ALLCITY INSURANCE COMPANY
122 Fifth Avenue
New York, New York 10011
(212) 387-3000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 18, 1997
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To the Shareholders:
The Annual Meeting of Shareholders of Allcity Insurance
Company (the "Company") will be held at the offices of the
Company, 122 Fifth Avenue, New York, New York 10011 on Tuesday,
November 18, 1997, at 10:00 a.m. for the following purposes:
(1) To consider and act upon the election of
five members of the Board of Directors of the Company.
(2) To transact such other business as may
properly come before the Meeting.
Shareholders of record as of the close of business on
October 20, 1997 are entitled to vote at and take part in the
business of the Meeting.
All shareholders are urged to participate either by
sending in their proxies or by attending the Meeting in person.
John R. Petrowski
Corporate Secretary
October 22, 1997
IMPORTANT FOR ALL SHAREHOLDERS
It is important that your shares be represented at the Annual
Meeting of Shareholders. To be sure your interests are
represented, please sign and return promptly the enclosed proxy in
the envelope provided. No postage is required.
<PAGE>
ALLCITY INSURANCE COMPANY
122 Fifth Avenue
New York, New York 10011
(212) 387-3000
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
November 18, 1997
This proxy statement is furnished in connection with the
solicitation of proxies for use at the Annual Meeting of
Shareholders (the "Meeting") of Allcity Insurance Company (the
"Company"), to be held on November 18, 1997 at the offices of the
Company, 122 Fifth Avenue, New York, New York 10011. This proxy
statement and the accompanying form of proxy are being sent to
shareholders on or about the date hereof.
The enclosed form of proxy is being solicited by the
Board of Directors of the Company. Where the shareholder
specifies a choice as provided in the form of proxy with respect
to the matter to be acted upon, the shares will be voted in
accordance with the choice so specified; otherwise they will be
voted in accordance with the Board of Directors' recommendations.
A shareholder executing and returning a proxy has the power to
revoke it before it is voted by sending written notice or a
subsequently executed and dated proxy to the Company at its
principal office or by attending the Meeting and voting in person.
The expense of solicitation of the proxies will be borne
by the Company. The solicitation will be made primarily by mail,
and directors, officers and regular employees of the Company may
solicit proxies by telephone, telecopier, telegram or in person.
Brokerage houses and other custodians, nominees and fiduciaries
will be reimbursed for the expense of forwarding documents to
beneficial owners for whom they hold stock.
VOTING SECURITIES AND PRINCIPAL HOLDERS
General. Shareholders of record as of the close of
business on October 20, 1997 (the "Record Date") are entitled to
notice of and to vote at the Meeting. On the Record Date, there
were outstanding 7,078,625 Common Shares of the Company which
<PAGE>
entitle shareholders to one vote in person or by proxy for each
share held. The following table sets forth, as of the Record
Date, information as to ownership of the Company's Common Shares
by persons owning more than 5% of such shares. Information as to
management's ownership of securities of the Company and the
Company's parents is set forth under the caption "ELECTION OF
DIRECTORS--Security Ownership of Management."
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent of
of Beneficial Ownership Class
<S> <C> <C>
Empire Insurance Company
("Empire") 5,987,401* 84.6%
122 Fifth Avenue
New York, New York 10011
Baldwin Enterprises, Inc.
529 East South Temple
Salt Lake City, Utah 84102 368,607* 5.2%
</TABLE>
Leucadia National Corporation ("Leucadia") controls
Empire and may be considered a "parent" of the Company.
ELECTION OF DIRECTORS
Pursuant to the Company's Charter and By-laws, the Board
of Directors is presently comprised of 14 members who are divided
into three classes, Classes I, II and III, serving staggered
three-year terms of office. Classes I and III consist of five
directors each, while Class II consists of four directors.
At the Meeting, there will be an election of five Class
I directors, who will serve for a three-year term expiring at the
2000 Annual Meeting of Shareholders. Joseph M. Berlin, Ian M.
Cumming, Thomas E. Mara, Joseph S. Steinberg and Daniel G. Stewart
are the Board of Directors' nominees for the Class I
directorships. All of such persons are presently directors of the
Company.
Although management does not contemplate that any of the
nominees will be unable to serve for any reason, in the event that
a vacancy unexpectedly occurs, shares represented by valid proxies
will be voted for the election of a substitute nominee to be
designated by management.
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* Owned directly with sole voting power and investment power.
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<PAGE>
All of the persons named as proxies in the accompanying
form of proxy have advised the Company that they intend to vote
shares represented by proxies received by them in favor of
management's nominees in the election of directors, unless the
authority to do so is withheld.
Further Information about Nominees For Directors
Information about each nominee's position with the
Company and Empire and principal occupation appears below.
Class I Directorships (Term Expires at 2000 Annual Meeting of
Shareholders):
JOEL M. BERLIN
Position: Director of the Company and Empire since
1996.
Principal Occupation: Senior Vice President of
Marketing of the Company and Empire since May
1996. Previously, Chairman of the Board and Chief
Executive Officer of the Sperry & Hutchinson Co.,
Inc. ("S&H") (an incentive marketing firm) from
April 1993 to May 1996 and President and Chief
Operating Officer of S&H from March 1992 to May
1996.
IAN M. CUMMING
Position: Director of the Company and Empire
since 1988.
Principal Occupation: Chairman of the
Board of Leucadia since June 1978. Director of
Skywest, Inc. (a Utah-based regional air carrier)
since June 1986. Director of M.K. Gold (an
international gold mining company) since June 1995.
THOMAS E. MARA
Position: Director of the Company and Empire
since 1994.
Principal Occupation: Executive Vice President
of Leucadia since May 1980 and Treasurer of
Leucadia since January 1993.
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<PAGE>
JOSEPH S. STEINBERG
Position: Director of the Company and Empire
since 1988.
Principal Occupation: President since January 1979 and
Director since December 1978 of Leucadia. Director
since June 1988 of Jordan Industries, Inc., a
holding company principally engaged in
manufacturing. Director of M.K. Gold since June
1995. Chairman of the Board of Colonial Penn
Insurance Company ("CPIC") since February 1996.
DANIEL G. STEWART
Position: Director of the Company and Empire
since 1980.
Principal Occupation: Independent consulting actuary.
Previously, Senior Vice President of Mutual Benefit
Life Insurance Company from 1985 to November 1991.
Further Information About Directors Continuing in Office
The following directors are continuing in office for the
respective periods indicated and until their successors are
elected. Each of these directors was elected previously by the
shareholders of the Company to hold such office. Information about
each director's position with the Company and Empire and principal
occupation appears below.
Class II Directorships (Term Expires at 1998 Annual Meeting of
Shareholders):
MARTIN B. BERNSTEIN
Position: Director of the Company and Empire
since 1988.
Principal Occupation: President and Director of
Ponderosa Fibres of America Inc. (a pulp
manufacturer for paper producers).
LOUIS V. SIRACUSANO
Position: Director of the Company and Empire
since 1985.
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<PAGE>
Principal Occupation: Attorney with McKenna, Fehringer,
Siracusano & Chianese (a law firm) for over five
years.
LUCIUS THEUS
Position: Director of the Company and Empire
since 1980.
Principal Occupation: President, The U.S. Associates
(consultants in civic affairs, human resources and
business management) since 1989. Principal and
Director of The Wellness Group, Inc. (a provider of
health promotion programs) since 1989; Corporate
Director, Civic Affairs, of the Allied Corporation
(diversified industrial companies) from 1981 to
1989.
HELEN W. VOGEL
Position: Director of the Company and Empire since
1980.
Principal Occupation: Teacher of political science
at the White Plains, New York, Senior Center for
over twenty years.
Class III Directorships (Term Expires at 1999 Annual Meeting of
Shareholders):
FRANCIS M. COLALUCCI
Position: Director of the Company and Empire since May
1996.
Principal Occupation: Senior Vice President, Chief
Financial Officer and Treasurer of the Company and
Empire since 1996. Previously, Vice President and
Corporate Treasurer of The Continental Corporation
from 1991 to 1996.
OLIVER L. PATRELL
Position: Director of the Company and Empire since
1983.
Principal Occupation: Independent consultant.
Previously Chairman of the Board of Directors of
CPIC from August 1991 to February 1996. Chief
Executive Officer of CPIC from August 1991 to May
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<PAGE>
1995. President of CPIC from August 1991 to May
1994. Chairman of the Board of the Company and
Empire from February 1984 to February 1996.
President and Chief Executive Officer of the
Company and Empire from February 1983 to August
1991.
RICHARD G. PETITT
Position: Chairman of the Board of Directors, President
and Chief Executive Officer of the Company and
Empire since 1996.
Principal Occupation: Chairman of the Board of
Directors, President and Chief Executive Officer of
the Company and Empire since 1996. Chairman of the
Board and President of Colonial Penn Life Insurance
Company since March 1992 and August 1991,
respectively. Since September 1983, has served in
various executive capacities at Leucadia and its
subsidiaries including Vice President of Leucadia
and President of the Sperry & Hutchinson Co., Inc.
HARRY H. WISE
Position: Director of the Company and Empire
since 1988.
Principal Occupation: President and Director,
H.W. Associates, Inc. (an investment advisory
firm); President and Director, Madison Equity
Capital Corp. (a sponsor of private investment
partnerships).
HENRY H. WULSIN
Position: Director of the Company and Empire
since 1993.
Principal Occupation: President since May 1994 and
Chief Executive Officer since May 1995 of CPIC.
Previously, Executive Vice President from August
1991 to May 1994 and Chief Operating Officer from
August 1991 to May 1995 of CPIC. Previously,
Senior Vice President of the Company and Empire
from May 1988 to September 1991.
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<PAGE>
Security Ownership of Management
The following table sets forth information concerning
beneficial ownership of the Company's Common Shares as of October
15, 1997 by all directors and nominees and by all officers and
directors as a group. Each holder shown exercises sole voting and
sole investment power of the shares shown opposite his name.
Directors and nominees not listed below did not own any of the
Company's Common Shares.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and Nature Percent of
of Beneficial Ownership Class
<S> <C> <C>
Ian M. Cumming (1) (1) (1)
Joseph S. Steinberg (1) (1) (1)
Helen W. Vogel 200 *
Harry H. Wise 1,100 *
Directors and Officers
as a group (16 persons) (2)
<FN>
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* Less than 1% of Common Stock.
(1) Although neither Mr. Cumming nor Mr. Steinberg directly owns
any Common Shares of the Company, by virtue of their respective
approximately 16% and 15% interest in Leucadia, each may be deemed
to be the beneficial owner of a proportionate number of the Common
Shares beneficially owned by Leucadia through its 100% ownership
of Empire.
(2) Aside from the beneficial ownership described in note 1 to
this table, various directors and an officer beneficially own in
the aggregate less than 1% of the common shares of Leucadia.
</TABLE>
COMPENSATION OF DIRECTORS AND OFFICERS
AND OTHER TRANSACTIONS WITH MANAGEMENT
Compensation
The Company does not remunerate its officers and
directors directly. Officers and directors of the Company are
also officers and directors of the Company's parent, Empire, which
pays all salaries and directors' fees. All such salaries and
fees, and all other operating expenses, are shared by the Company
and Empire pursuant to a pooling arrangement under which 30% of
such expenses are charged to the Company.
The following table sets forth certain information for
the fiscal year ended December 31, 1996 concerning the Company's
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<PAGE>
30% share of the cash compensation and other benefits paid to, or
accrued for, Richard G. Petitt, the Chief Executive Officer of the
Company and Andrew W. Attivissimo, who was Chief Executive Officer
of the Company in 1995. These are the only executive officers
whose compensation paid, or accrued for, under the pooling
arrangement exceeded $100,000 for 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Name and Principal Annual Compensation Compensation
LTIP All Other
Salary Bonus Payouts Compensation
Year ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Richard G. Petitt 1996 86,674 150,000 0 8,844 (a)
President and C.E.O.
Andrew W. Attivissimo 1996 87,791 30,000 69,631 89,397 (c)
President and C.E.O. 1995 78,906 0 30,497 (b) 72,876 (d)
1994 75,018 42,300 39,985 (b) 79,961 (e)
<FN>
(a) Includes Salary Cap Restoration Plan ($3,450), Pension Plan
($4,455) and Company match of 401(k) plan ($939).
(b) Contributions made to a trust pursuant to the Empire Long
Term Incentive Plan.
(c) Includes Supplemental Retirement Plan ($86,698), Pension Plan
($1,856), income from Empire Long Term Incentive Plan units
($599) and Company match of 401(k) plan ($244).
(d) Includes Supplemental Retirement Plan ($58,090), Pension Plan
($5,325), income from Empire Long Term Incentive Plan units
($9,217) and Company match of 401(k) plan ($244).
(e) Includes Supplemental Retirement Plan ($71,558), Pension Plan
($6,187), income from Empire Long Term Incentive Plan units
($2,021) and Company match of 401(k) plan ($195).
</TABLE>
The Company does not directly remunerate directors. The
directors of the Company and Empire who are not employees of
Empire and the Company were paid an annual fee of $5,000. In
addition, eligible directors receive $1,500 for each joint board
meeting attended. For attendance at a meeting of a committee of
the joint board, such directors receive $1,500 per meeting. In
addition, each Chairperson of a Committee is entitled to $500 per
annum. All fees paid to such directors are shared in accordance
with the pooling arrangement.
In February 1996, Mr. Patrell retired as Chairman of the
Board of Directors and Chief Executive Officer of the Company and
Empire; he remains a Director of Empire and the Company. Upon his
retirement, Leucadia agreed to pay to Mr. Patrell the amount of
$1,000,000, of which $333,333 was paid by Empire. Pursuant to the
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<PAGE>
pooling arrangement, the Company contributed 30% of the
compensation paid to Mr. Patrell. Mr. Patrell agreed not to
compete against Leucadia or its affiliated entities for a two year
period of time.
Mr. Attivissimo was employed pursuant to an Employment
Agreement which was to terminate on December 31, 1996. The
Employment Agreement was to continue from year to year thereafter
unless the period of employment was terminated at the end of a
calendar year by either Mr. Attivissimo or Empire on at least six
months written notice. In May 1996, Mr. Attivissimo retired from
his positions as an officer and director of the Company and
Empire. Pursuant to the terms of his Employment Agreement, Mr.
Attivissimo will continue to be paid his normal salary at the rate
of $240,000 per annum until December 31, 1997. In addition, Mr.
Attivissimo received a lump sum supplemental retirement benefit of
$1,901,000, $482,375 under Empire's Long Term Incentive Plan and
title to an automobile having a book value of approximately
$13,000. Pursuant to the pooling arrangement, the Company is
obligated to pay 30% of the compensation and cost of benefits
payable to Mr. Attivissimo.
Pension Plan
The Empire Insurance Group Employees' Retirement (1985) Plan
(the "Pension Plan") covers all eligible employees of the Company
and Empire and is operated by the Company and Empire under the
pooling arrangement. Each Company employee is eligible to
participate in the Pension Plan once he attains age 21 and
completes a year of service consisting of a minimum of 1,000
credited hours. A participant's monthly retirement benefit,
payable at age 65, normal retirement age under the Pension Plan,
is equal to (a) the sum of 1.30% of the first $833 per month of
the participant's average monthly compensation plus 1.75% of the
participant's average monthly compensation over $833 per month (b)
multiplied by the participant's years of service while a
participant in the Pension Plan and Empire's terminated pension
plan (up to a maximum of 35 years) (c) less such participant's
benefit under Empire's terminated pension plan. The maximum
benefit payable under the Pension Plan is $90,300 per year, as
adjusted for increases in the cost of living. A participant's
average compensation is the average of his total compensation
during the five consecutive plan years or calendar years completed
during which compensation is highest. A participant will be 100%
vested in his Pension Plan benefit upon completing five years of
credited service. Once a participant attains age 55, early
retirement age under the Pension Plan, and has completed ten years
of service, he may receive an immediate benefit from the Pension
Plan.
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<PAGE>
The amounts set forth in the following table show estimated
annual benefits upon retirement, 30% of the cost of which is paid
by the Company through the pooling arrangement. The basic benefit
amounts listed in the table are not subject to any deduction for
Social Security benefits or other offset amounts.
<TABLE>
<CAPTION>
Years of Service
Highest 5-Year
Average Compensation
at Retirement 10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$ 10,000 $ 1,300 $ 1,950 $ 2,600 $ 3,250 $ 3,900 $ 4,550
25,000 3,925 5,888 7,850 9,813 11,775 13,738
50,000 8,300 12,450 16,600 20,750 24,900 29,050
75,000 12,675 19,013 25,350 31,688 38,025 44,363
100,000 17,050 25,575 34,100 42,625 51,150 59,675
150,000 25,800 38,700 51,600 64,500 77,400 90,300
</TABLE>
Salary Cap Restoration Plan
In 1994, Empire established a Salary Cap Restoration
Plan ("SCR Plan") for certain officers of the Company and Empire.
Under the SCR Plan, Empire will provide these officers with an
additional benefit, to be paid in a lump-sum upon retirement,
equal to the difference between the actuarially determined
lump-sum benefits, as computed under the Pension Plan, of the
officer's highest five year average compensation (not to exceed
$300,000) and the current maximum compensation limit of $150,000.
The SCR Plan is an unfunded plan.
Under the pooling arrangement, the Company is
obligated to pay 30% of the cost of benefits payable under the SCR
Plan.
Employees' Savings Plan
Empire has the Empire Insurance Company Employees'
Savings Plan (the "Savings Plan"), under which each eligible
employee is able to defer a percentage of his annual compensation,
up to a maximum of 15% of his annual compensation or $9,240, as
adjusted for increases in the cost of living, whichever is less,
and have Empire contribute such deferred amounts to the Savings
Plan on his behalf. Empire makes matching contributions to the
Savings Plan, up to certain limits. In 1995, Empire matched 65%
of each participant's deferral contribution up to a maximum
matching contribution of $650. A participant is always 100%
vested in his plan benefit. A participant may contribute, from
his after-tax dollars, an amount, not to exceed 10% of his annual
compensation. Effective July 1996, the Savings Plan was amended
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<PAGE>
to allow Empire matching contributions equal to 50% of an
employee's contributions up to a maximum of 2.5% of the employee's
salary. Under the pooling arrangement, the Company is obligated
to provide 30% of Empire's contributions under the Savings Plan.
Supplemental Retirement Plan
Under Empire's Supplemental Retirement Plan, eligible
employees who work until their normal retirement date, which,
under this plan, is the last day of the month in which such
employee attains 60 years of age, are entitled to receive monthly
benefits equal to (a) the difference between (i) one twelfth of a
stipulated percentage (the "stipulated percentage") of such
participant's final average compensation (the "base amount") and
(ii) the aggregate amount of the monthly pension and benefit
entitlement such participant would receive under Empire's Pension
Plan, Savings Plan and other employee pension benefit plans if
such benefits were paid in the form of an annuity for the life of
the participant and fifty percent of the participant's monthly
Social Security benefit, multiplied, unless otherwise specified in
the plan, by (b) a fraction, not exceeding one (the "reduction
factor"), the numerator of which is the number of the
participant's years of service and the denominator of which is
five. Final average compensation is the average annual
compensation paid during any five consecutive calendar years
during which the participant's compensation was highest. The plan
provides that the minimum benefit payable is equal to the base
amount multiplied by the reduction factor. Participants remaining
in the employ of the Company after the normal retirement date
continue to accrue benefits under the plan. Early retirement,
between age 55 and 60 under this plan, is permitted provided the
participant electing early retirement has at least ten years of
service. Amounts payable under the plan are payable out of the
assets of the Trust to Fund Benefits under Certain Unfunded
Deferred Compensation Plans of the Company, established effective
November 1, 1987 (the "Trust Fund"). The Trust Fund is subject to
the claims of certain creditors of the Company if the Company
becomes insolvent. The Board of Directors had designated one key
employee, Andrew W. Attivissimo, to receive benefits under the
plan based on a maximum stipulated percentage of 60% and a minimum
stipulated percentages of 30%. Upon his retirement, Mr.
Attivissimo received a lump sum payment under the plan of
$1,901,000.
OTHER MATTERS
Management knows of no other business to come before the
Meeting; however, if any other business properly comes before the
Meeting, it is the intention of the persons named in the proxy to
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<PAGE>
vote in accordance with their best judgment of what is in the best
interests of the Company.
To assure representation of your interest if you cannot
attend the Meeting, please sign and return promptly the proxy in
the enclosed envelope.
By Order of the Board of Directors.
John R. Petrowski
Corporate Secretary
October 22, 1997
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<PAGE>
ALLCITY INSURANCE COMPANY
PROXY SOLICITED BY MANAGEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
November 18, 1997
The undersigned, being a shareholder of Allcity Insurance Company,
hereby appoints Messrs. John R. Petrowski and Bruce Osterman, or either
of them, as attorneys and proxies with full power of substitution, to
vote at the Annual Meeting of Shareholders of the Company, to be held
at the offices of the Company, 122 Fifth Avenue, New York, New York 10011
on the 18th day of November, 1997 at 10:00 a.m., and at any adjournments
thereof, upon the matters which appear on this proxy form, according to
the number of votes and as fully as the undersigned would be entitled
to vote if personally present, hereby ratifying all that said attorneys
and proxies may do by virtue hereof.
Every properly signed proxy form will be voted in accordance with
specifications made thereon and may be voted in the discretion of such
proxy with respect to any other matters that may properly come before
the Meeting. If no specifications are made it will be voted FOR the
Election of Directors.
(Continued and to be SIGNED on Reverse Side)
^ FOLD AND DETACH HERE ^
<PAGE>
Please mark -----
your votes as | X |
indicated in -----
this example
Management Recommends a Vote "FOR" the Following Proposal:
(1) Election of Directors
FOR Withhold Authority To Nominees: Joel M. Berlin,
All Nominees Vote For All Nominees Ian M. Cumming, Thomas E.
Listed Listed Mara, Joseph S. Steinberg
and Daniel G. Stewart
----- ----- For election to Class I of the
| | | | Board of Directors
----- -----
(Instruction: To withhold for any
individual nominee, strike a
line through the nominee's
name above.)
Dated----------------------, 1997
-----|
| ---------------------------------
|
---------------------------------
Signature(s) of Shareholder
(Signature should agree with name
as it appears hereon. Executors,
administators, trustees, guardians
and attorneys should also indicate
when signing. Attorneys should
submit powers of attorney.)
PLEASE RETURN THIS PROXY IN THE
ENCLOSED STAMPED ENVELOPE.
^ FOLD AND DETACH HERE ^
<PAGE>
