As filed with the Securities and Exchange Commission on __________________, 1998
- --------------------------------------------------------------------------------
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GORAN CAPITAL INC.
(Exact Name of Registrant as specified in its charter)
CANADA Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
181 University Avenue
Suite 1101-Box 11
Toronto, Ontario, Canada M5H 3M7
(Address of Principal Executive Offices) (Zip Code)
GORAN CAPITAL INC. SHARE OPTION PLAN
(Full title of plan)
David L. Bates
Vice President and General Counsel
Goran Capital Inc.
4720 Kingsway Drive
Indianapolis, Indiana 46205
(416) 594-1155 (Canada), (317) 259-6300 (USA)
(Name and address of agent for service)
telephone number, including area code, of agent for service
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
be Registered Registered(1) Share(2) Price(2) Fee
<S> <C> <C> <C> <C>
Common Shares, 1,069,265 29 61/64 32,024,487 $9,705
without par
value
============== ============= ========= ============ ================
</TABLE>
(1) The number of shares registered is equal to the number of shares of common
stock of Goran Capital Inc. which are subject to all Options granted by
Goran Capital Inc. to purchase such stock. There are currently 578,996
options outstanding. Any additional shares of Common Shares to be issued as
a result of stock dividends, stock splits or similar transactions shall be
covered by this Registration Statement as provided in Rule 416.
(2) Estimated solely to determine the registration fee and based on the average
of high and low sales per Common Share of Goran Capital Inc. on the NASDAQ
Stock Market on January 16, 1998, as to shares not yet subject to options
granted under the Plan, pursuant to Rule 457(c).
<PAGE>
REOFFER PROSPECTUS
Up to 1,069,265 Shares
GORAN CAPITAL INC.
Common Shares, without par value
This Prospectus is a "reoffer prospectus" prepared in accordance with the
requirements of Part I of Form F-3, pursuant to General Instruction C of Form
S-8. The Common Shares covered by this reoffer prospectus ("Prospectus" or
"Reoffer Prospectus") are being sold by certain employees and directors of Goran
Capital Inc. (the "Company")and other persons, which shares have been or will be
acquired by the selling security holders pursuant to the Goran Capital Inc.
Share Option Plan. Resales of Common Shares by such affiliates may also be made
under Rule 144 under the Securities Act of 1933, as amended (the "1933 Act").
The Common Shares are listed for trading on the NASDAQ Stock Market's
National Market (the "NASDAQ National Market") under the symbol "GNCNF" and on
the Toronto Stock Exchange under the symbol "GNC." On January 16, 1998, the last
reported sale price on the NASDAQ National Market was US $29 61/64 per share.
The Common Shares may be offered from time to time in transactions on the
NASDAQ National Market, in negotiated transactions or otherwise at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.
The enforcement by investors of civil liabilities under the federal
securities laws may be affected adversely by the fact that the Company is
incorporated or organized under the laws of Canada, that certain of its officers
and directors may not be residents of the United States, that some or all of the
experts named in the Registration Statement may be residents of Canada and that
a portion of the Company's assets and said persons may be located outside the
United States.
See "Risk Factors" on Page 9 hereof for a discussion of certain risk
factors that should be considered by prospective purchasers of Common Shares.
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.
The date of this Prospectus is January 21, 1998.
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), as applicable to foreign private issuers,
and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). The Company has filed
with the Commission a Registration Statement (the "Registration Statement), of
which this Prospectus is a part, on Form S-8 under the 1933 Act with respect to
Common Shares offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits relating
thereto. For further information with respect to the Company and the Common
Shares offered by this Prospectus, reference is made to such Registration
Statement and exhibits. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. Such information, and the reports and other
information filed with the Commission by the Company can be inspected and copied
at the Commission's public reference facilities located at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the following
Regional Offices: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York, New York
1048. Copies of such materials may also be obtained from the Commission at
prescribed rates by mailing a request to the Public Reference Section of the
Commission, at Room 1024, 450 Fifth Street N.W., Judiciary Plaza, Washington,
D.C. 20549. The Commission also maintains a Web site on the Internet that
contains reports and other information regarding registrants that file
electronically with the Commission, including the Company. The address of such
site is: http://www.sec.gov. In addition, the Company furnishes its shareholders
with annual reports containing consolidated financial statements certified by an
independent chartered accounting firm. The financial statements included in such
reports will be prepared in accordance with Canadian generally accepted
accounting principles and will include a reconciliation of such information with
U.S. generally accepted accounting principles.
The Common Shares are listed for trading on the NASDAQ Stock Market's
National Market under the symbol "GNCNF" and on the Toronto Stock Exchange under
the symbol "GNC" and reports and other information concerning the Company can be
inspected at such exchanges.
3
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
With respect to any document incorporated by reference in this Prospectus
but not delivered herewith, the Company undertakes to provide without charge to
each person, including a beneficial owner, to whom this Prospectus is delivered,
upon written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference herein (not including
exhibits to such information unless such exhibits are specifically incorporated
by reference into such information). Such requests may be addressed to Goran
Capital Inc., 181 University Avenue, Suite 1101-Box 11, Toronto, Ontario, Canada
M5H 3M7 or 4720 Kingsway Drive, Indianapolis, Indiana 46205. See "Incorporation
of Certain Information by Reference."
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Reoffer 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 replaces such
statement. The modifying or superseding statement need not state that it has
modified or superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The making of a modifying
or superseding statement shall not be deemed an admission that the modified or
superseded statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission of a material fact required to be
stated or necessary to make a statement not misleading in light of the
circumstances in which it was made. Any statement so modified or superseded
shall not be deemed, in its unmodified or superseded form, to constitute a part
of this Reoffer Prospectus.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER UNITED STATES FEDERAL SECURITIES LAW
The Company is a Canadian federally chartered corporation. Certain of the
directors and executive officers of the Company and certain experts named herein
are not residents of the United States. Certain assets of the Company and such
individuals and experts are located outside of the United States. As a result,
it may be difficult or impossible for shareholders of the Company to effect
service of process upon such persons within the United States with respect to
matters arising under the United States federal securities laws or to enforce
against them in United States courts judgments of such courts predicated upon
the civil liability provisions of the Untied States federal securities laws.
Shareholders of the Company should be aware that there is some doubt as to the
enforceability in Canada in original actions, or in actions for enforcement of
judgments of United States courts, of civil liabilities predicated upon the
United States federal securities laws. In addition, awards of punitive damages
and actions brought in the United States or elsewhere may be unenforceable in
Canada.
4
<PAGE>
No dealer, sales representative, or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Reoffer Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company, the Selling Shareholders or any Underwriter. This
Reoffer Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities other than the registered securities to which it
relates or an offer to, or solicitation of, any person in any jurisdiction where
such an offer or solicitation would be unlawful. Neither the delivery of this
Reoffer Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained herein is
correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION.................................................. 3
INCORPORATION OF DOCUMENTS BY REFERENCE................................. 4
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED STATES
FEDERAL SECURITIES LAW................................................ 4
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS..................... 5
PROSPECTUS SUMMARY...................................................... 6
RECENT DEVELOPMENTS...................................................... 9
RISK FACTORS............................................................. 9
USE OF PROCEEDS......................................................... 19
DETERMINATION OF OFFERING PRICE......................................... 19
SELLING SECURITY HOLDERS; PLAN OF DISTRIBUTION.......................... 19
LEGAL MATTERS........................................................... 22
EXPERTS ............................................................... 22
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE....................... 23
FORWARD LOOKING STATEMENTS - SAFE HARBOR PROVISIONS
The statements contained in this Prospectus which are not historical facts,
including but not limited to statements concerning (i) the impact of federal and
state laws and regulations, including but not limited to the 1994 Reform Act and
1996 Reform Act, on the Company's business and results of operations, (ii) the
competitive advantage afforded to IGF by approaches adopted by management in the
areas of information, technology, claims handling and underwriting, and (iii)
the sufficiency of the Company's cash flow to meet the operating expenses, debt
service obligations and capital needs of the Company and its subsidiaries, are
forward-looking statements within the meanings of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. From time to time the Company may also issue other statements either
orally or in writing, which are forward looking within the meaning of these
statutory provisions. Forward looking statements are typically identified by the
words "believe", "expect", "anticipate", "intend", "estimate", "plan" and
similar expressions. These statements involve a number of risks and
uncertainties, certain of which are beyond the Company's control. Actual results
could differ materially from the forward looking statements in this Prospectus
or from other forward looking statements made by the Company. In addition to the
risks and uncertainties of ordinary business operations, some of the facts that
could cause actual results to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements are the
risks and uncertainties (i) discussed herein, (ii) contained in the Company's
other filings with the Securities and Exchange Commission and public statements
made by the Company from time to time, and (iii) set forth under "Risk Factors."
5
<PAGE>
PROSPECTUS SUMMARY
Unless the context indicates otherwise (i) the "Company" refers to Goran
Capital Inc., a Canadian corporation and its subsidiaries, (ii) "SIG" refers to
Symons International Group, Inc., an Indiana corporation and 67% owned
subsidiary of the Company, and its subsidiaries, (iii) the "Subsidiaries" refer
to the direct and indirect subsidiaries of the Company, and (iv) the "Insurers"
refer to IGF Insurance Company, an Indiana property and casualty insurance
company and a wholly-owned subsidiary of SIG ("IGF"), and, through SIG's 100%
ownership interest in GGS Management Holdings, Inc. ("GGS Holdings"), Pafco
General Insurance Company, an Indiana property and casualty insurance company
("Pafco"), and Superior Insurance Company, a Florida property and casualty
insurance company, together with its subsidiaries ("Superior").
The Company
Goran Capital Inc., a specialty property and casualty insurer, underwrites
and markets nonstandard private passenger automobile insurance and crop
insurance. The Company believes that it has demonstrated an ability to acquire
under-performing niche insurance businesses and develop them toward their full
potential. Through its Subsidiaries, the Company writes business in the U. S.
exclusively through independent agencies and seeks to distinguish itself by
offering high quality, technology-based services for its agents and
policyholders. For the year ended December 31, 1996, the Company had
consolidated gross premiums written of approximately $307.6 million.
The Company writes nonstandard automobile insurance in the U.S. through
approximately 6,000 independent agencies in 18 states and writes crop insurance
in the U.S. through approximately 1,200 independent agencies in 39 states. Based
on a Company analysis of gross premiums written in 1996 as reported by A.M.
Best, the Company believes that the combination of Pafco and Superior makes the
Company's nonstandard automobile group the twelfth largest underwriter of
nonstandard automobile insurance in the United States. Based on premium
information compiled in 1996 by the National Crop Insurance Services, Inc.
("NCIS"), the Company believes that IGF is the fifth largest underwriter of
Multi-Peril Crop Insurance ("MPCI") in the United States.
Nonstandard automobile insurance products are designed for drivers who are
unable to obtain coverage from standard market carriers. These drivers are
normally charged higher premium rates than the rates charged for preferred or
standard risk drivers and generally purchase lower liability limits than
preferred or standard risk policyholders. According to statistical information
derived from insurer annual statements compiled by A.M. Best, the nonstandard
automobile market accounted for $17.4 billion in annual premium volume for 1995.
In April 1996, SIG acquired Superior from Fortis, Inc. (the "Acquisition")
through GGS Holdings, which was then 52% owned by SIG and 48% owned by
investment partnerships affiliated with Goldman, Sachs & Co. (the "GS Funds").
The 48% interest owned by the GS
6
<PAGE>
Funds was purchased by SIG in August, 1997, utilizing a portion of the proceeds
of a $135 million offering of Trust Preferred Securities. See "Recent
Developments." The Acquisition has allowed SIG to expand its nonstandard
automobile business through wider geographic distribution and a broader range of
products. Pafco writes business primarily in the Midwest and Colorado, and
Superior writes business primarily in the Southeast (particularly Florida) and
in California. SIG regularly evaluates acquisition opportunities. There can be
no assurance that any suitable acquisition opportunities will arise.
IGF is a wholly-owned subsidiary of SIG located in Des Moines, Iowa. IGF
underwrites MPCI, crop hail insurance and other named peril crop insurance. MPCI
is a federally-subsidized program administered by the Federal Crop Insurance
Corporation ("FCIC"), which is a federally chartered corporation operated
through the United States Department of Agriculture ("USDA"). MPCI is designed
to provide farmers who suffer an insured crop loss due to the weather or other
natural perils with the funds needed to continue operations and plant crops for
the next growing season. For purposes of the profit/loss sharing arrangement
with the federal government, MPCI Premium is the amount of premiums credited to
IGF for all Buy-up Coverage (i.e. coverage in excess of CAT Coverage (defined
below)) sold, consisting of amounts paid by farmers plus the amount of any
related federal premium subsidy. For the purpose of such profit/loss sharing
arrangement, MPCI Imputed Premium is the amount of premiums credited to IGF for
all CAT Coverage (i.e. the minimum level of MPCI providing coverage for 50% of
historic yield at 60% of the per unit price set by the FCIC) it sells. For the
year ended December 31, 1996, SIG wrote approximately $82.1 million in MPCI
Premiums and $28.0 million in crop/hail gross premiums. In addition to premium
revenues for the same period, SIG received from FCIC: (i) CAT Coverage Fees* in
the amount of $1.2 million, (ii) Buy-up Expense Reimbursement Payments** in the
amount of $25.0 million and (iii) CAT LAE Reimbursement Payments*** and MPCI
Excess LAE Reimbursement Payments**** in the aggregate amount of $5.8 million.
IGF uses proprietary software to write and service policies. The Company uses
employee claims adjusters rather than relying solely on part-time, independent
contractor adjusters as do many of its competitors. Management believes that the
approaches adopted by IGF's management team in the information technology,
claims handling and underwriting aspects of its business are innovations which
provide IGF with a competitive advantage in the crop insurance industry.
- --------
*A fixed administration fee of $50 per policy paid by farmers upon purchase
of CAT Coverage.
**An expense reimbursement payment made by the FCIC to an MPCI insurer
equal to a percentage of gross premiums written for each Buy-up Coverage policy
written.
***An LAE (as hereinafter defined) reimbursement payment made by the FCIC
to an MPCI insurer equal to 13% of MPCI Imputed Premiums for each CAT Coverage
policy.
****A small excess LAE reimbursement payment made by the FCIC to an MPCI
insurer to the extent that loss ratios on a per state basis exceed certain
levels.
7
<PAGE>
The Federal Crop Insurance Reform Act of 1994 (the "1994 Reform Act")
required farmers for the first time to purchase at least a basic level of MPCI
coverage ("CAT Coverage") in order to be eligible for other federally-sponsored
farm benefits, including but not limited to low interest loans and crop price
supports. The 1994 Reform Act also authorized for the first time the marketing
and selling of CAT Coverage by Local USDA offices which has been eliminated for
the 1998 crop year. The Federal Agriculture Improvement and Reform Act of 1996
(the "1996 Reform Act"), signed into law by President Clinton in April, 1996,
limited the role of the USDA offices in the delivery of MPCI coverage beginning
in July, 1996, which was the commencement of the 1997 crop year, and also
eliminated the linkage between CAT Coverage and qualification for certain
federal farm program benefits. The limitation of the USDA's role in the delivery
system for MPCI provided SIG with the opportunity to realize increased revenues
from the distribution and servicing of its MPCI product. As a result of this
limitation, the FCIC, through December, 1997, has transferred to IGF
approximately 17,000 insureds for CAT Coverage who previously purchased such
coverage from USDA field offices. The Company has not experienced any material
negative impact in 1997 from the delinkage mandated by the 1996 Reform Act. The
Company believes that any future potential negative impact of the delinkage
mandated by the 1996 Reform Act will be mitigated by, among other factors, the
likelihood that farmers will continue to purchase MPCI to provide basic
protection against natural disasters since ad hoc federal disaster relief
programs have been reduced or eliminated. In addition, the Company believes that
(i) lending institutions would likely continue to require this coverage as a
condition to crop lending and (ii) many of the farmers who entered the MPCI
program as a result of the 1994 Reform Act have come to appreciate the
reasonable price of the protection afforded by CAT Coverage and will remain in
the program regardless of delinkage. There can, however, be no assurance as to
the ultimate effect which the 1996 Reform Act may have on the business or
operations of the Company.
On June 9, 1997, the Secretary of Agriculture announced that the USDA would
no longer provide CAT Coverage through USDA offices in any state effective for
the 1998 crop year. This was implemented by a transferring of CAT policies to
the various members of the crop insurance industry, including IGF. At this time,
the Company believes that it will retain approximately 9,000 policies that were
formerly written by USDA offices, although there can be no assurance that the
Company will retain this number of policies. Based on historical, per-policy
averages, the Company has preliminarily estimated that it will receive an
additional approximate $6 to $7 million in premiums from such transferred
policies for the 1997 and 1998 crop years, however, there can be no assurance
that this number will be realized. This estimate assumes that IGF will retain
100% of such premiums. There can be no assurance as to the ultimate effect which
the 1996 Reform Act may have on the business operations of the Company.
The Company also engages through Subsidiaries other than SIG and its
Subsidiaries in certain reinsurance and surplus lines operations. Granite
Reinsurance Company Ltd. of Barbados ("Granite Re"), a wholly-owned subsidiary
of the Company, underwrites finite risk insurance and stop-loss reinsurance
including reinsurance for crop insurance coverage written by IGF. Granite Re
participates in various programs of reinsurance for Bermudian, Canadian and U.S.
reinsurance
8
<PAGE>
companies. Symons International Group, Inc. (Florida) ("SIGF"), also a
wholly-owned Subsidiary of the Company, is a specialized surplus lines
underwriting unit based in Florida which provides certain commercial insurance
products through retail agencies, principally in the southeast United States.
SIGF writes these specialty products through a number of different insurers
including Pafco, United National Insurance Group, Munich American Reinsurance
Corp. and underwriters of Lloyd's of London. Effective January 1, 1996, SIG
transferred to the Company all of the shares of capital stock of SIGF. Also,
Granite Insurance Company ("Granite Insurance"), a Canadian federal insurance
company and wholly-owned Subsidiary of the Company which stopped writing
insurance in 1990, has a book of property and casualty insurance business which
is in run-off.
The Common Shares of the Company are traded on the Toronto Stock Exchange
under the symbol "GNC" and on the NASDAQ National Market under the symbol
"GNCNF."
The Company is a Canadian corporation and its principal executive offices
in Canada are located at 181 University Avenue, Suite 1101-Box 11, Toronto,
Ontario, Canada M5H 3M7 (telephone number (416) 594-1155) and its principal
executive offices in the U.S. are located at 4720 Kingsway Drive, Indianapolis,
Indiana (telephone number (317) 259-6300).
RECENT DEVELOPMENTS
In August, 1997, a $135 million offering of trust preferred securities
("Preferred Securities") was completed by SIG Capital Trust I. SIG Capital Trust
I then invested $135 million in senior subordinated notes of SIG. The proceeds
were used by SIG (i) to retire bank debt of approximately $44,900,000 in
principal amount, (ii) to purchase the shares of GGS Holdings not owned by the
Company and (iii) for general corporate purposes. The Company invested the net
proceeds in short-term, income-generating investment-grade securities.
In connection with the issuance of the Preferred Securities, SIG entered
into a Senior Subordinated Indenture (the "Indenture"), pursuant to which SIG
became subject to certain covenants and restrictions. The description of the
Indenture and other related documents is contained in SIG's Registration
Statement on Form S-4, which was filed with the Commission on September 16,
1997. These covenants and restrictions might have a material/adverse effect on
the ability of SIG to conduct it business and on the market price of the Common
Shares of the Company.
RISK FACTORS
There are certain risks involved in an investment in the Common Shares.
Accordingly, prospective purchasers of the Common Shares should consider
carefully the factors set forth below as well as the other information contained
in this Reoffer Prospectus.
9
<PAGE>
Uncertain Pricing and Profitability
One of the distinguishing features of the property and casualty industry is
that its products generally are priced before its costs are known, because
premium rates usually are determined before losses are reported. Premium rate
levels are related in part to the availability of insurance coverage, which
varies according to the level of surplus in the industry. Increases in surplus
have generally been accompanied by increased price competition among property
and casualty insurers. The nonstandard automobile insurance business in recent
years has experienced very competitive pricing conditions and there can be no
assurance as to the Company's ability to achieve adequate pricing. Changes in
case law, the passage of new statutes or the adoption of new regulations
relating to the interpretation of insurance contracts can retroactively and
dramatically affect the liabilities associated with known risks after an
insurance contract is in place. New products also present special issues in
establishing appropriate premium levels in the absence of a base of experience
with such products' performance.
The number of competitors and the similarity of products offered, as well
as regulatory constraints, limit the ability of property and casualty insurers
to increase prices in response to declines in profitability or market demand. In
states which require prior approval of rates, it may be more difficult for the
Company to achieve premium rates which are commensurate with the Company's
underwriting experience with respect to risks located in those states. In
addition, the Company does not control rates on its MPCI business, which are
instead set by the FCIC. Accordingly, there can be no assurance that these rates
will be sufficient to produce an underwriting profit.
The reported profits and losses of a property and casualty insurance
company are also determined, in part, by the establishment of, and adjustments
to, reserves reflecting estimates made by management as to the amount of losses
and loss adjustment expenses ("LAE") that will ultimately be incurred in the
settlement of claims. The ultimate liability of the insurer for all losses and
LAE reserved at any given time will likely be greater or less than these
estimates and material differences in the estimates may have a material adverse
effect on the insurer's financial position or results of operations in future
periods.
Nature of Nonstandard Automobile Insurance Business
The nonstandard automobile insurance business is affected by many factors
which can cause fluctuations in the results of operations of this business. Many
of these factors are not subject to the control of the Company. The size of the
nonstandard market can be significantly affected by, among other factors, the
underwriting capacity and underwriting criteria of standard automobile insurance
carriers. In addition, an economic downturn in the states in which the Company
writes business could result in fewer new car sales and less demand for
automobile insurance. Severe weather conditions could also adversely affect the
Company's business through higher losses and LAE. These factors, together with
competitive pricing and other considerations, could result in fluctuations in
the Company's underwriting results and net income.
10
<PAGE>
Nature of Crop Insurance Business
The Company's operating results from its crop insurance program can vary
substantially from period to period as a result of various factors, including
timing and severity of losses from storms, droughts, floods, freezes and other
natural perils and crop production cycles. Therefore, the results for any
quarter or year are not necessarily indicative of results for any future period.
The underwriting results of the crop insurance business are recognized
throughout the year with a reconciliation for the current crop year in the
fourth quarter.
The Company expects that for the foreseeable future a majority of its crop
insurance business will continue to be derived from MPCI business. The MPCI
program is federally regulated and supported by the federal government by means
of premium subsidies to farmers, expense reimbursement and federal reinsurance
pools for private insurers. As such, legislative or other changes affecting the
MPCI program could impact the Company's business prospects. The MPCI program has
historically been subject to modification at least annually since its
establishment in 1980, and some of these modifications have been significant. No
assurance can be given that future changes will not significantly affect the
MPCI program and the Company's crop insurance business.
The 1994 Reform Act also reduced the expense reimbursement rate payable to
the Company for its costs of servicing MPCI policies that exceed the basic CAT
Coverage level (such policies, "Buy-up Coverage") for the 1997, 1998 and 1999
crop years to 29%, 28% and 27.5%, respectively, of the MPCI Premium serviced, a
decrease from the 31% level established for the 1994, 1995 and 1996 crop years.
Historically, the FCIC has paid the maximum MPCI Buy-up Expense Reimbursement
Payment rate allowable by law, although no assurance can be given that this
practice will continue. Although the 1994 Reform Act directs the FCIC to alter
program procedures and administrative requirements so that the administrative
and operating costs of private insurance companies participating in the MPCI
program will be reduced in an amount that corresponds to the reduction in the
expense reimbursement rate, there can be no assurance that the Company's actual
costs will not exceed the expense reimbursement rate. The FCIC has appointed
several committees comprised of members of the insurance industry to make
recommendations concerning this matter.
The crop insurance industry has recently completed negotiation of the 1998
Standard Reinsurance Agreement ("1998 SRA") with the FCIC, with the 1998 SRA
providing for a 27% MPCI Expenses Reimbursement Payment rate and no change to
the CAT Coverage program for prior years.
The 1994 Reform Act also directs the FCIC to establish adequate premiums
for all MPCI coverages at such rates as the FCIC determines are actuarially
sufficient to attain a targeted loss ratio. Since 1980, the average MPCI loss
ratio has exceeded this target ratio. There can be no assurance that the FCIC
will not increase rates to farmers in order to achieve the targeted loss ratio
11
<PAGE>
in a manner that could adversely affect participation by farmers in the MPCI
program above the CAT Coverage level.
The 1996 Reform Act limited the role of USDA offices in the delivery of
MPCI coverage and eliminated the linkage between CAT Coverage and qualifications
for certain federal farm program benefits. Currently, MPCI coverage is not
required for federal farm program benefits if producers sign a written waiver
that waives eligibility for emergency crop loss assistance. The 1996 Reform Act
also provided that the Secretary of Agriculture may continue to offer CAT
Coverage through USDA offices if the Secretary of Agriculture determines that
the number of approved insurance providers operating in a state is insufficient
to adequately provide catastrophic risk protection coverage to producers.
Effective June 9, 1997, the Secretary of Agriculture announced that the USDA
would no longer provide CAT Coverage through USDA offices in any state. This was
implemented by transferring the collection of premium and administration of CAT
policies to the various members of the crop insurance industry, including IGF.
At this time, the Company believes that it will retain approximately 9,000
policies that were formerly written by USDA offices, although there can be no
assurance that the Company will retain this number of policies. Based on
historical, per-policy averages, the Company has preliminarily estimated that it
will receive approximately an additional $6 to $7 million in premiums from such
transferred policies for the 1997 and 1998 crop years, however, there can be no
assurance that this number will be realized. This estimate assumes that IGF will
retain 100% of such premiums.
Total MPCI Premium for each farmer depends upon the kind of crops grown,
acreage planted and other factors determined by the FCIC. Each year, the FCIC
sets, by crop, the maximum per unit commodity price ("Price Election") to be
used in computing MPCI Premiums. Any reduction of the Price Election by the FCIC
will reduce the MPCI Premium charged per policy, and accordingly will adversely
impact MPCI Premium volume.
The Company's crop insurance business is also affected by market conditions
in the agricultural industry which vary depending on such factors as federal
legislation and administration policies, foreign country policies relating to
agricultural products and producers, demand for agricultural products, weather,
natural disasters, technological advances in agricultural practices,
international agricultural markets and general economic conditions both in the
United States and abroad. For example, the number of MPCI Buy-up Coverage
policies written has historically tended to increase after a year in which a
major natural disaster adversely affecting crops occurs, and to decrease
following a year in which favorable weather conditions prevail.
Highly Competitive Businesses
Both the nonstandard automobile insurance and crop insurance businesses are
highly competitive. Many of the Company's competitors in both the nonstandard
automobile insurance and crop insurance business segments have substantially
greater financial and other resources than the Company, and there can be no
assurance that the Company will be able to compete effectively against such
competitors in the future.
12
<PAGE>
In its nonstandard automobile business, the Company competes with both
large national writers and smaller regional companies. The Company's competitors
include other companies which, like the Company, serve the independent agency
market, as well as companies which sell insurance directly to customers. Direct
writers may have certain competitive advantages over agency writers, including
increased name recognition, loyalty of the customer base to the insurer rather
than an independent agency and, potentially, reduced acquisition costs. In
addition, certain competitors of the Company have from time to time decreased
their prices in an apparent attempt to gain market share. Also, in certain
states, state assigned risk plans may provide nonstandard automobile insurance
products at a lower price than private insurers.
In the crop insurance business, the Company competes against other crop
insurance companies and, with respect to CAT Coverage, USDA field service
offices in certain areas. In addition, the crop insurance industry has become
increasingly consolidated. From the 1985 crop year to the 1995 crop year, the
number of insurance companies that have entered into agreements with the FCIC to
sell and service MPCI policies has declined from 50 to 17. The Company believes
that to compete successfully in the crop insurance business it will have to
market and service a volume of premiums sufficiently large to enable the Company
to continue to realize operating efficiencies in conducting its business. No
assurance can be given that the company will be able to compete successfully if
this market consolidates further.
Importance of Ratings
A.M. Best has currently assigned Superior a B+ (Very Good) rating and Pafco
a B- (Adequate) rating. A "B+" and a "B-" rating are A.M. Best's sixth and
eighth highest rating classifications, out of 15 ratings. A "B+" rating is
awarded to insurers which, in A.M. Best's opinion, "have demonstrated very good
overall performance when compared to the standards established by the A.M. Best
Company" and "have a good ability to meet their obligations to policyholders
over a long period of time." A "B-" rating is awarded to insurers which, in A.M.
Best's opinion, "have demonstrated adequate overall performance when compared to
the standards established by the A.M. Best Company" and "generally have an
adequate ability to meet their obligations to policyholders, but their financial
strength is vulnerable to unfavorable changes in underwriting or economic
conditions". IGF recently received an "NA-2" rating (a "rating not assigned"
category for companies that do not meet A.M. Best's minimum size requirements)
from A.M. Best. IGF intends to seek a revised rating although there can be no
assurance that a revised rating will be obtained or as to the level of any such
rating. A.M. Best bases its ratings on factors that concern policyholders and
agents and not upon factors concerning investor protection. Such ratings are
subject to change and are not recommendations to buy, sell or hold securities.
One factor is an insurer's ability to compete effectively is its A.M. Best
rating. The A.M. Best ratings for the Company's rated Insurers are lower than
for many of the Company's competitors. There can be no assurance that such
ratings or future changes therein will not affect the Company's competitive
position.
13
<PAGE>
Geographic Concentration
The Company's nonstandard automobile insurance business is concentrated in
the states of Florida, California, Texas, Indiana, Missouri and Virginia;
consequently the Company will be significantly affected by changes in the
regulatory and business climate in those states. The Company's crop insurance
business is concentrated in the states of Iowa, Texas, Illinois, Kansas, Montana
and Minnesota. The Company will be significantly affected by weather conditions,
natural perils and other factors affecting the crop insurance business in those
states.
Future Growth and Continued Operations Dependent on Access to Capital
Property and casualty insurance is a capital intensive business. The
Company must maintain minimum levels of surplus in the Insurers in order to
continue to write business, meet the other related standards established by
insurance regulatory authorities and insurance rating bureaus and satisfy ratio
covenants in loan agreements.
Historically, the Company has achieved premium growth as a result of both
acquisitions and internal growth. It intends to continue to pursue acquisition
and new internal growth opportunities. Among the factors which may restrict the
Company's future growth is the availability of capital. Such capital will likely
have to be obtained through debt or equity financing or retained earnings. There
can be no assurance that the Insurers will have access to sufficient capital to
support future growth and also satisfy the capital requirements of rating
agencies, creditors and regulators. In addition, the Company will require
additional capital to finance future acquisitions.
Uncertainty Associated with Estimating Reserves for Unpaid Losses and LAE
The reserves for unpaid losses and LAE established by the Company are
estimates of amounts needed to pay reported and unreported claims and related
LAE based on facts and circumstances then known. These reserves are based on
estimates of trends in claims severity, judicial theories of liability and other
factors.
Although the nature of the Company's insurance business is primarily
short-tail, the establishment of adequate reserves is an inherently uncertain
process, and there can be no assurance that the ultimate liability will not
materially exceed the Company's reserves for losses and LAE and have a material
adverse effect on the Company's results of operations and financial condition.
Due to the inherent uncertainty of estimating these amounts, it has been
necessary, and may over time continue to be necessary, to revise estimates of
the Company's reserves for losses and LAE. The historic development of reserves
for losses and LAE may not necessarily reflect future trends in the development
of these amounts. Accordingly, it may not be appropriate to extrapolate
redundancies or deficiencies based on historical information.
14
<PAGE>
Reliance Upon Reinsurance
In order to reduce risk and to increase its underwriting capacity, the
Company purchases reinsurance. Reinsurance does not relieve the Company of
liability to its insureds for the risks ceded to reinsurers. As such, the
Company is subject to credit risk with respect to amounts not recoverable from
reinsurers. Although the Company places its reinsurance with reinsurers,
including the FCIC, which the Company generally believes to be financially
stable, a significant reinsurer's insolvency or inability to make payments under
the terms of a reinsurance treaty could have a material adverse effect on the
Company's financial condition or results of operations.
The amount and cost of reinsurance available to companies specializing in
property and casualty insurance are subject, in large part, to prevailing market
conditions beyond the control of such companies. The Company's ability to
provide insurance at competitive premium rates and coverage limits on a
continuing basis depends upon its ability to obtain adequate reinsurance in
amounts and at rates that will not adversely affect its competitive position.
Due to continuing market uncertainties regarding reinsurance capacity, no
assurances can be given as to the Company's ability to maintain its current
reinsurance facilities, which generally are subject to annual renewal. If the
Company is unable to renew such facilities upon their expiration, the Company
may need to reduce the levels of its underwriting commitments.
Risks Associated with Investments
The Company's results of operations depend in part on the performance of
its invested assets. Certain risks are inherent in connection with fixed
maturity securities including loss upon default and price volatility in reaction
to changes in interest rates and general market factors. Equity securities
involve risks arising from the financial performance of, or other developments
affecting particular issuers as well as price volatility arising from general
stock market conditions.
Comprehensive State Regulation
Insurers are subject to comprehensive regulation by government agencies in
the states in which they operate. The nature and extent of that regulation vary
from jurisdiction to jurisdiction, but typically involve prior approval of the
acquisition of control of an insurance company or of any company controlling an
insurance company, regulation of certain transactions entered into by an
insurance company with any of its affiliates, limitations on dividends, approval
or filing of premium rates and policy forms for many lines of insurance,
solvency standards, minimum amounts of capital and surplus which must be
maintained, limitations on types and amounts of investments, restrictions on the
size of risks which may be insured by a single company, limitation of the right
to cancel or non-renew policies in some lines, regulation of the right to
withdraw from markets or agencies, requirements to participate in residual
markets, licensing of insurers and agents, deposits of securities for the
benefit of policyholders, reporting with respect to the financial condition, and
other matters. In addition, state insurance department examiners perform
15
<PAGE>
periodic financial and market conduct examinations of insurance companies. Such
regulation is generally intended for the protection of policyholders rather than
security holders. No assurance can be given that future legislative or
regulatory changes will not adversely affect the Company.
Holding Company Structure; Dividend and Other Restrictions; Management Fees
Holding Company Structure; Dividend and Other Restrictions. Each of the
Company and SIG is a holding company whose principal asset is the capital stock
of its Subsidiaries. Since SIG currently intends to retain earnings to finance
the growth and development of its business and does not anticipate paying cash
dividends on its Common Stock in the near future, the Company will have to rely
on dividends and other payments from Granite Re, SIGF and Granite Insurance to
meet its obligations to creditors and to pay corporate expenses. There can be no
assurance that such dividends and other payments will be sufficient to allow the
Company to meet such obligations and pay such expenses. SIG relies primarily on
dividends and other payments from its Subsidiaries (including management fees),
including the Insurers, to meet its obligations to creditors and to pay
corporate expenses. The Insurers are domiciled in the states of Indiana and
Florida and each of these states limits the payment of dividends and other
distributions by insurance companies.
Under these laws, the maximum aggregate amounts of dividends permitted to
be paid in 1997 by IGF and Pafco without prior regulatory approval is
$12,122,000 and $561,000, respectively, none of which has been paid. In the
consent order approving the Acquisition (the "Consent Order"), the Florida
Department of Insurance ("Florida Department") has prohibited Superior from
paying any dividends (whether extraordinary or not) for four years from the date
of Acquisition without the prior written approval of the Florida Department.
Further, state insurance laws and regulations require that the statutory surplus
of an insurance company following any dividend or distribution by such company
be reasonable in relation to its outstanding liabilities and adequate for its
financial needs.
Management Fees. The management agreement originally entered into between
SIG and Pafco was assigned as of April 30, 1996 by SIG to GGS Management, Inc.,
a wholly-owned subsidiary of GGS Holdings ("GGS Management"). This agreement
provides for an annual management fee equal to 15% of gross premiums written. A
similar management agreement with a management fee of 17% of gross premiums
written has been entered into between GGS Management and Superior. Employees of
SIG relating to the nonstandard automobile insurance business and all Superior
employees became employees of GGS Management effective April 30, 1996. In the
Consent Order approving the Acquisition, the Florida Department has reserved,
for a period of three years, the right to reevaluate the reasonableness of fees
provided for in the Superior management agreement at the end of each calendar
year and to require Superior to make adjustments in the management fees based on
the Florida Department's consideration of the performance and operating
percentage of Superior and other pertinent data. There can be no assurance that
either the Indiana Department or the Florida Department will not in the future
require a reduction in these management fees.
16
<PAGE>
Control by Existing Shareholders
G. Gordon Symons, Chairman of the Board of the Company and SIG and the
father of Alan G. Symons, President and Chief Executive Officer of the Company
and Chief Executive Officer of SIG and Douglas H. Symons, Vice President and
Chief Operating Officer of the Company and President and Chief Operating Officer
of SIG, beneficially own in the aggregate approximately 53.5% of the outstanding
Common Shares (inclusive of Common Shares subject to stock options).
Accordingly, since G. Gordon Symons and members of his family have the ability
to elect the Board of Directors of the Company, they have the ability to
effectively control all of the Company's policy decisions. Third parties will
not be able to obtain control of the Company through purchases of Common Shares
not owned by G. Gordon Symons and his family.
Potential Limitations on Ability to Raise Additional Capital
The Company's failure to maintain ownership of at least 50% of SIG's voting
securities will expose the Company to a risk that it will be characterized as an
investment company within the meaning of the Investment Company Act of 1940, as
amended (the "1940 Act"), unless the Company's remaining voting securities of
SIG, together with any other investment securities, represent not more than 40%
of the total assets of the Company on an unconsolidated basis. In such event,
the Company would be required to comply with the registration and other
requirements of the 1940 Act, which would be significantly burdensome for the
Company. This constraint makes it unlikely that the Company would approve a
stock issuance by SIG that reduces the Company's ownership below 50% and
therefore would likely limit the amount of additional capital which can be
raised by SIG through the issuance of voting securities. Among other
consequences, such a limit could affect SIG's ability to raise funds for
acquisition opportunities which may become available to SIG or to GGS Holdings.
Conflicts of Interest
Conflicts of interest between the Company and SIG could arise with respect
to business dealings between them, including potential acquisitions of
businesses or properties, the issuance of additional securities, the election of
new or additional directors and the payment of dividends by the Company. Of the
seven directors of the Company, five are current directors of SIG (three of whom
are members of the Symons family). The Company has not instituted any formal
plan or arrangement to address potential conflicts of interest that may arise
between the Company and SIG.
Conflicts of interest similar to those which could arise between the
Company and SIG could also arise between each of the Company, SIG and GGS
Holdings. Alan G. Symons, President and Chief Executive Officer of the Company
and Chief Executive Officer of SIG, and Douglas H. Symons, Vice President and
Chief Operating Officer of the Company and President and Chief Operating Officer
of SIG, also serve as the Chief Executive Officer and President, and Executive
Vice President, respectively, of GGS Holdings. Such individuals have entered
into
17
<PAGE>
employment agreements with GGS Holdings requiring them to devote substantially
all of their working time and attention to the business and affairs of GGS
Holdings. Further, Alan G. Symons and certain other members of management of the
Company have received options to purchase shares of common stock of GGS
Holdings. In addition, in the event that SIG does not continue to own at least
50% of the outstanding voting securities of GGS Holdings and the voting
securities of GGS Holdings owned by SIG, together with any other investment
securities, represent over 40% of the total assets of SIG on an unconsolidated
basis, SIG will be exposed to a risk that it would be characterized as an
investment company within the meaning of the 1940 Act. This consideration will
limit the amount of additional capital which can be raised through the issuance
by GGS Holdings of its voting securities.
Dependence on Key Personnel in Connection with Future Success
The future success of the Company depends significantly upon the efforts of
certain key management personnel including G. Gordon Symons, Chairman of the
Board of the Company, Alan G. Symons, President and Chief Executive Officer of
the Company, Douglas H. Symons, Vice President and Chief Operating Officer of
the Company and President and Chief Executive Officer of Pafco, Dennis G.
Daggett, President and Chief Operating Officer of IGF, and Roger C. Sullivan,
Jr., Executive Vice President of Superior. A loss of any of these officers could
adversely affect the Company's business.
Possible Liabilities Relating to Transactions
Prior to the offering, the Company entered into a number of transactions,
including the Acquisition and certain other related transactions (collectively,
the "Transactions"). The application of the tax laws to the factual
circumstances relating to certain aspects of the Transactions is uncertain. The
Company cannot predict with certainty whether or when any such liabilities might
arise. Accordingly, the Company's results of operations in one or more future
periods could be materially adversely affected by liabilities relating to the
Transactions. The Company has agreed to indemnify SIG against any of the
foregoing liabilities.
Trading of SIG Common Stock
The market price of the Common Shares may be significantly affected by
trading in the shares of Common Stock of SIG on the NASDAQ National Market since
SIG currently constitutes a substantial majority of the consolidated total
assets of the Company and contributes a substantial majority of the consolidated
net income of the Company. In addition, factors such as quarterly variations in
the Company's financial results, announcements by the Company, SIG or others and
developments affecting the Company or SIG could cause the market price of the
Common Shares to fluctuate significantly.
18
<PAGE>
Shares Eligible For Future Sale
Sales of substantial amounts of Common Shares in the public market could
adversely affect prevailing market prices for the common Shares and may also
affect the Company's future ability to raise additional capital in the equity
markets at a time and a price favorable to the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the offer and sale of Common
Shares by selling security holders pursuant to this Prospectus.
DETERMINATION OF OFFERING PRICE
Common Shares offered pursuant to this Prospectus will be sold by certain
affiliates of the Company as determined by them in their discretion.
SELLING SECURITY HOLDERS; PLAN OF DISTRIBUTION
The Common Shares offered pursuant to this Prospectus are being sold by
certain employees and directors of the Company, its subsidiaries and affiliates,
or other persons who have acquired, or will acquire, such shares under the Goran
Capital Inc. Share Option Plan. The names of employees or directors of the
Company and other persons who may be selling shareholders from time to time are
listed below. The shares may be sold from time to time by the selling
shareholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The shares may be sold by one or more of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) an exchange distribution in accordance with the rules of such exchange; and
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
selling shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers may receive compensation in the form of commissions,
discounts or concessions from selling shareholders and/or the purchasers of the
Common Shares. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the 1933 Act in
connection with such sales. In addition, any securities covered by this
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 other than pursuant to this Prospectus.
Upon the Company being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchaser by a broker or dealer, a
19
<PAGE>
supplemented prospectus will be filed, if required, pursuant to Rule 424(c)
under the 1933 Act, disclosing (i) the name of each such selling shareholder and
of the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Common Shares offered hereby may not
simultaneously engage in market making activities with respect to the Common
Shares. In addition, and without limiting the foregoing, each selling
shareholder will be subject to applicable provisions of the 1934 Act and the
rules and regulations thereunder, including, without limitation, Rule 10b-5,
which provisions may limit the timing of purchases and sales of the Common
Shares by the selling shareholder.
The Company is permitted to suspend the use of this Prospectus in
connection with sales of the Common Shares by holders during certain periods of
time under certain circumstances relating to pending corporate developments and
public filings with the Commission and similar events. Expenses of preparing the
filing the registration statements and all post-effective amendments will be
borne by the Company. The following table sets forth information with respect to
certain of the selling shareholders.
<TABLE>
<CAPTION>
Name of Selling Percentage of
Shareholder and Number of Common Stock to Common Stock
Position With the Shares Shares Subject be Owned After Owned After the
Company Owned (1) to Option Exercise of Option Exercise of Option
- ----------------------- --------------- -------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
G. Gordon
Symons, Chairman 2,506,609 564,645 2,506,609 39.3%
(1a)
Alan G. Symons,
President, CEO,
Director 598,227(2) 208,297 598,227 9.5%
Douglas H.
Symons, President,
COO and Director 301,988(3) 177,338 301,988 4.7%
David L. Bates,
Vice President,
General Counsel
and Secretary 7,916(4) 6,919 7,916 Less than 1%
Gary P.
Hutchcraft, Vice
President, CFO
and Treasurer 3,450(5) 3,000 3,450 Less than 1%
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Name of Selling Percentage of
Shareholder and Number of Common Stock to Common Stock
Position With the Shares Shares Subject be Owned After Owned After the
Company Owned (1) to Option Exercise of Option Exercise of Option
- ----------------------- --------------- -------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Bruce K. Dwyer,
Controller 30,366(5a) 26,166 30,366 Less than 1%
Terry E. Diers,
Vice President,
Marketing, Pafco
General Insurance
Company 1,500 1,500 1,500 Less than 1%
Nathan V. Wilson,
Assistant
Treasurer, Pafco
General Insurance
Company 1,000 1,000 1,000 Less than 1%
Elizabeth Symons,
Employee,
SIG-Florida 27,467(6) 17,400 27,467 Less than 1%
Dennis G.
Daggett, President,
COO of IGF
Insurance
Company 25,000(7) 25,000 25,000 Less than 1%
Thomas F.
Gowdy, Executive
Vice President,
IGF Insurance
Company 23,000(7) 23,000 23,000 Less than 1%
Ronald Chapman,
General Manager,
SIG-Florida 2,000 2,000 2,000 Less than 1%
John L. Mason,
Treasurer, IGF
Insurance
Company 1,000(8) 1,000 1,000 Less than 1%
David B. Shapira,
Director 103,000(8a) 3,000 103,000 1.6%
J. Ross Schofield,
Director 6,800(5) 3,000 6,800 Less than 1%
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Name of Selling Percentage of
Shareholder and Number of Common Stock to Common Stock
Position With the Shares Shares Subject be Owned After Owned After the
Company Owned (1) to Option Exercise of Option Exercise of Option
- ----------------------- --------------- -------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
James G.
Torrance, Director 4,000(9) 2,000 4,000 Less than 1%
John K.
McKeating,
Director 2,000(9) 2,000 2,000 Less than 1%
Roger C. Sullivan,
Executive Vice
President, Superior
Insurance Company 2,000(9) 2,000 2,000 Less than 1%
</TABLE>
(1) Includes common shares subject to options, some of which for certain
individuals have not yet vested and therefore are not exercisable within 60
days of the date hereof, although such shares are not "beneficially" owned
within the meaning of Section 13(d) of the Exchange Act.
(1a) Includes 315,145 shares subject to currently exercisable stock options.
Also includes 1,646,413 shares held by Symons International Group, Ltd. of
which Mr. Symons is the controlling shareholder and 544,511 shares held by
Vantage Investment Trust U/A, March 15, 1993 of which Mr. Symons is the
income and principal beneficiary.
(2) Includes 124,969 shares issuable upon exercise of options.
(3) Includes 63,983 shares issuable upon exercise of options.
(4) Includes 5,864 shares issuable upon exercise of options and 997 shares held
in Mr. Bates' 401(k) account.
(5) Includes 3,000 shares issuable upon exercise of options.
(5a) Includes 3,200 shares held in Mr. Dwyer's Registered Retirement Savings
Plan.
(6) Includes 8,367 shares issuable upon exercise of options.
(7) Includes 22,000 shares issuable upon exercise of options.
(8) Includes 1,000 shares issuable upon exercise of options.
(8a) Includes 3,000 shares issuable upon exercise of options. Also includes
100,000 shares held by 400589 Ontario Limited of which Mr. Shapira is the
controlling shareholder.
(9) Includes 2,000 shares issuable upon exercise of options.
An aggregate of up to 1,069,265 shares of Common Shares may be offered and
sold pursuant to this Prospectus by the selling shareholders.
LEGAL MATTERS
The valid issuance of the Common Shares offered hereby and certain other
legal matters will be passed upon for the Company by Smith Lyons, Toronto,
Canada.
EXPERTS
The consolidated balance sheets of the Company, as of December 31, 1996 and
1995 and the related consolidated statements of operations, earnings (deficits)
and changes in cash resources and cash flows for each of the years in the
22
<PAGE>
three-year period ended December 31, 1996, have been examined by Schwartz
Levitsky Feldman, independent chartered accountants. Such financial statements
have been incorporated by reference herein and in the Registration Statement in
reliance upon the reports with respect thereto of Schwartz Levitsky Feldman and
upon the authority of said firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are hereby incorporated by reference into this
Prospectus:
(1) The annual report on Form 10-K of the Company for the fiscal
year ended December 31, 1996, as amended by Forms 10-K/A filed
with the Commission on April 29, 1997 and May 19, 1997;
(2) All other reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the
Company since December 31, 1996; and
(3) The description of the capital stock of the Company contained
in the Company's Registration Statement on Form 20-F, which
was filed with the Commission on June 21, 1994, and all
amendments of reports filed for the purpose of updating such
description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Prospectus and to be a part
thereof from the date they are filed.
23
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
Document(s) containing information specified by Part I of the form of
Registration Statement on Form S-8, promulgated under the Securities Act of
1933, as amended (the "1933 Act"), will be sent or given to participants in the
Goran Capital Inc. Share Option Plan (the "PLAN") as specified in Rule 428(b)(1)
promulgated by the Securities and Exchange Commission (the "Commission") under
the 1933 Act. Such document(s) are not being filed with the Commission but
constitute (along with the documents incorporated by reference into this Form
S-8 Registration Statement (the "Registration Statement") pursuant to Item 3 of
Part II hereof), a prospectus that meets the requirements of Section 10(a) of
the 1933 Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are hereby incorporated by reference into this
Registration Statement.
(1) The annual report on Form 10-K of the Company for the fiscal
year ended December 31, 1996, as amended by Forms 10-K/A filed
with the Commission on April 29, 1997 and May 19, 1997.
(2) All other reports filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act") by the
Company since December 31, 1996.
(3) The description of the capital stock of the Company contained
in the Company's Registration Statement on Form 20-F, which
was filed with the Commission on June 21, 1994, and all
amendments of reports filed for the purpose of updating such
description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the 1934 Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference into this Registration Statement and
to be a part thereof from the date they are filed.
Item 4. Description of Securities.
Not applicable.
S-1
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Subject to the limitations of the Canadian Business Corporations Act (the
"Act") with respect to indemnities in respect of derivative actions, under its
By-Laws, the Company shall indemnify a present or former director or officer of
the Company or a person who acts or acted at the Company's request as a director
or officer of another corporation of which the Company is or was a shareholder
or creditor, and his heirs and legal representatives, against all costs, charges
and expenses, including an amount paid to settle an action or satisfy a fine or
judgment, reasonably incurred by him in respect of or in connection with any
civil, criminal or administrative action, proceeding or investigation to which
he is, or may be made, a party by reason of being or having been such a director
or officer and provided that the director or officer acted honestly and in good
faith with a view to the best interests of the Company and, in the case of a
criminal or administrative action or proceeding that is enforced by a monetary
penalty, had reasonable grounds for believing that his conduct was lawful. The
indemnification provisions of the Bylaws effectively provide for indemnification
to the maximum extent permitted by the Act and generally provide that the
Company will provide indemnification in every circumstance where the Act so
permits or requires. The Company also carries director and officer liability
insurance coverage.
Item 7. Exemption from Registration Claimed.
The Common Shares which were acquired prior to the date of filing of this
S-8 with the Commission to be reoffered pursuant to the Reoffer Prospectus were
acquired pursuant to options granted under the Plan in transactions not
involving any public offering. Accordingly, such Common Shares were acquired in
private placements which were exempt from registration under Section 4(2) of the
1933 Act.
Item 8. Exhibits.
The exhibits furnished with the Registration Statement are listed on Page
E-6.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes, (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act; (ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding
S-2
<PAGE>
the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; (iii) to include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that clauses (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those clauses is contained in periodic reports filed by the Registrant pursuant
to Section 13 or 15(d) of the 1934 Act that are incorporated by reference in the
Registration Statement; (2) that, for the purpose of determining any liability
under the 1933 Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
S-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Toronto, and the Province of Ontario, Canada, on this
20th day of January, 1998.
GORAN CAPITAL INC.
By: /s/ Alan G. Symons
-------------------------
Alan G. Symons
President and Chief Executive Officer
Each person whose signature appears below hereby severally constitutes and
appoints Alan G. Symons, Douglas H. Symons and David L. Bates and each of them,
as attorney-in-fact for the undersigned, in any and all capacities, with full
power of substitution, to sign any amendments to this Registration Statement
(including post-effective amendments) and any subsequent registration statement
filed by the Registrant pursuant to Rule 462(b) of the Securities Act of 1933,
and to file the same with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each said attorney-in-fact, or
any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
(1) Principal Executive Officer:
/s/ Alan G. Symons President and Chief
Alan G. Symons Executive Officer January 20, 1998
S-4
<PAGE>
(2) Principal Financial and Accounting Officer:
/s/ Gary P. Hutchcraft Vice President and
Gary P. Hutchcraft Chief Financial Officer January 20, 1998
and Treasurer
(3) The Board of Directors
/s/ G. Gordon Symons Director January 20, 1998
G. Gordon Symons
/s/ Alan G. Symons Director January 20, 1998
Alan G. Symons
/s/ Douglas H. Symons Director January 20, 1998
Douglas H. Symons
/s/ John K. McKeating Director January 20, 1998
John K. McKeating
/s/ James G. Torrance Director January 20, 1998
James G. Torrance
/s/ J. Ross Schofield Director January 20, 1998
J. Ross Schofield
/s/ David B. Shapira Director January 20, 1998
David B. Shapira
S-5
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
5 Opinion of Smith Lyons as to the legality of the securities being
registered
10.20 Goran Capital Inc. Share Option Plan*
23.1 Consent of Schwarz Levitsky Feldman
23.2 Consent of Smith Lyons (included as part of Exhibit 5)
23.3 Consent of Coopers & Lybrand, LLP
24 Power of Attorney (included on Page S-4 of the Registration
Statement)
* Incorporated by reference to the similarly designated exhibit to the
Registration Statement of Symons International Group, Inc. on S-1, Registration
No. 333-9129
E-6
Exhibit 5
January 21, 1998
Goran Capital Inc.
181 University Avenue
Suite 1101-Box 11
Toronto, Ontario
Canada M5H 3M7
Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-8 (the "Registration Statement") of Goran Capital Inc. (the
"Corporation"), relating to the offer and sale of up to 1,069,265 common shares
in the capital of the Corporation (the "Common Shares") issued or to be issued
under the Corporation's Share Option Plan (the "Plan"). In connection with your
request, we have relied upon such certificates of officers of the Corporation
and considered such questions of law and taken such further action as we have
deemed necessary or appropriate to enable us to render this opinion.
In providing our opinion herein we have assumed that the Plan has been duly
approved by the shareholders of the Corporation and, for purposes of determining
the number of common shares of the Corporation that have been issued, or are
subject to issuance, pursuant to the exercise of options granted under the Plan,
we have relied solely on a certificate of an officer of the Corporation.
Based upon such examination and subject to the limitations set out herein,
we are of the opinion that, when the Common Shares have been purchased and the
purchase price therefor has been paid in accordance with the Plan, the Common
Shares will be validly issued as fully paid and non-assessable shares in the
capital of the Corporation.
We are qualified to render opinions only as to the laws of the Provine of
Ontario and the federal laws of Canada applicable therein. The opinions express
below are to be construed in accordance with such laws only as they are in
effect on the date hereof. In particular, we express no opinion with respect to
the securities laws of any jurisdiction in which the Common Shares have been or
may be issued or in which such Common Shares may be sold pursuant to the
Registration Statement.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement. In giving this consent, however, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the United
States Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Yours very truly,
/s/ Smith Lyons
Smith Lyons
E-7
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 21, 1997 which was included in
the 1996 annual report to shareholders, filed as Exhibit 13.2 to Goran Capital
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedules, which are also included in such Annual Report on Form 10-K,
and to the reference to our firm under the caption "Experts" in the Reoffer
Prospectus accompanying this Registration Statement.
/s/ Schwartz Levitsky Feldman
Schwartz Levitsky Feldman
Chartered Accountants
Toronto, Ontario, Canada
January 20, 1998
E-8
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Goran Capital Inc. on Form S-8 (File No. 0-0000) of our report dated June 14,
1996, on our audits of the consolidated financial statements of Superior
Insurance Company and Subsidiaries as of December 31, 1995 and 1994 and for the
years ended December 31, 1995, 1994 and 1993, which was included in Form 8-K
dated May 15, 1996, as amended by Forms 8-K/A dated July 16, 1996, August 1,
1996 and April 4, 1997.
/s/ Coopers & Lybrand, L.L.P.
Atlanta, Georgia
January 21, 1998
E-9
