SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2001.
--------------------
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 0-14697
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HARLEYSVILLE GROUP INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0241172
- ------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
355 MAPLE AVENUE, HARLEYSVILLE, PENNSYLVANIA 19438-2297
--------------------------------------------------------------
(Address of principal executive offices, including zip code)
(215) 256-5000
--------------
(Registrant's telephone number, including area code)
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.
---
At May 4, 2001 29,183,218 shares of common stock of Harleysville Group Inc.
were outstanding.
Page 1
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
INDEX
Page Number
------------
Part I - Financial Information
Consolidated Balance Sheets - March 31, 2001 and
December 31, 2000 3
Consolidated Statements of Income - For the
three months ended March 31, 2001 and 2000 4
Consolidated Statement of Shareholders' Equity -
For the three months ended March 31, 2001 5
Consolidated Statements of Cash Flows -
For the three months ended March 31, 2001
and 2000 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Results
of Operations and Financial Condition 13
Quantitative and Qualitative Disclosure About
Market Risk 16
Part II - Other Information 17
Page 2
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
MARCH 31, DECEMBER 31,
2001 2000
----------- --------------
(Unaudited)
ASSETS
- --------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized
cost (fair value $482,176
and $578,662) $ 460,482 $ 562,603
Available for sale, at fair value
(amortized cost $865,150 and $800,954) 898,118 818,891
Equity securities, at fair value
(cost $123,580 and $125,517) 169,353 193,750
Short-term investments, at cost,
which approximates fair value 66,357 23,881
----------- --------------
Total investments 1,594,310 1,599,125
Cash 17,329 28,395
Receivables:
Premiums 105,353 101,511
Reinsurance 77,445 76,841
Accrued investment income 20,618 23,316
----------- --------------
Total receivables 203,416 201,668
Deferred policy acquisition costs 84,606 84,759
Prepaid reinsurance premiums 20,502 18,154
Property and equipment, net 27,307 27,621
Deferred income taxes 24,165 19,545
Other assets 39,540 42,595
----------- --------------
Total assets $2,011,175 $ 2,021,862
=========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------
Liabilities:
Unpaid losses and loss
settlement expenses $ 857,414 $ 864,843
Unearned premiums 362,207 354,098
Accounts payable and accrued expenses 102,643 120,210
Debt 96,450 96,450
Due to affiliate 21,763 19,680
----------- --------------
Total liabilities 1,440,477 1,455,281
----------- --------------
Shareholders' equity:
Preferred stock, $1 par value, authorized
1,000,000 shares; none issued
Common stock, $1 par value, authorized
80,000,000 shares; issued 30,174,963
and 30,001,852 shares; outstanding
29,174,963 and 29,001,852 shares 30,175 30,002
Additional paid-in capital 134,674 131,537
Accumulated other comprehensive income 51,182 56,010
Retained earnings 370,232 364,597
Treasury stock, at cost, 1,000,000 shares (15,565) (15,565)
----------- --------------
Total shareholders' equity 570,698 566,581
----------- --------------
Total liabilities and
shareholders' equity $2,011,175 $ 2,021,862
=========== ==============
See accompanying notes to consolidated financial statements.
Page 3
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(dollars in thousands, except per share data)
2001 2000
--------- ---------
Revenues:
Premiums earned $177,274 $170,241
Investment income, net of
investment expense 21,325 21,770
Realized investment gains (losses) (2,353) 1,274
Other income 4,074 4,134
--------- ---------
Total revenues 200,320 197,419
--------- ---------
Losses and expenses:
Losses and loss settlement expenses 126,509 127,491
Amortization of deferred policy
acquisition costs 45,175 43,987
Other underwriting expenses 14,723 15,840
Interest expense 1,621 1,660
Other expenses 1,495 1,666
--------- ---------
Total expenses 189,523 190,644
--------- ---------
Income before income taxes 10,797 6,775
Income taxes (benefit) 1,079 (466)
--------- ---------
Net income $ 9,718 $ 7,241
========= =========
Per common share:
Basic earnings $ .33 $ .25
========= =========
Diluted earnings $ .33 $ .25
========= =========
Cash dividend $ .14 $ .135
========= =========
See accompanying notes to consolidated financial statements.
Page 4
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(dollars in thousands)
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
PAID-IN COMPREHENSIVE RETAINED TREASURY
SHARES AMOUNT CAPITAL INCOME EARNINGS STOCK TOTAL
---------- -------- -------------- ---------- ---------- --------- ---------
Balance,
December 31, 2000 30,001,852 $ 30,002 $ 131,537 $ 56,010 $ 364,597 $(15,565) $566,581
---------
Net income 9,718 9,718
Other compre-
hensive income,
net of tax:
Unrealized
investment
losses, net of
reclassification
adjustment (4,828) (4,828)
---------
Comprehensive
income 4,890
---------
Issuance of
common stock 173,111 173 3,137 3,310
Cash dividend
paid (4,083) (4,083)
---------- ---------
Balance at
March 31, 2001 30,174,963 $ 30,175 $ 134,674 $ 51,182 $ 370,232 $(15,565) $570,698
========== ======== ============== ========== ========== ========= =========
See accompanying notes to consolidated financial statements.
Page 5
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(in thousands)
2001 2000
--------- ---------
Cash flows from operating activities:
Net income $ 9,718 $ 7,241
Adjustments to reconcile net income
to net cash used by operating
activities:
Change in receivables, unearned
premiums, prepaid reinsurance
and due to affiliate 6,096 (8,590)
Increase (decrease) in unpaid losses
and loss settlement expenses (7,429) 9,279
Deferred income taxes (1,879) (1,394)
Decrease in deferred policy
acquisition costs 153 810
Amortization and depreciation 719 865
(Gain) loss on sale of investments 2,353 (1,274)
Other, net (14,425) (18,595)
--------- ---------
Net cash used by operating
activities (4,694) (11,658)
--------- ---------
Cash flows from investing activities:
Fixed maturity investments:
Purchases (60,407) (35,864)
Sales or maturities 99,540 24,346
Equity securities:
Purchases (1,671) (12,269)
Sales 135 5,807
Net (purchases) sales of short-
term investments (42,476) 33,121
Purchase of property and equipment (267) (1,299)
--------- ---------
Net cash provided (used)
by investing activities (5,146) 13,842
--------- ---------
Cash flows from financing activities:
Issuance of common stock 2,857 1,945
Dividend paid (4,083) (3,900)
Purchase of treasury stock (1,022)
---------
Net cash used by
financing activities (1,226) (2,977)
--------- ---------
Decrease in cash (11,066) (793)
Cash at beginning of period 28,395 20,273
--------- ---------
Cash at end of period $ 17,329 $ 19,480
========= =========
See accompanying notes to consolidated financial statements.
Page 6
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - Basis of Presentation
The financial information for the interim periods included herein is
unaudited; however, such information reflects all adjustments which are, in the
opinion of management, necessary to a fair presentation of the financial
position, results of operations, and cash flows for the interim periods. The
results of operations for interim periods are not necessarily indicative of
results to be expected for the full year.
These financial statements should be read in conjunction with the financial
statements and notes for the year ended December 31, 2000 included in the
Company's 2000 Annual Report filed with the Securities and Exchange Commission
on Form 10-K.
2 - Earnings Per Share
The computation of basic and diluted earnings per share is as follows for
the three months ended March 31:
2001 2000
----------- -----------
(dollars in thousands,
except per share data)
Numerator for basic
and diluted earnings
per share:
Net income $ 9,718 $ 7,241
=========== ===========
Denominator for basic
earnings per share --
weighted average
shares outstanding 29,137,261 28,900,561
Effect of stock
incentive plans 583,071 110,864
----------- -----------
Denominator for
diluted earnings
per share 29,720,332 29,011,425
=========== ===========
Basic earnings
per share $ .33 $ .25
=========== ===========
Diluted earnings
per share $ .33 $ .25
=========== ===========
Page 7
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following options to purchase shares of common stock were not included
in the computation of diluted earnings per share because the exercise price of
the options was greater than the average market price:
FOR THE THREE MONTHS
ENDED MARCH 31,
2001 2000
---- -----
(in thousands)
Number of options - 1,343
==== =====
3 - Reinsurance
Premiums earned are net of amounts ceded of $14,971,000 and $19,689,000 for
the three months ended March 31, 2001 and 2000, respectively. Losses and loss
settlement expenses are net of amounts ceded of $16,341,000 and $12,121,000 for
the three months ended March 31, 2001 and 2000, respectively. Such amounts do
not include the reinsurance transactions with Mutual under the pooling
arrangement.
Harleysville Group has a reinsurance agreement with Harleysville Mutual
Insurance Company (Mutual) whereby Mutual reinsures accumulated catastrophe
losses in a quarter up to $14,400,000 in excess of $3,600,000 in return for a
reinsurance premium. The agreement excludes catastrophe losses resulting from
earthquakes or hurricanes, and supplements the existing external catastrophe
reinsurance program. Under the agreement, Harleysville Group ceded premiums
earned of $1,617,000 and $1,548,000 and losses incurred of $159,000 and $56,000
to Mutual for the three months ended March 31, 2001 and 2000, respectively.
Harleysville Group cedes business to and assumes business from Mutual under
a reinsurance pooling agreement. Because this agreement does not relieve
Harleysville Group of primary liability as the originating insurer, there is a
concentration of credit risk arising from business ceded to Mutual. However,
the reinsurance pooling agreement provides for the right of offset and the net
balance with Mutual is a liability at March 31, 2001 and December 31, 2000.
Mutual has an A. M. Best rating of "A" (Excellent) and, in accordance with
certain state regulatory requirements, maintained $351.5 million (fair value) of
investments in a trust account to secure liabilities under the reinsurance
pooling agreement at March 31, 2001.
Page 8
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4 - Cash Flows
There were cash tax payments of $2,108,000 in the first quarter of 2001.
There were no cash tax payments in the first quarter of 2000. Cash interest
payments of $305,000 and $306,000 were made in the first quarter of 2001 and
2000, respectively.
5 - Restructuring Charges
On July 29, 1999, Harleysville Group announced a plan to consolidate its
claims operations from 23 general claims offices into a centralized direct
reporting center and four specialized regional claims centers. As a result of
this consolidation, the Company recorded a restructuring charge in 1999 for
employee termination benefits to be paid and occupancy charges.
Employee termination benefits include severance payments and related
benefits and outplacement services for 173 employees. Severance payments
totaling $1,793,000 have been made to 172 employees, and the remaining accrual
for employee termination benefits is $10,000 at March 31, 2001. Included in
occupancy charges are future lease obligations, less anticipated sublease
benefits, for leased premises which will no longer be used by the claims
operation. Through March 31, 2001, operations in the 23 general claims offices
have been closed. Payments totaling $418,000 have been made, and the remaining
accrual for occupancy charges is $201,000 at March 31, 2001.
On February 7, 2000, Harleysville Group announced a plan to consolidate
selected support services and office functions throughout its field operations.
As a result of this consolidation, the Company recorded a restructuring charge
in 2000 for employee termination benefits to be paid, occupancy charges and a
write-down of equipment to fair value. This charge was included in other
underwriting expenses.
Employee termination benefits include severance payments and related
benefits and outplacement services for 109 employees. Severance payments
totaling $883,000 have been made to the 109 employees. Included in occupancy
charges is a future lease obligation, less anticipated sublease benefits, for
leased premises which will no longer be used. Payments totally $67,000 have
been made and the remaining accrual for occupancy charges is $121,000 at March
31, 2001. Also, as a direct result of the consolidation, a loss of $52,000 was
realized on the disposal of equipment.
Page 9
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Both consolidations were completed in 2000.
ACTIVITY IN THE RESTRUCTURING ACCRUALS
--------------------------------------
(IN THOUSANDS)
CLAIMS FIELD
RESTRUCTURING RESTRUCTURING
------------------------ -----------------------
EMPLOYEE EMPLOYEE
TERMINATION TERMINATION
BENEFITS OCCUPANCY TOTAL BENEFITS OCCUPANCY TOTAL
---------- ----------- -------- ---------- ----------- -------
Restructuring charge $ 2,017 $ 594 $ 2,611
Reversal of prior
accrual due to
voluntary
terminations
and additional
sublease benefits (42) (57) (99)
---------- ----------- --------
Balance at
December 31, 1999 $ 1,975 $ 537 $ 2,512
========== =========== ========
Restructuring
charge $ 899 $ 188 $ 1,087
Cash payments (1,793) (371) (2,164) (883) (50) (933)
Change in prior
accrual due to
voluntary
terminations
greater than
anticipated and
reduced sublease
benefits (172) 50 (122) (16) (16)
---------- ----------- -------- --------- --------- -------
Balance at
December 31, 2000 $ 10 $ 216 $ 226 $ $ 138 $ 138
Cash payments (47) (47) (17) (17)
Change in prior
accrual due to
reduced sublease
benefits 32 32
---------- ----------- -------- --------- --------- -----
Balance at
March 31, 2001 $ 10 $ 201 $ 211 $ $ 121 $ 121
========== =========== ======== ========== ======= =======
Page 10
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6 - Segment Information
The performance of the personal lines and commercial lines is evaluated
based upon underwriting results as determined under statutory accounting
practices (SAP).
Financial data by segment is as follows for the three months ended March
31, 2001 and 2000:
2001 2000
--------- ---------
(in thousands)
Revenues:
Premiums earned:
Commercial lines $116,458 $108,023
Personal lines 60,816 62,218
--------- ---------
Total premiums earned 177,274 170,241
Net investment income 21,325 21,770
Realized investment
gains (losses) (2,353) 1,274
Other 4,074 4,134
--------- ---------
Total revenues $200,320 $197,419
========= =========
Income before income taxes:
Underwriting loss:
Commercial lines $ (3,195) $ (7,898)
Personal lines (6,087) (9,221)
--------- ---------
SAP underwriting loss (9,282) (17,119)
GAAP adjustments 149 42
--------- ---------
GAAP underwriting loss (9,133) (17,077)
Net investment income 21,325 21,770
Realized investment
gains (losses) (2,353) 1,274
Other 958 808
--------- ---------
Income before income taxes $ 10,797 $ 6,775
========= =========
Page 11
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7 - Comprehensive Income
Comprehensive income for the three months ended March 31, 2001 and 2000
consisted of the following (all amounts are net of taxes):
2001 2000
-------- --------
(in thousands)
Net income $ 9,718 $ 7,241
Other comprehensive income:
Unrealized investment holding
gains (losses) arising
during period (6,376) 11,671
Less:
Reclassification adjustment
for (gains) losses included
in net income 1,548 (826)
-------- --------
Net unrealized investment
gains (losses) (4,828) 10,845
-------- --------
Comprehensive income $ 4,890 $18,086
======== ========
8 - New Accounting Standards
Harleysville Group transferred investments with an amortized cost of
$81.0 million and unrealized gains of $1.5 million from the held to maturity
classification to the available for sale classification on January 1, 2001,
under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," an amendment of SFAS No. 133.
Harleysville Group has no derivative instruments or hedging activities.
9 - New Statutory Accounting Principles
The NAIC has adopted the Codification of Statutory Accounting Principles
with an effective date of January 1, 2001. The codification principles are
intended to provide a basis of accounting recognized and adhered to in the
absence of, conflict with, or silence of, state statutes and regulations. The
impact of the codified principles on the statutory capital and surplus of the
Company's insurance subsidiaries ranges from (2%) to 9% of statutory capital and
surplus and, on a consolidated basis, increases statutory capital and surplus by
approximately 7%.
Page 12
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Premiums earned increased $7.0 million during the three months ended March
31, 2001 as compared to the three months ended March 31, 2000. The increase is
primarily due to an increase of $8.4 million in premiums earned for commercial
lines partially offset by a decline of $1.4 million in personal lines premiums
earned. The increase in premiums earned for commercial lines primarily is due
to higher rates partially offset by fewer policy counts. The decline in
premiums earned for personal lines primarily is due to fewer policy counts
partially offset by higher rates.
Investment income decreased $0.4 million for the three months ended March
31, 2001 primarily resulting from a lower yield and a lower level of invested
assets.
Realized investment gains (losses) were $3.6 million lower for the three
months ended March 31, 2001 compared to the same prior year quarter primarily
resulting from lesser sales of equity securities and from an increase of $2.6
million in losses recognized on equity investments that were trading below cost
on an other-than-temporary basis, offset by greater gains on the sale of fixed
maturity securities.
Income before income taxes increased $4.0 million for the three months
ended March 31, 2001, primarily due to a lower underwriting loss offset by lower
realized gains (losses) and lower investment income. Harleysville Group's
statutory combined ratio decreased to 104.2% for the three months ended March
31, 2001 from 111.6% for the three months ended March 31, 2000. The three
months ended March 31, 2000 included a pre-tax charge of $1.1 million ($.03 per
basic share after taxes) related to the consolidation of selected non-claims
support services and office functions throughout the field operations. This
restructuring charge adversely affected the statutory combined ratio by 0.7
points for the three months ended March 31, 2000. Income before income taxes for
the three months ended March 31, 2000 also was reduced by $1.9 million ($0.04
per basic share after taxes) to reflect the effect of a settlement of litigation
between the North Carolina Rate Bureau and the Commissioner of Insurance over
personal automobile insurance rate levels dating back to 1994. The settlement,
which mandated a refund of premium be made to policyholders, adversely affected
the combined ratio by 1.2 points. Excluding the impacts of the field
restructuring and North Carolina Rate Bureau settlement, the statutory combined
ratio decreased 5.5 points primarily due to better results in commercial lines,
particularly commercial automobile. These improved commercial lines results
primarily are due to higher pricing of commercial lines policies. Losses ceded
under the
Page 13
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
aggregate catastrophe reinsurance agreement with Mutual did not change
significantly for the three months ended March 31, 2001 and net catastrophe
losses decreased $1.6 million due to fewer catastrophes.
The income tax expense for each of the three month periods ended March 31,
2001 and 2000 includes the tax benefit of tax-exempt investment income of $2.7
million and $2.9 million, respectively.
Liquidity and Capital Resources
Operating activities used $4.7 million and $11.7 million of net cash for
the three months ended March 31, 2001 and 2000, respectively. The change
primarily is from improved underwriting cash flow. Change in the amount of
realized gains (losses) and a change in the amount of other liabilities.
Investing activities used $5.1 million for the three months ended March 31,
2001 and provided $13.8 million of net cash for the three months ended March 31,
2000. The increase is primarily due to an increase in the purchase of
short-term investments, partially offset by an increase in net sales of fixed
maturity investments and equity securities.
Net cash used by financing activities decreased $1.8 million for the three
months ended March 31, 2001 primarily due to a decrease in the purchase of
treasury stock and an increase in the issuance of common stock.
Harleysville Group Inc. had $13.8 million of cash and marketable securities
at March 31, 2001 which is available for general corporate purposes including
dividends, debt service, capital contributions to subsidiaries, acquisitions and
the repurchase of stock. The Company has no material commitments for
capital expenditures as of March 31, 2001.
Certain of the statements contained herein (other than statements of
historical facts) are forward looking statements. Such forward looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and include estimates and assumptions
related to economic, competitive and legislative developments. These forward
looking statements are subject to change and uncertainty which are, in many
instances, beyond the Company's control and have been made based upon
management's expectations and beliefs concerning future developments and their
potential effect on Harleysville Group.
Page 14
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
There can be no assurance that future developments will be in accordance with
management's expectations so that the effect of future developments on
Harleysville Group will be those anticipated by management. Actual financial
results including premium growth and underwriting results could differ
materially from those anticipated by Harleysville Group depending on the outcome
of certain factors, which may include changes in property and casualty loss
trends and reserves; natural catastrophe losses; competition in insurance
product pricing; government regulation and changes therein which may impede the
ability to charge adequate rates; performance of the financial markets;
fluctuations in interest rates; availability and price of reinsurance; and the
status of labor markets in which the Company operates.
Page 15
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK
Harleysville Group's market risk generally represents the risk of gain or
loss that may result from the potential change in the fair value of Harleysville
Group's investment portfolio as a result of fluctuations in prices and interest
rates. Harleysville Group attempts to manage its interest rate risk by
maintaining an appropriate relationship between the average duration of the
investment portfolio and the approximate duration of its liabilities.
Harleysville Group has maintained approximately the same duration of its
investment portfolio to its liabilities from December 31, 2000 to March 31,
2001. In addition, the Company has maintained approximately the same investment
mix during this period.
Page 16
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults Upon Senior Securities - None
ITEM 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of Harleysville Group Inc. was held on
April 25, 2001 (the "Annual Meeting" or "Meeting"), with the following result:
The total number of shares represented at the Annual Meeting in person or
by proxy was 27,133,590 of the 29,164,259 shares of common stock outstanding and
entitled to vote at the Meeting.
On the resolution to elect Lowell R. Beck, Robert D. Buzzell and Joseph E.
McMenamin as class "A" Directors to serve until the expiration of their
respective terms and until their successors are duly elected, the nominees for
Director received the number of votes set forth opposite their respective names:
Number of Votes
--------------------
For Withheld
------- --------
Lowell R. Beck 27,079,370 54,220
Robert D. Buzzell 27,081,370 52,220
Joseph E. McMenamin 27,089,044 44,546
There were no abstentions or broker non-votes recorded. On the basis of the
above vote, Lowell R. Beck, Robert D. Buzzell and Joseph E. McMenamin were
elected as class "A" Directors to serve until the expiration of their respective
terms and until their successors are duly elected.
Page 17
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
(Continued)
ITEM 5. Other Information - None
ITEM 6. a. Exhibits - None
b. Reports on Form 8-K - None
SIGNATURE
Pursuant to the requirements 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.
HARLEYSVILLE GROUP INC.
Date: May 14, 2001 /s/BRUCE J. MAGEE
---------------- -------------------------
Bruce J. Magee
Senior Vice President and
Chief Financial Officer
(principal financial officer and
principal accounting officer)
Page 18