<PAGE>
<PAGE>
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
FRONTIER INSURANCE GROUP INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
<PAGE>
[LOGO]
Insurance Group,Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775-8000
(914) 796-2100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 23, 1996
To the Stockholders of
FRONTIER INSURANCE GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Frontier Insurance Group, Inc. (the "Company") will be held at the
Company's corporate headquarters, 195 Lake Louise Marie Road, Rock Hill, New
York 12775-8000 (located on Lake Louise Marie Road, which runs parallel to New
York State Route 17, between Exits 109 and 110 of Route 17), on Thursday, May
23, 1996, at 10:00 A.M., local time, to consider and act upon the following
proposals:
1) To elect a board of five (5) directors.
2) To ratify the reappointment of Ernst & Young LLP as independent auditors
of the Company for the year ending December 31, 1996.
3) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only holders of record of the Company's Common Stock at the close of
business on March 29, 1996, the record date for the Annual Meeting, are entitled
to notice of and to vote at the Annual Meeting.
The Company's 1995 Annual Report to Stockholders is included with this
Notice and proxy material.
By order of the Board of Directors,
/s/ JOSEPH P. LOUGHLIN
Joseph P. Loughlin
Secretary
Rock Hill, New York
April 10, 1996
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
<PAGE>
[LOGO]
Insurance Group,Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775-8000
(914) 796-2100
----------------------
PROXY STATEMENT
----------------------
Annual Meeting of Stockholders
To Be Held on May 23, 1996
GENERAL
This Proxy Statement is being furnished to holders of record of Common
Stock, $.01 par value per share ("Common Stock") of Frontier Insurance Group,
Inc., a Delaware Corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders ("Annual Meeting") to be held at the Company's
corporate headquarters, 195 Lake Louise Marie Road, Rock Hill, New York,
12775-8000, on Thursday, May 23, 1996, at 10:00 a.m. local time, and at any and
all adjournments or postponements thereof. The cost of this solicitation will be
borne by the Company. This Proxy Statement and enclosed proxy card are being
mailed to the Company's stockholders on or about April 10, 1996.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Meeting, the stockholders will be asked to consider and vote upon
the following proposals:
1) To elect a board of five (5) directors.
2) To ratify the reappointment of Ernst & Young LLP as independent auditors
of the Company for the year ending December 31, 1996.
all as more fully described in this Proxy Statement.
VOTING AT THE ANNUAL MEETING
Only holders of record of Common Stock at the close of business on March
29, 1996 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting, each such holder of record being entitled to one vote per share on each
matter to be considered at the Annual Meeting. On the Record Date, there were
13,067,654 shares of Common Stock issued and outstanding.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting (6,534,103 shares of the 13,068,205 shares outstanding) is
necessary to constitute a quorum at the Annual Meeting. A plurality vote of the
shares of Common Stock present in person or represented by proxy at the Annual
Meeting is required to elect the Board of five (5) directors, and the
affirmative vote by the holders of a majority of such shares is required to
ratify the reappointment of Ernst & Young LLP as independent auditors of the
Company for the year ending December 31, 1996.
If the enclosed proxy card is properly executed and returned to the Company
prior to voting at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. Shares represented by
proxies which are marked "WITHHOLD AUTHORITY" to vote for (i) all five (5)
nominees or (ii) for any individual nominee(s) for election as directors and are
not otherwise marked "FOR" the other nominees, will not be counted in
determining whether a plurality vote has been received for the election of
directors. Similarly, shares represented by proxies which are marked "ABSTAIN"
on any other proposal will not be counted in determining whether the requisite
vote has been received for such proposal. IN THE ABSENCE OF INSTRUCTIONS, THE
SHARES WILL BE VOTED FOR ALL THE PROPOSALS SET FORTH IN THE NOTICE OF ANNUAL
MEETING. In instances where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned proxies (so called "broker
non-votes"), those shares will not be included in the totals and, therefore,
will have no effect on the vote. At any time prior to its exercise, a proxy may
be revoked by the holder of Common Stock granting it by such holder delivering
written notice of revocation or a duly executed proxy bearing a later date to
the Secretary of the Company at the address of the Company set forth on the
first page of this Proxy Statement or by attending the Annual Meeting and voting
in person.
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date the beneficial
ownership of the Company's Common Stock by (i) each person known by the Company
to own beneficially five percent or more of such shares, (ii) each director, all
of whom are nominees for election as a director, (iii) each person named in the
Summary Compensation Table under "Executive Compensation" on page 6 of this
Proxy Statement, and (iv) all directors and executive officers as a group,
together with their respective percentage ownership of the outstanding shares:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
----------------------------------
Currently Acquirable Percent of
NAME AND ADDRESS Owned Within 60 Days (1) Outstanding
---------------- ---------------- -------------- ------------
<S> <C> <C> <C>
Walter A. Rhulen (2) ............................ 926,349(3) -- 7.1
Peter L. Rhulen (2) ............................. 915,528(4) -- 7.0
Lawrence E. O'Brien ............................. 42,175 625 *
Douglas C. Moat ................................. 893 10,153 *
Alan Gerry ...................................... -- -- *
Thomas J. Dietz ................................. 68,095 67,500 1.0
Harry W. Rhulen ................................. 89,470(5) 95,612(6) 1.4
Dennis F. Plante ................................ 37,676 1,450 *
Peter H. Foley ................................. -- -- *
Estate of Jesse M. Farrow (2) ................... 900,523(3) -- 6.9
Denver Investment Advisors LLC
1225 - 17th Street, 26th Floor
Denver, CO 80202 ............................. 1,190,007(7) -- 9.1
Wellington Management Company
75 State Street
Boston, MA 02109 .............................. 672,840(8) -- 5.1
All directors and executive
officers as a group (9 persons) ............... 2,090,800 177,952 17.4
</TABLE>
- ------------------------------------
* Less than 1%
(1) Reflects number of shares of Common Stock acquirable upon exercise of
options.
(2) Address is 195 Lake Louise Marie Road, Rock Hill, NY 12775-8000
(3) Does not include 4,192 shares of Common Stock owned by the wife of Walter
A. Rhulen, the beneficial ownership of which Mr. Rhulen disclaims.
(4) Does not include 12,015 shares of Common Stock owned by the wife of Peter
L. Rhulen and 30,000 shares of Common Stock owned by a charitable
foundation of which Mr. Rhulen acts as trustee. Mr. Rhulen disclaims
beneficial ownership of the aforementioned shares.
(5) Includes 3,086 shares owned by a daughter of Mr. Harry W. Rhulen for whom
he acts as custodian under the Uniform Gifts to Minors Act. Does not
include 5,879 shares of Common Stock owned by Mr. Rhulen's wife as to which
Mr. Rhulen disclaims beneficial ownership.
(6) Includes 93,750 shares purchasable at $50.00 per share upon exercise of
options granted to Mr. Walter A. Rhulen, his father, and gifted to Mr.
Harry W. Rhulen by his father.
(7) Information is from Schedule 13G, dated March 6, 1996, filed by Denver
Investment Advisors, LLC, which reflects shared dispositive power with
respect to 1,190,007 shares.
(8) Information is from a Schedule 13G, dated January 31, 1996, filed by
Wellington Management Company, which reflects shared dispositive power with
respect to 672,840 shares.
-2-
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, the entire Board of five (5) directors, as fixed by
the Company's Bylaws, is to be elected to hold office until the next Annual
Meeting of Stockholders and until their successors are duly elected and
qualified. Unless otherwise specifically directed by stockholders executing
proxies, it is intended that all proxies in the accompanying form received in
time for the Annual Meeting will be voted at the Annual Meeting FOR the election
of the five (5) nominees named below, all of whom are currently directors of the
Company. In the event any nominee should become unavailable for election for any
presently unforeseen reason, it is intended that the proxies will be voted for
such substitute nominee as may be designated by the present Board of Directors.
Each nominee's name, age, office with the Company, the year first elected
as a director, and certain biographical information are set forth below:
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE SERVED AS A DIRECTOR POSITION
---- --- -------------------- --------
<S> <C> <C> <C>
Walter A. Rhulen (1) 64 1986 President and Chairman of the Board
Peter L. Rhulen (1) 57 1986 Vice President and a Director
Lawrence E. O'Brien (2) 55 1990 Director
Douglas C. Moat (2) 64 1991 Director
Alan Gerry 67 1996 Director
</TABLE>
- ----------------------
(1) Member of Stock Option Committee
(2) Member of Audit Committee and Member of Compensation Committee
Walter A. Rhulen has been the President and Chairman of the Board of the
Company since commencement of its operations in July 1986 and the President of
Frontier Insurance since 1976. Mr. Rhulen was also the President of Rhulen
Agency, a position he held for more than 22 years, which office he resigned in
1986. Mr. Rhulen, a chartered property and casualty underwriter (CPCU), has more
than 40 years experience in the insurance business.
Peter L. Rhulen has been a Vice President and director of the Company since
commencement of its operations in July 1986 and a Vice President of Frontier
Insurance since 1976. Mr. Rhulen was formerly Vice Chairman of Markel/Rhulen, a
position he held from October 1989 to September 1992, and now acts as an
independent insurance consultant. Mr. Rhulen is also Vice Chairman of the Board
and President of RAI Partners, Inc. (formerly Rhulen Agency), a firm of which he
has been an executive officer for more than 25 years and which firm is winding
down its business affairs after the sale of substantially all of its assets to
Markel/Rhulen. Mr. Rhulen devotes only minimal time to the affairs of the
Company in his capacity as Vice President.
Lawrence E. O'Brien has been a director of the Company since 1990 and a
member of the Audit Committee since that date. Mr. O'Brien holds both the CPCU
and the ARM professional designations. He is the President of O'Brien Management
Company, Inc., an insurance consulting firm, a position he has held since
January, 1988 and has served as a principal consultant and Treasurer of CONFIRM,
Inc., since 1994. From 1983 until 1990 when it was sold, he was co-founder and a
director of Underwriter Management Associates, a managing general insurance
agency. From 1976 to 1987, Mr. O'Brien was Executive Vice President of
Associated Risk Managers, a New York statewide affiliation of independent
insurance agents marketing specialized insurance programs. Previously he was
employed in various capacities by Chubb & Son.
Douglas C. Moat has been a director of the Company since August 1991 and a
member of the Audit Committee since that date. Mr. Moat, a JD, CLU, and FLMI, is
Chairman of the Manhattan Group, Inc., an insurance and financial services firm.
Mr. Moat has over 40 years' experience in insurance and financial services sales
and management including 13 years as a private consultant. During his career, he
has held positions as Executive Vice President, The Home Group; Director -
Financial Services Corporate Staff, ITT Corp.; Vice President, USLIFE Corp., and
President of USLIFE's mutual fund subsidiary; Vice President, The Glens Falls
Group and the National Life Assurance Company of Canada. Mr. Moat is a member of
the New York Bar Association, serves on several insurance and banking
committees, and writes and speaks extensively on insurance topics, often acting
as an expert witness.
Alan Gerry was elected a director of the Company in March 1996. Mr. Gerry
is the founder of Cablevision Industries Corporation, the eighth largest
multiple cable system operator in the United States and its Chairman of the
Board and Chief Executive Officer until its merger with Time Warner
Entertainment in January 1996. Mr. Gerry is a member of the Board of Directors
of Time Warner Entertainment, the National Cable Television Association, and C-
SPAN, the industry public affairs programming network. He was a founding member
of the Board of the Cable Alliance for Education and is a past President of the
New York State Cable Television Association.
----------------------
Messrs. Walter A. Rhulen and Peter L. Rhulen are brothers.
-3-
<PAGE>
<PAGE>
MEETINGS AND COMMITTEES
There were four meetings of the Board of Directors during 1995. Messrs.
Walter A. Rhulen, Lawrence E. O'Brien, and Douglas C. Moat attended all such
meetings, Mr. Peter L. Rhulen attended three meetings and Mr. Alan Gerry was not
elected a director until 1996.
The Audit Committee, composed of two independent directors, Messrs. O'Brien
and Moat, meets with the Company's independent auditors to review the scope of
their annual audit, the adequacy of the Company's system of internal controls,
and the sufficiency of its financial reporting. The Audit Committee held three
meetings during 1995.
The Compensation Committee, composed of two independent directors, Messrs.
O'Brien and Moat, establishes the compensation program for Mr. Walter A. Rhulen,
the Company's President (Chief Executive Officer) and Chairman of the Board, and
recommends to the Board of Directors, in consultation with Mr. Rhulen, a general
compensation program for all officers. See "Compensation Committee Report on
Executive Compensation." The Compensation Committee held two meetings during
1995.
The Incentive and Non-Incentive Stock Option Committee selects optionees
and, for non-incentive options, option terms, in accordance with the Company's
Stock Option Plans. This Committee met twice during 1995.
The Company does not have a standing nominating committee.
----------------------
COMPENSATION OF DIRECTORS
The Company pays each director, other than Walter A. Rhulen, an annual
retainer of $24,000, plus reimbursement of expenses, and each director who
serves as a member of the Audit Committee an additional annual retainer of
$2,000, plus reimbursement of expenses.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the stockholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors of the Company for the
current year. The affirmative vote of a majority of shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required to
ratify the reappointment of Ernst & Young LLP. Unless marked to the contrary,
proxies received will be voted FOR ratification of the reappointment of Ernst &
Young LLP. It is anticipated that a representative of Ernst & Young LLP will be
present at the Annual Meeting to answer questions within such firm's field of
expertise.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS.
OTHER BUSINESS
Management does not know of any matter to be brought before the Annual
Meeting other than as described above. In the event any other matter properly
comes before the Annual Meeting, the persons named in the accompanying form of
proxy have discretionary authority to vote on such matters.
REPORT OF COMPENSATION COMMITTEE
In 1993, in order to more closely link executive compensation to the
Company's performance, the Board of Directors, following the recommendation of
the Compensation Committee, established a five-year compensation program for Mr.
Walter A. Rhulen, the Company's President, Chief Executive Officer and Chairman
of the Board (the general terms of which are reflected under "Executive
Compensation-Employment Agreement" in this Proxy Statement) and adopted an
Executive Bonus Plan for the executive officers of the Company and its
subsidiaries based on the Company's return on investment.
In 1995, the Board of Directors, upon the recommendation of the
Compensation Committee, revised the Executive Bonus Plan to base the bonus on
the Company's earnings per share before extraordinary items ("EPS"). The revised
program provides an annual bonus to the executive officer in the event the
Company's EPS for the year exceeds its highest EPS during the five preceding
years by at least 10%. In such event, the bonus shall equal 5% of the executive
-4-
<PAGE>
<PAGE>
officer's base salary plus a percentage of base salary equal to the percentage
by which the Company's EPS for the year exceeds 10% of the target year's EPS.
Bonuses under the Executive Bonus Plan for 1995 aggregated $342,900 to the 15
executive officers eligible for bonuses thereunder.
The Executive Bonus Plan and Mr. Walter A. Rhulen's bonus arrangement have
been designed to comply with the compensation deductibility requirements of
Section 162(m) of the Internal Revenue Code.
THE COMPENSATION COMMITTEE
Douglas C. Moat
Lawrence E. O'Brien
----------------------
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid and
accrued by the Company to its Chief Executive Officer and each of its other four
most highly compensated executive officers for the years ended December 31,
1995, 1994, and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Awards
Principal Salary Bonus ------- All Other
Position Year ($) ($) Options (#) Compensation ($) (1)
-------- ---- ------ ----- ----------- --------------------
<S> <C> <C> <C> <C> <C>
Walter A. Rhulen 1995 500,000 296,900 -- 23,400
President 1994 500,000 -- -- 27,300
and Chairman 1993 500,000 200,000 375,000(2) (3) 26,600
Thomas J. Dietz 1995 215,000 35,400 -- 16,300
Vice President 1994 215,000 -- -- 15,000
1993 182,500 109,900 67,500 (2) 19,000
Dennis F. Plante 1995 136,300 23,500 2,500 (4) 14,600
Vice President 1994 129,000 10,000 -- 13,800
and Treasurer 1993 125,300 25,700 1,650 (5) 10,300
Harry W. Rhulen 1995 105,000 23,900 2,500 (4) 10,000
Vice President 1994 90,000 10,000 -- 9,200
1993 80,800 16,500 2,475 (5) 6,600
Peter H. Foley 1995 77,900 45,300 10,000 (6) 3,600
Vice President 1994 -- -- -- --
1993 -- -- -- --
</TABLE>
- ----------------------
(1) Represents the allocable amount accrued for contribution by the Company to
its profit sharing plan and the allocable amount of the Company's
contribution to its 401K plan. The allocable amount, accrued for
contribution to the Company's profit sharing plan for Messrs. W. Rhulen,
Dietz, Plante, and H. Rhulen, was $8,700, $8,700,$8,700 and $6,200,
respectively, and the allocable amount contributed to the Company's 401K
Plan for Messrs. W. Rhulen, Dietz, Plante, H. Rhulen, and Foley was
$14,600, $7,600, $5,900 $3,900, and $3,600, respectively.
(2) Exercisable at an exercise price of $50.00 per share at any time through
December 31, 1999 provided the optionee is in the then employ of the
Company or has continuously been so employed through December 31, 1997, if
exercised thereafter. In the event the optionee dies while in the employ of
the Company, or the Company is acquired, the option automatically is
modified so that 25% of the shares subject thereto become exercisable at
$34.67 per share subsequent to November 5, 1994, with an additional 25%
exercisable cumulatively annually thereafter at exercise prices increasing
by approximately $8.00 per share for each 25% tranche.
(footnotes continued on next page)
-5-
<PAGE>
<PAGE>
(3) As permitted by the terms of the option, Mr. Rhulen transferred his option
to his children on December 30, 1993.
(4) Exercisable cumulatively at the rate of 25% of the underlying shares per
year, commencing March 3, 1996.
(5) Exercisable cumulatively at the rate of 25% of the underlying shares per
year, commencing June 18, 1994.
(6) Exercisable cumulatively at the rate of 25% of the underlying shares per
year, commencing June 5, 1996.
----------------------
The following table sets for certain information concerning options granted
during 1995 to the individuals named in the Summary Compensation Table:
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------
Potential Realizable
Number of Value of Assumed
Securities % of Annual Rates of Stock
Underlying Total Options Exercise Price Appreciation
Options Granted to All Price Expiration for Option Term
Name Granted (#) Employees ($/Share) Date 5% ($) 10% ($)
- ---- ----------- --------- ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dennis F. Plante 2,500 1.6 20.75 03/03/2000 14,318 31,695
Harry W. Rhulen 2,500 1.6 20.75 03/03/2000 14,318 31,695
Peter H. Foley 10,000 6.3 24.50 06/25/2000 67,620 149,695
</TABLE>
----------------------
The following table presents the value of unexercised options held at
December 31, 1995 by the individuals named in the Summary Compensation Table:
OPTIONS VALUE TABLE
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
at Year-End (#) at Year-End ($)*
Exercisable (E)/ Exercisable (E)/
Name Unexercisable (U) Unexercisable (U)
---- ----------------- -----------------
<S> <C> <C>
Thomas J. Dietz 74,642 (E) 163,900 (E)
Dennis F. Plante 1,450 (E) 10,900 (E)
2,700 (U) 20,900 (U)
3,113 (U)
Harry W. Rhulen 95,612 (E) (1) 12,900 (E)
26,900 (U)
Peter H. Foley 10,000 (U) 75,000 (U)
</TABLE>
- ----------------------
* Values are calculated by subtracting the exercise price from the fair
market value of the Common Stock at year-end.
(1) Includes 93,750 shares purchasable at $50.00 per share upon exercise of
options granted to Mr. Walter A. Rhulen, his father, and gifted to Mr.
Harry W. Rhulen by his father.
----------------------
-6-
<PAGE>
<PAGE>
Mr. Harry W. Rhulen is the son of Mr. Walter A. Rhulen
EMPLOYMENT AGREEMENTS
Mr. Walter A. Rhulen is employed under an agreement with the Company
effective January 1, 1993 and expiring December 31, 1997, which provides for
annual base compensation of $500,000 plus an annual bonus in the event the
Company's earnings per share before extraordinary items ("EPS") exceeds its
highest EPS during the five preceding years by at least 10%. In such event, Mr.
Rhulen's bonus shall be $50,000, plus a multiple of $30,000 for each percentage
point or fraction thereof by which the Company's EPS for the year exceeds the
10% threshold.
In addition, in 1993, Mr. Walter A. Rhulen was granted an option to
purchase 375,000 shares of Common Stock at $50.00 per share. On the date the
option was granted, the closing price of the Common Stock on the New York Stock
Exchange was $30.17.
----------------------
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return to
the Company's (FTR) shareholders during the five-year period ended December 31,
1995, as well as an overall stock market index (S&P 500 Index) and FTR's peer
group index (SIC Code Index 6331 -- Fire, Marine, and Casualty Insurance, and
6351- Surety Insurance combined):
[PERFORMANCE GRAPH]
FIVE-YEAR COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
FRONTIER INSURANCE GROUP, INC., S&P 500 INDEX, AND PEER GROUP INDEX
<TABLE>
<CAPTION>
COMPANY FISCAL YEAR ENDING
------- --------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FRONTIER INSURANCE GROUP 100 156.33 296.17 308.65 229.98 342.46
S&P 500 INDEX 100 130.48 140.46 154.62 156.66 215.54
PEER GROUP INDEX 100 129.56 153.23 156.57 156.76 228.37
- ----------------------------------------------------------------------------------------------------
</TABLE>
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in the Company's proxy
soliciting material for the next Annual Meeting of Stockholders must be received
by the Company at its principal office by December 31, 1996.
Dated: April 10, 1996
-7-
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
FRONTIER INSURANCE GROUP, INC.
PROXY
The undersigned hereby appoints WALTER A. RHULEN and DENNIS F. PLANTE and
each of them, proxies, each with the power of substitution, to vote the shares
of the undersigned at the Annual Meeting of Stockholders of Frontier Insurance
Group, Inc. on May 23, 1996, and any adjournments or postponements thereof, upon
all matters as may properly come before the Annual Meeting. Without otherwise
limiting the foregoing general authorization, the proxies are instructed to vote
as indicated herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1) AND (2) LISTED BELOW,
TO COME BEFORE THE MEETING:
(1) TO ELECT A BOARD OF FIVE (5) DIRECTORS,
<TABLE>
<S> <C>
FOR the nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all five (5) nominees listed below [ ]
all five (5) nominees listed below [ ]
Walter A. Rhulen, Peter L. Rhulen, Lawrence E. O'Brien, Douglas C. Moat, Alan Gerry
To withhold authority to vote for any individual nominee(s), indicate on line below:
- ------------------------------------------------------------------------------------------
(PLEASE COMPLETE, DATE AND SIGN ON THE REVERSE SIDE AND MAIL IN THE ENCLOSED ENVELOPE.)
</TABLE>
(2) To ratify the reappointment of Ernst & Young as independent auditors to
audit the financial statements of the Company for the year ending December
31, 1996.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) Upon any and all other business that may come before the Annual Meeting.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1) and (2) unless the stockholder
specifies otherwise, in which case it will be voted as specified.
Dated:..............................., 1996
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(Signature(s) of Stockholder(s)
(Executors, Administrators, etc. should give
full title.)
