SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ]Confidential, for Use of the Commission Only as permitted by Rule 14-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) or 240.14a-12
Trenwick Group Inc.
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(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
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1. Title of each class of securities to which transaction
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2. Aggregate number of securities to which transaction
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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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[ ] 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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4. Date Filed:
<PAGE>
Trenwick Group Inc.
[TRENWICK insignia]
One Canterbury Green
Stamford, Connecticut 06901
April 17, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Trenwick Group Inc. (the "Company") on Thursday, May 18, 2000, at the Hyatt
Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich, Connecticut at 8:30
a.m. local time. A Notice of the Meeting, a Proxy and a Proxy Statement
containing information about the matters to be acted upon at the meeting are
enclosed.
All holders of common stock as of the close of business on March 24, 2000 are
entitled to vote at the Annual Meeting on the basis of one vote for each share
of common stock held.
A record of the Company's activities for the year 1999 is included in the annual
report to stockholders. Whether or not you attend the Annual Meeting, the
Company requests that you please exercise your voting rights by completing and
returning your Proxy promptly in the enclosed self-addressed, stamped envelope.
If you attend the meeting and desire to vote in person, your Proxy will not be
used.
Sincerely,
/s/ James F. Billet, Jr.
- ------------------------
JAMES F. BILLETT, JR.
Chairman, President and Chief Executive Officer
<PAGE>
[TRENWICK insignia]
One Canterbury Green
Stamford, Connecticut 06901
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
May 18, 2000
To the Holders of Common Stock:
The Annual Meeting of Stockholders of Trenwick Group Inc. (the
"Company"), a Delaware corporation, will be held on Thursday, May 18, 2000, at
the Hyatt Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich, Connecticut
at 8:30 a.m. local time to act upon the following matters:
PROPOSAL NO. 1
- --------------
To elect four directors to serve until the Annual Meeting of
Stockholders in 2003.
PROPOSAL NO. 2
- --------------
To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the year ending December 31, 2000.
PROPOSAL NO. 3
- --------------
To consider and act upon such other matters as may properly come before
the Annual Meeting or any adjournment thereof.
Information regarding the matters to be acted upon at the Annual
Meeting is contained in the accompanying Proxy Statement.
The Board of Directors has fixed the close of business on March 24,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and any postponement or adjournment
thereof. Accordingly, only holders of record of the Company's common stock at
the close of business on March 24, 2000 will be entitled to vote at the meeting
and any adjournment or postponement thereof.
MANAGEMENT SINCERELY DESIRES THE ATTENDANCE OF EVERY STOCKHOLDER AT THE
ANNUAL MEETING. IT IS RECOGNIZED, HOWEVER, THAT SOME WILL BE UNABLE TO ATTEND.
IN ORDER TO ACHIEVE A QUORUM REQUIRED TO CONDUCT BUSINESS AT THE ANNUAL MEETING,
WE ASK THAT YOU VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
SELF-ADDRESSED, STAMPED ENVELOPE. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON
IF YOU ARE LATER ABLE TO ATTEND THE ANNUAL MEETING.
By order of the Board of Directors,
/s/ John V. Del Col
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John V. Del Col
Secretary
<PAGE>
[TRENWICK insignia]
One Canterbury Green
Stamford, Connecticut 06901
PROXY STATEMENT
Introduction
This Proxy Statement is being furnished by the Board of Directors of
Trenwick Group Inc. (the "Company") to stockholders of the Company on or about
April 17, 2000, in connection with the solicitation of proxies ("Proxies") for
use at the Annual Meeting of Stockholders of the Company to be held on May 18,
2000 (the "Annual Meeting"), at the Hyatt Regency Greenwich, 1800 East Putnam
Avenue, Old Greenwich, Connecticut at 8:30 a.m. local time for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders.
Voting Securities
The close of business on March 24, 2000 has been fixed by the Company's
Board of Directors as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting. At such date, the
Company had issued and outstanding 16,295,207 shares of common stock, par value
$.10 per share. Each share of common stock issued and outstanding on the record
date will be entitled to one vote on all matters to come before the Annual
Meeting. There is no cumulative voting of common stock.
Annual Report
A copy of the annual report to stockholders for the fiscal year 1999
containing financial statements of the Company has been mailed to all
stockholders.
Revocation of Proxy
The accompanying Proxy, if properly executed by a stockholder entitled
to vote, will be voted at the Annual Meeting, but may be revoked at any time
before the vote is taken by giving written notice to the Secretary of the
Company, by a duly executed Proxy bearing a later date or by voting in person at
the Annual Meeting.
Quorum and Votes Required
The presence, in person and by Proxy, of a majority in number of the
outstanding shares of common stock as of the record date constitutes a quorum
and is required in order for the Company to conduct business at the Annual
Meeting. Each share is entitled to one vote. In accordance with the Company's
Restated Certificate of Incorporation, as amended, and the General Corporation
Law of the State of Delaware, (i) a plurality of the votes duly cast is required
for the election of directors to serve until the Annual Meeting of Stockholders
in 2003; and (ii) the affirmative vote of a majority of the votes duly cast is
required to ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the year ending December 31, 2000.
1
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A broker non-vote occurs when a nominee holding shares for a beneficial
owner does not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that proposal and has not received
instructions from the beneficial owner. Under the General Corporation Law of the
State of Delaware, abstaining votes and broker non-votes are deemed to be
present for purposes of determining whether a quorum is present at a meeting but
are not deemed to be votes duly cast. As a result, abstentions and broker
non-votes will be included for the purposes of determining whether a quorum is
present at the Annual Meeting, but will not be included in the tabulation of the
voting results and will not have the effect of votes in opposition with respect
to the election of directors or the ratification of the appointment of
PricewaterhouseCoopers LLP.
Authority Granted by the Proxy
The Proxy is in such form as to permit a vote for, or the withholding
of authority to vote for, individual nominees, and to indicate separate
approval, disapproval or abstention with respect to the other proposals
identified in the Proxy and accompanying Notice of Annual Meeting of
Stockholders and described in this Proxy Statement. If no instructions are
indicated, Proxies returned to the Company will be voted FOR the election of the
directors described herein by the persons named in the enclosed Proxy, to wit:
W. Marston Becker, James F. Billett, Jr., and Joseph D. Sargent, or any one or
several of them as may act (the "Proxy Committee"). With respect to the other
proposal described herein, if no instructions are indicated, the shares
represented by the Proxy will be voted FOR the proposal. As to any such other
matters that may properly be brought before the Annual Meeting, the shares
represented by the Proxy will be voted in accordance with the judgment of the
Proxy Committee.
PROPOSAL NO. 1
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ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, two of which
consist of four directors and one of which consists of three directors. Each
class serves three years, with the terms of office of the respective classes
expiring in successive years. The term of the office of directors in Class I
expires at the 2000 Annual Meeting. Vacancies in directorships (including
vacancies resulting from resignations and newly created directorships) may be
filled, until the expiration of the term of the vacated directorship and until a
successor is elected and qualified, by the vote of a majority of the directors
then in office.
The Board of Directors proposes that the nominees described below be
elected as Class I directors for a new term of three years and until their
successors are duly elected and qualified. All nominees are currently serving as
Class I directors. Nominees Billett, Becker, and Sargent were elected to Class I
at the Company's 1997 Annual Meeting. Nominee DeMichele served as a director of
Chartwell Re Corporation ("Chartwell") until its merger with and into the
Company on October 27, 1999 (the "Merger"), and on that date joined the
Company's board as a Class I director. Mr. DeMichele was elected to the Board of
Directors of Chartwell at its 1998 annual meeting. Proxies may be voted only for
the four nominees to Class I.
Although the Board of Directors does not contemplate that any of the
nominees will be unable to serve, if such a situation arises prior to the
meeting, the Proxy Committee will vote in accordance with its best judgment.
Unless otherwise directed, all returned Proxies will be voted FOR the
election of the directors standing for election in Class I.
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<PAGE>
CLASS I: DIRECTORS STANDING FOR ELECTION
James F. Billett, Jr. Director since 1978(1)
James F. Billett, Jr., 56, has served as Chairman of the Board and Chief
Executive Officer of the Company and its predecessor since 1978 and resumed the
Presidency in 1988. He is Chairman of the Executive Committee of the Board of
Directors (the "Executive Committee") and the Investment Committee of the Board
of Directors (the "Investment Committee"). Mr. Billett was formerly a Vice
President of General Reinsurance Corporation.
W. Marston Becker Director since 1997
Mr. Becker, 47, has served as Chairman of the Compensation Committee of
the Board of Directors (the "Compensation Committee") and a member of the
Executive Committee since May 1998. He has been President - Specialty Insurance
of Royal & SunAlliance USA, Inc. since its acquisition of Orion Capital
Corporation ("Orion") in November 1999. From January 1997 to November 1999, he
was Chairman of the Board and Chief Executive Officer of Orion. He was
previously Vice Chairman of the Board (March 1996 to December 1996) and Senior
Vice President (July 1994 to March 1996) of Orion and served as President and
Chief Executive Officer of the DPIC Companies (subsidiaries of Orion) from July
1994 to June 1996 and as President and Chief Executive Officer of McDonough
Caperton Insurance Group, an insurance brokerage firm, from March 1987 to July
1994.
Robert M. DeMichele Director since 1999
Robert M. DeMichele, 55, has been a director of the Company and a
member of the Investment Committee since the Merger. From December 1995 until
the Merger, Mr. DeMichele was a director of Chartwell. From December 13, 1995 to
the present he has been a director, Chief Executive Officer and President of
Lexington Global Asset Management. From 1982 until December 13, 1995, Mr.
DeMichele served as President, Chief Executive Officer and a director of
Piedmont Management Co. ("Piedmont"). Mr. DeMichele also serves as a director of
The Navigators Group, Inc.
Joseph D. Sargent Director since 1978 (1)
Joseph D. Sargent, 70, has been a member of the Executive Committee
since 1979 and a member of the Compensation Committee since 1986. He has been
Chairman and a Principal of Bradley, Foster & Sargent, an investment advisory
firm, since 1994. Mr. Sargent is a member of the Board of Directors of Mutual
Risk Management, Ltd., MMI Companies Inc., Policy Management Systems Corporation
and Command Systems Inc.
CLASS II: TERM EXPIRES AT THE 2001 ANNUAL MEETING
Frank E. Grzelecki Director since 1999
Frank E. Grzelecki, 62, has served as a director of the Company and a
member of the Investment Committee since the Merger. From March 1994 until the
Merger, Mr. Grzelecki was a director of Chartwell. Mr. Grzelecki is a Managing
Director of Saugatuck Associates, Inc., a private investment firm. He retired as
a director and Vice Chairman of Handy & Harman in 1998, a position he held since
1997. From 1992 to 1997, Mr. Grzelecki served as a director and President and
Chief Operating Officer of Handy & Harman. Mr. Grzelecki is also a director of
Barnes Group Inc.
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Frederick D. Watkins Director since 1979(1)
Frederick D. Watkins, 84, has been a member of the Executive Committee
since 1979, a member of the Compensation Committee since 1986 and a member of
the Audit Committee of the Board of Directors (the "Audit Committee") since
1988. He is retired Executive Vice President of Connecticut General Insurance
Corporation (1979-1980) and former President of Aetna Insurance Company
(1966-1979), which he joined in 1937. Mr. Watkins was Chairman of Terra Nova
Insurance Company Ltd. from 1978 until 1994.
Stephen R. Wilcox Director since 1978(1)
Stephen R. Wilcox, 66, has been a member of the Investment Committee
since 1979 and a member of the Audit Committee since 1985, serving as the
latter's Chairman since 1988. Since 1998, Mr. Wilcox has been President and
Chief Executive Officer of Kelton International Inc., a securities
broker-dealer. He has been President of The Wilcox Group, Inc., a financial and
consulting firm, since 1998. He was a Senior Consultant of Hyperion Capital
Management from 1986 to 1988 and a Partner and Senior Vice President of Conning
& Company, with which he was associated from 1958 to 1988.
CLASS III: TERM EXPIRES AT 2002 ANNUAL MEETING
Anthony S. Brown Director since 1990
Anthony S. Brown, 57, has served as member of the Audit Committee since
1991. He is a Professor at the Terry Sanford Institute of Public Policy at Duke
University and was Director of Equity Administration of The First Boston
Corporation, an investment banking firm, between 1991 and 1993. Prior to 1991,
Mr. Brown was Vice President, External Affairs, of the University of Connecticut
and was formerly Chairman and Chief Executive Officer of Covenant Insurance
Company, with which he was associated from 1968 to 1989.
Richard E. Cole Director since 1999
Richard E. Cole, 60, has served as a director of the Company and a
member of the Executive Committee since the Merger. Until the Merger he was the
Chairman of the Board of Directors of Chartwell (from March 1993) and
Chartwell's Chief Executive Officer and a director (from July 1990). From July
1990 to March 1993, Mr. Cole also served as President of Chartwell. From October
1988 to July 1990, Mr. Cole was engaged as a principal in various
entrepreneurial activities outside of the insurance and reinsurance industries.
Prior to October 1988, Mr. Cole was President of Cole, Booth, Potter (formerly
Sten-Re Cole & Associates, Inc.), a reinsurance brokerage firm focusing on
specialty lines insurance and reinsurance for regional companies. Mr. Cole is
also a director of Indiana Lumbermens Mutual Insurance Company.
Neil Dunn Director since 1984(1)
Neil Dunn, 50, has been a member of the Investment Committee since 1984
and a member of the Executive Committee and the Compensation Committee since
1986. He is Managing Director of Kempen Capital Management (UK) Ltd and
previously served in the same capacity for Voyageur International Asset Managers
Ltd and for Piper International Asset Management, an affiliate of Piper Jaffray
Companies Inc. Prior to 1994, Mr. Dunn was Senior Partner of the investment
advisory firm Neil Dunn & Company, Scotland.
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<PAGE>
P. Anthony Jacobs Director since 1979(1)
P. Anthony Jacobs, 58, has been a member of the Investment Committee
since 1979, the Executive Committee and the Compensation Committee since 1986,
and the Audit Committee since 1998. Mr. Jacobs served as President and Chief
Executive Officer of Lab Holdings from September 1997 until August 1999, at
which time the company was merged with its subsidiary Lab One and Mr. Jacobs
retired. Mr. Jacobs also served as President of Lab Holdings from May 1993 to
September 1997 and as its Chief Operating Officer from May 1990 to September
1997. From December 1996 until August 1998, he was Chairman of the Board of SLH
Corporation. Mr. Jacobs is also a director of Response Oncology, Inc. and
Syntroleum Corporation.
(1) Dates earlier than December 30, 1985, reflect Board membership of
Trenwick Limited, the Company's predecessor.
There are no family relationships among any directors and executive
officers of the Company. For information with respect to arrangements relating
to the election of one director and certain other business relationships, see
"Certain Relationships and Related Transactions."
All directors have entered into indemnification agreements with the
Company that limit a director's personal liability, as a result of serving as a
director, to the maximum extent permitted by Delaware law.
THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors held ten meetings during 1999. No director
attended fewer than 75% of the aggregate number of meetings of the Board and
Board Committees on which the director served. The Company considers attendance
at meetings to be only one measure of a director's contribution to the Company.
Directors also fulfill their responsibilities by rendering advice in informal
consultations with executive officers of the Company.
The Board of Directors has four committees: the Audit Committee, the
Compensation Committee, the Executive Committee and the Investment Committee.
The Audit Committee and the Compensation Committee are comprised exclusively of
non-employee directors. All members of the Executive Committee and the
Investment Committee, other than Mr. Billett, are non-employee directors.
The Company does not have a Nominating Committee. The Board of
Directors nominates candidates for director.
The Audit Committee is composed of Messrs. Wilcox - Chairman, Brown,
Jacobs, and Watkins. The Audit Committee has responsibility to recommend to the
Board of Directors the selection of the Company's independent accountants, to
review and approve the scope of the independent accountants' audit activity, to
review the financial statements which are the subject of the independent
accountants' certification, and to review with such independent accountants the
adequacy of the Company's accounting systems and system of internal accounting
controls. The Audit Committee met five times during 1999.
The Compensation Committee is composed of Messrs. Becker - Chairman,
Dunn, Jacobs, Sargent, and Watkins. The Compensation Committee exercises
authority with respect to the Company's compensation structure for senior
executives and other key employees, approves cash compensation and non-stock
based benefits for the Chief Executive Officer and executive officers, and
designs, recommends for Board approval and administers the Company's stock-based
compensation plans. The Compensation Committee met three times during 1999.
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The Executive Committee is composed of Messrs. Billett - Chairman,
Becker, Cole, Dunn, Jacobs, Sargent, and Watkins. The Executive Committee meets
when required on short notice during intervals between the meetings of the Board
of Directors and has authority to exercise all the powers of the Board of
Directors concerning the management and direction of the affairs of the Company,
subject to specific directions of the Board of Directors and subject to the
limitations of the General Corporation Law of the State of Delaware. The
Executive Committee met one time during 1999.
The Investment Committee is composed of Messrs. Billett - Chairman,
DeMichele, Dunn, Grzelecki, Jacobs, and Wilcox. The Investment Committee
exercises authority with respect to financial matters, including the investment
of the Company's assets, assessment of the potential impact of both short-term
and long-term economic trends, and the establishment of related investment
guidelines. The Investment Committee met four times during 1999.
PRINCIPAL STOCKHOLDERS
The following table lists the stockholders known to the Company to be
beneficial owners of more than five percent of the outstanding common stock, as
of the record date, based upon information filed with the Securities and
Exchange Commission (the "Commission"). Such stockholders hold sole voting and
dispositive power over such shares except as noted.
Shares
Beneficially
Name & Address Owned Percent
- -------------- ------------ --------
NewSouth Capital Management, Inc. 2,162,920(1) 13.27%
1000 Ridgeway Loop Road, Suite 233
Memphis, Tennessee 38120
The Prudential Insurance Company of America 1,440,400(2) 8.8%
751 Broad Street
Newark, New Jersey 07102
Stuart Smith Richardson 1,181,002(3) 7.3%
Foot of Broad Street, Suite 201
Stratford, CT 06497
Reich & Tang Asset Management L.P. 912,613(4) 5.6%
600 Fifth Avenue
New York, New York 10020
Royce & Associates Inc. 826,910(5) 5.1%
1414 Avenue of the Americas
New York, New York 10019
(1) Based upon information contained in Amendment No. 5 to Schedule 13G
filed with the Commission on February 14, 2000. Sole voting power is
held over 2,143,170 shares, shared voting power is held over 19,750
shares and sole dispositive power is held over all the shares.
(2) Based upon information contained in Amendment No. 8 to Schedule 13G
filed with the Commission on January 31, 2000. The Prudential Insurance
Company of America may have direct or indirect voting and/or investment
discretion over the shares, which are held for the benefit of its
clients by its separate accounts, externally managed accounts,
registered investment companies, subsidiaries and/or other affiliates,
so that in the aggregate sole voting and dispositive power is held over
1,091,500 shares and shared voting and dispositive power is held over
348,900 shares.
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(3) Based upon information contained in a Schedule 13D filed with the
Commission on November 5, 1999. Voting and dispositive power are held
directly and through various trusts by Stuart Smith Richardson, Peter
L. Richardson, Lunsford Richardson, Jr., Richard G. Smith, III, Robert
Randolph Richardson, Barbra R. Evans, Norris W. Preyer, Laurinda V.
Lowenstein Douglas, Margaret W. Gallagher, Estate of H. Smith
Richardson, Jr., James L. Richardson, Chester F. Chapin, Charles S.
Chapin, Lynn C. Guzenhauser, Beatrix W. Richardson, Sion A. Boney, III
and Center for Creative Leadership.
(4) Based upon information contained in Amendment No. 1 to Schedule 13G
filed with the Commission on February 15, 2000. The shares were
purchased by Reich & Tang Asset Management L.P. ("Reich & Tang"), a
registered investment adviser, on behalf of certain accounts (none of
which has a greater than 5% interest in the stock) for which Reich &
Tang provides investment advice on a fully discretionary basis. Reich &
Tang holds shared voting and dispositive power over the shares.
(5) Based upon information contained in Amendment No. 3 to Schedule 13G
filed with the Commission on February 2, 2000. Royce & Associates, Inc.
holds sole voting and dispositive power over 826,910 shares. Royce &
Associates, Inc. is a registered investment adviser. Charles M. Royce
may be deemed a controlling person of Royce & Associates, Inc. Mr.
Royce disclaims beneficial ownership.
MANAGEMENT
The following table reflects information as of the record date
regarding the number of shares of the Company's common stock beneficially owned
by each director, by the executive officers named in the Summary Compensation
table below and by all directors and executive officers as a group:
Amount of
Beneficial Ownership (1)
------------------------
Number of Shares
Directors Common Stock Percent
--------------- -------
W. Marston Becker.................... 616,139(2) 3.78%
Anthony S. Brown..................... 12,075(3) *
Richard E. Cole...................... 260,929(4) 1.58%
Robert M. DeMichele.................. 19,003(5) 0.12%
Neil Dunn............................ 8,250(3) *
Frank E. Grzelecki................... 4,125(5) *
P. Anthony Jacobs.................... 9,750(3) *
Joseph D. Sargent.................... 136,426(3)(6) 0.84%
Frederick D. Watkins................. 12,450(3) *
Stephen R. Wilcox.................... 7,750(3) *
* Less than 0.1%
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Amount of
Beneficial Ownership (1)
------------------------
Number of Shares
Named Executive Officers Common Stock Percent
------------------------ -------------- -------
James F. Billett, Jr................. 332,485(7) 2.03%
Stephen H. Binet..................... 97,518(8) 0.60%
Pierre D. Croizat.................... 32,707(9) 0.20%
Alan L. Hunte........................ 95,365(10) 0.58%
James E. Roberts..................... 49,406(11) 0.30%
Directors and executive officers
as a group........................... 1,895,961 11.16%
(16 individuals)
(1) Includes, in each case, shares deemed to be beneficially owned by such
persons because they hold or share investment or voting power. Includes,
as to directors (other than Mr. Billett) a total of 238,087 shares subject
to outstanding stock options that are vested and exercisable within 60
days of the date of this Proxy Statement. Includes, as to executive
officers, a total of 202,233 shares subject to outstanding stock options
that are vested and exercisable within 60 days of the date of this Proxy
Statement and 205,381 Restricted Shares not vested within 60 days of the
date of this Proxy Statement, but that have full dividend and voting
rights and that are included in the computation of such executive
officers' percentage of beneficial ownership.
(2) Includes 3,750 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement. Also
includes 608,269 shares owned by Royal & SunAlliance USA, Inc. ("Royal &
SunAlliance"). Mr. Becker is President - Specialty Insurance of Royal &
SunAlliance. Mr. Becker disclaims beneficial ownership of the shares
attributed to Royal & SunAlliance.
(3) Includes 6,750 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement.
(4) Includes 232,237 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement.
(5) Includes 3,300 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement.
(6) Also includes 33,150 shares owned by relatives or held in trust for them,
as to which Mr. Sargent disclaims beneficial ownership.
(7) Includes 38,019 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement and 47,147
Restricted Shares that are not vested within 60 days of the date of this
Proxy Statement, but that have full dividend and voting rights.
(8) Includes 36,519 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement and 22,612
Restricted Shares that are not vested within 60 days of the date of this
Proxy Statement, but that have full dividend and voting rights.
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(9) Includes 13,620 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement and 18,290
Restricted Shares that are not vested within 60 days of the date of this
Proxy Statement, but that have full dividend and voting rights.
(10) Includes 32,627 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement and 18,971
Restricted Shares that are not vested within 60 days of the date of this
Proxy Statement, but that have full dividend and voting rights.
(11) Includes 13,644 shares subject to stock options that are vested and
exercisable within 60 days of the date of this Proxy Statement and 23,452
Restricted Shares that are not vested within 60 days of the date of this
Proxy Statement, but that have full dividend and voting rights.
Business Experience of Executive Officers Who Are Not Directors
Steven J. Bensinger, 45, has been an Executive Vice President of the
Company since the Merger. Prior to the Merger, Mr. Bensinger served as President
of Chartwell from March 1993 until the Merger and as director of Chartwell from
February 1994, until the Merger. From July 1998 until the Merger, Mr. Bensinger
also served as Chairman and Chief Executive of Chartwell UK plc and Chartwell
Managing Agents Limited. From February 1991 to November 1992, Mr. Bensinger was
President and Chief Operating Officer of Skandia America Reinsurance Corporation
("Skandia America"). From prior to 1988 to February 1991, Mr. Bensinger was
Skandia America's Chief Financial Officer. Prior to joining Skandia America, he
was a partner with the international accounting and consulting firm of
PricewaterhouseCoopers LLP.
Stephen H. Binet, 46, has been the President and Chief Executive
Officer of Trenwick America Reinsurance Corporation ("Trenwick America Re"), the
Company's U.S. reinsurance subsidiary since 1999, a director of Trenwick America
Re since 1988 and an Executive Vice President of Trenwick America Re since 1993.
Mr. Binet manages Trenwick America Re's reinsurance underwriting operations. Mr.
Binet joined Trenwick America Re in 1980, prior to which time he was employed by
General Reinsurance Corporation.
Pierre D. Croizat, 59, has been Managing Director and Chief Executive
Officer of Trenwick Holdings Limited, a Director and Chairman of Trenwick
International Limited since February 1998 and the President and Chief Executive
Officer of Chartwell Managing Agents Limited, the Company's Lloyd's subsidiary,
since the Merger. From April 1996 until joining the Company in September 1997,
he was engaged in reinsurance consulting. Previously, he headed the Paris-based
Sorema Group of global reinsurance companies.
John V. Del Col, 38, has served as Senior Vice President, General
Counsel, and Secretary of the Company since the Merger. From January 1998 until
the Merger, Mr. Del Col was Vice President, General Counsel, and Secretary of
Chartwell. From July 1994 until December 1997, Mr. Del Col was the Deputy
General Counsel and Assistant Secretary at MeesPierson Holdings Inc., a Dutch
merchant bank. From November 1991 until July 1994, Mr. Del Col was an associate
in the law firm LeBoeuf, Lamb, Greene & MacRae. Prior thereto, Mr. Del Col was
an associate in the law firm of Sullivan & Cromwell.
Paul Feldsher, 51, has been an Executive Vice President and Chief
Underwriting Officer of the Company since 1999, a director of Trenwick America
Re since 1988 and an Executive Vice President of Trenwick America Re since 1993.
Mr. Feldsher manages the Company's underwriting policy and quality control
operations. He began his career with Liberty Mutual Insurance Company in 1972
and was employed by North American Reinsurance prior to joining Trenwick America
Re in 1983.
9
<PAGE>
Robert A. Giambo, 46, has served as an Executive Vice President and
Chief Actuary of the Company since 1999, a director and Chief Actuary of
Trenwick America Re since 1988 and an Executive Vice President of Trenwick
America Re since 1993. Prior to joining Trenwick America Re in 1986, he was
associated with The Home Insurance Company and The Insurance Services Office.
Mr. Giambo received his Casualty Actuarial Fellowship in 1980.
Alan L. Hunte, 51, was appointed Executive Vice President of the
Company in 1999, Chief Financial Officer in 1993, Treasurer in 1987 and Vice
President in 1984. He has been a director and Treasurer of Trenwick America Re
since 1988 and also Executive Vice President and Chief Financial Officer of
Trenwick America Re since 1993. Mr. Hunte is a Chartered Accountant, having
served as audit manager for a public accounting firm prior to joining the
Company in 1981.
James E. Roberts, 54, was appointed Chairman and Chief Executive
Officer of Canterbury Financial Group Inc., Trenwick's U.S. primary insurance
subsidiary, upon completion of the Merger. Mr. Roberts was a director and Vice
Chairman of Trenwick America Re from 1995 through 1999. He was previously
associated with Re Capital Corporation and its principal operating subsidiary,
Re Capital Reinsurance Corporation, a property-casualty reinsurer. At the
former, he served as President and Chief Executive Officer from March 1992 until
joining Trenwick America Re. He was President and Chief Executive Officer of the
operating subsidiary from 1991 until May 1995.
Directors' Compensation
For the year ended December 31, 1999, each non-employee director
chairing a Board Committee received an annual retainer of $17,500, and each
other non-employee director received an annual retainer of $15,000. In addition,
each non-employee director received a fee of $1,000 for each Board meeting
attended, plus reimbursement of all customary expenses incurred in connection
with attendance at Board meetings. Directors who served on the various Board
Committees each received, in addition to the above amounts, a meeting fee of
$750 per Committee meeting attended in conjunction with a regularly scheduled
Board meeting and $1,000 per Committee meeting attended not in conjunction with
a regularly scheduled Board meeting, plus reimbursement of customary expenses
incurred in connection with attendance at each Committee meeting. The Company
also pays the premium to provide the directors with $250,000 of coverage under a
group Travel Accident Insurance policy.
Under the Company's Deferred Compensation Plan, non-employee directors
may elect to defer receipt of all or a portion of fees to be earned in the next
succeeding year and have such fees accrue either (i) at the interest rate
determined by the Compensation Committee or (ii) based upon the performance of
the Company's common stock, including any dividends paid thereon. A
participating non-employee director will receive all amounts so deferred and
accrued in one payment on the first business day of the year following the year
in which the participant ceases to be a director.
Other Compensation for Outside Directors
The Company maintains a Retirement Plan that covers non-employee
directors. At the time of retirement, a director becomes entitled to receive,
for that number of years equal to the number of years of service as a director,
an annual pension benefit equal to 50% of the amount of the director's final
annual retainer.
Pursuant to the 1993 Stock Option Plan for Non-Employee Directors (the
"Option Plan"), each of the Company's eligible non-employee directors has
received a one-time grant of an option for 3,000 shares of the Company's common
stock. Under the Option Plan, each eligible director is granted an option for an
additional 750 shares immediately following each Annual Meeting.
10
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
calendar years ended December 31, 1999, 1998 and 1997 of all persons who were,
at December 31, 1999, the Chief Executive Officer and the four other most highly
paid officers of the Company (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------------------- ---------------------------
Restricted Securities
Other Annual Share Underlying All Other
Salary Bonus Compensation Awards Options/ Compensation
Name & Principal Position Year ($) ($) ($)(1) ($)(2) SARs (#) ($)(3)
- ------------------------- ------ -------- -------- ------------ ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
James F. Billett, Jr. 1999 560,334 315,000 87,443 275,007 28,448 128,031
Chairman, President 1998 526,928 350,000 76,274 739,245 24,573 125,417
& Chief Executive Officer 1997 446,492 405,000 88,201 108,183
Stephen H. Binet 1999 305,908 157,500 149,988 15,517 35,133
President & 1998 288,472 175,000 393,266 12,287 34,155
Chief Executive Officer, 1997 247,692 200,000 32,490
Trenwick America Re
Pierre D. Croizat* 1999 356,655 180,000 174,986 18,103 32,288
Chairman, Trenwick 1998 330,971 300,000 25,000 16,419
International Ltd. 1997 78,462
Alan L. Hunte 1999 255,177 225,000 124,990 12,931 35,158
Executive Vice President, 1998 236,154 250,000 335,516 12,287 34,181
Chief Financial Officer 1997 187,692 250,000 32,513
& Treasurer
James E. Roberts 1999 305,908 157,500 149,988 15,517 33,753
Chairman & 1998 300,014 175,000 442,266 12,287 32,761
Chief Executive Officer, 1997 296,769 200,000 31,240
Canterbury Financial Group
</TABLE>
*Mr. Croizat is also Managing Director and Chief Executive Officer of Trenwick
Holdings and President and Chief Executive Officer of Chartwell Managing Agents
Limited. He joined Trenwick in September 1997.
(1) Consists of personal benefits provided by the Company for the indicated
calendar years in which the amounts exceeded the lesser of $50,000 or ten
percent of the Named Executive's combined salary and bonus for the year.
Includes $43,111 for 1999 and $43,653 for each of 1998 and 1997 for
supplemental whole life and health benefits and, for 1999, 1998 and 1997,
respectively, automobile expenses of $38,584, $29,121, and $38,868.
(2) Amounts reflect (a) Restricted Shares awarded as follows on March 3, 1999,
based on the closing price per share on such date of $29.00: Mr. Billett,
9,483 shares, Mr. Binet, 5,172 shares, Mr. Croizat, 6,034 shares, Mr.
Hunte, 4,310 shares and Mr. Roberts, 5,172 shares. The Restricted Shares
vest in equal annual installments over five years from the date of award,
beginning in 2001. Dividends are paid on Restricted Shares at the same rate
11
<PAGE>
as paid to all stockholders and, as permitted, those amounts have not been
included in this table. The aggregate total of unvested Restricted Share
holdings of each of the Named Executives as of December 31, 1999, at the
then-applicable market price per share of $16.9375, were as follows:
Unvested
Name Restricted Shares Value ($)
---- ----------------- ----------
James F. Billett, Jr. 26,076 441,662
Stephen H. Binet 14,009 237,277
Pierre D. Croizat 6,034 102,201
Alan L. Hunte 11,827 200,320
James E. Roberts 15,129 256,427
(3) Includes Company contributions to the Company's 401(k) Savings Plan on
behalf of each of the Named Executives of $9,600 in 1999 and 1998 and
$9,500 in 1997 (the maximum contribution under the Plan in each case).
Also includes Company contributions to the Company's Pension Plan, a
qualified defined contribution plan (the "Qualified Pension Plan"), of
$12,800 in 1999, 1998 and 1997 for each of the Named Executives other than
Mr. Croizat, who became eligible to participate in the last quarter of
1998 and for whom $7,539 was contributed in 1998. Also includes
contributions made and interest credited for each of these Named
Executives to the Company's Supplemental Executive Retirement Plan
(consisting of contributions in excess of Qualified Pension Plan
contribution limits imposed by the Internal Revenue Code). For Mr.
Billett, contributions were $60,026, $61,754 and $52,920, respectively,
and interest credited was $45,605, $41,262 and $32,963, respectively, for
1999, 1998 and 1997. For 1999, the contribution for each of the other
Named Executives was $9,200, and interest credited was, $3,533, $3,558,
$688 and $2,153 for Messrs. Binet, Hunte, Croziat and Roberts,
respectively. For 1998, the contribution for each of the other Named
Executives was $7,257, and interest credited was, $2,875, $2,901 and
$1,481 for Messrs. Binet, Hunte, Croziat, and Roberts, respectively (Mr.
Croizat not having been credited with any contributions prior to December
31, 1998). For 1997, the contribution for each of the other Named
Executives (except Mr. Croizat) was $4,623 and interest credited was
$1,950, $1,973 and $700 for Messrs. Binet, Hunte and Roberts,
respectively.
The following table sets forth information with respect to stock option
grants to the Named Executives in 1999. The options, granted on March 3, 1999,
to the Named Executives pursuant to the Company's 1993 Stock Option Plan become
exercisable in five equal annual installments beginning one year from the date
of grant, but become immediately exercisable in full in the event of a change in
control of the Company. They are subject to termination prior to their
expiration date in the event of termination of the grantee's employment.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of Percent of Total Rates
Securities Options/SARs of Stock Price
Underlying Granted to Exercise or Appreciation
Options/SARs Employees in Base Price Expiration for Option Term ($)
-------------------
Name Granted (#) Fiscal Year (%) ($/Share) Date 5% 10%
- ---- ----------- --------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
James F. Billett, Jr. 28,448 19.0% 29.00 03/03/09 518,832 1,314,824
Stephen H. Binet 15,517 10.4% 29.00 03/03/09 282,997 717,172
Pierre D. Croizat 18,103 12.1% 29.00 03/03/09 330,161 836,694
Alan L. Hunte 12,931 8.6% 29.00 03/03/09 235,834 597,651
James E. Roberts 15,517 10.4% 29.00 03/03/09 282,997 717,172
</TABLE>
12
<PAGE>
The following table sets forth all stock options exercised during 1999
by the Named Executives and the number of unexercised options held by the Named
Executives at December 31, 1999. Also included is the value of "in-the-money"
options on December 31, 1999. In-the-money options are options whose exercise
price is less than the fair market value of the Company's common stock.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs at FY
Shares at FY-End (#) End($)(2)
Acquired Value ----------------- -------------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($)(1) Unexercisable Unexercisable
- ---- --------------- ------------- ----------------- -------------------------
<S> <C> <C> <C> <C>
James F. Billett, Jr. 0 0 27,415/175,606 0/0
Stephen H. Binet 0 0 30,958/101,846 0/0
Pierre D. Croizat 0 0 5,000/ 38,103 0/0
Alan L. Hunte 0 0 27,583/ 80,135 0/0
James E. Roberts 0 0 8,083/ 72,221 0/0
<FN>
(1) Represents in each case the difference between the fair market value
per share of the Company's common stock on the date of exercise and the
option exercise price per share.
(2) Represents the difference between the closing price per share of the
Company's common stock on December 31, 1999, of $16.9375 and the exercise
price of "in-the-money" options granted to each Named Executive.
</FN>
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON
THE COMPENSATION OF EXECUTIVE OFFICERS OF THE COMPANY
The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of five independent outside directors, four of whom have
served together in such capacity since 1986. The fifth, Committee Chairman W.
Marston Becker, was named to the Committee in May 1997. The Committee meets
periodically to review and recommend for Board approval the Company's
compensation program for senior executives and other key employees and
independently administers the stock option and other incentive plans of the
Company.
The guiding principle of the Committee is to establish a compensation
program which aligns executive compensation with the Company's objectives,
business strategies and financial and operational performance. In this
connection, the Committee seeks to:
(1) Attract and retain qualified executives, in a highly competitive
environment, who will play a significant role in the achievement of the
Company's goals.
(2) Create a performance-oriented environment that rewards performance
with respect to the financial and operational goals of the Company and which
takes into account industry-wide trends and performance levels.
(3) Reward executives for strategic management and the long-term
enhancement of stockholder value.
13
<PAGE>
Compensation for the Named Executives consists of three key elements:
base salary and benefits, discretionary annual cash bonus and stock-based
compensation. The Committee seeks to weigh each element both separately and
collectively to ensure that the executive officers are appropriately compensated
in a manner that advances both the short-term and long-term interests of the
stockholders. The Committee's determinations are guided by the results of a
comparative analysis of the Company's executive compensation practices which was
last performed in 1997 by an independent compensation consulting firm and will
be updated in 2000.
The base salary for each executive officer is set on the basis of the
salary levels in effect for comparable positions in the reinsurance industry,
adjusted for the executive's experience and performance level and internal
comparability considerations. The Company monitors industry salary levels
through its participation in an annual industry survey administered by a
nationally known compensation consulting firm. The Committee believes that base
salaries should be adjusted from time to time with the objective of remaining
within the range of the 50th through the 75th percentiles of the Company's peers
based on survey information available to the Committee.
In addressing the second compensation element, the Committee considers
a menu of measures to be utilized in setting goals and evaluating annual
performance. These measures include return on equity, growth in earnings per
share, growth in dividend-adjusted book value per share, total return to
shareholders and combined ratio (calculated by dividing claims, claims expenses,
policy acquisition costs and underwriting expenses by net premiums earned), each
of which is considered on an absolute basis and in comparison to the Company's
peers, as well as the accomplishment of tactical and strategic objectives. The
Committee fixes the amount that may be awarded to the Chief Executive Officer
("CEO") and an aggregate amount that may be awarded to other executive officers.
The CEO allocates awards among the other executive officers up to the aggregate
amount, which allocations are then reviewed and ratified by the Committee.
In authorizing 1999 bonuses for executive officers, the Committee was
cognizant of the Company's financial result as reflected in the numerical
measures specified in the preceding paragraph and the decline in the market
price of its shares. The Committee also weighed the successful integration of
Chartwell (acquired during the fourth quarter of 1999) into the Company's
operations, the pending acquisition of LaSalle Re Holdings Limited and the
Company's relative financial and strategic positioning at year end. Based on
these factors, the Committee reduced the overall cash bonus pool for these
executives to 10% below its 1998 level.
The Company's third compensation element, stock-based compensation,
provides each executive officer with a meaningful stockholding in the Company as
a long-term incentive and a mechanism for aligning the executive officers'
interests with those of the stockholders. Under the Company's stock plans, the
Committee has the opportunity to award both stock options and restricted stock
to executive officers. Each is linked to the creation of stockholder value by
providing additional value to the executive as the Company's stock price
increases. Options are exercisable over an extended period of time and expire
within ten years of grant. Option grants are made at an exercise price not less
than the fair market value of the underlying stock at the time of grant.
Restricted Shares cannot be transferred until the shares vest, with vesting
occurring over an extended time subject to the executive officer's continued
employment. The holder has all the rights and privileges of a stockholder with
respect to the Restricted Shares, other than the ability to transfer them,
including the right to vote and to receive dividends.
The 1997 compensation study recommended annual awards of Restricted
Shares and stock options with a potential total value of up to a maximum of 150%
of the recipient's annual salary. The Committee believes that this structure,
initiated in March 1998, promotes the retention of key employees in a highly
competitive labor environment while emphasizing the alignment between their
interests and those of the Company's stockholders. In light of the cited
performance measures, 1999's awards, distributed in 2000, were made at rate of
up to 100% of 1999 salaries for the Company's senior executive officers, other
than Mr. Billett. The LaSalle transaction will represent a technical "change of
control" under the Company's long-term incentive plans and accelerate vesting of
previous awards. The Committee structured the 2000 award such that its vesting
will not accelerate with the closing of the LaSalle transaction.
14
<PAGE>
Compensation of the Chief Executive Officer
Mr. Billett's base salary is set using the same criteria as all other
executive officers. His 1999 cash bonus award increased from the prior year's
level in reflection of the significant strategic initiatives undertaken by the
Company in 1999. His stock award was set at 125% of 1999 salary, which was
greater than the other executive officers in recognition of the significance of
his contribution to the Company's 1999 strategic initiatives.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
Company's Chief Executive Officer and the four other most highly compensated
executive officers. However, qualifying performance-based compensation is not
subject to the deduction limit if certain requirements are met. No executive
officer was subject to the limitations of Section 162(m) in 1999. The Committee
structures stock-based compensation for executive officers so as to qualify for
deductibility under the statute to the extent feasible. However, to maintain a
competitive position within the Company's peer group, the Committee retains the
authority to approve stock-based compensation that may not be deductible.
Members of the Compensation Committee
W. Marston Becker, Chairman
Neil Dunn
P. Anthony Jacobs
Joseph D. Sargent
Frederick D. Watkins
15
<PAGE>
Stockholder Return Performance Presentation
Set forth below is a line graph for the five year period commencing
December 31, 1994 and ending December 31, 1999, comparing the yearly percentage
change on a dividend reinvestment basis of the Company's common stock against
the cumulative total stockholder return of the Standard & Poor's 500 Stock Index
and the Dow Jones Insurance-Property & Casualty Index.
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Trenwick Group Inc. $100.00 $135.98 $114.60 $143.70 $128.34 $69.67
S&P 500 Index $100.00 $137.98 $169.17 $225.61 $290.09 $351.13
Dow Jones Insurance-Property & Casualty $100.00 $141.28 $169.86 $248.55 $267.97 $205.24
Index
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's common stock, to file
reports of ownership and changes in ownership with the Commission. Based on the
Company's review of all insiders' filings received, and written representations
from reporting persons, the Company believes there were no Section 16 violations
for 1999 other than (i) the failure of Anthony S. Brown to file until January
13, 2000 a Form 4 with the Commission to report an acquisition of the Company's
common stock on December 23, 1999 and (ii) the failure of W. Marston Becker to
file during 1999 three Forms 4 in connection with three acquisitions of the
Company's common stock (aggregating 120 shares) pursuant to a broker-sponsored
dividend reinvestment plan.
16
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Audited financial statements of the Company and its consolidated
subsidiaries are included in the Company's annual report to stockholders, a copy
of which has been furnished to all stockholders of record. Upon recommendation
of the Audit Committee, the Board of Directors has appointed
PricewaterhouseCoopers LLP to examine its consolidated financial statements for
the year ending December 31, 2000, and has determined it desirable to request
that the stockholders approve such appointment. PricewaterhouseCoopers LLP and
its predecessor Price Waterhouse LLP have acted as the Company's independent
accountants since 1979. Representatives of PricewaterhouseCoopers LLP will be
present at the Annual Meeting and will have the opportunity to make a statement
if they desire to do so and are also expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as independent accountants for the
Company for the year ending December 31, 2000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Indebtedness
With the approval of the Compensation Committee, the Company extended
lines of credit of $1,000,000 to James F. Billett, Jr., the Chairman, President
and Chief Executive Officer, and $250,000 to Alan L. Hunte, an Executive Vice
President and the Chief Financial Officer and Treasurer. The lines of credit are
payable upon demand and bear interest on outstanding balances at the prime rate
of interest until paid in full. The largest aggregate amount of indebtedness
outstanding under the lines of credit and the amount outstanding as of March 24,
2000 was $750,000 under Mr. Billett's line of credit and $245,000 under Mr.
Hunte's line of credit. The proceeds from loans made under the lines of credit
have been used by Messrs. Billett and Hunte to fund credit extended in
connection with earlier acquisitions of the Company's common stock.
Reinsurance Arrangements
Certain of the Company's subsidiaries are reinsurers of various Royal &
SunAlliance subsidiaries. W. Marston Becker, a director of the Company is the
President - Specialty Insurance of Royal & SunAlliance. In each case, a Company
subsidiary is a participant in a treaty which includes other independent
reinsurers subject to the same terms and conditions. Aggregate reinsurance
premiums written with Royal & SunAlliance subsidiaries in 1999 were $11.4
million, representing 3.6% of total reinsurance premiums written by the
Company's subsidiaries for the year.
17
<PAGE>
Stockholders Agreement
In connection with the Merger, the Company assumed Chartwell's rights
and obligations under a Stockholders Agreement (the "Stockholders Agreement")
entered into in December 1995 by Chartwell and certain of its stockholders,
including Messrs. L. Richardson, Jr., S. Richardson, S. Boney, L.R. Preyer, P.L.
Richardson and R.R. Richardson, each of whom was a director of Piedmont, and
certain other stockholders who are relatives of the foregoing, or which are
trusts with respect to which the foregoing or such relatives are trustees or
hold beneficial interests, as well as a charitable organization established by
relatives of the foregoing (collectively, the "Richardson Stockholders"). The
Stockholders Agreement addressed certain matters relating to the control of
Chartwell after the merger of Piedmont with and into Chartwell in December 1995
(the "Piedmont Merger").
The Stockholders Agreement contains provisions giving the Richardson
Stockholders certain rights with respect to representation on the Company's
Board of Directors. Pursuant to the provisions of the Stockholders Agreement,
the number of persons that the Richardson Stockholders may designate is
determined based upon the percentage of common stock of the Company (formerly
Chartwell) held by the Richardson Stockholders. Upon consummation of the
Piedmont Merger, the Richardson Stockholders were entitled to designate four
persons to be nominated for election to Chartwell's Board of Directors. The
Richardson Stockholders are now entitled to designate one person to be nominated
for election to the Board of Directors of the Company. Stuart Smith Richardson
exercises the designation rights of the Richardson Stockholders. Robert M.
DeMichele is the current designee of the Richardson Stockholders. In the event
that Mr. DeMichele ceases to serve as a director of the Company, the Richardson
Stockholders will have the right to designate another person for election to the
Board of Directors.
If at any time (i) a designee of the Richardson Stockholders is sitting
on the Company's Board of Directors and (ii) the board of directors of any
principal U.S. subsidiary of the Company has any member who is not an officer or
employee of the Company or any of its subsidiaries, the Company must cause one
designee of the Richardson Stockholders that is sitting on the Company's Board
of Directors to be elected to the board of directors of such subsidiary.
Amendments to and modifications of the Stockholders Agreement may only
be made by written consent of the Company and other parties to the Stockholders
Agreement holding not less than 66 2/3% of the Company's common stock then
subject to the Stockholders Agreement, except that any amendment, modification
or other change to the Stockholders Agreement that affects the nomination or
agreement to vote for the directors designated by the Richardson Stockholders
requires the consent of 66 2/3% of the outstanding shares of the Company's
common stock held by the Richardson Stockholders.
The Stockholders Agreement became effective in December 1995 and
continues in effect until (i) the written consent of all parties to the
agreement is obtained, (ii) the Company is dissolved or liquidated, (iii) the
date which is the later of (A) the date on which settlement of the Company's
Contingent Interest Notes due June 30, 2006 occurs and (B) the first date on
which the total number of shares of the Company's common stock held by the
Richardson Stockholders represents less than ten percent of the then issued and
outstanding common stock of the Company, or (iv) December 2006.
Registration Rights Agreement
In connection with the Merger, the Company assumed Chartwell's rights
and obligations under a Registration Rights Agreement (the "Registration Rights
Agreement") entered into in December 1995 by Chartwell, the Richardson
Stockholders and certain of Chartwell's other stockholders. Pursuant to the
Registration Rights Agreement, upon the request of stockholders holding at least
330,000 shares of the Company's common stock or any security convertible into
330,000 shares of the Company's common stock, the Company must, subject to
18
<PAGE>
certain limited exceptions, use its best efforts to register such shares under
the Securities Act of 1933, as amended. The Company is not obligated to effect
more than one registration in any nine-month period or more than four during the
term of the Registration Rights Agreement. The Richardson Stockholders have the
right to initiate two of the four registrations effected pursuant to the
Registration Rights Agreement. The Company must pay all registration expenses in
connection with the four registrations except underwriting discounts and
commissions and transfer taxes. If the registration is in the form of an
underwritten offering, the stockholders holding a majority of the shares of the
Company's common stock being registered pursuant to the registration may select
the underwriters, subject to the Company's approval.
Parties to the Registration Rights Agreement have "piggyback" rights to
register shares of the Company's common stock in connection with registration of
equity securities by the Company. These rights are subject to limitation if the
registration involves an underwritten offering and the managing underwriter
determines that, in its good faith view, the inclusion of all or any portion of
such additional securities in the registration would have a material adverse
effect on the offering.
Indemnification; Insurance
The Company has assumed Chartwell's obligation to indemnify the former
officers and directors of Piedmont in respect of acts or omissions occurring
prior to the effective time of the Piedmont Merger (including, but not limited
to, the transactions contemplated by the agreement pursuant to which the
Piedmont Merger was effected) to the extent provided under Piedmont's
certificate of incorporation and by-laws as in effect on the date of the merger
agreement, in each case subject to any limitation imposed by applicable law. In
addition, the Company assumed Chartwell's obligation to maintain Piedmont's
existing directors' and officers' liability insurance for six years from the
date of the Piedmont Merger, subject to certain limitations.
The Company has also generally agreed to indemnify the former officers
and directors of Chartwell in respect of acts or omissions occurring prior to
the effective time of the Merger (including, but not limited to, the
transactions contemplated by the agreement pursuant to which the Merger was
effected) to the extent provided under Chartwell's certificate of incorporation
and by-laws as in effect on the date of the merger agreement, in each case
subject to any limitation imposed by applicable law. In addition, the Company
agreed to maintain Chartwell's existing directors' and officers' liability
insurance for six years from the Merger, subject to certain limitations.
STOCKHOLDER PROPOSALS--2001 ANNUAL MEETING
In order for a proposal by a stockholder of the Company to be eligible
to be included in the Company's Proxy Statement and Proxy for the 2001 Annual
Meeting of Stockholders, the proposal must be received in proper form by the
Secretary of the Company at the Company's principal executive offices no later
than December 1, 2000.
In order for a proposal by a stockholder of the Company which is not
included in the Company's Proxy Statement and Proxy for the 2001 Annual Meeting
of Stockholders to be considered timely, the proposal must be received by the
Secretary of the Company at the Company's principal executive offices no later
than March 3, 2001. Absent receipt of proper stockholder notice prior to March
3, 2001, the proxies designated by the Board of Directors of the Company for the
2001 Annual Meeting of Stockholders may vote in their discretion on any proposal
any shares for which they have been appointed proxies without mention of such
matter in the Company's Proxy Statement for such meeting or on the Proxy for
such meeting.
19
<PAGE>
OTHER MATTERS
Management of the Company is not aware of, and does not intend to
present, any matters at the Annual Meeting other than those set forth above.
Should other matters properly come before the meeting, the persons named on the
enclosed Proxy may vote such Proxy in accordance with their best judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed Proxy, this Proxy Statement and other material which may be sent to
stockholders in connection with this solicitation. Proxies will be solicited on
behalf of the Corporation by D.F. King & Co., Inc. ("D.F. King") for a fee of
approximately $7,000 plus reasonable out of pocket expenses. D.F. King may
solicit proxies by mail, personal interview, telephone and telegraph. In
addition, proxies may be solicited by mail, personal interview, telephone and
telegraph by directors, officers and employees of the Company and its
subsidiaries without receiving additional compensation. The Company will also
request brokers and other nominees to forward soliciting material to the
beneficial owners of shares which are held of record by them and may reimburse
such persons for expenses incurred in connection with the forwarding of such
material.
By order of the Board of Directors,
/s/ John V. Del Col
----------------------------------
John V. Del Col
Secretary
Stockholders are entitled to receive, upon written request, and without
charge, a copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 as filed with the Securities and Exchange Commission. Please
direct such requests to the Office of the Secretary, Trenwick Group Inc., One
Canterbury Green, Stamford, Connecticut 06901.
20
<PAGE>
APPENDIX A
TRENWICK GROUP INC.
Proxy Solicited on Behalf of the Management of
the Company for the Annual Meeting on May 18, 2000
The undersigned hereby constitutes and appoints James F. Billett, Jr., and W.
Marston Becker, and Joseph D. Sargent and each of them, his/her true and lawful
agents and proxies with full power of substitution in each to represent the
undersigned at the Annual Meeting of the Stockholders of Trenwick Group Inc. to
be held on May 18, 2000, at the Hyatt Regency Greenwich, 1800 East Putnam
Avenue, Old Greenwich, Connecticut at 8:30 a.m. local time, and at any
adjournment thereof on all matters coming before the meeting.
Election of Directors, Nominees: COMMENTS: (Change of Address)
To elect the following directors
to terms of three years: --------------------------------
James F. Billett, Jr., W. Marston Becker, --------------------------------
Robert M. DeMichele and Joseph D. Sargent --------------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
The nominees listed above shall serve
their respective terms until their
successors are duly elected and
qualified.
You are encouraged to specify your choices by marking the appropriate boxes (SEE
REVERSE SIDE), but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxy Committee cannot vote
your shares unless you sign and return this card.
SEE REVERSE
SIDE
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FOLD AND DETACH HERE
<PAGE>
1427
[ X ]
Please mark your
votes as in this
example
This Proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR Election of Directors and
FOR Proposal 2.
The Board of Directors recommends a vote FOR Election of Directors FOR Proposal
2.
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
Instruction: To withhold authority to vote for any individual
nominee, please print that nominee's name on the line below.
--------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent accountants for the
year ending December 31, 2000.
Change of Address/Comments
on Reverse Side [ ]
The signer hereby revokes all proxies previously
given by the signer to vote at said meeting or any
adjournments thereof.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
If corporation or partnership, please sign in full
corporate or partnership name by authorized
officer or signatory.
--------------------------------------------------
--------------------------------------------------
SIGNATURE(S) DATE
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FOLD AND DETACH HERE
