On
January 14, 2009, Hallmark Financial Services, Inc. issued the following press
release:
Hallmark
Financial Services Announces Slate of Director Nominees for
Specialty
Underwriters’ Alliance
FORT
WORTH, Texas, January 14, 2009 -- Hallmark Financial Services, Inc.
(NASDAQ:HALL) announced today that it has notified Specialty Underwriters’
Alliance, Inc. (NASDAQ:SUAI) of Hallmark’s intention to nominate C. Gregory
Peters, Mark E. Pape and Robert M. Fishman for election to the board of
directors at SUAI’s 2009 Annual Meeting of Stockholders. Hallmark
beneficially owns approximately 9.9% of SUAI's outstanding common
stock. As the second largest stockholder in SUAI, Hallmark strongly
believes in a need for improved governance and stockholder representation on the
board of SUAI. Hallmark believes that the interests of all SUAI
stockholders will benefit from these highly qualified, truly independent,
director nominees that possess a wealth of property and casualty insurance
industry expertise.
Background
As
previously disclosed, on June 16, 2008, Hallmark delivered to SUAI’s board of
directors a proposal to acquire SUAI in a stock-for-stock transaction (the
“Proposal”). SUAI responded through a public announcement on June 26,
2008 that its board of directors had unanimously rejected the
Proposal. On July 1, 2008, Hallmark then delivered to SUAI’s board of
directors a letter reaffirming the Proposal (the “July 1 Letter”). In
the July 1 Letter, Hallmark stated that it was committed to its Proposal and
strongly believed that the Proposal offered significant and compelling benefits
to SUAI’s stockholders, and reiterated that its senior management stood ready to
meet with the members of the SUAI board and answer any questions concerning the
Proposal. Copies of each of the Proposal and the July 1 Letter are
exhibits to Hallmark’s Schedule 13D/A for SUAI filed on July 1, 2008 and can be
obtained on the SEC’s website at http://www.sec.gov. For each of the
Proposal and the July 1 Letter, the offer price in Hallmark stock in the
proposed transaction represented a substantial premium to the then most recent
closing price of SUAI common stock as well as its 30 day trailing average
price. Nevertheless, on July 2, 2008, SUAI publicly reaffirmed its
rejection of Hallmark’s proposal. Then, on August 5, 2008, SUAI’s
board proceeded to adopt certain “defensive” amendments to the company’s bylaws,
including bylaws eliminating stockholders’ rights to fill vacancies on the board
or to call special meetings and adding advance notice provisions for board
nominations by stockholders.
The
Hallmark Nominees
C. Gregory Peters served as
Senior Vice President, Equity Research at Raymond James and Associates from
November 1999 through June 2007, where Mr. Peters was responsible for launching
Raymond James’ sell-side research practice for the insurance industry and served
as its lead analyst for property and casualty companies.
Mark E. Pape served as
Executive Vice President and Chief Financial Officer at Affirmative Insurance
Holdings, Inc. from November 2005 through December 2007 and served on
Affirmative’s Board of Directors from July 2004 through November
2005. Mr. Pape also held positions at Torchmark Corporation and
American Income Holding, Inc.
Robert M. Fishman served as
Managing Director of Southwest Insurance Partners, Inc. in 2008 and, from
November 2006 through May 2007, was the Chief Executive Officer and President of
United America Indemnity Ltd. Mr. Fishman also held senior positions
at ARAG NA and Zurich Financial Services.
ADDITIONAL
INFORMATION CONCERNING PARTICIPANTS
HALLMARK,
TOGETHER WITH THE OTHER PARTICIPANTS (AS DEFINED BELOW), INTENDS TO MAKE A
PRELIMINARY FILING WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") OF A
PROXY STATEMENT AND ACCOMPANYING PROXY CARD TO BE USED TO SOLICIT VOTES FOR THE
ELECTION OF ITS SLATE OF DIRECTOR NOMINEES AT THE 2009 ANNUAL MEETING OF
STOCKHOLDERS OF SUAI.
HALLMARK
STRONGLY ADVISES ALL SUAI STOCKHOLDERS TO READ THE PROXY STATEMENT WHEN IT IS
AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY
STATEMENT WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEBSITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION
WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’
PROXY SOLICITOR.
THE
PARTICIPANTS IN THE PROXY SOLICITATION ARE ANTICIPATED TO BE HALLMARK FINANCIAL
SERVICES, INC., AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS (“AHIC”), HALLMARK
SPECIALTY INSURANCE COMPANY (“HSIC”), C. GREGORY PETERS, MARK E. PAPE AND ROBERT
M. FISHMAN (COLLECTIVELY, THE “PARTICIPANTS”). INFORMATION ABOUT THE
PARTICIPANTS WILL BE SET FORTH IN THE PROXY STATEMENT FILED BY HALLMARK WITH THE
SEC. HALLMARK MAY BE DEEMED TO BENEFICIALLY OWN 1,429,615 SHARES OF
COMMON STOCK OF SUAI, REPRESENTING APPROXIMATELY 9.9% OF THE OUTSTANDING SHARES
OF COMMON STOCK, AS FOLLOWS: (I) 21,000 SHARES OF COMMON STOCK ARE OWNED
DIRECTLY BY HALLMARK, (II) 1,308,615 SHARES OF COMMON STOCK ARE OWNED DIRECTLY
BY AHIC AND (III) 100,000 SHARES OF COMMON STOCK ARE OWNED DIRECTLY BY
HSIC. AS THEIR PARENT COMPANY, HALLMARK MAY BE DEEMED TO BENEFICIALLY
OWN THE SHARES OF COMMON STOCK OWNED BY AHIC AND HSIC. CURRENTLY,
MESSRS. PETERS, PAPE AND FISHMAN DO NOT DIRECTLY OWN ANY SECURITIES OF
SUAI. AS MEMBERS OF A “GROUP” FOR THE PURPOSES OF RULE 13D-5(B)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EACH OF THE PARTICIPANTS MAY BE
DEEMED TO BENEFICIALLY OWN THE 1,429,615 SHARES BENEFICIALLY OWNED BY
HALLMARK. EACH OF THE PARTICIPANTS DISCLAIMS BENEFICIAL OWNERSHIP OF
THE SHARES HE/IT DOES NOT DIRECTLY OWN.