SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 19, 2000
EVEREST RE GROUP, LTD.
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(Exact Name of Registrant as Specified in Charter)
Bermuda 1-15731 Not Applicable
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
c/o ABG Financial & Management Services, Inc.
Parker House, Wildey Road
St. Michael, Barbados Not Applicable
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 246-436-6287
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 19, 2000, Everest Reinsurance Holdings, Inc. ("Everest
Holdings"), a Delaware corporation and subsidiary of Everest Re Group, Ltd. (the
"Company"), completed the acquisition of all of the issued and outstanding
capital stock of Gibraltar Casualty Company ("Gibraltar") from The Prudential
Insurance Company of America ("The Prudential") pursuant to a Stock Purchase
Agreement between The Prudential and Everest Holdings dated February 24, 2000
and amended on August 8, 2000 (the "Stock Purchase Agreement"). As a result of
the acquisition, Gibraltar became a wholly owned subsidiary of Everest Holdings
and, immediately following the acquisition, its name was changed to Mt. McKinley
Insurance Company.
Gibraltar, a run-off property and casualty insurer in the United
States, has had a long relationship with Everest Holdings and its principal
operating company, Everest Reinsurance Company ("Everest Re"). Gibraltar was
formed in 1978 by Everest Re and wrote direct insurance until 1985, when it was
placed in run off. In 1991, Gibraltar became a subsidiary of The Prudential.
Gibraltar is also a reinsurer of Everest Re (all as detailed in filings that the
Company and Everest Holdings have made with the Securities and Exchange
Commission). Under a series of transactions dating to 1986, Gibraltar reinsured
several components of Everest Re's business. In particular, in connection with
The Prudential's initial public offering of Everest Holdings stock in 1995,
Gibraltar provided stop-loss reinsurance protection for any adverse loss
development on Everest Re's reserves, with $375 million in limits, of which
approximately $90 million remains available. The stop-loss and other reinsurance
contracts between Gibraltar and Everest Re remain in effect following the
acquisition.
With performing assets and accrued income of $507 million and total
assets of $654 million supporting its liabilities, Gibraltar had unaudited GAAP
stockholders' equity of approximately $56 million at June 30, 2000. In
connection with the acquisition, Prudential Property and Casualty Insurance
Company ("Prupac"), a subsidiary of The Prudential, provided reinsurance to
Gibraltar covering 80% of the first $200 million of any adverse development of
Gibraltar's reserves and The Prudential guaranteed Prupac's obligations to
Gibraltar.
The purchase price paid by Everest Holdings for Gibraltar was $51.8
million in cash reflecting a modest negotiated discount to stockholders' equity.
The purchase price was funded primarily by borrowings under Everest Holdings'
revolving line of credit.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The financial statements required by this item will be filed by
amendment no later than 60 days after the date that this initial report
on Form 8-K was required to be filed.
(b) Pro Forma Financial Information
The pro forma financial information required by this item will be filed
by amendment no later than 60 days after the date that this initial
report on Form 8-K was required to be filed.
(c) Exhibits
2.1 Stock Purchase Agreement between The Prudential Insurance Company of
America and Everest Reinsurance Holdings, Inc. for the sale of common
stock of Gibraltar Casualty Company dated February 24, 2000
(incorporated by reference to Exhibit 10.32 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 (File
No. 1-15731)).
2.2 Amendment No. 1, dated August 8, 2000, to Stock Purchase Agreement
between The Prudential Insurance Company of America and Everest
Reinsurance Holdings, Inc. for the sale of common stock of Gibraltar
Casualty Company dated February 24, 2000 (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2000 (File No. 1-15731)).
10.1 Proportional Excess of Loss Reinsurance Agreement entered into between
Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty Company) and
Prudential Property and Casualty Insurance Company dated September 19,
2000, filed herewith.
10.2 Guarantee Agreement entered into by The Prudential Insurance Company of
America in favor of Mt. McKinley Insurance Company (f/k/a Gibraltar
Casualty Company) dated September 19, 2000, filed herewith.
99.1 Press Release issued by the Company on September 19, 2000, filed
herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: October 3, 2000
EVEREST RE GROUP, LTD.
By: /S/ JANET J. BURAK
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Name: Janet J. Burak
Title: Senior Vice President,
General Counsel and Secretary
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
2.1 Stock Purchase Agreement between The Prudential Insurance Company
of America and Everest Reinsurance Holdings, Inc. for the sale of
common stock of Gibraltar Casualty Company dated February 24,
2000 (incorporated by reference to Exhibit 10.32 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1999 (File No. 1-15731)).
2.2 Amendment No. 1, dated August 8, 2000, to Stock Purchase
Agreement between The Prudential Insurance Company of America and
Everest Reinsurance Holdings, Inc. for the sale of common stock
of Gibraltar Casualty Company dated February 24, 2000
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2000 (File No. 1-15731)).
10.1 Proportional Excess of Loss Reinsurance Agreement entered into
between Mt. McKinley Insurance Company (f/k/a Gibraltar Casualty
Company) and Prudential Property and Casualty Insurance Company
dated September 19, 2000, filed herewith.
10.2 Guarantee Agreement entered into by The Prudential Insurance
Company of America in favor of Mt. McKinley Insurance Company
(f/k/a Gibraltar Casualty Company) dated September 19, 2000,
filed herewith.
99.1 Press Release issued by the Company on September 19, 2000, filed
herewith.
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