<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Home State Holdings, Inc.
------------------------------------------
(Name of Issuer)
Common Stock
------------------------------------
(Title of Class of Securities)
437368 10 3
---------------------
(CUSIP Number)
Nancy Hasley Corbett, Esq.
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
(212) 309-6000
----------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 1, 1997
--------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 2 OF 11 PAGES
-------------- ---- ---
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Swiss Reinsurance America Corporation
IRS Employer's Identification No: 13-1675535
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
(b)[ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2
(d) or (e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 700,000 shares of Common Stock
SHARES --------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0 shares of Common Stock
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 700,000 shares of Common Stock
WITH --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 shares of Common Stock
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
700,000 shares of Common Stock
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11%**
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IC, CO
- --------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
** Based on 5,660,000 shares of Common Stock outstanding as of
April 14, 1997.
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 3 OF 11 PAGES
-------------- ---- ---
The statement on Schedule 13D filed with the Securities and Exchange
Commission (the "Commission") on October 11, 1996 (the "Initial Schedule 13D")
by Swiss Reinsurance America Corporation (the "Reporting Person"), as amended on
April 3, 1997 by Amendment No. 1 to the Schedule 13D ("Amendment No. 1"), is
hereby amended by this Amendment No. 2 to the Schedule 13D (the Initial Schedule
13D, as amended, is hereinafter referred to as the "Schedule 13D"). Unless
otherwise indicated, all capitalized terms used herein have the meanings
ascribed to them in the Initial Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration
Item 3 is hereby amended and restated in its entirety by the following
information:
The Reporting Person has entered into a Securities Purchase Agreement
(the "Securities Purchase Agreement") dated October 4, 1996 (a copy of which is
attached hereto as Exhibit A), by and among the Company, the Reporting Person
and Reliance Insurance Company, a corporation organized under the laws of the
State of Pennsylvania ("Reliance").
Pursuant to the Securities Purchase Agreement, on October 4, 1996, the
Reporting Person acquired for an aggregate cash purchase price of $5,000,000 (i)
Class A Warrants (the "Warrants") evidenced by the Warrant Certificate attached
hereto as Exhibit B entitling the Reporting Person to purchase an aggregate of
700,000 shares of Common Stock at an exercise price of $9.50 per share and (ii)
5,000 shares of Series A Cumulative Voting Preferred Stock, $0.01 par value (the
"Preferred Stock"). In addition, the Reporting Person entered into certain
reinsurance binders with the Company pursuant to which the Reporting Person will
reinsure, in 1997, specified risks underwritten by the Company, all on the terms
set forth in the reinsurance binders executed by the Company on September 27,
1996; and entered into an agreement with the Company pursuant to which the
Reporting Person may provide reinsurance coverage to the Company in respect of
years subsequent to 1997. The number of shares of the Company's Common Stock
deliverable upon exercise of the Warrants, and the exercise price thereof, are
subject to adjustment as provided in the Warrants.
The funds required by the Reporting Person to pay the purchase price
for the Warrants and the shares of Preferred Stock came from working capital of
the Reporting Person available for investment.
Item 4. Purpose of the Transaction
Item 4 is hereby amended and restated in its entirety by the following
information:
The Warrants and shares of Preferred Stock were acquired by the
Reporting Person for investment purposes and not with the purpose of changing
control of the Company. The Reporting Person or its affiliates may from time to
time make additional equity investments in the Company (whether through
privately negotiated transactions, open market purchases or otherwise) or make
other proposals with respect to the business and operations of the Company.
In connection with, and as a condition to, the acquisition of the
Warrants and the shares of Preferred Stock, the following agreements relating to
or bearing upon such securities have been executed and delivered by the
Reporting Person:
(a) A Stockholders' Agreement (the "Stockholders' Agreement")
dated as of October 4, 1996 (a copy of which is attached
hereto as Exhibit C) by and among the Company, the Reporting
Person, Reliance, Herrick Partners, L.P., a Delaware limited
partnership ("Herrick Partners"), Michael H.
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 4 OF 11 PAGES
-------------- ---- ---
Monier ("Mr. Monier") and Edward D. Herrick ("Mr. Herrick")
pursuant to which, among other things, (i) the Reporting
Person has the right to designate an individual to serve as a
Director of the Company for so long as its holds shares of
Preferred Stock, (ii) each of the Reporting Person and
Reliance has the right, upon the occurrence of a Redemption
Default (as defined in the Stockholders' Agreement), to
designate an individual to serve as a Director of the Company,
(iii) the parties to the Stockholders' Agreement have agreed
to vote in favor of the election of any individual so
designated by the Reporting Person and/or Reliance, and (iv)
the parties have agreed to vote in favor of amending the
Certificate of Incorporation of the Company (as contemplated
in the Securities Purchase Agreement and as described below).
(b) A Registration Rights Agreement (the "Registration Rights
Agreement") dated as of October 4, 1996 (a copy of which is
attached hereto as Exhibit D) by and among the Company, the
Reporting Person and Reliance, pursuant to which the Reporting
Person and Reliance will be granted certain registration
rights with respect to the shares of Common Stock obtainable
upon conversion or exercise of the Warrants.
(c) A Management and Consulting Agreement (the "Consulting
Agreement") dated October 4, 1996 (a copy of which is
incorporated herein by reference as Exhibit H) between the
Company and the Reporting Person, pursuant to which the
Reporting Person has agreed to render certain management and
consulting services to the Company in connection with the
operation and conduct of the Company's and its subsidiaries'
businesses.
(d) A letter agreement (the "Reinsurance Letter") dated
October 4, 1996 (a copy of which is incorporated herein by
reference as Exhibit I) between the Company, the Reporting
Person and certain subsidiaries of the Company relating to
certain reinsurance arrangements.
In addition to the foregoing, Robert Abidor, a former executive of the
Company and a holder of 8.55% of the Company's shares of Common Stock, has
agreed, by letter agreement dated October 4, 1996 (a copy of which is attached
hereto as Exhibit E) to vote his shares of Common Stock in favor of amending the
Certificate of Incorporation as contemplated under the Securities Purchase
Agreement (as described below).
The Securities Purchase Agreement requires the Company to present at
the next annual stockholders' meeting, for a vote by the stockholders, certain
proposed amendments to the Certificate of Incorporation of the Company. Such
amendments would facilitate the election of those Directors which may be
designated by the Reporting Person and Reliance by, among other things, (i)
providing for an increase in the size of the Board of Directors to not less than
eight (8) nor more than ten (10) members,(ii) permitting class voting and (iii)
permitting the removal of Directors without cause. The parties to the
Stockholders' Agreement and Mr. Abidor have agreed to vote all of their
respective shares in favor of the proposed amendments.
Prior to the execution of the Securities Purchase Agreement, and as a
condition to the closing thereunder, the Board of Directors of the Company
amended its By-Laws to increase the size of the Board of Directors from seven
(7) to no less than eight (8) and to no more than ten (10), as set by resolution
of the Board of Directors from time to time. Prior to the closing of the
Reporting Person's purchase of the Warrants and shares of Preferred Stock, the
Board of Directors fixed the size of the Board at nine (9). Upon the closing of
the Reporting Person's purchase of the Warrants and shares of Preferred Stock,
an individual designated by the Reporting Person was appointed by the Board of
Directors to fill a vacancy on the Board of Directors.
On April 29, 1997, the Company, the Reporting Person and Reliance
entered into a letter agreement (the "Letter Agreement"; a copy of which is
attached hereto as Exhibit J) relating to a default by the Company under the
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 5 OF 11 PAGES
-------------- ---- ---
Securities Purchase Agreement. The aforementioned default resulted from the
Company's failure to maintain a ratio of "net written premiums" for the fiscal
year ended December 31, 1996 to "statutory surplus" as of such fiscal year-end
of less than 2.5:1.0 for the Company and its subsidiaries as required by
Section 8.13 of the Securities Purchase Agreement.
Pursuant to the Letter Agreement, the Reporting Person and Reliance
have agreed to waive the aforementioned default under the Securities Purchase
Agreement. As a condition to the effectiveness of such waiver, the Board of
Directors of the Company was required to appoint, and it has appointed, a
committee (the "Committee") of four directors consisting of Robert Baylis,
Henry Sopher, Edward D. Herrick and Michael Monier; Mr. Sopher serves as
Chairman of the Committee. The Committee reports to the Board of Directors of
the Company and is expressly empowered to pursue all strategic alternatives
to improve the financial condition of the Company. The Letter Agreement
supersedes the letter agreement entered into by the Company, the Reporting
Person and Reliance on March 31, 1997 (a copy of which is attached hereto as
Exhibit G).
Under the Securities Purchase Agreement, the Reporting Person had the
contractual right (the "Purchase Option") to acquire, for an aggregate cash
purchase price of $5,000,000, (i) additional Class A Warrants entitling it to
purchase an aggregate of 700,000 shares of Common Stock at an exercise price of
$9.50 per share and (ii) 5,000 additional shares of Preferred Stock. The
Reporting Person has elected not to exercise the Purchase Option, which expired
on April 1, 1997.
Except as described in this Item 4 and elsewhere in this Schedule 13D,
neither the Reporting Person nor any of the persons named on Appendix A to Item
2 of this Schedule 13D has any plans or proposals which relate to or would
result in: (a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries; (d) any
change in the present Board of Directors or management of the Company, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the Board; (e) any material change in the present
capitalization or dividend policy of the Company; (f) any other material change
in the Company's business or corporate structure; (g) changes in the Company's
charter, By-Laws or instruments corresponding thereto or other actions which may
impede the acquisition of control of the Company by any person; (h) causing a
class of securities of the Company to be delisted from a national securities
exchange or cease to be authorized to be quoted in an interdealer quotation
system of a registered national securities association; (i) causing a class of
equity securities of the Company to become eligible for termination of
registration pursuant to Section 12(g)(4) of the Act, as amended; or (j) any
action similar to those enumerated above.
Item 5. Interest in Securities of the Company
Item 5 is hereby amended and restated in its entirety by the following
information:
(a) The Reporting Person directly owns (i) warrants to purchase 700,000
shares of the Company's Common Stock, and (ii) 5,000 shares of Preferred Stock
of the Company. Such holdings enable the Reporting Person to directly control
approximately 700,000 shares of the Company's Common Stock. Such holdings would
constitute beneficial ownership of approximately 11% of the outstanding shares
of the Company's Common Stock . The number of shares of Common Stock obtainable
upon exercise in full of the Warrants is subject to adjustment as provided in
the Warrants.
The Reporting Person, Reliance, Mr. Herrick, Herrick Partners, Mr.
Monier and the Company are each party to the Stockholders' Agreement. Within the
meaning of Rule 13(d)(5) under the Securities Exchange Act of 1934, as amended
(the "Act"), the terms of the Stockholders' Agreement could be deemed to provide
for an agreement among the parties to (i) act together for the purpose of voting
equity securities of the Company and (ii) share the power to dispose
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 6 OF 11 PAGES
-------------- ---- ---
of, or share the power to direct the disposition of, equity securities of the
Company. Accordingly, the parties thereto could be deemed to be members of a
"group" and could be deemed to be beneficial owners of all of the securities
held by such group. The Reporting Person denies the existence of such a group
and disclaims beneficial ownership of the securities held by any person other
than by the Reporting Person.
(b) The number of shares of Common Stock as to which the Reporting
Person may be deemed to (i) have sole power to vote or to direct the vote, (ii)
shared power to vote or to direct the vote, (iii) sole power to dispose or
direct the disposition, or (iv) shared power to dispose or direct the
disposition is set forth in the cover page and such information is incorporated
herein by reference. With respect to the election of Directors pursuant to the
Stockholders' Agreement, Reliance, Mr. Herrick, Herrick Partners and Mr. Monier
have agreed to cast votes in favor of the designee of the Reporting Person.
(c) Except as reported in Item 4 herein, there have been no reportable
transactions with respect to the Common Stock within the last 60 days by the
Reporting Person and persons named in Appendix A.
(d) Not Applicable.
(e) Not Applicable.
Item 7. Material to be Filed as Exhibits
Item 7 is hereby amended and supplemented by the following:
Exhibit H -- Management and Consulting Agreement, dated October 4, 1996
between the Company and the Reporting Person
Exhibit I -- Letter Agreement, dated October 4, 1996, between the
Company, the Reporting Person and certain subsidiaries of
the Company
Exhibit J -- Letter Agreement, dated April 29, 1997, among the Company,
the Reporting Person and Reliance.
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 7 OF 11 PAGES
-------------- ---- ---
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned, by its duly authorized officer, certifies that the
information set forth in this statement is true, complete and correct.
SWISS REINSURANCE AMERICA
CORPORATION
Date: May 12, 1997 By: /s/ Thomas L. Forsyth
----------------------
Thomas L. Forsyth
General Counsel
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 8 OF 11 PAGES
-------------- ---- ---
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION SEQUENTIALLY NUMBERED PAGE
----------- ----------- --------------------------
<S> <C> <C>
Exhibit A Securities Purchase Agreement, dated as of October __
4, 1996, by and among the Company, the Reporting
Person and Reliance*
Exhibit B Form of Warrant Certificate issued to the Reporting __
Person*
Exhibit C Stockholders' Agreement, dated as of October 4, __
1996, by and among the Company, the Reporting
Person, Reliance, Mr. Herrick, Herrick Partners and
Mr. Monier*
Exhibit D Registration Rights Agreement, dated as of October __
4, 1996, by and among the Company, the Reporting
Person and Reliance*
Exhibit E Letter Agreement, dated October 4, 1996, executed __
by Robert Abidor in favor of the Reporting Person
and Reliance*
Exhibit F Letter Agreement, dated August 15, 1996, between __
the Company and Isis Consulting, Inc.*
Exhibit G Letter Agreement, dated March 31, 1997, among the __
Company, the Reporting Person and Reliance**
Exhibit H Management and Consulting Agreement, dated __
October 4, 1996, between the Company and the
Reporting Person***
Exhibit I Letter Agreement, dated October 4, 1996, between __
the Company, the Reporting Person and certain
subsidiaries of the Company***
Exhibit J Letter Agreement, dated April 29, 1997, among the 9
Company, the Reporting Person and Reliance****
</TABLE>
* Previously filed with the Initial Schedule 13D
** Previously filed with Amendment No. 1
*** Incorporated by reference to Exhibit 10.35 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996,
filed with the Commission on April 16, 1997
**** Filed herewith
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 9 OF 11 PAGES
-------------- ---- ---
EXHIBIT J
- --------------------------------------------------------------------------------
3 South Revmont Drive
Shrewsbury, New Jersey 07702
CONFIDENTIAL
- ------------
April 29, 1997
Mr. George Roberts
Reliance Insurance Company
4 Penn Center Plaza
Philadelphia, PA 19103
Mr. James Slattery
Swiss Reinsurance America Corporation
287 Park Avenue
New York, NY 10017
Gentlemen:
Reference is made to the Securities Purchase Agreement dated as of
October 4, 1996 (as amended, the "Purchase Agreement") by and among Home State
Holdings, Inc. (the "Company") and Swiss Re and Reliance (the "Purchasers"), as
purchasers of the Company's Series A Cumulative Voting Preferred Stock (the
"Preferred Stock") and Class A Warrants. Capitalized terms used herein which are
defined in the Purchase Agreement shall have the same meanings herein as
therein.
The Purchasers hereby waive the default existing under Section 8.13 of
the Purchase Agreement arising from the failure of the Company to maintain a
ratio of "net written premiums" for the fiscal year ended December 31, 1996 to
"statutory surplus" as of such fiscal year-end, for the Company and its
Subsidiaries on a consolidated basis in accordance with SAP, of less than
2.5:1.0 (the "1996 Premium to Surplus Ratio Default"). The Purchasers
acknowledge that the occurrence of the 1996 Premium to Surplus Ratio Default
shall not be deemed a failure by the
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 10 OF 11 PAGES
-------------- ---- ---
Company to perform its covenant and agreement set forth in Section 8.13 of the
Purchase Agreement for the fiscal year ended December 31, 1996.
The waiver granted hereunder shall be limited specifically to the
matters set forth above and does not constitute directly or by implication an
amendment or waiver of any other provisions of the Purchase Agreement or any
other default which may occur or may have occurred under the Purchase Agreement.
The foregoing waiver shall be deemed effective as of April 4, 1997
provided that the Board of Directors of the Company appoint, by no later than
April 28, 1997, a committee of four directors consisting of Robert Baylis, Henry
Sopher, and two of the following selected by the Company: Perez Ehrich, Edward
D. Herrick, Michael Monier or Harold Stowe, chaired by Henry Sopher, with full
power and authority vested in such committee to pursue all strategic
alternatives for the Company to improve its financial condition and to report to
the Company's Board of Directors. In addition, such committee shall work with
insurance regulatory authorities and rating agencies to maintain and improve the
Company's good standing with regulatory authorities and ratings with rating
agencies. In connection with all of the foregoing, such committee shall have the
authority to hire investment bankers and other advisers to work with such
committee. The waiver hereby evidenced supersedes any prior waiver relating to
the subject matter hereof.
This letter may be executed in one or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument. This letter shall be effective (subject to the
preceding paragraph) when signed by the Purchasers and a copy thereof is
delivered to each of the Purchasers. Each of the Purchasers hereby represents to
the other that it has not received any remuneration or consideration not
specified in this letter for the waiver granted hereunder.
<PAGE>
<PAGE>
CUSIP NO. 437368 10 3 13D PAGE 11 OF 11 PAGES
-------------- ---- ---
Please indicate your acknowledgment of the foregoing in the space
provided below.
RELIANCE INSURANCE COMPANY
By: /s/ Albert Benchimol
----------------------------------
Name: Albert Benchimol
Title: Vice President and Treasurer
SWISS REINSURANCE AMERICA
CORPORATION
By: /s/ James P. Slattery
----------------------------------
Name: James P. Slattery
Title: Senior Vice President
Acknowledged as of the
date first above written
HOME STATE HOLDINGS, INC.
By: /s/ Eric A. Reehl
---------------------------------
Name: Eric A. Reehl
Title: Executive Vice President
<PAGE>
