Specialty Underwriters Alliance Inc
Specialty Underwriters Alliance — Proxy Contest (April 2009)
30 slides from Specialty Underwriters Alliance's proxy contest presentation, Apr 17, 2009
Slide 1: 2009 Annual Shareholders Meeting Investor Presentation
SPECIALTY UNDERWRITERS' ALLIANCE, INC. 2009 Annual Shareholders Meeting Investor Presentation April 17, 2009
Slide 2: Who We Are
Who We Are < SUA
Slide 3: Overview
Overview Specialty Underwriters' Alliance, Inc. (NASDAQ: SUAI) is an insurance holding company whose sole subsidiary is a specialty property and casualty insurance company Unique business model that closely aligns our interests with those of our Partner Agents Primary focus is on underwriting discip
Slide 4: Investment Philosophy
Investment Philosophy Managed through Hyperion Asset Management Conservative approach based on Company's philosophy of managing underwriting risk, not investment risk Portfolio of fixed maturity investments, no equity or preferred shares Investment guidelines stipulate no investment in securities be
Slide 5: Partner Agent Model
Partner Agent Model Lower up-front commission paid to Partner Agents Underwriting profit-based commission Significant equity ownership (Partner Agents invest $1 million in our non voting, convertible Series B Common Stock) As of 12/31/08, own approximately 9% (on a fully converted basis) of the outs
Slide 6: What We Have Accomplished and Plan for the Future
What We Have Accomplished and Plan for the Future
Slide 7: A Track Record of Growth
A Track Record of Growth Generated profits three years in a row Added (on average) two new Partner Agents every year Increased dramatically the number of states in which our programs are available Created economies of scale sufficient to support two claims offices Will internalize a significant port
Slide 8: Other Accomplishments
Other Accomplishments Solid loss ratio and loss reserves In spite of recent rate decreases in Florida and California, managed to maintain solid loss ratio Conservative loss reserves leading to favorable loss development in most quarterly periods Loss ratio, on average, ten percentage points better t
Slide 9: Other Accomplishments (cont)
Other Accomplishments (cont) Expense management Lean and scalable infrastructure Majority of additional hiring only in the areas that are more volume sensitive, such as underwriting and claims Switching to internal claims handling for more efficient cost management Information management Data wareho
Slide 10: Comparison of Cumulative Total Return
© Performance Graph COMPARISON OF CUMULATIVE TOTAL RETURN —— 0 sassie006 s2rs2008 sars2007 ars2008 3912008 = SUAl +S8P 500 + S&P 500 Property & Casuaty Insurance index SUA
Slide 11: Well-Positioned for Continued Growth
Well-Positioned for Continued Growth Increase premium via "A" paper fronting facility Add additional Partner Agents, states and customer classes As premium increases, operating expenses are highly leverageable Maintain solid loss ratios based on understanding our book through experienced management
Slide 12: Experienced Leadership that is Looking Out for Stockholder Value
Experienced Leadership that is Looking Out for Stockholder Value
Slide 13: SUA's Board and Management Team: Independent, Accountable and Qualified
SUA's Board and Management Team: Independent, Accountable and Qualified Board composition: 5 independent directors 2 executives Declassified Board structure Highly qualified directors/nominees with well established and relevant track records of success: Insurance / Reinsurance Law - Corporate Govern
Slide 14: SUA's Board Nominees: Experienced & Qualified
SUA's Board Nominees: Experienced & Qualified
Slide 15: SUA's Management Team
SUA's Management Team *Scott Goodreau has over 15 years of legal experience
Slide 16: SUA's Board: Active and Engaged
SUA's Board: Active and Engaged Committed to Corporate Governance Nominating and Corporate Governance, Compensation, Audit and Strategic Review Committees comprised entirely of independent Board members Board and Committees have an executive session at each meeting All Board members have attended 10
Slide 17: SUA's Board (cont)
SUA's Board (cont) Established Strategic Review Committee Committee currently meets weekly Involved in development and ongoing review of all strategic alternatives Proactively evaluate mergers or sales opportunities Will review all opportunities that may arise for strategic transactions or other tra
Slide 18: Hallmark Claims to be Interested in Corporate Governance
Hallmark Claims to be Interested in Corporate Governance
Slide 19: What Does Hallmark Bring to the Table
What Does Hallmark Bring to the Table Hallmark corporate governance quotient speaks for itself Hallmark's CGQ 31.4 (as compared to all Insurance Companies) vs SUA's CGQ of 83.1 (as compared to all Insurance Companies). Hallmark's nominees interests are not aligned with our Stockholders None of the H
Slide 20: Hallmark Offer and Why We Rejected It
Hallmark Offer and Why We Rejected It
Slide 21: Timeline
Timeline 2/29/08 Senior management has first SUA/Hallmark general meeting (no discussion of a merger or acquisition) 3/31/08 Senior management has telephone conversation with Mark Morrison, Hallmark's CEO, where benefits of an acquisition were communicated by Mr. Morrison 4/4/08 Following year-long
Slide 22: Timeline (cont)
6/20/08 In response to contacts from Mr. Schwarz, Mr. Smith urges Mr. Schwarz to share any additional information he may have with him in writing regarding the offer prior to next Board meeting 6/25/08 Board reconvenes in person with legal and financial advisors and, after due deliberation, Board re
Slide 23: Hallmark's Unsolicited Offer
Hallmark's Unsolicited Offer After the June 16 unsolicited offer, the SUA Board meets immediately via teleconference on both June 17 and 18, 2008. The Board reconvenes on June 25, 2008 with consultation from financial and legal advisors present Board considers the following issues All stock offer $6
Slide 24: Comparison of Hallmark and SUA Stock
Comparison of Hallmark and SUA Stock Had SUA accepted Hallmark's offer, at June 16 stock price, stockholder value would be worse today Comparison of percentage change in closing price of Hallmark and SUA common stock from June 16, 2008 (date of initial Hallmark offer) to present, (April 13, 2009 - l
Slide 25: Hallmark is Only Interested in One Thing: Capturing SUA's Inherent Value for Itself
Hallmark is Only Interested in One Thing: Capturing SUA's Inherent Value for Itself
Slide 26: A Question of Value
A Question of Value Unprecedented turmoil in capital markets and general business activities have been severely impacted by the economic environment and credit crisis, to a degree unprecedented in recent history. These events have adversely impacted SUA's business and current stock valuation Current
Slide 27: A Question of Value (cont)
A Question of Value (cont) * Peer Group of 20 P&C insurance companies based on asset size automatically generated by SNL Financial Inc.
Slide 28: Hallmark has repeatedly expressed its intent to acquire and exert control over SUA
Over the last year, Hallmark has repeatedly expressed its intent to acquire and exert control over SUA March 31, 2008: Mark Morrison, Hallmark's CEO, expressed benefits and possible structure of a potential Hallmark-SUA business combination July 1, 2008: Hallmark reiterates its offer (unchanged) aft
Slide 29: Current Board has demonstrated its commitment to corporate governance and maximizing value
Current Board has demonstrated its ability and commitment to corporate governance and to maximize value for all stockholders Current Board will consider a merger or sale that captures the long term value of SUA's business platform All Partner Agents publicly expressed full support for current Board
Slide 30: <@ SUA
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