SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 16, 2002
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HARLEYSVILLE GROUP INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-14697 51-0241172
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
355 Maple Avenue, Harleysville, Pennsylvania 19438
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(Address of principal executive offices) (Zip Code)
(215) 256-5000
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Registrant's telephone number, including area code
N/A
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(Former name or former address, if changed since last report.)
Item 5. Other Events
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This Form 8-K may contain "forward-looking statements" (as defined in
Section 27A(I)(1) of the Securities Act of 1933, as amended,) regarding the
possible outcome of litigation commenced against the Company. Expressions which
identify forward-looking statements speak only as of the date the statement is
made. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties involved in
litigation, many of which cannot be predicted or quantified and are beyond their
control. Future developments and actual outcomes could differ materially from
those set forth in, contemplated by, or underlying the forward-
looking statements. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information will prove to be accurate.
On January 8, 2002, the Company filed an 8-K stating that Harleysville
Mutual Insurance Company ("Mutual"), which owns approximately 56% of the
outstanding common stock of the Company, received a request from GE Reinsurance
Corporation ("GE Re") to arbitrate a reinsurance agreement between Mutual and GE
Re relating to certain automobile insurance policies written in California
through a managing general agent beginning in 1999. In its request for
arbitration, GE Re stated it intention to seek rescission of the agreement and
reimbursement for its losses, which it claimed at that time to exceed $40
million. On January 11, 2002, Mutual filed an action for breach of contract
against GE Re in the United States District Court for the Eastern District of
Pennsylvania.
The Company's insurance subsidiaries participate in an intercompany
underwriting pool with Mutual under which the Company's participation, on a
consolidated basis, is 72% of all premiums, losses, settlement expenses and
other underwriting expenses for business written by all participants in the
pool. Accordingly, the Company would bear the same portion of any damages
awarded on the claims of GE Re.
On December 13, 2002, Mutual and GE Re settled this matter by agreeing to a
termination of the reinsurance agreement effective December 31, 2002. The
terms of the settlement agreement are otherwise confidential.
The settlement agreement will not result in a material charge or benefit to
the earnings of the Company during its fiscal year ending December 31, 2002, and
the Company does not anticipate any material impact from the termination of the
reinsurance agreement in any future period.
SIGNATURES
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 hereunto duly authorized.
HARLEYSVILLE GROUP INC.
Registrant
/s/Roger A. Brown
December 16, 2002 -----------------------------
Roger A. Brown
Senior Vice President, Secretary
and General Counsel