Filed Pursuant to Rule 424(b)(3)
Registration No. 333-87361[EVEREST LOGO]Everest Reinsurance Holdings, Inc.477 Martinsville RoadLiberty Corner, New Jersey 07938January 14, 2000Restructuring proposedyour vote is very importantDear Fellow Stockholders:The board of directors of Everest Reinsurance Holdings, Inc., which is referred to in this letter as Everest Holdings, has called a special meeting of stockholders for February 23, 2000. The purpose of the meeting is to consider and vote on an agreement and plan of merger that will cause a restructuring of Everest Holdings.As a result of the restructuring, Everest Holdings will become a wholly-owned subsidiary of a new holding company called Everest Re Group, Ltd., which is referred to in this letter as Everest Group. Everest Group was recently organized under the laws of Bermuda and has its principal offices in Barbados. Also as a result of the restructuring, each outstanding share of common stock of Everest Holdings will automatically convert into one common share of Everest Group. We expect to list the Everest Group common shares on the New York Stock Exchange under Everest Holdings current trading symbol, RE. The exchange of Everest Holdings common stock for Everest Group common shares will be a taxable transaction in which stockholders will recognize gain, if any, but not loss.The board of directors of Everest Holdings believes that the proposed restructuring will provide us with an enhanced ability to compete and create better returns for our stockholders by permitting us to take maximum advantage of favorable business, regulatory, tax and financing environments in Bermuda and Barbados. Accordingly, the board of directors has declared the agreement and plan of merger to be advisable, has approved it and recommends that stockholders vote FOR its adoption.Your vote is very important. We cannot implement the restructuring unless the stockholders vote to adopt the agreement and plan of merger at the special meeting. Whether or not you plan to attend the special meeting of stockholders, please take the time to indicate your voting instructions on the enclosed proxy card and return it promptly in the postage prepaid envelope provided for that purpose. If you attend the special meeting in person, you may vote personally on all matters brought before the special meeting even if you have previously submitted your proxy.
Sincerely,
|
Joseph V.
Taranto
|
Chairman and Chief
Executive Officer
|
1.
|
A proposal to adopt an
agreement and plan of merger among Everest Holdings, Everest Re 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 automatically convert 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 | 14 | ||||
RECENT DEVELOPMENTS | 17 | ||||
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. Everest
Holdings must receive the notice before the special meeting.
Second, you may complete and submit a new proxy card by mail.
Everest Holdings will record the latest proxy actually
received by it prior to the special meeting 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,
Everest Group will mail to you a transmittal form with
instructions on how to exchange your Everest Holdings stock
certificates for Everest Group share certificates.
|
Q:
|
When do you expect to complete the
restructuring?
|
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 restructuring is approved by
the stockholders 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) 436-6287.
|
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 February 23, 2000 at 11:00 a.m. at the Companys
corporate headquarters at Westgate Corporate Center, 477
Martinsville Road, Liberty Corner, New Jersey.
|
Holders of record of shares of Everest Holdings
common stock at the close of business on January 10, 2000 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 outstanding
shares of Everest Holdings common stock. As of January 10,
2000, directors and executive officers of Everest Holdings and
their affiliates owned beneficially approximately 1.76% 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 automatically convert
into one common share of Everest Group. Each shareholder
s 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 executive 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 February 24,
2000, 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
stockholders have approved the merger.
|
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 Restructuring
Absence 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, Everest
Group will mail to stockholders a transmittal form with
instructions on how to exchange stock certificates for share
certificates of Everest Group.
|
Under Everest Groups bye-laws, Everest
Group may redeem or purchase common shares from any person,
and may decline to register a transfer of common shares, if
the board of directors has reason to believe that the
ownership of common shares, or the transfer, 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
limit 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. 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 Capital
Common 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 Group
s 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 Group
s 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 Group
s 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 in New Jersey 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. Everest Ltd. also holds approximately $100 million
of investments.
|
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 | 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 executive offices 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
automatically convert 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 automatically convert into one share of
the surviving corporation;
|
|
each share of Everest Holdings common stock
owned by Everest Holdings or by any direct or indirect
wholly-owned subsidiary of Everest Holdings immediately prior
to the effective time of the merger will automatically be
cancelled and no Everest Group common shares will be issued in
exchange for those shares of Everest Holdings common
stock;
|
|
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. Tarantos 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. Taranto
s 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 interest, dividends and
other similar types of U.S. source income 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 will be unable to 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 will be unable to 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 will be unable to declare or pay any dividends during the
next financial year without the approval of the Minister of
Finance.
|
|
Everest
Bermuda will be unable to 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 will be unable to
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;
|
|
Current
Report on Form 8-K filed on December 28, 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 RE GROUP, LTD. (FORMERLY EVEREST REINSURANCE
GROUP, LTD.) BALANCE
SHEET AS OF SEPTEMBER 14, 1999 (date of inception) |
F-3 | ||||
EVEREST RE GROUP, LTD. (FORMERLY 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:
|
EVEREST REINSURANCE HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.V. Taranto, S.L. Limauro, and J.J. Burak, and each of them, as proxies of the undersigned, each with full power to act without the others and with full power of substitution, to vote all the shares of Common Stock of EVEREST REINSURANCE HOLDINGS, INC. held in the name of the undersigned at the close of business on January 10, 2000, at the Special Meeting of Stockholders to be held on February 23, 2000, at 11:00 a.m. (local time), and at any adjournment thereof, with all the powers the undersigned would have if personally present, as follows:
(CONTINUED ON OTHER SIDE)
[X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING ITEMS:
1. | APPROVAL AND ADOPTION OF THE AGREEMENT AND PLAN OF MERGER, dated as of September 17, 1999, among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and Everest Re Merger Corporation, providing for, among other things, the merger of Everest Re Merger Corporation with and into Everest Reinsurance Holdings, Inc., the conversion of Everest Reinsurance Holdings, Inc. Common Stock into Everest Re Group, Ltd. Common Shares and the conversion of Everest Re Merger Corporation Common Stock into Everest Reinsurance Holdings, Inc. Common Stock, as more fully described in the Proxy Statement dated January 14, 2000 relating to the Special Meeting. | ||
FOR
[ ] |
AGAINST
[ ] |
ABSTAIN
[ ] |
|
In their discretion, upon such other matters as may properly come before the meeting, all in accordance with the accompanying Notice and Proxy Statement, receipt of which is acknowledged. |
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED THEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED BY THE STOCKHOLDER, THE SHARES WILL BE VOTED ACCORDINGLY. IF NOT OTHERWISE SPECIFIED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR ITEM 1. | |
SIGNATURE (S) | DATE |
|
|
Sign exactly as name appears hereon. When signing in a representative capacity, please give full title. |