- Additional Proxy Soliciting Materials (definitive) (DEFA14A)
April 01 2009 - 5:22PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under §240.14a-12
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Specialty Underwriters Alliance, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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April 1, 2009
Dear Fellow Stockholders:
Enclosed with this package are proxy materials and a
WHITE PROXY CARD
relating to our upcoming 2009
annual stockholders meeting. Your vote to support your board of directors at this years meeting
is one of the most important decisions you will make regarding Specialty Underwriters Alliance,
Inc. (SUA) and its future.
The members of your board of directors are independent, highly qualified and have a proven track
record of protecting the long-term interests of all SUA stockholders. Please vote your
WHITE PROXY
CARD
today. Your vote is very important, no matter how many shares you own.
One of our competitors, Hallmark Financial Services, Inc. (Hallmark), under the direction of its
chairman Mark Schwarz, has acquired a large stake in your company and is seeking your support to
elect its own nominees to your board.
As you may remember, Hallmark made an all-stock offer for
SUAs shares last June. The board of directors, in consultation with its financial and legal
advisors, reviewed Hallmarks offer and, after careful deliberation, unanimously determined not to
accept that offer, concluding that it was inadequate and inconsistent with SUAs strategic
direction.
Hallmark has now opted for an alternative method to gain control over SUA without providing value
to the stockholders by asking you to vote for their alternative slate of directors. Please discard
any gold proxy card you receive from Hallmark.
WE BELIEVE HALLMARK INTENDS TO ACQUIRE CONTROL OF THE COMPANY
We do not believe that Hallmark has nominated its slate of directors as an involved, concerned
stockholder, as Hallmark contends. Rather, we believe Hallmark is seeking control of SUA.
Consider these facts:
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Over the last ten months, Mark Schwarz, Chairman of Hallmarks
board of directors, has repeatedly expressed Hallmarks intent to
acquire and exert control over your Company both in public
statements and in conversations with senior officers of SUA.
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As recently as March 2, 2009 at a dinner with SUA executives, Mr.
Schwarz expressed Hallmarks continuing interest in entering into
discussions with SUAs board to pursue negotiations of a
definitive merger.
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222 S. Riverside Plaza, Suite 1600
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Chicago, IL 60606-6001
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312.277.1652
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fax: 877.782.2098
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www.suainsurance.com
Page 2 of 4
Hallmark owns 9.9% of the Company, yet seeks board representation of over 40%.
Given Hallmarks
demonstrated and continuing desire to acquire SUA, we believe
this excess representation will
dilute the true independence of the board and is not in the best interest of all SUA
stockholders.
In fact, Mr. Schwarz rejected representation on SUAs board of directors.
In an effort to avoid this costly proxy contest, we approached Mr. Schwarz on March 17, 2009 and
told him our board was willing to increase its size to add
ONE
of the additional directors he had
proposed. We requested that Hallmark agree not to seek control of SUA for a reasonable period of
time without approval of our board (which would include Hallmarks nominee). We believe Hallmarks
rejection of our offer to seat one Hallmark nominee reveals that the
true motivation for the
election of Hallmarks alternative slate is to push for effective control of SUA.
YOUR BOARD REPRESENTS ALL STOCKHOLDERS, WHILE WE BELIEVE THE HALLMARK NOMINEES WOULD REPRESENT ONLY
ONE STOCKHOLDER HALLMARK
The members of the SUA board of directors have consistently taken great care to exercise their
judgment in the best interest of all the Companys stockholders.
Hallmark claims that SUA avoided engaging in discussions with Hallmark regarding Hallmarks June
2008 offer. What Hallmark does not disclose is that Courtney Smith, our Chief Executive Officer,
replied to Mr. Schwarz requests to meet with your board by inviting Mr. Schwarz to provide any
additional relevant information in writing prior to their meetings. It was Hallmark that was then
unresponsive.
In addition to the meeting of our Chief Executive Officer and General Counsel with Mr. Schwarz on
March 2, 2009,
certain of our independent board members have agreed to meet with Mr. Schwarz in
early April 2009
to allow him to get to know our directors and share Hallmarks perspective on SUA.
Hallmark portrays itself as a champion of corporate governance. To the contrary, the governance
rating data shows otherwise. According to RiskMetrics Group, a leading independent proxy advisor
who rates public companies based on their corporate governance:
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SUAs Corporate Governance Quotient (CGQ) is better than
99.2%
of all companies that
RiskMetrics rates and better than
83.1%
of insurance companies.
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In contrast, Hallmark Financial Services CGQ is better than just
31.4%
of insurance
companies.
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222 S. Riverside Plaza, Suite 1600
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Chicago, IL 60606-6001
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312.277.1652
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fax: 877.782.2098
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www.suainsurance.com
Page 3 of 4
Your current board is dedicated to protecting your best interests. Consider the following:
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Independence.
We currently have five independent directors and two employee
directors. In addition to our independent standing committees, the boards Strategic
Review Committee reviews all strategic alternatives for SUA.
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Excellent Communication with, and Responsiveness to, our Stockholders.
We have
open lines of communication with all of our stockholders and respond to inquiries in a very
timely manner. We reach out to our largest stockholders after every earnings call. During
our most recent visit with many of our larger stockholders last September, we heard
unanimous support for our boards decision not to accept the Hallmark offer. We welcome
input from our stockholders at any time.
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We always will seek to increase value for all of our stockholders, whether through organic growth
or through a sale or merger of the company should that be in the best interests of our
stockholders.
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Since September 2008, the capital markets and general business activities have been
severely impacted by the economic environment and credit crisis, to a degree unprecedented
in recent history.
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We believe these events have adversely impacted our business and our current stock
valuation, which we believe does not reflect the intrinsic value of SUAs business platform
that has been built over the past four years.
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Hallmark is aware of this discounted value and apparently wants to change the board in
order to capture that value for itself.
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We believe our stockholders are best served if we continue to build our business and to
insist that any proposed sale or merger transaction recognize the long-term potential of
the SUA business platform.
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IF A STRONG GOVERNING APPROACH IS IMPORTANT TO YOU AND YOU BELIEVE YOUR BOARD SHOULD SEEK TO
ENHANCE VALUE FOR ALL STOCKHOLDERS VOTE THE
WHITE PROXY CARD
!
222 S. Riverside Plaza, Suite 1600
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Chicago, IL 60606-6001
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312.277.1652
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fax: 877.782.2098
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www.suainsurance.com
Page 4 of 4
Your board strongly urges you not to sign any gold proxy card you may receive from Hallmark.
Instead, your board urges you to sign and date the
WHITE PROXY CARD
enclosed and return it in the
envelope provided.
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
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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.
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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
.
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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
.
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222 S. Riverside Plaza, Suite 1600
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Chicago, IL 60606-6001
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312.277.1652
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fax: 877.782.2098
w
www.suainsurance.com
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