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 REINSURANCE HOLDINGS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-13816 22-3263609
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
477 Martinsville Road
P.O. Box 830
Liberty Corner, NJ 07938-0830
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 908-604-3000
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. ("the
Company"), a Delaware corporation and subsidiary of Everest Re Group, Ltd.
("Everest Group"), 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 the Company 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 the Company
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 the Company 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 Group 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 the Company's 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 the Company 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 Everest Re Group,
Ltd. 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 10.2 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2000 (File No. 1-13816)).
10.1 Proportional Excess of Loss Reinsurance Agreement dated September
19, 2000 between Mt. McKinley Insurance Company (f/k/a Gibraltar
Casualty Company) and Prudential Property and Casualty Insurance
Company (incorporated by reference to Exhibit 10.1 to the Everest Re
Group, Ltd. Current Report on Form 8-K dated October 3, 2000 (File No.
1-15731)).
10.2 Guarantee Agreement dated September 19, 2000 by The Prudential
Insurance Company of America in favor of Mt. McKinley Insurance Company
(f/k/a Gibraltar Casualty Company) (incorporated by reference to
Exhibit 10.2 to the Everest Re Group, Ltd. Current Report on Form 8-K
dated October 3, 2000 (File No. 1-15731)).
99.1 Press Release issued by Everest Re Group, Ltd. on September 19, 2000
(incorporated by reference to Exhibit 99.1 to the Everest Re Group,
Ltd. Current Report on Form 8-K dated October 3, 2000 (File No.
1-15731)).
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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 REINSURANCE HOLDINGS, INC.
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 Everest Re Group, Ltd. 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 10.2 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2000 (File No. 1-13816)).
10.1 Proportional Excess of Loss Reinsurance Agreement dated
September 19, 2000 between Mt. McKinley Insurance Company
(f/k/a Gibraltar Casualty Company) and Prudential Property
and Casualty Insurance Company (incorporated by reference
to Exhibit 10.1 to the Everest Re Group, Ltd. Current Report
on Form 8-K dated October 3, 2000 (File No. 1-15731)).
10.2 Guarantee Agreement dated September 19, 2000 by The
Prudential Insurance Company of America in favor of Mt.
McKinley Insurance Company (f/k/a Gibraltar Casualty Company)
(incorporated by reference to Exhibit 10.2 to the Everest
Re Group, Ltd. Current Report on Form 8-K dated October 3,
2000 (File No. 1-15731)).
99.1 Press Release issued by Everest Re Group, Ltd. on September
19, 2000 (incorporated by reference to Exhibit 99.1 to the
Everest Re Group, Ltd. Current Report on Form 8-K dated
October 3, 2000 (File No. 1-15731)).
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