PAGE
As filed with the Securities and Exchange Commission on February 8, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
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
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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
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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.
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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.
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CALCULATION OF REGISTRATION FEE
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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
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Common Stock,
par value
$2.00 per
share
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Total 324,923 shares $18.47 $6,001,327.81 $1,669.00
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(1) Estimated pursuant to Rule 457 solely for the purpose of calculating
the registration fee.
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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.
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PAGE
Prospectus, subject to completion, dated February 8, 1999
SELECTIVE INSURANCE GROUP, INC.
COMMON STOCK
324,923 Shares
The shareholders of Selective Insurance Group, Inc. listed below
are offering or selling 324,923 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 February 5, 1999, the closing price of one share of
Common Stock on the Nasdaq National Market was $17 3/4.
We urge you to carefully read this Prospectus which will describe
the specific terms of the offering before you make your investment
decision.
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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 , 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................................................ 9
PLAN OF DISTRIBUTION................................................ 10
WHERE YOU CAN FIND MORE INFORMATION................................. 11
LEGAL OPINION....................................................... 12
EXPERTS............................................................. 12
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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.
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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
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of writing insurance risk policies which we believe are favorable at prices
we believe to be fair in order to compete on the basis 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. Another competitive factor in the
industry involves banks stepping up efforts to break the barriers between
various segments of the financial services industry, including insurance.
These efforts pose new challenges to insurance companies and agents from
industries traditionally outside the insurance business.
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 law contains multiple implementation dates that will be determined
through the adoption of regulations. One provision of the law reduces
average statewide automobile insurance premiums by 15%, with the greatest
reductions being applicable to liability-only policies. We anticipate that
this provision will become effective on or about March 22, 1999, and that
our New Jersey personal automobile direct premiums written will be reduced
between 11% and 12%, or approximately $17 million. This is less than the
average of 15% because a higher proportion of our policies provide physical
damage coverage, on which the rate reduction will be lower. In addition to
this reduction in new and renewal insurance premiums, policyholders may,
without penalty, request that their policies be reissued at the lower
premium rates prior to their renewal. We cannot estimate how many policy-
holders will request the reissuance of their policies.
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, if any. 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.
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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.
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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
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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.
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.
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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.
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.
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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;
* 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.
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SELLING SHAREHOLDERS
Shares Shares
Beneficially Beneficially
Selling Owned Prior Shares Being Owned After
Shareholder To Offering (1) Offered Offering
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David Fuller 103,891 103,891 0
Senior Vice President
and Secretary of PDA
Software Systems, Inc.
Thomas McCarthy 103,891 103,891 0
Senior Vice President
of PDA Software
Systems, Inc.
Niels Mortensen (2) 103,891 103,891 0
Senior Vice President
and Treasurer of PDA
Software Systems, Inc.
Lori Barrett (3) 250 250 0
Rob Bayer (3) 750 750 0
Denny Beckemeimer (3) 500 500 0
Randy Bell (3) 1,550 1,550 0
Ron Berkley (3) 600 600 0
Brenda Berry (3) 250 250 0
John Bisacca (3) 250 250 0
Dan Bock (3) 250 250 0
Chuck Brown (3) 750 750 0
Carol Colbock (3) 750 750 0
Marv Cowan (3) 250 250 0
Donna Cutitta (3) 250 250 0
Maurice Fanty (3) 250 250 0
Pat Fawks (3) 250 250 0
Dan Ford (3) 250 250 0
Tim Harrington (3) 500 500 0
Steve Hendrix (3) 500 500 0
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Keri Hull (3) 250 250 0
Terry Humphies 600 600 0
Mary Ann Jones (3) 250 250 0
Brent Kevern (3) 1,250 1,250 0
Gary Kline (3) 250 250 0
Michille Millege (3) 500 500 0
Carsten Mortensen (3) 500 500 0
Terry Schmidt (3) 250 250 0
Greg Smith (3) 250 250 0
Joe Spila (3) 250 250 0
Rich Todd (3) 750 750 0
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(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) 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.
(3) These shares of Common Stock were issued under a series of restricted
stock agreements and may not be sold until the restrictions lapse. 13,250
shares of the restricted stock 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;
-10-
PAGE
* 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:
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. 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
-11-
PAGE
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.
-12-
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.
324,923 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. . . . . . . . . . . . . . . . . $ 1,669.00
Accounting Fees and Expenses . . . . . . . . . $ 3,500.00
Legal Fees and Expenses . . . . . . . . . . . . $ 10,000.00
Printing Fees and Expenses . . . . . . . . . . . $ 1,000.00
NASDAQ Listing Fees . . . . . . . . . . . . . . $ 6,498.46
Miscellaneous Expenses . . . . . . . . . . . . . $ 2,332.54
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
PAGE
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.
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).
PAGE
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
(to be filed by amendment).
5 Opinion of Thornton R. Land, Esq., General Counsel of the
Company (to be filed by amendment).
23.1 Consent of Independent Accountants.
23.2 Consent of Thornton R. Land, Esq. (contained in Exhibit 5
hereto) (to be filed by amendment).
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
PAGE
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 8th day of February, 1999.
SELECTIVE INSURANCE GROUP, INC.
By: /s/ James W. Entringer
---------------------------
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
--------- ----- ----
/s/ James w. Entringer Chairman of the Board and February 8, 1999
- ---------------------- Chief Executive Officer
James W. Entringer
/s/ Gregory E. Murphy President and Chief February 8, 1999
- ---------------------- Operating Officer
Gregory E. Murphy
/s/ David B. Merclean Senior Vice President and February 8, 1999
- ---------------------- Chief Financial Officer
David B. Merclean
/s/ A. David Brown Director February 8, 1999
- ----------------------
A. David Brown
/s/ William A. Dolan, II Director February 8, 1999
- ----------------------
William A. Dolan, II
PAGE
/s/ William C. Gray, D.V.M. Director February 8, 1999
- ----------------------
William C. Gray, D.V.M.
/s/ C. Edward Herder Director February 8, 1999
- ----------------------
C. Edward Herder
/s/ Frederick H. Jarvis Director February 8, 1999
- ---------------------
Frederick H. Jarvis
/s/ William M. Kearns, Jr. Director February 8, 1999
- -----------------------
William M. Kearns, Jr.
/s/ Joan Lamm-Tennant, Ph.D. Director February 8, 1999
- -----------------------
Joan Lamm-Tennant, Ph.D.
/s/ S. Griffin McClellan, III Director February 8, 1999
- -----------------------
S. Griffin McClellan, III
/s/ William M. Rue Director February 8, 1999
- ----------------------
William M. Rue
/s/ Thomas D. Sayles, Jr. Director February 8, 1999
- ----------------------
Thomas D. Sayles, Jr.
/s/ J. Brian Thebault Director February 8, 1999
- ----------------------
J. Brian Thebault
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.
* To be filed by amendment.
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
February 5, 1999
New York, New York
