SEC Form DEFM14A filed by ICC Holdings Inc.

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

ICC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ICC HOLDINGS, INC.
225 20th Street
Rock Island, Illinois 61201

October 28, 2024

Dear Shareholder:

You are cordially invited to attend a special meeting of the shareholders of ICC Holdings, Inc., a Pennsylvania corporation (the “Company”), which will be held on Tuesday, November 26, 2024, at 1:00 p.m. Central Time and accessed virtually at http://www.viewproxy.com/ICCHSM/2024.

At the special meeting, holders of our common stock, par value $0.01 per share (“Company common stock”), will be asked to consider and vote on a proposal to approve the Agreement and Plan of Merger, dated as of June 8, 2024, by and among Mutual Capital Holdings, Inc., a Pennsylvania corporation (“Mutual Capital”), Mutual Capital Merger Sub, Inc., a Pennsylvania corporation and wholly owned subsidiary of Mutual Capital (“Merger Sub”), and the Company, as amended by that certain Amendment to Merger Agreement, dated as of October 11, 2024 (as it may be further amended from time to time, the “merger agreement”). Pursuant to the merger agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Mutual Capital (the “merger”). As a result of the merger, each issued and outstanding share of Company common stock (other than shares held in the treasury of the Company) will be cancelled and extinguished and converted into the right to receive $23.50 in cash, without interest and net of any applicable withholding taxes.

The board of directors of the Company (the “Board”) has unanimously approved the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and determined that it is advisable, fair to and in the best interests of the Company to enter into the merger agreement.

The Board unanimously recommends that the shareholders of the Company vote “FOR” the proposal to approve and adopt the merger agreement. In addition, the Board unanimously recommends that the shareholders of the Company vote “FOR” the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger and “FOR” the proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies.

The enclosed proxy statement describes the merger agreement and the merger and provides specific information concerning the special meeting. In addition, you may obtain information about the Company from documents filed with the Securities and Exchange Commission (the “SEC”). We urge you to, and you should, read the entire proxy statement carefully, as it sets forth the details of the merger agreement and other important information related to the merger.

Your vote is very important. The merger cannot be completed unless holders of a majority of the votes cast, virtually or represented by proxy, at the special meeting and entitled to vote at the special meeting vote in favor of the approval of the merger agreement. A broker non-vote or an abstention from voting will not constitute or be counted as votes cast and, consequently, will have no effect on the outcome on the proposal to approve the merger agreement.

While shareholders may exercise their right to vote their shares virtually, we recognize that many shareholders may not be able to attend the special meeting. Accordingly, we have enclosed a proxy that will enable your shares of Company common stock to be voted on the matters to be considered at the special meeting. If you are a shareholder of record and desire your shares of Company common stock to be voted in accordance with the Board’s recommendation on all proposals, you need only sign, date and return the proxy in the enclosed postage-paid envelope. Otherwise, please mark the proxy to indicate your voting instructions; sign and date the proxy; and return it in the enclosed postage-paid envelope. You also may submit a proxy by using a toll-free telephone number or the Internet. We have provided instructions on the proxy card for using these convenient services. Submitting a proxy will not prevent you from voting your shares of Company common stock virtually if you subsequently choose to attend the special meeting. Even if you plan to attend the special meeting virtually, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares of Company common stock will be represented at the special meeting if you are unable to attend.

If you hold your shares of Company common stock in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares of Company common stock. Without those instructions, your shares of Company common stock will not be voted.

If you have any questions or need assistance in voting your shares, please contact our proxy solicitor, Alliance Advisors, LLC, toll-free at (888) 991-1293 or by email at [email protected].

Thank you for your continued support.

	Sincerely,
	Gerald J. Pepping Chair of the Board of Directors

Neither the SEC nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger, the merger agreement or the other transactions contemplated thereby or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated October 25, 2024 and is first being mailed to shareholders on or about October 28, 2024.

ICC HOLDINGS, INC.
225 20th Street
Rock Island, Illinois 61201

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To the Shareholders of ICC Holdings, Inc.:

NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of ICC Holdings, Inc., a Pennsylvania corporation (the “Company”), which will be held on Tuesday, November 26, 2024, at 1:00 p.m. Central Time and accessed virtually at http://www.viewproxy.com/ICCHSM/2024 to consider and vote upon the following proposals:

1.     to approve and adopt the Agreement and Plan of Merger, dated as of June 8, 2024, by and among Mutual Capital Holdings, Inc., a Pennsylvania corporation (“Mutual Capital”), Mutual Capital Merger Sub, Inc., a Pennsylvania corporation and wholly owned subsidiary of Mutual Capital (“Merger Sub”), and the Company, as amended by that certain Amendment to Merger Agreement, dated as of October 11, 2024 (as it may be further amended from time to time, the “merger agreement”), pursuant to which Merger Sub will be merged with and into the Company (the “merger”);

2.     to approve, on an advisory (non‑binding) basis, the compensation that may become payable to the Company’s named executive officers in connection with the merger; and

3.     to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to approve and adopt the merger agreement.

The Company will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof. Please refer to the attached proxy statement for additional information with respect to the business to be transacted at the special meeting.

The holders of record of our common stock, par value $0.01 per share (“Company common stock”), at the close of business on September 30, 2024 are entitled to notice of and to vote at the special meeting or at any adjournment thereof. All shareholders of record are cordially invited to attend the special meeting virtually.

The board of directors of the Company (the “Board”) has unanimously approved the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and determined that it is advisable, fair to and in the best interests of the Company to enter into the merger agreement.

The Board unanimously recommends that the shareholders of the Company vote “FOR” the proposal to approve and adopt the merger agreement. In addition, the Board unanimously recommends that the shareholders of the Company vote “FOR” the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger and “FOR” the proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies.

Your vote is important, regardless of the number of shares of Company common stock you own. The approval of the merger agreement by at least a majority of the votes cast, virtually or represented by proxy, at the special meeting and entitled to vote at the special meeting is a condition to the consummation of the merger. The advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies, each requires the affirmative vote of the holders of a majority of the votes cast, virtually or represented by proxy, at the special meeting. Even if you plan to attend the special meeting virtually, we request that you complete, sign, date and return the enclosed proxy and thus ensure that your shares of Company common stock will be represented at the special meeting if you are unable to attend.

You also may submit your proxy by using a toll-free telephone number or the Internet. We have provided instructions on the proxy card for using these convenient services.

If you are a shareholder of record and you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of the approval of the merger agreement, the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger, and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. If you fail to vote or submit your proxy, the effect will be that your shares of Company common stock may not be counted for purposes of determining whether a quorum is present at the special meeting but will not affect the proposal to the approve the merger agreement, the advisory vote to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger or the vote regarding the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

You may revoke your proxy at any time before the vote at the special meeting by following the procedures outlined in the accompanying proxy statement. If you are a shareholder of record, you may revoke your proxy by attending the meeting and voting virtually.

	By order of the Board of Directors,
	Arron K. Sutherland
	President, Chief Executive Officer and Director
	October 28, 2024

TABLE OF CONTENTS

SUMMARY

This summary discusses the material information contained in this proxy statement, including with respect to the merger agreement and the merger. We encourage you to, and you should, read carefully this entire proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement, as this summary may not contain all of the information that may be important to you. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies (page 19)

ICC Holdings, Inc.

ICC Holdings, Inc. (“ICCH,” the “Company,” “we,” “our” or “us”) is a Pennsylvania corporation. The Company is a holding company for the following subsidiaries: Two Rivers Realty Investments, LLC, a real estate services and holding company; Beverage Insurance Agency, Inc., dba Beverage Insurance Specialty, a wholesale insurance agency; Estrella Innovative Solutions, Inc., an outsourcing company; Southern Hospitality Education, LLC, dba Katkin, a full-service food safety and education company; Guild Insurance Inc. (“Guild”), an operating insurance agency acquired in October 2023; and Illinois Casualty Company (“Illinois Casualty”), an operating insurance company. Illinois Casualty is an Illinois domiciled company which also owns Two Rivers Investment Properties, LLC, a real estate services and holding company, and ICC Re Limited, a vehicle to participate in various Lloyd’s of London (“Lloyd’s”) syndicate’s underwriting activity.

We are a specialty insurance carrier primarily underwriting commercial multi‑peril, liquor liability, workers’ compensation, and umbrella liability coverages for the food and beverage industry through our subsidiary insurance company, Illinois Casualty. Illinois Casualty writes business in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Tennessee, Utah, and Wisconsin and markets through independent agents. We primarily market our products through a network of 184 independent agents in the states that we write in. The Company common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”). See the section of this proxy statement entitled “The Companies—ICC Holdings, Inc.” on page 19.

Additional information about the Company is contained in its public filings, which are incorporated by reference herein. See the section of this proxy statement entitled “Where You Can Find Additional Information” on page 81.

Mutual Capital Holdings, Inc.

Mutual Capital Holdings, Inc. (“Mutual Capital”) is a Pennsylvania corporation. Mutual Capital Group, Inc. (“MCG”), the parent company of Mutual Capital, is a mutual insurance holding company, and Mutual Capital is its wholly-owned subsidiary and intermediate holding company, which owns various insurance company subsidiaries that engage in property and casualty insurance business and related services. See the section of this proxy statement entitled “The Companies—Mutual Capital Holdings, Inc.” on page 19.

Mutual Capital Merger Sub, Inc.

Mutual Capital Merger Sub, Inc. (“Merger Sub”) is a Pennsylvania corporation and wholly owned subsidiary of Mutual Capital that was formed on May 30, 2024, solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. See the section of this proxy statement entitled “The Companies—Mutual Capital Merger Sub, Inc.” on page 19.

The Merger Proposal (page 26)

You will be asked to consider and vote upon the proposal to approve and adopt the Agreement and Plan of Merger, dated as of June 8, 2024, by and among the Company, Mutual Capital and Merger Sub, as amended by that certain Amendment to Merger Agreement, dated as of October 11, 2024 (as it may be further amended from time to time, the “merger agreement”), pursuant to which Merger Sub will be merged with and into the Company (the “merger”). The merger agreement provides, among other things, that at the effective time of the merger, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Mutual Capital. As a result of the merger, each share of common stock, par value $0.01 per share (the “Company common stock”), issued and outstanding immediately before the effective time of the merger, other than shares held in the treasury of the Company, will be cancelled and extinguished and be converted into the right to receive $23.50 in cash, without interest and less all applicable withholding taxes (the “merger consideration”).

The Special Meeting (page 20)

The special meeting will be held on Tuesday, November 26, 2024, at 1:00 p.m. Central Time and accessed virtually at http://www.viewproxy.com/ICCHSM/2024.

Record Date and Quorum (page 21)

The holders of record of the Company common stock as of the close of business on September 30, 2024 (the “record date”) are entitled to receive notice of and to vote at the special meeting.

The presence at the special meeting, virtually or by proxy, of shareholders entitled to cast a majority of all of the votes entitled to be cast at the meeting will constitute a quorum, permitting the Company to conduct its business at the special meeting.

Shares of Company common stock held by shareholders of record that submit a proxy, but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card will be counted for the purpose of determining whether a quorum is present at the special meeting.

Shares of Company common stock held by shareholders in “street name” by a broker, bank or other nominee that do not instruct the nominee how to vote such shares will not be counted for purposes of determining whether a quorum is present at the special meeting.

Required Vote for the Merger (page 21)

Each share of Company common stock outstanding at the close of business on the record date is entitled to one vote at the special meeting.

For the Company to complete the merger, shareholders holding a majority of the votes cast, virtually or represented by proxy, at the special meeting and entitled to vote at the special meeting must vote “FOR” the proposal to approve and adopt the merger agreement.

A broker non-vote or an abstention from voting for the proposal to approve and adopt the merger agreement will not constitute or be counted as votes cast and, consequently, will have no effect on the proposal to approve and adopt the merger agreement. For more information on broker non-votes, see the section of this proxy statement entitled “The Special Meeting – Voting; Proxies; Revocation – Shares of Company Common Stock Held in ‘Street Name’” on page 23.

As of the record date, there were 3,138,580 shares of Company common stock issued and outstanding.

Conditions to the Merger (page 68)

Each party’s obligation to complete the merger is subject to the satisfaction or waiver by the Company, Mutual Capital and Merger Sub (except for the condition in the second bullet below which may be waived by Mutual Capital and Merger Sub) of the following conditions:

The respective obligations of Mutual Capital and Merger Sub to complete the merger are subject to the satisfaction or waiver of the following additional conditions:

The obligation of the Company to complete the merger is subject to the satisfaction or waiver of the following additional conditions:

The consummation of the merger is not subject to any financing condition.

When the Merger Becomes Effective (page 55)

We expect to complete the merger in the fourth quarter of 2024, subject to the approval and adoption of the merger agreement by the Company’s shareholders as specified herein and the satisfaction or waiver of the other closing conditions.

Reasons for the Merger; Recommendation of the Company’s Board of Directors in Favor of the Merger (pages 30 and 34)

The Board of Directors of the Company (the “Board” or “Board of Directors”) unanimously recommends that the shareholders of the Company vote “FOR” the proposal to approve and adopt the merger agreement. For a description of the reasons considered by the Board in deciding to recommend approval and adoption of the merger agreement, see the section of this proxy statement entitled “The Merger—Reasons for the Merger.”

Opinion of the Company’s Financial Advisor (page 35)

Feldman Financial Advisors, Inc. (“Feldman Financial”) delivered its opinion to the Board that, as of June 8, 2024 and based upon and subject to the factors and assumptions set forth therein, the $23.50 in cash per share of the Company common stock to be paid to the holders (other than Mutual Capital and its affiliates) of the outstanding shares of Company common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Feldman Financial, dated June 8, 2024, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Feldman Financial provided its opinion for the information and assistance of the Board in connection with its consideration of the merger. The Feldman Financial opinion is not a recommendation as to how any holder of shares of Company common stock should vote with respect to the merger or any other matter.

Pursuant to an engagement letter between the Company and Feldman Financial, the Company has agreed to pay Feldman Financial a fee of $150,000, all of which was paid upon the issuance of the opinion.

For additional information, see the section of this proxy statement entitled “Opinion of the Company’s Financial Advisor” beginning on page 35 and Annex B to this proxy statement.

Certain Effects of the Merger (page 55)

If the conditions to the closing of the merger are either satisfied or, to the extent permitted, waived, Merger Sub will be merged with and into the Company, the separate corporate existence of Merger Sub will cease and the Company will continue as the surviving corporation, with all of its property, rights, privileges, powers, franchises, debts, liabilities and duties continuing unaffected by the merger. Upon completion of the merger, each share of Company common stock issued and outstanding immediately before the effective time of the merger, other than shares held in the treasury of the Company, will be cancelled and extinguished and converted into the right to receive $23.50 in cash, without interest and less any applicable withholding taxes. Following completion of the merger, the Company common stock will no longer be publicly traded, and the Company’s existing shareholders will cease to have any ownership interest in the Company.

Treatment of Company Equity Awards (page 55)

Restricted Stock Units. Each outstanding restricted stock unit (each, an “RSU”) will vest in full and will be cancelled and converted into the right to receive from the surviving corporation an amount equal to the merger consideration and such amount, less any required payroll and withholding taxes, will be paid in cash to the holder of such RSU without interest upon the later of the next regular payroll following the closing and the date that is within 15 calendar days after closing.

ESOP. Effective on the fifth business day prior to the closing of the merger, the Company’s employee stock ownership plan (the “ESOP”) will be amended to freeze the plan and convert the ESOP into a profit-sharing plan. After the repayment of the outstanding indebtedness of the ESOP and the exchange of shares of the Company common stock for the merger consideration, the merger consideration received upon conversion of the balance of the unallocated shares of Company common stock and any other unallocated assets remaining in the ESOP’s suspense account shall be allocated as earnings to the accounts of the ESOP participants who are employed as of the 5th business day before closing based on their account balances under the ESOP as of such date.  Post-closing, the ESOP is expected to merge with and into the Company’s 401(k) plan or that of a member of the controlled group.

Interests of the Company’s Directors and Executive Officers in the Merger (page 45)

In considering the recommendation of the Board that you vote to approve and adopt the merger agreement, you should be aware that aside from their interests as shareholders of the Company, some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. Interests of executive officers and directors that may be different from or in addition to the interests of the Company’s shareholders include:

The Board was aware of and considered these interests, among other matters, in evaluating the merger agreement and the merger, and in recommending to the shareholders of the Company that the merger agreement be approved and adopted. See the section of this proxy statement entitled “The Merger—Background of the Merger” and see the section of this proxy statement entitled “The Merger—Reasons for the Merger.” The Company’s shareholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve and adopt the merger agreement. These interests are described in more detail below in the section of the proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger,” and certain of them are quantified in the disclosure below.

Financing (page 45)

The Company and Mutual Capital estimate that the total amount of funds required to complete the merger will be approximately $73.8 million. We understand that Mutual Capital intends to fund the merger consideration through (i) the receipt of proceeds from the issuance by Mutual Capital of shares of a newly authorized series of preferred shares, no par value, to be designated as Series A Convertible Preferred Stock, to an investment fund managed by an affiliate of Mutual Capital (the “equity purchaser”), for an aggregate purchase price of approximately $36.6 million (the “equity financing”); and (ii) a senior borrowing facility to be entered into by Mutual Capital and certain of its subsidiaries and affiliates pursuant to which a subsidiary of Mutual Capital will borrow $40 million (the “debt financing”), with the closings of the equity financing and the debt financing to take place simultaneously with the closing of the merger. The Company, through its investment in another investment fund managed by an affiliate of Mutual Capital, indirectly owns approximately 4.5% of the limited partner interests in the equity purchaser and as a result approximately $1.6 million of the purchase price of the equity financing will be funded by the Company.

Material U.S. Federal Income Tax Consequences of the Merger (page 49)

If you are a U.S. holder (as such term is defined under “The Merger—Material U.S. ‎Federal Income Tax Consequences of the Merger”), the receipt of cash in exchange for shares of ‎Company common stock pursuant to the merger will generally be a taxable transaction for U.S. ‎federal income tax purposes. A U.S. holder that receives cash in exchange for shares of Company ‎common stock pursuant to the merger will generally recognize gain or loss in an amount equal to ‎the difference, if any, between the cash received by such holder in the merger and the adjusted tax ‎basis in the shares of Company common stock. If you are a non-U.S. holder (as such term is ‎defined under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”), ‎the merger will generally not be a taxable transaction to you for U.S. federal income tax purposes ‎unless you have certain connections to the United States. You should consult your own tax ‎advisors regarding the particular tax consequences to you of the exchange of shares of Company ‎common stock for cash pursuant to the merger in light of your particular circumstances (including ‎the application and effect of any state, local or foreign income and other tax laws). For further ‎information about the material U.S. federal income tax consequences of the merger, see “The ‎Merger—Material U.S. Federal Income Tax Consequences of the Merger.”‎

Regulatory Approvals (page 52)

Insurance laws and regulations generally provide that no person may directly or indirectly acquire control of an insurance company unless and until that acquisition has been approved by the relevant domiciliary or other insurance regulator of that insurance company. Pursuant to those laws and regulations, Mutual Capital and/or the Company have filed, or will file, applications for prior approval or prior notifications relating to the various insurance company subsidiaries of the Company with a number of state insurance regulators in the United States.

Although Mutual Capital and the Company do not expect the relevant insurance regulatory authorities to raise any significant concerns in connection with their review of the merger, there is no assurance that Mutual Capital or the Company, as applicable, will obtain all required insurance regulatory approvals on a timely basis, if at all, or that these approvals will not include a restriction, limitation or condition which, in such case, would permit Mutual Capital to refuse to close the transactions contemplated by the merger agreement and consummate the merger.

No Appraisal Rights

Under Pennsylvania law, holders of Company common stock are not entitled to appraisal rights.

Delisting and Deregistration of Company Common Stock (page 53)

If the merger is completed, the Company common stock will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, the Company would no longer file periodic reports with the Securities and Exchange Commission (the “SEC”) with respect to the Company common stock. See the section of this proxy statement entitled “Delisting and Deregistration of Company Common Stock.”

No Solicitation by the Company (page 63)

Pursuant to the terms of the merger agreement, the Company has agreed not to (i) solicit, initiate or knowingly encourage inquiries or proposals relating to alternative takeover transactions or (ii) subject to certain exceptions, engage in discussions or negotiations regarding, or provide any non‑public information in connection with, alternative takeover proposals. As described below, the Company has the right to terminate the merger agreement prior to the receipt of shareholder approval of the merger to accept a “superior proposal”, subject to the terms and conditions of the merger agreement. See the section of this proxy statement entitled “The Merger Agreement — No Solicitation by the Company.”

Termination (page 63)

The Company and Mutual Capital may terminate the merger agreement by mutual written consent at any time before the effective time of the merger.

In addition, either the Company or Mutual Capital may terminate the merger agreement if:

The Company may also terminate the merger agreement:

Mutual Capital may also terminate the merger agreement:

In the event that after the date of the merger agreement and prior to the termination of the merger agreement, the Company or senior management of the Company shall have received or there shall have been publicly announced a bona fide takeover proposal that has not been withdrawn or abandoned prior to such termination and (a)(i) thereafter the merger agreement is terminated by either Mutual Capital or the Company for failure to close before the outside date and the Company shall have failed to obtain the requisite shareholder approval or (ii) prior to the date that is 12 months after the date of such termination, the Company enters into a definitive agreement or consummates a transaction with respect to a takeover proposal (whether or not the same takeover proposal as referred to above), then the Company shall, on the earlier of the date it enters into such definitive agreement and the date of consummation of such transaction, pay Mutual Capital a termination fee equal to $2.5 million, as further described below under “The Merger Agreement – Termination.” Also, in the event that the merger agreement is terminated either by the Company if, prior to the receipt of the required vote of the shareholders of the Company to approve and adopt the merger agreement at the special meeting (including any adjournments or postponements), the Company pursues and enters into an alternative takeover proposal or by Mutual Capital if, prior to the receipt of the required vote of the shareholders of the Company to approve and adopt the merger agreement at the special meeting (including any adjournments or postponements), the Board withdraws or adversely changes its recommendation of the merger agreement or resolved to do the foregoing, the Company shall, within two business days following such termination, pay Mutual Capital a termination fee equal to $2.5 million, as further described below under “The Merger Agreement – Termination.” 

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the special meeting, the merger agreement and the merger. These questions and answers may not address all of the questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

The merger consideration represents a multiple of 1.07 times the Company’s book value at March 31, 2024, a 48% premium to the Company’s volume weighted average stock price over the 30 days prior to announcement of the merger agreement and a 42% premium to the Company’s 52‑week high closing stock price prior to the announcement of the merger agreement.

As of the close business on September 30, 2024, the record date for the special meeting, there were 3,138,580 shares of Company common stock issued and outstanding.

Concurrently with the execution of the merger agreement, the then directors and executive officers of the Company, beneficially owning 800,949 shares of Company common stock on that date, entered into voting agreements with Mutual Capital (the “voting agreements”) in which they have agreed, among other things and solely in their capacity as shareholders, to vote the shares of the Company common stock owned beneficially by such shareholder “FOR” the proposal to approve and adopt the merger agreement and to vote against proposals in opposition to, or in competition with, the merger, at every meeting of the Company’s shareholders prior to December 31, 2024 at which these matters are considered. This includes a voting agreement with R. Kevin Clinton, who passed away in August 2024.

As of the close of business on the record date, parties to the voting agreements were entitled to vote 809,714 shares of Company common stock, or approximately 26% of the shares of Company common stock issued and outstanding on that date.

If you are a shareholder of record and you submit a proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card, your shares will be counted for the purpose of determining whether a quorum is present at the special meeting.

If you hold your shares of Company common stock in “street name” with your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, these shares will not be counted for purposes of determining whether a quorum is present at the special meeting since all of the proposals currently expected to be voted on at the special meeting are considered non‑routine matters.

If you are a Company shareholder who holds shares of Company common stock in “street name” and you do not instruct your broker on how to vote your shares, your broker may not vote your shares. A broker non-vote will not constitute or be counted as votes cast and, assuming a quorum is present, will have no effect on any of the proposals being considered at the special meeting.

If you are a shareholder of record and you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposal to approve and adopt the merger agreement, the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger, and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

If you hold your shares of Company common stock in “street name” through a broker, bank or other nominee, you should follow the directions provided by your broker, bank or other nominee regarding how to instruct your broker, bank or other nominee to vote your shares. Without those instructions, your shares will not be voted, will not constitute or be counted as votes cast and, consequently, will have no effect on the proposal to approve and adopt the merger agreement.

The record date for shareholders entitled to vote at the special meeting is earlier than the consummation of the merger. So, if you transfer your shares of Company common stock after the record date but before the closing of the merger, you will have transferred your right to receive the merger consideration in the merger, but you will have retained the right to vote at the special meeting.

Alliance Advisors, LLC
Toll-free: (888) 991‑1293
[email protected]

or

ICC Holdings, Inc.
225 20th Street
Rock Island, Illinois 61201
Attention: Investor Relations
(309) 732‑0105

If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.

CAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTS

This proxy statement, and the documents incorporated by reference in this proxy statement, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “project,” “expect,” “estimate,” “anticipate,” “plan,” “believe,” “should,” or the negative versions of those words or other comparable words. These forward-looking statements do not relate solely to historical or current facts, rather they are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time. These statements are not guarantees of future performance. These forward-looking statements are based upon the Company’s current expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and the Company’s future financial condition and results.

Various forward-looking statements in this proxy statement relate to the acquisition by Mutual Capital of the Company. Important transaction-related and other risk factors that could cause actual results and events to differ materially from those expressed or implied in the forward-looking statements include: (i) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (ii) the completion of the transaction on unanticipated terms and timing, including delays in obtaining required shareholder and regulatory approvals, and in satisfying the other conditions to the completion of the transaction; (iii) significant transaction costs associated with the transaction; (iv) potential litigation relating to the transaction, including the effects of any outcomes related thereto; (v) the risk that disruptions from the transaction will harm the Company’s business, including current plans and operations; (vi) the ability of the Company to retain and hire key personnel; and (vii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction.

Other factors that could cause these forward-looking statements to differ, possibly materially, from that currently contemplated include:

Additional risks and uncertainties include general economic and political conditions, including the effects of a prolonged U.S. or global economic downturn or recession; changes in costs; variations in political, economic or other factors; risks relating to conducting operations in a competitive environment; effects of acquisition and disposition activities, inflation rates, or recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil unrest, or other external factors over which we have no control; changes in our plans, strategies, objectives, expectations, or intentions, which may happen at any time at our discretion; and other factors discussed in the Company’s Annual Report or Form 10‑K and subsequent filings with the SEC. All forward-looking statements speak only as of the date they are made and are based on information available at that time. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect subsequent circumstances or events.

THE COMPANIES

ICC Holdings, Inc.

ICC Holdings, Inc. is a Pennsylvania corporation with principal executive offices located at 225 20th Street, Rock Island, Illinois 61201, telephone number (309) 793‑1700. The Company is a holding company for the following subsidiaries: Two Rivers Realty Investments, LLC, a real estate services and holding company; Beverage Insurance Agency, Inc., dba Beverage Insurance Specialty, a wholesale insurance agency; Estrella Innovative Solutions, Inc., an outsourcing company; Southern Hospitality Education, LLC, dba Katkin, a full-service food safety and education company; Guild, an operating insurance agency acquired in October 2023; and Illinois Casualty, an operating insurance company. Illinois Casualty is an Illinois domiciled company which also owns Two Rivers Investment Properties, LLC, a real estate services and holding company, and ICC Re Limited, a vehicle to participate in various Lloyd’s syndicate’s underwriting activity.

A detailed description of the Company’s business is contained in the Company’s Annual Report on Form 10‑K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 28, 2024, and which is incorporated by reference into this proxy statement. See the section of this proxy statement entitled “Where You Can Find Additional Information.”

Mutual Capital Holdings, Inc.

Mutual Capital Holdings, Inc. is a Pennsylvania corporation with principal executive offices located at 41908 Route 6, Wyalusing, Pennsylvania 18853, telephone number (570) 746‑9520. Mutual Capital is a wholly owned subsidiary of Mutual Capital Group, Inc., a mutual insurance holding company. Mutual Capital owns various insurance company subsidiaries that engage in property and casualty insurance business and related services.

Mutual Capital Merger Sub, Inc.

Mutual Capital Merger Sub, Inc. is a Pennsylvania corporation and wholly owned subsidiary of Mutual Capital with principal executive offices located at 41908 Route 6, Wyalusing, Pennsylvania 18853, telephone number (570) 746‑9520. Merger Sub was formed on May 30, 2024 solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub has no material assets or operations of its own.

THE SPECIAL MEETING

We are furnishing this proxy statement to the Company’s shareholders as part of the solicitation of proxies by the Board for use at the special meeting. This proxy statement provides the Company’s shareholders with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to our shareholders as part of the solicitation of proxies by the Board for use at the special meeting to be held which will be held on Tuesday, November 26, 2024, at 1:00 p.m. Central Time and accessed virtually at http://www.viewproxy.com/ICCHSM/2024.

Purposes of the Special Meeting

One purpose of the special meeting is for our shareholders to consider and vote upon the proposal to approve and adopt the merger agreement. Our shareholders must approve and adopt the merger agreement for the merger to occur. If our shareholders fail to approve and adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached to this proxy statement as Annex A-1 and Annex A-2, and the material provisions of the merger agreement are described under “The Merger Agreement.”

In addition, in accordance with Section 14A of the Exchange Act, the Company is providing its shareholders with the opportunity to cast an advisory (non‑binding) vote on the compensation that may be payable to its named executive officers in connection with the merger, the value of which is disclosed in the table in the section of this proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger.” The vote on executive compensation that may become payable in connection with the merger is a vote separate and apart from the vote to approve and adopt the merger agreement. Accordingly, a shareholder may vote to approve and adopt the merger agreement and vote not to approve the executive compensation and vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either the Company or Mutual Capital. Accordingly, because the Company is contractually obligated to pay the compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger agreement is adopted and approved and regardless of the outcome of the advisory vote. Our shareholders are also being asked to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve and adopt the merger agreement.

This proxy statement and the enclosed form of proxy are first being mailed to shareholders on or about October 28, 2024.

Recommendation of the Company’s Board of Directors

After careful consideration, the Board has unanimously approved the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and determined that it is advisable, fair to and in the best interests of the Company to enter into the merger agreement. Certain factors considered by the Board in reaching its decision to approve and adopt the merger agreement may be found in the section of this proxy statement entitled “The Merger—Reasons for the Merger.”

The Board unanimously recommends that the shareholders of the Company vote “FOR” the proposal to approve and adopt the merger agreement.

In addition, the Board unanimously recommends that the shareholders of the Company vote “FOR” the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

Record Date and Quorum

The holders of record of Company common stock as of the close of business on September 30, 2024, the record date, are entitled to receive notice of and to vote at the special meeting. As of the close of business on the record date, 3,138,580 shares of Company common stock were issued and outstanding.

The presence at the special meeting, virtually or by proxy, of holders entitled to cast a majority of all votes entitled to be cast at the special meeting will constitute a quorum, permitting the Company to conduct its business at the special meeting. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting. However, if a new record date is set for an adjourned special meeting, then a new quorum will have to be established. Proxies received but marked as abstentions as described below under the sub‑heading “—Voting; Proxies; Revocation—Abstentions” will be included in the calculation of the number of shares considered to be present at the special meeting.

Shares of Company common stock held by shareholders of record that submit a proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card will be counted for the purpose of determining whether a quorum is present at the special meeting.

Shares of Company common stock held by shareholders in “street name” by a broker, bank or other nominee that do not instruct the nominee how to vote such shares will not be counted for purposes of determining whether a quorum is present at the special meeting.

Required Vote

Each share of Company common stock issued and outstanding at the close of business on the record date is entitled to one vote at the special meeting.

For the Company to complete the merger, shareholders holding a majority of the votes cast, virtually or represented by proxy, at the special meeting and entitled to vote at the special meeting must vote “FOR” the proposal to approve and adopt the merger agreement. A broker non-vote or an abstention from voting will not constitute or be counted as votes cast and, consequently, will have no effect on the proposal to approve and adopt the merger agreement.

Approval of each of the advisory (non‑binding) proposal on executive compensation that may become payable to the Company’s named executive officers in connection with the merger and the adjournment proposal requires the affirmative vote of a majority of the votes cast, virtually or represented by proxy at the special meeting. An abstention or a broker non-vote will not constitute or be counted as votes cast and, consequently, will have no effect on the outcome of these proposals.

As of the close of business on the record date, there were 3,138,580 shares of Company common stock issued and outstanding.

Voting by the Company’s Directors and Executive Officers

As of the close of business on the record date, parties to the voting agreements, including directors and executive officers of the Company, were entitled to vote 809,714 shares of Company common stock, or approximately 26% of the shares of Company common stock issued and outstanding on that date. Pursuant to the voting agreements, all of the Company’s directors and executive officers will vote their shares in favor of the proposal to approve and adopt the merger agreement and the other proposals to be considered at the special meeting. Tuscarora Wayne Insurance Company, a subsidiary of Mutual Capital which controls 6.4% of the Company common stock, has indicated that it intends to vote its shares “FOR” the proposal to approve and adopt the merger agreement.

Voting; Proxies; Revocation

Attendance

Shareholders as of the record date may attend, vote, and submit questions virtually at the special meeting by logging in to http://www.viewproxy.com/ICCHSM/2024 to register and receive instructions on how to attend the special meeting. To log in, shareholders (or their authorized representatives) will need the control number provided on their proxy card, voting instruction form, or this notice. If you are not a shareholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to participate.

At the special meeting, shareholders will be able to attend, vote, and submit questions virtually. Whether or not you plan to attend the special meeting, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described in these proxy materials. Additional information can also be found at http://www.viewproxy.com/ICCHSM/2024.

Shareholders of record at the close of business on September 30, 2024 shall be entitled to vote at the special meeting. As of the record date, the Company had 3,138,580 shares of Company common stock outstanding and entitled to vote. Common share ownership entitles the holder to one vote per share upon each matter to be voted at the special meeting.

Voting Virtually at the Special Meeting

We strongly encourage you to vote your proxy by Internet or mail prior to the meeting, even if you plan to attend the virtual special meeting. Please also note that in order to attend and vote at the special meeting, you must have already pre-registered for the meeting no later than Monday, November 25, 2024. Once you have pre-registered, you will receive a confirmation e-mail with information on how to attend and vote at the meeting. 

Registered holders may log into the virtual special meeting website at www.AALVote.com/ICCHSM, click on the ballot posted on the site and follow the instructions provided on the ballot. 

If you are the beneficial owner of shares held in street name, in order to vote at the special meeting, you will need to provide a legal proxy from your bank, broker or other nominee. Beneficial owners are strongly encouraged to obtain the legal proxy at least 5 business days prior to the special meeting. Beneficial owners will need to have an electronic image (such as a pdf file or scan) of the legal proxy ready to include when voting. You should refer to the voting instructions provided by your brokerage firm, bank, or other holder of record for information about how to obtain a legal proxy. 

Providing Voting Instructions by Proxy

To ensure that your shares of Company common stock are voted at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the special meeting virtually.

Deadline for Voting 

The deadline for voting electronically is 11:59 p.m., Eastern Time, on Monday, November 25, 2024. If you have timely pre-registered, you may attend the virtual meeting and vote your shares by ballot at the special meeting.

Shares of Common Stock Held by Record Holder

If you are a shareholder of record, you may provide voting instructions by proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting voting instructions. You may vote by telephone by calling the toll-free number or via the Internet by accessing the Internet address as specified on the enclosed proxy card. Your shares of Company common stock will be voted as you direct in the same manner as if you had completed, signed, dated and returned your proxy card, as described below.

Submit a Proxy Card by Mail. If you complete, sign, date and return the enclosed proxy card by mail so that it is received in time for the special meeting, your shares of Company common stock will be voted in the manner directed by you on your proxy card.

If you fail to return your proxy card and you are a holder of record on the record date, unless you attend the special meeting and vote virtually, the effect will be that your shares of Company common stock will not be considered present at the special meeting for purposes of determining whether a quorum is present at the special meeting and will not affect the vote regarding the approval and adoption of the merger agreement, the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, or the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposal to approve and adopt the merger agreement, the advisory (non‑binding) proposal to approve the compensation that may become payable to the named executive officers of the Company in connection with the merger, and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

Shares of Company Common Stock Held in “Street Name”

If your shares of Company common stock are held by a bank, broker or other nominee on your behalf in “street name,” your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your shares. Many banks and brokerage firms have a process for their customers to provide voting instructions by telephone or via the Internet, in addition to providing voting instructions by a voting instruction form.

In accordance with the rules of The New York Stock Exchange, banks, brokers and other nominees who hold shares of Company common stock in “street name” for their customers do not have discretionary authority to vote the shares with respect to the proposal to approve and adopt the merger agreement or any of the other proposals described in this proxy statement. Accordingly, if banks, brokers or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to the proposal to approve and adopt the merger agreement or any of the other proposals described in this proxy statement. Since all of the proposals currently expected to be voted on at the special meeting are considered non‑routine matters, shares held in “street name” through a broker, bank or other nominee will not be counted as present for the purpose of determining the existence of a quorum if such broker, bank or other nominee does not have instructions to vote on any such proposals. For shares of Company common stock held in “street name,” only shares of Company common stock affirmatively voted “FOR” the proposal to approve and adopt the merger agreement will be counted as a favorable vote for such proposal.

Revocation of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted. If you are a shareholder of record, you may revoke your proxy at any time before the vote is taken at the special meeting by:

Please note, however, that only your last-dated proxy will count. Attending the special meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to the Company or by sending a written notice of revocation to the Company, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by the Company before the special meeting.

If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee in order to revoke your proxy or submit new voting instructions.

Abstentions

An abstention occurs when a shareholder attends a meeting, either virtually or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares of Company common stock represented at the special meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have no effect on the proposal to approve and adopt the merger agreement, the advisory (non‑binding) proposal on executive compensation that may become payable to the Company’s named executive officers in connection with the merger, and the adjournment proposal.

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies. In the event that there is present, virtually or by proxy, sufficient favorable voting power to secure the vote of the shareholders of the Company necessary to approve the proposal to approve and adopt the merger agreement, the Company does not anticipate that it will adjourn or postpone the special meeting unless it is advised by counsel that failure to do so could reasonably be expected to result in a violation of applicable law.

The special meeting may be adjourned by the Board or the chairperson of the special meeting as long as the holders of a majority of the shares of Company common stock are present virtually or represented by proxy at the special meeting. In addition, regardless of whether a quorum is present, the chairperson of the special meeting has the power under the Company’s bylaws to adjourn the special meeting from time to time. Any signed proxies received by the Company in which no voting instructions are provided on such matter will be voted in favor of an adjournment in these circumstances. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company’s shareholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

Solicitation of Proxies

The Board is soliciting your proxy, and the Company will bear the cost of this solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of outstanding Company common stock. Alliance Advisors, LLC, a proxy solicitation firm, has been retained to assist the Company in the solicitation of proxies for the special meeting, and the Company will pay Alliance Advisors, LLC $25,000, plus reimbursement of out-of-pocket expenses for these services. Proxies may be solicited by mail, personal interview, e‑mail, telephone, or via the Internet by Alliance Advisors, LLC, or, without additional compensation, by certain of the Company’s directors, officers and employees.

Other Information

You should not return your stock certificate or send documents representing Company common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and related materials and instructions for exchanging your shares of Company common stock for the merger consideration.

THE MERGER

(PROPOSAL 1)

Certain Effects of the Merger

If the merger agreement and merger are approved and adopted by the Company’s shareholders and the other conditions to the closing of the merger are either satisfied or waived, at the effective time of the merger Merger Sub will be merged with and into the Company with the Company continuing as the surviving corporation in the merger and a wholly owned subsidiary of Mutual Capital.

Upon the consummation of the merger, each share of Company common stock issued and outstanding immediately before the effective time of the merger, other than shares held in the treasury of the Company will be cancelled and extinguished and converted into the right to receive $23.50 in cash, without interest and less all applicable withholding taxes.

The Company common stock is currently registered under the Exchange Act and is traded on Nasdaq under the symbol “ICCH.” As a result of the merger, the Company will cease to be a publicly traded company and will be wholly owned by Mutual Capital. Following the consummation of the merger, the Company common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and the Company will no longer be required to file periodic reports with the SEC with respect to the Company common stock, in each case in accordance with applicable law, rules and regulations.

Background of the Merger

The Company’s board of directors (the “Board”) and the senior management of the Company periodically review and consider alternatives to protect and enhance the value of the Company's business. The Company considers its strategic options in light of the totality of the circumstances, including current and anticipated business and industry trends, regulatory conditions, policyholder interests, short-term and long-term value for the shareholders of the Company and the impact on constituencies and the ratings environment expected to impact the insurance industry.

From time to time, the Company receives inquiries from interested parties about potential strategic opportunities. During the second half of 2020, the Company had engaged in discussions with Mutual Capital Group, Inc. (“Mutual Capital Group”), whose subsidiary, Tuscarora Wayne Insurance Company (“Tuscarora Wayne”) owns 200,000 shares of the Company’s common stock, and certain of its affiliates about a potential business combination. While those discussions terminated in December 2020, on February 11, 2022, an affiliate of Mutual Capital Group, Mutual Capital Investment Fund, L.P. (“MCIF”), submitted a non-binding indication of interest to acquire the Company in a two-step transaction where (i) the Company would complete a 10,000 to 1 reverse stock split immediately prior to closing the merger, whereby fractional shares would be paid $18.50 per pre-split share in cash, (ii) in connection with the merger between the Company and a merger acquisition subsidiary of MCIF, (a) post-split shareholders of the Company would be able to elect $18.50 per pre-split share in cash or common stock of the surviving corporation, with a maximum of $25 million in cash available, and (b) MCIF’s $30 million investment in convertible preferred stock in its merger acquisition subsidiary would be exchanged for convertible preferred stock of the surviving corporation, which convertible preferred stock would vote with the common stock on an as-converted basis, have a conversion ratio of not greater than $16 per pre-split share, an aggregate liquidation preference of $30 million, and a cumulative quarterly annual dividend of 4%. As a result of the transaction, it was contemplated that the Company would be able to delist and terminate its reporting obligations under the Securities Exchange Act of 1934 and no longer incur the expenses associated with being a public reporting company, and MCIF would have a majority of the voting power of the surviving corporation.

At a meeting of the executive committee of the Board on February 15, 2022, Arron K. Sutherland, the Company’s President and Chief Executive Officer, reviewed the terms of MCIF’s proposal with members of the committee. After a discussion among members of the committee and senior management, a representative of Griffin Financial Group (“Griffin Financial”), financial advisor to Mutual Capital and MCIF, was invited to the meeting to discuss the proposal and answer additional questions from members of the committee, including the impact on continuing shareholders. The committee requested that additional information be provided in connection with its upcoming meeting of the Board.

At a meeting of the Board on March 1, 2022, management reviewed a revised MCIF proposal with members of the Board. The updated proposal provided, among other things, that (i) the preferred stock would be replaced by $10 million of convertible debt bearing interest at 6% but retaining the same conversion features, (ii) MCIF would purchase $20 million of the Company’s common stock at a maximum purchase price of $16.00 per share, and (iii) the surviving corporation would establish an annual post-closing buyback program for continuing shareholders, other than certain insiders, the ESOP and MCIF, of approximately $500,000. After this discussion, a representative of Griffin was invited to the meeting to review the sequence of the transaction and answer questions from members of the Board, including the consequences for continuing shareholders. After these discussions, the Board decided to move forward and permit MCIF to proceed with due diligence.

Over the next few months, management responded to due diligence requests from MCIF.

At a meeting of the Board on April 26, 2022, Jay Chadwick, Chairman of Mutual Capital Group, Jason Wolfe, President and Chief Executive Officer of Mutual Capital Investment Advisors, an indirect subsidiary of Mutual Capital Group (“MCIA”), and a representative of Griffin Financial met with members of the Board. These representatives reviewed a further modified proposal, dated April 25, 2022, pursuant to which, among other things, (i) 100% of the interested shareholders, excluding the ESOP and certain identified insiders, would be able to receive $18.50 per share in cash, (ii) MCIF would increase the amount of their equity purchase from $20 million to $25 million and with the same per share purchase price, and (iii) the amount of the convertible debt would be increased from $10 million to $25 million. After a further discussion with members of the Board, these representatives left the meeting. The Board then discussed with management the potential for financing a self-tender or reverse stock split with the goal of remaining independent and no longer being a reporting company.

In May 2022, based upon further discussions with the Company, MCIF submitted a further modified proposal pursuant to which, in connection with the merger between the Company and a merger acquisition subsidiary of MCIF, (i) shareholders of the Company who own less than 10,000 shares of common stock would receive $18.50 per share in cash, and (ii) shareholders of the Company who own more than 10,000 shares of common stock would be able to elect to receive either $18.50 per share in cash or common stock of the surviving corporation, other than the ESOP and certain directors and executive officers who would be required to receive shares of common stock of the surviving corporation. There would no longer be any requirements to complete a reverse stock split or assume any convertible debt. As a result of the transaction, it was contemplated that the Company would be able to delist and terminate its reporting obligations under the Securities Exchange Act of 1934 and no longer incur the expenses associated with being a public reporting company, and MCIF would have a majority of the voting power of the surviving corporation.

Over the next several months, MCIF continued to conduct due diligence but ultimately discussions among the parties regarding the proposed transaction were terminated.

During the spring of 2023, representatives of Mutual Capital and MCIF contacted Mr. Sutherland about re-engaging in discussions about a potential strategic business combination. In light of these discussions, management contacted potential investment bankers to assist the Company in evaluating strategic alternatives. At a meeting of the Board on June 6, 2023, representatives of Weild & Co. (“Stonybrook”) met with the Board and discussed a potential engagement and, if discussions with Mutual Capital did not materialize, a process to ascertain interest in a strategic combination with third parties. The Board engaged Stonybrook as its financial advisor on July 13, 2023.

In August 2023, Mr. Sutherland visited Mutual Capital’s offices and met with members of its board of directors and key executives. At a meeting of the Board on August 29, 2023, Mr. Sutherland provided an update regarding these meetings. Ultimately, these discussions did not result in a further proposal from Mutual Capital.

As a result, the Board authorized Stonybrook to approach potential strategic partners, including Mutual Capital, to gauge their interest in a potential strategic transaction with the Company, taking into account, among other factors, the strategic fit for the Company's business, the rationale for a potential transaction and the perceived likelihood of engaging in discussions regarding a potential strategic transaction that could be actionable in the near term. Between October 2023 and February 2024, Stonybrook contacted eighty-seven strategic buyers and financial investors, of which fifteen parties, including Mutual Capital, entered into nondisclosure agreements and were provided access to an electronic dataroom. Of those companies, five parties, including Mutual Capital, had meetings with management. By February 8, 2023, Mutual Capital, a financial sponsor focused on the insurance sector (“Party A”) and a specialty insurance producer platform for an established large private equity sponsor (“Party B”) had provided Stonybrook non-binding indications of interest.

In the fall of 2023, management worked with Stevens & Lee, P.C. (“Stevens & Lee”) in preparing draft definitive agreements in connection with a potential whole company merger.

At a meeting of the Board on February 13, 2024, Mr. Sutherland reviewed each of these indications of interest with the Board. Mutual Capital’s indication of interest proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash purchase price of $23.00, which represented a price to book value of 1.08x. Additionally, Mutual Capital indicated that Mr. Sutherland and the rest of the senior management team would remain in place, with Mr. Sutherland reporting to the President and Chief Executive Officer of Mutual Capital. Party A’s indication of interest proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash price of $22.00, which represented a price to book value of 1.03x. Party A also indicated that Mr. Sutherland and key members of the management team would continue in place and sign new employment agreements. Party B’s indication of interest proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash price of $25.60, which represented a price to book value of 1.20x. Based upon a recommendation from Stonybrook, the Board directed management to work with Stonybrook and obtain non-binding letters of intent and mark ups of the previously prepared definitive agreement from interested parties.

Over the next month, management had meetings with Mutual Capital, Party A, and a financial sponsor focused on the insurance sector (“Party C”). Party B determined that a further meeting was unnecessary.

At a meeting of the Board on March 5, 2024, representatives of Stonybrook provided the Board with an update on the process to date, feedback received from interested parties and responded to questions from members of the Board.

At a meeting of the Board on March 26, 2024, Mr. Sutherland reviewed the non-binding letters of intent received by Mutual Capital, Party A, and Party C, and a revised proposal submitted by Party B. Mutual Capital submitted an initial letter of intent on March 8, 2024, which it revised on March 25, 2024. Based upon the revised letter of intent, Mutual Capital proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash price of $23.50, which represented a price to book value of 1.10x and a premium of 51.6% to the Company’s closing stock price on March 22, 2024 of $15.50. It also contemplated certain changes to the employment and compensation arrangements with senior management. For more information, see “- Interests of the Company’s Directors and Executive Officers in the Merger” below. Party A submitted a non-binding letter of intent on March 8, 2024, which proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash price of $21.35, which represented a price to book value of 1.00x and a premium of 37.2% to the Company’s closing stock price on March 22, 2024. Party C submitted a non-binding letter of intent on March 22, 2024, which proposed a whole company acquisition, with the Company’s shareholders receiving an expected per share cash price of between $18.14 and $21.35, which represented a price to book value of between 0.85x and 1.00x and a premium of between 17.0% and 37.2% to the Company’s closing stock price on March 22, 2024. Rather than a whole company acquisition, Party B proposed a $40 million cash investment, with the proceeds to be used for growth and potential for a higher per share sale price in connection with a subsequent sale of the Company. Members of the Board discussed the benefits and deficiencies of each proposal and considered the attributes of each potential acquiror. After such discussion, the Board authorized the Company's senior management team, with the assistance of the Company's legal and financial advisors, to negotiate final terms of a potential business combination transaction with Mutual Capital and its advisors, and to enter into a 30-day period of exclusive negotiations to finalize definitive agreements.

On April 4, 2024, a virtual kick-off meeting was held with senior management of the Company and Mutual Capital and representatives of each of Stonybrook, Griffin Financial, Stevens & Lee and Locke Lord LLP (“Locke Lord”), counsel to Mutual Capital, at which additional due diligence and potential next steps were discussed. Also, on April 4, 2024, the Company and Mutual Capital entered into a 30-day exclusivity period.

At the direction of the Board, senior management contacted investment banks to select a firm that would be able to provide a fairness opinion to the Board in connection with this proposed combination. On April 12, 2024, Feldman Financial was engaged to do so.

Over the course of the next several weeks, Mutual Capital engaged in a further due diligence review of the Company, which involved the review of materials in the data room as well as numerous virtual and telephonic meetings and conversations with the Company's management team. Concurrently during that time, representatives of the Company and its advisors also conducted a due diligence review of Mutual Capital. During that same period, representatives of Stevens & Lee and representatives of Locke Lord exchanged drafts of the merger agreement, voting agreement and ancillary transaction documents, and together with representatives of the Company and Mutual Capital, held numerous virtual and telephonic meetings to discuss and negotiate the terms of the merger agreement and other definitive agreements for the transaction.

On April 30, 2024, the Company and Mutual Capital extended the exclusivity period to end on June 7, 2024.

On May 3, 2024, the Board held a meeting at which Mr. Sutherland and representatives of Stevens & Lee were also present. At this meeting, representatives of Stevens & Lee presented on the Board’s fiduciary duties in the context of a potential strategic transaction, and Mr. Sutherland and Stevens & Lee provided an update on the status of negotiations to date.

On June 3, 2024, the compensation committee of the Board met to discuss matters relating to amendments to arrangements with the senior management in connection with the merger agreement. Members of the Company’s senior management and Stevens & Lee were also present at that meeting.

On June 4, 2024, the Board held a virtual meeting with Mr. Sutherland and representatives of Stevens & Lee and Feldman Financial in attendance. Representatives of Stevens & Lee provided a presentation regarding the final terms of the merger agreement, the voting agreement and the ancillary agreements. Feldman Financial then reviewed with the Board its financial analysis of the merger consideration and rendered an oral opinion, confirmed by delivery of a written opinion dated June 8, 2024, to the Board to the effect that, as of such date and based on and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken as set forth in such opinion, the merger consideration provided for in the merger agreement was fair, from a financial point of view, to holders of the Company’s common stock (other than, to the extent applicable, Mutual Capital, Merger Sub and their respective affiliates). After further discussions, and taking into account the factors described below in greater detail under the sections titled "The Merger - Reasons for the Merger; Recommendation of the Board of Directors," the Board unanimously: (i) determined that the merger is fair to and in the best interests of the Company; (ii) approved and declared advisable the execution and delivery of the merger agreement, the performance by the Company of its covenants and agreements contained therein and the transactions contemplated by the merger agreement, including the merger, all on the terms and subject to the conditions contained therein; (iii) authorized and approved the merger agreement and the transactions and other documents and agreements contemplated by the merger agreement and such other documents and agreements, including the voting agreements; (iv) directed that the adoption of the merger agreement be submitted to a vote at a meeting of the Company’s shareholders; and (v) recommended that the Company’s shareholders adopt the merger agreement.

On June 4, 2024, the boards of directors of Mutual Capital and Merger Sub approved the entry into the merger agreement and the consummation of the transactions contemplated thereby, including without limitation the merger, and authorized the execution and delivery of the merger agreement.

On June 8, 2024, the Company, Mutual Capital and the Merger Sub entered into the merger agreement and the ancillary agreements and Mutual Capital entered into the voting agreements, and the Company and Mutual Capital issued a joint press release announcing the merger.

On October 11, 2024, following receipt of the requisite board approvals, the Company, Mutual Capital and the Merger Sub entered into that certain Amendment to Merger Agreement to (i) clarify the voting threshold required for approval of the merger and (ii) to extend the Outside Date (as defined in the merger agreement) from October 8, 2024 to December 31, 2024.

Reasons for the Merger

As described above in the section of this proxy statement entitled “—Background of the Merger,” prior to and in reaching its determination to approve the merger agreement, the Board consulted with and received the advice of the Company’s financial advisor, Feldman Financial, and the Company’s legal advisor, Stevens & Lee, discussed certain issues with the Company’s management and considered a variety of factors weighing positively in favor of the merger agreement and the merger, each of which the directors believed supported their decision, including the following material factors:

In the course of its deliberations, the Board also considered a variety of risks and countervailing factors related to the merger agreement and the merger, including the following material factors:

In addition to considering the factors described above, the Board also identified and considered a variety of other factors, including the following:

The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but rather includes the material factors considered by the Board. The Board collectively reached the conclusion to approve the merger agreement and deem the merger agreement, the merger and the other transactions contemplated by the merger agreement, to be advisable and in the best interests of the Company, in light of the various factors described above and other factors that the members of the Board believed were appropriate. In view of the wide variety of factors considered by the Board in connection with its evaluation of the merger and the complexity of these matters, the Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board. Rather, the Board made its recommendation based on the totality of the information available to the Board, including discussions with, and questioning of, the Company’s management and the financial and legal advisors. In considering the factors discussed above, individual members of the Board may have given different weights to different factors.

This explanation of the Board’s reasons for recommending the approval of the merger agreement and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described in the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 17.

Recommendation of the Company’s Board of Directors

After careful consideration, the Board has unanimously approved and adopted the merger agreement, the merger and the other transactions contemplated by the merger agreement and determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable, fair to and in the best interests of the Company.

The Board unanimously recommends that the shareholders of the Company vote “FOR” the proposal to approve and adopt the merger agreement.

Opinion of the Company’s Financial Advisor

At the June 4, 2024 meeting of the Board, representatives of Feldman Financial rendered Feldman Financial’s oral opinion, as to the fairness from a financial point of view, to the holders of the Company common stock of the $23.50 in cash per share of the Company common stock (the “merger consideration”) to be received by such holders in the merger pursuant to the merger agreement. Subsequently, Feldman Financial confirmed its oral opinion by delivering to the Board its written opinion dated June 8, 2024. The full text of Feldman Financial’s written opinion, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Feldman Financial in preparing its opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference.

Feldman Financial’s opinion was provided for the information and assistance of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the merger and the other transactions contemplated by the merger agreement and Feldman Financial’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of the Company common stock of the merger consideration. Feldman Financial’s opinion did not address any other term or aspect of the merger agreement, the merger, and the other transactions contemplated by the merger agreement, and does not constitute a recommendation to any shareholder of the Company or any other person as to how such shareholder or other person should vote with respect to the merger and the other transactions contemplated by the merger agreement or otherwise act with respect to the merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Feldman Financial reviewed, among other things:

For purposes of rendering its opinion, Feldman Financial has relied upon and assumed the accuracy and completeness, without independent investigation, of all the financial and other information that was provided to Feldman Financial by the Company or its respective representatives or obtained from publicly available sources. Feldman Financial did not perform any independent evaluation or appraisal of the assets and liabilities of the Company. With respect to the Projections and any other information and data provided to or otherwise reviewed by or discussed with Feldman Financial, it has, with the consent of the Board, assumed that the Projections and such other information and data have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of the Company. Feldman Financial expressed no opinion with respect to the Projections or the assumptions on which they are based. Feldman Financial also assumed that there had been no material change in the respective assets, financial condition, operating results, business, or prospects of the Company since the date of the most recent financial statements made available to Feldman Financial.

Feldman Financial also assumed, with the Company’s consent, that (i) each of the parties to the merger agreement would comply in all material respects with all material terms and conditions of the merger agreement and all related agreements, that all of the representations and warranties contained in such agreements were true and correct in all material respects, that each of the parties to such agreements would perform in all material respects all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements were not and would not be waived, (ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the merger, no delay, limitation, restriction, or condition would be imposed that would have an adverse effect on the Company, Mutual Capital, the merger, or any related transactions, and (iii) the merger and any related transactions would be consummated in accordance with the terms of the merger agreement without any waiver, modification, or amendment of any material term, condition, or agreement thereof and in compliance with all applicable laws and other requirements. Finally, with the Company’s consent, Feldman Financial relied upon the advice that the Company received from its legal, accounting, and tax advisors as to all legal, accounting, and tax matters relating to the merger and the other transactions contemplated by the merger agreement. Feldman Financial expressed no opinion as to any such matters. Feldman Financial’s opinion did not address and expressed no view or opinion with respect to whether Mutual Capital has sufficient cash, available lines of credit, or other sources of funds to enable it to pay the aggregate merger consideration to the holders of the Company common stock at the closing of the merger.

Feldman Financial’s opinion was necessarily based on financial, economic, regulatory, market, and other conditions as in effect on, and the information made available to Feldman Financial as of, the date thereof. Events occurring after the date thereof could materially affect Feldman Financial’s opinion. Feldman Financial has not undertaken to update, revise, reaffirm, or withdraw its opinion or otherwise comment upon events occurring after the date thereof.

The following is a summary of the material financial analyses performed by Feldman Financial in arriving at its opinion.

Feldman Financial’s opinion was only one of many factors considered by the Board in evaluating the merger. Neither Feldman Financial’s opinion nor its financial analyses were determinative of the merger consideration or the views of the Board or the Company’s management with respect to the merger consideration or the merger. The type and amount of consideration payable in the merger were determined through negotiations between the Company and Mutual Capital. Feldman Financial was retained by the Company solely to render an opinion regarding the fairness of the merger consideration. Feldman Financial was not engaged to and did not assist the Company with negotiating the financial terms of the merger. Feldman Financial has acted exclusively for the Board in rendering the opinion.

None of the analyses performed by Feldman Financial were necessarily assigned a greater significance by Feldman Financial than any other, nor does the order of analyses described represent relative importance or weight given to those analyses by Feldman Financial. Some of the summaries in the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Feldman Financial’s financial analyses. The summary text describing each financial analysis does not constitute a complete description of Feldman Financial’s financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Feldman Financial. The summary text set forth below does not represent and should not be viewed by anyone as constituting conclusions reached by Feldman Financial with respect to any of the analyses performed by it in connection with its opinion. Rather, Feldman Financial made its determination as to the fairness, from a financial point of view, to holders of the Company common stock of the merger consideration to be paid under the merger agreement based on its analyses as a whole.

The preparation of a fairness opinion is a complex process involving subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. The process, therefore, is not necessarily susceptible to a partial analysis or summary description. Feldman Financial believes that selecting portions of the factors and analyses to be considered without considering all factors and analyses, or attempting to ascribe relative weights to some or all such factors and analyses, could create an incomplete view of the evaluation process underlying its opinion. Also, no company included in Feldman Financial’s comparative analyses described below is identical to the Company, and no transaction is identical to the merger. Accordingly, an analysis of comparable companies or transactions involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the trading values or transaction values, as the case may be, of the Company and the other businesses to which it was compared.

In performing its analyses, Feldman Financial also made numerous assumptions with respect to industry performance, business and economic conditions, and various other matters, many of which cannot be predicted and are beyond the control of the Company, Mutual Capital, and Feldman Financial. The analyses performed by Feldman Financial are not necessarily indicative of actual values or future results, both of which may be significantly more or less favorable than suggested by such analyses. Feldman Financial prepared its analyses solely for purposes of rendering its opinion and provided such analyses to the Board at its June 4, 2024 meeting. Estimates on the values of companies do not purport to be appraisals or necessarily reflect the prices at which companies or their securities may actually be sold. Such estimates are inherently subject to uncertainty, and actual values may be materially different. Accordingly, Feldman Financial’s analyses do not necessarily reflect the value of the Company common stock or the prices at which the Company common stock may be sold at any time.

Comparative Stock Price Performance

For informational purposes, Feldman Financial compared the trading stock price performance of the Company common stock with various stock indexes through May 30, 2024. The periods reviewed included the year-to-date 2024 period, past one year, past two years, and since the Company’s initial public offering in March 2017. The following table displays a summary of the net change in stock price movement for the relevant periods.

Analysis of Implied Premiums

Feldman Financial reviewed the historical trading prices for the Company common stock for the one-year period ended May 30, 2024. In addition, Feldman Financial compared the merger consideration of $23.50 per share to be paid to holders of the outstanding shares of the Company common stock pursuant to the merger agreement in relation to the Company’s recent trading price levels. The following table displays a summary of the analysis:

Historical Offer Premiums Paid Analysis

Feldman Financial reviewed historical premiums paid in insurance company merger and acquisition transactions between January 1, 2000 and May 30, 2024, involving target companies headquartered in the United States, Bermuda, or the Cayman Islands. There were 129 such transactions with publicly reported data, including 74 transactions in which the target companies were identified as property and casualty insurance companies. For these groups of transactions, Feldman Financial compared the premiums paid based on the closing price per share of the target company’s common stock one day, one month, and three months days prior to the announcement of the transaction, to implied premiums calculated in an identical manner for the proposed merger. The following table displays a summary of the analysis:

(1) Based on closing market price data at May 30, 2024

Trading Comparables Company Analysis

Using publicly available information, Feldman Financial compared selected financial data of the Company with similar data for selected publicly traded companies engaged in the property and casualty insurance business which Feldman Financial judged to be analogous to the Company. The companies selected by Feldman Financial were:

In selecting these companies, Feldman Financial also considered certain financial data, including asset size, equity capital level, and total market capitalization. Additional selectivity was applied to emphasize the inclusion of specialty insurers within the group. None of the selected companies reviewed is identical to the Company. Certain of these companies may have characteristics that are materially different from those of the Company. However, the companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of Feldman Financial’s analysis, may be considered similar to those of the Company. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect the Company.

The analysis compared financial information for the Company with corresponding data for the trading comparables as of or for the last twelve months (LTM) ended March 31, 2024. Market pricing data for the trading comparables was reviewed as of May 30, 2024. The table below sets forth the relevant data for the Company and the median, mean, upper quartile, and lower quartile data for the trading comparables. Applying the median and mean market valuation ratios as shown below for the trading comparables to the corresponding financial data for the Company at March 31, 2024 produced a range of implied trading valuations for the Company from $15.22 to $24.10 per share.

(1) Operating earnings exclude realized securities gains and other non‑recurring items.

Selected Acquisition Transactions Analysis

Feldman Financial reviewed a group of selected acquisition transactions completed since 2014 involving target companies in the property and casualty insurance industry. The acquisition transactions group was composed of the following ten transactions:

None of the selected transactions reviewed was identical to the merger. Certain of these transactions may have characteristics that are materially different from those of the merger. However, the transactions selected were chosen because the participants in, and certain other aspects of, the transactions, for purposes of Feldman Financial’s analysis, may be considered similar to the participants in and aspects of the transaction. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the transactions differently than they would affect the merger.

Using the latest publicly available information prior to the announcement of the relevant transaction, Feldman Financial reviewed the following transaction metrics: transaction value to total common book value, transaction value to LTM earnings, and transaction value to LTM total revenue. Feldman Financial compared the indicated transaction metrics for the merger to the median, average, upper quartile, and lower quartile metrics of the selected acquisition transactions as summarized below:

Illustrative Present Value of Future Share Price Analysis

Feldman Financial performed an illustrative analysis that estimated the present value per share of the Company common stock, assuming the Company performed in accordance with the internal forecasts, or Projections, for the years ending December 31, 2024 to 2026. The Company’s financial forecasts did not provide for any estimated dividend distributions for the years ending December 31, 2024 to 2026. To approximate the terminal value of a share of the Company common stock at December 31, 2026, Feldman Financial applied ratios of the Company’s estimated December 31, 2026 book value ranging from 80.0% to 120.0% and price to 2026 earnings per share ratios ranging from 9.0x to 13.0x. Feldman Financial selected these price to book value and earnings per share ratios based on Feldman Financial’s review of, among other matters, the trading market valuation ratios of the Company and of selected companies that Feldman Financial deemed to be comparable to the Company. The terminal values were then discounted to present values using different discount rates ranging from 14.5% to 16.5%, which were chosen to reflect different assumptions regarding required rates of return of holders or prospective buyers of the Company common stock. Feldman Financial derived such discount rates by application of the capital asset pricing model, which requires certain company-specific and industry-related inputs, as well as certain financial metrics for the U.S. financial markets generally.

The following discussion describes the approximate discount rate calculation for the Company common stock as performed by Feldman Financial in the present value analysis. The resulting discount rate served as the midpoint for a range of discount rates considered appropriate for the Company common stock by Feldman Financial. In its normal course of business, Feldman Financial employs the Kroll Cost of Capital Navigator in determining an appropriate discount rate in which the discount rate equals the sum of the risk-free rate, the equity risk premium, the industry premium, and the size premium. Feldman Financial calculated a discount rate of 15.55%, which was the sum of the risk-free rate of 4.74%, equity risk premium of 6.22%, industry premium of -3.05%, and size premium of 7.64%, based on data sourced from the Kroll Cost of Capital Navigator.

As illustrated in the following tables, the present value analysis indicated an implied range of values per share of the Company common stock of $13.92 to $22.00 when applying market valuation ratios based on book value and $15.42 to $23.46 when applying market valuation ratios based on earnings per share at the range of discount rates.

The Company retained Feldman Financial to provide a fairness opinion in connection with the proposed merger based on Feldman Financial’s experience, reputation, and familiarity with the Company. Feldman Financial is a financial advisory firm that regularly undertakes the valuation of equity securities in connection with public offerings, private placements, business combinations, and similar transactions. Feldman Financial previously served as the independent valuation appraiser in connection with the Company’s mutual-to-stock conversion and initial public offering in 2017. For services rendered in connection with the delivery of its opinion, the Company has paid Feldman Financial a total fee of $150,000. In addition, the Company has agreed to reimburse Feldman Financial for its expenses incurred in connection with its services and will indemnify Feldman Financial against certain liabilities arising out of Feldman Financial’s engagement.

Unaudited Prospective Financial Information

In the ordinary course of business and not in connection with the merger, management of the Company prepared certain unaudited prospective financial information of the Company for the fiscal years 2024 through 2026, which information is referred to as the “Projections.” The Projections were prepared in the ordinary course for internal use only and not for public disclosure. The Projections were also provided to and approved by the Company for use by Feldman Financial for the purposes of its respective financial analysis and fairness opinion, as described in the section of this proxy statement entitled “The Merger – Opinion of the Company’s Financial Advisor.”

The Company does not, as a matter of course, make public forecasts as to future book value, earnings, or other results available due to, among other reasons, the inherent difficulty of accurately predicting financial performance for future periods and the uncertainty, unpredictability, and subjectivity of the underlying assumptions and estimates. The Projections are not included in this proxy statement to influence any decision on whether to vote for the proposal to approve and adopt the merger agreement, but rather we have included a summary of these Projections below to give our shareholders access to certain nonpublic information provided to the Board and our financial advisor in connection with the merger. The inclusion of the Projections should not be regarded as an indication that the Board, the Company, Mutual Capital, Merger Sub, their respective affiliates, officers, directors, advisors or other representatives or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of actual future results.

The Projections reflect numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond the Company’s control. As a result, there can be no assurance that the Projections will be realized or that actual results will not be significantly higher or lower than projected. The Projections were prepared for internal use and were not prepared with a view toward public disclosure or toward compliance with United States generally accepted accounting principles (“GAAP”), published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Projections included in this proxy statement have been prepared by, and are the responsibility of, the Company’s management. Neither the Company’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the Projections. The report of Johnson Lambert LLP incorporated by reference in this proxy statement relates to the Company’s historical financial information. It does not extend to the Projections and should not be read to do so.

Projections of this type are based on estimates and assumptions in many respects, and as a result, subject to interpretation. While presented with numeric specificity, these Projections were based on numerous variables and assumptions (including, but not limited to, industry performance and competition and general business, economic, market, and financial conditions and additional matters specific to the Company’s businesses) that are inherently subjective and uncertain and are beyond the control of our management. Important factors that may affect actual results and cause these Projections to not be achieved include, but are not limited to, risks and uncertainties relating to our business (including its ability to achieve strategic goals, objectives, and targets over applicable periods), industry performance, general business and economic conditions and other factors described in the “Risk Factors” section of our Annual Report on Form 10‑K, as updated by subsequent Quarterly Reports on Form 10‑Q, all of which are filed with the SEC and incorporated by reference into this proxy statement. Also, see the section of this proxy statement entitled “Where You Can Find More Information.” These Projections also reflect numerous variables, expectations, and assumptions available at the time they were prepared as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in these Projections. Since the Projections cover multiple years, such information by its nature becomes less predictive with each successive year. Accordingly, there can be no assurance that the forecasted results summarized below will be realized.

The following is a summary of the Projections for the fiscal years ending December 31, 2024 to 2026:

Summary of the Unaudited Prospective Financial Projection

Earnings Projections for Fiscal 2024 to 2026
(Dollars in thousands, except for per share data)

Readers of this proxy statement are cautioned not to place undue reliance on the specific portions of the Projections set forth above. No one has made or makes any representation to any shareholder regarding the information included in the Projections.

For the foregoing reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this proxy statement should not be regarded as an indication that the Projections will necessarily be predictive of actual future events, and they should not be relied on as such. Except as required by applicable securities laws, the Company does not intend to update or otherwise revise the Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

Financing         

The Company and Mutual Capital estimate that the total amount of funds required to complete the merger will be approximately $73.8 million. We understand that Mutual Capital intends to fund the merger consideration through (i) the receipt of proceeds from the issuance by Mutual Capital of shares of a newly authorized series of preferred shares, no par value, to be designated as Series A Convertible Preferred Stock, to an investment fund managed by an affiliate of Mutual Capital (the “equity purchaser”), for an aggregate purchase price of approximately $36.6 million (the “equity financing”); and (ii) a senior borrowing facility to be entered into by Mutual Capital and certain of its subsidiaries and affiliates pursuant to which a subsidiary of Mutual Capital will borrow $40 million (the “debt financing”), with the closings of the equity financing and the debt financing to take place simultaneously with the closing of the merger. The Company, through its investment in another investment fund managed by an affiliate of Mutual Capital, indirectly owns approximately 4.5% of the limited partner interests in the equity purchaser and as a result approximately $1.6 million of the purchase price of the equity financing will be funded by the Company.

Interests of the Company’s Directors and Executive Officers in the Merger

In considering the recommendation of the Board that you vote to approve and adopt the merger agreement, you should be aware that aside from their interests as shareholders of the Company, the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. Members of the Board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, and in recommending to the shareholders of the Company that the merger agreement be approved and adopted. See the section of this proxy statement entitled “The Merger—Background of the Merger” and the section entitled “The Merger—Reasons for the Merger.” The Company’s shareholders should take these interests into account in deciding whether to vote “FOR” the proposal to approve and adopt the merger agreement. These interests are described in more detail below, and certain of them are quantified in the disclosure below.

Treatment of Company Equity Awards

As described below under the section of this proxy statement entitled “The Merger Agreement—Treatment of Company Equity Awards,” equity-based awards held by the Company’s directors and executive officers immediately prior to the effective time of the merger will be treated at the effective time of the merger as follows:

Restricted Stock Units. Each outstanding RSU will vest in full and will be cancelled and converted into the right to receive from the surviving corporation a lump-sum amount equal to the merger consideration, less any required payroll and withholding taxes, will be paid in cash to the holder of such RSU upon the later of the next regular payroll following the closing and by the date that is 15 calendar days after the closing. The table below sets forth the number of shares of Company common stock subject to RSUs held by each of the Company’s executive officers and the applicable vesting date of each such RSU:

Employment Agreement

Mr. Sutherland’s employment agreement provides that, in the event of a termination of his employment by the Company without cause (other than due to death or total disability), subject to his execution of a release of claims in favor of the Company and its affiliates, he will receive his accrued benefits, and the Company will make available to Mr. Sutherland and his qualified dependents continued coverage under its insurance plans, as required by COBRA, with Mr. Sutherland financially responsible for such coverage. Additionally, following the execution of a general release in our favor, Mr. Sutherland will be entitled to a lump sum payment equal to twelve months of base salary payable within thirty days following termination of employment. Also, beginning on the 13th month following termination of his employment and continuing through the 24th month following such termination, Mr. Sutherland will receive monthly payments equal to his base salary, which may be offset by any sources of employment or consulting or similar-type sources of income. Such severance payments shall be conditioned on Mr. Sutherland’s compliance with certain restrictive covenants, including a confidentiality provision, an invention assignment provision and two-year post‑termination non‑competition and non‑solicitation covenants. A portion of Mr. Sutherland’s severance payments would be payable over time following a qualifying termination of employment without regard to the consummation of the merger and are not enhanced by reason of the merger or a termination of employment following the merger.

For an estimate of the value of the severance payments and benefits described above that would be payable to Mr. Sutherland, see the section of this proxy statement entitled “—Quantification of Payments and Benefits to the Company’s Named Executive Officers” below.

SERP

Pursuant to the SERP (i) in the event of separation of Mr. Sutherland’s service by the Company without cause (as defined in the SERP) before his 62^nd birthday, Illinois Casualty will be required to pay Mr. Sutherland monthly installments of $16,666.67 for a continuous period of 120 months beginning after Mr. Sutherland attains the age of 62, (ii) except as described in clause (i), if Mr. Sutherland’s voluntary separation from service with the Company occurs before he attains the age of 62, Illinois Casualty will be required to pay Mr. Sutherland the following amounts: (A) in the event of Mr. Sutherland’s voluntary separation of service occurs prior to November 20, 2027, Illinois Casualty will be required to pay Mr. Sutherland monthly installments of $8,333.33 for a continuous period of 120 months beginning after Mr. Sutherland attains the age of 62, (B) if Mr. Sutherland’s voluntary separation of service occurs after November 20, 2027 but prior to September 20, 2030, such monthly installment payment will increase to $12,500, and (C) if Mr. Sutherland’s voluntary separation of service occurs after September 20, 2030, such monthly installment payment will increase to $16,666.67, and (iii) in the event of separation of Mr. Sutherland’s service with cause, Mr. Sutherland will receive no benefits, whether accrued or otherwise, under the SERP. 

For an estimate of the value of the severance payments and benefits described above that would be payable to Mr. Sutherland, see the section of this proxy statement entitled “—Quantification of Payments and Benefits to the Company’s Named Executive Officers” below.

CIC Agreement

Pursuant to the CIC Agreement, each CIC Executive is entitled to, within thirty days after a termination without cause by the Company or its subsidiaries within one year following the effective time of the merger or delivery of the notice of termination, a lump sum cash payment equal to the sum of (a) one times such CIC Executive’s base salary in effect as of the delivery date of the notice of termination and (b) one times the average cash bonus paid to the such CIC Executive within the current calendar year and two calendar years preceding the year in which the notice of termination is delivered. Additionally, upon such occurrence, during the period commencing from the date of termination of employment until the end of the twelfth month after such date, the executive shall be permitted to continue participation in, and the Company and/or Illinois Casualty, as applicable, shall maintain the same level of contribution for, such CIC Executive’s participation in their respective medical/health insurance in effect with respect to such executive during the one year period prior to such executive’s termination of employment or, if the Company and/or Illinois Casualty, as applicable, is not permitted to provide such benefits because such CIC Executive is no longer an employee or as a result of any applicable legal requirement, such executive shall receive a dollar amount, on or within thirty days following the date of termination of employment, equal to the cost to the Company and/or Illinois Casualty, as applicable, of obtaining such benefits (or substantially similar benefits).

For an estimate of the value of the severance payments and benefits described above that would be payable to each of the Company’s named executive officers, see the section of this proxy statement entitled “—Quantification of Payments and Benefits to the Company’s Named Executive Officers” below.

ESOP

Effective on the fifth business day prior to the closing of the merger, the ESOP will be amended to freeze the plan and convert the ESOP into a profit-sharing plan. After the repayment of the outstanding indebtedness of the ESOP and the exchange of shares of the Company common stock for the merger consideration, the merger consideration received upon conversion of the balance of the unallocated shares of Company common stock and any other unallocated assets remaining in the ESOP’s suspense account shall be allocated as earnings to the accounts of the ESOP participants who are employed as of the 5th business day before closing based on their account balances under the ESOP as of such date.  Post-closing, the ESOP is expected to merge with and into the Company’s 401(k) plan or that of a member of the controlled group.

For an estimate of the value of each of the Company’s named executive officer’s pro rata share of the unallocated assets remaining in the ESOP, see the section of this proxy statement entitled “—Quantification of Payments and Benefits to the Company’s Named Executive Officers” below.

Indemnification

Under the merger agreement, from and after the effective time of the merger, Mutual Capital has agreed that it will, and will cause the surviving corporation to, subject to certain limitations, indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date of the merger agreement or who becomes such prior to the effective time of the merger, an officer or director of the Company or any of its subsidiaries (“indemnified parties”), against (i) any and all losses, claims, damages, costs, expenses, fines, liabilities or judgments or amounts incurred by such person in connection with any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company or any of its subsidiaries and (ii) all of such liabilities based in whole or in part on, or pertaining to, the merger agreement or the transactions contemplated by the merger agreement.

From the effective time of the merger, the articles of incorporation and bylaws of the surviving corporation will contain the provisions with respect to indemnification and exculpation set forth in the articles of incorporation and amended and restated bylaws of the Company, which provisions will not be amended, modified or otherwise repealed for a period of six years after the effective time of the merger in any manner that would diminish or adversely affect the rights thereunder of any indemnified party as of the effective time, unless such modification is required after the effective time by law and then only to the minimum extent required by such law.

Quantification of Payments and Benefits to the Company’s Named Executive Officers

The information in the table below is intended to comply with Item 402(t) of Regulation S‑K, which requires disclosure of information about certain compensation for each of the Company’s named executive officers that is based on or otherwise related to the merger, and assumes, among other things, that each named executive officer will experience a qualifying termination immediately following the consummation of the merger. Please note that the amounts described and quantified below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date and do not reflect certain compensation actions that may occur before the effective time of the merger. For purposes of calculating the amounts included in the table below, we have assumed December 31, 2024 as the closing date of the merger and a termination of each named executive officer’s employment by Mutual Capital or its subsidiaries without cause immediately following the effective time of the merger.

Golden Parachute Compensation

(1)         Represents cash payments under the CIC Agreement upon a termination without cause by the Company or its subsidiaries within one year following the effective time of the merger, including (i) a cash severance payment in an amount equal to the sum of the CIC Executive’s annual base salary ($240,000 for Mr. Smith and $240,000 for Mr. Schmeichel) plus the CIC Executive’s average annual cash bonus for the two previous calendar years ($44,790 for Mr. Smith and $44,790 for Mr. Schmeichel). For purposes of calculating the amounts included in the table above, we have assumed that each of the CIC Executive will continue in the Company’s medical/health insurance in effect during the one calendar year period prior to termination of employment, in which case the amount of contributions on behalf of such CIC Executive would be $1,097 for Mr. Smith and $1,102 for Mr. Schmeichel. All such payments are “double-trigger” (i.e., payable upon a qualifying termination following the effective time of the merger). Receipt of these payments is subject to the CIC Executive’s execution of a general release of claims in favor of the Company and its affiliates.

Mr. Sutherland will receive the severance described above if his employment is terminated by the Company without “cause” (other than due to death or total disability) in connection with a “change in control.” Mr. Sutherland is entitled to cash severance (i) of a lump sum payment equal to twelve months of base salary ($516,021) payable within thirty days following termination of employment, and (ii) beginning on the 13th month following termination of his employment and continuing through the 24th month following such termination, of monthly payments equal to his base salary ($43,001.75 per month), which may be offset by any sources of employment or consulting or similar-type sources of income. Receipt of these payments is subject to (i) Mr. Sutherland’s execution of a general release of claims in favor of the Company and its affiliates and (ii) his compliance with certain restrictive covenants, including a confidentiality provision, an invention assignment provision and two-year post‑termination non‑competition and non‑solicitation covenants. A portion of Mr. Sutherland’s cash severance pursuant to his employment agreement would be payable over time following such termination and would not be enhanced by reason of the merger. For purposes of calculating the amounts included in the table above, we have assumed that Mr. Sutherland’s employment will be terminated by the Company without cause immediately following the effective time of the merger and there is no dollar-for-dollar offset of his monthly severance payments.

(2)         Represents the value of unvested RSUs based on the merger consideration that would become fully vested following the effective time of the merger. For a more detailed discussion regarding the treatment of equity awards, see the section of this proxy statement entitled “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger—Treatment of Company Equity Awards.”

(3)         For purposes of this quantification, we have assumed that Mr. Sutherland’s employment has been terminated by the Company without cause, in which case Mr. Sutherland will receive monthly installments of $16,666.67 for a continuous period of 120 months beginning after Mr. Sutherland attains the age of 62 pursuant to the SERP in the event of a separation of service without cause. These payments would not begin until 2030 and would be paid over 10 years following Mr. Sutherland attaining the age of 62.

Represents the value of each named executive officer’s pro rata share of the balance of the unallocated shares of Company common stock and any other unallocated assets remaining in the ESOP’s suspense account as of the effective time of the merger based on the merger consideration. For purposes of calculating the amounts included in the table above, we assumed that there was no outstanding indebtedness to be repaid at the effective time of the merger. Accordingly, each named executive officer would receive the following shares of Company common stock, which, based on the merger consideration, would be merged, post-closing, with and into the Company’s 401(k) plan or that of a member of the controlled group: 8,372.1552 for Mr. Sutherland, 6,899.8744 for Mr. Smith and 7,086.7940 for Mr. Schmeichel.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences of the ‎merger to U.S. holders and non-U.S. holders (each, as defined below) of Company common stock ‎whose shares are exchanged for cash pursuant to the merger. This discussion is general in nature ‎and does not discuss all aspects of U.S. federal income taxation that may be relevant to a holder of ‎the shares of Company in light of their particular circumstances. This discussion is based on the ‎provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), applicable U.S. Treasury regulations promulgated under the Code, judicial ‎opinions and administrative rulings and published positions of the Internal Revenue Service, each ‎as in effect as of the date hereof. These authorities are subject to change, possibly on a retroactive ‎basis, and any such change could affect the accuracy of the statements and conclusions set forth in ‎this discussion. This discussion does not address any tax consequences arising under the Medicare ‎contribution tax on net investment income, nor does it address any tax considerations under state, ‎local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax. ‎This discussion is not binding on the Internal Revenue Service or the courts and, therefore, could ‎be subject to challenge, which could be sustained. We have not sought, and do not intend to seek, ‎any ruling from the Internal Revenue Service with respect to the merger, or the statements made ‎and the conclusions reached in the following discussion.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Company common stock that is:

For purposes of this discussion, a “non‑U.S. holder” is a beneficial owner of Company common stock, other than a partnership or other entity taxable as a partnership for U.S. federal income tax purposes, that is not a U.S. holder.

This discussion applies only to holders of shares of Company common stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that may be relevant to a holder in light of its particular circumstances, or that may apply to a holder that is subject to special treatment under the U.S. federal income tax laws (including, for example, insurance companies, controlled foreign corporations, passive foreign investment companies, dealers or brokers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting, holders subject to the alternative minimum tax, U.S. holders that have a functional currency other than the U.S. dollar, tax-exempt organizations, banks and certain other financial institutions, mutual funds, certain expatriates, partnerships, S corporations, or other pass-through entities or investors in partnerships or such other entities, holders who hold shares of Company common stock as part of a hedge, straddle, constructive sale or conversion transaction, holders who will hold, directly or indirectly, an equity interest in the surviving corporation, holders who acquired their shares of Company common stock through the exercise of employee stock options or other compensation arrangements and holders who own or have owned (directly, indirectly or constructively) five percent (5%) or more of the Company’s common stock (by vote or value)).

If a partnership (including for this purpose any entity or arrangement treated as a ‎partnership for U.S. federal income tax purposes) holds shares of Company common stock, the tax ‎treatment of a partner in such partnership will generally depend on the status of the partners and the ‎activities of the partners and the partnership. If you are a partnership (including any entity or ‎arrangement treated as a partnership for U.S. federal income tax purposes), or a partner thereof, ‎holding shares of Company common stock, you should consult your tax advisor regarding the tax ‎consequences of exchanging the Company common stock pursuant to the merger.‎

The following discussion is for general informational purposes only and is not a substitute for ‎careful tax planning and advice. Holders of Company common stock are urged to consult their ‎own tax advisors to determine the particular tax consequences to them of the merger, including ‎the applicability and effect of U.S. federal estate, gift and other non-income taxes, the ‎alternative minimum tax and any state, local, foreign or other tax laws‎.

Consequences to U.S. Holders

The receipt of cash by U.S. holders in exchange for shares of Company common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. holder who receives cash in exchange for shares of Company common stock pursuant to the merger will recognize gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received and (ii) the U.S. holder’s adjusted tax basis in such shares.

If a U.S. holder’s holding period in the shares of Company common stock surrendered in the merger is greater than one year as of the date of the merger, the gain or loss will be long-term capital gain or loss. Long-term capital gains of certain non‑corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of a capital loss recognized on the exchange is subject to limitations. If a U.S. holder acquired different blocks of Company common stock at different times and different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of Company common stock.

Consequences to Non‑U.S. Holders

A non‑U.S. holder who receives cash in exchange for shares of Company common stock pursuant to the merger ‎generally will not be subject to U.S. federal income taxation unless:

Any gain recognized by a non‑U.S. holder described in the first bullet above generally will be subject to U.S. federal income tax on a net income basis at regular graduated U.S. federal income tax rates in the same manner as if such holder were a “U.S. person” as defined under the Code. A non‑U.S. holder that is a corporation may also be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) on after-tax profits effectively connected with a U.S. trade or business to the extent that such after-tax profits are not reinvested and maintained in the U.S. business.

Gain described in the second bullet above generally will be subject to U.S. federal income tax at a flat 30% rate, but may be offset by certain U.S. source capital losses, if any, of the non‑U.S. holder‎, provided the non-U.S. holder has timely filed the applicable U.S. federal income tax returns with respect to report any such ‎losses.

Gain described in the third bullet point above generally will be subject to U.S. federal ‎income tax on a net income basis at regular graduated U.S. federal income tax rates in the same ‎manner as if such non-U.S. holder were a U.S. holder. In addition, in such case, U.S. federal ‎income tax may be required to be withheld at a rate of 15% of the amount realized upon such ‎disposition. We will be classified as a United States real property holding corporation generally if the fair ‎market value of our “United States real property interests” equals or exceeds 50% of the sum of the ‎fair market value of our worldwide real property interests plus our other assets used or held for use ‎in a trade or business, as determined for U.S. federal income tax purposes. We believe that we are not, ‎and do not anticipate that the Company will become, a “United States real property holding corporation” and that the common stock will not be considered “United States real property interests.” The Company is expected to provide certifications to Mutual Capital and the Merger Sub at or before the closing of the merger in support thereof.

Information Reporting and Backup Withholding

Payments made in exchange for shares of Company common stock pursuant to the merger may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 24%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption should complete and return Internal Revenue Service Form W‑9, certifying that such U.S. holder is a U.S. person, the taxpayer identification number provided is correct and such U.S. holder is not subject to backup withholding. In general, a non‑U.S. holder will not be subject to U.S. federal backup withholding and information reporting with respect to cash payments to the non‑U.S. holder pursuant to the merger if the non‑U.S. holder has provided an Internal Revenue Service Form W‑8BEN (or an Internal Revenue Service Form W‑8ECI if the non‑U.S. holder’s gain is effectively connected with the conduct of a U.S. trade or business).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, provided that such holder furnishes the required information to the Internal Revenue Service in a timely manner.

The following discussion if for general informational purposes only and is not a substitute for ‎careful tax planning and advice. Holders of Company common stock should consult their tax ‎advisors as to the specific tax consequences to them of the merger, including the applicability ‎and effect of U.S. federal estate, gift and other non-income taxes, the alternative minimum tax ‎and the effect of any federal, state, local, foreign or other tax laws‎.

Regulatory Approvals

Insurance Regulatory Approvals

The insurance laws and regulations of all fifty U.S. states and the District of Columbia generally require that before the acquisition of control of an insurance company may occur, either through the acquisition of or merger with the insurance company or a holding company of that insurance company, the acquiring party must obtain approval from the insurance regulator of the insurance company’s state of domicile. In addition, under the laws of certain states, an acquirer must obtain the approval of the state’s insurance regulator to acquire control of an insurance company that is commercially domiciled in that state. Generally, state statutes provide that control over a domestic insurer is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10% or more of the voting securities of the domestic insurer. Because a person acquiring 10% or more of our common stock would indirectly control the same percentage of the stock of our insurance subsidiaries, the insurance change of control laws would apply to the acquisition of Company common stock by Mutual Capital pursuant to the merger agreement.

Prior to granting approval of an application to acquire control of a domestic insurer, the state insurance commissioner will consider such factors as the financial strength of the applicant, the integrity and management of the applicant’s board of directors and executive officers, the acquirer’s plans for the future operations of the domestic insurer and any anti‑competitive results that may arise from the consummation of the acquisition of control. Mutual Capital has filed applications with the insurance departments of the State of Illinois and the Commonwealth of Pennsylvania with respect to the acquisition of control of Illinois Casualty.

Further, several U.S. state insurance laws require prior notification to state insurance regulatory authorities of an acquisition of control of a non‑domiciliary insurance company doing business in that state if the acquisition would result in specified levels of market concentration. While these prior notification statutes do not authorize the state insurance regulatory authorities to disapprove the acquisition of control, they authorize regulatory action in the affected state, including requiring the insurance company to cease and desist from doing certain types of business in the affected state or denying an application for a license to do business in the affected state, if particular conditions exist, such as the substantial lessening of competition in any line of business in such state.

Timing

Although Mutual Capital and the Company do not expect the relevant insurance regulatory authorities to raise any significant concerns in connection with their review of the merger, there is no assurance that Mutual Capital or the Company, as applicable, will obtain all required insurance regulatory approvals on a timely basis, if at all, or that these approvals will not include a restriction, limitation or condition which, in such case, would permit Mutual Capital to refuse to close the transactions contemplated by the merger agreement and consummate the merger.

Other

Other than the approvals and notifications described above, neither the Company nor Mutual Capital is aware of any material insurance regulatory approvals required to be obtained, or waiting periods required to expire, after the making of a filing. If the Company or Mutual Capital discover that other approvals or filings and waiting periods are necessary, they will seek to obtain or comply with them, although, as is the case with the regulatory approvals described above, there can be no assurance that they will be obtained on a timely basis, if at all. Mutual Capital and the Company are each required to use their respective reasonable best efforts to file all the necessary documentation and obtain all consents of third parties that are necessary to consummate the acquisition and to comply with the terms and conditions of all consents, approvals and authorizations of any third party or governmental entity.

Delisting and Deregistration of Company Common Stock

If the merger is completed, the Company common stock will be delisted from Nasdaq and deregistered under the Exchange Act. As such, we would no longer be required to file periodic reports with the SEC with respect to the Company common stock.

THE MERGER AGREEMENT

The following is a summary of the material provisions of the merger agreement, a copy of which is attached to this proxy statement as Annex A-1 and Annex A-2 and which is incorporated by reference into this proxy statement. This summary may not contain all of the information about the merger agreement that is important to you. We encourage you to read carefully the merger agreement in its entirety, as the rights and obligations of the parties thereto are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The following summary of the merger agreement, and the copy of the merger agreement attached hereto as Annex A-1 and Annex A-2 to this proxy statement, are intended to provide information regarding the terms of the merger agreement and are not intended to modify or supplement any factual disclosures about the Company in its periodic and current reports filed with the SEC. In particular, the merger agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company or its subsidiaries or affiliates. The merger agreement contains representations and warranties by the Company, Mutual Capital and Merger Sub that were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to qualifications and limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may apply contractual standards of materiality or material adverse effect that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Moreover, the description of the merger agreement below does not purport to describe all of the terms of such agreement and is qualified in its entirety by reference to the full text of such agreement, a copy of which is attached hereto as Annex A-1 and Annex A-2 to this proxy statement and which is incorporated herein by reference.

Additional information about the Company may be found elsewhere in this proxy statement and the Company’s other public filings. See section entitled “Where You Can Find Additional Information.”

Structure of the Merger; Articles of incorporation; Bylaws; Directors and Officers

At the effective time of the merger, Merger Sub, a wholly owned subsidiary of Mutual Capital, will merge with and into the Company and the separate corporate existence of Merger Sub will cease. The Company will be the surviving corporation in the merger. As a result of the merger, the Company will become a wholly owned subsidiary of Mutual Capital. Merger Sub was created solely for purposes of the merger and has no material assets or operations of its own.

At the effective time of the merger, the articles of incorporation and bylaws of the Company, as in effect immediately prior to the effective time of the merger will be amended and restated as of the effective time to be in the form (except with respect to the name of the Company) of the articles of incorporation and bylaws of Merger Sub, and as so amended will be the articles of incorporation and bylaws of the surviving corporation. Following the effective time of the merger, the directors and officers of the surviving corporation will be as set forth in the merger agreement. See the section of this proxy statement entitled “The Merger Agreement —Corporate Governance” below. Such directors and officers will hold office until their respective successors are duly elected or appointed and qualified, or their earlier death, resignation or removal in accordance with the articles of incorporation and bylaws of the surviving corporation.

Closing and Effective Time of the Merger

The closing of the merger will take place at 9:00 a.m. Central Time on the second business day after the satisfaction or waiver of all of the conditions described in the section of this proxy statement entitled “—Conditions of the Merger” beginning on page 68 (other than any condition that by its nature cannot be satisfied until the closing of the merger, but subject to satisfaction of any such condition), at the offices of Stevens & Lee, P.C., 620 Freedom Business Center Drive, Suite 200, King of Prussia, Pennsylvania, unless another date or place is agreed to in writing by the Company, Mutual Capital and Merger Sub.

The merger will become effective as of the date and time of the filing of the statement of merger with the Department of State of the Commonwealth of Pennsylvania, or such later time as specified in the statement of merger and as is agreed to by the Company and Mutual Capital.

Effect of the Merger on Capital Stock

The merger agreement provides that, at the effective time of the merger, each share of Company common stock issued and outstanding immediately before the effective time of the merger, other than shares held in the treasury of the Company, will be cancelled and extinguished and converted into the right to receive $23.50 in cash, without interest and less all appliable withholding taxes if any. Following the effective time of the merger, each holder of Company common stock will cease to have any rights with respect to such Company common stock, except for the right to receive the merger consideration therefor, without interest and less all appliable withholding taxes if any.

Each share of Company common stock held in the treasury of the Company will be cancelled and extinguished and no payment or other consideration will be made with respect to such shares.

Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately before the effective time of the merger will thereafter represent one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the surviving corporation.

Treatment of Company Equity Awards

Under the merger agreement, equity-based awards outstanding as of the effective time of the merger will be treated at the effective time of the merger as follows:

Restricted Stock Units. At the effective time of the merger, each RSU that is outstanding immediately prior to the effective time shall, automatically and without any required action on the part of the recipient thereof, vest in full (to the extent the corresponding RSU has not already vested prior to the effective time) and be canceled and converted into the right to receive from the surviving corporation a lump-sum amount in cash equal to the merger consideration which shall be paid to the recipient of such RSU in a cash lump-sum, less any required payroll and withholding taxes, upon the later of (a) the next regular payroll following the closing date of the merger and (b) by the date that is 15 calendar days after the effective time of the merger.

Prior to the effective time of the merger, the Board or the applicable committee thereof will adopt appropriate resolutions and take such other actions as are reasonably necessary or appropriate to provide that (x) the Company’s equity incentive plan and all awards issued thereunder will terminate as of the effective time, (y) the provisions in any other compensatory plan, program, arrangement or agreement providing for the issuance or grant of any other interest to employees or other service providers of the Company or its subsidiaries in respect of the equity of the Company shall be of no further force or effect and shall terminate as of the effective time, and (z) the awards issued under the Company’s equity incentive plan will be treated as set forth in the merger agreement.

ESOP. The Company shall, and shall cause Illinois Casualty to, take or cause to be taken all such actions as may be necessary to effect the actions set forth below relating to the ESOP prior to or simultaneous with the effective time of the merger, as applicable. Effective on the 5th business day before the effective time of the merger, the ESOP shall be amended to freeze the plan and convert the ESOP into a profit sharing plan (such date, the “ESOP Freeze Date”). No new participants shall be admitted on or after the ESOP Freeze Date. The Company shall, and shall cause the Illinois Casualty to, direct the ESOP trustee to repay all outstanding indebtedness of the ESOP (including any loan to the ESOP) by delivering a sufficient number of unallocated shares of the Company common stock to the Company at least 5 business days prior to the effective time of the merger, with each remitted share to be valued equal to the closing price of the Company common stock on the day immediately prior to the ESOP Freeze Date. After repayment of the outstanding indebtedness of the ESOP (including any loan to the ESOP) and the exchange of the shares of Company common stock for the merger consideration, the merger consideration received upon conversion of the balance of the unallocated shares and any other unallocated assets remaining in the ESOP’s suspense account after repayment of the loan to the ESOP and conversion of the shares of Company common stock into the merger consideration shall be allocated as earnings to the accounts of the ESOP participants who are employed as of the ESOP Freeze Date based on their account balances under the ESOP as of the ESOP Freeze Date. Post-closing, the surviving corporation shall take action to merge the ESOP with and into the surviving corporation’s 401(k) plan or that of a member of the controlled group. The Company, Illinois Casualty, and following the effective time of the merger, Mutual Capital, the surviving corporation and Illinois Casualty, will adopt such amendments to the ESOP to effect these applicable provisions of the merger agreement.

Payment; Surrender of Shares; Stock Transfer Books

Before the effective time of the merger, Merger Sub will designate a bank or trust company reasonably acceptable to the Company to act as paying agent (the “paying agent”) to receive the funds necessary to make payments under the merger agreement. At least two business days prior to the closing of the merger, Mutual Capital and Merger Sub, on the one hand, and the Company, on the other hand, shall confirm in writing to each other that they are ready, willing and able to effect the closing of the transactions contemplated by the merger agreement (the “closing confirmation”). At least one business day prior to the closing date of the merger, Mutual Capital or Merger Sub will deposit, or will cause to be deposited, into one or more escrow accounts (the “escrow accounts”) an amount equal to the aggregate merger consideration. At the closing of the merger, upon delivery of the closing confirmation, Mutual Capital will cause the escrow agent to transfer the funds held in the escrow accounts to a separate account of the paying agent established by the Company for the benefit of the holder of the Company common stock.

As soon as reasonably practicable after the effective time of the merger (but no later than three business days following the effective time), Mutual Capital will cause the paying agent to mail to each holder of record of certificates or book-entry shares whose shares of Company common stock were converted into the right to receive the merger consideration, a letter of transmittal and instructions on how to surrender certificates representing such Company common stock in exchange for the merger consideration. Each holder of certificates or book-entry shares may thereafter until the first anniversary of the effective time of the merger surrender such certificates or book-entry shares to the paying agent. Upon delivery of a properly completed letter of transmittal, duly executed and completed in accordance with the instructions thereto, and the surrender of certificates or book-entry shares on or before the first anniversary of the effective time of the merger, Merger Sub will cause the paying agent to pay the holder of such certificates or book-entry shares, in exchange therefor, cash in an amount equal to the merger consideration multiplied by the number of shares of Company common stock represented by such certificate or book-entry share. The merger consideration paid upon the surrender of certificates and book-entry shares in accordance with the merger agreement will be deemed to have been paid in full satisfaction of all rights pertaining to shares of the Company common stock previously represented by such certificates and book-entry shares.

If payment of the merger consideration in respect of cancelled shares of Company common stock is to be made to a person other than the person in whose name surrendered certificates are registered, it will be a condition to such payment that:

At the effective time of the merger, the stock transfer books of the Company will be closed and there will not be any further registration of transfers of any shares of Company common stock thereafter on the records of the Company. From and after the effective time of the merger, the holders of certificates and book-entry shares will cease to have any rights with respect to any such certificates and book-entry shares, except as otherwise provided for in the merger agreement or by applicable law. Each certificate or book-entry share representing Company common stock that is surrendered will be cancelled.

You should not send in your Company common stock certificates until you receive a letter of transmittal with instructions from the paying agent. Do not send Company common stock certificates with your proxy card.

Representations and Warranties

The merger agreement contains representations and warranties made by the Company, Mutual Capital and Merger Sub. The statements embodied in those representations and warranties were made for purposes of the merger agreement and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the merger agreement (including in the confidential disclosure letter delivered by the Company to Mutual Capital in connection therewith). In addition, some of those representations and warranties were made as of specified dates, may be subject to a contractual standard of materiality or material adverse effect different from that generally applicable to shareholders or may have been used for the purpose of allocating contractual risk between the parties to the merger agreement rather than establishing matters as facts.

The representations and warranties made by the Company (including, in certain cases, with respect to its subsidiaries) relate to, among other things, the following:

Many of the Company’s representations and warranties are qualified as to, among other things, “materiality” or “Material Adverse Effect.” For purposes of the merger agreement, “Material Adverse Effect” means a material adverse effect on (i) the ability of the Company to consummate the merger or (ii) the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole, except to the extent such material adverse effect under clause (ii) results from:

The representations and warranties made by Mutual Capital and Merger Sub to the Company are more limited and relate to, among other things, the following:

Certain of the representations and warranties of Mutual Capital and Merger Sub are qualified as to, among other things, “materiality” or certain events, changes, circumstances, effects, developments or state of facts that would reasonably be expected to have a material adverse effect on the ability of Mutual Capital or Merger Sub to satisfy its obligations under the merger agreement.

The representations and warranties contained in the merger agreement will terminate upon the earlier of the effective time of the merger or the termination of the merger agreement pursuant to its terms.

Covenants Related to the Conduct of Business

The Company has agreed to covenants in the merger agreement that affect the conduct of its business and that of its subsidiaries between the date of the merger agreement and the effective time of the merger (or the earlier termination of the merger agreement). In addition, subject to certain exceptions specified in the merger agreement, required by applicable law or as agreed to by the parties, unless Mutual Capital gives its written consent, the Company and each of its subsidiaries are restricted from, among other things:

No Solicitation by the Company

The Company has agreed under the merger agreement, subject to certain exceptions described below, from and after the date of the merger agreement, to cease any discussions or negotiations with any parties that may then be ongoing with respect to a takeover proposal and to:

Additionally, from and after the date of the merger agreement, subject to certain exceptions, the Company will not, nor will it permit any of its subsidiaries to, nor will it authorize or permit any of its or their representatives to:

In the event the Company receives a “superior proposal” or a proposal which is reasonably expected to lead to a superior proposal that was made prior to the receipt of shareholder approval of the merger agreement and in circumstances not involving a breach of the merger agreement, the Board determines in good faith, after considering applicable provisions of state law and after consultation with outside counsel, that a failure to do so would be inconsistent with its fiduciary duties under applicable law, the Company may in response to such takeover proposal:

From and after the date of the merger agreement, under the merger agreement, the Company has agreed not to waive or fail to enforce any provision of any confidentiality or standstill agreement to which it is a party relating to a potential or actual takeover proposal (unless the Board determines in good faith, after considering applicable provisions of applicable law and after consultation with outside counsel, that enforcing or not waiving such provision would otherwise prevent a takeover proposal from being made to the Company).

In addition, except as described below, neither the Board nor any committee thereof may:

Notwithstanding the restrictions described above, at any time prior to the receipt of shareholder approval of the merger agreement, in the event the Board determines in good faith, in response to a superior proposal made in circumstances not involving a breach of the merger agreement, after considering applicable provisions of applicable law and after consultation with outside counsel, that the failure to do so would be inconsistent with its fiduciary duties under applicable law, the Board may:

Such actions may only be taken if, (i) after the third business day following Mutual Capital’s receipt of prior written notice that the Board has received a superior proposal and specifying the material terms and conditions of the superior proposal, identifying the person making the superior proposal and providing notice of the action the Board has determined to take; (ii) if the Company has negotiated in good faith with Mutual Capital during such three business days’ notice period, to the extent Mutual Capital requests to negotiate, to enable Mutual Capital to propose revisions to the terms of the merger agreement; (iii) if, following the end of such three business days’ notice period, the Board considered in good faith any written revisions to the terms of the merger agreement proposed by Mutual Capital, and determined in good faith (after consultation with financial advisors and receiving the advice of outside counsel) that the superior proposal would nevertheless continue to constitute a superior proposal if the revisions proposed by Mutual Capital were to be given effect; and (iv) if in the event of any change to any of the financial terms (including the form, amount and timing of payment of consideration) or any other material terms of such superior proposal, the Company has delivered to Mutual Capital an additional three business days’ notice and a new notice period during which time the Company will be required to comply with these requirements anew.

Under the merger agreement the Company has agreed to promptly (and in any event within 24 hours) advise Mutual Capital orally and in writing of any request for confidential information in connection with a takeover proposal or of any takeover proposal, the material terms and conditions thereof and the identity of such person making such request or takeover proposal and to keep Mutual Capital promptly advised of all significant developments which could lead the Board to withdrawing or modifying its recommendation of the merger agreement.

Under the merger agreement, “takeover proposal” means any inquiry, proposal or offer from any person or group of persons (other than Mutual Capital and its subsidiaries, affiliates and representatives) relating to (i) any direct or indirect acquisition or purchase, in a single transaction or a series of related transactions, of (A) 20% or more of the consolidated assets (including equity interests in subsidiaries) of the Company and its subsidiaries, taken as a whole, or (B) equity securities of the Company which together with any other equity securities of the Company beneficially owned by such person or group of persons would equal 20% or more of any class of equity securities of the Company; (ii) any tender offer or exchange offer that, if consummated, would result in any person or group of persons beneficially owning 20% or more of any class of equity securities of the Company; or (iii) any merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving (A) the Company or (B) subsidiaries of the Company representing 20% or more of the consolidated revenues or earnings of the Company and its subsidiaries, taken as a whole, other than the transactions contemplated by the merger agreement.

Under the merger agreement, “superior proposal” means a bona fide written takeover proposal (with all references to “20%” in the definition of takeover proposal being deemed to be references to “100%”) that was not the result of a violation of the non‑solicitation provisions and which the Board determines in good faith (after consultation with financial advisors and receiving the advice of outside counsel) (i) is in the best interests of the Company; (ii) is more favorable to the Company’s shareholders from a financial point of view than the merger; (iii) is no less favorable to the shareholders of the Company with respect to the certainty and timing of closing and payment than the merger; and (iv) for which the third party has demonstrated that the financing for such offer, if any, is fully committed.

Other Covenants and Agreements

Shareholder Meeting

The Company has agreed to, as soon as practicable after the date of the merger agreement, take all actions in accordance with applicable law, its constituent documents and the rules of Nasdaq, duly call, give notice of, convene and hold a special meeting of the Company’s shareholders for the purpose of considering and taking action upon shareholder approval of the merger agreement, which meeting is the subject of this proxy statement.

Efforts to Complete the Merger

Prior to the closing of the merger, the Company, Mutual Capital and Merger Sub have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, all things necessary, proper or advisable under any applicable laws to consummate and make effective in the most expeditious manner possible the transactions contemplated by the merger agreement

In addition, the Company and Mutual Capital have agreed to use reasonable best efforts to:

Notwithstanding anything to the contrary in the merger agreement, the parties agreed that in no event will Mutual Capital or its subsidiaries (including Merger Sub and, after the closing of the merger, the surviving corporation and its subsidiaries) or affiliates be required to agree to, or the Company be permitted to agree to, (i) any prohibition of or limitation on its or their ownership (or any limitation that would affect its or their operation) of any portion of their respective businesses or assets, including after giving effect to the transactions contemplated by the merger agreement, (ii) divest, hold separate or otherwise dispose of any portion of its or their respective businesses or assets, including after giving effect to the transactions contemplated by the merger agreement, (iii) any limitation on its or their ability to effect the merger, or the ability of the Company (or Merger Sub) or its or their respective subsidiaries to acquire, hold or exercise full rights of ownership of any capital stock of the Company or any subsidiary of the Company, (iv) would require Mutual Capital or any of its affiliates to contribute additional capital and surplus to Illinois Casualty in an amount materially in excess of that which would be required to meet the capital targets projected in the financial projections and plan of operations submitted to the applicable insurance regulator in the Form A or to enter into or provide any keep-well, capital maintenance agreement or similar arrangement that would obligate Mutual Capital or any of its affiliates to maintain capital or surplus of Illinois Casualty in an amount materially in excess of that which would be required to meet the aforementioned capital targets, in each case so long as such capital targets projected in such financial projections or plan of operations have a risk based capital in all quarters of at least the reasonable amount expected to be included in similarly situated companies, (v) impose any dividend limitation other than those provided under applicable law, (vi) would materially and adversely affect the economic benefits reasonably anticipated by Mutual Capital and its affiliates to be derived under the merger agreement or in connection with the transactions contemplated hereby, or (vii) any other limitation on its or their ability to effectively control their respective businesses or any limitation that would affect its or their ability to control their respective operations, including after giving effect to the merger. Nothing in this paragraph shall require any party to take or agree to take any such action with respect to its business or operations pursuant to this paragraph unless the effectiveness of such agreement or action is conditioned upon the closing of the merger.

Indemnification

Under the merger agreement, from and after the effective time of the merger, Mutual Capital has agreed that it will, and will cause the surviving corporation to, subject to certain limitations, indemnify, defend and hold harmless each person who is now, or has been at any time prior to the date of the merger agreement or who becomes such prior to the effective time of the merger, an officer or director of the Company or any of its subsidiaries (“indemnified parties”), against (i) any and all losses, claims, damages, costs, expenses, fines, liabilities or judgments or amounts incurred by such person in connection with any claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of the fact that such person is or was a director or officer of the Company or any of its subsidiaries and (ii) all of such liabilities based in whole or in part on, or pertaining to the merger agreement or the transactions contemplated by, the merger agreement.

From the effective time of the merger, the articles of incorporation and bylaws of the surviving corporation will contain the provisions with respect to indemnification and exculpation set forth in the articles of incorporation and amended and restated bylaws of the Company, which provisions will not be amended, modified or otherwise repealed for a period of six years after the effective time of the merger in any manner that would diminish or adversely affect the rights thereunder of any indemnified party as of the effective time, unless such modification is required after the effective time by law and then only to the minimum extent required by such law.

Employee Matters

The merger agreement provides that, from and after the effective time of the merger, Mutual Capital will cause the surviving corporation or another subsidiary of the surviving corporation to (i) agree to retain each employee of the Company and its subsidiaries who remain employed at the effective time (collectively, the “continuing employees”) in a comparable position that is no less favorable to such continuing employee by the Company or its subsidiaries immediately prior to the effective time and (ii) provide for each continuing employee (A) at least the same base salary and wage rate, (B) short- and long-term target incentive compensation opportunities that are no less favorable in the aggregate than those provided to each such continuing employee immediately prior to the effective time (provided that Mutual Capital shall not be obligated to provide such incentives in the form of equity or equity-based awards) and (C) employee benefits (excluding equity and equity-based awards) which are substantially comparable in the aggregate (including with respect to the proportion of employee cost) to those provided to such continuing employee immediately prior to the effective time.

In addition, the merger agreement provides that Mutual Capital will honor, or will cause the surviving corporation to honor, all Company benefit plans and compensation arrangements and agreements in accordance with their terms, provided that Mutual Capital or the surviving corporation may amend or terminate any Company benefit plan or compensation arrangement in accordance with its terms and applicable law (including obtaining any required consent). Notwithstanding anything in the merger agreement to the contrary, the surviving corporation and its subsidiaries will not provide any form of equity-based compensation after the effective time of the merger.

For purposes of all employee benefit plans and other employment agreements, arrangements and policies of the surviving corporation under which an employee’s benefits depend on length of service, credit will be given to current employees of the Company and its subsidiaries for service with the Company or any of its subsidiaries or predecessors prior to the effective time of the merger, provided that such crediting of service does not result in duplication of benefits and that such service would have been recognized under the corresponding Company benefit or compensation arrangement.

Increase to Loss Reserves

The Company shall cause Illinois Casualty to record a $2.0 million addition to its loss reserves immediately prior to the closing, provided that the Company’s obligation to perform this covenant shall only arise upon Mutual Capital’s written notification to the Company that it is prepared to deliver the officer’s certificate described in the last bullet of the third paragraph in the section of this proxy statement entitled “—Conditions to the Merger” below.

Corporate Governance

Following the effective time of the merger, (i) the directors and officers of the surviving corporation will be as determined by Mutual Capital, except that Mr. Sutherland will serve as President and Chief Executive Officer of the surviving corporation, until his successor is duly elected or appointed and qualified or until his earlier death, resignation or removal in accordance with the articles of incorporation and bylaws of the surviving corporation, and (ii) the board of directors of Illinois Casualty shall consist of nine directors, designated by Mutual Capital, including (a) two non‑employee directors, each of whom are to be initially proposed by the Company and are mutually acceptable to both the Company and Mutual Capital, and (b) Mr. Sutherland, subject only to any applicable regulatory approvals, with each such director to hold office until his or her successor having been duly elected and qualified, subject to his or her earlier death, resignation, disqualification or removal. The two non-employee directors described above are expected to be John Klockau and Gerald Pepping.

Other Covenants

The merger agreement contains additional agreements between the Company and Mutual Capital relating to, among other things:

Conditions to the Merger

The obligations of the Company, Mutual Capital and Merger Sub to effect the merger is subject to the satisfaction or waiver by the Company, Mutual Capital and Merger Sub (except for the condition in the second bullet below which may be waived by Mutual Capital and Merger Sub) on or before the closing date of the merger of the following conditions:

The obligation of Mutual Capital and Merger Sub to effect the merger is further subject to the satisfaction, or waiver by Mutual Capital and Merger Sub, on or prior to the closing date of the merger, of the following conditions:

The obligation of the Company to effect the merger is further subject to the satisfaction, or waiver by the Company, on or prior to the closing date of the merger, of the following conditions:

None of Mutual Capital nor Merger Sub nor the Company can provide assurance that all of the conditions precedent to the merger will be satisfied or waived by the party permitted to do so.

Termination

The Company, Mutual Capital and Merger Sub may mutually agree in writing, at any time prior to the effective time of the merger, to terminate the merger agreement and abandon the merger. Also, either Mutual Capital or the Company may terminate the merger agreement and abandon the merger without the consent of the other, at any time prior to the effective time of the merger if:

Mutual Capital can terminate the merger agreement prior to the effective time of the merger if:

The Company can terminate the merger agreement:

In the event that after the date of the merger agreement and prior to the termination of the merger agreement, the Company or senior management of the Company shall have received or there shall have been publicly announced a bona fide takeover proposal that has not been withdrawn or abandoned prior to such termination and:

Also, in the event that the merger agreement is terminated either:

the Company shall, within two business days following such termination, pay Mutual Capital a termination fee equal to $2.5 million by wire transfer of same day funds. 

Amendment and Waivers

Subject to applicable law, the merger agreement may be amended by the parties thereto by action taken or authorized by or on behalf of their respective Boards of Directors, at any time prior to the closing date, whether before or after approval of the merger agreement by the shareholders of the Company and Merger Sub; provided that the merger agreement may not be amended except by an instrument in writing signed by the parties to the merger agreement. At any time prior to the effective time of the merger, any party to the merger agreement may (i) extend the time for the performance of any of the obligations or other acts of the other parties to the merger agreement, (ii) waive any inaccuracies in the representations and warranties by the other party contained in the merger agreement or in any document delivered pursuant thereto, and (iii) subject to the requirements of applicable law, waive compliance by the other party with any of the agreements or conditions contained in the merger agreement.

On October 11, 2024, following receipt of the requisite board approvals, the Company, Mutual Capital and the Merger Sub entered into that certain Amendment to Merger Agreement to (i) clarify the voting threshold required for approval of the merger and (ii) to extend the Outside Date (as defined in the merger agreement) from October 8, 2024 to December 31, 2024.

Expenses

All fees, costs and expenses (including all legal, accounting, broker, finder or investment banker fees) incurred in connection with the merger agreement and merger will be paid by the party incurring such fees, costs and expenses. However, if the Company fails promptly to pay any termination fee to Mutual Capital due pursuant to the merger agreement, the Company shall also pay any costs and expenses (including reasonable legal fees and expenses) incurred by Mutual Capital in connection with any action to enforce merger agreement for such amount against the Company.

Specific Performance

The parties are entitled to an injunction or any other appropriate form of specific performance or equitable relief to prevent breaches or threatened breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement, in addition to any other remedy to which they are entitled at law or in equity.

Governing Law and Jurisdiction; Waiver of Jury Trial

The merger agreement is governed by Pennsylvania law. Each party to the merger agreement has consented to submit to the jurisdiction of any federal or state court sitting in Philadelphia, Pennsylvania. In addition, each party has irrevocably waived any right to a trial by jury in respect of any litigation arising out of or relating to the merger agreement or the transactions contemplated thereby.

VOTING AGREEMENTS

As an inducement to Mutual Capital and Merger Sub entering into the merger agreement, on June 8, 2024, (a) R. Kevin Clinton (individually and through family trusts), (b) James Dingman, (c) Joel Heriford, (d) John Klockau, (e) Gerald Pepping, (f) Daniel Portes, (g) Norman Schmeichel, (h) Christine Schmitt, (i) Mark Schwab, (j) Michael Smith, (k) Kathleen Springer, (l) Julia Suiter, and (m) Arron Sutherland, each a director or executive officer of the Company as of the date of such agreement (collectively, the “Shareholders”), who collectively beneficially own shares representing approximately 26% of the shares of Company common stock issued and outstanding as of the record date, entered into Voting Agreements with Mutual Capital and Merger Sub (collectively, the “Voting Agreements”), pursuant to which the Shareholders have agreed to, among other things, vote their shares at any meeting of the shareholders of the Company however called (or any action by written consent in lieu of a meeting) or any adjournment or postponement thereof prior to December 31, 2024 (i) in favor of (a) the approval and adoption of the merger agreement and (b) the approval of any proposal to adjourn or postpone the special meeting, (ii) against any action or agreement that would constitute, or could reasonably be expected to result in, a breach of any representation, warranty, covenant, agreement or other obligation of the Company in the merger agreement, (iii) against any takeover proposal or any other proposal made, directly or indirectly, in opposition to the adoption of the merger agreement or otherwise inconsistent with the merger, and (iv) against any agreement, amendment to the Company’s organizational documents or other action that is intended or could reasonably be expected to prevent, impede, interfere with, delay, postpone or discourage the consummation of the merger, subject to the terms and conditions set forth in the Voting Agreements. In addition, subject to certain conditions set forth in the Voting Agreements, each Shareholder appointed Mutual Capital and its designees as the Shareholder’s proxy and attorney-in-fact (with full power of substitution) to vote all the shares of Company common stock beneficially owned by such Shareholder at any meeting of shareholders of the Company however called or any adjournment or postponement thereof prior to December 31, 2024 in favor or against of the actions described above. In August 2024, Mr. Clinton passed away. The form of the Voting Agreements is attached to this proxy statement as Annex C and is incorporated herein by reference.

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER‑RELATED COMPENSATION

(PROPOSAL 2)

As required by Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, the Company is required to submit a proposal to the Company’s shareholders for an advisory (non‑binding) vote to approve the payment by the Company of certain compensation to the named executive officers of the Company that is based on or otherwise related to the merger. This proposal is commonly known as “say-on-golden parachutes,” and we refer to it as the named executive officer merger-related compensation proposal. This compensation is summarized in the Golden Parachute Compensation table under “The Merger—Interests of the Company’s Directors and Executive Officers in the Merger,” including the footnotes to that table and the related narrative discussion.

The Board encourages you to review carefully the named executive officer merger-related compensation information disclosed in this proxy statement.

The Board unanimously recommends that the Company’s shareholders approve the following resolution:

“RESOLVED, that the shareholders of Company hereby approve, on an advisory (non‑binding) basis, the compensation that may be paid or become payable to the named executive officers of the Company that is based on or otherwise related to the merger as disclosed pursuant to Item 402(t) of Regulation S‑K in the Golden Parachute Compensation table, the footnotes to that table and the related narrative discussion.”

The vote on the named executive officer merger-related compensation proposal is a vote separate and apart from the vote on the proposal to approve and adopt the merger agreement. Accordingly, you may vote to approve and adopt the merger agreement and vote not to approve the named executive officer merger-related compensation proposal and vice versa. Because the vote on the named executive officer merger-related compensation proposal is advisory only, it will not be binding on either the Company or Mutual Capital. Accordingly, if the merger agreement and merger are approved and adopted and the merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the advisory (non‑binding) vote of the Company’s shareholders.

The above resolution approving the merger-related compensation of the Company’s named executive officers on an advisory basis will require the affirmative vote of the holders of a majority of the votes cast, virtually or represented by proxy, at the special meeting at which a quorum is present.

The Board unanimously recommends a vote “FOR” the named executive officer merger-related compensation proposal.

VOTE ON ADJOURNMENT

(PROPOSAL 3)

The Company’s shareholders are being asked to approve a proposal that will give the Company authority to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies in favor of the proposal to approve and adopt the merger agreement, if there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement. If this adjournment proposal is approved, the special meeting could be adjourned by the Board to any date. In addition, regardless of whether a quorum is present, the chairperson of the special meeting has the power under the Company’s bylaws to adjourn the special meeting from time to time. Furthermore, the Board could postpone the special meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons. If the special meeting is adjourned for the purpose of soliciting additional proxies, shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you sign, date and return a proxy and do not indicate how you wish to vote on any proposal, or if you sign, date and return a proxy and you indicate that you wish to vote in favor of the proposal to approve and adopt the merger agreement but do not indicate a choice on the adjournment proposal, your shares of common stock will be voted in favor of the adjournment proposal. The Company does not intend to call a vote on this proposal if Proposal 1 has been approved at the special meeting.

The Board unanimously recommends a vote “FOR” the adjournment proposal.

MARKET PRICES AND DIVIDEND DATA

The Company common stock is traded on Nasdaq under the symbol “ICCH.” As of September 30, 2024, there were 3,138,580 shares of the Company common stock outstanding, held by 129 shareholders of record. This number does not include shareholders for whom shares are held in “nominee” or “street” name. While we are unable to estimate the actual number of beneficial holders of the Company common stock, we believe the number of beneficial holders is substantially higher than the number of holders of record of shares of the Company common stock.

The closing price of the Company common stock on Nasdaq on June 7, 2024, the last trading day prior to the public announcement of the Merger Agreement, was $16.00 per share. On October 24, 2024, the latest practicable trading day before the printing and mailing of this proxy statement, the closing price of the Company common stock on Nasdaq was $23.39 per share. You are encouraged to obtain current market quotations for the Company common stock. Following the merger, there will be no further market for the Company common stock, which will be delisted from Nasdaq and deregistered under the Exchange Act.

Dividends

Under the terms of the merger agreement, from the date of the merger agreement until the effective time or the earlier termination of the merger agreement, we may not declare or pay dividends to our common shareholders without Mutual Capital’s written consent. We have not historically paid any dividends on the Company common stock.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934 (the “Exchange Act”), as of September 30, 2024, the only persons known by us to be beneficial owners of five percent or more of the outstanding shares of the Company common stock were as follows:

Directors and Executive Officers

The following is information regarding beneficial ownership of the Company common stock by each named executive officer, continuing directors, and other executive officers of the Company, including as a group, as of September 30, 2024.

*Less than 1% of Class.

FUTURE SHAREHOLDER PROPOSALS

The Company does not currently expect to hold an annual meeting of shareholders in 2025 (the “2025 Annual Meeting”) because it will not be a public company after the merger is completed. However, if the merger is not completed, the Company’s shareholders will continue to be entitled to attend and participate in the Company’s annual meeting of shareholders, and the Company will hold the 2025 Annual Meeting, in which case the Company will provide notice of or otherwise publicly disclose the date on which the 2025 Annual Meeting will be held. If the 2025 Annual Meeting is held, shareholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for consideration at the 2025 Annual Meeting (“2025 Annual Proxy Statement”) in accordance with Rule 14a-8 under the Exchange Act and the Company’s bylaws, as described below.

Shareholders may present proper proposals for inclusion in the 2025 Annual Proxy Statement by submitting their proposals in writing to the Company in a timely manner. As described in the Company’s annual proxy statement for the 2024 annual meeting of shareholders filed with the SEC on May 1, 2024, the Company’s shareholders have the opportunity to submit proper proposals for inclusion in the 2025 Annual Proxy Statement and for consideration at the 2025 Annual Meeting by submitting their proposals to ICC Holdings, Inc. at 225 20th Street, Rock Island, Illinois 61201, Attn: Secretary, no later than January 1, 2025 and otherwise complying with the requirements of Rule 14a-8 of the Exchange Act.

In accordance with the Company’s bylaws, a shareholder who desires to propose a matter for consideration at an annual meeting of shareholders, even if the proposal is not submitted by the deadline for inclusion in our proxy materials, must comply with the procedures specified in the Company’s bylaws, including providing notice thereof in writing, delivered or mailed by first-class United States mail, postage prepaid, to the Secretary of the Company, not less than 60 days nor more than 90 days prior to the anniversary date of the previous year’s annual meeting. For the 2025 Annual Meeting of Shareholders, this period will begin on March 16, 2025, and end on April 15, 2025.

In accordance with the Company’s bylaws, a shareholder who desires to nominate candidates for election to the Board must comply with the proceeding specified in the bylaws, including providing proper notice of the nomination in writing, delivered, or mailed by first-class United States mail, postage prepaid, to the Secretary of the Company not less than 60 days nor more than 90 days prior to the anniversary date of the previous year’s annual meeting. For the 2025 Annual Meeting of Shareholders, this period will begin on March 16, 2025, and end on April 15, 2025.

If the shareholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange Act of 1934, as amended, proxy holders may exercise discretionary voting authority under proxies that we solicit to vote in accordance with their best judgment on any such shareholder proposal or nomination.

OTHER BUSINESS

The sole business that may be considered at the special meeting are the matters set forth in the Notice of Special Meeting accompanying this proxy statement.

MULTIPLE SHAREHOLDERS SHARING ONE ADDRESS

In accordance with Rule 14a-3(e)(1) under the Exchange Act, one proxy statement will be delivered to two or more shareholders who share an address, unless the Company received instructions to the contrary from any shareholder at that address. If, in the future, any shareholder wishes to receive a separate proxy statement, a separate copy may be obtained, without charge, upon written or oral request to the office of the Company’s Corporate Secretary, ICC Holdings, Inc., 225 20th Street, Rock Island, Illinois 61201, telephone number (309) 793‑1700. Eligible shareholders of record who receive multiple copies of the proxy statement can request householding by contacting the Company in the same manner. Shareholders who own shares through a bank, broker or other nominee can request householding by contacting the nominee. The Company hereby undertakes to deliver promptly, upon written or oral request, a separate copy of the proxy statement to a shareholder at a shared address to which a single copy of the document was delivered.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

The SEC maintains a website that contains reports, proxies and information statements and other information regarding us and other issuers that file electronically with the SEC at www.sec.gov. Our proxy statements, annual reports on Form 10‑K, quarterly reports on Form 10‑Q and current reports on Form 8‑K, as well as any amendments to those reports, are available free of charge through the SEC’s website.

The Company will make available a copy of its public reports, without charge, on its website at ir.iccholdingsinc.com as soon as reasonably practicable after the Company files the reports electronically with the SEC. In addition, you may obtain a copy of the reports, without charge, by contacting the Company at the address and phone number set forth below. Each such request must set forth a good faith representation that, as of the record date, the person making the request was a beneficial owner of Company common stock entitled to vote at the special meeting. In order to ensure timely delivery of such documents prior to the special meeting, any such request should be made by November 19, 2024 to receive them before the special meeting. A copy of any exhibit to a filing may be obtained upon request by a shareholder (for a fee limited to the Company’s reasonable expenses in furnishing the exhibit).

ICC Holdings, Inc.
225 20th Street
Rock Island, Illinois 61201
Attention: Investor Relations
309-732-0105

The SEC allows us to “incorporate by reference” into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information. Information in documents that is deemed, in accordance with SEC rules, to be furnished and not filed will not be deemed to be incorporated by reference into this proxy statement. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement, and prior to the date of the special meeting:

The Company hereby undertakes to provide, without charge, to you, upon your written or oral request and by first class mail or other equally prompt means within one business day of receipt of such request, a copy of any and all of the information that has been incorporated by reference in this proxy statement (not including exhibits to the information that is incorporated by reference unless such exhibits are specifically incorporated by reference into the information that this proxy statement incorporates). This includes information contained in documents filed subsequent to the date on which definitive copies of this proxy statement are sent or given to you, up to the date of responding to the request.

No persons have been authorized to give any information or to make any representations other than those contained in this proxy statement, and, if given or made, such information or representations must not be relied upon as having been authorized by us or any other person. This proxy statement is dated October 25, 2024. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date, and the mailing of this proxy statement to shareholders does not and will not create any implication to the contrary.

Annex A-1

Execution Copy

AGREEMENT AND PLAN OF MERGER

by and among

MUTUAL CAPITAL HOLDINGS, INC.,

MUTUAL CAPITAL MERGER SUB, INC.

and

ICC HOLDINGS, INC.

dated as of

June 8, 2024

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