UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. 1
GRYPHON HOLDINGS INC.
(Name of Issuer)
Common Stock, $0.01 par value per share
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(Title of Class of Securities)
400515102
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(CUSIP NUMBER)
Gregory B. Nevers, Esq.
Corporate Counsel
Markel Corporation
4551 Cox Road
Glen Allen, VA 23060
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications
May 26, 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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 400515102
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This statement amends the statement on Schedule 13D dated March 30,
1998 ("Schedule 13D"), previously filed by Markel Corporation, a Virginia
corporation ("Markel"), relating to the common stock, $.01 par value per share
("Common Stock"), of Gryphon Holdings, Inc., a Delaware corporation ("Gryphon"
or the "Issuer"). Defined terms used herein and not otherwise defined shall have
the meaning set forth in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is supplemented by the following:
On May 26, 1998 Markel sent a letter to the Board of Directors of Gryphon,
a copy of which is attached as Exhibit A and is hereby incorporated by this
reference (the "May 26 Letter"). As referenced in the May 26 Letter Markel has
made regulatory filings with insurance regulatory authorities in California,
Pennsylvania and Connecticut seeking approval or exemptions under applicable
insurance laws to purchase up to 19.9% of Gryphon's outstanding shares of Common
Stock. In addition to the possible actions set forth in the May 26 Letter and
Item 4 of the Schedule 13D, Markel may have discussions with Gryphon's Board of
Directors, management and/or other shareholders of Gryphon concerning (i) the
acquisition or disposition of shares of Gryphon Common Stock; (ii) Gryphon's
charter, bylaws, shareholder rights plan and other instruments and/or actions
which may impede the acquisition of control of Gryphon; and (iii) Gryphon's
current and future business plans, prospects and management. Except as described
above or in the Schedule 13D, Markel does not currently have any plans or
proposals which relate to or would result in any of the actions or transactions
specified in clauses (a) though (j) of Item 4 of Schedule 13D. However, Markel
reserves the right at any time to formulate other plans and purposes regarding
its Shares or the Issuer.
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: May 28, 1998 /s/ STEVEN A. MARKEL
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STEVEN A. MARKEL
Vice Chairman
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Exhibit A
May 26, 1998
Board of Directors
Gryphon Holdings, Inc.
30 Wall Street
New York, NY 10005-2201
Gentlemen:
As you know, we at Markel Corporation believe there are potentially significant
future opportunities for Gryphon Holdings, Inc. We own 9.9% of the outstanding
shares of Gryphon and have filed regulatory applications seeking approval to
increase our ownership up to 19.9%. We are not seeking to increase our ownership
beyond this level because Stephen Crane, Gryphon's president, has made it
abundantly clear that the Company is not for sale. Stephen expressed tremendous
optimism for the future and suggested the Board would only consider a "trade of
gold for silver." Accordingly, we have assumed the Board of Directors has no
interest in discussing any greater level of investment by Markel. We are seeking
these approvals to have flexibility to increase our ownership and share in the
future, if Mr. Crane's optimism is correct, or to protect our already
substantial investment if the Company's share price deteriorates.
Currently, management of Gryphon is vigorously objecting to our regulatory
filings including making a request for discovery in the state of Pennsylvania
and accusing Markel of making false and misleading statements. We believe our
filings are accurate and complete and we are confident that they will ultimately
be approved. Management's objections to our filings appear designed to delay and
do not serve any legitimate business objective of Gryphon. Frankly, we do not
understand management's objections to our proposed limited additional purchases.
We believe that having the flexibility to purchase up to 19.9% would allow us to
support the price of Gryphon's stock in the face of downward selling pressure.
We believe the Board should support this goal. We have been contacted by other
shareholders who, after expressing dismay at the Company's operating
performance, have asked about our willingness to purchase their shares.
Unfortunately we have been unable to discuss purchasing their shares because of
delays in obtaining regulatory approvals.
Markel has made significant investments on a friendly basis in a number of other
insurance companies and has never before received an objection to such
investments. We have expressed our willingness to pursue discussions with
Gryphon's Board of Directors to allay any concerns about our intent and provide
assurance that we would not increase our holdings beyond 19.9% without Board
approval. In light of our pending regulatory applications and our assurances
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regarding further acquisitions of stock, we believe the Board's fiduciary duties
require that the Board not take any extraordinary preclusive measures which
entrench management, such as amending the Company's shareholder rights plan.
Since our initial acquisition of Gryphon shares several events have occurred
which cause us to be concerned about management entrenchment. First, Mr. Crane
has been unwilling to discuss any potential opportunities for our companies to
work together to enhance value for both our shareholder constituencies. Second,
Gryphon's first quarter results were surprisingly disappointing, particularly in
light of the special adjustments and charges taken in the fourth quarter of last
year. Finally, management has announced another restructuring and significant
charges to be taken in the second quarter. As a significant shareholder we are
relying on the Board to closely monitor management in order to ensure that all
shareholders' interests are protected.
We stand ready to meet with the Board or a special committee of the Board at
your convenience. We trust that you will conclude that our proposal seeking
flexibility to acquire more shares is in the Company's best interest. We believe
that as a significant, knowledgeable shareholder, we can work with you to
enhance Gryphon's value for all shareholders.
Very truly yours,
Steven A. Markel
Vice Chairman
