-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S2UcLcr8QEWBvUuR6MpSmwUOH8ZuZbmIZLCWAJsz4rwEgTwIxoi5o9589FJkzLrG z24rC1IwGkhhPNYesGyHNQ== 0000774624-98-000047.txt : 19980506 0000774624-98-000047.hdr.sgml : 19980506 ACCESSION NUMBER: 0000774624-98-000047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980505 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980505 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED GROUP INC CENTRAL INDEX KEY: 0000774624 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 420958655 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12663 FILM NUMBER: 98610818 BUSINESS ADDRESS: STREET 1: 701 FIFTH AVE CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152804211 MAIL ADDRESS: STREET 1: 701 5TH AVENUE CITY: DES MOINES STATE: IA ZIP: 50391-2000 FORMER COMPANY: FORMER CONFORMED NAME: AID CORP DATE OF NAME CHANGE: 19870519 8-K 1 PRESS RELEASE 05/05/98 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report May 5, 1998 (Date of earliest event reported) ALLIED Group, Inc. (Exact name of registrant as specified in its chapter) Iowa 0-14243 42-0958655 (State of other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) Fine Number) Identification No.) 701 Fifth Avenue, Des Moines, Iowa 50391-2000 (Address of principal executive offices) (Zip Code) 515-280-4211 (Registrant's telephone number including area code) The total number of pages contained herein is 7. 2 Item 5. Other Events. Attached hereto and incorporated herein is the press release dated May 5, 1998 which is filed as Exhibit 20.4 to this Form 8-K announcing an amendment to the Second Amended and Restated Reinsurance Pooling Agreement. Item 7. Financial Statements and Exhibits. (c) Exhibits. 10.65 Third Amendment to the Second Amended and Restated Reinsurance Pooling Agreement, dated May 5, 1998. 20.4 Press release dated May 5,1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLIED Group, Inc. (Registrant) /s/ Jamie H. Shaffer -------------------------------------------------------------- Jamie H. Shaffer, Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: May 5, 1998 EX-10 2 3RD AMENDMENT TO 2ND AMENDED REINS POOL 3 EXHIBIT 10.65 THIRD AMENDMENT TO THE SECOND AMENDED AND RESTATED REINSURANCE POOLING AGREEMENT WHEREAS, the undersigned parties (Participants) entered into the above-captioned agreement (Agreement) on December 14, 1992 and executed amendments thereto on February 18, 1993 and February 10, 1995; WHEREAS, the Participants desire to enter into a third amendment to the Agreement pursuant to Section 8.1 thereof; and WHEREAS, the amendments set out hereinbelow were approved by the Coordinating Committee and the board of directors of ALLIED Mutual Insurance Company on May 4, 1998 and by the boards of directors of AMCO Insurance Company, ALLIED Property and Casualty Insurance Company, and Depositors Insurance Company on May 5, 1998; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, the Participants hereby agree as follows; 1. Effective January 1, 1998, Section 3.8 of the Agreement is deleted therefrom in its entirety; 2. Effective on the date of this amendment, Section 3.7 of the Agreement is hereby amended by deleting therefrom in its entirety the final sentence thereof, as added by the Second Amendment thereto; 3. Effective July 1, 1998, Exhibit C to the Agreement, which is captioned "Administrative Fee" and which is incorporated by reference into Section 3.7 thereof, is amended as follows: A. Subsection 2 of Exhibit C is deleted in its entirety and replaced with the following; "7.5% of Adjusted Earned Premiums+ multiplied by its Applicable Participation Percentage (6.75% for unallocated LAE and 0.75% for investment expense)" B. The following is added to the definitions of Adjusted Written Premiums and Adjusted Earned Premiums by insertion at the end thereof: "and those premiums written by the Square Deal Division of Mutual" C. Subsections 3 and 4 of Exhibit C are deleted therefrom in their entirety. 4 4. Effective January 1, 1999, Exhibit C to the Agreement is amended as follows: A. Subsection 1 is deleted in its entirety and replaced with the following: "Commencing on January 1, 1999, its Applicable Participation Percentage multiplied by that percentage of Adjusted Written Premiums* which is the product of Adjusted Written Premiums* and a percentage equaling the average underwriting expense (excluding commissions and premiums taxes) incurred by the Participants and the Square Deal Division of Mutual during the Annual Statement years 1994 through 1998." B. Subsection 2 is deleted in its entirety and replaced with the following: "Commencing on January 1, 1999, its Applicable Participation Percentage multiplied by the total of (i) total unallocated loss adjustment expense incurred by the Participants and the Square Deal Division of Mutual for that Annual Statement year and (ii) 0.50% of Adjusted Earned Premiums+." C. The following is added to the Exhibit as Subsection 3: "The foregoing notwithstanding, for Annual Statement years 1998 through 2000, no Affiliated Company shall be required to pay the Pool Administrator in any year an Administration Fee calculated pursuant hereto which is greater than that it would have paid if the Administrative Fee had been calculated pursuant to the terms of the Agreement as they existed prior to execution of this Third Amendment." 5. Effective January 1, 2000, Exhibit C to the Agreement is amended by (i) striking the phrase "1994 through 1998" from the last line of Subsection 1 and by replacing it with "1995 through 1999" and (ii) striking the phrase "0.50% of Adjusted Earned Premiums+" from the last line of Subsection 2 and by replacing it with "0.25% of Adjusted Earned Premiums+." 6. Effective January 1, 2001, the Agreement shall be amended by deleting Section 3.7 and Exhibit C therefrom in their entirety and by replacing Section 3.7 with the following: "For each Annual Statement year commencing on or after January 1, 2001, the Pool Administrator shall be reimbursed by each Affiliated Company for those Company Specific Expenses and Non-Pooled Items paid by the Pool Administrator on its behalf. In addition thereto, each Affiliated Company shall pay to the Pool Administrator an amount equaling its Applicable Participation Percentage of the Participants', including Square Deal Division of Mutual, total Administrative Expenses." 5 IN WITNESS HEREOF, the undersigned parties hereto have executed this amendment on the 5th day of May, 1998.
ALLIED Mutual Insurance Company AMCO Insurance Company By: /s/ Douglas L. Andersen By: /s/ Douglas L. Andersen --------------------------------------- --------------------------------------- Its: President and Chief Executive Officer Its: President and Chief Executive Officer ------------------------------------- ------------------------------------- ALLIED Property and Casualty Depositors Insurance Company Insurance Company By: /s/ Douglas L. Andersen By: /s/ Douglas L. Andersen --------------------------------------- --------------------------------------- Its: President and Chief Executive Officer Its: President and Chief Executive Officer ------------------------------------- -------------------------------------
EX-20 3 PRESS RELEASE 05/05/98 6 EXHIBIT 20.4 ALLIED GROUP, INC. ANNOUNCES BOARD ACTIONS Des Moines, Iowa, May 5, 1998--ALLIED Group, Inc. (NYSE symbol GRP) today announced three actions by its Board of Directors. The first was an amendment to the pool administration provisions of the pooling agreement between the Company's property-casualty segment and ALLIED Mutual Insurance Company; the amendment was also approved by the Board of Directors of ALLIED Mutual. The second was the approval of a stock repurchase program. The third was declaring a second-quarter dividend of $0.13 per share that will be payable June 26, 1998 to stockholders of record on June 12, 1998. The pooling agreement provides that pool participants cede to AMCO Insurance Company, the ALLIED Group, Inc. subsidiary named as pool administrator, premiums, losses, and certain expenses and assume from AMCO an amount of the pooled property-casualty business equal to their participation percentage (64% for the Company's property-casualty segment, 36% for ALLIED Mutual). Prior to the amendment, AMCO paid certain underwriting, unallocated loss settlement, and premium collection expenses for the pool participants and was reimbursed on a set percentage-of-premiums basis. Having AMCO assume the risk of expense volatility rewarded the Company if efficiencies were achieved and allowed ALLIED Mutual to benefit from a stable, predictable expense ratio. As the Company's operations became more efficient, the difference between its expense ratio and ALLIED Mutual's widened. Recently, the gap began closing. The amended agreement accelerates movement toward convergence and eliminates any difference in expense ratios by 2001. The amendment is effective in 1998 and was filed on a Form 8-K with the SEC. The two Boards acted to phase out the difference in expense ratios so all parties to the pooling agreement would continue to qualify for a pooled rating from A.M. Best. 7 To estimate the impact on future earnings per share, Company management assumed third and fourth quarter 1998 earnings will be the same as first quarter's and calculated the effect of the amended agreement to be a $0.01 per share per quarter reduction. Using the same assumption and calculation, Company management estimated the amended agreement will reduce 1999 earnings by $0.04 per share each quarter. The ALLIED Group, Inc. Board also approved a stock repurchase program to acquire up to 250,000 shares of Company common stock over the next twelve months. The repurchases will be made from time to time in compliance with Rule 10b-18 of the Securities Exchange Act of 1934. Completion of the program will depend on market conditions. The program is not a request or an offer for or in response to a tender offer or any other offer for Company shares. The Company may terminate the program at any time. As of April 30, 1998, the Company had 30.6 million shares of common stock outstanding. At the 1998 ALLIED Group, Inc. Annual Meeting of Stockholders held today, three members were elected to the Board of Directors: James W. Callison, Richard O. Jacobson, and John P. Taylor. They will serve until the 2001 Annual Meeting. The estimates of reductions in future earnings discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (Reform Act). These forward-looking statements are made pursuant to the safe harbor provisions of the Reform Act. Investors are cautioned that there are important factors that could cause actual results to differ materially from those in these forward-looking statements. These factors include, but are not limited to, (1) heightened competition--particularly intensified price competition, (2) adverse state and federal legislation and regulations, (3) changes in interest rates causing a reduction of investment income, (4) general economic and business conditions that are less favorable than expected, (5) unanticipated changes in industry trends, (6) adequacy of loss reserves, (7) catastrophic events or the occurrence of a significant number of storms and wind and hail losses, and (8) other risks detailed from time to time in the Company's reports. ALLIED Group, Inc. is a regional property-casualty insurance holding company specializing in personal lines. The Company's property-casualty subsidiaries use independent agencies, exclusive agencies, and direct response marketing in central and western states. -----END PRIVACY-ENHANCED MESSAGE-----