<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[_] 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 Section 240.14a-11(c) or Section 240.14a-12
MMI COMPANIES, 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)(4) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
MMI COMPANIES, INC.
540 LAKE COOK ROAD
DEERFIELD, IL 60015
NOTICE OF ANNUAL STOCKHOLDERS MEETING
March 19, 1998
The Annual Meeting of Stockholders of MMI Companies, Inc., a Delaware
corporation (the "Company"), will be held on April 16, 1998, at 9:00 A.M. at
540 Lake Cook Road, Deerfield, Illinois, for the following purposes:
1. To elect eight Directors to the classes whose terms expire at the Annual
Meeting of Stockholders in 1999, 2000 and 2001 as more fully described
in the accompanying Proxy Statement.
2. To consider and vote upon the ratification of the appointment of Ernst &
Young LLP as independent auditors of the financial statements of the
Company for the fiscal year ending December 31, 1998.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
All stockholders are invited to attend, although only those stockholders of
record at the close of business March 12, 1998 will be entitled to notice of
and to vote at the meeting or any adjournment thereof. Your attention is
directed to the Proxy Statement accompanying this Notice for a more complete
statement regarding the matters proposed to be acted upon at the meeting.
PLEASE SIGN AND DATE THE ACCOMPANYING PROXY FORM AND RETURN IT IN THE
STAMPED, SELF-ADDRESSED ENVELOPE ENCLOSED FOR YOUR USE.
LOGO
Wayne A. Sinclair
Secretary
<PAGE>
PROXY STATEMENT
MMI COMPANIES, INC.
540 LAKE COOK ROAD
DEERFIELD, ILLINOIS 60015
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
board of directors (the "Board of Directors") of MMI Companies, Inc. (singly,
or where the context requires, with its subsidiaries, the "Company") of proxies
for use at the Annual Meeting of Stockholders to be held on April 16, 1998 (the
"Annual Meeting"). At the Annual Meeting, stockholders will be asked to elect
directors, ratify the appointment of Ernst & Young LLP as the auditors of the
financial statements of the Company for 1998 and transact such other business
as may properly come before the Annual Meeting.
Only holders of shares of the Company's Common Stock, par value $.10 per
share (the "Common Stock"), are entitled to vote at the Annual Meeting. As of
December 31, 1997, the Company had 18,831,822 shares of Common Stock
outstanding. Only stockholders of record at the close of business on March 12,
1998, will be entitled to vote at the Annual Meeting. Each stockholder will be
entitled to one vote for each share of Common Stock outstanding in his or her
name on the records of the Company. Item 1--Election of Directors, requires the
affirmative vote of a plurality of the shares of Common Stock represented in
person or by proxy at the Annual Meeting. Item 2--Ratification of Appointment
of Independent Auditors, requires an affirmative vote of a majority of the
shares of Common Stock represented in person or by proxy at the Annual Meeting.
Abstentions and broker non-votes will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. For
purposes of determining the approval of any matter submitted to the
stockholders for a vote, abstentions will be treated as votes against, and if a
broker indicates on a proxy that it does not have discretionary authority to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
All proxies duly executed and received will be voted on all business properly
presented at the Annual Meeting. Proxies that specify a vote on a proposal will
be voted in accordance with such specification. Proxies that do not specify a
vote on a proposal will be voted in favor of the proposal. The Board of
Directors knows of no other business to be brought before the Annual Meeting.
However, if other business is properly brought before the Annual Meeting, the
holders of the proxies will vote on those proposals at their discretion.
However, a stockholder voting by means of a proxy has the power to revoke it at
any time before it is exercised by submitting another proxy bearing a later
date, by notifying the Secretary of the Company in writing of such revocation,
or by voting in person at the Annual Meeting.
The Company will pay the expense of soliciting proxies. Proxies will be
solicited by mail. Proxies may also be solicited by telephone calls or personal
calls by officers, directors, or employees of the Company, none of whom will be
specially compensated for soliciting proxies. In addition, the Company may
retain the services of a proxy soliciting firm to assist in the solicitation.
This Proxy Statement and the accompanying proxy were mailed on or about March
19, 1998. The Company's 1997 Annual Report to Stockholders accompanies this
Proxy Statement.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors has nominated eight persons for election at the Annual
Meeting. Richard R. Barr and F. Laird Facey, M.D. are nominated for the class
of directors whose term expires at the annual meeting of stockholders to be
held in 2000. George B. Caldwell, Alan C. Guy, Timothy R. McCormick, Scott S.
Parker and Robert A. Spass are nominated for the class of directors whose term
expires at the annual meeting of stockholders to be held in 2001. Joseph D.
Sargent, currently serving in the class of directors whose term expires at the
annual meeting of stockholders to be held in 2000, has agreed to stand for
election to the class whose term expires in 1999 in order to have a balanced
number of directors in each class. Each of the nominees is currently serving as
a director. Mr. Spass was appointed to the Board of Directors and is nominated
for election pursuant to an acquisition agreement dated June 25, 1997 by and
between the
1
<PAGE>
Company and Unionamerica Holdings plc (singly, or where the context requires,
with its subsidiaries, "Unionamerica"), whereby the Company agreed to use its
best efforts to nominate Mr. Spass and Ian G. Sinclair for a three-year term as
directors. Mr. Sinclair has served as a director since January 1, 1998. He has
decided not to stand for election.
The persons named on the accompanying proxy intend to vote in favor of all
nominees, all of whom have agreed to serve. If any nominee should, before the
meeting, become unavailable for election, the holders of the proxy may exercise
their discretion to vote for the election of such substitute person as the
Board of Directors may recommend.
The Restated Certificate of Incorporation permits the Board of Directors to
adopt a resolution from time to time establishing the size of the Board of
Directors. The size of the Board of Directors effective as of the Annual
Meeting will be set at fourteen members.
Nominations of persons for election to the Board of Directors of the Company
may be made at the Annual Meeting only (i) by or at the direction of the Board
of Directors or (ii) by a stockholder of the Company entitled to vote for the
election of Directors at the meeting who complies with the following
procedures. The Nominating Committee will consider nominations made in
accordance with procedures set forth below. Nominations by stockholders must be
made by timely notice in writing to the Secretary of the Company. To be timely,
a stockholder's notice must be delivered or mailed to and received at the
principal executive offices of the Company not later than the close of business
on March 30, 1998. Such stockholder's notice shall set forth (i) as to each
person whom such stockholder proposes to nominate for election or re-election
as a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named as a nominee and to serving as a director if elected);
and (ii) as to the stockholder giving the notice (x) the name and address, as
they appear on the Company's books, of such stockholder and (y) the number of
shares of Common Stock the stockholder beneficially owns. The officer of the
Company or other person presiding at the Annual Meeting will, if the facts so
warrant, determine and declare to the Annual Meeting that a nomination was not
made in accordance with such provisions and, if he or she should so determine,
he or she will so declare to the Annual Meeting and the defective nomination
will be disregarded. In any event, only eight directors will be elected at the
Annual Meeting.
NOMINEES FOR ELECTION
Richard R. Barr, age 58, retired in 1995 as President of Presbyterian
Healthcare Services in Albuquerque, New Mexico. He is presently Executive Vice
President of Rust Tractor Company in Albuquerque, New Mexico. Mr. Barr has been
a director of the Company since 1986.
George B. Caldwell, age 67, has been Chairman of the Collier Company since
1990 and was President Emeritus of Lutheran General HealthSystem in Park Ridge,
Illinois from 1990 to 1995. Mr. Caldwell has been a director of the Company
since 1983. Mr. Caldwell is also a director of Transcend Services, Inc.
F. Laird Facey, M.D., age 66, is a general surgeon affiliated with Daniel
Freeman Hospitals, Inc. in Inglewood, California. Dr. Facey has been a director
of the Company since 1983.
Alan C. Guy, age 50, has been President and Chief Executive Officer of
Covenant Health since 1996. He was President and Chief Executive Officer of
Fort Sanders Alliance from 1985 to 1996. Mr. Guy was appointed to the Board of
Directors in 1998.
Timothy R. McCormick, age 52, has been President of the Unity Health System
in Rochester, New York since 1977. Mr. McCormick has been a director of the
Company since 1986.
Scott S. Parker, age 63, has been President and Chief Executive Officer of
Intermountain Health Care, Inc. in Salt Lake City, Utah since 1975. Mr. Parker
has been a director of the Company since 1986. Mr. Parker is also a director of
First Security Corporation, Questar Corporation and First Consulting Group Inc.
2
<PAGE>
Joseph D. Sargent, age 68, has been the Vice Chairman and Treasurer of
Connecticut Surety Corporation since February 1998 and was Chairman from 1993
to 1998. Mr. Sargent is also a director of Trenwick Group, Inc., Executive
Risk, Inc., Policy Management Systems Corporation, Mutual Risk Management Ltd.,
E. W. Blanch Holdings, Inc. and Command Systems Inc. Mr. Sargent has been a
director of the Company since 1985.
Robert A. Spass, age 41, has served as Managing Partner of Insurance Partners
Advisors, L.P. since 1994. He has been President and Chief Executive Officer of
International Insurance Advisors, Inc. since 1990. Mr. Spass was appointed to
the Board of Directors in 1998. He is also a director of Superior National
Insurance Group, Inc., Highlands Insurance Group, Inc., Tarquin plc, Charman
Group Ltd. and Charman Underwriting Agency Ltd.
CONTINUING AS DIRECTORS
B. Frederick Becker, age 51, is Chairman and Chief Executive Officer. Mr.
Becker joined the Company as its President in 1985. Mr. Becker has been a
director of the Company since 1985 and his term ends in 1999. Mr. Becker is
also a director of Transcend Services, Inc.
K. James Ehlen, M.D. age 53, has been President of Allina Health System in
Minneapolis, Minnesota since 1994. He served as Chief Executive Officer of
Medica Health Plans from 1991 to 1994. Dr. Ehlen was elected to the Board of
Directors in 1997 and his term ends in 1999.
William M. Kelley, age 62, has been Chairman of Hill-Rom in Batesville,
Indiana since 1995. He served as President of Hill-Rom from 1992 to 1995. Mr.
Kelley has been a director of the Company since 1993 and his term ends in 2000.
Andrew D. Kennedy, age 54, is a Partner with Beachcroft Stanleys, London
solicitors, with whom he has been affiliated since 1970. Mr. Kennedy has been a
director of the Company since 1996 and his term ends in 1999.
Gerald L. McManis, age 61, is President of McManis Associates, Inc. ("McManis
Associates"), a subsidiary of the Company. He joined the Company in 1993 when
the Company acquired McManis Associates. Prior to the acquisition, Mr. McManis
was President of McManis Associates, which he co-founded in 1964. Mr. McManis
is a director of Magellan Health Services, Inc. Mr. McManis has been a director
of the Company since 1994 and his term ends in 2000.
Edward C. Peddie, age 56, has been President of SantaFe Healthcare in
Gainesville, Florida since 1978. Mr. Peddie has served as President and CEO of
AvMed, Inc. since 1986. Mr. Peddie has been a director of the Company since
1990 and his term ends in 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has appointed an Executive and Finance
Committee, an Audit Committee, an Investment Committee, a Personnel and
Compensation Committee and a Nominating Committee. The Executive and Finance
Committee has, during the interim between meetings of the Board of Directors,
all of the authority of the Board of Directors, except such authority denied
such committee by the Company's Restated Certificate of Incorporation and
bylaws or by law. The Executive and Finance Committee consists of Messrs. Barr,
Becker, Caldwell, Sargent and Dr. Facey, and met eleven times in 1997. The
Audit Committee is composed of five non-employee directors, Messrs. Guy,
McCormick and Peddie, and Drs. Ehlen and Facey, and oversees the selection and
retention of an independent auditor and has responsibility for the content and
oversight of the audit program, including review of the effectiveness of the
Company's corporate accounting and financial practices and the adequacy of its
internal controls. The Audit Committee met six times in 1997. The Investment
Committee determines the Company's investment policy and reviews the actions of
the Company and its investment advisors. The Investment Committee consists of
Messrs. Barr, Kennedy, McManis and Spass, and met four times in 1997. The
Personnel and Compensation Committee is composed of four non-employee
directors, Messrs. Kelley, Parker, Sargent and Dr. Facey, and fixes the
compensation and benefits of the Chief Executive Officer and such other
officers or staff persons
3
<PAGE>
employed by the Company or its subsidiaries who report directly to its Chief
Executive Officer. The Personnel and Compensation Committee met six times in
1997. The Nominating Committee prepares and presents to the Board of Directors
a slate of directors which such committee proposes for election. The Nominating
Committee consists of Messrs. Kelley, Peddie and Sargent and met six times in
1997.
During the fiscal year ended December 31, 1997, the Board of Directors met
seven times. Each director was present at seventy-five percent or more of the
aggregate number of meetings of the Board of Directors and the total number of
meetings held by committees of the Board of Directors on which such director
served.
DIRECTOR COMPENSATION
Non-employee directors receive an annual fee of $15,000 and $1,100 per
meeting day attended. Chairmen of Committees of the Board of Directors receive
an additional annual fee of $2,000. Annual and meeting fees may be received in
cash or may be deferred. Directors may receive annual and meeting fees in lieu
of cash in the form of stock issued at 85% of fair market value. In addition,
non-employee directors receive life insurance under a group universal life
insurance policy with a death benefit of $100,000, receive travel and accident
insurance for Company related trips with variable benefits ranging from $62,500
to $250,000, participate in the 1993 Non-Employee Directors' Formula Stock
Option Plan (the "1993 Director Stock Option Plan") and participate in the
Board of Directors Retirement Plan ("Retirement Plan").
The Retirement Plan was suspended as of February 26, 1998. All current non-
employee directors, upon retirement from the board, who completed at least one
year of service as of February 26, 1998 will receive a benefit of $15,000 per
year served on the Board of Directors prior to February 26, 1998, with a
maximum benefit of $150,000. Benefits payable under the Retirement Plan shall
be payable in the form of either (i) a lump-sum cash payment, or (ii) a number
of shares of MMI Common Stock equal to a director's account balance that would
be paid in cash divided by 85% of the fair market value of MMI Common Stock on
the last trading date before the Company receives an irrevocable election that
the director elects to receive stock, rather than cash. Retirement benefits,
either in the form of cash or stock, may also be deferred for a period of up to
ten years beginning with retirement from the Board of Directors.
Under the 1993 Director Stock Option Plan, non-employee directors of the
Company are granted an initial non-qualified option to purchase 4,125 shares of
Common Stock and annually thereafter are granted a non-qualified option to
purchase 1,375 shares of Common Stock. In addition, commencing in 1998, due to
suspension of the Retirement Plan, directors may also receive 2,500 performance
share options annually if the Company meets performance goals for the fiscal
year. Each such option will be exercisable for ten years from the date of the
grant. The exercise price of each such option will be the fair market value on
the date of the grant.
EXECUTIVE OFFICERS
The following section provides information about the executive officers of
the Company. Mr. Becker is also an executive officer.
Paul M. Orzech, age 55, has been Executive Vice President and Chief Financial
Officer of the Company since 1993.
Anna Marie Hajek, age 49, is Executive Vice President of the Company and was
named President of the MMI Healthcare Risk Services Group in 1998. She was
President of the Healthcare Services Group from 1995 to 1998 and was President
of the Company's risk management services subsidiary, MMI Risk Management
Resources, Inc. from 1992 to 1997. Ms. Hajek joined the Company in 1985.
4
<PAGE>
Steve A. Schleisman, age 53, was Executive Vice President of the Company and
President of the MMI Insurance Group until his resignation in January 1998.
Prior to joining the Company in 1995, he served as President of American
International Underwriters-North America, a subsidiary of American
International Group.
Ian G. Sinclair, age 53, has been Chief Executive Officer of Unionamerica
Insurance Company Limited since 1997. He was Managing Director-Underwriting of
Unionamerica from 1984 to 1996.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership
of shares of Common Stock as of December 31, 1997, by each person or entity
known by the Company to beneficially own more than 5% of the outstanding shares
of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------ ---------- --------
<S> <C> <C>
FMR Corp. (1) ............................................. 1,402,649 7.4
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company of America (2)............ 1,263,472 6.7
751 Broad Street
Newark, New Jersey 07102
Wellington Management Company, LLP (3)..................... 1,144,900 6.1
75 State Street
Boston, Massachusetts 02109
Franklin Resources, Inc. (4)............................... 1,119,100 5.9
777 Mariners Island Blvd.
San Mateo, California 94404
</TABLE>
- -------------------
(1) These figures were reported in a Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1997. With respect to those shares,
FMR Corp. had the sole power to direct the disposition of 1,402,649 shares.
(2) These figures were reported in a Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1997. With respect to those shares,
The Prudential Insurance Company of America had the sole power to vote
693,830 shares, shared power to vote 569,642 shares, the sole power to
direct the disposition of 693,830 shares, and shared power to direct the
disposition of 569,642 shares.
(3) These figures were reported in a Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1997. With respect to those shares,
Wellington Management Company, LLP had shared power to vote 917,400 shares,
and shared power to direct the disposition of 1,144,900 shares.
(4) These figures were reported in a Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1997. With respect to those shares,
Franklin Resources, Inc. had the sole power to vote 988,900 shares, and the
sole power to direct the disposition of 1,119,100 shares.
5
<PAGE>
The following table sets forth information regarding the beneficial ownership
of shares of Common Stock as of December 31, 1997 by each director, director
nominee and named executive officer of the Company and all directors, director
nominees and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- ------------------------ ------------- --------
<S> <C> <C>
DIRECTORS AND DIRECTOR NOMINEES
Richard R. Barr (2)..................................... 10,836 *
B. Frederick Becker (3) (4) (5)......................... 381,984 2.0
George B. Caldwell (2).................................. 29,553 *
K. James Ehlen, M.D. (2)................................ 4,125 *
F. Laird Facey, M.D. (2)................................ 34,217 *
Alan C. Guy............................................. -- *
William M. Kelley (2)................................... 10,474 *
Andrew D. Kennedy (2)................................... 7,336 *
Timothy R. McCormick (2)................................ 11,701 *
Gerald L. McManis (3)................................... 204,826 1.1
Scott S. Parker (2)..................................... 10,697 *
Edward C. Peddie (2).................................... 13,254 *
Joseph D. Sargent (2)................................... 14,045 *
Robert A. Spass......................................... 38,614 *
CERTAIN EXECUTIVE OFFICERS
Anna Marie Hajek (3) (4)................................ 76,174 *
Paul M. Orzech (3) (4).................................. 63,872 *
Steve A. Schleisman (3)................................. 34,995 *
Ian G. Sinclair (3)..................................... 281,653 1.5
ALL DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE
OFFICERS AS A GROUP
(18 persons)............................................ 1,228,356 6.1
</TABLE>
- -------------------
*Represents less than 1% of the Common Stock.
(1) Includes shares of Common Stock and options, exercisable within sixty days,
to purchase shares of Common Stock. Except as noted below, each of the
persons identified above holds exclusive voting and investment power over
the shares of Common Stock beneficially owned.
(2) Includes options granted under the 1993 Director Stock Option Plan as
follows: Dr. Ehlen--4,125 options; Mr. Kennedy--5,500 options; each other
noted director, 9,625 options.
(3) Includes options granted under the 1993 Employee Stock Plan, or in the case
of Mr. Sinclair, replacement options received in connection with the
acquisition of Unionamerica, as follows: Mr. Becker--274,875 options; Mr.
McManis--15,000 options; Mr. Sinclair--180,517 options; Ms. Hajek--71,250
options; Mr. Orzech--46,000 options; Mr. Schleisman--33,000 options.
(4) Messrs. Becker, Orzech, and Ms. Hajek have voting and dispositive power
over 187,000 shares solely in their capacities as trustees of the Company's
Amended and Restated Savings and Profit Sharing Plan (401(k)).
(5) Does not include 50,000 shares that Mr. Becker may be deemed to own
indirectly by virtue of an interest in a private investment limited
partnership. Mr. Becker disclaims beneficial ownership of such shares.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Directors, Director Nominees and their Affiliates
Certain directors of the Company and the health systems and employers with
which they are affiliated obtained insurance or consulting services in 1997
from the Company's subsidiaries in the ordinary course of business at the
Company's customary and standard rates. These directors and their affiliated
hospitals are K. James Ehlen, M.D., President of Allina Health System; Alan C.
Guy, President and Chief Executive Officer of
6
<PAGE>
Covenant Health; Timothy R. McCormick, President of Unity Health System; Scott
S. Parker, President and Chief Executive Officer of Intermountain Health Care,
Inc. and Edward C. Peddie, President and CEO of SantaFe HealthCare. Premiums
and consulting and fee revenues from these healthcare institutions were not
material to the Company's operations in 1997. See also "Compensation Committee
Interlocks and Insider Participation in Compensation Decisions."
Beachcroft Stanleys, London solicitors, of which Mr. Kennedy is a Partner,
provided legal services to the Company in 1997 at their standard rates. Such
legal fees amounted to less than 5% of Beachcroft Stanleys' total revenues in
1997.
Dr. Facey's director fees in 1997 were paid to F. Laird Facey M.D., Inc. Such
director fees exceeded 5% of the revenues for such corporation. In addition,
medical malpractice premiums paid to the Company by such corporation exceeded
5% of its revenues.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and beneficial owners of more than ten percent
of any class of the Company's equity securities to file reports of ownership on
Forms 3,4 and 5 with the Securities and Exchange Commission. Dr. Facey did not
file a timely report on Form 4 with regard to the acquisition of 1,000 shares
of Common Stock on May 9, 1997 by a pension trust over which he has control.
Such Form 4 was filed on June 18, 1997.
EXECUTIVE COMPENSATION
COMPENSATION AND OPTION TABLES
The following table summarizes the compensation of the Company's chief
executive officer and the next most highly compensated executive officers of
the Company for 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- -----------------
NAME AND
PRINCIPAL OTHER ANNUAL OPTION ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS PAYOUTS(2) COMPENSATION(3)
- ------------- ---- -------- -------- --------------- ------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
B. Frederick
Becker 1997 $519,000 $275,000 - 25,000 - $38,000
Chairman and
Chief Execu-
tive 1996 467,000 240,000 - - - 23,000
Officer 1995 408,000 347,000 - - - 22,000
Ian G.
Sinclair 1997 542,000 394,000 $273,000 - $38,000 24,000
Chief Execu-
tive Offi-
cer, 1996 450,000 466,000 - 96,000 77,000 23,000
Unionamerica 1995 441,000 524,000 - - 37,000 22,000
Insurance
Co. Ltd.
Paul M.
Orzech 1997 283,000 87,000 - 6,000 - 22,000
Executive
Vice Presi-
dent and 1996 271,000 72,000 - 13,000 - 15,000
Chief Finan-
cial Officer 1995 256,000 92,000 - 17,000 - 15,000
Steve A.
Schleisman
(4) 1997 254,000 15,000 - 2,000 - 74,000
Executive
Vice Presi-
dent 1996 250,000 17,000 - 2,000 - 67,000
President, 1995 57,000 17,000 - 50,000 - -
MMI Insur-
ance Group
Anna Marie
Hajek 1997 232,000 70,000 - 4,000 - 20,000
Executive
Vice Presi-
dent; 1996 218,000 60,000 - 13,000 - 15,000
President, 1995 187,000 95,000 - 13,000 - 15,000
MMI
Healthcare
Risk Serv-
ices Group
</TABLE>
- -------------------
(1) In connection with the acquisition of Unionamerica, the Company terminated
certain of Unionamerica's executive compensation plans. Mr. Sinclair
received $273,000 in 1997 related to accelerated payment of awards
previously granted under such plans.
7
<PAGE>
(2) For Mr. Sinclair, amounts include payments received pursuant to
Unionamerica's Loan Stock Plan, which has been terminated.
(3) 1997 amounts include compensation as follows:
<TABLE>
<CAPTION>
RETIREMENT
401(K) PLAN LIFE INSURANCE EQUITY PLAN
----------- -------------- -----------
<S> <C> <C> <C>
Mr. Becker.......................... $15,000 $8,000 $15,000
Mr. Sinclair........................ - 24,000 -
Mr. Orzech.......................... 15,000 1,000 6,000
Mr. Schleisman...................... 15,000 54,000 5,000
Ms. Hajek........................... 15,000 1,000 4,000
</TABLE>
(4) Mr. Schleisman resigned in January, 1998.
The following table shows the total number of options granted to each of the
named executive officers during 1997 (both as a number of shares of Common
Stock and as a percentage of all options granted to employees during 1997) and,
for each of these grants, the exercise price per share of Common Stock, option
expiration date and potential realizable value at the termination date.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF SHARE
PRICE APPRECIATION
FOR OPTION TERM (1)
-------------------
PERCENT
OF TOTAL
OPTIONS
NUMBER OF GRANTED
OPTIONS TO EXERCISE
GRANTED EMPLOYEES PRICE
NAME IN 1997 IN 1997 PER SHARE EXPIRATION DATE 5% 10%
- ---- --------- --------- --------- ----------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
B. Freder-
ick Becker 25,000 15.1 $29.25 February 26, 2007 $460,000 $1,165,000
Ian G.
Sinclair
(2) - - - - - -
Paul M.
Orzech (3) 3,000 1.8 29.25 Repriced - -
3,000 1.8 22.75 February 26, 2007 43,000 109,000
Steve A.
Schleisman
(3) 1,000 0.6 29.25 Repriced - -
1,000 0.6 22.75 February 26, 2007 14,000 36,000
Anna Marie
Hajek (3) 2,000 1.2 29.25 Repriced - -
2,000 1.2 22.75 February 26, 2007 29,000 73,000
</TABLE>
- -------------------
(1) The potential realizable values were calculated by assuming that the value
of the Common Stock appreciates from the exercise price on the date of
grant to the expiration date of the options at the alternate assumed annual
rates of 5% and 10%.
(2) For Mr. Sinclair, does not include 180,517 options granted to replace, at
comparable terms, options granted in prior years by Unionamerica.
(3) For Mr. Orzech and Schleisman and Ms. Hajek, options with an expiration
date of February 26, 2007 were repriced on April 17, 1997.
The following table shows, for each of the named executive officers, the
number of unexercised options held at December 31, 1997 and the aggregate
dollar value of unexercised options that are in-the-money based on the market
value of the Company's Common Stock as of December 31, 1997. There were no
exercises of options by named executive officers in 1997.
8
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ------------------------- ----------------------------
<S> <C> <C>
B. Frederick Becker...... 274,875/- $3,515,000/-
Ian G. Sinclair.......... 180,517/- 2,301,000/-
Paul M. Orzech........... 46,000/- 326,000/-
Steve A. Schleisman...... 33,000/20,000 30,000/18,000
Anna Marie Hajek......... 71,250/- 674,000/-
</TABLE>
- -------------------
(1) These values are calculated by determining the difference between the fair
market value of the Common Stock at December 31, 1997 which was determined
to be $25 1/8 per share, the closing price on the New York Stock Exchange
at such date, and the exercise price of the option.
The following table sets forth information regarding repricing of options
held by any executive officer during the last ten completed fiscal years.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
MARKET TERM
PRICE OF EXERCISE REMAINING
NUMBER OF STOCK AT PRICE AT NEW AT DATE
NAME AND PRINCIPAL OPTIONS TIME OF TIME OF EXERCISE OF
POSITION DATE REPRICED REPRICING REPRICING PRICE REPRICING
- ------------------ ---- --------- --------- --------- -------- ---------
(YEARS)
<S> <C> <C> <C> <C> <C> <C>
Paul M. Orzech.......... April 17, 1997 3,000 $22.75 $29.25 $22.75 9.9
Executive Vice
President and
Chief Financial Officer
Steve A. Schleisman..... April 17, 1997 1,000 22.75 29.25 22.75 9.9
Executive Vice
President;
President, MMI
Insurance Group
Anna Marie Hajek........ April 17, 1997 2,000 22.75 29.25 22.75 9.9
Executive Vice
President;
President, MMI
Healthcare Risk
Services Group
</TABLE>
9
<PAGE>
PENSION PLAN
The following table sets forth the estimated annual pension benefits payable
upon retirement to Unionamerica employees under the Unionamerica (1993) Pension
Scheme (the "Pension Plan") formula to persons in the specified remuneration
and years of service classifications.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION FOR
REPRESENTATIVE YEARS OF CREDITED
SERVICE
---------------------------------------
PENSIONABLE SALARY 15 20 25 30 35
- ------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000................................ $31,250 $41,667 $52,083 $62,500 $72,917
150,000................................. 37,500 50,000 62,500 75,000 87,500
175,000................................. 43,750 58,333 72,917 87,500 102,083
200,000................................. 50,000 66,667 83,333 100,000 116,667
225,000................................. 56,250 75,000 93,750 112,500 131,250
250,000................................. 62,500 83,333 104,467 125,000 145,883
300,000................................. 75,000 100,000 125,000 150,000 175,000
400,000................................. 100,000 133,333 166,667 200,000 233,333
450,000................................. 112,500 150,000 187,500 225,000 262,500
500,000................................. 125,000 166,667 208,333 250,000 291,667
</TABLE>
Pension Plan benefits are based on an employee's pensionable salary and years
of credited service with the Company. Under the terms of the Pension Plan, the
pensionable salary used to determine benefits shown in the table above is the
greater of the employee's pensionable salary on the date of retirement or the
highest pensionable salary for such employee in the last five years.
Pensionable salary for the purpose of determining benefits means solely
compensation listed in the "Salary" column of the Summary Compensation Table.
As of December 31, 1997, the number of years of credited service for Mr.
Sinclair was 24 years.
Annual pension amounts shown in the table above are not subject to any offset
or deduction for U.K. government-provided benefits. Total pension benefits
shown in the table are subject to certain limitations imposed by the Inland
Revenue. Benefits therefore will be restricted should any participating
employee's total benefits exceed such limitations.
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Introduction
The Company's executive compensation program is administered by the Personnel
and Compensation Committee of the Board of Directors (the "Committee"). The
Committee consists of no fewer than three non-employee Directors, who are
appointed by the Board of Directors to serve a one year term.
The Committee functions to:
. establish, approve, and review annually the terms of employment including
the compensation for the Chief Executive Officer of the Company, based
upon an appraisal of the performance of the Chief Executive Officer, and
where appropriate, negotiate and execute contracts with such employee;
. approve and review periodically compensation process, programs,
incentives, and other employee benefit plans;
. monitor and oversee the establishment of employment contracts made with
other executive officers or other key employees;
. review and recommend action by the Board of Directors with respect to the
compensation of directors;
. administer the Company's Return on Equity Plan ("ROE Plan"), 1993
Employee Stock Plan ("Stock Plan"), 1995 Employee Stock Investment Plan
("ESIP"), Long Term Incentive Plan of 1997, and Retirement Equity Plan
("REP"); and
10
<PAGE>
. perform other duties with regard to the compensation of officers and
other key executives of the Company as the Board of Directors may request
or are appropriate within the intention of the foregoing.
As outlined above, the Committee specifically determines the total
compensation for the Company's Chief Executive Officer, B. Frederick Becker,
and considers for approval recommendations made by the Chief Executive Officer
with regard to other officers and key employees, including the Company's next
most highly paid executive officers; Ian G. Sinclair, Paul M. Orzech, and Anna
Marie Hajek, who are collectively referred to as the "Named Executives."
Compensation Policies for the Named Executives
The Committee's compensation policies and programs are designed to: 1) reward
performance, 2) attract and retain qualified executives, and 3) integrate pay
with the Company's long-term and annual performance goals. The Company's
compensation package consists of base compensation, an annual bonus based upon
the achievement of annually established goals, stock options and other long-
term compensation strategies.
Annual Base Pay
The base pay of each executive officer is set at the level that the Committee
believes is appropriate with consideration for industry standards, performance,
and scope of responsibility in relation to other officers and key employees
within the Company. Salaries for executive officers are reviewed annually by
the Committee.
Annual Incentive (Bonus) Program
The Company maintains bonus plans that are designed to attract and retain
well qualified executives and to focus executives' attention on key corporate,
business unit and individual objectives. Such plans include performance targets
established at the beginning of the fiscal year, with awards granted based on
actual performance as compared to targets. Each of the Named Executives
participates in the Company's annual incentive program. Awards are approved
annually by the Committee.
The Company's principal incentive plan is its Officer Incentive Plan (the
"Incentive Plan"). At the beginning of each Incentive Plan year, the Committee
recommends an aggregate annual award budget and establishes a profit target.
Individual performance goals, both quantitative and qualitative, are
established for each participant. Potential awards generally range between 15%
to 35% of base salary, with the percentage determined by level within the
organization. Individual performance determines 67% of the employee's incentive
award; the Company's performance determines 33% of an employee's award.
At year end, both Company and individual performance are assessed. If the
Company does not achieve the profit target, it is intended but not required
that the 33% Company component will not be paid. In 1997, the Company did not
reach its operating profit target; therefore, the 1997 incentive awards
reflected only the 67% individual component. If Company profits equal or exceed
the predetermined profit target, the Committee may recommend that the Board of
Directors increase the amount for each participant by a factor of up to 25% of
the total award. The maximum amount that can be paid under the Incentive Plan
is 125% of the budgeted incentive amount. No such award was made for 1997.
Employee Stock Plan
The purpose of the Stock Plan is to promote the long-term growth of the
Company by rewarding key management employees with a proprietary interest in
the Company for outstanding long-term performance and to attract, motivate and
retain highly qualified and capable management employees.
The Committee may, at its discretion, make awards to participants under the
Stock Plan in the form of non-qualified stock options, incentive stock options,
or restricted stock, or a combination thereof. The maximum number of shares
which the Committee may issue under the Stock Plan is 2,308,000 shares. As of
December 31, 1997, there were 1,582,000 stock options outstanding pursuant to
the Stock Plan, which
11
<PAGE>
included 571,000 options granted to Unionamerica employees pursuant to the
Acquisition Agreement to replace, at comparable terms, options granted in prior
years by Unionamerica.
Return on Equity Incentive Plan
The Company's ROE Plan is maintained by the Company to assist in attracting
and retaining management personnel for the Company and to encourage executives
to strive for outstanding results in the operation of the Company from year to
year. The ROE Plan is intended to provide an incentive comparable to equity
participation in the performance of the Company.
The Committee designates participants and their class of participation in the
ROE Plan. Mr. Becker and Orzech and Ms. Hajek participate in the ROE Plan.
Awards under the ROE Plan are calculated by multiplying a participant's base
salary by an ROE factor which is a function of the Company return on equity and
the participant's class of participation. Return on equity, as defined in the
ROE Plan, is the ratio of operating earnings per share to book value per share.
ROE factors may range from zero, if ROE is less than 14%, to a maximum of 40%
to 60% of base salary if ROE exceeds 14%. Awards vest over a period of 40
months following the end of an ROE Plan year, and may be adjusted over the
vesting period based on the development, if any, of the Company's loss
reserves.
The Company's return on equity for 1997 was less than the target specified in
the ROE Plan. In 1997, the Company paid awards relating to the 1993, 1994 and
1995 ROE Plan years.
Repricing of Options
On April 17, 1997, the Committee repriced all stock options granted on
February 26, 1997 to Mr. Orzech, Mr. Schleisman, Ms. Hajek and non-executive
employees. The exercise price for such options was reset from $29.25 per share
to $22.75 per share, the fair market value of the Company's common stock on
that date. The original vesting schedule and expiration dates remained
unchanged. The 25,000 stock options granted to Mr. Becker were not repriced.
The options were repriced to provide greater incentive for employees to
increase the Company's revenues and profits and to retain experienced employees
and executives.
1997 Compensation for the Chief Executive Officer
Mr. Becker is eligible to participate in all of the Company's compensation
programs. The Committee considers industry standards and annual performance
with respect to goals established by the Committee in determining his base
compensation. In 1997, the Company increased Mr. Becker's salary by 11% to
$519,000. The increase related to accomplishment of performance objectives in
1996, continued success in achieving long-term corporate objectives and
industry compensation standards. The Committee established performance goals
for Mr. Becker for 1997 that consisted of financial, operational and management
objectives, with heaviest weighting given to financial objectives. The
Committee determined that Mr. Becker had achieved 65% of his goals and
objectives relative to his bonus target for 1997 and awarded Mr. Becker a bonus
of $204,000 under the Incentive Plan as compensation for this achievement. Mr.
Becker received $71,000 pursuant to the ROE Plan in 1997 relating to the 1993,
1994 and 1995 ROE Plan years.
The Committee believes the compensation to the Company's Chief Executive
Officer and Named Executives to be reflective of Company performance within the
scope of industry standards.
Personnel and Compensation Committee of the MMI Companies, Inc. Board of
Directors:
Joseph D. Sargent F. Laird Facey, M.D. William M. Kelley Scott S. Parker
(Chairman)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Personnel and Compensation Committee consists of Messrs. Sargent, Kelley
and Parker and Dr. Facey. No executive officer of the Company served as a
director or member of the compensation committee
12
<PAGE>
of any entity whose executive officers served on the Board of Directors or
Personnel and Compensation Committee of the Company.
EMPLOYMENT AGREEMENTS
Mr. Becker
The Company is a party to an employment agreement dated May 1, 1997, with its
Chairman and Chief Executive Officer, B. Frederick Becker. In that employment
agreement, the Company agreed to pay Mr. Becker a salary of not less than
$531,300 per annum. If the Company achieves the financial, operational and
managerial goals mutually agreed to by Mr. Becker and the Personnel and
Compensation Committee of the Board of Directors, Mr. Becker will receive a
bonus of up to 60% of his annual salary. Mr. Becker is also entitled to an
annual perquisite allowance of $35,000 and to participate in any employee
benefits available to senior executives, including any retirement,
hospitalization, group life insurance or similar program of the Company. The
Company also agreed to pay Mr. Becker a lump sum equal to one and one-half
times his annual salary if the Company terminates his employment without cause.
Mr. Becker's employment agreement provides that the Company will pay Mr.
Becker an amount equal to two times his annual salary and maximum bonus if any
of the following events occur within twelve months of a Change of Control (as
defined) of the Company: (a) an involuntary termination of Mr. Becker's
employment except for death, permanent disability or cause or (b) the voluntary
termination of Mr. Becker's employment within sixty days of either (i) a
reduction in his responsibilities, title, salary, bonus opportunity or benefits
or (ii) a relocation of the Company's principal place of business in excess of
seventy-five miles from its existing location. Such employment agreement
defines a Change of Control as either (a) the acquisition of beneficial
ownership of more than 50% of the Company's outstanding stock or the combined
voting power of the Company's then outstanding securities by any individual,
entity, controlled group of entities, or group of individuals or entities
acting in concert for the purpose of controlling the Company, or (b) the
approval of the stockholders of the Company of i) a reorganization, merger or
consolidation, in each case where stockholders immediately prior to such
reorganization, merger or consolidation do not immediately thereafter own more
than 50% of the reorganized, merged or consolidated Company's then outstanding
securities, ii) a liquidation or dissolution of the Company, or iii) the sale
of all or substantially all of the Company's assets.
Mr. Sinclair
The Company has entered into an employment contract with Mr. Sinclair, as
Chief Executive Officer of Unionamerica. The Company has agreed to employ Mr.
Sinclair until the earlier to occur of i) the termination of his employment by
the Company upon not less than three months' written notice or ii) the day upon
which he attains the age of 65 years or such other age as may be determined by
the Board of Directors as the retirement age.
The base salary of Mr. Sinclair is $519,000, or such salary as may from time
to time be agreed in writing. He is also entitled to participate in the
Company's pension, health insurance, profit sharing and incentive plans from
time to time, to be reimbursed for out-of-pocket expenses incurred in the
course of employment and to receive use of company automobiles.
Mr. Sinclair can terminate his employment upon not less than two months'
written notice to the Company. The Company can terminate his employment at any
time with or without cause. If the Company terminates his employment with
cause, Mr. Sinclair is entitled to receive only accrued but unpaid salary as of
the date of termination. If the Company terminates his employment without
cause, Mr. Sinclair is entitled to receive a payment in lieu of salary and
other benefits for three months. In addition, Mr. Sinclair has agreed i) for a
period of six months after termination of his employment not to entice certain
employees of the Company away from the Company and not to solicit certain
clients of the Company and ii) for a period of four months after termination of
employment, not to engage in any competing business in the London Market.
13
<PAGE>
Mr. Schleisman
In January 1998, the Company entered into an agreement with Mr. Schleisman,
whereby Mr. Schleisman resigned. The Company agreed to continue Mr.
Schleisman's salary of $255,000 for twelve months and provide certain employee
benefits for a twelve month period. In addition, all unvested stock options
previously granted lapsed, and the Company continued its previous agreement to
pay Mr. Schleisman $1,000,000 upon the attainment of age 65 or death, whichever
occurs first. Mr. Schleisman agreed not to solicit employees of the Company for
a two year period.
Other Executive Officers
The Company is a party to agreements with Messrs. McManis and Orzech and Ms.
Hajek. In those agreements, the Company agrees to pay such executive officers a
lump sum equal to one and one-half times their annual salary if any of the
following events occur within twelve months of a Change of Control (as defined)
of the Company: (a) an involuntary termination of such executive officer's
employment except for death, disability or cause or (b) the voluntary
termination of such executive officer's employment within sixty days of either
(i) a reduction in their responsibilities or base salary or (ii) a relocation
of the Company's principal place of business in excess of fifty miles from its
existing location. Such employment agreement defines a Change of Control as
either (a) a reconstitution of more than 50% of the Board of Directors of the
Company within any consecutive twelve month period or (b) an accumulation of
more than 50% of the Company's outstanding stock by any individual, entity,
controlled group of entities, or group of individuals or entities acting in
concert for the purpose of controlling the Company.
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the S&P 500 index and an index of peer companies selected by the
Company, for the period from June 24, 1993, the date of the Company's initial
public offering of Common Stock, through December 31, 1997. The chart assumes
an initial investment of $100.00 and reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG MMI COMPANIES, INC., S&P 500 INDEX AND COMPANY PEER GROUP
LOGO
14
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6/24/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
------- -------- -------- -------- -------- --------
MMI Companies, Inc. $100.00 $111.59 $119.67 $182.69 $247.49 $194.96
S&P 500 Index 100.00 106.75 108.11 148.74 182.89 243.91
Company Peer Group 100.00 93.35 94.27 139.62 169.51 241.74
</TABLE>
The Company's peer group includes the companies that comprise the S&P
Property-Casualty Insurance Index: The Allstate Corporation, The Chubb
Corporation, Cincinnati Financial Corporation, General Re Corporation, Loews
Corporation, MGIC Investment Corporation, Progressive Corporation, Safeco
Corporation, The St. Paul Companies, Inc. and USFG Corporation. The companies
in the peer group are weighted by market capitalization as of the beginning of
the measurement period. The company peer group changed from the prior year due
to the addition of Cincinnati Financial Corporation and Progressive
Corporation to the S&P Property-Casualty Insurance Index and the elimination
of Frontier Insurance Group, Inc., The Hartford Steam Boiler Inspection and
Insurance Company, MAIC Holdings, Inc., and Mutual Risk Management Ltd. from
the Company peer group due to immateriality. Had the composition of the peer
group remained unchanged from year to year, its total return in 1997 would
have been 42.8%, resulting in a cumulative total return through 1997 of
142.0%.
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors and its Audit Committee recommend the ratification of
the appointment of Ernst & Young LLP, independent auditors, to audit the
Company's financial statements for the fiscal year ending December 31, 1998.
An appropriate resolution ratifying such appointment will be submitted to the
stockholders at the Annual Meeting. The shares represented by the accompanying
proxy will be voted for the ratification of the appointment of Ernst & Young
LLP, which has served as independent auditor of the Company since 1983. If
such resolution is not adopted, management will reconsider such appointment. A
representative of Ernst & Young LLP will be present at the Annual Meeting,
will have the opportunity to make a statement if he or she wishes, and will be
available to respond to appropriate questions of stockholders.
STOCKHOLDER PROPOSALS
If any stockholder wishes to propose a matter for consideration at the
Company's annual meeting to be held in April 1999, the proposal should be sent
to the Secretary of the Company, Wayne A. Sinclair, at the principal executive
offices of the Company. A proposal must be received by the Company by November
22, 1998 in order to be considered for inclusion in the Company's 1999 annual
meeting Proxy Statement and form of Proxy which is expected to be mailed in
March of 1999.
By order of the Board of Directors
LOGO
Wayne A. Sinclair
Secretary
March 19, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1997, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE TO
STOCKHOLDERS UPON WRITTEN REQUEST ADDRESSED TO PAUL M. ORZECH, EXECUTIVE VICE
PRESIDENT AND CHIEF FINANCIAL OFFICER, MMI COMPANIES, INC., 540 LAKE COOK
ROAD, DEERFIELD, ILLINOIS 60015.
15
<PAGE>
LOGO
<PAGE>
PROXY PROXY
MMI COMPANIES, INC.
DEERFIELD, ILLINOIS, U.S.A.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints B. Frederick Becker and George B. Caldwell, or
any one of them, with power of substitution, attorneys and proxies to represent
the undersigned at the annual meeting of the stockholders of MMI Companies, Inc.
(the "Company") to be held on April 16, 1998, and at any adjournments thereof,
with all powers which the undersigned would possess if personally present, and
to vote, as and to the extent indicated below all shares of stock which the
undersigned may be entitled to vote at said meeting or any adjournments thereof,
upon all matters that may properly come before the meeting, including the
matters listed on the reverse side of this card which are more fully described
in the Notice of Annual Meeting and Proxy Statement relating to said meeting.
The shares represented by this proxy will be voted as and to the extent directed
on the reverse side hereof. If no directions are given, the proxies will vote:
(a) FOR the election of all listed director nominees, (b) in accordance with the
Board of Directors' recommendation on the other matters listed on the reverse
side of this card, and (c) at their discretion on any other matter that may
properly come before the meeting.
If you do not sign and return a proxy card, or attend the meeting, your shares
cannot be voted.
<PAGE>
The Board of Directors recommends a vote "FOR" items 1 and 2.
ITEM 1. ELECTION OF ALL DIRECTOR NOMINEES:
FOR all nominees WITHHOLD
listed at right AUTHORITY to vote
*(except as marked for all nominees listed
to the contrary). at right.
[_] [_]
*Richard R. Barr, George B. Caldwell, F. Laird Facey, M.D., Alan C. Guy, Timothy
R. McCormick, Scott S. Parker, Joseph D. Sargent, Robert A. Spass
*EXCEPTIONS
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
ITEM 2. RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
FOR AGAINST ABSTAIN
[_] [_] [_]
I PLAN TO ATTEND THE MEETING [_]
Please sign this proxy and return it promptly whether or not you plan to attend
the meeting. If signing for a corporation or partnership or as agent, attorney
or fiduciary, indicate the capacity in which you are signing. If you do attend
the meeting and decide to vote by ballot, such vote will supersede this proxy.
Dated:_______________, 1998
- ----------------------------
Signature
- ----------------------------
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
