- Additional Proxy Soliciting Materials (definitive) (DEFA14A)
April 21 2009 - 5:18PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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 Pursuant to §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)(1) and 0-11.
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(1)
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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 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 SUAs stockholders.
We are extremely pleased that Glass Lewis & Co., a leading independent proxy advisor to a
large number of the worlds largest institutional investors, has very recently issued its
recommendation to SUAs stockholders to REJECT Hallmarks nominees.
AS YOU WILL SEE BELOW, HALLMARKS 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 SUAs Board
rejected Hallmarks proposal and refused to enter into discussions with Hallmark.
THE TRUTH:
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SUAS BOARD DELIBERATED FULLY WITH ITS LEGAL AND FINANCIAL ADVISORS IN 2008 AND DETERMINED
THE OFFER WAS
WELL BELOW MARKET FOR INSURANCE ACQUISITIONS
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THIS SENTIMENT WAS
UNANIMOUSLY
SUPPORTED BY THE MANY STOCKHOLDERS WE VISITED
AFTER THE DECISION IN 2008.
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THE COMPANYS SENIOR MANAGEMENT HAS MET WITH HALLMARK DURING 2008 AND 2009 AT HALLMARKS
REQUEST.
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FOUR OF SUAS INDEPENDENT DIRECTORS HAVE MET WITH HALLMARKS CHAIRMAN, MARK SCHWARZ, AND
CEO, MARK MORRISON, TO HEAR THEIR PERSPECTIVES AND POSITIONS.
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OUR BOARD WILL CONTINUE TO CONSIDER WHETHER A SALE OR MERGER WILL BEST INCREASE VALUE FOR
OUR STOCKHOLDERS AS COMPARED TO ORGANIC GROWTH.
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WE BELIEVE ANY SALE OR MERGER TRANSACTION SHOULD RECOGNIZE THE LONG-TERM POTENTIAL OF THE
SUA BUSINESS PLATFORM.
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222 S. Riverside Plaza, Suite 1600
u
Chicago, IL 60606-6001
u
312.277.1652
u
fax: 877.782.2098
u
www.suainsurance.com
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Page 2 of 4
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Hallmark tells you it believes that SUA needs improved corporate governance.
THE TRUTH:
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RISKMETRICS GROUP RATES
SUA AS HAVING A BETTER CORPORATE GOVERNANCE QUOTIENT (CGQ)
THAN 83.1%
OF RATED INSURANCE COMPANIES.
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HALLMARKS CGQ IS BETTER THAN JUST 31.4%
OF INSURANCE COMPANIES.
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THE STRATEGIC REVIEW COMMITTEE OF SUA (COMPOSED SOLELY OF INDEPENDENT DIRECTORS)
PROACTIVELY REVIEWS SUAS PROSPECTS AND STRATEGIC ALTERNATIVES WITH THE INTERESTS OF ALL SUA
STOCKHOLDERS IN MIND NOT JUST THE INTERESTS OF HALLMARK FINANCIAL.
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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:
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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.
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OUR COMPENSATION COMMITTEE RE-NEGOTIATED EXISTING EMPLOYMENT AGREEMENTS DURING 2007 AND
EARLY 2008 AND
APPROVED THE REVISED AGREEMENTS MORE THAN TWO MONTHS PRIOR TO HALLMARKS
WRITTEN OFFER
(A MERE FOUR DAYS AFTER HALLMARK RAISED THE POSSIBILITY OF A BUSINESS
COMBINATION).
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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
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Hallmark claims that SUA has performed well below the industry and its peers.
THE TRUTH:
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SUA WENT PUBLIC IN LATE 2004 AND, DESPITE TOUGH ECONOMIC TIMES, HAS MADE CONSIDERABLE
STRIDES TO GROW ITS BUSINESS.
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IN FACT, OVER THE PAST THREE YEARS:
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SUAS BOOK VALUE GROWTH HAS AVERAGED 9.2% ANNUALLY.
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SUAS AVERAGE RETURN ON EQUITY HAS BEEN 7.6%.
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SUAS STOCK PRICE HAS BEATEN THE S&P 500 P&C INSURANCE INDEX.
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222 S. Riverside Plaza, Suite 1600
u
Chicago, IL 60606-6001
u
312.277.1652
u
fax: 877.782.2098
u
www.suainsurance.com
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Page 3 of 4
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Hallmark compares our expense ratios to the industry and points out that they are high.
THE TRUTH :
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OUR LOSS RATIOS ARE APPROXIMATELY 10% LOWER THAN THE INDUSTRY
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A MORE APPROPRIATE MEASUREMENT IS
OUR COMBINED RATIO
(EXPENSE AND LOSS RATIO),
WHICH
HAS AVERAGED BETTER THAN THE INDUSTRY OVER THE LAST THREE YEARS
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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 Boards nominees.
Please support your Company and vote your shares today.
Thank you for your time and attention.
Sincerely,
Your Board of Directors
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1
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Based on SNL Financial, Inc. P&C Industry Data.
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222 S. Riverside Plaza, Suite 1600
u
Chicago, IL 60606-6001
u
312.277.1652
u
fax: 877.782.2098
u
www.suainsurance.com
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Page 4 of 4
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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
.
222 S. Riverside Plaza, Suite 1600
u
Chicago, IL 60606-6001
u
312.277.1652
u
fax: 877.782.2098
u
www.suainsurance.com
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