250,000 Shares
USF&G Corporation
$10.25 Series B Cumulative Convertible Preferred Stock
All of the shares of $10.25 Series B Cumulative Convertible
Preferred Stock, $50.00 par value ("Series B Preferred Stock")
of USF&G Corporation (the "Corporation") covered by this
Prospectus are to be offered and sold from time to time after
the date of this Prospectus by RAS Trading, L.P. (the "Selling
Stockholder"). See "Selling Stockholder." The shares may be
sold directly by the Selling Stockholder or indirectly through
brokers or to underwriters or dealers, in each case in the
over-the-counter market or in negotiated transactions or
otherwise, at prices to be negotiated at such time and noted on
a confirmation of any such sale. The Selling Stockholder
reserves the sole right to accept or reject, in whole or in
part, any proposed purchase of the shares of Series B Preferred
Stock. See "Plan of Distribution." The Corporation will not
receive any proceeds from the sale of shares by the Selling
Stockholder. See "Use of Proceeds."
Dividends on the Series B Preferred Stock at an annual rate of
$10.25 per share are cumulative and are payable quarterly on
January 31, April 30, July 31, and October 31. Each share of
Series B Preferred Stock has a preference upon liquidation of
$100.00 per share plus accrued and unpaid dividends. The shares
of Series B Preferred Stock proposed to be sold hereunder were
issued in three subseries designated Series B Preferred Stock
1995, Series B Preferred Stock 1996 and Series B Preferred Stock
1997. The Series B Preferred Stock will be redeemable, in whole
or in part, at the option of the Corporation, at the Redemption
Prices set forth herein, as follows: the Series B Preferred
Stock 1995, at any time on and after June 1, 1994; the Series B
Preferred Stock 1996, at any time on and after June 1, 1995; and
the Series B Preferred Stock 1997, at any time on and after June
1, 1996. No redemption may be made prior to June 1, 1997 unless
the closing price of the Common Stock exceeds 150 percent of the
Series B Preferred Stock conversion price and subject to certain
other conditions. In addition, if certain change in control
events should occur, then at the election of each holder of
Series B Preferred Stock, the Corporation will seek to issue and
sell additional nonredeemable equity securities and apply the
net proceeds thereof to redeem the holder's shares of Series B
Preferred Stock, but only if and to the extent any such proceeds
are raised. See "Description of Series B Preferred Stock."
The Series B Preferred Stock is convertible, at the option of
the holder, into Common Stock, $2.50 par value, of the
Corporation (the "Common Stock") at any time, unless previously
redeemed, at a rate of 8.316 shares of Common Stock for each
share of Series B Preferred Stock (equivalent to a conversion
price of $12.025 per share of Common Stock), subject to
adjustment in certain events. On February 3, 1994, the reported
last sale price of the Common Stock on the New York Stock
Exchange was $15.50 per share. See "Description of Series B
Preferred Stock."
See "Special Considerations" for certain information relevant
to an investment in the Series B Preferred Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 4, 1994
AVAILABLE INFORMATION
The Corporation is subject to the information requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, files reports, proxy or information
statements and other information with the Securities and
Exchange Commission (the "Commission"). This Prospectus
contains information concerning the Corporation, but does not
contain all of the information set forth in the Registration
Statement and exhibits thereto which the Corporation has filed
with the Commission under the Securities Act of 1933 (the
"Securities Act"). Such reports, proxy or information
statements, Registration Statement and exhibits and other
information filed by the Corporation with the Commission can be
inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth St., N.W.,
Washington, D.C. 20549, and at the Regional Offices of the
Commission at Seven World Trade Center, 13th Floor, New York,
New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such materials can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such reports, proxy or information
statements, Registration Statement and exhibits and other
information concerning the Corporation can also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005, and the Pacific Stock
Exchange, Inc., 301 Pine Street, San Francisco, California 94104,
and 233 South Beaudry Avenue, Los Angeles, California 90012.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation hereby incorporates by reference in this
Prospectus (1) its Annual Report on Form 10-K for the year ended
December 31, 1992, as amended on July 13, 1993, under File No. 1-8233
(the "Form 10-K"), including such portion of the Corporation's proxy
statement for its annual meeting of stockholders held May 12, 1993 as is
incorporated in the Form 10-K by reference, (2) its Quarterly Report on
Form 10-Q for the three months ended March 31, 1993, under File No. 1-8233
(3) its Quarterly Report on Form 10-Q for the six months ended June 30,
1993, under File No. 1-8233, and (4) its Quarterly Report on Form 10-Q for
the nine months ended September 30, 1993, under File No. 1-8233 (items 2,
3, and 4 are collectively referred to as the "Form 10-Q's").
All documents filed by the Corporation pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Series B Preferred Stock shall be deemed to be
incorporated by reference in this Prospectus and made a part
hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other document
subsequently filed with the Commission which also is or is
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Corporation will provide without charge to each person to
whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the documents
incorporated by reference herein (not including the exhibits to
such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such
copies should be directed to: USF&G Corporation, 100 Light
Street, Baltimore, Maryland 21202, Attention: John F. Hoffen,
Jr., Secretary, telephone (410) 547-3000.
THE CORPORATION
USF&G Corporation (the "Corporation") is a holding company
whose principal subsidiaries are engaged in writing
property/casualty insurance and life insurance/annuities.
Property/casualty insurance is written primarily by United
States Fidelity and Guaranty Company, founded in 1896, and is
sold through independent agents supported by the Company's
underwriting, marketing, administrative and claim services
offices located throughout the United States. Life insurance
and annuities are written primarily by Fidelity and Guaranty
Life Insurance Company, founded in 1959, and are sold throughout
the United States through independent agents. The Corporation is
incorporated in Maryland, and its principal executive office is located
at 100 Light Street, Baltimore, Maryland 21202, telephone (410) 547-3000.
SPECIAL CONSIDERATIONS
Prospective purchasers should carefully consider the following
factors, among others, in evaluating an investment in the Series
B Preferred Stock.
No Prior Market; Determination of Offering Price. Prior to the
offering of shares of Series B Preferred Stock and except for
the initial issuance of shares to certain institutional
shareholders in June 1991, there has been no offering of Series
B Preferred Stock. The price for the shares will be determined
from time to time by the Selling Stockholder through negotiation
directly with prospective purchasers or with underwriters,
broker/dealers or agents. Such price may not be indicative of
the price at which a purchaser may be able to resell such
shares. See "Plan of Distribution."
Absence of Ready Market. The Company currently does not expect
to apply to list shares of the Series B Preferred Stock on the
New York Stock Exchange or on any other securities exchange or
to otherwise register such shares with any quotation service.
As a result, it is not expected that there will be a market for
the resale of the shares of Series B Preferred Stock; therefore,
a purchaser of Series B Preferred Stock may be unable to sell or
otherwise dispose of all or any portion of such shares.
Control of Class by Affiliates of General Electric. Entities
managed or advised by General Electric Investment Corporation
own in the aggregate 1,000,000 shares of the Series B Preferred
Stock. For so long as such entities own such shares, such
entities will be able to control the voting with respect to any
matter upon which the holders of the Series B Preferred Stock
may be entitled to vote as a single class. See "Description of
Series B Preferred Stock" and "Description of Series B Preferred
Stock -- Voting Rights."
Insurance Holding Company. Because the operations of the
Corporation are conducted through its subsidiaries, the
Corporation is dependent on dividends from its subsidiaries to
meet its obligations and as a source of funds for the payment of
dividends on its preferred stock, including the Series B
Preferred Stock. There are regulatory restrictions on payment
of dividends by insurance subsidiaries that may limit the
Corporation's ability to receive funds from its subsidiaries.
The Maryland Insurance Commissioner's approval is required for
any dividend payment from a Maryland insurance subsidiary to its
holding company which exceeds 10% of the subsidiary's
policyholders' surplus. During 1993, $147 million in dividends
is available for payment to the Corporation from its insurance
subsidiaries without prior approval from the Maryland Insurance
Commissioner. Of this amount, $94 million of the dividends have
been paid through September 30, 1993.
RATIO OF CONSOLIDATED
EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
The historical ratios of consolidated earnings to combined
fixed charges and preferred stock dividends of the Corporation
for the nine months ended September 30, 1993 and 1992 and for each of
the five years ended December 31, 1992 are as follows:
Nine Months
Ended September 30, Years Ended December 31,
1993 1992 1992 1991 1990 1989 1988
Ratio . . . . . . 1.3 .8 .8 (A) (B) 2.4 4.0
<FN>
(A) The Corporation had a net loss for the year ended December 31, 1991, and
earnings were inadequate to cover combined fixed charges and preferred stock
dividends by $186 million for the year ended December 31, 1991.
(B) The Corporation had a net loss for the year ended December 31, 1990, and
earnings were inadequate to cover combined fixed charges and preferred stock
dividends by $452 million for the year ended December 31, 1990.
The ratios were determined by dividing consolidated earnings by
total fixed charges and preferred stock dividends. Earnings
consist of income from continuing operations before considering
income taxes, the cumulative effect of accounting changes, and
fixed charges. Fixed charges consist of interest, that portion
of rentals which is deemed to be an appropriate interest factor,
and preferred stock dividend requirements.
USE OF PROCEEDS
The Corporation will receive no part of the proceeds from the
sale by the Selling Stockholder of the shares of Series B
Preferred Stock offered hereby. The Corporation will bear all
expenses in connection with the registration and sale of the
shares being sold by the Selling Stockholder, except for
underwriting discounts and commissions and transfer taxes, if
any, with respect to such shares. Such expenses are estimated
to be $36,000.
SELLING STOCKHOLDER
RAS Trading, L.P. (the "Selling Stockholder") is the beneficial
owner of 250,000 shares of the Series B Preferred Stock of the
Corporation, and has sole voting and investment power over the
shares that it so beneficially owns. The shares of Series B
Preferred Stock held by the Selling Stockholder at the beginning
of the offering proposed hereby represent 19.23% of the total
shares of Series B Preferred Stock issued and outstanding. The
shares of Series B Preferred Stock held by the Selling
Stockholder are divided into subseries as follows: 125,000
shares of Series B Preferred Stock 1995; 62,500 shares of Series
B Preferred Stock 1996; and 62,500 shares of Series B Preferred
Stock 1997. In connection with the offering described in this
Prospectus, the Selling Stockholder may offer from time to time
all 250,000 of its shares of the Series B Preferred Stock for
its own account and upon completion of the offering will own no
other shares of Series B Preferred Stock. Neither the Selling
Stockholder nor its general partners or officers have held any
position or office, or have had any other material relationship
with the Corporation or any of its predecessors or affiliates,
within the past three years.
PLAN OF DISTRIBUTION
The Series B Preferred Stock and Common Stock issuable upon
conversion thereof which are offered hereby may be sold from
time to time to purchasers directly by the Selling Stockholder.
Alternatively, the Selling Stockholder may from time to time
offer the Series B Preferred Stock and such Common Stock to or
through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions
or commissions from the Selling Stockholder or the purchasers of
Series B Preferred Stock and Common Stock for whom they may act
as agent. Any underwriters, broker/dealers or agents that
participate in the distribution of the Series B Preferred Stock
and Common Stock may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of
Series B Preferred Stock and Common Stock received by them or
any discounts, commissions, concessions or other compensation
received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the
Securities Act.
The Series B Preferred Stock and Common Stock offered hereby
may be sold from time to time in one or more transactions at
fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at
negotiated prices. The price for the shares of Series B
Preferred Stock to be sold hereunder will be determined from
time to time by the Selling Stockholder through negotiation
directly with prospective purchasers or with underwriters,
broker/dealers or agents. The sale of the Series B Preferred
Stock and the Common Stock issuable upon conversion thereof may
be effected in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or
quotation service on which the Series B Preferred Stock or the
Common Stock may be listed or quoted at the time of sale (only
the Common Stock is presently listed on a national securities
exchange, and the Corporation currently has no intention to list
the Series B Preferred Stock), (ii) in the over-the-counter
market or (iii) in transactions otherwise than on such exchanges
or in the over-the-counter market. At the time a particular
offering of the Series B Preferred Stock and the Common Stock is
made, a Prospectus Supplement, if required, will be distributed
which will set forth the aggregate amount of Preferred Stock and
Common Stock being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers
or agents, any discounts, commissions and other terms
constituting compensation from the Selling Stockholder and any
discounts, commissions or concessions allowed or reallowed or
paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Series B Preferred Stock and Common Stock
issuable on conversion will be offered or sold in such
jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions the Series B
Preferred Stock and Common Stock may not be offered or sold
unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification
is available and is complied with.
The Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases
and sales of any of the Series B Preferred Stock and Common
Stock by the Selling Stockholder. The foregoing may affect the
marketability of the Series B Preferred Stock and the Common
Stock issuable on conversion thereof.
The Selling Stockholder acquired the shares of Series B
Preferred Stock offered hereby from American General
Corporation. Pursuant to the Stock Purchase Agreement dated
June 3, 1991 (the "Stock Purchase Agreement") to which American
General Corporation was a party, certain registration and other
rights have devolved to the Selling Stockholder. Under the
Stock Purchase Agreement, all expenses of the registration of
the Series B Preferred Stock and Common Stock will be paid by
the Corporation, including, without limitation, filing fees of
the Commission, expenses of compliance with state securities or
"blue sky" laws and fees and expenses of legal counsel to the
Selling Stockholder; provided, however, that the Selling
Stockholder will pay all underwriting discounts and selling
commissions, if any. The Selling Stockholder will be
indemnified by the Corporation against certain civil
liabilities, including certain liabilities under the Securities
Act or will be entitled to contribution in connection therewith.
DESCRIPTION OF SERIES B PREFERRED STOCK
Under the Corporation's Articles of Incorporation ("Charter"),
the Corporation is authorized to issue 12,000,000 shares of
preferred stock, $50.00 par value per share, in one or more
series, with such terms as are determined by the Board of
Directors. Pursuant to the Articles Supplementary to the
Charter adopted by the Board (the "Articles Supplementary"), the
Board has classified 1,300,000 shares of the preferred stock as
$10.25 Series B Cumulative Convertible Preferred Stock. The
1,300,000 shares of Series B Preferred Stock were issued in
three subseries: 650,000 shares of the "Series B Cumulative
Convertible Preferred Stock 1995" (the "Series B Preferred
Stock 1995"); 325,000 shares of the "Series B Cumulative
Convertible Preferred Stock 1996" (the "Series B Preferred
Stock 1996"); and 325,000 shares of the "Series B Cumulative
Convertible Preferred Stock 1997" (the "Series B Preferred Stock
1997"). Of the shares of Series B Preferred Stock being offered
hereby, 125,000 shares are Series B Preferred Stock 1995, 62,500
shares are Series B Preferred Stock 1996, and 62,500 shares are
Series B Preferred Stock 1997. Each of the subseries of Series
B Preferred Stock has the same rights except with respect to the
timing of the Corporation's right to redeem such shares. See
"Description of Series B Preferred Stock -- Redemption."
The Series B Preferred Stock was first issued pursuant to a
Stock Purchase Agreement dated June 3, 1991 (the "Stock Purchase
Agreement"). Entities managed or advised by General Electric
Investment Corporation, including General Electric Pension Trust
and Employers Reinsurance Corporation (collectively, "General
Electric Investment Corp."), acquired 1,000,000 shares of Series
B Preferred Stock and The Dreyfus Fund Incorporated acquired
50,000 shares. Neither General Electric Investment Corp. nor
The Dreyfus Fund Incorporated have sold any of their respective
shares of Series B Preferred Stock. Under the Stock Purchase
Agreement, General Electric Investment Corp. and The Dreyfus
Fund have certain rights to require the Corporation to register
their shares of the Series B Preferred Stock (and the Common
Stock into which the Series B Preferred Stock may be converted)
to facilitate their resale of such shares.
The following description of the terms and provisions of the
shares of Series B Preferred Stock does not purport to be
complete and is subject to and qualified in its entirety by
reference to the Articles Supplementary, a copy of which is
filed as an exhibit to the Registration Statement of which this
Prospectus is a part and is incorporated herein by reference.
See "Description of Capital Stock." The Corporation will
provide a copy of the Charter, including the Articles
Supplementary, upon request to holders of the Series B Preferred
Stock.
General
The Series B Preferred Stock is fully paid and nonassessable.
The holders of the Series B Preferred Stock have no preemptive
rights with respect to any shares of capital stock of the
Corporation or any other securities of the Corporation
convertible into or carrying rights or options to purchase any
such shares.
Ranking
The Series B Preferred Stock ranks on a parity as to payment of
dividends and upon liquidation with the Series A Preferred Stock
and the Series C Preferred Stock of the Corporation. See
"Description of Capital Stock." So long as any shares of
Series B Preferred Stock remain outstanding, the Corporation may
not, without the consent of the holders of two-thirds of the
outstanding shares of Series B Preferred Stock voting as a
single class: (i) issue any class or series of capital stock
that ranks senior to the Series B Preferred Stock as to payment
of dividends or upon liquidation; (ii) increase the number of
authorized shares of preferred stock or create any new class or
series of stock which ranks on a parity with the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock; or (iii) reissue any shares of Series B Preferred Stock
that have been redeemed. In addition, under the Articles
Supplementary to the Charter under which the Series A and Series
C Preferred Stock were established, the approval of a majority
of the outstanding shares of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, and any
other stock ranking on a parity with such preferred stock as to
dividends and upon liquidation (each a "Parity Stock"), voting
together as a single class, is required in order to take any
action that would result in an increase in the number of
authorized shares of preferred stock or to create any other
class of capital stock (other than any other series of preferred
stock) ranking on a parity with such preferred stock as to
dividends and upon liquidation.
Dividends
Holders of shares of Series B Preferred Stock are entitled to
receive, when, as and if declared by the Board of Directors of
the Corporation out of assets of the Corporation legally
available for payment, cumulative cash dividends at the rate per
annum of $10.25 per share. Dividends on the Series B Preferred
Stock are payable quarterly, in arrears, on January 31, April
30, July 31, and October 31 of each year at such annual rate.
Dividends payable on the Series B Preferred Stock for any period
greater or less than a full dividend period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
All dividends declared on the Series B Preferred Stock for any
dividend period and on any class or series of stock of the
Corporation ranking on a parity with the Series B Preferred
Stock as to dividends shall be declared pro rata so that the
amounts of dividends per share declared for such period on the
Series B Preferred Stock and on any class or series of stock
ranking on a parity with the Series B Preferred Stock as to
dividends that were outstanding during such period shall in all
cases bear to each other the same proportions that the
respective dividend rates of such stock for such period bear to
each other.
The Corporation shall not (i) declare or pay any dividend or
other distribution with respect to any junior stock of the
Corporation, (ii) redeem or set apart funds for the purchase or
redemption of any junior stock through a sinking fund or
otherwise, or (iii) purchase any shares of Series B Preferred
Stock or any Parity Stock (except for consideration payable in
junior stock) or redeem fewer than all of the shares of Series B
Preferred Stock or any Parity Stock then outstanding, unless in
each case all accrued and unpaid dividends with respect to the
Series B Preferred Stock and any Parity Stock at the time such
dividends are payable have been paid or funds have been set
apart for payment of such dividends or such dividends or
payments are payable solely in shares of junior stock. "Junior
stock" means the Common Stock and any other class of capital
stock of the Corporation now or hereafter issued and outstanding
that ranks junior in priority as to the payment of dividends and
upon liquidation to the Series B Preferred Stock.
Redemption
The Series B Preferred Stock is redeemable at the option of the
Corporation, in whole or in part, at any time or from time to
time, as follows: the Series B Preferred Stock 1995, at any
time on and after June 1, 1994; the Series B Preferred Stock
1996, at any time on and after June 1, 1995; and the Series B
Preferred Stock 1997, at any time on and after June 1, 1996.
Such redemption may be effected on not less than thirty (30) nor
more than forty-five (45) days notice. The "Redemption Price"
per share for any redemption effected on or after June 1, 1994
and prior to June 1, 1997 shall be equal to the Liquidation
Value (as defined below) plus accrued and unpaid dividends to
the redemption date. The Redemption Price per share for any
redemption effected on or after June 1, 1997 shall be equal to
the Liquidation Value plus accrued and unpaid dividends to the
redemption date, plus a premium as provided in the following
table:
Redemption
Year Premium
June 1, 1997 to May 31, 1998........... $4.100
June 1, 1998 to May 31, 1999........... 3.075
June 1, 1999 to May 31, 2000........... 2.050
June 1, 2000 to May 31, 2001........... 1.025
June 1, 2001 and thereafter............ 0
Notwithstanding the foregoing, no redemption may be effected at
the option of the Corporation prior to June 1, 1997 unless the
closing price of the Common Stock exceeds 150% of the then
current Series B Conversion Price (as defined below) on the date
notice of redemption is given and for each of the twenty (20)
prior consecutive trading days.
On and after the date fixed for redemption, dividends shall
cease to accrue on the Series B Preferred Stock so called for
redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as
stockholders of the Corporation, including the right to convert
such shares into shares of Common Stock, shall cease except the
right to receive the monies payable upon such redemption,
without interest, upon surrender of the certificates evidencing
such shares.
In addition, in the event that there shall occur a "change in
control" (as defined below) of the Corporation, then, at the
election of each holder of Series B Preferred Stock, the
Corporation will use its best efforts to issue and sell
additional nonredeemable (except at the option of the
Corporation) equity securities and apply the net proceeds
thereof to redeem the Series B Preferred Stock, but only if and
to the extent any such proceeds are raised. In such event, the
"Redemption Price" per share shall be equal to the Liquidation
Value plus accrued and unpaid dividends to the redemption date,
plus a premium as provided in the following table:
Redemption
Year Premium
June 1, 1993 to May 31, 1994.......... $8.200
June 1, 1994 to May 31, 1995.......... 7.175
June 1, 1995 to May 31, 1996.......... 6.150
June 1, 1996 to May 31, 1997.......... 5.125
June 1, 1997 to May 31, 1998.......... 4.100
June 1, 1998 to May 31, 1999.......... 3.075
June 1, 1999 to May 31, 2000.......... 2.050
June 1, 2000 to May 31, 2001.......... 1.025
June 1, 2001 and thereafter........... 0
The term "change in control" means any acquisition, in one or
more related transactions, by any person or group of 50% or more
of the combined voting power of the outstanding voting
securities of the Corporation, a sale of substantially all of
the assets of the Corporation, or a merger of the Corporation
with or into another person which results in the exchange,
conversion, reclassification or cancellation of the Common Stock
of the Corporation.
Liquidation Preference
The amount which the holders of shares of Series B Preferred
Stock shall be entitled to receive in the event of any
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, shall be $100.00 per share
(the "Liquidation Value"), plus an amount per share equal to all
dividends accrued and unpaid thereon to the date of such
liquidation, dissolution or winding up.
Upon any such liquidation, dissolution or winding up, the
preferential amounts with respect to the Series B Preferred
Stock and any Parity Stock shall be distributed pro rata in
accordance with the aggregate preferential amounts of the Series
B Preferred Stock and such other Parity Stock, if any, out of or
to the extent of the net assets of the Corporation legally
available for such distribution, before any distributions are
made with respect to any junior stock. After payment in full of
the liquidation price of the Series B Preferred Stock, the
holders of such shares are not entitled to any further
participation in any distribution of assets by the Corporation.
Neither a consolidation or merger of the Corporation with
another corporation nor a sale or transfer of all or
substantially all of the Corporation's assets for cash or
securities nor a statutory share exchange will be considered a
liquidation, dissolution or winding up of the Corporation.
Voting Rights
Except as indicated below, or except as expressly required by
applicable law, the holders of shares of Series B Preferred
Stock will have no voting rights.
If on the record date for any meeting of shareholders dividends
on the Series B Preferred Stock or any outstanding Parity Stock
are cumulatively in arrears in the amount of two or more full
quarterly dividends, the number of directors of the Corporation
will be increased by two and the holders of shares of Series B
Preferred Stock, voting together as a class with the holders of
any other class or series of Parity Stock, will have the right
to elect two directors to the Corporation's Board of Directors
to fill such newly created directorships until all such
dividends have been paid in full. In such event or in the case
of any other matter where the holders of Series B Preferred
Stock are to vote with holders of Parity Stock as a single
class, holders of Series B Preferred Stock shall have a number
of votes per share determined by dividing the Liquidation Value
of such share by $50.00.
The approval of two-thirds of the outstanding shares of Series
B Preferred Stock voting as a single class is required in order
to: (i) authorize the issuance of any capital stock which would
rank senior to the Series B Preferred Stock as to payment of
dividends or upon liquidation; (ii) increase the number of
authorized shares of preferred stock or create any new class of
stock or series of preferred stock which ranks on a parity with
the Series B Preferred Stock and Parity Stock; (iii) reissue any
shares of Series B Preferred Stock that have been redeemed; or
(iv) amend the Charter of the Corporation to affect materially
and adversely the rights of the holders of the Series B
Preferred Stock. In addition, under the Articles Supplementary
to the Charter under which the Series A and Series C Preferred
Stock were established, the approval of a majority of the
outstanding shares of Series B Preferred Stock and Parity Stock,
voting together as a single class, is required in order to
increase the number of shares of preferred stock authorized in
the Charter or to create any other class of stock (but not any
other series of preferred stock) ranking on a parity with such
preferred stock as to dividends and upon liquidation.
Entities managed or advised by General Electric Investment
Corporation own in the aggregate 1,000,000 shares of the Series
B Preferred Stock. For so long as such entities own such
shares, such entities will be able to control the voting with
respect to any matter upon which the holders of the Series B
Preferred Stock may be entitled to vote as a single class.
Conversion Rights
At the option of the holders of the Series B Preferred Stock,
such shares may be converted into that number of shares of
Common Stock of the Corporation determined by dividing the
Liquidation Value per share by the applicable conversion price.
Accrued dividends will be paid in cash upon conversion of the
Series B Preferred Stock. The initial conversion price for the
Series B Preferred Stock is $12.025 per share (the "Series B
Conversion Price") which is equivalent to 8.316 shares of Common
Stock per converted share of Series B Preferred Stock.
The Series B Conversion Price is subject to adjustment in
certain events, including stock dividends, subdivisions, splits
and combinations; distributions of rights or warrants to
purchase Common Stock at less than the then current market
price; and distributions to all holders of Common Stock of
evidence of indebtedness or assets of the Corporation (other
than regular quarterly Common Stock dividends consistent with
the Corporation's current dividend policy and future dividends
payable out of consolidated earned surplus or current earnings).
Conversion of shares of Series B Preferred Stock may be
effected by delivering certificates evidencing the shares to be
converted, together with written notice of conversion and a
proper assignment of such certificates to the Corporation or in
blank, to the office to be maintained by the Corporation for
that purpose. Conversion shall be deemed to have been effected
on the date when the aforesaid delivery is made. The
Corporation shall issue and deliver to or upon the written order
of such holder certificates for the number of full shares of
Common Stock to which such holder is entitled with respect to
the shares of Series B Preferred Stock so converted. Fractional
shares of Common Stock will not be delivered upon conversion,
but a cash adjustment will be paid in respect of such fractional
interests, based on the then current market price per share of
Common Stock.
Rights Under the Stock Purchase Agreement
Certain "Significant Holders" (defined below) of shares of
Series B Preferred Stock are given additional rights pursuant to
the Stock Purchase Agreement. The following description of the
terms and provisions of the Stock Purchase Agreement does not
purport to be complete and is subject to and qualified in its
entirety by reference to the Stock Purchase Agreement, a copy of
which is filed as an exhibit to the Registration Statement of
which this Prospectus is a part and is incorporated herein by
reference The term "Significant Holder" means any holder of
$1,000,000 or more in aggregate Liquidation Value of Series B
Preferred Stock. Restrictions or other provisions in the Stock
Purchase Agreement which relate solely to shares of Series B
Preferred Stock other than shares purchased by American General
Corporation and now owned by the Selling Stockholder, do not
apply to the shares of Series B Preferred Stock offered hereby.
Financial Statements and Other Reports. So long as any shares
of Series B Preferred Stock remain outstanding, the Corporation
is obligated to deliver certain financial statements and other
reports to Significant Holders. Such financial statements and
reports shall include all quarterly and annual financial reports
and statements of the Corporation and its consolidated
subsidiaries, other documents filed by the Corporation with the
Commission or otherwise delivered to the Corporation's
stockholders, and additional financial data as such Significant
Holder may reasonably request. In connection therewith,
Significant Holders have certain rights of access to the
Corporation's independent public accountants.
Additional Information. With respect to the insurance
subsidiaries of the Corporation, each Significant Holder shall
also be provided with the statutory financial statements of such
insurance subsidiaries, the final report on any tri-annual
examination of the financial condition and operation of such
insurance subsidiaries, and certain other information specified.
Board Nominee. So long as GE Investment Private Placement
Partners I, Limited Partnership ("GE Partners") is the
beneficial owner of any shares of Series B Preferred Stock or
Common Stock issued upon conversion thereof, the Corporation
will nominate, as a candidate for election to the Board of
Directors, a person who is reasonably acceptable to the then
current Board who is designated by GE Partners. If GE Partners
no longer beneficially owns any such shares, then such right to
designate a candidate will devolve to the holders representing
50% or more of the Series B Preferred Stock held by Significant
Holders.
Inspection of Property. So long as any shares of Series B
Preferred Stock remain outstanding, the Corporation will permit
each Significant Holder or its designee to visit and inspect
the properties of the Corporation and to discuss the affairs,
finances and accounts of the Corporation with the principal
officers and auditors of the Corporation, all at such reasonable
times during business hours as any Significant Holder may
reasonably request. Information so obtained by a Significant
Holder shall remain subject to certain confidentiality measures.
Dividend Payments. Any Significant Holder of recognized
standing may require the Corporation to make dividend payments
on shares of Series B Preferred Stock held by such person by
wire transfer of immediately available funds.
Covenants. The Corporation is also subject to other covenants
regarding its operations as described in the Stock Purchase
Agreement.
Amendments to the Stock Purchase Agreement. In general, the
Stock Purchase Agreement may be amended upon the Corporation
obtaining the written consent to such amendment given by the
holders of at least 66-2/3% of the shares of the Series B
Preferred Stock purchased pursuant thereto outstanding at the
time such consent is given. The foregoing does not apply to an
amendment which would affect the time or amount of any required
payment, adversely affect the conversion or preference rights
of the Series B Preferred Stock, or reduce the percentage of the
aggregate number of shares of the Series B Preferred Stock
required with respect to any consent, all of which shall require
the consent of the holders of all of the Series B Preferred
Stock at the time outstanding. The provisions of the Stock
Purchase Agreement regarding restrictions on transfer and
registration rights may not be amended without the consent of
the holders of at least 66-2/3% of the shares of Series B
Preferred Stock then outstanding and of at least 66-2/3% of the
shares of Common Stock constituting "restricted securities" (as
defined in the Stock Purchase Agreement) at the time issued or
issuable upon conversion of all the Series B Preferred Stock
then outstanding. No provision of the Stock Purchase Agreement
applicable only to Significant Holders may be amended without
the consent of the holders of at least 66-2/3% of the shares of
Series B Preferred Stock held by such Significant Holders.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Corporation consists of
240,000,000 shares of common stock, $2.50 par value (the "Common
Stock") and 12,000,000 shares of preferred stock, $50.00 par
value, of which 4,000,000 shares are classified as $4.10 Series
A Convertible Exchangeable Preferred Stock, 1,300,000 shares are
classified as Series B Cumulative Convertible Preferred Stock,
1,000 shares are classified as 11% Preferred Stock (the "11%
Preferred Stock"), 3,800,000 shares are classified as $5.00
Series C Cumulative Convertible Preferred Stock and 1,200,000
are classified as Junior Participating Preferred Stock (the
"Junior Preferred Stock"). As of January 17, 1994, there were
issued and outstanding 85,039,534 shares of Common Stock,
4,000,000 shares of Series A Preferred Stock, 1,300,000 shares
of Series B Preferred Stock and 3,800,000 shares of Series C
Preferred Stock. No shares of 11% Preferred Stock or Junior
Preferred Stock are currently outstanding.
The following summary of the terms of the Corporation's capital
stock does not purport to be complete and is qualified in its
entirety by reference to the applicable provisions of Maryland
law and the Corporation's Charter.
The Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and 11% Preferred Stock rank on a parity with
each other and rank senior to the Junior Preferred Stock and the
Common Stock as to dividends and upon liquidation.
The Transfer Agent and Registrar for the Corporation's Common
Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Junior Preferred Stock is First
Chicago Trust Company, New York, New York.
Common Stock
Each holder of Common Stock is entitled to one vote for each
share of Common Stock held. Cumulative voting for the election
of directors is not provided for in the Charter or the by-laws.
Subject to the prior rights of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and the
Junior Preferred Stock and any other preferred stock which may
be classified and issued, the holders of the Common Stock of the
Corporation are entitled to receive, pro-rata, such dividends as
may be declared by the Board of Directors out of funds legally
available therefor, and are also entitled to share, pro-rata, in
any other distribution to stockholders. There are no redemption
or sinking fund provisions and no direct limitations in any
indenture or agreement on the payment of dividends. Payment of
dividends by the Corporation is not subject to restrictions
under the Maryland Insurance Code. However, payment of
dividends to the Corporation by its insurance subsidiaries is
subject to certain restrictions under Maryland and other state
insurance laws. Such restrictions as well as other contractual
restrictions may limit the amount of dividends that may be paid
by the Corporation. See "Special Considerations -- Insurance
Holding Company."
Series A Preferred Stock
Subject to the limitations discussed herein, the holders of the
Series A Preferred Stock are entitled to receive, when and as
declared by the Board of Directors out of funds legally
available therefor, cumulative dividends at the annual rate of
$4.10 per share and no more, payable quarterly, in arrears, on
January 31, April 30, July 31 and October 31 in each year.
Unless full cumulative dividends on all outstanding Series A
Preferred Stock and any other class of preferred stock ranking
on a parity with the Series A Preferred Stock have been paid,
the Corporation will not declare or pay any dividend on or set
aside or apply any amount to the redemption or purchase of, any
shares of the Common Stock or on any other class of stock
ranking junior to the Series A Preferred Stock (except for
dividends payable only in, or rights to subscribe for or
purchase, shares of junior stock).
Holders of Series A Preferred Stock have limited voting rights
similar to those of the Series B Preferred Stock, except that
under the terms of the Series A Preferred Stock: (i) the right
to elect two additional directors does not accrue until
dividends on the Series A Preferred Stock are cumulatively in
arrears in the amount of six or more full quarterly dividends;
and (ii) no provision is made for voting on any matters as a
single class separate and apart from Parity Stock. See
"Description of Series B Preferred Stock -- Voting Rights."
At the option of the holders of the Series A Preferred Stock,
such shares may be converted into shares of Common Stock of the
Corporation at the then applicable conversion rate. The present
conversion rate is 1.179 shares of Common Stock for each share
of Series A Preferred Stock (equivalent to a conversion price of
$42.40 per share). The conversion price is subject to
adjustment in certain events, including stock dividends,
subdivisions, splits and combinations, and certain other
distributions of rights or warrants to purchase Common Stock at
less than the then current market price (as defined), and
distributions to all holders of Common Stock of evidences of
indebtedness or assets of the Corporation other than cash out of
earned surplus. This conversion price has been adjusted under
this provision since the Corporation has paid dividends on its
Common Stock notwithstanding the deficit in its earned surplus
account.
The Series A Preferred Stock is exchangeable in whole but not
in part at the option of the Corporation on any dividend payment
date for the Corporation's 8.20% Convertible Subordinated
Debentures due October 31, 2011 (the "Debentures") at a rate of
$50 principal amount of the Debentures plus cash in the amount
of accrued but unpaid dividends, if any, for each share of
Series A Preferred Stock.
The Series A Preferred Stock is redeemable at the option of the
Corporation for cash, as a whole or in part, at redemption
prices declining to $50 per share on October 31, 1996, plus
accrued and unpaid dividends to the redemption date. The Corporation
may not purchase or redeem less than all the Series A Preferred
Stock and any other series of Parity Stock if, as of such time,
the Corporation has failed to pay all accrued and unpaid
dividends thereon.
In case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, holders of any
shares of Series A Preferred Stock are entitled to receive $50
per share, plus an amount equal to any dividends accrued and
unpaid to the payment date, before any distribution is made to
the holders of any junior stock, and no more.
Series C Preferred Stock
Subject to the limitations discussed herein, the holders of the
Series C Preferred Stock are entitled to receive, when and as
declared by the Board of Directors out of funds legally
available therefor, cumulative dividends from the date of issue
thereof at the annual rate of $5.00 per share and no more,
payable quarterly, in arrears, on January 31, April 30, July 31
and October 31 in each year. Unless full cumulative dividends
on all outstanding Series C Preferred Stock and any other class
of preferred stock ranking on a parity with the Series C
Preferred Stock have been paid, the Corporation will not declare
or pay any dividend on or set aside or apply any amount to the
redemption or purchase of, any shares of the Common Stock or on
any other class of stock ranking junior to the Series C
Preferred Stock (except for dividends payable only in, or rights
to subscribe for or purchase, shares of junior stock).
Holders of Series C Preferred Stock have limited voting rights
similar to those of the Series B Preferred Stock except that
under the terms of the Series C Preferred Stock no provision is
made for voting on any matters as a single class separate and
apart from Parity Stock. See "Description of Series B
Preferred Stock -- Voting Rights."
At the option of the holders of the Series C Preferred Stock,
such shares may be converted into shares of Common Stock of the
Corporation at the then applicable conversion rate. The present
conversion rate is 4.158 shares of Common Stock for each share
of Series C Preferred Stock (equivalent to a conversion price of
$12.025 per share). The conversion price is subject to
adjustment in certain events, including stock dividends,
subdivisions, splits and combinations, and certain other
distributions of rights or warrants to purchase Common Stock at
less than the then current market price (as defined), and
distributions to all holders of Common Stock of evidences of
indebtedness or assets of the Corporation (other than regular
quarterly Common Stock dividends consistent with the
Corporation's current dividend policy and future dividends
payable out of consolidated earned surplus or current earnings).
The conversion price is also subject to further adjustment in
the event of certain transactions pursuant to a plan under which
all or substantially all the Common Stock is to be exchanged or
converted into the right to receive cash, securities or other
assets.
The Series C Preferred Stock is redeemable, commencing on June
13, 1994, at the option of the Corporation for cash, as a whole
or in part, at redemption prices declining to $50 per share
on June 13, 2001, plus accrued and unpaid dividends to the
redemption date. The Corporation may not purchase or redeem
less than all the Series C Preferred Stock and any other series
of Parity Stock if, as of such time, the Corporation has failed
to pay all accrued and unpaid dividends thereon.
In case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, holders of any
shares of Series C Preferred Stock are entitled to receive $50
per share, plus an amount equal to any dividends accrued and
unpaid to the payment date, before any distribution is made to
the holders of any Junior Stock.
Shareholder Rights Plan
The Corporation has a shareholder rights plan (the "Plan") to
deter coercive or unfair takeover tactics and to prevent a
potential purchaser from gaining control of the Corporation
without offering a fair price to all of the Corporation's
stockholders. Under the Plan, each outstanding share of the
Corporation's Common Stock has one preferred share purchase
right (a "Right") expiring in 1997. Each Right entitles the
registered holder to purchase 1/100 of a share of Junior
Preferred Stock for $140. The Rights cannot be exercised unless
certain events occur that might lead to a concentration in
ownership of Common Stock. At that time, the Rights may be
exercised for Common Stock having a value of twice the exercise
price. Under certain conditions, the Rights also become
exercisable into shares of Common Stock of a purchaser having a
value of twice the exercise price. The Corporation will
generally be entitled to redeem the Rights, at $.05 per Right,
any time before the tenth day after a 20% position in the
Corporation is acquired. The Form 8-A setting forth a
description of the Plan is included in the exhibit to the Registration
Statement of which this Prospectus is a part which sets forth the
Corporation's Charter. Such exhibit is incorporated by reference herein.
Special Statutory Requirements for Certain Transactions
Business Combination Statute. The Maryland General Corporation
Law establishes special requirements with respect to "business
combinations" between Maryland corporations and "interested
stockholders" unless exemptions are applicable. "Interested
stockholders" are all persons owning beneficially, directly or
indirectly, more than 10% of the outstanding voting stock of a
Maryland corporation. "Business combinations" include any
merger or similar transaction subject to a statutory vote and
additional transactions involving transfers of assets or
securities in specified amounts to interested stockholders or
their affiliates. Unless an exemption is available,
transactions of these types may not be consummated between a
Maryland corporation and an interested stockholder or its
affiliates for a period of five years after the date on which
the stockholder first became an interested stockholder and
thereafter may not be consummated unless recommended by the
board of directors of the Maryland corporation and approved by
the affirmative vote of at least 80% of the votes entitled to be
cast by all holders of outstanding shares of voting stock and 66
2/3% of the votes entitled to be cast by all holders of
outstanding shares of voting stock other than the interested
stockholder. A business combination with an interested
stockholder which is approved by the board of directors of a
Maryland corporation at any time before an interested
stockholder first becomes an interested stockholder is not
subject to the special voting requirements. An amendment to a
Maryland corporation's charter electing not to be subject to the
foregoing requirements must be approved by the affirmative vote
of at least 80% of the votes entitled to be cast by all holders
of outstanding shares of voting stock and 66 2/3% of the votes
entitled to be cast by holders of outstanding shares of voting
stock who are not interested stockholders. Any such amendment
is not effective until 18 months after the vote of stockholders
and does not apply to any business combination of a corporation
with a stockholder who was an interested stockholder on the date
of the stockholder vote. The Corporation has not adopted any
such amendment to its Charter.
Control Share Acquisition Statute. The Maryland law imposes
limitations on the voting rights in a "control share
acquisition." The Maryland statute defines a "control share
acquisition" at the 20%, 33 1/3% and 50% acquisition levels, and
requires a two-third stockholder vote (excluding shares owned by
the acquiring person and certain members of management) to
accord voting rights to stock acquired in a control share
acquisition. The statute also requires Maryland corporations to
hold a special meeting at the request of an actual or proposed
control share acquirer generally within 50 days after a request
is made with the submission of an "acquiring person statement,"
but only if the acquiring person (a) posts a bond for the cost
of the meeting and (b) submits a definitive financing agreement
to the extent that financing is not provided by the acquiring
person. In addition, unless the charter or by-laws provide
otherwise, the statute gives the Maryland corporation, within
certain time limitations, various redemption rights if there is
a stockholder vote on the issue and the grant of voting rights
is not approved, or if an "acquiring person statement" is not
delivered to the target within ten days following a control
share acquisition. Moreover, unless the charter or by-laws
provide otherwise, the statute provides that if, before a
control share acquisition occurs, voting rights are accorded to
control shares which results in the acquiring person having
majority voting power, then minority stockholders have appraisal
rights. An acquisition of shares may be exempted from the
control share statute provided that a charter or by-law
provision is adopted for such purpose prior to the control share
acquisition. There are no such provisions in the Charter or
by-laws of the Corporation.
Reference is made to the full text of the foregoing statutes
for their entire terms, and the partial summary contained in
this Prospectus is not intended to be complete.
Insurance Acquisitions Disclosure and Control Act
Under the Maryland Insurance Code, unless certain filings are
made with the State Insurance Commissioner, no person may
acquire any voting security or security convertible into a
voting security of an insurance holding company, such as the
Corporation, which controls one or more Maryland insurance
companies if, as a result of such acquisition, such person would
"control" such insurance holding company. The acquisition may
not proceed unless it has been approved by the Maryland
Insurance Commissioner within 60 days after such filings have
been submitted. "Control" is presumed to exist if a person,
directly or indirectly, owns or controls 10% or more of the
voting securities of another person. This presumption may be
rebutted by establishing by a preponderance of evidence that
control does not exist in fact.
Reference is made to the full text of the statute for its
entire terms, and this partial summary is not intended to be
complete.
LEGAL MATTERS
The legal validity of the Series B Preferred Stock and the
Common Stock issuable upon conversion thereof to which this
Prospectus relates will be passed upon for the Corporation by
John A. MacColl, Esquire, Senior Vice President-General Counsel
of the Corporation. Mr. MacColl owns shares of Common Stock and
options to acquire such shares aggregating less than 0.1% of the
Corporation's outstanding Common Stock.
EXPERTS
The consolidated financial statements of the Corporation
incorporated in this Prospectus by reference to Form 10-K for the year ended
December 31, 1992 have been audited by Ernst & Young, independent auditors, as
set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting
and auditing.
With respect to the unaudited condensed consolidated interim
financial information for the three month periods ended March
31, 1993 and March 31, 1992, for the six month and three
month periods ended June 30, 1993 and June 30, 1992, and for the nine month
and three month periods ended September 30, 1993 and 1992,
incorporated by reference in this Prospectus, Ernst & Young has
reported that they have applied limited procedures in accordance
with professional standards for a review of such information.
However, their separate reports, included in the Corporation's
Quarterly Report on Form 10-Q for the quarters ended March 31,
1993, June 30, 1993, and September 30, 1993 and incorporated herein by
reference, states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be
restricted in light of the limited nature of the review
procedures applied. The independent auditors are not subject to
the liability provisions of Section 11 of the Securities Act for
their reports on the unaudited interim financial information
because those reports are not a "report" or a "part" of the
Registration Statement prepared or certified by the auditors
within the meaning of Sections 7 and 11 of the Securities Act.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in
this Prospectus, and any information or representation not
contained or incorporated by reference herein must not be relied
upon as having been authorized by the Corporation or the Selling
Stockholder. This Prospectus does not constitute an offer of
any securities other than the registered securities to which it
relates or an offer to any person in any jurisdiction where such
offer would be unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no
change in the affairs of the Corporation since the date hereof
or that the information contained herein is correct as of any
time subsequent to its date.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Corporation 3
Special Considerations 3
Ratio of Consolidated Earnings to
Combined Fixed Charges and
Preferred Stock Dividends 4
Use of Proceeds 4
Selling Stockholder 4
Plan of Distribution 5
Description of Series B Preferred Stock 6
Description of Capital Stock 11
Legal Matters 14
Experts 15
250,000 Shares
USF&G Corporation
$10.25 Series B Cumulative
Convertible Preferred Stock
____________
PROSPECTUS
____________