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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 18, 2000
Registration No. 33-30833
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SELECTIVE INSURANCE GROUP, INC.
(Exact name of issuer as specified in its charter)
NEW JERSEY 22-2168890
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
40 WANTAGE AVENUE, BRANCHVILLE, N.J. 07890
(973) 948-3000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Thornton R. Land, Esq.
Executive Vice President, Administration and General Counsel
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, N.J. 07890
(973) 948-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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WITH COPY TO:
Stewart E. Lavey, Esq.
Drinker Biddle & Shanley LLP
500 Campus Drive
Florham Park, NJ 07932
(973) 360-1100
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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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, 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. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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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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SUBJECT TO COMPLETION, DATED JULY __, 2000
PROSPECTUS
[Logo]
1,500,000 SHARES OF COMMON STOCK
OF
SELECTIVE INSURANCE GROUP, INC.
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SELECTIVE INSURANCE GROUP STOCK PURCHASE PLAN FOR
INDEPENDENT INSURANCE AGENTS
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This prospectus relates to our common stock offered under the
Selective Insurance Group Stock Purchase Plan for Independent Insurance Agents.
Our insurance agencies and their principals, key employees, and their individual
retirement accounts, Keogh plans and employee benefit plans are eligible to
participate in the plan as described in this prospectus. Insurance agency
participants may use cash, all or a portion of their earned cash commissions or
all or a portion of their distributions earned under Selective's profit sharing
program for agents to purchase shares under the Stock Purchase Plan and may
allocate these amounts among their participants. Other participants may use cash
to purchase shares under the Stock Purchase Plan.
The purchase price for shares offered under the Stock Purchase
Plan is the average of the high and low sales prices of our common stock quoted
on the Nasdaq National Market on the date of purchase, less a discount of 10%.
Shares purchased under the plan will be restricted for a period of
one year. During this period you will not be able to sell or transfer your
shares or dispose of them in any way.
Our common stock is listed on the Nasdaq National Market under the
trading symbol "SIGI".
YOU SHOULD CAREFULLY CONSIDER THE RISKS OF AN INVESTMENT IN OUR
COMMON STOCK. RISK FACTORS BEGIN ON PAGE 3.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved any of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is _____________, 2000.
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TABLE OF CONTENTS
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<TABLE>
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Page
<S> <C>
Summary................................................................. 1
Use of Proceeds......................................................... 3
Risk Factors............................................................ 3
Selective Insurance Group............................................... 12
The Plan................................................................ 13
Description of Capital Stock............................................ 23
Plan of Distribution.................................................... 23
Experts................................................................. 23
Legal Matters........................................................... 23
Where You Can Find More Information..................................... 23
</TABLE>
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SUMMARY
This summary highlights selected information from this prospectus and may
not contain all of the information that is important to you. You should read all
of the information in this prospectus along with the other information and
financial statements we refer you to in the section "Where You Can Find More
Information" appearing at the end of this document. References to Selective
Insurance Group include its subsidiaries.
SELECTIVE INSURANCE GROUP
We are a regional insurance holding company offering commercial insurance
products, risk management products and managed care and professional employer
services. We also offer personal insurance products to individuals and families.
Our principal executive offices are located at 40 Wantage Avenue, Branchville,
New Jersey 07890 and our telephone number is (973) 948-3000.
THE SELECTIVE INSURANCE GROUP STOCK PURCHASE PLAN
FOR INDEPENDENT INSURANCE AGENTS
Eligibility
Each independent insurance agency which is under contract with us to
promote and sell our insurance is eligible to enroll in the plan and to purchase
shares on any purchase date. Eligible agencies are under no obligation to enroll
in the plan or to purchase shares under the plan. Also eligible to purchase
shares under the plan are:
- the principals, general partners, officers and stockholders of
eligible agencies;
- key employees of eligible agencies designated by the principals,
general partners or officers of the agencies.
- their individual retirement plans;
- their Keogh plans; and
- employee benefit plans of eligible agencies.
We will determine whether any agency, or any entity, individual person or
benefit plan designated by an agency, is eligible to purchase shares under the
plan.
How to Make Purchases
Plan participants can make purchases of our common stock under the plan
once each calendar quarter. The purchase date in each quarter is the same as our
dividend payment date in that quarter. We will send an enrollment/purchase form
to each insurance agency which is eligible to participate in the Plan. An agency
that chooses to participate in the plan must complete the enrollment/purchase
form and return it to us at the address indicated on the form. Once an agency is
enrolled in the plan, we will send another enrollment/purchase form in advance
of each scheduled purchase date. To make a purchase under the plan, the agency
must complete the form indicating the dollar amount of our common stock to be
purchased on the next purchase date indicated on the form. The form must then be
returned to Selective at the address indicated on the form at least 15 days
before the scheduled purchase date. If any of the principals, general partners,
officers, stockholders, key employees, or their individual retirement plans or
Keogh plans, or employee benefit plans of an agency wish to participate in the
plan, the agency must indicate on the form the
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dollar amount or percentage of earned commissions to be invested by them, and
they must sign the form. You must return the form to us before the purchase
date. If you are purchasing shares for cash, you must enclose a check for the
amount you choose to invest when you return the election form to us.
Agencies which participate in the plan may elect to purchase shares for
cash or to apply all or a portion of their earned cash commissions or all or a
portion of distributions earned under Selective's profit sharing plan for agents
to purchase shares under the plan. Each participating agency can allocate the
shares purchased among the participants affiliated with the agency. Each
participating agency, together the participants affiliated with the agency, may
invest in each calendar quarter up to an aggregate amount of $30,000 to purchase
shares under the plan. Participants pay no brokerage commissions or other
charges on their purchases of shares under the plan.
Terms of Purchase
We are offering our common stock under the plan for purchase on each
quarterly cash dividend payment date determined by Selective's board of
directors. The purchase price for shares offered under the plan is the average
of the high and low sales prices of our common stock quoted on the Nasdaq
National Market on the date of purchase, less a discount of 10%.
We use a book-entry system for the plan. We establish an account for each
participant with First Chicago Trust Company of New York, a division of
EquiServe. The shares purchased are credited to participants' individual
accounts, and we register participants' shares on our stock records. Each
participant receives a written confirmation statement each time shares are
purchased. You can request that certificates be issued to you, or you can close
your account, by sending a written request to First Chicago Trust Company of New
York.
Restrictions on Shares Purchased under the Plan
Shares purchased under the plan on and after the date of this prospectus
will be restricted for a period of one year starting on the day after the date
of purchase. During this time, you cannot sell, transfer, pledge, assign or
dispose of the shares in any other way. During the restricted period, your
shares will be held in your account at First Chicago Trust Company of New York,
but you will not be allowed to have share certificates issued to you. At the end
of the restricted period, your shares will remain in your account at First
Chicago Trust Company of New York until you request that certificates be issued
to you or that your account be closed.
During the restricted period you can vote your shares and you will
receive dividends declared and paid on your shares. There is no risk of
forfeiture of your shares during the restricted period.
Supplements
If we change any of the procedures or terms of the plan after the date of
this prospectus, we will send you a supplemental document called a "prospectus
supplement" that will describe any changed procedures or terms.
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USE OF PROCEEDS
We will receive all of the cash proceeds from the sale of our shares of
our common stock under the plan, and we will retain cash applied to the purchase
of shares of our common stock from agencies' commissions and distributions from
our profit sharing plan. We will use the proceeds for general corporate
purposes.
RISK FACTORS
You should carefully consider the following risk factors, together with
the other information in this prospectus, before you make a decision on whether
to purchase any shares of common stock offered by this prospectus.
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, and the trading price of our
common stock could decline significantly.
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. 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. Therefore, unusually severe storms or other natural disasters
which destroy property in the states in which we write insurance could adversely
effect our operations. Approximately 46% of our net premiums are earned from
insurance policies written in New Jersey. Other East Coast states, including
Connecticut, Delaware, Georgia, Maryland, New York, North Carolina,
Pennsylvania,
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Rhode Island, South Carolina, Virginia and several Midwestern states, including
Iowa, Illinois, Indiana, Ohio, Michigan and Wisconsin, account for substantially
all of our other business. 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.
WE FACE SIGNIFICANT COMPETITION FROM OTHER REGIONAL AND NATIONAL INSURANCE
COMPANIES AND FROM SELF-INSURANCE.
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. The Internet may also emerge as a significant source of
new competition, both from existing competitors using their brand names and
resources to write insurance through this distribution channel, and from
emerging companies.
The insurance industry continues to experience pricing competition, which
has impacted our commercial business. If our competitors price their premiums
more aggressively, they may adversely affect our underwriting results and our
ability to grow our insurance business. In addition, we face competition within
each agency which markets our insurance, because most of our agencies represent
more than one insurance company.
We also face competition from the implementation of self-insurance,
primarily in commercial insurance. Many of our customers and potential customers
are examining the risks and benefits of self-insuring as an alternative to
traditional insurance.
WE FACE COMPETITION FROM BANKS.
On November 12, 1999, the President signed into law the Financial
Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act.
The Act permits banks to engage in non-banking, financial services businesses
including the underwriting of insurance. The Act repealed portions of federal
law which historically prohibited banks from engaging in the insurance business.
The future impact of the Act is uncertain, but we may face future competition
from banks in the underwriting of insurance as a result of the Act.
We already face competition from banks, because banks have acquired
insurance agencies in states where we sell insurance including some 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 additional
insurance agencies which are important to us in states where we do business, we
might have to try to replace those insurance agencies. Also, as a result of the
Act, banks will be able to write
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property and casualty insurance and could compete directly with us by selling
insurance though their own insurance agencies.
WE ARE HEAVILY REGULATED IN THE STATES IN WHICH WE OPERATE.
We are subject to extensive supervision and regulation in the states in
which we transact business. 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. The extent of regulation varies but generally
is derived from state statutes. These statutes delegate regulatory, supervisory
and administrative authority to state insurance departments. Changes in workers'
compensation, insurance, health care, managed care or other applicable laws or
regulations, or their interpretations, may also have an adverse effect on our
business.
Although the federal government does not directly regulate the insurance
industry, federal initiatives from time to time can impact the insurance
industry. The Comptroller of the Currency can exercise some regulatory oversight
of the insurance related activities of national banks which could affect our
ability to compete with those banks in ways we cannot anticipate at this time.
In addition, proposals intended to control the cost and availability 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.
Other regulatory risks are as follows:
Automobile Insurance Regulation
In March 1999, a personal automobile insurance law in New Jersey became
effective which requires a statewide average premium reduction of 15%. As a
result, we anticipate that our annual premiums in this line may be reduced by
approximately $19 million. Due to provisions of the law, overall loss costs are
anticipated to decrease, primarily due to changes in auto medical claim
handling. Loss cost savings are expected to partially offset the financial
impact of the rate reduction. Also, we have been required to write auto
insurance in New Jersey cities under the new Urban Enterprise Zone law, some of
which have inadequate rates. As a result of the rate reduction and Urban
Enterprise Zone business, partially offset by loss cost savings and prior rate
adequacy, we expect an adverse impact on this line of business which is expected
to increase the statutory combined ratio for this line of business to a range of
105%-109%.
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South Carolina law has established a joint underwriting association for
automobile insurance. We are required to be a member along with other automobile
insurers in South Carolina. As a member of this association, we have to write
automobile insurance for some involuntary risks, and we share in the profit or
loss of the association. On March 1, 2003, the association 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 Regulation
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 marketplace. 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 homeowners 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.
THE PROPERTY AND CASUALTY INSURANCE INDUSTRY IS CYCLICAL.
Historically, the property and casualty insurance industry has been
cyclical. Over the past several years, premium rates have declined. The decline
in premium rates has adversely affected our underwriting results. Furthermore,
the industry's profitability is affected by unpredictable developments,
including:
- natural disasters;
- fluctuations in interest rates and other changes in the investment
environment that affect returns on our investments;
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- 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 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 and pay dividends
on our common stock unless our insurance subsidiaries can pay dividends to us.
Our insurance subsidiaries may only declare and pay 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 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 policyholders 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 RESERVES MAY NOT BE ADEQUATE TO COVER ESTIMATED LOSSES AND EXPENSES.
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 subjective 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
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- trends in general economic conditions, including inflation.
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 TO REDUCE OUR EXPOSURE TO RISKS.
We transfer our exposure to some 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
inability of any of our reinsurers 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.
WE DEPEND ON 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. 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. Also,
independent agents may decide to sell their businesses to banks, other insurance
agencies or other businesses. Our agents could decide to buy other agencies.
Changes in ownership or control of agencies, or expansion of agencies through
acquisition could adversely affect an agency's ability to control growth and
profitability, thereby adversely affecting our business.
WE MAY BE ADVERSELY IMPACTED BY A CHANGE IN OUR RATING.
Insurance companies are rated by independent rating agencies. 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.
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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 1999, A.M. Best continued
our "A+" rating.
Additionally, we have a Long Term Insurance Financial Strength Rating of
"A3" (Good) from Moody's Investor Services. Moody's ratings range from a low of
"c" to a high of "Aaa".
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 1999, Standard &
Poor's reaffirmed our "A+" rating.
We cannot be sure that we will maintain our current A.M. Best, Moody's or
Standard & Poor's ratings. Our business could be adversely effected if we
receive a significant downgrade in these ratings.
OUR ACQUISITIONS OF OTHER COMPANIES SUBJECT US TO RISKS.
As part of our strategy to enhance the technical skills needed to support
our insurance business, we acquire or invest in other complementary companies,
products and technologies. We recently acquired PDA Software Services, Inc.,
Consumer Health Network Plus, LLC and Selective HR Solutions, Inc. (formerly
known as and Modern Employers, Inc.), to further these objectives. Risks
commonly encountered in acquisitions include:
- the difficulty of assimilating the operations and personnel of the
combined companies;
- incurrence of unforseen obligations or liabilities;
- 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 from the issuance of stock to
sellers;
- the difficulty in maintaining controls, procedures and policies;
- the impairment of relationships with employees and customers as a
result of any integration of new personnel; and
- litigation or regulatory changes.
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In addition, as we complete acquisitions of companies which compete in
different markets than we do, we may face risks and uncertainties associated
with entering those new markets.
WE EMPLOY ANTI-TAKEOVER MEASURES.
We own, directly or indirectly, all of the shares of stock of our
insurance 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, other factors may discourage, delay or prevent a change of
control of Selective. 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 stockholder 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 transactions
specified in the statute (including 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 the shareholder became an
interested shareholder, unless that transaction is approved by the board of
directors of the corporation before that 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.
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WE DEPEND ON KEY PERSONNEL
The success of our business is dependent, to a large extent, on our
ability to attract and retain key employees, in particular our senior officers,
key management, sales, information systems, underwriting, claims, managed care,
professional employment organization and corporate personnel. Competition for
key personnel is intense. Most of our employees are not subject to employment
contracts or non-compete arrangements.
WE FACE RISKS FROM TECHNOLOGY-RELATED FAILURES
Insurance and insurance-related businesses are increasingly dependent on
computer and Internet-enabled technology. Our inability to bring new technology
on-line or to market, or our inability to anticipate or manage problems with
technology associated with scalability, security, functionality or reliability,
may adversely impact our businesses.
WE FACE RISKS IN THE PROFESSIONAL EMPLOYMENT ORGANIZATION BUSINESS
We intend to expand the operating territories of Selective HR Solutions
into our core operating states. The professional employment organization
business model is less understood, accepted and regulated in these markets,
compared with Selective HR Solution's home state of Florida.
Adverse litigation or regulation, service problems, the inability to
develop a competitive service and product package, our inability to encourage
its agents to sell the product and the consuming public's lack of awareness or
interest in professional employment organizations could adversely affect our
business.
LITIGATION COULD AFFECT OUR BUSINESS PRACTICES AND FINANCIAL RESULTS
The insurance industry has been the target of class action litigation in
the following areas: after-market crash parts, urban homeowner underwriting
practices, health maintenance organization practices and personal injury
protection payments. While we have not been impacted by that sort of litigation
to date, it is possible that future class action litigation could adversely
affect our insurance and managed care businesses.
UNIONIZATION OF MEDICAL PROVIDERS COULD IMPACT OUR OPERATIONS
Our Consumer Health Network subsidiary builds medical provider networks
and leases networks to insurers, medical management companies, third party
administrators and other medical claim payors. The lessors receive medical fee
discounts from network providers in exchange for patient volume commitments. If
medical providers decided to unionize, that could impair Consumer Health
Network's ability to maintain and grow networks, negotiate fee discount
arrangements and lease networks to their customers. These events would have an
adverse impact not only on Consumer Health Network, but also on Alta Services
which leases Consumer Health Network networks, and on our business as a whole
because we rely in part, on provider networks and discounts to manage our claims
medical expenses.
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SELECTIVE INSURANCE GROUP
We are a regional insurance holding company offering a broad range of
commercial insurance products, risk management products, managed care,
professional employer services and related services. We also offer personal
insurance products to individuals and families. Our commercial and personal
products are sold 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;
- FloodConnect, LLC;
- PDA Software Services, Inc.;
- Alta Services LLC;
- Consumer Health Network Plus LLC; and
- Selective HR Solutions, Inc., (formerly known as Modern Employers, Inc.)
We were incorporated in New Jersey in 1977 to acquire all of the shares
of Selective Insurance Company of America, formerly called "Selected Risks
Insurance Company."
Because we are a holding company, we rely on our subsidiaries for cash to
pay our obligations and dividends to our stockholders. State insurance laws and
regulations, as administered
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by state insurance departments, can restrict how much money our insurance
subsidiaries may distribute to us.
THE PLAN
GENERAL
Our board of directors adopted the Selective Insurance Group Stock
Purchase Plan for Independent Insurance Agents to motivate persons performing
independent insurance agency services for us by enabling them to participate in
our long-term growth and success. The Plan was originally adopted in May 1989
and was most recently amended on August 3, 1999.
The Plan allows our independent insurance agencies and their eligible
principals, key employees and benefit plans to purchase shares of our common
stock for cash. Our insurance agencies may also elect to apply all or a portion
of their earned cash commissions and distributions from our profit sharing plan
for agents to the purchase of shares of our common stock under the plan. Each
eligible insurance agency, together with its affiliated participants, may invest
up to an aggregate amount of $30,000 per calendar quarter under the plan. We
offer shares of common stock under the plan at a 10% discount from market value
on the date of purchase, and participants pay no brokerage commissions or other
charges on their purchases of shares under the plan.
Shares are purchased under the plan on each quarterly dividend payment
date established by our Board of Directors. These dates are usually around the
first day of March, June, September and December of each year. We do not
guarantee that dividends will be paid, and we can designate other dates as
purchase dates. We do not pay any interest on cash payments we receive under the
plan.
PARTICIPATION IN THE PLAN
Eligibility
Each independent insurance agency which is under contract with us to
promote and sell our insurance products is eligible to participate in the plan
and to purchase shares of our common stock under the plan. Also eligible to
purchase shares under the plan are:
- the principals, general partners, officers and stockholders of
eligible insurance agencies;
- key employees of eligible insurance agencies designated by the
principals, general partners or officers of the agencies;
- their individual retirement plans;
- their Keogh plans; and
- employee benefit plans of eligible insurance agencies.
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We will determine whether any insurance agency, or any entity, individual
person or employee benefit plan designated by an agency is eligible to
participate in the plan. Eligible agencies, entities and individual persons are
under no obligation to participate in the plan or to purchase shares of our
common stock under the plan. If an eligible agency chooses not to participate in
the plan, it will receive the earned cash commissions and the distributions from
our agents' profit sharing plan to which it is entitled as it has in the past.
The plan is for the benefit only of independent insurance agencies under
contract with us and their eligible principals, key employees and employee
benefit plans. No other persons can be direct or indirect beneficiaries or
participants in the plan. We will not be obligated under any arrangements
between an agency and its producers or other employees.
How to Enroll in the Plan
We send to each insurance agency which is eligible to participate in the
plan:
- an enrollment/purchase form;
- copies of this prospectus and any prospectus supplements; and
- copies of our most recent Annual Report.
If your agency wishes to participate in the plan, you must complete and
sign the enrollment/purchase form and return it to us in the postage-paid
envelope provided. You can obtain additional forms by written or telephonic
request to Selective, attention: Accounts.
An eligible agency will become a participant in the plan when it has
received a copy of this prospectus, any applicable prospectus supplement or
supplements, our most recent Annual Report and after we have received a properly
completed enrollment/purchase form signed on behalf of the agency.
How To Purchase Shares of Selective Common Stock
Once each calendar quarter, and prior to each purchase date, we mail
enrollment/purchase forms to each agency enrolled in the plan. Each form will
state when the next purchase date will occur. Purchases can be made under the
plan on the date described as the purchase date in each form. There is a place
on the form for each agency to designate the dollar amount to be invested on the
next purchase date, how much of that amount is paid in cash, how much of that
amount is to be deducted from monthly payments of earned cash commissions and
how much of that amount is to be deducted from the agency's distributions under
our profit sharing plan for agents. There is also a place on the form to
designate a percentage of earned cash commissions to be invested on the next
purchase date. If an agency elects a percentage of commissions to be invested,
that election will remain in effect until revoked in writing by the agency.
"Earned cash commissions" means those commissions which are earned and
actually available for payment to a participating agency for personal and
commercial direct bill policies after all offsetting debits and credits are
applied, as determined solely from our records.
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The enrollment/purchase form must also be completed by each principal, general
partner, officer, stockholder, key employee, individual retirement account,
Keogh plan or employee benefit plan of the participating agency who wishes to
participate in the plan. All participants must state on their
enrollment/purchase form:
- their full names and addresses;
- their social security or taxpayer identification numbers; and
- the dollar amount to be invested in our shares of common stock.
In addition, each participant must sign their enrollment/purchase from
and certify to us that they have received a copy of this prospectus and any
prospectus supplements and a copy of our Annual Report. The form must be signed
by the agency and each affiliated participant shown on the form.
Completed and signed election forms must be sent to:
Selective Insurance Group, Inc.
40 Wantage Avenue
Branchville, New Jersey 07890
Attention: Accounts
Purchased Shares and Your Account
We use a book-entry system for the plan. When you make your first
purchase of shares under the plan, we establish an account for you with First
Chicago Trust Company of New York, the plan administrator. Each time you
purchase shares, the shares are credited to your account and we register your
shares on our stock records. You receive a written account statement annually
and each time you purchase shares. After the expiration of the restricted period
described below under "Restrictions on Shares Purchased under the Plan", you can
request that certificates be issued to you in your name, or you can close your
account. You can vote all shares held in your account.
If you close your account, you will receive a certificate for the whole
number of shares held in your account and a check for the cash value of any
fractional shares and any cash held in your account. If an agency closes its
account, it can re-enroll in the plan at any time it is eligible to participate
by completing a new enrollment/purchase form.
Restrictions on Shares Purchased under the Plan
Shares purchased under the Plan on or after the date of this prospectus
will be restricted for a period of one-year beginning on the date of the day
after the date of purchase. During this one-year restricted period, you cannot
sell, transfer, pledge, assign or dispose of your shares in any way. During this
period, your shares will be held in your account at First Chicago Trust Company
of New York, but you will not be allowed to have share certificates issued to
you. However, you will be able to vote your shares during this period and you
will receive any dividends declared by our board
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<PAGE> 20
of directors. You will own all of the shares in your account and none of your
shares will be subject to forfeiture.
After the restricted period expires, your shares will remain in your
account until you request that certificates be issued to you or that your
account be closed. If you wish certificates to be issued to you or that your
account be closed, you must make a request in writing to First Chicago Trust
Company of New York. These requests are normally processed in approximately
three days.
How to Sell Your Shares
If you wish to sell your shares after the expiration of the restricted
period, you must send a written request to First Chicago Trust Company of New
York that a certificate be issued to you for the number of shares you wish to
sell. Once the certificate is issued to you, you can sell the shares in a
private sale or in the open market through a broker of your choice.
SHARES AVAILABLE UNDER THE PLAN
The maximum number of shares of common stock issuable under the plan is
1,500,000 (giving effect to the two-for-one stock split in December 1997). We
make the shares available from our authorized but unissued shares or from
treasury stock, including shares purchased by us in the open market. In the
event that our board of directors determines that:
- any stock dividend,
- extraordinary cash dividend,
- recapitalization,
- reorganization,
- merger,
- consolidation,
- split-up,
- spin-off,
- combination,
- exchange of shares,
- warrants,
- or rights offering to purchase our common stock at a price
substantially below fair market value,
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<PAGE> 21
- or other similar corporate event,
affects our common stock so that an adjustment is required in order to preserve
the benefits or potential benefits intended to be made available under the
program, then the board of directors may, in its sole discretion, adjust any or
all of the number and kind of shares which may be sold under the plan.
DIVIDENDS; DIVIDEND REINVESTMENT
We pay dividends, as and when declared by our Board of Directors, to the
record holders of shares of our common stock. As the record holder of shares of
common stock purchased under the plan, you will receive dividends, if any, in
cash for all shares registered in your name on the record date.
Any dividend payable in common stock or any split shares distributed by
us on shares purchased under the program will be deposited in your account at
First Chicago Trust Company of New York. Any shares received as the result of a
stock split will be subject to the same restrictions on transfer as the shares
purchased under the program. Shares received as dividends will not be subjected
to any transfer restrictions.
Participants in the plan are also eligible to participate in our dividend
reinvestment plan on the terms and conditions of that plan. If you elect to
participate in our dividend reinvestment plan, you will be entitled to reinvest
your dividends to purchase additional shares of our common stock. There is no
discount on the purchase of shares under our dividend reinvestment plan. The
transfer restrictions applicable to shares purchased under the plan will not
apply to any shares purchased under our dividend reinvestment plan. Information
about our dividend reinvestment plan can be obtained from us or from First
Chicago Trust Company of New York.
OTHER SHAREHOLDER RIGHTS; INFORMATION REPORTING
If we have a rights offering, participants in the plan will be entitled
to participate based upon their total share holdings. Rights on shares purchased
under the program and registered in the name of a plan participant will be
mailed directly to that participant in the same manner as to shareholders not
participating in the plan. See "Description of the Capital Stock - Stockholders
Rights Plan" for information relating to our stockholder rights plan.
Each participant in the plan will receive our annual and other periodic
or quarterly reports issued to stockholders, notices of stockholder meetings and
proxy statements and Internal Revenue Service Information for reporting
dividends paid and income resulting from the discount on the purchase of shares
under the plan.
Each participant will be entitled to vote the shares purchased under the
plan and registered in that participant's name on a record date for a meeting of
stockholders. A participant may vote in person or by proxy at any meeting of
stockholders.
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<PAGE> 22
ADMINISTRATION OF THE PLAN, INQUIRIES AND CORRESPONDENCE
First Chicago Trust Company of New York is the transfer agent and
registrar for our common stock. They also administer the plan and our dividend
reinvestment plan. All enrollment forms and election forms should be sent to
Selective Insurance Group. All other inquiries and correspondence should be sent
to:
First Chicago Trust Company of New York
a division of EquiServe
P.O. Box 2500
Jersey City, New Jersey 07303-2500
Telephone inquiries may be directed to us at (973) 948-3000 or to First Chicago
Trust Company of New York at (201) 324-0498.
We pay all expenses related to the plan. Plan participants pay no brokers
commissions or administrative or other charges under the plan.
AMENDMENT OR TERMINATION OF THE PLAN
We reserve the right to amend or terminate the plan at any time. If we
terminate the plan, you will receive a certificate for the whole number of
shares held in your account on the date of termination and a check for the cash
value of any fractional shares and any cash held in your account.
FEDERAL INCOME TAX CONSEQUENCES OF PURCHASING SHARES UNDER THE PLAN
The difference between the fair market value of the total number of
shares of our common stock received by a participant on a date of purchase and
the amount paid by the participant constitutes ordinary income to the
participant and will be recognized by the participant at the time of purchase.
Under the terms of the plan, if any agency participant earned $15,000 in cash
commissions or a profit sharing distribution and elected to invest $10,000 of
that amount in our common stock under the plan, the agency participant would
receive $5,000 in cash, and $10,000 would be used to purchase our shares. If on
the date of purchase the fair market value of our stock is $20, the
participant's purchase price would be $18 per share (a 10% discount). We would
purchase 555 shares ($10,000/$18) on the participant's behalf. As a result of
this transaction the participant's taxable ordinary income would be: $15,000
(the amount of either the commission payment or profit sharing distribution),
plus the participant would also incur ordinary income in the amount of $1,100,
which is the difference between the fair market value of the number of shares
purchased and the purchase price paid for the shares. Similarly, if a
participant elected to invest $10,000 in cash under the plan, the participant
would receive 555 shares ($10,000/$18) of stock, and would incur ordinary income
in the amount of $1,110.
We believe that no income tax consequences will arise to the participants
as a result of our payment of the costs of administration of the program. Except
as described in this document, we believe there are no other federal income tax
consequences to a participant resulting from purchases under the program.
Selective will be allowed a deduction, equal to the amount of ordinary income
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<PAGE> 23
recognized by the participant, in the tax year in which the participant includes
the income. In certain circumstances, backup tax withholding will be required.
The tax basis of any shares acquired pursuant to the plan will be their
fair market value on the date the shares were purchased and the holding period
applicable to the shares will commence on the purchase date.
A participant will have dividend income upon the receipt of any
dividends, whether or not reinvested through our dividend reinvestment plan. A
participant will recognize gain or loss upon that participant's sale or exchange
of the shares. The amount of the gain or loss will be equal to the difference
between the sales price of the shares and the participant's tax basis in the
shares.
The program is not qualified under either Section 401(a) or Section 423
of the U.S. Internal Revenue Code and is not subject to ERISA.
EACH PARTICIPANT IS ADVISED TO CONSULT ITS OWN TAX ADVISOR TO DETERMINE
THE PERSONAL TAX CONSEQUENCES OF PARTICIPATION IN THE PROGRAM.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Selective consists of 180,000,000
shares of common stock, $2.00 par value, and 5,000,000 shares of preferred
stock, without par value. As of June 30, 2000, there were issued and outstanding
25,491,991 shares of common stock. We had no preferred stock issued and
outstanding.
The following is a description of the material terms of our
capital stock.
COMMON STOCK
All shares of our common stock have equal rights. The holders of
shares of our common stock, subject to the preferential rights of the holders of
any shares of our preferred stock, are entitled to dividends when and as
declared by our board of directors. The holders of our common stock have one
vote per share on all matters submitted to a vote of our shareholders and the
right to our net assets in liquidation after payment of any amounts due to
creditors and any amounts due to the holders of our preferred stock. Holders of
shares of our common stock are not entitled as a matter of right to any
preemptive or subscription rights and are not entitled to cumulative voting for
directors. All outstanding shares of our common stock are, and the shares of
common stock issued under the plan will be, fully paid and nonassessable.
Our by-laws provide that the annual meeting of stockholders shall
be held on the first Friday in May of each year at our principal office or at
such other place in New Jersey as is designated by the board of directors. A
written notice of meeting must be given to each stockholder at least ten days
before the meeting.
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The transfer agent and registrar for our common stock is First
Chicago Trust Company of New York, P.O. Box 2500, Jersey City, New Jersey
07303-2500.
PREFERRED STOCK
Under our certificate of incorporation, we are authorized to issue
up to 5,000,000 shares of preferred stock in one or more series with the
designations and the relative voting, dividend, liquidation, conversion,
redemption and other rights and preferences fixed by our board of directors. Our
board of directors can issue preferred stock without any approval by our
stockholders.
On November 3, 1989, our board of directors created a series of
preferred stock designated as Series A Junior Preferred Stock. We have reserved
300,000 shares of Series A Junior Preferred Stock for issuance under our
stockholder rights plan, which is described below.
STOCKHOLDER RIGHTS PLAN
We have a stockholder rights plan. Under our stockholder rights
plan, each stockholder has one right for each share of our common stock it
holds. Each right entitles its holder to purchase from Selective one
two-hundredth of a share of Series A Junior Preferred Stock at a purchase price
of $80.00. We have the authority to adjust the rights to prevent dilution of the
interests represented by each right. The rights agreement between Selective and
First Chicago Trust Company of New York, as rights agent, describes the terms of
the rights.
Each outstanding share of Series A Junior Preferred Stock will be
entitled to a preferential quarterly dividend of 100 times the dividend declared
on a share of our common stock and a preferential liquidation payment of 100
times the payment made for a share of our common stock. Each outstanding share
of Series A Junior Preferred Stock will have one vote, and each one
two-hundredth of a share will have one two-hundredth of a vote, voting together
with outstanding shares of common stock. In the event of a merger or other
transaction in which shares of common stock are exchanged, each share of Series
A Junior Preferred Stock will receive 100 times the amount received for each
outstanding share of common stock.
The rights are attached to all outstanding shares of our common
stock and trade with our common stock until they become exercisable. We will not
distribute separate rights certificates. The rights will separate from our
common stock and a distribution date will occur upon the earlier of:
(1) 10 days following the date of any public
announcement that a person or group of affiliated or associated
persons has acquired beneficial ownership of 15% or more of the
outstanding shares of our common stock, or
(2) 10 business days following the commencement or
announcement of a tender offer or exchange offer that would result
in a person or group becoming the beneficial owner of 15% or more
of the outstanding shares of our common stock.
Until the distribution date or earlier redemption, exchange or
expiration of the rights:
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(1) the rights will be evidenced by the common stock
certificates and will be transferred with and only with
those common stock certificates,
(2) new common stock certificates will contain a notation
incorporating our rights agreement by reference, and
(3) the surrender for transfer of any certificates for common
stock will also constitute the transfer of the rights
associated with the common stock represented by those
certificates.
The rights are not exercisable until the distribution date and
will expire at the close of business on February 2, 2009 unless we redeem or
exchange them first as described below.
As soon as practicable after the distribution date, we will mail
right certificates to holders of record of common stock as of the close of
business on the distribution date. Thereafter, the separate right certificates
alone will represent the rights. Except as otherwise determined by our board of
directors, we will issue rights only with shares of our common stock issued
before the distribution date.
If any person becomes the beneficial owner of 15% or more of the
outstanding shares of our common stock we will provide each right holder, other
than the beneficial owner of 15% or more of the outstanding shares of our common
stock, with the right to receive upon exercise of the right that number of
shares of common stock having a market value of two times the exercise price of
the right. In the event that, at any time following the stock acquisition date:
(1) we are acquired in a merger or other business combination
transaction, or
(2) 50% or more of our assets or earning power is sold,
then each holder of a right shall thereafter have the right to receive, upon
exercise of a right, common stock of the acquiring company having a value equal
to two times the exercise price of the right.
We may adjust the purchase price payable, and the number of shares
of preferred stock or other securities or property issuable, upon exercise of
the rights from time to time to prevent dilution:
(1) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, common stock or the
preferred stock,
(2) if holders of the preferred stock are granted certain
rights or warrants to subscribe for preferred stock or
convertible securities at less than the current market
price of the preferred stock, or
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(3) upon the distribution to holders of the preferred stock of
evidences of indebtedness or assets, excluding regular
quarterly cash dividends, or of subscription rights or
warrants, other than those referred to above.
With certain exceptions, we will not adjust the purchase price
until cumulative adjustments amount to at least 1% of the purchase price. We
will not issue fractional units and, instead, we will make an adjustment in cash
based on the market price of the preferred stock on the last trading date prior
to the date of exercise.
The rights are redeemable in whole, but not in part, at a price of
$.01 per right by our board of directors at any time until the stock acquisition
date on which a person or group has become the beneficial owner of 15% or more
of the outstanding shares of our common stock. At any time after a person or
group has become the beneficial owner of 15% or more of the outstanding shares
of our common stock, and before that person or group has acquired 50% of the
outstanding shares of our common stock, the board of directors may exchange each
right held by stockholders, other than the beneficial owner of 15% or more of
the outstanding shares of our common stock, for one share of our common stock or
one two-hundredth of a share of Series A Junior Preferred Stock.
Immediately upon the action of the board of directors ordering
redemption or exchange of the rights, the rights will terminate and thereafter
the holders of rights will be entitled only to receive shares of common stock or
the redemption price.
Until a right is exercised, the holder will have no rights as a
stockholder of Selective beyond those as an existing stockholder. As long as the
rights are attached to our common stock, we will issue a right with each new
share of our common stock issued.
Our stockholder rights plan has the effect of discouraging,
delaying or preventing attempts to take over Selective.
ANTITAKEOVER PROVISIONS
Under our certificate of incorporation, a merger, consolidation,
sale of all or substantially all of our assets or other business combination
involving an interested stockholder holding 10% or more of the voting power of
our capital stock requires the affirmative vote of two-thirds of our outstanding
voting stock unless the transaction has been approved by a majority of those
members of our board of directors who are to affiliated with the interested
stockholder or unless the interested stockholder offers a fair price and
reasonably uniform terms to all other stockholders, as described in our
certificate of incorporation. Our certificate of incorporation also provides for
a classified, or "staggered", board of directors. The vote of two-thirds of our
outstanding voting stock are required to amend or repeal these provisions.
The foregoing provisions have the effect of discouraging, delaying or
preventing attempts to take over Selective.
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REGULATION OF INSURANCE COMPANY TAKEOVERS
Selective owns, directly or indirectly, all of the shares of stock of its
insurance company subsidiaries domiciled in New Jersey, New York, North Carolina
and South Carollina. State insurance laws require prior approval by state
insurance departments of any acquisition of control of an insurance company
domiciled in the state or a company which controls an insurance company
domiciled in the state. For this purpose, control generally includes ownership
of 10% or more of an insurance company or insurance holding company unless the
state insurance commissioner determines otherwise. Any purchase of 10% or more
of the common stock of Selective could require approval of the insurance
departments in the states mentioned above.
PLAN OF DISTRIBUTION
The shares of common stock registered under this registration statement
will be offered as described in this prospectus or, if applicable, as provided
in any prospectus supplement. The shares of common stock will be offered by us
to eligible agencies and other eligible participants as described in this
prospectus or a prospectus supplement. The last sale price of the common stock
quoted on the Nasdaq National Market on July 14, 2000 was $18.50.
LEGAL MATTERS
Drinker Biddle & Shanley LLP, Florham Park, New Jersey will pass upon the
validity of the shares of common stock issuable under the plan for Selective.
EXPERTS
The consolidated financial statements and schedules of Selective
Insurance Group, Inc. and its subsidiaries as of December 31, 1999 and 1998, and
for each of the years in the three-year period ended December 31, 1999, have
been incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.
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
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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, as amended, for the fiscal year ended
December 31, 1999;
2. Our definitive Proxy Statement dated March 31, 2000, filed in
connection with our May 5, 2000 Annual Meeting of Stockholders;
3. Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
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 updating 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 C. Nieroda, Assistant Vice President, Corporate Secretary and
Corporate Counsel, 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee $ *
Accounting Fees and Expenses $ 2,500
Legal Fees and Expenses $ 15,000
Printing Fees and Expenses $ 2,500
NASDAQ Listing Fees $ *
Miscellaneous Expenses $ 1,000
Total Expenses $ 21,000
</TABLE>
----------
* previously paid
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 to the 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
25
<PAGE> 30
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, employees 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 that a director or officer
shall not be personally liable, or shall 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 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 provided 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 to
the 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.
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<PAGE> 31
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
4.1 Selective Insurance Group, Inc. Stock Purchase Plan for Independent
Insurance Agents (included in the Prospectus)*
4.2 Enrollment/Purchase Form*
5 Opinion of Drinker Biddle & Shanley LLP.*
23.1 Consent of Independent Auditors.*
23.2 Consent of Drinker Biddle & Shanley LLP (contained in Exhibit 5 hereto)
24 Powers of Attorney*
</TABLE>
------------------
* Filed herewith
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.
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<PAGE> 32
(2) That, for the purpose of determining any liability under the
Securities Act, each 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 termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
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.
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<PAGE> 33
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
Post-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Branchville
and State of New Jersey on the 17th day of July, 2000.
SELECTIVE INSURANCE GROUP, INC.
By: /s/Gregory E. Murphy
---------------------------------
Gregory E. Murphy
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement on Form S-3 has
been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Gregory E.Murphy Chairman of the Board, July 17, 2000
------------------- President and Chief
Gregory E. Murphy Executive Officer and Director
/s/Dale A. Thatcher Senior Vice President of Finance and July 17, 2000
------------------- Chief Financial Officer
Dale A. Thatcher
* Director
-------------------
Paul D. Bauer
* Director
-------------------
A. David Brown
* Director
-------------------
William A. Dolan, II
* Director
-------------------
William C. Gray, D.V.M.
* Director
-------------------
C. Edward Herder
</TABLE>
29
<PAGE> 34
<TABLE>
<S> <C>
* Director
-------------------
William M. Kearns, Jr.
* Director
-------------------
Joan Lamm-Tennant, Ph.D.
* Director
-------------------
S. Griffin McClellan, III
* Director
-------------------
William M. Rue
* Director
-------------------
Thomas D. Sayles
* Director
-------------------
J. Brian Thebault
</TABLE>
* Gregory E. Murphy hereby signs this
Post-Effective Amendment No. 2 to the
Registration Statement on Form S-3 on
behalf of each of the indicated persons
for whom he is attorney-in-fact on July
17, 2000 pursuant to a power of
attorney filed herewith.
By: /s/ Gregory E. Murphy
-------------------------
Gregory E. Murphy
Attorney-in-Fact
Dated: July 17, 2000
30
<PAGE> 35
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.2 Enrollment/Purchase Form
5 Opinion of Drinker Biddle & Shanley LLP
23.1 Consent of Independent Auditors
24 Powers of Attorney
</TABLE>
31
