report of
the Compensation Committee is contained below.
COMPENSATION OF DIRECTORS
- -------------------------
During 1997, non-employee directors of the Company continued to receive the
reduced compensation levels initiated in 1993, and accordingly received an
annual retainer of $5,000 plus a fee of $500 per meeting for attending any
regular or special meetings of the Board of Directors. The members of each
committee of the Board of Directors, other than officers of the Company,
received a fee of $500 for each meeting attended. Chairmen of committees
received a fee of $750 for each meeting attended.
5
<PAGE> 9
The First Restatement of the ACCEL International Corporation 1987 Stock
Incentive Plan (the Restated Plan) provides for options to be granted every year
to non-employee directors of the Company for a predetermined number of shares of
Common Stock. In 1991, the year the Restated Plan was adopted, the non-employee
directors were granted options for 2,000 shares each. In subsequent years,
options for 1,000 shares each were granted and will continue to automatically be
granted according to the Restated Plan (subject to adjustment for stock
dividends, stock splits and other similar events). Newly appointed or elected
non-employee directors are granted options for 2,000 shares in the year they are
appointed or elected, and thereafter will receive the automatic grants. The
exercise price is equal to the fair market value of a share of stock on the date
the option is granted. Options become exercisable as to 50% of the shares
subject to the option on completion of each full year prior to termination of
the director's status as director after the date the option was granted. The
options lapse on the earliest of the date 10 years after the option was granted,
or the date 180 days after the termination of the director's status as director.
The options shall fully vest and become completely exercisable upon the death or
voluntary retirement of a director. The provisions of the 1996 Stock Incentive
Plan (the 1996 Plan) adopted in 1996, are substantially identical to the
Restated Plan pertaining to non-employee directors.
COMPENSATION COMMITTEE
- ----------------------
Executive Compensation including the grant of stock options is determined by the
Compensation Committee of the Board of Directors. The formal policy previously
established by the Compensation Committee was continued with respect to 1997
compensation as follows:
REPORT OF THE COMPENSATION COMMITTEE
The Company's compensation package for its executive officers consists of base
salary, participation in a profit sharing plan for senior officers, and periodic
stock option grants or awards. The base salary for Mr. Friedberg, the Chairman
of the Board, President and Chief Executive Officer, is fixed by the Committee
and may be adjusted as determined periodically by the Committee after a
performance review is conducted. As of June 1, 1996, the Committee had
formulated a compensation arrangement for Mr. Friedberg to include base salary
and authorize a stock option to be granted. A similar compensation arrangement
was approved for Mr. Coats on the recommendation of Mr. Friedberg. Base salary
levels for all other executive officers are determined by Mr. Friedberg and
recommended to the Committee. The amount of profit sharing compensation and
stock option grants or awards, if any, are also determined by this Committee.
Based on Mr. Friedbergs experience and performance, the Committee established a
total aggregate annual compensation level for Mr. Friedberg of $350,000, subject
to an annual review, with an allocation of the $350,000 between cash
compensation and stock options to be determined annually by the Committee. The
stock options granted for this purpose are valued by calculating the difference
between the book value and market value per share as of the date of grant. The
annual review takes into account Company performance, comparative industry data
and various subjective considerations of individual performance as well as
corporate goals. For 1997, cash compensation was set at $275,000, and stock
options were awarded based on the approximate difference between book and market
value.
The Committee believes that a significant or meaningful portion of total cash
compensation should be related to profitability and the achievement of fixed
objectives. Consequently, the profit sharing potential for the Company's
executive officers is conditioned on overall corporate performance
(profitability), and achieving individual and departmental objectives tied to a
percentage of total base salary.
6
<PAGE> 10
Generally speaking, base salary levels are set and adjusted at levels which are
part of the Company's budgetary process, yet are believed by the Committee to be
sufficient to attract and retain qualified executives when considered with the
other components of the Company's compensation structure.
In previous years, profit sharing plans had been adopted for all employees of
the Company and for senior officers. The overall objectives for establishing the
Company's incentive compensation programs were to enhance total compensation
without adding fixed expense, modify the corporate reward systems and give
managers the discretion to reward contributors, better focus management's
attention on the achievement of objectives and drive accountability to all
levels of the Company, and foster teamwork.
For 1997, no profit sharing goal was set for employees and senior officers.
Accordingly, no profit sharing compensation was paid to any employees or senior
officers in 1997.
In addition to approving an ACCEL Bonus Plan, the Compensation Committee
determines annual stock option grants or awards to executive officers and other
eligible employees. Stock options are intended to encourage key employees to
remain employed by the Company by providing them with a long-term interest in
the Company's overall performance as reflected by the performance of the market
of the Company's Common Stock.
Raymond H. Deck, Chairman Kermit G. Hicks, Member Stephen M. Qua, Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
Mr. Qua is associated with two automobile dealerships which, during the year
ended December 31, 1997, were master policyholders of the Company and received
commissions from the Company in connection with credit insurance sold by such
dealerships. During the fiscal year ended December 31, 1997, such dealerships
received commissions in the amount of $30,136.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY
- -------
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's current Chief
Executive Officer, Executive Vice President, and each of the Company's other
most highly compensated executive officers whose total annual salary and bonus
for the fiscal year ended December 31, 1997, exceeded $100,000 (the named
executives) during each of the last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- ----------------------------------------------------------------------------------------------------------------
Securities All Other
Year Name , Age, and Principal Position Salary Bonus Underlying Compensation
($) ($) Options/SARs (#) ($) (1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 Thomas H. Friedberg, 59 (2) 275,000 -- 60,000 14,300
1996 Chairman of the Board, President 140,000 -- 110,000 2,183
1995 and Chief Executive Officer -- -- 100,000 --
- ----------------------------------------------------------------------------------------------------------------
1997 Douglas J. Coats, 65 (2) 137,500 -- 30,000 12,980
1996 Executive Vice President. President, 71,250 -- 55,000 2,611
1995 Acceleration National Insurance Co. -- -- 50,000 --
- ----------------------------------------------------------------------------------------------------------------
1997 Nicholas Z. Alexander, 62 119,600 -- 10,000 11,514
1996 Senior Vice President, 115,000 -- 10,000 8,628
1995 Secretary and General Counsel 109,000 -- 10,000 4,093
- ----------------------------------------------------------------------------------------------------------------
1997 Bryce E. Farmer, 47 (3) 109,200 -- 10,000 3,151
1996 Senior Vice President 97,125 -- 10,000 318
1995 Administration -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
1997 William E. Merritt, Jr., 63 (4) 107,362 -- 10,000 10,243
1996 Senior Vice President 60,480 -- -- 3,067
1995 Claims -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents approximate amounts contributed on behalf of each such executive
to the Acceleration Retirement Savings and Stock Ownership Plan.
(2) Mr. Friedberg was appointed Chairman of the Board and Chief Executive
Officer of the Company on May 23, 1995, and was named President in October,
1995. Mr. Coats was appointed Executive Vice President of the Company and
President of Acceleration National Insurance Company on May 23, 1995. They
served without salary for the first year of employment. In lieu of salary,
they were granted stock options for 100,000 shares and 50,000 shares,
respectively, of Common Stock, which options vested immediately, became
exercisable one year following the date of grant, and will lapse five years
from the date of grant. As of June 1, 1996, the Compensation Committee of
the Board of Directors commenced a salary and stock option compensation
arrangement for Mr. Friedberg and Mr. Coats. Continuing the arrangement for
1997, the indicated salary levels were agreed to and Mr. Friedberg was
granted an option for 60,000 shares and Mr. Coats was granted an option for
30,000 shares. Except for the exercise price, which was $2.75 per share,
the terms of the options were the same as for the options previously
granted.
(3) Mr. Farmer commenced employment with the Company on February 5, 1996.
(4) Mr. Merritt commenced employment with the Company on June 7, 1996.
8
<PAGE> 12
The following table sets forth information concerning individual grants of
options to purchase the Company's Common Stock made to the named executives in
1997:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
INDIVIDUAL GRANTS IN 1997 at Assumed Annual Rates
of Stock Price Appreciation
for Option Term
- -----------------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options Exercise or
Options/ Granted to Base Price Expiration
Name SARs Employees in ($ Sh) (1) Date 5% ($) 10% ($)
Granted (#) Fiscal Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Friedberg 60,000 30.3% $2.75 5/20/02 45,586 100,734
- -----------------------------------------------------------------------------------------------------------------------------------
Douglas J. Coats 30,000 15.1% $2.75 5/20/02 22,793 50,367
- -----------------------------------------------------------------------------------------------------------------------------------
Nicholas Z. Alexander 10,000 5.0% $2.75 5/20/07 17,295 43,828
- -----------------------------------------------------------------------------------------------------------------------------------
Bryce E. Farmer 10,000 5.0% $2.75 5/20/07 17,295 43,828
- -----------------------------------------------------------------------------------------------------------------------------------
William E. Merritt, Jr. 10,000 5.0% $2.75 5/20/07 17,295 43,828
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Market price of the Company's Common Stock on date of grant.
The following table sets forth certain information regarding individual
exercises of stock options during 1997 by each of the named executives:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------
Value
Shares Realized Number of Securities Value of Unexercised
Acquired (Mkt. Price Underlying Unexercised In-The-Money Options at
Name on at Exercise Options at Fiscal Year End (1)
Exercise Less Fiscal Year End (#)
(#) Exercise ----------------------------------------------------------------
Price) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Friedberg 0 N/A 115,000 60,000 108,075 52,500
- ------------------------------------------------------------------------------------------------------------------
Douglas J. Coats 0 N/A 105,000 30,000 118,125 26,250
- ------------------------------------------------------------------------------------------------------------------
Nicholas Z. Alexander 0 N/A 22,564 47,691 25,385 51,152
- ------------------------------------------------------------------------------------------------------------------
Bryce E. Farmer 0 N/A 2,500 17,500 2,813 17,188
- ------------------------------------------------------------------------------------------------------------------
William E. Merritt, Jr. 0 N/A 2,500 17,500 2,813 17,188
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Intended to represent the amount by which the market price of the Company's
Common Stock on December 31, 1997 ($3.625) exceeded the exercise prices of
unexercised options on that date.
9
<PAGE> 13
BENEFICIAL OWNERSHIP OF MANAGEMENT
- ----------------------------------
The following table sets forth certain information regarding the named
executive's beneficial ownership of the Common Stock of the Company as of
January 31, 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Shares of Common Stock of
Company Beneficially Owned
- ------------------------------------------------------------------------------------------------------
Title of Class Name of Officer Number (1) Percent of Class
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Common Stock Thomas H. Friedberg 382,478 4.4%
- ------------------------------------------------------------------------------------------------------
Common Stock Douglas J. Coats 112,197 1.3%
- ------------------------------------------------------------------------------------------------------
Common Stock Nicholas Z. Alexander 38,673 *
- ------------------------------------------------------------------------------------------------------
Common Stock Bryce E. Farmer 3,953 *
- ------------------------------------------------------------------------------------------------------
Common Stock William E. Merritt, Jr. 3,304 *
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts shown represent the total shares owned outright by such
individuals together with shares which are issuable upon the exercise of
all stock options which are currently exercisable. Specifically, the
following individuals have the right to acquire the shares indicated after
their names, upon the exercise of such stock option: Mr. Friedberg,
115,000; Mr. Coats, 105,000; Mr. Alexander, 22,564; Mr. Farmer, 2,500; and
Mr. Merritt, 2,500.
* Less than 1% of outstanding Common Stock.
CERTAIN RELATIONSHIPS
Several of the Company's directors are associated with automobile dealerships.
During the year ended December 31, 1997, these dealerships were master
policyholders of the Company and received commissions from the Company in
connection with credit insurance sold by them. All commissions paid to
automobile dealerships and agencies associated with the Company's directors were
at rates determined on a basis consistent with commissions paid to non-related
parties. Total commission on credit insurance business paid to all agencies
relating to all directors as a group during the year ended December 31, 1997 was
$30,136.
None of the Companys directors whose agencies received commissions in connection
with the credit insurance business of the Company exceeded $60,000 in amount of
commissions received during the year ended December 31, 1997. An insurance
agency of which Robert Betagole is a shareholder, received $678,769 through a
reinsurance arrangement.
10
<PAGE> 14
FINANCIAL PERFORMANCE
- ---------------------
The graph below summarizes the cumulative return experienced by the Company's
shareholders compared with the Russell 2,000 and NASDAQ Insurance Stocks.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
VS. RUSSELL 2000 AND NASDAQ INSURANCE STOCKS
(Performance results through 12/31/97)
Value of Investment ($)
[GRAPHIC]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ACCEL $100 $111 $52 $81 $81 $107
Russell 2000 $100 $119 $117 $150 $175 $214
NASDAQ Insurance Stocks $100 $107 $101 $143 $163 $239
- --------------------------------------------------------------------------------
</TABLE>
* $100 invested on 1/1/92 in stock or index including reinvestment of dividends.
Fiscal year ending December 31.
11
<PAGE> 15
SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of January 31, 1998
(except as otherwise noted) with respect to stockholders known to the Company to
be the beneficial owners of more than five percent (5%) of any class of the
Company's voting securities:
<TABLE>
<CAPTION>
Amount of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Ownership (1) of Class
<S> <C> <C> <C>
Common Stock David T. Chase 4,007,148 Shares (2) (5) 46.3%
D.T. Chase Enterprises, Inc.
One Commercial plaza
Hartford, CT 06103
Arnold L. Chase 1,167,824 Shares (3) 13.5%
D.T. Chase Enterprises, Inc.
One Commercial Plaza
Hartford, CT 06103
The Darland Trust 1,167,824 Shares (4) 13.5%
P.O. Box 472
St. Peters House, Le Bordage
Guernsey GYI 6AY
Channel Islands
Rhoda L. Chase 2,000,000 Shares (5) 23.1%
c/o Chase Enterprises, Inc.
One Commercial Plaza
Hartford, CT 06103
Spitzer Profit Sharing and 750,250 Shares (6) 8.7%
Savings Plan
150 E. Bridge Street
Elyria, OH 44035
</TABLE>
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(1) Except as otherwise noted, the Company has no reason to believe that any
beneficial owner listed above does not have sole voting and investment
power with respect to these shares.
(2) Includes 6,500 shares of Common Stock subject to immediately exercisable
options. According to a Schedule 13D filed with the Commission, Mr. David
T. Chase has, to the extent temporarily transferred to him, sole power to
vote and dispose of 1,000,000 shares of Common Stock loaned to him by his
wife, Rhoda L. Chase (the Rhoda Chase Borrowed Shares) and shares the power
to dispose or to direct the disposition of (i) 665,000 shares beneficially
owned by Rhoda L. Chase, (ii) 1,167,824 shares beneficially owned by his
son, Arnold L. Chase, and (iii) 1,167,824 shares beneficially owned by The
Darland Trust (the Trust), a trust whose beneficiaries are his daughter,
Cheryl A. Chase, and her children.
(3) According to a Schedule 13D filed with the Commission, Mr. Arnold L. Chase
shares the power to dispose or to direct the disposition of the 1,167,824
shares owned by him with Mr. David T. Chase and has the sole power to vote
or direct the vote of such shares. Such shares are also included in the
above table in Mr. David T. Chases shares.
12
<PAGE> 16
(4) According to a Schedule 13D filed with the Commission, the Trust shares the
power to dispose or to direct the disposition of the 1,167,824 shares owned
by it with Mr. David T. Chase and has the sole power to vote or direct the
vote of such shares. Such shares are also included in the above table in
Mr. David T. Chases shares.
(5) According to a Schedule 13D filed with the Commission, Rhoda L. Chase has
the sole power to vote or to direct the vote of all such shares except to
the extent that she may be deemed to have temporarily transferred the sole
power to vote or to direct the vote of (i) the 335,000 Rhoda Chase Borrowed
Shares to David T. Chase, and (ii) 335,000 shares of Common Stock (the
Partnership Shares) temporarily on loan to Insurance Holdings Limited
Partnership (the Partnership) to the Partnership. The general partner of
the Partnership is Chase Insurance Corporation (CIC). David T. Chase is the
President and a Director of CIC; Arnold L. Chase is an Executive Vice
President and Director of CIC; Cheryl A. Chase is an Executive Vice
President and Director of CIC, and John P. Redding is a Vice President of
CIC. Rhoda L. Chase shares the power to dispose or to direct the
disposition of 665,000 of the shares of Common Stock owned by her with
David T. Chase. Rhoda L. Chase has the sole power to dispose or to direct
the disposition of the Rhoda Chase Borrowed Shares, except to the extent
that she may be deemed to have temporarily transferred such power to David
T. Chase. Rhoda L. Chase has the sole power to dispose or to direct the
disposition of the Partnership Shares, except to the extent that she may be
deemed to have temporarily transferred such power to the Partnership.
1,665,000 of the shares of Common Stock owned by Rhoda L. Chase are also
included in the above table in David T. Chases shares.
(6) Spitzer Profit Sharing and Savings Plan under agreement dated December 31,
1973, is an Employee Benefit Plan, Pension Fund subject to the provisions
of the Employee Retirement Income Security Act of 1974.
13
<PAGE> 17
2. APPROVAL OF THE ADOPTION OF AMENDMENTS TO THE
1996 STOCK INCENTIVE PLAN
GENERAL
- -------
On June 11, 1996, the stockholders approved the adoption of the Companys 1996
Stock Incentive Plan (the Plan). The purpose of the Plan is to advance the
long-term interests of the Company by (i) motivating executive officers, other
personnel and independent agents of the Company by means of long-term incentive
compensation; (ii) furthering the identity of interests of participants with
those of the stockholders of the Company, through the ownership and performance
of the Common Stock, $.10 par value, of the Company (Common Stock); and (iii)
permitting the Company to attract and retain directors and executive personnel
upon whose judgment the successful conduct of the business of the Company
largely depends.
The maximum number of shares of Common Stock with respect to which awards may be
granted under the Plan currently is 1,000,000 of which up to 100,000 shares are
reserved for the grant of stock options to Directors of the Company who are not
employees of the Company or any of its subsidiaries (the Outside Directors). The
Plan provides that each person who becomes an Outside Director is initially
entitled to an option to purchase 2,000 shares of Common Stock and an option to
purchase 1,000 at each annual meeting thereafter.
PROPOSED AMENDMENTS TO THE PLAN
- -------------------------------
Since 1993 the Outside Directors have received an annual retainer of $5,000
reduced from $7,500 plus a fee of $500 reduced from $750 per meeting for
attending any regular or special meetings of the Board of Directors. Since the
compensation of the Outside Directors has been at a reduced level for five
years, the Board of Directors believed it was appropriate to consider how to
increase such compensation in a manner that was advantageous to both the Outside
Directors and the Company. The Board of Directors concluded that instead of
increasing the cash compensation of the Outside Directors, the Company should be
able to grant options to purchase a greater number of shares than the Plan now
permits. Accordingly, the Board of Directors has approved, subject to the
approval of the stockholders, amendments to the Plan which would increase the
total number of shares of Common Stock with respect to which awards may be
granted from 1,000,000 to 1,500,000 of which 500,000 shares rather than 100,000
shares would be reserved for the grant of stock options to Outside Directors. In
addition, each Outside Director would be granted the option to purchase 10,000
instead of 2,000 shares of Common Stock upon his or her initial appointment or
election and at each annual meeting thereafter each Outside Director (other than
any Outside Director who first became a Director at any time during the period
following the immediately preceding annual meeting of stockholders) would be
granted the option to purchase 10,000 instead of 1,000 shares of Common Stock.
No other changes to the Plan are proposed. The text of the proposed amendments
to the Plan is included in this Proxy Statement as Exhibit A.
Approval of the proposed amendments to the Plan requires the affirmative vote of
the holders of a majority of the shares voting in person or by proxy at the
Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS.
14
<PAGE> 18
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has served as the independent auditors for the Company for
each of the years in the four-year period ended December 31, 1997. In recent
years, it has been the practice of the Board of Directors to annually review and
select independent auditors for the Company. The Board of Directors intends to
continue such practice and to make the selection of independent auditors later
in the year. The selection of independent auditors has not therefore been made
for the current fiscal year. Representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting of Stockholders with an opportunity to make a
statement and will be available to respond to appropriate questions, if any, of
the stockholders of the Company.
STOCKHOLDER PROPOSALS
Stockholders wishing to submit proposals for the Company's 1999 Proxy Statement
may do so prior to December 31, 1998 by letter addressed to the Company in care
of the Secretary.
OTHER MATTERS
Management does not know of any other business to be presented for consideration
at the meeting. If any other business properly comes before the meeting, or any
adjournment or adjournments thereof, the proxy holders will vote in regard
thereto according to their discretion insofar as such proxies are not limited to
the contrary. The 1997 Annual Report to Stockholders is being furnished to
stockholders along with this proxy statement.
By Order of the Board of Directors
Nicholas Z. Alexander, Secretary
April 29, 1998
A COPY OF THE COMPANY'S LAST ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE, WITHOUT CHARGE, UPON WRITTEN
REQUEST OF A BENEFICIAL OWNER OF COMMON STOCK ENTITLED TO VOTE AT THE MEETING.
REQUESTS FOR A COPY OF THE REPORT SHOULD BE DIRECTED TO NICHOLAS Z. ALEXANDER,
SECRETARY, ACCEL INTERNATIONAL CORPORATION, 475 METRO PLACE NORTH, SUITE 150,
P.O. BOX 8017, DUBLIN, OHIO 43016-2017.
15
<PAGE> 19
EXHIBIT A
ACCEL INTERNATIONAL CORPORATION
1996 STOCK INCENTIVE PLAN
Proposal 2
On March 16, 1998, the Board of Directors adopted the following: that the 1996
Stock Incentive Plan of ACCEL International Corporation, effective June 11,
1996, be amended (First Amendment to the Plan) so that Section 5., Subsection
(a) and Section 13., Subsection (a) shall read as follows:
SECTION 5. SHARES AVAILABLE
- ---------------------------
(a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the
adjustments provided for in Sections 17 and 18 hereof, the maximum number
of shares of Common Stock available for grant of Awards under the Plan is
1,500,000 shares. Of this total number, up to 500,000 shares may be issued
pursuant to the exercise of Directors Stock Options. Notwithstanding the
foregoing, at no time shall the number of shares of Common Stock deemed to
be available for grant in any fiscal year exceed ten percent of the total
number of issued and outstanding shares of Common Stock of the Company. The
number of shares of Common Stock available for grant to any individual
Participant in any calendar year shall not exceed 250,000 shares.
SECTION 13. DIRECTORS STOCK OPTIONS
- -----------------------------------
(a) Grants. Awards may be granted to non-employee Directors only in the
form of stock options satisfying the requirements of this Section 13. Each
person who is elected or appointed to serve as a Director of the Company
after the effective date of the First Amendment to the Plan shall, upon his
initial appointment or election as a Director, automatically be granted an
option for 10,000 shares of Common Stock. At each years annual meeting of
the stockholders of the Company commencing on the effective date of the
First Amendment to the Plan, there shall be granted automatically to each
non-employee Director (other than any non-employee Director who first
became a Director at any time during the period following the immediately
preceding annual meeting of the stockholders of the Company), the option to
purchase 10,000 shares of Common Stock. All stock options granted under
this Section 13 shall be nonqualified stock options.
16
<PAGE> 20
ACCEL INTERNATIONAL CORPORATION PROXY
PROXY THIS PROXY IS SOLICITED
ANNUAL MEETING OF STOCKHOLDERS BY THE BOARD OF DIRECTORS
JUNE 16, 1998 OF THE COMPANY
The undersigned hereby appoints Thomas H. Friedberg, Cynthia A. Moore and
Nicholas Z. Alexander as Proxies, each with the power to appoint a substitute,
and hereby authorizes them to represent and to vote as designated below, all of
the shares of ACCEL International Corporation held of record by the undersigned
on April 24, 1998 at the Annual Meeting of Stockholders to be held at the La
Quinta Inn, 12727 Southwest Freeway, Stafford, Texas, at 9:00 A.M. on June 16,
1998 or at any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary below) to vote for all listed below
Robert Betagole Douglas J. Coats Richard Desich Kermit G. Hicks John P. Redding
David T. Chase Raymond H. Deck Thomas H. Friedberg Stephen M. Qua
(INSTRUCTION: To withhold authority to vote for any individual, write that nominee's name in the space
provided below.)
--------------------------------------------------------------------------------
(Continued and to be signed, on the other side)
2. Approval of adoption of amendments to 1996 Stock Incentive Plan [ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
- --------------------------------------------------------------------------------
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE DIRECTOR NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE APPROVAL
OF THE AMENDMENTS TO THE 1996 STOCK INCENTIVE PLAN. THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF THIS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON JUNE 16, 1998 AND THE RELATED PROXY STATEMENT.
PLEASE SIGN BELOW EXACTLY AS NAME
APPEARS. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING
AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT
OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
DATED , 1998
----------------------------
----------------------------------------
SIGNATURE
----------------------------------------
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
