<PAGE>
<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
[FRONTIER INSURANCE GROUP 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 22, 1997
______________________
To the Stockholders of
FRONTIER INSURANCE GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
(the "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 22, 1997, at 10:00 a.m., local time, to consider and act upon the
following proposals:
1. To elect a board of six (6) directors.
2. To ratify the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending
December 31, 1997.
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 Common Stock at the close of business
on March 24, 1997, the Record Date for the Annual Meeting, are entitled to
notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Joseph P. Loughlin
Joseph P. Loughlin
Secretary
Rock Hill, New York
April 9, 1997
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE REQUESTED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
PROXY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
<PAGE>
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
<PAGE>
[FRONTIER INSURANCE GROUP 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 22, 1997
-----------------------
INTRODUCTION
General
This Proxy Statement is being furnished to holders of Common Stock, par
value $.01 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 to be held on Thursday, May 22, 1997 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), at 10:00 a.m., local time, and at
any and all adjournments or postponements thereof (the "Annual Meeting"). 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 9, 1997.
Matters to be Considered at the Annual Meeting
At the Annual Meeting, the stockholders will be asked to consider
and vote upon the following proposals:
1. To elect a board of six (6) directors, and
2. To ratify the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending
December 31, 1997.
all as more fully described in this Proxy Statement.
2
<PAGE>
<PAGE>
Voting at the Annual Meeting
Only holders of record of Common Stock at the close of business on March
24, 1997 (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
14,702,779 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 (7,351,389 shares of the 14,702,779 shares outstanding) is
necessary to constitute a quorum at the Annual Meeting. All abstentions and
broker non-votes, if any, will be included as shares that are present and
entitled to vote for purposes of determining the presence of 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
six (6) directors, and the affirmative vote by the holders of a majority of such
votes is required to ratify the reappointment of Ernst & Young LLP as
independent auditors of the Company for the year ending December 31, 1997.
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
six (6) nominees or (ii) 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. At any time prior to its exercise, a proxy may be revoked by the holder
of Common Stock granting it by 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.
3
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock on the Record Date 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 9 of this
Proxy Statement, and (iv) all Directors and executive officers as a group,
together with their respective percentage ownership of the outstanding shares:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
CURRENTLY ACQUIRABLE PERCENT OF
NAME AND ADDRESS OWNED WITHIN 60 DAYS(1) OUTSTANDING
---------------- ----- ----------------- -----------
<S> <C> <C> <C>
Walter A. Rhulen (2) ............... 1,083,822(3) -- 7.4%
Peter L. Rhulen (2) ................ 972,950(4) -- 6.6%
Lawrence E. O'Brien ................ 34,392 688 *
Douglas C. Moat .................... 4,263 688 *
Alan Gerry ......................... -- -- *
Thomas J. Dietz .................... 69,704 74,250 1.0%
Harry W. Rhulen .................... 97,631(5) 105,854(6) 1.4%
Peter H. Foley ..................... 952 2,750 *
Mark H. Mishler .................... -- 2,049 *
Estate of Jesse M. Farrow (2) ...... 859,594 -- 5.9%
Denver Investment Advisors, LLC .... 1,218,726(7) -- 8.3%
125-17th Street, 26th Floor, Denver, CO
80202
Wellington Management Company ...... 1,139,071(8) -- 7.8%
75 State Street
Boston, MA 02109
All directors and executive officers
as a group (12 persons) .......... 2,276,314 190,383 16.8%
</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 5,072 shares of Common Stock owned by the wife of Walter
A. Rhulen, the beneficial ownership of which Mr. Rhulen disclaims.
(4) Does not include 245,391 shares, 13,216 shares, 26,200 shares and 12,650
shares of Common Stock owned, respectively, by two children of Mr. Peter L.
Rhulen, Mr. Rhulen's spouse, The Eileen and Peter Rhulen Foundation, Inc.,
for which Mr. Rhulen acts as President, and a charitable foundation for
which Mr. Rhulen acts as trustee. Mr. Rhulen disclaims beneficial ownership
of such shares.
4
<PAGE>
<PAGE>
(5) Includes 3,394 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 5,459 shares of Common Stock owned by Mr. Rhulen's wife, as to
which Mr. Rhulen disclaims beneficial ownership.
(6) Includes 103,125 shares purchasable at $45.45 per share upon exercise of
options granted to Mr. Walter A. Rhulen, his father, and given to Mr. Harry
W. Rhulen by his father.
(7) Information is from a Schedule 13G dated February 10, 1997, filed by Denver
Investment Advisors, LLC, which reflects shared dispositive power with
respect to 1,218,726 shares.
(8) Information is from a Schedule 13G dated January 24, 1997, filed by
Wellington Management Company, which reflects shared dispositive power with
respect to 1,139,071 shares.
On the Record Date, the outstanding Common Stock was held by 14,702,779
registered stockholders.
ELECTION OF DIRECTORS
At the Meeting, the entire Board of six (6) Directors 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 six (6) nominees named below, all of
whom, except for Harry W. Rhulen, 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
Served
Name Age as a Director Position
---- --- ------------- --------
<S> <C> <C> <C>
Walter A. Rhulen (1) ..... 65 1986 President and Chairman of the Board
Peter L. Rhulen (1) ...... 58 1986 Vice President and a Director
Harry W. Rhulen .......... 33 -- Executive Vice President and a Director
Lawrence E. O'Brien (2) .. 56 1990 Director
Douglas C. Moat (2) ...... 65 1991 Director
Alan Gerry (1)(2) ........ 68 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 Company 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.
5
<PAGE>
<PAGE>
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. Mr. Rhulen
devotes only minimal time to the affairs of the Company in his capacity as Vice
President.
Harry W. Rhulen was elected Executive Vice President of the
Company in October 1996, having been a Vice President of the Company since June
1990 and an employee since June 1989. Mr. Rhulen also serves as Chief Executive
Officer of United Capitol from its acquisition in May 1996.
Lawrence E. O'Brien has been a director of the Company since June
1990 and a member of the Audit Committee since that date. Mr. O'Brien, a CPCU,
is the President of O'Brien Management Company, Inc., an insurance consulting
firm, a position he has held since January 1988, and was a co-founder and a
director of Underwriter Management Associates, a managing general insurance
agency with which he had been associated since its inception in 1983 until its
sale in September 1990. 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.
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 and Mr.
Harry W. Rhulen is the son of Walter A. Rhulen.
6
<PAGE>
<PAGE>
MEETINGS AND COMMITTEES
There were five meetings of the Board of Directors during 1996.
Messrs. Walter A. Rhulen, Douglas C. Moat and Peter L. Rhulen attended all such
meetings, and Mr. Alan Gerry and Mr. Lawrence E. O'Brien attended four meetings.
There were also six occasions on which the Board took action by unanimous
written consent.
The Audit Committee, composed of three independent Directors,
Messrs. O'Brien, Moat and Gerry, 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 1996.
The Compensation Committee, composed of three independent
Directors, Messrs. O'Brien, Moat and Gerry, 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 one meeting during 1996.
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 thirteen times during 1996.
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.
7
<PAGE>
<PAGE>
RATIFICATION OF REAPPOINTMENT 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
year ending December 31, 1997. 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. 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
REAPPOINTMENT 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 link more closely 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 Agreements" 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 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 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 1996 aggregated $679,065 to the 17 executive
officers eligible for bonuses thereunder.
The Executive Bonus Plan and Mr. Walter A. Rhulen's bonus arrangement
have been designed to comply with the compensation deductibility requirements of
Section 162(m) of the Internal Revenue Code.
THE COMPENSATION COMMITTEE
Douglas C. Moat
Lawrence E. O'Brien
Alan Gerry
8
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid and
accrued by the Company to its Chief Executive Officer, each of its other four
most highly compensated executive officers, and one former executive officer for
the years ended December 31, 1996, 1995 and 1994.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Awards
------
All Other
Compensation
Name and ------------
Principal Position Year Salary ($) Bonus ($) Options (#) ($)(1)
------------------ ---- ---------- -------- -----------
<S> <C> <C> <C> <C>
Walter A. Rhulen 1996 500,000 415,500 -- 30,000
President and Chairman 1995 500,000 296,900 -- 23,400
1994 500,000 -- -- 27,300
Thomas J. Dietz 1996 250,000 75,000 -- 20,000
Vice President 1995 215,000 35,400 -- 16,300
1994 215,000 -- -- 15,000
Peter H. Foley 1996 191,000 157,800 20,000(2) 17,000
Vice President 1995 77,900 45,300 11,000(3) 3,600
1994 -- -- -- --
Harry W. Rhulen 1996 125,000 65,000 -- 14,000
Vice President 1995 105,000 23,900 2,750(4) 10,000
1994 90,000 10,000 -- 9,200
Mark H. Mishler 1996 106,000 60,000 -- 11,300
Vice President-Finance 1995 87,000 8,900 2,750(4) 8,500
and Treasurer 1994 80,000 7,500 -- 6,700
Dennis F. Plante 1996 138,200 -- -- 2,900
Former Vice President 1995 136,300 23,500 -- 14,600
and Treasurer (5) 1994 129,000 10,000 -- 13,800
</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 401(k) plan. The allocable amount, accrued for
contribution to the Company's profit sharing plan for Messrs. W. Rhulen,
Dietz, Foley, H. Rhulen, and Mishler was $9,500,$9,500,$9,500, $9,400 and
$6,700, respectively, and the allocable amount contributed to the Company's
401(k) plan for Messrs. W. Rhulen, Dietz, Foley, H. Rhulen, Mishler and
Plante was $20,500, $10,500, $7,500, $4,600, $4,600 and $ $2,900
respectively.
(2) Exercisable cumulatively at the rate of approximately 10% of the underlying
shares per year, commencing June 30, 1997.
(3) Exercisable cumulatively at the rate of 25% of the underlying shares per
year, commencing June 5, 1996.
(4) Exercisable cumulatively at the rate of 25% of the underlying shares per
year, commencing March 3,1996.
(5) On April 19, 1996, Dennis F. Plante terminated his employment with the
Company. As a part of this termination, he received severance on a
bi-weekly basis, equal to his salary on that date through December 31,
1996. Mr. Plante exercised all vested options at such time.
9
<PAGE>
<PAGE>
The following table sets forth certain information concerning options granted
during 1996 to the individuals named in the Summary Compensation Table:
Option Grants in 1996
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------
Number of Potential Realizable Value of
Securities % of Total Assumed Annual Rates of
Underlying Options Stock Price Appreciation for
Options Granted to All Exercise Price Expiration Option Term
Name Granted (#) Employees ($/Share) Date 5% ($) 10% ($)
---- ---------- --------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Peter H. Foley 20,000 29.2 38.00 06/03/2006 448,200 1,119,600
</TABLE>
The following table presents the value of unexercised options held at
December 31, 1996 by the individuals named in the Summary Compensation Table:
Options Value Table
<TABLE>
<CAPTION>
Number of Unexercised Options at Value of Unexercised In-the-Money
Year-End (#) Exercisable (E)/ Options at Year-End ($)* Exercisable (E)/
Name Unexercisable (U) Unexercisable (U)
---- -------------------------------- -----------------------------------------
<S> <C> <C>
Walter A Rhulen -- --
Thomas J. Dietz 74,250 (E) -0- (E)
Peter H. Foley 2,750 (E) 43,938 (E)
28,250 (U) 136,813 (U)
Harry W. Rhulen 105,854 (E) 40,663 (E)
2,744 (U) 49,105 (U)
Mark H. Mishler 2,049 (E) 31,559 (E)
2,516 (U) 46,053 (U)
</TABLE>
- ---------------
* Values are calculated by subtracting the exercise price from the fair
market value of the Common Stock at year-end.
(1) Includes 103,215 shares purchasable at $45.45 per share upon exercise of
options granted to Mr. Walter A. Rhulen, his father, and gifted to Mr.
Harry W. Rhulen by his father.
------------------
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
10
<PAGE>
<PAGE>
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 412,500 shares of Common Stock at $45.45 per share. On the date the
option was granted, the closing price of the Common Stock on the New York Stock
Exchange was $27.43.
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,
1996, 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):
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FRONTIER INSURANCE GROUP, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------FISCAL YEAR ENDING-----------------
COMPANY 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
FRONTIER INSURANCE GROUP 100 172.18 197.43 147.11 219.06 292.23
PEER GROUP 100 118.37 120.84 121.00 176.15 212.82
BROAD MARKET 100 107.64 118.50 120.06 165.18 203.11
</TABLE>
Assumes $100 Invested on Jan. 1, 1992
Assumes Dividend Reinvested
Fiscal Year Ending Dec. 31, 1996
11
<PAGE>
<PAGE>
STOCKHOLDER PROPOSALS FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder proposal to be considered for inclusion in the Company's proxy
soliciting material for the 1997 Annual Meeting of Stockholders must be received
by the Company at its principal office by December 31, 1997.
Dated: April 9, 1997
12
<PAGE>
<PAGE>
APPENDIX 1
- --------------------------------------------------------------------------------
[FRONT OF PROXY CARD]
- --------------------------------------------------------------------------------
PROXY FRONTIER INSURANCE GROUP, INC.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WALTER A. RHULEN and PETER H. FOLEY 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 22, 1997, and any adjournments and 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.
PLEASE COMPLETE, DATE AND SIGN ON THE REVERSE SIDE AND MAIL IN THE
ENCLOSED ENVELOPE.
[BACK OF PROXY CARD]
Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1) AND (2) LISTED BELOW,
TO COME BEFORE THE ANNUAL MEETING:
(1) TO ELECT A BOARD OF SIX (6) DIRECTORS,
FOR the nominees listed WITHHOLD AUTHORITY to vote
below (except as marked to for all five (5) nominees
the contrary below) five listed below
(5) nominees listed below
[ ] [ ]
Walter A. Rhulen, Peter L. Rhulen, Lawrence E. O'Brien, Douglas C. Moat, Alan
Gerry, Harry W. Rhulen.
To WITHHOLD AUTHORITY to vote for any individual nominee(s), print such
nominee's name below:
________________________________________________________________________________
(2) To ratify the reappointment of Ernst & Young LLP as independent auditors of
the Company for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Upon any and all other business that may come before the Annual Meeting.
Check here if you plan to attend the Annual Meeting of Stockholders. [ ]
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.
SIGNATURE(S): DATE
------------------------------------------------- ------------
- ------------- 1997
Note: Executors, Administrators, Trustees, etc.
should give full title.
