AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 1997
Registration No. 333-14123
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT 1 to
FORM S-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE SEIBELS BRUCE GROUP, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0672136
(State or other jurisdiction of (IRS employer identification
incorporation) number)
1501 Lady Street (P.O. Box 1)
Columbia, SC 29201 (29202)
(803) 748-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Priscilla C. Brooks, Corporate Secretary
The Seibels Bruce Group, Inc.
1501 Lady Street (P.O. Box 1)
Columbia, SC 29201 (29202)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
John C. West, Jr., Esquire
John C. West, Jr., P.A.
1111 Broad Street
(P.O. Box 661)
Camden, SC 29020
Matthew P. McClure, Esquire
The Seibels Bruce Group, Inc.
1501 Lady Street
Columbia, SC 29201
William E. Donnelly, Esquire
McGuire, Woods, Battle & Booth, LLP
The Army and Navy Club Building
1627 Eye Street, N
Washington, DC 20006-4007
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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, check the following box.
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a) (1)
of this Form, check the following box.
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.
PART I
INFORMATION REQUIRED IN PROSPECTUS
THE SEIBELS BRUCE GROUP, INC.
Cross Reference Sheet pursuant to Regulation S-K, Item 501(b)
Form S-2 Item Number and Heading Location In Prospectus
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................. Inside Front and Outside
Back Cover Pages of
Prospectus;
Available Information
3. Summary Information, Risk Factors, and Ratio
of Earnings to Fixed Charges................... Prospectus Summary
4. Use of Proceeds................................ Use of Proceeds
5. Determination of Offering Price................ Not Applicable
6. Dilution....................................... Not Applicable
7. Selling Security Holders....................... Selling Shareholders
8. Plan of Distribution........................... Plan of Distribution
9. Description of Securities to be Registered..... Description of Capital
Stock
10. Interests and Named Experts and Counsel........ Legal Matters; Experts
11. Information with Respect to the Registrant..... Risk Factors; Prospectus
Summary;The Company;
Selling Shareholders
12. Incorporation of Certain Information by
Reference...................................... Incorporation of Certain
Information by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Act Liabilities.................................Indemnification of Directors
and Officers
March 14, 1997
PROSPECTUS
THE SEIBELS BRUCE GROUP, INC.
1501 LADY STREET (PO BOX 1)
COLUMBIA, SOUTH CAROLINA 29201 (29202)
(803) 748-2000
15,770,000 Shares of
COMMON STOCK
$1.00 Par Value Per Share
This Prospectus relates to 15,770,000 shares of Common Stock,
$1.00 par value per share ("Common Stock") offered for sale by certain
selling shareholders. See "Selling Shareholders."
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK.
POTENTIAL PURCHASERS OF COMMON STOCK SHOULD CAREFULLY
CONSIDER THE MATTERS SET FORTH UNDER "RISK FACTORS."
The Common Stock of the Company is traded on the NASDAQ
National Market under the symbol "SBIG." On March 10, 1997, the last
reported sales price of the Common Stock on the NASDAQ National
Market was $1.9375 per share. See "Market Price and Dividends."
The Company will not receive any cash proceeds from the sale by
the Selling Shareholders of the Common Stock offered hereby. The
expenses of registration under the Securities Act of 1933 of the Common
Stock offered hereby are estimated to be $35,000 and will be paid by the
Company.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS.ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Company's principal executive offices are located at 1501
Lady Street, Columbia, South Carolina 29201. The telephone number of the
Company's principal executive offices is (803) 748-2000.
The date of this Prospectus is March 14, 1997
THE COMPANY IS A HOLDING COMPANY WHICH CONTROLS CERTAIN INSURANCE
COMPANY SUBSIDIARIES DOMICILED IN SOUTH CAROLINA AND KENTUCKY. THE
INSURANCE LAWS OF SOUTH CAROLINA AND KENTUCKY EACH PROVIDE THAT NO
PERSON MAY ACQUIRE CONTROL OF THE COMPANY, AND THUS INDIRECT CONTROL
OF THESE INSURANCE COMPANY SUBSIDIARIES, UNLESS SUCH PERSON HAS GIVEN
PRIOR WRITTEN NOTICE TO SUCH INSURANCE COMPANY SUBSIDIARIES AND TO
THE DIRECTOR OF INSURANCE OF SOUTH CAROLINA AND THE INSURANCE
COMMISSIONER OF KENTUCKY, AS THE CASE MAY BE, AND RECEIVED THE PRIOR
APPROVAL OF THE DIRECTOR OF INSURANCE OF SOUTH CAROLINA AND THE
INSURANCE COMMISSIONER OF KENTUCKY, RESPECTIVELY. ANY PURCHASER OR
HOLDER OF SHARES OF COMMON STOCK OF THE COMPANY POSSESSING 10% OR MORE
OF THE VOTING POWER OF SUCH CLASS WOULD BE PRESUMED TO HAVE ACQUIRED
SUCH CONTROL UNLESS THE DIRECTOR OF INSURANCE OF SOUTH CAROLINA AND
THE INSURANCE COMMISSIONER OF KENTUCKY, UPON APPLICATION, HAS
DETERMINED OTHERWISE.
TABLE OF CONTENTS
PROSPECTUS SUMMARY....................................4
RISK FACTORS..........................................7
USE OF PROCEEDS.......................................14
SELLING SHAREHOLDERS..................................15
PLAN OF DISTRIBUTION..................................15
DESCRIPTION OF CAPITAL STOCK..........................16
LEGAL MATTERS.........................................18
EXPERTS...............................................18
AVAILABLE INFORMATION.................................18
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.....18
INDEMNIFICATION OF DIRECTORS AND OFFICERS.............19
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information in this Prospectus and in the documents incorporated
herein by reference.
The Company
The Seibels Bruce Group, Inc. provides automobile, flood and
other property and casualty insurance services and products. The
Company's largest source of revenues derives from the company's role as
one of three servicing carriers for the South Carolina Reinsurance
Facility (the "South Carolina Facility" or the "Facility"), a state-
sponsored plan for insuring South Carolina drivers outside of the
voluntary market. The Company also is a leading provider, and an original
participant, in the National Flood Insurance Program (the "NFIP"), a flood
insurance program administered by the Federal Emergency Management
Agency ("FEMA"). As a servicing carrier for the Facility and FEMA, the
Company receives commissions and fees, but reinsures all of the
underwriting risk. The Company provides other fee based services,
including services in its capacity as a managing general agent ("MGA")
for commercial insurance policies underwritten by an unaffiliated
insurance company, catastrophe claims services, excess and surplus lines
brokerage services and liability run-off management services. Recently,
the Company began marketing and underwriting nonstandard automobile
insurance on a risk-bearing basis.
Founded in 1869, the Company was long regarded as a leading
provider of insurance services and products in the southeastern United
States. From the mid-1980s through the middle of 1995, the Company
experienced significant operating losses due primarily to environmental
and construction defect claims on general liability policies written by the
company prior to 1985, losses from Hurricane Hugo in 1989 and from
Hurricane Andrew in 1992, and losses on workers' compensation
insurance policies written by the Company. Despite a significant
recapitalization in 1994, these operating losses reduced the Company's
shareholders' equity to $650,000 by the end of 1994, and the Company
suspended its underwriting operation in early 1995. Beginning in 1995,
new management took a number of actions to stabilize and improve the
Company's financial condition through significant cost reductions and the
investment of new equity capital as well as a renewed emphasis on the
Company's fee-based businesses. As a result of these actions, the
Company realized positive net income in 1995 and 1996 and was able to
resume limited insurance underwriting activities in 1996.
Nonstandard Automobile Business. The Company became a
servicing carrier for the South Carolina Facility in 1974 and, as such, has
the longest tenure of existing servicing carriers with the Facility. The
South Carolina Facility is a legislatively mandated residual market plan
for nonstandard automobile insurance in South Carolina. Generally,
nonstandard automobile insurance is obtained by persons unable to obtain
insurance through standard market carriers based on, among other factors,
poor premium payment history, make of automobile, limited driving
experience or unsatisfactory driving records. At September 30, 1996, the
Company estimates that approximately 42% of all South Carolina drivers
were insured through the Facility, either under policies written through a
pool of "Designated Agents" for the Facility or by other voluntary
insurance companies that elect not to retain such risks. Generally, the
Facility offers nonstandard automobile insurance policies with basic
limits of $15,000 per person and $30,000 per accident for bodily injury
and $5,000 for property damage. As a servicing carrier, the Company
handles production, policy administration, claims adjustment and
processing of policies written by the 65 Designated Agents assigned to
the Company. The Company receives a fee based on the premiums
written and an additional fee based on the claims adjusted, but does not
retain any of the underwriting risk.
In addition to its servicing carrier operations for the Facility, the
Company recently began marketing and underwriting nonstandard
automobile insurance on a risk-bearing basis. The Company markets its
nonstandard automobile insurance products through independent agents
primarily in South Carolina and North Carolina.
Reform legislation recently was passed by the South Carolina
Senate which would, if such legislation becomes law, reorganize the
South Carolina Facility over a three-year transition period. The Company
believes that the proposed reorganization likely would result in Facility
rates increasing to a self-sustaining level and, as a result, a voluntary exit
from the Facility by insureds able to obtain more attractive rates in the
market. Reform legislation also is pending before the South Carolina
House of Representatives. Although this bill would not result in a
reorganization of the Facility, it would eliminate certain factors used in
rating South Carolina drivers and overhaul the calculation of recoupment
fees.
In the event no reform legislation is passed by the South Carolina
Legislature, the Company believes that the current Insurance
Commissioner has demonstrated a willingness to allow premium rates to
rise to approximate self-sustaining levels. For example, physical damage
rates were recently allowed to rise approximately 62%. The Company
believes that these rates likely will increase again in order to remain at a
self-sustaining level. The Company also anticipates that similar increases
in liability rates will also be allowed by the current Insurance
Commissioner. These rate increases may be effected through
adjustments to criteria under the Facility legislation which are within the
purview of the Commissioner.
If Facility rates are increased and the Facility is in fact
depopulated, the Company believes there will be an opportunity to attract
these insureds leaving the Facility to the Company's nonstandard
automobile insurance products and, eventually, into standard and preferred
automobile products. In particular, the Company believes that its long-
standing agent relationships, its underwriting experience and knowledge
of the South Carolina automobile insurance market will allow it to obtain
and underwrite profitable, new business. See "Risk Factors -- Nature of
Automobile Insurance Business in South Carolina."
Flood Insurance Business. The Company also provides flood
insurance through the Write Your Own Flood Program ("WYO") of the
NFIP. The Company joined the NFIP as an original servicing carrier in
1983 and believes that it currently is one of the 10 largest flood servicing
carriers in the NFIP. The Company's flood insurance provides protection
to policyholders for property damage resulting from floods, subject to
limits of $250,000 on residential buildings, $500,000 on commercial
risks and $100,000 and $500,000 for residential and non-residential
contents, respectively. As a servicing carrier, the Company handles
production, policy administration and claims adjustment for its flood
policies, but retains no underwriting risk. The Company receives a fee
based on the premiums written and an additional fee based on claims
adjusted. The Company's flood products are marketed through
independent agents primarily in Florida, New Jersey, North Carolina and
South Carolina. The Company also provides specialized catastrophe
claims services to other flood insurers through its network of storm
adjusters. The Company believes that is claims service business will
provide opportunities to expand the Company's underlying flood
insurance business into other areas of the country.
MGA/Commercial Lines and Other Services. The Company
serves as a MGA in connection with commercial policies underwritten
for Generali-U.S. Branch ("Generali"), a member of the Generali Group.
The Generali Group had approximately $79.7 billion in total assets at
December 31, 1995 and has an A.M. Best, Company, Inc. ("A.M. Best")
rating of A (Excellent). The Company sells and services certain Generali
commercial products, including commercial automobile products, in
Georgia, Kentucky, North Carolina, South Carolina and Tennessee. The
Company receives a commission, and Generali currently retains the
underwriting risk. The Company expects to assume a portion of this
commercial business on a risk-bearing basis in 1997. In addition, the
Company acts as a brokerage operation for certain other specialty lines of
insurance, including excess and surplus lines; provides claims adjustment
and administrative services, including the catastrophe claims services
noted above, for various property-casualty insurers; and provides services
to companies running-off discontinued business, leaving the region or
temporarily needing services due to sharp increases in volume. The
Company provides all of these additional services on a fee-for-service
basis.
Strategy. The Company's objective is to increase its revenues
and net income by growing its property and casualty insurance business in
the Southeast region of the United States. To meet its objective, the
Company intends to:
capitalize on existing agent relationships to expand its
risk-bearing automobile insurance business in South
Carolina and other southeastern states;
continue to reduce expenses related to the Company's
Facility operations and to upgrade the Company's
management information systems;
increase the Company's flood insurance operations by
expanding agent coverage in several high-volume
markets and providing a bundled product, including
flood mapping services, flood insurance, excess flood
insurance and multiple payment methods;
increase the profitability of its MGA relationship with
Generali by assuming on a risk-bearing basis a portion
of the Generali commercial policies; and
expand its excess and surplus insurance business and
catastrophe claims service business by expanding the
types of products available and improving the quality of
service provided to agents and policyholders.
The Company's principal executive offices are located at 1501
Lady Street, Columbia, South Carolina 29201, and its telephone number
is (803) 748-2000.
The Offering
Common Stock being offered by the Selling
Shareholders 15,770,000 shares
Common Stock outstanding after the
Offering(1) 32,572,029 shares
Use of Proceeds The Company will not receive any proceeds
from any sale of the shares by the Selling Shareholders.
The shares offered by the Selling Shareholders pursuant
to this Prospectus include shares of Common Stock under-
lying options (the "Options") granted by the Company to
certain of the Selling Shareholders. The gross proceeds
from an exercise of the Options are estimated to be
$15,025,000 (assuming an exercise price of $1.50 with
respect to 3,125,000 Options , $2.00 with respect to
3,125,000 Options, and $2.50 with respect to 1,635,000
Options). There can be no assurance, however, that the
Options will be exercised. The proceeds derived from
the exercise of the options will be retained by the
Company for general corporate purposes, including
possible acquisitions. Although the Company regularly
evaluates possible acquisition opportunities, it is not
currently a party to any letters of intent or arrange-
ment regarding any acquisition. The Company may also
contribute some or all of the proceeds from the exercise
of the options to one or more of its insurance company
subsidiaries for statutory capital as the Company deems
necessary to support their insurance operations.
NASDAQ Stock Market Symbol SBIG
(1) Includes 7,885,000 shares of common stock to be issued assuming the
exercise of options held by the Selling Shareholders.
RISK FACTORS
There are certain risks involved in an investment in the Common
Stock. Accordingly, prospective purchasers of the Common Stock should
consider carefully the factors set forth below as well as the other
information contained in or incorporated by reference into this
Prospectus.
Changes in Automobile Insurance Business in South Carolina
The South Carolina Senate recently passed reform legislation
that would, if such legislation becomes law, reorganize the South Carolina
Facility over a three-year period. Reform legislation is also pending
before the South Carolina House of Representatives which would not
reorganize the Facility but would effect amendments to the rating of
South Carolina drivers and the calculation of recoupment fees paid by
South Carolina drivers. South Carolina drivers pay recoupment fees to
subsidize the Facility's deficit. The Company believes either piece of
legislation, if it becomes law, will likely result in higher Facility premium
rates.
Should the South Carolina Legislature not pass reform
legislation, the Company believes that the current Insurance
Commissioner has demonstrated a willingness to increase the Facility's
premium rates. Physical damage premium rates were recently increased
approximately 62%. The Company also anticipates that similar increases
in liability premium rates will also be allowed by the current Insurance
Commissioner through adjustments to criteria under the Facility
legislation which are within the Commissioner's purview.
The Company believes that in any event a strong likelihood exists
that premium rates for drivers in the Facility will increase in order to
prohibit the Facility from operating at a deficit. This, in turn, may result
in a large voluntary depopulation of the Facility. As depopulation occurs,
the Company will lose service and commission income resulting from its
role as one of the Facility's three servicing carriers. Although the
Company intends to offset this loss through increased risk-bearing
activities, there can be no guarantee that the Company will be successful.
In addition, there can be no assurance that the Company will accurately
identify and insure the drivers leaving the Facility on a profitable basis.
Regulation
The Company is subject to comprehensive regulation by federal
and state government agencies. Such regulation is generally intended for
the protection of policyholders rather than security holders. The nature
and extent of that regulation vary from jurisdiction to jurisdiction, but
typically involve prior approval of the acquisition of control of an
insurance company or of any company controlling an insurance company,
regulation of certain transactions entered into by an insurance company
with any of its affiliates, limitations on dividends, approval or filing of
premium rates and policy forms for many lines of insurance, solvency
standards, minimum amounts of capital and surplus which must be
maintained, limitations on types and amounts of investments, limitation of
the right to cancel or non-renew policies in some lines, regulation of the
right to withdraw from markets or agencies, requirements to participate in
residual markets, licensing of insurers and agents, deposits of securities
for the benefit of policyholders, reporting with respect to financial
condition, and other matters. In addition, state insurance department
examiners perform periodic financial and market conduct examinations of
insurance companies and may require insurance companies to establish
reserves and require insurance companies to pay assessments (up to
prescribed limits) to guaranty funds which are established by the various
states to fund policyholder losses or liabilities of insolvent or
rehabilitated companies. SCIC was assessed approximately $116,000 in
1995 and $29,000 in 1996 by state guaranty funds, the impact of which
will be partially offset by credits against future state premium taxes.
Because such assessments are typically not made for several years after
an insurer fails and depend upon the final outcome of liquidation or
rehabilitation proceedings, the Company cannot accurately determine the
precise amount or timing of any future assessments. No assurance can be
given that future legislative or regulatory changes will not also adversely
affect the Company.
Although the federal government does not directly regulate the
insurance business, federal legislation and administrative policies in
several areas can significantly affect the insurance business. Recently,
increased scrutiny has been place upon the insurance regulatory
framework, and certain state legislatures have considered or enacted laws
that alter, and in many cases, increase state authority to regulate insurance
companies and insurance company systems.
In light of recent legislative developments, the NAIC and state
insurance regulators have begun reexamining existing laws and
regulations, specifically focusing on insurance company investments and
solvency issues, risk-adjusted capital guidelines interpretations of
existing laws, the development of new laws, the implementation of
nonstatutory guidelines and the circumstances under which dividends may
be paid. The NAIC has adopted a risk-based capital ("RBC") formula for
property and casualty insurance companies to evaluate the adequacy of
statutory capital requirements and to use as an early warning tool by the
NAIC and state regulators to identify companies that require additional
scrutiny or regulatory action. Regulatory compliance is determined by
the ratio of a company's total adjusted capital to its "authorized control
level" RBC. As of December 31, 1996, SCIC's RBC fell within the
Regulatory Action Level. The formula is subject to periodic review and
may be modified at the discretion of the NAIC. There can be no
assurance that existing insurance-related laws and regulations will not
become more restrictive in the future or that new restrictive laws will not
be enacted and, therefore, it is not possible to predict the potential effects
thereof on the Company.
Financial Condition
For the year ended December 31, 1995, the Company reported
net income of $1,152,000. However, for the years ended December 31,
1994 and 1993, the Company recorded net losses of $19,074,000 and
$1,014,000 (after an extraordinary item) respectively. Following several
years of operating losses, and a resulting shortfall in statutory capital, the
Company suspended underwriting new and renewal personal lines of
business in the second quarter of 1995. Having increased capital and in
combination with improved operating results, the Company received
authorization from the South Carolina Department of Insurance and
resumed underwriting new business during the third quarter of 1996.
Although operating and strategic plans provide for underwriting
profitability, there can be no assurance that the Company will achieve this
objective, or will not suffer further operating losses.
The Company also has experienced negative cash flows from
operations for each of the last three fiscal years primarily due to the
Company's transition during this time period out of most of its risk-
bearing activities. This transaction caused significant downsizing of the
Company's revenues while run-off of claims for such risk-bearing
activities remained relatively constant. The Company invests its cash in
bonds and other securities, and such instruments are subject to market
fluctuations. To the extent that the Company is required to sell
marketable securities in order to fund operations, the Company may
experience realized losses on its investment portfolio. The Company
believes that its cash and short-term investments, which are generally not
subject to market fluctuation, will be sufficient to fund such negative cash
flows.
Uncertainty Associated with Estimating Reserves for Unpaid Losses and LAE
The Company currently underwrites a limited number of
insurance policies on a risk-bearing basis. Historically, however, the
Company wrote larger amounts of insurance on a risk-bearing basis and it
could be partly liable in the future due to this past underwriting activity.
For example, the Company acquired a California managing general agency
in 1981 and assumed West Coast general liability policies that included
contractors liability and environmental coverages that subsequently
accumulated substantial losses. While the statute of limitations has
expired on certain of these claims and the Company has divested itself of
certain other claims, the Company remains liable for a portion of the
potential environmental claims associated with this acquisition.
The reserves for losses and loss adjustment expense ("LAE")
established by the Company are estimates of amounts needed to pay
reported and unreported claims and related expenses based on facts and
circumstances known to the Company as of the time it established the
reserves. Reserves are based on historical claims information, industry
statistics and other factors. The establishment of appropriate reserves is
an inherently uncertain process, and there can be no assurance that the
ultimate liability will not materially exceed the Company's claim and
policy reserves and have a material adverse effect on the Company's
results of operations and financial condition.
Significant uncertainties exist for estimating the Company's
potential losses from environmental and toxic tort claims. Among the
complications are a lack of historical data, long reporting delays,
difficulty in properly allocating responsibility and/or liability for
environmental damage, changes in underlying laws and judicial
interpretation of those laws, potential for an environmental claim to
involve many insurance providers over many periods, questions
concerning interpretation and application of insurance and reinsurance
coverage and uncertainty regarding the number and identity of insurers
with potential environmental exposure.
Due to the inherent uncertainty of estimating reserves, it has
been necessary, and may over time continue to be necessary, to revise
estimated future liabilities as reflected in the Company's reserves for
claims and policy expenses. The historic development of reserves for
losses and LAE may not necessarily reflect future trends in the
development of these amounts. Accordingly, it may not be appropriate to
extrapolate redundancies or deficiencies based on historical information.
The Company's loss reserves are an estimate at a given point in
time of the amount that the Company expects to pay insurance claimants
based on the facts and circumstances known at the time. It can be
expected that the ultimate liability in each case will differ from such
estimates. For each of the three years ended December 31, 1995, 1994,
and 1993, the results of operations were affected by reserves from prior
years having been deficient in those earlier periods. The impact of the
adverse development was $3.4 million in 1995, $17.0 million in 1994,
and $10.5 million in 1993. Adverse development increased during the
early 1980s and peaked in 1985. The Company currently believes that
the reserves are sufficient to prevent prior years' losses from adversely
affecting future periods. However, establishing reserves remains an
estimation process, and there can be no assurance that adverse
developments will not occur in the future or that reserves will be adequate
to cover actual losses.
Significant Contracts
The Company derives a substantial portion of its net income
from a Servicing Agreement with the South Carolina Facility, FEMA, and
Generali. The agreement with the South Carolina Facility does not expire
until September 30, 1999. However, legislative initiatives could
potentially lessen the profitability of the business prior to expiration of
the contract. The agreement with the FEMA is renewed annually and is
conditioned upon the Company meeting reporting requirements and other
obligations. Accordingly, there can be no assurance that the Company
will continue to benefit from agreements with these programs; or that, if
the agreements continue, their terms will be consistent with past
agreements. In addition, the Company does not control rates on its South
Carolina Facility business and NFIP business, which are instead set by the
South Carolina Facility and FEMA, respectively.
Re-Entry into Risk-Bearing Activities
Underwriting Depopulating South Carolina Drivers. The
Company believes that a strong likelihood exists that South Carolina
drivers will voluntarily leave the South Carolina Facility due to increases
in premium rates. In the event of such depopulation, the Company will
lose service and commission income resulting from its role as one of the
Facility's three servicing carriers. The Company intends to attempt to
attract these drivers to nonstandard automobile products underwritten by
the Company. There can be no assurance, however, that the Company will
successfully attract such drivers or that the Company will accurately
identify and insure the drivers leaving the Facility on a profitable basis.
Future Growth and Continued Operations Dependent on Access
to Capital. Property and casualty insurance is a capital intensive business.
The Company must maintain minimum levels of surplus in order to write
business and meet the other related standards established by insurance
regulatory authorities and insurance rating bureaus.
The Company intends to continue to pursue acquisition and new
internal growth opportunities. Among the factors which may restrict the
Company's future growth is the availability of capital. Such capital will
likely to be obtained through debt or equity financing or retained earnings.
There can be no assurance that the Company will have access to sufficient
capital to support future growth and also satisfy the capital requirements
of rating agencies and regulators. In addition, the Company may require
additional capital to finance future acquisitions.
Designated Agents. The Company is required by the South
Carolina Facility to write its Facility-related business through the
Designated Agents assigned to the Company's Block. Designated Agents
are currently not allowed to write any non-Facility-related automobile
insurance business. If certain reform legislation discussed above becomes
law, Designated Agents may be allowed to write other automobile
insurance business besides Facility-related policies. Should this occur,
the can be no assurance that Designated Agents that the Company either
currently services or has serviced in the past will write other automobile
insurance business with the Company.
Independent Agents. The Company engages in active recruitment
and training of independent agents to market and sell its products, in part
by frequent presentations designed to educate agents with respect to the
Company's automobile insurance products and operations. The Company
also periodically reviews and terminates its agency relationships with
non-producing or under-producing agents or agents who do not comply
with the Company's guidelines and policies with respect to the sale of
such products. While the Company believes that the commissions it pays
to independent agents are competitive with the commissions paid by other
insurance companies selling similar policies, there can be no assurance
that the Company will be able to continue to attract and retain independent
agents to sell the Company's automobile insurance products.
Importance of Ratings. The Company has elected not to be rated
by A.M. Best, the industry's leading rating authority, and accordingly was
last assigned a group rating of NR-9 ("Not Assigned-Company Request").
A.M. Best is an independent company which rates insurance companies
based on its judgment of factors related to the ability to meet
policyholder and other contractual obligations. Most of the Company's
competitors have A.M. Best ratings. While the Company believes the
lack of a rating does not have a material impact on its non-standard
automobile business, since these lines generally are not as sensitive to the
rating of the insuring company as for commercial line business, there can
be no assurance that such ratings or future changes therein will not affect
the Company's competitive position. Furthermore, to the extent the
Company begins to offer product lines where a rating is an important
factor, the Company's results of operations could be adversely affected.
At the appropriate time, the Company plans to seek a new rating from
A.M. Best.
Uncertain Pricing and Profitability. In 1996, the Company made
the strategic decision to re-enter the risk-bearing, nonstandard
automobile insurance business. The Company intends to begin
underwriting a portion of the commercial lines business that it currently
writes as an MGA for an unaffiliated insurance company. These insurance
businesses are affected by many factors which can cause fluctuations in
the results of operations of these businesses. Many of these factors are
not subject to the control of the Company. For example, severe weather
conditions could adversely affect the Company's business through higher
losses and loss adjustment expenses ("LAE"). Such factors, together with
competitive pricing and other considerations, could result in fluctuations
in the Company's underwriting results and net income.
Geographic Concentration
The Company's business is concentrated in the states of South
Carolina, Kentucky, North Carolina, Tennessee and Georgia.
Consequently, the Company will be significantly affected by changes in
the regulatory and business climate in those states. A bill that would
implement a reorganization of the South Carolina Reinsurance Facility is
currently pending before the State Legislature for the State of South
Carolina.
Risks Associated with the National Flood Insurance Program
Absence of Homeowner's Insurance Product. The Company
currently does not offer a homeowner's insurance product. Many
consumers, particularly in flood-prone areas, purchase flood insurance at
the same time they purchase homeowners insurance. Accordingly, the
Company believes that its failure to offer a homeowner's insurance
product has limited its ability to expand its flood insurance business at a
pace that is equivalent to the growth of the NFIP program as a whole. The
Company has no current plans to offer a homeowner's insurance product.
FEMA Requirements. The Company derives a substantial portion
of its net income through the WYO Program of the NFIP. FEMA, which
administers the NFIP, instituted a "Cover America" program requiring all
flood insurers increase the number of "new policies" in the flood
program by at least 10% each year in order to retain 32.6% of the
premiums written. If an insurer in the NFIP fails to grow the number of
new policies written by 10%, its commission level is reduced to 30.6%
of premiums written. The Company feels it has adequately reserved for
any reduction in premium level.
Independent Agents. The Company markets its flood insurance
products through a network of approximately 2,000 independent agents
and periodically reviews and terminates its agency relationships with non-
producing or under-producing agents or agents who do not comply with
the Company's guidelines and policies with respect to the sale of its flood
products. While the Company believes that the commissions it pays to its
agents are competitive with the commissions paid by other insurance
companies selling similar policies, there can be no assurance that the
Company will be able to continue to attract and retain independent agents
to sell the Company's flood insurance products.
Systems Operations. The Company has encountered difficulties
in complying with FEMA reporting requirements. In order to comply
with such requirements, the Company has recently entered into an
agreement with a major provider of processing for the NFIP to out source
the processing of its flood insurance business. FEMA has undertaken a
review of the quality of the Company's reporting systems and pursuant to
a decision issued on February 26, 1997 has allowed the Company 120
days within which to achieve compliance with FEMA reporting
requirements. Although the Company expects that a new out sourcing
arrangement will enable the Company to achieve compliance with FEMA
reporting requirements within the 120-day mandated period, there can be
no assurance that the Company will in fact be able to do so or that the
Company will be able to comply with FEMA reporting requirements on an
ongoing basis.
Volatility of Flood Claims Business. The profitability of the
flood insurance industry is significantly affected by unpredictable events
such as hurricanes and weather patterns. Since the Company earns a
portion of its revenues from servicing flood claims, the frequency and
magnitude of such events could have an adverse effect the profitability of
the Company.
Contract Changes. The Company's agreement with the NFIP is
renewed annually and is conditioned upon the Company meeting reporting
requirements and other obligations. Additionally, commission rates
derived from participation in the NFIP are mandated by FEMA. There can
be no assurance that FEMA will renew its agreement with the Company or
that FEMA will not reduce the commission the Company is paid in
connection with the NFIP.
Nature of Automobile Insurance Business in South Carolina
In 1996, the Company made the strategic decision to re-enter the
risk-bearing, nonstandard automobile insurance business. The
nonstandard automobile insurance business is affected by many factors
which can cause fluctuations in the results of operations of this business.
Many of these factors are not subject to the control of the Company. The
size of the nonstandard market can be significantly affected by, among
other factors, the underwriting capacity and underwriting criteria of
standard automobile insurance carriers. In addition, an economic
downturn in the states in which the Company writes business could result
in fewer new car sales and less demand for automobile insurance. Severe
weather conditions could also adversely affect the Company's business
through higher losses and loss adjustment expenses. These factors,
together with competitive pricing and other considerations, could result
in fluctuations in the Company's underwriting results and net income.
Depopulation of the Facility. The Company has positioned itself
to take advantage of a potential depopulation of the South Carolina
Facility in response to the 1997 Automobile Insurance Reform Bill (the
"Reform Bill") currently being considered by the South Carolina
Legislature. The bill has passed the Senate and is pending consideration
by the House of Representatives. The Reform Bill, if enacted into law,
would result in higher rates for drivers in the South Carolina Facility and
would prohibit the Facility from operating at a deficit. This, in turn, is
anticipated to result in a large voluntary depopulation of the Facility.
However, there can be no assurance that the Reform Bill will be enacted
into law or that if enacted, will result in the significant voluntary
depopulation of the Facility that the Company anticipates. Moreover,
there can be no assurance that the Company will accurately identify and
insure the drivers leaving the Facility on a profitable basis.
Risks Associated with Systems Operations
The Company operates and maintains its own computer system
for its operations, including policy issuance, billing, claims processing,
and financial and management reporting. Commencing in late 1994, the
Company switched its policy and claims processing from an outsourcing
arrangement with a third party vendor to its own computer system. The
Company has experienced difficulties in transitioning to its computer
systems in commercial lines and is in the process of establishing a data
bridge between these systems in order to eliminate redundant entry of
policy information and reduce policy issuance time. To the extent that
the Company continues to be delayed in transitioning certain systems
operations, its results of operations may be adversely affected.
Competition
All of the areas of business in which the Company engages are
highly competitive. The principal methods of competing are service and
pricing. Many competing property and casualty companies offer more
diversified lines of insurance than the Company's property and casualty
insurance group and have substantially greater financial resources. In
addition, effective October 1, 1994, the Company received a smaller
book of business from the South Carolina Reinsurance Facility due to a
competitive bidding process. The Company responds to this competitive
environment by constantly updating its policy offerings, improving
operating procedures and constantly reviewing expenses. There can be no
assurance that the Company's responses to competition will be
successful.
Limitation on Net Operating Loss Carry Forwards
As of December 31, 1995, the Company had unused net
operating tax loss carry forwards and capital loss carry forwards of $97.9
million for income tax purposes, all of which have been reserved through
valuation allowance for financial reporting purposes. However, due to a
"change in ownership" condition that occurred in 1995, the Company's
use of the net operating loss carry forwards is subject to limitation in
future years to an amount estimated to be approximately $2.0 million per
year. A future change in ownership resulting from the registration of
shares could further limit the utilization of net operating loss carry
forwards.
Tax Considerations
There are various applicable tax consequences associated with an
investment in the Common Stock. Each investor is urged to consult with
his, her or its own tax advisor concerning the effects of applicable income
tax laws and regulations on an investment by him, her or it in the Company
and his, her or its individual tax situation. The Company will not seek or
receive a ruling from the Internal Revenue Service or a tax opinion as to
the tax consequences of an investment in the Common Stock.
Dividends
The Company is a legal entity separate and distinct from its
subsidiaries. As a holding company, the primary sources of cash needed
to meet its obligations, including principal and interest payments with
respect to indebtedness, are dividends and other permitted
payments from its subsidiaries and affiliates. South Carolina insurance
laws and regulations require a domestic insurer such as SCIC, the
Company's principal subsidiary, to report any action authorizing
distributions to shareholders and material payments from subsidiaries and
affiliates at least thirty days prior to distribution or payment except in
limited circumstances. Additionally, those laws and regulations provide
the South Carolina Department of Insurance with the right to disapprove
and prohibit distributions meeting the definition of an "Extraordinary
Dividend" under the statutes and regulations. If the ability of SCIC and
the Company's other insurance subsidiaries to pay dividends or make
other payments to the Company is materially restricted by regulatory
requirements, it could affect the Company's ability to service its debt
and/or pay dividends. Moreover, no assurance can be given that legislative
changes will not result in statutory provisions more restrictive than those
currently in effect.
The ability of the Company to declare and pay cash dividends is
dependent upon the ability of SCIC to declare and pay dividends to the
Company. SCIC is regulated as to its payment of dividends by the South
Carolina Insurance Holding Company Regulatory Act. This law provides
that, without the prior approval of the Director of Insurance r of the State
of South Carolina, dividends within any twelve-month period may not
exceed the greater of (i) 10% of SCIC's surplus as regards policyholders
as of December 31 of the prior year or (ii) SCIC's statutory net income,
not including realized capital gains or losses, for the prior calendar year.
The Company's payment of cash dividends is at the discretion of the
Board of Directors, upon approval of the Commissioner, and is based on
its earnings, financial condition, capital requirements and other relevant
factors. The Board of Directors does not presently intend to pay any cash
dividends in the foreseeable future.
Dependence on Key Personnel in Connection with Future Success
The future success of the Company depends significantly upon
the efforts of certain key management personnel including former
Governor of South Carolina John C. West, Chairman of the Board of
Directors of the Company; Ernst N. Csiszar, President and Chief
Executive Officer of the Company; and John A. Weitzel, Chief Financial
Officer of the Company. Loss of any of these officers could adversely
affect the Company's business. As the Company continues to grow, it
will need to recruit and retain additional qualified management personnel,
and there can be no assurance that it will be able to do so. See
"Management -- Directors and Executive Officers of the Company."
Control by Principal Shareholders
Prior to this offering, the principal shareholders of the Company
were Saad A. Alissa, certain of the Selling Shareholders who comprise the
Powers Group and the remainder of the Selling Shareholders who
comprise the Avent Group, who beneficially own directly or indirectly on
a fully diluted basis, respectively, approximately 22%, 39% and 10% of
the Common Stock. Until such time as these principal shareholders sell
or dispose of the Common Stock held by them, either through this
offering or otherwise, each of Mr. Alissa, the Powers Group and the
Avent Group will have the ability to exert significant influence over the
policies and affairs of the Company.
Market for Common Stock; Possible Price Volatility
The Company's Common Stock is currently listed on the
NASDAQ Stock Market, and generally was not widely traded during the
year-ended December 31, 1996. While the shares to be sold in this
offering will increase the amount of stock available for trading, there can
be no assurance that a more active trading market will develop or, if
developed, that it will be maintained.
The market price of the Company's Common Stock has
experienced significant volatility over the last five years. Factors such as
events resulting in significant claims on policies issued by the Company
and its subsidiaries, adjustments in reserves, changes in the value of the
Company's investment portfolio, cancellation or amendment of
contractual relationships, announcements of technological innovations or
new products by the Company or its competitors, governmental
regulation, regulatory approvals or developments relating to corporate
alliances or patent or proprietary rights may have a significant impact on
the market price of the Company's Common Stock. In addition, general
market price declines, volatility or share illiquidity in the future could
adversely affect the market price of the Company's Common Stock.
There can be no assurance that the market price of the Common Stock
will not decline after an investor purchases shares, or that following the
purchase of the shares of Common Stock, a shareholder will be able to
sell shares at a price equal to or greater than the acquisition price.
Shares Eligible for Future Sale
Future sales of substantial amounts of Common Stock in the
public market, or the possibility of such future sales, could adversely
affect the market price of the Common Stock. The Company has
outstanding a substantial number of unregistered shares of Common
Stock, and a substantial number of authorized shares available for future
issuance. The Company issued 7,000,000 shares of Common Stock to
Saad A. Alissa in a private placement. Under terms of the stock purchase
agreement with Mr. Alissa, the Company is required, at its expense, to
register Mr. Alissa's shares for resale. The Company is currently
preparing a registration statement on Form S-2 to register Mr. Alissa's
shares. Mr. Alissa has informed the Company that, pursuant to such
registration, he will offer his shares for sale to the public in an
underwritten offering. The Company may also register shares of Common Stock or
grant registration rights in connection with future financing. In addition,
certain employees, officers and directors of the Company hold Common Stock
and/or options to purchase Common Stock. See "Description of Capital Stock."
No prediction can be made as to the effect, if any, that future
sales of shares, or the availability of shares for future sale, will have on
the market price of the Common Stock prevailing from time to time.
Sales of substantial amounts of Common Stock in the public market, or
the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock. If such sales reduce the
market price of the Common Stock, the Company's ability to raise
additional capital in the equity markets could be adversely affected.
Effect of Certain Anti-Takeover Provisions
The Company's Articles of Incorporation, the South Carolina
Business Corporation Act of 1988 and the insurance laws of states in
which the Company conducts business contain certain provisions which
could delay or impede the removal of incumbent directors and could
make more difficult a merger, tender offer or proxy contest involving the
Company, even if such a transaction would be beneficial to the interests
of the shareholders, or could discourage a third party from attempting to
acquire control of the Company. In particular, the classification of the
company's board of Directors could have the effect of delaying a change
in control of the company. In addition, the Company has authorized
5,000,000 shares of Special Stock, which the Company could issue
without further shareholder approval and upon such terms and conditions,
and having such rights, privileges and preferences, as the Board of
Directors may determine. The Company has no current plans to issue any
Special Stock. In addition, South Carolina insurance laws and regulations
prohibit any person from acquiring control of the Company without the
prior approval of the South Carolina Department of Insurance.
USE OF PROCEEDS
The Company will not receive any proceeds from any sale of the
shares by the Selling Shareholders. The shares offered by the Selling
Shareholders pursuant to this Prospectus include shares of Common
Stock underlying options (the "Options") granted by the Company to
certain of the Selling Shareholders. The gross proceeds from an exercise
of the Options are estimated to be $15,025,000 (assuming an exercise
price of $1.50 with respect to 3,125,000 Options , $2.00 with respect to
3,125,000 Options, and $2.50 with respect to 1,635,000 Options). The
Company intends to contribute the net proceeds from the exercise of any
of the Options to SCIC as a capital contribution. However, there can be
no assurance that the Options will be exercised.
SELLING SHAREHOLDERS
The following sets forth, as of February 26, 1997, certain
information with respect to the Selling Shareholders.
<TABLE>
<S> <C> <C> <C> <C>
Ownership After Offering(2)
Shares Owned ------------------------
Name Before Offering(1) Shares Offered Number Percentage
- ----------------- ---------------- -------------- ------- -----------
Frank H. Avent(4) 2,080,000(3) 2,080,000 -0- (5)
Fred C. Avent 150,000 150,000 -0- (5)
Mary C. Avent 80,000 80,000 -0- (5)
Larry M. Brice 100,000 100,000 -0- (5)
DeLeon Finklea 200,000 200,000 -0- (5)
Winston R. Godwin, IRA 100,000 100,000 -0- (5)
Rex W. and Jane P. Huggins 536,000 500,000 36,000 (5)
Peter D. and Vera C. Hyman 100,000 100,000 -0- (5)
Angela A. Lynch 80,000 80,000 -0- (5)
Joseph K. Newsom, Sr. 100,000 100,000 -0- (5)
PepsiCo Bottling of Florence 2,000,000 2,000,000 -0- (5)
Charles H. Powers(4) 10,328,206 10,000,000 328,206 1.01
Walker S. Powers(4) 2,000,000 2,000,000 -0- (5)
Celeste A. Roseman 80,000 80,000 -0- (5)
Mark J. Ross 100,000 100,000 -0- (5)
Howard Stokes 100,000 100,000 -0- (5) *
(1) Number of shares and percentage amounts include shares of Common Stock underlying certain
options that are exercisable within 60 days after February 26, 1997 as follows: Frank H. Avent - 40,000;
Fred C. Avent - 75,000; Mary C. Avent - 40,000; Larry M. Brice - 50,000; DeLeon Finklea - 100,000;
Winston R. Godwin - 50,000; Rex W. and Jane P. Huggins - 250,000; Peter D. and Vera C. Hyman -
50,000; Angela A. Lynch - 40,000; Joseph K. Newsom - 50,000; PepsiCo Bottling of Florence -
1,000,000; Charles H. Powers - 5,000,000; Walker S. Powers - 1,000,000; Celeste A. Roseman - 40,000;
Mark J. Ross- 50,000; and Howard Stokes - 50,000.
(2) Assumes the sale of all shares offered, including the 7,885,000 shares the Selling Shareholders
may receive upon exercise of the options held by each of them as discussed in Note 1.
(3) Includes 2,000,000 shares of Common Stock (including 1,000,000 shares underlying options)
as to which Mr. Avent shares voting and dispositive power with PepsiCo Bottling of Florence
("PepsiCo"). Mr. Avent has informed the Company that he is President and General Manager of PepsiCo.
(4) Messrs. Avent, Powers and Powers currently serve as directors of the Company.
(5) Less than 1%
</TABLE>
PLAN OF DISTRIBUTION
This offering involves shares of Common Stock issued and
shares of Common Stock issuable upon the exercise of the Options under
agreements between the Company and the Selling Shareholders. Selling
Shareholders may offer such shares for sale from time to time. Such
shares may be offered for sale in transactions effected in the
over-the-counter market or such other market in which the Common
Stock is traded. Such shares may be offered and sold to or through
broker-dealers, market makers, or others who may charge commissions
or effect markups in connection with such transactions. Such shares may
also be offered and sold in privately negotiated transactions not effected
on any established trading market.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $1.00, and 5,000,000
shares of Special Stock, no par value. There were issued and outstanding
as of February 26, 1997, 24,687,029 shares of Common Stock, all of
which are fully paid and nonassessable. No shares of Special Stock are
outstanding. However, the Board of Directors of the Company could,
without stockholder approval, issue Special Stock and establish the rights,
privileges, and preferences thereof, including, but not limited to, dividend
rights, convertibility features, redemption rates and prices, liquidation
preferences, and voting rights. Such issuance could adversely affect the
rights of the holders of shares of the Company's Common Stock.
Dividend Rights
Holders of the Common Stock and Special Stock are entitled to
receive dividends when, as and if declared by the Board of Directors out
of the assets of the Company which are by law available therefor.
However, the Board of Directors could provide, upon issuing Special
Stock, that holders of Special Stock should receive dividends in
preference to holders of Common Stock, or that no dividends be paid on
Common Stock if dividends in full on all shares of Special Stock to which
the holders thereof are entitled shall not have been paid or declared and
set apart for payment.
Voting Rights
Holders of shares of the Common Stock are entitled to one vote
per share and, subject to the voting rights, if any, of holders of Special
Stock which may hereafter be issued, have the exclusive right to receive
notice of shareholders' meetings and to vote thereat.
Limitation of Liability of Directors and Indemnification
Section Six of Article Eight of the Company's By-laws limits the
liability of its directors to the fullest extent that the General Corporation
Law of the State of South Carolina permits.
Existing Antitakeover Provisions
South Carolina Control Share Acquisitions Act ("CSAA"). The
Company is subject to the CSAA, which is intended to render it more
difficult or to discourage an attempt to obtain control of the Company by
merger, tender offer, proxy contest or otherwise.
South Carolina Business Combination Statute. South Carolina
law regulates business combinations such as mergers, consolidations and
asset purchases where the business acquired was, or the assets belonged
to, a public corporation, such as the Company, and where the acquirer
became an Interested Shareholder (as defined below) of the public
corporation before a majority of the disinterested members of the Board
of Directors of the public corporation approved either (i) the purchase
resulting in such acquirer becoming an Interested Shareholder or (ii) the
business combination. In the context of this law, an "Interested
Shareholder" is any person who directly or indirectly, alone or in concert
with others, beneficially owns or controls 10% or more of the voting
stock of the public corporation, and a "disinterested" board member is a
person who is neither a present nor a former officer or employee of the
corporation. The law is very broad in its scope and is designed to inhibit
unfriendly acquisitions. It does not apply to corporations whose Articles
of Incorporation contain a provision electing not to be covered by the law.
The Company's Articles of Incorporation do not contain such a provision.
The law prohibits business combinations with an unapproved
Interested Shareholder for a period of two years after the date on which
the person became an Interested Shareholder and requires that any
business combination with an unapproved Interested Shareholder after
such two-year period be approved by a majority vote of outstanding shares
held by persons other than the Interested Shareholder or, alternatively,
meet certain requirements that other shareholders receive at least a
specified price for their shares.
Supermajority Voting Requirements. Article 9(k) of the
Company's Articles of Incorporation requires a special vote of the
shareholders to approve certain transactions, including, among other
things, a merger or the sale, lease or exchange of substantially all of the
assets (as therein defined) of the Company, with any shareholder owning
at least 10% of the Company's equity securities. The approval of such
transactions requires the affirmative vote of at least 80% of the holders
of each class of equity securities of the Company entitled to vote thereon.
The requirement of an 80% shareholder vote does not apply, however, to
transactions approved by at least 75% of all the members of the Board of
Directors. If such approval by the Board of Directors is obtained, the
transaction generally would require approval by the holders of a majority
of the outstanding shares entitled to vote, or as otherwise established by
law.
The Company's Articles of Incorporation further provide that
Article 9(k) may not be amended, altered or repealed without the approval
of the holders of 80% of the Company's shareholders unless 75% of the
Board of Directors approves such a change, in which case approval by the
holders of 66-2/3% of the Common Stock is required.
Classified Board of Directors; Removal of Directors. The
Company's Articles of Incorporation provide for the division of the Board
of Directors into three classes of directors serving staggered three-year
terms. As a result, approximately one-third of the members of the Board
of Directors are elected each year.
Pursuant to the Company's Articles of Incorporation, directors
may be removed without cause by the affirmative vote of the holders of a
majority of the shares entitled to vote in the election of directors at a
meeting called for that purpose at which 80% of the shares entitled to
vote are represented. Directors may be removed for cause by the
affirmative vote of the holders of a majority of the shares entitled to vote
in the election of directors at a meeting called for that purpose at which a
majority of the shares issued, outstanding and entitled to vote are
represented. Under South Carolina law, a director of the Company may
not be removed from the Board of Directors if the number of votes
sufficient to elect such director is voted against his removal.
The classified Board and director removal provisions could have
the effect of discouraging a third party from making a tender offer or
otherwise attempting to obtain control of the Company, even though such
an attempt might be beneficial to the Company and its shareholders. In
addition, the classified Board and director removal provisions could delay
shareholders who do not agree with the policies of the Board of Directors
from removing a majority of the Board for two years, unless they can
obtain the affirmative vote of the holders of a majority of the shares at a
meeting at which eighty percent (80%) of the shares are present in person
or represented by proxy, or they can show cause and obtain the affirmative
vote of the holders of a majority of the shares at a meeting at which a
majority is present or represented.
Liquidation Rights
In the event of liquidation of the Company, holders of the
Company's Common Stock are entitled to share pro rata the net assets
remaining after the payment of all amounts due creditors and such
amounts, if any, as may be due to holders of any Special Stock then
outstanding.
Preemptive Rights
No holder of any of the Common Stock or Special Stock of the
Company is entitled, as of right, to purchase or subscribe for any unissued
shares of any class, or additional shares of any class, to be issued by
reason of any increase of the authorized capital stock of the Company of
any class, or bonds, certificates of indebtedness, debentures, or other
securities convertible into shares of the Company or carrying any right to
purchase shares of any class. Any such unissued shares, or other
securities convertible into shares or carrying any right to purchase shares,
may be issued and disposed of, to such persons, firms, corporations, or
associations and upon such terms as may be deemed advisable by the
Board of Directors.
Transfer Agent and Registrar
American Stock Transfer and Trust Company is the transfer agent
and registrar for the Common Stock.
LEGAL MATTERS
Certain legal matters in connection with the registration and
potential offering of the shares have been passed upon for the Company
by John C. West, Jr., P.A., 1111 Broad Street (P.O. Box 661), Camden,
South Carolina 29020.
EXPERTS
The financial statements and schedules of the Company as of
December 31, 1995 and 1994 and for each of the years in the three-year
period ended December 31, 1995 have been incorporated by reference
herein in reliance upon the reports of Arthur Andersen LLP, independent
public accountants, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 ("Exchange Act"), and, in accordance
therewith, files periodic reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports and other
information concerning the Company may be inspected and copied at the
public reference facilities of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, NW, Washington, DC 20549. Copies of such
material also can be obtained by mail from the Public Reference Section
of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, NW,
Washington, DC 20549, at prescribed rates. The Company's Common
Stock is listed on the NASDAQ National Market. Reports and other
information concerning the Company can be inspected at the offices of
the NASDAQ Stock Market, 1735 K Street, NW, Washington, DC
20006-1506. The Commission also maintains a world wide web site that
contains reports, proxy and information statements and other information
regarding the Company. The world wide web site address is
http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission (File No.
000-8804) pursuant to Sections 13(a) or 15(d) of the Exchange Act are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K/A-1 for the fiscal year
ended December 31, 1995;
2. The Company's 1995 Annual Report to Shareholders;
3. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996;
4. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996;
5. The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996; and
6. The Company's Reports on Form 8-K dated January 19, February
2, March 14, and April 8, 1996.
The Company's annual report on Form 10-K includes audited
financial statements as of December 31, 1995. Unaudited interim
financial statements of the Company are contained in the Company's
Form 10-Q quarterly reports.
The information relating to the Company in this Prospectus does
not purport to be complete and should be read together with the
information in the documents incorporated be reference herein.
All documents filed by the Company pursuant to Sections 13(a)
or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the offering of the Securities hereby shall be deemed to be
incorporated by reference in this Prospectus and made a part hereof from
the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.
Where any document or part thereof is incorporated by
reference in this Prospectus and not delivered herewith, the Company will
undertake to provide without charge to each person, including any
beneficial owner to whom a Prospectus is delivered, upon written or oral
request, a copy of any and all of the information that has been
incorporated by reference in this Prospectus. Any request for such
information should be addressed to the Corporate Secretary, The Seibels
Bruce Group, Inc., PO Box 1, Columbia, South Carolina 29202.
No person has been authorized to give any information or to
make any representation not contained in this Prospectus and, if given or
made, the information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than
the shares of Common Stock to which it relates or an offer to any person
in any jurisdiction where such an offer would be unlawful. Neither the
delivery of this Prospectus, nor any distribution of securities pursuant
hereto shall imply or create an implication that there has been no change
in the affairs of the Company or in the information set forth or
incorporated be reference herein subsequent to the date hereof.
The Company has filed with the Commission a Registration
Statement on Form S-2 (herein, together with all amendments and
exhibits thereto, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with respect to
the shares of its Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is
hereby made to the Registration Statement. The statements contained in
this Prospectus concerning the contents of any contract or other
document referred to are not necessarily complete. Where such contract
or other document is an exhibit to the Registration Statement, each
statement is qualified in all respects by the provisions of such exhibit, to
which reference is hereby made for a full statement of the provisions
thereof.
This Prospectus is accompanied by the Company's latest Annual
Report to shareholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The South Carolina General Corporation Law (the "SCGCL")
permits a corporation to indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if (I) such individual conducted himself in good faith, (ii) in
the case of conduct in his official capacity with the corporation, his
conduct was in its best interest, and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was
unlawful. The SCGCL does not permit a corporation to indemnify a
director (x) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation
or (y) in connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit
was improperly received by him. In connection with a proceeding by or in
the right of the corporation, the SCGCL limits indemnification to
reasonable expenses incurred in connection with the proceeding. The
South Carolina General Corporation Law also permits a corporation to
indemnify its officers, employees and agents to the extent, consistent
with public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or contract.
Addendum Two to the Company's Articles of Incorporation, as
amended, provides that a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
gross negligence, intentional misconduct or a knowing violation of law,
(iii) under Section 33-8-330 of the SCGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. Section Six of
Article eight of the Bylaws of the company provides that the company
shall indemnify officers and directors of the Company and its subsidiaries
to the extent permitted by South Carolina law and may insure such
persons against liability arising out of or relating to their employment by
the Company in an amount and according to such terms as the Board of
Directors deems prudent.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a schedule of the estimated expenses to be
incurred by the Company in connection with the issuance and distribution
of the securities being registered hereby.
SEC Registration Fee $ 17,685
Accounting Fees and Expenses 1,000
Legal Fees and Expenses 7,500
Miscellaneous 8,815
--------
Total $ 35,000
Item 15. Indemnification of Directors and Officers
The South Carolina General Corporation Law provides for
indemnification of directors, officers, employees and agents, subject to
certain limitations (S.C. Code, Title 33, Article 5). Section Six of
Article Eight of the Company's by-laws provides that the Company shall
indemnify officers and directors of the Company and its subsidiaries to
the extent permitted by South Carolina law and may insure such persons
against liability arising out of or related to their employment by the
Company in an amount and according to such terms as the Board of
Directors deems prudent.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
Item 16. Exhibits
Number Description
- ------ -----------
5.1 Opinion of John C. West, Jr., P.A. (filed herewith).
10.1 Stock Purchase Agreement dated as of December 22,
1993 between registrant on the one hand and Abdullatif
Ali Alissa Est. and Saad A. Alissa, incorporated herein
by reference to the Annual Reporton Form 10-K,
Exhibit (10)(10)-1, for the fiscal year ended
December 31, 1993.
10.2 Stock Purchase Agreement dated as of January 29, 1996
between registrant on the one hand and Charles H.
Powers and Walker S. Powers, and amendment thereto,
incorporated herein by reference to submission DEF
14-A, filing date May 10, 1996, file number
000-08804, accession number 0001005150-96-000127,
accepted May 9, 1996.
10.3 Stock Option Agreement dated as of January 30, 1996
between registrant on the one hand and Charles H.
Powers, Walker S. Powers and Rex and Jane Huggins,
incorporated herein by reference to submission DEF
14-A, filing date May 10, 1996, file number
000-08804, accession number 0001005150-96-000127,
accepted May 9, 1996.
10.4 Stock Purchase Agreement dated as of March 28, 1996
between registrant on the one hand and Fred C. Avent,
Frank H. Avent and PepsiCo of Florence (filed
previously).
10.5 Stock Purchase Agreement dated as of March 28, 1996
between registrant on the one hand and Junius DeLeon
Finklea, Joseph K. Newsom, Sr., Mark J. Ross, Larry
M. Brice, J. Howard Stokes, Winston Y. Godwin, IRA
and Peter D. and Vera C. Hyman (filed previously).
13.1 Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, incorporated herein by reference
to submission 10-K405 A-1, filing date April 25, 1996,
file number 000-08804, accession number
0000276380-96-000009, accepted date April 25, 1996.
13.2 1995 Annual Report to Shareholders (filed previously).
13.3 1996 Notice of Special Meeting of Shareholders and
Proxy Statement, incorporated herein by reference to
submission DEF 14A, filing date May 10, 1996, file
number 000-08804, accession number 0001005150-96-000127,
accepted date May 9, 1996.
13.4 Notice of 1996 Annual Meeting of Shareholders and
Proxy Statement, incorporated herein by reference to
submission DEF 14A, filing date October 29, 1996, file
number 000-08804, accession number 0000276380-96-000020,
accepted date October 29, 1996.
13.5 Quarterly Report on Form 10-Q for quarter ended
March 31, 1996, incorporated herein by reference to
submission 10-Q, filing date May 15, 1996, file number
000-08804, accession number 000276380-96-000010,
accepted date May 15, 1996.
13.6 Quarterly Report on Form 10-Q for quarter ended June
30, 1996, incorporated herein by reference to
submission 10-Q, filing date August 14, 1996, file
number 000-08804, accession number 0000276380-96-000011.
13.7 Quarterly Report on Form 10-Q for quarter ended
September 30, 1996, incorporated herein by reference
to submission 10-Q, filing date November 14, 1996,
file number 000-08804, accession number
0000276380-96-000024.
13.8 Reports on Form 8-K, incorporated herein by reference
to submission 8-K, filing date January 10, 1996, file
number 000-08804, accession number
000276380-96-000002, accepted date January 10,
1996; filing date February 2, 1996, file number
000-08804, accession number 000276380-96-000004,
accepted date February 2, 1996; filing date March 14,
1996, file number 000-08804, accession number
000276380-96- 000005, accepted date March 14,
1996; filing date April 8, 1996, file number 000-08804,
accession number 000276380-96-000007, accepted
date April 8, 1996.
23.1 Consent of Arthur Andersen LLP (filed herewith).
23.2 Consent of John C. West, Jr., P.A. (included in Exhibit
5.1 above).
28.1 Schedule P of Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, incorporated
herein by reference to Form SE, dated April 1, 1996.
Item 17. Undertakings
(a) The Company hereby undertakes:
1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
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) 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.
(e) The Company hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange
Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom
the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 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, suite 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 Act and will be governed by the
final adjudication of such issue.
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 the requirements for filing on Form S-2 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Columbia, State of South Carolina,
on March 14, 1997.
THE SEIBELS BRUCE GROUP, INC.
By: /s/ Ernst N. Csiszar
____________________________________________
Ernst N. Csiszar
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below constitutes and appoints Ernst N.
Csiszar and John A. Weitzel, and each of them, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) and supplements to this Registration
Statement, and to file the same, with the Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and things requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
---------- ------ ----
/s/ Ernst N. Csiszar
______________________ President, Chief Executive March 14, 1997
(Ernst N. Csiszar) Officer, and Director
/s/ John A. Weitzel(1)
______________________ Chief Financial Officer March 14, 1997
(John A. Weitzel) and Director
/s/ Mary M. Gardner(1)
______________________ Controller (Principal Accounting March 14, 1997
(Mary M. Gardner) Officer)
/s/ Priscilla C. Brooks(1)
______________________ Corporate Secretary March 14, 1997
(Priscilla C. Brooks)
/s/ John C. West(1)
_____________________ Chairman of the Board and March 14, 1997
(John C. West) Director
/s/ William M. Barilka(1)
_____________________ Director March 14, 1997
(William M. Barilka)
/s/ Albert H. Cox(1)
_____________________ Director March 14, 1997
(Albert H. Cox)
/s/ Claude E. McCain(1)
____________________ Director March 14, 1997
(Claude E. McCain)
/s/ Kenneth W. Pavia(1)
____________________ Director March 14, 1997
(Kenneth W. Pavia)
/s/ John P. Seibels(1)
____________________ Director March 14, 1997
(John P. Seibels)
/s/ George R.P. Walker(1)
________________________ Director March 14, 1997
(George R.P. Walker, Jr.)
/s/ Charles H. Powers(1)
_______________________ Director March 12, 1997
(Charles H. Powers)
/s/ Walker S. Powers(1)
______________________ Director March 12, 1997
(Walker S. Powers)
/s/ Frank H. Avent(1)
_____________________ Director March 12, 1997
(Frank H. Avent)
_____________________ Director
(Fred S. Clark)
(1) By: /s/ Ernst N. Csiszar
---------------------
Ernst N. Csiszar
as attorney-in-fact
EXHIBIT INDEX
Number Description
- ------ -----------
5.1 Opinion of John C. West, Jr., P.A. (filed herewith).
10.1 Stock Purchase Agreement dated as of December 22,
1993 between registrant on the one hand and Abdullatif
Ali Alissa Est. and Saad A. Alissa, incorporated herein
by reference to the Annual Reporton Form 10-K,
Exhibit (10)(10)-1, for the fiscal year ended
December 31, 1993.
10.2 Stock Purchase Agreement dated as of January 29, 1996
between registrant on the one hand and Charles H.
Powers and Walker S. Powers, and amendment thereto,
incorporated herein by reference to submission DEF
14-A, filing date May 10, 1996, file number
000-08804, accession number 0001005150-96-000127,
accepted May 9, 1996.
10.3 Stock Option Agreement dated as of January 30, 1996
between registrant on the one hand and Charles H.
Powers, Walker S. Powers and Rex and Jane Huggins,
incorporated herein by reference to submission DEF
14-A, filing date May 10, 1996, file number
000-08804, accession number 0001005150-96-000127,
accepted May 9, 1996.
10.4 Stock Purchase Agreement dated as of March 28, 1996
between registrant on the one hand and Fred C. Avent,
Frank H. Avent and PepsiCo of Florence (filed
previously).
10.5 Stock Purchase Agreement dated as of March 28, 1996
between registrant on the one hand and Junius DeLeon
Finklea, Joseph K. Newsom, Sr., Mark J. Ross, Larry
M. Brice, J. Howard Stokes, Winston Y. Godwin, IRA
and Peter D. and Vera C. Hyman (filed previously).
13.1 Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, incorporated herein by reference
to submission 10-K405 A-1, filing date April 25, 1996,
file number 000-08804, accession number
0000276380-96-000009, accepted date April 25, 1996.
13.2 1995 Annual Report to Shareholders (filed previously).
13.3 1996 Notice of Special Meeting of Shareholders and
Proxy Statement, incorporated herein by reference to
submission DEF 14A, filing date May 10, 1996, file
number 000-08804, accession number 0001005150-96-000127,
accepted date May 9, 1996.
13.4 Notice of 1996 Annual Meeting of Shareholders and
Proxy Statement, incorporated herein by reference to
submission DEF 14A, filing date October 29, 1996, file
number 000-08804, accession number 0000276380-96-000020,
accepted date October 29, 1996.
13.5 Quarterly Report on Form 10-Q for quarter ended
March 31, 1996, incorporated herein by reference to
submission 10-Q, filing date May 15, 1996, file number
000-08804, accession number 000276380-96-000010,
accepted date May 15, 1996.
13.6 Quarterly Report on Form 10-Q for quarter ended June
30, 1996, incorporated herein by reference to
submission 10-Q, filing date August 14, 1996, file
number 000-08804, accession number 0000276380-96-000011.
13.7 Quarterly Report on Form 10-Q for quarter ended
September 30, 1996, incorporated herein by reference
to submission 10-Q, filing date November 14, 1996,
file number 000-08804, accession number
0000276380-96-000024.
13.8 Reports on Form 8-K, incorporated herein by reference
to submission 8-K, filing date January 10, 1996, file
number 000-08804, accession number
000276380-96-000002, accepted date January 10,
1996; filing date February 2, 1996, file number
000-08804, accession number 000276380-96-000004,
accepted date February 2, 1996; filing date March 14,
1996, file number 000-08804, accession number
000276380-96- 000005, accepted date March 14,
1996; filing date April 8, 1996, file number 000-08804,
accession number 000276380-96-000007, accepted
date April 8, 1996.
23.1 Consent of Arthur Andersen LLP (filed herewith).
23.2 Consent of John C. West, Jr., P.A. (included in Exhibit
5.1 above).
28.1 Schedule P of Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, incorporated
herein by reference to Form SE, dated April 1, 1996.
Exhibit 5.1
John C. West, JR., P.A.
1111 Broad Street
PO Box 861
Camden, South Carolina 29020
March 10, 1997
The Seibels Bruce Group, Inc.
1501 Lady Street
Columbia, South Carolina 29201
RE: The Seibels Bruce Group, Inc. Form S-2 Registration Statement
Gentlemen:
I have examined the Registration Statement on Form S-2 filed by The
Seibels Bruce Group, Inc., a South Carolina (the "Company"), on October 15,
1996, with the Securities and Exchange Commission (the "Commission"), under the
Securities Act of 1933, as amended, and Amendment No. 1 thereto to be filed
with the Commission on March 11, 1997, (the "Registration Statement"),
regarding 15,770,000 shares of the Company's common stock, $1.00 par value
per share (the "Shares"), 7,885,000 of which may be issued by the Company
to certain selling shareholders pursuant to the exercise of currently
exercisable stock options outstanding and then sold by such selling
shareholders (the "Company Shares"), and 7,885,000 of which are outstanding
and are to be sold by certain selling shareholders (the "Outstanding Shares").
Based upon our review of the Company's Articles of Incorporation, Bylaws,
and such other documents, records and matters of law as I have deemed
necessary, it is my opinion that i) the Company Shares when issued in accordance
with the terms of the respective options will be legally issued, fully paid
and nonassessable, and ii) the Outstanding Shares are legally issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ John C. West, Jr.
--------------------
John C. West, Jr.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports
dated March 29, 1996, included in The Seibels Bruce Group, Inc.'s
Annual Report (Form 10-K/A-1) for the year ended December 31, 1995
and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Columbia, South Carolina
March 13, 1997
