NYMAGIC, INC.
330 Madison Avenue
New York, New York 10017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 12, 1998
April 7, 1998
The Annual Meeting of Shareholders of NYMAGIC, INC. will be held at its
offices at 330 Madison Avenue, New York, New York on May 12, 1998, at 9:30 A.M.
for the following purposes:
1. To elect the three directors who shall constitute Class III members of
the Board of Directors to hold office for the following three years.
2. To ratify the appointment of KPMG Peat Marwick LLP as the independent
public accountants for the current fiscal year.
3. To transact such other business as may properly come before the
meeting.
All of the above matters are more fully described in the accompanying Proxy
Statement.
The close of business on March 31, 1998, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at this
Annual Meeting. In order that your shares may be represented at this meeting and
to assure a quorum, please sign and return the enclosed Proxy promptly. A
postage paid, return addressed envelope is enclosed. In the event you are able
to attend in person, we will cancel the Proxy at your request.
James A. Lambert
Secretary
<PAGE>
Proxy Statement
Annual Meeting of Shareholders
of
NYMAGIC, INC.
April 7, 1998
This Proxy Statement and accompanying form of proxy are being sent to the
shareholders of NYMAGIC, INC., a New York corporation ("NYMAGIC" or the
"Company"), on or about April 7, 1998, in connection with the solicitation of
proxies to be voted at the Annual Meeting of Shareholders, and any adjournment
thereof (the "Annual Meeting"), to be held at 9:30 a.m. at the offices of the
Company at 330 Madison Avenue, New York, New York on May 12, 1998.
It is the policy of the Company that all proxy (voting instructions) cards
and ballots, which identify shareholders, be kept secret. Proxy cards are
returned in envelopes addressed to Chase Mellon Shareholder Services, L.L.C.,
the Company's transfer agent, which receives, inspects and tabulates the
proxies. When a signed proxy card is returned with choices specified with
respect to voting matters, the shares represented are voted in accordance with
the shareholder's instructions. If a proxy card is returned and the shareholder
has made no specifications with respect to voting matters, the shares will be
voted for all nominees for director identified on page 2, and for the proposal
to ratify the appointment of KPMG Peat Marwick LLP as independent accountants.
Any shareholder of NYMAGIC may revoke any proxy given pursuant to this
solicitation by written notice delivered to the Secretary of the Company at any
time prior to its use or by voting in person at the Annual Meeting.
The proxy card provides space for a shareholder to withhold voting for any
of the nominees for the Board of Directors or to abstain from voting on any
proposal if the shareholder chooses to do so. Each matter submitted to the
shareholders requires the affirmative vote of a majority of the votes cast at
the meeting. For purposes of determining whether a quorum is present,
abstentions and broker non-votes will not be included. For purposes of
determining the number of votes cast with respect to any voting matter,
abstentions and broker non-votes will not be included.
The entire expense of this solicitation, which represents the amount
normally expended for an uncontested solicitation, will be borne by the Company.
In addition to solicitation by mail, there may be solicitation made by
directors, officers and regular employees of the Company. The cost of
solicitation may include reimbursements to brokers, custodians, nominees and
other fiduciaries for reasonable out-of-pocket and clerical expenses incurred in
forwarding proxy material to their principals.
The principal executive offices of NYMAGIC are located at 330 Madison
Avenue, New York, New York 10017 (telephone no. (212) 551-0600). The date of
this Proxy Statement is April 7, 1998.
Introduction
This Proxy Statement is being furnished to the holders of shares of Common
Stock, $1.00 par value per share of the Company (the "Common Stock" or "NYMAGIC
Common Stock"), in connection with the solicitation of proxies by the Board of
Directors of NYMAGIC (the "Board" or "Board of Directors") for use at the Annual
Meeting of Shareholders to be held on May 12, 1998, at 9:30 a.m., local time, at
the offices of NYMAGIC located at 330 Madison Avenue, New York, New York and at
any adjournment thereof. This Proxy Statement and the accompanying Notice of
Meeting of Shareholders and form of Proxy, together with a copy of the Company's
Annual Report, are first being mailed to shareholders of NYMAGIC on or about
April 7, 1998.
1
<PAGE>
Only shareholders of record of the NYMAGIC's Common Stock outstanding as of
the close of business on March 31, 1998, will be entitled to vote. On March 1,
1998, there were 9,676,806 outstanding shares of Common Stock. Each share of
Common Stock is entitled to one vote. There are no cumulative voting rights.
John N. Blackman, Jr., Mark W. Blackman and their mother, Louise B. Tollefson,
as sole beneficiary of the Louise B. Tollefson Florida Intangible Tax Trust,
(collectively, the "Blackman Family"), own in the aggregate 5,884,881 shares or
approximately 61%, of the Company's Common Stock. The Blackman Family has
indicated that, with respect to the proposals set forth herein, it will vote in
favor of Proposals No. 1 and No. 2.
A list of shareholders entitled to vote at the meeting shall be made
available for inspection by shareholders during ordinary business hours at the
offices of NYMAGIC located at 330 Madison Avenue, New York, New York, 10017 for
a period of ten days before the meeting and at the time and place of the
meeting.
Proposal No. 1: Election of Class III Directors
The Board of Directors of the Company has the responsibility for
establishing broad corporate policies and for the overall performance of
NYMAGIC. Although not involved in day-to-day operations, members of the Board of
Directors are kept informed of the Company's business by various reports and
documents sent to them on a regular basis and by operating and financial reports
at the Board and committee meetings made by the Chairman and other officers of
the Company.
Three Directors, who shall constitute Class III members of the Board of
Directors, are to be elected at the Annual Meeting, each to hold office for
three years. Class III, I and II Directors were last elected at the Annual
Meeting of Shareholders held in 1995, 1996 and 1997, respectively.
The Board of Directors has nominated Mrs. Goulding and Messrs. Lambert and
Kean, Jr. to serve as Class III Directors and, unless otherwise marked, a proxy
will be voted for the election of such persons. In the event any one or more of
such nominees shall unexpectedly become unavailable for election, votes will be
cast, pursuant to authority granted by the enclosed proxy, for such persons as
may be designated by the Board of Directors.
THE BOARD RECOMMENDS A VOTE "FOR" THE THREE NOMINEES LISTED BELOW.
The following table presents certain information concerning the nominees
for election as Directors, including all positions and offices with the Company
and its predecessors, terms of office as Director and periods during which the
nominee served as such, current membership on committees of the Board of
Directors of the Company, business experience during the last five years and
directorships held in other business corporations.
<TABLE>
<CAPTION>
Nominees For Class III Directors
Director
Name Age Since Position
---- --- ----- --------
<S> <C> <C> <C>
Jean H. Goulding 56 1976 Director
John Kean, Jr.(4) 73 1991 Director
James A. Lambert(1) 42 1986 General Counsel, Chief
Operating Officer,
Secretary, Director
</TABLE>
--------------------------------------
(1) Member of Executive Committee.
(2) Member of Finance Committee.
(3) Member of Audit Committee.
(4) Member of Stock Option & Compensation Committee.
2
<PAGE>
Jean H. Goulding has been a Director since 1976. Ms. Goulding was employed
by the Company or its subsidiaries from 1965 to 1992 and served as Executive
Vice President-Underwriting from 1988 until her retirement in 1992.
John Kean, Jr. has been a Director since 1991. Until his retirement in
1991, Mr. Kean was a Senior Vice President and Director of Guy Carpenter & Co.,
Inc.
James A. Lambert has been a Director since 1986. Mr. Lambert was appointed
Chief Operating Officer in 1989 and has served as General Counsel and Secretary
since 1986.
Directors and Executive Officers
The following is a list of the other Directors and executive officers of
the Company as of the date hereof:
<TABLE>
<CAPTION>
Class of
Name Age Director Position(s)
---- --- -------- -----------
<S> <C> <C> <C>
John N. Blackman, Jr.(1)(2) 51 I Chairman of the Board, Director
Mark W. Blackman(1) 46 II President, Chief Executive Officer,
Director
Thomas J. Condon (2) 53 I Director
Charles A. Mitchell 49 II Director
William R. Scarbrough(3) 69 II Director
Michael S. Shaffet (3) 62 I Director
Richard T. Soper(1)(3) 72 II Director
William A. Thorne (1)(2)(4) 72 I Director
Sergio B. Tobia (4) 59 I Director
Louise B. Tollefson(4) 74 II Director
Thomas J. Iacopelli 37 Chief Financial Officer
</TABLE>
----------------------------------------
(1) Member of Executive Committee.
(2) Member of Finance Committee.
(3) Member of Audit Committee.
(4) Member of Stock Option & Compensation Committee.
John N. Blackman, Jr. has been a Director since 1975 and was appointed
Chairman of the Board in 1988. Mr. Blackman has been employed by MMO and
affiliates since 1973 and in December 1988 became Chairman of the Board of MMO,
PMMO, and Midwest. Mr. Blackman is the son of Louise B. Tollefson and brother of
Mark W. Blackman.
Mark W. Blackman has been a Director since 1979 and was appointed President
in 1988. Mr. Blackman has been employed by the Company or its subsidiaries since
1977. Mr. Blackman is the son of Louise B. Tollefson and brother of John N.
Blackman, Jr.
Thomas J. Condon was elected to the Board of Directors in June 1987. He is
a Vice-President - Investments and Investment Advisor with A.G. Edwards & Sons,
Inc., which he joined in September 1993. Mr. Condon formerly served as Senior
Vice President at Peoples Westchester Savings Bank from 1981 through September
1993.
Charles A. Mitchell has been a Director and Vice President since 1981. He
has been employed by the Company or its subsidiaries since 1976.
William R. Scarbrough became a Director in June 1995. Until his retirement
in 1993, Mr. Scarbrough was a Vice President and Director of Wm. H. McGee & Co,
Inc.
Michael S. Shaffet has been a Director since September 1990. Mr. Shaffet is
the Treasurer and Chief Financial Officer of M. Fabrikant & Sons, Inc. Prior to
assuming that position in 1989, he was a partner in Berman, Shaffet & Schain,
the accountants for MMO and affiliates.
3
<PAGE>
Richard T. Soper has been a Director since 1972. Mr. Soper is Vice Chairman
of Argent Marine Operations, Inc. Prior to assuming that position in 1990, Mr.
Soper served from 1986 as Chairman and President of the American Bureau of
Shipping. From 1978 to 1986, he was Executive Vice President of Sea Land
Service, Inc. and from 1983 to 1986, served as Chairman of the Board of Intersea
Operations, Ltd., Inc.
William A. Thorne has been a Director since 1972. Mr. Thorne has been
employed by Hydrocarbon Products Company, Inc. as its Treasurer and has been its
Chairman of the Board since March 1983.
Sergio B. Tobia has been a Director since 1981. Mr. Tobia was a Senior Vice
President and Director of Sorema North America Reinsurance Co. from 1989 until
his retirement in 1996.
Louise B. Tollefson has been a Director since 1986 and is the mother of
John N. Blackman, Jr. and Mark W. Blackman.
Thomas J. Iacopelli joined the Company in 1985 as its Assistant Controller.
In 1987, Mr. Iacopelli was appointed Controller of the Company and in 1989 he
was appointed Chief Financial Officer of the Company. Prior to joining the
Company, Mr. Iacopelli was employed by the accounting and consulting firm of
Coopers & Lybrand. Mr. Iacopelli is a Certified Public Accountant.
Compensation and Other Information Compensation of Directors
Directors who are not also officers of the Company receive $8,000 and
shares of the Company's Common Stock in an amount equal to $10,000 as an annual
retainer plus an additional $1,000 for each meeting of the Board of Directors
and $750 for any Committee meeting attended. Directors who are also officers of
the Company receive $350 for each meeting of the Board of Directors and any
Committee meeting attended. All Directors of the Company's subsidiaries receive
$250 for each meeting of the Board of Directors and $100 for any Committee
meeting attended.
Compensation of Executive Officers
The following Summary Compensation Table shows the compensation paid by
the Company for services rendered during fiscal years 1997, 1996, and 1995 for
the person who was the President at the end of the last fiscal year and the four
most highly compensated named executive officers of the Company whose salary and
bonus exceeded $100,000 in 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation Awards
------------------- ----------------------------- All Other
Name and Other Annual Restricted Stock Compensation
Principal Position Year Salary($) Bonus($) Compensation($)(2) Awards($) Options/SARs(#) ($)(1)
- ------------------ ---- --------- --------------------------- --------- --------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
John N. Blackman, Jr 1997 323,606 40,000 -0- -0- -0- 167,257
Chairman 1996 304,375 40,000 336,600 -0- -0- 145,244
1995 279,094 40,000 -0- -0- -0- 149,940
Mark W. Blackman 1997 323,606 40,000 -0- -0- -0- 167,257
President 1996 304,375 40,000 336,600 -0- -0- 145,244
1995 279,038 40,000 -0- -0- -0- 149,940
James A. Lambert 1997 245,316 35,000 198,550 -0- -0- 24,000
General Counsel & 1996 229,932 35,000 -0- -0- -0- 22,500
Secretary 1995 209,547 35,000 -0- -0- -0- 22,500
Robert L. Palmer 1997 140,051 13,000 58,927 -0- -0- 22,958
Vice-President - 1996 129,859 13,000 27,000 -0- -0- 21,429
Mutual Marine 1995 120,083 13,000 -0- -0- 10,000 19,962
Office, Inc.
Judith D. Cohen 1997 129,859 13,000 71,330 -0- -0- 21,429
Vice-President - 1996 119,667 13,000 -0- -0- -0- 19,900
Mutual Marine 1995 104,427 13,000 -0- -0- 10,000 16,140
Office, Inc.
</TABLE>
4
<PAGE>
(1) The amounts shown in this column for 1997, represent contributions made
by the Company in 1997 on behalf of all eligible employees, including the
officers listed above, pursuant to the terms of the Company's defined
contribution retirement plans ("retirement benefits"). The amounts shown in this
column represent the retirement benefits paid in that year as well as certain
amounts for Mr. John N. Blackman, Jr. and Mr. Mark W. Blackman, which represent
compensation provided to them for the purchase of life insurance as follows:
$79,225 each, as the premium for term life insurance, and $64,032 each,
representing the dollar value benefit to each of them for an interest free loan
for the payment of the premium for whole life insurance, calculated using an
imputed interest rate of 7.5%.
(2) The amounts shown in this column represent proceeds from the exercise
of stock options.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
The Company does not maintain any employment contracts with its executive
officers. The Company maintains an Executive Severance Pay Plan which provides
for severance benefits to executive officers in an amount equal to two years'
salary in the event of the termination of employment, except for cause, and one
year's salary in the event of a change of control.
Stock Options
No stock options were granted to the named executive officers in 1997 under
the Company's stock options plans. For a description of the Company's stock
option plans, see "Stock Option Plans."
Aggregated Stock Option/SAR Exercises and Year-End Values
The following table shows stock options exercised by named executive
officers in 1997, including the aggregate value of gains on the date of
exercise. In addition, this table includes the number of shares covered by both
exercisable and non-exercisable stock options as of December 31, 1997. Also
reported are values for "in-the-money" options that represent the positive
spread between the exercise price of any such existing stock options and the
year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Year-End Option/SAR Values
Shares Number of Unexercised Value of Unexercised
Acquired Value Options/SARs at In-The-Money Options SARs at
on Realized December 31, 1997 (#) December 31, 1997 ($)
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John N. Blackman, Jr -0- -0- -0- -0- -0- -0-
Mark W. Blackman -0- -0- -0- -0- -0- -0-
James A. Lambert 27,500 $198,550 17,056 10,444 $165,885 $104,465
Robert L. Palmer 4,500 $ 58,927 7,000 8,000 $100,160 $114,140
Judith D. Cohen 6,000 $ 71,330 4,000 11,000 $ 57,070 $156,770
</TABLE>
Retirement Plans
The Company maintains two retirement plans for the benefit of employees.
Both plans provide for 100% vesting upon completion of three years of service.
The Money Purchase Plan provides for a yearly contribution equal to 7-1/2% of an
employee's cash compensation for each year of service during which the employee
has completed 1000 hours of service and is employed on the last day of the plan
year. The Profit Sharing Plan does not provide for any specified level of
contribution but any contribution made is subject to the restrictions set forth
above for the Money Purchase Plan. For the most recent plan year, a contribution
equal to 7-1/2% of cash compensation was made to all eligible participants in
the Profit Sharing Plan. The Company does not maintain any defined benefit
retirement plans.
5
<PAGE>
Executive Life Insurance Plan
The Company maintains an Executive Life Insurance Plan for eligible
officers. Under the Plan, the Company pays life insurance premiums for the
benefit of participating officers with such amounts secured by a lien on the
policy and repaid in full upon termination of the policy.
Stock Option Plans
In 1983, the Company's Board of Directors and Shareholders approved the
Company's 1983 Employee Stock Option Plan (the "1983 Plan"). The 1983 Plan
authorized the granting to employees of the Company options to purchase an
aggregate of 250,000 shares of the Company's Common Stock under the 1983 Plan.
Under the 1983 Plan, the option price may not be less than the fair market value
on the date of grant, or less than 110% of the fair market value in the case of
an employee who owns 10% of the total combined voting power or value of the
Common Stock of the Company immediately before the grant of any option. The 1983
Plan is administered by the Stock Option & Compensation Committee.
In 1986, the Company's Board of Directors and Shareholders approved the
1986 Stock Option Plan (the "1986 Plan"), to provide a means whereby the
Company, through the grant of non-qualified stock options to key officers and
employees, may attract and retain persons of ability as officers and employees.
The 1986 Plan authorizes the issuance of options to purchase up to 500,000
shares of the Company's Common Stock at not less than 95% of the fair market
value at the date of grant. The 1986 Plan is administered by the Stock Option &
Compensation Committee.
In 1991, the Company's Board of Directors and Shareholders approved the
1991 Stock Option Plan (the "1991 Plan"), to provide a means whereby the
Company, through the grant of non-qualified stock options to key officers and
employees, may attract and retain persons of ability as officers and employees.
The 1991 Plan authorizes the issuance of options to purchase up to 500,000
shares of the Company's Common Stock at not less than 95% of the fair market
value at the date of grant. The 1991 Plan is administered by the Stock Option &
Compensation Committee.
Compensation Committee Interlocks and Insider Participation
Directors Tobia, Kean, Thorne and Tollefson served as members of the Stock
Option & Compensation Committee of the Board of Directors during the most recent
fiscal year.
Sergio B. Tobia is a retired Senior Vice President, Chief Administrative
Officer and Director of Sorema North American Reinsurance Company. Such
reinsurance company participates in the Company's ceded business from time to
time and the Company anticipates doing business with such reinsurer during
fiscal 1998.
Louise B. Tollefson is the mother of the Chairman and the President.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Securities
Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file initial reports of ownership and reports of changes in
ownership with the SEC. Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms which
they file.
The Company prepares Section 16(a) forms on behalf of its officers and
directors based on the information provided by them. Based solely on a review of
this information, copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, the Company
believes that in 1997 all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with.
6
<PAGE>
Share Investment Performance Graph
In accordance with SEC rules, set forth below is a line graph comparing the
cumulative total stockholder return on the Company's Common Stock to the total
return of the S&P 500 Index and a peer group(1) of the Company's competitors,
obtained from Value Line, Inc. for the period of five fiscal years commencing
January 1, 1993 and ending December 31, 1997, assuming $100 invested in the
Company's Common Stock and in each index and assuming reinvestment of dividends.
Although inclusion of a share performance graph in this Proxy Statement
appears to suggest that Executive Compensation should be based on stock
performance alone, the Stock Option and Compensation Committee of the Board of
Directors considers many factors in determining compensation. See "Compensation
Committee Report".
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act, as amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following Share Investment Performance
Graph and the Compensation Committee Report contained in this Proxy Statement
shall not be incorporated by reference into any such filings.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Comparison of Five-Year Cumulative Total Return*
NYMAGIC INC, Standard & Poors 500 and Value Line Insurance: Prop/Cas Index
(Performance Results Through 12/31/97)
NYMAGIC INC Standard & Poors 500 Insurance: Prop/Cas
----------- -------------------- -------------------
1992 $ 100.00 $ 100.00 $ 100.00
1993 $ 91.99 $ 110.09 $ 102.18
1994 $ 67.76 $ 111.85 $ 101.16
1995 $ 64.19 $ 153.80 $ 142.15
1996 $ 69.45 $ 189.56 $ 181.74
1997 $ 108.24 $ 252.82 $ 280.29
Assumes $100 invested at the close of trading 12/92 in NYMAGIC INC common stock,
Standards & Poors 500, and Insurance: Prop/Cas.
*Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.
Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.
(1) Based on information for a peer group of the Company's competitors as
obtained from and compiled by Value Line, Inc., which includes the
following companies: 20th Cent. Inds. Cal. (TW), Berkley W.R. Corp. (BKLY),
Chubb Corporation (CB), Cincinnati Financial Corp., (CINF), USF&G
Corporation (FG), Fremont General Corp. (FMT), Frontier Insurance Group
(FTR), Gainsco Inc. (GNA), General Reinsurance Corporation (GRN), Hartford
Steam Boiler (HSB), Orion Capital Corp. (OC), Ohio Casualty Corp. (OCAS),
Progressive Corp. Ohio (PGR), SAFECO Corporation (SAFC), Selective
Insurance Group, Inc. (SIGI), and St. Paul Insurance Co. (SPC), all of
which were included in the prior year's peer group. The following companies
were added to the peer group this year by Value Line, Inc.: Ace, Ltd.
(ACL), Allmerical Financial (AFC), Allstate Corp. (ALL), American Financial
Group (AFG), Hartford Financial (HIG), Market Corp. (MKL), Mercury General
(MCY), NAC Re. Corp. (NRC), Old Republic (ORI), and Transatlantic Holdings
(TRH).
7
<PAGE>
Compensation Committee Report
Summary of Compensation Policies for Executive Officers
The Stock Option & Compensation Committee of the Board of Directors (the
"Committee") meets quarterly and reviews certain aspects of the Company's
compensation as affects executives and non-executives alike. The Committee's
review procedures for use during 1997 are summarized below.
o The Company develops compensation data for all employees utilizing national
and regional surveys for the insurance and brokerage industries. The
Company's executive positions including the three named executive officers
other than the Chairman and the President are matched to comparable survey
positions and compensation data. The referenced surveys for the insurance
and brokerage industries do not disclose the identities of individual
participants and survey data for comparable executive positions is not
generally available. The Committee uses such survey data in connection with
reviewing salaries on an individual basis with the objective of providing
each such officer with sufficient compensation to cause them to maintain
their continued employment with the Company.
o The Committee reviews the compensation levels of the Chairman and President
in conjunction with the information developed from industry surveys. The
Committee, at the request of the Chairman and the President, has kept the
salaries of these two executive officers beneath the higher end of the
median range of salaries indicated by the compensation surveys. In light of
the significant ownership position of the Chairman and the President, the
effect of their salaries in maintaining their continued employment is not
deemed to be as significant as with the other executive officers.
Additionally, the pricing pressures which exist in the markets within which
the Company competes have adversely impacted the Company's ability to show
growth in earnings. It has not been deemed appropriate during this time
period to increase the salaries of these two executive officers towards the
higher end of the median range of salaries indicated by the compensation
surveys. There are no specific performance goals for these officers and no
performance related compensation incentives other than options.
o The Committee reviews the compensation levels for executive officers
excluding the Chairman and the President within the context of salary
recommendations for such officers and the industry salary information. The
Committee does not utilize performance objectives for executives and senior
officers as such are deemed inappropriate for the industry and markets
within which the Company competes. Rather, the Committee balances the
competitive marketplace pressures which might cause an officer to leave the
Company along with corporate needs in the context of the recommendations of
the Chairman and the President. It is the Committee's objective to maintain
quality management without increasing the Company's salary expense beyond
the median range indicated by the compensation surveys. No specific
relationship between corporate performance for the last fiscal year and
each element of compensation was considered by the Committee in determining
executive compensation in general or the Chairman's and the President's
compensation in particular. Bonuses are generally awarded based upon length
of service and job responsibilities.
o In connection with the review of executives and senior officers, the
Chairman and the President, from time to time, make recommendations to the
Committee with respect to the award or repricing of options pursuant to the
Company's Stock Option Plans. Through the use of options which vest over a
five to ten year period and a competitive base salary, the Committee
attempts to meet competitive marketplace pressures while at the same time
focusing long-term compensation gains for officers on areas which provide
similar benefits to non-employee shareholders. The options are awarded in a
quantity designed to be sufficient to provide each option recipient with an
incentive to maintain continued employment with the Company. In light of
their significant ownership position with the Company, the Chairman and the
President have not been awarded additional options for the past six years.
No outside factors other than comparative surveys were considered by the
Committee in determining each element of compensation. In particular, the
Committee did not consider the amounts of options outstanding or previously
granted or the aggregate size of current awards in deciding to award
additional options, although the repricing of previous grants was taken
into consideration.
8
<PAGE>
o The Company has reviewed the recent amendments to the Internal Revenue Code
and related regulations of the Internal Revenue Service which limit the
deductibility of executive compensation paid to the Chairman and the
President and each of the other three most highly compensated officers at
the end of any fiscal year to the extent such compensation exceeds
$1,000,000 in any year and does not qualify for an exception under the
statute or proposed regulations. The Committee does not believe that annual
cash compensation will be likely to exceed $1,000,000 for any executive
officer in the foreseeable future and has therefore concluded that no
action with respect to qualifying such compensation for deductibility was
necessary at this time. The Committee will continue to evaluate the
advisability of qualifying the deductibility of such compensation in the
future.
Respectfully submitted,
Sergio B. Tobia, Chairman
John Kean, Jr.
William A. Thorne
Louise B. Tollefson
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth information as of March 1, 1998, with
respect to beneficial ownership of NYMAGIC Common Stock by beneficial owners
known by the Company to own more than 5% of such stock, directors and nominees,
each officer named in the Summary Compensation Table, and all directors and
officers as a group. Except as described in the notes below, all owners listed
have power to vote and dispose of the shares held by them.
<TABLE>
<CAPTION>
Percent of
Amount and Nature Common Stock
Name of Ownership Outstanding
---- ----------------- -------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 619,800(5) 6.38%
1299 Ocean Avenue - 7th Floor
Santa Monica, CA 90401
T. Rowe Price Associates, Inc. 1,012,000(6) 10.42%
100 East Pratt Street
Baltimore, Maryland 21202
John N. Blackman, Jr. 2,010,996(1) 20.70%
Mark W. Blackman 1,962,674(2) 20.20%
Judith D. Cohen 4,000(3) *
Thomas J. Condon 606 *
Jean H. Goulding 22,106 *
John Kean, Jr 506 *
James A. Lambert 18,055(3) *
Charles A. Mitchell 7,700(3) *
Robert L. Palmer 7,000(3) *
William R. Scarbrough 606 *
Michael S. Shaffet 1,906(4) *
Richard T. Soper 506 *
William A. Thorne 32,906(4) *
Sergio B. Tobia 3,726 *
Louise B. Tollefson 3,506 *
Howard S. Tuthill, Trustee 1,911,211(7) 19.68%
All directors and officers as a ----------- -----
group (15 persons) 5,988,010(8) 61.65%
</TABLE>
---------------------------------------
* Less than 1% of issued and outstanding Common Stock.
(1) Mr. Blackman is also the Trustee of trusts for the benefit of his minor
children which own, in total, 92,822 shares of the Company's Common Stock, which
shares are included herein.
(2) Trusts for the benefit of Mr. Blackman's children own, in total, 54,876
shares of the Company's Common Stock, which shares are included herein.
9
<PAGE>
(3) Of the shares shown as beneficially owned by the following individuals,
the amount listed next to each name include shares with respect to which options
are currently exercisable by that person: Mr. Mitchell - 7,000; Mr. Lambert -
17,055; Mrs. Cohen - 4,000; and Mr. Palmer - 7,000.
(4) Of the shares shown as beneficially owned by Mr. Thorne, 16,706 shares
are held by him individually and 16,200 shares are held by Mr. Thorne and his
wife as joint tenants. Of the shares shown as beneficially owned by Mr. Shaffet,
400 are held individually by his wife.
(5) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advsior, is deemed to have beneficial ownership of 619,800 shares of
NYMAGIC, INC. stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group, Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(6) T. Rowe Price Associates, Inc. has filed a report on Schedule 13G
disclosing beneficial ownership of 1,012,000 shares in total. T. Rowe Price
Associates, Inc. beneficially owns 512,000 and T. Rowe Price Small Cap Value
Fund, Inc. 500,000.
(7) Howard S. Tuthill, as Trustee of the Louise B. Tollefson Florida
Intangible Tax Trust, of which Ms. Tollefson is the beneficiary, has filed a
report on Schedule 13D disclosing ownership of 1,911,211 shares of Common Stock
in connection with certain aspects of estate and tax planning for Louise B.
Tollefson.
(8) Of the 5,988,010 shares indicated as beneficially owned by all
directors and officers as a group, 35,055 shares with respect to which options
are currently exercisable. See "Compensation and Other Information-Stock Option
Plans". These shares are included in the total number of outstanding shares for
the purpose of determining the percentage of Common Stock beneficially owned by
all directors and officers as a group.
Certain Transactions
The Company made annual charitable donations to the John N. Blackman, Sr.
Foundation (the "Foundation") in the amount of approximately $480,000 in 1997,
1996 and 1995. The Foundation was established by Mr. John N. Blackman, Sr., the
founder of the Company, shortly before his death in 1988. The Foundation
supports numerous charities with a primary emphasis on those charities assisting
the indigent, disabled or disadvantaged. The Foundation is managed by Mr. John
N. Blackman, Jr., Mr. Mark W. Blackman and Mr. James A. Lambert, all of whom
donate their time and receive no form of remuneration from the Foundation.
Proposal No. 2: Selection of Independent Public Accountants
KPMG Peat Marwick LLP, the independent accountant engaged as the principal
accountant to audit the Company's financial statements for the fiscal year
ending December 31, 1997, has been extended an offer to continue as the
Company's independent accountant for the fiscal year ending December 31, 1998.
The Company's Board of Directors, following the recommendations of the Audit
Committee, recommends that shareholders approve the selection of KPMG Peat
Marwick LLP as the Company's independent accountant for the fiscal year ending
December 31, 1998.
THE BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting and will be given an opportunity to make a statement, if they so desire,
and to respond to appropriate questions.
10
<PAGE>
Other Matters
NYMAGIC knows of no matters other than those described above that may come
before the Annual Meeting. As to other matters, if any, that properly may come
before the Annual Meeting, NYMAGIC intends that proxies in the accompanying form
will be voted in respect thereof in accordance with the judgment of the person
or persons voting the proxies.
Committees of the Board of Directors
NYMAGIC has no standing nominating committee of the Board of Directors or
committee performing a similar function. The Board and all committees of the
Board, each held at least four meetings during the fiscal year ended December
31, 1997. Each of the Company's current directors attended 75% or more of the
aggregate of the meetings of the Board and each Committee on which he or she
served.
The Company currently has standing Executive, Audit, Finance and Stock
Option & Compensation Committees. The Executive Committee may exercise all
powers of the Board of Directors in the management of the business and affairs
of the Company during intervals between meetings of the full Board of Directors.
Among the Audit Committee's responsibilities are (i) reviewing the Company's
external and internal audit functions and the adequacy of the internal
accounting and financial controls, (ii) reviewing with the independent auditors
their report on the Company's financial statements, and (iii) reviewing the
professional services proposed to be provided by the independent auditors to
consider the possible effect of such services on their independence. The Finance
Committee monitors and reviews the Company's financial position and investments.
The Stock Option & Compensation Committee is charged with the administration of
the Company's Stock Option Plans and the review and approval of the Company's
salary structure and benefit packages, with recommendations thereon to be given
to the Chairman of the Board of Directors.
Last Date of Submission of Shareholder Proposals and Additional Information
Shareholder proposals intended to be presented at NYMAGIC's Annual Meeting
to be held on May 11, 1999, must be received by NYMAGIC no later than December
15, 1998, and must satisfy the conditions set by the SEC for shareholder
proposals to be included in the Proxy Statement and form of Proxy for that
meeting.
NYMAGIC, INC.
James A. Lambert
Secretary
<PAGE>
PROXY
NYMAGIC, INC.
PROXY SOLICITED ON BEHALF OF THE NYMAGIC, INC. BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Mark W. Blackman and James
A. Lambert and each of them, with full power of substitution, attorneys and
proxies to represent and to vote all of the shares of Common Stock which the
undersigned would be entitled to vote, with all powers the undersigned would
possess if personally present, at the Annual Meeting of Shareholders of NYMAGIC,
INC. (the "Company"), to be held at the Company's offices, 330 Madison Ave, New
York, New York, on May 12, 1998, at 9:30 A.M., local time, and at any
adjournment thereof, on all matters coming before said meeting.
FOLD AND DETACH HERE
<PAGE>
PLEASE MARK YOUR |X|
VOTE AS INDICATED
IN THIS EXAMPLE
This proxy, when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for Proposals 1, 2, and 3.
1. ELECTION OF JEAN H. GOULDING, JAMES A. LAMBERT AND JOHN KEAN, JR.
(Strike out name(s) of any nominee(s) against whom you are voting) as
Directors of the Company to serve for three years until the Company's 2001
Annual Meeting. (Mark only One).
FOR AGAINST ABSTAIN
|_| |_| |_|
2. RATIFICATION OF THE RE-APPOINTMENT OF KPMG PEAT MARWICK, LLP as independent
accountants of the Company. (Mark only One).
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion upon any other business which may properly come before
the meeting or any adjournment thereof.
The undersigned acknowledges receipt of
the accompanying Proxy Statement and
Annual Report dated APRIL 7, 1998.
(When signing as attorney, trustee,
executor, Administrator, guardian,
corporate officer, etc., please give
full title. If more than one trustee,
all should sign. Joint owners must each
sign.)
Date ___________________________________
Signature_______________________________
Signature ______________________________
PLEASE DATE AND SIGN EXACTLY AS NAME
APPEARS ON ABOVE LABEL.
FOLD AND DETACH HERE
