DELPHI INTERNATIONAL LTD, S-1/A, 1997-12-24

DELPHI INTERNATIONAL LTD
S-1/A, 1997-12-24
LIFE INSURANCE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 24, 1997

REGISTRATION NO. 333-34829
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

AMENDMENT NO. 4 TO

REGISTRATION STATEMENT
ON FORM S-1 UNDER
THE SECURITIES ACT OF 1933
------------------------

DELPHI INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
BERMUDA 6719 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
CHEVRON HOUSE CT CORPORATION SYSTEM
CHURCH STREET 1633 BROADWAY
HAMILTON, BERMUDA NEW YORK, NEW YORK 10019
(441) 295-3688 (212) 664-1666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES) NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>

------------------------

Copies to:

<TABLE>
<S> <C>
JAMES R. CAMERON, ESQ. NICOLAS G. TROLLOPE, ESQ.
BAKER & MCKENZIE CONYERS DILL & PEARMAN
805 THIRD AVENUE CLARENDON HOUSE, CHURCH STREET
NEW YORK, NEW YORK 10022 HAMILTON, BERMUDA
TELEPHONE: (212) 751-5700 TELEPHONE: (441) 295-1422
FACSIMILE: (212) 759-9133 FACSIMILE: (441) 292-4720
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED DECEMBER 24, 1997

PROSPECTUS

DELPHI INTERNATIONAL LTD.

2,200,000 SHARES OF COMMON STOCK
(AND RIGHTS TO ACQUIRE UP TO 2,050,000 SHARES OF COMMON STOCK)

Delphi International Ltd., a Bermuda corporation (the "Company"), is
granting at no cost to holders of the outstanding Class A Common Stock, par
value $.01 per share ("Delphi Class A Common Stock"), of Delphi Financial Group,
Inc., a Delaware corporation ("Delphi"), to holders of the outstanding Class B
Common Stock, par value $.01 per share, of Delphi ("Delphi Class B Common Stock"
and, together with the Delphi Class A Common Stock, the "Delphi Common Stock"),
and to holders of options to purchase Delphi Common Stock, of record at the
close of business on the date of this Prospectus (the "Record Date"),
non-transferable rights (collectively, the "Rights") to purchase up to an
aggregate of 2,050,000 Common Shares, par value $.01 per share, of the Company
("Common Shares").

The Amended and Restated Bye-Laws (the "Bye-Laws") of the Company contain
certain provisions that limit the voting rights that may be exercised by certain
holders of Common Shares. The Bye-Laws provide that each holder of Common Shares
is entitled to one vote per share on all matters submitted to a vote of
shareholders, except that if, and so long as, the Controlled Shares (as defined)
of any person constitute 9.5% or more of the issued and outstanding Common
Shares, the voting rights with respect to the Common Shares owned by such person
shall be limited, in the aggregate, to a voting power of 9.5%, pursuant to a
formula specified in the Bye-Laws. Subject to the voting limitation set forth in
the preceding sentence, each Common Share will also entitle the holder thereof
to one vote per share on all matters required to be submitted to the
shareholders of the Company's wholly-owned subsidiary, Oracle Reinsurance
Company Ltd., a Bermuda company ("Oracle Re"). See "Description of Capital
Stock -- Common Shares -- Limitation on Voting Rights" and "-- Voting Rights in
Oracle Re."

Each record holder of Delphi Common Stock and options to purchase Delphi
Common Stock will receive one Right for every ten shares of Delphi Common Stock
and options to purchase Delphi Common Stock on an aggregate basis owned on the
Record Date. Each Right will entitle the holder to purchase one Common Share at
a purchase price of ten U.S. dollars and twenty-five cents ($10.25) per share
(the "Exercise Price").

The exercise period for the Rights will expire at 5:00 p.m., New York City
time, on , 1998, unless extended by the Company (the "Expiration Date").
Once made, subscriptions are irrevocable, and no alternative, conditional or
contingent rights will be accepted by the Company. The Rights Offering is
conditioned upon the purchase of at least 599,500 Common Shares upon the
exercise of Rights. In the event that such number of shares is not subscribed
for pursuant to the Rights, the Rights Agent (as defined below) will promptly
return, without interest, all funds received in payment of the Exercise Price.
See "The Rights Offering -- Conditions to the Rights Offering."

The Company and certain of its officers and directors, certain officers,
directors and employees of Delphi and Rosenkranz & Company, a principal
shareholder of Delphi (collectively, the "Standby Purchasers") have entered into
an agreement (the "Standby Agreement") pursuant to which the Standby Purchasers
have agreed to purchase, and the Company has agreed to sell 900,500 Common
Shares (the "Standby Commitment Shares") on the Expiration Date at the Exercise
Price. The obligations of the Standby Purchasers and the Company under the
Standby Agreement are conditioned on the purchase of at least 599,500 Common
Shares upon the exercise of the Rights. In addition, the number of Standby
Commitment Shares will be reduced on a share by share basis (but not below
150,000 Common Shares) to the extent that more than 1,149,500 Common Shares are
purchased upon the exercise of Rights. To the extent that this reduction results
in less than 900,500 Common Shares being purchased by the Standby Purchasers,
150,000 Common Shares ("Minimum Standby Commitment Shares") will be purchased by
certain of the Standby Purchasers ("Minimum Standby Purchasers") and any
remaining Common Shares will be purchased by the other Standby Purchasers,
pro-rata to their commitments. Delphi will finance 50% of the purchases made by
substantially all of the Minimum Standby Purchasers of Common Shares represented
by their Rights and their Standby Commitment Shares, which will total 273,486
Common Shares if such Minimum Standby Purchasers exercise all of their Rights
and purchase all of their Standby Commitment Shares. All of such Common Shares
will be pledged to Delphi and Delphi will obtain a security interest in such
shares. See "The Rights Offering -- Standby Agreement" and "Certain
Relationships and Related Transactions -- Standby Agreement."

The offering of Common Shares pursuant to the Rights and the offering of
Common Shares pursuant to the Standby Agreement are collectively referred to in
this Prospectus as the "Rights Offering." The Standby Commitment Shares are
included in the total number of Common Shares registered pursuant to the
registration statement of which this prospectus forms a part. Following
completion of the Rights Offering, assuming full exercise by all holders of
Rights and without giving effect to the issuance of any Common Shares pursuant
to the Standby Agreement, the Standby Purchasers will beneficially own, in the
aggregate, approximately 38.3% of the Common Shares. In the event that Common
Shares are issued to the Standby Purchasers pursuant to the Standby Agreement,
the percentage of Common Shares to be held following completion of the Rights
Offering by persons who are not affiliated with the Standby Purchasers may be
very small. The Standby Purchasers may be deemed to be statutory underwriters
and in the event that they seek to sell Common Shares purchased pursuant to the
Standby Agreement, such resales may be required to be made pursuant to a resale
prospectus included in a registration statement declared effective by the
Securities and Exchange Commission prior to such resale. The Company and the
Standby Purchasers have not entered into any agreement which would require the
Company to file a registration statement covering such resales.

The Company has filed with the Securities and Exchange Commission a
Registration Statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Rights offered hereby and the Common
Shares issuable upon the exercise thereof. Prior to the Rights Offering, there
has been no public market for the Common Shares or the Rights. See "The Rights
Offering -- Background" for factors considered by the Company in determining the
Exercise Price. Although the Company has applied for quotation of the Common
Shares on the Nasdaq SmallCap Market ("Nasdaq") under the symbol "DLTD" the
Common Shares have not been approved for quotation by Nasdaq and there can be no
assurance that the Common Shares will be accepted for quotation by Nasdaq. In
the event that the Common Shares are not approved for quotation on Nasdaq, the
Company anticipates that the Common Shares will be quoted on the National
Association of Securities Dealers, Inc.'s "Electronic Bulletin Board" under the
symbol "DLTD." See "Risk Factors -- No Assurance of Quotation of Common Shares
on Nasdaq" and "-- Risks of Quotation on NASD's 'Electronic Bulletin Board' ."
There can, however, be no assurance that an active trading market in the Common
Shares will develop or be sustained. The Rights are non-transferrable by the
holders thereof and no public market for the Rights will develop.
------------------------

AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT
IN THE COMMON SHARES. ------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
====================================================================================================================
EXERCISE AND PROCEEDS TO THE
OFFERING PRICE COMPANY(1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Common Share...................................................... $10.25 $10.25
- --------------------------------------------------------------------------------------------------------------------
Total................................................................. $21,012,500 $21,012,500
====================================================================================================================
</TABLE>

(1) Before deduction of expenses estimated to be $750,000.

The date of this Prospectus is , 1997.
<PAGE> 3

The Company intends to furnish its shareholders with annual reports
containing audited consolidated financial statements and with quarterly reports
containing unaudited consolidated financial statements for each of the first
three quarters of each fiscal year, in each case prepared in accordance with
United States generally accepted accounting principles ("U.S. GAAP").

------------------------

NOTICE TO NEW HAMPSHIRE RESIDENTS:

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY
WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO,
ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

------------------------

FOR NORTH CAROLINA RESIDENTS ONLY:

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER RULED UPON
THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. EACH NORTH CAROLINA BUYER UNDERSTANDS
THAT NEITHER THE COMPANY NOR ANY SUBSIDIARY OF THE COMPANY IS LICENSED AS AN
INSURANCE COMPANY IN NORTH CAROLINA NOR DOES EITHER MEET THE BASIC ADMISSION
REQUIREMENTS FOR LICENSING AS AN INSURANCE COMPANY IN NORTH CAROLINA.

------------------------

CONSENT UNDER THE EXCHANGE CONTROL ACT 1972 (AND REGULATIONS THEREUNDER)
HAS BEEN OBTAINED FROM THE BERMUDA MONETARY AUTHORITY FOR THE ISSUE AND TRANSFER
OF THE COMMON SHARES BEING OFFERED PURSUANT TO THE RIGHTS OFFERING. IN ADDITION,
A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE REGISTRAR OF COMPANIES IN
BERMUDA FOR FILING PURSUANT TO THE COMPANIES ACT 1981 OF BERMUDA. IN GIVING SUCH
CONSENT AND IN ACCEPTING THIS PROSPECTUS FOR FILING, THE BERMUDA MONETARY
AUTHORITY AND THE REGISTRAR OF COMPANIES IN BERMUDA, RESPECTIVELY, ACCEPT NO
RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF ANY PROPOSAL OR FOR THE
CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED HEREIN.

------------------------

In this Prospectus, references to "dollar" and "$" are to United States
currency, and the terms "United States" and "U.S." mean the United States of
America, its states, its possessions and all areas subject to its jurisdiction.
References in this Prospectus to "BD$" are to Bermuda currency.

i
<PAGE> 4

ENFORCEABILITY OF CIVIL LIABILITIES UNDER
UNITED STATES FEDERAL SECURITIES LAWS

The Company is organized pursuant to the laws of Bermuda. In addition,
certain of the directors, officers and controlling persons of the Company, as
well as certain of the experts named herein, reside outside the United States,
and all or a substantial portion of their assets, and all of the assets of the
Company, are or may be located in jurisdictions outside the United States. As a
result, it may be difficult for investors to effect service of process within
the United States upon such persons who reside outside the United States or to
realize against them upon judgments of courts of the United States predicated
upon civil liabilities under the U.S. federal securities laws.

The Company has been informed by its Bermuda counsel, Conyers Dill &
Pearman, that the United States and Bermuda do not currently have a treaty
providing for reciprocal recognition and enforcement of judgments of U.S. courts
in civil and commercial matters and that a final judgment for the payment of
money rendered by any federal or state court in the United States based on civil
liability, whether or not predicated solely upon the U.S. federal securities
laws, would, therefore, not be automatically enforceable in Bermuda. The Company
has also been advised by Conyers Dill & Pearman that a final and conclusive
judgment obtained in federal or state courts in the United States under which a
sum of money is payable as compensatory damages (i.e., not being a sum claimed
by a revenue authority for taxes or other charges of a similar nature by a
governmental authority, or in respect of a fine or penalty or multiple or
punitive damages) may be the subject of an action on a debt in the Supreme Court
of Bermuda under the common law doctrine of obligation. Such an action should be
successful upon proof that the sum of money is due and payable, and without
having to prove the facts supporting the underlying judgment, as long as (i) the
court that gave the judgment was competent to hear the action in accordance with
private international law principles as applied by the courts in Bermuda and
(ii) the judgment is not contrary to public policy in Bermuda, was not obtained
by fraud or in proceedings contrary to natural justice of Bermuda and is not
based on an error in Bermuda law. A Bermuda court may impose civil liability on
the Company or its directors or officers in a suit brought in the Supreme Court
of Bermuda against the Company or such persons with respect to a violation of
U.S. federal securities laws, provided that the facts surrounding such violation
would constitute or give rise to a cause of action under Bermuda law.

The Company has irrevocably appointed the Service of Process Department at
CT Corporation System, 1633 Broadway, New York, New York 10019, as its agent to
receive service of process with respect to actions against it arising out of or
in connection with violations of the U.S. federal securities laws in any federal
or state court in the United States relating to the transactions covered by this
Prospectus.

ii
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, included elsewhere in this Prospectus. See
"Glossary of Selected Insurance and Reinsurance Terms" for definitions of
certain terms used in this Prospectus. Unless the context otherwise requires,
references herein to the "Company" give effect to the formation of, and include,
its wholly-owned subsidiary, Oracle Reinsurance Company Ltd., a Bermuda company
("Oracle Re").

THE COMPANY

Following the completion of the Rights Offering, the Company, a
newly-formed Bermuda insurance holding company, will provide, through its
wholly-owned subsidiary, Oracle Re, excess of loss and quota share reinsurance
primarily for group employee benefit insurance products, including group
long-term disability and excess workers' compensation insurance, offered by
Reliance Standard Life Insurance Company ("RSL") and Safety National Casualty
Corporation ("Safety National"), insurance affiliates of Delphi. The Company
will also seek to expand its customer base and to develop additional products
and services. The Company has been organized to take advantage of reinsurance
and alternative risk market opportunities that it believes exist in the Bermuda
market.

The Company, through its wholly-owned subsidiary, Oracle Re, also intends
to provide risk financing products to clients seeking an alternative to
traditional commercial insurance for certain risk exposures. These risk
financing products include a retention by the client of a significant amount of
its loss exposure, the transfer of more unpredictable layers of loss to insurers
and a greater involvement by the client in risk management and loss prevention
and loss control. Oracle Re will offer these products in the so-called
"alternative market," which has developed in response to the volatility in cost
and availability of traditional commercial insurance coverage. The Company
intends to provide risk financing products through a facility frequently
referred to as a "rent-a-captive," which is designed to provide insureds with
certain of the benefits available through captive insurance companies without
the administrative costs and capital commitment necessary to establish and
operate their own captive insurance company. Oracle Re will offer its
rent-a-captive facility to clients of Safety National to manage their workers'
compensation expenses and may thereafter offer these services to additional
clients and other insurance exposures.

Regulatory Status of Oracle Re

In September 1997, the Bermuda Registrar of Companies (Insurance Division)
and the Insurers Admissions Committee of Bermuda reviewed Oracle Re's
application for licensing as a Class 3 and long-term insurance company. During
such reviews, the application was approved and, upon the due capitalization of
Oracle Re of a minimum of $1.0 million dollars, which is to occur upon the
consummation of the Rights Offering, together with the filing of certain
prescribed forms and the payment of certain fees, Oracle Re will be issued a
registration certificate under the Insurance Act 1978 as a Class 3 and long-term
Bermuda exempted insurer. Accordingly, although Oracle Re has been incorporated
under the laws of Bermuda, it is not currently licensed to underwrite, although
it has received all required permissions to do so subject to its capitalization.
The Rights Offering is conditioned upon the purchase of at least 599,500 Common
Shares upon the exercise of Rights and, in such event, the Company will receive
net proceeds of approximately $14.6 million from the sale of such number of
shares and the sale of 900,500 Standby Commitment Shares. Oracle Re will
commence underwriting business immediately upon being licensed to do so which
the Company anticipates will be the date upon which this Rights Offering is
completed and the proceeds therefrom are contributed by the Company to Oracle
Re.

Relationship with Delphi Financial Group, Inc.

1
<PAGE> 6

products, primarily annuities, to individuals and groups. Delphi is publicly
traded on the New York Stock Exchange and as of September 30, 1997, had
approximately $3.1 billion in total assets and a market capitalization of
approximately $800.0 million.

RSL and Safety National have agreed, subject to the completion of the
Rights Offering, to participate in various reinsurance arrangements with Oracle
Re and to cede to Oracle Re portions of their existing portfolios of employee
benefits product insurance relating to their group employee benefit products,
for an aggregate premium of approximately $116.0 million. Oracle Re is also
currently in negotiations with RSL and Safety National with respect to the
ceding of certain prospective risks by such companies to Oracle Re with
aggregate annual premiums expected to range from $5.0 million to $10.0 million.

RSL is engaged in the sale of life, accident and health insurance products
targeted principally to the group employee benefits market. RSL insures groups
ranging from ten to more than 1,000 individuals, although the typical size of
the insured groups is between 100 to 300 individuals. In underwriting its group
employee benefit products, RSL tends to avoid concentrations of business in any
particular industry segment or geographic area. RSL is rated "A- (Excellent)" by
A.M. Best Company ("A.M. Best"), an independent insurance industry rating
organization, and its claims-paying ability is rated "A (Good Financial
Security)" by Standard & Poor's Corporation ("Standard & Poor's").

Safety National is an insurance specialist providing excess workers'
compensation and insurance products to the self-insured market. Safety National,
founded in 1942, is licensed in all 50 states and is one of the oldest
continuous writers of excess workers' compensation insurance in the United
States. Safety National's excess workers' compensation products provide coverage
to employers and groups who self-insure their workers' compensation risks. The
coverage underwritten by Safety National applies to losses in excess of the
applicable self-insured retentions or deductibles of employers and groups whose
workers' compensation claims are generally handled by third-party administrators
and is principally targeted to mid-size companies and association groups,
particularly small municipalities, hospitals and schools. These target markets
tend to be less prone to catastrophic workers' compensation exposures and are
less price sensitive than larger account business. Safety National is rated "A
(Excellent)" by A.M. Best and its claims-paying ability is rated "A (Good
Financial Security)" by Standard & Poor's.

Delphi and its affiliates are expected to enter into various agreements
with the Company and Oracle Re which will cover, among other things, investment
advisory services for Oracle Re, reinsurance arrangements with Oracle Re and the
purchase of a $30.0 million note (the "Note") from the Company upon completion
of the Rights Offering. Neither Delphi, RSL nor Safety National has any
obligation to provide capital or financial support to the Company or Oracle Re
except for the obligations pursuant to the Note. See "Management's Discussion
and Analysis of Financial Condition and Plan of Operation" and "Certain
Relationships and Related Transactions."

Business Strategy

The Company's objective is to provide reinsurance, through its wholly-owned
subsidiary, Oracle Re, initially to RSL and Safety National, and later to other
primary issuers, and alternative risk market products and services. The Company
intends to pursue the following business strategies:

- focus primarily on reinsurance for group employee benefit insurance
products, including group long-term disability and excess workers'
compensation insurance;

- utilize a rent-a-captive facility to fund captive client's risks;

- focus on sound underwriting specifying an adequate premium for a given
exposure commensurate with the amount of capital which Oracle Re
estimates is being placed at risk;

- focus on a long-term investment horizon and seek above-average returns
through reinvestment of funds held for reserves;

- develop a reputation as a financially-secure reinsurer and manage
prudently Oracle Re's risk exposure in relation to its capital base; and

2
<PAGE> 7

- focus on generating consistent profits from fees received for the various
services provided to clients in connection with Oracle Re's
rent-a-captive facility.

Oracle Re's rent-a-captive program will allow clients to participate in a
significant portion of their own loss exposure without the administrative costs
and capital commitment necessary to establish and operate their own captive
insurance company. A portion of the underwriting profit and investment income
produced by the client's rent-a-captive business will be returned to the client,
creating a direct incentive for the client to engage in loss prevention and loss
control and to reduce the overall cost of financing its loss exposures.

Oracle Re's investment strategy will focus on the management of its asset
and liability durations. Since Oracle Re's initial reinsurance transactions will
involve liabilities with long-term durations, Oracle Re will be able to invest
its assets in long-term duration investments. Oracle Re's investment objective
is to maximize returns while focusing on the preservation of capital,
diversification of risk and liquidity of investments. Oracle Re's assets will be
allocated among a number of investment managers with expertise in utilizing
different investment strategies. These broad strategies include, among others,
diversified hedging, hedged equity, common stock/specialized trading, short
selling, risk arbitrage, distressed securities, futures and commodities and
foreign securities investing. The managers primarily invest the assets in a
variety of marketable securities and other liquid assets. Oracle Re will invest
through the investment vehicles of the managers (generally in the form of a
corporation or partnership) or through managed accounts. Oracle Re will be able
to redeem its investment from substantially all the investment vehicles on at
least an annual basis with many of the managers providing quarterly or more
frequent liquidity. Oracle Re's multi-manager, multi-strategy approach is
designed to produce capital appreciation with reduced volatility.
------------------------

The Company was formed on September 2, 1997 under the laws of Bermuda. The
Company's principal executive offices are located at Chevron House, Church
Street, Hamilton, Bermuda, and its telephone number is (441) 295-3688.

THE OFFERING

Terms of Offering.......... Holders of record at the close of business on the
Record Date of the outstanding Delphi Common Stock
and options to purchase Delphi Common Stock will
receive one Right for every ten such shares and
options, on an aggregate basis. Each Right will
entitle the holder to purchase one Common Share at
a purchase price of $10.25 per share. Holders of
Rights will have the opportunity to acquire
approximately 2,050,000 Common Shares.

Exercise Price............. $10.25 per Common Share

Expiration Date............ , 1998 at 5:00 p.m., New York City time

Rights..................... Rights will be evidenced by non-transferable
certificates that will be exercisable by the holder
until the Expiration Date, at which time
unexercised rights will become null and void.

3
<PAGE> 8

Conditions to the Rights
Offering................. The Rights Offering is conditioned upon the
purchase of at least 599,500 Common Shares upon the
exercise of Rights. In the event that such number
of shares is not subscribed for pursuant to the
Rights, the Rights Agent will promptly return,
without interest, all funds received in payment of
the Exercise Price. See "The Rights
Offering -- Conditions to the Rights Offering."

Standby Agreement.......... The Company and the Standby Purchasers have entered
into the Standby Agreement pursuant to which the
Standby Purchasers have agreed to purchase, and the
Company has agreed to sell 900,500 Common Shares
(the "Standby Commitment Shares") on the Expiration
Date at the Exercise Price. The obligations of the
Standby Purchasers and the Company under the
Standby Agreement are conditioned on the purchase
of at least 599,500 Common Shares upon the exercise
of the Rights. In addition, the number of Standby
Commitment Shares will be reduced on a share by
share basis (but not below 150,000 Common Shares)
to the extent that more than 1,149,500 Common
Shares are purchased upon the exercise of Rights.
To the extent that this reduction results in less
than 900,500 Common Shares being purchased by the
Standby Purchasers, 150,000 Common Shares (the
"Minimum Standby Commitment Shares") will be
purchased by certain of the Standby Purchasers (the
"Minimum Standby Purchasers") and any remaining
Common Shares will be purchased by the other
Standby Purchasers, pro-rata to their commitments.
Delphi will finance 50% of the purchases made by
substantially all of the Minimum Standby Purchasers
of Common Shares represented by their Rights and
their Standby Commitment Shares, which will total
273,486 Common Shares if such Minimum Standby
Purchasers exercise all of their Rights and
purchase all of their Standby Commitment Shares.
All of such Common Shares will be pledged to Delphi
and Delphi will obtain a security interest in such
shares. See "The Rights Offering -- Standby
Agreement" and "Certain Relationships and Related
Transactions -- Standby Agreement."

The Company has entered into the Standby Agreement
to provide additional assurance that, if the
minimum required 599,500 Common Shares underlying
Rights are sold, the Company would, with the sale
of the Standby Commitment Shares, sell at least
1,500,000 Common Shares. Following completion of
the Rights Offering, (a) assuming that all of the
Rights issued in the Rights Offering are exercised
by the holders thereof, an additional 150,000
Common Shares are issued to the Standby Purchasers
(the "Additional Shares") and 2,200,000 Common
Shares are outstanding following the completion of
the Rights Offering, the Standby Purchasers will
beneficially own, in the aggregate, approximately
42.5% of the Common Shares of the Company and (b)
assuming that 900,500 Standby Commitment Shares are
issued to the Standby Purchasers, 1,149,500 Common
Shares are issued upon exercise of Rights by the
holders thereof and 2,050,000 Common Shares are
outstanding following completion of the Rights
Offering, the Standby Purchasers will beneficially
own, in the aggregate, approximately 82.3% of the
Common Shares of the Company. See "The Rights
Offering -- Standby Agreement" and "Certain
Relationships and Related Transactions -- Standby
Agreement."

4
<PAGE> 9

Delphi has agreed to provide five year loans to
Messrs. Elenowitz and Smith, directors of the
Company, for 50% of the cost of their purchases of
Common Shares and to provide certain other Minimum
Standby Purchasers with similar loans of up to
$356,111 in the aggregate to purchase the Common
Shares represented by their Rights and their
Minimum Standby Commitment Shares and up to a
further $132,738 to the extent that additional
portions of their Standby Commitments are utilized.
The maximum amount that Delphi will lend to Messrs.
Elenowitz and Smith is $781,296 and $131,472,
respectively, and the maximum amount that Delphi
will lend to the other Minimum Standby Purchasers
as a group is $488,848. As a result, the maximum
amount that Delphi will lend to the Minimum Standby
Purchasers is $1,401,616. Interest on such loans
will be paid at the interest rate charged Delphi by
its commercial banking group (currently LIBOR plus
0.45%) and payments of interest and principal will
be deferred until maturity. All of the Common
Shares purchased by such Minimum Standby Purchasers
shall be pledged to Delphi to secure the loan to
each such Minimum Standby Purchaser and Delphi will
have recourse only against such Common Shares. As a
result of the loans and if such Minimum Standby
Purchasers exercise all of their Rights and
purchase all of their Standby Commitment Shares,
273,486 Common Shares will be pledged to Delphi and
Delphi will obtain a security interest in such
shares. The Company believes these Minimum Standby
Purchasers have the ability to repay these loans.
Delphi will not, however, assume ownership of the
Common Shares as a result of such pledge. To secure
repayment obligations, Delphi may cause these
Minimum Standby Purchasers to sell the Common
Shares purchased pursuant to such financing and to
remit the proceeds to Delphi in full satisfaction
of the loan. Any sales of Common Shares will be
made pursuant to a registration statement declared
effective by the Securities and Exchange Commission
or pursuant to an exemption from registration. See
"The Rights Offering -- Standby Agreement" and
"Certain Relationships and Related
Transactions -- Standby Agreement."

Maximum Number of Common
Shares to be outstanding
after the Rights
Offering(1).............. 2,200,000 shares

Voting Rights.............. The Company. The Bye-Laws contain certain
provisions that limit the voting rights that may be
exercised by certain holders of Common Shares. The
Bye-Laws provide that each holder of Common Shares
is entitled to one vote per share on all matters
submitted to a vote of shareholders, except that
if, and so long as, the Controlled Shares (as
defined) of any person constitute 9.5% or more of
the issued and outstanding Common Shares, the
voting rights with respect to the Controlled Shares
owned by such person shall be limited, in the
aggregate, to a voting power of 9.5%, pursuant to a
formula specified in the Bye-Laws.

Oracle Re. Subject to the voting limitation set
forth above, each Common Share will also entitle
the holder thereof to one vote per share on all
matters required to be submitted to a vote of the
shareholders of Oracle Re.

Use of Proceeds............ The minimum and maximum net proceeds from the
Offering are estimated to be approximately $14.7
million and $21.9 million, respec-

5
<PAGE> 10

tively. The Company intends to contribute such net
proceeds to the capital of Oracle Re to be used to
support its insurance operations, including
increasing its statutory capital to support its
underwriting capacity and the Company will also use
the proceeds for working capital and general
corporate purposes. See "Use of Proceeds."

Risk Factors............... Prospective investors in the Common Shares offered
hereby should consider carefully the matters set
forth in "Risk Factors," as well as the other
information set forth in this Prospectus.

Proposed Nasdaq or NASD
"Electronic Bulletin
Board" Symbol............ DLTD(2)
- ---------------

(1) Includes 2,050,000 Common Shares which may be issued upon exercise of the
Rights and 150,000 Minimum Standby Commitment Shares. Gives effect to the
redemption upon the completion of the Rights Offering of the outstanding
1,200,000 Common Shares. See "Capitalization."

(2) See "Risk Factors -- No Assurance of Quotation of Common Shares on Nasdaq,"
"-- Risks of Quotation on NASD's 'Electronic Bulletin Board' " and
"-- Risks of Low-Priced Stock."

6
<PAGE> 11

RISK FACTORS

In evaluating the Company and its business, prospective investors should
consider carefully the following risk factors in addition to the other
information contained in this Prospectus.

NO OPERATING HISTORY

The Company was formed on September 2, 1997 and has no operating history.
Businesses which are starting up or in their initial stages of development
present substantial business and financial risks and may suffer significant
losses. They must develop business relations, establish operating procedures,
hire staff, obtain facilities and complete other tasks appropriate for the
conduct of their intended business activities. There can be no assurance that
the Company will be successful in implementing its business strategy. See
"Proposed Business."

RISKS RELATED TO MINIMUM OFFERING

The Rights Offering is conditioned upon the purchase of at least 599,500
Common Shares upon the exercise of the Rights and, in such event, the Company
will receive net proceeds of approximately $14.6 million from the sale of such
number of shares and the sale of 900,500 Standby Commitment Shares. Although the
Company believes that it will be able to implement its business strategy
utilizing such proceeds, there can be no assurance that the Company will be able
to do so.

DEPENDENCE ON CONTRACTUAL RELATIONSHIPS WITH DELPHI, RSL AND SAFETY NATIONAL

The Company and Oracle Re intend to enter into certain agreements with
Delphi, RSL and Safety National pursuant to which such entities will provide
services and cede reinsurance business to the Company and Oracle Re during the
organizational period of operations, as well as on an ongoing basis. Among these
agreements are various reinsurance agreements, pursuant to which RSL and Safety
National will, subject to the completion of the Rights Offering, cede to Oracle
Re certain portions of their existing portfolios of employee benefits product
insurance relating to their group employee benefit products, for an aggregate
premium of approximately $116.0 million. Oracle Re is also currently in
negotiations with RSL and Safety National with respect to the ceding of certain
prospective risks by such companies to Oracle Re with aggregate annual premiums
expected to range from $5.0 million to $10.0 million. The reinsurance agreements
will be cancelable by Safety National or RSL, as the case may be, upon a Change
of Control (as defined therein) of the Company. The failure to enter into, or
the termination of, the reinsurance agreements would have a material adverse
effect on the Company.

INTENSE REINSURANCE COMPETITION, POTENTIAL ADVERSE IMPACT FROM ABSENCE OF
FINANCIAL RATING AND NON-ADMITTED STATUS

The reinsurance industry is highly competitive. Oracle Re will compete with
major domestic and foreign insurers and reinsurers, many of which have greater
financial, marketing and management resources than will Oracle Re. Competition
in the types of reinsurance business that Oracle Re intends to underwrite is
based on many factors, including the perceived financial strength of the
reinsurer, premium charges, other terms and conditions offered, services
provided, ratings assigned by independent rating agencies, speed of claims
payment and reputation and experience in the line of reinsurance to be written.
Ultimately, this competition could affect Oracle Re's ability to attract
business on terms having the potential to yield appropriate levels of profits.

Neither Oracle Re nor the Company is rated by A.M. Best's or by any other
insurance rating agency and is not expected to receive a rating until it has
accumulated at least five consecutive years of representative operating
performance. Insurance ratings are used by insurers and reinsurance
intermediaries as an important means of assessing the financial strength and
quality of reinsurers. In addition, a ceding company's own rating may be
adversely affected by the lack of a rating of its reinsurer. Therefore, the lack
of a rating may dissuade a ceding company from reinsuring with Oracle Re and may
influence a ceding company to reinsure with another company that has an
insurance rating.

7
<PAGE> 12

Oracle Re is not licensed or admitted as an insurer in any jurisdiction
other than Bermuda. Because many jurisdictions do not permit insurance companies
to take credit for reinsurance obtained from unlicensed or non-admitted insurers
on their statutory financial statements unless security is posted, Oracle Re's
reinsurance contracts are expected to require it to post a letter of credit or
other security. Although the Company has received commitments from a commercial
bank group for a standby letters of credit facility for the benefit of RSL and
Safety National and the Company believes that Oracle Re will obtain a letter of
credit facility on acceptable terms, there can be no assurance that Oracle Re
will be able to obtain a standby letters of credit facility on commercially
acceptable terms or if at all.

POTENTIAL REQUIREMENT TO LIQUIDATE ASSETS OF ORACLE RE

The Company's reinsurance subsidiary, Oracle Re, is not licensed or
admitted as an insurer in any jurisdiction other than Bermuda. Under the
proposed terms of the reinsurance agreements between Oracle Re and RSL and
Safety National, Oracle Re will be required to provide security, which it
expects will be in the form of a standby letters of credit facility, to RSL and
Safety National to support reinsurance recoverables owed to these reinsureds in
a form acceptable to the insurance commissioners of the States of Illinois and
Missouri, the domiciliary states of RSL and Safety National, respectively. The
standby letters of credit facility will permit RSL and Safety National to take
credit on their statutory financial statements for the reinsurance ceded to
Oracle Re, either as an additional asset or as a reduction in liability. The
Company has received commitments from a commercial bank group for a standby
letters of credit facility, for the benefit of RSL and Safety National which is
to be secured by Oracle Re's investment portfolio with an initial mark-to-market
maintenance requirement of at least 140% of the facility amount as well as a
negative pledge with respect to all other assets of Oracle Re. In the event that
Oracle Re should default under the standby letters of credit facility, it may be
required to liquidate all or a substantial portion of its investment portfolio
and/or its other assets which have been pledged as security for this facility or
otherwise secure its obligations to its reinsureds, which would likely have a
material adverse effect on the business and operations of the Company and Oracle
Re.

POTENTIAL ADVERSE CONSEQUENCES OF OPERATING IN ALTERNATIVE MARKET

Oracle Re's products and services will compete with other products in the
alternative insurance markets. Such competitive products include captive
insurance companies, rent-a-captives, self-insurance plans and cash flow
insurance products. Many of these competitive alternative market products are
offered by companies with significantly greater financial and other resources
than Oracle Re.

Business conditions in the alternative insurance market in which the
Company will compete are influenced by the traditional insurance market. Since
the late 1980's, the rates in the traditional insurance market have been soft
and the market has been characterized by excessive capital and competitive
pricing which the Company believes will make it easier to structure programs
because of the availability of coverage and decreased prices of reinsurance, but
more difficult to attract potential participants and sell programs because of
competition with traditional insurance products.

STRICT REGULATORY ENVIRONMENT

Oracle Re is not licensed or otherwise authorized to transact the business
of insurance in any jurisdiction except Bermuda. The insurance laws of each
state of the United States and of many non-U.S. jurisdictions regulate the sale
of insurance and reinsurance within their jurisdiction by insurers, such as
Oracle Re, which are not admitted to do business within such jurisdiction.
Oracle Re does not intend to maintain an office or to solicit, advertise, settle
claims or conduct other activities which may constitute the transaction of the
business of insurance in any jurisdiction in which it is not licensed or
otherwise authorized to transact the business of insurance. Accordingly, Oracle
Re does not believe that it will be in violation of insurance laws of any state
in the United States or of any other non-U.S. jurisdiction. There can be no
assurance, however, that inquiries or challenges relating to the activities of
Oracle Re or the Company will not be raised in the future or that Oracle Re's
location, regulatory status or restrictions on its activities resulting
therefrom will not adversely affect its ability to conduct its business.

8
<PAGE> 13

In addition, RSL and Safety National are subject to insurance regulations
in their domiciliary states, Illinois and Missouri, respectively, which limit or
prohibit certain reinsurance transactions. Under these insurance regulations,
certain reinsurance agreements (and modifications thereto) between Oracle Re and
Safety National or RSL are subject to the approval of the Director of Insurance
in their respective domiciliary state. RSL and Safety National have provided
written notice of their intention to enter into the proposed reinsurance
transactions and have received the approval from the insurance regulators in
their respective domiciliary states. There can be no assurance, however, that
the insurance regulators in the respective domiciliary states will not object to
any future reinsurance transactions between RSL, Safety National and Oracle Re.

From time to time, there have been congressional and other initiatives in
the United States regarding the supervision and regulation of the insurance
industry, including proposals to supervise and regulate alien reinsurers. While
none of these proposals have been adopted to date on either the federal or state
level, there can be no assurance that federal or state legislation will not be
enacted subjecting Oracle Re to supervision and regulation in the United States,
which could have a material adverse effect on Oracle Re. In addition, no
assurance can be given that if Oracle Re were to become subject to any laws of
the United States or any state thereof or of any other country at any time in
the future, it would be in compliance with such laws. In general, the Bermuda
statutes and regulations applicable to Oracle Re are less restrictive than those
that would be applicable were it subject to the insurance laws of any state in
the United States. See "Regulation -- Bermuda."

HOLDING COMPANY STRUCTURE AND DIVIDEND RESTRICTIONS

The Company is a holding company with no operations or significant assets
other than its ownership of the capital stock of Oracle Re. Future dividends and
other permitted payments from Oracle Re are expected to be the Company's
principal source of funds to pay expenses, including the payment of principal
and interest on the Note, and to pay cash dividends on its capital stock, if
any. Oracle Re's ability to pay cash dividends is subject to limitations imposed
by the insurance laws and regulations of Bermuda, its jurisdiction of
incorporation and domicile, and are expected to be limited by the proposed terms
of the standby letters of credit facility. See "Dividend Policy," "Management's
Discussion and Analysis of Financial Condition and Plan of Operation,"
"Regulation -- Bermuda" and Notes to Balance Sheet.

POTENTIAL INADEQUACY OF LOSS RESERVES

Oracle Re will establish loss reserves for the ultimate payment of all
losses and loss adjustment expenses ("LAE") incurred with respect to business
written by it. The reserves for losses and LAE will include reserves for unpaid
reported losses and LAE and for losses which have been incurred but have not yet
been reported ("IBNR"). Under U.S. generally accepted accounting principles
("U.S. GAAP"), Oracle Re is not permitted to establish loss reserves for its
employee benefit product reinsurance until an event or circumstance which may
give rise to a claim occurs. Reserves are estimates involving actuarial and
statistical projections at a given time to reflect Oracle Re's expectations of
the costs of the ultimate settlement and administration of claims. The
estimation of reserves by new reinsurers, such as Oracle Re, may be inherently
less reliable than the reserve estimations of a reinsurer with a stable volume
of business and an established loss history, although Oracle Re will have access
to the historical loss experience of Safety National and RSL for their business
that it reinsures. Actual losses and LAE paid may deviate, perhaps
substantially, from estimates reflected in Oracle Re's loss reserves in its
financial statements. If the loss reserves in respect of business written should
be inadequate, Oracle Re will be required to increase loss reserves with a
corresponding reduction in Oracle Re's net income in the period in which the
deficiency is identified. In addition, under Bermuda statutory accounting,
reinsurers may discount loss reserves and in the event there has been
discounting of loss reserves, the statutory financial return and statutory
financial statements shall include an opinion from a loss reserve specialist
(i.e., an actuary) where compliance with statutory ratios is not possible on an
undiscounted basis. There can, however, be no assurance that losses will not
exceed Oracle Re's loss reserves and have a material adverse effect on the
Company's financial condition or results of operations in a particular period.
See "Proposed Business -- Reserves."

9
<PAGE> 14

FLUCTUATIONS IN PRICE OF COMMON SHARES DUE TO VOLATILITY OF REPORTED EARNINGS

The investment strategy proposed for the Company has historically involved
risk levels comparable with that of bond indices. Bonds are the type of
investment vehicle most typically held by insurance companies with liabilities
similar to that of the Company. There can, however, be no assurance that future
risk levels will not increase. In addition, to the extent that the Company
invests in securities for which mark-to-market valuation changes will be
reflected in the Company's statement of operations, it is anticipated that
reported earnings for the Company will have a high degree of volatility. As
such, quarterly and annual results may be difficult to predict. The result of
this could be a reduction of security analysts' and news media's coverage or
investor interest in the Company.

DISCRETIONARY AUTHORITY OF INVESTMENT ADVISORS AND INVESTMENT STRATEGY

Oracle Re will enter into an investment advisory agreement (the "Investment
Advisory Agreement") with Acorn Advisory Capital L.P. (the "Investment Advisor")
pursuant to which the Investment Advisor will have discretionary authority with
respect to its investments. The Company's success, therefor, will depend to a
great extent on the ability of the Investment Advisor to select appropriate
investments for Oracle Re and to allocate assets among investment managers. The
initial term of the Investment Advisory Agreement is until December 31, 1998 and
shall thereafter be automatically renewed for successive two-year terms, unless
terminated on 60 days' notice by either the Company or the Investment Advisor.

The Investment Advisor, together with its affiliates, has over fifteen
years of experience managing multi-manager, multi-strategy programs with
moderate levels of investment risk while achieving actual returns higher than
expected for the level of investment risk assumed. No assurance can be given,
however, that the returns on Oracle Re's investments will be similar to the past
returns achieved by the Investment Advisor.

The profitability of a significant portion of Oracle Re's investment
program will depend, to a great extent, upon accurate assessment by the
investment managers selected by the Investment Advisor of the future price
movements of stocks, bonds and other financial instruments relative to other
securities and/or relative to pertinent indices. There can be no assurance that
the various investment managers with whom investments are made will be able to
predict accurately these price movements.

The success of any investment activity is affected by general economic
conditions, which may affect the level and volatility of interest rates and the
extent and timing of investor participation in the markets for both equity and
interest-rate-sensitive securities. Unexpected volatility or illiquidity in the
markets in which Oracle Re directly or indirectly holds positions could impair
its ability to carry out its business or cause it to incur significant losses.

The institutions, including brokerage firms and banks, with which Oracle Re
(directly or indirectly) expects to do business, or to which securities will be
entrusted for custodial purposes, may encounter financial difficulties that
impair the operational capabilities or the capital position of Oracle Re or an
entity in which it has invested. Oracle Re and the Investment Advisor will
attempt to limit their transactions to well-capitalized and established banks
and brokerage firms in an effort to mitigate such risks, but there can be no
assurance that such transactions can be so limited, or that if limited in such
manner, will result in a mitigation of risks.

POTENTIAL U.S. TAX CONSEQUENCES

The Company and Oracle Re intend to operate their business in a manner that
will not cause them to be viewed as engaged in a trade or business in the United
States and, thus, will not require them to pay United States corporate income
taxes (other than withholding taxes). However, because there is considerable
uncertainty as to the activities which constitute being engaged in a trade or
business within the United States, there can be no assurances that the United
States Internal Revenue Service (the "IRS") will not contend successfully that
the Company or Oracle Re is engaged in a trade or business in the United States.
If the Company or Oracle Re were subject to U.S. income tax, the Company's
shareholders' equity and earnings could be materially adversely affected. See
"Certain Tax Considerations -- Taxation of the Company and Oracle Re -- United
States."

10
<PAGE> 15

If Oracle Re has "related person insurance income" ("RPII"), determined on
a gross basis, greater than or equal to 20% of such company's gross insurance
income for any fiscal year, and if U.S. insureds or reinsureds or related
persons to them directly or indirectly own 20% or more of the voting power or
value of Oracle Re, each U.S. shareholder of the Company who owns Common Shares
(directly or through foreign entities) on the last day of such fiscal year may
be required to include in such shareholder's gross income for U.S. tax purposes
a proportionate share of such RPII. RPII is income of Oracle Re attributable to
insurance or reinsurance policies where the direct or indirect insureds are U.S.
shareholders or are related to U.S. shareholders. RPII may be included in a U.S.
shareholder's gross income whether or not such shareholder is a policyholder.
While the Company intends to operate its business and monitor the direct and
indirect ownership of its shares so that RPII is not reportable by its U.S.
shareholders, due to the factual nature of the question and the absence of IRS
regulations in the area, there can be no assurances of this result. See "Certain
Tax Considerations -- Taxation of Shareholders -- United States Taxation of U.S.
and Non-U.S. Shareholders."

Each "United States shareholder" of a "controlled foreign corporation"
("CFC") must include in its gross income for United States federal income tax
purposes its pro rata share of the CFC's "subpart F income," even if the subpart
F income is not distributed. For these purposes, any U.S. person who owns,
directly or indirectly through foreign persons, or is considered to own under
applicable constructive ownership rules of the Internal Revenue Code of 1986, as
amended (the "Code"), 10% or more of the total combined voting power of all
classes of stock of a foreign corporation, will be considered to be a "United
States shareholder." In general, a foreign insurance company such as Oracle Re
is treated as a CFC only if such "United States shareholders" collectively own
more than 25% of the total combined voting power or total value of the Company's
shares for an uninterrupted period of 30 days or more during any tax year. The
Company believes that, because of the dispersion of the Company's share
ownership and because of the restrictions on voting rights under the Company's
Bye-Laws, shareholders who acquire Common Shares in the Rights Offering will not
be subject to treatment as "United States shareholders" of a CFC. There can be
no assurance, however, that the CFC rules will not apply to shareholders of the
Company. Accordingly, U.S. persons who might, directly or through attribution,
acquire 10% or more of the Common Shares of the Company should consider the
possible application of the CFC rules. See "Certain Tax Considerations --
Taxation of Shareholders -- Classification of the Company or Oracle Re as a
Traditional Controlled Foreign Corporation."

ANTI-TAKEOVER CONSIDERATIONS

The Company's Bye-Laws contain certain provisions that may make more
difficult the acquisition of control of the Company by means of a tender offer,
open market purchase, proxy fight or otherwise. Pursuant to the Company's
Bye-Laws, the Company's Board of Directors may by resolution establish one or
more series of preferred shares having such number of shares, designations,
relative voting rights, dividend rates, liquidation and other rights,
preferences and limitations as may be fixed by the Board of Directors without
any further shareholder approval. In addition, the Company's Bye-Laws restrict
certain "business combinations" between the Company and an "interested
shareholder." While these provisions are designed to encourage persons seeking
to acquire control of the Company to negotiate with the Board of Directors, they
could have the effect of impeding or discouraging a prospective acquiror from
making a tender offer or otherwise attempting to obtain control of the Company.
To the extent these provisions discourage takeover attempts, they could deprive
shareholders of opportunities to realize takeover premiums for their shares or
could depress the market price of the shares. The Company's Bye-Laws will also
have the effect of rendering more difficult or discouraging unsolicited takeover
bids from third parties or the removal of incumbent management. Such provisions
include (i) providing for a staggered Board of Directors and (ii) limiting any
person owning more than 9.5% of the outstanding Common Shares to voting power of
9.5%. See " -- Limitations on Voting," "Management -- Staggered Board and
Committees of the Board" and "Description of Capital Stock -- The Bye-Laws." The
provision in the reinsurance agreements to be entered into with RSL and Safety
National which provides that they will have the right to terminate the agreement
in the event of a Change of Control (as defined therein) of the Company may also
have the effect of rendering more difficult or discouraging unsolicited takeover
bids from third parties. See "Proposed Business -- Reinsurance Agreements with
RSL and Safety National" and "Certain Relationship and Related Transactions."

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<PAGE> 16

POTENTIAL CONFLICTS OF INTEREST, TRANSACTIONS WITH AFFILIATES AND BUSINESS
OPPORTUNITIES

In connection with the organization, initial financing and commencement of
operations of the Company, the Company and Oracle Re will enter into various
agreements with Delphi, RSL and Safety National which will cover, among other
things, investment advisory services for Oracle Re, reinsurance agreements,
pursuant to which RSL and Safety National are expected to agree to cede to
Oracle Re portions of their existing portfolio and certain ongoing risks
relating to their group employee benefit products. Delphi, RSL and Safety
National will also be party to various agreements with the Company with respect
to, among other things, the Note.

In addition, certain individuals who are directors of the Company and
Oracle Re are directors or officers of Delphi, RSL and Safety National.
Conflicts of interest could arise with respect to future transactions involving
Delphi, RSL or Safety National, on the one hand, and the Company or Oracle Re,
on the other hand, which may result in such transactions being negotiated not at
arms' length. Conflicts of interest could also arise with respect to business
opportunities that could be advantageous to Delphi, RSL or Safety National, on
the one hand, and the Company and Oracle Re, on the other hand. Delphi and its
affiliates may seek to participate in business opportunities which may be
suitable for the Company or Oracle Re.

PROPOSED LEGISLATION MAY NOT BE GRANTED

Oracle Re is seeking a private act of the Bermuda Legislature in November
1997 (the "Private Act") which will, among other things, allow it to underwrite
unsegregated insurance and reinsurance business and segregated cell business
within the same entity. The Private Act will allow Oracle Re to create one or
more cells or separate accounts (each, a "Separate Account") in which it will
segregate premiums, investment income and losses from one or more policies and
shall keep such funds separate and independent from other segregated and
unsegregated funds of Oracle Re. The Private Act, if granted, generally will
provide that the Separate Account is not chargeable with any liability arising
from any other business of Oracle Re and will not be subject to claims arising
out of other business Oracle Re may conduct. In the event that the Private
Legislation is not granted, as to which there can be no assurance, Oracle Re
will be unable to underwrite segregated cell business, which could limit the
amount of insurance and reinsurance business underwritten by Oracle Re and have
a material adverse effect on its business and results of operations. See
"Proposed Business -- Proposed Legislation."

POTENTIAL INABILITY TO MEET MINIMUM LIQUIDITY RATIO

The Insurance Act 1978 and related regulations (the "Act") provides that an
insurer engaged in general business is required to maintain the value of its
relevant assets at not less than 75% of the amount of its relevant liabilities.
The Company intends to maintain significant investments in certain unquoted
equity securities which assets will not automatically be regarded as Relevant
Assets, as defined in the Act. However, the Company has made an application to
the Minister through the offices of the Registrar and has received a letter from
the Registrar indicating that there is sufficient evidence in Oracle Re's
application to support a recommendation to the Minister that the said
investments be treated as Relevant Assets on the basis that their underlying
financial strength is sustained by assets that are quoted investments under the
Act. However, the Registrar has noted in his letter that until such time as
Oracle Re is registered under the Act and a formal application is made, the
Minister's approval in this regard cannot be finalized. Oracle Re will be
registered under the Act once it has received the contribution of the net
proceeds of the Rights Offering from the Company. See "Use of Proceeds" and
"Capitalization." Oracle Re believes that it will be successful in obtaining the
permission of the Minister once it is registered because its application is
substantially similar to other applications approved by the Minister in this
context. In the event that the Minister's approval is not granted, as to which
there can be no assurance, Oracle Re will be unable to record the unquoted
equity securities as Relevant Assets for the purposes of meeting its minimum
liquidity ratio under the Act which could potentially limit the amount of
insurance business underwritten by it and may have a material adverse effect on
its business and results of operations.

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<PAGE> 17

ABSENCE OF PUBLIC MARKET FOR COMMON SHARES

Prior to the Rights Offering, there has been no public market for the
Common Shares and there can be no assurance that an active trading market will
develop and continue upon completion of the Rights Offering or that the market
price of the Common Shares will not decline below the Exercise Price. The
Exercise Price was selected by the Company as an appropriate per share price for
initial trading purposes in light of the Company's desired capitalization. The
Rights are non-transferable by the holders thereof and no public market for the
Rights will develop.

NO ASSURANCE OF QUOTATION OF COMMON SHARES ON NASDAQ

Although the Company has applied for quotation of the Common Shares on
Nasdaq, the Common Shares have not been approved for quotation by Nasdaq and
there can be no assurance that the Common Shares will be accepted for quotation
by Nasdaq. Initial listing on Nasdaq generally requires, among other things,
that (i) the Company have at least $4.0 million in "net tangible assets" (total
assets less total liabilities and goodwill), $50.0 million in market
capitalization or $750,000 in net income (in the latest fiscal year or two of
the last three fiscal years), (ii) there be at least 1,000,000 shares in the
public float valued at $5.0 million or more, (iii) the minimum bid price of the
Common Shares be $4.00 per share, (iv) the Common Shares have at least three
active market makers, (v) the Company has at least one year of operating history
(which Nasdaq has advised may be met pursuant to the terms of the reinsurance
arrangements between the Company and each of Safety National and RSL) or $50.0
million in market capitalization and (vi) the Common Shares be held by at least
300 holders, each with 100 shares or more. Although the Rights Offering is
conditioned upon the purchase of at least 599,500 Common Shares upon the
exercise of Rights, the Rights Offering is not conditioned upon any minimum
number of holders, and, accordingly, there can be no assurance that the Company
will be able to comply with the listing requirements for inclusion of the Common
Shares on Nasdaq enumerated in the foregoing clauses (ii) and (vi).

RISKS OF QUOTATION ON NASD'S "ELECTRONIC BULLETIN BOARD"

If the Company is unable to satisfy Nasdaq's initial quotation
requirements, trading in the Common Shares would be conducted in the
over-the-counter market in the so-called "pink sheets" or the National
Association of Securities Dealers' "Electronic Bulletin Board." Consequently,
the liquidity of the Common Shares could be impaired, not only in the number of
securities which could be bought and sold, but also through delays in the timing
of transactions, reduction in security analysts' and the news media's coverage
of the Company and lower prices for the Common Shares than might otherwise be
obtained. Quotation on the NASD's "Electronic Bulletin Board" is effected by
voluntary quotations by brokers that could be withdrawn at any time. The Company
is currently pursuing discussions with several brokers concerning the making of
quotations in the Common Shares.

RISKS OF LOW-PRICED STOCK

If the Company's securities were not listed on Nasdaq (see "No Assurance of
Quotation of Common Shares of Nasdaq"), they could become subject to Rule 15g-9
under the Exchange Act, which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worth in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by this rule, a broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, such
rule may adversely affect the ability of broker-dealers to sell the Company's
securities and may adversely affect the ability of purchasers to sell any of the
securities acquired hereby in the secondary market.

Commission regulations define a "penny stock" to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the Commission

13
<PAGE> 18

relating to the penny stock market. Disclosure is also required to be made about
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks.

The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the Common Shares will qualify for exemption from these
restrictions. In any event, even if the Common Shares were exempt from such
restrictions, they would remain subject to Section 15(b)(6) of the Exchange Act,
which gives the Commission the authority to prohibit any person that is engaged
in unlawful conduct while participating in a distribution of a penny stock from
associating with a broker-dealer or participating in a distribution of a penny
stock, if the Commission finds that such a restriction would be in the public
interest. If the Common Shares were subject to the rules on penny stocks, the
market liquidity for the Common Shares could be severely adversely affected.

SHARES ELIGIBLE FOR FUTURE SALES

While the Company and the Standby Purchasers have not entered into any
agreement which would require the Company to file a registration statement
covering such resales, any future sales of substantial amounts of the Standby
Commitment Shares by the Standby Purchasers, or the perception that such sales
could occur, could adversely affect prevailing market prices for the Common
Shares. Although the Company can make no prediction as to the effect, if any,
that such sales of Common Shares would have on the market price prevailing from
time to time, sales of substantial amounts of Common Shares, or the availability
of such shares for sale, could adversely affect prevailing market prices.

LIMITATIONS ON VOTING

The Company's Bye-Laws contain certain provisions that limit the voting
rights that may be exercised by certain holders of Common Shares. The Bye-Laws
provide that each holder of Common Shares is entitled to one vote per share on
all matters submitted to a vote of shareholders, except that if, and so long as,
the Controlled Shares of any person constitute 9.5% or more of the issued and
outstanding Common Shares, the voting rights with respect to the Controlled
Shares owned by such person shall be limited, in the aggregate, to a voting
power of 9.5%, pursuant to a formula specified in the Bye-Laws. See "Description
of Capital Stock -- Common Shares -- Limitation on Voting Rights."

SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS

The Company is organized pursuant to the laws of Bermuda. In addition,
certain of the directors and officers of the Company, as well as certain of the
experts named herein, reside outside the United States, and all or a substantial
portion of their assets, and all of the assets of the Company, at any one time
are or may be located in jurisdictions outside the United States. As a result,
it may be difficult for investors to effect service of process within the United
States upon such persons who reside outside the United States or to realize
against them upon judgments of courts of the United States predicated upon civil
liabilities under the U.S. federal securities laws. See "Enforceability of Civil
Liabilities Under United States Federal Securities Laws."

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<PAGE> 19

THE RIGHTS OFFERING

The Company is granting, at no cost, to the holders of the outstanding
Delphi Common Stock and holders of options to purchase Delphi Common Stock, of
record at the close of business on the Record Date, Rights to purchase up to an
aggregate of approximately 2,050,000 Common Shares.

Each record holder of Delphi Common Stock and options to purchase Delphi
Common Stock will receive one Right for every ten shares of Delphi Common Stock
and options to purchase Delphi Common Stock owned on an aggregate basis on the
Record Date. Each Right will entitle the holder to purchase one Common Share at
a purchase price of $10.25 per share (the "Exercise Price").

As of the close of business on October 31, 1997, there were approximately
19,017,206 shares of Delphi Common Stock and 1,373,609 options (including 73,440
deferred shares) to purchase Delphi Common Stock outstanding. Accordingly,
subject to changes in the number of outstanding shares of Delphi Common Stock
and options to purchase Delphi Common Stock, a total of approximately 2,050,000
Rights are expected to be issued to holders of Delphi Common Stock and options
to purchase Delphi Common Stock outstanding on the Record Date.

BACKGROUND. The Company has determined to proceed with the Rights Offering
as a means for the Company to raise financing. The Company believes that the
Rights Offering will result in several advantages over a traditional initial
public offering, including the opportunity to offer its Common Shares to
investors who, as shareholders and option holders of Delphi, already have some
knowledge of the insurance business, the opportunity to achieve a broader
distribution to a more stable shareholder base and the minimization of
underwriting discounts and commissions.

Prior to the Rights Offering, there has been no public market for the
Common Shares or the Rights, and there can be no assurance that a public market
for the Common Shares will develop following completion of the Rights Offering.
No public market will develop for the Rights. Consequently, the Exercise Price
was selected by the Company as an appropriate per share price for initial
trading purposes in light of the Company's desired capitalization.

EXERCISE PRIVILEGE. Each Right will entitle the holder thereof to receive,
upon payment of the Exercise Price, one Common Share, subject to the
restrictions described herein (the "Exercise Privilege").

NO FRACTIONAL RIGHTS. No fractional Rights will be issued in the Rights
Offering and a holder of a number of shares of Delphi Common Stock and options
to purchase shares of Delphi Common Stock not evenly divisible by ten will be
entitled to receive the next higher whole number of Rights. For purposes of this
rounding process, record holders of shares of Delphi Common Stock known to be
acting as nominees for beneficial holders of shares of Delphi Common Stock will
be disregarded, and the rounding process will take place with respect to the
aggregate holdings of shares of Delphi Common Stock by the beneficial holder.

EXPIRATION DATE. The Rights Offering will terminate, and the Rights will
expire, at 5:00 p.m., New York City time, on , 1998, unless extended
by the Company (the "Expiration Date"). After the Expiration Date, unexercised
Rights will be null and void. The Company will not be obligated to honor any
purported exercise of Rights received by BankBoston, N.A. (the "Rights Agent")
after the Expiration Date, regardless of when the documents relating to such
exercise were sent.

NON-TRANSFERABILITY OF RIGHTS. The Rights are not transferable by the
holders thereof, and may only be exercised prior to the Expiration Date by the
holders thereof.

CONDITIONS TO THE RIGHTS OFFERING. The Rights Offering is conditioned upon
the purchase of at least 599,500 Common Shares upon exercise of the Rights. In
the event that such number of shares is not subscribed for pursuant to the
Rights or the Standby Agreement, the Rights Agent will promptly return, without
interest, all funds received in payment of the Exercise Price.

METHOD OF EXERCISING RIGHTS. Rights may be exercised by completing and
signing the "Election to Purchase" form that appears on the back of each Rights
certificate. The completed and signed "Election to Purchase" form, accompanied
by payment in full of the Exercise Price for all shares for which the Exercise

15
<PAGE> 20

Privilege has been exercised, must be received by the Rights Agent on or before
the Expiration Date. The Company will not be obligated to honor any purported
exercise of Rights received by the Rights Agent after the Expiration Date,
regardless of when the documents relating to such exercise were sent.

Therefore, the Company and Delphi suggest, for the holders' protection,
that Rights be delivered to the Rights Agent by overnight or express mail
courier, or, if mailed, by registered mail. The Rights and Exercise Price, if
any, should be mailed or delivered to the Rights Agent as follows:

By First Class Mail, Hand or Overnight/Express Mail Courier:

BankBoston, N.A.
70 Campanelli Drive
Braintree, Massachusetts 02814

Payment of the Exercise Price must be made in U.S. dollars by cash, check or
money order payable to "State Street Bank and Trust Company." BankBoston, N.A.
will serve as the escrow agent of the Delphi International Escrow Account.

A holder of Rights who purchases less than all the Common Shares
represented by his Rights certificate will receive from the Rights Agent a new
Rights certificate representing the balance of the unsubscribed Rights, to the
extent that the Rights Agent is able to reissue a Rights certificate prior to
the Expiration Date.

Certificates representing the Common Shares purchased by exercising the
Exercise Privilege will be issued as soon as practicable after the Expiration
Date. All funds received by the Rights Agent in payment of the Exercise Price
will be retained in escrow by the Escrow Agent and will not be delivered to the
Company until the certificates representing Common Shares have been issued.

Record holders of shares of Delphi Common Stock who hold such shares for
the account of others (e.g., brokers or depositories for securities), and who
thus receive Rights certificates representing Rights for the account of more
than one beneficial owner, should provide such beneficial owners with copies of
this Prospectus and should ascertain and execute on their behalf the intentions
of such beneficial owners as to the exercise or transfer of such Rights.

All questions as to the validity, form, eligibility (including times of
receipt and beneficial ownership) and acceptance of subscription forms and the
Exercise Price will be determined by the Company, whose determination will be
final and binding. Once made, subscriptions are irrevocable, and no alternative,
conditional or contingent subscriptions will be accepted. The Company reserves
the absolute right to reject any or all purchases not properly submitted or the
acceptance of which would, in the opinion of its counsel, be unlawful. The
Company also reserves the right to waive any irregularities (or conditions) and
its interpretations of the terms (and conditions) of the Rights Offering shall
be final and binding. Any irregularities in connection with purchases must be
cured within five business days of the giving of notice of defect by the Rights
Agent, but not later than the Expiration Date, unless waived by the Company. The
Company, Delphi and the Rights Agent are not under any duty to give notification
of defects in such subscriptions and will not have any liability for failure to
give such notifications. Exercises will not be deemed to have been made until
such irregularities have been cured or waived, and rejected exercises and the
Exercise Price paid therefor, without interest, will be returned promptly by the
Rights Agent to the appropriate holders of the Rights.

INVESTOR INFORMATION. Investors who desire additional copies of this
Prospectus or additional information should contact Customer Service at
BankBoston, N.A., telephone number (800) 426-5523.

STANDBY AGREEMENT. The Company and the Standby Purchasers have entered
into the Standby Agreement pursuant to which the Standby Purchasers have agreed
to purchase, and the Company has agreed to sell 900,500 Common Shares (the
"Standby Commitment Shares") on the Expiration Date at the Exercise Price. The
obligations of the Standby Purchasers and the Company under the Standby
Agreement are conditioned on the purchase of at least 599,500 Common Shares upon
the exercise of the Rights. In addition, the number of Standby Commitment Shares
will be reduced on a share by share basis (but not below 150,000 Common Shares)
to the extent that more than 1,149,500 Common Shares are purchased upon the
exercise of Rights. To the extent that this reduction results in less than
900,500 Common Shares being purchased by the

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<PAGE> 21

Standby Purchasers, 150,000 Common Shares (the "Minimum Standby Commitment
Shares") will be purchased by certain of the Standby Purchasers (the "Minimum
Standby Purchasers") and any remaining Common Shares will be purchased by the
other Standby Purchasers, pro-rata to their commitments. Delphi will finance 50%
of the purchases made by substantially all of the Minimum Standby Purchasers of
Common Shares represented by their Rights and their Standby Commitment Shares,
which will total 273,486 Common Shares if such Minimum Standby Purchasers
exercise all of their Rights and purchase all of their Standby Commitment
Shares. All of such Common Shares will be pledged to Delphi and Delphi will
obtain a security interest in such shares. See "Certain Relationships and
Related Transactions -- Standby Agreement."

The Company has entered into the Standby Agreement to provide additional
assurance that, if the minimum required 599,500 Common Shares underlying Rights
are sold, the Company would, with the sale of the Standby Commitment Shares,
sell at least 1,500,000 Common Shares. Following completion of the Rights
Offering, (a) assuming that all of the Rights issued in the Rights Offering are
exercised by the holders thereof, 150,000 Common Shares are issued to the
Standby Purchasers (the "Additional Shares") and 2,200,000 Common Shares are
outstanding following the completion of the Rights Offering, the Standby
Purchasers will beneficially own, in the aggregate, approximately 42.5% of the
Common Shares of the Company and (b) assuming that 900,500 Standby Commitment
Shares are issued to the Standby Purchasers, 1,149,500 Common Shares are issued
upon exercise of Rights by the holders thereof and 2,050,000 Common Shares are
outstanding following completion of the Rights Offering, the Standby Purchasers
will beneficially own, in the aggregate, approximately 82.3% of the Common
Shares of the Company. See "Certain Relationships and Related
Transactions -- Standby Agreement."

Delphi has agreed to provide five year loans to Messrs. Elenowitz and
Smith, directors of the Company, for 50% of the cost of their purchases of
Common Shares and to provide certain other Minimum Standby Purchasers with
similar loans of up to $356,111 in the aggregate to purchase the Common Shares
represented by their Rights and their Minimum Standby Commitment Shares and up
to a further $132,738 to the extent that additional portions of their Standby
Commitments are utilized. The maximum amount that Delphi will lend to Messrs.
Elenowitz and Smith is $781,296 and $131,472, respectively, and the maximum
amount that Delphi will lend to the other Minimum Standby Purchasers as a group
is $488,848. As a result, the maximum amount that Delphi will lend to the
Minimum Standby Purchasers is $1,401,616. Interest on such loans will be paid at
the interest rate charged Delphi by its commercial banking group (currently
LIBOR plus 0.45%) and payments of interest and principal will be deferred until
maturity. All of the Common Shares purchased by such Minimum Standby Purchasers
shall be pledged to Delphi to secure the loan to each such Minimum Standby
Purchaser and Delphi will have recourse only against such Common Shares. As a
result of the loans and if such Minimum Standby Purchasers exercise all of their
Rights and purchase all of their Standby Commitment Shares, 273,486 Common
Shares will be pledged to Delphi and Delphi will obtain a security interest in
such shares. The Company believes that these Minimum Standby Purchasers have the
ability to repay these loans. Delphi will not, however, assume ownership of the
Common Shares as a result of such pledge. To secure repayment obligations,
Delphi may cause these Minimum Standby Purchasers to sell the Common Shares
purchased pursuant to such financing and to remit the proceeds to Delphi in full
satisfaction of the loan. Any sales of Common Shares will be made pursuant to a
registration statement declared effective by the Securities and Exchange
Commission or pursuant to an exemption from registration. See "Certain
Relationships and Related Transactions -- Standby Agreement."

FEDERAL INCOME TAX CONSEQUENCES. The following summary of the material
federal income tax consequences affecting holders of Delphi Common Stock and
options to purchase shares of Delphi Common Stock receiving Rights in the Rights
Offering under the Code is based upon current law and is the opinion of Baker &
McKenzie:

DISTRIBUTION OF RIGHTS TO HOLDERS OF DELPHI COMMON STOCK. It is possible
that the IRS may hold that the receipt of the Rights by the holders of Delphi
Common Stock constitutes a distribution of "property" by Delphi to its
shareholders, although it is Baker & McKenzie's opinion that no such
distribution occurs because the Rights do not constitute the property of Delphi,
but rather the property of the Company. If the IRS were

17
<PAGE> 22

to successfully hold that the Rights should be considered "property" of Delphi
within the meaning of Section 317(a) of the Code, the federal income tax
consequences of a distribution of the Rights to holders of Delphi Common Stock
would be as follows: (i) each noncorporate holder of Delphi Common Stock would
be deemed to have received a distribution from Delphi, generally taxable as
ordinary dividend income, in an amount equal to the fair market value (if any)
of the Rights, as of the date of distribution, (ii) each corporate shareholder
of Delphi Common Stock would be deemed to have received a distribution from
Delphi (generally taxable as a dividend subject to the dividends-received
deduction for corporations (generally 70%, but 80% under certain circumstances))
in an amount equal to the fair market value (if any) of the Rights, as of the
date of distribution; and (iii) the tax basis of the Rights in the hands of each
holder (whether corporate or noncorporate) of Delphi Common Stock would be equal
to the fair market value (if any) of the Rights as of the date of distribution.

Since the fair market value of the Rights would determine the amount of
taxable income deemed received by the holders of Delphi Common Stock, the
determination of the fair market value of each Right as of the date of
distribution is critical. The Exercise Price was selected by the Company as an
appropriate per share price for initial trading purposes in light of the
Company's desired capitalization. Based on this fact and because Delphi views
the Rights as merely a mechanism that permits the purchase of the Common Shares,
the Company's Board of Directors believes that the per share value of Common
Shares represented by the Rights at the date of the commencement of the Rights
Offering approximates the Exercise Price, and that the Rights should have no
value for federal income tax purposes. However, the Internal Revenue Service is
not bound by this determination.

EXERCISE OF RIGHTS. Holders of Rights, whether corporate or
noncorporate, will recognize neither gain nor loss upon the exercise of the
Rights. A holder of Rights who receives Common Shares upon the exercise of the
Rights will acquire a tax basis in such shares equal to the sum of the Exercise
Price paid under the Rights Offering and the tax basis (if any) of the holder of
Rights in the Rights.

NON-EXERCISE OF RIGHTS. The income tax treatment applicable to holders
of Rights who fail to exercise their Rights prior to the Expiration Date is set
forth in Section 1234 of the Code. Holders of Rights who allow their Rights to
lapse are deemed under the Code to have sold their Rights on the date on which
the Rights expire. Since upon such lapse no consideration will be received by a
holder of Rights, and since the Rights will have been held for not longer than
one year, a short-term capital loss equal to the tax basis (if any) in the
Rights will be sustained by the holder on such lapse, provided that Common
Shares subject to the Rights would have been capital assets in the hands of the
holder had they been acquired by him.

Because of the complexity of the provisions of the Code referred to above
and because tax consequences may vary depending upon the particular facts
relating to each holder of Delphi Common Stock, such holder should consult their
own tax advisors concerning their individual tax situations and the tax
consequences of the Rights Offering under the Code and any applicable state,
local or foreign tax laws.

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<PAGE> 23

USE OF PROCEEDS

The minimum and maximum net proceeds from the Rights Offering are estimated
to be approximately $14.6 million (the "Minimum Net Proceeds") and $21.8 million
(the "Maximum Net Proceeds"), respectively. In the event that the Minimum Net
Proceeds are raised pursuant to the Rights Offering, the Company intends to
contribute approximately $13.0 million of such net proceeds to Oracle Re, which
will be used by Oracle Re to support its insurance operations, including
increasing its statutory capital to support its underwriting capacity, and
approximately $1.6 million of such net proceeds will be used by the Company for
working capital and general corporate purposes. The Company believes that it
will be able to implement its business strategy in the event that the Minimum
Net Proceeds are raised in the Rights Offering. Any additional proceeds raised
pursuant to the Rights Offering will primarily be contributed to Oracle Re, to
be utilized as described in the preceding sentence, and, to a lesser extent,
will be used by the Company for working capital and general corporate purposes.
In the event that the Maximum Net Proceeds are raised pursuant to the Rights
Offering, the Company intends to contribute approximately $20.2 million of such
net proceeds to Oracle Re, which will be used by Oracle Re to support its
insurance operations, including increasing its statutory capital to support its
underwriting capacity, and approximately $1.6 million of such net proceeds will
be used by the Company for working capital and general corporate purposes.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 2, 1997.

<TABLE>
<CAPTION>
ACTUAL
--------------
(IN THOUSANDS)
<S> <C>
Long-term debt................................................................. $ --
Shareholders' equity:
Preferred Shares, par value $.01 per share, 5,000,000 shares authorized; none
issued.................................................................... --
Common Shares, par value $.01 per share 10,000,000 shares authorized;
1,200,000 shares outstanding, actual...................................... 12
Additional paid-in capital................................................... --
Retained earnings............................................................ --
-------
Total shareholders' equity................................................ 12
-------
Total capitalization................................................. $ 12
=======
</TABLE>

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<PAGE> 24

DIVIDEND POLICY

The Board of Directors of the Company does not intend to pay cash dividends
on the Common Shares in the foreseeable future. The Company intends to retain
all earnings, if any, for use in the operations of the Company's business,
including the payment of principal and interest on the Note. The declaration and
payment of cash dividends in the future, if any, will be at the discretion of
the Board of Directors and will depend upon the Company's results of operations
and cash flows, the financial position and capital requirements of Oracle Re,
general business conditions, legal, tax and regulatory restrictions on the
payment of dividends and other factors the Board of Directors deems relevant.
While the Company is not itself subject to any significant legal prohibitions on
the payment of dividends, Oracle Re is subject to Bermuda regulatory constraints
which affect its ability to pay dividends to the Company.

In accordance with Bermuda statutes and regulations, Oracle Re is
prohibited from paying dividends or other distributions unless after such
payment the amount by which its general business assets exceed its general
liabilities is the greatest of the following amounts: (i) $1.0 million; (ii) an
amount equal to 20% of the first $6.0 million of net written premiums in the
subject year plus 15% of all net written premiums in excess thereof in the
subject year; or (iii) an amount equal to 15% of the reserves for losses and
loss adjustment expenses reflected in the balance sheet at the date of
determination.

Oracle Re may not declare and pay a dividend or make a distribution out of
contributed surplus or other assets legally available for distribution if after
the payment of such dividend or distribution Oracle Re will not meet the minimum
solvency margin and minimum liquidity ratio as detailed above.

Further, in accordance with Bermuda statutes, before reducing by 15% or
more its total statutory capital as set out in its previous year's financial
statement, a Class 3 insurer, such as Oracle Re, must apply to the Minister of
Finance (the "Minister") for his approval and is obliged to provide such
information in connection therewith as the Minister may require. Accordingly,
there is no requirement or assurance that dividends will be declared or paid in
the future. See "Regulation -- Bermuda" and "Description of Capital Stock --
Common Shares -- Dividend Rights."

The standby letters of credit facility is expected to restrict the ability
of Oracle Re to pay dividends to the Company in any year to the greater of (i)
50% of the prior year's net income or (ii) the prior year's net income up to
$3.0 million. See "Management's Discussion and Analysis of Financial Condition
and Plan of Operation -- Liquidity and Capital Resources."

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<PAGE> 25

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION

GENERAL

The Company was formed on September 2, 1997 under the laws of Bermuda and
accordingly has no operating history.

LIQUIDITY AND CAPITAL RESOURCES

The Company will rely primarily on cash dividends from Oracle Re, the net
proceeds from the Note and the net proceeds from the Rights Offering to pay its
operating expenses. The payment of dividends by Oracle Re to the Company is
indirectly limited under Bermuda insurance law and will be limited by the terms
of the standby letters of credit facility. The Insurance Act 1978 and related
regulations requires Oracle Re to maintain a minimum solvency margin and minimum
liquidity ratio. See "Dividend Policy" and "Regulation -- Bermuda -- Minimum
Liquidity Ratio and -- Restriction on Dividends."

Oracle Re is not licensed or admitted as an insurer in any jurisdiction
other than Bermuda. Because many jurisdictions do not permit insurance companies
to take credit for reinsurance obtained from unlicensed or non-admitted insurers
on their statutory financial statements unless security is posted, Oracle Re's
reinsurance contracts require it to post a letter of credit or other security.
Although the Company has received commitments from a commercial bank group for a
standby letters of credit facility for the benefit of RSL and Safety National,
and Oracle Re believes it will obtain a letter of credit facility on terms
acceptable to the Company, there can be no assurance that Oracle Re will be able
to obtain a standby letters of credit facility on commercially acceptable terms
or if at all.

Both RSL and Safety National intend, subject to the completion of the
Rights Offering, to participate in various reinsurance arrangements with Oracle
Re and to cede to Oracle Re portions of their existing portfolios of employee
benefits product insurance relating to their group employee benefit products for
an aggregate premium of approximately $116.0 million. Oracle Re is also
currently in negotiations with RSL and Safety National with respect to the
ceding of certain prospective risks by such companies to Oracle Re with
aggregate annual premiums expected to range from $5.0 million to $10.0 million.

RSL has agreed, subject to completion of the Rights Offering, to cede a
portion of its liabilities under group long-term disability claims incurred
prior to January 1, 1996 to Oracle Re on a quota share basis for a one-time
premium of approximately $40.7 million, less a one-time ceding commission of
approximately $5.7 million and federal excise tax due in the amount of
approximately $400,000, resulting in a net premium to Oracle Re of approximately
$34.6 million. RSL will be entitled to share in a portion of the investment
return of Oracle Re on such reinsurance. On an annual basis, RSL will receive an
amount equal to the lesser of (a) 70% of the amount by which the investment
return exceeds 6% or (b) 2% of Oracle Re's average reserves carried with respect
to the agreement.

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<PAGE> 26

profit commissions earned under the agreement. In the event the underwriting
cash flow profit commissions earned do not reduce the advance underwriting cash
flow profit to zero, Safety National shall retain such advance until all losses
are paid under the agreement. Oracle Re shall also pay the federal excise tax of
$810,000 due. The net funds paid by Safety National to the Company will be
approximately $64.2 million.

It is anticipated that the cash generated from the Company's investment
portfolio will be sufficient to pay losses, profit commissions and expenses for
the foreseeable future. The Company plans to account for these arrangements as
reinsurance transactions under Statement of Financial Accounting Standards No.
113, "Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts." As such, the loss reserves assumed will be discounted
based upon a rate that is no higher than the risk-free rate of return for
investments with a similar duration to those of the liabilities assumed.
Assuming these arrangements were in place, the estimated amount of loss reserves
assumed by Oracle Re would be approximately $114.0 million.

Oracle Re is also currently in negotiations with RSL and Safety National
with respect to the ceding of certain prospective risks by such companies to
Oracle Re with aggregate annual premiums expected to range from $5.0 million to
$10.0 million. The terms of such negotiations have not been finalized and there
can be no assurance that Oracle Re and RSL or Safety National will reach
agreement with respect to such reinsurance.

Oracle Re is not licensed or admitted as an insurer in any jurisdiction
other than Bermuda. Under the terms of the reinsurance agreements between Oracle
Re and RSL and Safety National, Oracle Re is required to provide security, which
it expects will be in the form of a standby letters of credit facility, to RSL
and Safety National to support reinsurance recoverables owed to these reinsureds
in a form acceptable to the insurance commissioners of the States of Illinois
and Missouri, the domiciliary states of RSL and Safety National, respectively.
The standby letters of credit facility will permit RSL and Safety National to
take credit on their statutory financial statements for the reinsurance ceded to
Oracle Re, either as an additional asset or as a reduction in liability. The
Company has received commitments from a commercial bank group for a standby
letters of credit facility, for the benefit of RSL and Safety National which is
to be secured by Oracle Re's investment portfolio with an initial mark-to-market
maintenance requirement of at least 140% of the facility amount as well as a
negative pledge with respect to all other assets of Oracle Re. In the event that
Oracle Re should default under the standby letters of credit facility, it may be
required to liquidate all or a substantial portion of its investment portfolio
and/or its other assets which have been pledged as security for this facility or
otherwise secure its obligations to its reinsureds, which would likely have a
material adverse effect on the business and operations of the Company and Oracle
Re.

The Company intends to enter into an agreement with Delphi, RSL and Safety
National pursuant to which such entities will agree to purchase the Note from
the Company in the aggregate principal amount of $30.0 million concurrently with
the completion of the Rights Offering. The Note will bear simple interest at a
rate of 9.0% per annum, and will become payable thirty years from issuance. The
Company will have the option during any five year period to make semi-annual
interest payments through the issuance of additional promissory notes in lieu of
cash payments. Delphi will grant the Company an option, exercisable during the
five year period after issuance of the Note, to borrow an additional $5.0
million on the same terms. The payment by the Company of the principal of and
interest on the Note shall be subordinated and junior in right of payment to the
prior payment in full of the senior indebtedness of the Company, whether
presently outstanding or thereafter incurred. The Company does not currently
have any senior indebtedness outstanding.

The primary sources of liquidity for Oracle Re will be net cash flow from
the maturity or sale of investments by Oracle Re and operating activities of
Oracle Re, primarily premiums received.

The Company does not currently have any material commitments for any
capital expenditures over the next 12 months.

The Company expects that its financing and operational needs for the
foreseeable future will be met by the proceeds of the Rights Offering, proceeds
of the Note, as well as by funds generated from operations after commencement.
However, no assurance can be given that the Company will be successful in the
implementation of its start-up plan. See "Risk Factors -- No Operating History."

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Oracle Re's investment strategy will focus on the management of its asset
and liability durations. Since Oracle Re's initial reinsurance transactions will
involve liabilities with long-term durations, Oracle Re will be able to invest
its assets in long-term duration investments. Oracle Re's investment objective
is to maximize returns while focusing on the preservation of capital,
diversification of risk and liquidity of investments. Oracle Re's assets will be
allocated among a number of various investment managers with expertise in
utilizing different investment strategies. These broad strategies include, among
others, diversified hedging, hedged equity, common stock/specialized trading,
short selling, risk arbitrage, distressed securities, futures and commodities
and foreign securities investing. The managers primarily will invest the assets
in a variety of marketable securities and other liquid assets, which may include
derivative instruments. Oracle Re will invest through the investment vehicles of
the managers (generally in the form of a corporation or partnership) or through
managed accounts. Oracle Re will be able to redeem its investment from
substantially all the investment vehicles on at least an annual basis with many
of the managers providing quarterly or more frequent liquidity. Oracle Re's
multi-manager, multi-strategy approach combines lower risk and higher risk
strategies in a program that is designed to produce capital appreciation with
reduced volatility.

EFFECTS OF INFLATION

The effects of inflation on the Company will be implicitly considered in
pricing and estimating reserves for unpaid losses and LAE. The actual effects of
inflation on the results of the Company cannot be accurately known until claims
are ultimately settled.

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PROPOSED BUSINESS

GENERAL

Following the completion of the Rights Offering, the Company, a
newly-formed Bermuda insurance holding company, will provide, through its
wholly-owned subsidiary, Oracle Re, excess of loss and quota share reinsurance
primarily for group employee benefit insurance products, including group
long-term disability and excess workers' compensation insurance, offered by RSL
and Safety National, insurance affiliates of Delphi. The Company will also seek
to expand its customer base and to develop additional products and services. The
Company has been organized to take advantage of reinsurance and alternative risk
market opportunities that it believes exist in the Bermuda market. See "The
Bermuda Market."

The Company, through its wholly-owned subsidiary, Oracle Re, also intends
to provide risk financing products to clients seeking an alternative to
traditional commercial insurance for certain risk exposures. These risk
financing products include a retention by the client of a significant amount of
its loss exposure, the transfer of more unpredictable layers of loss to insurers
and a greater involvement by the client in risk management and loss prevention
and loss control. Oracle Re will offer these products in the so-called
"alternative market," which has developed in response to the volatility in cost
and availability of traditional commercial insurance coverage. The Company
intends to provide products through a facility frequently referred to as a
"rent-a-captive," which is designed to provide insureds with certain of the
benefits available through captive insurance companies without the
administrative costs and capital commitment necessary to establish and operate
their own captive insurance company. Oracle Re will offer its rent-a-captive
facility to clients of Safety National to manage their workers' compensation
exposures and may thereafter offer these services to additional clients and
other insurance exposures.

REGULATORY STATUS OF ORACLE RE

In September 1997, the Bermuda Registrar of Companies (Insurance Division)
and the Insurers Admissions Committee of Bermuda reviewed Oracle Re's
application for licensing as a Class 3 and long-term insurance company. During
such reviews, the application was approved and, upon the due capitalization of
Oracle Re, which is to occur upon the consummation of the Rights Offering,
together with the filing of certain prescribed forms and the payment of certain
fees, Oracle Re will be issued a registration certificate under the Insurance
Act 1978 as a Class 3 and long-term Bermuda exempted insurer. Accordingly,
although Oracle Re has been incorporated under the laws of Bermuda, it is not
currently licensed to underwrite, although it has received all required
permissions to do so subject to its capitalization. The Rights Offering is
conditioned upon the purchase of at least 599,500 Common Shares upon the
exercise of Rights and, in such event, the Company will receive net proceeds of
approximately $14.6 million from the sale of such number of shares and the sale
of 900,500 Standby Commitment Shares. Oracle Re will commence underwriting
business immediately upon being licensed to do so which the Company anticipates
will be the date upon which this Rights Offering is completed and the proceeds
therefrom are contributed by the Company to Oracle Re.

RELATIONSHIP WITH DELPHI FINANCIAL GROUP, INC.

Delphi is an insurance holding company engaged through RSL and Safety
National in offering a diverse portfolio of group employee benefit insurance
products, including life, short-term and long-term disability, excess workers'
compensation, special accident and dental insurance. RSL also offers asset
accumulation products, primarily annuities, to individuals and groups. Delphi is
publicly traded on the New York Stock Exchange and as of September 30, 1997, had
approximately $3.1 billion in total assets and a market capitalization of
approximately $800.0 million.

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National with respect to the ceding of certain prospective risks by such
companies to Oracle Re with aggregate annual premiums expected to range from
$5.0 million to $10.0 million.

RSL is engaged in the sale of life, accident and health insurance products
targeted principally to the group employee benefits market. RSL insures groups
ranging from ten to more than 1,000 individuals, although the typical size of
the insured groups is between 100 to 300 individuals. In underwriting its group
employee benefit products, RSL tends to avoid concentrations of business in any
particular industry segment or geographic area. RSL is rated "A- (Excellent)" by
A.M. Best, an independent insurance industry rating organization, and its
claims-paying ability is rated "A (Good Financial Security)" by Standard &
Poor's.

Delphi and its affiliates are expected to enter into various agreements
with the Company and Oracle Re which will cover, among other things, investment
advisory services for Oracle Re, reinsurance arrangements with Oracle Re and the
Note to be made by Delphi, RSL and Safety National to the Company upon
completion of the Rights Offering. Neither Delphi, RSL nor Safety National has
any obligation to provide capital or financial support to the Company or Oracle
Re except for the obligations pursuant to the Note. See "Management's Discussion
and Analysis of Financial Condition and Plan of Operation" and "Certain
Relationships and Related Transactions."

REINSURANCE INDUSTRY

Reinsurance is a form of insurance in which a reinsurer indemnifies an
insurer against part or all of the liability assumed by the insurer under one or
more insurance policies. Reinsurance provides an insurer with several benefits:
a reduction in net liability on individual risks, protection against
catastrophic losses and assistance in maintaining acceptable financial ratios.
Reinsurance also provides an insurer with additional underwriting capacity by
allowing the insurer to accept larger risks and to expand the book of business
it writes at a faster rate.

There are two basis types of reinsurance agreements, treaty and
facultative. A treaty is an agreement, usually continuous or renewable on an
annual basis, between a primary insurer and a reinsurer under which the
reinsurer automatically will assume a predetermined portion of risk associated
with each policy written on a book or class of business, generally up to a
specified limit per insured. Under a facultative agreement, the insurer cedes
and the reinsurer assumes all or part of the risks insured under a single
primary insurance policy. A facultative agreement is separately negotiated for
each risk or group of risks ceded. Facultative reinsurance is normally purchased
by insurance companies for (i) individual risks not covered by their reinsurance
treaties, (ii) higher limits on risks covered by their reinsurance treaties,
(iii) supplementing the protection provided by its reinsurance treaties and (iv)
risks outside the cedent's normal book of business.

Reinsurers indemnify primary insurers under both treaty and facultative
agreements on either a proportional or excess of loss basis. In the case of
proportional reinsurance, the reinsurer, in return for a predetermined portion
or share of the insurance premium charged by the primary insurer, indemnifies
the primary insurer against a predetermined similar portion of the losses of the
primary insurer under the covered primary policy or policies. In the case of
excess of loss reinsurance, the reinsurer indemnifies the primary insurer
against all or a specific portion of losses on underlying insurance policies in
excess of a specified dollar amount, known as the "retention" or "attachment
point," subject to a negotiated limit. Premiums payable to

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the reinsurer by the primary insurer for excess of loss coverage are not
directly proportional to the premiums the primary reinsurer receives because the
reinsurer does not assume a proportionate risk.

THE BERMUDA MARKET

The "Bermuda Market" consists of insurance and reinsurance companies
domiciled in Bermuda. The Bermuda Market was initially developed in the 1960's
as an alternative risk transfer market by commercial insurance buyers who sought
to stabilize insurance costs and coverage by alternative methods of risk
coverage. These methods included the establishment of captive insurance
companies, which allowed such buyers to retain all or a portion of the risk
exposure that they traditionally would have transferred to commercial insurers.

According to Business Insurance (April 14, 1997), the number of insurers
and reinsurers in Bermuda grew by 4.9% from approximately 1,401 in 1995 to 1,470
at year-end 1996. Capital and surplus increased by 23.8% to $36.9 billion in
1995 from $29.8 billion in 1994, and net premiums increased by 23.5% to $18.4
billion in 1995 from $14.9 billion in 1994. Most of the growth in the number of
companies is attributable to the continued growth of captive companies. However,
the growth in capital and surplus and gross written premiums is largely
attributable to the establishment of a number of large excess liability insurers
and property catastrophe reinsurers. The success of these companies has led to
further investment in the Bermuda Market and an increase in the types of
insurance and reinsurance products being offered. The increase in the types of
reinsurance and the development of the Bermuda reinsurance market may increase
the amount of business submitted to Bermuda companies and, in particular, may
provide to the Company opportunities to underwrite business that may not be made
available to companies in other jurisdictions. The Company expects that brokers
and ceding companies will request quotations on behalf of businesses that are
similar in nature to those which the Company proposes to underwrite initially.

The development of the Bermuda Market, in addition to providing increased
opportunities, provides a stable business environment in which to operate. In
addition, there exists in the Bermuda Market a pool of experienced personnel in
the types of reinsurance the Company proposes to underwrite, and, the Company
believes, the regulatory system is not unnecessarily cumbersome or expensive.

Because of its growth and the diversity of the lines of business written by
Bermuda insurers and the reinsurers, the Bermuda Market is now recognized as one
of the major markets, in addition to, among others, those in the United States
and London, for the placement by commercial buyers of insurance and reinsurance
risks.

BUSINESS STRATEGY

Upon completion of the Rights Offering, Oracle Re will be licensed to
underwrite reinsurance treaties in Bermuda where it intends to conclude all
business it underwrites. The Company will use the offices of International
Advisory Services Ltd. ("IAS"), its Bermuda manager, and, while actively seeking
to hire additional underwriting professionals, the Company will be in a
position, with its current management team, to commence underwriting business
upon completion of the Rights Offering. The Company will have, at the
commencement of operations, sufficient underwriting personnel to carry out its
initial business plan. In addition to the services of Colin O'Connor, President
and Chief Executive Officer of the Company, the Company will have access to the
expertise of the staff at IAS, who have significant experience in the
underwriting and administration of the Company's proposed classes of business.
See "Certain Relationships and Related Transactions -- Agreement with
International Advisory Services Ltd." Furthermore, the Company will seek to hire
additional underwriting professionals when needed as justified by the volume of
business opportunities presented to it, and the Company believes that there is a
sufficient pool of experienced professionals in Bermuda to provide an adequate
underwriting staff.

The Company's objective is to provide, through its subsidiary Oracle Re,
reinsurance primarily for a diverse portfolio of group employee benefit
insurance products, including life, short-term and long-term disability, excess
workers' compensation, special accident and dental insurance, offered by RSL or
Safety National, insurance affiliates of Delphi. The Company also intends to
provide, through Oracle Re, risk

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financing products to clients seeking an alternative to traditional commercial
insurance for certain of their risk exposures.

The Company will incur certain costs associated with implementing its
business strategy. The Company anticipates that a significant portion of these
costs will consist of loss and loss adjustment expenses on its insurance
business. The Company will also incur ongoing operating expenses, including U.S.
federal excise taxes, profit sharing commissions, and general and administrative
costs, including costs incurred with respect to its letters of credit facility,
interest expense and salaries.

The Company will seek to develop a sustainable competitive advantage
through the implementation of its business strategy, the principal components of
which are as follows. There can, however, be no assurance that the Company will
be able to successfully implement any or all of the following business
strategies.

Focus on Employee Benefit Product Reinsurance. Oracle Re intends to focus its
underwriting primarily on employee benefit product reinsurance. The Company
believes that Oracle Re's commitment to the employee benefit product reinsurance
market will be an important factor in its ability to obtain business and should
enable it to establish long-term relationships with insurance companies.

Use the Rent-A-Captive Facility to Fund Captive Client's Risks. The Company's
business strategy with respect to the rent-a-captive products is to design
reinsurance programs and to use the rent-a-captive facility to fund captive
client's risks. Oracle Re's rent-a-captive program will allow clients to
participate in a significant portion of their own loss exposure without the
direct administrative costs and capital commitment necessary to establish and
operate their own captive insurance company. A portion of the underwriting
profit and investment income produced by the client's rent-a-captive business
will be returned to the client, creating a direct incentive for the client to
engage in loss prevention and loss control to reduce the overall cost of
financing its exposures.

Focus on Sound Underwriting. Oracle Re's underwriting strategy with respect
to its group employee benefit insurance products is to focus on sound
underwriting policies which will require adequate premiums for a given exposure
commensurate with the amount of capital which Oracle Re estimates is being
placed at risk. Financial reinsurance will generally be offered with finite
limits and the risk assumed will combine timing and interest rate risk with
certain underwriting risk. The Company anticipates that its financial
reinsurance products will comply with Statement of Financial Accounting
Standards No. 113, "Accounting and Reporting for Reinsurance of Short-Duration
and Long-Duration Contracts". Rent-a-captive programs will also be underwritten
with the goal of achieving an underwriting profit.

Focus on a Long-Term Investment Horizon. Oracle Re's investment strategy will
focus on the management of its asset and liability durations. Since Oracle Re's
initial reinsurance transactions will involve liabilities with longer-term
durations, Oracle Re will be able to invest its assets in longer-term duration
investments. Oracle Re's investment objective is to maximize returns, while
focusing on the preservation of capital, diversification of risk and liquidity
of investments. Oracle Re's assets will be allocated among a number of
investment managers with expertise in utilizing different investment strategies.
These broad strategies include, among others, diversified hedging, hedged
equity, common stock/specialized trading, short selling, risk arbitrage,
distressed securities, futures and commodities and foreign securities investing.
The managers primarily invest the assets in a variety of marketable securities
and other liquid assets, which may include derivative instruments. Oracle Re
will invest through the investment vehicles of the managers (generally in the
form of a corporation or partnership) or through managed accounts, which are the
only means available to access outside managers. The Company believes that
investing with outside managers allows it to access a diversity of talented
money managers in a cost effective manner. While not necessarily typical, this
manner of investing is not uncommon in the insurance industry. Oracle Re will be
able to redeem its investment from substantially all the investment vehicles on
at least an annual basis with many of the managers providing quarterly or more
frequent liquidity. Oracle Re's multi-manager, multi-strategy approach combines
lower risk and higher risk strategies in a program that is designed to produce
capital appreciation with reduced volatility.

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Develop a Reputation as a Financially Secure Reinsurer and Manage Prudently
the Company's Risk
Exposure in Relation to its Capital Base. Because Oracle Re was recently formed,
its capital will be unencumbered by issues of unrealized losses on investment
portfolio and uncollectible reinsurance. Also, Oracle Re intends to emphasize
liquidity, capital preservation and security in its investment portfolio and
manage prudently its risk exposure in relation to its capital base. The Company
believes that these factors will assist Oracle Re in developing a reputation as
a financially secure reinsurer.

Generate Consistent Profits from Rent-A-Captive Fees. Oracle Re expects to
receive profits from investment and underwriting fees received for its captive
insurance products and services provided to clients in connection
with Oracle Re's rent-a-captive program.

REINSURANCE AGREEMENTS WITH RSL AND SAFETY NATIONAL

Each of RSL and Safety National intend, subject to the completion of the
Rights Offering, to participate in various reinsurance arrangements with Oracle
Re. RSL and Safety National will cede certain portions of their existing
portfolios and certain ongoing risks relating to their group employee benefit
products, for an aggregate premium of approximately $116.0 million for the
existing portfolio and aggregate annual premiums ranging from approximately $5.0
million to $10.0 million for the ongoing risks. The reinsurance agreements will
be cancellable by Safety National or RSL, as the case may be, upon a Change of
Control of the Company. A "Change of Control" shall be deemed to occur if (a)
the individuals who constitute the Board of Directors of the Company cease for
any reason to continue to represent at least a majority of the directors
constituting the Company's Board of Directors; (b) shareholders of the Company
approve a merger, consolidation, recapitalization or reorganization of the
Company, reverse split of any class of voting securities of the Company, or an
acquisition of securities or assets by the Company, or the sale or disposition
by the Company of all or substantially all of the Company's assets, or if any
such transaction is consummated without shareholder approval, other than any
such transaction in which the holders of outstanding the Company voting
securities receive immediately prior to the transaction, voting securities of
the surviving or transferee entity representing more than 60% of the total
voting power outstanding immediately after such transaction, with the voting
power of each such continuing holder relative to other such continuing holders
not substantially altered in the transaction; or (c) the shareholders of the
Company approve a plan of complete liquidation. See "Certain Relationships and
Related Transactions -- Reinsurance Agreements."

The proposed reinsurance transactions with RSL and Safety National are
subject to the approval of insurance regulators in Illinois and Missouri. RSL
and Safety National are subject to insurance regulations in their domiciliary
states, Illinois and Missouri, respectively, which limit or prohibit certain
reinsurance transactions. Under these insurance regulations, any reinsurance
agreements (and modifications thereto) between Oracle Re and Safety National or
RSL are subject to the approval of the Director of Insurance in their respective
domiciliary state. Safety National and RSL have provided written notice of their
intention to enter into the proposed reinsurance transactions and have received
the approval from the insurance regulators in their respective states.

RSL has agreed, subject to completion of the Rights Offering to cede
approximately 23% of its liabilities under group long-term disability claims
incurred prior to January 1, 1996 to Oracle Re on a quota share basis for a
one-time premium of approximately $40.7 million, less a one-time ceding
commission of approximately $5.7 million and federal excise tax due in the
amount of approximately $400,000, resulting in a net premium to Oracle Re of
approximately $34.6 million. The premium and the terms of the reinsurance
agreement, including the ceding commission, were negotiated between the parties
as the appropriate amounts for the risk being underwritten based on actuarial
analysis. Oracle Re will be liable for a portion of the benefits payable to
approximately 3,350 claimants with an average liability of approximately $10,500
per claimant. Oracle Re will be liable for a portion of the benefits payable to
claimants under long-term disability policies until such time as the benefits
end due to the death or recovery of the claimant or exhaustion of benefits
(typically at the claimant's age 65). In accordance with U.S. GAAP, Oracle Re
will establish loss reserves of approximately $35.0 million for the ultimate
payment of all losses and LAE incurred with respect to such business, an amount
approximately equal to the reserves currently held by RSL. The reinsurance
agreement covers only

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claims incurred prior to January 1, 1996 which are open and outstanding as of
the effective date, and consequently Oracle Re will have no liability for claims
incurred but not reported. Based on the historical loss payment experience of
RSL, aggregate amounts recoverable from Oracle Re are estimated to be
approximately $5.7 million during the first year of the contract, declining by
approximately 10% to 12% per year. Benefit amounts payable under disability
claims are fixed, but the duration of such payments may vary but cannot exceed
the pre-defined benefit period. Based on the historical experience of RSL, total
undiscounted benefits due from Oracle Re are estimated to be approximately $52.2
million. The maximum undiscounted benefits which could be due from Oracle Re are
estimated to be approximately $66.4 million. RSL also will be entitled to share
in a portion of the investment return of Oracle Re on such reinsurance. On an
annual basis, RSL will receive an amount equal to the lesser of (a) 70% of the
amount by which the investment return exceeds 6% or (b) 2% of Oracle Re's
average reserves carried with respect to the agreement.

Safety National has agreed, subject to completion of the Rights Offering,
to cede a portion of its liabilities under excess workers' compensation and
casualty business claims incurred prior to January 1, 1997 to Oracle Re on an
excess of loss basis. On excess workers' compensation, Safety National will cede
its net losses sustained in excess of $590.9 million, subject to an aggregate
limit of $185.1 million. As of September 30, 1997, Safety National has sustained
ultimate losses on the workers' compensation business being ceded to Oracle Re
of $237.7 million of paid losses, $205.2 million of case reserves and $281.5
million of incurred but not reported losses. The excess workers' compensation
business to be ceded by Safety National relates to coverage underwritten by
Safety National for self-insured employers on an excess of loss basis, which
coverage provides protection for losses in excess of a specified retained
amount. Excess workers' compensation claims are reported to Safety National when
the self-insured employers estimates that the claim may exceed their deductible
(on average $284,000). Virtually all of its excess workers' compensation claims
are reported to Safety National within seven years of the date of loss. The
majority of Safety National's excess workers' compensation claims are comprised
of death and permanent disability claims which result primarily in statutorily
determined indemnity payments. Such indemnity payment amounts are generally not
subject to change and the Company is not aware of any legislation or other
proposals which could impact the amount of indemnity payments on such claims. As
such, Safety National's loss payment patterns have been stable. Based upon the
historical loss payment experience of Safety National and the attachment point
of the excess of loss reinsurance agreement, aggregate amounts recoverable from
Oracle Re on the excess workers' compensation business are estimated to begin in
the year 2009. On casualty business, Safety National will cede its net losses
sustained in excess of $80.0 million, subject to an aggregate limit of $5.0
million. As of September 30, 1997, Safety National has sustained ultimate losses
on the casualty business being ceded to Oracle Re of $61.8 million of paid
losses, $3.2 million of case reserves and $15.0 million of incurred but not
reported losses. The casualty business to be ceded by Safety National relates to
the excess umbrella liability business which was underwritten by Safety National
beginning June, 1981 and discontinued in November, 1985. This coverage was
underwritten primarily for small commercial risks on an excess of loss basis,
which coverage provides protection for losses in excess of a specified retained
amount. The losses resulting from such business are liability claims and, as
such, loss payments are expected to be made considerably after the time at which
Safety National discontinued writing this line of business. Loss payments are
usually the result of negotiated settlement or litigation. Such loss payments
are not based upon statutorily determined payments as are the majority of Safety
National's excess workers' compensation claims and, accordingly, Safety
National's casualty losses maintain a less predictable payment pattern than
excess workers' compensation. Based upon the historical loss payment experience
of Safety National and the attachment point of the excess of loss reinsurance
agreement, aggregate amounts recoverable from Oracle Re on the casualty business
are estimated to begin in the year 2002. Safety National's reserve assumptions
have produced reserves which historically have been judged to be adequate. Any
disputed amounts between the insureds and Safety National which result in
litigation are subject to changing judicial interpretations which could impact
the Company's ability to develop an adequate reserve.

Safety National shall pay to Oracle Re a one-time premium in the amount of
$81.0 million for the excess workers' compensation and casualty coverage. The
premium and the terms of the reinsurance agreement, including the advance
underwriting cash flow profit commission, were negotiated between the parties as
the appropriate amounts for the risk being underwritten based upon actuarial
analysis. Safety National will be

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entitled to share in a portion of the investment return of Oracle Re on such
reinsurance, and on an annual basis, Safety National will receive an amount
equal to 70% of the first 3% of the amount by which the investment return
exceeds 5%. Safety National will also be entitled to share in the annual
underwriting cash flow profit produced by the reinsurance agreement, and on an
annual basis, Safety National will receive underwriting cash flow profit equal
to 1.35% of the difference between gross premium received and the cumulative
losses paid by Oracle Re, compounded at a 5% growth rate. At the inception of
the agreement, Oracle Re will pay an advance underwriting cash flow profit
commission in the amount of $16.0 million to Safety National. This advance
commission shall be used to pay the underwriting cash flow profit commissions
earned under the agreement. In the event the underwriting cash flow profit
commissions earned do not reduce the advance underwriting cash flow profit to
zero, Safety National shall retain such advance until all losses are paid under
the agreement. Oracle Re shall also pay the federal excise tax due in the amount
of $810,000. The net funds paid by Safety National to the Company will be
approximately $64.2 million.

The reserves for RSL and Safety National for unpaid losses are necessarily
based on estimates. RSL and Safety National reserve assumptions have produced
reserves which historically have been judged to be adequate, however, actual
experience could produce ultimate business liabilities higher or lower than the
corresponding reserve levels.

ALTERNATIVE MARKET

The commercial insurance market in the United States is cyclical in nature
which has resulted in unpredictable, severe swings in pricing and in the
availability of coverage. This has led many commercial insurance buyers to
develop alternatives. These buyers believe that an effective way to stabilize
insurance costs is to participate in a portion of their exposure which
traditionally has been underwritten in the insurance market. According to the
Conning Insurance Research and Publications "Alternative Markets -- Evolving to
a New Layer" (1996), during the hard market of the mid-1980's, characterized by
increasing prices and a lack of available coverage, the alternative market grew
from 21% of the $58.0 billion commercial property/casualty insurance market in
1979, to 28% of the $146.0 billion market in 1987. Despite the increased price
competition in the traditional insurance market during the recent soft insurance
market, the alternative market has continued to grow to 33% in 1994. Future
estimates for the alternative market share for 1997 and 1998 are between 33% and
37%. The Company believes this indicates that the alternative market has
established a permanent market share and that, generally, once an entity chooses
an alternative market, pricing alone will not necessarily cause it to return to
the traditional market. Included in these alternative market share estimates are
alternative risk financing vehicles such as: (a) captive insurance companies,
risk retention

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groups and rent-a-captive vehicles; (b) self-insurance plans; and (c)
policyholder insurance groups. Additional products such as large deductible and
retrospectively-rated insurance programs represent other non-traditional
insurance products that are part of the alternative insurance market, but are
not included in the above estimates.

Most alternative insurance products have as their basis the financial
participation by the insured in some or all of its risk as compared to
traditional insurance products which shift all or substantially all of the
insured's risk to the insurer and leave the insured with little or no financial
participation in the risks. Generally, a goal of a modern risk management plan
is to participate, in some manner, in those loss events which occur frequently,
are low in severity and are relatively predictable and to transfer to insurers
those events which occur infrequently, are severe and are relatively
unpredictable. The reasons to participate in events which are frequent, low in
severity and relatively predictable are to (a) eliminate or reduce the
transaction costs associated with transferring these loss events to an insurer
which can be high; (b) gain access to the investment income produced by the
funds set aside to fund these loss events; and (c) avoid the cyclical nature of
the price demanded by the commercial insurance market to insure these loss
events.

FINANCIAL REINSURANCE

Financial reinsurance will generally be offered with finite limits and the
risk assumed will combine timing and interest rate risk with certain limited
underwriting risk. It is anticipated that business written will not generate
underwriting income, and that Oracle Re's profit will be generated from
investment income on assets retained. Oracle Re will provide risk specific
finite reinsurance mechanisms that respond to the clients' individual risk
management and financing needs. These coverages will include loss portfolio
transfers of self-insured retentions and captive close-outs. Oracle Re will also
provide traditional reinsurance for per occurrence casualty coverages with
aggregates for commercial insureds and aggregate stop loss programs for
corporate or captive retentions. Coverages are described below:

Loss Portfolio Transfers of Self-Insured Retentions. Loss portfolio
transfers of self-insured retentions ("SIRs") will permit entities, for some of
whom Safety National provides excess workers' compensation insurance, to
transfer their self-insured workers' compensation loss reserve portfolio to
Oracle Re. Collateral assets are required by state insurance statutes or
regulations to secure self-insured workers' compensation exposures and guarantee
payments with respect to accumulated net retained liabilities. Such collateral
assets, which may be sizeable given regulatory requirements, would be released
as a result of such transfer and could be used for other corporate purposes
which makes loss portfolio transfers of SIRs attractive. In addition, many
self-insured entities are associations of smaller entities who have formed a
trust to pool their workers' compensation exposures. Such association members
have joint and several liability for their exposures. A loss portfolio transfer
can eliminate the joint and several liability for association members. Coverage
may be underwritten on an unlimited liability or finite layer basis.

Captive Close-Outs. Captive close-outs will permit the owners of a captive
insurer to eliminate the run-off period ordinarily involved if it ceases
insurance operations. With many long-tail lines of business, particularly
workers' compensation, claims will continue to be paid many years after the
premiums have been collected. A captive insurer that has decided to cease its
operations faces an expensive administrative burden to service the claims until
they are all settled. Such a captive insurer could cede its liabilities to
Oracle Re who would assume the run-off.

Per Occurrence Casualty Coverage with Aggregates. Per occurrence casualty
coverage with aggregates may provide both specific and aggregate coverage for an
insured or ceding company. The specific coverage will protect against unusually
large claims by limiting the amount the insured or ceding company will pay. The
aggregate coverage will protect the insured or ceding company against an
unusually heavy frequency of smaller claims (capped by the amount of specific
risk retained by the insured or ceding company). An aggregate attachment point
will be negotiated with the insured or ceding company which represents the
amount they must pay out in claims before Oracle Re begins to pay.

Aggregate Stop Loss Programs. Aggregate stop loss programs provide the
aggregate portion of the coverage described above for per occurrence casualty
coverage with aggregates. An aggregate attachment

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point will be negotiated with the insured or ceding company which represents the
amount it must pay out in claims before Oracle Re begins to pay. A loss
limitation will also be negotiated to limit the dollar amount of any single
claim applied towards the aggregate attachment point.

RENT-A-CAPTIVE FACILITY

Oracle Re's rent-a-captive program will allow clients to participate in a
significant portion of their own loss exposure without the direct administrative
costs and capital commitment necessary to establish and operate their own
captive insurance company. A portion of the underwriting profit and investment
income produced by the client's rent-a-captive business will be returned to the
client creating a direct incentive for the client to engage in loss prevention
and loss control to reduce the overall cost of financing its exposures.

The Company's business strategy with respect to the rent-a-captive products
is to design reinsurance programs and to use the rent-a-captive facility to fund
captive clients' risks. Each program will be underwritten with the goal of
achieving an underwriting profit. Under each program, an insured or group of
insureds will procure workers' compensation insurance from Safety National or
another insurance company licensed in the U.S., which will retain a portion of
the workers' compensation exposure it has underwritten. Safety National, or the
other primary carrier, will then cede to Oracle Re the remaining portion of the
workers' compensation exposure it has not retained. The insured or an entity
affiliated with the insured (the "Program Sponsor") will either purchase a
separate class of preferred shares from Oracle Re or enter into a good
experience return agreement with Oracle Re. Pursuant to a preferred
shareholders' agreement or the good experience return agreement, Oracle Re and
each program sponsor will designate a portion of the risks reinsured as
participating program risks. The profits and losses from those risks are
allocated to the applicable program or class of preferred shares on Oracle Re's
books and records. The method for calculating such profits and losses is
established in the preferred shareholders' agreement or good experience return
agreement. If the business is profitable, the program sponsor may, subject to
the Board's discretion, receive dividends on the preferred shares or good
experience returns under the good experience return agreements, as the case may
be. If the losses incurred with respect to the participating program risks are
greater than expected, the Program Sponsor may be required to indemnify Oracle
Re.

In certain cases (after due disclosure and acceptance by the insured), an
agent or broker placing risks with Safety National may act as the Program
Sponsor and purchase preferred shares from Oracle Re. In such cases, Safety
National will reinsure a portion of those risks with Oracle Re and pursuant to
the terms of the applicable preferred shareholders' agreement, the agent or
broker will receive dividends if the business is profitable and may be required
to indemnify Oracle Re if the business suffers greater than expected losses.

Oracle Re will generally reinsure Safety National or other ceding companies
for the first $250,000 of losses per occurrence subject to a maximum aggregate
of stop loss limit determined per account with excess exposures retained by
Safety National or the other ceding company. In some cases, Oracle Re will
assume a greater amount of risk but retrocede such risk to a third party
reinsurer.

Oracle Re expects to receive profits from fees received for the various
services provided to clients in connection with Oracle Re's rent-a-captive
program. Oracle Re will receive investment and underwriting fees for its captive
insurance products and services. In a typical program, these fees will total
between 2.5% and 5% of the client's premium. Oracle Re will market its services
to insurance producers and brokers. The services offered to clients in
connection with Oracle Re's rent-a-captive programs will include the following:

- design and implementation of an effective risk financing program;

- use of the rent-a-captive facility to fund the clients' risks; and

- brokering to unaffiliated reinsurers the excess risk which Oracle Re
elects not to retain.

While Oracle Re's initial focus will be on workers' compensation products
and services, the Company's strategy anticipates that over time Oracle Re will
offer a more complete line of general reinsurance products and services.

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PROPOSED LEGISLATION

The Private Act will be presented to the Bermuda Legislature, which
consists of the Senate and House of Assembly of Bermuda. The Company, as the
petitioner for the Private Act, will present a "Private Bill" to the Bermuda
Legislature, which must be approved by both Houses and assented to by Her
Majesty the Queen Elizabeth II or by the Governor of Bermuda acting on behalf of
Her Majesty. Assuming the approval of both Houses and the Governor on behalf of
Her Majesty, the "Private Bill" will then become a "Private Act," and will
become law when the Governor signifies such assent by proclamation published in
the Official Gazette of Bermuda. Oracle Re believes that it will be successful
in obtaining its Private Act since it will be modeled substantially along
similar lines to previous Private Acts approved by the Bermuda Legislature.
However, there can be no assurance that Oracle Re will be successful in this
regard, and, in the event that the Private Act is not granted, Oracle Re will be
unable to underwrite segregated cell business, which could limit the amount of
insurance and reinsurance business underwritten by Oracle Re and have a material
adverse effect on its business and results of operations.

INVESTMENTS AND INVESTMENT ADVISORY AGREEMENT

Oracle Re's investment strategy will focus on the management of its asset
and liability durations. Since Oracle Re's initial reinsurance transactions will
involve liabilities with long-term durations, Oracle Re will be able to invest
its assets in long-term duration investments. Oracle Re's investment objective
is to maximize returns while focusing on the preservation of capital,
diversification of risk and liquidity of investments. Oracle Re's assets will be
allocated among a number of various investment managers with expertise in
utilizing different investment strategies. These broad strategies include, among
others, diversified hedging, hedged equity, common stock/specialized trading,
short selling, risk arbitrage, distressed securities, futures and commodities
and foreign securities investing, which may include derivative instruments. The
managers primarily will invest the assets in a variety of marketable securities
and other liquid assets. Oracle Re will invest through the investment vehicles
of the managers (generally in the form of a corporation or partnership) or
through managed accounts. Oracle Re will be able to redeem its investment from
substantially all the investment vehicles on at least an annual basis with many
of the managers providing quarterly or more frequent liquidity. Oracle Re's
multi-manager, multi-strategy approach combines lower risk and higher risk
strategies in a program that is designed to produce capital appreciation with
reduced volatility.

The identification of and allocation to strategies will vary from time to
time based on a number of factors including assessing the current economic
environment and outlook for profitability for each strategy, evaluating the
liquidity and credit risks of the securities involved, estimating the volatility
of the expected return and quantifying the correlation among strategies to
achieve meaningful diversification. The selection of investment managers include
both a qualitative and quantitative assessment and review including review of
investment and research methodology, evaluation of risk management and control
systems, assessment of the manager's organizational structure and capacity
constraints, analysis of the risk/reward profile and historic correlation to
various markets and other managers.

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<PAGE> 38

investment risk assumed. The Investment Advisor will be paid a fee equal to 50
basis points of assets under management. The Investment Advisor has advised the
Company that it intends to waive the fee for the initial two-year period of the
Investment Advisory Agreement and has as its option the ability to waive future
fees, although there can be no assurance that it will do so. In addition, the
Investment Advisory Agreement will allow the Investment Advisor to defer payment
of its fees, although there can be no assurance that it will do so. The initial
term of the Investment Advisory Agreement is until December 31, 1998 and shall
thereafter be automatically renewed for successive two-year terms, unless
terminated on 60 days' notice by either the Company or the Investment Advisor.

The amount of the fees which the Investment Advisor elects to defer will be
invested by the Company in the same manner as the Company's other assets. Thus,
the Investment Advisor will effectively participate in the investment
performance of the Company to the extent it elects to defer its fee.

The Company is seeking to establish a standby letters of credit facility,
which will likely contain certain restrictions on the type of investments
included in that portion of the portfolio which the Company anticipates will be
required to be pledged to secure such facility. See "Management's Discussion and
Analysis of Financial Condition and Plan of Operation -- Liquidity and Capital
Resources."

MARKETING

Oracle Re is not registered or licensed as an insurance company in any
jurisdiction other than Bermuda and will therefore not actively market its
products in the United States. Although the insurance laws of United States
jurisdictions generally exempt the business of reinsurance from laws which
require persons to procure a certificate of authority prior to transacting the
business of insurance, the Company intends to conduct its business at its
principal offices in Bermuda and will not maintain an office in the United
States, and its personnel will not solicit, advertise, settle claims or conduct
other insurance activities in the United States. The Company, through Oracle Re,
initially intends to reinsure group employee benefit insurance products offered
by RSL and Safety National to the independent U.S. broker market. In addition,
the Company intends to provide risk financing products for clients of Safety
National in the alternative market. The rent-a-captive facility will provide the
insured with a risk financing facility and will permit Safety National and
brokers to address the specific risk financing needs of the insured.

RESERVES

In accordance with U.S. GAAP, Oracle Re will not be permitted to establish
loss reserves for its employee benefit product insurance business until an event
or circumstance which may give rise to a claim occurs. Generally, reserves will
be established without regard to whether the claim may subsequently be contested
by Oracle Re. The reserves for losses and LAE established by Oracle Re will
include reserves for unpaid reported losses and LAE and for losses which have
been incurred but have not yet been reported ("IBNR"). Such reserves will be
estimated by Oracle Re based upon RSL's and Safety National's historical loss
reserves, reports received from ceding companies, supplemented by Oracle Re's
own estimates of reserves for which ceding company reports have not been
received and its own historical experience. To the extent RSL's and Safety
National's historical experiences are inadequate for estimating reserves, such
estimates may be actuarially determined based upon industry experience and
Oracle Re's judgment. The estimates will be continually reviewed and as
adjustments to these reserves become necessary, such adjustments will be
reflected in current operations.

Loss reserves represent estimates of what an insurer or reinsurer
ultimately expects to pay on claims at a given time, based on facts and
circumstances then known, and it is possible that the ultimate liability may
exceed or be less than such estimates. The estimates are not precise in that,
among other things, they are based on predictions of future developments and
estimates of future trends in claim severity and other variable factors such as
inflation. During the loss settlement period, it often becomes necessary to
refine and adjust the estimates of liability on a claim either upward or
downward. Even after such adjustments, ultimate liability may exceed or be less
than the revised estimates. The estimation of reserves by new insurers, such as
Oracle Re, may be inherently less reliable than the reserve estimations of a
reinsurer with a stable volume of business

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and an established loss history, although Oracle Re will have access to the
historical experience of Safety National and RSL for their business that it
reinsures. Actual losses and LAE may deviate, perhaps substantially, from
estimates reflected in Oracle Re's loss reserves in its financial statements. If
the loss reserves in respect of business written should be inadequate, Oracle Re
will be required to increase loss reserves with a corresponding reduction in
Oracle Re's net income in the period in which the deficiency is identified. In
addition, under Bermuda statutory accounting, reinsurers may discount loss
reserves and in the event there has been discounting of loss reserves, the
statutory financial return and statutory financial statements must include an
opinion from a loss reserve specialist (i.e., an actuary) in the event that
compliance with statutory ratios is not possible on an undiscounted basis.
Oracle Re intends to have its reserves examined by independent actuaries.

RETROCESSION

Reinsurers may purchase reinsurance to cover some or all of their own risk
exposure, subject to market availability. Reinsurance of reinsurance is called
retrocession. Reinsurance companies cede risks under retrocessional agreements
to other reinsurers, commonly referred to as retrocessionaires, for reasons
similar to those that cause primary insurers to purchase reinsurance, namely to
reduce net liability on individual risks, to protect against catastrophic
losses, to stabilize financial ratios and to obtain additional underwriting
capacity. Oracle Re may enter into retrocessional agreements with respect to its
rent-a-captive business.

COMPETITION

The reinsurance industry is highly competitive. Oracle Re will compete with
other reinsurers, many of which will have greater financial, marketing and
management resources than the Company, and it may compete with new market
entrants in the future. Competition in the types of reinsurance that Oracle Re
intends to underwrite is based on many factors, including the perceived
financial strength of the reinsurer, pricing and other terms and conditions,
services provided, ratings assigned by independent rating organizations
(including A.M. Best's), speed of claims payment and reputation and experience
in the line of reinsurance to be written.

EMPLOYEES

The Company has a President and Chief Executive Officer, a Vice-President,
a Secretary and an Assistant Secretary. Following completion of the Rights
Offering, the Company anticipates that it will expand its staff, including
underwriting professionals, as it commences operations.

PROPERTIES

The Company intends to use the offices of IAS, its Bermuda manager, at
which the principal offices of the Company and Oracle Re will be located.

LEGAL PROCEEDINGS

Although the Company is not currently involved in any litigation or
arbitration, the Company expects that it will be subject to litigation and
arbitration in the ordinary course of its business.

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REGULATION

BERMUDA

The Insurance Act 1978 and Related Regulations. The Insurance Act 1978 and
related regulations (the "Act"), which regulates the business of Oracle Re,
provides that no person shall carry on an insurance business in or from within
Bermuda unless registered as an insurer under the Act by the Minister of Finance
(the "Minister"). The Minister, in deciding whether to grant registration, has
broad discretion to act as he thinks fit in the public interest. The Minister is
required by the Act to determine whether the applicant is a fit and proper body
to be engaged in the insurance business and, in particular, whether it has, or
has available to it, adequate knowledge and expertise. In connection with
registration, the Minister may impose conditions relating to the writing of
certain types of insurance. The registration of an applicant as an insurer is
subject to its complying with the terms of its registration and other conditions
as the Minister may impose at any time.

An Insurance Advisory Committee appointed by the Minister advises him on
matters connected with the discharge of his functions, and sub-committees
thereof supervise and review the law and practice of insurance in Bermuda,
including reviews of accounting and administrative procedures.

The Act imposes on Bermuda insurance companies solvency and liquidity
standards and auditing and reporting requirements and grants to the Minister
powers to supervise, investigate and intervene in the affairs of insurance
companies. Significant aspects of the Bermuda insurance regulatory framework, as
it applies to Class 3 insurers, are set forth below.

Classification of Insurers. The Act provides for four classes of
registration of insurers carrying on general business (as defined in the Act).
Oracle Re will be registered and licensed as a Class 3 insurer and as a
long-term Insurer. Class 3 insurers are subject to a higher degree of regulation
than Class 1 and 2 insurers, which are primarily concerned with underwriting
related risks. In addition, the minimum capital and surplus for a Class 3
insurer is $1.0 million, whereas the minimum capital and surplus for Class 2 and
Class 1 insurers is $250,000 and $120,000, respectively. There is also a Class 4
insurer classification which is used predominately for property catastrophe
reinsurance companies and companies involved in the excess liability business.

Long-Term Business. Oracle Re will be registered as a Class 3 insurer and
as a long-term insurer, that is, it is proposed that Oracle Re will carry on
both general business and long-term business as those terms are defined in the
Act. Long-term business is essentially effecting and carrying out contracts of
insurance on human life or contracts to pay annuities on human life. An insurer
carrying on long-term business must maintain its accounts in respect of that
long-term business separate from any accounts kept in respect of any other
business. The Act imposes certain restrictions on payments made from the
insurer's long-term business account which must be established with respect to
its long-term business. Further, there are restrictions on the transfer of
long-term insurance business (requires a Court order) and voluntary winding up
(liquidation of a long-term insurer is under court supervision). Long-term
insurers must appoint an approved actuary, that is, an actuary approved by the
Minister.

Cancellation of Insurer's Registration. An insurer's registration may be
canceled by the Minister on certain grounds specified in the Act, including
failure of the insurer to comply with its obligations under the Act or, if, in
the opinion of the Minister after consultation with the Insurance Advisory
Committee, the insurer has not been carrying on business in accordance with
sound insurance principles.

Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will annually audit and report on the Statutory
Financial Statements and the Statutory Financial Return of the insurer, the
latter of which is required to be filed annually with the Registrar of Companies
(the "Registrar"), who is the chief administrative officer under the Act. The
auditor must be approved by the Minister as the independent auditor of the
insurer. The approved auditor may be the same person or firm which audits the
insurer's financial statements and reports for presentation to its shareholders.

Loss Reserve Specialist. Each Class 3 insurer is required to submit an
annual loss reserve opinion by its approved loss reserve specialist when filing
its Statutory Financial Statements and Statutory Financial Return.

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<PAGE> 41

The loss reserve specialist, who will normally be a qualified property/casualty
actuary, must be approved by the Minister.

Statutory Financial Statements. An insurer must prepare annual Statutory
Financial Statements. The Act prescribes rules for the preparation and substance
of such Statutory Financial Statements (which include, in statutory form, a
balance sheet, an income statement, and a statement of capital and surplus, and
detailed notes thereto). The insurer is required to give detailed information
and analyses regarding premiums, claims, reinsurance and investments. The
Statutory Financial Statements are not prepared in accordance with U.S. GAAP and
are distinct from the financial statements prepared for presentation to the
insurer's shareholders under The Companies Act 1981 of Bermuda, which financial
statements may, if the Board so determines, be prepared in accordance with U.S.
GAAP. Oracle Re, within four months after the end of its financial year, must
file its Statutory Financial Statements with the Registrar. The Statutory
Financial Statements must be maintained at the principal office of the insurer
for a period of five years.

Minimum Solvency Margin. The Act provides that the statutory assets of an
insurer must exceed its statutory liabilities by an amount greater than the
prescribed minimum solvency margin which varies with the class of the insurer
and the insurer's net premiums written and loss reserve level.

Minimum Liquidity Ratio. The Act provides a minimum liquidity ratio for
general business. An insurer engaged in general business is required to maintain
the value of its relevant assets at not less than 75% of the amount of its
relevant liabilities. Relevant assets include cash and time deposits, quoted
investments, unquoted bonds and debentures, mortgages secured by first liens on
real estate, investment income due and accrued, accounts and premiums receivable
and reinsurance balances receivable. There are certain categories of assets
which, unless specifically permitted by the Minister, do not automatically
qualify as relevant assets such as unquoted equity securities, investments in
and advances to affiliates, real estate and collateral loans. The relevant
liabilities are total general business insurance reserves and total other
liabilities less deferred income tax and sundry liabilities.

The Company intends to maintain significant investments in the investment
vehicles of certain investment managers which assets will not automatically be
regarded as Relevant Assets, as defined in the Act. However, the Company has
made an application to the Minister through the offices of the Registrar and has
received a letter from the Registrar indicating that there is sufficient
evidence in Oracle Re's application to support a recommendation to the Minister
that the said investments be treated as Relevant Assets on the basis that their
underlying financial strength is sustained by assets that are quoted investments
under the Act. However, the Registrar has noted in his letter that until such
time as Oracle Re is registered under the Act and a formal application is made,
the Minister's approval in this regard cannot be finalized. Oracle Re will be
registered under the Act once it has received the contribution of the net
proceeds of the Rights Offering from the Company. See "Use of Proceeds" and
"Capitalization." Oracle Re believes that it will be successful in obtaining the
permission of the Minister once it is registered because its application is
substantially similar to other applications approved by the Minister in this
context. However, there can be no assurance that Oracle Re will be successful,
and in the event that the Minister's approval is not granted, Oracle Re will be
unable to record the unquoted equity securities as Relevant Assets for the
purposes of meeting its minimum liquidity ratio under the Act which could
potentially limit the amount of insurance business underwritten by it and may
have a material adverse effect on its business and results of operations.

Restriction on Dividends. The payment of dividends or other distributions
by Oracle Re is limited under the Act. In accordance therewith, Oracle Re is
prohibited from paying dividends or other distributions unless after such
payment the amount by which its general business assets exceed its general
business liabilities is the greatest of the following amounts: (i) $1.0 million;
(ii) an amount equal to 20% of the first $6.0 million of net written premiums in
the subject year plus 15% of all net written premiums in excess thereof in the
subject year; or (iii) an amount equal to 15% of the reserves for losses and
loss adjustment expenses reflected in the balance sheet at the date of
determination.

Oracle Re may declare and pay a dividend or make a distribution out of
contributed surplus or other assets legally available for distribution provided
that after the payment of such dividend or distribution Oracle Re will continue
to meet its minimum solvency margin and minimum liquidity ratio as detailed
above.

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Further, in accordance with the Act, before reducing by 15% or more its total
statutory capital as set out in its previous year's financial statements, a
Class 3 insurer must apply to the Minister for his approval and is obliged to
provide such information in connection therewith as the Minister may require.

Annual Financial Return. Oracle Re will be required to file with the
Registrar its Statutory Financial Return no later than four months from its
financial year end (unless specifically extended). The Statutory Financial
Return includes, among other matters, a report of the approved independent
auditor on the Statutory Financial Statements of the insurer, a declaration of
the statutory ratios, and a solvency certificate.

Supervision, Investigation and Intervention. The Minister may appoint an
inspector with extensive powers to investigate the affairs of an insurer if the
Minister believes that an investigation is required in the interest of the
insurer's policyholders or persons who may become policyholders. In order to
verify or supplement information otherwise provided to him, the Minister may
direct an insurer and others to produce documents or information relating to
matters connected with the insurer's business.

If it appears to the Minister that there is a significant risk of the
insurer becoming insolvent, the Minister may direct the insurer not to take on
any new insurance business, not to vary any insurance contract if the effect
would be to increase the insurer's liabilities, not to make certain investments,
to realize certain investments, to maintain in Bermuda, or transfer to the
custody of a Bermuda bank, certain assets, and to limit its premium income.
Further, in such circumstances, the Minister may direct that no dividends be
paid.

An insurer is required to maintain a principal office in Bermuda and to
appoint and maintain a principal representative in Bermuda. For purposes of the
Act, the principal office of Oracle Re will be at Chevron House, Church Street,
Hamilton, Bermuda and International Advisory Services Ltd. will be the principal
representative of Oracle Re. Without a reason acceptable to the Minister, an
insurer may not terminate the appointment of its principal representative, and
the principal representative may not cease to act as such, unless 30 days'
notice in writing to the Minister is given of the intention to do so. It is the
duty of the principal representative, within 30 days of his reaching the view
that there is a likelihood of the insurer for which he acts becoming insolvent
or it comes to his knowledge, or he has reason to believe, that an "event" has
occurred, to make a report in writing to the Minister setting out all the
particulars of the case that are available to him. Examples of such an "event"
include failure by the insurer to comply substantially with a condition imposed
upon the insurer by the Minister relating to a solvency margin or a liquidity or
other ratio.

UNITED STATES AND OTHER

Oracle Re is not admitted to do business in any jurisdiction except
Bermuda. The insurance laws of each state of the United States and of many
foreign countries regulate the sale of insurance within their jurisdictions by
alien insurers, such as Oracle Re, which are not admitted to do business within
such jurisdiction. With some exceptions, such sale of insurance within a
jurisdiction where the insurer is not admitted to do business is prohibited.

Oracle Re will conduct its business through its executive offices in
Bermuda and does not intend to maintain an office or to solicit, advertise,
settle claims or conduct other insurance activities in the United States or in
any jurisdiction other than Bermuda where the conduct of such activities would
require that Oracle Re be so admitted.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY AND ORACLE RE

The table below sets forth the names, ages and titles of the members of the
Board of Directors and executive officers of the Company and Oracle Re:

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY AND ORACLE RE
- -------------------------------------------- --- ------------------------------------------------
<S> <C> <C>
Robert Rosenkranz........................... 55 Chairman of the Board
Colin O'Connor.............................. 49 President, Chief Executive Officer and Director
David Ezekiel............................... 49 Vice President and Director
Nicolas G. Trollope......................... 50 Secretary and Director
David W. Elenowitz.......................... 39 Director
Edward A. Fox............................... 60 Director
Harold F. Ilg............................... 50 Director
Charles P. O'Brien.......................... 60 Director
Lewis S. Ranieri (1)........................ 50 Director
Thomas L. Rhodes............................ 58 Director
Robert M. Smith, Jr......................... 46 Director
</TABLE>

- ---------------
(1) Mr. Ranieri is a director of the Company only.

In addition, Bermuda law imposes certain managerial requirements for all
exempted companies. To meet these requirements, the Company and Oracle Re will
have a secretary who is ordinarily resident in Bermuda and a resident
representative. In accordance with Bermuda law, the secretary of the Company
will not also act as the resident representative. To satisfy Bermuda law, the
Company and Oracle Re will appoint David Ezekiel and Nicolas G. Trollope, Esq.
as resident representative and Secretary, respectively.

ROBERT ROSENKRANZ has served as Chairman of the Board of Directors of each
of the Company and Oracle Re since their inception in September 1997. Mr.
Rosenkranz will devote to such companies such time as is sufficient to enable
him to fulfill his duties as Chairman of the Boards of Directors. Mr.
Rosenkranz's time commitment to these companies will likely not exceed 10% of
his available business time. Mr. Rosenkranz has served as the President and
Chief Executive Officer of Delphi since May 1987 and has served as Chairman of
the Board of Directors of Delphi since April 1989. Mr. Rosenkranz is also the
Chairman of the Board of RSL, First Reliance Standard Life Insurance Company and
Reliance Standard Life Insurance Company of Texas and a director of Safety
National. Mr. Rosenkranz has served as either sole or managing general partner
of Rosenkranz & Company or as beneficial owner of its corporate general partner
since October 1978. Mr. Rosenkranz has served as either the general partner or
as the beneficial owner of the corporate general partner of Acorn Partners since
1982.

COLIN O'CONNOR has served as President, Chief Executive Officer and
Director of each of the Company and Oracle Re since their inception in September
1997. Mr. O'Connor will continue to spend substantially all of his business time
fulfilling his presidential and directorial duties. Mr. O'Connor has served as
President of Belvedere Insurance Company Ltd. for more than the past five years.
Mr. O'Connor is a director of Lombard Odier International Trust (Bermuda) Ltd.
and Midlands Management Co.

DAVID EZEKIEL has served as Vice President and Director of each of the
Company and Oracle Re since their inception in September 1997. Mr. Ezekiel is
the President and Managing Director of IAS, a Bermuda domiciled and licensed
insurance management company, which he founded in 1981. IAS, which currently has
more than 50 personnel, provides the management and administrative expertise for
many Bermuda-based insurance companies. Companies under the management of IAS
have an aggregate annual premium volume of more than $925.0 million and invested
assets of more than $3.5 billion. Mr. Ezekiel, together with the staff of IAS,
will devote sufficient time to the Company as is required to accomplish the
duties assigned to them. Mr. Ezekiel is not likely to spend more than 10% of his
business time on Company and Oracle Re matters.

39
<PAGE> 44

Prior to founding IAS, Mr. Ezekiel was a partner with the accounting firm of
Moore, Stephens & Butterfield, the Bermuda arm of KPMG Peat Marwick. Mr. Ezekiel
was admitted as a Member of the Institute of Chartered Accountants in England
and Wales in 1971 and admitted to Fellowship in 1978.

NICOLAS G. TROLLOPE has served as Secretary and Director of each of the
Company and Oracle Re since their inception in September 1997. Mr. Trollope will
devote to such companies such time as is sufficient to enable him to fulfill his
secretarial and directorial duties thereto, which will likely not exceed 10% of
his available business time. Mr. Trollope is currently a partner with the law
firm of Conyers Dill & Pearman, Hamilton, Bermuda, which he joined in 1975. Mr.
Trollope is a director and officer of numerous Bermuda exempted companies for
which Conyers Dill & Pearman acts as legal counsel and for which its associated
company, Codan Services Ltd., provides corporate administrative services.

DAVID W. ELENOWITZ has served as Director of each of the Company and Oracle
Re since their inception in September 1997. Mr. Elenowitz is the President of
Mercury Capital, Inc., a private investment firm which he founded in November
1993. Prior to forming Mercury Capital, Inc., Mr. Elenowitz headed the U.S.
operations of The Sutton Company, a private investment firm which acquired
businesses for its own account. Mr. Elenowitz is a director of Outsource
Merchandising Corp. and Food Service Holdings, Inc.

EDWARD A. FOX has served as Director of each of the Company and Oracle Re
since their inception in September 1997. Mr. Fox, Chairman of SLM Holding Corp.,
the parent of Sallie Mae, a financial intermediary serving the education credit
market, served as the Dean of the Amos Tuck School of Business Administration at
Dartmouth College from May 1990 until September 1994. From April 1973 until May
1990, Mr. Fox was President and Chief Executive Officer of Sallie Mae. Mr. Fox
is a director of Delphi.

HAROLD F. ILG has served as a Director of each of the Company and Oracle Re
since their inception in September 1997. Mr. Ilg is the Vice Chairman of the
Board of Safety National Casualty Corporation. Mr. Ilg also serves on Safety
National's Executive and Investment Committee and has been associated with
Safety National since 1978. Mr. Ilg is a Certified Public Accountant and
previously worked for Coopers and Lybrand prior to his association with Safety
National. Mr. Ilg is a member of the Missouri Society of CPA's and the Insurance
Accounting and Systems Association. Mr. Ilg is a director of RSL and Safety
National.

CHARLES P. O'BRIEN has served as a Director of each of the Company and
Oracle Re since their inception in September 1997. Mr. O'Brien has served as
President, Chief Executive Officer and a director of RSL since August 1976. Mr.
O'Brien also serves as President, Chief Executive Officer and a director of
First Reliance Standard Life Insurance Company and Reliance Standard Life
Insurance Company of Texas. Mr. O'Brien is a director of Delphi and Safety
National.

LEWIS S. RANIERI has served as a Director of the Company since its
inception in September 1997. Mr. Ranieri has served as Chairman and Chief
Executive Officer since January 1988 of Ranieri & Co., Inc. and Overseas
Hyperion Partners L.P. and Hyperion Partners II L.P. (collectively, "Hyperion"),
funds created to invest in the financial services, housing and real estate
industries. As part of his responsibilities with Hyperion, Mr. Ranieri serves as
Chairman of Hyperion Capital Management, a New York-based money management firm
specializing in mortgage-backed securities, as Chairman, director and/or trustee
of several investment companies advised by Hyperion Capital Management, Inc., as
Chairman and a director of Bank United Corp. and as a director of Bank United, a
Houston-based savings and loan institution. Mr. Ranieri is also a director of
Delphi.

THOMAS L. RHODES has served as a Director of each of the Company and Oracle
Re since their inception in September 1997. Mr. Rhodes has been President of
National Review since November 1992, where he has also served as a director
since 1988. From 1987 to November 1992, Mr. Rhodes was a partner of Goldman
Sachs & Co., New York, New York. Mr. Rhodes is Co-Chairman, Co-Chief Executive
Officer and Co-Manager of Financial Asset Management LLC, Co-Chairman and
Co-Chief Executive Officer of Asset Investors Corporation and Co-Chairman and
Co-Chief Executive Officer of Commercial Assets, Inc. Mr. Rhodes is a director
of Apartment Investment and Management Company, The Lynde and Harry Bradley
Foundation, Delphi, RSL and trustee of The Heritage Foundation.

40
<PAGE> 45

ROBERT M. SMITH, JR. has served as a Director of each of the Company and
Oracle Re since their inception in September 1997. Mr. Smith, has served as Vice
President of Delphi and Delphi Capital Management, Inc. since July 1994. Prior
to joining Delphi, Mr. Smith served as Director, Investment Banking for Merrill
Lynch & Company in New York. Mr. Smith is a director of Delphi, RSL, First
Reliance Standard Life Insurance Company, Reliance Standard Life Insurance
Company of Texas and Safety National.

STAGGERED BOARD AND COMMITTEES OF THE BOARD

The Company's Bye-Laws provide that the Board of Directors shall be divided
into three classes which classes will be as follows: the first class, whose
initial term expires at the first annual meeting (to be held in 1998) of the
Company's shareholders following the completion of the Rights Offering, will be
comprised of Messrs. O'Connor, Fox and O'Brien; the second class, whose initial
term expires at the second annual meeting of the Company's shareholders
following the completion of the Rights Offering, will be comprised of Messrs.,
Smith, Ranieri, Ilg and Rhodes; and the third class, whose initial term expires
at the third annual meeting of the Company's shareholders following the
completion of the Rights Offering, will be comprised of Messrs. Rosenkranz,
Trollope, Elenowitz and Ezekiel. Following their initial terms, all classes of
directors shall be elected to three year terms.

In accordance with the Company's Bye-Laws, the Board of Directors intends
to establish Executive, Audit and Compensation Committees, each of which will
report to the Board of Directors. The Executive Committee will consist of
Messrs. Rosenkranz, Ilg, Elenowitz, O'Connor and Smith, and will be responsible
for establishing the Company's underwriting guidelines and will review the
execution of such guidelines. The Audit Committee will consist of Messrs.
Elenowitz, Ezekiel and Smith, and will establish standards for review of the
Company's compliance with applicable accounting and regulatory requirements. The
Compensation Committee will consist of Messrs. Ezekiel and Rhodes, and will
review the compensation of the Company's Chief Executive Officer and stock
options.

EMPLOYMENT ARRANGEMENT

The Company and Colin O'Connor have entered into an oral employment
arrangement pursuant to which Mr. O'Connor has agreed to serve as President and
Chief Executive Officer of the Company and Oracle Re for an annual salary of
$150,000 plus employee benefits and a bonus to be determined in the discretion
of the Company's Board of Directors. Mr. O'Connor has agreed to devote
substantially all of his business time to the affairs of the Company and Oracle
Re.

DIRECTOR COMPENSATION AND BENEFITS

Directors who are employees of the Company will not be paid any fees or
additional compensation for services as members of the Company's Board of
Directors or any committee thereof. Non-employee directors may receive customary
directors' fees, the amount of which has not yet been determined. All directors
are entitled to reimbursement by the Company for travel and other related
expenses incurred while attending meetings of the Company's Board of Directors
or any committees thereof.

DIRECTORS AND OFFICERS INSURANCE

The Company provides and maintains insurance against liability incurred by
any director or officer of the Company arising out of the performance of their
official duties. The Company has agreed to indemnify the directors and officers
of the Company with respect to their acts or omissions which they may occur
while in office to the extent provided by the Bye-Laws of the Company, and in
each case subject to any limitation imposed by applicable law.

41
<PAGE> 46

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company and Oracle Re have entered into a series of agreements with
Delphi and/or affiliates thereof, including RSL and Safety National, with
respect to the formation of the Company and Oracle Re and the operation thereof.

REINSURANCE AGREEMENTS

RSL has agreed, subject to completion of the Rights Offering to cede a
portion of its liabilities under group long-term disability claims incurred
prior to January 1, 1996 to Oracle Re on a quota share basis for a one-time
premium of approximately $40.7 million, less a one-time ceding commission of
approximately $5.7 million and federal excise tax due in the amount of
approximately $400,000, resulting in a net premium to Oracle Re of approximately
$34.6 million. RSL will be entitled to share in a portion of the annual
investment return of Oracle Re on such reinsurance, and will receive an amount
equal to the lesser of (a) 70% of the amount by which the investment return
exceeds 6% or (b) 2% of Oracle Re's average reserves carried with respect to the
agreement. Mr. Rosenkranz, the Chairman of the Board of Directors of RSL, is
also the Chairman of the Board of Directors of Oracle Re. Mr. O'Brien, the
President, Chief Executive Officer and Director of RSL, is also a director of
Oracle Re. Mr. Ilg, a director of RSL, is also a director of Oracle Re. Mr.
Smith, a director of RSL, is also a director of Oracle Re. Mr. Rhodes, a
director of RSL, is also a director of Oracle Re.

Oracle Re is currently in negotiations with RSL and Safety National with
respect to the ceding of certain prospective risks by such companies to Oracle
Re with aggregate annual premiums expected to range from $5.0 million to $10.0
million. The terms of such negotiations have not been finalized and there can be
no assurance that Oracle Re and RSL or Safety National will reach agreement with
respect to such reinsurance.

NOTE AGREEMENT

The Company will enter into a note agreement with Delphi, RSL and Safety
National pursuant to which such companies will agree to purchase the Note from
the Company in the aggregate principal amount of $30.0 million concurrently with
the completion of the Rights Offering. The Note will bear simple interest at a
rate of 9.0% per annum, and will become payable thirty years from issuance. The
Company will have the option during any five year period to make semi-annual
interest payments through the issuance of additional

42
<PAGE> 47

promissory notes in lieu of cash payments. The payment by the Company of the
principal of and interest on the Note shall be subordinated and junior in right
of payment to the prior payment in full of the senior indebtedness of the
Company, whether presently outstanding or thereafter incurred. The Company does
not have any senior indebtedness presently outstanding. Delphi will grant the
Company an option, exercisable during the five year period after issuance of the
Note, to borrow an additional $5.0 million on the same terms. Mr. Rosenkranz,
the President, Chief Executive Officer and Chairman of the Board of Directors of
Delphi, the Chairman of the Board of Directors of RSL and a director of Safety
National, is also the Chairman of the Board of Directors of the Company. Mr.
O'Brien, the President and Chief Executive Officer of RSL, and a director of
RSL, Safety National and Delphi, is also a director of the Company. Mr. Ilg, a
director of RSL and Safety National, is also a director of the Company. Mr.
Smith, a Vice President and a director of Delphi, and a director of both RSL and
Safety National, is also a director of the Company. Mr. Fox, a director of
Delphi, is also a director of the Company. Mr. Ranieri, a director of Delphi, is
also a director of the Company. Mr. Rhodes, a director of Delphi and RSL, is
also a director of the Company.

RECENT SALES OF UNREGISTERED SECURITIES

On September 2, 1997, the Company issued 1,200,000 of its Common Shares for
an aggregate purchase price of $12,000, or $.01 per share, to the Oracle Re
Purpose Trust, which shares will be redeemed, for an aggregate redemption price
of $12,000, or $.01 per share, upon completion of the Rights Offering. The Trust
is a mechanism whose sole purpose is to permit the organization of the Company
prior to the issuance of shares pursuant to the Rights Offering. The Trustee of
the Trust is Codan Trust Company Limited, which is controlled by the law firm of
Conyers Dill & Pearman. Nicolas G. Trollope, a partner with Conyers Dill &
Pearman, is also a director of the Company. Such issuance was a private
transaction not involving a public offering and was exempt from the registration
provisions of the Securities Act pursuant to Section 4(2) thereof.

INVESTMENT ADVISORY AGREEMENT

The allocation of Oracle Re's assets to the strategies and among investment
managers within the strategies will be performed by Acorn Advisory Capital L.P.
(the "Investment Advisor") pursuant to an investment advisory agreement (the
"Investment Advisory Agreement"). The Investment Advisor, together with its
affiliates, has over fifteen years of experience managing multi-manager,
multi-strategy programs with moderate levels of investment risk while achieving
actual returns higher than expected returns for the level of investment risk
assumed. The Investment Advisor will be paid a fee equal to 50 basis points of
assets under management. The Investment Advisor has advised the Company that it
intends to waive the fee for the initial two-year period of the Investment
Advisory Agreement and has as its option the ability to waive future fees,
although there can be no assurance that it will do so. In addition, the
Investment Advisory Agreement allows the Investment Advisor to defer payment of
its fees, although there can be no assurance that it will do so. Mr. Rosenkranz,
Chairman of the Board of Directors of the Company and Oracle Re, may be deemed
to be the beneficial owner of substantially all of the Investment Advisor.

The initial term of the Investment Advisory Agreement is until December 31,
1998 and shall thereafter be automatically renewed for successive two-year
terms, unless terminated on 60 days' notice by either the Company or the
Investment Advisor.

STANDBY AGREEMENT

The Company and the Standby Purchasers have entered into the Standby
Agreement pursuant to which the Standby Purchasers have agreed to purchase, and
the Company has agreed to sell 900,500 Common Shares (the "Standby Commitment
Shares") on the Expiration Date at the Exercise Price. The obligations of the
Standby Purchasers and the Company under the Standby Agreement are conditioned
on the purchase of at least 599,500 Common Shares upon the exercise of the
Rights. In addition, the number of Standby Commitment Shares will be reduced on
a share by share basis (but not below 150,000 Common Shares) to the extent that
more than 1,149,500 Common Shares are purchased upon the exercise of Rights. To
the extent that this reduction results in less than 900,500 Common Shares being
purchased by the Standby Purchasers,

43
<PAGE> 48

150,000 Common Shares (the "Minimum Standby Commitment Shares") will be
purchased by certain of the Standby Purchasers (the "Minimum Standby
Purchasers") and any remaining Common Shares will be purchased by the other
Standby Purchasers, pro-rata to their commitments. Delphi will finance 50% of
the purchases made by substantially all of the Minimum Standby Purchasers of
Common Shares represented by their Rights and their Standby Commitment Shares,
which will total 273,486 Common Shares if such Minimum Standby Purchasers
exercise all of their Rights and purchase all of their Standby Commitment
Shares. All of such Common Shares will be pledged to Delphi and Delphi will
obtain a security interest in such shares. See "The Rights Offering -- Standby
Agreement."

The Company has entered into the Standby Agreement to provide additional
assurance that, if the minimum required 599,500 Common Shares underlying Rights
are sold, the Company would, with the sale of the Standby Commitment Shares,
sell at least 1,500,000 Common Shares. Following completion of the Rights
Offering, (a) assuming that all of the Rights issued in the Rights Offering are
exercised by the holders thereof, 150,000 Common Shares are issued to the
Standby Purchasers (the "Additional Shares") and 2,200,000 Common Shares are
outstanding following the completion of the Rights Offering, the Standby
Purchasers will beneficially own, in the aggregate, approximately 42.5% of the
Common Shares of the Company and (b) assuming that 900,500 Standby Commitment
Shares are issued to the Standby Purchasers, 1,149,500 Common Shares are issued
upon exercise of Rights by the holders thereof and 2,050,000 Common Shares are
outstanding following completion of the Rights Offering, the Standby Purchasers
will beneficially own, in the aggregate, approximately 82.3% of the Common
Shares of the Company. See "The Rights Offering -- Standby Agreement."

The following table sets forth the Standby Purchasers, the number of
Standby Commitment Shares and Minimum Standby Commitment Shares each Standby
Purchaser has agreed to purchase pursuant to the Standby Agreement. The
following table also sets forth the number of Rights to acquire Common Shares
that each Standby Purchaser, as of October 31, 1997, will own. This table
assumes that as of the date of the Prospectus the information set forth is the
same as on October 31, 1997. All of these persons are employees of Delphi, or
one of its affiliates, or Rosenkranz & Company, except for Messrs. Elenowitz,
Fox, O'Connor, Ranieri and Rhodes. Messrs. Ilg, O'Brien, Smith and Rosenkranz
hold the positions set forth in "Management."

<TABLE>
<CAPTION>
MINIMUM
STANDBY STANDBY
COMMITMENT COMMITMENT NUMBER OF
NAME SHARES(1) SHARES RIGHTS
---------------------------------------------------- ---------- ---------- ---------
<S> <C> <C> <C>
Wayne M. Benseler................................... 3,700 -- 2,000
John P. Csik........................................ 2,300 2,300 2,307
Lawrence E. Daurelle................................ 1,800 -- 1,914
Jane R. Dunlap...................................... 5,000 -- 3,716
Linda Eike.......................................... 10,000 2,600 1,977
David W. Elenowitz and David W. Elenowitz Spray
Trust............................................. 150,000 71,000 2,448
Christopher A. Fazzini.............................. 5,000 -- 1,543
Aaron A. Fischer.................................... 10,000 10,000 1,630
Catherine M. Fleming................................ 2,000 2,000 83
Edward A. Fox....................................... 40,000 -- 3,769
Kenneth R. Hamm..................................... 800 -- 1,224
Duane A. Hercules Living Trust...................... 15,000 -- 15,208
Ilg Family L.P. No. 1............................... 80,000 -- 71,247
Paul J. Kehoe....................................... 2,000 -- 2,043
Louis C. Lucido..................................... 31,000 12,500 2,000
Eugene R. Maier..................................... 5,000 5,000 2,861
Patricia A. Mortz................................... 10,000 10,000 2,041
Charles P. O'Brien.................................. 33,400 -- 16,845
Colin O'Connor...................................... 15,000 15,000 --
</TABLE>

44
<PAGE> 49

<TABLE>
<CAPTION>
MINIMUM
STANDBY STANDBY
COMMITMENT COMMITMENT NUMBER OF
NAME SHARES(1) SHARES RIGHTS
---------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Jeffrey W. Otto..................................... 2,400 2,400 2,307
Stuart M. Presson................................... 2,700 2,700 2,769
Joseph W. Rachinsky................................. 3,800 -- 1,700
Lewis S. Ranieri.................................... 80,000 -- 1,688
Thomas L. Rhodes.................................... 20,000 -- 1,045
Rosenkranz & Company (2)............................ 300,000 -- 530,567
Terrence T. Schoeninger Trust....................... 20,000 -- 35,338
Gerald R. Scott Trust............................... 15,000 -- 30,673
Robert M. Smith, Jr. ............................... 12,500 12,500 13,153
Debra Staples....................................... 100 -- 517
William Troy........................................ 2,000 2,000 10
Mark A. Wilhelm Trust............................... 20,000 -- 31,348
------- ------- -------
Total..................................... 900,500 150,000 785,971
======= ======= =======
</TABLE>

- ---------------
(1) Represents aggregate commitment including Minimum Standby Commitment Shares.

(2) Rosenkranz & Company has advised the Company that it intends to distribute
any shares purchased pursuant to the Standby Agreement to its partners. As a
result, Mr. Robert Rosenkranz will receive directly or indirectly an initial
distribution of approximately 73.5% of any shares so purchased.

Delphi has agreed to provide five year loans to Messrs. Elenowitz and
Smith, directors of the Company, for 50% of the cost of their purchases of
Common Shares and to provide certain other Minimum Standby Purchasers with
similar loans of up to $356,111 in the aggregate to purchase the Common Shares
represented by their Rights and their Minimum Standby Commitment Shares and up
to a further $132,738 to the extent that additional portions of their Standby
Commitments are utilized. The maximum amount that Delphi will lend to Messrs.
Elenowitz and Smith is $781,296 and $131,472, respectively, and the maximum
amount that Delphi will lend to the other Minimum Standby Purchasers as a group
is $488,848. As a result, the maximum amount that Delphi will lend to the
Minimum Standby Purchasers is $1,401,616. Interest on such loans will be paid at
the interest rate charged Delphi by its commercial banking group (currently
LIBOR plus 0.45%) and payments of interest and principal will be deferred until
maturity. All of the Common Shares purchased by such Minimum Standby Purchasers
shall be pledged to secure the loan to each such Minimum Standby Purchaser and
Delphi will have recourse only against such Common Shares. As a result of the
loans and if such Minimum Standby Purchasers exercise all of their Rights and
purchase all of their Standby Commitment Shares, 273,486 Common Shares will be
pledged to Delphi and Delphi will obtain a security interest in such shares. The
Company believes these Minimum Standby Purchasers have the ability to repay
these loans. Delphi will not, however, assume ownership of the Common Shares as
a result of such pledge. To secure repayment obligations, Delphi may cause these
Minimum Standby Purchasers to sell the Common Shares purchased pursuant to such
financing and to remit the proceeds to Delphi in full satisfaction of the loan.
Any sales of Common Shares will be made pursuant to a registration statement
declared effective by the Securities and Exchange Commission or pursuant to an
exemption from registration. See "The Rights Offering -- Standby Agreement."

AGREEMENT WITH INTERNATIONAL ADVISORY SERVICES LTD.

The Company has agreed to engage IAS to provide certain management and
administrative services to the Company. David Ezekiel, Vice President and a
director of the Company and Oracle Re, is the President, Managing Director and
principal shareholder of IAS. These services will include underwriting support
and administration, preparation of financial statements, liaison with auditors,
legal advisors and other service providers, together with such other duties as
may be agreed upon. The Company will pay to IAS a fee based upon the time and
expenses incurred for the provision of such services, which fee the Company
expects to be approximately $100,000 during 1998.

45
<PAGE> 50

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of Common Shares by each person expected by the Company to own
beneficially more than five percent of the Common Shares immediately following
the Rights Offering, each of the Company's Directors, which includes the
Company's Chief Executive Officer, and all directors and officers of the Company
as a group, assuming (a) that all of the Rights issued in the Rights Offering
are exercised by the holders thereof, that an additional 150,000 Common Shares
are issued to the Standby Purchasers (the "Additional Shares") and that
2,200,000 Common Shares are outstanding following completion of the Rights
Offering and (b) that 900,500 Standby Commitment Shares are issued to the
Standby Purchasers, 1,149,500 Common Shares are issued upon exercise of Rights
by the holders thereof and that 2,050,000 Common Shares are outstanding
following completion of the Rights Offering. This table assumes that as of the
date of the Prospectus the number of Rights is the same as on October 31, 1997.

<TABLE>
<CAPTION>
AMOUNT OF
AMOUNT OF RIGHTS AMOUNT OF STANDBY
NAME AND ADDRESS OF AND NATURE OF ADDITIONAL PERCENT OF COMMITMENT PERCENT OF
BENEFICIAL OWNER(1) OWNERSHIP SHARES CLASS(A) SHARES CLASS(B)
- ---------------------------------------- ---------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Rosenkranz & Company(2)................. 530,567 -- 24.1% 300,000 40.5%
Robert Rosenkranz(2).................... 43,801 -- 2.0 -- 2.1
Colin O'Connor.......................... -- 15,000 * 15,000 *
David Ezekiel........................... -- -- -- -- --
Nicolas G. Trollope..................... -- -- -- -- --
David W. Elenowitz(3)................... 2,448 71,000 3.3 150,000 7.4
Edward A. Fox........................... 3,769 -- * 40,000 2.1
Harold F. Ilg(4)........................ 71,247 -- 3.2 80,000 7.4
Charles P. O'Brien...................... 16,845 -- * 33,400 2.5
Lewis S. Ranieri........................ 1,688 -- * 80,000 4.0
Thomas L. Rhodes........................ 1,045 -- * 20,000 1.0
Robert M. Smith, Jr.(3)................. 13,153 12,500 1.2 12,500 1.3
All officers and directors as a group
(11 persons).......................... 684,563 98,500 35.6% 730,900 69.0%
</TABLE>

- ---------------
* Less than 1%.

(1) The address of each of Rosenkranz & Company, Robert Rosenkranz, David W.
Elenowitz and Robert M. Smith, Jr. is 650 Madison Avenue, Suite 2600, New
York, New York 10022. The address of Colin O'Connor is Delphi International
Ltd., Chevron House, Church Street, Hamilton, Bermuda. The address of David
Ezekiel is International Advisory Services Ltd., Chevron House, Church
Street, P.O. Box HM 1760, Hamilton Bermuda. The address of Nicolas G.
Trollope, Esq. is Conyers, Dill & Pearman, Clarendon House, Church Street,
Hamilton, Bermuda. The address of Edward A. Fox is R.R. 67-15, Harborside,
Maine 04642. The address of Harold F. Ilg is Safety National Casualty
Corporation, 2043 Woodland Parkway, Suite 200, St. Louis, Missouri 63146.
The address of Charles P. O'Brien is Reliance Standard Life Insurance
Company, 2501 Parkway, Philadelphia, Pennsylvania 19130. The address of
Lewis S. Ranieri is Ranieri & Co., Inc., 50 Charles Lindbergh Blvd., Suite
500, Uniondale, New York 11553. The address of Thomas L. Rhodes is National
Review, 215 Lexington Avenue, New York, New York 10016.

(2) Rosenkranz & Company has advised the Company that it intends to distribute
such Common Shares to its partners promptly after completion of the Rights
Offering. As a result, Mr. Robert Rosenkranz will receive directly or
indirectly a distribution of approximately 420,422 Common Shares, which,
assuming that he exercises the Rights that he owns personally and that he
receives approximately 220,500 Standby Commitment Shares, will represent
33.4% of the Common Shares to be outstanding following completion of the
Rights Offering.

(3) Delphi has agreed to provide five year loans to Messrs. Elenowitz and Smith
for 50% of the cost of their purchases of Common Shares and to provide
certain other Minimum Standby Purchasers with similar loans of up to
$356,111 in the aggregate to purchase the Common Shares represented by their
Rights and their Minimum Standby Commitment Shares and up to a further
$132,738 to the extent that additional portions of their Standby Commitments
are utilized. The maximum amount that Delphi will lend to Messrs. Elenowitz
and Smith is $781,296

46
<PAGE> 51

and $131,472, respectively, and the maximum amount that Delphi will lend to
the other Minimum Standby Purchasers as a group is $488,848. As a result,
the maximum amount that Delphi will lend to the Minimum Standby Purchasers
is $1,401,616. Interest on such loans will be paid at the interest rate
charged Delphi by its commercial banking group (currently LIBOR plus 0.45%)
and payments of interest and principal will be deferred until maturity. All
of the Common Shares purchased by such Minimum Standby Purchasers shall be
pledged to secure the loan to each such Minimum Standby Purchaser and Delphi
will have recourse only against such Common Shares. As a result of the loans
and if such Minimum Standby Purchasers exercise all of their Rights and
purchase all of their Standby Commitment Shares, 273,486 Common Shares will
be pledged to Delphi and Delphi will obtain a security interest in such
shares. The Company believes these Minimum Standby Purchasers have the
ability to repay these loans. Delphi will not, however, assume ownership of
the Common Shares as a result of such pledge. To secure repayment
obligations, Delphi may cause these Minimum Standby Purchasers to sell the
Common Shares purchased pursuant to such financing and to remit the proceeds
to Delphi in full satisfaction of the loan. Any sales of Common Shares will
be made pursuant to a registration statement declared effective by the
Securities and Exchange Commission or pursuant to an exemption from
registration.

(4) These Rights are owned by the Ilg Family L.P. No. 1.

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DESCRIPTION OF CAPITAL STOCK

The following summarizes certain provisions of the Memorandum of
Association and the Bye-Laws of the Company. Such summaries do not purport to be
complete and are subject to, and are qualified in their entirety by, all of the
provisions of the Memorandum of Association and the Bye-Laws. Copies of the
Memorandum of Association and the Bye-Laws are filed as exhibits to the
Registration Statement of which this Prospectus is a part.

GENERAL

The authorized share capital of the Company will be 15,000,000 shares,
consisting of 10,000,000 common shares, par value $.01 per share ("Common
Shares") and 5,000,000 preferred shares, par value $.01 per share ("Preferred
Shares"). The Company expects 2,050,000 Common Shares (assuming that no Standby
Commitment Shares are issued to the Standby Purchasers), and no Preferred
shares, to be issued and outstanding following completion of the Rights
Offering.

COMMON SHARES

The Common Shares offered hereby will be validly issued, fully paid and
nonassessable. There are no provisions of Bermuda law or the Company's Bye-Laws
which impose any limitations on the rights of shareholders to hold or vote
Common Shares by reason of such shareholders not being residents of Bermuda.

Dividend Rights. The Company is a holding company with no operations or
significant assets other than its ownership of the capital stock of Oracle Re,
its insurance subsidiary. Therefore, the Company will rely primarily on
dividends from Oracle Re to pay dividends on the Common Shares. Oracle Re's
ability to pay dividends to the Company in the future is subject to limitations
imposed by the insurance laws and regulations of Bermuda, its jurisdiction of
incorporation and domicile, and will depend on, among other things, its
statutory surplus, future earnings and regulatory restrictions. The payment of
dividends by Oracle Re to the Company will also be limited by the terms of the
proposed standby letters of credit facility. See "Dividend Policy,"
"Management's Discussion and Analysis of Financial Conditions and Plan of
Operation -- Liquidity Capital Resources" and "Regulation -- Bermuda."

Holders of the Common Shares will be entitled to receive dividends ratably
when and as declared by the Board of Directors out of funds legally available
therefor.

Limitation on Voting Rights. Each holder of Common Shares is entitled to
one vote per share on all matters submitted to a vote of the Company's
shareholders at any such meeting, subject to the 9.5% voting limitation
described below. All matters, including the election of directors, voted upon at
any duly held shareholders' meeting shall be carried by a majority of the votes
cast at the meeting by shareholders represented in person or by proxy, except
(i) approval of a merger, consolidation or amalgamation, or the sale, lease or
exchange of all or substantially all of the assets of the Company, which
requires (in addition to any regulatory or court approvals) the approval of at
least 66 2/3% of the outstanding voting shares, voting together as a single
class, (ii) approval of a special resolution, (iii) amendment of certain
provisions of the Bye-Laws which require the approval of at least 66 2/3% of the
outstanding voting shares, voting together as a single class and (iv) as
otherwise provided in the Bye-Laws. A special resolution requires the approval
of at least 66 2/3% of the votes cast by such shareholders represented in person
or by proxy at a duly convened meeting.

The Bye-Laws contain certain provisions that limit the voting rights that
may be exercised by certain holders of Common Shares. The Bye-Laws provide that
each holder of Common Shares is entitled to one vote per share on all matters
submitted to a vote of the Company's shareholders, except that if, and so long
as, the Controlled Shares of any person constitute 9.5% or more of the issued
and outstanding Common Shares, the voting rights with respect to the Controlled
Shares owned by such person shall be limited, in the aggregate, to a voting
power of 9.5%, pursuant to a formula specified in the Bye-Laws. "Controlled
Shares" means (i) all shares of the Company directly, indirectly or
constructively owned by any person within the meaning of Section 958 of the Code
and (ii) all shares of the Company directly, indirectly or beneficially owned by
such person within the meaning of Section 13(d) of the Exchange Act (including
any shares owned by a group of

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persons as so defined and including any shares that would otherwise be excluded
by the provisions of Section 13(d)(6) of the Exchange Act). Under these
provisions, if, and so long as, any person (as defined below) directly,
indirectly or constructively owns, within the meaning of Section 958 of the
Code, Controlled Shares having more than 9.5% of the total number of votes
exercisable in respect of all shares of voting stock of the Company, the voting
rights attributable to such shares will be limited, in the aggregate, to 9.5% of
the total number of votes.

The Common Shares have noncumulative voting rights, which means that the
holders of a majority of the Common Shares may elect all of the directors of the
Company and, in such event, the holders of the remaining shares will not be able
to elect any directors. The Board of Directors is presently divided into three
classes, two of which consist of four directors and one of which consists of
three directors. At present, the first class is elected for a term which expires
at the first annual meeting of the Company's shareholders following the
completion of the Rights Offering, and the second and third class is elected for
a term which expires at the second and third meeting of the Shareholders
following the completion of the Rights Offering, respectively, with the result
that shareholders will not vote for the election of a majority of directors in
any single year. See "Management -- Staggered Board Committees of the Board."
Directors may be removed without cause only by the affirmative vote of the
holders of at least 66 2/3% of the outstanding shares generally entitled to vote
at a meeting of shareholders. Directors may be removed with cause by the
affirmative vote of the holders of a majority of the votes cast at a meeting of
shareholders.

This classified, or "staggered," board provision could prevent a party who
acquires control of a majority of the outstanding voting power from obtaining
control of the Board until the second annual shareholders meeting following the
date the acquiror obtains the controlling share interest. The classified board
provision could have the effect of discouraging a potential acquiror from making
a tender offer or otherwise attempting to obtain control of the Company and
could thus increase the likelihood that incumbent directors will retain their
positions.

Preemptive Rights. No holder of Common Shares of the Company shall, by
reason only of such holding, have any preemptive right to subscribe to any
additional issue of shares of any class or series nor to any security
convertible into such shares.

Voting Rights in Oracle Re. The Company's Bye-Laws provide that each
holder of Common Shares is entitled to one vote per share on all matters
submitted to a vote of Oracle Re's shareholders, subject to the 9.5% voting
limitation set forth above.

THE BYE-LAWS

The Bye-Laws provide for the internal regulation of the Company, including,
among other things, the establishment of share rights, modification of such
rights, issuance of share certificates, imposition of a lien over shares in
respect of unpaid amounts on those shares, calls on shares which are not fully
paid, forfeiture of shares, the transfer of shares, alterations to capital, the
convening and conduct of general meetings, proxies, the appointment and removal
of directors, conduct and power of directors, dividends, the appointment of any
auditor and the winding-up of the Company.

Pursuant to the Company's Bye-Laws, the Company's Board of Directors may by
resolution establish one or more series of preferred shares having such number
of shares, designations, relative voting rights, dividend rates, liquidation and
other rights, preferences and limitations as may be fixed by the Board of
Directors without any further shareholder approval. Such rights, preferences,
powers and limitations as may be established could also have the effect of
impeding or discouraging the acquisition of control of the Company.

TRANSFER AGENT

The transfer agent and registrar for the Common Shares will be BankBoston,
N.A., Braintree, Massachusetts. BankBoston, N.A. will maintain a branch register
for the Common Shares in Braintree, Massachusetts and will maintain a principal
register for the Common Shares at the Company's registered office.

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DIFFERENCES IN CORPORATE LAW

The Companies Act 1981 of Bermuda (the "Companies Act") differs in certain
material respects from laws generally applicable to United States corporations
and their shareholders. Set forth below is a summary of certain significant
provisions of the Companies Act (including modifications adopted pursuant to the
Bye-Laws) applicable to the Company, which differ in certain respects from, for
example, the provisions of Delaware corporate law. The following statements are
summaries, and do not purport to deal with all aspects of Bermuda law that may
be relevant to the Company and its shareholders.

Interested Directors. The Bye-Laws provide that any transaction entered
into by the Company in which a director has an interest is not voidable by the
Company nor can such director be liable to the Company for any profit realized
pursuant to such transaction provided the nature of the interest is disclosed at
the first opportunity at a meeting of directors or in writing to the directors.
Under Delaware law, such transaction would not be voidable if (i) the material
facts as to such interested director's relationship or interests are disclosed
or are known to the board of directors and the board in good faith authorizes
the transaction by the affirmative vote of a majority of the disinterested
directors, (ii) such material facts are disclosed or are known to the
stockholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the stockholders or (iii) the
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified. Under Delaware law, such interested director could be held
liable for any transaction for which such director derived an improper personal
benefit.

Mergers and Similar Arrangements. The Company may acquire the business or
another Bermuda exempted company or a company incorporated outside Bermuda and
carry on such business when it is within the objects of its Memorandum of
Association. The Company may also amalgamate with another Bermuda company or
with a body incorporated outside Bermuda. In the case of an amalgamation, a
shareholder may apply to a Bermuda court for a proper valuation of such
shareholder's shares if such shareholder is not satisfied that fair value has
been paid for such shares. The court ordinarily would not set aside the
transaction on that ground absent evidence of fraud or bad faith. Under Delaware
law, with certain exceptions, any merger, consolidation or sale of all or
substantially all the assets of a corporation must be approved by the board of
directors and a majority of the outstanding shares entitled to vote. Under
Delaware law, a stockholder of a corporation participating in certain major
corporate transactions may, under varying circumstances, be entitled to
appraisal rights pursuant to which such stockholder may receive cash in the
amount of the fair market value of the shares held by such stockholder (as
determined by a court or by agreement of the corporation and the stockholder) in
lieu of the consideration such stockholder would otherwise receive in the
transaction. Delaware law does not provide stockholders of a corporation with
voting or appraisal rights when the corporation acquires another business
through the issuance of its stock or other consideration (i) in exchange for the
assets of the business to be acquired, (ii) in exchange for the outstanding
stock of the corporation to be acquired or (iii) in a merger of the corporation
to be acquired with a subsidiary of the acquiring corporation.

Takeovers. Bermuda law provides that where an offer is made for shares of
another company and, within four months of the offer, the holders of not less
than 90% of the shares which are the subject of the offer accept, the offeror
may by notice require the nontendering shareholders to transfer their shares on
the terms of the offer. Dissenting shareholders may apply to the court within
one month of the notice objecting to the transfer. The burden is on the
dissenting shareholders to show that the court should exercise its discretion to
enjoin the required transfer, which the court will be unlikely to do unless
there is evidence of fraud or bad faith or collusion between the offeror and the
holders of the shares who have accepted the offer as a means of unfairly forcing
out minority shareholders. Delaware law provides that a parent corporation, by
resolution of its board of directors and without any shareholder vote, may merge
with any 90% or more owned subsidiary. Upon any such merger, dissenting
stockholders of the subsidiary would have appraisal rights.

Shareholder's Suit. The rights of shareholders under Bermuda law are not
as extensive as the rights of shareholders under legislation or judicial
precedent in many United States jurisdictions. Class actions and derivative
actions are generally not available to shareholders under the laws of Bermuda.
However, the Bermuda courts ordinarily would be expected to follow English case
law precedent, which would permit a shareholder to commence an action in the
name of the Company to remedy a wrong done to the Company

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where the act complained of is alleged to be beyond the corporate power of the
Company or is illegal or would result in the violation of the Memorandum of
Association or Bye-Laws. Furthermore, consideration would be given by the court
to acts that are alleged to constitute a fraud against the minority shareholders
or where an act requires the approval of a greater percentage of the Company's
shareholders than actually approved it. The winning party in such an action
generally would be able to recover a portion of its attorneys' fees incurred in
connection with such action. Class actions and derivative actions generally are
available to stockholders under Delaware law for, among other things, breach of
fiduciary duty, corporate waste and actions not taken in accordance with
applicable law. In such actions, the court has discretion to permit the winning
party to recover attorneys' fees incurred in connection with such action.

Waiver of Action and Indemnification of Directors, Officers and
Auditors. The Company may exempt and indemnify its directors, officers and
auditors in their capacity as such in respect of any loss arising or liability
attaching to them by virtue of any rule of law in respect of any negligence,
default, breach of duty or breach of trust of which a director, officer or
auditor may be guilty in relation to the Company other than in respect of his
own fraud or dishonesty. The Company has adopted provisions in its Bye-laws that
provide that each member of the Company and the Company itself agrees to waive
any claim or right of action he or it might have, whether individually or by or
in the right of the Company, against any director on account of any action taken
by such director, or the failure of such director to take any action, in the
performance of his duties, or supposed duties, with or for the Company, provided
that such waiver shall not extend to any matter in respect of any fraud or
dishonesty which may attach to such directors. The Company also has adopted
provisions in its Bye-Laws that provide that the Company shall indemnify its
directors, officers and may indemnify its auditors to the maximum extent
permitted under the Companies Act. Under Delaware law, a corporation may adopt a
provision eliminating or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for breaches of the director's duty of loyalty, for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, for improper payment of dividends or for any
transaction from which the director derived an improper personal benefit.
Delaware law has provisions and limitations similar to Bermuda regarding
indemnification by a corporation of its directors or officers, except that under
Delaware law the statutory rights to indemnification may not be as limited.

Inspection of Books and Records. Members of the general public have the
right to inspect the public documents of the Company available at the office of
the Registrar of Companies in Bermuda, which will include the Memorandum of
Association (including its objects and powers) and any alteration to the
Memorandum of Association and documents relating to any increase or reduction of
authorized capital. The shareholders have the additional right to inspect the
Bye-Laws, minutes of general meetings and audited financial statements of the
Company, which must be presented to the annual general meeting of shareholders.
The register of shareholders of the Company is also open to inspection by
shareholders without charge, and to members of the public for a fee. The Company
is required to maintain its share register in Bermuda but may establish a branch
register outside Bermuda. The Company is required to keep at its registered
office a register of its directors and officers which is open for inspection by
members of the public without charge. Bermuda law does not, however, provide a
general right for shareholders to inspect or obtain copies of any other
corporate records. Delaware law permits any shareholder to inspect or obtain
copies of a corporation's shareholder list and its other books and records for
any purpose reasonably related to such person's interest as a shareholder.
Delaware law does not permit inspection by the public of the register of
shareholders.

ANTI-TAKEOVER EFFECTS OF BYE-LAWS

The Bye-Laws contain certain provisions that may be viewed as making the
acquisition of control of the Company by means of a tender offer, open market
purchase, proxy fight or otherwise more difficult. These provisions are designed
to encourage persons seeking to acquire control of the Company to negotiate with
the directors. The directors believe that, as a general rule, the interests of
the Company's shareholders would be best served if any change in control results
from negotiations with the directors. The directors would negotiate based upon
careful consideration of the proposed terms, such as the price to be paid to
shareholders, the form of consideration to be paid and the anticipated tax
effects of the transaction. However, these provisions could

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have the effect of discouraging a prospective acquiror from making a tender
offer or otherwise attempting to obtain control of the Company. To the extent
these provisions discourage takeover attempts, they could deprive shareholders
of opportunities to realize takeover premiums for their shares or could depress
the market price of the Common Shares.

In addition to those provisions of the Bye-Laws discussed above, set forth
below is a description of other relevant provisions of the Bye-Laws. The
descriptions are intended as a summary only and are qualified in their entirety
by reference to the Bye-Laws, which are filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

Shareholder Proposals. The Bye-Laws provide that shareholders holding not
less than one tenth of the paid up capital of the Company carrying the right of
voting at general meetings of the Company have at all times the right to submit
a proposal for consideration at an annual general meeting or special general
meeting, or to nominate persons for election as directors, provided that written
notice of such shareholder's intent to make such a proposal or nomination must
be given and received by the Secretary of the Company at the registered offices
of the Company not later than two months prior to the annual general meeting or
special general meeting. If the Board fails to proceed to convene a special
general meeting within 21 days of receipt by the Company of notice to hold such
meeting, the shareholders may do so in accordance with Bermuda law. The notice
must describe the proposal or nomination in sufficient detail for a proposal or
nomination to be summarized on the agenda for the meeting and must set forth (i)
the name and record address of the shareholder proposing such meeting, (ii) a
representation that the shareholder is a holder of record of shares of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to present such proposal or nomination and (iii) the class
and number of shares of the Company which are beneficially owned by the
shareholder. In addition, the notice must set forth a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such proposed business at the meeting and any material interest of the
shareholder in such business. In the case of a nomination of any person for
election as a director, the notice shall set forth: (i) the name, age, business
address and residence address of any person to be nominated; (ii) the principal
occupation or employment of the person; (iii) the number of Common Shares which
are beneficially owned by such person; (iv) such other information regarding
such nominee proposed by such shareholder as would be required to be included in
a proxy statement filed pursuant to Regulation 14A under the Exchange Act,
whether or not the Company is then subject to such Regulation; and (v) the
consent of each nominee to serve as a director of the Company, if so elected.
The presiding officer of the annual general meeting or special general meeting
shall, if the facts warrant, refuse to acknowledge a proposal or nomination not
made in compliance with the foregoing procedure.

The affirmative vote of the holders of at least 66 2/3% of the outstanding
shares entitled to vote, shall be required to amend or repeal, or adopt any
provision inconsistent with, the foregoing provision of the Bye-Laws.

The advance notice requirements regulating shareholder nominations and
proposals may have the effect of precluding a contest for the election of
directors or the introduction of a shareholder proposal if the procedures
summarized above are not followed and may discourage or deter a third party from
conducting a solicitation of proxies to elect its own slate of directors or to
introduce a proposal.

Restrictions on Certain Business Combinations. The Company's Bye-Laws
contain provisions which restrict certain "business combinations." In general,
the Bye-Laws prohibit an "interested shareholder" of the Company from, either
directly or indirectly, being a party to or taking any action in connection with
any "business combination" with the Company or Oracle Re for a period of five
years commencing on the date such person first became an "interested
shareholder," unless (a) the "business combination" is approved by a prior
resolution of the "continuing directors" of the Company's Board of Directors; or
(b) the "business combination" is approved by a prior resolution of at least
66 2/3% of the outstanding voting shares of the Company other than those voting
shares beneficially held by an "interested shareholder." A "business
combination" includes, among other things, (i) any scheme of arrangement,
reconstruction or amalgamation involving the Company or Oracle Re and an
"interested shareholder," (ii) any transaction or series of transactions
involving the sale, purchase, lease, exchange, mortgage, pledge, transfer or
other disposition or

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encumbrance of the assets of the Company and Oracle Re, (iii) the interest or
transfer to an "interested shareholder" or any affiliate thereof of any
securities by the Company or Oracle Re other than an issue or distribution to
all shareholders of the Company entitled to participate therein, (iv) the
adoption of any plan or proposal for the liquidation or dissolution of the
Company or Oracle Re unless such plan or proposal is initiated, proposed or
adopted independently of any "interested shareholder" and (v) the
reclassification of any securities or other restructuring of the capital of the
Company or Oracle Re in such a way as to confer a benefit on the "interested
shareholder." An "interested shareholder" means any shareholder of the Company
(other than the Company or any subsidiary, any profit-sharing employee share
ownership or other employee benefit plan of the Company or any subsidiary or any
trustee of or fiduciary with respect to any such plan when acting in such
capacity or shareholders of the Company who acquired their Common Shares in the
initial capitalization of the Company) who is, or has announced or publicly
disclosed a plan or intention to become the beneficial owner of Common Shares
representing ten percent or more of the value of the Company. A "continuing
director" includes (i) any member of the Company's Board of Directors who, while
a member thereof, is not an "interested shareholder" or an affiliate of an
"interested shareholder" and was a member of the Company's Board of Directors
prior to the time that the "interested shareholder became such, and (ii) any
person who subsequently becomes a member of the Company's Board of Directors
and, while such person is a member thereof, is not an "interested shareholder"
or an affiliate of an "interested shareholder," and such person's nomination for
election or election to the Company's Board of Directors is recommended or
approved by a majority of the "continuing directors" then in office. As a result
of the application of this provision of the Company's Bye-Law, potential
acquirors of the Company may be discouraged from attempting to effect an
acquisition transaction with the Company, thereby possibly depriving holders of
the Company's securities of certain opportunities to sell or otherwise dispose
of such securities at above-market prices pursuant to such transaction.

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CERTAIN TAX CONSIDERATIONS

The following summary of the taxation of the Company and Oracle Re and the
taxation of shareholders of the Company is based upon current law and is the
opinion of Conyers Dill & Pearman with respect to matters of Bermuda taxation
and is the opinion of Baker & McKenzie with respect to matters of United States
taxation. Legislative, judicial or administrative changes may be forthcoming
that could affect this summary. Neither the Company nor Oracle Re intends to
seek a tax ruling with respect to any of the issues described below.

TAXATION OF THE COMPANY AND ORACLE RE

Bermuda

The Company and Oracle Re have each received from the Minister of Finance
of Bermuda an assurance under The Exempted Undertakings Tax Protection Act, 1966
of Bermuda, to the effect that in the event of there being enacted in Bermuda
any legislation imposing tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax shall not be applicable to
the Company or Oracle Re or to any of their operations or the shares, debentures
or other obligations of the Company or Oracle Re until March 28, 2016. These
assurances are subject to the proviso that they are not construed so as to
prevent the application of any tax or duty to such persons as are ordinarily
resident in Bermuda (the Company is not currently so designated) or to prevent
the application of any tax payable in accordance with the provisions of The Land
Tax Act 1967 of Bermuda or otherwise payable in relation to the land, if any,
leased to Oracle Re. Each of the Company and Oracle Re is required to pay
certain annual Bermuda government fees and Oracle Re, additionally, is required
to pay certain insurance registration fees as an insurer under the Insurance Act
1977 of Bermuda. Under current rates, the Company will pay a fixed annual fee of
BD $8,400, and Oracle Re will pay a total of BD $7,540 per year (which includes
the annual Bermuda government fee and the annual insurance business fee).
Currently there is no Bermuda withholding tax on dividends that may be paid by
Oracle Re to the Company.

United States

The Company and Oracle Re intend to operate their business in a manner that
will not cause them to be treated as engaged in a trade or business within the
United States. On this basis, it is not expected that either the Company or
Oracle Re will be required to pay United States income tax (other than
withholding tax as described below). However, because there is considerable
uncertainty as to the activities which constitute being engaged in a trade or
business in the United States, there can be no assurances that the IRS will not
contend successfully that the Company or Oracle Re is engaged in a trade or
business in the United States. A foreign corporation deemed to be so engaged (i)
would be subject to U.S. income tax, as well as the branch profits tax, on its
income which is treated as effectively connected with the conduct of that trade
or business except to the extent the corporation is entitled to relief under the
permanent establishment provision of a tax treaty, as discussed below, and (ii)
would be required to file yearly income tax returns. Such income tax, if
imposed, would be based on effectively connected income computed in a manner
generally analogous to that applied to the income of a domestic corporation,
except that a foreign corporation can anticipate an allowance of deductions and
credits only if it files a United States income tax return. Under regulations,
the foreign corporation would be entitled to deductions and credits for a
taxable year only if the return for that year is filed timely under rules set
forth therein. The maximum federal tax rates currently are 35% for a
corporation's effectively connected income and 30% for the branch profits tax.
The branch profits tax is imposed each year on a corporation's effectively
connected earnings and profits (with certain adjustments) deemed repatriated out
of the U.S.

Under the tax convention between Bermuda and the United States (the
"Treaty"), a Bermuda company, such as Oracle Re, predominantly engaged in the
insurance business, is subject to U.S. income tax on income found to be
effectively connected with a U.S. trade or business only if that trade or
business is conducted through a permanent establishment in the United States.
Oracle Re would not be entitled to the benefits of the Treaty, however, if (i)
50% or more of Oracle Re's stock were beneficially owned, directly or
indirectly, by persons other than Bermuda residents or U.S. citizens or
residents, or (ii) Oracle Re's income were used in

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substantial part to make disproportionate distributions to, or to meet certain
liabilities to, persons who are not Bermuda residents or U.S. citizens or
residents. While there can be no assurances, it is not anticipated that the
above exceptions to the Treaty benefits will apply to Oracle Re after the Rights
Offering.

Oracle Re intends to operate under guidelines that should minimize the risk
that it will be found to have a U.S. permanent establishment.

Foreign corporations not engaged in a trade or business in the United
States are nonetheless subject to U.S. withholding tax on certain "fixed or
determinable annual or periodic gains, profits and income" derived from sources
within the United States as enumerated in Section 881(a) of the Code (such as
dividends and certain types of interest on investments).

The United States also imposes an excise tax on insurance and reinsurance
premiums paid to foreign insurers or reinsurers with respect to risks located in
the United States. The rate of tax currently applicable to reinsurance premiums
paid to Oracle Re is 1% of gross premiums.

TAXATION OF SHAREHOLDERS

Bermuda

There currently is no Bermuda withholding tax on dividends paid by the
Company. There currently is no Bermuda tax or other levy payable on the sale of
Common Shares of the Company.

United States Taxation of U.S. and Non-U.S. Shareholders

General. The following discussion summarizes certain U.S. federal income
tax consequences relating to the acquisition, ownership and disposition of
Common Shares by a beneficial owner of Common Shares that is (i) a citizen or
resident of the United States, (ii) a United States domestic corporation, or
(iii) otherwise subject to U.S. federal income taxation on a net income basis in
respect of Common Shares. This summary deals only with Common Shares acquired by
purchasers in the Rights Offering and held as capital assets and does not deal
with the tax consequences applicable to all categories of investors, some of
which (such as broker-dealers, investors who hold Common Shares as part of
hedging or conversion transactions and investors whose functional currency is
not the U.S. dollar) may be subject to special rules. Prospective purchasers of
Common Shares are advised to consult their own tax advisers with respect to
their particular circumstances and with respect to the effects of U.S. federal,
state, local or other laws to which they may be subject.

Dividends. Distributions with respect to the Common Shares will be treated
as ordinary dividend income to the extent of the Company's current or
accumulated earnings and profits as determined for U.S. federal income tax
purposes, subject to the discussion below relating to the potential application
of the "controlled foreign corporation" or "passive foreign investment company"
rules. Such dividends will not be eligible for the dividends-received deduction
allowed to United States corporations under the Code. The amount of any
distribution in excess of the Company's current and accumulated earnings and
profits will first be applied to reduce the holder's tax basis in the Common
Shares, and any amount in excess of tax basis will be treated as gain from the
sale or exchange of the Common Shares.

Classification of the Company or Oracle Re as a Traditional Controlled
Foreign Corporation. Under Section 951(a) of the Code, each "10% Voting U.S.
Shareholder" of a CFC must include in its gross income for United States Federal
income tax purposes its pro rata share of the CFC's "subpart F income," even if
the subpart F income is not distributed. Under Code Section 951(b), any U.S.
corporation, citizen, resident or other U.S. person who owns, directly or
indirectly through foreign persons, or is considered to own (by application of
the rules of constructive ownership set forth in Code Section 958(b), generally
applying to options, family members, partnerships, estates, trusts or controlled
corporations), 10% or more of the total combined voting power of all classes of
stock of the foreign corporation will be considered to be a "10% Voting U.S.
Shareholder." In general, a foreign corporation is treated as a CFC only if such
"10% Voting U.S. Shareholders" collectively own more than 50% (more than 25% for
certain insurance companies, such as Oracle Re) of the total combined voting
power or total value of the corporation's stock for an uninterrupted period of
30 days or more during any tax year. Under the Memorandum of Association and
Bye-Laws of the Company and Oracle Re, the voting power of a shareholder, plus
the voting power of all other shareholders

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whose shares would be attributed to the first shareholder under the stock
ownership attribution rules of the Code, is limited to 9.5% of the total voting
power of the Company and Oracle Re.

Due to the existence of extremely broad constructive ownership rules and
for other reasons it may be difficult or impossible for the Company to ensure
that neither it nor Oracle Re has or will become a controlled foreign
corporation. However, so long as a shareholder of the Company or Oracle Re is
not characterized as a 10% Voting U.S. Shareholder, the classification of the
Company or Oracle Re as a CFC should have no adverse effect on such shareholder.
Therefore, each investor should consult its own tax advisor to ensure that its
ownership interest in the Company will not cause it to become a 10% Voting U.S.
Shareholder of the Company or Oracle Re, or any subsidiary which may be created
by the Company or Oracle Re.

Related Person Insurance Income Rules. Certain special provisions of the
Code will apply to Oracle Re if both (A) as is anticipated, 25% or more of the
value or voting power of the Common Shares is held (directly or indirectly
through foreign entities) by United States persons, and (B)(i) Oracle Re has
gross RPII greater than or equal to 20% of its gross insurance income and (ii)
20% or more of either the voting power or the value of the Oracle Re common
stock is owned directly or indirectly through foreign entities by persons
(directly or indirectly) insured or reinsured by Oracle Re or persons related to
such insureds or reinsureds. RPII is income (investment income and premium
income) from the direct or indirect insurance or reinsurance of any United
States person who holds Common Shares (directly or indirectly through foreign
entities) or a person related to such a United States holder of Common Shares.

While there can be no assurance, it is not anticipated that 20% or more of
the gross insurance income of Oracle Re for any taxable year will constitute
RPII. Even if 20% or more of the gross insurance income of Oracle Re for any
taxable year were to constitute RPII, it is not anticipated that 20% or more of
the voting power or the value of Oracle Re's common stock will be held by U.S.
insureds or reinsureds or persons related thereto. If, however, 20% or more of
Oracle Re's gross income were to constitute RPII and 20% or more of the Common
Shares of Oracle Re were to be owned directly or indirectly by U.S. insureds or
reinsureds or related persons to such insureds or reinsureds, each direct and
indirect United States holder of Common Shares would be taxable currently on its
allocable share of the RPII, even if such United States holder did not
constitute a 10% Voting U.S. Shareholder, as defined above. For this purpose,
all of Oracle Re's RPII would be allocated solely to United States holders to
the extent of their ratable share of Oracle Re's income.

Computation of RPII. To the extent information is required, the Company
may send a letter after each fiscal year to each person who was a Oracle Re
policyholder during the year asking the policyholder to represent whether it was
a U.S. shareholder of the Company or related to a U.S. shareholder during the
year. There can be no assurance that this procedure will enable the Company to
identify all of Oracle Re's RPII. For any year that the Company determines that
Oracle Re's gross RPII is 20% or more of Oracle Re's gross insurance income for
the year, the Company may also seek information from its shareholders as to
whether beneficial owners of Common Shares at the end of the year are United
States persons so that RPII may be apportioned among such persons. To the extent
the Company is unable to determine whether a beneficial owner of shares is a
U.S. person the Company may assume that such is not a U.S. person for purposes
of apportioning RPII, thereby increasing the per share RPII amount for all U.S.
shareholders.

Dispositions of Common Shares by U.S. Persons Generally. Subject to the
discussions below relating to "Disposition of Common Shares by U.S. Persons Who
are Not 10% Voting U.S. Shareholders," U.S. Persons will, upon the sale or
exchange of Common Shares, generally recognize gain or loss for federal income
tax purposes equal to the excess of the amount realized upon such sale or
exchange over such person's federal income tax basis for such Common Shares.
However, in certain circumstances described below, gain may be recharacterized,
in whole or in part, as a dividend.

Disposition of Common Shares by U.S. Persons Who Are Not 10% Voting U.S.
Shareholders. As noted above, in the case of a U.S. person who owns Common
Shares but is not a 10% Voting U.S. Shareholder, RPII may be allocable to such
holder's Common Shares in the Company during the period of ownership but not
taxed to him because less than 20% of such Common Shares is owned by persons
generating RPII or less than 20% of Oracle Re gross insurance income is RPII.
Upon such holder's sale or exchange of Common Shares at a gain, however, there
is a reasonable likelihood that an amount of such gain equal to such holder's
allocable share of untaxed RPII will be taxable as a dividend. Moreover, the IRS
has an arguable position that

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the amount of gain so taxed as a dividend will be equal to all the earnings and
profits allocable to the U.S. holder during the period that such holder held the
Common Shares (whether or not Oracle Re has RPII). If the IRS were to take this
position and were to prevail, for individuals, this would mean that the amount
of gain taxed as a dividend would bear tax at the rates applicable to ordinary
income rather than at the currently lower rates applicable to long-term capital
gain. The rates applicable to corporate shareholders would not be affected,
however, since corporations pay tax on capital gains at the same rates as they
pay on ordinary income.

If only the untaxed RPII would be subject to dividend characterization, the
selling shareholder nevertheless has the burden of showing the amount of untaxed
RPII allocable to the Common Shares sold. The Company will keep records showing
what it believes to be the untaxed RPII allocable to each Common Share and will,
upon reasonable request, provide any owner or prior owner of Common Shares with
such information.

Uncertainty as to Application of RPII. The RPII provisions of the Code
have never been interpreted by the courts. Regulations interpreting the RPII
provisions of the Code exist only in proposed form, having been proposed in
April 1991. It is not certain whether these regulations will be adopted in their
proposed form or what changes or clarifications might ultimately be made thereto
or whether any such changes, as well as any interpretation or application of
RPII by the IRS, the courts or otherwise, might have retroactive effect. The
description of RPII by the IRS, the courts or otherwise, might have retroactive
effect. The description of RPII herein is therefore qualified. Accordingly, the
meaning of the RPII provisions and the application thereof to the Company and
Oracle Re are uncertain. The provisions include the grant of authority to the
U.S. Treasury to prescribe "such regulations as may be necessary to carry out
the purposes of this subsection including...regulations preventing the avoidance
of this subsection, through cross insurance arrangement or otherwise..." In
addition, there can be no assurance that the amounts of the RPII inclusions, if
any, will not be subject to adjustment based upon subsequent IRS examination.
Each U.S. person who is considering an investment in the Common Shares should
consult its tax advisor as to the effects of these uncertainties.

Foreign Tax Credit. In the event, as expected, that U.S. shareholders own
at least 50% of the Company's shares, only a portion of the dividends paid by
the Company will be treated as foreign source income for purposes of computing a
shareholder's U.S. foreign tax credit limitation. It is likely that
substantially all of the RPII and dividends that are foreign source income will
constitute either "passive" or "financial services" income for foreign tax
credit limitation purposes. Thus, it may not be possible for most U.S.
shareholder to utilize excess foreign tax credits to reduce U.S. tax on such
income.

Passive Foreign Investment Companies. Sections 1291 through 1297 of the
Code contain special rules applicable with respect to foreign corporations that
are "passive foreign investment companies" ("PFICs"). In general, a foreign
corporation will be a PFIC if 75% or more of its income constitutes "passive
income" or 50% or more of its assets produce passive income. If the Company were
to be characterized as a PFIC, its United States shareholders would be subject
to a penalty tax at the time of their sale of (or receipt of an "excess
distribution" with respect to) its shares. In general, a shareholder receives an
"excess distribution" if the amount of the distribution is more than 125% of the
average distribution with respect to the stock during the three preceding
taxable years (or shorter period during which the taxpayer held the stock). In
general, the penalty tax is equivalent to an interest charge on taxes that are
deemed due during the period the United States shareholder owned the shares,
computed by assuming that the excess distribution or gain (in the case of a
sale) with respect to the shares was taxed in equal portions throughout the
holder's period of ownership. The interest charge is equal to the applicable
rate imposed on underpayments of U.S. Federal income tax for such period.

The PFIC statutory provisions contain an express exception for income
"derived in the active conduct of an insurance business by a corporation which
is predominantly engaged in an insurance business..." This exception is intended
to ensure that income derived by a bona fide insurance company is not treated as
passive income, except to the extent such income is attributable to financial
reserves in excess of the reasonable needs of the insurance business. It is the
Company's intention that the Company and Oracle Re, taken together, will be
predominantly engaged in an insurance business. The PFIC statutory provisions
contain a look-through rule that states that, for purposes of determining
whether a foreign corporation is a PFIC, such foreign corporation shall be
treated as if it "received directly its proportionate share of the income" and
as if it "held its

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proportionate share of the assets" of any other corporation in which it owns at
least 25% of the stock. While no explicit guidance is provided by the statutory
language, it is anticipated that, under the look-through rule, the Company would
be deemed to own the assets and to have received any income of Oracle Re
directly for the purposes of determining whether the Company qualifies for the
aforementioned insurance exceptions. It is believed that this interpretation of
the look-through rule is consistent with the legislative intention generally to
exclude bona fide insurance companies from the application of PFIC provisions;
there can, of course, be no assurance as to what positions the IRS or a court
might take in the future.

No regulations interpreting these specific issues under the PFIC provisions
have yet been issued. Therefore, substantial uncertainty exists with respect to
their application or their possible retroactivity. Each U.S. person who is
considering an investment in the Common Shares should consult its tax advisor as
to the effects of these rules.

Other. Dividends paid by the Company to U.S. corporate shareholders will
not be eligible for the dividends received deduction provided by Section 243 of
the Code.

Except as discussed below with respect to backup withholding, dividends
paid by the Company will not be subject to a U.S. withholding tax.

Information Reporting. If Oracle Re meets the RPII CFC rule in a given tax
year, each U.S. person who is a shareholder of the Company on the last day of
the Company's fiscal year must attach a Form 5471 to such shareholder's income
tax or information return for the period which includes that date. In the event
that Oracle Re's gross RPII constitutes 20% or more of its gross insurance
income (which is not anticipated) and no other exception applies that would
prevent Oracle Re from being subject to the RPII CFC rule, the Company intends
to provide Form 5471 to its U.S. shareholders for attachment to their returns.
The amount of the RPII inclusions may be subject to adjustment based upon
subsequent IRS examination. A tax-exempt organization will be required to attach
Form 5471 to its information return in the circumstances described above.
Failure to file Form 5471 may result in penalties.

In addition, U.S. persons who at any time own 10% or more in value of the
total outstanding shares of the Company have an independent obligation to file
Form 5471 with respect to such shares, and should consult with their tax advisor
regarding this and other possible reporting requirements.

Information reporting to the IRS by paying agents and custodians located in
the United States will be required with respect to payments of dividends on the
Common Shares to U.S. persons. Thus, a holder of Common Shares may be subject to
backup withholding at the rate of 31% with respect to dividends paid by such
persons, unless such holder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact, or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. The backup withholding tax is not an additional tax and may
be credited against a holder's regular Federal income tax liability. Subject to
certain exceptions, persons that are not U.S. persons will be subject to United
States Federal income tax on dividend distributions with respect to, and gain
realized from the sale or exchange of, Common Shares only if such dividends or
gains are effectively connected with the conduct of a trade or business within
the United States.

The summary is based upon current law and is the opinion of Conyers Dill &
Pearman with respect to matters of Bermuda taxation and is the opinion of Baker
& McKenzie with respect to matters of United States taxation. The tax treatment
of a holder of Common Shares, or of a person treated as a holder of Common
Shares for United States Federal income, state, local or non-U.S. tax purposes,
may vary depending on the holder's particular tax situation. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could be retroactive and could affect the tax consequences to holders of Common
Shares. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING
THE UNITED STATES FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF OWNING
THE COMMON SHARES.

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CERTAIN BERMUDA LAW CONSIDERATIONS

The Company has been designated as a non-resident for exchange control
purposes by the Bermuda Monetary Authority, Foreign Exchange Control, whose
permission for the issue and transfer of Common Shares has been obtained. Prior
to the Offering, this Prospectus will be filed with the Registrar of Companies
in Bermuda in accordance with Bermuda law.

CONSENT UNDER THE EXCHANGE CONTROL ACT, 1972 (AND REGULATIONS THEREUNDER)
HAS BEEN OBTAINED FROM THE BERMUDA MONETARY AUTHORITY FOR THE ISSUE AND TRANSFER
OF THE COMMON SHARES BEING OFFERED PURSUANT TO THE RIGHTS OFFERING. IN ADDITION,
A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE REGISTRAR OF COMPANIES IN
BERMUDA PURSUANT TO THE COMPANIES ACT, 1981 OF BERMUDA.

IN GIVING SUCH CONSENT AND IN ACCEPTING THIS PROSPECTUS FOR FILING, THE
BERMUDA MONETARY AUTHORITY AND THE REGISTRAR OF COMPANIES IN BERMUDA,
RESPECTIVELY, ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF ANY
PROPOSAL, OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS
EXPRESSED HEREIN.

The transfer of Common Shares between persons regarded as non-resident in
Bermuda for exchange control purposes and the issue of shares after the
completion of the Offering to such persons may be effected without specific
consent under the Exchange Control Act of 1972 and regulations thereunder.
Issues and transfers of shares to any person regarded as resident in Bermuda for
exchange control purposes require specific prior approval under the Exchange
Control Act of 1972.

There are no limitations on the rights of persons regarded as non-resident
of Bermuda for foreign exchange control purposes owning Common Shares to hold or
vote their Common Shares. Because the Company has been designated as a
non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds in and out of Bermuda or to pay dividends to U.S.
residents who are holders of Common Shares, other than in respect of local
Bermuda currency. In addition, because the Company has been designated as a
non-resident for Bermuda exchange control purposes, it does not intend to
maintain Bermuda dollar deposits and, accordingly, will not pay dividends on the
Common Shares in Bermuda currency.

In accordance with Bermuda law, share certificates are issued only in the
names of corporations or individuals. In the case of an applicant acting in a
special capacity (for example, as an executor or trustee), certificates may, at
the request of the applicant, record the capacity in which the applicant is
acting. Notwithstanding the recording of any such special capacity, the Company
is not bound to investigate or incur any responsibility in respect of the proper
administration of any such estate or trust. The Company will take no notice of
any trust applicable to any of its Common Shares whether or not it had notice of
such trust.

As an "exempted company," the Company is exempt from Bermuda laws
restricting the percentage of share capital that may be held by non-Bermudians,
but as an exempted company the Company may not participate in certain business
transactions, including (i) the acquisition or holding of land in Bermuda
(except that required for its business and held by way of lease or tenancy for
terms of not more than 21 years) without the express authorization of the
Bermuda legislature, (ii) the taking of mortgages on land in Bermuda to secure
an amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda, (iii) the acquisition of any bonds or debentures secured by any land in
Bermuda, other than certain types of Bermuda government securities or securities
of another "exempted" company, partnership or other corporation resident in
Bermuda but incorporated abroad or (iv) the carrying on of business of any kind
in Bermuda, except in furtherance of the business of the Company carried on
outside Bermuda or under a license granted by the Minister of Finance of
Bermuda.

The Bermuda government actively encourages foreign investment in "exempted"
entities like the Company that are based in Bermuda but do not operate in
competition with local business. In addition to having no restrictions on the
degree of foreign ownership, the Company is subject neither to taxes on its
income or dividends nor to any foreign exchange controls in Bermuda. In
addition, there is currently no capital gains tax in Bermuda, and profits can be
accumulated by the Company, as required, without limitation. There is no minimum
subscription which must be raised by the issue of Common Shares pursuant to the
Offerings in order to provide for the matters listed in Section 28 of the
Companies Act 1981 of Bermuda.

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LEGAL MATTERS

Certain legal matters in connection with the Rights Offering will be passed
upon for the Company by Baker & McKenzie, New York, New York, who will rely as
to matters of Bermuda law upon the opinion of Conyers Dill & Pearman, Hamilton,
Bermuda. The validity of the issuance of the Common Shares offered hereby is
being passed upon for the Company by Conyers Dill & Pearman.

EXPERTS

The balance sheet of Delphi International Ltd. at September 2, 1997
appearing in this Prospectus and Registration Statement has been audited by
Ernst & Young, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and has been included herein in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company is not a reporting company under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Company has filed a Registration
Statement on Form S-1 under the Securities Act with the Commission in
Washington, D.C. with respect to the Rights and Common Shares offered hereby.
This Prospectus, which is a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto. For further information with respect to the Company and the securities
offered hereby, reference is hereby made to the Registration Statement and such
exhibits, which may be inspected without charge at the office of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York, New
York 10048 and at 500 West Madison, Suite 1400, Chicago, Illinois 60661. Copies
of such material may also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete and in each instance reference is made to the copy
of such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.

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GLOSSARY OF SELECTED INSURANCE AND REINSURANCE TERMS

ALTERNATIVE MARKET......... The segment of the insurance market which has
developed in response to volatility in cost and
availability of traditional commercial insurance
coverage and consists of various risk financing
mechanisms, including self insurance, captive
insurance companies, rent-a-captive facilities,
risk retention groups and governmental pools, plans
and trusts.

ATTACHMENT POINT........... The amount of loss (per occurrence or in the
aggregate, as the case may be) above which excess
of loss coverage becomes operative.

BROKER..................... One who negotiates contracts of insurance or
reinsurance, receiving a commission for placement
and other services rendered, between (1) a policy
holder and primary insurer, on behalf of the
primary insurer, (2) a primary insurer and
reinsurer, on behalf of the primary insurer or (3)
a reinsurer and a retrocessionaire, on behalf of
the reinsurer.

CAPTIVE INSURANCE
COMPANY.................... An insurance or reinsurance company which is
controlled by the insured or a group of insureds
and which is formed for the purpose of insuring or
reinsuring risks associated with the activities of
its shareholders or members.

CASUALTY INSURANCE......... Insurance which primarily is concerned with the
losses caused by injuries to third persons (i.e.,
not the insured) and the legal liability imposed on
the insured resulting therefrom. It includes but is
not limited to, employers' liability, workers'
compensation, public liability, automobile
liability and personal liability insurance. It
excludes certain types of loss that by law or
custom are considered as being exclusively within
the scope of other types of insurance, such as fire
or marine.

CATASTROPHE REINSURANCE.... A form of excess of loss property reinsurance that,
subject to a specified limit, indemnifies the
ceding company for the amount of loss in excess of
a specified retention with respect to an
accumulation of losses resulting from a
catastrophic event.

CEDE; CEDENT; CEDING
COMPANY.................... To transfer the risk and related premium in
connection with a reinsurance transaction. When a
party reinsures its liability with another insurer
(a "cession"), it "cedes" business and is referred
to as the "cedent" or "ceding company."

COMMERCIAL LINES........... The various kinds of insurance which are written
for businesses.

DIRECT WRITTEN PREMIUMS.... Total premiums for insurance written during a given
period whether or not then earned and without any
allowance for premiums then ceded by reinsurance.

EARNED PREMIUMS............ That portion of premiums written (after reinsurance
ceded) which applies to the expired portion of the
policy term. Earned premiums are recognized as
revenues under both SAP and GAAP.

EXCESS OF LOSS
REINSURANCE................ Reinsurance which indemnifies the reinsured against
all or a specified portion of losses on underlying
insurance policies in excess of a specified dollar
amount, called a "layer" or "retention." Also known
as non-proportional reinsurance or stop loss
coverage.

FACULTATIVE REINSURANCE.... A form of reinsurance which is transacted between
the reinsurer and the reinsured on a risk-by-risk
basis. The reinsurance of all or a portion of the
insurance provided by a single policy. Each
facultative reinsurance policy is negotiated
separately.

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GENERAL LIABILITY
INSURANCE.................. Insurance for certain acts or omissions resulting
in bodily injury or property damage on the premises
of a business, when someone is injured as a result
of using the product manufactured or distributed by
a business, or when someone is injured in the
general operation of a business.

GROSS WRITTEN PREMIUMS..... Total premiums for insurance written and
reinsurance assumed during a given period whether
or not earned before deduction of brokerage
commission and other acquisition costs.

INCURRED BUT NOT REPORTED
("IBNR") LOSS RESERVES... Reserves for estimated losses which have been
incurred by insureds and reinsureds but not yet
reported to the insurer or reinsurer, including
unknown future developments on losses which are
known to the insurer or reinsurer.

LAYER...................... The interval between the retention or attachment
point and the maximum limit of indemnity for which
an insurer or reinsurer is responsible.

LOSS....................... An occurrence that is the basis for submission
and/or payment of a claim. Losses may be covered,
limited or excluded from coverage, depending on the
terms of the policy.

LOSS ADJUSTMENT EXPENSES
("LAE").................. The expenses of adjusting, settling or otherwise
resolving claims, including legal and other fees
and the portion of general expenses allocated to
claim settlement and adjustment costs. LAE is
divided into two segments: Allocated Loss
Adjustment Expenses ("ALAE") and Unallocated Loss
Adjustment Expenses ("ULAE"). ALAE is the expense
of settling claims including legal and other fees.
ULAE is the portion of general expenses allocated
to claim settlement and adjustment costs.

LOSS AND LOSS ADJUSTMENT
EXPENSES................. The sum of incurred losses, including IBNR, and
loss adjustment expenses.

LOSS RESERVES.............. A balance sheet liability for unpaid losses which
represents estimates of amounts needed to pay
losses and expenses both on claims which have been
reported but have not yet been resolved and on
claims which have occurred but have not yet been
reported. Reserves established by insurers and
reinsurers and set forth on its balance sheet to
reflect the estimated cost of payments for claims
that the insurer or reinsurer ultimately will be
required to pay in respect of losses occurring on
or prior to the balance sheet date on insurance or
reinsurance it has written. Reserves are
established for loss and loss adjustment expenses,
and consist of case reserves and reserves for IBNR
losses.

NET PREMIUMS EARNED........ The amount of net premiums written recognized as
income during a given period.

NET WRITTEN PREMIUMS....... Gross premiums written less premiums ceded. Gross
premiums written for a given period less premiums
ceded to reinsurers and retrocessionaires during
such period.

PREMIUMS CEDED............. The consideration paid by an insurer or a reinsurer
to reinsurers in connection with one or more
reinsurance transactions.

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PREMIUMS EARNED............ Net premiums written less Unearned Premiums, which
is the portion of premium which represents the
consideration for the assumption of risk in the
past.

PRIMARY INSURER............ An insurance company that contracts with the
consumer to provide insurance coverage. Such
primary insurer may then cede a portion of its
business to reinsurers.

PROPORTIONAL REINSURANCE... A generic term describing all forms of reinsurance
in which the reinsurer shares a proportional part
of the original premiums and losses of the
reinsured. (Also known as pro rata reinsurance,
quota share reinsurance or participating
reinsurance.) In proportional reinsurance the
reinsurer general pays the ceding company a ceding
commission. The ceding commission generally is
based on the ceding company's cost of acquiring the
business being reinsured (including commissions,
premium taxes, assessments and miscellaneous
administrative expense) and also may include a
profit factor.

QUOTA SHARE REINSURANCE.... Reinsurance wherein the insurer cedes, for a
predetermined portion of the insurance premium
charged by the insurer an agreed fixed percentage
of losses and loss adjustment expenses for each
insurance policy covered.

REINSURANCE................ A transaction in which the reinsurer agrees, in
return for a payment of premium, to assume an
agreed portion of the reinsured's risk resulting
from a policy or policies of insurance or
reinsurance. The practice whereby one insurer,
called the reinsurer, in consideration of a premium
paid to such insurer, agrees to indemnify another
insurer, called the ceded company, for part or all
of the liability assumed by the ceding company
under one or more policies or contracts of
insurance which it has issued. Reinsurance can
provide a ceding company with several benefits,
including a reduction in net liability on
individual risks and catastrophe protection from
large or multiple losses. Reinsurance also provides
a ceding company with additional underwriting
capacity by permitting it to accept larger risks
and write more business than would be possible
without a concomitant increase in capital and
surplus, and facilitates the maintenance of
acceptable financial ratios by the ceding company.

RENT-A-CAPTIVE............. An insurance or reinsurance company formed for the
purpose of insuring risks associated with the
activities of individuals or a group of unrelated
insureds and which is not controlled by its
insureds but by either an insurer, a broker or an
entity seeking to profit from operating the rent-a-
captive.

RETENTION.................. The portion of risk which is not transferred by the
insured or the reinsured to an insurance or
reinsurance company. The client's retention refers
to the portion of risk which is not transferred by
the client to the commercial insurance or
reinsurance market. The amount or portion of risk
that an insurer retains for its own account. Losses
in excess of the retention level are paid by the
reinsurer, subject to certain specified limits. The
retention level may be specified as a percentage or
dollar amount. In proportional treaties, the
retention may be a percentage of the original
policy's limit. In excess of loss business, the
retention is a dollar amount of loss, a loss ratio
or a percentage.

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RETROCESSION............... A transaction whereby a reinsurer cedes to another
reinsurer all or part of the reinsurance that the
first reinsurer has assumed. Retrocessions do not
legally discharge the ceding reinsurer from its
liability with respect to its obligations to the
reinsured. Reinsurance companies cede risks to
retrocessionaires for reasons similar to those that
cause primary insurers to purchase reinsurance to
reduce net liability on individual risks, to
protect against catastrophic losses, to stabilize
financial ratios and to obtain additional
underwriting capacity.

SOFT INSURANCE MARKET...... The period of the insurance market cycle which is
characterized by excessive capital and competition
resulting in an increased availability of coverage
and decreased prices.

STATUTORY ACCOUNTING
PRACTICES ("SAP").......... The rules and procedures prescribed or permitted by
state insurance regulatory or other authorities
(usually the domiciliary state) for recording
transactions and preparing financial statements.

STATUTORY SURPLUS.......... The amount remaining after all liabilities are
subtracted from all assets, in accordance with SAP.
Statutory surplus is also referred to as "surplus,"
"surplus as regards policyholders" or
"policyholders surplus" for statutory accounting
purposes.

TREATY REINSURANCE......... The reinsurance of a specified type or category of
risks defined in a reinsurance agreement (a
"treaty") between an insurer and a reinsurer and a
retrocessionaire. In treaty reinsurance the cedent
is typically obligated to offer, and the reinsurer
or retrocessionaire is obligated to accept, a
specified portion of a type or category of risks
insured by the ceding company as set forth in the
governing contract. Treaty reinsurance may provide
for proportional or non-proportional reinsurance.

UNDERWRITER................ An employee of an insurance company who examines,
accepts or rejects risks and classifies accepted
risks in order to charge an appropriate premium for
each accepted risk. The underwriter is expected to
select business which will produce an average risk
of loss no greater than that anticipated for the
class of business.

UNDERWRITING............... The insurer's or reinsurer's process of reviewing
applications for insurance coverage, and the
decision whether to accept all or part of the
coverage and determination of the applicable
premiums; also refers to the acceptance of such
coverage.

UNDERWRITING CAPACITY...... The maximum amount that an insurance company can
underwrite. The limit is generally determined by
the company's retained earnings and investment
capital. Reinsurance serves to increase a company's
capacity by reducing its exposure from particular
risks.

UNEARNED PREMIUM........... The portion of premiums written that is allocable
to the unexpired portion of the policy term and,
therefore, that has not yet been earned.

WORKERS' COMPENSATION
INSURANCE................ Insurance for employers covering employee
work-related injuries, deaths and diseases,
regardless of fault.

64
<PAGE> 69

INDEX TO BALANCE SHEET

<TABLE>
<S> <C>
Independent Auditors' Report.......................................................... F-2
Balance Sheet......................................................................... F-3
Notes to Balance Sheet................................................................ F-4
</TABLE>

F-1
<PAGE> 70

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder
Delphi International Ltd.

We have audited the accompanying balance sheet of Delphi International Ltd.
as of September 2, 1997 (date of incorporation). This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the balance sheet is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Delphi International Ltd. at
September 2, 1997 (date of incorporation), in conformity with accounting
principles generally accepted in the United States.

ERNST & YOUNG

Hamilton, Bermuda
September 2, 1997,
except for Note 5, as to which the date is
November 21, 1997

F-2
<PAGE> 71

DELPHI INTERNATIONAL LTD.

BALANCE SHEET
SEPTEMBER 2, 1997 (DATE OF INCORPORATION)
(EXPRESSED IN UNITED STATES DOLLARS)

<TABLE>
<S> <C>
ASSETS
Cash............................................................................... $12,000
=======

SHAREHOLDER'S EQUITY
Preferred Shares -- (par value $.01 per share; 5,000,000 shares authorized; none
issued).......................................................................... $ --
Common Shares -- (par value $.01 per share; 10,000,000 shares authorized; 1,200,000
shares issued and outstanding)................................................... 12,000
-------
Additional paid-in capital......................................................... --
-------
Total shareholder's equity......................................................... $12,000
=======
</TABLE>

See accompanying notes to balance sheet.

F-3
<PAGE> 72

DELPHI INTERNATIONAL LTD.

NOTES TO BALANCE SHEET
SEPTEMBER 2, 1997 (DATE OF INCORPORATION)

1. ORGANIZATION

Delphi International Ltd. (the "Company") was incorporated on September 2,
1997 under the laws of Bermuda, to provide employee benefit product reinsurance
to insurers and reinsurers on a worldwide basis. The Company will operate
through its wholly-owned subsidiary, Oracle Reinsurance Company Ltd., a Bermuda
exempted insurance and reinsurance company ("Oracle Re").

2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying balance sheet of the Company has been prepared in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP").

Translation of Foreign Currencies

The Company's functional currency is the United States dollar.

3. TAXATION

Under current Bermuda law, the Company is not be required to pay any taxes
in Bermuda on either income or capital gains. The Company has received from the
Minister of Finance of Bermuda an assurance under The Exempted Undertakings Tax
Protection Act 1966 of Bermuda that in the event of any such taxes being
imposed, the Company will be exempted until 2016. The Company intends to operate
its business in a manner such that it will not be required to pay United States
income tax.

4. SHAREHOLDER'S EQUITY AND RESTRICTIONS

Holders of the Company's Common Shares are entitled to one vote per share
on all matters submitted to a vote of shareholders, unless any one person's
shares constitute 9.5% or more of the issued and outstanding Common Shares. If a
person's ownership constitutes 9.5% or more of the issued and outstanding Common
Shares, then the voting rights with respect to those shares shall be limited, in
the aggregate, to a voting power of 9.5%.

The Company is not subject to any significant legal prohibitions on the
payment of dividends.

5. SUBSEQUENT EVENT

Oracle Re was incorporated on September 10, 1997, under the laws of Bermuda
and was approved for licensing as a Class 3 and a long-term insurer under the
Insurance Act 1978 and related regulations. Oracle Re will commence writing
insurance when the appropriate minimum capitalization is obtained. At September
10, 1997, the required minimum statutory capital and surplus was $1,000,000.

The Company is planning to grant, at no cost, to holders of the outstanding
common stock and options to purchase common stock of Delphi Financial Group,
Inc., rights to purchase up to an aggregate of approximately 2,050,000 common
shares of the Company ("Rights Offering"). Subject to the completion of the
Rights Offering, the Company has agreed, or intends to agree, to enter into the
following agreements:

- After minimum capitalization is obtained, Oracle Re intends to assume
certain reinsurance from Reliance Standard Life Insurance Company and
Safety National Casualty Corporation, subsidiaries of Delphi Financial
Group, Inc. Management believes that the methods used to determine
premiums, commissions, liabilities assumed, shared underwriting and
investment returns, and other servicing fees under the contracts are
reasonable.

F-4
<PAGE> 73

- Concurrent with the Rights Offering, the Company intends to borrow
$30.0 million from Delphi Financial Group, Inc. ("Delphi") and its
subsidiaries. The Note will bear simple interest at a rate of 9.0% per
annum, and will become payable thirty years from issuance. The Company
will have the option during any five-year period to make semi-annual
interest payments through the issuance of additional promissory notes
in lieu of cash payments. Delphi will grant the Company an option,
exercisable during the five-year period after issuance of the Note, to
borrow an additional $5.0 million on the same terms.

- The Company intends to enter into an investment advisory agreement
with Acorn Advisory Capital L.P. who will advise the company on asset
strategies and investment managers. The Chairman of the Company may be
deemed to be the beneficial owner of substantially all of Acorn
Advisory Capital L.P.

- The Company has agreed to engage International Advisory Services Ltd.
to provide certain management and administrative services to the
Company. A vice president and director of the Company is also the
President, Managing Director and principal shareholder of
International Advisory Services Ltd.

- The Company intends to enter into a Standby Agreement with certain
employees, officers, directors, and shareholders of Delphi Financial
Group, Inc., or its affiliates to purchase up to 900,500 common shares
pursuant to the Rights Offering which may not be purchased in the
Rights Offering.

F-5
<PAGE> 74

======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES TO WHICH IT RELATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SUCH SECURITIES IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 7
The Rights Offering................... 15
Use of Proceeds....................... 19
Capitalization........................ 19
Dividend Policy....................... 20
Management's Discussion and Analysis
of Financial Condition and Plan of
Operation........................... 21
Proposed Business..................... 24
Regulation............................ 36
Management............................ 39
Certain Relationships and Related
Transactions........................ 42
Security Ownership of Certain
Beneficial Owners and Management.... 46
Description of Capital Stock.......... 48
Certain Tax Considerations............ 54
Certain Bermuda Law Considerations.... 59
Legal Matters......................... 60
Experts............................... 60
Additional Information................ 60
Glossary of Selected Insurance and
Reinsurance Terms................... 61
Index to Balance Sheet................ F-1
</TABLE>

------------------------
UNTIL , 1998 (25 DAYS AFTER THE EXPIRATION DATE OF THE RIGHTS
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON SHARES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS.
======================================================

======================================================
2,200,000 SHARES OF
COMMON STOCK
AND RIGHTS TO ACQUIRE UP TO
2,050,000 SHARES OF
COMMON STOCK

DELPHI INTERNATIONAL LTD.
-----------------

PROSPECTUS
-----------------
, 1997
======================================================
<PAGE> 75

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses payable in connection with the offering of the Rights and the
sale of the Common Shares offered hereby are estimated to be as follows:

<TABLE>
<S> <C>
SEC registration fee............................................ $ 6,833
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 500,000
Accounting fees and expenses.................................... 25,000
Blue sky fees and expenses...................................... 40,000
Transfer agent, rights agent and registrar fees and expenses.... 15,000
Miscellaneous................................................... 13,167
----
Total................................................. $750,000
====
</TABLE>

- ---------------

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 98 of the Companies Act provides generally that a Bermuda company
may indemnify its directors, officers and auditors against any liability which
by virtue of Bermuda law otherwise would be imposed on them, except in cases
where such liability arises from the fraud or dishonesty of which such director,
officer or auditor may be guilty in relation to the company. Section 98 further
provides that a Bermudian company may indemnify its directors, officers and
auditors against liability incurred by them in defending any proceedings,
whether civil or criminal, in which judgment is awarded in their favor or they
are acquitted or in which they are acquitted or granted relief by the Supreme
Court of Bermuda in certain proceedings arising under Section 281 of the
Companies Act.

The Company has adopted provisions in its Bye-Laws that provide that the
Company shall indemnify its officers and directors to the maximum extent
permitted under the Companies Act. The Company has also adopted provisions in
its Bye-laws that provide that each member of the Company and the Company itself
agrees to waive any claim or right of action he or it might have, whether
individually or by or in the right of the Company, against any director on
account of any action taken by such director, or the failure of such director to
take any action, in the performance of his duties, or supposed duties, with or
for the Company, provided that such waiver shall not extend to any matter in
respect of any fraud or dishonesty which may attach to such directors.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company was incorporated in September 2, 1997 under the laws of
Bermuda. On September 2, 1997, the Company issued 1,200,000 of its Common Shares
for an aggregate purchase price of $12,000, or $.01 per share, to the Oracle Re
Purpose Trust, which shares will be redeemed, for an aggregate redemption price
of $12,000, or $.01 per share, upon completion of the Rights Offering. The Trust
is a mechanism whose sole purpose is to permit the organization of the Company
prior to the issuance of shares pursuant to the Rights Offering. The Trustee of
the Trust is Codan Trust Company Limited, which is controlled by the law firm of
Conyers Dill & Pearman. Nicholas G. Trollope, a partner with Conyers Dill &
Pearman, is also a director of the Company. Such issuance was a private
transaction not involving a public offering and was exempt from the registration
provisions of the Securities Act pursuant to Section 4(2) thereof.

II-1
<PAGE> 76

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -------------------------------------------------------------------------------
<C> <S>
3.1 Memorandum of Association+
3.2 Amended and Restated Bye-Laws+
4.1 Specimen certificate representing the Common Shares+
4.2 Specimen certificate representing the Rights+
5.1 Opinion of Conyers Dill & Pearman as to the legality of the Common Shares
8.1 Opinion of Baker & McKenzie as to certain tax matters
8.2 Opinion of Conyers Dill & Pearman as to certain tax matters (included in
Exhibit 5.1)
8.3 Tax Assurance with respect to Delphi International Ltd. from the Minister of
Finance of Bermuda+
8.4 Tax Assurance with respect to Oracle Reinsurance Company Ltd. from the Minister
of Finance of Bermuda+
8.5 Notification with respect to Oracle Reinsurance Company Ltd. from the Registrar
of Companies of Bermuda pertaining to Relevant Assets+
10.1 Form of Note Agreement between Delphi International Ltd. and Delphi Financial
Group, Inc., Reliance Standard Life Insurance Company and Safety National
Casualty Corporation+
10.2 Form of Reinsurance Agreement between Oracle Reinsurance Company Ltd. and
Reliance Standard Life Insurance Company+
10.3 Form of Reinsurance Agreement between Oracle Reinsurance Company Ltd. and
Safety National Casualty Corporation+
10.4 Form of Investment Advisory Agreement between Oracle Reinsurance Company Ltd.
and Acorn Advisory Capital L.P.+
10.5 Amended and Restated Standby Agreement between Delphi International Ltd. and
certain employees, officers and directors of Delphi Financial Group Inc. and
Delphi International Ltd. and Rosenkranz & Company+
10.6 Intentionally Omitted
10.7 Description of Oral Employment Agreement with Colin O'Connor+
21.1 Subsidiaries of the Registrant+
23.1 Consent of Ernst & Young
23.2 Consent of Baker & McKenzie (included in Exhibit 8.1)
23.3 Consent of Conyers Dill & Pearman+
24.1 Powers of Attorney+
</TABLE>

- ---------------
+ Previously filed.

All schedules for which provision is made in the applicable accounting
regulations promulgated by the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.

ITEM 17. UNDERTAKINGS.

RULE 415 OFFERING.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,

II-2
<PAGE> 77

represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such posteffective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of this chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided, that
the registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial statements.
Notwithstanding the foregoing, with respect to registration statements on Form
F-3, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or Rule 3-19
of this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Form F-3.

WARRANTS AND RIGHTS OFFERINGS

The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of the
rights offering and the amount of unsubscribed securities purchased pursuant to
the standby arrangements.

REQUEST FOR ACCELERATION OF EFFECTIVE DATE OR FILING OF REGISTRATION STATEMENT
ON FORM S-8

Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 78

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda on
the 24th of December, 1997.

DELPHI INTERNATIONAL LTD.

By: /s/ COLIN O'CONNOR
------------------------------------
Name: Colin O'Connor
Title: President, Chief Executive
Officer and Director

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- --------------------------------- ------------------

<C> <S> <C>
/s/ COLIN O'CONNOR President, Chief Executive December 24, 1997
- ----------------------------------- Officer and Director (Principal
Colin O'Connor Executive, Accounting and
Financial Officer)

* Chairman of the Board December 24, 1997
- -----------------------------------
Robert Rosenkranz

* Vice President and Director December 24, 1997
- -----------------------------------
David Ezekiel

* Director December 24, 1997
- -----------------------------------
Nicolas G. Trollope

* Director December 24, 1997
- -----------------------------------
Edward A. Fox

* Director December 24, 1997
- -----------------------------------
Harold F. Ilg

* Director December 24, 1997
- -----------------------------------
Charles P. O'Brien

* Director December 24, 1997
- -----------------------------------
Lewis S. Ranieri

* Director December 24, 1997
- -----------------------------------
Thomas L. Rhodes

* Director December 24, 1997
- -----------------------------------
Robert M. Smith, Jr.

/s/ COLIN O'CONNOR
- -----------------------------------
*by Colin O'Connor as
attorney-in-fact
</TABLE>

II-4
<PAGE> 79

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------------------------------------------------------------------- ------------
<C> <S> <C>
3.1 Memorandum of Association+.............................................
3.2 Amended and Restated Bye-Laws+.........................................
4.1 Specimen certificate representing the Common Shares+...................
4.2 Specimen certificate representing the Rights+..........................
5.1 Opinion of Conyers Dill & Pearman as to the legality of the Common
Shares.................................................................
8.1 Opinion of Baker & McKenzie as to certain tax matters..................
8.2 Opinion of Conyers Dill & Pearman as to certain tax matters (included
in Exhibit 5.1)........................................................
8.3 Tax Assurance with respect to Delphi International Ltd. from the
Minister of Finance of Bermuda+........................................
8.4 Tax Assurance with respect to Oracle Reinsurance Company Ltd. from the
Minister of Finance of Bermuda+........................................
8.5 Notification with respect to Oracle Reinsurance Company Ltd. from the
Registrar of Companies of Bermuda pertaining to Relevant Assets+.......
10.1 Form of Note Agreement between Delphi International Ltd. and Delphi
Financial Group, Inc., Reliance Standard Life Insurance Company and
Safety National Casualty Corporation+..................................
10.2 Form of Reinsurance Agreement between Oracle Reinsurance Company Ltd.
and Reliance Standard Life Insurance Company+..........................
10.3 Form of Reinsurance Agreement between Oracle Reinsurance Company Ltd.
and Safety National Casualty Corporation+..............................
10.4 Form of Investment Advisory Agreement between Oracle Reinsurance
Company Ltd. and Acorn Advisory Capital L.P.+..........................
10.5 Amended and Restated Standby Agreement between Delphi International
Ltd. and certain employees, officers and directors of Delphi Financial
Group Inc. and Delphi International Ltd. and Rosenkranz & Company+.....
10.6 Intentionally Omitted..................................................
10.7 Description of Oral Employment Agreement with Colin O'Connor+..........
21.1 Subsidiaries of the Registrant+........................................
23.1 Consent of Ernst & Young...............................................
23.2 Consent of Baker & McKenzie (included in Exhibit 8.1)..................
23.3 Consent of Conyers Dill & Pearman+.....................................
24.1 Powers of Attorney+....................................................
</TABLE>

- ---------------
+ Previously filed.

II-5

<PAGE> 1

EXHIBIT 5.1

[LETTERHEAD OF CONYERS DILL & PEARMAN]

December 24, 1997

Delphi International Ltd.
Chevron House
Church Street
Hamilton
Bermuda

Dear Sirs:

We have acted as Bermuda counsel for Delphi International Ltd. (the "Company"),
a Bermuda exempted company, in connection with the proposed issue and sale of
common shares of the Company.

In our capacity as Bermuda counsel to the Company, we participated in the
preparation of the registration statement ("Registration Statement") on Form
S-1 registration no. 333-34829 which was filed with the Securities and Exchange
Commission ("Commission") under the Securities Act of 1933, as amended ("Act"),
of the United States of America together with all exhibits to the Registration
Statement and the forms of prospectus (the "Prospectus") also filed with the
Commission together with all amendments thereto filed in accordance with the
Act.

For the purposes of giving this opinion, we have examined and relied upon the
Registration Statement. We have also reviewed a copy of the memorandum of
association and bye-laws of the Company certified as a true copy thereof by the
secretary of the Company, minutes of meetings of the Company's board of
directors and minutes of shareholders' meetings and such other documents and
have made such enquiries as to questions of law as we have deemed necessary in
order to render the opinion set forth below.

<PAGE> 2
-2-

We have assumed:

(i) the genuineness and authenticity of all signatures and the conformity to
the originals of all copies (whether or not certified) of all documents
examined by us and the authenticity and completeness of the originals from
which such copies were taken;

(ii) the correctness, accuracy and completeness of all factual representations
made in the Registration Statement and in the other documents which we
have reviewed; and

(iii) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions
expressed herein.

We have made no investigation and express no opinion in relation to the laws of
any jurisdiction other than Bermuda. This opinion is to be governed by and
construed in accordance with the laws or Bermuda and is limited to and is
given on the basis of the current law and practice in Bermuda.

The term "non assessability" is not a legal concept under Bermuda law, but when
we describe shares as being "non assessable" (see paragraph 2 below) we mean
with respect to the shareholders of a company, in relation to fully paid shares
of the Company and subject to any contrary provision in any agreement in
writing between the Company and any one of its shareholders holding such shares
but only with respect to such shareholder, that such shareholder shall not be
bound by an alteration to the memorandum of association or the bye-laws of that
company after the date upon which they became such shareholders, if and insofar
as the alteration requires them to take, or subscribe for additional shares, or
in any way increases their liability to contribute to the share capital of, or
otherwise pay money to, such company.

On the basis of and subject to the foregoing, we are of the opinion that:

1. The Company has been duly incorporated and is an existing limited
liability exempted company under the laws of Bermuda, with corporate power
and corporate authority to own, lease and operate its properties and
conduct its business as described in the Prospectus.

2. The Common Shares to be sold by the Company have been duly authorised and,
when duly paid for, will be legally issued, fully paid and non-assessable;
such Common Shares are not subject to the pre-emptive rights of any
shareholder of the Company; all corporate action required to be taken for
the authorisation, issue and the sale of the Common Shares has been
validly taken and, when such Common Shares have been duly paid for, no
personal liability will attach to a holder thereof solely by reason of the
ownership thereof.

3. The statements in the Registration Statement and Prospectus under the
captions "Proposed Legislation," "Regulation-Bermuda," "Description of
Capital Stock" and "Certain Bermuda Law Considerations" have been prepared
and reviewed by us and are correct in all material respects.

4. The statements in the Registration Statement and Prospectus under the
captions "Certain Tax Considerations -- Taxation of the Company and Oracle
Re -- Bermuda" and "Certain Tax Considerations -- Taxation of Shareholders
-- Bermuda" are based on current Bermuda law and are the opinion of this
Firm.

Yours faithfully

/s/ CONYERS DILL & PEARMAN

CONYERS DILL & PEARMAN

<PAGE> 1
EXHIBIT 8.1

[Baker & McKenzie Letterhead]

December 24, 1997

Delphi International Ltd.
Chevron House
Church Street
Hamilton, Bermuda

Ladies and Gentlemen:

We are delivering this opinion in connection with the Registration
Statement on Form S-1 (the "Registration Statement") (Registration No.
333-34829) filed by Delphi International Ltd. (the "Company") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
with respect to the offering of Rights to acquire up to 2,200,000 of the
Company's Common Shares, $.01 par value per share (the "Common Shares").

We have reviewed the Registration Statement and have considered such
aspects of United States law as we have deemed relevant for purposes of the
opinion set forth below. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals
and the conformity to authentic originals of all documents submitted to us as
copies.

Based upon and subject to the foregoing and to the conditions and
limitations contained in the discussion in the Registration Statement, we are of
the opinion that the discussion in the Registration Statement under the headings
"Risk Factors -- Tax Matters," "The Rights Offering -- Federal Income Tax
Consequences" and "Certain Tax Considerations," except for those sections
dealing with Bermuda tax considerations, addresses all material U.S. Federal
income tax considerations affecting the Company, Oracle Reinsurance Company
Ltd., a Bermuda company, and holders of Common Shares (other than those tax
considerations that depend on circumstances specific to such holders) and the
statements of law contained therein are accurate in all material respects, and
such discussion is our opinion with respect to the matters of law referred to
therein.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above.

Very truly yours,

/s/ Baker & McKenzie

Baker & McKenzie

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated September 2, 1997, except for Note 5, as to which
the date is November 21, 1997, in Amendment No. 4 to the Registration Statement
on Form S-1 (No. 333-34829) and related Prospectus of Delphi International Ltd.
dated December 24, 1997, for the registration of 2,200,000 common shares and
granting of common stock purchase rights.

/s/ ERNST & YOUNG

Hamilton, Bermuda

December 23, 1997