PAGE
As filed with the Securities and Exchange Commission on March 2, 1999
Registration No. 333-71953
- ------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-3/A
Pre-Effective Amendment No. 1 to
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
SELECTIVE INSURANCE GROUP, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 22-2168890
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
40 Wantage Avenue
Branchville, NJ 07890
(973) 948-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Thornton R. Land, Esquire
Executive Vice President, Administration, and General Counsel
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, NJ 07890
(973) 948-3000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
James D. Epstein, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
Philadelphia, Pennsylvania 19103-2799
(215) 981-4000
--------------------
Approximate date of commencement of proposed sale to the public: As
soon as possible after the effective date of this Registration Statement
and from time to time as determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box.
----
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, please check
the following box. X
----
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
----
PAGE
If this Form is a post-effective amendment filed pursuant to Rule
462 under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same offering.
----
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
----
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------
Title of Amount to be Proposed maximum Proposed maximum Amount of
Securities registered offering price aggregate registration
to be per share (1) offering price(1) fee (2)
- ---------------------------------------------------------------------------
Common Stock,
par value
$2.00 per
share
- ---------------------------------------------------------------------------
Total 20,000 shares $18.29 $365,800.00 $102.00
- ---------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating
the registration fee.
(2) Fees totaling $1,669.000 were previously paid by the Registrant in
connection with the inital filing of this Registration Statement on
February 8, 1999, with respect to 324,923 shares. Registrant is
hereby registering an additional 20,000 shares for a total of 344,923
shares under this Registration Statement.
- ---------------------------------------------------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
- ---------------------------------------------------------------------------
PAGE
Prospectus, subject to completion, dated March 2, 1999
SELECTIVE INSURANCE GROUP, INC.
COMMON STOCK
344,923 Shares
The shareholders of Selective Insurance Group, Inc. listed below
are offering or selling 344,923 shares of Common Stock under this
Prospectus.
The selling shareholders obtained their shares of Selective stock
in connection with a merger of PDA, Inc. with and into a wholly-owned
subsidiary of Selective.
The selling shareholders may offer their Selective stock through
public or private transactions on or off the United States exchanges,
at prevailing market prices, or at privately negotiated prices.
Investing in the Common Stock involves risks. Risk Factors begin on
page 2 of this Prospectus.
Our Common Stock is quoted on the Nasdaq National Market under the
symbol "SIGI." On March 1, 1999, the closing price of one share of
Common Stock on the Nasdaq National Market was $18 5/8.
We urge you to carefully read this Prospectus which will describe
the specific terms of the offering before you make your investment
decision.
- --------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------
The date of this Prospectus is March , 1999
Vertical note left of this page:
The information in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This Prospectus
is not an offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is not
permitted.
PAGE
TABLE OF CONTENTS
Page
THE COMPANY ........................................................ 1
RISK FACTORS........................................................ 2
USE OF PROCEEDS..................................................... 8
SELLING SHAREHOLDERS................................................ 8
PLAN OF DISTRIBUTION................................................ 9
WHERE YOU CAN FIND MORE INFORMATION................................. 9
LEGAL OPINION....................................................... 10
EXPERTS............................................................. 10
-I-
PAGE
THE COMPANY
We are a regional insurance holding company offering a broad range of
commercial insurance products, alternative risk management products and
managed care and related services. We also offer personal insurance
products to individuals and families. Our commercial and personal products
are distributed primarily in suburban and rural areas of New Jersey,
Pennsylvania, New York, Maryland, Virginia, South Carolina, Delaware, North
Carolina and Georgia and several Midwestern states, including Iowa,
Illinois, Indiana, Ohio, Michigan and Wisconsin
We offer our insurance products and services through the following
subsidiaries:
* Selective Insurance Company of America;
* Selective Way Insurance Company;
* Selective Insurance Company of the Southeast;
* Selective Insurance Company of South Carolina;
* Selective Insurance Company of New York; and
* SRM Insurance Brokerage, LLC
In addition, we offer various services to the insurance industry
through the following subsidiaries:
* Selective Technical Administration Resources, Inc.;
* SelecTech LLC;
* PDA Software Services, Inc.; and
* Alta Services LLC.
Our principal executive offices are located at 40 Wantage Avenue,
Branchville, New Jersey 07890 and our telephone number is (973) 948-3000.
-1-
PAGE
RISK FACTORS
You should carefully consider the risks described below regarding
Selective and the Common Stock. The risks and uncertainties described
below are not the only ones Selective faces. There may be additional
risks and uncertainties. If any of the following risks actually occur,
Selective's business, financial condition or results of operations
could materially be affected. In such case, the trading price of the
Common Stock could decline significantly.
This Prospectus contains forward-looking statements. These statements
are identified by words such as "expect," "anticipate," "should" and words
of similar import. Actual results may differ significantly from those
expressed or implied by the forward-looking statements. Factors that
might cause such a difference include the various risks set forth below that
we believe are material to investors who purchase or own our securities.
Before deciding to purchase the securities offered by this Prospectus,
investors should carefully consider the following information together with
the other information contained in this Prospectus.
We may be adversely affected by catastrophes and weather-related events.
Property and casualty insurance companies frequently experience losses
from catastrophes and other weather-related events. Such catastrophes may
have a material adverse effect on our operations. Catastrophes are caused
by various events including windstorms, hurricanes, earthquakes, tornadoes,
hail, severe winter weather and fires. We cannot predict how severe
a particular catastrophe may be until after it occurs. The extent of our
losses from such catastrophes is a function of the total amount of losses
our clients incur, the number of our clients affected, the frequency of
such events and the severity of the particular catastrophe. Most
catastrophes are restricted to small geographic areas. However, hurricanes,
floods and earthquakes may produce significant damage in large, heavily
populated areas.
Our geographic concentration ties our performance to the economic,
regulatory and demographic conditions of the East-Coast and Midwestern
states.
Our property and casualty insurance business is concentrated
geographically. Approximately 54% of our net premiums are earned from
insurance policies written in New Jersey. Other East Coast states,
including Pennsylvania, New York, Maryland, Virginia, South Carolina,
Delaware, North Carolina and Georgia and several Midwestern states,
including Iowa, Illinois, Indiana, Ohio, Michigan and Wisconsin, account
for substantially all of our other business. Therefore, unusually severe
storms or other natural disasters which destroy property in these states
could adversely effect our operations. Because our business is
concentrated in a limited number of markets, we may be exposed to risks of
adverse developments which are greater than the risks of having business in
more markets.
Our revenues and profitability also are subject to prevailing economic,
regulatory, demographic and other conditions in the states in which we write
insurance. In particular, while our personal automobile insurance results
in New Jersey have been more favorable over the past three years, the future
regulatory environment in New Jersey is uncertain.
We face significant competition from other regional and national insurance
companies and from self-insurance and new market entrants.
We compete with regional and national insurance companies, including
direct writers of insurance coverage. Many of these competitors are larger
than we are and have greater financial, technical and operating resources.
The property and casualty insurance industry is highly competitive on the
basis of both price and service. There are many companies competing for
the same insurance customers in the geographic areas in which we operate,
particularly outside of New Jersey. If our competitors price their
premiums more aggressively, they may adversely affect our underwriting
results. The insurance industry continues to experience pricing competition,
which has impacted our commercial business. We will not abandon our
underwriting principle of writing insurance risk policies which we believe
are favorable at prices we believe to be fair in order to compete on the
basis
-2-
PAGE
of price. In addition, because our insurance products are marketed through
independent insurance agencies, most of which represent more than one
insurance company, we face competition within each agency.
We also face competition from the implementation of self-insurance,
primarily in the commercial insurance line area. Many of our customers
and potential customers are examining the risks of self-insuring as
an alternative to traditional insurance. We also face potential competition
from banks. Banks have recently acquired insurance agencies in states where
we sell insurance, including some of the agencies which sell insurance
written by us. Some banks could have business strategies for operating
their insurance agencies that differ from strategies which we think are
important for the distribution of our insurance products through independent
insurance agencies. If those banks were to acquire a significant number of
our independent insurance agencies or insurance agencies which are important
to us in states where we do business, we would need to substitute insurance
agencies to sell our insurance products. In addition, banks are making
efforts to cause changes in laws and regulations which limit their ability
to engage in non-banking, financial service businesses, such as the
underwriting of insurance. If banks were also able to write insurance,
they could compete directly with us by selling insurance through their own
insurance agencies.
We are heavily regulated by the states in which we operate.
We are subject to extensive supervision and regulation in the states in
which we transact business. Such supervision and regulation relate to
numerous aspects of our business and financial condition. The primary
purpose of such supervision and regulation is the protection of insurance
policyholders, and not shareholders or other investors. Our business can be
adversely affected by automobile insurance regulations and any other
regulations affecting property and casualty insurance companies. Changes in
workers' compensation, insurance, health care or managed care laws or
regulations, or their interpretations, may also have an adverse effect on
our business. The extent of regulation varies but generally is derived from
state statutes. These statutes delegate regulatory, supervisory and
administrative authority to state insurance departments. Although the U.S.
Federal government does not directly regulate the insurance industry, Federal
initiatives from time to time can impact the insurance industry.
In addition, many proposals intended to control the cost and avail-
ability of health care services have been debated in Congress and state
legislatures. Although we do not write health insurance, rules and
regulations affecting healthcare services can affect workers' compensation,
commercial and personal automobile, liability and other insurance which
we do write. We cannot determine what health care reform legislation will
be adopted by Congress or any state legislature. We also cannot determine
the nature and effect, if any, that the adoption of health care legislation
or regulations (or changing interpretations) at the federal or state level
would have on us.
Certain other regulatory risks are as follows:
Automobile Insurance Regulation. On May 19, 1998, the Governor of New
Jersey signed into law personal automobile insurance reform legislation.
The various provisions contained in the law take effect for new policies
issued and renewal policies processes on or after March 22, 1999. One
provision of the law reduces statewide automobile insurance premiums by 15%
overall, with the greatest reductions being applicable to liability-only
policies. As a result of the mandatory rate reduction, we anticipate that
our New Jersey personal automobile direct premiums written will be reduced
approximately 10%, or $17 million. This figure has been determined by
applying the various specified rate reduction percentages to our current
premium volume, less the expense component, by coverage. This is less than
the average of 15% because the distribution of our premium by coverage is
different than the statewide industry average distribution of premium by
coverage. We have filed, at the request of the Department of Banking and
Insurance, a summary of the rate rollback which makes certain assumptions
as to future policyholder election of certain reduced coverages, which
assumptions would result in a reduction of our personal automobile premiums
closer to 15%. In addition to this reduction in new and renewal premiums,
effective April 21, 1999 policyholders may, without penalty, request that
their policies be reissued at the lower premium rates prior to their
renewal. We cannot estimate how many policyholders will request the
reissuance of their policies.
-3-
PAGE
The law also contains provisions that are intended to reduce the costs
associated with insurance losses. These provisions include: (i) revisions
to the state's no-fault law; (ii) increased fraud prosecution initiatives;
and (iii) the elimination of unnecessary medical tests and the use of
medical fee schedules. We are not currently able to estimate the extent of
the possible reduction in our loss costs. However, we believe the new law
will not significantly impact our overall after-tax financial results due
to reductions in policy acquisition costs (commission, premium taxes, etc.)
from the lower premium volume, and potentially lower costs as a result of
the savings provisions included in the law. In particular, we anticipate
we will be able to lower loss costs in the area of Personal Injury Protec-
tion through pre-certification and utilization review of numerous medical
tests, treatments and procedures.
During 1997, the Governor of New Jersey signed into law an insurance
reform bill. This enacted law: (i) eliminates automatic approval of annual
"cost-of-living" premium increases in favor of "expedited rate filings" of
3% or less, which do not require prior approval from the insurance
commissioner; (ii) prohibits insurers from not renewing "good" drivers
("good drivers" are those who have no more than one at-fault accident or
four insurance point moving violations within a five-year period);
(iii) eliminates the bad driver surcharge system in favor of a tier rating
system; and (iv) requires automobile insurers to write an amount of auto-
mobile insurance in urban territories equal to their average statewide
market share.
New Jersey insurance regulations require insurers to write all personal
automobile coverage presented to them from drivers with eight points or less
on their driving record. While we are required to write such coverage, the
rates we charge reflect the insured's motor vehicle record and incidence of
at-fault accidents. Drivers whose poor driving record makes them ineligible
to otherwise obtain insurance must purchase insurance from the Personal
Automobile Insurance Plan. We receive a proportionate share of Personal
Automobile Insurance Plan business based on our voluntary personal auto-
mobile writings. Pennsylvania, Delaware, the District of Columbia,
Virginia, Georgia and New York also maintain similar risk plans. Each plan
requires an insurance company to accept its proportionate share of this
business based upon its share of the voluntary market. In addition, we are
required to write involuntary coverage for a Commercial Automobile Insurance
Plan, because we voluntarily write commercial automobile insurance.
Involuntary coverage is insurance for those insureds which are otherwise not
able to obtain insurance in the marketplace.
South Carolina insurance regulations require insurers to write all
personal and certain commercial automobile coverage presented to them by
drivers. Although we are required to write all new applications, we are
able to transfer up to 35% of this business to the South Carolina
Reinsurance Facility (the "SCRF"). This mechanism allows us to move less
desirable risks to the SCRF. Effective March 1, 1999, as a result of a
recent South Carolina law, insurers will no longer be required to accept
all applications for automobile insurance coverage. In addition, this law
will eliminate the SCRF and replace it with a joint underwriting association
known as the South Carolina Associated Insurers Plan (the "SCAAIP"). On
March 1, 1999, we may begin refusing to renew policies currently ceded to
the SCRF. We, like all automobile insurers licensed in South Carolina, will
be a member of the SCAAIP. As a member of the SCAAIP, we will share in its
profit or loss. South Carolina law requires that the SCAAIP be self-
sustaining. On March 1, 2003, the SCAAIP will be replaced by an assigned
risk plan. This plan will assign risks which are unable to obtain coverage
voluntarily to insurers based on their market share. We are unable at this
time to assess the impact of these changes on our results of operations.
Workers' Compensation Insurance Regulation. Because we voluntarily
write workers' compensation insurance, we are required by state law to
write involuntary coverage. Insurance companies that underwrite voluntary
workers' compensation insurance can either write involuntary coverage
assigned by state regulatory authorities or participate in a sharing
arrangement. We currently write involuntary coverage assigned to us
directly from the State of New Jersey.
Homeowners Insurance Regulations. New Jersey regulations prohibit us
from canceling or not renewing homeowners insurance policies for any
arbitrary, capricious or unfairly discriminatory reason or without adequate
notice to the insured. We are subject to regulatory provisions that are
designed to address problems in the homeowners property insurance market-
place. These provisions are designed to address problems in the availability
and affordability of such insurance. These provisions take two forms,
voluntary and involuntary. Voluntary provisions, such as the New Jersey
Windstorm Market Assistance Program, generally do not result in assessments
to us. This program is designed to assist property owners in New Jersey
coastal areas in obtaining homeowners insurance. We have the option to
accept or decline to write insurance offered to us through the program.
Involuntary provisions, such as the New Jersey Fair Access to Insurance
Requirements, generally result in assessments to us. The New Jersey Fair
Access to Insurance Requirements writes fire and extended coverage on home-
owners for those individuals unable to secure insurance elsewhere.
Insurance companies who voluntarily write homeowner's insurance in New
Jersey are assessed a portion of any deficit from the New Jersey Fair Access
to Insurance Requirements based on their share of the voluntary market.
Similar involuntary plans exist in the District of Columbia and most other
states where we operate.
-4-
PAGE
We may be restricted in declaring dividends and distributions.
As an insurance holding company, our principal assets consist of the
capital stock of our insurance subsidiaries. We cannot declare dividends on
our Common Stock unless our insurance subsidiaries can pay dividends to us.
Our insurance subsidiaries may only declare dividends to us if they are
permitted to do so under the insurance regulations of their respective
domicile states. All of the states in which our insurance subsidiaries are
domiciled (including New Jersey, New York, North Carolina and South
Carolina), regulate the payment of dividends.
Some states, such as New Jersey, New York and South Carolina require
that we give notice to the relevant state insurance commissioner prior to
declaring any dividends and distributions. During the notice period, the
state insurance commissioner may disallow all or part of the proposed
dividend if it determines that the insurer's surplus as regards policy-
holders is not reasonable in relation to the insurer's liabilities and
adequate to its financial needs, or in the case of New Jersey, if the
regulatory authority determines that the insurer is otherwise in a hazardous
financial condition.
Our loss reserves may not be adequate.
We are required to maintain loss reserves. These reserves provide
capital for our estimated liability for losses and expenses associated with
reported and unreported claims for each accounting period. Our reserve
amounts are estimates of what we expect the ultimate settlement and
administration of what claims will cost. Reserve amounts are based on facts
and circumstances of which we are aware, predictions of future events,
estimates of future trends in claims severity and frequency and other sub-
jective factors. There is no method for precisely estimating our ultimate
liability.
We regularly review our reserving techniques and our overall amount of
reserves. We also review:
* information regarding each claim for losses;
* our loss history and the industry's loss history;
* legislative enactments, judicial decisions and legal developments
regarding damages;
* changes in political attitudes; and
* trends in general economic conditions, including inflation.
We receive an actuarial opinion regarding the adequacy of our loss
reserves from our Vice President and Actuary. However, we do not receive an
independent actuarial opinion. Although our reserves have been adequate in
the past, we cannot guarantee they will be adequate in the future. If our
reserves are inadequate, we will be required to increase reserves. That
would result in an increase in losses and a reduction in our net income and
stockholders' equity for the period in which the deficiency in reserves is
identified.
We rely on the availability of reinsurance.
We transfer our exposure to certain risks to others through reinsurance
arrangements with other insurance companies. Under our reinsurance
arrangements, another insurer assumes a specified portion of our losses
and allocated loss adjustment expense in exchange for a specified portion of
policy premiums. The availability, amount and cost of reinsurance depend
on general market conditions and may vary significantly. Any decrease in
the amount of our reinsurance will increase our risk of loss. Furthermore,
we face a credit risk with respect to reinsurance. When we obtain
reinsurance, we are still liable for those transferred risks if the
reinsurer cannot meet those obligations. Therefore, the insolvency or
inability of our reinsurer's to meet its financial obligations could
materially affect our operations.
We depend on investment income for a significant portion of our revenues and
earnings.
We, like many other property and casualty insurance companies, depend
on income from our investment portfolio for a significant portion of our
revenues and earnings. Any significant decline in our investment income
would have an adverse effect on our results.
-5-
PAGE
The property and casualty insurance industry is cyclical.
Historically, the property and casualty insurance industry has been
cyclical. Over the last several years, the industry has been in a downturn
which has resulted in a decline in premium rates. The decline in premium
rates has adversely affected our underwriting results. Furthermore, the
industry's profitability is affected by unpredictable developments,
including, natural disasters (such as hurricanes, windstorms, earthquakes,
hail, explosions and fires); fluctuations in interest rates and other
changes in the investment environment that affect returns on our
investments; inflationary pressures that affect the size of losses; and
judicial decisions that affect insurers' liabilities. The demand for
property and casualty insurance, particularly commercial lines, can also
vary with the overall level of economic activity.
We rely upon independent insurance agents.
We market and sell our insurance products through independent, non-
exclusive insurance agencies and brokers. Agencies and brokers are not
obligated to promote our insurance products and they may also sell our
competitors' insurance products. As a result, our business depends in part
on the marketing efforts of these agencies and brokers. Therefore, we must
offer insurance products and services that meet the requirements of the
clients and customers of these agencies and brokers. As we diversify and
expand our business geographically, we may need to expand our network of
agencies and brokers to successfully market our products. If these agencies
and brokers fail to market our products successfully, our business may be
adversely impacted.
We may be adversely impacted by a change in our rating.
Insurance companies are rated by rating agencies to provide meaningful
information on specific insurance companies. Higher ratings generally
indicate financial stability and a strong ability to pay claims. Ratings
are assigned by rating agencies to insurers based upon factors relevant to
policyholders. Ratings are not recommendations to buy, hold or sell our
common stock.
Currently, we are rated "A+" (Superior) by A.M. Best. Ratings by A.M.
Best in the insurance industry range from "A++" (Superior) to "F"
(in Liquidation). According to A.M. Best, an insurer with an "A++" or "A+"
rating has demonstrated superior overall performance. During 1998, A.M.
Best continued our "A+" rating.
We also have an "A+" claims-paying rating from Standard & Poor's.
According to Standard & Poor's, insurers with this rating offer good
financial security, but their ability to meet policyholder obligations is
susceptible to adverse economic and underwriting conditions. Claims-paying
ability ratings by Standard & Poor's for the industry range from "AAA
(Superior)" to "R (Regulatory Action)". Insurers with a rating of "BBB-"
or better, such as Selective, are considered to have a secure claims-paying
ability. During 1998, Standard & Poor's reaffirmed our "A+" rating.
We cannot be sure that we will maintain our current A.M. Best or
Standard & Poor's ratings. Our business could be adversely effected if we
receive a significant downgrade in these ratings.
We employ certain anti-takeover measures.
We own, directly or indirectly, all of the shares of stock of our
subsidiaries domiciled in the States of New Jersey, New York, North Carolina
and South Carolina. State insurance laws require prior approval by state
insurance departments of any acquisition of control of a domestic insurance
company or of any company which controls a domestic insurance company.
"Control" is generally presumed to exist through the ownership of 10% or
more of the voting securities of a domestic insurance company or of any
company which controls a domestic insurance company. Any purchaser of 10%
or more of the outstanding shares of our Common Stock will be presumed to
have acquired control of our subsidiaries unless the relevant insurance
commissioner determines otherwise. Accordingly, any purchase of 10% or more
of our outstanding Common Stock would require prior action by all or some of
the insurance commissioners of the above-referenced states.
-6-
PAGE
In addition, certain other factors may discourage, delay or prevent a
change of control of our company. These include, among others, provisions
in our Restated Certificate of Incorporation, as amended, relating to
supermajority voting and fair price requirements with respect to certain
business combinations, staggered terms for our directors, supermajority
voting requirements to amend the foregoing provisions, our preferred share
purchase rights plan, guaranteed payments which are to be made to certain
officers upon a change of control of our company, and the ability of our
Board of Directors to issue "blank check" preferred stock.
The New Jersey Shareholders Protection Act provides, among other
things, that a New Jersey corporation, such as Selective, may not engage in
certain specified transactions (including certain business combinations)
with a shareholder having indirect or direct beneficial ownership of 10% or
more of the stock for a period of five years following the date on which
such shareholder became an interested shareholder, unless that transaction
is approved by the board of directors of the corporation prior to such
date. These provisions also could have the effect of depriving shareholders
of an opportunity to receive a premium over the prevailing market price in
the event of an attempted hostile takeover.
We may be adversely affected by Year 2000 computer problems.
Many currently installed computer systems and software products use
only two digits to identify a year in the date field with the assumption
that the first two digits of the year are always "19." Consequently, on
January 1, 2000, computers that are not "Year 2000" compliant may read the
year as 1900. Systems that calculate, compare or sort using the incorrect
date may malfunction. As a result, during the next year, computer systems
and/or software used by many companies may need to be upgraded to comply
with such "Year 2000" requirements. Significant uncertainty exists in the
software industry concerning the potential effects associated with such
compliance.
We, like all users of automated information systems, are addressing
the potential "Year 2000" issues that could affect our automated information
systems, such as mainframe applications, personal computers and communica-
tions systems. We are also addressing the "Year 2000" issues associated
with the information systems used by our suppliers and independent insurance
agents which could impact us. We are further addressing risks associated
with non-information systems exposures, such as building security systems
and heating and ventilation. In 1996, we established an internal team
dedicated to administering a "Year 2000" Project. This team completed an
initial impact and analysis study and began to convert or modify our
information systems and applications in 1997.
If we, or one of our suppliers or independent insurance agents, fails
to correct a material "Year 2000" problem, we could have an interruption in,
or a failure of, certain normal business activities or operations such as
policy underwriting and claim payment. Such failures could materially
and adversely affect our results of operations, liquidity and financial
condition. Contingency plans have been and are being developed to address
potentially adverse "Year 2000" situations which could affect material areas
of our internal information systems. We have secured a first priority
status with the disaster recovery provider by complying with their "Year
2000" readiness checklist. However, unforseen "Year 2000" problems could
adversely affect us.
Our acquisitions of other companies subject us to risks.
As part of our overall strategy to enhance our technical skills needed
to support the core property and insurance business, we acquire or invest
in other complementary companies, products or technologies. For example, we
recently acquired PDA Software Services, Inc. in furtherance of these
objectives. Risks commonly encountered in such transactions include:
* the difficulty of assimilating the operations and personnel of
the combined companies;
* the potential disruption of the ongoing business;
* the inability to retain key personnel;
* a decrease in reported earnings due to acquisition costs and
charges;
* the dilution of shareholders;
-7-
PAGE
* the difficulty in maintaining controls, procedures and policies;
and
* the impairment of relationships with employees and customers
as a result of any integration of new personnel.
In addition, as we complete acquisitions of companies which compete in
different markets than we do, we may face risks associated with entering
those new markets.
USE OF PROCEEDS
All of the net proceeds from the sale of the Common Stock will go to
the shareholders who offer and sell their shares. Accordingly, we will not
receive any proceeds from sales of the Common Stock.
SELLING SHAREHOLDERS
Shares Shares
Beneficially Beneficially
Selling Owned Prior Shares Being Owned After
Shareholder To Offering (1) Offered Offering
- -------------------------------------------------------------------------
David Fuller (2) 103,891 103,891 0
Senior Vice President
and Secretary of PDA
Software Systems, Inc.
Thomas McCarthy (2) 103,891 103,891 0
Senior Vice President
of PDA Software
Systems, Inc.
Niels Mortensen (2)(3) 103,891 103,891 0
Senior Vice President
and Treasurer of PDA
Software Systems, Inc.
Group of 27 holders of
restricted stock (3) 12,500 12,500 0
- ----------------------
(1) Assumes that all of the shares beneficially owned by the selling
shareholders and being offered under this Prospectus are sold, and that the
selling shareholders acquire no additional shares of Common Stock before the
completion of this offering. Each selling shareholder beneficially owns
less than 1% of the total number of shares of Common Stock.
(2) Excludes an indeterminant number of shares of Common Stock which may
be issued in connection with a purchase price adjustment for the acquisition
of PDA, Inc.
(3) 19,394 of Mr. Mortensen's shares of Common Stock were pledged to us to
secure his obligations to repay $195,000 plus interest by April 30, 2000.
These 19,394 shares cannot be sold until they are released from this pledge.
-8-
PAGE
(4) These shares of Common Stock were issued under a series of restricted
stock agreements and may not be sold until the restrictions lapse. The
12,500 shares of the restricted stock, which represents less than 1% of the
outstanding common stock, were issued to 27 individuals and will
vest over a period of 4 years.
PLAN OF DISTRIBUTION
The selling shareholders may offer their Selective shares at various
times in one or more of the following transactions:
* on any of the United States securities exchanges where our capital
stock is listed;
* in the over-the-counter market;
* in transactions other than on such exchanges or in the over-the-
counter market;
* in connection with short sales of Selective shares;
* by pledge to secure debts and other obligations;
* in connection with the writing of non-traded and exchange-traded
call options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter options; or
* in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, broker-dealers will either receive discounts or commissions
from the selling shareholders, or they will receive commissions from
purchasers of shares for whom they acted as agents.
The selling shareholders may also transfer their shares owned by them
in other ways not involving market makers or established trading markets,
including directly by gift, donation or other transfer without
consideration, and upon any such transfer the transferee would have the same
rights of sale as such selling shareholder under this Prospectus. Any such
transferee will be named in the applicable prospectus supplement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file
at the SEC's public reference rooms in Washington, D.C. at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be a part of this Prospectus, and information that we file
later with the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934:
-9-
PAGE
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
2. Our definitive Proxy Statement dated March 30, 1998, filed in
connection with our May 1, 1998 Annual Meeting of Stockholders;
3. Quarterly Report on Form 10-Q for the quarters ended March 31, 1998;
June 30, 1998; and September 30, 1998; and
4. Current Report on Form 8-K filed on February 4, 1999.
5. The descriptions of the Common Stock and purchase rights for units
of Series A Junior Preferred Stock associated with the Common Stock
set forth in our registration statements filed pursuant to Section 12
of the Securities Exchange Act of 1934, and any amendment or report
filed for the purpose of updated those descriptions.
You may request a copy of these filings, at no cost, by calling or
writing to:
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, New Jersey 07890
Attention: Michele Nieroda, Corporate Secretary
Telephone: (973) 948-3000
This Prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in
this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state
where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the
date on the front of the document.
LEGAL OPINION
For the purpose of this Offering, Thornton R. Land, Esq., Selective's
Executive Vice President and General Counsel is giving his opinion on the
validity of the shares. Mr. Land owns, has options to purchase and has
other interests in, shares of Selective's Common Stock.
EXPERTS
The consolidated financial statements and related schedules of
Selective as of December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, have been incorporated by
reference herein and in the registration statement in reliance upon the
reports of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
-10-
PAGE
========================================================================
You should rely only on the information incorporated by reference or
provided in this Prospectus. Selective has not authorized anyone else to
provide you with different information. Selective is not making an offer
of these securities in any state where the offer is not permitted. You
should not assume that the information in this Prospectus is accurate as
of any date other than the date on the front of this prospectus.
PROSPECTUS
--------------------
SELECTIVE INSURANCE GROUP, INC.
344,923 Shares
--------------------
COMMON STOCK
, 1999
--------- --
=======================================================================
PAGE
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission
Registration Fee. . . . . . . . . . . . . . . . . $ 1,771.00
Accounting Fees and Expenses . . . . . . . . . $ 3,500.00
Legal Fees and Expenses . . . . . . . . . . . . $ 10,000.00
Printing Fees and Expenses . . . . . . . . . . . $ 1,000.00
NASDAQ Listing Fees . . . . . . . . . . . . . . $ 8,498.46
Miscellaneous Expenses . . . . . . . . . . . . . $ 230.54
Total Expenses . . . . . . . . . . . . . . .$ 25,000.00
Item 15. Indemnification of Directors and Officers
-----------------------------------------
Selective is organized under the laws of the State of New Jersey. The
New Jersey Business Corporation Act, as amended (the "Act"), provides that a
New Jersey corporation has the power generally to indemnify its directors,
officers, employees and other agents against expenses and liabilities in
connection with any proceeding involving such person by reason of his being
a corporate agent, other than a proceeding by or in the right of the
corporation, if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, such person had no
reasonable cause to believe his conduct was unlawful. In the case of an
action brought by or in the right of the corporation, indemnification of
directors, officers, employees and other agents against expenses is
permitted if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
however, no indemnification is permitted in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation, unless and only tot he extent that the New Jersey Superior
Court, or the court in which such proceeding was brought, shall determine
upon application that despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to such indemnification. Expenses incurred by a director, officer,
employee or other agent in connection with a proceeding may be, under
certain circumstances, paid by the corporation in advance of the final
disposition of the proceeding as authorized by the board of directors. The
power to indemnify and advance expenses under the Act does not exclude other
rights to which a director, officer, employee or other agent of the
corporation may be entitled to under the certificate of incorporation, by-
Laws, agreement, vote of shareholders, or otherwise provided that no
indemnification is permitted to be made to or on behalf of such person if a
judgment or other final adjudication adverse to such person establishes that
his acts or omissions were in breach of his duty or loyalty to the
corporation, were not in good faith or involved a violation of the law, or
resulted in the receipt by such person of an improper personal benefit.
Under the Act, a New Jersey corporation has the power to purchase and
maintain insurance on behalf of any director, officer, employee or other
agent against any expenses incurred in any proceeding and any liabilities
asserted against him by reason of his being or having been a corporate
agent, whether or not the corporation has the power to indemnify him against
such expenses and liabilities under the Act. All powers granted to a New
Jersey corporation discussed above may be exercised by such corporation
notwithstanding the absence of any provision in its certificate of
incorporation or by-laws authorizing the exercise of such powers. However,
a New Jersey corporation may, with certain limitations, provide in its
certificate of incorporation that a director or officer shall not be
personally liable, or shall be liable only to the extent therein provided,
to the corporation or its shareholders for damages for breach of any duty
owed to the corporation or its shareholders.
PAGE
Reference is made to Sections 14A:3-5 and 14A:2-7(3) of the Act in
connection with the above summary of indemnification and insurance.
Section (a) of Article NINTH of Selective's Restated Certificate of
Incorporation, and Section 14 of Selective's By-laws provide generally that
a director shall not be personally liable to Selective or its stockholders
for damages from breach of any duty owed to Selective or its stockholders,
except tot eh extent such personal liability may not be eliminated or
limited under the Act. Such provisions further provide generally that an
officer of Selective or its stockholders, except to the extent and for the
duration of any period of time such personal liability may be eliminated or
limited under the Act.
Section (b) of Article NINTH of Selective's Restated Certificate of
Incorporation, and Section 14 of Selective's By-laws, provide generally that
each person who was or is made a party to or is involved in a pending,
threatened or completed civil, criminal, administrative or arbitrative
action, suit or proceeding, or any appeal therein or any inquiry or
investigation which could lead to such action, suit or proceeding by reason
of his/her being or having been a director or officer of Selective or any
constituent corporation absorbed by Selective in a consolidation or merger,
or by reason of his/her having been a director, officer, trustee, employee
or agent of another entity serving as such at the request of elective, or
legal representative of any such person, shall be indemnified and held
harmless by Selective to the fullest extent permitted by the Act, as amended
(but, in the case of any amendments, only to the extent such amendment
permits Selective to provide broader indemnification rights than the Act
permitted prior to such amendment). Such provisions of the Restated
Certificate of Incorporation and By-laws of Selective provide, under certain
circumstances, for a right to be paid by Selective the expenses incurred in
any proceeding in advance of the final disposition of such insurance on
behalf of any director, officer, employee or agent of Selective against any
expenses incurred and any liabilities asserted against him/her in any
proceeding by reason of such person having been a director, officer,
employee or agent, whether or not Selective would have the power to
indemnify such person.
The directors and officers of Selective are insured by policies
purchased by Selective against liability and expenses incurred in their
capacity as directors or officers.
Item 16. Exhibits.
--------
Exhibit No. Description
4.1 Restated Certificate of Incorporation, as amended through
December 1, 1997 (incorporated herein by reference to Exhibit
3.1 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, File No. 000-08641).
4.2 The Company's By-Laws, adopted on August 26, 1977, amended
through May 1, 1992 (incorporated herein by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994, File No. 0-8641).
4.3 Form of Indenture dated December 29, 1982, between the
Selective Insurance Group, Inc. and Midlantic National Bank,
as Trustee relating to the Company's 8 3/4% Subordinated
Convertible Debentures due 2008 (incorporated herein by
reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-3, File No. 2-80881).
4.4 Rights Agreement dated November 3, 1989 between Selective
Insurance Group, Inc. and Midlantic National Bank
(incorporated herein by reference to Exhibit 4.2 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994, File No. 0-8641).
4.5 Selective Insurance Group, Inc. Restricted Stock Grant
(filed herewith).
5 Opinion of Thornton R. Land, Esq., General Counsel of the
Company (filed herewith).
PAGE
23.1 Consent of Independent Accountants.
23.2 Consent of Thornton R. Land, Esq. (contained in Exhibit 5
hereto) (filed herewith).
24 Power of Attorney (contained in signature pages).
Item 17. Undertakings
------------
The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (other than
as provided in the proviso and instructions to Item 512(a) of Regulation
S-K) (i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act"); (ii) to reflect in the
prospectus any facts or events arising after the effective date of this
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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement and (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.
(2) That, for the purpose of determining any liability under the
Securities 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termina-
tion of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this 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.
Insofar as indemnification for liabilities arising under the Securities
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 Securities 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 Securities Act and will be governed by
the final adjudication of such issue.
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-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 2nd day of March, 1999.
SELECTIVE INSURANCE GROUP, INC.
By: *
---------------------------
James W. Entringer
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Gregory E. Murphy, David B.
Merclean and Thornton R. Land, jointly and severally, his or her true and
lawful attorneys-in-fact, each with full power of substitution, for him or
her in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done or 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 dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board and March 2, 1999
- ---------------------- Chief Executive Officer
James W. Entringer
* President and Chief March 2, 1999
- ---------------------- Operating Officer
Gregory E. Murphy
* Senior Vice President and March 2, 1999
- ---------------------- Chief Financial Officer
David B. Merclean
* Director March 2, 1999
- ----------------------
A. David Brown
* Director March 2, 1999
- ----------------------
William A. Dolan, II
* Director March 2, 1999
- ----------------------
William C. Gray, D.V.M.
PAGE
* Director March 2, 1999
- ----------------------
C. Edward Herder
* Director March 2, 1999
- ---------------------
Frederick H. Jarvis
* Director March 2, 1999
- -----------------------
William M. Kearns, Jr.
* Director March 2, 1999
- -----------------------
Joan Lamm-Tennant, Ph.D.
* Director March 2, 1999
- -----------------------
S. Griffin McClellan, III
* Director March 2, 1999
- ----------------------
William M. Rue
* Director March 2, 1999
- ----------------------
Thomas D. Sayles, Jr.
* Director March 2, 1999
- ----------------------
J. Brian Thebault
* By:/s/ Thornton R. Land March 2, 1999
---------------------
Thornton R. Land,
/Attorney-in-fact
PAGE
Index of Exhibits
-----------------
Exhibit No. Description
-----------
4.5 Selective Insurance Group, Inc. Restricted Stock Grant
5 Opinion of Thornton R. Land, Esq., General Counsel of the
Company.
23.1 Consent of Independent Accountants.
23.2 Consent of Thornton R. Land, Esq. (included in Exhibit 5)
PAGE
EXHIBIT 4.5
Selective Insurance Group, Inc.
Restricted Stock Grant
THIS DOCUMENT EVIDENCES A RESTRICTED STOCK GRANT (the "Grant"),
effective the _______ day of ___________, 1999 from SELECTIVE INSURANCE
GROUP, INC., a New Jersey Corporation, with its principal office at 40
Wantage Avenue, Branchville, New Jersey 07890 (hereinafter called the
"Company"), to __________, an employee of PDA Software Services, Inc., a
subsidiary of the Company, residing at ___________________ (hereinafter
called the "Employee").
WITNESSETH THAT:
WHEREAS, the Company has selected the Employee to receive an award
of restricted stock, subject to the terms and conditions of this written
document.
NOW THEREFORE, the Company hereby grants to the Employee, subject
to the terms and conditions hereinafter set forth, an award (the "Award") of
___________ shares of the Company's common stock, par value $2.00 per share
(the "Shares"). The Award shall be subject to the terms and conditions of
this Grant. By accepting the Grant, the Employee agrees to be bound by the
provisions hereof.
1. (a) Within thirty (30) days after the effective date of this
Grant, the Shares shall be issued and registered in the name of Employee and
shall be deposited in escrow with the Company pursuant to the provisions
hereof. The Shares, when issued, will be validly issued, fully-paid and
nonassessable.
(b) Any and all cash dividends and/or distributions with
respect to the Shares shall be automatically deposited in escrow with the
Company pursuant hereto. Such cash dividends will accumulate for the
benefit of the Employee without any interest accrual. Any other dividends
and/or distributions with respect to the Shares, including, but not limited
to, any stock dividend, stock division, combination of shares or otherwise,
and any distribution of the property or assets of the Company with respect
to the Shares shall be accumulated and shall be retained by the Company in
escrow and shall be deemed to be Shares. If any dividend or distribution
with respect to the shares is delivered to Employee, Employee will deposit
such dividend or distribution with the Company in escrow pursuant hereto.
2. Subject to the provisions of Section 3 hereof, the Shares and
any and all accumulated dividends and distributions with respect thereto
shall vest to Employee on February 3, 2003 (the "Vesting Date") and, shall
no longer be subject to forfeiture provided that Employee shall have
remained in the full-time employ of the Company or a subsidiary of the
Company from and after the date hereof to and including the Vesting Date.
At such time as the Company shall have determined that the
foregoing condition has been satisfied, the Company shall release from
escrow to Employee the Shares and any and all accumulated dividends and
distributions with respect thereto.
PAGE
3. (a) If Employee shall cease to be employed full-time by the
Company or any of its subsidiaries prior to the Vesting Date for any reason
other than death, total disability or retirement, the Award shall
immediately be forfeited and shall be void.
(b) If Employee shall cease to be employed full-time by the
Company or any of its subsidiaries by reason of death, total disability or
retirement, Employee or his executor, administrator, personal representa-
tive, heirs or beneficiaries, as the case may be, shall be entitled to
receive, upon vesting, all of the Shares, together with any and all
accumulated dividends and distributions with respect thereto.
(c) Notwithstanding the provisions of Section 2 hereof and
Section 3(b) hereof, the Shares and any and all accumulated dividends, and
distributions with respect thereto shall immediately vest to Employee or to
Employee's executor, administrator, personal representative, heirs or
beneficiaries, as the case may be, and the Vesting Date shall be deemed to
have occurred, upon the occurrence prior to February 3, 2003 of a "Change
in Control" of the Company, as hereinafter defined. For the purposes of
this Grant, Change in Control of the Company (a "Change in Control") shall
mean the occurrence of an event of a nature that would be required to be
reported in response to Item 1(a) of a Current Report on Form 8-K, as in
effect on the date hereof, pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), provided,
however, that a Change in Control shall, in any event, conclusively be
deemed to have occurred upon the first to occur of a one of the following
events:
(i) The acquisition by any person or group, including,
without limitation, any current stockholder or stockholders of the Company,
of securities of the Company resulting in such person's or group's owning
of record or beneficially twenty-five percent (25%) or more, of any class
of voting securities of the Company;
(ii) The acquisition by any person or group, including,
without limitation, any current stockholder or stockholders of the Company,
of securities of the Company resulting in such person's or group's owning of
record or beneficially twenty percent (20%) or more, but less than twenty-
five percent (25%), of any class of voting securities of the Company, if the
Board of Directors of the Company (the "Company Board") adopts a resolution
that such acquisition constitutes a Change in Control;
(iii) The sale or disposition of all or substantially all
of the assets of the Company;
(iv) The reorganization, recapitalization, merger,
consolidation or other business combination involving the Company the result
of which is the ownership by the stockholders of the Company of less, than
eighty percent (80%) of those voting securities of the resulting or
acquiring entity having the power to elect a majority of the board of
directors of such entity; or
-2-
PAGE
(v) A change in the membership in the Company Board
which, taken in conjunction with any other prior or concurrent changes,
results in twenty percent (20%) or more of the membership of the Company
Board being persons not nominated by the Company Board as set forth in the
Company's then most recent proxy statement, excluding changes resulting from
substitutions by the Company Board because of retirement or death of a
director or directors, removal of a director or directors by the Company
Board or resignation of a director or directors due to demonstrated
disability or incapacity.
Notwithstanding anything in this Section 3(c) to the contrary, no
Change in Control shall be deemed to have occurred for the purposes of this
Grant by virtue of any transaction which results in Employee, or a group of
persons which includes the Employee, acquiring, directly or indirectly,
voting securities of the Company.
For the purpose of this Section 3 (c), the following definitions
shall apply:
(i) the terms "person" and "beneficial owner" shall
have the meanings set forth in Regulation 13D under the Exchange Act, as
such Regulation exists on the date hereof;
(ii) the term "voting security" shall include any
security that has, or may have upon an event of default or in respect to any
transaction, a right to vote on any matter upon which the holder of any
class of common stock of the Company would have a night to vote;
(iii) the term "group" shall have the meaning set forth
in Section 13(d)(3) of the Exchange Act; and
(iv) the term "substantially all of the assets of the
Company" shall mean more than fifty percent (50%) of the Company's assets on
a consolidated basis, as shown in the Company's most recent audited balance
sheet.
4. The Shares and any accumulated dividends and distributions
with respect thereto may not be sold, assigned, transferred, pledged,
hypothecated, or otherwise disposed of by Employee other than as expressly
provided in Section 3(b) hereof by reason of the Employee's death or
disability until the release from escrow of the Shares and any accumulated
dividends and distributions with respect thereto. The Shares and any shares
of the Company's common stock distributed with respect thereto may not be
sold, transferred or otherwise disposed of in the absence of an effective
registration statement under the Act covering, the Shares except in
compliance with Rule 144 of the General Rules and Regulations under the
Securities Act of 1933, as amended (the "Act") or otherwise pursuant to an
exemption from the registration requirements under the Act which may, in the
opinion of counsel for the Company, be available.
-3-
PAGE
5. The Company shall be under no obligation to release from
escrow the Shares and any accumulated dividends and distributions with
respect thereto until Employee has paid or caused to be paid all taxes
required to be withheld with respect to the issuance and vesting of Shares
and such dividends and distributions pursuant to applicable law.
6. If, prior to the release from escrow by the Company of the
Shares, there shall be any increases or reductions in the number of shares
of the Company's common stock outstanding by reason of any stock dividends
or stock divisions or other readjustments or, if there is any other material
change in the capital structure of the Company by reason of any
reclassification, reorganization, recapitalization or otherwise, there shall
be a proportionate and equitable adjustment of the Award with respect to the
amount and class of Shares subject to the Award as shall be conclusively
determined by the Company.
7. The Company may, in its discretion after the Vesting Date,
but shall not be obligated to, authorize the Company to purchase from
Employee for cash such number of shares which shall have vested to Employee
on the Vesting Date, at the fair market value thereof, as conclusively
determined by the Company, sufficient for Employee to pay taxes required by
law on the fair market value of such Shares and any and all accumulated
dividends and distributions with respect thereto. The Company or subsidiary
shall, if legally required, deduct from any compensation payable by it to
Employee any taxes required by applicable law to be withheld with respect to
the issuance or vesting of Shares and any and all accumulated dividends and
distributions with respect thereto, pursuant to the Award and the payment of
any amounts described in this Section 7.
8. Except as otherwise specifically required by any pension,
retirement, group insurance or other benefit plan of the Company or its
subsidiaries, the Award evidenced by this Grant shall not be taken into
account in determining the Employee's benefits under such plans.
9. The Company shall have exclusive authority to interpret all
matters relating to this Grant and to prescribe, amend or rescind rules and
regulations relating to this Grant, and that the Company's determinations on
such matters shall be final, conclusive and binding on the parties to this
Grant. The authority of the Company under this Grant may be delegated by
the Company Board to an individual, committee of individuals or other entity
(the "Delegate"). In the event of such delegation, that Delegate will
possess (concurrently with the Company) all of the power and authority of,
and will be authorized to take any and all actions required to be taken
hereunder by the Company, subject to such conditions and limitations as the
Company Board may prescribe.
10. Any claim by Employee against the Company or any subsidiary,
employee, officer or director thereof, arising out of or in connection with
this Grant shall, irrespective of the jurisdiction in which such claim may
be asserted, be barred by the expiration of one (1) year after the date of
the act or omission in respect of which such claim arises, and no such claim
shall be
-4-
PAGE
asserted against the Company or any subsidiary, employee, officer
or director thereof after the expiration of such one-year period.
11. This Grant is not an agreement to employ or to continue the
employment of Employee. Nothing in this Grant shall be deemed to create any
limitation or restriction upon such rights as the Company would otherwise
have to terminate the employment of the Employee at any time for any reason.
12. This Grant and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the state of New Jersey
pertaining to contracts made and to be performed wholly within such
jurisdiction.
13. This Grant represents all terms and conditions regarding the
subject matter hereof and all prior or contemporaneous agreements or
understandings, whether oral or in writing, are deemed to be merged herein.
14. This Grant may be amended by the Company at any time;
provided, however, that subject to Section 6 hereof, no amendment may reduce
the number of Shares subject to this Grant or defer the Vesting Date without
the consent of the Employee. Any amendment to this Grant will be made in
writing and executed by an officer of the Company.
15. Any notice or other communication to be sent to a party under
this Grant may be sent by regular first-class U.S. Mail, postage prepaid, to
the address specified for the party in the preamble of this Grant, or to
such other address as a party may specify by proper notice under this Grant.
IN WITNESS WHEREOF, the Company his issued and the Employee has
accepted and agreed to be bound by the provisions of this Grant, effective
as of the date first above written.
SELECTIVE INSURANCE GROUP, INC.
By: ___________________________
Title: ________________________
EMPLOYEE
______________________________
-5-
PAGE
Exhibit 5
[Letterhead of Selective Insurance Group, Inc.]
March 2, 1999
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, New Jersey 07890
Re: Registration Statement on Form S-3
- --------------------------------------
Ladies and Gentleman:
Reference is made to the Registration Statement on Form S-3 of Selective
Insurance Group, Inc., a New Jersey Corporation (the "Company"), to which
this opinion is attached as an exhibit (the "Registration Statement"). The
Registration Statement relates to the offering and sale by certain selling
shareholders of up to an aggregate of 344,923 shares of common stock, $2.00
par value per share (the "Shares"), of the Company which are currently
outstanding.
In this connection, I, or members of my staff have examined the Registration
Statement, including the exhibits thereto, the originals or copies,
certified or otherwise identified to my satisfaction, of the Restated
Certificate of Incorporation and the By-Laws of the Company as amended to
date, and such other documents and corporate records relating to the Company
as I have deemed appropriate for the purpose of rendering the opinion
expressed herein. The opinion expressed herein is based exclusively on the
applicable provisions of the New Jersey Business Corporation Act.
On the basis of the foregoing, I am of the opinion that the Shares have been
legally issued and are fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption Legal
Opinion in the prospectus which is part of the Registration Statement. In
giving such consent, I do not thereby admit that I am in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended.
Very truly yours,
/s/ Thornton R. Land
Thornton R. Land
Executive Vice President,
Administration and
General Counsel
PAGE
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
The Board of Directors
Selective Insurance Group, Inc.
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of Selective Insurance Group, Inc. of our reports
dated January 22, 1998, with respect to the consolidated balance sheets of
Selective Insurance Group, Inc. and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of income, stockholders'
equity and cash flows and related schedules for each of the years in the
three-year period ended December 31, 1997, which reports appear in the
December 31, 1997 Annual Report on Form 10-K of Selective Insurance Group,
Inc. and to the reference to our Firm under the heading "Experts" in the
prospectus.
/s/ KPMG Peat Marwick LLP
March 1, 1999
New York, New York
