SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 or 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended:                                   Commission File Number:
 SEPTEMBER 30, 2002                                              1-13816
- ---------------------                                    -----------------------

                       EVEREST REINSURANCE HOLDINGS, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


       DELAWARE                                            22-3263609
- ------------------------                            ----------------------------
(State or other juris-                              (IRS Employer Identification
diction of incorporation                               Number)
    or organization)

                              477 MARTINSVILLE ROAD
                               POST OFFICE BOX 830
                      LIBERTY CORNER, NEW JERSEY 07938-0830
                                 (908) 604-3000
         (Address, including zip code, and telephone number, including
             area code, of registrant's principal executive office)

- --------------------------------------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.

                       YES    X                  NO
                           -------                  -------

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

                                                    Number of Shares Outstanding
                Class                                    at November 1, 2002
                -----                               ----------------------------

COMMON STOCK,      $.01 PAR VALUE                              1,000


The registrant meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore  filing this form with the reduced  disclosure
format permitted by General Instruction H of Form 10-Q.



                       EVEREST REINSURANCE HOLDINGS, INC.

                               INDEX TO FORM 10-Q

                                     PART I

                              FINANCIAL INFORMATION

                                                                            PAGE
ITEM 1.  FINANCIAL STATEMENTS                                               ----
         --------------------

         Consolidated Balance Sheets at September 30, 2002 (unaudited)
           and December 31, 2001                                               3

         Consolidated Statements of Operations and Comprehensive Income
           for the three months and nine months ended September 30,
           2002 and 2001(unaudited)                                            4

         Consolidated Statements of Changes in Stockholders' Equity for
           the three months and nine months ended September 30, 2002
           and 2001 (unaudited)                                                5

         Consolidated Statements of Cash Flows for the three months and nine
           months ended September 30, 2002 and 2001 (unaudited)                6

         Notes to Consolidated Interim Financial Statements                    7

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         ------------------------------------
         OF FINANCIAL CONDITION AND RESULTS OF OPERATION                      16
         -----------------------------------------------

ITEM 4.  CONTROLS AND PROCEDURES                                              27
         -----------------------

                                     PART II

                                OTHER INFORMATION
                                -----------------

ITEM 1.  LEGAL PROCEEDINGS                                                    28
         -----------------

ITEM 5.  OTHER INFORMATION                                                  None
         -----------------

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                     28
         --------------------------------


PART I - ITEM 1

                       EVEREST REINSURANCE HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
               (Dollars in thousands, except par value per share)


                                                                  September 30,        December 31,
                                                                  -------------        -------------
                                                                       2002                 2001
                                                                  -------------        -------------
                                                                    (unaudited)
                                                                                 
ASSETS:
Fixed maturities - available for sale, at market value
 (amortized cost: 2002, $4,101,825; 2001, $4,051,833)             $   4,337,478        $   4,186,923
Equity securities, at market value
 (cost: 2002, $79,380; 2001, $66,412)                                    69,033               67,453
Short-term investments                                                  322,412              115,850
Other invested assets                                                    35,932               32,039
Cash                                                                    106,458               67,509
                                                                  -------------        -------------
      Total investments and cash                                      4,871,313            4,469,774

Accrued investment income                                                68,220               64,972
Premiums receivable                                                     606,203              454,548
Reinsurance receivables                                               1,639,259            1,471,357
Funds held by reinsureds                                                116,551              149,710
Deferred acquisition costs                                              152,143              114,948
Prepaid reinsurance premiums                                            123,537               48,100
Deferred tax asset                                                      143,771              178,476
Other assets                                                             84,966               60,496
                                                                  -------------        -------------
TOTAL ASSETS                                                      $   7,805,963        $   7,012,381
                                                                  =============        =============

LIABILITIES:
Reserve for losses and adjustment expenses                        $   4,531,070        $   4,274,335
Unearned premium reserve                                                741,215              473,308
Funds held under reinsurance treaties                                   354,322              308,811
Losses in the course of payment                                          55,100               83,360
Contingent commissions                                                    4,717                3,345
Other net payable to reinsurers                                         127,537              132,252
Current federal income taxes                                            (11,818)             (30,365)
8.5% Senior notes due 3/15/2005                                         249,758              249,694
8.75% Senior notes due 3/15/2010                                        199,137              199,077
Revolving credit agreement borrowings                                   125,000              105,000
Interest accrued on debt and borrowings                                   2,274               11,944
Other liabilities                                                       152,573               90,211
                                                                  -------------        -------------
      Total liabilities                                               6,530,885            5,900,972
                                                                  -------------        -------------



STOCKHOLDER'S EQUITY:
Common stock, par value: $0.01; 200 million shares authorized;
 1,000 shares issued in 2002 and 2001                                         -                    -
Additional paid-in capital                                              259,432              258,775
Accumulated other comprehensive income, net of
 deferred income taxes of $72.8 million in 2002 and $40.8
 million in 2001                                                        135,349               76,003
Retained earnings                                                       880,297              776,631
                                                                  -------------        -------------
      Total stockholder's equity                                      1,275,078            1,111,409
                                                                  -------------        -------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                        $   7,805,963        $   7,012,381
                                                                  =============        =============


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                       3


                       EVEREST REINSURANCE HOLDINGS, INC.
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                (Dollars in thousands, except per share amounts)



                                                         Three Months Ended               Nine Months Ended
                                                            September 30,                    September 30,
                                                    ----------------------------    ----------------------------
                                                        2002            2001            2002            2001
                                                    ------------    ------------    ------------    ------------
                                                    (unaudited)                     (unaudited)
                                                                                        
REVENUES:
Premiums earned                                     $    456,387    $    343,022    $  1,366,112    $  1,060,396
Net investment income                                     64,402          65,316         194,673         201,425
Net realized capital (loss)                               (7,074)           (991)        (45,944)         (1,696)
Net derivative (expense)                                  (1,009)              -          (1,259)              -
Other income (expense)                                       540          (1,597)         (3,941)           (135)
                                                    ------------    ------------    ------------    ------------
Total revenues                                           513,246         405,750       1,509,641       1,259,990
                                                    ------------    ------------    ------------    ------------

CLAIMS AND EXPENSES:
Incurred loss and loss adjustment expenses               328,831         358,489         966,981         889,478
Commission, brokerage, taxes and fees                    107,872         109,432         333,107         288,111
Other underwriting expenses                               16,581          14,674          45,980          40,922
Interest expense on senior notes                           9,730           9,726          29,186          29,176
Interest expense on credit facility                          966           1,574           2,728           6,090
                                                    ------------    ------------    ------------    ------------
Total claims and expenses                                463,980         493,895       1,377,982       1,253,777
                                                    ------------    ------------    ------------    ------------

INCOME (LOSS) BEFORE TAXES                                49,266         (88,145)        131,659           6,213

Income tax expense (benefit)                              14,463         (35,063)         27,993         (14,058)
                                                    ------------    ------------    ------------    ------------
NET INCOME (LOSS)                                   $     34,803   ($     53,082)   $    103,666    $     20,271
                                                    ============    ============    ============    ============

Other comprehensive  income, net of tax                   68,840          35,292          59,346          45,391
                                                    ------------    ------------    ------------    ------------
COMPREHENSIVE INCOME (LOSS)                         $    103,643   ($     17,790)   $    163,012    $     65,662
                                                    ============    ============    ============    ============


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                       4


                       EVEREST REINSURANCE HOLDINGS, INC.
                       CONSOLIDATED STATEMENTS OF CHANGES
                             IN STOCKHOLDER'S EQUITY
                (Dollars in thousands, except per share amounts)




                                                     Three Months Ended            Nine Months Ended
                                                        September 30,                 September 30,
                                                 --------------------------    --------------------------
                                                    2002            2001           2002           2001
                                                 -----------    -----------    -----------    -----------
                                                 (unaudited)                   (unaudited)
                                                                                  
COMMON STOCK (shares outstanding):
Balance, beginning of period                           1,000          1,000          1,000          1,000
Issued during the period                                   -              -              -              -
                                                 -----------    -----------    -----------    -----------
Balance, end of period                                 1,000          1,000          1,000          1,000
                                                 ===========    ===========    ===========    ===========


COMMON STOCK (par value):
Balance, beginning of period                     $         -    $         -    $         -    $         -
Common stock retired during the period                     -              -              -              -
                                                 -----------    -----------    -----------    -----------
Balance, end of period                                     -              -              -              -
                                                 -----------    -----------    -----------    -----------


ADDITIONAL PAID IN CAPITAL:
Balance, beginning of period                         259,411        257,928        258,775        255,359
Common stock issued during the period                     21            584            657          3,153
                                                 -----------    -----------    -----------    -----------
Balance, end of period                               259,432        258,512        259,432        258,512
                                                 -----------    -----------    -----------    -----------


ACCUMULATED OTHER COMPREHENSIVE INCOME,
  NET OF DEFERRED INCOME TAXES:
Balance, beginning of period                          66,509         66,846         76,003         56,747
Net increase during the period                        68,840         35,292         59,346         45,391
                                                 -----------    -----------    -----------    -----------
Balance, end of period                               135,349        102,138        135,349        102,138
                                                 -----------    -----------    -----------    -----------


RETAINED EARNINGS:
Balance, beginning of period                         845,494        811,734        776,631        738,381
Net income (loss)                                     34,803        (53,082)       103,666         20,271
                                                 -----------    -----------    -----------    -----------
Balance, end of period                               880,297        758,652        880,297        758,652
                                                 -----------    -----------    -----------    -----------


TOTAL STOCKHOLDER'S EQUITY, END OF PERIOD        $ 1,275,078    $ 1,119,302    $ 1,275,078    $ 1,119,302
                                                 ===========    ===========    ===========    ===========


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                       5



                       EVEREST REINSURANCE HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)



                                                                 Three Months Ended             Nine Months Ended
                                                                    September 30,                  September 30,
                                                              -------------------------     ------------------------
                                                                 2002           2001           2002           2001
                                                              ----------     ----------     ----------    ----------
                                                                     (unaudited)                  (unaudited)
                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                             $   34,803     $  (53,082)    $  103,666    $   20,271
  Adjustments to reconcile net income to
   net cash provided by operating activities:
  (Increase) in premiums receivable                              (51,001)       (25,957)      (148,862)      (69,682)
  Increase in funds held, net                                     44,077         79,548         76,910        97,476
  (Increase) in reinsurance receivables                          (88,498)      (191,019)      (157,057)     (245,459)
  Decrease (increase) in deferred tax asset                       16,993         (7,063)         7,019       (40,365)
  Increase in reserve for losses and loss
   adjustment expenses                                            91,407        286,592        230,065       357,387
  Increase in unearned premiums                                  100,647         13,326        266,115       103,798
  (Increase) in other assets and liabilities                     (22,511)       (51,784)      (166,603)      (79,332)
  Accrual of bond discount/amortization of bond premium           (2,169)        (1,575)        (6,332)       (4,107)
  Amortization of underwriting discount on senior notes               42             38            124           113
  Realized capital losses                                          7,074            991         45,944         1,696
                                                              ----------     ----------     ----------    ----------

Net cash provided by operating activities                        130,864         50,015        250,989       141,796
                                                              ----------     ----------     ----------    ----------


CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from fixed maturities matured/called - available
 for sa1e                                                        155,982         78,507        340,555       205,794
Proceeds from fixed maturities sold - available for sale         157,604        101,835        610,234       312,974
Proceeds from equity securities sold                                   -              -         19,940        28,949
Proceeds from other invested assets sold                               4              3          3,064            26
Cost of fixed maturities acquired - available for sale          (292,701)      (188,535)    (1,025,585)     (721,676)
Cost of equity securities acquired                               (22,978)        (9,048)       (32,276       (29,075)
Cost of other invested assets acquired                            (4,529)           (70)        (6,368)         (578)
Net (purchases) sales of short-term securities                  (145,586)        74,443       (206,169)      149,806
Net (decrease) increase  in unsettled
 securities transactions                                         (11,327)       (59,258)        56,326        12,801
                                                              ----------     ----------     ----------    ----------

Net cash (used in) investing activities                         (163,531)        (2,123)      (240,279)      (40,979)
                                                              ----------     ----------     ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued during the period                                 21            584            657         3,153
Borrowing on revolving credit agreement                           25,000              -         45,000        22,000
Repayments on revolving credit agreement                          (5,000)             -        (25,000)     (123,000)
                                                              ----------     ----------     ----------    ----------

Net cash provided by (used in) financing activities               20,021            584         20,657       (97,847)
                                                              ----------     ----------     ----------    ----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                            2,807          7,129          7,582           (97)
                                                              ----------     ----------     ----------    ----------

Net (decrease) increase in cash                                   (9,839)        55,605         38,949         2,873

Cash, beginning of period                                        116,297         15,665         67,509        68,397
                                                              ----------     ----------     ----------    ----------
Cash, end of period                                           $  106,458     $   71,270     $  106,458    $   71,270
                                                              ==========     ==========     ==========    ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash transactions:
Income taxes paid, net                                        $   12,747     $       33     $    6,052    $   53,961
Interest paid                                                 $   20,291     $   20,621     $   41,461    $   45,278


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


                                        6




                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

1.       GENERAL

As used in this document,  "Holdings" means Everest Reinsurance Holdings,  Inc.,
"Group" means  Everest Re Group,  Ltd.,  "Bermuda Re" means Everest  Reinsurance
(Bermuda),  Ltd.,  "Everest  Re"  means  Everest  Reinsurance  Company  and  the
"Company" means Everest Reinsurance Holdings, Inc. and its subsidiaries.

The  consolidated  financial  statements  of the  Company for the three and nine
months ended September 30, 2002 and 2001 include all adjustments,  consisting of
normal recurring  accruals,  which, in the opinion of management,  are necessary
for a fair  presentation of the results on an interim basis.  Certain  financial
information,  which is normally included in annual financial statements prepared
in accordance with generally accepted accounting principles in the United States
of America,  has been omitted  since it is not  required  for interim  reporting
purposes.  The year-end consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting  principles in the United States of America. The results for
the three and nine months ended  September 30, 2002 and 2001 are not necessarily
indicative of the results for a full year. These financial  statements should be
read in conjunction with the audited consolidated financial statements and notes
thereto for the years ended  December  31, 2001,  2000 and 1999  included in the
Company's most recent Form 10-K filing.

2.       UNIVERSAL SHELF REGISTRATION STATEMENT

On July 30, 2002, the Company filed a shelf  registration  statement on Form S-3
with the Securities and Exchange Commission,  which provides for the issuance of
up to $475.0 million of  securities.  Generally,  under this shelf  registration
statement,  Group may issue common shares,  preferred shares, debt, warrants and
hybrid  securities,  Holdings may issue debt securities and warrants and Everest
Re Capital Trust may issue trust preferred  securities.  This shelf registration
statement became effective on September 26, 2002.

3.       CONTINGENCIES

The Company  continues to receive  claims under expired  contracts  which assert
alleged injuries and/or damages relating to or resulting from toxic torts, toxic
waste and other hazardous substances,  such as asbestos.  The Company's asbestos
claims typically involve potential  liability for bodily injury from exposure to
asbestos or for property damage  resulting from asbestos or products  containing
asbestos.  The  Company's   environmental  claims  typically  involve  potential
liability for (a) the mitigation or remediation of  environmental  contamination
or (b) bodily  injury or property  damages  caused by the  release of  hazardous
substances into the land, air or water.

The Company's  reserves include an estimate of the Company's  ultimate liability
for  asbestos  and  environmental  claims  for which  ultimate  value  cannot be
estimated  using  traditional  reserving   techniques.   There  are  significant
uncertainties  in estimating the amount of the Company's  potential  losses from


                                       7


                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

asbestos and environmental  claims. Among the complications are: (a) potentially
long waiting periods between exposure and  manifestation of any bodily injury or
property  damage;   (b)  difficulty  in  identifying   sources  of  asbestos  or
environmental    contamination;    (c)   difficulty   in   properly   allocating
responsibility  and/or  liability  for  asbestos or  environmental  damage;  (d)
changes in  underlying  laws and  judicial  interpretation  of those  laws;  (e)
potential  for an  asbestos or  environmental  claim to involve  many  insurance
providers  over  many  policy  periods;  (f) long  reporting  delays,  both from
insureds  to  insurance  companies  and  ceding  companies  to  reinsurers;  (g)
historical  data concerning  asbestos and  environmental  losses,  which is more
limited and  variable  than  historical  information  on other types of casualty
claims; (h) questions concerning interpretation and application of insurance and
reinsurance  coverage;  and (i) uncertainty regarding the number and identity of
insureds with potential asbestos or environmental exposure.

With respect to asbestos claims in particular,  several  additional factors have
emerged fairly  recently that further  compound the difficulty in estimating the
Company's  liability.  These developments  include:  (a) continued growth in the
number of claims filed, in part reflecting a much more aggressive plaintiff bar;
(b) a  disproportional  percentage  of  claims  filed  by  individuals  with  no
functional  injury from asbestos,  claims with little to no financial  value but
that have increasingly been considered in jury verdicts and settlements; (c) the
growth in the number and  significance  of bankruptcy  filings by companies as a
result of asbestos  claims;  (d) the growth in claim filings against  defendants
formerly  regarded as "peripheral";  (e) the  concentration of claims in a small
number of states that favor  plaintiffs;  (f) the growth in the number of claims
that might impact the general  liability  portion of insurance  policies  rather
than the product liability portion;  (g) responses in which specific courts have
adopted  measures  to  ameliorate  the  worst  procedural  abuses;  and  (h) the
potential  that the U. S.  Congress  may  consider  legislation  to address  the
asbestos litigation issue.

Management  believes that these factors continue to render reserves for asbestos
and environmental  losses  significantly  less subject to traditional  actuarial
methods than are reserves on other types of losses.  Given these  uncertainties,
management  believes  that no meaningful  range for such ultimate  losses can be
established.  The  Company  establishes  reserves  to the  extent  that,  in the
judgement of  management,  the facts and  prevailing law reflect an exposure for
the Company or its ceding  companies.  In connection with the acquisition of Mt.
McKinley Insurance Company ("Mt.  McKinley"),  which has significant exposure to
asbestos and environmental  claims,  Prudential  Property and Casualty Insurance
Company ("Prupac"),  a subsidiary of The Prudential Insurance Company of America
("The  Prudential"),  provided  reinsurance to Mt. McKinley covering 80% ($160.0
million)  of  the  first  $200.0  million  of  any  adverse  development  of Mt.
McKinley's  reserves  as of  September  19, 2000 and The  Prudential  guaranteed
Prupac's obligations to Mt. McKinley. Through September 30, 2002, cessions under
this reinsurance agreement have reduced the available remaining limits to $126.4
million net of  coinsurance.  Effective  September  19, 2000,  Mt.  McKinley and
Bermuda Re entered into a loss portfolio transfer reinsurance agreement, whereby
Mt.  McKinley  transferred,  for what  management  believes  to be  arm's-length
consideration,  all of its  net  insurance  exposures  and  reserves,  including
allocated and  unallocated  loss  adjustment  expenses to Bermuda Re. Due to the
uncertainties  discussed  above,  the ultimate  losses may vary  materially from



                                       8


                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


current loss reserves  and,  depending on coverage  under the Company's  various
reinsurance arrangements,  could have a material adverse effect on the Company's
future financial condition, results of operations and cash flows.

The  following   table  shows  the   development  of  prior  year  asbestos  and
environmental  reserves on both a gross and net of retrocessional  basis for the
three and nine months ended September 30, 2002 and 2001:


(dollar amounts in thousands)                  Three Months Ended                 Nine Months Ended
                                                  September 30,                      September 30,
                                              2002              2001             2002              2001
                                         -----------------------------------------------------------------
                                                                                   
Gross basis:
Beginning of period reserves             $   639,102       $   673,927       $   644,390       $   693,704
Incurred losses                                    -            12,563            30,000            29,673
Paid losses                                  (22,148)          (18,830)          (57,436)          (55,717)
                                         -----------------------------------------------------------------

End of period reserves                   $   616,954       $   667,660       $   616,954       $   667,660
                                         =================================================================

Net basis:
Beginning of period reserves             $   262,602       $   298,758       $   276,169       $   317,196
Incurred losses                                    -                 -             1,885                 -
Paid losses                                  (11,609)          (10,471)          (27,061)          (28,909)
                                         -----------------------------------------------------------------

End of period reserves                   $   250,993       $   288,287       $   250,993       $   288,287
                                         =================================================================


At September 30, 2002, the gross reserves for asbestos and environmental  losses
were comprised of $107.9 million  representing  case reserves reported by ceding
companies,  $49.6 million  representing  additional case reserves established by
the Company on assumed  reinsurance  claims,  $165.5 million  representing  case
reserves established by the Company on direct excess insurance claims, including
Mt. McKinley, and $294.0 million representing incurred but not reported ("IBNR")
reserves.

In the  ordinary  course of  business,  the  Company is  involved  in  lawsuits,
arbitrations and other formal and informal dispute  resolution  procedures,  the
outcomes of which will  determine the  Company's  rights and  obligations  under
insurance and reinsurance  agreements and other more general contracts.  In some
disputes,  the Company  seeks to enforce  its rights  under an  agreement  or to
collect funds owing to it. In other matters,  the Company is resisting  attempts
by others to collect funds or enforce alleged rights. Such disputes are resolved
through formal and informal means, including litigation and arbitration.


                                       9


                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

In all such  matters,  the Company  believes  that its positions are legally and
commercially  reasonable.  The Company also regularly  evaluates those positions
including,  where  appropriate,  consideration  during the processes by which it
establishes it insurance  reserves.  The Company's  aggregate reserves take into
account the possibility that the Company may not ultimately  prevail in each and
every disputed matter.  The Company  believes its aggregate  reserves reduce the
potential  that an adverse  resolution of one or more of these  matters,  at any
point in time, would have a material impact on the Company's financial condition
or results of  operations.  However,  there can be no  assurances  that  adverse
resolutions  of such  matters  in any one  period or in the  aggregate  will not
result in a material impact.

The Company does not believe  that there are any other  material  pending  legal
proceedings  to which it or any of its  subsidiaries  or  their  properties  are
subject.

The  Prudential  sells  annuities  which are  purchased by property and casualty
insurance  companies to settle certain types of claim  liabilities.  In 1993 and
prior years, the Company,  for a fee,  accepted the claim payment  obligation of
these property and casualty insurers, and, concurrently, became the owner of the
annuity or assignee of the annuity proceeds. In these circumstances, the Company
would be liable if The Prudential were unable to make the annuity payments.  The
estimated  cost to  replace  all  such  annuities  for  which  the  Company  was
contingently liable at September 30, 2002 was $149.6 million.

The Company has purchased  annuities from an unaffiliated life insurance company
with an A+ (superior)  rating from A.M. Best to settle certain claim liabilities
of the Company.  Should the life  insurance  company  become  unable to make the
annuity payments,  the Company would be liable for those claim liabilities.  The
estimated  cost to  replace  such  annuities  at  September  30,  2002 was $14.5
million.

4.       OTHER COMPREHENSIVE INCOME

The Company's other comprehensive income is comprised as follows:


(dollar amounts in thousands)                     Three Months Ended                 Nine Months Ended
                                                      September 30,                     September 30,
                                                  2002            2001              2002            2001
                                              -------------------------------------------------------------
                                                                                     
Net unrealized appreciation of
   investments, net of deferred
   income taxes                               $   69,735       $   36,424       $   57,903       $   47,339
Currency translation adjustments, net
   of deferred income taxes                         (895)          (1,132)           1,443           (1,948)
                                              -------------------------------------------------------------
Other comprehensive income, net of
   deferred income taxes                      $   68,840       $   35,292       $   59,346       $   45,391
                                              =============================================================


                                       10


                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

5.       CREDIT LINE

On December 21, 1999,  the Company  entered into a three-year  senior  revolving
credit facility with a syndicate of lenders (the "Credit Facility"). First Union
National Bank is the  administrative  agent for the Credit Facility.  The Credit
Facility  is used for  liquidity  and  general  corporate  purposes.  The Credit
Facility  provides for the borrowing of up to $150.0  million with interest at a
rate  selected  by the  Company  equal to either  (i) the Base Rate (as  defined
below) or (ii) an  adjusted  London  InterBank  Offered  Rate  ("LIBOR")  plus a
margin. The Base Rate is the higher of the rate of interest established by First
Union  National  Bank from time to time as its prime rate or the  Federal  Funds
rate plus 0.5% per annum.  On December 18, 2000, the Credit Facility was amended
to extend the borrowing  limit to $235.0 million for a period of 120 days.  This
120-day period expired during the three months ended  September 30, 2001,  after
which the limit  reverted to $150.0  million.  The amount of margin and the fees
payable for the Credit Facility depends upon the Company's senior unsecured debt
rating.  Group  has  guaranteed  the  Company's  obligations  under  the  Credit
Facility.

The Credit  Facility  requires  Group to maintain a debt to capital ratio of not
greater  than 0.35 to 1, the  Company to  maintain a minimum  interest  coverage
ratio of 2.5 to 1 and Everest Re to  maintain  its  statutory  surplus at $850.0
million  plus  25%  of  aggregate  net  income  and  25%  of  aggregate  capital
contributions.  As of September  30, 2002,  the Company was in  compliance  with
these covenants.

During the three and nine months  ended  September  30,  2002,  the Company made
payments on the Credit Facility of $5.0 million and $25.0 million, respectively,
compared to the $0.0  million  and $123.0  million for the three and nine months
ended  September 30, 2001.  During the three and nine months ended September 30,
2002 the  Company  made new  borrowings  of $25.0  million  and  $45.0  million,
respectively,  compared to the $0.0 million and $22.0  million for the three and
nine months ended  September 30, 2001.  As of September  30, 2002 and 2001,  the
Company had outstanding Credit Facility  borrowings of $125.0 million and $134.0
million,  respectively.  Interest  expense  incurred  in  connection  with these
borrowings  was $1.0  million  and  $1.6  million  for the  three  months  ended
September 30, 2002 and 2001, respectively, and $2.7 million and $6.1 million for
the nine months ended September 30, 2002 and 2001, respectively.

6.       SENIOR NOTES

During the first  quarter of 2000,  the Company  completed a public  offering of
$200.0  million  principal  amount of 8.75%  senior notes due March 15, 2010 and
$250.0 million principal amount of 8.5% senior notes due March 15, 2005.

Interest expense incurred in connection with these senior notes was $9.7 million
for the three months ended  September  30, 2002 and 2001,  and $29.2 million for
the nine months ended September 30, 2002 and 2001.


                                       11


                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


7.       SEGMENT REPORTING

The  Company,  through  its  subsidiaries,   operates  in  four  segments:  U.S.
Reinsurance,   U.S.   Insurance,   Specialty   Reinsurance   and   International
Reinsurance.  The U.S. Reinsurance operation writes property and casualty treaty
reinsurance  through  reinsurance  brokers  as  well  as  directly  with  ceding
companies  within the United  States,  in addition  to  property,  casualty  and
specialty  facultative  reinsurance  through  brokers and  directly  with ceding
companies within the United States. The U.S. Insurance operation writes property
and casualty insurance primarily through general agent relationships and surplus
lines brokers  within the United  States.  The Specialty  Reinsurance  operation
writes  accident and health,  marine,  aviation and surety  business  within the
United States and worldwide  through brokers and directly with ceding companies.
The International Reinsurance operation writes property and casualty reinsurance
through the Company's branches in London, Canada, and Singapore,  in addition to
foreign "home-office" business.

These  segments  are  managed in a  carefully  coordinated  fashion  with strong
elements of central control, including with respect to capital,  investments and
support operations. As a result, management monitors and evaluates the financial
performance  of  these   operating   segments   principally   based  upon  their
underwriting  gain  or  loss  ("underwriting  results").  The  Company  utilizes
inter-affiliate reinsurance and such reinsurance does not impact segment results
as business is reported in the unit  responsible  for the  business as initially
written with third parties,  generally  within the segment in which the business
was first  produced.  Underwriting  results include earned premium less incurred
loss and loss adjustment  expenses,  commission and brokerage expenses and other
underwriting expenses.

The following tables present the relevant underwriting results for the operating
segments for the three and nine months ended  September 30, 2002 and 2001,  with
all dollar values presented in thousands.


                                             U.S. REINSURANCE
- ---------------------------------------------------------------------------------------------------------
                                                  Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                                  2002             2001           2002             2001
                                              -----------------------------------------------------------
                                                                                  
Earned premiums                               $  153,940      $   90,962      $  458,587      $   338,626
Incurred losses and loss adjustment
 expenses                                        113,282         168,479         327,425          351,872
Commission and brokerage                          32,786          42,593         112,707          106,445
Other underwriting expenses                        4,538           4,049          13,797           11,384
                                              -----------------------------------------------------------
Underwriting gain (loss)                      $    3,334     ($  124,159)     $    4,658     ($   131,075)
                                              ===========================================================


                                       12




                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001



                                              U.S. INSURANCE
- ---------------------------------------------------------------------------------------------------------
                                                  Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                                  2002             2001           2002             2001
                                              -----------------------------------------------------------
                                                                                  
Earned premiums                               $  118,352      $   82,901      $  324,848      $   203,399
Incurred losses and loss adjustment
 expenses                                         87,762          58,919         230,237          145,183
Commission and brokerage                          30,868          18,751          78,895           46,279
Other underwriting expenses                        5,861           4,919          16,788           12,836
                                              -----------------------------------------------------------
Underwriting (loss) gain                     ($    6,139)     $      312     ($    1,072)    ($       899)
                                              ===========================================================



                                           SPECIALTY REINSURANCE
- ---------------------------------------------------------------------------------------------------------
                                                  Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                                  2002             2001           2002             2001
                                              -----------------------------------------------------------
                                                                                  
Earned premiums                               $   89,239      $  103,242      $  307,786      $   296,050
Incurred losses and loss adjustment
 expenses                                         71,484          90,027         238,082          238,123
Commission and brokerage                          23,368          28,778          86,699           76,343
Other underwriting expenses                        1,584           1,350           4,476            4,300
                                              -----------------------------------------------------------
Underwriting (loss)                          ($    7,197)    ($   16,913)    ($   21,471)    ($    22,716)
                                              ===========================================================



                                         INTERNATIONAL REINSURANCE
- ---------------------------------------------------------------------------------------------------------
                                                  Three Months Ended               Nine Months Ended
                                                      September 30,                   September 30,
                                                  2002             2001           2002             2001
                                              -----------------------------------------------------------
                                                                                  
Earned premiums                               $   94,856      $   65,917      $  274,891      $   222,321
Incurred losses and loss adjustment
 expenses                                         56,303          41,064         171,237          154,300
Commission and brokerage                          20,850          19,310          54,806           59,044
Other underwriting expenses                        3,053           3,960           9,374           10,573
                                              -----------------------------------------------------------
Underwriting gain (loss)                      $   14,650      $    1,583      $   39,474     ($     1,596)
                                              ===========================================================


                                       13



                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


The  following  table  reconciles  the  underwriting  results for the  operating
segments  to income  before tax as reported in the  consolidated  statements  of
operations  and  comprehensive  income,  with all  dollar  values  presented  in
thousands:


                                     ----------------------------------------------------------------------
                                           Three Months Ended                      Nine Months Ended
                                              September 30,                           September 30,
                                         2002               2001                 2002               2001
                                     ----------------------------------------------------------------------
                                                                                     
Underwriting gain (loss)             $    4,648         ($  139,177)         $   21,589         ($  156,286)
Net investment income                    64,402              65,316             194,673             201,425
Realized (loss)                          (7,074)               (991)            (45,944)             (1,696)
Net derivative (expense)                 (1,009)                  -              (1,259)                  -
Corporate expenses                       (1,545)               (396)             (1,545)             (1,829)
Interest expense                        (10,696)            (11,300)            (31,914)            (35,266)
Other income (expense)                      540              (1,597)             (3,941)               (135)
                                     ----------------------------------------------------------------------
Income (loss) before taxes           $   49,266         ($   88,145)         $  131,659          $    6,213
                                     ======================================================================


The Company writes premium in the United States and international  markets.  The
revenues, net income and identifiable assets of the individual foreign countries
in which the Company writes business are not material to the Company's financial
condition, results of operations and cash flows.

8.       DERIVATIVES

The Company has in its product  portfolio a credit default swap contract,  which
it no longer offers.  This contract  meets the definition of a derivative  under
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging  Activities" ("FAS 133"). The Company's position in this
contract is unhedged and is accounted for as a derivative in accordance with FAS
133.  Accordingly,  this  contract is carried at fair value with changes in fair
value recorded in the statement of operations.

9.       NEW ACCOUNTING PRONOUNCEMENT

In June 2001, the Financial  Accounting Standards Board ("FASB") issued FAS 142,
"Goodwill and Other Intangible  Assets".  FAS 142 established new accounting and
reporting  standards  for acquired  goodwill  and other  intangible  assets.  It
requires that an entity determine if other intangible  assets have an indefinite
useful life or a finite useful life.  Goodwill and those intangible  assets with
indefinite  useful lives are not subject to  amortization  and must be tested at
least  annually for  impairment.  Those with finite  useful lives are subject to
amortization  and must be tested  annually  for  impairment.  This  statement is
effective for all fiscal  quarters of all fiscal years  beginning after December
15, 2001. The Company adopted FAS 142 on January 1, 2002. The  implementation of
this statement has not had a material impact on the financial position,  results
of operations or cash flows of the Company.

                                       14



                       EVEREST REINSURANCE HOLDINGS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   (continued)

         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

10.       RELATED-PARTY TRANSACTIONS

During the normal  course of  business,  the  Company,  through its  affiliates,
engages in what management believes to be arm's-length reinsurance and brokerage
and commission business  transactions with companies controlled by or affiliated
with one of its outside directors.  Such  transactions,  individually and in the
aggregate,  are  immaterial to the  Company's  financial  condition,  results of
operations and cash flows.

The  Company  engages  in  business  transactions  with  Group and  Bermuda  Re.
Effective January 1, 2002,  Everest Re and Bermuda Re entered into a Quota Share
Reinsurance   Agreement,   for  what  management  believes  to  be  arm's-length
consideration, whereby Everest Re cedes 20% of the net retained liability on all
new and renewal  policies  written during the term of this agreement.  Effective
January 1, 2002,  Everest Re,  Everest  National  Insurance  Company and Everest
Security Insurance Company entered into an Excess of Loss Reinsurance  Agreement
with Bermuda Re, for what management believes to be arm's-length  consideration,
covering workers' compensation losses occurring on and after January 1, 2002, as
respects new, renewal and in force policies  effective on that date.  Bermuda Re
is liable for any loss exceeding $100,000 per occurrence, with its liability not
to exceed $150,000 per  occurrence.  Effective  October 1, 2001,  Everest Re and
Bermuda Re entered into a loss portfolio reinsurance agreement,  whereby Everest
Re transferred  all of it's Belgium Branch net insurance  exposures and reserves
to Bermuda Re for what management believes to be arm's-length  consideration and
subsequently  closed its Belgium  Branch.  Effective  September  19,  2000,  Mt.
McKinley  and  Bermuda Re entered  into a loss  portfolio  transfer  reinsurance
agreement,  whereby Mt. McKinley transferred, for what management believes to be
arm's-length  consideration,  all of its net insurance exposures and reserves to
Bermuda Re.

                                       15



PART I - ITEM 2


                       EVEREST REINSURANCE HOLDINGS, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

INDUSTRY CONDITIONS

The worldwide  reinsurance and insurance  businesses are highly  competitive yet
cyclical by product and market.  The  terrorist  attacks on  September  11, 2001
resulted  in losses  which  reduced  industry  capacity  and were of  sufficient
magnitude to cause most individual companies to reassess their capital position,
tolerance  for risk,  exposure  control  mechanisms  and the  pricing  terms and
conditions  at which they are willing to take on risk.  The gradual and variable
improving  trend that had been apparent  through 2000 and earlier in 2001 firmed
significantly. This firming generally took the form of immediate and significant
upward pressure on prices, more restrictive terms and conditions and a reduction
of coverage  limits and capacity  availability.  Such pressures were  widespread
with  variability  depending  on the product and  markets  involved,  but mainly
depending on the characteristics of the underlying risk exposures. The magnitude
of the changes was sufficient to create temporary disequilibrium in some markets
as individual  buyers and sellers  adapted to changes in both their internal and
market dynamics.

Thus far in 2002, our markets, and reinsurance and insurance markets in general,
have continued to firm.  This firming  reflects the continuing  implications  of
losses  arising  from the  September  11  attacks as well as  aggregate  company
reactions to broad and growing  recognition  that competition in the late 1990's
reached extremes in many classes and markets, which ultimately led to inadequate
pricing and overly broad terms,  conditions and  coverages.  The effect of these
extremes,  which is only now becoming apparent through excessive loss emergence,
varies  widely by company  depending  on product  offerings,  markets  accessed,
underwriting  and  operating  practices,  competitive  strategies  and  business
volumes. Across all market participants,  however, the aggregate effect has been
impaired  financial  results and erosion of the industry  capital base.  Coupled
with  deteriorating  investment  market  conditions  and  results,  and  renewed
concerns  regarding  longer term industry  specific issues,  including  asbestos
exposure and sub-par capital  returns,  these financial  impacts have introduced
substantial,  and in some cases  extreme,  pressure  for the  initiation  and/or
strengthening  of corrective  action by individual  market  participants.  These
pressures,  aggregating across industry  participants,  have resulted in firming
prices,  terms and conditions and tightened  coverage  availability  across most
classes and markets.

These  changes  reflect a clear  reversal of the general trend from 1987 through
1999 toward increasingly  competitive global market conditions across most lines
of business as reflected by decreasing prices and broadening contract terms. The
earlier  trend  resulted  from a number of factors,  including  the emergence of
significant  reinsurance  capacity  in  Bermuda,  changes in the Lloyds  market,
consolidation  and increased  capital  levels in the  insurance and  reinsurance
industries,  as well as the emergence of new reinsurance and financial  products
addressing traditional exposures in alternative fashions.  Many of these factors
continue  to exist and may take on  additional  importance  as the result of the
firming  conditions  which have  emerged.  As a result,  although the Company is


                                       16



encouraged  by the  recent  improvements,  and more  generally,  current  market
conditions, the Company cannot predict with any reasonable certainty whether and
to what extent these improvements will persist.

SEGMENT INFORMATION

The  Company,  through  its  subsidiaries,   operates  in  four  segments:  U.S.
Reinsurance,   U.S.   Insurance,   Specialty   Reinsurance   and   International
Reinsurance.  The U.S. Reinsurance operation writes property and casualty treaty
reinsurance  through  reinsurance  brokers  as  well  as  directly  with  ceding
companies  within the United  States,  in addition  to  property,  casualty  and
specialty  facultative  reinsurance  through  brokers and  directly  with ceding
companies within the United States. The U.S. Insurance operation writes property
and casualty insurance primarily through general agent relationships and surplus
lines brokers  within the United  States.  The Specialty  Reinsurance  operation
writes  accident and health,  marine,  aviation and surety  business  within the
United States and worldwide  through brokers and directly with ceding companies.
The International Reinsurance operation writes property and casualty reinsurance
through the Company's branches in London, Canada, and Singapore,  in addition to
foreign "home-office" business.

These  segments  are  managed in a  carefully  coordinated  fashion  with strong
elements of central control, including with respect to capital,  investments and
support operations. As a result, management monitors and evaluates the financial
performance  of  these   operating   segments   principally   based  upon  their
underwriting results. The Company utilizes inter-affiliate  reinsurance and such
reinsurance  does not impact segment results as business is reported in the unit
responsible for the business as initially written with third parties,  generally
within the segment in which the business was first produced.


THREE MONTHS ENDED  SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 2001

PREMIUMS.  Gross premiums written increased 42.6% to $693.5 million in the three
months ended  September  30, 2002 from $486.3  million in the three months ended
September   30,  2001  as  the  Company  took   advantage  of  selected   growth
opportunities, while continuing to maintain a disciplined underwriting approach.
Premium  growth areas  included a 65.2%  ($100.2  million)  increase in the U.S.
Reinsurance  operation  principally  attributable  to growth across property and
casualty  lines,  a  60.4%  ($50.3  million)   increase  in  the   International
Reinsurance  operation,  mainly attributable to growth in the London, Canada and
Latin  American  markets  and a  41.6%  ($57.7  million)  increase  in the  U.S.
Insurance operation, principally attributable to growth in workers' compensation
insurance.  These  increases  were  partially  offset by a 0.9%  ($1.0  million)
decrease  in the  Specialty  Reinsurance  operation.  The Company  continued  to
decline  business  that  did not  meet  its  objectives  regarding  underwriting
profitability.

Ceded premiums  increased to $169.9 million in the three months ended  September
30, 2002 from $123.1 million in the three months ended  September 30, 2001. This
increase  was  principally  attributable  to $100.2  million  of ceded  premiums
relating to a Quota Share  Reinsurance  Agreement between Everest Re and Bermuda
Re,  whereby  Everest Re cedes 20% of its net retained  liability on all new and
renewal  policies  written during the term of this  agreement,  and an Excess of
Loss  Agreement  between  Everest Re,  Everest  National  Insurance  Company and
Everest  Security  Insurance  Company and Bermuda Re, whereby Bermuda Re assumes


                                       17



liability for primary insurance workers'  compensation losses exceeding $100,000
per occurrence, with its liability not to exceed $150,000 per occurrence.  Ceded
premiums for the three months ended September 30, 2002 included $4.5 million and
$11.9 million in adjustment  premiums relating to claims made under the 2001 and
2000 accident year aggregate excess of loss elements of the Company's  corporate
retrocessional program, respectively.  Ceded premiums for the three months ended
September  30,  2001  included  $59.9  million and $10.9  million in  adjustment
premiums relating to claims made under the 2001 and 1999 accident year aggregate
excess of loss  elements  of the  Company's  corporate  retrocessional  program,
respectively,  with the 2001 accident year cessions  relating to losses incurred
as a result of the September 11 attacks.

Net premiums  written  increased by 44.2% to $523.6  million in the three months
ended September 30, 2002 from $363.2 million in the three months ended September
30,  2001.  This  increase  reflects  the  increase in gross  premiums  written,
partially offset by the increase in ceded premiums.

PREMIUM  REVENUES.  Net premiums earned  increased by 33.0% to $456.4 million in
the three  months  ended  September  30, 2002 from  $343.0  million in the three
months ended  September  30,  2001.  Contributing  to this  increase was a 69.2%
($63.0  million)  increase in the U.S.  Reinsurance  operation,  a 43.9%  ($28.9
million) increase in the International  Reinsurance operation and a 42.8% ($35.5
million)  increase  in  the  U.S.  Insurance  operation.  These  increases  were
partially  offset  by  a  13.6%  ($14.0  million)   decrease  in  the  Specialty
Reinsurance operation.  All of these changes reflect period to period changes in
net written  premiums  and  business mix  together  with normal  variability  in
earnings  patterns.  Business mix changes  occur not only as the Company  shifts
emphasis between products, lines of business,  distribution channels and markets
but also as individual contracts renew or non-renew,  almost always with changes
in coverage,  structure,  prices and/or terms, and as new contracts are accepted
with coverages, structures, prices and/or terms different from those of expiring
contracts.   As  premium   reporting  and  earnings  and  loss  and   commission
characteristics  derive  from  the  provisions  of  individual  contracts,   the
continuous turnover of individual contracts,  arising from both strategic shifts
and day to day  underwriting,  can and  does  introduce  appreciable  background
variability in various underwriting line items.

EXPENSES.  Incurred loss and loss adjustment  expenses ("LAE") decreased by 8.3%
to $328.8  million in the three  months  ended  September  30,  2002 from $358.5
million in the three months ended  September 30, 2001.  The decrease in incurred
losses and LAE was  principally  attributable  to the  decrease  in  catastrophe
losses,  partially  offset  by the  increase  in net  premiums  earned  and also
reflects the impact of changes in the Company's mix of business. Incurred losses
and LAE include  catastrophe  losses,  which  include the impact of both current
period events and favorable and unfavorable  development on prior period events,
and are net of reinsurance. A catastrophe is an event that causes a pre-tax loss
on property  exposures of at least $5.0 million and has an event date of January
1, 1988 or later.  Catastrophe  losses,  net of contract  specific  cessions but
before cessions under the corporate  retrocessional  program, were $10.2 million
in the three months ended September 30, 2002,  principally  relating to European
flood losses,  compared to net catastrophe losses of $192.8 million in the three
months ended September 30, 2001, which was principally  related to the September
11 attacks.  Incurred  losses and LAE for the three months ended  September  30,
2002 reflected  ceded losses and LAE of $130.4 million  compared to ceded losses
and LAE in the three months ended  September 30, 2001 of $227.8  million.  Ceded
losses and LAE in the three  months  ended  September  30,  2002  include  $55.6
million of ceded losses relating to the reinsurance  transactions  noted earlier
between  the  Company  and  Bermuda  Re. The ceded  losses and LAE for the three
months ended  September  30, 2002  included  $9.6  million and $22.0  million of


                                       18



losses  ceded under the 2001 and 2000  accident  year  aggregate  excess of loss
component of the Company's corporate retrocessional program,  respectively.  The
ceded  losses and LAE for the three  months ended  September  30, 2001  included
$130.0  million  and  $20.0  million  of  losses  ceded  under the 2001 and 1999
accident year  aggregate  excess of loss  component of the  Company's  corporate
retrocessional  program,  respectively,  with the 2001  accident  year  cessions
relating to losses incurred as a result of the September 11 attacks.

Contributing  to the  decrease  in incurred  losses and LAE in the three  months
ended  September 30, 2002 from the three months ended  September 30, 2001 were a
32.8% ($55.2 million)  decrease in the U.S.  Reinsurance  operation  principally
reflecting decreased  catastrophe losses,  partially offset by increased premium
volume  and a  20.6%  ($18.5  million)  decrease  in the  Specialty  Reinsurance
operation principally  attributable to decreased  catastrophe losses,  partially
offset  by  increased  premium  volume in A&H  business.  These  decreases  were
partially  offset by a 49.0%  ($28.8  million)  increase  in the U.S.  Insurance
operation and a 37.1% ($15.2 million) increase in the  International  operation;
both increases principally reflect increased premium volume. Incurred losses and
LAE for each operation were also impacted by variability  relating to changes in
the level of premium volume and mix of business by class and type.

The Company's loss and LAE ratio ("loss ratio"), which is calculated by dividing
incurred losses and LAE by premiums earned,  decreased by 32.4 percentage points
to 72.1% in the three months ended  September  30, 2002 from 104.5% in the three
months ended September 30, 2001 reflecting the incurred losses and LAE discussed
above.  The  following  table  shows the loss  ratios for each of the  Company's
operating  segments for the three months ended  September 30, 2002 and 2001. The
loss ratios for all operations were impacted by the factors noted above.



                                      Operating Segment Loss Ratios
- ----------------------------------------------------------------------------------------
     Segment                                     2002                               2001
- ----------------------------------------------------------------------------------------
                                                                             
U.S. Reinsurance                                 73.6%                             185.2%
U.S. Insurance                                   74.2%                              71.1%
Specialty Reinsurance                            80.1%                              87.2%
International Reinsurance                        59.4%                              62.3%


Underwriting  expenses  increased by 0.3% to $124.5  million in the three months
ended September 30, 2002 from $124.1 million in the three months ended September
30, 2001.  Commission,  brokerage,  taxes and fees  decreased  by $1.6  million,
principally  reflecting  $18.2  million  of ceded  commissions  relating  to the
reinsurance  transactions  noted  earlier  between  the  Company and Bermuda Re,
partially  offset by  increases  in  premium  volume  and  changes in the mix of
business.  Other underwriting  expenses increased by $1.9 million as the Company
expanded its operations to support its increased  business volume.  Contributing
to these underwriting expense increases were a 55.2% ($13.1 million) increase in
the  U.S.  Insurance  operation  and a  2.7%  ($0.6  million)  increase  in  the
International operation.  These increases were partially offset by a 20.0% ($9.3
million) decrease in the U.S.  Reinsurance  operation and a 17.2% ($5.2 million)
decrease  in  the  Specialty  Reinsurance   operation.   The  changes  for  each
operation's  expenses  principally  resulted from changes in commission expenses
related to changes in premium  volume and business mix by class and type and, in
some cases,  changes in the use of  reinsurance,  including with Bermuda Re, and
the underwriting  performance of the underlying business.  The Company's expense
ratio, which is calculated by dividing underwriting expenses by premiums earned,
was 27.3% for the three months ended  September  30, 2002  compared to 36.2% for
the three months ended September 30, 2001.


                                       19



The Company's  combined ratio,  which is the sum of the loss and expense ratios,
decreased by 41.4 percentage points to 99.3% in the three months ended September
30, 2002 compared to 140.7% in the three months ended  September  30, 2001.  The
following  table shows the combined  ratios for each of the Company's  operating
segments for the three months ended  September  30, 2002 and 2001.  The combined
ratios  for  all  operations  were  impacted  by  the  loss  and  expense  ratio
variability noted above, and for certain operations, by the impact of adjustment
premiums ceded under the accident year  aggregate  excess of loss element of the
Company's retrocessional program, principally relating to losses incurred as the
result of the September 11 attacks.




                                    Operating Segment Combined Ratios
- ----------------------------------------------------------------------------------------
     Segment                                     2002                               2001
- ----------------------------------------------------------------------------------------
                                                                             
U.S. Reinsurance                                 97.8%                             236.5%
U.S. Insurance                                  105.2%                              99.6%
Specialty Reinsurance                           108.1%                             116.4%
International Reinsurance                        84.6%                              97.6%


INVESTMENT RESULTS. Net investment income decreased 1.4% to $64.4 million in the
three months  ended  September  30, 2002 from $65.3  million in the three months
ended  September  30,  2001,  principally  reflecting  the  effects of the lower
interest  rate  environment,  partially  offset by the effect of  investing  the
$413.0 million of cash flow from operations in the twelve months ended September
30, 2002. The following table shows a comparison of various investment yields as
of September 30, 2002 and December 31, 2001,  respectively,  and for the periods
ended September 30, 2002 and 2001, respectively.


                                                                           2002               2001
                                                                           -----------------------
                                                                                         
Imbedded pre-tax yield of cash and invested
 assets at September 30, 2002 and December 31, 2001                        5.6%                6.0%
Imbedded after-tax yield of cash and invested
 assets at September 30, 2002 and December 31, 2001                        4.4%                4.6%
Annualized pre-tax yield on average cash and
 invested assets for the three months ended September 30,
 2002 and 2001                                                             5.6%                6.2%
Annualized after-tax yield on average cash and
 invested assets for the three months ended September 30,
 2002 and 2001                                                             4.4%                4.7%


Net realized  capital loss was $7.1 million in the three months ended  September
30, 2002,  reflecting  realized  capital losses on the Company's  investments of
$18.4 million which  included $8.7 million  relating to write-downs in the value
of securities deemed to be impaired on an other than temporary basis,  partially
offset by $11.3  million of realized  capital  gains,  compared to net  realized
capital losses of $1.0 million in the three months ended September 30, 2001. The
net  realized  capital  losses in the three  months  ended  September  30,  2001
reflected  realized capital losses of $4.7 million,  which included $0.0 million
relating to write-downs  in the value of securities  deemed to be impaired on an
other than temporary basis, partially offset by $3.7 million of realized capital
gains.


                                       20



Interest expense for the three months ended September 30, 2002 was $10.7 million
compared  to $11.3  million  for the three  months  ended  September  30,  2001.
Interest  expense for the three months ended  September  30, 2002  reflects $9.7
million  relating to the  Company's  issuance of senior  notes and $1.0  million
relating  to the  Company's  borrowings  under its  revolving  credit  facility.
Interest  expense for the three months ended  September  30, 2001  reflects $9.7
million  relating to the  Company's  issuance of senior  notes and $1.6  million
relating to the Company's borrowings under its revolving credit facility.

Other  income for the three  months  ended  September  30, 2002 was $0.5 million
compared to other  expense of $1.6 million for the three months ended  September
30, 2001.  Significant  contributors  to other income for the three months ended
September 30, 2002 were normal provision for uncollectible  audit premium in the
U.S.  Insurance  operation and the amortization of deferred expenses relating to
the  Company's  issuance of senior  notes in 2000,  partially  offset by foreign
exchange  gains  and fee  income.  Other  expense  for the  three  months  ended
September 30, 2001 principally  included the  amortization of deferred  expenses
relating to the Company's  issuance of senior notes in 2000 and foreign exchange
losses,  partially  offset by fee income.  The foreign exchange gains and losses
for both periods are attributable to fluctuations in foreign  currency  exchange
rates.

The Company has in its product  portfolio a credit default swap contract,  which
it no longer offers.  This contract  meets the definition of a derivative  under
FAS 133. Net derivative expense,  essentially  reflecting changes in fair value,
from this credit default  transaction  for the three months ended  September 30,
2002 was $1.0  million  compared  to $0.0  million  for the three  months  ended
September 30, 2001.

INCOME TAXES. The Company  recognized income tax expense of $14.5 million in the
three months ended September 30, 2002 compared to an income tax benefit of $35.1
million in the three months  ended  September  30, 2001.  The tax benefit in the
three  months  ended  September  30,  2001  resulted  primarily  from the losses
relating to the September 11 attacks, for which the benefit was calculated based
on the specific impacts of the event.

NET INCOME. Net income was $34.8 million in the three months ended September 30,
2002 compared to a net loss of $53.1 million in the three months ended September
30, 2001.  The net loss in the three months ended  September  30, 2001  resulted
primarily from the losses relating to the September 11 attacks.


NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2001

PREMIUMS. Gross premiums written increased 37.9% to $1,911.1 million in the nine
months ended  September 30, 2002 from $1,386.1  million in the nine months ended
September   30,  2001  as  the  Company  took   advantage  of  selected   growth
opportunities, while continuing to maintain a disciplined underwriting approach.
Premium  growth areas  included a 58.0%  ($226.4  million)  increase in the U.S.
Insurance operation, principally attributable to growth in workers' compensation
insurance,  a 44.8% ($110.9 million) increase in the  International  Reinsurance
operation,  mainly  attributable  to  growth  in the  London,  Canada  and Latin
American  markets,  a 34.5% ($151.3  million)  increase in the U.S.  Reinsurance
operation primarily  reflecting growth across property and casualty lines and an
11.8%  ($36.5  million)  increase  in  the  Specialty   Reinsurance   operation,


                                       21



principally  attributable to growth in marine and aviation business. The Company
continued  to  decline  business  that  did not meet  its  objectives  regarding
underwriting profitability.

Ceded premiums  increased to $354.0  million in the nine months ended  September
30, 2002 from $221.1 million in the nine months ended  September 30, 2001.  This
increase  was  principally  attributable  to $214.4  million  of ceded  premiums
relating to a Quota Share  Reinsurance  Agreement between Everest Re and Bermuda
Re,  whereby  Everest Re cedes 20% of its net retained  liability on all new and
renewal  policies  written during the term of this  agreement,  and an Excess of
Loss  Agreement  between  Everest Re,  Everest  National  Insurance  Company and
Everest  Security  Insurance  Company and Bermuda Re, whereby Bermuda Re assumes
liability for primary insurance workers'  compensation losses exceeding $100,000
per occurrence, with its liability not to exceed $150,000 per occurrence.  Ceded
premiums for the nine months ended  September 30, 2002 included $5.1 million and
$11.9 million in adjustment  premiums relating to claims made under the 2001 and
2000 accident year aggregate excess of loss elements of the Company's  corporate
retrocessional program,  respectively.  Ceded premiums for the nine months ended
September  30,  2001  included  $59.9  million and $26.3  million in  adjustment
premiums relating to claims made under the 2001 and 1999 accident year aggregate
excess of loss  elements  of the  Company's  corporate  retrocessional  program,
respectively,  with the 2001 accident year cessions  relating to losses incurred
as a result of the September 11 attacks.

Net premiums  written  increased by 33.6% to $1,557.0 million in the nine months
ended  September  30,  2002  from  $1,165.0  million  in the nine  months  ended
September  30, 2001.  This  increase  reflects  the  increase in gross  premiums
written, partially offset by the increase in ceded premiums.

PREMIUM REVENUES.  Net premiums earned increased by 28.8% to $1,366.1 million in
the nine  months  ended  September  30, 2002 from  $1,060.4  million in the nine
months ended  September  30,  2001.  Contributing  to this  increase was a 59.7%
($121.4  million)  increase in the U.S.  Insurance  operation,  a 35.4%  ($120.0
million)  increase in the U.S.  Reinsurance  operation,  a 23.6% ($52.6 million)
increase in the International  Reinsurance  operation and a 4.0% ($11.7 million)
increase in the Specialty  Reinsurance  operation.  All of these changes reflect
period to period changes in net written  premiums and business mix together with
normal variability in earnings patterns.

EXPENSES.  Incurred loss and LAE increased by 8.7% to $967.0 million in the nine
months  ended  September  30, 2002 from $889.5  million in the nine months ended
September  30,  2001.  The increase in incurred  losses and LAE was  principally
attributable to the increase in net premiums earned and lower catastrophe losses
and also  reflects  the  impact of  changes in the  Company's  mix of  business.
Incurred losses and LAE include catastrophe losses,  which include the impact of
both current period events,  and favorable and unfavorable  development on prior
period events and are net of reinsurance.  A catastrophe is an event that causes
a pre-tax  loss on property  exposures of at least $5.0 million and has an event
date of January 1, 1988 or later.  Catastrophe  losses, net of contract specific
cessions but before cessions under the corporate  retrocessional  program,  were
$11.9 million in the nine months ended September 30, 2002,  principally relating
to European flood losses,  compared to net catastrophe  losses of $222.1 million
in the nine months ended September 30, 2001,  which was  principally  related to
the  September  11 attacks.  Incurred  losses and LAE for the nine months  ended
September 30, 2002 reflected ceded losses and LAE of $263.7 million  compared to


                                       22



ceded  losses and LAE in the nine  months  ended  September  30,  2001 of $337.5
million.  Ceded  losses and LAE in the nine  months  ended  September  30,  2002
include $55.6 million of ceded losses relating to the  reinsurance  transactions
noted  earlier  between the Company and Bermuda Re. The ceded losses and LAE for
the nine months  ended  September  30,  2002  included  $11.0  million and $22.0
million of losses ceded under the 2001 and 2000 accident year  aggregate  excess
of  loss   component  of  the  Company's   corporate   retrocessional   program,
respectively.  The ceded losses and LAE for the nine months ended  September 30,
2001  included  $130.0  million and $49.0 million of losses ceded under the 2001
and 1999  accident  year  aggregate  excess of loss  component of the  Company's
corporate  retrocessional  program,  respectively,  with the 2001  accident year
cessions relating to losses incurred as a result of the September 11 attacks.

Contributing to the increase in incurred losses and LAE in the nine months ended
September  30, 2002 from the nine months ended  September  30, 2001 were a 58.9%
($85.1 million) increase in the U.S. Insurance operation principally  reflecting
increased  premium  volume  coupled  with  changes  in  this  segments  specific
reinsurance  programs and an 11.0% ($16.9 million) increase in the International
Reinsurance  operation.  These increases were partially  offset by a 6.9% ($24.4
million) decrease in the U.S. Reinsurance operation. Incurred losses and LAE for
each  operation  were also  impacted by  variability  relating to changes in the
level of premium volume and mix of business by class and type.

The Company's loss ratio,  decreased by 13.1  percentage  points to 70.8% in the
nine  months  ended  September  30,  2002 from  83.9% in the nine  months  ended
September 30, 2001 reflecting the incurred losses and LAE discussed  above.  The
following  table  shows  the loss  ratios  for each of the  Company's  operating
segments for the nine months ended  September 30, 2002 and 2001. The loss ratios
for all operations were impacted by the factors noted above.



                                      Operating Segment Loss Ratios
- ---------------------------------------------------------------------------------------
     Segment                                   2002                               2001
- ---------------------------------------------------------------------------------------
                                                                            
U.S. Reinsurance                               71.4%                              103.9%
U.S. Insurance                                 70.9%                               71.4%
Specialty Reinsurance                          77.4%                               80.4%
International Reinsurance                      62.3%                               69.4%


Underwriting  expenses  increased by 15.2% to $379.1  million in the nine months
ended  September 30, 2002 from $329.0 million in the nine months ended September
30, 2001.  Commission,  brokerage,  taxes and fees  increased by $45.0  million,
principally  reflecting  increases  in premium  volume and changes in the mix of
business, partially offset by $31.3 million of ceded commissions relating to the
reinsurance transactions noted earlier between the Company and Bermuda Re. Other
underwriting  expenses  increased  by $5.1  million as the Company  expanded its
operations  to support its  increased  business  volume.  Contributing  to these
underwriting expense increases were a 61.9% ($36.6 million) increase in the U.S.
Insurance  operation,   a  13.1%  ($10.5  million)  increase  in  the  Specialty
Reinsurance operation and a 7.4% ($8.7 million) increase in the U.S. Reinsurance
operation.  These  increases  were  partially  offset by a 7.8%  ($5.4  million)
decrease  in the  International  Reinsurance  operation.  The  changes  for each
operation's  expenses  principally  resulted from changes in commission expenses
related to changes in premium  volume and business mix by class and type and, in
some cases,  changes in the use of reinsurance and the underwriting  performance
of the underlying  business.  The Company's expense ratio was 27.7% for the nine
months  ended  September  30, 2002  compared to 31.0% for the nine months  ended
September 30, 2001.


                                       23


The Company's combined ratio decreased by 16.4 percentage points to 98.5% in the
nine months ended September 30, 2002 compared to 114.9% in the nine months ended
September 30, 2001.  The following  table shows the combined  ratios for each of
the Company's  operating  segments for the nine months ended  September 30, 2002
and 2001. The combined  ratios for all operations  were impacted by the loss and
expense ratio variability noted above, and for certain operations, by the impact
of adjustment  premiums ceded under the accident year  aggregate  excess of loss
element of the Company's retrocessional program,  principally relating to losses
incurred as the result of the September 11 attacks.



                                    Operating Segment Combined Ratios
- ----------------------------------------------------------------------------------------
      Segment                                   2002                                2001
- ----------------------------------------------------------------------------------------
                                                                             
U.S. Reinsurance                                99.0%                              138.7%
U.S. Insurance                                 100.3%                              100.4%
Specialty Reinsurance                          107.0%                              107.7%
International Reinsurance                       85.6%                              100.7%


INVESTMENT  RESULTS.  Net investment  income decreased 3.4% to $194.7 million in
the nine months ended  September 30, 2002 from $201.4 million in the nine months
ended  September  30,  2001,  principally  reflecting  the  effects of the lower
interest  rate  environment,  partially  offset by the effect of  investing  the
$413.0 million of cash flow from operations in the twelve months ended September
30, 2002. The following table shows a comparison of various investment yields as
of September 30, 2002 and December 31, 2001,  respectively,  and for the periods
ended September 30, 2002 and 2001, respectively.



                                                                           2002               2001
                                                                           -----------------------
                                                                                         
Imbedded pre-tax yield of cash and invested
 assets at September 30, 2002 and December 31, 2001                        5.6%                6.0%
Imbedded after-tax yield of cash and invested
 assets at September 30, 2002 and December 31, 2001                        4.4%                4.6%
Annualized pre-tax yield on average cash and
 invested assets for the nine months ended September 30,
 2002 and 2001                                                             5.8%                6.4%
Annualized after-tax yield on average cash and
 invested assets for the nine months ended September 30,
 2002 and 2001                                                             4.5%                4.8%



Net  realized  capital  losses  were  $45.9  million  in the nine  months  ended
September  30,  2002,  reflecting  realized  capital  losses  on  the  Company's
investments  of  $79.8  million,   which  included  $65.6  million  relating  to
write-downs  in the value of  securities  deemed to be impaired on an other than
temporary basis, of which $25.7 million related to WorldCom, partially offset by
$33.9 million of realized capital gains, compared to net realized capital losses
of $1.7 million in the nine months ended  September  30, 2001.  The net realized
capital losses in the nine months ended  September 30, 2001  reflected  realized
capital  losses of $26.0  million,  which  included  $16.7  million  relating to
write-downs  in the value of  securities  deemed to be impaired on an other than
temporary basis, partially offset by $24.3 million of realized capital gains.


                                       24


Interest  expense for the nine months ended September 30, 2002 was $31.9 million
compared to $35.3 million for the nine months ended September 30, 2001. Interest
expense for the nine months ended  September  30, 2002  reflects  $29.2  million
relating to the Company's  issuance of senior notes and $2.7 million relating to
the Company's  borrowings under its revolving credit facility.  Interest expense
for the nine months ended September 30, 2001 reflects $29.2 million  relating to
the  Company's  issuance  of  senior  notes  and $6.1  million  relating  to the
Company's borrowings under its revolving credit facility.

Other  expenses for the nine months ended  September  30, 2002 were $3.9 million
compared to other  expenses of $0.1 million for the nine months ended  September
30, 2001.  Significant  contributors  to other expense for the nine months ended
September  30, 2002 were an increase  in other  liabilities  related to deferred
recognition of reinsurance recoveries under retroactive  reinsurance between the
Company and Bermuda Re, the normal provision for uncollectible  audit premium in
the U.S. Insurance  operation and the amortization of deferred expenses relating
to the  Company's  issuance  of senior  notes in 2000,  partially  offset by fee
income and foreign  exchange  gains.  Other  expense  for the nine months  ended
September 30, 2001 principally  included the  amortization of deferred  expenses
relating to  Company's  issuance of senior  notes in 2000,  partially  offset by
foreign  exchange  gains and fee  income.  The foreign  exchange  gains for both
periods are attributable to fluctuations in foreign currency exchange rates.

INCOME TAXES. The Company  recognized income tax expense of $28.0 million in the
nine months ended  September 30, 2002 compared to a tax benefit of $14.1 million
in the nine months ended  September 30, 2001. The tax benefit in the nine months
ended  September 30, 2001  resulted  primarily  from the losses  relating to the
September 11 attacks, for which the benefit was calculated based on the specific
impacts of the event.

NET INCOME. Net income was $103.7 million in the nine months ended September 30,
2002 compared to $20.3 million in the nine months ended September 30, 2001. This
increase  generally  reflects the improved  underwriting  results and  decreased
interest expense, partially offset by increased tax expense and realized capital
losses.

MARKET  SENSITIVE  INSTRUMENTS.  The  Company's  risks  associated  with  market
sensitive  instruments  have not  changed  materially  since  the  period  ended
December 31, 2001.

SAFE HARBOR DISCLOSURE.  This report contains forward-looking  statements within
the meaning of the U.S.  federal  securities  laws.  The Company  intends  these
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements in the federal securities laws. In some cases, these
statements can be identified by the use of forward-looking  words such as "may",
"will",  "should",   "could",   "anticipate",   "estimate",   "expect",  "plan",
"believe",  "predict",  "potential"  and  "intend".  Forward-looking  statements
contained in this report include  information  regarding the Company's  reserves
for losses and LAE, including estimates of the Company's  catastrophe  exposure.
Forward-looking  statements only reflect the Company's  expectations and are not
guarantees of performance.  These statements  involve risks,  uncertainties  and
assumptions.  Actual events or results may differ  materially from the Company's
expectations. Important factors that could cause the Company's actual results to
be materially  different from its expectations  include the  uncertainties  that
surround the estimating of reserves for losses and LAE, those  discussed in Note
2 to the Financial  Statements  included in this report and the risks  described
under the caption  "Risk  Factors" in the  Company's  most recent Report on Form
10-K.  The Company  undertakes no  obligation  to update or revise  publicly any


                                       25



forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.


                                       26


PART I - ITEM 4


                       EVEREST REINSURANCE HOLDINGS, INC.
                             CONTROLS AND PROCEDURES


Within the 90-day period prior to the filing of this report,  an evaluation  was
carried out under the  supervision and with the  participation  of the Company's
management,  including the Chief Executive Officer and Chief Financial  Officer,
of the  effectiveness  of the disclosure  controls and procedures (as defined in
Rule  13a-14(c)  under the  Securities  Exchange  Act of  1934).  Based on their
evaluation,  the Chief  Executive  Officer  and  Chief  Financial  Officer  have
concluded that the Company's disclosure controls and procedures are, to the best
of  their  knowledge,  effective  to  ensure  that  information  required  to be
disclosed by the Company in reports that it files or submits  under the Exchange
Act is recorded,  processed,  summarized  and  reported  within the time periods
specified in Securities and Exchange  Commission rules and forms.  Subsequent to
the date of their evaluation, there were no significant changes in the Company's
internal  controls or in other  factors  that could  significantly  affect these
controls,   including  any   corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.

                                       27




                       EVEREST REINSURANCE HOLDINGS, INC.

                                Other Information

PART II - ITEM 1. LEGAL PROCEEDINGS

In the  ordinary  course of  business,  the  Company is  involved  in  lawsuits,
arbitrations and other formal and informal dispute  resolution  procedures,  the
outcomes of which will  determine the  Company's  rights and  obligations  under
insurance and reinsurance  agreements and other more general contracts.  In some
disputes,  the Company  seeks to enforce  its rights  under an  agreement  or to
collect funds owing to it. In other matters,  the Company is resisting  attempts
by others to collect funds or enforce alleged rights. Such disputes are resolved
through formal and informal means, including litigation and arbitration.

In all such  matters,  the Company  believes  that its positions are legally and
commercially  reasonable.  The Company also regularly  evaluates those positions
including,  where  appropriate,  consideration  during the processes by which it
establishes it insurance  reserves.  The Company's  aggregate reserves take into
account the possibility that the Company may not ultimately  prevail in each and
every disputed matter.  The Company  believes its aggregate  reserves reduce the
potential  that an adverse  resolution of one or more of these  matters,  at any
point in time, would have a material impact on the Company's financial condition
or results of  operations.  However,  there can be no  assurances  that  adverse
resolutions  of such  matters  in any one  period or in the  aggregate  will not
result in a material impact.

The Company does not believe  that there are any other  material  pending  legal
proceedings  to which it or any of its  subsidiaries  or  their  properties  are
subject.

Part II - ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a)   Exhibit Index:

     Exhibit No.        Description                               Location
     -----------        -----------                               --------
     99.1               CEO and CFO certification of Form 10-Q    Filed herewith


b)   A report on Form 8-K dated  August 13,  2002 was filed on August 13,  2002,
     reporting the voluntary  certification by Joseph V. Taranto,  the Company's
     Chief  Executive  Officer,  and Stephen L.  Limauro,  the  Company's  Chief
     Financial Officer, of the Company's 2001 annual report on Form 10-K and all
     subsequent reports filed prior to such date.


Omitted  from  this Part II are items  which  are  inapplicable  or to which the
answer is negative for the period covered.


                                       28



                       EVEREST REINSURANCE HOLDINGS, INC.

                                   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.

                                              Everest Reinsurance Holdings, Inc.
                                                          (Registrant)





                                              /S/ STEPHEN L. LIMAURO
                                              ----------------------------------
                                              Stephen L. Limauro
                                              Executive Vice President and Chief
                                              Financial Officer


                                              (Duly Authorized Officer,
                                              Executive Vice President and Chief
                                              Financial Officer)









Dated:  November 1, 2002





I, Joseph V. Taranto, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Everest  Reinsurance
     Holdings, Inc;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



November 1, 2002                                           /S/ JOSEPH V. TARANTO
- ----------------                                           ---------------------
                                                           Joseph V. Taranto
                                                           Chairman and Chief
                                                           Executive Officer



I, Stephen L. Limauro, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Everest  Reinsurance
     Holdings, Inc;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



November 1, 2002                                    /S/ STEPHEN L. LIMAURO
- ----------------                                    ----------------------------
                                                    Stephen L. Limauro
                                                    Executive Vice President and
                                                    Chief Financial Officer