-----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, RvgGHsYbwcRhRs8/T0/o/D0ygtw2dB5lPRSiEtLsdm/NpjKkNozdJkDIqeCmEq9k IUydA39tP1aKSO6TqBvdRw== 0000950135-03-005000.txt : 20030929 0000950135-03-005000.hdr.sgml : 20030929 20030929171053 ACCESSION NUMBER: 0000950135-03-005000 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCE GROUP INC /MA CENTRAL INDEX KEY: 0000811612 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 042599931 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13672 FILM NUMBER: 03915617 BUSINESS ADDRESS: STREET 1: 211 MAIN ST CITY: WEBSTER STATE: MA ZIP: 01570 BUSINESS PHONE: 5089439000 MAIL ADDRESS: STREET 1: 211 MAIN STREET STREET 2: 211 MAIN STREET CITY: WEBSTER STATE: MA ZIP: 01570 10-K/A 1 b47929cge10vkza.txt FORM 10-K/A DATED 12/31/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-13672 The Commerce Group, Inc. (Exact name of registrant as specified in its charter) Massachusetts 04-2599931 (State or other jurisdiction (IRS Employer Identification No.) of incorporation) 211 Main Street 01570 Webster, Massachusetts (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (508) 943-9000 Securities registered pursuant to Section 12(b) of the Act: Name of each Exchange Title of each Class on Which Registered ------------------- --------------------- Common Stock, $.50 Par Value Per Share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X] No [ ] The aggregate market value of the common stock held by non-affiliates of the registrant, computed by reference to the price at which the common stock was last sold, as of June 30, 2003, was $786,766,166. ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company has granted stock options to eligible agents of American Commerce. The following table provides a summary of those grants.
GRANT NUMBER OF DATE EXPIRATION DATE UNDERLYING SHARES EXERCISABLE DATE EXERCISE PRICE ---- ----------------- ----------- ---------- -------------- 11/29/99 1,872,380 11/29/04 11/29/09 $36.32 07/31/00 25,000 7/31/05 7/31/10 $34.04 07/31/01 225,000 7/31/06 7/31/11 $42.85 07/31/02 475,000 7/31/07 7/31/12 $49.50
No cash consideration was received by the Company in exchange for the options. The purpose of the options is to provide an incentive for the agents to maintain their existing business volume with American Commerce. Additional options are granted based on the year-over-year increase in the volume of agency business written with American Commerce. The options have been offered and sold pursuant to Securities Act Rule 506. Neither the Company nor any person acting on its behalf has offered or sold the options by any form of general solicitation or general advertising, and the Company has exercised reasonable care to assure that none of the recipients is an underwriter within the meaning of Section 2(11) of the Securities Act. Based upon representations from the recipients, the Company has reason to believe that not more than one of the recipients was not an accredited investor, as defined in Securities Act Rule 501. The right of the recipient to exercise these options is contingent upon the average volume of other-than-Massachusetts private passenger automobile and homeowners direct written premiums placed and maintained with American Commerce for a five-year period specified in each option agreement. If qualified, the recipient may purchase the Company's common stock at the exercise price for a period of five years beginning five years after the date of the grant (the "Confirmation Date"). Unexercised options terminate not later than ten years after the date of the grant (the "Expiration Date"). The options may be exercised only by withholding option shares to pay the exercise price. The Company provided "put rights" to the holders of the options granted in 1999. These put rights permit the option holders to require the Company to purchase the options, at any time from and after the Confirmation Date through and including the Expiration Date, at a price of $3.68 per share, which is the difference between the exercise price per option and $40.00. Our total liability under the put rights, assuming that the options become fully exercisable, would be $6.9 million. For the other information required by this Item, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations--Common Stock Price and Dividend Information." ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K A. (1) The financial statements and notes to financial statements are filed as part of this report in "Part II Item 8". (2) The financial statement schedules are listed in the Index to Consolidated Financial Statement Schedules. (3) The exhibits are listed in the Index to Exhibits. B. No reports on Form 8-K were filed during the quarter ended December 31, 2002. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: September 29, 2003 THE COMMERCE GROUP, INC. By:/s/ Arthur J. Remillard, Jr. -------------------------------- Arthur J. Remillard, Jr. President, Chief Executive Officer, and Chairman of the Board THE COMMERCE GROUP, INC. AND SUBSIDIARIES INDEX TO EXHIBITS(A)
EXHIBIT NUMBER TITLE - ------- ----- 3.1 Articles of Organization, as amended (B) 3.2 By-Laws (B) 4 Stock Certificate (B) 10.8* 1994 Management Incentive Plan as amended (C) 10.18* Form of Non-Qualified Stock Option Agreement (D) 10.19* Form of Incentive Stock Option Agreement (D) 10.20* Form of Non-Qualified Stock Option Agreement (D) 10.21* Form of Stock Option Agreement (D) 10.23* Form of Book Value Award Agreement (E) 10.24 Reinsurance Agreement with Employers Reinsurance Corporation(F) 10.25* 2002 Amended & Restated Incentive Compensation Plan (G) 10.26 ACIC Agent Growth Option Agreement (G) 10.27 Form of AAA Marketing Agreement 10.28 Form of AAA Service Agreement 21.1 Subsidiaries of the Registrant (G) 31.1 Rule 13a-14(a)/15d-14(a) Certification 31.2 Rule 13a-14(a)/15d-14(a) Certification
(A) Exhibits other than those listed are omitted because they are not required or are not applicable. Copies of exhibits are available without charge by writing to the Assistant to the President at 211 Main Street, Webster, MA 01570. (B) Incorporated herein by reference to the exhibit with the same exhibit number, filed as an exhibit to the Registrant's Registration Statement on Form S-18 (No. 33-12533-B). (C) Incorporated herein by reference to the exhibit with the same exhibit number, filed as an exhibit to the Registrant's Form 10-Q for the period ended September 30, 1997. (D) Incorporated herein by reference to the exhibit with the same exhibit number, filed as an exhibit to the Registrant's Form 10-K for the year ended December 31, 1999. (E) Incorporated herein by reference to the exhibit with the same exhibit number, filed as an exhibit to the Registrant's Form 10-Q for the period ended June 30, 2002. (F) Incorporated herein by reference to the exhibit with the same exhibit number, filed as an exhibit to the Registrant's Form 10-Q for the period ended September 30, 2002. (G) Filed as an exhibit to the Registrant's Form 10-K for the year ended December 31, 2002. * Denotes management contract or compensation plan or arrangement. EX-10.27 3 b47929cgexv10w27.txt FORM OF AAA MARKETING AGREEMENT Exhibit 10.27 COMMERCE INSURANCE [CIC Logo] The Commerce Insurance Company Citation Insurance Company 211 Main Street, Webster, Massachusetts 01570 (508) 943-9000 Members of The Commerce Group, Inc. June 16, 1995 Mr. Earle B. Seeley, Pres. AUTOMOBILE CLUB OF MERRIMACK VALLEY 155 Parker Street Lawrence, MA 01842-0039 RE: MASSACHUSETTS PERSONAL AUTOMOBILE GROUP MARKETING AGREEMENT Dear Buzz: This letter is to document and confirm the personal automobile group marketing agreement between The Automobile Club of Merrimack Valley, herein after referred to as AAA, and The Commerce Insurance Company. Relevant components of the agreement include: 1. Group Definition - All vehicles owned by members of AAA will be eligible for the group personal automobile program. Although separate negotiations will occur between Commerce and other AAA offices, it is our intent to offer a group program to all AAA members in Massachusetts. While Commerce will attempt to maintain consistency in the group products made available to the different AAA Chapters, it is recognized that differences may result from the underlying loss experience and marketing plans/requirements of each Chapter. 2. Effective Date - All policies effective on or after 9/1/95. 3. Marketing - All marketing will be performed exclusively by AAA. Commerce agents selected by AAA to participate in the servicing of the AAA group will not be permitted to advertise and/or market the AAA group marketing program, or to participate in and/or initiate the signing-up of new AAA members.(1) - ------------------ (1) [NB. Superseded prior to the date the registrant first filed this exhibit with the Commission. By letter dated August 7, 1995, AAA Massachusetts/New Hampshire, acting as licensee of The American Automobile Association (Incorporated), authorized the registrant's independent agents participating in the AAA group marketing program to use the AAA mark under limited circumstances.] COMMGRO COMPANIES . . .COME GROW WITH US Automobile Club of Merrimack Valley June 16, 1995 Page 2 AAA will initially market the group program to their entire membership list, by including marketing materials (including a list of all Commerce agents who are participating in the group program) in their September 1995 Newsletter. * * * (2) 4. AAA Group Marketing Service Network - The AAA Insurance Agency will continue servicing members of the AAA group, adding group insurance customers based upon their own desires and resource constraints, and assuring that every account written by the AAA Insurance Agency, Inc. is an active AAA member. The Commerce Insurance Company will assist AAA Insurance Agency in approaching other Commerce agents, both voluntary agents and ERP's, to determine their interest in participating in the servicing of the AAA group program. AAA will contract with all interested agents, assuring that such agents fully understand their rights and responsibilities (as documented within this proposal). To facilitate this process, Commerce will provide AAA with a list of selected voluntary agents and ERP's that may be good candidates for such a servicing network. Commerce will also provide AAA with a sample "sub-producer" agreement, which may provide a starting point for developing the final agreement between the AAA Insurance Agency and each of the interested/selected agents that will comprise the servicing network. The final decision, regarding which agents will comprise the service network, will be AAA's. However, AAA agrees to provide the program to both voluntary agents and ERP's, in order to assure that the ratio of voluntary agent to ERP business produced by the AAA group program is approximately the same as is produced by non-group programs industrywide (i.e. about 1 ERP unit for every 2 voluntary agent units). In addition, AAA agrees to resolve any instances where a participating agent appears to be abusing the program. Commerce will provide AAA with the on-going statistical information necessary to effect both of these conditions. 5. Group Deviation - A 10% deviation from the Commissioner's base rates will be filed effective 9/1/95.(3) The deviation will apply to all private passenger vehicle types, including private passenger motorcycles and miscellaneous classes. The deviation will be off the "net" (of SDIP credits or surcharges) premium.(4) It is the Commerce's good faith intent to again file a 10% deviation for policies effective 1/1/96. However, it is recognized that a modification (in the deviation and/or the level of agency participation in the deviation) may be required, if a - ------------------ (2) [NB. Omitted text waived by agreement of the parties prior to the date the registrant first filed this exhibit with the Commission and no longer is operative.] (3) [NB. Superseded prior to the date this exhibit was first filed with the Commission.] (4) [NB. Sentence superseded prior to the date this exhibit was first filed with the Commission.] Automobile Club of Merrimack Valley June 16, 1995 Page 3 significant rate decrease is approved by the Commissioner for 1/1/96, or early results of the program indicates that it is attracting an unacceptable customer profile. 6. AAA Insurance Agency Participation in the Deviation - * * * (5) 7. Participation of Agents in the Servicing Network - Agents in the servicing network will receive a 10.0% commission for 1995 effective date business written through the AAA group program. * * *(6) 8. AAA Insurance Agency Override Commission - * * *(7) The override commission for 1996 and later policy years will be established after the Commissioner establishes the commission level for the particular year. However, the AAA override commission will be a minimum of 1 point each year. 9. Ownership of Renewals - Agents in the servicing network will maintain ownership of any AAA group accounts written/serviced through their agency. 10. Profit Sharing A) [RESERVED] B) AAA Insurance Agency, Inc. will be subject to two separate and distinct profit sharing calculations, and the results of the calculation will not be netted together. First, business produced directly by the AAA Insurance Agency, Inc. will continue to be treated as a separate entity for profit sharing, as it is today. Second, all AAA business written by agents in the servicing network will be aggregated and subjected to a separate and distinct profit sharing calculation. The AAA Insurance Agency, Inc. will receive 50% of any profit resulting from this profit sharing calculation, but any loss will not be used to reduce the profit sharing calculation applied to business written directly by the AAA Insurance Agency, Inc. It is Commerce's intent to use our standard Profit Sharing Plan (for business written by the servicing network agents). However, further technical research on the best approach needs to be conducted, as there are - ------------------ (5) [NB. Omitted text was superseded by related Service Agreement prior to the date the registrant first filed this exhibit with the Commission.] (6) [Omitted text was was superseded by related Service Agreement prior to the date the registrant first filed this exhibit with the Commission.] (7) [NB. Superseded, prior to the date the registrant first filed this exhibit with the Commission, by the annual addendum to the Agency Agreement between Commerce and AAA, which Agency Agreement is the standard form of agreement that Commerce enters into with each of its voluntary agents in Massachusetts.] Automobile Club of Merrimack Valley June 16, 1995 Page 4 a number of conditions/provisions in our standard plan that would need to be waived/adjusted. Accordingly, it may be appropriate to develop a separate/unique Profit Sharing Plan for this servicing network agent business. The results of our analysis will be shared with you as soon as they become available, so that the details of the AAA servicing network agent Profit Sharing Plan can be finalized in the near future. 11. Billing Options/Programs - All AAA group business written by the servicing network agents must be 100% direct bill (although the agents may be eligible to utilize EFT for non-AAA group business written by their agency). 12. Operational Issues: A) Separate agent codes will be assigned to every agent who elects to participate in the AAA group servicing network. This will facilitate access to the results of the group program, for filing of subsequent rate deviations, for commissioning, and for the profit sharing and billing options noted above. B) Verification of AAA membership: 1) New Business Effective 9/1/95 and later, must contain the 7 digit AAA membership number(s) of the vehicle owner(s). To facilitate tracking and verification of the AAA discount, ISI's and Commerce's internal systems will be updated to allow the entry and maintenance of the membership number. In addition, ISI will be asked to develop a mechanism for this membership number to be entered through VISION. Note that all business written by agents in the servicing network will fall into this new business category, as their existing AAA members will need to be cancelled and re-written (from the agent's prior code number, to the specially-assigned AAA group code number) for the discount to apply. The Commerce will, however, let such renewal business be transferred to the AAA servicing account code with a 20% renewal down payment. Systems will need to be designed to automatically validate membership (and/or identify instances where membership cannot be validated). While validation at the time of new business processing would be optimum, after-the-fact validation of membership (within 30 days after processing) is also acceptable. AAA agrees to make their membership file available to the Automobile Club of Merrimack Valley June 16, 1995 Page 5 Commerce for this function, either by remote access or by periodic transmissions of the membership file to the Commerce. Underwriting Department personnel will be in contact with AAA, so that the details relative to these system issues can be defined, once this proposal is finalized. 2) Renewal policies written by the AAA Insurance Agency effective 9/1/95 and later, will be considered to be owned by active AAA members. In order to support a pre-renewal membership re-validation process, Commerce will work with AAA (and the AAA membership file) to enter the AAA membership number(s) onto every policy. The details and timeframes for this process will be worked out subsequent to the agreement to this proposal, with all vehicles on renewal policies written by AAA Insurance Agency, Inc. considered eligible for the discount until an automated verification system can be created and implemented. 13. AAA Endorsement of Commerce as Their Sole Massachusetts Personal Automobile Carrier - The Automobile Club of Merrimack Valley agrees to endorse Commerce Insurance Company as the sole underwriter of their Massachusetts personal automobile group marketing insurance program(s), for a period of 3 years, commencing on September 1, 1995. This exclusive endorsement of Commerce by AAA will be a "rolling" 3 year agreement, whereby the endorsement will apply to the 3 years subsequent to each September 1st, unless AAA advises Commerce in writing prior to September 1st of the particular year of their desire to not extend the endorsement for another 3 years. Please sign and return this letter as confirmation of your agreement to this Massachusetts personal automobile group marketing program and the associated exclusive endorsement by AAA of Commerce Insurance Company as the sole underwriter of the AAA group marketing program. If you have any questions, please advise. Very truly yours, Gerald Fels, Executive Vice President Automobile Club of Merrimack Valley June 16, 1995 Page 6 CC: Arthur Remillard, Jr. AUTOMOBILE CLUB OF MERRIMACK VALLEY By: Earle B. Seeley, Pres., CEO Title: ______________________________ Signature: __________________________ (Date) EX-10.28 4 b47929cgexv10w28.txt FORM OF AAA SERVICE AGREEMENT Exhibit 10.28 SERVICE AGREEMENT This Agreement is made between The Commerce Insurance Company, headquartered at 211 Main Street, Webster, MA 01570 ("Commerce"), and Automobile Club Insurance Agency, Inc., headquartered at 155 Parker Street, Lawrence, MA 01842 ("ACIA"). WHEREAS ACIA shall make available to members of Automobile Club of Merrimack Valley, a member of the American Automobile Association ("AAA"), a Personal Automobile Group Marketing Rate Deviation Program (the "AAA Program"); WHEREAS the AAA Program will be available exclusively on policies underwritten by Commerce; WHEREAS certain independent agents and brokers and Commerce will be able to access the AAA program on behalf of AAA members by entering into a Participation Agreement with ACIA; WHEREAS these independent agents and brokers of Commerce which sign a Participation Agreement with ACIA shall be known as Servicing Network Agent(s); NOW, THEREFORE, in consideration of the foregoing and the mutual promises and undertakings contained herein, the parties agree as follows: Service Provided Commerce agrees to provide to ACIA, the following services for all AAA Program policies underwritten by Commerce: 1. Policy Production - Commerce will distribute, or cause to be distributed, all policies, endorsements, cancellations and related materials directly to the Servicing Network Agents. 2. Information Access - Commerce will undertake a new programming effort so as to provide to all Servicing Network Agents, software to access to billing and claim information for AAA Program policies. 3. Calculation and Payments - Commerce will calculate amounts due from ACIA to the Servicing Network Agents as governed by the Participation Agreement between Servicing Network Agents and ACIA. Commerce, as designee of ACIA, shall make payment of any amounts due, directly to the Service Network Agents and reconcile commissions with the Service Network Agents. 4. Tax Information - Commerce shall maintain required tax information and records, and prepare for submission to the Internal Revenue Service all necessary tax documents pertaining to commission. 5. Telemarketing Service - Commerce will establish and maintain an inbound telemarketing service so as to assist qualified AAA members in locating a Servicing Network Agent. 6. Agent Contact - Commerce will act as a liaison between ACIA and independent agents and brokers of Commerce so as to provide these independent agents and brokers and ACIA the opportunity to enter into a Participation Agreement. 7. Marketing - Commerce will provide certain underwriting information to ACIA to facilitate marketing of the AAA Program to potential insureds. 8. Conversion of Existing Policies; Direct Bill - Upon receipt of the appropriate information and validation, Commerce shall convert existing eligible policies into the AAA Program and, where appropriate, shall convert all AAA Program policies from "Agency Bill" to "Direct Bill". 9. Membership Verification - Commerce will verify the AAA membership status of each applicant and participation in the AAA Program, both upon application and at renewal, to ensure the continued eligibility of each applicant and participant. 10. Record Keeping and Reporting - Commerce shall, in accordance with industry custom, maintain required records of policies placed in the AAA Program by a Servicing Network Agent and will, upon request, provide ACIA an ongoing summarized analysis of each Servicing Network Agent's business placed in the AAA Program. Commerce shall also assemble, prepare and maintain information and provide actuarial support for the purposes of validation and filing for subsequent rate deviations, all as required by the Massachusetts Division of Insurance. 11. Indemnification - Commerce shall exonerate, indemnify and hold harmless ACIA from and against all losses, expenses and costs related to certain actions arising out of the AAA Program. Service Fee In exchange for the aforementioned services provided by Commerce, ACIA will pay to Commerce a monthly fee (the "Service Fee"). For the remainder of 1995, this service Fee shall be equal to * * *%(1) of the written premiums on each AAA Program policy, whether produced by any Servicing Network Agent or ACIA. For calendar years 1996 and beyond, ACIA and Commerce agree to renegotiate the Service Fee. Term and Termination This Agreement shall remain in effect for as long as the AAA Program is maintained and Commerce remains the sole underwriter of the AAA Program. - ------------------ (1) [NB. Superseded by the accompanying Addendum prior to the date the registrant first filed this exhibit with the Commission.] - 2 - Waiver No party shall be deemed to have waived any right hereunder unless such waiver is in writing. No delay or omission on the part of either party in exercising any right shall operate as a waiver or bar of such right or any other right. A waiver on any one occasion shall not be construed as a bar or waiver of the waived right or any right on any future occasion. Assignment This Agreement may not be assigned by either party. Automatic Compliance To the extent that any provisions of this Agreement are, or may be, in conflict with any applicable statute or regulation, such provisions of the Agreement shall be deemed to be amended to conform to the requirements of such statute or regulation. Headings and Counterparts The headings contained in this Agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions. This Agreement may be executed simultaneously, in separate counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Severability The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and such provision shall be carried out as nearly as possible according to its original terms and intent. Entire Agreement and Amendment This instrument contains the entire understanding of the service agreement between the two parties and no statements, promises or inducements made by any party hereto, or agent of either party hereto, which is not contained in this written contract, shall be valid or binding. This Agreement may not be enlarged, modified or altered except by a written instrument signed by the parties thereto. Effective Date This Agreement supersedes all previous agreements, on the same subject matter, whether written or oral, between Commerce and ACIA and - 3 - (1) shall be effective 9/1/95; and (2) shall continue in full force and effect until altered, amended, suspended or terminated. IN WITNESS WHEREOF, Automobile Club Insurance Agency, Inc. and The Commerce Insurance Company have caused this Agreement to be executed this 1st day of September, 1995. Automobile Club Insurance Agency, Inc. The Commerce Insurance Company BY: BY: ----------------------------- ----------------------------- TITLE: President/CEO TITLE: -------------------------- -------------------------- - 4 - ADDENDUM TO THE SERVICE AGREEMENT This Addendum is incorporated into and shall constitute part of the Service Agreement dated August 11, 1995 by and between The Commerce Insurance Company and the AAA Insurance Agency, Inc. It is hereby understood and agreed that: The Service Fee shall be equal to 1.0% of the written premiums on each AAA Program policy with a 2003 effective date produced by any Servicing Network Agent. No Service Fee will be paid for AAA Program policies with 2003 effective dates produced by the AAA Insurance Agency, Inc. Accepted this 14th date of February, 2003 and shall be effective January 1, 2003. The Commerce Insurance Company The Citation Insurance Company AAA Insurance Agency, Inc. By: By: ----------------------------- ----------------------------- Peter Dignan Senior Vice President - 5 - EX-31.1 5 b47929cgexv31w1.txt SECTION 302 CERTIFICATION CERTIFICATION I, Arthur J. Remillard, Jr., certify that: 1. I have reviewed this annual report on Form 10-K/A of The Commerce Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 29, 2003 /s/ Arthur J. Remillard, Jr. ----------------------------------- Arthur J. Remillard, Jr. President, Chief Executive Officer, and Chairman of the Board EX-31.2 6 b47929cgexv31w2.txt SECTION 302 CERTIFICATION CERTIFICATION I, Gerald Fels, certify that: 1. I have reviewed this annual report on Form 10-K/A of The Commerce Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 29, 2003 /s/ Gerald Fels ----------------------------------------- Gerald Fels Executive Vice President, Chief Financial Officer, and Director -----END PRIVACY-ENHANCED MESSAGE-----