<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
American Bankers Insurance Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
AMERICAN BANKERS INSURANCE GROUP, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1999
The 1999 annual meeting of shareholders of American Bankers Insurance
Group, Inc. will be held at the Company's Auditorium, 11222 Quail Roost Drive,
Miami, Florida 33157-6596, on Friday, May 7, 1999, beginning at 10:00 a.m. local
time. At the meeting, holders of the Company's common stock will act on the
following matters:
(1) Election of ten directors;
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for fiscal 1999; and
(3) Any other matters that properly come before the meeting.
Holders of record of the Company's common stock at the close of business on
March 26, 1999 are entitled to vote at the meeting or any postponement or
adjournment.
By order of the Board of Directors,
ARTHUR W. HEGGEN (SIG)
Arthur W. Heggen
Corporate Secretary
April 8, 1999
Miami, Florida
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ABOUT THE MEETING........................................... 1
What is the purpose of the annual meeting?................ 1
Who is entitled to vote?.................................. 1
What constitutes a quorum?................................ 1
How do I vote?............................................ 2
Can I change my vote after I return my proxy card?........ 2
How do I vote my shares held through the Company's benefit
plans?................................................. 2
What are the Board's recommendations?..................... 3
What vote is required to approve each item?............... 3
STOCK OWNERSHIP............................................. 4
Who are the largest owners of the Company's stock?........ 4
How many shares do the Company's directors and executive
officers own?.......................................... 6
Section 16(a) Beneficial Ownership Reporting Compliance... 7
Change in Control of the Company.......................... 7
ITEM 1 -- ELECTION OF DIRECTORS............................. 9
Who Are the Directors Standing For Election?.............. 9
Who are the Directors Continuing in Office?............... 10
What is the Business Experience of the Nominees and
Directors?............................................. 10
How are directors compensated?............................ 12
How often did the Board meet during fiscal 1998?.......... 13
What are the committees of the Board?..................... 13
Certain Relationships and Related Transactions............ 15
Executive Compensation.................................... 16
ITEM 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS............................................... 24
OTHER MATTERS............................................... 25
ADDITIONAL INFORMATION...................................... 25
</TABLE>
<PAGE> 4
AMERICAN BANKERS INSURANCE GROUP, INC.
11222 QUAIL ROOST DRIVE
MIAMI, FLORIDA 33157-6596
PROXY STATEMENT
------------------------
This proxy statement contains information related to the annual meeting of
shareholders of American Bankers Insurance Group, Inc. to be held on Friday, May
7, 1999, beginning at 10:00 a.m. at the Company's Auditorium, 11222 Quail Roost
Drive, Miami, Florida 33157-6596, and at any postponements or adjournments
thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's annual meeting, holders of the Company's common stock will
elect directors and ratify the Company's independent auditors. In addition, the
Company's management will report on the performance of the Company during fiscal
1998 and respond to questions from shareholders.
Shareholders of the Company will not be asked to vote on the proposed
acquisition of the Company by Fortis, Inc. A separate proxy statement and proxy
card will be mailed for the special meetings of the shareholders to approve of
the proposed acquisition.
WHO IS ENTITLED TO VOTE?
Only holders of record of the Company's common stock at the close of
business on the record date, March 26, 1999, are entitled to receive notice of
the annual meeting and to vote at the meeting, or any postponement or
adjournment of the meeting. These holders will be entitled to vote the shares of
common stock that they owned on the record date. Each outstanding share entitles
its holder to cast one vote on each matter to be voted upon.
WHAT CONSTITUTES A QUORUM?
Presence at the meeting by the holders of a majority of the shares of
common stock outstanding on the record date, in person or by proxy, will
constitute a quorum. Once a quorum is reached the Company will conduct the
business of the meeting. On the close of business on March 12, 1999, there were
43,094,551 shares of the Company's common stock outstanding. Proxy cards
received but marked as abstentions and broker non-votes will be deemed to be
present at the meeting for purposes of calculating quorum.
<PAGE> 5
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and mail it
in the enclosed prepaid envelope, the proxy holders will vote as you direct. If
you are a registered shareholder and attend the meeting, you may deliver your
completed proxy card in person. If you hold your shares in "street name" you
should receive a proxy form from the broker that holds your shares. Follow the
instructions provided by your broker regarding how to instruct your broker to
vote your shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised. To do so, file with the
Company's Secretary either a notice of revocation or a properly signed proxy
card bearing a later date. In addition, the powers of the proxy holders will be
suspended if you attend the meeting in person and so request. Simply attending
the meeting will not revoke the authority you granted to the proxy holders. If
your shares are held in "street name," you must follow the broker's instruction
to change your vote.
HOW DO I VOTE MY SHARES HELD THROUGH THE COMPANY'S BENEFIT PLANS?
If you participate in the American Bankers Insurance Group, Inc. 401(k) and
Employee Stock Ownership Plan, you may vote the number of shares of the
Company's common stock credited to your account as of the record date. CG Trust
Company ("CG Trust") will vote your shares as you have indicated on the
red-striped voting instructions included in this proxy statement. CG Trust must
receive your properly signed voting instructions by April 29, 1999. If you do
not vote, the shares credited to your account will be voted by the trustee in
the same proportion that it votes shares for which it receives timely
instructions. Up to April 29, 1999, you may also revoke your previous voting
instructions by filing with the CG Trust either a written notice of revocation
or a properly signed red-striped voting instruction card bearing a later date.
If you participate in the American Bankers Insurance Group, Inc. Leveraged
Employee Stock Ownership Plan (the "ESOP"), you may vote the number of shares of
the Company's common stock allocated to you. The ESOP trustees (the "Trustees")
will vote your shares as you have indicated on the blue-striped voting
instructions included in this proxy statement. The Trustees must receive your
properly signed voting instructions by May 3, 1999. If you do not give
instructions, on any matter, the Trustees will not vote your shares on that
matter. Please sign and return the voting instructions promptly to assure that
your shares of the Company's common stock are represented at the annual meeting.
2
<PAGE> 6
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board of Directors recommends a vote:
- FOR election of the nominated slate of directors (see page 9); and
- FOR ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors (see page 24);
With respect to any other matters that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. Directors who receive the most affirmative votes
are elected by plurality. Because the nominees for director are unopposed, a
properly executed proxy card marked "WITHHELD" and a broker non-vote will have
no impact on the election of directors. The shares represented by these proxy
cards will be counted for purposes of determining whether there is a quorum.
OTHER ITEMS. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote on
the item will be required for approval. A properly executed proxy card marked
"ABSTAIN" with respect to any such matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum. Accordingly, an
abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
3
<PAGE> 7
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S STOCK?
The Company is aware of the following persons who are beneficial owners of
more than 5% of the Company's common stock. All information is as of the close
of business on March 12, 1999 for all beneficial owners, except FMR Corp., which
is as of December 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------------------------ ----------------- ----------
<S> <C> <C> <C>
$1.00 Par Value Fortis, Inc. ("Fortis") 3,148,006(a) 7.27%
Common Stock One Chase Manhattan Plaza
New York, New York 10005
FMR Corp 3,219,940(b) 7.43%
82 Devonshire Street
Boston, Massachusetts 02109
R. Kirk Landon 2,543,007(c) 5.87%
11222 Quail Roost Drive
Miami, Florida 33157-6596
</TABLE>
- ---------------
(a) Pursuant to a Voting Agreement, dated as of March 5, 1999, between Fortis
and the shareholders of the Company named therein (the "Voting Agreement"),
Fortis has shared voting and dispositive power over 3,148,006 shares.
Messrs. Landon and Gaston are parties to the Voting Agreement. This number
does not include 8,406,559 shares acquirable pursuant to a Stock Option
Agreement, dated as of March 5, 1999, between the Company and Fortis (the
"Stock Option Agreement"). Fortis may only acquire these shares upon the
occurrence of certain conditions and any consummation of the purchase of
these shares is subject to applicable regulatory approvals. The Stock Option
Agreement and the Voting Agreement were executed in connection with the
Agreement and Plan of Merger (the "Merger Agreement") dated as of March 5,
1999, among the Company, Fortis and Greenland Acquisition Corp., a
wholly-owned subsidiary of Fortis. See "Change in Control" on pages 7-8. If
Fortis acquired the 8,406,559 shares pursuant to the Stock Option Agreement,
it would be the beneficial owner of 22.34% of the outstanding common stock.
(b) Based on information supplied to the Company, FMR Corp. and its affiliates
("FMR") beneficially own 3,219,940 shares and has sole dispositive power
over these shares. Of these shares, FMR has sole voting power with respect
to 651,200 shares and no voting power with respect to the remaining shares.
If Fortis acquired the 8,406,559 shares pursuant to the Stock Option
Agreement, FMR would be the beneficial owner of 6.23% of the outstanding
common stock.
4
<PAGE> 8
(c) Mr. Landon's beneficial ownership includes the following shares:
<TABLE>
<C> <S>
642,145 Owned directly.
129,824 Owned by the R. Kirk Landon Revocable Trust. Mr.
Landon is the trustee.
140,500 Owned by the R. Kirk Landon Charitable Remainder
Unitrust. Bessemer Trust Company of Woodbridge,
New Jersey is the trustee and has sole dispositive
power over these shares. Mr. Landon is a
beneficiary of the Unitrust.
90,079 Owned by The Landon Foundation. Mr. Landon is a
director.
15,562 Allocated under the Company's 401(k) and Employee
Stock Ownership Plan.
27,892 Acquirable under the 1994 Amended and Restated
Directors' Deferred Compensation Plan.
1,370,450 Owned by the Landon Corporation. Mr. Landon is the
controlling shareholder.*
126,555 Owned by R. Kirk/B. Landon Foundation. Mr. Landon
is a director.*
</TABLE>
*In connection a marital settlement agreement (the "Settlement Agreement")
the Landon Corporation will be liquidated and the R. Kirk/B. Landon
Foundation will be terminated. Upon the liquidation of Landon Corporation,
one-third of the Landon Corporation's shares will be distributed to Mrs.
Landon and upon the termination of the R. Kirk/B. Landon Foundation,
one-half of the Foundation's shares will be distributed to a foundation
created by Mrs. Landon. Accordingly, at such time, none of the shares
distributed to Mrs. Landon or her foundation will be beneficially owned by
Mr. Landon. The number of shares beneficially owned by Mr. Landon does not
include 391,368 shares owned by Mrs. Landon for which Mr. Landon disclaims
beneficial ownership.
Up to 40,000 shares are subject to option exercise granted by Mr. Landon to
Jack Kemp on May 24, 1995 (the "Kemp Option"). The Kemp Option is
exercisable at $14.50 per share and expires on May 24, 2000.
Mr. Landon shares voting and dispositive power with Fortis over the shares
for which Mr. Landon is the beneficial owner pursuant to the Voting
Agreement. Shares subject to the Kemp Option and subject to distribution in
connection with the Settlement Agreement will no longer be subject to the
Voting Agreement upon the exercise of the Kemp Option or their transfer,
respectively. If Fortis acquired the 8,406,559 shares pursuant to the Stock
Option Agreement, Mr. Landon would be the beneficial owner of 4.92% of the
outstanding common stock.
5
<PAGE> 9
HOW MANY SHARES DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows the amount of the Company's common stock
beneficially owned (and acquirable within 60 days under stock options or other
Company plans) by the Company's directors, the executive officers of the Company
named in the Summary Compensation Table, and the directors and executive
officers of the Company as a group. All information is as of the close of
business on March 12, 1999.
<TABLE>
<CAPTION>
AMOUNT OF
SHARES PERCENTAGE
BENEFICIALLY OF
NAME OWNED OWNERSHIP
- ---- ------------ ----------
<S> <C> <C>
William H. Allen, Jr....................................... 9,202(a) *
Nicholas A. Buoniconti..................................... 17,800(b) *
Armando M. Codina.......................................... 54,532(c) *
Peter J. Dolara............................................ 13,514(d) *
Gerald N. Gaston........................................... 640,264(e) 1.48%
Daryl L. Jones............................................. 7,322(f) *
James F. Jorden............................................ 1,776(g) *
Jack F. Kemp............................................... 42,000(h) *
Bernard P. Knoth, S.J...................................... 2,000(i) *
R. Kirk Landon............................................. 2,543,007(j) 5.87%
Eugene M. Matalene, Jr..................................... 12,000(k) *
Albert H. Nahmad........................................... 18,038(l) *
Nicholas J. St. George..................................... 18,567(m) *
Robert C. Strauss.......................................... 18,037(n) *
George E. Williamson II.................................... 42,706(o) *
Eugene E. Becker........................................... 223,268(p) *
Floyd C. Denison........................................... 115,329(q) *
Jay R. Fuchs............................................... 91,632(r) *
Bernard Janis**............................................ 718 *
John P. Laborde**.......................................... 1,000 *
Malcolm G. MacNeill**...................................... 32,788(s) *
Directors and Executive Officers as a Group
(28 persons including those named above)................. 4,166,319(t) 9.62%
</TABLE>
- ---------------
<TABLE>
<CAPTION>
<C> <S>
(a) Includes 2,702 shares acquirable under the 1994 Amended and
Restated Directors' Deferred Compensation Plan (the
"Deferred Plan").
(b) Includes 7,800 shares acquirable under the Deferred Plan and
6,000 shares acquirable under the 1994 Non-Employee
Directors' Stock Option Plan (the "Non-Employee Directors'
Plan") and 2,000 shares acquirable under the 1997 Equity
Incentive Plan (the "Incentive Plan").
(c) Includes 24,032 shares acquirable under the Deferred Plan.
(d) Includes 1,000 shares owned by Mr. Dolara's wife; 2,000
shares owned by his children; and 3,514 shares acquirable
under the Deferred Plan.
(e) Includes 589,436 shares owned by Mr. Gaston directly; 11,000
shares owned by Mr. Gaston's wife; 24,266 shares owned by
Mr. Gaston's son; and 15,562 shares allocated under the
Company's 401(k) and Employee Stock Ownership Plan (the
"401(k) ESOP"). Mr. Gaston shares voting and dispositive
power with Fortis over shares Mr. Gaston owns directly and
allocated under the 401(k) ESOP pursuant to the Voting
Agreement.
(f) Includes 5,322 shares acquirable under the Deferred Plan and
2,000 shares acquirable under the Incentive Plan.
(g) Includes 440 shares held indirectly by an Individual
Retirement Account Trust.
(h) Includes 40,000 shares acquirable by Mr. Kemp upon the
exercise of the Kemp Option granted by Mr. Landon to Mr.
Kemp; and 2,000 shares acquirable under the Incentive Plan.
See footnote (c) under "Who are the Largest Shareholders."
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
<C> <S>
(i) Includes 2,000 shares acquirable under the Incentive Plan.
(j) See footnote (c) under "Who are the Largest Shareholders."
(k) Includes 6,000 shares acquirable under the Non-Employee
Directors' Plan; and 2,000 shares acquirable under the
Incentive Plan.
(l) Includes 2,000 shares owned by Watsco, Inc.; 20 shares owned
by Mr. Nahmad's son; 8,018 shares acquirable under the
Deferred Plan; 6,000 shares acquirable under the Non-
Employee Directors' Plan; and 2,000 shares acquirable under
the Incentive Plan.
(m) Includes 8,547 shares acquirable under the Deferred Plan.
(n) Includes 8,037 shares acquirable under the Deferred Plan;
6,000 shares acquirable under the Non-Employee Directors'
Plan; and 2,000 shares acquirable under the Incentive Plan.
(o) Includes 32,606 shares acquirable under the Deferred Plan;
6,000 shares acquirable under the Non-Employee Directors'
Plan; and 2,000 shares acquirable under the Incentive Plan.
(p) Includes 188,252 shares owned by Mr. Becker directly; and
6,000 Restricted Shares under the 1994 Senior Management
Stock Option Plan (the "Senior Plan") and 6,000 Restricted
Shares under the Incentive Plan owned by Mr. Becker
directly; 9,798 shares owned by Mr. Becker's wife; and
13,218 shares allocated under the 401(k) ESOP.
(q) Includes 95,694 shares owned by Mr. Denison directly; 4,000
Restricted Shares under the under the Senior Plan and 4,800
Restricted Shares under the Incentive Plan owned by Mr.
Denison directly; 20 shares owned by Mr. Denison's son and
10,815 shares allocated under the 401(k) ESOP.
(r) Includes 71,800 shares owned by Mr. Fuchs directly; 4,400
Restricted Shares under the Senior Plan and 4,800 Restricted
Shares under the Incentive Plan owned by Mr. Fuchs directly;
and 10,632 shares allocated under the 401(k) ESOP.
(s) Includes 1,330 shares owned by Mr. MacNeill's daughter.
(t) The 40,000 shares subject to the Kemp Options have only been
counted once in determining the total number of shares
beneficially owned and percentage of ownership by the
Directors and Executive Officers as a group. See footnote
(h) above and footnote (c) under "Who are the Largest
Shareholders."
* Denotes less than 1% ownership.
** Director Emeritus.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the U.S. federal securities laws, the Company's directors, certain
officers, and any persons holding more than ten percent of the Company's common
stock are required to report their ownership of the Company's common stock and
any changes in that ownership to the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Specific due dates for these
reports have been established and the Company is required to report in this
proxy statement any failure to file by these dates during 1998. Based on a
review of filing with the Securities and Exchange Commission and written
representations that no other reports were required, the Company believes all of
these persons complied with these filing requirements, except for Mr. Nahmad and
Mr. Jorden who each filed a late report of a sale. The sale of 2,000 shares by
Mr. Nahmad on January 6, 1998 was reported on February 13, 1998. The sale of
2,346 shares by Mr. Jorden, which was thought to have occurred in April, 1998
but in fact occurred on the last day of March, was reported on May 7, 1998.
CHANGE IN CONTROL OF THE COMPANY
On March 5, 1999, the Company entered into an agreement pursuant to which
Fortis will acquire the Company through a merger. The Company, Fortis and
Greenland Acquisition Corp., a wholly-owned subsidiary of Fortis ("Greenland"),
entered into an Agreement and Plan of Merger (the "Merger Agreement") which
provides that, subject to satisfaction of specified terms and conditions,
including regulatory and common stock-
7
<PAGE> 11
holder approval, Greenland will merge with and into the Company. The Company
will be the surviving corporation in the Merger and will become an indirect
wholly-owned subsidiary of Fortis. If the merger is consummated, holders of
common stock will receive $55.00 in cash for each share of common stock. Holders
of $3.125 Series B Cumulative Convertible preferred stock will receive $109.857
in cash for each share unless the merger is not approved by the holders of at
least 2/3 of the shares of preferred stock voting as a class or if Fortis
reasonably determines that such a vote is not likely to be obtained. In such
case, the preferred stock will continue to remain outstanding after the merger,
pursuant to the terms and conditions as are in effect on March 5, 1999, except
that the preferred stock will be convertible as provided in the Company's
Articles of Incorporation.
Under the terms of the Merger Agreement, Fortis is entitled, at its sole
option, to cause Greenland to commence a tender offer (the "Tender Offer") to
acquire up to 100% (but not less than a majority) of the outstanding Company's
common stock (excluding any of the Company's common stock owned by Fortis
pursuant to the Stock Option Agreement), together with all associated stock
purchase rights issued pursuant to the Rights Agreement (as defined below), and
up to 100% (but not less than a majority) of the Preferred Stock.
Pursuant to a Stock Option Agreement, dated as of March 5, 1999, the
Company has granted Fortis an option (the "Option") to purchase up to 8,406,559
shares (approximately 19.9 percent) of the Company's common stock at an exercise
price of $55.00 per share (or to obtain a specified cash value for the Option
from the Company). The Option is exercisable upon the occurrence of certain
events, including, without limitation, a third party's acquisition of beneficial
ownership of 15 percent or more of the outstanding Company's common stock. The
total profit to Fortis pursuant to the termination fee contemplated by the
Merger Agreement and the exercise of the Option is limited to $100 million.
In addition, certain stockholders of the Company holding approximately 7.5
percent of the outstanding Company's common stock have entered into a voting
agreement with Fortis (the "Voting Agreement"), pursuant to which such
stockholders agreed to vote their shares in favor of adoption of the Merger
Agreement and approval of the Merger, subject to certain conditions. Messrs.
Landon and Gaston are parties to the Voting Agreement.
On March 4, 1999, the Company entered into Amendment Number Two (the
"Amendment Number Two") to the Rights Agreement (the "Rights Agreement") between
the Company and ChaseMellon Shareholder Services, L.L.C. Amendment Number Two
provides that Fortis, Greenland and their affiliates will not be deemed to be an
Acquiring Person (as defined in the Rights Agreement), a Distribution Date (as
defined in the Rights Agreement) will not be deemed to occur, and the rights
issuable pursuant to the Rights Agreement will not separate from the Company's
common stock, solely as a result of Fortis or Greenland entering into the Merger
Agreement, the Voting Agreement or the Stock Option Agreement or consummating
the Tender Offer, the Merger and/or the other transactions contemplated thereby.
YOU ARE NOT BEING ASKED TO VOTE ON THE MERGER AT THIS TIME. A SEPARATE
PROXY STATEMENT AND PROXY CARD WILL BE MAILED FOR THE SPECIAL MEETING OF
SHAREHOLDERS TO APPROVE THE MERGER.
8
<PAGE> 12
ITEM 1 -- ELECTION OF DIRECTORS
WHO ARE THE DIRECTORS STANDING FOR ELECTION?
The Board of Directors is currently divided into three classes, with five
directors for each class. The term of each class of directors is generally three
years with the term for one class expiring each year in rotation. As a result,
generally each year one class of directors is elected. The Company did not hold
an annual meeting of shareholders in 1998. As a consequence, nominees for two
classes are being submitted for election at this annual meeting. In order to
keep the three classes of directors equal in number, rather than the normal
three-year term, the Board has nominated each Class III director to serve only a
two-year term ending in 2001. The Board has nominated the Class I directors to
serve the normal three-year term ending in 2002.
The proxy holders intend to vote for the election of each of the ten
nominees named below, unless you indicate that your vote should be withheld from
any or all of them. Each nominee elected as a director will continue in office
until his or her successor has been duly elected and qualified, or until the
earliest of his or her death, resignation or retirement.
The Board of Directors has proposed the following nominees for election as
directors at this annual meeting:
CLASS III DIRECTORS. The directors standing for election are:
William H. Allen, Jr.
Jack F. Kemp
James F. Jorden
R. Kirk Landon
Robert C. Strauss
CLASS I DIRECTORS. The directors standing for election are:
Nicholas A. Buoniconti
Armando M. Codina
Peter J. Dolara
Eugene M. Matalene, Jr.
Nicholas St. George
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
ABOVE-NAMED NOMINEES FOR ELECTION AS DIRECTORS.
Each of the nominees has consented to serve as a member of the Board of
Directors. If any of them should become unavailable to serve as a director, the
Board of Directors may designate a substitute nominee. In that case, the proxy
holders will vote for the substitute nominee designated by the Board of
Directors.
9
<PAGE> 13
WHO ARE THE DIRECTORS CONTINUING IN OFFICE?
CLASS II DIRECTORS. The following Class II directors were elected at the
Company's 1997 annual meeting and whose term will end in 2000:
Gerald N. Gaston
Daryl L. Jones
Bernard P. Knoth, S.J.
Albert H. Nahmad
George E. Williamson II
WHAT IS THE BUSINESS EXPERIENCE OF THE NOMINEES AND DIRECTORS?
WILLIAM H. ALLEN, JR., Director since 1992. Age: 63
Mr. Allen has been Vice Chairman of NationsBank, FL, a bank, since 1996.
Mr. Allen also has served as a director of Decorator Industries, a manufacturer
of accessories for hospitality, recreation vehicle and manufactured housing
industries, since 1995 and of Winsloew Furniture Group, a furniture manufacturer
and distributor, since 1993. He also served as Chairman of the Board and Chief
Executive Officer of Intercontinental Bank, a commercial bank, from 1987 to
1995.
NICHOLAS A. BUONICONTI, Director since 1993. Age: 58
Mr. Buoniconti has served as a director of Bankers American Life Assurance
Company since 1993. He also has served as a director of Innkeepers USA, a
hotelier, since 1995 and of The Sports Authority, a sporting goods retailer,
since 1996. Previously, Mr. Buoniconti served as the Vice Chairman, Chief
Operating Officer and Director of Columbia Laboratories, a pharmaceutical
distributor, from 1992 to 1998 and was a partner for Nicholas A. Buoniconti,
P.A., attorneys-at-law, from 1990 to 1992. He also served as President and Chief
Operating Officer of UST, a conglomerate from 1983 to 1989.
ARMANDO CODINA, Director since 1987. Age: 52
Mr. Codina has served as Chairman of the Board of Codina Group, Inc., a
real estate development company, since 1979 (Codina Group, Inc. was formerly
known as InterAmerica Investments Inc. from 1979 to 1989). He has also served as
director of Winn-Dixie Stores, Inc., a food store chain, since 1987, of
BellSouth Corporation, a communications company, since 1992, of FPL Group, Inc.,
a electric utility, since 1995 and of AMR, Inc., an airline, since 1994.
PETER J. DOLARA, Director since 1995. Age: 61
Mr. Dolara has been an officer and Senior Vice President of American
Airlines, since 1971. He has also served as a director of the Easter Seal
Society of Dade County since 1993 and of the United Way of Dade County since
1994.
10
<PAGE> 14
GERALD N. GASTON, Director since and Vice Chairman since 1980. Age: 66
Mr. Gaston has been President and Chief Executive Officer of the Company,
since 1996 and was the Chief Operating Officer of the Company, from 1982 to
1995. Mr. Gaston has served as the Chairman of the Board of American Bankers
Insurance Company of Florida ("ABIC") since 1992, of American Bankers Life
Assurance Company of Florida ("ABLAC") since 1992 and certain other Company
subsidiaries since 1993. Previously, he has served in various capacities for
ABIC, ABLAC and other Company subsidiaries.
JAMES F. JORDEN, Director since 1982. Age: 57
Mr. Jorden has served as senior managing Partner of Jorden Burt Boros
Cicchetti Berenson & Johnson LLP, attorneys-at-law since 1988.
DARYL L. JONES, Director since 1994. Age: 43
Mr. Jones has served as a State of Florida Senator for District 40, since
1992 and an attorney with Adorno and Zeder, attorneys-at-law, since 1996. Mr.
Jones was a Lt. Col./F16 Pilot for the U.S. Air Force Reserves, from 1989 to
1991 and a State of Florida Representative for District 118, from 1990 to 1992.
JACK KEMP, Director since 1995. Age: 63
Mr. Kemp has served as Co-Director of Empower America, a public
policy/think tank, since 1993. He has been a member of the Washington Speakers
Bureau, since 1995, and a director of Oracle, a database software provider,
since 1997, of Carson Products, since 1996, of Everen Capital since 1997 and of
The Sports Authority, a sporting goods retailer, since 1997.
BERNARD P. KNOTH, S.J., Director since 1997. Age: 50
Mr. Knoth has served as President of Loyola University since 1995 and as
Associate Dean of Georgetown University from 1990 to 1995.
R. KIRK LANDON, Chairman of the Board since 1980. Age: 70
Mr. Landon has served as the Vice Chairman of the Board of Trustees of
Barry University, since 1983 and director of Lennar Corporation, a development
company, since 1999. Mr. Landon was the Chief International Marketing Officer of
the Company, ABIC and ABLAC from 1996 to 1999 and Chief Executive Officer of the
Company from 1980 to 1995. Mr. Landon has also served in various other
capacities for the Company's subsidiaries. Mr. Landon was also the Chairman and
director of the Federal Reserve Bank of Atlanta, Miami, Branch, from 1991 to
1998 and director of Mayor's Jewelers, a jewelry retailer, from 1987 to 1999.
ALBERT H. NAHMAD, Director since 1993. Age: 58
Mr. Nahmad has served as President, Chairman of the Board and Chief
Executive Officer of Watsco, Inc., the largest U.S. distributor of HVAC
products, since 1973. He has
11
<PAGE> 15
also served as director of the Panama Canal Commission, since 1995 and as
Chairman of the Board of Directors of the Miami Children's Hospital Foundation,
since 1990.
EUGENE M. MATALENE, JR., Director since 1990. Age: 51
Mr. Matalene has served as President of Strata Capital Management Corp., a
merchant bank, since 1997. He also has served as a director of Acom, Inc., a
designer and manufacturer of digital imaging equipment, since 1999. Mr. Matalene
was a Managing Director of Furman Selz, investment banking, from 1996 to 1997
and a Managing Director of PaineWebber Incorporated, investment banking from
1987 to 1996.
NICHOLAS J. ST. GEORGE, Director since 1983. Age: 60
Mr. St. George has served as President, Chief Executive Officer, since 1979
and Director, since 1972 of Oakwood Homes Corporation, a manufacturer, retailer
and financier of mobile/manufactured homes. He has also served as a director of
Legg Mason, Inc., an investment bank, since 1983 and director of Carey
International, Inc., a chauffeured vehicle service company, since 1997.
ROBERT C. STRAUSS, Director since 1992. Age: 57
Mr. Strauss has served as President, Chief Executive Officer and Director
of Noven Pharmaceuticals, Inc., a drug delivery business, since 1997. Mr.
Strauss has also served as a director of Columbia Laboratories, a pharmaceutical
distribution company, since 1995, and a director of Eclipse Surgical
Technologies, Inc., a manufacturer of medical devices, since 1998. Previously,
Mr. Strauss was the Chief Operating Officer and Director of Ivax, a generic drug
maker in 1997. From 1996 to 1997, Mr. Strauss was the President and Chief
Executive Officer and from 1983 to 1995 Chairman, President and Chief Executive
Officer of Cordis Corporation, which is now a Johnson & Johnson company.
GEORGE E. WILLIAMSON II, Director since 1985. Age: 54
Mr. Williamson has been the President of Williamson Cadillac Company, an
automobile dealer, since 1967 and of Williamson Saturn, Inc. d/b/a Saturn of
Dadeland and Saturn of West Dade, since 1991 and 1995, respectively. Mr.
Williamson has also served as a director of Northern Trust Bank of Florida, N.A.
since 1988.
HOW ARE DIRECTORS COMPENSATED?
BASE COMPENSATION. Each non-employee director receives a quarterly
retainer of $5,000 ($5,500 if the director serves as the chairman of a Board of
Directors' committee of the Company or any of its subsidiaries). Each
non-employee director also receives a fee of $1,000 for each Board or committee
meeting attended (or $500 for each meeting attended telephonically). Only one
attendance fee is paid for meetings held on the same day. Directors who reside
outside of Miami are also reimbursed for travel expenses. Directors who are also
employees of the Company receive no additional compensation for service as
directors.
Non-employee directors may elect to defer their retainer and meeting fees
under the 1994 Amended and Restated Deferred Compensation Plan (the "Deferred
Plan"). The Deferred Plan allows directors to defer this amount in cash or in
stock equivalents. Upon
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<PAGE> 16
termination from the Board of Directors, the director will receive cash, or if
the director deferred fees in stock equivalents, cash or actual shares Company's
common stock as elected by the director. Directors who defer fees must make an
election in writing. All fees earned during each director's term shall be
deferred until retirement, resignation or death. The deferral may be revoked
with respect to future payments or the form of future payments to be deferred
may be changed upon written notice which must be delivered to the Company prior
to the annual meeting of shareholders. The revocation or change will be
effective six months following receipt of the notice. There are 400,000 shares
of common stock of the Company reserved for issuance under the Deferred Plan.
All of the non-employee directors, other than Messrs. Kemp, Knoth, S.J.,
Matelene and Jorden, are currently participating in this plan.
OPTIONS. Each non-employee director receives an automatic award, on the
date of the annual meeting, of options to purchase 2,000 shares of common stock.
Grants are currently made under the Company's 1997 Equity Incentive Plan (the
"Incentive Plan"). Each option award may not be exercised until one year after
the date of grant and generally has a five-year term. The holder may purchase
shares at their fair market value on the date of grant. On March 5, 1999, the
Board of Directors amended the 1994 Non-Employee Directors' Stock Option Plan
(the "Prior Plan") to allow grants thereunder to be exercisable for five years
or as otherwise determined by the Board of Directors. The Board of Directors
also extended by one year the term of options issued in 1994 under the Prior
Plan. These options were set to expire in May 1999.
During 1998, the Company did not hold an annual meeting of shareholders
during 1998 and under the terms of the Company's By-laws there was no annual
meeting of directors. As a result, the non-employee directors were not entitled
to receive automatic awards in 1998 under the Incentive Plan. During 1998
substantial efforts were made by the non-employee directors of the Company in
guiding the Company during the proposed acquisitions of the Company. The Company
awarded the non-employee directors stock options to purchase 2,000 shares of
common stock in recognition of the substantial efforts of the non-employee
directors in 1998. The options were awarded as of February 19, 1999 under the
1999 Non-Employee Director One-Time Award Plan. These awards have similar terms
to those awarded under the Incentive Plan.
HOW OFTEN DID THE BOARD MEET DURING FISCAL 1998?
The Board of Directors met 16 times and took action by unanimous consent
three times during fiscal 1998. Each director attended more than 75% of the
total number of meetings of the Board of Directors and of its Committees on
which the director served, except for Messrs. Buoniconti, Kemp and Knoth, S.J.
WHAT ARE THE COMMITTEES OF THE BOARD?
The Board of Directors has standing Audit, Compensation and Nominating,
Executive, Finance, Planning and Takeover Evaluation Committees.
13
<PAGE> 17
BOARD COMMITTEE MEMBERSHIP
The member of the Board of Directors served on committees noted below by an
asterisk. The Chairman of the committees are noted with two asterisks.
<TABLE>
<CAPTION>
COMPENSATION TAKEOVER
AUDIT & NOMINATING EXECUTIVE FINANCE PLANNING EVALUATION
DIRECTOR COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
- -------- --------- ------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
William H. Allen, Jr...... * * **
Nicholas A. Bouniconti.... * *
Armando M. Codina......... * * *
Peter J. Dolara........... * *
Gerald N. Gaston.......... ** * *
Daryl L. Jones............ * *
James F. Jorden........... * * * *
Jack F. Kemp..............
Bernard P. Knoth, S.J..... *
R. Kirk Landon............ * * * **
Eugene M. Matalene, Jr.... * *
Albert H. Nahmad.......... * * ** *
Nicholas J. St. George.... *
Robert C. Strauss......... ** * * *
George E. Williamson II... ** * *
</TABLE>
AUDIT COMMITTEE. The Audit Committee met four times during 1998. The Audit
Committee recommends the appointment of the independent auditors; reviews the
arrangements and scope of the independent audit; reviews all financial
statements and reviews matters of concern to the Audit Committee, the auditors
or management relating to these statements or the results of any audit thereof;
considers the comments from the independent auditors with respect to any
weakness in internal controls and the consideration given or corrective action
taken by management; reviews internal accounting procedures and controls with
the internal financial and accounting staff; reviews the activities, reports and
recommendations of the internal auditors and management's supervision in control
of that department; and completes any other requests made by the Board of
Directors.
COMPENSATION AND NOMINATING COMMITTEE. During 1998 the Compensation and
Nominating Committee met four times. The Compensation and Nominating Committee
establishes the compensation package of the Chairman of the Board of Directors,
the Chief Executive Officer and the President of the Company and its major
subsidiaries. This committee reviews and approves the compensation package
suggested by management for all other officers. The Compensation and Nominating
Committee is responsible for the administration of all perquisites offered to
officers of the Company and its major subsidiaries. These perquisites include
pension, retirement or profit-sharing plans, management incentive plans,
restricted or qualified stock plans, and insurance benefits. In addition, it
assists the Chairman of the Board and the Chief Executive Officer in the
development of a management succession plan. In connection with the Incentive
Plan, the Nominating and Compensation Committee has full power and authority to
select employees to participate in each plan, except for awards made to
non-employee directors, to determine the amount and timing of awards, to
interpret the Incentive Plan and establish rules for its administration.
The Compensation and Nominating Committee, subject to the control of the
Board of Directors or the Executive Committee, recommends and implements
criteria regarding composition of the Board of Directors, including, but not
limited to, seeking out possible
14
<PAGE> 18
candidates to fill directorships; determining the desirable balance of expertise
and composition of the Board of Directors; aiding in attracting such qualified
candidates; reviewing the management slate of directors to be elected at an
annual meeting; recommending to the Board of Directors the inclusion of the
slate in the proxy statement; reviewing the qualifications of candidates for
corporate officership; and recommending the officers for approval by the Board
of Directors. Nominations for the election of directors may be made by the Board
of Directors or by any shareholder entitled to vote for the election of
directors.
Nominations by any holder of common stock shall be made by notice in
writing, delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Company not less than 5 days nor more than 60 days prior
to any meeting of shareholders called for the election of directors. Each notice
shall set forth (i) the name, age, business address and, if known, residence
address of each proposed nominee, (ii) the principal occupation or employment of
each nominee and (iii) the number of shares of the Company's common stock which
are beneficially owned by each nominee. The Company's Secretary shall determine
whether any nomination complies with the procedure set forth above. Nominations
that fail to comply with the above-stated procedures shall be null and void and
disregarded by the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jorden Burt Boros Cicchetti Berenson & Johnson LLP, of which Mr. Jorden is
a Senior Managing Partner, serves as general counsel for the Company and its
subsidiaries. In 1998, the firm received approximately $4,289,000 for legal
services rendered and costs incurred in that capacity.
Mr. St. George is President, Chief Executive Officer and Director of
Oakwood Homes Corporation. Oakwood Homes produced $69,692,254 in gross premiums
for certain Company subsidiaries. In addition, these subsidiaries have
reinsurance agreements with an affiliate of Oakwood Homes Corporation and ceded
premiums of $67,712,205. These subsidiaries received a ceding fee of $7,262,272.
Mr. Landon served as the Chairman of the Board and Chief International
Officer of the Board until January 15, 1999. As of January 15, 1999, the Company
and Mr. Landon entered into a Consulting and Non-Competition Agreement (the
"Landon Consulting Agreement") under which Mr. Landon will receive $1,035,000
over a one-year period. In connection with the execution of the Landon
Consulting Agreement, Mr. Landon and the Company agreed to terminate Mr.
Landon's executive severance agreement. As a result, Mr. Landon is no longer
entitled to receive retirement benefits under the severance agreement. Under the
Landon Consulting Agreement, Mr. Landon agreed to continue to consult with the
officers of the Company and to serve as a representative of the Company at
various conferences and functions. In addition, Mr. Landon agreed that for five
years after the termination of the Landon Consulting Agreement, he would not
perform similar services for any competitor of the Company, and would not
solicit clients or employees of the Company.
In connection with the Merger Agreement, Mr. Gaston entered into a
Consulting Agreement with the Company dated March 5, 1999 which will become
effective at the Effective Time (as defined in the Merger Agreement) (the
"Gaston Consulting Agreement"). Under the Gaston Consulting Agreement, Mr.
Gaston agreed to consult with officers of the Company for a term of twenty-four
months commencing at the
15
<PAGE> 19
Effective Time (as defined in the Merger Agreement). In addition, at the
Effective Time, the Company is obligated to pay to Mr. Gaston a lump sum of
$8,045,000 as full payment of the Company's obligation under the Executive
Severance Contract with Mr. Gaston, dated February 1, 1990 (subject to
adjustment so that the amount received by Mr. Gaston as a result of the merger
shall not exceed 2.99 times Mr. Gaston's "base amount" as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended). Under the Gaston
Consulting Agreement, Mr. Gaston agreed that for two years after the termination
of the Gaston Consulting Agreement he would not perform in any similar services
for any competitor of the Company and would not solicit clients or employees of
the Company.
The Company believes these transactions were made on terms no less
favorable than that which could have been received by unaffiliated third
parties.
EXECUTIVE COMPENSATION
The following Report of the Compensation and Nominating Committee and the
performance graphs included elsewhere in this proxy statement do not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this Report or the performance graphs by reference therein.
REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The Compensation and Nominating Committee of the Board of Directors (the
"Committee") is responsible for establishing the various compensation programs
for the executive officers. In addition, the Committee assists the Chairman of
the Board of Directors and the Chief Executive Officer in the development of a
management succession plan and reviews the qualifications of candidates for
corporate officership and recommends the officers for approval by the Board of
Directors.
COMPENSATION POLICIES. In developing compensation plans and setting
compensation levels, the Committee reviewed a diverse group of insurance company
salaries. The Committee also reviewed the same diverse group with respect to
stock options and long term incentive plans.
EXECUTIVE OFFICER COMPENSATION. The Company's compensation program for
executive officers consists of three key elements:
- a base salary,
- an annual bonus, and
- long-term incentives.
The Committee believes that this approach best serves the interests of
shareholders by ensuring that executive officers are compensated in a manner
that advances both short-and long-term interests of shareholders.
BASE SALARY. Base salaries of individual executive officers are reviewed
by the Committee annually. In determining adjustments to base salary for a
particular year, the
16
<PAGE> 20
Committee relies on reports from consultants and reports from the Company's
Human Resources Department. Salaries for all officers, with the exception of the
Chief Executive Officer, are based upon recommendations made by the officers'
superiors taking into account the superiors' subjective assessment of the nature
of the position, and the contribution, experience and Company tenure of the
executive officer. The Chief Executive Officer reviews all salary
recommendations with the Committee, which is responsible for approving or
disapproving those recommendations.
ANNUAL BONUS. Executive officers and other senior officers participate in
the Management Incentive Plan ("MIP"). The Committee chooses those officers who
will participate in the MIP, acting upon the advice of the Chief Executive
Officer. Each participant's MIP is based on individual performance objectives,
which may include profits, premiums, and other individual performance measures.
The performance objectives have different weights, but in general, at least 40%
of each participant's bonus must be based on the Company's profit objective. A
target bonus percentage is established for each participant. For executive
officers this percentage ranges from 40% to 100% of base salary. Participants
can earn up to 200% of this target bonus percentage based on their actual
performance on each category in their MIP. For each category three performance
levels are determined in advance. The minimum is the minimum level of acceptable
performance, where 0% of the target bonus percentage would be earned. The target
is the planned performance level, where 100% of the target bonus percentage
would be earned. The maximum is the most optimistic level of performance that
has only a slight probability of being achieved, where 200% of the target bonus
percentage would be earned. The actual performance is compared to the
established objectives and the award for each item measured.
In 1998 certain employees of the Company, including the named executive
officers, received a special one-time bonus for their work in connection with
the proposed acquisitions of the Company. The one-time bonus reflects the
additional efforts related to the proposed acquisitions.
LONG-TERM INCENTIVES. Long-term incentives consist of stock option grants
and accompanying restricted shares. A stock option permits the holder to buy
Company stock at a specific price during a specific time period. As the price of
Company stock rises, the option increases in value. Restricted shares are tied
to the officer's continued employment and service to the Company and vest only
upon reaching a fixed anniversary date from the date of option exercise. The
number of options granted to any one employee is based on a formula which is
tied to the executive officer's base salary. However, other subjective factors
are taken into consideration such as the executive's level of responsibility,
experience and long-term expected contribution to the Company. During 1998, the
Company granted stock options to executive officers under the Incentive Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Gaston has served in his current
capacity as CEO, since January 1, 1996. The Committee, in determining CEO base
pay, reviewed a number of executive compensation analyses for insurance
companies with comparable asset size and premium income. Median income for CEOs
of insurance companies with comparable asset size was $1.1 million. Effective
May 1998, Mr. Gaston received a raise of 10% increasing his base pay to
$800,000. His May 1998 increase was based on factors including the compensation
analyses discussed above, increased profitability of 22% for 1997, increased
premium production of 10% for 1997, and the development and execution of plans
for future growth.
17
<PAGE> 21
Mr. Gaston's MIP award for 1998 was $1,042,900. Fifty percent of his award
was directly related to 1998 actual profits which exceeded the plan objective by
6%. Other categories used to determine Mr. Gaston's award included the gross
written premium for the Company, expense control and merger related projects
having relative weights of 20%, 5% and 25%, respectively.
Mr. Gaston did not receive any option grants under the Incentive Plan. With
respect to the Company's long-term incentive plans, he converted a previously
issued debenture due May 24, 1999 into 140,000 shares of stock issued under the
1994 Key Executive Debenture Plan. Mr. Gaston does not currently hold any
options or other forms of long term incentive plans.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). Section 162(m) of
the Internal Revenue Code, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Compensation and Nominating Committee
reviews the compensation of its executive officers (which currently consists of
the Management Incentive Plan and the Incentive Plan described above) to ensure
that it complies with the statute.
CONCLUSION. The Compensation and Nominating Committee has the
responsibility for ensuring that the Company's compensation program continues to
be in the best interests of its shareholders. The Committee consists entirely of
non-employee directors. The Committee's objective is to assist the Company,
through a sound and reasonable structured compensation program, in the
recruitment, retention and motivation of talented managers capable of
contributing significantly to the Company's increased profitability and to the
creation, over time, of enhanced shareholder value. The Committee administers
the program, which encompasses base pay and long- and short-term incentive plans
and reviews the general compensation philosophy of the Company, as well as the
specific elements of the compensation program. The advice of qualified outside
advisors and independent compensation experts is obtained to assist the
Compensation and Nominating Committee in establishing and evaluating
compensation policies, especially in relation to other comparable companies.
Finally, the Compensation and Nominating Committee also reviews the results of
the Company's compensation programs to determine if such programs are performing
appropriately and achieving the desired results.
Robert C. Strauss, Chairman
Nicholas A. Buoniconti
Armando M. Codina
Peter J. Dolara
Bernard P. Knoth, S.J.
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<PAGE> 22
SUMMARY COMPENSATION TABLE
The Summary Compensation Table below indicates the cash compensation paid
by the Company and its subsidiaries as well as certain other compensation paid
or accrued for the Chairman of the Board, Chief Executive Officer and the three
other highest paid executive officers, for services rendered in all capacities
during the fiscal years ended December 31, 1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
--------------------------------------------- ------------------------------------------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
COMPENSATION STOCK SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) AWARDS ($)(3)(4) (#)(3) ($)(5)
- --------------------------- ---- --------- ----------- ------------ ---------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Kirk Landon............ 1998 674,615 447,300 -- -- -- 30,824
Chairman and Chief 1997 618,269 519,200 -- -- -- 37,531
International Marketing 1996 544,135 454,600 -- -- -- 21,728
Officer of ABIG
Gerald N. Gaston.......... 1998 771,154 1,142,900 -- -- -- 30,824
President, Vice Chairman 1997 672,115 986,200 -- -- -- 37,623
and Chief Executive 1996 560,481 919,100 -- -- -- 21,728
Officer of ABIG
Eugene E. Becker.......... 1998 314,769 220,800 -- 289,125 9,000 30,824
Executive Vice President 1997 292,385 238,800 -- 170,625 9,000 37,623
and Chief Marketing 1996 253,423 229,900 -- 123,000 4,500 21,728
Officer of ABIG
Jay R. Fuchs.............. 1998 241,107 168,900 -- 231,300 7,200 30,824
President of ABLAC and 1997 224,951 165,900 -- 136,500 7,200 37,669
ABIC 1996 194,329 159,200 -- 90,200 3,300 21,728
Floyd G. Denison.......... 1998 212,308 212,700 -- 269,850 8,400 30,824
Executive Vice President 1997 193,654 135,300 -- 136,500 7,200 37,669
of Finance 1996 179,393 101,800 -- 82,000 3,000 24,847
</TABLE>
- ---------------
(1) In 1998 certain employees of the Company, including the named executive
officers, received a special one-time bonus for their work in connection
with the proposed acquisitions of the Company.
(2) Officers also receive certain perquisites and personal benefits; however,
such items do not exceed the lesser of $50,000 or 10% of such Officer's
salary and bonus and, therefore, are not required to be reported.
(3) Officers received awards of options under the Incentive Plan. The options
are not exercisable until November 1999. Under these Incentive Plan awards,
the grantees were given options, which upon the exercise the grantee will
receive one "Primary Share" and two additional "Restricted Shares" for each
option. The Restricted Shares vest three years from the date of exercise of
the related option. Holders of Restricted Shares are entitled to receive
dividends equal to those granted to the holders of the Company's common
stock and are entitled to vote such shares. The grantee must continue to own
the Primary Shares during the vesting period of the Restricted Shares. If
the grantee disposes of or pledges the Primary Shares, the grantee will
forfeit the Restricted Shares. The exercise price for the Primary Shares was
$48.1875.
(4) At December 31, 1998, Restricted Shares of common stock held by the
executive officers named in the table and the market value thereof were as
follows: Mr. Landon, 81,000 shares acquired under the 1991 Stock
Option/Restricted Stock Award Plan (the "1991 Plan"), $3,882,938; Mr.
Becker, 12,000 acquired under the Senior Plan and the Incentive Plan,
$575,250; Mr. Fuchs, 9,200 acquired under the Senior Plan and the Incentive
Plan, $441,025; and Mr. Denison, 8,800 acquired under the Senior
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<PAGE> 23
Plan and the Incentive Plan, $421,850. The value is based on the average of
the high and low trades reported on December 31, 1998 of $47.9375.
(5) For 1998, this amount represents the allocation of shares of the Company's
common stock under the Company's Leveraged Employee Stock Ownership Plan
(the "LESOP"). Messrs. Landon, Gaston, Becker, Fuchs and Denison were each
allocated 643 shares. The value is based on the average of the high and low
trades reported on December 31, 1998 of $47.9375 multiplied by the number of
shares allocated to each named executive officer. Shares allocated to each
U.S.-based participant in the LESOP were transferred by the Company to the
401(k) ESOP as of the beginning of 1999.
OPTION GRANTS IN 1998
The following table sets forth information with regard to grants of stock
options to each of the named executive officers during the year ended December
31, 1998. Grants were made under the Incentive Plan. No SARs have been granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE OF EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) BASE PRICE ($/SH) DATE 5%($)(3) 10%($)(3)
- ---- ------------- -------------- ----------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Kirk Landon....... -- -- -- -- -- --
Gerald N. Gaston..... -- -- -- -- -- --
Eugene E. Becker..... 9,000 4.4% 48.1875 11/12/01 357,485 432,676
Jay R. Fuchs......... 7,200 3.5% 48.1875 11/12/01 285,988 346,140
Floyd G. Denison..... 8,400 4.1% 48.1875 11/12/01 333,653 403,831
</TABLE>
- ---------------
(1) See footnote (3) under Summary Compensation Table for material terms of the
options granted.
(2) As a percentage of all awards for common stock granted under the Incentive
Plan. During 1998, awards for 206,600 shares of common stock were granted
under the Incentive Plan which includes awards for 24,600 shares of common
stock granted to the named executive officers.
(3) Assumed annual rates of appreciation of 5% and 10% would result in the price
of the Company's common stock increasing to $55.783 and $64.138,
respectively.
20
<PAGE> 24
AGGREGATED OPTION EXERCISES IN 1998 AND 1998 YEAR-END
OPTION VALUES
The following table sets forth information with regard to stock option
exercises during 1998 by each of the named executive officers and December 31,
1998 values of all unexercised options held by these individuals.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT 12/31/98(#)(2) 12/31/98($)(3)
SHARES --------------------- ---------------------
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
R. Kirk Landon............ 212,380 8,690,083 0/0 0/0
Gerald N. Gaston.......... 140,000 4,737,688 0/0 0/0
Eugene Becker............. 57,938 2,604,404 0/9,000 0/286,875
Jay R. Fuchs.............. 7,200 364,650 0/7,200 0/267,750
Floyd G. Denison.......... 7,200 363,516 0/8,400 0/229,500
</TABLE>
- ---------------
(1) Market value of shares acquired at date of exercise minus exercise price for
those shares.
(2) All unexercised options include options that were granted under the
Incentive Plan. See note (3) for the Summary Compensation Table and the
accompanying table disclosure for additional information regarding the
options granted under the Incentive Plan.
(3) The average of high and low trades on December 31, 1999, minus exercise
price.
RETIREMENT PLANS
The Company has a non-contributory pension plan covering substantially all
of its employees. The Company contributes such amounts as are necessary, on an
actuarial basis, to provide the plan with assets sufficient to meet the benefits
to be paid to plan members. Contributions under the plan are based on length of
service and average annual compensation. Compensation includes normal salary and
wages and does not include bonuses, overtime pay, reimbursements or special pay.
Upon normal retirement, age 65, the participant's monthly benefit will be equal
to 2% of the "average monthly earnings" multiplied by the number of years of
service to the Company less 50% of the monthly primary social security benefits
to which the individual is entitled. The participant's "average monthly
earnings" equals the average monthly compensation for the highest 60 consecutive
months of compensation within the last 120 months immediately preceding
retirement. There was no actuarially-determined pension expense as a result of
the plan reaching the full funding limitation.
The Company has adopted a Non-qualified Supplemental Benefit Plan. The plan
is a non-qualified, unfunded, deferred compensation arrangement designed solely
to equalize the total benefits certain key executives would have received under
the Company's Retirement Plan, but for the limitations on benefits (i) imposed
under the Retirement Plan due to limits the length of service credited in
calculating benefits and (ii) by Section 415 of the Internal Revenue Code (as
reflected in Section 7.01 of the Retirement Plan). The plan is intended to
benefit the Company and its affiliates by recognizing the value of the past and
present services of the key executives covered by the plan and to encourage them
to continue careers with the Company and its affiliates. The Compensation and
Nominating Committee administers and interprets the provisions of the plan.
21
<PAGE> 25
Participants are those key executives designated from time to time by the Board
of Directors.
Following are the estimated annual benefits under both Retirement Plans for
various lengths of service and compensation levels based on the assumption that
the retiree will choose a life-only benefit and is retiring at age 65 during the
year 1998. Election of the other available payment options could change the
benefit; however, all benefits are actuarially equivalent. For annual benefits
in excess of $120,000 or salaries in excess of $150,000, assume the employee is
a member of both retirement plans.
PENSION ACCRUAL BASED ON YEARS OF SERVICE
<TABLE>
<CAPTION>
5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS 50 YEARS
AVERAGE ANNUAL SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
-------------- ------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 1,084 11,084 21,084 31,084 41,084 51,084 61,084 71,084 81,084 91,084
$ 150,000 6,084 21,084 36,084 51,084 66,084 81,084 96,084 111,084 126,084 141,084
$ 200,000 11,084 31,084 51,084 71,084 91,084 111,084 131,084 151,084 171,084 191,084
$ 250,000 16,084 41,084 66,084 91,084 116,084 141,084 166,084 191,084 216,084 241,084
$ 300,000 21,084 51,084 81,084 111,084 141,084 171,084 201,084 231,084 261,084 291,084
$ 350,000 26,084 61,084 96,084 131,084 166,084 201,084 236,084 271,084 306,084 341,084
$ 400,000 31,084 71,084 111,084 151,084 191,084 231,084 271,084 311,084 351,084 391,084
$ 450,000 36,084 81,084 126,084 171,084 216,084 261,084 306,084 351,084 396,084 441,084
$ 500,000 41,084 91,084 141,084 191,084 241,084 291,084 341,084 391,084 441,084 491,084
$ 550,000 46,084 101,084 156,084 211,084 266,084 321,084 376,084 431,084 486,084 541,084
$ 600,000 51,084 111,084 171,084 231,084 291,084 351,084 411,084 471,084 531,084 591,084
$ 650,000 56,084 121,084 186,084 251,084 316,084 381,084 446,084 511,084 576,084 641,084
$ 700,000 61,084 131,084 201,084 271,084 341,084 411,084 481,084 551,084 621,084 691,084
$ 750,000 66,084 141,084 216,084 291,084 366,084 441,084 516,084 591,084 666,084 741,084
$ 800,000 71,084 151,084 231,084 311,084 391,084 471,084 551,084 631,084 711,084 791,084
$ 850,000 76,084 161,084 246,084 331,084 416,084 501,084 586,084 671,084 756,084 841,084
$ 900,000 81,084 171,084 261,084 351,084 441,084 531,084 621,084 711,084 801,084 891,084
$ 950,000 86,084 181,084 276,084 371,084 466,084 561,084 656,084 751,084 846,084 941,084
$1,000,000 91,084 191,084 291,084 391,084 491,084 591,084 691,084 791,084 891,084 991,084
</TABLE>
EMPLOYMENT AGREEMENTS
To help ensure that Senior Management will be prepared to function in the
Company's best interests in the event of any possible change in control of the
Company, whether by merger, sale or other comparable action, and to help ensure
the continuing services of such officers, the Board of Directors (with only
non-employee directors participating) authorized the Company to enter into
certain contracts with selected executive officers. While there was no reason to
believe that a merger or sale was imminent, the Board of Directors believed it
to be in the best interest of the Company and its shareholders that it act at
that time to avoid the need for hasty action in the future and to ensure
continuity of highly qualified management.
Severance Agreements that were entered into prior to 1989 (the "Prior
Severance Agreements") provide that an officer is entitled to receive payment of
an amount (the "Designated Amount") equal to twice the officer's Current Annual
Salary (as defined in the Prior Severance Agreement) in the event that the
Company is Merged or Sold (as defined in the Prior Severance Agreement),
regardless of whether the officer had terminated his employment.
Severance Agreements that were entered into after 1988 (the "Recent
Severance Agreements") provide that if, within 24 months following a Change of
Control (as defined in the Recent Severance Agreements) of the Company, an
officer in good faith determines that there has been a significant adverse
change in circumstances affecting such officer's
22
<PAGE> 26
position or status within the Company, such officer may terminate his employment
and be entitled to receive payment of an amount (the "Maximum Amount") equal to
the maximum amount that will not constitute a "parachute payment" as defined in
Section 280G of the Code, as amended (or any successor provision or, if no such
provision exists, as defined in such provision immediately prior to its repeal)
and as calculated by the Company's independent auditors. The Recent Severance
Agreements also provide that within fifteen (15) business days following the
occurrence of a Change in Control (as defined in the Recent Severance
Agreements) of the Company, the Company is required to deposit with an escrow
agent an amount equal to the Maximum Amount calculated as of the date of such
Change in Control.
These Prior Severance Agreements and the Recent Severance Agreements also
generally provide the executive officers will receive the following compensation
in the amounts and for the reasons indicated:
(a) Upon retirement at or after attainment of age 65, from 100% up to
150% of current base salary. Upon termination for the convenience of the
Company, an amount equal to his then current annual base salary.
Termination for convenience means termination at the behest of the Company,
whether by dismissal, by requested resignation or by resignation which
follows a greater than 20% decrease in the employee's salary.
(b) In the event of termination of employment for certain illnesses or
disabilities which preclude an employee from rendering satisfactory
services for a period of three months or more, an amount from 50% up to
100% of his then current annual base salary.
(c) In the event of death, an amount payable to his beneficiary or
estate equal to 150% of his annual base salary at the time of death.
If, at December 31, 1998, a merger or sale had occurred as set forth above,
the Company would have been obligated to make payments to Mr. Landon, Mr.
Gaston, Mr. Becker, Mr. Fuchs and Mr. Denison of up to approximately $6,546,340,
$8,045,430, $648,000, $494,510 and $1,770,100 respectively. Mr. Landon agreed to
terminate his Executive Severance Agreement in connection with executing the
Landon Consulting Agreement on January 15, 1999 and thus would not be entitled
to any amounts under his Executive Severance Agreement.
In the Merger Agreement, the Company has agreed to use its best efforts to
cause itself and the certain officers with executive severance agreements to
enter into amendments to those agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDERS PARTICIPATION
Present members of the Compensation and Nominating Committee are Messrs.
Robert C. Strauss (Chairman), Armando M. Codina, Nicholas A. Buoniconti, Peter
J. Dolara and Bernard P. Knoth, S.J.
23
<PAGE> 27
PERFORMANCE GRAPHS
The following graph compares the Company's cumulative total shareholder
return (common stock appreciation plus dividends on a reinvested basis) over the
last five fiscal years compared to the NASDAQ Market Index and the NASDAQ
Insurance Index.
FIVE-YEAR CUMULATIVE TOTAL RETURN
AMERICAN BANKERS INSURANCE GROUP, INC., NASDAQ MARKET INDEX
AND NASDAQ INSURANCE INDEX [graph]
<TABLE>
<CAPTION>
AMERICAN
BANKERS NASDAQ NASDAQ
MEASUREMENT PERIOD INSURANCE MARKET INSURANCE
(FISCAL YEAR COVERED) GROUP, INC. INDEX INDEX
- --------------------- ----------- ------ ---------
<S> <C> <C> <C>
1993 100 100 100
1994 94 98 94
1995 156 138 134
1996 209 170 152
1997 381 208 224
1998 341 294 199
</TABLE>
The graph assumes that the value of the investment in the Company's common
stock and each index was $100 at December 31, 1993, and that all dividends were
reinvested.
Although, the Company's common stock and preferred stock is currently
listed on the New York Stock Exchange, the Company has prepared the performance
graph to include the performance of the Nasdaq National Market and the NASDAQ
Insurance Index. The Company believes that its peer group consists of those
companies comprising the NASDAQ Insurance Index rather than those within the S&P
500. Thus, the Company has chosen to continue to measure the performance of its
common stock against the Nasdaq National Market and NASDAQ Insurance Index.
ITEM 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
The Company has appointed PricewaterhouseCoopers LLP as the Company's
independent accountants since 1981. Services provided to the Company and its
subsidiaries by PricewaterhouseCoopers LLP in fiscal 1998 included the
examination of the Company's consolidated financial statements, limited reviews
of quarterly reports, services related to
24
<PAGE> 28
filings with the Securities and Exchange Commission and consultations on various
tax and information services matters.
Representatives of PricewaterhouseCoopers LLP will be present at the annual
meeting to respond to appropriate questions and to make such statements as they
may desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR FISCAL 1999. In the event shareholders do not ratify the
appointment, the appointment will be reconsidered by the Audit Committee and the
Board of Directors.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the annual meeting other than the
items referred to above. If any other matter is properly brought before the
meeting for action by shareholders, proxies in the enclosed form returned to the
Company will be voted in accordance with the recommendation of the Board of
Directors or, in the absence of such a recommendation, in accordance with the
judgment of the proxy holder.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING. Shareholders interested
in presenting a proposal for consideration at the Company's annual meeting of
shareholders in 2000 may do so by following the procedures prescribed in Rule
14a-8 under the Securities Exchange Act of 1934 and the Company's by-laws. To be
eligible for inclusion, shareholder proposals must be received by the Company's
Corporate Secretary no later than December 6, 1999.
PROXY SOLICITATION COSTS. The proxies being solicited hereby are being
solicited by the Company. The cost of soliciting proxies in the enclosed form
will be borne by the Company. Officers and regular employees of the Company may,
but without compensation other than their regular compensation, solicit proxies
by further mailing or personal conversations, or by telephone, telex, facsimile
or electronic means. The Company will, upon request, reimburse brokerage firms
and others for their reasonable expenses in forwarding solicitation material to
the beneficial owners of stock.
By order of the Board of Directors
ARTHUR W. HEGGEN (SIG)
Arthur W. Heggen
Corporate Secretary
April 8, 1999
25
<PAGE> 29
Appendix A
AMERICAN BANKERS INSURANCE GROUP, INC.
AMERICAN BANKERS INSURANCE GROUP, INC. LEVERAGED EMPLOYEE STOCK
OWNERSHIP PLAN
VOTING INSTRUCTIONS TO ESOP TRUSTEES
The undersigned participant in the American Bankers Insurance Group, Inc.
Leveraged Employee Stock Ownership Plan hereby instructs the ESOP Trustees (the
"Trustees") to vote all shares, as designated on the reverse side, of Common
Stock of American Bankers Insurance Group, Inc. (the "Company") at the Annual
Meeting of the Shareholders to be held on Friday, May 7, 1999 at 10:00 A.M.
Eastern time in the Auditorium of the Company's Headquarters, 11222 Quail
Roost Drive, Miami, Florida 33157 and at any and all adjournments or
postponements thereof.
THIS INSTRUCTION CARD MUST BE PROPERLY COMPLETED, SIGNED, DATED AND RECEIVED
BY THE TRUSTEES' AGENT BY 5:00 P.M. EASTERN TIME ON MAY 3, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 & 2.
IF THIS INSTRUCTION CARD IS PROPERLY SIGNED, DATED AND TIMELY RECEIVED, BUT NO
INSTRUCTIONS ARE GIVEN, OR YOU DO NOT VOTE, THE SHARES OF COMMON STOCK CREDITED
TO YOUR ACCOUNT WILL NOT BE VOTED BY THE TRUSTEES.
Please mark your vote, date and sign your name as it appears on the mailing
label, detach and return it in the enclosed envelope.
[See Reverse Side]
FOLD AND DETACH HERE
<PAGE> 30
PLEASE VOTE IN THE BOX IN THE FOLLOWING MANNER USING DARK INK ONLY
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<CAPTION>
AMERICAN BANKERS INSURANCE GROUP, INC. LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN
<S> <C>
ITEM 1 - Election of the following nominees as Directors: ITEM 2 - Proposal to ratify appointment of
PricewaterhouseCoopers LLP as independent
Term ending in 2001: William H. Allen, Jr., Jack F. Kemp, accountants.
James F. Jorden, R. Kirk Landon and Robert C. Strauss.
FOR AGAINST ABSTAIN
Term ending in 2002: Nicholas A. Buoniconti, Armando M. Codina,
Peter J. Dolara, Eugene M. Matalene, Jr. and Nicholas J. St. George. [ ] [ ] [ ]
FOR ALL WITHHELD FOR ALL WITHHELD FOR THE FOLLOWING ONLY: ITEM 3 - In their discretion, the proxies are authorized
NOMINEES NOMINEES (Write the name of the nominee(s) to consider and act upon such other matters as may
in space below) properly come before the meeting or any and all post-
[ ] [ ] ponements or adjournments thereof.
---------------------------------
FOR AGAINST ABSTAIN
---------------------------------
[ ] [ ] [ ]
---------------------------------
Signature ___________________________________________________
Signature if held jointly ___________________________________
Dated: ________________________________________________, 1999
Please date this Instruction Card and sign it exactly as
your name appears to the left.
</TABLE>
<PAGE> 31
Appendix B
AMERICAN BANKERS INSURANCE GROUP, INC.
AMERICAN BANKERS INSURANCE GROUP, INC. 401(k) AND EMPLOYEE STOCK
OWNERSHIP PLAN
VOTING INSTRUCTIONS TO CG TRUST COMPANY
The undersigned participant in the American Bankers Insurance Group, Inc. 401(k)
and Employee Stock Ownership Plan (the "401(k) Plan") hereby instructs CG Trust
Company ("CG Trust") to vote all shares, as designated on the reverse side, of
Common Stock of American Bankers Insurance Group, Inc. (the "Company") at the
Annual Meeting of the Shareholders to be held on Friday, May 7, 1999 at 10:00
A.M. Eastern time in the Auditorium of the Company's Headquarters, 11222 Quail
Roost Drive, Miami, Florida 33157 and at any and all adjournments or
postponements thereof.
THIS INSTRUCTION CARD MUST BE PROPERLY COMPLETED, SIGNED, DATED AND RECEIVED
BY CG TRUST'S AGENT BY 5:00 P.M. EASTERN TIME ON APRIL 29, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 & 2.
IF THIS INSTRUCTION CARD IS PROPERLY SIGNED, DATED AND TIMELY RECEIVED, BUT NO
INSTRUCTIONS ARE GIVEN, OR YOU DO NOT VOTE, THE SHARES OF COMMON STOCK CREDITED
TO YOUR ACCOUNT WILL BE VOTED BY CG TRUST IN THE SAME PROPORTION THAT IT VOTES
SHARES FOR WHICH IT RECEIVES TIMELY INSTRUCTIONS.
Please mark your vote, date and sign your name as it appears on the mailing
label, detach and return it in the enclosed envelope.
[See Reverse Side]
FOLD AND DETACH HERE
<PAGE> 32
PLEASE VOTE IN THE BOX IN THE FOLLOWING MANNER USING DARK INK ONLY
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<CAPTION>
AMERICAN BANKERS INSURANCE GROUP, INC. 401(k) AND EMPLOYEE STOCK OWNERSHIP PLAN
<S> <C>
ITEM 1 - Election of the following nominees as Directors: ITEM 2 - Proposal to ratify appointment of
PricewaterhouseCoopers LLP as independent
Term ending in 2001: William H. Allen, Jr., Jack F. Kemp, accountants.
James F. Jorden, R. Kirk Landon and Robert C. Strauss.
FOR AGAINST ABSTAIN
Term ending in 2002: Nicholas A. Buoniconti, Armando M. Codina,
Peter J. Dolara, Eugene M. Matalene, Jr. and Nicholas J. St. George. [ ] [ ] [ ]
FOR ALL WITHHELD FOR ALL WITHHELD FOR THE FOLLOWING ONLY: ITEM 3 - In their discretion, the proxies are authorized
NOMINEES NOMINEES (Write the name of the nominee(s) to consider and act upon such other matters as may
in space below) properly come before the meeting or any and all post-
[ ] [ ] ponements or adjournments thereof.
---------------------------------
FOR AGAINST ABSTAIN
---------------------------------
[ ] [ ] [ ]
---------------------------------
Signature ___________________________________________________
Signature if held jointly ___________________________________
Dated: ________________________________________________, 1999
Please date this Instruction Card and sign it exactly as
your name appears to the left.
</TABLE>
<PAGE> 33
Appendix C
FOR USE BY THE HOLDERS OF COMMON STOCK OF
AMERICAN BANKERS INSURANCE GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS - MAY 7, 1999
The undersigned hereby appoints R. KIRK LANDON, GERALD N. GASTON and ARTHUR W.
HEGGEN, and each of them, proxies with the power of substitution to each for and
in the name of the undersigned to vote all shares as designated on the reverse
side, of Common Stock of American Bankers Insurance Group, Inc. (the "Company")
which the undersigned would be entitled to vote at the Annual Meeting of
Shareholders of the Company to be held on Friday, May 7, 1999 at 10:00 A.M.
Eastern time in the Auditorium of the Company's Headquarters, 11222 Quail Roost
Drive, Miami, Florida 33157 and at any and all adjournments or postponements
thereof.
P R O X Y
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 & 2.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR" Items 1 & 2. Please mark your vote, date and
sign your name as it appears on the mailing label, detach and return it in the
enclosed envelope.
[See Reverse Side]
FOLD AND DETACH HERE
<PAGE> 34
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF AMERICAN BANKERS
INSURANCE GROUP, INC.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED FOR ITEMS 1 & 2.
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<CAPTION>
AMERICAN BANKERS INSURANCE GROUP, INC. BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<S> <C>
ITEM 1 - Election of the following nominees as Directors: ITEM 2 - Proposal to ratify appointment of
PricewaterhouseCoopers LLP as independent
Term ending in 2001: William H. Allen, Jr., Jack F. Kemp, accountants.
James F. Jorden, R. Kirk Landon and Robert C. Strauss.
FOR AGAINST ABSTAIN
Term ending in 2002: Nicholas A. Buoniconti, Armando M. Codina,
Peter J. Dolara, Eugene M. Matalene, Jr. and Nicholas J. St. George. [ ] [ ] [ ]
FOR ALL WITHHELD FOR ALL WITHHELD FOR THE FOLLOWING ONLY: ITEM 3 - In their discretion, the proxies are authorized
NOMINEES NOMINEES (Write the name of the nominee(s) to consider and act upon such other matters as may
in space below) properly come before the meeting or any and all post-
[ ] [ ] ponements or adjournments thereof.
---------------------------------
FOR AGAINST ABSTAIN
---------------------------------
[ ] [ ] [ ]
---------------------------------
If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a
corporation, please sign the full corporate name, by a duly
authorized officer. If shares are held jointly, each
shareholder named should sign.
Signature ___________________________________________________
Signature if held jointly ___________________________________
Dated: ________________________________________________, 1999
</TABLE>
