|
Bermuda
(State or Other Jurisdiction of
Incorporation or Organization) |
6321
(Primary Standard Industrial
Classification Code Number) |
Not Applicable
(I.R.S. Employer
Identification No.) |
c/o ABG
Financial & Management Services Inc.
Parker House
Wildey Business Park, Wildey Road
St. Michael, Barbados
(246) 436-6287
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of Registrants Principal
Executive Offices)
|
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 664-1666
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service) |
Richard Warren
Shepro, Esq.
Carol S. Rivers, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
|
Janet J. Burak, Esq.
Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
(908) 604-3000
|
Title of Each
Class of
Securities to be Registered |
Amount to be
Registered |
Proposed Maximum
Offering Price Per Unit (1) |
Proposed Maximum
Aggregate Offering Price (1) |
Amount of
Registration Fee |
|||||
---|---|---|---|---|---|---|---|---|---|
Common shares, par
value $.01
per share |
48,655,428 | $26.90625 | $1,309,135,110 | $363,940(2) |
(1)
|
Estimated
solely for the purpose of computing the registration fee
calculated in accordance with Rule 457(f) under the Securities Act
of 1933.
|
(2)
|
Previously paid.
|
Sincerely,
|
Joseph V. Taranto
|
Chairman and
Chief Executive Officer
|
1.
|
A
proposal to adopt an agreement and plan of merger among Everest
Holdings, Everest Reinsurance Group, Ltd., a Bermuda company
referred to in this document as Everest Group, and Everest Re
Merger Corporation, a Delaware corporation and wholly-owned
subsidiary of Everest Group that is referred to in this document
as Everest Merger. The proposed merger will cause a restructuring
of Everest Holdings. As a result of the restructuring, Everest
Holdings will become a wholly-owned subsidiary of Everest Group
and each outstanding share of common stock of Everest Holdings
will be converted into one common share of Everest Group.
|
2.
|
Any other
business related to the proposed restructuring that may properly
come before the special meeting.
|
By Order of the
Board of Directors,
|
Janet J. Burak
|
Secretary
|
Page
|
|||||
---|---|---|---|---|---|
REFERENCES TO ADDITIONAL INFORMATION | i | ||||
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE MEETING | 1 | ||||
SUMMARY | 2 | ||||
RISK FACTORS | 7 | ||||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | 13 | ||||
THE COMPANIES | 15 | ||||
MARKET PRICE AND DIVIDEND INFORMATION | 17 | ||||
FINANCIAL INFORMATION ABOUT EVEREST GROUP | 18 | ||||
THE SPECIAL MEETING | 18 | ||||
THE PROPOSED RESTRUCTURING | 20 | ||||
MANAGEMENT | 29 | ||||
MATERIAL TAX CONSIDERATIONS | 31 | ||||
DESCRIPTION OF EVEREST GROUP SHARE CAPITAL | 43 | ||||
REGULATORY CONSIDERATIONS ASSOCIATED WITH OPERATING IN
BERMUDA AND
BARBADOS |
49 | ||||
LEGAL MATTERS | 54 | ||||
EXPERTS | 54 | ||||
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING | 55 | ||||
ENFORCEABILITY OF CIVIL LIABILITIES UNDER UNITED
STATES FEDERAL SECURITIES
LAWS |
55 | ||||
WHERE YOU CAN FIND MORE INFORMATION | 55 |
Q:
|
What am I
being asked to vote on?
|
A:
|
You are being asked to
vote in favor of a merger as a result of which Everest
Holdings will become a wholly-owned subsidiary of a
new holding company, Everest Group, and you will
receive one common share of Everest Group for each
share of common stock of Everest Holdings that you own.
|
Q:
|
What do I
need to do now?
|
A:
|
After you have
carefully read this document, complete, sign, date and
mail your proxy card in the enclosed envelope so that
your shares will be represented at the special meeting.
|
Q:
|
If my shares
are held in street name by my broker, will
my broker vote my shares for me?
|
A:
|
No. Your broker will
not be able to vote your shares without instructions
from you. You should instruct your broker to vote your
shares, following the directions provided by your
broker. Your failure to instruct your broker to vote
your shares will be the equivalent of voting against
the adoption of the agreement and plan of merger.
|
Q:
|
Can I change
my vote after I have submitted my proxy with voting
instructions?
|
A:
|
Yes. There are three
ways in which you may revoke your proxy and change
your vote. First, you may send a written notice to the
party to whom you submitted your proxy stating that
you would like to revoke your proxy. The notice must
be received before the special meeting to be
effective. Second, you may complete and submit a new
proxy card by mail. The latest proxy actually received
by Everest Holdings prior to the special meeting will
be recorded and any earlier proxies will be revoked.
Third, you may attend the special meeting and vote in
person. Simply attending the special meeting, however,
will not revoke your proxy. If you have instructed a
broker to vote your shares, you must follow directions
received from your broker to change or revoke your
proxy.
|
Q:
|
Should I
send in my stock certificates?
|
A:
|
No. You should not
send in your stock certificates at this time. If the
restructuring is completed, a transmittal form with
instructions on how to exchange your Everest Holdings
stock certificates for Everest Group share
certificates will be mailed to you.
|
Q:
|
When do you
expect the restructuring to be completed?
|
A:
|
We are working to
complete the restructuring as soon as possible. We
hope to complete the restructuring shortly after the
special meeting of Everest Holdings stockholders,
assuming that the required stockholder approval is
obtained at the meeting.
|
Q:
|
Whom should
I call with questions?
|
A:
|
Stockholders with any
questions about the restructuring and the related
transactions should call Everest Holdings Vice
President, Investor Relations, Mr. James H. Foster, at
(908) 604-3169.
|
Everest Holdings was
formed in 1993 as the holding company for Everest
Reinsurance Company, a property and casualty reinsurer
referred to in this document as Everest Re, and its
subsidiaries. The mailing address of its principal
executive offices is 477 Martinsville Road, P.O. Box
830, Liberty Corner, New Jersey 07938-0830 and its
telephone number is (908) 604-3000.
|
Everest Group was
recently organized under the laws of Bermuda and is
wholly owned by Everest Holdings. As a result of the
restructuring, Everest Group will become the new
holding company for Everest Holdings and its
subsidiaries. Everest Group has no significant assets
or capitalization and has not engaged in any business
or prior activities other than in connection with the
restructuring. The mailing address of its principal
executive offices is c/o ABG Financial &
Management Services Inc., Parker House, Wildey
Business Park, Wildey Road, St. Michael, Barbados and
its telephone number is (246)
.
|
Everest Merger was
recently organized under the laws of Delaware in order
to accomplish the proposed restructuring and is wholly
owned by Everest Group. Everest Merger has no
significant assets or capitalization and has not
engaged in any business or prior activities other than
in connection with the restructuring.
|
The special meeting of
stockholders will be held on [Meeting Date], 1999 at
[Meeting Time] at [Meeting Place].
|
Holders of record of
shares of Everest Holdings common stock at the close
of business on [Record Date], 1999 will be entitled to
vote in person or by proxy at the special meeting.
|
|
To consider and adopt
an agreement and plan of merger; and
|
|
To transact any other
business related to the proposed restructuring that
may properly come before the special meeting.
|
Adoption of the
agreement and plan of merger requires the affirmative
vote of a majority of the shares of Everest Holdings
common stock. As of [Record Date], 1999, directors and
executive officers of Everest Holdings and their
affiliates owned beneficially approximately
% of the shares of Everest Holdings common stock
outstanding on that date.
|
Everest Merger will be
merged into Everest Holdings, with Everest Holdings as
the surviving corporation. As a result of the merger,
Everest Holdings will become a subsidiary of Everest
Group and each outstanding share of common stock of
Everest Holdings will be converted into one common
share of Everest Group. Each shareholders
percentage ownership in Everest Group immediately
following the restructuring will be identical to that
shareholders percentage interest in Everest
Holdings immediately before the restructuring.
Following the merger, Everest Group will capitalize a
Bermuda-based reinsurance subsidiary called Everest
Reinsurance (Bermuda) Ltd., referred to in this
document as Everest Bermuda.
|
Everest Group will be
a publicly owned holding company, organized under the
laws of Bermuda and having its principal offices in
Barbados, and will own all of the stock of Everest
Holdings and all of the share capital of Everest
Bermuda.
|
The board of directors
of Everest Holdings believes that the proposed
restructuring will provide Everest Group with an
enhanced ability to compete and create better returns
for stockholders by permitting Everest Group to take
maximum advantage of favorable business, regulatory,
tax and financing environments in Bermuda and Barbados.
|
The board of directors
of Everest Holdings has declared the agreement and
plan of merger to be advisable, has approved it and
recommends that stockholders vote FOR its
adoption.
|
The obligation of
Everest Holdings and Everest Merger to complete the
merger is subject to the satisfaction or waiver of the
following conditions:
|
|
adoption of the
agreement and plan of merger by the Everest Holdings
stockholders;
|
|
effectiveness of the
registration statement for the Everest Group common
shares to be issued in the merger;
|
|
approval by the NYSE
for the listing of the Everest Group common shares to
be issued in the merger;
|
|
approval of the merger
by government regulatory authorities and the
expiration of applicable waiting periods; and
|
|
absence of any order
or injunction preventing completion of the merger.
|
If approved by the
Everest Holdings stockholders, the merger will become
effective on [Effective Time], 1999, subject to the
above conditions. However, the board of directors of
Everest Holdings can abandon or delay the merger at
any time before it becomes effective, even after the
merger has been approved by the stockholders.
|
Everest Group has
obtained the approval of its acquisition of control of
Everest Holdings insurance subsidiaries from the
insurance regulatory authorities in Delaware and
Arizona and will give written notice of the
restructuring to the insurance and financial services
regulatory authorities in other U.S. jurisdictions
where those subsidiaries are licensed. Outside of the
United States, Everest Group has filed or will file
applications seeking approval of the restructuring
with the insurance and financial services regulatory
authorities in the countries where Everest Holdings
insurance subsidiaries are domiciled or
licensed.
|
Under Section 262 of
the Delaware General Corporation Law, Everest Holdings
stockholders have no right to a court determination,
in a proceeding known as an appraisal, of the value of
their shares in connection with the restructuring. See
The Proposed RestructuringAbsence of
Appraisal Rights.
|
The restructuring will
not be taxable for federal income tax purposes to
Everest Holdings. However, a U.S. holder of Everest
Holdings common stock will recognize gain in an amount
equal to the excess, if any, of the fair market value
of the Everest Group common shares received at the
effective time of the restructuring over that holder
s adjusted basis in the Everest Holdings common
stock surrendered. See Material Tax
Considerations.
|
If the restructuring
is completed, stockholders will be mailed a
transmittal form with instructions on how to exchange
their stock certificates for share certificates of
Everest Group.
|
Under Everest Group
s bye-laws, Everest Group may refuse to
recognize a transfer of common shares, and may redeem
or purchase common shares from any person, if the
board of directors has reason to believe that the
transfer, or the ownership of common shares, would
result in
|
|
any person that is not
an investment company, as defined in the Investment
Company Act of 1940, beneficially owning more than
5.0% of any class of the issued and outstanding share
capital of Everest Group,
|
|
any person owning,
directly or indirectly, more than 9.9% of any class of
the issued and outstanding share capital of Everest
Group or
|
|
any adverse tax,
regulatory or legal consequences to Everest Group, any
of its subsidiaries or any of its shareholders.
|
In addition, Everest
Groups bye-laws provide that the voting rights
of any person owning, directly or indirectly, more
than 9.9% of the voting power of the issued and
outstanding share capital of Everest Group will
ordinarily be limited to a voting power of 9.9%.
Because of the attribution and constructive ownership
rules of the U.S. Internal Revenue Code of 1986,
referred to in this document as the Code, and the
rules of the SEC regarding determination of beneficial
ownership, some persons may become subject to these
limitations whether or not they directly hold of
record more than 9.9% of Everest Groups issued
and outstanding share capital. See Description
of Everest Group Share CapitalCommon Shares.
|
Nine Months
Ended September 30, (unaudited) |
Year Ended December 31,
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1999 |
1998 |
1998 |
1997 |
1996 |
1995 |
1994 |
|||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||||||||
Operating Data | |||||||||||||||||||||
Gross premiums written | $ 836.6 | $ 792.9 | $1,045.9 | $1,075.0 | $1,044.0 | $ 949.5 | $ 953.2 | ||||||||||||||
Net premiums written | 804.3 | 756.3 | 1,016.6 | 1,031.1 | 1,030.5 | 783.2 | 863.2 | ||||||||||||||
Net premiums earned | 795.0 | 771.3 | 1,068.0 | 1,049.8 | 973.6 | 753.3 | 853.3 | ||||||||||||||
Net investment income | 188.9 | 183.2 | 244.9 | 228.5 | 191.9 | 166.0 | 143.6 | ||||||||||||||
Net realized capital gains (losses) (1) | (17.1 | ) | 3.5 | (0.8 | ) | 15.9 | 5.7 | 33.8 | (10.5 | ) | |||||||||||
Total revenue | 966.3 | 960.7 | 1,315.2 | 1,299.2 | 1,169.3 | 948.9 | 982.8 | ||||||||||||||
Losses and LAE incurred (including catastrophes) | 568.9 | 564.0 | 778.4 | 765.4 | 716.0 | 674.7 | 720.8 | ||||||||||||||
Total catastrophe losses (2) | 25.3 | 17.1 | 30.6 | 8.6 | 7.1 | 31.4 | 81.9 | ||||||||||||||
Commission, brokerage, taxes and fees | 214.4 | 197.7 | 274.6 | 274.8 | 254.6 | 227.4 | 197.9 | ||||||||||||||
Other underwriting expenses | 36.1 | 36.2 | 49.6 | 51.7 | 54.9 | 60.0 | 68.3 | ||||||||||||||
Compensation related to public offering | | | | | | 13.3 | | ||||||||||||||
Restructuring and early retirement costs | | | | | | | 7.8 | ||||||||||||||
Total expenses (3) | 819.4 | 798.0 | 1,102.5 | 1,091.9 | 1,025.5 | 975.4 | 994.8 | ||||||||||||||
Income (loss) before taxes (3) | 146.9 | 162.7 | 212.7 | 207.3 | 143.8 | (26.6 | ) | (12.0 | ) | ||||||||||||
Income tax (benefit) | 28.4 | 37.2 | 47.5 | 52.3 | 31.8 | (27.3 | ) | (22.6 | ) | ||||||||||||
Net income (3) | $ 118.5 | $ 125.5 | $ 165.2 | $ 155.0 | $ 112.0 | $ 0.7 | $ 10.7 | ||||||||||||||
Net income per basic share (4) | $ 2.42 | $ 2.49 | $ 3.28 | $ 3.07 | $ 2.22 | $ 0.01 | $ 0.21 | ||||||||||||||
Net income per diluted share (5) | $ 2.41 | $ 2.47 | $ 3.26 | $ 3.05 | $ 2.21 | $ 0.01 | $ 0.21 | ||||||||||||||
Dividends paid per share | $ 0.18 | $ 0.15 | $ 0.20 | $ 0.16 | $ 0.12 | $ 0.14 | $ 0.15 | ||||||||||||||
Certain GAAP Financial Ratios | |||||||||||||||||||||
Loss and LAE ratio (6) | 71.6 | % | 73.1 | % | 72.9 | % | 72.9 | % | 73.5 | % | 89.6 | % | 84.5 | % | |||||||
Underwriting expense ratio (7) | 31.5 | 30.4 | 30.3 | 31.1 | 31.8 | 39.9 | 31.2 | ||||||||||||||
Combined ratio | 103.1 | % | 103.5 | % | 103.2 | % | 104.0 | % | 105.3 | % | 129.5 | % | 115.7 | % | |||||||
Certain SAP Data (8) | |||||||||||||||||||||
Ratio of net premiums written to surplus (9) | 1.0 | x | 1.0 | x | 1.0 | x | 1.4 | x | 1.2 | x | 1.0 | x | 1.2 | x | |||||||
Statutory surplus | $1,128.1 | $ 998.7 | $1,059.4 | $ 908.8 | $ 772.7 | $ 686.9 | $ 600.7 | ||||||||||||||
Loss and LAE ratio (10) | 71.3 | % | 72.2 | % | 72.2 | % | 75.7 | % | 71.2 | % | 92.2 | % | 85.8 | % | |||||||
Underwriting expense ratio (11) | 31.5 | 30.4 | 31.1 | 25.6 | 31.7 | 38.9 | 32.6 | ||||||||||||||
Combined ratio | 102.8 | % | 102.6 | % | 103.3 | % | 101.3 | % | 102.9 | % | 131.1 | % | 118.4 | % | |||||||
Balance Sheet Data (at end of period) | |||||||||||||||||||||
Total investments and cash | $4,160.7 | $4,450.2 | $4,325.8 | $4,163.3 | $3,624.6 | $3,238.3 | $2,573.2 | ||||||||||||||
Total assets | 5,783.1 | 5,811.9 | 5,996.7 | 5,538.0 | 5,047.8 | 4,647.8 | 4,040.6 | ||||||||||||||
Loss and LAE reserves | 3,698.0 | 3,491.7 | 3,800.0 | 3,437.8 | 3,246.9 | 2,969.3 | 2,706.4 | ||||||||||||||
Total liabilities | 4,405.3 | 4,353.4 | 4,517.5 | 4,230.5 | 3,961.7 | 3,664.2 | 3,299.6 | ||||||||||||||
Stockholders equity (12) | 1,377.8 | 1,458.6 | 1,479.2 | 1,307.5 | 1,086.0 | 983.6 | 741.0 | ||||||||||||||
Book value per share (13) | 28.61 | 29.00 | 29.59 | 25.90 | 21.51 | 19.36 | 14.82 |
(1)
|
After-tax operating
income (loss), before after-tax net realized capital
gains or losses, was $129.7 million (or $2.64 per
basic share and $2.63 per diluted share), $123.2
million (or $2.44 per basic share and $2.43 per
diluted share), $165.7 million (or $3.29 per basic
share and $3.27 per diluted share), $144.6 million (or
$2.86 per basic and $2.85 per diluted share), $108.3
million (or $2.14 per basic and diluted share),
($21.2) million (or ($0.42) per basic and diluted
share) and $17.5 million (or $0.35 per basic and
diluted share) for the periods ended September 30,
1999 and 1998 and the years ended December 31, 1998,
1997, 1996, 1995 and 1994, respectively. Supplemental
after-tax operating income, before net realized gains
and excluding IPO-related charges was, $78.4 million
(or $1.56 per basic and diluted share) for the year
ended December 31, 1995.
|
(2)
|
Catastrophe losses are
net of reinsurance. A catastrophe is defined, for
purposes of the Selected Consolidated Financial Data,
as an event that causes a pre-tax loss before
reinsurance of at least $5.0 million and has an event
date of January 1, 1988 or later.
|
(3)
|
Some amounts may not
reconcile due to rounding.
|
(4)
|
Based on weighted
average basic shares outstanding of 49.0 million, 50.5
million, 50.4 million, 50.5 million, 50.6 million,
50.2 million and 50.0 million for the periods ended
September 30, 1999 and 1998 and the years ended
December 31, 1998, 1997, 1996, 1995 and 1994,
respectively.
|
(5)
|
Based on weighted
average diluted shares outstanding of 49.2 million,
50.8 million, 50.7 million, 50.8 million, 50.7
million, 50.2 million and 50.0 million for the periods
ended September 30, 1999 and 1998 and the years ended
December 31, 1998, 1997, 1996, 1995 and 1994,
respectively.
|
(6)
|
GAAP losses and LAE
incurred as a percentage of GAAP net premiums earned.
|
(7)
|
GAAP underwriting
expenses as a percentage of GAAP net premiums earned.
Including restructuring and early retirement costs
incurred in the fourth quarter of 1994, Everest
Holdings GAAP underwriting expense ratio in 1994
was 32.1%.
|
(8)
|
Statutory results are
on a Everest Re legal entity basis; consequently,
investments in subsidiary operations are accounted for
on an equity basis. Effective January 1, 1997, the
reinsurance operations of Everest Re Holdings, Ltd.
were transferred to Everest Re on a portfolio basis.
Excluding the impact of the portfolio transaction, the
1997 ratio of net written premiums to surplus, the
1997 loss and LAE ratio, the 1997 underwriting expense
ratio and the 1997 combined ratio were 1.1 x, 70.5%,
32.2% and 102.7%, respectively.
|
(9)
|
Statutory net premiums
written as a percentage of period-end surplus.
|
(10)
|
Statutory losses and
LAE incurred as a percentage of SAP net premiums
earned.
|
(11)
|
Statutory underwriting
expenses as a percentage of SAP net premiums written.
|
(12)
|
Excluding net
unrealized appreciation (depreciation) of investments,
stockholders equity was $1,339.9 million,
$1,254.1 million, $1,281.6 million, $1,147.1 million,
$1,008.3 million, $899.9 million and $799.1 million as
of September 30, 1999 and 1998 and December 31, 1998,
1997, 1996, 1995 and 1994, respectively.
|
(13)
|
Based on 48.2 million
shares outstanding for September 30, 1999, 50.3
million shares outstanding for September 30, 1998,
50.0 million shares outstanding for December 31, 1998,
50.5 million shares outstanding for December 31, 1997
and 1996, 50.8 million shares outstanding for December
31, 1995, and 50.0 million shares outstanding for
December 31, 1994.
|
|
any U.S. taxpayer who
directly or indirectly through foreign entities owns
shares of a foreign insurance company; or
|
|
any person related to
a U.S. taxpayer meeting the above definition.
|
|
25% or more of the
value or voting power of the share capital of Everest
Bermuda is owned directly, indirectly or by
attribution by U.S. taxpayers;
|
|
20% or more of the
value or voting power of the share capital of Everest
Bermuda is owned directly, indirectly or by
attribution by U.S. taxpayers, or persons related to
U.S. taxpayers, who are insured or reinsured by
Everest Bermuda; and
|
|
Everest Bermuda has
gross RPII equal to 20% or more of its gross insurance
income.
|
|
any person that is not
an investment company beneficially owns more than 5.0%
of any class of Everest Groups issued and
outstanding share capital,
|
|
any person controls,
based on the definition of control discussed in the
next paragraph, more than 9.9% of any class of Everest
Groups issued and outstanding share capital or
|
|
share ownership by any
person may cause adverse tax, regulatory or legal
consequences to Everest Group, any of its subsidiaries
or any of its shareholders,
|
|
owns the shares
directly,
|
|
is a U.S. person and
is treated as owning the shares by application of the
attribution and constructive ownership rules of
Sections 958 (a) and 958(b) or 544 and 554 of the
Code, or
|
|
beneficially owns the
shares within the meaning of Section 13(d)(3) of the
Exchange Act.
|
|
changes in the level
of competition in the domestic and international
reinsurance or primary insurance markets that
adversely affect the volume or profitability of
Everest Groups reinsurance or insurance
business, including the intensification of price and
contract terms competition, the entry of new
competitors, consolidation in the reinsurance and
insurance industry and the development of new products
by new and existing competitors;
|
|
changes in the demand
for reinsurance and insurance products of the type
that Everest Group and its ceding insurance customers
offer;
|
|
Everest Groups
ability to execute its strategies;
|
|
catastrophe losses in
Everest Groups domestic or international
reinsurance or insurance business;
|
|
adverse development on
claim and claim expense liabilities related to
business written in prior years, including evolving
case law and its effect on environmental and other
latent injury claims, changing government regulations,
newly identified toxins, newly reported claims, new
theories of liability, or new insurance and
reinsurance contract interpretations, to the extent
that the adverse development exceeds the limits
available under or is not covered by Everest Res
stop loss agreement with Gibraltar Casualty Company;
|
|
greater than expected
loss ratios on reinsurance or insurance written by
Everest Group;
|
|
changes in inflation
that affect the profitability of Everest Groups
current reinsurance and insurance businesses or the
adequacy of its claim and claim expense liabilities;
|
|
changes in Everest
Groups retrocessional arrangements;
|
|
lower than estimated
retrocessional or reinsurance recoveries on losses,
including losses due to a decline in the
creditworthiness of Everest Groups
retrocessionaires or reinsurers;
|
|
changes in the
reinsurance/retrocessional market impacting Everest
Groups ability to cede risks above its desired
level of retention;
|
|
changes in interest
rates, increases in which cause a reduction in the
market value of Everest Groups fixed income
investment portfolio and common stockholders
equity, and decreases in which cause a reduction of
income earned on new cash flow from operations as well
as on the reinvestment of the proceeds from sales,
calls or maturities of existing investments;
|
|
decline in the value
of Everest Groups common equity investments;
|
|
changes in the
composition of Everest Groups investment
portfolio;
|
|
gains or losses
related to changes in foreign currency exchange rates;
|
|
changes in the role of
reinsurance brokers and Everest Groups
relationship with those brokers;
|
|
impact of Year 2000
computer hardware, software and microprocessors
embedded in certain equipment on Everest Groups
operations and potential for Year 2000 claims under
reinsurance and insurance contracts written by Everest
Group;
|
|
impact of the Euro on
Everest Groups operations or financial condition;
|
|
adverse results in
litigation matters, including litigation related to
environmental, asbestos and other potential mass tort
claims;
|
|
changes in Everest
Groups capital needs;
|
|
changes in Everest
Groups ratings;
|
|
the impact of current
and future regulatory environments, generally, and on
the ability of Everest Groups subsidiaries to
enter and exit reinsurance or insurance markets; and
|
|
changes in the
commission or brokerage levels that competitors are
willing to offer to ceding companies, brokers or
agents.
|
|
Everest National
Insurance Company, an Arizona insurance company, is
licensed in 42 states and the District of Columbia and
is authorized to write primary insurance in the states
in which it is licensed, often called writing
insurance on an admitted basis.
|
|
Everest Insurance
Company of Canada, a Canadian insurance company, is
licensed in all Canadian provinces and territories and
is federally licensed to write primary insurance under
the Insurance Companies Act of Canada.
|
Everest Indemnity
Insurance Company, a Delaware insurance company,
engages in the excess and surplus lines insurance
business in the United States. Excess and surplus
lines insurance is specialty property and liability
coverage that an insurer not licensed to write
insurance in a particular state is permitted to
provide when the specific specialty coverage is
unavailable from admitted insurers. This is often
called writing insurance on a non-admitted basis.
Everest Indemnity is licensed in Delaware and is
eligible to write business in 39 states, the District
of Columbia and the Commonwealth of Puerto Rico on a
non-admitted basis.
|
|
Mt. McKinley Managers,
L.L.C., a New Jersey limited liability company, is
licensed in New Jersey as an insurance producer, which
is any intermediary, such as an agent or broker, which
acts as the conduit between an insurance company and
an insured. Mt. McKinley holds licenses to allow it to
act as an insurance producer in connection with
policies written on both an admitted and a surplus
lines basis. After a 1998 acquisition of the assets of
insurance agency operations in Alabama and Georgia,
the continuing insurance agency operations are now
carried on by subsidiaries of Mt. McKinley. These
subsidiaries are WorkCare Southeast, Inc., an Alabama
insurance agency, and WorkCare Southeast of Georgia,
Inc., a Georgia insurance agency.
|
|
Everest Re Holdings,
Ltd., a Bermuda company formed in 1998 and referred to
in this document as Everest Ltd., owns Everest Re
Ltd., a United Kingdom company that is in the process
of being dissolved because its reinsurance operations
have been converted into branch operations of Everest
Re.
|
High
|
Low
|
|||
---|---|---|---|---|
1997 | ||||
First Quarter | 32.7500 | 26.0000 | ||
Second Quarter | 40.2500 | 26.7500 | ||
Third Quarter | 41.1250 | 34.5000 | ||
Fourth Quarter | 43.0000 | 33.0000 | ||
1998 | ||||
First Quarter | 41.6250 | 35.2500 | ||
Second Quarter | 45.2500 | 36.1250 | ||
Third Quarter | 43.5000 | 34.1875 | ||
Fourth Quarter | 38.9375 | 28.7500 | ||
1999 | ||||
First Quarter | 38.9375 | 30.1250 | ||
Second Quarter | 34.8125 | 28.8750 | ||
Third Quarter | 35.6875 | 21.9375 | ||
Fourth Quarter (through November 22, 1999) | 27.2500 | 20.5000 |
|
by giving written
notice of revocation to Everest Holdings, addressed to
Janet J. Burak, 477 Martinsville Road, P.O. Box 830,
Liberty Corner, New Jersey 07938-0830, if the notice
of revocation is received by Everest Holdings prior to
the special meeting;
|
|
by submitting a later
dated proxy with voting instructions by mail, if the
proxy is received by Everest Holdings prior to the
special meeting; or
|
|
by voting in
person at the special meeting, although a proxy is not
revoked by simply attending the special meeting.
|
|
Everest Group, a
company organized in Bermuda and with its principal
office in Barbados, will become the new publicly-owned
parent corporation of Everest Holdings.
|
|
Everest Holdings, as a
subsidiary of Everest Group, will continue to act as
the holding company for the subsidiaries of Everest
Holdings in the United States and Canada.
|
|
Everest Group will
also be the holding corporation for a new
Bermuda-based reinsurance subsidiary, Everest Bermuda.
|
|
Everest Holdings has
organized a subsidiary, Everest Group, under the laws
of Bermuda and established its principal office in
Barbados.
|
|
Everest Group has
organized a Delaware subsidiary, Everest Merger.
|
|
Everest Merger will be
merged into Everest Holdings, with Everest Holdings as
the surviving corporation. When the merger is
completed, Everest Holdings will become a subsidiary
of Everest Group and each outstanding share of common
stock of Everest Holdings will be converted into one
common share of Everest Group.
|
|
After the merger is
completed, Everest Group will capitalize Everest
Bermuda, its Bermuda-based reinsurance subsidiary.
|
|
The board of directors
believes that Bermuda is an important insurance market
that attracts a significant deal flow because of its
favorable business, regulatory and tax environments,
and having a presence in Bermuda is important as a
competitive matter.
|
|
The board of directors
believes that, compared to U.S. state regulatory
environments, the Bermuda regulatory environment
offers insurance companies more flexibility to price
their products, develop new products and write
additional lines of reinsurance and imposes fewer
restrictions on an insurance companys ability to
make investments and distribute capital to
shareholders.
|
|
The board of directors
believes that a holding company structure in the form
proposed by the restructuring will provide a more
suitable corporate structure for expansion of Everest
Groups business and future acquisitions and
diversification opportunities. Everest Group currently
has no specific plans for material acquisitions or to
significantly diversify its business from the business
that Everest Holdings is currently conducting and that
Everest Bermuda is expected to conduct subsequent to
the restructuring.
|
|
The board of directors
believes that the establishment of Bermuda and
Barbados operations will, over a period of time,
reduce corporate income taxes because, unlike the U.S.
tax system which imposes corporate income tax on the
worldwide income of U.S. corporations, Bermuda
generally imposes no corporate income taxes on foreign
income and Barbados generally imposes corporate income
tax only on some foreign income of a non-Barbados
company managed and controlled in Barbados. Income
taxes should therefore be reduced to the extent
operations after the restructuring are conducted
outside of the United States and outside of other
countries with significant corporate taxes. To the
extent that Everest Groups taxes are reduced, it
expects to be able to price its products more
competitively.
|
|
Everest Merger will be
merged with and into Everest Holdings, with Everest
Holdings as the surviving corporation;
|
|
each share of Everest
Holdings common stock issued and outstanding
immediately prior to the merger will be converted into
one Everest Group common share;
|
|
each share of Everest
Merger common stock issued and outstanding immediately
prior to the merger will remain outstanding and be
converted into one share of the surviving corporation;
|
|
the certificate of
incorporation of Everest Holdings as in force and
effect immediately prior to the effective time of the
merger will be the certificate of incorporation of the
surviving corporation;
|
|
the by-laws of Everest
Holdings as in force and effect immediately prior to
the effective time of the merger will be the by-laws
of the surviving corporation; and
|
|
the directors and
officers of Everest Holdings who are in office
immediately prior to the effective time of the merger
will be the directors and officers of the surviving
corporation and will remain in office until the
election and qualification of their successors or
until their tenure is otherwise terminated in
accordance with the by-laws of the surviving
corporation.
|
|
the Everest Holdings
stockholders will have adopted the agreement and plan
of merger;
|
|
the registration
statement on Form S-4 filed with the SEC to register
the Everest Group common shares to be issued in the
merger will have become effective under the Securities
Act, and no stop order or proceeding seeking a stop
order with respect to that registration statement will
be in effect;
|
|
the Everest Group
common shares issuable to stockholders pursuant to the
agreement and plan of merger will have been approved
by the NYSE for listing, subject to official notice of
issuance;
|
|
the merger will have
received all required consents and approvals from
applicable governmental and regulatory authorities and
other persons, and all applicable waiting periods will
have expired; and
|
|
no temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the merger will be in
effect.
|
Benefit Plans and
Stock Options
|
|
the annual incentive
plan,
|
|
the executive
performance annual incentive plan,
|
|
the 1995 stock
incentive plan,
|
|
the 1995 stock option
plan for non-employee directors,
|
|
the senior executive
change of control plan and
|
|
all other plans,
arrangements or agreements under which Everest
Holdings stock options have been granted.
|
Change of Control
Provisions
|
Employment
Agreements
|
|
the completion of a
tender offer or exchange offer for the ownership of
securities of Everest Re or Everest Group representing
25% or more of the combined voting power of that
companys then outstanding voting securities;
|
|
the completion of a
merger or consolidation of Everest Re or Everest Group
with another corporation that results in less than 75%
of the outstanding voting securities of the surviving
or resulting corporation being owned by the former
stockholders of Everest Re, Everest Group or their
affiliates;
|
|
the transfer by
Everest Re or Everest Group of substantially all of
its assets to another corporation or entity that is
not a wholly owned subsidiary of Everest Re or Everest
Group;
|
|
the acquisition by any
person of direct or indirect beneficial ownership of
securities of Everest Re or Everest Group representing
25% or more of the combined voting power of the then
outstanding securities of Everest Re or Everest Group;
and
|
|
a tender offer,
merger, consolidation, sale of assets or contested
election, or any combination of those transactions,
which causes the persons who were members of the board
of directors of Everest Re or Everest Group
immediately before the transaction to cease to
constitute at least a majority of that board of
directors.
|
|
all of Mr. Taranto
s outstanding stock options will immediately
vest and become exercisable;
|
|
Mr. Taranto will
receive a cash payment equal to the lesser of
|
|
2.99 multiplied by Mr.
Tarantos annual compensation for the most recent
taxable year ending prior to the date of the material
change, less the value of Mr. Tarantos gross
income in the most recent taxable year ending prior to
the date of a material change attributable to Mr.
Tarantos exercise of stock options, stock
appreciation rights and other stock-based awards
granted to Mr. Taranto, and
|
|
2.99 multiplied by Mr.
Tarantos annualized includible
compensation for the base period as that phrase
is defined in Section 280G(d) of the Code;
|
|
Mr. Taranto will
continue to be covered under the medical and dental
insurance plans of Everest Re or Everest Global
Services, as applicable, for a period of three years
from the date of termination; and
|
|
Mr. Taranto will
receive special retirement benefits in an amount that
will equal the retirement benefits he would have
received had he continued in the employ of Everest Re
or Everest Global Services, as applicable, for three
years following his termination under the Everest
Reinsurance Retirement Plan and any supplemental,
substitute, or successor retirement plans.
|
|
one year following a
material change;
|
|
termination by Mr.
Taranto of his employment with Everest Re or Everest
Global Services, as applicable, under circumstances
not following a material change;
|
|
the termination by
Everest Re or Everest Global Services, as applicable,
of Mr. Tarantos employment for due cause; and
|
|
December 31, 2001, or
any date thereafter, with 60 days written notice.
|
Rights Agreement
|
|
a citizen or resident
of the United States;
|
|
a corporation,
partnership or other entity created or organized in
the United States or under the laws of the United
States or of any of its political subdivisions;
|
|
an estate whose income
is includible in gross income for U.S. federal income
tax purposes regardless of its source; or
|
|
any trust if, and only
if, a court within the United States is able to
exercise primary supervision over the administration
of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the
trust.
|
Bermuda
|
Barbados
|
United States
|
|
a U.S. holder of
Everest Holdings common stock will recognize gain in
an amount equal to the excess, if any, of the fair
market value of the Everest Group common shares at the
time of the merger over the holders adjusted
basis in the Everest Holdings common stock surrendered;
and
|
|
a U.S. holder of
Everest Holdings common stock will not recognize loss
in the merger if the fair market value of the Everest
Group common shares at the time of the merger is less
than the holders adjusted basis in the Everest
Holdings common stock surrendered.
|
Information
Reporting
|
Backup Withholding.
|
|
is a corporation or
other exempt recipient and, if required, demonstrates
that is has that status; or
|
|
provides a United
States taxpayer identification number, certifies that
the taxpayer identification number provided is correct
and that the holder has not been notified by the IRS
that it is subject to backup withholding due to the
under-reporting of interest or dividends, and
otherwise complies with the applicable requirements of
the backup withholding rules.
|
Bermuda
|
Barbados
|
United States
|
|
U.S. federal income
tax at graduated rates on its taxable income that is
treated as effectively connected to its conduct of a
trade or business within the United States;
|
|
U.S. branch profits
tax on its effectively connected earnings and profits
deemed repatriated out of the United States; and
|
|
U.S. withholding tax
on some types of U.S. source income, such as
dividends, not effectively connected with a U.S. trade
or business.
|
Corporate Income
Tax and Branch Profits Tax
|
Withholding Tax
|
Insurance Excise Tax
|
Bermuda Taxation
|
Barbados Taxation
|
United States
Taxation of Shareholders
|
|
foreign personal
holding company income, such as interest,
dividends and other types of passive investment income;
and
|
|
insurance income,
which is defined to include any income that is
attributable to the issuing or reinsuring of any
insurance or annuity contract that would be taxed
under the insurance company provisions of the Code if
that income were the income of a domestic insurance
company.
|
|
any income from
sources within the United States that is effectively
connected with the conduct of a trade or business
within the United States and not exempted or subject
to a reduced rate of tax by applicable treaty;
|
|
some income subject to
high foreign taxes; and
|
|
exempt insurance
income derived prior to January 1, 2000 by a
qualifying insurance company as defined in
Section 953(e) of the Code.
|
|
the tax-exempt
shareholder,
|
|
an affiliate of the
tax-exempt shareholder which itself is exempt from tax
under Section 501(a) of the Code or
|
|
a director or officer
of, or an individual who directly or indirectly
performs services for, the tax-exempt shareholder or
an exempt affiliate but only if the insurance covers
primarily risks associated with the performance of
services in connection with the tax-exempt shareholder
or exempt affiliate.
|
|
must include in each
year as ordinary income any excess of the fair market
value of the common shares at the end of the taxable
year over their adjusted basis; and
|
|
will be permitted an
ordinary loss in respect of any excess of the adjusted
basis of the common shares over their fair market
value at the end of the taxable year, but only to the
extent of the net amount previously included in income
as a result of the mark to market election.
|
Backup Withholding.
|
|
T is
the aggregate number of votes conferred by all the
issued and outstanding share capital immediately prior
to that application of the formula with respect to any
particular person, adjusted to take into account any
prior reduction taken with respect to any other person
as a result of a previous application of the formula;
|
|
C is the
number of controlled shares attributable to the person;
and
|
|
Controlled shares of
any person refers to all shares of the issued and
outstanding share capital owned by that person, whether
|
|
directly,
|
|
with respect to
persons who are U.S. persons, by application of the
attribution and constructive ownership rules of
sections 958(a) and 958(b) or 544 and 554 of the Code,
or
|
|
beneficially within
the meaning of Section 13(d)(3) of the Exchange Act.
|
|
any person that is not
an investment company beneficially owning more than
5.0% of any class of the issued and outstanding share
capital of Everest Group,
|
|
any person holding
controlled shares in excess of 9.9% of any class of
the issued and outstanding share capital of Everest
Group or
|
|
any adverse tax,
regulatory or legal consequences to Everest Group, any
of its subsidiaries or any of its shareholders.
|
|
any person that is not
an investment company beneficially owns more than 5.0%
of any class of the issued and outstanding share
capital of Everest Group,
|
|
any person holds
controlled shares in excess of 9.9% of any class of
the issued and outstanding share capital of Everest
Group or
|
|
share ownership by any
person may result in adverse tax, regulatory or legal
consequences to Everest Group, any of its subsidiaries
or any other shareholder,
|
(1)
|
Duty of good faith.
A director or officer must act honestly and in
good faith with a view to the best interests of the
company. This means that in conflict of interest
situations, a director or officer must place the best
interests of the company above his own personal
interests. It also means that a director or officer
may not use his position as a director to make a
personal profit from opportunities that rightfully
belong to the company.
|
(2)
|
Duty of care. A
director or officer must exercise the care, diligence
and skill that a reasonably prudent person would
exercise in comparable circumstances. This means that
a director or officer must act reasonably in
accordance with the level of skill expected from a
person of his knowledge and experience. A director
must attend diligently to the companys affairs,
but is permitted to do so on an intermittent rather
than a continuous basis. A director or officer may
delegate management functions to suitably qualified
persons, although he will not avoid his duty by
delegation to others.
|
|
the material facts as
to the interested directors 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,
|
|
the material facts are
disclosed or are known to the stockholders entitled to
vote on the transaction and the transaction is
specifically approved in good faith by the holders of
a majority of the voting shares or
|
|
the transaction is
fair to the corporation as of the time it is
authorized, approved or ratified.
|
|
$100,000,000;
|
|
50% of net premiums
written, provided that net premiums written cannot be
less than 75% of gross premiums written, even if more
than 25% of gross premiums written have been ceded by
Everest Bermuda; and
|
|
15% of loss and other
insurance reserves.
|
|
Everest Bermuda cannot
declare or pay any dividends during a financial year
if it cannot meet its minimum solvency margin or
minimum liquidity ratio, or if declaring or paying
those dividends would cause it to fail to meet its
minimum solvency margin or minimum liquidity ratio.
|
|
Everest Bermuda cannot
declare or pay in any financial year dividends of more
than 25% of its total statutory capital and surplus,
as shown on its previous years statutory
financial statements, unless at least seven days
before payment of those dividends it files with the
Registrar of Companies an affidavit stating that it
will continue to meet the required margins.
|
|
If Everest Bermuda
fails to meet its minimum solvency margin or minimum
liquidity ratio on the last day of any financial year,
it cannot declare or pay any dividends during the next
financial year without the approval of the Minister of
Finance.
|
|
Everest Bermuda cannot
reduce the total statutory capital stated in its
previous years statutory financial statements by
15% or more without the approval of the Minister of
Finance.
|
|
If Everest Bermuda
writes long-term business, it cannot declare or pay a
dividend to anyone who is not a policyholder unless,
after payment of the dividend, the value of the assets
in its long-term business fund, as certified by its
approved actuary, will exceed its liabilities for
long-term business by at least the $250,000 minimum
solvency margin prescribed by the Insurance Act. The
amount of this dividend may not exceed the sum of (1)
the amount by which Everest Bermudas long-term
business solvency margin exceeds the $250,000 minimum
and (2) any other funds properly available for payment
of dividends, such as funds derived from business
other than long-term business.
|
|
The Minister of
Finance may impose additional restrictions on Everest
Bermudas ability to pay dividends, if the
Minister believes that the insurer is in danger of
becoming insolvent or has violated the Insurance Act
or any of the conditions of its registration.
|
|
not to take on any new
insurance business,
|
|
not to change the
terms of any insurance contract in a way that would
increase the insurers liabilities,
|
|
not to make
investments,
|
|
to realize investments,
|
|
to maintain assets,
|
|
to transfer assets to
the custody of a specified bank,
|
|
not to declare or pay
any dividends or other distributions,
|
|
to limit the payment
of dividends or other distributions and/or
|
|
to limit its premium
income.
|
|
acquiring or holding
land in Bermuda without the express authorization of
the Bermuda legislature, other than rental property
required for their business and leased for no more 50
years;
|
|
taking mortgages on
land in Bermuda to secure an obligation exceeding
$50,000 without the consent of the Minister of Finance;
|
|
acquiring any bonds or
debentures secured by any land in Bermuda, other than
some types of Bermuda government securities; or
|
|
conducting business of
any kind in Bermuda, except in furtherance of their
business conducted outside Bermuda.
|
|
the name of the
company has been changed,
|
|
the corporate
instruments of the company have been altered,
|
|
the objects of the
company have been altered or its business has been
restricted or
|
|
any change is made
among its directors,
|
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
|
New York Regional
Office
7 World Trade Center
Suite 1300
New York, New York
10048
|
Chicago Regional Office
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661
|
|
the majority of the
executive officers or directors of the issuer are
United States citizens or residents,
|
|
more than 50% of the
assets of the issuer are located in the United States
or
|
|
the business of the
issuer is administered principally in the United
States.
|
|
Annual Report on Form
10-K for the year ended December 31, 1998;
|
|
Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1999, June
30, 1999 and September 30, 1999; and
|
|
All documents filed
with the SEC by Everest Holdings under Sections 13(a),
13(c) 14, and 15(d) of the Exchange Act after the date
of this document and before the special meeting of
stockholders, are considered to be part of this
document, effective as of the date these documents are
filed.
|
REPORT OF INDEPENDENT ACCOUNTANTS | F-2 | ||||
EVEREST REINSURANCE GROUP, LTD. BALANCE SHEET AS OF
SEPTEMBER 14, 1999
(date of inception) |
F-3 | ||||
EVEREST REINSURANCE GROUP, LTD. NOTES TO FINANCIAL STATEMENT | F-4 |
ASSETS | |||||
Cash | $50,000 | ||||
Total Assets | $50,000 | ||||
SHAREHOLDERS EQUITY | |||||
Common shares, $0.01 par value (1,200,000 shares authorized, issued and outstanding) | $12,000 | ||||
Paid in capital | 38,000 | ||||
Total Shareholders Equity | $50,000 | ||||
A.
|
All cash balances are
held in a non-interest bearing account at the Bank of
N.T. Butterfield & Son Limited in Hamilton,
Bermuda.
|
B.
|
All amounts are
reported in U.S. dollars.
|
(a) Conversion
of Everest Holdings Common Stock. Each issued and
outstanding share of Everest Holdings Common Stock
(other than shares to be canceled in accordance with
Section 3.01(c)) shall be automatically converted into
and shall become one validly issued, fully paid and
non-assessable Everest Group Common Share.
|
(b) Everest
Merger Common Stock. Each issued and outstanding
share of Everest Merger Common Stock shall be
converted into and become one fully paid and
nonassessable share of Everest Holdings Common Stock.
|
(c) Cancellation
of Everest Holdings-Owned Stock. Each outstanding
Everest Group Common Share that is owned by Everest
Holdings prior to the Effective Time shall immediately
after the Effective Time be repurchased by Everest
Group for $0.01 per share, or $12,000 in the
aggregate, and shall upon such repurchase be canceled
and retired and shall cease to be issued. Each
outstanding share of Everest Holdings Common Stock
that is owned by Everest Holdings or by any direct or
indirect wholly-owned subsidiary of Everest Holdings
prior to the Effective Time shall automatically be
canceled and retired and shall cease to be issued and
no Everest Group Common Shares or other consideration
shall be delivered or deliverable in exchange for such
shares of Everest Holdings Common Stock.
|
(a) Exchange
Procedures. Following the Effective Time, each
holder of an outstanding certificate or certificates
theretofore representing shares of Everest Holdings
Common Stock may, but shall not be required to,
surrender the same to Everest Group for cancellation
or transfer, and each such holder or transferee will
be entitled to receive certificates representing the
same number of Everest Group Common Shares as the
shares of Everest Holdings Common Stock previously
represented by the stock certificates surrendered. If
any certificate representing Everest Group Common
Shares is to be issued in a name other than that in
which the certificate theretofore representing Everest
Holdings Common Stock surrendered is registered, it
shall be a condition to such issuance that the
certificate surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the
person requesting such issuance shall either: (i) pay
Everest Group or its agents any taxes or other
governmental charges required by reason of the
issuance of certificates representing Everest Group
Common Shares in a name other than that of the
registered holder of the certificate so surrendered;
or (ii) establish to the satisfaction of Everest Group
or its agents that such taxes or governmental charges
have been paid. Until so surrendered or presented for
transfer, each outstanding certificate which, prior to
the Effective Time, represented Everest Holdings
Common Stock shall be deemed and treated for all
corporate purposes to represent the ownership of the
same number of Everest Group Common Shares as though
such surrender or transfer and exchange had taken
place.
|
(b) No Further
Ownership Rights in Everest Holdings Common Stock.
All Everest Group Common Shares issued upon the
surrender for exchange of certificates in accordance
with the terms of this Article III shall be deemed to
have been issued and paid in full satisfaction of all
rights pertaining to the shares of Everest Holdings
Common Stock theretofore represented by such
certificates, subject, however, to the Surviving
Corporations obligation (if any) to pay any
dividends or make any other distributions with a
record date prior to the Effective Time which may have
been declared or made by Everest Holdings on such
shares of Everest Holdings Common Stock in accordance
with the terms of this Agreement or prior to the date
of this Agreement and which remain unpaid at the
Effective Time. Following the Effective Time, there
shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of
the shares of Everest Holdings Common Stock that were
outstanding immediately prior to the Effective Time.
If, after the Effective Time, certificates are
presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article
III, except as otherwise provided by law.
|
(a) Stockholder
Approval. The Everest Holdings Stockholder
Approval shall have been obtained.
|
(b) Form S-4.
The registration statement on Form S-4 filed with
the Securities and Exchange Commission by Everest
Group in connection with the issuance of the Everest
Group Common Shares in the Merger shall have become
effective under the Securities Act of 1933, as
amended, and shall not be the subject of any stop
order or proceedings seeking a stop order.
|
(c) NYSE
Listing. The Everest Group Common Shares issuable
pursuant to the terms of this Agreement shall have
been approved for listing by the New York Stock
Exchange, Inc., subject to official notice of issuance.
|
(d)
Governmental, Regulatory and Other Consents. All
filings required to be made prior to the Effective
Time with, and all consents, approvals, permits and
authorizations required to be obtained prior to the
Effective Time from, any court or governmental or
regulatory authority or agency, domestic or foreign,
or other person, in connection with the execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby will have been made
or obtained (as the case may be) and all applicable
waiting periods shall have expired.
|
(e) No
Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or any of
the other transactions contemplated hereby shall be in
effect.
|
(a)
|
if to Everest Holdings:
|
Everest Reinsurance Holdings, Inc.
|
477 Martinsville Road
|
P.O. Box 830
|
Liberty Corner, New Jersey 07938-0830
|
(b)
|
if to Everest Group:
|
Everest Reinsurance Group, Ltd.
|
c/o ABG Financial & Management
Services Inc.
|
Parker House
|
Wildey Business Park, Wildey Road
|
St. Michael, Barbados
|
(c)
|
if to Everest Merger:
|
Everest Re Merger Corporation
|
c/o Everest Reinsurance Holdings, Inc.
|
477 Martinsville Road
|
P.O. Box 830
|
Liberty Corner, New Jersey 07938-0830
|
EVEREST
REINSURANCE
HOLDINGS
, INC
.
|
/S
/ STEPHEN
L. LIMAURO
|
By:
|
Stephen L. Limauro
|
Name:
|
Senior Vice President
and Comptroller
|
Title:
|
EVEREST
RE
MERGER
CORPORATION
|
/S
/ JANET
J. BURAK
|
By:
|
Janet J. Burak
|
Name:
|
Senior Vice President
and Secretary
|
Title:
|
EVEREST
REINSURANCE
GROUP
, LTD
.
|
/S
/ JANET
J. BURAK
|
By:
|
Janet J. Burak
|
Name:
|
Deputy Chairman
|
Title:
|
Exhibit
Number |
Description of Document |
|||
---|---|---|---|---|
2.1 | Agreement and Plan of Merger among Everest
Holdings, Everest Group and Everest Merger, dated as
of September 17, 1999 (included as Appendix A to the proxy statement/prospectus contained in this Registration Statement). |
|||
*3.1 | Memorandum of Association of Everest Group. | |||
3.2 | Form of Bye-laws of Everest Group. | |||
*3.3 |
Certificate of Incorporation of Everest Holdings
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 (No. 333-05771)). |
|||
*3.4 |
By-laws (as amended and restated) of Everest Holdings
(incorporated by reference to Exhibit 3.2 to
the Annual Report on Form 10-K for the year ended December 31, 1997). |
|||
**4.1 | Specimen Everest Group common share certificate. | |||
*4.2 | Rights
Agreement, dated as of September 24, 1998, between
Everest Holdings and First Chicago Trust
Company of New York, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 28, 1998). |
|||
*4.3 |
Amendment dated as of September 16, 1999 to Rights
Agreement, dated as of September 24, 1998,
between Everest Holdings and First Chicago Trust Company of New York (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). |
|||
**5.1 | Opinion of Conyers Dill & Pearman as to the validity of the Everest Group common shares. | |||
**8.1 | Opinion of Conyers Dill & Pearman as to certain Bermuda tax matters (included in Exhibit 5.1). | |||
**8.2 | Opinion of Clarke & Co. as to certain Barbados tax matters. | |||
**8.3 | Opinion of Mayer, Brown & Platt as to certain United States tax matters. | |||
*10.1 |
Everest Holdings Annual Incentive Plan effective
January 1, 1999 (incorporated by reference to
Exhibit 10.1 to the Annual Report on Form 10-K for the year ended December 31, 1998). |
|||
*10.2 |
Everest Holdings Amended 1995 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 to
the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.3 |
Everest Holdings Amended Annual Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Annual Report on Form 10-K for the year ended December 31, 1995). |
Exhibit
Number |
Description of Document |
|||
---|---|---|---|---|
*10.4 |
Everest Holdings 1995 Stock Option Plan for
Non-Employee Directors (incorporated by reference to
Exhibit 4.3 to the Registration Statement on Form S-8 (No. 333-05771)). |
|||
*10.5 |
Amended and Restated Employment Agreement between
Everest Re and Joseph V. Taranto effective
as of October 11, 1994 (incorporated by reference to Exhibit 10.50 to the Registration Statement on Form S-1 (No. 33-71652)). |
|||
*10.6 |
Resolution adopted by the Compensation Committee of
Everest Holdings on February 24, 1997
establishing a Chief Executive Officers Bonus Plan (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K for the year ended December 31, 1997). |
|||
*10.7 | Form
of Non-Qualified Stock Option Award Agreement to be
entered into between Everest Holdings
and participants in the 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.8 | Form
of Restricted Stock Agreement to be entered into
between Everest Holdings and participants in
the 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.9 | Form
of Stock Option Agreement (Version 1) to be entered
into between Everest Holdings and
participants in the 1995 Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.10 | Form
of Stock Option Agreement (Version 2) to be entered
into between Everest Holdings and
participants in the 1995 Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.11 |
Deferred Compensation Plan, as amended, for certain
United States employees of Everest Holdings
and its participating subsidiaries (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K for the year ended December 31, 1998). |
|||
*10.12 |
Employment Agreement with Joseph V. Taranto executed
on July 15, 1998 (incorporated by reference
to Exhibit 10.21 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). |
|||
*10.13 | Change
of Control Agreement with Joseph V. Taranto, effective
July 15, 1998 (incorporated by
reference to Exhibit 10.22 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). |
|||
*10.14 | Senior
Executive Change of Control Plan (incorporated by
reference to Exhibit 10.24 to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998). |
|||
*10.15 |
Resolution adopted by the board of directors of
Everest Holdings on April 1, 1999 awarding stock
options to outside directors (incorporated by reference to Exhibit 10.25 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). |
|||
*10.16 |
Executive Performance Annual Incentive Plan adopted by
the stockholders of Everest Holdings on
May 20, 1999 (incorporated by reference to Exhibit 10.26 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). |
|||
*10.17 |
Amendment to Amended and Restated Employment Agreement
between Everest Re, Everest
Holdings and Joseph V. Taranto dated September 21, 1999 (incorporated by reference to Exhibit 10.28 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). |
|||
10.18 | Form
of Amendment to Employment Agreement by and among
Everest Re, Everest Holdings, Everest
Group and Joseph V. Taranto. |
|||
10.19 | Form
of Amendment to Change of Control Agreement by and
among Everest Re, Everest Holdings,
Everest Group and Joseph V. Taranto. |
|||
21.1 | Subsidiaries of Everest Group, giving effect to the proposed restructuring. | |||
**23.1 | Consent of Conyers Dill & Pearman (included in Exhibit 5.1). | |||
**23.2 | Consent of Clarke & Co. (included in Exhibit 8.2). | |||
**23.3 | Consent of Mayer, Brown & Platt (included in Exhibit 8.3). | |||
23.4 | Consent of PricewaterhouseCoopers LLP. |
Exhibit
Number |
Description of Document |
|||
---|---|---|---|---|
23.5 | Consent of PricewaterhouseCoopers. | |||
*27.1 | Financial data schedule. | |||
*99.1 | Form of proxy card of Everest Holdings. | |||
*99.2 | Consent of Martin Abrahams. | |||
*99.3 | Consent of Kenneth J. Duffy. | |||
*99.4 | Consent of John R. Dunne | |||
*99.5 | Consent of Thomas J. Gallagher. | |||
*99.6 | Consent of William F. Galtney, Jr. | |||
*99.7 | Consent of Joseph V. Taranto. |
(a)
|
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;
|
(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, represent a
fundamental change in the information set forth in the
registration statement;
|
(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 post-effective 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.
|
(b)
|
The undersigned
registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of
1933, each filing of the Registrants annual
report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated
by reference in the Registration Statement 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.
|
(c)
|
(1)The undersigned
registrant undertakes as follows: that prior to any
public reoffering of the securities registered
hereunder through use of a prospectus which is a part
of this Registration Statement, by any person or party
who is deemed to be an underwriter within the meaning
of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information
called for by the applicable registration form with
respect to reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other items of the applicable form.
|
(2)
|
The undersigned
registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately
preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act
of 1933 and is used in connection with an offering of
securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement and
will not be used until such amendment is effective,
and that, for purposes of determining any liability
under the Securities Act of 1933, each such
post-effective 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 will be deemed to be the initial bona
fide offering thereof.
|
(d)
|
Insofar as
indemnification for liabilities arising 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 Securities Act of 1933 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 whether
such
indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
|
(e)
|
The undersigned
registrant hereby undertakes to respond to requests
for information that is incorporated by reference into
the prospectus pursuant to Item 4, 10(b), 11 or 13 of
this form, within one business day of receipt of such
request, and to send the incorporated documents by
first class mail or other equally prompt means. This
includes information contained in documents filed
subsequent to the effective date of the registration
statement through the date of responding to the
request.
|
(f)
|
The undersigned
registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a
transaction, and the company being acquired involved
therein, that was not the subject of and included in
the registration statement when it became effective.
|
EVEREST
REINSURANCE
GROUP
, LTD
.
|
/S
/ STEPHEN
L. LIMAURO
|
By:
|
Stephen L. Limauro
|
Chairman and
Director
|
/s/
STEPHEN
L. LIMAURO
Stephen L. Limauro |
Chairman and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
|
/s/
JANET
J. BURAK
Janet J. Burak |
Deputy Chairman and Director | |
/s/
STEPHEN
L. LIMAURO
Stephen L. Limauro |
Authorized Representative in the United States | |
Exhibit
Number |
Description of Document |
|||
---|---|---|---|---|
2.1 |
Agreement and Plan of Merger among Everest Holdings,
Everest Group and Everest Merger, dated as
of September 17, 1999 (included as Appendix A to the proxy statement/prospectus contained in this Registration Statement). |
|||
*3.1 | Memorandum of Association of Everest Group. | |||
3.2 | Form of Bye-laws of Everest Group. | |||
*3.3 |
Certificate of Incorporation of Everest Holdings
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 (No. 333-05771)). |
|||
*3.4 |
By-laws (as amended and restated) of Everest Holdings
(incorporated by reference to Exhibit 3.2 to
the Annual Report on Form 10-K for the year ended December 31, 1997). |
|||
**4.1 | Specimen Everest Group common share certificate. | |||
*4.2 | Rights
Agreement, dated as of September 24, 1998, between
Everest Holdings and First Chicago Trust
Company of New York, as Rights Agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on September 28, 1998). |
|||
*4.3 |
Amendment dated as of September 16, 1999 to Rights
Agreement, dated as of September 24, 1998,
between Everest Holdings and First Chicago Trust Company of New York (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). |
|||
**5.1 | Opinion of Conyers Dill & Pearman as to the validity of the Everest Group common shares. | |||
**8.1 | Opinion of Conyers Dill & Pearman as to certain Bermuda tax matters (included in Exhibit 5.1). | |||
**8.2 | Opinion of Clarke & Co. as to certain Barbados tax matters. | |||
**8.3 | Opinion of Mayer, Brown & Platt as to certain United States tax matters. | |||
*10.1 |
Everest Holdings Annual Incentive Plan effective
January 1, 1999 (incorporated by reference to
Exhibit 10.1 to the Annual Report on Form 10-K for the year ended December 31, 1998). |
|||
*10.2 |
Everest Holdings Amended 1995 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 to
the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.3 |
Everest Holdings Amended Annual Incentive Plan
(incorporated by reference to Exhibit 10.4 to the
Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.4 |
Everest Holdings 1995 Stock Option Plan for
Non-Employee Directors (incorporated by reference to
Exhibit 4.3 to the Registration Statement on Form S-8 (No. 333-05771)). |
|||
*10.5 |
Amended and Restated Employment Agreement between
Everest Re and Joseph V. Taranto effective
as of October 11, 1994 (incorporated by reference to Exhibit 10.50 to the Registration Statement on Form S-1 (No. 33-71652)). |
|||
*10.6 |
Resolution adopted by the Compensation Committee of
Everest Holdings on February 24, 1997
establishing a Chief Executive Officers Bonus Plan (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K for the year ended December 31, 1997). |
|||
*10.7 | Form
of Non-Qualified Stock Option Award Agreement to be
entered into between Everest Holdings
and participants in the 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.8 | Form
of Restricted Stock Agreement to be entered into
between Everest Holdings and participants in
the 1995 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
Exhibit
Number |
Description of Document |
|||
---|---|---|---|---|
*10.9 | Form
of Stock Option Agreement (Version 1) to be entered
into between Everest Holdings and
participants in the 1995 Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.17 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.10 | Form
of Stock Option Agreement (Version 2) to be entered
into between Everest Holdings and
participants in the 1995 Stock Option Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K for the year ended December 31, 1995). |
|||
*10.11 |
Deferred Compensation Plan, as amended, for certain
United States employees of Everest Holdings
and its participating subsidiaries (incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K for the year ended December 31, 1998). |
|||
*10.12 |
Employment Agreement with Joseph V. Taranto executed
on July 15, 1998 (incorporated by reference
to Exhibit 10.21 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). |
|||
*10.13 | Change
of Control Agreement with Joseph V. Taranto, effective
July 15, 1998 (incorporated by
reference to Exhibit 10.22 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). |
|||
*10.14 | Senior
Executive Change of Control Plan (incorporated by
reference to Exhibit 10.24 to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998). |
|||
*10.15 |
Resolution adopted by the board of directors of
Everest Holdings on April 1, 1999 awarding stock
options to outside directors (incorporated by reference to Exhibit 10.25 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). |
|||
*10.16 |
Executive Performance Annual Incentive Plan adopted by
the stockholders of Everest Holdings on
May 20, 1999 (incorporated by reference to Exhibit 10.26 to the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999). |
|||
*10.17 |
Amendment to Amended and Restated Employment Agreement
between Everest Re, Everest
Holdings and Joseph V. Taranto dated September 21, 1999 (incorporated by reference to Exhibit 10.28 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). |
|||
10.18 | Form
of Amendment to Employment Agreement by and among
Everest Re, Everest Holdings, Everest
Group and Joseph V. Taranto. |
|||
10.19 | Form
of Amendment to Change of Control Agreement by and
among Everest Re, Everest Holdings,
Everest Group and Joseph V. Taranto. |
|||
21.1 | Subsidiaries of Everest Group, giving effect to the proposed restructuring. | |||
**23.1 | Consent of Conyers Dill & Pearman (included in Exhibit 5.1). | |||
**23.2 | Consent of Clarke & Co. (included in Exhibit 8.2). | |||
**23.3 | Consent of Mayer, Brown & Platt (included in Exhibit 8.3). | |||
23.4 | Consent of PricewaterhouseCoopers LLP. | |||
23.5 | Consent of PricewaterhouseCoopers. | |||
*27.1 | Financial data schedule. | |||
*99.1 | Form of proxy card of Everest Holdings. | |||
*99.2 | Consent of Martin Abrahams. | |||
*99.3 | Consent of Kenneth J. Duffy. | |||
*99.4 | Consent of John R. Dunne | |||
*99.5 | Consent of Thomas J. Gallagher. | |||
*99.6 | Consent of William F. Galtney, Jr. | |||
*99.7 | Consent of Joseph V. Taranto. |
|