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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
MERCHANTS GROUP, INC.
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(Name of Issuer)
COMMON STOCK, $.01 par value
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(Title of Class of Securities)
588539-10-6
--------------
(CUSIP Number)
Robert M. Zak
Merchants Mutual Insurance Company
250 Main Street, Buffalo, New York 14202 (716) 849-3380
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 16, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e) 13d-(f) or 13d-1(g), check the following
box /X/.
This Document contains 7 Pages
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CUSIP NO. 588539-10-6 Schedule 13D PAGE 2 OF 7 PAGES
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<S> <C> <C>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Merchants Mutual Insurance Company (16-0550140)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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7 SOLE VOTING POWER
255,000
NUMBER OF -------------------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH -------------------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
255,000
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
255,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.8%
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14 TYPE OF REPORTING PERSON*
IC
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</TABLE>
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AMENDMENT NO. 1 TO
SCHEDULE 13D
MERCHANTS GROUP, INC.
---------------------
This Amendment No. 1 amends Item 4 of the Schedule 13D dated March 31, 1998,
(the "Schedule 13D"), filed by Merchants Mutual Insurance Company. All other
information included in the Schedule 13D is substantially unchanged.
ITEM 1. SECURITY AND ISSUER.
--------------------
This Statement, as amended, relates to the shares of Common Stock,
$.01 par value per share ("Shares"), of Merchants Group, Inc., a
Delaware corporation (the "Issuer"). The address of the Issuer's
principal executive offices is 250 Main Street, Buffalo, New York
14202.
ITEM 2. IDENTITY AND BACKGROUND.
------------------------
This Statement, as amended, is filed on behalf of Merchants Mutual
Insurance Company, a New York domiciled mutual property and casualty
insurance company ("Mutual"). The address of Mutual's principal office
is 250 Main Street, Buffalo, New York 14202.
As previously reported, Mutual acquired its Shares of the Issuer prior
to November 1986. In November 1986 the Issuer completed its initial
public offering. Mutual filed a Schedule 13G with the Securities and
Exchange Commission ("SEC") on February 13, 1987, reporting its
ownership of 1,155,000 Shares of Issuer, which represented 57.6% of
Issuer's issued and outstanding Shares as of December 31, 1986. As a
result of the sale by Mutual of 900,000 Shares and the sale by the
Issuer of an additional 950,000 Shares in a public offering in June
1993 which was registered with the SEC, Mutual filed Amendment No. 1
to its Schedule 13G with the SEC on July 6, 1993, reporting its
reduced ownership of 255,000 Shares of Issuer, which represented 8.4%
of Issuer's issued and outstanding Shares at that time. Mutual has not
acquired or disposed of any Shares since the filing of Amendment No. 1
to its Schedule 13G on July 6, 1993. At present, Mutual owns 8.8% of
the Shares of the Issuer.
Mutual filed a Schedule 13D with the SEC on March 31, 1998, reporting
that Mutual was considering whether it would be in its best interest
to purchase all or substantially all of the stock of the Issuer or its
wholly-owned subsidiary, Merchants Insurance Company of New Hampshire,
Inc. ("MNH").
Mutual is filing this Amendment No. 1 to its Schedule 13D to update
the information contained in Item 4 relating to the purpose for which
it holds the Shares (see Item 4. Purpose of Transaction).
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Item 2 information with respect to the directors and executive
officers of Mutual was contained in Attachment A to its Schedule 13D
filed on March 31, 1998, which is incorporated herein by this
reference. There has been no change in that information since
March 31, 1998. Mutual and its executive officers and directors are
sometimes hereinafter collectively referred to as the "Reporting
Persons."
NOTE: Nothing in this Statement, as amended, shall be construed as
a statement or admission that the Reporting Persons, or any
of them, (i) are acting as a group in the acquisition,
disposition or holding of Shares, (ii) collectively
constitute a "person" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the
"Act"), or (iii) for the purposes of Section 13(d) of the
Act, are the beneficial owners of any Shares other than
those Shares in which each person is specifically identified
in this Statement to have a beneficial ownership.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
Reference is made to Item 5 in the original Schedule 13D filed on
March 31, 1998. There have been no changes since the filing of the
original Schedule 13D on March 31, 1998.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
The business and day-to-day operations of the Issuer and MNH are
closely aligned with those of Mutual. This is the result of a
combination of factors. Mutual has had a historical ownership interest
in the Issuer and MNH. Prior to November 1986 MNH was a wholly-owned
subsidiary of Mutual. Following the Issuer's initial public offering
in November 1986 until a secondary stock offering in July 1993 the
Issuer was a majority-owned subsidiary of Mutual. Mutual currently
owns 8.8% of the Issuer. Under the Management Agreement dated
September 29, 1986 ("Management Agreement"), Mutual provides the
Issuer and MNH with all facilities and personnel to operate their
business. The only officers of the Issuer or MNH who are paid full
time employees are employees of Mutual whose services are provided to
the Issuer and MNH by Mutual under the Management Agreement. Also, the
operation of MNH's insurance business, which offers substantially the
same lines of insurance as Mutual through the same independent
insurance agents, creates a close relationship among the companies.
From time to time the Directors of the Issuer and Mutual have
discussed possible changes in the relationship among the three
companies for the purposes of improving their insurance operations and
reducing the instances where there might be conflicts between MNH and
Mutual.
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On March 25, 1998, Mutual informed the Issuer's Board of Directors
that Mutual was considering whether it would be in its best interest
to purchase all or substantially all of the stock of the Issuer or
MNH, and that Mutual had retained an investment banking firm and
independent legal counsel to assist it in determining whether such a
proposal was advisable and, if so, whether Mutual could obtain
regulatory approvals and financing for any such proposal.
Beginning in early June 1998, representatives of Mutual and of the
Issuer have had preliminary discussions regarding the possible terms
and conditions upon which Mutual might offer to purchase all of the
stock of the Issuer. The discussions included a possible purchase
price, the status of Mutual's efforts to secure the financing for such
a purchase, the legal and regulatory conditions that would have to be
satisfied in order for such a purchase to be consummated, the changes,
if any, that might be made to the termination provisions of the
Management Agreement and other terms of a potential offer. Mutual has
not presented an offer to the Issuer and there can be no assurance
that Mutual will present an offer to the Issuer or whether such an
offer would be accepted or as to whether Mutual would be able to
secure the financing and regulatory approvals necessary to complete
any such offer, if made and accepted. Mutual advised the Issuer that
Mutual continues to work diligently on financing alternatives and has
committed to keep the Issuer apprised of its efforts. Mutual believes
that in the event that it were to make an offer it should be able to
obtain the financing and regulatory approvals necessary to acquire the
Issuer, provided that the purchase price is no higher than the market
price of the Issuer's common stock as of the date of this Amendment to
Schedule 13D.
Subject to the preceding two paragraphs, the Reporting Persons do not
have any present plans or proposals that relate to or would result in:
(i) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries; (ii) a sale or transfer of a material amount of assets
of the Issuer or any of its subsidiaries; (iii) any change in the
present Board of Directors or management of the Issuer, including any
plans or proposals to change the number or term of Directors or to
fill any existing vacancies on the Board; (iv) any material change in
the present capitalization or dividend policy of the Issuer; (v) any
other material change in the Issuer's business or corporate structure;
(vi) changes in the Issuers's Certificate of Incorporation, By-Laws or
instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person; (vii) causing
a class of securities of the Issuer to cease to be listed on a
national securities exchange; (viii) a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant
to Section 12(g)(4) of the Act; or (ix) any action similar to any of
those enumerated above.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-------------------------------------
As of the date hereof, Mutual owns 255,000 Shares (8.8% of the class),
all of which were acquired prior to the Issuer's initial public
offering in November 1986. Mutual has sole voting and sole dispositive
power with respect to all of those Shares. Neither Mutual nor any
Reporting Person has acquired or disposed of any Shares during the
past 60 days. The information set forth in Item 5 of the original
Schedule 13D filed on March 31, 1998 is incorporated herein by
reference. There has been no change in that information since
March 31, 1998.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
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Not applicable.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
Not applicable.
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SIGNATURE
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED: June 16, 1998
MERCHANTS MUTUAL INSURANCE COMPANY
By: /s/ Robert M. Zak
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Robert M. Zak
President
