385,810 Shares
DELPHI FINANCIAL GROUP, INC.
CLASS A COMMON STOCK
This Prospectus relates to 385,810 shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), of Delphi Financial Group,
Inc., which have been registered for sale from time to time by the selling
stockholders named herein or their permitted transferees or successors (the
"Selling Stockholders"). Any or all of the Class A Common Stock being registered
hereby may be sold from time to time to purchasers directly by the Selling
Stockholders. Alternatively, the Selling Stockholders may from time to time
offer the Class A Common Stock through underwriters, dealers or agents who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of Class A
Common Stock for whom they may act as agent. To the extent required, the names
of the Selling Stockholders, the number of shares of Class A Common Stock to be
sold, the purchase price, the public offering price, the name of any agent,
dealer or underwriter and any applicable commission or discount or other items
constituting compensation or indemnification arrangements with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The Company will receive no proceeds from the sale by the Selling Stockholders
of the Class A Common Stock offered hereby. The shares of Class A Common Stock
to which this Prospectus relates were issued to the Selling Stockholders in
connection with the Matrix Acquisition (as defined herein). All Registration
Expenses (as defined herein) incurred in connection with the registration of the
Class A Common Stock to which this Prospectus relates will be borne by the
Company. The Company has agreed to indemnify and hold harmless each of the
Selling Stockholders against certain liabilities to which they may become
subject under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state law. See "Plan of Distribution."
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol "DFG." The last reported sale price of the Class A Common Stock as
reported by the New York Stock Exchange on July 30, 1998 was $58.375 per share.
See "Risk Factors" beginning on page 3 hereof for certain information
relevant to an investment in the securities offered hereby.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is August 5, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Securities and Exchange Commission, Washington, D.C. (the "Commission").
Reports, proxy and information statements and other information filed by the
Company in accordance with the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, New York, New
York 10048; and Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also
maintains a World Wide Website at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. The Company's Class A Common Stock is
listed on the New York Stock Exchange, and such reports and other information
concerning the Company can be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement under
the Securities Act with respect to the Class A Common Stock offered hereby (the
"Registration Statement"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. With respect
to each such contract or agreement filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed to be qualified in
its entirety by such reference. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the Class A Common Stock offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and (ii)
its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Class A Common Stock offered hereby shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(not including exhibits to such documents unless exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Delphi Financial Group, Inc., at 1105 North Market Street, Suite 1230, P.O. Box
8985, Wilmington, Delaware 19899, Attention: Secretary. Telephone requests may
be directed to (302) 478-5142.
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The term "Delphi", as used herein, refers to Delphi Financial Group, Inc.
and does not include its subsidiaries, and the term the "Company", as used
herein, refers to Delphi Financial Group, Inc. and all its subsidiaries, except
where another definition is indicated or the context otherwise requires.
RISK FACTORS
An investment in the Class A Common Stock involves a degree of risk.
Prospective investors should carefully evaluate the following considerations in
addition to the other information in this Prospectus, including the information
in the documents incorporated by reference, and the accompanying Prospectus
Supplement, if any, before purchasing any shares of the Class A Common Stock
offered hereby.
Voting Power of Rosenkranz & Company. Each share of Class A Common Stock
entitles the holder thereof to one vote and each share of Class B Common Stock,
par value $.01 per share, of the Company (the "Class B Common Stock" and
together with the Class A Common Stock, the "Common Stock") entitles the holder
thereof to a number of votes per share equal to the lesser of (1) the number of
votes such that the aggregate of all outstanding shares of Class B Common Stock
will be entitled to cast 49.9% of the number of votes represented by the
aggregate of all outstanding shares of the Common Stock or (2) ten votes. The
superior voting rights of the Class B Common Stock might discourage unsolicited
merger proposals and unfriendly tender offers and may therefore deprive
stockholders of any opportunity to sell their shares at a premium over
prevailing market prices. Each share of Class B Common Stock is convertible at
any time into one share of Class A Common Stock. The holders of the Class A
Common Stock vote as a separate class to elect one director of the Company. See
"Description of Common Stock." As of June 30, 1998, Mr. Robert Rosenkranz, by
means of beneficial ownership of the corporate general partner of Rosenkranz &
Company, an irrevocable proxy and direct or beneficial ownership, had the power
to vote all of the outstanding shares of Class B Common Stock, which as of such
date represented 49.9% of the voting power of the Common Stock. Holders of a
majority of the combined voting power of the Company's stockholders have the
power to elect all of the members of the Company's Board of Directors (other
than the director elected by the holders of the Class A Common Stock) and to
determine the outcome of fundamental corporate transactions, including mergers
and acquisitions, consolidations and sales of all or substantially all of the
assets of the Company. The Company is a party to consulting and other agreements
with certain affiliates of Rosenkranz & Company which are expected to continue
in accordance with their terms.
Insurance Regulations. The Company's insurance subsidiaries are highly
regulated by state insurance authorities in the states in which they are
domiciled and the other states in which they conduct business. Such regulations,
among other things, limit the amount of dividends and other payments that can be
made by such subsidiaries without prior regulatory approval (as described below
under "-- Holding Company Structure") and impose restrictions on the amount and
type of investments such subsidiaries may have. These regulations also affect
many other aspects of the Company's insurance subsidiaries' businesses,
including, for example, risk-based capital requirements, various reserve
requirements and the terms and conditions and manner of sale and marketing of
such subsidiaries' insurance products. These regulations are intended to protect
policyholders rather than investors.
Holding Company Structure. Because Delphi is a holding company, its ability
to pay cash dividends on the Class A Common Stock, as well as to meet its debt
service obligations and pay expenses, will depend upon receipt of sufficient
funds from its subsidiaries, as well as the Company's financial resources at the
holding company level.
The Company had approximately $249.5 million of available investments as a
source of liquidity at the holding company level at March 31, 1998, primarily
held through its non-insurance subsidiaries, which are generally not subject to
any significant restrictions on their ability to pay dividends or make
distributions to
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Delphi. These investments consist primarily of fixed maturity securities,
balances with independent investment managers and marketable securities. The
balances with independent investment managers are substantially all withdrawable
by the Company at least annually, subject to applicable notice requirements.
Other current sources of liquidity include principal and interest payments
received on a surplus debenture (the "Surplus Debenture") issued by Reliance
Standard Life Insurance Company of Texas ("RSLIC-Texas") to Delphi, dividends
paid from insurance subsidiaries, primarily generated from operating cash flows
and investments, and borrowings available under the $200.0 million Third Amended
and Restated Credit Agreement dated as of December 5, 1996 among Delphi and the
lenders named therein (the "Credit Agreement"). During 1998, the Company's
insurance subsidiaries will be permitted to make dividend payments totaling
$47.0 million without prior regulatory approval, and as of March 31, 1998,
$133.0 million was available for borrowing under the Credit Agreement, $98.0
million of which is restricted for use in connection with, among other things,
acquisitions or redemption of SIG Holdings, Inc.'s ("SIG") 8.5% Senior Secured
Notes due 2003 (the "SIG Senior Notes"). At March 31, 1998, the unpaid principal
balance of the Surplus Debenture, which is payable in quarterly installments
through December 31, 1999, was $38.8 million. RSLIC-Texas generates less than 1%
of the Company's premiums, policyholder fees and deposits; therefore, payments
on the Surplus Debenture are generally funded by dividend payments made by
Reliance Standard Life Insurance Company ("RSLIC") to RSLIC-Texas. These
dividends are subject to regulatory restrictions and, in the absence of
regulatory approval, are generally limited within any 12-month period, in the
aggregate, to the greater of RSLIC's statutory net income for the preceding
calendar year, or 10% of RSLIC's statutory surplus as of the preceding December
31, determined in accordance with state insurance regulations. RSLIC will be
permitted to make dividend payments of $30.1 million during 1998 without prior
regulatory approval. Safety National Casualty Corporation's ("SNCC") ability to
pay dividends is subject to regulatory and certain other contractual
restrictions and, in the absence of the requisite approvals, dividends are
generally limited within any 12-month period, in the aggregate, to the lesser of
10% of SNCC's statutory surplus as of the preceding December 31, or SNCC's
statutory net investment income for the preceding calendar year, determined in
accordance with state insurance regulations. SNCC will be permitted to make
dividend payments of $16.9 million during 1998 without prior regulatory
approval. Additional dividends may also be paid by RSLIC and SNCC with the
requisite approvals.
The Company's current liquidity needs, in addition to funding operating
expenses, include principal and interest payments on outstanding borrowings
under the Credit Agreement, its 8.0% Senior Notes due 2003 (the "Senior Notes"),
its 9.31% Junior Subordinated Deferrable Interest Debentures (the "Junior
Debentures") and the SIG Senior Notes, which borrowings and notes outstanding
totaled $300.1 million as of March 31, 1998. Beginning in 1999, the maximum
amount available to Delphi under the Credit Agreement will be reduced on October
1 of each year with the balance due on April 1, 2003. At Delphi's current level
of borrowing, no principal repayments would be required until October 1, 2002.
The Senior Notes mature in their entirety on October 1, 2003 and are not subject
to any sinking fund requirements nor are they redeemable prior to maturity. The
Junior Debentures mature in their entirety on March 25, 2027, but Delphi has the
option to shorten their maturity to a date not earlier than March 25, 2012 upon
the occurrence of certain tax events. The Junior Debentures are not subject to
any sinking fund requirements, but may be redeemed at the option of Delphi on or
after March 25, 2007 or at any time after the occurrence of certain tax events.
The SIG Senior Notes mature in $9.0 million annual installments beginning in May
1999. See Notes F and K to the Consolidated Financial Statements incorporated
herein by reference.
Investment Performance and Strategy. The market value of the Company's
investments varies depending on economic and market conditions. The Company's
profitability is also significantly affected by its investment results. In
addition, in the event that investments are called, redeemed or otherwise repaid
prior to stated maturity, the Company may be unable to reinvest the proceeds in
securities with comparable interest rates. The Company may, depending on its
liquidity requirements, also be required in the future to sell certain
invest-
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ments at a price and a time when the market value of such investments is less
than the book value of such investments. As of March 31, 1998, 39% of the
Company's invested assets consisted of mortgage-backed securities which subject
the Company to a degree of extension risk and prepayment risk. As of March 31,
1998, non-investment grade fixed maturity investments, balances with independent
investment managers and equity securities represented 4% and 3% and 1% of total
invested assets, respectively.
Shares Eligible for Future Sale. As of June 30, 1998, the Company has
outstanding 5,749,844 shares of Class B Common Stock. All of such Class B Common
Stock may be converted into Class A Common Stock, in whole or in part, at any
time by the holders thereof and must be converted in certain other
circumstances, including upon transfer thereof other than to a limited class of
transferees and upon the registration of such shares under the Securities Act.
The Company does not intend to list the Class B Common Stock on any exchange or
to make any other arrangements for secondary trading thereof. However, an
increase in the number of shares of Common Stock that become available for sale
in the public market may adversely affect the trading price of the Class A
Common Stock in the public market and could impair the Company's ability to
raise additional capital through the sale of its equity securities.
Competition; Ratings; Other Factors Affecting Business. The insurance
industry is highly competitive. The Company competes with numerous other
insurance and financial services companies both in connection with sales of
insurance and asset accumulation products and in acquiring blocks of business.
Many of these organizations have substantially greater asset bases, higher
ratings from rating agencies, larger and more diversified portfolios of
insurance products and larger agency sales operations. Competition in asset
accumulation product markets is also encountered from the expanding number of
banks, securities brokerage firms and other financial intermediaries marketing
alternative savings products, such as mutual funds, traditional bank investments
and retirement funding alternatives.
The Company believes that its reputation in the marketplace, quality of
service and investment returns have enabled it to compete effectively for new
insurance business in its targeted markets. The Company reacts to changes in the
marketplace generally by focusing on products with adequate margins and avoiding
those with low margins. The Company believes that its smaller size, relative to
some of its competitors, enables it to more easily tailor its products to the
demands of customers.
Ratings with respect to claims-paying ability and financial strength have
become an increasingly important factor impacting the competitive position of
insurance companies. Each of the rating agencies reviews its ratings of
companies periodically and there can be no assurance that current ratings will
be maintained in the future. Claims-paying and financial strength ratings are
based upon factors relevant to policy owners and are not directed toward
protection of investors. A downgrade in the ratings of the Company's insurance
subsidiaries could adversely affect sales of their products and could have a
material adverse effect on the results of operations of the Company.
Changing economic conditions can have an impact on underwriting results for
the Company's insurance products and the returns on the Company's investment
portfolio.
THE COMPANY
Delphi, organized as a Delaware corporation in 1987, is an insurance
holding company engaged through its subsidiaries in offering a diverse portfolio
of group employee benefit products and services including life, disability,
excess workers' compensation and personal accident insurance, as well as
integrated disability and other absence management services. The Company also
offers asset accumulation products, primarily annuities, to individuals and
groups. The Company's two product categories are group employee bene-
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fit products and asset accumulation products. The Company offers its insurance
products in all fifty states and the District of Columbia.
Operating Strategy
The Company's operating strategy is to offer financial products and
services which have the potential for significant growth or which require
expertise to meet the specialized needs of its customers. The Company has
concentrated its efforts within certain niche insurance markets, primarily group
employee benefits for small to mid-sized employers where much of the employment
growth in the U.S. economy has occurred in the last few years. It has also
developed complementary investment management skills which, together with its
insurance business, are aimed at achieving above average returns on the capital
of the Company. The Company's operating strategy has also emphasized the
acquisition of blocks of insurance business and financial services companies and
the active management of its investment portfolio.
The Company acquired RSLIC and its subsidiary, First Reliance Standard Life
Insurance Company ("FRSLIC"), in November 1987. RSLIC, founded in 1907, and
FRSLIC underwrite a diverse portfolio of life, accident and health insurance
products targeted principally to the employee benefits market and RSLIC also
market assets accumulation products, primarily annuities, to individuals and
groups.
SIG, the parent company of SNCC, was merged into the Company in March 1996.
SNCC is an insurance specialist providing excess workers' compensation insurance
products to the self-insured market. Founded in 1942, SNCC is one of the oldest
continuous writers of excess workers' compensation insurance in the United
States.
Matrix Absence Management, Inc. ("Matrix") was merged into the Company on
June 30, 1998 (the "Matrix Acquisition"). Matrix provides integrated disability
and other absence management services to the employee benefits market.
The Company's management of its investment portfolio is an important
component of its profitability. The Company's strategy emphasizes liquidity and
yield, while seeking to limit risks associated with interest rate fluctuations
and credit quality.
The Company's principal executive offices are located at 1105 North Market
Street, Suite 1230, P.O. Box 8985, Wilmington, Delaware 19899. Its telephone
number is (302) 478-5142.
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SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Class A Common Stock by the Selling Stockholders as of June 30,
1998, and the number of shares of Class A Common Stock covered by this
Prospectus.
Beneficial Ownership
Name of of Class A Common Stock Number of
Selling Stockholder prior to the Offering Shares Offered
- ------------------- --------------------------------- ---------------
Number of Percent
Shares of Class
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John H. Payne 186,253 1.3% 186,253
David F. Nolan 75,388 * 75,388
Thomas E. Sitter 70,954 * 70,954
Martin A. Grable 53,215 * 53,215
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* Indicates less than 1%
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DESCRIPTION OF COMMON STOCK
General
The following description does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the more complete
descriptions thereof set forth in the following documents: (i) Delphi's Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation");
and (ii) its By-Laws, which documents have been incorporated by reference as
exhibits to the Registration Statement of which this Prospectus forms a part.
Delphi currently is authorized to issue 40,000,000 shares of Class A Common
Stock, 20,000,000 shares of Class B Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"). As of June 30,
1998, there were 14,166,300 shares of Class A Common Stock and 5,749,844 shares
of Class B Common Stock outstanding. There are no shares of Preferred Stock
outstanding.
Subject to the limitations imposed by the terms of the Preferred Stock,
holders of the Common Stock are entitled to participate equally in dividends as
and when declared by the Board of Directors out of legally available funds.
There are no sinking fund or redemption provisions applicable to the Common
Stock and the shares of Common Stock are not convertible and do not have any
preemptive rights. On liquidation, dissolution, or winding up of Delphi, whether
voluntary or involuntary, after payments have been made to holders of
outstanding shares of the Preferred Stock, holders of the Common Stock have the
right to share ratably in the remaining net assets available for distribution.
All shares of Class A Common Stock sold hereunder are fully paid and
non-assessable.
State Street Bank and Trust Company is the Transfer Agent for the Class A
Common Stock. The Class A Common Stock is listed on the New York Stock Exchange.
Class A Common Stock and Class B Common Stock
All currently outstanding shares of the Class B Common Stock and shares of
the Class A Common Stock are fully paid and nonassessable. The holders of the
Common Stock do not have any preemptive rights to subscribe for or purchase any
additional securities issued by Delphi. No redemption or sinking fund provisions
are associated with the Class A Common Stock or Class B Common Stock. Cumulative
voting is not permitted by holders of either the Class A Common Stock or Class B
Common Stock.
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Voting. Each share of Class A Common Stock entitles the holder thereof to
one vote per share. Each share of Class B Common Stock entitles the holder
thereof to a number of votes per share equal to the lesser of (1) the number of
votes such that the aggregate of all outstanding shares of Class B Common Stock
will be entitled to cast 49.9% of the number of votes represented by the
aggregate of all outstanding shares of the Common Stock or (2) ten votes.
Proposals submitted to a vote of stockholders will be voted on by holders of the
Common Stock voting together as a single class (subject to any voting rights
which may be granted to holders of Preferred Stock), except that holders of the
Class A Common Stock will vote as a separate class to elect one director so long
as the outstanding shares of Class A Common Stock represent at least 10% of the
aggregate number of outstanding shares of the Company's common stock. At all
meetings of the stockholders of Delphi, unless a separate vote of any class is
required, the holders of a majority of the voting power of the Common Stock,
represented in person or by proxy, shall constitute a quorum for the transaction
of business; and, generally, the affirmative vote of the holders of a majority
of the votes cast at a meeting at which a quorum is present shall be the act of
the stockholders of Delphi. The superior voting rights of the Class B Common
Stock might discourage unsolicited merger proposals and unfriendly tender offers
and may therefore deprive stockholders of any opportunity to sell their shares
at a premium over prevailing market prices.
Transfer. The Certificate of Incorporation does not contain any
restrictions on the transfer of shares of Class A Common Stock. Upon transfer of
shares of Class B Common Stock to any person except to a "Permitted Transferee"
(as defined therein), such shares of Class B Common Stock will automatically be
converted into an equal number of shares of Class A Common Stock. Permitted
Transferees of any holder of Class B Common Stock include persons or entities
who on January 24, 1990 were holders or beneficial owners of Class B Common
Stock or had the right to acquire shares of Class B Common Stock upon the
exercise of warrants, certain relatives of such holders of Class B Common Stock,
the trustee of a trust exclusively for the benefit of such holders of Class B
Common Stock and/or one or more of such holders' Permitted Transferees, the
estate of such holders of Class B Common Stock and certain corporations or
partnerships of which two-thirds of the voting power is controlled by or under
common control with such holders of Class B Common Stock.
Conversion. Class A Common Stock has no conversion rights. Class B Common
Stock is convertible into Class A Common Stock, in whole or in part, at any time
and from time to time at the option of the holder, on the basis of one share of
Class A Common Stock for each share of Class B Common Stock converted. If at any
time the number of outstanding shares of Class B Common Stock falls below 5% of
the aggregate number of issued and outstanding shares of Common Stock or the
Board of Directors and the holders of a majority of the outstanding shares of
Class B Common Stock approve the conversion of all of the Class B Common Stock
into Class A Common Stock, then each outstanding share of Class B Common Stock
shall automatically convert into one share of Class A Common Stock. In the event
of a transfer of shares of Class B Common Stock, other than to a Permitted
Transferee, each share of Class B Common Stock so transferred shall be
automatically converted into one share of Class A Common Stock.
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Dividends. Holders of Common Stock are entitled to receive cash dividends
pro rata on a per share basis if and when such dividends are declared by the
Board of Directors of Delphi from funds legally available therefor. In the case
of any dividend paid other than in cash, holders of Common Stock are entitled to
receive such dividend pro rata on a per share basis. Dividends paid in common
stock may be paid (i) in shares of Class A Common Stock on the Class A Common
Stock and Class B Common Stock, (ii) in shares of Class B Common Stock on the
Class A Common Stock and Class B Common Stock and (iii) in shares of Class A
Common Stock on the Class A Common Stock and in shares of Class B Common Stock
on the Class B Common Stock. Delphi's stock dividends to date have been paid in
the manner described in clause (iii).
Liquidation, Merger or Consolidation. Holders of Class A Common Stock and
Class B Common Stock share with each other, after payments of any preferential
amounts to which the holders of Preferred Stock are entitled, on a ratable basis
as a single class, in the net assets of the Company available for distribution
in respect of Class A Common Stock and Class B Common Stock in the event of
liquidation or any payments made on the Common Stock in the event of a merger or
consolidation of Delphi.
Other Terms. Neither the Class A Common Stock nor the Class B Common Stock
may be subdivided or combined in any manner unless contemporaneously therewith
the other class of shares is subdivided or combined in the same proportion.
Additional shares of Class B Common Stock may not be issued except (i) in
payment of a stock dividend on then outstanding shares of Class B Common Stock;
(ii) in connection with a stock split, reclassification or other subdivision of
then outstanding shares of Class B Common Stock; (iii) upon exercise of options
or warrants previously issued to certain key employees of Delphi; and (iv)
pursuant to the Company's Long Term Performance-Based Incentive Plan.
Delaware Law and Certain Provisions of Delphi's Certificate of Incorporation
Delphi is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("Section 203"). In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date that the
person became an interested stockholder unless (with certain exceptions) the
business combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the stockholder. Generally, an "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years prior, did own) 15% or more of the corporation's voting
stock.
The Certificate of Incorporation prohibits stockholders from taking any
action without a meeting, except upon unanimous written consent. In addition,
special meetings of stockholders may only be called by the Board of Directors.
These provisions may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting unless a special meeting is called by the
Board of Directors of Delphi. The Certificate of Incorporation also provides
that the Board of Directors has the exclusive power to fill newly created
directorships and vacancies in the Board. The Certificate of Incorporation
provides that directors of Delphi will not be personally liable for monetary
damages for breach of the director's fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to Delphi or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchase or redemptions as provided in
section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. The Certificate of
Incorporation provides that Delphi shall indemnify its officers and directors to
the fullest extent permitted by Delaware law.
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PLAN OF DISTRIBUTION
Any or all of the Class A Common Stock being registered hereby may be sold
from time to time to purchasers directly by any Selling Stockholder.
Alternatively, any Selling Stockholder may from time to time offer the Class A
Common Stock through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or commissions
from such Selling Stockholder and/or the purchasers of Class A Common Stock for
whom they may act as agent. Any such Selling Stockholder, and any such
underwriters, dealers or agents that participate in the distribution of Class A
Common Stock, may be deemed to be underwriters, and any profit on the sale of
the Class A Common Stock by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any such shares of Class A Common Stock may be so
offered or sold in the open market, on the New York Stock Exchange, in privately
negotiated transactions, in an underwritten offering, or a combination of such
methods, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. To the extent required,
the names of the Selling Stockholders, the number of shares of Class A Common
Stock to be sold, purchase price, public offering price, the name of any agent,
dealer or underwriter and any applicable commission or discount or other items
constituting compensation or indemnification arrangements with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The Company will receive no proceeds from the sale by any Selling Stockholder of
the Class A Common Stock offered hereby.
In connection with distributions of the Class A Common Stock, any Selling
Stockholder may enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of the Class A Common Stock in the
course of hedging the positions they assume with such Selling Stockholder. Any
Selling Stockholder also may sell the Class A Common Stock short and deliver the
Class A Common Stock to close out such short positions. Any Selling Stockholder
also may enter into option or other transactions with broker-dealers that
involve the delivery of the Class A Common Stock to the broker-dealers, which
may then resell or otherwise transfer such Class A Common Stock. Any Selling
Stockholder also may loan or pledge the Class A Common Stock to a broker-dealer
and the broker-dealer may sell the Class A Common Stock so loaned or upon a
default may sell or otherwise transfer the pledged Class A Common Stock.
The shares of Class A Common Stock covered by this Prospectus were issued
to the Selling Stockholders in connection with the Matrix Acquisition.
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All Registration Expenses incurred in connection with the registration of
the Class A Common Stock to which this Prospectus relates, estimated to be
approximately $[ ], will be borne by the Company. As and when the Company is
required to update this Prospectus, it may incur additional expenses in excess
of this estimated amount. "Registration Expenses" means all fees and expenses
incident to the registration of the Class A Common Stock to which this
Prospectus relates, including fees and expenses of counsel to the Company but
excluding all fees and disbursements of counsel to the Selling Stockholders,
stock transfer taxes that may be payable by the Selling Stockholders and all
underwriting discounts and commissions relating to the Class A Common Stock to
which this Prospectus relates.
The Company has agreed to indemnify and hold harmless each of the Selling
Stockholders against certain liabilities to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law.
LEGAL OPINIONS
Certain legal matters in connection with the offering of the Class A Common
Stock will be passed upon for the Company by Cahill Gordon & Reindel, a
partnership including a professional corporation, New York, New York.
EXPERTS
The consolidated financial statements and schedules of Delphi Financial
Group, Inc. and subsidiaries at December 31, 1997 and 1996, and for each of the
three years in the period ended December 31, 1997, appearing in Delphi Financial
Group, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1997,
are incorporated by reference in this Prospectus and have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon also
incorporated by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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No dealer, salesman or other person has been
authorized to give any information or to make
representations other than those contained in this 385,810 Shares
Prospectus, and, if given or made, such information
or representations must not be relied upon as having
been authorized by the Company or the Selling DELPHI FINANCIAL GROUP, INC.
Stockholders. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that the
information herein is correct as of any time Class A Common Stock
subsequent to its date. This Prospectus does not
constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is
not authorized or in which the person making such ________________
offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or PROSPECTUS
solicitation. _________________
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TABLE OF CONTENTS
Page
Available Information.........................2
Information Incorporated by Reference.........2
Risk Factors..................................3
The Company...................................5
Selling Stockholders..........................7
Description of Common Stock...................8
Plan of Distribution..........................11 August 5, 1998
Legal Opinions................................12
Experts.......................................12
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