Specialty Underwriters' Alliance, Inc. Urges Stockholders to Reject Election of Hallmark Board Slate
22 April 2009 - 7:02AM
PR Newswire (US)
CHICAGO, April 21 /PRNewswire-FirstCall/ -- Specialty Underwriters'
Alliance, Inc. (NASDAQ:SUAI) ("SUA" or the "Company") announced
today that the Company is currently distributing a letter to
stockholders in response to the proxy contest being waged by
Hallmark Financial Services, Inc. The text of the letter to
stockholders can be seen in its entirety below: [Specialty
Underwriters' Alliance letterhead] April 21, 2009 Dear Fellow
Stockholders: We previously sent you proxy materials and a WHITE
proxy card relating to the upcoming Annual Stockholders' Meeting of
Specialty Underwriters' Alliance, Inc. ("SUA" or the "Company"). No
matter how many shares you own, it is very important that you be
represented at the Annual Meeting. You have likely also received a
gold proxy card from Hallmark Financial Services, Inc.
("Hallmark"), asking you to support its nominees in what we believe
is an attempt by Hallmark to gain effective control of SUA without
adequately compensating all of SUA's stockholders. We are extremely
pleased that Glass Lewis & Co., a leading independent proxy
advisor to a large number of the world's largest institutional
investors, has very recently issued its recommendation to SUA's
stockholders to REJECT Hallmark's nominees. AS YOU WILL SEE BELOW,
HALLMARK'S MATERIALS ARE FULL OF HALF-TRUTHS AS WELL AS OUTRIGHT
INACCURACIES: With regard to a takeover proposal made by Hallmark
last year, Hallmark has stated "SUA's Board rejected Hallmark's
proposal and refused to enter into discussions with Hallmark." THE
TRUTH: -- SUA'S BOARD DELIBERATED FULLY WITH ITS LEGAL AND
FINANCIAL ADVISORS IN 2008 AND DETERMINED THE OFFER WAS WELL BELOW
MARKET FOR INSURANCE ACQUISITIONS. -- THIS SENTIMENT WAS
UNANIMOUSLY SUPPORTED BY THE MANY STOCKHOLDERS WE VISITED AFTER THE
DECISION IN 2008. -- THE COMPANY'S SENIOR MANAGEMENT HAS MET WITH
HALLMARK DURING 2008 AND 2009 AT HALLMARK'S REQUEST. -- FOUR OF
SUA'S INDEPENDENT DIRECTORS HAVE MET WITH HALLMARK'S CHAIRMAN, MARK
SCHWARZ, AND CEO, MARK MORRISON, TO HEAR THEIR PERSPECTIVES AND
POSITIONS. -- OUR BOARD WILL CONTINUE TO CONSIDER WHETHER A SALE OR
MERGER WILL BEST INCREASE VALUE FOR OUR STOCKHOLDERS AS COMPARED TO
ORGANIC GROWTH. -- WE BELIEVE ANY SALE OR MERGER TRANSACTION SHOULD
RECOGNIZE THE LONG-TERM POTENTIAL OF THE SUA BUSINESS PLATFORM.
Hallmark tells you it believes that "SUA needs improved corporate
governance." THE TRUTH: -- RISKMETRICS GROUP RATES SUA AS HAVING A
BETTER CORPORATE GOVERNANCE QUOTIENT ("CGQ") THAN 83.1% OF RATED
INSURANCE COMPANIES. -- HALLMARK'S CGQ IS BETTER THAN JUST 31.4% OF
INSURANCE COMPANIES. -- THE STRATEGIC REVIEW COMMITTEE OF SUA
(COMPOSED SOLELY OF INDEPENDENT DIRECTORS) PROACTIVELY REVIEWS
SUA'S PROSPECTS AND STRATEGIC ALTERNATIVES WITH THE INTERESTS OF
ALL SUA STOCKHOLDERS IN MIND - NOT JUST THE INTERESTS OF HALLMARK
FINANCIAL. Hallmark accuses SUA of entering into change of control
and employment agreements with its senior management as a defensive
measure and reaction to their initial indication of interest in
merging with SUA. THE TRUTH: -- OUR COMPENSATION COMMITTEE
(COMPRISED OF INDEPENDENT BOARD MEMBERS) CONDUCTED A COMPREHENSIVE
REVIEW OF OUR OFFICER COMPENSATION DURING CALENDAR 2007 WITH THE
ASSISTANCE OF F.W. COOK, A NATIONALLY RECOGNIZED COMPENSATION
CONSULTANT. -- OUR COMPENSATION COMMITTEE RE-NEGOTIATED EXISTING
EMPLOYMENT AGREEMENTS DURING 2007 AND EARLY 2008 AND APPROVED THE
REVISED AGREEMENTS MORE THAN TWO MONTHS PRIOR TO HALLMARK'S WRITTEN
OFFER (A MERE FOUR DAYS AFTER HALLMARK RAISED THE POSSIBILITY OF A
BUSINESS COMBINATION). -- POTENTIAL SEVERANCE PAYMENTS UNDER THE
NEW AGREEMENTS ARE LESS THAN THOSE PROVIDED FOR IN THE INITIAL
EMPLOYMENT AGREEMENTS THAT WERE IN PLACE WHEN THE COMPANY WENT
PUBLIC. Hallmark claims that SUA has performed well below the
industry and its peers. THE TRUTH: -- SUA WENT PUBLIC IN LATE 2004
AND, DESPITE TOUGH ECONOMIC TIMES, HAS MADE CONSIDERABLE STRIDES TO
GROW ITS BUSINESS. -- IN FACT, OVER THE PAST THREE YEARS: -- SUA'S
BOOK VALUE GROWTH HAS AVERAGED 9.2% ANNUALLY. -- SUA'S AVERAGE
RETURN ON EQUITY HAS BEEN 7.6%. -- SUA'S STOCK PRICE HAS BEATEN THE
S&P 500 P&C INSURANCE INDEX. Hallmark compares our expense
ratios to the industry and points out that they are high. THE
TRUTH: -- OUR LOSS RATIOS ARE APPROXIMATELY 10% LOWER THAN THE
INDUSTRY.(1) -- A MORE APPROPRIATE MEASUREMENT IS OUR COMBINED
RATIO (EXPENSE AND LOSS RATIO), WHICH HAS AVERAGED BETTER THAN THE
INDUSTRY OVER THE LAST THREE YEARS.(1) HALLMARK IS ASKING YOU TO
ELECT ITS NOMINEES WHEN THEY BRING NO EXPERIENCE THAT IS NOT
ALREADY PRESENT ON YOUR BOARD. BESIDES ITS STATED GOAL OF ACQUIRING
SUA, HALLMARK HAS PRESENTED YOU WITH NO PLAN AS TO WHAT IT BELIEVES
THE COMPANY SHOULD DO DIFFERENTLY. Send a message to Hallmark.
Discard any gold proxy card you receive. Please do not return the
gold proxy card, even to vote against the Hallmark nominees. Doing
so will override any previous vote you have cast for your current
Board's nominees. Please support your Company and vote your shares
today. Thank you for your time and attention. Sincerely, Your Board
of Directors If you have questions or need assistance voting your
shares, please call: The Altman Group, Inc. 1200 Wall Street West,
3rd Floor Lyndhurst, NJ 07071 Toll Free at: (866) 620-5668 or (201)
806-7300 -- Even if you have previously signed a gold proxy card,
you should sign, date and return the enclosed WHITE PROXY CARD. You
have the right to change your vote and only the latest dated proxy
counts. -- Please do not send back any gold proxy card you receive,
even to vote against the Hallmark candidates. Doing so will cancel
any prior vote you cast for your board. Please return only the
WHITE PROXY CARD. If you hold your shares in a brokerage or bank
account (in "street name"), your broker or bank cannot vote your
shares this year (as it has in past routine annual meetings) unless
you complete, sign and return the enclosed WHITE PROXY CARD. About
Specialty Underwriters' Alliance, Inc. Specialty Underwriters'
Alliance, Inc., through its subsidiary SUA Insurance Company, is a
specialty property and casualty insurance company providing
commercial insurance products through exclusive wholesale Partner
Agents that serve niche groups of insureds. These targeted
customers require highly specialized knowledge due to their unique
risk characteristics. Examples include tow trucks, professional
employer organizations, public entities, and contractors. SUA's
innovative approach provides products and claims handling, allowing
the Partner Agent to focus on distribution and customer
relationships. Safe Harbor Statement The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" for
forward-looking statements. This release or any other written or
oral statements made by or on behalf of the company may include
forward-looking statements that reflect the company's current views
with respect to future events and financial performance. All
statements other than statements of historical fact included in
this release are forward-looking statements. Forward-looking
statements can generally be identified by the use of
forward-looking terminology such as "may," "will," "plan,"
"expect," "intend," "estimate," "anticipate," "believe" or
"continue" or their negative or variations or similar terminology.
All forward-looking statements address matters that involve risks
and uncertainties. Accordingly, there are or will be important
factors that could cause our actual results to differ materially
from those indicated in these statements. We believe that these
factors include but are not limited to ineffectiveness or
obsolescence of our business strategy due to changes in current or
future market conditions; increased competition on the basis of
pricing, capacity, coverage terms or other factors; greater
frequency or severity of claims and loss activity, including as a
result of natural or man-made catastrophic events, than our
underwriting, reserving or investment practices anticipate based on
historical experience or industry data; the effects of acts of
terrorism or war; developments in the world's financial and capital
markets that adversely affect the performance of our investments;
changes in regulations or laws applicable to us, our subsidiaries,
brokers or customers; acceptance of our products and services,
including new products and services; changes in the availability,
cost or quality of reinsurance and failure of our reinsurers to pay
claims timely or at all; decreased demand for our insurance or
reinsurance products; loss of the services of any of our executive
officers or other key personnel; the effects of mergers,
acquisitions and divestitures; changes in rating agency policies or
practices; changes in legal theories of liability under our
insurance policies; changes in accounting policies or practices;
and changes in general economic conditions, including inflation and
other factors. Forward-looking statements speak only as of the date
on which they are made, and the company undertakes no obligation to
update publicly or revise any forward-looking statement, whether as
a result of new information, future developments or otherwise. (1)
Based on SNL Financial, Inc. P&C Industry Data. DATASOURCE:
Specialty Underwriters' Alliance, Inc. CONTACT: Scott Goodreau of
Specialty Underwriters' Alliance, Inc., 1-888-782-4672, ; or Leslie
Loyet of Financial Relations Board, +1-312-640-6672, , for
Specialty Underwriters' Alliance, Inc.
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