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CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING STATEMENTSInformation both included and incorporated by reference in this proxy statement may containstatements that are considered ‘‘forward-looking’’ within the meaning of the Private SecuritiesLitigation Reform Act of 1995. All statements, other than statements of historical fact, regarding,among other things, our expected financial position and business are forward-looking statements. Theseforward-looking statements are identified by their use of terms such as: ‘‘expect(s),’’ ‘‘intend(s),’’ ‘‘may,’’‘‘plan(s),’’ ‘‘should,’’ ‘‘believe(s),’’ ‘‘anticipate(s),’’ ‘‘will,’’ ‘‘project(s),’’ ‘‘estimate(s),’’ ‘‘continue,’’‘‘potential,’’ ‘‘opportunity,’’ ‘‘on track,’’ or similar terms. We or our representatives may also makesimilar forward-looking statements from time to time orally or in writing. We cannot guarantee that wewill achieve these plans, intentions or expectations, including completing the Merger on the termssummarized in this proxy statement. You are cautioned that these forward-looking statements aresubject to a number of risks, uncertainties, or other factors that may cause (and in some cases havecaused) actual results to differ materially from those described in the forward-looking statements.These risks and uncertainties include, but are not limited to, the following:• the risk that the Merger may not be consummated in a timely manner, if at all;• the occurrence of events, changes or other circumstances that could give rise to the terminationof the Merger Agreement, including under circumstances which may require us to payNationwide Mutual a termination fee of $29,588,535 and certain of its reasonable out-of-pocketexpenses;• Harleysville Mutual or Nationwide Mutual may be unable to obtain the approval of theirrespective members required for the Parent Merger;• the outcome of any legal proceeding instituted against us or others in connection with theMerger;• conditions to the closing of the Merger may not be satisfied or the Merger Agreement may beterminated prior to the closing;• our businesses may suffer as a result of uncertainty surrounding the Merger;• the effect of the announcement of the Merger on our business relationships, operating resultsand business generally;• the amount of the costs, fees, expenses and charges related to the Merger;• risks regarding employee retention;• diversion of our management’s attention from ongoing business operations;• future regulatory or legislative actions that could adversely affect us;• other economic, business and/or competitive factors that could adversely affect us; and• other risks detailed in our filings with the SEC, including our most recent filings on Form 10-Kor Form 10-Q, which are available at http://www.sec.gov.These factors may not constitute all of the factors that could cause actual results to differmaterially from those discussed in any forward-looking statement. We operate in a continually changingbusiness environment and new factors emerge from time to time. We cannot predict such factors norcan we assess the impact, if any, of such factors on our financial position or our results of operations.Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.18
We undertake no obligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise.All forward-looking statements included in this proxy statement speak only as of the date of thisproxy statement and all forward-looking statements incorporated by reference into this proxy statementspeak only as of the date of the document in which they were included. We expressly disclaim anyobligation to release publicly any revision or updates to any forward-looking statements, except to theextent required by law. All subsequent written and oral forward-looking statements attributable to us orany person acting on our behalf are qualified by the cautionary statements in this section.All information contained in this proxy statement concerning Harleysville Mutual and its affiliateshas been supplied by Harleysville Mutual and has not been independently verified by us. Allinformation contained in this proxy statement concerning Nationwide Mutual, Merger Sub and theiraffiliates has been supplied by Nationwide Mutual and has not been independently verified by us.THE SPECIAL MEETINGGeneral: Date, Time and PlaceThis proxy statement is being furnished to our stockholders as part of the solicitation of proxies byour board of directors for use at the Special Meeting to be held at 1:00 p.m. (E.S.T.), on Tuesday,April 24, 2012, at our corporate headquarters located at 355 Maple Avenue, Harleysville,Pennsylvania 19438.Matters to be ConsideredThe purpose of the Special Meeting will be to consider and vote upon a proposal to adopt theMerger Agreement. We are also asking you to approve, on a non-binding advisory basis, compensationthat may be paid or become payable to our named executive officers that is based on or otherwiserelates to the Merger. If any other matters are properly presented at the Special Meeting for action,the persons named in the enclosed proxy will have discretion to vote on such matters in accordancewith their best judgment.Record Date and QuorumThe holders of record of shares of the Company’s common stock as of the close of business onFebruary 29, 2012, the record date, will be entitled to receive notice of, and to vote at, the SpecialMeeting or any adjournment or postponement thereof. As of the record date, there were 27,277,285shares of the Company’s common stock outstanding.A quorum of stockholders is necessary to take action at the Special Meeting. A majority of theoutstanding shares of the Company’s common stock, represented in person or by proxy, will constitutea quorum. Votes cast in person or by proxy at the Special Meeting will be tabulated by the inspectorsof election appointed for the Special Meeting. The inspectors of election will determine whether aquorum is present at the Special Meeting. In the event that a quorum is not present at the SpecialMeeting, we expect that the Special Meeting will be adjourned or postponed to solicit additionalproxies.Abstentions and ‘‘broker non-votes’’ will be treated as present for purposes of determining thepresence of a quorum. Once a share is represented at the Special Meeting, it will be counted for thepurpose of determining a quorum at the Special Meeting and any adjournment or postponement of theSpecial Meeting, unless the holder is present solely to object at the beginning of the Special Meeting tothe transaction of any business because the Special Meeting is not lawfully called or convened.However, if a new record date is set for the adjourned or postponed Special Meeting, then a newquorum will have to be established at the adjourned or postponed Special Meeting.19
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 and 22: not apply to the proposal to approv
Page 23: Q: What happens if the Merger is no
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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You are cordially invited to attend a special meeting (the âSpecial