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• Sending a written notice, including by facsimile or electronic mail, to the Secretary of theCompany that is delivered before the Special Meeting to:Harleysville Group Inc.355 Maple AvenueHarleysville, Pennsylvania 19438Facsimile: (215) 256-5631Attention: Robert A. KauffmanEmail: rkauffman@harleysvillegroup.com• Attending the Special Meeting and voting in person. If your shares are held in the name of abank, broker or other holder of record, you must obtain a proxy, executed in your favor, fromthe institution that holds your shares to be able to vote at the Special Meeting.Q. If my broker or bank holds my shares in ‘‘street name,’’ will my broker or bank vote my sharesfor me?A. Your broker or bank will not be able to vote your shares without instructions from you. Youshould instruct your broker or bank to vote your shares following the procedure provided by yourbroker or bank. Without instructions, your shares will not be voted, which will have the same effectas if you voted ‘‘AGAINST’’ the proposal to adopt the Merger Agreement.Q. Will I have the right to have my shares appraised if I dissent from the Merger?A. Yes, you will have appraisal rights. If you wish to exercise your right to an appraisal as a dissentingstockholder, you must not vote in favor of the proposal to adopt the Merger Agreement, and youmust strictly follow the other requirements of Delaware law pertaining to appraisal rights. Asummary describing the requirements you must meet in order to exercise your right to an appraisalis in the section entitled ‘‘The Merger—Appraisal Rights’’ and Appendix C to this proxy statement.Q. When is the Merger expected to be completed and what are the material conditions to completion?A. We currently expect to complete the Merger in the first half of 2012, but we cannot be certainwhen or if the conditions to the Merger will be satisfied or, to the extent permitted, waived. TheMerger cannot be completed until a number of conditions are satisfied, including: adoption of theMerger Agreement by the Company’s stockholders at the Special Meeting; adoption of the MergerAgreement by the respective members of Harleysville Mutual and Nationwide Mutual; approval ofthe Parent Merger by the Superintendent of Insurance of the State of Ohio, the Commissioner ofInsurance of the Commonwealth of Pennsylvania, and the Attorney General of the Commonwealthof Pennsylvania; and no action shall have been instituted by any governmental entity, including theU.S. Department of Justice or the U.S. Federal Trade Commission, challenging or seeking toenjoin the consummation of the Mergers.Q. Should I send in my share certificates now?A. No. Shortly after the Merger is completed, you will receive a letter of transmittal with instructionsinforming you how to send in your share certificates to the exchange agent in order to receive yourcash payment. You should use the letter of transmittal to exchange share certificates for the cashpayment to which you are entitled as a result of the Merger. PLEASE DO NOT SEND INSHARE CERTIFICATES WITH YOUR PROXY.16
Q: What happens if the Merger is not completed?A: If the Merger is not completed for any reason, stockholders will not receive any payment for theirshares in connection with the Merger. Instead, unless and until we consummate anothertransaction similar to the Merger, we will remain a public company and shares of the Company’scommon stock will continue to be listed and traded on NASDAQ and registered under theExchange Act. Under specified circumstances, we may be required to pay Nationwide Mutual atermination fee and/or reimburse Nationwide Mutual for certain of its out-of-pocket expenses asdescribed in the section entitled ‘‘The Merger Agreement—Termination Fee.’’Q. Will I owe taxes as a result of the Merger?A. Yes, if you recognize taxable gain. The Merger will be a taxable transaction for U.S. federalincome tax purposes to U.S. holders of shares of the Company’s common stock. As a result, to theextent you recognize taxable gain, the cash you receive in the Merger in exchange for your sharesof the Company’s common stock will be subject to U.S. federal income tax and also may be taxedunder applicable state, local and foreign income and other tax laws. In general, you will recognizegain or loss equal to the difference between the amount of cash you receive in the Merger and theaggregate adjusted tax basis of your shares of the Company’s common stock. Refer to the sectionentitled ‘‘The Merger—Material U.S. Federal Income Tax Consequences’’ in this proxy statement for amore detailed explanation of the tax consequences of the Merger. You are urged to consult yourown tax advisor to determine the particular tax consequences to you (including the application andeffect of any state, local or foreign income and other tax laws) of the receipt of cash in exchangefor shares of the Company’s common stock pursuant to the Merger.Q. Who can help answer my other questions?A. If you need assistance in submitting your proxy or voting your shares or need additional copies ofthis proxy statement or the enclosed proxy card, you should contact Mark R. Cummins, ExecutiveVice President, Chief Investment Officer and Treasurer, at (215) 256-5000. If your broker holdsyour shares, you should also call your broker for additional information.Q. Where can I find more information about the Company?A. We file reports, proxy statements and other information with the SEC. The filings are available tothe public at the SEC’s website, http://www.sec.gov. Our website,http://www.harleysvillegroup.com/fin/fin_12.html, has copies of these filings as well. Information onour website is not incorporated by reference in this proxy statement. Our shares of common stockare listed on NASDAQ under the symbol ‘‘HGIC’’ and you may inspect our SEC filings at theSEC’s public reference facilities. For a more detailed description of the information available,please see the section entitled ‘‘Where You Can Obtain Additional Information’’ in this proxystatement.17
Page 2: Harleysville Group Inc. Stockholder
Page 5 and 6: TABLE OF CONTENTSSUMMARY TERM SHEET
Page 7 and 8: SUMMARY TERM SHEETExcept as otherwi
Page 9 and 10: February 29, 2012, there were 27,27
Page 11 and 12: non-binding advisory basis, the gol
Page 13 and 14: Opinion of Keefe, Bruyette & Woods,
Page 15 and 16: Governmental and Regulatory Approva
Page 17 and 18: QUESTIONS AND ANSWERS ABOUT THE SPE
Page 19 and 20: Q. Is any other vote required befor
Page 21: not apply to the proposal to approv
Page 25 and 26: We undertake no obligation to publi
Page 27 and 28: eturn your proxy card. If you submi
Page 29 and 30: Stockholder Voting AgreementIn conn
Page 31 and 32: Harleysville Mutual and their respe
Page 33 and 34: confidential discussions with other
Page 35 and 36: synergies between the companies and
Page 37 and 38: Mutual. At the end of the call, Cre
Page 39 and 40: advisors. He also indicated that Ha
Page 41 and 42: as to the fairness of the considera
Page 43 and 44: stockholders. Credit Suisse then re
Page 45 and 46: In addition, on September 28, 2011,
Page 47 and 48: closing of the Mergers, including t
Page 49 and 50: The foregoing discussion of factors
Page 51 and 52: Management Financial Projections fo
Page 53 and 54: did not independently verify the ac
Page 55 and 56: Selected Publicly Traded Companies
Page 57 and 58: most recent quarter-end prior to th
Page 59 and 60: Historical Premiums Paid AnalysisKB
Page 61 and 62: ordinary income tax rates in effect
Page 63 and 64: Trade Commission under the HSR Act
Page 65 and 66: The following table identifies the
Page 67 and 68: stock, the aggregate number of shar
Page 69 and 70: directors’ and officers’ liabil
Page 71 and 72: occurring during the retention peri
Page 73 and 74:
to the extent unvested as of April
Page 75 and 76:
Program for that performance period
Page 77 and 78:
under the Harleysville Mutual Assum
Page 79 and 80:
should be executed by or for all jo
Page 81 and 82:
including a request that the court
Page 83 and 84:
A. Andrew Tignanelli v. W. Thacher
Page 85 and 86:
oard of directors from performing i
Page 87 and 88:
Effect of the MergerAt the effectiv
Page 89 and 90:
No consideration will be paid to st
Page 91 and 92:
• accuracy of information contain
Page 93 and 94:
• receipt by Nationwide Mutual’
Page 95 and 96:
affecting investment assets of us o
Page 97 and 98:
e made pursuant to existing contrac
Page 99 and 100:
No Solicitations by the CompanyUnde
Page 101 and 102:
defined in the Merger Agreement) to
Page 103 and 104:
• between the date of the Merger
Page 105 and 106:
Termination Fee if the Mergers Are
Page 107 and 108:
MARKET PRICE OF THE SHARES OF THE C
Page 109 and 110:
SHAREHOLDINGS OF DIRECTORS AND MANA
Page 111 and 112:
If you have questions about the Spe
Page 113 and 114:
TABLE OF CONTENTSARTICLE I DEFINITI
Page 115 and 116:
Section 7.12 Retention of Executive
Page 117 and 118:
membership interests, by contract,
Page 119 and 120:
‘‘Delaware Certificate of Merge
Page 121 and 122:
avoidance of doubt, Harleysville De
Page 123 and 124:
‘‘IRCA’’ means the Immigrat
Page 125 and 126:
‘‘Order’’ means an order, i
Page 127 and 128:
corporation) of which is beneficial
Page 129 and 130:
Nationwide Mutual and will have the
Page 131 and 132:
Section 3.2 HGI Stock Options and R
Page 133 and 134:
(e) Promptly following the date tha
Page 135 and 136:
have been made available to Nationw
Page 137 and 138:
execution and delivery of this Agre
Page 139 and 140:
Person the right to enjoin or resci
Page 141 and 142:
listing on any list maintained by a
Page 143 and 144:
accordance with their terms. Harley
Page 145 and 146:
facility or assigned risk pool. To
Page 147 and 148:
Section 4.20 Intellectual Property.
Page 149 and 150:
ARTICLE VREPRESENTATIONS AND WARRAN
Page 151 and 152:
are set forth in Section 5.2(b) of
Page 153 and 154:
development involving a prospective
Page 155 and 156:
(b) Except as set forth in Section
Page 157 and 158:
extent that it is a party thereto,
Page 159 and 160:
Section 5.15 Cancellations. Except
Page 161 and 162:
(d) Except as set forth in Section
Page 163 and 164:
agreements, information on the basi
Page 165 and 166:
Section 5.21 Rating Agencies. Excep
Page 167 and 168:
Agreement, the Mergers, the Voting
Page 169 and 170:
Agreement with and the approval of
Page 171 and 172:
Producers wrote, sold or produced s
Page 173 and 174:
(o) Brokers or Finders. No broker,
Page 175 and 176:
ARTICLE VIICOVENANTSSection 7.1 Har
Page 177 and 178:
(i) Except as set forth in Section
Page 179 and 180:
(w) Neither of the Harleysville Par
Page 181 and 182:
Notwithstanding anything to the con
Page 183 and 184:
(c) the receipt by such Party of an
Page 185 and 186:
of any nature whatsoever and, speci
Page 187 and 188:
Section 8.2 Stockholder Meeting and
Page 189 and 190:
Section 9.2 Conditions to Obligatio
Page 191 and 192:
(c) by any of the Harleysville Part
Page 193 and 194:
or related to the authorization, pr
Page 195 and 196:
allow the other Parties a reasonabl
Page 197 and 198:
IN WITNESS WHEREOF, Nationwide Mutu
Page 199 and 200:
In connection with this opinion, we
Page 201 and 202:
APPENDIX CGENERAL CORPORATION LAW O
Page 203 and 204:
either notice that such notice has
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