ALLCITY INSURANCE COMPANY
335 Adams Street
Brooklyn, New York 11201
(718) 422-4000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 25, 1999
--------------------
To the Shareholders:
The Annual Meeting of Shareholders ("Meeting") of Allcity Insurance
Company
(the "Company") will be held at the offices of the Company, 335 Adams
Street, Brooklyn, New York 11201 on Monday, October 25, 1999, 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 September 24,
1999
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 15, 1999
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.
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ALLCITY INSURANCE COMPANY
335 Adams Street
Brooklyn, New York 11201
(718) 422-4000
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
October 25, 1999
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 October 25,
1999,
10:00 a.m. at the offices of the Company, 335 Adams Street, Brooklyn,
New
York 11201. 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 matters 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. Attendance at the meeting will not in
and of
itself constitute revocation of a proxy.
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
September
24, 1999 (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 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."
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Name and Address Amount and Nature Percent of
Of Beneficial Owner of Beneficial Ownership Class
Empire Insurance Company 5,987,401 Common 84.6%
("Empire") Shares owned of
335 Adams Street record
Brooklyn, New York 11201
Baldwin Enterprises, Inc. 373,607 Common 5.3%
529 East South Temple Shares owned of
Salt Lake City, Utah 84102 record
Leucadia National Corporation ("Leucadia") controls Empire
and
Baldwin Enterprises, Inc. and may be considered a "parent" of the
Company.
ELECTION OF DIRECTORS
Pursuant to the Company's Charter, By-laws and acts of the Board of
Directors, the Board of Directors is presently comprised of 13 members
who
are divided into three classes, Classes I, II and III, serving
staggered
three-year terms of office. Classes I consist of five directors and
Classes II and III consist of four directors each.
At the Meeting, there will be an election of four Class III directors,
who
will serve for a three-year term expiring at the 2002 Annual Meeting
of
Shareholders. Frank M. Colalucci, James E. Jordan, Joseph A. Orlando
and
Harry H. Wise are the Board of Directors' nominees for the Class III
directorships. There will also be an election of one Class I
director, who
will serve until the 2000 Annual Meeting of Shareholders. Carmen M.
Rivera
is the Board of Directors' nominee for the Class I directorship. All
of
the nominees 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 any of the nominees
become unavailable for election, shares represented by valid proxies
will
be voted for the election of a substitute nominee to be designated by
management.
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.
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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):
CARMEN M. RIVERA, 53
Position: Director of the Company and Empire since March 1999.
Principal Occupation: Senior Vice President of Small Business Division
of
the Company and Empire since November 1998. Previously Select Manager
of
the New York City Office of Travelers Property and Casualty
Corporation.
Class III Directorships (Term Expires at 2002 Annual Meeting of
Shareholders):
FRANCIS M. COLALUCCI, 54
Position: Director of the Company and Empire since May
1996.
Principal Occupation: Executive Vice President, Chief Financial
officer and
Treasurer of the Company and Empire since March 1999 and 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.
JAMES E. JORDAN, 55
Position: Director of the Company and Empire since 1997.
Principal Occupation: Financial Consultant of the Jordan Company since
1984; President of William Penn Co. from 1986 to 1997.
JOSEPH A. ORLANDO, 43
Position: Director of the Company and Empire since 1998.
Principal Occupation: Vice President and Chief Financial Officer of
Leucadia since 1996.
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HARRY H. WISE, 60
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).
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 I Directorships (Term Expires at 2000 Annual Meeting of
Shareholders):
IAN M. CUMMING, 59
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);
Director of
MK Gold Company (an international gold mining company); Director of
HomeFed
Corporation, a real estate development company.
THOMAS E. MARA, 53
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.
JOSEPH S. STEINBERG, 55
Position: Director of the Company and Empire since 1988.
Principal Occupation: President of Leucadia since January 1979 and
Director
since December 1978; Director of Jordan Industries, Inc., a holding
company
principally engaged in manufacturing; Director of MK Gold Company;
Director
of HomeFed Corporation.
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DANIEL G. STEWART, 80
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.
Class II Directorships (Term Expires at 2001 Annual Meeting of
Shareholders):
MARTIN B. BERNSTEIN, 65
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, 52
Position: Director of the Company and Empire since 1985.
Principal Occupation: Partner with McKenna, Fehringer, Siracusano &
Chianese (a law firm) since 1976.
LUCIUS THEUS, 76
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).
ROBERT V. TOPPI, 62
Position: President, Chief Executive Officer and Director of the
Company
and Empire since August 17, 1998.
Principal Occupation: President and Chief Executive Officer of the
Company
and Empire since August 17, 1998. Previously Resident Vice President
of the
Greater New York District of Aetna Casualty & Surety Company, a stock
property/casualty insurer, from 1963 to 1996.
Security Ownership of Management
The following table sets forth information concerning beneficial
ownership
of the Company's Common Shares as of June 30, 1999 by all directors
and
nominees and by all officers and directors as a group. Directors and
nominees not listed below did not own any of the Company's Common
Shares.
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Amount and Nature Percent
Name of Beneficial Owner of Beneficial Ownership of Class
Ian M. Cumming (l) (1)
Joseph S. Steinberg (1) (1)
Directors and Executive
Officers as a group
(22 persons) (2) (2)
(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. Mr. Cumming and Mr.
Steinberg have an oral agreement pursuant to which they will consult
with
each other as to the election of a mutually acceptable Board of
Directors
of Leucadia.
(2) Aside from the beneficial ownership described in note 1 to this
table,
various directors and officers beneficially own in the aggregate less
than
1% of the common shares of Leucadia.
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.
The Company operates under the same general management as Empire and
has
full use of Empire's personnel, information technology systems and
facilities. 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, 1998 concerning the Company's 30% share of the cash
compensation and other benefits paid to, or accrued for, any officer
of the
Company during 1998 whose compensation paid, or accrued for, under the
pooling arrangement exceeded $100,000.
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SUMMARY COMPENSATION TABLE
Long Term
Name and Principal Annual Compensation Compensation
Position
LTIP All Other
Salary Bonus Payouts Compensation
Year ($) ($) ($) ($)
Robert V. Toppi 1998 (a) (a) (a) (a)
President and C.E.O.
(a) Mr. Toppi receives no compensation from the Company or Empire.
He is
compensated directly by Leucadia.
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. 30% of all fees paid to such directors are charged to the
Company in accordance with the pooling arrangement.
Pension Plans
Pensions for officers and employees of the Company during 1998 were
provided under a trusteed non-contributory defined benefit pension
plan
("Plan"). Any employee is eligible for membership in the Plan on
January
lst or July lst of any plan year after which he has completed one full
year
of service, consisting of a minimum of 1,000 credited hours with
Empire,
provided they have attained the age of 21 years by or before such
date.
Members of the Plan receive a basic pension if they work until their
normal
retirement date, which is the last day of the month in which they
attain 65
years of age with 5 years of credited service. Any member in the
active
employ of Empire may elect early retirement between 55 and 65. A
member
electing early retirement must have at least 10 years of service. A
monthly average of total compensation received over the highest 5
consecutive plan or calendar years before retirement is taken to
compute
benefits as follows:
1.30% of the first $833 per month of average pay, plus
1.75% of average pay over $833 per month.
The sum of these two credits is multiplied by the years of credited
service. The basic benefit amounts listed in the table below are not
subject to any deduction for Social Security benefits or other offset
amounts. The maximum benefit payable under the pension plan is
$96,400 per
year. Benefits accrued under the plan were frozen as of December 31,
1998.
The plan was merged with the Leucadia plan effective January 1, 1999.
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<TABLE>
<CAPTION>
The amounts set forth in the following table show estimated annual
benefits
upon retirement to which the Company contributes 30% of such cost
through
the pooling agreement.
Highest 5-Year Years of Service
Average
Compensation at 10 15 20 25 30 35
Retirement
<C> <C> <C> <C> <C> <C> <C>
($) 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
160,000 27,500 4l,300 55,100 69,000 82,600 96,400
</TABLE>
Effective January 1, 1999, Empire adopted a non-contributory
defined contribution plan. The contributions, ranging from 2% - 16%
of
employees' current pension eligible compensation, are based on the age
and
service of the employees with Empire. These contributions will
accumulate
for participants on a tax-deferred basis. Participants will have
choices
to direct the investment of their contributions to their accounts.
Salary Cap Restoration Plan
In 1994, Empire established a Salary Cap Restoration Plan
("SCRP") for
certain corporate officers. Under the SCRP, 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 defined benefit pension plan,
of
the officer's highest five year average compensation (not to exceed
$320,000, adjusted for the cost-of-living) at retirement and the
current
maximum compensation limit of $160,000. The SCRP was an unfunded
plan.
Along with the defined benefit plan, the benefits under SCRP were
curtailed
as of December 31, 1998.
Employees' Savings Plan
Empire sponsors an Employees' Savings Plan (the "Savings Plan"), under
which eligible employees may defer a portion of their annual
compensation,
subject to limitations. Empire contributes a matching amount, subject
to
certain limits. In 1996, Empire matched 65% of each participant's
deferred
contribution up to a maximum matching contribution of $813. A
participant
may also contribute, from his after-tax dollars, an amount, not to
exceed
10% of his annual compensation. Effective July 1996, the Savings Plan
was
amended 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.
Empire's contributions to the Savings Plan were $420,000, $438,000 and
$524,000 in 1998, 1997 and 1996, respectively. Under the pooling
agreement, the Company is obligated to provide 30% of Empire's
contributions under the Savings Plan.
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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 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 15, 1999
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